Morris Int’l, Inc. v. Packer,
2021 NCBC 13.
STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
MECKLENBURG COUNTY 20 CVS 2156
MORRIS INTERNATIONAL, INC.,
Plaintiff,
ORDER AND OPINION ON
v. DEFENDANTS ANTHONY WILLIAM
PACKER, PACKER INVESTMENT
ANTHONY WILLIAM PACKER; COMPANY, INC., PA&K, LLC, OLDE
PACKER INVESTMENT BEAU GENERAL PARTNERSHIP, and
COMPANY, INC.; PA&K, LLC;
OLDE BEAU GENERAL KPP, LLC’s MOTION FOR
PARTNERSHIP; KPP, LLC; JUDGMENT ON THE PLEADINGS
KENNINGTON INVESTMENT AND DEFENDANTS
COMPANY, INC.; BARRY POOLE; SHERRI KENNINGTON FAGAN,
LAURA POOLE; SHERRI KRISTI KENNINGTON HALL, KATHY
KENNINGTON FAGAN; KRISTI KENNINGTON DAVIS, and
KENNINGTON HALL; and KATHY KENNINGTON INVESTMENT
KENNINGTON DAVIS, COMPANY, INC.’s SECOND MOTION
FOR JUDGMENT ON THE
Defendants.
PLEADINGS
THIS MATTER is before the Court on Defendants Anthony William Packer
(“Packer”), Packer Investment Company, Inc. (“PIC”), PA&K, LLC (“PA&K”), Olde
Beau General Partnership (“OBGP”), and KPP, LLC’s (“KPP”; collectively Packer,
PIC, OBGP, and KPP are “Packer Defendants”) Motion for Judgment on the
Pleadings (“Packer Defendants’ Motion,” ECF No. 74) and Defendants Sherri
Kennington Fagan (“Fagan”), Kristi Kennington Hall (“Hall”), Kathy Kennington
Davis (“Davis”), and Kennington Investment Company, Inc.’s (“KIC”) Second Motion
for Judgment on the Pleadings (“KIC Motion,” ECF No. 67; collectively,Packer
Defendants’ Motion and the KIC Motion are referred to as 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 on the Motions,
the applicable law, and other appropriate matters of record, CONCLUDES that the
Motions should be GRANTED, in part, and DENIED, in part, for the reasons set forth
below.
Morris Law Firm, PLLC, by Bradley C. Morris, for Plaintiff Morris
International, Inc.
Jerry Meek, Attorney at Law, PLLC, by Gerald F. Meek, for Defendants
Barry Poole and Laura Poole.
James, McElroy & Diehl, P.A., by Fred B. Monroe, for Defendants Sherri
Kennington Fagan, Kristi Kennington Hall, Kathy Kennington Davis,
and Kennington Investment Company, Inc.
Vann Law Firm, P.A., by Christopher M. Vann, for Defendants Anthony
William Packer, Packer Investment Company, Inc., PA&K, LLC, Olde
Beau General Partnership, and KPP, LLC.
McGuire, Judge.
I. FACTS
1. The facts relevant to the determination of the Motions are drawn from
the Amended Complaint. (“Amended Complaint,” ECF No. 4.)
2. This matter arises from the development of property in the Olde Beau
Subdivision in Alleghany County, North Carolina. The Olde Beau Golf and Country
Club is part of the Olde Beau Subdivision. The Olde Beau Subdivision was created
in 1992, but by 2015, “much of its available property . . . [was] still vacant for years
after initial development.” (Amended Complaint, ECF No. 4, at ¶ 13.)
3. The Olde Beau Subdivision property was owned by OBGP. (Id. at ¶ 4.)
The General Partners in OBGP are PIC and KIC. (Id. at ¶¶ 5–6.) Packer is the
President of PIC. (Id. at ¶ 5.) Plaintiff alleges, on information and belief, that KIC
is “controlled by Defendant Sherri Kensington Fagan.” (Id. at ¶ 6.)
4. Packer is also a member of PA&K. PA&K is in the business of
developing residential properties and was involved in developing, managing,
constructing, and selling property in the Olde Beau Subdivision. (Id. at ¶ 3.) In
March 2015, Packer, on behalf of PA&K and OBGP, contacted Plaintiff Morris
International, Inc. (“Plaintiff”), which specializes in the development and marketing
of real estate, to discuss Plaintiff’s potential assistance in developing and marketing
the vacant real property at Olde Beau Subdivision. Specifically, PA&K and OBGP
contemplated creating a luxury RV resort, whereby a portion of the Olde Beau
Subdivision would be developed for sales of individual lots to be owned and used by
owners of luxury motorhome coaches, with improvements, appropriate amenities and
golf club memberships. (Id. at ¶ 14.)
5. In April 2015, Packer, “on behalf of PA&K and OBGP,” met with
Plaintiff, including its representative Sid Morris (“Morris”), to discuss the project.
Packer “personally and directly represented to Plaintiff’s representatives . . . that
Packer was acting on behalf of and with the full authority of his partners to enter a
venture with [Plaintiff] to pursue” the project. (Id. at ¶ 17.)
6. On May 20, 2015, Plaintiff and PA&K executed a document titled
“Agreement with PA&K, LLC and Morris International, Inc. Olde Beau Golf and
Country Club Development Project” (“Agreement”). (Id. at ¶ 18, Ex. B at pp. 3–4.)1
The Agreement provided as follows:
This agreement with PA&K, LLC. (PAK) and Morris
International, Inc. (MI) represents the working
relationship agreed by parties for moving forward with the
development of properties and infrastructure at the Olde
Beau Golf and Country Club site in Roaring Gap, NC.
PAK and MI have agreed to the following:
All budgeted items will be mutually approved by PAK and
MI prior to implementation.
Regarding the development of a luxury RV Resort:
Sales shall mean net sales after all costs.
Sales of the first $6MM will be split on a 50/50% basis by
PAK and MI
All sales after the first $6MM will be split 70% MI and 30%
PAK
All amenities sold will be split 70% MI and 30% PAK
Every purchaser of such property will be required to join
the golf club.
All current interior roads are owned and will be
maintained by the Olde Beau HOA.
Regarding the development of The NOAH Project:
Sales shall mean net sales after an costs.
Sales shall be split on a 50/50% basis by PAK and MI
unless the $6MM threshold has been met. Then the split
will be 70% MI and 30% PAK.
Regarding the development of any existing Olde Beau
Property:
1 In the Amended Complaint, Plaintiff misidentifies the Agreement as Exhibit A.
This includes homes and sites, town homes and sites,
condos and sites and any other sale on the premises.
Sales shall mean net sales after all costs.
Sales shall be split on a 50/50% basis by PAK and MI.
Raw land sales will be split 70% PAK and 30% MI
Outside developer participating in the cost of the project
shall be paid from proceeds first.
PAK will provide all land to be developed as part of their
ongoing contribution and serve as liaison to the existing
Olde Beau community.
MI will provide the management for marketing,
advertising, promotion, creative and sales as part of their
contribution.
(Id.) The Agreement is signed on behalf of PA&K by Packer, and on behalf of Plaintiff
by Morris.
7. On September 15, 2015, PA&K and Plaintiff executed an addendum to
the Agreement (“Addendum”) which provided as follows:
As an addendum to the original agreement dated May 20,
2015, PA&K, LLC (PA&K) and Morris International, Inc.
(MI) agree the definition of cost with regard to this
agreement is any cost attendant to the sales, marketing,
construction and delivery of a mutually agreed motor coach
resort on the Olde Beau property as defined in the agreed
and approved land plan.
With regard to Olde Beau Club Facilities which are
currently in existence, including maintenance and needed
capital improvements, those costs will be incurred by
PA&K. Club facilities are defined as the club house, golf
course, tennis courts, pool, fitness center and walking
trails. Should any of these costs come from the line of
credit, when cash flow is distributed to the partners, these
costs will be deducted from PA&K’s share of the cash flow
distribution.
With regard to marketing costs as defined in the 2015-2016
Marketing Budget for Olde Beau RV Resort, those costs as
incurred will come from the line of credit and when cash
flow is distributed to the partners, be deducted from MI’s
share of the cash flow distribution.
The cost of the Project/Sales/Marketing Manager is a draw
against commission position and is expected to be paid
initially from the line of credit, then as sales occur, these
costs will be paid with safes commissions from the RV lots.
(Id. at pp. 5–6.) The Addendum was signed on behalf of PA&K by Packer, and on
behalf of Plaintiff by Morris. The project reflected in the Agreement and Addendum
is referred to herein as the “Joint Venture.”
8. Plaintiff alleges that “Packer, as President of PIC, a general partner in
OBGP, and on behalf of OBGP, entered into this agreement and committed the real
estate to the Olde Beau Joint Venture (the “Property”) [ ] to the JV Agreement with
the knowledge and authority of OBGP and all its other partners.” (ECF No. 4, at ¶
21.)
9. Following the execution of the Agreement, Plaintiff contributed its
money, skill, and expertise to the Joint Venture. Plaintiff alleges it provided the
following services:
“a. Engaged a land planner and executed a survey and
slope analysis of the [Property]; b. Designed a 93 site RV
resort to be developed in multiple phases; c. Researched
and met with several RV sales professionals across the
country to develop marketing and sales strategies; d. Met
with and presented [Plaintiff]’s plan to the Olde Beau
membership; e. Conducted over 40 site visits; f. Hired a
development manager; g. Appointed an internal project
manager at [Plaintiff] and devoted other personnel at
[Plaintiff] to the project; h. Established a North Carolina
limited liability company, Olde Beau RV Resort and
Country Club, LLC (subsequently dissolved), to carry out
the joint venture's business; i. Developed RV project
construction and sales budgets; and j. Visited several top
RV resorts in the US.”
(Id. at ¶ 24.)
10. In addition, the parties: created pro forma sales and profit projections
from the RV resort showing expected profits in the millions of dollars; shared hard
costs of the project and opened a line of credit to fund the planning and development
of the project; and developed a plan to submit for zoning approval. (Id. at ¶¶ 26–28.)
11. Barry Poole (“Poole”) is involved in developing, marketing, and selling
real estate as recreational vehicle (“RV”) resort properties, including the real property
at issue in this case. (Id. at ¶ 8.) Poole negotiated with Plaintiff, PA&K, and OBGP
about acting as construction manager for the RV resort project, and through those
negotiations, gained detailed knowledge of the plans and opportunities that the Joint
Venture was pursuing, and specifically, of Plaintiff’s interest in the Joint Venture.
(Id. at ¶ 38.) Plaintiff does not allege that the parties entered into any type of contract
with Poole or that Poole was hired as the construction manager for the Joint Venture.
12. In January 2016, Packer and Morris attended a meeting of the
Allegheny County Zoning Board (“Zoning Board”) to seek approval for the RV resort.
The meeting also was attended by an organized group of vocal and unhappy
community members who opposed the project. (Id. at ¶¶ 28–29.) The community
members made it known that they were contemplating legal action to halt the
development. (Id. at ¶29.) Although the Zoning Board approved the project, Packer
and Morris agreed to “hold off on further development until the threat of legal action
was resolved.” (Id. at ¶ 31.) Packer also stated that he “likely would put the
[P]roperty up for auction.” (Id.)
13. Regarding the aftermath of the decision to put the Joint Venture on
hold, Plaintiff alleges the following:
33. The parties met in late August to discuss the status of
the project. [Plaintiff] asserted that it should be paid its
costs for its share of the venture. Packer refused the
request. He said an auction of the [P]roperty had been held
with no major changes in the ownership of the [P]roperty,
and he was dealing with a lawsuit that the Olde Beau
member opposition group had filed. The meeting ended
with no change in the [ ] Joint Venture and
acknowledgement that the project was still on hold.
34. Packer confirmed the substance of the meeting in a
letter dated August 31, 2016. Regarding the RV project, he
said “[w]e are in agreement with you that the [luxury RV
resort] is not a reasonable project to proceed with in the
current environment due to the action of a small minority
of members and the lack of total buy in by the membership
created an atmosphere which would make the marketing
difficult to reach the planned objectives in the investment.”
35. Thus, as of the end of August 2016 [Plaintiff] was led
to believe and understood that the RV project and other
objectives of the [ ] Joint Venture would not proceed, and
that Packer, PA&K and OBGP would pursue other
opportunities to develop or sell components of the
[Property].
(ECF No. 4, at ¶¶ 33–35.)
14. Unbeknownst to Plaintiff, Packer and Barry Poole formed KPP in July
2017 to act as the developer of the RV resort project that had been the subject of the
Joint Venture (the “New Venture”). (Id. at ¶ 37.) In November 2017 Morris learned
that Packer and Barry Poole were proceeding with the New Venture. Morris visited
the Property and saw that excavation and other land development was underway
according to the design that Plaintiff had prepared in pursuit of the Joint Venture.
(Id. at ¶ 36.)
15. Plaintiff subsequently sent a written request to Packer demanding “as
a partner in the [ ] Joint Venture, relevant information about the project, including
‘books and records of the project, marketing materials and plans, any existing or
pending contracts with vendors or purchasers, and other information relevant to this
project.’” (Id. at ¶39.) Packer failed to provide the requested information. (Id. at ¶
40.)
II. PROCEDURAL BACKGROUND
14. Plaintiff filed the Complaint in this matter on January 30, 2020,
(ECF No. 3), and an Amended Complaint on March 2, 2020. (ECF No. 4.) This case
was designated a mandatory complex business case and assigned to the undersigned.
(Design. Ord., ECF No. 1; Assign. Ord., ECF No. 2.)
15. In the Amended Complaint, Plaintiff alleges claims against PA&K and
OBGP for: breach of contract (Count I); breach of fiduciary duties (Count II); and
dissolution and accounting (Count VIII). Plaintiff alleges a claim for a constructive
trust against PA&K, KPP, OBGP, PIC, and KIC (Count III); a claim against OBGP
and KPP for an equitable lien (Count IX); and a claim for tortious interference with
a business contract and relationship against Barry Poole, Laura Poole, Fagan, Hall,
Davis, KPP, KIC, and PIC (Count VI). Plaintiff alleges claims against all Defendants
for: “misappropriation/conversion” (Count IV); violation of North Carolina’s Unfair
and Deceptive Trade Practices Act, N.C.G.S. § 75-1.1 (“UDTPA”) (Count V); and civil
conspiracy (Count VII).
16. On October 30, 2020, Kennington Defendants filed the KIC Motion, and
a Brief in Support of the KIC Motion. (ECF Nos. 67–68.)
17. On November 13, 2020, Packer Defendants filed Packer Defendants’
Motion and a Brief in Support of Packer Defendants’ Motion. (ECF Nos. 74–75.)
Plaintiff filed a Brief in Opposition to Packer Defendants’ Motion (ECF No. 81), and
Packer Defendants filed a Reply. (ECF No. 82.)
18. On November 19, 2020, Plaintiff filed a voluntary dismissal of its claims
against Fagan, Hall, and Davis without prejudice. (ECF No. 77.) This left KIC as
the only remaining Kennington Defendant in the lawsuit. On the same date, Plaintiff
filed its Brief in Opposition to the KIC Motion. (“Brief in Opposition,” ECF No. 78.)
On November 30, 2020, KIC filed a Reply Brief. (ECF No. 79.)
19. On January 11, 2021, the Court held a hearing on the Motions, which
are now ripe for resolution.
III. ANALYSIS
20. The Court will first decidePacker Defendants’ Motion and then the KIC
Motion.
A. Standard of Review
21. “A [Rule 12(c)] motion for judgment on the pleadings is the proper
procedure when all the material allegations of fact are admitted in the pleadings and
only questions of law remain. When the pleadings do not resolve all the factual
issues, judgment on the pleadings is generally inappropriate.” Ragsdale v. Kennedy,
286 N.C. 130, 137 (1974) “A complaint is fatally deficient in substance, and subject to
a motion by the defendant for judgment on the pleadings if it fails to state a good
cause of action for plaintiff and against defendant[.]” Bigelow v. Town of Chapel Hill,
227 N.C. App. 1, 3 (citation omitted).
22. When deciding a motion under Rule 12(c), the Court may only consider
“the pleadings and exhibits which are attached and incorporated into the pleadings.”
Davis v. Durham Mental Health/Dev. Disabilities/Substance Abuse Area Auth., 165
N.C. App. 100, 104 (2004). The Court must “view the facts and permissible inferences
in the light most favorable to the nonmoving party.” Ragsdale,
286 N.C. at 137. “All
well pleaded factual allegations in the nonmoving party’s pleadings are taken as true
and all contravening assertions in the movant’s pleadings are taken as false. All
allegations in the non-movant’s pleadings, except conclusions of law, legally
impossible facts, and matters not admissible in evidence at the trial, are deemed
admitted by the movant.”
Id. (internal citations omitted).
B. Packer Defendants’ Motion
23. The Court first addresses two arguments made byPacker Defendants
that impact multiple claims: that OBGP was not a partner in the Joint Venture; and
that the Joint Venture was dissolved on or around August 31, 2016.
i. Plaintiff adequately alleges OBGP was a partner in the Joint Venture
24. Packer Defendants first argue that OBGP was not a party to the
Agreement and that “all claims against OBGP should be dismissed.” (ECF No. 75, at
pp. 5–6.) 2 Packer Defendants contend that OBGP was not a signatory to, and is not
expressly named in, the Agreement, and that the terms of the Agreement must
prevail over the allegations in the Amended Complaint. (Id.)
25. Plaintiff argues that Packer Defendants, by focusing solely on the
written Agreement, ignore the allegations of fact in the Amended Complaint that
support the claim that OBGP was a partner in the Joint Venture. (ECF No. 81, at
pp. 1–4.) Plaintiff contends that in addition to the Agreement, the Court may
consider its allegations regarding oral representations, the course of conduct between
the parties, and the inferences to be drawn from that conduct. (ECF No. 4, at pp. 1–
4.) Plaintiff points to its allegations that: (a) OBGP owned the Property (ECF No. 4,
at ¶ 4); (b) Packer controlled PIC, a general partner in OBGP (Id. at ¶ 5); (c) in seeking
out Plaintiff and forming the Joint Venture, Packer acted “on behalf of” PA&K and
2 Although Packer Defendants only argue that OBGP was not a party to the Agreement, and
do not expressly argue that OBGP was not a partner in the Joint Venture, the Court
interprets Packer Defendants’ argument as encompassing the broader contention that OBGP
was not a partner in the Joint Venture.
OBGP (Id. at ¶¶ 14, 16–17, 21, and 28); and (d) Plaintiff’s work on the Joint Venture
benefitted OBGP as owner of the Property. (Id. at ¶¶ 17, 24.)
26. Under North Carolina law
A contract, express or implied, is essential to the formation
of a partnership. A partnership may be formed by an oral
agreement. Even without proof of an express agreement to
form a partnership, a voluntary association of partners
may be shown by their conduct. A finding that a
partnership exists may be based upon a rational
consideration of the acts and declarations of the parties,
warranting the inference that the parties understood that
they were partners and acted as such.
Potter v. Homestead Preservation Ass'n, 330 N.C. 569, 576 (1992)
27. The Court concludes that, at this stage of the proceedings, Plaintiff
sufficiently alleges that OBGP was a partner in the Joint Venture to survive
judgment on the pleadings. Under North Carolina law, a joint venture may be formed
by written and oral agreement and can be inferred from the conduct of the parties.
Plaintiff alleges statements and conduct by Packer that could support the claim that
OBGP was a partner in the Joint Venture despite not being a signatory to the
Agreement.
ii. The pleadings establish that the Joint Venture dissolved
28. Packer Defendants’ primary argument is that the allegations in the
Amended Complaint establish that the Joint Venture dissolved on or about August
31, 2016. (ECF No. 75, at pp. 8–11; ECF No. 82, at pp. 3–5.) Packer Defendants
contend that dissolution of the Joint Venture eliminated any fiduciary duties between
Plaintiff, PA&K, and OBGP and triggered the accrual of certain causes of action
arising from the Joint Venture and the Agreement. (Id.) Since this argument could
be dispositive of claims alleged by Plaintiff in this action, the Court will next address
this question.
29. “A joint [venture] is in the nature of a kind of partnership, and although
a partnership and a joint [venture] are distinct relationships, they are governed by
substantially the same rules.” Jones v. Shoji, 336 N.C. 581, 585 (1994) (quoting Pike
v. Trust Co.,
274 N.C. 1, 9 (1968)). A joint venture is governed by partnership law, as
codified in the Uniform Partnership Act. N.C.G.S. § 59-31, et seq.
30. “Ordinarily where an agreement of joint venture fails to fix a definite
date of termination, the agreement remains in force until its purpose is accomplished
or until such accomplishment has become impracticable.” Oliver v. Roberts, 49 N.C.
App. 311, 315-16 (1980). N.C.G.S. § 59-61 (providing that unless specified otherwise
in the partnership agreement, a partnership dissolves by “the termination of the
definite term or particular undertaking specified in the agreement.”). Furthermore,
“[o]n dissolution, the partnership is not terminated, but continues until the winding
up of partnership affairs is completed.” N.C.G.S. § 59-60. Simmons v. Quick-Stop
Food Mart, Inc.,
307 N.C. 33, 40 (1982). “Winding up generally involves the settling
of accounts among partners and between the partnership and its creditors.”
Id. A
right to an account of partnership interests accrues at the date of dissolution.
N.C.G.S. § 59-73. A claim for winding up and accounting of a partnership is a
statutory claim for which no other limitations period is provided and is therefore
subject to a three-year statute of limitations. N.C.G.S. § 1-52(2).
31. Packer Defendants contend that “this agreement with PA&K, LLC and
Morris International (MI) represents the working relationship agreed by the parties
for moving forward with the development of properties and infrastructure at the Olde
Beau Golf and Country Club site in Roaring Gap, NC,” and that other allegations
make it clear that the primary purpose of the Joint Venture was the development of
the luxury RV resort. 3 (ECF No. 75, at p. 9.) Packer Defendants further contend that
Plaintiff’s allegations show that on or about August 31, 2016, Packer had notified
Plaintiff that it was not reasonable to proceed with the RV resort project, that
Plaintiff concedes that it “understood that the RV project and other objectives of the
. . . Joint Venture would not proceed, and that Packer, PA&K, and OBGP would
pursue other opportunities to develop or sell components of the [Property].” (ECF No.
75, at p. 10; quoting ECF No. 4, at ¶ 35.) Plaintiff also asked to be reimbursed for its
costs expended on behalf of the Joint Venture and dissolved the limited liability
company it had formed “to carry out the joint venture’s business.” (ECF No. 4, at ¶¶
27(h), 32, and 33.)
3 The Amended Complaint alleges that “[u]nder the terms of the JV Agreement, [Plaintiff],
OBGP, and PA&K agreed to develop property and infrastructure for three aspects of the Olde
Beau property: a ‘Luxury RV Resort,’ ‘The NOAH Project,’ and the ‘existing Olde Beau
Property.’ For each of these developments, the parties agreed to share costs and profits
generated from sales of the respective properties.” (ECF No. 4, at ¶ 19.) However, Plaintiff
makes no allegations regarding any aspect of the Joint Venture other than the development
of the RV resort and does not separately allege that PA&K and OBGP breached any
agreement regarding the Joint Venture other than the RV resort project. Finally, the parties
have not provided the Court with any information regarding any part of the Joint Venture
other than the luxury RV resort and have made no arguments regarding any project outside
of the RV resort.
32. In response, Plaintiff contends that the “Packer Defendants urge the
Court to cherry pick allegations in the Amended Complaint to find as a factual matter
that the joint venture terminated in August 2016, while disregarding inconsistent
allegations and fair inferences in favor of Plaintiff.” (ECF No. 81, at pp. 7–8.) For
example, Plaintiff argues that allegations that the RV resort project was “on hold
until the threat of litigation was resolved is in conflict with the notion” that the Joint
Venture was dissolved in August 2016. (Id. at p. 9.) Plaintiff also asserts that
a fair reading of paragraph 35, with due inferences in favor
of the non-moving party would be: Thus, as of the end of
August 2016 [Plaintiff] was led to believe and thus
understood that the RV project would not proceed at that
time pending resolution of the opposition legal action, and
that Packer, PA&K and OBGP would pursue opportunities
other than the RV project to develop or sell components of
the Olde Beau property. This reading of paragraph 35 is
consistent with the allegations in paragraphs 31-34, and is
a fair reflection of the fact that [Plaintiff] never agreed or
contemplated that its joint venture partners would, among
all the possible alternatives, form a new venture to develop
the same RV project on the same land according to the
same plans developed by [Plaintiff].
(Id. at p. 9.) Plaintiff also argues that the question of whether the Joint Venture was
dissolved is a “factual inquiry” that cannot be determined in this case without
“impermissible resolution of questions of fact.” (Id. at p. 10.)
33. After thorough consideration, the Court concludes that Plaintiff’s
allegations establish that on or about August 31, 2016, the development of the luxury
RV resort had become impracticable, the Joint Venture’s purpose could not
reasonably be accomplished, and the Joint Venture dissolved. Oliver v. Roberts, 49
N.C. App. at 315–316. Plaintiff alleges that after a seven-month delay in the project,
it “understood” the RV resort project to be at an end on or about August 31, 2016, and
that “Packer, PA&K and OBGP would pursue other opportunities to develop or sell
components of the [Property].” (ECF No. 4, at ¶ 35.) Plaintiff does not claim that it
objected to Packer’s assertion that the project could not proceed. To the contrary,
Plaintiff makes other allegations consistent with an understanding that the Joint
Venture had ceased. Plaintiff alleges that Packer stated he intended to put the
Property up for auction but does not allege that Plaintiff objected to Packer’s stated
intention. (Id. at ¶ 31.) Plaintiff asked to be reimbursed for its out-of-pocket costs in
the project (Id. at ¶ 32) and dissolved the limited liability company it had formed “to
carry out the [J]oint [V]enture’s business.” (Id. at ¶ 24.)
34. The allegations in the Amended Complaint establish that the Joint
Venture dissolved on or about August 31, 2016. The Court now turns to Plaintiff’s
claims againstPacker Defendants.
iii. Breach of contract
35. As its first claim, Plaintiff alleges that PA&K and OBGP breached the
Agreement by proceeding with the New Venture in 2017 without Plaintiff’s
involvement after leading Plaintiff to believe the project was “in abeyance.” (ECF No.
4, at ¶¶ 41–49.) Plaintiff alleges that it “has been damaged as a result of PA&K’s and
OBGP’s breach” and seeks money damages and an order of specific performance. (Id.
at ¶¶ 47–49.)
36. Packer Defendants argue that the dissolution of the Joint Venture
terminated the contractual rights and obligations the parties had to one another
under the Agreement to develop the RV resort, and that those rights became
unenforceable. (ECF No. 75, at pp. 10–11; ECF No. 82, at p. 4.) Packer Defendants
contend that the dissolution triggered Plaintiff’s right to seek a winding up and
accounting of its interests in the Joint Venture under N.C.G.S. §§ 59-67 and 59-73,
and that following dissolution “PA&K did not owe any obligation to the Joint Venture
other than to cooperate in winding up its affairs.” (Id. at p. 11.) Packer Defendants
argue that the right to winding up “is a contractual right” subject to the three-year
statute of limitations appearing at N.C.G.S. § 1-52(1), and that “Plaintiff’s right to an
account of its Joint Venture interest expired in August 2019,” long before Plaintiff
filed this lawsuit. (Id.) In other words, Packer Defendants assert that any rights
Plaintiff has in the Joint Venture following dissolution had to be pursued through a
claim for winding up. Plaintiff does not specifically respond to Packer Defendants’
argument, relying instead on its contention that the Joint Venture was not dissolved.
37. The Court concludes that Defendants’ argument has merit. As
discussed above, the allegations establish that the Joint Venture dissolved on or
about August 31, 2016, because the development of the luxury RV resort became
untenable. Plaintiff understood the project to be at an end and that PA&K and OBGP
would pursue other opportunities for the Property. Under these allegations, any
contractual obligation that PA&K and OBGP had to include Plaintiff in development
of the Property arising from the Agreement necessarily ceased when the Joint
Venture dissolved. Packer and KPP’s decision to proceed with the RV resort project
in 2017 did not breach any existing contractual obligation to Plaintiff.
38. Furthermore, to the extent Plaintiff wished to pursue its rights under
the Agreement, it could have pursued those rights during a winding up and
accounting of the Joint Venture. Chesson v. Rives, 2013 NCBC LEXIS 46, at *16
(N.C. Super. Ct. Oct. 28, 2013) (holding that partners could pursue “partnership
rights . . . which survived dissolution through an accounting.”) Plaintiff’s right to a
winding up and accounting of the Joint Venture accrued on or about August 31, 2016,
and that right was subject to the three year statute of limitations in N.C.G.S. § 1-
52(2) (stating that actions must be commenced within 3 years from accrual “[u]pon a
liability created by statute, either state or federal, unless some other time is
mentioned in the statute creating it.”). 4 Therefore, to the extent Packer Defendants
seek dismissal of Plaintiff’s claim for breach of contract based on Packer and KPP
proceeding with the New Venture,Packer Defendants’ Motion should be GRANTED.
iv. Breach of fiduciary duty
39. Plaintiff alleges that “[a]s partners in the [ ] Joint Venture, PA&K and
OBGP owed fiduciary duties to” Plaintiff and breached those duties by “failing to
acknowledge the [ ] Joint Venture with [Plaintiff], and appropriating the Joint
Venture's assets and business opportunities, without the knowledge, authorization,
consent, or ratification of [Plaintiff], for PA&K’s and OBGP’s (and others acting in
concert with them) own selfish interests” and “by refusing [Plaintiff]’s direct, written
4 Packer Defendants’ contention that Plaintiff’s right to a winding up and accounting is
subject to the three-year statute of limitation applicable to claims arising from a contract
(N.C.G.S. § 1-52(1)) is misplaced. The right to a winding up and accounting was not provided
for in the Agreement. Rather, in this case, it is provided by the applicable provisions of the
North Carolina Uniform Partnership Act (the “Act”).
request for the books and other material information relating to the [ ] Joint Venture
and the RV resort project.” (ECF No. 4, at ¶¶ 51–53.)
40. Defendants incongruously contend that the fiduciary duties owed to
Plaintiff by PA&K and OBGP ended when the Joint Venture dissolved, but also
concede that “[t]he partnership continue[d] after dissolution until the winding up of
the partnership affairs is completed” and assert that “[t]o the extent a fiduciary duty
exists after dissolution, it would be limited to winding up the partnership, not to
future business because the partnership has been dissolved.” (Id.; quoting Simmons,
307 N.C. at 39.)
41. North Carolina’s appellate courts have not expressly addressed the
nature of any continuing fiduciary obligations partners owe one another following
dissolution of the partnership during the period of winding up the partnership’s
business, accounting, and distributing partnership assets. However, the statutory
obligations placed on partners support the existence of a continuing fiduciary duty
following dissolution, at least with respect to the protection of partnership assets and
conducting a proper accounting and distribution. The Act provides that a partnership
continues following dissolution and until a winding up has occurred. N.C.G.S. § 59-
60. Partners act as stewards of the partnership’s property and are accountable to one
another for use of such property. Section 59-51, titled “Partner accountable as a
fiduciary,” provides, “[e]very partner must account to the partnership for any benefit,
and hold as trustee for it any profits derived by him without the consent of the other
partners from any transaction connected with the formation, conduct or liquidation
of the partnership or from any use by him of its property.” Once partnership
liabilities have been discharged, a partner is entitled to his net share of the value of
any partnership property. N.C.G.S. § 59-68. Furthermore, “[N.C.G.S.] § 59-
50 requires partners to render on demand true and full information of all things
affecting the partnership to any partner.” See Compton v. Kirby, 157 N.C. App. 1, 15
(2003). Concluding that partners’ fiduciary duties to one another cease upon
dissolution but prior to an accounting for and distribution of partnership property
would be antithetical to the requirements of the Act.
42. In addition, other jurisdictions have concluded that a partners’ fiduciary
duties continue beyond dissolution and until a partnership has been wound up.
Wilson v. Scruggs, 371 F. Supp. 2d 837, 840 n. 4 (2005) (“[N]umerous cases have held
that the fiduciary duties of partners continue until the partnership affairs are wound
up following dissolution of the partnership”; and cases cited therein.); Steeby v. Fial,
765 P.2d 1081, 1084 (Colo. App. 1988) (“Even after dissolution of a partnership, both
partners continue to have a fiduciary duty to the other partner that continues until
the partnership assets have been divided and the liabilities have been satisfied”); Dev.
Specialists, Inc. v. Akin Gump Strauss Hauer & Feld LLP,
480 B.R. 145, 156 (S.D.N.Y
2012) (“Post-dissolution, former partners generally do not owe fiduciary duties either
to one another or to the dissolved firm. But there is an important exception: they
have a continuing duty to each other as they wind up the partnership's affairs,
including winding up the partnership's unfinished business.”), rev’d on other grounds,
574 Fed. Appx. 15 (2nd Cir. 2014).
43. The Court concludes that PA&K and OBGP owed fiduciary duties to
Plaintiff following dissolution of the Joint Venture and through the period during
which Plaintiff was entitled to seek a winding up. PA&K and OBGP had continuing
obligations to preserve, account for, and distribute partnership property assets, and
to provide an accounting of partnership assets, through on or about August 31, 2019.
Plaintiff alleges that among the assets the Joint Venture held at the time of
dissolution were “valuable designs, marketing plans, slope analyses, surveys, zoning
authorizations and other substantial intellectual property that was materially
created and developed through substantial effort by [Plaintiff].” 5 (ECF No. 4, at ¶
54.) Plaintiff further alleges that sometime in 2017, KPP proceeded with the New
Venture using “the design that [Plaintiff] had prepared in pursuit of the [Joint
Venture].” (Id. at ¶ 36.) Plaintiff also alleges that after it learned of the New Venture,
presumably sometime in late 2017 or 2018, Plaintiff “demanded, as a partner in the
[ ] Joint Venture, relevant information about the project, including ‘books and records
of the project, marketing materials and plans, any existing or pending contracts with
vendors or purchasers, and other information relevant to this project,’” but that
Packer refused to provide the information. (Id. at ¶ 39.) Plaintiff filed this lawsuit
on March 2, 2020. Therefore, Plaintiff alleges timely claims for breach of fiduciary
duty for failure to preserve and account for partnership property and failure to
5 Plaintiff does not allege that the Joint Venture owned any other assets at the time of
dissolution. Plaintiff does not allege that the Property, or any portion of it, had been conveyed
to the Joint Venture or that the Property was owned by the Joint Venture at the time it
dissolved. To the contrary, Plaintiff alleges that OBGP conveyed 10.38 acres of the Property
to KPP in March 2018. (ECF No. 4, at ¶ 65.)
provide access to the books, records, and other information regarding the Joint
Venture. Honeycutt v. Weaver, 257 N.C. App. 599, 604 (2018) (“Allegations of breach
of fiduciary duty . . . are governed by the [3]-year statute of limitations applicable to
contract actions contained in [N.C.G.S] § 1-52(1)[.]”).
44. For the foregoing reasons, to the extent Packer Defendants seek
dismissal of Plaintiff’s claim for fiduciary duty,Packer Defendants’ Motion should be
DENIED.
v. Conversion
45. Plaintiff alleges that:
[t]he [Joint Venture] had substantial assets that were
contributed by [Plaintiff] in the form of intellectual
property, marketing strategy and plans, site planning,
slope analysis, zoning approval and other valuable and
material components of a viable venture . . . In violation of
[Plaintiff]’s rights and without its knowledge, participation
or consent, the Defendants joined forces to wrongfully
appropriate these assets to their own benefit, and to the
detriment of [Plaintiff] and the [Joint Venture].
(ECF No. 4, at ¶¶ 75–76.) Plaintiff brings its claim for conversion against, inter alia,
Packer, KPP, PA&K, OBGP, and PIC. (Id. at p. 15.)
46. Under North Carolina law, conversion is the “unauthorized assumption
and exercise of the right of ownership over goods or personal chattels belonging to
another, to the alteration of their condition or the exclusion of an owner's rights.”
Variety Wholesalers, Inc. v. Salem Logistics Traffic Servs., LLC, 365 N.C. 520, 523,
(2012) (citation omitted). There are two elements in a claim for conversion: (1) the
plaintiff's ownership, and (2) the defendant's wrongful possession. Id.
47. Packer Defendants argue that Plaintiff lacks standing to sue for
conversion because the property at issue was owned by the partnership and any claim
for conversion must be brought in the name of the partnership. With regard to Packer
and KPP, who are third parties and were not partners in the Joint Venture, Packer
Defendants are correct.
48. To the extent Plaintiff claims that Packer or KPP converted marketing
strategies, site plans and analysis, and other materials that Plaintiff contributed to
the Joint Venture, Plaintiff lacks standing to pursue the claim and it must fail.
Plaintiff alleges that the contributed plans and materials became the Joint Venture’s
property. (ECF No. 4, at ¶¶ 21, 24–25, 75.) By statute, any property that the Plaintiff
“originally brought into the partnership stock” or that was “subsequently acquired by
purchase or otherwise, on account of the partnership, is partnership property.”
N.C.G.S. § 59-38. Since the property that was allegedly converted was partnership
property, only the partnership, not the individual partners, can assert the claim for
conversion. Ron Medlin Constr. v. Harris, 364 N.C. 577, 584 (2010) (“[W]hen property
is owned by a partnership, the partnership is the real party in interest for purposes
of pursuing a civil action pertaining to the partnership property”); see also BDM Invs.
v. Lenhil, Inc.,
2012 NCBC LEXIS 7, at *27 (N.C. Super. Ct. Jan. 18, 2012). Plaintiff
has not sued in the name of the Joint Venture.
49. In response to Packer Defendants’ argument, Plaintiff does not dispute
that the property at issue was owned by the Joint Venture and not by Plaintiff.
Instead, relying on Gaskin v. J.S. Procter Co., LLC, Plaintiff tries to argue that it
should be permitted to sue individually because it was owed a “special duty.” 196
N.C. App. 447 (2009) (ECF No. 81, at p. 5–7, 12.) In Gaskin, the Court of Appeals
held:
The general rule of partner standing to sue individually is
stated in Energy Investors [Fund, L.P. v. Metric
Constructors, Inc.]: “It is settled law in this State that one
partner may not sue in his own name, and for his benefit,
upon a cause of action in favor of a partnership.” 351 N.C.
[331], at 336-37 (citation and quotation marks omitted).
The rule includes a cause of action against other partners
in the partnership, Jackson v. Marshall, 140 N.C. App. 504,
508, 537 (2000), disc. review denied,
353 N.C. 375 (2001),
as well as a cause of action against an unrelated third
party, Energy Investors, 351 N.C. at 336-37. “The only two
exceptions to this rule are: (1) a plaintiff alleges an injury
‘separate and distinct’ to himself, or (2) the injuries arise
out of a ‘special duty’ running from the alleged wrongdoer
to the plaintiff." 351 N.C. at 335 (emphasis added)
(recognizing the two exceptions in a suit brought by a
limited partner and citing Barger v. McCoy Hillard &
Parks, 346 N.C. 650, 660, (1997), which recognized the
same two exceptions in a suit brought by shareholders in a
corporation).
196 N.C. App. at 451
50. Plaintiff’s reliance on Gaskin is misplaced. First, the Barger exceptions
do not apply to claims raised by a partner in a general, as opposed to a limited,
partnership. See Gillespie v. Majestic Transp., Inc., 2016 NCBC LEXIS 69, *10-11
(N.C. Super. Ct. Sept. 9, 2016). In this case, the Joint Venture was a general
partnership.
51. In addition, Plaintiff does not allege, nor support by argument, that
Packer and KPP owed Plaintiff a fiduciary or any other special duty. See Energy
Investors, 351 N.C. at 335 (stating plaintiff must allege a special duty “running from
the alleged wrongdoer to the plaintiff”) (emphasis added). Plaintiff does not allege
facts that provide grounds for it to assert individual or direct claims for conversion
against Packer and KPP. Accordingly, to the extent Defendants seek dismissal of
Plaintiff’s claim for conversion against Packer and KPP,Packer Defendants’ Motion
should be GRANTED.
52. Plaintiff’s claims against PA&K, OBGP, and PIC are a different story.
Plaintiff alleges that PA&K and OBGP were partners with Plaintiff in the Joint
Venture. A partner may bring an action for conversion against another
partner. Pugh v. Newbern, 193 N.C. 258, 261 (1927) (“A partner may maintain an
action at law against his copartner . . . [w]hen the joint property [of the partnership]
has been wrongfully destroyed or converted.”); Lewis v. Boling,
42 N.C. App. 597, 606
(1979) (noting that a claim for conversion of partnership property is an exception to
the rule that one partner cannot sue another); Gillespie,
2016 NCBC LEXIS 69, at
*16. Therefore, Plaintiff’s claim for conversion against PA&K and OBGP survive
judgment on the pleadings at this stage of the action.
53. Plaintiff also alleges that PIC was a general partner in OBGP. (ECF
No. 4, at ¶ 5.) As a general partner, PIC “is jointly and severally liable for the acts
and obligations of” OBGP. N.C.G.S. § 59-45(a). Since Plaintiff alleges a viable claim
for conversion against OBGP, the claim against PIC, as a partner in OBGP, survives.
Ron Medlin Constr., 364 N.C. at 583; Johnson v. Gill,
235 N.C. 40, 44 (1952) (“[T]he
common law rule of joint and several liability of partners for a tort committed by one
of the members of the partnership is incorporated in the Uniform Partnership Act.”);
Stevens v. Nimocks,
82 N.C. App. 350, 352 (1986) (“It is well established that each
partner in a partnership is jointly and severally liable for a tort committed in the
course of the partnership business, and the injured party may sue all members of the
partnership or any one of them at his election.”).
54. To the extent Defendants seek dismissal of Plaintiff’s claim for
conversion against PA&K, OBGP, and PIC,Packer Defendants’ Motion should be
DENIED.
vi. Tortious interference with contract
55. In its fifth count in the Amended Complaint, Plaintiff makes claims for
tortious interference with contract against, inter alia, PIC and KPP. (ECF No. 4, at
¶¶ 91–95.) Plaintiff alleges that “[e]ach of the Defendants at all relevant times had
actual knowledge of the [ ] Joint Venture, and of [Plaintiff]’s interest in the RV resort
project.” (Id. at ¶ 92.) Plaintiff further alleges “[w]ith wrongful intent to induce
PA&K and OBGP to breach their joint venture agreement and partnership with
[Plaintiff], the Defendants, and each of them, interfered in the relationship and
induced PA&K and OBGP to breach the Agreement.” (Id. at ¶¶ 92–93.) Plaintiff
further alleges that Defendants' conduct was “willful, malicious and wanton.” (Id. at
¶ 94.)
56. The elements of and pleading requirements for a claim of tortious
interference with contract are well established. See Morris Int'l v. Packer, 2020
NCBC LEXIS 122, *14-17 (N.C. Super. Ct. Oct. 15, 2020). In support of dismissal,
Packer Defendants contend that
Plaintiff does not allege that KPP or PIC acted without
justification or that there was no legitimate business
purpose for KPP to obtain the property. Plaintiff does not
allege facts as to the nature of conduct by KPP that would
have induced PA&K and OBGP to breach the Agreement
or how KPP interfered with the Agreement. Plaintiff does
not allege in what way KPP’s conduct was malicious.
(ECF No. 75, at p. 18.)
57. The Court agrees with Packer Defendants’ argument. The Amended
Complaint alleges that KPP was formed for the purpose of developing the RV resort
and that OBGP conveyed the portion of the Property on which the resort is being
developed to KPP. (ECF No. 4, at ¶¶ 37, 65.) PIC is a general partner in OBGP. (Id.
at ¶ 5.) These allegations support the conclusion that KPP and PIC had a business
interest in the RV resort project. In order to survive dismissal, a complaint
alleging tortious interference “must admit of no motive for interference other than
malice.” Pinewood Homes, Inc. v. Harris, 184 N.C. App. 597, 605 (2007); Filmar
Racing, Inc. v. Stewart,
141 N.C. App. 668, 674 (2001) (“[W]e have held that the
complaint must admit of no motive for interference other than malice”).
58. Plaintiff does not allege facts regarding how, or by what conduct, KPP
and PIC induced a party to breach, or otherwise interfered with, the Agreement.
Instead, Plaintiff simply alleges that they “interfered” and “induced PA&K and OBGP
to breach the Agreement.” (ECF No. 4, at ¶ 93.) The Court is not required to accept
these conclusory allegations which are unsupported by the facts.
59. Finally, although Plaintiff alleges that the interference was “willful,
malicious, and wanton,” (Id. at ¶ 94), in the absence of “specific, supportive, factual
allegations, the [C]ourt need not accept as true general conclusory allegations of the
elements of a cause of action for purposes of a motion to dismiss.” Plasman v. Decca
Furniture (USA), Inc., 2016 NCBC LEXIS 80, *43-44 (N.C. Super. Ct. Oct. 21, 2016)
(quoting Global Promotions Grp., Inc. v. Danas, Inc.,
2012 NCBC LEXIS 40, at *12
(N.C. Super. Ct. June 22, 2012).
60. Plaintiff has not adequately alleged claims for tortious interference with
contract against KPP and PIC. To the extent they seek dismissal on Plaintiff’s claim
for tortious interference with contract against KPP and PIC,Packer Defendants’
Motion should be GRANTED.
vii. UDTPA
61. Plaintiff alleges that Packer and the other Packer Defendants violated
the UDTPA by pursuing the New Venture and “concealing” it from Plaintiff, and by
“excluding” Plaintiff from participation in the New Venture. (ECF No. 4, at ¶ 83.)
Plaintiff further alleges that “PA&K’s and OBGP’s conduct constitutes breach of
fiduciary duties and constructive fraud which supports” the UDTPA claim, but
alleges only that the other Packer Defendants knew about Plaintiff’s previous
involvement in the Joint Venture and acted in “their own selfish interests.” (Id. at
¶¶ 84–87.)
62. Packer Defendants argue that the UDTPA claim must be dismissed
because PA&K and OBGP did not owe Plaintiff fiduciary duties at the time of the
New Venture. (ECF No. 75, at pp. 16–17.) The Court already has concluded that
PA&K and OBGP continued to have fiduciary obligations to Plaintiff with regard to
preserving the Joint Venture’s assets and providing access to information regarding
the Joint Venture at the time the New Venture commenced. A breach of fiduciary
can support a claim for violation of the UDTPA. White v. Thompson, 196 N.C. App.
568, 574 (2009), aff’d,
364 N.C. 47 (2010). Therefore, PA&K and OBGP are not
entitled to judgment on the pleadings on Plaintiff’s claim for violation of the UDTPA.
63. The Court also concludes that Plaintiff has pleaded UDTPA claims
against Packer, PIC, and KPP. The Amended Complaint alleges that PIC is a general
partner in OBGP, that Packer is the President of PIC, and that Packer acted as an
agent of both PA&K and OBGP in the Joint Venture. Packer also is a member of
KPP. Plaintiff alleges that KPP used Joint Venture assets in conducting the New
Venture, and that Packer has refused to provide Plaintiff with books, records or other
information about the Joint Venture or KPP. Read together, these allegations could
support a claim that Packer Defendants have engaged in conduct that “possessed the
tendency . . . to mislead” or deceive. RD&J Props. v. Lauralea-Dilton Enters., LLC,
165 N.C. App. 737, 748 (2004) (“To prevail on a Chapter 75 claim, a plaintiff need not
show fraud, bad faith, or actual deception. Instead, it is sufficient if a plaintiff shows
that a defendant's acts possessed the tendency or capacity to mislead or created the
likelihood of deception.”)
64. To the extent Packer Defendants seek dismissal as to Plaintiff’s claim
for violation of the UDTPA against Packer Defendants,Packer Defendants’ Motion
should be DENIED.
viii. Civil conspiracy
65. Plaintiff alleges thatPacker Defendants engaged in a civil conspiracy
causing injury to Plaintiff as follows:
97. The Defendants all entered an agreement to pursue
the [New Venture], with knowledge that their actions were
unlawful as relating to [Plaintiff] and its interest in the
[Joint Venture].
98. Each of the Defendants willfully and wantonly
participated in pursuit of the goal of their agreement.
99. Each of the Defendants, acting in concert with the
others, caused damage to [Plaintiff].
(ECF No. 4, at ¶¶ 97–99.)
66. “There is no independent cause of action for civil conspiracy. Only when
there is an underlying claim for unlawful conduct can a plaintiff state a claim for civil
conspiracy by also alleging the agreement of two or more parties to carry out the
conduct and injury resulting from the agreement.” Toomer v. Garrett, 155 N.C. App.
462, 483 (2002). “The charge of conspiracy itself does nothing more than associate
the defendants together and perhaps liberalize the rules of evidence to the extent that
under proper circumstances the acts and conduct of one might be admissible against
all.” Shope v. Boyer,
268 N.C. 401, 405 (1966); see also GoRhinoGo, LLC v. Lewis,
2011 NCBC LEXIS 39, at *20 (N.C. Super. Ct. Sept. 9, 2011) (“Having joined the
conspiracy, [two individual defendants] became exposed to liability with [co-
defendant] and any other co-conspirators for damages caused by any act in
furtherance of the common scheme.”).
67. To plead a claim for civil conspiracy, a plaintiff must allege: “(1) An
agreement between two or more individuals; (2) to do an unlawful act or to do a lawful
act in an unlawful way; (3) resulting in injury to plaintiff inflicted by one or more of
the conspirators; and (4) pursuant to a common scheme.” Piraino Bros., LLC v.
Atlantic Fin. Grp., Inc., 211 N.C. App. 343 (2011).
68. Packer Defendants argue that the conspiracy claim should be dismissed
because it does not allege facts showing “how the conspiracy came to be, when, or
why.” (ECF No. 75, at p. 19; citing Bottom v. Bailey, 238 N.C. App. 202, 213 (2014)).
Plaintiff argues that its allegations sufficiently state a claim for civil conspiracy.
(ECF No. 81, at pp. 15–16.)
69. The Court has reviewed the allegations in the Amended Complaint and
concludes that while long on conclusory claims and short on specific facts, the
allegations nonetheless state a claim for civil conspiracy sufficient to stave off
judgment at this time. The Court has determined that Plaintiff’s claims for breach
of fiduciary duty, conversion, and unfair trade practices can proceed, providing the
required underlying unlawful act. Plaintiff also alleges facts from which it could be
inferred that PA&K, OBGP, Packer, PIC, and KPP engaged in a common scheme to
convert to KPP’s use certain assets contributed by Plaintiff to, and owned by, the
Joint Venture and to deny Plaintiff information regarding the Joint Venture.
Plaintiff also alleges that it was injured by these actions. Therefore, to the extent
Packer Defendants seek dismissal of Plaintiff’s claim for civil conspiracy against
Packer Defendants,Packer Defendants’ Motion should be DENIED.
ix. Dissolution and accounting
70. Packer Defendants also seek dismissal of Plaintiff’s eighth count for
dissolution and an accounting of the Joint Venture on the grounds that the Joint
Venture dissolved on or about August 31, 2016, and that Plaintiff’s time to request
an accounting expired on or around August 31, 2019, making it untimely. (ECF No.
75, at p. 19.)
71. The Court has concluded that Plaintiff’s allegations establish that the
Joint Venture partnership dissolved on or around August 31, 2016. Accordingly, the
claim for dissolution is moot. Plaintiff’s claim for accounting arose on the date of
dissolution, (N.C.G.S. § 59-73), but Plaintiff did not file its claim for accounting until
January 30, 2020. Therefore, the claim for dissolution is barred by the 3-year statute
of limitations. N.C.G.S. § 1-52(2).
72. Therefore, to the extent Packer Defendants seek dismissal of Plaintiff’s
claim for dissolution and accounting,Packer Defendants’ Motion should be
GRANTED.
x. Constructive trust and equitable lien
73. Plaintiff seeks imposition of a constructive trust over the Property,
(ECF No. 4, at ¶¶ 57–72), and claims an equitable lien on the Property. (Id. at ¶¶
105–11.) “When a court impresses a constructive trust upon property for the benefit
of a claimant, it exercises its equitable powers to fashion remedies.” Weatherford v.
Keenan, 128 N.C. App. 178, 179 (1997). “[A] constructive trust is not a standalone
claim for relief or cause of action.” LLG-NRMH, LLC v. Northern Riverfront Marina
& Hotel, LLLP,
2018 NCBC LEXIS 105, at *14 (N.C. Super. Ct. Oct. 9,
2018) (citing Weatherford as quoted herein).
A constructive trust is a duty, or relationship, imposed by
courts of equity to prevent the unjust enrichment of the
holder of title to, or of an interest in, property which such
holder acquired through fraud, breach of duty or some
other circumstance making it inequitable for him to retain
it against the claim of the beneficiary of the constructive
trust.
Variety Wholesalers, Inc. v. Salem Logistics Traffic Servs., LLC, 365 N.C. 520, 530
(2012) (quoting Wilson v. Crab Orchard Dev. Co.,
276 N.C. 198, 211 (1970). “In the
absence of [a fiduciary] relationship, [the plaintiff] faces the difficult task of proving
some other circumstance making it inequitable” for a defendant to possess the
property at issue. Id. at 520-31 (quotation omitted).
74. An equitable lien is a remedy. An equitable lien arises “[w]here property
of one person can by a proceeding in equity be reached by another as security for a
claim on the ground that otherwise the former would be unjustly enriched.” Embree
Constr. Group, Inc. v. Rafcor, Inc., 330 N.C. 487, 496 (1992) (quoting Restatement of
Restitution § 161 (1937)). An equitable lien is available only where a party has no
adequate remedy at law. James River Equipment, Inc. v. Tharpe’s Excavating, Inc.,
179 N.C. App. 336, 345 (2006).
75. Packer Defendants argue, inter alia, that the dissolution of the Joint
Venture extinguished any basis for Plaintiff to seek a constructive trust over the
Property, and that Plaintiff has failed to establish that it does not have an adequate
remedy at law. (ECF No. 75, at p. 13.) The Court finds merit inPacker Defendants’
argument.
76. The pleadings establish that the Joint Venture dissolved on or about
August 31, 2016. The dissolution ended any contractual obligation PA&K and OBGP
had to contribute the Property to the Joint Venture. To the extent PA&K and OBGP
had continuing fiduciary duties to Plaintiff following dissolution, those obligations
were only to preserve the assets already owned by the Joint Venture and to
participate in a winding-up and dissolution of the Joint Venture. Plaintiff does not
allege that the Property had been conveyed to the Joint Venture or that the Joint
Venture owned the Property as of the time it dissolved. To the contrary, Plaintiff
alleges that OBGP continued to own the Property and conveyed 10.38 acres of the
Property to KPP in March 2018. (ECF No. 4, at ¶ 65.) Therefore, PA&K and OBGP
did not breach fiduciary duties to Plaintiff by conveying the property to KPP.
77. In addition, Plaintiff has not established that it lacked an adequate
remedy at law with regard to its claims involving the Property. Where, as in this
case, a partnership agreement exists, a partner must first pursue its legal remedies
before it can invoke the court’s equitable authority. 330 N.C. at 578–79. In Potter,
the Court held:
These remedies may include an action for breach of
contract or dissolution, winding up, and distribution of
partnership assets under North Carolina’s Uniform
Partnership Act. In the event remedies under the law fail
to give relief, a partner may be entitled to pursue a
partnership interest through such remedies in equity as an
equitable lien based upon fraud or an equitable trust based
upon unjust enrichment. The partner's right to such
equitable remedies, however, does not exist for any
practical purpose until the affairs of the partnership have
to be wound up, or the share of a partner has to be
ascertained. Such a lien based on fraud does not come into
existence until actual dissolution occurs. In other words,
plaintiff must pursue her legal remedies first.
Id. at 578 (quotations and citations omitted).
78. Plaintiff has failed to plead or argue that it lacked an adequate remedy
at law for its claims that PA&K and OBGP promised to contribute the Property to
the Joint Venture. To the contrary, Plaintiff discovered that the New Venture was
underway in November 2017. Plaintiff could have sought a winding-up and
accounting of the Joint Venture, in which it could have pursued its claim to an
equitable interest in the Property, by filing an appropriate action under N.C.G.S. §
59-67 on or before August 31, 2019. Plaintiff chose not to do so. Consequently, no
winding-up and accounting occurred. Plaintiff also could have claimed an interest in
the Property by timely suing PA&K and OBGP for breach of the Agreement but did
not do so. Crosby v. Bowers, 87 N.C. App. 338, 344–45 (1987).
79. Plaintiff has not established that it lacks an adequate remedy at law for
its claims regarding the Property. Therefore, to the extent it seeks dismissal on
Plaintiff’s claims for constructive trust and equitable lien, Packer Defendants’ Motion
should be GRANTED.
C. KIC Motion
80. The Amended Complaint purports to make claims against KIC for
conversion, unfair and deceptive trade practices, tortious interference, civil
conspiracy, and constructive trust. The only allegation regarding KIC in the
Amended Complaint is that it “is a general partner of OBGP and is, upon information
and belief, controlled by [Fagan].” (ECF No. 4, at ¶ 6.) Plaintiff does not allege that
KIC or Fagan engaged in any specific conduct involving the Joint Venture or the New
Venture.
81. KIC moves for dismissal on the grounds that the Amended Complaint
fails to allege any claims against it. (ECF No. 68, at pp. 6–7.) In its Brief in
Opposition, Plaintiff does not respond to KIC’s argument.
82. Nonetheless, Plaintiff alleges that KIC is a general partner in OBGP,
and accordingly, KIC is jointly and severally liable for any torts committed by OBGP.
See N.C.G.S. § 59-45(a). Therefore, to the extent any of the claims stated against both
OBGP and KIC have survived Packer Defendants’ Motion, so too must they survive
against KIC. Accordingly, to the extent the KIC Motion seeks judgment as to
Plaintiff’s claims for conversion, unfair and deceptive trade practices, and civil
conspiracy, the motion should be DENIED. However, to the extent the KIC Motion
seeks judgment as to Plaintiff’s claims for tortious interference and constructive
trust, the motions should be GRANTED.
IV. CONCLUSION
THEREFORE, it is ORDERED that:
1. To the extent Packer Defendants’ Motion seeks judgment on the
pleadings as to Plaintiff’s claim for breach of contract based on
Packer and KPP proceeding with development of the RV resort on
the Property, Packer Defendants’ Motion is GRANTED, and the
claim is dismissed.
2. To the extent Packer Defendants’ Motion seeks judgment on the
pleadings as to Plaintiff’s claim for breach of fiduciary duty,
Packer Defendants’ Motion is DENIED.
3. To the extent Packer Defendants’ Motion seeks judgment on the
pleadings as to Plaintiff’s claim for conversion against Packer and
KPP, Packer Defendants’ Motion is GRANTED, and the claim is
dismissed.
4. To the extent Packer Defendants’ Motion seeks judgment on the
pleadings as to Plaintiff’s claim for conversion against PA&K,
OBGP, and PIC, Packer Defendants’ Motion is DENIED.
5. To the extent Packer Defendants’ Motion seeks judgment on the
pleadings as to Plaintiff’s claim for tortious interference with
contract against KPP and PIC, Packer Defendants’ Motion is
GRANTED, and the claim is dismissed.
6. To the extent Packer Defendants’ Motion seeks judgment on the
pleadings as to Plaintiff’s claim for violation of the UDTPA
against Packer Defendants, Packer Defendants’ Motion is
DENIED.
7. To the extent Packer Defendants’ Motion seeks judgment on the
pleadings as to Plaintiff’s claim for civil conspiracy against Packer
Defendants, Packer Defendants’ Motion is DENIED.
8. To the extent Packer Defendants’ Motion seeks judgment on the
pleadings as to Plaintiff’s claim for dissolution and accounting,
Packer Defendants’ Motion is GRANTED, and the claim is
dismissed.
9. To the extent Packer Defendants’ Motion seeks judgment on the
pleadings as to Plaintiff’s claims for constructive trust and
equitable lien, Packer Defendants’ Motion is GRANTED, and the
claim is dismissed.
10. To the extent the KIC Motion seeks judgment on the pleadings as
to Plaintiff’s claims for conversion, unfair and deceptive trade
practices, and civil conspiracy, the motion should be DENIED.
11. To the extent the KIC Motion seeks judgment on the pleadings as
to Plaintiff’s claims for tortious interference and constructive
trust, the motions should be GRANTED, and the claims
dismissed.
SO ORDERED, this the 22nd day of February, 2021.
/s/ Gregory P. McGuire
Gregory P. McGuire
Special Superior Court Judge for
Complex Business Cases
