Justia North Carolina Supreme Court Opinion Summaries

Cherry Oil is a closely held corporation in eastern North Carolina, primarily owned and managed by members of the Cherry and Mauck families. Armistead and Louise Mauck, who together own 34% of the company’s shares, became involved in the business after Armistead was invited to join during a period of financial difficulty. In 1998, the families formalized their relationship through a Shareholder Agreement, which included provisions allowing either party to force a buyout of shares at fair market value. Over time, disputes arose regarding management and succession, culminating in the Maucks’ removal from the board and Cherry Oil’s attempt to buy out their shares. The buyout process stalled, leaving the Maucks as minority shareholders no longer employed by the company.The Maucks filed suit in Superior Court, Lenoir County, asserting claims for judicial dissolution under N.C.G.S. § 55-14-30, breach of fiduciary duty, constructive fraud, and breach of the Shareholder Agreement. The case was designated a mandatory complex business case and assigned to the North Carolina Business Court. The Business Court dismissed most claims, including the judicial dissolution claim for lack of standing, finding that the Shareholder Agreement’s buyout provision provided an adequate remedy. It also dismissed other claims for reasons such as untimeliness and insufficient factual allegations. The court later granted summary judgment to defendants on the remaining claims, concluding that the actions taken by the Cherry family were valid corporate acts and that the Maucks had not demonstrated breach of duty or contract.On appeal, the Supreme Court of North Carolina held that the Maucks did have standing to seek judicial dissolution but affirmed the dismissal of that claim under Rule 12(b)(6), finding that the Shareholder Agreement’s buyout provision provided a sufficient remedy and that the complaint did not allege facts showing dissolution was reasonably necessary. The Supreme Court otherwise affirmed the Business Court’s rulings. View "Mauck v. Cherry Oil Co." on Justia Law

Plaintiff and defendant were business associates who sought to purchase three restaurants known as Jib Jab. Plaintiff, with a background in investing, initiated negotiations and sought a partner with restaurant experience, leading to an oral agreement with defendant. Plaintiff was to handle acquisition terms and financing, while defendant would manage operations. No written partnership agreement was executed. Both parties made several unsuccessful attempts to secure financing, including SBA loans, but neither was willing to personally guarantee the loan, and plaintiff refused to pay off defendant’s unrelated SBA debts. Eventually, defendant proceeded alone, secured financing, and purchased Jib Jab through an entity he formed, without plaintiff’s involvement.Plaintiff filed suit in the Superior Court, Mecklenburg County, alleging the formation of a common law partnership and asserting direct and derivative claims against defendant and the purchasing entity, including breach of partnership agreement, breach of fiduciary duty, tortious interference, misappropriation of business opportunity, and requests for judicial dissolution and accounting. Defendants moved for partial judgment on the pleadings, resulting in dismissal of all derivative claims, certain direct claims, and claims for constructive trust. The remaining claims were plaintiff’s direct claims for breach of partnership agreement, breach of fiduciary duty, tortious interference, and claims for judicial dissolution and accounting.On appeal, the Supreme Court of North Carolina reviewed the Business Court’s orders. The Supreme Court affirmed the dismissal of derivative claims, holding that North Carolina law does not permit derivative actions by a general partner on behalf of a general partnership. The Court also affirmed the dismissal of conclusory tortious interference claims and upheld the Business Court’s decision to strike portions of plaintiff’s affidavit and disregard an unsworn expert report. Finally, the Supreme Court modified and affirmed summary judgment for defendants, holding that no partnership existed due to lack of agreement on material terms, and that plaintiff failed to show he could have completed the purchase but for defendant’s actions. View "Cutter v. Vojnovic" on Justia Law

Plaintiff Vanguard Pai Lung, LLC, a manufacturer and distributor of high-speed circular knitting machines, sued its former president and CEO, William Moody, and his associated entities, Nova Trading USA, Inc., and Nova Wingate Holdings, LLC. The lawsuit stemmed from an investigation by Pai Lung Machinery Mill Co. Ltd., which owns a majority interest in Vanguard Pai Lung, revealing alleged fraud and embezzlement by Moody. Plaintiffs brought sixteen claims, including fraud, conversion, embezzlement, unfair and deceptive trade practices, and unjust enrichment. Defendants counterclaimed with twelve claims primarily based on alleged breaches of contract.The Superior Court of Mecklenburg County, designated as a mandatory complex business case, heard the case. After a jury found in favor of the plaintiffs on several claims, including fraud and conversion, defendants filed post-trial motions, including a motion for judgment notwithstanding the verdict (JNOV). The business court ruled that several issues raised in the JNOV motion were not preserved because they were not included in the directed verdict motion. The court also denied defendants' other post-trial motions on the merits.The Supreme Court of North Carolina reviewed the case. The court affirmed the business court's decision, endorsing the rule that to preserve an issue for a JNOV motion under Rule 50(b), the movant must have timely moved for a directed verdict on that same issue. The court agreed that the business court correctly determined that several of defendants' arguments were not preserved and properly rejected the remaining post-trial arguments on the merits. The Supreme Court affirmed the judgment and post-trial orders of the business court. View "Vanguard Pai Lung, LLC v. Moody" on Justia Law

Two brothers, Jim and Charles, manage two LLCs, JHD Properties, LLC, and Berry Hill Properties, LLC, which were established by their father as part of his estate plan. Each brother, along with two other siblings, holds a 25% equity interest in the LLCs through individual trusts. The LLCs own approximately sixty-eight acres of undeveloped land in Wake County, North Carolina. The operating agreements of the LLCs require unanimous agreement between the two managers for any binding action. Since 2018, Jim and Charles have been unable to agree on the use or sale of the property, leading to a managerial deadlock.The plaintiffs, James H.Q. Davis Trust and William R.Q. Davis Trust, filed an action seeking judicial dissolution of the LLCs, arguing that it had become impracticable to conduct the business of the LLCs due to the deadlock. The Business Court granted the motion to intervene by the Charles B.Q. Davis Trust and later denied the Charles Trust’s motion to dismiss. Both parties filed cross-motions for summary judgment. The Business Court granted summary judgment in favor of the plaintiffs, concluding that the deadlock made it impracticable to conduct the LLCs' business in conformance with the operating agreements.The Supreme Court of North Carolina reviewed the case and affirmed the Business Court’s decision. The Court held that judicial dissolution was appropriate because the managerial deadlock prevented the LLCs from conducting any economically useful activity and there was no mechanism in the operating agreements to break the deadlock. The Court concluded that it was not practicable for the managers to operate the LLCs in accordance with the operating agreements, thus affirming the grant of summary judgment for the plaintiffs. View "Davis Trust v. JHD Properties, LLC" on Justia Law

The case involves a group of plaintiffs who claimed that the defendant, Bank of America, fraudulently denied them mortgage modifications under the Home Affordable Modification Program (HAMP) and then foreclosed on their homes. The plaintiffs filed their complaint in May 2018 and their amended complaint in March 2019, alleging claims based on common law fraud, fraudulent concealment, intentional misrepresentation, promissory estoppel, conversion, unjust enrichment, unfair and deceptive trade practices, and, in the alternative, negligence.However, the Supreme Court of North Carolina found that the plaintiffs' claims were time-barred by the applicable statutes of limitations. The court held that the statutes of limitations for all of plaintiffs’ claims, except for their unfair and deceptive trade practices claim, started to run at the latest by the date that each plaintiff lost his or her home. Each plaintiff lost his or her home sometime between April 2011 and January 2014. Thus, the latest point in time any plaintiff could have filed a complaint was January 2017, or in the case of an unfair and deceptive trade practices claim, January 2018. Plaintiffs did not file their original complaint until May 2018. Therefore, their claims are time-barred.The court also rejected the plaintiffs' argument that the discovery rule tolled the statute of limitations for their fraud claims beyond the dates of their foreclosures. The court found that the plaintiffs were on notice of the defendant's alleged fraud by the time they lost their homes, and they should have investigated further. The court therefore reversed the decision of the Court of Appeals and affirmed the trial court's dismissal of the plaintiffs' complaint. View "Taylor v. Bank of America, N.A" on Justia Law

The case before the Supreme Court of North Carolina involved a dispute between The Society for the Historical Preservation of the Twentysixth North Carolina Troops, Inc. (plaintiff) and the City of Asheville (defendant). The controversy centered around a monument dedicated to Zebulon Vance, a former North Carolina Governor and Confederate Colonel. The plaintiff, a nonprofit historical preservation organization, raised funds to restore the monument and entered into a donation agreement with the City, whereby the monument was restored and then donated to the City. However, the City later decided to remove the monument, citing it as a public safety threat due to vandalism and threats of toppling.In response, the plaintiff filed a complaint against the City, alleging that the City breached the 2015 donation agreement and seeking a temporary restraining order, preliminary injunction, and a declaratory judgment. The plaintiff argued that both parties had entered into a contract with the intent to preserve the monument in perpetuity. The City filed a motion to dismiss the plaintiff’s complaint for lack of standing and failure to state a claim. The trial court granted the City's motion, and this decision was affirmed by the Court of Appeals.When the case reached the Supreme Court of North Carolina, the court reversed the Court of Appeals’ determination that the plaintiff's breach of contract claim should be dismissed for lack of standing. However, the court noted that the plaintiff had abandoned the merits of its breach of contract claim in its appeal. As such, the court affirmed the dismissal of the plaintiff's claims for a temporary restraining order, preliminary injunction, and declaratory judgment for lack of standing. The court concluded that the plaintiff failed to assert any ground for which it has standing to contest the removal of the monument. View "Soc'y for the Hist. Pres. of the Twenty-sixth N.C. Troops, Inc. v. City of Asheville" on Justia Law

This case was brought before the Supreme Court of North Carolina to determine whether a person who files a motion to claim exempt property after a judgment is entered makes a general appearance in the action and thereby waives objections to the sufficiency of service of process and personal jurisdiction.The plaintiff, John Slattery, alleged that he was induced to invest $500,000 in a sham technology company, Appy City, by defendants Timothy Fields and Melissa Crete. Later, he named additional defendants, including Daisy Mae Barber, alleging they conspired to hide the invested funds by converting them into cryptocurrency. The Business Court entered default judgment against all defendants, including Barber, when they failed to respond to the complaint. Barber first appeared in the case when she filed a motion to claim exempt property. Later, she moved to set aside the entries of default and summary judgment, arguing the Business Court’s judgment was void for lack of personal jurisdiction as she had not been served with process nor appeared in the action before the entry of summary judgment.The Supreme Court of North Carolina held that when a defendant makes a general appearance in an action after the entry of a judgment, she waives any objections to the lack of personal jurisdiction or the sufficiency of service of process if she does not raise those objections at that time. Therefore, Barber, by filing a motion to claim exempt property, made a general appearance in the underlying action and did not raise her objections to personal jurisdiction or the sufficiency of service of process until over three months later. As a result, she waived these objections, and the Business Court’s judgment may be enforced. The decision of the Business Court was affirmed. View "Slattery v. Appy City, LLC" on Justia Law

The Supreme Court of North Carolina was required to decide whether a trial court can refuse to hear oral testimony during a summary judgment hearing on the mistaken belief that the North Carolina Rules of Civil Procedure prohibit the receipt of such testimony. The plaintiff, a corporation, had sued the defendants for breach of a commercial lease, and the defendants counterclaimed for fraud. During the summary judgment hearing, the trial court declined a request by the defendants to introduce live testimony, asserting that it was not permitted during a summary judgment hearing. The defendants appealed, and the Court of Appeals vacated the trial court's summary judgment order and remanded the case, leading to this appeal.The Supreme Court of North Carolina held that a trial court errs if it fails to exercise its discretion under the misapprehension that it has no such discretion, referring to Rule 43(e) of the North Carolina Rules of Civil Procedure that allows for the introduction of live oral testimony during a summary judgment hearing at the discretion of the trial court. The court found that the trial court was mistaken in its belief that it could not allow oral testimony, and this error warranted vacatur and remand for reconsideration. The Supreme Court thereby modified and affirmed the decision of the Court of Appeals to vacate the trial court's summary judgment order and remand the case. View "D.V. Shah Corp. v. VroomBrands, LLC" on Justia Law

In this appeal from the orders and opinions entered in December 2019, February 2020, May 2020, and April 2021 by the superior court after the case was designated a mandatory complex business case, the Supreme Court affirmed in part and reversed in part, holding that remand was required as to some issues.Plaintiffs and Defendants entered into an asset purchase agreement under which three software applications for use in the clinical trial process would be sold to Defendants by Plaintiffs in exchange for stock and $2.5 million. After the deal soured Plaintiffs brought this lawsuit asserting claims for, among other things, breach of contract and negligent misrepresentation. The trial court granted Defendants' motions to dismiss as to some claims and then granted summary judgment for Defendants on all remaining claims. The Supreme Court affirmed the trial court as to all issues except for the order granting summary judgment on the issues of breach of portions of the asset purchase agreement, holding that further discovery was required. View "Value Health Solutions, Inc. v. Pharmaceutical Research Associates, Inc." on Justia Law

In this appeal from the business court judgment denying Defendant's motion for a protective order the Supreme Court affirmed, holding that the trial court did not abuse its discretion.Defendants - a corporate entity and the individual corporate members of that entity - were jointly represented by the same law firm. During a joint conference call with counsel, defendant Nicholas Hurysh secretly recorded the conversation. Hurysh later sought to waive the attorney-client privilege and disclose the contents of the conference call. The corporate entity moved for a protective order. The trial court denied the protective order, concluding that Hurysh held the attorney-client privilege individually and was permitted to waive it. The Supreme Court affirmed, holding (1) there existed a factual dispute concerning the scope of counsel's representation on the conference call, and the trial court correctly resolved the dispute in favor of Hurysh; and (2) the trial court's findings were supported by substantial evidence, and the trial court's ultimate determination was not an abuse of discretion. View "Howard v. IOMAXIS, LLC" on Justia Law