Bloxsom v. Choquette, 2021 NCBC 57.
STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE SUPERIOR COURT DIVISION CABARRUS COUNTY 20 CVS 3334
JOHN BLOXSOM; REBECCA BLOXSOM; HEATH DRYE; CAROLINE DRYE; TINTU PARAMESWAR; and DONNA PARAMESWAR, individually and derivatively on behalf of Saratoga Homeowners Association,
Plaintiffs,
v. ORDER AND OPINION ON MOTIONS TO DISMISS NEAL CHOQUETTE; WENDY CHOQUETTE; GARY CHOQUETTE; AMERICAN LAND CORPORATION – CHARLOTTE, INC.; ATLANTIC GRADING CO. INC. f/k/a NO SNIVELING GRADING CO. INC.; CEDAR PROPERTY MANAGEMENT, LLC n/k/a AUSTERLITZ PROPERTY MANAGEMENT, LLC; and PAYNE ROCK INVESTMENTS, LLC,
Defendants,
and
SARATOGA HOMEOWNERS ASSOCIATION,
Nominal Defendant.
THIS MATTER is before the Court on the Motion to Dismiss of Nominal
Defendant Saratoga Homeowners Association (the “Association”) (ECF No. 6); the
Motion to Dismiss of Defendants Neal Choquette, Wendy Choquette, Gary Choquette
and American Land Corporation–Charlotte, Inc. (“American Land”) (ECF No. 11);
and the Motion to Dismiss of Plaintiffs as to certain counterclaims asserted by Defendants Neal Choquette, Wendy Choquette, Gary Choquette, and American Land
(ECF No. 39).
THE COURT, having considered the Motions, the briefs filed by the parties,
the applicable law, arguments of counsel, and all matters of record, CONCLUDES
that the Motions should be GRANTED in part and DENIED in part for the reasons
set forth below.
Fitzgerald Litigation by Andrew Fitzgerald and Stuart Punger for Plaintiffs John Bloxsom, Rebecca Bloxsom, Heath Drye, and Caroline Drye.
Weaver, Bennett & Bland, P.A., by Bo Caudill for Plaintiffs Donna Parameswar and Tintu Parameswar.
Devore, Acton and Stafford, P.A., by F. William DeVore, IV for Defendants Neal Choquette, Wendy Choquette, Gary Choquette, and American Land Corporation – Charlotte, Inc.
Hamilton Stephens Steele + Martin, PLLC, by M. Aaron Lay and Graham Morgan for Defendants Atlantic Grading Co., Inc. f/k/a No Sniveling Grading Co. Inc.; Cedar Property Management, LLC n/k/a Austerlitz Property Management, LLC; and Payne Rock Investments, LLC.
Offit Kurman, P.A., by Keith B. Nichols and Amy P. Hunt for Nominal Defendant Saratoga Homeowners Association.
Davis, Judge. INTRODUCTION
1. The admonition to “Love thy Neighbor” has been in existence since time
immemorial. The parties to this case, however, have instead embraced the entirely
separate maxim of “Sue thy Neighbor,” engaging in a seemingly nonstop barrage of
lawsuits against one another. In the present action, six residents of a Cabarrus
County neighborhood known as Saratoga have sued the members of their homeowners’ association’s board of directors (the “Board”), alleging a nefarious course
of conduct rife with conflicts of interest, ineptitude, and retaliation. In response,
Defendants have asserted counterclaims in which they accuse Plaintiffs of engaging
in a concerted scheme to drive them out of the neighborhood.
FACTUAL AND PROCEDURAL BACKGROUND
2. The Court does not make findings of fact on motions to dismiss under
Rule 12(b)(6) of the North Carolina Rules of Civil Procedure and instead recites those
facts contained in the Complaint and documents attached to the Complaint that are
relevant to the Court’s determination of the Motions. See, e.g., Concrete Serv. Corp.
v. Inv’rs Grp., Inc., 79 N.C. App. 678, 681 (1986); Window World of Baton Rouge, LLC
v. Window World, Inc., 2017 NCBC LEXIS 60, at *11 (N.C. Super. Ct. July 12, 2017).
Accordingly, the following facts are drawn from Plaintiffs’ Complaint and the relevant
governing documents of the Association referred to in the Complaint.
A. The Parties
3. The residential neighborhood “Saratoga” is located in Cabarrus County,
North Carolina. (ECF No. 8.1, at p. 1.) The Association—named in this action as a
nominal defendant—is the homeowners’ association that encompasses all lots in
Saratoga. (Id.) The Association is a North Carolina nonprofit corporation with its
principal office in Mecklenburg County, North Carolina. (ECF No. 8.2, at p. 1.)
4. Plaintiffs John Bloxsom, Rebecca Bloxsom, Heath Drye, Caroline Drye,
Tintu Parameswar, and Donna Parameswar (collectively, “Plaintiffs”) all live in
Saratoga and are all members of the Association. (ECF No. 3, at ¶¶ 1, 44.) 5. Defendants Neal Choquette (“Neal”), Wendy Choquette (“Wendy”), and
Gary Choquette (“Gary”) (collectively, the “Choquettes”) are residents of Mecklenburg
County, North Carolina and all currently serve on the Association’s Board. (Id. at ¶¶
2, 8.)
6. In addition to serving on the Board, Neal and Wendy own and operate
four other businesses also named as defendants to this action: American Land;
Atlantic Grading Co. Inc. f/k/a No Sniveling Grading Co. Inc. (“AGC”); Cedar Property
Management, LLC n/k/a Austerlitz Property Management, LLC (“CPM”); and Payne
Rock Investments, LLC (“PRI”) (collectively, the “Choquette Businesses”). 1 (Id. at ¶
3.) Gary and Wendy are employed by each of the Choquette Businesses. (Id. at ¶ 5.)
B. Prior Actions Between the Parties
7. It is something of an understatement to say that this lawsuit is not the
first legal dispute between the parties. First, on February 20, 2018, the Parameswars
filed a complaint against Neal in Superior Court, Mecklenburg County, alleging
various incidents of malfeasance and misconduct by him with respect to the
Parameswars and their property. See Parameswar v. Choquette, Case No. 2018-CVS-
3724 (hereinafter, “Parameswar I,” ECF No. 13). Parameswar I was ultimately
resolved by the Parameswars and Neal entering into a Settlement and Release
Agreement on December 20, 2018, which incorporates by reference a subsequent
1 The Choquette Businesses exist under the laws of North Carolina with their principal places
of business in Mecklenburg County, North Carolina. However, the Choquettes utilize a combination of the Choquette Businesses to transact business in Cabarrus County. (ECF No. 3, at ¶ 4, 6.) Consent Order signed by the Honorable Lisa Bell on January 17, 2019. (“Settlement
Agreement and Consent Order,” ECF No. 14.)
8. Second, on April 18, 2019, all of the named Plaintiffs in this case—along
with two additional Saratoga residents, Ronald and Sharon Kerr—filed a complaint
solely against the Association in Superior Court, Cabarrus County, alleging
malfeasance and misconduct by the Association. See Kerr v. Saratoga Homeowners
Assoc., Case No. 2019-CVS-1247 (hereinafter, “Parameswar II,” ECF No. 6, Ex. A).
In Parameswar II, the only relief sought was the appointment of a receiver for the
Association. Parameswar II was voluntarily dismissed without prejudice on July 29,
2021. (See ECF No. 53.)
9. Third, on August 20, 2019, Neal and American Land filed a defamation
action against all of the named Plaintiffs in the above-captioned action—as well as
against the Kerrs—in Superior Court, Cabarrus County. See Amer. Land Corp. v.
Kerr, Case No. 2019-CVS-2923 (hereinafter, “Defamation Action,” ECF No. 27.1). A
voluntary dismissal was taken as to all defendants on December 4, 2020. (ECF No.
27.2.)
C. The Present Action
10. On November 6, 2020, Plaintiffs—this time, the Bloxsoms, Dryes, and
Parameswars—filed this lawsuit (the “Present Action”), purporting to assert claims
both individually and derivatively on behalf of the Association against the Choquettes
and the Choquette Businesses. 2 (ECF No. 3.) The Complaint contains claims for
2 The Court notes that although the introductory paragraph of the Complaint states that
claims are being asserted both individually and derivatively on behalf of the Association (ECF breach of fiduciary duty and slander of title as well as a request that the Court enter
a declaratory judgment that certain transactions conducted by Defendants are void
on conflict of interest grounds. (Id.) In their Complaint, Plaintiffs also seek an
accounting of the Association’s financial affairs and request that the Court “pierce
the corporate veil” as to the Choquette Businesses. 3
11. The Present Action is predicated on (1) alleged violations by the Board
members of various provisions of the Articles of Incorporation of the Association
(“Articles,” ECF No. 10.2); the Bylaws of the Association (“Bylaws,” ECF No. 8.3); the
Declaration of Covenants, Conditions, and Restrictions for Saratoga Phase I and
Saratoga Phase II (“Declaration,” ECF No. 8.1); the North Carolina Planned
Community Act, N.C.G.S. § 47F-1-101, et seq.; and the North Carolina Nonprofit
Corporation Act, N.C.G.S. § 55A-1-01, et seq.; and (2) allegations of certain “conflict
of interest transactions” by Defendants and “arbitrary, malicious, and capricious
enforcement of the Declarations and Bylaws.” (ECF No. 3, at ¶¶ 10–37.)
12. Although the Complaint sets out a long list of specific examples of
Defendants’ failures as members of the Board to meet duties imposed upon them by
the Articles, Bylaws, the Declaration, and North Carolina law, Plaintiffs generally
allege that (1) the Board has failed to adhere to corporate requirements (e.g., failure
to keep adequate records, failure to provide adequate notice of meetings, failure to
No. 3, at p. 1), the Complaint fails to differentiate between those claims being brought individually and those being asserted derivatively. 3 Plaintiffs also requested in their prayer for relief that the Court “appoint a receiver for the
Association to operate the Association and to investigate the Choquettes’ breach of fiduciary duties.” (Id. at p. 13.) However, on April 16, 2021, Plaintiffs withdrew their request for the appointment of a receiver. (ECF No. 51.) keep meeting minutes, and failure to obtain liability insurance); and (2) the
Choquettes use the Association as a means to harass Plaintiffs and to profit
themselves and the Choquette Businesses at the expense of lot owners such as
Plaintiffs (e.g., by levying assessments for their own benefit, accessing owners’ lots
without permission, and engaging in “noxious, offensive, and/or illegal trades or
activities on the lots of the lot owners in Saratoga”). (Id. at ¶¶ 13–37.)
13. On December 20, 2020, this matter was designated a mandatory
complex business case and assigned to the Honorable Gregory P. McGuire. (Design.
Ord., ECF No. 1; Assign. Ord., ECF No. 2.)
D. The Pending Motions
14. On January 8, 2021, the Association filed a motion to dismiss this action
pursuant to Rule 12(b)(6) in which it asserts that the present lawsuit has been abated
based on the prior pending action doctrine. (ECF No. 6.)
15. On January 25, 2021, the Choquettes and American Land also filed a
motion to dismiss pursuant to Rule 12(b)(6) based, in part, upon the prior pending
action doctrine. The Choquettes’ Motion also makes the following additional
arguments: (1) Plaintiffs have failed to state valid claims for relief against Gary and
Wendy individually; and (2) due to the Settlement Agreement and Consent Order
entered in Parameswar I, the doctrine of res judicata serves as a bar to some or all of
Plaintiffs’ claims. (ECF No. 12.)
16. On January 25, 2021, the Choquettes and American Land filed an
Answer and Counterclaims (ECF No. 15.), which asserted counterclaims for slander per se (Count I); abuse of process (Count II); intentional interference with business
relations (Count III); civil conspiracy (Count IV); and breach of contract (Count V). 4
(Id.) These counterclaims are primarily based on the contentions of the Choquettes
and American Land that Plaintiffs have (1) made defamatory statements about them;
and (2) engaged in a concerted scheme to force them out of the Saratoga community
and end their control over the Association. (ECF No. 15, at pp. 9–12.)
17. On February 24, 2021, Plaintiffs filed a motion to dismiss Counts II, III,
and V of the counterclaims of the Choquettes and American Land. (ECF No. 39.)
18. This matter came before Judge McGuire for a hearing on April 20, 2021.
On July 1, 2021, this matter was reassigned to the undersigned. (Reassign. Ord.,
ECF No. 52.) The Court notified the parties that the undersigned would be ruling
upon the Motions presently before the Court, and the parties elected to provide the
Court with a transcript of the April 20 hearing in lieu of requesting rehearing. Since
that date, the undersigned has thoroughly reviewed the hearing transcript, the
pleadings, the briefs of the parties, and all other applicable matters of record. This
matter is now ripe for decision.
LEGAL STANDARD
19. A motion to dismiss pursuant to Rule 12(b)(6) “tests the legal sufficiency
of the complaint.” Concrete Serv. Corp. v. Investors Group, Inc., 79 N.C. App. 678,
681 (1986). The Court’s inquiry is “whether, as a matter of law, the allegations of the
complaint, treated as true are sufficient to state a claim upon which relief may be
4 The counterclaim for breach of contract was asserted only against the Parameswars. granted under some legal theory, whether properly labeled or not.” Harris v. NCNB
Nat’l Bank, 85 N.C. App. 669, 670 (1987). In deciding a Rule 12(b)(6) motion to
dismiss, the court construes the complaint liberally and accepts all well-pleaded
factual allegations as true. Laster v. Francis, 199 N.C. App. 572, 577 (2009); Krawiec
v. Manly, 370 N.C. 602, 606 (2018). The Court, however, is not required “to accept
as true allegations that are merely conclusory, unwarranted deductions of fact, or
unreasonable inferences.” Good Hope Hosp., Inc. v. N.C. Dep’t of Health & Human
Servs., 174 N.C. App. 266, 274 (2005) (citation omitted).
20. Furthermore, the Court “can reject allegations that are contradicted by
the documents attached, specifically referred to, or incorporated by reference in the
complaint.” Moch v. A.M. Pappas & Assocs., LLC, 251 N.C. App. 198, 206 (2016)
(citation omitted). The Court may consider any such attached or incorporated
documents without converting the Rule 12(b)(6) motion into a motion for summary
judgment. Id. Moreover, the Court “may properly consider documents which are the
subject of a plaintiff’s complaint and to which the complaint specifically refers even
though they are presented by the defendant.” Oberlin Capital, L.P. v. Slavin, 147
N.C. App. 52, 60 (2001) (citation omitted); see also Window World, 2017 NCBC LEXIS
60, at *11.
21. “It is well-established that dismissal pursuant to Rule 12(b)(6) is proper
when ‘(1) the complaint on its face reveals that no law supports the plaintiff’s claim;
(2) the complaint on its face reveals the absence of facts sufficient to make a good
claim; or (3) the complaint discloses some fact that necessarily defeats the plaintiff’s claim.’ ” Corwin v. British Am. Tobacco PLC, 371 N.C. 605, 615 (2018) (quoting Wood
v. Guilford Cty., 355 N.C. 161, 166 (2002)).
ANALYSIS
A. The Association’s Motion to Dismiss
22. The sole argument for dismissal asserted by the Association in its
Motion is based on the prior pending action doctrine. Specifically, the Association
argues that the pendency of Parameswar II—largely involving the same parties—
serves to abate the present action. (ECF No. 6, at p. 1.)
23. Our Supreme Court has held that “where a prior action is pending
between the same parties for the same subject matter in a court within the state
having like jurisdiction, the prior action serves to abate the subsequent action.”
Eways v. Governor’s Island, 326 N.C. 552, 558 (1990). “This is so because the court
can dispose of the entire controversy in the prior action and in consequence the
subsequent action is wholly unnecessary. By abating the second action, a multiplicity
of actions is prevented.” Clark v. Craven Regional Med. Auth., 326 N.C. 15, 20 (1990).
The test for determining the applicability of the doctrine is as follows: “Do the two
actions present a substantial identity as to parties, subject matter, issues involved,
and relief demanded?” Cameron v. Cameron, 235 N.C. 82, 85 (1952).
24. At the time the Association’s Motion was filed, Parameswar II remained
pending. In Parameswar II, all of the named Plaintiffs in this case—along with the
Kerrs—brought an action alleging malfeasance and misconduct by the Association,
seeking the appointment of a receiver for the Association. (ECF No. 6, at Ex. A.) The Association argues that Parameswar II abates the present action because it involves
substantially the same plaintiffs and because the relief sought against the
Association—appointment of a receiver—is also one of the requested forms of relief
set out in Plaintiffs’ complaint in the Present Action. (ECF No. 6, at p. 3.)
25. However, on July 29, 2021, Plaintiffs (and the Kerrs) took a voluntary
dismissal without prejudice of Parameswar II. (ECF No. 53). 5 Accordingly, because
Parameswar II is no longer pending, no basis currently exists for application of the
prior pending action doctrine. The Association’s Motion to Dismiss is therefore
DENIED as MOOT.
B. Motion to Dismiss of the Choquettes and American Land
26. In their Motion, the Choquettes and American Land advance three
arguments in support of the dismissal of this action as to them: (1) Plaintiffs have
failed to sufficiently allege valid claims for relief against Gary and Wendy
individually; (2) the prior pending action doctrine mandates a finding that the
Present Action has abated; and (3) as a result of the Settlement Agreement and
Consent Order entered in Parameswar I, Plaintiffs’ claims are barred by the doctrine
of res judicata. (ECF No. 12, at pp. 3–7.)
27. The argument advanced by the Choquettes and American Land based
on the prior pending action doctrine is identical to the argument of the Association
on that issue. For the reasons set forth above, that ground for dismissal is now moot.
5 Prior to that date, Plaintiffs voluntarily dismissed their request for appointment of a receiver in the Present Action. (ECF No. 51.) Therefore, the Court must analyze only their two remaining arguments in support of
dismissal.
i. Individual Liability of Gary and Wendy
28. The Choquettes contend that the Complaint lacks allegations of specific
misconduct by Gary or Wendy individually. In response, Plaintiffs argue that the
Complaint makes “numerous allegations . . . against Wendy and Gary with regards
to their misconduct as members of the Board[.]” (ECF No. 27, at p. 6; citing to ECF
No. 3, at ¶¶ 3–8 and 13–16.) More specifically, Plaintiffs argue that they have
alleged that these Defendants made themselves members of the board “such that they purport to act with absolute control and discretion over the Saratoga neighborhood.” Thus, these allegations on the face of the Complaint unequivocally demonstrate that Wendy and Gary [ ] were in a position of power and control over the Association as they engaged in self-dealing, breached their duties to the Association and Plaintiffs, failed to procure proper insurance, and harassed Plaintiffs. Gary and Wendy[’s] [ ] arguments that, taking the allegations of the Complaint as true, they do not have notice of the claims made against them are disingenuous and meritless here.
(Id. at p. 6.)
29. Under the law of this State, “a director, officer, or agent of a corporation
is not, merely by virtue of his office, liable for the torts of the corporation or of other
directors, officers, or agents.” Green v. Freeman, 222 N.C. App. 652, 674 (2012)
(quoting Oberlin, 147 N.C. App. at 57); see also Yates Constr. Co. v. Bostic, 2014 NCBC
LEXIS 19, at *6–9 (N.C. Super. Ct. May 12, 2014). Nevertheless, “[a] director or other
corporate agent can . . . be held directly liable to an injured third party for a tort
personally committed by the director or one in which he participated” where the director or corporate agent was actively involved in the tortious conduct; mere
awareness or knowledge of the alleged wrongdoing is not enough. See Oberlin, 147
N.C. App. at 57; Red Fox Future, LLC v. Holbrooks, 2014 NCBC LEXIS 8, at *36 (N.C.
Super. Ct. Mar. 24, 2014) (granting summary judgment in favor of LLC member and
finding that the member’s “passive awareness of [other members’] actions hardly
constitutes active participation”). Consequently, determination of the liability of a
corporation for tortious conduct does not automatically also result in a determination
of individual liability of its officers or shareholders. See Red Fox, 2014 NCBC LEXIS
8, at *36–39.
30. In Oberlin, our Court of Appeals considered, inter alia, whether the trial
court had properly dismissed individual claims against three of four board members
where allegations were made against them collectively and solely in their capacities
as directors. 147 N.C. App. at 57. The Court of Appeals affirmed the trial court’s
dismissal, reasoning that the plaintiff “failed to allege sufficiently any wrongful
action” on the part of three of the board members. Id. The Court of Appeals stated
that the plaintiff “simply allege[d] in a conclusory manner” that the board members
“were kept fully apprised and informed” of the wrongdoing and that they participated
in concealing it, but failed to allege their active participation. Id. Thus, the Court of
Appeals upheld the dismissal of the claims against the director defendants because
the complaint “[did] not clarify how and to what extent [those] defendants actively
and personally participated in the alleged wrongdoing.” Id. 31. Here, although the Court acknowledges that the Complaint rarely
differentiates between the Choquette Defendants, Plaintiffs’ allegations, taken in the
light most favorable to them, allege that: (1) all three Choquettes—who make up the
entire Board of the Association—committed various wrongful acts as members of the
Board that constituted a clear conflict of interest intended to benefit themselves or
private businesses that they either owned or in which they otherwise had a financial
interest at the expense of the best interests of the Association (see, e.g., ECF No. 3, at
¶ 17); and (2) all three Choquettes engaged in retaliatory actions against the Plaintiffs
(Id. at ¶¶ 29–37). Therefore, unlike in Oberlin, where the Court of Appeals stressed
the fact that the defendant board members only had passive knowledge of the
wrongdoing and participated in its concealment, the Complaint here alleges that the
Choquettes—Neal, Gary, and Wendy—all actively participated in the various alleged
wrongdoings. While the level of detail in support of these allegations is minimal, the
Court finds them adequate to put the Choquettes on notice of the claims against them
and sufficient to survive a motion to dismiss. Accordingly, the Choquettes’ motion to
dismiss all claims against Gary and Wendy is DENIED.
ii. Res Judicata
32. The Choquettes contend that in the Settlement Agreement and Consent
Order entered in Parameswar I, the Parameswars “forever released Neal [ ] and
American Land from any and all claims that existed or could exist.” (ECF No. 12, at
p. 5.) The Choquettes and American Land argue that the doctrine of res judicata therefore applies such that “Plaintiffs’ claims as to these Defendants, specifically
Neal [ ] and American Land, should be dismissed.” (Id. at p. 6.) 6
33. In response, Plaintiffs argue that: (1) because Neal and the
Parameswars were the only parties to the Settlement Agreement and Consent Order,
the res judicata argument could not possibly apply as to the Dryes and the Bloxsoms;
(2) the Settlement Agreement and Consent Order only released Neal and the
Parameswars for liability for past acts, whereas the Complaint in the Present Action
alleges acts occurring after the Settlement Agreement and Consent Order were
entered; and (3) the Parameswars’ obligation to release their claims against Neal no
longer existed based on Neal’s prior repudiation of the Settlement Agreement and
Consent Order. (ECF No. 27, at pp. 11–14.)
34. Our Supreme Court has held that “[u]nder the doctrine of res judicata
or ‘claim preclusion,’ a final judgment on the merits in one action precludes a second
suit based on the same cause of action between the same parties or their privies.”
Whitacre P’ship v. BioSignia, Inc., 358 N.C. 1, 15 (2004). “For res judicata to apply,
a party must show that the previous suit resulted in a final judgment on the merits,
that the same cause of action is involved, and that both the party asserting res
judicata and the party against whom res judicata is asserted were either parties or
stand in privity with parties.” Williams v. Peabody, 217 N.C. App. 1, 5 (2011) (quoting
State ex rel. Tucker v. Frinzi, 344 N.C. 411, 413–14 (1996)).
6 Although none of the Plaintiffs in the Present Action other than the Parameswars were
parties in Parameswar I, the Choquettes nevertheless appear to be contending that their res judicata argument applies equally to all Plaintiffs. 35. Initially, the Court notes that even assuming the Settlement Agreement
and Consent Order could potentially have res judicata effect, only the claims asserted
by the Parameswars in the present action would be implicated given that none of the
other Plaintiffs here were parties in Parameswar I. Moreover, the language in the
Settlement Agreement and Consent Order only relieves the Parameswars and Neal
“from any and all liability of any nature whatsoever, whether known or unknown,
premised on or arising out of any acts or omissions . . . which actions or omissions
occurred on or before [December 20, 2018].” (ECF No. 14, at p. 2 (emphasis added).)
Based on the Court’s reading of the Complaint in the Present Action—which is
admittedly not a model of specificity—it cannot be said at this early stage of the
litigation that all of the alleged acts of Neal forming the basis for Plaintiffs’ claims
occurred before December 20, 2018.
36. In addition, the parties disagree as to whether the obligations of the
Parameswars were terminated due to Neal’s alleged repudiation of the Settlement
Agreement. The Court is unable to resolve this issue at the Rule 12(b)(6) stage given
that it involves a disputed question of fact. Therefore, the Choquettes’ motion to
dismiss this action as to Neal and American Land based on the doctrine of res judicata
is DENIED.
C. Plaintiffs’ Motion to Dismiss Counterclaims
37. Plaintiffs seek dismissal of the counterclaims asserted by the
Choquettes and American Land (hereinafter, “Counterclaimants”) for abuse of process (Count II), intentional interference with business relations (Count III), and
breach of contract (Count V).
i. Abuse of Process
38. “[T]he gravamen of a cause of action for abuse of process is the improper
use of the process after it has been issued.” Petrou v. Hale, 43 N.C. App. 655, 659
(1979). In order to survive a motion to dismiss pursuant to Rule 12(b)(6), an abuse of
process claim must allege the following two elements:
(1) that the defendant had an ulterior motive to achieve a collateral purpose not within the normal scope of the process used, and (2) that the defendant committed some act that is a malicious misuse or misapplication of that process after issuance to accomplish some purpose not warranted or commanded by the writ.
Pinewood Homes, Inc. v. Harris, 184 N.C. App. 597, 602 (2007) (internal quotation
marks and citation omitted). Accordingly, “[a]buse of process requires both an
ulterior motive and an act in the use of the legal process not proper in the regular
prosecution of the proceeding, and that both requirements relate to the defendant’s
purpose to achieve through the use of the process some end foreign to those it was
designed to effect.” Chidnese v. Chidnese, 210 N.C. App. 299, 310 (2011).
39. Counterclaimants essentially allege that Plaintiffs, with an “ulterior
purpose or motive,” committed the following acts: filed various lawsuits against
Defendants; filed reports with federal and state agencies complaining about
Defendants; interfered with real estate owned by the Choquettes and/or American
Land; and issued subpoenas to companies owned or operated by the Choquettes and/or American Land. (ECF No. 15, at ¶ 8.) Counterclaimants assert that these
acts were “not proper” and constituted an “abuse of the legal process.” (Id. at ¶ 9.)
40. Plaintiffs contend that the abuse of process counterclaim is defective
because it does not adequately allege the second element of the tort. Specifically,
Plaintiffs argue that Counterclaimants have “failed to allege what non-judicial act
took place after the subpoenas were sent or lawsuits were filed to accomplish the
ulterior motives alleged.” In response, Counterclaimants contend that “by
purposefully filing multiple legal proceedings as a vehicle to attempt to gain an
advantage on these Defendants”—primarily in an effort to force them out of the
Saratoga neighborhood—“the Plaintiffs have committed a willful act that will support
an abuse of process claim.”
41. The Court agrees with Plaintiffs that although the abuse of process
counterclaim does allege an ulterior motive for Plaintiffs’ initiation of various prior
legal proceedings, there are no allegations in the counterclaim that Plaintiffs
committed a subsequent act inconsistent with the process they had issued. It is well
established that “the mere filing of a civil action with an ulterior motive is not
sufficient to sustain a claim for abuse of process.” Chidnese, 210 N.C. App. at 312
(2011).
42. Accordingly, the Court concludes that Counterclaimants have failed to
state a valid claim for abuse of process. Therefore, Plaintiffs’ motion to dismiss the
abuse of process counterclaim is GRANTED. ii. Intentional Interference with Business Relations
43. Plaintiffs likewise seek dismissal of the counterclaim denominated as a
claim for intentional interference with business relations. This Court has held that
“[a] claim for tortious interference with ‘business relations’ embraces claims for
interference with both existing contracts and prospective future contracts.” E-Ntech
Indep. Testing Services v. Air Masters, Inc., 2017 NCBC LEXIS 2, at *30 (N.C. Super.
Ct. Jan. 5, 2017). In their briefs, the Choquettes and American Land make clear that
their counterclaim is one for tortious interference with prospective economic
advantage.
44. “An action for tortious interference with prospective economic
advantage is based on conduct by the defendant[ ] which prevents the plaintiff[ ] from
entering into a contract with a third party.” Walker v. Sloan, 137 N.C. App. 387, 392–
93 (2000) (citing Owens v. Pepsi Cola Bottling Co., 330 N.C. 666, 680 (1992)). In order
to state a claim for tortious interference with prospective economic advantage, “the
plaintiff[ ] must allege facts to show that the defendant[ ] acted without justification
in inducing a third party to refrain from entering into a contract with them which
contract would have ensued but for the interference.” Radcliffe v. Avenel Homeowners
Ass’n, 248 N.C. App. 541, 567 (2016).
45. Counterclaimants allege that “Plaintiffs have committed intentional
acts in a joint effort to prevent [Counterclaimants] from selling their remaining
lots/properties in the Saratoga community.” (ECF No. 15, at ¶¶ 11–12.) However,
there is no allegation that Plaintiffs actually induced a third party not to enter into a contract with the Counterclaimants. “The inducement required to establish a claim
for intentional interference with prospective economic advantage requires purposeful
conduct intended to influence a third party not to enter into a contract with the
claimant.” Simply the Best Movers, LLC v. Marrins’ Moving Sys., Ltd., 2016 NCBC
LEXIS 28, at **6 (N.C. Super. Ct. Apr. 6, 2016) (quoting KRG New Hill Place, LLC v.
Springs Investors, LLC, 2015 NCBC LEXIS 20, at **14–15 (N.C. Super. Ct. Feb. 27,
2015)).
46. Here, there is no allegation that Plaintiffs took any purposeful action
that was intended to specifically influence third parties (i.e., potential buyers of lots
in Saratoga) not to purchase lots from Counterclaimants. Instead, Counterclaimants
have alleged only that the numerous disputes and legal actions between the parties
to this lawsuit have caused third parties to shy away from buying property in
Saratoga. Counterclaimants have made no allegations of purposeful conduct by
Plaintiffs intentionally directed at actual potential buyers.
47. Accordingly, Plaintiffs’ motion seeking dismissal of Counterclaimants’
intentional interference with business relations counterclaim is GRANTED. See
Regency Ctrs. Acquisition, LLC v. Crescent Acquisitions, LLC, 2018 NCBC LEXIS 7,
at *23–24 (N.C. Super. Ct. Jan. 24, 2018) (dismissing tortious interference claim
where plaintiff did not allege defendant made any representations directly to third
party intended to influence the third party not to enter into a commercial lease with
plaintiff); KRG, 2015 NCBC LEXIS 20, at **16–17 (dismissing tortious interference
counterclaim where defendants did not allege that plaintiffs took any purposeful action intended to influence a third party not to enter into a commercial development
agreement with defendants).
iii. Breach of Contract
48. Finally, Plaintiffs contend that the counterclaim for breach of contract
should be dismissed. In this counterclaim, Counterclaimants allege that the
Parameswars breached the Settlement Agreement and Consent Order entered in
Parameswar I by causing both a housing discrimination complaint and the Present
Action to be filed. (ECF No. 15, at ¶ 21.) Plaintiffs contend that this claim is invalid
because Neal previously repudiated the Settlement Agreement and Consent Order
by filing the Defamation Action, thereby terminating any obligations the
Parameswars had thereunder. In response, Counterclaimants argue that the filing
of the Defamation Action did not constitute a repudiation because none of the claims
in that action arose before the Settlement Agreement and Consent Order were
entered.
49. The Court previously addressed this repudiation argument with regard
to the portion of the Choquettes’ Motion seeking dismissal of the claims in the
Complaint against Neal and American Land under the doctrine of res judicata. As
discussed above, the Court is unable to resolve the parties’ differing contentions on
this issue at the Rule 12(b)(6) stage. Accordingly, Plaintiffs’ motion to dismiss the
breach of contract counterclaim is DENIED. CONCLUSION
THEREFORE, IT IS ORDERED that the parties’ pending Motions are
GRANTED in part and DENIED in part, as follows:
1. The Association’s Motion to Dismiss is DENIED as MOOT.
2. The Choquettes’ and American Land’s Motion to Dismiss is
DENIED.
3. Plaintiffs’ Motion to Dismiss Counterclaimants’ abuse of process
counterclaim is GRANTED.
4. Plaintiffs’ Motion to Dismiss Counterclaimants’ intentional
interference with business relations counterclaim is GRANTED.
5. Plaintiffs’ Motion to Dismiss Counterclaimants’ breach of contract
counterclaim is DENIED.
SO ORDERED, this the 15th of September, 2021.
/s/ Mark A. Davis Mark A. Davis Special Superior Court Judge for Complex Business Cases