By: Rachel Brinson
Water.io Ltd v. Sealed Air Corp, 2025 NCBC 5 (N.C. Super. Ct. Feb. 19, 2025) (Conrad, J.)
Key Terms: motion to dismiss; breach of contract; repudiation; nonperformance; counterclaims; implied covenant of good faith and fair dealing; UDTP; N.C.G.S. § 75-1.1; Rule 12(b)(6); statute of limitations; N.C.G.S. § 1-52(1); UCC; N.C.G.S. § 25-2-725(1); contract for the sale of goods; predominate purpose test; nonconforming goods; fraudulent inducement; heightened pleading standard
This case arises out of a dispute over a contract for the development and sale of sensors for use in insulated shipping containers. Plaintiff brought suit alleging that Defendant breached their contract by repudiation and nonperformance. Defendant counterclaimed for breach of contract, breach of the implied covenant of good faith and fair dealing, and unfair or deceptive trade practices. Plaintiff moved to dismiss the counterclaims.
Breach of Contract and Breach of the Implied Covenant of Good Faith and Fair Dealing. Because Defendant’s counterclaims for breach of contract and breach of the implied covenant of good faith and fair dealing were based on the same underlying allegations, the Court considered the two claims as one. Plaintiff moved to dismiss the claims based on the statute of limitations. The Court first determined, under the predominate purpose test, that the contract was predominately one for the sale of goods and therefore, the UCC’s four-year statute of limitations applied. Accordingly, the Court dismissed the claims to the extent they were based on alleged breaches occurring more than four years prior to the commencement of this suit, but otherwise denied the motion.
UDTP. Defendant asserted a UDTP claim based on Plaintiff’s alleged breach of contract. The Court dismissed the claim, concluding that Defendant’s allegations of fraudulent inducement were conclusory and not pleaded with sufficient particularity and therefore did not supply the necessary aggravating circumstances to support a UDTP claim based on breach of contract. Further, the Court concluded that the Parties’ dispute was essentially one regarding contractual rights and obligations, which does not support a UDTP claim.
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Barings LLC v. Fowler, 2025 NCBC 6 (N.C. Super. Ct. Feb. 13, 2025) (Conrad, J.)
Key Terms: motion to dismiss; trade secrets; confidential information; corporate raid; conspiracy; tortious interference with contract; N.C.G.S. § 75-1.1; breach of fiduciary duty
In March 2024, twenty-two members of Plaintiff Barings LLC’s Global Private Finance group resigned in unison to join Defendant Corinthia Global Management Limited, a fledgling competitor. In this lawsuit, Plaintiff alleges that the departing employees took its trade secrets and other confidential information at Defendant Corinthia’s direction. Plaintiff Barings also alleges that Defendant Corinthia conspired with Defendants Ian Fowler (a leader of the Global Private Finance group) and Kelsey Tucker (Barings’s former head of global operations) in orchestrating the raid. Defendants moved to dismiss all nine claims brought by Plaintiff.
Breach of Contract. Plaintiff alleges that the individual Defendants breached the restrictive covenants of their respective employment or separation agreements with Plaintiff. However, the Court found that Plaintiff failed to meet the modest pleading requirements to state a claim for breach of contract because its allegations of breaches were conclusory and not specific enough to put the Defendants on notice of the claims against them. The Court granted the motion to dismiss the breach of contract claims against the individual Defendants.
Misappropriation of Trade Secrets. Plaintiff alleged that Defendants misappropriated its trade secrets, including plans for new products, employee compensation information, and various internal policies. Applying the lex loci test, the Court determined that North Carolina law, not English law, controls this claim for present purposes. The Court found that Plaintiff had sufficiently identified its allegedly misappropriated trade secrets and properly alleged that it was harmed by the alleged misappropriations. However, the Court found that the allegations against the individual Defendants were insufficient because Plaintiff failed to specifically allege that the individual Defendants improperly acquired, used, or disclosed any trade secrets. Accordingly, the Court dismissed the claim against the individual Defendants but denied the motion as to Corinthia.
Tortious Interference with Contract. Plaintiff alleged that Defendants induced the departing employees to breach their employment agreements by misusing Plaintiff’s confidential information and soliciting its customers. Corinthia argued that any interference on its part was justifiable market competition. The Court rejected this argument because Plaintiff had adequately alleged that Corinthia misappropriated its trade secrets, which is not a lawful means of competition. Defendants also argued that it did not know about the employees’ agreements, induce the employees to breach the agreements, or cause any harm to Plaintiff. The Court disagreed, finding that Plaintiff’s allegations that Corinthia held resignation letters from the employees for months before such employees resigned, conditioned such employees’ start dates with Corinthia on the expiration of applicable restrictive periods, and returned documents containing Plaintiff’s trade secrets all supported an inference that Corinthia knew of the agreements and induced their breach to Plaintiff’s harm. Conversely, the Court again found that the allegations against the individual Defendants were conclusory and not sufficient to state a claim for tortious interference with contract. The Court granted the motion to dismiss the claims against the individual Defendants but denied it as to Corinthia.
UDTP. Since Plaintiff’s UDTP claim was predicated on its underlying misappropriation of trade secrets and tortious interference with contract claims, the Court dismissed the UDTPA claim to the same extent it had dismissed the other claims, but otherwise denied the motion to dismiss the UDTP claim.
Civil Conspiracy. Although the Court dismissed the misappropriation of trade secrets and tortious interference with contract claims against the individual Defendants, the underlying claims against Corinthia survived and Plaintiff alleged that all the Defendants conspired together to commit those torts. Thus, although the conspiracy allegations were not as particularized or comprehensive as they could be, they were sufficient to survive a motion to dismiss.
Constructive Fraud and Breach of Fiduciary Duty. These claims against Defendant Fowler survived because Plaintiff had sufficiently alleged that Fowler owed it fiduciary duties as an officer and director and that he breached those duties for his own benefit by secretly helping Corinthia raid Plaintiff’s Global Private Finance group.
Permanent Injunction. Noting that injunctions are remedies and not standalone causes of action, the Court granted the motion to dismiss the claim for permanent injunction without prejudice to Plaintiff’s ability to seek a permanent injunction as a remedy if it is successful on an underlying claim.
Breach of Stipulated Injunction Order. Corinthia argued that the claim for breach of the injunction order should be dismissed because dismissal of all other claims against Corinthia warranted termination of the injunction order and because Plaintiff did not allege any damages. The Court rejected both arguments because 1) not all claims against Corinthia had been dismissed and 2) North Carolina does not require proof of damages as an element of a breach of contract claim.
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Barings LLC v. Fowler, 2025 NCBC Order 11 (N.C. Super. Ct. Feb. 13, 2025) (Conrad, J.)
Key Terms: motion to stay; N.C.G.S. § 1-75.12(a); forum non conveniens
As summarized above, this case involves claims relating to an alleged corporate raid. Plaintiff is a Delaware LLC headquartered in North Carolina and Defendant Corinthia is chartered and headquartered in the United Kingdom. Corinthia moved to stay the case on forum non conveniens grounds pursuant to N.C.G.S. § 1-75.12, arguing that North Carolina is an inconvenient forum and that Plaintiff’s claims should be heard in England. The Court determined that the applicable factors regarding whether to grant a stay were either neutral or weighed against a stay and that Corinthia had not shown that a substantial injustice would result if the case were to proceed in North Carolina. First, Plaintiff’s choice of forum deserved great deference so this factor weighed against a stay. Second, the witnesses and sources of proof were located both in the United States and in England, so these factors were neutral. Third, the Court would likely need to apply North Carolina, Delaware, and English law, so this factor weighed slightly against a stay since the Court was best suited to apply North Carolina law and frequently applied Delaware law. The remaining factors either weighed against a stay or warranted little weight. Therefore, the Court denied Corinthia’s motion to stay.
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ECA Gen. P’Ship, LLC v. First Bank, 2025 NCBC Order 12 (N.C. Super. Ct. Feb. 18, 2025) (Robinson, C.J.)
Key Terms: order on designation; N.C.G.S. § 7A-45.4(a); N.C.G.S. § 7A-45.4(a)(5); timely notice of designation; intellectual property
Plaintiff filed this action, asserting various claims arising from alleged cybercrime activity. Defendants timely served their Notice of Designation but did not file it with the clerk of court, as required by N.C.G.S. §§ 7A-45.4(c) and (d). Accordingly, the Court determined, on procedural grounds, that the case was not properly designated to the Business Court.
In addition, even assuming the NOD was timely, the Court determined that designation pursuant to N.C.G.S. § 7A-45.4(a)(5) was not proper because the material issues in dispute, namely the Defendant’s security procedures and negligent conduct, were not tied to the underlying intellectual property involved, as required by section 7A-45.4(a)(5).
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Lucas v. Hopper, 2025 NCBC Order 13 (N.C. Super. Ct. Feb. 20, 2025) (Earp, J.)
Key Terms: motion to quash subpoenas; discovery dispute; close of discovery; BCR 10.9; BCR 10.4
Defendants filed objections and motions to quash subpoenas issued to third parties by Plaintiffs that would require production of documents by the subpoenaed parties after the close of the discovery period. Finding that Plaintiffs did not move to extend the discovery period and failed to comply with BCR 10.4 requiring that discovery be served with enough time so that responses are due before the close of discovery, the Court granted the motions and quashed the subpoenas as untimely.
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Implus Footcare, LLC v. Vore, 2025 NCBC Order 14 (N.C. Super. Ct. Feb. 25, 2025) (Davis, J.)
Key Terms: motion for commission; non-party subpoena; Rule 45; Massachusetts; letters rogatory; BCR 10.9; discovery dispute
Defendants sought the issuance of a commission from the Court pursuant to Rule 45(f) to compel discovery from a non-party entity located in Massachusetts. However, Defendants failed to follow BCR 10.9 prior to filing the motion for commission. The Court therefore denied the motion, without prejudice, and instructed the parties to participate in the BCR 10.9 process and to make a good-faith effort to resolve their discovery dispute.
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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 02/25/25
By: Natalie E. Kutcher
CTS Metrolina, LLC v. Berastain, 2025 NCBC 3 (N.C. Super. Ct. Feb. 4, 2025) (Earp, J.)
Key Terms: motion to dismiss; Rule 12(b)(6); unfair and deceptive trade practices act; tortious interference; misappropriation of trade secrets; computer trespass; N.C.G.S. 14-458(a); vicarious liability; declaratory judgment; civil conspiracy
As previously summarized here, this case arose after Plaintiff purchased the assets of a business from Defendants Berastain and Moreau in 2022. As part of the transaction, Berastain and Moreau executed confidentiality and noncompete agreements. Following Berastain and Moreau’s departure from Plaintiff, a significant number of Plaintiff’s “jobs” were deleted from a project management platform by two employees, who later became employed by Inkwell, a company formed by Berastain and Moreau. Inkwell was subsequently purchased by S&P Cap, a company formed by two brokers who participated in the CTS Metrolina purchase agreement. Inkwell, S&P Cap, Cherry and Pena moved to dismiss a number of Plaintiff’s claims pursuant to Rule 12(b)(6).
Tortious Interference with Contract Claim against Inkwell. The Court denied Inkwell’s motion to dismiss as it related to Inkwell’s interference with Berastain and Moreau’s noncompete agreement with CTS Metrolina. The Court noted the inapplicability of the intracorporate immunity doctrine, which applies to conspiracies, to this claim. The Court held that the amended complaint sufficiently alleged that Inkwell had induced Berastain and Moreau to violate their restrictive covenants with CTS Metrolina and satisfied the pleading elements for this claim. However, the Court granted Inkwell’s motion as it related to contracts with CTS Metrolina’s customers, subcontractors, and vendors. CTS Metrolina’s “mere expectation of a continuing business relationship” was insufficient to establish a claim for tortious interference.
Tortious Interference with Contract Claim against Cherry and S&P Cap. The Court granted Cherry and S&P Cap’s motions to dismiss, as the amended complaint failed to establish the existence of a valid contract between CTS Metrolina and its customers, subcontractors and vendors. As with Inkwell, the expectation of a continuing business relationship with these entities did not constitute a contract for the purposes of a tortious interference claim.
Misappropriation of Trade Secrets Claim against Inkwell, Cherry and S&P Cap. Defendants argued that the misappropriation of trade secrets claim failed because Plaintiff had failed to adequately allege the existence of a trade secret or misappropriation. The Court agreed in part, concluding that Plaintiff’s allegations regarding misappropriation of “business operation information” were too vague. However, Plaintiff’s detailed descriptions of its customer lists and subcontractor/vendor lists were adequate to allege the existence of compilation-based trade secrets and its allegations that Defendants had used the information were sufficient to allege misappropriation.
Computer Trespass Claim against Pena and Inkwell. Plaintiff alleged that Pena violated North Carolina’s Computer Trespass Statute (N.C.G.S. § 14-458(a)) by deleting its “jobs” from iRestore, a project management platform. Pena argued that these allegations failed because they did not allege that iRestore was a “computer or computer network” or that the data belonged to Plaintiff rather than iRestore. The Court disagreed, finding that the allegations were sufficient to show that iRestore operates on a “computer or computer network” and that Plaintiff’s use of the possessive “its jobs” was sufficient to allege that the data belonged to Plaintiff. Inkwell also argued that Plaintiff’s claim against it could not survive to the extent the claim sought to allege Inkwell’s liability for the violations of its employees under the doctrine of respondeat superior. The Court disagreed, concluding that the Computer Trespass Statute did not foreclose the possibility of vicarious liability under the present circumstances.
Civil Conspiracy Claim against Cherry, Pena, S&P Cap. Defendants argued that the civil conspiracy claim should be dismissed for failure to allege facts showing how, when, and why a conspiracy was formed. The Court denied the motion, finding that Plaintiff’s allegations that Berastain, Moreau, Cherry, Pena and S&P Cap agreed to unlawfully compete with CTS Metrolina, and carried out this agreement by violating the Computer Trespass Statute and the Court’s prior orders were sufficient to state a claim.
Unfair and Deceptive Trade Practices Claim against Inkwell, Cherry, Pena. The Court also denied dismissal of Plaintiff’s UDTPA claim, concluding that the alleged violation of the Computer Trespass Statute constituted an “unfair act or practice,” and, as the alleged wrongful conduct was not contained within CTS Metrolina, the conduct was sufficiently “in or affecting commerce” to support the claim.
Accounting and Constructive Trust Claims against Inkwell and S&P Cap. The Court granted dismissed Plaintiff’s claims for accounting and constructive trust, as those are remedies rather than independent claims. This dismissal was without prejudice to Plaintiff’s ability seek the imposition of either or both remedies for any surviving claims at the appropriate time.
Declaratory Judgment Claim against Inkwell and S&P Cap. The Court denied the motion to dismiss Plaintiff’s claim for declaratory judgment, which requested that the sale of IER and Inkwell to S&P Cap be declared void ab initio because it perpetuated Berastain’s and Moreau’s unlawful competition in violation of their restrictive covenants. The Court concluded that because Berastain and Moreau had entered into the restrictive covenants with Plaintiff, Plaintiff had an interest in determining whether Berastain and Moreau could profit from the sale of IER and Inkwell.
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Pro-Tops, Inc. v. Maksimenko, 2025 NCBC 4 (N.C. Super. Ct. Feb. 10, 2025) (Earp, J.)
Key Terms: Rule 12(b)(5); motion to dismiss; invalid service of process; Rule 4; sheriff; private process server
Plaintiff filed a verified complaint against Defendant Maksimenko. Plaintiff sought to effectuate service through a private process server on six different occasions without success. The personal process server contacted Maksimenko, who denied “ducking” service, and requested that the two meet at a local hardware store. On December 19, 2024, the private process server met with Maksimenko and handed him copies of the complaint and summons. Maksimenko moved to dismiss under Rule 12(b)(5) for improper service of process.
The Court granted Maksimenko’s motion to dismiss, noting that Plaintiff’s affidavit of service did not indicate service by sheriff was attempted or that the sheriff was otherwise unable to serve the summons or complaint. Citing precedent, the Court noted that “use of a private process server is limited by statute to scenarios where the sheriff is unable to fulfill the duties of a process server.” Finding that service was not properly effectuated on Maksimenko, Plaintiff’s case was dismissed.
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Wilmington Tr., N.A. v. TM Northlake Mall, L.P., 2025 NCBC Order 7 (N.C. Super. Ct. Jan. 31, 2025) (Conrad, J.)
Key Terms: motion to approve sale; receivership; bankruptcy law; objections
In 2019, TM Northlake Mall, L.P. defaulted on a loan secured by its primary asset, a property known as Northlake Mall. Plaintiff Wilmington Trust, as trustee for the noteholder, initiated this suit and moved to place TM Northlake into receivership. A general receiver was appointed with broad authority to manage Northlake Mall’s operations and advertise the property for sale. Having found a buyer and negotiated a proposed purchase agreement, the receiver moved for the Court to approve the sale of Northlake Mall.
Two objections to the receiver’s motion were filed. The first objection was filed by a party interested in purchasing the property, who objected on the basis that the receiver’s marketing campaign was deficient and the sale price of the property was below value. The first objection requested a thirty-day due diligence period, to allow the objecting party to decide if it was willing to make an offer. The second objection was filed by two plaintiffs in two premises liability lawsuits against the receiver, who objected on the basis that the sale price of the property was too low to ensure the receivership estate had sufficient assets to compensate them should they succeed in obtaining a judgment.
Noting the broad authority given to receivers under state law and looking to bankruptcy law for guidance, the Court held that the receiver’s judgment was reasonable and that a sound business justification supported the proposed sale. The Court highlighted the “striking” fact that both TM Northlake and Wilmington Trust, who both had “every incentive” to maximize the sale price, approved the proposed sale. The Court further found that the objections filed did not present compelling reasons to reject the sale. As such, the Court approved the receiver’s proposed sale of the property.
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Hedgepeth v. Cornblum, 2025 NCBC Order 8 (N.C. Super. Ct. Jan. 31, 2025) (Robinson, J.)
Key Terms: order on designation; mandatory complex business case; N.C.G.S. § 7A-45.4(a)(1); N.C.G.S. § 7A-45.4(c); contemporaneous service requirement
In this Order on Designation, the Court determined that designation under N.C.G.S. § 7A-45.4(a)(1) was not appropriate. This case arises out of a dispute relating to the assessment and collection of clubhouse dues in a planned community. Plaintiff alleges that Defendants took control of the community’s homeowner’s association for the purpose of assessing and collecting dues for their own benefit. Plaintiff sought designation based solely upon her claim to pierce the corporate veil.
Citing precedent, the Court emphasized that a claim for piercing the corporate veil on its own is insufficient to support mandatory complex business case designation under N.C.G.S. § 7A-45.4(a)(1). As Plaintiff’s other claims did not implicate the law governing corporations, partnerships, or LLCs, designation was inappropriate. The Court further noted that Plaintiff’s failure to comply with the contemporaneous service requirement of N.C.G.S. § 7A-45.4(c) rendered the designation untimely.
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Laport v. Bakkavor Foods USA, Inc., 2025 NCBC Order 9 (N.C. Super. Ct. Feb. 5, 2025) (Robinson, J.)
Key Terms: order on designation; N.C.G.S. § 7A-45.4(a)(2); securities
This case arises from a dispute following Plaintiff Laport’s departure from Defendant Bakkavor Food’s employment. Laport filed this lawsuit in Mecklenburg County against Bakkavor Foods asserting claims of fraud in the inducement, negligent misrepresentation, violation of the North Carolina Wage and Hour Act, breach of contract, breach of covenant of good faith and fair dealing, conversion of wages, unjust enrichment, quantum meruit, and unfair and deceptive trade practices against Bakkavor Foods. Among these claims, the complaint alleges that Bakkavor Foods represented to Laport that he would earn the option to own shares of Bakkavor Foods’ stock through the company’s incentive plan. Bakkavor Foods filed a timely notice of designation under N.C.G.S. § 7A-45.4(a)(2). Laport subsequently filed an objection to the designation of the case, arguing that the complaint does not assert any securities claims.
The Court overruled Laport’s objection. Though the complaint did not explicitly assert a securities claim under Chapter 78A, the Court noted that section 7A-45.4(a)(2) does not require the claim to be explicitly stated to be properly designated. While a “tangential relationship” between securities and the complaint’s allegations is insufficient to warrant designation, designation is proper when the acquisition, disposition, transfer, existence, or characteristics of the securities is at issue. Finding that Laport’s claims required a determination of whether the shares in dispute had vested under the incentive plan, the Court held that the case would proceed as a mandatory complex business case.
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Maven Advantage, Inc. v. Square One Storm Restoration, LLC, 2025 NCBC Order 10 (N.C. Super. Ct. Feb. 10, 2025) (Davis, J.)
Key Terms: preliminary injunction; non-compete; non-solicit; misappropriation of trade secrets
This case arises following Defendants William Couch and Tyler Daniels’ resignation from Plaintiff Maven Advantage’s employment. Plaintiff alleges that Couch and Daniels violated their restrictive covenant agreements with Plaintiff through their employment with Square One, who is also a named defendant. Plaintiff asserted claims of unfair and deceptive trade practices, common law unfair competition, misappropriation of trade secrets, tortious interference with contract, and tortious interference with prospective economic advantage against all three defendants, and claims against Couch and Daniels for breach of contract and against Daniels for civil embezzlement. Shortly after the suit was filed, a TRO was entered prohibiting Defendants from using confidential information and customer lists obtained from Plaintiff and from contacting or soliciting Plaintiff’s current or prospective customers using information obtained from Plaintiff. Here, the Court addressed Plaintiff’s motion for a preliminary injunction.
The Court denied Plaintiff’s request for a preliminary injunction, finding that Plaintiff failed to show a likelihood of success on the merits of its claims. In coming to this decision, the Court noted that Defendants had “meticulously rebutted” each of Plaintiff’s allegations relating to specific events of alleged misappropriation or solicitation through affidavits. The Court also acknowledged that Plaintiff’s affidavits contained hearsay, which was directly contradicted by affidavits submitted by Defendants from individuals with first-hand knowledge of the events. Though acknowledging that these findings and credibility determinations were limited in application to the preliminary injunction motion, the Court found that Plaintiff had failed to meet the high burden required to show entitlement to a preliminary injunction with the limited evidence on record at this time.
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James H.Q. Davis Trust v. JHD Properties, LLC, No. 32PA24, 2025 N.C. LEXIS 66, 2025 WL 350300 (Jan. 31, 2025) (Barringer, J.)
Key Terms: N.C.G.S. § 57D-6-02(2); judicial dissolution; “not practicable” standard
This appeal arose from the Business Court’s order on cross-motions for summary judgment, which, as summarized here, granted summary judgment in favor of plaintiffs on their claim for judicial dissolution of two LLCs. The Business Court had concluded that judicial dissolution was warranted under N.C.G.S. § 57D-6-02(2), which provides that dissolution is appropriate when it is “not practicable” to conduct the LLC’s business. The Business Court found that the “not practicable” standard had been met because the LLCs’ managers had been unable to reach agreement for at least three years, resulting in the failure of the LLCs to conduct any economically useful activity, and the LLCs’ operating agreements did not provide any mechanism to break the deadlock. The Supreme Court affirmed and held that “not practicable” means “unfeasible” and does not mean “impossible.” In determining whether it is not practicable for managers to continue operating a company, a court may consider: (1) whether the management of the company is unable or unwilling to work together to reasonably engage in or promote the purpose for which the company was formed; (2) whether there is deadlock between the managers; (3) whether the operating agreement provides a means of navigating around such deadlock; (4) whether, due to the company’s financial position, there is still a business to operate; (5) whether continuing the company is financially feasible; and (6) whether a member or manager has engaged in misconduct. Applying these factors to the present case, the Supreme Court agreed that it was not practicable for the managers to continue operating the LLCs due to the presence of managerial deadlock, the lack of an equitable means of resolving that deadlock, and the unwillingness of the managers to permit the LLCs to engage in and pursue the purpose for which they were formed.
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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 02/11/25
