The Court began this final installment of the Maurer (2005 NCBC 1; 2005 NCBC 4) saga with a bit of ominous poetry: "O, what a tangled web we weave, When first we practise to deceive."
The first issue it addressed was whether bonus payments which the company had withheld from a terminated shareholder/employee were "wages" within the North Carolina Wage and Hour Act. If they were, the Court was entitled to award liquidated damages as a result of the company’s failure to pay. The Court rejected a blanket rule that payments to be made following termination of employment could not be "wages," and was persuaded by the company’s own treatment of the bonus payments as such by making withholdings for Social Security and Medicare.
The Court found that the company had not acted in good faith in withholding the payments, and that it had done so in order to pressure the plaintiff into selling her stock. The Court refused to consider the company’s argument that it had acted on the advice of its counsel, since the company had invoked the attorney-client privilege at the lawyer’s deposition. It awarded plaintiff liquidated damages on this aspect of her claim.
The Court was not so generous, however, on plaintiff’s fraud claim, on which she had prevailed at trial. It granted judgment notwithstanding the verdict on this claim, holding that the alleged misrepresentation by a defendant that he would arrange for a sale of the company if he was hired and given stock was not definite and specific enough to support a claim for fraud, and that plaintiff could not have reasonably relied upon it.
Plaintiff could not recover for dilution of her ownership when one of the individual defendants purchased additional stock, because there can be damages for dilution of ownerhip only when the recipient pays less than the actual value of the stock. The Court also set aside the jury’s award of punitive damages, and held that there could be cases where a plaintiff prevailed on a fraud claim (which requires proof by a preponderance of the evidence) but would not be entitled to punitive damages (which require proof by clear and convincing evidence).
The Court was critical of plaintiff’s failure to disclose a secret "side deal" with one of the defendants, which it termed a breach of her fiduciary duty.