Zagaroli v. Neill
| Decision Date | 07 November 2017 |
| Docket Number | 15 CVS 2635 |
| Citation | 2017 NCBC 101 |
| Court | Superior Court of North Carolina |
| Parties | PETE ZAGAROLI, Plaintiff and Counterclaim Defendant, v. JAMES CLAYTON NEILL; RICK BERRY; NEILL GRADING AND CONSTRUCTION COMPANY, INC.; and RECLAMATION, LLC, Defendants andCounterclaim/Third-Party Plaintiffs, v. BENCHMADE, LLC and DEAN PRITCHETT, Third-Party Defendants. |
Law Offices of Matthew K. Rogers, by Matthew K. Rogers, for Plaintiff Pete Zagaroli and Third-Party Defendant Benchmade LLC.
Young Morphis, Bach & Taylor, LLP, by Paul E. Culpepper and Timothy D. Swanson, for Defendants James Clayton Neill, Rick Berry, Neill Grading and Construction Company, Inc., and Reclamation, LLC.
Michael L. Robinson Special Superior Court Judge.
1. THIS MATTER is before the Court on Defendants' Motion for Judgment on the Pleadings and Plaintiff's Motion to Amend First Amended Complaint (collectively, the "Motions"). Having considered the Motions, the briefs, and the arguments of counsel at a hearing on the Motions, the Court GRANTS in part and DENIES in part Defendants' motion and DENIES Plaintiff's motion.
2. The Court does not making findings of fact on Defendants' Motion for Judgment on the Pleadings, but only recites those factual allegations of the First Amended Complaint that are relevant and necessary to the Court's determination of the motion.
3. Plaintiff Pete Zagaroli ("Plaintiff") is a resident of Catawba County, North Carolina. (First Am. Compl. ¶ 1, ECF No. 2; Answer, Countercl. & Third-Party Compl. ¶ 1, ECF No. 12 ["Answer"].) Plaintiff was, at one time, a construction general contractor who built new construction, renovations, and additions. (First Am. Compl. ¶ 9; Answer ¶ 9.)
4. Defendants James Clayton Neill ("Clay") and Rick Berry ("Rick") are also residents of Catawba County. (First Am. Compl. ¶¶ 2-3; Answer ¶¶ 2-3.)
5. Defendant Neill Grading and Construction Company, Inc. ("Neill Grading") is a North Carolina corporation with its principal place of business in Hickory, North Carolina. (First Am. Compl. ¶ 4; Answer ¶ 4.) Neill Grading is owned and operated by Clay and his family. (First Am. Compl. ¶ 5.)
6. Defendant Reclamation, LLC ("Reclamation") is a North Carolina limited liability company with its principal place of business in Catawba County. (First Am. Compl. ¶ 7.)
7. From 2007 through 2010, Plaintiff researched and evaluated various ways to make money from renovating historic factories and mills. (First Am. Compl. ¶ 10; Answer ¶ 10.) Plaintiff sought out professionals with experience in renovating mills to obtain tax credits and began working with James Maynard, an architect having significant experience with historic mills. (First Am. Compl. ¶ 11.)
8. On three separate occasions between 2007 and July 31, 2009, Plaintiff contracted to purchase an abandoned hosiery mill property called the Hollar Hosiery Mill (the "Hollar Mill"). (First Am. Compl. ¶ 12.) On one of these occasions, Plaintiff approached Clay to partner in renovating the Hollar Mill. (First Am. Compl. ¶ 15.) Plaintiff informed Clay that Plaintiff had contracted to purchase the Hollar Mill, but that Plaintiff was financially unable to renovate it on his own. (First Am. Compl. ¶ 16.)
9. As a result of discussions between Plaintiff and Clay, Clay caused a limited liability company to contract for the purchase of the Hollar Mill in order to renovate and develop it consistent with Plaintiff's development plans. (First Am. Compl. ¶ 17.) Plaintiff understood that he was partnering with Clay to develop the Hollar Mill and that Plaintiff would perform and profit from design, construction administration, and project oversight. (First Am. Compl. ¶ 19.) Plaintiff alleges that he and Clay agreed that if Plaintiff did not perform design, construction administration, and project oversight, Plaintiff would be paid twenty-five percent of the profits from the business. (First Am. Compl. ¶ 19.)
10. In 2009, Plaintiff prepared a general business plan for the renovation of historic factories and mills throughout Catawba County, including the Hollar Mill, Moretz Mills, and Lyerly Mills (the "Wingfoot Business Plan"). (First Am. Compl. ¶¶ 21-22.) Clay and Rick expressed a desire to partner with Plaintiff in the Wingfoot Business Plan. (First Am. Compl. ¶ 23.)
11. Plaintiff prepared development concept drawings and pro forma profit statements and performed cost analyses for renovation of the Hollar Mill. (First Am. Compl. ¶ 31.) Clay and Plaintiff used Plaintiff's designs and cost analyses to solicit numerous potential tenants for the Hollar Mill, including Lenoir-Rhyne and Dale Jarrett. (First Am. Compl. ¶ 33; Answer ¶ 33.)
12. In September 2009, Clay formed Hollar Hosiery Investments, LLC ("HHI"). (First Am. Compl. ¶ 20; Answer ¶ 20.) At this same time, Plaintiff alleges that he commenced construction on the Hollar Mill in reliance on his partnership with Clay and Rick. (First Am. Compl. ¶ 27.) Plaintiff alleges that in or around 2010, a gentleman's partnership agreement existed between Plaintiff and Clay to evaluate and make money in all possible ways from historic mill renovation and reclamation of materials from mills. (First Am. Compl. ¶ 38.)
13. In November 2010, members of HHI contracted directly with Plaintiff's construction company, Zagaroli Construction Company, Inc. ("Zagaroli Construction"), for construction work at the Hollar Mill. (First Am. Compl. ¶ 42.) In or around the end of 2010, however, Plaintiff expressed to Clay that Zagaroli Construction needed money and that Plaintiff could not continue to spend time and money on the Hollar Mill renovation without being timely compensated. (First Am. Compl. ¶ 43.) Plaintiff further told Clay that Plaintiff's dedication to the Wingfoot Business Plan and the Hollar Mill had caused Plaintiff's financial condition to deteriorate and, unless Plaintiff was timely paid for his work, he may not be able to renew his general contractor's license. (First Am. Compl. ¶ 44.) Plaintiff alleges that, in response, Clay told Plaintiff that Plaintiff was vital to, and must remain a part of, the Wingfoot Business Plan and the Hollar Mill renovation, and that if Plaintiff could not be the general contractor for the renovations, then Plaintiff would be paid to solicit and supervise other general contractors to perform the renovation work for the Hollar Mill. (First Am. Compl. ¶¶ 45-46.)
14. At some time thereafter, Plaintiff approached furniture companies with which he had a personal relationship for the purpose of selling furniture he had made. (First Am. Compl. ¶ 54.) One such company, Mitchell Gold, expressed interest in purchasing furniture made from reclaimed materials. (First Am. Compl. ¶ 54.) Because Plaintiff did not have sufficient funds, Plaintiff asked Clay if Clay was interested in funding furniture manufacturing from reclaimed materials. (First Am. Compl. ¶¶ 55-56; Answer ¶¶ 55-56.) Clay stated that he was interested and suggested that they solicit investment from Rick. (First Am. Compl. ¶ 57.) Rick committed to contributing $26, 000 in start-up capital. (First Am. Compl. ¶ 57; Answer ¶ 57.)
15. Plaintiff alleges that he told Clay and Rick that Plaintiff could not provide furniture manufacturing services unless he was paid for his work. (First Am. Compl. ¶ 58.) As a result, Plaintiff alleges that Clay and Rick promised to pay Plaintiff at least $1, 000 per week for his furniture reclamation work. (First Am. Compl. ¶ 59.) Clay and Rick told Plaintiff that they were partners and that Plaintiff was a thirty percent owner, but that because of Zagaroli Construction's financial condition, they all agreed that Plaintiff would be an unnamed partner. (First Am. Compl. ¶¶ 59-61, 63; Answer ¶¶ 59, 61, 63.) Clay and Rick were also thirty percent owners, and Ryan Lovern, a commercial real estate broker, was a ten percent owner. (First Am. Compl. ¶¶ 62-63; Answer ¶¶ 62-63.)
16. On February 18, 2011, Clay formed Reclamation. (First Am. Compl. ¶ 64; Answer ¶ 64.) Clay told Plaintiff that Plaintiff was a thirty percent owner of Reclamation. (First Am. Compl. ¶ 65; Answer ¶ 65.)
17. Plaintiff alleges that he was first paid his $1, 000 per week salary in May 2011. (First Am. Compl. ¶ 75.) In July 2011, Plaintiff notified Clay and Rick that Reclamation did not have funds to pay Plaintiffs $1, 000 per week salary. (First Am. Compl. ¶ 78.) Plaintiff alleges that he was paid $22, 000 in salary in 2011. (First Am. Compl. ¶ 84.)
18. In May 2012, Plaintiff requested that Clay pay Plaintiff for his construction administration and design services regarding the Hollar Mill, alleging that Clay promised to pay him at least $35, 000 for his work at the Hollar Mill. (First Am. Compl. ¶ 87.)
19. In 2012, Plaintiff was performing all aspects of Reclamation's business. (First Am. Compl. ¶ 94; Answer ¶ 94.) In the summer of 2012, Plaintiff notified Clay and Rick that Reclamation needed additional funds to ensure that Plaintiff was paid his $1, 000 per week salary. (First Am. Compl. ¶ 98.) Plaintiff contends that Reclamation continued to have insufficient cash flow to pay him the minimum weekly compensation promised by Clay and Rick, and that Reclamation paid the weekly salary only when Reclamation had sufficient funds. (First Am. Compl. ¶ 101.) Plaintiff avers that in 2012, he was paid $29, 500 in salary. (First Am. Compl. ¶ 115.)
20. At the end of 2012, Plaintiff alleges that Clay and Rick agreed that Reclamation owed Plaintiff $22, 500 in back wages for 2012, which they agreed should be characterized as debt owed by Reclamation to Plaintiff. (First Am. Compl. ¶ 116.)
21. Plaintiff avers that, on or about October 25,...
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