GVEST REAL EST., LLC v. JS REAL EST. INVS., LLC, 2023 NCBC 61

STATE OF NORTH CAROLINA
MECKLENBURG COUNTY
IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
16 CVS 21135
GVEST REAL ESTATE, LLC,
(formerly Gee Real Estate, LLC)
Plaintiff,
v.
JS REAL ESTATE INVESTMENTS,
LLC; SHAW CAPITAL &
GUARANTY, LLC; TR REAL
ESTATE, LLC; LEVAN CAPITAL,
LLC (formerly known as Trinvest
Partners, LLC); JAMES SHAW;
TYSON RHAME; and YARDS AT
NODA, LLC,
Defendants,
v.
JS REAL ESTATE INVESTMENTS,
LLC; TR REAL ESTATE, LLC;
JAMES SHAW; TYSON RHAME;
and
YARDS AT NODA, LLC,
Counterclaim
Plaintiffs,
v.
GVEST REAL ESTATE, LLC
(formerly GEE REAL ESTATE, LLC),
Counterclaim
Defendant.
ORDER AND OPINION ON MOTIONS
FOR SUMMARY JUDGMENT
1. 	Yards at NoDa, LLC owns an apartment complex of the same name in
Charlotte, North Carolina’s vibrant North Davidson neighborhood. By all accounts,
the company is prosperous and has room to grow. 	Phase one of the complex is
complete and generating rental income; phase two, though still in the planning
Gvest Real Est., LLC v. JS Real Est. Invs., LLC, 2023 NCBC 61.

stages, shows promise. But success has not been enough to ward off internal conflict.
The founders of Yards at NoDa have split into two factions that distrust one another
and, in this lawsuit, have traded accusations and recriminations of self-interested
scheming going all the way back to the company’s formation.
2. 	Discovery is now closed. Each side has moved for summary judgment. For
the following reasons, the Court GRANTS Defendants’ motion and GRANTS in part
and DENIES in part Plaintiff’s motion.
Baucom, Claytor, Benton, Morgan & Wood, P.A., by Rex C. Morgan, for
Plaintiff Gvest Real Estate, LLC.
Alston & Bird, LLP, by Matthew P. McGuire, Caitlin Van Hoy, Ryan P.
Ethridge, and Michael A. Kaeding, for Defendants JS Real Estate
Investments, LLC, Shaw Capital & Guaranty, LLC, TR Real Estate,
LLC, Levan Capital, LLC, James Shaw, Tyson Rhame, and Yards at
NoDa, LLC.
Conrad, Judge.
I.
BACKGROUND
3. 	The Court does not make findings of fact when ruling on motions for
summary judgment. The following background, drawn from the evidence submitted
by the parties, provides context for the Court’s analysis and ruling only.
4. 	All parties agree that Ray Gee had the original idea for what eventually
became Yards at NoDa. 	Gee, a real estate developer, found an undeveloped parcel
whose owners were in financial distress. Convinced that it was a prime location for
apartments, Gee began looking for investors. 	He approached James Shaw, a friend
and business associate. Shaw came on board and then invited Tyson Rhame, another
business associate, to join as well. Gee, Shaw, and Rhame together formed Yards at

NoDa in 2012 to buy and develop the parcel and later manage the apartment complex
once up and running. 	(See, e.g., Bell Dep. 83:5–14, ECF Nos. 89 & 101.3; Gee Dep.
26:21–27:16, 50:22–51:23, 64:3–6, 65:18–66:13, ECF No. 101.1; Rhame Dep. 82:3–15,
ECF No. 101.4.)
5. 	Yards at NoDa’s original members are holding companies owned by either
Gee, Shaw, or Rhame. Gee’s company, Gvest Real Estate, LLC (“Gvest”), took a 25%
interest based on a token $1,000 capital contribution. 	Shaw’s company, JS Real
Estate Investments, LLC (“JS Real Estate”), took a 37.5% interest based on a
$2,500,000 capital contribution. 	And Rhame’s company, TR Real Estate, LLC (“TR
Real Estate”), also took a 37.5% interest based on a $2,500,000 capital contribution.
Yards at NoDa’s operating agreement names Gee and Shaw as the initial managers.
(See Op. Agrmt. §§ 2.7, 3.1, 5.1.1, Ex. A, ECF No. 20.5.)
6. 	If there was a honeymoon period after the formation of Yards at NoDa, it
didn’t last long. 	Relations between Gee and Shaw deteriorated so rapidly that, by
2014, they had ended their friendship and dissolved many of their business ventures
other than Yards at NoDa. Two years later, Gvest filed this lawsuit. (See Defs.’ Ex.
F-4, ECF No. 101.6.)
7. 	Many of Gvest’s allegations reflect concerns that Shaw and Rhame have
tried to dilute its interest or shut it out of Yards at NoDa. As an example, Shaw filed
tax forms that assigned a 16.78% membership interest to Gvest rather than the 25%
interest listed in the operating agreement; the forms were later amended to correct
the size of Gvest’s interest. In addition, Shaw and Rhame allegedly refused a series

of requests by Gvest to review company books and records. (See Gee Dep. 136:5–11;
Pl.’s Ex. 5, ECF No. 93.1.)
8. 	Other allegations go toward changes or attempted changes in Yards at
NoDa’s membership and management. In 2013, Shaw and Rhame took preliminary
steps to transfer the interests of JS Real Estate and TR Real Estate to other holding
companies (“Shaw Capital” and “Levan Capital”) that they personally own. Around
the same time, they proposed to amend the operating agreement to admit Shaw
Capital and Levan Capital as members. Gvest approved the amendment at first but
revoked its approval before it took effect. Then, in August 2014, JS Real Estate and
TR Real Estate voted to remove Gee as manager and replace him with Rhame. Gvest
contends that these actions have thrown a cloud over Yards at NoDa’s membership
and management. (See, e.g., Defs.’ Exs. F-3, F-7, F-8, F-10, F-11, ECF No. 78.1.)
9. 	A third set of allegations sound in fraud. 	In 2015 and 2016, the federal
government filed a civil forfeiture action against Shaw and Rhame and indicted them
for wire and mail fraud and money laundering. 	The prosecution resulted from an
investigation into the practices of a currency trading business (“Sterling Currency
Group”) jointly owned by Shaw and Rhame. 	Gvest alleges that Shaw and Rhame
misled it about the legality of Sterling Currency Group’s business and that they used
tainted funds to capitalize Yards at NoDa. (See Am. Compl. Ex. B, ECF No. 20.2.)
10. 	Based 	on 	these 	allegations, 	Gvest 	filed 	suit 	against 	seven 	named
Defendants: Shaw, Rhame, JS Real Estate, TR Real Estate, Shaw Capital, Levan
Capital, and Yards at NoDa. 	Gvest has asserted a claim for declaratory judgment

regarding the status of Yards at NoDa’s members and managers; a pair of claims to
enforce 	its 	informational 	rights 	under 	the 	operating 	agreement 	and 	N.C.G.S.
§ 57D-3-04; and claims for breach of fiduciary duty, constructive fraud, fraudulent
inducement, and negligent misrepresentation. Gvest also claims that Yards at NoDa
is an alter ego of Shaw and Rhame and demands punitive damages.
11. 	Defendants 	deny 	any 	wrongdoing; 	five 	of 	the 	seven 	have 	also
counterclaimed.1 	They allege that Gee abdicated his responsibilities as a manager
by refusing to show up to work, skipping meetings, and ignoring calls, e-mails, and
text messages. His actions and inactions supposedly pushed a key employee to resign
and jeopardized financing for the development. (See, e.g., Frericks Aff. ¶¶ 3, 4, ECF
No. 92; Shaw 2d Aff. ¶ 7; Bell Dep. 108:11–14, 113:23–114:1.)2
12. 	Defendants 	further 	allege 	that 	Gvest 	fraudulently induced Shaw 	and
Rhame to invest in Yards at NoDa. Gee supposedly told Shaw and Rhame that the
project would require just $5 million in capital up front because Yards at NoDa would
be able to get the rest of the funding from a lender called ANICO at a 90% loan-to-cost
ratio. 	In reality, Defendants say, funding from ANICO was not available, and the
lender that eventually funded the project imposed far less favorable terms. Shaw and
Rhame had to contribute over $13 million as a result. In addition, Gvest supposedly
received its 25% interest in Yards at NoDa based on representations that Gee would
1 Shaw Capital and Levan Capital are the only Defendants that have not asserted
counterclaims.
2 The record contains several affidavits by Shaw and Rhame. 	For ease of reference, the
affidavits cited in this opinion are noted here. (Shaw 1st Aff., ECF No. 81; Shaw 2d Aff., ECF
No. 90; Rhame 1st Aff., ECF No. 80; Rhame 2d Aff., ECF No. 91.)

provide the “sweat equity” needed to make the development successful. 	As alleged,
though, Gee was an absentee manager. 	(See, e.g., Shaw 2d Aff. ¶¶ 4–6; Rhame 2d
Aff. ¶¶ 3, 4; Shaw Dep. 71:13–73:2, ECF No. 101.2.)
13. 	These 	allegations 	underlie 	counterclaims 	against 	Gvest 	for 	breach 	of
fiduciary 	duty, 	constructive 	fraud, 	fraudulent 	inducement, 	negligent
misrepresentation, and unfair or deceptive trade practices under N.C.G.S. § 75-1.1.
Defendants also demand punitive damages.
14. 	Both sides have moved for summary judgment. (See ECF Nos. 75, 82.) Their
motions have been fully briefed, and the Court held a hearing on 11 May 2023. The
motions are ripe for decision.
II.
LEGAL STANDARD
15. 	Summary 	judgment 	is 	appropriate 	when 	“the 	pleadings, 	depositions,
answers to interrogatories, and admissions on file, together with the affidavits, if any,
show that there is no genuine issue as to any material fact and that any party is
entitled to a judgment as a matter of law.” N.C. R. Civ. P. 56(c). In ruling on a motion
for summary judgment, the Court must consider the evidence in the light most
favorable to the nonmoving party, drawing all inferences in the nonmoving party’s
favor. See, e.g., Morrell v. Hardin Creek, Inc., 371 N.C. 672, 680 (2018).
16. 	The moving party “bears the initial burden of demonstrating the absence of
a genuine issue of material fact.” Liberty Mut. Ins. Co. v. Pennington, 356 N.C. 571,
579 (2002). The moving party meets its burden “by proving that an essential element
of the opposing party’s claim is nonexistent, or by showing through discovery that the

opposing party cannot produce evidence to support an essential element of his claim.”
DeWitt v. Eveready Battery Co., 355 N.C. 672, 681 (2002) (citations and quotation
marks omitted). 	If the moving party makes that showing, “the burden shifts to the
nonmoving party to ‘produce a forecast of evidence demonstrating that the nonmoving
party will be able to make out at least a prima facie case at trial.’ ” 	Cummings v.
Carroll, 379 N.C. 347, 358 (2021) (quoting DeWitt, 355 N.C. at 682). The nonmoving
party “may not rest upon the mere allegations or denials of his pleading, but his
response, by affidavits or as otherwise provided in this rule, must set forth specific
facts showing that there is a genuine issue for trial.” N.C. R. Civ. P. 56(e).
III.
DEFENDANTS’ MOTION
17. 	Defendants move for summary judgment on every claim in Gvest’s amended
complaint. 	The Court notes at the outset that some of Defendants’ arguments are
uncontested because Gvest did not respond to them in its opposition brief. See BCR
7.2 (“A party should . . . brief each issue and argument that the party desires the
Court to rule upon and that the party intends to raise at a hearing.”).
A. Declaratory Judgment
18. 	In its claim for declaratory judgment, Gvest alleges that JS Real Estate and
TR Real Estate forfeited their membership rights in Yards at NoDa by attempting to
transfer their interests to Shaw Capital and Levan Capital in 2013. 	Gvest also
alleges that JS Real Estate and TR Real Estate were not members when they
removed Gee as manager and replaced him with Rhame. Based on these allegations,
Gvest seeks declarations that it is the sole member of Yards at NoDa, that JS Real

Estate and TR Real Estate are merely economic interest holders, and that Gee
remains a manager.
19. 	Defendants admit that JS Real Estate and TR Real Estate attempted to
transfer their interests but contend that undisputed evidence shows that the attempt
did not comply with the operating agreement, making it null and void. 	As a result,
they contend, the membership of Yards at NoDa never changed, all three original
members remain members today, and the removal of Gee as manager was valid.
20. 	An LLC is primarily a creature of contract, meaning that members have
great freedom in choosing the rules that govern their relationship. This includes the
rules that govern transfers of membership interests. 	See N.C.G.S. § 57D-2-30(a).
Here, the members of Yards at NoDa agreed that a transfer is not permitted unless
it satisfies certain conditions, including delivery of “a written instrument agreeing to
be bound by the terms of Section VI” of the operating agreement, delivery of “the
transferee’s taxpayer identification number” and “initial tax basis” of the transferred
interest, and “the prior written consent of the Manager.” 	(Op. Agrmt. §§ 6.1.1.2,
6.1.1.5, 6.1.1.6.) A transfer of membership rights that fails to meet these conditions
“shall be deemed invalid, null and void, and of no force or effect.” (Op. Agrmt. § 6.1.3.)
21. 	As Defendants note, Gee testified on Gvest’s behalf that he had seen no
evidence that JS Real Estate and TR Real Estate had delivered either the required
written instrument agreeing to be bound by Section VI of the operating agreement or
the required information regarding their taxpayer identification number and initial
tax basis. 	(See Gee Dep. 148:24–149:24.) 	Gvest offers no response in its opposition

brief and does not point to any evidence tending to show that JS Real Estate and TR
Real Estate complied with those conditions on transfer.
22. 	In addition, in early 2013, Gee and Shaw were Yards at NoDa’s managers.
Arguably, both men needed to give written consent to the disputed transfer under
section 6.1.1.6 of the operating agreement. 	But even if that section requires the
consent of just one of the two managers, there is insufficient evidence that either Gee
or Shaw gave consent in writing. Gee certainly didn’t; he contends that he didn’t even
know about the attempted transfer because Shaw and Rhame hid it from him.
Although Shaw admits that he wanted to transfer JS Real Estate’s interest to another
of his wholly owned entities, no document in the record reflects his written consent.
The evidence includes two draft consent forms, each of which has a blank signature
line for Shaw. 	(See Defs.’ Exs. F-7, F-8.) 	And Gee testified that he had seen no
evidence that Shaw gave consent in writing. (See Gee Dep. 149:25–150:10.)
23. 	Gvest offers no evidence to show written consent from either manager. 	It
argues that Shaw must have complied with the operating agreement because he was
aware of its terms and because he later signed tax forms stating that Shaw Capital
and Levan Capital were members of Yards at NoDa. 	This is supposition, not
evidence. 	Shaw’s knowledge of the operating agreement has no bearing on his
compliance with it, and his signature on the tax forms underscores the absence of a
signature on the draft consent forms. 	“Cases are not to be submitted to a jury on
speculations, guesses, or conjectures.” Roumillat v. Simplistic Enters., Inc., 331 N.C.
57, 69 (1992).

24. 	In short, Gvest has not offered substantial evidence to create a genuine issue
of material fact regarding JS Real Estate’s and TR Real Estate’s compliance with
sections 6.1.1.2, 6.1.1.5, or 6.1.1.6 of the operating agreement. This means that the
attempted transfer of their interests is null and void. 	(See Op. Agrmt. § 6.1.3.)
Accordingly, Gvest is not entitled to a declaration that it is the only member of Yards
at NoDa or that JS Real Estate and TR Real Estate are merely economic interest
holders. 	It follows that Gvest is not entitled to a declaration that Gee is a manager
of Yards at NoDa. As members, JS Real Estate and TR Real Estate had the right to
remove Gee as manager at any time and for any reason by a majority vote. (See Op.
Agrmt. § 5.1.4.)
25. 	The Court therefore grants Defendants’ motion as to Gvest’s claim for
declaratory judgment.
B. Claims Relating to Corporate Records
26. 	Gvest alleges that Shaw and Rhame have wrongfully refused to provide
access to Yards at NoDa’s books and records. On that basis, Gvest has asserted one
claim to enforce its contractual right to information under the operating agreement
and another to enforce its statutory inspection right under N.C.G.S. § 57D-3-04. The
relief sought for each claim is the same: an order compelling Shaw and Rhame to
allow inspection of company records.
27. 	Defendants argue that both claims are moot because Gvest has received all
the documents that it requested. In support, Defendants offer evidence to show that
they have satisfied every document demand made by Gvest and that no further
demands have been made. (See McGuire Aff. ¶¶ 4, 5, ECF No. 101.)

28. 	Gvest concedes as much. 	In its opposition brief, it does not point to any
record that it sought and that Defendants withheld. 	Rather, it worries that
Defendants might deny access to records again in the future.
29. 	Apprehension about a potential future dispute cannot sustain these claims.
Gvest demanded Yards at NoDa’s books and records, and it has now received them.
An order compelling Shaw and Rhame to provide access to the same documents would
serve no purpose. 	Accordingly, the Court dismisses both claims as moot. 	See In re
Peoples, 296 N.C. 109, 147 (1978) (holding that a court usually should dismiss a claim
when 	“the 	relief 	sought 	has 	been 	granted 	or 	. . . 	the 	questions 	originally 	in
controversy between the parties are no longer at issue”); Brady v. Van Vlaanderen,
2015 NCBC LEXIS 59, at *6–8 (N.C. Super. Ct. June 3, 2015) (dismissing inspection
demand as moot because the plaintiff had received access to records at issue).
C. Breach of Fiduciary Duty and Constructive Fraud
30. 	Gvest’s claims for breach of fiduciary duty and constructive fraud share a
common premise. As alleged, JS Real Estate and TR Real Estate together own 75%
of Yards at NoDa and are therefore controlling members that owe a fiduciary duty to
Gvest as minority member. 	Defendants argue that JS Real Estate and TR Real
Estate are minority members and that no fiduciary duty arises from their collective
majority interest.
31. 	The Court agrees with Defendants. 	The usual rule is that members of an
LLC do not owe a fiduciary duty to one another. 	See Kaplan v. O.K. Techs., L.L.C.,
196 N.C. App. 469, 473 (2009). In some circumstances, “a holder of a majority interest
who exercises control over the LLC owes a fiduciary duty to minority interest

members.” 	Bennett v. Bennett, 2019 NCBC LEXIS 19, at *19 (N.C. Super. Ct. Mar.
15, 2019) (citation and quotation marks omitted). But Yards at NoDa has no majority
member. 	JS Real Estate and TR Real Estate hold minority interests, just as Gvest
does. 	(See Op. Agrmt. Ex. A.) 	Our courts have routinely “refused to impose a
fiduciary duty on minority members that exercise their voting rights by joining
together to outvote a third member.” Vanguard Pai Lung, LLC v. Moody, 2019 NCBC
LEXIS 39, at *20 (N.C. Super. Ct. June 19, 2019) (emphasis in original); see also Duffy
v. 	Schussler, 	287 	N.C. 	App. 	46, 	63–64 	(2022) 	(finding 	Vanguard’s 	“reasoning
persuasive”).
32. 	Accordingly, Gvest has not shown a genuine issue of material fact regarding
the existence of a fiduciary relationship. 	The Court grants Defendants’ motion for
summary judgment as to the claims for breach of fiduciary duty and constructive
fraud. See Dalton v. Camp, 353 N.C. 647, 651 (2001) (“For a breach of fiduciary duty
to exist, there must first be a fiduciary relationship between the parties.”); Forbis v.
Neal, 361 N.C. 519, 528 (2007) (noting that constructive fraud requires the existence
of a confidential or fiduciary relationship).
D. Fraudulent Inducement and Negligent Misrepresentation
33. 	Gvest’s claims for fraud and negligent misrepresentation are both centered
on allegedly false representations made by Shaw and Rhame regarding the legality
of Sterling Currency Group’s business practices. 	Defendants move for summary
judgment on these claims on two grounds: first, that each representation alleged in
the amended complaint was true; and second, that Gvest did not reasonably rely on
any representation when it invested in Yards at NoDa. Defendants offer evidence—

including affidavits from Shaw and Rhame as well as excerpts of Gee’s deposition
testimony—to support their arguments. 	(See Shaw 1st Aff. ¶¶ 5–8; Rhame 1st Aff.
¶¶ 5–8; Gee Dep. 85:2–14, 96:8–10.)
34. 	Defendants have met their initial burden, as the moving parties, to show an
absence of evidence to support an essential element of the claims. See Marcus Bros.
Textiles, Inc. v. Price Waterhouse, LLP, 350 N.C. 214, 224 (1999) (noting that fraud
and 	negligent 	misrepresentation 	require 	analogous 	showings 	of 	reasonable 	or
justifiable reliance, respectively); Rowan Cnty. Bd. of Educ. v. U.S. Gypsum Co., 332
N.C. 1, 17 (1992) (noting that a “false representation” is an essential element of
fraud). 	As a result, Gvest needed “to come forth with evidence to controvert”
Defendants’ arguments “or otherwise suffer entry of summary judgment against it.”
Econo-Travel Motor Hotel Corp. v. Taylor, 301 N.C. 200, 205 (1980). 	Gvest’s
opposition brief is silent about both claims, and it has therefore failed to establish a
genuine issue of material fact regarding the falsity of any alleged representations and
its own reliance on them.
35. 	The Court grants Defendants’ motion for summary judgment as to Gvest’s
claims for fraudulent inducement and negligent misrepresentation.
E. Alter Ego Liability & Punitive Damages
36. 	The entry of summary judgment on every claim for relief asserted by Gvest
necessitates the entry of summary judgment on its claim of alter ego liability and its
demand for punitive damages, neither of which is an independent cause of action.
See Green v. Freeman, 367 N.C. 136, 146 (2013) (“There must also be an underlying
legal claim to which [alter ego] liability may attach.”); Funderburk v. JPMorgan

Chase Bank, N.A., 241 N.C. App. 415, 425 (2015) (“[A] claim for punitive damages is
not a stand-alone claim.”).
IV.
GVEST’S MOTION
37. 	Gvest seeks summary judgment on some, but not all, counterclaims asserted
by Shaw, Rhame, JS Real Estate, TR Real Estate, and Yards at NoDa.
A. Breach of Fiduciary Duty
38. 	In response to Gvest’s motion for summary judgment, Defendants have
narrowed their counterclaim for breach of fiduciary duty. 	They now concede that
Gvest owed no fiduciary duty to Shaw, Rhame, JS Real Estate, or TR Real Estate.
Based on that concession, the Court enters summary judgment in Gvest’s favor on
the counterclaim for breach of fiduciary duty as to those four Defendants.3
39. 	That leaves Yards at NoDa. Its counterclaim is peculiar in that it does not
allege that Gvest directly owed or breached any fiduciary duty. Indeed, a member of
an LLC typically does not owe a fiduciary duty to the company. What Yards at NoDa
alleges instead is that Gee (who is not a party in this litigation) owed a fiduciary duty
as manager, that he breached that duty through mismanagement and dereliction,
and that Gvest is responsible for his actions as his alter ego.
40. 	Gvest concedes for purposes of summary judgment that it can be liable for
Gee’s breach of fiduciary duty if there was one. 	It contends only that Gee’s conduct
3 At the hearing, Defendants’ counsel conceded that Shaw, Rhame, JS Real Estate, and TR
Real Estate do not have a viable claim for constructive fraud for the same reason. Because
Gvest’s motion does not challenge the counterclaim for constructive fraud, however, the Court
will address the issue in a future proceeding.

did not amount to a breach of fiduciary duty, partly because the operating agreement
provides 	that 	a 	manager 	is 	not 	liable 	for 	any 	act 	or 	omission 	unless 	“made
fraudulently or in bad faith” or constituting “gross negligence.” (Op. Agrmt. § 5.4.1.)
41. 	On that point, there is a genuine issue of material fact. Yards at NoDa offers
evidence to show that Gee missed important meetings, refused to respond to calls and
e-mails, sabotaged an appraisal for a construction loan, and alienated a key employee.
(See, e.g., Frericks Aff. ¶¶ 3, 4; Shaw 2d Aff. ¶ 7; Bell Dep. 108:11–14, 113:23–114:1.)
Although the parties dispute whether Gee acted in bad faith or was grossly negligent,
intent is generally a question for the jury. 	Viewing the evidence in the light most
favorable to Yards at NoDa, a jury could conclude that Gee was not only derelict in
his duty but also that he acted in bad faith or was grossly negligent.
42. 	The Court therefore denies Gvest’s motion for summary judgment as to
Yards at NoDa’s counterclaim for breach of fiduciary duty.
B. Fraudulent Inducement
43. 	Defendants claim that Gvest fraudulently induced them to invest in Yards
at NoDa. 	They allege that Gvest misrepresented Gee’s experience as a real estate
appraiser, made erroneous projections for Yards at NoDa’s expected net rental
income, falsely promised that Gee would contribute “sweat equity” in return for
Gvest’s 25% membership interest in Yards at NoDa, and represented that JS Real
Estate and TR Real Estate would have to contribute only $5 million based on a false
promise that Gvest could secure financing from ANICO at a 90% loan-to-cost ratio.
44. 	Although Gvest’s arguments are not as clear as they could be, a fair reading
of its motion reveals three grounds for summary judgment. 	It contends, first, that

representations regarding Gee’s experience are true; second, that Defendants failed
to plead certain allegations with particularity; and third, that predictions and
estimates are not fraudulent simply because they turn out to be inaccurate.
45. 	Fraud 	has 	five 	“essential 	elements”: 	(a) 	a 	false 	representation 	or
concealment of a material fact, (b) calculated to deceive, (c) made with intent to
deceive, (d) that did in fact deceive, and (e) that resulted in damage to the injured
party. Rowan Cnty. Bd. of Educ., 332 N.C. at 17. The claimant must show not only
that he actually relied on the misrepresentation but also that his reliance was
reasonable. See Forbis, 361 N.C. at 527.
46. 	Statements of opinion, predictions of future events, and promises of future
intent generally do not give rise to an action for fraud. 	See, e.g., Lester v. McLean,
242 N.C. 390, 397 (1955); Leftwich v. Gaines, 134 N.C. App. 502, 508 (1999); Braun
v. Glade Valley School, Inc., 77 N.C. App. 83, 87 (1985). 	Of course, “a promissory
misrepresentation may constitute actual fraud if the misrepresentation is made with
intent to deceive and no intent to comply with the stated promise or representation.”
Braun, 77 N.C. App. at 87. To show fraud based on promissory misrepresentations,
the claimant must offer evidence “from which a court and jury may reasonably infer
that the defendant did not intend to carry out such representations when they were
made.” Whitley v. O’Neal, 5 N.C. App. 136, 139 (1969).
47. 	Under Rule 9(b), the claimant must plead fraud with particularity. 	This
means 	that 	Defendants 	must 	allege 	the 	“time, 	place 	and 	content” 	of 	the
misrepresentation, the “identity of the person making the representation,” and “what

was obtained as a result.” Terry v. Terry, 302 N.C. 77, 85 (1981). If the pleading does
not allege fraud with particularity, “summary judgment is proper.” 	Trull v. Cent.
Carolina Bank & Tr. Co., 117 N.C. App. 220, 224 (1994); see also In re Se. Eye Center-
Pending Matters, 2019 NCBC LEXIS 29, at *47 (N.C. Super. Ct. May 7, 2019)
(collecting cases holding that “summary judgment is appropriate . . . where a plaintiff
has failed to plead fraud with particularity”).
48. 	Gvest contends that representations regarding Gee’s experience as an
appraiser, including his professional certifications, were true. 	Defendants concede
the point in their opposition brief. Thus, no reasonable jury could conclude that Gvest
made fraudulent representations regarding Gee’s experience.
49. 	Next, Gvest argues that Defendants’ allegations regarding projections of net
rental income are not sufficiently particular to state a claim for fraud. 	The Court
agrees. Defendants do not allege when or where Gee provided a projection for Yards
at NoDa’s rental income. Nor do they allege the content of the projection, other than
to say that it turned out to be erroneous. These scant allegations do not satisfy Rule
9(b). See, e.g., S.N.R. Mgmt. Corp. v. Danube Partners 141, LLC, 189 N.C. App. 601,
611 (2008) (affirming dismissal of fraud claim that did not allege time or place of
misrepresentation); Bob Timberlake Collection, Inc. v. Edwards, 176 N.C. App. 33, 39
(2006) (same). 	Moreover, Defendants have not offered evidence to show that Gee’s
projection was a false representation of an existing fact as opposed to a statement of
opinion. 	See, e.g., Lester, 242 N.C. at 397 (“The value of the property . . . was

necessarily a matter of opinion. 	It does not appear to have been represented as
anything else. . . . [S]uch representations do not constitute fraud.”).
50. 	The other arguments in Gvest’s opening brief are not fully developed. 	It
says nothing about the alleged promise that Gee would contribute sweat equity
toward the development. 	It does address the alleged representation regarding
available 	financing 	terms 	but 	contends 	only 	that 	ANICO’s 	refusal 	to 	provide
financing was the fault of Shaw and Rhame. But there are genuine issues of material
fact regarding the representations that Gee made with respect to anticipated
financing terms and the reason that financing from ANICO was not available. (See,
e.g., Shaw Dep. 82:23–83:11.)
51. 	In its reply brief, Gvest asserts a series of new, more detailed arguments.
One of the new arguments is that Rhame has no viable claim for fraud because the
alleged misrepresentations were made only to Shaw. Another new argument is that
Gee’s alleged promise to contribute sweat equity is not sufficiently definite and
specific to support a claim for fraud. 	These are reasonable arguments. 	See, e.g.,
Ragsdale 	v. 	Kennedy, 	286 	N.C. 	130, 	139 	(1974) 	(To 	be 	fraudulent, 	a
“misrepresentation must be definite and specific.”); Hospira Inc. v. AlphaGary Corp.,
194 N.C. App. 695, 699 (2009) (“An essential element of actionable fraud is that the
false representation or concealment be made to the party acting thereon.” (emphasis
in original)). 	But because Gvest made them for the first time in its reply brief, the
Court declines to consider them. See BCR 7.7.

52. 	The Court therefore denies Gvest’s motion for summary judgment as to the
fraud counterclaim.
C. Section 75-1.1
53. 	Defendants claim that Gvest engaged in unfair or deceptive trade practices
under section 75-1.1 by misrepresenting the value of the Yards at NoDa project and
the amount of financing that it would require. Gvest contends that its alleged acts,
even if true, were not in or affecting commerce and therefore not a violation of section
75-1.1.
54. 	The General Assembly has declared that “unfair or deceptive acts or
practices in or affecting commerce” are “unlawful.” 	N.C.G.S. § 75-1.1(a). 	Although
“commerce” broadly means “business activities,” id. § 75-1.1(b), our Supreme Court
has stressed that section 75-1.1 is “not intended to apply to all wrongs in a business
setting,” Dalton v. Camp, 353 N.C. 647, 657 (2001). 	The term “business activities”
refers to “a business’s regular interactions with other market participants,” White v.
Thompson, 364 N.C. 47, 52 (2010), and “connotes the manner in which businesses
conduct their regular, day-to-day activities,” HAJMM Co. v. House of Raeford Farms,
Inc., 328 N.C. 578, 594 (1991). 	This excludes “a business’s internal operations,”
White, 364 N.C. at 53, as well as activities “done for the purpose of raising capital”
and similar extraordinary events, Nobel v. Foxmoor Grp., 380 N.C. 116, 120–21 (2022)
(citation and quotation marks omitted). 	Put simply, “any unfair or deceptive
practices occurring in the conduct of extraordinary events of, or solely related to the
internal operations of, a business will not give rise to a claim under” section 75-1.1.
White, 364 N.C. at 52.

55. 	The alleged misconduct here concerns the formation of Yards at NoDa and
its 	acquisition 	of 	capital. 	In 	Defendants’ 	own 	words, 	Gvest 	allegedly 	made
“misrepresentations to Shaw and Rhame to induce them to create and bankroll
Yards” at NoDa. (Defs.’ Br. Opp’n Gvest’s Mot. Summ. J. 10, ECF No. 88 (emphasis
added).) It may be true that Gvest did so for its “own . . . gain” and that its conduct
in securing investments from Defendants is “morally suspect.” 	Nobel, 380 N.C. at
121. 	Even so, the alleged conduct “was not ‘in or affecting commerce’ because” it
involved the sort of extraordinary event that does “not constitute a ‘business
activity’ ” under binding appellate precedent. Id.
56. 	Defendants contend that Gvest’s solicitation of investments is not an
extraordinary event because soliciting investors is its day-to-day business. 	This
Court has rejected identical arguments in the past. 	See, e.g., Aym Techs., LLC v.
Scopia Cap. Mgmt. LP, 2021 NCBC LEXIS 29, at *28–31 (N.C. Super. Ct. Mar. 31,
2021) (granting summary judgment on section 75-1.1 claim involving entity whose
“day-to-day business involves capital raising activities”). 	The “focus under the
relevant cases is not who is a party to the transaction, but rather what is the purpose
of the transaction.” 	Latigo Invs. II, LLC v. Waddell & Reed Fin., Inc., 2007 NCBC
LEXIS 17, at *11 (N.C. Super. Ct. June 11, 2007) (citation and quotation marks
omitted). 	“If the transactions at issue involve capital raising, our courts have held
that the” conduct is not in or affecting commerce within the meaning of section 75-1.1.
Aym Techs., 2021 NCBC LEXIS 29, at *29. So it is in this case.

57. 	The Court therefore grants Gvest’s motion for summary judgment on the
section 75-1.1 counterclaim.
V.
CONCLUSION
58. 	For these reasons, the Court GRANTS Defendants’ motion for summary
judgment.
59. 	The Court also GRANTS in part and DENIES in part Gvest’s motion for
partial summary judgment as follows:
a. 	The Court GRANTS the motion as to the counterclaim for breach of
fiduciary duty to the extent brought by Shaw, Rhame, JS Real Estate,
and TR Real Estate and DENIES the motion as to that counterclaim to
the extent brought by Yards at NoDa.
b. 	The Court DENIES the motion as to Defendants’ counterclaim for
fraudulent inducement.
c. 	The Court GRANTS the motion as to Defendants’ counterclaim for
violation of section 75-1.1.
60. 	In 	addition 	to 	these 	rulings, 	the 	Court 	notes 	that 	counterclaims 	for
constructive fraud, negligent misrepresentation, and punitive damages also remain
pending.
SO ORDERED, this the 12th day of September, 2023.
/s/ Adam M. Conrad
Adam M. Conrad
Special Superior Court Judge
for Complex Business Cases