Orlando Residence, Ltd. v. All. Hosp. Mgmt., LLC, 2018 NCBC 132.
STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE SUPERIOR COURT DIVISION COUNTY OF WAKE 17 CVS 3254
ORLANDO RESIDENCE, LTD.,
Plaintiff,
v.
ALLIANCE HOSPITALITY MANAGEMENT, LLC; ROLF A. TWEETEN; and AXIS HOSPITALITY, INC., ORDER & OPINION DISMISSING ACTION Defendants and Crossclaim Defendants,
and
KENNETH E. NELSON,
Nominal Defendant and Crossclaim Plaintiff.
1. THIS MATTER is before the Court on (1) Defendants Alliance
Hospitality Management, LLC (“Alliance”), Rolf A. Tweeten (“Tweeten”), and Axis
Hospitality Inc.’s (“Axis”) (collectively “Alliance Defendants”) Motion to Dismiss
Pursuant to Rules 12(b)(1) and 12(b)(6) (“Alliance Defendants’ Motion to Dismiss
Orlando’s Claims”); (2) Plaintiff Orlando Residence, Ltd.’s (“Orlando”) Motion for
Leave to File an Amended Complaint (“Motion to Amend”); (3) Nominal Defendant
and Crossclaim Plaintiff Kenneth E. Nelson’s (“Nelson”) Motion Re Status as a
Nominal Defendant (“Nelson’s Nominal Defendant Motion”); (4) Orlando’s Motion to
Dismiss Pursuant to Rules 12(b)(1) and 12(b)(6) (“Orlando’s Motion to Dismiss
Nelson’s Crossclaims”); (5) Alliance Defendants’ Motion to Dismiss Crossclaims, to Strike, for More Definite Statement, and for Entry of Appropriate Orders (“Alliance
Defendants’ Motion to Dismiss Nelson’s Crossclaims”); and (6) Nelson’s Motion for
Leave to be Heard and for Continuance and Discovery (“Nelson’s Rule 56(f) Motion”).
2. For the reasons discussed below, the Court GRANTS Alliance
Defendants’ Motion to Dismiss Orlando’s Claims pursuant to Rule 12(b)(6), DENIES
Orlando’s Motion to Amend, DENIES Nelson’s Nominal Defendant Motion, GRANTS
Orlando’s Motion to Dismiss Nelson’s Crossclaims, GRANTS Alliance Defendants’
Motion to Dismiss Nelson’s Crossclaims, and DENIES Nelson’s Rule 56(f) Motion. As
a result, all claims in this action are DISMISSED with PREJUDICE.
Kenison, Dudley & Crawford, LLC, by F. James Warmoth, for Plaintiff Orlando Residence, Ltd.
Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, LLP, by Michael W. Mitchell and Jackson W. Moore, Jr., for Defendants Alliance Hospitality Management, LLC, Rolf A. Tweeten, and Axis Hospitality, Inc.
Kenneth E. Nelson (pro se).
Gale, Judge.
I. INTRODUCTION
3. This action is the third in a line of lawsuits related to Nelson’s ownership
interest in Alliance, and Orlando’s right to receive Alliance distributions as Nelson’s
judgment creditor. Nelson instituted the first lawsuit, Nelson v. Alliance Hosp.
Mgmt., LLC, No. 11 CVS 3217, in Wake County Superior Court (the “Nelson Action”),
contending that he was entitled to ten Alliance ownership units, which would now
represent a 16.4% ownership percentage as a result of Alliance having redeemed units of a withdrawing member. In the Nelson Action, Alliance Defendants admitted
Nelson was entitled to a 10% share, but denied that he had ever been granted actual
ownership units. A few weeks later, Orlando, then represented by the same attorney
representing Alliance Defendants in the Nelson Action, brought a separate action,
Orlando Residence, Ltd. v. Nelson, No. 12-CVS-12861, also in Wake County Superior
Court (the “Foreign Judgment Action”), in which it sought to enforce two foreign
judgments it had secured against Nelson. In the Foreign Judgment Action, Orlando
secured charging orders directing that any Alliance distributions that would
otherwise be made to Nelson should be made to Orlando instead.
4. After the charging orders were issued, Alliance made several
distributions to its members during the pendency of the Nelson Action. Consistent
with its litigation position, Alliance distributed a 10% share to Orlando representing
Nelson’s ownership interest rather than a distribution of 16.4%.
5. The Nelson Action was tried before a jury which was asked only to
determine whether Nelson had been validly issued ten ownership units in Alliance.
This Court issued judgment accordingly, directing Alliance to reflect this ownership
on its corporate books. Neither the jury nor this Court was asked to determine the
percentage ownership those units represent.
6. Following entry of judgment in the Nelson Action, Orlando made a
motion in the Foreign Judgment Action to hold Alliance Defendants in contempt on
the basis that their failure to distribute 16.4% of distributions violated the court’s
charging orders. After fully considering the litigation record in the Nelson Action, presiding Superior Court Judge Hon. Michael Morgan entered an order finding and
concluding as a matter of law that Alliance had complied with the charging orders
when distributing 10%.
7. Orlando did not appeal Judge Morgan’s order, nor did it seek to continue
to litigate a claim in the Foreign Judgment Action that it was entitled to recoup an
additional percentage of prior Alliance distributions. Rather, it instituted this third
action which has been designated as a complex business case and assigned to the
undersigned. Orlando asserts that it has standing to bring this action because
Nelson’s membership rights in Alliance were assigned to Orlando immediately upon
issuance of the charging orders. The Complaint and proposed Amended Complaint
contain a number of causes of action, each of which depend upon this central premise.
8. The Court now finds and concludes that this action is an improper
collateral attack on Judge Morgan’s order, and Orlando’s action should be dismissed
with prejudice. While Orlando named Nelson as a nominal defendant in this current
action, Nelson contends that he is a proper party to present multiple claims against
Orlando and Alliance Defendants. The Court disagrees and concludes that all claims
pending in the action should now be dismissed.
II. STATEMENT OF FACTS
9. Tweeten is the sole owner of Axis, an Illinois corporation with its
principal place of business in North Carolina. In 2007, Axis purchased a 51% interest
in Alliance, a Georgia limited-liability company that provides hotel management
services. Nelson v. Alliance Hosp. Mgmt., LLC, No. COA13-1325, 2014 N.C. App. LEXIS 521, at *2 (May 20, 2014). Tweeten hired Nelson as a consultant to help him
acquire Alliance. Id. After Axis fully acquired Alliance, Nelson worked for Alliance
until January 2011. Id.
10. On February 25, 2011, Nelson brought the Nelson Action against
Alliance Defendants. See Complaint, Nelson v. Alliance Hosp. Mgmt., LLC, No. 11
CVS 3217 (N.C. Super. Ct. Feb. 25, 2011), ECF No. 1. The action was designated as
an exceptional business case, Notice of Designation, Nelson, No. 11 CVS 3217 (N.C.
Super. Ct. March 22, 2011), ECF No. 17, and assigned to the undersigned,
Assignment Order, Nelson, No. 11 CVS 3217 (N.C. Super. Ct. March 24, 2011), ECF
No. 18. The Nelson Action arose from a dispute between Nelson and Alliance
Defendants “over the existence and extent of [Nelson’s] membership and ownership
interests in Alliance, and the refusal of [Alliance] Defendants to distribute to Nelson
any proceeds from a sale of a substantial portion of Alliance’s assets.” Nelson, No. 11
CVS 3217, 2013 NCBC LEXIS 5, at *1 (N.C. Super. Ct. Jan. 25, 2013).
11. Among his multiple claims, Nelson sought a declaratory judgment “that
[he] owns ten of Alliance’s sixty-one outstanding Membership Interest Units.” Id. at
*2. Nelson asserted that documents representing a 2009 Consent Resolution and a
2010 Admission of New Member evidenced the corporate action taken to issue him
ten ownership units. Nelson, No. 11 CVS 3217, 2013 NCBC LEXIS 2, at *5–6 (N.C.
Super. Ct. Jan. 3, 2013). He claimed the issuance was effective as of March 2010, see
id. at 24, a date at which one-hundred units were outstanding, and after which
Alliance redeemed units from a withdrawing member leaving only sixty-one units outstanding. Alliance Defendants contended that the documents were not valid
corporate actions but that Tweeten would nonetheless honor his oral promise of a
fixed 10% interest. Id. at *12, 19. All parties sought a declaration in their favor, but
the only claim remaining at trial was Nelson’s claim for a declaratory judgment. See
Nelson, 2016 N.C. App. LEXIS 412, at *10 (April 19, 2016).
12. A jury trial was held during the week of March 16, 2015. The parties
agreed to submit two special interrogatories to the jury: (1) “Did Alliance’s board of
directors issue 10 membership units to Kenneth E. Nelson?” and (2) “Does section
3.1.12 of the Operating Agreement void the transfer of the membership units?” Final
Judgment at 2, Nelson, No. 11 CVS 3217 (N.C. Super. Ct. March 27, 2015), ECF No.
133. The jury answered the first issue, “Yes” and the second issue, “No.” Id. The
jury was not asked to determine the percentage interest Nelson’s ten units represent
at any given time. The Court entered judgment directing Alliance’s Board of
Directors to “adopt a resolution, or otherwise amend the corporate records, to reflect
that Nelson owns 10 membership units.” Id. The Court never decreed Nelson’s
percentage ownership in Alliance.
13. Orlando brought its Foreign Judgment Action against Nelson within
weeks of the Nelson Action. In that action, on May 12, 2011, presiding judge Hon.
Michael O’Foghluda recognized a Tennessee judgment Orlando had secured against
Nelson, and issued a charging order directing that “any distribution, allocations, or
payments in any form otherwise due from Alliance Hospitality Management LLC, to
Kenneth E. Nelson up to $121,127.85 . . . shall instead be paid to Orlando Residence Ltd.” (Compl. ¶ 21, ECF No. 5.) On February 13, 2013, Judge O’Foghluda issued a
second charging order on the basis of a judgment entered for Orlando against Nelson
in the United States District Court for the District of South Carolina in the amount
of $4,000,000, plus post judgment interest. (See Compl. ¶ 22.)
14. The two Wake County suits proceeded simultaneously and predated the
present action. The same counsel represented Orlando as plaintiff in the Foreign
Judgment Action and Alliance Defendants in defense of the Nelson Action. During
the pendency of the proceedings, Alliance made distributions to or on behalf of its
members. It paid 10% to Orlando pursuant to the charging orders, reflecting Alliance
Defendants’ continued position that Nelson’s ownership interest is 10%.
15. In this present action, Orlando contends that Alliance made
distributions totaling $7,167,086 between May 12, 2011 and March 7, 2013, 10% of
which was paid to Orlando, (Compl. ¶ 50), and that Alliance made an additional
$5,762.00 distribution to Orlando on April 14, 2018, (Supp. Br. Sup. Mot. Leave Am.
& Supp. Compl. Orlando Residence, LTD ¶ 1, ECF No. 92). Orlando contends that
upon issuance of the first charging order in 2011 it immediately became an assignee
of Nelson’s membership interest in Alliance. However, Orlando neither intervened
in the Nelson Action nor advised this Court of its position that Alliance Defendants
were making deficient distributions to Orlando. It likewise raised no objection in the
Foreign Judgment Action at the time that distributions were made.
16. Following this Court’s entry of judgment in the Nelson Action on March
27, 2015, Orlando filed a motion in the Foreign Judgment Action on September 3, 2015, seeking to hold Alliance Defendants in contempt for failing to comply with the
charging orders when distributing 10% rather than 16.4% of the total distribution to
Orlando on Nelson’s behalf. Hon. Michael R. Morgan, now Associate Justice of the
North Carolina Supreme Court, heard the motion as the presiding Wake County
Superior Court Judge. Before ruling he heard argument from both Orlando and
Alliance Defendants, and he considered the substantial evidentiary record in and
rulings by this Court in the Nelson Action.
17. On November 20, 2015, Judge Morgan entered a written order
specifically concluding that, “as a matter of law . . . Alliance complied with the terms
of the Charging Order.” (Mem. Supp. Mot. Dismiss Pursuant Rules 12(b)(1) &
12(b)(6) Defs./Cross-cl. Defs. Alliance Hospitality Mgmt., LLC Ex. F, at ¶ 31 (“Order
Denying Mot. Civil Contempt”), ECF No. 21.7.) Orlando neither appealed that order
in the Foreign Judgment Action nor sought to continue litigating its right to
additional amounts of prior distributions as Nelson’s assignee.
III. PROCEDURAL HISTORY
18. Orlando initiated the present action on March 1, 2017. (See Compl.)
19. Orlando asserts claims for (1) declaratory judgment, (2) violation of the
charging orders/civil contempt, (3) violation of the Uniform Fraudulent Transfer Act,
(4) constructive trust, (5) conversion, and (6) accounting. (See Compl. ¶¶ 57–108.)
Orlando seeks a declaratory judgment “that there are 61 units outstanding in
Alliance, that Nelson owns 16.4% of Alliance, and that Alliance was and in the future is required to pay 16.4% of all distributions to [Orlando] until such time as [Orlando]’s
judgments against Nelson are satisfied.” (Compl. ¶ 68.)
20. Orlando named Nelson as a nominal defendant but asserts no claims
against Nelson. (See Compl. ¶ 12.)
21. This action was designated as a complex business case by the Chief
Justice on March 15, 2017, (Designation Order, ECF No. 7), and assigned to the
undersigned on the same day, (Assignment Order, ECF No. 8).
22. On March 30, 2017, Nelson filed a responsive pleading in which he seeks
to state claims against both Orlando and Alliance Defendants, all denominated as
“crossclaims.” (Answer, Defenses & Cross-cls. Kenneth E. Nelson, ECF No. 11.)
23. Alliance Defendants moved to dismiss Orlando’s claims on May 3, 2017.
(Mot. Dismiss Pursuant Rules 12(b)(1) & 12(b)(6) Defs./Cross-cl. Defs. Alliance
Hospitality Mgmt., LLC, ECF No. 20.)
24. On May 30, 2017, Alliance Defendants moved to dismiss Nelson’s
crossclaims or “to strike impertinent and irrelevant material, for a more definite
statement, and for the Court to enter appropriate orders to prevent future vexatious
litigation by Nelson against the Alliance Defendants.” (Mot. Dismiss Cross-cls.,
Strike, More Definite Statement & Entry Appropriate Order, ECF No. 31.)
25. Orlando also moved to dismiss Nelson’s crossclaims on May 30, 2017.
(Mot. Dismiss Cross-cls. Pl. Orlando Residence, Ltd., ECF No. 33.) 26. Nelson filed his Nominal Defendant Motion on August 31, 2017, arguing
that he is more than a nominal defendant and should be allowed to pursue claims.
(Nelson’s Mot. Re Status Nominal Def. 2–3, ECF No. 54.)
27. On September 5, 2017, the parties filed the record from the Foreign
Judgment Action. (See Notice Filing Record 12 CvS 12861, ECF No. 58.)
28. Nelson filed his Rule 56(f) Motion on October 12, 2017, claiming he is
entitled to conduct discovery before motions to dismiss his claims should be heard.
(Nelson’s Mot. Leave Heard & Continuance & Disc., ECF No. 66.)
29. On October 20, 2017, Orlando moved to amend its Complaint, (Mot.
Leave Am. & Suppl. Compl. Orlando Residence, Ltd. (“Orlando’s Mot. Leave Amend
Compl.”), ECF No. 72), which Alliance Defendants oppose, (see Resp. Opp’n Mot.
Leave Amend & Supp. Compl., ECF No. 83).
30. All Motions have been fully briefed and heard and are now ripe for
disposition.
IV. ANALYSIS
A. Alliance Defendants’ Motion to Dismiss Orlando’s Claims Must Be Granted
31. Alliance Defendants move to dismiss all of Orlando’s claims on the
grounds that (1) Orlando does not have standing to litigate the ownership structure
of Alliance, which is an internal corporate issue; (2) the Wake County Superior Court
has already ruled that Alliance has complied with the charging orders, and its ruling
bars at least claims for any distribution through the date of that ruling on November
20, 2015; (3) Orlando’s claims depend on Nelson’s rights, and any claim to enforce those rights is barred by the claim preclusion doctrine; and (4) Orlando’s claims are
barred by the applicable statute of limitations. (See Mem. Supp. Mot. Dismiss
Pursuant Rules 12(b)(1) & 12(b)(6) 2, ECF No. 21.1.) The Court considers this Motion
addressed to the Original Complaint, as intended. As discussed more fully below, the
Court finds that the same result would be proper if the Amended Complaint was
allowed and the same motion to dismiss was presented against it.
32. Orlando contends that this Court cannot properly consider the record in
the Foreign Judgment Action when ruling on a Rule 12(b)(6) motion, and in
particular, this Court should not consider Judge Morgan’s order denying Orlando’s
effort to hold Alliance Defendants in contempt. (Br. Opp’n Mot. Dismiss Defs. 11–12
(“Resp. Br.”), ECF No. 35.)
33. Orlando’s argument fails for two reasons. First, Alliance Defendants
challenge Orlando’s standing, which presents a matter of subject matter jurisdiction
and affords the Court a basis to consider matters beyond the Complaint. See DOT v.
Blue, 147 N.C. App. 596, 603, 556 S.E.2d 609, 617 (2001) (“When reviewing a motion
to dismiss for lack of subject matter jurisdiction . . . , a trial court may consider and
weigh matters outside the pleadings.”). Second, the Foreign Judgment Action is a
matter of public record and is properly considered by this Court, even on a Rule
12(b)(6) motion, because like this case, it was a proceeding before the Wake County
Superior Court. See Funderburk v. JP Morgan Chase Bank, N.A., 241 N.C. App. 415,
420, 775 S.E.2d 1, 4 (2015) (citing Stocum v. Oakley, 185 N.C. App. 56, 61, 648 S.E.2d 227, 232 (2007) (“Trial courts may properly take judicial notice of its own records in
any prior or contemporary case when the matter noticed has relevance.”)).
34. Significantly, Orlando asserts that, based on N.C. Gen. Stat. § 57-C-5-
03, which was in effect at the time the charging orders were entered, it acquired
standing to assert any of Nelson’s rights as an assignee of his interest in Alliance as
early as May 12, 2011 upon the issuance of a charging order in the Foreign Judgment
Action.1 (Resp. Br. 3.) On that basis, Orlando asked Judge Morgan to find Alliance
in civil contempt of the charging orders for distributing 10% instead of 16.4%. Fully
aware of the underlying facts and disputes, Judge Morgan made the specific and
precise finding that “as a matter of law . . . Alliance complied with the terms of the
Charging Order . . . .” (Order Denying Mot. Civil Contempt ¶ 31.) Yet, Orlando seeks
to obtain the exact opposite outcome in this present action on the same facts and on
essentially the same claim, asserting rights it insists it has held since the first
charging order.
35. North Carolina law clearly prohibits collaterally attacking the ruling of
one superior court judge by presenting the same issue to another judge. See State v.
Woolridge, 357 N.C. 544, 549, 59 S.E.2d 191, 194 (2003) (“No appeal lies from one
superior court judge to another.”) (citing Calloway v. Ford Motor Co., 281 N.C. 496,
501, 189 S.E.2d 484, 488 (1972)). Orlando seeks to avoid that rule by arguing that
Judge Morgan did not finally adjudicate the issue of what percentage ownership is
1 It is unclear whether Orlando’s rights as Nelson’s assignee are a matter of North Carolina
law or the law of Georgia, where Alliance was incorporated. The Court need not resolve that issue as the result is the same under the law of both states. represented by Nelson’s ten units. (Resp. Br. 1.) Unlike the claim preclusion
doctrine, the prior judge’s ruling need not be a final judgment before the rule applies.
See, e.g., Woolridge, 357 N.C. at 550, 59 S.E.2d at 194 (invalidating an order denying
a motion to suppress that was previously granted by another judge in the same
action). Judge Morgan squarely held that, as a matter of law, Alliance complied with
the charging order when distributing only 10% of proceeds to Orlando as Nelson’s
creditor. (Order Denying Mot. Civil Contempt ¶ 31.) Orlando presented the same
arguments to Judge Morgan on which it premises its claims in this action. Therefore,
Orlando is barred from making such a bare collateral attack and pursuing a new
finding that clearly contradicts Judge Morgan’s order. Because this essential issue
governs all of Orlando’s claims, they should all be dismissed.
36. Alliance Defendants’ Motion to Dismiss Orlando’s Claims should be
granted for the above reasons. The Court need not then delve into the myriad of
additional issues addressed in briefs and arguments, including the internal affairs
doctrine, the statute of limitations, res judicata, and the doctrine of issue preclusion.
B. Orlando’s Motion to Amend
37. Having found that the original Complaint must be dismissed, the Court
must next consider whether allowing Orlando to amend its Complaint would
command a different result. Orlando seeks leave to amend its Complaint to add a
contract claim on the theory that Alliance had a duty to Orlando, as an assignee of
Nelson’s rights, to pay Orlando the disputed 6.4% once the jury determined that
Nelson had ten ownership units in Alliance. (Orlando’s Mot. Leave Amend Compl. 3.) This claim is based on the same facts as the claims asserted in the original
Complaint. (See Orlando’s Mot. Leave Amend Compl. ¶¶ 10–11.)
38. The law is settled that the Court could, in its discretion, allow the
Motion to Amend, see Revolutionary Concepts, Inc. v. Clements Walker, PLLC, 227
N.C. App. 102, 110, 744 S.E.2d 130, 136 (2013) (stating that orders regarding motions
to amend a pleading are reviewed for abuse of discretion), but it can also, in its
discretion, deny an amendment that would be futile. See N.C. Council of Churches v.
State, 120 N.C. App. 84, 94, 461 S.E.2d 354, 360–61 (1995) (affirming denial of a
motion to amend as futile where “plaintiff’s claims, even as amended, cannot survive
[a dispositive motion]”).
39. The Court, in its discretion, finds and concludes that the Amended
Complaint would be futile because the new contract claim Orlando seeks to add would
be dismissed for the same reason that all claims presented in the initial Complaint
must be dismissed. For the above reasons, and in the Court’s discretion, Orlando’s
Motion to Amend should be denied, Defendants’ Motion to Dismiss Orlando’s Claims
should be granted, and Orlando’s Complaint should be dismissed with prejudice.
C. Nelson’s Right to Assert Claims
40. Nelson has filed a motion asking “that he not be identified or treated as
a ‘nominal’ defendant in this action” because he purports that he has an ownership
interest in the property at issue since, if Orlando prevails, the additional distributions that Alliance will be required to make to Orlando will reduce Orlando’s judgment
against Nelson. 2 (See Nelson’s Mot. Re Status Nominal Def. ¶ 1.)
41. Alliance Defendants contend that whether Nelson should only be
considered a nominal defendant, his crossclaims should be dismissed because they
are either not relevant to Orlando’s claims or are barred by the statute of limitations
or issue preclusion. (Br. Alliance Defs. Regarding Kenneth E. Nelson’s Status
“Nominal” Def. 3, ECF No. 63.)
42. Nelson asserts crossclaims against Alliance Defendants, some of which
are duplicative or appear to be more properly asserted only against Orlando. Most
likely out of an abundance of caution, Orlando has moved to dismiss any “crossclaims”
against it. (See Br. Supp. Mot. Dismiss Pursuant Rules 12(b)(1) & 12(b)(6), ECF No.
34.1.) The Court first notes that, in light of the dismissal of Orlando’s claims, none
of Nelson’s crossclaims are properly before this Court. A related underlying
transaction or occurrence is a prerequisite to the bringing of crossclaims. See N.C.
Gen. Stat. § 1A-1, Rule 13(g).
43. Furthermore, the Eastern District of Wisconsin entered a bill of peace
order enjoining Nelson “from filing any further legal actions or claims against
Orlando . . . .” Orlando Residence Ltd. v. GP Credit Co., LLC, 609 F. Supp. 2d 813,
817 (E.D. Wis. 2009). The Court finds that this order precludes Nelson’s right to
present claims against Orlando in this action. Accordingly, Nelson’s claims against
Orlando should be dismissed with prejudice.
2 It is obvious from the face of the record that any Alliance distributions will not approach
the amount of the judgments Orlando holds against Nelson. 44. To the extent Nelson’s crossclaims are asserted against Alliance
Defendants, the Court finds that Nelson’s claims for (1) common law conspiracy
against Tweeten, (2) statutory conspiracy under Wis. Stat. § 134.01 against Tweeten,
(3) conspiracy to slander title against Tweeten, (4) aiding and abetting slander of title
against Tweeten, (5) breach of fiduciary duty against Tweeten for freezing Nelson out
of Alliance, (6) constructive fraud against Tweeten and Axis, (7) equitable accounting,
(8) unjust enrichment, (9) quantum meruit, (10) breach of contract and breach of the
duty of good faith and fair dealing against Tweeten, (11) breach of contract and
breach of the duty of good faith and fair dealing against Axis, (12) derivative action
for constructive fraud against Tweeten and Axis, (13) derivative action for breach of
fiduciary duty against Tweeten, (14) breach of fiduciary duty, and (15) constructive
fraud, bear no relation to Orlando’s claims and so are not properly brought as
crossclaims pursuant to Rule 13(g). (See Br. Supp. Mot. Dismiss Cross-cls., Strike,
More Definite Statement & Entry Appropriate Orders 4–6, ECF No. 32.) The Court
notes that Nelson unsuccessfully sought to interject many of these claims or the facts
regarding them into the Nelson Action. However, the Court need not wade into the
waters of claim preclusion or estoppel to conclude that Nelson’s claims are in any
event not proper in this action. Rather, those claims are not proper because the right
to assert them depends on Orlando’s Complaint surviving, which it has not.
45. Nelson’s crossclaims, or counterclaims denominated as crossclaims
should be dismissed with prejudice, and Nelson’s Nominal Defendant Motion should
be denied as moot. D. Nelson’s Rule 56(f) Motion
46. Nelson moves for leave to be heard, and for a Rule 56(f) continuance of
Alliance Defendants’ Motion to Dismiss Orlando’s claims. His motion is directed not
to his own claims, but to Orlando’s claims. (See Nelson’s B. Supp. Mot. to be Heard
& Continuance & Discovery 1, ECF No. 67.) Orlando, not Nelson, is the proper party
to seek a continuance to allow discovery on Orlando’s claims against Alliance
Defendants. See N.C. Gen. Stat. § 1A-1, Rule 56(f). Accordingly, Nelson’s Rule 56(f)
Motion should be denied.
V. CONCLUSION
47. For the foregoing reasons, the Court orders as follows:
a. Alliance Defendants’ Motion to Dismiss Orlando’s Claims is
GRANTED and Orlando’s Complaint is DISMISSED with
PREJUDICE;
b. Orlando’s Motion to Amend is, in the Court’s discretion,
DENIED;
c. Orlando’s Motion to Dismiss Nelson’s Crossclaims is GRANTED
and all crossclaims against Orlando are DISMISSED with
d. Alliance Defendants’ Motion to Dismiss Nelson’s Crossclaims is
GRANTED and all crossclaims against Alliance Defendants are
DISMISSED with PREJUDICE;
e. Nelson’s Nominal Defendant Motion is DENIED; f. Nelson’s Rule 56(f) Motion is DENIED.
IT IS SO ORDERED, this the 20th day of December, 2018.
/s/ James L. Gale James L. Gale Senior Business Court Judge