CHI v. N. RIVERFRONT MARINA & HOTEL LLLP; FENG v. N. RIVERFRONT MARINA & HOTEL LLLP, 2023 NCBC 47

STATE OF NORTH CAROLINA
NEW HANOVER COUNTY
IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
21 CVS 4611
23 CVS 62
HE CHI; BIAN YIDE; CAO YONGJIE;
CHEN MINZHI; CHENG TAO; HU KUN;
LIANG JINGQUAN; LUO PENG; MA
QIHONG; MA WEIGUO; SONG YING;
WANG JIAN; WANG LING; WANG
XUEHAI; XIE QIN; YE XIAFEN; and
ZHANG YUNLONG,
Plaintiffs,
v.
NORTHERN RIVERFRONT MARINA
AND HOTEL LLLP; NRMH HOLDINGS
LLC; NRMH HOTEL HOLDINGS LLC;
USA INVESTCO LLC; PAC RIM
VENTURE LTD.; RIVERFRONT
HOLDINGS II LLC; WILMINGTON
RIVERFRONT DEVELOPMENT LLC;
GOLDEN MARINA LLC; CIRCLE
MARINA CARWASH, INC.; CHARLES J.
SCHONINGER; JOHN C. WANG;
JIANGKAI WU; CHRISTOPHER
ARDALAN; and GONGZHAN WU,
Defendants.
WANG FENG and ZHANG SHIXIONG,
Plaintiffs,
v.
NORTHERN RIVERFRONT MARINA
AND HOTEL LLLP; NRMH HOLDINGS
LLC; NRMH HOTEL HOLDINGS LLC;
USA INVESTCO LLC; RIVERFRONT
HOLDINGS II LLC; WILMINGTON
RIVERFRONT DEVELOPMENT LLC;
GOLDEN MARINA LLC; CIRCLE
MARINA CARWASH, INC.; CHARLES
J. SCHONINGER; JOHN C. WANG;
JIANGKAI WU; and CHRISTOPHER
ARDALAN,
Defendants.
ORDER AND OPINION ON MOTIONS
TO DISMISS
Chi v. N. Riverfront Marina & Hotel LLLP; Feng v. N. Riverfront Marina & Hotel
LLLP, 2023 NCBC 47.

1. 	THIS 	MATTER 	is 	before 	the 	Court 	on 	four 	motions 	to 	dismiss,
(collectively the “Motions”). 	Defendants Northern Riverfront Marina and Hotel
LLLP, NRMH Holdings LLC, NRMH Hotel Holdings LLC, USA InvestCo LLC,
Riverfront Holdings II LLC, Wilmington Riverfront Development LLC, Golden
Marina LLC, Circle Marina Carwash, Inc., Charles J. Schoninger, John C. Wang, and
Christopher Ardalan move to dismiss the Second Amended Complaint filed by
seventeen Plaintiffs (the “Chi Plaintiffs”) in Civil Action no. 21 CVS 4611 (the “Chi
Complaint”) (ECF No. 92). 	Defendants also move to dismiss the virtually identical
complaint filed by Plaintiffs Weng Feng and Zhang Shixiong (the “Feng Plaintiffs”)
in Civil Action no. 23 CVS 62 (the “Feng Complaint”) (ECF No. 29).1 	Likewise,
Defendant Jiangkai “Samson” Wu (“Samson Wu”)2 moves to dismiss the claims
brought against him by both the Chi Plaintiffs, (ECF No. 95), and the Feng Plaintiffs,
(ECF No. 31).3
2. 	The Court, having considered the Motions, the briefs supporting and
opposing the Motions, and the parties’ arguments at a hearing held on 21 April 2023,
1 The only substantive difference between the Chi Second Amended Complaint and the Feng
Complaint is the addition of paragraph 26 in the Feng Complaint, which identifies the Chi
action as a “Companion Matter.” Because the allegations in both pleadings are otherwise the
same, the Court opts to cite only to the Chi Second Amended Complaint.
2 The Court refers to Defendant Jiangkai Wu as “Samson Wu” to distinguish him from other
individuals with the name Wu who are either parties or counsel in these cases.
3 The Court previously dismissed defendants Pac Rim Venture Ltd. and Gongzhan Wu for
lack of in personam jurisdiction. (See Order and Opinion, Chi ECF No. 76.)

concludes for the reasons stated below that the Motions should be GRANTED in part
and DENIED in part, as provided herein.
Ledolaw, by Michelle Ledo, and DGW Kramer, LLP, by Katherine
Burghardt 	Kramer, 	for 	Plaintiffs 	Ma 	Qihong, 	Luo 	Peng, 	Liang
Jingquan, Hu Kun, Cheng Tao, Chen Minzhi, Cao Yongjie, Bian Yide,
He Chi, Zhang Yunlong, Ye Xiafen, Xie Qin, Wang Xuehai, Wang Ling,
Wang Jian, Song Ying, and Ma Weiguo, as well as for Plaintiffs Weng
Feng and Zhang Shixiong.
The Law Offices of Oliver & Cheek, PLLC, by George M. Oliver, for
Defendants 	Wilmington 	Riverfront 	Development 	LLC, 	Riverfront
Holdings II LLC, USA InvestCo LLC, NRMH Hotel Holdings LLC,
NRMH Holdings LLC, Northern Riverfront Marina and Hotel, LLLP,
Christopher Ardalan, John C. Wang, Charles J. Schoninger, Circle
Marina Carwash, Inc., and Golden Marina LLC.
The Law Offices of G. Grady Richardson, Jr., P.C., by Jennifer L.
Carpenter, for Defendant Jiangkai Wu.
Earp, Judge.
I. 	FACTUAL BACKGROUND
3. 	The Court does not make findings of fact when deciding motions to
dismiss pursuant to Rule 12(b)(6) but recites only those factual allegations from the
Chi Complaint and the Feng Complaint that are relevant and necessary to a
determination of the Motions.4
4. 	Plaintiffs He Chi, Bian Yide, Cao Yongjie, Chen Minzhi, Cheng Tao, Hu
Kun, Liang Jingquan, Luo Peng, Ma Qihong, Ma Weiguo, Song Ying, Wang Jian,
Wang Ling, Wang Xuehai, Xie Qin, Ye Xiafen, Zhang Yunlong, Weng Feng, and
4 The Court’s earlier Order and Opinion, ECF No. 76, contains additional fact background.

Zhang Shixiong, (collectively, “Plaintiffs”), are all citizens of the People’s Republic of
China. (Chi Second Am. Verified Compl., [“Chi Complaint”], ¶ 26, ECF No. 88;
Verified Compl., [“Feng Compl.”], ¶ 27, ECF No. 3.) Each is alleged to have invested
a minimum of five hundred thousand dollars5 to become limited partners in NRMH.
(Chi Compl. ¶ 74.)
5. 	Northern Riverfront Marina and Hotel LLLP (“NRMH”) is a North
Carolina Limited Liability Limited Partnership. (Chi Compl. ¶ 2.) Wilmington
Riverfront Development LLC (“Wilmington Development”) is a North Carolina LLC
and the general partner of NRMH. (Chi Compl. ¶ 7.)
6. 	Charles 	Schoninger 	(“Schoninger”) 	is 	the 	managing 	member 	of
Wilmington Development and the central figure in Plaintiffs’ allegations. 	(Chi
Compl. ¶ 10.) Plaintiffs allege that Schoninger formed NRMH to raise funds for the
purpose of developing real estate located on the riverfront in downtown Wilmington,
North Carolina (the “Project”). (Chi Compl. ¶ 37.) The business plan for the Project
and the offering circular for the investment stated that NRMH intended to construct
a 	marina 	with 	204 	boat 	slips, 	two 	restaurants, 	and 	a 	136-room 	hotel 	with
approximately 35,000 square feet of retail space. (Chi Compl. ¶ 34, Ex. B.)6
5 Each Plaintiff contributed additional amounts in administrative and other fees.
6 The Chi Plaintiffs did not attach any exhibits to the Chi Second Amended Complaint and
appear to have intended to incorporate the exhibits attached to their First Amended
Complaint in their Second Amended Complaint. 	The Feng Plaintiffs also fail to attach
exhibits and instead reference exhibits filed in the Chi “Companion Matter,” which the Court
is left to assume are the exhibits attached to the Chi First Amended Complaint. (Feng Compl.
¶ 26.) 	The Court observes that Plaintiffs’ inexact pleading creates needless potential for
confusion and strongly discourages the practice of incorporating exhibits from one civil action
to another civil action.

7. 	Plaintiffs allege that in exchange for their investment, they were
promised that the Project would meet the requirements of the USICS Employment-
based Fifth Preference Visa Program (the “EB-5 program”), a government program
affording foreign investors in a new commercial enterprise special dispensation with
respect to permanent resident status. (Chi Compl. ¶¶ 27, 35.) They also allege that
they were promised certain periodic monetary returns, including a return of the
amount of their investment at the end of an investment term that was to last no
longer than five years. (Chi Compl. ¶¶ 50, 70, 77.)
8. 	USA InvestCo, LLC (“InvestCo”) is a North Carolina LLC that is alleged
to have engaged in activities to promote the Project. (Chi Compl. ¶ 6.) Samson Wu,
a licensed immigration broker in China, worked for a company called Pac Rim
Ventures 	(formerly 	a 	party 	to 	this 	action) 	before 	taking 	a 	“directorial 	and/or
managerial role” with InvestCo. (Chi Compl. ¶ 12.) Plaintiffs allege that “[i]n those
roles, [Samson] Wu was responsible for promotion and dissemination of information
about the Project in [China] to potential immigration agencies and investors and for
recruiting investors.” (Chi Compl. ¶ 12.) Samson Wu is also alleged to have been the
Manager and Vice President of an InvestCo affiliate in China. 	(Chi Compl. ¶ 1.)
Given his ability to speak both Mandarin and English, Samson Wu allegedly served
as a “go-between” for communications between the investors and other Project
representatives until at least 2021. (Chi Compl. ¶ 12.)
The Court’s references to exhibits herein are to those attached to the Chi First Amended
Complaint. (See ECF No. 26.1)

9. 	Schoninger is alleged to own, “partially or wholly, directly or indirectly,”
and to manage Defendants NRMH, Wilmington Development, InvestCo, and the
three named holding companies: 	NRMH Holdings LLC (“NRMH Holdings 1”),
Riverfront Holdings II LLC (“NRMH Holdings 2”), and NRMH Hotel Holdings LLC
(“NRMH Holdings 3”). (Chi Compl. ¶ 10.)
10. 	Christopher Ardalan 	(“Ardalan”) 	and John 	C. 	Wang 	(“Wang”) 	are
directors of InvestCo, along with Schoninger. (Chi Compl. ¶ 13.) In addition, Wang
owns “partially or wholly, directly or indirectly, and manages” Golden Marina LLC
(“Golden Marina”) and Circle Marina Carwash, Inc. (“Car Wash”). (Chi Compl. ¶ 11.)
11. 	At various times between 1 August 2011 and 19 February 2013, each
Plaintiff 	entered 	into 	both 	an 	Agreement 	of 	Limited 	Partnership 	and 	its
accompanying Subscription Agreement (collectively, the “Contract”) to become a
Limited Partner in NRMH. 	(Chi Compl. ¶ 74.) 	Plaintiffs allege that prior to
executing the Contract, some or all of them received marketing materials that were
prepared and disseminated by some of the defendants. (Chi Compl. ¶¶ 39-40.) They
further allege that the content of the Business Plan included in those materials
changed on 30 May 2012 in response to USCIS’s approval of fewer investors than was
originally contemplated. (Chi Compl. ¶ 73.)
12. 	Plaintiffs 	allege 	that 	before 	agreeing 	to 	the 	Contract 	terms 	they
attended seminars that were hosted by Schoninger, Ardalan, NRMH, InvestCo, and
Samson Wu. (Chi Compl. ¶ 78.) They allege that both the marketing materials they
received and the seminars they attended (which varied by Plaintiff) contained false

statements that were intended to, and did, induce them to execute the Contract. (Chi
Compl. ¶¶ 145-46.)
13. 	Included in the marketing materials was an offering circular that states
in relevant part:
THESE SECURITIES ARE SUBJECT TO A HIGH DEGREE OF RISK. SEE
SECTION III, “RISK FACTORS” IN SUBSCRIPTION AGREEMENT.
(Chi Compl. Ex. B, [“Offering Circular”], i.) 	It contains a series of securities
disclosure notices, among them:
FORWARD-LOOKING 	STATEMENTS. 	THIS 	OFFERING 	CIRUCILAR
CONTAINS 	FORWARD-LOOKING 	STATEMENTS 	BASED 	ON 	THE
MANAGING GENERAL PARTNER’S EXPERIENCE AND EXPECTATIONS
ABOUT THE MARKETS IN WHICH THE PARTNERSHIP INVESTS. . . .
SUCH FORWARD-LOOKING STATEMENTS ARE NOT GUARANTIES OF
FUTURE 	PERFORMANCE 	AND 	ARE 	SUBJECT 	TO 	MANY 	RISKS,
UNCERTAINTIES, 	AND 	ASSUMPTIONS 	THAT 	ARE 	DIFFICULT 	TO
PREDICT. 	THEREFORE 	ACTUAL 	RETURNS 	COULD 	DIFFER
MATERIALLY 	AND 	ADVERSELY 	FROM 	THOSE 	EXPRESSED 	OR
IMPLIED IN ANY FORWARD-LOOKING STTAEMENTS AS A RESULT OF
VARIOUS FACTORS. THE SECTION III, ENTITLED “RISK FACTORS” IN
THE 	SUBSCRIPTION 	AGREEMENT. 	. 	. 	DISCUSSES 	SOME 	OF 	THE
IMPORTANT RISK FACTORS THAT MAY AFFECT THE PARTNERSHIP’S
RETURNS. 	PROSPECTIVE 	INVESTORS 	SHOULD 	CAREFULLY
CONSIDER THOSE RISKS . . . BEFORE DECIDING WHETHER TO INVEST
IN 	THE 	PARTNERSHIP. 	NEITHER 	THE 	MANAGING 	GENERAL
PARTNER NOR THE PARTNERSHIP UNDERTAKES ANY OBLIGATION
TO REVISE OR UPDATE ANY FORWARD-LOOKING STATEMENT FOR
ANY REASON.
SUITABILITY. 	THIS IS A PRIVATE OFFERING AND IS AVAILABLE
ONLY 	TO 	INVESORS 	WHO 	ARE 	“ACCREDITED 	INVESTORS” 	AS
DEFINED IN REGULATION D PROMULGATED BY THE SEC . . . . EACH
INVESTOR MUST . . . HAVE SUCH KNOWLEDGE AND EXPERIENCE IN
FINANCIAIL 	AND BUSINESS 	MATTERS 	THAT 	SUCH 	INVESTOR 	IS
CAPABLE 	OF 	EVALUATING 	THE 	MERITS 	AND 	RISKS 	OF 	THIS
INVESTMENT AND MUST BE ABLE TO BEAR THE ECONOMIC RISKS OF
THIS INVESTMENT. . . . DO NOT CONSIDER INVESTING IF YOU ARE

NOT FINANCIALLY SOPHISTICATED AND CAPABLE OF EVALUATING
THE MERITS AND RISKS OF THE INVESTMENT, EITHER ON YOUR
OWN, OR WITH THE ASSISTANCE OF YOUR FINANCIAL ADVISOR.
THESE 	SECURITIES 	ARE 	SPECULATIVE 	AND 	THEY 	INVOLVE 	A
SUBSTANTIAL RISK, AND THEY ARE ONLY A SUITABLE INVESTMENT
FOR 	A 	LIMITED 	PORTION 	OF 	THE 	RISK 	SEGMENT 	OF 	YOUR
PORTFOLIO.
TERMS OF THE OFFERING.
* * * *
NO ONE HAS BEEN AUTHORIZED TO MAKE ANY REPRESENTATIONS
ABOUT 	THE 	ISSUER 	OR 	THE 	SECURITIES, 	OTHER 	THAN 	THOSE
REPRESENTATIONS 	MADE 	IN 	THIS 	OFFERING 	CIRCULAR.
THEREFORE, DO NOT CONSIDER ANY INFORMATION THAT HAS BEEN
DESCRIBED TO YOU ORALLY. PLEASE MAKE SURE THAT YOU INVEST
SOLELY ON THE BASIS OF THE INFORMATION IN THIS OFFERING
CIRCULAR.
THIS 	OFFERING 	CIRCULAR 	IS 	NOT 	LEGAL, 	TAX 	OR 	FINANCIAL
ADVICE. PLEASE CONSULT YOUR OWN PROFESSIONAL ADVISORS AS
TO 	THE 	LEGAL, 	TAX 	AND 	FINANCIAL 	IMPLICATIONS 	OF 	THIS
INVESTMENT . . . .
IN 	MAKING 	AN 	INVESTMENT 	DECISION, 	RELY 	ON 	YOUR 	OWN
EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING,
INCLUDING THE MERITS AND RISKS INVOLVED. . . .
AN INVESTMENT IN THE PARTNERSHIP INVOLVES A HIGH RISK OF
LOSS OF PRINCIPAL AND LACK OF LIQUIDITY, AND THEREFORE
REQUIRES THE FINANCIAL ABILITY AND WILLINGNESS TO BEAR
SUCH RISKS. . . . THE MANAGING GENERAL PARTNER WILL RESPOND
TO 	ANY 	QUESTIONS 	YOU 	OR 	YOUR 	ADVISERS 	MAY 	HAVE
CONCERNING THIS OFFERING AND WILL MAKE AVAILABLE FOR
EXAMINATION BY YOU OR YOUR ADVISERS SUCH RECORDS AND
FILES IN ITS POSSESSION AS MAY BE PERTINENT TO YOUR DECISION
WHETHER TO INVEST IN INTERESTS.
THE TERMS AND CONDITIONS OF THIS OFFERING . . . AND THE
RIGHTS AND LIABILITIES OF THE PARTNERSHIP THE MANAGING
GENERAL 	PARTNER 	AND 	THE 	LIMITED 	PARTNERS 	ARE
GOVERNED 	BY 	THE 	[PARTNERSHIP] 	AGREEMENT 	AND 	THE
SUBSCRIPTION AGREEMENT BETWEEN EACH LIMITED PARTNER

AND THE PARTNERSHIP. . . AND THE DESCRIPTION OF ANY OF
SUCH MATTERS IN THE TEXT OF THIS OFFERING CIRCULAR IS
SUBJECT TO AND QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO [THE PARTNERSHIP AGREEMENT AND THE SUBSCRIPTION
AGREEMENT].
(Offering Circular, ii-iv) (emphasis added).
14. 	To become a limited partner in NRMH, Plaintiffs were required to agree
with the general partner, Wilmington Development, to terms stated in the Agreement
of Limited Partnership of Northern Riverfront Marina and Hotel, LLLP, (the
“Partnership Agreement”). The Partnership Agreement, in turn, required Plaintiffs
to execute the accompanying Subscription Agreement and invest the required
minimum 	$500,000.00 	capital 	contribution 	(plus 	fees). 	(See, 	e.g., 	Partnership
Agreement Art. I, § 1.4 (“ ‘Limited Partner’ shall mean each Person executing a
Subscription Agreement and acquiring Units in the Partnership.”) 	Each Plaintiff’s
money was placed in escrow pending approval of his or her participation in the EB-5
program. 	Once approved, the money was released to NRMH. 	(Chi Compl. Ex. F,
[“Subscription Agreement”], App. I, ¶¶ 1, 3.)
15. 	NRMH is managed exclusively by its general partner, Wilmington
Development. (Partnership Agreement Art. VII, § 7.1.) Section 7.4 of the Partnership
Agreement limits the general partner’s liability:
No General Partner nor any officer appointed by the General Partner shall be
liable to the Partnership or to any Partner for damages attributable to any
breach of duty owned (sic) by the General Partner or officer to the Partnership
or the Partners, except to the extent (i) required under the Act, (ii) such breach
of duty is based upon such Person’s gross negligence or willful misconduct as
established by a non-appealable court order, judgment, decree or decision, or
(iii) such breach of duty is based upon a knowing violation of applicable law or
this Agreement.

* * * *
The General Partner does not, in any way, guarantee the return of a Partner’s
Capital Contribution, the Preferred Return, or any profit from the operations
of the Partnership. 	No General Partner shall be responsible to any Partner
because of a loss of their investments or a loss in operations, unless the loss
shall have been the result of gross negligence or willful misconduct[.]
(Chi Compl. Ex. E [“Partnership Agreement”] § 7.4. See also § 8.4: (“[N]o Limited
Partner shall have any recourse against the General Partner . . . except as
otherwise set forth herein.”)7
16. 	The 	Subscription 	Agreement 	also 	contains 	representations 	and
warranties that were required of each Plaintiff before they were permitted to invest.
Among the representations each Plaintiff made were: (1) that they were able to ask
questions of and receive answers from the Partnership or a person acting on its behalf
concerning the terms and conditions of the Offering Circular; (2) that each Plaintiff
met the criteria of Accredited Investor;8 (3) that prior to signing the Subscription
Agreement, each Plaintiff was supplied with all the information regarding the Project
that s/he had requested; (4) that to the extent s/he deemed it necessary, each Plaintiff
7 Some of the documents in the record contain grammatical or typographical errors. 	The
Court identifies some of those errors but does not attempt to identify all of them.
8 “Individuals may qualify as accredited investors based on wealth and income thresholds, as
well as other measures of financial sophistication.”
See www.sec.gov/education/captialraising/building-blocks/accreditedinvestor (last visited 26
July 2023.)
“Accredited Investor” is defined in the Subscription Agreement as one who “has a net worth
(either individually or jointly with his or her spouse) of at least $1,000,000; or . . . 	had an
individual income, not including the income of his or her spouse (even if they are proposing
to purchase an Interest with funds that are community property or as joint tenants or tenants
in common), in excess of $200,000 in each of the most recent two years or joint income with
his or her spouse in excess of $300,000 in each of those years and reasonably expects to
achieve the same level in the current year.”

had consulted with his/her own legal, tax, and financial advisers; (5) that each
Plaintiff was aware that an investment in the partnership was “highly speculative”
and subject to “substantial risks”; (6) that the partnership had no history of achieving
revenues and that the estimated returns were uncertain and the actual results “could
vary in a materially adverse manner”; (7) that each Plaintiff, in making the decision
to invest, relied on his/her own independent investigation; and (8) that each Plaintiff
either read and understood English or had the Subscription Agreement translated by
a trusted advisor into a language that the Plaintiff understood. (Subscription
Agreement § II.)
17. 	Section III of the Subscription Agreement is captioned “Risk Factors”
and repeats multiple times many of the same warnings listed above. 	Notably,
Plaintiffs were told that “[n]o assurances can be made that [the general partner’s]
forecasts will prove to be accurate, and investors are cautioned against placing
excessive reliance on such forecasts in deciding whether to invest in the Partnership.”
(Subscription 	Agreement 	§ 	III(B).) 	Subsection 	J 	highlights 	the 	Partnership
Agreement’s provision that “the General Partner shall not be liable to the Limited
Partners for any loss or liability incurred in connection with the affairs of the
Partnership, so long as such loss or liability did not result from willful misconduct or
gross negligence. . . .Therefore, a Limited Partner may have a more limited right of
action against the General Partner than he would have had absent these provisions
in the Partnership Agreement.” (Subscription Agreement § III(J).)

18. 	Finally, 	the 	Subscription 	Agreement 	states 	in 	Section 	V(I): 	“This
Subscription Agreement constitutes the entire agreement among the parties hereto
with respect to the subject matter hereof.” (Subscription Agreement § V(I).)
19. 	The final page of Exhibit F to the Chi Complaint (incorporated by
reference in the Feng Complaint) is a single page document titled, “Agreement on
Investment Period.” 	Although included with the Subscription Agreement as an
exhibit to the Chi and Feng Complaints, the final page of Exhibit F is not numbered
consecutively with the pages of the Subscription Agreement, nor is it in the same
font.9 (Ex. F, final page.)
20. 	The Agreement on Investment Period purports to reduce to writing the
parties’ “consensus” that the investment period for each Plaintiff’s funds would begin
on the date NRMH had the use of the money and run for a period of three years, with
NRMH having the ability to call for two one-year extensions. (Chi Compl. ¶¶ 63, 77.)
At the conclusion of the investment period (maximum five years), the agreement
stated that “NRMH will repurchase the limited partnership units on a (FIFO) first in
first out manor [sic].” (Ex. F, final page.)
21. 	Exhibit D to the Chi Complaint (incorporated by reference in the Feng
Complaint) is a document titled, “Conversion of Interest in the Northern Riverfront
9 During the hearing, counsel for Plaintiffs, referencing paragraph 63 of the Chi Complaint,
clarified that the Agreement on Investment Period that was included with the Subscription
Agreement in Exhibit F is “its own document” and “[her] office may have just inadvertently
included” it in Exhibit F. (21 April 2023 Transcript [“Tr.”] 106:23-107:10, Chi ECF No. 135.)
However, during the same hearing, co-counsel for Plaintiffs referenced paragraph 74 of the
Chi Complaint and argued that the Agreement on Investment Period is part of the
Subscription Agreement. (Tr. 54:11-19) (“[T]hat’s the way we have it alleged[.]”.)

Marina and Hotel, LLLP, (“Conversion Agreement”). The document appears to be an
unsigned template that is also undated, except for the typewritten year “2011.” The
template purports to establish a “trigger date” defined as “completion of the resort,
USCIS conditions being met, Partner receipt of a [sic] Unconditional Green Card and
a period of not less than 5 years from approval of I-485.” 	On the trigger date, the
document states:
[T]he General Partner shall be responsible to acquire the interests of the
Partner upon the payment of the sum of USD500,000 to be paid in U.S. dollars;
In [sic] the event General Partner is unable to pay said amount at trigger date
partner shall be entitled to record and take owner ship [sic] of assets (Two hotel
rooms and One marina berth) as defined in the Quit Claim.
(Ex. D) (emphasis in original).
22. 	Each Plaintiff agreed to the terms of the Contract on a different date
between 2011 and 2013. (Chi Compl. ¶ 91.) Consequently, the five-year investment
term referenced in both the Agreement on Investment Period and the Conversion
Agreement, if effective, would have expired on a different date for each Plaintiff. (Chi
Compl. ¶ 91.) However, the latest date the term would have expired for any Plaintiff
is 19 February 2018. (Chi Compl. ¶ 91.)
II. 	PROCEDURAL BACKGROUND
23. 	The Chi Plaintiffs initiated this action on 13 December 2021, asserting
that their investment in NRMH had failed to provide the allegedly promised return.
(ECF No. 3.) 	A First Amended & Verified Complaint (“Amended Complaint”) was
subsequently filed on 3 February 2022. (ECF No. 26.)

24. 	On 24 March 2022, then Defendants Pac Rim Venture Ltd. (“PRV”) and
Gongzhan Wu filed their motion to dismiss. 	(ECF No. 40.) 	After full briefing, the
Court held a hearing on the motion on 16 May 2022. Thereafter, on 24 August 2022,
the Court entered an Order and Opinion dismissing PRV and Gongzhan Wu for lack
of in personam jurisdiction. (ECF No. 76.)10
25. 	Following service of process on Samson Wu, on 26 September 2022, the
Chi Plaintiffs moved for leave to file a Second Amended Complaint in order to expand
their allegations regarding Mr. Wu. (ECF No. 79.) The motion went unopposed, and
the Court entered an order allowing the Chi Plaintiffs’ Second Amended Complaint
on 20 December 2022. (ECF No. 86.)
26. 	The parties have been engaged in discovery since at least 18 May 2022.
(ECF No. 61.) 	The Court has permitted requested extensions. 	Pursuant to the
Amended Case Management Order, the deadline for fact discovery for both the Chi
and Feng Plaintiffs is now 15 January 2024. (ECF No. 131.)11
10 The Chi Plaintiffs subsequently filed an action against PRV and Gongzhan Wu in state
court in New York. He Chi et al. v. Gongzhan Wu et al., No. 653488/2022 (NY Supreme Ct.
2022). This Court has not been provided with a copy of the complaint in that action, but the
Order and Opinion of Judge Lyle E. Frank dismissing the plaintiffs’ claims on statute of
limitations grounds was provided to the Court during the hearing on these Motions. 	The
Court takes judicial notice of the fact that the action against PRV and Gongzhan Wu was
dismissed, but the Court also recognizes that it is not constrained to follow the New York
court’s analysis of the claims that were before it with respect to PRV and Gongzhan Wu when
deciding the fate of the claims pending here against the NRMH Defendants and Samson Wu.
11 Counsel for the parties agree that discovery in this matter has been time consuming and
costly. Some Plaintiffs reside in the PRC and must travel to the United States to be deposed.
In addition, Plaintiffs are not fluent in the English language, requiring translation that slows
the process and increases the expense.

27. 	Although they did not file a motion pursuant to Rule 12(b)(6) in response
to the First Amended Complaint, the NRMH Defendants have exercised their right
to do so in response to the Chi Complaint, as well as to the identical claims in the
Feng action. 	Samson Wu has likewise moved to dismiss both actions pursuant to
Rule 12(b)(6).
28. 	After full briefing, the Court held a hearing on the Motions on 21 April
2023, during which all parties participated through counsel. 	The Motions are now
ripe for disposition.
III. 	LEGAL STANDARD
29. 	When ruling on a motion to dismiss pursuant to Rule 12(b)(6) of the
North Carolina Rules of Civil Procedure, the Court reviews the allegations in the light
most favorable to the non-moving party. See Christenbury Eye Ctr., P.A. v. Medflow,
Inc., 370 N.C. 1, 5 (2017). 	The Court’s inquiry is “whether, as a matter of law, the
allegations of the complaint, treated as true, are sufficient to state a claim upon which
relief may be granted under some legal theory whether properly labeled or not.”
Harris v. NCNB Nat’l Bank, 85 N.C. App. 669, 670 (1987).
30. 	The Court accepts all well-pleaded factual allegations as true. 	See
Krawiec v. Manly, 370 N.C. 602, 606 (2018). However, the Court is not required “to
accept as true allegations that are merely conclusory, unwarranted deductions of fact,
or unreasonable inferences.” Good Hope Hosp., Inc. v. N.C. Dep’t of Health & Human
Servs., 174 N.C. App. 266, 274 (2005) (citation omitted). It may also ignore the legal

conclusions set forth in the pleading. McCrann v. Pinehurst, LLC, 225 N.C. App. 368,
377 (2013).
31. 	Furthermore, the Court “can reject allegations that are contradicted by
the documents attached, specifically referred to, or incorporated by reference in the
complaint.” Laster v. Francis, 199 N.C. App. 572, 577 (2009) (cleaned up); see Moch
v. A.M. Pappas & Assocs., LLC., 251 N.C. App. 198, 206 (2016). 	The Court may
consider these attached or incorporated documents without converting the Rule
12(b)(6) motion into a motion for summary judgment. Id. (citation omitted).
32. 	“It is well-established that dismissal pursuant to Rule 12(b)(6) is proper
when ‘(1) the complaint on its face reveals that no law supports the plaintiff’s claim;
(2) the complaint on its face reveals the absence of facts sufficient to make a good
claim; or (3) the complaint discloses some fact that necessarily defeats the plaintiff’s
claim.’ ” Corwin v. British Am. Tobacco PLC, 371 N.C. 605, 615 (2018) (quoting Wood
v. Guilford Cty., 355 N.C. 161, 166 (2002)). This standard of review for Rule 12(b)(6)
is the standard our Supreme Court “uses routinely . . . in assessing the sufficiency of
complaints in the context of complex commercial litigation.” Id. at 615 n.7 (citations
omitted).
IV. 	ANALYSIS
33. 	Both the Chi and Feng Complaints assert claims for fraud, negligent
misrepresentation, breach of fiduciary duties, conversion, and violation of the North
Carolina Securities Act, N.C.G.S. § 78A-8, against NRMH, InvestCo, Wilmington

Development, Schoninger, Ardalan, Samson Wu, and Wang (claims 1, 3, 4, 5, 6);
breach 	of 	contract 	against 	NRMH, 	InvestCo, 	Wilmington 	Development 	and
Schoninger (claim 2); unjust enrichment against the three holding companies, Car
Wash and Golden Marina (claim 7); gross mismanagement against Schoninger (claim
8); equitable accounting against NRMH, Wilmington Development and InvestCo
(claim 9);12 and a demand to exercise their statutory inspection rights pursuant to
N.C.G.S. § 59-305 and § 59-106(b) against NRMH and Schoninger (claim 10).
A. 	Statute of Limitations
34. 	While 	they 	assert 	multiple 	grounds 	for 	dismissal, 	the 	statute 	of
limitations is central to Defendants’ argument with respect to the first seven claims.
Consequently, the Court addresses that argument first.
35. 	A statute of limitations defense may properly be asserted in a Rule
12(b)(6) motion to dismiss if it appears on the face of the complaint that such a statute
bars the claim. Futures Group v. Brosnan, 2022 NCBC LEXIS 150, at **10-11 (N.C.
Super. Ct. Dec. 7, 2022) (citing Horton v. Carolina Medicorp, 344 N.C. 133, 136
(1996)); Toomer v. Branch Banking & Tr. Co., 171 N.C. App. 58, 65 (2005).
36. 	Claims for fraud, negligent misrepresentation, breach of fiduciary duty,
breach of contract, conversion, and unjust enrichment are all subject to a three-year
statute of limitations that begins when the claims accrue. See BDM Invs. v. Lenhill,
Inc., 2012 NCBC LEXIS 7, at **36 (N.C. Super Ct. Jan. 18, 2012) (statute of
12 Plaintiffs concede that the ninth cause of action, (“Equitable Accountings”), should be
dismissed. (Br. Supp. Opp. Defs.’ Mot. Dismiss, ECF No. 108, [“Pls.’ Resp. Br.”], 6 n.2)

limitations for claims of fraud and negligent misrepresentation is three years) (citing
N.C.G.S. § 1-52(5)); Loray Mill Devs., LLC v. Camden Loray Mill Phase 1, LLC, 2023
NCBC LEXIS 21, at **31 (N.C. Super. Ct. Feb. 7, 2023) (claims for breach of fiduciary
duty and breach of contract each subject to a three-year statute of limitations) (citing
N.C.G.S. §§ 1-52(1), (5), (9)); Lau v. Constable, 2019 NCBC LEXIS 71, at *21 (N.C.
Super. Ct. Sept. 24, 2019) (statute of limitations for conversion claim is three years)
(citing N.C.G.S. § 1-52(4)); Martin Marietta Materials, Inc. v. Bondhu, LLC, 241 N.C.
App. 81, 84 (2015) (statute of limitations for unjust enrichment claim is three years)
(citing N.C.G.S. § 1-52(1)).
37. 	A claim generally accrues, and the statute of limitations begins to run,
when the right to institute and maintain suit arises. Ocean Hill Joint Venture v. N.C.
Dep’t of Env’t, Health & Nat. Res., 333 N.C. 318, 323 (1993) (cleaned up). 	If the
discovery rule applies, however, a claim will not accrue until the plaintiff knows or
should know that his rights have been violated. Chisum v. Campagna, 376 N.C. 680,
701 (2021) (under the discovery rule, the limitations period begins at the time the
plaintiff knew or should have known of the breach of contract).
38. 	Several of Plaintiffs’ claims in this case are subject to the discovery rule,
including 	their 	claims 	for 	fraud 	and 	negligent 	misrepresentation. 	See, 	e.g.,
Christianbury Eye Ctr., P.A. v. Medflow, Inc., 2015 NCBC LEXIS 64, at ** 18 (N.C.
Super. Ct. June 19, 2015), aff’d, 370 N.C. 1 (2017) (“The statute of limitations
governing a fraud claim is three years and begins to run from the time the claimant
should have discovered the facts constituting the fraud.”); Barger v. McCoy Hillard

& Parks, 346 N.C. 650, 666 (1997) (a claim for negligent misrepresentation “does not
accrue until two events occur: 	first, the claimant suffers harm because of the
misrepresentation, and second, the claimant discovers the misrepresentation.”).
39. 	Likewise, the right to sue for both breach of contract and breach of
fiduciary duty arises when the plaintiff knew or should have known of the alleged
breach. See, e.g., Chisum, 376 N.C. at 701 (“As soon as the injury becomes apparent
to the claimant or should reasonably become apparent, the cause of action [for breach
of contract] is complete and the limitation period begins to run.”); Toomer, 171 N.C.
App. at 68-69 (discovery rule applies to claims for breach of fiduciary duty); Trail
Creek Invs. LLC v. Warren Oil Holding Co., 2023 NCBC LEXIS 70, at **25 (N.C.
Super. Ct. May 9, 2023) (in action alleging fraud, negligent misrepresentation, breach
of fiduciary duty, and conspiracy, the applicable statute of limitations “does not begin
to run until the plaintiff has actual or constructive notice of the defendants’ wrongful
acts.”); see also Carlisle v. Keith, 169 N.C. App. 674, 683 (2005) (“ ‘Discovery’ is defined
as an actual discovery or the time when the fraud should have been discovered in the
exercise of due diligence.”).
40. 	Ordinarily, determining when a plaintiff discovered or should have
discovered that he or she has been wronged is a question of fact to be answered by a
jury. See Forbis v. Neal, 361 N.C. 519, 524 (2007) (noting that “a jury must decide
when fraud should have been discovered in the exercise of reasonable diligence under
the circumstances.”) 	However, “[a] motion to dismiss under Rule 12(b)(6) is an

appropriate method of determining whether the statutes of limitation bar plaintiff's
claims if the bar is disclosed in the complaint.” Carlisle, 169 N.C. App. at 681.
41. 	A plaintiff who ignores warning signs and fails to exercise reasonable
diligence does so at their peril. “Where a person is aware of facts and circumstances
which, in the exercise of due care, would enable him or her to learn of or discover the
fraud, the fraud is discovered for the purposes of the statute of limitations." Jennings
v. Lindsey, 69 N.C. App. 710, 715 (1984). The Court applies these principles below to
each of the claims asserted.
B. Fraud, Negligent Misrepresentation and Violation of Chapter 78A
(against NRMH, InvestCo, Wilmington Development, Schoninger, Ardalan,
Samson Wu and Wang)
42. 	Limited 	liability 	limited 	partners 	are 	treated 	like 	corporate
shareholders with respect to their standing to bring direct claims. Energy Investors
Fund, L.P. v. Metric Constructors, Inc., 351 N.C. 331, 336 (2000) (citing Barger v.
McCoy Hillard & Parks, 346 N.C. 650, 660 (1997)). 	A partner induced by fraud to
join a partnership may maintain a direct action for that fraud. 	Barger, 346 N.C. at
654 (“A special duty therefore has been found when the wrongful actions of a party
induced an individual to become a shareholder) (citing Howell v. Fisher, 49 N.C. App.
488 (1980)).
43. 	Here, Plaintiffs’ allegations establish that they knew or should have
known of the alleged misrepresentations well before they filed their lawsuit on 13
December 2021 (Chi) and 5 January 2023 (Feng). 	As a result, their fraud-based

claims against InvestCo, Ardalan, Samson Wu, and Wang are barred by the statute
of limitations.
44. 	However, 	the 	doctrine 	of 	equitable 	estoppel 	tolls 	the 	statute 	of
limitations on the fraud-based claims asserted against Schoninger and Wilmington
Development. 	Similarly, the statute of limitations for a securities fraud claim
pursuant to Chapter 78A is extended if the defendant engages in “any fraudulent or
deceitful act that . . . induces the [plaintiff] to forgo or postpone commencing an action
based upon the violation.” N.C.G.S. § 78A-56(f). 	See Merrell v. Smith, 2023 NCBC
LEXIS 3, at **50 (N.C. Super. Ct. Jan. 11, 2023) (observing that the concealment
exception in § 78A-56(f) operates to toll the statute of limitations). 	Accordingly, for
the reasons stated below, the fraud-based claims survive this motion on statute of
limitations grounds. 	The victory is short-lived, however, because the claims do not
meet the heightened pleading requirements of Rule 9(b).
1. The Discovery Rule
45. 	In paragraphs 89, 144, and 180 of the Chi Complaint and the companion
paragraphs of the Feng Complaint, Plaintiffs list the misrepresentations that they
claim induced them to invest.13 Notable among them are that:
a. 	Plaintiffs’ funds would be used for the development of a marina
and hotel complex, including a restaurant, (¶ 89(f));
13 Plaintiffs also allude to misrepresentations that they allege continued during the
Investment Term, including misrepresentations that they claim occurred during visits to the
site, but they provide no supporting facts. (Chi Compl. ¶ 147.)

b. 	Construction of the Project had already begun, construction on
the Hotel would begin in the first half of 2012 and take a total
of 20 months to complete, while construction on the Marina
would begin in January 2012 and take a total of 13 months to
complete, (¶ 89(i));
c. 	The Project was insured against delay in completion and,
therefore, was guaranteed to be completed on time, (¶ 89(o));
d. 	The Project itself would achieve financial stabilization within 3
to 5 years of commencement. (¶ 89(p))
e. 	Each Plaintiff would receive a Preferred Return of 1% per
annum on their investment capital during the Investment
Term, (¶ 89(j));
f. 	Plaintiffs would be entitled to a 10% share of any profits
generated 	by 	the 	Project 	as 	part 	of 	their 	membership 	in
Defendant NRMH, (¶ 89(k));
g. 	At the expiration of the Investment Term, Plaintiffs would enjoy
the right to the return of their investment capital, (¶ 89(l)); and
h. Each Plaintiff would receive equity rights to two marina slips
and a hotel room in the event NRMH was unable to repay their
investment capital, (¶ 89(h)).
46. 	Each 	Plaintiff 	executed 	the 	Subscription 	Agreement 	and 	the
Partnership Agreement on a different date between 1 August 2011 and 19 February

2013. 	(Chi Compl. ¶ 91.) 	However, after the two one-year extensions, expiration of
the Investment Term for the last-in-time Plaintiff was February 2018. 	(Chi Compl.
¶¶ 102, 109, Ex. K.)
47. 	Plaintiffs allege that they were guaranteed that a hotel would be built
by the end of 2013 or early 2014 and that the marina would be completed by March
2013. (Chi Compl. ¶¶ 59-60.) 	But these things did not happen. Although the marina
was finally built (on a smaller scale than allegedly represented), NRMH never broke
ground on a hotel. (Chi Compl. ¶¶ 94, 130-35.)
48. 	Plaintiffs allege that they were told that they would receive financial
rewards from their investment, including a return of 1% per annum during the
Investment Term and a 10% share of any profits generated. 	They each allege that
they were promised that the entire Project would financially stabilize within five (5)
years of “commencement,” and that when the Investment Term expired, they would
get either their investment capital back from a repurchase of their partnership
interests, or they would receive the deeds to two marina slips and a hotel room. They
recognize that the Investment Term for the last-in-time Plaintiff expired in February
2018, but they complain that they have not yet received any of the promised financial
rewards.
49. 	According to Plaintiffs’ own allegations, then, it was evident that
something was amiss with their investments by early 2014 at the latest, when no
hotel had been built and while the marina existed, it was much smaller than
promised. It was equally obvious that the financial rewards were not as promised as

each year passed with no payment of a 1% return and no payment of profits. 	The
crowning glory was when the Investment Period finally expired for the last-in-time
investor in February 2018, and Plaintiffs did not receive either a return of their
investment capital or deeds to the promised two marina slips and a hotel room (in the
still non-existent hotel).14
50. 	Nevertheless, the Chi Plaintiffs did not commence this action until
December 2021, more than three years after they should have discovered the alleged
misrepresentations. The Feng Plaintiffs started their action even later. 	Accordingly,
the Court dismisses the fraud, negligent misrepresentation and Chapter 78A claims
against InvestCo, Ardalan, Samson Wu, and Wang on statute of limitations grounds.
2. Equitable Tolling
51. 	As for NRMH, Wilmington Development and Schoninger, however, the
result is different. 	Plaintiffs claim that certain communications from Schoninger,
“lulled [them] into non-action.” (Chi Compl. ¶ 112.) They allege that in January 2020,
almost two years after the Investment Term expired in February 2018, Schoninger,
writing as “Managing Partner” of NRMH, sent them a letter in which he describes
the Project’s dire financial state. 	Schoninger wrote: “[I]f we tried to liquidate the
project today . . . I don’t think we could get much more than 10 cents on the dollar. I
know that is not what we want to hear[.]” 	He alluded to difficulties with USCIS’s
approval of the Project and then requested that Plaintiffs agree to extend the time
14 Indeed, Defendants argue that Plaintiffs should have been aware from the start that
something was wrong because Plaintiffs allege that the marketing materials differed from
the language of the Subscription and Partnership Agreements in multiple ways. (Tr. 15-31.)

for the anticipated return of their investment another two years, at which point he
promised that NRMH would deed each of them a marina slip and begin discussions
about a payment plan for the rest (the “Extension Letter”). (Chi Compl. ¶¶ 106-107,
Ex. J.) The Extension Letter states in relevant part:
We 	feel 	we 	are 	approximately 	two 	years 	away 	from 	where 	we 	will 	be
[financially] stable. 	It is for this reason; (sic) I am asking for an extension of
two years before we can legitimately start the process of refunding our
investors. . . . I believe if we can get at least 2 more years that will give me
enough time to sell boat slips at a high value. . . . Once this project is stabilized,
I will have the opportunity to give each investor a slip valued at over $250,000
USD and then start a payment plan for the remainder. 	The payment plan
would be as follows: Within 24 months from 2/1/2020 we would make our best
efforts to deed a slip membership to each investor, and then discuss a payment
plan for the remaining funds to be paid out over the next 36 months.
(Chi Compl. Ex J.)
52. 	Plaintiffs further allege that in February 2021, Schoninger, again
writing as manager of NRMH, issued a second letter (the “Update Letter”) in which
Samson Wu had “direct input,” although the nature of that input is not alleged. 	In
the Update Letter, Schoninger “continued to lay blame for the extreme delays with
the Project on outside forces, specifically the COVID pandemic” and “continued to
represent that the Project was on track to issue title to the Marina slips and
commence discussions surrounding repayment of remaining capital contributions in
2022.” (Chi Compl. ¶¶ 114-115, Ex. L.)
53. 	The Update Letter states in relevant part:
The pandemic created a very difficult year for businesses with the mandatory
shut-downs. 	. 	. 	. 	With 	travel 	restrictions, 	bans, 	and 	social 	distancing
requirements, we lost an entire season of business. . . . Even as I write this
letter – the Governor has not fully opened the state. . . . We know we are not
alone with these issues, but I wanted you to know what has been specifically

impacting the projects. 	Needless to say, our restaurant hopes to recover from
these losses and that life will get back to normal sometime this year. The same
effects were also felt at the marina. . . . With such a dense population near our
restaurant 	and 	marina, 	we 	imagine 	that 	once 	the 	Government 	allows
everything to open, our businesses will make up for the losses and challenges
we faced (and are continuing to face) throughout the COVID pandemic.
. . . [W]e are confident that NRMH is on track towards achieving our objectives
we mentioned in our letter to you in 2020. We aim to deed a slip membership
to 	each 	investor 	at 	our 	marina 	and 	produce 	a 	payment 	plan 	to 	begin
reimbursing our investors by end of first quarter 2022. Over the following 36
months (after Q1 2022), our goal is to reimburse each investor with their
original amount of $500,000 through the sale of slips and the growth of assets.
. . . During this time, we are working on other options. 	We have ordered a
Broker’s Price Opinion (BPO) letter from a realtor (expected in about 4-5
weeks) to serve as an appraisal of the property values that will include the
marina, the restaurant (Marina Grill), and the future hotel site. This BPO will
allow us to better understand the possibility of a sale or the ability to refinance
the assets. 	After paying off the debt, the remaining equity would be used to
settle with investors. Another option is liquidating other assets at a discount
in order to reach these goals. These options may allow us to settle at an earlier
date; maybe not at 100 cents on the dollar.
. . . . Next year at this time, I am looking forward to bringing you the very
happy news of your upcoming first scheduled payment date.
(Chi Compl. Ex. L.)15
54. 	In the face of an otherwise time-barred claim, “[e]quitable estoppel may
be invoked, in a proper case, to bar a defendant from relying upon the statute of
15 The Chi Complaint also alleges that Plaintiff Bian Yide visited the Project site in late April
2019, which was followed by a letter from Schoninger as “Member/Manager” of NRMH dated
23 May 2019. 	In the May 2019 letter, Schoninger “reiterated the promised return of
investment capital but asked for more time in which to do so.” (Chi Compl. ¶101, Ex. I.)
Other allegations regarding the communications that some Defendants had with some
Plaintiffs after February 2018 are less detailed. 	Plaintiffs allege, for example, that in
December 2020, “Defendant Wu again reached out to Defendant Ardalan and Defendant
Schoninger 	to 	report 	that 	he 	‘communicated 	with 	NRMH 	Investors 	regarding 	their
investment repayment.’ ” The content of Samson Wu’s communications with the investors is
not pled. (Chi Compl. ¶ 111.)

limitations.” Glynne v. Wilson Med. Ctr., 236 N.C. App. 42, 53 (2014). It arises “when
a party has been induced by another's acts to believe that certain facts exist, and that
party rightfully relies and acts on that belief to his [or her] detriment.” Id. (cleaned
up).
55. 	The purpose of equitable estoppel is to prevent a party “from using a
statute of limitations as a sword, so as to unjustly benefit from his own conduct which
induced a plaintiff to delay filing suit.” 	Friedland v. Gales, 131 N.C. App. 802, 806
(1998).
56. 	To plead equitable estoppel, Plaintiffs must allege: “(1) conduct on the
part of the party sought to be estopped which amounts to a false representation or
concealment of material facts; (2) the intention that such conduct will be acted on by
the other party; and (3) knowledge, actual or constructive, of the real facts.” Robinson
v. Bridgestone/Firestone N.A. Tire, LLC, 209 N.C. App. 310, 319 (2011). In addition,
Plaintiffs must show they lacked knowledge and the means of ascertaining the real
facts and rightfully relied on Defendants’ conduct to their detriment. 	Id.; Johnson
Neurological Clinic, Inc. v. Kirkman, 121 N.C. App. 326, 332 (1996).
57. 	Facts supporting equitable estoppel must be pled with particularity
and demonstrate that Defendants’ representations delayed Plaintiffs from filing
suit. 	See Duke Univ. v. St. Paul Mercury Ins. Co., 95 N.C. App. 663, 673 (1989);
Rivenbark v. Moore, 57 N.C. App. 339, 342 (1982); see also N.C. R. Civ. P. 8(c).
Further, 	while 	“[m]ere 	negotiations 	with 	a 	possible 	settlement 	unsuccessfully
accomplished is not that type of conduct designed to lull the claimant into a false

sense of security[,]” Duke Univ. v. St. Paul, 95 N.C. App. at 673, “[i]f the debtor makes
representations which mislead the creditor, who acts upon them in good faith, to the
extent that he fails to commence his action in time, estoppel may arise. The tolling
of the statute may arise from the honest but entirely erroneous expression of opinion
as to some significant legal fact.” Duke Univ. v. Stainback, 320 N.C. 337, 341 (1987).
58. 	In this case, viewing the allegations in the light most favorable to
Plaintiffs—as the Court must at this stage, equitable estoppel has been adequately
pled with respect to the fraud and negligent misrepresentation claims against
Schoninger and Wilmington Development. A trier of fact could find that one or both
letters written by Schoninger in his role as managing member of Wilmington
Development, the General Partner of NRMH, contained misrepresentations that
misled Plaintiffs and resulted in the delayed filing of this action.
59. 	Similarly, 	Chapter 	78A 	affords 	a 	plaintiff 	who 	has 	been 	duped
additional time to bring a claim for securities fraud. 	The statute of limitations is
three years after discovery of the facts constituting the violation (but in any case no
later than five years after the sale or contract of sale), “except that if a person who
may be liable under this section engages in any fraudulent or deceitful act that
conceals the violation or induces the person to forgo or postpone commencing an
action based upon the violation, the suit may be commenced not later than three years
after the person discovers or should have discovered that the act was fraudulent or
deceitful.” N.C.G.S. § 78A-56(f).

60. 	Plaintiffs adequately allege that they were induced to forgo or postpone
commencing their action against NRMH, Wilmington Development and Schoninger
as a result of the January 2020 Extension Letter and the subsequent Update Letter.
Consequently, the statute of limitations does not bar their Chapter 78A claim against
these defendants.
61. 	As for Samson Wu, however, the Court concludes that Plaintiffs’ general
allegations of his involvement with the February 2021 letter and of his other
communications with Plaintiffs are not pled with sufficiently particularity to forestall
the running of the statute of limitations on the fraud, negligent misrepresentation
and Chapter 78A claims.
3. Rule 9(b) Pleading Requirements
62. 	In addition to the statute of limitations, Defendants move to dismiss any
of Plaintiffs’ fraud-based claims that survive the statute of limitations because they
do not meet the heightened pleading requirements of Rule 9(b). The Court agrees.
63. 	Rule 9 requires a plaintiff who pleads fraud to identify “the time, place,
and content of the fraudulent representation, identity of the person making the
representation 	and 	what 	was 	obtained 	as 	a 	result 	of 	the 	fraudulent 	act 	or
representations.’ ” Terry v. Terry, 302 N.C. 77, 85 (1981)). See Haigh v. Superior Ins.
Mgmt. Grp., 2017 NCBC LEXIS 100, at * 27 (N.C. Super. Ct. Oct. 24, 2017) (applying
Rule 9(b) pleading requirements to statutory claims for securities fraud); Bucci v.
Burns, 2017 NCBC LEXIS 83, at *11 (N.C. Super. Ct. Sept. 14, 2017) (same). Claims
for negligent misrepresentation must meet this same demanding standard. See BDM

Invs. v. Lenhil, Inc., 2012 NCBC LEXIS 7, at *56 (N.C. Super. Ct. Jan. 18, 2012)
(applying Rule 9(b) to negligent misrepresentation claim).
64. 	To the extent the fraud claim is omission-based, Plaintiffs must plead:
(1) the relationship between plaintiff and defendant giving rise to the duty to speak;
(2) the event that triggered the duty to speak or the general time period over which
the relationship arose and the fraud occurred; (3) the general content of the
information that was withheld and the reason for its materiality; (4) the identity of
those under a duty who failed to make such disclosures; (5) what the defendant
gained from withholding the information; (6) why the plaintiff's reliance on the
omission was reasonable and detrimental; and (7) the damages the fraud caused the
plaintiff. Lawrence v. UMLIC-Five Corp., 2007 NCBC LEXIS 20, at *9 (N.C. Super.
Ct. June 18, 2007).
65. 	Both the Chi and the Feng Complaints fail to meet the particularity
requirements of Rule 9. 	Violating a fundamental rule, Plaintiffs attempt to state
claims for fraud and misrepresentation against many of the defendants jointly as a
group, rather than specifying the misrepresentations made by each Defendant. For
example, in paragraph 144 of the Chi Complaint Plaintiffs allege that multiple
misrepresentations were made by seven different defendants without any indication
of who made which statements, when, or where they were made. 	Further, in
paragraph 91 of the same pleading, the Chi Plaintiffs allege that at seminars and in
marketing materials regarding the investment Defendants made misrepresentations

and omitted information, but they do not elaborate, nor do they attribute any
statement or omission to any particular defendant.
66. 	The Plaintiffs are also grouped together. For example, Plaintiffs allege
that they received different versions of the marketing materials at different times,
but they do not specify which Plaintiffs were misled by which statements in which
marketing materials. (See, e.g., Chi Compl. ¶¶ 73, 78, 85.)
67. 	Although the Chi Complaint is lengthy, the fraud counts are not the
place to try to shorten it. Plaintiffs can ill-afford to plead fraud or misrepresentation
in a conclusory fashion. See, e.g., Flanders/Precisionaire Corp. v. Bank of N.Y Mellon
Trust Co., 2015 NCBC LEXIS 36, at *30 (N.C. Super. Ct. Apr. 7, 2015) (dismissing
fraud claim when Plaintiff “has failed to allege the circumstances constituting the
alleged fraud with sufficient particularity—most significantly by failing to identify
the specific individuals . . . as well as when and how the alleged fraud occurred.”);
Julian v. Wells Fargo Bank, N.A., 2012 NCBC LEXIS 32, at ** 20 (N.C. Super. Ct.
May 22, 2012) (complaint that does not allege the identity of an individual who made
the 	deceptive 	or 	misleading 	representation 	does 	not 	meet 	the 	particularity
requirements of Rule 9(b)); Bob Timberlake Collection, Inc. v. Edwards, 176 N.C. App.
33, 	39 	(2006) (dismissing 	fraud 	claim 	where 	plaintiff 	failed 	to 	identify 	which
representative of defendant gave plaintiff false information or where and when
plaintiff received it); Stec v. Fuzion Inv. Capital, LLC, 2012 NCBC LEXIS 24, at **38
(N.C. Super. Ct. Apr. 30, 2012) (dismissing fraud claim because plaintiff failed to
identify who engaged in actionable conduct and when and where conduct occurred).

68. 	Accordingly, to the extent Plaintiffs’ fraud-based claims (as to NRMH,
Wilmington Development and Schoninger) are not dismissed on statute of limitations
grounds as a result of equitable tolling, the claims are nevertheless dismissed for
failure to satisfy Rule 9(b)’s heightened pleading requirements.16
4. Dismissal with Prejudice
69. 	Furthermore, since December 2021, Plaintiffs have attempted to state
their claims on four separate occasions. 	(Chi ECF Nos. 3, 26, 88; Feng ECF No. 3.)
At a hearing on then–Defendant Gongzhan Wu’s Motion to Dismiss held 16 May
2022, the Court observed that North Carolina’s standards for pleading fraud are very
particular and addressed with the parties the heightened pleading requirements of
Rule 9: 	“[E]ach Plaintiff needs to tell me which Defendant made a misrepresentation
or statement of fraud on what date, to what effect. . . . I’m not sure as I sit here that
I’ve got that level of specificity[.]” (16 May 2022 Tr. 31:22-32:7, Chi ECF. No. 134.)
70. 	Plaintiffs later filed both the Chi Complaint and the Feng Complaint
that are the subject of this Motion, and in each instance, they failed to heed the
Court’s comments.
71. 	Rule 15 provides that “leave [to amend] shall be freely given when
justice so requires.” N.C.G.S. § 1A-1, R. 15(a). Even so, “the right to amend pursuant
to Rule 15 is not unfettered.” Howard v. IOMAXIS, LLC, 2021 NCBC LEXIS 116, at
16 Plaintiffs’ allegations also undercut their ability to prove reasonable reliance, a necessary
element of their fraud and negligent misrepresentation claims. See, e.g., Boone Ford, Inc. v.
IME Scheduler, Inc., 262 N.C. App. 169, 175-76, 822 S.E.2d 95 (2018) (holding that where a
representation is controverted by the express terms of a contract, reliance unjustified as a
matter of law).

*17 (N.C. Super. Ct. Dec. 22, 2021) (citing Vaughan v. Mashburn, 371 N.C. 428, 433
(2018)). 	Reasons to deny a motion to amend include “undue delay, bad faith, dilatory
motive, repeated failure to cure deficiencies, undue prejudice and futility of the
amendment.” Bartlett Milling Co. v. Walnut Grove Auction & Realty Co., 192 N.C.
App. 74, 89 (2008) (quoting Nationsbank of N.C., N.A. v. Baines, 116 N.C. App. 263,
268 (1994)).
72. 	Over the course of more than 19 months of litigation, Plaintiffs here
have repeatedly failed to cure deficiencies when pleading their fraud–based claims.
The Court, in its discretion, determines that Plaintiffs have been afforded sufficient
opportunities 	to 	do 	so. 	Accordingly, 	Plaintiffs’ 	claims 	for 	fraud, 	negligent
misrepresentation and violation of Chapter 78A are dismissed with prejudice. 	See
First Fed. Bank v. Aldridge, 230 N.C. App. 187, 191 (2013) (“The decision to dismiss
an action with or without prejudice is in the discretion of the trial court[.]”).
C. 	Conversion 	(against 	NRMH, 	InvestCo, 	Wilmington 	Development,
Schoninger, Ardalan, Samson Wu, and Wang)
73. 	Conversion is the “unauthorized assumption and exercise of the right of
ownership over goods or personal chattels belonging to another, to the alteration of
their condition or the exclusion of an owner’s rights.” Peed v. Burleson’s, Inc., 244
N.C. 437, 439 (1956) (citation and quotation marks omitted).
74. 	A claim for conversion of partnership property is an exception to the
general rule that one partner may not maintain an action against another partner.
Pugh v. Newbern, 193 N.C. 258, 261 (1927); Barnes v. Perry, 2018 NCBC LEXIS 262,

at *22-24 (N.C. Super. Ct. July 30, 2018); Gillespie v. Majestic Transp., Inc., 2016
NCBC LEXIS 69, at * 16-17 (N.C. Super. Ct. Sept. 9, 2016).
75. 	Again, 	however, 	the 	statute 	of 	limitations 	is 	the 	impediment.
Conversion claims are subject to a three-year limitation period. See, e.g., Stratton v.
Royal Bank of Can., 211 N.C. App. 78 (2011) (citing N.C.G.S. § 1-52(4)). 	The claim
accrues “when the unauthorized assumption and exercise of ownership occurs—not
when the plaintiff discovers the conversion.” 	Id. at 83 (citing White v. Consol.
Planning Inc., 166 N.C. App. 283, 309-11 (2004) (concluding statute of limitations
runs from the date of conversion, rather than discovery)).
76. 	Although it is true that “[w]here there has been no wrongful taking or
disposal of the goods, and the defendant has merely come rightfully into possession
and then refused to surrender them, demand and refusal are necessary to the
existence of the tort,” Id. at 310–11, the rule has no application here. In this case,
Plaintiffs’ have alleged that they were fraudulently induced to hand over their
funds to Defendants who, from the beginning, never intended to honor their alleged
promises. As in White, the allegations are that the wrongful taking and Defendants’
possession of the funds were simultaneous. Consequently, Defendants exercised
unlawful dominion over the funds from the start, and no demand and refusal is
necessary to start the statute of limitations. Id. at 311. 	See In re Parker, 2015
Bankr. LEXIS 2663, at * 50 (Bankr. E.D.N.C Aug. 10, 2015) (where claim for
conversion is dependent upon claim for fraud, defendant would not have had lawful

possession, and demand and refusal was not necessary to trigger the statute of
limitations clock).
77. 	If, alternatively, Plaintiffs contend that their investment funds were
transferred lawfully at the start but were later converted when the money was not
returned at the end of the Investment Period as allegedly promised, the law does not
permit them to delay making a demand for return of the money and then benefit from
that delay. In those circumstances, the time that the “unauthorized assumption and
exercise of the right of ownership” to the money began is clear. 	The statute of
limitations begins to run at the time of the default, and a demand and refusal is
unnecessary. Marzec v. Nye, 203 N.C. App. 88, 96 (2010) (The statute of limitations
for a conversion claim “generally begins running at the time a defendant asserts
dominion over the property.”); Furman v. Timberlake, 93 N.C. 66, 68-69 (1885) (“[I]f
[defendant] is shown to have converted [money], a demand is unnecessary, and the
statute begins to run from the time of the conversion.”).17
78. 	Accordingly, with respect to Defendants NRMH, InvestCo, Ardalan,
Samson Wu, and Wang, the Court dismisses the conversion claim (Fifth Claim for
17 The pleadings state that only nine of the nineteen Plaintiffs demanded the return of their
investment. (Chi Complaint ¶ 108-110.) Those nine Plaintiffs sent an “Omnibus Demand”
letter via email to NRMH, InvestCo and Schoninger on 16 April 2020. (Chi Compl. Ex. K.)
They gave these Defendants until 15 May 2020 to return their money (Chi Compl. 110), but
they allege that there was no response from these Defendants until Schoninger sent a 26
February 2021 Update Letter requesting more time, (Chi Compl. 114, Ex. L), and that their
money was not returned.
However, Plaintiffs also allege that they recognized in the Omnibus Demand that the
Investment Term had expired “as of 2018 and that the relevant agreements provide that at
the expiration of the Investment Term, the investors’ capital contribution of $500,000 was to
be repaid with fiat currency or real estate equity.” (Chi Compl. ¶ 109.) Thus, Plaintiffs admit
that they were aware of the default “as of 2018.”

Relief) on statute of limitations grounds. 	As for Defendants Schoninger and
Wilmington Development, however, Plaintiffs have sufficiently pled that the statute
should be tolled, and the conversion claim against Schoninger and Wilmington
Development survives this motion.
D. 	Breach 	of 	Fiduciary 	Duty 	(against 	NRMH, 	InvestCo, 	Wilmington
Development, 	Schoninger, 	Ardalan, 	Samson 	Wu, 	and 	Wang) 	and 	Gross
Mismanagement (against Schoninger)
79. 	Plaintiffs focus their argument on the existence of a fiduciary duty,
rather than on their standing to bring this direct claim. 	Therefore, the Court
addresses their argument first, before turning to the question of standing.
80. 	Other than the de jure fiduciary duty that exists between NRMH’s
general partner, Wilmington Development, and its limited partners, the facts as pled
do not give rise to any other fiduciary duty. Plaintiffs concede that no other de jure
fiduciary duty exists, but they argue that the facts support a de facto one. (Pls.’ Resp.
Br. 20). The Court disagrees.
81. 	It is well-established that “[t]he 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. Mbrshp. Corp., 250 N.C. App. 631, 636 (2016)
(citation and internal quotation marks omitted).
82. 	Plaintiffs argue that the nature of the immigration industry in China is
such that they were forced to place their trust in an immigration advisor, who in turn

relied on one or more of the NRMH Defendants to provide accurate information. (Pls.’
Resp. Br. 21). 	Therefore, they contend, the NRMH Defendants “held all the cards
related to the progress, success, and life of the EB-5 Project[,]” (Pls.’ Resp. Br. 21.)
83. 	However, Plaintiffs, all accredited investors, were far from helpless. By
signing the Subscription Agreement, they each warranted that, prior to investing, all
information that they had requested had been made available to them, that they were
aware that the investment was “highly speculative and subject to substantial risks,”
but that they were “capable of bearing the high degree of economic risk . . . including
but not limited to, the possibility of the complete loss of all contributed capital.”
(Subscription Agreement § II(H, J).) They warranted that they had been given access
to the books and records of the Partnership “necessary to verify the accuracy of any
information provided.” 	(Subscription Agreement § II(L).) They were repeatedly
warned to consult their own professional advisors about the risks of investing in
NRMH. 	(Subscription 	Agreement, 	§ 	III) 	(“EACH 	INVESTOR. 	. 	. 	SHOULD
CONSULT HIS OR HER OWN LEGAL, TAX AND FINANCIAL ADVISORS”).
84. 	Moreover, 	language 	was 	not 	a 	barrier 	given 	that 	each 	Plaintiff
warranted that 	he 	or she 	either understood English 	or had the 	Subscription
Agreement translated by a trusted advisor into a language that the plaintiff
understood. 	(Subscription Agreement § II(M)). 	In short, the Plaintiffs had cards to
play. 	No de facto fiduciary duty arose on these facts. 	The fact that financial
transactions were involved, standing alone, is not enough. 	Cf. Global Promotions
Group, Inc. v. Danas Inc., 2012 NCBC LEXIS 40, at **13 (N.C. Super Ct. June 22,

2012) (no fiduciary duty exists between a bank and its customers despite the fact that
banks exercise some degree of custodial control over customer accounts); Bradshaw
v. Maiden, 2015 NCBC LEXIS 80, at ** 34-37 (N.C. Super. Ct. Aug. 10, 2015) (no
fiduciary duty found despite numerous conclusory allegations in the complaint
because controlling documents attached to or referenced in the complaint did not
support the assertion that defendant had domination and influence over plaintiffs);
Sec. Nat'l Bank of Greensboro v. Educators Mut. Life Ins. Co., 265 N.C. 86, 95 (1965)
(“There was no fiduciary relationship; the relation was that of debtor and creditor.”);
Branch Banking & Trust Co. v. Thompson, 107 N.C. App. 53, 61 (1992) (The “mere
existence of a debtor-creditor relationship between [the parties does] not create a
fiduciary relationship.”); Dallaire v. Bank of Am., N.A., 367 N.C. 363, 368 (2014)
(same). Accordingly, Plaintiffs’ claim for breach of fiduciary duty against Defendants
NRMH, InvestCo, Ardalan, Samson Wu, Wang, and Schoninger is dismissed.
85. 	On 	the 	other 	hand, 	under 	the 	North 	Carolina 	Uniform 	Limited
Partnership Act, a general partner (in this instance Wilmington Development) owes
limited partners fiduciary duties as a matter of law. 	N.C.G.S. § 59-403. 	See also,
Casey 	v. 	Grantham, 	239 	N.C. 	121, 	124-25 	(1954) 	(“It 	is 	elementary 	that 	the
relationship of partners is fiduciary[.]”). The question here is whether those fiduciary
duties give the limited partner standing to bring a direct claim.
86. 	“It is settled law in this State that one partner may not sue in his own
name, and for his benefit, upon a cause of action in favor of a partnership.” Godwin
v. Vinson, 251 N.C. 326, 327 (1959). “The rule includes a cause of action against other

partners in the partnership.” Id. “The only two exceptions to this rule are: (1) a
plaintiff alleges an injury ‘separate and distinct’ to himself, or (2) the injuries arise
out of a special duty[.]” Energy Invs., 351 N.C. at 337.
87. 	In Gaskin v. J.S. Procter Co., LLC, 196 N.C. App. 447 (2009), our Court
of Appeals addressed the Barger exceptions that afford limited partners standing to
sue general partners (and the manager of the limited partnership) for harm to the
partnership. After determining that the only two exceptions to the general rule that
a partner may not sue directly are the “special duty” and “distinct injury” exceptions,
the court concluded that neither exception was met on the facts of that case. Gaskin,
196 N.C. App. at 455. The court observed that the complaint alleged that the wrongs
committed put the partnership as a whole in “dire financial condition.” It further
recognized that allowing claims by some partners and not others, equally impacted,
would create “a danger of multiple lawsuits.” Id. 	In so holding, the court implicitly
rejected an argument that the fiduciary duty that existed between the partners in the
limited 	partnership—as 	opposed 	to 	the 	general 	partner’s 	duty 	to 	the 	limited
partnership itself—had been breached.
88. 	The same observations are true here. 	Plaintiffs’ allegations are that
Wilmington Development, acting through Schoninger, breached its fiduciary duties
to the partnership as a whole. 	Moreover, there is no “distinct injury”18 alleged that
18 The Gaskin Court observed that “the question is not whether the limited partner plaintiff
is in a less favorable position than the general partner, but whether the plaintiff is in a less
favorable position when compared to all other limited partners.” 	196 N.C. App. at 457
(cleaned up).

would permit a direct claim by these Plaintiffs against Wilmington Development.19
Therefore, Plaintiffs’ breach of fiduciary duty claim against Wilmington Development
is dismissed.
89. 	Relatedly, in a separate claim, Plaintiffs allege that Schoninger is guilty
of “gross mismanagement” due to alleged violation of his “statutory obligations” as
“manager, 	director, 	and 	controlling 	officer” 	of 	NRMH, 	its 	general 	partner,
Wilmington Development, and InvestCo. (Chi Compl. ¶ 190.) However, Plaintiffs do
not reference the statute(s) that they allege gives rise to Schoninger’s obligations.
90. 	Instead, Plaintiffs claim that Schoninger “owns, partially or wholly,
directly or indirectly, and manages each of these entities.” (Chi Compl. ¶ 10.) They
allege that Schoninger “has an obligation to discharge his managerial duties in good
faith, with the care an ordinary prudent person in a like position would exercise in
similar circumstances, and in a manner that he reasonably believes to be in their best
interests.” (Chi Compl. ¶ 190.)
91. 	A claim for gross mismanagement of an entity is quintessentially a
derivative claim. Barger, 346 N.C. at 654 (“The only injury plaintiffs as shareholders
allege is the diminution or destruction of the value of their shares as the result of
defendants’ negligent or fraudulent misrepresentations of TFH’s financial status.
This is precisely the injury suffered by the corporation itself.”). But, as to Wilmington
Development and InvestCo, both LLCs, there is no allegation that any Plaintiff is a
19 Moreover, when, as here, the general partner is an LLC, North Carolina law does not, as
a matter of course, extend the general partner’s fiduciary duty to its manager. Cf. Sturm v.
Goss, 90 N.C. App. 326, 330 (1988) (declining to extend fiduciary duty to director of a
corporate general partner in his individual capacity.)

member of either company with standing to assert such a claim. Kane v. Moore, 2015
NCBC LEXIS 157, at *13 (N.C. Super. Ct. Nov. 26, 2018) (“a plaintiff purporting to
bring derivative claims on behalf of a North Carolina LLC must be a member of
that LLC at the time the act or omission for which the proceeding is brought
occurred[.]”) (internal quotations omitted).
92. 	As 	for 	NRMH, 	although 	the 	North 	Carolina 	Uniform 	Limited
Partnership Act provides for derivative actions, see N.C.G.S. § 59-1001, these
Plaintiffs 	have 	not 	pled 	one. 	Accordingly, 	Plaintiffs’ 	claim 	for 	“gross
mismanagement” against Schoninger is dismissed.
E. 	Breach of Contract (against NRMH, InvestCo, Wilmington Development,
and Schoninger)
93. 	To state a claim for breach of contract, Plaintiffs need only allege “the
existence of a valid contract and a breach of the terms therein.” Moss v. N.C. Dep’t of
State Treasurer, Ret. Sys. Dov., 282 N.C. App. 505, 509 (2022).
94. 	Curiously, Plaintiffs allege that they contracted with NRMH, InvestCo,
Wilmington Development, and Schoninger “upon the execution of the Subscriptions.”
(Chi Compl. ¶ 151.) 	The exhibits incorporated in their pleadings reflect, however,
that Plaintiffs entered into the Partnership Agreement (and the accompanying
Subscription Agreement) only with Wilmington Development, the general partner of
NRMH, to become limited partners of NRMH. 	Neither InvestCo nor Schoninger,
individually, 	was 	a 	party 	to 	the 	Partnership 	Agreement 	or 	the 	Subscription
Agreement 	and, 	therefore, 	neither 	of 	them 	can 	be 	liable 	for 	breach 	of 	these

agreements. 	Accordingly, claims for breach of contract attempted against InvestCo
and against Schoninger, individually, are dismissed.20
95. 	As for Wilmington Development, Plaintiffs allege that it breached the
Partnership and Subscription Agreements by: (a) “obtaining and transferring title to
the Project Property . . . to entities other than NRMH; (b) failing to remit the 1% per
annum Preferred Return for the duration of the Investment Term; (c) failing to
provide any partial repayment of Plaintiffs’ capital contribution . . . by executing the
Quit Claim deeds; (d) failing to provide any return of investment capital to Plaintiffs
at the expiration of the Investment Term, and (e) successfully operating the Marina
for more than six (6) years without remitting the 10% pro rata allocation of profits to
Plaintiffs, as limited partners of NRMH.” (Chi Compl. ¶ 156).
96. 	However, with the possible exception of the first, none of the promises
alleged above is included in either the Partnership Agreement or the Subscription
Agreement. 	Plaintiffs’ claim depends on whether promises made in the offering
circular and other marketing materials were “incorporated by reference” in the
contract but were not honored. (Chi Compl. ¶ 152)
97. 	The answer is no. 	The offering circular clearly provides that only the
terms in the Partnership Agreement and Subscription Agreement control:
THE TERMS AND CONDITIONS OF THIS OFFERING . . . AND THE RIGHTS AND
LIABILITIES OF THE PARTNERSHIP, THE MANAGING GENERAL PARTNER
AND THE LIMITED PARTNERS ARE GOVERNED BY THE [PARTNERSHIP]
20 To the extent Plaintiffs attempt to allege a claim against their own partnership (NRMH)
for breach of the agreements that formed it, the allegations do not state a claim. 	Nor do
Plaintiffs allege a derivative action on behalf of NRMH. 	Further, Plaintiffs do not include
veil-piercing allegations to consider a claim against Schoninger on that basis. 	See, e.g.,
Consoli v. Global Supply & Logistics, Inc., 2014 N.C. App. 560 (2011).

AGREEMENT 	AND 	THE 	SUBSCRIPTION 	AGREEMENT 	BETWEEN 	EACH
LIMITED PARTNER AND THE PARTNERSHIP. . . AND THE DESCRIPTION OF
ANY OF SUCH MATTERS IN THE TEXT OF THIS OFFERING CIRCULAR IS
SUBJECT TO AND QUALIFIED IN ITS ENTIRETY BY REFERENCE TO [THE
PARTNERSHIP AGREEMENT AND THE SUBSCRIPTION AGREEMENT].
(Offering Circular iv, emphasis added.) 	In addition, the Subscription Agreement
contains a merger clause specifying that the Subscription Agreement “constitutes the
entire agreement among the parties hereto with respect to the subject matter hereof.”
(Chi Compl. Ex. F at 81, ¶ 1.) Therefore, extraneous representations in the offering
circular—or in any other marketing materials Plaintiffs may have received—do not
constitute contract terms.
98. 	In addition, Plaintiffs claim is contradicted by their own allegations. For
example, 	Plaintiffs 	claim 	that 	NRMH 	breached 	the 	contract 	by 	“successfully
operating the Marina for more than six (6) years without remitting the 10% pro rata
allocation of profits to Plaintiffs, as limited partners of NRMH.” 	At the same time,
however, Plaintiffs allege that the marina is currently operating with “only around
80 concrete slips,” (Chi. Compl. ¶ 129), when the Project was “supposed to involve the
construction of a 204-slip marina[.]” (Chi Compl ¶ 34.) Moreover, the Project was to
include a 136-room luxury hotel with at least two restaurants. No hotel exists21 and
only one restaurant is operating on the property. (Chi Compl. ¶¶ 34, 129, 131.) There
is no allegation in the Chi or Feng Complaints even suggesting that the Project has
been profitable.
21 In fact, Plaintiffs allege that NRMH sold the real property that was to be the site of the
hotel to Defendant Car Wash. (Chi Compl. ¶ 133.)

99. 	To the contrary, Plaintiffs allege that for tax years 2014-19, NRMH
“provided K-1 forms to each investor which, with the exception of 2014, documented
a consistent annual loss allocable to each investor of approximately $1,500.” (Chi
Compl 	¶ 	98.) 	There 	have 	been 	no 	distributions. 	Indeed, 	the 	Subscription
Agreement’s warning that “there is no assurance that there will be Distributable
Cash for distribution to investors” has come to pass. 	(Subscription Agreement §
III(F).)
100. 	In short, the Court finds no allegation in the lengthy Chi and Feng
Complaints or their exhibits to support Plaintiffs’ assertion that distributions were
to be based on the success of the marina alone, or even if so, that the marina has
generated a profit. Accordingly, Plaintiffs’ claim for breach of contract on this basis
is dismissed.
101. 	Notable among the other promises that Plaintiffs allege were not
honored are two representations about investment returns. 	Plaintiffs allege that
they were promised that: (1) they would receive a 1% per annum Preferred Return
for the duration of the Investment Term; and (2) at the conclusion of the Investment
Term (a maximum of five years) they would receive a return of their investment
capital.
102. 	Defendants do not contest the fact that Plaintiffs have not received
either a preferred return or the return of their investment capital. 	Rather, they
respond that statements made in marketing materials are not contract terms, and

the Subscription Agreement itself, which is peppered with warnings about the risk of
their investment, provides no guaranteed return or repurchase.
103. 	But for the odd last page that is included with the Subscription
Agreement as Exhibit F to the Chi Complaint, the Court agrees that neither the
Partnership Agreement nor the Subscription Agreement contains any promise of a
guaranteed return at any point in time. To the contrary, the Subscription Agreement
expressly outlines the risks associated with an investment in NRMH, including the
“uncertainty of cash flow to meet fixed obligations” and the potential that “the
Partnership may have to dispose of the Project on disadvantageous terms in order to
raise needed funds.” (See Subscription Agreement § III(C).)
104. 	However, Exhibit F to the Chi Complaint, which is referenced as the
Subscription Agreement, includes as its final page an unsigned document captioned,
“Agreement on Investment Period.” The document is in a different font, does not bear
the same footer, and is numbered out of sequence from the balance of the pages in the
exhibit.
105. 	The Agreement on Investment Period defines the investment term as
commencing on the day NRMH has use of the investors’ funds and extending a
maximum 	of 	five 	years. 	It 	then 	states: 	“NRMH 	will 	repurchase 	the 	limited
partnership 	units 	on 	a 	(FIFO) 	first 	in 	first 	out 	manor 	(sic).”
The origin and purpose of this document are mysteries that cannot be satisfied at this
stage. 	Given Rule 12(b)(6)’s liberal standard, the Court is constrained to conclude

that Plaintiffs have alleged that the Subscription Agreement includes a promise to
repurchase partnership units.
106. 	The applicable statute of limitations for a breach of contract claim is
three years from the date it accrues. 	N.C.G.S. § 1-52(1). 	“A claim for breach of
contract accrues when the plaintiff knew or should have known that the contract had
been breached[.]” Chisum, 376 N.C. at 720; accord Christenbury Eye Ctr., P.A., 370
N.C. at 5-6 (“We have long recognized that a party must initiate an action within a
certain statutorily prescribed period after discovering its injury to avoid dismissal of
a claim.” (emphasis added)); Black v. Littlejohn, 312 N.C. 626, 639 (1985) (“a statute
of limitations should not begin running against plaintiff until plaintiff has knowledge
that a wrong has been inflicted upon him.”).
107. 	As stated above, Plaintiffs’ allegations establish that they knew or
should 	have 	known 	when 	they 	were 	not 	reimbursed 	in 	February 	2018 	that
Wilmington Development had breached any promise to repurchase their partnership
interests that might have existed in the Subscription Agreement. However, Plaintiffs
have also sufficiently alleged that, as to Wilmington Development, the statute of
limitations should be equitably tolled. 	Accordingly, their breach of contract claim
against Wilmington Development on this basis may proceed.
108. 	Finally, Plaintiffs allege that Wilmington Development breached the
Subscription Agreement by “obtaining and transferring title to the Project Property
. . . to entities other than NRMH.” 	(Chi Compl. ¶ 156.) 	They contend that NRMH
did not acquire title to the Project Property until “sometime in late 2014,” and that in

November 2015, the title to a portion of the property (10 Harnett Street) was
transferred to City Marina, which later transferred it to NRMH Holdings I. 	(Chi
Compl. ¶¶ 123-124.)
109. 	Plaintiffs also allege that in July 2016, NRMH transferred another
portion of the Project Property (1 Hanover Street) to NRMH Holdings 3, which sold
the property to Car Wash in March 2019. (Chi Compl. ¶ 125.)22
110. 	As a consequence of these transfers, which they allege breached "Section
4” of the Subscription Agreement,23 Plaintiffs allege that NRMH does not currently
hold title to the Project Property, and therefore the value of their limited partnership
interests has been “diluted.” (Chi Compl. ¶ 126.)
111. 	Plaintiffs allege that it was not until after a group of them sent a
demand letter in April 2020 that they discovered that the real property they were
promised would not be sold during the pendency of the USCIS process had, in fact,
been transferred to third parties. (Chi Comp. ¶¶ 117, 121.) Therefore, this claim may
also proceed.
22 These allegations appear to contradict Plaintiffs’ later allegation that the transfer(s)
occurred four years prior to the time the 26 February 2021 “Update Letter” on the status of
the Project was sent to investors. (Chi Comp. ¶ 121.)
23 The reference to Section 4 is incorrect. 	At Section I(D)(4), the Subscription Agreement
contains an agreement by NRMH not to sell the property the Plaintiffs relied upon for EB-5
visa approval until removal of their conditional permanent resident status. The Partnership
Agreement also limits the authority of the Manager (Schoninger) from entering into
“agreements with Affiliates of the General Partner for the sale, lease, exchange, or disposition
of all or any portion of the Property” at Section 7.11(e).

112. 	The Subscription Agreement limits NRMH’s ability to sell the property
on which the investor relies “for EB-5 visa approval until removal of the [investor’s]
conditional permanent residence status.” (Subscription Agreement § I(D)(4)).
113. 	Although 	Plaintiffs 	do 	not 	specifically 	allege 	when 	each 	of 	them
successfully removed the conditions on their permanent resident status, a January
2020 letter from Schoninger to Plaintiffs, referenced as Exhibit J in the Chi
Complaint, includes his congratulations to some Plaintiffs: 	“Regarding the USCIS,
it looks like we are finally getting our early investors through the I-829 process!”24
Given this statement in January 2020, the Court determines that Plaintiffs have
alleged a breach of the Subscription Agreement with respect to any sale of the Project
Property that occurred prior to removal of conditions on Plaintiffs’ permanent
resident status years later. This contract claim may also proceed.
F. Unjust Enrichment (against NRMH Holdings 1, NRMH Holdings 2, NRMH
Holdings 3, Golden Marina, and Car Wash)
114. 	Plaintiffs’ Seventh Claim for Relief is asserted only against NRMH
Holdings 1, NRMH Holdings 2, NRMH Holdings 3, Golden Marina, and Car Wash,
none of which is alleged to have been a partner in NRMH or a party to the
Subscription Agreement.
115. 	To state a claim for unjust enrichment, Plaintiffs must allege "that
[they] conferred a benefit on another party, that the other party consciously accepted
24 The “I-829 process” is a reference to the USCIS form investors use to petition for removal
of conditions on their permanent resident status. 	See www.uscis.gov/i-829 (last visited 24
July 2023).

the benefit, and that the benefit was not conferred gratuitously or by an interference
in the affairs of the other party.” Se. Shelter Corp. v. BTU, Inc., 154 N.C. App. 321,
330 (2002); see also Booe v. Shadrick, 322 N.C. 567, 570 (1988).
116. 	Plaintiffs allege that they provided investment capital to NRMH that
was then used by the three holding companies, Golden Marina, and Car Wash “to
secure title to the Project Property in their own names at various times for their own
benefit.” (Chi Compl. ¶ 184.)
117. 	These allegations do not state a claim. Plaintiffs allege that they
invested in NRMH, not in these other entities. Instead, they allege that NRMH
improperly transferred assets from the partnership to the three holding companies,
Golden Marina, and Car Wash. 	Nowhere do they allege that they agreed, at any
point in time, for their money to be transferred from NRMH to these entities with
the expectation that they would receive a benefit from them. Plaintiffs’ allegations
do not fit their legal theory.25
118. 	Accordingly, the unjust enrichment claim against NRMH Holdings 1,
NRMH Holdings 2, NRMH Holdings 3, Golden Marina, and Car Wash is dismissed.
25 Moreover, unlike Plaintiffs’ fraud, negligent misrepresentation, breach of fiduciary duty,
and breach of contract claims, the three-year statute of limitations for an unjust enrichment
claim is not subject to the discovery rule. 	Se. Anesthesiology Consultants, PLLC v. Rose,
2019 NCBC LEXIS 63, at *17 (N.C. Super. Ct. Oct. 10, 2019) (the discovery rule does not
apply to an unjust enrichment claim); Lau v. Constable, 2017 NCBC LEXIS 10, at **13
(same). But see Lockerman v. South River Elec. Mbrshp. Corp., 2015 NCBC LEXIS 	60, at
**23 (N.C. Super. Ct. June 8, 2015) (implying that the discovery rule could be implicated if
the unjust enrichment claim is “predicated on fraud.”).

G. Records Demand (against NRMH and Schoninger)
119. 	Finally, Plaintiffs claim that NRMH and Schoninger, its manager,
violated their statutory rights by failing to respond to a demand made by nine of them
to produce copies of certain partnership records that NRMH is required by law to
maintain. (Chi Compl. ¶¶ 201-02.)
120. 	Exhibit K to the Chi Complaint is the 16 April 2020 written demand of
nine 	Plaintiffs 	to 	“NRMH 	GP 	Charles 	schoninger” 	(sic) 	and 	“InvestCo 	Chuck
Schoninger” (sic) demanding that by 25 April 2020, Schoninger produce their K-1
forms for tax year 2019, the names and contact information of the investors, and
“financial statements, cash flow statements and balance sheets . . . since the date of
establishment of the company.” (Chi Compl. Ex. K.)
121. 	Plaintiffs allege that Schoninger refused to provide the requested
information. (Chi Compl. ¶ 201.)
122. 	Section 59-106 of the North Carolina General Statutes requires a
limited partnership to keep at an office in this State specific records, including but
not limited to tax returns and financial statements for the most recent three years,
and a current list of the full name and last known mailing address of each partner.
These records are “subject to inspection and copying at the reasonable request, and
at the expense, of any partner during ordinary business hours.” N.C.G.S. § 59-106.
123. 	Section 59-305 of the North Carolina General Statutes gives limited
partners the right to “[i]nspect and copy any of the partnership records required to
be maintained,” and to “[o]btain from the general partners from time to time upon

reasonable demand (i) true and full information regarding the state of the business
and financial condition of the limited partnership, (ii) promptly after becoming
available, a copy of the limited partnership’s federal, State, and local income tax
returns for each year, and (iii) other information regarding the affairs of the limited
partnership as is just and reasonable.” N.C.G.S. § 59-305.
124. 	The nine Plaintiffs who sent Schoninger the 16 April 2020 letter have
stated a claim for violation of their right to inspect and copy records as provided by
statute. 	Accordingly, as to those nine Plaintiffs only, the Court hereby DENIES the
Motion with respect to the Tenth Claim for Relief (Demand for Inspection of Books
and Records).26
V. 	CONCLUSION
125. 	WHEREFORE, for the foregoing reasons, Defendants’ Motions are
GRANTED in part and DENIED in part as follows:
a. 	Defendants’ motions to dismiss Plaintiffs’ claims for fraud,
negligent 	misrepresentation, 	and 	violation 	of 	Chapter 	78A
(claims 1, 3, 6) against Defendants Northern Riverfront Marina
and Hotel LLLP, NRMH Holdings LLC, NRMH Hotel Holdings
LLC, 	USA 	InvestCo 	LLC, 	Riverfront 	Holdings 	DII 	LLC,
Wilmington Riverfront Development LLC, Golden Marina LLC,
Circle Marina Carwash, Inc., Charles J. Schoninger, John C.
Wang, Christopher Ardalan, and Jiangkai “Samson” Wu in both
26 Section 8.3 of the Partnership Agreement also speaks to Plaintiffs’ inspection rights.

the Chi Complaint and the Feng Complaint are GRANTED, and
those claims are dismissed with prejudice;
b. 	Defendants’ motions to dismiss Plaintiffs’ claims for conversion
in both the Chi Complaint and the Feng Complaint (claim 5) as
to Defendants Northern Riverfront Marina and Hotel LLLP,
NRMH 	Holdings 	LLC, 	NRMH 	Hotel 	Holdings 	LLC, 	USA
InvestCo LLC, Riverfront Holdings DII LLC, Golden Marina
LLC, Circle Marina Carwash, Inc., John C. Wang, Christopher
Ardalan, and Jiangkai “Samson” Wu are GRANTED, and the
conversion claims against these Defendants are dismissed with
prejudice; but as to Charles J. Schoninger and Wilmington
Riverfront Development LLC, the motions are DENIED;
c. 	Defendants’ motions to dismiss Plaintiffs’ claims for breach of
fiduciary 	duty 	in 	both 	the 	Chi 	Complaint 	and 	the 	Feng
Complaint (claim 4) as to Defendants Northern Riverfront
Marina and Hotel LLLP, NRMH Holdings LLC, NRMH Hotel
Holdings LLC, USA InvestCo LLC, Riverfront Holdings DII
LLC, Wilmington Riverfront Development LLC, Golden Marina
LLC, Circle Marina Carwash, Inc., Charles J. Schoninger, John
C. Wang, Christopher Ardalan, and Jiangkai “Samson” Wu are
GRANTED, and the claims are dismissed with prejudice;

d. 	Defendants’ motions to dismiss Plaintiffs’ claims for breach of
contract in both the Chi Complaint and the Feng Complaint
(claim 2) as to Defendants Northern Riverfront Marina and
Hotel LLLP, USA InvestCo LLC, and Charles J. Schoninger are
GRANTED, 	and 	the 	claims 	against 	these 	Defendants 	are
dismissed with prejudice, but as to Wilmington Riverfront
Development LLC and Plaintiffs’ claim for breach with respect
to the alleged transfer of Project property and the failure to
repurchase Plaintiffs’ partnership interests, the motions are
DENIED;
e. 	Defendants’ motions to dismiss Plaintiffs’ claims for unjust
enrichment in both the Chi Complaint and the Feng Complaint
(claim 7) against Defendants NRMH Holdings LLC, NRMH
Hotel Holdings LLC, Riverfront Holdings DII LLC, Golden
Marina LLC, and Circle Marina Carwash, Inc. are GRANTED,
and the claims are dismissed with prejudice;
f. 	Defendants’ 	motions 	to 	dismiss 	Plaintiffs’ 	claims 	for 	gross
mismanagement in both the Chi Complaint and the Feng
Complaint (claim 8) against Defendant Charles J. Schoninger is
GRANTED, and the claims are dismissed with prejudice;
g. 	Defendants’ motion to dismiss Plaintiffs’ claim for equitable
accountings in both the Chi Complaint and the Feng Complaint

(claim 9) against Defendants Northern Riverfront Marina and
Hotel LLLP, Wilmington Riverfront Development LLC, and
InvestCo LLC (claim 9) is GRANTED as unopposed, and the
claims are dismissed with prejudice;
h. With respect to the nine plaintiffs who sent the 16 April 2020
letter,27 Defendants’ motion to dismiss Plaintiffs’ Demand for
Inspection in both the Chi Complaint and the Feng Complaint
(claim 10) against Defendants Northern Riverfront Marina and
Hotel LLLP is DENIED.
IT IS SO ORDERED, this the 27th day of July, 2023.
27 The signatures on the 16 April 2020 demand are in Chinese, and the Court is unable to
identify the individuals who signed the letter by name at this time. On or before 4 August
2023, Plaintiffs shall identify these nine Plaintiffs on the record.
/s/ Julianna Theall Earp
Julianna Theall Earp
Special Superior Court Judge
for Complex Business Cases