By: Natalie E. Kutcher
Carolina Med. Partners, PLLC v. Shah, 2025 NCBC 61 (N.C. Super. Ct. Oct. 8, 2025) (Conrad, J.)
Key Terms: motion to dismiss; constructive fraud; pleading standard; Rule 12(b)(6)
These consolidated cases arose from a dispute among three physicians, Nimish Patel, Shephali Patel, and Amit Shah, who previously practiced together. Nimish and Shephali Patel asserted a counterclaim against Shah for constructive fraud based on allegations that Shah, as the majority managing member of their practice, used company funds for the benefit of himself, his wife, and other entities in which Shah had an interest. Shah moved to dismiss the Patels’ counterclaim under Rule 12(b)(6). Shah argued that the Patels’ claim was waived in a Practice Separation Agreement, and that the Patels’ claim failed to sufficiently allege an essential element of constructive fraud.
The Court denied Shah’s motion. Though the Practice Separation Agreement was not attached to the pleadings, the Court determined that it could review the agreement, as it was central to the dispute and its authenticity was undisputed. Following a review of the Practice Separation Agreement, the Court held that the release contained therein was ambiguous and could arguably not apply to the present situation given the Agreement’s dispute resolution provisions. The Court further found that the Patels sufficiently pleaded the essential elements of a claim for constructive fraud: (1) that the defendant owes the plaintiff a fiduciary duty; (2) that the defendant breached that duty; and (3) that the defendant sought to benefit himself in the transaction. Though some allegations regarding benefit were “less plausible than others,” the pleadings were sufficient to survive dismissal.
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Meyer v. Hatteras Inv. Partners, L.P., 2025 NCBC 62 (N.C. Super. Ct. Oct. 10, 2025) (Earp, J.)
Key Terms: motion to dismiss; Rule 12(b)(1); Delaware law; limited partnership; demand futility; derivative claims
Plaintiffs, limited partners in the Feeder Funds for Nominal Defendant Hatteras Master Fund, L.P., brought this derivative action alleging that the individual defendants, directors of Master Fund, breached their fiduciary duties to the Master Fund by proposing and approving a deal to sell the Master Fund’s alternative asset portfolio to The Beneficient Company Group, L.P. in exchange for near valueless equity in The Beneficient Company Group. Defendants moved to dismiss with prejudice pursuant to Rule 12(b)(1), arguing that Plaintiffs failed to satisfy the statutory pre-suit requirements for instituting a derivative action. Plaintiffs moved for a voluntary dismissal without prejudice pursuant to Rule 41(a)(2).
Defendants first argued that the Plaintiffs failed to meet the ownership requirement to have standing to bring a derivative suit on behalf of a Delaware limited partnership since they alleged only that they were limited partners of the Feeder Funds, not the Master Fund. Plaintiffs responded that because Delaware already recognized double derivative standing in the “alternative entity space,” Delaware law should be expanded to permit limited partners in a parent entity to sue on behalf of its subsidiary. The Court determined, however, that it was unnecessary to address this issue because Plaintiffs had failed to satisfy the derivative demand prerequisite to suit.
Plaintiffs admitted that they did not make a demand upon the Master Fund. Accordingly, the Court analyzed whether Plaintiffs had adequately pleaded demand futility. Demand futility must be pleaded with respect to a LP’s general partner—here, the Adviser. The Court first determined that Plaintiffs’ allegations regarding the Adviser’s majority owner and CEO were insufficient to allege demand futility as to the Adviser. The Court next determined that Plaintiffs failed to allege a material benefit to the Adviser from the transaction. Finally, the Court found that Plaintiffs failed to adequately allege that the Adviser engaged in conduct that would subject it to liability for which it could not be indemnified. Having determined that the Plaintiffs failed to meet any of the standards for alleging demand futility under Delaware law, the Court granted Defendants’ motion to dismiss for lack of subject matter jurisdiction pursuant to Rule 12(b)(1). Plaintiff’s motion to voluntarily dismiss was consequently denied as moot.
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Tiller v. Phillips, 2025 NCBC 63 (N.C. Super. Ct. Oct. 15, 2025) (Houston, J.)
Key Terms: motion to strike; Rule 12(f); derivative demand; motion to dismiss; Rule 12(b)(6); veil piercing; breach of contract; unjust enrichment; unlawful distribution; conversion; tortious interference; facilitation of civil conspiracy
Plaintiffs Lisa and William Tiller co-founded MedShift, LLC with Defendant Brian Phillips. Phillips controlled two family trusts which eventually became the majority owners of MedShift. Plaintiffs filed this action against Phillips, the family trusts, and nominal defendant MedShift, asserting numerous direct and derivative claims arising from Phillips’ alleged misconduct. Defendants moved to dismiss the complaint pursuant to Rules 12(b)(1) and 12(b)(6). Plaintiffs subsequently moved under Rule 12(f) to strike MedShift’s non-derivative-demand-based arguments.
Motion to Strike
Plaintiffs sought to strike some of MedShift’s arguments because, as a nominal defendant, it did not have standing to raise all of the arguments. The Court denied the motion as moot because MedShift’s arguments were largely duplicative of the other Defendants’ arguments, which were appropriately considered by the Court.
Motion to Dismiss
Turning to Defendants’ motion to dismiss, the Court held that Plaintiffs had failed to meet the statutory pre-suit requirements for a derivative claim. Plaintiffs argued that the demand requirement was fulfilled via an email sent to Phillips in June 2024, wherein Lisa Tiller raised several grievances about Phillips’ actions with MedShift. Plaintiffs further argued that a letter sent contemporaneously with the filed complaint constituted a demand. The Court rejected both arguments, finding that the email sent in June 2024 was “primarily Ms. Tiller’s airing of personal grievances against Phillips,” and the letter sent with the complaint failed to satisfy the statutory requirement that a demand be made 90 days prior to the initiation of a lawsuit. As such, the Court dismissed without prejudice all of the putative derivative causes of action.
Regarding the direct claims, the Court granted in part and denied in part Defendants’ motion to dismiss under 12(b)(6) as follows:
Alter Ego/Piercing the Corporate Veil. Plaintiffs sought to pierce MedShift’s corporate veil and hold Phillips individually responsible for his tortious conduct. The Court dismissed the claim for several reasons. First, the complaint failed to plead any non-declaratory cause of action against MedShift; thus, there was no underlying claim to provide a basis for piercing MedShift’s corporate veil. Second, Phillips was not an individual interest owner in MedShift, and the complaint failed to allege that the family trusts (who held ownership interests in MedShift) were implicated in the claim. Third, Plaintiffs’ allegations of domination and control were insufficient.
Breach of Contract. The Court dismissed the claim as to Phillips, individually, on the basis that Phillips was not a party to the MedShift operating agreement. The Court also dismissed the claim as to the family trust defendants, as the trusts owed no express duties under the operating agreement to other members.
Unjust Enrichment. The Court dismissed this claim because the complaint alleged that Defendants wrongfully took Plaintiffs’ membership interest, not that Plaintiffs conferred it on Defendants, a required element of the claim.
Unlawful Distribution. The Court dismissed this claim as derivative.
Fraud and Negligent Misrepresentation. These claims were dismissed because they failed to either meet the Rule 9(b) pleading standard or failed to allege justifiable reliance.
Conversion. The Court dismissed this claim because (i) the membership interests at issue were intangible interests not subject to a conversion claim; and (ii) the complaint failed to make any substantive distinction between the Tillers individually (who did not have an ownership interest in MedShift) and the Tiller Trust (who held an ownership in MedShift).
Tortious Interference. Defendants argued only that Plaintiffs failed to adequately allege that Phillips acted without justification. The Court determined that Plaintiffs had adequately alleged facts permitting the inference that Phillips acted in his own self-interest rather than the interests of MedShift and that his conduct was not justified or privileged. Thus, this claim survived dismissal.
Facilitation of Civil Conspiracy. The Court dismissed Plaintiffs’ claim because such a claim does not exist under NC law. To the extent Plaintiffs sought to assert a claim for civil conspiracy, the claim nonetheless failed because it failed to allege that Phillips conspired with another individual or entity. An individual cannot conspire with himself, even when acting in different roles.
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rFactr, Inc. v. McDowell, 2025 NCBC 64 (N.C. Super. Ct. Oct. 16, 2025) (Robinson, C.J.)
Key Terms: summary judgment; defamation per se; arson; stalking; Facebook videos; insinuation; crime of moral turpitude
This case arises from a dispute between rFactr (a technology company), its executives, Richard Brasser and Greg Gentner, on one hand, and the company’s former investor, Chris McDowell, on the other. In 2018, rFactr and its executives sued Chris McDowell and his wife Caroline McDowell for defamation, alleging that Mrs. McDowell told a potential client of rFactr that the executives were under criminal investigation. The lawsuit was stayed in February 2023, following Brasser and Gentner’s criminal indictment for tax crimes.
In September 2023, Richard Brasser and his wife, Megan Brasser, created an online fundraiser titled “Brasser Family Justice” to provide support to the Brasser family for legal bills, security, and a re-opening of the investigation into a 2016 fire which destroyed their home. In connection with this fundraiser, Mrs. Brasser posted numerous videos on YouTube and Facebook alleging that “Chris” or “a couple up in Richmond” were plotting to bring about personal, financial, and physical harm to the Brassers, including but not limited to, stalking the Brassers’ children, being involved with the 2016 house fire, committing tax and securities fraud, and using their connections with the federal government to have Mr. Brasser wrongfully prosecuted. The McDowells, who live in Richmond, filed counterclaims against the Brassers for defamation per se in connection with these statements and subsequently moved for summary judgment on the same.
The Court denied the McDowell’s motion for summary judgment on two grounds. First, the McDowells had not met their burden of establishing as a matter of law that the Brassers’ statements were defamatory in nature. The statements relating to arson were implicit, rather than explicit. With regard to the stalking accusations, a reasonable juror could find that the statements did not subject the McDowells to ridicule or were substantially true, as Mrs. McDowell had testified in depositions that she had hired a private investigator and monitored the Brassers social media posts. The statements that the McDowells were “crazy” or “psychopaths,” had lied to government officials relating to Mr. Brasser’s criminal charges, and had committed financial crimes were non-actionable statements of opinion, personal interpretation, emotion, or outrage, rather than statements of fact.
Second, the Court could not conclude, as a matter of law, that the McDowells were the readily ascertainable subjects of the statements. The information provided in the videos and posts were descriptors, but did not state the McDowells name or enough information to determine that the statements were “of or concerning” the McDowells.
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Charles Schwab & Co., v. Marilley, 2025 NCBC Order 75 (N.C. Super. Ct. Oct. 8, 2025) (Earp, J.)
Key Terms: Rule 36, motion to strike; motion to amend or withdraw; discovery responses; requests for admission
This order arose from Defendant Peter Marilley’s: (i) motion to strike twenty-one requests for admission propounded by Defendant Lauren Marilley; and (ii) motion to withdraw or amend his admissions. Mr. Marilley argued that Ms. Marilley improperly served forty-six requests for admission, as the case management order permitted her to propound only twenty-five. Mr. Marilley also argued that his failure to respond to Ms. Marilley’s requests was the product of excusable neglect and should be withdrawn or amended.
The Court denied Mr. Marilley’s motion to strike. The Court noted that the discovery requests were propounded prior to the case management order being entered, and the case management order entered by the Court explicitly instructed Mr. Marilley to respond to the outstanding discovery from Ms. Marilley. The Court also highlighted Mr. Marilley’s failure to seek a protective order or serve written objections to the discovery, which waived his objections thereto. The Court also denied Mr. Marilley’s motion to amend or withdraw, noting the importance of the deadlines established under Rule 36 for responses to discovery (“[t]he Rules of Civil procedure are rules after all – not suggestions”) and the prejudice to Ms. Marilley which would naturally result from granting the motion at this late stage of the case.
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Kjet Ventures, LLC v. Jamison, 2025 NCBC Order 76 (N.C. Super. Ct. Oct. 9, 2025) (Houston, J.)
Key Terms: sanctions; Rule 11; criminal contempt; attorney; motion for extension of time
This case was originally filed in Gaston County Superior Court but was subsequently designated to the Business Court as a mandatory complex business case. Despite being designated to the Business Court, Defendants’ counsel filed a motion for extension of time with the Gaston County Superior Court and submitted a proposed order. The Gaston County Clerk of Superior Court granted the motion and entered the order. The Court struck the clerk’s order, granted the requested extension, and instructed Defendants to comply with the Business Court Rules and to not submit any proposed orders to the Gaston County Clerk. Despite this, Defendant thereafter filed motions for extensions of time to respond to discovery requests only with the Gaston County Superior Court which were again granted by the Clerk.
The Court struck the motions for extension of time and their corresponding orders and directed the Gaston County Clerk not to enter any orders in this case. The Court then analyzed whether the conduct of Defendants’ counsel constituted criminal contempt. The Court found that Defendants’ counsel demonstrated a “blatant disregard and knowing violation” of the prior orders entered and substantially interfered with the practices of the Court and its business. The Court ordered Defendants’ counsel to appear before the Court to show cause as to why he should not be held in criminal contempt or otherwise sanctioned under Rule 11.
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Fortune Brands Innovations, Inc. V. Bleser, 2025 NCBC Order 77 (N.C. Super. Ct. Oct. 10, 2025) (Robinson, C.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(d)(1); notice of designation; contemporaneous filing requirement
The day after Plaintiff filed its lawsuit against Defendant, asserting claims for breach of contract and threatened or inevitable misappropriation of trade secrets under Delaware law, Plaintiff filed its Notice of Designation, seeking designation as a mandatory complex business case under N.C.G.S. § 7A-45.4(a)(1).
The Court determined that the case was not properly designated because Plaintiff had failed to follow N.C.G.S. § 7A-45.4(d)(1), which requires the Notice of Designation to be filed contemporaneously with the complaint. As such, Plaintiff’s designation was untimely. The Court further noted that, even if the Notice of Designation had been filed contemporaneously, the case was not properly designated under N.C.G.S. § 7A-45.4(a)(1), which is for disputes involving the law governing corporations. The law governing corporations is not implicated by reference to Delaware trade secrets law or an alleged breach of restrictive covenants in employment agreements.
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North Carolina ex rel. Jackson v. EIDP, Inc., 2025 NCBC Order 78 (N.C. Super. Ct. Oct. 10, 2025) (Robinson, C.J.)
Key Terms: motion to stay proceedings pending decision on petition for writ of certiorari
As summarized here, the Court previously entered an order and opinion denying Defendants’ motion to dismiss for lack of subject matter jurisdiction. Defendants thereafter filed a petition for writ of certiorari seeking immediate review of the order by the North Carolina Supreme Court. Defendants then moved to stay proceedings in the trial court pending a decision from the Supreme Court on their petition for writ of certiorari. Plaintiffs opposed the motion, noting the harm of delaying justice and the Defendants’ failure to satisfy the burden to show a stay is necessary.
The Court, noting that a stay is not required upon a writ of certiorari, denied the motion in its discretion. Upon weighing the potential harm that an indefinite delay to the proceedings may have to those who have been injured for the damage allegedly done against the “little prejudice” felt by the Defendants if the case proceeds, the Court determined that a stay was not appropriate. The Court further noted that Defendants failed to show a high likelihood of success on the merits.
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Duramax Holdings LLC v. Brace, 2025 NCBC Order 79 (N.C. Super. Ct. Oct. 16, 2025) (Houston, J.)
Key Terms: motion to withdraw; pro hac vice
This Order arises following the filing of a joint motion to withdraw by two attorneys representing Plaintiff. The movants indicated that Plaintiff had retained legal counsel based in Ohio, who is not licensed to practice in North Carolina. The Court granted this motion, noting that the briefing on a motion to dismiss before the Court was already completed, and Plaintiff would not be prejudiced by the withdrawal of its current counsel.
The movants further noted to the Court that three of the attorneys listed on Plaintiff’s filings were not licensed to practice in North Carolina and had not completed the pro hac vice admission process in the six months following the filing. The Court cautioned all counsel against voluntarily designating or allowing other attorneys to designate them in filings before the Court before having complied with the provisions required for pro hac vice admission.
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Comic Book Certification Serv. LLC v. CBCS Operations, LLC, 2025 NCBC Order 80 (N.C. Super. Ct. Oct. 21, 2025) (Davis, J.)
Key Terms: pro hac vice admission; N.C.G.S. § 84-4.1
Defendant moved for leave to seek pro hac vice admission for two out-of-state attorneys. Throughout the litigation, Defendant’s attorney of record was licensed to practice in North Carolina but resided in Texas. Defendant moved the Court for pro hac vice admission of two other attorneys based out of its counsel’s Texas office through association with the North Carolina-licensed attorney.
The Court denied the motion. N.C.G.S. § 84-4.1 requires attorneys seeking pro hac vice admission to associate with an attorney who is a resident of the state. Though Defendant requested to be excused from this statutory requirement, the Court held that it did not have the authority to excuse noncompliance with the statute.
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From the Supreme Court of North Carolina
Mauck v. Cherry Oil Co., Inc., No. 318A24, 2025 N.C. LEXIS 861 (N.C. 2025) (Earls, J.)
Key Terms: dissolution; N.C.G.S. § 55-14-30(2)(ii); standing; Meiselman claim; buyback option; reasonably necessary
The Maucks, minority shareholders in Cherry Oil, sued to dissolve Cherry Oil under N.C.G.S. § 55-14-30(2)(ii), arguing that dissolution was “reasonably necessary” to protect their “rights and interests” as shareholders. The Business Court dismissed that claim for lack of standing under Rule 12(b)(1). On appeal, the Supreme Court affirmed on alternate grounds. Contrary to the Business Court’s opinion, the Maucks had standing to bring the dissolution claim because they alleged the violation of a legal right secured by the statute and they fell within the class of people the statute authorizes to sue. However, dismissal was nonetheless appropriate under Rule 12(b)(6) because the complaint alleged the existence of a buyback option in the shareholder agreement—which provided essentially the same relief to the Maucks as dissolution—and the complaint did not allege additional factual allegations that dissolution was otherwise reasonably necessary to protect the Maucks’ rights or interests.
Chief Justice Newby and Justice Barringer concurred in part and concurred in the result only in part.
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Posted 10/21/25
By: Austin T. Webber
Brown v. TM Northlake Mall, LP, 2025 NCBC 57 (N.C. Super. Ct. Sept. 29, 2025) (Conrad, J.)
Key Terms: discovery; wrongful death; Rule 12(b)(6); untimely; N.C.G.S. § 1-53(4); statute of limitations; equitable estoppel; concealment
As summarized here, these consolidated cases arose from a 2022 shooting at Northlake Mall that killed Armani Spencer and injured Plaintiffs Bianca Brown and Brianna Perkins. Brown and Spencer’s estate, and later Perkins, sued various entities associated with Defendants Northlake Commons shopping center and Northlake Mall.
During discovery, Plaintiffs discovered the alleged misconduct of Defendant AMMS, Inc. and its owners, Defendants Amy R. Thompkins and Michael McLaughlin. After obtaining leave to amend, Spencer’s estate amended its complaint to assert wrongful death claims against AMMS, Thompkins, and McLaughlin, each of whom moved to dismiss the claim as untimely pursuant to Rule 12(b)(6).
Under N.C.G.S. § 1-53(4), a wrongful death claim must be filed within two years of the date of death. Spencer’s estate argued that AMMS, Thompkins, and McLaughlin were equitably estopped from asserting the statute of limitations as a defense because any delay in filing suit against them resulted from their concealment of their role in providing security for Northlake Commons. The Court disagreed, concluding that the amended complaint did not allege that AMMS, Thompkins, or McLaughlin denied their involvement in providing security or that they lied during the investigation. The Court granted the motion to dismiss.
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iTi Commc’ns, LLC v. Seamon, Whiteside & Assocs., Inc., 2025 NCBC 58 (N.C. Super. Ct. Sept. 30, 2025) (Earp, J.)
Key Terms: Rule 15(d); motion to supplement; Rule 15(a); motion to amend; futility; moot; Rule 12(c); judgment on the pleadings; Rule 10(c); written instrument; breach of contract; breach of good faith and fair dealing; unjust enrichment; express contract; negligence; economic loss rule; conversion; N.C.G.S. § 44A-2; excused performance; unenforceable penalty; liquidated damages; motion to strike; sur-reply; BCR 7
This case involves a contractual dispute between Plaintiff iTi Communications, LLC and Defendant Seamon, Whiteside, and Associates, Inc. Plaintiff contracted to provide information technology services and equipment to Defendant under a Master Services Agreement and subsequent Statements of Work (the “Contract”). Pursuant to the Contract, Defendant gave Plaintiff ninety days’ notice that it intended to terminate the Contract, which triggered an early termination fee provision. Plaintiff invoiced Defendant for the fee, but prior to the end of the ninety-day notice period, Defendant discovered a data breach had occurred as a result of Plaintiff’s alleged failure to back up Defendant’s data.
Plaintiff sued Defendant for breach of contract, among other claims. Defendant asserted counterclaims for breach of contract, breach of the duty of good faith and fair dealing, unjust enrichment, negligence, and conversion. Plaintiff filed a Rule 12(c) motion as to its breach of contract claim and Defendant’s counterclaims, as well as a motion to strike Defendant’s sur-reply brief. Following a hearing on Plaintiff’s motions, Defendant filed a motion to supplement its answer with documents obtained in discovery, followed by an alternative motion to amend its answer.
Defendant’s Motion to Supplement the Pleadings. The Court elected to treat Defendant’s motion to supplement as a motion to amend, because the documents Defendant sought to attach to its answer involved events that predated its answer, rather than events that occurred after the answer was filed. Plaintiff argued that the motion to amend was futile, but because the Court granted in part and denied in part Defendant’s Rule 12(c) motion, the Court granted Defendant’s motion to supplement. The Court denied Defendant’s alternative motion to amend its answer as moot.
Plaintiff’s Motion for Judgment on the Pleadings. As an initial matter, the Court concluded that it could consider both the contracts attached to the complaint and Defendant’s proposed attachments when deciding Plaintiff’s Rule 12(c) motion, because all of the documents fell within the scope of “written instruments” under Rule 10(c).
Breach of Contract Counterclaim. Defendant alleged that Plaintiff breached the Contract by failing to provide continuous backup support of Defendant’s data; Plaintiff argued that this fell outside the scope of the Contract. Although the plain language of the Contract supported Plaintiff’s argument, the Court determined that it could not conclude that all relevant contractual obligations were before the Court and denied Plaintiff’s motion to dismiss this counterclaim.
Breach of Good Faith and Fair Dealing Counterclaim. Because Defendant’s counterclaim for breach of the implied covenant of good faith and fair dealing was based upon the same acts as its counterclaim for breach of contract, the Court granted the motion as to this counterclaim.
Unjust Enrichment Counterclaim. Because an express contract governed the dispute, the Court granted Plaintiff’s motion as to Defendant’s unjust enrichment counterclaim.
Negligence Counterclaim. The Court concluded that the economic loss rule barred Defendant’s recovery in tort for Plaintiff’s alleged failure to perform the Contract and granted Plaintiff’s motion as to Defendant’s negligence counterclaim.
Conversion Counterclaim. Defendant alleged that Plaintiff converted its servers after the Contract was terminated. Plaintiff argued that both the terms of the Contract and N.C.G.S. § 44A-2 permitted it to retain Defendant’s servers. Plaintiff also argued that the economic loss rule barred Defendant’s conversion counterclaim. The Court determined that Plaintiff was not entitled to judgment on the pleadings under any of these theories and denied the motion as to this counterclaim.
Breach of Contract Claim. Plaintiff sought judgment in its favor that Defendant breached the Contract by failing to pay the early termination fee. Defendant argued that it was excused from paying the fee due to Plaintiff’s prior breach of the Contract and, further, that the fee was an unenforceable penalty. The Court agreed that the pleadings contained allegations that Defendant’s performance was excused and denied Plaintiff’s motion as to this claim on that basis, but the Court concluded that the early termination fee constituted a valid liquidated damages provision.
Motion to Strike Sur-Reply Brief. The Court granted Plaintiff’s motion to strike Defendant’s sur-reply brief because BCR 7 does not permit the filing of sur-replies absent Court permission.
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Mayer v. Goldner, 2025 NCBC 59 (N.C. Super. Ct. Oct. 2, 2025) (Conrad, J.)
Key Terms: personal jurisdiction; minimum contacts; specific jurisdiction; physical contacts; intentional contact; defamation; unfair and deceptive trade practices; tortious interference with contract
Third-Party Defendant Grand Hook Agency, LLC is a limited liability company organized in Georgia by Third-Party Defendants Gabriel Mayer and Matthew Queen. Third-Party Plaintiff Sherbrooke Corporate Ltd. is a captive insurance company organized in North Carolina. Third-Party Plaintiff Samuel Goldner is the majority member of Sherbrooke; Mayer and Queen are officers, directors, and minority shareholders of Sherbrooke. Third-Party Plaintiffs alleged that Mayer and Queen created Grand Hook to compete with Sherbrooke and that Mayer and Queen used their positions within Sherbrooke to give Grand Hook a competitive edge, asserting claims for civil conspiracy, unfair and deceptive trade practices, and tortious interference with contract against Grand Hook. Grand Hook moved to dismiss for lack of personal jurisdiction.
Grand Hook argued that it did not have any physical contacts with North Carolina. The Court, however, concluded that the alleged defamatory statements made by Grand Hook’s principals, Mayer and Queen, to a North Carolina state agency were intentional conduct directed at North Carolina. The Court further determined that, liberally construed, the allegations of the complaint supported an inference that Sherbrooke’s injuries were felt primarily in North Carolina. The Court rejected Grand Hook’s merits-based argument regarding the impossibility of competing against a captive insurance company and Grand Hook’s argument that the actions of Mayer and Queen could not be attributed to it. The Court denied the motion.
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Valleygate Dental Surgery of Charlotte, LLC v. Farrell, 2025 NCBC 60 (N.C. Super. Ct. Oct. 7, 2025) (Houston, J.)
Key Terms: motion to dismiss; Rule 12(b)(3); improper venue; motion to transfer venue; N.C.G.S. § 1-82; N.C.G.S. § 1-83; residence of limited liability company
This case arose from a dispute over the ownership of a dental practice. Plaintiff Valleygate Dental Surgery of Charlotte, LLC is a North Carolina limited liability company that operates a dental surgery center in Charlotte, North Carolina. Plaintiff initiated this lawsuit in Cumberland County Superior Court, alleging in its complaint that its principal place of business was Cumberland County, North Carolina.
Defendants moved to dismiss for improper venue, arguing that Plaintiff’s principal place of business was actually Mecklenburg County and that no party was located in Cumberland County. Defendants alternatively moved to transfer the action to Mecklenburg County. However, Defendants conceded at the hearing that Plaintiff’s registered office and registered agent’s office were located in Cumberland County, and Defendants admitted in their verified answer to Plaintiff’s complaint that Plaintiff’s principal place of business was located in Cumberland County.
The Court concluded that, based on Defendants’ admissions, venue in Cumberland County was proper and denied the motion to dismiss. The Court further determined that Defendants failed to demonstrate that litigating in Cumberland County was unduly burdensome, expensive, inconvenient to witnesses, or contrary to the interests of justice and denied Defendants’ alternative motion to transfer venue.
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Covenant Clearinghouse LLC v. D.R. Horton, Inc., 2025 NCBC Order 69 (N.C. Super. Ct. Sept. 26, 2025) (Robinson, C.J.)
Key Terms: order on designation; N.C.G.S. § 7A-45.4(a)(9); declaratory judgment, breach of declaration; amount in controversy
Plaintiff Covenant Clearinghouse LLC initiated this action on 15 August 2025, asserting claims for declaratory judgment and breach of declaration against Defendant D.R. Horton, Inc. Defendant timely filed a notice of designation, seeking designation pursuant to N.C.G.S. § 7A-45.4(a)(9). Based on the allegations in the complaint, the Court could not determine whether the amount in controversy met the $1 million minimum threshold required by N.C.G.S. § 7A-45.4(a)(9)(c), so the Court concluded that the action was not properly designated as a mandatory complex business case.
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WP Church, LLC v. Whalen, 2025 NCBC Order 70 (N.C. Super. Ct. Sept. 26, 2025) (Davis, J.)
Key Terms: restaurants; preliminary injunction; likelihood of success on the merits; derivative claim; breach of fiduciary duty; business judgment rule; conflict of interest; duty of loyalty; ratification; statute of limitations; pre-suit demand; futility; irreparable harm; balancing the equities
Plaintiff WP Church, LLC and Defendant Patrick Whalen are two of the members of 5Church Charleston, LLC, a South Carolina limited liability company formed to operate a restaurant in South Carolina. Whalen is also the sole manager of 5Church. Whalen and the other members of 5Church (exclusive of Plaintiff) are also engaged in other restaurant ventures. Plaintiff alleged that Whalen caused 5Church to loan his other restaurants millions of dollars. Plaintiff further alleged that Whalen used 5Church’s funds to pay for legal expenses, rental payments, and automobile lease payments incurred by his other restaurants. Soon after initiating this action on 10 June 2025, Plaintiff discovered that Whalen continued to commingle 5Church’s funds with those of his other restaurants and filed a motion for preliminary injunction.
Whalen contended that Plaintiff was unlikely to succeed on the merits of its derivative claim for breach of fiduciary duty because (1) the terms of 5Church’s Operating Agreement permitted Whalen to make loans to his other restaurants; (2) Whalen was protected under the business judgment rule; (3) the loans were in the best interest of 5Church; (4) the other members of 5Church (exclusive of Plaintiff) supported making the loans; (5) Plaintiff ratified making the loans; (6) Plaintiff’s lawsuit was barred by the statute of limitations; and (7) Plaintiff’s pre-suit demand letter was insufficient under South Carolina law. The Court rejected all of Whalen’s arguments, determining that (1) no provision of 5Church’s Operating Agreement explicitly permitted Whalen to make loans to his other restaurants; (2) Whalen could not rely on the business judgment rule because his actions were based on a conflict of interest rather than good faith; (3) Whalen failed to provide sufficient evidence that the loans made to other restaurants sufficiently benefitted 5Church; (4) Whalen owed 5Church a duty of loyalty and neither 5Church nor its members benefitted from the loans; (5) Plaintiff did not ratify the loans by receiving regular financial statements when the statements did not disclose the terms of the loans and, further, any alleged ratification was revoked once Plaintiff made pre-suit demand and then filed suit; (6) a question of fact existed as to Whalen’s statute of limitations defense; and (7) Plaintiff’s pre-suit demand letter was sufficient and, alternatively, South Carolina law recognizes futility as a defense to a pre-suit demand letter.
Having concluded that Plaintiff had shown a likelihood of success on the merits of its derivative claim for breach of fiduciary duty, the Court determined that Plaintiff made a sufficient showing of irreparable harm as Whalen had repeatedly used 5Church’s funds for the benefit of his other restaurants and to the detriment of 5Church, even after receiving formal notice from Plaintiff via the pre-suit demand letters and the initiation of this suit. The Court concluded that a balancing of the equities favored the entry of a preliminary injunction in favor of Plaintiff. The Court granted the motion and enjoined Whalen from using 5Church’s funds outside the ordinary course of business.
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Action Learning Assocs., LLC v. Kenan-Flagler Bus. Sch. Exec. Educ. LLC, 2025 NCBC Order 71 (N.C. Super. Ct. Sept. 29, 2025) (Davis, J.)
Key Terms: motion to amend; BCR 7.4; BCR 7.2; BCR 7.10; supporting brief
As summarized here, this case arose from various disagreements between former collaborators Plaintiff Action Learning Associates, LLC and Defendant Kenan-Flagler Business School Executive Education LLC. After the Court decided Defendant’s motion to dismiss Plaintiff’s first amended complaint, Plaintiff filed a motion to amend and attached a proposed second amended complaint. Plaintiff did not file a supporting brief. Defendant opposed the motion, noting that Plaintiff had failed to comply with BCR 7.2. Plaintiff did not file a reply brief.
Pursuant to BCR 7.4, the Court decided the motion without a hearing, concluding that the motion to amend was not included in the types of motions that do not require an accompanying brief under BCR 7.10 because Plaintiff sought to add parties and new allegations through its motion. The Court denied Plaintiff’s motion without prejudice to refile it with a supporting brief.
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Buchanan v. Cameron, 2025 NCBC Order 72 (N.C. Super. Ct. Sept. 30, 2025) (Robinson, C.J.)
Key Terms: order on designation; opposition to designation; N.C.G.S. § 7A-45.4(a)(1); partnership; sole proprietorship; Chapter 59; complex and novel issues; tort claims
Plaintiffs initiated this action on 20 August 2025, asserting claims against Defendants for declaratory judgment, conversion, tortious interference with contract, and defamation per se. Plaintiffs simultaneously filed a notice of designation, and the case was designated as a mandatory complex business case under N.C.G.S. § 7A-45.4(a)(1). Defendants timely filed an opposition to designation.
Defendants argued that designation under N.C.G.S. § 7A-45.4(a)(1) was improper because the matter involved a determination as to whether certain businesses were sole proprietorships or partnerships. The Court disagreed, noting that disputes involving partnerships fell within the purview of N.C.G.S. § 7A-45.4 (a)(1) and that a complaint did not need to expressly reference Chapter 59 to qualify for designation under this subsection. Defendants further contended that the matter did not involve complex or novel issues, but the Court reiterated that designation did not require a particular level of complexity. The Court also rejected as irrelevant Defendants’ argument that the accompanying tort claims, by themselves, did not permit designation. The Court overruled the opposition and determined that the matter was properly designated as a mandatory complex business case under N.C.G.S. § 7A-45.4(a)(1).
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Am. Prods., Inc. v. Knight Hardwood Flooring Inc., 2025 NCBC Order 73 (N.C. Super. Ct. Oct. 3, 2025) (Robinson, C.J.)
Key Terms: order on designation; N.C.G.S. § 7A-45.4(a)(8); breach of contract; tortious interference with contract; unfair trade practices; civil conspiracy; confidential and proprietary information; misappropriation of trade secrets
Plaintiff American Products, Inc. initiated this action on 27 August 2025, asserting claims for (1) breach of employment contracts against its former employees, Defendants Benjamin Markovich, Bergen Blanton, and Charles N. Stinnett, III; (2) tortious interference with contract against the former employees’ new employer, Defendant Knight Hardwood Flooring Inc.; and (3) unfair trade practices and civil conspiracy against all Defendants. Defendnats timely filed a notice of designation, seeking designation pursuant to N.C.G.S. § 7A-45.4(a)(8). The Court declined to designate the matter as a mandatory complex business case because Plaintiff’s generalized claims involving confidential or proprietary information were not sufficient to bring a claim for misappropriation of trade secrets. The Court noted that while the complaint referred generally to “trade secrets” and included allegations that might have served as the basis for a misappropriation of trade secrets claim, Plaintiff chose not to allege such a claim.
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Grajales v. Tea Dating Advice Inc., 2025 NCBC Order 74 (N.C. Super. Ct. Oct. 7, 2025) (Robinson, C.J.)
Key Terms: order on designation; N.C.G.S. § 7A-45(a)(5); The Tea App; intellectual property; computer software; defense
Plaintiff Anthony Josue Grajales initiated this action on 25 August 2025, alleging that Defendants permitted users of The Tea App to post anonymous comments regarding Plaintiff’s alleged misconduct, including his name and business name. Plaintiff asserted claims for defamation (libel), false light invasion of privacy, intentional infliction of emotional distress, tortious interference with business relations, and negligence. Defendants The Tea App and Sean Cook timely filed a notice of designation, seeking mandatory complex business designation under N.C.G.S. § 7A-45(a)(5). The Tea App and Cook contended that resolution of the claims involved the performance of a computer software application, but the Court disagreed, concluding that the claims were tied to the alleged torts of others rather than the underlying intellectual property aspects of the app. The Tea App and Cook argued that they intended to seek dismissal of Plaintiff’s claims pursuant to section 230 of the Communication Decency Act, but the Court reiterated that a forecasted defense cannot serve as the basis for designation under N.C.G.S. § 7A-45(a)(5). The Court declined to designate the matter as a mandatory complex business case.
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Posted 10/07/25
