Richardson v. Utili-Serve, LLC, 2020 NCBC 83.
STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE SUPERIOR COURT DIVISION CATAWBA COUNTY 20 CVS 1429
JASON T. RICHARDSON; JAMES COLE RICHARDSON; and PARKER H. RICHARDSON, ORDER AND OPINION ON DEFENDANTS’ MOTIONS TO Plaintiffs, DISMISS AND FOR RULE 11 SANCTIONS AND ON PLAINTIFFS’ v. MOTION FOR SUMMARY AND EXPEDITED RELIEF OR FOR UTILI-SERVE, LLC and CLIFFORD PRELIMINARY INJUNCTION LEE DIETRICH,
Defendants.
1. Jason, James, and Parker Richardson are members of Utili-Serve, LLC.
They suspect Utili-Serve’s fourth member and only manager, C. Lee Dietrich, of
self-dealing and mismanagement. To investigate, the Richardsons made a demand
to inspect the company’s records and audit its books. Utili-Serve mostly refused the
demand, prompting the Richardsons to file this action and seek a court-ordered
inspection and audit.
2. The parties have filed dueling motions. Dietrich and Utili-Serve ask the
Court to dismiss the complaint and award sanctions. The Richardsons request either
summary relief or a preliminary injunction requiring Utili-Serve to turn over the
requested records and to permit an audit. For the following reasons, the Court
DENIES Dietrich and Utili-Serve’s motions and GRANTS in part and DENIES in
part the Richardsons’ motion.
Ellis & Winters LLP, by Curtis J. Shipley, Andrew S. Chamberlin, and Scottie Forbes Lee, for Plaintiffs Jason T. Richardson, James Cole Richardson, and Parker H. Richardson. Shumaker, Loop & Kendrick, LLP, by Frederick M. Thurman, Jr., for Defendant Utili-Serve, LLC.
Bell Davis & Pitt, by Marc E. Gustafson, for Defendant Clifford Lee Dietrich.
Conrad, Judge.
I. BACKGROUND
3. The following background is drawn from the allegations of the complaint
and its attachments.
4. Utili-Serve provides electrical utility services to energy suppliers. (See
Compl. ¶ 12, ECF No. 12.) It has four members, divided into two classes. Dietrich is
the sole Class A member, owns 51% of the company, and serves as its manager. The
Richardsons are Class B members and collectively own the remaining 49%. (See
Compl. ¶ 13.)
5. Much of this dispute has to do with the difference between Class A and Class
B membership. When the members revised Utili-Serve’s operating agreement in
2017, they agreed that “Class A Members” (meaning Dietrich) “shall have all voting
rights on all matters” and that “Class B Members” (meaning the Richardsons) “shall
not have any vote in the conduct or management of the business or affairs of”
Utili-Serve. (Compl. Ex. 1 § 2.1 (“Member”), ECF No. 3.1 [“Op. Agrmt.”].) In another
section, they further agreed that “no amendment to this Agreement . . . will be valid
or binding . . . unless in writing and signed by the Manager and by the Members
holding at least a Majority in Interest of the Class A Members” (again meaning
Dietrich). (Op. Agrmt. § 11.4.) 6. Though not allowed a say in company management, Class B members
retained the right to their share of distributions and a limited right to transfer their
interests. (See Op. Agrmt. §§ 7.1, 8.1.) They also gained broad inspection and audit
rights. Section 11.1 allows that “[e]ach Member, at such Member’s expense, may
inspect and make copies of the records maintained by the Company and may require
an audit of the books of account maintained by the Company to be conducted by
independent accountants for the Company.” (Op. Agrmt. § 11.1.)
7. Controversy flared up in late 2019. The Richardsons began questioning
Dietrich about suspected self-dealing and other mischief, which he denies. (See
Compl. ¶ 16.) Then Dietrich proposed changing the company’s tax status, drawing a
protest from the Richardsons that doing so would run afoul of the operating
agreement and devalue their interests. (See Compl. ¶¶ 14, 18.) Dietrich made the
change anyway. (See Compl. ¶ 18.) 1
8. A few months later, the Richardsons made a written demand to inspect
Utili-Serve’s records and to audit its books under section 11.1 of the operating
agreement and N.C.G.S. § 57D-3-04. (See Compl. ¶ 19; Compl. Ex. 2 at 1, 6–7, ECF
No. 3.2.) They specified thirty-eight categories of requested records, ostensibly to
ascertain the company’s financial condition, to investigate self-dealing and other
1 Dietrich claims that he amended Utili-Serve’s operating agreement in January 2020 to
permit or ratify the change in tax status. This document, which is attached to the motion to dismiss, is signed only by Dietrich and states that it is “effective as of the Effective Date without the need for its execution by any of the Class B Members.” (Defs.’ Ex. 1 at p.16 n.*, ECF No. 9.) The Richardsons say that this is the first time they’ve seen an executed copy. (See Pls.’ Opp’n to Mots. to Dismiss & for Sanctions 4 n.1, ECF No. 14 [“Pls.’ MTD Opp’n”].) This amendment, if valid, does not alter the relevant terms of the operating agreement, and neither side has suggested that it has any effect on the asserted claims or pending motions. improprieties by Dietrich, and to determine the value of the members’ interests. (See
generally Compl. Ex. 2.) Dated May 1, 2020, the letter called for a response within
two weeks. (Compl. Ex. 2 at 7.)
9. Utili-Serve responded on May 12. (Compl. ¶ 20; see also Compl. Ex. 3, ECF
No. 3.3.) It stated that, after receiving the demand, Dietrich “determine[d] it is in the
Company’s best interest to amend” section 11.1 of the operating agreement. (Compl.
Ex. 3 at 3.) Without notice to the Richardsons and without their consent, Dietrich
rewrote section 11.1 to eliminate the Class B members’ audit right altogether and to
narrow their inspection right so that it mirrors section 57D-3-04(a). (See Compl. ¶ 20;
Compl. Ex. 3 at 5–7.) 2 On that basis, the company agreed to produce a few
documents—the articles of organization, some financial statements, and one or two
others—but said the rest were “not within the scope of N.C.G.S. § 57D-3-04” and
therefore not open to inspection or audit. (Compl. Ex. 3 at 3.)
10. Believing that Utili-Serve’s response was designed “to prevent them from
investigating potential mismanagement,” the Richardsons sued. (Compl. ¶ 21.) They
ask the Court to exercise its mandamus power to compel an inspection of the
requested records. (See Compl. ¶ 27.) In addition, they claim that the denial of their
inspection and audit demand and the unilateral amendment of section 11.1 are
breaches of the operating agreement, the implied duty of good faith and fair dealing,
and Dietrich’s fiduciary duties. (See Compl. ¶¶ 32, 36, 40, 41.)
2 Exhibit 3 contains two documents: Utili-Serve’s response letter and the amendment to section 11.4. Pincites are to the .pdf document page numbers, not those of the individual documents. 11. Dietrich and Utili-Serve have moved to dismiss the complaint for failure to
state a claim under Rule 12(b)(6) of the North Carolina Rules of Civil Procedure. They
have also sought sanctions under Rule 11. (ECF No. 8.) The Richardsons oppose
those motions and have moved for a summary order or a preliminary injunction
compelling an inspection and an audit. (ECF No. 15.)
12. The motions have been fully briefed, and the Court held a hearing on
October 6, 2020. These matters are ripe for determination.
II. DEFENDANTS’ MOTIONS
13. The motion to dismiss, if granted, would resolve all issues, and so it is the
natural place to start. In deciding the motion, the Court takes the allegations of the
complaint as true and views the facts and permissible inferences in the light most
favorable to the Richardsons. See, e.g., Sykes v. Health Network Sols., Inc., 372 N.C.
326, 332, 828 S.E.2d 467, 471 (2019). Exhibits to the complaint are deemed to be part
of it and may also be considered. See Krawiec v. Manly, 370 N.C. 602, 606, 811 S.E.2d
542, 546 (2018); N.C. R. Civ. P. 10(c).
A. Mandamus Claim for Inspection and Copying
14. The first claim for relief is for a summary order compelling Utili-Serve to
allow the Richardsons to inspect and copy the records specified in the demand letter.
(See Compl. ¶ 27.) In their opening brief, Dietrich and Utili-Serve argue, without
citation, that this “is simply a remedy” and not an independent cause of action. (Defs.’
Br. Supp. Mots. to Dismiss & for Sanctions 12, ECF No. 9 [“Defs.’ MTD Br”].) They
have since abandoned that argument, bowing to decisions holding that an LLC member may “employ the . . . mandamus power of the courts to enforce his right to
inspect company records.” Miller v. Burlington Chem. Co., 2016 NCBC LEXIS 190,
at *11 (N.C. Super. Ct. Sept 27, 2016); see also Amory v. ACTS Contracting, Inc., No.
19 CVS 166 ¶¶ 33–37 (N.C. Super. Ct. Apr. 16, 2019).
15. In their reply brief, Dietrich and Utili-Serve argue that the claim is moot
because they have agreed to provide some records and the Richardsons are not
entitled to more. A claim is moot only “when a determination is sought on a matter
which, when rendered, cannot have any practical effect on the existing controversy.”
Roberts v. Madison Cnty. Realtors Ass’n, Inc., 344 N.C. 394, 398–99, 474 S.E.2d 783,
787 (1996) (citation omitted).
16. The chief issue in this case is whether the Richardsons have the right to
inspect documents that Utili-Serve refused to provide, which make up the bulk of the
demand. That is a live dispute. See Gvest Real Estate, LLC v. JS Real Estate Invs.,
LLC, 2017 NCBC LEXIS 32, at *7–8 (N.C. Super. Ct. Apr. 6, 2017) (denying motion
to dismiss when parties had “live dispute over the scope of [the member’s] inspection
rights”). The Court therefore denies the motion to dismiss the first claim for relief.
B. Breach of Contract
17. The Richardsons claim that the refusal to allow an inspection and audit was
a breach of section 11.1 of the operating agreement. (See Compl. ¶ 32.) Dietrich and
Utili-Serve move to dismiss the claim because, after receiving the demand, Dietrich
amended section 11.1 to narrow the inspection right and excise the audit right. “Following” the amendment, they contend, there could be no breach. (Defs.’ MTD Br.
6–7.)
18. This argument assumes that the amendment is not only valid but also
“retroactive,” reaching back in time to expunge rights the Richardsons had when they
made the demand. (Defs. MTD Br. 7.) The Richardsons respond that a unilateral,
retroactive amendment is not enforceable. (See Pls.’ MTD Opp’n 11–13.) It would
certainly raise difficult questions. See, e.g., Sears Roebuck & Co. v. Avery, 163 N.C.
App. 207, 219, 593 S.E.2d 424, 432 (2004) (citing cases that have “concluded that the
power to unilaterally amend contractual provisions without limitation gives rise to
an illusory contract”). But the Court need not wade into that issue because the
amendment isn’t retroactive. On its face, it “is effective the 11 day of May, 2020”—
ten days after the Richardsons made their demand. (Compl. Ex. 3 at 5.)
19. Thus, the pertinent question is whether the complaint states a claim for
breach of section 11.1 as it existed at the time of the demand. The unamended section
11.1 is broad, allowing any member to “inspect and make copies of the records
maintained by” Utili-Serve. (Op. Agrmt. § 11.1.) At no point do Dietrich and
Utili-Serve contend that the Richardsons’ demand exceeded the operating
agreement’s scope. They do contend in a footnote that there was no breach because
“[s]ection 11.1 imposed no specific obligation as to when inspection must be allowed.”
(Defs.’ MTD Br. 6 n.20.) Had Utili-Serve merely dawdled, it might have a point, but
it affirmatively refused the inspection and audit demand. (See Compl. ¶¶ 19, 20, 32,
Ex. 3.) This written refusal of rights granted by the operating agreement and properly exercised by the Richardsons is enough to allege a breach. See, e.g., Profile
Invs. No. 25, LLC v. Ammons E. Corp., 207 N.C. App. 232, 236–37, 700 S.E.2d 232,
235–36 (2010); Kezeli v. Logan, 2015 NCBC LEXIS 31, at *17–18 (N.C. Super. Ct.
Mar. 26, 2015).
20. The Court therefore denies the motion to dismiss the claim for breach of
contract.
C. Breach of Implied Duty of Good Faith and Fair Dealing
21. The Richardsons claim that Dietrich’s unilateral amendment of section 11.1,
without notice, was a breach of the implied duty of good faith and fair dealing. (See
Compl. ¶¶ 36, 38.) According to Dietrich, section 11.4 of the operating agreement
gives him the “clear and unambiguous” power to amend it without the Richardsons’
consent. (Defs.’ MTD Br. 8–9; see also Op. Agrmt. § 11.4.) He and Utili-Serve contend
that the implied covenant cannot “override the Operating Agreement’s express
language, which allowed for the amendment.” (Defs.’ MTD Br. 9.)
22. If Dietrich and Utili-Serve are right about their interpretation of section
11.4, they may lose more than they gain. The power that Dietrich claims to have is
one that courts view with skepticism. When one party to a contract “retains an
unlimited right to decide later the nature or extent of his performance,” the promise
is illusory and unenforceable. Sears Roebuck, 163 N.C. App. at 219, 593 S.E.2d at
433 (quoting 1 Walter H.E. Jaeger, Williston on Contracts § 43, at 140 (3d ed. 1957)).
In other words, construing the operating agreement to give Dietrich the power to amend it unilaterally and with no duty to do so in good faith would threaten the
validity of the disputed amendment.
23. For now, that issue remains in the distance. Nothing in section 11.4
expressly states that Dietrich has the unrestrained power to amend the operating
agreement. At this early pleading stage, the Court assumes without deciding that
the operating agreement, like “every contract,” has “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.” Bicycle Transit Auth., Inc. v. Bell, 314
N.C. 219, 228, 333 S.E.2d 299, 305 (1985) (citation and quotation marks omitted); see
also N.C.G.S. § 57D-2-30(e) (stating that “the implied contractual covenant of good
faith and fair dealing . . . govern[s] the administration and enforcement of operating
agreements”).
24. The Court also concludes that the Richardsons have adequately alleged a
breach of the implied covenant. The complaint alleges that Dietrich amended section
11.1, without notice, in retaliation for the Richardsons’ assertion of their inspection
and audit rights and with the intent to extinguish or curtail those rights. (See Compl.
¶¶ 36, 38.) The complaint further alleges that Dietrich aimed to insulate himself
“from an investigation of potential improprieties in the management of Utili-Serve.”
(Compl. ¶ 36.) Taking these allegations as true, the Court denies the motion to
dismiss the claim for breach of the implied duty of good faith and fair dealing. See,
e.g., Maglione v. Aegis Fam. Health Ctrs., 168 N.C. App. 49, 58, 607 S.E.2d 286, 292
(2005) (concluding that there was evidence of breach of covenant of good faith and fair dealing when the defendant exercised discretionary authority to switch a “bonus
calculation method” without notice and with improper motives).
D. Breach of Fiduciary Duty
25. The fourth claim is for breach of fiduciary duty against Dietrich, again
premised on his amendment of section 11.1. To state a claim for breach of fiduciary
duty, a plaintiff must allege the existence of a fiduciary duty, a breach of that duty,
and an injury proximately caused by the breach. See Green v. Freeman, 367 N.C. 136,
141, 749 S.E.2d 262, 268 (2013). Dietrich challenges only the first element. (See
Defs.’ MTD Br. 9–10.)
26. The usual rule is that members of an LLC do not owe fiduciary duties to one
another. An exception is that the “holder of a majority interest who exercises control
over the LLC owes a fiduciary duty to the minority interest members.” Vanguard Pai
Lung, LLC v. Moody, 2019 NCBC LEXIS 39, at *17 (N.C. Super. Ct. June 19, 2019)
(quoting Fiske v. Kieffer, 2016 NCBC LEXIS 22, at *9 (N.C. Super. Ct. Mar. 9, 2016));
see also Kaplan v. O.K. Techs., L.L.C., 196 N.C. App. 469, 473, 675 S.E.2d 133, 137
(2009).
27. Here, Dietrich is Utili-Serve’s majority member and its only manager.
(Compl. ¶ 13; Op. Agrmt. Schedule 1.) He possesses all voting and managerial rights
to the exclusion of the other members. (See Op. Agrmt. § 2.1 (“Member”), 3.1, 4.2, 4.3,
4.4.) And he has the sole authority to sell the company’s assets while claiming to
have the power to amend the operating agreement without consent of the other
members. (See Op. Agrmt. §§ 9.1, 11.4.) In Dietrich’s own words, he has “plenary power,” and the Richardsons have “no voting, management, or operational rights.”
(Defs.’ MTD Br. 11.) The facts stated in the complaint, along with the provisions of
the operating agreement, suffice to allege that Dietrich is Utili-Serve’s controlling
member. See Vanguard Pai Lung, 2019 NCBC LEXIS 39, at *19–20; Plasman v.
Decca Furniture (USA), Inc., 2016 NCBC LEXIS 80, at *25 (N.C. Super. Ct. Oct. 21,
2016).
28. Dietrich also argues that he acted in his capacity as manager, not as
majority member. (See Defs.’ MTD Br. 9–12.) The complaint alleges otherwise. (See,
e.g., Compl. ¶¶ 13, 20, 40, 41.) And indeed, Dietrich signed the amendment twice,
once as the Class A member and once as manager. (See Compl. Ex. 3.)
29. The Court therefore denies the motion to dismiss the claim for breach of
fiduciary duty.
E. Rule 11
30. Rule 11 sanctions may be imposed when a pleading is not well grounded in
fact, lacks legal sufficiency, or was filed for an improper purpose. See N.C. R. Civ. P.
11(a); Bryson v. Sullivan, 330 N.C. 644, 655, 412 S.E.2d 327, 332 (1992). Dietrich
and Utili-Serve argue that the Richardsons’ claims lack a factual or legal basis “[f]or
the reasons set forth in support of [the] motion to dismiss.” (Defs. MTD Br. 13.)
Having denied the motion to dismiss, the Court finds no basis for imposing sanctions
and denies that motion too. III. PLAINTIFFS’ MOTION
31. Next, the Court turns to the Richardsons’ motion for summary relief or for
a preliminary injunction. They ask for an order to compel Utili-Serve to allow an
inspection of its records and an audit of its books. (See Pls.’ Br. Supp. Mot. Summ.
Relief or Prelim. Inj. 9, ECF No. 16.) At the hearing, counsel for the Richardsons
confirmed that their request for summary relief, grounded in the Court’s mandamus
power, is limited to the inspection right.
A. Mandamus
32. By statute, an LLC member has a qualified right to inspect and copy the
company’s records. See N.C.G.S. § 57D-3-04(a). An operating agreement may expand
the members’ inspection rights but cannot diminish them. See id. § 57D-2-30(b)(4).
“Thus, when determining whether a member has a right to access requested
information, a court must look to section 57D-3-04 and to the LLC’s operating
agreement.” Miller, 2016 NCBC LEXIS 190, at *12. Although no statute creates an
express cause of action for an LLC member to enforce his inspection rights, the
mandamus power of the courts is available for that purpose, including to enforce
greater access allowed by the operating agreement. See id. *11, 18–19; Amory, No.
19 CVS 166 ¶¶ 33–37.
33. A writ of mandamus is a court order “to a board, corporation, inferior court,
officer or person commanding the performance of a specified official duty imposed by
law.” Morningstar Marinas/Eaton Ferry, LLC v. Warren Cnty., 368 N.C. 360, 364,
777 S.E.2d 733, 736 (2015) (citation and quotation marks omitted). Mandamus is appropriate when (1) the petitioner has a “clear legal right to the act requested,”
(2) the respondent has a “legal duty to perform the act,” (3) performance of the act is
“ministerial in nature and does not involve the exercise of discretion,” (4) the
respondent “did not perform the act” and “the time for performance has expired,” and
(5) there is no “alternative, legally adequate remedy” available. Id. (citation,
quotation marks, and alternations omitted).
34. The material facts are undisputed. 3 At the time the Richardsons made their
demand, the operating agreement allowed any member to “inspect and make copies
of the records maintained by” Utili-Serve, without exception. (Op. Agrmt. § 11.1.)
They requested thirty-eight categories of records, including financial statements,
company credit card statements, employee paystubs, expense reports, bank
statements, lease agreements, documents related to Utili-Serve’s change in tax
status, and other documents related to specified transactions involving Dietrich and
his family. (See Compl. Ex. 2 at 2–7; Richardson Aff. ¶¶ 13, 14, ECF No. 16.1.) With
few exceptions, Utili-Serve denied that request. (See Compl. Ex. 3 at 2–4; Richardson
Aff. ¶¶ 15, 16.) The denial was based on Dietrich’s decision—after receiving the
demand—to amend and narrow section 11.1 so that each member may inspect
3 Most of the testimony from the parties’ affidavits is irrelevant, featuring back-and-forth
arguments over whether Dietrich engaged in misconduct and whether the Richardsons miscalculated certain distributions and offsets. (See, e.g., ECF No. 16.1 ¶¶ 6–11, 18; ECF No. 20 ¶¶ 8, 9, 11–22; ECF No. 21.2 ¶¶ 2–7, 9; ECF No. 21.3 ¶¶ 2–5; ECF No. 23 ¶¶ 2–10.) These exchanges have no bearing on the scope of the Richardsons’ inspection right, and the merits of any potential direct or derivative claims for alleged wrongdoing are not before the Court in this case. company records only as “required under [N.C.G.S.] § 57D-3-04(a).” (Compl. Ex. 3 at
6; see also Compl. Ex. 3 at 3; Dietrich Aff. ¶ 10, ECF No. 20.)
35. Without question, the broad language of section 11.1 gave the Richardsons
the right to inspect the requested records at the time of their demand. The only
argument offered by Dietrich and Utili-Serve is that section 11.1 “as amended” is
narrower. (See, e.g., Defs.’ Opp’n Mot. Summ. Relief or Prelim. Inj. 1, 9–13, ECF No.
19 [“Defs.’ PI Opp’n”].) As discussed, though, the amendment is not retroactive. Even
assuming Dietrich had the unilateral power to extinguish rights already claimed and
exercised (which is not at all clear), he did not do so. The amendment, if valid, became
effective on May 11 and going forward. When the Richardsons invoked their
inspection right on May 1, that right vested and was unaffected by the purported
amendment. The Richardsons were entitled to inspect the requested records at that
time and are now entitled to enforce that right.
36. Dietrich and Utili-Serve do not make any other arguments. In passing, they
refer to the amendment of section 11.1 as a “clarifying” amendment, presumably
suggesting that section 11.1’s scope was always the same as that of section 57D-3-04.
(See Defs.’ PI Opp’n 4; Dietrich Aff. ¶ 10.) No reasonable reader could read the
language in that way. The amendment was narrowing, not clarifying.
37. Dietrich and Utili-Serve also question the purpose of the demand. (See
generally Defs.’ PI Opp’n.) They stop short of saying the Richardsons’ purpose is
disqualifying, though. In any event, section 11.1 does not expressly require a member
making an inspection request to have any particular purpose, and this Court has held that a shareholder’s effort to investigate possible mismanagement or
misappropriation by corporate leadership—the purpose the Richardsons have
articulated here, (see Richardson Aff. ¶¶ 6–11, 13, 14, 16–18)—is a proper purpose in
the analogous area of shareholder inspection rights. See Sharman v. Fortran Corp.,
2018 NCBC LEXIS 27, at *14–15 (N.C. Super. Ct. Apr. 2, 2018).
38. The Court concludes, based on the undisputed material facts, that the
requirements for mandamus relief have been met. When the Richardsons made their
request on May 1, they had an unqualified contractual right to the records they
requested. Utili-Serve had no discretion to refuse, yet the evidence is undisputed
that Utili-Serve has not complied and has refused the demand. The Court therefore
grants the Richardsons’ motion for summary relief to enforce their inspection right
under the operating agreement. The Court need not and does not decide whether
section 57D-3-04 also supports their claim to the requested records.
39. Neither side has directly addressed whether the requested records are
confidential. It seems safe to assume that some of the records, touching on financial
matters, are sensitive. In its discretion, the Court will allow the parties to negotiate
a protective order and will condition access to the records on reasonable safeguards
to protect any sensitive information from dissemination.
B. Preliminary Injunction
40. The Richardsons also ask the Court to enter a preliminary injunction
compelling Utili-Serve to allow an audit of its books. A preliminary injunction’s
purpose is to preserve the status quo during litigation. See A.E.P. Indus., Inc. v. McClure, 308 N.C. 393, 401, 302 S.E.2d 754, 759 (1983) (citation omitted). It is proper
only when the plaintiff can show a likelihood of success on the merits and a likelihood
of irreparable harm. See id. at 401, 302 S.E.2d at 759–60. Because the Richardsons
seek a mandatory preliminary injunction, their burden is heightened: the case must
be “urgent”; the right must be “clear”; and the injury must be “immediate, pressing,
irreparable, and clearly established.” Auto. Dealer Res., Inc. v. Occidental Life Ins.
Co. of N.C., 15 N.C. App. 634, 639, 190 S.E.2d 729, 732 (1972) (citations and quotation
marks omitted).
41. Even if the Richardsons are likely to succeed on the merits, they have failed
to show irreparable harm. Neither their opening brief nor their reply brief adequately
articulates any immediate and pressing harm that an injunction can prevent. If some
harm exists, it seems likely that access to the requested records will lessen the blow.
In short, the Richardsons have not carried their heightened burden, and the Court
denies the request for a mandatory injunction compelling an audit of Utili-Serve’s
books.
IV. CONCLUSION
42. The Court DENIES Dietrich and Utili-Serve’s motions to dismiss and for
Rule 11 sanctions.
43. The Court GRANTS in part and DENIES in part the Richardsons’ motion
for summary and expedited relief or, in the alternative, for preliminary injunction
and ORDERS as follows: a. The parties shall file either a jointly proposed consent protective order or
separately proposed orders for the Court’s consideration no later than December
4, 2020.
b. No later than fourteen days after the Court’s entry of the consent
protective order, Utili-Serve shall make available to the Richardsons all
documents specified in the May 1, 2020 demand letter located at ECF No. 3.2.
c. In all other respects, the Court DENIES the Richardsons’ motion.
44. The Court further ORDERS that no later than December 4, 2020, the
parties shall conduct a case management meeting, with their case management
report and proposed case management order due no later than fourteen days
thereafter. See Business Court Rules (“BCR”) 9.1, 9.2. In addition to the matters
specifically listed in BCR 9, the report should address what matters remain for
resolution by the Court.
SO ORDERED, this the 17th day of November, 2020.
/s/ Adam M. Conrad Adam M. Conrad Special Superior Court Judge for Complex Business Cases