Archive for March, 2023

N.C. Business Court Opinions, March 1, 2023 – March 14, 2023

North Carolina ex rel. Stein v. EIDP, Inc., 2023 NCBC 18 (N.C. Super. Ct. Mar. 2, 2023) (Robinson, J.)

Key Terms: motion to dismiss; Rule 12(b)(6); contamination; chemical manufacturing; DuPont; PFAS; pollution; negligence; trespass; public nuisance; fraud; res judicata; consent order; statutes of limitations; nullum tempus

In this action, the State of North Carolina brought claims for negligence, trespass, public nuisance, and fraud against various DuPont-related entities arising from the alleged contamination of North Carolina’s air, land, and water through Defendants’ chemical manufacturing operations at Fayetteville Works. Defendants moved to dismiss pursuant to Rule 12(b)(6), asserting that Plaintiff’s claims are barred by the doctrine of res judicata, the relevant statutes of limitations, and failure to state a claim.

Defendants first argued that Plaintiff’s claims are barred by res judicata due to a consent order entered in a previous lawsuit between the N.C. Division of Environmental Quality and two of the present defendants, which contained many of the same core factual allegations. The Court rejected this argument due to the express language of the consent order which stated that it was not to be a determination on the merits of any factual allegations or legal claims in the action. Since there was no final judgment on the merits, res judicata could not apply.

Next, Defendants argued that all of Plaintiff’s claims were barred by the three-year statute of limitations. In response, Plaintiff contended that the doctrine of nullum tempus prevented the relevant statutes of limitations from running against it. Absent express statutory language to the contrary, the doctrine of nullum tempus effectively tolls an otherwise applicable statute of limitations if the State is acting in its governmental, rather than proprietary, capacity. Noting that the North Carolina Supreme Court has held that the State acts in its governmental capacity when “promoting or protecting the health, safety, security, or general welfare of its citizens,” the Court agreed with Plaintiff that it was acting in its governmental capacity by bringing suit to recover costs associated with abatement of the alleged contamination. Accordingly, the applicable statutes of limitations were tolled by the doctrine of nullum tempus.

Regarding the common law negligence claim, the Court rejected Defendants’ argument that they owed no common law duties to Plaintiff but instead only owed duties arising under North Carolina’s environment control statutes. The Court concluded that the relevant statutes did not specifically abrogate common law actions, and, therefore, Plaintiff could bring a properly-pleaded claim for common law negligence. Since the complaint adequately alleged that certain Defendants did not exercise ordinary care in manufacturing and discharging PFAS, the Court denied the motion to dismiss the negligence claim.

The Court also rejected a similar argument regarding the public nuisance claim and found that Plaintiff’s allegation that the contamination is subversive of public order and affects the citizens of North Carolina at large was sufficient to survive dismissal at the 12(b)(6) stage.

Regarding the trespass claim, the Court concluded that, contrary to Defendants’ arguments, Plaintiff did not have to have an exclusive possessory interest in the resources at issue in order to state a claim. Since Plaintiff had alleged that it possesses and holds in trust certain land, water, and air for the benefit of the public, it had sufficiently alleged trespass even though said resources were also used by North Carolina citizens.

As to fraudulent concealment, Defendants first contended that they had no duty to disclose the information allegedly concealed. The Court determined that allegations of false statements made by one or more of the Defendants regarding the health effects of certain chemicals constituted affirmative actions to conceal material facts from the State and thus gave rise to a duty to disclose.

Defendants also argued that Plaintiff did not sufficiently allege reasonable reliance. However, since the Complaint alleged that the studies that put Defendants on notice that PFAS threatened human health were internal studies to which Plaintiff did not have access until at least 2016, Plaintiff had sufficiently alleged reasonable reliance. Finally, Defendants argued that the complaint failed to allege fraudulent concealment with particularity because it grouped certain Defendants together despite them having responsibility for Fayetteville Works at different times. The Court disagreed based on the complaint’s detailed allegations regarding the ownership of the facility and the chemicals produced there. Thus, the fraudulent concealment claim survived.

Lastly, Defendants argued that the fraudulent transfer claim should be dismissed because it was wholly dependent on the viability of Plaintiff’s claims for negligence, trespass, nuisance, and fraud. Since those claims survived, the fraudulent transfer claim survived as well.


States Mortg. Co. Inc. v. Bond, 2023 NCBC 19 (N.C. Super. Ct. Mar. 6, 2023) (Earp, J.)

Key Terms: motion to dismiss; Rule 12(b)(6); motion to amend; Rule 15; mortgage brokerage; proprietary customer information; misappropriation of trade secrets; breach of fiduciary duties; unfair and deceptive trade practices; permanent injunction

Plaintiff States Mortgage Company Inc. filed suit against two former employees and each of their new business entities alleging, inter alia, that the former employees took Plaintiff’s propriety customer information, specifically a master customer spreadsheet, and used it in their new businesses. Defendants Mark Bond and LKN Capital Mortgage, Inc. (“Bond Defendants”) moved to dismiss all claims, and Plaintiff moved to amend its complaint. Because the test for futility for a motion to amend mirrors the test for a motion to dismiss, the Court addressed the claims as stated in the proposed amended complaint.

Misappropriation of Trade Secrets. Plaintiff’s trade secret misappropriation claim arose from Defendants’ alleged taking and use of Plaintiff’s master customer spreadsheet. The Bond Defendants argued that Plaintiff failed 1) to identify the trade secret with particularity, 2) to allege facts showing that it protected the secrecy of any information, and 3) to adequately specify how the alleged misappropriation occurred. The Court rejected each of these arguments. First, the Court found that Plaintiff’s allegations describing the spreadsheet as a compilation of customer information acquired over years of doing business was sufficient to identify the alleged trade secret at issue. Second, the Court found that Plaintiff had minimally met the pleading requirements to show reasonable efforts to maintain the spreadsheet’s secrecy. Although nondisclosure agreements and employment policies are often used to safeguard alleged proprietary business information, North Carolina law does not require their use to satisfy the “reasonable efforts” requirement of the North Carolina Trade Secret Protection Act. Third, Plaintiff had sufficiently pleaded misappropriation by alleging, inter alia, that defendants had used a co-worker’s computer or coerced the co-worker herself to provide the spreadsheet and transfer it to defendant’s personal computer. Accordingly, the motion to dismiss the claim for misappropriation of trade secrets was denied.

Breach of Fiduciary Duty. Plaintiff based its breach of fiduciary duty claim on allegations that the former employee defendants owed fiduciary duties to Plaintiff as employees. Since a fiduciary relationship does not arise between an employee and employer by operation of law, the Court considered whether a de facto fiduciary relationship existed. Based on the facts alleged, the Court found that neither man was in a position of such power that Plaintiff would have been subjugated to his improper influence or dominion. Accordingly, no fiduciary relationship existed and the Court dismissed the claim.

Unfair and Deceptive Trade Practices. The Bond Defendants sought dismissal of the UDTPA claim based on their argument that the underlying trade secret misappropriation claim failed. However, since that claim survived and could support liability under the UDTPA, the Court denied dismissal of the UDTPA claim.

Permanent Injunction. Noting that injunctions are remedies, not independent causes of action, the Court dismissed the “claim” for a permanent injunction, but without prejudice to Plaintiff’s ability to pursue injunctive relief if warranted.

Motion to Amend. Having already determined that the proposed amendments to the trade secrets misappropriation claim were not futile, the Court was also unpersuaded by arguments that the Plaintiff’s proposed amendments were irreconcilable with its prior pleadings. Thus, the Court granted the Plaintiff’s motion to amend, consistent with its rulings on the motion to dismiss.


Vitaform, Inc. v. Aeroflow, Inc., 2023 NCBC 20A (N.C. Super. Ct. Mar. 13, 2023) (Bledsoe, CJ.)

Key Terms: motion to exclude experts; expert report; expert witness; motion in limine; discovery; relevance; Daubert; Rule 702

Vitaform, Inc., a designer and manufacturer of post-partum compression garments, filed suit against Aeroflow, Inc. and its subsidiary, based on its contention that Aeroflow wrongfully revealed Plaintiff’s confidential information and trade secrets to Aeroflow’s subsidiary, which unfairly allowed the subsidiary to compete with Plaintiff. In a previous opinion, the Court dismissed most of Plaintiff’s claims, including claims for misappropriation of trade secrets and breach of the covenant of good faith and fair dealing, such that four claims, largely relating to a specific phone call in which Aeroflow allegedly promised to maintain the confidentiality of Plaintiff’s business plan, remained to proceed to trial. Following various discovery disputes, motions, and sanctions, Plaintiff withdrew its previous expert witness designations and designated a single expert witness for damages. Thereafter, Defendants designated a rebuttal expert and each party moved to exclude the other’s expert witness.

Analyzing the Defendants’ motion to exclude under Rule 702 of the North Carolina Rules of Evidence and the Daubert standard, the Court agreed with Defendants that Plaintiff’s expert’s opinions were both irrelevant and unreliable. Since Plaintiff’s expert premised his damages analysis either upon claims already dismissed or, as to the surviving claims, using methodologies properly applied to the dismissed claims, such opinions were inherently irrelevant under the Daubert standard. The expert’s opinions were also inherently unreliable under Rule 702 because of the improper methodology used. Thus, the expert’s opinions were excluded.

Additionally, the Court concluded that Plaintiff should not be permitted to offer an alternative theory of damages at such a late stage in the litigation (trial scheduled in five weeks). Since Plaintiff had represented to Defendants for over a year that all of its damages evidence would come from its expert alone, it could not now introduce new theories or evidence of damages not previously disclosed. The Court noted, however, that its decision was without prejudice to Plaintiff’s right to seek nominal and punitive damages at trial.

Finally, the Court also excluded Defendant’s rebuttal witness since testimony from a rebuttal expert that attacks another, already-excluded expert is inherently irrelevant.


Loyd v. Griffin, 2023 NCBC Order 12 (N.C. Super. Ct. Mar. 6, 2023) (Robinson, J.)

Key Terms: motion to exclude expert witness; Rule 56(e); motion to supplement; joint appendix; BCR 7.11; Rule 702; Daubert; reliability; admissibility

Defendants retained an expert witness to opine on the damages Defendants suffered due to Plaintiff’s alleged misconduct. Plaintiff moved to exclude Defendants’ expert’s opinions and testimony from consideration on summary judgment. In response, Defendants moved to supplement the record with damages evidence in the event their expert was excluded.

Since Plaintiff only challenged the reliability of the expert’s testimony, the Court focused solely on the three prongs of the reliability test. First, the Court concluded that the information upon which the expert based his opinion—which was the same as the information before the Court on summary judgment—was sufficient for the applicable damages analysis. Second, the Court determined that the expert’s opinions were based on reliable methods given the expert’s independent testing to ensure accuracy of the information he relied on, the probative value of the letters of intent, his stated methodology, and the widespread usage of such calculations in the industry. Any question relating to the factual basis of his opinions, such as whether the facts he received were qualitatively reliable, goes to the weight to be given the opinion by the factfinder, not the admissibility of the opinion. Third, as to application of the methodology to the facts, the Court concluded that any dispute goes to the testimony’s weight and was better left to the trier of fact.

Thus, the Court denied the Motion to Exclude and consequently denied the Defendants’ Motion to Supplement as moot.


In re Se. Eye Ctr. (Pending Matters); In re Se. Eye Ctr. (Judgments), 2023 NCBC Order 13 (N.C. Super. Ct. Mar. 9, 2023) (Bledsoe, C.J.)

Key Terms: receiver; accounting; objection; trust; legal interest; standing

This order addresses the objection of McDaniel, a non-party who was previously permitted to intervene in the action, to the receiver’s accounting for JDPW Trust. McDaniel’s objection claimed that the receiver engaged in various forms of misconduct in a conspiracy with the receiver’s attorneys. The Court overruled the objection and denied McDaniel’s request for a hearing to examine the receiver, concluding that most of the objection was divorced from any matter in which McDaniel had a legal interest, and that the remainder either misread the receiver’s report or constituted an improper attempt to re-litigate issues already decided.


In re Se. Eye Ctr. (Pending Matters); In re Se. Eye Ctr. (Judgments), 2023 NCBC Order 14 (N.C. Super. Ct. Mar. 9, 2023) (Bledsoe, C.J.)

Key Terms: receiver; interim report; objection; trust; standing; beneficiary

This order addresses the objections of Defendant Harris and intervenor McDaniel to the receiver’s interim report for JDPW Trust. Regarding Harris’s objection, the Court determined that Harris lacked standing to object because he was not a beneficiary of the Trust, but merely a former trustee of the Trust with no other legal relationship with the Trust. The Court determined that McDaniel lacked standing to object as well, because he was neither a beneficiary of the Trust nor in a legal relationship with the Trust. Moreover, McDaniel improperly attempted to use the objection to raise collateral issues unrelated to the report in question and to re-litigate matters already decided. Accordingly, the Court overruled both objections and denied the objectors’ concurrent requests for a hearing to examine the receiver.


In re Se. Eye Ctr. (Pending Matters); In re Se. Eye Ctr. (Judgments), 2023 NCBC Order 15 (N.C. Super. Ct. Mar. 9, 2023) (Bledsoe, C.J.)

Key Terms: sua sponte order; Rule 11; Rule 12; sanctions; abusive language; invective; ad hominem; contempt; professional conduct; BCR 7.5

Following orders overruling certain objections to a receiver’s report, the Court sua sponte entered this order to address the inflammatory rhetoric contained in the objections and to put the objector on notice that any further similar conduct may result in the imposition of sanctions and/or the initiation of contempt or other proceedings. The Court found that the objections were replete with personal vitriol against the receiver and other parties in this case, ad hominem attacks against the receiver and others, and egregious accusations of misconduct against others with virtually no citations to evidence, the developed record, or to applicable law, all of which impugned the other parties and detracted from the dignity of the courts and the judicial process.

Noting that the objector’s pro se status did not protect him from the rules of conduct that bind attorneys, including Rule 11 of the Rules of Civil Procedure and Rule 12 of the General Rules of Practice, the Court ordered the objector to cease and desist further abusive filings or oral advocacy before the Court and to adhere to BCR 7.5 (which requires pinpoint citations in motions and briefs) but did not at this time order the objector to show cause as to why he should not be sanctioned.


Oxendine v. Lumbee Tribe Holdings, Inc., 2023 NCBC Order 16 (N.C. Super. Ct. Mar. 14, 2023) (Bledsoe, C.J.)

Key Terms: determination order; injunctive relief pending arbitration; mandatory complex business case; notice of designation; N.C.G.S. § 7A-45.4(a)(1); contract law

Plaintiff moved for injunctive relief pending arbitration, seeking to enjoin Defendant from exercising a buyout option prior to arbitration. Defendant filed a notice of designation under N.C.G.S. § 7A-45.4(a)(1), which allows for designation if the action involves a material issue related to disputes involving the law governing limited liability companies. Assuming without deciding that a motion seeking injunctive relief under North Carolina’s arbitration act constituted a pleading for purposes of Business Court designation, the Court concluded that although the relief requested may involve a determination of the parties’ rights under Defendant’s operating agreement, it would nonetheless require only a straightforward application of contract law principles and thus did not implicate the law governing limited liability companies as required by N.C.G.S. § 7A45.4(a)(1). Therefore, the Court determined that the action should not proceed as a mandatory complex business case.

By Rachel E. Brinson

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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 03/15/23

N.C. Business Court Opinions, February 15, 2023 – February 28, 2023

Conservation Station, Inc. v. Bolesky, 2023 NCBC 14 (N.C. Super. Ct. Feb. 17, 2023) (Robinson, J.)

Key Terms: entry of default; good cause; motion to dismiss; 12(b)(6); pro se litigant

After Plaintiff filed suit in Wake County Superior Court, Defendant Bolesky, appearing pro se, filed a motion to dismiss, which was denied. The matter was subsequently designated to the Business Court. When Bolesky still had not filed an answer nearly two months after designation,

Plaintiff filed a motion for entry of default, a copy of which was delivered to Bolesky by mail. When Bolesky did not respond by the deadline, the Court ordered Plaintiff to provide the Court with information regarding Bolesky’s involvement in the case. Following a review of this information, the Court entered default against Bolesky.

Bolesky then moved to set aside the entry of default and to dismiss under Rule 12(b)(6). In his motion, Bolesky stated his failure to timely respond was due to his “excusable ignorance of the law and deadlines for filings as a Pro Se litigant.” The Court denied Bolesky’s motion to set aside, concluding that Bolesky had failed to show the necessary good cause. The Court highlighted that Bolesky was put on notice of Plaintiff’s motion for entry of default when he received a copy in the mail and was specifically advised of this during a case management conference a few days later. The Court noted that Bolesky “was bound, as a pro se litigant, to be aware of and abide by the Rules of Civil Procedure and to comply with filing deadlines.”

The Court also denied Bolesky’s motion to dismiss, as Bolesky had previously filed a motion to dismiss which had been heard and decided by the Wake County Superior Court.


Intersal, Inc. v. Wilson, 2023 NCBC 15 (N.C. Super. Ct. Feb. 23, 2023) (Earp, J.)

Key Terms: pirate ship; breach of contract; summary judgment; media rights; affirmative defense; law of the case doctrine; judicial estoppel; collateral estoppel

This dispute arises from a series of agreements between Plaintiff and the North Carolina Department of Natural and Cultural Resources (“DNCR”) covering the discovery, promotion, and preservation of two ships that sunk off the North Carolina coast in the eighteenth-century. In the mid-1990s, DNCR issued Plaintiff permits to search for the Queen Anne’s Revenge (“QAR”), the flagship of the infamous pirate Blackbeard, and the El Salvador, a Spanish merchant vessel. The wreckage sites of the QAR and El Salvador were located in 1996 and 1998, respectively.

In 1998, Plaintiff and DNCR entered into an agreement regarding the research and preservation of the QAR’s artifacts (the “1998 Agreement”). After fifteen years, the working relationship between Plaintiff and the DNCR hit stormy seas. Plaintiff filed a petition with the Office of Administrative Hearings (“OAH”) related to the numerous disputes between the parties, resulting in a new agreement in 2013 (the “2013 Agreement”). In the 2013 Agreement, which expressly superseded the 1998 Agreement, Plaintiff relinquished its rights to any coins or precious metals recovered from the QAR in exchange for a “more streamlined” renewal process for its El Salvador Permit and the right to certain promotion/media opportunities with respect to the QAR project. Less than a week after the execution of the 2013 Agreement, the DNCR participated with the U.S. Coast Guard in raising five of the QAR’s cannons. The DNCR failed to inform Plaintiff of this event, denying Plaintiff the opportunity to film the event or place restrictions upon third-party media companies in attendance. DNCR subsequently published media without Plaintiff’s watermark and allowed access to the QAR site without seeking Plaintiff’s consent. In 2015, the DNCR terminated Plaintiff’s El Salvador permit.

Plaintiff filed suit against DNCR and other state agencies (“Defendants”) in 2015 for breach of both the 1998 Agreement and the 2013 Agreement. After a dismissal of Plaintiff’s claims and subsequent partial reversal and remand by the North Carolina Supreme Court, both parties moved for summary judgment. Plaintiff moved for partial summary judgment seeking: (1) to establish as a matter of law that two of Defendants’ affirmative defenses were barred; and (2) a declaratory judgment that Defendants breached specific paragraphs of the 2013 Agreement relating to media access and rights. Defendants moved for summary judgment on Plaintiffs’ two breach of contract claims.

The Court granted Plaintiff’s motion in part, determining that Defendants’ second affirmative defense (that the 2013 Agreement was illegal and void as against public policy) and ninth affirmative defense (to the extent Defendants contend the terms of the 2013 Agreement are unenforceable) were barred by the law of the case doctrine and judicial estoppel, as the Supreme Court had already affirmed the trial court’s determination that the 2013 Agreement was a novation of the 1998 Agreement, and neither party had challenged the validity of the 2013 Agreement before the Supreme Court. The Court also granted Plaintiff’s request for a declaratory judgment in part, but only in relation to DNCR’s posting on the internet of non-commercial media of the QAR after the effective date of the 2013 Agreement.

The Court partially granted Defendants’ motion for summary judgement on Plaintiff’s first breach of contract claim insofar as Plaintiff’s claims asserted breaches of the 2013 Agreement for DNCR’s production of media in response to public records requests predating the 2013 Agreement’s effective date. Defendant’s motion for summary judgment on Plaintiff’s second breach of contract claim, which related to the termination of the El Salvador permit, was granted based on collateral estoppel, as an OAH administrative judge had previously determined that renewing the permit was not in the State’s best interest.


Mary Annette, LLC v. Crider, 2023 NCBC 16 (N.C. Super. Ct. Feb. 23, 2023) (Conrad, J.)

 Key Terms: motion to dismiss; breach of contract; operating agreement; breach of fiduciary duty; controlling member; UDTPA; in or affecting commerce; fraud; reformation

This lawsuit arises out of disputes relating to the creation, ownership, and management of Mary Annette, LLC (“MA”). MA’s operating agreement named three one-third members: Twilight Developments, Inc., Ozzie 1, LLC, and Mountain Girl Ventures, LLC. The lawsuit originated when MA filed a complaint against Terri Lynn Crider, the sole owner of Mountain Girl, alleging that Crider improperly held herself out to be an officer and agent of MA, then refused to hand over company records and accounts. The lawsuit was later expanded to incorporate all MA members MA, as well as those members’ owners in their individual capacity. Crider and Mountain Girl asserted seven counterclaims, which Plaintiffs moved to dismiss in full.

The Court summarily denied Plaintiffs’ motion to dismiss the quiet title and conversion counterclaims, as Plaintiffs had failed to advance any arguments directed to those counterclaims.

The Court also denied Plaintiffs’ motion to dismiss the breach of contract counterclaim, as Plaintiffs’ arguments focused solely on the operating agreement and failed to properly address the existence of an oral agreement alleged by Defendants. The Court declined to consider Plaintiffs’ argument that the operating agreement’s merger clause extinguished any pre-existing oral argument, as the argument had not been previously presented to the Court and was therefore untimely.

The Court granted Plaintiffs’ motion as to the fiduciary duty counterclaim, as Defendants failed to allege that Plaintiffs owed them a fiduciary duty. Although Defendants argued that a controlling member may owe fiduciary duties to minority members, the counterclaim’s allegations showed that Defendant Mountain Girl was the controlling member of MA, not the other way around.

The Court denied Plaintiffs’ motion to dismiss the fraud counterclaim, due to the scattershot, conclusory, and undeveloped nature of Plaintiffs’ arguments. Plaintiffs had failed to cite specific statements in their arguments claiming lack of specificity or failure to allege misrepresentation. Moreover, Plaintiffs’ arguments regarding the economic loss rule and lack of standing suggested a misunderstanding of the allegations and were inapplicable.

As to Defendants’ counterclaim to reform the operating agreement, the Court dismissed the counterclaim as to Crider, since she was not a party to the operating agreement but denied it as to Mountain Girl as Plaintiffs “raise[d] no arguments as to why Mountain Girl’s claim should be dismissed.”

Lastly, the Court dismissed the section 75-1.1 counterclaim, because the alleged misconduct concerned either the capitalization of MA or matters of internal governance and was therefore not in or affecting commerce.


MarketPlace 4 Ins., LLC v. Vaughn, 2023 NCBC 17 (N.C. Super. Ct. Feb. 24, 2023) (Davis, J.)

 Key Terms: judgment on the pleadings; restrictive covenants; misappropriation of trade secrets; UDTPA; tortious interference with contract; tortious interference with prospective economic advantage; computer trespass; vicarious liability

Plaintiff, which owns and operates independent insurance agencies, acquired all assets of the Gilliam Agency (including restrictive covenants between it and its employees), another insurance company, through an asset purchase agreement (the “APA”). Certain Gilliam Agency employees became employees of Plaintiff after the acquisition, including Defendant Jeffrey Vaughn. Less than a year later, Vaughn resigned and began working for Defendant Guidelight Insurance Solutions, Inc. Upon discovering that Vaughn was accessing Plaintiff’s computer database and using Plaintiff’s confidential information to solicit its customers, Plaintiff filed suit against Vaughn and Guidelight, basing its claims against Guidelight largely on a theory of vicarious liability. Defendants each filed separate motions for judgment on the pleadings, seeking dismissal of all claims against them.

Breach of Contract (Vaughn). Plaintiff’s breach of contract claims were based on restrictive covenants in an agreement entered into between Vaughn and his former employer, the Gilliam Agency. Because restrictive covenants transferred pursuant to an asset purchase agreement begin to run from the date of execution of the asset purchase agreement, the Court dismissed Plaintiff’s breach of contract claims to the extent they were based on breaches of non-solicitation covenants  that occurred after the one-year restricted period of the covenants expired. The Court also determined that the two non-solicitation provisions were overbroad because they encompassed customers of Nationwide that had never done business with the Gilliam Agency. The Court dismissed the claim as to the first provision, but deferred a final decision on the second because it was potentially subject to blue-pencilling. Lastly, as to Vaughn’s alleged breaches for disclosure of confidential information, the Court dismissed the claim to the extent it was based on Vaughn’s alleged disclosure of Plaintiff’s confidential information, because the APA only permitted Plaintiff to enforce the confidentiality provisions relating to information that belonged to the Gilliam Agency.

Misappropriation of Trade Secrets (Vaughn). Vaughn argued that Plaintiff had failed to sufficiently allege the existence of trade secrets, reasonable protective measures, or actual misappropriation. After comparing Plaintiff’s allegations to existing caselaw, the Court rejected Vaughn’s arguments and denied dismissal.

Computer Trespass (Vaughn). The Court denied the motion as to this statutory claim, determining that Plaintiff had adequately alleged that Vaughn had accessed its computer database without authority and had done so with the requisite intent.

Tortious Interference with Contract (Vaughn). Vaughn argued that this claim should be dismissed because 1) Plaintiff did not allege that any of its customers actually breached their contracts; and 2) any interference was justified because Vaughn was acting as a business competitor. As to the first argument, the Court explained that actual breach is not a required element of the claim; the plaintiff must merely allege wrongful interference. As to the second, the Court emphasized that the “without justification” is satisfied where, as here, the complaint alleges defendant’s interference involved unlawful means, such as misappropriation of trade secrets. Accordingly, dismissal of this claim was denied.

Tortious Interference with Prospective Economic Advantage (Vaughn). The Court dismissed this claim as Plaintiff did not allege the loss of any specific contractual opportunity.

UDTPA (Vaughn). The Court denied the motion as to this claim, based on the survival of Plaintiff’s claims for misappropriation of trade secrets and tortious interference with contract.

Tortious Interference with Contract (Guidelight). As for the direct claim, the Court granted dismissal because the complaint did not allege any inducement by Guidelight itself, rather than by Vaughn. The Court, however, denied dismissal of the vicarious liability claim, determining that Plaintiff had sufficiently alleged that Guidelight ratified Vaughn’s actions by not taking any action against him when it learned of his conduct.

Tortious Interference with Prospective Economic Advantage (Guidelight). The Court dismissed the direct claim because Plaintiff did not allege that Guidelight caused the loss of any specific contractual opportunity. The Court also dismissed the vicarious liability claim since the underlying tort claim against Vaughn had failed.

UDTPA (Guidelight). Because the Court determined that the UDTPA claim against Vaughn survived and the law allows for vicarious liability for unfair and deceptive trade practices, the Court denied dismissal of this claim.

Misappropriation of Trade Secrets (Guidelight). Pointing to persuasive caselaw from other jurisdictions, the Court rejected Guidelight’s argument that North Carolina does not permit vicarious liability principles to be applied to statutory claims unless authorized by the legislature. Thus, this claim premised on vicarious liability survived.

Computer Trespass (Guidelight). Lastly, the Court declined to recognize a vicarious liability claim for computer trespass because the text of N.C.G.S. § 14-458, a criminal statute, suggested a legislative intent to limit civil liability to the specific persons who intentionally violated the statutory provisions. As the statute only applies to the trespass itself, and not the improper use of information accessed through the trespassing, the Court dismissed Plaintiff’s claim against Guidelight.


Futures Grp, Inc., v. Brosnan, 2023 NCBC ORDER 11 (N.C. Super. Ct. Feb. 24, 2023) (Earp, J.)

 Key Terms: advancement

This order follows the Court’s prior order granting partial summary judgment and ordering advancement. Following the parties’ inability to agree on the amount of the advanceable expenses already incurred or a procedure for ongoing advancements, the Court issued this order outlining the advancement procedure, and limiting the scope of advanceable expenses.


By Natalie E. Kutcher

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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 03/01/23