Opinion of the Court
court’s dismissal of plaintiffs’ breach of contract and unfair and deceptive trade
practices (“UDTP”) claims, and reverse in part and remand with instructions to
dismiss the remaining claims.
Choto Enterprises, Inc. and H&G Logistics, Inc. were both independent service
providers (“ISPs”) for FedEx Ground Package Systems. Plaintiffs, Choto Enterprises
and Napoleon Choto, filed suit against defendants, H&G Logistics, Henry Lotterer,
and Gabriela Lotterer, asserting claims for breach of contract, constructive fraud,
tortious interference with prospective economic advantage, and UDTP. Plaintiffs’
claims center on the allegation that H&G attempted to sell its FedEx routes without
sharing the proceeds with Choto, which plaintiffs contend violated an alleged joint
venture between the parties. To support this theory, plaintiffs rely primarily on an
8 March 2019 license agreement between Choto and H&G. However, that agreement
expired more than a year before H&G attempted to sell its routes.
The trial court dismissed plaintiffs’ breach of contract and UDTP claims, as
well as all claims against Henry and Gabriela Lotterer in their individual capacities
but allowed plaintiffs’ constructive fraud and tortious interference claims against
H&G to proceed. The court certified its ruling for immediate appeal under Rule 54(b),
and both plaintiffs and defendants filed appeals.
I.
This case was heard in the Superior Court, Wake County, where defendants’
motion to dismiss was considered under Rules 12(b)(1), 12(b)(6), and 12(c) of the
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North Carolina Rules of Civil Procedure. In ruling on a motion under Rule 12(c),
“[o]nly the pleadings and exhibits which are attached and incorporated into the
pleadings may be considered by the trial court.” Helms v. Holland, 124 N.C. App.
629, 633 (1996). “No evidence is to be heard, and the trial judge is not to consider
statements of fact in the briefs of the parties or the testimony of allegations by the
parties in different proceedings.” Minor v. Minor, 70 N.C. App. 76, 78 (1984). Under
Rule 12(c), if the trial court considers matters outside the pleadings and does not
exclude them, the motion for judgment on the pleadings must be treated as a motion
for summary judgment and resolved according to the procedures outlined in Rule 56
of the North Carolina Rules of Civil Procedure. Helms, 124 N.C. App. at 633 (citing
N.C.G.S. § 1A-1, Rule 12(c)).
Here, the trial court reviewed the case file, pleadings, relevant case law,
submitted documents and affidavits, briefing, and arguments from both parties
before determining that defendants’ motion to dismiss should be granted in part.
“Because matters outside the pleadings were considered by the court in reaching its
decision on the judgment on the pleadings, the motion will be treated as if it were a
motion for summary judgment.” Id. Summary judgment shall be granted “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) (2023).
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The trial court dismissed breach of contract, fraud, tortious interference, and
UDTP claims against Henry and Gabriela Lotterer in their individual capacities, as
well as breach of contract and UDTP claims against H&G Logistics, Inc. The order
does not, however, explicitly resolve constructive fraud and tortious interference
against H&G Logistics, Inc., indicating these claims remain pending. “A grant of
partial summary judgment, because it does not completely dispose of the case, is an
interlocutory order from which there is ordinarily no right of appeal.” Liggett Grp.,
Inc. v. Sunas, 113 N.C. App. 19, 23 (1993) (citations omitted).
Recognizing its ruling had fully terminated claims as to fewer than all parties,
the trial court certified the order for immediate appeal under Rule 54(b) of the North
Carolina Rules of Civil Procedure, finding no just reason for delay in plaintiffs’ ability
to seek appellate review. N.C.G.S. § 1A-1, Rule 54(b) (2023). “[A] Rule 54(b)
certification is effective to certify an otherwise interlocutory appeal only if the trial
court has entered a final judgment with regard to a party or a claim in a case which
involves multiple parties or multiple claims.” CBP Res., Inc. v. Mountaire Farms of
N.C., Inc., 134 N.C. App. 169, 171 (1999) (citation omitted). Because the trial court’s
ruling fully disposed of plaintiffs’ breach of contract and UDTP claims and all claims
against the Lotterers individually, it constitutes a final judgment as to those claims
and parties. Accordingly, this Court has jurisdiction to review plaintiffs’ appeal.
Defendants argue this Court should assume jurisdiction over their cross-
appeal because the issues raised are inextricably intertwined with plaintiffs’ appeal.
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They contend that the trial court’s partial dismissal creates a risk of fragmented
litigation and inconsistent verdicts if appellate review is not granted. If this Court
affirms the dismissal of plaintiffs’ breach of contract and UDTP claims, then the
remaining constructive fraud and tortious interference claims—relying on the same
joint venture theory—must also fail.
We agree appellate jurisdiction is proper. Where related claims hinge on the
same outcome-determinative issue, immediate review prevents piecemeal litigation
and inconsistent verdicts. See Washington v. Cline, 233 N.C. App. 412, 417 (2014)
(allowing review of a cross-appeal to prevent fragmentary appeals where it involved
the application of the same rules to the same facts and circumstances as the primary
appeal). Because plaintiffs’ remaining claims arise from the same alleged joint
venture as their dismissed claims, and defendants’ cross-appeal raises intertwined
legal questions, this Court assumes jurisdiction and will proceed to review the merits.
II.
Every claim plaintiffs asserted in their complaint—breach of contract,
constructive fraud, tortious interference, and UDTP—hinges on an alleged joint
venture because it establishes either a fiduciary relationship, a contractual or
business interest, or a basis for unfair or deceptive conduct. See, e.g., Greene v. Rogers
Realty & Auction Co., 159 N.C. App. 466, 469 (2003) (holding that a fiduciary duty
does not arise in the absence of a contractual or representative relationship between
the parties); Compton v. Kirby, 157 N.C. App. 1, 20 (2003) (holding that a breach of
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fiduciary duty and constructive fraud may serve as the basis for a UDTP claim); Terry
v. Terry, 302 N.C. 77, 83 (1981) (holding that constructive fraud arises from the abuse
of a confidential or fiduciary relationship and requires allegations establishing both
the existence of such a relationship and the circumstances under which the defendant
took advantage of it).
The dismissed claims, including breach of contract and UDTP, were already
resolved by the trial court, but their viability still depended on the joint venture
theory. The remaining claims for constructive fraud and tortious interference
continue to rely upon the same premise. If this Court determines that no joint
venture existed, then not only do the remaining claims fail, but the trial court’s
dismissal of the other claims is appropriate.
Defendants argue plaintiffs failed to establish the essential elements of a joint
venture and, as a result, cannot demonstrate a fiduciary relationship or a legally
protectable economic interest in H&G’s business operations. We agree.
Establishing the existence of a joint venture requires two key elements: (1) an
agreement—whether explicit or implied—to undertake a single business venture
with shared profits, and (2) an equal right among the parties to control how the
venture operates. Edwards v. Nw. Bank, 39 N.C. App. 261, 275 (1979). A joint
venture can be established when the parties contribute “funds, property, or labor”
toward a shared goal for their mutual benefit, and each party has some degree of
authority over the actions of the other within a fiduciary relationship. Pike v.
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Wachovia Bank & Tr. Co., 274 N.C. 1, 9 (1968).
For a joint venture to exist, the parties must pool their resources—whether
“property, money, efforts, skill, or knowledge”—toward a shared undertaking. Id.
While their contributions do not have to be equal or identical, each participant must
contribute something that advances the venture. Id. A joint venture is similar to a
partnership in nature. While the two are distinct legal relationships, they are
generally governed by the same legal principles. Id.
Considering the evidence in the light most favorable to plaintiffs, it is
insufficient to establish the parties’ business relationship constituted a joint venture.
This Court concludes that no joint venture existed because plaintiffs failed to
establish the essential elements of profit-sharing and mutual control, both of which
are required under North Carolina law.
First, on 8 March 2019, Choto entered into a license agreement with H&G,
granting it certain ISP routes. Under this arrangement, H&G, as the licensee,
retained all revenue generated from the contract. The agreement further specifies
that each party “shall continue to own separately one hundred percent of all business,
real, and any other property interests currently owned by or obtained by it in the
future.” The contract states that “Lotterer will receive all revenues from the FedEx
contract and will pay” Choto only for the revenue “Choto generates” from his work
under that contract, with payments made weekly “after Lotterer receives payment.”
This language establishes a compensation structure based on services rendered,
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rather than a profit-sharing agreement, as it does not provide for joint ownership of
profits or losses—a necessary element of a joint venture. See Se. Shelter Corp. v.
BTU, Inc., 154 N.C. App. 321, 327 (2002) (holding that a fixed payment obligation,
regardless of profitability, does not constitute profit-sharing necessary for a joint
venture).
Second, plaintiffs have not alleged facts sufficient to establish an agency
relationship between itself and H&G to support a joint venture claim. The complaint
does not reference “agent” or “agency,” nor does it assert that Choto had the right to
control H&G or that H&G had the right to control Choto. The only specific evidence
Choto cites—the 8 March 2019 license agreement—contains no language suggesting
agency or mutual control. Instead, the agreement explicitly states that both parties
retain separate ownership of their respective businesses and property.
Because a joint venture requires mutual agency, these allegations are
insufficient to establish the necessary element of control. See id. at 328 (holding that
an agreement lacking mutual control and a principal-agent relationship does not
establish a joint venture, even where one party provided expertise and guidance in
business operations); Rhoney v. Fele, 134 N.C. App. 614, 620 (1999) (holding that a
joint venture requires a legal right to control the other party’s conduct in pursuit of a
common purpose, and summary judgment was proper where no such right to control
was established); Edwards, 39 N.C. App. at 276–77 (holding that a party does not
become a joint venturer merely by exercising control over its security interest, as joint
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venture status requires equal control over the means used to carry out the venture).
The absence of both profit-sharing and mutual control is fatal to plaintiffs’ joint
venture claim, and without a joint venture, the foundation for their causes of action
collapses. Each of plaintiffs’ claims—breach of contract, UDTP, constructive fraud,
and tortious interference—relies on the existence of a joint venture between Choto
and H&G. The pleaded allegations and incorporated documents depend on this
theory, yet the record contains no evidence that plaintiffs had a right to H&G’s profits
or authority over its business decisions. Without such evidence, plaintiffs cannot
establish a fiduciary duty, a protectable business or economic interest, or wrongful
interference with a contract or expectancy. Because a joint venture is essential to
their claims and the evidence does not support its existence, defendants are entitled
to judgment as a matter of law.
III.
The record does not support plaintiffs’ assertion they had entered into a joint
venture with H&G Logistics. The license agreement between the parties explicitly
states each retained separate ownership of their respective business interests and
does not establish the mutual control or profit-sharing necessary to form a joint
venture. Without a joint venture, plaintiffs cannot demonstrate a fiduciary duty, a
protectable economic interest, or wrongful interference with a contract or expectancy.
Because all of plaintiffs’ claims rest on the existence of a joint venture, and the
evidence does not support that such a relationship existed, defendants are entitled to
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judgment as a matter of law. We affirm in part the trial court’s dismissal of plaintiffs’
breach of contract and unfair and UDTP claims and reverse in part and remand with
instructions to dismiss the remaining claims.
AFFIRMED IN PART; REVERSED IN PART; AND REMANDED.
Chief Judge DILLON and Judge TYSON concur.
Report per Rule 30(e).
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