N.C. Business Court Opinions, August 17, 2022 – August 30, 2022

 

KNC Techs., LLC v. Tutton, 2022 NCBC Order 50 (N.C. Super. Ct. Aug. 17, 2022) (Davis, J.)

Key Terms: Rule 38; Rule 39; right to jury trial; waiver

Upon its own motion, the Court addressed whether a jury trial was appropriate. Neither party had requested a jury trial in their pleadings or within ten days following service of the last pleading, as required by Rule 38(b) of the North Carolina Rules of Civil Procedure; accordingly, the parties had waived their right to a jury trial per Rule 38(d). Although Rule 39(b) grants a court the discretion to order a jury trial even when the right has been waived, the Court declined to do so here and denied Plaintiff’s belated request for a jury trial.

 

Chi v. N. Riverfront Marina & Hotel LLLP, 2022 NCBC 46 (N.C. Super. Ct. Aug. 24, 2022) (Earp, J.)

Key Terms: Rule 12(b)(6); BCR 5; breach of contract; litigation privilege; confidentiality; waiver

Plaintiffs and Defendant Wilmington Riverfront entered into a partnership agreement to form Defendant NRMH for investing in developing riverfront property. After the investment failed to provide the allegedly promised returns, Plaintiffs brought suit, attaching to their complaint various partnership documents, including the partnership agreement and a subscription agreement. Defendants asserted a counterclaim for breach of contract alleging that Plaintiffs violated the confidentiality provisions in the agreements by disclosing confidential information about the partnership in public filings in the present lawsuit. Plaintiffs moved to dismiss, arguing that Defendants allegations were conclusory and therefore failed to state a claim; that their disclosures were protected by “litigation privilege”; and that Defendants had waived their right to pursue a claim because they included the same documents with their counterclaim. The Court denied the motion, concluding that 1) the Defendants had satisfied the minimal pleading requirements for a breach of contract claim; 2) Plaintiffs had failed to provide any North Carolina authority regarding a litigation privilege as argued here, and Business Court Rule 5 provides a mechanism for filing documents under seal; and 3) the waiver argument failed because the complaint did not allege that Defendants were bound by the confidentiality provisions, and, moreover, Defendants’ disclosure came after Plaintiffs had already disclosed the same material.

 

Total Merch. Servs., LLC v. TMS NC, Inc., 2022 NCBC Order 51 (N.C. Super. Ct. Aug. 30, 2022) (Bledsoe, C.J.)

Key Terms: sanctions; inherent authority; discovery violations; interlocutory appeal; preliminary injunction

This case arose from Defendants’ alleged breach of an exclusive sales agreement and Plaintiff’s attempts to enforce its inspection rights pursuant to the agreement. Over a year after filing the case, Plaintiff moved for sanctions due to Defendants’ discovery conduct and failure to comply with a Preliminary Injunction Order and a Compel Order. The Court detailed the Defendants’ conduct over the past year, which included improperly removing the case to federal court; refusing to respond to discovery requests for nearly fifteen months; taking an improper interlocutory appeal of the Preliminary Injunction Order; stubbornly and willfully failing to comply with the Preliminary Injunction Order; and failing to timely comply with the Compel Order. After reviewing its inherent authority to impose sanctions for a party’s misconduct, the Court concluded that sanctions should be awarded against Defendants for their egregious conduct; however, the Court deferred entry of the sanctions and ordered Defendants (and a non-party owner of Defendant TMS NC, Inc.) to appear and show cause why the Court should not enter sanctions, in addition to attorneys’ fees and costs, up to and including striking Defendants’ answer, affirmative defenses, and remaining counterclaims.

 

By: Ashley B. Oldfield

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 08/31/22 in Legal Updates