Best Cartage, Inc. v. Stonewall Packaging, LLC, 060811 NCSUP, 10 CVS 4283

Docket Nº:10 CVS 4283
Opinion Judge:Gale, Judge.
Party Name:BEST CARTAGE, INC., Plaintiff, v. STONEWALL PACKAGING, LLC, and JACKSON PAPER MANUFACTURING COMPANY, Defendants, and GGG, INC. d/b/a GRISANTI, GALEF and GOLDRESS as Receiver for STONEWALL PACKAGING, LLC, Defendant-Intervenor.
Attorney:Carruthers & Roth, P.A. by J. Patrick Haywood and Rachel S. Decker for Plaintiff. Long, Parker, Warren, Anderson & Payne, P.A. by Philip S. Anderson for Defendant Stonewall Packaging, LLC and for Defendant-Intervenor GGG, Inc. d/b/a Grisanti, Galef and Goldress as Receiver for Stonewall Packaging...
Case Date:June 08, 2011
Court:Superior Courts of Law and Equity of North Carolina
 
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2011 NCBC 15

BEST CARTAGE, INC., Plaintiff,

v.

STONEWALL PACKAGING, LLC, and JACKSON PAPER MANUFACTURING COMPANY, Defendants,

and

GGG, INC. d/b/a GRISANTI, GALEF and GOLDRESS as Receiver for STONEWALL PACKAGING, LLC, Defendant-Intervenor.

No. 10 CVS 4283

Superior Court of North Carolina, Forsyth

June 8, 2011.

          Carruthers & Roth, P.A. by J. Patrick Haywood and Rachel S. Decker for Plaintiff.

          Long, Parker, Warren, Anderson & Payne, P.A. by Philip S. Anderson for Defendant Stonewall Packaging, LLC and for Defendant-Intervenor GGG, Inc. d/b/a Grisanti, Galef and Goldress as Receiver for Stonewall Packaging, LLC.

          Wyrick Robbins Yates & Ponton LLP by Lee M. Whitman and McKenna Long & Aldridge LLP by Gregory S. Brow for Defendant Jackson Manufacturing Company.

          ORDER AND OPINION

          Gale, Judge.

         {1} This matter is before the Court on Defendant Jackson Paper Manufacturing Company's Motion to Dismiss. For the reasons stated below, the motion is GRANTED.

          I. INTRODUCTION

         {2} The action arises from a transportation services contract Plaintiff Best Cartage, Inc. ("Best Cartage") entered with Defendant Stonewall Packaging, LLC ("Stonewall"), knowing it to be a limited liability company. Defendant Jackson Paper Manufacturing Company ("Jackson") is neither a party to the contract nor referred to in it directly or indirectly. The contract disclaims any third-party beneficiaries, except for Stonewall's lender, which is specifically identified, and for which specific rights are enumerated. Best Cartage initially brought its contract claim solely against Stonewall. After Stonewall was placed into receivership, by its Amended Complaint Best Cartage alleges that it negotiated the contract with Jackson after Stonewall had been formed, believed Jackson to be Stonewall's partner, but elected to contract solely with Stonewall. Best Cartage claims that Jackson is individually liable under the contract because it was a partner or joint venturer. Alternatively, Best Cartage seeks to pierce Stonewall's corporate veil to impose Stonewall's contract liabilities on Jackson.

         {3} Best Cartage invokes theories of partnership, joint venture, and corporate liability based on broadly stated allegations. Nevertheless, the Amended Complaint omits key assertions necessary to state actionable claims upon which relief can be granted, and inferences necessary to provide those elements are inconsistent with the facts alleged. In particular, the Amended Complaint does not support an inference that the contract made with Stonewall individually was a partnership contract for partnership purposes, and it does not adequately allege a wrong or injustice beyond the underlying breach of contract that would justify piercing Stonewall's corporate veil to reach Jackson. Accordingly, all claims in the Amended Complaint against Jackson should be dismissed. Best Cartage's recovery, if any, should be against Stonewall, the party with which it elected to contract.

         II. PROCEDURAL BACKGROUND

         {4} Best Cartage initiated this action in Forsyth County Superior Court on June 7, 2010, by a Complaint naming Stonewall as the sole defendant and containing a single claim for breach of contract. The Complaint was served on June 9, 2010, the same day that Stonewall was placed into receivership by the Jackson County Superior Court on petition by Stonewall's lender, Atlantic Capital Bank.1Stonewall's receiver intervened on September 28, 2010. On November 23, 2010, Best Cartage moved for leave to file its Amended Complaint in this action to assert claims against Jackson. The Honorable Stuart Albright, sitting in Forsyth County, granted leave to file the Amended Complaint on December 13, 2010. The case was then designated as a complex business case and assigned to the undersigned.

         {5} The Amended Complaint attaches and incorporates the agreement between Best Cartage and Stonewall. The Amended Complaint carries forward the breach of contract claim against both Stonewall and Jackson and adds four new claims to impose that contract liability on Jackson, including: 1) partnership by estoppel; 2) joint venture; 3) de facto partnership; and 4) piercing of the corporate veil.2 These new claims seek to impose liability on Jackson for Stonewall's breach of its contract with Best Cartage. Jackson timely moved to dismiss all claims asserted against it by the Amended Complaint. The motion has been fully briefed, and the Court heard oral argument.

         III. STATEMENT OF FACTS3

         {6} Best Cartage is a North Carolina corporation based in Forsyth County. It is a contract carrier authorized by the Interstate Commerce Commission. Stonewall is a Delaware limited liability company4 with its principal place of business in Sylva, Jackson County, North Carolina. Stonewall manufactured parts of cardboard boxes, incorporating materials manufactured by others. The Amended Complaint asserts that Stonewall was formed at Jackson's insistence to vertically integrate the manufacture and assembly of cardboard boxes and to incorporate a middle layer into the cardboard sheets manufactured by Jackson.

         {7} Best Cartage and Stonewall executed an agreement attached to the Amended Complaint as Exhibit A, incorporated by the Amended Complaint, and titled "Exclusive Transportation Agreement - Stonewall Packaging, LLC, Sylva, North Carolina and Best Cartage, Inc., Kernersville, North Carolina – November 5, 2009" ("Agreement"). Paragraph 17 of the Amended Complaint alleges that Stonewall had been formed several months before the Agreement was executed. Best Cartage alleges that Jackson, not Stonewall, negotiated the terms of the Agreement with Best Cartage, and that one of Jackson's officers signed the Agreement on Stonewall's behalf.

         {8} Best Cartage alleges that when entering the Agreement, it was aware of and relied on the fact that Stonewall and Jackson were partners or engaged in a joint venture. More specifically, Paragraphs 35 and 36 of the Amended Complaint allege:

35. Plaintiff relied upon the strength and reputation of Defendant Jackson in entering into the Agreement and in purchasing the equipment necessary to fulfill Plaintiff's obligations under the Agreement.

36. Based on the representations of Defendants through words and conduct as described herein, Plaintiff executed the Agreement and purchased equipment necessary to fulfill Plaintiff's obligations under the Agreement, which because of Defendants' breach of the Agreement was a detrimental change in position for Plaintiff.5

         {9} Best Cartage asserts that Jackson made both public and private statements that it was in a joint venture or partnership with Stonewall.6 More specifically, the Amended Complaint refers to statements made by Jackson to obtain tax incentives which were shared between the two companies. As evidence of a partnership or joint venture, Best Cartage further alleges that Jackson undertook a series of actions on Stonewall's behalf without compensation from Stonewall, including site selection and acquisition, equipment selection, purchasing efforts and other actions on which Jackson employees labored. The Amended Complaint does not, however, assert that Stonewall and Jackson shared all profits and losses for Stonewall's operations or that Stonewall and Jackson each had the right to direct or control the actions of the other.

         {10} The Agreement provides for an initial term of December 1, 2009 until November 30, 2012, with subsequent extensions. Best Cartage was to be Stonewall's exclusive transporter, and it was required to provide transportation services on a daily basis. The Agreement includes a choice of law provision that provides that the construction and performance of the Agreement is to be governed by North Carolina law. This choice of law provision does not address extra-contractual claims.

         {11} Best Cartage and Stonewall were the only parties to the Agreement, although Stonewall's lender is also expressly referred to by name. The Agreement includes a merger clause. The Agreement makes no reference to Jackson or any other partner or joint venturer. The Agreement prohibits assignment. It also expressly disclaims any third-party beneficiaries, except for specific rights enumerated in favor of Stonewall's lender.

         {12} Best Cartage alleges it acquired thirty-seven tractor-trailers to service the Agreement.7 Stonewall ceased operations at an unspecified date prior to May 12, 2010. As a result, the Amended Complaint asserts that, as of May 12, 2010, Best Cartage had direct damages totaling $500, 678.48, of which the predominant component is unpaid freight invoices, and consequential damages of $1, 315, 336.51, representing the loan balance resulting from the tractor-trailers acquisition.

         {13} Best Cartage alternatively alleges that if no partnership or joint venture liability is imposed on Jackson, Jackson so dominated Stonewall as to justify piercing the corporate veil to impose Stonewall's obligations on Jackson. Paragraph 55 of the Amended Complaint broadly alleges: "Upon information and belief, Defendant Jackson so controlled and dominated Defendant Stonewall in order to commit a wrong, to perpetuate the violation of a legal duty, was dishonest and unjust, and in contravention of Plaintiff's legal rights." The Amended Complaint is sparse as to any allegation of what this wrong or duty is, other than Stonewall's underlying breach of contract. In an effort to assert such a wrong, Paragraph 53 of the Amended Complaint asserts that Jackson did not actually sell its component medium paper to Stonewall, so that upon receivership Jackson was able to retrieve its product from Stonewall.8 Best Cartage does not allege any fraud or deception in negotiating the Agreement, and again alleges that it was aware when...

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