Higgins v. Synergy Coverage Solutions, LLC

Citation2020 NCBC 4
Decision Date15 January 2020
Docket Number18 CVS 12548
CourtSuperior Courts of Law and Equity of North Carolina

Fosbinder Law Office, by Julie Fosbinder, for Plaintiff Arlene B. Higgins.

Robinson, Bradshaw & Hinson, P.A., by Pearlynn Houck Fitz E. Barringer, and Travis Hinman, for Defendants Synergy Coverage Solutions, LLC, Synergy Holdings, LLC, Synergy Insurance Company, and Bruce A. Flachs.

Louis A. Bledsoe, III Chief Business Court Judge

1. THIS MATTER is before the Court on Defendants' Motion to Dismiss Plaintiff's First Amended Complaint (the "Motion") under Rule 12(b)(6) of the North Carolina Rules of Civil Procedure ("Rule(s)") in the above-captioned case.

2. After reviewing the Motion, the briefs in support and opposition, the First Amended Complaint, certain documents identified and relied upon in Plaintiff's First Amended Complaint and submitted by Defendants in support of the Motion, and the arguments of counsel at the hearing on the Motion (the "Hearing"), the Court hereby GRANTS in part and DENIES in part the Motion.


3. The Court does not make findings of fact on motions to dismiss under Rule 12(b)(6). Rather, the Court recites only the relevant allegations asserted in Plaintiff's First Amended Complaint to determine the Motion.

4. This litigation arises from the termination of Plaintiff Arlene B. Higgins ("Higgins" or "Plaintiff") from her long-term employment with Defendant Synergy Coverage Solutions, LLC ("Synergy Solutions" or the "Company"). Higgins alleges that after she had been employed at Synergy Solutions for ten years, the Company terminated her employment in breach of an oral contract to employ her until the Company was sold, to prevent her from realizing the value of certain phantom units that might vest if she were an employee at the time of sale. Alternatively, Higgins argues she was terminated because of her age.

5. Synergy Solutions "operates as a managing general agent and underwriter, providing workers compensation administrative services for certain insurance companies[.]" (First Am. Compl. ¶ 2 [hereinafter "FAC"], ECF No. 31.) Defendant Synergy Holdings, LLC ("Synergy Holdings") is an insurance holding company and the parent of Synergy Solutions and Defendant Synergy Insurance Company ("Synergy Insurance"). Synergy Insurance is an affiliate of Synergy Solutions for which Synergy Solutions provides workers compensation administrative services.[1](FAC ¶¶ 2-4.)

6. At all relevant times, Defendant Bruce A. Flachs ("Flachs") was the "Organizer, President, Manager, and Chief Executive Officer" of Synergy Solutions, and the "Organizer, President, Manager, and Member" of Synergy Holdings. (FAC ¶ 5.)

7. Flachs and Higgins first began working together in the insurance industry in 1993. (FAC ¶ 9.) In August 2006, Flachs recruited Higgins to become the Chief Underwriting Officer of Synergy Solutions, a position she held until she was terminated in July 2017. (FAC ¶¶ 1, 8.) Higgins reported directly to Flachs, and Flachs conducted her annual performance reviews. (FAC ¶¶ 8, 18, 25-27, 35.)

8. In July 2009, Synergy Holdings adopted a "Phantom Compensation Plan" ("Plan") to give employees of Synergy Holdings and its subsidiaries, including Synergy Solutions, the opportunity to receive bonus compensation for their services in the form of a cash payout of "Phantom Units" upon the sale of Synergy Holdings if certain conditions were met. (FAC ¶ 17; see Mem. Supp. Defs.' Mot. Dismiss Pl.'s FAC Ex. 1, at ¶ 9 [hereinafter the "Plan"], ECF No. 42.2.) Each grant of Phantom Units under the Plan was governed by the terms of a Phantom "Award Agreement" between the employee recipient and Synergy Holdings. (See Mem. Supp. Defs.' Mot. Dismiss Pl.'s FAC Exs. 2-5, [hereinafter "Award Agreement(s)"], ECF Nos. 42.3- 42.6.) The Plan specifically provided that the value of any Phantom Units awarded to an employee would be paid to the employee upon the sale of 50% or more of Synergy Holdings's shares or upon the disposition of substantially all of the assets of that entity. (Plan ¶¶ 6(a), 17.) The Plan further provided, however, that any Phantom Units awarded under the Plan would be "forfeited and cancelled immediately" upon termination of the employee's employment with Synergy Holdings or its affiliates, "voluntarily or involuntarily, with or without cause[.]" (Plan ¶ 4(b).)

9. Higgins opted to receive four Phantom Unit awards under the Plan in lieu of bonuses and/or salary increases during her employment. These Awards totaled 8, 600 Phantom Units: 5, 000 in August 2009, 600 in August 2012, 2, 000 in July 2014, and 1, 000 in July 2015. (FAC ¶¶ 19, 22, 25-26.)[2]

10. According to Higgins, beginning in her 2009 performance review and continuing in each review thereafter, Flachs represented "that he was continuously pursuing and entertaining offers from third parties to purchase Synergy Holdings[.]" (FAC ¶ 18.) Higgins also alleges Flachs told her "that her retention in her management role was critical to the success of the company. . . . [and that] she would benefit financially when the company would eventually sell." (FAC ¶ 18.) According to Higgins, she relied on Flachs's representations in deciding to accept each award of Phantom Units.

11. Higgins's work responsibilities at Synergy Solutions and its affiliates increased with her seniority at the Company. While continuing to serve as Synergy Solutions's Chief Underwriting Officer, she took over management of the Company's "Premium Audit Department" in 2009, (FAC ¶ 20), and became a member of the Board of Directors of Synergy Insurance in 2012, (FAC ¶ 24). In 2014, she was given the additional title of Executive Vice President of Premier Markets and made Manager over Marketing. (FAC ¶ 24.) Higgins consistently received positive performance reviews from Flachs through July 2016. (See FAC ¶¶ 26-27.)

12. The relationship between Higgins and the Company deteriorated in 2017. Higgins alleges that "[o]n or about May 11, 2017, without any advance notice or prior discussion, Flachs informed Higgins of his plan to restructure the management of [Synergy Solutions, ] . . . placed two managers in the chain of command between himself and Higgins, . . . reduced the number of employees directly reporting to Higgins[, and] moved Higgins from her office into one of the smallest offices in the building[.]" (FAC ¶ 31.) Two months later, on July 14, 2017, Flachs terminated Higgins's employment, stating in her termination letter that her "work performance d[id] not meet the standards set forth by [Synergy Solutions]." (FAC ¶ 35.) Higgins was fifty years old when she was terminated. (FAC ¶ 36.) Her responsibilities were given to an employee who was thirty-nine years old. (FAC ¶ 35.)


13. Higgins initiated this action against Defendants on September 25, 2018, fourteen months after her termination. The case was designated as a mandatory complex business case on November 9, 2018, (Designation Order, ECF No. 1), and assigned to the undersigned on the same day, (Assignment Order, ECF No. 2).

14. After Defendants moved to dismiss the Complaint on December 31, 2018, (Defs.' Mot. Dismiss, ECF No. 20), Higgins filed the First Amended Complaint as of right on February 7, 2019, (see FAC).

15. Higgins now asserts claims against Synergy Solutions for breach of contract, defamation, and, in the alternative, quantum meruit/unjust enrichment; and against all Defendants for common law fraud, fraud in the inducement, constructive fraud, violation of N.C. G.S. § 143-422.2, and violation of the North Carolina Securities Act, N.C. G.S. § 78A-1 et seq., and, in the alternative, negligent misrepresentation. Higgins also seeks an accounting of Synergy Holdings from the Synergy Defendants and asserts a claim in the alternative against the Synergy Defendants for alleged violation of the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq. (See FAC.)

16. Defendants filed the Motion on March 12, 2019, seeking the dismissal of all claims asserted in the First Amended Complaint. (Defs.' Mot. Dismiss Pl.'s FAC [hereinafter "Mot. Dismiss FAC"], ECF No. 41.) The Motion has been fully briefed, and the Hearing on the Motion was held on May 21, 2019, at which all parties were represented by counsel. The Motion is now ripe for resolution.


17. In ruling on a motion to dismiss for failure to state a claim under Rule 12(b)(6), the Court's inquiry is "whether the allegations of the complaint, if treated as true, are sufficient to state a claim upon which relief can be granted under some legal theory." Corwin v. Brit. Am. Tobacco PLC, 371 N.C. 605, 615, 821 S.E.2d 729, 736 (2018) (quoting CommScope Credit Union v. Butler & Burke, LLP, 369 N.C. 48, 51, 790 S.E.2d 657, 659 (2016)).

18. "It is well established that dismissal pursuant to Rule 12(b)(6) is proper when '(1) the complaint on its face reveals that no law supports the . . . claim; (2) the complaint on its face reveals the absence of facts sufficient to make a good claim; or (3) the complaint discloses some fact that necessarily defeats the . . . claim.'" Id., 821 S.E.2d at 736-37 (quoting Wood v Guilford Cty., 355 N.C. 161, 166, 558 S.E.2d 490, 494 (2002)). The Court will not grant a motion to dismiss "unless it appears to a certainty that [the] plaintiff is entitled to no relief under any state of facts which could be proved in support of the claim." Sutton v. Duke, 277 N.C. 94, 103, 176 S.E.2d 161, 166 (1970) (emphasis and...

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