Bigelow Corporation v. Hounds Town USA, LLC

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF NORTH CAROLINA

CHARLOTTE DIVISION

CASE NO. 3:23-CV-00134-FDW-SCR

BIGELOW CORPORATION and )

SARAH BIGELOW, )

)

Plaintiffs, )

)

v. ) ORDER

)

HOUNDS TOWN USA, LLC, and )

ELEVATE DESIGN AND BUILD, LLC, )

)

Defendants. )

)

THIS MATTER is before the Court on Defendant Hounds Town USA, LLC’s (“HTU”)

Motion to Dismiss for Failure to State a Claim, (Doc. No. 2), HTU’s Motion to Deny Joinder of

Elevate Design and Build, LLC (“Elevate”), (Doc. No. 8), and HTU’s Motion to Dismiss

Plaintiffs’ Amended Complaint for Failure to State a Claim, (Doc. No. 10). The motions have been

fully briefed and are ripe for review. For the reasons set forth below, HTU’s first Motion to Dismiss

is DENIED AS MOOT; HTU’s Motion to Dismiss the Amended Complaint is GRANTED; and

HTU’s Motion to Deny Joinder is DENIED AS MOOT. As such, Plaintiffs’ Amended Complaint

is DISMISSED WITH PREJUDICE as against HTU, and it is DISMISSED WITHOUT

PREJUDICE to Plaintiffs refiling a new action in state court as against Elevate.

I. BACKGROUND1

Plaintiffs Sarah Bigelow (“Mrs. Bigelow”) and Bigelow Corporation (“Bigelow Corp.,”

and collectively with Mrs. Bigelow, “Plaintiffs”), filed their Amended Complaint on March 23,

1 The background set forth herein is taken from a combination of the parties’ briefing and attached exhibits.

The background is taken in the light most favorable to Plaintiffs as the nonmoving party.

2023. Therein, Plaintiffs assert nine claims against Defendant HTU surrounding Plaintiffs’ effort

to open a Hounds Town franchise.

HTU is a franchisor of doggie daycares across the United States. (Id. at 2). Plaintiffs sought

to open a Hounds Town franchise in North Carolina. (Id.). During the franchise information

disclosure phase, Plaintiffs relayed to HTU’s management team, including Mike Gould (“Mr.

Gould”), HTU’s owner, that they generally did not have any construction experience, and

specifically, that they did not have any franchise location construction experience. (Id.). Mr. Gould

informed Plaintiffs of HTU’s buildout process, during which a franchisor can either serve as their

own project manager or hire a private constructor to build out a franchise. (Id. at 2). Mr. Gould

identified Edward Bharath (“Bharath”), owner of Maruthi Enterprise, LLC, as HTU’s construction

manager and, on numerous occasions, advised Plaintiffs that using Bharath as their contractor was

an exceptional idea due to Plaintiffs’ lack of construction experience. (Id. at 2–3).2 Plaintiffs allege

that in reliance on these representations, they executed a Franchise Agreement (“Agreement”) with

HTU on May 29, 2020. (Id.).

On or around February 20, 2021, Plaintiffs—without making any further inquiries into

Bharath—executed a construction contract with Bharath to build out the Franchise Location. (Id.

at 3). Plaintiffs contend they contracted with Bharath based upon HTU’s recommendations. (Id.)

Plaintiffs admit that at the time they contracted with Bharath, they contemporaneously learned

Bharath did not have a North Carolina general contractor’s license and would need to hire a

licensed contractor to perform the work. (Id.). From March 29 to July 1, 2021, Plaintiffs

experienced “myriad, critical construction issues with Bharath,” including but not limited to:

(1) obtaining proper permits from Union County; (2) repeated permit denials due

to Bharath not being in compliance with county building codes and regulations; (3)

fraudulent, falsified contractor bids; (4) cost overruns; (5) fraudulent overpricing;

2 The Court notes that neither Bharath nor Maruthi Enterprise, LLC, are parties to this action.

(6) excessive and unexplained construction delays; (7) cost overruns;

(8) overpayment for materials and broken promises for reimbursement; and

(9) professional incompetence.

(Id. at 4). In May 2021, Plaintiffs sought to terminate the Franchise Agreement with Defendant

but did not actually do so. (Doc. No. 11, p. 4). Instead, later that same month, Plaintiffs entered

into a second construction contract with Shaheid Hasan, Chief Executive Officer of Elevate. (Doc.

No. 6, p. 4). Mr. Hasan is the North Carolina licensed contractor that Bharath allegedly retained to

perform the buildout construction. (Id.) In August 2021, Plaintiffs learned of at least three other

North Carolina franchisees who, upon Mr. Gould’s recommendation, hired Bharath as their

construction manager and have since suffered construction and financial issues. (Id. at 5).

On May 27, 2022, Plaintiffs terminated their contract with Elevate, alleging Elevate

breached its contract by (1) not completing the construction buildout by the contracted due date;

(2) construction incompetency; (3) failure to schedule and pass building inspections with Union

County Building Code Enforcement; and (4) failure to obtain a certificate of occupancy by the

contracted due date. (Id. at 4). HTU then terminated the Franchise Agreement with Plaintiffs in

October 2022. (Id.). Plaintiffs claim the actions of HTU, Elevate, and Bharath, caused them

significant delays and financial losses related to the opening of the Franchise Location, which did

not open for over two years after the execution of the Franchise Agreement. (Id. at 5).

On January 19, 2023, Plaintiffs filed their Complaint in the Union County Superior Court.

(Doc. No. 1-1). On March 1, 2023, Defendant filed a Notice of Removal to this Court based on

complete diversity of citizenship jurisdiction under 28 U.S.C. § 1332, and then filed a Motion to

Dismiss for Failure to State a Claim. (Docs. Nos. 1, 2). On March 23, 2023, Plaintiffs filed their

Amended Complaint, asserting the following nine causes of action: (1) breach of contract against

all defendants; (2) unjust enrichment against all defendants; (3) punitive damages against HTU;

(4) unfair and deceptive trade practices against HTU; (5) piercing the corporate veil, alter ego, and

mere instrumentality against HTU; (6) fraud against HTU; (7) negligent misrepresentation against

HTU; (8) negligence against HTU; and (9) negligent infliction of emotional distress against HTU.

(Doc. No. 6, pp. 6-10). Defendant now moves to dismiss Plaintiff’s Amended Complaint with

prejudice, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. (Doc. No. 10).

Defendant also moves to Deny Joinder of Elevate Design and Build, LLC, pursuant to 28 U.S.C.

§ 1447(e). (Doc. No. 8). Plaintiffs filed Responses in Opposition to both motions on May 4, 2023,

and Defendant filed Replies to both Responses on May 11, 2023. (Doc. Nos. 16, 17, 18, 19).

II. STANDARD OF REVIEW

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

dismissed for failure to state a claim upon which relief can be granted. A Rule 12(b)(6) inquiry is

limited to determining if the pleader’s allegations constitute “a short and plain statement of the

claim showing the pleader is entitled to relief.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). To

survive a 12(b)(6) motion to dismiss, Plaintiff’s “complaint must contain sufficient factual matter,

accepted as true, to state a claim to relief that is plausible on its face.” Id. (quoting Bell Atl. Corp.

v. Twombly, 550 U.S. 544, 570 (2007)). Facial plausibility exists only when the factual content

allows a court to draw the “reasonable inference” that the defendant is liable for the misconduct.

Iqbal 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). The Court must draw all reasonable

factual inferences in favor of the party asserting the claim. 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-pled 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. ANALYSIS

HTU has moved to dismiss all of Plaintiffs’ claims with prejudice, pursuant to Rule

12(b)(6), arguing the terms of the Franchise Agreement bar each of Plaintiffs’ claims. However,

Plaintiffs’ response in opposition focuses entirely on the validity and applicability of the Franchise

Agreement and its terms. Specifically, Plaintiffs argue that HTU’s Motion must be denied for three

reasons: (1) the Franchise Agreement was fraudulently induced and is thus void; (2) whether the

Franchise Agreement terms contradict Plaintiffs’ claims involves questions of fact more

appropriately resolved at trial or on a motion for summary judgment; and (3) HTU cannot “show

that Plaintiffs’ Amended Complaint clearly reveals on its face that Plaintiffs’ claims are time

barred.” (Doc. No. 16, p. 1).

As a preliminary matter, the Court notes that Plaintiffs’ explicit failure to address all but

one of HTU’s grounds for dismissal is troubling. In a footnote in their Memorandum in Opposition,

Plaintiffs explain:

Plaintiffs do not address HTU’s arguments concerning breach of contract, negligent

misrepresentation, negligence, negligent misrepresentation [sic], negligent

infliction of emotional distress, unjust enrichment, piercing the corporate veil and

punitive damages ([Doc. 11] at 9, 10, 13, 14, 15) because Plaintiffs do not need to

resort to these legal theories to prevail on this Motion to Dismiss. Plaintiffs,

however, do not concede HTU’s arguments regarding their inapplicability.

(Doc. No. 16, p. 5). The Fourth Circuit has made clear that a “party waives an argument . . . by

failing to develop its argument—even if its brief takes a passing shot at the issue.” Grayson O Co.

v. Agadir Int’l LLC, 856 F.3d 307, 316 (4th Cir. 2017) (internal quotation marks and alterations

omitted) (quoting Brown v. Nucor Corp., 785 F.3d 895, 923 (4th Cir. 2015) (quoting Belk, Inc. v.

Meyer Corp., 679 F.3d 146, 152 n.4 (4th Cir. 2012))).3 As the First Circuit has aptly explained:

Overburdened trial judges cannot be expected to be mind readers. . . . In opposing

a Rule 12(b)(6) motion, a plaintiff cannot expect a trial court to do his homework

for him. Rather, the plaintiff has an affirmative responsibility to put his best foot

forward in an effort to present some legal theory that will support his claim.

McCoy v. Mass. Inst. of Tech., 950 F.2d 13, 22–23 (1st Cir. 1991) (internal citations omitted).

Where a party fails to do so, “[n]o amount of interpretive liberality can save chestnuts so poorly

protected from the hot fire of dismissal.” Id. at 23. As a result, the Court will treat HTU’s

arguments that Plaintiffs left unaddressed as uncontested. See, e.g., City of Brevard v. CDM Smith,

Inc., No. 1:20-cv-160 MR WCM, 2021 WL 1015858, at *6 (W.D.N.C. Feb. 2, 2021) (collecting

cases holding that when a plaintiff’s failure to respond to a motion to dismiss argument, courts

may assume they concede the merits of that argument).4

However, even where a motion to dismiss goes unchallenged, “the district court

nevertheless has an obligation to review the motions to ensure that dismissal is proper.” Stevenson

v. City of Seat Pleasant, 743 F.3d 411, 416 n.3 (4th Cir. 2014) (citing Pomerleau v. W. Springfield

Pub. Sch., 362 F.3d 143, 145 (1st Cir. 2004)); Ricciani v. Marriot Int'l, Inc., No. 3:21-CV-00106-

GCM, 2022 WL 36919, at *1 (W.D.N.C. Jan. 4, 2022). Thus, this court must determine first

whether the Franchise Agreement may be properly considered in resolving HTU’s Motion to

Dismiss, and then whether its specific terms bar Plaintiff’s claims such that dismissal with

3 See also Brooks v. Receivables Performance Mgmt. LLC, No. 3:21-cv-00579-RJC-DCK, 2023 WL

3080746, at *2 (W.D.N.C. Apr. 24, 2023) (citing Lisa Teresa S. v. Kijakazi, No. 3:21-cv-480 (MHL), 2022 WL

3269955, at *3 n.5 (E.D.Va. July 26, 2022) (“Plaintiff’s failure to develop arguments regarding these contentions

waives any claim involving them.”); Hughes v. B/E Aerospace, Inc., No. 1:12CV717, 2014 WL 906220, at *1 n.1

(M.D.N.C. Mar. 7, 2014) (“A party should not expect a court to do the work that it elected not to do.”).

4 See also Brand v. N.C. Dep't of Crime Control & Pub. Safety, 352 F. Supp. 2d 606, 618 (M.D.N.C. 2004)

(“By failing to respond, Plaintiff concedes that he has not stated a . . . claim.”); Kinetic Concepts, Inc. v. ConvaTec

Inc., No. 1:08CV918, 2010 WL 1667285, at *7–8 (M.D.N.C. Apr. 23, 2010) (recognizing “the general principle that

a party who fails to address an issue has conceded the issue”); McCrosky v. Preferred Furniture Components, Inc.,

No. 1:21CV43, 2021 WL 5416229, at *2 (M.D.N.C. Nov. 19, 2021) (finding a Plaintiff has conceded an issue where

he does not address it in his response to a Motion to Dismiss).

prejudice is appropriate. For the reasons outlined below, the Court finds Plaintiffs have “thrown

all of [their] eggs in the wrong basket.” Foodbuy, LLC v. Gregory Packaging, Inc., 987 F.3d 102,

120 (4th Cir. 2021). For even if this Court construes the Amended Complaint liberally, Plaintiffs

have failed to state a claim showing they are entitled to the relief they seek.

A. Extrinsic Materials

In resolving a Rule 12(b)(6) motion, courts are “[g]enerally . . . limited to considering the

sufficiency of allegations set forth in the complaint and the ‘documents attached or incorporated

into the complaint.’” Zak v. Chelsea Therapeutics Intern., Ltd., 780 F.3d 597, 606 (4th Cir. 2015)

(quoting E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 448 (4th Cir. 2011)).

Thus, while “[c]onsideration of extrinsic documents during the pleading stage of litigation

improperly converts [a] motion to dismiss into a motion for summary judgment,” id., courts “may

consider a document attached to a motion to dismiss if that document ‘was integral to and explicitly

relied on in the complaint’ and if its authenticity is not challenged.” Harrell v. Freedom Mortgage

Corp., 976 F.3d 434, 439 (4th Cir. 2020) (quoting Am. Chiropractic Ass’n v. Trigon Healthcare,

Inc., 367 F.3d 212, 234 (4th Cir. 2004) (quoting Phillips v. LCI Int’l Inc., 190 F.3d 609, 618 (4th

Cir. 1999))) (internal citations omitted).5 The Fourth Circuit explained:

The rationale underlying this exception is that the primary problem raised by

looking to documents outside the complaint—lack of notice to the plaintiff—is

dissipated “[w]here plaintiff has actual notice … and has relied upon these

documents in framing the complaint.” What the rule seeks to prevent is the situation

in which a plaintiff is able to maintain a claim of fraud by extracting an isolated

statement from a document and placing it in the complaint, even though if the

statement were examined in the full context of the document, it would be clear that

the statement was not fraudulent.

5 See also Occupy Columbia v. Haley, 738 F.3d 107, 116 (4th Cir. 2013) (citing Fed. R. Civ. P. 12(d)). A

court may, however, consider a “written instrument” attached as an exhibit to a pleading, see Fed. R. Civ. P. 10(c),

“as well as [documents] attached to the motion to dismiss, so long as they are integral to the complaint and authentic.”

Philips v. Pitt Cnty. Mem’l Hosp., 572 F.3d 176, 180 (4th Cir. 2009). Rule 10(c) states, “[a] copy of a written

instrument that is an exhibit to a pleading is part of the pleading for all purposes.” Fed. R. Civ. P. 10(c).

Am. Chiropractic Ass’n, 367 F.3d at 234 (quoting In re Burlington Coat Factory Securities

Litigation, 114 F.3d 1410, 1426 (3d Cir. 1997) (quotation marks omitted)); see also Schmidt.

Here, Plaintiffs neither attached nor incorporated the Franchise Agreement into their

Complaint. (See Doc. No. 1-1; Doc. No. 6). Rather, HTU attached the Franchise Agreement as an

exhibit to its Motion to Dismiss. (Doc. No. 10-1; see also Doc. No. 2-1). HTU argues the Court

may properly consider this extrinsic evidence because it is integral to Plaintiffs’ claims, as six are

based on the Franchise Agreement’s existence, it is referred to throughout Plaintiffs’ allegations,

and it contains a “mutual, contractually agreed upon one-year statute of limitation.” (Doc. No. 19,

p. 2). Plaintiffs respond that the Amended Complaint merely “cursorily mentions” the Franchise

Agreement, and as such it is not integral to their claims and should be considered only at the

summary judgment stage. (Doc. No. 16, p. 9).

The Franchise Agreement is properly considered in resolving HTU’s Motion to Dismiss

for two reasons. First, Plaintiffs’ Amended Complaint does more than “cursorily mention[]” the

Franchise Agreement; rather, the Agreement “was integral to and explicitly relied on” in the

Amended Complaint. Harrell, 976 F.3d at 439. Even taking as true Plaintiffs’ contention that the

Amended Complaint only contains five “allegations that superficially mention the Franchise

Agreement,” (Doc. No. 16, p. 8), this assertion discounts that this action arises out of the existence

of a franchise relationship between Plaintiffs and HTU. More importantly, it completely ignores

the fact that seven of Plaintiffs’ claims expressly reference either the Franchise Agreement or the

“contract” between Plaintiffs and HTU. That Plaintiffs did not incorporate the Franchise

Agreement as an exhibit, explicitly incorporate it by reference, or explicitly allege specific terms,

does not alter the Agreement’s applicability—or its indispensability—to many of Plaintiffs’

claims. For example, Plaintiffs’ breach of contract claim cannot survive dismissal unless there is

sufficient factual content to allow this Court to reasonably infer HTU breached specific provisions

of the Franchise Agreement. Iqbal, 556 U.S. at 678. Similarly, Plaintiffs’ claim for negligence

contends “HTU was under a contractual duty to exercise reasonable care in conducting its business

with Plaintiffs.” (Doc. No. 6, p. 7). Whether such a contractual duty existed turns on the terms of

the Agreement. As such, the Franchise Agreement is integral to the Amended Complaint.

Second, Plaintiffs do not challenge the Franchise Agreement’s authenticity. Harrell, 976

F.3d at 439. Though Plaintiffs argue the Agreement was fraudulently induced and is thus void,6

they do not allege the Agreement attached to HTU’s Motion is not the one they signed to

memorialize the terms of their franchise relationship with HTU. Therefore, because the Franchise

Agreement was both integral to, and relied upon by, the Amended Complaint, and because its

authenticity is not in dispute, this Court may properly consider the Franchise Agreement in

resolving HTU’s Motion to Dismiss. Accordingly, the Court now turns to whether the Agreement

bars Plaintiffs’ claims.

B. Contractual Limitation in the Franchise Agreement

HTU first argues Plaintiffs’ claims for breach of contract, unjust enrichment, fraud,

negligent misrepresentation, negligence, negligent infliction of emotional distress, and unfair and

deceptive trade practices, are time barred by the contractually agreed upon one-year statute of

limitation contained in the Agreement. In response, Plaintiffs argue the Agreement does not bar

its claims because: (1) Plaintiffs were fraudulently induced into executing the Agreement,

rendering it invalid and void, and (2) the statute of limitations is an affirmative defense that should

not be addressed on a motion to dismiss. The Court will address each argument in turn.

6 The Court addresses this argument below.

1. Fraudulent Inducement

In response to HTU’s Motion to Dismiss, Plaintiffs allege the Agreement was “fraudulently

induced” and is “not a valid contract,” and that “since the Court must take Plaintiffs’ allegations

as true and drawing all reasonable inferences in their favor,” the Franchise Agreement is

unenforceable for purposes of this Motion to Dismiss. (Doc. No. 16 p. 7). Conversely, however,

Plaintiffs alleged in both their original Complaint and Amended Complaint that the Franchise

Agreement is a “valid and legally enforceable contract[].” (Doc. No. 6 p. 6).7 Both cannot be true.8

While there is no “precise formula” or “any certain language” that must be used to plead a

claim of fraud, Carver v. Roberts, 337 S.E.2d 126, 128 (N.C. Ct. App. 1985), a complaint must

allege facts that, if proven, would support a claim for fraud “upon a liberal construction of the

whole pleading,” Piles v. Allstate Ins. Co., 653 S.E.2d 181, 186 (N.C. Ct. App. 2007) (quoting

Carver, 337 S.E.2d at 128). Nevertheless, Rule 9(b) of the Federal Rules of Civil Procedure’s

particularity requirements do not release a plaintiff from its burden to plead facts that, if accepted

as true, “state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570; see Iqbal,

556 U.S. at 684 (holding plausibility requirement applies to all civil actions). As such, to satisfy

7 The Amended Complaint names as defendants both HTU and Elevate Design and Build, LLC, (Doc. No.

6, p. 1), and it states in full that “Plaintiffs and Defendants entered into a valid and legally enforceable contracts.” (Id.

at 6). Similarly, the original Complaint names only HTU as the sole defendant, (Doc. No. 1-1, p. 3), and it states that

“Plaintiffs and Defendant entered into a valid and legally enforceable Agreement. . . . Defendant breached the

Agreement by failing to perform the obligations it premised related to the construction buildout of the Franchise

Location.” (Id. at 7).

8 “[I]t is axiomatic that a complaint may not be amended by the briefs in opposition to a motion to dismiss.”

Mylan Labs., Inc. v. Akzo, N.V., 770 F. Supp. 1053, 1068 (D. Md. 1991) (quoting Car Carriers, Inc. v. Ford Motor

Co., 745 F.2d 1101 (7th Cir. 1984)), aff’d, 2 F.3d 56 (4th Cir. 1993). Thus, courts “need not feel constrained to accept

as truth conflicting pleadings that make no sense, or that would render a claim incoherent, or that are contradicted

either by statements in the complaint itself or by documents upon which its pleadings rely. . . .” Davis v. Univ. of N.

Carolina at Greensboro, No. 1:19CV661, 2022 WL 3586093, at *8 (M.D.N.C. Aug. 22, 2022) (citing In re Livent,

Inc. v. Noteholders Sec. Litig., 151 F. Supp. 2d 371, 405–06 (S.D.N.Y. 2001) (granting a motion to dismiss where

“the allegations of fraud [were] internally self-contradictory, and the inconsistencies defeat[ed] a reasonable inference

that the requisite scienter standard the pleadings must demonstrate ha[d] been satisfied.”)). “Where, as here, a plaintiff

pleads contradictory allegations, those inconsistencies defeat a reasonable inference in the plaintiff’s favor.” Davis,

2022 WL 3586093, at *8. See also Lynn v. Selene Fin., LP, No. 7:15-CV-159-FL, 2016 WL 5231832, at *8 (E.D.N.C.

Aug. 25, 2016) (quoting Nicholson v. Fitzgerald Auto Mall, No. RDB-13-3711, 2014 WL 2124654, at *4 (D. Md.

May 20, 2014) (quoting Frederico v. Home Depot, 507 F.3d 188, 201–02 (3d Cir. 2007))).

the particularity requirement for a fraud claim, the complaint must “at a minimum, describe the

time, place, and contents of the false representations, as well as the identity of the person making

the misrepresentation and what he obtained thereby.” Nathan v. Takeda Pharms. N. Am., Inc., 707

F.3d 451, 455–56 (4th Cir. 2013) (quoting United States ex rel. Wilson v. Kellogg Brown & Root,

Inc., 525 F.3d 370, 379 (4th Cir. 2008)).

Thus, for fraud claims, “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) (internal citations

omitted). The misrepresentation must be of a “subsisting or ascertainable fact, as distinguished

from a matter of opinion or representation relating to future prospects.” Id. at 500 (internal citations

omitted). Further, where there was a duty to disclose a material fact related to the transaction,

concealment of that fact is actionable. Hardkin v. KCS Int’l, Inc., 682 S.E.2d 726, 733 (N.C. Ct.

App. 2009) (quoting Harton v. Harton, 344 S.E.2d 117, 119 (N.C. Ct. App. 1986)).

Here, Plaintiffs cannot overcome the contractually agreed upon terms of the Agreement by

pleading the Agreement is both a valid and an invalid contract. Importantly, Plaintiffs have failed

to allege an essential element to a fraud claim—that HTU made a false representation or concealed

a material fact. As a result, Plaintiffs have failed to state a claim for fraudulent inducement

sufficient to invalidate the Franchise Agreement. Even construing Plaintiffs’ allegations liberally,

they rely on opinions rather than ascertainable facts. For example, Plaintiffs contend “HTU falsely

and fraudulently made representations of material fact by holding Bharath out as HTU’s

construction manager and advising Plaintiffs that Bharath was a competent, capable, and highly

skilled construction manager and contractor.” (Doc. No. 6, p. 8) (emphasis added). The parties do

not dispute that Bharath was HTU’s construction manager at the time Plaintiffs and HTU signed

the Franchise Agreement. (Doc. No. 16, p. 2; Doc. No. 6, p. 2, 4; Doc. No. 12, p. 3). More

importantly, whether Bharath was in fact a competent, capable, and highly skilled construction

manager or contractor, is a matter of opinion based on HTU’s then-existing relationship with

Bharath. (Doc. No. 6, p. 2). Similarly, whether using “HTU’s construction manager as Mr.

Bigelow’s contractor was an exceptional idea due to Mr. Bigelow’s complete lack of construction

experience” also constitutes Mr. Gould’s opinion. (Doc. No. 6, p. 2). Likewise, Plaintiffs’

allegations that Mr. Gould “advised” and “counseled” them to hire Bharath, (id. at 2–3), fail to

indicate ascertainable facts but instead demonstrate Mr. Gould’s opinion—or advice—that doing

so could be beneficial.

Furthermore, Plaintiffs do not allege HTU made the Franchise Agreement contingent on

Plaintiffs’ use of Bharath as the construction manager. Rather, they acknowledge they had the

option to either use Bharath, hire another private contractor, or serve as their own construction

manager. And as their Amended Complaint makes clear, Plaintiffs could have conducted their own

investigation into Bharath prior to signing a separate contract with him. Caper Corp. v. Wells Fargo

Bank, N.A., 578 F. App’x 276, 281 (Mem) (4th Cir. 2014) (“Where a plaintiff ‘could have

discovered the truth [about the misrepresentation] upon inquiry, the complaint must allege that

[the plaintiff] was denied the opportunity to investigate or … could not have learned the true facts

by exercise of reasonable diligence’ in order to survive a motion to dismiss.”) (quoting Pinney v.

State Farm Mut. Ins. Co., 552 S.E.2d 186, 192 (N.C. Ct. App. 2001) (emphasis supplied) (internal

quotation marks omitted)); Hudson-Cole Dev. Corp. v. Beemer, 511 S.E.2d 309, 313 (N.C. Ct.

App. 1999)).9

9 See also Prassas Cap., LLC v. Blue Sphere Corp., No. 3:17-CV-131-RJC-DCK, 2018 WL 1567362, at *6

Plaintiffs allege they signed the Franchise Agreement with HTU on May 29, 2020, they

had multiple subsequent conversations with Mr. Gould concerning Bharath’s potential

involvement, and they then executed a construction contract with Bharath on February 20, 2021.

(Doc. No. 6, p. 2–3). Thus, Plaintiffs had approximately nine months to investigate Bharath’s work

record, to ask HTU and Mr. Gould questions, and to decide whether or not to move forward with

Bharath. Despite having the opportunity and means to do so,10 they failed to conduct any

investigation to corroborate Bharath’s capabilities before hiring him as their construction manager.

Not only does Plaintiffs’ Amended Complaint fail to allege HTU misrepresented any

ascertainable facts—instead citing mere opinions on Bharath’s possible future usefulness—but it

also fails to demonstrate that Plaintiffs lacked a choice in the construction manager they hired to

carry out the buildout, or that Plaintiffs lacked the opportunity and ability to investigate Bharath’s

capabilities. Thus, because Plaintiffs failed to demonstrate a false representation or concealment

of material fact on HTU’s part, their Sixth Claim for Relief for Fraud fails, and must be dismissed

with prejudice. Further, their argument that the Franchise Agreement was fraudulently induced—

and does not bar Plaintiffs’ claims—also fails. Accordingly, this Court may consider the Franchise

Agreement to determine whether its terms bar Plaintiffs’ claims.11

(W.D.N.C. Mar. 30, 2018) (quoting Hudson-Cole Dev. Corp., 511 S.E.2d at 313); Oberlin Capital, L.P. v. Slavin, 554

S.E.2d 840, 846–47 (N.C. App. 2001) (holding the complaint failed to allege fraudulent concealment when “[Plaintiff]

could have discovered the facts regarding the [ ] breach upon reasonably adequate inquiry” and when “[Plaintiff]'s

complaint does not allege that it was denied the opportunity to investigate or that it could not have learned the true

facts by exercise of reasonable diligence.”); Rosenthal v. Perkins, 257 S.E.2d 63 (N.C. Ct. App. 1979) (dismissing

plaintiffs' complaint as it failed to state a claim for relief for fraud when plaintiffs failed to allege “they were denied

the opportunity to investigate the premises or that they could not have discovered” flooding of a house).

10 Plaintiffs allege they learned “contemporaneously with the execution of the Bharath construction contract”

that he was not a licensed North Carolina contractor, and on “or about August 13, 2021, . . . [that] Jamie Enders,

franchisee located in Henderson, Nevada, had similar issues with Bharath. Plaintiffs contacted Mr. Enders about his

experience with Bharath.” (Doc. No. 6, p. 3, 5). Further, “Plaintiffs have learned that there are at least three other

North Carolina franchisees who, upon Mr. Gould’s recommendation, hired Bharath” and are having difficulties. (Id.

at 5). These assertions indicate that Plaintiffs could have—and later did—their own research into Bharath.

11 The Court notes that, having found the Franchise Agreement is valid and enforceable, its provision

concerning inducement likely applies. That provision provides:

2. Affirmative Defense

Plaintiffs next rely on Goodman v. Praxair, Inc., 494 F.3d 458, 464 (4th Cir. 2007), to argue

the statute of limitations—as an affirmative defense—should not be addressed on a motion to

dismiss. Plaintiffs correctly cite the Fourth Circuit has holding that “a motion to dismiss filed under

Federal Rule of Procedure 12(b)(6), which tests the sufficiency of the complaint, generally cannot

reach the merits of an affirmative defense, such as the defense that the plaintiff’s claim is time-

barred.” Id. (emphasis added). However, there is an exception to this rule: “in the relatively rare

circumstances where facts sufficient to rule on an affirmative defense are alleged in the complaint,

the defense may be reached by a motion to dismiss filed under Rule 12(b)(6). This principle only

applies, however, if all facts necessary to the affirmative defense ‘clearly appear[] on the face of

the complaint.’” Id. (emphasis in original) (quoting Richmond, Fredericksburg, & Potomac R.R.

v. Forst, 4 F.3d 244, 250 (4th Cir. 1993) (emphasis added); accord Desser v. Woods, 296 A.2d

586, 591 (Md. 1972)).12

In the present case, the Franchise Agreement’s contractual limitation period states:

Franchisee agrees and acknowledges it has not been induced to enter into this Franchise Agreement

in reliance upon, nor as a result of, any statements, representations, warranties, conditions,

covenants, promises or inducements, whatsoever (oral or written), whether directly related to the

contents of this Franchise Agreement or related matters, made by Franchisor, its officers, directors,

agents, employees or contractors except as stated in this Franchise Agreement. Franchisee

acknowledges that Franchisee has been granted franchise rights based on the information supplied

to Franchisor in Franchisee’s application.

(Doc. No. 10-1, p. 7). Further, any representations made between the execution of the Franchise Agreement in May

2020, and the construction contract in February 2021, could not have induced the Agreement. Even taking Plaintiffs’

allegations as true, they merely plead that before the Agreement, HTU knew Plaintiffs lacked construction and

franchise experience, that Mr. Gould identified Bharath as HTU’s construction manager, and that Mr. Gould “strongly

advised” Plaintiffs that hiring Bharath would make the buildout process run smoother. (Doc. No. 6, p. 2). As explained

above, none of these points consist of ascertainable facts that HTU fraudulently misrepresented or concealed.

12 See also Pickens v. Lewis, No. 1:15-CV-275-FDW, 2017 WL 708730, at *2 (W.D.N.C. Feb. 22, 2017) (“It

is well settled that a defendant may raise the statute of limitations as a bar to a plaintiff's complaint by way of a motion

to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, if the time bar is apparent on the face of

the Complaint.”) (citing Dean v. Program's Pride Corp., 395 F.3d 471, 474 (4th Cir. 2005); Bethel v. Jendoco Constr.

Corp., 570 F.2d 1168 (3d Cir. 1978)).

Any claim or controversy arising out of or related to this Franchise Agreement, or

the making, performance, breach, interpretation, or termination thereof, brought by

any party hereto against the other, will be commenced within one year from the

occurrence of the facts giving rise to such claim or action, or such claim or action

will be barred.

(Doc. No. 10-1, p. 54). Thus, for HTU’s affirmative defense—that Plaintiffs’ claims are time-

barred by the terms of the Franchise Agreement—to fall within the Goodman exception, the face

of the Amended Complaint must clearly demonstrate that Plaintiffs failed to bring this action

within one year from the occurrence of the facts giving rise to their claims.

Construing the Amended Complaint liberally, and taking Plaintiffs’ allegations as true,

Plaintiffs learned of the alleged facts supporting their claims by August 2021. By this time,

Plaintiffs had learned Bharath was not a licensed North Carolina contractor, had been informed of

another franchisee’s similar problems with Bharath, had hired another construction coordinator

and executed a second construction contract, had discovered HTU was no longer working with

Bharath and consequently initiated “remediation efforts”, and had experienced problems with

Bharath’s performance for months. (Doc. No. 6, p. 2–6). Thus, it is clear from the face of the

Amended Complaint that Plaintiffs knew of the facts giving rise to this action by August 2021 but

did not file their original Complaint until January 10, 2023—seventeen months later. (Doc. No. 6).

Contrary to Plaintiffs’ contention, it does not matter that “Plaintiffs neither pled any

allegations nor incorporated the Franchise Agreement’s terms relied upon by HTU to show that

Plaintiffs’ claims are time barred.” (Doc. No. 16, p. 10). It is irrelevant that Plaintiffs failed to

reference the terms of the Franchise Agreement because, as explained above, Plaintiffs have failed

to allege false representation sufficient to support their fraud claim. As such, the Agreement is

valid and enforceable whether they cite to it or not, and it therefore applies to “any claim or

controversy arising out of or related to this Franchise Agreement, or the making, performance,

breach, interpretation, or termination thereof.” (Doc. No. 10-1, p. 54). Because the facts sufficient

to rule on HTU’s affirmative timeliness defense appear on the face of the Amended Complaint,

this Court may properly consider whether Plaintiffs’ claims are time-barred in resolving HTU’s

Motion to Dismiss. Goodman, 494 F.3d at 464. The Court next turns to whether the Franchise

Agreement’s limitations clause is enforceable.

“[I]t is well established that, in the absence of a controlling statute to the contrary, a

provision in a contract may validly limit, . . . the time for bringing an action on such contract to a

period less than that prescribed in the general statute of limitations,” as long as the contractually

agreed upon period is reasonable. Order of the United Commercial Travelers of America v. Wolfe,

331 U.S. 586, 608 (1947); see also Heimeschoff v. Hartford Life & Acc. Ins. Co., 571 U.S. 99,

107 (2013); Atlantic Coast Line Ry. Co. v. Pope, 119 F.2d 39, 44 (4th Cir. 1941); Steele v. Safeco

Ins. Co. of Am., 735 S.E.2d 451 (Table) (N.C. Ct. App. 2012).13

Here, the limitation clause in the Franchise Agreement is enforceable for two reasons. First,

the relevant statutes do not prohibit a shorter limitations period. Plaintiffs’ claims for breach of

contract, unjust enrichment, fraud, negligent misrepresentation, negligence, and negligent

infliction of emotional distress, are governed by the three-year statute of limitations period

prescribed in N.C. GEN. STAT. §1-52. This statute neither explicitly nor implicitly prohibits

contractual limitations shorter than the statutory period. See id. Similarly, Plaintiffs’ claim for

unfair and deceptive trade practices is governed by the four-year statute of limitations period

prescribed in N.C. GEN. STAT. §75-16.2, which also lacks language prohibiting contractual

limitations shorter than the statutory period. See id.14 Thus, the parties are permitted to establish

13 See also Bald Head Island Ltd., LLC v. Ironshore Specialty Ins. Co., 609 F. Supp. 3d 393, 398 (E.D.N.C.

2022), reconsideration denied, No. 7:21-CV-177-BO, 2022 WL 17637455 (E.D.N.C. Dec. 13, 2022) (citing Badgett

v. Fed. Express Corp., 378 F.Supp.2d 613, 623–25 (M.D.N.C. 2005)).

14See also, Steele, 735 S.E.2d at *3 (noting “N.C.G.S. § 1–52, which concerns breach of contract actions,

does not prohibit shorter limitations periods than the three years provided by the statute. . . . Likewise, N.C.G.S. § 75–

16.2, which concerns Unfair and Deceptive Practices Act actions, does not prohibit shorter limitations periods than

the four years provided by the statute.”).

their own limitations provision, so long as it is not unreasonable. See Bald Head Island Ltd., 609

F. Supp. 3d at 398 (citing Badgett, 378 F.Supp.2d 623–25).

Second, the Court finds the limitations clause in the Franchise Agreement to be reasonable

under North Carolina law. Numerous North Carolina courts have found one-year limitation periods

reasonable. See, e.g., Badgett, 378 F. Supp. 2d at 625 (holding a six-month limitations clause was

reasonable and thus barred emotional distress, 42 U.S.C. § 1981, and Family Medical Leave Act,

claims); Johnson v. ADT Security Systems, Inc., 1999 WL 1940046, at *1, *4 (W.D.N.C. Mar.

10, 1999) (upholding a one-year limitations provision in a security services contract to bar claims

for breach of contract, negligence, and intentional infliction of emotional distress); Sanghrajka v.

Family Fare, LLC, No. COA 18-164, 2019 WL 438314, at *3 (N.C. Ct. App. Feb. 5, 2019)

(enforcing a contractual one-year limitation period in a franchise agreement); Beard v. Sovereign

Lodge, W.O.W., 113 S.E. 661, 662 (N.C. 1922) (dismissing plaintiff’s action based on a one-year

contractual limitation).15 Thus, because the period contained in the Franchise Agreement is not

proscribed by statute and is reasonable, it is enforceable.

Accordingly, the limitation provision applies to establish that Plaintiffs were required to

bring “[a]ny claim or controversy arising out of or related to th[e] Franchise Agreement, or the

making, performance, breach, interpretation, or termination thereof . . . within one year from the

occurrence of the facts giving rise to such claim or action, or such claim or action will be barred.”

(Doc. No. 10-1, p. 54) (emphasis added). Thus, the Franchise Agreement’s one-year limitations

15 See also, Beachcrete, Inc. v. Water Street Center Associates, LLC, 615 S.E.2d 719 (N.C. Ct. App. 2005)

(upholding a one-year limitation provision in contract); Horne-Wilson, Inc. v. Nat’l Sur. Co., 161 S.E. 726 (N.C. 1932)

(finding a one-year contractual limitation reasonable); Welch v. Phoenix Ins. Co., 136 S.E. 117 (1926) (affirming

dismissal of action based on a one-year contractual limitation).

provision bars Plaintiffs’ claims for breach of contract,16 fraud,17 negligent misrepresentation,18

negligence,19 negligent infliction of emotional distress,20 and unfair and deceptive trade

practices,21 because the facts supporting these claims clearly stem from the Franchise Agreement

and the parties’ conduct and obligations flowing therefrom. Therefore, Plaintiffs’ First Claim for

Relief for Breach of Contract, Fourth Claim for Unfair and Deceptive Trade Practices, Sixth Claim

for Fraud, Seventh Claim for Negligent Misrepresentation, Eighth Claim for Negligence, and

Nineth Claim for Negligent Infliction of Emotional Distress, against HTU are time-barred by the

terms of the Franchise Agreement and are thus dismissed with prejudice.22

C. Plaintiffs’ Second Claim for Unjust Enrichment

HTU next contends Plaintiffs’ Second Claim for Unjust Enrichment must also be

dismissed, and Plaintiffs declined to respond to HTU’s arguments in their Memorandum in

Opposition. A claim for unjust enrichment is “neither in tort nor contract but is described as a

16 Plaintiffs’ breach of contract claim alleges “Plaintiffs and Defendants entered into a valid and legally

enforceable contracts [sic],” and that while Plaintiffs performed, “Defendants breached their respective contracts by

failing to perform their obligations related to the construction buildout of the Franchise Location.” (Doc. No. 6, p. 6).

Thus, by its plain terms, this claim arises out of, relates to, and depends on, HTU’s breach of the Franchise Agreement.

17 Plaintiffs’ fraud claim asserts “HTU’s false and fraudulent representations were calculated and intended to

induce Plaintiffs to execute the Agreement,” and “Plaintiffs were deceived by HTU’s false and fraudulent

misrepresentations and executed the Agreement.” (Id. at 8). As such, this claim also arises out of the making,

performance, interpretation, and termination of the Franchise Agreement.

18 Plaintiffs’ negligent misrepresentation claim contends “Plaintiffs relied on the information by executing

the Agreement,” and such “reliance caused severe financial damage to Plaintiffs.” (Id. at 9). Thus, this claim also

arises out of the making and performance of the Franchise Agreement.

19 Plaintiffs’ negligence claim alleges “HTU was under a contractual duty to exercise reasonable care in

conducting its business with Plaintiffs,” and that “HTU was negligent and breached its duty of care owed to Plaintiffs”

causing financial injury. (Id. at 9–10). Thus, as above, this claim arises out of, relates to, and depends on, the making,

interpretation, and performance of the Franchise Agreement.

20 Plaintiffs’ negligent infliction of emotional distress claim asserts “Plaintiff Sarah Bigelow reasonably relied

on HTU’s representations concerning Bharath and executed the Agreement and a separate contract with Bharath,” and

that “HTU’s conduct did, in fact, cause Plaintiff Sarah Bigelow severe emotional distress.” (Id. at 10). Thus, this claim

arises out of, and relates to, the making, performance, and alleged breach of the Franchise Agreement.

21 Finally, Plaintiffs’ unfair and deceptive practices claim alleges HTU’s “errors, omissions,

misrepresentations, and breaches constitute unfair and deceptive trade practices.” (Id. at 7). As such, Plaintiffs’ claim

that HTU is liable for unfair and deceptive trade practices arises out of, and relates to, whether HTU committed

misrepresentations or breaches during the making, performance, or breach of the Franchise Agreement.

22 Having determined these claims are time-barred and are thus subject to dismissal, this Court declines to

address HTU’s argument that the economic loss doctrine bars Plaintiffs’ claims for negligence, negligent

misrepresentation, negligent infliction of emotional distress, and unjust enrichment.

claim in quasi contract or a contract implied in law.” Booe v. Shadrick, 369 S.E.2d 554, 556 (1988).

However, where a contract exists between the parties, “the contract governs the claim, and the law

will not imply a contract.” Id. (citing Concrete Co. v. Lumber Co., 124 S.E.2d 905 (N.C. 1962)).

Here, the Franchise Agreement is a written contract between the parties that governs

Plaintiffs’ unjust enrichment claim. Plaintiffs’ claim alleges that “Defendants benefitted from their

respective contracts by receiving payments under said contracts. . . . It would be inequitable for

Defendants to enjoy the benefit of retaining Plaintiffs’ funds while Plaintiffs did not get what it

bargained for under said contracts.” (Doc. No. 6, p. 6). Thus, Plaintiffs’ unjust enrichment claim

clearly flows from—and is governed by—the Franchise Agreement, as its terms determine whether

the parties performed, and whether Plaintiffs got what they bargained for. (Doc. No. 10-1, p. 54).

Accordingly, the Court will not imply a contract here, and Plaintiffs’ have failed to state a claim

for relief. Therefore, Plaintiffs’ Second Claim against HTU for Unjust Enrichment is dismissed

with prejudice.23

D. Plaintiffs’ Third & Fifth Claims for Punitive Damages & Piercing the Corporate Veil

Finally, Plaintiffs attempt to assert independent claims for punitive damages and piercing

the corporate veil. HTU argues that because neither claim constitutes an independent theory of

liability, both should be dismissed. The Court agrees.

“[T]he doctrine of punitive damages is a means of punishing a wrongdoer but does not, by

itself, provide an independent basis for asserting a claim.” Gauldin v. Honda Power Equip. Mfg.,

23 Plaintiffs’ alternative claim for quantum meruit fails for the same reasons. See Sullivan v. Laboratory Corp.

of Am. Holdings, No. 1:17cv193, 2018 WL 1586471, at *7 (M.D.N.C. Mar. 28, 2018) (interpreting North Carolina

law as treating unjust enrichment as a cause of action, and quantum meruit as the measure of recovery) (citing W.F.

Magann Corp. v. Diamond Mfg. Co., 775 F.2d 1202, 1208 (4th Cir. 1985)). Whitfield v. Gilchrist, 497 S.E.2d 412,

414 (N.C. 1998) (emphasis in original) (“Quantum meruit is a measure of recovery for the reasonable value of services

rendered in order to prevent unjust enrichment. . . . [Q]uantum meruit is not an appropriate remedy when there is an

actual agreement between the parties. Only in the absence of an express agreement of the parties will courts impose a

quasi contract or a contract implied in law in order to prevent an unjust enrichment.”)

Inc., 351 F. Supp. 2d 455, 458 (M.D.N.C. 2005); see also Oestreicher v. Am. Nat. Stores, Inc., 225

S.E.2d 797, 808 (N.C. 1976) (“If the complainant fails to plead or prove his cause of action, then

he is not allowed an award of punitive damages because he must establish his cause of action as a

prerequisite for a punitive damage award.”). Similarly, the doctrine of piercing the corporate veil

is not a theory of liability on its own. Green v. Freeman, 749 S.E.2d 262, 271 (N.C. 2013). Rather,

piercing the corporate veil is “a method of imposing liability on an underlying cause of action.”

Strawbridge v. Sugar Mountain Resort, Inc., 243 F. Supp. 2d 472, 479 (W.D.N.C. 2003) (citing

Shearson Lehman Hutton, Inc., v. Venners, 165 F.3d 912 (table), 1998 WL 761505 at *2 (4th

Cir.1998) (citing William Fletcher, Fletcher Cyclopedia of the Law of Private Corporations § 41,

at 603 (perm ed. rev. vol.1990)). Thus, piercing the corporate veil is derivative and is not an

independent cause of action. Strawbridge, 243 F. Supp. 2d at 479.

Here, Plaintiffs seek to recover for punitive damages and piercing the corporate veil as

independent causes of action. (See Doc. No. 6, p. 6–8). However, for the reasons outlined above,

Plaintiffs’ other claims failed to survive HTU’s Motion to Dismiss. Therefore, without these

underlying causes of action to support them, Plaintiffs’ Third Claim for Punitive Damages and

Fifth Claim for Piercing the Corporate Veil, Alter Ego, and Mere Instrumentality, must be

dismissed with prejudice.

IV. HTU’S MOTION TO DENY JOINDER & JURISDICTION OVER ELEVATE

For the foregoing reasons, Plaintiffs have failed to state a claim for relief for all nine of

their claims against HTU. Thus, this action is DISMISSED WITH PREJUDICE against HTU.

Accordingly, HTU’s Motion to Deny Joinder, (Doc. No. 8), is DENIED AS MOOT.

However, this Court lacks subject matter jurisdiction over Plaintiffs’ claims against Elevate

Design and Build, LLC. “The United States Courts are courts of specifically limited jurisdiction

and may exercise only that jurisdiction which Congress has prescribed.” Chris v. Tenet, 221 F.3d

648, 655 (4th Cir. 2000) (citing Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377

(1994)); Lovern v. Edwards, 190 F.3d 648, 654 (4th Cir. 1999). Before a court can rule on any

other issue, “questions of subject matter jurisdiction must be decided first, because they concern

the court’s very power to hear the case.” Owens-Illinois, Inc. v. Meade, 186 F.3d 435, 442 n.4 (4th

Cir. 1999) (internal quotation marks omitted). If there is doubt whether such jurisdiction exists,

the court must “raise lack of subject-matter jurisdiction on its own motion,” without regard to the

parties’ positions. Ins. Corp. of Ir., Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702

(1982); see also Hertz Corp. v. Friend, 559 U.S. 77, 94 (2010) (noting federal courts are

independently obligated to determine whether subject matter jurisdiction exists, “even when no

party challenges it”); Mansfield, Coldwater & Lake Mich. Ry. v. Swan, 111 U.S. 379, 382 (1884).

Thus, it is well-settled that lack of subject matter jurisdiction may be raised at any time by a litigant

or the court sua sponte. See, e.g., id. at 384. No party can waive the defect, or consent to [subject

matter] jurisdiction. No court can ignore the defect; rather a court, noticing the defect, must raise

the matter on its own.” Wis. Dept. of Corrs. v. Schacht, 524 U.S. 381, 389 (1998) (internal citations

omitted); see also Ashcroft v. Iqbal, 556 U.S. 662, 671 (2009) (“Subject-matter jurisdiction cannot

be forfeited or waived and should be considered when fairly in doubt.”).

Here, the claims in the Amended Complaint are matters of state—not federal—law, and as

such, this Court lacks federal question jurisdiction over Plaintiffs’ claims against Elevate. 28

U.S.C. § 1331. Further, Plaintiffs concede there is no diversity jurisdiction between Plaintiffs and

Elevate. (Doc. No. 17, p. 4–5). For purposes of diversity jurisdiction under 28 U.S.C. § 1332, it is

undisputed that Bigelow Corporation is a North Carolina corporation, Mrs. Bigelow is a citizen of

North Carolina, and Elevate is a North Carolina limited liability company with its principal place

of business in Durham, North Carolina. (Doc. No. 6, p. 1; Doc. No. 9, p. 1; Doc. No. 17, p. 1).

Thus, this Court does not have diversity jurisdiction over Plaintiffs’ Amended Complaint as

against Elevate. Therefore, as to Elevate, Plaintiffs’ Amended Complaint is DISMISSED

WITHOUT PREJUDICE to Plaintiffs filing a new action in state court, if at all. However, the

Court emphasizes that this Opinion is not to be construed as a decision on the sufficiency of the

complaint or the merits of the claims as against Elevate Design and Build, LLC.

V. CONCLUSION

IT IS THEREFORE ORDERED that HTU’s Motion to Dismiss, (Doc. No. 2), is

DENIED AS MOOT.

IT IS FURTHER ORDERED HTU’s Motion to Deny Joinder, (Doc. No. 8), is DENIED

AS MOOT.

IT IS FURTHER ORDERED that Defendant HTU’s Motion to Dismiss Plaintiffs’

Amended Complaint, (Doc. No. 10), is GRANTED. Accordingly, Plaintiffs’ Amended

Complaint, (Doc. No. 6), is DISMISSED WITH PREJUDICE as against Hounds Town USA,

LLC. Additionally, for the reasons outlined above, Plaintiffs’ Amended Complaint as against

Elevate Design and Build, LLC, is DISMISSED WITHOUT PREJUDICE to Plaintiffs filing a

new action in state court.

IT IS SO ORDERED.

August 2, 2023

Frank D. Whitney

United States District Judge * ey

22