Dapper Dev., L.L.C. v. Cordell

2025 NCBC 33

• Court: North Carolina Business Court
• Decided: July 15, 2025
• Docket: 24-CVS-18718
• Status: Published

Opinion

Dapper Dev., L.L.C. v. Cordell, 2025 NCBC 33.

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE SUPERIOR COURT DIVISION MECKLENBURG COUNTY 24CV018718-590 DAPPER DEVELOPMENT, L.L.C.; TANTALUM HOLDINGS, LLC; BRENDAN GELSON; KYLE TUDOR; and MASON HARRIS,

Plaintiffs, ORDER AND OPINION ON PLAINTIFFS’ MOTION FOR v. JUDGMENT ON THE PLEADINGS ANDREW CORDELL,

Defendant.

1. THIS MATTER is before the Court upon Plaintiffs’ Motion for Judgment

on the Pleadings (the “Motion”), filed pursuant to Rule 12(c) of the North Carolina

Rules of Civil Procedure (the “Rule(s)”) on 20 November 2024 in the

above-captioned case. 1

2. Having considered the Motion, the parties’ briefs in support of and in

opposition to the Motion, the relevant pleadings, the arguments of counsel at the

hearing on the Motion, and other appropriate matters of record, the Court hereby

GRANTS in part and DENIES in part the Motion.

Venn Law Group, by Megan Sadler and Gordon Wikle, for Plaintiffs Dapper Development, L.L.C., Tantalum Holdings, LLC, Brendan Gelson, Kyle Tudor, and Mason Harris.

Wagner Hicks, PLLC, by Sean C. Wagner, for Defendant Andrew Cordell.

Brown, Judge.

1 (Pls.’ Mot. J. Pleadings [hereinafter, “Mot.”], ECF No. 42.) I.

FACTUAL AND PROCEDURAL BACKGROUND

3. The Court does not make findings of fact when ruling on a motion for

judgment on the pleadings under Rule 12(c) and instead recites only those allegations

in the pleadings that are relevant and necessary to the Court’s determination of the

motion.

4. Plaintiffs Brendan Gelson (“Gelson”), Kyle Tudor (“Tudor”), and Mason

Harris (“Harris”) (collectively, the “Individual Plaintiffs”) and Defendant Andrew

Cordell (“Cordell” or “Defendant”) are the sole owners of Plaintiffs Dapper

Development, L.L.C. (“Dapper”) and Tantalum Holdings, LLC (“Tantalum”; together

with Dapper, the “Companies”). 2 Dapper primarily constructs new homes and

renovates and resells single family homes while Tantalum acquires and rents various

residential properties in Mecklenburg County as well as one property in Watauga

County, North Carolina. 3

5. The Companies are governed by substantially similar operating

agreements, which Gelson, Tudor, Harris, and Cordell entered into on 10 February

2022 (the “Operating Agreements”). 4 Sections 5.1 and 5.2 of the Operating

Agreements provide that the Companies shall be operated by Managers and specify

2 (Compl. ¶ 19, ECF No. 2; Answer ¶ 19, ECF No. 35; see also Compl., Exs. 1, 2; Answer &

Countercls., Ex. 1, ECF No. 35.1; Answer & Countercls., Ex. 2, ECF No. 35.2.)

3 (Compl. ¶¶ 13–14, 16; Answer ¶¶ 13–14, 16.)

4 (Compl. ¶ 17; Countercls. ¶ 18, ECF No. 35; Compl., Exs. 1, 2; Answer & Countercls., Exs.

1, 2.) that “[e]ach Member, by virtue of his or her status as a Member, shall be a Manager

of the Compan[ies.]” 5 The Operating Agreements identify Gelson, Tudor, Harris, and

Cordell as the sole Members and Managers of the Companies and, at the time the

Operating Agreements were signed, each owned a 25% membership interest in each

of the Companies, granting them equal voting interests in each Company. 6

6. In early 2023, after a series of disputes arose between Cordell and the

Individual Plaintiffs regarding the management of the Companies, the Individual

Plaintiffs began discussing Cordell’s exit from the Companies. 7 From approximately

April to June of 2023, the Individual Plaintiffs and Cordell attempted to negotiate a

voluntary buyout of Cordell’s membership interest. 8

7. On 14 June 2023 the Individual Plaintiffs, collectively owning a majority

of the membership interests in the Companies, sent a notice to Cordell advising him

that, pursuant to Section 5.2 and 10.2(b) of the Operating Agreements, 9 they had

voted in favor of:

5 (Compl., Exs. 1, 2; Answer & Countercls., Exs. 1, 2.)

6 (Compl. ¶ 19; Answer ¶ 19; Compl., Exs. 1, 2; Answer & Countercls., Exs. 1, 2.)

7 (Compl. ¶¶ 35–51; Countercls. ¶¶ 48–68.)

8 (Compl. ¶¶ 50–67; Countercls. ¶¶ 61–76.)

9 Section 5.2 of the Operating Agreements specifies that “[e]ach Manager shall have a voting

interest which is proportional to his . . . Member’s interest in [Dapper / Tantalum] as set forth on Schedule A attached hereto.”

Section 10.2(b) of the Operating Agreements provides as follows:

A Member shall be terminated from the Company upon an affirmative vote in favor of such termination from the Members constituting a majority of the membership interest of the Company. Upon a Member’s termination of (i) the termination of the employment of Andrew Cordell (“Mr. Cordell”) by [the Companies] effective immediately;

(ii) the termination of Mr. Cordell from [the Companies] effective immediately; and

(iii) the removal of Mr. Cordell as a manager of [the Companies] effective immediately. 10

In addition, the Individual Plaintiffs offered Cordell a cash payment of $485,000,

subject to adjustment, and quitclaim title to the 1742 Winston property (the “Winston

Property”) as payment for Cordell’s membership and economic interest in the

Companies. 11

8. On 15 June 2023, Cordell rejected the Individual Plaintiffs’ buyout offer and

extended a counteroffer, which was summarily rejected by the Individual Plaintiffs. 12

Soon thereafter, on 23 June 2023, Cordell filed the lawsuit styled, Andrew Cordell v.

Brendan Gelson, et al., 2023-CVS-10868 (the “Initial Lawsuit”) in Mecklenburg

employment with [Dapper/Tantalum] (other than retirement), or upon a Member’s expiration of the term of employment (“Triggering Event”), the Member shall sell and the Company or the surviving Members shall purchase all of the Membership and Economic Interest of the Member. The procedures for purchase described in Section 10.2.a shall apply. The purchase price shall be determined in accordance with Section 10.2.d below, and unless otherwise agreed among the parties the purchase price shall be due and payable in cash at closing.

(Compl., Exs. 1, 2; Answer & Countercls., Exs. 1, 2.)

10 (Compl. ¶ 69; Countercls. ¶ 76; Compl., Ex. 4; Answer & Countercls., Ex. 7, ECF No. 35.7.)

11 (Compl., Ex. 4; Answer & Countercls., Ex. 7.)

12 (Answer & Countercls., Ex. 8, ECF No. 35.8; Answer & Countercls., Ex. 9, ECF No. 35.9.) County Superior Court. The case was designated a mandatory complex business case

and assigned to Chief Judge Louis Bledsoe, III.

9. In his amended complaint filed in the Initial Lawsuit on 14 July 2023,

Cordell alleged that:

(i) “In addition to their roles as members and managers, [Cordell] and [Gelson, Harris, and Tudor] each serve as employees of Dapper and Tantalum with varying responsibilities.” 13

(ii) “While their roles as employees provide Plaintiff [Cordell] and Member Defendants with different responsibilities and authorities, they cannot act for Dapper or Tantalum without majority support from the other members/managers.” 14

(iii) “Based on the language in section 10.2.b of the Operating Agreement, Plaintiff [Cordell] argued that the vote to terminate would not affect Plaintiff’s status as a Member of the Companies, but only serve to terminate his employment with the Companies.” 15

(iv) “Following the termination of Plaintiff [Cordell’s] employment with the Companies and Member Defendants taking actions to prevent him from accessing the Companies’ properties, Defendants continued to use Plaintiff’s general contractor’s license for the necessary permits for ongoing construction and renovation projects.” 16

13 Plaintiffs attached the First Amended Complaint Cordell filed in the Initial Lawsuit as an

exhibit to their Complaint. (Compl., Ex. 6 [hereinafter, “Initial Lawsuit Am. Compl.”] ¶ 19, ECF No. 2 (emphasis added).) Defendant similarly attached the First Amended Complaint filed in the Initial Lawsuit as an exhibit to his Answer and Counterclaims. (Answer & Countercls., Ex. 20 [hereinafter, “Initial Lawsuit Am. Compl.”], ECF No. 35.20.) The Court may take judicial notice of the Initial Lawsuit among the parties. See Stocum v. Oakley, 185 N.C. App. 56, 61 (2007) (“Trial courts may properly take judicial notice of its [sic] own records in any prior or contemporary case when the matter noticed has relevance.”) (citation and quotation marks omitted).

14 (Initial Lawsuit Am. Compl. ¶ 20 (emphasis added).)

15 (Initial Lawsuit Am. Compl. ¶ 35 (emphasis added).)

16 (Initial Lawsuit Am. Compl. ¶ 50 (emphasis added).) (v) “Plaintiff has argued and continues to maintain that based on the reference to employment, the termination vote only has the effect of terminating Plaintiff’s status as an employee.” 17

(vi) “For the reasons stated above, Plaintiff requests an Order from this Court declaring that the vote to terminate had the limited effect of terminating Plaintiff’s status as an employee of the Company.” 18

(vii) “Pursuant to Section 10.2.b & d of the Operating Agreements, upon termination of a member’s employment, the member shall sell their Membership Interests to the Companies for the fair market value.” 19

In his response brief to the motion to dismiss filed by defendants in the Initial

Lawsuit, Cordell further clarified that he “does not dispute that a ‘Triggering Event,’

as defined in Section 10.2.b of the Operating Agreements, has occurred. . . . [T]he

dispute centers around the effect of a ‘Triggering Event’ — not whether a ‘Triggering

Event’ took place.” 20

10. During the pendency of the Initial Lawsuit, Cordell, Gelson, Harris, and

Tudor continued negotiating the buyout of Cordell’s membership interests in the

Companies and, on 1 November 2023, the parties entered into an Interest and

Property Transfer Agreement related to the Winston Property as a partial

redemption of Cordell’s membership interests. 21 Then, on 13 December 2023, this

Court entered a Consent Scheduling Order (the “Consent Order”) executed by the

17 (Initial Lawsuit Am. Compl. ¶ 54 (emphasis added).)

18 (Initial Lawsuit Am. Compl. ¶ 56 (emphasis added).)

19 (Initial Lawsuit Am. Compl. ¶ 84.)

20 (Initial Lawsuit Mem. Opp. Defs.’ Mot. Dismiss 3–4, ECF No. 33.)

21 (Compl., Ex. 9; Compl. ¶¶ 114–15.) parties. In the Consent Order, the parties “agree[d] and acknowledge[d] that the

Companies are required to redeem Cordell’s 25% interest in the Companies . . . [and

that] [t]he following terms shall apply to the process utilized to consummate such

purchase and sale, pursuant to Article 10 of the [Operating Agreements].” 22 The

parties additionally agreed to “various deadlines related [to] the process of the

redemption of Cordell’s interest, the timing of the valuation of the fair market value

of the assets to determine the value to be paid to fully redeem Cordell from both

Companies, and significant disclosure of confidential information of the Companies

to Cordell to support that redemption.” 23 Cordell thereafter moved the Court to

enforce the Consent Order in a motion filed on 6 February 2024. 24 The Court granted

Cordell’s motion to enforce the Consent Order in part on 23 February 2024. 25

11. On 10 April 2024, after the parties engaged two appraisers pursuant to the

process provided for in the Consent Order and Gelson, Tudor, and Harris made

several additional, but unfruitful, attempts to buy out Cordell’s interest, Cordell

22 (Initial Lawsuit Consent Scheduling Order, ECF No. 41.) In the Order and Opinion issued by this Court on Defendant’s Motion to Dismiss Pursuant to Rule 12(b)(6), the Court held that “the Consent Order is a valid and enforceable contract between the parties under North Carolina law[.]” (Order & Op. on Def.’s Mot. Dismiss Pursuant R. 12(b)(6) ¶ 52, ECF No. 31; see also Dapper Dev., L.L.C. v. Cordell, 2024 NCBC LEXIS 126, at **25 (N.C. Super. Ct. Sept. 25, 2024).)

23 (Initial Lawsuit Consent Scheduling Order; see also Compl. ¶ 119.)

24 (Initial Lawsuit Mot. Enforce Consent Scheduling Order & Request Expedited Disc., ECF.

No. 49.)

25 (Initial Lawsuit Order Pl.’s Mot. Enforce Consent Scheduling Order & Request Expedited

Disc., ECF No. 58.) voluntarily dismissed the Initial Lawsuit without prejudice and without prior notice

to the current Plaintiffs or the Court. 26

12. Shortly after Cordell’s voluntary dismissal of the Initial Lawsuit, on 23 April

2024, Gelson, Tudor, and Harris, individually and on behalf of Dapper and Tantalum,

filed the complaint initiating this action (the “Complaint”). In the Complaint,

Plaintiffs assert claims against Cordell for:

(i) breach of contract for his alleged failure to abide by the terms of the

Operating Agreements; 27

(ii) declaratory judgment determining “the rights, duties and liabilities as

between Plaintiffs and Cordell under the Operating Agreement[s]”; 28

(iii) breach of the implied duty of good faith and fair dealing; 29

(iv) breach of contract for his failure to abide by the Consent Order in the Initial

Lawsuit; 30 and

(v) abuse of process. 31

13. On 18 June 2024, Cordell filed a Motion to Dismiss pursuant to Rule

12(b)(6). 32 After full briefing and a hearing on the motion at which all parties were

26 (Initial Lawsuit Notice Vol. Dism’l, ECF No. 59; see also Compl. ¶ 137.)

27 (Compl. ¶¶ 150–60.)

28 (Compl. ¶¶ 161–69.)

29 (Compl. ¶¶ 170–75.)

30 (Compl. ¶¶ 176–83.)

31 (Compl. ¶¶ 184–94.)

32 (Def.’s Mot. Dismiss, ECF No. 12.) represented by counsel, this Court granted Cordell’s motion in part, dismissing with

prejudice Plaintiffs’ claim for breach of the implied covenant of good faith and fair

dealing with respect to subparagraphs (c), (d), (i), (j), (k), and (l) of paragraph 174 of

the Complaint. 33 Cordell’s Motion to Dismiss was otherwise denied.

14. After the Court’s partial denial of Defendant’s Motion to Dismiss, on 7

October 2024, Cordell filed an Answer and Counterclaims, asserting counterclaims

against Plaintiffs for:

(i) declaratory judgment that “Cordell was not an employee of the Companies

as of June 14, 2023”; 34

(ii) negligent or fraudulent misrepresentation of Cordell’s employment

status; 35

(iii) violation of the North Carolina Wage and Hour Act; 36

(iv) declaratory judgment that “a Triggering Event for purposes of Section

10.2(b) did not and could not occur, because Cordell was never an employee

of the Companies”; 37

33 (Order & Op. on Def.’s Mot. Dismiss Pursuant R. 12(b)(6); see also Dapper Dev., L.L.C. v.

Cordell, 2024 NCBC LEXIS 126 (N.C. Super. Ct. Sept. 25, 2024).)

34 (Countercls. ¶ 207.)

35 (Countercls. ¶¶ 241–47.)

36 (Countercls. ¶¶ 248–55.)

37 (Countercls. ¶ 262.) (v) declaratory judgment that “the appropriate valuation date for both the

assets and liabilities of the Companies [for purposes of Section 10.2(d) of

the Operating Agreements] is December 12, 2023”; 38

(vi) declaratory judgment that “Cordell remains a Member of the Companies”; 39

(vii) declaratory judgment that “Cordell’s status as a Manager of the Companies

was not terminated by the June 14, 2023 vote”; 40

(viii) declaratory judgment that “any payment to Cordell in exchange for his

Membership Interest as part of a voluntary sale of his Membership Interest

is not subject to a setoff”; 41

(ix) breach of the Operating Agreements; 42

(x) breach of the implied duty of good faith and fair dealing; 43

(xi) breach of fiduciary duty; 44

(xii) failure to permit Cordell to inspect the Companies’ books and records; 45

(xiii) equitable accounting; 46

38 (Countercls. ¶ 271.)

39 (Countercls. ¶ 285.)

40 (Countercls. ¶ 292.)

41 (Countercls. ¶ 299.)

42 (Countercls. ¶¶ 301–13.)

43 (Countercls. ¶¶ 314–18.)

44 (Countercls. ¶¶ 319–24.)

45 (Countercls. ¶¶ 325–37.)

46 (Countercls. ¶¶ 338–44.) (xiv) reimbursement/contribution; 47 and

(xv) judicial dissolution pursuant to North Carolina General Statute (N.C.G.S.)

§ 57D-6-02. 48

Plaintiffs filed a response to Defendant’s counterclaims on 31 October 2024. 49

15. Plaintiffs filed the current Motion before this Court on 20 November 2024,

and, after full briefing, the Court held a hearing on the Motion on 26 February 2025

(the “Hearing”), at which all parties were represented by counsel. The Motion is now

ripe for resolution.

II.

LEGAL STANDARD

16. Rule 12(c) provides that “[a]fter the pleadings are closed but within such

time as not to delay the trial, any party may move for judgment on the pleadings.”

N.C. R. Civ. P. 12(c). Rule 12(c) is intended “to dispose of baseless claims or defenses

when the formal pleadings reveal their lack of merit and is appropriately employed

where all the material allegations of fact are admitted in the pleadings and only

questions of law remain.” DiCesare v. Charlotte-Mecklenburg Hosp. Auth., 376 N.C.

63, 70 (2020) (quoting Ragsdale v. Kennedy, 286 N.C. 130, 137 (1974)).

17. However, “[g]ranting judgment on the pleadings ‘is not favored by law[.]’”

Bauman v. Pasquotank Cnty. ABC Bd., 270 N.C. App. 640, 642 (2020) (quoting

47 (Countercls. ¶¶ 345–54.)

48 (Countercls. ¶¶ 355–63.)

49 (Answer Def.’s Countercls., ECF No. 36.) Carpenter v. Carpenter, 189 N.C. App. 755, 762 (2008)). Thus, in deciding whether to

grant a motion for judgment on the pleadings, “the trial court is required to view the

facts and permissible inferences in the light most favorable to the nonmoving party,

with all well pleaded factual allegations in the nonmoving party’s pleadings being

taken as true and all contravening assertions in the movant’s pleadings being taken

as false.” Anderson Creek Partners, L.P. v. Cnty. of Harnett, 382 N.C. 1, 12 (2022)

(internal quotations omitted).

18. Under Rule 12(c), the trial court may consider “[a]n exhibit, attached to

and made a part of the [complaint],” Wilson v. Crab Orchard Dev. Co., 276 N.C. 198,

206 (1970), and documents that are “the subject of the action and specifically

referenced in the complaint,” Erie Ins. Exch. v. Builders Mut. Ins. Co., 227 N.C. App.

238, 242 (2013). Where a document is attached to a pleading, “[t]he terms of such

exhibit control other allegations of the pleading attempting to paraphrase or construe

the exhibit, insofar as these are inconsistent with its terms.” Wilson, 276 N.C. at 206.

19. “The party moving for judgment on the pleadings must show that no

material issue of fact exists and that he is entitled to judgment as a matter of law.”

Daniels v. Montgomery Mut. Ins. Co., 320 N.C. 669, 682 (1987). Moreover, a “motion

under Rule 12(c) must be carefully scrutinized lest the nonmoving party be precluded

from a full and fair hearing on the merits.” Newman v. Stepp, 376 N.C. 300, 305

(2020) (citation and internal quotation marks omitted). III.

ANALYSIS

20. Plaintiffs request that the Court grant their Motion for Judgment on the

Pleadings as follows:

(i) Entry of judgment on the pleadings in Plaintiffs’ favor on Plaintiffs’ first

and fourth claims for breach of contract and second claim for declaratory

judgment;

(ii) Dismissal of Cordell’s second, third, fifth, sixth, seventh, eighth, and

eleventh counterclaims with prejudice;

(iii) Dismissal of Cordell’s first, fourth, twelfth, thirteenth, and fifteenth

counterclaims as moot; and

(iv) Dismissal of Cordell’s ninth, tenth, and fourteenth counterclaims without

prejudice. 50

The Court will address each of the relevant claims and counterclaims, beginning with

Cordell’s counterclaim for declaratory judgment on Cordell’s employment status.

A. Cordell’s First Counterclaim for Declaratory Judgment – Employment Status

21. In his first counterclaim, Cordell takes a diametrically opposed position to

that which he took in the Initial Lawsuit, alleging “[t]here exists an actual, definite,

and concrete controversy between Cordell and Individual Plaintiffs related [to]

whether Cordell was an employee of the Companies as of June 14, 2023.” 51 Although

50 (Mot. 3–4.)

51 (Countercls. ¶ 204.) Cordell asserted unqualifiedly in the Initial Lawsuit that he was an employee of the

Companies, 52 he now requests “an Order from this Court declaring that [he] was not

an employee of the Companies as of June 14, 2023.” 53

22. Under the Declaratory Judgment Act, “[a]ny person interested under

a . . . written contract . . . , or whose rights, status or other legal relations are affected

by a . . . contract . . . , may have determined any question of construction or validity

arising under the . . . contract . . . , and obtain a declaration of rights, status, or other

legal relations thereunder.” North Carolina General Statutes (“N.C.G.S.”) § 1-254.

When asserting a claim for declaratory judgment, the claimant “must set forth in his

pleading all facts necessary to disclose the existence of an actual controversy between

the parties . . . with regard to their respective rights and duties.” Lide v. Mears, 231

N.C. 111, 118 (1949). A motion to dismiss a declaratory judgment claim is

appropriate only “when the complaint does not allege an actual, genuine existing

controversy.” Legalzoom.com, Inc. v. N.C. State Bar, 2012 NCBC LEXIS 49, at **9

(N.C. Super. Ct. Aug. 27, 2012) (quoting N.C. Consumers Power, Inc. v. Duke Power

Co., 285 N.C. 434, 439 (1974)).

23. Plaintiffs contend that Cordell should be judicially estopped from asserting

that he was not an employee of the Companies as of 14 June 2023. 54 In his amended

52 (See supra ¶ 9.)

53 (Countercls. ¶ 207 (emphasis added).)

54 (See generally Mem. L. Supp. Pls.’ Mot. J. Pleadings [hereinafter, “Pls.’ Br. Supp.”] 9–13,

ECF. No. 43.) complaint filed in the Initial Lawsuit, Cordell repeatedly alleges that he was an

employee of the Companies and that the 14 June 2023 termination vote had the effect

of terminating his status as an employee of the Companies. 55 Cordell maintained

this position throughout the Initial Lawsuit, and it was not until his motion to dismiss

and supporting brief filed on 18 June 2024 in the current lawsuit that Cordell

changed courses and alleged he was never an employee of the Companies. 56 Cordell,

however, contends “application of judicial estoppel is inappropriate and would lead to

an inequitable and unjust outcome.” 57

24. Our Supreme Court first recognized the doctrine of judicial estoppel in

Whitacre P’ship v. Biosignia, Inc., 358 N.C. 1 (2004), and noted that “the

circumstances under which judicial estoppel may appropriately be invoked are

probably not reducible to any general formulation of principle.” Id. at 28. The

purpose of the doctrine, the Court noted, is “to protect the integrity of judicial

proceedings” from “individuals who would play ‘fast and loose’ with the judicial

system.” Id. at 26. The doctrine “prohibit[s] parties from deliberately changing

positions according to the exigencies of the moment[.]” Id. at 28. “[J]udicial estoppel

forbids a party from asserting a legal position inconsistent with one taken earlier in

the same or related litigation.” Price v. Price, 169 N.C. App. 187, 191 (2005). North

55 (See, e.g., Initial Lawsuit Am. Compl. ¶¶ 19, 20, 35, 50, 54, 56, 70, 97, 103; see also supra

¶ 9.)

56 (Def.’s Mot. Dismiss 2; Mem. L. Supp. Mot. Dismiss Pls.’ Compl. 2, 10, 14, ECF No. 13; see

also Pls.’ Br. Supp. 7.)

57 (Def. Andrew Cordell’s Br. Opp. Pls.’ Mot. J. Pleadings [hereinafter, “Def.’s Resp.”] 9, ECF

No. 57.) Carolina courts have further held that it is appropriate for a trial court to consider

whether the doctrine of judicial estoppel is applicable upon a Rule 12(c) motion and

to consider pleadings in a related prior action for the purposes of judicial estoppel so

long as they are attached to or the subject of the complaint. Estate of Means v. Scott

Elec. Co., 207 N.C. App. 713, 716–17 (2010). A party’s voluntary dismissal of a prior

action pursuant to Rule 41(a) does not bar the application of judicial estoppel in a

subsequent lawsuit. Se. Shortlines, Inc. v. Rutherford R.R. Dev. Corp., 2012 N.C.

App. LEXIS 743, at *5, 12–13 (2012).

25. In Whitacre P’ship, our Supreme Court stated that “judicial estoppel is to be

applied in the sound discretion of [the] trial courts” and listed three factors that may

be considered by the trial court in determining whether judicial estoppel should be

applied:

First, a party’s subsequent position must be clearly inconsistent with its earlier position. Second, courts regularly inquire whether the party has succeeded in persuading a court to accept that party’s earlier position, so that judicial acceptance of an inconsistent position in a later proceeding might pose a threat to judicial integrity by leading to inconsistent court determinations or the perception that either the first or the second court was misled. Third, courts consider whether the party seeking to assert an inconsistent position would derive an unfair advantage or impose an unfair detriment on the opposing party if not estopped.

Whitacre P’ship, 358 N.C. at 29, 33 (cleaned up). However, the first factor is the only

factor that must be present for judicial estoppel to apply. Wiley v. United Parcel Serv.,

Inc., 164 N.C. App. 183, 188 (2004).

26. Preliminarily, Cordell contends that judicial estoppel should not apply to his

assertions regarding employment because the meaning of “employment” is a legal position. 58 Judicial estoppel, Cordell states, is “limited to the context of inconsistent

factual assertions and . . . should not be applied to prevent the assertion of

inconsistent legal theories.” Whitacre P’ship, 358 N.C. at 32.

27. The Court disagrees. While the question of whether someone is an

“employee” is often a mixed question of law and fact, here, for the duration of the

Initial Lawsuit, Cordell made repeated and unqualified factual allegations in his

pleadings that he was an employee of the Companies. See, e.g., Askew v. Leonard

Tire Co., 264 N.C. 168 (1965). In the Background section of his amended complaint

filed in the Initial Lawsuit, Cordell asserted that he was an employee of the

Companies four times. 59 Furthermore, not once during the pendency of the Initial

Lawsuit did Cordell ever contest the plain and unambiguous language of the

Operating Agreements that he was an employee of the Companies. See, e.g., State ex

rel. Emp. Sec. Com. v. Faulk, 88 N.C. App. 369, 374 (1988) (typical questions of law

regarding employee status involve matters such as a company’s requisite degree of

control over a person to legally classify them as an “employee”). Thus, this Court

holds that the doctrine of judicial estoppel can be applied to Cordell’s repeated factual

allegations in a prior civil action before this Court that he was an employee of the

Companies.

28. As only the first factor must be present for judicial estoppel to apply, the

dispositive issue is whether Cordell’s position on his employment status, based upon

58 (Def.’s Resp. 10.)

59 (Initial Lawsuit Am. Compl. ¶¶ 19, 20, 35, 50.) the factual allegations in the instant case, is clearly inconsistent with his position as

asserted in his earlier action. Wiley, 164 N.C. App. at 188. Here, in the amended

complaint filed in the Initial Lawsuit, Cordell unqualifiedly alleged multiple times

that he was an employee of the Companies. 60 Then, after months of litigation and

without prior notice to the parties or the Court, Cordell unilaterally filed a Rule 41(a)

voluntary dismissal of the Initial Lawsuit. Now, in a new lawsuit also pending in the

Business Court, Cordell unqualifiedly alleges the diametrically opposite position that

he never was an employee of the Companies. 61 Cordell’s current position is “clearly

inconsistent” with the position Cordell asserted in the Initial Lawsuit.

29. The second and third Whitacre factors are also present in this instance. In

the Consent Order executed by the parties and approved by this Court in the Initial

Lawsuit, the Court ordered that the parties redeem Cordell’s 25% interest in the

Companies pursuant to the process set forth in Section 10.2(d) of the Operating

Agreements. 62 In entering the Consent Order, the Court necessarily accepted

Cordell’s initial assertions that he was an employee of the Companies and that his

employment with the Companies had been terminated. For the redemption process

set forth in Section 10.2(d) of the Operating Agreements to be triggered, Cordell must

have been an employee and his employment with the Companies must have been

60 (See supra ¶ 9 and related footnotes.)

61 (See generally, Countercls.)

62 (Initial Lawsuit Consent Scheduling Order 2–6.) terminated. 63 This Court again accepted Cordell’s earlier position that he was an

employee and that his employment had been terminated, constituting a “Triggering

Event” under the Operating Agreements, in its 2 February 2024 and 23 February

2024 Orders wherein the Court ordered that the appraisal process set forth in the

Consent Order proceed. 64 Acceptance of Cordell’s current position that he was not

an employee of the Companies and, therefore, that his employment could not have

been terminated and a Triggering Event initiating the 10.2(d) appraisal process could

not have occurred, would doubtlessly result in inconsistent court determinations and

create the very real perception that this Court was misled.

30. Lastly, Cordell would impose an unfair detriment on Plaintiffs if not

judicially estopped. The Individual Plaintiffs spent nearly two years defending the

Initial Lawsuit, engaging in the 10.2(d) appraisal process, participating in buyout

negotiations, and prosecuting the current action based on Cordell’s repeated initial

assertions that he was an employee of the Companies. The Individual Plaintiffs,

pursuant to the terms of the Consent Order, additionally provided sensitive company

information to Cordell on the belief that it would facilitate the appraisal and

redemption process.

63 Section 10.2 of the Operating Agreements provides the redemption process set forth in

Section 10.2(d) can additionally be triggered by the death of a member or the expiration of a member’s term of employment, neither of which are applicable here. (Compl., Exs. 1, 2; Answer & Countercls., Exs. 1, 2.)

64 (Initial Lawsuit Order Pl.’s Mot. Enforce Consent Scheduling Order & Request Expedited

Disc. 7; Initial Lawsuit Order on Appraisal Process, ECF No. 48.) 31. For the reasons stated above, the Court concludes, in its discretion, that the

doctrine of judicial estoppel bars Cordell from alleging he is not, and never was, an

employee of the Companies. Thus, the Court GRANTS Plaintiffs’ Motion for

judgment on the pleadings on Defendant’s first counterclaim for declaratory

judgment and dismisses this counterclaim with prejudice.

B. Cordell’s Second Counterclaim for Negligent or Fraudulent Misrepresentation

32. Cordell attempts to avoid application of judicial estoppel against his

assertions in the Initial Litigation that he was an employee of the Companies by

alleging in this action that the Individual Plaintiffs fraudulently or negligently

“misrepresented Cordell’s employment status on, at least, the following occasions” to

“mislead him into believing that the buyout provisions of Section 10.2(b) of the

Operating Agreements were triggered”: 65

(i) 8 June 2023 representation by the Individual Plaintiffs’ first attorney that,

“unless Cordell agreed to resign from the Companies as an employee,

Member, and Manager, [the Individual Plaintiffs] would vote to ‘terminate’

Cordell as an employee, Member, and Manager”; 66

(ii) 14 June 2023 Termination Notice, “whereby Individual Plaintiffs

represented to Cordell that his employment with the Companies had been

terminated and he was no longer an employee of the Companies”; 67

65 (Countercls. ¶¶ 243, 245.)

66 (Countercls. ¶ 70.)

67 (Countercls. ¶ 243.) (iii) 11 July 2023 correspondence from Individual Plaintiffs, “whereby it was

reiterated that they had voted to terminate Cordell’s employment with the

Companies”; 68 and

(iv) 4 August 2023 correspondence “whereby Plaintiffs’ counsel stated that it

was undisputed that Cordell’s employment was terminated.” 69

Cordell further claims Plaintiffs knew that Cordell was not an employee of the

Companies when making these misrepresentations and that he relied on Plaintiffs’

representations by taking steps to engage in the Section 10.2 buyout process. 70

33. For a fraud claim to withstand a motion for judgment on the pleadings, a

counterclaim plaintiff must allege that the counterclaim defendants (1) made a false

misrepresentation, (2) reasonably calculated to deceive, (3) with the intent to deceive,

(4) which did in fact deceive, and (5) resulted in damage to the plaintiff. Value Health

Sols., Inc. v. Pharm. Rsch. Assocs., 385 N.C. 250, 264 (2023). Additionally, Rule 9(b)

of our Rules of Civil Procedure requires that the circumstances, of which the plaintiff

contends constitute fraud, be stated with particularity. As to claims for fraudulent

misrepresentation, the plaintiff must allege the “time, place and content of the

fraudulent representation, identity of the person making the representation and

what was obtained as a result of the fraudulent acts or representations.” Terry v.

Terry, 302 N.C. 77, 85 (1981). “Furthermore, any reliance on alleged false

68 (Countercls. ¶ 243.)

69 (Countercls. ¶ 243.)

70 (Countercls. ¶¶ 72, 75, 78, 244, 246.) representations must be reasonable. Reliance is not reasonable where the plaintiff

could have discovered the truth of the matter through reasonable diligence but failed

to investigate.” Cobb v. Pa. Life Ins. Co., 215 N.C. App. 268, 277 (2011) (citing State

Props. v. Ray, 155 N.C. App. 65, 72 (2002)). See also Kumar v. Patel, 2024 NCBC

LEXIS 36, at **29 (N.C. Super. Ct. Feb. 28, 2024) (“Reliance is not reasonable if

Plaintiffs fail to make any independent investigation as to the truth of the assertion.”)

(citing Calloway v. Wyatt, 246 N.C. 129, 130 (1957)).

34. Negligent misrepresentation “occurs when a party justifiably relies to his

detriment on information prepared without reasonable care by one who owed the

relying party a duty of care.” BDM Invs. v. Lenhil, Inc., 264 N.C. App. 282, 299 (2019)

(citing Raritan River Steel Co. v. Cherry, Bekaert & Holland, 322 N.C. 200, 206 (1988)

and Rountree v. Chowan Cnty., 252 N.C. App. 155, 162 (2017)). As with fraudulent

misrepresentation, for purposes of negligent misrepresentation, reliance is not

reasonable or justifiable “if a plaintiff failed to make reasonable inquiry, had the

opportunity to investigate, and could have learned the true facts through reasonable

diligence.” Id. (cleaned up). “The extent to which a party justifiably relied upon items

of information is generally a question for the jury in the absence of a showing that

‘the facts are so clear as to permit only one conclusion.’” Cummings v. Carroll, 379

N.C. 347, 366 (2021) (quoting Marcus Bros. Textiles, Inc. v. Price Waterhouse, LLP,

350 N.C. 214, 225 (1999)).

35. Even when viewing the facts and permissible inferences in the light most

favorable to Cordell and taking all well pleaded factual allegations in Cordell’s counterclaims as true, “the facts are so clear as to permit only one conclusion” that

Cordell’s reliance on Plaintiffs’ representations of his employment status was not

reasonable or justifiable. In his counterclaims, Cordell alleges he relied on the

Individual Plaintiffs’ representations of his employment status in communications

made between June and August 2023. 71 However, Cordell was a founding member

of Dapper and Tantalum, had been with the Companies since their respective

formation in February 2020 and January 2021, participated in the drafting and

updating of the Operating Agreements, and had access to the Companies’ books and

records prior to June 2023. 72 Furthermore, Cordell initiated and prosecuted a lawsuit

for approximately nine months in which he unqualifiedly alleged repeatedly that he

was an employee of the Companies, allegations on which the Court and the other

parties relied in agreeing to a Consent Order enabling the parties to pursue a buyout

of Cordell’s interest in the Companies pursuant to the Operating Agreements. 73

Based on the allegations contained in Cordell’s counterclaims, there are no facts

showing that at any point between Cordell’s “termination” from the Companies in

June 2023 and the dismissal of the Initial Lawsuit and initiation of this action in

April 2024 Cordell took steps to investigate the veracity of Individual Plaintiffs’

alleged statements relating to his status as an employee of the Companies. 74

71 (Countercls. ¶ 243.)

72 (Countercls. ¶¶ 16–18.)

73 (See, e.g., Initial Lawsuit Am. Compl. ¶¶ 19, 20, 35, 50, 54, 56.)

74 (See, e.g., Countercls. ¶¶ 185–92). Cordell attempts to bolster his claims for fraudulent and negligent misrepresentation by conclusorily stating, “[w]hile Cordell undertook efforts to 36. As Cordell fails to allege facts constituting reasonable reliance, the Court

GRANTS Plaintiffs’ Motion to the extent it pertains to Defendant’s second

counterclaim for negligent or fraudulent misrepresentation and dismisses this

counterclaim with prejudice. See, e.g. Martin Commc’ns, LLC v. Flowers, 2021 NCBC

LEXIS 30, at **16–17 (N.C. Super. Ct. Mar. 31, 2021) (dismissing Plaintiff’s claims

for fraud and negligent misrepresentation because the Amended Complaint is “devoid

of any allegations that Plaintiff even attempted to investigate the veracity of

Defendants’ statements” and finding allegations that “these representations involved

information which was exclusively within the knowledge of the Defendants, and

[Plaintiff] had no way to ascertain the falsity of these representations at the time

investigate Plaintiffs’ representations, he was limited to the information that was available to him, which did not include the Companies’ up to date records, which left him unable to learn the true facts.” (Def.’s Resp. 24–25.) However, Cordell fails to state with particularity the investigatory efforts he allegedly took, as required by Rule 9. He fails to identify with specificity the limited information available to, or records unavailable to, him or what information Plaintiffs possess that he does not have equal access to, regarding his status as an employee. The North Carolina Supreme Court has described the following factors for determining whether an employer-employee relationship exists:

[t]he person employed

(a) is engaged in an independent business, calling, or occupation; (b) is to have the independent use of his special skill, knowledge, or training in the execution of the work; (c) is doing a specified piece of work at a fixed price or for a lump sum or upon a quantitative basis; (d) is not subject to discharge because he adopts one method of doing the work rather than another; (e) is not in the regular employ of the other contracting party; (f) is free to use such assistants as he may think proper; (g) has full control over such assistants; and (h) selects his own time.

Bordini v. Donald J. Trump for President, Inc., 2019 N.C. App. LEXIS 2, 5 (2019) (citing Hayes v. Bd. of Trs. of Elon Coll., 224 N.C. 11, 16 (1944)). None of the above-listed factors require Cordell to have access to the Companies’ records. they were made” conclusory and insufficient to support Plaintiff’s claims for fraud

and negligent misrepresentation); Burton v. Hobart Fin. Grp., Inc., 2024 NCBC

LEXIS 34, at **61–62 (N.C. Super. Ct. Feb. 26, 2024) (finding Rule 9(b)’s specificity

requirements were not met and dismissing Plaintiffs’ fraudulent misrepresentation

claim because there was no allegation that Plaintiffs exercised reasonable diligence

to independently investigate the truth of the assertion).

C. Cordell’s Third Counterclaim for Violation of North Carolina’s Wage & Hour Act

37. In his third counterclaim, Cordell pleads in the alternative that, if he is

determined to be an employee of the Companies, Plaintiffs violated the North

Carolina Wage and Hour Act by “fail[ing] to pay Cordell the statutory minimum wage

or overtime pay during the course of his employment with the Companies.” 75

Plaintiffs seek dismissal of Cordell’s counterclaim, stating the bona fide executive

exemption bars any recovery under the Wage and Hour Act. 76

38. N.C.G.S. § 95-25.14(b)(4) provides that the provisions of N.C.G.S. § 95-25.3

(Minimum Wage) and N.C.G.S. § 95-25.4 (Overtime) do not apply to “[a]ny person

employed in a bona fide executive . . . capacity, as defined under the Fair Labor

Standards Act.” The Fair Labor Standards Act, in turn, defines “employee employed

in a bona fide executive capacity” as “any employee who owns at least a bona fide 20-

percent equity interest in the enterprise in which the employee is employed . . . and

75 (Countercls. ¶ 252.)

76 (Pls.’ Br. Supp. 23.) who is actively engaged in its management.” 29B CFR § 541.101. “‘[M]anagement’

includes, but is not limited to, activities such as . . . planning the work; determining

the techniques to be used . . . determining the type of materials, supplies, machinery,

equipment or tools to be used or merchandise to be bought, stocked and sold[.]” 29B

CFR § 541.102.

39. Here, it is indisputable that Cordell owns a 25% equity interest in the

Companies. 77 Furthermore, it is indisputable that Cordell was “actively engaged in

[the Companies’] management.” 29B CFR § 541.101. Section 5.1 of the Operating

Agreements provides “[t]he business and affairs of the Compan[ies] shall be managed

by its . . . Managers . . . [and] the Managers shall have full and complete authority,

power and discretion to manage and control the business, affairs and properties of

the Compan[ies], to make all decisions regarding those matters and to perform any

and all other acts or activities customary or incident to the management of the

Compan[ies’] business.” 78 Section 5.2 of the Operating Agreements grants specific

management authority to Cordell, stating:

Andrew Cordell, as one of the four Managers, has the authority to act on behalf of the Compan[ies] in the execution of all documents necessary to sell, purchase or mortgage the property for or owned by the Compan[ies], and such signature from Andrew Cordell shall bind the Compan[ies] without the need for signature from any of the other Members or Managers. 79

77 Schedule A to the Operating Agreements provides that Cordell, Tudor, Harris, and Gelson

each own a 25% equity interest in the Companies. (Answer & Countercls., Exs. 1, 2.)

78 (Answer & Countercls., Exs. 1, 2.)

79 (Answer & Countercls., Exs. 1, 2.) The pleadings before the Court demonstrate Cordell uncontrovertibly exercised his

granted management authority, as evidenced by Cordell’s signature, on behalf of

Dapper, on the Real Estate Purchase Contract for a property located on Kensington

Drive attached as Exhibit 3 to Cordell’s Answer and Counterclaims. 80 Therefore, the

Court GRANTS Plaintiffs’ Motion as it relates to Cordell’s third counterclaim for

violation of the Wage and Hour Act and dismisses this counterclaim with prejudice.

D. Cordell’s Fourth Counterclaim and Plaintiffs’ Second Claim for Declaratory Judgment – Occurrence of Triggering Event

40. Plaintiffs next seek dismissal of Cordell’s fourth counterclaim in which he

“requests an Order from this Court declaring that a Triggering Event for purposes of

Section 10.2(b) did not and could not occur, because Cordell was never an employee

of the Companies.” 81 Plaintiffs relatedly seek entry of judgment on the pleadings in

Plaintiffs’ favor that “[t]he Triggering Event under the Operating Agreements

occurred on June 14, 2023.” 82

41. Section 10.2(b) of the Operating Agreements provides:

A Member shall be terminated from the Company upon an affirmative vote in favor of such termination from the Members constituting a majority of the membership interest of the Company. Upon a Member’s termination of employment with [Dapper/Tantalum] (other than retirement), or upon a Member’s expiration of the term of employment (“Triggering Event”), the Member shall sell and the Company or the surviving Members shall purchase all of the Membership and Economic Interest of the Member. The procedures for purchase described in Section 10.2.a shall apply. The purchase price shall be determined in

80 (Answer & Countercls., Ex. 3, ECF No. 35.3; see also Countercls. ¶¶ 49–52.)

81 (Countercls. ¶ 262.)

82 (Mot. 3.) accordance with Section 10.2.d below, and unless otherwise agreed among the parties the purchase price shall be due and payable in cash at closing. 83

42. Article 4, Schedule A, and Section 5.2 of the Operating Agreements provide

that Cordell, Tudor, Harris, and Gelson are the sole Members and Managers of the

Companies and that Cordell, Tudor, Harris, and Gelson each have equal voting

rights. 84 On 14 June 2023, Tudor, Harris, and Gelson, collectively constituting a

majority of the Companies’ membership interest, voted to terminate Cordell from the

Company. 85 As stated previously, this Court holds that the doctrine of judicial

estoppel bars Cordell from alleging he is not, and never was, an employee of the

Companies. 86 Thus, the plain language of the Operating Agreements provides that

the Individual Plaintiffs’ 14 June 2023 vote had the impact of terminating both

Cordell’s status as a Member of the Companies and his employment with the

Companies, constituting a Triggering Event.

43. Additionally, as Plaintiffs state in their supporting brief, “Cordell’s current

position is diametrically opposed to his admissions in the 2023 Litigation that a

Triggering Event had occurred under the Operating Agreements.” 87 In the Initial

Lawsuit, Cordell asserted to this Court that a Triggering Event took place on 14 June

83 (Compl., Exs. 1, 2; Answer & Countercls., Exs. 1, 2.)

84 (Compl., Exs. 1, 2; Answer & Countercls., Exs. 1, 2.)

85 (Compl., Ex. 4; Answer & Countercls., Ex. 7, ECF No. 35.7.)

86 (See supra ¶¶ 21–31 and related notes.)

87 (Pls.’ Br. Supp. 12.) 2023, disputing only the effect of the Triggering Event. 88 This Court accepted

Cordell’s assertions that a Triggering Event took place, necessarily relying on their

truth in issuing the Consent Order and the 2 February 2024 and 23 February 2024

Orders enforcing the Consent Order. The Individual Plaintiffs, like the Court, relied

on Cordell’s prior assertions regarding the occurrence of a Triggering Event. They

spent nearly two years and in excess of $100,000 defending the Initial Lawsuit,

participating in buyout negotiations, engaging in an appraisal process predicated on

the occurrence of a Triggering Event, and prosecuting the current lawsuit on the basis

of Cordell’s assertions in the Initial Lawsuit that he did not dispute whether a

Triggering Event took place. 89 To protect the integrity of the judicial process and to

prevent the imposition of an unfair detriment on Plaintiffs, the Court, in its

discretion, similarly holds the doctrine of judicial estoppel bars Cordell from alleging

a Triggering Event did not, and could not, occur.

44. For the reasons described above, the Court finds Plaintiffs are entitled to

judgment as a matter of law on Cordell’s fourth counterclaim. The Court therefore

GRANTS Plaintiffs’ Motion to dismiss Cordell’s fourth counterclaim for declaratory

judgment and dismisses this counterclaim with prejudice. Plaintiffs’ Motion for

Judgment on the Pleadings with respect to Plaintiffs’ second claim requesting

a declaratory judgment on the occurrence of a Triggering Event is similarly

GRANTED.

88 (See, e.g., Initial Lawsuit Mem. Opp. Defs.’ Mot. Dismiss 3–4.)

89 (Pls.’ Br. Supp. 12–13.) E. Cordell’s Sixth Counterclaim and Plaintiffs’ Second Claim for Declaratory Judgment – Status as Member

45. In his sixth counterclaim, Cordell “requests an Order from this Court

declaring that Cordell remains a Member of the Companies at this time.” 90 Cordell

contends that (1) “no Triggering Event for purposes of Section 10.2(b) of the Operating

Agreements has occurred and his status as a Member of the Companies remains

unaffected” 91 or, in the alternative, (2) “even if a ‘Triggering Event’ did occur, Cordell

. . . remains a Member of the Companies until such time as the ‘closing’ contemplated

by Section 10.2(d) occurs.” 92

46. Plaintiffs seek dismissal of Cordell’s sixth counterclaim, contending “there

is no real dispute that Cordell was removed as a member[.]” 93 Relatedly, Plaintiffs

request entry of judgment on the pleadings in Plaintiffs’ favor that, “[a]s of June 14,

2023, Cordell ceased to be a member . . . of each of the Companies[.]” 94

47. The Court agrees with Plaintiffs. Section 10.2(b) of the Operating

Agreements unambiguously states that “[a] Member shall be terminated from the

Company upon an affirmative vote in favor of such termination from the Members

constituting a majority of the membership interest of the Company.” 95 On 14 June

90 (Countercls. ¶ 285.)

91 (Countercls. ¶ 280.)

92 (Countercls. ¶ 281.)

93 (Pls.’ Br. Supp. 20.)

94 (Mot. 3.)

95 (Compl., Exs. 1, 2; Answer & Countercls., Exs. 1, 2.) 2023, Tudor, Harris, and Gelson, together constituting a majority of the membership

interest of the Companies, affirmatively voted to terminate Cordell’s membership

interest. 96 Although Section 57D-3-02 of the North Carolina Limited Liability

Company Act, as Cordell states, provides that a “person ceases to be a member upon

the occurrence of . . . [(3)] the transfer . . . of the person’s entire economic interest,”

an operating agreement can “[s]upplant, vary, disclaim, or nullify the provisions of

this Chapter or their application.” N.C.G.S. § 57D-2-30. Based on the plain language

of the Operating Agreements and the Individual Plaintiffs’ 14 June 2023 vote, the

Court finds that Plaintiffs are entitled to judgment as a matter of law on Cordell’s

sixth counterclaim. Thus, the Court GRANTS Plaintiffs’ Motion to dismiss Cordell’s

sixth counterclaim for declaratory judgment and dismisses this counterclaim with

prejudice. Plaintiffs’ Motion for Judgment on the Pleadings with respect to Plaintiffs’

second claim requesting a declaratory judgment that Cordell ceased to be a member

of each of the Companies on 14 June 2023 is similarly GRANTED.

F. Cordell’s Twelfth Counterclaim – Inspection of Books and Records

48. In his twelfth counterclaim, Cordell contends, “[a]s a Member of the

Companies, Cordell is entitled to inspect the Companies’ books and records under

N.C.G.S. § 57D-3-04” and “requests that this Court order the Companies to permit

inspection of the books and records . . . ; to pay the copying costs of such inspection;

and to reimburse Cordell for his costs associated with bringing this action[.]” 97

96 (Compl., Ex. 4; Answer & Countercls., Ex. 7.)

97 (Countercls. ¶¶ 327, 336.) Plaintiffs seek dismissal of Cordell’s counterclaim, contending Cordell’s first demand

for inspection was made after his status as a Member of the Companies was

terminated on 14 June 2023. 98

49. As both Plaintiffs and Cordell recognize, the information rights provided by

N.C.G.S. § 57D-3-04 are limited to members of a limited liability company. For the

reasons stated above, this Court holds the Individual Plaintiffs’ 14 June 2023 vote

terminated Cordell’s status as a Member of the Companies. 99 As Cordell did not make

his first demand for inspection until 16 June 2023, two days after his status as a

Member was terminated, the Court finds that no material issue of fact exists, and

Plaintiffs are entitled to judgment as a matter of law on Cordell’s twelfth

counterclaim. Plaintiffs’ Motion to dismiss Cordell’s twelfth counterclaim is

GRANTED and this counterclaim is dismissed with prejudice.

G. Cordell’s Fifteenth Counterclaim – Judicial Dissolution Pursuant to N.C.G.S. § 57D-6-02

50. In his fifteenth counterclaim, Cordell contends “[t]he liquidation of the

Companies is necessary to protect [his] rights and interests[.]” 100 Specifically, Cordell

alleges, “Individual Plaintiffs have taken actions to operate the Companies to the

exclusion of Cordell, despite his [reasonable and] clearly expressed expectations” and

“Plaintiffs have operated the Companies in a manner that is inconsistent with

applicable law,” as demonstrated by the nuisance violation letters and permit

98 (Pls.’ Br. Supp. 21.)

99 (See supra ¶¶ 45–47 and related notes.)

100 (Countercls. ¶ 356.) violation letter received from the City of Charlotte and the demand for unpaid

homeowners association fees received from the Wildwood Meadows Homeowners

Association. 101 Plaintiffs seek dismissal of Cordell’s claim for judicial dissolution,

stating the claim is moot because only members of a limited liability company have

standing to request judicial dissolution. 102

51. As Plaintiffs allude, under N.C.G.S. § 57D-6-02:

The superior court may dissolve an LLC in a proceeding brought by either of the following: (1) The Attorney General . . . (2) A member, if it is established that (i) it is not practicable to conduct the LLC’s business in conformance with the operating agreement and this Chapter or (ii) liquidation of the LLC is necessary to protect the rights and interests of the member.

Since this Court has determined that Cordell is no longer a Member of the

Companies, 103 Cordell lacks standing to request judicial dissolution and this Court

lacks jurisdiction to grant judicial dissolution. Therefore, the Court GRANTS

Plaintiffs’ Motion to dismiss Cordell’s fifteenth counterclaim and dismisses this

counterclaim with prejudice.

H. Cordell’s Seventh Counterclaim and Plaintiffs’ Second Claim for Declaratory Judgment – Status as Manager

52. Plaintiffs next seek dismissal of Cordell’s seventh counterclaim for “an

Order from this Court declaring that Cordell’s status as a Manager of the Companies

101 (Countercls. ¶¶ 358, 362.)

102 (Pls.’ Br. Supp. 21.)

103 (See supra ¶¶ 45–47 and related notes.) was not terminated by the June 14, 2023 vote of the Individual Plaintiffs.” 104

Plaintiffs similarly request entry of judgment on the pleadings in Plaintiffs’ favor

that, “[a]s of June 14, 2023, Cordell ceased to be a . . . manager of each of the

Companies[.]” 105

53. Cordell contends, because he remains a Member for the reasons listed in his

sixth counterclaim, he also remains a Manager of the Companies because Section 5.2

of the Operating Agreements provides that “[e]ach Member, by virtue of his or her

status as a Member, shall be a Manager of the Company[.]” 106 Plaintiffs, however,

contend “[t]he June 14, 2023 Notice removed Cordell as a Manager of both Companies

as a matter of law” pursuant to Section 5.2 of the Operating Agreements. 107

54. Section 5.2 of the Operating Agreements provides that “remov[al] [of] a

Manager shall require the affirmative vote of Members owning at least a majority of

all interests in the Company.” 108 On 14 June 2023, Tudor, Harris, and Gelson,

together constituting a majority of the membership interest of the Companies,

affirmatively voted to terminate Cordell as a Manager of the Companies. 109 As the

14 June 2023 vote additionally terminated Cordell’s status as a Member of the

104 (Countercls. ¶ 292.)

105 (Mot. 3.)

106 (Def.’s Resp. 20.)

107 (Pls.’ Br. Supp. 19–20.)

108 (Compl., Exs. 1, 2; Answer & Countercls., Exs. 1, 2.)

109 (Compl., Ex. 4; Answer & Countercls., Ex. 7.) Companies, for the reasons described above, 110 this Court finds Cordell’s argument

to be moot. The Court therefore GRANTS Plaintiffs’ Motion to dismiss Cordell’s

seventh counterclaim for declaratory judgment and dismisses this counterclaim with

prejudice. The Court further GRANTS Plaintiffs’ Motion with respect to Plaintiffs’

second claim requesting a declaratory judgment that Cordell ceased to be a manager

of each of the Companies on 14 June 2023.

I. Cordell’s Fifth Counterclaim and Plaintiffs’ Second Claim for Declaratory Judgment – Valuation Dates

55. In his fifth counterclaim, Cordell alleges the Operating Agreements do not

specify the effective date for the valuation of the Companies’ assets or for the

determination of the Companies’ liabilities. 111 He “requests an Order from this Court

declaring that the appropriate valuation date for both the assets and liabilities of the

Companies is December 12, 2023[,]” the date on which the first appraisal was

transmitted to Cordell. 112 Plaintiffs seek dismissal of Cordell’s counterclaim,

contending that 14 June 2023, the date on which the Individual Plaintiffs voted to

terminate Cordell as an employee, member and manager of the Companies, is the

appropriate valuation date. 113 Plaintiffs similarly seek entry of judgment on the

pleadings in Plaintiffs’ favor that “[t]he Triggering Event is the effective date for

110 (See supra ¶¶ 45–47 and related notes.)

111 (Countercls. ¶¶ 267–68.)

112 (Countercls. ¶¶ 269, 271.)

113 (Pls.’ Br. Supp. 17–18.) purposes of the appraisals of the Companies’ assets under Section 10.2.d of the

Operating Agreements.” 114

56. The Declaratory Judgment Act, N.C.G.S. § 1-253 et seq., as described

earlier, authorizes a court to declare the “rights, status, and other legal relations” of

adverse parties when an actual dispute exists. PHE, Inc. v. Dolinsky, 2022 NCBC

LEXIS 123, at **19 (N.C. Super. Ct. Oct. 19, 2022). If a genuine controversy is

adequately pled, the claim for a declaratory judgment may move forward. Indeed,

“[t]he question is not whether the plaintiff[s] will prevail on their claim, it is only

whether they have identified an actual, genuine controversy.” BIOMILQ, Inc. v.

Guiliano, 2023 NCBC LEXIS 24, at **32 (N.C. Super. Ct. Feb. 10, 2023) (cleaned

up). Morris v. Plyler Paper Stock Co., 89 N.C. App. 555, 557 (1988) (“A motion to

dismiss for failure to state a claim is seldom appropriate ‘in actions for declaratory

judgments, and will not be allowed simply because the plaintiff may not be able to

prevail.’”).

57. Here, Cordell has identified an actual, genuine controversy regarding the

valuation date. Section 10.2(b) of the Operating Agreements provides in relevant

part:

Upon a Member’s termination of employment with [the Companies] . . . (“Triggering Event”), the Member shall sell and the Compan[ies] or the surviving Members shall purchase all of the Membership and Economic Interest of the Member. The procedures for purchase described in Section 10.2.a shall apply. The purchase price shall be determined in accordance with Section 10.2.d below, and unless otherwise agreed

114 (Mot. 3.) among the parties the purchase price shall be due and payable in cash at closing. 115

Section 10.2(a), in turn, outlines the procedure to be utilized following a “Triggering

Event” under Section 10.2(b):

The closing of the purchase and sale shall take place within six (6) months of the date of [the “Triggering Event”]. The purchase price for the Membership and Economic Interest of the [terminated] Member shall be determined in accordance with the provisions of Section 10.2.d below. Unless otherwise agreed among the parties, the purchase price shall be due and payable in cash at closing. 116

Section 10.2(d) of the Operating Agreements prescribes the below valuation process

for determining the purchase price of a Membership Interest:

[T]o determine the purchase price for a Membership or Economic Interest in the Company, all of the assets of the Company shall be valued at their fair market value and any liabilities or debts of the Company shall be subtracted from the total value to determine the fair market value of the Company. The resulting amount shall then be multiplied times the percentage Membership or Economic Interest in the Company to be purchased to determine the purchase price for the Membership or Economic Interest in the Company. The fair market value of the assets of the Company shall be determined by agreement of the parties or, in the absence of agreement, by a duly qualified appraiser. If the parties cannot agree upon the fair market value of the assets of the Company, the Company shall hire and pay for a qualified appraiser to determine the fair market value of the assets. In the event the selling Member objects to or disagrees with the value determined by the appraiser hired by the Company, the selling Member shall have the right, at his or her expense, to hire a second appraiser to determine the fair market value of the assets of the Company. In the event the Company objects to the value determined by the appraiser by the selling Member, the two appraisers shall then select a third appraiser to determine the fair market value of the assets of the Company. The cost of the third appraisal shall be shared equally by the Company and the selling Member. The fair market value of the assets of the Company determined by the third appraiser shall be binding upon all parties. In

115 (Compl., Exs. 1, 2; Answer & Countercls., Exs. 1, 2.)

116 (Compl., Exs. 1, 2; Answer & Countercls., Exs. 1, 2.) the determination of the fair market value of the assets of the Company, the appraiser shall take into account all assets of the Company excluding any “goodwill” and any life insurance proceeds in excess of cash value paid to or for the benefit of the Company as a result of a Member's death. For purposes of this subparagraph, in the event the Company owns any real estate, a qualified appraiser shall be deemed to be an appraiser having an MAI designation, unless otherwise mutually agreed by the parties. 117

58. At no point do the Operating Agreements specify the effective date for the

valuation of the Companies’ assets or determination of the Companies’ liabilities.

The Consent Order agreed to by the parties and attached to the pleadings similarly

does not clearly identify a valuation date. 118 Because Cordell has adequately pled the

existence of a genuine controversy regarding the valuation date, Plaintiffs’ Motion for

Judgment on the Pleadings with respect to Cordell’s fifth counterclaim and Plaintiffs’

second claim requesting a declaratory judgment on the valuation date shall

be DENIED.

59. Plaintiffs relatedly request that the Court grant their Motion for Judgment

on the Pleadings with respect to Plaintiffs’ second claim for declaratory judgment that

“(iv) The figure to be used for purposes of the appraisal of the assets of the Companies

are those set forth in Exhibit 14 to the Plaintiffs’ Complaint as of June 14, 2023; [and]

(v) The figure to be used for purposes of deducting the liabilities of the Companies

from the appraised value[] of the assets is to be the liabilities as calculated by the

Companies’ accountants on financial statements kept in the regular course of

117 (Compl., Exs. 1, 2; Answer & Countercls., Exs. 1, 2.)

118 (Initial Lawsuit Consent Scheduling Order.) business.” 119 The Court declines to address whether Plaintiffs are entitled to

judgment on the pleadings with respect to these aspects of Plaintiffs’ second claim

because Plaintiffs did not address these arguments in their brief. See N.C. Bus. Ct.

Rule 7.2 (“A party should . . . brief each issue and argument that the party desires

the Court to rule upon and that the party intends to raise at a hearing.”). Thus,

Plaintiffs’ Motion as it pertains to these aspects of Plaintiffs’ second claim for

declaratory judgment shall be DENIED.

J. Cordell’s Eleventh Counterclaim – Breach of Fiduciary Duty

60. Plaintiffs next seek entry of judgment on the pleadings on Cordell’s eleventh

counterclaim for breach of fiduciary duty. Cordell contends “[t]he Individual

Plaintiffs owed fiduciary duties in their capacities as Managers of the Companies to

Cordell in his capacity as a Member of the Companies.” 120 The Individual Plaintiffs

breached their fiduciary duties, Cordell argues, “by, among other things, causing the

Companies to refuse to provide complete and accurate financial information to

Cordell and/or misrepresenting the financial status of the Companies to Cordell.” 121

Plaintiffs, however, maintain judgment on the pleadings is appropriate here because

“managers of a limited liability company . . . owe a fiduciary duty to the company,

and not to individual members.” 122

119 (Mot. 3.)

120 (Countercls. ¶ 320.)

121 (Countercls. ¶ 321.)

122 (Pls.’ Br. Supp. 25 (quoting Kaplan v. O.K. Techs., L.L.C., 196 N.C. App. 469, 474 (2009)).) 61. To state a claim for breach of fiduciary duty, a counterclaim plaintiff must

plead the existence of a fiduciary duty, a breach of that duty, and injury proximately

caused by the breach. See e.g., Green v. Freeman, 367 N.C. 136, 141 (2013). Where

there is no fiduciary duty, there can be no claim for its breach. Governor's Club Inc.

v. Governors Club Ltd. P'ship, 152 N.C. App. 240, 247 (2002).

62. A fiduciary relationship is one in which “there has been a special

confidence reposed in one who in equity and good conscience is bound to act in good

faith and with due regard to the interests of the one reposing

confidence.” CommScope Credit Union v. Butler & Burke, LLP, 369 N.C. 48, 52

(2016). “[I]t extends to any possible case in which a fiduciary relationship exists in

fact, and in which there is confidence reposed on one side, and resulting domination

and influence on the other.” Dalton v. Camp, 353 N.C. 647, 651–52 (quoting Abbitt v.

Gregory, 201 N.C. 577, 598 (1931)) (emphasis in original). “North Carolina recognizes

two types of fiduciary relationships: de jure, or those imposed by operation of law,

and de facto, or those arising from the particular facts and circumstances constituting

and surrounding the relationship.” Hager v. Smithfield E. Health Holdings, LLC,

264 N.C. App. 350, 355 (2019) (citing Lockerman v. S. River Elec. Mbrshp. Corp., 250

N.C. App. 631, 635 (2016)).

63. Here, as both parties recognize, no de jure fiduciary relationship is present

as “the default rule is that managers of a limited liability company owe duties to the

company and not its members.” 123 See, e.g., Mary Annette, LLC v. Crider, 2023 NCBC

123 (Def.’s Resp. 27.) LEXIS 28, at **10–11 (N.C. Super. Ct. Feb. 23, 2023) (“Generally, members of an LLC

don’t owe fiduciary duties to each other or the company, and managers and officers

owe fiduciary duties to the company but not to the members.” (citing Kaplan v. O.K.

Techs., L.L.C, 196 N.C. App. 469, 473–74 (2009))). Thus, for Cordell’s counterclaim

to survive a Rule 12(c) motion, he must adequately plead the existence of a de facto

fiduciary relationship.

64. “The standard for finding a de facto fiduciary relationship is a demanding

one: Only when one party figuratively holds all the cards—all the financial power or

technical information, for example—have North Carolina courts found that the

special circumstance of a fiduciary relationship has arisen.” Lockerman, 250 N.C.

App. at 636 (citation and internal quotation marks omitted). It is insufficient to

allege mere influence over another's affairs. Hartsell v. Mindpath Care Ctrs., 2022

NCBC LEXIS 130, at **11 (N.C. Super. Ct. Nov. 2, 2022).

65. Thus, the question here is whether Cordell has sufficiently pled that the

Individual Plaintiffs “held all the cards.” In his counterclaim, Cordell alleges that,

“[s]tarting on June 6, 2023, and before any steps were taken by Individual Plaintiffs

to attempt to remove Cordell as a Member, Manager, or purported employee of the

Companies, Individual Plaintiffs took affirmative steps to limit Cordell’s visibility

into the finances of each of the Companies.” 124 Specifically, Cordell alleges, the

124 (Countercls. ¶ 85.) Individual Plaintiffs removed his access to all of the Companies’ bank accounts and

changed lockbox codes on several Dapper properties. 125

66. However, Cordell subsequently alleges “[a]fter learning of the Individual

Plaintiffs’ actions, Cordell contacted the [bank’s] branch manager, who advised

Cordell that Bank OZK had inadvertently failed to adhere to their internal

verification process . . . [and] restored his account access on June 7, 2023.” 126

Similarly, when the Individual Plaintiffs allegedly “once again[] attempted to remove

Cordell from the Companies’ Bank OZK accounts” on 29 June 2023, Cordell was able

to contact the Bank OZK branch manager, resulting in a hold being placed on the

Companies’ bank accounts until the pending litigation could be resolved. 127

Furthermore, Cordell states the parties “engage[d] in substantive negotiations . . .

which resulted in numerous offers and counteroffers being exchanged between

Cordell and the Individual Plaintiffs” related to a voluntary buyout of Cordell’s

membership interest. 128 Assuming the truth of these allegations, as is required at

the Rule 12(c) stage, it is clear that the Individual Plaintiffs did not exercise

near-complete domination over Cordell and that, at the very least, Cordell was still

holding “a card or two” during the relevant period. See Bourgeois v. Lapelusa, 2022

NCBC LEXIS 111, at **15 (N.C. Super. Ct. Sept. 23, 2022).

125 (Countercls. ¶¶ 86–87, 89.)

126 (Countercls. ¶ 87.)

127 (Countercls. ¶¶ 106–113.)

128 (Countercls. ¶ 68.) 67. Without the existence of a de jure or de facto fiduciary relationship there can

be no claim for breach of fiduciary duty. Therefore, the Court GRANTS Plaintiffs’

Motion for Judgment on the Pleadings with respect to Cordell’s eleventh counterclaim

and this counterclaim is dismissed with prejudice.

K. Cordell’s Ninth Counterclaim – Breach of Contract – Operating Agreements

68. In his ninth counterclaim, Cordell alleges the Individual Plaintiffs breached

the Operating Agreements by: (1) “failing to maintain accurate Capital Accounts as

required by [Section 8.3 of] the Operating Agreements”; (2) failing to make

distributions in accordance with Section 9.2 of the Operating Agreements; (3) failing

to maintain accurate accounting records on a cash basis and in accordance with

accepted accounting principles as required by Section 9.3 of the Operating

Agreements; and (4) “refusing to reimburse Cordell [the amount of] $24,154.95

following the submission of [documents justifying] such reimbursements to the

Companies [in breach of Section 5.9].” 129 Plaintiffs seek entry of judgment on the

pleadings in their favor, contending “[t]his cause of action references various concepts

from the Operating Agreements – such as maintenance of capital accounts,

distributions, accounting principles and reimbursements of expenses upon receipt of

appropriate documentation – without describing the date or substance of any

purported breach.” 130

129 (Countercls. ¶¶ 6(i), 303–12.)

130 (Pls.’ Br. Supp. 24.) 69. “Unlike claims subject to Rule 9, a claim for breach of contract is not subject

to heightened pleading standards[.]” AYM Techs., LLC. v. Rodgers, 2018 NCBC

LEXIS 14, at *52–53 (N.C. Super. Ct. Feb. 9, 2018). To properly plead a breach of

contract claim, a plaintiff need only allege “(1) [the] existence of a valid contract and

(2) [a] breach of the terms of that contract.” Poor v. Hill, 138 N.C. App. 19, 26 (2000).

70. In considering a 12(c) motion, the trial court is required to view the facts

presented in the pleadings and the inferences to be drawn therefrom in the light most

favorable to the non-moving party. See, e.g., Anderson Creek Partners, L.P., 382 N.C.

at 11–12. Here, viewing the facts and allegations in the light most favorable to

Cordell, the Court cannot conclude that Plaintiffs are entitled to judgment as a

matter of law as to Cordell’s breach of contract claim. Cordell has properly alleged

the existence of a contract, a breach of the contract, and damages proximately

resulting therefrom. 131 Accordingly, Cordell’s pleadings are sufficient to survive a

Rule 12(c) motion and the Court DENIES Plaintiffs’ Motion with respect to Cordell’s

ninth counterclaim.

L. Cordell’s Tenth Counterclaim – Breach of the Implied Covenant of Good Faith and Fair Dealing – Operating Agreements

71. Plaintiffs next seek dismissal of Cordell’s tenth counterclaim for breach of

the implied covenant of good faith and fair dealing.

72. In addition to its express terms, “[i]n 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.” Governor’s

131 (Countercls. ¶¶ 302–313.) Club Inc., 152 N.C. App. at 251 (citation omitted) (internal quotation marks

omitted). To state a claim for breach of the implied covenant of good faith and fair

dealing, a plaintiff must “plead that the party charged took action ‘which injure[d]

the right of the other to receive the benefits of the agreement,’ thus ‘depriv[ing] the

other of the fruits of [the] bargain.’” Conleys Creek Ltd. P’ship v. Smoky Mt. Country

Club Prop. Owners Ass’n, 255 N.C. App. 236, 253 (2017) (quoting Bicycle Transit

Auth. v. Bell, 314 N.C. 219, 228–29 (1985)). “Evasion of the spirit of the bargain, lack

of diligence and slacking off, willful rendering of imperfect performance, abuse of a

power to specify terms, and interference with or failure to cooperate in the other

party’s performance” may each constitute a breach of the implied covenant of good

faith and fair dealing. Intersal, Inc. v. Wilson, 2023 NCBC LEXIS 29, at **67 (N.C.

Super. Ct. Feb. 23, 2023) (quoting Restatement 2d of Contracts § 205 cmt. d (1981)).

73. Cordell’s implied covenant claim rests on many of the same grievances as

his breach of contract claim; specifically, that Plaintiffs breached the implied

covenant by: (1) “restrict[ing], limit[ing] and otherwise obstruct[ing] Cordell’s access

to the Companies’ email account, bank accounts, financial records, and properties”;

and (2) “knowingly and intentionally manipulat[ing] or otherwise alter[ing] their

financial records in a manner designed to mislead Cordell into believing that his

Membership Interest was less valuable than the true and accurate records would

have reflected.” 132

132 (Countercls. ¶ 317.) 74. Under North Carolina law, “where 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, we treat the former claim as ‘part and parcel’ of the latter.”

Cordaro v. Harrington Bank, FSB, 260 N.C. App. 26, 38–39 (2018); see also Se.

Anesthesiology Consultants, PLLC v. Rose, 2019 NCBC LEXIS 52, at *23 (N.C. Super.

Ct. Aug. 20, 2019) (“[G]ood faith and fair dealing claims that are ‘part and parcel’ of

breach of contract claims . . . merely stand or fall together.”). Accordingly, the Court

DENIES Plaintiff’s Motion on Cordell’s counterclaim for breach of the implied

covenant of good faith and fair dealing in the same manner as the Court has denied

Plaintiffs’ Motion on Cordell’s breach of contract counterclaim.

M. Plaintiffs’ First Claim for Breach of Contract

75. Plaintiffs’ first claim for breach of contract is premised on Cordell’s alleged

breach of the Operating Agreements by (i) refusing to accept a buyout offer in June

2023 in breach of Section 10, and (ii) unilaterally causing Bank OZK (the “Bank”) to

freeze the Companies’ funds in late June or early July 2023 in breach of Article 5.3. 133

76. Plaintiffs contend they are entitled to judgment on the pleadings in their

favor regarding the first aspect of this claim because “Cordell has unequivocally

admitted that he was an employee of the Companies and that a ‘Triggering Event’

under Section 10.2.d occurred such that the Companies are required to redeem his

interests.” 134 Cordell maintains, however, that “[t]he terms of the Operating

133 (Compl. ¶¶ 89–91, 152–58.)

134 (Pls.’ Br. Supp. 9–10.) Agreements demonstrate the lack of a Triggering Event” 135 and Plaintiffs, by not

producing the first appraisal report until 12 December 2023, failed to abide by the

multi-step buyout process outlined in Section 10.2(d) of the Operating Agreements. 136

77. As an initial matter, for reasons stated in Section D of this Opinion, this

Court holds a Triggering Event under Section 10 of the Operating Agreements

occurred on 14 June 2023. However, the plain language of the Operating Agreements

does not require Cordell to accept a buyout offer upon the occurrence of a Triggering

Event. Section 10.2(d) of the Operating Agreements provides:

If the parties cannot agree upon the fair market value of the assets of the Company, the Company shall hire and pay for a qualified appraiser to determine the fair market value of the assets. In the event the selling Member objects to or disagrees with the value determined by the appraiser hired by the Company, the selling Member shall have the right, at his or her expense, to hire a second appraiser to determine the fair market value of the assets of the Company. In the event the Company objects to the value determined by the appraiser by the selling Member, the two appraisers shall then select a third appraiser to determine the fair market value of the assets of the Company. . . . The fair market value of the assets of the Company determined by the third appraiser shall be binding upon all parties. 137

Section 10.2(a) of the Operating Agreements sets a deadline for the buyout of a

terminated Member’s interests, providing “[t]he closing of the purchase and sale [of

the membership interests] shall take place within six (6) months of the [Triggering

Event].” 138

135 (Def.’s Resp. 14; see also Countercls. ¶¶ 6, 146–47, 262.)

136 (Countercls. ¶¶ 133–37.)

137 (Compl., Exs. 1, 2; Answer & Countercls., Exs. 1, 2.)

138 (Compl., Exs. 1, 2; Answer & Countercls., Exs. 1, 2.) 78. Here, Cordell states Plaintiffs provided the first appraisal report on 12

December 2023, two days before the closing deadline of 14 December 2023. 139 By

providing the first appraisal report only two days before closing, Cordell alleges,

“Plaintiffs knew that Cordell would be unable to realize the benefits and protections

afforded by Section 10.2(d)[.]” 140 Viewing the facts and permissible inferences in the

light most favorable to Cordell, the Court cannot conclude that no material issue of

fact exists and that Cordell breached the Operating agreements by refusing to accept

a buyout offer. Thus, the Court DENIES Plaintiff’s Motion for Judgment on the

Pleadings with respect to Plaintiffs’ first claim for breach of contract.

79. The Court declines to address whether Plaintiffs are entitled to judgment

on the pleadings in respect to the second aspect of this claim because Plaintiffs did

not address this argument in their brief. See N.C. Bus. Ct. Rule 7.2. Accordingly, the

Court DENIES Plaintiffs’ Motion as it relates to the second aspect of Plaintiffs’ claim

for breach of contract to the extent Plaintiffs’ counsel argued it at the Hearing.

N. Plaintiffs’ Fourth Claim for Breach of Contract – the Consent Order

80. Plaintiffs next seek entry of judgment on the pleadings in their favor on

Plaintiffs’ fourth claim for breach of contract. In their Complaint, Plaintiffs allege

Cordell breached the 13 December 2023 Consent Order by “failing to accept the

Companies’ tender on the agreed-upon timeframe.” 141

139 (Countercls. ¶¶ 133–34.)

140 (Countercls. ¶ 136.)

141 (Compl. ¶ 180.) 81. Though Plaintiffs move for judgment on the pleadings on their fourth claim,

they do not address this issue in their brief. Therefore, the Court declines to consider

whether Plaintiffs are entitled to judgment on the pleadings for their fourth claim

and DENIES Plaintiff’s Motion with respect to this claim to the extent Plaintiffs’

counsel argued the claim at the Hearing. See Bus. Ct. Rule 7.2.

O. Cordell’s Eighth Counterclaim and Plaintiffs’ Second Claim for Declaratory Judgment – Winston Property

82. Plaintiffs next seek dismissal of Cordell’s eighth counterclaim for “an Order

from this Court declaring that any payment to Cordell in exchange for his

Membership Interest as part of a voluntary sale of his Membership Interest is not

subject to a setoff.” 142 In relevant part, the Interest and Property Transfer

Agreement, which provides for the transfer of the Winston Property to Cordell’s

company, Creta Construction LLC, provides the following:

2. Credit. . . . The Parties hereby agree that, upon the transfer of the [Winston] Property to Creta pursuant to the Deed, the aggregate purchase price required to be paid to Cordell in connection with the buyout of Cordell’s membership interests in the Companies in accordance with the terms of the operating agreement of the Companies, or as a result of the [Initial Lawsuit], shall be reduced by an amount equal to $181,807.51 (the “Credit”). 143

Cordell contends the Interest and Property Transfer Agreement does not give

Plaintiffs the right to offset against any future purchase of Cordell’s Membership

Interest because, among other reasons: (1) “[t]he obligations under Section 10.2 of the

142 (Countercls. ¶ 299.)

143 (Answer & Countercls., Ex. 29, ECF No. 35.29.) Operating Agreements were not triggered”; (2) “[t]he Initial Lawsuit has been

dismissed pursuant to Rule 41(a)”; and (3) “[t]he funds were deemed by Plaintiffs to

be an in-kind distribution made on November 1, 2023.” 144 Plaintiffs, however,

maintain the “Interest and Property Transfer Agreement entitles Dapper to an offset

against the purchase price of Cordell’s interest in the amount of $181,807.51.” 145

83. Here, Cordell fails to adequately plead the existence of a genuine

controversy. In the Consent Order, which this Court has previously found to be a

“valid and enforceable contract between the parties under North Carolina law,” 146 the

parties “agree and acknowledge that, pursuant to the Interest and Property Transfer

Agreement, . . . the price required to be paid to Cordell by the Companies for the

purchase and sale of the Interest pursuant to Article 10 of the Operating Agreements

shall be reduced by an amount equal to $181,807.51.” 147 Likewise, in the Statement

of Purpose section of the Interest and Property Transfer Agreement, the parties

clearly state their intent for the transfer of the Winston Property to serve as a credit

to be applied to the buyout of Cordell’s membership interests in the Companies:

“Whereas, the Seller Parties[, the Plaintiffs,] desire to transfer, and the Buyer

Parties[, Cordell,] desire that Creta acquire, the [Winston] Property in exchange for

144 (Countercls. ¶ 298.)

145 (Mot. 3.)

146 (Order & Op. on Def.’s Mot. Dismiss Pursuant R. 12(b)(6) ¶ 52; see also Dapper Dev., L.L.C.,

2024 NCBC LEXIS 126, at **25.)

147 (Initial Lawsuit Consent Scheduling Order 6.) a credit of $181,807.51 to be applied to the buyout of Cordell’s membership

interests in the [Companies], as described below. 148

84. Furthermore, for reasons described previously, this Court holds the

obligations under Section 10.2 of the Operating Agreements have been triggered,

requiring Cordell to sell, and the Plaintiffs to purchase, his membership and economic

interests in the Companies. 149 The plain language of paragraph 2 of the Interest and

Property Transfer Agreement, quoted above, additionally provides the settlement or

final determination of the Initial Lawsuit is not a precondition to the existence of the

credit. Therefore, the Court GRANTS Plaintiffs’ Motion to the extent it pertains to

Cordell’s eighth counterclaim for declaratory judgment and dismisses this

counterclaim with prejudice. The Court similarly GRANTS Plaintiffs’ Motion for

Judgment on the Pleadings with respect to Plaintiffs’ second claim requesting

a declaratory judgment that the Interest and Property Transfer Agreement entitles

Dapper to an offset of $181,807.51 against the purchase price of Cordell’s interest in

the company.

P. Cordell’s Thirteenth Counterclaim – Equitable Accounting

85. As “Cordell’s information rights have proven to be inadequate in his pursuit

to determine the accurate calculation of the Companies’ liabilities and his capital

account balance[,]” Cordell requests that the “Court order the Companies to hire a

neutral third-party accounting professional to conduct an audit of the Companies’

148 (Answer & Countercls., Ex. 29 (emphasis added).)

149 (See supra ¶¶ 40–44.) books and records[.]” 150 Plaintiffs seek dismissal of this counterclaim as only

members of a limited liability company can seek equitable accounting. 151

86. This Court has held that equitable accounting “is a remedy, not an

independent cause of action, and is available only if the plaintiff first shows that he

lacks an adequate remedy at law and alleges facts in the complaint to that effect.”

Elhulu v. Alshalabi, 2021 NCBC LEXIS 44, at **20 (N.C. Super. Ct. Apr. 29, 2021)

(cleaned up). The Court concludes that Defendant is not entitled to an equitable

accounting under the pleadings at issue. Therefore, Plaintiffs’ Motion is GRANTED

as to Cordell’s “claim” for an equitable accounting. Cordell’s thirteenth counterclaim,

however, is dismissed without prejudice to Cordell’s ability to seek an equitable

accounting as a remedy at a later stage of this litigation to the extent permitted by

applicable law. While the Court may ultimately conclude that Cordell is not entitled

to an accounting, the Court cannot conclude, at the motion for judgment on the

pleadings stage, that Cordell cannot plausibly allege a proper claim for an accounting.

Q. Cordell’s Fourteenth Counterclaim – Reimbursement/Contribution

87. Lastly, Plaintiffs seek entry of judgment on the pleadings in Plaintiffs’ favor

on Cordell’s counterclaim for reimbursement/contribution. In his counterclaim,

Cordell alleges, “[a]fter the Individual Plaintiffs transmitted the Termination Notice,

Cordell became aware that the Companies were in default or had failed to satisfy

several [of] the Companies’ debts and/or financial obligations, which were due and

150 (Countercls. ¶¶ 341, 343.)

151 (Pls.’ Br. Supp. 21.) owing.” 152 “Upon receiving notice of the Companies’ outstanding debts and/or

financial obligations,” Cordell states, he “took steps to satisfy them” even though the

Companies were the primary obligors on the debt obligations and Cordell and the

Individual Plaintiffs were secondary obligors. 153 Despite Cordell’s satisfaction of the

Companies outstanding financial obligations, he alleges, the Plaintiffs have

repeatedly refused to reimburse him for the expenses incurred to satisfy the

Companies’ debts. 154 Plaintiffs contend Cordell’s counterclaim should be dismissed

because (1) “‘reimbursement’ is not a cause of action under North Carolina law”; (2)

“‘contribution’ applies only in the context of joint tortfeasors and is inapplicable here”;

(3) Cordell does not “identify anywhere in his pleading what specifically he alleges

entitles him to ‘reimbursement/contribution’”; and (4) the counterclaim “is premised

on purported payments he made on behalf of the Companies AFTER his

termination[.]” 155

88. Despite Plaintiffs’ contentions, reimbursement is a cause of action under

North Carolina law. N.C.G.S. § 26-3.1 provides where a guarantor pays the debt of

his principal, the guarantor has a right to “either sue his principal for reimbursement

or sue his principal on the instrument and may maintain any action or avail himself

of any remedy which the creditor himself might have had against the principal

152 (Countercls. ¶ 347.)

153 (Countercls. ¶¶ 348–50.)

154 (Countercls. ¶¶ 351–54.)

155 (Pls.’ Br. Supp. 25–26.) debtor.” Here, Cordell alleged that: (1) the “Companies have a number of secured and

unsecured debt obligations from various creditors”; (2) the “Companies are the

primary obligors on the debt obligations”; (3) “Cordell . . . [was a] secondary obligor[]

on one or more of the Companies’ outstanding debts and/or financial obligations”; and

(4) “[u]pon receiving notice of the Companies’ outstanding debts and/or financial

obligations, Cordell took steps to satisfy them.” 156 Viewing the facts and allegations

in the light most favorable to Cordell, the Court cannot conclude at this point that

Plaintiffs are entitled to judgment as a matter of law as to Cordell’s

reimbursement/contribution claim. Cordell has adequately alleged the existence of a

debt owed by the Companies, that he was a guarantor of the principal’s debt, and that

he paid the debt of his principal. Accordingly, Cordell’s pleadings are sufficient to

survive a Rule 12(c) motion and the Court DENIES Plaintiffs’ Motion with respect

to Cordell’s fourteenth counterclaim.

IV.

CONCLUSION

89. WHEREFORE, for the reasons set forth above, the Court hereby GRANTS

in part and DENIES in part the Motion as follows:

a. Plaintiffs’ Motion is GRANTED with respect to Defendant’s first,

second, third, fourth, sixth, seventh, eighth, eleventh, twelfth, and

fifteenth counterclaims, and these claims are hereby DISMISSED with

prejudice.

156 (Countercls. ¶¶ 346, 348–50.) b. Plaintiffs’ Motion is GRANTED as to subsections (i) (Triggering Event),

(iii) (Cordell’s status as a Member or Manager), and (vi) (setoff) of

Plaintiffs’ second claim for relief, and these claims are hereby

DISMISSED with prejudice.

c. Plaintiffs’ Motion is GRANTED with respect to Defendant’s thirteenth

counterclaim, and this claim is hereby DISMISSED without

d. Plaintiffs’ Motion is DENIED as to Plaintiffs’ first and fourth claims for

relief.

e. Plaintiffs’ Motion is DENIED as to subsections (ii) (effective date for

purposes of appraisals), (iv) (figure to be used for purposes of the

appraisal), and (v) (figure to be used for purposes of deducting liabilities)

of Plaintiffs’ second claim for relief.

f. Plaintiffs’ Motion is DENIED with respect to Defendant’s fifth, ninth,

tenth, and fourteenth counterclaims.

g. Plaintiffs’ Motion is otherwise DENIED.

SO ORDERED, this the 15th day of July, 2025.

/s/ A. Todd Brown A. Todd Brown Special Superior Court Judge for Complex Business Cases