VISTA HORTICULTURAL, INC. v. JOHNSON PRICE SPRINKLE, PA, 2024 NCBC 62

STATE OF NORTH CAROLINA
BUNCOMBE COUNTY
IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
23 CVS 1594
VISTA HORTICULTURAL, INC.
d/b/a EDEN BROTHERS,
Plaintiff,
v.
JOHNSON PRICE SPRINKLE, PA
and SOK HEANG CHENG,
Defendants.
ORDER AND OPINION ON
DEFENDANTS’ MOTION FOR
SUMMARY JUDGMENT
1. 	THIS MATTER is before the Court upon Defendants’ Motion for Summary
Judgment (the “Motion”), filed pursuant to Rule 56 of the North Carolina Rules of
Civil Procedure (the “Rule(s)”) on 10 May 2024 in the above captioned case.1
2. 	Having considered the Motion, the parties’ briefs and materials offered in
support of and in opposition to the Motion, the arguments of counsel at the hearing
on the Motion, and other appropriate matters of record, the Court hereby GRANTS
in part and DENIES in part the Motion.
Tonkon Torp LLP, by Caroline Harris Crowne and Samantha Taylor,
and DeVore, Acton & Stafford, PA, by F. William DeVore, IV, for Plaintiff
Vista Horticultural, Inc. d/b/a Eden Brothers.
Ragsdale Liggett PLLC, by Melissa Dewey Brumback and John M.
Nunnally, for Defendants Johnson Price Sprinkle, PA and Sok Heang
Cheng.
Bledsoe, Chief Judge.
1 (Defs.’ Mot. Summ. J. [hereinafter, “Mot.”], ECF No. 48.)
Vista Horticultural, Inc. v. Johnson Price Sprinkle, PA, 2024 NCBC 62.

I.
FACTUAL AND PROCEDURAL BACKGROUND
3. 	While the Court does not make findings of fact on a motion for summary
judgment, “it is helpful to the parties and the courts for the trial judge to articulate a
summary of the material facts which he considers are not at issue and which justify
entry of judgment.” Collier v. Collier, 204 N.C. App. 160, 161–62 (2010) (citation and
quotation marks omitted). 	Accordingly, the following background, drawn from the
undisputed evidence submitted by the parties, is intended only to provide context for
the Court’s analysis and ruling and not to resolve issues of material fact.
4. 	Plaintiff Vista Horticultural, Inc. d/b/a Eden Brothers (“Vista”) is an online
retailer specializing in seed and flower bulbs.2 	In 2017, Vista engaged Defendant
Johnson Price Sprinkle, PA (“JPS”) to provide various accounting- and bookkeeping-
related services, the extent of which the parties dispute. Defendant Sok Heang Cheng
(“Cheng”) was the JPS shareholder on the Vista account throughout the engagement
and Vista’s primary point of contact for routine communications.3
5. 	Vista contends that it engaged JPS for “accounting, bookkeeping, and
business consulting services” that included from the outset, the filing of Vista’s
monthly North Carolina sales tax returns and advice concerning the “sales tax nexus
based on the current state of the law in 2017.”4 JPS disagrees and argues that the
2 (Pl.’s Resp. Opp’n Defs.’ Mot. Summ. J. 3 [hereinafter “Pl.’s Br. Opp’n”], ECF No. 54.)
3 (Pl.’s Br. Opp’n Exs. 1 (ECF No. 54.2), 2 (ECF No. 54.3), 6 (ECF No. 54.7), 7 (ECF No. 54.8),
8 (ECF No. 54.9).)
4 (Pl.’s Br. Opp’n 3–4; Pl.’s Br. Opp’n Exs. 1, 3 (ECF No. 54.4).)

scope of its engagement with Vista was limited by its engagement letters to the
preparation of “[f]ederal and North Carolina income tax returns [ . . .], [l]ocal
government property tax listing(s), [and] [y]ear-end informational reporting”5 and by
the parties’ oral agreements for various “one off” services that were agreed-upon
outside the scope of the engagement letters.6 Defendants contend they never agreed
to provide “out-of-state tax advice” or “sales tax nexus” advice to Vista.7
6. 	The scope of JPS’s engagement is important because, consistent with JPS’s
advice to Vista in 2017, Vista paid sales taxes from 2017 until 2021 only to the state
of its physical operations, i.e., North Carolina, in accordance with the applicable law
in 2017.8 On 21 June 2018, however, the United States Supreme Court ruled in South
Dakota v. Wayfair, Inc., 585 U.S. 162 (2018), that states could assess taxes to out-of-
5 (Defs.’ Br. Supp. Mot. Summ. J. 3 [hereinafter “Defs.’ Br. Supp.”], ECF No. 49; Defs.’ Br.
Supp. Exs. 2 (11 January 2018 engagement letter, ECF No. 49.3), 3 (30 January 2019
engagement letter, ECF No. 49.4), 4 (20 January 2020 engagement letter, ECF No. 49.5), 5
(8 February 2021 engagement letter, ECF No. 49.6).)
6 (Defs.’ Br. Supp. 4, 5 (“JPS provided Vista/Randon with a number of ‘one off’ services outside
the scope of these written agreements.”).)
7 (Defs. Br. Supp. 15.)
8 See, e.g., Nat’l Bellas Hess v. Dep’t of Revenue, 386 U. S. 753 (1967) (holding that an out-of-
state seller’s liability to collect and remit sales tax to the consumer’s State depended on
whether the seller had a physical presence in that State); Quill Corp. v. N.D., 504 U.S. 298,
311 (1992) (following Bellas Hess and holding that a State may not require a business to
collect its sales tax if the business lacks a physical presence in the State because to do
otherwise would unduly burden interstate commerce since the tax would not have a
“substantial nexus” with the activity being taxed). 	See also Complete Auto Transit, Inc. v.
Brady, 430 U.S. 274, 279 (1977) (holding as part of a four-part test that a tax will survive a
Commerce Clause challenge so long as the “tax is applied to an activity with a substantial
nexus with the taxing State”).

state online retailers for sales to in-state residents, overruling prior law. Id. at 188.9
Since Vista had substantial online sales to residents in states other than North
Carolina during and after 2018, the Wayfair decision greatly expanded Vista’s sales
tax liability for those sales.10 	Vista contends that Defendants failed to advise it of
the Wayfair decision until 2021, preventing Vista from passing its sales tax liability
on to its online customers for three years and thereby causing the company to incur
an unexpected $2 million tax liability.11 Defendants maintain that they had no legal
duty to advise Vista of the Wayfair decision and that Vista is responsible for its losses
because it “did not tend to its ordinary business affairs in a diligent manner.”12
7. 	Vista initiated this action in Buncombe County Superior Court on 25 April
2023 alleging malpractice against DMJPS, PLLC (“DMJPS”),13 and then in an
9 The Supreme Court concluded in Wayfair that “the physical presence rule of Quill is
unsound and incorrect” and thus overruled both Quill and Bellas Hess. Wayfair, 585 U.S. at
188. The Court held that the appropriate rule of decision is “the first prong of the Complete
Auto test,” which the Court noted “simply asks whether the tax applies to an activity with a
substantial nexus with the taxing State.” Id. at 188 (citing Complete Auto, 430 U. S. at 279).
The Court further held that “such a nexus is established when the taxpayer [or collector]
‘avails itself of the substantial privilege of carrying on business’ in that jurisdiction.” 	Id.
(quoting Polar Tankers, Inc. v. City of Valdez, 557 U. S. 1, 11 (2009)). Applying this test in
Wayfair, the Court held that “the nexus is clearly sufficient based on both the economic and
virtual contacts [Wayfair had] with the State.” Id.
10 (Pl.’s Br. Opp’n Ex. 24, Dep. Sok Heang Cheng, dated 26 February 2024, at 147:6–148:4
[hereinafter “Cheng Dep.”], ECF No. 54.25; Pl.’s Br. Opp’n Ex. 21.)
11 (Pl.’s Br. Opp’n 13; Second Amended Compl. (“SAC”) ¶¶ 31–32, ECF No. 40.)
12 (Pl.’s Br. Opp’n 18.)
13 (Compl., ECF Nos. 3, 5.) ECF Nos. 3 and 5 are identical. On 24 January 2024, the parties
filed a Stipulated Notice of Dismissal of all claims against DMJPS without prejudice. (ECF
No. 37.)

Amended Complaint filed on 9 May 2023, against JPS.14 	On 8 February 2024 and
with 	leave 	of 	court,15 	Plaintiff 	filed 	its 	Second 	Amended 	Complaint, 	adding
allegations and claims against Cheng.
8. 	Vista asserts claims against JPS for breach of contract and against both JPS
and 	Cheng 	for 	professional 	malpractice/professional 	negligence, 	common 	law
negligence, gross negligence/punitive damages, and breach of fiduciary duty. For its
relief, Vista seeks compensatory and punitive damages as well as disgorgement of the
professional fees Vista paid to JPS from mid-2018 through mid-2021. 	Defendants
have denied all liability, and their Motion seeks summary judgment on all claims.
9. 	After full briefing, the Court held a hearing on the Motion on 10 July 2024,
at which all parties were represented by counsel (the “Hearing”). The Motion is now
ripe for resolution.
II.
LEGAL STANDARD
10. 	Under Rule 56(c), “[s]ummary judgment is appropriate ‘if the pleadings,
depositions, answers to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any material fact and that
any party is entitled to a judgment as a matter of law.’ ” Da Silva v. WakeMed, 375
N.C. 1, 10 (2020) (quoting N.C. R. Civ. P. 56(c)). “A genuine issue of material fact is
one that can be maintained by substantial evidence.” Curlee v. Johnson, 377 N.C. 97,
14 (Am. Compl., ECF No. 4.)
15 (Order and Opinion on Plaintiff’s Mot. Leave Am. Compl. Include Add’l Party, ECF No. 39.)

101 (2021) (cleaned up). 	“Substantial evidence is such relevant evidence as a
reasonable mind might accept as adequate to support a conclusion and means more
than a scintilla or a permissible inference[.]” 	DeWitt v. Eveready Battery Co., 355
N.C. 672, 681 (2002) (cleaned up). 	“An issue is material if, as alleged, facts ‘would
constitute a legal defense, or would affect the result of the action or if its resolution
would prevent the party against whom it is resolved from prevailing in the action.’ ”
Bartley v. City of High Point, 381 N.C. 287, 292 (2022) (quoting Koontz v. City of
Winston-Salem, 280 N.C. 513, 518 (1972)). “When considering a motion for summary
judgment, the trial judge must view the presented evidence in a light most favorable
to the nonmoving party.” Belmont Ass’n v. Farwig, 381 N.C. 306, 310 (2022) (quoting
Dalton v. Camp, 353 N.C. 647, 651 (2001)).
11. 	“The 	party 	seeking 	summary 	judgment 	bears 	the 	initial 	burden 	of
demonstrating the absence of a genuine issue of material fact.” Liberty Mut. Ins. Co.
v. Pennington, 356 N.C. 571, 579 (2002). 	The movant may meet this burden either
(1) “by proving an essential element of the opposing party’s claim does not exist,
cannot be proven at trial, or would be barred by an affirmative defense,” or (2) “by
showing through discovery that the opposing party cannot produce evidence to
support an essential element of [its] claim[.]” Dobson v. Harris, 352 N.C. 77, 83 (2000)
(cleaned up). 	If the movant meets its burden, “the burden shifts to the nonmoving
party to produce a forecast of evidence demonstrating that the nonmoving party will
be able to make out at least a prima facie case at trial[.]” Cummings v. Carroll, 379
N.C. 347, 358 (2021) (cleaned up); see also N.C. R. Civ. P. 56(e) (“[A]n adverse party

may not rest upon the mere allegations or denials of his pleading, but his response,
by affidavits or as otherwise provided in this rule, must set forth specific facts
showing that there is a genuine issue for trial.”).
III.
ANALYSIS
A. Vista’s Breach of Contract Claim Against JPS
12. 	Vista alleges that it entered into several valid and enforceable contracts
with JPS between 2017 and 2021, both written and oral, and that JPS breached those
contracts “by failing to update its tax advice in response to a change in the law and
failing to advise [Vista] that it could be incurring substantial state tax liabilities,
when JPS had information showing [Vista’s] revenue from sales outside North
Carolina.”16 Vista also contends that JPS breached its contract with Vista by failing
to respond to Vista’s inquiry about a sales tax notice from the Arizona Department of
Revenue in early 2021.17
13. 	JPS moves to dismiss, contending that JPS did not breach any of its written
agreements with Vista and that JPS had no contractual duty to advise Vista of the
Wayfair decision and its possible implications for Vista’s business.
14. 	As an initial matter, the Court agrees with JPS that Vista has not offered
evidence that JPS failed to fulfill its obligations under the express terms of its written
16 (SAC ¶ 43.)
17 (See Defs.’ Br. Supp. Ex. 1, Dep. Sabine Randon, dated 27 February 2024, at 228:24–229:21
[hereinafter “Randon Dep.”], ECF No. 49.2; see also ECF No. 49.14 (Arizona sales tax notice).)

engagement letters with Vista. The specific terms of those agreements require only
the preparation of federal and North Carolina state income tax returns, local
government property tax listings, and year-end informational reporting, and Vista
does not contend or offer evidence that JPS breached these specific contractual duties.
15. 	Vista does contend, however, that JPS and Vista discussed the scope of the
parties’ engagement in the spring of 2017, eight months before the first written
engagement letter, and developed a course of conduct “separate and apart from the
annual tax return engagement letters.”18 Vista relies on that course of conduct, “laid
out in the initial engagement emails as well as in the invoices,” as the basis for “the
relationship between [Vista] and JPS from 2017 to 2021.”19 	Vista asserts that,
through this course of conduct, JPS became aware that Vista expected JPS to provide
tax advice, provided advice to Vista on the payment of sales taxes in 2017, and
thereby assumed a duty to update that advice in the face of changes in the law, which
it failed to do when the Wayfair decision was issued the following year.20
16. 	For its part, JPS acknowledges that it “provided [Vista] with a number of
‘one off’ services outside the scope of these written agreements,”21 but argues that
Vista’s breach of contract claim should be dismissed because it is undisputed that
JPS never agreed to provide, nor ever in fact provided, “out-of-state tax advice” to
18 (Pl.’s Br. Opp’n 25.)
19 (Pl.’s Br. Opp’n 25.)
20 (Pl.’s Br. Opp’n 25.)
21 (Defs.’ Br. Supp. 5.)

Vista. 	JPS argues that since it never gave Vista any tax advice on the payment of
sales taxes on out-of-state sales, it had no duty to provide Vista advice about changes
in the law concerning that issue.22
17. 	Based on a careful review of the evidence advanced by the parties, the Court
concludes that JPS’s Motion should be denied as to Vista’s breach of contract claim.
Viewing the evidence of record in the light most favorable to Vista, a factfinder could
reasonably conclude that JPS agreed to provide services beyond the scope of the
written engagement letters and in particular that:
a. 	At the beginning of the engagement in May 2017, Vista told Defendants
that it was “not knowledgeable” and wanted assistance with “[b]asically,
everything 	from 	accounting, 	tax 	preparation, 	tax 	advising, 	[and]
professional advising”23;
b. 	While JPS and Vista executed annual engagement letters, Vista and
Defendants agree that JPS agreed to provide, and did provide, various
services from time to time that were beyond the scope of the services
described in the engagement letters24;
22 (Defs.’ Br. Supp. 15.) 	Defendants base their argument on the parties’ alleged oral and
written agreements as well as their contention that, “[a]side from JPS’s contractual
obligations, JPS was subject to, and complied with, 21 N.C. Admin. Code 8N.0211(b)
(“Responsibilities in Tax Practice”). (Defs. Br. Supp. 14–15.)
23 (Pl.’s Br. Supp. Ex. 25, Randon Dep. 126:12–127:2, ECF No. 54.26; see also ECF No. 49.2.)
24 (Defs. Br. Supp. 5 (“JPS provided Vista/Randon with a number of ‘one-off’ services outside
the scope of these written agreements.”); Pl’s. Br. Opp’n 4 (“throughout the engagement, the
core scope of services JPS provided to Eden Brothers followed the initial engagement emails
from the spring of 2017 [and not the written engagement letters]”).)

c. 	JPS rendered a broad range of services at the start of the relationship
in May and June 2017 before the first written engagement letter was
issued, 	including: 	“tax 	research 	related 	to 	corporate 	tax 	issues,”
“preparation of tax projections,” “preparation of 2016 federal and state
income tax returns,” “accounting and bookkeeping services” for May and
June 2017, as well as “small business consulting services”25;
d. 	At the beginning of the engagement and before Wayfair was issued,
Cheng and Randon discussed that Vista shipped products into other
states and that eventually they would need to examine the sales tax
implications of that activity26;
e. 	From the beginning of the engagement, JPS filed monthly North
Carolina sales tax returns for Vista, which required a monthly, ongoing
assessment of Vista’s sales tax liability27;
f. 	During the course of the engagement, JPS viewed itself as Vista’s Chief
Financial Officer28 and performed, among other things, Vista’s monthly
25 (Pl.’s Br. Opp’n Ex. 3 at 1.)
26 (Cheng Dep. 67:1–5, 67:6–25; Pl.’s Br. Supp. Ex. 5 (12/31/16 carryforward notes indicating
that Cheng and Randon “[d]iscussed potential for nexus in other states (income, franchise,
sales)” and that Vista “wants to pass for now” and “acknowledged back penalties/interest
could apply.”)
27 (Pl.’s Br. Opp’n Ex. 2.)
28 (Randon Dep. 181:25-182:2 (ECF No. 54.26); 227:11–24 (ECF No. 60.2).)

revenue reconciliation,29 managed Vista’s accounts payable system,30
handled Vista’s employee retirement plan,31 and prepared Vista’s tax
returns and tax projections32;
g. 	JPS became aware of the Wayfair decision shortly after it was issued
and recognized its potential impact on JPS’s clients33;
h. Vista was not aware of the Wayfair decision and its implications for
Vista’s business until it hired its first CFO in the spring of 202134; and
29 (Pl.’s Br. Opp’n Ex. 4 at 3–4.)
30 (Pl.’s Br. Opp’n Ex. 4 at 1–6.)
31 (Pl.’s Br. Opp’n Ex. 4 at 1; Randon Dep. 243:25–244:2 (ECF No. 60.2).)
32 (Pl.’s Br. Opp’n Exs. 3, 16.)
33 (Pl.’s Br. Opp’n Ex. 9 (email from JPS’s VP of Taxation to its Tax and Assurance
Departments after Wayfair seeking annual online sales information for clients with
significant online retail sales “so we can get some idea of the impact [of Wayfair] on our client
base”); Ex. 23 (emails referring JPS personnel to Wayfair expert for advice); see also Defs. Br.
Supp. 6 (“Wayfair represented a seismic shift in the tax obligations of online retailers”).)
34 (Pl’s. Br. Opp’n Ex. 27, Dep. Keith Simon, dated 28 February 2024, at 56:10–57:23, ECF
No. 54.28; Defs.’ Br. Supp. Ex. 1 (Randon Dep. 131:13–23 (ECF No. 54.26)).) 	Although
Defendants argue that Vista knew about Wayfair because JPS sent Randon an article about
the Wayfair decision and its impacts in December 2019, (Defs.’ Br. Supp. Ex. 7), and because
Cheng asserts that she called Randon in August 2018 to request state-by-state sales records,
(Cheng Dep. 68:1–73:22), Vista offers evidence to dispute each claim. Not only did Randon
testify that she had no memory of reading the Wayfair article, (Randon Dep. 176:5–177:6
(ECF No. 54.26)), and that Cheng never called her to request state-by-state sales records or
mention Wayfair, (Randon Dep. 132:19–133:4 (ECF Nos. 49.2, 54.26)), but Vista also points
to evidence suggesting that Randon did not open the email containing the Wayfair article,
(ECF No. 49.10 at 3), and establishing that Cheng did not recall whether she told Randon
about the Wayfair decision or its implications for Vista before 2021, (Cheng Dep. 72:17–73:12;
80:1–8.) 	As discussed in more detail below, the parties also offer conflicting evidence
concerning the matters discussed at a February 2020 meeting in which Cheng asked Randon
to provide state-by-state sales data. Vista’s evidence shows that Cheng did not explain why
she needed this information and that JPS did not include the request in its follow up email
setting forth Vista’s responsibilities arising from the meeting, (Randon Dep. 136:16–17 (ECF
Nos. , 49.2, 54.26).) Nor have Defendants offered evidence that Cheng followed up with Vista

i. 	Defendants did not advise Vista of the Wayfair decision and its impact
until Vista’s newly hired CFO identified that Vista had an out-of-state
sales tax compliance problem in mid-2021.35
18. 	Based 	on 	the 	above, 	and 	despite 	Defendants’ 	contention 	that 	Vista’s
statement that it wanted to “pass for now” terminated any obligation JPS may have
had to advise Vista of the Wayfair decision when it was issued, the Court concludes
that a reasonable factfinder could conclude that providing and updating sales tax
advice concerning out-of-state sales was included within the wide-ranging financial,
tax, accounting, and bookkeeping services JPS had agreed to provide. 	This is
particularly true in light of the parties’ recognition in 2017 that JPS would need to
look into Vista’s shipping of product into other states, the parties’ specific discussion
of the “potential for nexus in other states” the year before the Wayfair decision was
issued, and the fact that JPS was providing ongoing, monthly sales tax compliance
services to Vista which, until Wayfair, required payment of sales taxes only to North
Carolina. Given the reasonable inferences that may be drawn from this evidence, the
Court concludes that the parties’ competing contentions and evidence concerning the
scope of their engagement must be resolved by a jury.
19. 	The Court also concludes that Plaintiff has offered sufficient evidence to
survive Defendants’ motion under Rule 56 on its claim for breach of contract based
at any time. 	Viewed in the light most favorable to Vista, this evidence creates an issue of
fact as to when Vista learned of the Wayfair decision and its implications for Vista’s business.
35 (Pl’s. Br. Opp’n Ex. 23, ECF No. 54.24; Randon Dep. 228:24–229:5 (ECF Nos. 49.1, 60.2);
Simon Dep. 56:10–57:23.)

on JPS’s alleged failure to provide a substantive response to Plaintiff’s inquiry
concerning the sales tax notice Vista received from the Arizona Department of
Revenue in early 2021.36
20. 	Based on the above, the Court concludes that Defendants’ motion for
summary judgment on Vista’s breach of contract claim should be denied.
B. Vista’s Claim for Professional Negligence/Malpractice and Common Law
Negligence
21. 	Defendants 	seek 	to 	dismiss 	Vista’s 	claims 	for 	professional
negligence/malpractice 	and 	common 	law 	negligence 	on 	grounds 	that 	Vista’s
contributory negligence bars these claims as a matter of law.
22. 	To establish professional negligence under North Carolina law, “the plaintiff
bears the burden of showing: (1) the nature of the defendant’s profession; (2) the
defendant’s duty to conform to a certain standard of conduct; and (3) a breach of the
duty proximately caused injury to the plaintiffs.” 	Frankenmuth Ins. v. City of
Hickory, 235 N.C. App. 31, 35 (2014) (cleaned up). “It is generally recognized that an
accountant may be held liable for damages naturally and proximately resulting from
his failure to use that degree of knowledge, skill and judgment usually possessed by
members of the profession in a particular locality.” Snipes v. Jackson, 69 N.C. App.
64, 73 (1984). In particular, “[a]n accountant may be liable for loss or damage due to
erroneous tax advice or management.” 	Id. To establish common law negligence, “a
36 (See, e.g., Defs.’ Br. Supp. Ex. 12, ECF No. 49.13 (Randon’s 2 March 2021 email to JPS);
ECF No. 49.14 (Arizona sales tax notice); Randon Dep. 227:7–10 (ECF No. 60.2), 229:5–8
(ECF Nos. 49.1, 60.2) (“[Defendants] failed to respond upon a direct question about Arizona
letter and did not inform me what this meant.”).)

plaintiff must offer evidence of four essential elements in order to prevail: duty,
breach of duty, proximate cause, and damages.” Estate of Mullis by Dixon v. Monroe
Oil Co., 349 N.C. 196, 201 (1998).
23. 	“Contributory negligence ‘is negligence on the part of the plaintiff which
joins, simultaneously or successively, with the negligence of the defendant alleged in
the complaint to produce the injury of which the plaintiff complains,’ ” Hummer v.
Pulley, Watson, King & Lischer, P.A., 140 N.C. App. 270, 278-79 (2000) (cleaned up),
and is a defense to a claim of professional negligence, see, e.g., Piraino Bros., LLC v.
Atl. Fin. Group, Inc., 211 N.C. App. 343, 351 (2011). “In order to prove contributory
negligence on the part of a plaintiff, the defendant must demonstrate: (1) a want of
due care on the part of the plaintiff; and (2) a proximate connection between the
plaintiff's negligence and the injury.” 	Proffitt v. Gosnell, 257 N.C. App. 148, 152
(2017) (cleaned up).
24. 	Defendants contend that “[t]he undisputed evidence demonstrates that
[Vista] is contributorily negligent because [Vista] did not tend to its ordinary business
affairs in a diligent manner.”37 	For their proof, Defendants rely on Vista’s owner
Sabine Randon’s deposition admission that she did not send “sales by state data” to
Defendants after Defendants requested the information when the out-of-state tax
issue was discussed in a February 2020 meeting between Cheng, JPS’s employee
Zeiger, and Randon.38
37 (Defs.’ Br. Supp. 18.)
38 Zeiger’s contemporaneous, handwritten notes of the February 2020 meeting state: “sales
by state. Sabine [Randon] to f/u [follow up] with report (mid-year).” (Defs.’ Br. Supp. Ex. 9.)

25. 	Defendants ignore, however, that Randon further testified that the sales-
by-state information was “one of the many items that were addressed in passing by
[Cheng], 	and 	that 	[Cheng] 	did 	not 	explain 	the 	reason 	[why 	she 	needed 	this
information].”39 Moreover, in the follow-up email Zeiger sent to Randon shortly after
the February 2020 meeting with a list of tasks and document requests, Zeiger did not
mention sales-by-state information, much less include it in the list of documents and
information Defendants requested Vista to provide.40 Neither Zeiger nor Cheng (nor
anyone else at JPS) followed up with Vista to seek sales-by-state information, and it
was not until the spring of 2021 that anyone at JPS mentioned the Wayfair decision
to Vista or its potential impact on Vista’s sales tax liabilities.41 Based on this record,
the Court cannot conclude that Vista was contributorily negligent as a matter of law
in not learning about and acting upon the Wayfair decision before the spring of 2021.
26. 	Similarly, while Defendants marshal facts to suggest a benign explanation
for their failure to provide a substantive response to Randon’s inquiry about the
Arizona sales tax notice,42 nothing Defendants argue suggests that Plaintiff was
contributorily negligent as a matter of law. 	Indeed, Plaintiff has offered evidence
(See also Defs.’ Br. Supp. Ex. 1 (Randon Dep. 134:3–19 (ECF Nos. 49.2, 54.26) (acknowledging
Defendants requested sales information by state) and 136:5–17 (ECF Nos. 49.2, 54.26)
(acknowledging that Vista did not send the requested information).)
39 (Defs. Br. Supp. Ex. 1 (Randon Dep. 134:3–19 (ECF Nos. 49.2, 54.26)).)
40 (Defs. Br. Supp. Ex. 15.)
41 (Defs.’ Br. Supp. Ex. 1 (Randon Dep. 131:13–23 (ECF Nos. 49.2, 54.26)); Pl’s. Br. Opp’n Exs.
23, 25 (Randon Dep. 228:24–229:5 (ECF Nos. 49.2, 60.2)), 27 (Simon Dep. 56:10–57:23).)
42 (Defs.’ Br. Supp 9–10.)

that, after Plaintiff received the notice in February 2021, Zeiger prepared a strategy
memo which Cheng never reviewed and which was never provided to Plaintiff,43 and,
when Randon asked on 2 March 2021 “do you know anything about other states
asking for sales tax now?”,44 Defendants did not advise Plaintiff of the now-nearly-
three-year-old 	Wayfair 	decision 	or 	otherwise 	provide 	a 	substantive 	answer 	to
Randon’s inquiry. 	The Court cannot find Vista contributorily negligent as a matter
of law on this record.
27. 	Accordingly, for each of these reasons, the Court concludes that Defendants’
Motion should be denied as to Vista’s claims for professional negligence/malpractice
and common law negligence. See, e.g., Ballenger v. Crowell, 38 N.C. App. 50, 55 (1978)
(“Like 	negligence, 	contributory 	negligence 	is 	rarely 	appropriate 	for 	summary
judgment.”).45
C. Vista’s Claim for Breach of Fiduciary Duty
28. 	Defendants next seek summary judgment on Vista’s claim for breach of
fiduciary duty. Here, Defendants’ arguments fare better.
43 (Pl.’s Br. Opp’n Ex. 19, ECF No. 54.20; Pl.’s Br. Opp’n Ex. 26, Dep. Hannah Zeiger, dated
26 February 2024, at 105:24-106:2, ECF No. 54.27; Cheng Dep. 150:12–153:22.)
44 (Pl.’s Br. Opp’n Ex. 17, ECF No. 54.18.)
45 Because Defendants challenged Vista’s negligence claims in their opening brief solely on
contributory negligence grounds, the Court declines to consider the affidavit of Plaintiff’s
expert, Gregory T. Reagan, which was submitted with Plaintiff’s opposition brief to establish
Defendants’ breach of the applicable standard of care, since that issue has no bearing on the
issue of contributory negligence. 	(ECF No. 55.) 	As a result, Defendants’ challenge to the
admissibility of Reagan’s affidavit on this Motion is denied as moot. 	(See Defs.’ Reply Br.
Supp. Mot. Summ. J. 5–6 [hereinafter “Defs. Reply Br.”], ECF No. 60.)

29. 	To make out a claim for breach of fiduciary duty, Vista must show that “(1)
the defendant owed the plaintiff a fiduciary duty; (2) the defendant breached that
fiduciary duty; and (3) the breach of fiduciary duty was a proximate cause of injury
to the plaintiff.” Sykes v. Health Network Sols., Inc., 372 N.C. 326, 339 (2019).
30. 	It is axiomatic that “[f]or a breach of fiduciary duty to exist, there must first
be a fiduciary relationship between the parties.” Dalton v. Camp, 353 N.C. 647, 651
(2001). 	“North Carolina recognizes two types of fiduciary relationships: de jure, or
those imposed by operation of law, and de facto, or those arising from the particular
facts and circumstances constituting and surrounding the relationship.” 	Hager v.
Smithfield E. Health Holdings, LLC, 264 N.C. App. 350, 355 (2019).
31. 	North 	Carolina 	courts, 	however, 	do 	not 	recognize 	de 	jure 	fiduciary
relationships between accountants and their clients, or between external auditors
and their clients. 	See, e.g., Harrold v. Dowd, 149 N.C. App. 777, 783–84 (2002)
(accountants); CommScope Credit Union v. Butler & Burke, LLP, 369 N.C. 48, 52–53
(2016) (external auditors); see also, e.g., Silverdeer, LLC v. Berton, 2013 NCBC LEXIS
21, at *26–27 (N.C. Super. Ct. Apr. 24, 2013) (cleaned up) (noting that “an accountant-
client relationship is not an inherently fiduciary one and . . . mere allegations of the
accountant’s failure to properly advise his client [are] insufficient to support a claim
for breach of fiduciary duty.”). As a result, for a fiduciary duty to exist between Vista
and Defendants, it must be a de facto one.
32. 	Under North Carolina law, “a [de facto] fiduciary relationship is generally
described as arising when ‘there has been a special confidence reposed in one who in

equity and good conscience is bound to act in good faith and with due regard to the
interests of the one reposing confidence.’ ” 	Dallaire v. Bank of Am., N.A., 367 N.C.
363, 367 (2014) (quoting Green v. Freeman, 367 N.C. 136, 141 (2013)). “The standard
for finding a de facto fiduciary relationship is a demanding one: Only when one party
figuratively holds all the cards—all the financial power or technical information, for
example—have North Carolina courts found that the special circumstance of a
fiduciary relationship has arisen.” 	Lockerman v. S. River Elec. Membership Corp.,
250 N.C. App. 631, 636 (2016) (cleaned up).
33. 	Here, the Court concludes that Vista has failed to offer evidence from which
a reasonable factfinder could conclude that its relationship with Defendants was a
fiduciary one.
34. 	First, while Vista certainly looked to Defendant to provide important and
necessary financial and accounting services, those services were defined by contract
and the performance of those services was governed by the parties’ contract terms
and the standard of care accountants owe their clients under North Carolina law.46
35. 	Moreover, the evidence on which Vista relies for a fiduciary relationship
does not permit a factfinder to conclude that Defendants “figuratively held all the
cards” in the parties’ relationship. 	Indeed, the undisputed evidence shows that
46 See 21 N.C. Admin. Code 8N.0211(b) (“Responsibilities in Tax Practice”) (providing that “A
member has no obligation to communicate with a taxpayer when subsequent developments
affect advice previously provided with respect to significant matters, except while assisting
a taxpayer in implementing procedures or plans associated with the advice provided or when
a member undertakes this obligation by specific agreement”); see also Defs.’ Br. Supp. Ex. 15
at 16.

Randon took an active part in that relationship. 	She requested information and
asked questions, including, in early 2021, about out-of-state sales taxes.47 She hired
JPS to perform discrete tasks, including, for example, to assist in obtaining a PPP
loan for Vista.48 Despite JPS’s provision of bookkeeping and accounting services, JPS
only paid invoices after Vista’s specific approval,49 and Randon carefully scrutinized
Vista’s receipt of funds, often on an hourly basis.50
36. 	While it is certainly true that Defendants had a very involved role in
performing their accounting-related services for Vista, the Court concludes that no
reasonable factfinder could find that Defendants’ performance of those services,
including 	Defendants’ 	sales 	tax-related 	services, 	“influenced, 	controlled, 	or
dominated” Vista’s decision-making process enough to create a de facto fiduciary
duty. 	See Provectus Biopharmaceuticals, Inc. v. RSM US LLP, 2018 NCBC LEXIS
101, *48 (N.C. Super. Ct. Sept. 28, 2018) (finding an accountant did not have a
fiduciary duty even where the client “lacked the internal resources or ability to
manage and monitor its accounting and financial systems”). Accordingly, the Court
will grant this portion of Defendants’ Motion and dismiss Vista’s claim for breach of
fiduciary duty with prejudice. See, e.g., Sykes, 372 N.C. at 340 (recognizing that “[o]ur
courts have been clear that general contractual relationships do not typically rise to
47 (See Defs.’ Br. Supp. Ex. 12; Pl.’s Br. Opp’n Ex. 17.)
48 (Randon Dep. 108:9–109:22 (ECF Nos. 49.2, 54.26); Randon Dep. 178:5–179:7 (ECF No.
60.2).)
49 (Randon Dep. 111:24–112:12 (ECF Nos. 49.2, 54.26).)
50 (Randon Dep. 112:19–113:25 (ECF Nos. 49.2, 54.26).)

the level of fiduciary relationships” and that “[p]arties to a contract do not thereby
become each other’s fiduciaries; they generally owe no special duty to one another
beyond the terms of the contract[.]”) (cleaned up).
D. Vista’s Claims for Gross Negligence/Punitive Damages
37. 	“Gross negligence has been defined as ‘wanton conduct done with conscious
or reckless disregard for the rights and safety of others.’ ” 	Toomer v. Garrett, 155
N.C. App. 462, 482 (2002) (quoting Bullins v. Schmidt, 322 N.C. 580, 583 (1988)). “An
act is wanton when it is done of wicked purpose, or when done needlessly, manifesting
a reckless indifference to the rights of others.” Yancey v. Lea, 354 N.C. 48, 52 (2001)
(internal citation omitted). 	It requires more than “[c]arelessness or recklessness.”
Shaw v. Goodyear Tire & Rubber Co., 225 N.C. App. 90, 95 (2013). “An act or conduct
rises to the level of gross negligence when the act is done purposely and with
knowledge that such act is a breach of duty to others, i.e., a conscious disregard of the
safety of others.” Id. at 53 (emphasis in original). “Aside from allegations of wanton
conduct, a claim for gross negligence requires that plaintiff plead facts on each of the
elements of negligence, including duty, causation, proximate cause, and damages.”
Toomer, 155 N.C. App. at 482 (cleaned up).
38. 	Under North Carolina law, “ ‘[p]unitive damages may be awarded only if the
claimant proves’ that either fraud, malice, or ‘[w]illful or wanton conduct’ occurred
and related to the injury.” 	Estate of Long v. Fowler, 378 N.C. 138, 150 (quoting
N.C.G.S. § 1D-15(a)). 	As our Supreme Court has explained: “ ‘[w]illful or wanton
conduct’ means more than gross negligence and is defined as ‘the conscious and

intentional disregard of and indifference to the rights and safety of others, which the
defendant knows or should know is reasonably likely to result in injury, damage, or
other harm.’ ” Id. at 150–51 (quoting N.C.G.S. § 1D-5).
39. 	Defendants seek dismissal of Plaintiff’s claims for gross negligence and
punitive damages, arguing that Vista has failed to offer evidence that Defendants
engaged in reckless, intentional, willful, or wanton conduct. 	At most, Defendants
argue, Vista’s evidence—consisting of Defendants “doing nothing, failing to advise,
and failing to follow up”—is not evidence of willfulness or wantonness and instead
only gives rise to a claim in simple negligence.51 The Court agrees.
40. 	As discussed above, Vista has offered sufficient evidence to support its
claims sounding in negligence. 	Our Supreme Court has held, however, that the
difference between ordinary negligence and gross negligence is “substantial” and “is
not in degree or magnitude of inadvertence or carelessness, but rather is intentional
wrongdoing or deliberate misconduct affecting the safety of others.” Yancey, 354 N.C.
at 53. While “[n]egligence, a failure to use due care, be it slight or extreme, connotes
inadvertence . . . [w]antonness . . . connotes intentional wrongdoing.” 	Id. (emphasis
in original.) “An act or conduct moves beyond the realm of negligence when the injury
or damage itself is intentional.” Id. (emphasis in original.)
41. 	Although Vista attempts to build its claims for gross negligence and punitive
damages on a series of speculative inferences based on Defendants’ alleged failures
51 (Defs.’ Reply Br. 11.)

to perform and what Vista contends are Cheng’s repeated lies and evasions,52 the
Court cannot conclude from this evidence, and the reasonable inferences permitted
therefrom, that Defendants intended, expected, knew, or should have known that
their conduct would cause the injury or damage that Vista alleges. Nor can the Court
otherwise conclude from this record that Defendants acted willfully, wantonly,
intentionally, or with reckless or conscious disregard for or indifference to Vista’s
rights. 	Further, contrary to Vista’s contention, the Court cannot conclude that
Plaintiff’s evidence reflects “a repeated course of conduct [by Defendants] which
constituted a callous or intentional indifference to the plaintiff’s rights” as in Potts v.
KEL, LLC, 2021 NCBC LEXIS 100, *34 (N.C. Super. Ct. Nov. 5, 2021) (quotations
omitted). Rather than engage in “a repeated course of conduct” as in Potts, the Court
concludes that the evidence, when viewed in the light most favorable to Vista, shows
only that Defendants failed to advise Vista about the Wayfair decision after it was
issued and to 	recognize 	the 	sales 	tax liability the 	decision imposed on 	Vista
thereafter.
52 (Pl.’s Br. Opp’n 23–24 (contending variously that “Cheng is now lying,” “Cheng realized for
the first time during the February 2020 meeting,” “Cheng did not want to draw any attention
to her failure,” “[Cheng] intentionally downplayed the issue,” “Cheng chose not to advise
[Vista],” “Cheng did not [take action] because she knew it would raise questions about her
oversight of the account,” “Cheng instructed Ms. Zeiger . . . because Ms. Cheng wanted to
control the message and protect herself from accusations of malpractice,” “Cheng never
followed up . . . because she could not explain her delay in raising the issue,” “Cheng either
chose not to review Ms. Zeiger’s memo in 2021 or is now lying about that . . . or intentionally
delayed communicating its conclusions to [Vista],” and “Cheng [took action] for fear that the
sales tax issue would be discovered.”)

42. 	While a jury certainly might find Defendants negligent on the evidence of
record here, 	Vista 	has 	not 	offered sufficient 	evidence 	of 	Defendants’ reckless,
intentional, willful, or wanton conduct to permit its claims for gross negligence or
punitive damages to proceed to a jury at trial. Accordingly, the Court shall grant this
aspect of Defendants’ Motion and dismiss Vista’s claims for gross negligence and
punitive damages. See, e.g., Archie v. Durham Pub. Schs. Bd. of Ed., 283 N.C. App.
472, 478 (2022) (“A plaintiff must come forward with particular evidence of gross
negligence to overcome summary judgment.”); Robinson v. Duke Univ. Health Sys.,
229 N.C. App. 215, 239 (2013) (affirming dismissal of punitive damages claim under
Rule 56 where plaintiffs failed to “present any evidence that defendants’ conduct in
this case was willful, wanton, malicious, or fraudulent”).53
IV.
CONCLUSION
43. 	WHEREFORE, the Court hereby GRANTS in part and DENIES in part
the Motion as follows:
a. 	Defendant’s Motion is hereby DENIED as to Vista’s claims against JPS
for breach of contract54 and against JPS and Cheng for professional
negligence/malpractice and common law negligence.
53 Plaintiff does not contend that Defendants’ conduct was “malicious” or “fraudulent.”
54 The Court notes that Defendants contend for the first time in their Reply Brief that Vista’s
request for disgorgement on its breach of contract claim is improper. 	(Defs. Reply Br. 12–
13.) 	Because this issue was not raised in Defendants’ Motion or opening brief, the Court
declines to consider Defendants’ contention in its resolution of the Motion. 	See Business
Court Rule 7.7 (“A reply brief must be limited to discussion of matters newly raised in the

b. 	Defendant’s Motion is hereby GRANTED as to Vista’s claims against
JPS and Cheng for gross negligence/punitive damages, and breach of
fiduciary 	duty, 	and 	those 	claims 	are 	hereby 	DISMISSED 	with
prejudice.
SO ORDERED, this the 17th day of September, 2024.55
/s/ Louis A. Bledsoe, III
Louis A. Bledsoe, III
Chief Business Court Judge
responsive brief, and the Court may decline to consider issues or arguments raised by the
moving party for the first time in a reply brief.”).
55 The Court notes that while Vista observed in its opposition brief that Defendants filed their
Motion before “the close of fact discovery, and before responding to outstanding discovery
requests from [Vista],” Pl.’s Br. Opp’n 2, n.6, Plaintiff has not sought relief under either Rule
56(f) or BCR 10.9 or otherwise contended that the Court should defer consideration of the
Motion.