The Court dismissed a defamation claim. It found that the claims were not plead with sufficient particularity (omitting in some instances to state to whom the statements were made and when they were made). One allegedly defamatory statement was subject to an absolute privilege, which covers "not only . . . statements made in the course of a pending judicial proceeding but also . . . communications relevant to proposed judicial proceedings.”
The Court entered a series of discovery rulings in this case.
In a July 2007 ruling, the Court struck a Motion to Compel because the moving party had not included a certificate of compliance with Business Court Rule 18.6(a). The Court found an attachment including the correspondence between the parties over discovery matters to be insufficient: "[t]he purpose of the certificate is to have the moving party succinctly set out what was done to resolve the dispute short of judicial intervention—the Court has no interest in, nor should it be burdened with, sifting through 23 pages of correspondence to determine whether the parties have complied with its rules."
In an October 2007 opinion, the Court expressed its frustration with the discovery conduct of the lawyers for the parties: "[r]ather than focusing on the merits of the claims, counsel have opted for personal combat, engaging in chest-thumping and mud-slinging the likes of which would make a professional wrestler blush." The Court admonished that "counsel are not awarded points for gamesmanship in discovery; rather, the proper focus should be on the orderly disclosure of relevant facts." The Court stayed all further discovery pending its consideration of a raft of Motions to Compel filed by the parties, and reminded the parties of the possibility of sanctions for their conduct.
In a January 2008 opinion,the Court found that Defendant’s counsel had "abused the discovery process" by surreptitiously copying privileged documents from electronically stored information (ESI) produced by the Plaintiff. The Court ordered the data returned to Plaintiff and ruled that the Defendant could not use any of the information.
In a February 2008 ruling, the Court ruled that the Defendant could not make use of any information contained in the returned ESI, even if that information was obtained legitimately, from other sources, during discovery.
A party must comply with Business Court Rule 15.8 (word limitation for briefs) and 18.6 (requiring certification prior as to resolution efforts before filing a motion to compel) even when pursuing discovery from a non-party.
Although Plaintiff’s claims were timely against the insurance agent they claimed had defrauded them, those claims were not timely against the agent’s employer. The agent had terminated his relationship with his employer several years before the lawsuit was filed. Although the statute did not run against the agent, because the alleged fraud continued, the Court held that "the statute of limitations as to claims against a principal is tolled only to the extent its agent continues to engage in fraudulent conduct during the course of the agency relationship. Should the agency relationship terminate, however, there no longer exists a basis to impute the deceptive acts of the agent to the principal for purposes of tolling the statute of limitations, and the applicable limitations period therefore begins to run."
A manager of an limited liability company may not, as a condition of the payment of consideration from a merger of the LLC, require that the member receiving the consideration execute a general release exonerating the manager and insiders from any misconduct. Holding the consideration "hostage" in exchange for such a release might amount to willful and wanton conduct warranting punitive damages.
An LLC member pursuing a derivative claim must be a member of the LLC at the time the suit is filed. Where the LLC no longer existed at the time the lawsuit was filed, Plaintiffs lacked standing to bring their claim. Plaintiff’s claim for mismanagement was a "classic derivative claim," which was also barred by their lack of standing.
The Court also dismissed Plaintiffs’ unfair and deceptive practices claim, because "misconduct arising from a merger of business entities is not the type of ‘regular, day-to-day’ business activity that is the principal focus of North Carolina’s Unfair and Deceptive Trade Practices Act."
Plaintiff sought Defendant’s psychiatric records in discovery to determine whether she had ever been treated for bipolar disorder. The Court determined that the Defendant had not met her burden of establishing that the information sought was subject to the Psychologist-Patient privilege, and ordered the records to be produced.
Paintiffs, who had suffered signficant losses on variable annuity policies sold to them by the defendant agents and insurance companies, asserted claims on multiple theories: breach of fiduciary duty, constructive fraud, unfair and deceptive practices, negligence, negligent misrepresentation, aiding and abetting breach of fiduciary duty, and unjust enrichment.
The Court dismissed some claims and ordered the Plaintiffs to replead others with more particularity.
It held that Plaintiffs could proceed on their claims against some of the agents for breach of fiduciary duty, given the Plaintiffs alleged lack of financial sophistication and their allegations of reliance upon the expertise of the agents. There was no claim for such breach against the insurance companies, since they had not obtained any benefit from the sale of the policies other than the commissions received.
The causes of action for breach of fiduciary duty arose when the Plaintiffs knew or should have known of the facts giving rise to their claims. The Court found the facts insufficient to determine whether the statute of limitations had run, and ordered Plaintiffs to replead their claims with more particularity. The Court made a similar order with respect to the constructive fraud claim, and ordered Plaintiffs to provide more detail in their pleading as to when they were charged the commissions and surrender charges that formed the basis of their claims. Those charges would have put Plaintiffs on notice of their claims and begun the running of the statute of limitations.
The Court also demanded more particularity on the negligent misrepresentation claim. It disagreed with Plaintiffs contention that their only burden was to allege the misrepresentations made, and that they had been made negligently. Instead, Plaintiffs had to alleged "(1) there was a duty owed by defendants to plaintiffs, (2) the defendants did not use reasonable care in supplying information leading to (3) misrepresentations made to the plaintiffs which (4) the plaintiffs justifiably relied on (5) and that reliance caused pecuniary injury to the plaintiffs."
The Court dismissed the unfair and deceptive practices claim. It found that variable annuity policies are subject to pervasive and intricate regulation, and that such policies involve securities transactions not within the scope of the statute. It made no difference that the Plaintiffs did not understand that they were investing in securities.
The punitive damages claims against the insurance companies were also dismissed, because there is no vicarious liability for punitive damages.
The unjust enrichment claims were also dismissed because there was an express contract between the parties.
The Court denied Defendant’s motion to dismiss Plaintiff’s unfair and deceptive practices claim. It rejected the argument that the matter before the Court was simply a private dispute which did not implicate the consuming public or the general marketplace, and was therefore not "in commerce."
The Court held that the statute reaches "derivative claims arising out of fraudulent activities relating to the manner in which a business conducts its “regular, day-to-day activities, or affairs . . . .” It further held that plaintiff, in its derivative action, had alleged fraud and various breaches of the duties of good faith, loyalty, and due care, stating "North Carolina courts have consistently held that allegations of fraud or a breach of fiduciary duty will support a separate claim for unfair or deceptive trade practices."
Defendants moved to dismiss on the ground that their signatures did not appear on the agreement which was the subject of the suit. The Court denied the motion based on plaintiff’s claim that the defendants were co-adventurers. Since adventurers in a joint venture are treated as partners in a partnership, the signature of one alleged co-adventurer was sufficient to bind all.
The Court also found a question of fact on whether the contract had been executed under seal so as to make applicable the ten year statute of limitations of N.C. Gen. Stat. §1-47(2).
The issue here was the timeliness of Plaintiff’s claim against the estate of one of the defendants. The Plaintiff had failed to serve that defendant’s personal representative with notice of his claim within the 90 day period prescribed in N.C. Gen. Stat. §28A-19-3(a).
The Plaintiff argued that it was excused from the notice requirement because the personal representative had a duty to notify it of the 90-day claim period. In order to carry that burden, however, the Plaintiff needed to show that the personal representative had actual knowledge of the claim. The Court that there was no such evidence, based on the affidavit of the personal representative denying such knowledge. The Court held that the personal representative had "no affirmative duty to shift through all the work files accumulated during [the decedent’s} career to determine whether any one of them could possibly be the basis of an unsatisfied claim that could be asserted against the estate."
The Court also rejected Plaintiff’s argument that its breach of contract claim was subject to the ten year statute of limitations of N.C. Gen. Stat. §1-47(2) because the contract had been signed under seal. It found, as a matter of law, that the contract had not been signed under seal.