Organic supermarket chain Earth Fare and its post-bankruptcy owner told North Carolina's top court on Tuesday that its founder can't recover damages for work he was salaried to do while revitalizing the brand, saying the justices should unravel a $195,000 unjust enrichment verdict in his favor.
Adam Peoples of Hall Booth Smith PC, arguing for Earth Fare 2020 Inc. and owner Dennis Hulsing, said during oral arguments that Earth Fare founder Randy Talley was not entitled to anything more than the $50,000 salary he accepted in exchange for securing investors to help save the brand. A salaried worker cannot unjustly enrich their employer for work they were contractually obligated to perform, Peoples said.
"The issues in this appeal, collectively, present a single fundamental question: what does a salary buy?" he told the justices. "Our position is straightforward. A salary is not an opening bid. It is the bargain."
Talley had said at trial in July 2024 that he was entitled to stock options and commissions under an oral agreement he claimed to have reached with Hulsing, but the jury found there was no such contract. It did, however, find Talley had conferred a benefit on Earth Fare for which he had not been compensated, finding in his favor on his unjust enrichment claim against Hulsing and awarding him $195,000 in damages.
Talley's counsel, Agustin Martinez of Brooks Pierce McLendon Humphrey & Leonard LLP, asked the high court Tuesday for a second shot at his claims for breach of contract and violation of the North Carolina Wage and Hour Act. The jury had only scrapped both because they were improperly instructed, he argued.
Martinez said Talley did not need to have a valid contract with Hulsing to prove Hulsing violated the Wage and Hour Act. The trial court, however, told the jury not to consider the Wage and Hour Act issue if they found against him on his breach of contract claim.
"The Wage and Hour Act does not have any requirement of approving an enforceable contract or an express contract," Martinez told the justices. "Yes, the Wage and Hour Act includes the term 'promises.' But again, that's not the same thing as an enforceable contract."
Talley co-founded Earth Fare as a regional organic grocery store chain in the 1990s before leaving the business in 2007, according to his brief on appeal. When Earth Fare declared bankruptcy in 2020 and began liquidating assets, Talley returned to try to "resuscitate the company," he said.
Talley brought his business plan to save Earth Fare to Hulsing, who agreed to buy the brand — including its intellectual property and three stores — out of bankruptcy for $1.5 million, Talley's brief said. Hulsing then formed the entity Earth Fare 2020 Inc. and became its president and CEO.
According to Hulsing's brief, Talley agreed in a March 2020 contract to a $50,000 annual salary in exchange for his work rallying other investors and finding leases for more stores. Talley, however, claims he was also promised stock options and commissions on the more than $25 million in investor funds he helped secure, citing an email exchange from August 2020 in which he claims Hulsing agreed to those terms.
Talley said Hulsing never followed through and instead offered "shifting proposals" that strayed farther and farther from what he believed had been their agreed-upon terms of payment.
Talley ultimately sued Hulsing and Earth Fare in the North Carolina Business Court in October 2022. When the case went to trial two years later, he sought more than $1.3 million in damages for breach of contract, violation of the Wage and Hour Act and unjust enrichment.
During arguments Tuesday, Peoples argued the only enforceable contract between his client and Talley was the March 2020 agreement in which Talley accepted a $50,000 salary. Peoples argued the emails Talley exchanged with Hulsing later that year in which he claims Hulsing agreed to additional compensation had none of the hallmarks of an enforceable contract.
The deal was never reduced to writing and Hulsing didn't unconditionally accept the terms, Peoples said. Instead, he said, Talley sought to add to the conditions Hulsing proposed, making it a counter-offer instead of a done deal.
"This was not an offer and acceptance," Peoples told the justices. "This was an offer, a counteroffer and a counteroffer."
He said there was also no consideration in which Talley offered to do new work in exchange for additional forms of payment. For one thing, he said Talley testified that all the work outlined in the August email exchange was work he had already performed, like procuring store leases and cultivating relationships with investors.
"Mr. Talley had already done the thing that he was now hoping to offer in exchange for more money," he told the justices. "The consideration was gone, there was nothing new for him to offer."
"No writing, no acceptance, no consideration equals no contract," he said. "The jury got it right."
Martinez, arguing for Talley, countered that the Wage and Hour Act is "much broader than contract law" in that it only requires an employment relationship as opposed to an express contract. Talley had an employment relationship with Hulsing, he said, and had been promised compensation that went beyond what was initially agreed.
That promise of additional compensation wades into Wage and Hour Act territory, he argued, saying the jurors should have been allowed to consider it even if they determined there was no express contract based on the August 2020 emails.
Martinez said Talley's responsibilities had evolved, going beyond what was first contemplated in his employment agreement and prompting discussions about additional compensation.
Justice Richard Dietz seemed to struggle with where to connect the Wage and Hour Act claim without an express contract. He said it seems like a scenario where Talley either proves he had a contract with Hulsing under which he's owed additional compensation, or he gets unjust enrichment damages because he provided services that benefited the company.
"Help me understand why that paradigm is not correct, which would just mean that the post-trial orders are correct — the jury got it right in this case," Justice Dietz said.
Earth Fare and Hulsing are represented by Adam F. Peoples and Michael R. Cline of Hall Booth Smith PC.
Talley is represented by Agustin Martinez and Robert J. King III of Brooks Pierce McLendon Humphrey & Leonard LLP.
The case is Talley vv Earth Fare 2020 Inc. et al., case number 174A25, in the North Carolina Supreme Court.
Feb 17
Deal Summary
