N.C. Business Court Opinions, June 4, 2025 – June 17, 2025

By: Austin Webber

Packard v. SEI Priv. Tr. Co., 2025 NCBC 26 (N.C. Super. Ct. June 10, 2025) (Davis, J.)

Key Terms: Rule 12(b)(6); breach of fiduciary duty; negligence; incorporated by reference; authenticity

Plaintiffs brought suit alleging claims for negligence and breach of fiduciary duty/constructive fraud arising from alleged errors related to a managed investment account. Defendant moved to dismiss the claims.

Defendant’s arguments supporting its motion to dismiss were based upon the contents of five documents, three of which were attached to the complaint and two of which were incorporated by reference in one of the three documents attached to the complaint. Defendant submitted the two incorporated documents with its motion to dismiss, along with an affidavit from the Defendant’s office manager attesting to their authenticity. The Court held it could properly consider the three documents attached to the complaint but could not consider the two documents incorporated by reference because they were neither attached to nor referenced in the complaint, the Plaintiffs never signed these documents, and, without considering the affidavit of the office manager, it was unclear whether the two incorporated documents were substantively identical to the documents provided to Plaintiffs. The Court refused to convert the Rule 12(b)(6) motion into a summary judgement motion because the relevance, admissibility, and authenticity of the two incorporated documents were appropriate subjects for discovery. When only considering only the complaint and three documents attached thereto, the Court denied Defendant’s motion to dismiss.

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800 Degrees Phillips Place LLC v. Jensen, 2025 NCBC Order 39 (N.C. Super. Ct. June 2, 2025) (Houston, J.)

Key Terms: derivative action; settlement; joint motion to approve dismissal with prejudice; members’ notice; fiduciary duties; breach of contract

Plaintiffs filed suit against Defendant, asserting direct and derivative claims arising from Defendant’s alleged breaches of his fiduciary duties and contractual obligations as manager of 800 Degrees Phillips Place LLC. Following settlement negotiations, Plaintiffs voluntarily dismissed the direct claims and the parties moved for approval of dismissal of the derivative claims. No objections to the motion by other members of 800 Degrees were received. Having considered the motion and the record (including the parties’ proposed settlement agreement) and weighing the benefits of the derivative claims against the company’s best interests, the Court granted the motion, concluding that the settlement had been reached as part of arm’s-negotiations and was in the best interest of the company.

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Russell v. McLawhorn, 2025 NCBC Order 40 (N.C. Super. Ct. June 5, 2025) (Robinson C.J.)

Key Terms: equitable motion to confirm arbitrator; arbitration; BCR 7.3; BCR 4.1; procedural matter in arbitration

The parties previously jointly selected an arbitrator to resolve certain disputes between them pursuant to the arbitration provisions of their companies’ operating agreements. After the arbitration proceeding had commenced, Plaintiff purported to unilaterally terminate the arbitration. Defendant filed a motion requesting that the Court confirm that the arbitrator had the power to continue as arbitrator to resolve the arbitration. The Court denied the motion as the interpretation of the termination language in the arbitration contract was a procedural question for the arbitrator to decide.

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Maxwell Foods, LLC v. Smithfield Foods, Inc., 2025 NCBC Order 41 (N.C. Super Ct. June 5, 2025) (Conrad, J.)

Key Terms: Daubert; specialized knowledge; expert qualification; reliable testimony; breach of contract; most-favored-nation clause; economic benefits; damages; expert witness; Rule 401; Rule 702(a)

As previously summarized here, this action arose from the parties’ disputes relating to an output contract under which Defendant agreed to buy all hogs produced by Plaintiff each month. The only issues remaining for trial are whether Defendant breached the contract’s most-favored-nation clause by giving a third-party, Prestage, better terms, and the amount of damages arising from Defendant’s breach of the output provision. Presently before the Court were the parties’ Daubert motions whereby Defendant sought to exclude the testimony of Plaintiff’s expert witness, Shaffer, and Plaintiff sought to exclude the testimony of Defendant’s expert witness, Piggott.

Defendant’s Motion: Defendant argued that Shaffer’s testimony regarding his calculation of output damages based on Prestage’s 2020 contract should be excluded because his analysis of the contract’s pricing formula ignored the requirement that Prestage supply a minimum number of hogs or risk a monetary penalty. Plaintiff countered that the volume requirements were irrelevant to the MFN clause and that Shaffer’s analysis wouldn’t have changed even if he had included it. The Court agreed with Defendant and granted its motion to exclude Shaffer’s output damages testimony based on Prestage’s 2020 contract. The Court concluded that Shaffer’s opinion was unreliable because it failed to take into account both the pricing terms and the volume requirements which were interdependent provisions and ignoring the volume requirements would put Plaintiff in a better position than it would have been in had Defendant performed.

Plaintiff’s Motion: Plaintiff argued Piggott’s testimony should be excluded because he was not qualified to testify about leanness, quality or hog genetics, hog contracts, or damages. The Court agreed that Piggott’s opinions regarding leanness, quality and hog genetics should be excluded because his opinions were merely a summation of Defendant’s position, without any application of economic principles based upon his expertise, and his opinions would not be helpful to the jury. However, the Court concluded that Piggott’s opinions pertaining to hog contracts were admissible because Piggott grounded his opinions in his training, education and experience in agricultural economics, commodity markets, and risk allocation, and Plaintiff’s arguments related to Piggott’s qualifications went to the weight of such evidence, not its admissibility. Lastly, the Court rejected Plaintiff’s argument that Piggott’s opinions on damages should be excluded because he was not a damages expert and improperly relied on assistance from a data analytics company. That Piggott is not a “damages expert” does not mean that he is unqualified to rebut the opinions of Plaintiff’s experts, and his reliance upon a data analytics company was not improper because such company worked under Piggott’s supervision.

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Evergreen Buildings Sols., LLC v. Taylor, 2025 NCBC Order 42 (N.C. Super. Ct. June 5, 2025) (Houston, J.)

Key Terms: preliminary injunction; temporary restraining order; confidential or proprietary information; covenant not to compete; covenant not to solicit

Plaintiff initiated this action, asserting various claims against two former employees, Taylor and Price, and their new employer, arising from alleged breaches of their employment agreements. Plaintiff moved for a preliminary injunction.

Breach of Contract Claim. The Court found that Plaintiff had not shown a likelihood of success on the merits of its claims relating to the non-competition, non-solicitation, and confidentiality provisions of the employment agreements because Plaintiff failed to demonstrate that these provisions were reasonable and enforceable given their expansive geographic, temporal, and subject-matter breadth, the expansive scope of the clients and other persons not to be solicited, and their prohibition on “direct or indirect” competition.

Conversion and Computer Trespass. The Court also found that Plaintiff had not shown a likelihood of success on its conversion or computer trespass claims as Plaintiff failed to provide any evidence that Taylor or Price converted or otherwise stole Plaintiff’s confidential or proprietary information or that they accessed its computers or software to download or use Plaintiff’s information for an improper purpose. The mere ability or opportunity to access allegedly confidential or proprietary information was not sufficient to support either claim.

Tortious Interference with Contract. Similarly, the Court found that Plaintiff had not shown a likelihood of success on its tortious interference claim against the remaining Defendants. Plaintiff’s conclusory allegations of wrongdoing were insufficient and the weight of the evidence showed that Defendant Integrity’s hiring of Taylor and Price to develop its business in the same markets as Plaintiff was for a legitimate business purpose.

UDTPA Claim. Plaintiff had also not shown a likelihood of success on its UDTPA claim as it had only demonstrated a possibility of success of its breach of contract claims with scant evidence of any other wrongdoing by Defendants.

Constructive Trust/Receiver and Punitive Damages. The Court noted these requests are remedies, not independent causes of action warranting injunctive relief.

Finally, the Court noted that Plaintiff’s delay of more than two years to pursue its claims against Taylor, and more than five months against Price, weighed against Plaintiff’s argument that it had been irreparably harmed.

In sum, Plaintiff’s allegations largely based on conclusory allegations, speculation, and hearsay were insufficient to show a likelihood of success on the merits of any of its claims. Further, the balance of the equities weighed against injunctive relief. Accordingly, the Court denied Plaintiff’s motion for injunctive relief.

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Janvier v. QBE Ins. Corp., 2025 NCBC Order 43 (N.C. Super. Ct. June 10, 2025) (Robinson, C.J.)

Key Terms: breach of contract; declaratory judgment; negligence; breach of fiduciary duty/constructive trust; N.C.G.S. § 7a-45.4(a)(9); mandatory complex business case

Defendants filed a Conditional Notice of Designation (“Conditional NOD”) under N.C.G.S. § 7A-45.4(a)(9), which requires, inter alia, that all parties consent to the designation. Plaintiff opposed the designation, arguing that Plaintiff (an individual serving as a limited receiver) was not a corporation, as required for designation under subsection (a)(9), and Plaintiff did not consent to the designation. As the Court explained, a Conditional NOD must be followed with a supplement indicating all parties’ consent to designation. Here, no supplement was filed and Plaintiff plainly did not consent as he had filed an opposition. Accordingly, designation was not proper.  The Court did not address whether the receiver qualified as a corporation under N.C.G.S. 7A-45.4(a)(9).

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Friedmann v. Griffin, 2025 NCBC Order 44 (N.C. Super. Ct. June 16, 2025) (Davis, J.)

Key Terms: preliminary injunction; N.C.G.S. § 57D-3-20, -21; LLC; abandonment of managerial duties; Chapter 57D; bad faith

Plaintiff initiated this action against Defendant Griffin and their jointly-owned LLCs, asserting various claims, including that Griffin had violated N.C.G.S. § 57D-3-20 by denying Plaintiff company-related information and taking unilateral action in the management of the companies. Plaintiff moved for a preliminary injunction to enjoin Griffin from, inter alia, interfering with Plaintiff’s management rights.

Griffin opposed the motion, arguing that Plaintiff had abandoned his managerial duties. Although the Court agreed that a manager could potentially abandon his management duties under the default provisions of the LLC Act (which applied because the companies had no operating agreements), the Court held that too many factual issues existed regarding abandonment to deny the motion on that basis. Based on the record before it, the Court granted a preliminary injunction because Defendant’s actions of unilaterally withdrawing company funds and establishing separate personal/company bank accounts without Plaintiff’s consent or access violated N.C.G.S. § 57D-3-20, and Plaintiff showed a substantial likelihood of irreparable harm because, due to the animosity of the parties, Plaintiff’s managerial rights would be frequently and continuously violated.

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Gordon v. Gordon Recyclers, Inc., 2025 NCBC Order 45 (N.C. Super. Ct. June 16, 2025) (Davis, J.)

Key Terms: amended complaint; Rule 15; N.C.G.S. §55-7-03; futile; undue prejudice; Rule 7(b)(1)

As summarized here, this action concerns a dispute as to the rights of Plaintiff, a non-voting shareholder of Defendants, to attend the Defendants’ annual shareholder meetings. Plaintiff sought leave to file an amended complaint adding five new factual allegations and a new prayer for relief that the Court order shareholder meetings to be held. Defendant opposed the motion arguing that the proposed amendments were futile because an application for a court-ordered shareholder meeting under N.C.G.S. § 55-7-03 could only be made through a motion, not a pleading, per Rule 7. Defendants also argued that the proposed amendments were unduly prejudicial because they would disrupt the status quo and conflicted with the Court’s previous preliminary injunction order. The Court rejected both arguments and granted the motion. Rule 7 did not prevent Plaintiff from seeking its requested relief through a pleading. Further, the Court’s PI Order and the proposed amended complaint were not inconsistent, and the filing of the Amended Complaint would not disrupt or inconvenience Defendants regular annual shareholders’ meeting as Plaintiff had not yet requested the Court to order the meetings take place at a certain time of year.

To subscribe, email 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 06/17/25

N.C. Business Court Opinions, May 21, 2025 – June 3, 2025

By: Lauren Schantz

Mohr Partners, Inc. v. Elior, Inc., 2025 NCBC 24 (N.C. Super. Ct. May 21, 2025) (Davis, J.)

Key Terms: amend pleadings; undue delay; prejudice; summary judgment; offensive summary judgment; real estate; exclusive representation agreement; commission; self-service; exclusive right to sell; exclusive agency; breach of contract; waiver; excused; actual damages; nominal damages, errata sheet; breach of fiduciary duty;

This action involves a dispute between a real estate broker, Plaintiff Mohr Partners, Inc., and its client, Defendant Elior, Inc., regarding Mohr’s entitlement to a commission under an Exclusive Representation Agreement (“ERA”). During the term of the ERA, Elior self-serviced certain transactions for which it did not pay Mohr a commission. Elior also refused to pay Mohr a commission for services Mohr performed on two transactions: the Moosic Transaction and the Berkeley Transaction. The parties filed cross-motions for summary judgment and Elior filed a motion for leave to amend.

Motion for Leave to Amend. Elior sought to amend its answer to assert that the ERA was not a valid contract. Because the parties had proceeded with the conduct of the case based on the premise that the ERA was valid, and the discovery period was now closed, the Court denied the motion due to undue delay and the resulting prejudice to Mohr.

Entitlement to Commission. The parties sought summary judgment on the issue of whether the ERA entitled Mohr to a commission for real estate transactions that Elior self-serviced. The Court concluded that the ERA constituted an exclusive agency agreement—which allows for self-servicing without payment of a commission—rather than an exclusive right to sell agreement because the ERA contained no language that expressly relinquished Elior’s right to self-service real estate transactions. Accordingly, Mohr was not entitled to a commission on the self-serviced transactions.

The Moosic Transaction. Elior argued that Mohr was not entitled to a commission for services performed as part of the Moosic Transaction because the real estate sale was part of a larger merger and acquisition transaction not covered by the ERA. The Court rejected this argument, noting that the ERA contained no language exempting real estate transactions that accompanied the sale of a business. Elior also argued that the Moosic Transaction was not assigned to Mohr, but the record did not support this argument. Thus, the Court concluded that Mohr was entitled to a commission for the Moosic Transaction, granted Mohr’s motion and denied Elior’s motion on this issue, and deferred ruling on the amount owed to Mohr.

The Berkeley Transaction – Breach of Contract. Mohr contended that Elior breached the ERA by failing to pay a commission for the Berkeley Transaction. Elior argued that Mohr mistakenly conveyed an unauthorized offer to a third-party and that this mistake excused Elior from paying the commission and gave rise to affirmative claims against Mohr. Although the parties agreed that a genuine issue of material fact existed as to whether Mohr’s conveyance of the offer was a breach of the ERA, Mohr argued that it was nonetheless entitled to summary judgment because Elior had waived any breach by continuing to have Mohr work on the Berkeley Transaction after the alleged breach. The Court concluded that a genuine issue of material fact existed regarding waiver, and, therefore, denied Mohr’s motion for summary judgment as to its breach of contract claim. However, the Court granted Mohr summary judgment on the issue of damages for Elior’s breach of contract counterclaim, determining that Elior had failed to offer sufficient evidence that it was entitled to actual damages. Accordingly, Elior would be limited at trial to seeking nominal damages on its breach of contract counterclaim regarding the Berkeley Transaction.

The Berkeley Transaction – Breach of Fiduciary Duty. Elior contended that Mohr, as its real estate agent, breached its fiduciary duty by conveying an unauthorized offer during negotiations. The Court denied Mohr’s motion for summary judgment on Elior’s breach of fiduciary duty counterclaim because whether Mohr’s conveyance of the offer constituted a breach of the ERA was a genuine issue of material fact for the jury to decide. The Court also concluded that Elior could only recover nominal damages on this counterclaim because Elior had failed to offer sufficient evidence that it was entitled to actual damages.

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United Therapeutics Corp. v. Roscigno, 2025 NCBC 25 (N.C. Super. Ct. May 27, 2025) (Earp, J.)

Key Terms: motion to dismiss; employment agreement; breach of contract; declaratory judgment; Rule 12(b)(1); standing; subject matter jurisdiction; justiciable controversy; intellectual property; judicial notice; redressability; equitable remedy; Rule 12(b)(6); statute of limitations

This action centers on an employment dispute. Pursuant to employment agreements, Defendant Roscigno worked for Plaintiff United Therapeutics Corporation (“UTC”), first as a clinical research scientist and then as the president of a UTC subsidiary, developing new drugs and drug delivery systems. Four years after resigning from UTC, Roscigno joined Defendant Liquidia Technologies, Inc., a direct competitor of UTC, and developed competing drugs and drug delivery systems for Liquidia. UTC filed suit against Defendants, asserting claims for trade secret misappropriation and unfair and deceptive trade practices based on alleged violations of Roscigno’s UTC employment agreements. UTC moved to amend its complaint to add claims for breach of contract and declaratory judgment, but the Court denied the request as untimely. UTC subsequently initiated this suit, and Defendants moved to dismiss the Complaint in its entirety.

Liquidia argued that the Court lacked subject matter jurisdiction over the claims asserted against it because the Complaint’s allegations only related to Roscigno’s alleged breach of his employment agreement with UTC. The Court disagreed, concluding that a justiciable controversy existed as to whether Roscigno was required to assign and transfer to UTC his interest in certain intellectual property created during his employment with Liquidia. The Court took judicial notice that Roscigno had assigned his rights in UTC’s disputed intellectual property to Liquidia.

Roscigno argued that UTC lacked standing to bring its claims because the claims are not redressable based on his transfer of his ownership rights in the intellectual property to Liquidia. The Court disagreed, determining that, at this stage, the Court could not conclude that the equitable remedies of specific performance, a constructive trust, or both may be available to Plaintiffs. The Court denied Defendants’ motion to dismiss pursuant to Rule 12(b)(1) on both grounds.

Defendants also argued that UTC’s claims were barred by a three-year statute of limitation, contending that UTC’s claim accrued when Liquidia’s patent issued listing Roscigno as an inventor. UTC argued that its breach of contract claim is predicated on Roscigno’s alleged misuse of its confidential information, and UTC did not learn of this alleged misconduct until Liquidia produced discovery in other litigation. The Court concluded that the competing views were a question of fact for the jury and denied Defendants’ motion to dismiss pursuant to Rule 12(b)(6).

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Myers v. Tier 1 Home Sols., LLC, 2025 NCBC Order 36 (N.C. Super. Ct. May 22, 2025) (Robinson, C.J.)

Key Terms: consent order; motion to dismiss; Rule 12(b)(1); Rule 12(b)(6); derivative claims; LLC; N.C.G.S. § 57D-8-04

Plaintiff Joseph Myers and Defendant Kristopher Garrett Austin are 50/50 members of Defendant Tier 1 Home Solutions, LLC. Myers brought derivative claims on behalf of Tier 1 against Austin and direct claims against all Defendants. After Defendants moved to dismiss all claims, the parties agreed to the dismissal of the derivative claims and submitted a proposed consent order. Pursuant to N.C.G.S. § 57D-8-04, the Court concluded that the continuance of the derivative proceeding was not in Tier 1’s best interests and that the discontinuance of the claims would not substantially affect the interests of the members. Therefore, the Court granted the motion to dismiss the derivative claims with prejudice.

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Helix Mech., LLC v. Element Serv. Grp. Mech., LLC, 2025 NCBC Order 37 (N.C. Super. Ct. May 29, 2025) (Robinson, C.J.)

Key Terms: designation; N.C.G.S. § 7A-45.4(a)(4); N.C.G.S. § 7A-45.4(a)(5); breach of contract; trademark; intellectual property; material issues

This action arises out of an alleged breach of contract for the purchase of a commercial HVAC business. Defendants sought to designate this matter under N.C.G.S. § 7A-45.4(a)(4) and (a)(5), contending that the action involved a dispute involving trademark law and/or the ownership or use of intellectual property. The Court determined that designation pursuant N.C.G.S. § 7A-45.4(a)(4) was improper because the allegations of the Complaint did not implicate trademark law and required only the application of contract law principles. The Court also determined that designation pursuant N.C.G.S. § 7A-45.4(a)(5) was improper because the material issues were tied to the alleged breach of contract rather than the underlying intellectual property aspects of the intellectual property involved. Accordingly, the matter was not designated as a mandatory complex business case.

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BioGas Corp. v. NC Biogas Dev., LLC, 2025 NCBC Order 38 (N.C. Super. Ct. June 2, 2025) (Robinson, C.J.)

Key Terms: show cause; civil contempt; consent order; motion for sanctions; willful; N.C.G.S. § 5A-23; N.C.G.S. § 5A-21; purge conditions; joint and several liability; judgment; interim award; voluntary dismissal; attorneys’ fees; N.C.G.S. § 6-21.2

Counterclaim Defendants BioGas Corp. and S. Anwar Shareef were ordered to show cause why the Court should not hold them in civil contempt for violation of a consent order that enjoined Counterclaim Defendants from entering into any contract regarding a particular project without first consulting and obtaining written consent from Counterclaim Plaintiff NC Biogas Development, LLC (“NCBD”) during the pendency of the action.

The Court concluded that Counterclaim Defendants did not have the ability to comply with the consent order because the contracts had already been signed without NCBD’s approval. The Court, with the consent of BioGas Corp., Shareef, and Counterclaim Defendant NC BioGas, LLC, entered judgment against the Counterclaim Defendants for an interim award in an amount equal to the amount in dispute in the Counterclaim Plaintiffs’ first counterclaim. The Court directed Counterclaim Plaintiffs to file a voluntary dismissal as to that counterclaim because the Court’s judgment granted the relief sought. The Court permitted Counterclaim Plaintiffs to seek attorneys’ fees to the extent allowed by law.

To subscribe, email 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 06/03/25