McGUIRE v. LORD CORP.

McGuire v. LORD Corp., 2020 NCBC 11.

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE

SUPERIOR COURT DIVISION

WAKE COUNTY 19 CVS 11634

ROBERT MCGUIRE,

Plaintiff,

v. ORDER AND OPINION ON

DEFENDANT’S MOTION TO DISMISS

LORD CORPORATION,

Defendant.

1. This action arises from Plaintiff Robert McGuire’s (“McGuire”) contention

that Defendant LORD Corporation (“LORD” or the “Company”) breached its

representative’s promise that he would have an opportunity to repurchase certain

shares from LORD if he first elected to sell those shares to LORD under existing

agreements between LORD and McGuire. McGuire alleges that he relied upon

LORD’s promise in selling his shares but was not permitted to repurchase his shares

thereafter. McGuire alleges various claims based on these alleged facts, and LORD

now moves to dismiss each of these claims under Rule 12(b)(6) of the North Carolina

Rules of Civil Procedure (“Rule(s)”) (the “Motion”). (Def.’s Mot. Dismiss, ECF No. 9.)

2. After considering the Motion, the related briefs, the Complaint, the

documents identified and relied upon in the Complaint and submitted by LORD in

support of the Motion, and the arguments of counsel at the hearing on the Motion on

January 16, 2020 (the “Hearing”), the Court hereby GRANTS the Motion and

dismisses McGuire’s Complaint with prejudice.

Vennum PLLC, by Elizabeth Vennum and Jordan Burke, for Plaintiff

Robert McGuire.

Parker, Poe, Adams & Bernstein LLP, by Scott E. Bayzle and Charles E.

Raynal, IV, for Defendant LORD Corporation.

Bledsoe, Chief Judge.

I.

FACTUAL AND PROCEDURAL BACKGROUND

3. The Court does not make findings of fact on motions to dismiss under Rule

12(b)(6). Rather, the Court recites only those facts alleged in the Complaint that are

relevant to the Court’s determination of the Motion. The Court may consider

documents to which the Complaint specifically refers, even when such documents are

submitted by the defendant. 1 Oberlin Capital, L.P. v. Slavin, 147 N.C. App. 52, 60,

554 S.E.2d 840, 847 (2001). Additionally, the Court may “reject allegations [in the

complaint] that are contradicted by the documents attached, specifically referred to,

or incorporated by reference in the complaint.” Laster v. Francis, 199 N.C. App. 572,

577, 681 S.E.2d 858, 862 (2009).

4. McGuire served as LORD’s Regional Director in Japan from 2013 to 2018.

(Compl. ¶ 7, ECF No. 3.) In that role, LORD offered McGuire the opportunity to

purchase from LORD shares of LORD’s Class B Common Stock (the “Class B Shares”

or “Shares”) under LORD’s Management Incentive Plan’s Restricted Stock Program

(the “Plan”). (Compl. ¶ 8.) Under the Plan, participants, including McGuire, had the

opportunity to purchase Shares during a period established by LORD each year,

typically in the Spring (the “Annual Purchase Period”). (See Def.’s Mem. Law Supp.

1 The parties agree that the exhibits attached to LORD’s Motion, (ECF Nos. 10.2–10.6), are

relied upon and referenced in the Complaint, and McGuire has withdrawn any objection to

the Court’s consideration of those documents on this Motion.

Def.’s Mot. Dismiss Ex. A, at ¶ 4 [hereinafter the “Plan”], ECF No. 10.2.) To effect

the purchase of Shares under the Plan, a participant was first required to sign a stock

purchase agreement with the Company. (Plan ¶ 4.) McGuire signed his stock

purchase agreement, specifically titled “Third Restated Stock Purchase Agreement”

(the “Stock Purchase Agreement” or the “Agreement”), on May 20, 2014. 2 (Def.’s

Mem. Law Supp. Def.’s Mot. Dismiss Ex. B [hereinafter the “Stock Purchase

Agreement”], ECF No. 10.3.) Consistent with the Plan and the Agreement, McGuire

thereafter purchased 675 Class B Shares from LORD. (Compl. ¶ 11.)

5. The Plan and the Agreement governed McGuire’s rights with respect to

these Shares. Under the Agreement, McGuire was permitted to redeem Shares

during a specially identified period each year (the “Annual Redemption Period”),

(Stock Purchase Agreement ¶ 2(c)), and the Plan and the Agreement governed

McGuire’s right to repurchase any Shares after redemption, (Plan ¶ 10). LORD’s

Stock Redemption Policy, which is part of the Plan, (Compl. ¶ 8), specified the

“procedures to be applied by [LORD] in determining the manner in which redemption

requests will be received and administered in the event shareholders request

redemption of shares in excess of resources made available by [LORD].” (Def.’s Mem.

Law Supp. Def.’s Mot. Dismiss Ex. D, at 1 [hereinafter the “Stock Redemption

Policy”], ECF No. 10.5.)

2 The Stock Purchase Agreement specifically provided that it “set[ ] forth agreements and

understandings between [McGuire] and Lord with respect to any” Class B Shares that “may

be purchased by [McGuire] subject to [the] Agreement[.]” (Stock Purchase Agreement 1; see

also Compl. ¶ 9.)

6. The Plan made clear that at all times the Compensation Committee of

LORD’s Board of Directors had the right, “in its sole discretion,” to amend, modify,

suspend, or terminate the Plan and the Stock Purchase Agreement (together, the

“Program”). (See Plan ¶ 2 (“The Committee shall have the full and complete

discretionary authority to . . . change the terms of the Program, including but not

limited to terminating the Program.”); Plan ¶ 16 (“The Committee shall have the right

in its sole discretion to amend or modify the Program in any manner at any time,

including the right in its sole discretion to suspend or terminate the Program in whole

or in part.”).) Similarly, the Stock Redemption Policy provided that it could be

“modified or terminated at anytime by the Board.” (Stock Redemption Policy 1.)

7. In 2017, McGuire decided to explore the potential sale of some of his Class

B Shares. He e-mailed LORD’s Shareholder Relations Specialist, Denise Austin

(“Austin”), on March 2, 2017, stating that he understood he could sell stock once a

year and was “contemplating selling some stock in March or April to cover some

expenses.” (Def.’s Mem. Law Supp. Def.’s Mot. Dismiss Ex. C [hereinafter the “E-mail

Exchange”], ECF No. 10.4.) He asked Austin, “Is this possible?” and, “Can I then

turnaround and buy back again in June?” (E-mail Exchange 1.) Austin responded

the same day, “yes, you can sell up to 100K net proceeds once per year. [A]nd you can

turn around and purchase in June.” (E-mail Exchange 1.) McGuire then asked,

“What if I want to sell more?” (E-mail Exchange 1.) Austin replied, “you can request

to redeem additional shares and then the request has to be approved. I am not in the

office this week and have limited access to my files. I can send you all of the request

docs on Monday.” (E-mail Exchange 1.)

8. According to McGuire, he relied on Austin’s representation—which McGuire

characterizes as a “guarantee”—concerning his right to repurchase sold Shares in

June 2017 in selling 329 of his Shares for net proceeds of $449,398.41 on April 18,

2017. (Compl. ¶ 24.) Ten days later, on April 28, 2017, LORD suspended the Plan,

which prevented McGuire from repurchasing his sold Shares. LORD subsequently

terminated the Plan in December 2017. (Compl. ¶¶ 26–27.) McGuire alleges that

the value of each sold Share he was denied the right to repurchase has increased from

$3,230 in 2017 to $11,000 as of the filing of the Complaint. (Compl. ¶ 35.)

9. McGuire filed this action on August 23, 2019, alleging claims against LORD

for: (i) breach of contract, (ii) negligence, (iii) negligent misrepresentation, (iv) breach

of implied duty of good faith and fair dealing, and (v) violation of sections 78A-8(2)

and 78A-56(b)(2)3 of the North Carolina Securities Act (“NCSA”), N.C.G.S. § 78A-1 et

seq., for which he seeks monetary relief. (Compl. 7–12.)

10. LORD filed the current Motion in lieu of an answer on November 5, 2019.

The Motion has been fully briefed, and all parties were represented by counsel at the

Hearing. The Motion is now ripe for resolution.

3 For purposes of this Motion, the Court assumes McGuire’s reference to section 78A-56(b)(2),

a subsection that does not exist, reflects a typographical error and that his claim is brought

instead under N.C.G.S. § 78A-56(b).

II.

LEGAL STANDARD

11. When considering a motion to dismiss under Rule 12(b)(6), the Court

determines “whether the allegations of the complaint, if treated as true, are sufficient

to state a claim upon which relief may be granted under some legal theory.” Corwin

v. British Am. Tobacco PLC, 371 N.C. 605, 615, 821 S.E.2d 729, 736 (2018) (citation

omitted).

12. The Court views the allegations in the complaint “in the light most favorable

to the non-moving party[,]” Christenbury Eye Ctr., P.A. v. Medflow, Inc., 370 N.C. 1,

5, 802 S.E.2d 888, 891 (2017) (citation omitted), and will not dismiss the complaint

“unless it appears to a certainty that plaintiff is entitled to no relief under any state

of facts which could be proved in support of the claim[,]” Sutton v. Duke, 277 N.C. 94,

103, 176 S.E.2d 161, 166 (1970) (emphasis omitted). However, the Court is “not

required . . . to accept as true allegations that are merely conclusory, unwarranted

deductions of fact, or unreasonable inferences.” Good Hope Hosp., Inc. v. N.C. Dep’t

of Health & Human Servs., 174 N.C. App. 266, 274, 620 S.E.2d 873, 880 (2005)

(internal quotation marks and citation omitted). Under Rule 12(b)(6), dismissal of a

complaint is proper: “(1) when the complaint on its face reveals that no law supports

[the] claim; (2) when the complaint reveals on its face the absence of fact sufficient to

make a good claim; [or] (3) when some fact disclosed in the complaint necessarily

defeats the . . . claim.” Oates v. JAG, Inc., 314 N.C. 276, 278, 333 S.E.2d 222, 224

(1985).

III.

ANALYSIS

A. Breach of Contract

13. McGuire does not allege that LORD has breached the Agreement or the

Plan. Rather, McGuire’s breach of contract claim is based on his allegation that he

entered into a new contract with LORD based on his e-mail exchange with Austin

“together with the Stock Purchase Agreement and the Plan” (the “New Contract”).

(Compl. ¶ 38.) McGuire contends that under the New Contract, he would be

permitted to repurchase during the Annual Purchase Period any Class B Shares he

elected to sell during the Annual Redemption Period. (Compl. ¶ 39.) McGuire asserts

that LORD breached the New Contract by preventing McGuire from repurchasing in

June 2017 the Class B Shares he sold in April 2017. 4 (Compl. ¶ 40.)

14. To maintain a claim for breach of contract, a plaintiff must plead

“(1) existence of a valid contract and (2) breach of the terms of that contract.” Poor v.

Hill, 138 N.C. App. 19, 26, 530 S.E.2d 838, 843 (2000). For a valid contract to exist,

there must be “mutual assent of both parties to the terms of the agreement so as to

4 Although McGuire makes the argument in his opposition brief that he alleges breach based

on the “old” contract created by the Plan and Stock Purchase Agreement, (Pl.’s Mem. Law

Opp’n Def.’s Mot. Dismiss 13 [hereinafter “Opp’n Br.”], ECF No. 15), the Court only looks to

the allegations of the Complaint, and McGuire has not made a claim based on the “old”

contract in his Complaint. See, e.g., Carlisle v. Keith, 169 N.C. App. 674, 681, 614 S.E.2d 542,

547 (2005) (“A Rule 12(b)(6) motion tests the legal sufficiency of the pleading.” (citation

omitted)); Window World of Baton Rouge, LLC v. Window World, Inc., 2017 NCBC LEXIS 60,

at *11 (N.C. Super. Ct. July 12, 2017) (“When considering a Rule 12(b)(6) motion to dismiss,

‘a court properly may consider only evidence contained in or asserted in the pleadings.’ ”

(citation omitted)); see also Brown v. Secor, 2017 NCBC LEXIS 65, *19 (N.C. Super. Ct. July

28, 2017) (“The requirement to liberally construe the complaint is not an invitation to rewrite

it.”).

establish a meeting of the minds.” Snyder v. Freeman, 300 N.C. 204, 218, 266 S.E.2d

593, 602 (1980). “The well-settled elements of a valid contract are offer, acceptance,

consideration, and mutuality of assent to the contract’s essential terms.” Se.

Caissons, LLC v. Choate Constr. Co., 247 N.C. App. 104, 110, 784 S.E.2d 650, 654

(2016) (citation omitted). Mutual assent is determined by “the parties’ words and

acts from the perspective of a reasonable person.” Baker v. Bowden, 2017 NCBC

LEXIS 31, at *9 (N.C. Super. Ct. Apr. 3, 2017) (citing Howell v. Smith, 258 N.C. 150,

153, 128 S.E.2d 144, 146 (1962)).

15. Where parties agree to modify a contract, the modification, as a new

agreement, must meet all requisite elements of a contract and must be supported by

additional consideration. See NRC Golf Course, LLC v. JMR Golf, LLC, 222 N.C.

App. 492, 502, 731 S.E.2d 474, 480 (2012) (“Parties to a contract may agree to change

its terms; but the new agreement, to be effective, must contain the

elements necessary to the formation of a contract.” (quoting Southern Spindle & Flyer

Co., Inc. v. Milliken & Co., 53 N.C. App. 785, 788, 281 S.E.2d 734, 736 (1981));

LaBarre v. Duke Univ., 99 N.C. App. 563, 565, 393 S.E.2d 321, 323 (1990) (holding

that modifying an existing contract requires “additional consideration”); see also

Geiger v. Cent. Carolina Surgical Eye Assocs., P.A., No. COA14-169, 2014 N.C. App.

LEXIS 1051, at *17 (N.C. Ct. App. Oct. 7, 2014) (“[A] modification must reflect an

agreement between the parties that the terms of the contract should be altered.”

(internal quotation marks and citation omitted)). Consideration sufficient to support

a contract or contract modification has been defined as “any benefit, right, or interest

bestowed upon the promisor, or any forbearance, detriment, or loss undertaken by

the promisee.” Lee v. Paragon Grp. Contractors, Inc., 78 N.C. App. 334, 337–38, 337

S.E.2d 132, 134 (1985) (citation omitted).

16. LORD contends that the alleged New Contract is invalid, requiring

dismissal of McGuire’s claim for breach. Specifically, LORD argues that there was

never an offer, acceptance, or consideration to support the New Contract, and further,

that instead of guaranteeing a right to repurchase as McGuire contends, Austin’s

e mails “merely summariz[ed] certain procedures for redemption and purchase of

shares under [the Plan and Stock Purchase Agreement] as they existed at the time.” 5

(Def.’s Mem. Law Supp. Def.’s Mot. Dismiss 11.) The Court agrees.

17. McGuire’s opening e-mail to Austin on March 2, 2017 was a straightforward

request for information concerning the then-current Plan:

Denise

I understand I can sell stock one time per year. I am contemplating

selling some stock in March or April to cover some expenses. Is this

possible? What is the amount of time required?

Can I turn around and buy back again in June?

Bob

5 LORD also grounds its argument for dismissal of the contract claim on the Plan’s provisions

permitting the Compensation Committee of LORD’s Board of Directors to amend, modify,

suspend, or terminate the Plan at any time in its sole discretion, which it elected to lawfully

do here, and on its contention that, in any event, Austin lacked authority to bind LORD to

amend or modify the Plan or Agreement through the New Contract. (Mem. Law Supp. Def.’s

Mot. Dismiss 10–12, ECF No. 10.) The Court finds it unnecessary to discuss either in

connection with this claim.

(E-mail Exchange 1.) McGuire did not make an offer to contract through his e-mail,

nor did he suggest to Austin that he was seeking her assent to an agreement or

inviting her to negotiate. Viewed in the light most favorable to McGuire, he simply

sought information from the appropriate LORD representative concerning the terms

of the current Plan.

18. Austin’s response later that day provided the information McGuire

requested: “yes, you can sell up to 100K net proceeds once per year and you can turn

around and purchase in June.” (E-mail Exchange 1.) Austin was plainly

communicating information about the Plan’s terms and not making an offer on behalf

of LORD to allow McGuire to repurchase his Shares in June should he elect to sell

them in April. Austin did not suggest that LORD would repurchase McGuire’s Shares

in June, regardless of whether the Plan permitted such a purchase or not, and

McGuire did not ask her to guarantee that he would have the right to repurchase any

sold Shares in June 2017 separate and apart from his rights under the Plan and the

Agreement. In short, McGuire seeks to convert an e-mail exchange requesting and

conveying information about the Plan’s terms into a new contract that contravenes

the express terms of the Plan and the Agreement. And even if the e-mail exchange

could be read as creating the alleged New Contract, McGuire has not pleaded any

facts showing that Lord received any benefit, right, or interest for its alleged promise

or any forbearance, detriment, or loss undertaken by McGuire. Thus, even reading

the e-mail exchange in the light most favorable to McGuire, the Court concludes that

McGuire’s alleged New Contract was never formed as a matter of law and thus that

his breach of contract claim must be dismissed.

B. Breach of Implied Duty of Good Faith and Fair Dealing

19. McGuire alleges that LORD had an implied duty of good faith and fair

dealing in performing and enforcing the New Contract. (Compl. ¶ 57.) Because the

Court has concluded that the New Contract was not formed as a matter of law,

McGuire’s claim for breach of an implied duty under that contract necessarily fails. 6

See Se. Anesthesiology Consultants, PLLC v. Rose, 2019 NCBC LEXIS 52, at *23 (N.C.

Super Ct. Aug. 20, 2019) (“North Carolina state court decisions considering good faith

and fair dealing claims that are ‘part and parcel’ of breach of contract claims . . . have

concluded that the two claims merely stand or fall together.”).

C. Tort and Statutory Claims

20. McGuire also asserts claims for negligent misrepresentation, negligence,

and violation of the NCSA. Each claim is premised on two theories of recovery, one

based on omission, and the other on misrepresentation.

21. McGuire’s omission-based claims rest on his contention that Austin, as

LORD’s Shareholder Relations Specialist with regular contact with LORD’s Board,

knew or should have known that LORD retained the ability to modify or terminate

6 McGuire contends in conclusory fashion in his opposition brief that LORD breached the

implied duty of good faith and fair dealing in connection with the “old” contract under the

Plan and Stock Purchase Agreement. (Pl.’s Mem. Law Opp’n Def.’s Mot. Dismiss 13.)

McGuire does not plead such a claim in his Complaint, however, and, in any event, fails to

identify in the Complaint or his brief what implied term McGuire allegedly violated and how.

As such, any purported claim for breach of an implied duty of good faith and fair dealing

based on the “old” contract necessarily fails and must be dismissed.

the Plan—and thus that McGuire’s ability to repurchase any sold Shares was not

guaranteed—yet failed to so inform McGuire. (Compl. ¶ 30; see also Compl. ¶¶ 32–

33 (alleging that Austin provided misleading information when she omitted the

“material fact” that McGuire’s repurchase of shares was “conditional and not

absolute”).)

22. McGuire’s misrepresentation-based claims are based on his allegation,

made “on information and belief,” that LORD decided to suspend and/or terminate

the Plan prior to McGuire’s March 2, 2017 e-mail inquiry and thus that Austin knew

or should have known at the time of her e-mail communications with McGuire that

“she could not truthfully guarantee [McGuire’s] ability to repurchase shares,” yet did

so anyway. (Compl. ¶ 31; see also Compl. ¶ 51 (alleging that Austin had “actual

knowledge about potential changes to the Plan”).)

23. The Court now turns to McGuire’s specific tort-based claims.

1. Negligent Misrepresentation and Negligence 7

24. McGuire first asserts negligent misrepresentation and negligence claims

based on Austin’s alleged failure to inform McGuire that the Plan allowed LORD to

modify or terminate the Plan at any time. (Compl. ¶¶ 47–48, 50–51.) As LORD points

out, however, under North Carolina law, a negligent misrepresentation claim cannot

be based on an omission. See Aldridge v. Metro. Life Ins. Co., 2019 NCBC LEXIS 116,

at *112–13 (N.C. Super. Ct. Dec. 31, 2019) (“[A] claim for negligent misrepresentation

can only be based on affirmative misrepresentations, not on omissions.” (citing

7McGuire’s negligence claim is based entirely on the same allegations that support his

negligent misrepresentation claim; thus, the Court treats them together.

Harrold v. Dowd, 149 N.C. App. 777, 783, 561 S.E.2d 914, 919 (2002))). As a result,

McGuire’s negligent misrepresentation claim, and his negligence claim based on

omission, must be dismissed to the extent they are based on Austin’s alleged failure

to provide McGuire information about the Plan.

25. McGuire’s negligent misrepresentation and negligence claims based on

Austin’s affirmative misrepresentations fare no better. First, as explained in

dismissing McGuire’s breach of contract claim above, Austin’s e-mail statements to

McGuire did not guarantee, promise, or otherwise commit LORD to repurchase

McGuire’s Shares in the event he sold them. The context of the exchange makes plain

that McGuire was seeking information about the Plan as it then existed, and Austin

was providing Plan information in response to that inquiry. As such, to the extent

McGuire’s negligent misrepresentation and negligence claims depend on Austin’s

statements constituting a “guarantee” of a right to repurchase his Shares, his claims

necessarily fail.

26. More broadly, McGuire’s claims for negligent misrepresentation and

negligence likewise fail because, based on the facts alleged, McGuire’s purported

reliance on Austin’s statements was unjustified as a matter of law. “Justifiable

reliance is an essential element of . . . negligent misrepresentation.” Cobb v. Pa. Life

Ins. Co., 215 N.C. App. 268, 277, 715 S.E.2d 541, 549–50 (2011) (quoting Helms v.

Holland, 124 N.C. App. 629, 635, 478 S.E.2d 513, 517 (1996)). “Reliance is not

justifiable for purposes of negligent misrepresentation if a plaintiff failed to make

reasonable inquiry, had the opportunity to investigate, and could ‘have learned the

true facts through reasonable diligence[.]’ ” BDM Invs. v. Lenhil, Inc., 826 S.E.2d

746, 761 (N.C. Ct. App. 2019) (quoting Rountree v. Chowan Cty., 252 N.C. App. 155,

796 S.E.2d 827, 832 (2017)).

27. Here, even if Austin’s statements could be read as a promise or guarantee,

McGuire had access to the Plan documents, (Compl. ¶ 48), and those documents

revealed that the Plan could be amended or terminated at any time; thus, any LORD

promise to permit repurchase of Shares was not guaranteed. Even though “the

question of justifiable reliance is generally a factual issue for the jury,” Ness v. Jones,

89 N.C. App. 504, 506, 366 S.E.2d 570, 571 (1988), North Carolina law makes plain

that McGuire’s purported reliance on Austin’s statements as a guarantee of

repurchase as alleged here is unjustified as a matter of law, see, e.g., Boone Ford, Inc.

v. IME Scheduler, Inc., 822 S.E.2d 95, 100 (N.C. Ct. App. 2018) (holding reliance

unjustified as a matter of law where alleged misrepresentation contradicted express

contract term); Cobb, 215 N.C. App. at 277, 715 S.E.2d at 549–50 (holding plaintiff’s

failure to read insurance policy that contradicted defendant’s representation

“resulted in unjustifiable reliance” as a matter of law because plaintiff “could have

discovered [the policy’s] true meaning with minimal investigation”).

28. For each of these reasons, therefore, the Court concludes that McGuire’s

negligent misrepresentation and negligence claims must be dismissed under Rule

12(b)(6).

2. NCSA claims

29. McGuire asserts two NCSA claims, one under section 78A-56(b) and the

other under section 78A-8(2). N.C.G.S. § 78A-56(b) provides that a person who

purchases a security “by means of any untrue statement of a material fact or any

omission [of] a material fact” and “who does not sustain the burden of proof that the

person did not know, and in the exercise of reasonable care could not have known, of

the untruth or omission” may seek recovery from the seller. N.C.G.S. § 78A-8(2)

makes it unlawful “[t]o make any untrue statement of a material fact or to omit to

state a material fact necessary in order to make the statements made, in the light of

the circumstances under which they are made, not misleading[.]” As a general

matter, “the NCSA does not impose a duty to disclose,” Aldridge, 2019 NCBC LEXIS

116, at *119 (citation omitted); rather, “[l]iability must be tied to a statement which

was untrue or which was made misleading by omissions[,]” NNN Durham Office

Portfolio 1, LLC v. Highwoods Realty Ltd. P’ship, 2013 NCBC LEXIS 11, at *36–37

(N.C. Super. Ct. Feb. 19, 2013).

30. McGuire’s claims under sections 78A-56(b) and 78A-8(2) are based on both

omission and misrepresentation. Central to the former is McGuire’s allegation that

Austin had a duty to advise McGuire that the Plan permitted its modification or

termination at any time but failed to do so. But McGuire’s pleading acknowledges

that the Plan documents (i.e., the Plan, Agreement, and Stock Redemption Policy)

were available for his inspection and review, (Compl. ¶ 48), and he nowhere alleges

that LORD prevented his review of those documents or otherwise impeded his ability

to ascertain their terms. It is undisputed that had McGuire consulted the Plan

documents, he would have readily seen that the Plan and the Stock Redemption

Policy could be terminated at any time in LORD’s sole discretion. (See Plan ¶ 2

(permitting LORD “full and complete discretionary authority to . . . change the terms

of the Program, including but not limited to terminating the Program”); Plan ¶ 16

(permitting LORD “the right in its sole discretion to suspend or terminate the

Program in whole or in part”); Stock Redemption Policy 1 (permitting LORD to

“modif[y] or terminate [the Policy] at anytime”).)

31. Because LORD provided McGuire the Plan documents and those documents

made plain that LORD could modify or terminate the Plan at any time in its sole

discretion, McGuire cannot show that LORD failed to provide information of which

McGuire was unaware as required under section 78A-56(b) or made a statement that

was “misleading” under section 78A-8(2). See, e.g., Sullivan v. Mebane Packaging

Grp., Inc., 158 N.C. App. 19, 34–35, 581 S.E.2d 452, 463 (2003) (finding no actionable

omission under section 78A-56(b) where defendant provided document to plaintiff

summarizing plaintiff’s material rights and disputed transaction’s material terms).

Accordingly, the Court concludes that McGuire’s omission-based claims under

sections 78A-56(b) and 78A-8(2) must therefore be dismissed.

32. McGuire’s misrepresentation-based claims under sections 78A-56(b) and

78A-8(2) are similarly deficient. First, the same allegations which preclude

justifiable reliance on McGuire’s negligent misrepresentation claim preclude a

factfinder from concluding that McGuire, “in the exercise of reasonable care,” “could

not have known . . . of the untruth” of Austin’s statements under section 78A-56(b)

because the Plan documents clearly provide that LORD could terminate the Plan at

any time for any reason.

33. Moreover, McGuire’s misrepresentation claims under both section 78A-56(b)

and section 78A-8(2) necessarily fail because McGuire has not alleged facts showing

that Austin made an “untrue statement of a material fact” as required under both

sections. See Worley v. Moore, 2018 NCBC LEXIS 114, at *19–20 (N.C. Super. Ct.

Nov. 2, 2018) (finding no liability under sections 78A-56(b) and 78A-8(2) where

plaintiffs failed to sufficiently allege that statements constituting misrepresentations

or misleading omissions had been made). Taking McGuire’s allegations as true,

Austin accurately related to McGuire on March 2, 2017 that under the then-current

Plan, McGuire would have had a right to repurchase his sold Shares in June 2017.

34. In opposition, McGuire relies on his conclusory allegation that, “on

information and belief,” Austin knew when she e-mailed McGuire that LORD had

decided to suspend and terminate the Plan, (Compl. ¶ 31), to assert that Austin’s

statement concerning repurchase in June 2017 was false. This allegation does not

salvage McGuire’s claim. Although McGuire alleges that a decision to suspend and

terminate the Plan had been made, McGuire does not allege that LORD had decided

at the time of Austin’s March 2, 2017 statements to McGuire that any planned

suspension and termination would occur prior to June 2017—the timing necessary to

make Austin’s March 2, 2017 statement to McGuire inaccurate. McGuire’s allegation

that the Plan was suspended in late April 2017, on which McGuire also relies, does

not bear on whether the decision to suspend prior to June 2017 was made prior to

Austin’s e-mail on March 2, 2017. As a result, based on the pleaded allegations, the

Court concludes that a factfinder could not reasonably find that Austin’s March 2,

2017 e-mail statements were false when made.

35. It also bears mentioning that the only allegation McGuire makes concerning

Board decision-making that is not “on information and belief” is his assertion that as

of the date of Austin’s e-mails in early March, “the Board was exploring alternatives

to the Plan[.]” (Compl. ¶ 51(b).) To allege that the Board was “exploring alternatives

to the Plan,” however, is not to allege that a decision to suspend and terminate the

Plan had been made, providing further support for the Court’s conclusion that

McGuire has failed to allege facts showing that Austin’s statements were false when

made.

36. For each of these reasons, therefore, the Court concludes that McGuire’s

claims under sections 78A-56(b) and 78A-8(2) are fatally deficient and should be

dismissed as a matter of law.

IV.

CONCLUSION

37. WHEREFORE, based on the foregoing, the Court hereby GRANTS the

Motion and DISMISSES McGuire’s Complaint, and all the claims alleged therein,

with prejudice.

SO ORDERED, this the 11th day of February, 2020.

/s/ Louis A. Bledsoe, III

Louis A. Bledsoe, III

Chief Business Court Judge