CVO Enterprises, Inc. v. Shiflett Enterprise Solutions, Inc.

CourtDistrict Court, W.D. North Carolina
DecidedSeptember 3, 2025
Docket1:24-cv-00238
StatusUnknown

This text of CVO Enterprises, Inc. v. Shiflett Enterprise Solutions, Inc. (CVO Enterprises, Inc. v. Shiflett Enterprise Solutions, Inc.) is published on Counsel Stack Legal Research, covering District Court, W.D. North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
CVO Enterprises, Inc. v. Shiflett Enterprise Solutions, Inc., (W.D.N.C. 2025).

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NORTH CAROLINA ASHEVILLE DIVISION 1:24-cv-00238-MR-WCM

OSP SOLUTIONS, LLC, and ) CVO ENTERPRISES, INC., ) ) Plaintiffs, ) AMENDED ) MEMORANDUM AND v. ) RECOMMENDATION ) ) ZACHARY M. SHIFLETT, and ) SHIFLETT ENTERPRISE ) SOLUTIONS, INC., ) ) Defendants. ) _______________________________ )

This matter is before the Court on Plaintiffs’ Motion to Dismiss Defendant Shiflett’s Counterclaims (the “Motion to Dismiss,” Doc. 11), which has been referred to the undersigned pursuant to 28 U.S.C. § 636 for the entry of a recommendation.1

1 On July 21, 2025, the undersigned issued a Memorandum and Recommendation. Doc. 16. No party has objected to that recommendation, which remains pending for disposition by the presiding District Judge. Nonetheless, the Court has since identified authority that, in the interest of justice, counsels toward allowing Defendant’s counterclaim for wrongful termination in violation of public policy to proceed. This Amended Memorandum and Recommendation is being filed for the limited purpose of amending the undersigned’s recommendation as to that claim. I. Procedural History On September 12, 2024, OSP Solutions, LLC, and CVO Enterprises, Inc.

(“CVO”) (collectively “Plaintiffs”) filed their Complaint against Zachary M. Shiflett (“Shiflett”) and Shiflett Enterprise Solutions, Inc. (“Shiflett Enterprise Solutions”) (collectively “Defendants”). Doc. 1. On November 7, 2024, Defendants filed an Answer and Shiflett asserted

counterclaims. Doc. 9. On December 19, 2024, Plaintiffs filed the Motion to Dismiss. Docs. 11, 12. Shiflett has responded, and Plaintiffs have replied. Docs. 14, 15. II. The Allegations in the Parties’ Pleadings

A. Plaintiffs’ Complaint Plaintiffs allege that they are fiber optic companies and subsidiaries of Blue Ridge Infrastructures Partners Midco, LLC (“Blue Ridge Infrastructures”). Doc. 1 at ¶¶ 2, 12–13.

Shiflett was originally hired for a sales position with another (non-party) subsidiary of Blue Ridge Infrastructure but, on March 28, 2023, “was transferred to a salaried position at CVO, where he had no sales responsibilities.” Id. at ¶¶ 14–15.

In the summer of 2023, Shiflett “began to cultivate relationships with OSP’s international suppliers, manufacturers, and distributors of products used in the fiber optics business.” Id. at ¶ 18. Subsequently, and while still employed by CVO, Shiflett began his own company—Shiflett Enterprise Solutions—to compete with Plaintiffs in the

fiber optics industry, approached Plaintiffs’ customers about transferring their business to Shiflett Enterprise Solutions, and misappropriated Plaintiffs’ proprietary information and trade secrets. Id. at ¶¶ 32, 33, 43-63. Plaintiffs terminated Shiflett’s employment on June 26, 2024. Id. at ¶

41. B. Shiflett’s Counterclaim Shiflett alleges that Plaintiffs employed him as director of sales from March 28, 2023 until June 26, 2024. Doc. 9 at ¶¶ 1, 2.2

Shiflett alleges that he accepted the position based on Plaintiffs’ “assurance that he would be paid a salary, commissions, and a share of profits.” Id. at ¶ 1. Although Plaintiffs paid Shiflett “$73,033.56 on September 18, 2023,”

“$122,793.51 for a portion of the commissions he earned in 2023,” and “an additional payment for commissions [Shiflett] earned in 2023,” Plaintiffs “unjustifiably stopped paying [him] the commissions he earned pursuant to the parties’ agreement in 2024.” Id. at ¶¶ 8–10.

2 The parties appear to disagree regarding whether Shiflett was employed in a sales position. Shiflett alleges that he is entitled to unpaid commissions and “has been harmed by more than $1,000,000 for sales he made on the plaintiff’s behalf.”

Id. at ¶¶ 13–14. III. Legal Standard When considering a motion made pursuant to Rule 12(b)(6), the court accepts the allegations in the complaint as true and construes them in the light

most favorable to the plaintiff. See Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc., 591 F.3d 250, 253 (4th Cir. 2009); Francis v. Giacomelli, 588 F.3d 186, 192 (4th Cir. 2009). The court, however, is not required to accept “legal conclusions, elements

of a cause of action, and bare assertions devoid of further factual enhancement.” Consumeraffairs.com, 591 F.3d at 255; see Giacomelli, 588 F.3d at 192. That is, while “detailed factual allegations” are not required, the complaint must contain “enough facts to state a claim to relief that is plausible

on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); see Consumeraffairs.com, 591 F.3d at 255. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v.

Iqbal, 556 U.S. 662, 678 (2009); accord Consumeraffairs.com, 591 F.3d at 255. In short, the well-pled factual allegations must move a plaintiff’s claim from conceivable to plausible. Twombly, 550 U.S. at 570; Consumeraffairs.com, 591 F.3d at 256.

IV. Discussion Shiflett has asserted counterclaims for breach of contract, violation of the North Carolina Wage and Hour Act (“NCWHA”), wrongful discharge in violation of public policy, and, in the alternative to his breach of contract claim,

claims for quantum meruit and unjust enrichment. Plaintiffs challenge all the counterclaims. A. Breach of Contract To state a claim for breach of contract, a claimant must “plausibly allege

‘the existence of a contract between plaintiff and defendant, the specific provisions breached, the facts constituting the breach, and the amount of damages resulting to plaintiff from such breach.’” Johnson v. Cricket Counsel USA, Inc., 658 F.Supp.3d 276, 282 (E.D.N.C. Aug. 24, 2023) (citing RGK. Inc.

v. U.S. Fid. & Guar. Co., 292 N.C. 668, 675 (1977); Cantrell v. Woodhill Enters., Inc., 273 N.C. 490, 497 (1968)); see also; Boyd v. Tchrs. Ins. & Annuity Ass’n of Am., 807 F. App’x 254, 255 (4th Cir. 2020) (quoting Wells Fargo Ins. Servs. USA, Inc. v. Link, 372 N.C. 260, 276 (2019)). “Failure to allege the ‘specific

contract terms which were breached...obviously fall[s] far short of the line of plausibility of entitle[ment] to relief.’” Levy v. Infilaw Corp., No. 3:17-CV- 00026-GCM, 2017 WL 3573825, at *3 (W.D.N.C. Aug. 17, 2017) (quoting Page v. Select Portfolio Servicing, Inc., No. 1:12CV900, 2013 WL 4679428, at *3 (M.D.N.C. Aug. 30, 2013), report and recommendation adopted, No.

1:12CV900, 2013 WL 5462282 (M.D.N.C. Sept. 30, 2013)). Here, Plaintiffs argue that Shiflett has failed to “specifically identify” a written agreement between Shiflett and Plaintiffs regarding the payment of commissions, the material terms of such an

agreement, or the specific provision(s) Plaintiffs allegedly breached.3 With respect to an agreement between the parties and the material terms of that agreement, Shiflett alleges that he accepted “employment based on the plaintiffs’ assurance that he would be paid a salary, commissions, and

a share of profits” and that “plaintiffs memorialized the agreements in writing, specifically by emails and spreadsheets.” Doc 9 at ¶¶ 1, 7. Further, with respect to Plaintiffs’ alleged breach, Shiflett has alleged that Plaintiffs “stopped paying [him] the commissions he earned pursuant to

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