DAPPER DEV., L.L.C. v. CORDELL, 2024 NCBC 63

2024 NCBC 63Ncbizct

Abrir fonte

Texto completo

STATE OF NORTH CAROLINA
MECKLENBURG COUNTY
IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
24CV018718-590
DAPPER DEVELOPMENT, L.L.C.;
TANTALUM HOLDINGS, LLC;
BRENDAN GELSON; KYLE
TUDOR; and MASON HARRIS,
Plaintiffs,
v.
ANDREW CORDELL,
Defendant.
ORDER AND OPINION ON
DEFENDANT’S MOTION TO DISMISS
PURSUANT TO RULE 12(b)(6)
1. 	THIS MATTER is before the Court upon Defendant’s Motion to Dismiss
(the “Motion”), filed pursuant to Rule 12(b)(6) of the North Carolina Rules of Civil
Procedure (the “Rule(s)”) on 18 June 2024 in the above-captioned case.1
2. 	Having considered the Motion, the parties’ briefs in support of and in
opposition to the Motion, the Complaint and attached exhibits2, the arguments of
counsel at the hearing on the Motion, and other appropriate matters of record, the
Court hereby GRANTS in part and DENIES in part the Motion.
Venn Law Group, by Megan Sadler and Gordon Wikle, for Plaintiffs
Dapper 	Development, 	L.L.C., 	Tantalum 	Holdings, 	LLC, 	Brendan
Gelson, Kyle Tudor, and Mason Harris.
Wagner Hicks, PLLC, by Sean C. Wagner and James Ray, for Defendant
Andrew Cordell.
Bledsoe, Chief Judge.
1 (Def.’s Mot. Dismiss [hereinafter, “Mot.”], ECF No. 12.)
2 (Compl., ECF No. 2.)
Dapper Dev., L.L.C. v. Cordell, 2024 NCBC 63.
I.
FACTUAL AND PROCEDURAL BACKGROUND
3. 	The Court does not make findings of fact when ruling on a motion to dismiss
under 	Rule 	12(b)(6). 	Rather, 	the 	Court 	recites 	the 	allegations 	asserted 	and
documents referenced in the challenged pleading—here, the Complaint—that are
relevant and necessary to the Court’s determination of the Motion.
4. 	Plaintiffs Brendan Gelson (“Gelson”), Kyle Tudor (“Tudor”), and Mason
Harris (“Harris”) (collectively, the “Individual Plaintiffs”) and Defendant Andrew
Cordell 	(“Cordell” 	or 	“Defendant”) 	are 	the 	sole 	owners 	of 	Plaintiffs 	Dapper
Development, L.L.C. (“Dapper”) and Tantalum Holdings, LLC (“Tantalum”; together
with 	Dapper, 	the 	“Companies”).3 	Dapper’s 	primary 	business 	purposes 	are 	to
construct new homes and to renovate and resell single family homes.4 	Tantalum
primarily acquires and rents various residential properties in Mecklenburg County
as well as one property in Watauga County, North Carolina.5
5. 	On 10 February 2022, Gelson, Tudor, Harris, and Cordell entered into the
Restated Operating Agreement of Dapper Development L.L.C. and the Operating
Agreement of Tantalum Holdings LLC (collectively, the “Operating Agreements”).6
3 (Compl. ¶ 19; see Compl., Exs. 1, 2.)
4 (Compl. ¶¶ 13–14.)
5 (Compl. ¶ 16.)
6 (Compl. ¶ 17; Compl. Exs. 1, 2.)
The Dapper and Tantalum Operating Agreements contain substantially similar
provisions.
6. 	The Operating Agreements identify Gelson, Tudor, Harris, and Cordell as
the sole Members of the Companies.7 	Pursuant to Section 5.2 of the Operating
Agreements, “[e]ach Member, by virtue of his . . . status as a Member, shall be a
Manager of [Dapper/Tantalum].”8 The Individual Plaintiffs and Cordell therefore are
also the sole Managers of the Companies.
7. 	Section 5.1 of the Operating Agreements outlines the rights and duties of
the 	Companies’ 	Managers, 	providing 	that 	the 	“business 	and 	affairs 	of
[Dapper/Tantalum] shall be managed by its Manager or Managers . . . [who] shall
have full and complete authority, power and discretion to manage and control the
business, 	affairs 	and 	properties 	of 	[Dapper/Tantalum], 	to 	make 	all 	decisions
regarding those matters and to perform any and all other acts or activities customary
or incident to the management of [Dapper’s/Tantalum’s] business.”9
8. 	Section 5.2 further specifies that “[e]ach Manager shall have a voting
interest which is proportional to his . . . Member’s interest in [Dapper/Tantalum].”10
At the time the Operating Agreements were signed, Gelson, Tudor, Harris, and
7 (Compl. Exs. 1, 2.)
8 (Compl. Exs. 1, 2.)
9 (Compl. Exs. 1, 2.)
10 (Compl. Exs. 1, 2.)
Cordell each owned a 25% membership interest in each of the Companies, granting
them equal voting interests in each Company.11
9. 	In the first quarter of 2023, the Individual Plaintiffs “became concerned
regarding Cordell’s behavior and decision-making” and began discussing Cordell’s
exit from the Companies.12 From approximately April to June of 2023, the Individual
Plaintiffs sought to negotiate an appropriate valuation for the Companies, pursuant
to the valuation process outlined in Section 10.2.d of the Operating Agreements, to
buy out Cordell and redeem his membership interests.13
10. 	Following a breakdown in their buyout negotiations, on 14 June 2023, the
Individual Plaintiffs, together constituting a majority of the membership interest of
the Companies, voted to terminate Cordell from the Companies and to remove Cordell
as a Member/Manager of both Companies pursuant to Sections 5.2 and 10.2.b of the
Operating Agreements.14 A termination notice was sent to Cordell that same day.15
11. 	Section 	5.2 	of 	the Operating 	Agreements 	describes 	a 	process 	for 	the
termination of Managers, stating that “[t]o elect or remove a Manager shall require
11 (Compl. ¶ 19; Compl. Exs. 1, 2.)
12 (Compl. ¶¶ 35, 47.)
13 (Compl. ¶¶ 50–66.; Compl. Exs. 1, 2.)
14 (Compl. ¶¶ 26–29, 69.)
15 (Compl. ¶ 69.)
the affirmative vote of Members owning at least a majority of all interests in the
Company.”16 Section 10.2.b of the Operating Agreements further provides as follows:
A Member shall be terminated from the Company upon an affirmative vote in
favor of such termination from the Members constituting a majority of the
membership interest of the Company. 	Upon a Member’s termination of
employment with [Dapper/Tantalum] (other than retirement), or upon a
Member’s expiration of the term of employment (“Triggering Event”), the
Member shall sell and the Company or the surviving Members shall purchase
all of the Membership and Economic Interest of the Member. The procedures
for purchase described in Section 10.2.a shall apply. The purchase price shall
be determined in accordance with Section 10.2.d below, and unless otherwise
agreed among the parties the purchase price shall be due and payable in cash
at closing.17
12. 	In response to the Individual Plaintiffs’ alleged termination and removal of
Cordell as a Member/Manager of both Companies, on 23 June 2023, Cordell filed the
lawsuit styled, Andrew Cordell v. Brendan Gelson, et al., 2023-CVS-10868 (the
“Initial Lawsuit”) in Mecklenburg County Superior Court. 	The case was thereafter
designated a mandatory complex business case and assigned to the undersigned.18
13. 	In his amended complaint filed in that action on 14 July 2023, Cordell
alleged that:
(i) 	the 14 June 2023 vote to terminate had the limited effect of terminating
Cordell’s status as an employee of the Companies19;
16 (Compl. ¶ 24; Compl. Exs. 1, 2.)
17 (Compl. Exs. 1, 2.)
18 (Initial Lawsuit Designation Order, ECF No. 1, Initial Lawsuit Assignment Order, ECF
No. 2.)
19 (First Am. Compl. ¶¶ 51—57 [hereinafter, “Initial Lawsuit Compl.”], ECF No. 4.)
(ii) 	Cordell’s status as a Member and Manager of the Companies was
unaffected until the closing for the sale of his membership interest20;
(iii) 	The assets of the Companies should be valued at their fair market value
for the purpose of a buyout of Cordell’s membership interest under
Section 10.2.d of the Operating Agreements21;
(iv) 	Gelson, Tudor, and Harris breached the Operating Agreements by
refusing 	to 	hire 	an 	MAI-designated 	appraiser 	to 	value 	Cordell’s
membership interest, as required by Section 10.2 of the Operating
Agreements22;
(v) 	Gelson, Tudor, and Harris breached the Operating Agreements’ implied
covenant of good faith and fair dealing23;
(vi) 	The Companies were unjustly enriched by continuing to use Cordell’s
general 	contractor’s 	license 	on 	necessary 	permits 	for 	ongoing
construction and renovation projects after Cordell’s termination of
employment on 14 June 202324;
20 (Initial Lawsuit Compl. ¶¶ 58–73.)
21 (Initial Lawsuit Compl. ¶¶ 74–80.)
22 (Initial Lawsuit Compl. ¶¶ 81–89.)
23 (Initial Lawsuit Compl. ¶¶ 89–95.)
24 (Initial Lawsuit Compl. ¶¶ 96–101.)
(vii) 	The Companies appropriated Cordell’s name or likeness by continuing
to use Cordell’s general contractor’s license after the termination of his
employment from the Companies25; and
(viii) 	The Companies violated N.C.G.S. § 57D-3-04(d) by refusing to permit
Cordell to inspect the Companies’ books and records.26
14. 	On 13 December 2023, this Court entered a Consent Scheduling Order (the
“Consent Order”) in the Initial Lawsuit. In the Consent Order, the Companies agreed
to “various deadlines related [to] the process of the redemption of Cordell’s interest,
the timing of the valuation of the fair market value of the assets to determine the
value to be paid to fully redeem Cordell from both Companies, and significant
disclosure of confidential information of the Companies to Cordell to support that
redemption.”27
15. 	On 10 April 2024, after the parties engaged two appraisers and Gelson,
Tudor, and Harris made several additional, but unfruitful, attempts to buy out
Cordell’s interest, Cordell voluntarily dismissed the Initial Lawsuit without prior
notice to the Companies.28
16. 	Less than two weeks after Cordell’s voluntary dismissal of the Initial
Lawsuit, on 23 April 2024, Gelson, Tudor, and Harris, individually and on behalf of
25 (Initial Lawsuit Compl. ¶¶ 102–06.)
26 (Initial Lawsuit Compl. ¶¶ 107–12.)
27 (Initial Lawsuit Consent Scheduling Order, ECF No. 41; see also Compl. ¶ 119.)
28 (Initial Lawsuit Notice Vol. Dism’l, ECF No. 59; see also Compl. ¶ 137.)
Dapper and Tantalum, filed the complaint initiating this action (the “Complaint”). In
the current action, Plaintiffs assert claims against Cordell for (i) breach of contract
for his alleged failure to abide by the terms of the Operating Agreements29; (ii)
declaratory judgment determining “the rights, duties and liabilities as between
Plaintiffs and Cordell under the Operating Agreements”30; (iii) breach of the implied
duty of good faith and fair dealing31; (iv) breach of contract for his failure to abide by
the Consent Order in the Initial Lawsuit32; and (v) abuse of process.33
17. 	Cordell filed the Motion on 18 June 2024, and, after full briefing, the Court
held a hearing on the Motion on 27 August 2024 (the “Hearing”), at which all parties
were represented by counsel. The Motion is now ripe for resolution.
II.
LEGAL STANDARD
18. 	When deciding whether to dismiss for failure to state a claim under Rule
12(b)(6), the Court considers “whether the allegations of the complaint, if treated as
true, are sufficient to state a claim upon which relief can be granted under some legal
theory.” 	Corwin v. Brit. Am. Tobacco PLC, 371 N.C. 605, 615 (2018) (quoting
CommScope Credit Union v. Butler & Burke, LLP, 369 N.C. 48, 51 (2016)).
29 (Compl. ¶¶ 150–60.)
30 (Compl. ¶¶ 161–69.)
31 (Compl. ¶¶ 170–75.)
32 (Compl. ¶¶ 176–83.)
33 (Compl. ¶¶ 184–94.)
19. 	“[D]ismissal 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, 371 N.C.
at 615 (quoting Wood v. Guilford County, 355 N.C. 161, 166 (2002)).
20. 	Under Rule 12(b)(6), “the trial court is to construe the pleading liberally and
in the light most favorable to the plaintiff, taking as true and admitted all well-
pleaded factual allegations contained within the [pleading].” 	Donovan v. Fiumara,
114 N.C. App. 524, 526 (1994) (cleaned up); see also, e.g., Sykes v. Health Network
Sols., Inc., 372 N.C. 326, 332 (2019) (recognizing that, under Rule 12(b)(6), the
allegations of the complaint should be “view[ed] as true and in the light most
favorable to the non-moving party”) (cleaned up). 	The claim is not to be dismissed
unless it appears beyond doubt that the non-moving party could prove no set of facts
in support of his claim which would entitle him to relief. U.S. Bank Nat’l Ass’n ex rel.
C-BASS Mortg. Loan Asset-Backed Certificates, Series 2006-RP2 v. Pinkney, 369 N.C.
723, 726 (2017).
21. 	When analyzing a motion to dismiss, the Court may “also consider any
exhibits attached to the complaint because ‘[a] copy of any written instrument which
is an exhibit to a pleading is a part thereof for all purposes.’ ” Krawiec v. Manly, 370
N.C. 602, 606 (2018) (quoting N.C. R. Civ. P. 10(c)).
III.
ANALYSIS
22. 	Defendant’s Motion seeks to dismiss Plaintiffs’ claims for breach of contract,
declaratory judgment, breach of the duty of good faith and fair dealing, and breach of
the Consent Order.34 The Court will take up each in turn.
A. 	Breach of Contract
23. 	Plaintiffs’ claim for breach of contract is premised on Cordell’s alleged
breach of the Operating Agreements by (i) refusing to accept a buyout offer in June
2023 in breach of Section 10, and (ii) unilaterally causing Bank OZK (the “Bank”) to
freeze the Companies’ funds in late June or early July 2023 in breach of Article 5.35
24. 	“Unlike claims subject to Rule 9, a claim for breach of contract is not subject
to heightened pleading standards[.]” 	AYM Techs., LLC. v. Rodgers, 2018 NCBC
LEXIS 14, at *52–53 (N.C. Super. Ct. Feb. 9, 2018). 	“The elements of a claim for
breach of contract are (1) existence of a valid contract and (2) breach of the terms of
that contract.” 	Poor v. Hill, 138 N.C. App. 19, 26 (2000). 	“Thus, in any breach of
contract action, the complaint must allege the existence of a contract between the
plaintiff and the defendant, the specific provisions breached, the facts constituting
the breach, and the amount of damages resulting to the plaintiff from such breach.”
Howe v. Links Club Condo. Ass’n, 263 N.C. App. 130, 139 (2018) (cleaned up).
34 (Def.’s Mot. Dismiss 1.) Defendant has not moved to dismiss Plaintiffs’ claim for abuse of
process.
35 (Compl. ¶¶ 89–91, 152–58.)
25. 	Cordell argues that his alleged conduct is insufficient to establish a breach
of the Operating Agreements, even under North Carolina’s liberal notice pleading
requirements and even when viewed in a light most favorable to Plaintiffs.36
26. 	Cordell first argues that Plaintiffs have failed to adequately plead that the
terms of the Operating Agreements were breached when he refused to accept the
Individual Plaintiffs’ buyout offer in June 2023. 	Specifically, Cordell contends that
the 	plain 	language of 	the 	Operating 	Agreements 	mandates 	that 	any 	existing
employment relationship between a Member and the Companies must be terminated
in order to constitute a “triggering event” pursuant to Section 10.2.b (the “Buyout
Provision”).37 	Cordell asserts that Plaintiffs failed to “allege—because they cannot
do so in good faith—that he was ever a Dapper and Tantalum employee subject to
termination.”38 According to Cordell, since Plaintiffs did not plead adequate facts to
establish that a “triggering event” had occurred, the Buyout Provision is inapplicable,
36 (Def.’s Br. Supp. Mot. Dismiss 7, ECF No. 13.)
37 (Def.’s Br. Supp. Mot. Dismiss 8–10.) In relevant part, Section 10.2.b of the Operating
Agreements provides:
A Member shall be terminated from the Compan[ies] upon an affirmative vote
in favor of such termination from the Members constituting a majority of the
membership interest of the Compan[ies]. Upon a Member’s termination of
employment with [the Companies] (other than retirement), or upon a
Member’s expiration of the term of employment (“Triggering Event”),
the Member shall sell and the Compan[ies] or the surviving Members shall
purchase all of the Membership and Economic Interest of the Member.
(Emphasis added.)
(Def.’s Br. Supp. Mot. Dismiss 9; see also Compl. Exs. 1, 2.)
38 (Def.’s Br. Supp. Mot. Dismiss 10.)
and Plaintiffs’ “complaint on its face reveals the absence of facts sufficient to make a
good claim” for breach of Section 10 of the Operating Agreements. Corwin, 371 N.C.
at 615 (quoting Wood, 355 N.C. at 166).
27. 	The Court disagrees. 	When analyzing a motion to dismiss, the Court may
not only consider the complaint, but also any exhibits attached to the complaint.
Krawiec, 370 N.C. at 606; N.C. R. Civ. P. 10(c). 	An exhibit, attached to and made a
part of the pleading, is considered a part of the pleading and “[t]he terms of such
exhibit control other allegations of the pleading attempting to paraphrase or construe
the exhibit, insofar as these are inconsistent with its terms.” Wilson v. Crab Orchard
Dev. Co., 276 N.C. 198, 206 (1970).
28. 	In the Complaint, Plaintiffs allege that on 14 June 2023 they “voted to
terminate Cordell from the Companies and to remove Cordell as a Member/Manager
of both Companies.” 	(Emphasis added).39 Plaintiffs then refer to the 14 June 2023
termination notice sent to Cordell, a copy of which is attached to the Complaint as
Exhibit 4.40 	In the termination notice, the Individual Plaintiffs state that they, as
majority Members of Dapper and Tantalum, had voted affirmatively in favor of “the
termination of the employment of Andrew Cordell” from both Companies and that
“from and after [14 June 2023], Mr. Cordell shall no longer be an employee . . . of
Dapper or Tantalum.” (Emphasis added.)41
39 (Compl. ¶ 69.)
40 (Compl. ¶¶ 69–70.)
41 (Compl. Ex. 4.)
29. 	Cordell contends that, while the 14 June 2023 termination notice was
incorporated into Plaintiffs’ Complaint and states that Cordell’s employment was
terminated, neither the notice, nor Plaintiffs’ Complaint, allege that he was actually
an employee.42 Cordell’s contention ignores, however, that the trial court must “take
the allegations in the complaint as true and draw all reasonable inferences in the
plaintiff’s favor” when evaluating whether a complaint adequately states a claim for
relief for purposes of Rule 12(b)(6). 	New Hanover Cnty. Bd. Of Educ. v. Stein, 380
N.C. 94, 107 (2022) (quoting North Carolina Consumers Power, Inc. v. Duke Power
Co., 285 N.C. 434, 439 (1974)) (emphasis added). 	Inarguably, it is a reasonable
inference that, if a person’s employment has been terminated and that person is “no
longer an employee,” the impacted person was an employee of the terminating
company prior to that person’s termination.
30. 	Accordingly, drawing all reasonable inferences in Plaintiffs’ favor, the Court
concludes that between the Complaint and the 14 June 2023 termination notice,
Plaintiffs have alleged sufficient facts to establish that (i) Cordell was an employee of
Dapper and Tantalum subject to termination, and (ii) by voting to terminate Cordell’s
employment with Dapper and Tantalum, a “triggering event” had occurred, requiring
Cordell to sell “all of [his] Membership and Economic Interest” in the Companies.43
As a result, Defendant’s Motion is denied with respect to Plaintiffs’ breach of contract
42 (Reply Br. Supp. Mot. Dismiss 3.)
43 (Compl. ¶ 27, Compl. Exs. 1, 2.)
claim for Cordell’s refusal to accept a buyout offer in June 2023 in alleged violation
of Section 10.44
31. 	Cordell next argues that Plaintiffs failed to adequately plead that Cordell’s
communication with the Bank constituted a breach of the Operating Agreements.45
Specifically, Cordell asserts that (i) Plaintiffs failed to specify which part of Article 5
Cordell’s actions breached; (ii) Cordell was not prohibited from communicating with
the Companies’ financial institutions, in either his capacity as a Member or a
Manager; and (iii) Plaintiffs have not alleged that Cordell actually requested the
Bank to freeze the Companies’ funds.46
32. 	Defendant seeks to impose a higher pleading burden than is required under
North Carolina law. 	Under Rule 8, Plaintiffs need only make a “short and plain
44 In their opposition brief, Plaintiffs call attention to Cordell’s repeated and unequivocal
admissions in the Initial Lawsuit that he was an employee of the Companies and that a
“triggering event” under Section 10.2.b had occurred, such that the Companies were required
to redeem his interests. (Pls.’ Br. Opp’n Def.’s Mot. Dismiss 14 [hereinafter “Pls.’ Br. Opp’n”],
ECF No. 19.) Plaintiffs contend that the doctrine of judicial estoppel, formally recognized by
the North Carolina Supreme Court in Whitacre P’Ship v. Biosignia, Inc., 358 N.C. 1 (2004),
prevents Cordell from seeking to “swap horses in mid-stream.” 	(Pls.’ Br. Opp’n 15). 	The
Court will not address Plaintiffs’ judicial estoppel arguments at this time, however, as they
are irrelevant to a Rule 12(b)(6) motion. 	At the motion to dismiss stage, “the trial
court . . . may not consider evidence outside the four corners of the complaint and the
attached [exhibits].” 	Weaver v. Saint Joseph of the Pines, Inc., 187 N.C. App. 198, 203–04
(2007). Evidence of a defendant’s inconsistent factual allegations in a prior lawsuit may not
compensate for or overcome shortcomings in the filed complaint in the current action. That
said, Plaintiffs certainly may raise judicial estoppel through proper motions practice at any
time. See, e.g., Old Republic Nat’l Title Ins. Co. v. Hartford Fire Ins. Co., 369 N.C. 500, 506
(2017) (“[a] party is generally not allowed to change his position with respect to a material
matter, during the course of litigation, nor should he be allowed to blow hot and cold in the
same breath”) (cleaned up).
45 (Def.’s Br. Supp. Mot. Dismiss 13.)
46 (Def.’s Br. Supp. Mot. Dismiss 13.)
statement of the claim,” N.C. R. Civ. P. 8(a), and our courts have held that “stating a
claim for breach of contract is a relatively low bar.” 	Vanguard Pai Lung, LLC v.
Moody, 2019 NCBC LEXIS 39, at *11 (N.C. Super. Ct. June 19, 2019); see, e.g., Poor,
138 N.C. App. at 26.
33. 	Here, Plaintiffs plead that the “Operating Agreements are valid contracts
which bind Cordell,”47 that “Cordell unilaterally took action—after having been
removed as a Manager—to cause the Bank to make the Funds unavailable to the
Companies,” and that “in so doing, [Cordell] breached Article 5 [Rights and Duties of
Managers] of the Operating Agreements[.]”48 Plaintiffs identify the specific contract
provisions that were allegedly breached (Article 5—Rights and Duties of Managers),
the facts constituting the alleged breach (Cordell’s unilateral action to cause the Bank
to make the Funds unavailable to the Companies after he had been removed as a
Manager), and the amount of damages resulting from the breach (in excess of
$25,000).49 See Howe, 263 N.C. App. at 139. Since Plaintiffs have met the low burden
established by Rule 8(a), the Court shall deny Defendant’s Motion as to Plaintiffs’
claim based on Cordell’s alleged breach of Article 5.
47 (Compl. ¶ 151.)
48 (Compl. ¶¶ 157–58.)
49 (Compl. Prayer for Relief ¶ 1.)
B. 	Declaratory Judgment
34. 	Defendant next seeks the dismissal of Plaintiffs’ claim for a declaratory
judgment determining the “rights, duties and liabilities as between Plaintiffs and
Cordell under the Operating Agreement[s].”50
35. 	Under the 	Declaratory 	Judgment 	Act, 	“[a]ny 	person 	interested under
a . . . written contract . . . , or whose rights, status or other legal relations are affected
by a . . . contract . . . , may have determined any question of construction or validity
arising under the . . . contract . . . , and obtain a declaration of rights, status, or other
legal relations thereunder.” N.C.G.S. § 1-254. When asserting a claim for declaratory
judgment, the claimant “must set forth in his pleading all facts necessary to disclose
the existence of an actual controversy between the parties . . . with regard to their
respective rights and duties.” Lide v. Mears, 231 N.C. 111, 118 (1949). A motion to
dismiss pursuant to Rule 12(b)(6) is “seldom an appropriate pleading in actions for
declaratory judgments, and . . . is allowed only when the record clearly shows that
there is no basis for declaratory relief as when the complaint does not allege an actual,
genuine existing controversy.” Duke Power Co., 285 N.C. at 439.
36. 	In seeking to dismiss Plaintiffs’ claim for declaratory judgment, Defendant
argues that “[t]here can be no dispute that Cordell remains a Member and Manager
of the Companies, because there is no mechanism for involuntarily removing a
Member or Manager, except for termination of an employment relationship pursuant
to Section 10.2 of the Operating Agreements” and that “Cordell was never an
50 (Compl. ¶ 169.)
employee of the Companies subject to termination, which is dispositive as to his
status as a Member and Manager.”51 	Plaintiffs contend in opposition that Cordell
was removed as a Member and Manager from both Companies by the 14 June 2023
termination vote.52
37. 	As discussed above, the Court has concluded that Plaintiffs have alleged
sufficient facts to permit the conclusion that (i) Cordell was an employee of Dapper
and Tantalum subject to termination, and (ii) by voting to terminate Cordell’s
employment with Dapper and Tantalum, a “triggering event” under Section 10.2.b of
the Operating Agreements occurred, resulting in Cordell forfeiting his status as a
Member and triggering an obligation to sell “all of [his] Membership and Economic
Interest” in the Companies.53
38. 	The Court further concludes that Plaintiffs have alleged sufficient facts to
permit a reasonable factfinder to find that Cordell was terminated as a Manager of
the 	Companies. 	Section 	5.2 	of 	the 	Operating 	Agreements 	provides 	that
“[t]o . . . remove a Manager shall require the affirmative vote of Members owning at
least a majority of all interests in the Compan[ies].”54 	Plaintiffs allege that under
Section 5.2, Harris, Tudor, and Gelson, together constituting a majority of all
interests in the Companies, voted to terminate Cordell as a Manager of both
51 (Reply Br. Supp. Mot. Dismiss 11.)
52 (Compl. ¶ 69.)
53 (Compl. Exs. 1, 2.)
54 (Compl. ¶ 24; Compl. Exs. 1, 2.)
Companies.55 Therefore, the Court concludes that Plaintiffs have pleaded sufficient
facts to establish that an actual controversy exists between the parties. Defendant’s
Motion seeking to dismiss Plaintiffs’ declaratory judgment claim shall therefore be
denied.
C. 	Breach of Duty of Good Faith and Fair Dealing
39. 	Defendant next seeks to dismiss Plaintiffs’ claim for breach of the implied
duty of good faith and fair dealing under the Operating Agreements.
40. 	North Carolina law has long recognized that, in addition to its express
terms, in every contract there is an implied covenant of good faith and fair dealing
that “neither party will do anything which injures the right of the other to receive the
benefits of the agreement.” Gay v. Peoples Bank, 2015 NCBC LEXIS 62, at *27 (N.C.
Super. Ct. June 10, 2015) (quoting Governor’s Club Inc. v. Governor’s Club Ltd. P’ship,
152 	N.C. 	App. 	240, 	251 	(2002)). 	Moreover, 	our 	courts 	have 	held 	that 	“[a]
contract . . . encompasses not only its express provisions but also all such implied
provisions as are necessary to effect the intention of the parties unless express terms
prevent such inclusion.” 	Gay, 2015 NCBC LEXIS, at *27–28 (quoting Lane v.
Scarborough, 284 N.C. 407, 410 (1973)).
41. 	To state a valid claim for breach of the implied covenant of good faith and
fair dealing, a plaintiff must “plead that the party charged took action ‘which injure[d]
the right of the other to receive the benefits of the agreement,’ thus ‘depriv[ing] the
other of the fruits of [the] bargain.’ ” Conleys Creek Ltd. P’ship v. Smoky Mt. Country
55 (Compl. ¶¶ 24, 69.)
Club Prop. Owners Ass’n, 255 N.C. App. 236, 253 (2017) (quoting Bicycle Transit
Auth. v. Bell, 314 N.C. 219, 228–29 (1985)). “Evasion of the spirit of the bargain, lack
of diligence and slacking off, willful rendering of imperfect performance, abuse of a
power to specify terms, and interference with or failure to cooperate in the other
party’s performance” may each constitute a breach of the implied covenant of good
faith and fair dealing. 	Intersal, Inc. v. Wilson, 2023 NCBC LEXIS 29, at *67 (N.C.
Super. Ct. Feb. 23, 2023) (quoting Restatement 2d of Contracts § 205 cmt. d (1981)).
42. 	Plaintiffs argue that Cordell breached the duty of good faith and fair dealing
by:
(a) 	“Recommending that [the Individual Plaintiffs] use a lender with a
higher interest rate for a March 2023 transaction for no business
reason”56;
(b) 	“Misleading [the Individual Plaintiffs] about the interest rate of the
financing related to the Winston Property acquisition in 2023”57;
(c) 	“Demanding 	unsupportable 	amounts 	to 	be 	redeemed 	by 	the
Companies”58;
(d) 	“Refusing 	to 	acknowledge 	his 	termination/expulsion 	from 	the
Companies”59;
56 (Compl. ¶ 174(a).)
57 (Compl. ¶ 174(b).)
58 (Compl. ¶ 174(c).)
59 (Compl. ¶ 174(d).)
(e) 	“Taking action to have the Bank freeze funds” even though Gelson,
Tudor, 	and 	Harris 	“are 	fully 	authorized 	under 	the 	Operating
Agreements to use the funds in the ordinary course of business”60;
(f) 	“Taking specific steps to impede [the Individual Plaintiffs’] efforts and/or
ability to change bank account numbers for recurring monthly mortgage
payments in the name of the Companies for no business reason”61;
(g) 	“Keeping Dapper from disposing of the Winston Property in September
2023 to an interested third-party buyer by threatening the potential
buyer and then attempting to obtain the Winston Property from Dapper
for about $40,000 less than the third-party buyer would have paid”62;
(h) 	“Refusing to allow the Funds to be utilized by the Companies”63;
(i) 	“Demanding that the Funds be distributed without regard for the
definition of ‘Distributable Cash’ under Section 1.6 of the Operating
Agreements”64;
(j) 	“Making outrageous monetary demands of the Companies which were
unsupported by any factual or legal basis”65;
60 (Compl. ¶ 174(e).) 	Plaintiffs allege the Bank holds approximately $473,698.01 plus any
accruing interest on behalf of the Companies (the “Funds”). Plaintiffs further allege that the
Funds are not distributable cash under the Operating Agreements. (Compl. ¶¶ 147–48.)
61 (Compl. ¶ 174(f).)
62 (Compl. ¶ 174(g).)
63 (Compl. ¶ 174(h).)
64 (Compl. ¶ 174(i).)
65 (Compl. ¶ 174(j).)
(k) 	“Requiring 	[the 	Individual 	Plaintiffs] 	to 	expend 	over 	$100,000 	in
attorneys’ fees by refusing to accept the 14 June 2023 [buyout offer]”66;
and
(l) 	“Refusing to accept his termination as a Member and Manger under the
Operating Agreement.”67
43. 	In response to Plaintiffs’ claims, Cordell contends that Plaintiffs “failed to
make allegations sufficient to establish that (1) Cordell acted to frustrate Plaintiffs’
performance of an express provision of the Operating Agreements, or (2) Cordell
performed obligations of an express provision of the Operating Agreements in bad
faith.”68 (Emphasis added.)
44. 	Once again, Cordell seeks to impose a higher pleading burden on Plaintiffs
than Rule 8 requires. In pleading a claim for breach of the implied covenant of good
faith and fair dealing, Plaintiffs are not required to plead with particularity the
express terms that were breached. 	To survive a Rule 12(b)(6) motion to dismiss,
Plaintiffs need only plead the existence of a valid contract and that Defendant took
action “which injure[d] the right of the other to receive the benefits of the agreement.”
Conleys Creek Ltd. P’ship, 255 N.C. App. at 253.
45. 	As a Manager, Cordell was entrusted with performing a wide range of
activities for the Companies; he had “full and complete authority, power and
66 (Compl. ¶ 174(k).)
67 (Compl. ¶ 174(l).)
68 (Reply Br. Supp. Mot. Dismiss 12.)
discretion 	to 	manage 	and 	control 	the 	business, 	affairs 	and 	properties 	of 	the
Compan[ies], to make all decisions regarding those matters and to perform any and
all 	other 	acts 	or 	activities 	customary 	or 	incident 	to 	the 	management 	of 	the
Compan[ies’] business.”69 In addition, Cordell had “the authority to act on behalf of
the Compan[ies] in the execution of all documents necessary to sell, purchase or
mortgage the property for or owned by the Compan[ies], and such signature from
Andrew Cordell [bound] the Compan[ies] without the need for signature from any of
the other Members or Managers.”70 In undertaking these rights and duties, Cordell
had an implied duty to act in good faith and to make reasonable efforts to perform his
obligations under the Operating Agreements.
46. 	Considering the above, the Court holds that the allegations set forth in
subparagraphs (a), (b), (e), (f), (g), and (h) of paragraph 174 of Plaintiffs’ Complaint,
viewed as true and in a light most favorable to Plaintiffs, permit a reasonable
factfinder to conclude that Cordell took action “which injure[d] the right of the
[Plaintiffs] to receive the benefits of the [Operating Agreements].” Gay, 2015 NCBC
LEXIS, at *27. Accordingly, the Court finds that these allegations state a viable claim
for breach of the covenant of good faith and fair dealing and will deny Defendants’
Motion as to this aspect of Plaintiffs’ claim.
47. 	In contrast, however, the Court concludes that Plaintiffs’ allegations at
subparagraphs (c), (d), (i), (j), (k), and (l) of paragraph 174 of the Complaint involve
69 (Compl. Exs. 1, 2.)
70 (Compl. Exs. 1, 2.)
Cordell’s assertion of his alleged rights under the Operating Agreements and thus,
as pleaded, do not permit a reasonable conclusion that these actions injured Plaintiffs’
rights to receive the benefits of the Operating Agreements. 	As a result, the Court
will grant Defendant’s Motion as to these allegations, and subparagraphs (c), (d), (i),
(j), (k), and (l) of paragraph 174 of Plaintiffs’ Complaint shall be dismissed.
48. 	Cordell also argues that “Plaintiffs’ contention that Cordell was terminated
as a Member and Manager of the Companies on June 14, 2023, if taken as true and
viewed in a light most favorable to Plaintiffs, mandates dismissal of their claim for
breach of the implied covenant.”71 Dismissal is mandated, Cordell contends, because
“assuming that Cordell had no obligations to the Companies as either a Member or
Manager, then it follows that Cordell had no performance obligations under the
Operating Agreements as of June 14, 2023.”72
49. 	Cordell ignores, however, that North Carolina permits alternative pleading.
Under Rule 8(e)(1), “[a] party may set forth two or more statements of a claim or
defense alternatively or hypothetically, either in one count or defense or in separate
counts or defenses . . . A party may also state as many separate claims or defenses as
he has regardless of consistency[.]” Thus, as Cordell posits, if a factfinder concludes
that the 14 June 2023 vote terminated Cordell’s status as a Member and Manager,
Cordell can only be liable on the implied covenant claim for his actions which occurred
on or before 14 June 2023. 	But if a factfinder concludes that Cordell has not been
71 (Def.’s Br. Supp. Mot. Dismiss 17.)
72 (Def.’s Br. Supp. Mot. Dismiss 17.)
terminated as a Member and Manager of the Companies, the 14 June 2023 vote would
not limit Plaintiffs’ right to pursue their claim. The Court reads Plaintiffs’ claim in
this respect to state an alternative claim for relief and therefore rejects Cordell’s
Motion based on this separate ground.
D. 	Breach of the Consent Order
50. 	Plaintiffs’ fourth claim for relief for breach of contract is premised on
Defendant’s alleged breach of the 13 December 2023 Consent Order. 	During the
course of the Initial Lawsuit, the parties entered into the Consent Order in which
“the Companies agreed to voluntarily provide certain information not otherwise
required by the discovery process in the Initial Litigation, in exchange for Cordell’s
agreement to comply with the terms of Section 10 of the Operating Agreements on a
mutually agreed upon timeframe.”73 	Plaintiffs contend that Cordell breached the
Consent Order by “failing to accept the Companies’ tender on the agreed-upon
timeframe.”74
51. 	Cordell seeks dismissal of this claim on grounds that “Plaintiffs have failed
to allege facts sufficient to demonstrate that the Consent [ ] Order was a binding
contract, as opposed to a court order, which has no legal effect following the voluntary
dismissal of the prior litigation.”75
73 (Compl. ¶ 178.)
74 (Compl. ¶ 180.)
75 (Mot. 3.)
52. 	Under North Carolina law, “[t]he general rule is that a consent judgment is
the contract of the parties entered upon the record with the sanction of the court.”
Crane v. Green, 114 N.C. App. 105, 106 (1994). Thus, a consent judgment is “both an
order of the court and a contract between the parties.” 	Ibele v. Tate, 163 N.C. App.
779, 781 (2004). Furthermore, as our courts have stated, “[i]f a consent judgment is
merely a recital of the parties’ agreement and not an adjudication of rights, it is
[enforceable] . . . through a breach of contract action.” 	Id. 	Since the Consent Order
is a valid and enforceable contract between the parties under North Carolina law and
Plaintiffs have adequately alleged facts that, if taken as true, establish that Cordell
breached its terms, the Court concludes that Plaintiffs’ claim for breach of the
Consent Order survives Rule 12(b)(6) scrutiny and therefore shall deny Cordell’s
Motion with respect to this claim.
IV.
CONCLUSION
53. 	WHEREFORE, for the reasons set forth above, the Court hereby GRANTS
in part and DENIES in part the Motion as follows:
a. 	Defendant’s Motion is hereby DENIED as to Plaintiffs’ claims against
Cordell for breach of contract, declaratory judgment, and breach of the
Consent Order.
b. 	Defendant’s Motion is hereby DENIED in part as to Plaintiffs’ claim
for breach of the implied covenant of good faith and fair dealing with
respect to subparagraphs (a), (b), (e), (f), (g) and (h) of paragraph 174 of
the Complaint.
c. 	Defendant’s Motion is hereby GRANTED as to Plaintiffs’ claim for
breach of the implied covenant of good faith and fair dealing with respect
to subparagraphs (c), (d), (i), (j), (k) and (l) of paragraph 174 of the
Complaint, 	and 	Plaintiffs’ 	claim 	is 	hereby 	DISMISSED 	with
prejudice to this extent.
d. 	Defendants’ Motion is otherwise DENIED.
SO ORDERED, this the 25th day of September, 2024.
/s/ Louis A. Bledsoe, III
Louis A. Bledsoe, III
Chief Business Court Judge

Continue sua pesquisa no ChatGPT ou Claude

Conecte o Omnilex para pesquisar o corpus jurídico pelo seu assistente de IA.