WHALEN v. TUTTLE, 2024 NCBC 72

STATE OF NORTH CAROLINA
MECKLENBURG COUNTY
IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
24CV029650-590
WPATRICK WHALEN, individually,
and CU SOBE, LLC,
Plaintiffs,
v.
MICHAEL M. TUTTLE,
Defendant.
ORDER AND OPINION
ON MOTION TO STRIKE
AND MOTION TO DISMISS
1. 	Patrick Whalen and Michael Tuttle are co-owners (with other individuals)
of half a dozen restaurant businesses, including CU SOBE, LLC. 	In a private
mediation earlier this year, Whalen and Tuttle signed a written agreement to settle
a host of long-smoldering disputes between them. Just a few months later, Whalen
and CU SOBE brought this suit against Tuttle, claiming that he breached the
settlement agreement and engaged in misconduct related to CU SOBE’s funding and
operations.
2. 	Tuttle has moved to strike certain allegations in the complaint and to
dismiss all claims asserted against him. 	For the following reasons, the Court
DENIES the motion to strike and GRANTS in part and DENIES in part the
motion to dismiss.
Parton Law PLLC, by Corey Parton and Leslie Muse, for Plaintiffs Patrick
Whalen and CU SOBE, LLC.
Michael Best & Friedrich LLP, by Justin G. May, Rebecca R. Thornton, J.
Luke Taylor, and Matt B. Couch, for Defendant Michael M. Tuttle.
Conrad, Judge.
Whalen v. Tuttle, 2024 NCBC 72.

I.
BACKGROUND
3. 	The following background assumes that the allegations in the complaint are
true.
4. 	Whalen 	owns 	and 	operates 	many 	restaurants 	in 	the 	Carolinas 	and
elsewhere. 	He first met Tuttle in 2018. At that time, Tuttle was a frequent patron
of Whalen’s restaurants with aspirations to become one of Whalen’s investors. Tuttle
approached Whalen to express his interest, offering assurances that he had ample
means and experience to help fund future restaurant ventures. Eventually, Whalen
and his business partners agreed to bring Tuttle into the fold. 	Starting in 2019,
Tuttle made five investments in Whalen’s restaurants, totaling more than $3 million,
in return for ownership interests in the restaurants’ operating companies. 	(See
Compl. ¶¶ 11, 13–15, 17–19, 22, ECF No. 3.)
5. 	At issue here is a sixth investment. 	In June 2022, Whalen and Tuttle
discussed opening a new restaurant in Miami, Florida, to be owned and operated by
a North Carolina LLC called CU SOBE. On a visit to the prospective site, they struck
an oral agreement. 	Tuttle promised to contribute $2 million toward the project; he
would pay this amount in twenty installments beginning the following summer; and
in return, he would get a 25% membership interest in CU SOBE. 	That December,
CU SOBE leased space for the restaurant and began lining up contractors to handle
its construction. (See Compl. ¶¶ 25, 27, 31, 36.)
6. 	Things began to go sideways as the due date for Tuttle’s first installment
approached. 	Although the schedule called for him to pay $100,000 in July 2023, he

asked Whalen to push back the due date by two months. Whalen was willing to grant
the two-month delay on condition that CU SOBE would have the right to accelerate
the unpaid balance at any time. 	Tuttle agreed. 	Then, on 5 July 2023 (apparently
before Tuttle’s delayed first installment would have been due), CU SOBE exercised
its acceleration right and demanded that Tuttle to pay all $2 million immediately.
When Tuttle refused, Whalen called for a meeting. 	In a testy exchange, Whalen
pressed Tuttle about his financial commitment to CU SOBE and accused him of
engaging in rude and disruptive behavior at several restaurants. Tuttle supposedly
reaffirmed his $2 million pledge and apologized for his behavior. (See Compl. ¶¶ 44,
45, 47, 48, 50, 52, 60, 61.)
7. 	But this fragile truce did not last. 	Tuttle requested financial records from
the entities in which he had invested and began disparaging Whalen in messages to
fellow investors. Growing acrimony gave rise to a fight for control of CU SOBE and
other companies in Whalen’s restaurant empire. In one incident, Tuttle tried to fire
a lawyer that Whalen retained to represent CU SOBE. 	This prompted a backlash
from Whalen and other investors, who voted to ban Tuttle from restaurant grounds
while affirming that Whalen alone had complete managerial authority over each
restaurant and its operating entity. 	Meanwhile, having received no payments from
Tuttle, CU SOBE turned to other investors for funding and delayed the opening of
the Miami restaurant. (See Compl. ¶¶ 63, 68, 79, 83–85.)

8. 	In April 2024, Whalen and Tuttle held a private mediation to try to resolve
their many disputes. At mediation, they negotiated and signed a written settlement
agreement. (See Compl. ¶¶ 86, 87.)
9. 	Despite the apparently successful mediation, Whalen and CU SOBE filed
this lawsuit. Their complaint asserts claims for breach of the settlement agreement,
breach of the oral agreement to fund CU SOBE’s operations, breach of CU SOBE’s
operating agreement, fraudulent inducement, and unfair or deceptive trade practices
under N.C.G.S. § 75-1.1.
10. 	Tuttle has moved to strike a series of allegations in the complaint and to
dismiss all claims. (See ECF Nos. 8, 11.) Following full briefing and a hearing on 15
November 2024, the motions are ripe.
II.
MOTION TO STRIKE
11. 	The Court begins with the motion to strike. A trial court “may order stricken
from 	any 	pleading 	any 	. . . 	redundant, 	irrelevant, 	immaterial, 	impertinent, 	or
scandalous matter.” 	N.C. R. Civ. P. 12(f). 	“Matter should not be stricken unless it
has no possible bearing upon the litigation. If there is any question as to whether an
issue may arise, the motion should be denied.” 	Shellhorn v. Brad Ragan, Inc., 38
N.C. App. 310, 316 (1978).
12. 	Tuttle seeks to strike two groups of allegations. The first group includes five
paragraphs alleging that Tuttle engaged in boorish and disruptive behavior at the
restaurants in which he invested. 	(See Compl. ¶¶ 52–54, 64, 143.) 	Tuttle contends
that these allegations are irrelevant. 	The second group includes six paragraphs

alleging that Tuttle disparaged and defamed Whalen in communications with fellow
investors and other individuals. 	(See Compl. ¶¶ 67–71, 142.) 	Tuttle contends that
these allegations are conclusory and insufficient to satisfy the heightened pleading
standard for defamation.
13. 	Both arguments fall short. The complaint lists Tuttle’s disruptive behavior
as one of the aggravating circumstances giving rise to a claim for unfair or deceptive
trade 	practices 	under 	section 	75-1.1. 	Likewise, 	the 	complaint 	lists 	Tuttle’s
supposedly defamatory statements as an additional basis for that claim, as well as
the claim for breach of CU SOBE’s operating agreement. 	This does not necessarily
mean that the allegations are sufficient to state a claim for relief. But Tuttle has not
shown that they have “no possible bearing upon the litigation.” 	Shellhorn, 38 N.C.
App. at 316. In its discretion, the Court denies the motion to strike. See, e.g., Buckley
LLP v. Series 1 of Oxford Ins. Co. NC LLC, 2020 NCBC LEXIS 36, at *6–7 (N.C.
Super. Ct. Mar. 23, 2020) (denying motion to strike “inflammatory allegations”
relating to section 75-1.1 claim).
III.
MOTION TO DISMISS
14. 	Next, the Court turns to the motion to dismiss. See N.C. R. Civ. P. 12(b)(6).
Familiar standards of review apply. Although the Court must treat all well-pleaded
allegations as true and view the facts and permissible inferences in the light most
favorable to the nonmoving party, see, e.g., Sykes v. Health Network Sols., Inc., 372
N.C. 326, 332 (2019), it “is not required to accept as true any conclusions of law or

unwarranted deductions of fact,” Oberlin Capital, L.P. v. Slavin, 147 N.C. App. 52,
56 (2001).
15. 	One preliminary matter must be addressed. In support of his motion, Tuttle
attached CU SOBE’s articles of organization and the settlement agreement that he
and Whalen signed in April 2024. 	(See, e.g., Def.’s Exs. A, B, ECF Nos. 10.1, 10.2.)
Whalen and CU SOBE object that these documents should not be considered because
they are outside the four corners of the complaint. 	The Court overrules their
objections. 	The articles of organization “are a public record available through the
North Carolina Secretary of State” and subject to “judicial notice.” Truist Fin. Corp.
v. Rocco, 2024 NCBC LEXIS 62, at *31 n.75 (N.C. Super. Ct. Apr. 25, 2024) (citing
N.C. R. Evid. 201). And “the complaint specifically refers” to, and asserts a claim for
breach of, the settlement agreement. Weaver v. St. Joseph of the Pines, Inc., 187 N.C.
App. 198, 204 (2007) (citation and quotation marks omitted). 	Neither document’s
authenticity is in dispute. Accordingly, the Court may consider them.
A. Breach of Settlement Agreement
16. 	Whalen claims that Tuttle breached their April 2024 settlement agreement.
As Tuttle correctly observes, though, the allegations of breach are too conclusory to
state a claim. 	All that the complaint alleges is that Tuttle’s “failure to perform a
material term of the Settlement Memorandum constitutes breach,” that Tuttle
“breached the Settlement Memorandum by repudiation, as evidenced by his words
and conduct,” and that Tuttle “further breached the Settlement Memorandum’s
implied provisions of good-faith and fair dealing.” 	(Compl. ¶¶ 93–95.) 	At no point

does the complaint identify which material term Tuttle failed to perform or the
actions or inactions that constituted the failure to perform. Nor does it describe the
words and conduct manifesting either a repudiation or a breach of the implied
covenant of good faith and fair dealing. The Court and Tuttle are left to guess at the
basis for the claim.
17. 	Accordingly, the Court grants the motion to dismiss Whalen’s claim for
breach of the settlement agreement. See Vogel v. Health Sci. Found., Inc., 2013 N.C.
App. LEXIS 1287, at *14 (N.C. Ct. App. 2013) (unpublished) (“[W]e are unable to
ascertain from our study of the complaint how Defendant’s alleged actions constitute
a breach of the contract between the parties.”); Glob. Promotions Grp., Inc. v. Danas
Inc., 2012 NCBC LEXIS 40, at *17 (N.C. Super. Ct. June 22, 2012) (dismissing
“conclusory” claim for breach of contract).
B. Breach of Oral Contract
18. 	CU 	SOBE 	claims 	that 	Tuttle 	breached 	an 	oral 	contract 	to 	fund 	its
operations. 	As alleged, Tuttle has not made any of the promised installment
payments toward his $2 million pledge. Nor did he pay the full contribution amount
when CU SOBE exercised its right to accelerate the balance. 	(See Compl. ¶¶ 104,
106, 108.)
19. 	Tuttle contends, first, that CU SOBE lacks standing. 	This is so, he says,
because he and Whalen reached their agreement in June 2022, (see Compl. ¶ 27),
some five months before CU SOBE’s articles of organization show that it was formed,
(see Def.’s Ex. B). 	Because CU SOBE did not exist at the time of the contract, he

contends, the company is not a party to it and has no right to enforce it. 	But this
argument rests on a misreading of the claim. The complaint alleges that Whalen and
Tuttle renegotiated matters in May 2023—long after CU SOBE’s formation—and
amended the contract. 	A fair inference is that CU SOBE is a party to the amended
contract. The allegations tend to show, for example, that Whalen negotiated on CU
SOBE’s behalf as its manager and that the amended contract gave CU SOBE the
right to accelerate the balance owed by Tuttle. (See Compl. ¶¶ 2, 45, 83, 106.) Viewed
in the light most favorable to CU SOBE, these allegations are sufficient to allege that
the company is a party to an oral contract with Tuttle and that it has standing to
enforce its contractual rights.
20. 	Second, 	Tuttle 	argues 	that 	the 	claim 	must 	be 	dismissed 	because 	his
settlement agreement with Whalen includes a general release. It would be premature
to dismiss the claim for that reason, however, because the meaning and enforceability
of the settlement agreement are uncertain. 	(See, e.g., Def.’s Ex. A ¶¶ 3, 12 (noting
that the agreement was “subject to Michael Tuttle’s satisfaction of due diligence” and
that the parties anticipated drafting “a more formal agreement” with additional
terms).) Whether the settlement agreement contains an enforceable general release
barring this and other claims is an issue for discovery.* See Brown v. Lanier, 60 N.C.
App. 	575, 	578 	(1983) 	(reversing 	and 	remanding 	to 	address 	disputes 	about
enforceability of release); Islet Scis., Inc. v. Brighthaven Ventures, LLC, 2017 NCBC
* This conclusion applies equally to Tuttle’s argument that the settlement agreement’s
release provision bars the claims for breach of the operating agreement, fraud, and unfair or
deceptive trade practices under section 75-1.1.

LEXIS 3, at *15–16 (N.C. Super. Ct. Jan. 12, 2017) (denying motion for judgment on
the pleadings due to factual disputes concerning application of release).
21. 	The Court denies Tuttle’s motion to dismiss CU SOBE’s claim for breach of
the oral contract.
C. Breach of CU SOBE’s Operating Agreement
22. 	Whalen and CU SOBE claim that Tuttle breached at least three provisions
in the company’s operating agreement. (See Compl. ¶¶ 120, 122, 125.) In seeking to
dismiss the claim, Tuttle argues that the complaint does not allege that he assented
to the operating agreement’s terms, meaning that a valid contract was never formed.
At most, he argues, the complaint alleges an unenforceable agreement to agree.
23. 	Although the complaint is not as clear as it could be, the Court concludes
that it sufficiently alleges that the operating agreement is a valid contract and that
Tuttle is a party to it. Taking the allegations as true, they show that Tuttle became
a member of CU SOBE, received “a printed copy of” its operating agreement, and
“agreed to be bound by the terms” of that agreement. 	(Compl. ¶¶ 27, 29, 30, 117.)
Moreover, the statutory default rule is that “[a] person who becomes an interest
owner is deemed to assent to, and is bound by . . . and is otherwise deemed to be a
party to, the operating agreement.” N.C.G.S. § 57D-2-31(b).
24. 	The Court denies the motion to dismiss the claim for breach of CU SOBE’s
operating agreement.

D. Fraud
25. 	Whalen and CU SOBE claim that Tuttle fraudulently induced them to give
him a membership interest in the company by falsely representing that he had
sufficient liquidity to satisfy his $2 million pledge. (See Compl. ¶¶ 133, 135.) Tuttle
seeks to dismiss the claim, arguing that the complaint does not allege that he made
any specific representation and otherwise does not satisfy the heightened pleading
requirements for fraud claims.
26. 	Fraud 	has 	five 	“essential 	elements”: 	(a) 	a 	false 	representation 	or
concealment of a material fact, (b) calculated to deceive, (c) made with intent to
deceive, (d) that did in fact deceive, and (e) that resulted in damage to the injured
party. Rowan Cnty. Bd. of Educ. v. U.S. Gypsum Co., 332 N.C. 1, 17 (1992). Unlike
contract claims, fraud claims must “be stated with particularity.” N.C. R. Civ. P. 9(b).
To satisfy the particularity requirement, a plaintiff typically must allege the “time,
place and content” of the misrepresentation, the “identify of the person making the
representation,” and “what was obtained as a result.” Terry v. Terry, 302 N.C. 77, 85
(1981).
27. 	The complaint does not come close to meeting this heightened standard.
Just three paragraphs describe the negotiations that led to Tuttle’s promise to fund
CU SOBE’s operations. Paragraph 25 states that Whalen and Tuttle first discussed
opening a new restaurant in Miami, Florida in June 2022. Paragraph 26 states that
they flew to Miami to visit a prospective restaurant site that same month. 	And
paragraph 27 states that they formed an oral contract—with Tuttle promising $2

million in return for an interest in CU SOBE—during the flight. Missing from these
paragraphs is any allegation, much less an allegation stated with particularity, that
Tuttle made a representation about his liquidity to induce Whalen to accept these
terms. 	See, e.g., S.N.R. Mgmt. Corp. v. Danube Partners 141, LLC, 189 N.C. App.
601, 612–13 (2008) (affirming dismissal of fraud claim due to lack of particularity
about time, place, and content of alleged representation).
28. 	In their opposition brief, Whalen and CU SOBE try to fill the gap with
allegations elsewhere in the complaint that Tuttle bragged in 2018 about his personal
wealth and assured Whalen in 2019 “that he was an experienced investor with
sufficient liquidity.” 	(Compl. ¶¶ 14, 17.) 	These alleged statements do not concern
Tuttle’s capacity to invest in CU SOBE—a restaurant business that was not yet
contemplated and that Whalen did not discuss with Tuttle for another three years.
See Charlotte Motor Speedway, LLC v. Cnty. of Cabarrus, 230 N.C. App. 1, 10 (2013)
(concluding that defendant’s alleged representation about its “ability to fund the
promised amounts” were not “definite and specific”). 	What’s more, Whalen and CU
SOBE have not alleged that Tuttle’s statements about his wealth and liquidity were
false when he made them in 2018 and 2019. Indeed, the complaint goes on to allege
that Tuttle invested upwards of $3 million in five restaurant businesses before any
discussions about CU SOBE occurred. (See Compl. ¶¶ 19, 21, 22.)
29. 	In addition, Whalen and CU SOBE point to events that took place long after
the time of the oral contract, including discussions that Whalen and Tuttle allegedly
had in 2023. 	But the fraud claim is limited to “misrepresentations regarding his

liquidity prior to the” contract. 	(Compl. ¶ 136 (emphasis added).) 	In any event,
Whalen and CU SOBE do not explain how a misrepresentation that Tuttle might
have made in 2023 could have induced Whalen to enter into a contract a year earlier.
30. 	At points in their brief, Whalen and CU SOBE also suggest that Tuttle’s
promise to pay $2 million was itself fraudulent. 	They did not plead that theory,
however. Plus, an unfulfilled promise, standing alone, does not support an action for
fraud. 	The plaintiff must also allege facts “from which a court and jury may
reasonably infer that the defendant did not intend to carry out [the promissory]
representations when they were made.” 	Whitley v. O’Neal, 5 N.C. App. 136, 139
(1969). No allegations along those lines appear in the complaint.
31. 	The Court grants the motion to dismiss the claim for fraudulent inducement.
E. Section 75-1.1
32. 	The section 75-1.1 claim is a catchall claim premised on each of the other
claims for fraud and breach of contract, as well as allegations that Tuttle defamed
Whalen. (See, e.g., Compl. ¶¶ 140–48.) Tuttle contends that the section 75-1.1 claim
is defective for the same reasons as the other claims and for additional, independent
reasons.
33. 	The Court agrees with Tuttle. First, the claims for breach of the settlement
agreement and fraudulent inducement, having been dismissed, cannot support the
section 75-1.1 claim.
34. 	Second, the remaining claims—for breach of the oral contract and breach of
the operating agreement—cannot support the section 75-1.1 claim either. 	“A mere

breach of contract, even if intentional, is not an unfair or deceptive act under [section
75-1.1].” 	Bob Timberlake Collection, Inc. v. Edwards, 176 N.C. App. 33, 42 (2006)
(internal citation omitted). 	Rather, “a party must show substantial aggravating
circumstances attending the breach of contract,” id., such as forgery, destruction of
documents, or deception in the contract’s formation, see Post v. Avita Drugs, LLC,
2017 NCBC LEXIS 95, at *10–12 (N.C. Super. Ct. Oct. 11, 2017). Nothing of the sort
is alleged.
35. 	Third, although defamation “may be sufficient to make out a separate”
section 75-1.1 claim, “the predicate tort must nevertheless be validly alleged.” 	Reid
Pointe, LLC v. Stevens, 2008 NCBC LEXIS 16, at *27 (N.C. Super. Ct. Aug. 18, 2008).
“The claimant must recite the defamatory statement verbatim or ‘with sufficient
particularity 	to 	enable 	the 	court 	to 	determine 	whether 	the 	statement 	was
defamatory.’ ” 	Addison Whitney, LLC v. Cashion, 2017 NCBC LEXIS 111, at *15
(N.C. Super. Ct. Dec. 1, 2017) (quoting Stutts v. Duke Power Co., 47 N.C. App. 76, 84
(1980)). 	Here, though, the complaint is too vague, stating only that Tuttle “alleged
poor management and potential financial improprieties” by Whalen. 	(Compl. ¶ 68.)
The particularity requirement demands more. 	See Greentouch USA, Inc. v. Lowe’s
Co. Inc, 2024 NCBC LEXIS 132, at *17 (N.C. Super. Ct. Oct. 2, 2024) (dismissing
claim 	based 	on 	insufficiently 	particular 	allegation 	that 	defendant 	made 	false
statements about plaintiff’s “financial condition”); see also Wynn v. Tyrell Cnty. Bd.
of Educ., 2017 N.C. App. LEXIS 358, at *8 (N.C. Ct. App. 2017) (unpublished)
(observing that plaintiff must allege more than “the gist of the statements”).

36. 	Fourth, 	Tuttle’s 	alleged 	misconduct 	relates 	to 	his 	overdue 	capital
contribution, 	interference 	with 	Whalen’s 	managerial 	authority, 	disruption 	of
restaurant operations, and noncompliance with CU SOBE’s operating agreement.
Even if true, these actions were not “in or affecting commerce” as required by section
75-1.1. 	They 	are 	simply 	internal 	company 	disputes 	or 	disputes 	involving
extraordinary events unrelated to day-to-day business activities. 	See Nobel v.
Foxmoor Grp., LLC, 380 N.C. 116, 121–22 (2022) (holding that section 75-1.1 does not
apply 	to 	extraordinary 	events, 	such 	as 	“[i]nvestments 	and 	other 	mechanisms
associated with financing business entities”); White v. Thompson, 364 N.C. 47, 51–52
(2010) (affirming dismissal of claim based on conduct “solely related to the internal
operations” of business); see also Upchurch v. Sapp, 2020 NCBC LEXIS 118, at *7–8
(N.C. Super. Ct. Oct. 8, 2020) (collecting cases). 	That Whalen and Tuttle co-own
several restaurants and related operating entities makes no difference. 	See, e.g.,
LLG-NRMH, LLC v. N. Riverfront Marina & Hotel, LLLP, 2018 NCBC LEXIS 105,
at *12 (N.C. Super. Ct. Oct. 9, 2018) (“The fact that separate entities comprise a single
market participant does not make external what is otherwise internal to the
business.” (cleaned up)).
37. 	The Court therefore grants the motion to dismiss the section 75-1.1 claim.
IV.
CONCLUSION
38. 	For these reasons, the Court DENIES the motion to strike.
39. 	In addition, the Court GRANTS the motion to dismiss the claims for breach
of the settlement agreement, fraudulent inducement, and violations of section 75-1.1.

In its discretion, the Court DISMISSES without prejudice the claims for breach
of the settlement agreement and fraudulent inducement and DISMISSES with
prejudice the section 75-1.1 claim. 	The Court DENIES the motion to dismiss the
claims for breach of the oral contract and breach of the operating agreement.
SO ORDERED, this the 19th day of November, 2024.
/s/ Adam M. Conrad
Adam M. Conrad
Special Superior Court Judge
for Complex Business Cases