Archive for August, 2022

N.C. Business Court Opinions, August 17, 2022 – August 30, 2022

 

KNC Techs., LLC v. Tutton, 2022 NCBC Order 50 (N.C. Super. Ct. Aug. 17, 2022) (Davis, J.)

Key Terms: Rule 38; Rule 39; right to jury trial; waiver

Upon its own motion, the Court addressed whether a jury trial was appropriate. Neither party had requested a jury trial in their pleadings or within ten days following service of the last pleading, as required by Rule 38(b) of the North Carolina Rules of Civil Procedure; accordingly, the parties had waived their right to a jury trial per Rule 38(d). Although Rule 39(b) grants a court the discretion to order a jury trial even when the right has been waived, the Court declined to do so here and denied Plaintiff’s belated request for a jury trial.

 

Chi v. N. Riverfront Marina & Hotel LLLP, 2022 NCBC 46 (N.C. Super. Ct. Aug. 24, 2022) (Earp, J.)

Key Terms: Rule 12(b)(6); BCR 5; breach of contract; litigation privilege; confidentiality; waiver

Plaintiffs and Defendant Wilmington Riverfront entered into a partnership agreement to form Defendant NRMH for investing in developing riverfront property. After the investment failed to provide the allegedly promised returns, Plaintiffs brought suit, attaching to their complaint various partnership documents, including the partnership agreement and a subscription agreement. Defendants asserted a counterclaim for breach of contract alleging that Plaintiffs violated the confidentiality provisions in the agreements by disclosing confidential information about the partnership in public filings in the present lawsuit. Plaintiffs moved to dismiss, arguing that Defendants allegations were conclusory and therefore failed to state a claim; that their disclosures were protected by “litigation privilege”; and that Defendants had waived their right to pursue a claim because they included the same documents with their counterclaim. The Court denied the motion, concluding that 1) the Defendants had satisfied the minimal pleading requirements for a breach of contract claim; 2) Plaintiffs had failed to provide any North Carolina authority regarding a litigation privilege as argued here, and Business Court Rule 5 provides a mechanism for filing documents under seal; and 3) the waiver argument failed because the complaint did not allege that Defendants were bound by the confidentiality provisions, and, moreover, Defendants’ disclosure came after Plaintiffs had already disclosed the same material.

 

Total Merch. Servs., LLC v. TMS NC, Inc., 2022 NCBC Order 51 (N.C. Super. Ct. Aug. 30, 2022) (Bledsoe, C.J.)

Key Terms: sanctions; inherent authority; discovery violations; interlocutory appeal; preliminary injunction

This case arose from Defendants’ alleged breach of an exclusive sales agreement and Plaintiff’s attempts to enforce its inspection rights pursuant to the agreement. Over a year after filing the case, Plaintiff moved for sanctions due to Defendants’ discovery conduct and failure to comply with a Preliminary Injunction Order and a Compel Order. The Court detailed the Defendants’ conduct over the past year, which included improperly removing the case to federal court; refusing to respond to discovery requests for nearly fifteen months; taking an improper interlocutory appeal of the Preliminary Injunction Order; stubbornly and willfully failing to comply with the Preliminary Injunction Order; and failing to timely comply with the Compel Order. After reviewing its inherent authority to impose sanctions for a party’s misconduct, the Court concluded that sanctions should be awarded against Defendants for their egregious conduct; however, the Court deferred entry of the sanctions and ordered Defendants (and a non-party owner of Defendant TMS NC, Inc.) to appear and show cause why the Court should not enter sanctions, in addition to attorneys’ fees and costs, up to and including striking Defendants’ answer, affirmative defenses, and remaining counterclaims.

 

By: Ashley B. Oldfield

The information in this article is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation.

 

Posted 08/31/22

North Carolina Business Court Addresses Three Motions By and Against the Receiver in In re Southeastern Eye Center

On August 10, 2022, the North Carolina Business Court released three Orders of Significance in In re Southeastern Eye Center-Pending Matters and In re Southeastern Eye Center-Judgments. This litigation was initiated in 2012, resulting in a number of opinions and orders from the Court. The Orders released on August 10 all relate to the receiverships into which various entities involved have been placed.

In Order No. 45, the movants sought to compel the Receiver, pursuant to Article 38, § 1-501, et seq. of the North Carolina General Statutes, to testify under oath at a hearing in response to questions from the movants concerning information they contended the Receiver was required to provide to interested parties. Setting aside issues of standing, the Court determined that the relief requested was not authorized by Article 38 and denied the motions. However, the Court further noted that it had directed the Receiver to file an interim report by September 1, 2022, which would provide at least some of the information that the movants were seeking.

In Order No. 46, the Receiver sought an accounting from Doug Harris (“Harris”), who served as trustee for JDPW Trust (“JDPW”) prior to the Receiver’s appointment. In previous orders and opinions, the Court had concluded that Harris had committed a breach of trust against JDPW through various transactions which benefited himself and others and which were not in the best interests of JDPW and its beneficiaries. Reviewing caselaw and statutory authority, the Court determined that an accounting was an appropriate remedy and that the Receiver had satisfied his burden entitling him to an accounting. Thus, the Court granted the motion and ordered Harris to file an accounting setting forth the assets, income, and expenses of JDPW during his time as trustee and making available all original source documents so that the accounting could be verified.

In Order No. 47, the Receiver sought authority to exercise the power of sale in a deed of trust owned by JDPW. As an initial matter, the Court addressed whether the statutes in effect when JDPW was placed in receivership in 2016 governed, or whether the North Carolina Commercial Receivership Act, which became effective January 1, 2021, controlled. In agreement with the Receiver, the Court concluded that the versions of sections 1-501.1 through 1-507.11 that were in effect at the commencement of the receivership continued to govern the receivership and thus the Receiver was entitled to seek its requested relief under those provisions. The Court then granted the motion, concluding that, based on the Receiver’s forecast of evidence, it was in JDPW’s best interest to seek to enforce the deed of trust through power of sale procedures. The Court also delegated its authority to the Clerk of Superior Court of Guilford County to conduct the foreclosure proceedings and directed that any appeal therefrom be filed in the Business Court.

By: Ashley B. Oldfield

The information in this article is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation.

 

Posted 08/19/22

Rick Rayburn and Jack Miller Recognized by Best Lawyers®

The Best Lawyers in America® recognized two Rayburn Cooper & Durham attorneys in its 2023 edition.

Rick Rayburn is listed by Best Lawyers in the areas of:

  • Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law
  • Bet-the-Company Litigation
  • Commercial Litigation
  • Corporate Law

Rayburn has served as the managing shareholder of Rayburn Cooper & Durham for over 30 years.  He represents business enterprises and individuals in a wide variety of financial transactions and commercial disputes including corporate and commercial litigation, financial restructurings, business reorganizations, workouts, executive employment contracts and disputes, shareholder disputes, business formations, venture capital infusions, private and public securities offerings, mergers, acquisitions, joint ventures, divestitures, refinancings, and recapitalizations.

John R. Miller, Jr.  is a “Lawyer of the Year” recipient in the 2023 edition of The Best Lawyers in America®! “Lawyer of the Year” is awarded to only one lawyer per region and practice area, making it Best Lawyers’ most outstanding recognition.  Jack received this award in the area of Bankruptcy and Creditor Debtor Rights/Insolvency and Reorganization Law.  He represents debtors in business workouts and financial reorganizations and trustees, debtors, creditors, and creditors’ committees in business bankruptcies under Chapter 7 or 11 of the Bankruptcy Code.  He also works with restructuring financing and/or operations outside a formal court proceeding for financially distressed business entities.

Since it was first published in 1983, Best Lawyers® has become universally regarded as the definitive guide to legal excellence. Best Lawyers lists are compiled based on an exhaustive peer-review evaluation. Over 83,000 leading attorneys globally are eligible to vote, and Best Lawyers has received more than 13 million votes to date on the legal abilities of other lawyers based on their specific practice areas around the world. For the 2017 Edition of The Best Lawyers in America©, 7.3 million votes were analyzed, which resulted in almost 55,000 leading lawyers being included in the new edition. Lawyers are not required or allowed to pay a fee to be listed; therefore inclusion in Best Lawyers is considered a singular honor. Corporate Counsel magazine has called Best Lawyers “the most respected referral list of attorneys in practice.”

 

About Rayburn Cooper & Durham, P.A. (RCD)

For more than 35 years, Rayburn Cooper & Durham has served both businesses and individuals with bankruptcy and financial restructuring, business litigation and general corporate matters. The attorneys within the firm have extensive experience and provide creative solutions to help clients establish their enterprises, grow and prosper and also protect their rights, assets, and interests. Recognizing the unique needs of their clients, RCD does not represent large banks or financial institutions. RCD – The way forward. www.rcdlaw.net

 

 

 

 

Posted 08/18/22