N.C. Business Court Opinions, July 30, 2025 – August 12, 2025
By: William H. Scott and Ashley Oldfield
Vincelette v. Court, 2025 NCBC 38 (N.C. Super. Ct. July 30, 2025) (Brown, J.)
Key Terms: Rule 12(b)(1); Rule 12(b)(6); standing; N.C.G.S. § 57D-8-08; derivative claims; civil conspiracy; fiduciary duty; declaratory judgment; conversion; advancement; specific performance; inspection rights
Plaintiff and Defendants Melissa Peirce and Kelly Court were the three members of Defendant Wellspring Nurse Source, LLC, a member-managed LLC governed by an Operating Agreement and Connecticut law. Plaintiff and Ms. Court previously sued Ms. Peirce, asserting that Ms. Peirce had defrauded and embezzled funds from Nurse Source. The prior litigation resulted in a Settlement Agreement under which Ms. Peirce’s membership interest would be bought out. However, the Settlement Agreement was never effectuated. Instead, Ms. Court and Ms. Peirce claimed to have reinstated Ms. Peirce and terminated Plaintiff from the company for cause. Plaintiff subsequently filed suit, asserting derivative claims on behalf of Nurse Source and direct claims. Defendants moved for partial dismissal pursuant to Rules 12(b)(1) and 12(b)(6).
Derivative Claims
Motions to Dismiss for Lack of Standing. Defendants sought dismissal of Plaintiff’s derivative claims for lack of standing, arguing that Plaintiff lacked standing under Connecticut law because she was not a member of Nurse Source when she filed suit. The Court disagreed, concluding that Plaintiff had adequately pleaded and provided sufficient supporting evidence of her membership in Nurse Source to withstand a motion to dismiss under either Rule 12(b)(1) or 12(b)(6).
Plaintiff’s Claim for Declaratory Judgment. The Court dismissed Plaintiff’s claim for a declaratory judgment to the extent it was duplicative of her claim for breach of the Settlement Agreement. However, the Court denied dismissal of the claim to the extent it was based on the validity of Ms. Peirce’s reinstatement and reimbursement of her benefits as Plaintiff had adequately pleaded the existence of an actual controversy regarding these issues.
Breach of Fiduciary Duty. Defendants argued that this claim should be dismissed because Plaintiff failed to allege any injury to Nurse Source. The Court disagreed and denied the motion, finding that Plaintiff’s allegations that Defendants’ decision not to exercise its rights under the Settlement Agreement to rid Nurse Source of Ms. Peirce were sufficient to allege injury to Nurse Source where Ms. Peirce was alleged to have previously defrauded and embezzled funds from Nurse Source.
Breach of Contract. Plaintiff alleged that Ms. Peirce and Ms. Court breached the Settlement Agreement by refusing to carry out its terms. The Court dismissed the claim as to Ms. Court because she was not a party to the Settlement Agreement but otherwise denied dismissal.
Injunctive Relief/Specific Performance. The Court dismissed the claim for injunctive relief because there is no standalone claim for injunctive relief but, in its discretion, declined to dismiss the claim for specific performance of the Settlement Agreement.
Civil Conspiracy. The Court denied dismissal of Plaintiff’s civil conspiracy claim, finding that Plaintiff had adequately alleged the existence of a conspiracy between Ms. Court and Ms. Peirce, the timeframe and purpose of the conspiracy, the steps taken to carry out the conspiracy, and the resulting injury.
Direct Claims
Declaratory Judgment. Plaintiff requested a declaratory judgment regarding four issues relating to her alleged termination from Nurse Source. The Court dismissed the claim as to the first issue, finding it duplicative of her direct claim for breach of contract, but otherwise denied dismissal, concluding that the other issues would not necessarily be determined through the breach of contract claim.
Conversion. Plaintiff’s conversion claim was based on certain unauthorized transfers and cash advances taken from a third-party company, which assigned the claim to her. Defendants contended that the claim should be dismissed because 1) personal claims cannot be assigned; 2) the claim was barred by the economic loss rule; and 3) Ms. Court could not be personally liable for causing Nurse Source to convert funds. The Court rejected all three arguments, concluding that 1) tort claims involving economic loss to a company may be assigned; 2) the economic loss rule did not bar the conversion claim because, as alleged, the unauthorized transfers fell outside the parties’ contract; and 3) a LLC member may be held personally liable for torts committed when acting on behalf of the company.
Violation of Conn. Gen. Stat. § 34-255i(a). Defendants contended that Plaintiff’s claim for violation of her inspection rights under Connecticut law should be dismissed because she was no longer a member at the time she made the request. As the Court had already determined that Plaintiff adequately alleged that she remains a member of Nurse Source, the Court denied dismissal of this claim.
Breach of Operating Agreement-Indemnification and Advancement. Plaintiff alleged that the company’s refusal to advance her litigation expenses was a breach of the Operating Agreement which provides for advancement to any member in “defending any claim, demand, action, suit or proceeding.” Defendants argued that the claim should be dismissed because Plaintiff was prosecuting, not defending, claims. The Court denied dismissal, finding that Plaintiff had adequately pleaded the existence of a contract, that she had incurred expenses defending a claim, and that Nurse Source had breached the contract by refusing to advance the expenses.
Breach of Fiduciary Duty. Under Connecticut law, a member may maintain a direct action against another member for breach of fiduciary duty provided the member shows that the injury is personal to the member and not solely the result of an injury suffered by the company. The Court found that Plaintiff had adequately pleaded personal injury based on allegations that Defendants had wrongfully deprived Plaintiff of her membership rights. Thus, the Court denied dismissal.
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Orange Peel Events, LLC v. Ninja Brewing, Inc., 2025 NCBC 39 (N.C. Super. Ct. July 30, 2025) (Conrad, J.)
Key Terms: motion to dismiss; declaratory judgment; live music; lease; breach of fiduciary duty; joint venture
Plaintiff Orange Peel Events, LLC manages outdoor live music shows in and around Asheville, North Carolina. Public Interest Projects, Inc. is its sole member. In 2019, Public Interest and Defendant Asheville Brewing Properties LLC formed 75 Coxe Properties to purchase real property which they then leased to Defendant Ninja Brewing Inc, a sister company of Asheville Brewing. Ninja and Orange Peel then entered into a management agreement for use of the property as an outdoor entertainment venue. Disputes between the parties eventually arose, culminating in Ninja giving notice that it intended to terminate the management agreement with Orange Peel. Plaintiffs initiated this lawsuit, bringing both direct claims and derivative claims on behalf of 75 Coxe Properties, and Defendants counterclaimed. Both sides moved to dismiss.
Breach of Fiduciary Duty/ Misappropriation of Corporate Opportunity. The Court dismissed Plaintiffs’ claims for breach of fiduciary duty and misappropriation of corporate opportunity because no fiduciary relationship existed between the parties. Although Plaintiffs alleged that a fiduciary relationship arose through a joint venture with Defendants, the management agreement between the parties expressly disclaimed the existence of a joint venture.
Breach of Management Agreement. The Court denied Ninja’s motion to dismiss Orange Peel’s claim for breach of the management agreement, except to the extent it was based on Ninja’s termination of the agreement. Because the agreement unambiguously allowed either party to terminate it without cause, Orange Peel’s claim based on termination of the agreement failed.
Declaratory Judgment. The Court denied Ninja’s motion to dismiss Public Interest’s claim for a declaratory judgment concerning whether 75 Coxe Properties’ operating agreement required the consent of a majority in interest of the company’s membership for cash distributions as the parties’ conduct clearly indicated an actual controversy regarding this issue.
Punitive Damages. The Court denied Ninja’s and Asheville Brewing’s motion to dismiss Orange Peel’s demand for punitive damages, finding the issue premature.
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Qian v. Zheng, 2025 NCBC 40 (N.C. Super. Ct. July 31, 2025) (Brown, J.)
Key Terms: failure to respond to discovery; sanctions; Rule 37; inherent authority
This lawsuit involves a dispute between the members/managers of Defendant Halifax Safeguard Property, LLC. During the course of discovery, Plaintiffs’ counsel sought to withdraw, citing an inability to meaningfully communicate with their clients. After permitting Plaintiffs’ counsel to withdraw, the Court ordered Plaintiffs to respond to all outstanding discovery and pleadings within 60 days. When Plaintiffs failed to respond to the discovery by the deadline, the Court entered a second order providing that Plaintiffs must respond to the discovery by the end of April and that if they failed to do so, Defendants were permitted to seek sanctions. After Plaintiffs failed to meet this second deadline, Defendants moved for sanctions, requesting that the Court prohibit Plaintiffs from supporting their claims, from opposing Defendants’ defenses to their claims, and from introducing evidence regarding the same. The Court granted the motion pursuant to its inherent authority and Rule 37, concluding that Plaintiffs’ failure to participate in discovery had deprived Defendants of the opportunity to gain information about the claims against them and their defenses thereto. The Court noted that Plaintiffs’ pro se status did not excuse them from their duty to respond to discovery requests.
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Weatherspoon Fam. LLC v. Hatteras Inv. Partners, L.P., 2025 NCBC 41 (N.C. Super. Ct. July 31, 2025) (Houston, J.)
Key Terms: Rule 12(b)(1); voluntary dismissal; derivative suit; pre-suit demand; futility; N.C.G.S. § 57-D-8-04; Delaware law; Rule 15(a)
In 2021, Hatteras Evergreen Private Equity Fund, LLC (“Evergreen Fund”) exchanged its $43 million investment portfolio for preferred equity shares in The Beneficient Company Group, LLP. Defendants Hatteras Investment Partners, L.P. (“HIP”) (Evergreen Fund’s manager) and HIP’s manager spearheaded the transaction. Evergreen Fund’s investment resulted “in the loss of most, if not all, of the value of Evergreen Fund’s assets.” Thereafter, Plaintiff Weatherspoon Family LLC filed a derivative action on behalf of Evergreen Fund asserting a breach of fiduciary duty relating to the transaction. However, Plaintiff did not make a pre-suit demand to request an investigation, instead “contending that such a demand would be futile and should be excused.” Defendants and Evergreen Fund moved to dismiss. Thereafter, Plaintiff filed a notice of voluntary dismissal without prejudice, followed by a motion for leave to voluntarily dismiss the action without prejudice. The next day, Plaintiff filed an alternative motion for leave to file an amended complaint in the event the Court denied leave to dismiss.
Plaintiff’s Notice of Voluntary Dismissal Without Prejudice. Because N.C.G.S. § 57D-8-04 prohibits a derivative proceeding from being discontinued without the court’s approval, the Court struck Plaintiff’s notice of voluntary dismissal.
Plaintiff’s Motion for Voluntary Dismissal Without Prejudice. Plaintiff sought dismissal without prejudice so that Plaintiff’s counsel could pursue the litigation in Delaware with other investors. In considering whether to grant a voluntary dismissal of a derivative action, the court must weigh any legitimate corporate claims brought in the derivative suit against the corporation’s best interests. The Court concluded that Plaintiff’s lone claim for breach of fiduciary duty was not a legitimate claim under applicable Delaware law because Plaintiff had not made the required pre-suit derivative demand and had failed to adequately allege facts with sufficient particularity to demonstrate that pre-suit demand would have been futile and should be excused. The Court also concluded that dismissal without prejudice so that the same suit could be pursued in Delaware was not in Evergreen Fund’s best interest because it would involve the expenditure of additional time and resources for the purpose of pursuing a claim which as currently pleaded was deficient. Accordingly, the Court denied Plaintiff’s motion for leave to voluntarily dismiss without prejudice.
Plaintiff’s Alternative Motion for Leave to File First Amended Complaint. Because Rule 15 permits a party to amend his pleading once as a matter of right before a responsive pleading is filed and Defendants here had yet to file a responsive pleading, the Court granted Plaintiff’s motion to amend and deemed the filed amended complaint as filed as of the date of entry of the present order. The Court also denied as moot Defendants’ motion to dismiss, without prejudice to their right to respond to the amended complaint.
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Members of N.C. State Univ.’s 1983 Men’s Basketball Nat’l Championship Team v. Nat’l Collegiate Athletic Ass’n, 2025 NCBC 42 (N.C. Super. Ct. Aug. 6, 2025) (Davis, J.)
Key Terms: basketball; NCAA; NIL; motion to dismiss; continuing wrong doctrine; statute of limitations; right of publicity; Copyright Act; preemption
Plaintiffs, members of the N.C. State’s 1983 men’s basketball championship team, brought suit against the NCAA for using–without permission–their names, images, and likenesses (“NIL”) contained in game footage from the 1983 season. The NCAA moved to dismiss.
First, the Court held that the claims were barred by the statutes of limitations because Plaintiffs’ alleged injuries derived from an act taken during or before the 1983 season–namely, the required signing of the NCAA’s Student-Athlete Statement which served to verify an athlete’s eligibility to participate in NCAA sports and also authorized the NCAA to use the athlete’s name or picture. The Court rejected application of the continuing wrong doctrine.
Second, the Court concluded that the suit should be dismissed because Plaintiffs did not have a legally enforceable right. The sole basis of the lawsuit was the NCAA’s repeated use of their NIL from game footage previously broadcast. However, Plaintiffs did not have a “right of publicity” in footage of games in which they voluntarily participated.
Finally, the Court concluded that the federal Copyright Act preempted any claims because both the Subject Matter Prong and the Equivalence Prong of the test for preemption were satisfied.
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Port Trinitie Homeowners Ass’n v. Port Trinitie Ass’n, 2025 NCBC 43 (N.C. Super. Ct. Aug. 7, 2025) (Earp, J.)
Key Terms: Rule 12(b)(6); N.C.G.S. § 47A; condominium association; homeowners association; breach of governing documents; breach of fiduciary duty; ultra vires acts
This lawsuit arose from a dispute between the Condo Association and the Homeowners Association for the Port Trinitie development. The members of the two associations share use and maintenance of community facilities owned by the Condo Association. The Homeowners Association and its president initiated this lawsuit against the Condo Association and its board members, alleging various claims relating to their alleged breaches of the development’s Governing Documents. Defendants moved to dismiss all claims.
Breach of Governing Documents. The Court denied the motion to dismiss the claim for breach of the Governing Documents, finding that Plaintiffs had met the minimum pleading standards for breach of contract: the existence of a valid contract and a breach thereof.
Breach of North Carolina General Statutes. Plaintiffs alleged that Defendants’ breaches of the Governing Documents also violated the Condo Act and the Nonprofit Corporation Act. The Court dismissed the claim as to the Condo Act for lack of standing because Plaintiffs were not unit owners. The Court also dismissed Plaintiffs’ claim for inspection rights under the Nonprofit Corporation Act as Plaintiffs had not pleaded that they complied with the statutory prerequisites.
Breach of Fiduciary Duty. Plaintiffs asserted breach of fiduciary duty claims against both the Condo Association and the Individual Defendants. The Court dismissed the claim as to the Condo Association as no de jure fiduciary duty existed and Plaintiffs had not alleged the existence of a de facto duty. That the Homeowners Association only had two voting representatives on matters pertaining to the community facilities while the Condo Association had seven voting representatives did not mean that the Condo Association “held all the cards.” The Court also dismissed the claim as to the Individual Defendants because any fiduciary duty they owed was to the Condo Association and its unit owners, not to the Plaintiffs.
Actions Committed Ultra Vires. Plaintiffs asserted that the Individual Defendants were personally liable for ultra vires acts in violation of the Governing Documents. However, challenges to ultra vires acts are limited by N.C.G.S. § 55A-3-04 to actions by a member or director against the corporation to enjoin the act. Rather than seeking the relief permitted by statute, Plaintiffs’ claim appeared to simply recast their breach of contract claim. Accordingly, the Court dismissed this claim.
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State of N.C. v. E.I. Du Pont de Nemours & Co., 2025 NCBC 44 (N.C. Super. Ct. Aug. 7, 2025) (Robinson, C.J.)
Key Terms: Rule 12(b)(1); air and water contamination; N.C.G.S. § 114-2; subject matter jurisdiction; repeal; common law authority; separation of powers
The State of North Carolina, by and through the State Attorney General, initiated this action in 2020, asserting claims arising from the alleged contamination of North Carolina’s air, land, and water through operations at a chemical manufacturing facility known as Fayetteville Works. During discovery, Plaintiff asserted that it was authorized to bring suit under N.C.G.S. § 114-2(8)(a), which authorizes the AG to bring suit “in all matters affecting the public interest.” In 2024, the General Assembly repealed N.C.G.S. § 114-2(8)(a). Thereafter, Defendants moved to dismiss under Rule 12(b)(1) for lack of subject matter jurisdiction, arguing that the repeal of N.C.G.S. § 114-2(8)(a) divested the AG of authority to prosecute the case.
Power of the Attorney General to Originate & Maintain This Action. The Court first determined that N.C.G.S. § 114-2(8)(a) conferred authority on the AG to originate and maintain the action prior to the statute’s repeal. The Court next determined that under the common law, the AG had, and continues to have, the power to originate and maintain suits for the protection and defense of North Carolina’s natural resources. Lastly, the Court held that both the environmental claims and fraudulent concealment claims fell within this power.
Separation of Powers. Moving Defendants also argued that the AG lacked the ability to bring the suit except in the name of, and at the request of, the NC Department of Environmental Quality. The Court disagreed because 1) there was no clear expression limiting the AG’s common law powers to protect NC’s water and air resources; 2) while N.C.G.S. § 113-131(d) required the AG to act as attorney for NCDEQ when requested, it did not bar the AG from representing NC in natural resources cases without the NCDEQ’s explicit request; and 3) the NCDEQ was limited in the remedies it could seek.
For these reasons, the Court denied the motion to dismiss for lack of subject matter jurisdiction.
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