# PACKRITE, LLC v. GRAPHIC PACKAGING INTERNATIONAL, LLC

> District Court, M.D. North Carolina · December 2, 2020

URL: https://www.frixlaw.com/law-library/cases/10653585

## Case

- **Court:** District Court, M.D. North Carolina
- **Decided:** December 2, 2020
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10653585

## How later opinions describe it (automated extraction)

- holding that when two parties were sophisticated in negotiating commercial real estate transactions, the lessor did not have a duty to disclose to the lessee that it was negotiating a lease with another party for the same premises
- holding that a company had a duty to disclose to its employee that it had stopped funding the pension plan, when an employee “inquired . . . about the status of the pension plan”
- holding that, under North Carolina law, a newsletter publisher's editors had no duty to disclose their job negotiations with publisher's competitor

## Opinion text

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

PACKRITE, LLC, )
)
Plaintiff, )
)
v. ) 1:17CV1019
)
)
GRAPHIC PACKAGING )
INTERNATIONAL, LLC, )
)
Defendant. )

MEMORANDUM OPINION AND ORDER
LORETTA C. BIGGS, District Judge.
Before the Court are Defendant’s Motion to Dismiss two of Plaintiff’s claims in its
Second Amended Complaint (“Complaint”) pursuant to Rules 9(b) and 12(b)(6) of the Federal
Rules of Civil Procedure, (ECF No. 71), and Defendant’s Motion for Partial Summary
Judgment, related to the same claims, (ECF No. 92). For the reasons that follow, Defendant’s
Motion to Dismiss will be granted and Defendant’s Motion for Partial Summary Judgment
will be denied as moot.
I. BACKGROUND
A. Factual Background
Packrite, LLC (“Packrite”), a North Carolina company, is a “specialized trade finisher
for the corrugated and folding carton packaging industries.” (ECF No. 69 ¶¶ 1, 4.) Graphic
Packaging International, LLC (“Graphic”) is a Delaware company, headquartered in Atlanta,
Georgia, that manufactures “folding cartons, unbleached paperboard, and coated recycled
board used in packaging for the food, beverage, and consumer product industries.” (Id. ¶¶ 2,
5.)
Beginning in or around 2012, Graphic engaged Packrite’s services as an outsource

vendor on an as-needed basis to assist with fulfilling customer orders and meeting Graphic’s
manufacturing needs. (Id. ¶¶ 6, 12.) In or around August 2016, Graphic requested Packrite’s
temporary assistance “in producing the packaging for Clorox Kitty Litter” (the “Clorox
Business”). (Id. ¶ 15 (internal quotation marks omitted).) The Clorox Business “was part of
a very large contract obtained by [Graphic,]” and Graphic “did not have the resources,
equipment, or capacity to undertake the Clorox Business itself.” (Id. ¶¶ 16, 17.) According to

the Complaint, “Packrite was initially unwilling to assist” Graphic with the Clorox Business
because Packrite also lacked the necessary resources to assist on such a large project and,
further, such assistance would limit Packrite’s ability to pursue or obtain other business
opportunities. (Id. ¶¶ 21, 23, 25.)
The Complaint alleges that Chris Berndt, Graphic’s Director of Operations, stated to
Packrite that, should Packrite agree to assist Graphic with the Clorox Business, Graphic would

then agree to enter into a three-year contract “under which Packrite would be the sole
producer of [Graphic’s] requirements of [b]eer [c]artons” (the “Beer Carton Project” or “Beer
Carton Contract”). (Id. ¶ 27.) Chris Berndt “specifically and unequivocally” represented to
Packrite that the Beer Carton Project “would result in gross revenue of approximately
$10,000,000.00 per year to Packrite.” (Id. ¶ 31.) “Based solely upon the[se] representations,”
Packrite agreed to assist Graphic with the Clorox Business and, in early September 2016,
Packrite began its production preparations followed by the start of actual production in
November 2016. (Id. ¶¶ 32, 38, 40.)
In November 2016, shortly after Packrite began production on the Clorox Business,

Packrite representatives met with Kristopher Dover, Vice President of Operations at Graphic.
(Id. ¶ 46.) At that meeting, Mr. Dover informed Packrite that Chris Berndt “did not actually
have the requisite authority to commit [Graphic] to the promised [ ]Beer Carton Contract
when he did so in August 2016.” (Id. ¶ 47.) Nevertheless, Mr. Dover, who did have authority
to commit Graphic to the Beer Carton Contract, stated that Graphic “would honor Mr.
Berndt’s original promise” and that Graphic would complete the Beer Carton Project with

Packrite “on the same terms promised in August 2016.” (Id. ¶ 48.)
In early 2017, Graphic provided Packrite with an initial draft of the Beer Carton Project
contract, to which Packrite proposed revisions and returned to Graphic. (Id. ¶¶ 54, 56; see also
id. at 25–35, 34–42.) Packrite did not receive any further “specific response from [Graphic]
regarding either its proposed changes to the draft Beer Carton Contract or the omitted quantity
and price terms, although the parties continued discussions and negotiations relating to the

same through approximately May 2017.” (Id. ¶ 57.) The Complaint alleges that, by the end
of February 2017, Graphic had reached the internal decision that it would not utilize Packrite’s
facility for the Beer Carton Project and by April 20, 2017, had developed an “Exit Plan” to
move the Beer Carton Project from Packrite’s facility. (Id. ¶¶ 93, 94.) The Complaint further
alleges that from early 2017 through approximately May 2017, “representatives of [Graphic]
were specifically instructed by [Graphic’s] management to ‘stall’ Packrite on the finalization of

the Beer Carton Contract.” (Id. ¶ 58). According to the Complaint, Graphic identified tactics
of practicing confidentiality, limited its involvement, and withheld certain concerns with the
quality of Packrite’s work related to the Clorox Business as a part of its plan to exit business
relations with Packrite. (Id. ¶¶ 95, 102.) Ultimately, the parties never executed a contract for

the Beer Carton Project. (Id. ¶ 73.) On October 11, 2017, Packrite initiated this lawsuit in
North Carolina State Court. On November 8, 2017, Graphic removed the action to this Court.
B. Procedural Background
On August 29, 2018, this Court granted Defendant’s partial motion to dismiss three of
Plaintiff’s claims in its original complaint (“2018 Order”). (ECF No. 19.) Specifically, this
Court dismissed without prejudice Defendant’s Fraudulent Misrepresentation/Inducement

claim, Negligent Misrepresentation/Detrimental Reliance claim, and Unfair and Deceptive
Trade Practices Act (“UDTPA”) claim due to the failure of those claims to meet the
heightened pleading standard of Federal Rule of Civil Procedure 9(b). (Id. at 18.) After seeking
leave of this Court, Plaintiff filed its First Amended Complaint on October 15, 2018. (ECF
Nos. 21, 24.) On July 9, 2019, this Court granted Defendant’s Partial Motion to Dismiss in
part, dismissing two of Plaintiff’s claims in its First Amended Complaint (“2019 Order”).

(ECF No. 39.) Specifically, this Court dismissed without prejudice Plaintiff’s Fraudulent
Omission claim and Negligent Misrepresentation claim due to the failure of those claims to
satisfy the heightened pleading standard of Federal Rule of Civil Procedure 9(b). (Id. at 13,
14, 16.) With consent from Defendant, Plaintiff filed a Second Amended Complaint on July
21, 2020. (ECF Nos. 68; 69.) Defendant now moves to dismiss Plaintiff’s claims for
Fraudulent Omission (Claim III) and Unfair and Deceptive Trade Practices (Claim IV), for

failure to state a claim upon which relief can be granted. (ECF No. 71 at 1.) In addition,
Defendant has moved for partial summary judgment on the same claims. (ECF No. 92.) The
Court will begin its discussion with Defendant’s motion to dismiss.
II. MOTION TO DISMISS

A. Standards of Review: Rules 12(b)(6) and 9(b)
A motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure
“challenges the legal sufficiency of a complaint,” including whether it meets the pleading
standard of Rule 8(a)(2). Francis v. Giacomelli, 588 F.3d 186, 192 (4th Cir. 2009). Rule 8(a)(2)
requires a complaint to contain “a short and plain statement of the claim showing that the
pleader is entitled to relief,” Fed. R. Civ. P. 8(a)(2), thereby “giv[ing] the defendant fair notice

of what the . . . claim is and the grounds upon which it rests,” Bell Atl. Corp. v. Twombly, 550
U.S. 544, 555 (2007) (alteration in original) (citation omitted). Because a Rule 12(b)(6) motion
tests the sufficiency of a complaint without resolving factual disputes, a district court “must
accept as true all of the factual allegations contained in the complaint and draw all reasonable
inferences in favor of the plaintiff.” Kensington Volunteer Fire Dep’t, Inc. v. Montgomery Cnty., 684
F.3d 462, 467 (4th Cir. 2012) (citation and internal quotation marks omitted).

“To survive a motion to dismiss, a complaint must contain sufficient factual
matter . . . 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). A complaint may fail to state a claim upon
which relief can be granted in two ways: first, by failing to state a valid legal cause of action,
i.e., a cognizable claim, see Holloway v. Pagan River Dockside Seafood, Inc., 669 F.3d 448, 452 (4th
Cir. 2012); or, second, by failing to allege sufficient facts to support a legal cause of action, see

Painter’s Mill Grille, LLC v. Brown, 716 F.3d 342, 350 (4th Cir. 2013). In considering a Rule
12(b)(6) motion to dismiss, the “court evaluates the complaint in its entirety, as well as
documents attached [to] or incorporated into the complaint.” E.I. du Pont de Nemours & Co. v.
Kolon Indus., Inc., 637 F.3d 435, 448 (4th Cir. 2011) (citation omitted).

Where, as in this case, a party alleges fraud, the complaint must satisfy the more
demanding pleading requirements of Rule 9(b). Harrison v. Westinghouse Savannah River Co., 176
F.3d 776, 783-84 (4th Cir. 1999). Under Rule 9(b), “[i]n alleging fraud or mistake, a party must
state with particularity the circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b).
The alleged “circumstances” which must be plead with particularity include “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.” Harrison, 176 F.3d at 784 (citation omitted).
The primary purposes of Rule 9(b) are: (1) to give a defendant sufficient notice of the
claim(s) against him so that he may formulate a defense; (2) to forestall frivolous lawsuits; (3)
to prevent fraud actions in which all facts are learned only through discovery; and (4) to protect
a defendant’s goodwill and reputation. Id. Failure to satisfy the heightened pleading
requirements of Rule 9(b) subjects a fraud claim to dismissal under Rule 12(b)(6). Id. at 783

n.5.
B. DISCUSSION
(i) Fraudulent Omission (Claim III)
To state a claim for fraud under North Carolina law, a plaintiff must allege a "(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." Becker v. Graber Builders, Inc., 561 S.E.2d 905, 910 (N.C. Ct. App. 2002) (quoting Ragsdale
v. Kennedy, 209 S.E.2d 494, 500 (N.C. 1974)).
A party may base its claim for fraud on concealment or nondisclosure. River's Edge

Pharm., LLC v. Gorbec Pharms. Servs., Inc., No. 1:10CV991, 2012 WL 1439133, at *22 (M.D.N.C.
Apr. 25, 2012) (citing Breeden v. Richmond Cmty. Coll., 171 F.R.D. 189, 194 (M.D.N.C. 1997)).
“In such cases, the plaintiff ‘must additionally allege that [defendant] had a duty to disclose
material information to [it] as silence is fraudulent only when there is a duty to speak.’” Id.
(quoting Breeden, 171 F.R.D. at 194). To comply with the pleading requirements of Rule 9(b)
with respect to fraud by omission, a plaintiff typically will be required to allege the following

with reasonable particularity:
(1) the relationship or situation giving rise to the duty to speak, (2) the event or
events triggering the duty to speak, and/or the general time period over which
the relationship arose and the fraudulent conduct occurred, (3) the general
content of the information that was withheld and the reason for its materiality,
(4) the identity of those under a duty who failed to make such disclosures, (5)
what those defendant(s) gained by withholding information, (6) why plaintiff’s
reliance on the omission was both reasonable and detrimental, and (7) the
damages proximately flowing from such reliance.
Breeden, 171 F.R.D. at 195. Given that Plaintiff’s claim for fraud is based on non-disclosure
and concealment, the Court will first determine whether Plaintiff has pled facts with sufficient
particularity demonstrating that Defendant had any duty to disclose.
Typically, where commercial parties are in arm’s-length negotiations, as in the instant
case, there is no duty to disclose. See RREF BB Acquisitions, LLC v. MAS Props., LLC, No. 13
CVS 193, 2015 WL 3646992, at *10 (N.C. Super. Ct. June 9, 2015) (collecting cases), overturned
on reconsideration on other grounds, 2015 WL 7910510 (N.C. Super. Ct. Dec. 3, 2015); see also
Comput. Decisions, Inc. v. Rouse Off. Mgmt. of N.C., Inc., 477 S.E.2d 262, 264-66 (N.C. Ct. App.
1996) (holding that when two parties were sophisticated in negotiating commercial real estate
transactions, the lessor did not have a duty to disclose to the lessee that it was negotiating a
lease with another party for the same premises). In such cases where no fiduciary relationship

exists, however, a duty to disclose may arise when: (1) “a party has taken affirmative steps to
conceal material facts from the other”; (2) “one party has knowledge of a latent defect in the
subject matter of the negotiations about which the other party is both ignorant and unable to
discover through reasonable diligence,” Hardin v. KCS Int’l, Inc., 682 S.E.2d 726, 733 (N.C. Ct.
App. 2009) (quoting Sidden v. Mailman, 529 S.E.2d 266, 270-71 (N.C. Ct. App. 2000)); or (3) a
party speaks about a particular matter, in which case “a full and fair disclosure as to the matters

discussed” may be required, Shaver v. N.C. Monroe Constr. Co., 306 S.E.2d 519, 525 (N.C. Ct.
App. 1983) (holding that a company had a duty to disclose to its employee that it had stopped
funding the pension plan, when an employee “inquired . . . about the status of the pension
plan”). See also Breeden, 171 F.R.D. at 196.
Here, Graphic argues that Packrite’s claim for fraudulent omission should be dismissed
because it does not meet the elevated pleading standard required by Rule 9(b). (ECF No. 71

at 1-2.) Specifically, Graphic argues that Packrite “fail[s] to identify any relationship or
situation giving rise to Graphic’s duty to immediately inform Packrite of its decision not to
enter into a contract.” (Id. at 1.) Packrite argues, on the other hand, that it has pled sufficient
facts showing that Graphic had a duty to disclose. Packrite contends that its Complaint alleges
that Defendant took affirmative steps to conceal that it had decided not to enter the Beer
Carton Contract, that Defendant knew of a latent defect in the subject matter of the
negotiations, and that, once it spoke on the Beer Carton Contract, full and fair disclosure was
required even if Defendant was not initially subject to such a duty. (ECF No. 91 at 10-11.)
According to Plaintiff’s Response, its Complaint alleges that Graphic took affirmative

steps to conceal its decision not to award Packrite the Beer Carton Contract by: (1) offering
pretextual excuses for a delay in responding to Packrite’s contract draft; (2) directing Packrite
to undergo MillerCoors qualification trials; and, (3) purposefully withholding substantial
quality claims so that Packrite would not ascertain it would not be awarded the Beer Carton
Contract. (Id. at 11.) Plaintiff’s argument that a duty to disclose arose from Graphic taking
affirmative steps to conceal its decision not to move forward with the Beer Carton Contract,

however, is not plausible.
Despite Plaintiff’s argument, the Complaint itself fails to set forth any pretextual excuse
Graphic allegedly made to Packrite for its delay in providing Packrite with further drafts of
the Beer Carton Contact. Indeed, with respect to the delay in response to Packrite’s request
for clarification on the status of the Beer Carton Contract, the Complaint alleges that Graphic
“continued to ignore these requests or delay providing a definitive written response.” (ECF

No. 69 ¶ 97.) Further, the Complaint alleges that after Packrite submitted corrections to the
proposed draft of the contract “[it] received no further specific response from [Graphic]
regarding either its proposed changes to the draft Beer Carton Contract or the omitted quantity
and price terms” even though Packrite “made numerous and continuous attempts to ascertain
the status of the written Beer Carton Contract.” (Id. ¶ 57.) Thus, the Complaint, contrary to
Packrite’s assertions, does not allege with any particularity any excuses, pre-textural or
otherwise, by Graphic for its the delay in responding to Packrite’s continued inquiries
regarding the contract and therefore cannot serve as basis for any duty to disclose.
With respect to Packrite’s contention that Graphic required it to undergo the

MillerCoors qualification trials to conceal the fact that it did not intend to follow through with
the Beer Carton Contract, this claim is likewise not sufficient to give rise to a duty to disclose,
even if true. In Big Red, LLC v. Davines, 31 Fed. App’x 216 (4th Cir. 2002), a case with similar
facts, though not on all fours, to those in the instant case, the Fourth Circuit found no duty
to disclose even when the plaintiff had expended significant sums and had taken substantial
actions to its detriment in reliance on an oral agreement for an exclusive distributorship. Id.

at 224. In Big Red, the parties negotiated an exclusive distribution agreement which resulted
in an oral agreement that defendant would grant exclusive distribution rights to Big Red. Id.
at 217-18. Though the parties worked on various scenarios of a written contract and had
agreed on most of the terms of the oral agreements, their deal was never reduced to writing.
Id. at 217. Believing a contract to be imminent, the plaintiff alleged that it ordered more of
defendant’s products, entered a long-term lease to warehouse plaintiff’s products, and placed

its first order as a master distributor pursuant to the unsigned agreement in the approximate
of $250,000. Id. When the plaintiff learned through rumors some months later that defendant
was in negotiations with another company, it filed suit and asserted causes of action for fraud,
negligent misrepresentation, and unfair and deceptive trade practices. Id. at 219. The district
court dismissed each of plaintiff’s claims on defendant's motion to dismiss. Id. The plaintiff
appealed only the dismissal of its unfair and deceptive trade practices claim. Id. The Fourth

Circuit in analyzing dismissal of the unfair and deceptive claim concluded that “[defendant]
had no duty to disclose to [plaintiff] its intentions regarding the outstanding negotiations
between them or that it had chosen to entertain negotiations with another prospective
distributor.” Id. at 222.

Moreover, other courts in the Fourth Circuit have come to the same conclusion when
deciding similar cases. See e.g. Broussard v. Meineke Disc. Muffler Shops, Inc., 155 F.3d 331, 347
(4th Cir. 1998) (stating “in North Carolina parties to a contract do not thereby become each
others’ [sic] fiduciaries; they generally owe no special duty to one another beyond the terms of
the contract and the duties set forth in the U.C.C.” (internal quotation and citation omitted));
see also Eli Rsch., Inc. v. United Commc'ns Grp., LLC, 312 F. Supp. 2d 748, 760 (M.D.N.C. 2004)

(holding that, under North Carolina law, a newsletter publisher's editors had no duty to
disclose their job negotiations with publisher's competitor). Even though the fraud claim in
Big Red was based on misrepresentation rather than omission as in the instant matter, the
Court finds the reasoning to be persuasive here, that under the circumstances in this case no
duty to disclose arises.
Packrite argues that in addition to Big Red being unpublished1, the circumstances in the

instant matter are far more egregious than the circumstances in that case. (ECF No. 91 at 17–
18.) This Court disagrees for several reasons. At the outset, the Court acknowledges that
unpublished decisions of the Fourth Circuit are not binding. As the Fourth Circuit has
observed (in published decisions), ordinarily, unpublished opinions are not accorded
precedential value, but they are “entitled only to the weight they generate by the persuasiveness

1 The Court finds this argument perplexing given that Packrite also provides an unpublished decision
in support of its argument.
of their reasoning.” Collins v. Pond Creek Mining Co., 468 F.3d 213, 219 (4th Cir. 2006) (internal
citation and quotation omitted). Next, turning to the issue of egregiousness, first, the plaintiff
in Big Red had an oral agreement and the parties were close to a final agreement, having

resolved most of the critical terms of the contract to be written; thus, their reliance was far
more reasonable than in this case. Here, though neither party argues the unreasonableness of
Plaintiff’s reliance, Plaintiff relied on nothing more than a promise to enter into a future
contract and a first draft of an agreement where practically none of the critical terms had been
resolved. Second, it appears that the plaintiff in Big Red expended far more funds in reliance
on the oral agreement than Plaintiff in this case. Third, even though Plaintiff was upset by

Graphic waiting several months to inform it that it no longer intended to enter the contract,
in Big Red the plaintiff found out through rumor. Finally, the history of the parties’ relationship
as alleged in the Complaint indicates that, since 2012, Graphic had engaged Packrite on an as-
needed basis only through individual purchase orders. (ECF No. 69 ¶ 12.) Plaintiff in its
Complaint states that “[u]pon information and belief, it has never been, and is not today, the
typical business practice of [Grapic] to enter into long-term contracts with its vendors.” (Id.)

Given the underlying facts and circumstances of this case as alleged in Plaintiff’s Complaint,
the Court finds that while Plaintiff’s reliance on a promise to enter into this long-term contract
may have been detrimental, such reliance by Packrite was unreasonable.
Packrite’s contention that Graphic’s withholding of quality claims gave rise to a duty
to disclose likewise fails. Packrite alleges that “upon information and belief” Graphic
contrived quality claims to be used as a pretextual excuse for not entering the Beer Carton

Contract as a part of its plan to cease business relations with Packrite, (Id. ¶ 70), and withheld
these purported claims for months “for the specific purpose of avoiding alerting Packrite of
[Graphic’s] intent not to award” it the Beer Carton Contract,” (Id. ¶ 102). However, Packrite
offers no facts upon which its belief is founded. “Allegations of fraud may be made ‘upon

information and belief’ only when the matters are particularly within the defendants'
knowledge, and facts are stated upon which the belief is founded.” Breeden, 171 F.R.D. at 197
(citing Andrews v. Fitzgerald, 823 F. Supp. 356, 375 (M.D.N.C.1993)). Although the nature of
fraudulent omissions are more difficult to plead as compared to misrepresentations, to meet
the pleading requirements of Rule 9(b), “a plaintiff may not entirely dispense with the
statement of facts upon which his belief is founded.” Id. Packrite failed to allege a factual

basis giving rise to its belief that Graphic contrived and withheld its quality claims for the
purpose of concealing its decision not to enter the Beer Carton Contract. This Court therefore
determines that Packrite has failed to set forth any specific allegations from which a plausible
inference could be drawn that a duty to disclose arose from Graphic’s handling of its quality
claims.
Plaintiff’s next argument that a duty to disclose arose from Graphic’s knowledge of a

latent defect is likewise not plausible. While Plaintiff asserts that in its Complaint it explicitly
pled that there was a latent defect in the subject matter of negotiations, (ECF No. 91 at 12), a
review of the Complaint reveals that Plaintiff does not make any such allegation. In fact, the
Complaint makes no mention of a latent defect at all. This appears little more than an effort
to reframe its concealment argument which the Court has already determined does not give
rise to a duty to disclose.
Plaintiff also asserts that the allegations in the Complaint show that Defendant was
under a duty to disclose because full and fair disclosure was required after Defendant had
spoken on the matter. (ECF No. 91 at 10-11.) While the Complaint references continued

“representations” and “assurances” generally received from Graphic, (ECF No. 69 ¶¶ 59, 60,
63, 96, 99, 100, 101), it does not identify with any particularity the representations or
assurances or when specifically they occurred. Despite Plaintiff’s assertion that “[Graphic]
engaged in negotiations with Packrite regarding the specifics and details of the Beer Carton
Contract from mid-January 2017 through approximately May 2017,” (Id. ¶ 53), the Complaint
fails to identify any conversation or written communication between Graphic and Packrite

regarding the Beer Carton Contract that took place within the relevant time frame that might
support a duty to disclose. In fact, the Complaint expressly alleges that “[d]espite repeated
requests for clarification on the status of the promised ‘Beer Carton Contract’ from Packrite,
[Graphic] continued to ignore these requests or delay providing a definitive written response.”
(Id. ¶ 97.) The Court finds that the Complaint fails to plead with specificity any
communication, spoken or written, made by Graphic to Packrite during the relevant period

that would create a duty thereby requiring Graphic to disclose its intent not to move forward
with the contract.
In further support of its contention that it has pled with sufficient specificity to satisfy
Rule 9(b) a claim for fraudulent omission, Packrite argues that “the singular defect that [this]
Court found in Packrite’s previous pleading has been remedied in [its] Complaint.” (ECF No.
91 at 9.) The Court disagrees. The Court previously dismissed Plaintiff’s fraudulent omission

claim for failing to specifically allege when a duty to disclose arose and failing to set forth
specific allegations from which a plausible inference could be drawn as to when Graphic’s
discussions regarding the Beer Carton Contract became fraudulent. (ECF No. 39 at 13.)
Contrary to Plaintiff’s assertion, its current Complaint does not remedy the flaws this Court

previously articulated. Plaintiff’s minor variations to its allegations, which merely shifts its
allegations to a new general time reference, continues to fail to meet to meet the heightened
pleading standards required by Rule 9(b).
Finally, the Complaint asserts that Graphic had “a duty, at minimum, not to
misrepresent to Packrite its intentions regarding the Beer Carton Contract upon specific and
repeated inquiry by Packrite regarding the same,” (ECF No. 69 ¶ 103), but fails to allege with

any specificity any misrepresentations that took place during the relevant time frame. Notably,
Plaintiff’s claim is one for omission, not misrepresentation.
Because Packrite has failed once again to meet the heightened pleading standard under
Rule 9(b) related to its claim of fraudulent omission, it fails to state a plausible claim under
Rule 12(b)(6) and the claim must be dismissed.
(ii) Unfair and Deceptive Trade Practices (Claim IV)

Defendant argues that Packrite’s unfair and deceptive trade practices allegations are
“identical to its fraudulent omission allegations” and therefore should likewise be dismissed.
(ECF No. 72 at 15.) Packrite, however, asserts that its UDTPA claim can survive independent
of its fraudulent omission claim. (ECF No. 91 at 12.)
Under North Carolina’s Unfair and Deceptive Trade Practices Act, unfair methods of
competition and unfair or deceptive acts or practices, in or affecting commerce, are unlawful.

N.C. Gen. Stat. § 75-1.1(a). North Carolina’s UDTPA does not provide a definition of what
constitutes an unfair or deceptive act. Noble v. Hooters of Greenville (NC), LLC, 681 S.E.2d 448,
452 (N.C. Ct. App. 2009) (quoting Bernard v. Cent. Carolina Truck Sales, Inc., 314 S.E.2d 582, 584
(N.C. Ct. App. 1984)). However, North Carolina courts have found that “[a]n act or practice

is unfair if it ‘is immoral, unethical, oppressive, unscrupulous, or substantially injurious to
consumers’ . . . [and] [a]n act or practice is deceptive if it ‘has the capacity or tendency to
deceive.’” Bob Timberlake Collection, Inc. v. Edwards, 626 S.E.2d 315, 322-23 (N.C. Ct. App. 2006)
(quoting Marshall v. Miller, 276 S.E.2d 397, 403 (N.C. 1981)).
As earlier recognized by this Court, “[t]o treat the [fraud claim and the UDTPA claim]
with two different pleading standards would permit [plaintiff] to bring a disguised fraud claim

without putting [defendant] on notice of the ‘particular circumstances’ of its [UDTPA] claim.”
Topshelf Mgmt., Inc. v. Campbell-Ewald Co., 117 F. Supp. 3d 722, 731 (M.D.N.C. 2015) (quoting
Harrison, 176 F.3d at 784). While this Court’s statements in Topshelf were made in the context
of an alleged fraudulent misrepresentation, the Court finds they are likewise applicable in this
instance of fraud based on an alleged omission, particularly given that the UDTPA claim is
based on identical allegations as the fraud claim.

A party asserting a UDTPA claim must allege: “(1) an unfair or deceptive act or
practice, (2) in or affecting commerce, and (3) which proximately caused injury to plaintiffs.”
Walker v. Fleetwood Homes of N.C., Inc., 653 S.E.2d 393, 399 (N.C. 2007) (quoting Gray v. N.C.
Ins. Underwriting Ass’n, 529 S.E.2d 676, 681 (N.C. 2000)). Whether an act is unfair or deceptive
is a question of law to be determined by the Court. S. Atl. Ltd. P'ship of Tenn., L.P. v. Riese, 284
F.3d 518, 529 (4th Cir. 2002) (citing Ellis v. N. Star Co., 388 S.E.2d 127, 131 (N.C. 1990)).
In its Complaint, Packrite incorporates the factual allegations constituting its fraudulent
omission claim and alleges that such allegations also constitute a violation of the UDTPA.
(ECF No. 69 ¶¶ 106-08.) In essence, Plaintiff argues that Defendant’s alleged delay in

disclosing its intent not to enter the Beer Carton Contract constitutes an unfair or deceptive
trade practice.
Plaintiff argues that its Complaint “alleges substantial conduct indicating that [Graphic]
actively misled Packrite and concealed these material facts for the specific purpose of inducing
Packrite to continue to act in reliance upon them—all for [Graphic’s] benefit.” (ECF No. 91
at 14). Specifically, Plaintiff points to the following allegations:

These deceptive acts include, without limitation, directing Packrite to undergo
MillerCoors qualification trials after the point in which it is alleged that
[Graphic] had definitively determined that they would not award Packrite the
MillerCoors contract, (Doc. 69, ¶97), and by withholding their substantial
quality claims months after [Graphic] had purportedly developed a factual basis
to bring them specifically to avoid a situation where Packrite “gets word early
of [Graphic’s] intent to [exit].” (Doc. 69 ¶95). Further, Packrite alleges that the
quality claims themselves were known to be baseless by [Graphic] and were
contrived specifically for the purpose of serving as a pretextual excuse for why
it would not be entering into the Beer Carton Contract with Packrite and as a
mechanism by which it could wrongfully refuse to pay Packrite the amounts
owed under the numerous Clorox Business purchase orders Packrite had
fulfilled for [Graphic] in the Spring of 2017. (Doc. 69, ¶¶65, 70). Lastly, Packrite
has alleged that [Graphic] secretly and unilaterally altered its established
payment terms with Packrite, all for the express purpose of creating a “fund”
out of which [Graphic] could recover its contrived quality claims
contemporaneously with its exit from Packrite. (Doc. 69, ¶65, 95).
(ECF No. 91 at 14-15.) For the same reason that these allegations were not pled with sufficient
specificity to satisfy its fraudulent omission claim, they likewise do not support this claim for
unfair and deceptive trade practices.
Defendant’s alleged conduct does not convert this contract dispute concerning the
Clorox Business into a tort dispute over the Beer Carton Project. Even accepting Plaintiff’s
allegations as true, and resolving all inferences in its favor, Packrite’s allegations surrounding

the withholding of quality claims and shift in the payment terms of the Clorox work relates to
the issue of damages with respect to the Clorox contract dispute and should be resolved under
contract law. “A mere breach of contract, even if intentional, is not an unfair or deceptive act
under Chapter 75.” Bob Timberlake Collection, 626 S.E.2d at 323 (citing Bartolomeo v. S.B. Thomas,
Inc., 889 F.2d 530, 535 (4th Cir.1989)). “North Carolina law ‘does not permit a party to
transmute a breach of contract claim into a tort or UDTPA claim for extraordinary damages

because awarding punitive or treble damages would destroy the parties' bargain and force the
defendant to bear a risk it never took on.’” Rahamankhan Tobacco Enterprises Pvt. Ltd. v. Evans
MacTavish Agricraft, Inc., 989 F. Supp. 2d 471, 475 (E.D.N.C. 2013) (quoting PCS Phosphate Co.
v. Norfolk S. Corp., 559 F.3d 212, 224 (4th Cir. 2009)). “Rather, a claimant must allege an
independent, identifiable tort containing an aggravating element such as malice or recklessness
in order to recover punitive damages.” Id. at 476. Plaintiff has made no such allegations.

For this reason, as well as those discussed with respect to Packrite’s failure to plead its
fraudulent omission claim in compliance with Rule 9(b), the Court likewise finds that Packrite
has failed to plead a plausible UDTPA claim. This Court will therefore grant Graphic’s motion
to dismiss Packrite’s UDTPA claim.
(iii) CONCLUSION
Plaintiff has now been given three opportunities to sufficiently plead its various fraud

and UDTPA claims and has failed to do so. A contract dispute between sophisticated
commercial parties cannot be transformed into a tort claim because of bad business decisions
resulting in loss. Rahamankhan, 989 F. Supp. at 475. It would be futile and prejudicial to
Defendant to give Plaintiff further opportunity to pursue said claims and therefore the Court

must dismiss the claims with prejudice. In light of this Court’s conclusion in relation to the
Motion to Dismiss, Defendant’s Motion for Partial Summary Judgment related to the same
claims is now moot and likewise must be dismissed.

For the reasons outlined above, the Court enters the following:
ORDER

IT IS THEREFORE ORDERED that Defendant’s Motion to Dismiss Counts III and IV
of Plaintiff’s Complaint (ECF No. 71) is GRANTED and Count III and Count IV of
Plaintiff’s Complaint are DISMISSED WITH PREJUDICE.

IT IS FURTHER ORDERED that Defendant’s Motion for Partial Summary Judgment
(ECF NO. 92) is DENIED as moot.

This the 2nd day of December 2020.
/s/ Loretta C. Biggs
United States District Judge

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10653585. Public record. Not legal advice.