In re Southeastern Eye Center-Pending Matters, 072216 NCSUP, 15 CVS 1648

Court:Superior Courts of Law and Equity of North Carolina
Attorney:Law Offices of Richard M. Greene, by Richard M. Greene, for Plaintiff Central Carolina Surgical Eye Associates, P.A. Teague Rotenstreich Stanaland Fox & Holt PLLC, by Lyn Broom and Steven B. Fox, for Defendant John D. Matthews, M.D. Oak City Law LLP, by Robert E. Fields, III, for Receiver Gerald ...
Opinion Judge:Louis A. Bledsoe, III Special Superior Court Judge
Party Name:IN RE SOUTHEASTERN EYE CENTER-PENDING MATTERS
Case Date:July 22, 2016
Docket Nº:15 CVS 1648
 
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2016 NCBC 57

IN RE SOUTHEASTERN EYE CENTER-PENDING MATTERS

No. 15 CVS 1648

Superior Court of North Carolina, Wake

July 22, 2016

          Law Offices of Richard M. Greene, by Richard M. Greene, for Plaintiff Central Carolina Surgical Eye Associates, P.A.

          Teague Rotenstreich Stanaland Fox & Holt PLLC, by Lyn Broom and Steven B. Fox, for Defendant John D. Matthews, M.D.

          Oak City Law LLP, by Robert E. Fields, III, for Receiver Gerald A. Jeutter, Jr.

          ORDER AND OPINION ON PLAINTIFF'S MOTION TO DISMISS AND TO STRIKE AND DEFENDANT'S MOTION TO DISMISS (CCSEA V. MATTHEWS)

          Louis A. Bledsoe, III Special Superior Court Judge

         {1} THIS MATTER is before the Court upon (i) Plaintiff Central Carolina Surgical Eye Associates, P.A.'s ("Plaintiff" or "CCSEA") Motion to Dismiss Second Counterclaim and to Strike Second Counterclaim1 ("CCSEA's Motion" or "CCSEA's Motion to Dismiss"), and (ii) Defendant John D. Matthews, M.D.'s ("Defendant" or "Dr. Matthews") Motion to Dismiss Plaintiff's First and Second Claims for Relief ("Dr. Matthews' Motion" or "Dr. Matthews' Motion to Dismiss").2 After considering CCSEA's Motion and Dr. Matthews' Motion, the briefs in support of and in opposition to each Motion, and the arguments of counsel at a hearing on June 14, 2016, the Court hereby DENIES Dr. Matthews' Motion and GRANTS in part and DENIES in part CCSEA's Motion.

         I. INTRODUCTION

         {2} This action is one of a number of related proceedings involving C. Richard Epes, M.D. ("Dr. Epes") or various entities that he, alone or with others, owns or controls that contain common issues of fact and law and which the Court has consolidated into a single "Master File" proceeding captioned In re Southeastern Eye Center – Pending Matters, 15 CVS 1648 (Wake County) (the "Consolidated Matters").

         {3} This specific lawsuit-CCSEA v. Matthews[3]-arises out of a dispute between CCSEA, formerly the operator of an ophthalmological practice in Greensboro, North Carolina principally owned and controlled by Dr. Epes, and Dr. Matthews, a physician who formerly worked at the practice and who remains a 25% shareholder of CCSEA.

         {4} The process by which the various related proceedings were consolidated in this Court and the procedures this Court has subsequently implemented to manage the Consolidated Matters are relevant to the determination of the pending Motions and thus will be discussed in some detail below.

         {5} The Court's involvement in the Consolidated Matters began on October 27, 2014, when John T. Harriott, M.D. ("Dr. Harriott") filed a complaint against CCSEA, Dr. Epes (a 75% shareholder of CCSEA), J. Mark McDaniel, Jr. (CCSEA's principal officer) ("Mr. McDaniel"), Dr. Matthews, 4 and Southeastern Cataract Laser Center, PLLC ("SCLC") in a lawsuit captioned Harriott v. Central Carolina Surgical Eye Associates, P.A., 14 CVS 9982 (Guilford County) (the "Harriott Action"). The Harriott Action was designated a complex business case and assigned to the undersigned.

         {6} On February 4, 2015, Old Battleground Properties, Inc. and Nivison Family Investments, LLC filed a complaint against CCSEA, SCLC, Dr. Epes, Dr. Epes's wife, Bessie K. Epes (Dr. Epes and Bessie K. Epes collectively, the "Epeses"), Mr. McDaniel, and other related defendants in a lawsuit captioned Old Battleground Properties, Inc. v. Central Carolina Surgical Eye Associates, P.A., 15 CVS 1648 (Wake County) (the "Nivison Action"). The Nivison Action was also designated a complex business case and assigned to the undersigned.

         {7} The Harriott and Nivison Actions each alleged, among other things, that the Epeses and Mr. McDaniel had operated CCSEA and various other entities that some or all of them owned or controlled to advance their personal financial benefit at the expense of various creditors of the Epeses and the Epeses' various entities.

         {8} On February 13, 2015, the Court entered an order in the Harriott Action finding substantial evidence that the Epeses' and Mr. McDaniel's conduct in connection with the operation of CCSEA and SCLC had been in furtherance of their efforts to defraud, avoid, and hinder creditors, and concluding that a receiver should be appointed with general authority to take fiscal and operational charge of CCSEA and SCLC for the benefit of Dr. Harriott and third-party creditors.

         {9} On February 25, 2015, the Court entered a similar order in the Nivison Action (the "Appointment Order"). The Appointment Order appointed Gerald A. Jeutter, Jr. (the "Receiver") to serve as a receiver for CCSEA, SCLC, and three other related entities-HUTA Leasing, LLC, Southeastern Eye Management, Inc., and EMS Partners, LLC (collectively, the "Initial Corporate Defendants"). (Appointment Order ¶ 48.)

         {10} The Appointment Order vested the Receiver with all power and authority available to a receiver under North Carolina law, including the authority to take possession and control of the Initial Corporate Defendants' assets and to assume full control and management of the Initial Corporate Defendants and any of their subsidiary entities. (Appointment Order ¶ 49.) The Appointment Order also enjoined all creditors of the Initial Corporate Defendants, including CCSEA, "from in any way interfering with or disturbing the property and assets" of the Initial Corporate Defendants. (Appointment Order ¶ 50(l).)

         {11} Through the Receiver's investigation of the Initial Corporate Defendants, it became apparent that a number of lawsuits5 were pending in the North Carolina courts involving the Epeses, the Initial Corporate Defendants, and other entities that the Epeses owned or controlled (the "Pending Actions"). On May 13, 2015 and upon proper request, the Chief Justice of the North Carolina Supreme Court designated each of the Pending Actions (other than the previously-designated Harriott and Nivison Actions) as an exceptional case pursuant to Rule 2.1 of the General Rules of Practice for the Superior and District Courts, and assigned those cases to the undersigned.

         {12} On June 19, 2015, because each of the Pending Actions presented common issues of fact and law and the parties sought to establish interests in or the right to execute upon the same property, the Court entered an order consolidating all of the Pending Actions into the Consolidated Matters. The order directed parties in all the Pending Actions to file subsequent pleadings and documents in the Consolidated Matters, not in the individually-captioned Pending Actions. (Order on Mot. to Consolidate ¶ 5.)

         {13} On June 22, 2015, the Court entered a Master Case Management Order to govern case activity in the Consolidated Matters (the "Master CMO"). In particular, the Master CMO provided for the continuing litigation of the Pending Actions as Consolidated Matters and established a claims procedure to be followed by all persons with claims against the Epeses or the Initial Corporate Defendants in lieu of filing additional lawsuits. (Master CMO § IV.A.) Under the terms of the Master CMO, any claim against an Initial Corporate Defendant that was not advanced in a Pending Action was to be submitted in writing to the Receiver for review, determination, and, if necessary, prosecution as if it were a Pending Action. (Master CMO § IV.A, B.) The Master CMO expressly bound "all parties to these consolidated actions, all parties asserting claims in the Receivership encompassed by these actions, and all parties added hereafter . . . ." (Master CMO § I.B.)

         {14} On July 14, 2015, the Court approved a settlement agreement and release between CCSEA and the Epeses (the "Order Approving Settlement and Release"). The Order Approving Settlement and Release also ordered, based on the Receiver's recommendation, that Mr. Jeutter be appointed as receiver for all other entities owned or controlled by the Epeses. (Order Appr. Settl. and Release Decretal ¶ 1.) These entities include: Surgical Eye Center, Inc., ME Greensboro, LLC, HUTA Leasing Company, and MEM of High Point, LLC (collectively with the Initial Corporate Defendants, the "Corporate Defendants").

         {15} The approved settlement and release, in relevant part, was premised upon the Epeses' agreement to make substantially all of their personal assets available to the Receiver for use in the negotiation of the resolution of claims against the Corporate Defendants and the Epeses. (Order Appr. Settl. and Release ¶ 4.) The Epeses' agreement was made in exchange for the Receiver's agreement to release the Epeses from all claims owned by the Corporate Defendants, including CCSEA. (Order Appr. Settl. and Release ¶ 4.) The transfer of the Epeses' assets to the Receiver was accomplished by transferring their assets to two limited liability companies, KEPES Newco, LLC and DRE Newco, LLC, set up for the purpose of liquidating the assets and paying the Epeses' debts. (Order...

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