N.C. Business Court Opinions, October 7, 2026 – October 20, 2026
Estevez v. C&S Com., LLC, 2026 NCBC 80 (N.C. Super. Ct. Oct. 19, 2026) (Houston, J.)
Key Terms:partial summary judgment; Rule 56; operating agreement; unjust enrichment; declaratory judgment; standing; controversy; unconscionability; fiduciary duty; punitive damages
As previously summarized here, this case arises from a dispute between members of Defendant C&S Commerce, LLC. Defendant Clay is the majority member and sole manager of the company. Plaintiffs are minority members and former employees of the company. Plaintiffs allege that, after rejecting Clay’s multiple attempts to purchase their membership interests, Clay terminated their employment with C&S “for cause” and demanded the forfeiture of their membership interests. Defendants moved for partial summary judgment on Plaintiffs’ (i) claim for unjust enrichment, (ii) request for a declaratory judgment concerning the validity and enforceability of various provisions of the C&S operating agreement, and (iii) request for punitive damages.
Unjust Enrichment. The Court noted that while unjust enrichment could be pled in the alternative, an express contract governing the same subject matter precludes recovery under unjust enrichment. As the operating agreement expressly governed the termination of membership interests and their transfer, the Court determined that Plaintiffs’ unjust enrichment claim should be dismissed and granted Defendants’ motion as to this claim.
Defendants’ Request for Affirmative Declaratory Relief. Defendants requested that the Court affirmatively declare that certain provisions of the operating agreement were valid and enforceable. But the Court noted that Rule 56 does not permit a party to obtain summary judgment on an affirmative claim that has not been pleaded. Because Defendants failed to plead a counterclaim seeking declaratory relief, the Court denied Defendants’ motion as to this request.
Declaratory Judgment: Standing and Actual Controversy. Defendants first sought to dismiss all but two of Plaintiffs’ requests for declaratory judgment on the basis that Plaintiffs lacked standing or otherwise failed to allege a case or controversy. The Court noted that a declaratory judgment requires an actual controversy between parties having adverse interests, and courts lack jurisdiction to issue advisory opinions. The Court determined that Plaintiffs lacked standing to seek a declaratory judgment with regard to Section 3.5 of the operating agreement, as that section dealt with duties owed to the company and Plaintiffs’ claims were brought individually rather than derivatively. The Court found no evidence of a dispute or controversy between the parties sufficient to invoke the Court’s jurisdiction over Plaintiffs’ request for a declaratory judgment as to three additional provisions in the operating agreement. The Court dismissed without prejudice Plaintiffs’ requests for declaratory relief as to these four sections.
Declaratory Judgment: Waiver of Fiduciary Duty. The Court granted Defendants’ motion as to Plaintiffs’ requests for declarations that two sections of the operating agreement violated North Carolina law by eliminating the manager’s fiduciary duties to the minority members, noting that Plaintiffs had expressly agreed to waive these duties, and the record did not contain sufficient evidence to establish that the contractual waivers were unconscionable or otherwise unenforceable.
Declaratory Judgment: Unconscionability of Membership Forfeiture Provisions. Defendants sought summary judgment on Plaintiffs’ request for a declaration that the provision of the operating agreement governing membership forfeitures was unconscionable. The Court explained that a party challenging a contract on unconscionability grounds must establish both procedural and substantive unconscionability. The Court determined that the provision was not procedurally unconscionable because Plaintiffs had several days to review the operating agreement, understood that Clay’s attorney did not represent them, and voluntarily elected not to seek independent legal counsel. The Court further determined that the provision was not substantively unconscionable because it permitted forfeiture of membership interests upon termination for cause or conviction of a felony, but required an 80% membership vote for employment termination. The Court emphasized North Carolina’s public policy favoring freedom of contract. The Court granted summary judgment in favor of Defendants as to this provision.
Declaratory Judgment: Compensation for Shares and Inspection of Records. The Court dismissed without prejudice Plaintiffs’ requests for declarations that they were entitled to compensation for the redemption of their membership interests and to inspection of C&S’s financial records, concluding that these requests were duplicative of Plaintiffs’ surviving breach of contract claim, which was based upon the same alleged conduct.
Punitive Damages. The Court granted Defendants’ motion as to Plaintiffs’ request for punitive damages. Because punitive damages are generally unavailable for a breach of contract claim—Plaintiffs’ only remaining substantive cause of action—absent an identifiable tort, the Court determined that punitive damages were unavailable to them.
*******
N.C. State Health Plan for Teachers & State Employees v. Atrium Health, Inc., 2026 NCBC Order 77 (N.C. Super. Ct. Oct. 14, 2026) (Houston, J.)
Key Terms: temporary restraining order; preliminary injunction; irreparable harm; likelihood of success on the merits; State Health Plan
This case arises from a dispute between each side’s implementation of healthcare cost-sharing programs. Plaintiffs North Carolina State Health Plan for Teachers and State Employees, Office of the North Carolina State Treasurer, and Treasurer Bradford B. Briner implemented a three-tiered Preferred Provider Program that designated most of Defendant Atrium Health, Inc.’s locations as “Non-Preferred” providers, causing Health Plan participants to incur higher cost-sharing and copays for Atrium’s services. Atrium implemented its own payment program, which permitted Atrium to collect copays or cost-sharing amounts from Health Plan participants that were lower than originally contemplated under the Health Plan. Plaintiffs sued Atrium, asserting claims for declaratory judgment, tortious interference with contract, and unfair and deceptive trade practices. Plaintiffs additionally sought a temporary restraining order to (i) enjoin Atrium from advertising or implementing its program; (ii) require Atrium to remove certain statements from its promotional materials; and (iii) declare that Atrium’s program unlawfully interferes with and usurps the Treasurer’s statutory authority.
The Court denied Plaintiffs’ motion for a temporary restraining order. The Court noted that such orders are extraordinary remedies generally intended to preserve the status quo rather than determine the ultimate rights of the parties. Although the Court acknowledged the seriousness of Plaintiffs’ potential harm, including the threat to the structural and financial viability of the Health Plan, the Court also noted that such harm was primarily financial in nature, and that Plaintiffs’ complaint acknowledged that such a threat existed prior to Atrium’s implementation of the competing plan. As such, an adequate remedy at law was likely to exist. Concluding that Plaintiffs had failed to demonstrate a reasonable likelihood of success on the merits, a likelihood of irreparable harm resulting from Atrium’s conduct, or that an injunction was otherwise necessary to preserve Plaintiffs’ rights during litigation, the Court denied the motion.
*******
Song v. Probst, 2026 NCBC Order 78 (N.C. Super. Ct. Oct. 14, 2026) (Conrad, C.J.)
Key Terms: order on designation; mandatory complex business case; N.C.G.S. § 7A-45.4(a)(1); limited liability company
This case arises from a dispute between members of a limited liability company regarding the enforcement of buy-sell provisions contained in the company’s operating agreement. Plaintiffs brought suit against Defendant, asserting claims for declaratory judgment, breach of contract and specific performance, breach of the implied covenant of good faith and fair dealing, and unjust enrichment and restitution. Plaintiffs filed a Notice of Designation, seeking designation of the case as a mandatory complex business case pursuant to N.C.G.S. § 7A-45.4.
The Court concluded designation was improper. The Court first noted that Plaintiffs’ Notice of Designation failed to identify the specific statutory subsection under which designation was sought, and contained conflicting references to subsections (a)(1) and (b)(4). The Court emphasized that it is the designating party’s responsibility to certify that the case meets the statutory criteria for designation, and the Court cannot correct or complete an insufficient certification on the party’s behalf. The Court further held that, even if Plaintiffs had properly sought designation under N.C.G.S. § 7A-45.4(a)(1), the claims were grounded in contract law rather than the law governing limited liability companies. The Court therefore determined that the case was not properly designated under N.C.G.S. § 7A-45.4(a), without prejudice to the parties’ right to seek designation as otherwise permitted by statute.
*******
Cherry v. Mauck, 2026 NCBC Order 79 (N.C. Super. Ct. Oct. 15, 2026) (Conrad, C.J.)
Key Terms: receivership; motion to approve sale; stalking horse bidder; business judgment rule; auction procedures; N.C.G.S. § 1-507.46
This case arises out of a management dispute in two family businesses—AJAL and C-Gas. As summarized here, the Court previously determined that C-Gas was dissolved pursuant to its operating agreement and subsequently placed C-Gas into receivership to liquidate its assets and wind up its affairs. C-Gas, which primarily operated as a holding company, owned vehicles, customer lists, propane tanks, and other equipment that was leased to Cherry Oil Company, Inc. pursuant to a long-term master lease agreement.
The receiver moved for approval of proposed auction procedures for C-Gas’s assets, with Plaintiff Cherry serving as the stalking horse bidder with an offer of approximately $1.8 million. Defendant Mauck timely objected to the proposed sale process, arguing that, because the master lease with Cherry Oil was C-Gas’s most valuable asset, the receiver should market the leasing rights alongside the physical assets to maximize the return to the estate. Mauck also argued that the proposed bidding procedures would discourage competing bidders and allow Cherry to purchase the assets at a discounted price.
The Court overruled Mauck’s objections and noted that, although N.C.G.S. § 1-507.46 requires court approval for sales of receivership property outside the ordinary course of business, the statute does not establish a standard for approving such sales. Using bankruptcy law as an analog, the Court applied the business judgment standard to the receiver’s motion. The Court determined that the receiver’s proposed stalking horse auction satisfied this standard, noting that Cherry’s offer established a minimum sale price while allowing other bidders to submit higher offers. The Court further highlighted that the offer resulted from an arm’s-length negotiation, and that the proposed auction provided additional benefits to the receivership estate, including the absence of a break-up fee and a significantly reduced auctioneer commission if no competing bids were received. The Court further rejected Mauck’s argument that the master lease with Cherry Oil should be marketed alongside the physical assets, noting the uncertainty created by adding the lease and abandoning Cherry’s stalking horse bid. The Court granted the receiver’s motion with slight modifications to the bidding procedures.
*******
Estevez v. C&S Com., LLC, 2026 NCBC Order 80 (N.C. Super. Ct. Oct. 16, 2026) (Houston, J.)
Key Terms: motion to seal; confidentiality; BCR 5.2; BCR 5.1; harm; disclosure
Plaintiffs moved to seal documents designated as confidential by Defendants that Plaintiffs filed in connection with their motion for leave to amend. Although Plaintiffs contended that the documents contained sensitive, non-public business information, they failed to identify any specific harm that would result from their disclosure and represented that they would have filed the documents publicly had Defendants consented. Defendants opposed filing the documents publicly, but did not file a brief in support of sealing as permitted by BCR 5.2(c).
The Court noted that, under BCR 5.1, the party seeking to seal documents bears the burden of establishing the need for confidentiality. The Court determined that neither Plaintiffs nor Defendants had presented sufficient evidence that public disclosure of the documents would result in serious harm to the parties or third parties. Observing that a substantial portion of the allegedly confidential information was already publicly available in Plaintiffs’ original motion for leave to amend, the Court denied the motion and ordered that the documents be unsealed.
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.