N.C. Business Court Opinions, June 17, 2026 – June 30, 2026

By: Amanda Reader, Romney Harris, and Ashley Oldfield

Covenant Clearinghouse LLC v. D.R. Horton, Inc, 2026 NCBC 56 (N.C. Super Ct. June 19, 2026) (Houston, J.)

Key Terms: Rule 12(b)(6); Rule 12(b)(7); declaratory judgment; breach of contract; declaration; real property; N.C.G.S. Chapter 39(A); transfer fee covenant; horizontal privity; touch and concern; under oath; necessary parties; proper parties

This case involves a recorded Declaration of Covenant with respect to certain real property. Plaintiff, the designated trustee under the Declaration at issue, sought declaratory judgments that the Declaration’s provision requiring payment of a 1% capital recovery fee on future property transfers remained valid, that a 2012 termination of the Declaration was ineffective because it was not executed under oath as required by the Declaration, and asserted a breach of contract claim against Defendant for allegedly selling lots without paying the fee. Defendant moved to dismiss under Rules 12(b)(6) and 12(b)(7).

Rule 12(b)(6)

Declaratory Judgment Claims. Defendant moved to dismiss Plaintiff’s declaratory judgment claims relating to the validity of the Declaration and purported termination thereunder pursuant to rule 12(b)(6) and asserted various arguments related to the enforceability of the Declaration. However, the Court emphasized that a motion to dismiss a declaratory judgment action is rarely appropriate unless there is no genuine controversy between the parties to be determined. Here, Defendants arguments go to the merits of Plaintiff’s declaratory judgment claims rather than asserting that no actual controversy exists; thus, the Court denied the motion to dismiss Plaintiff’s claims for declaratory relief.

Breach of Declaration. Defendant also moved to dismiss Plaintiff’s claim for breach of the declaration based on substantially the same arguments they made with respect to the declaratory judgment claims focusing on the validity and enforceability of the Declaration. Defendant argued that the Declaration was invalid pursuant to N.C.G.S. § 39A–1 et seq.’s prohibition against transfer fee covenants. However, the Court determined that the Declaration was recorded in February 2010 and on its face, N.C.G.S. § 39A–1 et seq. applies only to transfer fee covenants recorded after July 1, 2010. The Court therefore denied Defendant’s motion to dismiss the breach of declaration claim based on Defendant’s public policy arguments. Defendant further argued that Plaintiff’s claim for breach of the Declaration failed because the restrictive covenants in the Declaration did not satisfy the requirements of covenants running with the land of horizontal privity and touch and concern. The Court determined that accepting the well pleaded allegations of the complaint as true, as it must at the motion to dismiss stage, Defendant’s arguments were not enough to satisfy the Court that Plaintiff could not prove any set of facts that would support its claim for relief. The Court denied the motion to dismiss to the extent it was premised on these arguments. Finally, Defendant asserted that the Termination validly terminated any obligations Defendant might otherwise have under the Declaration, therefore invalidating Plaintiff’s claim for breach. Exploring the nuances of notarial requirements and the common usage of the phrase “under oath,” the Court determined that the Complaint sufficiently pleaded that the purported termination was not signed under oath as required by the Declaration and therefore denied Defendant’s motion to dismiss to the extent it relied on the termination’s effectiveness.

Rule 12(b)(7)

Without conclusively determining whether the parties at issue were necessary parties, in the exercise of its discretion,  the Court granted Defendant’s Rule 12(b)(7) motion in part and required the lot owners, the beneficiaries, and the original declarants to be joined as proper parties as their interests could be affected by a ruling on the Declaration’s validity and the termination. The Court ordered Plaintiff to file an amended complaint adding the proper parties within thirty days.

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Healthcare Found. of Wilson v. DLP Healthcare, LLC, 2026 NCBC 57 (N.C. Super Ct. June 23, 2026) (Conrad, J.)

Key Terms: Rule 12(b)(6); breach of contract; implied covenant of good faith and fair dealing; breach of fiduciary duty; aiding and abetting breach of fiduciary duty; tortious interference with contract; Delaware law; valuation agreement; put option

This suit arose from a dispute between the members of a hospital holding company over the valuation of Plaintiff’s minority interest in the company. As alleged, Plaintiff exercised a contractual put option requiring Defendant DLP Healthcare to purchase its membership interest, but Defendants halted the appraisal process after learning the valuation would require a significantly higher purchase price than anticipated. Plaintiff asserted claims for breach of contract, breach of the implied covenant of good faith and fair dealing, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, tortious interference with contract. Defendants moved to dismiss all claims under Rule 12(b)(6).

Breaches of Contract. Plaintiff alleged that DLP Healthcare 1) breached the parties’ agreement establishing December 31, 2024 as the appraisal valuation date by renouncing that date; and 2) breached the put agreement and the operating agreement by encouraging or directing Plaintiff’s manager (the parent company of DLP Healthcare) to instruct the appraiser not to issue the final appraisal. Applying North Carolina law to the first and Delaware law to the second, the Court denied dismissal of these claims. Plaintiff had adequately alleged the existence of a separate agreement establishing December 31, 2024 as the appraisal valuation date, despite Defendants’ argument that no mutual assent existed, which was a question of fact for the trier of fact. Further, Plaintiff had demonstrated that it could potentially prove facts in support of its claims that Defendant breached the put agreement, operating agreement, and implied covenant of good faith and fair dealing.

Breach of Fiduciary Duty and Aiding and Abetting Breach of Fiduciary Duty. The Court also denied dismissal of Plaintiff’s direct and derivative claims for breach of fiduciary duties as well as the direct aiding and abetting claim. Applying Delaware law, the Court concluded Plaintiff plausibly alleged that Plaintiff’s manager breached its duty of loyalty by stopping the appraisal process to benefit its affiliate, DLP Healthcare, at Plaintiff’s expense. The Court further concluded Plaintiff sufficiently alleged knowing participation by DLP Healthcare and adequately pleaded damages resulting from the delayed completion of the put transaction.

Tortious Interference with Contract. The Court dismissed Plaintiff’s derivative claim for tortious interference with contract with prejudice because Plaintiff failed to allege facts showing that the appraiser’s delay in issuing the final appraisal was a breach of its engagement agreement or that the holding company suffered a cognizable injury from the delayed appraisal.

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Olds v. Olds, 2026 NCBC 58 (N.C. Super Ct. June 25, 2026) (Shirley, J.)

Key Terms: Rule 12(b)(6); uniform transfers to minors act; conversion; constructive fraud; fraudulent conveyance; uniform voidable transactions act; unfair and deceptive trade practices; defamation; qualified privilege; piercing the corporate veil;

Plaintiff, the beneficiary of a UTMA account, sued his father and an LLC he controlled after Defendant allegedly transferred more than $1 million from the UTMA account into the LLC shortly before Plaintiff turned 21 and refused to return the funds or produce company records unless Plaintiff signed a confidentiality agreement.

Conversion. Plaintiff alleged Defendant transferred more than $1 million from the UTMA account into an LLC he controlled without Plaintiff’s knowledge or consent to retain control over the funds. Plaintiff further alleged Defendant refused to return the funds, permit Plaintiff to withdraw from the LLC, or provide information regarding Plaintiff’s ownership interest. The Court held these allegations sufficiently stated a claim for conversion.

Fraud-Based Claims. The Court dismissed Plaintiff’s claims for fraud, common law fraud, fraudulent misrepresentation, and fraud in the inducement. Plaintiff failed to identify which statements were false with the particularity required by Rule 9(b). The Court also rejected Plaintiff’s concealment theory because the Complaint alleged Defendant disclosed the transfer of the funds, Plaintiff identified no duty requiring advance disclosure, and failed to allege reliance or damages arising from Defendants’ refusal to provide LLC records.

Constructive Fraud. The Court allowed the constructive fraud claim to proceed only insofar as it was based on Defendant’s transfer and continued control of the UTMA funds. It dismissed the claim to the extent it relied on Defendant’s alleged misrepresentations or concealment of material facts.

Fraudulent Conveyance. The Court dismissed Plaintiff’s fraudulent conveyance claim, holding the transferred funds were custodial property—not Defendant’s personal assets—and therefore were not “assets” under the Uniform Voidable Transactions Act.

Unfair and Deceptive Trade Practices. The Court dismissed Plaintiff’s claim under N.C.G.S. § 75-1.1. The Court concluded the claim failed for the same reasons as Plaintiff’s fraud claims and further held the alleged conduct did not occur “in or affecting commerce” because it concerned the internal affairs of an LLC rather than marketplace activity.

Piercing the Corporate Veil; Punitive Damages; Statement of Sum Certain. The Court dismissed Plaintiff’s veil-piercing and punitive damages claims without prejudice because neither is an independent cause of action. It denied Defendants’ motion as to Plaintiff’s statement of sum certain, construing it as a request for damages.

Defamation Counterclaim. The Court granted in part and denied in part Plaintiff’s motion to dismiss Defendant’s defamation counterclaim. The Court held Defendant sufficiently alleged actual malice to defeat a defense of qualified privilege. With respect to Defendant’s allegations that Plaintiff had made “numerous statements” to unidentified third parties concerning Defendant’s allegedly fraudulent conduct, the Court dismissed the claim because the allegations were too vague to allege defamation per se and Defendant did not allege the special damages necessary for a claim of defamation per quod. The Court allowed the counterclaim to proceed based on Plaintiff’s statements to Wofford College and emails sent on March 2 and 3, 2025, concluding the alleged statements were pleaded with sufficient particularity and that at least some constituted verifiable factual assertions rather than non-actionable opinion.

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Zhang v. CapitalNexus, LLC, 2026 NBCB 59 (N.C. Super Ct. June 25, 2026) (Conrad, J.)

Key Terms: Rule 12(b)(6); EB-5 immigration program; derivative claims; Rule 23(b); fraud; breach of contract; inspection rights, conspiracy; negligent misrepresentation; breach of fiduciary duties; tortious interference with contract; declaratory judgment; N.C.G.S. § 75-1.1

Plaintiffs, two Chinese citizens, invested over a million dollars in Northlake Hotel in connection with the federal EB-5 immigration program, which allows foreign citizens to apply for permanent residency in the U.S. if they invest in a business that creates jobs for American workers. In short, Northlake Hotel would be owned by Avivar, with MJM Group (owned by the Mittals) as its majority member and Charlotte Harris as its minority member. Charlotte Harris’s general partner was CapitalNexus (closely held by Tony Zhang) and its limited partners included Plaintiffs and other investors. Unbeknownst to Plaintiffs, Defendants engaged in a series of transactions and restructurings and Avivar eventually filed chapter 11 bankruptcy. Although Northlake Hotel was sold during the bankruptcy, neither Charlotte Harris nor the Plaintiffs received any return. Plaintiffs initiated this action alleging numerous claims relating to their lost investments and the potential effect Defendants’ actions would have on their EB-5 petitions. Defendants moved to dismiss all claims.

Derivative Claims. The Court dismissed all of the derivative claims without prejudice because Plaintiffs failed to verify their amended complaint as required by Rule 23(b). Rule 23(b)’s verification requirement for derivative actions applies not only to corporations but also to limited partnerships and other entities with a legal identity separate from their owners.

Breach of Contract Claims. Plaintiffs alleged three breach of contract claims. The Court dismissed the claims based on the Investment Summary and Investment Memo, holding that, on the face of the documents, the Summary was not a contract and the Memo was not a guarantee; thus there could be no breach of contract. As to the Partnership Agreement, the Court concluded that Plaintiffs had standing to enforce it, but nonetheless dismissed the claim to the extent it was asserted against individuals or entities who were not parties to Partnership Agreement. The Court also denied dismissal of Plaintiffs’ claim, as third-party beneficiaries, for breach of the operating agreements. The Court rejected Defendants’ arguments that Plaintiffs lacked standing, that the claim was barred by the statute of limitations, and that any alleged breach could not have affected Plaintiffs’ permanent residency applications.

Fraud-based Claims. Plaintiffs asserted fraud-based claims based on 1) allegations that they were wrongfully induced to invest in Charlotte Harris; and 2) allegations that Northlake Hotel’s financial status and Avivar’s bankruptcy proceeding were concealed from them, thereby preventing them from intervening on Charlotte Harris’s behalf. With respect to wrongful inducement, the Court dismissed the claim to the extent it was based on alleged representations which were contrary to the express terms of the offering documents or which were based on group pleading. However, the Court denied dismissal as to specific representations made by Tony and CapitalNexus.  The Court also dismissed the claim with respect to Avivar’s bankruptcy proceeding because any injury was to the partnership as a whole, not to the Plaintiffs individually, and thus Plaintiffs did not have standing.

Fiduciary Duty-based Claims. Plaintiffs alleged that Tony and the Mittals had breached fiduciary duties owed to Charlotte Harris by engaging in self-dealing and other misconduct. The Court dismissed these claims for lack of standing because the duties owed were to Charlotte Harris, not the Plaintiffs individually, and there were no allegations of a separate, distinct injury to Plaintiffs.

Tortious Interference with Contract. The Court dismissed this claim because the complaint alleged only conclusory assertions that Sterling (another member of Avivar) and the Mittals had intentionally induced Tony not to perform under the Investment Memo, Investment Summary, and Partnership Agreement.

UDTPA Claim. The Court dismissed the UDTPA claim because it was based on conduct internal to the partnership and related businesses and therefore was not in or affecting commerce.

Civil Conspiracy. The Court denied dismissal of this claim because claims remained upon which a conspiracy claim could be based and, as alleged, the intracorporate immunity doctrine did not apply because at least one independent party, Sterling, was involved.

Inspection Rights. Because Plaintiff had adequately alleged that it made an inspection demand to CapitalNexus which was refused, the Court denied dismissal of this claim. CapitalNexus’s argument that it had fulfilled its statutory and contractual obligations was a question for a later stage.

Declaratory Judgment. The Court denied dismissal of this claim, concluding that Plaintiffs had adequately alleged an actual controversy regarding CapitalNexus’s position as general partner of Charlotte Harris and the status of Plaintiffs’ capital accounts and partnership rights.

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Dougherty v. Bojangles Rests., Inc., 2026 NCBC 60 (N.C. Super Ct. June 29, 2026) (Earp, J.)

Key Terms: Rule 12(b)(6); data breach; negligence; negligence per se; breach of implied contract; unjust enrichment; invasion of privacy; unfair and deceptive trade practices; declaratory judgment; injunctive relief

Plaintiffs, former employees of Bojangles, brought this putative class action asserting various claims against Bojangles arising from an alleged data breach involving employees’ and former employees’ personal information. Plaintiffs alleged that Bojangles failed to implement reasonable cybersecurity measures and delayed notifying affected individuals for approximately eight months, thereby causing damages.

Negligence per se. The Court dismissed Plaintiffs’ this claim with prejudice because it was based on alleged violations of the Federal Trade Commission Act and HIPAA, which are not public safety laws and therefore cannot support a negligence per se claim.

Negligence. The Court declined to dismiss Plaintiffs’ negligence claim, concluding that, under North Carolina’s liberal notice-pleading standard, Plaintiffs had 1) adequately alleged that Bojangles had a duty to exercise reasonable care in safeguarding employee information and to provide a timely notice of breach; and 2) sufficiently pleaded causation and damages by alleging that the data breach caused them, or would cause them, harm and to suffer damages, including fraudulent debit card charges, increased spam and scam activity, the expenditure of substantial time and money monitoring their accounts, exposure of their personal information on the dark web, and emotional distress.

Breach of Implied Contract. The Court denied dismissal of this claim, holding that Plaintiffs had adequately alleged an implied agreement that, in exchange for providing sensitive personal information as a condition of employment, Bojangles would employ reasonable cybersecurity measures to protect that information.

Unjust Enrichment. The Court denied dismissal of this claim, concluding that Plaintiffs’ allegations that they reasonably understood that, in exchange for receiving Plaintiffs’ personal information, Bojangles would use adequate data security measures to protect the information.

Invasion of Privacy. The Court dismissed Plaintiffs’ invasion of privacy claim, concluding that the complaint did not allege Bojangles itself intruded upon Plaintiffs’ private affairs, but instead alleged unauthorized access by third-party cybercriminals.

Unfair and Deceptive Trade Practices. The Court denied dismissal of this claim, concluding that the allegations of Bojangles’ failure to implement reasonable security measures in violation of their common law and statutory duties were sufficient to allege unfair conduct under the UDTPA.

Declaratory Judgment. The Court concluded that Plaintiffs had adequately alleged an actual controversy based on allegations that Bojangles continues to have possession of Plaintiffs’ personal information and still fails to have adequate security measures.

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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 06/30/26

N.C. Business Court Opinions, June 3, 2026 – June 16, 2026

By: Amanda Reader, Romney Harris, and Ashley Oldfield

BioSkryb Genomics, Inc. v. AClarity Genomics Inc., 2026 NCBC 51 (N.C. Super. Ct. June 8, 2026) (Conrad, J.)

Key Terms: summary judgment; California choice-of-law clause; nonsolicitation covenant; restrictive covenant; public policy exception; extraterritorial effect; attorney’s fees

Plaintiff, a Delaware company headquartered in North Carolina, initiated this action, alleging, inter alia, that after Defendant left his role at Plaintiff, he had breached the nonsolicitation provisions of his employment agreements, both of which contained a California choice of law provision. Defendant denied wrongdoing and asserted a counterclaim under California law, which prohibits contracts in restraint of trade and provides for a private right of action against an employer who attempts to enforce such a contract. After discovery closed, Plaintiff voluntarily dismissed its claims without prejudice, leaving Defendant’s counterclaim as the only remaining claim. Defendant then moved for summary judgment on Plaintiff’s liability for that counterclaim.

Because the parties agreed that the nonsolicitation provisions would be void under California law, the motion turned on whether California law applied. Plaintiff argued that the choice of law provisions should be disregarded because the agreements had no meaningful connection to California and applying California law would violate North Carolina public policy. The Court rejected Plaintiff’s arguments and enforced the choice-of-law provisions. The Court concluded that the parties had a reasonable basis for selecting California law because although Plaintiff was headquartered in North Carolina, it had substantial California ties and Defendant had traveled there approximately twenty-five times for Plaintiff’s business. The Court also concluded that applying California law would not violate a fundamental policy of North Carolina, since North Carolina generally disfavors restrictive covenants. The Court also rejected Plaintiff’s argument that California law should not apply extraterritorially because Defendant worked in North Carolina. Although legislation is generally presumed to operate territorially, the Court concluded that the California statute’s language overcame that presumption because it explicitly stated that it applied regardless of where the employment took place. Accordingly, the Court granted summary judgment in Defendant’s favor on liability for his counterclaim.

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Moore v. Brooks, 2026 NCBC 52 (N.C. Super. Ct. June 9, 2026) (Houston, J.)

Key Terms: motion to compel arbitration; arbitration agreement; American Arbitration Association Commercial Rules; substantive arbitrability; alter ego; veil piercing; non-signatory; estoppel; delegation

Plaintiff Drue Moore’s estate, the Redwood Trust, and Redwood Holdings were involved in a dispute with Defendant Winthrop Intelligence, a Wyoming LLC, concerning Winthrop’s operating agreements and related claims arising from alleged misconduct by Drue Moore. Winthrop moved to compel arbitration of certain counterclaims and crossclaims based on arbitration provisions in Winthrop’s 2020 and 2024 operating agreements.

Arbitration as to Redwood Holdings. The Court first addressed whether the Court or an arbitrator should decide arbitrability. The operating agreements were written agreements containing arbitration provisions, and the parties did not dispute that Winthrop and Redwood Holdings were parties to those agreements. The arbitration provisions incorporated the American Arbitration Association Commercial Rules, which give the arbitrator authority to decide issues of arbitrability. The Court concluded that this incorporation clearly and unmistakably delegated questions of substantive arbitrability to the arbitrator.

The Court rejected Redwood Holdings’ broad challenge to the enforceability of the operating agreements as a basis to avoid delegation, explaining that wholesale challenges to the validity of the contract generally do not defeat a clear delegation provision. Because the operating agreements identified Winthrop and Redwood Holdings as parties, contained mandatory arbitration provisions incorporating the AAA rules, and Redwood Holdings refused to arbitrate, the Court granted Winthrop’s motion to compel arbitration as to its claims against Redwood Holdings for breach of the operating agreement and expulsion under the operating agreement.

Arbitration as to Non-Signatories. Winthrop also sought to compel arbitration against the Estate and the Redwood Trust, neither of which appeared on the face of the operating agreements. The Court noted that, while questions about the validity of an arbitration agreement may be delegated to an arbitrator, a court must first determine whether a nonparty is bound by or may enforce the agreement.

Winthrop argued that the Estate and Redwood Trust were bound by the arbitration provisions based on delegation, veil piercing or alter ego principles, and ratification or estoppel through acceptance of supposed benefits. The Court rejected each theory. Because the Estate and Redwood Trust were not parties to the operating agreements, they could not have delegated arbitrability to an arbitrator. The Court also concluded that Winthrop had not shown that Redwood Holdings, the Estate, the Redwood Trust, or Drue Moore were alter egos of one another sufficient to pierce the veil under North Carolina or Wyoming law. Finally, the Court found Winthrop’s estoppel theory unsupported by the record and declined to bind the Estate or Redwood Trust based on alleged acceptance of membership benefits.

Accordingly, the Court concluded that Winthrop failed to show an agreement to arbitrate between Winthrop and either the Estate or the Redwood Trust and denied the motion to compel arbitration as to those parties.

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Moore v. Brooks, 2026 NCBC 53 (N.C. Super. Ct. June 9, 2026) (Houston, J.)

Key Terms: Rule 60; void judgment; personal jurisdiction; Rule 12(b)(2); Business Court Rules; electronic filing; notice; order of inclination; motion to set aside; appeal

Plaintiffs moved under Rule 60(b)(4) to set aside the Business Court’s prior order dismissing certain Defendants for lack of personal jurisdiction. Plaintiffs had already appealed the dismissal order to the North Carolina Supreme Court but asked the Court for an order of inclination on how it would likely resolve the Rule 60 motion if the appeal were not otherwise pending.

Plaintiffs argued that the dismissal order was void because Defendants’ motion to dismiss had been filed and served through the Business Court’s e-filing system, but was not timely filed with the Durham County Clerk of Superior Court as required. The Court determined that this technical defect did not leave the Court without jurisdiction to rule on the motion to dismiss and did not render the resulting order void. The Rules contemplate various situations in which a court may rule on a motion before it is filed (including motions for a TRO and oral motions). Further, Plaintiffs had actual notice of the motion, fully briefed the personal-jurisdiction issue, participated in the hearing, and did not object to the defect until after the Court ruled and therefore were not prejudiced by the defect. In contrast, Defendants would be materially affected if the dismissal order was set aside because they would then be subject to the Court’s jurisdiction for the duration of the case. Accordingly, the Court indicated that if the matter were not otherwise the subject of a perfected appeal, it would deny the Rule 60 motion.

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Matt Logan, Inc. v. Abitz, 2026 NCBC 54 (N.C. Super. Ct. June 9, 2026) (Robinson, C.J.)

Key Terms: Rule 12(b)(6); restrictive covenants; non-compete; non-solicitation; overbroad; breach of employment agreement; trade secrets; misappropriation of trade secrets; UDPTA; unfair competition; injunctive relief

Plaintiff, which provides financial and brokerage advice to clients, sued its former employee after he resigned shortly before Plaintiff transitioned to a new financial advisory firm and allegedly solicited Plaintiff’s clients for his newly formed LLC. Defendant moved under Rule 12(b)(6) to dismiss several claims.

Breach of Employment Agreement. Defendant sought dismissal of Plaintiff’s breach of contract claim only to the extent it related to the agreement’s non-solicitation and non-competition provisions, not the nondisclosure provision.

As to the non-solicitation provision, which prohibited Defendant from inducing or attempting to induce, directly  or indirectly, any person to discontinue doing business with Plaintiff, the Court rejected Plaintiff’s attempt to characterize the restriction as a narrower “non-interference” provision, and held it unenforceable because it broadly prohibited solicitation of anyone doing business with Plaintiff without limiting the restriction to customers with whom Defendant had contact or influence.

As to the non-competition provision, which prohibited Defendant from performing any services in competition with Plaintiff, the Court concluded that it was unenforceable because it barred Defendant from working in any capacity for any competitor and was not limited to work similar to his prior role and therefore failed to protect a legitimate business interest. The Court declined to narrow the provision based on Plaintiff’s contention that the provision only restricted Defendant from taking an identical position.

Misappropriation of Trade Secrets. Plaintiff alleged that Defendant misappropriated trade secrets by using confidential client information and information about Plaintiff’s planned advisor transition. Defendant argued that Plaintiff failed to identify any trade secret with sufficient particularity. The Court dismissed the claim. Although confidential client and business information may qualify as trade secrets, Plaintiff’s generalized allegations did not give Defendant notice of the specific information allegedly misappropriated. Defendant’s knowledge developed during employment also could not itself support a trade secrets claim. The Court further held that Plaintiff failed to plead misappropriation of advisor-transition information because Defendant allegedly learned that information in meetings he attended with Plaintiff’s consent, and Plaintiff did not allege later unauthorized access to the information.

Unfair Competition and Unfair and Deceptive Trade Practices. The Court denied dismissal of the claim. Although the trade secrets claim failed, computer trespass may support a claim, and Defendant did not challenge Plaintiff’s computer trespass claim. Accepting the allegations as true, the Court could not conclude that Plaintiff was entitled to no relief.

Injunctive Relief. Plaintiff also asserted a separate claim for injunctive relief based on Defendant’s alleged solicitation of clients and use of confidential information. The Court dismissed the claim because injunctive relief is a remedy, not an independent cause of action.

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Belmont Korners, LLC v. Lynk Invs., LLC, 2026 NCBC 55 (N.C. Super. Ct. June 16, 2026) (Shirley, J.)

Key Terms: Rule 12(b)(6); declaratory judgment; LLC operating agreement; fiduciary duty; fraud; fraudulent inducement; reasonable reliance; constructive fraud; civil conspiracy; intracorporate immunity doctrine; N.C.G.S. § 75-1.1; unfair or deceptive trade practices; unjust enrichment; constructive trust; punitive damages; accounting

This matter arises from a failed Charlotte real estate development project. Plaintiffs Belmont Korners, LLC and related entities alleged that developer Defendant Staley, lender Defendant Lynk Investments, LLC, and individuals associated with Lynk wrongfully obtained control over the project property. Plaintiffs asserted declaratory judgment and other claims. The Lynk Defendants moved to dismiss under Rule 12(b)(6). The Court granted the motion, leaving only Plaintiffs’ declaratory judgment claim to proceed.

Claims Asserted Collectively by Multiple Plaintiffs. As an initial matter, the Court addressed the Complaint’s frequent references to “Plaintiffs” collectively. The Court explained that collective pleading is not necessarily fatal, but where multiple plaintiffs and defendants are involved, the pleading must allege facts showing that the plaintiff asserting the claim has standing and that the defendant against whom relief is sought engaged in conduct sufficient to support liability.

Fiduciary Duty and Constructive Fraud. Plaintiffs alleged that Lynk owed fiduciary duties based on the parties’ lender-borrower relationship and because Lynk’s alleged representative signed Belmont Development’s operating agreement as manager. The Court rejected both theories. A lender-borrower relationship does not create fiduciary duties, and Plaintiffs did not plead facts showing that Lynk became an LLC member or manager or undertook another person’s fiduciary duties. Because constructive fraud also required a fiduciary relationship, the Court dismissed both claims against Lynk with prejudice.

Fraud and Fraudulent Inducement. Plaintiffs alleged that Lynk misrepresented that the 2024 restructuring would not affect Plaintiffs’ ownership rights and misrepresented the ownership structure, including RATB’s existence. The Court held that Plaintiffs failed to plead fraud with particularity because they did not identify specific statements, when they were made, why reliance was reasonable, or what Lynk obtained from the alleged misrepresentations. The fraud-based claims were dismissed with prejudice.

Civil Conspiracy. Plaintiffs alleged that Lynk and others conspired to seize control of the property and deprive Plaintiffs of ownership benefits. The Court dismissed the claim because Plaintiffs pleaded only conclusory allegations and the intracorporate immunity doctrine applied.

Unfair or Deceptive Trade Practices and Unjust Enrichment. Plaintiffs alleged unfair or deceptive trade practices under N.C.G.S. § 75-1.1 and unjust enrichment based on Defendants’ alleged control over the property. The Court dismissed the UDTPA claim because the alleged misconduct concerned the restructuring, membership, management, and control of a single real estate venture, not marketplace conduct between separate market participants. The unjust enrichment claim also failed because Plaintiffs did not plead that the Lynk Defendants received title to the property or personally received a measurable benefit from Plaintiffs.

Constructive Trust, Punitive Damages, and Accounting/Referee. The Court also dismissed Plaintiffs’ requests for constructive trust, punitive damages, accounting, and appointment of a referee because they were remedies rather than standalone claims. Further, punitive damages were not recoverable for Plaintiffs’ only remaining claim (for declaratory judgment) and the other requested remedies were not asserted against the Lynk Defendants.

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Higher Tech Realty NC, LLC v. Navigate Realty, LLC, 2026 NCBC Order 53 (N.C. Super Ct. June 2, 2026) (Davis, J.)

Key Terms: temporary restraining order; confidentiality agreement; non-compete; non-solicitation; likelihood of success on the merits; valuable consideration; blue-penciling; tortious interference with contract; irreparable harm; balancing of equities; breach of contract; notice of restrictive covenants

This action involves a dispute between plaintiff Mark Spain Real Estate and its former employees Byerly, Connor, and Johnson, and their new employer, Navigate Realty regarding the former employees’ alleged violations of the restrictive covenants in their employment agreements with Mark Spain and Navigate’s alleged scheme to misappropriate Mark Spain’s information and poach its employees. Plaintiff sought a temporary restraining order (1) enjoining the former employees from working in their current roles and from soliciting current Mark Spain employees; and (2) enjoining Navigate from tortiously interfering with Mark Spain’s contracts with its employees.

To grant a TRO, the plaintiff must demonstrate a (1) likelihood of success on the merits and (2) likelihood of irreparable harm/loss if the TRO is not granted.

Breach of Contract. With respect to Plaintiff’s claim against Johnson for breach of the contract, the Court found that Plaintiff had not shown a likelihood of success on the merits because Plaintiff had not shown that the agreement was supported by valuable consideration. The agreement was signed after Johnson was already employed and there was no evidence that new consideration was paid. With respect to the breach of contract claims against the other two former employees, the Court found that Plaintiff had not shown a likelihood of success on the merits regarding the non-compete because it appeared overbroad and unenforceable. The non-compete prohibited future participation in “services,” the definition of which was broad and ambiguous. Further, the territorial limitation included states in which the former employees had not worked. However, with respect to the non-solicitation agreement, the Court found that Plaintiff had shown a legitimate business interest in protecting itself against solicitation of its employees by former employees and had presented evidence that the former employees had breached the non-solicitation agreements.

Tortious Interference with Contract. The Court found that Plaintiff had shown a likelihood of success on its tortious interference with contract claim due to (1) Navigate knowing that its employees were bound by restrictive covenants with Mark Spain, and (2) allegations that Navigate had engaged in a coordinated raiding scheme to poach employees and harm Mark Spain.

Irreparable Harm and Balancing of the Equities. Because Plaintiff moved quickly in seeking injunctive relief and had shown that it would likely continue to lose employees, the Court found that Plaintiff had adequately shown the potential for irreparable harm. Further, the balance of equities weighed in favor of injunctive relief because an injunction against further solicitation of employees would not cause any significant harm to defendants.

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Brooks v. Piedmont Hardware Lumber Co., Inc., 2026 NCBC Order 54 (N.C. Super Ct. June 4, 2026) (Robinson, C.J.)

Key Terms: N.C.G.S. § 7A-45.4(a); order on designation; N.C.G.S. § 7A-45.4(d)(1); contemporaneous filing; Rule 5(b)

Plaintiffs filed suit seeking judicial dissolution of the defendant company and alleging breach of fiduciary duties by the individual defendant. They filed their verified complaint at 4:51 P.M. on May 26, 2026. At 5:30 P.M., they filed a notice of designation and shortly after, served the NOD on the Chief Justice and the Business Court.

N.C.G.S. § 7A-45.4(d)(1) requires parties to file the NOD and the complaint contemporaneously. The Court ruled, consistent with Rule 5(b) and BCR 3.6, that any filing submitted past 5:00 P.M. is deemed to have been sent on the next business day. Accordingly, because Plaintiffs filed the complaint and the NOD on different filing dates, the filings were not contemporaneous and designation to the Business Court was improper. The Court noted that this type of filing error can be avoided by e-filing both documents in the same “envelope.”

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Indep. Infrastructure Co. v. View Cap. Mgmt., LLC, 2026 NCBC Order 55 (N.C. Super Ct. June 10, 2026) (Robinson, C.J.)

Key Terms: N.C.G.S. § 7A-45.4(a)(9); conditional notice of designation; amount in controversy; supplement to the conditional notice of designation

Shortly after defendants filed their answer and counterclaims, plaintiffs filed a conditional notice of designation pursuant to N.C.G.S. § 7A-45.4(a)(9), and subsequently filed a supplement notifying the court that all parties consented to designation. However, to satisfy the requirements of subsection (a)(9), the pleading on which the designation is based must provide a path whereby the Court can clearly determine that the amount in controversy requirement of $1,000,000 is met. Here, though, plaintiffs attempted to rely on the complaint to satisfy the amount in controversy, rather than the counterclaims upon which they based designation. As such, designation to the Business Court was improper.

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McCarron v. Howell, 2026 NCBC Order 56 (N.C. Super Ct. June 11, 2026) (Davis, J.)

Key Terms: preliminary injunction; appointment of receiver; Uniform Voidable Transactions Act; likelihood of success; balancing of equities, Rule 65; irreparable harm; N.C.G.S. § 39-23.4(b)(6)

In a previous lawsuit, a final judgment was entered against the corporate defendant in excess of $300,000. Thereafter, plaintiff filed the present action alleging that defendant had engaged in a series of fraudulent transactions to prevent plaintiff from collecting on the judgment. Plaintiff then moved for a preliminary injunction to enjoin further asset transfers and for the appointment of a receiver to manage the defendant corporations.

Preliminary Injunction: Plaintiff had shown a likelihood of success on the merits of its claim for fraudulent transfer under the Uniform Voidable Transactions Act because there was evidence of several of the badges of fraud in N.C.G.S. § 39-23.4(b), including that the assets were transferred to insiders, that the assets and the transfers were concealed from plaintiff, that defendant had absconded by allowing itself to be administratively dissolved, and that the transfers were made after debtor had been sued and/or while it was insolvent. The Court also found that there was a likelihood of irreparable harm because plaintiff would not be capable of being remedied solely by an award of money damages if defendant’s assets continued to be depleted through further transfers and there was evidence in the record that defendants intended to continue making the transfers. The Court also found that the balance of equities weighed in favor of an injunction due to the amount and frequency of the asset transfers, and the false representations made concerning those transfers.

The Court deemed a $100,000 bond necessary to protect the Defendants’ interests.

Appointment of Receiver: Lastly, based on the evidence of record, the Court appointed a receiver to take control of the assets of the corporate defendants to prevent further asset transfers during the pendency of the litigation.

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Watts Guerra LLC v. Series 1 of Oxford Ins. Co. NC LLC, 2026 NCBC Order 57 (N.C. Super Ct. June 13, 2026) (Earp, J.)

Key Terms: motion to compel; fee agreement; relevance; privilege; Rule 26; murvin test; subject matter waiver

Plaintiff initiated this lawsuit against its insurer, alleging, inter alia, that Defendant had engaged in a deliberate scheme to delay any claim by Plaintiff on the insurance policies. During discovery and following completion of the BCR 10.9 process, Defendant moved to compel Plaintiff to produce the following documents: (1) emails discussing the terms of an engagement agreement with drafts of the agreement attached; (2) emails between Plaintiff, its counsel, and third parties, and (3) emails between Plaintiff and its counsel regarding litigation strategy. Plaintiff objected on relevance and attorney-client privilege grounds.

Fee Agreement. Consistent with persuasive federal authority, the Court determined that Plaintiff’s engagement agreement with counsel and related communications were not privileged except with respect to a single sentence outlining the substantive work to be performed. Although Plaintiff disclosed some of the information in the engagement agreement to Defendant during negotiations, this did not constitute a waiver of privilege for the entire agreement because the disclosures were made during negotiations for a business solution and were not made to obtain a litigation advantage.

Emails with Third Parties. These emails were not privileged because they were not made in confidence and included multiple third parties. Further, they were relevant because they related to the parties’ competing explanations for the delays in the claim filing process.

Emails Regarding Litigation Strategy. These emails were protected by the attorney-client privilege because they contained advice of counsel and pertained to litigation strategy.

Because Plaintiff’s opposition to producing the majority of the documents was not substantially justified, the Court ordered Plaintiff to pay Defendant’s reasonable expenses in obtaining the order.

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 06/16/26

N.C. Business Court Opinions, May 20, 2026 – June 2, 2026

By: Romney Harris, Amanda Reader, and Ashley Oldfield

Wright v. LoRusso, 2026 NCBC 48 (N.C. Super. Ct. May 21, 2026) (Conrad, J.)

Key Terms: notice of appeal; N.C. R. App. P. (3)(a), (c)(1); time for taking Appeal; N.C.G.S. § 7A-27(a)

As summarized here, the Court previously entered a final judgment in this case and awarded damages to Defendant. Plaintiff, proceeding pro se, subsequently filed a notice of appeal through the Court’s e-filing system giving notice of appeal to the North Carolina Court of Appeals. The Court dismissed the appeal because 1) Plaintiff did not file his notice of appeal with the clerk of superior court as required by Appellate Rule 3 and the time to do so had expired; and 2) Plaintiff appealed to the wrong court since N.C.G.S. § 7A-27(a) requires that an appeal in a case designated as a mandatory complex business case shall be taken to the North Carolina Supreme Court.

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Overton Row Holdings, LLC v. CW Constr. & Dev., LLC, 2026 NCBC 49 (N.C. Super. Ct. June 2, 2026) (Houston, J.)

Key Terms: motion for summary judgment; motion to accept late filing; case management order; dual filing on Odyssey and Alpine; BCR 7.1; BCR 7.10

The parties’ deadline to file any dispositive motions was 21 May 2026. At approximately 5:30pm on that date, Defendant AGA Stucco filed its motion for summary judgment, brief, and supporting exhibits with the clerk of superior court via Odyssey. Six days later, AGA Stucco filed its motion for summary judgment, a brief, and certain supporting exhibits with the Business Court via Alpine; however, the brief filed was not the correct brief. The following day, AGA Stucco filed a motion requesting that the Court accept its motion for summary judgment and related filings as timely filed.

In its discretion, and pursuant to BCR 7.1(c) and 7.10, the Court denied the motion for summary judgment because it was not timely filed on Alpine (or even on Odyssey) and the correct supporting brief had yet to be filed on Alpine. The Court also denied the motion to accept the late filings because AGA Stucco did not provide any valid basis for the requested relief.

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Kadah v. Paladin Drones, Inc., 2026 NCBC 50 (N.C. Super. Ct. June 2, 2026) (Houston, J.)

Key Terms: emergency response drones; Rule 12(b)(6); breach of contract; misappropriation of trade secrets; defamation; tortious interference with prospective economic advantage

This action involves a dispute between Kadah and his former employer, Paladin Drones, Inc. Kadah moved under Rule 12(b)(6) to dismiss the counterclaims asserted against him by Paladin.

Breach of Contract. Paladin alleged that Kadah breached his employment agreement by 1) sharing confidential information with third parties in violation of the non-disclosure provisions of the agreement; and 2) deleting information from his company computer. The Court found these allegations sufficient to state a claim under notice pleading. Paladin also alleged that Kadah breached his non-compete agreement, which prohibited Kadah from competing nationwide for one year, including by participating in any activity where he contributes his knowledge “directly or indirectly” to a competitor in the public safety sector. The Court concluded that, under governing Texas law, these restrictions were unreasonable as a matter of law. Accordingly, the Court dismissed the claim for breach of the non-compete agreement.

Misappropriation of Trade Secrets. Paladin alleged misappropriation of trade secrets based on six categories of information. The Court dismissed the claim with respect to Paladin’s prospective customer list, its investor list, and the identities of the partners on its partner list because Paladin failed to plead facts suggesting that this information was not readily available through independent development. However, the claim otherwise survived because Paladin had adequately pleaded 1) trade secrets with respect to its customer list, the pricing information on its partner list, its go-to-market strategy, and its technology strategy; and 2) acts of misappropriation based on Kadah’s access to the information, his sharing it with third parties, and his retention of it after his employment ended.

Tortious Interference with Prospective Economic Advantage. Paladin alleged that 1) Kadah interfered with its prospective economic opportunities with three specific entities by making misrepresentations to them and disclosing Paladin’s alleged trade secrets, all in an effort to undercut those entities’ potential investments in Paladin; 2) that Kadah did so with the specific intent of harming Paladin and to benefit himself; and 3) that Kadah’s actions did, in fact, interfere with these opportunities. The Court found that these allegations were sufficient to state a claim.

Defamation. Paladin alleged that Kadah made defamatory statements to specific third parties in which he “alleged, in substance, that Paladin was being financially mismanaged and that its CEO was not competent.” The Court dismissed the claim because this “high-level paraphrase” of Kadah’s statements lacked the requisite particularity to state a claim.

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SCOR Glob. Life Ams. Reinsurance Co. v. Brighthouse Life Ins. Co., 2026 NCBC Order 51(N.C. Super Ct. May 20, 2026) (Davis, J.)

Key Terms: arbitration agreement; petition to enforce arbitration agreement; declaratory judgment; umpire selection process; candidate nomination; common candidate; contract interpretation; plain language; agreed method; arbitrator appointment; N.C.G.S. § 1-569.11(a); Federal Arbitration Act; North Carolina Revised Uniform Arbitration Act; retention of jurisdiction

Insurer Brighthouse and reinsurer SCOR entered into yearly agreements governing their business relationship. After a dispute arose regarding their rights and obligations under a spring 2025 contract, the parties executed an arbitration agreement to resolve it. The agreement provided for a three-member arbitration panel, with each side selecting one arbitrator and the third arbitrator, or umpire, to be selected through a ranking process in which each party nominated six different candidates. After exchanging candidate lists, the parties discovered that one nominee appeared on both lists. SCOR petitioned to enforce the arbitration agreement, while Brighthouse sought a declaratory judgment that the agreement required twelve distinct candidates and that the agreed selection procedure therefore could not proceed.

The Court rejected Brighthouse’s interpretation of the arbitration agreement. The Court concluded that the agreement required each party to nominate six different candidates on its own list, but did not require the combined pool to consist of twelve different individuals. Because the agreement used the word “different” only to describe each party’s six nominees, the Court determined that Brighthouse’s proposed reading would add language the parties did not include.

The Court further concluded that ordinary North Carolina contract-construction principles did not permit it to rewrite the parties’ agreement to address the shared-candidate issue. In the Court’s view, if the parties intended to require twelve unique candidates or to adopt a special procedure for handling a common nominee, they could have included such language in the agreement.

The Court also rejected Brighthouse’s argument that SCOR’s interpretation produced an absurd result. The Court determined that there was nothing unreasonable about allowing a common candidate to remain in the selection process where both parties had independently identified that person as fair and qualified. Accordingly, the Court directed the parties to continue the umpire-selection process under the agreement, with the shared nominee remaining on both lists, and retained jurisdiction.

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Davis v. HCA Healthcare, Inc., 2026 NCBC Order 52 (N.C. Super Ct. May 21, 2026) (Davis, J.)

Key Terms: Rule 53; referee; motions to seal; sealing procedure; BCR 5.2; public access to records; findings of fact and conclusions of law; objections to referee’s orders; waiver; protective order; confidential information; ex parte communications; judicial discretion; Chapter 75

Plaintiffs brought this putative class action, alleging that Defendants’ ownership and operation of health care facilities in and near Asheville, North Carolina, violated Chapter 75 through anticompetitive conduct in the provision of inpatient and outpatient services. After the parties filed numerous motions to seal, the Court determined that the motions should be referred to a referee under Rule 53. When the parties could not agree on a referee, the Court appointed one with the authority to resolve all pending and future motions to seal, oversee compliance with the Court’s sealing orders, and handle related matters as directed by the Court. The Court set forth the referee’s role, the procedures to be followed for the referee to enter orders and for the parties to object to said orders, and the referee’s compensation.

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Shively v. ACI Learning Holdings, LLC, 2026 N.C. LEXIS 486, 2026 WL 1459065 (May 22, 2026) (per curiam)

Key Terms: affirmed; personal jurisdiction; interlocutory appeal

As summarized here, the Business Court denied Defendants’ motions to dismiss for lack of personal jurisdiction and for failure to state a claim. The Supreme Court affirmed, per curiam.

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Relation Ins., Inc. v. Pilot Risk Mgmt. Consulting, LLC, 2026 N.C. LEXIS 493, 2026 WL 1459402 (May 22, 2026) (Barringer, J.)

Key Terms: reversed; summary judgment; trade secret misappropriation, nonsolicitation agreement; unjust enrichment; computer trespass; Computer Fraud and Abuse Act; spoliation of evidence; adverse inverse

Plaintiff Relation Insurance sued a group of its Former Employees and their new employer, Pilot Risk, contending that they unlawfully used Relation’s confidential information and trade secrets to solicit employees and clients for Pilot Risk’s benefit. As summarized here, the Business Court previously granted partial summary judgment in favor of Defendants on Plaintiffs’ claims for trade secret misappropriation, breach of nonsolicitation agreements, breach of settlement agreement, unjust enrichment, and violation of the federal Computer Fraud and Abuse Act. Plaintiffs appealed.

The Supreme Court affirmed the court’s grant of plaintiffs’ motion for adverse inference based on the Former Employees’ spoliation of evidence, but remanded the issue for the court to clarify, with greater precision, its application of the inference as to each claim.

The Court then reversed the grant of summary judgment on all claims except for the claim for unjust enrichment. The Court affirmed summary judgment in favor of Defendants on Plaintiffs’ unjust enrichment claim but on different grounds. Plaintiffs’ claim was based on the Former Employees taking or wrongfully retaining Relation’s information and giving it to Pilot Risk. Thus, there was no willing transfer—i.e., no conferral of a benefit—and therefore no claim for unjust enrichment.

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Langley v. Autocraft, Inc., 2026 N.C. LEXIS 500, 2026 WL 1459425 (May 22, 2026) (Barringer, J.)

Key Terms: modified and affirmed; illusory consideration; void for indefiniteness; quasi-estoppel; mend the hold doctrine; unjust enrichment

This case involves a dispute over whether Plaintiff was entitled to a 10% ownership interest in Defendant Autocraft, Inc., pursuant to the terms of a written agreement. As summarized here, the Business Court previously granted summary judgment in favor of Defendants on the basis that the consideration for the agreement was illusory. The Supreme Court affirmed the Business Court’s order but on different grounds—summary judgment in favor of Defendants was appropriate because the agreement was void for indefiniteness. The Court also rejected Plaintiff’s arguments based on the doctrines of quasi-estoppel and mend the hold.

The dissent would have remanded the case for evaluation of an unjust enrichment claim.

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 06/02/26