N.C. Business Court Opinions, March 11, 2026 – March 24, 2026

Ordoñez Cordero v. Ordoñez Cordero, 2026 NCBC 20 (N.C. Super. Ct. Mar. 10, 2026) (Houston, J.)

Key Terms: motion to dismiss; BCR 7.2

Defendant included a one paragraph “motion to dismiss” pursuant to Rule 12(b)(6) in his answer and identified it as an initial motion for the Court’s consideration in the parties’ case management report. The motion failed to comply with Business Court Rule 7.2’s requirement that motions be set out in a separate document and accompanied by a brief and the Court therefore summarily denied it.

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PCS Phosphate Co. v. Jacobs Eng’g Grp., Inc., 2026 NCBC 21 (N.C. Super. Ct. Mar. 11, 2026) (Houston, J.)

Key Terms: motion to dismiss; Rule 12(b)(6); group pleading; breach of contract; breach of warranty; professional negligence; economic loss rule; extra-contractual duty

Plaintiff PCS Administration and Defendant Jacobs Engineering Group, Inc. entered into an agreement for the supply of engineering and professional services related to the design and construction of an anhydrous hydrogen fluoride plant in Aurora, North Carolina. Plaintiffs allege that Jacobs breached said agreement, among others, and did not have the adequate experience necessary to build the plant resulting in costly delays and lost opportunities. Jacobs moved to dismiss Plaintiffs’ causes of action against Jacobs for (i) breach of contract, (ii) breach of warranty, and (iii) professional negligence.

Breach of Contract – PCS Phosphate. Plaintiffs PCS Administration and PCS Phosphate jointly pleaded breach of contract against Jacobs for breach of an agreement that only PCS Administration was a party and signatory to. Because PCS Phosphate was not a party to that agreement and therefore had no enforcement rights thereunder, the Court dismissed the claim for breach of contract to that extent. However, because PCS Phosphate entered into purchase orders with Jacobs that purportedly incorporated the terms of the agreement between Jacobs and PCS Administration, the Court found that the amended complaint, although riddled with conclusory assertions and improper group pleading, satisfied the notice pleading requirements to state a claim for breach of contract based on the purchase orders and denied the motion to dismiss those portions of the claim.

Breach of Contract – PCS Administration. Jacobs argued that PCS Administration failed to allege damages related to the alleged breach of the contract between Jacobs and PCS Administration. However, proof of breach entitles a party to at least nominal damages and here, PCS Administration also alleged lost profits and other monetary damages. The Court denied the motion to dismiss PCS Administration’s breach of contract claim.

Breach of Warranty – PCS Administration and PCS Phosphate. Determining that the breach of warranty claims are contractual in nature and premised on alleged breaches of the agreement between PCS Administration and Jacobs, to which the Court already held PCS Phosphate is not a party, the Court denied the motion to dismiss PCS Administration’s warranty claim but granted the motion to dismiss PCS Phosphate’s warranty claim without prejudice.

Professional Negligence – PCS Administration and PCS Phosphate. The Court rejected Jacobs’s first argument that PCS Administration failed to allege damages and noted that while Defendants may yet prove that PCS Administration sustained no injury, it has at this stage pleaded facts to suggest that it has been damaged by Jacobs’s conduct. Addressing Jacobs’s contention that the professional negligence claims were barred by the economic loss rule because contracts governed the rights and remedies of the parties, the Court found that Plaintiffs sufficiently alleged facts which, if true, could demonstrate that an extra-contractual duty imposed by law on professional service providers, such as engineers, existed and violation of that duty is negligence not barred by the economic loss rule. The Court denied the motion to dismiss the claims for professional negligence.

Consequential Damages – PCS Administration and PCS Phosphate. Jacobs argued that Plaintiffs’ requests for consequential damages were barred by the terms of the agreement between Jacobs and PCS Administration. Because requests for damages are not causes of action and Plaintiffs are not required to further specify the details of their damages theories at this stage of the case, the Court denied the motion to dismiss. The Court again noted that as currently alleged, PCS Phosphate is not a party to the Jacobs-PCS Administration agreement and therefore is not bound by its terms.

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JKH Cap., LLC v. Tanglewood Owners, LLC, 2026 NCBC 22 (N.C. Super. Ct. Mar. 13, 2026) (Conrad, J.)

Key Terms: motion to dismiss; personal jurisdiction; fraud

Defendant Addison Partners, a New York LLC, moved to dismiss all claims against it for lack of personal jurisdiction. Following the parties’ jurisdictional discovery, the Court concluded that Addison Partners had substantial contacts with North Carolina directly related to the claims in the case such that the Court could exercise personal jurisdiction over Addison Partners. For example, Addison Partners had entered into a contract to purchase the North Carolina property at issue, transferred the contract to a North Carolina entity, and advanced over $1 million in loans to the North Carolina entity to help maintain the North Carolina property. Addison Partners also played an active role in providing due-diligence materials regarding the subsequent sale of the property. The Court rejected Addison Partners’ arguments that the contacts of its agents, holding themselves out as representatives of Addison Partners, were not contacts of Addison Partners. The Court denied the motion to dismiss.

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Assurance Grp., LLC v. Shackelford, 2026 NCBC 23 (N.C. Super. Ct. Mar. 17, 2026) (Davis, J.)

Key Terms: motion to strike; Rule 12(f); motion to dismiss; Rule 12(b)(6); insurance marketing organization; tortious interference; third-party beneficiary; incidental beneficiary; defamation; slander per se; unfair and deceptive trade practices; North

Carolina Wage and Hour Act; N.C.G.S. § 95-25.1

Plaintiff TAG, an insurance marketing organization, filed a complaint against several former employees, independent contractors, and a new competing business formed by them, Defendant EPIC. Defendants filed counterclaims against TAG and its president, Third-Party Defendant Ed Shackelford, alleging claims for tortious interference, defamation, UDTP, violations of the North Carolina Wage and Hour Act, and declaratory relief. TAG moved to strike a paragraph in the Defendants’ counterclaims that incorporated by reference a separate lawsuit filed by former TAG agents against it and moved to dismiss the majority of Defendants’ Counterclaims.

Motion to Strike

TAG argued that the Defendants improperly incorporated by reference allegations from a different action involving different parties and that such allegations should be stricken. Relying on the North Carolina Supreme Court’s decision in Stanback v. Stanback, 297 N.C. 181 (1979), the Court held that a written instrument attached as an exhibit to a pleading, like the referenced portions of the other complaint were here, are properly incorporated and a part of the Counterclaims for all purposes. The Court denied the motion to strike.

Motion to Dismiss

Tortious Interference with Contract. Defendants’ tortious interference claim was based upon the insurance contracts between policyholders and insurance companies for which Defendants were the broker of record and therefore received accompanying commissions. Because Defendants were not parties to those contracts or intended third party beneficiaries thereof (as opposed to merely incidental beneficiaries), the Court held that Defendants could not satisfy the first element of a tortious interference with contract claim and thus, dismissed it with prejudice.

Defamation. Defendants’ allegations of slander per se relating to impeaching the Defendants in their trade, business, or profession were not legally sufficient to state a claim because they did not meet the heightened pleading requirements to assert a defamation claim. Defendants failed to allege who made the defamatory statements, who the statements were made to, and when and where they were communicated. Further, the nature of the statements—that the Defendants were no longer in the insurance business and had legal troubles—did not meet the threshold for impeaching one in his profession. The Court dismissed the defamation claim with prejudice.

Unfair and Deceptive Trade Practices. The Court found that Defendants did not assert an independent claim for unfair and deceptive trade practices based on allegations other than those in the tortious interference and defamation claims that the Court already held to be legally insufficient. Therefore, it dismissed the claim with prejudice.

North Carolina Wage and Hour Act against Ed Shackelford. The Court determined that while sparse, when taken as true and in conjunction with the remaining allegations in the complaint, Defendants’ allegations that Ed Shackelford made the decisions not to pay Defendants their earned wages and was an employer of Defendants, were sufficient to state a claim for individual liability against Shackelford under the North Carolina Wage and Hour Act and denied the motion to dismiss that claim.

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Wright v. LoRusso, 2026 NCBC 24 (N.C. Super. Ct. Mar. 18, 2026) (Conrad, J.)

Key Terms: final judgment; bench trial; findings of fact; breach of contract; declaratory judgment; defamation; punitive damages; presumed damages

The Court held a bench trial on claims and counterclaims asserted by the parties relating to a dispute among the members of LoRusso Ventures, LLC. LoRusso Ventures produces and sells bed skirts. Disputes arose between the majority member, Defendant, and certain minority members including Plaintiff. Plaintiff was terminated from the business and thereafter engaged in a years-long campaign to destroy the business and Defendant’s reputation.

Pre-Trial. Cataloging the Court’s prior orders related to various delays, rules violations, and failures to comply with court orders by Plaintiff, the Court noted that Plaintiff was pro se at the bench trial, failed to comply with pre-trial orders, and did not respond to or appear for the hearing on Defendant’s motion in limine to exclude any evidence or witnesses by Plaintiff at trial, which the Court granted.

Trial. The Court entered findings of fact and conclusions of law for all the matters heard at the bench trial. The Court entered judgment in favor of Defendant on each of Plaintiff’s claims because the only evidence Plaintiff submitted in support of them was his own testimony, which the Court did not find credible.

The Court found that LoRusso Ventures proved its counterclaims for tortious interference with contract and prospective business relations by a preponderance of the evidence and awarded LoRusso Ventures compensatory and punitive damages. In so doing, the Court found that Plaintiff knew of LoRusso Ventures’ contractual relationships with large hotel brands to sell its bed skirts to, including by secretly accessing LoRusso Ventures’ business email accounts without authorization following his termination, that Plaintiff intentionally and without justification induced the hotels to rescind the contracts, and that Plaintiff’s conduct resulted in actual harm to LoRusso Ventures. The Court found Plaintiff’s malicious, wanton, and willful acts to sabotage LoRusso Ventures’ business justified an award of punitive damages to punish such wrongful acts and deter future egregious conduct.

The Court further found that LoRusso had proved her counterclaims for breach of contract, declaratory judgment, and defamation by a preponderance of the evidence. The Court determined that Plaintiff’s intentional interference with LoRusso Ventures’ business relationships breached certain provisions of the company’s operating agreement and triggered a buy-sell event thereunder in favor of LoRusso. LoRusso did not offer evidence of actual damages resulting from such breaches but was awarded nominal damages and declaratory relief. The Court held that Plaintiff’s repeated statements to numerous third parties in the hotel industry that LoRusso was a “thief,” a “felon,” and an “embezzler” were false and defamatory per se and awarded LoRusso presumed damages for inconvenience and loss of reputation.

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Jekson USA, Inc. v. White, 2026 NCBC 25 (N.C. Super. Ct. Mar. 18, 2026) (Davis, J.)

Key Terms: motion to dismiss; Rule 12(b)(6); breach of contract; quantum meruit; constructive fraud; fraudulent inducement; Rule 9(b); unfair or deceptive trade practices; punitive damages; misappropriation of name or likeness; identity theft

Defendant, a mechanical engineer, resigned his employment with Plaintiff in 2024 and started a new company. Plaintiff filed suit alleging various claims arising from Defendant’s alleged breach of his employment contract and misappropriation of trade secrets. Defendant asserted counterclaims which Plaintiff moved to dismiss under Rule 12(b)(6).

Threshold Matters. Defendant filed his brief in opposition to Plaintiff’s motion to dismiss one day late and retroactively moved to extend the deadline. The Court, in its discretion, granted the motion to extend and considered Defendant’s response brief. The Court also determined that it could only consider two of the exhibits filed with Defendant’s response brief without converting the motion to dismiss into a motion for summary judgment because those documents were specifically referred to in his counterclaims, while the other documents were not.

Breach of Contract. The Court denied the motion to dismiss the breach of contract claim, determining that Defendant had sufficiently pleaded the required elements. The Court noted that it need not at the pleadings stage determine whether such contract was binding, oral, written, or the terms thereof.

Quantum Meruit. The Court also denied the motion to dismiss the quantum meruit counterclaim as such claims may be pleaded in the alternative to breach of contract.

Constructive Fraud. Because the Defendant failed to plead an exception to the general rule that a fiduciary relationship does not exist in the employment context, the Court dismissed the constructive fraud claim with prejudice.

Fraudulent Inducement. Noting that the elements of fraud and fraudulent inducement are the same and that a fraudulent inducement claim is subject to Rule 9(b)’s heightened pleading requirement, the Court found that Defendant failed to allege its claim for fraudulent inducement with sufficient particularity to satisfy Rule 9(b) and dismissed the claim without prejudice.

Unfair and Deceptive Trade Practices. Defendant asserted that Plaintiff had violated the UTDPA by attempting to enforce restrictive covenants in restraint of trade. The Court dismissed the claim without prejudice determining that employment disputes typically do not give rise to UDTP liability and rejecting Defendant’s argument which was unsupported by any North Carolina law.

Identity Theft. Defendant’s claim for identity theft was based on Plaintiff using his identity to obtain credit cards. The Court concluded that because civil liability for identity theft is grounded in fraud, such a claim must satisfy Rule 9(b)’s heightened pleading requirements, which Defendant’s claim failed to do. The Court dismissed the claim without prejudice, acknowledging that Defendant may potentially be able to state such a claim if pleaded with sufficient particularity.

Misappropriation of Name or Likeness. This claim requires the unauthorized use of  a person’s name or likeness “in connection with an advertisement or other commercial enterprise.” Defendant based his claim on 1) Plaintiff’s filings with the secretary of state continuing to list Defendant as an officer of Plaintiff; and 2) Plaintiff acquiring credit cards in Defendant’s name without his permission. As to the first, the Court determined that Plaintiff’s filings with the secretary of state were more properly characterized as regulatory requirements rather than acts in furtherance of an advertisement or commercial enterprise. Accordingly, the Court dismissed the claim to the extent it was based on these allegations. However, the Court found that Defendant’s allegations that Plaintiff acquired credit cards in his name without his knowledge or consent were sufficient to state a claim at this stage.

Punitive Damages. Reiterating that punitive damages are a remedy, not a stand-alone claim, the Court granted the motion to dismiss without prejudice to Defendant’s ability to seek punitive damages as a remedy later in the litigation.

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Treece v. Advisors Excel, LLC, 2026 NCBC 26 (N.C. Super. Ct. Mar. 19, 2026) (Houston, J.)

Key Terms: motion to dismiss; Rule 12(b)(6); misappropriation of trade secrets

Plaintiff alleged that he negotiated the sale of his financial advising firm through Defendant’s platform and that a person (neither a party to this action nor an employee or owner of Defendant) later approached Plaintiff with Plaintiff’s full client list. Plaintiff filed claims against Defendant for misappropriation of trade secrets and unfair and deceptive trade practices relating to the alleged improper disclosure of Plaintiff’s client list. The Court found the Plaintiff’s allegations to be conclusory and lacking specificity with regard to how the client list constituted a trade secret, how he maintained the confidentiality of such client list, and how the Defendant allegedly misappropriated the client list. For failure to specifically allege all elements necessary to assert a misappropriation of trade secrets claim, the Court dismissed the claim with prejudice. The Court additionally dismissed with prejudice Plaintiff’s unfair and deceptive trade practices claim to the extent it was based on the dismissed misappropriation of trade secrets claim and separately for failing to adequate allege facts to support an unfair and deceptive trade practices claim under Chapter 75.

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Highlights Healthcare, LLC v. Abell, 2026 NCBC Order 28 (N.C. Super. Ct. Mar. 12, 2026) (Davis, J.)

Key Terms: motion for claim and delivery; N.C.G.S. § 1-473; motion for reconsideration; Rule 54(b); preliminary injunction; conversion

Following the termination of Defendants Abell and Magee from Plaintiff Highlights Healthcare, LLC, Plaintiffs brought this suit alleging various claims arising from Abell’s and Magee’s alleged misappropriation of Plaintiffs’ confidential information and trade secrets to establish a competing business. The motions at issue relate to which party should have possession of a specific laptop during the pendency of the litigation. Plaintiffs allege that the laptop is company property given to Abell during his employment and that Plaintiffs repeatedly requested its return following his termination. Abell asserts that the laptop was a gift from Highlights and is now his personal property.

Motion for Reconsideration. As summarized here, the Court previously denied Plaintiffs’ motion for preliminary injunction seeking to prevent Abell and Magee from using Highlights’ confidential and trade secret information to compete against Plaintiffs. Highlights moved the Court to reconsider its denial of the preliminary injunction motion asserting that it demonstrated a likelihood of success on the merits of its conversion claim related to the laptop and asking the Court to modify the preliminary injunction order to compel Abell to return the laptop to Highlights during the litigation. The Court denied the motion. Although it could have, Highlights had not based its preliminary injunction motion on its conversion claim, and even if it had, it failed to establish a likelihood of success on the merits. Given Abell’s and Magee’s personal knowledge of the events surrounding the laptop’s purchase, the Court found their testimony more probative on the issue as compared to the affidavits submitted by Highlights from employees who were not employed at Highlights at the time the laptop was purchased. The Court also found Highlights failed to demonstrate irreparable harm if the laptop was not returned because the laptop had been “bricked,” preventing anyone other than Highlights from accessing its files and programs.

Claim and Delivery. Plaintiffs also sought possession of the laptop through a motion for claim and delivery under N.C.G.S. § 1-473. Given the competing testimony relating to the purchase and ownership of the laptop at issue, and noting that the claim and delivery statute does not describe if or how a court is to weigh conflicting evidence relevant to a motion for claim and delivery, the Court determined that it could not resolve factual disputes regarding ownership of the subject property under this procedure. It therefore denied the motion for claim and delivery.

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Mountain Girl Ventures, LLC v. Mary Annette, LLC, 2026 NCBC Order 29 (N.C. Super. Ct. Mar. 12, 2026) (Robinson, C.J.)

Key Terms: objection to designation; N.C.G.S. § 7A-45.4(a)(1); dissolution; winding up; complexity

Plaintiffs filed a complaint seeking dissolution of Defendant Mary Annette and appointment of a receiver pursuant to Chapter 57D. Mary Annette filed a notice of designation asserting that the case met the criteria for designation under N.C.G.S. § 7A-45.4(a)(1) as an action involving material issues related to disputes involving the law governing limited liability companies, such as Chapter 57D. Plaintiffs objected to Defendants’ notice of designation and argued that there was no dispute as to the applicable law to be applied and that the case was not complex or exceptional enough to warrant designation to the Business Court. Overruling the objection, the Court rejected Plaintiffs’ arguments and emphasized the Court’s many rulings noting that complexity is not a factor to be considered when deciding whether a case qualifies for designation.

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Moore v. Brooks, 2026 NCBC Order 30 (N.C. Super. Ct. Mar. 13, 2026) (Houston, J.)

Key Terms: motion to strike defenses; Rule 12(f); BCR 7.2; motion; defense; Rule 8(b)

Plaintiffs moved to strike defenses raised by Defendant Winthrop Intelligence, LLC in its answer to Plaintiffs’ amended complaint. Plaintiffs argued that the defenses at issue were intended to be raised as motions to dismiss and thus failed to comply with BCR 7.2 requiring a separate motion and accompanying brief. The Court rejected this argument because Defendant’s defenses did not seek affirmative relief and therefore BCR 7.2 did not apply. The Court nevertheless considered whether each affirmative defense had been sufficiently pleaded under Rule 8.

Subject Matter Jurisdiction. The Court found that Defendant’s one sentence defense asserting lack of subject matter jurisdiction did not comply with Rule 8(b)’s notice pleading requirement because it was conclusory and did not assert why the Court lacked jurisdiction. Therefore, the Court granted the motion to strike this defense without waiver of the parties’ or Court’s ability to later raise the issue of subject matter jurisdiction in a procedurally proper manner.

Failure to State a Claim. Similarly, the Defendant’s conclusory statement that the amended complaint failed to state a claim without further explanation of any deficiencies failed to meet the notice pleading requirements of Rule 8 and the Court granted the motion to strike.

Failure to Join Necessary Party. The Court found that Defendant adequately identified the party it contends should be joined and that the Court, and thus Plaintiffs, could reasonably discern why Defendant believes such third party is necessary. Therefore, the Court denied the motion to strike this defense.

Standing. The Court held that this one sentence defense was conclusory and failed to provide proper notice of the defense. The Court struck the defense without prejudice to any party’s ability to later raise an issue of standing or subject matter jurisdiction.

Breach of Operating Agreement. The Defendant had withdrawn this defense and therefore the Court denied the motion to strike as moot.

Failure to Plead Fraud and Duress with Particularity. Noting that failure to comply with Rule 9(b) constitutes a failure to state a claim upon which relief can be granted and that here, Defendant did not identify any particular deficiencies with the pleadings, the Court granted the motion to strike this defense.

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Becker v. Bridges Experience, Inc., 2026 NCBC Order 31 (N.C. Super. Ct. Mar. 13, 2026) (Earp, J.)

Key Terms: motion to conduct limited discovery; derivative demand; special committee; N.C.G.S. § 55-7-44(f); N.C.G.S. § 55-7-44(d); independent investigation

Following a derivative demand, Plaintiffs filed an amended complaint asserting direct and derivative claims for failure to provide dissenter’s rights, judicial dissolution, breach of fiduciary duty, and constructive fraud. The Court appointed a Special Committee pursuant to N.C.G.S. § 55-7-44(f) to investigate the derivative claims and determine if maintaining them was in the best interest of Bridges Experience, Inc.. The Special Committee determined that maintaining the derivative claims would not be in the company’s best interest. Plaintiffs moved to investigate and conduct discovery related to the Special Committee’s independence, good faith, and the reasonableness of its inquiry.

The Court found that Plaintiffs did not meet the statutory requirement of alleging with particularity facts establishing that the Special Committee was not independent, did not act in good faith, or did not conduct a reasonable inquiry to entitle Plaintiffs to conduct such discovery. The Court further determined that the Special Committee was independent and conducted his inquiry reasonably and in good faith based on the content of the derivative demands at issue. The Court found that Plaintiffs’ challenges to the investigation because they may have structured it differently or disagreed with the conclusions of the Special Committee did not override the sincerity or independence of the inquiry. The Court denied the motion to conduct limited discovery.

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Baldridge v. Cary Pediatric Ctr., P.A.; Barker v. Cary Pediatric Ctr., P.A., 2026 NCBC Order 32 (N.C. Super. Ct. Mar. 19, 2026) (Robinson, C.J.)

Key Terms: opposition to designation; N.C.G.S. § 7A-45.4(a)(5); data breach; pro hac vice forthcoming

In consolidated class actions, Plaintiffs asserted claims against Defendant relating to an alleged data breach of Defendant’s systems containing personally identifiable information and protected health information about Defendant’s pediatric patients. Defendant timely filed notices of designation of the actions seeking designation under N.C.G.S. § 7A-45.4(a)(5). Plaintiffs opposed designation arguing that the data breach aspects of the case are not tied to intellectual property disputes and therefore do not meet the criteria of subsection (a)(5). The Court found that the plain terms of the statute include disputes involving computer software and data security and that Plaintiffs’ allegations specifically assert that Defendant’s computer software failed to protect the information such that the cases were properly designated under subsection (a)(5). The Court reiterated its recent warning to out of state attorneys to not file or sign pleadings or other filings with the Court before they have been admitted to practice before the State Courts of North Carolina.

By: Rachel E. Brinson

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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 03/25/26

N.C. Business Court Opinions, February 25, 2026 – March 10, 2026

By: Austin Webber

Lucas v. Hopper, 2026 NCBC 16 (N.C. Super. Ct. Feb. 27, 2026) (Davis, J.)

Key Terms: summary judgment; unjust enrichment; proper parties

As previously summarized here, this case involves a dispute regarding the business relationship between Andrew Lucas and Harold Hopper. The Court previously granted summary judgment in favor of Defendant on Plaintiff’s claims premised on either a partnership or joint venture theory; however, the Court denied summary judgment on Plaintiff’s unjust enrichment claim and requested additional briefing on the issue of which of the individuals/entities in the suit should be parties to the unjust enrichment claim.

The Court concluded that A. Lucas was the only proper plaintiff as he was the party performing services for the benefit of Defendants; his company, SDB Partners, functioned merely as a conduit for payments. With respect to the defendants, Plaintiff argued that all three Defendants were proper because 1) L. Hopper owned LH Service and received all profits therefrom, and 2) H. Hopper indirectly benefited through his filing of a joint tax return with L. Hopper. The Court disagreed and concluded that LH Service was the only proper defendant because A. Lucas’s work was performed in furtherance of LH Service’s contracts with the Eden Facility and thus any benefit provided was to LH Service itself.

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Watts Guerra LLC v. Series 1 of Oxford Inx. Co. NC LLC, 2026 NCBC 17 (N.C. Super. Ct. Mar. 3, 2026) (Earp, J.)

Key Terms: motion to dismiss; Rule 12(b)(6); insurance policy; declaratory judgment; breach of contract; bad faith; NC Unfair and Deceptive Trade Practice Act; ejusdem generis; repudiation; excusal

Plaintiff Watts Guerra LLC purchased reinsured insurance policies related to a mass tort lawsuit (the “Policies”) from Defendant Series 1 of Oxford Insurance NC LLC. On multiple occasions, representatives or agents of Defendant or its parent stated they would not pay any claim for the Policies due to the potential sale of Defendant’s parent. Plaintiff filed multiple claims with Defendant under the Policies and, in response, Defendant requested Plaintiff provide certain information as required by the Policies, which Plaintiff refused to do. After the claims were not paid, Plaintiff brought suit. Defendant moved to dismiss all claims under Rule 12(b)(6).

Breach of Contract. Defendant argued that its indemnification obligations were not triggered because Plaintiff failed to satisfy the condition precedent of delivering the requested information. In response, Plaintiff asserted that it did not need to provide the information because Defendant had breached the contract by anticipatory repudiation. The Court held the Complaint did not sufficiently plead repudiation because (1) only the statements of the parties are attributable to a repudiation claims; (2) Defendant’s statement it would not pay the claim in full was not an unequivocal refusal to comply; and (3) Plaintiff’s submission of a second claim and allegation that it continued to engage with Defendant in good faith after the alleged repudiation, and Defendant’s second request for information showed that neither party treated Defendant’s statements and conduct as a repudiation. With respect to the information requests, Plaintiff argued that the principle of ejusdem generis applied, and that the general words of “all other information requested by Oxford” should be limited to the specifically requested documents in the Policies. The Court did not apply the principle of ejusdem generis in interpreting the Policies because such interpretation is contrary to the canons of contract construction, would create surplusage, and such a limited interpretation would undermine Defendant’s other rights under the Policies. Because the Policies required Plaintiff to provide certain information before filing suit and Plaintiff failed to do so, the Court granted Defendant’s motion to dismiss the breach of contract claim.

Bad Faith. Plaintiff argued Defendant committed bad faith by engaging in strategies to delay handling Plaintiff’s claim to make Defendant’s financial condition more appealing to potential buyers. The Court denied Defendant’s motion to dismiss because Plaintiff adequately alleged that on multiple occasions Defendant or its agents urged Plaintiff to delay submitting its claims and threatened it would not fund such claims while Defendant attempted to procure a buyer.

UTDPA. Plaintiff argued that a UTDPA claim alleging isolated instances of conduct was permissible. Defendant argued that a UTDPA claim was not permissible because the Captive Insurance Act excludes Defendant from regulation under Chapter 58. The Court held that N.C.G.S. 58-63-15(11) did not apply because such section does not create a private cause of action and the alleged violations do not indicate a general business practice; however, the Court noted under chapter 75, violations of some of N.C.G.S. § 58-63-15(11) may support a private cause of action. The Court denied Defendant’s motion to dismiss because Plaintiff sufficiently alleged claims under chapter 75.

Declaratory Judgment. Plaintiff’s request for declaratory judgments relating to Defendant’s alleged bad faith conduct and unfair and deceptive trade practices were sufficiently pleaded to survive dismissal. However, the Court dismissed the claim to the extent it related to Plaintiff’s breach of contract claim for the same reasons the breach of contract claim was dismissed.

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Jekson USA, Inc. v. White, 2026 NCBC 18 (N.C. Super. Ct. Mar. 4, 2026) (Davis, J.)

Key Terms: motion to dismiss; breach of contract, non-compete; non-solicit; misappropriation of trade secrets; unfair and deceptive trade practices; conversion

Plaintiff initiated this lawsuit against its former employee, alleging that Defendant had misappropriated its trade secrets, including a proprietary high throughput bullet loading tray (the “Tray”), and formed a competing business in violation of the non-compete and confidentiality provisions of his employment agreement. Defendant moved to dismiss all claims.

Breach of Contract. Defendant first argued that the non-compete and confidentiality provisions were without consideration as he signed the employment agreement 14 days after he began working for Plaintiff. The Court rejected this argument as it was unclear at this stage whether the terms were agreed to at the time Defendant began working. Further, a confidentiality agreement does not require additional consideration if it does not constitute a restraint of trade. Second, Defendant argued the non-compete expired when the 3-year term of his employment agreement expired; however, the Court noted Defendant’s employment would have become at-will and the terms of the non-compete continued for 1 year after termination. Third, Defendant argued the non-compete only applied if Plaintiff terminated Defendant’s employment. The Court held such language was ambiguous and that its interpretation was a question of fact. Fourth, Defendant argues the complaint failed to allege how Defendant breached the employment agreement; however, the Court found Plaintiff sufficiently alleged that, inter alia, Defendant hired a former employee of Plaintiff, solicited customers and suppliers, and used Plaintiff’s confidential information. For the foregoing reasons, the Court denied Defendant’s motion to dismiss for breach of contract.

Misappropriation of Trade Secrets. Defendant argued that this claim failed because the complaint did not 1) identify the trade secrets with adequate specificity; or 2) adequately allege acts of misappropriation. The Court disagreed. Plaintiff adequately identified the Tray and other information to be trade secrets and alleged various efforts to maintain their secrecy. Further, Plaintiff’s allegations that, among other things, Defendant claimed Plaintiff’s proprietary designs were his own, made and kept a 3D physical rendering of the Tray, and formed a new entity to compete with Plaintiff while still employed with Plaintiff were sufficient to allege misappropriation. Accordingly, the Court denied Defendant’s motion to dismiss the UDTPA claim.

Conversion. Defendant argued that because Plaintiff never demanded the return of its property, he could not be liable for conversion. But demand is only required where a defendant lawfully comes into possession of the converted property. Because Plaintiff alleged that Defendant took and retained the Tray without permission, demand and refusal were not necessary. Thus, the Court denied Defendant’s motion to dismiss the conversion claim.

Unfair and Deceptive Trade Practices. Because Plaintiff’s predicate claims for misappropriation of trade secrets and conversion survived, the UDTPA claim survived as well.

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Londry v. Stream Realty Partners, L.P., 2026 NCBC 19 (N.C. Super. Ct. Mar. 9, 2026) (Earp, J.)

Key Terms: motion to reconsider; N.C. R. Civ. P. 54(b); breach of partnership agreement; breach of fiduciary duties; N.C. R. Civ. P. Rule 60(a)

As summarized here, the Court previously denied Defendants’ summary judgment motion for Plaintiff’s breach of partnership agreement and breach of fiduciary duty claims, in part because Defendants had not presented the partnership agreement at issue. Defendants moved for reconsideration and, for the first time, submitted the partnership agreement to the Court. The Court declined to consider the agreement since the Defendants could have presented it at the summary judgment stage. Nevertheless, the Court, under Rules 54(b) and 60(a), concluded that its previous order warranted reconsideration because it had placed the burden on the wrong party. Because Defendants had presented substantial evidence that Plaintiff was not a partner in Stream Charlotte, the burden should have shifted to Plaintiff to present evidence showing a genuine issue of material fact existed. Because Plaintiff failed to show that Defendant Farrar, by himself, had authority to transfer a partnership interest to Plaintiff and that the partnership existed, Plaintiff failed to meet this burden. Accordingly, the Court granted Defendants’ motion for summary judgment on the breach of contract and breach of fiduciary duty claims.

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Gamba v. Balcerzak, 2026 NCBC Order 20 (N.C. Super. Ct. Feb. 26, 2026) (Robinson, C.J.)

Key Terms: order on designation; N.C.G.S. § 7A-45.4(a)(2); North Carolina Securities Act; N.C.G.S. § 78A; amended complaint; untimely

On January 14, 2025, Plaintiff served Defendant Gradient Investments, LLC the original complaint which alleged, inter alia, violations of Chapter 78A – the North Carolina Securities Act. Plaintiff later filed an amended complaint, which was deemed filed on December 15, 2025. Defendant Gradient filed the notice of designation on February 17, 2026 – over 1 year after the filing of the original complaint – seeking designation under N.C.G.S. § 7A-45.4(a)(2) stating the amended complaint alleges activities regulated by Chapter 78A. Although the Court agreed that subsection (a)(2) was implicated in the case, the Court determined that designation was improper because it was untimely. Both the original complaint and the amended complaint alleged violations of Chapter 78A; thus, the notice of designation should have been filed within 30 days of service of the original complaint.

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Powers v. E. Radiologists, Inc., 2026 NCBC Order 21 (N.C. Super. Ct. Feb. 26, 2026) (Houston, J.)

Key Terms: class action; attorneys’ fees; Rule 53; referee; special master

This case involves a putative data breach class action against Defendant. After the Court entered a preliminary approval of settlement in the amount of $3,200,000, Plaintiffs filed a motion for attorneys’ fees in the amount of $1,500,000, plus other out-of-pocket expenses and awards. The fee motion contained an initial declaration from one of Plaintiffs’ attorneys but lacked specific hourly rates, descriptions of the particular work performed by each attorney or time involved, or any other non-conclusory evidence. Rather, the fees amount was based upon one-third of the purported value of the settlement. The Court requested specific additional evidence to support the requested fees. Plaintiff’s counsel then submitted 15 declarations from the Plaintiffs’ attorneys; but again, they lacked the requisite itemization of the fees and costs or sufficient evidence that the hourly rates were consistent with standard market rates. The Court deferred ruling on the motion, and, with the consent of Plaintiff’s counsel, appointed a referee, at the expense of Plaintiff’s counsel, to evaluate the motion and provide a report to the Court.

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Assurance Grp., LLC v. Shackelford, 2026 NCBC Order 22 (N.C. Super. Ct. Feb. 27, 2026) (Davis, J.)

Key Terms: Letter of Rogatory; subpoena; production

Upon Plaintiff’s request, and the representations that all parties consent and Plaintiff’s counsel will comply with the laws of the Commonwealth of Massachusetts, the Court requested appropriate judicial authorities issue a subpoena to compel the production of documents of a Massachusetts business.

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Davis v. HCA Healthcare, Inc., 2026 NCBC Order 23 (N.C. Super. Ct. Feb. 27, 2026) (Davis, J.)

Key Terms: Rule 54(b); motions to reconsider; N.C.G.S. § 131E-97.3; competitive healthcare information; trade secrets; Public Records Act; Article I, Section 18 of the North Carolina Constitution; N.C.G.S. § 7A-109

This putative class action lawsuit was brought by a number of NC residents alleging that Defendants have violated Chapter 75 by engaging in anticompetitive acts regarding the provision of inpatient and outpatient services in western North Carolina. Defendants moved for summary judgment, contending that none of the anticompetitive terms alleged in the complaint were actually contained in their managed care contracts with commercial health insurance providers. In conjunction with the summary judgment motion, the parties filed numerous documents provisionally under seal and requested that the Court allow them to remain under permanent seal because they constituted “competitive health care information” under N.C.G.S. §§ 131E-97.3 and -99 and thus were exempted from disclosure under the Public Records Act. In a previous decision, the Court, relying on Frye Regional Medical Center, Inc. v. Blue Cross Blue Shield of North Carolina, Inc. 2020 NCBC Lexis 53 (N.C. Super. Ct. Apr. 17, 2020), disagreed that much of the information was protected but deferred ruling on the motions to seal to allow the parties to limit the number of documents sought to be sealed or propose redactions. Certain Defendants moved to reconsider and argued that the Court’s reliance on the Frye decision was in error because Frye failed to recognize that the Court of Appeals case on which it primarily relied had been superseded when the Legislature amended N.C.G.S. § 131E-97.3 to include a broad definition of “competitive health care information.” The Court agreed and vacated its previous order on the motions to seal and considered them anew.

Defendants argued that the motions to seal should be granted in full because 1) each and every word in the supporting documents were “competitive health care information” under the statute, and 2) at least some of the information in the documents related to proprietary trade secrets. The Court rejected the first argument as some of the information Defendants sought to seal was generalized, had little to no competitive value, was publicly available, or did not relate to competitive health care activities as such phrase was now defined under N.C.G.S. § 131E-97.3. Further, some documents and information had become stale over time. Finally, the requested relief was not narrowly tailored to protect the public’s qualified right of access to court records. As to Defendants’ second argument, the Court noted that some of the documents may contain trade secrets; however, the documents were not in-and-of-themselves trade secrets in their entirety as some information was publicly ascertainable or had no independent economic value. Accordingly, the Court directed the parties to confer to limit the number of documents for which sealing was sought, and the specific portions of those documents for which sealing was appropriate.

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Assurance Grp., LLC v. Shackelford, 2026 NCBC Order 24 (N.C. Super. Ct. Mar. 3, 2026) (Davis, J.)

Key Terms: motion for leave; futile; de facto fiduciary duty; familial relationship

Plaintiff is an insurance marketing organization that sells insurance-related products. Defendants were former agents of Plaintiff, who allegedly conspired to poach Plaintiff’s employees and clients and misappropriate Plaintiff’s confidential information. Plaintiff moved to amend its complaint, seeking to add, among other things, a breach of fiduciary duty claim against Defendant D. Shackelford.

Plaintiff argued that a fiduciary duty existed because D. Shackelford was an officer of Plaintiff and because of his close familial relationship with Plaintiff’s president (his uncle). However, at the hearing, Plaintiff’s counsel largely abandoned the argument that D. Shackelford was an officer due to Plaintiff having not included him in its list of officers in its answers to interrogatories. Regarding the familial relationship, the Court held that Plaintiff’s allegations were mere conclusory assertions not supported by any special circumstance giving rise to a fiduciary relationship since mere familial relationship are not sufficient to a fiduciary relationship. Accordingly, the Court denied the addition of the breach of fiduciary duty claim as futile.

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S&R Comput. Assocs., Inc. v. Hampel, 2026, 2026 NCBC Order 25 (N.C. Super. Ct. Mar. 4, 2026) (Houston, J.)

Key Terms: preliminary injunction; non-compete; non-solicit; reasonableness; geographical area; irreparable harm; blue pencil rule

Plaintiff, a computer support company, filed this action alleging, inter alia, that its former employees had breached the non-competition and non-solicitation provisions in their employment contracts. Plaintiff sought a preliminary injunction enjoining Defendants from breaching the contracts.

The Court concluded that Plaintiff had failed to show a likelihood of success on the merits for its claims for breach of the non-competes or non-solicits. The non-competes appeared overbroad because no evidence was submitted to justify the scope of the geographical area restriction and they prohibited future work distinct from the duties Defendants performed for Plaintiff. The non-solicits appeared unreasonable because they lacked limiting parameters, such as being limited to clients who had a relationship with the parties during Defendants’ employment. The Court also concluded that Plaintiff had failed to show a likelihood of irreparable harm because no evidence was submitted that Defendants performed services for a former client of Plaintiff and Plaintiff waited several months before bringing the preliminary injunction motion. The Court declined to apply the blue-pencil rule to rewrite the overbroad provisions. Accordingly, the Court denied Plaintiff’s motion for preliminary injunction.

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TIG Ins. Co. v. Fleming, 2026 NCBC Order 26 (N.C. Super. Ct. Mar. 5, 2026) (Robinson, C.J.)

Key Terms: mandatory complex business case; N.C.G.S. 7A-45.4(a) and (b); order on designation; and reverse piercing the corporate veil; non-competition; non-solicitation; trade secrets; confidential information

This case involves an attempt by Plaintiff to enforce a judgment of over $20,000,000 against Defendant P. Fleming and related entities where Plaintiff contends P. Fleming has shielded his assets by having them owned in the name of various entities over which he exercises complete domination and control. Plaintiff filed a notice of designation, asserting that designation was proper under N.C.G.S § 7A-45.4(a)(1)—disputes arising under Chapters 55 and 57D. According to Plaintiff, these Chapter were implicated because the Court would need to determine the true owners of certain entities and whether corporate entities should be disregarded under a theory of reverse veil piercing. The Court held that a claim for reverse veil piercing alone is insufficient under N.C.G.S. 7A-45.4(a) for designation. Because designation under N.C.G.S. 7A-45.4(a) failed, designation under N.C.G.S. 7A-45.4(b) must also fail because satisfying the requirements under N.C.G.S. 7A-45.4(a) is a prerequisite. Thus, the Court determined that designation was improper.

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Mary Annette, LLC v. Crider, 2026 NCBC Order 27 (N.C. Super. Ct. Mar. 9, 2026) (Robinson, C.J.)

Key Terms: notice of designation; motion to intervene; derivative claim; N.C.G.S. § 7A-45.4(a)(1); N.C.G.S. § 7A-45.4(a)(9); N.C.G.S. 7A-45.4(d)(2); N.C.G.S. § 57D-8-01

Plaintiff Mountain Girl Ventures, LLC (MGV) brought derivative claims on behalf of Mary Annette, LLC against Defendants for breach of contract and specific performance. Mary Annette, LLC, through its own counsel, filed a motion to intervene and timely filed a notice of designation under N.C.G.S. § 7A-45.4(a)(1). MGV filed an objection to the NOD. The Court determined that designation was proper because filing the NOD with the motion to intervene was appropriate under N.C.G.S. 7A-45.4(d)(2), a derivate claim implicates Chapter 57D, and MGV’s contention the NOD was improper under N.C.G.S. § 7A-45.4(a)(9) was irrelevant as Mary Annette solely sought designation under N.C.G.S. § 7A-45.4(a)(1).

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 03/10/26

N.C. Business Court Opinions, February 11, 2026 – February 24, 2026

By: Natalie E. Kutcher

Apex Health, Inc. v. Atrium Health, Inc., 2026 NCBC 10 (N.C. Super. Ct. Feb. 11, 2026) (Earp, J.)

Key Terms: motion to amend; Rule 15; breach of contract; unfair and deceptive trade practices; futility; undue delay; undue prejudice; fraudulent inducement; bad faith

Plaintiffs Apex Health, a provider and operator of Medicare Advantage health plans, and its affiliates filed suit against Defendant Atrium Health. In February 2021, Apex and Atrium executed an LOI to create a co-branded Medicare Advantage plan for Atrium’s patients. The parties entered into an agreement formalizing their arrangement on May 13, 2021. As efforts were underway to market the plan, Apex alleged that Atrium began to distance itself from the plan, failed to treat it as a “preferred plan” for its patients, and ultimately caused the plan to fail.

Apex filed suit on May 23, 2024, asserting a claim for breach of contract against Atrium. The parties subsequently submitted three joint motions to extend the discovery deadlines, which the Court granted. On November 6, 2025, Apex moved to amend the Complaint to add a claim for unfair and deceptive trade practices against Atrium.

The Court’s analysis included the following three considerations: (i) futility of the amendment; (ii) undue delay and undue prejudice; and (iii) bad faith. The Court concluded that the amendment was futile, as the UDTPA claim was grounded in fraudulent inducement, but the proposed amendment to the Complaint failed to meet the pleading requirements for fraud. The Court further held that amending the Complaint at this time would cause undue delay and prejudice, noting the significant amount of time that had passed since the lawsuit was filed. The Court did not find bad faith, but noted that it was Apex’s responsibility to use the discovery period efficiently and seek the Court’s intervention if Atrium presented obstacles or delays to the discovery process, which it did not. The Court denied Apex’s motion with prejudice.

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WP Church, LLC v. Whalen, 2026 NCBC 11 (N.C. Super. Ct. Feb. 11, 2026) (Davis, J.)

Key Terms: motion to dismiss; nominal defendant; Rule 12(b)(1); Rule 12(b)(6); derivative claims; pre-suit demand; demand futility; self-dealing; misappropriation; conflict of interest transaction; business judgment rule; economic loss rule

As previously summarized here and here, Plaintiff WP Church sued Defendant Whalen, the sole manager of 5Church Charleston, derivatively on behalf of 5Church based on Defendant’s alleged self-dealing and misappropriation of 5Church’s assets. Defendant filed a motion to dismiss Plaintiff’s Complaint pursuant to Rules 12(b)(1) and (6), alleging that Plaintiff failed to comply with the mandatory pre-suit demand requirements before initiating a derivative action, and that Plaintiff failed to state a valid claim for relief against Defendant because his actions were within the authority granted to him under 5Church’s operating agreement.

At the outset, the Court sua sponte raised the question of whether the Complaint was subject to dismissal on the basis that it failed to name 5Church as a nominal defendant. The Courted determined that South Carolina law applied because 5Church was a South Carolina entity and, under South Carolina law, the absence of 5Church as a nominal defendant did not deprive the Court of subject matter jurisdiction.

The Court next analyzed whether Plaintiff’s pre-suit demand was substantively defective. The Court determined that Plaintiff’s letter sufficiently set out Plaintiff’s allegations against Defendant and demanded that Defendant initiate a lawsuit on behalf of 5Church to prosecute these wrongdoings. The Court further noted that, even if the demand was found to be deficient, South Carolina law provides futility as a basis for excusing compliance with the pre-suit demand. As Defendant was the manager of the company and also the sole individual alleged to have committed these wrongful acts, the Court held that any demand would have been presumably futile. As such, the Court denied Defendant’s motion to dismiss pursuant to Rule 12(b)(1).

The Court next considered Defendant’s motion to dismiss the Complaint pursuant to Rule 12(b)(6). The Court was unpersuaded by Defendant’s argument that his actions fell within the purview of his managerial authority, noting that Defendant failed to cite any provision of the operating agreement permitting him to enter into a conflict-of-interest transaction and, if one existed, South Carolina law would not permit such a provision to be given effect. The Court also rejected Defendant’s argument that the business judgment rule applied to the situation, as Defendant stood on both sides of the transactions. Lastly, the Court rejected Defendant’s argument that the economic loss rule applied, noting that South Carolina law strictly limits the application of the rule to products liability context.  As such, the Court denied Defendant’s motion to dismiss under Rule 12(b)(6).

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Weatherspoon Fam. LLC v. Hatteras Inv. Partners, L.P., 2026 NCBC 12 (N.C. Super. Ct. Feb. 11, 2026) (Houston, J.)

Key Terms: motion to dismiss; Rule 12(b)(1); derivative lawsuit; pre-suit demand; futility; breach of fiduciary duty; particularity

As previously summarized here, Plaintiff sued Defendants derivatively on behalf of Nominal Defendant Hatteras Evergreen Private Equity Fund, LLC, asserting a claim for breach of fiduciary duty based on Defendants’ decision to exchange shares in Evergreen’s investment portfolio for preferred equity shares in another company, resulting in a significant loss to Evergreen’s assets. Defendants and Evergreen moved to dismiss Plaintiff’s amended complaint pursuant to Rule 12(b)(1) on the basis that Plaintiff failed to make a pre-suit demand prior to initiating a derivative lawsuit.

The Court granted the motion without prejudice. Analyzing the demand requirements under Delaware law, which governs Evergreen, the Court held that Plaintiff failed to plead with particularity facts which would excuse Plaintiff from making a pre-suit demand. The Court determined that Plaintiff failed to adequately plead that the manager of Evergreen received a material personal benefit from the alleged misconduct that is the subject of the litigation demand. The Court further concluded that Plaintiff’s allegations failed to demonstrate a substantial likelihood of liability for breach of fiduciary duty, or that Defendants lacked independence from another person or entity receiving material benefits. As such, the Court determined that Plaintiff lacked standing to bring the derivative lawsuit, and dismissed the action without prejudice.

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Town of Carrboro v. Duke Energy Corp., 2026 NCBC 13 (N.C. Super. Ct. Feb. 12, 2026) (Davis, J.)

Key Terms: motion to dismiss; Rule 12(b)(1); Rule 12(b)(6); climate change; issue of first impression; federal preemption; nonjusticiability; political question doctrine

Plaintiff filed this lawsuit asserting claims against Defendant for public nuisance, trespass, negligence, and gross negligence. Plaintiff alleged that Defendant has known for decades about the harmful effects of fossil fuel emissions but has undertaken a series of campaigns to downplay its dangers. Plaintiff alleged that increased carbon emissions have resulted in climate change and consequently damaged Plaintiff in terms of increased municipal spending to repair roads and infrastructure. Defendant moved to dismiss pursuant to Rules 12(b)(1) and 12(b)(6).

The Court noted that “[i]t would be a vast understatement to say that this case presents an issue of first impression under North Carolina law.” Although the Court first considered whether Plaintiff’s claims were subject to federal preemption, the Court ultimately did not need to make a final determination on this issue, as the issues presented in the lawsuit were subject to the political question doctrine.

The Court considered the following three factors recently established by the Supreme Court of North Carolina to determine the nonjusticiability of an issue: whether the issue has (1) a textually demonstrable commitment of the matter to another branch; (2) a lack of judicially discoverable and manageable standards; or (3) the impossibility of deciding a case without making a policy determination of a kind clearly suited for nonjudicial discretion. Finding that all three factors mandated the invocation of the political question doctrine, the Court granted Defendant’s motion to dismiss pursuant to Rule 12(b)(1) for lack of standing and dismissed Defendant’s motion to dismiss pursuant to Rule 12(b)(6) as moot.

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Mezcalito Apex, Inc. v. Murillo, 2026 NCBC 14 (N.C. Super. Ct. Feb. 17, 2026) (Robinson, C.J.)

Key Terms: Tex-Mex; motion to dismiss; Rule 12(b)(6); breach of contract; misappropriation of trade secrets; unfair and deceptive trade practices; confidentiality agreement; injunctive relief

This case arises out of a dispute between Plaintiff, a Tex-Mex restaurant, and its former senior-level employee, Defendant Murillo. Plaintiff alleged that, after leaving his employment with Plaintiff, Defendant moved to Missouri, where he worked for another Tex-Mex restaurant and subsequently became a 25% owner in that restaurant. Plaintiff further alleged that Defendant made a series of changes to the Missouri restaurant’s menus and other elements that “copied” Plaintiff’s restaurant.

After Plaintiff filed suit against both Defendant and the Missouri restaurant, the Missouri restaurant settled with Plaintiff by terminating Defendant’s employment and reversing the changes made to their restaurant, among other terms. Defendant moved to dismiss Plaintiff’s claims for breach of Defendant’s confidentiality agreement, misappropriation of Plaintiff’s trade secrets, unfair and deceptive trade practices, and preliminary and permanent injunction pursuant to Rule 12(b)(6).

Breach of Contract. The Court denied Defendant’s motion to dismiss the breach of contract claim, finding that Plaintiff sufficiently pled the elements of a valid contract and Defendant’s breach thereof.

Misappropriation of Trade Secrets. The Court granted Defendant’s motion to dismiss Plaintiff’s misappropriation of trade secrets claim, holding that: (1) menus and the presentation of food and drinks cannot constitute trade secrets, as they are within the public view; and (2) the remaining trade secrets were not identified with sufficient particularity under the NCTSPA. The Court further determined that Plaintiff’s allegation that Defendant had used, or will inevitably use or disclose the trade secrets, was insufficient to support the claim.

Unfair and Deceptive Trade Practices. The Court likewise granted Defendant’s motion to dismiss Plaintiff’s UDTPA claim, which relied upon the trade secret claim.

Preliminary and Permanent Injunction. Noting that injunctive relief is an ancillary remedy, and not an independent cause of action, the Court granted Defendant’s motion to dismiss this claim.

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PCS Phosphate Co. v. Jacobs Eng’g Grp., Inc., 2026 NCBC 15 (N.C. Super. Ct. Feb. 19, 2026) (Houston, J.)

Key Terms: motion to transfer; Rule 12(b)(3); forum non conveniens; choice of law provision; venue provision; N.C.G.S. § 22B–2; public policy; motion to dismiss

Plaintiffs PCS Phosphate Company, Inc. and PCS Administration (USA), Inc., both Delaware corporations, maintain their principal places of business in North Carolina. Defendant Buss Chemtech AG is a Swiss company, with its principal place of business in Switzerland. In 2019, Plaintiffs and Buss entered into an agreement, whereby Buss agreed to provide engineering services, equipment, and support for Plaintiffs’ project in North Carolina. The agreement contained choice of law and venue provisions, indicating that New York law would govern any disputes and designating the Southern District of New York as the venue for any such disputes.  Plaintiffs filed suit against Buss in North Carolina, asserting claims for breach of contract, breach of warranty, negligent misrepresentation, and professional negligence.

Buss moved to transfer venue to the Southern District of New York under Rule 12(b)(3) or, in the alternative, dismiss Plaintiffs’ lawsuit for forum non conveniens. Plaintiffs argued that (1) a state court action could not be “transferred” to federal court; (2) the choice of law and venue provisions were void and unenforceable under N.C.G.S. § 22B–2 because the agreement pertained to the improvement of real property situated within North Carolina; and (3) as the agreement involved improvements to real property in North Carolina, this state was the most convenient forum for the dispute.

The Court denied Buss’s motion to transfer under Rule 12(b)(3), holding that the agreement was subject to N.C.G.S. § 22B–2, rendering the choice of law and venue clauses unenforceable as a matter of public policy. The Court also denied Buss’s motion to dismiss on the basis of forum non conveniens. Buss’s argument for forum non conveniens primarily rested on two points: (1) that the Court should deny jurisdiction on the basis of the choice of law and venue clauses; and (2) that a North Carolina judgment would be unenforceable in Switzerland. The Court summarily dismissed Buss’s first argument, as the clauses were found to be unenforceable. Noting that two of the three parties to the present dispute resided in North Carolina, the dispute centered around services to be performed in North Carolina, and other factors, the Court refused to dismiss the lawsuit on the basis of forum non conveniens.

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Jones v. Bull & Bear Invs. LLC, 2026 NCBC Order 18 (N.C. Super. Ct. Feb. 13, 2026) (Robinson, C.J.)

Key Terms: order on designation; N.C.G.S. § 7A-45.4(a)(1); N.C.G.S. § 7A-45.4(a)(7); N.C.G.S. § 7A-45.4(c); timeliness; service of notice; landlord-tenant

Plaintiff Jones initiated this lawsuit on January 23, 2026 by filing a complaint against Defendant Bull & Bear Investments LLC in Guilford County Superior Court. In the complaint, Plaintiff asserted claims against Defendant for unlawful interference and coercion under the Fair Housing Act, voidable contract/duress, and unfair and deceptive trade practices. Ten days later, Plaintiff filed a Notice of Designation, seeking designation of this action as a mandatory complex business case under N.C.G.S. § 7A-45.4(a)(1) and (a)(7). Eight days after the filing of the NOD, Plaintiff emailed copies of the NOD to Business Court and Superior Court personnel, in addition to various state agencies, in an attempt to effectuate service.

The Court determined that Plaintiff’s designation was untimely. Noting that, under N.C.G.S. § 7A-45.4(d)(1), a notice of designation must be filed contemporaneously with a complaint, the Court observed that Plaintiff’s notice was not filed until ten days after the initial filing. The Court further noted that Plaintiff had failed to properly effectuate service on the Chief Justice of the Supreme Court of North Carolina and the Chief Judge of the Business Court under N.C.G.S. § 7A-45.4(c).

The Court also held that designation was not appropriate under N.C.G.S. § 7A-45.4(a)(1), as the dispute was essentially a landlord-tenant dispute which did not implicate the laws governing limited liability companies. The Court noted that designation under N.C.G.S. § 7A-45.4(a)(7) was inappropriate because that subsection has been repealed since October 2014.

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Brock v. Kyryk, 2026 NCBC Order 19 (N.C. Super. Ct. Feb. 23, 2026) (Robinson, C.J.)

Key Terms: opposition to designation; N.C.G.S. § 7A-45.4(e); derivative action; homeowners’ association; N.C.G.S. § 7A-45.4(a)(1); breach of fiduciary duty; North Carolina Planned Community Act; Chapter 55A; complexity; venue

Plaintiffs, members of a homeowners’ association, initiated a derivative lawsuit against Defendants, members of the association’s board, on 2 September 2025 (“First Action”). Defendant Taylor timely filed a notice of designation and, after the case was designated as a mandatory complex business case, Plaintiffs timely filed an opposition (“First Opposition”). Before the Court ruled on the First Opposition, Plaintiffs purported to voluntarily dismiss the First Action without prejudice on 1 December 2025. Taylor timely filed her response to the First Opposition the next day.

Plaintiffs filed another lawsuit on 11 December 2025, asserting similar claims against Defendants (“Second Action”). Taylor timely filed a notice of designation and, after the Second Action was designated to the Business Court, Plaintiffs again timely filed an opposition (“Second Opposition”). Taylor timely filed a response. The Court struck Plaintiffs’ voluntary dismissal of the First Action and stayed the Second Action.

Defendants argued that designation as a mandatory complex business case was proper under N.C.G.S. § 7A-45.4(a)(1), noting that the claim for breach of fiduciary duty asserted by Plaintiffs in both the First Action and Second Action was premised on fiduciary duties owed by nonprofit board members under Chapter 55A. The Court agreed, additionally noting that both complaints included derivative claims pursuant to N.C.G.S. § 55A-7-40.

The Court determined that none of Plaintiffs’ arguments had merit, holding that (1) case complexity has no bearing on designation; (2) the Business Court regularly hears disputes involving homeowners’ associations and their members; (3) the North Carolina Planned Community Act requires homeowners’ associations to exist as nonprofit corporations and further requires association officers and board members to exercise fiduciary duties described in Chapter 55A; (4) whether the case may be handled by a “regular” Superior Court Judge has no bearing on designation; and (5) once a case is designated to the Business Court, venue remains the county of origin and the assigned Business Court Judge is commissioned as a Superior Court Judge for that county. The Court overruled the Oppositions.

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 02/24/26

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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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 02/10/26

N.C. Business Court Opinions, January 14, 2026 – January 27, 2026

By: Ashley B. Oldfield

Lucas v. Hopper, 2026 NCBC 1 (N.C. Super. Ct. Jan. 14, 2026) (Davis, J.)

Key Terms: motion to strike affidavit; summary judgment; partnership; joint venture; principal and agent; unjust enrichment

This case involves a dispute regarding the business relationship between Andrew Lucas and Harold Hopper. Plaintiff Lucas brought suit alleging that their relationship gave rise to an implied partnership or joint venture and that he had been denied his full share of the profits. Defendant Hopper maintained that Lucas was merely an independent contractor and moved for summary judgment on all claims.

Motion to Strike. In response to Defendants’ motion for summary judgment, Plaintiffs submitted a lengthy affidavit from Lucas. Upon Defendants’ motion to strike, the Court struck the portions of Lucas’s affidavit which conflicted with his prior sworn deposition testimony.

Partnership Claims. Plaintiffs’ first six claims were premised on the theory that a partnership existed between the parties. The Court concluded that no partnership existed; therefore, it granted summary judgment in favor of Defendants on these claims and granted a declaratory judgment that no partnership existed. The Court’s conclusion was based on the following: 1) there was no business co-owned by Plaintiffs since LH Service, the only business at issue, was owned solely by Linda Hopper; 2) all projects underlying the lawsuit took place pursuant to contracts between LH Service and a third-party; 3) Lucas lacked authority to enter into contracts or sign checks with respect to these projects; 4) all of the key indicia of a partnership were absent (e.g., no capital contributions, no partnership bank account, no partnership tax returns, no partnership name, no partnership registered with the State); and 5) all payments flowing to Lucas were made through 1099s rather than K-1s. That Lucas received a portion of LH Service’s profits from the projects he worked on and that the parties sometimes referred to themselves as partners were insufficient to establish a partnership.

Joint Venture Claims. Plaintiffs’ next three claims were premised on the alternative theory that a joint venture existed between the parties. The Court rejected this theory because there was no evidence that the Plaintiffs stood in the relationship of both principal and agent to each of the other alleged co-venturers. Accordingly, the Court granted summary judgment in favor of Defendants on these claims and granted a declaratory judgment that no joint venture existed.

Unjust Enrichment. The Court denied Defendants’ motion for summary judgment on Plaintiffs’ unjust enrichment claim. The evidence in the record showed that Andrew had performed work for LH Service, that he had received some but not all of the amounts owed for this work, and that Hopper had admitted that money was owed to Lucas. The Court, however, requested additional briefing on the issue of which of the individuals/entities in the suit should be parties to the unjust enrichment claim.

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State ex rel. Jackson v. MV Realty PBC, LLC, 2026 NCBC 2 (N.C. Super. Ct. Jan. 16, 2026)

Key Terms: summary judgment; homeowner benefit agreement; UDTPA; covenant running with the land; notice of lis pendens; liquidated damages; unenforceable penalty; Telephone Solicitation Act; telephone solicitor; robocall; “Do Not Call” Registry; individual liability; permanent injunction

The NC Attorney General brought this action alleging that Defendants engaged in unfair or deceptive trade practices and other violations of North Carolina law through their enterprise in which they persuaded homeowners to sign “Homeowner Benefit Agreements” obligating them to use defendants’ agents as their exclusive real estate brokers if they sold their homes in the next forty years and authorizing monetary penalties for breach of the HBAs. The State moved for partial summary judgment on its UDTP claims and full summary judgment on its Telephone Solicitation Act claims.

UDTP Claims. The State first contended that Defendants violated the UDTPA each time they filed a memorandum with the register of deeds stating that the HBA constituted a covenant running with the land, thereby creating a cloud on the homeowners’ title. The Court agreed. The HBAs were akin to listing agreements which were contracts for personal services and therefore not covenants running with the land.  Under N.C.G.S. § 14-118.6, the presentation of an instrument for recording that purports to be an encumbrance that is determined to be false constitutes a violation of the UDTPA. Accordingly, the Court granted summary judgment in the State’s favor that Defendants had committed an unfair or deceptive trade practice by filing memorandums that falsely claimed to contain covenants that ran with the land.

The State next contended that Defendants violated the UDTPA by filing a notice of lis pendens with the clerk of court each time they sued a homeowner for breach of the HBA and sought to recover an early termination fee. Defendants had previously argued that the lis pendens were proper because the HBAs affected title to real property. However, they abandoned this meritless argument at summary judgment and only argued that because the State hadn’t placed in the summary judgment record each of the actual lis pendens and related complaints, the Court could not rule on the validity of each lis pendens. The Court rejected this argument because the State’s claim was based on Defendants’ pattern and practice of filing a lis pendens based solely on a homeowner’s alleged breach of a contract for personal services, which did not require the Court to make a determination regarding whether the homeowners had actually breach the HBAs. Accordingly, the Court granted summary judgment in the State’s favor that Defendants had committed an unfair or deceptive trade practice by the filing of lis pendens.

Lastly, the State contended that Defendants’ pattern and practice of collecting an early termination fee (ETF) from homeowners alleged to have breached their HBA constituted an unfair or deceptive trade practice. Pursuant to the HBA, the amount of the ETF was calculated based upon the greater of the value of the home at the time the HBA was signed or its value at the time the HBA was breached. The Court concluded that this provision was not a liquidated damages provision but was instead an unenforceable penalty. Accordingly, the Court granted summary judgment in the State’s favor that Defendants had committed an unfair or deceptive trade practice each time an ETF was collected.

Telephone Solicitation Act Claims. The State contended that Defendants violated the TSA by 1) calling nearly 150,000 phone numbers on the “Do Not Call” Registry, and 2) making robocalls. Defendants asserted that they did not violate the TSA because 1) MV Realty did not meet the statutory definition of “telephone solicitor,” 2) their calls weren’t robocalls because the calls involved human interaction, and 3) the calls were only made to people who had consented to receive the calls. The Court concluded that 1) MV Realty was a telephone solicitor because the purpose of the calls was to solicit a business transaction between the parties, 2) the limited human participation in the calls did not take them out of the scope of a robocall; and 3) Defendants failed to produce admissible evidence sufficient to create a dispute of material fact that the homeowners had consented to the calls. Accordingly, the Court granted summary judgment in the State’s favor on its claims under the TSA.

The Court also determined that both the entity defendants and the individual defendants (who were all substantially involved in the enterprise’s operations) were liable on the UDTPA and TSA claims. The Court entered a permanent injunction enjoining Defendants from collecting ETFs or filing memoranda or notices of lis pendens in connection with the program. The Court deferred ruling on the State’s request for monetary relief.

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Bui v. Phan, 2026 NCBC 3 (N.C. Super. Ct. Jan. 21, 2026) (Conrad, J.)

Key Terms: judgment; bench trial; LLC; member expulsion; declaratory judgment; breach of operating agreement; good faith; advice of counsel

Plaintiff and Defendant each owned a 50% membership interest in Golden Rooster LLC. After their relationship deteriorated, the parties agreed that Defendant would buy out Plaintiff’s interest. Disputes arose, however, and Plaintiff eventually brought suit 1) seeking a declaratory judgment that Defendant was no longer a member of the company because she was either subject to expulsion or had involuntary withdrawn; and 2) asserting a claim for damages for Defendant’s alleged breaches of the operating agreement. Following a bench trial, the Court entered judgment in favor of Defendant and declared that Defendant remained a member of Golden Rooster.

The Court concluded that the operating agreement, read as a whole, did not allow termination of membership for acts or omissions that the member believed in good faith to be within the scope of authority conferred or implied by the operating agreement. The evidence did not support a finding that Defendant had engaged in intentional wrongdoing. Rather, the evidence showed that Defendant had acted in good faith, including, in several instances, based upon her reliance on advice of counsel.

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Law Off. of Ashley-Nicole Russell, P.A. v. McLawhorn Legal Servs. PLLC, 2026 NCBC 4 (N.C. Super. Ct. Jan. 21, 2026) (Robinson, C.J.)

Key Terms: Rule 12(b)(6); tortious interference with contract; conversion; intangible property; computer trespass; UDTPA; constructive trust; punitive damages

This case arises out of a soured business relationship between two attorneys—Plaintiff Russell and Defendant McLawhorn—who co-own a family law practice—M&R. Each attorney is also the sole owner of their respective individual practice—Plaintiff ANR Law and Defendant MLS. Plaintiffs brought suit alleging that Defendants engaged in unlawful conduct in an attempt to steal Plaintiffs’ business. Defendants moved to dismiss under Rules 12(b)(6) and 41(b). As neither party had suggested that oral argument was necessary, the Court determined the motion without a hearing.

Tortious Interference with Contract. The Court concluded that the complaint’s allegations were deficient because it was unclear which firm’s—Plaintiff ANR Law’s or non-party M&R’s—client contracts were allegedly interfered with. To the extent the claim was based on interference with M&R’s contracts, the claim failed because M&R wasn’t a party and Plaintiffs didn’t purport to bring a derivative claim on behalf of M&R. To the extent the claim was based on interference with ANR Law’s contracts, the claim failed because the allegations were vague, conclusory, and didn’t put Defendants on sufficient notice of the basis of the claim.

Conversion. To the extent the claim was based on intangible personal property, such as confidential existing clients and prospective clients, accounts, marketing strategy, processes, techniques, and services, the claim failed because a conversion claim can’t be based on intangible property. To the extent the claim was based on tangible personal property, the claim failed because Plaintiffs didn’t allege that Defendants deprived or excluded Plaintiffs of use of any such property.

Computer Trespass. This claim failed because the allegations were vague and conclusory. Further, Plaintiffs’ briefing indicated that the claim was based on Defendants’ alleged computer trespass of M&R’s computer system. Since M&R was not a party and Plaintiffs hadn’t brought a derivative claim on behalf of M&R, Plaintiffs couldn’t recover for trespass to M&R’s property.

Unfair and Deceptive Trade Practices. As Plaintiffs’ UDTPA claim was premised solely upon its other claims, which were dismissed, the UDTPA claim was dismissed as well. Because the UDTPA claim failed on other grounds, the Court didn’t reach the issue of whether the learned profession exemption applied.

Constructive Trust and Appointment of a Receiver. The Court dismissed this claim because neither a constructive trust nor the appointment of a receiver pursuant to N.C.G.S. §§ 55-14-32 and 1-502(a) are standalone claims.

Punitive Damages. The Court dismissed this claim because punitive damages is a remedy not a standalone claim.

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N.C. Dep’t of Revenue v. Asphalt Emulsion Indus., LLC, 2026 NCBC 5 (N.C. Super. Ct. Jan. 21, 2026) (Houston, J.)

Key Terms: administrative law judge; petition for judicial review; summary judgment de novo standard of review; Tax Act; N.C.G.S. § 105-164.1, et seq.; sale; consideration

The N.C. Department of Revenue appealed from the Administrative Law Judge’s Final Decision granting summary judgment in favor of Asphalt Emulsion Industries, LLC and determining that AEI’s transfers of finished emulsion product to affiliated entities (“Transfers”) were not subject to sales tax, such that AEI was not required to pay sales tax to DOR for the Transfers under N.C.G.S. § 105-164.1, et seq.

Standard of Review. In reviewing a petition for judicial review arising from a final decision granting summary judgment, the standard of review is de novo.

Summary Judgment. Under the Tax Act, a “sale” requires a “transfer for consideration.” Thus, in order for a transfer to be a sale and subject to sales tax, the transfer must be for consideration. Here, the DOR contended that the Transfers were for consideration based on 1) internal accounting entries reflecting hypothetical markups; 2) various avenues of cashflow from AEI’s parent company to AEI; and 3) the presumption that if the Transfers weren’t gifts, they must be sales. The Court rejected each of these purported bases for consideration. First, there was no evidence that the accounting entries represented reciprocal transfer obligations or that any payments were ever made or expected relating to the entries. Second, there was no evidence that the cash infusions from AEI’s parent were linked to or in exchange for the Transfers. Finally, the Court declined to adopt a presumption of consideration—just because the Transfers weren’t a gift didn’t necessarily mean that they were a sale. Accordingly, the Court affirmed the ALJ’s decision and granted summary judgment in favor of AEI on the Transfer issue.

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Moore v. Brooks, 2026 NCBC 6 (N.C. Super. Ct. Jan. 23, 2026) (Houston, J.)

Key Terms: specific personal jurisdiction; Rule 12(b)(2); Rule 12(b)(6); intentional infliction of emotional distress

As previously summarized here, the family of Drue Moore brought this suit after Moore’s death, alleging various claims arising from a dispute between Moore and a company in which he was involved, Winthrop Intelligence, LLC. In that underlying dispute, Winthrop’s CFO Scott Brooks accused Moore of misappropriating funds, demanded that Moore assign his assets to Winthrop or Brooks, and threatened criminal charges and arrest. Brooks moved to dismiss for lack of personal jurisdiction and also sought dismissal of plaintiffs’ claim for intentional infliction of emotional distress under Rule 12(b)(6).

Personal Jurisdiction. Brooks, an Arizona resident, contended that that the Court did not have personal jurisdiction over him because 1) the contacts between him and Moore were created by Moore, and 2) Brooks’ conduct was on behalf of Winthrop. Because Brooks did not introduce competent evidence contradicting any of the relevant allegations of the complaint, the Court based its ruling on the allegations of the complaint, which, under the circumstances, were assumed to be true for Rule 12(b)(2) purposes. The Court concluded that the totality of Brooks’ alleged conduct was sufficient to subject him to jurisdiction before the Court—among other conduct, and acting on behalf of both Winthrop and himself individually, Brooks oversaw Winthrop’s North Carolina business operations, attempted to effectuate the transfer of North Carolina property to himself or to Winthrop, and directed demands and threats to Moore in North Carolina (including the threat to involve North Carolina law enforcement).

Intentional Infliction of Emotional Distress. The Court found that the complaint’s allegations that Brooks had demanded that Moore transfer certain assets to which Brooks had no legal claim and threatened to have him charged and arrested if he did not do so, resulting in Moore committing suicide, were sufficient to state an IIED claim.

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Charles Schwab & Co., Inc. v. Marilley, 2026 NCBC 7 (N.C. Super. Ct. Jan. 23, 2026) (Earp, J.)

Key Terms: motion to amend; futility; timeliness; summary judgment; Uniform Transfer to Minors Act; laches; statute of limitations; interpleader

As previously summarized here, this interpleader action was brought by Charles Schwab & Co. to determine the ownership of funds it held in a brokerage account. The funds were originally gifted to Ms. Marilley by her grandfather, Dr. Marilley, through the creation of an account subject to the Uniform Transfers to Minor Act. Mr. Marilley (Ms. Marilley’s father) later became the custodian of the UTMA Account and, after Ms. Marilley turned 21, a dispute arose between her and her father regarding ownership of the funds. Ms. Marilley moved for summary judgment as to ownership, Mr. Marilley moved to amend his answer, and Schwab moved for interpleader.

Summary Judgment on Declaratory Judgment Claim. Ms. Marilley requested that the Court enter summary judgment declaring her the sole and rightful owner of the funds. Mr. Marilley argued that summary judgment should be denied because 1) the claim was time-barred under either the three-year statute of limitations for contract-based claims or the doctrine of laches; and 2) genuine issues of material fact existed. With respect to Mr. Marilley’s affirmative defenses, the Court determined that he had waived the defenses by failing to plead them in his answer to Ms. Marilley’s crossclaims. In any event, the declaratory judgment claim was quiet-title based, not contract-based, and, therefore, the three-year statute of limitations did not apply. Mr. Marilley also had not demonstrated that laches applied because he had not shown any change in the condition of the funds or the relationship of the parties or any prejudice. The Court agreed with Ms. Marilley that the undisputed facts entitled her to summary judgment. There was no dispute that Dr. Marilley had irrevocably gifted the funds to Ms. Marilley as custodial property under the UTMA. Mr. Marilley’s argument that Ms. Marilley had granted him an ownership interest in the funds by signing a form converting the UTMA Account into a joint account was without merit because she had signed the form before she turned 21. Under the applicable UTMA, she had no power to affect the ownership of custodial funds in the UTMA Account until she had turned 21.

Motion to Amend Answer. Mr. Marilley moved to amend his answer to add the affirmative defenses discussed above and a crossclaim for unjust enrichment. The Court denied the motion. The affirmative defenses were futile for the same reasons as already discussed. The unjust enrichment claim was futile because the undisputed facts showed that Dr. Marilley, not Mr. Marilley, had bestowed the funds on Ms. Marilley. Further, to the extent Ms. Marilley had promised to return excess funds, such a promise would raise contract issues and foreclose a claim for unjust enrichment. The Court also concluded that Mr. Marilley had unduly delayed in seeking to amend in that the motion to amend was not filed until the eve of the hearing on the summary judgment motion.

Interpleader. The Court determined that interpleader was appropriate, and since it had already determined that the funds belonged solely to Ms. Marilley, the Court ordered Schwab to remove the restrictions on the funds and disburse them to Ms. Marilley. The Court also discharged Schwab of liability to either Mr. Marilley or Ms. Marilley respecting ownership of the funds and dismissed Schwab from the case.

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WP Church, LLC v. Whalen, 2026 NCBC Order 4 (N.C. Super. Ct. Jan. 15, 2026) (Davis, J.)

Key Terms: preliminary injunction; stay pending appeal; N.C.G.S. § 1-294; substantial right; discretionary stay

Plaintiff WP Church and Defendant Whalen are two members of 5Church Charleston, which was formed to operate a Church and Union restaurant in Charleston. WP Church filed this suit against Whalen alleging numerous claims predicated on Whalen’s alleged self-dealing and misappropriation of 5Church’s assets. 5 Church later filed a third-party complaint and cross claims against WP Church and others based on WP Church’s alleged breaches of a non-competition provision in 5Church’s operating agreement. 5Church sought a preliminary injunction enjoining WP Church from violating the non-competition provision, which was denied. WP Church sought a preliminary injunction enjoining Whalen from making transfers of 5Church’s assets outside the ordinary course of business, which was granted. 5 Church appealed from the denial of its preliminary injunction motion and Whalen appealed from the grant of a preliminary injunction against him. 5Church and Whalen jointly filed a motion to recognize the automatic stay under N.C.G.S. § 1-294 or for a discretionary stay pending the appeals.

The Court denied the motion. No automatic stay existed under N.C.G.S. § 1-294 because the appeals were interlocutory and neither appealing party had shown that the injunction orders affected a substantial right. The Court also declined to grant a discretionary stay because neither appealing party had shown that they were likely to suffer prejudice absent a stay or that they were likely to succeed on the merits.

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Lafayette Vill. Pub, LLC v. Burnham, 2026 NCBC Order 5 (N.C. Super. Ct. Jan. 15, 2026) (Davis, J.)

Key Terms: motion for order to show cause; criminal contempt; N.C.G.S. § 5A-11(a)(3); willful conduct; administrative dissolution

This case involves a long-running dispute over the management and control over Lafayette Village Pub between its three members—Plaintiffs John Bronson and Paul Bronson and Defendant Kenneth Burnham. While the lawsuit was pending, the parties were notified that the Pub’s lease would not be renewed and that it needed to vacate the premises by the end of 2024. After Defendant informed his office administrator of this and that the Pub would no longer be in business, she—on her own initiative and without direction from or knowledge by the Defendant—filed articles of dissolution for the Pub with the N.C. Secretary of State in early May 2025. The parties learned of the administrative dissolution later that month but neither side made any effort to have the Pub’s status reinstated. On 4 December 2025, Plaintiffs filed the present motion, contending that the dissolution was unauthorized and requesting that the Court enter an order for Defendant to show cause as to why he should not be held in criminal contempt for violating N.C.G.S. § 5A-11(a)(3), which defines criminal contempt to include “willful disobedience of, resistance to, or interference with a court’s lawful process, order, directive, or instruction or its execution.”

The Court denied the motion because there was no evidence showing that the dissolution was the direct result of the willful acts of Burnham. The only admissible evidence before the Court showed that the office administrator acted without Defendant’s knowledge or permission when she had the Pub administratively dissolved.

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Kennedy v. Ringel, 2026 NCBC Order 6 (N.C. Super. Ct. Jan. 21, 2026) (Conrad, J.)

Key Terms: motion for preliminary injunction; prior restraint on speech; jurisdiction; likelihood of success on the merits; early mediation

This case arises from a dispute among the members and managers of Refuge Builders, LLC (which was not made a party to the suit). Plaintiffs alleged that Defendants usurped control of the company and made defamatory statements to clients. Plaintiffs sought a preliminary injunction to enjoin Defendants from making false statements about them to third parties and to bar Defendants from denying Plaintiffs access to Refuge Builders’ accounts and excluding them from its management.

The Court denied the motion without prejudice. First, with respect to the false statements, Plaintiffs had made no showing that would warrant the extraordinary remedy of a prior restraint on speech. Second, the Court has no authority to enter an order that would affect Refuge Builders’ management or assets because Refuge Builders was not a party to the lawsuit. Third, each of Plaintiffs’ claims had a fatal defect or lacked the evidentiary support needed to establish a likelihood of success on the merits. However, based on its discussion with counsel at the PI hearing, the Court stayed further proceedings and ordered the parties to early mediation.

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Sambria Consulting Grp., LLC v. Mayfield, 2026 NCBC Order 7 (N.C. Super. Ct. Jan. 22, 2026) (Robinson, C.J.)

Key Terms: order on designation; N.C.G.S. § 7A-45.4(a)(1); breach of contract

Plaintiff initiated this lawsuit asserting various claims arising from the alleged breach of an asset purchase agreement between the parties. Defendants timely filed a notice of designation under N.C.G.S. § 7A-45.4(a)(1), asserting that designation was proper because the suit involved an alleged breach of contract and one of the defendants is a North Carolina corporation.

The Court concluded that designation was not proper because resolution of the pleaded claims would require only a straightforward application of contract law principles and did not implicate the law governing corporations under N.C.G.S. § 7A-45.4(a)(1).

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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 01/27/26

N.C. Business Court Opinions, January 1, 2026 – January 13, 2026

By: Rachel Brinson

KJET Ventures, LLC v. Jamison, 2026 NCBC Order 1 (N.C. Super. Ct. Jan. 7, 2026) (Houston, J.)

Key Terms: public censure and admonishment; Rule 11 sanctions, order to show cause, criminal contempt; attorneys’ fees; withdrawal as counsel

As summarized here, the Court previously ordered Defendants’ attorney to appear and show cause why he should not be held in criminal contempt for repeated failures to comply with the Business Court Rules and orders of the Court. Following the show cause hearing, the Court determined, in its inherent discretion, that while the attorney’s conduct did rise to the level of criminal contempt, to instead sanction the attorney pursuant to Rule 11, to publicly censure and admonish the attorney, to refer the attorney to the North Carolina State Bar for appropriate proceedings, and to order the attorney to pay the Plaintiff’s reasonable attorneys’ fees associated with his improper conduct. The Court also granted the attorney’s motion to withdraw as counsel for the Defendants.

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Implus Footcare, LLC v. Vore, 2026 NCBC Order 2 (N.C. Super. Ct. Jan. 12, 2026) (Davis, J.)

Key Terms: motion for appointment of discovery referee; discovery disputes; Rule 53

Plaintiff sought appointment of a discovery referee to resolve pending or anticipated discovery disputes on the grounds that the disputes constitute long or complicated accounts pursuant to Rule 53(a)(2)a. Defendants did not consent to the appointment of a discovery referee and the Court determined that none of Rule 53’s compulsory appointment of referee provisions applied based on the present record and denied the motion.

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Lexington Ins. Co. v. State of N.C., 2026 NCBC Order 3 (N.C. Super. Ct. Jan. 12, 2026) (Houston, J.)

Key Terms: pro hac vice admissions; sua sponte; courtroom attire; signature block; N.C. Gen. Stat. § 84–4.1

The Court sua sponte issued this order to memorialize its instructions to counsel regarding out-of-state attorneys’ appearances and pro hac vice admissions. The Court noted that numerous out-of-state attorneys have appeared in this case either through filings or at hearings without having been admitted, or even filed motions to be admitted, pro hac vice. The Court reminded the out-of-state attorneys, and local counsel, of the statutory requirements to be admitted pro hac vice, to caution against the use of “pro hac vice forthcoming” disclaimers on signature blocks, and to remind counsel of appropriate courtroom attire and decorum during all court proceedings including remote hearings. The Court ordered all attorneys not licensed in North Carolina to submit pro hac applications within seven days or to otherwise file certifications confirming they do not intend to seek such admission and motions to withdraw any such appearances.

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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 01/13/26

N.C. Business Court Opinions, December 17, 2025 – December 31, 2025

By: Ashley Oldfield

Kayser-Roth Corp. v. Gallotti, 2025 NCBC 76 (N.C. Super. Ct. Dec. 29, 2025) (Robinson, C.J.)

Key Terms: Rule 12(b)(6) motion to dismiss; contract interpretation; ambiguity; damages; fraud; breach of contract; Wage and Hour Act; statute of limitations

This action arose out of Defendant’s employment with, and termination from, Plaintiff. Plaintiff alleged that because it terminated Defendant for cause, it did not owe Defendant certain payments under his employment agreement. Defendant filed counterclaims for breach of contract for Plaintiff’s non-payment of severance, annual bonuses, and deferred compensation; NCWHA violations for such nonpayment; and fraud for Plaintiff’s alleged misrepresentation regarding the terms of the employment agreement which induced Defendant to sign it. Plaintiff moved to dismiss the counterclaims.

Damages. Under Defendant’s employment agreement, Defendant’s “base salary” was to be used to in calculating his bonus and severance payments. Defendant contended that “base salary” referred to his annual salary, while Plaintiff contended “base salary” referred to his monthly salary. Plaintiff argued that the claim should be dismissed or limited to the extent it sought damages beyond a calculation based on monthly salary. Due to various inconsistencies in the employment agreement, the Court determined that the term “base salary” was ambiguous and thus declined to dismiss or limit the claim.

Fraud. Defendant’s fraud claim was based on alleged misrepresentations made in 2018 regarding how his bonus and severance payments would be calculated under the employment agreement. The Court determined that Defendant’s allegations were insufficient to state a fraud claim. That Plaintiff now asserted a different interpretation of the agreement did not mean that Plaintiff’s agent had knowingly made a misrepresentation of existing fact at the time of the negotiations.

Statute of Limitations. Plaintiff asserted that Defendant’s breach of contract claim for the 2021 annual bonus and his NCWHA claim for the 2021 and 2022 annual bonuses were time-barred because they were brought outside their respective statutes of limitations. The parties disputed whether, under the employment agreement, bonuses were payable in the year in which they were earned or payable within 75 days of the close of the fiscal year. The Court concluded that under the NCWHA’s two-year statute of limitations, Defendant’s NCWHA claim for the 2021 annual bonus was barred regardless of which party’s position was correct. However, the Court determined that the employment agreement’s language regarding the payment date was ambiguous and, therefore, denied the motion as to the breach of contract claim for the 2021 bonus and the NCWHA claim for the 2022 bonus.

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Evergreen Builder Sols., LLC v. Taylor, 2025 NCBC 77 (N.C. Super. Ct. Dec. 29, 2025) (Houston, J.)

Key Terms: Rule 12(b)(6) motion to dismiss; breach of contract; non-compete agreement; non-solicit agreement; non-disclosure agreement; conversion; tortious interference with contract; legitimate business purpose; UDTPA; constructive trust; punitive damages

Plaintiff brought suit against two former employees, Taylor and Price, and their new employer (and related persons and entities, collectively the “Integrity Defendants”), asserting various claims relating to Taylor’s and Price’s alleged violations of the restrictive covenants in their employment agreements with Plaintiff. Defendants moved to dismiss most of the claims under Rule 12(b)(6).

Breach of Non-Compete and Non-Solicit Provisions. Although Plaintiff only operated in two cities in North Carolina, the non-compete and non-solicit provisions of Taylor’s and Price’s employment agreements prohibited them from competing “directly or indirectly” in any capacity with Plaintiff across at least a 150-mile radius spanning three states for at least three years. The Court found that these provisions were overbroad and unenforceable as they conceivably encompassed all services and products offered and clients serviced at any time regardless of whether Taylor and Price provided the products or services and regardless of whether Plaintiff provided the products or services while Taylor and Price were employed by Plaintiff. Thus, the breach of contract claim was dismissed to the extent based on the non-compete or non-solicit provisions.

Breach of Non-Disclosure/Confidentiality Provisions. With respect to these provisions, Taylor and Price argued that the claim should be dismissed because the information which Plaintiff alleged had been improperly disclosed was publicly available. However, even if the Court took judicial notice of the websites provided by Taylor and Price in support of this argument, the Court was unable to conclude that all of the information covered by the parties’ agreements was publicly available. As Plaintiff had minimally met the pleading requirements for this claim, the Court denied the motion to dismiss.

Conversion. Plaintiff alleged that Taylor and Price had converted its proprietary information by making copies of it while employed by Plaintiff and then using it without permission. The Court dismissed this claim because Plaintiff did not allege that it had demanded the return of the information or that it had actually been deprived of the information by Taylor’s and Price’s conduct.

Tortious Interference with Contract. Plaintiff alleged that the Integrity Defendants had tortiously interfered with Plaintiff’s agreements with Taylor and Price by inducing them to breach the agreements. The Court determined that, with respect to the non-compete and non-solicit provisions of the agreements, the claim failed because those provisions were unenforceable. With respect to the non-disclosure provisions, the claim failed as well because the complaint failed to factually allege that the Integrity Defendants acted with malice, i.e., without a legitimate business purpose. Moreover, the Court determined that the claim failed to meet the notice pleading standards and requirements because it lumped the six Integrity Defendants together and made only conclusory allegations of alter ego status. Without identifying which Defendant did what, the complaint failed to give sufficient notice of the claim.

Violation of the UDTPA. The Court dismissed the UDTPA claim against the Integrity Defendants because it was based solely on the tortious interference claim which was dismissed. However, the Court declined to dismiss the UDTPA claim against Taylor and Price based on Plaintiff’s existing claim for computer trespass, which defendants had not moved to dismiss and which may form the basis of a UDTPA claim.

Injunctive Relief, Constructive Trust, and Punitive Damages. As these are not standalone causes of action, the Court dismissed them without prejudice to Plaintiff’s ability to seek them as remedies if appropriate.

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Meridian Renewable Energy LLC v. Birch Creek Dev., LLC, 2025 NCBC Order 96 (N.C. Superior Ct. Dec. 29, 2025) (Houston, J.)

Key Terms: breach of contract; declaratory judgment; joint venture; chapter 11 bankruptcy; automatic stay; 11 U.S.C. § 362

Plaintiff Meridian Renewable Energy filed suit against Defendant Birch Creek Development asserting, inter alia, claims for breach of contract and declaratory judgment. Birch Creek responded by filing counterclaims against Meridian and third-party claims against Pine Gate Renewables for declaratory judgment and breach of fiduciary duty. A joint venture between Birch Creek and Pine Gate was also named as a third-party defendant. The dispute centered on a consulting agreement and multiple scopes of work (“SOWs”) between the parties. On November 6, 2025, Pine Gate filed chapter 11 bankruptcy in the Southern District of Texas. The parties agreed that the bankruptcy filing stayed all proceedings against Pine Gate under 11 U.S.C. § 362; Birch Creek, though, argued that the bankruptcy automatic stay should extend to all proceedings in the case, or, in the alternative, that the court should stay all proceedings in the case in its discretion.

The Court determined that the automatic stay did not prevent the ongoing litigation as between Meridian and Birch Creek on the whole. However, because both Meridian and Birch Creek sought declaratory judgments regarding the parties’ rights and interests under the consulting agreement and the SOWs, which would necessarily implicate Pine Gate, the Court determined that the declaratory judgment claims should be denied and dismissed without prejudice since the requested relief would not terminate the controversy between the parties. The remaining claims between Meridian and Birch Creek could proceed.

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Moore v. Brooks, 2025 NCBC Order 97 (N.C. Super. Ct. Dec. 31, 2025) (Houston, J.)

Key Terms: show cause; disqualification

As summarized here, the Court previously issued a show cause order to the law firm representing the Plaintiffs in this case due to their filing several motions on behalf of Defendant Redwood WI Holdings. The order directed the firm to show cause to why it should not be disqualified from representing Plaintiffs or Redwood WI Holdings or both.

After the show cause order was entered, Plaintiffs filed notices of voluntary dismissal without prejudice as to Redwood WI Holdings and several other defendants. The law firm then submitted a responsive brief asserting that Plaintiffs had intended to file suit against Redwood WI Holdings as a nominal defendant and that they did not intend to pursue causes of action against it. Because the law firm was no longer representing adverse parties, the Court in its discretion determined that the firm and its attorneys should not be disqualified as counsel.

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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 12/30/25

N.C. Business Court Opinions, December 3, 2025 – December 16, 2025

By: Austin Webber and Ashley Oldfield

Cherry v. Mauck, 2025 NCBC 74 (N.C. Super. Ct. Dec. 8, 2025) (Conrad, J.)

Key Terms: summary judgment; LLC; contractual dissolution; N.C.G.S. § 57D-6-02(2); judicial dissolution; N.C.G.S. § 57D-6-03(d); breach of contract; declaratory judgment

This case arises out of a management dispute in two family businesses—AJAL and C-Gas. As summarized here, the Court previously entered a preliminary injunction enjoining Defendant (a member and manager of both companies) from making distributions in violation of the companies’ operating agreements. Following entry of the preliminary injunction, Defendant sought dissolution of both companies. Plaintiffs moved for summary judgment on their claims for breach of contract, and Defendant moved for summary judgment relating to dissolution.

Plaintiffs’ Claims for Breach of Contract: Plaintiffs sought summary judgment on their claims that Defendant had breached the companies’ operating agreements by making distributions over Plaintiffs’ objections. As there was no dispute of material fact, the Court found Defendant liable on this claim as a matter of law, awarded nominal damages, and entered a permanent injunction enjoining Defendant from making additional distributions without majority consent. The Court, however, denied Plaintiffs’ request for an order requiring Defendant to pay back the amount of the distributions because 1) they had not been personally harmed by the distributions and had not asserted derivative claims on behalf of the companies; and 2) they had not requested specific performance in their complaint.

Declaratory Judgment/Judicial Dissolution: C-Gas. Defendant sought a declaration that C-Gas was dissolved under the deadlock provision in its operating agreement, which provides that if Plaintiff Jay and Defendant are unable to agree on certain matters, including making capital expenditures or cash distributions, and neither initiates the process to purchase the interest of the other within ten days, then C-Gas shall be dissolved. The Court found that there was no dispute of material fact that the parties’ disagreements triggered the deadlock provision and that no party had timely initiated the buy-out process. Thus, the Court granted Defendant’s motion for summary judgment on his declaratory-judgment claim that C-Gas was dissolved.

Judicial Dissolution: AJAL. Defendant sought judicial dissolution of AJAL under N.C.G.S. § 57D-6-02(2) and invoked both subsections of that provision—subsection (i), which provides for dissolution when it is not practicable to conduct the company’s business; and subsection (ii), which provides for dissolution to protect the rights and interests of a member. After the summary judgment hearing, Plaintiffs withdrew their opposition to dissolution under subsection (ii) and asserted their intent to buy Defendant’s interest in AJAL for fair value pursuant to N.C.G.S. § 57D-6-03(d). Defendant then asserted that summary judgment should only be granted under subsection (i) (which does not provide for a buy-out). The Court, however, held Defendant to his pleadings and granted Defendant summary judgment on his claim for dissolution under subsection (ii) of N.C.G.S. § 57D-6-02(2). But since Plaintiffs intended to purchase Defendant’s equity interest for fair value as allowed by N.C.G.S. § 57D-6-03(d), the Court did not order AJAL’s dissolution.

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Box Co. of Am. v. Bostick, 2025 NCBC 75 (N.C. Super. Ct. Dec. 15, 2025) (Davis, J.)

Key Terms: motion to dismiss; non-compete; non-solicitation; trade secrets; implied contract; quantum meruit; misappropriation of trade secrets; fraud; Rule 9(b); unfair and deceptive trade practices

Defendant Bostick was originally hired by CorTek, Inc. and signed a non-competition agreement prohibiting Bostick from working for a competitor for a two-year period following termination. CorTek later sold its assets to Plaintiff Box Company of America, LLC and assigned Bostick’s non-competition agreement to Plaintiff. Bostick worked for Plaintiff as a key sales employee for about a year before resigning and obtaining new employment with a competitor. After Plaintiff became aware of Bostick soliciting customers with whom he had working during his employment with Plaintiff, Plaintiff filed suit asserting various claims arising from Bostick’s alleged breach of the non-competition agreement and misappropriation of trade secrets. Bostick moved to dismiss all claims.

Breach of Contract: Non-Competition Agreement.  The Court concluded that the non-competition agreement was unenforceable because it prohibited activity in a particular industry in any capacity. The Court declined to consider parol evidence of the parties’ intent because the contract language was not ambiguous or to “blue-pencil” different terms into the agreement. The Court dismissed this claim with prejudice.

Breach of Contract: Confidentiality Agreement.  The Court dismissed, without prejudice, Plaintiff’s breach of contract claim for keeping Plaintiff’s proprietary information confidential because no written agreement existed and Plaintiff failed to adequately allege the existence of such agreement or its terms.

Breach of Implied Covenant of Good Faith and Fair Dealing. Where a claim for breach of the implied covenant of good faith and fair dealing is part and parcel with a breach of contract claim, they rise or fall together. Since the Court had dismissed the breach of contract claims, it also dismissed without prejudice the breach of the implied covenant of good faith and fair dealing claim.

Breach of Implied Contract. The Court dismissed this claim as the complaint was too vague and failed to adequately allege any implied-in-fact contract or the appropriate elements for quantum meruit.

Misappropriation of Trade Secrets. The Court dismissed this claim because Plaintiff failed to allege what reasonable protections it undertook to protect its trade secrets or how Defendant misappropriated any such trade secret.

Fraud. The Court dismissed Plaintiff’s fraud claim because Plaintiff largely failed to allege when the misrepresentations at issue were specifically made, thereby failing to comply with Rule 9(b)’s heightened pleading standard. Further, unfulfilled promises of future intent are typically not actionable on a theory of fraud.

Unfair and Deceptive Trade Practices. The Court dismissed this claim because 1) the underlying fraud and trade secret misappropriation claims had been dismissed; and 2) disputes between an employer and employee do not typically give rise to UDTP liability.

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Hubquarter Landing Townhome Owners Assoc., Inc. v. Lake Lyfe Homes, LLC, 2025 NCBC Order 94 (N.C. Super. Ct. Dec. 12, 2025) (Robinson, C.J.)

Key Terms: mandatory complex business case; N.C.G.S. § 7A-45.4(a); notice of designation; timeliness; third-party complaint; N.C.G.S. § 7A-45.4(b)(2); amount in controversy

Plaintiffs initiated this action on July 21, 2025. On September 2, 2025, the superior court stayed all proceedings for sixty days. On December 3, 2025, Defendants filed their Answer & Counterclaim/Third-Party Complaint and a Notice of Designation  contending that designation was proper under N.C.G.S. § 7A-45.4(a)(1), (a)(9), and (b)(2).

The Court determined that, for purposes of designation under N.C.G.S. § 7A-45.4(a)(1) and (a)(9), the NOD was untimely. Where a material issue is raised in both a complaint and a third-party complaint, the NOD’s timeliness will be based off of the complaint, which is the first pleading to raise the claimed basis for designation. Here, the issues raised in the third-party complaint were first raised in the complaint. Thus, because Defendants did not file their NOD within 30 days of service of the complaint, the NOD was untimely.

The Court also determined that designation was not proper under N.C.G.S. § 7A-45.4(b)(2) because neither the complaint nor third-party complaint sought damages equal to or exceeding $5,000,000. Defendants’ reference in the NOD to the five million dollar of the real property at issue did not meet the statutory requirement.

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Forsyth Tucker Sports Constr., LLC v. Tucker, 2025 NCBC Order 95 (N.C. Super. Ct. Dec. 15, 2025) (Robinson, C.J.)

Key Terms: N.C.G.S. § 7A-45.4(a); mandatory complex business case; notice of designation

Plaintiff initiated this action on October 6, 2025. On December 8, 2025, Defendant filed his Answer, Affirmative Defenses, Counterclaim, and Third-Party Claim against Andrew Forsyth, as a third party defendant, and simultaneously filed a notice of designation under N.C.G.S. § 7A-45.4(a)(1). Defendant contended that the third-party claim implicated the law governing LLCs because it involved a dispute regarding Defendant and Forsyth’s ownership interests in a limited liability company for which there was no written operating agreement. The Court agreed but concluded that designation was nonetheless improper because the NOD was untimely since the ownership issue was first raised in the complaint. Thus, the NOD should have been filed within thirty days of service of the complaint, which Defendant failed to do.

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Howard v. IOMAXIS, LLC, No. 134A25, 2025 N.C. LEXIS 1091 (N.C. 2025) (per curiam)

Key Terms: economic interest holder; motion to dismiss; personal jurisdiction; affirmed; per curiam

As summarized here, this action involves a dispute between the Ronald E. Howard Revocable Trust (a purported 51% economic interest holder in IOMAXIS) and the IOMAXIS members regarding the Trust’s right to the economic benefits from its interest. Two of the Defendants moved to dismiss on the basis of lack of personal jurisdiction, asserting that they lacked sufficient minimum contacts with North Carolina to confer personal jurisdiction over them. The Business Court denied the motion and Defendants appealed. The Supreme Court affirmed per curiam.

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Gvest Real Estate, LLC v. JS Real Estate Investments, LLC, No. 308A24, 2025 N.C. LEXIS 1083 (N.C. 2025) (Riggs, J.)

Key Terms: summary judgment; final judgment; limited liability company; operating agreement; transfer of membership interest; waiver; fiduciary duty; minority member oppression

As summarized here, this action involves a dispute between the three members of Yards at NoDa, LLC. Plaintiff, a minority member, sought a declaratory judgment that it was the sole member of the LLC due to the Defendants’ transfer of their membership interests. Plaintiff also asserted claims for breach of fiduciary duty and constructive fraud against the other two members, who collectively owned a majority interest. The Business Court granted summary judgment in favor of Defendants on these claims and Plaintiff appealed. The Supreme Court affirmed. With respect to the declaratory judgment claim, the evidence showed that the transfer of Defendants’ membership interests was invalid because it did not comply with the LLC’s operating agreement. As to the fiduciary-duty-based claims, Plaintiff urged the Court to use the present case to extend shareholder oppression claims to LLCs and to minority coalitions to create a fiduciary duty. Although the Court acknowledged that there may be situations where a fiduciary duty arises between members of an LLC (such as where the majority coalition controls the appointment of managers in a manager-managed LLC), such a fiduciary duty did not exist in the present circumstances.

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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 yo

Posted 12/16/25

N.C. Business Court Opinions, November 19, 2025 – December 2, 2025

By: Lauren Schantz

Estevez v. C&S Com., LLC, 2025 NCBC 73 (N.C. Super. Ct. Nov. 25, 2025) (Houston, J.)

Key Terms: Rule 12(b)(6); breach of fiduciary duty; piercing the corporate veil; limited liability company; majority member; remedy; N.C.G.S. 57D-3-30; mere instrumentality; alter ego; domination; conclusory allegations; operating agreement; waiver; good faith and fair dealing; unconscionability; public policy; freedom of contract

Plaintiffs are two minority members and employees of Defendant C&S Commerce, LLC. Defendant Cameron Clay is the majority member and sole manager of the company. Plaintiffs alleged that after they rejected Clay’s multiple attempts to purchase their membership interests, Clay fired them, refused their request to inspect the company’s books and records, and deemed their membership interests forfeited. Plaintiffs sued C&S and Clay, both individually and in his capacity as manager of C&S. Defendants moved to dismiss Plaintiffs’ remedy of piercing the corporate veil and their claim for breach of fiduciary duty.

Piercing the Corporate Veil. The Court determined that Defendants’ alleged breach of C&S’s operating agreement, standing alone, was insufficient to invoke this remedy. The Court further concluded that Clay’s majority ownership interest did not necessarily rise to the level of domination needed to support a veil-piercing theory. Because the remainder of Plaintiffs’ complaint merely recited the factors North Carolina courts consider when deciding whether to pierce the corporate veil without alleging any specific facts, the Court granted Defendants’ motion and dismissed Plaintiff’s request to pierce the corporate veil.

Breach of Fiduciary Duty. Clay argued that he did not owe Plaintiffs a fiduciary duty or, if he did, any such fiduciary duties were waived pursuant to the operating agreement. The Court agreed, concluding that C&S’s operating agreement contained an express waiver of any fiduciary duties owed by Clay, either as a manager or a majority member, to Plaintiffs. The Court noted that an alleged breach of the duty of good faith and fair dealing sounds in contract, not tort, and cannot serve as the basis for a breach of fiduciary duty claim. The Court determined that Plaintiffs’ argument that such a waiver was unconscionable and unenforceable was without merit given North Carolina’s freedom of contract principles. Thus, the Court dismissed Plaintiffs’ claim for breach of fiduciary duty with prejudice.

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Fulbright v. Asheville Arras Residences, LLC, 2025 NCBC Order 90 (N.C. Super. Ct. Nov. 19, 2025) (Davis, J.)

Key Terms: consent motion; settlement; derivative claims; dismissal; nonprofit corporation; condominium owners association; N.C.G.S. § 55A-7-40(d); adequate notice; best interests

Plaintiffs, owners of residential condominiums, sued several defendants over operational and safety concerns related to elevators in their buildings. Two Plaintiffs asserted a derivative claim on behalf of two condominium owners associations. The parties reached a settlement and moved the Court to approve dismissal of the derivative claim. The Court denied the motion without prejudice, noting that the motion omitted key details regarding the adequacy of the notice of the proposed settlement given to interested persons, whether the associations received any responses to the notice, and why the settlement was in the best interests of the associations.

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Water.io Ltd v. Sealed Air Corp., 2025 NCBC Order 91 (N.C. Super. Ct. Nov. 24, 2025) (Conrad, J.)

Key Terms: motion to amend; breach of contract; case management order; deadline to amend pleadings; Rule 15(a); unreasonable delay; nature of the case; raise the stakes; undue prejudice

Plaintiff initiated suit in July 2024, alleging that Defendant breached a contract for the development and sale of sensors. The case management order set a January 2025 deadline to amend the pleadings and a June 2025 deadline for the close of fact discovery. The Court subsequently granted numerous extensions of case management deadlines, though not the deadline to amend the pleadings, and, as summarized here, granted Defendant’s partial summary judgment motion filed prior to the close of discovery. Weeks before the fact discovery deadline, Plaintiff moved for leave to amend its complaint, adding a new defendant, six new claims for relief, and pages of new factual allegations. The Court denied the motion based on Plaintiff’s unreasonable delay in asserting the new allegations and because the amendments would change the nature of the case and raise the stakes of the lawsuit, thereby unduly prejudicing Defendant.

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Water.io Ltd v. Sealed Air Corp., 2025 NCBC Order 92 (N.C. Super. Ct. Nov. 24, 2025) (Conrad, J.)

Key Terms: discovery dispute; inadvertent production; attorney-client privilege; work-product immunity; claw-back; BCR 10.9; Rule 26(b)(3); waiver; undue hardship; substantial equivalent; timely; subject matter waiver

Plaintiff moved the Court to determine whether two documents inadvertently produced by Defendant in discovery may be clawed back on the basis of attorney-client privilege and/or work-product immunity. The Court concluded that the first document was protected by work-product immunity because Defendant’s in-house counsel requested that the document be created in anticipation of litigation with Plaintiff. The Court disagreed with Plaintiff that Defendant had waived its right to claw back the first document, determining that Defendant’s initial review for privilege was reasonable and its request was timely. The Court further determined that Plaintiff did not face undue hardship in obtaining the substantial equivalent of the first document through other discovery. Although the Court determined that Defendant waived its claw-back rights to the second document based on Defendant’s six-week delay in asserting the attorney-client privilege, the Court concluded that the imposition of a subject matter waiver was improper. The Court denied Plaintiff’s motion as to the first document and granted Plaintiff’s motion as to the second document.

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Dover Sub 1 LLC v. Hawks Note Purchase, LLC, 2025 NCBC Order 93 (N.C. Super. Ct. Nov. 25, 2025) (Robinson, C.J.)

Key Terms: opposition to designation; intervenor; N.C.G.S. § 7A-45.4(b)(2); limited liability company; N.C.G.S. § 7A-45.4(d)(2); timely; pleading; N.C.G.S. § 7A-45.4(a)(1); managerial authority; N.C.G.S. § 57D-3-20; N.C.G.S. § 7A-243; declaratory judgment; value of rights; N.C.G.S. § 7A-45.4(g)

This matter arises from a dispute among several interrelated limited liability companies that were parties to a real estate investment transaction. MaxMez NC, LLC filed a motion to intervene, a proposed intervenor complaint, and, a day later, a notice of designation. Plaintiffs opposed designation, arguing that the notice of designation was untimely, the matter did not involve a dispute involving the law governing limited liability companies, and MaxMez was using the designation process to delay trial.

The Court agreed that the notice of designation was untimely because MaxMez did not file it contemporaneously with its motion to intervene and intervenor complaint. However, the Court nevertheless concluded that the matter must be designated as a mandatory complex business case pursuant to N.C.G.S. § 7A-45.4(b)(2) because (1) the matter involved questions of managerial authority within a complex corporate structure such that the case was properly designated under section 7A-45.4(a)(1); and (2) it included a declaratory judgment claim where the rights at stake were valued at more than $5 million. The Court noted that a pleading need not expressly cite a provision of the North Carolina Limited Liability Company Act to qualify for designation under section 7A-45.4(a)(1), and the Court further determined that MaxMez had not unreasonably delayed in seeking to intervene. The opposition was overruled and the matter remained a mandatory complex business case.

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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 12/02/25

N.C. Business Court Opinions, November 5, 2025 – November 18, 2025

By: Ashley B. Oldfield

Moore v. Brooks, 2025 NCBC 69 (N.C. Super. Ct. Nov. 7, 2025) (Houston, J.)

Key Terms: Rule 12(b)(2); specific personal jurisdiction; purposeful availment; attorney-client relationship

Defendant Winthrop Intelligence, LLC, a Wyoming LLC, was formed by Drue Moore and his cousin in 2009. Drue later hired Defendant Robinson, a Wyoming-licensed attorney, to provide various legal services to him, including creating two Wyoming trusts and two Wyoming LLCs to help protect Drue’s assets from future creditors. Robinson eventually became Winthrop’s manager. Robinson’s company, ODFS, served as the trustee of Drue’s two trusts, one of which was the beneficiary of a life insurance policy on Drue’s life and the other held Drue’s interest in Winthrop. In September 2024, Robinson and Winthrop’s CFO, Brooks, accused Drue of taking unauthorized distributions. Over the next several months, they had multiple communications to negotiate a resolution to the dispute and Robinson transferred or attempted to transfer assets to Winthrop from the other entities. Drue passed away in early 2025 and shortly after, his family and the trusts filed suit against Robinson, his law firm, and ODFS (the “Robinson Defendants”), Brooks, Winthrop, the two LLCs, and several other entities, asserting claims for declaratory judgment, intentional infliction of emotional distress, conversion, unjust enrichment, breach of fiduciary duty, constructive fraud, constructive trust, and negligence. The Robinson Defendants moved to dismiss the claims against them for lack of personal jurisdiction.

Plaintiffs contended that the Court had specific personal jurisdiction over the Robinson Defendants because (i) Robinson and his firm provided legal services to Drue that concerned property in North Carolina; (ii) Robinson, as Winthrop’s manager, signed and filed annual reports with the NC Secretary of State; (iii) Robinson assisted with the management of the two Wyoming LLCs that ultimately took title to North Carolina property and ensured that Drue received mail in North Carolina; (iv) Robinson, through ODFS as trustee, collected insurance premiums and paid them to a North Carolina insurer; and (v) Robinson caused Brooks, as his purported agent, to contact, negotiate, and otherwise interact with Drue and others in North Carolina.

The Court determined that these purported contacts were too attenuated to form the basis of specific personal jurisdiction over the Robinson Defendants. The Robinson Defendants’ provision of legal and trustee services to Drue, a resident of North Carolina, was insufficient to render the Robinson Defendants subject to the Court’s jurisdiction because there was no indication that they purposefully availed themselves of the benefits of North Carolina. Moreover, Winthrop’s contacts with North Carolina were not attributable to the Robinson Defendants merely because Robinson was its attorney and manager. Finally, the evidence did not establish that Brooks was acting as an agent of Robinson (as opposed to being an agent of Winthrop) and therefore Brooks’ contacts with North Carolina were not attributable to the Robinson Defendants. For these reasons, the Court granted the Robinson Defendants’ Rule 12(b)(2) motion and dismissed the claims against the Robinson Defendants without prejudice.

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Fred Smith Co. v. Smith, 2025 NCBC 70 (N.C. Super. Ct. Nov. 14, 2025) (Davis, J.)

Key Terms: Rule 12(b)(1); Rule 12(b)(6); equitable distribution action; district court; exclusive jurisdiction; conversion; intangible interest; tortious interference with contract

Defendant Virginia Smith initiated an equitable distribution lawsuit in district court against Fred Smith and subsequently filed a motion for a preliminary injunction, seeking to enjoin Mr. Smith from, among other things, “disposing, transferring, . . . or in any manner alienating any marital or divisible asset.” Plaintiffs in the present lawsuit are twenty companies who are largely controlled by Mr. Smith and which are parties to various lending agreements valued at more than $120 million. After Mrs. Smith filed the motion for a preliminary injunction in the ED lawsuit, Plaintiffs initiated the present lawsuit seeking 1) declaratory and injunctive relief aimed at barring Mrs. Smith from making any arguments in connection with her preliminary injunction motion in the ED lawsuit which would affect Plaintiffs; and 2) monetary relief for claims for tortious interference with contract and conversion. In short, Plaintiffs asserted that Mrs. Smith’s preliminary injunction motion in the ED lawsuit implicated certain default provisions in their lending agreements to Plaintiffs’ detriment.  Mrs. Smith moved to dismiss the present lawsuit under Rules 12(b)(1) and 12(b)(6).

Rule 12(b)(1). The Court dismissed the declaratory and injunctive relief claims under Rule 12(b)(1) based on the district court’s exclusive jurisdiction over equitable distribution actions. The statutes governing equitable distribution actions expressly authorize a spouse—such as Mrs. Smith—to seek injunctive relief to protect her interest in the marital estate.  To the extent the Plaintiffs have an objection to Mrs. Smith’s preliminary injunction motion, the objection should be made in the ED lawsuit, in which the Plaintiffs could join. Further, North Carolina’s appellate courts have uniformly held in analogous cases that a superior court judge lacks authority to interfere with a district court’s resolution of a separately pending equitable distribution action. The Court declined, however, to dismiss the tort claims under Rule 12(b)(1), as these claims did not seek to directly interfere with the ED lawsuit or otherwise impinge on the district court’s authority.

Rule 12(b)(6). The Court nevertheless dismissed the tort claims under Rule 12(b)(6). Regarding the tortious interference claim, Plaintiffs’ allegation that Mrs. Smith had filed the preliminary injunction motion in the ED lawsuit was insufficient to satisfy the inducement or without justification elements.  Regarding the conversion claim, there were no allegations that Mrs. Smith had acquired ownership over, or possession of, any of Plaintiff’s property, a required element of the claim. Moreover, to the extent the claim was based on Mrs. Smith’s alleged assumption of ownership and management interests in Plaintiffs, those interest were intangible interests which cannot form the basis of a conversion claim.

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Weddle v. WakeMed Health & Hosps., 2025 NCBC 71 (N.C. Super. Ct. Nov. 17, 2025) (Conrad, J.)

Key Terms: final approval of class action settlement; motion for attorneys’ fees; reasonableness of rates; N.C. R. Prof. Cond. 1.5(a)

Plaintiffs filed this action, both individually and on behalf of a putative class, asserting claims relating to WakeMed’s use of third-party tracking software on its website and patient portal. The Court previously entered an order that preliminarily approved a settlement agreement, conditionally certified the settlement class, approved the claims and notice process, and set a schedule for submission of a motion for final settlement approval and for a hearing thereon. Plaintiffs timely moved for final settlement approval and for an award of attorneys’ fees, and the required fairness hearing was held.

The Court certified the settlement class, overruled the sole objection to the settlement, and approved the settlement, finding it fair, reasonable, and adequate, and in the best interest of the class.

The Court also granted the motion for attorneys’ fees, in part, and awarded $750,000, plus costs. Several of the factors in Rule 1.5(a) of the Rules of Professional Conduct weighed in favor of a substantial award, including the time and labor required, the novelty and difficulty of the questions involved, the skill required, and the tangible results obtained. However, the record did not establish that the hourly rates charged by Plaintiffs’ counsel (ranging from $450 to $995, for a “blended” hourly rate over $750) were reasonable when compared with customary rates for similar services in North Carolina. Thus, the Court reduced the requested amount of attorneys’ fees.

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Whole Foods Mkt. Grp., Inc. v. CBL-Friendly Ctr. CMBS, LLC, 2025 NCBC 72 (N.C. Super. Ct. Nov. 17, 2025) (Earp, J.)

Key Terms: redevelopment; asbestos remediation; Rule 12(b)(6) breach of contract; lease assumed pursuant to bankruptcy order; joint and several liability; consequential damages; constructive eviction; breach of covenant of good faith and fair dealing; declaratory judgment

The action arises from a controversy resulting from redevelopment work performed by Defendant CBL-Friendly on a portion of a building containing a Whole Foods store. Plaintiff Whole Foods Market Group, Inc. alleged that during the redevelopment work, asbestos both migrated to its store and was released within its store, forcing Whole Foods to close the premises for a period of two weeks, remediate the problem, and discard some of its inventory. Whole Foods brought suit against its landlord, Defendant Transformco, for breach of sublease, constructive eviction, breach of the covenant of good faith and fair dealing, and declaratory judgment, and against CBL-Friendly for breach of the operating agreement which outlined the terms by which CBL-Friendly would redevelop the property.  Both Defendants moved to dismiss under Rule 12(b)(6). The Court denied both motions.

Regarding the claim against CBL-Friendly for breach of the operating agreement, the Court determined that Whole Foods’ allegations that the operating agreement was a valid agreement between the parties and that CBL-Friendly had committed at least ten different breaches of it were sufficient to state a claim and allege standing. The Court also decided that CBL-Friendly’s arguments regarding joint and several liability, contract interpretation, and consequential damages would be more appropriately considered at summary judgment.

Regarding the claim against Transformco for breach of sublease, Transformco argued that Whole Foods was 1) statutorily barred from seeking recourse against it because Transformco acquired the sublease “free and clear of any liability” pursuant to a bankruptcy order; and 2) contractually barred from seeking recourse because Whole Foods certified in subsequent amendments to the sublease that Transformco was not in default, thereby waiving any right to sue. The Court rejected both arguments. When Transformco assumed the sublease from the debtor in bankruptcy, it did so subject to all of the debtor’s obligations; moreover, after assuming the sublease, Transformco expressly ratified the sublease’s obligations. Further, as alleged, Whole Foods was not aware of the defaults and therefore could not have waived any right to sue.

The Court also found that Whole Foods’ claims for constructive eviction and breach of the covenant of good faith and fair dealing were adequately pleaded.

As to the declaratory judgment claim in which Whole Foods sought a declaration that it had the right to withhold rent under the sublease, while the complaint did not allege a dispute regarding the validity of the sublease’s rent abatement provisions, it did allege the existence of a dispute regarding Transformco’s liability under the sublease, which the Court concluded was sufficient to state a claim for declaratory judgment.

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In re Asheville Eye Assocs. Data Incident Litig., 2025 NCBC Order 83 (N.C. Super. Ct. Nov. 10, 2025) (Davis, J.)

Key Terms: preliminary approval of class action settlement

The Court granted Plaintiffs’ application under Rule 23 for an order preliminarily approving a settlement agreement, certifying a settlement class, appointing Plaintiffs as class representatives, appointing class counsel, appointing a settlement administrator, and approving the form and content of notice to settlement class members.

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Howard v. Cameron Park Neighborhood Ass’n, 2025 NCBC Order 84 (N.C. Super. Ct. Nov. 12, 2025) (Robinson, C.J.)

Key Terms: order on designation; N.C.G.S. § 7A-45.4(a)(1); contract law; articles of incorporation; bylaws

Plaintiffs filed suit asserting declaratory judgments claims against Defendant neighborhood association regarding actions taken to change the name of the neighborhood and neighborhood association and whether such actions violated the Defendant’s articles of incorporation and bylaws. Defendant timely filed a notice of designation, seeking designation under N.C.G.S. § 7A-45.4(a)(1). Defendant contended that designation was proper because the claims raised multiple questions on nonprofit law.

The Court concluded that designation under N.C.G.S. § 7A-45.4(a)(1) was not proper. Plaintiffs’ claims sought enforcement of the Defendant’s articles of incorporation and bylaws and therefore only required a straightforward application of contract law principles rather than the law governing corporations.

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Best Logistics Grp., Inc. v. Bravo, 2025 NCBC Order 85 (N.C. Super. Ct. Nov. 12, 2025) (Conrad, J.)

Key Terms: nonsolicitation of customers; confidential information; temporary restraining order

Plaintiffs filed suit asserting that Defendants, former employees, took Plaintiffs’ trade secrets and confidential information and wer using that information to help their new employer compete. Plaintiffs moved for a temporary restraining order barring Defendants from soliciting certain customers and from using Plaintiffs’ confidential information.

The Court concluded that Plaintiffs had not shown a likelihood of success on their claim that Defendants breached the customer nonsolicitation clauses in their employment agreements because 1) there were good reasons to doubt the enforceability of the nonsolicitation clauses; and 2) there was insufficient evidence that Defendants had breached the clauses. However, the Court also concluded that Plaintiffs had shown a likelihood of success on their claim for breach of the agreements’ confidentiality clauses because 1) there was no dispute that the clauses were valid and enforceable; and 2) there was evidence showing that Defendants had sent confidential information to their personal emails shortly before their departures.

Accordingly, the Court denied the motion with respect to the nonsolicitation of customers but granted a TRO enjoining Defendants from using or disclosing specified confidential information of Plaintiffs.

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Strickland v. Guiliano, 2025 NCBC Order 86 (N.C. Super. Ct. Nov. 13, 2025) (Robinson, C.J.)

Key Terms: order on designation; N.C.G.S. § 7A-45.4(b)(2); mandatory mandatory; amount in controversy

Plaintiff filed suit seeking a declaratory judgment regarding the ownership, control, and governance of 108Labs, LLC and timely filed a notice of designation seeking designation under N.C.G.S. § 7A-45.4(b)(2). Plaintiff contended that the case qualified as a “mandatory mandatory” case because 108Labs’ total anticipated assets exceeded $5 million.

The Court concluded that designation under N.C.G.S. § 7A-45.4(b)(2) was not proper. Plaintiff had not indicated which subdivision of subsection (a) applied, a requirement for designation under subsection (b)(2). In addition, Plaintiff’s allegation regarding the value of 108Labs’ assets was insufficient to satisfy subsection (b)(2)’s requirement that the amount in controversy equal or exceed $5 million.

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Best Logistics Grp., Inc. v. Bravo, 2025 NCBC Order 87 (N.C. Super. Ct. Nov. 12, 2025) (Conrad, J.)

Key Terms: extension of temporary restraining order; Rule 65

As summarized above, the Court previously granted a temporary restraining order set to expire ten days from issuance. Plaintiffs then requested that the Court extend the TRO for more than twenty days and lengthen the briefing schedule for their pending motion for preliminary injunction. Defendants opposed the request. Because Rule 65 does not permit the Court to extend a TRO beyond another ten days without the opposing party’s consent, the Court denied the motion.

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Mauck v. Cherry Oil Co., 2025 NCBC Order 88 (N.C. Super. Ct. Nov. 17, 2025) (Davis, J.)

Key Terms: motion for court intervention to complete call of shares; Supreme Court; mandate

After all of the Plaintiffs’ claims were disposed of either at the Rule 12 or the Rule 56 stage, Plaintiffs appealed to the Supreme Court. While their appeal was pending, Plaintiffs filed a motion requesting that the Court intervene in the ongoing process regarding the appraisal of the Plaintiffs’ shares in Cherry Oil pursuant to a “call” provision in the company’s shareholder agreement. As summarized here, on 17 October 2025, the Supreme Court issued an opinion affirming, as modified, the Court’s previous rulings. The mandate issued on 6 November 2025.

The Court determined that it lacked authority to rule on the present motion because the Supreme Court’s opinion affirmed, as modified, the Court’s previous final judgment and therefore the case was concluded.

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Moore v. Brooks, 2025 NCBC Order 89 (N.C. Super. Ct. Nov. 17, 2025) (Houston, J.)

Key Terms: motion to realign; nominal party; N.C. R. Prof. Cond. 1.7; disqualification

Defendant Redwood WI Holdings moved to be realigned as a nominal plaintiff in this action. The Court denied the motion. Although the motion characterized Redwood WI Holdings as a nominal defendant, the Plaintiffs had asserted two direct causes of action for declaratory judgment against it and Defendant Winthrop Intelligence had asserted crossclaims against it; therefore, Redwood WI Holdings was a full defendant and could not be realigned as a nominal plaintiff. The Court also sua sponte addressed the potential issues arising under Rule 1.7 of the Rules of Professional Conduct given that the same law firm which has represented the Plaintiffs since the inception of the case had filed the motion to realign and other motions on behalf of Redwood WI Holdings, which has been a defendant in the case since it was filed. The Court ordered the firm to show cause as to why it should not be disqualified from representing Plaintiffs or Redwood WI Holdings or both.

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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 11/18/25

N.C. Business Court Opinions, October 22, 2025 – November 4, 2025

By: Rachel Brinson

Rucker v. Kubler, 2025 NCBC 65 (N.C. Super. Ct. Oct. 22, 2025) (Conrad, J.)

Key Terms: motion to dismiss; Ponzi scheme; securities; investments; standing; subject matter jurisdiction; traceability

Plaintiffs Mike and Kristina Rucker initiated this action against their longtime financial advisor Kubler and several related companies, alleging that Kubler had defrauded them. Defendant Steelpool Inc. challenged Plaintiffs’ standing to bring claims for fraud, securities fraud, and other related claims against it. Steelpool argued that the financial harm alleged by the Plaintiffs was not fairly traceable to Steelpool’s conduct and therefore deprived them of standing. Without deciding if traceability is required to show standing in North Carolina state court, and limiting its review to the allegations of the complaint, the Court held that Plaintiffs allegations taken as true tend to show an injury suffered by Plaintiffs and traceable to Steelpool. The Court declined to consider Steelpool’s offers of evidence outside the pleadings because, while a trial court may generally consider matters outside the pleadings in connection with a jurisdictional challenge, this is not true when the jurisdictional challenge implicates an element of the asserted cause of action, which was the case here. Plaintiffs did not need to prove the elements of their claims at this stage of the case.

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Tanger Props. Ltd. P’ship v. ACE Am. Ins. Co., 2025 NCBC 66 (N.C. Super. Ct. Oct. 27, 2025) (Davis, J.)

Key Terms: motion to dismiss; Rule 12(b)(6); insurance coverage; COVID-19; choice of law; bad faith; unfair and deceptive trade practices; North State Deli, LLC v. Cincinnati Insurance Co.; N.C.G.S. § 58-63-15(11); lex loci contractus; N.C.G.S. § 58-3-1; due process; statute of limitations; Florida law

Plaintiff Tanger Properties filed claims with its all-risk insurance providers, Defendants’ ACE American Insurance and Liberty Mutual Fire Insurance, for business losses allegedly suffered during the COVID-19 pandemic. Defendants denied Plaintiff’s claims for coverage, contending that because Tanger had not established any direct physical loss or damage to property, the claims were excluded by the policies. However, after the N.C. Supreme Court held in North State Deli, LLC v. Cincinnati Insurance Co., 386 N.C. 733 (2024) that under an all-risk policy with no virus exclusion, “a reasonable person in the position of the insured would understand the [businesses’] policies to include coverage for business income lost when virus-related government orders deprived the policyholder [businesses] of their ability to physically use and physically operate property at their insured business premises[,]” Plaintiff filed the present action challenging Defendants’ denial of coverage. Defendants moved to dismiss all claims.

Breach of Contract and Declaratory Judgment and Choice of Law. Defendants argued that Georgia law applied under the doctrine of lex loci contractus, while Plaintiff argued that North Carolina law applied under a statutory exception to lex loci contractus for insurance-related disputes. Choice of law was of great importance here because North Carolina is only jurisdiction in the country to have interpreted similar insurance policy provisions as providing coverage for pandemic-related business losses under the type of insurance policies at issue here. Weighing the due process concerns and considering the close connection factors outlined in American Realty Advisors v. Lexington Insurance Co., 2019 NCBC LEXIS 59 (N.C. Super. Ct. Sep. 10, 2019), including that Plaintiff was headquartered in North Carolina and had outlet centers here, the Court concluded that North Carolina law applied and therefore, denied Defendants’ motion to dismiss these claims.

Unfair and Deceptive Trade Practices Act. Tanger argued that Defendants violated the North Carolina Unfair Claims Settlement Act set out in N.C.G.S. § 58-63-15(11) by engaging in unfair claims settlement practices and refusing to reconsider Tanger’s claims following the decision in North State Deli, but after Tanger initiated the present litigation. Without deciding whether post-litigation conduct of an insurer can give rise to a claim under § 58-63-15(11), the Court found that Defendants failed to establish that North Carolina law does not permit such a claim and therefore denied the motion to dismiss.

Breach of the Implied Covenant of Good Faith and Fair Dealing. Defendants argued that Plaintiff’s claim for breach of the implied covenant of good faith and fair dealing is barred by the three-year statute of limitations. Construing the policy provisions in favor of Plaintiff, and considering a specific policy provision stating that the Florida statute of limitations applies to any claim for any loss under the policy, the Court determined that the applicable limitations period was four years for the bad faith claim. The Court next looked to determine the date of loss for Tanger’s bad faith claim, but found that discovery was necessary to establish that fact and accordingly denied the motion to dismiss this claim.

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Aspen Specialty Ins. Co. v. Nucor Corp., 2025 NCBC 67 (N.C. Super. Ct. Oct. 31, 2025) (Earp, J.)

Key Terms: cross motions for summary judgment; motion to strike; insurance coverage; plain language; unfair and deceptive trade practices; N.C.G.S. § 58-63-15(11); unfair claim settlement practices; equipment breakdown; iron ore; North State Deli, LLC v. Cincinnati Insurance Co., 386 N.C. 733 (2024)

Following an incident involving $14 million in losses caused by uncoated iron ore pellets damaging Defendants Nucor Corporation and Nucor Steel Louisiana, LLC’s reactor, Defendants filed insurance claims under separate property and equipment breakdown insurance policies. The Property Insurers (Plaintiffs) and Equipment Breakdown Insurers (Intervening Plaintiffs) denied Nucor’s claims asserting that the loss was not covered under either policy and filed suit seeking declaratory judgments confirming that their policies do not cover Nucor’s loss. Nucor counterclaimed for breach of contract, declaratory judgment, and unfair claim settlement practices. The Parties filed cross motions for summary judgment on various claims and counterclaims.

After careful review of the record, the Court determined that the Equipment Breakdown Insurers’ policy did not cover the loss because the series of events leading to the loss did not meet the definition of “Breakdown” under the policy. The Court focused on the policy definition’s inclusion of the phrase “direct physical loss” as well as the effect Nucor’s personnel and their decisions had on the event. The Court granted the Equipment Breakdown Insurers’ motion for summary judgment and entered judgment declaring that there was no coverage under the Equipment Breakdown Policy. Consequentially, the Court therefore denied Nucor’s motion for summary judgment on its claims for breach of contract and declaratory judgment and granted the Equipment Breakdown Insurers’ motion for summary judgment on Nucor’s UDTPA claim, which was based on its breach of contract claim.

Turning to the Property Insurers’ policy, the Court examined the Plaintiffs’ claim that coverage was excluded because Nucor did not suffer a “direct physical loss” within the meaning of the policy or otherwise fell under a policy exclusion. The Court found that physical loss included Nucor’s loss of use of the reactor while the solidified iron ore was removed as well as the repairs to the mortar joints of the reactor that were required. Finding the policy language unambiguous and interpreting the plain language as a matter of law, the Court determined that neither the faulty design nor inherent defect exclusions of the policy applied to the loss claimed by Nucor. The Court denied the Property Insurers’ motion and granted Nucor’s motion for summary judgment on its claims for breach of contract and declaratory judgment.

Lastly, the Court considered the Property Insurers’ motion to strike the declaration of Nucor’s technical manager, Gary Levanduski. The Property Insurers argued that Mr. Levanduski’s declaration contradicted his deposition testimony and contained legal conclusions. The Court found that Mr. Levanduski’s declaration did not contradict his deposition testimony but rather corresponded with it or addressed issues not raised during the deposition. The Court denied the motion to strike.

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Britcher v. Assurance Grp., LLC, 2025 NCBC 68 (N.C. Super. Ct. Nov. 4, 2025) (Davis, J.)

Key Terms: motion to dismiss; motion for more definite statement; Rule 12(b)(6); Rule 12(e); employment agreement; restrictive covenants; Rule 8(a); group pleading

Only considering Defendant The Assurance Group, LLC’s first argument to dismiss the Plaintiffs’ Complaint under Rule 12(b)(6), the Court analyzed whether the Plaintiffs’ operative complaint was too vague to put Defendant on notice of the claims being asserted against it. In its discretion the Court treated the motion to dismiss as a motion for a more definite statement under Rule 12(e) and found that the Plaintiffs’ allegations were not sufficient under Rule 8(a) because they failed to identify with particularity which of the twenty-one Plaintiffs were employees or independent contractors of Defendant, which operative contract such Plaintiffs were allegedly bound by, which claims each Plaintiff was pursuing, and which Plaintiffs left Defendant’s employ voluntarily or involuntarily. The Court ordered Plaintiffs to file a Second Amended Complaint with additional factual particularity.

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Sealy v. NWP Holdings, LLC, 2025 NCBC Order 81 (N.C. Super. Ct. Oct. 31, 2025) (Conrad, J.)

Key Terms: motion to cancel notice of lis pendens; purchase of membership interests; title to real property; N.C.G.S. § 1-116; constructive trust

Defendants NWP Holdings, LLC and Norwood Place Holdings I, LLC moved to cancel a notice of lis pendens filed by Plaintiffs Michael Sealy and Robert Davis. Plaintiffs’ Complaint sought to rescind a purchase agreement by NWP Holdings to buy Plaintiffs’ memberships interests in Norwood Place, and alleged fraud, failure of consideration, and constructive trust. The Court found that none of Plaintiffs’ claims relating to the dispute over their membership interests in the LLC directly seek to affect title to Norwood Place’s real property and therefore do not meet the statutory requirements for notice of lis pendens. The Court ordered that the notice of lis pendens be canceled.

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McCarron v. Howell, 2025 NCBC Order 82 (N.C. Super. Ct. Nov. 4, 2025) (Davis, J.)

Key Terms: motion to amend; fraudulent transfer; civil conspiracy; Rule 15; undue delay; undue prejudice; discovery

Plaintiff Shuan McCarron moved to amend his Complaint to add additional factual allegations to existing claims, to re-plead certain claims that were previously dismissed without prejudice by the Court here, and to add new claims against a new party, Defendant Harold Howell’s wife. Defendant opposed the motion to amend on the grounds of undue delay and undue prejudice. Despite more than fourteen months passing since the filing of the original complaint, the Court found that there was no undue delay because Plaintiff moved to amend within one month of receiving new information during discovery that formed the basis of the proposed amended allegations. The Court also found that the Defendant would not be materially prejudiced by the amendment even though additional fact discovery may be required. Lastly, the Court found that judicial economy would be served by permitting the amendment to include the claims against entities which were previously dismissed due to the overlapping nexus of facts. The Court granted the motion to amend.

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 11/04/25

N.C. Business Court Opinions, October 8, 2025 – October 21, 2025

By: Natalie E. Kutcher

Carolina Med. Partners, PLLC v. Shah, 2025 NCBC 61 (N.C. Super. Ct. Oct. 8, 2025) (Conrad, J.)

Key Terms: motion to dismiss; constructive fraud; pleading standard; Rule 12(b)(6)

These consolidated cases arose from a dispute among three physicians, Nimish Patel, Shephali Patel, and Amit Shah, who previously practiced together. Nimish and Shephali Patel asserted a counterclaim against Shah for constructive fraud based on allegations that Shah, as the majority managing member of their practice, used company funds for the benefit of himself, his wife, and other entities in which Shah had an interest. Shah moved to dismiss the Patels’ counterclaim under Rule 12(b)(6). Shah argued that the Patels’ claim was waived in a Practice Separation Agreement, and that the Patels’ claim failed to sufficiently allege an essential element of constructive fraud.

The Court denied Shah’s motion. Though the Practice Separation Agreement was not attached to the pleadings, the Court determined that it could review the agreement, as it was central to the dispute and its authenticity was undisputed. Following a review of the Practice Separation Agreement, the Court held that the release contained therein was ambiguous and could arguably not apply to the present situation given the Agreement’s dispute resolution provisions. The Court further found that the Patels sufficiently pleaded the essential elements of a claim for constructive fraud: (1) that the defendant owes the plaintiff a fiduciary duty; (2) that the defendant breached that duty; and (3) that the defendant sought to benefit himself in the transaction. Though some allegations regarding benefit were “less plausible than others,” the pleadings were sufficient to survive dismissal.

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Meyer v. Hatteras Inv. Partners, L.P., 2025 NCBC 62 (N.C. Super. Ct. Oct. 10, 2025) (Earp, J.)

Key Terms: motion to dismiss; Rule 12(b)(1); Delaware law; limited partnership; demand futility; derivative claims

Plaintiffs, limited partners in the Feeder Funds for Nominal Defendant Hatteras Master Fund, L.P., brought this derivative action alleging that the individual defendants, directors of Master Fund, breached their fiduciary duties to the Master Fund by proposing and approving a deal to sell the Master Fund’s alternative asset portfolio to The Beneficient Company Group, L.P. in exchange for near valueless equity in The Beneficient Company Group. Defendants moved to dismiss with prejudice pursuant to Rule 12(b)(1), arguing that Plaintiffs failed to satisfy the statutory pre-suit requirements for instituting a derivative action. Plaintiffs moved for a voluntary dismissal without prejudice pursuant to Rule 41(a)(2).

Defendants first argued that the Plaintiffs failed to meet the ownership requirement to have standing to bring a derivative suit on behalf of a Delaware limited partnership since they alleged only that they were limited partners of the Feeder Funds, not the Master Fund. Plaintiffs responded that because Delaware already recognized double derivative standing in the “alternative entity space,” Delaware law should be expanded to permit limited partners in a parent entity to sue on behalf of its subsidiary. The Court determined, however, that it was unnecessary to address this issue because Plaintiffs had failed to satisfy the derivative demand prerequisite to suit.

Plaintiffs admitted that they did not make a demand upon the Master Fund. Accordingly, the Court analyzed whether Plaintiffs had adequately pleaded demand futility. Demand futility must be pleaded with respect to a LP’s general partner—here, the Adviser. The Court first determined that Plaintiffs’ allegations regarding the Adviser’s majority owner and CEO were insufficient to allege demand futility as to the Adviser. The Court next determined that Plaintiffs failed to allege a material benefit to the Adviser from the transaction. Finally, the Court found that Plaintiffs failed to adequately allege that the Adviser engaged in conduct that would subject it to liability for which it could not be indemnified. Having determined that the Plaintiffs failed to meet any of the standards for alleging demand futility under Delaware law, the Court granted Defendants’ motion to dismiss for lack of subject matter jurisdiction pursuant to Rule 12(b)(1). Plaintiff’s motion to voluntarily dismiss was consequently denied as moot.

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Tiller v. Phillips, 2025 NCBC 63 (N.C. Super. Ct. Oct. 15, 2025) (Houston, J.)

Key Terms: motion to strike; Rule 12(f); derivative demand; motion to dismiss; Rule 12(b)(6); veil piercing; breach of contract; unjust enrichment; unlawful distribution; conversion; tortious interference; facilitation of civil conspiracy

Plaintiffs Lisa and William Tiller co-founded MedShift, LLC with Defendant Brian Phillips. Phillips controlled two family trusts which eventually became the majority owners of MedShift. Plaintiffs filed this action against Phillips, the family trusts, and nominal defendant MedShift, asserting numerous direct and derivative claims arising from Phillips’ alleged misconduct. Defendants moved to dismiss the complaint pursuant to Rules 12(b)(1) and 12(b)(6). Plaintiffs subsequently moved under Rule 12(f) to strike MedShift’s non-derivative-demand-based arguments.

Motion to Strike

Plaintiffs sought to strike some of MedShift’s arguments because, as a nominal defendant, it did not have standing to raise all of the arguments. The Court denied the motion as moot because MedShift’s arguments were largely duplicative of the other Defendants’ arguments, which were appropriately considered by the Court.

Motion to Dismiss

Turning to Defendants’ motion to dismiss, the Court held that Plaintiffs had failed to meet the statutory pre-suit requirements for a derivative claim. Plaintiffs argued that the demand requirement was fulfilled via an email sent to Phillips in June 2024, wherein Lisa Tiller raised several grievances about Phillips’ actions with MedShift. Plaintiffs further argued that a letter sent contemporaneously with the filed complaint constituted a demand. The Court rejected both arguments, finding that the email sent in June 2024 was “primarily Ms. Tiller’s airing of personal grievances against Phillips,” and the letter sent with the complaint failed to satisfy the statutory requirement that a demand be made 90 days prior to the initiation of a lawsuit. As such, the Court dismissed without prejudice all of the putative derivative causes of action.

Regarding the direct claims, the Court granted in part and denied in part Defendants’ motion to dismiss under 12(b)(6) as follows:

Alter Ego/Piercing the Corporate Veil. Plaintiffs sought to pierce MedShift’s corporate veil and hold Phillips individually responsible for his tortious conduct. The Court dismissed the claim for several reasons. First, the complaint failed to plead any non-declaratory cause of action against MedShift; thus, there was no underlying claim to provide a basis for piercing MedShift’s corporate veil. Second, Phillips was not an individual interest owner in MedShift, and the complaint failed to allege that the family trusts (who held ownership interests in MedShift) were implicated in the claim. Third, Plaintiffs’ allegations of domination and control were insufficient.

Breach of Contract. The Court dismissed the claim as to Phillips, individually, on the basis that Phillips was not a party to the MedShift operating agreement. The Court also dismissed the claim as to the family trust defendants, as the trusts owed no express duties under the operating agreement to other members.

Unjust Enrichment. The Court dismissed this claim because the complaint alleged that Defendants wrongfully took Plaintiffs’ membership interest, not that Plaintiffs conferred it on Defendants, a required element of the claim.

Unlawful Distribution. The Court dismissed this claim as derivative.

Fraud and Negligent Misrepresentation. These claims were dismissed because they failed to either meet the Rule 9(b) pleading standard or failed to allege justifiable reliance.

Conversion. The Court dismissed this claim because (i) the membership interests at issue were intangible interests not subject to a conversion claim; and (ii) the complaint failed to make any substantive distinction between the Tillers individually (who did not have an ownership interest in MedShift) and the Tiller Trust (who held an ownership in MedShift).

Tortious Interference. Defendants argued only that Plaintiffs failed to adequately allege that Phillips acted without justification. The Court determined that Plaintiffs had adequately alleged facts permitting the inference that Phillips acted in his own self-interest rather than the interests of MedShift and that his conduct was not justified or privileged. Thus, this claim survived dismissal.

Facilitation of Civil Conspiracy. The Court dismissed Plaintiffs’ claim because such a claim does not exist under NC law. To the extent Plaintiffs sought to assert a claim for civil conspiracy, the claim nonetheless failed because it failed to allege that Phillips conspired with another individual or entity. An individual cannot conspire with himself, even when acting in different roles.

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rFactr, Inc. v. McDowell, 2025 NCBC 64 (N.C. Super. Ct. Oct. 16, 2025) (Robinson, C.J.)

Key Terms: summary judgment; defamation per se; arson; stalking; Facebook videos; insinuation; crime of moral turpitude

This case arises from a dispute between rFactr (a technology company), its executives, Richard Brasser and Greg Gentner, on one hand, and the company’s former investor, Chris McDowell, on the other. In 2018, rFactr and its executives sued Chris McDowell and his wife Caroline McDowell for defamation, alleging that Mrs. McDowell told a potential client of rFactr that the executives were under criminal investigation. The lawsuit was stayed in February 2023, following Brasser and Gentner’s criminal indictment for tax crimes.

In September 2023, Richard Brasser and his wife, Megan Brasser, created an online fundraiser titled “Brasser Family Justice” to provide support to the Brasser family for legal bills, security, and a re-opening of the investigation into a 2016 fire which destroyed their home. In connection with this fundraiser, Mrs. Brasser posted numerous videos on YouTube and Facebook alleging that “Chris” or “a couple up in Richmond” were plotting to bring about personal, financial, and physical harm to the Brassers, including but not limited to, stalking the Brassers’ children, being involved with the 2016 house fire, committing tax and securities fraud, and using their connections with the federal government to have Mr. Brasser wrongfully prosecuted. The McDowells, who live in Richmond, filed counterclaims against the Brassers for defamation per se in connection with these statements and subsequently moved for summary judgment on the same.

The Court denied the McDowell’s motion for summary judgment on two grounds. First, the McDowells had not met their burden of establishing as a matter of law that the Brassers’ statements were defamatory in nature. The statements relating to arson were implicit, rather than explicit. With regard to the stalking accusations, a reasonable juror could find that the statements did not subject the McDowells to ridicule or were substantially true, as Mrs. McDowell had testified in depositions that she had hired a private investigator and monitored the Brassers social media posts. The statements that the McDowells were “crazy” or “psychopaths,” had lied to government officials relating to Mr. Brasser’s criminal charges, and had committed financial crimes were non-actionable statements of opinion, personal interpretation, emotion, or outrage, rather than statements of fact.

Second, the Court could not conclude, as a matter of law, that the McDowells were the readily ascertainable subjects of the statements. The information provided in the videos and posts were descriptors, but did not state the McDowells name or enough information to determine that the statements were “of or concerning” the McDowells.

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Charles Schwab & Co., v. Marilley, 2025 NCBC Order 75 (N.C. Super. Ct. Oct. 8, 2025) (Earp, J.)

 Key Terms: Rule 36, motion to strike; motion to amend or withdraw; discovery responses; requests for admission

This order arose from Defendant Peter Marilley’s: (i) motion to strike twenty-one requests for admission propounded by Defendant Lauren Marilley; and (ii) motion to withdraw or amend his admissions. Mr. Marilley argued that Ms. Marilley improperly served forty-six requests for admission, as the case management order permitted her to propound only twenty-five. Mr. Marilley also argued that his failure to respond to Ms. Marilley’s requests was the product of excusable neglect and should be withdrawn or amended.

The Court denied Mr. Marilley’s motion to strike. The Court noted that the discovery requests were propounded prior to the case management order being entered, and the case management order entered by the Court explicitly instructed Mr. Marilley to respond to the outstanding discovery from Ms. Marilley. The Court also highlighted Mr. Marilley’s failure to seek a protective order or serve written objections to the discovery, which waived his objections thereto. The Court also denied Mr. Marilley’s motion to amend or withdraw, noting the importance of the deadlines established under Rule 36 for responses to discovery (“[t]he Rules of Civil procedure are rules after all – not suggestions”) and the prejudice to Ms. Marilley which would naturally result from granting the motion at this late stage of the case.

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Kjet Ventures, LLC v. Jamison, 2025 NCBC Order 76 (N.C. Super. Ct. Oct. 9, 2025) (Houston, J.)

 Key Terms: sanctions; Rule 11; criminal contempt; attorney; motion for extension of time

This case was originally filed in Gaston County Superior Court but was subsequently designated to the Business Court as a mandatory complex business case. Despite being designated to the Business Court, Defendants’ counsel filed a motion for extension of time with the Gaston County Superior Court and submitted a proposed order. The Gaston County Clerk of Superior Court granted the motion and entered the order. The Court struck the clerk’s order, granted the requested extension, and instructed Defendants to comply with the Business Court Rules and to not submit any proposed orders to the Gaston County Clerk. Despite this, Defendant thereafter filed motions for extensions of time to respond to discovery requests only with the Gaston County Superior Court which were again granted by the Clerk.

The Court struck the motions for extension of time and their corresponding orders and directed the Gaston County Clerk not to enter any orders in this case. The Court then analyzed whether the conduct of Defendants’ counsel constituted criminal contempt. The Court found that Defendants’ counsel demonstrated a “blatant disregard and knowing violation” of the prior orders entered and substantially interfered with the practices of the Court and its business. The Court ordered Defendants’ counsel to appear before the Court to show cause as to why he should not be held in criminal contempt or otherwise sanctioned under Rule 11.

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Fortune Brands Innovations, Inc. V. Bleser, 2025 NCBC Order 77 (N.C. Super. Ct. Oct. 10, 2025) (Robinson, C.J.)

Key Terms: order on designation; mandatory complex business case; N.C.G.S. § 7A-45.4(a)(1); N.C.G.S. § 7A-45.4(d)(1); notice of designation; contemporaneous filing requirement

The day after Plaintiff filed its lawsuit against Defendant, asserting claims for breach of contract and threatened or inevitable misappropriation of trade secrets under Delaware law, Plaintiff filed its Notice of Designation, seeking designation as a mandatory complex business case under N.C.G.S. § 7A-45.4(a)(1).

The Court determined that the case was not properly designated because Plaintiff had failed to follow N.C.G.S. § 7A-45.4(d)(1), which requires the Notice of Designation to be filed contemporaneously with the complaint. As such, Plaintiff’s designation was untimely. The Court further noted that, even if the Notice of Designation had been filed contemporaneously, the case was not properly designated under N.C.G.S. § 7A-45.4(a)(1), which is for disputes involving the law governing corporations. The law governing corporations is not implicated by reference to Delaware trade secrets law or an alleged breach of restrictive covenants in employment agreements.

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North Carolina ex rel. Jackson v. EIDP, Inc., 2025 NCBC Order 78 (N.C. Super. Ct. Oct. 10, 2025) (Robinson, C.J.)

 Key Terms: motion to stay proceedings pending decision on petition for writ of certiorari

As summarized here, the Court previously entered an order and opinion denying Defendants’ motion to dismiss for lack of subject matter jurisdiction. Defendants thereafter filed a petition for writ of certiorari seeking immediate review of the order by the North Carolina Supreme Court. Defendants then moved to stay proceedings in the trial court pending a decision from the Supreme Court on their petition for writ of certiorari. Plaintiffs opposed the motion, noting the harm of delaying justice and the Defendants’ failure to satisfy the burden to show a stay is necessary.

The Court, noting that a stay is not required upon a writ of certiorari, denied the motion in its discretion. Upon weighing the potential harm that an indefinite delay to the proceedings may have to those who have been injured for the damage allegedly done against the “little prejudice” felt by the Defendants if the case proceeds, the Court determined that a stay was not appropriate. The Court further noted that Defendants failed to show a high likelihood of success on the merits.

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Duramax Holdings LLC v. Brace, 2025 NCBC Order 79 (N.C. Super. Ct. Oct. 16, 2025) (Houston, J.)

 Key Terms: motion to withdraw; pro hac vice

This Order arises following the filing of a joint motion to withdraw by two attorneys representing Plaintiff. The movants indicated that Plaintiff had retained legal counsel based in Ohio, who is not licensed to practice in North Carolina. The Court granted this motion, noting that the briefing on a motion to dismiss before the Court was already completed, and Plaintiff would not be prejudiced by the withdrawal of its current counsel.

The movants further noted to the Court that three of the attorneys listed on Plaintiff’s filings were not licensed to practice in North Carolina and had not completed the pro hac vice admission process in the six months following the filing. The Court cautioned all counsel against voluntarily designating or allowing other attorneys to designate them in filings before the Court before having complied with the provisions required for pro hac vice admission.

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Comic Book Certification Serv. LLC v. CBCS Operations, LLC, 2025 NCBC Order 80 (N.C. Super. Ct. Oct. 21, 2025) (Davis, J.)

 Key Terms: pro hac vice admission; N.C.G.S. § 84-4.1

Defendant moved for leave to seek pro hac vice admission for two out-of-state attorneys. Throughout the litigation, Defendant’s attorney of record was licensed to practice in North Carolina but resided in Texas. Defendant moved the Court for pro hac vice admission of two other attorneys based out of its counsel’s Texas office through association with the North Carolina-licensed attorney.

The Court denied the motion. N.C.G.S. § 84-4.1 requires attorneys seeking pro hac vice admission to associate with an attorney who is a resident of the state. Though Defendant requested to be excused from this statutory requirement, the Court held that it did not have the authority to excuse noncompliance with the statute.

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From the Supreme Court of North Carolina

Mauck v. Cherry Oil Co., Inc., No. 318A24, 2025 N.C. LEXIS 861 (N.C. 2025) (Earls, J.)

Key Terms: dissolution; N.C.G.S. § 55-14-30(2)(ii); standing; Meiselman claim; buyback option; reasonably necessary

The Maucks, minority shareholders in Cherry Oil, sued to dissolve Cherry Oil under N.C.G.S. § 55-14-30(2)(ii), arguing that dissolution was “reasonably necessary” to protect their “rights and interests” as shareholders. The Business Court dismissed that claim for lack of standing under Rule 12(b)(1). On appeal, the Supreme Court affirmed on alternate grounds. Contrary to the Business Court’s opinion, the Maucks had standing to bring the dissolution claim because they alleged the violation of a legal right secured by the statute and they fell within the class of people the statute authorizes to sue. However, dismissal was nonetheless appropriate under Rule 12(b)(6) because the complaint alleged the existence of a buyback option in the shareholder agreement—which provided essentially the same relief to the Maucks as dissolution—and the complaint did not allege additional factual allegations that dissolution was otherwise reasonably necessary to protect the Maucks’ rights or interests.

Chief Justice Newby and Justice Barringer concurred in part and concurred in the result only in part.

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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 10/21/25

N.C. Business Court Opinions, September 23, 2025 – October 7, 2025

By: Austin T. Webber

Brown v. TM Northlake Mall, LP, 2025 NCBC 57 (N.C. Super. Ct. Sept. 29, 2025) (Conrad, J.)

Key Terms: discovery; wrongful death; Rule 12(b)(6); untimely; N.C.G.S. § 1-53(4); statute of limitations; equitable estoppel; concealment

As summarized here, these consolidated cases arose from a 2022 shooting at Northlake Mall that killed Armani Spencer and injured Plaintiffs Bianca Brown and Brianna Perkins. Brown and Spencer’s estate, and later Perkins, sued various entities associated with Defendants Northlake Commons shopping center and Northlake Mall.

During discovery, Plaintiffs discovered the alleged misconduct of Defendant AMMS, Inc. and its owners, Defendants Amy R. Thompkins and Michael McLaughlin. After obtaining leave to amend, Spencer’s estate amended its complaint to assert wrongful death claims against AMMS, Thompkins, and McLaughlin, each of whom moved to dismiss the claim as untimely pursuant to Rule 12(b)(6).

Under N.C.G.S. § 1-53(4), a wrongful death claim must be filed within two years of the date of death. Spencer’s estate argued that AMMS, Thompkins, and McLaughlin were equitably estopped from asserting the statute of limitations as a defense because any delay in filing suit against them resulted from their concealment of their role in providing security for Northlake Commons. The Court disagreed, concluding that the amended complaint did not allege that AMMS, Thompkins, or McLaughlin denied their involvement in providing security or that they lied during the investigation. The Court granted the motion to dismiss.

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iTi Commc’ns, LLC v. Seamon, Whiteside & Assocs., Inc., 2025 NCBC 58 (N.C. Super. Ct. Sept. 30, 2025) (Earp, J.)

Key Terms: Rule 15(d); motion to supplement; Rule 15(a); motion to amend; futility; moot; Rule 12(c); judgment on the pleadings; Rule 10(c); written instrument; breach of contract; breach of good faith and fair dealing; unjust enrichment; express contract; negligence; economic loss rule; conversion; N.C.G.S. § 44A-2; excused performance; unenforceable penalty; liquidated damages; motion to strike; sur-reply; BCR 7

This case involves a contractual dispute between Plaintiff iTi Communications, LLC and Defendant Seamon, Whiteside, and Associates, Inc. Plaintiff contracted to provide information technology services and equipment to Defendant under a Master Services Agreement and subsequent Statements of Work (the “Contract”). Pursuant to the Contract, Defendant gave Plaintiff ninety days’ notice that it intended to terminate the Contract, which triggered an early termination fee provision. Plaintiff invoiced Defendant for the fee, but prior to the end of the ninety-day notice period, Defendant discovered a data breach had occurred as a result of Plaintiff’s alleged failure to back up Defendant’s data.

Plaintiff sued Defendant for breach of contract, among other claims. Defendant asserted counterclaims for breach of contract, breach of the duty of good faith and fair dealing, unjust enrichment, negligence, and conversion. Plaintiff filed a Rule 12(c) motion as to its breach of contract claim and Defendant’s counterclaims, as well as a motion to strike Defendant’s sur-reply brief. Following a hearing on Plaintiff’s motions, Defendant filed a motion to supplement its answer with documents obtained in discovery, followed by an alternative motion to amend its answer.

Defendant’s Motion to Supplement the Pleadings. The Court elected to treat Defendant’s motion to supplement as a motion to amend, because the documents Defendant sought to attach to its answer involved events that predated its answer, rather than events that occurred after the answer was filed. Plaintiff argued that the motion to amend was futile, but because the Court granted in part and denied in part Defendant’s Rule 12(c) motion, the Court granted Defendant’s motion to supplement. The Court denied Defendant’s alternative motion to amend its answer as moot.

Plaintiff’s Motion for Judgment on the Pleadings. As an initial matter, the Court concluded that it could consider both the contracts attached to the complaint and Defendant’s proposed attachments when deciding Plaintiff’s Rule 12(c) motion, because all of the documents fell within the scope of “written instruments” under Rule 10(c).

Breach of Contract Counterclaim. Defendant alleged that Plaintiff breached the Contract by failing to provide continuous backup support of Defendant’s data; Plaintiff argued that this fell outside the scope of the Contract. Although the plain language of the Contract supported Plaintiff’s argument, the Court determined that it could not conclude that all relevant contractual obligations were before the Court and denied Plaintiff’s motion to dismiss this counterclaim.

Breach of Good Faith and Fair Dealing Counterclaim. Because Defendant’s counterclaim for breach of the implied covenant of good faith and fair dealing was based upon the same acts as its counterclaim for breach of contract, the Court granted the motion as to this counterclaim.

Unjust Enrichment Counterclaim. Because an express contract governed the dispute, the Court granted Plaintiff’s motion as to Defendant’s unjust enrichment counterclaim.

Negligence Counterclaim. The Court concluded that the economic loss rule barred Defendant’s recovery in tort for Plaintiff’s alleged failure to perform the Contract and granted Plaintiff’s motion as to Defendant’s negligence counterclaim.

Conversion Counterclaim. Defendant alleged that Plaintiff converted its servers after the Contract was terminated. Plaintiff argued that both the terms of the Contract and N.C.G.S. § 44A-2 permitted it to retain Defendant’s servers. Plaintiff also argued that the economic loss rule barred Defendant’s conversion counterclaim. The Court determined that Plaintiff was not entitled to judgment on the pleadings under any of these theories and denied the motion as to this counterclaim.

Breach of Contract Claim. Plaintiff sought judgment in its favor that Defendant breached the Contract by failing to pay the early termination fee. Defendant argued that it was excused from paying the fee due to Plaintiff’s prior breach of the Contract and, further, that the fee was an unenforceable penalty. The Court agreed that the pleadings contained allegations that Defendant’s performance was excused and denied Plaintiff’s motion as to this claim on that basis, but the Court concluded that the early termination fee constituted a valid liquidated damages provision.

Motion to Strike Sur-Reply Brief. The Court granted Plaintiff’s motion to strike Defendant’s sur-reply brief because BCR 7 does not permit the filing of sur-replies absent Court permission.

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Mayer v. Goldner, 2025 NCBC 59 (N.C. Super. Ct. Oct. 2, 2025) (Conrad, J.)

Key Terms: personal jurisdiction; minimum contacts; specific jurisdiction; physical contacts; intentional contact; defamation; unfair and deceptive trade practices; tortious interference with contract

Third-Party Defendant Grand Hook Agency, LLC is a limited liability company organized in Georgia by Third-Party Defendants Gabriel Mayer and Matthew Queen. Third-Party Plaintiff Sherbrooke Corporate Ltd. is a captive insurance company organized in North Carolina. Third-Party Plaintiff Samuel Goldner is the majority member of Sherbrooke; Mayer and Queen are officers, directors, and minority shareholders of Sherbrooke. Third-Party Plaintiffs alleged that Mayer and Queen created Grand Hook to compete with Sherbrooke and that Mayer and Queen used their positions within Sherbrooke to give Grand Hook a competitive edge, asserting claims for civil conspiracy, unfair and deceptive trade practices, and tortious interference with contract against Grand Hook. Grand Hook moved to dismiss for lack of personal jurisdiction.

Grand Hook argued that it did not have any physical contacts with North Carolina. The Court, however, concluded that the alleged defamatory statements made by Grand Hook’s principals, Mayer and Queen, to a North Carolina state agency were intentional conduct directed at North Carolina. The Court further determined that, liberally construed, the allegations of the complaint supported an inference that Sherbrooke’s injuries were felt primarily in North Carolina. The Court rejected Grand Hook’s merits-based argument regarding the impossibility of competing against a captive insurance company and Grand Hook’s argument that the actions of Mayer and Queen could not be attributed to it. The Court denied the motion.

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Valleygate Dental Surgery of Charlotte, LLC v. Farrell, 2025 NCBC 60 (N.C. Super. Ct. Oct. 7, 2025) (Houston, J.)

Key Terms: motion to dismiss; Rule 12(b)(3); improper venue; motion to transfer venue; N.C.G.S. § 1-82; N.C.G.S. § 1-83; residence of limited liability company

This case arose from a dispute over the ownership of a dental practice. Plaintiff Valleygate Dental Surgery of Charlotte, LLC is a North Carolina limited liability company that operates a dental surgery center in Charlotte, North Carolina. Plaintiff initiated this lawsuit in Cumberland County Superior Court, alleging in its complaint that its principal place of business was Cumberland County, North Carolina.

Defendants moved to dismiss for improper venue, arguing that Plaintiff’s principal place of business was actually Mecklenburg County and that no party was located in Cumberland County. Defendants alternatively moved to transfer the action to Mecklenburg County. However, Defendants conceded at the hearing that Plaintiff’s registered office and registered agent’s office were located in Cumberland County, and Defendants admitted in their verified answer to Plaintiff’s complaint that Plaintiff’s principal place of business was located in Cumberland County.

The Court concluded that, based on Defendants’ admissions, venue in Cumberland County was proper and denied the motion to dismiss. The Court further determined that Defendants failed to demonstrate that litigating in Cumberland County was unduly burdensome, expensive, inconvenient to witnesses, or contrary to the interests of justice and denied Defendants’ alternative motion to transfer venue.

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Covenant Clearinghouse LLC v. D.R. Horton, Inc., 2025 NCBC Order 69 (N.C. Super. Ct. Sept. 26, 2025) (Robinson, C.J.)

Key Terms: order on designation; N.C.G.S. § 7A-45.4(a)(9); declaratory judgment, breach of declaration; amount in controversy

Plaintiff Covenant Clearinghouse LLC initiated this action on 15 August 2025, asserting claims for declaratory judgment and breach of declaration against Defendant D.R. Horton, Inc. Defendant timely filed a notice of designation, seeking designation pursuant to N.C.G.S. § 7A-45.4(a)(9). Based on the allegations in the complaint, the Court could not determine whether the amount in controversy met the $1 million minimum threshold required by N.C.G.S. § 7A-45.4(a)(9)(c), so the Court concluded that the action was not properly designated as a mandatory complex business case.

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WP Church, LLC v. Whalen, 2025 NCBC Order 70 (N.C. Super. Ct. Sept. 26, 2025) (Davis, J.)

Key Terms: restaurants; preliminary injunction; likelihood of success on the merits; derivative claim; breach of fiduciary duty; business judgment rule; conflict of interest; duty of loyalty; ratification; statute of limitations; pre-suit demand; futility; irreparable harm; balancing the equities

Plaintiff WP Church, LLC and Defendant Patrick Whalen are two of the members of 5Church Charleston, LLC, a South Carolina limited liability company formed to operate a restaurant in South Carolina. Whalen is also the sole manager of 5Church. Whalen and the other members of 5Church (exclusive of Plaintiff) are also engaged in other restaurant ventures. Plaintiff alleged that Whalen caused 5Church to loan his other restaurants millions of dollars. Plaintiff further alleged that Whalen used 5Church’s funds to pay for legal expenses, rental payments, and automobile lease payments incurred by his other restaurants. Soon after initiating this action on 10 June 2025, Plaintiff discovered that Whalen continued to commingle 5Church’s funds with those of his other restaurants and filed a motion for preliminary injunction.

Whalen contended that Plaintiff was unlikely to succeed on the merits of its derivative claim for breach of fiduciary duty because (1) the terms of 5Church’s Operating Agreement permitted Whalen to make loans to his other restaurants; (2) Whalen was protected under the business judgment rule; (3) the loans were in the best interest of 5Church; (4) the other members of 5Church (exclusive of Plaintiff) supported making the loans; (5) Plaintiff ratified making the loans; (6) Plaintiff’s lawsuit was barred by the statute of limitations; and (7) Plaintiff’s pre-suit demand letter was insufficient under South Carolina law. The Court rejected all of Whalen’s arguments, determining that (1) no provision of 5Church’s Operating Agreement explicitly permitted Whalen to make loans to his other restaurants; (2) Whalen could not rely on the business judgment rule because his actions were based on a conflict of interest rather than good faith; (3) Whalen failed to provide sufficient evidence that the loans made to other restaurants sufficiently benefitted 5Church; (4) Whalen owed 5Church a duty of loyalty and neither 5Church nor its members benefitted from the loans; (5) Plaintiff did not ratify the loans by receiving regular financial statements when the statements did not disclose the terms of the loans and, further, any alleged ratification was revoked once Plaintiff made pre-suit demand and then filed suit; (6) a question of fact existed as to Whalen’s statute of limitations defense; and (7) Plaintiff’s pre-suit demand letter was sufficient and, alternatively, South Carolina law recognizes futility as a defense to a pre-suit demand letter.

Having concluded that Plaintiff had shown a likelihood of success on the merits of its derivative claim for breach of fiduciary duty, the Court determined that Plaintiff made a sufficient showing of irreparable harm as Whalen had repeatedly used 5Church’s funds for the benefit of his other restaurants and to the detriment of 5Church, even after receiving formal notice from Plaintiff via the pre-suit demand letters and the initiation of this suit. The Court concluded that a balancing of the equities favored the entry of a preliminary injunction in favor of Plaintiff. The Court granted the motion and enjoined Whalen from using 5Church’s funds outside the ordinary course of business.

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Action Learning Assocs., LLC v. Kenan-Flagler Bus. Sch. Exec. Educ. LLC, 2025 NCBC Order 71 (N.C. Super. Ct. Sept. 29, 2025) (Davis, J.)

Key Terms: motion to amend; BCR 7.4; BCR 7.2; BCR 7.10; supporting brief

As summarized here, this case arose from various disagreements between former collaborators Plaintiff Action Learning Associates, LLC and Defendant Kenan-Flagler Business School Executive Education LLC. After the Court decided Defendant’s motion to dismiss Plaintiff’s first amended complaint, Plaintiff filed a motion to amend and attached a proposed second amended complaint. Plaintiff did not file a supporting brief. Defendant opposed the motion, noting that Plaintiff had failed to comply with BCR 7.2. Plaintiff did not file a reply brief.

Pursuant to BCR 7.4, the Court decided the motion without a hearing, concluding that the motion to amend was not included in the types of motions that do not require an accompanying brief under BCR 7.10 because Plaintiff sought to add parties and new allegations through its motion. The Court denied Plaintiff’s motion without prejudice to refile it with a supporting brief.

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Buchanan v. Cameron, 2025 NCBC Order 72 (N.C. Super. Ct. Sept. 30, 2025) (Robinson, C.J.)

Key Terms: order on designation; opposition to designation; N.C.G.S. § 7A-45.4(a)(1); partnership; sole proprietorship; Chapter 59; complex and novel issues; tort claims

Plaintiffs initiated this action on 20 August 2025, asserting claims against Defendants for declaratory judgment, conversion, tortious interference with contract, and defamation per se. Plaintiffs simultaneously filed a notice of designation, and the case was designated as a mandatory complex business case under N.C.G.S. § 7A-45.4(a)(1). Defendants timely filed an opposition to designation.

Defendants argued that designation under N.C.G.S. § 7A-45.4(a)(1) was improper because the matter involved a determination as to whether certain businesses were sole proprietorships or partnerships. The Court disagreed, noting that disputes involving partnerships fell within the purview of N.C.G.S. § 7A-45.4 (a)(1) and that a complaint did not need to expressly reference Chapter 59 to qualify for designation under this subsection. Defendants further contended that the matter did not involve complex or novel issues, but the Court reiterated that designation did not require a particular level of complexity. The Court also rejected as irrelevant Defendants’ argument that the accompanying tort claims, by themselves, did not permit designation. The Court overruled the opposition and determined that the matter was properly designated as a mandatory complex business case under N.C.G.S. § 7A-45.4(a)(1).

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Am. Prods., Inc. v. Knight Hardwood Flooring Inc., 2025 NCBC Order 73 (N.C. Super. Ct. Oct. 3, 2025) (Robinson, C.J.)

Key Terms: order on designation; N.C.G.S. § 7A-45.4(a)(8); breach of contract; tortious interference with contract; unfair trade practices; civil conspiracy; confidential and proprietary information; misappropriation of trade secrets

Plaintiff American Products, Inc. initiated this action on 27 August 2025, asserting claims for (1) breach of employment contracts against its former employees, Defendants Benjamin Markovich, Bergen Blanton, and Charles N. Stinnett, III; (2) tortious interference with contract against the former employees’ new employer, Defendant Knight Hardwood Flooring Inc.; and (3) unfair trade practices and civil conspiracy against all Defendants. Defendnats timely filed a notice of designation, seeking designation pursuant to N.C.G.S. § 7A-45.4(a)(8). The Court declined to designate the matter as a mandatory complex business case because Plaintiff’s generalized claims involving confidential or proprietary information were not sufficient to bring a claim for misappropriation of trade secrets. The Court noted that while the complaint referred generally to “trade secrets” and included allegations that might have served as the basis for a misappropriation of trade secrets claim, Plaintiff chose not to allege such a claim.

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Grajales v. Tea Dating Advice Inc., 2025 NCBC Order 74 (N.C. Super. Ct. Oct. 7, 2025) (Robinson, C.J.)

Key Terms: order on designation; N.C.G.S. § 7A-45(a)(5); The Tea App; intellectual property; computer software; defense

Plaintiff Anthony Josue Grajales initiated this action on 25 August 2025, alleging that Defendants permitted users of The Tea App to post anonymous comments regarding Plaintiff’s alleged misconduct, including his name and business name. Plaintiff asserted claims for defamation (libel), false light invasion of privacy, intentional infliction of emotional distress, tortious interference with business relations, and negligence. Defendants The Tea App and Sean Cook timely filed a notice of designation, seeking mandatory complex business designation under N.C.G.S. § 7A-45(a)(5). The Tea App and Cook contended that resolution of the claims involved the performance of a computer software application, but the Court disagreed, concluding that the claims were tied to the alleged torts of others rather than the underlying intellectual property aspects of the app. The Tea App and Cook argued that they intended to seek dismissal of Plaintiff’s claims pursuant to section 230 of the Communication Decency Act, but the Court reiterated that a forecasted defense cannot serve as the basis for designation under N.C.G.S. § 7A-45(a)(5). The Court declined to designate the matter as a mandatory complex business case.

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 10/07/25

N.C. Business Court Opinions, September 10, 2025 – September 23, 2025

By: Lauren Schantz

Implus Footcare, LLC v. Vore, 2025 NCBC 55 (N.C. Super. Ct. Sept. 11, 2025) (Davis, J.)

Key Terms: BCR 7.4; motion to amend; Rule 15; undue delay; unfair prejudice and bad faith; legal futility; judicial economy; moot; motion to dismiss; Rule 12(b)(6); breach of contract; novation; plain wording; non-solicitation; confidentiality; blue pencil; failure to brief arguments; unfair and deceptive trade practices; N.C.G.S. § 75-1.1; substantial aggravating circumstances; implied covenant of good faith and fair dealing; ambiguous; misappropriation of trade secrets; security measures; tortious interference with contract; legitimate business competition; specific knowledge; actual harm; civil conspiracy; statute of frauds; affirmative defense; tortious interference with economic advantage; abuse of process

This suit arose from a dispute between two competitors within the footcare accessories and shoe care industry. Plaintiff IM Group Holdings Corporation is the parent company of Plaintiff Implus Footcare, LLC, which designs and distributes footwear accessories and shoe care products. Implus employed Defendant Todd Vore as its president and Defendants H.B. Shoes Co. and The Mike Hale Company (“MHC”) as independent contractor sales representatives. Implus terminated its sales representative agreements (“SRAs”) with H.B. and MHC after Vore left Implus in 2020.

Implus alleged that Vore, H.B., and MHC continued to receive confidential financial information about Implus after their departures and used it to compete with Implus through Vore’s new company, Defendant Blue San, LLC. Implus alleged that at the time it entered into new SRAs with H.B. and MHC in 2024, they had already entered into similar agreements with Blue San and, at Vore’s urging, H.B. and MHC repudiated the 2024 SRAs with Implus.

Vore alleged that Blue San expanded into the footwear accessories and shoe care industry when Implus began experiencing market and financial distress. H.B. and MHC joined Blue San as sales representatives pursuant to oral agreements. Blue San alleged that Implus tried to hinder Blue San’s entry into the market by luring away H.B. and MHC and initiating this lawsuit.

Defendants moved to dismiss the Second Amended Complaint, Implus moved to dismiss Blue San’s counterclaims, and, before the Court decided the motions to dismiss, Plaintiffs moved to file a Third Amended Complaint that added additional claims and defendants.

Motion to Amend. Vore and Blue San argued that the Court should deny Plaintiffs’ motion to amend based on undue delay, unfair prejudice and bad faith, and legal futility. The Court disagreed, concluding that (1) there was no undue delay due to the unique procedural posture of the case and because the request was based on recently acquired discovery; (2) the amendments were not made in bad faith and would not result in unfair prejudice; (3) the legal sufficiency of the new claims was better suited to later motions practice; and (4) the addition of the new claims to the current lawsuit would promote judicial economy. The Court granted the motion. Although the filing of an amended complaint usually moots a prior complaint, the Court concluded that, in the interest of judicial economy, it could still decide defendants’ pending motions to dismiss because the amended complaint did not assert new material allegations related to the claims at issue in the motions.

Defendants H.B. and MHC’s Motion to Dismiss

Breach of Contract–Prior SRAs. Implus argued that H.B. and MHC violated the confidentiality provisions of their prior SRAs by sharing misdirected reports from former customers with Vore and Blue San after their termination. H.B. and MHC argued that the 2024 SRAs novated the prior SRAs—including the confidentiality provisions. The Court could not conclude from the plain wording of the 2024 SRAs that the parties intended a novation of the prior SRAs and denied the motion as to this claim.

Breach of Contract–2024 SRAs. Implus alleged that H.B. and MHC breached the non-solicitation and confidentiality provisions of the 2024 SRAs. Because counsel for Implus conceded that the non-solicitation provisions were overbroad and Implus failed to raise the blue pencil doctrine in its briefs, the Court dismissed this portion of the claim with prejudice. The Court concluded that the confidentiality provision was not overly broad or unenforceable and denied the motion as to this portion of the claim.

Unfair and Deceptive Trade Practices. The Court concluded that Implus sufficiently alleged substantial aggravating circumstances accompanying a breach of contract and denied the motion as to this claim.

Defendants’ Vore and Blue San’s Motion to Dismiss

Breach of Contract–Implied Covenant of Good Faith and Fair Dealing. IMGH alleged that Vore breached the implied covenant of good faith and fair dealing in his stockholders agreement by failing to inform Implus of his association with Blue San. The Court disagreed, determining that this was an obligation the parties could have (and did not) include in the agreement. The Court dismissed the claim with prejudice.

Breach of Contract–Confidentiality. Implus alleged that Vore breached the confidentiality provision of the stockholders agreement by sharing Plaintiffs’ confidential information with Defendants. The Court denied the motion as to this claim, because either the allegations in the complaint were sufficient or the language in the agreement was ambiguous.

Misappropriation of Trade Secrets. The Court agreed with Vore and Blue San that Implus failed to plead that adequate measures were taken to safeguard the secrecy of the alleged trade secret information and granted the motion, dismissing this claim with prejudice.

Tortious Interference with Contract. Implus alleged that Vore and Blue San interfered with (1) the confidentiality provisions of the prior and 2024 SRAs by asking H.B. and MHC to forward customer reports containing Implus’s confidential information to them, and (2) the term and service provisions of the 2024 SRAs by inducing H.B. and MHC to repudiate the 2024 SRAs. Vore and Blue San contended that (1) they were engaging in legitimate business competition; (2) Implus failed to allege they had specific knowledge of the provisions; and (3) Implus suffered no actual harm. The Court disagreed with Vore and Blue San and denied their motion to dismiss these claims.

Unfair and Deceptive Trade Practices. Because Implus sufficiently pleaded claims for tortious interference with contract, Implus also sufficiently pleaded its UDTP claim. The Court denied the motion to dismiss this claim.

Civil Conspiracy. Implus alleged that Blue San engaged in a conspiracy with H.B. and MHC to breach the SRAs. The Court disagreed, determining that (1) the basis of the underlying torts cannot also serve as the basis of a conspiracy to commit those torts; (2) complying with a request does not demonstrate a common scheme or objective; and (3) North Carolina does not recognize a claim for conspiracy based on a breach of contract claim. The Court dismissed the claim with prejudice.

Implus’s Motion to Dismiss

Tortious Interference with Contract. Blue San alleged that Implus induced H.B. and MHC to breach their contracts with Blue San. Implus argued that these contracts were invalid under the statute of frauds, but the Court determined that, as an affirmative defense, the statute of frauds is not properly considered at the Rule 12(b)(6) stage. Implus also contended that it was engaged in legitimate business competition by hiring H.B. and MHC, but the Court concluded that Blue San sufficiently alleged that Implus’s interference with H.B. and MHC’s oral employment agreements did not reflect legitimate competition. The Court denied the motion as to this claim.

Tortious Interference with Prospective Economic Advantage–H.B. and MHC. Should Blue San’s oral agreements with H.B. and MHC be unenforceable, Blue San argued that it would have entered into contracts with them but for Implus’s interference. Implus moved to dismiss on the same grounds as those argued regarding the tortious interference with contract claim and the Court denied Implus’s motion for the same reasons.

Tortious Interference with Prospective Economic Advantage–Prospective Customers. In response to allegations that that Implus interfered with contracts with Blue San’s potential customers, Implus argued that it was engaged in legitimate business competition and that the allegations failed to allege that the customers would have entered into contracts with Blue San “but for” Implus’s conduct. The Court concluded that Blue San adequately pleaded that Implus’s actions were anti-competitive rather than legitimate business tactics. The Court further concluded that Blue San adequately alleged that Implus’s conduct interfered with Blue San’s ability to contract with one of the alleged prospective customers but not the other. The Court denied Implus’s motion with respect to the first prospective customer, but granted it as to the second prospective customer and dismissed that portion of the claim with prejudice.

Abuse of Process. Blue San argued that after initiating this action, Implus improperly sent document preservation letters to Blue San’s principals to intimidate them. However, since Blue San conceded at the hearing that the letters were routine, the Court rejected this basis for an abuse of process counterclaim. Blue San argued that Implus improperly sought assurances from B.H. and MHC related to the 2024 SRAs in an email to their attorney, but the Court determined both that the email was sent prior to the issuance of process and the demands themselves did not support an abuse of process counterclaim. Blue San argued that Implus used the complaint to make demands of Vore for relief in addition to those sought in the complaint. The Court rejected this argument, noting a lack of persuasive legal authority and that the demands were made through counsel. The Court dismissed the counterclaim with prejudice.

Unfair and Deceptive Trade Practices. Because Blue San sufficiently pleaded claims for tortious interference with contract and economic advantage, Blue San also sufficiently pleaded its UDTP claim. The Court denied the motion as to this counterclaim.

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BioSkryb Genomics, Inc. v. AClarity Genomics, Inc., 2025 NCBC 56 (N.C. Super. Ct. Sept. 18, 2025) (Conrad, J.)

Key Terms: genomics; motion to strike; BCR 7.4; answer and counterclaim; frivolous; malicious; bad faith; Rule 12(f); irrelevant; Rule 8(a)(1); short and plain statement; prejudice

Plaintiff BioSkryb Genomics, Inc. sued its former officer and director, Defendant Jason West, for using its trade secrets to compete with BioSkryb in West’s newly formed company, Defendant AClarity Genomics, Inc. BioSkryb moved to strike over 60 paragraphs of Defendants’ answer and counterclaim, contending that the information contained in these paragraphs was irrelevant to Defendants’ counterclaim and served only to harass and embarrass BioSkryb. The Court denied the motion. The challenged allegations provided the background and related history of the dispute (from West’s perspective) and posed no real prejudice to BioSkyrb. Further, the Court  could not say that they had no possible bearing on the litigation.

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Law Off. of Ashley-Nicole Russell, P.A. v. McLawhorn Legal Servs., PLLC, 2025 NCBC Order 66 (N.C. Super. Ct. Sept. 10, 2025) (Robinson, C.J.)

Key Terms: order on designation; N.C.G.S. § 7A-45.4(a)(5); intellectual property; computer trespass

Plaintiffs initiated this action on 14 August 2025, asserting various claims arising from a soured business relationship between the owners of a family law practice in Raleigh. Defendants timely filed a notice of designation, seeking designation pursuant to N.C.G.S. § 7A-45.4(a)(5). The Court agreed with Defendants that designation pursuant to this section was proper because Plaintiffs’ claims, particularly their computer trespass claim, were predicated on Defendants’ alleged improper use of Plaintiffs’ intellectual property and unauthorized access of Plaintiffs’ computer networks. The Court designated the case as a mandatory complex business case.

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Mayes v. Nat’l Collegiate Athletics Ass’n, 2025 NCBC Order 67 (N.C. Super. Ct. Sept. 11, 2025) (Houston, J.)

Key Terms: college football; NCAA; temporary restraining order; irreparable harm; undue delay; likelihood of success on the merits

Plaintiff Mitchell Mayes sought a temporary restraining order enjoining the NCAA from enforcing a provision of the NCAA Bylaws that limits student-athletes to participating in no more than four seasons of college athletics over a five-year period. Mayes acknowledged that he had participated in four competitive seasons but argued his participation in the 2021–2022 season was in error and that he was entitled to a waiver under the NCAA Bylaws. Mayes contended that he would be irreparably harmed if he was not permitted to continue playing college football. The NCAA argued that Mayes unduly delayed in seeking injunctive relief, could not establish irreparable harm, and failed to show a likelihood of success on the merits. The Court agreed with the NCAA and denied the motion.

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Holly Springs Chamber of Commerce, Inc. v. Holly Springs Half Marathon, 2025 NCBC Order 68 (N.C. Super. Ct. Sept. 19, 2025) (Robinson, C.J.)

Key Terms: order on designation; transfer District Court to Superior Court; N.C.G.S. § 7A-45.4(d)(1); untimely

Plaintiff Holly Springs Chamber of Commerce, Inc. initiated this action in Wake County District Court on 10 March 2025. Defendant Holly Springs Half Marathon filed a Motion to Transfer to Superior Court Division on 26 March 2025, followed by an answer and counterclaim on 10 April 2025. The Wake County Superior Court granted Defendant’s motion to transfer on 2 September 2025, and Plaintiff filed a notice of designation ten days later. The Court determined that the notice of designation was untimely because it was not filed contemporaneously with the Complaint as required by N.C.G.S. § 7A-45.4(d)(1). Accordingly, the action was not properly designated as a mandatory complex business case.

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 09/23/25

N.C. Business Court Opinions, August 27, 2025 – September 9, 2025

By: Ashley Oldfield

Shively v. ACI Learning Holdings, LLC, 2025 NCBC 51 (N.C. Super. Ct. Aug. 27, 2025) (Robinson, C.J.)

Key Terms: Rule 12(b)(6); motion to dismiss; Rule 12(b)(2); personal jurisdiction; due process; specific jurisdiction; minimum contacts

This suit arose out of the termination of Plaintiff Shively’s employment with Defendant ACI Learning Holdings and Shively’s execution of and attempt to enforce the provisions of a severance agreement (“SAR”). Shively alleges that the ACI Defendants and the Boathouse Defendants (related entities) failed to purchase his equity interests in ACI pursuant to the SAR. The ACI Defendants moved to dismiss under Rule 12(b)(2), and the Boathouse Defendants moved to dismiss under Rules 12(b)(2) and 12(b)(6).

Personal Jurisdiction. The Boathouse Defendants contended that North Carolina’s long-arm statute did not subject them to jurisdiction in this action because they were not parties to the SAR. The Court disagreed, concluding that although the Boathouse Defendants had not signed the SAR, based upon the evidence before the Court, they had assented to it because one of their managing members had negotiated the SAR with Shively and the SAR included a provision that the “Company and/or Boathouse” agreed to buy Shively’s equity interests. Subsequent correspondence between the parties also showed that Boathouse understood itself to be a party to the SAR. Accordingly, the long-arm statute applied to the Boathouse Defendants. All Defendants contended that they lacked minimum contacts with North Carolina such that the Court’s exercise of personal jurisdiction would offend due process. Although some factors weighed against the exercise of personal jurisdiction, the Court ultimately concluded that Defendants had sufficient minimum contacts with North Carolina because the SAR had a substantial connection to North Carolina in that Defendants offered the SAR to Shively, who they knew to be a North Carolina resident, and Shively performed his obligations under the SAR while in North Carolina. Thus, the Court denied the motions to dismiss under Rule 12(b)(2).

Failure to State a Claim. The Boathouse Defendants argued that the complaint should be dismissed as to them because they were not parties to the SAR and could not be held liable for the breach thereof. The Court disagreed and denied the motion, concluding that the complaint sufficiently alleged facts supporting the conclusion that the Boathouse Defendants were parties to the SAR.

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Carolina Med. Partners, PLLC v. Shah, 2025 NCBC 52 (N.C. Super. Ct. Aug. 28, 2025) (Conrad, J.)

Key Terms: Rule 12(b)(6); motion to dismiss; statute of limitations; breach of fiduciary duty; constructive fraud; breach of contract; fraudulent inducement; breach of settlement agreement; wrongful interference with prospective contract; unjust enrichment; intentional infliction of emotional distress

The Patels and Shah are all physicians who used to practice together at Palmetto Medical Group and who shared interests in several other medical businesses. After their relationship deteriorated in 2021, they mediated their disputes and executed a Practice Separation Agreement which resolved some disputes and created a special litigation committee to investigate potential derivative claims that each side wished to bring. Shortly after, the Patels sued Shah and Palmetto Medical Group for breaching the Practice Separation Agreement, which lead to another partial settlement. The special litigation committee then finished its work and concluded that derivative claims were not in Palmetto Medical Group’s best interests. Two additional lawsuits followed and the three actions were consolidated. Shah and Palmetto Medical Group moved to dismiss all eleven claims asserted by the Patels.

Statute of Limitations. The Court concluded that Defendants’ argument that many of the claims were time-barred was premature because discovery was necessary to determine whether the statute of limitations was tolled due to the parties’ agreement that the claims would not be asserted while they engaged in mediation.

Breach of Fiduciary Duty and Constructive Fraud. The Court rejected Shah’s argument that these claims should be dismissed because the special litigation committee rejected them—the special litigation committee dealt with potential derivative claims, not direct claims, and, in any event, the committee’s report was outside the pleadings. The Court also was not persuaded that the Patels lacked standing since Shah did not dispute that he owed a fiduciary duty to the Patels and the complaint alleged that Shah had taken actions to benefit himself at the Patels’ expense. Lastly, the complaint’s allegations that Shah had unfairly rigged the distributions were sufficient to show bad faith and resulting harm. Accordingly, the Court declined to dismiss these claims.

Breach of Shareholder Agreement. The complaint alleged two claims for breach of the Palmetto Medical Group’s shareholder agreement: 1) that Shah manipulated the bonus formula to reduce the Patels’ bonuses; and 2) that the Patels were not reimbursed for professional expenses and not compensated for locum work and director-related services. The Court found both claims adequately pleaded and denied dismissal of both.

Fraudulent Inducement. The Court dismissed this claim because 1) it was not pleaded with adequate specificity under Rule 9(b); 2) the alleged misrepresentations were based on Shah’s opinions and the complaint did not allege that Shah did not honestly hold those opinions; and 3) the complaint did not allege in a nonconclusory way that the Patels were denied the opportunity to investigate or could not have learned the truth through reasonable diligence.

Breach of Settlement Agreement. The Court dismissed this claim, which was based on Shah’s alleged failure to make best efforts to convince a lender to release the Patels from certain personal guaranties. Although the complaint alleged that Shah did not make his best efforts, it did not allege that the lender would have released the guaranties even if Shah had done so.

Wrongful Interference with Prospective Contract. The Court declined to dismiss this claim, finding that the Patels had adequately alleged that Shah had interfered with the Patels’ relationships with patients by rerouting patients’ phone calls to make appointments with the Patels to Shah’s own answering service.

Unjust Enrichment. The Court dismissed this claim because the Patels did not allege that they had conferred a benefit on Shah.

Breach of Partnership Agreement. The Court declined to dismiss this claim because the complaint adequately alleged that Shah had made distributions in violation of the agreement and that the Patels were harmed by being deprived of their right to vote on distributions.

Breach of Operating Agreement. The Court dismissed this claim because the agreement at issue did not impose any obligations on Shah personally and therefore the Patels couldn’t maintain a claim against him for breaching the agreement.

Intentional Infliction of Emotional Distress. The Court dismissed this claim because the complaint’s allegations that Shah had berated Shephali Patel about her fitness as a wife, mother, doctor, and business owner did not satisfy the “extreme and outrageous conduct” element of the claim.

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Castillo v. RRD Fin., LLC, 2025 NCBC 53 (N.C. Super. Ct. Sept. 3, 2025) (Houston, J.)

Key Terms: judgment on the pleadings; partnership; joint venture; UDTPA; in or affecting commerce; internal conduct; negligent misrepresentation; BCR 7.2; BCR 7.5; BCR 7.8; incorporated briefing

Defendant RRD operates a network of used car dealerships. Defendants Eskandari and Algood are members and managers of RRD. Plaintiffs were previously employed as general managers of RRD dealerships; however, in December 2022 the parties negotiated and executed an operating agreement to document their partnership (or joint venture). During negotiations, certain representations were made to Plaintiffs regarding their compensation and Defendants’ provision of working capital and other assistance. Disputes eventually arose between the parties and Plaintiffs filed suit asserting that Plaintiffs had been wrongfully cast out of the partnership and deprived of information and profits. Defendants moved for judgment on the pleadings on the claims for violation of the UDTPA and negligent misrepresentation.

Pursuant to BCR 7.2, 7.5, and 7.8, the Court summarily denied Defendant Algood’s motion because he failed to submit substantive briefing in support of the motion, instead relying on the briefing submitted by the other Defendants.

As to the other Defendants, the Court granted judgment on the pleadings in their favor on the UDTPA claim because, as pleaded, the dispute was internal to a single business enterprise and therefore was not in or affecting commerce.

The Court also granted judgment on the pleadings on the negligent misrepresentation claim because Plaintiffs failed to plead the claim with the requisite particularity. There were no individualized, direct allegations of misrepresentation by Defendant Eskandari. As to Defendant RRD, the allegations did not specify the substance of the misrepresentation, who misrepresented it, or when or where it was misrepresented. Further, the purported intentional misrepresentations regarding compensation and financial support were promises or statements of intent, which could not form the basis of a negligent misrepresentation claim.

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Water.io Ltd v. Sealed Air Corp., 2025 NCBC 54 (N.C. Super. Ct. Sept. 5, 2025) (Conrad, J.)

Key Terms: breach of contract; sale of goods; UCC; consequential damages; N.C.G.S. § 25-1-305; common law; limitation of liability; waiver; estoppel

In this action, Plaintiff (the seller) alleged that Defendant (the buyer) wrongfully terminated a contract for the sale of goods, which delayed Plaintiff’s planned IPO and decimated its valuation. Defendant moved for partial summary judgment, arguing that Plaintiff could not recover the decline in valuation as damages for breach of contract because such damages are consequential damages (which Plaintiff conceded) and 1) the UCC bars sellers from recovering consequential damages for breach of contract; and 2) the parties’ contract contained a limitation-of-liability clause precluding liability for consequential damages.

The Court agreed with both points and granted summary judgment in Defendant’s favor that Plaintiff could not recover consequential damages from the alleged breach of contract. The plain terms of the UCC disallowed consequential damages as a remedy for sellers and the common law could not “add back” what the UCC’s drafters chose to leave out. The parties’ contract also precluded the recovery of consequential damages. That Defendant had made its own demand for damages in the pleadings (which it denied were consequential in nature) did not waive Defendant’s right to enforce the limitation-of-liability clause against Plaintiff.

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Piedmont NC LLC v. Walker & Assocs., Inc., 2025 NCBC Order 62 (N.C. Super. Ct. Sept. 3, 2025) (Robinson, C.J.)

Key Terms: order on designation; conditional designation; supplement; extension of time; clerk of court; N.C.G.S. § 7A-45.4(a)(9)

Plaintiffs initiated this action on 24 June 2025 asserting, inter alia, a claim for breach of contract, and contemporaneously filed a notice of designation, conditionally seeking designation pursuant to N.C.G.S. § 7A-45.4(a)(9), which permits designation in certain actions if all parties consent. Where a party files a conditional NOD, the party has thirty days after service to file a supplement to the conditional NOD that reflects the required consent. On 26 August 2025, Plaintiffs filed a motion with the clerk of court to extend the time to file the supplement, which was granted by the clerk and purported to extend Plaintiffs’ time to file the supplement to 29 August 2025. Plaintiffs filed the supplement on 29 August 2025.

The Court deemed the supplement untimely and therefore found that designation was improper. Plaintiffs filed the supplement after more than thirty days had passed from the filing of the conditional NOD. Further, while the Court may extend the time to file a supplement, Plaintiffs’ motion to extend was ineffective because it was untimely filed and sought an extension from the clerk of court, rather than the Court.

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Moore v. Brooks, 2025 NCBC Order 63 (N.C. Super. Ct. Sept. 4, 2025) (Houston, J.)

Key Terms: BCR 4; amendment to BCRs; stipulation of extension of time to file brief

Citing BCR Rule 4(e), the parties filed a stipulation purporting to extend a defendant’s deadline to file a reply brief in support of his pending motion to dismiss. BCR 4.1(e) previously provided that parties could enter into binding stipulations as permitted by Rule 6(b) of the Rules of Civil Procedure. However, BCR 4.1 and 4.2 have been recently amended to provide that parties may not act unilaterally to extend deadlines which have been set or modified by an order of the Court, but that parties may stipulate to extend a deadline to respond to a pleading. The Court determined that under either version of BCR 4, parties do not have the ability to extend briefing deadlines without a Court order. In its discretion, though, the Court construed the stipulation as a motion for extension of time and granted the requested extension.

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Tax Mgmt. Assocs., Inc. v. Bourgeault, 2025 NCBC Order 64 (N.C. Super. Ct. Sept. 4, 2025) (Conrad, J.)

Key Terms: preliminary injunction; trade secret; likelihood of success on the merits; allegations made upon information and belief; irreparable harm

Plaintiff initiated this action alleging that Defendant Bourgeault, a former employee, had taken its confidential information and trade secrets and was using them to compete against it. Plaintiff also moved for a preliminary injunction barring Defendants from interfering with its clients and using its trade secrets.

The Court denied the motion, concluding that Plaintiff had not shown a likelihood of success on the merits or irreparable harm. Many of Plaintiff’s key allegations were made upon information and belief, which are insufficient to warrant a preliminary injunction. Further, Bourgeault’s sworn declaration rebutted these allegations. In addition, Plaintiff’s delay in seeking injunctive relief weighed against a finding of irreparable harm.

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WP Church, LLC v. Whalen, 2025 NCBC Order 65 (N.C. Super. Ct. Sept. 5, 2025) (Davis, J.)

Key Terms: preliminary injunction; breach of operating agreement; competition; likelihood of success on the merits; speculation; irreparable harm; restaurant

The parties in this action are all entities or individuals connected to 5Church, a South Carolina LLC formed to operate a restaurant in Charleston. 5Church’s operating agreement purports to limit the ability of any “holder” to invest in, own, or control another person operating a restaurant within 25 miles of a restaurant operated by 5Church. Beginning in 2019, affiliates of one of 5Church’s members began purchasing and developing property for mixed-use developments. Plaintiff initiated this action and sought a preliminary injunction, asserting, inter alia, that certain defendants’ involvement with the mixed-use developments was in violation of the operating agreement because of the likelihood that they would lease space to a restaurant.

The Court denied the motion for a preliminary injunction, concluding that Plaintiff had not shown a likelihood of success on the merits or irreparable harm. As no restaurants currently operated at either development, Plaintiff’s claim was based on mere speculation. Moreover, the mere lease of space to a restaurant was not necessarily a breach of the operating agreement.

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 09/09/25

N.C. Business Court Opinions, August 13, 2025 – August 26, 2025

Elhulu v. Alshalabi, 2025 NCBC 45 (N.C. Super. Ct. Aug. 13, 2025) (Conrad, J.)

Key Terms: motion to dismiss; Rule 12(b)(6); fraudulent concealment; duty to disclose; RICO; predicate acts

Plaintiffs are three individuals who invested nearly $1 million in a medical laboratory company, Omni Holding Group, LLC. In the original complaint, Plaintiffs alleged that Omni’s founder, Alshalabi, induced them to invest these funds in Omni as part of a fraudulent scheme. Alshalabi was subsequently tried and convicted of Medicare and Medicaid fraud. Plaintiffs amended their complaint to include fraudulent concealment and RICO claims against a fellow-member of Omni, Ishnineh. Ishnineh had attended the meeting where Alshalabi solicited Plaintiffs’ investment, but the complaint did not allege that Ishnineh participated in the solicitation or communicated with Plaintiffs at any point. Ishnineh moved for a dismissal of both claims pursuant to Rule 12(b)(6).

The Court granted Ishnineh’s motion in full. As to the fraudulent concealment claim, the complaint did not allege that Ishnineh had a duty to disclose nor did it allege facts giving rise to a duty to disclose. This was fatal to the claim.

The Court also dismissed Plaintiffs’ RICO claim. Plaintiffs alleged mail fraud, wire fraud, and money laundering as the predicate acts for a pattern of racketeering. The allegations of mail fraud and wire fraud were comprised of the same allegations used in the fraudulent concealment claim, and as such, were insufficiently pleaded. As only one act remained (money laundering) the complaint failed to meet the requirement of establishing a pattern of unlawful activity.

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Qian v. Zhang, 2025 NCBC 46 (N.C. Super. Ct. Aug. 15, 2025) (Brown, J.)

Key Terms: Rule 12(b)(6); motion to dismiss; breach of fiduciary duty; self-dealing; de facto fiduciary relationship; de jure fiduciary relationship; general partnership; limited partnership; demand futility; N.C.G.S. § 59-1001; N.C.G.S. § 59-1003; mismanagement; business judgment rule; Declaratory Judgment Act; discretion; breach of contract; injunction

Defendant Halifax Safeguard Property, LLC is the General Partner of Nominal Defendant Carolina Sawmills, LP. Pro se plaintiffs Jian Qian, Jiangang Jiao, and Lina Li, along with Individual Defendants Lijia Zheng, Yawei Zheng, Fang Lin, and Haoyu Qi, are limited partners of CSLP, members of Halifax, and members of Halifax’s nine-member management committee. The Intervenors consist of two Halifax members and thirty-three CSLP limited partners. Plaintiffs initiated this action against Defendants for their alleged mismanagement of CSLP funds. The Intervenors asserted claims against Plaintiffs and Defendants for alleged mismanagement and self-dealing. Halifax and the Individual Defendants moved to dismiss the Intervenors’ Complaint.

Breach of Fiduciary Duty: Self-dealing. The Intervenors contended that Halifax, Plaintiffs, and the Individual Defendants breached fiduciary duties owed to CSLP and its limited partners by engaging in self-dealing.

Halifax conceded that it owed a de jure fiduciary duty to both CSLP and its limited partners, but argued that the claim was derivative in nature, the Intervenors failed to make a pre-suit demand, and the allegations were insufficient to rebut the business judgment rule. The Court disagreed, concluding that the Intervenors sufficiently pleaded demand futility under N.C.G.S. § 59-1003 and included allegations of financial self-dealing to rebut the business judgment rule. Halifax’s motion was denied.

The Court granted the Individual Defendants’ motion, determining that (1) where an LLC is the general partner of a limited partnership, members of the LLC do not have a de jure fiduciary relationship with the limited partnership or its limited partners; and (2) the Intervenors did not sufficiently plead the existence of a de facto fiduciary relationship between the Individual Defendants and CSLP. The Court declined to consider the Intervenors’ veil-piercing argument because it was not alleged in the Complaint.

Breach of Fiduciary Duty: Mismanagement. The Intervenors contended that Halifax, Plaintiffs, and the Individual Defendants breached fiduciary duties owed to CSLP and its limited partners by mismanaging CSLP funds. Halifax again argued for dismissal based on demand futility and the business judgment rule, but the Court again denied Halifax’s motion, declining to consider extrinsic evidence that contradicted the allegations in the Complaint and concluding that the Intervenors included sufficient allegations of bad faith. The Court granted the Individual Defendants’ motion for the same reasons discussed above and dismissed the claim with prejudice.

Declaratory Judgment. The Intervenors sought a declaration on the effectiveness of an amendment to CSLP’s Limited Partnership Agreement. The Court denied Halifax’s motion to dismiss this claim because Halifax sought to apply the incorrect legal standard to a Rule 12(b)(6) motion. The Court also denied the Individual Defendants’ motion, as the Intervenors had adequately pleaded a genuine controversy and the Court was unable to definitively state at this stage that the declaratory judgment claim would serve no useful purpose in clarifying legal relations.

Breach of Contract and Breach of Fiduciary Duty. The Intervenors alleged that Halifax’s mismanagement of CSLP funds constituted both a breach of the Limited Partnership Agreement and a breach of fiduciary duty. Halifax argued that other provisions of the Limited Partnership Agreement permitted CSLP to reimburse Halifax for expenses, but the Court concluded that this argument was premature and denied Halifax’s motion as to both claims.

Preliminary and Permanent Injunction. Halifax and the Individual Defendants moved to dismiss this claim because injunctions are remedies, not independent causes of action. The Court agreed and granted the motions, noting the decision had no impact on the Intervenors’ pending Motion for Preliminary Injunction.

Appointment of Receiver. The Intervenors moved to have a receiver appointed for Halifax and CSLP based on the alleged mismanagement by Halifax’s management committee. The Individual Defendants sought dismissal of this claim because they were not the entity over which the Intervenors sought a receivership, and Halifax contended that the Intervenors failed to include allegations necessary for the appointment of a receiver. But the Court concluded dismissal of this claim was premature and denied the motions.

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State of N.C. v. TikTok Inc., 2025 NCBC 47 (N.C. Super. Ct. Aug. 19, 2025) (Conrad, J.)

Key Terms: TikTok; unfair or deceptive trade practices; motion to dismiss; personal jurisdiction; failure to state a claim; 47 U.S.C. § 230(c)(1); publisher immunity; First Amendment

The State of North Carolina sued the owners and operators of TikTok for unfair or deceptive trade practices, alleging that they designed TikTok to be highly addictive to minors and then undertook a deceptive publicity campaign to convince parents and children that the app was safe. ByteDance moved to dismiss the complaint for lack of personal jurisdiction and for failure to state a claim.

The Court denied the motion to dismiss based on lack of personal jurisdiction, concluding that Defendants’ extensive, purposeful contacts with North Carolina–incuding marketing TikTok in North Carolina, cultivating ongoing relationships with in-state users, and collecting data from in-state users–from which the State’s claim arose, were sufficient to establish specific jurisdiction.

Turning to the Rule 12(b)(6) motion, the Court rejected ByteDance’s argument that it was immune from suit pursuant to 47 U.S.C. § 230(c)(1), which immunizes a provider of an internet platform from liability for any legal claim that treats it as a publisher or speaker of third-party content. The State did not seek to hold ByteDance liable for monitoring, altering, or removing content, or for failing to do those things. Instead, the State’s unfairness theory was based on allegations that ByteDance purposely designed TikTok to be addictive, and its deception theory was based on allegations that ByteDance misrepresented its safety features. Thus, 47 U.S.C. § 230(c)(1) did not apply.

ByteDance also asserted that the State’s claim violated the First Amendment by seeking to muzzle its editorial discretion to select, organize, and display videos and by attempting to regulate the adoption and enforcement of content moderation standards. Based on the pleadings, the Court disagreed. As alleged, TikTok’s features did not “express” any particular viewpoint; instead, they present content based on an algorithm designed to induce compulsive use. Further, the First Amendment does not protect TikTok’s alleged misrepresentations regarding its safety features.

Lastly, ByteDance argued that its actions were neither unfair nor deceptive. The Court rejected this argument as well. The State’s allegations that ByteDance designed TikTok to exploit minors’ immaturity and induce addictive, compulsive use were sufficient to allege unfair conduct. Moreover, the complaint identified numerous specific false and misleading statements which were sufficiently particular to satisfy the pleading standards for deceptive conduct.

For all of these reasons, the Court denied the motions to dismiss.

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Deleuran v. Thompson, 2025 NCBC 48 (N.C. Super. Ct. Aug. 22, 2025) (Brown, J.)

Key Terms: motion to dismiss; Rule 12(b)(1); Rule 12(b)(6); Chapter 55; derivative action; standing; pre-suit demand; extraordinary circumstances; separate injury; individual claims

Plaintiff initiated this action, alleging that Defendant engaged in various unauthorized and wrongful conduct related to the operation and distribution of funds from Living Well Behavioral Health, Inc., of which Plaintiff and Defendant are the sole and equal owners. Defendant moved to dismiss all claims pursuant to Rules 12(b)(1) and 12(b)(6).

Derivative Claims. Defendant moved to dismiss all derivative claims for lack of standing because Plaintiff failed to allege that a written demand was made upon Living Well as required by N.C.G.S. § 55-7-42. The Court found that Plaintiff’s demand upon Defendant was insufficient to satisfy the statutory pre-suit demand requirement because it was not made upon the corporation. Accordingly, the Court dismissed Plaintiff’s derivative claims without prejudice.

Individual Claims. The Court further held that Plaintiff could not proceed with the majority of her claims individually because she failed to allege the existence of a special duty or that she suffered a personal injury, separate and distinct from that allegedly suffered by the corporation. Plaintiff’s allegations regarding the imbalance of access to and influence over the corporation by Defendant were not sufficient to meet the extraordinary circumstances required to impose fiduciary duties between fifty-percent owners. However, the Court held that Plaintiff adequately alleged an individual injury to herself separate from the corporation in her claim asserting that Defendant breached N.C.G.S. § 55-16-02 by refusing to allow Plaintiff access to the books and records of the corporation. Thus, Plaintiff’s claim for breach of the Business Corporation Act survived but all other individual claims were dismissed with prejudice.

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Qian v. Zhang, 2025 NCBC 49 (N.C. Super. Ct. Aug. 22, 2025) (Brown, J.)

Key Terms: judgment on the pleadings; Rule 12(c); pro se; general partnership; limited partnership; receiver; breach of fiduciary duty; de facto fiduciary relationship; de jure fiduciary relationship

As summarized above, the Court previously granted in part and denied in part Halifax’s and the Individual Defendants’ motions to dismiss the Intervenors’ Complaint. Here, Individual Defendants Lijia Zheng, Yawei Zheng, and Fang Lin seek dismissal of pro se plaintiffs Jian Qian, Jiangang Jiao, and Lina Li’s claims to appoint a receiver and for breach of fiduciary duty.

Appointment of Receiver. The Individual Defendants argued that this claim should be dismissed because they were not the entity over which Plaintiffs sought a receivership, but the Court concluded that it was premature to foreclose the appointment of a receiver and denied the motion.

Breach of Fiduciary Duty. Plaintiffs alleged that the Zhengs, as General Manager and Operating Manager of Halifax, breached a fiduciary duty they owed to Plaintiffs and CSLP’s other limited partners. The Court first concluded that, where the LLC is the general partner of a limited partnership, the members of the LLC—i.e., the Zhengs—did not have a de jure fiduciary relationship with the limited partnership or its limited partners, including Plaintiffs. The Court also determined that Plaintiffs did not sufficiently plead the existence of a de facto fiduciary relationship. The Court granted the motion and dismissed this claim with prejudice.

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Oak Grove Techs., LLC v. Seventh Dimension, LLC, 2025 NCBC 50 (N.C. Super. Ct. Aug. 22, 2025) (Houston, J.)

Key Terms: motion to dismiss; Rule 12(b)(6); government contract; defense contract; breach of contract; fraud; unfair and deceptive trade practices

This matter is before the Court on Plaintiff’s and Third-Party Defendants’ motion to dismiss Defendants’ amended counterclaims and third-party complaint. Plaintiff Oak Grove Technologies, LLC and Defendant Seventh Dimension, LLC are defense contractors. Defendant, with the advice of Plaintiff, bid on and was awarded a contract with the U.S. Army Special Operations Command. Defendant subcontracted a portion of the contract to Plaintiff.

Defendants assert purported counterclaims for breach of the ARSOF Subcontract, breach of the EOS Subcontract, declaratory judgment, tortious interference with prospective business relationships, tortious interference with contractual relations, fraud and fraudulent inducement, negligent misrepresentation, defamation, unfair and deceptive trade practices, and punitive damages

Breach of the ARSOF Subcontract. The Court analyzed eleven claims of breach of the ARSOF Subcontract by Plaintiff and applying the plain, unambiguous language standard to the language of the subcontract and noting the low bar for notice pleading, found that most of the claims for breach of contract were sufficient to survive the motion to dismiss, except for those which Defendant failed to plead facts sufficient to demonstrate a breach.

Breach of EOS Subcontract. The Court found that Defendants’ barebones allegations failed to allege sufficient facts constituting the breach to put Plaintiff on notice of the nature of the claims for breach of the EOS Subcontract and therefore dismissed those claims. The Court also found that Defendants’ catchall, generalized allegation of breaches to be proven through discovery was insufficient to put Plaintiff on notice of such breaches.

Declaratory Judgment. The Court held that Defendants’ declaratory judgment claim relating to its ability to reduce Plaintiff’s rates presents a genuine controversy entitling the parties to a declaration of rights. However, the Court found that the declaratory judgment claim relating to the ARSOF Subcontract’s language requiring identification of a replacement employee was duplicative of a breach of contract claim which the Court had dismissed; therefore the Court dismissed the corresponding declaratory judgment claim as moot.

Tortious Interference with Contractual Relations. The Court dismissed this claim because Defendant did not allege that the Plaintiff induced a third-party not to perform under its contract with Defendant or that Defendant suffered actual pecuniary harm from such interference.

Fraud, Fraudulent Inducement, and Negligent Misrepresentation. The Court dismissed the fraud-based claims for several reasons. Defendants’ allegations regarding what Plaintiff told them about the government contract and Defendants’ reliance on such information were not sufficient to support Defendants’ fraud claims because Plaintiff did not prevent Defendants from reading the contract themselves and Defendants’ reliance on Plaintiff’s statements regarding the government’s requirements and procedures was not justified. Defendants’ allegations relating to Plaintiff’s statements that it would be a good partner were conclusory and furthermore, the statements by Plaintiff were non-actionable statements of intent rather than statements of fact. The fraud-based claims against the individual Third-Party Defendants failed for the same reasons.

N.C. Gen. Stat. § 75-1.1 et seq. (UDTP). The Court held that the UTDP failed to the extent it relied on the dismissed fraud-based claims. The Court further found that the counterclaims asserted no specific allegations of wrongdoing against certain of the Third-Party Defendants and therefore dismissed the claim as to those individuals. However, Defendants had sufficiently alleged that one of the Third-Party Defendants defamed Defendants, which was sufficient to support a UDTPA claim. Thus, the Court declined to dismiss the UDTP claim based on the allegations of defamation but otherwise dismissed the UDTP claim because the conclusory allegations failed to support it.

Punitive Damages. Finding that punitive damages is a remedy not a stand-alone cause of action, the Court dismissed it ex mero motu.

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Olds v. Olds, 2025 NCBC Order 57 (N.C. Super. Ct. Aug. 13, 2025) (Robinson, C.J.)

Key Terms: order on designation; opposition to designation; voluntary dismissal; gamesmanship

Plaintiff Davis Olds opposed Defendants’ Notice of Designation after voluntarily dismissing his claim for judicial dissolution upon which the designation was based. The Court reiterated that once a case has been properly designated, a party cannot divest the Court of its ability to hear the case by dismissing the claim(s) that served as the basis for proper designation. Accordingly, the Court overruled the opposition and determined that the case should proceed as a mandatory complex business case.

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Moore v. Brooks, 2025 NCBC Order 58 (N.C. Super. Ct. Aug. 13, 2025) (Houston, J.)

Key Terms: motion to compel arbitration; authenticity of exhibits; evidentiary support; BCR 7.5; BCR 7.11

Defendant Winthrop Intelligence, LLC moved to compel arbitration contending that Plaintiffs’ claims were subject to an arbitration clause contained in several relevant operating agreements. Winthrop relied upon a number of exhibits, including the purported operating agreements containing the arbitration provisions, attached to its motion to compel arbitration but failed to authenticate the exhibits by affidavit or otherwise. Winthrop, as the moving party, bore the burden of proof to present competent evidence of the existence of an agreement to arbitrate. The Court found that due to the unauthenticated exhibits, which were contested by Plaintiffs, there was no competent evidence in the record of any agreement to arbitrate between the parties and therefore denied the motion to compel arbitration. The Court did not grant Winthrop leave to submit authenticating evidence in support of the motion because Winthrop had multiple opportunities to do so during briefing on the motion and failed to comply with BCR 7.5 requiring all materials including supporting affidavits to be filed with the motion and thus waived its right to file the supporting material.

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Sugarbranch Dev., LLC v. Burbank Fin. Partners, LLC, 2025 NCBC Order 59 (N.C. Super. Ct. Aug. 14, 2025) (Robinson, C.J.)

Key Terms: order on designation; contemporaneous filing requirement; service on Chief Justice and Chief Judge

Defendants filed a notice of designation with the Mecklenburg County Clerk of Superior Court but failed to contemporaneously serve the NOD on the Chief Justice of the North Carolina Supreme Court and Chief Judge of the North Carolina Business Court as required by the designation statute, N.C.G.S. § 7A-45.4(c). The Court held that the contemporaneous filing and service requirements of the designation statute are mandatory and Defendants’ failure to comply with them rendered the NOD untimely. The Court declined to designate the action as a mandatory complex business case.

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State of N.C. v. TikTok Inc., 2025 NCBC Order 60 (N.C. Super. Ct. Aug. 19, 2025) (Conrad, J.)

Key Terms: motion to seal; TikTok; Apple; sensitive data; embarrassing allegations

Plaintiff, the State of North Carolina, moved to file its complaint against Defendants, the owners and operators of TikTok, under seal at the request of the Defendants and other nonparties including Apple Inc. The Court was not convinced by Apple’s arguments that certain paragraphs of the complaint detailing the number of downloads of TikTok from the Apple App Store from 2018 to 2023, the total amount of in-app payments, and general allegations regarding Defendants’ advertisement of TikTok in the App Store was sensitive, protected information. The Defendants sought to redact more than a third of the complaint but the Court found that the information was not unusually sensitive or of competitive value as the data was several years old. The Court also did not find that the complaint’s allegations describing TikTok’s algorithm were specific or detailed enough to warrant sealing. Finally, the Court found that the public interest outweighed Defendants’ concerns regarding disclosure of TikTok employees’ names and job titles, as well as potentially embarrassing allegations regarding TikTok’s safety procedures. The Court denied the motion to seal.

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Highlights Healthcare, LLC v. Abell, 2025 NCBC Order 61 (N.C. Super. Ct. Aug. 21, 2025) (Davis, J.)

Key Terms: preliminary injunction; motion to strike; affidavits; personal knowledge; reply brief; matters newly raised; allegations made upon information and belief; success on the merits; irreparable harm

Plaintiffs initiated this action against two former employees (Abell and Magee), asserting that they had misappropriated Plaintiffs’ confidential information and trade secrets and were using them to unlawfully compete in violation of certain restrictive covenants. Plaintiffs moved for a preliminary injunction to enforce the restrictive covenants and prevent the disclosure of their proprietary information. Defendants moved to strike the affidavit of Third-Party Defendant Graham, Plaintiffs’ manager, in support of Plaintiff’s reply brief in support of the motion for PI.

Motion to Strike. The Court struck the portions of Graham’s affidavit which addressed matters that were not newly raised in the Defendants’ response brief, as well as the portions purporting to state facts which had been alleged upon information and belief in Plaintiff’s Amended Complaint that Graham verified.

PI Motion. The Court denied the PI Motion. First, Plaintiffs had not shown a likelihood of success on the merits of their claims given that a significant portion of  their allegations were made upon information and belief. Further, Defendants had submitted detailed affidavits in opposition to the PI Motion that the Court found sufficient to rebut the allegations of the complaint for purposes of the PI Motion. Second, Plaintiffs failed to demonstrate that they would suffer irreparable harm if the preliminary injunction was not granted because the competing companies Plaintiffs were concerned about had either never been formed or had already opened and therefore, the prospect of its opening could not be avoided by issuance of a preliminary injunction.

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N.C. Department of Revenue v. Philip Morris USA, Inc., No. 242A23, 2025 N.C. LEXIS 683 (N.C. 2025) (Allen, J.)

Key Terms: contested tax case; constitutionality of statute; as-applied challenge; facial challenge; subject matter jurisdiction; Office of Administrative Hearings; separation of powers; franchise tax; N.C.G.S. § 105-241.17

At issue in this appeal was whether the Office of Administrative Hearings is required to dismiss a contested tax case for lack of jurisdiction when the taxpayer alleges that the statute at issue is unconstitutional as applied to the specific taxpayer. As summarized here, the Business Court previously determined that dismissal is required under these circumstances. The Supreme Court affirmed. Although N.C.G.S. § 105-241.17 is ambiguous as to whether all constitutional challenges should be dismissed or just facial challenges, a contrary interpretation would unnecessarily create separation-of-powers problems. Accordingly, the Supreme Court held that N.C.G.S. § 105-241.17 does not grant the OAH subject matter jurisdiction over as-applied constitutional challenges to tax statutes.

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Cutter v. Vojnovic, No. 229A24, 2025 N.C. LEXIS 689 (N.C. 2025) (Barringer, J.)

Key Terms: judgment on the pleadings; motion to strike; summary judgment; tortious interference; oral partnership; general partnership; derivative claims; standing; statutory interpretation; affidavit; expert report; profits and losses; N.C.G.S § 59-48(1); indicia of partnership

As summarized here and here, Plaintiff initiated this action alleging that he and Defendant had entered into a common law partnership agreement in relation to the purchase of a restaurant business (Jib Jab) and that Defendant’s closing of the purchase of the business without Plaintiff’s participation gave rise to numerous claims. Following a number of adverse decisions by the Business Court, Plaintiff appealed to the N.C. Supreme Court.

First, the Court affirmed judgment on the pleadings against Plaintiff on his tortious interference claim because the complaint’s allegations merely tracked the elements of the claim and did not include the necessary supporting facts. The Court also affirmed dismissal of Plaintiff’s derivative claims on behalf of the alleged partnership because the N.C. Uniform Partnership Act does not authorize one general partner to assert a derivative claim against another general partner.

Next, the Court affirmed the Business Court’s order granting in part Defendants’ motion to strike portions of Plaintiff’s summary judgment affidavit. Rather than setting forth specific facts, the stricken paragraphs were based on Plaintiff’s beliefs, opinions, conclusory statements, and legal conclusions, which do not create a genuine issue of material fact to survive summary judgment. The Court also affirmed the Business Court’s decision to exclude Plaintiff’s purported expert report because Rule 56 does not provide for unsworn expert reports to be considered at summary judgment.

Turning to the summary judgment motions, the Court affirmed summary judgment in favor of Defendants on the partnership-dependent claims. The Business Court had concluded that no partnership existed because the parties didn’t agree to share losses jointly or to the terms to obtain financing for the Jib Jab purchase. The Court disagreed that an explicit agreement on how to share losses is required to form a partnership because the statutorily provided default is that shared losses match shared profits. Nevertheless, summary judgment was proper because the undisputed evidence demonstrated that the parties never agreed upon the terms to obtain financing, which was a material term of the purported partnership agreement. The Court also noted that the evidence revealed no indicia of partnership, such as a registered partnership name, partnership tax returns, or partnership bank accounts.

Lastly, the Court affirmed summary judgment against Plaintiff on his tortious interference with prospective economic advantage claim because Plaintiff failed to produce evidence that he could have purchased Jib Jab but for Defendant’s interference.

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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 08/26/25

N.C. Business Court Opinions, July 30, 2025 – August 12, 2025  

By: William H. Scott and Ashley Oldfield

Vincelette v. Court, 2025 NCBC 38 (N.C. Super. Ct. July 30, 2025) (Brown, J.)

Key Terms: Rule 12(b)(1); Rule 12(b)(6); standing; N.C.G.S. § 57D-8-08; derivative claims; civil conspiracy; fiduciary duty; declaratory judgment; conversion; advancement; specific performance; inspection rights

Plaintiff and Defendants Melissa Peirce and Kelly Court were the three members of Defendant Wellspring Nurse Source, LLC, a member-managed LLC governed by an Operating Agreement and Connecticut law. Plaintiff and Ms. Court previously sued Ms. Peirce, asserting that Ms. Peirce had defrauded and embezzled funds from Nurse Source. The prior litigation resulted in a Settlement Agreement under which Ms. Peirce’s membership interest would be bought out. However, the Settlement Agreement was never effectuated. Instead, Ms. Court and Ms. Peirce claimed to have reinstated Ms. Peirce and terminated Plaintiff from the company for cause. Plaintiff subsequently filed suit, asserting derivative claims on behalf of Nurse Source and direct claims. Defendants moved for partial dismissal pursuant to Rules 12(b)(1) and 12(b)(6).

Derivative Claims

Motions to Dismiss for Lack of Standing. Defendants sought dismissal of Plaintiff’s derivative claims for lack of standing, arguing that Plaintiff lacked standing under Connecticut law because she was not a member of Nurse Source when she filed suit. The Court disagreed, concluding that Plaintiff had adequately pleaded and provided sufficient supporting evidence of her membership in Nurse Source to withstand a motion to dismiss under either Rule 12(b)(1) or 12(b)(6).

Plaintiff’s Claim for Declaratory Judgment. The Court dismissed Plaintiff’s claim for a declaratory judgment to the extent it was duplicative of her claim for breach of the Settlement Agreement. However, the Court denied dismissal of the claim to the extent it was based on the validity of Ms. Peirce’s reinstatement and reimbursement of her benefits as Plaintiff had adequately pleaded the existence of an actual controversy regarding these issues.

Breach of Fiduciary Duty. Defendants argued that this claim should be dismissed because Plaintiff failed to allege any injury to Nurse Source. The Court disagreed and denied the motion, finding that Plaintiff’s allegations that Defendants’ decision not to exercise its rights under the Settlement Agreement to rid Nurse Source of Ms. Peirce were sufficient to allege injury to Nurse Source where Ms. Peirce was alleged to have previously defrauded and embezzled funds from Nurse Source.

Breach of Contract. Plaintiff alleged that Ms. Peirce and Ms. Court breached the Settlement Agreement by refusing to carry out its terms. The Court dismissed the claim as to Ms. Court because she was not a party to the Settlement Agreement but otherwise denied dismissal.

Injunctive Relief/Specific Performance. The Court dismissed the claim for injunctive relief because there is no standalone claim for injunctive relief but, in its discretion, declined to dismiss the claim for specific performance of the Settlement Agreement.

Civil Conspiracy. The Court denied dismissal of Plaintiff’s civil conspiracy claim, finding that Plaintiff had adequately alleged the existence of a conspiracy between Ms. Court and Ms. Peirce, the timeframe and purpose of the conspiracy, the steps taken to carry out the conspiracy, and the resulting injury.

Direct Claims

Declaratory Judgment. Plaintiff requested a declaratory judgment regarding four issues relating to her alleged termination from Nurse Source. The Court dismissed the claim as to the first issue, finding it duplicative of her direct claim for breach of contract, but otherwise denied dismissal, concluding that the other issues would not necessarily be determined through the breach of contract claim.

Conversion. Plaintiff’s conversion claim was based on certain unauthorized transfers and cash advances taken from a third-party company, which assigned the claim to her. Defendants contended that the claim should be dismissed because 1) personal claims cannot be assigned; 2) the claim was barred by the economic loss rule; and 3) Ms. Court could not be personally liable for causing Nurse Source to convert funds. The Court rejected all three arguments, concluding that 1) tort claims involving economic loss to a company may be assigned; 2) the economic loss rule did not bar the conversion claim because, as alleged,  the unauthorized transfers fell outside the parties’ contract; and 3) a LLC member may be held personally liable for torts committed when acting on behalf of the company.

Violation of Conn. Gen. Stat. § 34-255i(a). Defendants contended that Plaintiff’s claim for violation of her inspection rights under Connecticut law should be dismissed because she was no longer a member at the time she made the request. As the Court had already determined that Plaintiff adequately alleged that she remains a member of Nurse Source, the Court denied dismissal of this claim.

Breach of Operating Agreement-Indemnification and Advancement. Plaintiff alleged that the company’s refusal to advance her litigation expenses was a breach of the Operating Agreement which provides for advancement to any member in “defending any claim, demand, action, suit or proceeding.” Defendants argued that the claim should be dismissed because Plaintiff was prosecuting, not defending, claims. The Court denied dismissal, finding that Plaintiff had adequately pleaded the existence of a contract, that she had incurred expenses defending a claim, and that Nurse Source had breached the contract by refusing to advance the expenses.

Breach of Fiduciary Duty. Under Connecticut law, a member may maintain a direct action against another member for breach of fiduciary duty provided the member shows that the injury is personal to the member and not solely the result of an injury suffered by the company. The Court found that Plaintiff had adequately pleaded personal injury based on allegations that Defendants had wrongfully deprived Plaintiff of her membership rights. Thus, the Court denied dismissal.

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Orange Peel Events, LLC v. Ninja Brewing, Inc., 2025 NCBC 39 (N.C. Super. Ct. July 30, 2025) (Conrad, J.)

Key Terms: motion to dismiss; declaratory judgment; live music; lease; breach of fiduciary duty; joint venture

Plaintiff Orange Peel Events, LLC manages outdoor live music shows in and around Asheville, North Carolina. Public Interest Projects, Inc. is its sole member. In 2019, Public Interest and Defendant Asheville Brewing Properties LLC formed 75 Coxe Properties to purchase real property which they then leased to Defendant Ninja Brewing Inc, a sister company of Asheville Brewing. Ninja and Orange Peel then entered into a management agreement for use of the property  as an outdoor entertainment venue. Disputes between the parties eventually arose, culminating in Ninja giving notice that it intended to terminate the management agreement with Orange Peel. Plaintiffs initiated this lawsuit, bringing both direct claims and derivative claims on behalf of 75 Coxe Properties, and Defendants counterclaimed. Both sides moved to dismiss.

Breach of Fiduciary Duty/ Misappropriation of Corporate Opportunity. The Court dismissed Plaintiffs’ claims for breach of fiduciary duty and misappropriation of corporate opportunity because no fiduciary relationship existed between the parties. Although Plaintiffs alleged that a fiduciary relationship arose through a joint venture with Defendants, the management agreement between the parties expressly disclaimed the existence of a joint venture.

Breach of Management Agreement. The Court denied Ninja’s motion to dismiss Orange Peel’s claim for breach of the management agreement, except to the extent it was based on Ninja’s termination of the agreement. Because the agreement unambiguously allowed either party to terminate it without cause, Orange Peel’s claim based on termination of the agreement failed.

Declaratory Judgment. The Court denied Ninja’s motion to dismiss Public Interest’s claim for a declaratory judgment concerning whether 75 Coxe Properties’ operating agreement required the consent of a majority in interest of the company’s membership for cash distributions as the parties’ conduct clearly indicated an actual controversy regarding this issue.

Punitive Damages. The Court denied Ninja’s and Asheville Brewing’s motion to dismiss Orange Peel’s demand for punitive damages, finding the issue premature.

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Qian v. Zheng, 2025 NCBC 40 (N.C. Super. Ct. July 31, 2025) (Brown, J.)

Key Terms: failure to respond to discovery; sanctions; Rule 37; inherent authority

This lawsuit involves a dispute between the members/managers of Defendant Halifax Safeguard Property, LLC. During the course of discovery, Plaintiffs’ counsel sought to withdraw, citing an inability to meaningfully communicate with their clients. After permitting Plaintiffs’ counsel to withdraw, the Court ordered Plaintiffs to respond to all outstanding discovery and pleadings within 60 days. When Plaintiffs failed to respond to the discovery by the deadline, the Court entered a second order providing that Plaintiffs must respond to the discovery by the end of April and that if they failed to do so, Defendants were permitted to seek sanctions. After Plaintiffs failed to meet this second deadline, Defendants moved for sanctions, requesting that the Court prohibit Plaintiffs from supporting their claims, from opposing Defendants’ defenses to their claims, and from introducing evidence regarding the same. The Court granted the motion pursuant to its inherent authority and Rule 37, concluding that Plaintiffs’ failure to participate in discovery had deprived Defendants of the opportunity to gain information about the claims against them and their defenses thereto. The Court noted that Plaintiffs’ pro se status did not excuse them from their duty to respond to discovery requests.

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Weatherspoon Fam. LLC v. Hatteras Inv. Partners, L.P., 2025 NCBC 41 (N.C. Super. Ct. July 31, 2025) (Houston, J.)

Key Terms: Rule 12(b)(1); voluntary dismissal; derivative suit; pre-suit demand; futility; N.C.G.S. § 57-D-8-04; Delaware law; Rule 15(a)

In 2021, Hatteras Evergreen Private Equity Fund, LLC (“Evergreen Fund”) exchanged its $43 million investment portfolio for preferred equity shares in The Beneficient Company Group, LLP. Defendants Hatteras Investment Partners, L.P. (“HIP”) (Evergreen Fund’s manager) and HIP’s manager spearheaded the transaction. Evergreen Fund’s investment resulted “in the loss of most, if not all, of the value of Evergreen Fund’s assets.” Thereafter, Plaintiff Weatherspoon Family LLC filed a derivative action on behalf of Evergreen Fund asserting a breach of fiduciary duty relating to the transaction. However, Plaintiff did not make a pre-suit demand to request an investigation, instead “contending that such a demand would be futile and should be excused.” Defendants and Evergreen Fund moved to dismiss. Thereafter, Plaintiff filed a notice of voluntary dismissal without prejudice, followed by a motion for leave to voluntarily dismiss the action without prejudice. The next day, Plaintiff filed an alternative motion for leave to file an amended complaint in the event the Court denied leave to dismiss.

Plaintiff’s Notice of Voluntary Dismissal Without Prejudice. Because N.C.G.S. § 57D-8-04 prohibits a derivative proceeding from being discontinued without the court’s approval, the Court struck Plaintiff’s notice of voluntary dismissal.

Plaintiff’s Motion for Voluntary Dismissal Without Prejudice. Plaintiff sought dismissal without prejudice so that Plaintiff’s counsel could pursue the litigation in Delaware with other investors. In considering whether to grant a voluntary dismissal of a derivative action, the court must weigh any legitimate corporate claims brought in the derivative suit against the corporation’s best interests. The Court concluded that Plaintiff’s lone claim for breach of fiduciary duty was not a legitimate claim under applicable Delaware law because Plaintiff had not made the required pre-suit derivative demand and had failed to adequately allege facts with sufficient particularity to demonstrate that pre-suit demand would have been futile and should be excused. The Court also concluded that dismissal without prejudice so that the same suit could be pursued in Delaware was not in Evergreen Fund’s best interest because it would involve the expenditure of additional time and resources for the purpose of pursuing a claim which as currently pleaded was deficient. Accordingly, the Court denied Plaintiff’s motion for leave to voluntarily dismiss without prejudice.

Plaintiff’s Alternative Motion for Leave to File First Amended Complaint. Because Rule 15 permits a party to amend his pleading once as a matter of right before a responsive pleading is filed and Defendants here had yet to file a responsive pleading, the Court granted Plaintiff’s motion to amend and deemed the filed amended complaint as filed as of the date of entry of the present order. The Court also denied as moot Defendants’ motion to dismiss, without prejudice to their right to respond to the amended complaint.

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Members of N.C. State Univ.’s 1983 Men’s Basketball Nat’l Championship Team v. Nat’l Collegiate Athletic Ass’n, 2025 NCBC 42 (N.C. Super. Ct. Aug. 6, 2025) (Davis, J.)

Key Terms: basketball; NCAA; NIL; motion to dismiss; continuing wrong doctrine; statute of limitations; right of publicity; Copyright Act; preemption

Plaintiffs, members of the N.C. State’s 1983 men’s basketball championship team, brought suit against the NCAA for using–without permission–their names, images, and likenesses (“NIL”) contained in game footage from the 1983 season. The NCAA moved to dismiss.

First, the Court held that the claims were barred by the statutes of limitations because Plaintiffs’ alleged injuries derived from an act taken during or before the 1983 season–namely, the required signing of the NCAA’s Student-Athlete Statement which served to verify an athlete’s eligibility to participate in NCAA sports and also authorized the NCAA to use the athlete’s name or picture. The Court rejected application of the continuing wrong doctrine.

Second, the Court concluded that the suit should be dismissed because Plaintiffs did not have a legally enforceable right. The sole basis of the lawsuit was the NCAA’s repeated use of their NIL from game footage previously broadcast. However, Plaintiffs did not have a “right of publicity” in footage of games in which they voluntarily participated.

Finally, the Court concluded that the federal Copyright Act preempted any claims because both the Subject Matter Prong and the Equivalence Prong of the test for preemption were satisfied.

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Port Trinitie Homeowners Ass’n v. Port Trinitie Ass’n, 2025 NCBC 43 (N.C. Super. Ct. Aug. 7, 2025) (Earp, J.)

Key Terms: Rule 12(b)(6); N.C.G.S. § 47A; condominium association; homeowners association; breach of governing documents; breach of fiduciary duty; ultra vires acts

This lawsuit arose from a dispute between the Condo Association and the Homeowners Association for the Port Trinitie development. The members of the two associations share use and maintenance of community facilities owned by the Condo Association. The Homeowners Association and its president initiated this lawsuit against the Condo Association and its board members, alleging various claims relating to their alleged breaches of the development’s Governing Documents. Defendants moved to dismiss all claims.

Breach of Governing Documents. The Court denied the motion to dismiss the claim for breach of the Governing Documents, finding that Plaintiffs had met the minimum pleading standards for breach of contract: the existence of a valid contract and a breach thereof.

Breach of North Carolina General Statutes. Plaintiffs alleged that Defendants’ breaches of the Governing Documents also violated the Condo Act and the Nonprofit Corporation Act. The Court dismissed the claim as to the Condo Act for lack of standing because Plaintiffs were not unit owners. The Court also dismissed Plaintiffs’ claim for inspection rights under the Nonprofit Corporation Act as Plaintiffs had not pleaded that they complied with the statutory prerequisites.

Breach of Fiduciary Duty. Plaintiffs asserted breach of fiduciary duty claims against both the Condo Association and the Individual Defendants. The Court dismissed the claim as to the Condo Association as no de jure fiduciary duty existed and Plaintiffs had not alleged the existence of a de facto duty. That the Homeowners Association only had two voting representatives on matters pertaining to the community facilities while the Condo Association had seven voting representatives did not mean that the Condo Association “held all the cards.” The Court also dismissed the claim as to the Individual Defendants because any fiduciary duty they owed was to the Condo Association and its unit owners, not to the Plaintiffs.

Actions Committed Ultra Vires. Plaintiffs asserted that the Individual Defendants were personally liable for ultra vires acts in violation of the Governing Documents. However, challenges to ultra vires acts are limited by N.C.G.S. § 55A-3-04 to actions by a member or director against the corporation to enjoin the act. Rather than seeking the relief permitted by statute, Plaintiffs’ claim appeared to simply recast their breach of contract claim. Accordingly, the Court dismissed this claim.

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State of N.C. v. E.I. Du Pont de Nemours & Co., 2025 NCBC 44 (N.C. Super. Ct. Aug. 7, 2025) (Robinson, C.J.)

Key Terms: Rule 12(b)(1); air and water contamination; N.C.G.S. § 114-2; subject matter jurisdiction; repeal; common law authority; separation of powers

The State of North Carolina, by and through the State Attorney General, initiated this action in 2020, asserting claims arising from the alleged contamination of North Carolina’s air, land, and water through operations at a chemical manufacturing facility known as Fayetteville Works. During discovery, Plaintiff asserted that it was authorized to bring suit under N.C.G.S. § 114-2(8)(a), which authorizes the AG to bring suit “in all matters affecting the public interest.” In 2024, the General Assembly repealed N.C.G.S. § 114-2(8)(a). Thereafter, Defendants moved to dismiss under Rule 12(b)(1) for lack of subject matter jurisdiction, arguing that the repeal of N.C.G.S. § 114-2(8)(a) divested the AG of authority to prosecute the case.

Power of the Attorney General to Originate & Maintain This Action. The Court first determined that N.C.G.S. § 114-2(8)(a) conferred authority on the AG to originate and maintain the action prior to the statute’s repeal. The Court next determined that under the common law, the AG had, and continues to have, the power to originate and maintain suits for the protection and defense of North Carolina’s natural resources. Lastly, the Court held that both the environmental claims and fraudulent concealment claims fell within this power.

Separation of Powers. Moving Defendants also argued that the AG lacked the ability to bring the suit except in the name of, and at the request of, the NC Department of Environmental Quality. The Court disagreed because 1) there was no clear expression limiting the AG’s common law powers to protect NC’s water and air resources; 2) while N.C.G.S. § 113-131(d) required the AG to act as attorney for NCDEQ when requested, it did not bar the AG from representing NC in natural resources cases without the NCDEQ’s explicit request; and 3) the NCDEQ was limited in the remedies it could seek.

For these reasons, the Court denied the motion to dismiss for lack of subject matter jurisdiction.

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 08/12/25

N.C. Business Court Opinions, July 16, 2025 – July 29, 2025

By: William H. Scott and Ashley Oldfield

Dapper Dev., L.L.C. v. Cordell, 2025 NCBC 33 (N.C. Super. Ct. July 15, 2025) (Brown, J.)

Key Terms: judgment on the pleadings; Rule 12(c); breach of contract; judicial estoppel; North Carolina Wage & Hour Act; N.C.G.S. § 95-25.14(b)(4); declaratory judgment; termination of membership interest; negligent/fraudulent misrepresentation; inspection of books and records; judicial dissolution

The Individual Plaintiffs and Defendant were each 25% members of Plaintiffs Dapper Development, L.L.C. and Tantalum Holdings, LLC (the “Companies”). The Companies’ Operating Agreements provide that the Companies shall be operated by Managers with each Member serving as a Manager. Following a series of disputes, Plaintiffs began to negotiate a voluntary buyout of Defendant’s membership interest in the Companies. In June 2023, Plaintiffs voted to remove Defendant from the Companies and offered a cash payment. Defendant rejected the buyout offer, extended a counteroffer, and filed suit against Plaintiffs after the counteroffer’s rejection. During continued buyout negotiations, Defendant voluntarily dismissed the Initial Lawsuit. Plaintiffs then filed suit against Defendant in April 2024.  Defendant answered and asserted numerous counterclaims. Plaintiffs moved for a judgment on the pleadings on some of their claims and on many of Defendant’s counterclaims.

Defendant’s Counterclaim for Declaratory Judgment – Employment Status. Defendant asserted that there was a controversy regarding whether he was an employee of the Companies. However, because Defendant had made repeated and unqualified factual allegations in the Initial Lawsuit that he was an employee of the Companies, the Court concluded that Defendant was judicially estopped from alleging in this action that he was not an employee of the Companies. Thus, the Court dismissed this counterclaim with prejudice.

Defendant’s Counterclaim for Negligent/Fraudulent Misrepresentation. The Court dismissed Defendant’s misrepresentation counterclaim with prejudice, concluding that Defendant failed to allege facts showing reasonable reliance on Plaintiffs’ representations about his employment status, especially considering that he had been with the Companies since their formation and had participated in drafting and updating the Companies’ operating agreements.

Defendant’s Counterclaim for Violation of North Carolina’s Wage & Hour Act. The Court dismissed Defendant’s Wage & Hour Act counterclaim with prejudice, agreeing with Plaintiffs that the bona fide executive exemption of N.C.G.S. § 95-25.14(b)(4) barred Defendant’s recovery because he was a 25% owner of the Companies who was actively engaged in their management.

Declaratory Judgment: Status as Member. The parties disputed whether Defendant had been removed as a member of the Company. The Court agreed with Plaintiffs that Defendant had been removed as a member because the Operating Agreements provided that a member was terminated upon the affirmative vote of a majority of the membership interest and such a vote had occurred.

Declaratory Judgment: Status as Manager. The parties disputed whether Defendant had been removed as a Manager of the Companies. Defendant argued that because he remains a Member, he also remains a Manager because the Operating Agreements provide that each Member is a Manager. Since the Court had already determined that Defendant was not a Member, the Court found Defendant’s argument moot and granted Plaintiffs a declaratory judgment that Defendant had ceased to be a Manager.

Defendant’s Counterclaim for Inspection of Books and Records. Because the information rights provided by N.C.G.S. § 57D-3-04 are limited to members of LLCs and Defendant did not make his demand for inspection until after his membership had terminated, the Court dismissed this counterclaim.

Defendant’s Counterclaim for Judicial Dissolution. Because the Court had determined that Defendant was no longer a member of the Companies, the Court dismissed the counterclaim as Defendant lacked standing to request judicial dissolution.

Defendant’s Counterclaim for Breach of Fiduciary Duty. Defendant alleged that Plaintiffs breached their fiduciary duties as Managers to him as a Member. Since no de jure fiduciary relationship exists between Managers and Members, the Court looked to whether Defendant had pleaded the existence of a de facto fiduciary relationship based on complete domination and control. Although Defendant alleged numerous controlling actions by Plaintiffs, he also alleged facts showing that he still “held a card or two.” Thus, the Court determined that a de facto fiduciary relationship did not exist and, therefore, dismissed the claim.

Defendant’s Counterclaims for Breach of Contract and Breach of the Implied Covenant of Good Faith and Fair Dealing: Operating Agreements. Defendant alleged that Plaintiffs had breached various provisions of the Operating Agreements. Plaintiffs sought judgment in their favor, arguing that the pleading was deficient because it did not describe the date or substance of any breach. The Court disagreed with Plaintiff and found that the breach of contract claim was adequately pleaded under the notice pleading standard. The Court also denied judgment on the ICGFFD claim for the same reasons.

Defendant’s Counterclaim for an Equitable Accounting. The Court dismissed the “claim” for an equitable accounting, but without prejudice to Defendant’s ability to seek an equitable accounting as a remedy at a later stage as permitted by law.

Defendant’s Counterclaim for Reimbursement/Contribution. Defendant sought reimbursement for payments he made to satisfy the Companies outstanding debts after he received notice of his termination. The Court was unable to conclude that Plaintiffs were entitled to judgment as a matter of law on this claim and thus denied the motion.

Declaratory Judgment: Occurrence of Triggering Event. The parties disputed whether a Triggering Event had occurred under the Operating Agreements. The Court agreed with Plaintiffs that a Triggering Event had occurred. First, under the Operating Agreements’ plain language, Plaintiffs’ June 2023 vote to terminate Defendant’s employment unambiguously constituted a Triggering Event. Second, since Defendant had taken contrary positions in the Initial Lawsuit, the Court held that the doctrine of judicial estoppel barred him from asserting in this lawsuit that a Triggering Event had not occurred.

Declaratory Judgment: Valuation Dates. The Court found that Defendant had adequately pleaded the existence of a controversy regarding the effective date for a valuation of the Companies as neither the Operating Agreements nor the Consent Order in the Initial Lawsuit clearly identified a date. Accordingly, judgment on the pleadings was denied.

Declaratory Judgment: Winston Property. The parties disputed whether any payment to Defendant in exchange for his Membership Interest was subject to setoff. The Court concluded that based on the relevant documents, Plaintiffs were entitled to a declaratory judgment that they were entitled to an offset against the purchase price of Defendant’s interest.

Plaintiffs’ Claim for Breach of Contract: Operating Agreement. Plaintiffs sought judgment on the pleadings on their claim that Defendant had breached the Operating Agreements by refusing to accept a buyout offer in June 2023. The Court denied the motion because it was unable to conclude that no material issue of fact existed and that Cordell breached the Operating Agreements by refusing to accept a buyout offer solely based on the parties’ pleadings.

Plaintiffs’ Claim for Breach of Contract: Consent Order. Since Plaintiffs did not address this claim in their brief, the Court denied Plaintiffs’ motion for judgment on the pleadings on it.

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Value Health Sols. Inc. v. Pharm Rsch. Assocs., 2025 NCBC 34 (N.C. Super. Ct. July 23, 2025) (Davis, J.)

Key Terms: Rule 12(f); motion to strike; summary judgment; statute of limitations; anticipatory repudiation; North Carolina Supreme Court

This lawsuit involves a dispute between Plaintiffs Neil Raja and Value Health Solutions Inc. (“VHS”) and Defendants Pharmaceutical Research Associates, Inc. and PRA Health Sciences, Inc. (PRA) in connection with PRA’s acquisition of VHS and its proprietary software (PSO). The Court previously entered orders dismissing certain of Plaintiffs’ claims and granting summary judgment as to Plaintiffs’ remaining claims. As summarized here, the North Carolina Supreme Court affirmed all but one of the Business Court’s rulings. The Supreme Court reversed the Court’s entry of summary judgment against Plaintiffs on the issue of PRA’s alleged breaches of Section 2.6 of the parties’ Asset Purchase Agreement and remanded for further proceedings. PRA allegedly breached Section 2.6(b)’s schedule of “Milestones” for business development; upon completing a Milestone, PRA was obligated to pay VHS set sums of money. Following supplemental discovery, Plaintiffs moved to strike Defendants’ statute of limitations affirmative defense and Defendants moved for summary judgment on three issues: 1) whether the statute of limitations barred Plaintiffs from asserting certain breaches of Section 2.6(b); 2) whether a signed agreement between PRA and third-party Takeda Pharmaceuticals constituted an External Sale under the APA; and 3) whether PRA’s internal use of PSO was an External Sale under the APA.

Motion to Strike: Defendants’ Statute of Limitations Defense. Plaintiffs argued that Defendants’ single-sentence statute of limitations affirmative defense should be stricken because it was not pleaded with the requisite specificity. The Court rejected this argument, concluding that the allegation was sufficient to put Plaintiffs on notice. Further, the Court found that Plaintiffs would not be unfairly prejudiced by allowing Defendants to pursue this defense as Plaintiffs had been on notice of it for over five years and had never previously asserted that it was insufficiently pleaded. Accordingly, the Court denied Plaintiffs’ motion to strike.

Summary Judgment: Statute of Limitations. Defendants contended that Plaintiff Raja had first learned of Defendants’ alleged breaches of contract through a conversation with PRA’s CEO in June 2015. The Court concluded that to the extent this conversation was sufficient to give rise to a claim for breach of contract at that time, the claim would be based on a theory of anticipatory repudiation. However, the evidence was clear that Plaintiffs did not treat the statements as an anticipatory repudiation at that time. Accordingly, the Court was unable to conclude as a matter of law that Plaintiffs’ claim accrued in June 2015. The Court denied Defendants’ motion for summary judgment, finding that significant questions of fact remained as to when Plaintiffs’ claim accrued.

Summary Judgment: External Sales

The Court granted Defendants’ motion for summary judgment related to External Sales. With respect to Takeda, the Court found that there was no evidence that the Takeda master service agreement was drafted to require Takeda to pay consideration to acquire and use a license of the PSO. Accordingly, the Takeda MSA was not an External Sale under the APA. With respect to PRA’s internal use of PSO to conduct research for customers, the Supreme Court had instructed that “in order for an External Sale to have occurred under the APA, a contract between PRA and its customer must have included a transfer of license for the customer to use PSO.” Since PRA had not conveyed a license to a customer, no External Sale occurred.

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Compass Tax Servs. LLC v. Karki, 2025 NCBC 35 (N.C. Super. Ct. July 23, 2025) (Robinson, C.J.)

Key Terms: counterclaim; breach of contract; material misrepresentation; fraud; breach of fiduciary duty; UDTPA; bench trial; final judgment

As summarized here, this dispute arose out of Defendant/Counterclaim Plaintiff Rabindra Karki’s sale of five Liberty Tax franchise locations to Plaintiffs/Counterclaim Defendants Compass Tax Services, LLC, Ashok Lamichhane, and Amar Shrestha pursuant to a sale Agreement. Although some payments were made under the Agreement, the full price was never paid to Karki. Karki asserted counterclaims arising from Counterclaim Defendants’ failure to pay and from Lamichhane’s conduct managing Compass Tax. The Court previously dismissed all of Plaintiffs’ claims leaving only Karki’s counterclaims for trial. Following a bench trial, the Court entered a final judgment.

Breach of Contract. The Court had previously determined that one or more of the Counterclaim Defendants failed to pay Karki under the Agreement. The only issue remaining was which of the Counterclaim Defendants were obligated to make the payments. Karki contended that Lamichhane and Shrestha were personally liable, while they contended that Compass Tax was liable. The Court concluded that Lamichhane and Shrestha were personally liable, jointly and severally, based on the evidence that they had signed the Agreement in a personal capacity and used their personal funds to make initial payments to Karki.

Fraud. The Court dismissed the fraud counterclaim with prejudice because Karki had failed to demonstrate by the greater weight of the credible evidence that Lamichhane knowingly made false promises to Karki regarding his intent to make payments pursuant to the September Agreement at the time that agreement was signed.

Breach of Fiduciary Duty. The Court dismissed Karki’s breach of fiduciary duty counterclaim against Lamichhane without prejudice. The Court first determined that, based on Lamichhane’s majority interest in Compass Tax and managerial control, Lamichhane owed a fiduciary duty to Karki–a minority member. The Court also concluded that there was ample evidence that Lamichhane had breached his fiduciary duties owed as majority and managing member. However, the evidence showed that any harm suffered as a result of Lamichhane’s actions was harm suffered by Compass Tax, not Karki. Accordingly, Karki lacked standing to bring a direct claim for breach of fiduciary duty for harm suffered by Compass Tax.

Constructive Fraud. The Court dismissed Karki’s constructive fraud counterclaim without prejudice, as the alleged harm was to Compass Tax, not to Karki.

UDTPA. The Court dismissed the UDTPA counterclaim with prejudice because the underlying tort claims had all been dismissed and, with respect to the breach of contract claim, Lamichhane’s and Shrestha’s conduct did not rise to the level of egregious or aggravating circumstances necessary to support a UDTPA claim. Further, the alleged misconduct concerned intra-corporate actions and therefore was not “in or affecting” commerce.

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Pridgen v. Carlson, 2025 NCBC 36 (N.C. Super. Ct. July 25, 2025) (Robinson, C.J.)

Key Terms: motion to dismiss; fraud; fraudulent concealment; statute of limitation; discovery rule; professional services; North Carolina Investment Advisers Act; N.C.G.S. § 78C-38(d); N.C.G.S. § 1-538.2; negligent misrepresentation

This action arises out of Plaintiff’s contention that beginning in 2007, Defendant Carlson, her investment advisor, made fraudulent statements to induce her to enter an investment advisor relationship with him and that he continued to make fraudulent statements throughout their relationship regarding his status as a registered investment advisor and the status of her investments. She further contended that the corporate Defendants—Carlson Financial and Repple—agreed to manage her investment profiles through Carlson, thereby becoming responsible for Carlson’s fraudulent acts. Plaintiff terminated her relationship with Carlson around July 2021 and filed suit on April 17, 2024.  The Carlson Defendants moved to dismiss under Rules 12(b)(1) and 12(b)(6) and Repple moved to dismiss under Rule 12(b)(6).

Statute of Limitation. Defendants argued that Plaintiff’s fraud claims should be analyzed under N.C.G.S. § 1-15(c), which provides that a cause of action for malpractice arising out of professional services accrues at the time of the occurrence of the last act of defendant giving rise to the cause of action. The Court rejected this argument, concluding that investment advisors did not fall under professional services for purposes of N.C.G.S. § 1-15(c). Instead, the Court applied N.C.G.S. § 1-52(9), which provides that causes of action for fraud do not accrue until the aggrieved party’s discovery of facts constituting fraud or mistake.

Fraudulent Inducement & Common Law Fraud 

The Court denied dismissal of the claims for fraudulent inducement and common law fraud, as Defendants conceded that Plaintiff alleged these claims with sufficient particularity under Rule 9(b). The Court also found that Plaintiff met the burden to demonstrate Repple’s vicarious liability for Carlson’s conduct while he was in Repple’s employ.

Fraudulent Concealment. The Court also denied dismissal of Plaintiff’s claim for fraudulent concealment. Plaintiff’s allegations that Carlson and Carlson Financial maintained total discretionary control over her investment portfolio created a fiduciary duty where Carlson had a “duty to speak” to inform Plaintiff of the true and diminishing value of her portfolio. Because Carlson sent Plaintiff monthly account statements containing false financial information through Repple, the Court determined that Plaintiff pleaded a valid claim against Repple.

Violation of the North Carolina Investment Advisers Act. The Court denied dismissal of this claim, rejecting Defendants’ five-year statute of limitations argument. Under the IAA, no person may sue more than three years after the person discovers the facts constituting the violation, but in any case no later than five years after the rendering of investment advice, except that if the violation is concealed through fraud, the suit may be commenced not later than three years after the person discovers that the act was fraudulent. Since Plaintiff had adequately alleged fraudulent conduct and there were disputed facts regarding when Plaintiff should have discovered the fraud, the Court declined to dismiss the claim at this stage.

Negligent Misrepresentation. The Court denied dismissal, noting the need for a more developed record to determine whether the applicable three-year statute of limitations barred the claim.

Civil Liability under N.C.G.S. § 1-538.2. N.C.G.S. § 1-538.2 allows private actions based on violations of criminal statutes. However, since the discovery rules does not apply to this claim, the three-year statute of limitations of N.C.G.S. § 1-52(2) barred the claim to the extent it was based on any actions that took place before 17 April 2021.

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United Therapeutics Corp. v. Liquidia Techs., Inc, 2025 NCBC 37 (N.C. Super. Ct. July 29, 2025) (Earp, J.)

Key Terms: summary judgment; trade secrets; compilation trade secret; process trade secrets; reasonable efforts to maintain secrecy; damages; UDTPA

As summarized here and here, this dispute concerns the alleged misappropriation of trade secrets by Defendant Roscigno from his former employer Plaintiff UTC to the benefit of his new employer, Defendant Liquidia. Liquidia moved for summary judgment on UTC’s misappropriation of trade secrets and UDTPA claims, arguing that the documents at issue (the “UTC Documents”) are not a protectable compilation or process trade secret and that UTC did not engage in reasonable efforts to protect its trade secrets.

Individual Trade Secret Documents. Although UTC claimed that the “totality” of the UTC Documents constituted a trade secret, it also referenced specific information within some of the documents. The Court found that a factfinder could conclude that the UTC Documents contain individual trade secrets that UTC had identified with sufficient particularity. Liquidia also argued that UTC could not recover damages for unjust enrichment for misappropriation of individual trade secrets because its expert did not apportion damages by-document. The Court, however, was unable to conclude that UTC would be incapable of presenting evidence to allow the calculation of damages with respect to at least some of the trade secrets. Additionally, if successful on liability, UTC could obtain injunctive relief, punitive damages, or attorneys’ fees. Accordingly, the Court denied summary judgment on this basis.

Compilation Trade Secrets. Liquidia argued that UTC could not support its claim for misappropriation of a compilation trade secret because it did not present evidence regarding the effort or cost expended in compiling the information and some of the information was publicly available. The Court rejected both these arguments, noting that it would be left to the jury to decide whether Roscigno compiled the documents as a “roadmap,” as UTC argues, or whether the documents “were randomly compiled in the course of doing business,” per Liquidia’s stance. Thus, the Court denied summary judgment on this basis.

Process Trade Secret. The Court found that record evidence existed to support a conclusion that the documents at issue constitute a process trade secret. Although the UTC Documents contained some information that is publicly available, other portions of the UTC Documents were not publicly available and thus the process may constitute a trade secret. Accordingly, the Court denied summary judgment on this basis.

Efforts to Maintain Secrecy. Liquidia asserted that the trade secret claim failed because, when it comes to efforts to maintain secrecy, UTC did not distinguish between its trade secrets and other confidential information. The Court disagreed, concluding that the failure to differentiate security measures was not dispositive. The evidence of UTC’s efforts to maintain the secrecy of its information was sufficient to go to the jury.

Unfair and Deceptive Trade Practices. The Court denied Defendant’s motion related to the UDTPA claim because it was based on the surviving trade secret misappropriation claim.

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Meridian Renewable Energy LLC v. Birch Creek Dev., LLC, 2025 NCBC Order 51 (N.C. Super. Ct. July 23, 2025) (Robinson, C.J.)

Key Terms: order on designation; N.C.G.S. § 7A-45-4(a)(1); N.C.G.S. § 7A-45-4(b)(2); N.C.G.S. § 7A-45.4(e); notice of designation; Chapter 59

As summarized here, the Court previously rejected Defendant Birch Creek Development, LLC’s attempt to designate this case as a complex business case based on Plaintiff Meridian Renewable Energy LLC’s second amended complaint. Thereafter, however, Birch Creek filed an answer with counterclaim and third-party complaint, asserting a claim for breach of fiduciary duty and declaratory relief against Pine Gate and other third-party defendants. Birch Creek contemporaneously filed a Notice of Designation, asserting that the case now met the criteria for a mandatory complex business case under N.C.G.S. § 7A-45.4(a)(1). Meridian timely filed an opposition to designation, contending that designation was improper.

Per N.C.G.S. § 7A-45.4(a)(1), designation as a mandatory complex business case is proper for actions involving a material issue related to “[d]isputes involving the law governing corporations . . . including disputes arising under Chapters 55, 55A, 55B, 57D, and 59 of the General Statutes.” Meridian argued that Birch Creek’s third-party complaint insufficiently referenced Chapter 59 and partnership law and that on the face of the contracts at issue, no joint venture or partnership existed. The Court disagreed, concluding that the action “involves the law governing partnerships under Chapter 59 of the General Statutes,” as Birch Creek’s new breach of fiduciary duty claim named Pine Gate as a joint venture partner and sought declaratory relief concerning the existence of a partnership. Moreover, the Court declined to make a determination on the merits at this stage as to whether a joint venture existed. Accordingly, the Court overruled Meridian’s Opposition and determined that the action was properly designated as a mandatory complex business case.

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Mohr Partners, Inc. v. Elior, Inc., 2025 NCBC Order 52 (N.C. Super. Ct. July 23, 2025) (Davis, J.)

Key Terms: summary judgment; stipulation; supplemental order

As summarized here, the Court previously issued an order and opinion which granted Plaintiff Mohr Partners, Inc’s motion for summary judgment concerning its entitlement to a commission for work on the Moosic Transition from Defendant Elior, Inc. but deferred ruling on the amount of the commission that Plaintiff was due. Thereafter, the parties stipulated that Plaintiff was due $450,000 plus pre-judgment interest and post-judgment interest.

This Order supplemented the original order by entering partial summary judgment in favor of Plaintiff on the Moosic Transaction for the parties’ stipulated amount.

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In Re Asheville Eye Assocs. Data Incident Litig., 2025 NCBC Order 53 (N.C. Super. Ct. July 24, 2025) (Davis, J.)

Key Terms: pro hac vice revocation; sua sponte judicial reconsideration; habitual practice; N.C.G.S. § 84-4.1

The Court previously entered an order granting pro hac vice admission to Raina C. Borrelli in ongoing litigation, after finding that Borrelli had satisfied the requirements of N.C.G.S. § 84-4.1, the statute governing pro hac vice admissions.

Thereafter, a supplement to the motion for Borrelli’s PHV admission was filed, which provided that Borelli had been admitted pro hac vice in North Carolina fifteen times in the last five years, rather than eight times, as was stated in the original PHV motion. The supplement stated that the failure to include the seven undisclosed cases in the original PHV motion was due to an “inadvertent error.”

N.C.G.S. § 84-4.1 forbids North Carolina courts from allowing nonresident attorneys to practice in this State’s courts habitually. The Court revoked Borrelli’s pro hac vice admission, concluding that her fifteen pro hac vice admissions within five years constituted habitual practice.

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Comic Certification Serv. LLC v. CBCS Operations, LLC, 2025 NCBC Order 54 (N.C. Super. Ct. July 28, 2025) (Davis, J.)

Key Terms: comics; default; Rule 55(a)

The Court entered default under Rule 55(a) against Defendants Eli Global, LLC and Global Growth Holdings, LLC for failing to timely file an answer or plead in response to Plaintiffs’ Amended Complaint.

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In re Matter of the 2025 Ann. S’holders’ Meeting of Charles & Colvard Ltd., 2025 NCBC Order 55 (N.C. Super. Ct. July 29, 2025) (Robinson, C.J.)

Key Terms: order on designation; application for court-order shareholder meeting; contemporaneous filing requirement

On 10 July 2025, Riverstyx initiated this action by filing an Application for Court-Ordered Shareholder Meeting pursuant to N.C.G.S. § 55-7-03. One week later, it filed a notice of designation under N.C.G.S. § 7A-45.4(a). The Chief Justice issued a determination order, directing the Court to determine whether the action was properly designated. Because the NOD was not filed contemporaneously with the filing of the Application, as required by N.C.G.S. § 7A-45.4(d)(1), the Court determined that the action was not properly designated as a mandatory complex business case.

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United Therapeutics Corp. v. Liquidia Techs., Inc., 2025 NCBC Order 56 (N.C. Super. Ct. July 29, 2025)

Key Terms: expert witness; trade secrets; value from secrecy; damages apportionment; Rule 403; Rule 702; state of mind

As summarized here and here, this dispute concerns the alleged misappropriation of trade secrets by Defendant Roscigno from his former employer Plaintiff UTC to the benefit of his new employer, Defendant Liquidia. UTC retained an expert witness to support its trade secret misappropriation claim, who opined in his report as to the value that Liquidia received from the trade secrets. Liquidia moved to exclude the expert under Rules 702 and 403 of the Rules of Evidence.

Liquidia first contended that the expert’s testimony should be excluded because it was based on his speculation about the “state of mind” of Defendants and the FDA. The Court agreed with Liquidia that to the extent the expert’s conclusions regarding the value Liquidia placed on the alleged trade secrets was not based on record evidence, it should be excluded. However, given the expert’s qualifications and experience, he could opine generally on the value this type of information would have to a competitor like Liquidia. The Court also held that the expert could testify as to what the FDA actually did and said based on the documents he reviewed and could testify as to the FDA’s general practices.

Next, Liquidia asserted that the expert’s opinions with respect to the value of the documents was inherently unreliable because his analysis lacked a specific methodology and he failed to assess the independent economic value of the trade secrets on a by-category or by-document basis. With respect to the first point, the Court determined that a specific methodology is unnecessary when the expert’s testimony is based on experience. Since the expert here had extensive relevant experience, his testimony was sufficiently reliable. As to the second point, the Court acknowledged that since the expert’s testimony did not apportion damages between specific trade secrets, Liquidia may have difficulty establishing damages at trial in the event that the jury determined that not all of the alleged trade secrets were misappropriated. However, this issue was left for trial.

Lastly, Liquidia argued that the expert’s opinions regarding the independent economic value of UTC’s alleged trade secrets were irrelevant because the expert did not address their value “derived from secrecy” since some of the information was in the public domain. The Court rejected this argument, concluding that most of the information was not publicly available and a fact-finder could conclude that UTC expended significant resources developing and including the publicly available information in its drug development efforts and that Roscigno purposefully chose those documents to include in a larger compilation which he then shared.

The Court also concluded that the probative value of the expert’s opinions outweighed the danger of misleading the jury.

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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 07/29/25

N.C. Business Court Opinions, July 2, 2025 – July 15, 2025

By: William H. Scott and Ashley Oldfield

Action Learning Assocs., LLC v. Kenan-Flagler Bus. Sch. Exec. Educ. LLC, 2025 NCBC 30 (N.C. Super. Ct. July 2, 2025) (Davis, J.)

Key Terms: motion to dismiss; breach of contract, tortious interference with contractual relations, fraud, unfair and deceptive trade practices, conversion, misappropriation of trade secrets, constructive fraud, civil conspiracy

Plaintiff Action Learning Associates, LLC and Defendant Kenan-Flagler Business School Executive Education LLC (“KFEE”) collaborated since 2013 to develop executive learning courses for clients, including ExxonMobil. The parties codified their working agreements in an Independent Contractor Scope of Work in 2013 and an updated Master Services Agreement (“MSA”) in 2019. The parties renewed the MSA annually between 2019 and 2022, and during negotiations for the 2023 renewal, Plaintiff entered a one-year contract to renew the MSA at discounted rates. In August 2023, KFEE informed Plaintiff that there would be no future renewals of the MSA. Plaintiff filed suit asserting various claims against KFEE and several of its employees (the “Individual Defendants”) arising from the failure to renew and other alleged misconduct. Defendant moved to dismiss all of Plaintiff’s claims pursuant to Rule 12(b)(6).

Breach of Contract. The Court granted the motion with respect to the Individual Defendants because they were not parties to the contracts at issue. The Court also granted the motion to the extent it was based on KFEE’s decision not to renew the MSA as there was no contractual right to renewal. The Court rejected Plaintiff’s argument in its brief that the failure to renew was a breach of the implied covenant of good faith and fair dealing since the complaint did not allege such a claim, and, in any event, such a claim would have failed along with the claim for breach of an express contract because they were based on identical facts. However, the Court denied the motion with respect to breach of the MSA’s confidentiality and non-disclosure provisions, concluding that the allegations met the minimum pleading requirements.

Tortious Interference with Contractual Relations. Plaintiffs alleged that Defendants had tortiously interfered with the contracts between the parties and with Plaintiff’s contracts with its former facilitators. The Court dismissed both. The first theory failed because one cannot legally interfere with a contract to which it is a party and there were no allegations that the Individual Defendants had taken any actions to induce any breach. The second failed because the complaint did not contain allegations of inducement regarding the facilitators.

Fraud & Fraud in the Inducement. The Court dismissed these claims because the allegations largely failed to meet the Rule 9(b) pleading standards. The only statement that met the pleading standards was not a misrepresentation of fact or promissory representation.

Conversion. Plaintiff’s conversion claim was based on materials which it had designed for its ExxonMobil programs. The Court granted the motion with respect to the Individual Defendants because there were no allegations that they had converted anything. KFEE argued that Plaintiff’s training materials were intellectual property rights which cannot be the subject of a conversion claim. However, because KFEE’s computer servers maintain some electronic documents that Plaintiff created, the Court allowed the conversion claim relating to KFEE to continue.

Unfair & Deceptive Trade Practices. The Court dismissed the UDPTA claim against the Individual Defendants because there were no remaining predicate claims against them, but denied dismissal as to KFEE based on the surviving conversion claim.

Misappropriation of Trade Secrets. The Court dismissed the claim for misappropriation of trade secrets because the complaint failed to even come close to describing the alleged trade secrets with the requisite degree of specificity.

Constructive Fraud. The Court dismissed the constructive fraud claim because Plaintiff had failed to allege the existence of a fiduciary duty. Allegations that KFEE had obtained Plaintiff’s confidential and proprietary information pursuant to the MSA and then breached its confidentiality obligations were not sufficient to demonstrate a fiduciary duty between the parties.

Civil Conspiracy. The Court dismissed the civil conspiracy claim because the underlying tort claims had been dismissed and because the complaint failed to adequately allege an agreement to commit an unlawful act or the identity of the conspirators.

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Londry v. Stream Realty Partners, L.P., 2025 NCBC 31 (N.C. Super. Ct. July 7, 2025) (Earp, J.)

Key Terms: summary judgment, breach of contract, breach of partnership agreement, N.C.G.S. § 59-704(a), fraud, economic loss rule, unfair and deceptive trade practices; tortious interference

Plaintiff Londry worked as a real estate broker for Defendant Stream Realty Partners-Charlotte, L.P. (“Stream Charlotte”). Defendant Farrar is a minority owner of Stream Charlotte. While employed by Stream Charlotte, Londry worked on a deal for the sale of seventeen parcels of land in South Carolina (the PBC Deal). Londry left Stream Realty, formed Alpha Advisors LLC as its sole member, and closed on the PBC Deal. Farrar heard of the closing and requested an escrow agreement to hold the portion of the commission that Stream Charlotte would have received if the listing agreement had been executed while Londry was employed by Stream Charlotte. Londry and Stream Charlotte both alleged that they are entitled to the commission for the closing of the PBC Deal. Londry filed a Complaint, alleging breach of contract against Stream Charlotte and Farrar, breach of partnership agreement against Farrar, breach of fiduciary duty against Farrar, fraud against Farrar, and unfair and deceptive trade practices against all Defendants. Stream Charlotte’s answered and asserted counterclaims for breach of fiduciary duty and tortious interference with prospective business relations. Defendants moved for summary judgment on all of Plaintiffs’ claims and Plaintiffs moved for affirmative summary judgment on their claim for wrongful interference.

Breach of Contract. The Court granted Defendant’s motion for summary judgment with respect to Plaintiff’s claims of divestment of partnership and for being stripped of his title as co-market leader. The Court denied summary judgment with respect to Plaintiff’s claims for payment of commissions on outstanding deals and for the related claim for breach of the covenant of good faith and fair dealing.

Breach of Partnership Agreement. The Court denied summary judgment with respect to breach of a partnership agreement. Londry asserted that he was a partner in Stream Charlotte and that Farrar had agreed to form a general partnership within the limited partnership of Stream Charlotte. Under N.C.G.S. § 59-704(a), admission to a limited partnership requires consent from all other partners. The Court found that, due to the absence in the record of Stream Charlotte’s partnership agreement and “the mix of evidence presented,” it could not conclude as a matter of law whether Londry and Farrar had reached an enforceable partnership agreement.

Breach of Fiduciary Duty. The Court denied summary on the breach of fiduciary duty claims because the Court could not determine whether a legal partnership, and therefore an accompanying fiduciary relationship, existed between Londry and Farrar.

Fraud. The Court granted summary judgment in Defendants’ favor on Londry’s fraud claim because it was based on alleged breaches of the employment agreement and was therefore barred by the economic loss rule.

Wrongful Interference with Contract. The Court granted Defendants’ motion for summary judgment for wrongful interference with the listing agreement providing for a commission on the PBC Deal, as Plaintiff had failed to establish that Defendants’ sole motivation in seeking a commission was to injure Plaintiffs. It was reasonable to expect Defendants to pursue a commission on a deal that it had pursued for more than two years.

Unfair and Deceptive Trade Practices Act. The Court granted the motion for summary judgment with respect to the UDTPA claim because the wrongful interference claim failed and Plaintiff had not produced sufficient evidence to prove that the breach of contract was accompanied by egregious or aggravating circumstances.

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Comic Book Certification Serv. LLC v. CBCS Operations, LLC, 2025 NCBC 32 (N.C. Super. Ct. July 9, 2025) (Davis, J.)

Key Terms: motion to dismiss; breach of contract; unjust enrichment; implied covenant of good faith and fair dealing; declaratory judgment; unfair and deceptive trade practices; fraud; piercing the corporate veil; alter ego/instrumentality test; comics

Plaintiff Michael Bornstein created Plaintiff Comic Book Certification Service LLC (“CBCS”) in 2014 to provide comic book grading services to comic book collectors. Pursuant to an Asset Purchase Agreement, an Equity Equivalence Agreement (“EEA”), and a Consulting Agreement, CBCS’s assets were subsequently sold to the newly-formed CBCS Operations, which the Non-CBCS Operations Defendants managed. The various agreements required CBCS Operations to pay CBCS certain sums over time. Defendants’ payments to CBCS were initially timely paid, then late-paid, and then not paid at all. Later, CBCS Operations provided Plaintiff with a Fair Market Value Statement which indicated that CBCS had a negative EBITDA, rendering Plaintiff’s equity interest in CBCS Operations worthless. Plaintiff filed suit in 2024, alleging various claims arising from the parties’ soured business relationship. Defendants moved to dismiss most of Plaintiff’s claims.

Breach of Contract/Breach of the Implied Covenant of Good Faith and Fair Dealing.

The Court dismissed Bornstein’s individual claims for breach of the EEA and the Consulting Agreement for lack of standing, as he signed both documents in his capacity as Manager of CBCS, not in his personal capacity. As for CBCS’s claims for breach of the EEA and the Consulting Agreement, the Court denied dismissal, except to the extent the claim was based on Defendants’ intentional devaluing of CBCS’s phantom equity interest, for which there was no express contractual basis. However, the Court allowed the claim for breach of the implied covenant of good faith and fair dealing to go forward based on the intentional devaluing of the phantom equity interest.

Unjust Enrichment. The unjust enrichment claim survived as an alternative to the breach of contract claim.

Breach of Fiduciary Duty and Constructive Fraud. The Court dismissed Plaintiff’s breach of fiduciary duty and constructive fraud claims because no fiduciary relationship arose from the parties’ arms-length contractual relationship.

UDTPA. The Court denied dismissal of the UDTPA claim because Plaintiffs had adequately pleaded substantial aggravating circumstances to elevate a breach of contract to an unfair or deceptive trade practice, including “an elaborate scheme designed to help CBCS Operations avoid making required payments to Plaintiffs while secretly devaluing Plaintiffs’ phantom equity interest.”

Declaratory Judgment. Plaintiffs requested three declarations from the Court. Although the first two clearly overlapped with the subject matter of Plaintiffs’ breach of contract claims, the Court declined to dismiss them at this stage. The third requested a declaration that Defendants must comply with a TRO entered in a separate pending lawsuit. The Court dismissed the claim for this declaration as it did not have the authority to issue a ruling addressing the enforceability of an order issued by another judge in another pending case.

Piercing the Corporate Veil. The Court dismissed Plaintiffs’ veil piercing claim against the Non-CBS Operations Defendants without prejudice. Plaintiffs’ pleadings did not satisfy the instrumentality test, which allows veil piercing if the corporate entity is a mere instrumentality or alter ego of another entity or individual. The Amended Complaint was unclear as to which entities controlled which other entities and how any such control specifically related back to Defendant CBCS Operations.

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Allin v. Compassion Healthcare, Inc., 2025 NCBC Order 50 (N.C. Super. Ct. July 14, 2025) (Robinson, C.J.)

Key Terms: order on designation; N.C.G.S. § 7A-45-4(a); timeliness of filing; clerk of court

Plaintiff filed suit on May 27, 2025, and served the Defendant with the complaint on June 5, 2025. Defendant timely served its Notice of Designation upon the Chief Justice and the Business Court on July 7, 2025, by email, but did not file the NOD with the Caswell County Clerk of Superior Court until July 9, 2025.

Per N.C.G.S. §§ 7A-45.4(c) and (d), parties must file NODs with the clerk of court within thirty days of service of a complaint, which here was July 7, 2025. Because the NOD was not filed with the clerk of court until July 9, 2025, it was untimely. Accordingly, the Business Court concluded that the action would not proceed as a mandatory complex business case under N.C.G.S. § 7A-45.4(a). This ruling was made without prejudice to the right of any party to seek designation as a mandatory complex business case as provided under N.C.G.S. § 7A-45.4.

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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 07/15/25

N.C. Business Court Opinions, June 18, 2025 – July 1, 2025

By: Natalie E. Kutcher

Fin. Carrier Servs. LLC v. Kingpin Cap. Inc., 2025 NCBC 27 (N.C. Super Ct. June 19, 2025) (Conrad, J.)

Key Terms: motion to dismiss; non-compete agreement; non-solicitation agreement; misappropriation of trade secrets; UDTPA; tortious interference; fraud, injunctive relief; confidentiality agreement

Defendant Ryan McCray was employed by Plaintiff Financial Carrier Services, LLC, a factoring and financial services company for over a decade, most recently serving as Plaintiff’s Client Services Supervisor. As a condition of his employment with Plaintiff, McCray signed an employment agreement containing broad noncompetition, nonsolicitation, and confidentiality provisions. In early 2024, McCray resigned from his position with Plaintiff, and took a similar role with Defendant Kingpin Capital, Inc. Plaintiff initiated this lawsuit against McCray and Kingpin, alleging misappropriation of trade secrets, breach of contract, tortious interference with contract, unfair and deceptive trade practices, and fraud. McCray and Kingpin moved jointly to dismiss all claims pursuant to Rule 12(b)(6).

Misappropriation of Trade Secrets. The Court granted Defendants’ motion as to Plaintiff’s misappropriation of trade secrets claim, noting the complaint failed to adequately describe the trade secrets at issue with particularity. Plaintiff’s broad descriptions of its alleged trade secrets, such as “business development strategies and goals,” “knowledge of [Plaintiff’s] operations” and “business practices and plans for future business” were held to be inadequate to put Defendants on notice of the precise information allegedly misappropriated.

Breach of Contract – Noncompetition and Nonsolicitation. The Court granted Defendants’ motion as to Plaintiff’s claims against McCray for breach of the employment agreement’s noncompetition and nonsolicitation provisions. The noncompetition provision, which barred McCray from “directly or indirectly” providing financial services to any of Plaintiff’s customers within the United States, was facially overbroad and unenforceable and not subject to blue-penciling because it was not clearly drafted to be divisible. The nonsolicitation provision was likewise facially overbroad and unenforceable because, read literally, it would bar McCray from doing any financial service business with any customer of Plaintiff’s within the United States, including those customers with which he’d had minimal or no contact.

Breach of Contract – Confidentiality. The Court denied Defendants’ motion as to Plaintiff’s claim for breach of the employment agreement’s confidentiality provision. Defendants argued the Complaint failed to adequately plead a breach. Noting that breach of contract claims are not subject to heightened pleading standards, the Court determined the claim was adequately pleaded.

Tortious Interference with Contract and Unfair and Deceptive Trade Practices. Plaintiff asserted that Defendant Kingpin had tortiously interfered with the restrictive covenants in McCray’s employment agreement and had unlawfully induced Plaintiff’s customers to terminate their contract with Plaintiff. Defendants moved to dismiss, arguing that the restrictive covenants were all unenforceable and that any interference with Plaintiff’s contracts was justified. The Court dismissed the claim to the extent it was based on the noncompetition and nonsolicitation provisions of McCray’s employment agreement, which had already been determined to be unenforceable. However, since the claim for breach of the confidentiality provision remained and such breach supplied the unlawful conduct necessary to plead a tortious interference claim, the motion was otherwise denied as to this claim. Because the UDTPA claim was premised on the tortious interference claim, it survived to the same extent as the tortious interference claim.

Fraud. Plaintiff’s fraud claim was based on Defendant’s providing a materially different version of McCray’s employment agreement which Plaintiff believed to be fake. The Court dismissed this claim, concluding that Plaintiff had not alleged that it had been deceived by, relied upon, or been damaged by the disputed document.

Injunctive Relief. Noting that injunctive relief is not an independent cause of action, the Court dismissed the standalone claim for injunctive relief without prejudice to Plaintiff’s ability to seek injunctive relief at a later time if appropriate.

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Accelerando, Inc. v. Relentless Sols., Inc., 2025 NCBC 28 (N.C. Super. Ct. June 19, 2025) (Robinson, C.J.)

Key Terms: motion to dismiss; misappropriation of trade secrets; breach of contract; tortious interference with contract; unjust enrichment, unfair and deceptive trade practices

Plaintiff Accelerando Inc. is a provider of software and services to businesses that license a point-of-sale software owned by NCR Corporation. Defendant Relentless Solutions, Inc. is also an authorized provider of software and services to NCR licensees. In 2017, Plaintiff and Relentless entered into a reseller agreement, whereby Relentless was authorized to resell certain products created by Plaintiff to use with the NCR software. In 2021, three of Plaintiff’s employees, including Defendant Robert Yoder, resigned from Plaintiff’s company and began working for Relentless. Following this, several of Plaintiff’s customers left Plaintiff and began working with Relentless. Plaintiff filed suit, asserting various claims relating to Defendants’ alleged misappropriation of trade secrets. Relentless moved to dismiss all claims asserted against it pursuant to Rule 12(b)(6).

Misappropriation of Trade Secrets. The Court denied in part and granted in part the motion to dismiss the trade secret claim. Relentless argued that the Complaint failed to include sufficient facts or evidence demonstrating that Relentless possessed and used the alleged trade secrets. The Court held that the Complaint’s allegations were “minimally sufficient” at the present stage to the extent the claim was based on Customer Service Protocols taken by Dollaeye, a former employee of Plaintiff. However, the Court ruled that Plaintiff’s allegations relating to trade secrets taken by Defendant Yoder and another employee, Muller, were insufficient to support a claim. Plaintiff conceded that the confidential information taken by Yoder did not warrant trade secret protection. Additionally, the Complaint failed to allege that any trade secrets were taken by Muller and subsequently used by Relentless. Although Relentless argued that the Complaint’s allegations amounted to misappropriation by “inevitable disclosure,” a doctrine not yet recognized in North Carolina, the Court concluded that the pleadings alleged actual, rather than inevitable, disclosure of trade secrets.

Breach of Contract. The Court denied Relentless’ motion to dismiss Plaintiff’s breach of contract claim, holding that the Complaint had met the relatively low bar to state a claim for breach of contract. Specifically, the Court pointed to allegations asserting the existence of a valid contract between Plaintiff and Relentless, and Relentless’ breach of the contract by using Plaintiff’s confidential proprietary information to compete with Plaintiff.

Wrongful Interference with Contract. The Court denied Relentless’ motion to dismiss as to wrongful interference with contract, concluding that Plaintiff had adequately pleaded the claim. Because Plaintiff had alleged that Relentless had interfered with Plaintiff’s contracts through unlawful means, the Court rejected Relentless’ argument that the interference was justified.

Unfair and Deceptive Trade Practices. Because the Court had concluded that Plaintiff’s allegations were sufficient to state claims for misappropriation and tortious interference, the Court concluded that the allegations were likewise sufficient to state a UDTPA claim as to that same conduct.

Unjust Enrichment. The Court dismissed the unjust enrichment claim because, as alleged, any benefit Relentless received resulted from Relentless’ unauthorized taking of Plaintiff’s trade secrets and confidential information, not from a voluntary conferment of benefit from one party to another, as required to state an unjust enrichment claim.

Permanent Injunction. The Court granted Relentless’ motion to dismiss Plaintiff’s claim for a permanent injunction, as injunctive relief is a remedy, not an independent cause of action. The Court dismissed this claim without prejudice to Plaintiff’s ability to seek this remedy at a later time.

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Accelerando, Inc. v. Relentless Sols., Inc. 2025 NCBC 29 (N.C. Super. Ct. June 19, 2025) (Robinson, C.J.)

Key Terms: judgment on the pleadings; breach of contract; tortious interference with contract; unjust enrichment, unfair and deceptive trade practices; restrictive covenants

As described further above, this case arises following certain individuals’ resignation from Plaintiff Accelerando Inc. and subsequent employment with Defendant Relentless Solutions, Inc. In 2009, Defendant Robert Yoder began his employment with Plaintiff. At this time, Yoder executed a subcontractor agreement with Plaintiff containing noncompetition and confidentiality provisions. Yoder served as Plaintiff’s Vice President of Platform Services until his resignation in 2021. On the day of his resignation, Yoder allegedly forwarded certain information relating to two of Plaintiff’s customers to Yoder’s personal email address. Yoder subsequently began employment with Relentless. Plaintiff filed suit against both Relentless and Yoder. Yoder moved for judgment on the pleadings on all claims asserted against him.

Breach of Restrictive Covenants. The Court granted Yoder’s motion as it related to the noncompetition provision of the agreement, on the basis that the restriction was overly broad and unenforceable as a matter of law because, among other reasons, it prohibited “indirect” competition. The Court denied Yoder’s motion as it related to the confidentiality provision, noting that the pleadings adequately alleged the requisite elements for a breach of contract action.

Wrongful Interference with Contract. The Court denied Yoder’s motion as it related to Plaintiff’s claim for wrongful interference with contract. Yoder asserted that the claim failed due to Plaintiff’s failure to allege how Yoder induced the named customers to terminate their contracts with Plaintiff, or allege malice on Yoder’s behalf. The Court disagreed, finding that the Complaint adequately pleaded the elements of the claim, including that Defendants had interfered through unlawful means.

Unfair and Deceptive Trade Practices. The Court denied Yoder’s motion as it relates to Plaintiff’s claim under the NCUDTPA, noting that the survival of the tortious interference claim asserted by Plaintiff warranted the survival of its connected NCUDTPA claim.

Unjust Enrichment. The Court granted Yoder’s motion as it related to the unjust enrichment claim. As with the analysis offered above for Defendant Relentless’ motion to dismiss, the Court found that no benefit was voluntarily conferred upon Yoder by Plaintiff.

Permanent Injunction. The Court granted Yoder’s motion to dismiss Plaintiff’s claim for a permanent injunction, as injunctive relief is a remedy, not an independent cause of action. The Court dismissed this claim without prejudice to Plaintiff’s ability to seek this remedy at a later time.

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Johnson v. Hildebrandt, 2025 NCBC Order 46 (N.C. Super. Ct. June 24, 2025) (Houston, J.)

Key Terms: voluntary dismissal; pro se; motion to reopen case; show cause hearing

Plaintiff filed a putative derivative action on behalf of nominal defendants in March 2024 alleging that Defendants Hildebrandt and Johnson had engaged in corporate mismanagement and waste. Although Plaintiff was represented by counsel, in July 2024, Plaintiff, through his son, filed a pro se notice of voluntary dismissal. Though the dismissal was notarized, Plaintiff’s son stated at hearing that the notarization had taken place without Plaintiff being present and without the notary observing Plaintiff signing the document. Plaintiff’s counsel filed to reopen the case in March 2025, contending that the dismissal was unauthorized and ineffective. Because no material actions were taken in the case prior to the dismissal and no filings were made in the case following the dismissal until the motion to reopen, the Court entered an order requiring Plaintiff to show cause why the action should not be dismissed for failure to prosecute.

Following the show cause hearing, the Court held that the voluntary dismissal should be struck because 1) Plaintiff was represented by counsel and therefore could not make pro se filings; 2) Plaintiff had not obtained leave to file the dismissal, which is required for dismissal of derivative claims; and 3) there were reasonable grounds to question the authenticity of the filing. Plaintiff orally moved for a dismissal without prejudice at the show cause hearing, indicating that a resolution outside of court was expected. Finding that the dismissal was in the best interest of all interested parties, the Court granted this dismissal without prejudice.

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Rhinehart v. Howard, 2025 NCBC Order 47 (N.C. Super. Ct. June 27, 2025) (Robinson, C.J.)

Key Terms: order on designation; N.C.G.S. § 7A-45.4; mandatory complex business case; contemporaneous filing

Plaintiff initiated this action in Cumberland County Superior Court on June 24, 2025. On June 25, 2025, Plaintiff filed a notice of designation. The Court determined that designation was improper because the NOD was not contemporaneously filed with the complaint, as required by N.C.G.S. § 7A-45.4(d)(1). This ruling was made without prejudice to the right of any party to seek designation of this action as a mandatory complex business case as provided under N.C.G.S. § 7A-45.4.

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G1.34 Holdings, LLC v. Chapman Grp. Inc. of SC., 2025 NCBC Order 48 (N.C. Super. Ct. June 27, 2025) (Robinson, C.J.)

Key Terms: order on designation; N.C.G.S. § 7A-45.4(a)(5); intellectual property; mandatory complex business case

Plaintiff filed suit alleging claims for unfair and deceptive trade practices and tortious interference. Plaintiff timely filed a notice of designation, designating the case as a mandatory complex business case under N.C.G.S. § 7A-45.4(a)(5), which provides for designation of actions involving a material issue related to disputes involving the ownership, use, licensing, lease, installation, or performance of intellectual property.

The Court held that the case was improperly designated. After a review of the record, the Court determined that the dispute arose from a financing agreement for software development costs, not the software or intellectual property itself. Designation under § 7A-45.4(a)(5) requires the dispute to be “closely tied to the underlying intellectual property aspects” of the property at issue rather than closely tied to areas such as contract, fraud, or tort. The Court also declined to recommend the case for Rule 2.1 designation. This ruling was made without prejudice to the right of any party to seek designation of this action as a mandatory complex business case as provided under N.C.G.S. § 7A-45.4.

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In re Asheville Eye Assocs. Data Incident Litig., 2025 NCBC Order 49 (N.C. Super. Ct. July 1, 2025) (Davis, J.)

Key Terms: pro hac vice; sanctions; duty of candor; barred from practicing law in North Carolina

This Order arises from the Court’s sua sponte reconsideration of its Order granting Andrew J. Shamis pro hac vice status in this matter. Shamis, an attorney with Shamis & Gentile, P.A. in Florida, was listed as additional counsel on the complaint, “pro hac vice forthcoming.” Shamis was also listed as an attorney in two other class action cases in the state. In his various pro hac vice motions for these three cases, Shamis presented conflicting information to the Court regarding the states in which he is admitted to practice, his Florida bar license number, and his history of pro hac vice admission in North Carolina.

On May 9, 2025, Shamis’ conflicting representations were noted by Chief Judge Robinson in one of the other cases, resulting in his request for pro hac vice admission to be denied in that matter. On that same day, unaware of Shamis’ misrepresentations, the Court granted Shamis’ motion for pro hac vice admission in this case. Shamis did not alert the Court of the misrepresentations contained in his motion at this time. Three weeks later, the Court independently discovered this and noticed a hearing to determine whether reconsideration of his admission was warranted.

Three days before the hearing Shamis and local counsel filed an amended motion for Shamis to appear pro hac vice and statement in support thereof. In this amended motion and statement, Shamis disclosed for the first time that he had been admitted pro hac vice in North Carolina multiple times within the last five years. Shamis and local counsel represented that they were unaware of the inaccuracies contained in the pro hac vice motion when filed.

The Court revoked Shamis’ pro hac vice admission. Noting Shamis’ “repeated violations of clear North Carolina rules and his failure to comply with his duty of candor” the Court sanctioned Shamis, prohibiting him from practicing within the state for a period of one year. The Court further admonished local counsel for failing to bring to the Court’s attention the inaccuracies contained in Shamis’ motion.

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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

Posted 07/01/25

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

By: Austin Webber

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

To subscribe, email aoldfield@rcdlaw.net.

The information in this article is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation.

Posted 06/17/25

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

By: Lauren Schantz

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

To subscribe, email aoldfield@rcdlaw.net.

The information in this article is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation.

Posted 06/03/25

N.C. Business Court Opinions, May 7, 2025 – May 20, 2025

By: Ashley Oldfield 

Mary Annette, LLC v. Crider, 2025 NCBC 23 (N.C. Super. Ct. May 13, 2025) (Conrad, J.)

Key Terms: quiet title; bench trial; ambiguous deed

The parties to this action were involved in developing certain real property as a Planned Unit Development. However, after a dispute arose regarding the management and operations of Plaintiff Mary Annette, LLC and the ownership of the property, the parties filed suit asserting numerous claims and counterclaims. At issue here was Defendant Terri Crider’s counterclaim for quiet title, in which she asserted that she had only conveyed by deed her interest in the Planned Unit Development’s common area and not her interest in the individual units.

Having previously concluded that the deed was ambiguous on this point, the Court conducted a bench trial to determine the parties’ intent and found, based on the evidence presented at trial, that Defendant Crider had not conveyed her interest in the individual units. The deed’s text and the plat referred to therein supported this conclusion, as did the circumstances surrounding the parties’ efforts to create a Planned Unit Development. Plaintiffs presented no persuasive basis to read the deed differently, testifying only to their subjective views of the transaction and the parties’ intent. Accordingly, the Court entered judgment in favor of Crider on her counterclaim for quiet title and declared that she maintained her interest in the individual units.

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Inframark, LLC v. Holder, 2025 NCBC Order 29 (N.C. Super. Ct. May 9, 2025) (Robinson, C.J.)

Key Terms: order on designation; N.C.G.S. § 7A-45.4(a)(8); confidential information; trade secrets; contemporaneous filing and service; amended notice of designation

Plaintiff initiated this action asserting claims for breach of contract, tortious interference with contract, and unfair and deceptive trade practices arising from an employment dispute. Defendants timely filed a notice of designation with the Wake County Clerk of Superior Court, contending that designation was proper under N.C.G.S. § 7A-45.4(a)(8) (actions raising material issues involving trade secrets); however, the NOD did not include the necessary attachments and was not served on the Chief Justice of the Supreme Court or the Chief Judge of the Business Court until three days later when Defendants filed an Amended NOD, which was verbatim of the first NOD other than updates to the certificate of service.

The Court first noted that designation was improper on procedural grounds because 1) N.C.G.S. § 7A-45.4 does not provide for amending a NOD; and 2) Defendants’ failure to comply with the contemporaneous filing and service requirement rendered the NOD untimely. Second, although the complaint referenced trade secrets, the claims alleged only put the existence, ownership, or misuse of Plaintiff’s confidential information, not its trade secrets, in dispute. Thus, because the action did not involve a material issue relating to disputes involving trade secrets, designation was improper.

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Woodsmall v. Asheville Eye Assocs., PLLC, 2025 NCBC Order 30 (N.C. Super. Ct. May 9, 2025) (Davis, J.)

Key Terms: motion to consolidate; interim class counsel

Plaintiffs in five related actions against Asheville Eye Associates filed an unopposed motion to consolidate the actions and appoint interim class counsel. The Court granted the motion and consolidated the cases pursuant to NCRCP Rule 42(a) and ordered that any action filed in or transferred to the Court against the same Defendant and that arises out of the same operative facts as the consolidated action shall be consolidated with the same. The Court also appointed interim lead class counsel and provided that said counsel shall have the authority to speak for Plaintiffs and be responsible for coordinating activities and appearances on behalf of Plaintiffs, and that no pretrial proceedings shall be filed by any Plaintiff or any settlement negotiations conducted without interim lead class counsel’s approval. The Court stayed the action for ninety days and directed the parties to conduct a mediated settlement conference during that time period.

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Duramax Holdings LLC v. Brace, 2025 NCBC Order 31 (N.C. Super. Ct. May 14, 2025) (Robinson, C.J.)

Key Terms: order on designation; contemporaneous filing; N.C.G.S. § 7A-45.4(a)(8); N.C.G.S. § (a)(9); amount in controversy; Rule 2.1

Plaintiff filed a complaint asserting, inter alia, claims for breach of contract and trade secret misappropriation. Twelve days later, Plaintiff filed a notice of designation, contending that designation was proper under N.C.G.S. § 7A-45.4(a)(8) and (a)(9).

The Court first concluded that designation was improper because Plaintiff did not file its NOD contemporaneously with filing the complaint as required by N.C.G.S. § 7A-45.4(d)(1). Next, even if the NOD had been timely filed, designation under subsection (a)(9) was improper because there was no indication in the complaint or the NOD that the amount in controversy was at least $1,000,000 and the NOD did not indicate whether all parties consented to designation, both of which are requirements for designation under (a)(9). Lastly, the Court declined to recommend designation under Rules 2.1 and 2.2.

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Wright v. LoRusso, 2025 NCBC Order 32 (N.C. Super. Ct. May 16, 2025) (Conrad, J.)

Key Terms: motion in limine; expert testimony

The parties filed various motions in limine ahead of a June 2, 2025 trial date. Defendant moved to exclude Plaintiffs’ expert because 1) his anticipated testimony regarding tax and accounting matters did not require specialized knowledge; and 2) Plaintiffs served the expert’s final report after discovery closed. The Court denied this motion, concluding that tax and accounting matters were appropriate subjects for expert testimony and that any prejudice arising from the late-served final report could be cured by allowing Defendant to depose the expert regarding the final report prior to trial. Plaintiffs moved to exclude as irrelevant and unfairly prejudicial any testimony regarding disparaging statements Plaintiff Stansell made about Defendant. The Court denied this motion, concluding that this evidence was directly relevant to Defendant’s claim for breach of a nondisparagement clause. Lastly, Plaintiffs moved to exclude testimony relating to allegations of drug use. The Court deferred ruling on this motion until trial.

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Meridian Renewable Energy, LLC v. Birch Creek Dev., LLC, 2025 NCBC Order 33 (N.C. Super. Ct. May 16, 2025) (Robinson, C.J.)

Key Terms: order on designation; N.C.G.S. § 7A-45.4(a)(1); N.C.G.S. § 7A-45.4(b)(2); amount in controversy; partnership law; joint venture; amended complaint; untimely

Plaintiff initiated this action in August 2024, asserting claims for breach of contract, breach of the duty of good faith and fair dealing, declaratory judgment, and quantum meruit. Plaintiff then amended the complaint in September 2024 and again in April 2025, asserting the same four claims but adding additional allegations. Defendant filed a notice of designation in May 2025, contending that designation was proper under N.C.G.S. § 7A-45.4(a)(1) and (b)(2). Plaintiff opposed designation, arguing that 1) the NOD was untimely and 2) the action did not implicate the N.C. Uniform Partnership Act as contended by Defendant.

The Court determined that designation under N.C.G.S. § 7A-45.4(a)(1) was improper because the NOD was not timely filed. The claims in the second amended complaint were not materially different from those asserted in the original complaint; thus, to the extent designation would have been proper under subsection (a)(1), the NOD should have been filed within thirty days of service of the original complaint.

Designation under N.C.G.S. § 7A-45.4(b)(2) was also improper. The second amended complaint’s allegation that Plaintiff “has suffered or will suffer additional damages of up to $5,100,000” was too vague to satisfy subsection (b)(2)’s requirement that the pleading demand damages equal to or in excess of five million dollars. Further, the Court did not believe that the existence of a joint venture between Defendant and a third-party or the implication of partnership law would be material issues in the case. Accordingly, the action did not satisfy the requirements for designation under subsection (b)(2).

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Max v. Duncan, 2025 NCBC Order 34 (N.C. Super. Ct. May 19, 2025) (Conrad, J.)

Key Terms: motion for preliminary injunction; adequate remedy; money damages

Plaintiffs, a group of doctors employed by Defendant ECAA, filed suit alleging that ECAA had improperly changed the timing and structure of their compensation, thereby breaching their employment agreements and the company’s operating agreement. Plaintiffs moved for a preliminary injunction to enjoin these changes to their compensation.

The Court denied the motion because the dispute concerned only contractual obligations to pay money, for which compensatory damages could provide a complete and adequate remedy. The operating agreement’s statement that money damages would not be adequate to remedy a breach of its terms did not bind the Court nor relieve Plaintiffs of their burden to show the inadequacy of money damages, which they had failed to do.

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Maxwell Foods, LLC v. Smithfield Foods, Inc., 2025 NCBC Order 35 (N.C. Super. Ct. May 20, 2025) (Conrad, J.)

Key Terms: hog farm; breach of output contract; most-favored-nation clause; motions in limine; relevance

Plaintiff sued Defendant for breach of an output contract (under which Plaintiff sold hogs to Defendant) and a most-favored-nation clause in a related letter agreement. At the summary judgment stage, the Court entered summary judgment against Defendant as to liability for breach of the output contract and narrowed Plaintiff’s claim for breach of the most-favored-nation clause to allegations that Defendant failed to offer Plaintiff changes in pricing given to Prestage Farms. Prior to trial, the parties filed various motions in limine.

The Court denied Plaintiff’s motion to exclude evidence regarding the leanness of the hogs sold, because evidence that the parties took leanness into account when establishing the fixed premium or that Defendant paid Prestage Farms a higher premium for leaner hogs was relevant to Plaintiff’s claim for breach of the most-favored-nation clause.

The Court granted Defendant’s motion to exclude evidence of its foreign ownership and financial condition, because such evidence was unfairly prejudicial and irrelevant to any issue being tried.

The Court granted Plaintiff’s motion to exclude evidence about its business strategy, affiliated businesses, and owners’ financial condition. Such evidence was not relevant to Defendant’s compliance with the most-favored-nation clause and risked unfair prejudice and confusion of the issues.

The Court granted Defendant’s motion to exclude evidence of its internal strategy discussions (referred to as Project Chuckwagon), which Plaintiff contended was relevant to show that Defendant’s alleged breach of the most-favored-nation clause was part of a scheme to force Plaintiff out of business. However, since motive and intent are not elements of a claim for breach of contract, such evidence was irrelevant.

The Court denied Plaintiff’s motion to exclude evidence of offers made by Defendant to Plaintiff between 2014 and 2018, concluding that such evidence may be relevant to Defendant’s alleged breaches and to damages, but granted Plaintiff’s motion to exclude evidence of offers Defendant made to third-party suppliers other than Prestage Farms since that evidence was irrelevant to the issues at hand.

The Court denied Plaintiff’s motion seeking to bar Defendant from offering expert testimony by lay witnesses regarding leanness, meat quality, hog genetics, and hog markets. The disputed testimony was based on the witnesses’ personal knowledge and perception of facts and therefore was not expert testimony.

Plaintiff moved to exclude the introduction of any deposition testimony at trial. Acknowledging that Defendant’s designation of more than 2400 pages of deposition testimony for use at trial was overkill, the Court deferred ruling on the motion and instead directed Defendant to disclose to Plaintiff whether it intended to call each witness on its witness list by deposition or in person.

Lastly, the Court elected to defer ruling on Defendant’s motion to exclude references to its breach of the output provision (decided at summary judgment) and consider it together with Defendant’s motion to bifurcate trial.

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 05/20/25

N.C. Business Court Opinions, April 23, 2025 – May 6, 2025

By: Rachel Brinson

Yoder v. Verm, 2025 NCBC 22 (N.C. Super. Ct. May 6, 2025) (Brown, J.)

Key Terms: summary judgment; settlement agreement; 12(c) motion; collateral estoppel; breach of contract

As summarized here, this action arose from Defendants’ purported breaches of a Settlement Agreement resolving previous litigation between the parties. At issue here is Plaintiff’s motion for partial summary judgment on his claim for breach of the settlement agreement due to Defendants’ alleged failure to pay Plaintiff 36% of the appraised value of the real property at issue per the terms of the Settlement Agreement. Relying on and being bound by the Court’s previous determination as a matter of law at the 12(c) stage regarding the proper interpretation of the relevant provision of the Settlement Agreement, the Court determined that there were no material issues of fact relating to the deadlines imposed by the Settlement Agreement and that summary judgment in Plaintiff’s favor was appropriate. The Court rejected Defendants’ attempts to relitigate matters previous ruled on by the Court in its order and opinion on the 12(c) motion.

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Jones v. Nat’l Collegiate Athletics Ass’n, 2025 NCBC Order 25 (N.C. Super. Ct. April 25, 2025) (Houston, J.)

Key Terms: preliminary injunction; NCAA; college football; athletic eligibility; NIL deal; redshirt; antitrust; Chapter 75; restraint of trade; rule of reason; procompetitive effects; UNC; Duke

Plaintiffs, two college football players who have exhausted their years of athletic eligibility under the NCAA’s eligibility Bylaws, brought suit seeking 1) a declaration that the NCAA’s enforcement of the Bylaws violated North Carolina’s antitrust laws under Chapter 75; and 2) preliminary and permanent injunctive relief preventing enforcement of the Bylaws. Here, the Court addressed Plaintiffs’ motion for a preliminary injunction.

The Court denied the motion. First, Plaintiffs failed to show a reasonable likelihood of success on the merits of their claims. Under the three-step rule of reason test governing antitrust compliance, although Plaintiff had arguably shown that the Bylaws were commercial in nature and thus could be governed by Chapter 75, they failed to show that the challenged Bylaws were an unreasonable restraint on trade, particularly given the NCAA’s substantial evidence of procompetitive effects, or that legitimate competitive benefits could have been achieved by less restrictive means. In addition, Plaintiffs failed to make a sufficient evidentiary showing that the NCAA arbitrarily enforced the Bylaws. Second, Plaintiffs failed to show a likelihood of irreparable harm absent an injunction as they had known about the Bylaws their entire careers but delayed seeking injunctive relief until now. Moreover, the potential loss of NIL deals could be remedied by monetary damages. Finally, the balance of the equities weighed against injunctive relief. A preliminary injunction would upset the status quo by suspending the Bylaws otherwise applicable to the Plaintiffs who presently have exhausted their eligibility, and would, to some extent, prematurely determine the ultimate relief sought.

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Smith v. Nat’l Collegiate Athletics Ass’n, 2025 NCBC Order 26 (N.C. Super. Ct. April 25, 2025) (Houston, J.)

Key Terms: preliminary injunction; NCAA; college football; athletic eligibility; redshirt; antitrust; Chapter 75; restraint of trade; rule of reason; procompetitive effects; Duke

Raising substantially the same claims and arguments as in Jones v. National Collegiate Athletics Association (summarized above), Plaintiffs here sought a preliminary injunction preventing enforcement of the NCAA eligibility bylaws. The Court denied Plaintiff’s motion for a preliminary injunction on the same grounds as in Jones.

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DT Lulana Gardens LLC v. SDCK I LLC, 2025 NCBC Order 27 (N.C. Super. Ct. April 29, 2025) (Robinson, C.J.)

Key Terms: designation; N.C.G.S. § 7A-45.4(a)(2); securities; sale of collateral; UCC; security interest

This action arose out of a dispute between the parties related to a failed purchase of a secured promissory note and the alleged pledge of membership interests as collateral. Defendant timely filed a notice of designation, asserting that designation was proper under N.C.G.S. § 7A-45.4(a)(2)—disputes involving securities.

The Court concluded that the action did not meet the criteria for designation as a mandatory complex business case pursuant to the designation statute. Based on the complaint’s allegations, the case appeared to be a straightforward case involving a security interest under the Uniform Commercial Code and a potential breach of contract. At best, Defendant’s conclusory statement in its notice of designation showed a tangential relationship with securities, which was insufficient to warrant designation.

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Suazo v. Suazo, 2025 NCBC Order 28 (N.C. Super. Ct. May 6, 2025) (Robinson, C.J.)

Key Terms: opposition to designation; equitable distribution; N.C.G.S. § 7A-45.4(a)(1); N.C.G.S. § 7A-45.4(a)(8); amount in controversy; breach of fiduciary duty; misappropriation of trade secrets

This action arose out of a dispute between Plaintiff Gregory Suazo and Defendant Crystal Suazo regarding their jointly owned company, Reagan Madison Inc. Plaintiffs asserted various claims against Ms. Suazo and others, including claims for misappropriation of trade secrets and breach of fiduciary duty. Defendants timely filed a notice of designation under N.C.G.S. § 7A-45.4(a)(1) (claims involving the law governing corporations) and § 7A-45.4(a)(8) (disputes involving trade secrets). Plaintiffs opposed designation arguing that the case was “a divorce case with a business twist” and that the amount in controversy was less than $5 million and therefore didn’t meet the Business Court’s amount in controversy threshold.

The Court rejected both arguments. First, while the District Court has exclusive jurisdiction over all equitable distribution claims, that does not preclude the Business Court from exercising its authority to hear actions involving a material issue set forth in N.C.G.S. § 7A-45.4(a). Here, Plaintiffs claims for breach of fiduciary duty and misappropriation of trade secrets satisfied the requirements for designation under subsections (a)(1) and (a)(8), respectively. Second, the $5 million threshold referenced by Plaintiffs only applies to cases that must be designated to the Business Court under N.C.G.S. § 7A-45.4(b), i.e., “mandatory mandatory cases.” For a case to be designated under N.C.G.S. § 7A-45.4(a), the amount in controversy need only meet the requirement for a case to be in Superior Court—in excess of $25,000. Accordingly, the Court overruled Plaintiffs’ objection to designation.

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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 05/06/25

N.C. Business Court Opinions, April 9, 2025 – April 22, 2025

By: Natalie E. Kutcher

Atkore Int’l, Inc. v. Dinkheller, 2025 NCBC 20 (N.C. Super. Ct. April 10, 2025) (Robinson, C.J.)

Key Terms: motion to dismiss; non-compete agreement; misappropriation of trade secrets; NCUDTPA; tortious interference

Plaintiff filed suit against a former employee, Keith Dinkheller, and his new employer, National Pipe & Plastics, Inc., alleging various claims relating to Dinkheller’s alleged breaches of his confidentiality and noncompetition agreement with Plaintiff. Defendants moved to dismiss all claims pursuant to Rule 12(b)(6).

Breach of Contract – Dinkheller. The Court dismissed Plaintiff’s claim for breach of the noncompetition provision, finding that the provision was overly broad and unenforceable as a matter of law. The noncompetition provision’s time restriction (including a two-year look back period) paired with the broad definition of the “Company” (encompassing many entities beyond Plaintiff) and the far-reaching geographic restriction (which essentially covered the entire country), when considered as a whole, were not reasonably limited to protect Plaintiff’s legitimate business interests.

Tortious Interference with Contract – National Pipe. Plaintiff asserted that National Pipe intentionally induced Dinkheller to breach his restrictive covenants with Plaintiff. The Court dismissed the claim to the extent it related to the noncompetition agreement, having found that the noncompetition agreement was unenforceable as a matter of law. However, the Court denied Defendants’ motion to dismiss as to the nondisclosure provision, finding that the pleadings sufficiently alleged the requisite elements for the claim.

Breach of Fiduciary Duty and Constructive Fraud – Dinkheller. The Court granted Defendants’ motion to dismiss these claims because the complaint failed to allege that Dinkheller possessed the type of domination or control over Plaintiff required to warrant the imputation of fiduciary duties where Dinkheller was not an officer or director of Plaintiff.

UDTPA – All Defendants. The Court granted Defendants’ motion to dismiss Plaintiff’s UDTPA claim because Plaintiff did not raise any opposition to the motion in its brief, and as such, the motion was deemed unopposed.

Misappropriation of Trade Secrets – All Defendants. Plaintiff alleged that Dinkheller misappropriated its trade secrets, not only by disclosing them to his new employer, but also by disclosing them in an affidavit filed in this case. The Court found that Plaintiff had adequately identified its trade secrets and that the complained of conduct satisfied the misappropriation requirement. The Court also found the allegations that National Pipe had interfered with Dinkheller’s restrictive covenants by placing him in a position where he has disclosed and is using Plaintiff’s trade secrets was sufficient to allege the claim against National Pipe. Accordingly, the Court denied the motion to dismiss this claim.

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Jackson v. MH Master Holdings, LLLP, 2025 NCBC 21 (N.C. Super. Ct. April 16, 2025) (Earp, J.)

Key Terms: summary judgment; contract interpretation; ambiguity

As summarized here, this action was brought by the Attorney General on behalf of and in the name of Dogwood Health Trust, a nonprofit corporation, relating to an asset purchase agreement memorializing Defendant’s acquisition of Mission Health, a hospital system serving western North Carolina. Pursuant to the APA, the Attorney General was granted contractual enforcement rights under certain circumstances and filed this action alleging that Defendant violated the APA by failing to provide the requisite level of emergency and trauma care and oncology services.

Defendant moved for partial summary judgment, asking the Court to determine that the phrase “shall not discontinue the provision of [certain] services” in the APA was unambiguous and to interpret the language as a matter of law. The parties argued conflicting interpretations of the phrase based on dictionary definitions and other provisions in the APA. The Court denied Defendant’s motion, finding that not only was the phrase “shall not discontinue” ambiguous, but also that the word “services” lacked clarity. A more developed factual record was necessary to determine the parties’ true intent. As Defendant failed to establish that no genuine issues of material fact existed surrounding the interpretation of the APA’s language, the Court denied the motion.

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Jackson v. MH Master Holdings, LLLP, 2025 NCBC Order 22 (N.C. Super. Ct. April 10, 2025) (Earp, J.)

Key Terms: motion to compel; privilege; Public Records Act; N.C. Gen. Stat. § 132-1; in camera review; discovery

As summarized here, Defendant previously moved to compel Plaintiff to produce documents which were allegedly improperly withheld or redacted in response to a Rule 34 document request. Plaintiff (the Attorney General) asserted that the documents were properly withheld because they were attorney-client privileged or attorney work product. On February 28, 2025, the Court entered an order concluding that the documents were subject to the Public Records Act and that an in camera review was necessary to determine if they were protected under the Act. Having conducted the in camera review, the Court entered a second order on the motion to compel.

The Court first concluded that the statutory protection set forth in N.C.G.S. § 132-1.1(a), rather than the common law attorney-client privilege, governed the dispute. Prior to 2023, N.C.G.S. § 132-1.1(a) provided that attorney-client communications were excepted from the definition of “public records” for a period of three years from receipt of the communication and thus not subject to disclosure under the Act. In 2023, the statute was amended to eliminate the three-year limitation. Here, the document request was made after the 2023 amendment but sought documents that pre-existed the amendment. The Court concluded that the date of the records request governed and therefore, if the documents at issue otherwise qualified under the Act, they were not public records and therefore protected.

Defendant argued that many of the documents withheld by Plaintiff did not satisfy the requirements of Section 132-1.1(a), because they were documents created by or within the Attorney General’s Office, rather than communications made to the Attorney General’s Office. The Court rejected this argument, concluding that, just as communications from in-house counsel to their clients are protected by the attorney-client privilege, communications to the Attorney General from his staff attorneys are protected if the communications otherwise qualify under the Act.

Lastly, Defendant argued that the communications were not protected because they were made in the ordinary course of the Attorney General’s business and not for litigation purposes. Having conducted an in camera review of the documents, the Court largely agreed, concluding that most of the communications were not protected by the Act’s protections for attorney-client communications or attorney work product. The Court included an attachment to the order delineating which communications were protected and which were not.

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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 04/22/25