Auto Provisions, LLC v. G1.34 Holdings, LLC
This text of Auto Provisions, LLC v. G1.34 Holdings, LLC (Auto Provisions, LLC v. G1.34 Holdings, LLC) is published on Counsel Stack Legal Research, covering North Carolina Business Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.
Opinion
Auto Provisions, LLC v. G1.34 Holdings, LLC, 2026 NCBC 40.
STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE SUPERIOR COURT DIVISION WAKE COUNTY 24CV010060-910 AUTO PROVISIONS, LLC and RECON PARTNERS, LLC,
Plaintiffs and Counterclaim Defendants, ORDER AND OPINION ON v. PLAINTIFFS’ MOTIONS FOR SUMMARY JUDGMENT G1.34 HOLDINGS, LLC,
Defendant and Counterclaim Plaintiff.
1. THIS MATTER is before the Court following the 2 October 2025 filings of
(1) the Motion for Partial Summary Judgment (the RP Motion), filed by Plaintiff and
Counterclaim Defendant Recon Partners, LLC (RP), (ECF No. 80 [RP Mot.]); and
(2) Auto Provisions, LLC’s Motion for Summary Judgment (the AP Motion; and with
the RP Motion, the Motions), filed by Plaintiff and Counterclaim Defendant Auto
Provisions, LLC (AP), (ECF No. 82 [AP Mot.]).
2. Pursuant to Rule 56 of the North Carolina Rules of Civil Procedure (the
Rule(s)), the Motions, either in whole or in part, seek summary judgment as to the
claims and counterclaims asserted in this action. (See generally RP Mot.; AP Mot.)
3. For the reasons set forth herein, the Court GRANTS in part and DENIES
in part the Motions.
Michael Best & Friedrich LLP by Justin G. May and Matthew B. Couch, for Plaintiff and Counterclaim Defendant Auto Provisions, LLC.
Wyrick Robbins Yates & Ponton LLP by Charles George and Josey L. Newman, for Plaintiff and Counterclaim Defendant Recon Partners, LLC. Parry Law, PLLC by Jonah Garson and K. Alan Parry, for Defendant and Counterclaim Plaintiff G1.34 Holdings, LLC.
Robinson, Chief Judge.
I. INTRODUCTION
4. This action arises from a soured business relationship between members of
an LLC and their respective owners. AP and RP, on the one hand, and G1.34
Holdings, LLC (G1.34), on the other hand, each accuse the other(s) of materially
breaching their respective contractual obligations, and G1.34 further claims that AP
has breached fiduciary duties owed to G1.34 and that both AP and RP have been
unjustly enriched and breached implied duties of good faith and fair dealing.
II. FACTUAL BACKGROUND
5. The Court does not make findings of fact when ruling on a motion for
summary judgment. “[T]o provide context for its ruling, the Court may state either
those facts that it believes are not in material dispute or those facts on which a
material dispute forecloses summary adjudication.” Ehmann v. Medflow, Inc.,
2017 NCBC LEXIS 88, at *6 (N.C. Super. Ct. Sep. 26, 2017); see also Hyde Ins.
Agency, Inc. v. Dixie Leasing Corp., 26 N.C. App. 138, 142 (1975) (encouraging the
trial court to articulate a summary of the material facts considered not at issue
justifying entry of judgment). A. The Parties
6. AP is a North Carolina limited liability company with its principal place of
business in Wake County, North Carolina. (J.A. 2 at ¶ 1, ECF Nos. 90–100.) 1 AP is
owned and managed by Jeffrey Chapman (Chapman) and his wife, Stefanie Chapman
(Ms. Chapman). (J.A. 498 at 126:7–8; J.A. 607 at 20:4–5, 12–18; J.A. 342 at ¶ 5.)
7. RP is a North Carolina limited liability company with its principal place of
business in Wake County, North Carolina. (J.A. 2 at ¶ 2.)
8. G1.34 is a North Carolina limited liability company with its principal place
of business in Wake County, North Carolina. (J.A. 2 at ¶ 3; J.A. 237 at ¶ 3.) G1.34
is owned and managed by Dr. Nick Medendorp (Dr. Medendorp) and his wife, Molly
Medendorp (Ms. Medendorp). (J.A. 341–42 at ¶ 4; J.A. 709 at 18:8–16; J.A. 710
at 19:9–14.)
B. RP’s Formation
9. RP was formed on or about 15 November 2019. (See J.A. 101.) Around the
same time, AP was created to become a joint owner in RP. (See J.A. 493 at 121:9–12,
23–24.)
10. AP and G1.34 are the sole members of RP, with AP holding a sixty percent
(60%) interest and G1.34 holding a forty percent (40%) interest. (J.A. 118;
J.A. 341–42 at ¶¶ 4–5; J.A. 607 at 20:6–11.)
1 The joint appendix of exhibits submitted by the parties is expansive and, as a result, is split
across eleven separate record filings. (ECF Nos. 90–100.) For ease of reference, the Court cites to the joint appendix as follows: (J.A. [ ] at [ ].). The Court cites using the joint appendix number found in red at the top of each page. 11. RP was created to develop and market automotive reconditioning software
for automotive dealerships and to “provide its software as a service, partnering with
auto dealerships to operate and manage the vehicle reconditioning process.” (J.A. 341
at ¶ 3; J.A. 343 at ¶ 11; J.A. 493–94 at 121:23–122:3.)
1. The Framework Document
12. On or about 7 November 2019, Chapman and Dr. Medendorp executed a
document pertaining to certain aspects of RP’s foundation (the Framework
Document). (J.A. 1384–85; see also J.A. 792 at 283:16–17; J.A. 530 at 222:6–16.)
13. The Framework Document was signed by Dr. Medendorp on behalf of G1.34
and Chapman on behalf of NewChap, LLC 2. (J.A. 1384–85; see also Answer 3 ¶ 37,
ECF No. 27 [Reply Countercls.] (admitting, in relevant part, that the Framework
Document was signed on or about 8 November 2019 by Chapman and
Dr. Medendorp).)
14. The Framework Document outlined that NewChap, LLC and G1.34 would
own sixty percent (60%) and forty percent (40%) of RP, respectively, and contemplated
that NewChap, LLC would “provide software specification expertise, industry
knowledge and contacts, [and] cover pro-rate [sic] share of operating expenses[,]”
while G1.34 would “cover costs of software development, provide IT expertise, [and]
cover pro-rata share of operating expenses[.]” (J.A. 1384.)
2 The Framework Document refers to a NewChap, LLC, as AP had not been formed at the
time Chapman and Dr. Medendorp created and signed the Framework Document. (See J.A. 790 at 281:13–23.)
3 Although entitled Answer, this filing actually constitutes a reply to G1.34’s counterclaims. 15. The Framework Document also provided an agreed-upon definition of
Minimum Viable Product (MVP) and contemplated that (i) G1.34 would provide
capital to RP “for software development until MVP is fully usable”; (ii) RP would
contract separately and directly with software developers; (iii) G1.34 would receive
an additional nine percent (9%) equity “at completion of MVP and [when] first client
revenue has begun”; (iv) G1.34 would be “reimbursed it’s [sic] capital associated with
[software development] as note repayment after completion of MVP and [when] first
client revenue has begun”; and (v) NewChap, LLC would use its portion of RP profits
to pay back “G1.34 development capital as note payable until pro rata portion is fully
repaid.” (J.A. 1384–85.)
16. Subsequently, the Framework Document was provided to an attorney “to
create the [O]perating [A]greement.” (J.A. 794 at 285:16–18; J.A. 795 at 286:22–23
(the Framework Document “was the foundation for the [O]perating [A]greement”);
J.A. 712–13 at 55:20–56:2; J.A. 530 at 222:10–16.)
2. The Operating Agreement
17. On 6 December 2019, following the formation of RP, Chapman and
Dr. Medendorp executed the Operating Agreement of RP. (J.A. 100–29; J.A. 343–44
at ¶ 11; J.A. 96 at ¶ 6.)
18. The Operating Agreement provides that Chapman is the manager of RP.
(J.A. 103–04 at § 3.1; see also J.A. 543 at 254:18–19.) i. Software Development Funding and Repayment
19.
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Auto Provisions, LLC v. G1.34 Holdings, LLC, 2026 NCBC 40.
STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE SUPERIOR COURT DIVISION WAKE COUNTY 24CV010060-910 AUTO PROVISIONS, LLC and RECON PARTNERS, LLC,
Plaintiffs and Counterclaim Defendants, ORDER AND OPINION ON v. PLAINTIFFS’ MOTIONS FOR SUMMARY JUDGMENT G1.34 HOLDINGS, LLC,
Defendant and Counterclaim Plaintiff.
1. THIS MATTER is before the Court following the 2 October 2025 filings of
(1) the Motion for Partial Summary Judgment (the RP Motion), filed by Plaintiff and
Counterclaim Defendant Recon Partners, LLC (RP), (ECF No. 80 [RP Mot.]); and
(2) Auto Provisions, LLC’s Motion for Summary Judgment (the AP Motion; and with
the RP Motion, the Motions), filed by Plaintiff and Counterclaim Defendant Auto
Provisions, LLC (AP), (ECF No. 82 [AP Mot.]).
2. Pursuant to Rule 56 of the North Carolina Rules of Civil Procedure (the
Rule(s)), the Motions, either in whole or in part, seek summary judgment as to the
claims and counterclaims asserted in this action. (See generally RP Mot.; AP Mot.)
3. For the reasons set forth herein, the Court GRANTS in part and DENIES
in part the Motions.
Michael Best & Friedrich LLP by Justin G. May and Matthew B. Couch, for Plaintiff and Counterclaim Defendant Auto Provisions, LLC.
Wyrick Robbins Yates & Ponton LLP by Charles George and Josey L. Newman, for Plaintiff and Counterclaim Defendant Recon Partners, LLC. Parry Law, PLLC by Jonah Garson and K. Alan Parry, for Defendant and Counterclaim Plaintiff G1.34 Holdings, LLC.
Robinson, Chief Judge.
I. INTRODUCTION
4. This action arises from a soured business relationship between members of
an LLC and their respective owners. AP and RP, on the one hand, and G1.34
Holdings, LLC (G1.34), on the other hand, each accuse the other(s) of materially
breaching their respective contractual obligations, and G1.34 further claims that AP
has breached fiduciary duties owed to G1.34 and that both AP and RP have been
unjustly enriched and breached implied duties of good faith and fair dealing.
II. FACTUAL BACKGROUND
5. The Court does not make findings of fact when ruling on a motion for
summary judgment. “[T]o provide context for its ruling, the Court may state either
those facts that it believes are not in material dispute or those facts on which a
material dispute forecloses summary adjudication.” Ehmann v. Medflow, Inc.,
2017 NCBC LEXIS 88, at *6 (N.C. Super. Ct. Sep. 26, 2017); see also Hyde Ins.
Agency, Inc. v. Dixie Leasing Corp., 26 N.C. App. 138, 142 (1975) (encouraging the
trial court to articulate a summary of the material facts considered not at issue
justifying entry of judgment). A. The Parties
6. AP is a North Carolina limited liability company with its principal place of
business in Wake County, North Carolina. (J.A. 2 at ¶ 1, ECF Nos. 90–100.) 1 AP is
owned and managed by Jeffrey Chapman (Chapman) and his wife, Stefanie Chapman
(Ms. Chapman). (J.A. 498 at 126:7–8; J.A. 607 at 20:4–5, 12–18; J.A. 342 at ¶ 5.)
7. RP is a North Carolina limited liability company with its principal place of
business in Wake County, North Carolina. (J.A. 2 at ¶ 2.)
8. G1.34 is a North Carolina limited liability company with its principal place
of business in Wake County, North Carolina. (J.A. 2 at ¶ 3; J.A. 237 at ¶ 3.) G1.34
is owned and managed by Dr. Nick Medendorp (Dr. Medendorp) and his wife, Molly
Medendorp (Ms. Medendorp). (J.A. 341–42 at ¶ 4; J.A. 709 at 18:8–16; J.A. 710
at 19:9–14.)
B. RP’s Formation
9. RP was formed on or about 15 November 2019. (See J.A. 101.) Around the
same time, AP was created to become a joint owner in RP. (See J.A. 493 at 121:9–12,
23–24.)
10. AP and G1.34 are the sole members of RP, with AP holding a sixty percent
(60%) interest and G1.34 holding a forty percent (40%) interest. (J.A. 118;
J.A. 341–42 at ¶¶ 4–5; J.A. 607 at 20:6–11.)
1 The joint appendix of exhibits submitted by the parties is expansive and, as a result, is split
across eleven separate record filings. (ECF Nos. 90–100.) For ease of reference, the Court cites to the joint appendix as follows: (J.A. [ ] at [ ].). The Court cites using the joint appendix number found in red at the top of each page. 11. RP was created to develop and market automotive reconditioning software
for automotive dealerships and to “provide its software as a service, partnering with
auto dealerships to operate and manage the vehicle reconditioning process.” (J.A. 341
at ¶ 3; J.A. 343 at ¶ 11; J.A. 493–94 at 121:23–122:3.)
1. The Framework Document
12. On or about 7 November 2019, Chapman and Dr. Medendorp executed a
document pertaining to certain aspects of RP’s foundation (the Framework
Document). (J.A. 1384–85; see also J.A. 792 at 283:16–17; J.A. 530 at 222:6–16.)
13. The Framework Document was signed by Dr. Medendorp on behalf of G1.34
and Chapman on behalf of NewChap, LLC 2. (J.A. 1384–85; see also Answer 3 ¶ 37,
ECF No. 27 [Reply Countercls.] (admitting, in relevant part, that the Framework
Document was signed on or about 8 November 2019 by Chapman and
Dr. Medendorp).)
14. The Framework Document outlined that NewChap, LLC and G1.34 would
own sixty percent (60%) and forty percent (40%) of RP, respectively, and contemplated
that NewChap, LLC would “provide software specification expertise, industry
knowledge and contacts, [and] cover pro-rate [sic] share of operating expenses[,]”
while G1.34 would “cover costs of software development, provide IT expertise, [and]
cover pro-rata share of operating expenses[.]” (J.A. 1384.)
2 The Framework Document refers to a NewChap, LLC, as AP had not been formed at the
time Chapman and Dr. Medendorp created and signed the Framework Document. (See J.A. 790 at 281:13–23.)
3 Although entitled Answer, this filing actually constitutes a reply to G1.34’s counterclaims. 15. The Framework Document also provided an agreed-upon definition of
Minimum Viable Product (MVP) and contemplated that (i) G1.34 would provide
capital to RP “for software development until MVP is fully usable”; (ii) RP would
contract separately and directly with software developers; (iii) G1.34 would receive
an additional nine percent (9%) equity “at completion of MVP and [when] first client
revenue has begun”; (iv) G1.34 would be “reimbursed it’s [sic] capital associated with
[software development] as note repayment after completion of MVP and [when] first
client revenue has begun”; and (v) NewChap, LLC would use its portion of RP profits
to pay back “G1.34 development capital as note payable until pro rata portion is fully
repaid.” (J.A. 1384–85.)
16. Subsequently, the Framework Document was provided to an attorney “to
create the [O]perating [A]greement.” (J.A. 794 at 285:16–18; J.A. 795 at 286:22–23
(the Framework Document “was the foundation for the [O]perating [A]greement”);
J.A. 712–13 at 55:20–56:2; J.A. 530 at 222:10–16.)
2. The Operating Agreement
17. On 6 December 2019, following the formation of RP, Chapman and
Dr. Medendorp executed the Operating Agreement of RP. (J.A. 100–29; J.A. 343–44
at ¶ 11; J.A. 96 at ¶ 6.)
18. The Operating Agreement provides that Chapman is the manager of RP.
(J.A. 103–04 at § 3.1; see also J.A. 543 at 254:18–19.) i. Software Development Funding and Repayment
19. Section 11.1 of the Operating Agreement provides that “[RP] shall directly
enter into contracts with programmers for the development of computer software
(the ‘Software’), and G1.34 . . . shall immediately remit payments to [RP] in the
amount of any invoices received by [RP] for the Software.” (J.A. 113 at § 11.1.)
20. Pursuant to Section 11.2 of the Operating Agreement, AP is required to
transfer nine percent (9%) of its membership interest in RP to G1.34 “once (i) G1.34
has developed a Minimum Viable Product 4 from the Software . . . and (ii) [RP]
generates revenue of at least $10,000.00 from clients that have contracted to
purchase and/or subscribe for such product.” (J.A. 113 at § 11.2.)
21. Further, the Operating Agreement provides that G1.34 is entitled to
reimbursement of its “prefunding and/or invoice payment for the Software at the end
of each month during which [RP] earns profits of at least $10,000.00 from clients that
have contracted to purchase and/or subscribe for such product.” (J.A. 113 at § 11.3.)
ii. Member Rights
22. Pursuant to Section 4.7 of the Operating Agreement, the Manager of RP is
required to furnish to each Member (i) unaudited quarterly financial statements for
each of the first three fiscal quarters of each fiscal year within forty-five (45) days
after the end of each fiscal quarter; and (ii) audited financial statements within
ninety (90) days after the end of each fiscal year. (J.A. 106 at § 4.7.)
4The agreed-upon definition and requirements for achievement of MVP are set forth in Exhibit A to the Operating Agreement. (See J.A. 127–28.) 23. The Operating Agreement further provides that “[t]he Members shall have
the right to review all material contracts and agreements being considered by [RP]
prior to execution by the Manager.” (J.A. 106 at § 4.8.)
iii. Buy-Sell Process
24. Pursuant to Section 9.1 of the Operating Agreement, “[a]ny material
breach of this Agreement by a Member which is not cured within 10 days after [RP]
delivers written notice of such breach to the Member” constitutes a “Buy-Sell Event.”
(J.A. 109 at § 9.1(e).)
25. The occurrence of a valid Buy-Sell Event entitles the remaining Members
of RP to exercise an option to purchase the breaching Member’s membership interest.
(J.A. 110 at § 9.3.)
iv. Indemnification
26. Section 4.6 of the Operating Agreement provides:
Each Member agrees to indemnify, defend and hold the other Members and [RP], and each of the Members’ and [RP’s] respective members, managers, shareholders, directors, officers, representatives, employees and agents harmless from and against any and all losses resulting or arising from, relating to or incurred in connection with (i) any breach of any representation or warranty of such Member contained in this Agreement or any other document delivered by such Member in connection herewith; or (ii) any breach of or failure to comply with any covenant of such Member contained in this Agreement or any other document delivered by such Member in connection herewith.
(J.A. 106 at § 4.6.)
27. The Operating Agreement further provides that:
G1.34 agrees to indemnify, defend, protect, and hold harmless [RP] from and against any loss, liability, damages, costs or expenses (including interest, penalties and reasonable attorney’s fees), actually paid by [RP] resulting from and directly and proximately caused by: (i) a breach of G1.34’s material representations, warranties, covenants or other obligations related to the Software and as set forth in this Agreement; (ii) defects in materials, supplies, or products related to the Software and furnished by on behalf of [sic] G1.34; and (iii) the claims of any customer, vendor or supplier of [RP] related to the Software to the extent [RP] is not liable under this Agreement with respect to the claim being asserted.
(J.A. 113 at § 11.1.)
C. RP’s Business Operations and Software Development
28. Pursuant to its obligation under Section 11.1 of the Operating Agreement,
and at the recommendation of Dr. Medendorp, RP engaged Successive
Technologies, LLC (Successive) for the development of the Software. (J.A. 536
at 243:6–8; J.A. 539 at 250:18–19; J.A. 740 at 118:12–19.)
29. On or about 13 September 2020, RP and Successive executed both a Master
Services Agreement and an initial Statement of Work (SOW 1) for the software
development project. (J.A. 536 at 243:16–22; J.A. 299 at ¶¶ 8, 10; see also J.A. 346–47
at ¶ 20; J.A. 1412–30.)
30. Dr. Medendorp, on behalf of RP, entered into a licensing agreement with
EVOX Productions, LLC (EVOX) “for automobile images used for marketing and
vehicle identification[.]” (J.A. 350 at ¶ 31; J.A. 300 at ¶ 17.)
31. In October 2021, Dr. Medendorp, on behalf of RP, entered into an
agreement with Microsoft for cloud storage. (J.A. 301 at ¶ 23; J.A. 350 at ¶ 31.)
32. Dr. Medendorp, on behalf of RP, also entered into an agreement with
SendGrid for SMS and email communications such as advisor alerts. (J.A. 301
at ¶ 29; J.A. 350 at ¶ 31; see also J.A. 765 at 219:10–14; J.A. 766 at 220:8–14.) 33. On 25 November 2022, a project manager with Successive submitted a
certificate of completion to Chapman and Dr. Medendorp relating to SOW 1.
(J.A. 1386.)
34. Thereafter, on 20 December 2022, Successive provided Chapman and
Dr. Medendorp a list of items Successive suggested required “code refactoring.” (See
J.A. 1387–91; J.A. 549–50 at 260:20–261:11; J.A. 753–54 at 148:20–149:4.)
35. On 19 January 2023, RP and Successive entered into a second Scope of
Work Agreement (SOW 2) for the purpose of “refactoring” and optimizing the
Software code. (J.A. 1392–98; see J.A. 753–54 at 148:20–149:4; J.A. 348 at ¶ 25;
J.A. 549–50 at 260:20–261:5.)
36. The refactoring project was completed in May 2023. (See J.A. 1433.)
D. Disputes Giving Rise to Litigation
1. First Purported Breach by G1.34
37. On 18 September 2023, Dr. Medendorp, in an email to Chapman and his
attorney, identified several invoices for EVOX, Microsoft, and Twilio 5 from between
July 2023 and August 2023 that G1.34 contends are for operating expenses, as
opposed to software development, and, therefore, beyond the scope of what G1.34 is
required to pay for under the Operating Agreement. (See J.A. 1399–400.)
5 Twilio and SendGrid are used interchangeably by the parties to refer to the same invoices.
Dr. Medendorp explained in his deposition that SendGrid and Twilio “are two companies that are basically the same – same entity. One sends text messages. The other one is an e-mail server for systems like ours to send messages out.” (J.A. 765 at 219:10–14; see also J.A. 1460 (invoice from Twilio Inc. containing a logo naming both Twilio and SendGrid).) Dr. Medendorp demanded immediate reimbursement to G1.34 of G1.34’s payment for
those invoices. 6 (J.A. 1400.)
38. On 25 September 2023, Chapman provided notice to G1.34 that it had
materially breached its obligations under the Operating Agreement by failing to
immediately remit payments to RP for certain Microsoft, EVOX, and SendGrid
invoices. (J.A. 97 at ¶ 9; J.A. 321.)
39. Thereafter, on 9 October 2023, Chapman forwarded additional Microsoft,
EVOX, and SendGrid invoices to Dr. Medendorp, to which Dr. Medendorp lodged the
same objection—that the invoices were not for “contracts with programmers for the
development of computer software” and, therefore, not G1.34’s responsibility under
the Operating Agreement. (See J.A. 1534–35.)
2. Second Purported Breach by G1.34
40. On or about 27 July 2023, RP obtained a third scope of work from Successive
(SOW 3). (See J.A. 1568–73.)
41. On 9 August 2023, Chapman provided an initial SOW 3 invoice to G1.34 for
payment. (See J.A. 1440.)
42. Two days later, on 11 August 2023, Dr. Medendorp notified Chapman that
G1.34 believed SOW 3 contained “items that are outside of the contracted Exhibit A
requirements for G1.34’s software invoice payments” and provided examples of
several items in SOW 3 that G1.34 believed already met the requirements for MVP
under the Operating Agreement. (J.A. 1439–40.) Dr. Medendorp requested that
6 Dr. Medendorp raised similar objections and made demands for reimbursement on 11 September 2023 and 28 September 2023. (See J.A. 1527–28.) Chapman provide a corrected SOW 3 and revised invoice containing only those items
G1.34 is contractually required to pay for. (J.A. 1440.)
43. On or about 21 September 2023, RP obtained a revised SOW 3 from
Successive. (J.A. 299 at ¶ 14; J.A. 1583–88.)
44. On 25 September 2023, Chapman emailed Dr. Medendorp, indicating that
Successive’s work on SOW 3 had been stalled based on G1.34’s refusal to pay the
initial SOW 3 invoice. In the email, Chapman acknowledged G1.34’s contention that
some of the items in the initial SOW 3 were not required to achieve MVP—and,
therefore, outside of the scope of G1.34’s payment obligations—and provided G1.34
the revised SOW 3 covering the items RP believed were in mutual agreement.
(J.A. 1407.)
45. Thereafter, on 28 September 2023, Dr. Medendorp further objected to the
revised SOW 3. (See J.A. 1409–10.)
46. On 5 October 2023, RP submitted the Successive invoice related to SOW 3
to G1.34 for payment, for which G1.34 refused to remit payment. (J.A. 300
at ¶¶ 15–16; see also J.A. 1402 (referencing the 5 October 2023 invoice from
Successive).)
47. On 9 October 2023, Chapman emailed Dr. Medendorp, noting that G1.34
had failed to immediately remit payment for the SOW 3 invoice and requested that
payment be sent within ten days. (J.A. 1402–03.)
48. That same day, Dr. Medendorp responded to Chapman’s email
(i) indicating that RP had failed to refund G1.34 $20,291.22, which G1.34 represents is the balance of its overpayment of pre-funding for contracts with software
development programmers; and (ii) authorizing RP to pay the SOW 3 invoice with
those funds before returning the remainder to G1.34. (J.A. 1402.)
49. On 10 October 2023, Chapman emailed Dr. Medendorp, disputing that
G1.34 is entitled to a return of the $20,291.22 used to pay bills for Microsoft, EVOX,
and SendGrid, and requesting that G1.34 immediately remit payment for the SOW 3
invoice to “avoid a breach of the [O]perating [A]greement.” (J.A. 1404; see J.A. 97
at ¶ 10.)
3. Notice of Purported Buy-Sell Event
50. On 10 November 2023, AP provided notice to G1.34 and RP that G1.34 had
“materially breached the Operating Agreement” and triggered a Buy-Sell Event
pursuant to Article 9 of the Operating Agreement. (J.A. 97 at ¶ 13; see J.A. 863–64.)
51. On 14 November 2023, AP provided further notice to G1.34 that it intended
to exercise its right to purchase G1.34’s membership interest pursuant to Section 9.3
of the Operating Agreement. (J.A. 97 at ¶ 14; see J.A. 865.)
52. On or about 4 December 2023, AP and G1.34 jointly engaged Economics
Partners to perform a valuation of G1.34’s membership interest in RP. (J.A. 182
at ¶ 4; J.A. 97 at ¶ 15; see J.A. 732 at 86:4–5; J.A. 803 at 316:19–20.)
53. On 8 January 2024, Economics Partners provided its valuation to AP and
G1.34. (J.A. 182 at ¶ 5; J.A. 185–234; see also J.A. at 1591–92.)
54. Ultimately, AP and G1.34 did not close on the sale of G1.34’s membership
interest in RP. III. PROCEDURAL BACKGROUND
55. The Court sets forth here only those portions of the procedural history
relevant to its determination of the Motions.
56. On 26 March 2024, AP and RP initiated this action upon the filing of their
Complaint, (ECF No. 3), asserting the following claims against G1.34: (1) breach of
contract – specific performance (Count One), (J.A. 8–9 at ¶¶ 53–69);
(2) indemnification of AP (Count Two), (J.A. 9–10 at ¶¶ 70–76); (3) indemnification of
RP (Count Three), (J.A. 10–11 at ¶¶ 77–82); and (4) declaratory judgment (Count
Four), (J.A. 11 at ¶¶ 83–86).
57. On 7 May 2024, G1.34 filed the Answer and Counterclaim of G1.34
Holdings, LLC, (ECF No. 8), asserting the following counterclaims against AP and
RP: (1) breach of fiduciary duty as to AP (Counterclaim One), (J.A. 277–79
at ¶¶ 68–75); (2) breach of contract as to RP (Counterclaim Two), (J.A. 279–80
at ¶¶ 76–82); (3) breach of implied duties of good faith and fair dealing as to RP
(Counterclaim Three), (J.A. 280–81 at ¶¶ 83–86); (4) unjust enrichment as to RP
(Counterclaim Four), (J.A. 281 at ¶¶ 87–91); (5) breach of contract as to AP
(Counterclaim Five), (J.A. 281–82 at ¶¶ 92–97); (6) breach of implied duties of good
faith and fair dealing as to AP (Counterclaim Six), (J.A. 282–83 at ¶¶ 98–101);
(7) unjust enrichment as to AP (Counterclaim Seven), (J.A. 283 at ¶¶ 102–06);
(8) conversion as to both AP and RP (Counterclaim Eight), (J.A. 284 at ¶¶ 107–09); 7
7 On 25 September 2024, the Court entered its Order and Opinion on Plaintiffs’ Motion to
Dismiss Defendant’s Counterclaims, (ECF No. 42), dismissing with prejudice Counterclaim Eight. (J.A. 445–46 at ¶¶ 66, 70.) and (9) declaratory judgment as to both AP and RP (Counterclaim Nine), (J.A. 284–85
at ¶¶ 110–13).
58. On 2 October 2025, AP and RP filed the Motions. (See RP Mot.; AP Mot.)
Following full briefing, the Court held a hearing on the Motions on 18 February 2026
(the Hearing), at which all parties were represented by counsel. (See ECF No. 109.)
59. The Motions are ripe for resolution.
IV. LEGAL STANDARD
60. Summary judgment is appropriate “if the pleadings, depositions, answers
to interrogatories, and admissions on file, together with the affidavits, if any, show
that there is no genuine issue as to any material fact and that any party is entitled
to a judgment as a matter of law.” N.C.G.S. § 1A-1, Rule 56(c). “A ‘genuine issue’ is
one that can be maintained by substantial evidence.” Dobson v. Harris,
352 N.C. 77, 83 (2000) (citation omitted). “Substantial evidence is such relevant
evidence as a reasonable mind might accept as adequate to support a conclusion and
means more than a scintilla or a permissible inference.” Head v. Gould Killian CPA
Grp., P.A., 371 N.C. 2, 8 (2018) (citation modified) (quoting Ussery v. Branch
Banking & Tr. Co., 386 N.C. 325, 335 (2015)).
61. The moving party bears the burden of showing that there is no genuine
issue of material fact and that the movant is entitled to judgment as a matter of law.
Hensley v. Nat’l Freight Transp., Inc., 193 N.C. App. 561, 563 (2008), aff’d
363 N.C. 255 (2009). The movant may make the required showing by proving that
“an essential element of the opposing party’s claim does not exist, cannot be proven at trial, or would be barred by an affirmative defense . . . or by showing through
discovery that the opposing party cannot produce evidence to support an essential
element of her claim[.]” Dobson, 352 N.C. at 83 (citations omitted).
62. “Once the party seeking summary judgment makes the required showing,
the burden shifts to the nonmoving party to produce a forecast of evidence
demonstrating specific facts, as opposed to allegations, showing that he can at least
establish a prima facie case at trial.” Gaunt v. Pittaway, 139 N.C. App. 778, 784–85
(2000) (citations omitted). The Court must view the evidence in the light most
favorable to the nonmovant. Dobson, 352 N.C. at 83 (citation omitted). However, the
nonmovant
may not rest upon the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If he does not so respond, summary judgment, if appropriate, shall be entered against him.
N.C.G.S. § 1A-1, Rule 56(e).
63. “For affirmative summary judgment on a party’s own claim, the burden is
heightened.” Futures Grp., Inc. v. Brosnan, 2023 NCBC LEXIS 7, at *4 (N.C. Super.
Ct. Jan. 19, 2023); see also Brooks v. Mount Airy Rainbow Farms Ctr., Inc., 48 N.C.
App. 726, 728 (1980). The movant “must show that there are no genuine issues of
fact, that there are no gaps in his proof, that no inferences inconsistent with his
recovery arise from the evidence, and that there is no standard that must be applied
to the facts by the jury.” Parks Chevrolet, Inc. v. Watkins, 74 N.C. App. 719, 721
(1985); accord Kidd v. Early, 289 N.C. 343, 370 (1976). Consequently, “rarely is it proper to enter summary judgment in favor of the party having the burden of proof.”
Blackwell v. Massey, 69 N.C. App. 240, 243 (1984).
V. ANALYSIS
64. The Court first addresses AP’s and RP’s requests for summary judgment on
G1.34’s counterclaims. The Court then considers AP’s and RP’s requests for
affirmative summary judgment on their own claims.
A. Counterclaim One: Breach of Fiduciary Duty Against AP
65. G1.34 asserts Counterclaim One against AP, alleging that (i) AP, by virtue
of its status as majority member of RP, owed fiduciary duties to G1.34, including the
duties of loyalty and due care; (ii) AP breached its fiduciary duties to G1.34; and
(iii) AP’s breaches have diluted the value of G1.34’s membership interest and
frustrated G1.34’s efforts to realize value from RP, including in connection with the
development of the Software. (J.A. 277–79 at ¶¶ 69–72, 74.) Specifically, G1.34
alleges AP breached its fiduciary duties by:
a. attempting, through coercive means, to convert the value of
G1.34’s contributions to RP, including the “Loan” and the value of the
Software G1.34 helped to develop;
b. failing to disclose to G1.34 material agreements in which AP had
a conflict of interest;
c. failing to provide accurate and timely financial reports to G1.34;
and d. failing to repay misappropriated funds contributed by G1.34 for
the development of the Software.
(J.A. 278 at ¶ 72.)
66. “To establish a claim for breach of fiduciary duty, a plaintiff must show that:
(1) the defendant owed the plaintiff a fiduciary duty; (2) the defendant breached that
fiduciary duty; and (3) the breach of fiduciary duty was a proximate cause of injury
to the plaintiff.” Sykes v. Health Network Sols., Inc., 372 N.C. 326, 339 (2019)
(citation omitted).
67. AP seeks summary judgment on Counterclaim One for breach of fiduciary
duty, arguing G1.34 has failed to produce substantial evidence of the existence of a
fiduciary duty or, to the extent one exists, any breach thereof. (Mem. L. Supp. AP
Mot. 16, ECF No. 103 [AP Mem. Supp.].)
68. With respect to the existence of a fiduciary duty, AP contends that G1.34
has failed to demonstrate that AP “holds all the cards” because (1) RP is not a
member-managed company; and (2) the Operating Agreement (a) expressly
empowers RP’s managers to make all decisions with respect to the management of
RP’s business and affairs, (b) prohibits member participation in management, and
(c) limits the manager’s authority by requiring unanimous member approval of
certain acts. (AP Mem. Supp. 17–18.) Further, AP argues that the sole unique
advantage received by AP as a majority member—the power to appoint and remove
managers—does not justify imposing upon AP a fiduciary duty to G1.34. (AP Mem.
Supp. 18.) 69. G1.34, however, argues there is substantial evidence supporting its
contention that “AP, as RP’s majority member exercising total control over the affairs
of the business, owed G1.34, RP’s minority member, a ‘special duty’ to act in good
faith.” (Mem. L. Opp’n AP Mot. 8, ECF No. 108 [Mem. Opp’n AP Mot.].) As purported
evidence that AP “holds all the cards,” G1.34 points to the fact that “AP’s principal,
Chapman, is also RP’s manager, practically sharing AP’s interests in RP’s
management on a 1:1 basis[,]” and, more specifically, that Chapman claimed complete
authority to determine whether any MVP item had been achieved and/or whether the
Software would be marketed at all. (Mem. Opp’n AP Mot. 9.)
70. G1.34 further argues that “substantial evidence also supports G1.34’s
contention that it suffered a personal injury, separate and distinct from any injury
sustained by AP or by RP[,]” constituting additional grounds on which to conclude
that AP owed fiduciary duties to G1.34. (Mem. Opp’n AP Mot. 10.) Specifically, G1.34
notes that it was solely responsible for financing development of the Software under
the Operating Agreement and, therefore, “stood to suffer an injury of its own . . . if
AP prevented the . . . Software from being brought to the open market by RP.” 8
(Mem. Opp’n AP Mot. 10.)
8 G1.34 relies on Barger v. McCoy Hillard & Parks, in which our Supreme Court held that
shareholders of a corporation may bring claims against a third party in their individual capacity for harms to a corporation where either (1) there is a special duty, such as a contractual duty, between the wrongdoer and the shareholder; or (2) the shareholder suffered an injury separate and distinct from that suffered by other shareholders or the corporation itself. 346 N.C. 650, 658–59 (1997); see also Spivey v. Smith, 2023 NCBC LEXIS 111, at *30–31 (N.C. Super. Ct. Sep. 18, 2023) (applying Barger to claims involving an LLC). To establish the existence of a special duty, the facts must show that the wrongdoer owed a duty to the shareholders that was personal to them in their capacity as shareholders and “separate 71. In reply, AP contends that “[t]he operative question to determine a legal
fiduciary duty is the extent of AP’s rights in RP[;]” thus, “[t]he identity of RP’s
manager is immaterial to the legal duty analysis.” (AP’s Reply Supp. AP Mot. 3, ECF
No. 104.)
72. It is axiomatic that “[f]or a breach of fiduciary duty to exist, there must first
be a fiduciary relationship between the parties.” Dalton v. Camp, 353 N.C. 647, 651
(2001) (citations omitted). Members of an LLC generally do not owe fiduciary duties
to one another. Kaplan v. O.K. Techs., L.L.C., 196 N.C. App. 469, 473 (2009); see also
Merrell v. Smith, 2022 NCBC LEXIS 155, at *17 (N.C. Super. Ct. Dec. 13, 2022)
(citation modified) (“The North Carolina Limited Liability Company Act does not
create fiduciary duties among members.”).
73. Under certain circumstances, however, a majority member exercising
control over the LLC may owe fiduciary duties to minority members. See Vanguard
Pai Lung, LLC v. Moody, 2019 NCBC LEXIS 39, at *17 (N.C. Super. Ct. June 19,
2019) (citations omitted); Kaplan, 196 N.C. App. at 475 (noting that North Carolina
courts have found fiduciary duties arise where “one party figuratively holds all the
cards”). For example, a majority member’s ability to control the board of directors,
and distinct from the duty . . . owed to the corporation[,]” such as when a party violated its fiduciary duty to a shareholder. Barger, 346 N.C. at 659.
It appears that G1.34 is conflating the Barger exceptions—which are applied to determine whether members of an LLC have standing to bring direct claims, as opposed to derivative claims, against third parties for harms to the LLC—with the standard applied to determine whether the majority member of an LLC owes a fiduciary duty to the minority members. As G1.34 asserts Counterclaim One against AP based on a purported fiduciary relationship between them as members, it is not clear that Barger is applicable. dissolve the LLC, put the LLC into bankruptcy, and amend the LLC’s operating
agreement without approval from other members may reflect sufficient control to
create a fiduciary duty owed to minority members. Merrell, 2022 NCBC LEXIS 155,
at *18 (citing Vanguard, 2019 NCBC LEXIS 39, at *21); see also Emrich
Enters., LLC v. Hornwood, Inc., 2022 NCBC LEXIS 19, at *4 (N.C. Super. Ct. Feb. 15,
2022) (concluding fiduciary duty existed where operating agreement provided that all
decisions with respect to management of the LLC could be made by the majority
member); but see Strategic Mgmt. Decisions, LLC v. Sales Performance Int’l, LLC,
2017 NCBC LEXIS 69, at *13–14 (N.C. Super. Ct. Aug. 7, 2017) (concluding a
majority member’s authority to determine how much to pay managers, standing
alone, is insufficient to give rise to a fiduciary duty).
74. Where the LLC’s operating agreement provides sufficient protection to
minority members and limits the majority member’s powers, a majority membership
alone is insufficient to create a fiduciary duty owed to minority members. See
Wright v. Lorusso, 2023 NCBC LEXIS 114, at *15–17 (N.C. Super. Ct. Sep. 19, 2023).
In Wright, this Court determined that no reasonable jury could conclude that the
majority member, who was also the LLC’s manager, had the controlling authority
necessary to create a fiduciary duty where (i) unanimity of the members was required
to amend the operating agreement and to call for a loan or capital contribution from
members; (ii) the operating agreement prohibited the manager from unilaterally
starting a new line of business, selling material assets of the company, or paying a
salary or lending funds to any member or manager; and (iii) the operating agreement required a supermajority to approve amendments to the articles of organization,
declarations of bankruptcy, dissolution of the LLC, issuances of new ownership units,
and admission of new members. Id. at 15–16.
75. The undisputed evidence in this case establishes that AP, as a majority
member of RP, did not exercise a level of control over RP that could give rise to a
fiduciary duty owed to G1.34. AP’s sole unilateral authority under the Operating
Agreement is its ability to appoint and remove RP’s managers. (See J.A. 103 at § 3.1.)
Additionally, the Operating Agreement expressly prohibits members from
participating in the management of RP. (See J.A. 105 at § 4.2.) Despite these facts,
G1.34 purports to impute Chapman’s level of control over RP as its manager to AP to
conclude that AP owes a fiduciary duty to G1.34. (See Mem. Opp’n AP Mot. 9.)
76. While this Court has held that the managerial authority of a majority
member may demonstrate control sufficient to give rise to a fiduciary duty, such cases
typically involve a majority member who also acts as the manager of an LLC.
See, e.g., Wright, 2023 NCBC LEXIS 114, at *15–17. That is not the case here as
Chapman, not AP itself, is the manager of RP. G1.34 cites no authority supporting
its argument that a majority member that can unilaterally appoint managers, but is
a separate and distinct entity from those managers, owes a fiduciary duty to minority
members based on the appointed manager’s level of control over the LLC.
77. Moreover, the parties’ Operating Agreement does not grant the manager
unfettered control over RP. For example, the Operating Agreement prohibits the
manager from merging or consolidating the LLC, selling all or substantially all the LLC’s assets, admitting new members, or changing the LLC’s business without the
unanimous consent of the members. (J.A. 104 at § 3.3.) The Operating Agreement
also provides that all members must agree to voluntarily dissolve the LLC and amend
the Operating Agreement. (J.A. 112 at § 10.1(b); J.A. 115 at § 12.6.)
78. Accordingly, the Court concludes that there is no genuine issue of material
fact that AP, as the majority member of RP, owes no fiduciary duties to G1.34. In the
absence of such duties, there can be no breach of fiduciary duty. Therefore, the Court
GRANTS in part the AP Motion as to Counterclaim One for breach of fiduciary duty.
B. Counterclaim Two: Breach of Contract Against RP
79. G1.34 brings Counterclaim Two for breach of contract against RP, alleging
that RP has materially breached its express and implied contractual obligations to
G1.34 (i) “under the Operating Agreement . . . by failing to provide correct and timely
financial statements to [G1.34], and, upon information and belief, by failing to provide
material [RP] contracts for [G1.34’s] review prior to their execution[;]” and (ii) “under
the Loan Agreement . . . by repudiating the Loan Agreement and failing to pay
amounts due thereunder.” (J.A. 279–80 at ¶¶ 79–80.)
80. “The elements of a claim for breach of contract are (1) existence of a valid
contract and (2) breach of the terms of that contract.” Poor v. Hill, 138 N.C.
App. 19, 26 (2000) (citation omitted). A “[b]reach of contract occurs when a party fails
to perform a contractual duty which has become absolute.” Millis Constr. Co. v.
Fairfield Sapphire Valley, Inc., 86 N.C. App. 506, 510 (1987) (citation omitted).
“[W]hen performance of a duty under contract is presently due any nonperformance constitutes a breach.” Id. “In order for a breach of contract to be actionable it must
be a material breach, one that substantially defeats the purpose of the agreement or
goes to the very heart of the agreement, or can be characterized as a substantial
failure to perform.” Long v. Long, 160 N.C. App. 664, 668 (2003) (citation omitted).
The materiality of a breach of contract is “ordinarily a question for a jury.” Supplee v.
Miller-Motte Bus. Coll., Inc., 239 N.C. App. 208, 221 (2015) (citation modified).
81. Further, “[i]f the contract contains some condition precedent to defendant’s
liability, the plaintiff must also allege that the condition has been met.” Upchurch v.
Sapp, 2020 NCBC LEXIS 118, at *5 (N.C. Super. Ct. Oct. 8, 2020) (citation modified).
“A condition precedent is a fact or event that must exist or occur before there is a
right to immediate performance, before there is a breach of contract duty.” Mosely v.
WAM, Inc., 167 N.C. App. 594, 600 (2004) (citation omitted).
82. RP seeks summary judgment on Counterclaim Two for breach of contract
related to the Operating Agreement and the “Loan Agreement.” (Mem. Supp. RP
Mot. 7, ECF No. 101 [RP Mem. Supp.].)
1. The “Loan Agreement”
83. With respect to the purported “Loan Agreement,” RP contends it is entitled
to summary judgment on Counterclaim Two because “there is no genuine dispute that
a ‘Loan Agreement’ does not exist separate and apart from the Operating
Agreement.” (RP Mem. Supp. 8; see also Reply Countercls. ¶ 80 (expressly denying
that a “Loan Agreement” exists).) RP argues the 7 November 2019 Framework
Document was merely a basis for the Operating Agreement that Chapman and Dr. Medendorp provided to an attorney as the “foundation for the [O]perating
[A]greement[,]” and that the funding and repayment concepts in that document were
subsequently memorialized in, and thus merged into, Article 11 of the Operating
Agreement. (RP Mem. Supp. 8–10.) Further, RP argues G1.34 has failed to identify
any funds loaned to RP pursuant to the terms of the purported “Loan Agreement”
that were different from monies provided pursuant to Section 11.1 of the Operating
Agreement. (RP Mem. Supp. 10–11.)
84. Moreover, RP contends that even assuming the Framework Document
constitutes a separate agreement, it was executed prior to the formation of RP and
there is no evidence that it was subsequently ratified and adopted by RP. (RP Mem.
Supp. 11.)
85. G1.34 argues that “[s]ubstantial evidence in the record does show that RP,
AP, and Chapman characterized G1.34’s contributions as a loan.” (Mem. L. Opp’n RP
Mot. 7 n.1, ECF No. 105 [Mem. Opp’n RP Mot.].) The Court disagrees. Upon review
of the record, the Court concludes that G1.34 has not presented sufficient evidence
showing that it can establish at trial the existence of a valid, separate “Loan
Agreement.”
86. Although the Operating Agreement does not contain a merger clause, it is
undisputed that the parties provided the Framework Document to an attorney as the
basis for the creation of the Operating Agreement. (J.A. 794 at 285:16–18; J.A. 795
at 286:22–23; J.A. 712–13 at 55:21–56:2; see also J.A. 530 at 222:10–16.) 87. It is also undisputed that the Operating Agreement contains provisions
providing the mechanism for repayment of G1.34’s financial contributions. (See
J.A. 113 at § 11.3.) In fact, at her deposition, Ms. Medendorp testified that the “Loan
Agreement” referenced in Counterclaim Two refers to Article 11 of the Operating
Agreement. (J.A. 992 at 148:4–18.) Dr. Medendorp, though denying that the
Framework Document merged into the Operating Agreement, 9 testified that the
Operating Agreement provides a mechanism for repayment of the money G1.34
provided for Software development. (J.A. 798 at 289:6–14; see also J.A. 799
at 290:4–13; J.A. 800 at 291:2–3.)
88. At best, the evidence cited by G1.34 shows that RP listed G1.34’s financial
contribution as a “Loan From G1.34 Holdings, LLC” on certain of RP’s transaction
reports and balance sheets and that Doug Dreher, an accountant for RP,
acknowledged in an email to Chapman that the “loans from G1[.]34” show up on RP’s
balance sheet. (See J.A. 1468; J.A. 556–57.) Chapman has testified, however, that
he understood the contributions were listed as loans in the transaction reports as a
means of cleanly tracking the money. (See J.A. 529 at 221:13–22; J.A. 533
at 233:17–20; J.A. 535 at 242:1–8.) The fact that RP’s financial documents refer to
the money as a “loan” does not in itself create a genuine issue of material fact as to
whether a “Loan Agreement” in fact exists separate and apart from Article 11 of the
Operating Agreement. Moreover, Chapman has expressly denied the existence of any
9 Specifically, Dr. Medendorp testified that the Framework Document “contains a lot of information regarding the foundation of the company as well as the loan agreement.” (J.A. 738 at 108:1–3 (emphasis added).) “Loan” or separate “Loan Agreement,” and G1.34 has not presented any evidence
tending to show that Chapman or RP ever acknowledged or conceded that RP had
received a “Loan” from G1.34 pursuant to a “Loan Agreement” or that RP was bound
by the terms of the Framework Document upon execution of the Operating
Agreement. (See J.A. 527–28 at 214:18–215:10; see also J.A. 530 at 222:6–16
(Chapman’s testimony that “not everything in these initial documents translated
over” when the parties agreed to the terms of the Operating Agreement).)
89. Even assuming arguendo that the Framework Document constitutes a
separate “Loan Agreement” binding against RP, Counterclaim Two still necessarily
fails. The terms contained in the Framework Document, like the Operating
Agreement, establish conditions precedent to G1.34 receiving reimbursement of
funds contributed for development of the Software—namely, that MVP status be
achieved and client revenue begin. (J.A. 1384.) Although the Framework Document
does not set any threshold amount of revenue, the Operating Agreement provides
that G1.34 will receive reimbursement “at the end of each month during which the
Company earns profits of at least $10,000.00 from clients that have contracted to
purchase and/or subscribe for such product[,]” and Dr. Medendorp has acknowledged
that the revenue threshold is $10,000.00. (J.A. 113 at § 11.3; see J.A. 344–45 at ¶ 14.)
90. The record before the Court is devoid of any evidence showing that G1.34
has obtained any client revenue, let alone $10,000.00. Dr. Medendorp testified that
he does not recall the RP financial reports, through Q2 of 2024, reflecting gross profits
of at least $10,000.00 from clients. (J.A. 737 at 107:1–8; see also J.A. 983 at 70:15–25 (Ms. Medendorp’s testimony that she has no personal knowledge of $10,000.00 in
revenue being received).) Brian Burns—who provided a valuation of G1.34’s
membership interest in RP—testified that as of 31 October 2023, RP had not
generated $10,000.00 in revenue. (J.A. 1227 at 78:8–10.) Further, G1.34 does not
provide any evidence that the revenue threshold has been met. 10
91. In the absence of evidence that RP generated $10,000.00 in client revenue,
there exists no genuine dispute that G1.34 is not presently entitled to repayment of
its financial contributions pursuant to either the terms of the Operating Agreement
or, to the extent it could be considered a separate, binding contract, the Framework
Document. 11
10 G1.34 has suggested both in its brief and at the Hearing that, to the extent the revenue
threshold was not satisfied, RP still breached the “Loan Agreement” because Chapman intentionally prevented revenue from being generated to satisfy the condition precedent. (See Mem. Opp’n RP Mot. 9, 13.)
The express language of G1.34’s allegations as to Counterclaim Two, however, provides that G1.34 has “satisfied all conditions precedent to recovering the relief sought in this action.” (J.A. 279 at ¶ 78.) G1.34 does not otherwise allege that the satisfaction of any condition precedent was prevented by the actions of RP. Moreover, at an earlier hearing on AP and RP’s motion to dismiss G1.34’s counterclaims, counsel for G1.34 represented that the allegations in Counterclaim Two were that the $10,000.00 revenue condition precedent had been satisfied. (J.A. 388 at 32:12–18; J.A. 398 at 43:18–23.)
“It is well understood that . . . a party to a suit should not be allowed to change his position with respect to a material matter in the course of litigation.” Ingram v. Yadkin River Power Co., 181 N.C. 359, 360 (1921) (citation omitted). In both briefing and at the Hearing, AP and RP have argued that G1.34 should be prohibited from raising this argument at the summary judgment stage. The Court agrees and, accordingly, does not consider G1.34’s argument regarding prevention of the satisfaction of a condition precedent.
11 For purposes of clarity, the Court need not—and does not—reach the issue of whether a
genuine issue of material fact exists as to whether MVP has been achieved because the Court concludes herein that the other condition precedent to G1.34’s receipt of repayment and/or additional equity—achievement of $10,000.00 in client revenue—has not been satisfied. 92. Therefore, the Court GRANTS in part the RP Motion as to Counterclaim
Two for breach of contract as it relates to the purported “Loan Agreement.”
93. As to the Operating Agreement, RP contends it is entitled to summary
judgment on Counterclaim Two because (i) Dr. Medendorp testified at his deposition
that he had received all financial reports from RP’s accountant, Doug Dreher, through
Q2 of 2024; (ii) RP has not failed to provide any material contracts to G1.34 for review;
and (iii) even assuming RP did breach the Operating Agreement with respect to the
financial statements and material contracts, those alleged breaches are not
actionable because they are not material. (RP Mem. Supp. 11–13.)
94. G1.34 contends there is substantial evidence of such breaches in the record
and that whether the alleged breaches were material is a question for the jury. (Mem.
Opp’n RP Mot. 8.)
i. Financial Statements
95. As purported evidence of a breach of Section 4.7 of the Operating
Agreement, G1.34 cites a 21 April 2023 demand letter it sent to RP in which G1.34
claimed Chapman violated the Operating Agreement by, in relevant part, submitting
an inaccurate quarterly financial report to the members in 2023. (J.A. 1474–77.) The
fact that G1.34 claimed such a breach by Chapman and demanded RP investigate
such claim is not, however, evidence of an actual breach of the Operating Agreement.
G1.34 also cites a 26 June 2023 email from Chapman to RP’s accountants in which it
is implied that Dr. Medendorp had not yet received the Q2 financial reports for 2023. (J.A. 1466.) At the time this email was sent, however, the Q2 reports were not yet
due and, therefore, the email is not evidence that a breach occurred.
96. The only evidence cited by G1.34 which shows that Chapman, as the
manager of RP, actually failed to provide timely financial reports to G1.34 is a
17 April 2023 email from RP’s accountant, Doug Dreher, to Chapman, in which
Dreher advises Chapman that the ninety-day deadline provided in Section 4.7 of the
Operating Agreement by which RP’s manager is required to provide audited financial
statements for the fiscal year had already passed. (J.A. 1517.) RP concedes that the
email “could be some evidence of the failure to provide required financial statements
timely[.]” (Reply Supp. RP Mot. 6, ECF No. 102.)
97. The Court, therefore, concludes that a genuine issue of material fact exists
regarding whether Chapman’s failure, as the manager of RP, to provide G1.34 with
timely audited financial statements for fiscal year 2023 constitutes a material breach
of Section 4.7 of the Operating Agreement by RP. Therefore, the Court DENIES in
part the RP Motion as to Counterclaim Two to that limited extent.
98. To the extent Counterclaim Two is based on the alleged failure to timely
provide any other financial statements, the Court concludes that G1.34 has not shown
that a genuine issue remains for trial regarding such alleged breaches and, therefore,
the Court GRANTS in part the RP Motion as to Counterclaim Two to that extent.
ii. Material Contracts
99. With respect to the alleged breach by RP for failing to provide G1.34
material contracts for review, the only document cited by G1.34 as evidence of a breach is an email thread between Chapman and David Holmes, an insurance agent,
in which Chapman inquires about obtaining errors and omissions insurance.
(J.A. 1478–85.) The record is devoid of any further documentation or testimony
showing that a draft contract for errors and omissions coverage was submitted to RP
or that a contract for errors and omissions insurance was ever entered into by RP.
Similarly, no evidence was presented that any other material contract was entered
into without G1.34’s review, and G1.34 may not rest on the allegations of its
counterclaims to create a genuine issue for trial. See N.C.G.S. § 1A-1, Rule 56(e).
100. Therefore, the Court GRANTS in part the RP Motion as to Counterclaim
Two for breach of contract as it relates to the alleged breach of Section 4.8 of the
Operating Agreement for failure to provide material contracts to G1.34 for review.
C. Counterclaim Three: Breach of Implied Duties of Good Faith and Fair Dealing Against RP
101. G1.34 asserts Counterclaim Three against RP, alleging that RP has
breached its implied duty of good faith and fair dealing “in connection with the
performance of the contracts at issue.” (J.A. 280 at ¶¶ 84–85.)
102. RP contends it is entitled to summary judgment on Counterclaim Three
because it is based on the same alleged conduct as Counterclaim Two for breach of
contract and should rise or fall with that claim. (RP Mem. Supp. 14.)
103. G1.34 argues, however, that it may maintain an independent claim for
breach of the implied duty of good faith and fair dealing because RP has “acted in an
unexpected manner” under the Operating Agreement by attempting to prevent the
Software from being commercialized, “thus frustrating the purpose of the contract for G1.34 and denying G1.34 the reasonably expected fruits of its labor.” (Mem. Opp’n
RP Mot. 9.)
104. “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
(1985) (citation modified). “[W]here a party’s claim for breach of the implied covenant
of good faith and fair dealing is based upon the same acts as its claim for breach of
contract, [North Carolina courts] treat the former claim as ‘part and parcel’ of the
latter.” Cordaro v. Harrington Bank, FSB, 260 N.C. App. 26, 38–39 (2018) (citations
omitted).
105. It appears from the record before the Court and the arguments of counsel
that G1.34’s claim against RP for breach of the implied covenant of good faith and
fair dealing is premised on the same facts as its claim against RP for breach of
contract. In fact, to the extent Counterclaim Three is based on G1.34’s contention
that Chapman, as the manager of RP, intentionally prevented the commercialization
of the Software, that is the same argument G1.34 raised—which the Court has
declined to consider, (see supra ¶ 90 n.10)—to support its position that it should still
recover under its breach of contract claim despite the evidence showing that the
$10,000.00 revenue condition precedent has not been satisfied. Thus, Counterclaim
Three must rise and fall with Counterclaim Two.
106. The sole surviving issue under Counterclaim Two is whether Chapman’s
failure, as the manager of RP, to provide G1.34 with timely audited financial statements for fiscal year 2023 constitutes a material breach of Section 4.7 of the
Operating Agreement by RP. (See supra ¶ 97.) The Court concludes that the basis
for Counterclaim Three—that Chapman, on behalf of RP, attempted to prevent the
Software from being commercialized—is unrelated to the remaining question of
whether RP breached Section 4.7 of the Operating Agreement. Rather, the basis for
Counterclaim Three is “part and parcel” of those portions of Counterclaim Two which
the Court concludes should be dismissed—specifically, the portion of Counterclaim
Two alleging that RP breached the “Loan Agreement” by failing to pay amounts due
thereunder upon the satisfaction of certain conditions precedent. Accordingly, the
Court determines that Counterclaim Three must also be dismissed.
107. Therefore, the Court GRANTS in part the RP Motion as to Counterclaim
Three for breach of the implied covenant of good faith and fair dealing.
D. Counterclaim Four: Unjust Enrichment Against RP
108. G1.34 brings Counterclaim Four for unjust enrichment against RP in the
alternative to its Counterclaim Two against RP for breach of contract. Specifically,
G1.34 alleges that (i) RP “holds money that in equity and good conscience belongs to
[G1.34]”; (ii) RP obtained such money from G1.34 “in the form of the Loan, which
Loan [RP] has now repudiated without justification”; and (iii) RP “would be enriched
unjustly if permitted to retain the benefit of this wrongfully held money[.]” (J.A. 281
at ¶¶ 88–90.)
109. “In North Carolina, to recover on a claim of unjust enrichment, [the
claimant] must prove: (1) that it conferred a benefit on another party; (2) that the other party consciously accepted the benefit; and (3) that the benefit was not
conferred gratuitously or by an interference in the affairs of the other party.” PDF
Elec. & Supply Co. v. Jacobsen, 2020 NCBC LEXIS 103, at *29 (N.C. Super. Ct.
Sep. 9, 2020) (citing Se. Shelter Corp. v. BTU, Inc., 154 N.C. App. 321, 330 (2002)).
110. “A claim for unjust enrichment is ‘neither in tort nor contract but is
described as a claim in quasi contract or a contract implied in law.’ ” Id. at *28
(quoting Booe v. Shadrick, 322 N.C. 567, 570 (1988)). “The general rule of unjust
enrichment is that where services are rendered and expenditures made by one party
to or for the benefit of another, without an express contract to pay, the law will imply
a promise to pay a fair compensation therefor.” Krawiec v. Manly, 370 N.C. 602, 615
(2018) (citation modified). “If there is a contract between the parties the contract
governs the claim and the law will not imply a contract.” Booe, 322 N.C. at 570
111. As the Court has concluded that the Operating Agreement is a valid
agreement and governs the repayment of the financial contributions made by G1.34,
(see supra ¶¶ 88–89), Counterclaim Four for unjust enrichment fails as a matter of
law. See id.
112. Therefore, the Court GRANTS in part the RP Motion as to Counterclaim
Four for unjust enrichment.
E. Counterclaim Five: Breach of Contract Against AP
113. G1.34 brings Counterclaim Five for breach of contract against AP, alleging
that AP has materially breached its express and implied contractual obligations under the Operating Agreement “by failing to transfer an additional 9% membership
interest in [RP] to [G1.34] for [G1.34’s] successful delivery of the Software as a
‘minim[um] viable product.’ ” (J.A. 282 at ¶ 95.)
114. AP contends it is entitled to summary judgment on Counterclaim Five
because “G1.34 failed to produce substantial evidence that all conditions precedent
were met to oblige AP to transfer nine percent of its membership units to G1.34.” (AP
Mem. Supp. 11–12.)
115. Pursuant to Section 11.2 of the Operating Agreement, AP is required to
transfer nine percent (9%) of its membership interest to G1.34 “once (i) G1.34 has
developed a Minimum Viable Product from the Software . . . and (ii) [RP] generates
revenue of at least $10,000.00 from clients that have contracted to purchase and/or
subscribe for such product.” (J.A. 113 at § 11.2.)
116. As set forth herein, (supra ¶¶ 89–90), no genuine issue of material fact
exists as to whether RP obtained $10,000.00 in client revenue. Thus, it is clear from
the record before the Court that G1.34 is not presently entitled to the additional nine
percent (9%) equity pursuant to Section 11.2 of the Operating Agreement as at least
one of the conditions precedent to AP’s obligation to make such transfer has not been
satisfied.
117. Therefore, the Court GRANTS in part the AP Motion as to Counterclaim
Five for breach of Section 11.2 of the Operating Agreement. F. Counterclaim Six: Breach of Implied Duties of Good Faith and Fair Dealing Against AP
118. G1.34 asserts Counterclaim Six against AP, alleging that AP has breached
its implied duty of good faith and fair dealing “in connection with the performance of
the contracts at issue.” (J.A. 282–83 at ¶¶ 99–100.)
119. As with Counterclaim Three, Counterclaim Six for breach of the implied
covenant of good faith and fair dealing is “part and parcel” of Counterclaim Five
against AP for breach of contract, which the Court has concluded must be dismissed,
(see supra ¶ 117).
120. Therefore, the Court GRANTS in part the AP Motion as to Counterclaim
Six for breach of the implied covenant of good faith and fair dealing.
G. Counterclaim Seven: Unjust Enrichment Against AP
121. G1.34 brings Counterclaim Seven for unjust enrichment against AP in the
alternative to its Counterclaim Five against AP for breach of contract. Specifically,
G1.34 alleges that (i) AP “holds membership interests in [RP] that in equity and good
conscience belong to [G1.34]”; (ii) AP “has pretextually retained these membership
interests, and [AP’s] holding of these membership interests is unlawful”; and (iii) AP
“would be enriched unjustly if permitted to retain the benefit of th[e] wrongfully held
membership interests because, among other things, [G1.34] has fulfilled its
obligations to deliver the Software as a ‘minim[um] viable product[.]’ ” (J.A. 283
at ¶¶ 103–05.)
122. AP’s obligation to transfer an additional nine percent (9%) equity to G1.34
upon the satisfaction of certain conditions precedent is governed by Section 11.2 of the Operating Agreement. (J.A. 113 at § 11.2.) As a valid and enforceable contract
governs, G1.34 cannot maintain this claim for unjust enrichment. See Booe, 322 N.C.
at 570.
123. Therefore, the Court GRANTS in part the AP Motion as to Counterclaim
Seven for unjust enrichment.
H. Counterclaim Nine: Declaratory Judgment
124. G1.34 brings Counterclaim Nine for declaratory judgment against both AP
and RP, seeking judicial declarations providing that (i) RP breached the Operating
Agreement and “Loan Agreement”; (ii) no valid Buy-Sell Event occurred under the
Operating Agreement and, therefore, G1.34 is under no obligation to sell its
membership interest in RP; (iii) AP and RP have an obligation to repay the “Loan”;
and (iv) the Software is a minimum viable product according to the definition of MVP
in the Operating Agreement and, therefore, AP must transfer an additional nine
percent (9%) membership interest in RP to G1.34. (J.A. 284–85 at ¶ 112.)
125. RP seeks partial summary judgment on Counterclaim Nine as to the
requests for declarations that it breached a “Loan Agreement” and has an obligation
to repay the “Loan.” (RP Mot. 3.) AP seeks summary judgment as to Counterclaim
Nine in its entirety.
126. With respect to the request for a declaration that RP breached the
Operating Agreement and “Loan Agreement,” the Court has determined herein that
the sole surviving issue for trial is whether RP materially breached the Operating
Agreement by virtue of Chapman’s failure to provide timely audited financials for fiscal year 2023. (See supra ¶ 97.) Accordingly, the Court GRANTS in part the
Motions as to Counterclaim Nine’s request for a Court declaration that RP breached
the Operating Agreement and purported “Loan Agreement,” except to the extent
Counterclaim Nine seeks a limited declaration that RP breached Section 4.7 of the
Operating Agreement related to the 2023 audited financials. To that limited extent,
the Court DENIES in part the Motions as to Counterclaim Nine.
127. As to Counterclaim Nine’s request for a declaration that no valid Buy-Sell
Event occurred under the Operating Agreement and, thus, G1.34 is under no
obligation to sell its membership interest in RP, the Court has concluded herein that
a genuine issue remains for trial as to whether G1.34 materially breached the
Operating Agreement, thereby triggering a valid Buy-Sell Event under Article 9. (See
infra ¶¶ 137–38.) Accordingly, the Court DENIES in part the AP Motion as to
Counterclaim Nine’s request for such a declaration.
128. To the extent Counterclaim Nine seeks a declaration that AP and RP are
obligated to repay the “Loan,” the Court has concluded herein that G1.34 is not
presently entitled to repayment of its financial contributions under Section 11.3 of
the Operating Agreement because certain conditions precedent have not been
satisfied. (See supra ¶ 91.) As such, the Court GRANTS in part the Motions with
respect to Counterclaim Nine’s request for a declaration that AP and RP are obligated
to repay the “Loan.”
129. Further, with respect to the request for a declaration that the Software has
reached MVP and, thus, AP must transfer an additional nine percent (9%) membership interest in RP to G1.34, the Court has concluded herein that G1.34 is
not presently entitled to the additional equity as certain conditions precedent have
not been satisfied. (See supra ¶ 116.) Therefore, the Court GRANTS in part the AP
Motion as to Counterclaim Nine with respect to the request for such a declaration.
I. Counts One and Four: Breach of Contract (Specific Performance) and Declaratory Judgment
130. AP and RP bring Count One against G1.34 for breach of the Operating
Agreement, alleging that G1.34 materially breached the Operating Agreement “by
failing to remit payments to RP for invoices received by RP for software as required
by Section 11.1[.]” (J.A. 8 at ¶ 56.) AP and RP also allege that G1.34 has continued
to refuse to close on the sale of its membership interest pursuant to the Buy-Sell
process outlined in Article 9 of the Operating Agreement and, therefore, seek a Court
order “requiring specific performance by G1.34 to close on the membership purchase
required by the [Operating] Agreement.” (J.A. 8–9 at ¶¶ 58–69.)
131. Relatedly, AP and RP bring Count Four for declaratory judgment, seeking
judicial declarations that (i) G1.34 materially breached the Operating Agreement;
(ii) RP and AP have fulfilled all conditions necessary for AP to exercise its option to
purchase G1.34’s membership interest in RP; (iii) G1.34 must sell its membership
interest consistent with the terms and conditions provided by Article 9 of the
Operating Agreement; and (iv) G1.34 must accept a promissory note from AP
consistent with Article 9 of the Operating Agreement and the valuation of Economics
Partners. (J.A. 11 at ¶ 86.) 132. The remedy of specific performance is available to “compel a party to do
precisely what he ought to have done without being coerced by the court.” Munchak
Corp. v. Caldwell, 301 N.C. 689, 694 (1981) (citation omitted). “The party claiming
the right to specific performance must show the existence of a valid contract, its
terms, and either full performance on his part or that he is ready, willing and able to
perform.” Id. (citation omitted).
133. AP alone seeks affirmative summary judgment on Count One and Count
Four, arguing it has produced uncontested evidence that (i) the Operating Agreement
is a valid agreement, (ii) AP is entitled to close on the sale of G1.34’s membership
units, and (iii) G1.34 has refused to close on the sale of its membership units. (AP
Mem. Supp. 23–26.)
134. G1.34 argues AP has not satisfied the heightened burden justifying a grant
of affirmative summary judgment on its breach of contract claim because “substantial
evidence supports G1.34’s contention that no legitimate Buy-Sell events occurred
under the [Operating Agreement].” (Mem. Opp’n AP Mot. 28.)
135. With respect to the noticed Buy-Sell Event premised on G1.34’s failure to
pay certain Microsoft, EVOX, and SendGrid invoices, G1.34 contends that the record
includes substantial evidence showing that those invoices were for operating
expenses as opposed to software development costs and, therefore, not required to be
paid by G1.34 pursuant to the Operating Agreement. (Mem. Opp’n AP Mot. 14.)
Thus, G1.34 asserts “a genuine issue of fact exists as to whether G1.34’s
unwillingness to continue to pay for the [invoices], after repeatedly requesting reimbursement from RP for the same, constituted a valid Buy-Sell event.” (Mem.
Opp’n AP Mot. 15.)
136. As to the noticed Buy-Sell Event based on G1.34’s refusal to pay for items
contained in SOW 3, G1.34 argues “[s]ubstantial evidence in the record shows that
these items were out of scope and duplicative . . . and that Chapman signed SOW 3
over G1.34’s vigorous objections.” (Mem. Opp’n AP Mot. 16.) G1.34 maintains that
the SOW 3 “was not for any work defined in the Minimum Viable Product criteria for
the Software set forth in Exhibit A of the Operating Agreement[.]” (See J.A. 351
at ¶ 37.)
137. Upon review of the record, the Court determines that a genuine issue of
material fact exists as to whether G1.34’s failure to pay the Microsoft, EVOX,
SendGrid, and SOW 3 invoices constitutes a material breach of the Operating
Agreement sufficient to trigger a valid Buy-Sell Event under Article 9. AP has not
satisfied its heightened burden of showing that it is entitled to affirmative summary
judgment on Count One and Count Four, especially in light of the fact that G1.34 has
offered evidence tending to show that Dr. Medendorp consistently objected to G1.34’s
payment of such invoices as outside the scope of what is required by the Operating
Agreement and demanded reimbursement. (See, e.g., J.A. 350 at ¶ 33; J.A. 755–58
at 191:16–194:5; J.A. 958–962 (reflecting disagreements between Chapman and
Dr. Medendorp on in-scope items for SOW 3); J.A. 1399–400; J.A. 1402; J.A. 1439–
40; J.A. 1455–56; J.A. 1527–29; J.A. 1531; J.A. 1534; J.A. 1541.) 138. Therefore, the Court DENIES in part the AP Motion as to Count One and
Count Four.
J. Counts Two and Three: Indemnification
139. AP brings Count Two against G1.34 for indemnification, pursuant to
Section 4.6 of the Operating Agreement, for losses, including costs and reasonable
attorneys’ fees, “caused by [G1.34’s] breach of [its] obligation to close on the purchase
of its membership interest[.]” (J.A. 9–10 at ¶¶ 74–76.)
140. RP brings Count Three against G1.34 for indemnification, pursuant to
Sections 4.6 and 11.1 of the Operating Agreement, for losses, liabilities, damages,
costs, or expenses for “G1.34’s breach of its representation or warranty to remit
payments to [RP] for payment of invoices received by RP for the Software, as well as
its breach of its contractual obligation to close on the purchase of its membership
interest[.]” (J.A. 10–11 at ¶¶ 79–82.)
141. AP and RP seek affirmative summary judgment as to Count Two and Count
Three, in part, with respect to the issue of liability. (RP Mot. 3; AP Mot. 1.)
142. However, as the Court has determined that a genuine issue of material fact
remains for trial as to whether G1.34 has materially breached the Operating
Agreement, (see supra ¶ 137), it would be improper to grant summary judgment as to
the issue of liability for indemnification premised on such alleged breaches.
143. Therefore, the Court DENIES in part the Motions as to Count Two and
Count Three. VI. CONCLUSION
144. For the foregoing reasons, the Court hereby GRANTS in part and DENIES
in part the Motions as follows:
a. The Court GRANTS in part the AP Motion as to Counterclaim
One for breach of fiduciary duty.
b. The Court GRANTS in part the RP Motion as to Counterclaim
Two for breach of contract as it relates to the purported “Loan
c. The Court DENIES in part the RP Motion as to Counterclaim
Two for breach of the Operating Agreement to the limited extent that
claim is based on an alleged breach by RP of Section 4.7 of the Operating
Agreement for failing to provide G1.34 with timely audited financial
statements for fiscal year 2023. However, the Court GRANTS in part
the RP Motion as it relates to the allegations in Counterclaim Two of
other breaches of Sections 4.7 and 4.8 of the Operating Agreement.
d. The Court GRANTS in part the RP Motion as to Counterclaim
Three for breach of the implied covenant of good faith and fair dealing.
e. The Court GRANTS in part the RP Motion as to Counterclaim
f. The Court GRANTS in part the AP Motion as to Counterclaim
Five for breach of Section 11.2 of the Operating Agreement. g. The Court GRANTS in part the AP Motion as to Counterclaim
Six for breach of the implied covenant of good faith and fair dealing.
h. The Court GRANTS in part the AP Motion as to Counterclaim
i. The Court GRANTS in part the Motions as to Counterclaim Nine
with respect to the request for a declaration that RP breached the
Operating Agreement and purported “Loan Agreement,” except to the
extent G1.34 seeks a limited declaration that RP breached Section 4.7
of the Operating Agreement related to the 2023 audited financials. To
that limited extent, the Court DENIES in part the Motions as to
Counterclaim Nine.
j. The Court DENIES in part the AP Motion as to Counterclaim
Nine’s request for a declaration that no valid Buy-Sell Event occurred
and, therefore, G1.34 is under no obligation to sell its membership
interest in RP.
k. The Court GRANTS in part the Motions with respect to
Counterclaim Nine’s request for a declaration that AP and RP are
obligated to repay the “Loan.”
l. The Court GRANTS in part the AP Motion as to Counterclaim
Nine with respect to the request for a declaration that the Software has
reached MVP and, thus, AP must transfer an additional nine percent
(9%) membership interest in RP to G1.34. m. The Court DENIES in part the AP Motion as to Count One for
breach of contract and specific performance.
n. The Court DENIES in part the Motions as to Count Two and
Count Three for indemnification.
o. The Court DENIES in part the AP Motion as to Count Four for
declaratory judgment.
145. For the avoidance of doubt, the following claims will proceed to trial in this
matter:
a. G1.34’s Counterclaim Two for breach of contract to the limited
extent that claim is based on an alleged breach by RP of Section 4.7 of
the Operating Agreement for failure to provide G1.34 with timely
audited financials for fiscal year 2023.
b. G1.34’s Counterclaim Nine to the extent G1.34 seeks a judicial
declaration that (i) RP breached Section 4.7 of the Operating Agreement
related to the 2023 audited financials; and (ii) no valid Buy-Sell Event
occurred and, therefore, G1.34 is under no obligation to sell its
membership interest in RP.
c. AP and RP’s Count One for breach of contract and specific
performance.
d. AP’s Count Two for indemnification.
e. RP’s Count Three for indemnification.
f. AP and RP’s Count Four for declaratory judgment. SO ORDERED, this the 23rd day of April, 2026.
/s/ Michael L. Robinson Michael L. Robinson Chief Business Court Judge
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Auto Provisions, LLC v. G1.34 Holdings, LLC, Counsel Stack Legal Research, https://law.counselstack.com/opinion/auto-provisions-llc-v-g134-holdings-llc-ncbizct-2026.