MCFEE v. PRESLEY, 2024 NCBC 39

STATE OF NORTH CAROLINA
MECKLENBURG COUNTY
IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
21CVS18665-590
JACQUELINE S. MCFEE and
SAVAGE MCFEE, INC.,
Plaintiffs,
v.
WILLIAM C. PRESLEY; BILL
STACKS; SABR LEME, INC.; C.
PRESLEY PROPERTIES, LLC;
STACKS HOLDING, INC.; and CPP
INTERNATIONAL, LLC,
Defendants.
ORDER AND OPINION ON
PLAINTIFFS’ MOTION FOR
DEFAULT JUDGMENT
Terpening Law P.L.L.C., by William R. Terpening and Tomi M. Suzuki,
and Allan Law Firm, PLLC, by Albert P. Allan, for Plaintiffs Jacqueline
S. McFee and Savage McFee, Inc.
Johnston, Allison & Hord, P.A., by Kimberly J. Kirk and Katie D.
Burchette, for Defendants William C. Presley and C. Presley Properties,
LLC.
No counsel appeared for Defendants Bill Stacks, Sabr Leme, Inc., Stacks
Holding, Inc., and CPP International, LLC.
Conrad, Judge.
1. 	All that remains in this case is Plaintiff Jacqueline McFee’s motion for a
default judgment against Defendants Bill Stacks and CPP International, LLC
(“CPP”), neither of whom has made an appearance. McFee’s claims against the other
defendants, including William Presley and C. Presley Properties, LLC (“Presley
Defendants”), have been dismissed. Unlike Stacks and CPP, the Presley Defendants
actively opposed the claims against them, moved for summary judgment, and
prevailed across the board. The Court has asked the parties to address whether the
McFee v. Presley, 2024 NCBC 39.

Presley Defendants’ victory on the merits forecloses a judgment by default against
Stacks and CPP. 	For the following reasons, the Court concludes that it does and
DENIES McFee’s motion.
2. 	A short recap of the facts and procedural history will help frame the issue.
McFee used to work for CPP, a stationery company, as its lead designer. Presley was
its president during that time. 	In her employment agreement, McFee assigned to
CPP all intellectual property rights arising from her design work but retained an
option to reclaim those rights on certain conditions. 	CPP fired McFee in 2015. She
then sued the company in 2016 in federal court for false advertising, copyright
infringement, and more on the theory that her intellectual property rights had
reverted to her automatically under the terms of her employment agreement. 	The
federal court rejected that theory, holding that McFee did “not have ownership of the
intellectual property rights” at issue because CPP “needed to affirmatively assign”
the rights back to her. 	McFee v. CPP Int’l, 2017 U.S. Dist. LEXIS 21462, at *8
(W.D.N.C. Feb. 15, 2017) (dismissing federal-law claims with prejudice and declining
to exercise supplemental jurisdiction over state-law claims).
3. 	So McFee sued CPP again in 2017 in state court to compel it to reassign her
intellectual property rights and to recover damages for various alleged wrongs. Just
a day or two after McFee filed her state-court action, CPP sold assets from its arts
and crafts division to a company called Pacon and distributed some of the proceeds to
Presley. At the end of 2017, Presley stepped down and transferred control of CPP to
Stacks. 	In 2019, under Stacks’s leadership, CPP defaulted on a line of credit. 	The

lender foreclosed and sold the collateral securing the loan to a company called Bay
Sales. CPP soon went out of business. This hastened the end of McFee’s state-court
action: in February 2020, she obtained a default judgment against CPP, which
included an award of damages and a reassignment of intellectual property to her as
of the date of the judgment. (See Default J., ECF No. 153.16.)
4. 	This case followed in November 2021. McFee claims that the 2017 asset sale
to Pacon, the 2019 foreclosure sale to Bay Sales, and related distributions of proceeds
from those sales were fraudulent transfers made to avoid paying her 2020 default
judgment against CPP. 	She also alleges that Presley fraudulently induced her to
assign her intellectual property rights to CPP as early as 2008. 	The complaint, as
amended, includes claims for fraud, constructive fraud, breach of fiduciary duty,
unjust enrichment, and fraudulent transfer under N.C.G.S. §§ 39-23.4(a)(1) and
39-23.5(b) against some or all of the Presley Defendants, Stacks, and CPP. 	(McFee
named two other entities as codefendants as well, but the claims against them have
been dismissed, and they are not relevant to this discussion.)
5. 	After 	discovery 	closed, 	McFee 	and 	the 	Presley 	Defendants 	filed
cross-motions for summary judgment. 	The Court granted the Presley Defendants’
motion in its entirety. 	By her own admission, McFee’s section 39-23.5(b) claim for
fraudulent transfer was untimely. 	Her section 39-23.4(a)(1) claim concerning the
Pacon asset sale was also untimely because the undisputed evidence showed that she
filed this lawsuit more than four years after the sale and more than two years after
she had actual notice of the sale. Her section 39-23.4(a)(1) claim concerning the Bay

Sales transaction, though timely, was deficient for other reasons, including that a
foreclosure sale is not a “transfer made . . . by a debtor” within the meaning of the
statute. 	And her common-law claims (fraud, constructive fraud, breach of fiduciary
duty, and unjust enrichment) were either time-barred or lacked sufficient evidence to
create a jury question. See generally McFee v. Presley, 2023 NCBC LEXIS 173 (N.C.
Super. Ct. Dec. 28, 2023).
6. 	McFee 	also 	moved 	for 	a 	default 	judgment 	against 	the 	nonappearing
defendants.1 In an interim order, the Court held that most claims against Stacks and
CPP were defective on their face and dismissed them. 	Just a few claims survived:
the section 39-23.4(a)(1) claim for fraudulent transfer against CPP based on the
Pacon and Bay Sales transactions; the same claim against Stacks, though limited to
the Bay Sales transaction; and the claims for constructive fraud and breach of
fiduciary duty against Stacks, again limited to the Bay Sales transaction. As to these
claims, the Court determined that McFee’s allegations, if true, were sufficient to
establish liability but questioned whether entering a judgment by default in her favor
would conflict with the judgment on the merits that had been entered against her on
the very same issues. See McFee v. Presley, 2023 NCBC LEXIS 175, at *12 n.6 (N.C.
Super. Ct. Dec. 28, 2023).
1 This is McFee’s second motion for default judgment. In November 2022, the Court issued
an interim order on her first motion as to liability but deferred a decision as to damages. See
McFee v. Presley, 2022 NCBC LEXIS 142 (N.C. Super. Ct. Nov. 29, 2022). 	McFee then
amended her complaint, rendering her motion moot. See Moore v. Sullivan, 123 N.C. App.
647, 649 (1996) (When a “trial court enters a judgment determining the issue of liability but
ordering a trial on the issue of damages, the judgment is only an entry of default rather than
a default judgment.”).

7. 	Following the interim order, the Court directed McFee to file a brief
addressing why entering a default judgment against Stacks and CPP would not be
inconsistent with the summary-judgment order. 	The Court allowed the Presley
Defendants to brief the issue as well. 	Both sides timely submitted their written
arguments, and the Court heard oral arguments on 25 April 2024.
8. 	The legal principle at issue is not controversial. 	“Inconsistent judgments
are erroneous”—full stop. Graham v. Mid-State Oil Co., 79 N.C. App. 716, 720 (1986).
“When co-defendants are similarly situated, inconsistent judgments will result if one
defendant defends and prevails on the merits and the other suffers a default
judgment.” Angelo Iafrate Constr., LLC v. Potashnick Constr., Inc., 370 F.3d 715, 722
(8th Cir. 2004). 	Thus, “it would be incongruous and unfair to allow a plaintiff to
prevail against defaulting defendants on a legal theory rejected by a court with regard
to an answering defendant in the same action.” 	Moore v. Howell, 2023 U.S. Dist.
LEXIS 125880, at *5 (D. Nev. July 21, 2023) (cleaned up); see also SG Blocks, Inc. v.
Hola Cmty. Partners, 2024 U.S. Dist. LEXIS 28754, at *14 (C.D. Cal. Feb. 20, 2024)
(observing that “the legal determination” as to a claim against one defendant would
“bar the same claim against” a nonappearing defendant); Rivera v. Mattingly, 2021
U.S. Dist. LEXIS 67539, at *12 (S.D.N.Y. 2021) (denying default judgment because it
“would lead to inconsistent judgments”).
9. 	Here, the Presley Defendants defended and prevailed on the merits. 	The
Court determined that McFee’s section 39-23.4(a)(1) challenge to the Pacon asset sale
is time-barred. The Court also determined that the Bay Sales foreclosure sale is not

a transfer “by a debtor” as required by section 39-23.4(a)(1). 	Entering a default
judgment on identical claims against Stacks and CPP would conflict with these legal
determinations. 	So too would a default judgment against Stacks on the claims for
constructive fraud and breach of fiduciary duty as to the Bay Sales foreclosure sale.
McFee’s theory as pleaded (that CPP sold its assets and that Stacks should have
reserved the sale proceeds to pay her default judgment) is incompatible with the
undisputed evidence and the Court’s legal rulings (that CPP’s lender, not CPP or
Stacks, sold collateral after a loan default and reaped the proceeds).
10. 	At no point has McFee suggested that the claims and allegations against
Stacks and CPP differ from those against the Presley Defendants so that a legal
ruling as to one would not apply equally to the others had all defendants appeared in
the case. Rather, her position is that the summary-judgment decision isn’t binding,
thus erasing any inconsistency. The Court disagrees.
11. 	First, McFee starts with the determination that the Bay Sales foreclosure
sale was not a transfer “by a debtor.” That determination, she contends, was dictum
because the Court included a second, independent ground for its decision. 	Not so.
When two “independent grounds” support a judgment, both are “material.”2 Propst
2 Dictum or not, the Court’s ruling is correct. There is no dispute about what the Bay Sales
transaction was. It was a foreclosure sale by a secured lender, which means that it was not
a transfer “by a debtor.” 	N.C.G.S. § 39-23.4(a)(1). 	The twist is that Stacks and CPP, as
defaulting defendants, are deemed to have admitted the allegations in the amended
complaint. There, McFee portrays the Bay Sales transaction as an asset sale by CPP, never
acknowledging that it was a foreclosure sale by CPP’s lender. (See Am. Compl. ¶¶ 57, 66, 68,
82, 85, 129, ECF No. 98.) These allegations, taken as true, suffice to state a claim. But they
are indisputably false. Nothing compels the Court to put on blinders, accept false allegations
as true, and enter a default judgment based on a legal theory that it has rejected on the
merits. To do so would undermine the integrity of the judicial process.

v. N.C. HHS, 234 N.C. App. 165, 170 (2014) (citation and quotation marks omitted);
see also id. at 171 (“[A]lternative, independent grounds for an appellate decision are
not considered obiter dicta here.”); id. at 172 (“[W]here a trial court bases its judgment
on multiple independent grounds, each of which have been fully litigated, and that
judgment has not been appealed, the trial court’s determination as to every issue
actually decided has preclusive effect in later litigation.”).
12. 	Next, McFee argues that equitable considerations concerning the Bay Sales
foreclosure sale support her position. 	This is perplexing. 	For one thing, the
argument’s premise is false. 	McFee says that CPP’s lender could not have sold
collateral assets to Bay Sales “because she owned them.” (McFee’s Supp. Br. 4, ECF
No. 208 (emphasis added).) 	But she didn’t own them at the time of the sale; she
obtained the reassignment of her intellectual property rights later through the
default 	judgment 	in 	her 	state-court 	action 	against 	CPP.3 	Moreover, 	McFee’s
argument that the foreclosure sale was defective is a new theory that has no basis in
her amended complaint. And in any event, it is not at all clear why McFee believes
3 This error was no accident. McFee’s brief repeats it more than once. (See McFee’s Supp.
Br. 5 (stating that “[p]roperty owned by McFee should not have been conveyed or otherwise
encumbered by” CPP’s lender and implying that she reclaimed her intellectual property
rights automatically “by way of the ‘End of Sale’ provision” in her employment agreement
(emphasis added)); see also McFee’s Supp. Br. 3 (“the designs were undisputedly McFee’s at
the time” (emphasis added)).) What’s more, at the hearing, her counsel stated that the federal
court dismissed her first lawsuit without deciding whether her employment agreement
automatically reassigned rights to her. Let’s be clear: the federal court held that McFee did
“not have ownership” of the rights at issue and that her employment agreement did not
automatically reassign them. 	CPP Int’l, 2017 U.S. Dist. LEXIS 21462, at *8. 	And her
February 2020 default judgment in the state-court action “assigned and transferred” rights
to her “as of the date of this final judgment.” (Default J.) McFee’s insistence that each court
said the opposite is troubling.

a flawed foreclosure sale, as opposed to a flawless one, is a transfer “by a debtor”
under section 39-23.4(a)(1).
13. 	Finally, McFee contends that the summary-judgment order is interlocutory
and urges the Court to eliminate any inconsistency by revisiting the evidence and
revising that order. She has not moved for reconsideration, however. And the Court
sees no reason to retract its rulings.
14. 	For the foregoing reasons, the Court concludes that entering a default
judgment against Stacks and CPP would be inconsistent with the previous entry of
summary judgment in favor of the Presley Defendants. The Court therefore DENIES
McFee’s motion for default judgment and DISMISSES her remaining claims against
Stacks and CPP with prejudice.
15. 	There is one last administrative matter. 	McFee’s fellow plaintiff, Savage
McFee, Inc., concedes that it lacks standing to seek relief from the nonappearing
defendants but has not voluntarily dismissed its claims. 	(See Response to Show
Cause Ord. 4, ECF No. 185.) 	The Court therefore DISMISSES Savage McFee’s
claims against the nonappearing defendants without prejudice.
16. 	No issues remain for trial. Accordingly, this is a final order disposing of all
issues in this action.
SO ORDERED, this the 10th day of June, 2024.
/s/ Adam M. Conrad
Adam M. Conrad
Special Superior Court Judge
for Complex Business Cases