Found. Bldg. Materials, LLC v. Conking & Calabrese, Co., 2023 NCBC 46 (N.C. Super. Ct. July 7, 2023) (Earp, J.)
Key Terms: temporary restraining order; expedited discovery; misappropriation of trade secrets; preliminary injunction; irreparable harm; balance of equities
Plaintiff Foundation Building Materials, LLC (FBM) filed a complaint alleging that its former employees had resigned to start the North Carolina office of a competing company and in doing so are using FBM’s trade secrets. FBM simultaneously moved for a TRO, which was granted, and a preliminary injunction, both relating to the alleged misappropriation of trade secrets. Following expedited discovery, the Court heard the motion for a preliminary injunction and granted it in part and denied it in part.
The Court first determined that of the seven categories of information alleged to be trade secrets, FBM was only likely to succeed on the misappropriation of trade secrets claim as to three of the categories because, based on the evidence presented, the remaining categories either did not appear to be trade secrets or had not been misappropriated.
Regarding irreparable injury, the Court concluded that FBM was still susceptible to irreparable harm from improper use of two of the categories of information, but, as for the third category, any potential harm had already occurred and therefore a preliminary injunction was not appropriate in that regard.
Finally, the Court concluded that the equities weighed in favor of granting a preliminary injunction regarding the remaining two categories because failure to do so could deprive FBM of its competitive advantage, while Defendants would suffer little or no injury if the injunction were issued.
*******
Chi v. N. Riverfront Marina and Hotel LLLP; Feng v. N. Riverfront Marina and Hotel LLLP, 2023 NCBC Order 35 (N.C. Super Ct. July 11, 2023) (Earp, J.)
Key Terms: attendance at mediation; impasse; sanctions; N.C.G.S. 7A-38.1
Pursuant to case management orders entered by the Court, a two-day mediation, involving the parties in both actions, occurred by Zoom in May 2023. However, only eight of the nineteen plaintiffs participated on the first day and none participated on the second day, although their counsel appeared to convey an impasse. After learning that the defendants intended to move for sanctions for plaintiffs’ failure to appear, counsel for plaintiffs offered to pay the full mediator’s fee and reimburse defendants’ reasonable attorneys’ fees. The defendants rejected these offers and filed a motion for sanctions.
By statute and the rules governing mediated settlement conferences, parties to an action must attend mediation and are subject to sanctions for failure to do so without good cause. Moreover, only the mediator has the authority to declare an impasse. Accordingly, since the plaintiffs had not shown good cause for not attending the mediation, the Court granted the motion and ordered the plaintiffs to pay defendants’ attorneys’ fees for the mediation.
By: Natalie Kutcher and Grace Kinley
To subscribe to RCD’s Business Court Blast, email Ashley Oldfield at aoldfield@rcdlaw.net.
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 07/19/23
Vanguard Pai Lung, LLC v. Moody, 2023 NCBC 44 (N.C. Super. Ct. Jun. 27, 2023) (Conrad, J.)
Key Terms: self-dealing; judgment notwithstanding the verdict; motion for a new trial; motion to amend the judgment; Rule 59(e); jury instructions; fraud; circumstantial evidence; waiver of issues; conversion; embezzlement; UDTPA; in or affecting commerce; double damages; punitive damages
In this action, Vanguard and its majority member Pai Lung alleged that Defendant William Moody engaged in self-dealing and other misconduct through his position as manager and president of Vanguard and through using Defendants Nova Trading (Vanguard’s minority member) and Nova Wingate, both of which were solely owned by Moody. Following a jury verdict of over $3 million in favor of Plaintiffs, Defendants moved for judgment notwithstanding the verdict, for a new trial, and to alter or amend the judgment.
Fraud. The Court rejected Defendants’ argument that there was insufficient evidence of intent to deceive because 1) they failed to preserve the issue since it was not part of their motion for a directed verdict at trial; 2) they failed to comply with the Court’s briefing rules by not citing to the record; and 3) Plaintiffs’ circumstantial evidence of intent was sufficient to support the jury’s verdict.
Conversion. Defendants contended that there was insufficient evidence to support the jury’s award for conversion of money and other property because Plaintiffs did not identify the converted money and did not show that Moody himself possessed any of the converted property. However, the Court found that these arguments were waived since they were not raised at trial, and, in any event, there was sufficient evidence on both points to submit the issue to the jury.
Embezzlement. The Court found that Defendants’ two-sentence argument concerning Moody’s liability for embezzlement was conclusory, procedurally defective, and meritless and thus denied the motion as to the embezzlement claim.
Unfair and Deceptive Trade Practices Under Section 75-1.1. Plaintiffs’ UDTPA claim concerned a lease agreement between Vanguard and Nova Wingate, which Moody signed on behalf of Vanguard as its president and on behalf of Nova Wingate as its sole member. Defendants argued that any misconduct regarding the lease was internal and therefore not in or affecting commerce. The Court agreed—since Nova Wingate was a shell company that Moody used to channel money to himself and conceal misconduct, the unfairness did not concern the regular interactions of separate market participants but instead occurred in interactions between the principals of Vanguard. Accordingly, the Court granted the motion for JNOV as to the UDTPA claim.
Motion for New Trial. Defendants contended that the differing damages award for unjust enrichment and unfair and deceptive trade practices were contradictory and amounted to double recovery since they were based on the same underlying conduct. However, since the Court set aside the UDTPA verdict any potential inconsistency or double recovery was moot. Further, the Court found that the two claims were not identical and thus there was no contradiction. Defendants also argued that the damages award for conversion was excessive because it included amounts converted by Defendants that were outside the limitations period. The Court rejected this argument because it had correctly instructed the jury to limit its award to damages incurred during the limitations period and the jury is presumed to have followed the Court’s instruction. Finally, the Court rejected Defendants’ argument that the verdict was against the greater weight of the evidence because they had not remotely shown that the verdict was so exceptional that it resulted in a miscarriage of justice.
Motion to Alter or Amend the Judgment. Defendants moved to amend the judgment under Rule 59(e) to include a single $50,000 award for punitive damages arguing that the entity Defendants could not be separately liable for punitive damages because the jury found that they were alter egos of Moody with no independent identities. The Court denied this motion because 1) Defendants had waived the issue by not objecting at trial to the Court’s instruction on punitive damages; and 2) the jury had found all three Defendants liable on theories of alter-ego liability and direct liability.
*******
Cumberland Cnty. Hosp. Sys., Inc. v. Woodcock, 2023 NCBC 45 (N.C. Super. Ct. Jun. 27, 2023) (Davis, J.)
Key Terms: requests for admission; summary judgment; discovery; case management order; BCR 10.4
Plaintiff and Defendant Michael Woodcock are the two members of Defendant WCV. In its complaint, Plaintiff asserted both individual and derivative claims based largely on alleged misconduct by Woodcock. Following the Court’s dismissal of the derivative claims in a previous order (discussed here), WCV moved for a protective order and declaratory judgment seeking an order from the Court that WCV was not required to respond to Plaintiff’s discovery requests and declaring that WCV was no longer a party due to the dismissal of the derivative claims. In addition, Plaintiff moved for partial summary judgment against Woodcock based on his failure to respond to requests for admission and, in turn, Woodcock moved to withdraw and amend the deemed admissions.
The Court first granted Woodcock’s motion to withdraw and amend based on confusion over whether Woodcock was actually served with the requests for admission and Plaintiff’s failure to show that it would be prejudiced by Woodcock being allowed to serve responses. Since Plaintiff’s
motion for partial summary judgment was predicated on the deemed admissions, the Court denied the motion without prejudice.
Regarding WCV’s motion, the Court clarified that since two of Plaintiff’s individual claims were asserted against WCV, the claims were still pending against WCV and, accordingly, WCV remained a party and was required to respond to the discovery requests. The Court also rejected WCV’s argument that the discovery requests were invalid because they were served before the entry of the case management order—BCR 10.4 expressly provides that parties may begin discovery prior to entry of a CMO.
By: Rachel Brinson and Grace Kinley
To subscribe to RCD’s Business Court Blast, email Ashley Oldfield at aoldfield@rcdlaw.net.
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 07/04/23
