N.C. Business Court Opinions, September 28, 2022 – October 11, 2022

 

Philip Morris USA, Inc. v. N.C. Dep’t of Revenue, 2022 NCBC 58 (N.C. Super. Ct. Sept. 29, 2022) (Earp, J.)

Key Terms: judicial review; final agency determination; N.C.G.S. § 105-130.45; tax credit; cigarette exportation; Export Credit; generate; statutory interpretation; plain language; legislative intent

The dispute at its core is over whether N.C.G.S. § 105-130.45, the cigarette export tax credit, as amended effective 1 January 2005, limited the amount of Export Credit Petitioner Philip Morris could generate in any one year to $6 million, as Respondent, the N.C. Department of Revenue, contends. Philip Morris’ position is that the addition of the language at issue to subsection (b) was merely a reiteration of the pre-existing cap in subsection (c) of the amount of Export Credit that could be claimed annually, not a new cap on the amount of Export Credit that could be generated annually.

The relevant statutory language in subsection (b) was changed from “[t]he amount of credit allowed is computed as follows” to “[t]he amount of credit allowed may not exceed six million dollars ($6,000,000) and is computed as follows[.]” Despite Philip Morris’s arguments related to the General Assembly’s and the Department’s representations as to the impact of the amendment and its interpretation of the legislative intent, the Court focused on the plain language of the statute and found that it was unambiguous and not open to judicial construction. The Court held that a simple reading of the amended Export Credit Statute plainly indicates that the General Assembly intended to limit credit generation to six million dollars per year effective 1 January 2005. Contrary to Philip Morris’ argument, reading the new language in subsection (b), where it was placed, results in a second $6 million limitation—this one on credit generation—and not a repeat of the $6 million cap on use of the credit in subsection (c). The Court concluded that the Administrative Law Judge did not err by awarding summary judgment to the Department and that the position espoused by the Department and upheld in the final agency decision is consistent with the plain language of the statute.

 

Rizzuto v. DORFERCIM, Inc., 2022 NCBC Order 56 (N.C. Super. Ct. Sept. 30, 2022) (Bledsoe, C.J.)

Key Terms: notice of designation; N.C.G.S. § 7A-45.4(a)(5); breach of contract; intellectual property

Plaintiffs filed a notice of designation contending the case should be designated a mandatory complex business case pursuant to N.C.G.S. § 7A-45.4(a)(5). Designation is proper under subsection (a)(5) if the action involves a material issue related to intellectual property. Plaintiffs argued designation was proper because the Defendants terminated Plaintiffs’ access to a certain system containing software, trademarks, proprietary marks, and other confidential information for the relevant franchise. Despite these arguments in support of designation, the Court found that Plaintiffs’ claims were focused on the alleged breach of the franchise agreement rather than the underlying intellectual property aspects of the franchise’s software system. The Court reaffirmed that “to qualify for mandatory complex business case designation under this section, the material issue must relate to a dispute that is ‘closely tied to the underlying intellectual property aspects’ of the intellectual property at issue” and held that here, designation was improper.

 

Rybicka-Kozlowska v. Durham Nephrology Assocs., P.A., 2022 NCBC Order 57 (N.C. Super. Ct. Sept. 30, 2022) (Bledsoe, C.J.)

Key Terms: notice of designation; N.C.G.S. § 7A-45.4(a)(1); law governing corporations, partnerships, and limited liability companies; breach of contract

Defendants filed a notice of designation contending the case should be designated a mandatory complex business case pursuant to N.C.G.S. § 7A-45.4(a)(1). Designation is proper under subsection (a)(1) if the action involves a material issue related to disputes involving the law governing corporations, partnerships, and limited liability companies. Plaintiff entered into a Shareholder Agreement and Nonqualified Deferred Compensation Plan and Employment Agreement (collectively, the “Agreements”) with Defendant. Plaintiff was terminated from Defendant and alleged Defendants took actions to decrease the compensation owed to her under the Agreements. Defendants argued the dispute concerns Plaintiff’s rights as a former shareholder, therefore implicating the law governing corporations, and that their defenses to Plaintiff’s claims will require application of North Carolina’s Professional Corporation Act. The Court found, however, that the material issues of the action require only a straightforward application of contract law principles. Further, the Court reaffirmed that it may not consider any issues that may or may not be raised in a future pleading when determining whether designation is proper. Accordingly, designation was not proper in this action.

 

By Rachel E. Brinson

 

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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.

Posted 10/12/22 in Business Court Blast