Talisman Software, Sys. & Servs., Inc. v. Atkins

2016 NCBC 1
CourtNorth Carolina Business Court
DecidedJanuary 4, 2016
Docket14-CVS-5834
StatusPublished

This text of 2016 NCBC 1 (Talisman Software, Sys. & Servs., Inc. v. Atkins) is published on Counsel Stack Legal Research, covering North Carolina Business Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Talisman Software, Sys. & Servs., Inc. v. Atkins, 2016 NCBC 1 (N.C. Super. Ct. 2016).

Opinion

Talisman Software, Sys. & Servs., Inc. v. Atkins, 2016 NCBC 1.

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE SUPERIOR COURT DIVISION COUNTY OF DURHAM 14 CVS 5834

TALISMAN SOFTWARE, SYSTEMS & ) SERVICES, INC., ) Plaintiff, ) ) OPINION AND ORDER v. ) ) CHARLES ATKINS, ) Defendant. )

THIS CAUSE was designated a mandatory complex business case by Order of the

Chief Justice of the North Carolina Supreme Court pursuant to N.C. Gen. Stat. § 7A-45.4(b)

(hereinafter, references to the North Carolina General Statutes will be to “G.S.”), and

assigned to the undersigned Special Superior Court Judge for Complex Business Cases.

THIS MATTER comes before the Court upon Defendant Charles Atkins’ (Pro Se)

Motion to Dismiss Plaintiff’s Complaint (“Motion to Dismiss”). Defendant’s Motion to

Dismiss cites as grounds for the motion Rules 12(b)(1), 12(b)(2),1 12(b)(3), and 12(h)(3)) of the

North Carolina Rules of Civil Procedure (“Rule(s)”). On July 20, 2015, the Court held a

hearing on the Motion to Dismiss.

THE COURT, having reviewed the Motion to Dismiss, the briefs in support of and in

opposition to the Motion to Dismiss, the arguments of counsel at the hearing, and other

appropriate matters of record, CONCLUDES as follows.

Robinson Bradshaw & Hinson, P.A., by Adam K. Doerr, Esq. and Stephen M. Cox, Esq., for Plaintiff.

Charles A. Atkins, appearing pro se.

1 Despite referencing 12(b)(2), Atkins makes no argument regarding lack of personal jurisdiction.

Atkins admits in his Answer that he is a resident and citizen of North Carolina.1 McGuire, Judge.

FACTUAL AND PROCEDURAL BACKROUND

Among other things, the Complaint alleges that:

1. Plaintiff Talisman Software, Systems & Services, Inc. (“Talisman Software” or

Plaintiff) is a Delaware corporation authorized to conduct business in North Carolina.

Talisman Software provides services related to environmental risk management. Robert

Gray (“Gray”) and Adam Kantor (“Kantor”) are the Directors of Talisman Software, and

during all times relevant to this lawsuit were the only members of its Board of Directors.

2. On June 9, 2010, Talisman Software entered into an Employment Agreement

(“Employment Agreement”) with Defendant Charles Atkins (“Atkins” or Defendant). The

Employment Agreement was entered into in England. Talisman Software hired Atkins as

its President and Chief Executive Officer at an annual salary of $250,000. Section 16.5 of

the Employment Agreement states: “This Agreement is governed by and shall be construed

in accordance with English law and the parties irrevocably submit to the exclusive

jurisdiction of the English courts.”

3. In or around spring 2011, without the knowledge of Talisman Software’s Board

of Directors, Atkins restructured his salary so that $50,000 was paid to Atkins as wages, and

the remaining $200,000 was paid as a “consulting fee” to a company that Atkins controlled,

Financial Engineering and Risk Management (“FERM”). Atkins had employment taxes only

from the $50,000 being paid to him as wages, but not from the $200,000 paid to FERM.

Atkins restructured his salary in this manner to avoid paying in excess of $2 million that he

owed to the United States Internal Revenue Service (“IRS”).

4. In September 2011, Plaintiff received a Notice of Levy from the IRS requiring

Talisman Software to turn over any “wages and salary” paid to Atkins. Atkins directed Talisman Software to apply the IRS levy only to the $50,000 paid to him as wages, but not to

the remaining $200,000 paid to FERM.

5. In November 2013, the Talisman Software Board of Directors determined that

the compensation structure that Atkins had established was improper, and directed him to

cease paying the consulting fee to FERM. Atkins did not follow this directive, and continued

to make monthly payments to FERM in January and February 2014. Upon learning that

Atkins had continued to make the improper payments, the Board directed Talisman

Software’s bank to freeze the Talisman Software bank account (“Talisman Software

Account”).

6. On or about February 24, 2014, Atkins caused the Talisman Software Account

to transfer $250,016 to FERM in five separate transactions.2 These payments were in

addition to the wages and consulting fee being paid to Atkins and FERM.

7. On February 26, 2014, Atkins brought suit in Durham County Superior Court

(14-CVS-2136) against Talisman Software’s directors, Gray and Kantor (“First Suit”). Atkins

purported to file the First Suit both individually and derivatively on behalf of Talisman

Software. On February 26, 2014, the Honorable Howard E. Manning issued temporary

restraining order prohibiting Gray and Kantor from (i) interfering with Atkins’ authority as

Talisman Software’s President and CEO, (ii) transferring Talisman Software assets, and (iii)

interfering with Atkins’ access to Talisman Software’s bank accounts.

8. On February 28, 2014, at the request of Gray and Kantor, the First Suit was

designated to the North Carolina Business Court by Order of the Chief Justice of the North

Carolina Supreme Court, and was assigned to the Honorable John R. Jolly, Jr. Following a

series of hearings before and orders issued by Judge Jolly, the Court and the parties believed

2 Although the Complaint does not so allege, the Court presumes the transfers took place prior to the

Talisman Account being frozen. the dispute between the parties had been resolved by (a) Atkins return of $175,000 of

Talisman Software funds to Talisman Software, and (b) Atkins agreement to resign as

President and CEO of Talisman Software. Talisman Software’s Board of Directors believed

that they had accounted for all missing funds and consented to removing a freeze that had

been applied to several accounts controlled by Atkins.

9. On March 6, 2014, Judge Jolly dismissed all claims that Atkins had

purportedly brought on behalf of Talisman Software. On March 21, 2014, Atkins dismissed

all remaining claims in the lawsuit. On March 28, 2014, Atkins resigned as an employee of

Talisman Software.

10. After the claims in the First Suit had been dismissed, Gray and Kantor

discovered that Atkins had not returned all of the funds that he transferred from Talisman

Software’s accounts. Talisman Software alleges that Atkins has not returned and currently

owes $75,000 to Talisman Software.

11. On December 16, 2014, Plaintiff Talisman Software filed its Verified

Complaint against Atkins (Durham County No. 14 CVS 5834) (“Second Suit”). The Verified

Complaint alleges claims against Atkins for Breach of Fiduciary Duty, Conversion, Breach of

Contract, Constructive Trust, and Fraudulent Misrepresentation. The claims arise from

allegations regarding Atkins actions during his tenure as President and CEO of Talisman

Software and his failure to return all of Talisman Software’s funds

12. On February 16, 2015, Atkins filed his Verified Defenses, Answer and

Counterclaims (“Answer”). Atkins did not expressly raise improper venue as a separately

titled affirmative defense. In response to the allegations in paragraph number 3 of the

Verified Complaint, however, Atkins pleaded as follows:

For the reasons listed herein, Defendant denies that jurisdiction and venue are proper. Talisman is a wholly owned subsidiary of Talisman Environmental.

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