N.C. Business Court Opinions, August 16, 2023 – August 29, 2023

Atkinson v. Lexington Cmty. Ass’n, 2023 NCBC 58 (N.C. Super. Ct. Aug. 16, 2023) (Conrad, J.)

Key Terms: Planned Community Act; motion for judgment on the pleadings; Rule 12(c); declaratory judgment; declaration; standing; third-party complaint; moot

After being sued in a dispute regarding recovery of earnest money, the Association filed a third-party complaint against its president, Rankin, alleging breach of fiduciary duties. Rankin counterclaimed seeking, inter alia, a declaratory judgment that the Association had no authority to institute the action against him because it did not receive member approval as required by its governing declaration. Rankin filed a motion for judgment on the pleadings on his declaratory judgment claim.

The Court agreed with Rankin and found that the declaration required the Association to obtain membership approval before asserting third-party claims against Rankin. Because the Association failed to do so and the exemption for claims to enforce the declaration was inapplicable, its claims against Rankin were barred. The Court granted Rankin’s motion for judgment on the pleadings with respect to all claims asserted against him but dismissed the claims without prejudice because the Association could obtain member approval to refile. The Court then concluded that Rankin’s claim for declaratory judgment was mooted by the dismissal of the claims against him.


Campbell Sales Grp., Inc. v. Niroflex by Jiufeng Furniture, LLC, 2023 NCBC Order 38 (N.C. Super. Ct. Aug. 11, 2023) (Davis, J.)

Key Terms: motion in limine; evidence; lost profits damages; proximate cause; loss of reputation damages; admissibility; unfair or deceptive trade practices

Prior to the commencement of a jury trial set for August 21, 2023, Defendants filed two motions in limine relating to Plaintiff’s damages evidence on its UDTPA claim.

Defendants’ first motion in limine sought to prevent Plaintiff from presenting evidence of, or claiming entitlement to, lost profits damages because, Defendants argued, the damages Plaintiff suffered were not proximately caused by Defendants’ conduct and were too speculative. The Court agreed and granted the motion, concluding that Plaintiff’s lost profits damages were not proximately caused by Defendants’ conduct because it was Plaintiff who chose to discontinue its relationship with Genfine rather than Genfine refusing to sell its products through Plaintiff anymore. The Court hypothesized that a lost profits argument based on the profits Plaintiff lost by not being the exclusive retailer of Genfine furniture might have been viable, but that it was too late to now assert such a theory.

Defendants’ second motion in limine sought to prevent Plaintiff from presenting evidence of, or claiming entitlement to, damages from reputational harm. The Court granted this motion as well, noting first that Plaintiff had failed to cite any North Carolina case in which reputational damages were awarded in a business dispute, and concluding that even if such damages were potentially recoverable, Plaintiff’s apparent reputational damages were too speculative and its supporting evidence deficient.


Moose v. Allegacy Fed. Credit Union, 2023 NCBC Order 39 (N.C. Super. Ct. Aug. 21, 2023) (Conrad, J.)

Key Terms: motion to approve settlement; pre-certification class action; class claims; putative class; due process; public interest; indicia of abuse; settlement agreement

Plaintiff Moose brought individual and class claims against Defendant for assessing overdraft fees for certain debit-card transactions. No class had yet been certified in the case despite its pendency for almost three years. Nevertheless, having reached a settlement, the parties jointly moved for an order approving dismissal of Moose’s individual claims with prejudice and the putative class claims without prejudice.

The Court began by explaining that to guard against potential abuse of the class-action mechanism, a trial court must not only approve class-wide settlements, but must also conduct a limited inquiry where a named plaintiff has reached an individual settlement and is seeking a voluntary dismissal of a pre-certification class-action complaint. Upon review of the proposed settlement here, the Court was not persuaded by the parties “practical considerations” for settlement and found numerous indicia of abuse. Among them, the Plaintiff and her counsel would receive a settlement payment “several hundred times” the amount of the Plaintiff’s individual alleged damages and significantly more than she could have reasonably expected to recover through ordinary litigation.

Additionally, Moose herself would receive less than five percent of the total settlement amount while her counsel would receive the remainder. The Court was also concerned that the settlement could prejudice the absent class members since it did not address tolling or the effect of the statute of limitations on the class members’ claims.

For these reasons, the Court declined to approve the parties’ settlement agreement in its proposed form and ordered that they (1) file their settlement agreement publicly, (2) provide supplemental information to the Court including class size, the potential cost to notify the class of the settlement, an estimate of damages, and counsel’s billing rates and hours, and (3) attend an in-person hearing for all counsel of record, including out-of-state counsel who had not moved to appear pro hac vice, to discuss certification of the class.


Rorie v. Charlotte-Mecklenburg Hosp. Auth., 2023 NCBC Order 40 (N.C. Super. Ct. Aug. 21, 2023) (Conrad, J.)

Key Terms: motion to voluntarily dismiss; class action; precertification; prejudice; putative class

Plaintiff initiated a class action alleging that Defendant improperly disclosed the private health information of its patients through third-party tracking technology embedded in its website and asserted claims both individually and on behalf of all others similarly situated. Following Defendant’s motion to dismiss Plaintiff’s amended complaint, Plaintiff filed a notice of voluntary dismissal without prejudice.

The Court has a duty to ensure putative class members will not be prejudiced by the voluntary dismissal of a class-action complaint and therefore has to approve such a dismissal.

After conducting its limited review, the Court here found that neither the Plaintiff nor her counsel would gain from the dismissal of her individual or class claims and that the decision to dismiss the claims was instead based on the Plaintiff’s belief of the unlikelihood of success of her claims following review of the Defendant’s motion to dismiss. The Court also found that the dismissal would not harm putative class members because it was without prejudice and would not prevent putative class members from filing their own individual or class claims in the future.

Therefore, the Court approved the dismissal of Plaintiff’s claims without prejudice.


Mary Annette, LLC v. Crider, 2023 NCBC Order 41 (N.C. Super. Ct. Aug. 24, 2023) (Conrad, J.)

Key Terms: motion to compel; BCR 10.9; discovery dispute; Rule 34; requests for production of documents; attorneys’ fees; Rule 37; BCR 10.1; ESI protocol

Following compliance with Business Court Rule 10.9’s discovery dispute requirements, and with permission of the Court, Defendants filed a motion to compel regarding their requests for production. Defendants argued that Plaintiffs had failed to timely, completely, and competently respond to their requests.

Since Plaintiffs had not objected to any of the requests, the only issue was whether their production of documents was complete and properly formatted. Under Rule 34, which applied because the parties had not agreed to an ESI protocol, Plaintiffs were required to identify the form they intended to use for production, which they failed to do. Moreover, they then provided Defendants a cloud-based folder followed by a physical USB drive which “may or may not” contain the same files. The Court thus concluded that Plaintiffs production was incomplete and ordered Plaintiffs to produce all of the requested documents in a form agreeable to both sides. However, the Court denied Defendants’ related request that Plaintiffs produce an income and expense ledger that was not already in existence.

The Court also determined that Defendants, pursuant to Rule 37(a)(4), were entitled to their reasonable expenses, including attorneys’ fees, incurred in pursuing their motion to compel since Plaintiffs had failed to timely respond or comply with Rule 34 and had provided no justification for their noncompliance.


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 08/30/23 in Business Court Blast