Wortman v. Hutaff

Wortman v. Hutaff, 2013 NCBC 50.

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE

SUPERIOR COURT DIVISION

UNION COUNTY 10 CVS 4082

JUSTIN TODD WORTMAN, individually and

in his representative capacity as Successor and

Trustee of the Dan L. Moser Trust, dated

November 20, 2000, as subsequently amended,

JUDIE MOSER SHEPARD, CHELSEY SHEA

FELTS and DARBY VON WORTMAN,

Plaintiffs,

v.

RICHARD R. HUTAFF, THOMAS M. MOYER, ORDER AND OPINION

III, L. CARLTON TYSON, ESTATE OF CARL

A. BOGGS, JR., CARL A. BOGGS, III, C.

MARK TYSON, MILEY W. GLOVER,

individually and in his representative capacity

as Administrator C.T.A. of the ESTATE OF

DAN L. MOSER, KLJ PROPERTIES, LLC,

TOURNAMENT DRIVE INVESTORS, LLC,

and POTTER & COMPANY, P.A.,

Defendants.

Hedrick Gardner Kincheloe & Garofalo, LLP by Jeremy T. Canipe and

Amanda Johnson for Plaintiffs.

Alexander Ricks PLLC by Rodney E. Alexander for Defendants Miley W.

Glover and Potter & Company, P.A.

Caldwell Helder Helms & Robison, P.A. by R. Kenneth Helms, Jr. for

Defendants L. Carlton Tyson, the Estate of Carl A. Boggs, Jr., Carl A. Boggs,

III, C. Mark Tyson, KLJ Properties, LLC, and Tournament Drive Investors,

LLC.

Murphy, Judge.

{1} There are three Motions before the Court for resolution: (i) a Motion to

Dismiss pursuant to Rule 12(b)(6) of the North Carolina Rules of Civil Procedure

(“Motion I”) brought by L. Carlton Tyson (“Tyson”), the Estate of Carl A. Boggs, Jr.,

Carl A. Boggs, III, C. Mark Tyson, KLJ Properties, LLC (“KLJ”), and Tournament

Drive Investors (“TDI”) (collectively “Defendants I”); (ii) a Motion to Dismiss

pursuant to Rule 12(b)(6) (“Motion II”) by Miley W. Glover (“Glover”) and Potter &

Company, P.A. (“P&C”) (collectively “Defendants II”); and (iii) Plaintiffs’ Motion for

Leave to File Sur-Reply (“Motion III”). Having considered the parties’ motions,

briefs, and the arguments and contentions of counsel made during a hearing on

June 26, 2012, the Court hereby GRANTS Motion I, GRANTS in part and DENIES

in part Motion II, and DENIES Motion III.

I.

PROCEDURAL HISTORY

{2} On December 2, 2010, Plaintiffs filed their original Complaint in Union

County Superior Court, naming only Richard R. Hutaff (“Hutaff”) and Thomas M.

Moyer, III (“Moyer”) as defendants. The matter was designated a complex business

case on January 6, 2011, and subsequently assigned to this Court.

{3} Plaintiffs filed an Amended Complaint on March 18, 2011, adding as

defendants Tyson, the Estate of Carl A. Boggs, Jr., Carl A. Boggs, III, C. Mark

Tyson, Glover (both individually and in his representative capacity as

Administrator, C.T.A. of the Estate of Dan L. Moser), KLJ, TDI, and P&C.

{4} On March 13, 2012, Defendants II filed Motion II, with supporting brief,

and on March 15, 2012, Defendants I filed Motion I, with supporting brief.

{5} Plaintiffs filed Responses to Motions I and II on April 4, 2012. On April

16, 2012, in support of Motion I, Defendants I filed a Reply to Plaintiffs’ Response,

and on April 17, 2012, in support of Motion II, Defendants II filed a Reply to

Plaintiffs’ Response and a Reply in support of Motion I.

{6} On April 27, 2012, Plaintiffs filed a Motion for Leave to File Sur-Reply.

{7} The Court conducted a hearing on Defendants’ Motions on June 26, 2012.

II.

FACTUAL BACKGROUND

{8} Ordinarily, the Court does not make findings of fact in connection with

motions to dismiss pursuant to Rule 12(b)(6). See Concrete Serv. Corp. v. Investors

Grp., Inc., 79 N.C. App. 678, 681, 340 S.E.2d 755, 758 (1986). However, for the

purpose of analyzing Defendants I and II’s motions to dismiss pursuant to Rule

12(b)(6), the Court recites those facts included in the pleadings that are relevant to

the Court’s legal determinations. 1

{9} On August 6, 2002, Dan L. Moser (“Moser”) executed a Last Will and

Testament (the “Will”). Moser died testate in Union County on February 20, 2006.

(Am. Compl. ¶¶ 22, 24.)

{10} The Will provides that, after payment of all taxes and delivery of general

bequests, Moser’s residuary estate would be paid to Hutaff and Moyer in their

capacities as co-trustees of the pour-over Dan L. Moser Trust (the “Trust”) and

managed for the benefit of the Trust’s beneficiaries. (Am. Compl. ¶ 25.) In addition

to Plaintiffs, the Trust’s beneficiaries are Sharon Moser (Moser’s widow), Lawrence

P. Moser, Sr., and Mineral Springs United Methodist Church. (Am. Compl. ¶ 32.)

The terms of the Trust provide for the appointment of a successor trustee in the

event Hutaff and Moyer cease to act as Trustees. (Am. Compl. ¶ 96; Defs.’ Br. Supp.

Mot. II Ex. 2.) Specifically, the Trust states that,

If all the Settlor’s individual successor Trustees should fail to qualify

as Trustee . . . or for any reason should cease to act in such capacity,

then the successor or substitute Trustee who shall also serve without

bond shall be appointed by the following persons in the order named:

[Sharon Moser and if she] is not living and competent, a majority of the

beneficiaries . . . to whom the trust property could then be distributed .

...

(Defs.’ Br. Supp. Mot. II Ex. 2).

{11} One of the Moser Estate’s (the “Estate”) largest assets was Moser’s interest

in Carolina Golf Developers, LLC (“CGD”), a North Carolina limited liability

company that Moser, Carl A. Boggs, Jr. (“Boggs”) (now deceased), and Tyson formed

1 When conducting a 12(b)(6) inquiry, the court may consider documents that are the subject of the

action and specifically referenced in the complaint. Oberlin Capital, L.P. v. Slavin, 147 N.C. App. 52,

60, 554 S.E.2d 840, 847 (2001). In the Complaint, Plaintiffs refer to the “Will” (Am. Compl. ¶ 24), the

“Trust” (Am. Compl. ¶ 25), the “Operating Agreement” (Am. Compl. ¶ 107), the “Agreement for Sale

of Membership Interest” (Am. Compl. ¶ 214) and various documents and proceedings before the

Union County Clerk of Court (Am. Compl. ¶ 150, 217–220). The Court, therefore, considers these

documents, attached to Motion II, in reaching its determinations. (Defs.’ Br. Supp. Mot. II Ex. 1–10.)

in 1995. (Am. Compl. ¶¶ 44—45.) Under the Will, Moser’s interest in CGD became

part of the residuary estate and passed to the Trust. (Defs.’ Br. Supp. Mot. II Ex.

2.)

{12} As of February 20, 2006, Moser, Tyson, and KLJ each owned a 1/3 interest

in CGD. Boggs had previously transferred his 1/3 interest to KLJ. (Am. Compl. ¶¶

46—47.)

{13} Under the Trust, Plaintiffs were to receive all of Moser’s interest in CGD.

(Am. Compl. ¶ 49; Defs.’ Br. Supp. Mot. II Ex. 2.)

{14} On March 6, 2002, CGD entered into a loan agreement with United

Carolina Bank (“UCB”), and subsequently with UCB’s successor, Branch Banking

and Trust Company (“BB&T”), valued at approximately $2.9 million. CGD was the

primary obligor on the loan that was secured by real property owned by CGD.

Moser, Boggs, and Tyson personally and unconditionally guaranteed CGD’s

obligation under the loan agreement. (Am. Compl. ¶¶ 163–168.)

{15} The Members of CGD operated pursuant to an operating agreement (the

“Operating Agreement”) wherein the members were also the managers of the

company. (Defs.’ Br. Supp. Mot. II Ex. 3 § 5.1.) Under Section 8.8 of the Operating

Agreement,

[I]n the event of the death, or occurrence of an Event of Bankruptcy as

to, or legal incompetency or dissolution of any Member, his or its

personal representative or the trustee or receiver of his estate, after

being duly appointed and having qualified, shall have all of the rights

of a Member for the purpose of settling or managing his estate.

(Am. Compl. ¶ 108; Defs.’ Br. Supp. Mot. II Ex. 3 § 8.8.)

{16} On December 6, 2007, Hutaff and Moyer filed with the Union County

Clerk of Court their purported written resignation as co-executors of the Estate and

as Trustees of the Trust, effective December 3, 2007. Thereafter, neither took any

further action on behalf of the Estate or the Trust. However, neither Hutaff nor

Moyer gave notice of their intent to resign, or their actual resignation, to Plaintiffs,

nor did any court ever conduct a hearing on, or approve, their resignations. (Am.

Compl. ¶¶ 89—92.)2

{17} In December 2007, Sharon Moser executed a Renunciation of Right to

Qualify for Letters Testamentary or Letters of Administration in the Estate and

nominated Glover as Administrator C.T.A. (Am. Compl. ¶ 111.) On December 6,

2007, Glover submitted an Application for, and was granted, Letters of

Administration C.T.A. for the Estate. (Am. Compl. ¶¶ 113, 116.)

{18} Glover is a certified public accountant and, as a partner or shareholder in

P&C, provided professional services to the Estate on behalf of P&C. (Am. Compl.

¶¶ 112, 125.)3 Plaintiffs allege that “in connection with the services he provided to

the Estate, Glover has acted with express or implied authority conferred upon him

by [P&C].” (Am. Compl. ¶ 128.)

{19} Plaintiffs further allege that Glover, as Administrator of the Estate: (i)

transferred the Estate’s interest in Dan Moser Company, Inc. (“DMC”) and DMC

Rentals, Inc. (“DMCR”) to Sharon Moser, and (ii) made several commitments of

Estate assets, including cash distributions, to support the continued operation of

DMC. Before making the commitments, Glover petitioned and moved the Union

County Clerk of Court for approval of his actions. Following evidentiary hearings

on each petition and motion, the Clerk authorized each of Glover’s requests. (Am.

Compl. ¶¶ 129—148, 150; Defs.’ Br. Supp. Mot. II Ex. 7.1—7.8.) Glover maintained

that the commitments were in the best interest of the Estate. (Defs.’ Br. Supp. Mot.

II Ex. 7.1, 7.3, 7.5, 7.7.) After each hearing, the Clerk made findings of fact and

concluded as a matter of law that each transaction was “in the best interest of the

Estate . . . and the heirs and creditors of the Estate.” (Defs.’ Br. Supp. Mot. II Ex.

7.2, 7.4, 7.6, 7.8.)

2 In its January 30, 2012 Order, this Court concluded that Hutaff and Moyer’s resignation as

co-trustees of the Trust was not effective, and, as a result, they retained their duties as co-trustees.

Wortman v. Hutaff, 2012 NCBC 9 ¶ 50 (N.C. Super. Ct. Jan 30, 2012),

http://www.ncbusinesscourt.net/opinions/2012_NCBC_9.pdf (denying motion to dismiss predicated

on statute of limitations).

3 All of Plaintiffs’ claims against P&C are based on Glover’s conduct as Estate Administrator while in

the course and scope of his employment with P&C.

{20} On or about June 24, 2008, Boggs and Tyson demanded that Glover, as

Administrator of the Estate, make a capital contribution of $50,000.00 to CGD no

later than July 15, 2008. (Am. Compl. ¶ 118.) Glover refused the demand. (Am.

Compl. ¶ 120.)

{21} The BB&T loan matured on February 28, 2009, and became due and

payable. (Am. Compl. ¶¶ 172, 174, 176.) BB&T made demand for payment upon

the proper parties, but the loan went into default. (Am. Compl. ¶¶ 174–76.) As a

consequence, BB&T foreclosed on the loan security, which included property owned

by CGD. (Am. Compl. ¶¶ 173, 177.) Glover and certain of the Plaintiffs attended

the foreclosure hearing before the Union County Clerk of Court, and on July 7,

2009, CGD’s property was sold to Defendant TDI for $1,900,000.00 at a properly

noticed foreclosure sale. (Am. Compl. ¶¶ 178, 196–97.)

{22} At the time of the foreclosure sale, TDI’s members were Defendant Carl A.

Boggs, III (son of Boggs) and Defendant C. Mark Tyson (son of Tyson). (Am. Compl.

¶ 197.) According to Plaintiffs, Glover, Hutaff, and Moyer made no effort to defend

CGD in the foreclosure proceeding, and the sale resulted in a loan deficiency of

$411,926.46 due to BB&T. (Am. Compl. ¶¶ 179, 205.)

{23} Plaintiffs allege that Boggs, Tyson, and KLJ engaged in activities and

conduct injurious to their interest in the Estate by setting up TDI to purchase

CGD’s assets at foreclosure for less than fair market value, thereby depriving

Plaintiffs of their equitable interest in CGD. (Am. Compl. ¶¶ 238—39.)

Specifically, Plaintiffs contend that Boggs and Tyson helped their sons, Carl A.

Boggs III and C. Mark Tyson, obtain financing to purchase CGD’s assets at the

foreclosure sale. (Am. Compl. ¶ 192.)

{24} On or about September 10, 2009, Glover as Estate Administrator, Boggs

and Tyson individually, and Boggs on behalf of CGD, agreed to and executed an

Agreement for Sale of Membership Interest whereby Glover agreed to forgive any

outstanding loans or capital contributions from Moser to CGD in exchange for

Boggs and Tyson assuming the Estate’s 1/3 liability for the BB&T deficiency. (Am.

Compl. ¶ 214.) Moser’s loans and capital contributions to CGD totaled

approximately $745,130.00. (Am. Compl. ¶ 209.)

{25} On September 23, 2009, Glover submitted the Petition for Order of Sale of

Interest in Carolina Golf Developers, LLC (the “Sale Petition”) to the Union County

Clerk of Court, seeking an order granting judicial approval of the Agreement for

Sale of Membership Interest. (Am. Compl. ¶ 217; Defs.’ Br. Supp. Mot. II Ex. 9.1.)

In the Sale Petition, Glover alleged that “[i]t is in the best interest of the Estate

that [he] be allowed to sell the Estate’s interest in CGD to [Boggs and Tyson], at

private sale, in accordance with the terms of [the Sale Agreement].” (Defs.’ Br.

Supp. Mot. II Ex. 9.1.)

{26} At a properly noticed hearing before the Union County Clerk of Court on

October 13, 2009 (Defs.’ Br. Supp. Mot. II Ex. 9.2, 9.4), Glover argued that the

Estate’s membership interest in CGD had no value. (Am. Compl. ¶ 218; Defs.’ Br.

Supp. Mot. II Ex. 9.3.)

{27} Following the hearing, the Clerk issued an order approving conveyance of

the Estate’s membership interest in CGD to Boggs and Tyson (Am. Compl. ¶ 220;

Defs.’ Br. Supp. Mot. II Ex. 9.4), and made the following findings of fact in the Sale

Order: (i) “[t]he liabilities of CGD exceed the remaining assets of CGD by a

substantial amount;” (ii) “[t]he [1/3] interest in CGD that is owned by the [Estate]

has no value;” and (iii) “it is in the best interest of the Estate and the heirs and

creditors of the Estate that [Glover] be allowed to sell the Estate’s interest in CGD

to [Boggs and Tyson], at private sale.” (Defs.’ Br. Supp. Mot. II Ex. 9.4.)

{28} On September 21, 2010, Plaintiffs undertook to appoint Justin Todd

Wortman (“Wortman”) as successor trustee. (Am. Compl. ¶¶ 101.)

III.

LEGAL STANDARD

{29} The question for the court on a motion to dismiss is “whether, as a matter

of law, the allegations of the complaint, treated as true, are sufficient to state a

claim upon which relief may be granted under some legal theory, whether properly

labeled or not.” Harris v. NCNB Nat’l Bank, 85 N.C. App. 669, 670, 355 S.E.2d 838,

840 (1987) (citing Stanback v. Stanback, 297 N.C. 181, 254 S.E.2d 611 (1979)).

“[T]he pleadings, when taken as true, [must be] legally sufficient to satisfy the

elements of at least some legally recognized claim.” Arroyo v. Scottie’s Prof’l

Window Cleaning, Inc., 120 N.C. App. 154, 158, 461 S.E.2d 13, 16 (1995) (citing

Harris, 85 N.C. App. at 670, 355 S.E.2d at 840).

{30} “Dismissal of a complaint is proper under the provisions of Rule 12(b)(6) . .

. when some fact disclosed in the complaint necessarily defeats the plaintiff’s claim.”

Carlisle v. Keith, 169 N.C. App. 674, 681, 614 S.E.2d 542, 547 (2005) (quoting

Hooper v. Liberty Mut. Ins. Co., 84 N.C. App. 549, 551, 353 S.E.2d 248, 250 (1987))

(internal quotation marks omitted). In considering a motion to dismiss for failure to

state a claim upon which relief can be granted, “the well-pleaded material

allegations of the complaint are taken as admitted; but conclusions of law or

unwarranted deductions of fact are not admitted.” Sutton v. Duke, 277 N.C. 94, 98,

176 S.E.2d 161, 163 (1970) (citation omitted) (internal quotation marks omitted).

IV.

ANALYSIS

{31} In Motions I and II, Defendants I and II move to dismiss all of Plaintiffs’

claims asserted against them. Some of the claims addressed in Motion I are also

addressed in Motion II. Given this overlap, the Court will consider Motions I and II

together.

A.

STANDING

{32} Standing refers to “whether the party seeking relief has ‘alleged such a

personal stake in the outcome of the controversy as to assure that concrete

adverseness which sharpens the presentation[s] of issues upon which the court so

largely depends for illumination of difficult constitutional questions.’” Mangum v.

Raleigh Bd. of Adjustment, 362 N.C. 640, 642, 669 S.E.2d 279, 282 (2008) (quoting

Stanley v. Dep't of Conservation & Dev., 284 N.C. 15, 28, 199 S.E.2d 641, 650

(1973)) (internal quotation marks omitted). “A party has standing to initiate a

lawsuit if he is a ‘real party in interest.’” Slaughter v. Swicegood, 162 N.C. App.

457, 463, 591 S.E.2d 577, 582 (2004) (citing Energy Investors Fund, L.P. v. Metric

Constructors, Inc., 351 N.C. 331, 337, 525 S.E.2d 441, 445 (2000)). “A real party in

interest is ‘a party who is benefited or injured by the judgment in the case’ [and]

who by substantive law has the legal right to enforce the claim in question.”

Carolina First Nat'l Bank v. Douglas Gallery of Homes, 68 N.C. App. 246, 249, 314

S.E.2d 801, 803 (1984) (quoting Reliance Ins. Co. v. Walker, 33 N.C. App. 15, 18,

234 S.E.2d 206, 209 (1977)) (internal quotation marks omitted) (alteration in

original). “Standing most often turns on whether the party has alleged ‘injury in

fact’ in light of the applicable statutes or caselaw [sic].” Neuse River Found. v.

Smithfield Foods, Inc., 155 N.C. App. 110, 114, 574 S.E.2d 48, 52 (2002) (citations

omitted).

{33} First, Defendants II argue that Wortman does not have standing in this

lawsuit as successor trustee because Wortman has never been Trustee of the Trust.

Second, Defendants II argue that Plaintiffs do not have standing to maintain the

majority of the claims in this lawsuit because, as beneficiaries of the Trust,

Plaintiffs cannot demonstrate any injury to themselves that is capable of redress by

judgment. And third, Defendants II argue that Plaintiffs cannot establish the

actual damage required to sustain a claim for breach of fiduciary duty based on

Glover’s payment of administrative fees, distributions to Sharon Moser, DMC and

DMCR, abandonment of the Estate’s interest in the Moser Loans, and omission of

the Trust as the residuary beneficiary of the Estate.4

1.

WORTMAN AS TRUSTEE OF THE TRUST

{34} When there has been alleged injury to trust property the right to bring an

action ordinarily “vests in the trustee as a representative.” Slaughter, 162 N.C.

4 Defendants I argue that Plaintiffs cannot maintain a claim for breach of fiduciary duty by Boggs

and Tyson resulting from the foreclosure sale of CGD’s assets because they cannot establish actual

damage. (Defs.’ Br. Supp. Mot. I 12–13.) Because the Court concludes that Boggs and Tyson owed

no fiduciary duty to CGD or Plaintiffs, the Court does not address this argument by Defendants I.

Also, Defendants I argue that any claims for breach of fiduciary duty belong to Glover as Estate

Administrator. (Defs.’ Br. Supp. Mot. I 8.) For the same reason previously stated, the Court does

not address this argument by Defendants I.

App. at 464, 591 S.E.2d at 582. The court, in Slaughter, explained that when

property is placed into a trust, “the grantor’s legal title to that property passes to

the trustee” and the trustee assumes the legal right to maintain a cause of action

arising from wrongful conduct that inures to the detriment of the trust. Id.

{35} Here, Plaintiffs allege that they properly appointed Wortman as successor

trustee of the Trust and, therefore, he is a proper party to bring this action.

However, by the express terms of the Trust, if Hutaff and Moyer ceased to act as

Trustees, Sharon Moser had the exclusive right to appoint a successor trustee

during her lifetime, so long as she was competent. (Defs.’ Br. Supp. Mot. II Ex. 2.)

Only if Sharon Moser “is not living and competent” would “a majority of the

beneficiaries . . . to whom the trust property could then be distributed” be

authorized to appoint a successor trustee (Defs.’ Br. Supp. Mot. II Ex. 2.)

{36} At the time Plaintiffs purportedly appointed Wortman as successor

trustee, Sharon Moser was alive and Plaintiffs have failed to allege that she was

incompetent. Rather, Plaintiffs merely contend that she declined to appoint a

successor. (Am. Compl. ¶ 98.) Accordingly, Plaintiffs’ appointment of Wortman as

successor trustee did not comport with the terms of the Trust. The Court concludes,

therefore, that Wortman has never been properly authorized to serve as Trustee of

the Trust and, accordingly, has no standing herein as successor trustee.

{37} The Court, therefore, GRANTS Motion II as to Wortman’s claims in his

representative capacity as successor trustee of the Dan L. Moser Trust and

DISMISSES those claims with prejudice.

2.

PLAINTIFFS CANNOT DEMONSTRATE AN INJURY CAPABLE OF REDRESS BY

JUDGMENT

{38} Although Plaintiffs are beneficiaries under the Trust, they have no interest

in any Estate or Trust assets other than the Estate’s membership interest in CGD.

(Defs.’ Br. Supp. Mot. II Ex. 1–2.) Therefore, Plaintiffs lack standing to bring any

claims based on an entitlement to any Estate or Trust assets other than the Estate’s

membership interest in CGD.5

{39} However, Defendants II mischaracterize Plaintiffs’ claims in regard to the

distribution of those other assets. Plaintiffs reference Glover’s decisions in

distributing other Estate assets to Sharon Moser to show that he preferred one

beneficiary over the others. They do not claim any right or entitlement to those

assets, rather, Plaintiffs argue that Glover failed to protect their interest in CGD

while simultaneously protecting Sharon Moser’s interest. Plaintiffs rely on Glover’s

distribution of those assets and certain other inactions to support their claim that

Glover did not manage the Estate’s interest in CGD for the benefit of Plaintiffs, and

not as support for individual claims arising from an entitlement to those assets. As

such, Defendants II’s argument that Plaintiffs lack standing to bring most of the

claims in the Amended Complaint is unavailing.

{40} Therefore, the Court DENIES Motion II as it relates to Defendants II’s

assertions that Plaintiffs lack standing to assert most of the claims in the Amended

Complaint.

3.

PLAINTIFFS CANNOT ESTABLISH ACTUAL DAMAGES

{41} To maintain a claim for breach of fiduciary duty, Plaintiffs must have

sustained some actual damage. Piedmont Inst. of Pain Mgmt. v. Staton Found., 157

N.C. App. 577, 589–90, 581 S.E.2d 68, 76 (2003) (citations omitted). “[A]ctual

damage [means] some actual loss, hurt or harm resulting from the illegal invasion

of a legal right.” Hawkins v. Hawkins, 101 N.C. App. 529, 532, 400 S.E.2d 472,

474–75 (1991) (citation omitted).

{42} Defendants II argue that “Plaintiffs’ claims for breach of fiduciary duty

premised on Glover’s payment of administrative fees, distributions to Sharon

Moser, DMC and DMCR, abandonment of the Estate’s interest in the Moser loans

5 Such assets include cash used to pay administrative fees, DMC and DMCR stock, and

abandonment of the Estate’s interest in the loans Moser made to CGD. (Am. Compl. ¶ 366.)

and Glover’s omission of the Trust as the residuary beneficiary of the Estate must

be dismissed because [P]laintiffs cannot establish actual damage[].” (Defs.’ Br.

Supp. Mot. II 11.) In support of their argument, Defendants II rely principally on

their position that Plaintiffs were not entitled to receive any Estate assets other

than an interest in CGD. As previously noted, Plaintiffs allege only that Glover did

not manage the Estate or CGD in a manner that would protect them, thereby

causing them to lose their interest in CGD. Plaintiffs do not allege that they were

entitled to any distribution of Estate assets other than the Estate’s interest in CGD.

Accordingly, Defendants II’s argument that Plaintiffs cannot establish actual

damage for breach of fiduciary duty premised on Glover’s aforementioned actions is

misguided.

{43} For this reason, the Court DENIES Motion II as it pertains to Defendants

II’s claims that Plaintiffs cannot establish actual damage.

B.

BREACH OF FIDUCIARY DUTY

{44} “To state a claim for breach of fiduciary duty, a plaintiff must allege that a

fiduciary relationship existed and that the fiduciary failed to ‘act in good faith and

with due regard to [plaintiff’s] interests[.]’” Toomer v. Branch Banking & Trust Co.,

171 N.C. App. 58, 70, 614 S.E.2d 328, 337 (2005) (quoting White v. Consol.

Planning, Inc., 166 N.C. App. 283, 293, 603 S.E.2d 147, 155 (2004) (internal

quotation marks omitted) (alteration in original). Our Supreme Court defined a

fiduciary relationship as:

one in which there has been a special confidence reposed in one who in

equity and good conscience is bound to act in good faith and with due

regard to the interests of the one reposing confidence . . . [and] it

extends to any possible case in which a fiduciary relationship exists in

fact, and in which there is confidence reposed on one side, and

resulting domination and influence on the other.

Dalton v. Camp, 353 N.C. 647, 651–52, 548 S.E.2d 704, 707—08 (2001) (citation

omitted) (internal quotation marks omitted) (alteration in original).

{45} Plaintiffs argue that Boggs and Tyson, in their individual capacities, owed

fiduciary duties to Plaintiffs based on Boggs and Tyson’s role as managing members

of CGD, and their majority interest in CGD. In addition, Plaintiffs argue that

Glover owed fiduciary duties to Plaintiffs in his role as Administrator of the Estate.

1.

BOGGS AND TYSON AS MANAGERS OF CGD

{46} Pursuant to the North Carolina Limited Liability Company Act (the “LLC

Act”), a manager of a limited liability company “shall discharge his duties as

manager in good faith, with the care an ordinary prudent person in a like position

would exercise under similar circumstances, and in the manner the manager

reasonably believes to be in the best interests of the limited liability company.”

N.C. GEN. STAT. § 57C-3-22(b) (2013). However, managers owe these fiduciary

duties to the company, not to the individual members. Kaplan v. O.K. Techs., LLC,

196 N.C. App. 469, 474, 675 S.E.2d 133, 137 (2009). The court, in Kaplan, compared

managers of limited liability companies to directors of corporations in that “where it

is alleged that directors have breached [their] duty [as directors], the action is

properly maintained by the corporation rather than any individual creditor or

stockholder.” Id. (quoting Governor’s Club, Inc. v. Governors Club Ltd. P’ship, 152

N.C. App. 240, 248, 567 S.E.2d 781, 786–87 (2002)) (emphasis in original).

{47} Here, Boggs and Tyson owed no individual fiduciary duties to the members

of CGD, and therefore, owe no duties to Plaintiffs as beneficiaries of the Trust’s

property interest in CGD. If Boggs and Tyson owed any fiduciary duties, they were

due solely to CGD. Plaintiffs have alleged no distinct factual circumstances that

might give rise to a special confidence reposed in Boggs and Tyson as managers.

Therefore, the Court concludes that Boggs and Tyson, in their roles as managers of

CGD, owe no fiduciary duties to Plaintiffs.

2.

BOGGS AND TYSON’S MAJORITY INTEREST IN CGD

{48} Under the LLC Act, “[m]embers of a limited liability company are like

shareholders in a corporation in that members do not owe a fiduciary duty to each

other or to the company.” Kaplan, 196 N.C. App. at 473, 675 S.E.2d at 137 (citation

omitted). “An exception to this rule is that a controlling shareholder owes a

fiduciary duty to minority shareholders.” Id. In Kaplan, the court determined that

the plaintiff’s 41.5% ownership interest made him a minority shareholder, and,

therefore, he owed no fiduciary duty to the other members of the limited liability

company. Id.

{49} Here, Boggs and Tyson each own a 33.33% interest in CGD. Neither owns

a majority interest (more than 50%) in the company, and neither could individually

control CGD. Boggs and Tyson did not owe Plaintiffs fiduciary duties simply

because together they owned a majority interest in CGD and could out-vote

Plaintiffs. As minority members of CGD, neither Boggs nor Tyson individually

owed any fiduciary duty to any other member(s) of CGD.

{50} The Court concludes that Plaintiffs have failed to adequately allege the

existence of a fiduciary duty, an essential element of their claim for breach of

fiduciary duty against Boggs and Tyson. The Court, therefore, GRANTS Motion I

as to this claim and DISMISSES with prejudice Plaintiffs’ claims for breach of

fiduciary duty against Boggs and Tyson.

3.

GLOVER’S ROLE AS ADMINISTRATOR OF THE ESTATE

{51} “A personal representative is a fiduciary who . . . is under a general duty

to settle the estate of the personal representative's decedent as expeditiously and

with as little sacrifice of value as is reasonable under all of the circumstances.”

N.C. GEN. STAT. § 28A-13-2 (2013). In addition, a personal representative shall act

“for the best interests of all persons interested in the estate, and with due regard for

their respective rights.” Id. “[A]n administrator is not an insurer of the assets

committed to his care in the settlement of his decedent’s estate.” Poindexter v. First

Nat’l Bank, 244 N.C. 191, 194, 92 S.E.2d 773, 775 (1956). “In the ordinary course of

the administration all that is required of him is that he act in good faith and with

such care, foresight and diligence as an ordinarily sensible and prudent man would

act with his own property under like circumstances.” Id. (citations omitted).

Plaintiffs allege that Glover had the right, and therefore the duty, to participate in

the management of CGD to preserve its value, and his failure to do so resulted in a

breach of fiduciary duty owed to Plaintiffs as persons interested in the Estate.

{52} Here, the Operating Agreement grants a member’s personal representative

all rights of a member for the purpose of settling or managing the Estate. (Defs.’

Br. Supp. Mot. II Ex. 3 § 8.8.) All members of CGD have the right to manage the

company. (Am. Compl. ¶ 107; Defs.’ Br. Supp. Mot. II Ex. 3 § 5.1.) Specifically,

section 8.8 of the Operating Agreement states that a Member’s personal

representative may assume all of the Member’s rights in CGD “after being duly

appointed and having qualified.” (Am. Compl. ¶ 108; Defs.’ Br. Supp. Mot. II Ex. 3 §

8.8.) It is undisputed that Glover was appointed and qualified as Administrator of

the Estate in 2007. (Am. Compl. ¶¶ 113, 116.) By its terms, the Operating

Agreement confers all of the rights of a Member upon Glover, including the right to

participate in the control and management of CGD as a manager, for the purpose of

settling or managing the Estate.6

{53} As a manager, Glover had a duty to exercise his powers in good faith and

in the best interest of CGD. N.C. GEN. STAT. § 57C-3-22(b); Defs.’ Br. Supp. Mot. II

Ex. 3. Plaintiffs allege that Glover specifically elected to use Estate assets to

support the continued operation of DMC, yet refused to make any capital

contribution to CGD. It is not beyond the realm of reasonableness that Glover could

have taken steps as a manager of CGD to preserve the value of the Estate’s

membership interest in CGD and “defend” against the BB&T foreclosure

proceeding.7 The Operating Agreement confers on each manager the power to

“defend any actions or proceedings relating to” CGD and contains no requirement of

a majority vote to do so. (Defs.’ Br. Supp. Mot. II Ex. 3 § 5.1.) Moreover,

6 The Court acknowledges that there are other provisions of the Operating Agreement pertaining to

the death of a Member that could be interpreted in a way contrary to this conclusion. However, at

this stage of the case, there is sufficient evidence to support Plaintiffs’ allegations and allow the

claim to go forward.

7 Glover made cash distributions from the Estate to Sharon Moser to support the operations of DMC

and DMCR, yet refused to make capital contributions to support the operations of CGD. (Am.

Compl. ¶¶ 118, 120, 147–49.) Furthermore, Glover attended the BB&T foreclosure hearing, yet did

not offer any defenses. (Am. Compl. ¶ 178–79.)

Defendants II’s reliance on Crouse v. Mineo, 189 N.C. App. 232, 658 S.E.2d 33

(2008), for the proposition that Glover could not take these actions as a minority

member, is misplaced. The absence of an operating agreement between the parties

in Crouse prompted the court to look to the LLC Act for guidance. In this case,

however, the Operating Agreement explicitly confers upon each Member the

authority to defend CGD against any actions or proceedings. Id. at 237, 658 S.E.2d

at 36 (2008). The provisions of a written operating agreement must be followed

where one exists. Id. Therefore, Glover’s ability to exercise management rights

regarding CGD must be considered in terms of the Operating Agreement.

{54} At this stage of the proceedings, the Court is of the opinion that Plaintiffs’

allegations meet the minimal pleading standards of Rule 12(b)(6) and are sufficient

to state a claim for breach of fiduciary duty based on Glover’s failure to participate

in the management of CGD and to preserve its value. The Court, therefore,

DENIES Motion II as to the claim for breach of fiduciary duty predicated on

Glover’s failure to participate in the management of CGD, including failing to

defend the BB&T foreclosure proceeding, failing to affirmatively engage and

participate in the management of CGD, or failing to review the acts or omissions of

the surviving CGD Members.

C.

COLLATERAL ESTOPPEL

{55} Collateral estoppel “prevents relitigation of issues actually litigated and

necessary to the outcome of the prior action in a later suit involving a different

cause of action between the parties or their privies.” Thomas M. McInnis & Assocs.,

Inc. v. Hall, 318 N.C. 421, 428, 349 S.E.2d 552, 557 (1986).

To bar Plaintiffs’ claims under collateral estoppel:

(1) the issues to be concluded must be the same as those involved in

the prior action; (2) in the prior action, the issues must have been

raised and actually litigated; (3) the issues must have been material

and relevant to the disposition of the prior action; and (4) the

determination made of those issues in the prior action must have been

necessary and essential to the resulting judgment.

McCallum v. N.C. Coop. Extension Serv., 142 N.C. App. 48, 54, 542 S.E.2d 227, 233

(2001) (quoting King v. Grindstaff, 284 N.C. 348, 358, 200 S.E.2d 799, 806 (1973)).

Both Defendants I and II argue that collateral estoppel bars Plaintiffs’ claims for

breach of fiduciary duty predicated on the conveyance of the Estate’s membership

interest in CGD to Boggs and Tyson. In addition, Defendants II argue that

collateral estoppel bars Plaintiffs’ claims for breach of fiduciary duty predicated on

showing preferential treatment to Sharon Moser, to Plaintiffs’ detriment, by making

distributions of Estate assets to Sharon Moser while refusing to make a capital

contribution to CGD.

1.

CONVEYANCE OF THE ESTATE’S MEMBERSHIP INTEREST IN CGD TO BOGGS AND

TYSON

{56} “The clerk of superior court of each county . . . shall have jurisdiction of the

administration, settlement, and distribution of estates of decedents including, but

not limited to, estate proceedings as provided in G.S. 28A-2-4.” N.C. GEN. STAT. §

28A-2-1 (2013). Therefore, orders of a Clerk entered in estate proceedings within

the Clerk’s jurisdiction can serve as grounds to invoke collateral estoppel. See C.C.

Mangum, Inc. v. Brown, 124 N.C. App. 658, 659—61, 478 S.E.2d 245, 246—247

(1996) (affirming trial court’s entry of summary judgment on the basis of collateral

estoppel premised on Clerk’s order regarding foreclosure sale of real property).

{57} In this case, and pursuant to N.C.G.S. § 28A-16-2(b) (2013), Glover sought

and obtained a court order granting judicial approval of the Estate’s sale of its

membership interest in CGD to Boggs and Tyson. Defendants I and II argue that

collateral estoppel bars Plaintiffs’ claims for breach of fiduciary duty predicated on

the conveyance of the Estate’s membership interest in CGD to Boggs and Tyson

because the issue has already been litigated and decided by the Clerk of Court in its

Order Authorizing the Sale of Interest in Carolina Golf Developers, LLC (the “Sale

Order”). The Court addresses each element of collateral estoppel as applied to this

claim solely with respect to Glover, given the Court’s conclusion above that Boggs

and Tyson owed no fiduciary duty to Plaintiffs.

{58} First, whether Glover breached a fiduciary duty by entering into the

Agreement for Sale of Membership Interest and failing to act with due regard to

Plaintiffs’ interests is the same issue involved in the prior action before the Clerk of

Court. The principal issue raised before the Clerk was whether the sale of the

Estate’s membership interest in CGD to Boggs and Tyson was in the best interest of

the Estate and, therefore, of Plaintiffs. (Defs.’ Br. Supp. Mot. II Ex. 9.1.)

{59} Second, the issue of whether Glover breached a fiduciary duty by entering

into the Agreement for Sale of Membership Interest was actually litigated at an

evidentiary hearing before the Clerk. Plaintiffs received notice of, attended, and

participated in the hearing. Plaintiffs were, therefore, afforded a full and fair

opportunity to litigate the issue. (Defs.’ Br. Supp. Mot. II Ex. 9.2—9.3.) Moreover,

although Plaintiffs had the legal right to appeal the Clerk’s order, they did not do

so.

{60} Third, the issue of whether Glover breached a fiduciary duty by entering

into the Agreement for Sale of Membership Interest was material and relevant to

the disposition of the prior action. After conducting the evidentiary hearing, the

Clerk made the following findings of fact in its Sale Order: (i) “[t]he liabilities of

CGD exceed the remaining assets of CGD by a substantial amount;” (ii) “[t]he [1/3]

interest in CGD that is owned by the [Estate] has no value;” and (iii) “it is in the

best interest of the Estate and the heirs and creditors of the Estate that [Glover] be

allowed to sell the Estate’s interest in CGD to [Boggs and Tyson], at private sale.”

(Defs.’ Br. Supp. Mot. II Ex. 9.4) (emphasis added). The Clerk authorized the sale of

the Estate’s membership interest in CGD, based in part on a finding that the sale

was in the best interest of Plaintiffs as heirs of the Estate. (Defs.’ Br. Supp. Mot. II

Ex. 9.4.)

{61} Fourth, whether the sale was in the best interest of the Estate was the

principal issue decided by the Clerk, and the Clerk’s determination of that issue

was necessary and essential to approval of the sale. In approving the sale, the

Clerk determined that the sale was in the Plaintiffs’ best interest, and based its

conclusion thereon.

{62} Plaintiffs argue that collateral estoppel should not apply because the Clerk

based his conclusions upon Glover’s testimony that the Estate’s membership

interest in CGD had no value, which Plaintiffs allege was inaccurate because Glover

failed to obtain a proper valuation incorporating Moser’s capital contributions to

CGD. (Am. Compl. ¶ 219; Pls.’ Resp. Mot. I 9.) The North Carolina Court of

Appeals has previously addressed a similar issue. See Hillsboro Partners, LLC v.

City of Fayetteville, 738 S.E.2d 819, 825 (N.C. Ct. App. 2013).

{63} In Hillsboro Partners, the plaintiff argued that the defendant’s incorrect

conclusion that the plaintiff’s building was a safety hazard and its failure to

consider certain evidence in reaching that conclusion prevented collateral estoppel

from applying to its claims. Id. However, the plaintiff had been given notice of the

hearing and could have conducted its own investigation of the matter. Id. at 824–

25. The court concluded that the plaintiff could not use its failure to independently

inspect or verify the defendant’s representations “to avoid the administrative

process put in place by the North Carolina legislature.” Id. at 825.

{64} Any inaccuracy regarding the value of the Estate’s membership interest in

CGD was considered by the Clerk on the merits and, therefore, is insufficient to

counter the application of collateral estoppel. Also, Plaintiffs were given more than

ten days’ notice of the Sale Petition hearing, during which time they were at liberty

to conduct their own investigation into the value of the Estate’s membership

interest in CGD and present evidence to the Clerk. (Defs.’ Br. Supp. Mot. II Ex.

9.4.) Plaintiffs also had the legal right to appeal the Sale Order, but chose not to do

so. Thus, Plaintiffs are bound by the decision of the Clerk. Therefore, even if the

Court were to accept as true Plaintiffs’ claim that Glover’s testimony was

inaccurate, that claim will not prevent the application of collateral estoppel in this

case upon the facts before the Court.

{65} Accordingly, the Court concludes that collateral estoppel bars Plaintiffs’

claims for breach of fiduciary duty predicated on the conveyance of the Estate’s

membership interest in CGD to Boggs and Tyson. The Court, therefore, GRANTS

Motions I and II in favor of Defendants I and II regarding these claims and

DISMISSES them with prejudice.

2.

PREFERENTIAL TREATMENT OF SHARON MOSER TO PLAINTIFFS’ DETRIMENT

{66} “By G.S. 28A-2-1 the clerk is given exclusive original jurisdiction of ‘the

administration, settlement and distribution of estates of decedents’ except in cases

where the clerk is disqualified to act.” Matter of Adamee’s Estate, 291 N.C. 386,

398, 230 S.E.2d 541, 549 (1976) (quoting N.C. GEN. STAT. § 28A-2-3 (2013)).

{67} In this case, Glover petitioned and submitted several motions to the Union

County Clerk of Court to approve the commitment of Estate assets to support the

continued operation of DMC. Defendants II argue that collateral estoppel bars

Plaintiffs’ claim for breach of fiduciary duty regarding Glover’s alleged preferential

treatment of Sharon Moser to Plaintiffs’ detriment based on these commitments

because this issue has already been litigated and decided in the Clerk’s orders

authorizing the commitment of Estate assets to DMC.8 The Court addresses each

element of collateral estoppel as it applies to this claim.

{68} First, whether Glover breached a fiduciary duty by making the

commitments and failing to act with due regard to Plaintiffs’ interests is the same

issue involved in the prior actions before the Clerk. Glover’s petitions and motions

filed with the Clerk clearly demonstrate that the principal issue to be decided by the

Clerk was whether it was in the best interest of the Estate, and therefore Plaintiffs,

to commit Estate assets to DMC. (Defs.’ Br. Supp. Mot. II Ex. 7.1, 7.3, 7.5, 7.7.)

{69} Second, whether Glover breached a fiduciary duty by committing Estate

assets to DMC was raised in the petitions and motions to the Clerk and was

actually litigated in the evidentiary hearings on each petition and motion.

Plaintiffs were given sufficient notice of the hearings, actually participated in the

8 Based on the parties’ motions, briefs and the exhibits contained therein, it appears that both

parties acknowledge that the Estate still possesses the DMC and DMCR stock, so the Court will not

consider the disposition of DMC and DMCR stock in its evaluation of Plaintiffs’ claim for preferential

treatment.

hearings, and enjoyed a full and fair opportunity to litigate this issue.9 (Defs.’ Br.

Supp. Mot. II Ex. 7.1, 7.3, 7.5, 7.7.)

{70} Third, this issue was material and relevant to the disposition of the prior

action. After conducting evidentiary hearings, the Clerk found as fact and

concluded as a matter of law that each transaction was “in the best interest of the

Estate of Dan L. Moser, and the heirs and creditors of the Estate.” (Defs.’ Br. Supp.

Mot. II Ex. 7.2, 7.4, 7.6, 7.8) (emphasis added). Based on these findings and

conclusions, the Clerk authorized Glover to commit Estate assets to DMC.

{71} Fourth, the Clerk’s determination that allowing Glover to commit Estate

assets to DMC was in the best interest of the Estate and the heirs was necessary

and essential to the Clerk’s approval of the transactions. Accordingly, whether

Glover’s commitment of Estate assets to DMC was in Plaintiffs’ best interest has

already been litigated and determined by the Clerk. Plaintiffs are, therefore,

estopped from arguing that the commitment of Estate assets to DMC was to their

detriment.

{72} Based on the foregoing, the Court concludes that Plaintiffs are collaterally

estopped from bringing a claim for breach of fiduciary duty premised upon alleged

preferential treatment of Sharon Moser to Plaintiffs’ detriment by committing

Estate assets to support the continued operation of DMC. The Court, therefore,

GRANTS Motion II and DISMISSES those claims against Glover and P&C with

prejudice.

D.

CIVIL CONSPIRACY

{73} To recover on a claim of civil conspiracy, the plaintiff must show “(1) an

agreement between two or more individuals; (2) to do an unlawful act or to do a

lawful act in an unlawful way; (3) resulting in injury to plaintiff inflicted by one or

more of the conspirators; and (4) pursuant to a common scheme.” Strickland v.

9 The fact that Plaintiffs did not avail themselves of the opportunity to litigate the issue does not

change the Court’s conclusion that Plaintiffs had a full and fair opportunity to litigate. See Hillsboro

Partners, 738 S.E.2d at 826.

Hedrick, 194 N.C. App. 1, 19, 669 S.E.2d 61, 72 (2008) (citation omitted) (internal

quotation marks omitted).

{74} Plaintiffs allege that (1) Boggs and Tyson conspired to breach their

fiduciary duties, to Plaintiffs’ detriment, by entering into an agreement with Carl A.

Boggs, III, KLJ, and C. Mark Tyson to form TDI; and (2) Boggs, Tyson, and Glover

conspired to breach their fiduciary duties, to Plaintiffs’ detriment, by entering into

the Agreement for Sale of Membership Interest.

1.

AGREEMENT TO FORM TDI

{75} “[T]here is not a separate civil action for civil conspiracy in North

Carolina.” Dove v. Harvey, 168 N.C. App. 687, 690, 608 S.E.2d 798, 800 (2005)

(citations omitted). Recovery under a claim of conspiracy must be based on an

underlying claim of unlawful conduct. Id. “If the underlying acts supporting a

claim for conspiracy are dismissed, so too must the claim for conspiracy be

dismissed.” NNN Durham Office Portfolio I, LLC v. Highwoods Realty Ltd. P’ship.,

2013 NCBC 12 ¶ 102 (N.C. Super. Ct. Feb. 19, 2013),

http://www.ncbusinesscourt.net/opinions/2013_NCBC_12.pdf (granting motion to

dismiss civil conspiracy claim based on fraud, fraud in the inducement, and

negligent misrepresentation) (citing Esposito v. Talbert & Bright, Inc., 181 N.C.

App. 742, 747, 641 S.E.2d 695, 698 (2007)).

{76} Here, Plaintiffs allege that Boggs and Tyson conspired with Carl A. Boggs,

III, KLJ, and C. Mark Tyson to breach their fiduciary duties by forming TDI to

purchase the property of CGD at foreclosure, thereby depriving Plaintiffs of their

beneficial interest in CGD. (Am. Compl. ¶¶ 302, 317.) Because the underlying

claim for breach of fiduciary duty against Boggs and Tyson is dismissed, the

conspiracy claims against Boggs and Tyson predicated on the formation of TDI

cannot survive.

{77} Plaintiffs also allege that Carl A. Boggs, III, KLJ, C. Mark Tyson and TDI

conspired with Boggs and Tyson to aid them in breaching their fiduciary duties to

Plaintiffs by forming TDI. (Am. Compl. ¶¶ 326, 333, 341, 350.) Because this Court

concludes that Boggs and Tyson owed Plaintiffs no fiduciary duties, there is no

surviving underlying claim of unlawful conduct upon which Plaintiffs can maintain

a civil conspiracy claim against Carl A. Boggs, III, KLJ, C. Mark Tyson, and TDI.

Therefore, Plaintiffs’ civil conspiracy claims against Carl A. Boggs, III, KLJ, C.

Mark Tyson, and TDI should be dismissed.

2.

AGREEMENT FOR SALE OF MEMBERSHIP INTEREST

{78} Plaintiffs also allege that Boggs, Tyson, and Glover conspired to breach

their fiduciary duties by entering into the Agreement for Sale of Membership

Interest, thereby depriving Plaintiffs of their beneficial interest in CGD. As

discussed above, any claim for breach of fiduciary duty against Glover based on the

conveyance of the Estate’s membership interest in CGD to Boggs and Tyson is

barred by collateral estoppel. Therefore, since Plaintiffs have no underlying claim

for breach of fiduciary duty, the conspiracy claim based on the Agreement for Sale of

Membership Interest must also be dismissed.

{79} Given that there are no surviving claims upon which Plaintiffs’ claims for

civil conspiracy can stand, the Court GRANTS Motions I and II as to the civil

conspiracy claims and, therefore, DISMISSES Plaintiffs’ civil conspiracy claims

with prejudice.

E.

PUNITIVE DAMAGES

{80} To prevail on a claim for punitive damages, Plaintiffs must succeed on a

claim for compensatory damages, and prove by clear and convincing evidence that

at least one of the following aggravating factors was present: fraud, malice, or

willful or wanton conduct. N.C. GEN. STAT. § 1D-15 (2013); Sellers v. Morton, 191

N.C. App. 75, 85, 661 S.E.2d 915, 923 (2008). Here, Plaintiffs bring a claim for

punitive damages based on all claims against Defendants I and II, alleging that

their conduct constituted a willful and wanton disregard for Plaintiffs’ interests.

{81} Because a claim survives against Glover, and Plaintiffs allege he acted

willfully, Plaintiffs’ claims for punitive damages against Glover and P&C also

survive at this stage.10 However, the Court has dismissed all underlying claims for

compensatory damages against Defendants I. As such, Plaintiffs’ claims for

punitive damages against Defendants I are also dismissed.

{82} Accordingly, the Court GRANTS Motion I as to Plaintiffs’ punitive

damages claims against Defendants I, and DENIES Motion II as to Plaintiffs’

punitive damages claims against Defendants II. Plaintiffs’ punitive damages claims

against Defendants I are DISMISSED with prejudice.

V.

PLAINTIFFS’ MOTION FOR LEAVE TO FILE SUR-REPLY

{83} Based on the foregoing, and having considered Motion III and the briefs in

support of and opposition thereto, the Court DENIES Motion III.

VI.

CONCLUSION

{84} The Court GRANTS Motion I, GRANTS in part and DENIES in part

Motion II, and DENIES Motion III.

{85} WHEREFORE, the Court hereby DISMISSES Plaintiffs’ claims for breach

of fiduciary duty by Boggs and Tyson; breach of fiduciary duty by Glover and P&C

predicated on: (i) the conveyance of the Estate’s membership interest in CGD to

Boggs and Tyson, and (ii) preferential treatment to Sharon Moser to Plaintiffs’

detriment; civil conspiracy; punitive damages against Defendants I; and all claims

brought by Justin Todd Wortman in his representative capacity as Successor and

Trustee of the Dan L. Moser Trust.

SO ORDERED, this the 29th day of October, 2013.

10 All of Plaintiffs’ claims against P&C are based on Glover’s actions in his role as Administrator of

the Estate and as a partner or shareholder in P&C. (Am. Compl. ¶¶ 125–28, 362, 373.)