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.