N.C. Business Court Opinions, January 28, 2026 – February 10, 2026
By: Lauren Schantz
Child Care Inc. v. LJ Schs. (Carolina), Inc., 2026 NCBC 8 (N.C. Super. Ct. Feb. 6, 2026) (Brown, J.)
Key Terms: cross-motions for summary judgment; asset purchase agreement; breach of contract; breach of the duty of good faith and fair dealing; declaratory judgment; clear and unambiguous; arms-length negotiations; extrinsic evidence; illusory; dictionaries; part and parcel
This action arises out of a dispute over the interpretation of a provision in an Asset Purchase Agreement. Pursuant to the APA, LJ Schools purchased childcare facilities and other assets from Plaintiffs. The purchase price included a contingent payment of up to $6 million to be calculated based on a specified formula. The APA gave LJ Schools the sole discretion to determine the specific variables in the formula. At the end of the relevant period, Plaintiffs contended that they were owed the full $6 million; LJ Schools determined that Plaintiffs were owed nothing.
Plaintiffs sued LJ Schools, asserting claims for breach of contract, breach of the duty of good faith and fair dealing, and declaratory judgment. The parties filed cross-motions for summary judgment on all claims. The sole issue before the Court was to determine the amount of the contingent payment Plaintiffs were entitled to under the APA, which depended upon the meaning and interpretation of a single term.
LJ Schools’s Motion for Summary Judgment.
Breach of Contract. The Court first concluded that the terms of the APA were clear and unambiguous and the result of arms-length negotiations between the parties, making the consideration of extrinsic evidence unnecessary. Plaintiffs argued that the provision granting LJ Schools sole discretion to determine the specific variables in the relevant formula made the APA illusory. The Court disagreed, holding that LJ Schools was limited by the implied covenant of good faith and fair dealing when exercising its discretion. The Court further concluded that LJ Schools properly exercised its discretion to define and interpret an undefined term through the use of dictionaries. Plaintiffs failed to put forth any evidence of bad faith by LJ Schools, so the Court determined that LJ Schools was entitled to summary judgment on this claim.
Breach of the Duty of Good Faith and Fair Dealing and Declaratory Judgment. Because these claims were part and parcel of Plaintiffs’ breach of contract claim, the Court concluded that LJ Schools was entitled to summary judgment on these claims.
Plaintiffs’ Motion for Summary Judgment. Because Plaintiffs’ motion was based on the same claims and arguments, the Court denied it in its entirety.
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Hughes v. JBS Ventures, LLC, 2026 NCBC 9 (N.C. Super. Ct. Feb. 9, 2026) (Brown, J.)
Key Terms: judgment on the pleadings; Rule 12(c); LLC; membership interest; statute of limitations; conflict of laws; declaratory judgment; N.C.G.S. § 1-253; constructive trust; judicial dissolution; N.C.G.S. § 57D-6-02; standing; subject matter jurisdiction; breach of fiduciary duty; constructive fraud; choice-of-law; internal affairs doctrine; economic loss doctrine
This action arises out of a dispute over membership interests in an LLC. According to the operating agreement for JBS, Plaintiff Hughes would acquire a 23% interest in JBS after making specified capital contributions in cash. Rather than making cash payments, Hughes alleged that equivalent amounts were deducted from his monthly distributions. For five years, JBS treated Hughes as a member of the LLC. In 2019, Joseph Lenihan, the manager and majority member of JBS, informed Hughes that Hughes had no interest in JBS due to his failure to make the required cash payments.
Three years later, Lenihan caused JBS to sell its primary project and, in connection with a separate lawsuit, the Business Court ordered $6 million of the sale proceeds to be held in trust. Lenihan died a few months later. Two years after Lenihan’s death, Hughes sued JBS, Lenihan’s estate, the trust established by the Court and its trustee, and a minority member of JBS, asserting claims for declaratory judgment, constructive trust, and judicial dissolution of JBS. Hughes later amended his Complaint to add a claim for breach of fiduciary duty/constructive fraud. Defendants moved to dismiss Hughes’ Amended Complaint pursuant to Rule 12(c), contending that Hughes’ claims were barred by the statute of limitations and/or the economic loss doctrine.
Declaratory Judgment. The Court concluded that, because Hughes sought a declaratory judgment as to his rights under JBS’s operating agreement, the three-year statute of limitations for breach of contract applied to his declaratory judgment claim. The Court further concluded that Hughes’ declaratory judgment claim accrued, at the latest, in 2019 when Lenihan informed him that he had no interest in JBS. The Court therefore determined that the declaratory judgment claim was barred by the statute of limitations and granted Defendants’ motion to dismiss this claim.
Constructive Trust. Although claims for a constructive trust have a ten-year statute of limitations, the Court determined that Hughes’ constructive trust claim arose from the operating agreement and was properly subject to the three-year statute of limitations for breach of contract. Because this claim also accrued in 2019, the constructive trust claim was barred by the statute of limitations and the Court dismissed this claim.
Judicial Dissolution. Because JBS is a Georgia LLC, the Court concluded that it did not have subject matter jurisdiction over Hughes’ claim for judicial dissolution pursuant to Georgia law and dismissed this claim.
Breach of Fiduciary Duty/Constructive Fraud. The Court determined that the three-year statute of limitations for breach of contract applied to this claim because the underlying allegations arose from Hughes’ alleged membership interest in JBS based on the company’s operating agreement. The Court further concluded that the economic loss doctrine precluded Hughes from recovering in tort for breach of fiduciary duty or constructive fraud, since both the alleged misconduct and potential remedy therefor were based on the terms of JBS’s operating agreement. The Court granted Defendants’ motion as to this claim.
The Court dismissed all claims with prejudice, except for Plaintiff’s claim for judicial dissolution, which was dismissed without prejudice.
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Longville v. Benitez Nogueras, 2026 NCBC Order 8 (N.C. Super. Ct. Jan. 29, 2026) (Conrad, J.)
Key Terms: motion to seal; settlement; redact; public documents; embarrassment; reputational harm
After reaching a settlement, the parties jointly moved to seal several documents. The Court denied the motion because the documents had been filed publicly for months and the risk of embarrassment and/or reputational harm did not warrant sealing.
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Barings LLC v. Fowler, 2026 NCBC Order 9 (N.C. Super. Ct. Jan. 29, 2026) (Conrad, J.)
Key Terms: motion to compel; BCR 10.9; privilege; discovery deadline; extraordinary cause; untimely; BCR 10.4(a); disproportionate; overly burdensome; motion to reconsider; motion for leave to amend; interlocutory order; Rule 54(b); dismissal with prejudice; facially defective claims; manifest injustice; ruling on the merits; Rule 15(a)
As summarized here, Barings sued its competitor, Defendant Corinthia Global Management Limited, and two former employees, alleging that the former employees orchestrated a mass exodus of Barings employees who then joined Corinthia and used Barings’s trade secrets and confidential information to compete with Barings. Barings filed two motions to compel Corinthia to produce certain documents and a motion to reconsider and for leave to amend its complaint.
First Motion to Compel. The Court denied Barings’s motion to compel Corinthia to produce documents withheld on the basis of privilege as untimely under BCR 10.4(a) because the motion was made weeks after the close of fact discovery, granting it would require reopening discovery, and Barings did not demonstrate extraordinary cause for its delay. That the motion to compel was filed prior to the Court’s deadline for the submission of BCR 10.9 discovery disputes did not exempt it from the timeliness and other procedural requirements of the BCRs or previous Court orders.
Second Motion to Compel. Barings sought to push back the date range for Corinthia’s document production at the end of the discovery period. The Court denied the motion, concluding that the request was disproportionate to the needs of the case and overly burdensome for Corinthia at this late stage of the case.
Motion to Reconsider and for Leave to Amend. Barings moved the Court to reconsider its earlier ruling on its former employees’ motion to dismiss, modify the order to dismiss claims without prejudice rather than with prejudice, and grant Barings leave to amend its complaint for a third time. The Court denied the motion, concluding that (1) Barings failed to cure any facially defective claims asserted against the former employees when it filed an amended complaint and was not entitled to a third attempt; (2) a denial of Barings’s motion would not result in manifest injustice; (3) because a dismissal with prejudice is a ruling on the merits, Barings cannot seek leave to amend under Rule 15(a); and (4) Barings unreasonably delayed seeking leave to amend.
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WP Church, LLC v. Whalen, 2026 NCBC Order 10 (N.C. Super. Ct. Jan. 29, 2026) (Davis, J.)
Key Terms: restaurants; disqualification; inherent authority; sua sponte; derivative action; dual representation; N.C. R. Prof. Cond. 1.7; concurrent conflict of interest; N.C. R. Prof. Cond. 1.13; self-dealing; misappropriation; conflict of interest transaction; filings stricken
As previously summarized here, Plaintiff WP Church sued Defendant Whalen, the sole manager of 5Church Charleston, derivatively on behalf of 5Church based on Whalen’s alleged self-dealing and misappropriation of 5Church’s assets. 5Church then filed a third-party complaint and crossclaims against WP Church and others. Since the initiation of the lawsuit, the same law firm represented both Whalen and 5Church.
The Court, pursuant to its inherent authority, sua sponte directed the parties to submit briefs to determine whether Rules 1.7 and 1.13 of the Rules of Professional Conduct permitted the same firm to represent both Whalen and 5Church in this derivative action. The Court concluded that dual representation in a derivative action of a company and its principal(s) was permissible unless claims of serious wrongdoing, such as fraud, theft, self-dealing, or conflict of interest transactions, were asserted against a director or manager.
Whalen and 5Church argued that disqualification was improper, contending that they were not given proper notice of the grounds for disqualification, the declaration submitted by their law firm permitted dual representation, and plaintiffs in derivative actions should not be able to obtain disqualification by using “buzzwords” to describe director or manager wrongdoing. The Court found that each of these arguments lacked merit.
The Court concluded that, based on the numerous, well-pleaded allegations of self-dealing and misappropriation of 5Church’s assets asserted against Whalen, a single law firm could not represent both Whalen and 5Church. The Court then struck all filings made on behalf of 5Church, dismissed WP Church’s motion to dismiss 5Church’s third-party complaint as moot, and directed the parties to file a copy of this order with the Supreme Court of North Carolina once the appeals previously noticed by 5Church and Whalen were docketed.
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Charles Schwab & Co. v. Marilley, 2026 NCBC Order 11 (N.C. Super. Ct. Jan. 30, 2026) (Earp, J.)
Key Terms: interpleader; Uniform Transfer to Minors Act; sanctions; Rule 11; attorneys’ fees; N.C.G.S. § 6-21.5; crossclaim; Rule 7(a); Rule 8; preponderance of the evidence; factually insufficient; legally insufficient; improper purpose; complete absence of justiciable facts
As previously summarized here, Charles Schwab & Co. initiated this interpleader action to determine the ownership of funds it held in a brokerage account. The Court granted Ms. Marilley’s summary judgment motion, declaring her the rightful owner of the disputed funds to the exclusion of her father, Mr. Marilley, and dismissing Charles Schwab from the lawsuit. Ms. Marilley then moved for attorneys’ fees as a sanction under Rule 11 and pursuant to N.C.G.S. § 6-21.5.
Mr. Marilley argued that he should not be subject to sanctions or liable for attorneys’ fees because he did not assert any claims in the litigation. The Court disagreed, noting that Rule 11 and N.C.G.S. § 6-21.5 apply to any “pleading,” including an answer to a crossclaim, and emphasizing that it was Mr. Marilley’s refusal to recognize Ms. Marilley’s sole ownership of the disputed funds that gave rise to the action.
Rule 11 Sanctions. The Court determined that, based on a preponderance of the evidence, (1) Mr. Marilley lacked a reasonable belief that his wholesale denials of entire paragraphs of Ms. Marilley’s amended crossclaim were well-grounded in fact at the time he filed his answer; (2) he lacked a legally sufficient basis to assert any claim of ownership over the disputed funds; (3) his claim of ownership to the disputed funds was improper; and (4) Mr. Marilley intended to use such improper claim to harass Ms. Marilley and cause her unnecessary delay and needless cost. Because Mr. Marilley had an improper purpose for filing an answer that was both factually and legally insufficient, the Court concluded that Mr. Marilley had violated Rule 11 and that payment of Ms. Marilley’s attorneys’ fees incurred as a result of Mr. Marilley filing his answer was an appropriate sanction.
Attorneys’ Fees Under N.C.G.S. § 6-21.5. The Court concluded that Mr. Marilley reasonably should have known that no justiciable issue remained for him to litigate after the Court’s entry of its 8 October 2025 order and, in its discretion, awarded Ms. Marilley attorneys’ fees for all fees incurred since the entry of that order.
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Brady v. Cobin L. Grp., PLLC, 2026 NCBC Order 12 (N.C. Super. Ct. Jan. 30, 2026) (Davis, J.)
Key Terms: leave to amend; law firm; Rule 15; freely given when justice so requires; futility; declaratory judgment; subject matter jurisdiction; North Carolina Rules of Professional Conduct; North Carolina State Bar; joinder of necessary parties; N.C.G.S. § 1-260
This matter arises from an employment dispute between an attorney and his former firm. Plaintiff Brady sold his membership interest and goodwill in Defendant Cobin Law Group to Defendant Cobin pursuant to certain agreements. Brady then entered into an employment agreement with Cobin Law Group. After raising concerns about the firm’s accounting practices, Brad’s employment was terminated. Brady sued Cobin Law Group and Cobin for breaches of the various agreements, among other claims. After Defendants filed a partial motion to dismiss, answer, and counterclaims, Brady moved to amend his complaint under Rule 15.
Defendants opposed Brady’s motion based on futility. Defendants first contended that the Court lacked subject matter jurisdiction to hear Brady’s two declaratory judgment claims because they concerned the North Carolina Rules of Professional Conduct, which fell under the purview of the North Carolina State Bar. The Court disagreed, rejecting Defendants’ argument that the North Carolina State Bar had concurrent jurisdiction over these claims and noting that the parties agreed to make compliance with certain of the Rules of Professional Conduct a contractual obligation under the employment agreement.
The Court rejected Defendants’ argument that joinder of all of Brady’s clients for the past 20 years as necessary parties was required. The Court also disagreed with Defendants’ assertion that Brady’s declaratory judgment claims improperly sought judicial declarations as to disputed facts and concluded instead that Brady properly sought judicial declarations of the application of law to facts. The Court declined to address Defendants’ final argument that certain claims failed as a matter of law, determining that a fuller record and more extensive briefing was necessary.
The Court granted Brady’s motion for leave to amend.
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Fortune Brands Innovations, Inc. v. Bleser, 2026 NCBC Order 13 (N.C. Super. Ct. Feb. 4, 2026) (Robinson, C.J.)
Key Terms: order on designation; mandatory complex business case; amended complaint; N.C.G.S. § 7A-45.4(a)(8); misappropriation of trade secrets; new material issue; untimely; procedural shortcomings; breach of fiduciary duty; N.C.G.S. § 7A-45.4(a)(1); contemporaneous service; N.C.G.S. § 7A-45.4(c)
As previously discussed here, the Court concluded that Plaintiff Fortune Brands’s attempt to designate this matter as a mandatory complex business case under N.C.G.S. § 7A-45.4(a)(1) in October 2025 was untimely because the Notice of Designation was not filed contemporaneously with its complaint.
Fortune Brands filed an amended complaint in December 2025, adding claims for misappropriation of trade secrets and breach of fiduciary duty. Defendant Bleser sought to designate the matter as a mandatory complex business case under N.C.G.S. § 7A-45.4(a)(8) based on the misappropriation of trade secrets claim. The Court determined that Bleser’s basis for designation rested on the same conduct and facts as those set forth in the original complaint. Because the amended complaint did not raise a new material issue on which to base designation, the Court concluded that Bleser’s Notice of Designation, filed more than 30 days after the original complaint, was untimely.
The Court then addressed additional procedural shortcomings: (1) when the Court determined that Fortune Brands’s designation was untimely in October 2025, Bleser still had sufficient time to seek designation based on the original complaint and failed to do so; (2) since Bleser did not seek designation based on the newly-asserted breach of fiduciary duty claim, the Court declined to consider it as a basis for designation; and (3) Bleser filed his Notice of Designation prior to 5:00 P.M. but he did not email the Notice of Designation to the Chief Business Court Judge and the Chief Justice of the Supreme Court of North Carolina until after 5:00 P.M., thereby failing to comply with the requirement for contemporaneous service in N.C.G.S. § 7A-45.4(c).
The case was not designated as a mandatory complex business case.
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Brock v. Kyryk, 2026 NCBC Order 14 (N.C. Super. Ct. Feb. 5, 2026) (Houston, J.)
Key Terms: strike; notice of voluntary dismissal; putative derivative proceeding; N.C.G.S. § 55A-7-40; North Carolina Nonprofit Corporation Act; Rule 41
Although Plaintiffs purported to dismiss all claims asserted in this matter by filing a notice of voluntary dismissal, the action was brought pursuant to N.C.G.S. § 55A-7-40, the statute governing derivative proceedings in the North Carolina Nonprofit Corporation Act. Because a derivative proceeding may only be dismissed with approval of the Court, Plaintiffs’ purported dismissal of the action was ineffective under Rule 41. The Court struck Plaintiffs’ purported notice of voluntary dismissal and reopened the case.
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Mary Annette, LLC v. Crider, 2026 NCBC Order 15 (N.C. Super. Ct. Feb. 5, 2026) (Houston, J.)
Key Terms: motion to withdraw; limited appearance; Gen. R. Practice Super. & Dist. Cts. 12, 16; ex parte communications; scope of representation; BCR 3.6; BCR 6.4; BCR 7.3; N.C. R. Prof. Conduct 1.1, 1.2(c), 3.5(a)(3); general appearance; unprofessional; North Carolina State Bar
Counsel purported to make a limited appearance on behalf of Defendant Gina Crider for the purpose of filing a motion to dismiss. The action was later designated as a mandatory complex business case and the Court provided all counsel of record with instructions for practicing before the Business Court through its law clerk. Counsel responded that she no longer represented Ms. Crider. The Court, again through its law clerk, informed Counsel that she was welcome to file a motion to withdraw, but until the Court permitted her to withdraw, she would remain counsel of record consistent with Rule 16 of the General Rules of Practice for the Superior and District Courts. Counsel responded by sending an ex parte email to the Senior Court Coordinator, complaining about the Court’s instructions.
When Counsel finally filed a motion to withdraw, the motion (1) failed to comply with the consultation requirement of BCR 7.3; (2) failed to reflect Counsel’s consultation with her client regarding the motion; (3) failed to provide service information for Ms. Crider; (4) failed to comply with the formatting requirements of BCR 3.6; and (5) demonstrated that Counsel failed to comply with N.C. R. Prof. Conduct 1.1. The Court requested that Counsel file a supplemental or amended motion; Counsel again responded by sending the Senior Court Coordinator an ex parte email complaining about the Court’s instructions.
The Court reiterated that while an attorney may agree with a client to limit his or her scope of representation, once an attorney makes a general appearance before the Court, the attorney may not withdraw as counsel of record without leave of the Court. The Court denied Counsel’s motion without prejudice and directed her to file a compliant motion to withdraw. The Court admonished Counsel for her improper and unprofessional conduct and directed Counsel to cease ex parte communications with the Court. The Court indicated that the North Carolina State Bar would be notified of the order.
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Tanger Props. Ltd. P’ship v. ACE Am. Ins. Co., 2026 NCBC Order 16 (N.C. Super. Ct. Feb. 9, 2026) (Davis, J.)
Key Terms: appeal; motion to stay; automatic stay; N.C.G.S. § 1-294; interlocutory order; substantial right; choice-of-law; due process; discretionary stay
As previously summarized here, Tanger Properties sued its insurers, Defendants ACE American Insurance Company and Liberty Mutual Fire Insurance Company, for denying coverage related to losses associated with the COVID-19 pandemic. Tanger Properties subsequently filed an Amended Complaint, adding allegations and claims. Defendants moved to dismiss Tanger Properties’ Amended Complaint on the basis that Georgia, not North Carolina, law applied. The Court denied the motion and Defendants appealed. Defendants then moved to stay all proceedings pending their interlocutory appeal.
Automatic Stay. Defendants argued that the Court’s ruling on the choice-of-law issue would result in a denial of their due process rights and, thus, impact a substantial right. The Court disagreed, determining that the Court’s ruling did not raise due process concerns and did not affect a substantial right because Defendants’ choice of law argument was more akin to a defense, which would be protected on appeal from a final judgment. Accordingly, the automatic stay of N.C.G.S. § 1-294 was not triggered.
Discretionary Stay. After determining that Defendants failed to demonstrate either the potential for substantial prejudice absent a stay or a substantial likelihood of success on the merits of their appeal, the Court declined to enter a discretionary stay.
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Wright v. LoRusso, 2026 NCBC Order 17 (N.C. Super. Ct. Feb. 9, 2026) (Conrad, J.)
Key Terms: pro se; summary judgment; injunctive relief; accounting; disgorgement; attorneys’ fees; remedies; sanctions
Shortly before this matter was scheduled for trial, pro se Plaintiff Jody Stansell filed a motion in which he sought multiple forms of relief. The Court denied Stansell’s motion for summary judgment and request for emergency injunctive relief as untimely, duplicative, and without merit. Stansell made a request for an accounting, a claim he had voluntarily dismissed earlier in the litigation. The Court concluded that Stansell’s requests for disgorgement and attorneys’ fees were premature because they were remedies to which he might be entitled should he prevail at trial, and that his request for sanctions was baseless. The Court denied the motion in its entirety.
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