North Carolina Business Litigation Report

BHB Enterprises, Inc. v. Waste Management of Carolinas, Inc., March 25, 2009 (Diaz)(unpublished)

A parent corporation can, under certain circumstances, be liable for the actions of its subsidiary under a conspiracy theory, notwithstanding the doctrine of intracorporate immunity.

This opinion summarizes prior law in North Carolina -- consisting of six cases -- addressing the doctrine of intracorporate immunity in the context of a claim for civil conspiracy under North Carolina law. 

The Court nevertheless dismissed the claim in this case, stating that 

"if plaintiffs were allowed to sue parent entities whenever the decision to cause a subsidiary to act in a certain manner originated with the parent, it 'would increase litigation costs and deter the use of subsidiaries, even when there is a legitimate purpose for doing so and there is no wrong to others in being forced to look only to the subsidiary for relief.'"

The Court also dismissed an unfair and deceptive practices claim, even though Plaintiff had alleged that the Defendants had never intended to honor the contract at issue.  The Court said the Plaintiff had failed to allege any facts in its Complaint to support this assertion, and that it was "nothing more than an 'unwarranted deduction[] of fact' that the Court need not accept."

Judge Diaz also rejected other arguments by the Plaintiff that it said would support an unfair and deceptive practices claim, including arguments that (1) the Defendants had owed fiduciary duties to the Plaintiff, (2) the Defendants had "inequitably asserted their position of power over Plaintiff," and (3) the unilateral price increases amounted to conversion.

The Court ruled that there was nothing before it other than a breach of contract, and it relied on settled law that "a mere breach of contract, even if intentional, is not sufficiently unfair or deceptive to sustain an action under" the unfair and deceptive practices statute. 

Full Opinion

Brief in Support of Motion to Dismiss

Brief in Opposition to Motion to Dismiss

Reply Brief in Support of Motion to Dismiss

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Mack Sperling
Brooks Pierce, LLP
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