N.C. Business Court Opinions, January 29, 2025 – February 11, 2025
CTS Metrolina, LLC v. Berastain, 2025 NCBC 3 (N.C. Super. Ct. Feb. 4, 2025) (Earp, J.)
Key Terms: motion to dismiss; Rule 12(b)(6); unfair and deceptive trade practices act; tortious interference; misappropriation of trade secrets; computer trespass; N.C.G.S. 14-458(a); vicarious liability; declaratory judgment; civil conspiracy
As previously summarized here, this case arose after Plaintiff purchased the assets of a business from Defendants Berastain and Moreau in 2022. As part of the transaction, Berastain and Moreau executed confidentiality and noncompete agreements. Following Berastain and Moreau’s departure from Plaintiff, a significant number of Plaintiff’s “jobs” were deleted from a project management platform by two employees, who later became employed by Inkwell, a company formed by Berastain and Moreau. Inkwell was subsequently purchased by S&P Cap, a company formed by two brokers who participated in the CTS Metrolina purchase agreement. Inkwell, S&P Cap, Cherry and Pena moved to dismiss a number of Plaintiff’s claims pursuant to Rule 12(b)(6).
Tortious Interference with Contract Claim against Inkwell. The Court denied Inkwell’s motion to dismiss as it related to Inkwell’s interference with Berastain and Moreau’s noncompete agreement with CTS Metrolina. The Court noted the inapplicability of the intracorporate immunity doctrine, which applies to conspiracies, to this claim. The Court held that the amended complaint sufficiently alleged that Inkwell had induced Berastain and Moreau to violate their restrictive covenants with CTS Metrolina and satisfied the pleading elements for this claim. However, the Court granted Inkwell’s motion as it related to contracts with CTS Metrolina’s customers, subcontractors, and vendors. CTS Metrolina’s “mere expectation of a continuing business relationship” was insufficient to establish a claim for tortious interference.
Tortious Interference with Contract Claim against Cherry and S&P Cap. The Court granted Cherry and S&P Cap’s motions to dismiss, as the amended complaint failed to establish the existence of a valid contract between CTS Metrolina and its customers, subcontractors and vendors. As with Inkwell, the expectation of a continuing business relationship with these entities did not constitute a contract for the purposes of a tortious interference claim.
Misappropriation of Trade Secrets Claim against Inkwell, Cherry and S&P Cap. Defendants argued that the misappropriation of trade secrets claim failed because Plaintiff had failed to adequately allege the existence of a trade secret or misappropriation. The Court agreed in part, concluding that Plaintiff’s allegations regarding misappropriation of “business operation information” were too vague. However, Plaintiff’s detailed descriptions of its customer lists and subcontractor/vendor lists were adequate to allege the existence of compilation-based trade secrets and its allegations that Defendants had used the information were sufficient to allege misappropriation.
Computer Trespass Claim against Pena and Inkwell. Plaintiff alleged that Pena violated North Carolina’s Computer Trespass Statute (N.C.G.S. § 14-458(a)) by deleting its “jobs” from iRestore, a project management platform. Pena argued that these allegations failed because they did not allege that iRestore was a “computer or computer network” or that the data belonged to Plaintiff rather than iRestore. The Court disagreed, finding that the allegations were sufficient to show that iRestore operates on a “computer or computer network” and that Plaintiff’s use of the possessive “its jobs” was sufficient to allege that the data belonged to Plaintiff. Inkwell also argued that Plaintiff’s claim against it could not survive to the extent the claim sought to allege Inkwell’s liability for the violations of its employees under the doctrine of respondeat superior. The Court disagreed, concluding that the Computer Trespass Statute did not foreclose the possibility of vicarious liability under the present circumstances.
Civil Conspiracy Claim against Cherry, Pena, S&P Cap. Defendants argued that the civil conspiracy claim should be dismissed for failure to allege facts showing how, when, and why a conspiracy was formed. The Court denied the motion, finding that Plaintiff’s allegations that Berastain, Moreau, Cherry, Pena and S&P Cap agreed to unlawfully compete with CTS Metrolina, and carried out this agreement by violating the Computer Trespass Statute and the Court’s prior orders were sufficient to state a claim.
Unfair and Deceptive Trade Practices Claim against Inkwell, Cherry, Pena. The Court also denied dismissal of Plaintiff’s UDTPA claim, concluding that the alleged violation of the Computer Trespass Statute constituted an “unfair act or practice,” and, as the alleged wrongful conduct was not contained within CTS Metrolina, the conduct was sufficiently “in or affecting commerce” to support the claim.
Accounting and Constructive Trust Claims against Inkwell and S&P Cap. The Court granted dismissed Plaintiff’s claims for accounting and constructive trust, as those are remedies rather than independent claims. This dismissal was without prejudice to Plaintiff’s ability seek the imposition of either or both remedies for any surviving claims at the appropriate time.
Declaratory Judgment Claim against Inkwell and S&P Cap. The Court denied the motion to dismiss Plaintiff’s claim for declaratory judgment, which requested that the sale of IER and Inkwell to S&P Cap be declared void ab initio because it perpetuated Berastain’s and Moreau’s unlawful competition in violation of their restrictive covenants. The Court concluded that because Berastain and Moreau had entered into the restrictive covenants with Plaintiff, Plaintiff had an interest in determining whether Berastain and Moreau could profit from the sale of IER and Inkwell.
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Pro-Tops, Inc. v. Maksimenko, 2025 NCBC 4 (N.C. Super. Ct. Feb. 10, 2025) (Earp, J.)
Key Terms: Rule 12(b)(5); motion to dismiss; invalid service of process; Rule 4; sheriff; private process server
Plaintiff filed a verified complaint against Defendant Maksimenko. Plaintiff sought to effectuate service through a private process server on six different occasions without success. The personal process server contacted Maksimenko, who denied “ducking” service, and requested that the two meet at a local hardware store. On December 19, 2024, the private process server met with Maksimenko and handed him copies of the complaint and summons. Maksimenko moved to dismiss under Rule 12(b)(5) for improper service of process.
The Court granted Maksimenko’s motion to dismiss, noting that Plaintiff’s affidavit of service did not indicate service by sheriff was attempted or that the sheriff was otherwise unable to serve the summons or complaint. Citing precedent, the Court noted that “use of a private process server is limited by statute to scenarios where the sheriff is unable to fulfill the duties of a process server.” Finding that service was not properly effectuated on Maksimenko, Plaintiff’s case was dismissed.
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Wilmington Tr., N.A. v. TM Northlake Mall, L.P., 2025 NCBC Order 7 (N.C. Super. Ct. Jan. 31, 2025) (Conrad, J.)
Key Terms: motion to approve sale; receivership; bankruptcy law; objections
In 2019, TM Northlake Mall, L.P. defaulted on a loan secured by its primary asset, a property known as Northlake Mall. Plaintiff Wilmington Trust, as trustee for the noteholder, initiated this suit and moved to place TM Northlake into receivership. A general receiver was appointed with broad authority to manage Northlake Mall’s operations and advertise the property for sale. Having found a buyer and negotiated a proposed purchase agreement, the receiver moved for the Court to approve the sale of Northlake Mall.
Two objections to the receiver’s motion were filed. The first objection was filed by a party interested in purchasing the property, who objected on the basis that the receiver’s marketing campaign was deficient and the sale price of the property was below value. The first objection requested a thirty-day due diligence period, to allow the objecting party to decide if it was willing to make an offer. The second objection was filed by two plaintiffs in two premises liability lawsuits against the receiver, who objected on the basis that the sale price of the property was too low to ensure the receivership estate had sufficient assets to compensate them should they succeed in obtaining a judgment.
Noting the broad authority given to receivers under state law and looking to bankruptcy law for guidance, the Court held that the receiver’s judgment was reasonable and that a sound business justification supported the proposed sale. The Court highlighted the “striking” fact that both TM Northlake and Wilmington Trust, who both had “every incentive” to maximize the sale price, approved the proposed sale. The Court further found that the objections filed did not present compelling reasons to reject the sale. As such, the Court approved the receiver’s proposed sale of the property.
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Hedgepeth v. Cornblum, 2025 NCBC Order 8 (N.C. Super. Ct. Jan. 31, 2025) (Robinson, 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(c); contemporaneous service requirement
In this Order on Designation, the Court determined that designation under N.C.G.S. § 7A-45.4(a)(1) was not appropriate. This case arises out of a dispute relating to the assessment and collection of clubhouse dues in a planned community. Plaintiff alleges that Defendants took control of the community’s homeowner’s association for the purpose of assessing and collecting dues for their own benefit. Plaintiff sought designation based solely upon her claim to pierce the corporate veil.
Citing precedent, the Court emphasized that a claim for piercing the corporate veil on its own is insufficient to support mandatory complex business case designation under N.C.G.S. § 7A-45.4(a)(1). As Plaintiff’s other claims did not implicate the law governing corporations, partnerships, or LLCs, designation was inappropriate. The Court further noted that Plaintiff’s failure to comply with the contemporaneous service requirement of N.C.G.S. § 7A-45.4(c) rendered the designation untimely.
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Laport v. Bakkavor Foods USA, Inc., 2025 NCBC Order 9 (N.C. Super. Ct. Feb. 5, 2025) (Robinson, J.)
Key Terms: order on designation; N.C.G.S. § 7A-45.4(a)(2); securities
This case arises from a dispute following Plaintiff Laport’s departure from Defendant Bakkavor Food’s employment. Laport filed this lawsuit in Mecklenburg County against Bakkavor Foods asserting claims of fraud in the inducement, negligent misrepresentation, violation of the North Carolina Wage and Hour Act, breach of contract, breach of covenant of good faith and fair dealing, conversion of wages, unjust enrichment, quantum meruit, and unfair and deceptive trade practices against Bakkavor Foods. Among these claims, the complaint alleges that Bakkavor Foods represented to Laport that he would earn the option to own shares of Bakkavor Foods’ stock through the company’s incentive plan. Bakkavor Foods filed a timely notice of designation under N.C.G.S. § 7A-45.4(a)(2). Laport subsequently filed an objection to the designation of the case, arguing that the complaint does not assert any securities claims.
The Court overruled Laport’s objection. Though the complaint did not explicitly assert a securities claim under Chapter 78A, the Court noted that section 7A-45.4(a)(2) does not require the claim to be explicitly stated to be properly designated. While a “tangential relationship” between securities and the complaint’s allegations is insufficient to warrant designation, designation is proper when the acquisition, disposition, transfer, existence, or characteristics of the securities is at issue. Finding that Laport’s claims required a determination of whether the shares in dispute had vested under the incentive plan, the Court held that the case would proceed as a mandatory complex business case.
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Maven Advantage, Inc. v. Square One Storm Restoration, LLC, 2025 NCBC Order 10 (N.C. Super. Ct. Feb. 10, 2025) (Davis, J.)
Key Terms: preliminary injunction; non-compete; non-solicit; misappropriation of trade secrets
This case arises following Defendants William Couch and Tyler Daniels’ resignation from Plaintiff Maven Advantage’s employment. Plaintiff alleges that Couch and Daniels violated their restrictive covenant agreements with Plaintiff through their employment with Square One, who is also a named defendant. Plaintiff asserted claims of unfair and deceptive trade practices, common law unfair competition, misappropriation of trade secrets, tortious interference with contract, and tortious interference with prospective economic advantage against all three defendants, and claims against Couch and Daniels for breach of contract and against Daniels for civil embezzlement. Shortly after the suit was filed, a TRO was entered prohibiting Defendants from using confidential information and customer lists obtained from Plaintiff and from contacting or soliciting Plaintiff’s current or prospective customers using information obtained from Plaintiff. Here, the Court addressed Plaintiff’s motion for a preliminary injunction.
The Court denied Plaintiff’s request for a preliminary injunction, finding that Plaintiff failed to show a likelihood of success on the merits of its claims. In coming to this decision, the Court noted that Defendants had “meticulously rebutted” each of Plaintiff’s allegations relating to specific events of alleged misappropriation or solicitation through affidavits. The Court also acknowledged that Plaintiff’s affidavits contained hearsay, which was directly contradicted by affidavits submitted by Defendants from individuals with first-hand knowledge of the events. Though acknowledging that these findings and credibility determinations were limited in application to the preliminary injunction motion, the Court found that Plaintiff had failed to meet the high burden required to show entitlement to a preliminary injunction with the limited evidence on record at this time.
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James H.Q. Davis Trust v. JHD Properties, LLC, No. 32PA24, 2025 N.C. LEXIS 66, 2025 WL 350300 (Jan. 31, 2025) (Barringer, J.)
Key Terms: N.C.G.S. § 57D-6-02(2); judicial dissolution; “not practicable” standard
This appeal arose from the Business Court’s order on cross-motions for summary judgment, which, as summarized here, granted summary judgment in favor of plaintiffs on their claim for judicial dissolution of two LLCs. The Business Court had concluded that judicial dissolution was warranted under N.C.G.S. § 57D-6-02(2), which provides that dissolution is appropriate when it is “not practicable” to conduct the LLC’s business. The Business Court found that the “not practicable” standard had been met because the LLCs’ managers had been unable to reach agreement for at least three years, resulting in the failure of the LLCs to conduct any economically useful activity, and the LLCs’ operating agreements did not provide any mechanism to break the deadlock. The Supreme Court affirmed and held that “not practicable” means “unfeasible” and does not mean “impossible.” In determining whether it is not practicable for managers to continue operating a company, a court may consider: (1) whether the management of the company is unable or unwilling to work together to reasonably engage in or promote the purpose for which the company was formed; (2) whether there is deadlock between the managers; (3) whether the operating agreement provides a means of navigating around such deadlock; (4) whether, due to the company’s financial position, there is still a business to operate; (5) whether continuing the company is financially feasible; and (6) whether a member or manager has engaged in misconduct. Applying these factors to the present case, the Supreme Court agreed that it was not practicable for the managers to continue operating the LLCs due to the presence of managerial deadlock, the lack of an equitable means of resolving that deadlock, and the unwillingness of the managers to permit the LLCs to engage in and pursue the purpose for which they were formed.
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