Kane v. Moore

 Kane v. Moore, 

.


 STATE OF NORTH CAROLINA                  IN THE GENERAL COURT OF JUSTICE
                                               SUPERIOR COURT DIVISION
 WAKE COUNTY                                         17-CVS-13761

 JOHN McCORMICK KANE,
 MICHAEL PATRICK O’DONNELL,
 and SKELTON & ASSOCIATES,
 LP, derivatively on behalf of
 LOOKOUT CAPITAL, LLC,
 LOOKOUT CAPITAL BETA
 INVESTMENT, LLC, et al.,

                            Plaintiffs,
       v.
                                               ORDER AND OPINION ON
 WILLIAM M. MOORE, W.                         DEFENDANTS’ MOTIONS TO
 MERRETTE MOORE, and                         DISMISS PURSUANT TO RULE
 TIDEWATER EQUITY PARTNERS,                            12(b)(6)
 LLC,

                          Defendants,
       and

 LOOKOUT CAPITAL, LLC,
 LOOKOUT CAPITAL BETA
 INVESTMENT, LLC, et al.,

                Nominal Defendants.

      THIS MATTER comes before the Court on Defendants William M. Moore’s

(“Bill Moore”) and W. Merrette Moore’s (“Merrette Moore”) Motion to Dismiss Verified

Amended Derivative Complaint Under Rule 12(b)(6) (“Moores’ Motion”, ECF No. 42)

and on Defendant Tidewater Equity Partners, LLC’s (“Tidewater”) Partial Motion to

Dismiss Amended Complaint Under Rule 12(b)(6) (“Tidewater’s Motion”, ECF No. 44)

(collectively, Moores’ Motion and Tidewater’s Motion are “the Motions”).

      THE COURT, having considered the Motions, the briefs filed in support of and

in opposition to the Motions, the arguments of counsel at the hearing, and other
appropriate matters of record, CONCLUDES that the Motions should be GRANTED,

in part, and DENIED as moot, in part, in the manner and for the reasons set forth

below.

         Ellis & Winters LLP, by Paul K. Sun and Kelly M. Dagger, for Plaintiff Michael
         Patrick O’Donnell.

         Ward and Smith, P.A., by Gary J. Rickner and Marla S. Bowman for
         Defendants William M. Moore and W. Merrette Moore.

         Parry Tyndall White, by K. Alan Parry and Michelle M. Walker for Defendant
         Tidewater Equity Partners, LLC.

McGuire, Judge.


                   I.     FACTUAL AND PROCEDURAL BACKGROUND

         1.    The Court previously provided a thorough statement of facts related to

this matter in its Order and Opinion on Defendants’ Motion to Dismiss Pursuant to

Rule 12(b)(1) (“Rule 12(b)(1) Order”). (ECF No. 71; Kane v. Moore, 

 (N.C. Super. Ct. Nov. 26, 2018).) The Court recites herein only those facts

necessary for the disposition of the Motions. All facts are drawn from the Verified

Amended Derivative Complaint. (“VADC”, ECF No. 36.)

         2.    This lawsuit arises out of disputes between former Plaintiffs John

McCormick Kane (“Kane”) and Skelton & Associates, LP (“Skelton”)1, and remaining

Plaintiff Michael Patrick O’Donnell (“O’Donnell” or “Plaintiff”) (together, Kane,

Skelton and O’Donnell are referred to as “the Original Plaintiffs”); and William and

Merrette Moore arising from their business relationships as members of Nominal


1 As discussed more fully below, the Court dismissed all derivative claims brought by Kane

and Skelton in the Rule 12(b)(1) Order.
Defendant Lookout Capital, LLC (“Lookout”). Lookout is a private equity firm

operating in North Carolina. Bill Moore and Merrette Moore (collectively, Bill Moore

and Merrette Moore are referred to as “the Moores”) formed Lookout as a Delaware

limited liability company on March 10, 2010. The Moores were the sole managers of

Lookout.

      3.     Lookout identified potential investment opportunities for its members,

and then allowed members to decide whether to “opt in” or “opt out” of each proposed

investment presented by Lookout.       Lookout itself did not invest in any of the

investment opportunities it found for its members. Once Lookout committed to a

particular investment opportunity, it created a separate North Carolina limited

liability company exclusively for the purpose of collecting the Lookout members’

investment funds and purchasing and retaining the ownership interest in the

associated business.    Former Nominal Defendants Beta Investment, LLC; LC

Gamma, LLC; LC Delta Investment, LLC; LC Epsilon Investment, LLC; LC Eta

Investment, I, LLC; LC Theta Investment, LLC; LC Theta Investment II, LLC; and

LC Capitola Investment, LLC (collectively the “Investment Entities”) are the limited

liability companies formed to facilitate the separate investments.2 In addition to

being members in Lookout, each of the Original Plaintiffs invested in some of the

Investment Entities (together, Lookout and the Investment Entities are called “the

Nominal Defendants”).




2 As discussed more fully below, the Court dismissed all derivative claims purportedly
brought on behalf of the Investment Entities in the Rule 12(b)(1) Order.
      4.      In or around May 2016, while he was still serving as a manager of

Lookout, Merrette Moore formed Tidewater, a North Carolina limited liability

company. The Moores are members of Tidewater and Merrette Moore is the manager.

Plaintiff alleges that Tidewater competes with Lookout in the North Carolina private

equity market. Plaintiff further alleges that Merrette Moores’ “management and

control of both Lookout and Tidewater constitutes a conflict of interest” and “a

violation of Lookout’s Operating Agreement.” (ECF 36, at ¶ 93.) Plaintiff further

alleges that Merrette Moore, with Bill Moore’s knowledge and consent, has breached

fiduciary duties to Lookout and breached the Lookout Operating Agreement by

usurping and diverting corporate opportunities from Lookout to Tidewater, and by

damaging Lookout’s business reputation. (Id. at ¶¶ 93–94, 104–05, 110, 131–35.)

      5.      Plaintiff also alleges, inter alia, that the Moores, and particularly

Merrette Moore mismanaged Lookout, breached Lookout’s Operating Agreement,

breached fiduciary duties owed to Lookout (ECF No. 36, at ¶¶ 136–41, 154–76), and

mismanaged and breached fiduciary duties owed to the Investment Entities. (Id. at

¶¶ 142–53.)

      6.      The VADC was filed on March 7, 2018. In the VADC, the Original

Plaintiffs made claims derivatively on behalf of the Nominal Defendants against the

Moores for: breach of fiduciary duty under 6 Del. C. § 18-1104 (ECF No. 36, at ¶¶ 177–

85); breach of operating agreement under 6 Del. C. § 18-101 (Id. at ¶¶ 186–91); breach

of implied covenant of good faith and fair dealing (Id. at ¶¶ 192–98); and waste of

corporate assets (Id. at ¶¶ 209–16). The Original Plaintiffs made claims derivatively
on behalf of the Nominal Defendants against Tidewater for: aiding and abetting

breach of fiduciary duty (Id. at ¶¶ 199–208); tortious interference with contract (Id.

at ¶¶ 217–27); and tortious interference with prospective economic advantage (Id. at

¶¶ 228–36).    The Original Plaintiffs made claims derivatively on behalf of the

Nominal Defendants against both the Moores and Tidewater for unfair and deceptive

trade practices pursuant to 

 (“UDTPA”) (hereinafter the North

Carolina General Statutes are referred to as “G.S.”) (Id. at ¶¶ 237–45). Finally, the

Original Plaintiffs made claims derivatively on behalf of the Nominal Defendants

against Merrette Moore and Tidewater for unjust enrichment. (Id. at ¶¶ 246–57.)

      7.      On April 9, 2018, Defendants filed a Rule 12(b)(1) Motion to Dismiss

Verified Amended Complaint.       (“Rule 12(b)(1) Motion”, ECF No. 40.)      The Rule

12(b)(1) Motion sought dismissal of all claims against the Moores and Tidewater on

the grounds that the Original Plaintiffs lacked standing to pursue derivative claims

on behalf of the Nominal Defendants. The Parties fully briefed the Rule 12(b)(1)

Motion.

      8.       On April 9, 2018, the Moores also filed the Moores’ Motion.         The

Moores’ Motion seeks (a) dismissal of the derivative claims brought by the Original

Plaintiffs on behalf of the Investment Entities, under Rule 12(b)(6), on the grounds

that the Original Plaintiffs lack standing to pursue derivative claims on behalf of the

Investment Entities, (ECF No. 42, at pp. 2–4), and (b) dismissal of the derivative

claim brought by the Original Plaintiffs on behalf of Lookout for violation of the

UDTPA for failure to state a claim for relief. (Id.) The Moores filed an accompanying
Brief in Support of the Moores’ Motion (ECF No. 43.) The Original Plaintiffs filed a

Brief in Opposition to the Moores’ Motion, (ECF No. 50), and the Moores filed a Reply

Brief in Support of the Moores’ Motion. (ECF No. 55.)

       9.      On April 9, 2018, Tidewater filed Tidewater’s Motion.           Tidewater’s

Motion seeks (a) dismissal of derivative claims brought on behalf of the Investment

Entities, under Rule 12(b)(6), on the grounds that the Original Plaintiffs lacked

standing to pursue derivative claims on behalf of the Investment Entities, (ECF No.

44, at p. 2), (b) dismissal of the derivative claims brought on behalf of the Investment

Entities under Rule 12(b)(6) for tortious interference with contract, tortious

interference with prospective economic advantage, and unjust enrichment for failure

to state a claim for relief, and (c) dismissal of the Original Plaintiffs’ derivative claims

on behalf of Lookout for aiding and abetting breach of fiduciary duty and for violation

of the UDTPA. (Id.) Tidewater filed an accompanying Brief in Support of Tidewater’s

Motion.      (ECF No. 45.)    The Original Plaintiffs filed a Brief in Opposition to

Tidewater’s Motion, (ECF No. 51), and Tidewater filed a Reply Brief in Support of

Tidewater’s Motion. (ECF No. 56.)

       10.     The Court held a hearing on the Rule 12(b)(1) Motion, the Moores’

Motion, and Tidewater’s Motion.

       11.     On November 26, 2018, the Court issued the Rule 12(b)(1) Order. The

Rule 12(b)(1) Order granted, in part, and denied, in part, the Rule 12(b)(1) Motion.

, at *35–36. The Court dismissed without prejudice all of the

Original Plaintiffs’ derivative claims brought on behalf of the Investment Entities,
and Kane’s and Skelton’s derivative claims brought on behalf of Lookout. 

 The

Court denied the Rule 12(b)(1) Motion to the extent it sought dismissal of O’Donnell’s

derivative claims brought on behalf of Lookout. Id. at *36. Accordingly, the only

claims remaining in this lawsuit are O’Donnell’s derivative claims brought on behalf

of Lookout.

      12.     The Motions are now ripe for disposition.

                                      II.    ANALYSIS

      A. Rule 12(b)(6) Standard

      13.     In ruling on a motion to dismiss pursuant to Rule 12(b)(6), the Court’s

inquiry is “whether, as a matter of law, the allegations of the complaint, treated as

true are sufficient to state a claim upon which relief may be granted under some legal

theory, whether properly labeled or not.” Harris v. NCNB Nat’l Bank, 

, 

 (1987). Dismissal of a claim pursuant to Rule 12(b)(6)

is proper “(1) when the complaint on its face reveals that no law supports plaintiff’s

claim; (2) when the complaint reveals on its face the absence of fact sufficient to make

a good claim; [or] (3) when some fact disclosed in the complaint necessarily defeats

the plaintiff’s claim.” Oates v. JAG, Inc., 

, 

(1985). Otherwise, “a complaint should not be dismissed for insufficiency unless it

appears to a certainty that plaintiff is entitled to no relief under any state of facts

which could be proved in support of the claim.” Sutton v. Duke, 

, 

 (1970) (emphasis omitted).
      14.    The Court construes the VADC liberally and accepts all allegations as

true. Laster v. Francis, 

, 

 (2009). However,

the Court is not required “to accept as true allegations that are merely conclusory,

unwarranted deductions of fact, or unreasonable inferences.” Good Hope Hosp., Inc.

v. N.C. Dep’t of Health & Human Servs., 

, 

(2005).

      B. The Moores’ Motion

      15.     The Court has dismissed the Original Plaintiffs’ derivative claims

brought on behalf of the Investment Entities in the Rule 12(b)(1) Order, and,

therefore, the Moores’ motion to dismiss Plaintiff’s derivative claims brought on

behalf of the Investment Entities pursuant to the Rule 12(b)(6) is moot. However,

the Moores have also moved for dismissal of Plaintiff’s derivative claim brought on

behalf of Lookout for violation of the UDTPA. (ECF No. 42.)

      16.    Plaintiff alleges that the Moores’ breaches of fiduciary duties owed to

Lookout and breaches of Lookout’s Operating Agreement “constitute unfair and

deceptive acts in violation of North Carolina law.” (ECF No. 36, at ¶ 239.) Plaintiff

also alleges that

             Defendants’ breaches of contract and fiduciary duty were
             accompanied by aggravating circumstances, as they made
             misrepresentations to Lookout’s members regarding the
             nature of the company, formed Tidewater as a competing
             private equity firm to Lookout, prematurely and
             improperly discontinued Lookout’s investment activities,
             damaged Lookout’s reputation, engaged in self-dealing,
             and misappropriated Lookout’s assets and investment
             opportunities to the benefit of Defendants and the
             detriment of Lookout.
(Id. at ¶ 240.) With the exception of the reference to “misrepresentations to Lookout

members regarding the nature of the company,” this allegation is essentially a

restatement of the allegations supporting Plaintiff’s claims brought on behalf of

Lookout against the Moores for breach of fiduciary duty (see id. at ¶ 182), breach of

operating agreement (see id. at ¶ 190), breach of implied covenant of good faith and

fair dealing (see id. at ¶ 196), and waste of corporate assets (see id. at ¶ 211). The

Moores have not moved to dismiss any of these claims.

      17.    The Moores argue that Plaintiff’s UDTPA claim should be dismissed

because their alleged acts were not in or affecting commerce, and because Plaintiff’s

claim for breach of contract is insufficient to support a UDTPA claim because Plaintiff

does not allege aggravating circumstances accompanying the breaches. (ECF No. 43,

at pp. 13–17.)

      18.    The UDTPA declares unlawful any “[u]nfair methods of competition in

or affecting commerce, and unfair or deceptive acts or practices in or affecting

commerce.” To state a claim under G.S. § 75-1.1, a plaintiff must allege “(1) [that]

the defendants committed an unfair or deceptive act or practice, or an unfair method

of competition, (2) in or affecting commerce, (3) which proximately caused actual

injury to the plaintiff[ ] or to the plaintiffs’ business.” Birtha v. Stonemor, N.C., LLC,

, 

 (2012). “A practice is unfair when it offends

established public policy as well as when the practice is immoral, unethical,

oppressive, unscrupulous, or substantially injurious to consumers, and a practice is

deceptive if it has the capacity or tendency to deceive.” Bumpers v. Cmty. Bank of N.
Va., 

, 

 (2013) (quotation marks omitted). “An act

or practice is deceptive if it has the capacity or tendency to deceive.” Ace Chem. Corp.

v. DSI Transps., 

, 

 (1994) (quotation marks

omitted). Whether an act or practice is unfair or deceptive is ultimately a question

of law for the Court. Songwooyarn Trading Co. v. Sox Eleven, Inc., 

, 

 (2011).

      19.    For purposes of the UDTPA, the term “‘commerce’ includes all business

activities, however denominated, but does not include professional services rendered

by a member of a learned profession.” G.S. § 75-1.1(b). The phrase “‘[b]usiness

activities’ [ ] connotes the manner in which businesses conduct their regular, day-to-

day activities, or affairs, such as the purchase and sale of goods, or whatever other

activities the business regularly engages in and for which it is organized.” White v.

Thompson, 

, 

 (2010). Additionally, in Alexander

v. Alexander, 

, 

 (2016), the North Carolina

Court of Appeals held that:

             [a]lthough this statutory definition of commerce is
             expansive, the [UDTPA] is not intended to apply to all
             wrongs in a business setting. In White, our Supreme Court
             emphasized that the UDTPA is not focused on the internal
             conduct of individuals within a single market participant,
             that is, within a single business[,] but rather the General
             Assembly intended the Act’s provisions to apply to
             interactions between market participants.

, 

, at *7–8 (citing HAJMM Co. v. House

of Raeford Farms, Inc., 

, 

 (1991) and White, 

, 

) (internal citations and quotation marks omitted); see
also Weaver Inv. Co. v. Pressly Dev. Assocs., 

, 

 (2014) (dismissing plaintiff's UDTPA claim because “defendants’ misconduct

within the confines of the partnership was not ‘in or affecting commerce . . . .’”).

      20.    In addition, it is well established that “[a] mere breach of contract, even

if intentional, is not an unfair or deceptive act under [the UDTPA].” Bob Timberlake

Collection, Inc. v. Edwards, 

, 

 (2006) (citing

Bartolomeo v. S.B. Thomas, Inc., 

 (4th Cir. 1989) and Skinner v. E.

F. Hutton & Co., Inc., 

, S.E.2d 236, 241 (1985)). In order for a

breach of contract to provide the basis for a claim for unfair or deceptive trade

practices, “a party must show substantial aggravating circumstances attending the

breach.” Bob Timberlake, 

, 

; see also Post v.

Avita Drugs, LLC, 

, *11–12 (N.C. Super. Ct. Oct. 11, 2017)

(stating that “only where the circumstances of the breach exhibit clear deception are

they sufficiently egregious to impose [UDTPA] liability[,]” and citing cases discussing

potential aggravating circumstances).

      21.    The Court concludes that Plaintiff’s allegations that the Moores

breached their fiduciary duties to Lookout involve conduct purely internal to Lookout,

a single market participant, and cannot support a claim for violation of the UDTPA.

Plaintiff alleges that the Moores breached their duties primarily by mismanaging

Lookout, breaching Lookout’s Operating Agreement, and forming Tidewater while

still managers of Lookout. The alleged conduct did not impact anyone other than

Lookout and its members.
      22.     Plaintiff argues that the allegations that the Moores usurped or diverted

opportunities belonging to Lookout and gave such opportunities to Tidewater are

sufficient to sustain the UDTPA claim. (ECF No. 50, at pp. 16–17.) Plaintiff is

incorrect.   North Carolina courts have consistently held that allegations that a

corporate manager breached fiduciary duties by diverting opportunities from a

corporation to themselves, or to other third-party businesses the manager controlled,

does not amount to unfair conduct “in or affecting commerce.” E.g., Alexander, 

, 

 (holding that a majority

shareholder’s “misappropriation of [corporate] funds through payments made directly

to himself and his family members as well as payments made to cover some of his

own personal expenses” including “’land rent’ in connection with the storage of the

company’s vehicles . . . are more properly classified as the misappropriation of

corporate funds within a single entity rather than commercial transactions between

separate market participants ‘in or affecting commerce’”); Chisum v. Campagna, 

, *36–37 (N.C. Super. Ct. Nov. 7, 2017) (holding the plaintiff’s claim

that defendants diverted corporate opportunities and assets from LLCs in which

plaintiff had an interest to third-party companies in which defendants were sole

owners did “not allege that [defendants] directed any unfair or deceptive conduct

towards or in their interactions with the third-party [companies], but only that the

diversion of assets was a breach” of the defendants’ duties to the LLC in which

plaintiff had an interest); Bandy v. Gibson, 

, at *21–22 (N.C.

Super. Ct. July 26, 2017) (stating that the allegation that defendant-shareholder
diverted corporate funds to her husband and her husband’s company “was incidental

to the alleged unfair conduct that took place solely within [the corporation]” and was

not “in or affecting commerce”). The allegations that the Moores diverted Lookout’s

opportunities to Tidewater do not support the claim that these acts were in or

affecting commerce.

      23.       Plaintiff further contends that the Moores misrepresented to certain

Lookout members that investment opportunities were being presented by Lookout

when, in fact, the Moores were soliciting the investments for Tidewater, and that

these acts were in commerce. (ECF No. 50, at p. 17.) Again, however, Plaintiff alleges

that the misrepresentations were directed only to Lookout’s members, arguably in

breach of the Moores’ fiduciary duties to Lookout, and not any third-party market

participants.

      24.       Plaintiff also argues that the VADC alleges aggravating circumstances

surrounding the Moores’ breaches of the Lookout Operating Agreement that support

a claim under the UDTPA, (ECF No. 50, at pp. 18–20), and direct the Court to the

allegations in paragraph 240 of the VADC. (Id. at p. 19.) Again, these allegations

merely restate the allegations underlying Plaintiff’s claim for breach of fiduciary

duty, and do not state any additional aggravating conduct surrounding the alleged

breaches of the Operating Agreement.

      25.        Therefore, the Moores’ Motion seeking dismissal of Plaintiff’s

derivative claim brought on behalf of Lookout against the Moores for violation of the

UDTPA should be GRANTED.
      C. The Tidewater Motion

      26.     The Court has dismissed the Original Plaintiffs’ derivative claims

brought on behalf of the Investment Entities and, therefore, Tidewater’s motion to

dismiss the Original Plaintiffs’ derivative claims brought on behalf of the Investment

Entities, pursuant to the Rule 12(b)(6), for tortious interference with contract,

tortious interference with prospective economic advantage, and unjust enrichment is

moot. Tidewater has not moved to dismiss these claims to the extent that they are

brought on behalf of Lookout. (ECF No. 44, at p. 2.) However, Tidewater has also

moved for dismissal of Plaintiff’s derivative claims brought on behalf of Lookout for

aiding and abetting breach of fiduciary duty and for violation of the UDTPA. (Id. at

p. 2.) The Court will now consider the motion to dismiss these claims.

             a. Aiding and abetting breach of fiduciary duty

      27.    Plaintiff alleges that Tidewater “is a third party to the fiduciary

relationship between the Moores and Lookout’s members, and . . . Tidewater

knowingly participated in the Moores’ breach of their fiduciary duties to Lookout and

its members.” (ECF No. 36, at ¶¶ 203–04.)

      28.    Defendants argue, and Plaintiff agrees, that “North Carolina’s appellate

courts have not, to date, expressly recognized a cause of action for aiding and abetting

breach of fiduciary duty.” Islet Scis., Inc. v. Brighthaven Ventures, LLC, 

, at *14 (N.C. Super. Ct. Jan. 12, 2017). At best, “[t]he validity of an aiding

and abetting a breach of fiduciary duty claim brought against a corporation for the

actions of its directors is unsettled in North Carolina.” Corwin v. British Am. Tobacco
PLC, 

, 

 (Dec. 20, 2016)

(emphasis added).

      29.    However, former Chief Judge Gale of this Court recently issued a

decision holding squarely “that North Carolina does not recognize a claim of aiding

and abetting breach of fiduciary duty.” Zloop, Inc. v. Parker Poe Adams & Bernstein,

LLP, 

, at *33 (N.C. Super. Ct. Feb. 16, 2018). While recognizing

that this Court’s holdings are not binding precedent in this State, the Court

nevertheless finds Judge Gale’s reasoning and conclusion highly persuasive, and also

holds that North Carolina does not recognize a claim of aiding and abetting breach of

fiduciary duty. Accordingly, to the extent that Tidewater’s Motion seeks dismissal of

Plaintiff’s derivative claim brought on behalf of Lookout for aiding and abetting a

breach of fiduciary duty, it should be GRANTED.

             b. Violation of the UDTPA

      30.    Plaintiff’s UDTPA claim against Tidewater is based exclusively on its

claim that Tidewater aided and abetted the Moores’ breaches of their fiduciary duties.

(ECF No. 36, at ¶ 239.) Plaintiff does not allege any additional unfair or deceptive

conduct by Tidewater, and makes no argument that the UDTPA claim against

Tidewater can survive if the claim for aiding and abetting breach of fiduciary duty is

dismissed. (ECF No. 51, at pp. 21–22.)

      31.    Because the Court has dismissed Plaintiff’s claim against Tidewater for

aiding and abetting breach of fiduciary duty, the claim for violation of the UDTPA

also should be dismissed. B & F Slosman v. Sonopress, Inc., 

,


 (2001) (“The essence of plaintiff’s [UDTPA] claim is that

defendant committed fraud . . . . Having determined that plaintiff has failed to make

a prima facie case with respect to [the fraud claim], we likewise conclude plaintiff has

not established a claim for unfair and deceptive business practices.”); Combs &

Assocs. v. Kennedy, 

, 

 (2001) (“[P]laintiff’s

claim that defendants engaged in unfair and deceptive trade practices rests with its

claims for misappropriation of trade secrets, tortious interference with contracts and

civil conspiracy. Having determined that the trial court properly granted summary

judgment on each of these claims, we likewise conclude that no claim for unfair and

deceptive trade practices exists.”).

      32.    Therefore, Tidewater’s motion to dismiss Plaintiffs’ claim for violation

of the UDTPA should be GRANTED.

                                       D. CONCLUSION

      THEREFORE, IT IS ORDERED that the Moores’ Motion is GRANTED, in

part, and DENIED as moot, in part, as follows:

      1.     The Moores’ Motion to dismiss Plaintiff’s derivative claim brought on

             behalf of Lookout for violation of the UDTPA is GRANTED, and the

             claim is DISMISSED.

      2.     The Moores’ Motion to dismiss Plaintiff’s derivative claims brought on

             behalf of the Investment Entities DENIED as moot.
      IT IS FURTHER ORDERED that the Tidewater Motion is GRANTED, in part,

and DENIED as moot, in part, as follows:

      3.    Tidewater’s Motion to dismiss Plaintiff’s derivative claim brought on

            behalf of Lookout for aiding and abetting breach of fiduciary duty is

            GRANTED, and the claim is DISMISSED.

      4.    Tidewater’s Motion to dismiss Plaintiff’s derivative claim brought on

            behalf of Lookout for violation of the UDTPA is GRANTED, and the

            claim is DISMISSED.

      5.    Tidewater’s Motion to dismiss Plaintiffs’ derivative claims brought on

            behalf of the Investment Entities is DENIED as moot.



SO ORDERED, this the 4th day of December, 2018.




                                      /s/ Gregory P. McGuire
                                     Gregory P. McGuire
                                     Special Superior Court Judge for
                                     Complex Business Cases