State v. Alpha Construction of the Triad, Inc.
| Decision Date | 09 March 2017 |
| Docket Number | 14 CVS 5263 |
| Citation | 2017 NCBC 21 |
| Court | Superior Court of North Carolina |
| Parties | STATE OF NORTH CAROLINA COUNTY OF GUILFORD TRANSATLANTIC HEALTHCARE, LLC and PROFESSIONAL CENTER FOR INTERNAL MEDICINE, INC., Plaintiffs, v. ALPHA CONSTRUCTION OF THE TRIAD, INC.; J&M CONSTRUCTION SERVICES, INC.; JUDITH JUDALENA ALLEY a/k/a JUDITH J. BAUTISTA; and JEFFREY WAYNE ALLEY, Defendants. |
Gordon Law Offices, by Harry G. Gordon, for Plaintiffs.
Rossabi Reardon Klein Spivey PLLC, by Amiel J. Rossabi and Elizabeth M. Klein, for Defendants.
1. THIS MATTER is before the Court on (1) Plaintiffs' Motion for Summary Judgment or Partial Summary Judgment ("Plaintiffs' Motion for Summary Judgment") (2) Defendants' Motion for Summary Judgment, (3) Plaintiffs' Motion to Strike Affidavits of Judith Judalena Alley ("Motion to Strike"), (4) Plaintiffs' Motion to Compel Discovery ("Motion to Compel"), and (5) Defendants' Motions to Quash (collectively, the "Motions"). For the reasons discussed below, Plaintiffs' Motion for Summary Judgment is GRANTED IN PART and DENIED IN PART, Defendants' Motion for Summary Judgment is GRANTED IN PART and DENIED IN PART Plaintiffs' Motion to Strike is DENIED, Plaintiffs' Motion to Compel is GRANTED IN PART and DENIED IN PART, and Defendants' Motions to Quash are DENIED.
2. This lawsuit arises from the transfer of $165, 000 from Plaintiffs to Defendants. The threshold question is whether that transfer was a loan subject to repayment under North Carolina law, or a gift that Defendants have no obligation to repay.
3. The Court does not make findings of fact when it rules on a motion for summary judgment, but it may summarize the underlying facts to provide context for its ruling. E.g., In re Estate of Pope, 192 N.C.App. 321, 329, 666 S.E.2d 140, 147 (2008).
4. Plaintiffs Transatlantic Healthcare, LLC ("Transatlantic") and Professional Center for Internal Medicine, Inc. ("PCIM") are companies organized under Florida law. (Compl. ¶¶ 1-2.) Hemant Banker is the 99% owner of both companies. (Banker Aff. ¶ 2; Kutty Aff. ¶ 6.)
5. Defendant J&M Construction Services, Inc. ("J&M") is a former North Carolina corporation formed in 1999 by Defendant Jeffrey Wayne Alley ("Jeffrey Alley") and his late wife, Margie Beasley Alley ("Margie Alley"). (Compl. ¶ 7.) J&M was dissolved in September 2012. Defendants assert that Jeffrey Alley was the 100% owner of J&M at the time of dissolution. (Am. Countercl. ¶ 5.) Defendant Judith Judalena Alley a/k/a Judith J. Bautista's ("Judith Alley") ownership interest in J&M is a contested fact in this lawsuit.
6. Following Margie Alley's death in 2004, Jeffrey Alley married Margie Alley's cousin, Judith Alley. (Compl. ¶ 7.) In 2009, Judith Alley formed a new company, Defendant Alpha Construction of the Triad, Inc. ("Alpha"), a corporation organized under North Carolina law. (Compl. ¶ 20.) Judith Alley is the 100% owner of Alpha. (Am. Countercl. ¶ 4.)
7. During the economic recession in 2009, J&M began to experience financial difficulties. Around that time, Theresa "Tess" Judalena ("Tess Judalena"), Judith Alley's mother, approached Dr. Mohan Kutty ("Dr. Kutty") to ask for financial assistance on behalf of J&M. (Am. Answer ¶ 9.)
8. Dr. Kutty is a citizen and resident of Florida, where he owns and operates Trinity Physicians, LLC. (Am. Countercl. ¶ 8; Kutty Aff. ¶¶ 2, 7.) Through his company, Dr. Kutty provides free medical-consulting services to Transatlantic. (Kutty Aff. ¶ 7.) He also "provide[s] financial assistance to deserving students in need of financial assistance to further their education." (Kutty Aff. ¶ 10.) Dr. Kutty worked closely with Pilar "Lari" Cummings ("Pilar Cummings"), Judith Alley's aunt, who owns a Florida corporation that previously provided consulting services to Transatlantic. (Cummings Aff. ¶ 6.)
9. Pilar Cummings introduced Dr. Kutty and Hemant Banker to Tess Judalena-Pilar Cummings's sister-and to Jill Mary Bautista ("Jill Bautista")- Tess Judalena's daughter and Judith Alley's younger sister. (Banker Aff. ¶ 3(b).) Tess Judalena and Jill Bautista are citizens and residents of the Republic of the Philippines. (Banker Aff. ¶ 3(c).) Tess Judalena became the business contact for one of Hemant Banker's business ventures in the Philippines. (Banker Aff. ¶ 3(d).) On at least one occasion, Dr. Kutty provided financial assistance to Tess Judalena and to Jill Bautista to help with Jill Bautista's medical-school expenses. (Kutty Aff. ¶ 10.)
10. After his conversation with Tess Judalena, Dr. Kutty allegedly spoke with Judith Alley by phone regarding J&M's financial situation and was informed that, to continue operating, J&M needed approximately $160, 000 to $170, 000. (Judith Alley Aff. ¶¶ 3-4.) In response, Dr. Kutty asked Hemant Banker, as owner of Transatlantic and PCIM, to approve a $165, 000 transfer to Judith Alley for J&M. (Banker Aff. ¶ 3(h).) Hemant Baker approved the transfer. (Banker Aff. ¶ 3(g).)
11. Dr. Kutty was in charge of setting the terms of the transaction. (Kutty Dep. 24:14-26:11.) While Dr. Kutty claims that he instructed Transatlantic's account manager, Lori Diaz-Tess Judalena's sister and Judith Alley's aunt-to draw up loan papers and have Judith Alley and Jeffrey Alley sign a promissory note or a security agreement, it is uncontested that those documents were never created. (Diaz Aff. ¶¶ 4, 14; Kutty Dep. 25:3-27:17.)
12. On January 27, 2009, Plaintiffs received a fax from Judith Alley addressed to "Aunt Lari"-Judith Alley's name for Pilar Cummings-titled "Revised Equipment & Vehicle List with estimated amortization schedule." It contained a sample amortization schedule with the following terms:
(Compl. Ex. A.) Plaintiffs received a second fax from Judith Alley on February 17, 2009, containing an updated list of J&M's equipment and vehicles. Lori Diaz received both of Judith Alley's faxes and provided copies to Pilar Cummings, Dr. Kutty, and Hemant Banker. (Diaz Aff. ¶ 16.)
13. Between January and May 2009, Plaintiffs wired a total of $ 165, 000 to J&M in four separate installments. (Compl. ¶ 18.) From June 2009 to January 2013, Defendants made twenty-six payments to Plaintiffs, totaling $51, 500. (Compl. ¶ 29.) Some checks were written to Transatlantic, and others to PCIM. (Compl. ¶¶ 19, 25; Am. Countercl. ¶ 30.) J&M made the first four payments, each for $3, 000, between June and September 2009. (Compl. ¶ 27.)
14. On January 5, 2010, J&M held a special meeting of its board of directors for the purpose of "approving] the transfer of all equipment of [J&M] to TransAtlantic Health Group, Inc. [i]n satisfaction of debt." (Poe Aff. Ex. E, at 2.) During that meeting, the board passed a resolution signed by Jeffrey Alley, stating that J&M was unable to pay its debts because several of its customers had gone out of business. (See Poe Aff. Ex. E, at 1.) The meeting minutes state that (Poe Aff. Ex. E, at 1.) J&M's officers were ordered to "surrender all equipment of the corporation that is security for Transatlantic's loan to Transatlantic." (Poe Aff. Ex. E, at 1.)
15. A UCC financing statement filed with the North Carolina Secretary of State on February 19, 2010, lists Transatlantic as a secured party relating to J&M's outstanding debt. The financing statement lists equipment, supplies, tools, and receivables as collateral for the debt.
16. Judith Alley has testified that the board minutes from J&M's special meeting erroneously refer to "Transatlantic" instead of Truliant Federal Credit Union ("Truliant"). (Judith Alley Dep. 29:16-30:19, 227:11-16; Second Aff. Judith Alley ¶¶ 4-5.) At the time of the board meeting, J&M owed on a $395, 000 loan with Truliant. (Compl. ¶ 60; Am. Answer ¶¶ 60, 95, 102.)
17. Alpha, rather than J&M, made payments to Plaintiffs beginning with the fifth of the twenty-six payments on April 30, 2010. (Compl. ¶ 25.) Between May 2010 and January 2013, Alpha sent multiple checks to Plaintiffs in varying amounts of $3, 000, $1, 000, $300, and $200. (Compl. ¶¶ 26-27.) Some of the checks had "J&M Construction loan payment, " "J&M Construction loan, " or "J&M Loan" written on the memo line. (Compl. ¶¶ 30-35.) Judith Alley sent the last check on behalf of Alpha on January 31, 2013, for $200. (Compl. ¶ 46.)
18. On October 25, 2013, Plaintiffs sent Judith Alley a letter demanding that Defendants pay their unpaid balance.
19. Plaintiffs commenced this action on May 2, 2014, asserting claims for (1) breach of contract, (2) continuing fraud and misrepresentation, (3) continuing conspiracy to defraud, (4) fraudulent conveyance, (5) de facto merger, (6) continuation of the enterprise, (7) breach of fiduciary duty and constructive fraud, (8) intentional interference with contract, (9) inducing breach of fiduciary duty and aiding and abetting breach of fiduciary duty, (10) unfair or deceptive trade practices under N.C. Gen. Stat. § 75-1.1, and (11) accounting.
20. Def...
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