Gateway Management Services, Ltd. v. Carrbridge Berkshire Group, Inc.

2018 NCBC 43

GATEWAY MANAGEMENT SERVICES, LTD., d/b/a PREMIUM 2000+, Plaintiff, v. CARRBRIDGE BERKSHIRE GROUP, INC. a/k/a CARRBRIDGE BERKSHIRE CORPORATION; TRUNORTH WARRANTY PLANS OF NORTH AMERICA, LLC; CARRBRIDGE FIDELITY, LLC; and COMPASSONE WARRANTY PLANS OF NORTH AMERICA, LLC, Defendants.

No. 17 CVS 5275

Superior Court of North Carolina, Forsyth

May 9, 2018

Craige Jenkins Liipfert & Walker, LLP, by Ellis B. Drew, III for Plaintiff.

Womble Bond Dickinson (US), LLP, by Hayden J. Silver, III and Raymond M. Bennett, for Defendants Carrbridge Berkshire Group, Inc., TruNorth Warranty Plans of North America, LLC and CompassOne Warranty Plans of North America, LLC.

ORDER AND OPINION ON MOTIONS TO QUASH SERVICE OF PROCESS, MOTIONS TO DISMISS, AND MOTION FOR LEAVE TO AMEND THE COMPLAINT

Michael L. Robinson Special Superior Court Judge for Complex Business Cases

1. THIS MATTER is before the Court on two motions to quash service of process filed by Defendant Carrbridge Berkshire Group, Inc. ("Carrbridge Berkshire") on behalf of itself and Defendant Carrbridge Fidelity, LLC ("Carrbridge Fidelity") (collectively, the "Carrbridge Defendants"); Carrbridge Berkshire's motion to dismiss; Defendants TruNorth Warranty Plans of North America, LLC ("TruNorth") and CompassOne Warranty Plans of North America, LLC's ("CompassOne") (collectively, the "Warranty Defendants") motion to dismiss; and Plaintiff Gateway Management Services, Ltd.'s ("Gateway" or "Plaintiff") motion for leave to amend its complaint. For the reasons set forth below, the Court GRANTS Plaintiff's motion to amend and the Warranty Defendants' motion to dismiss and DENIES as moot Carrbridge Berkshire's motions to quash service of process and motion to dismiss.

I. INTRODUCTION

2. This litigation arises between competitors in the commercial used truck warranty business. Plaintiff claims that Defendants falsely advertise and represent to consumers that they have insurance, assets, and business associations that they do not actually have, thereby unfairly usurping a commercial advantage that Defendants would otherwise have been required to earn through skill, labor, and efforts. Plaintiff complains that it does have substantial insurance and assets to pay its customers' warranty claims, and is, thus, unfairly harmed by Defendants' conduct.

II. PROCEDURAL HISTORY

3. The Court sets forth here only those portions of the procedural history relevant to its determination of the motions.

4. Plaintiff filed its Complaint on August 21, 2017. (ECF No. 4.)

5. This action was designated as a mandatory complex business case by order of the Chief Justice of the Supreme Court of North Carolina dated November 9, 2017, (ECF No. 3), and assigned to the undersigned by order of Chief Business Court Judge James L. Gale on November 13, 2017, (ECF No. 2).

6. On December 13, 2017, Carrbridge Berkshire, on behalf of itself and Carrbridge Fidelity, filed a Motion to Quash Service of Process (the "First Motion to Quash"). (ECF No. 14.) After Plaintiff made a second attempt to serve the Carrbridge Defendants, Carrbridge Berkshire stipulated that it had been properly served, but maintained the motion on behalf of Carrbridge Fidelity. (ECF No. 31.) On February 7, 2018, Carrbridge Berkshire, on behalf of Carrbridge Fidelity, filed a Second Motion to Quash Service of Process (the "Second Motion to Quash"), (ECF No. 43), and a brief in support asserting that Carrbridge Fidelity was never properly served, (ECF No. 44). Plaintiff did not respond to the Second Motion to Quash. The First and Second Motion to Quash will be referred to collectively as the "Motions to Quash."

7. Also on December 13, 2017, the Warranty Defendants filed a motion to dismiss for lack of subject matter jurisdiction and failure to state a claim (the "Warranty Defendants' Motion to Dismiss"). (ECF No. 16.) The motion has been fully briefed.

8. On December 22, 2017, the Warranty Defendants filed their answer and asserted counterclaims against Plaintiff. (ECF No. 23.)

9. On January 22, 2018, Plaintiff filed a Motion for Leave to Amend the Complaint (the "Motion to Amend"), with an attached proposed First Amended Complaint (the "Amended Complaint"). (Mot. Leave to Amend Compl., Ex. A, ECF No. 33 ["Am. Compl."].) On February 14, 2018, Carrbridge Berkshire and the Warranty Defendants collectively filed a brief in opposition to the Motion to Amend. (ECF No. 50.) Plaintiff did not file a reply brief.

10. On February 12, 2018, Carrbridge Berkshire filed a motion to dismiss for lack of subject matter jurisdiction and failure to state a claim ("Carrbridge Berkshire's Motion to Dismiss") and a brief in support, (ECF Nos. 45-46), as well as its answer and counterclaims, (ECF No. 47). Plaintiff did not file a response in opposition to Carrbridge Berkshire's Motion to Dismiss.

11. On March 29, 2018, the Court held a hearing on the Motions to Quash, the Warranty Defendants' Motion to Dismiss, Carrbridge Berkshire's Motion to Dismiss, and the Motion to Amend. All parties were represented by counsel at the hearing.

12. The motions are ripe for resolution.

III. MOTIONS TO QUASH

13. Carrbridge Berkshire filed its First Motion to Quash on behalf of itself and Carrbridge Fidelity. (Mot. Quash Service Process ¶¶ 12-13, ECF No. 14.) Carrbridge Berkshire asserted that service was improper under Rule 12(b)(5) of the North Carolina Rules of Civil Procedure ("Rule(s)") as to both Carrbridge Defendants because copies of the summons and Complaint were not delivered to an officer, director, managing agent, or member of the Carrbridge Defendants; rather, service was delivered to the property manager of a building at which neither of the Carrbridge Defendants maintain an address. (Br. Supp. Mot. Quash Service Process 1-2, ECF No. 15 ["Br. Supp. Mot. Quash"].) Carrbridge Berkshire further argued that, as to Carrbridge Fidelity, the summons was invalid on its face under Rule 12(b)(4) because Carrbridge Fidelity is an entity that has never existed. (Br. Supp. Mot. Quash 5-6.)

14. After Plaintiff's second attempt to serve the Carrbridge Defendants, (Br. Opp'n Mot. Quash Service Process, Ex. A, ECF No. 32), Carrbridge Berkshire stipulated that it had been properly served but maintained that the First Motion to Quash, to the extent it was brought on behalf of Carrbridge Fidelity, should be granted, (Def. Carrbridge Berkshire's Stipulation Service Process 1-2, ECF No. 31). Carrbridge Berkshire filed a Second Motion to Quash as to Plaintiff's second attempt to serve Carrbridge Fidelity, again arguing that the summons is facially invalid because Carrbridge Fidelity does not exist. (Second Mot. Quash Service Process 2, ECF No. 43; Br. Supp. Second Mot. Quash Service Process 2, ECF No. 44.)

15. At the hearing, the parties stipulated that Carrbridge Fidelity never existed and, therefore, is not a proper party to this action. Accordingly, the Motions to Quash are denied as moot and Carrbridge Fidelity is dismissed from this action.

IV. PLAINTIFF'S MOTION TO AMEND

16. Under Rule 15(a), a party may amend a pleading to which a responsive pleading is permitted as a matter of course before the responsive pleading is served. N.C. Gen. Stat. § 1A-1, Rule 15(a). Thereafter, a party may only amend a pleading by leave of court or by written consent of the adverse party, and leave shall be freely given when justice so requires. Id. A motion for leave to amend is addressed to the sound discretion of the trial court. E.g., Draughon v. Harnett Cty. Bd. of Educ., 166 N.C.App. 464, 467, 602 S.E.2d 721, 724 (2004). Reasons justifying denial of a motion to amend are undue delay, bad faith, dilatory motive, repeated failure to cure defects by previous amendments, undue prejudice, and futility of amendment. Bodie Island Beach Club Ass'n v. Wray, 216 N.C.App. 283, 288-89, 716 S.E.2d 67, 73 (2011).

17. The Warranty Defendants and Carrbridge Berkshire oppose the Motion to Amend solely on the basis of futility, arguing that the Amended Complaint fails to state any claim upon which relief may be granted. (Defs.' Br. Opp'n Mot. Leave Amend 1-6, ECF No. 50.) Plaintiff argues that the Motion to Amend should be granted because whether the claims in the Amended Complaint are futile is best left to a later determination. (Br. Supp. Mot. Leave Amend Compl. 3-4, ECF No. 34.)

18. Plaintiff's original Complaint alleged that Defendants falsely claim to have insurance and business associations that they do not actually have, and further alleged that the Warranty Defendants' company names and designs infrine on other companies' trademarks, causing confusion in the relevant market. (Compl. ¶¶ 19- 36.) The Complaint asserted claims for (1) "false representation, " (2) unfair competition, and (3) unfair and deceptive trade practices ("UDTP"), and requested that the Court enjoin Defendants from falsely representing their affiliations and insurance coverage. (Compl. 3-5, 7.)

19. In contrast, the Amended Complaint makes no mention of trademark infringement and does not reassert a claim for false representation, but again asserts claims for unfair competition and UDTP based on nearly identical facts to those alleged in the Complaint. (Compare Compl. ¶¶ 19-32, 40-44, 51-68, with Am. Compl. ¶¶ 16-33, 36-56.) The Amended Complaint also adds a claim for tortious interference with contract. (Am. Compl. ¶¶ 61-66.) Finally, the Amended Complaint asserts claims against the Warranty Defendants and Carrbridge Fidelity, but does not name Carrbridge Berkshire as a defendant. (Am. Compl. 1.)

20. At this early stage of the litigation, the Court finds no reason to depart from the general rule that leave to amend pleadings should be freely given where justice so requires and therefore, grants Plaintiff's Motion...