Wright v. Lorusso

2022 NCBC 18

• Court: North Carolina Business Court
• Decided: April 22, 2022
• Docket: 20-CVS-10612
• Status: Published

Opinion

Wright v. LoRusso, 2022 NCBC 18.

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE SUPERIOR COURT DIVISION MECKLENBURG COUNTY 20 CVS 10612

NANCY WRIGHT; GREG WRIGHT; and JODY STANSELL, individually and as members of LORUSSO VENTURES, LLC d/b/a CINCH.SKIRT,

Plaintiffs,

v.

KRISTA LORUSSO, individually and ORDER AND OPINION ON NOMINAL as a member-manager of LORUSSO DEFENDANT LORUSSO VENTURES, VENTURES, LLC d/b/a LLC’S MOTION TO DISMISS SECOND CINCH.SKIRT, AMENDED COMPLAINT Defendant,

LORUSSO VENTURES, LLC d/b/a CINCH.SKIRT,

Nominal Defendant.

Miller Law Group, PLLC, by W. Stacy Miller, II, and Law Office of Matthew I. Van Horn, PLLC, by Matthew I. Van Horn, for Plaintiffs Nancy Wright, Greg Wright, and Jody Stansell.

Leonard G. Kornberg, P.A., by Leonard G. Kornberg, for Defendant Krista LoRusso.

Higgins & Owens, PLLC, by Sara W. Higgins, for Nominal Defendant LoRusso Ventures, LLC.

Conrad, J.

1. LoRusso Ventures, LLC is a small business that makes bed skirts for use in

hotels. It goes by the name Cinch.Skirt and has just four members. In this action,

three members (Nancy Wright, Greg Wright, and Jody Stansell) joined together to

sue the fourth (Krista LoRusso), asserting a mix of direct and derivative claims rooted in allegations of fraud and mismanagement. LoRusso responded with counterclaims

for everything from breach of contract to computer trespass. Discovery is ongoing,

and the merits of these claims and counterclaims are not yet at issue.

2. This decision concerns, instead, a procedural miscue. Cinch.Skirt,

appearing as a nominal defendant, contends that the Wrights and Stansell neglected

to serve it with a summons in timely fashion. It has moved to be dismissed from the

case as a result. (ECF Nos. 97, 98.)

3. Procedural missteps have stymied this litigation from its start in August

2020. Indeed, the original complaint was defective. (See ECF No. 3.) Because an

LLC is “a necessary party to any litigation brought derivatively in its name,” the

Wrights and Stansell should have named Cinch.Skirt as a nominal defendant.

Swenson v. Thibaut, 39 N.C. App. 77, 98 (1978). They didn’t, necessitating an

amendment.

4. After amending the complaint to add Cinch.Skirt, the Wrights and Stansell

obtained a summons issued to the company but didn’t immediately serve it. Sixty

days elapsed, and the summons became “dormant.” Valentine v. Solosko, 270 N.C.

App. 812, 815 (2020) (quoting Dozier v. Crandall, 105 N.C. App. 74, 75 (1992)). At

that point, the Wrights and Stansell could have bought more time by getting an

endorsement from the clerk of court or obtaining an alias or pluries summons. See

id. (discussing N.C. R. Civ. P. 4(d)). They did neither, inexplicably letting the

summons expire. It was this expired summons that the Wrights and Stansell

eventually served on Cinch.Skirt in May 2021—nearly six months after it was issued. 5. A series of motions followed. LoRusso (who apparently had received proper

service of process) moved to dismiss most of the claims against her for failure to state

a claim for relief. (See ECF Nos. 18, 19.) More pertinent here, Cinch.Skirt filed its

own motion to dismiss based on the belated service of the expired summons. (See

ECF Nos. 23, 24.) These motions were scheduled to be argued, but on the eve of the

hearing, the Wrights and Stansell moved to amend their complaint a second time.

(ECF No. 60.) With consent from LoRusso and Cinch.Skirt, the Court granted leave

to amend, denied the motions to dismiss without prejudice as moot, and directed the

Wrights and Stansell to file their second amended complaint by 3 December 2021.

(ECF No. 64.) That deadline passed without a filing. Five days delinquent, the

Wrights and Stansell filed the second amended complaint. (See 2d Am. Compl., ECF

No. 65.) They did not obtain a new summons issued to Cinch.Skirt.

6. Renewing its motion to dismiss, Cinch.Skirt now contends that service of

the expired summons in May 2021 was a nullity, that it has never received service of

a valid summons, and that the action is therefore discontinued as to the company

(but not LoRusso). It has a point. The Wrights and Stansell concede that they failed

to serve the summons on time. Their only defense—waiver—is baseless. After

accepting service of the expired summons through counsel, Cinch.Skirt objected to

the sufficiency of process and moved for dismissal at the very first opportunity. That

is hardly a waiver. Troubling too is that the Wrights and Stansell raised this defense

in a late-filed brief, continuing a pattern of missed deadlines and disdain for

procedural rules. 7. Even so, dismissal is the wrong remedy, at least in this case. Yes, failure to

serve Cinch.Skirt within the time allotted means that this action was discontinued

as to the company. See, e.g., Dozier, 105 N.C. App. at 78. But discontinuance is not

definitive. Usually, the plaintiff can fix the error simply by obtaining and serving a

new summons; the action then resumes and is “deemed to have commenced from th[e]

date” the new summons is issued. Id. Moreover, Cinch.Skirt is a necessary party

due to the presence of derivative claims on its behalf. Any dismissal would be

short-lived, perhaps requiring the Court to act on its own motion to rejoin the

company as a party. See, e.g., White v. Pate, 308 N.C. 759, 764 (1983); Rice v.

Randolph, 96 N.C. App. 112, 113 (1989).

8. To avoid more disruption and delay, the better course is to ensure now that

Cinch.Skirt is served as a nominal defendant rather than dismiss it and rejoin it later.

No prejudice would result. In theory, the date the action is deemed to have

commenced might implicate the statute of limitations, but that seems unlikely given

that the company has no claims against it. (See 2d Am. Compl. ¶ 117.) And in any

event, under Dozier, when the action is deemed to have commenced as to Cinch.Skirt

depends on when Cinch.Skirt is properly served with process, not whether it is or is

not dismissed from the case in the interim. 105 N.C. App. at 78.

9. Thus, the Court ORDERS that the Wrights and Stansell shall obtain and

serve summons on Cinch.Skirt on or before 5 May 2022. Having done so, the Court

DENIES the motion to dismiss as moot. SO ORDERED, this the 22nd day of April, 2022.

/s/ Adam M. Conrad Adam M. Conrad Special Superior Court Judge for Complex Business Cases