Archive for March, 2024

N.C. Business Court Opinions, March 13, 2024 – March 26, 2024

By: Natalie E. Kutcher and Ashley B. Oldfield

Sears Farm, LLC v. Samaritan Hous. Found., Inc., 2024 NCBC 19 (N.C. Super. Ct. Mar. 19, 2024) (Davis, J.)

Key Terms: motion to dismiss; Rule 12(b)(1); Rule 12(b)(6); motion to strike; Rule 12(f); breach of contract; covenant of good faith and fair dealing

This case arises from a series of transactions between the parties relating to the financing and construction of a retirement community. Beginning in 1998, Plaintiffs began their efforts to develop a luxury retirement community. In the early 2000’s, Plaintiffs involved Defendant Samaritan Housing Foundation, to assist with securing the requisite financing for the project and ultimately own and operate the retirement community. At some point thereafter, Plaintiffs and Defendant entered into a Site Transfer Agreement whereby Plaintiffs agreed to sell the site to Defendant once Defendant secured the financing required to complete the first phase of the project. The parties later entered into a Pre-Construction Funding and Development Agreement, which was restated and amended multiple times over the following decade (the “PCFD Agreements”). As construction of the project progressed, Defendant entered into a Master Trust Indenture with Wells Fargo (the “2012 MTI”), which purported to memorialize Defendant’s obligations to repay various parties, but which Plaintiffs did not sign. The retirement community eventually filed for bankruptcy in 2018. A settlement agreement between the parties resulted from the bankruptcy proceedings.

Plaintiffs filed suit alleging eight claims against Defendant and its president, which were eventually reduced to two claims solely against Defendant: (i) breach of contract and (ii) breach of implied covenant of good faith and fair dealing. Defendant moved to dismiss pursuant to Rules 12(b)(1) and 12(b)(6), or alternatively, to strike certain allegations relating to Defendant’s president on the grounds that the allegations were irrelevant, immaterial, and scandalous.

In support of its motion, Defendant argued that (i) any contractual obligations arising from the PCFD Agreements were nullified by the execution of the 2012 MTI; (ii) Plaintiffs failed to satisfy the requisite conditions precedent to obtain standing to assert claims under the 2012 MTI; and (iii) Plaintiffs released Defendant from any remaining obligations in the bankruptcy-related settlement agreement. In response, Plaintiffs argued that they never signed the 2012 MIT, and the release of claims in the settlement agreement did not affect their rights to pursue the claims at issue. The Court denied the motion to dismiss on the basis that the numerous agreements created “too many moving parts” and too many gaps in information to warrant a dismissal at this early stage of litigation.

The Court granted Defendant’s motion to strike to the extent it related to allegations pertaining to the six claims voluntarily dismissed by Plaintiffs, but otherwise denied it.


Golden Triangle #3, LLC v. RMP-Mallard Pointe, LLC, 2024 NCBC Order 26 (N.C. Super. Ct. Mar. 15, 2024) (Earp, J.)

Key Terms: motion in limine; expert testimony; Rule 702(a); lost profits; Daubert standard

Plaintiff, seeking damages arising out of Defendants’ alleged breaches of contract, designated two experts to testify on the issue of damages. Plaintiff’s first expert witness, David Knoble, was expected to testify about Plaintiff’s past and future damages. Plaintiff’s second expert witness, Damon Bidencope, was expected to testify on the value of the intended completed project. Defendants moved to (i) exclude all evidence of lost profits on the basis that they are inherently speculative; and (ii) exclude the opinions of Knoble and Bidencope under Rule of Evidence 702.

The Court denied Defendant’s motion. The Court rejected Defendants’ argument that evidence of lost profits was inherently speculative, highlighting that both parties have significant experience in the commercial real estate industry in the Charlotte area and the intended mixed-use development was not novel. Thus, in light of the relevant information available, Plaintiff’s damages in the form of lost profits were not impermissibly speculative. The Court also rejected Defendants’ argument to exclude the expert witnesses, finding that the proposed expert witness’ methodology passed the Daubert standard and that any issues with their methodology could be explored on cross-examination and would go to the testimony’s weight rather than its reliability.


Davis v. Davis Funeral Serv., Inc., 2024 NCBC Order 27 (N.C. Super. Ct. Mar. 15, 2024) (Conrad, J.)

Key Terms: show cause; court deadlines; sanctions; dismissal

The factual and procedural background of this case is summarized here and here. Upon the parties’ joint motion, the Court scheduled a jury trial for March 11 on the claims and counterclaims between Davis and Davis Funeral Service to be followed by a bench trial on the damages that Tedder is entitled to recover from Davis Funeral Service. The Court subsequently issued a pretrial scheduling order which required the parties, excluding Tedder, to submit their proposed pretrial order by February 5 and their proposed verdict forms and jury instructions by February 19. The parties did not submit their pretrial order on time, and despite the Court’s warning, also missed the deadline to submit proposed verdict forms and jury instructions. The Court canceled the pre-trial hearing and the trial and directed the parties to appear and show cause why they should not be sanctioned for disregarding the Court’s orders. Finding that the parties failed to provide a satisfactory explanation for their failure to comply with the deadlines and that their conduct wasted the Court’s resources and prejudiced Third-Party Defendant Tedder, the Court dismissed Plaintiff’s complaint and Defendants’ counterclaims without prejudice.


Intersal, Inc. v. Wilson, 2024 NCBC Order 28 (N.C. Super. Ct. Mar. 15, 2024) (Earp, J.)

Key Terms: pirate ship; attorney-client privilege; protective order; Public Records Act; Electronics Surveillance Act

As summarized here, this case arises from a series of agreements entered into between Plaintiff and Defendants relating to the rights over two sunken ships located off the North Carolina coast. Originally calendared for trial on February 19, 2024, the trial was postponed following the discovery of previously undisclosed images and recordings from a meeting in 2014.

On February 3, 2014, representatives and counsel for Plaintiff, Defendants, and Nautilus Productions, LLC met to discuss issues arising from a 2013 settlement agreement between the parties. Unbeknownst to the other parties, Nautilus’s CEO created two sound recordings of the meeting on his laptop. The recordings continued during breaks in the meeting when, at times, Defendants were left alone in the meeting room with their counsel. The recording was not disclosed to Plaintiff’s counsel until February 1, 2024, and was subsequently forwarded to Defendants’ counsel on February 7, 2024.

Defendants moved for a protective order on the basis that the recordings contained communications subject to the attorney-client privilege. Plaintiff argued that the North Carolina Public Records Act required the production of attorney-client communications from a governmental agency such as the North Carolina Department of Natural and Cultural Resources. Prior to 2023, the Public Records Act required a communication to be “by an attorney at law” and to have been made within the last three years to qualify for exemption from disclosure. The Act was amended in October 2023 to remove these two conditions. As a result, the current Act exempts from public disclosure all written communications made within the scope of the attorney-client relationship, regardless of its age. Plaintiff argued that since the recording was made in 2004, the prior version of the Act applied to the recordings, and the three-year limitation had expired.

The Court concluded that the Act did not require disclosure of the recordings because the definition of “public records” did not encompass the recordings since they were not made pursuant to law. The Court also held that since Defendants did not have possession of the recordings until February 7, 2024, the current Act applied, which eliminated the three-year limitation on attorney-client privileged communications. After an in camera review of the recording transcripts, the Court determined that certain portions of the transcript were privileged and ordered such portions to be redacted by March 22, 2024. The Court declined to rule on other grounds for the exclusion of the recordings until the parties had sufficient opportunity to conduct discovery and engage in further motions practice.


Bradshaw v. Maiden, No. 52A23, 2024 N.C. LEXIS 155, 2024 WL 1222541 (Mar. 22, 2024) (per curiam)

Key Terms: appeal; N.C.G.S. § 7A-30(2); dissent; 12(b)(6); summary judgment; hedge fund

This suit commenced in 2014 when Plaintiffs—several investors in a hedge fund run by Defendant Maiden—brought suit against Maiden, Maiden Capital, LLC, and SS&C (the fund’s administrator) for claims arising out of Plaintiffs’ injuries from investing in the fund. In 2015, the Business Court granted a 12(b)(6) dismissal, in part, of Plaintiffs’ claim against SS&C for gross negligence. In 2020, the Business Court granted summary judgment to SS&C on Plaintiffs’ remaining claims. Once the remaining claims involving the other parties were disposed of, Plaintiffs appealed the orders dismissing their claims against SS&C. The Court of Appeals affirmed in an unpublished decision; however, Plaintiffs then appealed to the Supreme Court based on a dissent.

The members of the Court were evenly split, with three voting to affirm, three voting to reverse, and one not participating. Accordingly, the decision of the Court of Appeals was left undisturbed and stands without precedential value.


Slattery v. Appy City, LLC, No. 218A22, 2024 N.C. LEXIS 161, 2024 WL 1222648 (Mar. 22, 2024) (Newby, C.J.)

Key Terms: entry of default; summary judgment; personal jurisdiction; service of process; general appearance; motion to claim exempt property; affirmed

This appeal arose from the entries of default and summary judgment against Defendant Barber after she failed to appear in the case. To enforce the judgment, Plaintiff served a notice of right to claim exemption on Barber; she then appeared for the first time and moved to claim exempt property. Three months later, she moved, under Rules 55 and 60, to set aside the entries of default and summary judgment, arguing that the judgment was void for lack of personal jurisdiction because she had not been served with process or appeared prior to entry of summary judgment. The Business Court denied the motion, concluding that while Plaintiff had failed to show that Barber was served, Barber had made a general appearance by moving to claim exempt property and therefore, had waived any objection to personal jurisdiction and sufficiency of service of process. Barber appealed.

The Supreme Court affirmed and held that Barber made a general appearance in the action when she moved to claim exempt property without simultaneously objecting to the Court’s personal jurisdiction. The Supreme Court’s decision was informed by the Court of Appeal’s 1991 decision in Faucette v. Dickerson, which presented similar facts. To the extent other decisions of the Court of Appeals suggest that a general appearance must be made before entry of judgment to waive objections to personal jurisdiction and sufficiency of service of process, such decisions are overruled.

Justice Riggs, joined by Justice Earls, dissented, on the basis that since the judgment was entered without personal jurisdiction over Barber, it was null and void on entry and could not be resurrected by a subsequent general appearance.


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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 03/27/24

N.C. Business Court Opinions, February 28, 2024 – March 12, 2024

JT Russell and Sons, Inc. v. Russell, 2024 NCBC 13 (N.C. Super. Ct. Feb 28, 2024) (Conrad, J.)

Key Terms: Rule 12(b)(6); UDTPA; misuse of corporate resources; in or affecting commerce; breach of contract; statute of frauds; N.C.G.S. § 22-1; account stated; statute of limitations; constructive trust

In this action, Plaintiff JT Rusell and Sons, an asphalt and road construction business, alleged that Defendant Jim Russell, its former officer, abused his position by channeling company resources toward his other personal and business interests, including Defendants Tillery Tradition and Mid-Eastern Asphalt. Defendants moved to dismiss some of the claims pursuant to Rule 12(b)(6).

UDTPA Claim. Defendants argued that the UDTPA claim should be dismissed because it was based on Jim’s alleged misuse of corporate resources, which were matters internal to JT Russell and therefore not “in or affecting commerce.” The Court agreed and dismissed the claim since,  as alleged, the unfairness of Jim’s conduct was wholly internal to JT Russell and did not occur in the broader marketplace.

Breach of Contract. The Court denied dismissal of the claim for breach of contract against Jim, determining that JT Russell had met the low bar necessary to allege breach of contract based on its allegations that Jim had offered to pay back certain sums, that JT Russell had accepted that offer, and that Jim failed to make the promised payments. The Court rejected Jim’s argument that any promise by him to repay Tillery Tradition’s debt was barred by the statute of frauds pursuant to N.C.G.S. § 22-1. Construed liberally, the complaint alleged Jim’s promise to repay his own debts and therefore, the statute’s requirement regarding contracts to repay the debts of another was inapplicable.

Account Stated. The Court denied dismissal of the claim for account stated against Tillery Tradition, finding that JT Russell had adequately alleged the necessary elements: that it had calculated the balance due, that it submitted a statement of account to Tillery Tradition, that Tillery Tradition had acknowledged the statement’s correctness, and that Tillery Tradition had made a promise to pay the balance due. Tillery Tradition’s arguments that 1) JT Russell had sent a demand for repayment and an invitation to negotiate, rather than a true statement of account, and 2) the claim was barred by the statute of limitations were both questions for discovery.

Constructive Trust. Because a constructive trust is not a standalone claim, the Court dismissed this claim, but without prejudice to JT Russell’s right to seek a constructive trust as a remedy at a later stage.


JT Russell and Sons, Inc. v. Russell, 2024 NCBC 14 (N.C. Super. Ct. Feb. 28, 2024) (Conrad, J.)

Key Terms: Rule 12(b)(6); derivative claims; presuit demand; N.C.G.S. § 55-7-42; dissolution; N.C.G.S. § 55-14-30(2); equitable accounting

This action involves a dispute between the shareholders of JT Russell and Sons, a family-owned business. After JT Russell brought suit against Jim Russell, one of its shareholders and a former officer, Jim sought dissolution of JT Russell and asserted derivative claims against some of the other current or former officers. The counterclaim-defendants moved to dismiss these claims.

Derivative Claims. The Court dismissed all of Jim’s derivative claims without prejudice for lack of subject matter jurisdiction based on Jim’s failure to comply with the presuit demand requirement of N.C.G.S. § 55-7-42. Although Jim contended that the list of potential claims he had provided to JT Russell prior to filing suit satisfied this requirement, the Court determined that the document was insufficient because it did not demand that JT Russell take any action.

Dissolution. Jim sought the dissolution of JT Russell on the grounds that his reasonable expectation to participate in the management of the family business had been frustrated and that the individual counterclaim defendants had mismanaged the company and misused its assets for personal gain. JT Russell conceded at the hearing that Jim had adequately stated a claim for dissolution but nonetheless sought partial dismissal to the extent the claim was based on alleged misconduct which Jim failed to object to while an officer and director. However, since Rule 12(b)(6) operates to dismiss claims, not allegations, the Court rejected this argument and denied dismissal of the dissolution claim.

Accounting. Because an equitable accounting is not an independent cause of action, the Court dismissed the claim, but did so without prejudice to Jim’s right to seek an accounting as a remedy.


Kumar v. Patel, 2024 NCBC 15 (N.C. Super. Ct. Feb. 28, 2024) (Robinson, J.)

Key Terms: conversion; eBay account; breach of contract; condition precedent; unjust enrichment; equitable accounting; fraud; negligent misrepresentation; Rule 9(b); reasonable reliance; breach of fiduciary duty; judicial dissolution; standing

This action arose out of Plaintiff Kumar and Defendant Patel’s formation of Defendant Empower Tomorrow, a nonprofit, and the events that followed. Plaintiffs contended that they provided the nonprofit startup funds with the understanding that the funds would eventually be repaid and that Kumar would be paid back-pay for his work at the nonprofit between 2019 and 2023. When the funds failed to materialize, Plaintiffs filed suit alleging eleven claims for relief. Defendants moved to dismiss most of the claims under Rules 12(b)(1) and 12(b)(6).

Conversion. Plaintiffs asserted a claim for conversion contending that 1) Defendants wrongfully converted loans and purchased inventory; and 2) Patel converted Kumar’s eBay account. The Court dismissed the claim on both grounds with prejudice. The Court determined first, that a failure to pay a debt does not amount to a civil claim for conversion, and second, that preventing access to an online electronics store platform such as eBay did not give rise to a claim for conversion either, particularly where the account still existed and Defendants had not caused a complete deprivation.

Accounting. The Court dismissed the accounting claim without prejudice because Plaintiffs did not allege or argue any reason why discovery procedures would be insufficient to obtain the desired account information.

Breach of Contract. Kumar’s breach of contract claim was based on breach of an alleged agreement that Empower Tomorrow would pay him a back-owed salary as soon as Empower Tomorrow became profitable and surpassed monthly net revenue of $10,000. However, because Kumar did not allege that either of the conditions precedent–profitability and $10,000 in revenue–had been met, the Court dismissed the claim without prejudice.

Unjust Enrichment. Kumar asserted an unjust enrichment claim based on his expectation to receive a salary once Empower Tomorrow became profitable. The Court determined, however, that the claim was insufficient because Kumar’s work appeared to be conferred gratuitously based on his allegation that he and Patel had not decided to receive salaries until years after the work had been completed.

Member Judicial Dissolution. The Court granted dismissal under Rule 12(b)(1) of Kumar’s claim for judicial dissolution of Empower Tomorrow because Empower Tomorrow’s articles of incorporation, which were attached to the complaint, contradicted and negated any allegation that Kumar was a member of the company.

Breach of Fiduciary Duty and Constructive Fraud. The Court dismissed Plaintiffs’ fiduciary duty claims against Patel with prejudice. No de jure fiduciary duty existed between Patel and Plaintiffs because any fiduciary duty she owed ran to Empower Tomorrow, not Plaintiffs. Moreover, Plaintiffs had not alleged any facts sufficient to establish the existence of a de facto fiduciary relationship.

Fraud and Negligent Misrepresentation. The Court dismissed these claims without prejudice based on Plaintiffs’ failure to plead the time, place, or specific content of any of the alleged misstatements of Patel or to allege facts constituting reasonable reliance.


BIOMILQ, INC. v. Guiliano, 2024 NCBC 16 (N.C. Super. Ct. Feb. 29, 2024) (Robinson, J.)

Key Terms: pro se; Rule 60; interlocutory order; Rule 12(b)(6); Rule 12(g); Rule (12(h)

Following entry of an Order denying Defendants’ motion to dismiss, Defendant Guiliano, proceeding pro se, filed a “Motion for Rule 60 Relief from Judgment” requesting that the Court reconsider its Order, reconsider the Rule 12(b) motions already filed, and consider a new 12(b)(6) motion to dismiss based on Rules 12(g) and (h)(2). The Court denied the motion without a hearing. Because the Order was an interlocutory order, the Court did not have authority to grant relief pursuant to Rule 60(b), which applies only to relief from a final judgment. Furthermore, consideration of Guiliano’s new motion under Rule 12(b)(6) pursuant to Rules 12(g) and (h)(2) was not appropriate because the Rules do not permit a party to make a pre-trial motion under Rule 12(b)(6) after the party has answered.


Found. Bldg. Materials, LLC v. Conking & Calabrese, Co., 2024 NCBC 17 (N.C. Super. Ct. Mar. 4, 2024) (Earp., J.)

Key Terms: tortious interference with business relations; without justification; unfair and deceptive trade practices; market power; monopoly; Noerr-Pennington doctrine

As summarized here, this lawsuit involves a dispute between Plaintiff FBM and Defendant Conking, who are competitors in the building material distribution industry. FBM moved to dismiss Conking’s counterclaims for tortious interference with business relations and unfair and deceptive trade practices.

The Court dismissed without prejudice Conkings’ claim for tortious interference with business relations because Conking failed to allege any facts showing that FBM/Henshaw acted without justification.

The Court also dismissed without prejudice Conking’s claim for unfair and deceptive trade practices under both N.C.G.S. § 75-1.1 and the common law. These claims were premised on 1) FBM’s alleged tortious interference; 2) FBM’s “exploitation” of its market power to convince others to place “holds” on doing business with Conking; and 3) the commencement and prosecution of the present lawsuit. Since the Court had already dismissed the tortious interference claim, the UDTP claim based on it failed as well. Further, FBM’s alleged misuse of its market power did not amount to an unfair trade practice since Conking did not allege a conspiracy or a monopoly. Lastly, Conking’s contention that the lawsuit itself constituted an unfair trade practice failed under the Noerr-Pennington doctrine because Conking had not shown that the lawsuit was objectively meritless.


Airtron, Inc. v. Heinrich, 2024 NCBC 18 (N.C. Super. Ct. Mar. 12, 2024) (Conrad, J.)

Key Terms: motion for sanctions; discovery violations; pro se; BCR 10.9; default judgment

This order and opinion addresses Plaintiff’s motion to sanction Defendant for disobeying the Court’s discovery orders. Defendant, proceeding pro se, was previously ordered by the Court to serve full and complete discovery responses. Thereafter, Defendant still failed to fully respond to Plaintiff’s discovery requests, but, upon Plaintiff’s motion to compel, the Court gave Defendant a second chance to fully respond and required him to pay some of Plaintiff’s attorney’s fees. After Defendant again failed to comply, Plaintiff moved for sanctions, including striking Defendant’s answer and entering a default judgment. Determining that lesser sanctions were insufficient, the Court granted the motion. Defendant’s conduct had stalled the progress of the case, prejudiced Plaintiff, and wasted judicial resources. Moreover, Plaintiff’s allegations against Defendant for misappropriation of trade secrets and unfair or deceptive trade practices were adequate to state a claim and therefore default judgment as to liability on those claims was appropriate.


Davis v. Davis Funeral Serv., Inc., 2024 NCBC Order 21 (N.C. Super. Ct. Mar. 4, 2024) (Conrad, J.)

Key Terms: attorneys’ fees; Rule 11; Rule 37(c); requests for admission

As summarized here, the Court previously granted summary judgment in favor of third-party defendant Tedder on Davis Funeral Service’s claims against her. Tedder then moved for an award of attorney’s fees under Rules 11 and 37(c) and N.C.G.S. § 1D-45. The Court granted the motion pursuant to Rule 11. The evidence showed that Davis Funeral Service knew or should have known at the time it filed its third-party complaint against Tedder that the allegations against her were false. Further, even if they hadn’t known at that time, they were previously put on notice of the dispositive evidence but continued to pursue the claims through summary judgment. The Court directed the parties to confer in an effort to agree to the amount due, but if the conference was unsuccessful Tedder could supplement her materials. The Court did not decide the motion under N.C.G.S. § 1D-45 since it provided a second basis to award the same fees. As for the request under Rule 37(c), Tedder sought attorneys’ fees incurred in conducting discovery related to her own counterclaims based on Davis Funeral Service’s denial of several requests for admission. The Court denied this request because it concluded that the admissions sought were of no substantial importance.


Gvest Real Est., LLC v. JS Real Est. Invs., LLC, 2024 NCBC Order 22 (N.C. Super. Ct. Mar. 7, 2024) (Conrad, J.)

Key Terms: motion for reconsideration; Rule 54(b)

In a previous order, summarized here, the Court entered summary judgment against Plaintiff on each of its claims. Plaintiff moved, under Rule 54(b), for partial reconsideration, seeking to revive its declaratory judgment claim. The Court denied the motion. Plaintiff’s arguments were based on the same evidence previously considered and found wanting by the Court. Moreover, Plaintiff attempted to raise new arguments which it had waived by not raising earlier. Finally, Plaintiff’s interpretation of the operating agreement at issue did not comport with the agreement’s plain language.


Bui v. Phan, 2024 NCBC Order 23 (N.C. Super. Ct. Mar. 8, 2024) (Bledsoe, C.J.)

Key Terms: notice of designation; N.C.G.S. § 7A-45.4(a)(1); opposition to designation

Plaintiff filed suit asserting claims for declaratory judgment and breach of Defendant Golden Rooster, LLC’s operating agreement, and timely filed a notice of designation. However, as summarized here, the Court determined that designation was improper. Thereafter, Defendants filed their answer and counterclaims asserting claims against Plaintiff for breach of fiduciary duty and involuntary withdrawal. Plaintiff timely filed a second notice of designation under N.C.G.S. § 7A-45.4(a)(1), but this time based on the counterclaims. Defendants opposed designation. The Court determined that designation was proper because Defendants’ counterclaims alleged that Plaintiff, as a managing member of Golden Rooster, breached fiduciary duties owed to the company, which duties are governed by Chapter 57D. Defendants’ argument that designation was improper under Rule 2.1(b) was irrelevant since Plaintiff sought designation under N.C.G.S. § 7A-45.4(a)(1). Furthermore, Defendants’ argument that designation was improper because the case was not complex or exceptional was without merit since designation does not require any particular complexity. Accordingly, the opposition was overruled.


Caraballo-Lopez v. Retail Bus. Servs., LLC, 2024 NCBC Order 24 (N.C. Super. Ct. Mar. 11, 2024) (Bledsoe, C.J.)

Key Terms: order on designation; untimely; personal injury; N.C.G.S. § 7A-45.4(h)

Defendants sought designation of this case as a mandatory complex business case pursuant to N.C.G.S. § 7A-45.4(a)(1). However, the Court determined that designation was improper for two reasons. First, Defendants failed to file their notice of designation within thirty days of accepting service of the first amended complaint. Second, the case is a wrongful death action which is excluded from designation by N.C.G.S. § 7A-45.4(h).


Howard v. IOMAXIS, LLC, 2024 NCBC Order 25 (N.C. Super. Ct. Mar. 12, 2024) (Earp, J.)

Key Terms: receiver; compensation; stay pending appeal; substantial right; N.C.G.S. § 1-294

The Court entered this order sua sponte to address the procedural posture of the case following IOMAXIS’s appeal of the Court’s Order on Receiver’s Application for Interim Compensation to Receiver and Counsel (the “Fee Order”), along with eight other interlocutory orders. IOMAXIS contended that a substantial right has been impacted because the Fee Order requires the immediate payment of a significant sum ($6,025.00) and that absent a stay of the Fee Order pending appeal, it is unclear whether IOMAXIS would be able to recoup the funds if the Supreme Court determines that the appointment of a receiver was improper.

The Court concluded that a stay of the Fee Order during the appeal was not appropriate. The attempted appeal was a nullity because IOMAXIS had failed to show a substantial right would be lost if the Fee Order was not reviewed before final judgment. The Court also acknowledged the Receiver’s policy arguments and agreed that permitting a party subject to a receivership to use an interlocutory appeal to delay the receiver’s compensation would jeopardize the receiver’s neutrality and discourage qualified individuals from accepting the assignments.

As for the other eight orders appealed, IOMAXIS had argued that the issues in those orders were “inextricably intertwined” with the issue regarding the Fee Order. However, since the Court determined that the appeal of the Fee Order was ineffective, so too was IOMAXIS’s attempt to appeal the other orders.

For these reasons, the Court held that N.C.G.S. § 1-294 did not stay the action pending the appeal. The Court also declined to exercise its discretion to issue a stay; however, to address IOMAXIS’s concern that the funds paid to the Receiver would be lost, the Court amended the previous Receiver Order to require Plaintiffs to post a bond with the clerk in the initial amount of $200,000.


By: Ashley B. Oldfield

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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 03/13/24