Viza Electronics, LLC v. Paradigm Clinical Research Institute, Inc.

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF NORTH CAROLINA

CHARLOTTE DIVISION

3:22-cv-49-MOC-DCK

VIZA ELECTRONICS, LLC, )

)

Plaintiff, )

)

vs. ) ORDER

)

PARADIGM CLINICAL )

RESEARCH INSTITUTE, INC., et. al, )

)

Defendants. )

___________________________________ )

THIS MATTER is before the Court on Defendants Paradigm Clinical Research Institute,

Inc. (“Paradigm”) and Ram Dandillaya, MD (“Dandillaya”)’s Motion to Dismiss, filed pursuant

to Rules 12(b)(2) and 12(b)(6) of the Federal Rules of Civil Procedure. (Doc. No. 15).

Defendants seek to dismiss Defendant Dandillaya on personal jurisdiction grounds, and they also

seek dismissal of all claims other than the breach of contract claim against Paradigm.

I. BACKGROUND AND PLAINTIFF’S FACTUAL ALLEGATIONS

Plaintiff Viza Electronics, LLC, is a North Carolina limited liability company with its

principal offices located in Charlotte, North Carolina. Defendant Paradigm is a corporation

organized under the laws of the State of California. Dandillaya is a citizen and resident of the

State of California and is an officer, owner, and founder of Paradigm. Defendant Juan De Borbon

Y De Rojas, also known as Jon Rojas, is a citizen and resident of the State of California and is an

officer, owner, agent and/or employee of Paradigm.

The following allegations in the Complaint are taken as true for the purposes of

Defendants’ motion to dismiss:

On March 11, 2020, the World Health Organization declared the COVID-19 virus a

pandemic. (Doc. No. 1 ¶ 9). Businesses throughout the United States were demanding access to

masks to help them limit the spread and to protect employees. (Id. ¶ 10). Viza was approached by

a number of customers, including Office Depot, that wished to place orders for large numbers of

masks. (Id. ¶ 11). Viza is an electronics distributor that markets and sources products such as

LED drivers, power adapters, and various cables and connectors, so it relied on others to help

procure masks. (Id. ¶ 12).

Defendant Paradigm is a California based clinical research consortium which conducts

clinical trials, and therefore expert in the medical products space. (Id. ¶ 13). Upon information

and belief, Paradigm had provided supplies of personal protective equipment (“PPE”) in prior

pandemics. (Id. ¶ 14). After the onset of the pandemic, Paradigm announced that it was able to

obtain supplies of PPE. (Id. ¶ 15).

In March 2020, Viza’s Manager of Business Development Kira Skill contacted Rojas to

see if Paradigm could provide masks to Viza. (Id. ¶ 16). Rojas represented to Skill that Paradigm

had suppliers in China that had committed large quantities of masks to Paradigm. Rojas stated

that Viza could purchase a large quantity, but that Viza would need to place an Order promptly

and provide a 50% deposit to Paradigm in order to guarantee delivery of the masks by April 24,

2020. (Id. ¶ 17).

Defendant Dandillaya, through Rojas, provided Viza with a letter dated March 23, 2020.

(Id. ¶ 18). In the letter, Dandillaya represented that:

[t]hrough our international network of manufacturers, we have identified stocks of

critical supplies: surgical masks, N95 masks, COVID-19 detection kits, protective

suits, hand sanitizer, etc. Perhaps more importantly, several of our manufacturing

partners have dedicated 100% of their capacity in an effort to meet volume

requirements over the next several months.

(Id. ¶ 19 & Pl. Ex. A). The representations in the letter were false. (Id. ¶ 20).

In reliance on the representations of Rojas and Dandillaya, Viza reached out to its

customers and obtained orders for large numbers of masks. (Id. ¶ 21). Specifically, Viza

customer Office Depot issued an order for ten million masks at $3.50 per mask. (Id. ¶ 22). Other

Viza customers also indicated they would purchase at a premium any masks that Viza could

procure. (Id. ¶ 23).

In reliance on the representations of Rojas and Dandillaya, Viza issued to Paradigm

Purchase Order VP20-B04U01 dated April 10, 2020 (the “Order”), in the amount of

$52,000,000. (Id. ¶ 24 & Pl. Ex. B). In response to the Order, Paradigm issued an Invoice dated

April 11, 2020. (Id. ¶ 25 & Pl. Ex. C).

On April 13, 2020, Viza wired to Paradigm the sum of $26,000,000 representing the

deposit of 50% of the Order amount (the “Deposit”). (Id. ¶ 26 & Pl. Exs. D and E). Paradigm

acknowledged receipt of the Deposit, but no masks were delivered by the promised date of April

24, 2020, or any time thereafter. (Id. ¶ 27). Instead, Paradigm admitted that its assurances that

Paradigm had a dedicated supplier of masks were false, and that Paradigm could not supply any

masks to Viza. (Id. ¶ 28).

Paradigm admitted it could not fill the Order and was in breach of the contract. (Id. ¶ 29).

Viza was unable to fill the orders from Office Depot and other Viza customers. (Id. ¶ 30). Viza

lost profits of at least $6,500,000 that it would have made selling masks to Office Depot. (Id. ¶

31). Viza’s commercial relationship with Office Depot was irreparably damaged and Viza lost

Office Depot as a customer, causing additional damages. (Id. ¶ 32).

Rojas and Paradigm expressly promised that Viza would receive a full refund of all sums

paid. (Id. ¶ 33). On April 22, 2020, Paradigm provided a partial return of the Deposit in the

amount of $17,625,000. (Id. ¶ 34). On May 8, 2020, Paradigm provided a partial return of the

Deposit in the amount of $1,250,000. (Id. ¶ 35). On June 18, 2020, Paradigm provided a partial

return of the Deposit in the amount of $4,275,000. (Id. ¶ 36).

On July 22, 2020, Paradigm provided a partial return of the Deposit in the amount of

$400,000. (Id. ¶ 37). Despite repeated demands, Paradigm has made no further payments since

July 22, 2020. (Id. ¶ 38). The outstanding amount of the Deposit retained by Paradigm is

$2,450,000. (Id. ¶ 39).

Based on the above factual allegations, Plaintiff filed this action on February 4, 2022,

alleging the following claims against Defendants: (1) fraud under North Carolina law against all

Defendants; (2) breach of contract against Defendant Paradigm; (3) conversion against

Defendant Paradigm; (4) unjust enrichment against Defendant Paradigm; and (5) a violation of

North Carolina’s Unfair and Deceptive Trade Practices Act, N.C. GEN. STAT. 75-1.1 et seq.

against all Defendants.

On March 24, 2022, Defendants filed the pending motion to dismiss pursuant to Rules

12(b)(6) and Rule 12(b)(2). Plaintiff has responded in opposition to the motion to dismiss, and

Defendants have filed a Reply. (Doc. Nos. 16, 17). The Court held a hearing on the motion on

August 15, 2022. This matter is ripe for disposition.

II. STANDARDS OF REVIEW

A. Motion to Dismiss for Lack of Personal Jurisdiction

Rule 12(b)(2) provides for dismissal for “lack of personal jurisdiction.” FED. R. CIV. P.

12(b)(2). When a district court considers a Rule 12(b)(2) motion based on the contents of the

complaint and supporting affidavits without an evidentiary hearing, the party asserting

jurisdiction bears the burden of establishing a prima facie case of jurisdiction. Hawkins v. i-TV

Digitalis Tavkozlesi zrt., 935 F.3d 211, 226 (4th Cir. 2019); Universal Leather, LLC v. Koro AR,

S.A., 773 F.3d 553, 558 (4th Cir. 2014). The standard or review is by a preponderance of the

evidence. Mylan Labs., Inc. v. Akzo, N.V., 2 F.3d 56, 60 (4th Cir. 1993). The court may consider

affidavits submitted by both parties, but it must resolve factual disputes and draw all reasonable

inferences in favor of the party asserting jurisdiction. Universal Leather, 773 F.3d at 560; Combs

v. Bakker, 886 F.2d 673, 676 (4th Cir. 1989) (“[T]he court must construe all relevant pleading

allegations in the light most favorable to the plaintiff, assume credibility, and draw the most

favorable inferences for the existence of jurisdiction.”). The court must then determine whether

the facts proffered by the party asserting jurisdiction make out a case of personal jurisdiction

over the party challenging jurisdiction. Sneha Media & Entm’t, LLC v. Associated Broad. Co. P

Ltd., 911 F.3d 192, 196–97 (4th Cir. 2018).

B. Motion to Dismiss for Failure to State a Claim

Federal Rule of Civil Procedure 12(b)(6) provides that a motion may be dismissed for

failure to state a claim upon which relief can be granted. A motion to dismiss pursuant to Rule

12(b)(6) tests the sufficiency of the complaint without resolving contests of fact or the merits of a

claim. Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992), cert. denied, 510

U.S. 828 (1993). Thus, the Rule 12(b)(6) inquiry is limited to determining if the allegations

constitute “a short and plain statement of the claim showing the pleader is entitled to relief”

pursuant to Federal Rule of Civil Procedure 8(a)(2). To survive a defendant’s motion to dismiss,

factual allegations in the complaint must be sufficient to “raise a right to relief above a

speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Thus, a complaint will

survive if it contains “enough facts to state a claim to relief that is plausible on its face.” Ashcroft

v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570).

For the purposes of a Rule 12(b)(6) analysis, a claim has facial plausibility “when the

plaintiff pleads factual content that allows the court to draw the reasonable inference that the

defendant is liable for the misconduct alleged.” Id. (quoting Twombly, 550 U.S. at 556). The

Court must draw all reasonable factual inferences in favor of the plaintiff. Priority Auto Grp.,

Inc. v. Ford Motor Co., 757 F.3d 137, 139 (4th Cir. 2014). In a Rule 12(b)(6) analysis, the Court

must separate facts from legal conclusions, as mere conclusions are not entitled to a presumption

of truth. Iqbal, 556 U.S. at 678. Importantly, “[t]hreadbare recitals of the elements of a cause of

action, supported by mere conclusory statements, do not suffice.” Id. However, well-pleaded

factual allegations are entitled to a presumption of truth, and the court should determine whether

the allegations plausibly give rise to an entitlement to relief. Id. at 679.

III. DISCUSSION

A. Defendants’ Motion to Dismiss Defendant Dandillaya for Lack of Personal

Jurisdiction

As noted, Defendant Dandillaya is the co-owner of Paradigm and resides in California.

The exercise of personal jurisdiction over a nonresident defendant is proper in North Carolina

when (1) there is a basis for jurisdiction under North Carolina’s long-arm statute, and (2) the

exercise of personal jurisdiction complies with due process. Pan-American Prods. & Holdings,

LLC v. R.T.G. Furniture Corp., 825 F. Supp. 2d 664, 677 (M.D.N.C. 2011). Courts construe

North Carolina’s long-arm statute to be coextensive with due process, such that the two-part test

collapses into the single inquiry of “whether the non-resident defendant has such ‘minimum

contacts’ with the forum state that exercising jurisdiction over it does not offend ‘traditional

notions of fair play and substantial justice.”’ Id. (quoting Christian Sci. Bd. of Dirs. of the First

Church of Christ, Scientist v. Nolan, 259 F.3d 209, 215 (4th Cir. 2001)). In other words, there

must be “some act by which the defendant purposefully avails itself of the privilege of

conducting activities within the forum State, thus invoking the benefits and protections of its

laws.” Hanson v. Denckla, 357 U.S. 235, 253 (1958).

Personal jurisdiction may be exercised specifically or generally. Here, Plaintiff does not

contend that this Court can exercise general personal jurisdiction against Defendant Dandillaya.

Indeed, Defendant Dandillaya’s activities in North Carolina have not been continuous and

systematic such that the court may exercise general personal jurisdiction over him. Plaintiff

argues, however, that this Court may assert specific jurisdiction over Defendant Dandillaya

because Plaintiff’s claims arose out of Dandillaya’s purposeful contact with North Carolina.

To establish specific jurisdiction, the plaintiff must show “a sufficient nexus between

[the] defendants’ contact with the forum state and the nature of the claims asserted.” WLD, LLC

v. Watkins, 454 F. Supp. 2d 426, 432 (M.D.N.C. 2006). The Fourth Circuit has applied a three-

part test for determining whether specific jurisdiction exists: (1) whether and to what extent the

defendant “purposely availed” itself of the privileges of conducting activities in the forum state;

(2) whether the plaintiff’s claim arises out of those forum-related activities; and (3) whether the

exercise of jurisdiction is constitutionally “reasonable.” ALS Scan, Inc. v. Digital Serv.

Consultants, Inc., 293 F.3d 707, 712 (4th Cir. 2002) (emphasis added). For specific jurisdiction

to exist, all three of the above-cited factors must be satisfied. Brown v. Advanced Dig. Sols.,

LLC, No. 17-0034, 2017 WL 3838640, at *5 (W.D.N.C. Aug. 31, 2017). If the plaintiff meets

the first two prongs, then the burden shifts to the defendant to show that exercising jurisdiction

would be unreasonable. Grober v. Mako Prods., Inc., 686 F.3d 1335, 1346 (Fed. Cir. 2012).

In arguing that this Court lacks personal jurisdiction over Defendant Dandillaya,

Defendants assert that Dr. Dandillaya is a practicing California physician who has never lived

North Carolina, never worked there, and has no bank accounts, real property or other assets in

the state. (Dandillaya Decl. ¶¶ 2–3). He has never travelled to North Carolina and has no ongoing

personal or business connections to the state. (Id.). Defendants also note that the letter written by

Dandillaya is a generic letter, not directed to anyone in particular. Finally, Defendants assert that

Plaintiff’s customers who ordered the masks were not located in North Carolina. Defendants

contend that forcing Defendant Dandillaya to defend this suit in North Carolina would offend

notions of due process.

The Court rejects Defendants’ arguments and finds that the Court does have personal

jurisdiction over Defendant Dandillaya. Dandillaya admits that he is an “owner of a non-resident

company that had business dealings with a North Carolina entity.” (Doc. No. 15-1, ¶ 10). North

Carolina courts hold that this alone is sufficient to subject a defendant to personal jurisdiction.

As the court explained in Acosta v. Byrum, 638 S.E.2d 246, 252–53 (N.C. App. 2006):

Dr. Faber’s motion to dismiss also alleged that defendant was not subject to

personal jurisdiction in North Carolina. Dr. Faber is a citizen and resident of

Alabama. He, however, is the owner of Psychiatric Associates, a company doing

business in North Carolina. . . . Dr. Faber was the owner of a medical practice

whose activities were carried on within North Carolina. Thus, North Carolina’s

long arm statute applies to Dr. Faber. . . .. As owner of a business in North

Carolina, Dr. Faber purposefully availed himself within the state and invoked the

protection of the laws. Thus, Dr. Faber had minimal contacts with the state.

Accordingly, since the long arm statute reaches Dr. Faber and he had minimum

contacts with the state, jurisdiction over Dr. Faber is proper in this matter.

See also Gunnings v. Internet Cash Enter. of Asheville, LLC, No. CIV 506CV98, 2007 WL

1931291, at *4 (W.D.N.C. July 2, 2007) (discussing Acosta and denying motion to dismiss).

Furthermore, Dandillaya prepared marketing materials which Plaintiff alleges falsely advertised

that a dedicated supply of masks was available. Dandillaya provided the letter, through his co-

owner Rojas, to Plaintiff, a North Carolina company. Under the facts as alleged, which this Court

must take as true, and construing all inferences in Plaintiff’s favor, it is reasonable to infer that

when Dandillaya prepared and directed the alleged false communications, he knew that the letter

was going to be sent to a North Carolina business, despite that the letter does not specifically

address anyone in particular. It is hard to imagine that, even if Dandillaya wrote the letter

initially without knowing its ultimate recipient, he no doubt learned at some point during the

business deal that the letter was being used to induce a North Carolina company to pay

Dandillaya’s company $52 million. Thus, as an officer of Paradigm, Defendant Dandillaya

“purposely availed” himself of the privileges of conducting activities in the forum state.

Moreover, Plaintiff’s claim clearly arises out of Defendant’s forum-related activities—that is

sending a letter to a North Carolina company with the intent to include a payment of $52 million.

Finally, the Court finds that the exercise of jurisdiction over Defendant Dandillaya is

constitutionally reasonable.

In sum, for the reasons stated herein, the Court has specific personal jurisdiction over

Defendant Dandillaya. See Raycap Asset Holdings Ltd. v. Kushner, No. 320CV00363,

KDBDCK, 2022 WL 301600, at *3 (W.D.N.C. Feb. 1, 2022) (court has jurisdiction over author

of fraudulent letter relied upon by North Carolina company, even though the letter was not

directly addressed to it); Vishay Intertechnology, Inc. v. Delta Int’l Corp., 696 F.2d 1062, 1065

(4th Cir. 1982) (telephone and written communications initiated from California constitute

“tortious conduct” occurring within North Carolina and established personal jurisdiction over

defendant). Defendants’ motion to dismiss Defendant Dandillaya for lack of personal jurisdiction

is denied.

B. Defendants’ Motion to Dismiss Plaintiff’s Tort Claims

1. Plaintiff’s Claim for Fraud

North Carolina recognizes that fraud comes in a variety of forms. As the North Carolina

Supreme Court has explained:

While fraud has no all-embracing definition and is better left undefined lest crafty

men find a way of committing fraud which avoids the definition, the following

essential elements of actionable fraud are well established: (1) False

representation or concealment of a material fact, (2) reasonably calculated to

deceive, (3) made with intent to deceive, (4) which does in fact deceive, (5)

resulting in damage to the injured party.

Ragsdale v. Kennedy, 209 S.E.2d 494, 500 (N.C. 1974). To state a claim for fraudulent

inducement, a plaintiff need only allege “sufficient specific facts giving rise to a plausible

inference that [Defendants] assurances … were false at the time they were made.” Packrite, LLC

v. Graphic Packaging Int'l, Inc., No. 1:17CV1019, 2019 WL 2992340, at *3 (M.D.N.C. July 9,

2019) (denying motion to dismiss fraud claim when defendant falsely stated that they would be

exclusive manufacturer).

The Court finds that Plaintiff has sufficiently alleged a claim of fraud against Defendants.

Here, Plaintiff alleges that in the letter to Plaintiff, Defendant Dandillaya made the following

factual assertions:

 Paradigm has “evolved rapidly to help health care systems meet the increasing

 demands for supplies and equipment.”

 Paradigm has “collaborated with international contacts.”

 Paradigm has “identified stocks of critical supplies: surgical masks, N95 masks,

 COVID-19 detection kits, protective suits, hand sanitizers, etc.”

 “[S]everal of our manufacturing partners have dedicated 100% of their capacity in

 an effort to meet volume requirements over the next several months.”

(Doc. No. 1, Ex. A). Plaintiff alleges that these representations were false, (Doc. No. 1, ¶ 20),

and the Court must assume these statements were false when ruling on the Rule 12(b)(6) motion.

The Court must also assume all favorable inferences from these facts, including the inference

that Paradigm was offering large quantities of N95 masks for immediate delivery. Furthermore,

Plaintiff alleges that Rojas stated that suppliers in China had committed large quantities of masks

that would be available for immediate delivery upon receipt of a 50% deposit. (Doc. No. 1, ¶ 17).

Defendants subsequently admitted that their assurances about supply had been false. (Doc. No. 1,

¶ 28). In their supporting brief, Defendants suggest that Plaintiff’s reliance on Defendants’

representations was unreasonable. Defendants’ arguments about the reasonableness of Plaintiff’s

reliance present questions for a jury, not for the Court on a Rule 12(b)(6) motion. See, e.g.,

Solum v. Certainteed Corp., 147 F. Supp. 3d 404, 414 (E.D.N.C. 2015).

As to Defendant Dandillaya, Defendants argue in their brief that the claim for fraud

against him individually is improper because it merely restates the breach of contract claim and

because Dandillaya did not personally handle the sale of the masks. (Doc. No. 15, p. 18). As

Plaintiff notes, however, “in [the] case of fraud by the officers, directors, managers, or

stockholders of a corporation, the court shall adjudge personally liable to creditors and others

injured thereby the officers, directors, managers, and stockholders who were concerned in the

fraud.” Lillian Knitting Mills Co. v. Earle, 74 S.E.2d 351, 356 (N.C. 1953). The North Carolina

Court of Appeals has explained that when the president of a corporation was charged with

conversion of a rented crane, he could be held personally liable for the conversion because he

signed a certificate guaranteeing the quality of the crane at the time of the sale and admitted his

participation in the sale. Esteel Co. v. Goodman, 348 S.E.2d 153 (N.C. App. 1986). The Esteel

Co. court reiterated the rule that “an officer of a corporation who commits a tort is individually

liable for that tort, even though the officer may have acted on behalf of the corporation in

committing the wrongful act.” Id. at 157.

Here, Plaintiff alleges that Dandillaya signed the letter falsely stating that dedicated

supplies were available. (Doc. No. 1 ¶¶ 18–20). Dandillaya was owner and CEO of the company

that refused to return Plaintiff’s deposit. The Court agrees with Plaintiff that Dadillaya’s precise

role in, and knowledge about, the contract, the wire transfer, and Paradigm’s refusal to return the

deposit is subject to discovery. Therefore, the Court will not dismiss Plaintiff’s fraud claim

against any of the named Defendants at the pleading stage. In sum, given the liberal pleading

standards of Iqbal and Twombly, the Court denies Defendants’ motion to dismiss Plaintiff’s

fraud claim.

2. Plaintiff’s North Carolina UDTPA Claim

The elements of a claim under the North Carolina UDTPA are “(1) [the] defendant

committed an unfair or deceptive act or practice, (2) the action in question was in or affecting

commerce, and (3) the act proximately caused injury to the plaintiff.” Bumpers v. Cmty. Bank of

N. Va., 747 S.E.2d 220, 226 (N.C. 2013) (alteration in original). “A practice is unfair when it

offends established public policy as well as when the practice is immoral, unethical, oppressive,

unscrupulous, or substantially injurious to consumers.” Walker v. Fleetwood Homes of N.C.,

Inc., 653 S.E.2d 393, 399 (N.C. 2007) (internal quotation marks omitted). “[A] practice is

deceptive if it has the capacity or tendency to deceive.” Id. (alteration in original) (internal

quotation marks omitted).

A plaintiff may bring a UDTPA claim where a defendant’s breach of contract involved

deception and egregious and aggravating circumstances. See S. Atl. Ltd. P’ship of Tenn., L.P. v.

Riese, 284 F.3d 518, 535 (4th Cir. 2002) (contractual breach that involves “egregious or

aggravating circumstances” gives rise to independent claim under the UDTPA). A breaching

party commits an egregious or aggravated breach when it acts deceptively “in the circumstances

of [the contract’s] breach.” See Software Pricing Partners, LLC v. Geisman, No. 3:19-cv-00195-

RJC-DCK, 2020 WL 3249984, at *10 (W.D.N.C. June 16, 2020) (quoting SciGrip, Inc. v. Osae,

838 S.E.2d 334, 347 (N.C. 2020)). Indeed, “deception either in the formation of the contract or in

the circumstances of its breach” may rise to the level of “substantial aggravating circumstances.”

Bartolomeo v. S.B. Thomas, Inc., 889 F.2d 530, 535 (4th Cir. 1989).

Here, Plaintiff alleges that the assurance of dedicated supplies of masks was false and

that Defendants specifically made the assurance to induce Plaintiff to swiftly deposit $26 million

to obtain desperately needed supplies. (Doc. No. 1 ¶¶ 41–46, 62–63). See S. Atl., 284 F.2d at 541

(“As a rule, misrepresentations, even negligent misrepresentations, are sufficient for an act to

qualify as an unfair or deceptive trade practice.”); see also Nexus Techs., Inc. v. Unlimited

Power Ltd., No. 1:19-CV-00009-MR, 2019 WL 4941178, at *7 (W.D.N.C. Oct. 7, 2019) (ruling

that substantial aggravating circumstances were present where breaching party “provided false

information regarding their progress and performance under the agreement”); Poor v. Hill, 530

S.E.2d 838, 845 (N.C. Ct. App. 2000) (“Applicable aggravating circumstances include conduct

of the breaching party that is deceptive”); Mosley & Mosley Builders v. Landin Ltd., 389 S.E.2d

576, 580 (N.C. App. 1989) (finding that breach accompanied by fraud or deception constitutes an

unfair or deceptive trade practice). Given the liberal pleading standards of Iqbal and Twombly,

these allegations are simply enough to state a claim for an unfair and deceptive trade practice in

North Carolina.

For the foregoing reasons, the Court finds that Plaintiff has sufficiently alleged a claim

under the North Carolina UDTPA. Therefore, Defendants’ motion to dismiss this claim is

denied.

3. Plaintiff’s Claim for Unjust Enrichment

In North Carolina, unjust enrichment is premised on the “equitable principle that a person

should not be permitted to enrich himself unjustly at the expense of another.” Atl. Coast Line R.

Co. v. State Highway Comm’n, 150 S.E.2d 70, 73 (N.C. 1966). “Courts may refuse to dismiss an

unjust enrichment claim and allow the claim to proceed as an alternative theory despite

defendants’ argument that an express contract governed the parties’ relationship.” Urbino v.

Ambit Energy Holdings, LLC, No. CIV.A. 14-5184 MAS, 2015 WL 4510201, at *7 n.8 (D.N.J.

July 24, 2015). Indeed, “multiple courts have allowed a plaintiff to plead claims under both

theories of recovery in the alternative and have declined to dismiss unjust enrichment claims at

the motion to dismiss stage finding such a dismissal premature.” Network Commodities, LLC v.

Golondrinas Trading Co., LTD., No. CIV. 11-3119 NLH/KMW, 2013 WL 1352234, at *11

(D.N.J. Apr. 1, 2013).

Here, Plaintiff’s claim of unjust enrichment claim against Defendants is based on

Defendants’ refusal to return the balance of the deposit. Plaintiff alleges that Defendants have

unjustly enriched themselves by keeping a portion of the deposit, in addition to breaching their

contractual obligations to deliver the purchased masks. As Plaintiff is entitled to allege

alternative claims, the Court denies the motion to dismiss this claim. See Intercollegiate

Women’s Lacrosse Coaches Ass’n v. Corrigan Sports Enters., Inc., 505 F. Supp. 3d 570, 587

(M.D.N.C. 2020) (holding deposit created viable claim for unjust enrichment as an alternative to

its breach of contract claim).

In sum, the Court finds that Plaintiff has sufficiently alleged a claim for unjust

enrichment under North Carolina common law. Therefore, Defendants’ motion to dismiss this

claim is denied.

4. Plaintiff’s Claim for Conversion

In support of its conversion claim, Plaintiff alleges that it wired its property, the deposit

of $26 million, and demanded return once Defendants admitted that masks would not be

delivered. Plaintiff has alleged that Defendant has refused to return its full deposit despite

repeated demands to do so, thereby converting the funds. Wrongfully holding a deposit is an act

of conversion. See e.g., In re Walker, 416 B.R. 449, 468 (Bankr. W.D.N.C. 2009) (keeping

deposit and applying to commission instead of returning it was an act of conversion). The Court

finds that Plaintiff has sufficiently alleged a conversion claim against Defendants. Moreover, the

Court agrees that this claim is distinct from Plaintiff's breach of contract claim. Therefore, the

motion to dismiss will be denied as to this claim.

IV. CONCLUSION

For the reasons stated herein, the Court will deny Defendants’ motion to dismiss.

IT IS, THEREFORE, ORDERED that Defendants’ Motion to Dismiss, (Doc. No. 15),

is DENIED.

Signed: September 23, 2022

i )

ort-aaxna <<

Max O. Cogburn i yg

United States District Judge Tie ga

15