The opinion
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
THE BINSKY CORPORATION, d/b/a)
ADVANTAGE FOOD & BEVERAGE, )
)
Plaintiff, )
)
Vv. ) 1:25cev1043
)
USCONNECT LLC )
and GLOBALCONNECT LLC, )
)
Defendants. )
MEMORANDUM OPINION AND RECOMMENDATION
OF UNITED STATES MAGISTRATE JUDGE
This matter comes before the undersigned United States
Magistrate Judge on Defendants’ Partial Motion to Dismiss (Docket
Entry 11) (the “Motion”). For the reasons that follow, the Court
should grant the Motion.
BACKGROUND
I. The Agreement & Plaintiff’s Notice of Sale
Plaintiff Advantage Food & Beverage (“Plaintiff”), an Ohio-
based vending company (see Docket Entry 1 (the “Complaint”), TI 1,
9) seeks recovery from Defendants USConnect and GlobalConnect
(collectively, “Defendants”),’ limited liability companies based in
North Carolina (see id. 3-4), following the termination of the
1 According to the Complaint, “GlobalConnect . . . is an
attempt at rebranding USConnect” (Docket Entry 1, @ 10). The
entities “operate[] the same type of business” (id.), employ the
same chief executive (see id. @ 5), and “are [allegedly] jointly
and severally liable to [Plaintiff] for their actions” (id. 7 12).
parties’ contractual relationship in July 2024 (see id. ¶ 16).
That contractual relationship allegedly began in 2021 when
Plaintiff and Defendants “entered into a [five-year l]icense
[a]greement” (id. ¶ 13; see also Docket Entry 12-1 at 2-4) (the
“Agreement”) which “established a framework for [Plaintiff’s] use
of [Defendants’] services, technology, and branding in its vending
operations” (Docket Entry 1, ¶ 13; see also id. ¶ 8 (alleging
examples of Defendants’ services, such as “cashless payment [ ],”
“inventory tracking,” “advertising,” and “data analytics”)).
According to the Complaint:
The [ ] Agreement does not have a provision that
specifically addresses the rights of the parties to
assign the [A]greement to a third party. There is no
provision that prohibits [Plaintiff] from assigning the
[ ] Agreement to a third party or that third party from
assuming the [A]greement.
Section 9 of the [ ] Agreement provides as a ground for
[Defendants] to terminate the [ ] Agreement:
9. Termination
9.1 Event of Default. The occurrence of
any one or more of the following events shall
constitute an event of default by Operator
under this Agreement (each, an “Event of
Default”):
. . .
(vi) Operator sells or agrees to sell
all or substantially all of its business
assets to any other party without the prior
written consent of [Defendants] (which consent
may be withheld, conditioned, or delayed in
the sole discretion of [Defendants]);
. . .
2
9.2 [Defendants’] Rights to Terminate
this Agreement. Upon the occurrence of any
one or more Events of Default, subject to
notice and opportunity to cure (if any),
[Defendants] may in [their] sole discretion
terminate this Agreement immediately upon
notice to Operator.
(Id. ¶¶ 14-15 (emphasis omitted) (ellipses in original).)
The Complaint alleges that, “[o]n or about July 1, 2024,
[Plaintiff] informed [Defendants] that [it] intended to sell the
majority of its assets to a third party, Continental Café, LLC [ ]
(‘Continental’).” (Id. ¶ 16.) “[Plaintiff also allegedly]
informed [Defendants] that it anticipated closing in 30 days,
around July 31, 2024” (id. ¶ 17) and wrote:
“Please let us know how we can help make this transition
smooth for you, Continental, and, most of all, our mutual
customers.” In doing so, [Plaintiff] afforded
[Defendants] the opportunity to allow Continental to
assume [Plaintiff’s obligations under the] Agreement, or
enter into a new license agreement with Continental.
(Id.)
II. Post-Notice Communication Between the Parties
“Rather than working to transfer the [ ] Agreement to
Continental[, Defendants allegedly] chose to proceed to collect
from Plaintiff certain termination/offboarding fees.” (Id. ¶ 26.)
As the Complaint alleges:
On July 2, 2024, [Defendants’] Senior VP of Operations
. . . wrote to [Plaintiff]: “I would like to have a call
with you to explain our standard offboarding
process. It includes dispositioning the card balances
3
and all existing liabilities during the 30 day period.
The offboarding team has been informed and has started
this process.”
(Id. ¶ 18.)
Next, the Complaint alleges that, “[o]n July 9, 2024,
[Defendants’ controller] sent [Plaintiff four] invoices . . . for
a total sum of $430,405.36.” (Id. ¶ 29.) Two days later, “[o]n
July 11, 2024” (id. ¶ 37), Defendants’ chief executive allegedly
wrote to Plaintiff:
“I will make sure that no auto-reloads are discontinued
on any of the user accounts until July 31st as I do not
wish to disrupt the users or clients or worry you guys.
As far as I’m concerned you all are members in good
standing until the time of the sale of your company and
thus, no changes will be made to any of your user
accounts[,] and those will be handled consistent with how
they have been handled in the past. . . . That said,
[one of Defendants’ employees] is in discussions with the
company purchasing you guys to see if there is a path
forward for us working with them, but that is still
undetermined at this time.”
(Id.)
“Meanwhile, on July 16, 2024, [Defendants’ controller
allegedly] acknowledged” (id. ¶ 28) that:
“[a]t this point the offboarding process is proceeding as
normal with the assumption that no one will assume the
contract. Should this change, we will make the necessary
adjustments.”
. . .
After further correspondence between [the controller] and
[Plaintiff], [the controller] sent [Plaintiff] an email
on July 19, 2024, demanding that [Plaintiff] send an
overnight payment of $327,316.69 to [Defendants], which
was based upon the July 9th invoices, [five] additional
4
invoices, and a credit in favor of [Plaintiff] for
deposits collected by [Defendants].
(Id. ¶¶ 28-30 (emphasis omitted); see also id. ¶ 31 (allegedly
“provid[ing] a breakdown of [invoices and credits totaling]
$327,316.69”).)
III. Plaintiff’s Payment
“On July 19, 2024, [Plaintiff allegedly] paid [Defendants]
$327,316.69, not because it agreed that all the charges were
proper, but rather to ensure that essential services supporting
customer account continuity were not disrupted by [Defendants].
[Plaintiff allegedly] also wanted to avoid late charges/interest
that [Defendants] threatened.” (Id. ¶ 32.)
As alleged the in the Complaint:
Of th[e c]ollected [a]mount, [Plaintiff] disputes that it
owes [Defendants] a total amount of $139,533.90 for [two]
invoices [of] $17,500.00 and [ ] $122,033.90, which
collectively represent unwarranted termination fees
([the] “Termination Fees”).
At the time of [the] termination of the [ ] Agreement,
the remaining term . . . was 22 months.
Plaintiff is informed and believes . . . that
[Defendants] ha[ve], since the date of the termination of
[the] Agreement, taken the same hardware and software
devices that [Plaintiff] was using and assigned those to
Continental at the same rates for [ ] 24 months.
In other words, [Defendants] ha[ve] essentially assigned
the [ ] Agreement from [Plaintiff] to Continental.
(Id. ¶¶ 33-36 (some parentheses omitted); see also id. ¶¶ 20
(alleging that, “[u]pon the sale of [Plaintiff’s] business to
Continental, [Plaintiff] transferred to Continental . . . all [ ]
5
equipment and machines utilized in connection with [Plaintiff’s]
business”), 27 (alleging that “[o]nly after [Defendants] collected
and/or withheld the [ T]ermination[ F]ees from [Plaintiff] did
[Defendants] then enter into a contract with Continental”), 42
(alleging that “[o]nly after charging and/or withholding funds from
[Plaintiff] for [the] Termination Fees[] did [Defendants] enter
into an agreement with Continental”).)
“Despite [Defendants’] prior representations that [they] would
‘make the necessary adjustments’ to the ‘offboarding process’ with
respect to the [ ] Termination [F]ees should the [ ] Agreement be
assumed by Continental” (id. ¶ 38), the Complaint alleges that “no
adjustments/refunds were made to [Plaintiff] after [Defendants]
secured the contract with Continental for all the payments
[Plaintiff] would have made . . . through the end of the term of
th[e Agreement]” (id.). Defendants allegedly “could have (and in
fact did ultimately) avoid all of the disputed damages ([the]
Termination Fees) that [they] collected from [Plaintiff].” (Id.
¶ 41; see also id. (alleging that Defendants “did not mitigate
[their] damages by entering into an agreement with Continental”).)2
2 The Complaint also alleges “facts as to Amazon shrinkage
monies owed to [Plaintiff]” (Docket Entry 1 at 10 (emphasis and
all-caps font omitted); see also id. ¶¶ 44-57 (alleging that
Defendants “owe[ Plaintiff] at least $209,276.58 [in] Amazon
[s]hrinkage [payments]”)). “[Although] Defendants dispute that it
[sic] owes any amount to [Plaintiff] as it relates to . . . [those]
shrink[age payments], [the] Motion [ ] does not address
[Plaintiff’s] claims related to the Amazon shrink[age].” (Docket
Entry 12 (the “Supporting Brief”) at 7 n.7.)
6
Iv. Relevant Causes of Action and Procedural History
As relevant to the Motion, the Complaint pursues four causes
of action related to the Termination Fees: “[m]Joney [h]lad and
[r]eceived” (id. at 17 (emphasis omitted) ) (“Count Four”),
“preach[ of] the [ ] Agreement” (id. FI 86) (“Count Five”), “breach
of the implied covenant of good faith and fair dealing” (id. JI 94)
(“Count Six”), and “[v]Jiolation[s] of the North Carolina Unfair and
Deceptive Trade Practices Act [(‘UDTPA’)], N.c. Gen. Stat. § 75-1.1
et seq.” (id. at 19 (emphasis omitted)) (“Count Seven”). According
to the Complaint, Counts Four through Six seek to recover the
“Termination Fees” (id. at 17 (emphasis omitted); accord id. at 18,
19; see also id. TI 86 (alleging “breach of the [ ] Agreement by
charging [Plaintiff] and/or withholding funds” as to Count Five),
92 (alleging breach of good faith and fair dealing “by charging [ ]
and/or withholding funds” as to Count Six)), while Count Seven
seeks redress related to the “Termination Fees” and “Amazon
[s]hrinkage” (id. at 19 (emphasis omitted)).
Pursuant to Federal Rule of Civil Procedure (the “Rules”)
12 (b) (6), Defendants moved for partial dismissal as to the “four
[ ] causes of action related to the Termination Fees” (Docket Entry
11, G7 6). Plaintiff responded in opposition (see Docket Entry 16
(the “Response”)), and Defendants replied in further support of the
Motion (see Docket Entry 18 (the “Reply”)).
DISCUSSION
I. Rule 12(b)(6) Standards
A complaint fails to state a claim when it does not “contain
sufficient factual matter, accepted as true, to ‘state a claim to
relief that is plausible on its face.’” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (internal citations omitted) (quoting Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Although the
“court must accept as true all of the allegations contained in a
complaint,” that tenet “is inapplicable to legal conclusions,” and
“[t]hreadbare recitals of the elements of a cause of action,
supported by mere conclusory statements, do not suffice.” Id.
Moreover, “where the well-pleaded facts do not permit the court to
infer more than the mere possibility of misconduct, the complaint”
cannot “survive a Rule 12(b)(6) motion.” Francis v. Giacomelli,
588 F.3d 186, 193 (4th Cir. 2009) (internal quotation marks
omitted).
“In deciding whether a complaint will survive a motion to
dismiss, a court evaluates the complaint in its entirety . . . .”
E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435,
448 (4th Cir. 2011). The Court may also consider a document
“attache[d ] to [the] motion to dismiss,” so long as “it was
integral to and explicitly relied on in the complaint and [ ] the
plaintiff[] do[es] not challenge its authenticity.” Brown
Goldstein Levy LLP v. Federal Ins. Co., 68 F.4th 169, 174 (4th Cir.
8
2023) (internal quotation marks omitted); see also Parker v. Henry
& William Evans Home for Child., Inc., 762 F. App’x 147, 153 (4th
Cir. 2019) (“The rationale underlying this exception is that
concerns about lack of notice to the plaintiff when the court looks
to documents outside the complaint are dissipated where plaintiff
has actual notice and has relied upon these documents in framing
the complaint.” (internal quotation marks and alterations
omitted)).
Here, in seeking partial dismissal of the Complaint,
Defendants submitted, inter alia, a “copy of Section[s] 9.1 through
9.3 of the [ ] Agreement” (Docket Entry 12 at 4 n.5; see also
Docket Entry 12-1 at 2-4). The Court may consider that submission,
as the Complaint relies on the Agreement (see, e.g., Docket Entry
1, WI 14-15 (describing and quoting extensively from the
Agreement)), its terms qualify as clearly integral to Plaintiff’s
claims, including for breach of contract (see id. II 83-87), and
Plaintiff’s Response does not contest its validity (see Docket
Entry 16 at 1-21).
II. Analysis
A. Voluntary Payment Doctrine
The Motion seeks dismissal of “four causes of action [which]
attempt to recover the Termination Fees” (Docket Entry 12 at 10) on
the grounds that North Carolina’s “voluntary payment doctrine bars
[such recovery]” (id.). Opposing dismissal, Plaintiff contends
that the circumstances of its payment implicate “exceptions to the
voluntary payment doctrine, including payments made under
misapprehension of the true facts [or], in the alternative,
withheld deposits that cannot be classified as voluntar[ily paid]”
(Docket Entry 16 at 5). Because the Complaint belies Plaintiff’s
contentions, Defendants’ position should prevail.
“North Carolina’s voluntary payment doctrine stands for the
simple principle that ‘the voluntary payment of money by a person
who has full knowledge of all the facts can not [sic] be
recovered.’” Johnson v. Sprint Sols., Inc., 357 F. App’x 561, 562
n.1 (4th Cir. 2009) (brackets in original) (quoting Guerry v.
American Tr. Co., 234 N.C. 644, 647, 68 S.E.2d 272, 274 (1951)).
Although “payments are not considered voluntary . . . when [ ] made
under misapprehension of the true facts,” Johnson v. Hooks, 21 N.C.
App. 585, 590, 205 S.E.2d 796, 799-800 (1974), “there can be no
recovery” for “a payment [ ] made in ignorance or mistake of fact
where the means of knowledge or information is in reach of the
paying party [who nonetheless] neglects to obtain it,” Johnson v.
Sprint Sols., Inc., No. 3:08cv54, 2008 WL 2949253, at *2 (W.D.N.C.
July 29, 2008) (citing Brummit v. McGuire, 107 N.C. 351, 356, 12
S.E. 191, 193 (1890)). Likewise, “a payment voluntarily made, with
a full knowledge of all the facts, though reluctantly done, and
under protest, cannot be recovered back.” Brummit, 107 N.C. at
357, 12 S.E. at 193 (citing Devereux v. Insurance Co., 98 N.C. 6,
10
8, 3 S.E. 639, 640 (1887)). In light of Defendants’ “use of the
voluntary payment doctrine . . . as an affirmative defense,
[the M]otion under Rule 12(b)(6) should be granted [only] if [the]
affirmative defense . . . is apparent from the face of the
[C]omplaint.” Sprint, 2008 WL 2949253, at *2 (internal quotation
marks and ellipses omitted).
Here, the Complaint alleges that, “[o]n July 9, 2024,
[Defendants] sent [Plaintiff four] invoices” (Docket Entry 1,
¶ 29). Two of those invoices for “$17,500.00” and “$122,033.90 [ ]
collectively represent[ed the T]ermination [F]ees” (id. ¶ 33
(parentheses omitted)). Even before sending those invoices,
Defendants informed Plaintiff of their intent to “‘disposition[]
the card balances and all existing liabilities’” (id. ¶ 18). Then,
with the invoices in Plaintiff’s possession and three days before
Plaintiff paid the Termination Fees (see id. ¶¶ 28, 30), Defendants
told Plaintiff that “‘the offboarding process is proceeding as
normal with the assumption that no one will assume the
[Agreement]’” (id. ¶ 28 (emphasis omitted); see also id. (alleging
that Defendants stated they would “‘make the necessary
adjustments’” if another party assumed the Agreement (emphasis
omitted))). “[O]n July 19, 2024, [Defendants] demand[ed] . . .
overnight payment of $327,316.69[, a figure] based upon the July
9th invoices, [five] additional invoices, and a credit in favor of
[Plaintiff] for deposits collected by [Defendants].” (Id. ¶ 30.)
11
That same day, and ten days after Plaintiff received invoices for
the Termination Fees (see id. ¶ 29), “[Plaintiff] paid [Defendants]
$327,316.69 [despite] it[s dis]agree[ment] that all the charges
were proper” (id. ¶ 32). That payment included “$139,533.90 for
. . . [the] Termination Fees” (id. ¶ 33 (parentheses and quotation
marks omitted)).
Those allegations demonstrate that Plaintiff knew of
Defendants’ intent to terminate the Agreement, received invoices
which included the Termination Fees, and, despite its disagreement
with the charges (see id. ¶ 32), paid the Termination Fees in full.
Accordingly, Plaintiff’s voluntary payment of the Termination Fees
with “full knowledge of all the facts,” Guerry, 234 N.C. at 647, 68
S.E.2d at 274, “is apparent from the face of the [C]omplaint,”
Sprint, 2008 WL 2949253, at *2 (internal quotation marks omitted),
and therefore bars Plaintiff from recovering the Termination Fees.
See also Sprint, 2008 WL 2949253, at *3 (noting that a plaintiff’s
“pay[ment of] invoices despite the knowledge that she was being
charged for [items] that she did not think were correct . . .
subject[ed] her[] to the voluntary payment doctrine”).
Seeking an exception to the voluntary payment doctrine,
Plaintiff offers a number reasons as to why it involuntarily paid
the Termination Fees “under misapprehension of the true facts”
(Docket Entry 16 at 5), all of which prove unavailing. First,
Plaintiff contends that “[it] was unaware of [ ] ongoing
12
interactions and negotiations between Defendants and Continental at
the time of payment” (id. at 7). Yet, as alleged in Complaint,
Defendants’ chief executive “wrote to Plaintiff” (Docket Entry 1,
¶ 37) eight days before Plaintiff paid the Termination Fees (see
id. ¶¶ 32, 37) stating that his colleague “‘[wa]s in discussions
with the company purchasing [Plaintiff, i.e., Continental,] to see
if there is a path forward for [Defendants’] working with them’”
(id. ¶ 37). Plaintiff therefore knew of “ongoing interactions [ ]
between Defendants and Continental” (Docket Entry 16 at 7) before
paying the Termination Fees. Similarly, the Complaint fails to
allege the existence of any “negotiations” (id.) between Defendants
and Continental (see, e.g., Docket Entry 1, ¶ 27 (alleging that
“[o]nly after [Defendants] collected” payment from Plaintiff “did
[they] . . . contract with Continental” (emphasis added))), let
alone that such negotiations occurred without Plaintiff’s knowledge
before it paid the Termination Fees. That absence of pre-payment
interactions unknown to Plaintiff also renders implausible any
“infer[ence] that Defendants . . . withheld material information
from [Plaintiff] regarding [their] interactions [with Continental]”
(Docket Entry 16 at 8).
Next, Plaintiff contends that the Complaint presents “a
legitimate dispute about whether Continental assumed the [ ]
Agreement from [Plaintiff] (with Defendants’ blessing),” in which
case, according to Plaintiff, “no Termination Fees would have been
13
due to Defendants because the [Agreement] would have remained in
effect and [would] not have been terminated.” (Id. at 6.) The
Complaint, however, lacks any indication that an assumption
occurred; instead, it alleges that Plaintiff “afforded [Defendants]
the opportunity to allow Continental to assume [the] Agreement, or
to enter into a new [ ] agreement with Continental” (Docket Entry
1, @ 17). Per the Complaint, Defendants chose the latter,
“‘proceeding [ on] the assumption that no one will assume the
[Agreement]’” (id. 7 28 (emphasis omitted)) and later “enter[ing]
into an agreement with Continental” (id. J 42). On those facts, no
assumption occurred, notwithstanding conclusory allegations to the
contrary (see, e.g., id. WII 36 (alleging that Defendants
“essentially assigned the [| ] Agreement from [Plaintiff] to
Continental”), 98h. (alleging that Defendants “treat[ed] the
transaction as .. . an assignment”)).°
As to Plaintiff’s contention that “[t]he voluntary payment
doctrine [ ] does not apply to those portions of the Termination
Fee[s] that are based upon Defendants’ unilateral[] withholding of
3 Plaintiff provides no authority for the proposition that,
following the collection of one buyer’s termination fees, another
buyer’s agreement involving “the same hardware, services, and fees”
(Docket Entry 16 at 4) “actually [constitutes an] assum[ption]” of
the first buyer’s agreement (id.). (See id.) And North Carolina
law appears to the contrary. See, e.g., Commercial Nat’l Bank of
Charlotte v. Charlotte Supply Co., 226 N.c. 416, 426, 38 S.E.2d
503, 509 (1946) (noting that, even between the same parties, “[t]he
making of a second contract dealing with the subject matter of an
earlier one does not necessarily abrogate the former contract”).
14
sums” (Docket Entry 16 at 8; see also id. at 9 (“[T]he [w]ithheld
[a]mount of $118,597.67 cannot be considered a voluntary
payment”)), the Complaint does not include any withheld sums in its
definition of the Termination Fees; rather, it alleges that “a
total amount of $139,544.90 for invoices [of] $17,500.00 and [ ]
$122,033.90[ ] collectively represent[s the] [T]ermination [F]ees”
(Docket Entry 1, ¶ 33 (parentheses omitted)), and that Plaintiff
affirmatively “paid” (id. ¶ 32) that amount (and more) to
Defendants (see id.). The voluntary payment doctrine therefore
bars Plaintiff’s recovery of the Termination Fees without
implicating any withheld sums. In turn, the Motion’s pursuit of
dismissal for reasons beyond the voluntary payment doctrine (see,
e.g., Docket Entry 12 at 12-13 (contending that Counts Four through
Seven errantly rest on a failure-to-mitigate theory)) encompasses
each of Plaintiff’s claims, including those related to withheld
sums (see Docket Entry 1, ¶¶ 86, 92 (asserting claims for breach of
contract and breach of the duty of good faith and fair dealing
based, in part, on Defendants’ alleged “withholding [of] funds from
[Plaintiff]”)).4
4 As noted above, the Complaint fails to plausibly allege
that Continental assumed Plaintiff’s obligations under the
Agreement. As such, the Court need not consider Plaintiff’s
contention that the voluntary payment doctrine should not apply
because “Defendants represented that ‘necessary adjustments’ would
be made if the [ ] Agreement should be assumed” (Docket Entry 16 at
6-7). Similarly, the Court need not address the effect of an
assumption on Defendants’ termination rights, or accept Plaintiff’s
(continued...)
15
B. UDTPA
The Motion also contends that Plaintiff’s UDTPA claim “does
not allege [ ] substantial aggravating circumstances” (Docket Entry
12 at 16 (quotation marks omitted)) and therefore warrants
dismissal “as it relates to the Termination Fees” (id. at 17; see
also Docket Entry 1, FI 98d. (alleging that Defendants “engaged in
unfair trade practices by collecting [the] Termination Fees from
[Plaintiff] while simultaneously entering into a contract with
Continental”)).°
4(...continued)
conclusion that, in the event of an assumption, “no Termination
Fees would have been due” (id. at 6). In any event, such an
inquiry would not impact the Court’s analysis of the voluntary
payment doctrine or its resolution of the Motion, as (A) the
Agreement does not address the parties’ assignment rights (see
Docket Entry 1, 9 14), and (B) Plaintiff appears to misunderstand
the nature of assignment and assumption of contractual obligations,
alleging on the one hand that Defendants prevented Plaintiff from
assigning Plaintiff’s own obligations to a third party (see id.
17 (alleging that Defendant could have “allow[ed] Continental to
assume [the ] Agreement”)), and on the other that Defendants
unilaterally assigned Plaintiff’s contractual obligations to
Continental (see, e.g., id. J 36 (alleging that Defendants
“essentially assigned the [| ] Agreement from [Plaintiff] to
Continental”)). See generally 6 Am. Jur. 2d Assignments $ 18 (2d
ed. May 2026) (noting that, “absen[t ] an express provision,” a
contract “is assignable without the consent of the other party”).
5 The Motion seeks only partial dismissal of Plaintiff’s
UDTPA claim, specifically the portions of that claim concerning the
Termination Fees. (See Docket Entry 11, 97 6; accord Docket Entry
12 at 7 n.7.) “Rule 12(b6) (6) . . . permits the [C]ourt, upon
motion of the defendant, to dismiss all or part of a plaintiff’s
cause of action for failure to state a claim upon which relief can
be granted.” Frye v. City of Kannapolis, 109 F. Supp. 2d 436, 438
(M.D.N.C. 1999). Here, although the Complaint limits its claims
for money had and received, breach of contract, and bad faith to
(continued...)
16
“To recover under the UDTPA, a [plaintiff] must show that (1)
the defendant engaged in conduct that was in or affecting commerce,
(2) the conduct was unfair or had the capacity or tendency to
deceive, and (3) the plaintiff suffered actual injury as a
proximate result... .” Belk, Inc. v. Meyer Corp., U.S., 679
F.3d 146, 164 (4th Cir. 2012) (internal quotation marks omitted).
As to that second element, “a mere breach of contract, even if
intentional, is not sufficiently unfair or deceptive to sustain
a[ UDTPA] action,” Branch Banking & Tr. Co. v. Thompson, 107 N.C.
App. 53, 62, 418 S.E.2d 694, 700 (1992). Rather, “a plaintiff must
show substantial aggravating circumstances attending the breach,”
id. (quotation marks omitted), such as “unfairness or ‘deception
either in the formation of the contract or in the circumstances of
its breach,’” SmithKline Beecham Corp. v. Abbott Lab’ys., No.
1:15ev360, 2017 WL 1051123, at *13 (M.D.N.C. Mar. 20, 2017)
5(...continued)
Defendants’ collection of the Termination Fees and/or withholding
of sums (see Docket Entry 1 at 17-18), its UDTPA claim pertains to
“Termination Fees” and “Amazon [s]hrinkage” (id. at 19 (emphasis
omitted)), the latter category of which the “Motion [ ] does not
address” (Docket Entry 12 at 7 n.7). Plaintiff’s UDTPA claim
“contains separate and independent theories of relief supported by
independent factual allegations,” Georgion v. Bank of Am., N.A.,
No. 1:22cv618, 2025 WL 2388779, at *4 (W.D.N.C. Aug. 18, 2025).
(See Docket Entry 1, WII 98-100 (separating allegations as to both
categories).) The Court may thus consider the Motion’s request for
partial dismissal of that claim. See Georgion, 2025 WL 2388779, at
*4-5 (distinguishing and/or declining to follow non-binding,
sister-circuit precedent to the contrary).
17
(quoting Bartolomeo v. S.B. Thomas, Inc., 889 F.2d 530, 535 (4th
Cir. 1989)).
Despite Plaintiff’s contention that the Complaint alleges
“several aggravating circumstances that . . . sufficiently
support[] its UDTPA claim” (Docket Entry 16 at 14), further
analysis reveals none. For example, the Complaint alleges that
Defendants “engaged in unfair trade practices by collecting [the ]
Termination Fees from [Plaintiff] while simultaneously entering
into a contract with Continental for the identical services and
hardware.” (Docket Entry 1, ¶ 98d.; accord id. ¶ 98g.; Docket
Entry 16 at 17.) Even if the Complaint itself did not contradict
that conclusory allegation (see, e.g., Docket Entry 1, ¶ 98f.
(alleging that Defendants contracted with Continental “only after”
collecting the Termination Fees); accord id. ¶¶ 27, 42), such
conduct lacks the requisite unfairness or capacity to deceive, as
Defendants informed Plaintiff of its “‘discussions’” with
Continental (id. ¶ 37) before Plaintiff paid the Termination Fees.
Even without Plaintiff’s knowledge, Defendants’ alleged
“negotiation and formation of a separate contract for [similar
services would] . . . relate [only] to the issue of damages,”
Rahamankhan Tobacco Enters. Pvt. Ltd. v. Evans MacTavish Agricraft,
Inc., 989 F. Supp. 2d 471, 476 (E.D.N.C. 2013), in the (as-yet
18
unrealized) event that Defendants pursued their own claims for
breach of contract, see id.®
Likewise, by informing Plaintiff of their intent to terminate
the Agreement (see Docket Entry 1, @ 18), invoicing Plaintiff for
a portion of its outstanding balance (see id. JF 29), and demanding
overnight payment of the full balance ten days later (see id.
{ 30), Defendants did not “appl[y] undue pressure on [Plaintiff] to
pay before [it] could learn of the true facts of the [alleged]
contract assumption” (Docket Entry 16 at 18); they simply acted on
their termination rights under the Agreement, including with
forewarning in the form of invoices. See South Alt. Ltd. P’ship of
Tenn., L.P. v. Riese, 284 F.3d 518, 539 n.22 (4th Cir. 2002)
(noting “rar[ity of] egregious and aggravating circumstances [ ]
attend[ing] the exercise of a contractual right”).’ For related
6 Plaintiff contests the applicability of “Rahamankhan.. .
[to this dispute given its] focus [ ] on nondisclosure ... rather
than on deception, as [alleged] here” (Docket Entry 16 at 20).
Notwithstanding that distinction, the case suggests the futility of
a UDTPA claim premised on the existence of a separate agreement for
similar services and/or products, regardless of a plaintiff’s
knowledge of such agreement. See Rahamankhan, 989 F. Supp. 2d at
476 (noting that existence of such agreement “does not convert
thle] contract dispute into a tort dispute”). And, as explained
further in the analysis that follows above, Defendants’ alleged
statements and actions regarding its agreement with Continental
neither possess the requisite capacity to deceive nor demonstrate
unfairness,
7 Similarly, despite the Response’s contention that “the
licensee-licensor relationship inherently demonstrates a power
imbalance” (Docket Entry 16 at 18), “there is no [such] imbalance
. . . [on the facts alleged, as] the business relationship[] at
(continued...)
19
reasons, the Complaint’s allegation that Defendants “impos[ed]
interest charges” (Docket Entry 1, JI 98e.; accord id. { 32) fails
to sustain its UDTPA claim, as the Complaint does not allege that
the Agreement forbids such conduct or anything to further
substantiate it, foreclosing the possibility of “systematic
overcharging [which, on allegations absent here,] can constitute an
unfair practice,” Foodbuy, LLC v. Gregory Packaging, Inc., No.
3:16cv809, 2022 WL 3102356, at *4 n.4 (W.D.N.C. Aug. 4, 2022). And
the Complaint’s lone allegation that Defendants “threaten[ed] to
disrupt [Plaintiff’s] essential services if payment was not made
immediately[]” (Docket Entry 1, q 98e.), without further
elaboration (see id.), constitutes “a mere [threat to] breach [the
Agreement, which,] even if [breached] intentional[ly], [would] not
[constitute] an unfair or deceptive act under [the UDTPA],” Bob
Timberlake Collection, Inc. v. Edwards, 176 N.C. App. 33, 42, 626
S.E.2d 315, 323 (2006); see also PCS Phosphate Co., Inc. v. Norfolk
S. Corp., 520 F. Supp. 2d 705, 718 (E.D.N.C. 2007) (noting that
“defendants’ threats to abandon [a] rail line [despite its
contractual obligations] do not rise to ‘substantial aggravating
7(...continued)
issue [is] demonstrative of the competitive nature of [the parties’
industries] and involve[s parties] of sufficiently similar business
sophistication and means,” Champion Pro Consulting Grp., Inc. v.
Impact Sports Football, LLC, 845 F.3d 104, 111 (4th Cir. 2016).
(See Docket Entry 1, 8-9 (alleging extent of Plaintiff’s and
Defendants’ various business capabilities) .)
20
circumstances’ surrounding nonperformance of the contract to
support a UDTPA claim”), aff’d, 559 F.3d 212 (4th Cir. 2009).
Additionally, Defendants’ alleged promise to “‘make the
necessary adjustments’” (Docket Entry 1, ¶ 28 (emphasis omitted))
in the event that a third-party “‘assume[d] the [Agreement]’” (id.
(emphasis omitted)) does not constitute a promise to “refund[ the
Termination Fees] after securing the Continental contract” (id.
¶ 98l.; accord Docket Entry 16 at 17)) or a “false representation”
(Docket Entry 16 at 20) sufficient to sustain Plaintiff’s UDTPA
claim. At best, Defendants’ statement amounts to an offer to
adjust “‘the offboarding process’” (Docket Entry 1, ¶ 28) in the
event of an assumption, which (per the allegations of the Complaint
as documented previously) never occurred. Nothing in the Complaint
renders that offer “false” (Docket Entry 16 at 17) or exhibits its
“capacity or tendency to deceive,” Belk, 679 F.3d at 164,
regardless of whether Plaintiff misinterpreted Defendants’
statement, see Salami v. JPMorgan Chase Bank, N.A., No. 1:18cv794,
2020 WL 3129891, at *7 (M.D.N.C. June 12, 2020)
(“‘[M]isunderstandings, despite their capacity to deceive,
ordinarily are insufficient to sustain a claim of deceptive conduct
under the UDTPA.’” (quoting Curtis B. Pearson Music Co. v. Everitt,
368 F. App’x 450, 456 (4th Cir. 2010))), recommendation adopted,
2020 WL 5705924 (M.D.N.C. July 1, 2020). The Complaint therefore
21
fails to allege the existence of aggravating circumstances
necessary to support a UDTPA claim as to the Termination Fees.
C. Further Deficiencies
The Supporting Brief contends that Plaintiff’s “[c]laims also
fail because North Carolina law does not recognize an affirmative
claim against a party for its purported failure to mitigate its own
damages” (Docket Entry 12 at 12). The Response counters that
Plaintiff “does not assert a cause of action for mitigation of
damages” (Docket Entry 16 at 10) and that Defendants’ alleged
failure to mitigate does “not [provide] the legal basis for its
claims” (id.). “Instead, [the Response insists that Plaintiff]
asserts [valid] claims for . . . money had and received” (id.),
“breach of contract, [and] breach of the covenant of good faith and
fair dealing” (id.). The Reply, in turn, contests Plaintiff’s
position on these points. (See Docket Entry 18 at 2-5, 8-10.)?
8 The Reply’s arguments as to the shortcomings of each claim
(see Docket Entry 18 at 2-5) stand in rebuttal to the Response,
which maintains that the claims rest on theories of relief
unrelated to Defendants’ failure to mitigate damages (see Docket
Entry 16 at 10). The Court may thus consider the Reply’s arguments
without classifying them as improperly raised. See Hutty v. PNC
Bank, Civ. No. 21-2535, 2023 WL 2025029, at *3 n.2 (D. Md. Feb. 15,
2023) (“Ordinarily, the [c]ourt does not consider arguments raised
for the first time in a reply brief.”). In any event, even if
raised for the first time, “whether to consider such arguments lies
within the [Court’s] discretion . . . .” Snowden v. Prince
George’s Cnty. Dep’t of Corr., Civ. No. 18-160, 2018 WL 3862253, at
*3n.2 (D. Md. Aug. 14, 2018).
22
1. Money Had and Received
The Complaint’s claim for “[mJoney [h]lad and [r]eceived”
(Docket Entry 1 at 17 (emphasis omtitted)), “under the doctrine of
unjust enrichment, is an action o[f] implied contract,” Dean v.
Mattox, 250 N.C. 246, 251, 108 S.E.2d 541, 546 (1959). As the
Reply correctly observes, a “claim for [m]Joney [h]ad and [r]eceived
cannot be maintained when the parties’ relationship is governed by
a written contract” (Docket Entry 17 at 5 (citing Atlantic & E.
Carolina Ry. Co. v. Wheatly Oil Co., 163 N.C. App. 748, 753, 594
S.E.2d 425, 429 (2004)). See also Metric Constructors, Inc. v.
Bank of Tokyo-Mitsubishi, Ltd., 72 F. App’x 916, 920 (4th Cir.
2003) (noting that, under North Carolina law, “[a]Jn unjust
enrichment claim is available only in the absence of an express
contract between the parties”). Because the Complaint alleges the
existence of a written agreement (see, e.g., Docket Entry 1, {7 13),
its claim for money had and received must fail.
2. Breach of Contract
As noted in the Response, “[Plaintiff’s] breach of contract
claim is based on Defendants’ alleged breach of the [ ] Agreement”
(Docket Entry 16 at 11) and, to survive dismissal, must rest on
factual allegations establishing “*‘(1) [the] existence of a valid
contract and (2) breach of the terms of that contract’” (id.
(quoting Cordaro v. Harrington Bank, FSB, 260 N.C. App. 26, 37, 817
S.E. 2d 247, 256 (2018))). As to that second element, the
23
Complaint alleges that Defendants “breached the [ ] Agreement by
charging [Plaintiff] and/or withholding funds from [Plaintiff]
under the guise of offboarding or Termination Fees.” (Docket Entry
1, ¶ 86.) Similarly, the Response contends that “Defendants
breached the [ ] Agreement by improperly treating it as terminated”
(Docket Entry 16 at 11). The Reply, however, maintains that
Defendants “w[ere] contractually entitled” (Docket Entry 18 at 3)
to “charg[e ] and/or withhold[] funds from [Plaintiff]” (id. at 2
(internal quotation marks omitted)). A review of the Complaint and
the Agreement confirms Defendants’ view.
To begin, the terms of the Agreement provide that, in the
event Plaintiff “‘sells or agrees to sell all or substantially all
of its business or assets to any other party . . . , [Defendants]
may in [their] sole discretion terminate th[e] Agreement’” (Docket
Entry 1, ¶ 15). Once Plaintiff “informed [Defendants] that [it]
intended to sell the majority of its assets to . . . Continental”
(id. ¶ 16), Defendants opted to exercise their termination rights
(see id. ¶ 18 (alleging that Defendants informed Plaintiff of their
intent to terminate the Agreement one day after Plaintiff’s notice
of its intent to sell)). Further, in “demanding . . . payment”
(id. ¶ 30) from Plaintiff, Defendants acted according to the terms
of the Agreement, which required that “[a]ny unpaid [f]ees and
other monetary obligations owed to [Defendants] . . . become
immediately due” upon termination (Docket Entry 12-1, § 9.3(iii)).
24
That same clause also demonstrates that “[Plaintiff ] authorize[d
Defendants] to set off any and all unpaid [f]ees or other monetary
obligations . . . against amounts of [Plaintiff’s] which
[Defendants] may [ ] have on hand” (id.), dispelling any notion
that Defendants breached the Agreement by “withholding funds from
[Plaintiff]” (Docket Entry 1, ¶ 86) and applying those funds as “a
credit” to Plaintiff’s balance upon invoicing (id. ¶ 30).
Additionally, the Response’s insistence that the “Agreement
was actually assumed” (Docket Entry 16 at 4) remains (under the
allegations of the Complaint) unfounded (see, e.g., Docket Entry 1,
¶ 42 (alleging the existence of separate agreement between
Defendants and Continental)) and, as to its breach of contract
claim, fails to render the Agreement’s terms inoperable.
Defendants did not breach those terms by acting on their
termination rights pursuant to Plaintiff’s sale.
In sum, the Complaint’s breach of contract claim attempts to
hold Defendants liable for actions expressly authorized under the
Agreement. Because the Motion seeks dismissal of that claim for
lacking a theory of relief beyond Defendants’ failure to mitigate
damages (see Docket Entry 11, ¶ 8), and because the Complaint
demonstrates none, Plaintiff’s breach of contract claim fails as a
matter of law, including as to any withheld sums.
25
3. Good Faith and Fair Dealing
The Response further contends that “[t]he Complaint’s
allegations establish a breach of the implied covenant of good
faith and fair dealing” (Docket Entry 16 at 12), while the Reply
insists that “Plaintiff [ ] cannot use the implied covenant to
create [ ] otherwise non-existent contractual obligation[s]”
(Docket Entry 18 at 4). This claim constitutes “‘a separate claim
from breach of contract . . ., [provided] the express terms of the
contract do not preclude the implied terms which [ P]laintiff
claims were breached’” (Docket Entry 16 at 12 (quoting Nanendla v.
WakeMed, 24 F.4th 299, 308 (4th Cir. 2022))). A party breaches its
duty of good faith and fair dealing when it fails “to make
reasonable efforts to perform [its] obligations under the
agreement,” Weyerhaeuser Co. v. Godwin Bldg. Supply Co., 40 N.C.
App. 743, 746, 253 S.E.2d 625, 627 (1979), or when it “injures the
right of [its counterpart] 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) (internal quotation marks omitted).
Here, the Complaint alleges that Defendants “unfairly
interfered with [Plaintiff’s] right(s) to receive the benefits of
the [ ] Agreement by charging [Plaintiff] and/or withholding funds
from [Plaintiff] under the guise of offboarding or Termination
Fees” (Docket Entry 1, ¶ 92; see also id. ¶ 93 (alleging that
Defendants’ “treating the conclusion of [their] relationship with
26
[Plaintiff ] as a termination” establishes Defendants’ failure to
“act in good faith”)). Yet, neither the Complaint nor the Response
identifies what “benefits” the Agreement impliedly vested in
Plaintiff that Defendants then deprived. The plain terms of the
Agreement enabled Defendants to collect “[a]ny unpaid [f]ees”
(Docket Entry 12-1, § 9.3(iii)) and to offset such amounts with
funds otherwise owed to Plaintiff (see id.). Plaintiff cites no
legal authority or factual support for the proposition that the
Agreement includes an implied obligation to refund the Termination
Fees or withheld funds in the event that Defendants reach an
agreement with Plaintiff’s buyer, or that contracting with
Continental would nullify Defendants’ termination rights. (See
Docket Entry 16 at 11-13.) Accordingly, the Complaint fails to
state a claim for breach of the implied covenant of good faith and
fair dealing.
CONCLUSION
North Carolina’s voluntary payment doctrine bars Plaintiff’s
recovery of the Termination Fees, and the Complaint fails to allege
substantial aggravating factors to sustain the portion of its UDTPA
concerning those fees. Furthermore, for additional reasons, each
cause of action relevant to the Motion fails to state a claim for
relief as alleged.
IT IS THEREFORE RECOMMENDED (A) that the Motion (Docket Entry
11) be granted, (B) that Counts Four, Five, and Six be dismissed
27
pursuant to Rule 12(b)(6) for failure to state a claim, and (C)
that Count Seven be partially dismissed as to any claim for
recovery of the Termination Fees on that same basis.
This 31st day of July, 2026.
/s/ L. Patrick Auld
L. Patrick Auld
United States Magistrate Judge
28