Kingsdown, Inc. v. Hinshaw
| Decision Date | 25 March 2015 |
| Docket Number | 14 CVS 1701 |
| Court | Superior Court of North Carolina |
| Parties | KINGSDOWN, INCORPORATED, Plaintiff, v. W. ERIC HINSHAW, REBECCA HINSHAW, and ANNE RAY, Defendants. ANNE RAY, Third-Party Plaintiff, v. FRANK HOOD, THOMAS I. McLEAN, GLENDEL STEPHENSON, WILLIAM S. PEARSON, WAYNE E. TUMLIN, TUGGLE DUGGINS P.A., and JOHN DOE, Third-Party Defendants. |
Tuggle Duggins P.A. by Denis E. Jacobson, Jeffrey S. Southerland, and Alan B. Felts for Plaintiff Kingsdown, Incorporated and Third-Party Defendants Frank Hood, Thomas I. McLean, Grendel Stephenson, William S. Pearson, and Wayne E. Tumlin.
Smith Moore Leatherwood LLP by Robert R. Marcus, Heather C. White, Whit D. Pierce, and Richard A. Coughlin for Defendants W. Eric Hinshaw and Rebecca Hinshaw.
William C. Ray for Defendant Anne Ray.
Sharpless & Stovola, P.A. by Frederick K. Sharpless for Third-Party Defendant Tuggle Duggins P.A.
ORDER AND OPINION ON MOTIONS CONCERNING DEFENDANT ANNE RAY
{1} THIS MATTER is before the Court on (i) Defendant Anne Ray's ("Ms. Ray") Motion to Dismiss Plaintiff's Amended Complaint under Rules 12(b)(6) ("Ray's Rule 12(b)(6) Motion") and 12(b)(3) ("Ray's Rule 12(b)(3) Motion"), (ii) Defendant Anne Ray's Motion for More Definite Statement ("Ray's Rule 12(e) Motion for More Definite Statement") (collectively, "the Ray Rule 12 Motions"), [1] (iii) Plaintiff Kingsdown, Incorporated's ("Plaintiff, " "Kingsdown" or the "Company") Motion to Dismiss the Counterclaims of Defendant Anne Ray, (iv) Third-Party Defendants Frank Hood, Thomas I. McLean, Glendel Stephenson, William S. Pearson, and Wayne E. Tumlin's (collectively, "Individual Third-Party Defendants") Motion to Dismiss Third-Party Complaint ("Individual Third-Party Defendants' Motion to Dismiss Third-Party Complaint") and (v) Third-Party Defendant Tuggle Duggins, P.A.'s ("Tuggle Duggins" or the "Firm") Motion to Dismiss Third-Party Complaint ("Tuggle Duggins' Motion to Dismiss Third-Party Complaint") and for Attorney's Fees Pursuant to N.C. Gen. Stat. § 75-16.1 ("Tuggle Duggins' Motion for Attorney's Fees").[2]
{2} THE COURT, having considered the parties' Motions, briefs in support of and in opposition to the Motions, appropriate matters of record, and the arguments of counsel made at the March 11, 2015 hearing held in this matter, hereby DENIES the Ray Rule 12 Motions, GRANTS Kingsdown's Motion to Dismiss the Counterclaims of Defendant Anne Ray, GRANTS the Individual Third-Party Defendants' Motion to Dismiss Third-Party Complaint, GRANTS Third-Party Defendant Tuggle Duggins' Motion to Dismiss Third-Party Complaint, and DENIES Third-Party Defendant Tuggle Duggins' Motion for Attorney's Fees.
{3} Kingsdown commenced this action against Eric Hinshaw ("Mr. Hinshaw"), his wife, Rebecca Hinshaw ("Ms. Hinshaw"), and Ms. Ray on August 29, 2014 and subsequently filed an Amended Complaint on September 2, 2014, generally alleging that while serving as Kingsdown's Chief Executive Officer ("CEO") and Chairman of the Board of Directors (the "Board"), Mr. Hinshaw breached his "duty to act in good faith and in the best interests of Kingsdown" by "repeatedly engag[ing] in self-dealing . . . and . . . abus[ing] his position as a fiduciary, " which "resulted in substantial benefits for himself, [Ms.] Hinshaw, and Ms. Ray at the expense of Kingsdown." (Am. Compl. ¶¶ 6–7.)
{4} Specific to the Motions at issue, Kingsdown alleges that (i) Mr. Hinshaw and Ms. Ray authorized non-business expenses for each other and Ms. Hinshaw for reimbursement by Kingsdown (Am. Compl. ¶ 10); (ii) Mr. Hinshaw caused Kingsdown to enter into an employment agreement with Ms. Ray "that purported to bind Kingsdown to employ Ms. Ray and pay her an exorbitant salary until she retired from Kingsdown" without the knowledge, approval, or authority of Kingsdown's Board (the "Employment Agreement") (Am. Compl. ¶ 11); and (iii) on account of her actions, Ms. Ray is liable to Kingsdown for breach of fiduciary duty, constructive fraud, and civil conspiracy, and Kingsdown is entitled to a declaratory judgment declaring that the Employment Agreement is invalid and unenforceable against Kingsdown (Am. Compl. ¶¶ 31–46, 57–62).
{5} On October 7, 2014, Ms. Ray filed her Rule 12 Motions, seeking dismissal of Kingsdown's claims under Rule 12(b)(3) for improper venue or division and Rule 12(b)(6) for failure to state a claim, and an order under Rule 12(e) requiring Kingsdown to file a more definite statement of its claims against Ms. Ray.
{6} On October 17, 2014, Ms. Ray filed an (i) Answer to Kingsdown's Amended Complaint, (ii) Counterclaims against Kingsdown, and (iii) Third-Party Complaint against Third-Party Defendants Hood (individually and as an officer and director of Kingsdown), McLean (individually and as former Board Chair of Kingsdown), Stephenson (individually and as a director of Kingsdown), Pearson (individually and as a director of Kingsdown), Tumlin (individually and as an officer of Kingsdown), Tuggle Duggins and John Doe (individually and as a co-conspirator).
{7} On November 4, 2014, Ms. Ray filed an amended Answer and Counterclaim in response to Kingsdown's Amended Complaint. In her Counterclaim, Ms. Ray denies all liability and generally contends that she has been a good, faithful, and loyal employee of Kingsdown; that the Employment Agreement was fairly and properly entered; that Kingsdown engaged in improper conduct to disparage her reputation and attempt to force her resignation from the Company; and that Kingsdown ultimately terminated her without provocation or cause. She asserts Counterclaims against Kingsdown for alleged breach of contract (arising out of the Employment Agreement), unlawful termination, blacklisting in employment, civil conspiracy, intentional infliction of emotional distress, constructive fraud, unfair and deceptive trade practices under N.C. Gen. Stat. § 75-1.1, defamation, negligence, indemnification, and for declaratory judgment.
{8} On November 17, 2014, the Individual Third-Party Defendants filed their Motion to Dismiss Ray's Third-Party Complaint. On December 1, 2014, Kingsdown filed its Motion to Dismiss the Counterclaims of Defendant Anne Ray. On December 10, 2014, Tuggle Duggins filed its Motion to Dismiss Third-Party Complaint and Motion for Attorney's Fees.
{9} The Motions before the Court have been fully briefed, and the Court held a hearing on the Motions on March 11, 2015, at which all parties were represented by counsel. The time for additional submissions and arguments has now expired and the Motions are ripe for resolution.
{10} The parties advised the Court in the Joint Case Management Report and reaffirmed at the March 11 hearing that Ray's Rule 12(b)(3) Motion for improper venue or division has been resolved and is now moot. Accordingly, the Court concludes that Ray's Rule 12(b)(3) Motion should be denied as moot.
{11} The question for the Court on a Rule 12(b)(6) motion to dismiss is "whether, as a matter of law, the allegations of the complaint, 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, 355 S.E.2d 838, 840 (1987) (citation omitted). "The complaint must be liberally construed, and the court should not dismiss the complaint unless it appears beyond a doubt that the plaintiff could not prove any set of facts to support his claim which would entitle him to relief." Block v. County of Person, 141 N.C.App. 273, 277–78, 540 S.E.2d 415, 419 (2000) (citing Dixon v. Stuart, 85 N.C.App. 338, 354 S.E.2d 757 (1987)).
{12} When the complaint fails to allege the substantive elements of some legally cognizable claim, or where it alleges facts that defeat the claim, the complaint should be dismissed under Rule 12(b)(6). Hudson-Cole Dev. Corp. v. Beemer, 132 N.C.App. 341, 345–46, 511 S.E.2d 309, 312 (1999) (citations omitted). In sum, Rule 12(b)(6) dismissal is proper "when one or more of the following three conditions is satisfied: (1) when the complaint on its face reveals that no law supports plaintiff's claim; (2) when the complaint reveals on its face the absence of fact sufficient to make a good claim; (3) when some fact disclosed in the complaint necessarily defeats the plaintiff's claim." Oates v. JAG, Inc., 314 N.C. 276, 278, 333 S.E.2d 222, 224 (1985) (citations omitted).
{13} Here, Ms. Ray's arguments for dismissal are essentially based on her contentions that Kingsdown's allegations about her and her conduct are false, not that they fail to state a claim as a matter of law. Her Motion contains numerous factual assertions that contradict or add to the allegations of the Amended Complaint, fails to discuss a single case or proposition of law, and contains numerous violations of the Business Court Rules.[3]
{14} Although Ms. Ray's procedural violations may justify summary denial under the Rules of this Court, [4] the Court has nonetheless reviewed the Motion carefully on the merits.[5] Based on that review, the Court concludes that Kingsdown's Amended Complaint, when viewed under the applicable standard, contains allegations sufficient to state a claim upon which relief may be granted as to each of Kingsdown's claims for relief against Ms. Ray, and further, that the Amended Complaint does not contain allegations of fact that necessarily defeat Kingsdown's claims. Accordingly, the Court concludes that Ms. Ray's Rule 12(b)(6) Motion to Dismiss should be denied.
{15} In determining a motion for more definite statement under N.C. R.C.P. Rule 12(e), the Court considers whether "a pleading to which a responsive pleading...
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