Holcomb v. Landquest Limited Liability Co.

2017 NCBC 35.

JONES D. HOLCOMB, Plaintiff, v. LANDQUEST LIMITED LIABILITY COMPANY, LSTAR MANAGEMENT, LLC, STEVEN J. VINING, and KYLE V. CORKUM Defendants.

No. 16 CVS 10147

Superior Court of North Carolina, Wake

April 21, 2017

Monteith & Rice, PLLC by Charles E. Monteith, Jr., Esq. for Plaintiff Jones D. Holcomb.

Ellis & Winters LLP by Thomas H. Segars, Esq., and Jeremy Falcone, Esq. for Defendants Landquest Limited Liability Company, LStar Management LLC, Steven J. Vining, and Kyle V Corkum.

OPINION AND ORDER ON MOTION FOR JUDGMENT ON THE PLEADINGS

Gregory P. McGuire Special Superior Court Judge

THIS MATTER comes before the Court on Defendants Landquest Limited Liability Company ("Landquest"), LStar Management, LLC ("LStar"), Steven J. Vining ("Vining"), and Kyle V. Corkum's ("Corkum") (collectively, "Defendants") Motion for Judgment on the Pleadings ("Motion for Judgment") pursuant to Rule 12(c) of the North Carolina Rules of Civil Procedure ("Rule(s)").

THE COURT, having considered the Motion, the briefs in support of and in opposition to the Motion, the oral arguments of counsel presented at the hearing, and other appropriate matters of record, concludes that the Motion should be GRANTED, in part, and DENIED, in part for the reasons set forth below.

FACTUAL AND PROCEDURAL BACKGROUND

1. The Court does not make findings of fact on a motion for judgment on the pleadings; rather, "[a]ll allegations in the nonmovant's pleadings, except conclusions of law, legally impossible facts, and matters not admissible in evidence at the trial, are deemed admitted by the movant for purposes of the motion." Ragsdale v. Kennedy, 286 N.C. 130, 137, 209 S.E.2d 494, 499 (1974). The following facts, construed in Plaintiff's favor, are assumed to be true for purposes of the Motion for Judgment.

2. Plaintiff Jones D. Holcomb is a former employee of Landquest and LStar. Landquest was a Delaware limited liability company, and is the predecessor to LStar, a North Carolina limited liability company (hereinafter, the Court will refer to Landquest and LStar collectively as "Landquest"). Plaintiff began employment with Landquest on or about September 20, 2008 as a Vice President of Finance. Vining is a manager at Landquest and Corkum is the managing partner of Landquest. Both were former employees of Landquest.

3. On September 30, 2008, Plaintiff executed an employment agreement with Landquest that outlined his compensation. The agreement provided that Plaintiff would be paid an annual salary of $100, 000.00, subject to federal and state withholding requirements. (Defs.' Answer, Ex. B, (hereinafter, "Empl. Agreement") ¶ 3(a).) The agreement further provided that "[u]ntil such time as Landquest's cash flow allows payment of this salary, the salary shall accrue. . . . [and] all accrued salary shall be due and payable within 12 months of the date of this Agreement." (Id.)

4. In January 2009, Plaintiff's salary was increased to $125, 000.00.

5. In June 2009, Landquest began making salary payments to Plaintiff.

6. In or around November 2009, Landquest reduced salary payments to Plaintiff to the amount Plaintiff would have received if federal and state taxes had been withheld. Landquest, however, did not withhold federal and state taxes from the reduced salary payments. Vining and Corkum promised Plaintiff that, when Landquest was financially able to do so, it would "'true up' its payments to Plaintiff by paying the appropriate salary amount that would have been paid if Landquest had deducted the necessary tax withholdings." (Compl. ¶ 15.)

7. In November 2009, Vining and Corkum held a staff meeting and informed Landquest's employees that the company would stop withholding taxes from the wages paid to employees and that the employees could expect a check "for the net amount of pay that such employees would have received if taxes and required withholdings had been deducted from the amount of wages actually due to the employees." (Compl. ¶ 16.) At least two Landquest employees resigned following Landquest's decision to not withhold taxes from its employees' pay. (Compl. ¶ 17.)

8. Plaintiff chose not to resign his employment and agreed to continue working for Landquest in reliance upon Vining's assurance that Landquest would pay Plaintiff the full amount of salary due and make the necessary tax withholdings from all salary payments due. (Compl. ¶ 18.)

9. On or around January 2, 2011, Vining and Corkum informed Plaintiff that "he would receive a distribution of profits from projects that closed during [his] employment with [Landquest]." (Compl. ¶ 20.) The profit distributions were to be made under written plan agreed to among Landquest's members entitled "Addendum to Operating Agreement of [Landquest] Management, LLC" (Defs.' Answer, Ex. C., (hereinafter, "Economic Interest Plan").) The Economic Interest Plan allows certain employees to receive a pro rata share of profit distributions, but provides that an employee would not receive a distribution if their employment terminated for cause. (Economic Interest Agreement ¶ 3(c).)

10. In October 2012, Vining again assured Plaintiff that LStar would eventually pay him the full amount of salary that was due to him with the necessary tax withholdings. Plaintiff agreed to continue working for Landquest in reliance on this promise. (Compl. ¶ 24.)

11. In January 2013, Corkum informed Plaintiff that Landquest planned to terminate his employment. Corkum told Plaintiff that Landquest "would not consider Plaintiff's termination to be for cause and thus ensure Plaintiff would receive the previously promised distribution of profits if Plaintiff agreed to continue working for [Landquest] for an additional two months." (Compl. ¶ 24.) Plaintiff agreed to continue working for Landquest "based upon Corkum's statement." (Compl. ¶ 25.)

12. On March 11, 2013, Landquest terminated Plaintiff's employment. Landquest did not pay Plaintiff the full amount of his salary and did not make the appropriate tax withholdings from Plaintiff's salary prior to his termination.

13. On May 15, 2015, Plaintiff filed a complaint in Wake County Superior Court ("2015 Complaint"). In the 2015 Complaint, Plaintiff alleged claims for fraud and negligent misrepresentation against the Defendants.

14. On August 5, 2015, Defendants filed a motion to dismiss the 2015 Complaint.

15. On August 17, 2015, Plaintiff filed a voluntary dismissal of the 2015 Complaint without prejudice.

16. On August 12, 2016, Plaintiff initiated the current action by filing a complaint ("2016 Complaint"). The 2016 Complaint alleges the same two claims made in the 2015 Complaint: fraud and negligent misrepresentation. Plaintiff bases his claims on allegations that "[i]n November 2009, October 2012 and January, 2013, Vining and Corkum" told Plaintiff that it was (a) Defendants' intention to pay him the full salary which he was promised; (b) Defendants' intention to reimburse him for any tax liability arising from Defendants' failure to make necessary tax withholdings from the salary payments that Plaintiff received; and, (c) Defendants' intention to pay Plaintiff a distribution of profits. (Compl. ¶¶ 31, 39) Plaintiff alleges that at the time they made the representations, Vining and Corkum either knew they were false or failed to exercise reasonable care in ascertaining the truth of the representations. (Compl. ¶¶ 33, 40.) Plaintiff relied on the false representations in continuing to work for Defendants. (Compl. ¶¶ 33, 42.)

17. On October 18, 2016, Defendants filed a Notice of Designation to the North Carolina Business Court, and the case was 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) (hereinafter, references to the North Carolina General Statutes will be to "G.S."). On October 20, 2016, the case was assigned to the undersigned Special Superior Court Judge for Complex Business Cases by Order of Chief Judge James L. Gale.

18. On November 4, 2016, Defendants filed a collective Answer of All Defendants ("Answer"). Defendants attached to and incorporated the 2015 Complaint (Exhibit A), the Employment Agreement (Exhibit B), and the Economic Interest Plan (Exhibit C).

19. On November 11, 2016, Defendants filed the Motion for Judgment, seeking dismissal of all of Plaintiff's claims. Plaintiff filed a response in opposition to the Motion for Judgment, and Defendants replied. On January 17, 2017, the Court held a hearing on the Motion for Judgment. The Motion for Judgment is now ripe for disposition.

DISCUSSION

20. Defendants move for judgment on the pleadings on the grounds that: (a) Plaintiff's claims are barred by the economic loss doctrine; (b) Plaintiff has not sufficiently alleged his claims in the 2016 Complaint; (c) Plaintiff's claims are barred by the applicable three-year statute of limitations because Plaintiff's claim is not "saved" by Rule 41(a); and (d) Plaintiff cannot, as a matter of law maintain claims for fraud and negligent representation against Vining and Corkum in their individual capacities.

21. Defendants move for judgment on the pleadings pursuant to Rule 12(c). "A motion for judgment on the pleadings is the proper procedure when all the material allegations of fact are admitted in the pleadings and only questions of law remain. When the pleadings do not resolve all the factual issues, judgment on the pleadings is generally inappropriate." Ragsdale, 286 N.C. at 137, 209 S.E.2d at 499. The Court must "view the facts and permissible inferences in the light most favorable to the nonmoving party." Id. "All well pleaded factual allegations in the nonmoving party's pleadings are taken as true and all contravening...