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

Daniel Jones signed a blank application for a homeowner’s insurance policy, trusting his agent, J. Kim Hatcher Insurance Agencies, Inc. (Hatcher), to complete it accurately. Jones relied on Hatcher’s assurance based on their prior dealings and the commission Hatcher would earn. After Hurricane Florence destroyed Jones’s home, his insurer refused to cover the losses, citing material misrepresentations in the application. Jones discovered that Hatcher had omitted the existence of a pond and understated the property size.Jones sued Hatcher for negligence and gross negligence, among other claims. Hatcher moved to dismiss the ordinary negligence claim under Rule 12(b)(6), arguing contributory negligence. The trial court granted Hatcher’s motion, but the Court of Appeals reversed, finding that dismissal was not warranted as the complaint did not necessarily defeat Jones’s claim for ordinary negligence. The Court of Appeals also affirmed the dismissal of Jones’s claim for punitive damages.The Supreme Court of North Carolina reviewed the case. It agreed with the Court of Appeals that Jones’s complaint did not show contributory negligence as a matter of law, as the factual circumstances could support that Jones acted with ordinary prudence in trusting Hatcher. The court also found that Jones’s complaint sufficiently alleged a claim for punitive damages based on Hatcher’s willful and wanton conduct, giving Hatcher adequate notice of the claims. Therefore, the Supreme Court affirmed the Court of Appeals’ decision on the contributory negligence issue and reversed its decision on the punitive damages issue. View "Jones v. J. Kim Hatcher Ins. Agencies, Inc" 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

During the Fall 2020 semester, amid the COVID-19 pandemic, North Carolina State University (NCSU) and the University of North Carolina at Chapel Hill (UNC-CH) transitioned to online classes and closed their campuses. Students, including the plaintiffs, sought refunds for mandatory fees and parking permits paid for services and facilities they could no longer access. The Board of Governors of the University of North Carolina moved to dismiss the lawsuit, citing sovereign immunity, which generally protects the State and its agencies from being sued.The Superior Court of Wake County denied the motion to dismiss the breach of contract claims but dismissed the constitutional claims. The Court of Appeals affirmed this decision, holding that sovereign immunity does not apply to valid contract claims against the State. The appellate court found that the plaintiffs had sufficiently alleged that implied contracts existed between them and the universities for the provision of services and facilities funded by the fees.The Supreme Court of North Carolina reviewed the case and agreed with the Court of Appeals that sovereign immunity does not bar the breach of contract claims at this stage. However, the Supreme Court clarified that the plaintiffs had alleged the existence of express contracts, not implied ones. The court held that the amended complaint sufficiently alleged that the universities made offers to provide specific services and facilities in exchange for mandatory fees, which the plaintiffs accepted by paying those fees. Therefore, the court modified and affirmed the judgment of the Court of Appeals, allowing the breach of contract claims to proceed. View "Lannan v. Bd. of Governors of the Univ. of N.C" on Justia Law

A clothing retailer, Cato Corporation, with over 1,300 stores, purchased an "all-risk" commercial property insurance policy from Zurich American Insurance Company in July 2019. In the spring of 2020, Cato alleged that the COVID-19 virus and related government orders forced it to close or severely curtail operations, causing significant revenue losses and expenses for remediation and reconfiguration of its stores. Cato sought coverage for these losses under its insurance policy, but Zurich refused, leading Cato to file a lawsuit seeking a declaratory judgment and damages for breach of contract and violations of North Carolina's Unfair and Deceptive Trade Practices Act.The Superior Court of Mecklenburg County dismissed Cato's claims on a Rule 12(b)(6) motion, relying on the Court of Appeals' decision in North State Deli, LLC v. Cincinnati Insurance Co. The Court of Appeals affirmed the dismissal, concluding that tangible alteration to the property was necessary to recover for a "direct physical loss of or damage" to property, which Cato failed to allege sufficiently.The Supreme Court of North Carolina reviewed the case and agreed with the Court of Appeals' decision to affirm the dismissal but disagreed with its reasoning. The Supreme Court concluded that Cato sufficiently alleged a "direct physical loss of or damage" to property under the precedent set in North State Deli. However, the Court found that the viral contamination exclusion in Cato's policy precluded coverage for the alleged losses. Therefore, the Supreme Court modified the Court of Appeals' decision but affirmed its judgment dismissing Cato's claims. View "Cato Corp. v. Zurich American Insurance Co." on Justia Law

Circle of Seven, LLC, left a Dodge Ram truck on a foreclosed property. The new property owner hired Bottoms Towing & Recovery to remove the truck. Bottoms Towing later sought to sell the truck to cover unpaid towing and storage fees. Circle of Seven contested the sale and the lien amount, arguing that the towing company had used the truck without authorization, which should reduce the lien.The Superior Court of Nash County held a hearing where Circle of Seven presented testimony from its managing member and an employee. The court found that Bottoms Towing had driven the truck and made unnecessary alterations, reducing the lien by $1,427.14 for maintenance and $62.50 for unauthorized use. Circle of Seven appealed, claiming the reduction was insufficient.The North Carolina Court of Appeals affirmed the trial court's decision, with a divided opinion. The majority found that the trial court's findings were supported by competent evidence. The dissent argued that Bottoms Towing unlawfully converted the truck for personal use and that the lien should be reduced based on the truck's loss in market value due to this conversion.The North Carolina Supreme Court reviewed the case based on the dissent. The Court held that it could not address the dissent's theory because Circle of Seven had not raised the conversion argument or presented evidence on the truck's value in the lower courts. The Court emphasized that appellate courts should not address issues not raised by the parties. Consequently, the Supreme Court affirmed the decision of the Court of Appeals. View "Bottoms Towing & Recovery, LLC v. Circle of Seven, LLC" on Justia Law

The case involves a dispute over a contract between a plaintiff, Pamela Phillips, and the defendant, Charlotte Metro Credit Union. In 2014, Phillips opened a checking account with the Credit Union and agreed to a standard membership agreement. This agreement included a "Notice of Amendments" provision, which allowed the Credit Union to change the terms of the agreement upon notice to Phillips. In 2021, the Credit Union amended its membership agreement to require arbitration for certain disputes and to waive members' right to file class actions. Phillips did not opt out of this amendment within the given 30-day window. Later that year, Phillips filed a class action complaint against the Credit Union for the collection of overdraft fees on accounts that were never overdrawn. The Credit Union responded by filing a motion to stay the action and compel arbitration.The trial court denied the Credit Union's motion to stay and compel arbitration, concluding that the "Notice of Amendments" provision did not permit the Credit Union to unilaterally add an arbitration provision. The Credit Union appealed this decision to the Court of Appeals, which reversed the trial court's determination and remanded the case to the trial court to stay the action pending arbitration.The Supreme Court of North Carolina affirmed the decision of the Court of Appeals. The court concluded that the Arbitration Amendment was within the universe of terms of the contract between the parties, and thus complies with the implied covenant of good faith and fair dealing and does not render the contract illusory. As such, the Arbitration Amendment is a binding and enforceable agreement between Phillips and the Credit Union. View "Canteen v. Charlotte Metro Credit Union" 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

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