State v. Dunn, 070816 NCSUP, 13 CVS 1318

Docket Nº:11 CVS 1522, 13 CVS 1318
Opinion Judge:James L. Gale Chief Special Superior Court Judge.
Party Name:SIU S. TONG, Plaintiff, v. DAVID DUNN, TIMOTHY KRONGARD, ED MASI, SOPHIA WONG, and JANET WYLIE, Defendants. DAVID J. POWELL, Jr., et al., Plaintiffs, v. DAVID DUNN; TIMOTHY KRONGARD; ED MASI; SOPHIA WONG; and JANET WYLIE, Defendants.
Attorney:Alston & Bird LLP by Michael Kaeding and Gregg E. McDougal for Defendants. Poyner Spruill, LLP by Steven B. Epstein for Plaintiffs.
Case Date:July 08, 2016
Court:Superior Courts of Law and Equity of North Carolina
 
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2016 NCBC 49

SIU S. TONG, Plaintiff,

v.

DAVID DUNN, TIMOTHY KRONGARD, ED MASI, SOPHIA WONG, and JANET WYLIE, Defendants.

DAVID J. POWELL, Jr., et al., Plaintiffs,

v.

DAVID DUNN; TIMOTHY KRONGARD; ED MASI; SOPHIA WONG; and JANET WYLIE, Defendants.

Nos. 11 CVS 1522, 13 CVS 1318

Superior Court of North Carolina, Orange

July 8, 2016

Alston & Bird LLP by Michael Kaeding and Gregg E. McDougal for Defendants.

Poyner Spruill, LLP by Steven B. Epstein for Plaintiffs.

ORDER & OPINION

James L. Gale Chief Special Superior Court Judge.

{1} THIS MATTER is before the Court on Defendants' Motion for Summary Judgment on the Statute of Limitations Defense ("Motion") filed in these two consolidated lawsuits. For the reasons explained below, the Motion is GRANTED.

I. INTRODUCTION

{2} The forty-two Plaintiffs in these two consolidated cases either are former Engineous, Inc. ("Engineous") common shareholders or are former holders of Engineous common stock options. Their claims arise from the merger of Engineous with ENG Acquisition, Inc. ("ENG"), a subsidiary of Dassault Systèmes Simulia Corporation ("Dassault") (the "Merger"). Plaintiffs complain that the Merger was unfair because it delivered no value to the common shareholders but guaranteed preferential payments to certain preferred shareholders, some of whom are Defendants in this action.

{3} Defendants have consistently maintained that Plaintiffs' claims are time-barred.1 They initially presented their statute-of-limitations defense through a motion for judgment on the pleadings. In ruling on that earlier motion, the Court determined that the briefing and argument suggested the existence of factual disputes that impacted Defendants' limitations defense, so the Court permitted limited discovery on that issue. That discovery has been completed, and the material facts are undisputed.

{4} For Plaintiffs to prevail on the Motion, their claims must have accrued within the controlling limitations period. The parties disagree as to the source of law that must guide the Court's consideration. Plaintiffs contend that North Carolina law applies, because the application of a statute of limitations is a procedural issue that should be governed by the law of the forum state. Defendants contend that Delaware law should apply, because the internal-affairs doctrine, which all parties agree applies to the substantive claims, should trump more-general procedural requirements. The Court need not resolve any such conflict-of- law issues because it concludes, after thorough consideration, that Plaintiffs' claims are time-barred under the laws of both states.

II. PARTIES

{5} Plaintiffs were either common shareholders of Engineous or holders of options to purchase Engineous common shares. Plaintiff Sui Tong ("Tong") was a cofounder, former director, and common shareholder of Engineous. Tong resigned from his director position while the Merger was under consideration.

{6} Defendants David Dunn ("Dunn"), Timothy Krongard ("Krongard"), Ed Masi ("Masi"), Sophia Tsai2 ("Tsai") and Janet Wylie ("Wylie") were Engineous directors leading up to and during the time of the Merger. Wylie was Engineous's CEO, and Dunn, Krongard, and Tsai were affiliated with entities that had invested in Engineous as preferred shareholders.

{7} Engineous was a software company organized under the laws of Delaware, with a principal place of business in Wake County, North Carolina.

{8} Dassault is a publicly traded French company.

III. PROCEDURAL HISTORY

{9} This litigation consists of two related lawsuits: Tong v. Dunn, No. 11 CVS 1522 ( N.C. Super. Ct. filed July 20, 2011) and Powell v. Dunn, No. 13 CVS 1318 ( N.C. Super. Ct. filed Aug. 1, 2013).

{10} The Complaint in Tong was filed on July 20, 2011, and alleged claims for breach of fiduciary duty against Defendants and aiding-and-abetting breach of fiduciary duty against ENG and Engineous. Tong was designated a mandatory complex business case on August 26, 2011, and assigned to the undersigned on September 2, 2011.

{11} The Court dismissed Plaintiffs' aiding-and-abetting claims against ENG and Engineous on March 19, 2012, based on the doctrine of intracorporate immunity, Tong, 2012 NCBC LEXIS 16, at *17–20, and dismissed Tong's claims for breach of fiduciary duty against Defendants on May 18, 2012, holding that the claims were barred by the res judicata effect of Tong's dismissal of a prior action, Tong, 2012 NCBC LEXIS 31, at *20–21. The remaining Plaintiffs voluntarily dismissed their other claims without prejudice on August 6, 2012, and Tong appealed the Court's dismissal of his breach-of-fiduciary-duty claim. On December 17, 2013, the North Carolina Court of Appeals reversed this Court's dismissal of Tong's claim and remanded the breach-of-fiduciary-duty claim to this Court for further proceedings. See Tong, 231 N.C.App. at 503, 752 S.E.2d at 677. Tong is the only remaining Plaintiff in Tong, and ENG and Engineous are no longer Defendants in that litigation.3

{12} The Plaintiffs that voluntarily dismissed their claims without prejudice in Tong, then filed Powell on August 1, 2013, alleging claims for breach of fiduciary duty and unfair or deceptive trade practices ("UDTP") against Defendants based on the same factual allegations they previously stated in Tong. Powell was designated a mandatory complex business case on August 19, 2013, and assigned to the undersigned on August 21, 2013.

{13} On January 28, 2014, the Court granted in part Defendants' motion for judgment on the pleadings under Rule 12(c) of the North Carolina Rules of Civil Procedure ("Rules"), dismissing Plaintiffs' UDTP claims but reserving its ruling on the statute-of-limitations issue until after the completion of limited discovery and supplemental briefing.

{14} The Court consolidated Powell and Tong on February 27, 2014.

{15} The Motion has been fully briefed and argued and is ripe for decision.

IV. FACTS

{16} The Court does not make findings of fact on a motion for summary judgment, but it may "articulate a summary of the material facts which [it] considers are not at issue and which justify entry of judgment." See Hyde Ins. Agency, Inc. v. Dixie Leasing Corp., 26 N.C.App. 138, 142, 215 S.E.2d 162, 165 (1975). Here, the parties base their positions on an uncontested statement of facts, which is...

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