Heron Bay Acquisition, LLC v. United Metal Finishing, Inc.

Heron Bay Acquisition, LLC v. United Metal Finishing, Inc., 2014 NCBC 15.

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE

SUPERIOR COURT DIVISION

COUNTY OF GUILFORD 12 CVS 5505

HERON BAY ACQUISITION, LLC, )

)

Plaintiff, )

)

v. )

)

ORDER

UNITED METAL FINISHING, )

INC., CLAUDE T. CHURCH and )

CATHERINE H. CHURCH, )

)

Defendants. )

)

{1} THIS MATTER is before the court on cross-motions for summary

judgment pursuant to Rule 56 of the North Carolina Rules of Civil Procedure

(“Rule(s)”). For the reasons stated below, Plaintiff’s motion is DENIED and

Defendants’ motion is GRANTED in part and DENIED in part.

Blanco Tackabery & Matamoros, P.A. by Peter J. Juran and Toni J. Grace for

Plaintiff Heron Bay Acquisition, LLC.

Tuggle Duggins, P.A. by Denis E. Jacobson, Jeffrey S. Southerland, and

Sarah J. Hayward for Defendants.

Gale, Judge.

I. PROCEDURAL HISTORY

{2} Plaintiff Heron Bay Acquisition, LLC (“Heron Bay”) initiated this

lawsuit on April 16, 2012. The matter was designated a Complex Business Case by

Chief Justice Sarah Parker on April 18, 2012, and assigned to the undersigned on

April 25, 2012.

{3} The action arises out of agreements by which Plaintiff contracted to

purchase Defendants’ business and the real estate upon which it is located.

Defendants terminated the agreements prior to closing. Plaintiff sues for damages

related to the termination, but does not seek specific performance. Plaintiff filed an

Amended Complaint on October 24, 2013, bringing claims for: (1) breach of the

Asset Purchase Agreement; (2) breach of the Real Estate Contract; (3) breach of the

covenant of good faith and fair dealing; and (4) unfair and deceptive trade practices.

Defendants answered the Amended Complaint on November 25, 2013.

{4} Plaintiff and Defendants filed cross-motions for summary judgment

(“the Motions”) on December 2, 2013. The Motions have been fully briefed, the court

heard oral argument on February 20, 2014, and the matter is ripe for disposition.1

II. PARTIES

{5} Plaintiff Heron Bay is an Ohio limited liability company created to

acquire companies which maintains its principal place of business in Uniontown,

Ohio. (Am. Compl. ¶ 1; Answer ¶ 1.) Scott Lowrie (“Lowrie”), an Ohio citizen, owns

Heron Bay. (Am. Compl. ¶ 1; Answer ¶ 1.)

{6} Defendant United Metal Finishing, Inc. of Greensboro (“UMF”) is a

North Carolina corporation located in Greensboro, North Carolina. (Am. Compl. ¶

2.) Defendants Claude Church (“Church”) and Catherine Church (collectively “the

Churches”) own the land on which UMF operates. (Am. Compl. ¶ 4; Answer ¶ 4.)

Church is UMF’s sole shareholder. (Am. Compl. ¶3; Answer ¶ 3.)

III. FACT STATMENT2

{7} UMF is in the business of electro-plating and anodizing metal, which

involves chemicals and materials that coat metal products. (Am. Compl. ¶ 6;

Answer ¶ 6.) In 2009, the Churches began to explore selling UMF and the

accompanying real property (“the Property”). Late that year, Heron Bay learned

1 A related case, Paradigm Financial Group, Inc. v. Church, No. 12-CVS-357 (Surry County) (N.C.

Super. Ct.) (herein after “the Paradigm case”) was also designated as a complex business case and

assigned to this court. The court heard motions for summary judgment in that case on the same day.

The court issues a separate order on those motions.

2 Unless otherwise noted, these facts are uncontested and are established by the record submitted.

The court does not make findings of fact when ruling upon a motion for summary judgment. Hyde

Ins. Agency, Inc. v. Dixie Leasing Corp., 26 N.C. App. 138, 142, 215 S.E.2d 162, 164–65 (1975).

that UMF and the Property were for sale, and Lowrie, representing Heron Bay,

signed a Confidentiality and Warranty Agreement to begin negotiations with UMF’s

broker, Paradigm Financial Group, Inc. (“Paradigm”), to purchase the business and

the Property. (Br. Supp. Pl. Mot. Summ. J. (“Pl. Supp. Br.”) Ex. 98; Am. Compl. ¶ 8;

Lowrie Aff. ¶ 4; Lowrie Dep. vol. I 10:15–20:30, Apr. 25, 2013.) A few months later,

Church received a demand from the Guilford County Department of Public Health

to remediate contamination at UMF and the Property after a report from ECS

Carolinas, LLP (“ECS”), an environmental consulting firm, revealed the extent of

contamination on the Property. (Pl. Supp. Br. Exhibit 64; Claude T. Church Dep. vol

I. 91:8–20, 100:18–101:25, Mar. 8, 2013.) Upon learning of this contamination,

Lowrie ceased negotiating UMF’s purchase. (Lowrie Aff. ¶ 6.)

{8} Heron Bay resumed negotiations in November 2010 when it learned

that UMF had retained ECS and an environmental attorney, George House

(“House”), to assist in remediating the contamination. (Lowrie Aff. ¶¶ 8–9.) Church

and House informed Lowrie that the North Carolina Department of Environment

and Natural Resources (“DENR”) had a program designed to encourage buyers to

purchase contaminated property by cutting off the buyer’s liability for past

contamination (“the Brownfield Program”). Essentially, the buyer of contaminated

land enters into a contract with DENR (“Brownfield Agreement”) which absolves

the buyer of liability to the State for historic contamination. (Eckard Dep. 36:7–24.)

Before entering a Brownfield Agreement, the buyer conducts testing on the land to

determine a baseline for existing contaminants at the time of purchase. (Eckard

Dep. 34:8–25.) On average, it takes approximately eighteen to twenty-four (18–24)

months from preliminary approval of a Brownfield Application to finalize a

Brownfield Agreement. (Eckard Dep. 85:7–10.) The shortest Brownfield Process of

of which DENR representative, Sharon Eckard (“Eckard”), is aware took twelve (12)

months to complete, and even then the purchaser was still performing his

obligations under the Brownfield Agreement at the time of her deposition. (Eckard

Dep. 30:16–31:4.)

{9} On March 9, 2011, DENR conditionally approved Heron Bay’s

Brownfield Application. (Pl. Supp. Br. Ex. 125; Lowrie Aff. ¶ 12; Eckard Dep. 54:2–

56:2.) Heron Bay, UMF, and the Churches then entered into formal contracts for

the purchase of UMF (“the Asset Purchase Agreement” or “APA”) and the Property

(“the Real Estate Contract” or “RPA”) (collectively, “the Purchase Agreements”).

(Pl. Supp. Br. Ex. 18 (“RPA”), Ex. 20 (“APA”).) Among other things, the Purchase

Agreements included certain representations and undertakings, including: (1)

representations as to the Property’s environmental condition and UMF’s ongoing

operations; (2) assurances regarding customer and supplier contracts; (3) giving

Heron Bay exclusive rights to purchase UMF by preventing Church from shopping

the company around to other interested purchasers; and (4) subject to certain

conditions, giving either party the right to terminate the Purchase Agreements

following November 1, 2011, less than nine months after Heron Bay’s Brownfield

Application had received preliminary approval.

A. Environmental Representations

{10} Although Heron Bay was obviously aware of environmental issues

from past operations when entering the Purchase Agreements, UMF and the

Churches made representations and undertook indemnity obligations in the

Purchase Agreements to protect Heron Bay’s post-acquisition liabilities.

Specifically, UMF represented that: (1) no hazardous materials were used in the

business; (2) no hazardous materials were released on the Property; (3) UMF was in

compliance with all relevant environmental laws; (4) Defendants would comply with

all relevant environmental laws going forward; (5) Defendants knew of no liabilities

resulting from environmental violations; (6) all UMF equipment was in good repair;

and (7) Defendants were not aware of any previous events which would have a

material adverse effect on the business. (RPA §§ 6.1.2, 6.1.6, 10.2; APA §§ 3.1.29,

3.1.23(a), (d)–(g), 3.1.9, 3.1.12(g), 3.1.15, 3.1.14.) Defendants promised to indemnify

Plaintiff for any liability resulting from Defendants’ failures to comply with these

representations. (APA § 6.1(c); RPA § 12(i).)

{11} Any remedy for inaccurate representations was limited by the

“Environmental Exceptions” listed in the APA and RPA, which provide that

Defendants would indemnify Heron Bay for any liability it incurred as a result of

environmental breaches for which Heron Bay would not receive Brownfield

immunity. (APA, Schedule 3.1.23; RPA, Ex. E.)

{12} Heron Bay contends that the Churches learned from ECS and House

that UMF equipment and operations were broken, in need of repair, historically

leaked contaminants onto the Property, and continued to pollute the Property.3 (Pl.

Supp. Br. 11.) Once documented, DENR required Defendants to remediate the

potential release of pollutants from underground piping, (Eckard Dep. 135:1–23,) by

renovating a concrete floor on the Property to lower the risk of future releases and

by remediating the soil below the concrete.4 (Eckard Dep. 136:31–138:3.)

{13} ECS was requested to do further testing to set a baseline for any

Brownfield Agreement. ECS’s subsequent testing revealed that the existing

contamination was more extensive than its former reports indicated. Specifically,

the groundwater test revealed that Nickel was at 16,000 mpl (the legal limit is 100),

and Chromium was as high as 47,000 mpl (the legal limit is 10). (Pl. Supp. Br. Ex.

147, Eckard Dep. 230:4–20.) The Parties dispute whether these elevated results

indicate that UMF continued to contaminate the Property, or whether previous

testing did not include enough statistical data for an accurate sampling and that

the more extensive documented level of contamination resulted from the wider

array of data samples.

B. Representations Regarding Customer and Supplier Contracts

{14} The APA represents that “[n]either [UMF] nor [Church] knows, or has

any reasonable grounds to know, that any such customer or supplier or any

material distributor has terminated or expects to terminate a portion of its normal

business with [UMF], as a result of the transactions contemplated in this

3 In support, Plaintiff cites three pages of deposition testimony that it did not include in the record.

4 Section III(E) provides a more detailed discussion of the subsequent remediation.

Agreement or otherwise.” (APA § 3.1.25.) Church testified that the “determining

factor” in his decision to terminate the Purchase Agreements was that UMF’s

“biggest customer,” Grass America, expressed serious concern about the change in

UMF’s ownership. (Claude T. Church Dep. 68:9–70:2, Sept. 24, 2013.) The record

suggests that on several occasions a representative from Grass America asked

Church’s employees how the change in UMF’s control would affect its business

relationship with the company. (Claude T. Church Dep. 69:17–70:21, Sept. 24,

2013.) Church did not advise Heron Bay of Grass America’s concern. (Claude T.

Church Dep. 70:24–71:9, Sept. 24, 2013.)

C. Post-Agreement New Equipment Purchases

{15} Plaintiff’s initial brief provides a list of the Purchase Agreements

sections that Defendants allegedly violated, including APA Sections 3.1.12(g),

3.1.19, 3.1.29, and 4.1.2, (Pl. Supp. Br. 10–11,) which contain future assurances

that: (1) Defendants will continue to disclose any material adverse effect on UMF

and will not themselves cause any adverse effect; (2) Defendants will continue to

disclose all agreements to which UMF is a party; and (3) the updated disclosures

UMF submits to Heron Bay will not have omissions. (Pl. Supp. Br. 10–11.) In its

Reply Brief, Plaintiff contends, for the first time, that UMF violated those

provisions by purchasing new equipment without Heron Bay’s permission. (Pl.

Supp. Br. Ex. 64; Pl.’s Reply Br. Supp. Mot. Summ. J. (“Pl. Reply Br.”) 3.)

D. No-Shop Agreement

{16} The APA prohibits Church from negotiating with another for the sale

and purchase of the business and real estate during the term of the agreements

with Heron Bay. A few months after signing the Purchase Agreements, Church

communicated with Pioneer Metal Finishing, LLC (“PMF”) concerning the sale of

UMF. (Pl. Supp. Br. Ex. 74–77.) In addition, Church hosted a site visit from Steve

King, a representative from PMF. (Pl. Supp. Br. Ex. 79.) PMF representatives

concluded that Church was “very interested in [PMF] pursuing an offer[]” and that

UMF could “get out of [its Heron Bay] contract for 25-50k”. (Pl. Supp. Br. Ex. 79;

see also, Pyle Dep. 48:12–49:8, 51:2–12 (testifying that Church was pursuing

discussions with PMF regarding UMF’s sale while under contract with Heron

Bay).)5 There is no evidence that Church disclosed UMF’s financial information to

PMF until after he terminated the Purchase Agreements.

{17} After November 1, 2011, the date on which the APA afforded either

party the right to terminate, (APA § 8.1(a),) but before Defendants later terminated

the Purchase Agreements, a PMF representative emailed Church’s accountant,

Ronall Davis (“Davis”), asking for financial information which Church had

previously denied him. (Pl. Supp. Br. Ex. 81 (email to Davis which reads, “[Church]

indicated his agreement with his prospective buyer has expired or at least triggered

the option for [Church] to terminate the agreement. We agreed he would call you to

provide us with information for a [sic] evaluation.”).) Church did not inform Heron

Bay of PMF’s interest in and discussion with UMF. (Lowrie Aff. ¶ 39.)

{18} Before Defendants terminated the Purchase Agreements, Davis also

met and communicated with an attorney, Jessica Cox (“Cox”), who represented

another potential purchaser, George Harrison (“Harrison”). (Cox Dep. 15:15–22.)

On January 23, 2012, Davis and Cox met to discuss the purchase of UMF and on

February 1, 2012, Cox sent Church a Letter of Intent, which detailed Harrison’s

offer to purchase UMF. (Pl. Supp. Br. Ex. 308.) Davis went over UMF’s financial

data with Harrison.6 (Davis Dep. 168:16–25.) Church met with Harrison’s agents

and considered his offer to purchase without informing Heron Bay. (Cox Dep.

15:15–22, 16:19–23.)

Paradigm case, to

5 Heron Bay incorporates the discussion of all No-Shop violations in briefs filed the

which this deposition, and several others, were attached.

6 Church testified that any information Davis shared with Cox and Harrison would have been

contrary to Church’s express instructions. (Claude T. Church Dep. vol. II 361:1–14, July 24, 2013.)

Davis testified that he went over the financials with Harrison at Church’s instruction. (Davis Dep.

168:16–25.)

E. UMF’s Alleged “Improper” Remediation

{19} Upon receiving ECS’s 2011 report regarding contamination on the

Property and within UMF operations, Lowrie met with Church to discuss the

remediation Defendants would need to undertake to consummate the transaction.

(Lowrie Aff. ¶ 24.) Lowrie contends remediation required an independent expert.

(Lowrie Aff. ¶ 24.) Church instead had his own maintenance man undertake the

remediation. (Lowrie Aff. ¶ 26.) UMF undertook to reline the sumps, change the

piping, and use an epoxy floor sealant. (Claude T. Church Dep. 37:7–11, Sept. 24,

2013.) When he discovered that Church had utilized a UMF employee to remove

the concrete floor, Lowrie advised Church that the contaminated floor should be

disposed of according to environmental regulations. (Lowrie Aff. ¶ 27.) Heron Bay

contends the remediation was substandard and in violation of APA Section 3.1.23,

which provides that Defendants would make reasonable industry standard repairs

and renovations to UMF equipment and operations prior to closing. (APA § 3.1.23.)

Church does not recall whether he notified DENR or Guilford County Department

of Public Health of these remediation efforts.

F. Defendants’ Termination

{20} Various communications between November 1, 2011 and Defendants’

later termination are reflected in Exhibits 167 through 175, which Plaintiff

contends collectively show that Defendants elected to waive their right to terminate

after November 1, 2011. Defendants gave oral notice of their intent to terminate

the Purchase Agreements pursuant to APA Section 8.1(a)(iv) during a November 2,

2011 telephone conference between their attorney (“Stanaland”) and Lowrie. (Pl.

Br. Opp’n Defs.’ Mot. Summ. J. (“Pl. Opp’n Br.”) Ex. 168, ¶ 1.) Two days later,

Defendants indicated they would defer termination and asked Lowrie to articulate

the steps he believed Defendants should take to satisfy the Purchase Agreements’

conditions. (Pl. Supp. Br. Ex. 167.) Exhibit 169 is an email from Stanaland to

Lowrie on November 8, 2011, affirming that Lowrie was permitted to resume direct

contact with Church and to visit the facilities, and that there was no impediment to

Church sending financial information Lowrie requested. (Pl. Opp’n Br. Ex. 169.)

On or around November 10, 2011, Lowrie advised Stanaland of UMF’s

noncompliance issues, to which Stanaland responded with a summary of

Defendants’ concerns about Heron Bay’s failure to satisfy the Purchase Agreements’

terms. (Br. Opp’n to Defs.’ Mot. Summ. J. (“Pl. Opp’n Br.”) Ex. 170 and 171.) On

November 18, 2011, Lowrie sent Stanaland an email stating that UMF would be

required to remediate certain ground contamination and any ongoing release of

contaminants from UMF operations. (Pl. Opp’n Br. Ex. 175.) Each of the Parties

indicated that the other would be required to undertake certain activities after

DENR released its draft of a Brownfield Agreement. (Pl. Opp’n Br. Ex. 174.)

{21} On February 17, 2012, Defendants terminated the Purchase

Agreements in writing. (Lowrie Dep. vol. II 397:1–8, Apr. 26, 2013; vol. III 464:11–

17, May 15, 2013.)

G. Defendants’ Alleged Improper Post-Termination Use of Heron Bay’s Brochure

{22} As negotiations progressed, Heron Bay updated UMF’s brochure and

website to attract new customers in anticipation of closing the transaction and

taking over UMF. (Lowrie Aff. ¶ 60.) Lowrie paid a photographer to shoot pictures

around the Property and drafted the text of the brochure. (Lowrie Aff. ¶ 60.) Heron

Bay contends that after terminating the Purchase Agreements, Defendants

misappropriated Plaintiff’s brochure and used it in the marketplace for their own

personal gain. (Lowrie Aff. ¶ 60.)

IV. LEGAL STANDARD

{23} Summary judgment is proper when the pleadings, depositions,

answers to interrogatories, admissions, and affidavits show that no genuine issue as

to any material fact exists and that the movant is entitled to judgment as a matter

of law. N.C. R. Civ. P. 56(c); Andresen v. Progress Energy, Inc., 204 N.C. App. 182,

184, 696 S.E.2d 159, 160–61 (2010).

V. ANALYSIS

A. Plaintiff’s Contract Claims

{24} Plaintiff complains that Defendants breached several provisions of the

APA and RPA, and subsequently wrongfully terminated the Purchase Agreements

under APA Section 8.1(a)(iv). While Plaintiff does not seek specific performance, it

contends that Defendants improperly terminated the contract because of

Defendants’ own breaches of the Purchase Agreements, thereby triggering liability

for wrongful termination. The claims require the court first to examine whether

Defendants had the right to terminate after November 1, 2011, and if they did,

whether they did so in a manner or for reasons which expose them to liability for

wrongful termination, and how any liability is to be measured in light of the remedy

provisions of the Purchase Agreements.

1. Defendants Had the Right to Terminate the Purchase Agreements; but

Material Fact Issues Remain as to Whether Plaintiff May Recover

Damages for the Termination

{25} The court concludes that the uncontested facts establish that

Defendants had the right to terminate the Purchase Agreements on February 17,

2012, and did not waive that right after November 1, 2011. The court finds without

merit Plaintiff’s alternative arguments that: (1) Section 8.1(a)(iv) was only a “check

date” that gave Defendants a right to terminate the contract on November 1, 2011,

which expired if not exercised on that date; (2) even if the right to terminate

extended beyond November 1, 2011, a party could not exercise it while in

substantial breach; and (3) Defendants waived or are otherwise equitably estopped

from exercising any right to terminate they retained after November 1, 2011.

{26} Analysis begins with the contractual provision. APA Section 8.1

provides, in relevant part:

(a) Anything herein or elsewhere to the contrary notwithstanding, this

Agreement may be terminated by written notice of termination at any

time before the Closing Date only as follows . . . (iv) by either [Heron

Bay] or [UMF] if the transactions contemplated hereby have not been

consummated by November 1, 2011.

...

(b) If this Agreement is terminated as permitted by Section 8.1(a) hereof,

such termination shall be without liability of any party . . . to any other

party to this Agreement provided however, that if such termination

shall result from the willful failure of any party to fulfill a condition to

the performance of the obligations of any other party or to perform a

covenant of this Agreement or from a willful breach by any party to

this Agreement, such party shall be fully liable for any and all losses,

costs, claims, or expenses, incurred or suffered by the other parties as a

result of such failure or breach.

(APA § 8.1 (emphasis added).)

i. November 1, 2011 Was Not Only a “Check Date”

{27} Plaintiff argues that APA Section 8(a)(iv) “was not intended to by [sic]

used by any party in the manner it is asserted by UMF or Claude Church as set

forth in the Termination Letter.” (Pl. Supp. Br. 21.) Rather, Plaintiff contends, the

provision was drafted to provide only a way to terminate the transaction if it was

stalled as of November 1, 2011. (Pl. Supp. Br. 21.) Because it was just a “check

date,” Plaintiff contends that negotiations and efforts toward closing after

November 1, 2011 evidence an intent to proceed to closing with no further threat of

termination.

{28} Defendants argue and the court agrees that this interpretation has no

evidentiary support and contradicts the APA’s clear language. (Defs.’ Resp. Br.

Opp’n Pl. Mot. Summ. J. (“Defs. Opp’n Br.”) 17.)

{29} The Parties could have included express language to limit the

termination right as Plaintiff contends. But they did not. Rather, they agreed that

either party could terminate the Purchase Agreements “at any time before the

Closing Date” (APA § 8.1(a),) “if the transactions contemplated . . . have not been

consummated by November 1, 2011.” (APA § 8.1(a)(iv).) It is undisputed that the

sale had not been consummated on this date, and there is no evidence that the

Parties ever agreed to a contract modification expressly eliminating the termination

right or extending the consummation date.

ii. The Right to Terminate Was Not Conditioned on the Absence of

Any Substantial Breach

{30} Plaintiff alternatively contends that Defendants may not terminate the

Purchase Agreements while in substantial breach. (Pl. Opp’n Br. 6.) Defendants

respond that Plaintiff’s interpretation again ignores the APA’s plain language.

(Reply Br. Supp. Defs.’ Mot. Summ. J. (“Defs. Reply Br.”) 4.)

{31} The court agrees with Defendants’ position for the same reason it could

not accept Plaintiff’s invitation to view the termination provision as merely a check

date. The Purchase Agreements specifically contemplate the possibility that one

party might terminate for the very reason that it was in willful breach of a

condition. It then provides the remedy that will follow for such a willful breach.

(APA § 8.1(b).) The chosen language is plainly inconsistent with the argument that

termination was conditioned on the absence of breach.

iii. The Evidence Does Not Support a Conclusion that Defendants

Waived Their Right to Terminate

{32} Alternatively, Plaintiff contends that Defendants waived their

termination right because UMF and Heron Bay continued to work towards closing

after November 1, 2011 and did so because UMF expressed the intent to move

forward. (Pl. Opp’n Br. 9–11.) Defendants respond both that the evidence does not

support any argument that they renounced their right to terminate and moreover

that the APA contains an explicit non-waiver provision requiring the party

discharging the contractual right to do so in a signed writing. (Defs. Reply Br. 7;

APA § 10.4.)

{33} A party seeking to show waiver of a contractual right must

demonstrate that the waiving party intended to relinquish the benefit at issue, and

manifested that intention either expressly or impliedly. Fairview Devs., Inc. v.

Miller, 187 N.C. App. 168, 172–73, 652 S.E.2d 365, 368 (2007). Courts disfavor

implicit waiver of a contractual right. Id. at 173, 652 S.E.2d at 369.

{34} Plaintiff invites the court to infer Defendants’ intent to waive their

contractual termination right from those communications detailed in Section III(F)

of this Order. Having studied those communications carefully, the court concludes

that any inference to be drawn would be that Defendants reserved rather than

waived their right to terminate.

{35} Defendants’ willingness to continue toward a potential closing does not

support the clear implication necessary under the case law to find a waiver of a

clear and express contractual termination right.

{36} While the case law disfavoring waiver by implication might be alone

dispositive, here the APA contains an express non-waiver provision. North Carolina

courts have recognized and enforced similar provisions. See, e.g., Long Drive

Apartments v. Parker, 107 N.C. App. 724, 729, 421 S.E.2d 631, 634 (1992) (noting

that the contract between the parties clearly indicated that certain actions would

not constitute waiver).

{37} The APA provides:

The rights and remedies of the parties to this Agreement are

cumulative and not alternative. Neither any failure nor any delay by

any party in exercising any right, power or privilege under this

Agreement or any of the documents referred to in this Agreement will

operate as a waiver of such right. . . . To the maximum extent

permitted by applicable law, (a) no claim or right arising out of this

Agreement can be discharged by one party . . . unless in writing signed

by the other party entitled to the benefit of such claim or right; (b) no

waiver that may be given by a party will be applicable except in the

specific instance for which is given; and (c) no notice to or demand on

one party will be deemed to be a waiver of any obligation of that

party[.]

(APA § 10.4.)

{38} Plaintiff has not identified any written, signed waiver of Defendants’

right to terminate the Purchase Agreements pursuant to APA Section 8.1(a)(iv). It

has not otherwise offered evidence adequate to overcome the APA’s non-waiver

provision. In sum, the court finds that the uncontested record defeats any claim

that Defendants waived their contractual termination right.

iv. Defendants Are Not Equitably Estopped from Exercising Their

Termination Right

{39} Even if Defendants did not waive the termination right, Plaintiff

asserts that they are equitably estopped from exercising it because Heron Bay

“spent innumerable hours working towards closing” in reasonable reliance on

Defendants’ representations that they would cure all material breaches prior to

closing. (Pl. Opp’n Br. 11.)

{40} “[E]quitable estoppel precludes a party from asserting rights he

otherwise would have had against another when his own conduct renders assertion

of those rights contrary to equity.” Woodring v. Swieter, 180 N.C. App. 362, 374–75,

637 S.E.2d 269, 279–80 (2005) (quoting Ellen v. A.C. Schultes of Md., Inc., 172 N.C.

App. 317, 321, 615 S.E.2d 729, 732 (2005)). Among other limitations, equitable

estoppel is not properly invoked when the party seeking it has an adequate remedy

at law. Mitchell, Brewer, Richardson, Adams, Burge & Boughman, PLLC v.

Brewer, 209 N.C. App. 369, 389, 391, 705 S.E.2d 757, 771–72 (2011) (holding

equitable estoppel was inappropriate to create an operating agreement governing

withdrawal after deadlock had arisen because there was an adequate remedy at law

under N.C. Gen. Stat. § 57C-6-02 (2011)) (citing Hawks v. Brindle, 51 N.C. App. 19,

25, 275 S.E.2d 277, 282 (1981) (denying recovery on an equitable restitution claim

where plaintiffs could recover under breach of covenant and had an adequate

remedy at law)).

{41} The court finds that the same evidence that is inadequate to

demonstrate any waiver is also inadequate to create the factual basis of an

equitable estoppel defense. In addition to this lack of record evidence, the contract

provides a legal remedy if the termination was for certain causes. If Plaintiff is able

to prove that Defendants’ own willful breaches of the Purchase Agreements

motivated their termination, the APA permits Plaintiff to recover damages it can

prove are related to those causes under APA Section 8.1(b). In this case, equitable

estoppel is improper both for lack of an evidentiary record, and because the

Purchase Agreements provide a remedy at law.

2. Breach of Contract Claims

{42} While Plaintiff’s claims are more focused on Defendants’ “wrongful”

termination, Plaintiff also asserts additional breach of contract claims. To prevail

on its claims for breach of contract, Plaintiff must demonstrate that: (1) valid

contracts existed between the parties; (2) Defendants breached those terms; and (3)

damages resulted from the breach. Claggett v. Wake Forest Univ., 126 N.C. App.

602, 608, 486 S.E.2d 443, 446 (1997).

{43} Plaintiff recites a litany of nineteen provisions from the APA and five

provisions from the RPA which it claims Defendants breached. (Pl. Supp. Br. 9–11.)

Without the benefit of a more specific statement, the court has plodded through the

cited sections. Having done so, the court concludes that many claims have no

adequate factual support to proceed but that material issues of fact allow limited

claims for breach to survive summary judgment.

i. Plaintiff’s Claims for Breach of Environmental Warranties and

Representations Fail

{44} Plaintiff contends that Defendants knowingly misrepresented the

existing condition of UMF and its liabilities at the time the APA and the RPA were

signed,7 and subsequent to their execution continued to leak harmful contaminants

into the soil in violation of several of the Purchase Agreements’ provisions.8 More

specifically, Plaintiff asserts misrepresentations regarding: (1) hazardous materials

used in the business; (2) hazardous materials released on the property; (3) the

Property’s and UMF’s compliance with all relevant environmental laws; (4) UMF’s

7 Plaintiff contends that Defendants made knowing environmental misrepresentations in APA §§

3.1.9, 3.1.12(g), 3.1.14, 3.1.15, 3.1.19, 3.1.23 (a), (d)–(g), 3.1.25, 3.1.39, 4.1.1, 4.1.4, 4.1.6, and 4.1.7;

and RPA §§ 6.1.2 and 6.1.6.

8 Upon discovering what Plaintiff alleges was UMF’s continued contamination, Plaintiff contends

that it became aware that Defendants were also in breach of APA §§ 3.1.23(k) and 3.1.16, and RPA §

10.2.

promise to remain in compliance with all environmental laws; (5) UMF’s liability for

environmental violations; (6) the condition of UMF’s equipment; and (7) the

Churches’ report that they were not aware of any occurrence which would have a

material adverse effect on the business. (APA §§ 3.1.23(a), (d)–(g), 3.1.9, 3.1.12(g),

3.1.15, 3.1.14.) Based on ECS’s later testing, Plaintiff claims it first discovered the

extent of contamination on the Property, particularly at the property line, as well as

indications that UMF’s operations stood on contaminated lands or waters, (APA §

3.1.23(k),) that UMF had not kept the Property free of waste while each party

prepared for closing, (RPA § 10.2,) and that UMF was subject to or threatened with

litigation, (APA § 3.1.16.)

{45} Defendants respond that each of these environmental representations

and warranties was limited by the identical exceptions delineated in both APA

Schedule 3.1.23 and RPA Exhibit E, entitled “Environmental Exceptions,” which

provide:

Any non-compliance or violation of Environmental Laws or

Environmental Requirements in connection with Sellers [sic] Property

discovered and documented in writing under the Brownfield Program

with the State of North Carolina, for which Purchaser has or will been

[sic] given complete immunity from environmental liability under the

Brownfield Program; provided, however, any liability for clean up or

remediation of Sellers [sic] Property as required under the Brownfield

Program shall be the sole responsibility of Seller including, without

limitation, all costs, fees and expenses associated with such clean-up or

remediation.

(APA, Schedule 3.1.23; RPA Exhibit E.) Plaintiff replies that the exception does

not apply because it was never given complete immunity and protection from

liabilities associated with the environmental breaches. (Pl. Supp. Br. 11.) That

assertion assumes, contrary to fact, that, having elected not to seek specific

performance to close the transaction, Plaintiff has suffered liability to which such

immunity or protection might attach. There is, however, no reason to assume that

Plaintiff is liable for contamination when it has never become an owner or operator

of the business or property. Had the transaction closed, Plaintiff would then either

have been given indemnity or would have a cause of action to enforce such

indemnity. But it has not closed, and Heron Bay has not been harmed by liability it

has not incurred.

{46} Plaintiff was, of course, well aware when entering the Purchase

Agreements that the business had caused at least past contamination. As to any

further indication of past or present contamination, there is no evidence that

Defendants failed to keep Plaintiff fully informed as to the extent of contamination

revealed by testing after the Purchase Agreements were executed. Defendants

contracted for and funded the testing and investigations required by DENR in

preparation for the final Brownfield Agreement. The very purpose of the testing was

to document a baseline for contamination to the Property, to provide the contours of

Heron Bay’s prospective immunity. Taken to its logical conclusion, Plaintiff’s

contract interpretation would allow it to terminate the Purchase Agreements and

then sue because the extent of the contamination led it to the determination to do

so, and then to recover the full value of the business and property as if it had no

greater contamination than known at the time the Purchase Agreements were

entered. This would be at odds with the intent of the Exception to incentivize full

disclosure and cooperation in the Brownfield testing, regardless of the results, and

ensuring Plaintiff’s indemnification for any additional liability after closing.

{47} It may be that ESC’s testing could be interpreted to have documented

contamination at the property line that might fall outside the indemnity provisions.

(Pl. Supp. Br. 11–12.) This potential liability concern arises, however, as a result of

closing. That condition subsequent never occurred.

{48} To recover damages on a breach of contract or warranty claim, the

“plaintiff must show that the contract was breached by [a] defendant and that the

breach caused [the] plaintiff’s damages.” Biemann & Rowell Co. v. Donohoe Cos.,

Inc., 147 N.C. App. 239, 244, 556 S.E.2d 1, 5 (2001); see also City of Charlotte v.

Skidmore, Owings & Merrill, 103 N.C. App. 667, 679, 407 S.E.2d 571, 579 (1991)

(“In an action against an owner for breach of an implied warranty, as in any action

for damages, proof of causation is essential.”). Having elected not to pursue the

purchase, Plaintiff has offered no evidence that this potential misrepresentation

caused it any damages.

{49} In sum, Plaintiff has not presented evidence allowing its claim for

breach of environmental warranties and representations to survive summary

judgment. Such representations were either excluded under Schedule 3.1.23 and

Exhibit E or potential harm from their inaccuracy never materialized in any

manner to expose Plaintiff to liability.

{50} While the theory has not been cogently stated, it appears that Plaintiff

intends to show damage from the environmental representations on the basis that

had the contamination been less, the transaction would have closed, and Plaintiff is

then entitled to recover its future lost profits. (Pl. Supp. Br. Ex. 346 ¶ 25.) That is,

that Plaintiff is entitled to hypothecate the transaction it had expected and then to

model a lost business value claim based on that hypothecated transaction.

{51} Ultimately, it is possible that the surviving claims will require the

court to grapple with whether Plaintiff’s damages theory can overcome some readily

apparent hurdles, such as the possible limitations imposed by the contract

provisions and the long recognized doctrines growing out of the venerable decision

in Hadley v. Baxendale, (1854) 156 Eng. Rep. 145, 9 Exch. 341. Whether any such

damage model may ultimately conform to the contract remedy provisions, the

Purchase Agreements restrict Plaintiff to its contractually bargained-for remedies.9

{52} Plaintiff also attempts to premise a claim on the broad assertion that

Church “swept numerous serious environmental problems under the carpet over the

years[.]” (Pl. Supp. Br. 12.) Plaintiff asserts that Church: (1) ignored ECS’s

recommendations that he report their 2007 findings to the State; (2) never informed

DENR that he cancelled the Purchase Agreements; (3) ignored a 2010 letter from

Guilford County Department of Public Health requesting that he enter into an

Administrative Agreement to conduct a cleanup of his property, (Pl. Supp. Br. Ex.

9 Specifically, in the event that a willful breach motivates a party to terminate the Purchase

Agreements, APA Section 8.1(b) permits the non-breaching party to recover for injury resulting from

such breach, not from the termination itself.

64,) and deferred action on a second letter, (Pl. Supp. Br. Ex. 276,) since the

Brownfield Process had commenced, (Pl. Supp. Br. Ex. 278;) and (4) knowingly

misrepresented on the Brownfield Application Owner Questionnaire that the

Property had no contamination or prior spills, (Pl. Supp. Br. Ex. 277 ¶ 6(b–c).)10

{53} For the same reasons stated above, Plaintiff has not demonstrated how

it suffered harm or liability because of these misrepresentations or “rug-sweeping”

maneuvers unless somehow it can tie these efforts to the breach-motivated

termination claims allowed by the Purchase Agreements. There is no basis to

conclude that they stand alone as actionable misrepresentations. Plaintiff received

ECS’s 2007 findings, (Pl. Reply Br. 6; Lowrie Dep. vol. I 101:10–102:9, Apr. 25, 2013

(testifying that Heron Bay and Lowrie were provided these reports in 2010),)

Church did not fail to inform Heron Bay that the Purchase Agreements had been

terminated, even if he neglected to inform DENR and Guilford County Department

of Public Health, (Lowrie Dep. vol. II 397:1–8, 464:11–17, Apr. 26, 2013 (testifying

that Defendants gave Heron Bay written notice that the Purchase Agreements were

terminated);) and in signing the Brownfield Application Owner Questionnaire,

Church made representations to DENR, not to Heron Bay. Further, the record

evidences that Defendants undertook efforts to find, rather than hide,

contamination and reported ECS’s findings to Heron Bay. An ECS representative

testified that UMF was always cooperative with ECS in testing the Property to

uncover contaminants. (Stewart Dep. 20:1–4, 60:14–61:4 (explaining that no one at

UMF failed to cooperate with ECS and that Church authorized and paid for ECS to

install an additional well to test the ground water).)

{54} In conclusion, Plaintiff has shown no environmental misrepresentation

on which it is entitled to proceed to trial.

10 In support, Plaintiff also cited “Church vol. 2 p. 269”.

(Pl. Supp. Br. 12.) However, upon inspection

of the second volume of Church’s deposition, this page does not mention the Brownfield Application

Owner Questionnaire.

ii. Material Fact Issues Remain as to Whether Defendants

Breached the APA by Failing to Report Customer Concerns

{55} Heron Bay contends that Defendants failed to inform it that one of

UMF’s existing customers expressed concern regarding the change in ownership.

(Pl. Supp. Br. 11; Claude T. Church. Dep. 68:25–70:2, 70:15–71:12, Sept. 24, 2013.)

Specifically, Plaintiff complains that Church did not tell Heron Bay that UMF’s

“biggest customer,” Grass America, expressed serious concern about who was taking

over the company and whether the new owner would carry on business like Church.

(Claude T. Church Dep. 69:1–2; 69:5–6; 69:17–23, Sept. 24, 2013.) Heron Bay

contends this was in violation of APA Section 3.1.25, which represented that neither

Church nor UMF had reason to believe that any UMF suppliers or customers

wished to terminate their contracts with UMF. (APA § 3.1.25.) Church knew that

Grass America had concerns about the future of its business relationship with

UMF, (Claude T. Church Dep. 69:1–2; 69:5–6, 69:17–23, Sept. 24, 2013,) and failed

to report them to Heron Bay. This could constitute a breach of Section 3.1.25 if

Grass America’s concerns amounted to an expectation that it would terminate its

contract with UMF.

{56} Church indicates that Grass America’s concern motivated him to

terminate the contracts with Heron Bay. (Claude T. Church Dep. 68:23–69:4;

69:17–70:14, Sept. 24, 2013.) APA Section 8.1(b) provides that “if such termination

[under subsection (a)] shall result from . . . a willful breach by any party to this

Agreement, such party shall be fully liable for any [damages] incurred or suffered

by the other parties as a result of such failure or breach.” Plaintiff has presented

sufficient evidence to proceed with a claim that Defendants willfully failed to advise

Heron Bay of customer concerns in violation of the APA, and that this willful failure

caused Defendants to terminate the agreements and, consequently, Plaintiff’s

damages. However, Plaintiff will be limited to the damages that it can demonstrate

were caused by that breach under acceptable damages theories.

iii. Material Fact Issues Remain Regarding Whether Defendants’

Allegedly Unauthorized Equipment Purchase Breached the APA

{57} Plaintiff contends that UMF purchased new equipment and incurred

additional indebtedness without Heron Bay’s permission, in violation of various

provisions of the Asset Purchase Agreement. (Pl. Reply Br. 3 (asserting violations

of APA §§ 3.1.12, 3.1.19, 3.1.29, and 4.1.2).) Plaintiff does not offer specific record

citations for its claim, and the court has not been able to discern from its own

review of the record what facts support this allegation. Construing the claim

liberally, the court gleans that in a November 7, 2011 letter to Defendants’ attorney,

Lowrie mentioned unauthorized equipment expenditures. (Pl. Resp. Br. Ex. 168.)

In response, Stanaland acknowledged an equipment purchase, and apparently

attached an updated disclosure.11 (Pl. Resp. Br. Ex. 171.) Even construing this

limited evidence the court was able to isolate in Plaintiff’s favor, the court is

dubious of whether Plaintiff can tie this purchase to Defendants’ termination or to

damage which Plaintiff suffered. However, simply because the record is not

sufficiently clear to do otherwise, the court, with some reluctance, allows this claim

to survive summary judgment.

iv. Material Fact Issues Remain as to Whether Plaintiff Can

Recover for Defendants’ “No-Shop” Violations

{58} Plaintiff also complains that UMF and Church violated the APA’s “no-

shop” term by repeatedly and aggressively pursuing discussions, negotiations, and

offers to sell UMF with multiple parties on multiple occasions. The APA provides,

neither [UMF] nor [Church] and none of their respective

representatives will directly or indirectly solicit or engage in

negotiations or discussions with, disclose any of the terms of this

Agreement to, accept any offer from, furnish any information to, or

otherwise cooperate, assist, or participate with, any person or

organization (other than Purchaser and its representatives) regarding

any offer or proposal with respect to the acquisition by purchase,

11 If Stanaland attached the disclosure to the letter, Plaintiff did not include the attachment in its

exhibits.

merger, lease or otherwise of [UMF], . . . and each will promptly notify

Purchaser of any such discussion, offer or proposal.

(APA, § 4.1.7.) Defendants respond that any conversations with interested buyers

were just “exploratory” and that UMF never provided financial information to these

prospective buyers. (Defs. Opp’n Br. 15.) Defendants also assert that Church told

each interested purchaser that he had entered into an agreement with another

party. (Claude T. Church Dep. vol. II, 253:17–254:7, July 24, 2013.) Church

testified that he was not aware that the Purchase Agreements required him to

notify Heron Bay about any potential purchasers who contacted UMF, though he

conceded that he had copies of the Purchase Agreements and could have looked at

them. (Claude T. Church Dep. vol. II, 258:8–24, July 24, 2013; Claude T. Church

Dep. 12:6–13, Sept. 24, 2013; APA § 4.1.7.)

{59} The court views Church’s claim that UMF withheld its financial data

from prospective buyers with skepticism. Church’s accountant, Davis, testified that

he reviewed UMF’s financial information with a prospective buyer at Church’s

direction while the Purchase Agreements were still in effect. (Davis Dep. 168:16–

25, 256:4–11.) Church stated he did not instruct Davis to provide UMF’s financial

data in that instance. (Claude T. Church Dep. vol. III, 361:7–14, July 26, 2013.)

Church admitted that he communicated with PMF to elicit an offer for UMF’s

purchase. (Claude T. Church Dep. vol. I, 142:18–23, Mar. 8, 2013.) The court

concludes that Plaintiff has presented adequate evidence to support its claim that

Defendants breached the no-shop provisions.

{60} Defendants argue that, even if Plaintiff demonstrates a breach of the

no-shop provisions, Plaintiff’s remedy is limited to specific performance as set out in

APA Section 4.1.9. (Br. Supp. Defs.’ Mot. Summ. J. (“Defs. Supp. Br.”) 17–18.) That

section provides:

in the event of a breach by [UMF] or [Church] . . . money damages

would not be an adequate remedy to [Heron Bay] and, even if money

damages were adequate, it would be impossible to ascertain or

measure with any degree of accuracy the damages sustained by [Heron

Bay] therefrom. Accordingly, if there should be a breach . . . of the

provisions of this Article IV, [Heron Bay] shall be entitled to an

injunction restraining [UMF] and [Church] from any breach without

showing or proving actual damage sustained by [Heron Bay]. Nothing

in the preceding sentence shall limit or otherwise affect any remedies

that [Heron Bay] may otherwise have under applicable law.

APA § 4.1.9 (emphasis added).

{61} The court reads this provision to allow for specific performance, but

does not provide that it is Plaintiff’s sole remedy. The final sentence of the

provision specifically reserves all other remedies to which Heron Bay would

otherwise be entitled.

v. Plaintiff Has Not Presented Evidence to Support an Actionable

Claim that Defendants “Unduly Delayed” the Brownfield

Process

{62} Plaintiff contends that Church terminated the Purchase Agreements

on the pretext that the process was taking too long when, in reality, Church

mistakenly believed he could complete the Brownfield Agreement on his own and

find a new buyer once his right to terminate matured. (Pl. Supp. Br. 14.; Claude T.

Church Dep. 74:2–10, Sept. 24, 2013.) As evidence of Church’s delay in furtherance

of this plan, Plaintiff asserts that Defendants failed to timely pay ECS’s invoices,

delaying submission of the Brownfield Assessment Report in violation of RPA

Section 17.1. The record is clear that the delay in payment was, at most, six days.

(Pl. Supp. Br. 6, Ex. 156; Stewart Dep. 77:23–78:21 (testifying that ECS had the

report ready on October 25, 2011 but did not submit it until October 31, as it was

awaiting payment from UMF); RPA § 17.1 (requiring “Seller’s Cooperation” in

effectuating the transaction contemplated).) The apparent argument is that the

delay was deliberate in order to allow the termination right to mature a few days

later.

{63} Defendants respond that this late payment did not delay progress in

obtaining a Brownfield Agreement because DENR did not review the report until

November 9, 2011 at the earliest. (Def. Opp’n Br. 7; Eckard Dep. 116:7–117:13;

Stewart Dep. 79:14–80:4, 84:25–85:10.) The record further indicates that the

average timeframe for completing the Brownfield Process is eighteen (18) months.

(Eckard Dep. 30:5–10.) If this transaction had proceeded in accord with such an

average, the Brownfield Agreement would not have been finalized until September

9, 2012, well past November 1, 2011 at which time the right to terminate matured.

{64} Even assuming a six-day delay in paying an invoice, the court cannot

reasonably conclude that such a delay was material in light of the other undisputed

evidence. The plain language of APA permits either Party to terminate the

Purchase Agreements after November 1, 2011 if the sale had not yet been

consummated. (APA § 8.1(a)(iv).) A final Brownfield Agreement, which would take,

at the very least, twelve months to reach, was a prerequisite to consummating the

deal. (Lowrie Dep. vol. III 502:24–503:11, May 15, 2013.) No claim based on any

asserted late payment of ECS’s invoice should proceed.

B. Plaintiff Is Not Entitled to Proceed on a Claim for Breach of the Implied

Covenant of Good Faith and Fair Dealing

{65} Plaintiff contends that UMF and the Churches breached the covenant

of good faith and fair dealing by interfering with the Brownfield process and by

ultimately terminating the APA and the RPA in search of a more financially

advantageous arrangement. (Am. Compl. ¶ 71–74.)

{66} “In every contract, there is an implied covenant of good faith and fair

dealing that neither party will do anything which injures the right of the other to

receive the benefits of the agreement.” Bicycle Transit Auth., Inc. v. Bell, 314 N.C.

219, 228, 333 S.E.2d 299, 305 (1985), cited in Sunset Beach Dev., LLC v. AMEC,

Inc., 196 N.C. App. 202, 217, 675 S.E.2d 46, 57 (2009). To support a claim, the

breach of the implied covenant must be separate and distinct from any breach of

other contract provisions. Oakeson v. TBM Consulting Grp., Inc., 2009 NCBC

LEXIS 34, at *13–14 (N.C. Super. Ct. Aug. 21, 2009); see also Richardson v. Bank of

Am., N.A., 182 N.C. App. 531, 558, 643 S.E.2d 410, 427 (2007). A breach of good

faith and fair dealing claim “cannot be used to contradict the express terms of a

contract[.]” Rezapour v. Earthlog Equity Grp., Inc., No. 5:12CV105-RLV, 2013 U.S.

Dist. LEXIS 92124, at *11 (W.D.N.C. July 1, 2013).

{67} Here, Plaintiff complains that Defendants terminated the Purchase

Agreements in hopes of finding a better deal. (Am. Compl. ¶ 73.) However, the

APA specifically permits either party to terminate the deal for any reason. (APA §

8.1.) It provides remedies if termination is for certain causes. To allow Plaintiff to

recover on this theory would contradict the express terms of the contract. Plaintiff

is not entitled to pursue an implied claim in derogation of the contract’s own

damages provision. Rezapour, 2013 U.S. Dist. LEXIS 92124, at *11.

C. Any UDTPA Must Be Limited to the Extra-Contractual Claim Complaining

of Defendants’ Misappropriation of Marketing Materials

{68} In addition to reasserting its environmental representation and undue

delay claims, which the court has rejected, as UDTPA claims, Plaintiff contends

that Defendants committed unfair and deceptive trade practices in multiple ways.

First, it states that Defendants attempted to hide modifications to the Property.

(Pl. Supp. Br. 15–16.) In support, Plaintiff references Church’s in-house attempt to

remediate the contamination in violation of APA Section 3.1.23. (Pl. Supp. Br. 16.)

Second, Plaintiff complains that Defendants shopped the deal in violation of APA

Section 4.1.7. (Pl. Supp. Br. 17–19.) Third, Plaintiff contends that Church and UMF

made unauthorized use of Heron Bay’s brochure. (Pl. Supp. Br. 19.)

{69} Defendants urge that these are repackaged contract claims that cannot

proceed as UDTPA claims. (Defs. Opp’n Br. 23.) To recover on an unfair and

deceptive trade practices claim, a plaintiff must show that: “(1) defendant[]

committed an unfair or deceptive act or practice, (2) in or affecting commerce, and

(3) plaintiff was injured as a result.” N.C. Gen. Stat. § 75-1.1 (2013); Phelps-

Dickson Builders, LLC v. Amerimann Partners, 172 N.C. App. 427, 439, 617 S.E.2d

664, 671 (2005) (citing Edwards v. West, 128 N.C. App. 570, 574, 495 S.E.2d 920,

923 (1998)). Absent evidence of aggravating circumstances, a breach of contract

does not rise to the level of an unfair and deceptive trade practice, Bumpers v.

Community Bank of Northern Virginia, ___ N.C. ___, 747 S.E.2d 220, 228 (N.C.

2013), even if the breach is intentional, Nucor Corp. v. Prudential Equity Group,

LLC, 189 N.C. App 731, 739, 659 S.E.2d 483, 488 (2008). Aggravating factors

include “an intentional misrepresentation for the purpose of deceiving another and

which has a natural tendency to injure the other.” Pan-Am Prods. & Holdings, LLC

v. R.T.G. Furniture Corp., 825 F. Supp. 2d 664, 700 (M.D.N.C. 2011).

{70} The evidentiary record, even construed in Plaintiff’s favor, does not

support a finding of aggravating circumstances adequate to support Plaintiff’s

UDTPA claim based on the Purchase Agreement provisions. However, the claim

regarding misappropriation of Plaintiff’s marketing materials is extra-contractual

and is not subject to the same limitations as contract claims. The court concludes

that there is adequate evidence to allow this limited UDTPA misappropriation

claim to survive summary judgment.

VI. CONCLUSION

{71} For the foregoing reasons:

(1) Defendants’ Motion is DENIED as to Plaintiff’s claims under the

Asset Purchase Agreement for unauthorized equipment

purchases, failure to report customer concerns, and violations of

the “no-shop” provision.

(2) Defendants’ Motion is DENIED as to Plaintiff’s UDTPA claim

for misappropriation of marketing materials.

(3) Defendants’ Motion is GRANTED as to all other of Plaintiff’s

claims, and those claims are DISMISSED.

(4) Plaintiff’s Motion is DENIED.

IT IS SO ORDERED, this the 7th day of May, 2014.