RCJJ, LLC v. RCWIL Enterprises, LLC
| Citation | 2016 NCBC 44 |
| Decision Date | 20 June 2016 |
| Docket Number | 14 CVS 3392 |
| Parties | RCJJ, LLC; DO GOOD REAL ESTATE, LLC; DO GOOD REAL ESTATE OF WILMINGTON, LLC and JOHNATHAN JACKSON, Plaintiffs, v. RCWIL ENTERPRISES, LLC d/b/a Nest Realty Wilmington and RYAN CRECELIUS, Defendants. |
| Court | Superior Courts of Law and Equity of North Carolina |
Shipman & Wright, LLP, by W. Cory Reiss, Esq. for Plaintiffs.
Murchison, Taylor & Gibson, PLLC, by Michael Murchison Esq. for Defendants.
THIS CAUSE, designated a mandatory complex business case by Order of the Chief Justice of the North Carolina Supreme Court, pursuant to N.C. Gen. Stat. § 7A-45.4(b) (), and assigned to the undersigned Special Superior Court Judge for Complex Business Cases, comes before the Court upon Defendants' Motion for Summary Judgment, pursuant to Rule 56 of the North Carolina Rules of Civil Procedure ("Rule(s)"). On February 22, 2016, the Court held a hearing on the Motion.
THE COURT, after reviewing the Motion for Summary Judgment, briefs in support of and in opposition to the Motion for Summary Judgment, the record evidence filed by the parties, the arguments, and other appropriate matters of record, FINDS and CONCLUDES as stated herein.
1. In March, 2010, Ryan Crecelius' ("Crecelius") formed Do Good Real Estate, a real estate brokerage firm that donated a percentage of its commissions to charity.[1] Do Good Real Estate operated in the Wilmington, North Carolina area. Crecelius operated the business as a sole proprietorship.[2]
2. In early 2012, Crecelius discussed expanding the Do Good Real Estate with Johnathon Jackson ("Jackson"), a longtime friend who lived in New York at the time.[3] In May, 2012, Jackson invested $25, 000 for 50% equity in the business.[4] As part of the investment agreement, Jackson and Crecelius organized RCJJ, LLC ("RCJJ"), in which Jackson and Crecelius each held a 50% interest. Jackson and Crecelius also formed Do Good Real Estate, LLC, in which RCJJ was the sole member, and Do Good Real Estate Wilmington, LLC, in which Do Good Real Estate, LLC, was the sole member.[5] (RCJJ Holdings, LLC, Do Good Real Estate, LLC, and Do Good Real Estate Wilmington, LLC are collectively referred to hereinafter as "Do Good."). Jackson and Crecelius entered into a written Operating Agreement for RCJJ.[6] The Operating Agreement contained non-competition and nonsolicitation covenants. The covenants prohibited Jackson and Crecelius while they were members of RCJJ "and for a period of six months thereafter" from competing with RCJJ and from employing any employee of RCJJ.[7]
3. Jackson was Do Good's Chief Financial Officer, and Crecelius was Chief Executive Officer and broker-in-charge ("BIC") with responsibility for the company's sales and day-to-day operations.[8] Do Good associated its first real estate agent in the spring of 2013 and by August 2014 had 13 agents.[9] The agents were independent contractors. Do Good required the agents to execute a "Confidentiality and Non-Solicitation Agreement" ("Confidentiality Agreement").[10] The Confidentiality Agreements prohibited the use and disclosure of certain confidential and proprietary information, including databases and computer programs, following termination of the agent's relationship with Do Good. The Confidentiality Agreements also prohibited the agents, while associated with Do Good, from "undertaking] the planning or organizing of any business activity competitive with Do Good Real Estate."[11]
4. Defendants allege that in the spring and summer of 2014, Jackson's behavior led to a deterioration of Crecelius' and Jackson's relationship. Defendants allege that Jackson treated Do Good's agents poorly, which negatively affected agent morale, and that Jackson was distracted from Do Good's business by other business ventures in which he was involved.[12] Jackson denies that he caused problems for Do Good. Nevertheless, it is undisputed that on or about July 20, 2014, Jackson and Crecelius began discussing separating their interests in Do Good.[13] Approximately two days later, Crecelius informed the agents that he and Jackson were having a dispute and that Crecelius anticipated Jackson would be leaving the Company.[14]
a. Negotiation of the Separation Agreement and Release.
5. From July 20 through August 13, 2014, the parties negotiated over Crecelius buying-out Jackson's interests in Do Good. On August 14, 2014, however, Crecelius withdrew his offer to buy Jackson's interests in Do Good for $100, 000.00 and a share of certain future commissions, and communicated to Jackson that he would proceed to dissolution unless Jackson bought out his interest in Do Good.[15] Thereafter, Jackson and Crecelius negotiated the terms of a buyout by Jackson, focusing on the valuation of Crecelius' interest in Do Good and on releasing Crecelius from his non-compete and non-solicitation obligations.[16]
6. It is undisputed that as of July 30, 2014, Jackson and Crecelius retained attorneys to negotiate the separation of their interests in Do Good on their respective behalves, and the remaining negotiations were conducted through counsel. On August 20, 2014, Jackson and Crecelius reached an agreement in principle for Crecelius to sell his interest in Do Good for $25, 000.00 and, inter alia, a release from the non-compete, nonsolicitation, and any other contractual obligation with respect to Do Good.[17]
7. On the evening of August 25, 2014, Jackson and Crecelius executed a Separation Agreement and General Release (the "Separation Agreement"). Jackson executed the Separation Agreement in his individual capacity and on behalf of Do Good. The Separation Agreement required Jackson to pay Crecelius $25, 000.00 for his interests in Do Good. In exchange, Crecelius withdrew as a member and officer of Do Good. The Separation Agreement also required Crecelius to "return to Jackson any keys or other company property in his possession" and "to transfer to Jackson . . . online systems and accounts" including Highrise and other databases.[18] The Separation Agreement did not expressly address whether Crecelius had the right to retain copies of the databases or information from the databases.
8. The Separation Agreement released Crecelius from any non-compete, non-solicit, and any other contractual obligations to Do Good, specifically including the covenants contained in the RCJJ Operating Agreement.[19] The Separation Agreement also contained broad mutual releases of claims, including Do Good's and Jackson's release of all claims against Crecelius.[20]
b. RCWIL and Nest Realty.
9. While negotiating with Jackson, Crecelius began to plan for his future after the separation. On August 13, 2014, Crecelius communicated with Jonathon Kauffmann ("Kauffmann"), a principal in Nest Realty in Charlottesville, Virginia, about the possibility of affiliating with Nest in the Wilmington area.[21] On August 20, 2014, Crecelius met with Kauffmann and reached a preliminary agreement that Crecelius could establish a Nest office in Wilmington.[22] On August 21, 2014, Crecelius formed RCWIL, LLC ("RCWIL").[23] On August 22, 2014, Crecelius filed an application for a real estate license for RCWIL.[24] RCWIL, doing business as Nest Realty, secured its license from the North Carolina Real Estate Commission (the "Commission") on August 28, 2014, and began operations on August 29, 2014.[25] All of Do Good's agents except for one terminated employment with Do Good and went to work for Crecelius at Nest.[26]
c. Crecelius’ and Jackson’s knowledge regarding intentions of Do Good agents.
10. It is undisputed that while Jackson and Crecelius were negotiating over the sale of their interests, Do Goods' agents were communicating to Crecelius' that they did not intend to work for Jackson if he retained Do Good, and would come to work for Crecelius if he created a new real estate brokerage. Crecelius did not tell Jackson about these communications with the agents. Crecelius contends only that he "was pretty confident" that the agents would follow him to Nest, but other evidence in the record belies this claim.[27] On August 13, 2014, Crecelius sent an email to Kauffmann stating that Crecelius had "the support of all of our agents if I decide to remove myself from [Do Good] and start something new."[28] On August 18, 2014, Crecelius emailed Kauffmann that "ALL 15 of [Do Good's] agents will be making the move with me" to Nest.[29] While there is no evidence that Crecelius solicited agents to leave Do Good, it is undisputed that he encouraged them not to reveal Crecelius' plans, to avoid contact with Jackson at certain times, and to not say or do anything to make Jackson suspicious.[30]
11. Jackson claims that he only "expected to lose two or three agents" and that had he known that all of the agents would leave, he would not have entered into the Separation Agreement.[31] Jackson admitted, however, that Jamie Jankowski had told him she was leaving Do Good, and that other agents told him that "they were undecided about their plans or were thinking about their options."[32] On July, 28, 2014, Jackson and Crecelius met with business advisor Dallas Romanowski, and Romanowski told Jackson that if he bought-out Crecelius, "the agents/brokers would very likely leave" Do Good.[33] On August 5, 2014, Crecelius texted Jackson indicating that Jankowski was likely to leave Do Good and "when she leaves you can bet a few others will too."[34] On August 8, 2014, Crecelius texted Jackson that "several" of the agents were threatening to leave Do Good, and that Crecelius ...
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