Reid Pointe, LLC v. Stevens

Reid Pointe, LLC v. Stevens, 2008 NCBC 15.

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
COUNTY OF MECKLENBURG 08 CVS 4304

REID POINTE, LLC, TUCKER CHASE, LLC,
MEADOW, LLC, SOUTHEASTERN LAND
INVESTMENTS, LLC, KYLIGLEN, LLC,
HARRY C. GRIMMER, and HARRY C.
GRIMMER AND ASSOCIATES, LLC,

Plaintiffs,
ORDER & OPINION
v.

CHARLES A. STEVENS and CAROLINA
DEVELOPMENT OF CHARLOTTE, INC.,

Defendants.

Bishop, Capitano, & Moss, P.A. by J. Daniel Bishop for Plaintiffs.

James, McElroy & Diehl, P.A. by Edward T. Hinson, Jr. for
Defendants.

Diaz, Judge.
{1} Before the Court is Plaintiffs’ Motion for Judgment on the Pleadings
as to Defendants’ Counterclaims (the “Motion”).
{2} After considering the Motion, the briefs of the parties, and the
arguments of counsel, the Court GRANTS in part and DENIES in part Plaintiffs’
Motion.

I.
PROCEDURAL BACKGROUND
{3} On 26 February 2008, Plaintiffs filed their Complaint in this case.
{4} The Complaint seeks a declaratory judgment with respect to the
parties’ rights under a series of real estate development agreements. (Compl. ¶¶
32–35.)
{5} The Complaint also asserts claims for (1) breach of fiduciary duty; (2)
constructive fraud; (3) conversion; (4) unfair and deceptive trade practices; and (5)
breach of contract.
{6} On 26 March 2008, Defendants answered the Complaint and filed
Counterclaims asserting claims for (1) dissolution of the five limited liability
companies created pursuant to the parties’ real estate development agreements; (2)
breach of contract; and (3) unfair and deceptive trade practices.
{7} On 15 May 2008, Plaintiffs filed the Motion and a supporting brief.
{8} Defendants filed a response brief on 4 June 2008.
{9} Plaintiffs filed a reply brief on 18 June 2008.
{10} The Court heard oral argument on the Motion on 10 July 2008.

II.
THE FACTS
A.
THE PARTIES
{11} Plaintiff Harry C. Grimmer and Associates (“Grimmer Associates”) is
a North Carolina limited liability company. Plaintiff Harry C. Grimmer
(“Grimmer”) is the sole member of Grimmer Associates. (Compl. ¶ 2.) 1
{12} Defendant Carolina Development of Charlotte, Inc. (“CDC”) is a North
Carolina corporation. Defendant Charles A. Stevens and his wife are the sole
owners of CDC. (Compl. ¶ 4.)
{13} Plaintiffs Meadow, LLC (“Meadow”), Tucker Chase, LLC (“Tucker
Chase”), Reid Pointe, LLC (“Reid Pointe”), Southeastern Land Investments, LLC
(“Southeastern”) and Kyliglen, LLC (“Kyliglen”), are North Carolina limited liability
companies (herein collectively referred to as the “LLCs”). (Compl. ¶ 6.)
{14} Meadow, Tucker Chase, Reid Pointe and Kyliglen were created to
develop real property as residential subdivisions. (Compl. ¶ 7.)

1
The Court refers to Grimmer and Grimmer Associates collectively as the “Grimmer Plaintiffs.”
{15} Southeastern was created to hold for resale parcels within each of the
Reid Pointe and Tucker Chase subdivisions. (Compl. ¶ 8.)
{16} Grimmer Associates and CDC are the sole members of Meadow.
(Compl. ¶ 6.)
{17} Grimmer and CDC are the sole members of Tucker Chase, Reid
Pointe and Southeastern. (Compl. ¶ 6.)
{18} Grimmer and CDC (along with non-party John R. Poore) are the sole
members of Kyliglen. (Compl. ¶ 8; Countercl. ¶ 3.)
B.
THE COUNTERCLAIMS
{19} In 2003, Stevens and John R. Poore approached Grimmer to propose a
partnership to acquire and develop real property in North Carolina. (Countercl. ¶¶
1–2.)
{20} Grimmer agreed to provide the financing for the project, and the three
created Kyliglen to hold the property. (Countercl. ¶¶ 1–2.)
{21} Stevens subsequently assigned his interest in Kyliglen to CDC.
(Countercl. ¶ 3.)
{22} Following their partnership in Kyliglen, Stevens and Grimmer
discussed the prospect of forming other real estate ventures. (Countercl. ¶ 4.)
{23} On 24 September 2003, the parties executed a letter outlining their
“proposed working relationship.” (Am. Reply Ex. A (hereinafter the “Letter
Agreement”).)
{24} Among other things, the parties agreed to form a new LLC for each
development project. (Am. Reply Ex. A.)
{25} The Letter Agreement contemplated that Grimmer and Stevens
would be members of the LLCs, but that each would have a different role and
ownership interest. (Am. Reply Ex. A.)
{26} Grimmer, as a 70% owner of the LLCs, would be primarily responsible
for financing the projects. (Am. Reply Ex. A.)
{27} Specifically, Grimmer assumed responsibility for “us[ing] [his]
financial connections with a local lender to obtain the necessary financing . . . in the
[sic] an amount sufficient to provide for all project costs . . . that would carry the
financial requirements of the project for approximately one year.” (Am. Reply Ex.
A.)
{28} Stevens, on the other hand, would own 30% of the LLCs and be
responsible for managing each company’s “day-to-day affairs.” (Am. Reply Ex. A.)
{29} In 2004, Stevens and Grimmer created Reid Pointe, Tucker Chase,
Meadow, and Southeastern, as contemplated by the terms of the Letter Agreement.
(Countercl. ¶ 10.) 2
{30} Each LLC was governed by an identical Operating Agreement entered
into by Grimmer (or Grimmer Associates in the case of Meadow) and CDC. (Compl.
¶ 9.)
{31} Reid Pointe, Tucker Chase, and Meadow also entered into separate
Land Development Construction and Management Services Agreements (the
“Development Agreements”) with CDC, setting forth CDC’s construction,
development, and marketing responsibilities with respect to each parcel of land.
(Compl. ¶¶ 13–15.)
{32} For each project, CDC developed draft budgets in accordance with the
terms of the respective Operating and Development Agreements. (Countercl. ¶ 11.)
{33} Defendants allege that heightened regulation in the construction
industry, coupled with extreme price increases in the cost of construction materials,
resulted in significant cost overruns for the development projects. (Countercl. ¶¶
14–17.)
{34} Defendants also allege that Grimmer was well aware of these
circumstances and was also partly to blame for the cost overruns. (Countercl. ¶¶
15, 18.) According to Defendants, Grimmer intervened in project management

2 Reid Pointe involved the development of property in Lancaster County, South Carolina.
(Mot. J.
Pleadings Ex. D.) The remaining LLCs were created to develop property in North Carolina. (Mot. J.
Pleadings Exs. A–C, E.)
issues on several occasions (despite the expectation that he would serve primarily
as a financial backer), which resulted in added and unnecessary expenses.
(Countercl. ¶ 18.)
{35} Among other things, Defendants assert Grimmer required Meadow to
pay $100,000.00 in excess invoices to his brother-in-law’s employer and caused
Tucker Chase to terminate a profitable contract in order to benefit his son.
(Countercl. ¶¶ 18–19.)
{36} In January 2008, Grimmer offered to redeem CDC’s member interest
in Reid Pointe for $3000.00 (Countercl. ¶ 23.) When CDC refused, Defendants
allege Grimmer embarked on a calculated campaign to drive CDC out of the LLCs.
(Countercl. ¶ 28.)
{37} Defendants assert Grimmer demanded that the LLCs no longer pay
CDC for its services under the Development Agreements and (to that end) arranged
to freeze the LLCs’ bank accounts. (Countercl. ¶ 24.)
{38} Defendants further allege that Grimmer contacted numerous vendors
and financial institutions and made damaging and untrue statements about
Defendants to cripple the LLCs’ operations and facilitate Grimmer’s scheme to seize
control. (Countercl. ¶¶ 25–26.)
{39} Defendants also assert that Grimmer, as majority member of each
LLC, removed CDC as manager of the LLCs. (Countercl. ¶ 29.) Shortly thereafter,
according to Defendants, Grimmer began (1) harassing Defendants repeatedly for
information relating to the operation of the LLCs that Defendants had already
provided; and (2) making capital calls for each entity, knowing full well that CDC
would be unable to meet the calls and thus would be forced to forfeit its member
interests. (Countercl. ¶¶ 28–30.)
III.
CONTENTIONS OF THE PARTIES
A.
JUDICIAL DISSOLUTION
{40} Defendants contend that judicial dissolution of the LLCs is proper
under section 57C-6-02 of the North Carolina General Statutes on two grounds: (1)
that the assets of the LLCs are being misapplied and wasted; and (2) that such
action is required to protect the rights and interests of CDC.
{41} Plaintiffs respond that Defendants have failed to assert any specific
factual allegations in support of this claim, making it ripe for dismissal.
B.
BREACH OF CONTRACT
{42} Defendants have asserted three separate bases for their breach of
contract claim.
{43} First, Defendants allege that CDC performed services pursuant to the
Tucker Chase and Reid Pointe Development Agreements for which it has not been
paid.
{44} Second, Defendants allege that Grimmer failed to arrange and secure
the necessary financing to complete the Tucker Chase and Reid Pointe projects,
which, according to Defendants, constitutes a material breach of the Letter
Agreement.
{45} Third, Defendants assert that Grimmer has withheld CDC’s pro-rata
portion of profits from Meadow.
{46} With respect to the fees allegedly owed CDC under the Tucker Chase
and Reid Pointe Development Agreements, Plaintiffs contend the underlying
contracts are illegal and therefore not enforceable because CDC is not licensed as a
general contractor in North Carolina or a construction manager in South Carolina. 3

3 CDC admitted at the hearing of this matter that it does not hold such licenses.
{47} According to Plaintiffs, the Development Agreements require CDC to
render services that constitute general contracting in North Carolina and
construction management in South Carolina. Because CDC never obtained the
requisite licensing to engage in such work, Plaintiffs contend CDC may not recover
fees under the contracts.
{48} Plaintiffs also dispute Defendants’ breach of contract claims based on
the Letter Agreement.
{49} Plaintiffs contend the Letter Agreement merely constitutes an
agreement to agree, and in any event, is superseded by the parties’ subsequently-
executed Operating Agreements, which deal thoroughly with Grimmer’s financing
obligations vis-à-vis the LLCs.
{50} Plaintiffs also argue that Grimmer has not breached the financing
terms of the Letter Agreement. According to Plaintiffs, the Letter Agreement did
not impose an open-ended commitment on Grimmer to provide financing, but
instead limited his financing obligations to a period of one year, with which he has
fully complied.
{51} Finally, as to Defendants’ allegations relating to Plaintiffs’ failure to
distribute profits from the Meadow venture, Plaintiffs argue that Defendants have
failed to identify the contract and term breached by the alleged failure to distribute
profits. According to Plaintiffs, the Meadow Operating Agreement does not require
the distribution of profits, but rather provides that any such distribution is within
the manager’s discretion.
C.
UNFAIR AND DECEPTIVE TRADE PRACTICES
{52} Defendants contend the following actions of the Grimmer Plaintiffs
support a claim for unfair and deceptive trade practices under section 75-1.1 of the
North Carolina General Statutes: (1) using their superior position in the LLCs to
discharge CDC as manager without good cause; (2) making untrue and damaging
statements about CDC to various suppliers, service providers and regulators; and
(3) denying payments due to CDC and at the same time demanding a capital call
from CDC.
{53} Plaintiffs respond that Defendants’ unfair and deceptive trade
practices claim is ripe for dismissal because the allegations (1) are insufficient to
support the elements of an independent tort and amount to nothing more than a
simple breach of contract; and (2) describe internal corporate governance matters
not involving commerce.

IV.
PRINCIPLES OF LAW
A.
MOTION FOR JUDGMENT ON THE PLEADINGS
{54} The purpose of a motion for judgment on the pleadings pursuant to
Rule 12(c) of the North Carolina Rules of Civil Procedure is “to dispose of baseless
claims or defenses when the formal pleadings reveal their lack of merit.” Ragsdale
v. Kennedy, 286 N.C. 130, 137, 209 S.E.2d 494, 499 (1974).
{55} “In considering a motion for judgment on the pleadings, the trial court
is required to view the facts presented in the pleadings and the inferences to be
drawn therefrom in the light most favorable to the non-moving party.” Am. Bank &
Trust Co. v. Elzey, 26 N.C. App. 29, 31, 214 S.E.2d 800, 802 (1975).
{56} A motion for judgment on the pleadings should be denied “unless it is
clear that [the non-moving party] is not entitled to any relief under any statement
of the facts.” Praxair, Inc. v. Airgas, Inc., 1999 NCBC 5 ¶ 5 (N.C. Super. Ct. May
26, 1999), http://www.ncbusinesscourt .net/opinions/1999%20NCBC%205.htm
(citing Arroyo v. Scottie's Prof’l Window Cleaning, Inc., 120 N.C. App. 154, 461
S.E.2d 13 (1995)).
B.
JUDICIAL DISSOLUTION
{57} Under North Carolina law, a trial court may dissolve a limited liability
company if a member establishes one of the following four things:
(1) the managers, directors, or any other persons in control of the
limited liability company are deadlocked in the management of the
affairs of the limited liability company, the members are unable to
break the deadlock, and irreparable injury to the limited liability
company is threatened or being suffered, or the business and affairs of
the limited liability company can no longer be conducted to the
advantage of the members generally, because of the deadlock; (2)
liquidation is reasonably necessary for the protection of the rights or
interests of the complaining member; (3) the assets of the limited
liability company are being misapplied or wasted; or (4) the articles of
organization or a written operating agreement entitles the complaining
member to dissolution of the limited liability company.

N.C. Gen. Stat. § 57C-6-02(2) (2007).
{58} Judicial dissolution is a remedy left largely to the discretion of the trial
court, and this is so even where a party establishes a statutory ground for
dissolution. See Royals v. Piedmont Elec. Repair Co., 137 N.C. App. 700, 704, 529
S.E.2d 515, 518 (2000) (citing Foster v. Foster Farms, Inc., 112 N.C. App. 700, 706,
436 S.E.2d 843, 847 (1993)).
C.
GENERAL CONTRACTORS/CONSTRUCTION MANAGERS
{59} Section 87-1 of the North Carolina General Statutes defines a general
contractor as
any person or firm or corporation who for a fixed price, commission,
fee, or wage, undertakes to bid upon or to construct or who undertakes
to superintend or manage, on his own behalf or for any person, firm, or
corporation that is not licensed as a general contractor pursuant to this
Article, the construction of any building, highway, public utilities,
grading or any improvement or structure where the cost of the
undertaking is thirty thousand dollars ($30,000) or more.

N.C. Gen. Stat. § 87-1 (2007).
{60} The phrase “undertakes to superintend or manage” is correspondingly
defined by regulation to refer to the actions of one who “is responsible for
superintending or managing the entire construction project, and either contracts
directly with subcontractors to perform the construction for the project or is
compensated for superintending or managing the project based upon the cost of the
project or the time taken to complete the project.” 21 N.C. Admin. Code 12.0208
(2007).
{61} Similarly, South Carolina defines a construction manager as
an entity working for a fee whose duties are to supervise and
coordinate the work of design professionals and multiple prime
contractors, while allowing the design professionals and contractors to
control individual operations and the manner of design and
construction. Services provided by a construction manager may
include:

(a) coordination, management, or supervision of design or construction;
(b) cost management, including estimates of construction costs and
development of project budgets;
(c) scheduling, which may include critical path techniques, for all
phases of a project;
(d) design review, including review of formal design submission and
construction feasibility; and
(e) bid packaging and contractor selection.

S.C. Code Ann. § 40-11-20(5) (2007).

{62} One who undertakes a project as a general contractor in North
Carolina or a construction manager in South Carolina is required to comply with
the licensing requirements of that state. See N.C. Gen. Stat. § 87-10; S.C. Code
Ann. § 40-11-320.
{63} An unlicensed contractor/construction manager may not recover for
work performed in violation of the relevant statutes. Ron Medlin Constr. v. Harris,
658 S.E.2d 6, 9 (N.C. Ct. App. 2008) (citing Builders Supply v. Midyette, 274 N.C.
264, 270, 162 S.E.2d 507, 511 (1968)); W & N Constr. Co. v. Williams, 472 S.E.2d
622, 623 (S.C. 1996).
D.
BREACH OF CONTRACT
{64} The elements of a claim for breach of contract are: (1) existence of a
valid contract; and (2) breach of the terms of that contract. Lake Mary Ltd. P’ship
v. Johnston, 145 N.C. App. 525, 536, 551 S.E.2d 546, 554 (2001) (citing Poor v. Hill,
138 N.C. App. 19, 26, 530 S.E.2d 838, 843 (2000)).
{65} Where the terms of a contract are clear and unambiguous, the contract
must be interpreted as written. See Martin v. Vance, 133 N.C. App. 116, 121, 514
S.E.2d 306, 309 (1999) (citation omitted). In such instances, construction is a
matter of law for the court; the court’s only duty is to determine the legal effect of
the language used and to enforce the agreement as written. Atl. & E. Carolina Ry.
Co. v. S. Outdoor Adver., Inc., 129 N.C. App. 612, 617, 501 S.E.2d 87, 90 (1998).
{66} On the other hand, where the language of the contract is fairly and
reasonably susceptible to either of the constructions asserted by the parties, its
interpretation is a question for the jury. Carolina Place Joint Venture v. Flamers
Charburgers, Inc., 145 N.C. App. 696, 699, 551 S.E.2d 569, 571 (2001) (citation
omitted).
{67} Whether the language of a contract is ambiguous or unambiguous is a
matter for the Court to determine. Anderson v. Anderson, 145 N.C. App. 453, 458,
550 S.E.2d 266, 269 (2001) (citation omitted). In making this determination, words
are to be given their usual and ordinary meaning and all the terms of the
agreement are to be reconciled if possible. Id. at 458, 550 S.E.2d at 269–70.
E.
UNFAIR AND DECEPTIVE TRADE PRACTICES
{68} To state a claim under the North Carolina Unfair and Deceptive Trade
Practices Act, N.C. Gen. Stat. §§ 75-1.1 to 75-16 (the “UDTPA”), a plaintiff must
allege “(1) defendants committed an unfair or deceptive act or practice, (2) in or
affecting commerce and (3) plaintiff was injured as a result.” Phelps-Dickson
Builders, L.L.C. v. Amerimann Partners, 172 N.C. App. 427, 439, 617 S.E.2d 664,
671 (2005) (citing Edwards v. West, 128 N.C. App. 570, 574, 495 S.E.2d 920, 923
(1998)).
{69} Generally, proof of an independent tort is sufficient to make out a
separate UDTPA claim. See Sara Lee Corp. v. Carter, 351 N.C. 27, 31–33, 519
S.E.2d 308, 311–12 (1999) (finding that the breach of a fiduciary duty by an
employee also gave rise to an UDTPA claim); Governor’s Club, Inc. v. Governors
Club Ltd. P’ship., 152 N.C. App. 240, 250, 567 S.E.2d 781, 788 (2002) (“Allegations
sufficient to allege constructive fraud are likewise sufficient to allege unfair and
deceptive trade practices.”); Norman W. Drouillard & Print Purchasing
Consultants, Inc. v. Keister Williams Newspaper Servs., Inc., 108 N.C. App. 169,
171–73, 423 S.E.2d 324, 326–27 (1992) (holding that a violation of the Trade Secrets
Protection Act may also be a violation of the UDTPA); Roane-Barker v. Se. Hosp.
Supply Corp., 99 N.C. App. 30, 41, 392 S.E.2d 663, 670 (1990) (holding that a claim
alleging tortious interference with contract also makes out an UDTPA violation).
{70} However, to sustain an UDTPA cause of action in this context, the
predicate tort must be validly alleged. See Craven v. Cope, 656 S.E.2d 729, 734
(N.C. Ct. App. 2008).
{71} On the other hand, “[a] mere breach of contract, even if intentional, is
not sufficiently unfair or deceptive to sustain an action under N.C.G.S. § 75-1.1.”
Mitchell v. Linville, 148 N.C. App. 71, 75, 557 S.E.2d 620, 623 (2001) (quoting
Branch Banking & Trust Co. v. Thompson, 107 N.C. App. 53, 62, 418 S.E.2d 694,
700 (1992)).
{72} To be actionable under the UDTPA, the breach must be accompanied
by “substantial aggravating circumstances.” Johnson v. Colonial Life & Accident
Ins. Co., 173 N.C. App. 365, 370, 618 S.E.2d 867, 871 (2005).
{73} Additionally, matters relating to internal corporate governance and
capital-raising activities are not sufficiently “in or affecting commerce” to form the
basis for an unfair and deceptive trade practices claim. See HAJMM Co. v. House of
Raeford Farms, 328 N.C. 578, 594, 403 S.E.2d 483, 493 (1991) (stating that the
trade, issuance, and redemption of corporate securities or other capital-raising
devices are not “in or affecting commerce” and therefore are not covered by the
UDTPA); see also Maurer v. SlickEdit, Inc., 2005 NCBC 1 ¶ 40 (N.C. Super. Ct. May
16, 2005), http:// www.ncbusinesscourt.net/opinions/2005%20ncbc%201.htm
(dismissing a claim for unfair and deceptive trade practices because the allegations
related to matters of internal corporate affairs and operations and not the regular
business activities of the corporation).

V.
ANALYSIS
A.
JUDICIAL DISSOLUTION
{74} Defendants assert two grounds for judicial dissolution of the LLCs.
{75} First, Defendants assert that “Grimmer has demonstrated that he is
not capable to competently manage the affairs of the LLCs at issue and thus the
assets of [the] limited liability companies [are being and] will be misapplied or
wasted under the management of Grimmer.” (Countercl. ¶ 33, Dissolution ¶ 3.)
{76} However, as Plaintiffs point out, Defendants fail to allege any specific
action or conduct on the part of Grimmer that constitutes waste or demonstrates
the misapplication of the LLCs’ assets.
{77} Without more, Defendants’ allegation that the assets of the LLCs are
and will continue to be misapplied and wasted is insufficient to sustain a claim for
judicial dissolution. See Daniels v. Montgomery Mut. Ins. Co., 320 N.C. 669, 682–
83, 360 S.E.2d 772, 780 (1987) (stating that the court is only required to accept the
truth of the non-moving party’s factual allegations on a motion for judgment on the
pleadings, not the party’s conclusions of law).
{78} Defendants also argue that judicial dissolution is necessary to protect
their rights and interests in the LLCs, asserting that Grimmer has engaged in a
series of actions to take over the LLCs and squeeze out CDC’s interest in each of
these entities. (Countercl. ¶ 28.)
{79} Among other things, Defendants allege Grimmer (1) refused to pay
CDC for services it provided pursuant to the parties’ Development Agreements; (2)
removed CDC as manager of the LLCs; (3) openly criticized CDC to various vendors,
service providers, and banking institutions; (4) initiated capital calls, with which he
knew CDC could not comply; and (5) refused to provide information to CDC
regarding the operation of the LLCs, including refinancing details and project
status reports. (Countercl. ¶¶ 24–26, 28–29, 31.)
{80} Applying an indulgent standard to Defendants’ pleading, these
allegations relating to the deteriorating relationship between Grimmer and CDC
are sufficient to allow Defendants to pursue their claim that liquidation is
reasonably necessary to protect Defendants’ rights and interests in the LLCs. 4
Accordingly, Plaintiffs’ Motion is DENIED as to this claim.
B.
BREACH OF CONTRACT
1.
DEVELOPMENT AGREEMENTS
{81} CDC contends Grimmer breached the Reid Pointe and Tucker Chase
Development Agreements by refusing to pay it for services provided pursuant to the
agreements. According to CDC, Grimmer owes $291,717.00 under the Reid Pointe
Development Agreement and $144,476.00 under the Tucker Chase Development
Agreement. (Countercl., Breach of Contract ¶ 2.)
{82} Plaintiffs argue, however, that CDC may not recover for breach of
these agreements because CDC was not licensed as a general contractor in North
Carolina or a construction manager in South Carolina. The Court disagrees.
{83} The purpose of a state’s general contractor licensing requirements is to
protect the public from incompetent builders. See, e.g., Dellinger v. Michal, 92 N.C.
App. 744, 747, 375 S.E.2d 698, 699 (1989); Watson v. Harmon, 312 S.E.2d 8, 11
(S.C. Ct. App. 1984).

4 As noted earlier, however, the Court retains ultimate discretion to decide whether dissolution is

appropriate on the equities presented.
{84} Although the Court’s research has not disclosed any binding precedent
on point, there is persuasive authority suggesting that the denial of contract
remedies to unlicensed general contractors or construction managers should
properly be restricted to circumstances where the contractor seeks compensation for
work falling within the statutory definition of general contracting or construction
management. See generally McCarroll v. L.A. County Dist. Council of Carpenters,
315 P.2d 322, 336 (Cal. 1957) (stating that the failure to obtain the requisite license
does not render the unlicensed entity “completely outside the protection of the law
and den[y] relief from torts committed against them or breaches of contract other
than contracts to recover compensation”); Ranchwood Cmtys. P’ship v. Jim Beat
Constr. Co., 57 Cal. Rptr. 2d 386, 393 (Cal. Ct. App. 1996) (stating that an
unlicensed contractor may maintain a cause of action for breach of contract
unrelated to his construction work).
{85} Here, the Tucker Chase and Reid Pointe Development Agreements
require CDC to, among other things, (1) develop construction schedules with all
contractors; (2) supervise, coordinate and expedite construction of all site
improvements per approved construction drawings; (3) schedule and supervise the
installation of on-site utilities; and (4) coordinate construction surveying and
engineering services necessary for site improvements, staking of lot corners, etc.
(Mot. J. Pleadings Exs. C–D.)
{86} The Agreements, however, also require Plaintiffs to compensate CDC
for its work in (1) selling all the lots in the project; (2) developing marketing and
advertising budgets; (3) implementing approved marketing plans; (4) writing the
contracts for the purchase of all lots; and (5) hiring and supervising sales managers
and sales personnel. (Mot. J. Pleadings Exs. C–D.)
{87} Thus, even assuming that some of the work undertaken by CDC
pursuant to the Agreements requires a general contracting or construction
management license, other portions of the work do not.
{88} Because the pleadings do not specify to what work the fees sought in
Defendants’ Counterclaim relate and, in light of the indulgent standard the Court
must apply to a claim for relief at this stage, the Court DENIES Plaintiffs’ Motion
as to this claim.
2.
LETTER AGREEMENT
{89} Defendants also contend Grimmer breached the Letter Agreement by
failing to secure financing with respect to the Tucker Chase and Reid Pointe
projects.
{90} Plaintiffs dispute that the Letter Agreement is a binding contract.
Regardless, Plaintiffs assert this claim should be dismissed because Grimmer has
fully complied with the Letter Agreement.
{91} The Letter Agreement purports to require Grimmer to “obtain the
necessary financing . . . in the [sic] an amount sufficient to provide for all project
costs . . . that would carry the financial requirements of the project for
approximately one year.” (Am. Reply Ex. A (emphasis added).)
{92} This language is clear and unambiguous. It requires only that
Grimmer secure LLC financing for project costs for one year, which the Court
construes as requiring Grimmer to obtain financing during the first year startup for
each LLC.
{93} Defendants do not dispute that the LLCs were formed in 2004 and
therefore have been operating for over three years. (Answer ¶ 6.) Additionally,
Defendants concede that the parties enjoyed a satisfactory working relationship
until December 2007 or January 2008, when (according to Defendants) Grimmer
failed to provide continued financing for the LLCs. (Countercl. ¶¶ 22, 27.)
{94} As such, even assuming the Letter Agreement is a binding contract,
Grimmer has fully complied with its terms by obtaining financing for each LLC
during its initial year of operation.
{95} Accordingly, the Court GRANTS Plaintiffs’ Motion as to this claim.
3.
UNDISTRIBUTED PROFIT
{96} Defendants’ final contention is that Grimmer (in his capacity as
Meadow’s manager) failed to make a pro-rata distribution of Meadow’s profits to
CDC. Defendants argue that Grimmer’s refusal to distribute this profit is
actionable as a breach of contract.
{97} Plaintiffs respond that Defendants failed to adequately plead this
cause of action by not specifying the precise contract and terms breached by
Grimmer.
{98} According to Plaintiffs, the only provisions that address the
distribution of profits are found in the Meadow Operating Agreement, and those
provisions expressly provide that any such distribution is within the discretion of
the manager.
{99} The Court agrees with Plaintiffs. Because Defendants have failed to
identify the specific contract and term breached by Grimmer with respect to
Meadow’s undistributed profit, the claim for breach of contract fails as a matter of
law. See Claggett v. Wake Forest Univ., 126 N.C. App. 602, 608, 486 S.E.2d 443,
446 (1997) (“To state a claim for breach of contract, the complaint must allege that a
valid contract existed between the parties, that defendant breached the terms
thereof, the facts constituting the breach, and that damages resulted from such
breach.”). Moreover, to the extent Defendants rely on the terms of the Meadow
Operating Agreement to support their breach of contract claim, Defendants have
failed to allege facts supporting an abuse of discretion by Plaintiffs as to the
distribution of profits.
{100} Accordingly, the Court GRANTS Plaintiffs’ Motion as to this claim.
C.
UNFAIR AND DECEPTIVE TRADE PRACTICES
{101} Defendants cite several instances of conduct by Grimmer that they
contend amount to an UDTPA violation. 5 This claim too, however, fails as a matter
of law.
{102} Defendants first allege that the Grimmer Plaintiffs “den[ied] payments
due to CDC” and failed to provide “loans and bank financing as expressly promised
in previous agreements.” (Countercl., Unfair and Deceptive Trade Practices ¶ 3.)
{103} But, as Plaintiffs point out, the former alleges, if anything, merely a
breach of the Reid Pointe and Tucker Chase Development Agreements and the
latter merely a breach of the Letter Agreement. As such, they cannot form the basis
for a UDTPA claim. See Mitchell, 148 N.C. App. at 75, 557 S.E.2d at 623 (“[A]ctions
for unfair or deceptive trade practices are distinct from actions for breach of
contract, . . . and a mere breach of contract, even if intentional, is not sufficiently
unfair or deceptive to sustain an action under N.C.G.S. § 75-1.1.”).
{104} Defendants next contend that the Grimmer Plaintiffs’ use of their
“superior position in the LLCs to discharge CDC as manager without good cause”
and their “demand[s] [for] a capital call from CDC” are unfair or deceptive acts or
practices in or affecting commerce. (Countercl., Unfair and Deceptive Trade
Practices ¶ 3.)
{105} The term “commerce” under section 75-1.1, however, “connotes the
manner in which businesses conduct their regular, day-to-day activities, or affairs,
such as the purchase and sale of goods, or whatever other activities the business
regularly engages in and for which it is organized.” HAJMM Co., 328 N.C. at 594,
403 S.E.2d at 493.
{106} In this case, Grimmer’s removal of CDC as manager and his demands
for capital calls are primarily matters of internal corporate governance that do not
relate to the day-to-day business activities of the LLCs. Accordingly, these matters

5 Although the facts alleged in the Counterclaim refer only to acts committed by Grimmer,

Defendants purport to bring an UDTPA claim against Grimmer and Grimmer Associates.
are not sufficiently “in or affecting commerce” to sustain an UDTPA claim. Maurer,
2005 NCBC 1 ¶ 40 (dismissing a claim for unfair and deceptive trade practices
because the allegations related to matters of internal corporate affairs and
operations and not the regular business activities of the corporation).
{107} Third, Defendants contend that Grimmer “ma[de] untrue and
damaging statements about CDC to various suppliers, service providers and
regulators.” (Countercl., Unfair and Deceptive Trade Practices ¶ 3.) Defendants
also assert that Grimmer “communicated unfavorably” with government regulators
and banking institutions. (Countercl. ¶ 26.)
{108} According to Defendants, such actions have “undermin[ed] the
confidence of the service providers of the LLCs” and “compromised the ability of the
LLCs to obtain necessary permitting and approvals,” and therefore are actionable
as unfair and deceptive trade practices. (Countercl. ¶¶ 25–26.)
{109} While proof of an independent defamation claim may be sufficient to
make out a separate UDTPA claim, the predicate tort must nevertheless be validly
alleged. Craven, 656 S.E.2d at 734.
{110} In North Carolina, a claim for defamation must be described “with
sufficient particularity” so as “to enable the court to determine whether the
statement, was [, in fact,] defamatory.” Andrews v. Elliot, 109 N.C. App. 271, 274,
426 S.E.2d 430, 432 (1993) (quoting Stutts v. Duke Power Co., 47 N.C. App. 76, 83–
84, 266 S.E.2d 861, 866 (1980)). Additionally, Rule 9(f) of the North Carolina Rules
of Civil Procedure requires the plaintiff to plead the time and place of any alleged
defamatory statement. N.C.R. Civ. P. 9(f).
{111} Defendants’ allegations fail to state a claim for defamation. Not only
do Defendants fail to describe sufficiently the alleged defamatory statements, but
they also fail to allege the time and place of such statements. Absent facts
supporting a valid claim for defamation, Defendants’ UDTPA claim also fails.
{112} Defendants’ remaining contentions are also insufficient to sustain their
UDTPA claim.
{113} Defendants’ allegations that Grimmer (1) persuaded banks to freeze
the LLCs’ accounts, (2) terminated Tucker Chase’s contract with a vendor to confer
a benefit on his son, and (3) intervened in the management of Meadow to pay his
brother-in-law’s employer a $100,000.00 premium, implicate only the rights and
interests of the LLCs, not those of Stevens or CDC.
{114} The right to pursue a cause of action based on this conduct therefore
belongs solely to the LLCs, and Defendants’ attempt to assert an UDTPA claim on
these grounds fails. See Regions Bank v. Reg’l Prop. Dev. Corp., 2008 NCBC 8
(N.C. Super. Ct. Apr. 21, 2008), http://www.ncbusinesscourt.net/opinions/
2008%20NCBC%208.pdf (dismissing defendant’s counterclaim because the
allegations related to general corporate harm and therefore the defendant lacked
standing to assert an individual cause of action).
{115} Finally, Defendants’ allegation that Grimmer “harassed” Defendants
with repeated demands for information already in his possession, without more, is
not enough to make out an UDTPA claim.
{116} Accordingly, the Court GRANTS Plaintiffs’ Motion as to this claim.

VI.
CONCLUSION
{117} The Court GRANTS Plaintiffs’ Motion as to Defendants’ UDTPA claim
and those portions of Defendants’ breach of contract claim alleging that Grimmer
failed to secure financing for the LLCs and distribute profits earned by Meadow.
Those claims are dismissed with prejudice.
{118} In all other respects, the Court DENIES the Motion.

This the 18th day of August, 2008.