Vanguard Pai Lung, LLC v. Moody, 18 CVS 13891

Docket Nº18 CVS 13891
Citation2022 NCBC 48
Case DateAugust 31, 2022
CourtSuperior Courts of Law and Equity of North Carolina

2022 NCBC 48

VANGUARD PAI LUNG, LLC; and PAI LUNG MACHINERY MILL CO. LTD., Plaintiffs and Counterclaim Defendants,

WILLIAM MOODY; NOVA TRADING USA, INC.; and NOVA WINGATE HOLDINGS, LLC, Defendants and Counterclaim Plaintiffs.

No. 18 CVS 13891

Superior Court of North Carolina, Mecklenburg

August 31, 2022

Womble Bond Dickinson (US) LLP, by Matthew F. Tilley, Russ Ferguson, and Patrick G. Spaugh, and Perkins Coie LLP, by John P. Schnurer, John D. Esterhay, Yun (Louise) Lu, and Hayden M. Schottlaender, for Plaintiffs Vanguard Pai Lung, LLC and Pai Lung Machinery Mill Co. LTD.


Burns, Gray & Gray, by Christopher A. Gray, for Defendants William Moody, Nova Trading USA, Inc., and Nova Wingate Holdings, LLC. [1]


Adam M. Conrad, Special Superior Court Judge

1. A six-day jury trial in this matter resulted in a verdict in favor of Plaintiffs Vanguard Pai Lung, LLC ("Vanguard") and Pai Lung Machinery Mill Co. LTD. ("Pai Lung"). Following the verdict, the parties agreed to submit two nonjury issues for the Court to resolve before entering judgment. One is Plaintiffs' motion for an award of costs and attorneys' fees against Defendants William Moody, Nova Trading USA, Inc. ("Nova Trading"), and Nova Wingate Holdings, LLC ("Nova Wingate"). (ECF No. 169.) The other is Nova Trading's motion for judicial dissolution of Vanguard. (ECF No. 170.) For the following reasons, the Court GRANTS in part and DENIES in part Plaintiffs' motion for costs and attorneys' fees and DENIES Nova Trading's motion for dissolution.



2. This case arises out of disputes over Vanguard's management and operations. Vanguard makes and sells high-speed circular knitting machines. Its majority member is Pai Lung, and its minority member is Nova Trading. Moody is Vanguard's former president and CEO; he is also the sole owner of Nova Trading and Nova Wingate.

3. In 2018, Vanguard and Pai Lung filed suit and asserted sixteen claims for relief against Moody, Nova Trading, and Nova Wingate. In a nutshell, the complaint alleged that Moody orchestrated a long-running scheme of self-dealing and other misconduct designed to benefit himself, his family, and his friends. Defendants counterclaimed and accused Pai Lung of using its majority position to force Moody out of Vanguard and to frustrate Nova Trading's minority rights. The twelve counterclaims included Nova Trading's demand for judicial dissolution of Vanguard on statutory and common-law grounds. Previous orders describe the competing allegations in more detail. See Vanguard Pai Lung, LLC v. Moody, 2020 NCBC LEXIS 92 (N.C. Super. Ct. Aug. 4, 2020); Vanguard Pai Lung, LLC v. Moody, 2019 NCBC LEXIS 39 (N.C. Super. Ct. June 19, 2019).


4. Many of the twenty-eight claims and counterclaims were dismissed or otherwise resolved before trial.[2] Those that remained, excluding Nova Trading's counterclaims for judicial dissolution, were tried before a jury in March 2022. The jury rendered a verdict in favor of Vanguard and Pai Lung on their claims-fraud, conversion, embezzlement, unjust enrichment, and more-and awarded compensatory and punitive damages totaling over $3 million. The jury also rendered a verdict in favor of Vanguard and Pai Lung on Defendants' counterclaims. (See Verdict Sheet, ECF No. 167.)

5. The parties agreed to reserve Nova Trading's dissolution counterclaims for resolution by the Court. Following the verdict, Nova Trading filed its motion to dissolve Vanguard, which seeks a decree of dissolution, appointment of a receiver, and entry of judgment on the dissolution counterclaims. Vanguard and Pai Lung oppose dissolution. They have, in turn, moved for an award of costs and reasonable attorneys' fees based on the jury's verdict.

6. These matters are now fully briefed. The Court held a hearing on 16 June 2022, at which all parties were represented by counsel.



7. The Court begins with Nova Trading's motion for judicial dissolution. In its pleading, Nova Trading asserted both statutory and common-law grounds for its


dissolution counterclaims. Its brief, however, argues for dissolution exclusively on statutory grounds. The Court therefore deems any common-law basis for dissolution to have been abandoned.

8. By statute, a member of an LLC may seek judicial dissolution when "it is not practicable to conduct the LLC's business in conformance with the operating agreement and [Chapter 57D]" or when "liquidation of the LLC is necessary to protect the rights and interests of the member." N.C. G.S. § 57D-6-02(2); see also Norris v. Greymont Dev., LLC, 2022 NCBC LEXIS 7, at *8 ( N.C. Super. Ct. Jan. 31, 2022) (noting that "the first prong is conjunctive, requiring the member to show impracticability under both the operating agreement and Chapter 57D to permit dissolution under this subsection"). Nova Trading contends that acrimony between the members and confusion over the size of each member's ownership interest in Vanguard will make it impracticable to conduct Vanguard's business going forward. It further contends that it is powerless within Vanguard and that dissolution is therefore necessary to protect its rights. (See Br. Supp. Mot. Dissolution 2-3, ECF No. 171.)

9. These arguments have no merit. For one thing, Nova Trading cites virtually no supporting evidence. It did not attach any exhibits to its motion, nor did it cite any previously filed materials apart from Vanguard's operating agreement. This is a glaring violation of the Business Court Rules, which require a party to include an index of exhibits, to file supporting materials with its motion or identify their location on the docket if filed previously, and to give "a pinpoint citation to the relevant page


of the supporting material whenever possible." BCR 7.5; see also Brewster v. Powell Bail Bonding, Inc., 2020 NCBC LEXIS 27, at *9 (N.C. Super. Ct. Mar. 11, 2020).

10. Nothing in the record suggests that it is impracticable to conduct Vanguard's business in conformance with its operating agreement and governing statutes. Nova Trading hasn't argued, for example, that Vanguard's management is deadlocked. Nor could it: Pai Lung holds a majority of seats on the board of managers and is able to direct the day-to-day business. (See Op. Agrmt. §§ 3.1(c), 4.3, ECF No. 175.3.) Indeed, Plaintiffs' evidence tends to show that Vanguard is operating and profitable. (See Pls.' Ex. B 36:3-7, ECF No. 175.2.) Likewise, there is no confusion about the size of each member's interest in Vanguard because the parties stipulated at trial that Pai Lung owns 67.1053% and that Nova Trading owns 32.8947%. (See Jury Instrs. 7, ECF No. 166.)

11. Dissolution is also not necessary to protect Nova Trading's rights. Nova Trading isn't powerless as it contends. Vanguard's operating agreement prevents Pai Lung from taking major actions-adding members, selling all company assets, and amending the operating agreement, among other things-without Nova Trading's approval. (...

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