Horizon Forest Prods., L.P. v. Flowers Flooring, LLC

• Court: Court of Appeals of North Carolina
• Decided: November 5, 2025
• Docket: 25-171
• Status: Published

Opinion

IN THE COURT OF APPEALS OF NORTH CAROLINA

No. COA25-171

Filed 5 November 2025

Wake County, No. 24CV011967-910

HORIZON FOREST PRODUCTS, L.P. d/b/a HORIZON FOREST PRODUCTS, Plaintiff,

v.

FLOWERS FLOORING, LLC, and JEREMY WILLIAM FLOWERS, Defendants.

Appeal by Plaintiff from judgment entered 4 December 2024 by Judge

Christine Walczyk in Wake County District Court. Heard in the Court of Appeals 27

August 2025.

Sands Anderson PC, by Joshua L. Rogers, for Plaintiff-Appellant.

Rosenwood, Rose & Litwak, PLLC, by Nancy S. Litwak, for Defendants- Appellees.

GRIFFIN, Judge.

Plaintiff Horizon Forest Products, L.P., appeals from the trial court’s dismissal

of Plaintiff’s alleged fraud, conversion, and punitive damages claims against

Defendants Flowers Flooring, LLC, and Jeremy William Flowers. Plaintiff contends

a single incident of writing a worthless check is sufficient for fraud and punitive

damages claims. Further, Plaintiff asserts Jeremy Flowers can be individually liable

because he actively participated in the wrongdoing. Finally, Plaintiff purports it

properly alleged all elements of conversion. We agree with Plaintiff on all arguments, HORIZON FOREST PRODS., L.P. V. FLOWERS FLOORING, LLC

Opinion of the Court

and reverse and remand.

I. Factual and Procedural Background

Plaintiff sold wood products to Flowers Flooring on 21 April 2023. Jeremy

Flowers wrote a check in the amount of $17,498.78 on behalf of Flowers Flooring and

Flowers Flooring delivered the check to Plaintiff. The check was not honored when

Plaintiff tried to cash it, leaving Plaintiff without those funds and an additional bank

service fee.

Less than a year later, Plaintiff filed a complaint and issuance of summons.

Shortly after, Defendants moved to dismiss the action for failure to state a claim upon

which relief can be granted.

On 3 September 2024, Judge Sasser entered an order dismissing Plaintiff’s

claims of fraud, conversion, and punitive damages while keeping its breach of

contract and unjust enrichment claims as to Flowers Flooring; and dismissing the

fraud, conversion, punitive damages, breach of contract, and unjust enrichment

claims as to Jeremy Flowers. About a month afterward, Plaintiff and Flowers

Flooring participated in arbitration for breach of contract and unjust enrichment,

where the arbitrator found for Plaintiff.

On 4 December 2024, Judge Walczyk entered judgment on the arbitrator’s

decision and the September 3 order, finalizing the dismissal of fraud, conversion, and

punitive damages claims. Plaintiff timely appeals.

II. Analysis

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Plaintiff argues the trial court erred in its dismissal of fraud, conversion, and

punitive damages claims against Flowers Flooring as well as in its dismissal of fraud,

conversion, and punitive damages claims against Jeremy Flowers.

A. Standard of Review

This Court reviews an appeal from a Rule 12(b)(6) motion to dismiss order

under a de novo standard of review to determine a pleading’s legal sufficiency and to

ensure the trial court ruled correctly on the motion to dismiss. Leary v. N.C. Forest

Prods., Inc., 157 N.C. App. 396, 400, 580 S.E.2d 1, 4 (2003). We then determine

whether the factual allegations of the complaint, when treated as true, sufficiently

state a claim upon which relief may be granted. Taylor v. Bank of America, N.A., 382

N.C. 677, 679, 878 S.E.2d 798, 800 (2022) (citation omitted). The complaint must be

liberally construed. Wells Fargo Bank, N.A. v. Corneal, 238 N.C. App. 192, 195, 767

S.E.2d 374, 377 (2014). Rule 12(b)(6) dismissal is proper when a complaint’s claim

on its face is unsupported by law, the complaint on its face shows a lack of sufficient

facts to make a claim, or the complaint discloses facts that undermine a claim. Howe

v. Links Club Condo. Ass’n, Inc., 263 N.C. App. 130, 137, 823 S.E.2d 439, 447 (2018)

(citation omitted).

B. Fraud

Plaintiff alleges the trial court erred in its dismissal of fraud claims for both

Flowers Flooring and Jeremy Flowers, as a corporate officer.

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An actual fraud claim must include (1) a false representation, (2) that was

reasonably designed to deceive, (3) made with intent to deceive, (4) that deceives, and

(5) damages the party who was deceived. Vanguard Pai Lung, LLC v. Moody, 387

N.C. 376, 383, 912 S.E.2d 788, 794 (2025) (citation omitted); Forbis v. Neal, 361 N.C.

519, 526–27, 649 S.E.2d 382, 387 (2007) (citation omitted). Fraud must be plead with

particularity, including the “‘alleg[ed] time, place, and content of the fraudulent

representation,’” the identity of the person who made the representation, and the

acquisition from the misrepresentation. Value Health Sols., Inc. v. Pharm. Rsch.

Assocs., Inc., 385 N.C. 250, 263, 891 S.E.2d 100, 112 (2023) (citation omitted). Mere

conclusory statements alleging fraud will be insufficient. Sharp v. Teague, 113 N.C.

App. 589, 597, 439 S.E.2d 792, 797 (1994) (citation omitted); Terry v. Terry, 302 N.C.

77, 85, 273 S.E.2d 674, 678 (1981).

Attempting to pay with checks unsupported by sufficient funds can qualify as

a sufficient fraud claim. Austin v. Tire Treads, Inc., 21 N.C. App 737, 739, 205 S.E.2d

615, 616 (1974) (citation omitted). Plaintiff should show that the alleged

insufficiently funded checks were not liquid when issued or collectable for a

reasonable period after the checks were issued. Id. at 740, 205 S.E.2d at 617.

A corporate officer, even when acting as an agent of an entity, may be

personally liable when he or she actively participated in fraud. Palomino Mills v.

Davidson Mills Corp., 230 N.C. 286, 292, 52 S.E.2d 915, 919 (1949); see Austin, 21

N.C. App. at 739–40, 205 S.E.2d at 616–17; Taft v. Brinley’s Grading Servs., Inc., 225

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N.C. App. 502, 520, 738 S.E.2d 741,752 (2013). For example, a corporate officer may

face personal liability for fraud when misrepresenting a company’s financial condition

causing damage to another party. Austin, 21 N.C. App. at 739, 205 S.E.2d at 616–17

Here, Plaintiff alleges Flowers Flooring, through Jeremy Flowers, delivered

Plaintiff a check not supported by sufficient funds, a plausible form of false

representation when treated as true. Plaintiff declares Defendants knew that the

amount in the check’s account was insufficient to pay for the goods. Further, Plaintiff

contends Defendants had no intention of paying Plaintiff. Moreover, Plaintiff asserts

Defendants intended to induce Plaintiff to rely on the validity of the check, and that

Plaintiff reasonably relied on their misrepresentation. Defendant’s check was then

dishonored, damaging Plaintiff by the check amount and the bank service fee.

Plaintiff sufficiently addresses each element of a fraud claim. These allegations,

when treated as true, sufficiently state a fraud claim upon which relief can be

granted.

Plaintiff not only alleged a sufficient fraud claim against Flowers Flooring, but

also sufficiently alleged a fraud claim against Jeremy Flowers, individually. It is

alleged Jeremy Flowers, as a corporate officer, actively participated in fraud when

misrepresenting Flowers Flooring’s financial condition. The complaint on its face

shows it is supported by law and facts and none of the facts defeat the claim; thus,

dismissal was not proper.

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Plaintiff pleaded the fraud claim with appropriate particularity including the

time, place, and content of the misrepresentation as well as the identities of the

culprits and the acquisition from the misrepresentation. In its complaint, Plaintiff

includes the date of the occurrence to be 21 April 2023, recognizes the fraudulent

representation content as the check not supported by sufficient funds, identifies

Jeremy Flowers made the misrepresentation in endorsing and delivering the

worthless check, and highlights that Defendants acquired Plaintiff’s expensive wood

products without proper payment. Plaintiff’s allegations satisfy the particularity

statement and meet the Rule 12(b)(6) standard.

C. Conversion

Conversion essentially consists of (1) a plaintiff’s ownership and (2) a

defendant’s wrongful possession. Variety Wholesalers, Inc. v. Salem Logistics Traffic

Servs., LLC, 365 N.C. 520, 523, 723 S.E.2d 744, 747 (2012) (citation omitted). In other

words, conversion is a tort consisting of unsanctioned control over goods or chattel

that belong to someone else, resulting in exclusion of the owner’s rights or in the

object’s alteration. Id.

The “economic loss rule prohibits recovery for purely economic loss in tort, as

such claims are instead governed by contract law.” Lord v. Customized Consulting

Specialty, Inc., 182 N.C. App. 635, 639, 643 S.E.2d 28, 30 (2007) (citation omitted).

Generally, a breach of contract does not amount to a tort claim by the promisee

against the promisor, but there are many exceptions including “a conversion of the

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property of the promisee, which was the subject of the contract, by the promisor.”

N.C. State Ports Authority v. Lloyd A. Fry Roofing Co., 294 N.C. 73, 82, 240 S.E.2d

345, 351 (1978) (citation omitted) (receiving negative treatment for a different

reason); see Lake Mary Ltd. Partnership v. Johnston, 145 N.C. App. 525, 532, 551

S.E.2d 546, 552 (2001) (showing that a conversion claim may coexist with a breach of

contract claim); Di Frega v. Pugliese, 164 N.C. App. 499, 509, 596 S.E.2d 456, 463–64

(2004) (holding the trial court did not err in denying the plaintiff’s motion to dismiss

the conversion claim, even with the existence of a lease agreement).

Plaintiff’s conversion claim arises from the same factual circumstance as

described in the fraud section: Defendants took control and ownership of Plaintiff’s

goods, the wood products, and failed to properly pay Plaintiff, resulting in Plaintiff’s

exclusion of its ownership rights. When treated as true, this allegation sufficiently

states a conversion claim upon which relief may be granted.

Defendants argue the economic loss rule bars Plaintiff’s conversion claim.

However, conversion claims are excepted from the general rule that a breach of

contract does not amount to a tort claim by the promisee against the promisor. Ports

Authority, 294 N.C. at 82, 240 S.E.2d at 351. Therefore, Plaintiff is not barred from

pursuing a conversion claim and sufficiently pled a compensable claim for conversion,

considering the complaint must be liberally construed.

D. Punitive Damages

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Punitive damages may be awarded if a claimant proves a defendant is liable

for compensatory damages where actual fraud was present and related to the injury.

N.C. Gen. Stat. § 1D-15(a)-(b) (2023); Estate of Long v. Fowler, 378 N.C. 138, 142, 861

S.E.2d 686, 691 (2021).

Plaintiff’s punitive damages claim turns on Defendants’ actual fraud, as

previously discussed, related to Plaintiff’s injury of $17,498.78 plus the $35 bank fee.

The punitive damages claims, when treated as true, are sufficiently stated such that

relief may be granted. Therefore, this claim should not be dismissed under Rule

12(b)(6).

III. Conclusion

At this stage, the allegations in Plaintiff’s complaint, when treated as true,

sufficiently state claims of fraud, conversion, and punitive damages on which relief

can be granted against both Defendants. We reverse the trial court’s dismissal of

each of those claims and remand.

REVERSED AND REMANDED.

Judges CARPENTER and MURRY concur.

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