The NC Business Court’s decision last month in Krawiec v. Manly, 2016 NCBC 7, illustrates a couple of things not to do in the Court.
Don’t Make "Aiding and Abetting" Claims
The Plaintiff made a claim against some of the Defendants for aiding and abetting the other Defendants in their alleged breach of contract. It didn’t withstand a Motion to Dismiss.
Judge Bledsoe observed that there was only one mention of such a cause of action in a reported North Carolina decision. That was in an unpublished 2011 Superior Court Order that dismissed the claim. Although there was an appeal of that Order, the Court of Appeals didn’t consider that cause of action. Op. ¶71 (citing Pete Fortner, PLLC v. Koonce Wooten & Heywood, LLP, 2011 N.C. App. LEXIS 130).
If the lack of North Carolina authority was not enough of a basis to dismiss the Plaintiffs’ aiding and abetting claim, Judge Bledsoe also stated that numerous states had refused to recognize a claim for aiding and abetting a breach of contract (like New York, Illinois, Pennsylvania, and Arizona). Op. ¶71.
If you are wondering why North Carolina’s Courts would even need to recognize a claim for aiding and abetting a breach of contract when our Courts already recognize a claim for tortious interference with contract, you are dead on target. Judge Bledsoe recognized that "some courts have noted that ‘aiding and abetting breach of contract’ is akin to a claim for tortious interference with contract." Op ¶71 & n.15.
But the tortious interference counterclaim that the Plaintiffs had brought was dismissed along with their aiding and abetting claim. Why? There was no allegation that the Defendants had knowledge of the contract that was interfered with, an essential element of the tort.
The breach of contract claim was not the only aiding and abetting claim that the Court dismissed. It also dismissed an aiding and abetting breach of fiduciary claim. The validity of those claims has repeatedly been questioned by the Business Court and even by the NC Court of Appeals. Judge Bledsoe described the validity of such a claim as an "open question." Op. ¶72.
The Court didn’t have to address whether such a claim exists because the Plaintiffs had not alleged that any of the Defendants owed them a fiduciary duty. There has to be a breach of a fiduciary duty before it can be "aided and abetted." Op. ¶72.
It is probably a waste of time to make an aiding and abetting claim in the Business Court. At least for aiding and abetting a breach of contract or aiding and abetting a breach of fiduciary duty.
You might remember the name of the Krawiec case. It generated an Opinion from the Business Court last year holding that the filing of an amended Complaint moots a previously filed Motion to Dismiss. That win last year for the Plaintiffs only delayed the Business Court’s review of their claims following the filing of a Motion to Dismiss the Amended Complaint.
But these Plaintiffs only delayed the inevitable consideration of a Motion to Dismiss by filing their Amended Complaint. Judge Bledsoe dismissed a substantial number of their claims, based on a Motion to Dismiss the Amended Complaint. But several claims survived the renewed Motion to Dismiss like: the breach of contract claim, as well as claims for fraudulent misrepresentation, unjust enrichment, and punitive damages.
Don’t Make A Trade Secrets Claim Without Pleading Every (Yes, EVERY) Aspect Of It With Specificity
Among the claims dismissed by Judge Bledsoe was the Plaintiffs’ claim of trade secrets in their "original ideas and concepts for dance production." That claim was dismissed because it was, as Judge Bledsoe put it, "so non-specific and generalized as to be meaningless." Op. ¶46.
The allegation that some of the Defendants had "unlawfully disclosed" the claimed trade secrets was also deemed inadequate. Op. ¶48. The requirement of specificity in trade secrets pleadings also extends to "the acts by which the alleged misappropriation was accomplished." Op. ¶49.