N.C. Business Court Opinions, February 12, 2025 – February 25, 2025
By: Rachel Brinson
Water.io Ltd v. Sealed Air Corp, 2025 NCBC 5 (N.C. Super. Ct. Feb. 19, 2025) (Conrad, J.)
Key Terms: motion to dismiss; breach of contract; repudiation; nonperformance; counterclaims; implied covenant of good faith and fair dealing; UDTP; N.C.G.S. § 75-1.1; Rule 12(b)(6); statute of limitations; N.C.G.S. § 1-52(1); UCC; N.C.G.S. § 25-2-725(1); contract for the sale of goods; predominate purpose test; nonconforming goods; fraudulent inducement; heightened pleading standard
This case arises out of a dispute over a contract for the development and sale of sensors for use in insulated shipping containers. Plaintiff brought suit alleging that Defendant breached their contract by repudiation and nonperformance. Defendant counterclaimed for breach of contract, breach of the implied covenant of good faith and fair dealing, and unfair or deceptive trade practices. Plaintiff moved to dismiss the counterclaims.
Breach of Contract and Breach of the Implied Covenant of Good Faith and Fair Dealing. Because Defendant’s counterclaims for breach of contract and breach of the implied covenant of good faith and fair dealing were based on the same underlying allegations, the Court considered the two claims as one. Plaintiff moved to dismiss the claims based on the statute of limitations. The Court first determined, under the predominate purpose test, that the contract was predominately one for the sale of goods and therefore, the UCC’s four-year statute of limitations applied. Accordingly, the Court dismissed the claims to the extent they were based on alleged breaches occurring more than four years prior to the commencement of this suit, but otherwise denied the motion.
UDTP. Defendant asserted a UDTP claim based on Plaintiff’s alleged breach of contract. The Court dismissed the claim, concluding that Defendant’s allegations of fraudulent inducement were conclusory and not pleaded with sufficient particularity and therefore did not supply the necessary aggravating circumstances to support a UDTP claim based on breach of contract. Further, the Court concluded that the Parties’ dispute was essentially one regarding contractual rights and obligations, which does not support a UDTP claim.
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Barings LLC v. Fowler, 2025 NCBC 6 (N.C. Super. Ct. Feb. 13, 2025) (Conrad, J.)
Key Terms: motion to dismiss; trade secrets; confidential information; corporate raid; conspiracy; tortious interference with contract; N.C.G.S. § 75-1.1; breach of fiduciary duty
In March 2024, twenty-two members of Plaintiff Barings LLC’s Global Private Finance group resigned in unison to join Defendant Corinthia Global Management Limited, a fledgling competitor. In this lawsuit, Plaintiff alleges that the departing employees took its trade secrets and other confidential information at Defendant Corinthia’s direction. Plaintiff Barings also alleges that Defendant Corinthia conspired with Defendants Ian Fowler (a leader of the Global Private Finance group) and Kelsey Tucker (Barings’s former head of global operations) in orchestrating the raid. Defendants moved to dismiss all nine claims brought by Plaintiff.
Breach of Contract. Plaintiff alleges that the individual Defendants breached the restrictive covenants of their respective employment or separation agreements with Plaintiff. However, the Court found that Plaintiff failed to meet the modest pleading requirements to state a claim for breach of contract because its allegations of breaches were conclusory and not specific enough to put the Defendants on notice of the claims against them. The Court granted the motion to dismiss the breach of contract claims against the individual Defendants.
Misappropriation of Trade Secrets. Plaintiff alleged that Defendants misappropriated its trade secrets, including plans for new products, employee compensation information, and various internal policies. Applying the lex loci test, the Court determined that North Carolina law, not English law, controls this claim for present purposes. The Court found that Plaintiff had sufficiently identified its allegedly misappropriated trade secrets and properly alleged that it was harmed by the alleged misappropriations. However, the Court found that the allegations against the individual Defendants were insufficient because Plaintiff failed to specifically allege that the individual Defendants improperly acquired, used, or disclosed any trade secrets. Accordingly, the Court dismissed the claim against the individual Defendants but denied the motion as to Corinthia.
Tortious Interference with Contract. Plaintiff alleged that Defendants induced the departing employees to breach their employment agreements by misusing Plaintiff’s confidential information and soliciting its customers. Corinthia argued that any interference on its part was justifiable market competition. The Court rejected this argument because Plaintiff had adequately alleged that Corinthia misappropriated its trade secrets, which is not a lawful means of competition. Defendants also argued that it did not know about the employees’ agreements, induce the employees to breach the agreements, or cause any harm to Plaintiff. The Court disagreed, finding that Plaintiff’s allegations that Corinthia held resignation letters from the employees for months before such employees resigned, conditioned such employees’ start dates with Corinthia on the expiration of applicable restrictive periods, and returned documents containing Plaintiff’s trade secrets all supported an inference that Corinthia knew of the agreements and induced their breach to Plaintiff’s harm. Conversely, the Court again found that the allegations against the individual Defendants were conclusory and not sufficient to state a claim for tortious interference with contract. The Court granted the motion to dismiss the claims against the individual Defendants but denied it as to Corinthia.
UDTP. Since Plaintiff’s UDTP claim was predicated on its underlying misappropriation of trade secrets and tortious interference with contract claims, the Court dismissed the UDTPA claim to the same extent it had dismissed the other claims, but otherwise denied the motion to dismiss the UDTP claim.
Civil Conspiracy. Although the Court dismissed the misappropriation of trade secrets and tortious interference with contract claims against the individual Defendants, the underlying claims against Corinthia survived and Plaintiff alleged that all the Defendants conspired together to commit those torts. Thus, although the conspiracy allegations were not as particularized or comprehensive as they could be, they were sufficient to survive a motion to dismiss.
Constructive Fraud and Breach of Fiduciary Duty. These claims against Defendant Fowler survived because Plaintiff had sufficiently alleged that Fowler owed it fiduciary duties as an officer and director and that he breached those duties for his own benefit by secretly helping Corinthia raid Plaintiff’s Global Private Finance group.
Permanent Injunction. Noting that injunctions are remedies and not standalone causes of action, the Court granted the motion to dismiss the claim for permanent injunction without prejudice to Plaintiff’s ability to seek a permanent injunction as a remedy if it is successful on an underlying claim.
Breach of Stipulated Injunction Order. Corinthia argued that the claim for breach of the injunction order should be dismissed because dismissal of all other claims against Corinthia warranted termination of the injunction order and because Plaintiff did not allege any damages. The Court rejected both arguments because 1) not all claims against Corinthia had been dismissed and 2) North Carolina does not require proof of damages as an element of a breach of contract claim.
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Barings LLC v. Fowler, 2025 NCBC Order 11 (N.C. Super. Ct. Feb. 13, 2025) (Conrad, J.)
Key Terms: motion to stay; N.C.G.S. § 1-75.12(a); forum non conveniens
As summarized above, this case involves claims relating to an alleged corporate raid. Plaintiff is a Delaware LLC headquartered in North Carolina and Defendant Corinthia is chartered and headquartered in the United Kingdom. Corinthia moved to stay the case on forum non conveniens grounds pursuant to N.C.G.S. § 1-75.12, arguing that North Carolina is an inconvenient forum and that Plaintiff’s claims should be heard in England. The Court determined that the applicable factors regarding whether to grant a stay were either neutral or weighed against a stay and that Corinthia had not shown that a substantial injustice would result if the case were to proceed in North Carolina. First, Plaintiff’s choice of forum deserved great deference so this factor weighed against a stay. Second, the witnesses and sources of proof were located both in the United States and in England, so these factors were neutral. Third, the Court would likely need to apply North Carolina, Delaware, and English law, so this factor weighed slightly against a stay since the Court was best suited to apply North Carolina law and frequently applied Delaware law. The remaining factors either weighed against a stay or warranted little weight. Therefore, the Court denied Corinthia’s motion to stay.
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ECA Gen. P’Ship, LLC v. First Bank, 2025 NCBC Order 12 (N.C. Super. Ct. Feb. 18, 2025) (Robinson, C.J.)
Key Terms: order on designation; N.C.G.S. § 7A-45.4(a); N.C.G.S. § 7A-45.4(a)(5); timely notice of designation; intellectual property
Plaintiff filed this action, asserting various claims arising from alleged cybercrime activity. Defendants timely served their Notice of Designation but did not file it with the clerk of court, as required by N.C.G.S. §§ 7A-45.4(c) and (d). Accordingly, the Court determined, on procedural grounds, that the case was not properly designated to the Business Court.
In addition, even assuming the NOD was timely, the Court determined that designation pursuant to N.C.G.S. § 7A-45.4(a)(5) was not proper because the material issues in dispute, namely the Defendant’s security procedures and negligent conduct, were not tied to the underlying intellectual property involved, as required by section 7A-45.4(a)(5).
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Lucas v. Hopper, 2025 NCBC Order 13 (N.C. Super. Ct. Feb. 20, 2025) (Earp, J.)
Key Terms: motion to quash subpoenas; discovery dispute; close of discovery; BCR 10.9; BCR 10.4
Defendants filed objections and motions to quash subpoenas issued to third parties by Plaintiffs that would require production of documents by the subpoenaed parties after the close of the discovery period. Finding that Plaintiffs did not move to extend the discovery period and failed to comply with BCR 10.4 requiring that discovery be served with enough time so that responses are due before the close of discovery, the Court granted the motions and quashed the subpoenas as untimely.
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Implus Footcare, LLC v. Vore, 2025 NCBC Order 14 (N.C. Super. Ct. Feb. 25, 2025) (Davis, J.)
Key Terms: motion for commission; non-party subpoena; Rule 45; Massachusetts; letters rogatory; BCR 10.9; discovery dispute
Defendants sought the issuance of a commission from the Court pursuant to Rule 45(f) to compel discovery from a non-party entity located in Massachusetts. However, Defendants failed to follow BCR 10.9 prior to filing the motion for commission. The Court therefore denied the motion, without prejudice, and instructed the parties to participate in the BCR 10.9 process and to make a good-faith effort to resolve their discovery dispute.
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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.