Husqvarna Prof'l Prods. v. Robin Autopilot Holdings, LLC

• Docket Number: 23 CVS 5594
• Decision Date: 22 December 2023
• Citation: 2023 NCBC 88 .
• Parties: HUSQVARNA PROFESSIONAL PRODUCTS, INC. and HUSQVARNA BUSINESS SUPPORT AB, Plaintiffs, v. ROBIN AUTOPILOT HOLDINGS, LLC; ROBIN TECHNOLOGIES, INC.; ROBOTIC MOWING INVESTMENTS, LLC; RLAM AZALEA, LLC; JEFFREY R. DUDAN IRREVOCABLE TRUST; JEFFREY DUDAN; and ANTHONY HOPP, Defendants.
• Court: Superior Court of North Carolina

1

2023 NCBC 88.

HUSQVARNA PROFESSIONAL PRODUCTS, INC. and HUSQVARNA BUSINESS SUPPORT AB, Plaintiffs, v. ROBIN AUTOPILOT HOLDINGS, LLC; ROBIN TECHNOLOGIES, INC.; ROBOTIC MOWING INVESTMENTS, LLC; RLAM AZALEA, LLC; JEFFREY R. DUDAN IRREVOCABLE TRUST; JEFFREY DUDAN; and ANTHONY HOPP, Defendants.

No. 23 CVS 5594

Superior Court of North Carolina, Mecklenburg

December 22, 2023

Nelson Mullins Riley & Scarborough, LLP, by Corey E. ManningThomas G. Hooper, Adam J. Hegler, and James K. Lehman, for Plaintiffs/Counterclaim DefendantsHusqvarna Professional Products, Inc. and Husqvarna Business Support AB.

Jackson Walker LLP, by Blake T. Dietrich and Hailey Oestreich, and Lincoln Derr PLLC, by Tricia M. Derr and R Jeremy Sugg, for

Defendants/Counterclaim PlaintiffsRobin Autopilot Holdings, LLC, Robin Technologies Inc., Robotic Mowing Investments, LLC, RLAM Azalea, LLCJeffrey R. Dudan Irrevocable Trust, Jeffrey Dudan, and Anthony Hopp.

ORDER AND OPINION ON PLAINTIFFS' MOTION FOR LEAVE TO AMEND COMPLAINT

Louis A. Bledsoe, III, Chief Business Court Judge.

1.THIS MATTER is before the Court on PlaintiffsHusqvarna Professional Products, Inc. and Husqvarna Business Support AB's (together, "Plaintiffs")Motion for Leave to Amend Complaint(the "Motion") in the above-captioned case.^[1]

2.Having considered the Motion, the parties' briefs, affidavits, and materials offered in support of and in opposition to the Motion, the arguments of counsel at the hearing on the Motion, and other relevant matters of record, the Court hereby GRANTS in part and DENIES in part the Motion.

I.BACKGROUND

3.A summary of the allegations in Plaintiffs' Complaint^[2] is set forth in the Court's Order and Opinion on Defendants' Motion to Dismiss Claims Against the Member Defendants and Robin Technologies, Inc., filed 22 September 2023.^[3]

4.Plaintiff seeks leave to file its First Amended Complaint^[4] pursuant to Rule 15 of the North Carolina Rules of Civil Procedure(the "Rule(s)") to supplement the factual allegations contained in the Complaint, add DefendantRobin Autopilot Holdings, LLC's ("Robin") former CEO, Logan Fahey("Fahey"), as a partydefendant, assert additional claims, and reassert various existing claims (the "Proposed Amended Complaint").^[5]

5.Defendants oppose the Motion to the extent Plaintiffs seek to reassert claims for anticipatory breach of contract against Robin and Robin Technologies, Inc.(Claims One, Six, Seven, and Eight)^[6] and assert new claims against Fahey for tortious interference with contract (Claims Eleven and Twelve)^[7] and breach of fiduciary duty (Claim Thirteen).^[8]Defendants contend that these claims are futile because the claim for breach of fiduciary duty cannot survive a motion to dismiss under Rule 12(b)(1) and the claims for tortious interference with contract and anticipatory repudiation cannot survive a motion to dismiss under Rule 12(b)(6).^[9]

6.After full briefing, the Court convened a hearing on the Motion on 13 December 2023(the "Hearing"), at which all parties were represented by counsel.The Motion is now ripe for resolution.

II.LEGAL STANDARD

7.Rule 15 governs amendments to pleadings and provides in relevant part:

A party may amend his pleading once as a matter of course at any time before a responsive pleading is served or, if the pleading is one to which no responsive pleading is permitted and the action has not been placed upon the trial calendar, he may so amend it at any time within 30 days after it is served.Otherwise a party may amend his pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires.

N.C. R. Civ. P. 15(a).The rule "encourages trial courts to permit amendment liberally and evinces our State's 'general policy of allowing an action to proceed to a determination on the merits.'"Duke Energy Carolinas, LLC v. AG Ins. SA/NV, 2019 NCBC LEXIS 105, at *4 (N.C. Super. Ct. Dec. 10, 2019)(quotingHouse of RaefordFarms, Inc. v. Raeford, 104 N.C.App. 280, 282(1991)).

8."Valid grounds for which a motion to amend may be denied include undue delay, bad faith, dilatory motive, repeated failure to cure deficiencies, undue prejudice and futility of the amendment."Bartlett Milling Co. v. Walnut Grove Auction & Realty Co., 192 N.C.App. 74, 89(2008)(cleaned up)."The futility standard under Rule 15 is essentially the same standard used in reviewing a motion to dismiss under Rule 12(b)(6), but provides the [c]ourt liberal discretion to find that an amendment lacks futility.Nevertheless, the court may deny a motion to amend where the allegations would not be sufficient to survive a motion to dismiss."Simply the Best Movers, LLC v. Marrins' MovingSys., Ltd., 2016 NCBC LEXIS 28, at **5-6 (N.C. Super. Ct. Apr. 6, 2016)(internal citation omitted).

9.Applying these standards, therefore, a motion to amend is not futile when "the allegations of the [amended pleading], treated as true, are sufficient to state a claim upon which relief may be granted under some legal theory, whether properly labeled or not."Harris v. NCNB Nat'l Bank, 85 N.C.App. 669, 670(1987)."[D]ismissal pursuant to Rule 12(b)(6) is proper when '(1) the complaint on its face reveals that no law supports the plaintiff's 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 plaintiff's claim.'"Corwin v. Brit. Am. Tobacco PLC, 371 N.C. 605, 615(2018)(quotingWood v. Guilford Cnty., 355 N.C. 161, 166(2002)).

10."In the end, a 'motion for leave to amend is addressed to the sound discretion of the trial judge[.]'"Howard v. IOMAXIS, LLC, 2023 NCBC LEXIS 159, at *16 (N.C. Super. Ct. Nov. 29, 2023)(quotingChicopee, Inc. v. Sims Metal Works, Inc., 98 N.C.App. 423, 430(1990)).

11."Standing is a necessary prerequisite to a court's proper exercise of subject matter jurisdiction,"In re Z.G.J., 378 N.C. 500, 504(2021), and "[s]tanding arguments can be presented under both Rule 12(b)(1)and12(b)(6),"Barefoot v. Barefoot, 2022 NCBC LEXIS 8, at *3 (N.C. Super. Ct. Feb. 2, 2022)."Rule 12(b)(1) requires the dismissal of any action 'based upon a trial court's lack of jurisdiction over the subject matter of the claim.'"Watson v. Joyner-Watson, 263 N.C.App. 393, 394(2018)(quotingRule 12(b)(1)).

III.ANALYSIS

A.Breach of Fiduciary Duty

12.Plaintiffs seek to assert a derivative claim against Fahey for breach of the fiduciary duty he owed Robin as its CEO.^[10]Defendants contend that this claim is futile because Plaintiffs failed to make pre-suit demand on Robin, as required under Ohio law, and therefore lack standing to assert this claim derivatively.^[11]Plaintiffs admit that they failed to make pre-suit demand but contend that derivative demand was excused as futile under Ohio law.^[12]The Court agrees with Defendants.

13.Robin is an Ohio limited liability company("LLC"), and Plaintiffs seek to assert a breach of fiduciary duty claim against Fahey on behalf of Robin.^[13]N.C. G.S. § 57D-8-06 provides that "[i]n any derivative proceeding in the right of a foreign LLC [such as the case here], the matters covered by [Chapter 57D] will be governed by the law of the jurisdiction of the foreign LLC's organization except for the matters governed by G.S. 57D-8-02[Stay of Proceedings], 57D-8-04 [Discontinuance or Settlement], and 57D-8-05 [Payment of Expenses]."As a result, Plaintiffs' standing to bring a derivative claim on behalf of Robin is governed by the Ohio Revised Limited Liability Company Act (the "Ohio Act").Ohio Rev. Code Ann. §§ 1706.01-.84.

14.The Ohio Act repealed and replaced Ohio's former LLC Act (the "Former Ohio Act") in early 2022.The Former Ohio Act permitted a member to commence a derivative action on behalf of an LLC if a demand on the LLC is refused, or, "if an effort to cause those managers to commence the action is not likely to succeed."SeeOhio Rev. Code § 1705.49(repealed Jan. 2022).It is undisputed that no similar provision or other futility exception to the Former Ohio Act's demand requirement appears in the new statute.See generallyOhio Rev. Code §§ 1706.01-.84.

15.To the contrary, the Ohio Act provides, without exception, that a member of an LLC "may not commence a derivative action in the right of the limited liability company, or a series thereof, until both of the following occur":

(A) A written demand has been made upon the limited liability company or the series to take suitable action.

(B) Ninety days have expired from the date the demand was made unless either of the following applies (i) The member has earlier been notified that the demand has been rejected by the limited liability company or the series; (ii) Irreparable injury to the limited liability company or the series would result by waiting for the expiration of the ninety-day period.

Ohio Rev. Code. Ann. § 1706.612(LexisNexis 2021).

16.Plaintiffs argue that the Court should nonetheless read a demand futility exception into the Ohio Act, contending first that if the Ohio legislature intended to eliminate the exception, it would have stated so expressly, and second that the Ohio legislature did not intend to eliminate the futility exception from the new Ohio LLC Act because Ohio Rule of Civil Procedure 23.1 contains a procedure for corporate shareholders to allege demand futility, (seeOhio Civ. R. 23.1).The Court finds neither argument persuasive.

17."In construing a statute[under Ohio law], a court's paramount concern is the legislative intent in enacting the statute.In determining legislative intent, the court first looks to the language in the statute and the purpose to be accomplished.The...