228 N.C. App. 571
N.C. Ct. App.2013Background
- Epic Project involves ~1271 acres in Cabarrus/Mecklenburg; Hurst and Henleys owned adjacent tracts; Purchase Agreement signed 6/28/2006 for $4.7M to Cramer Mountain Development (Desimone).
- Closing deadline 30 days after permits or by 6/28/2007; Cramer could accelerate closing with 10 days’ notice.
- On 3/12/2007, Desimone, Mascaro, Harrison induced signatures at Henleys’ barn; Moorehead I obtained deeds listing Moorehead I as grantee; $200,000 paid.
- 3/13/2007: Sistrunk closed for Moorehead I; Moorehead I executed $4.5M promissory note to plaintiffs; Moorehead I obtained $3.4M loan from F&M Bank secured by a first deed of trust; Blackmon signed as Member Manager.
- Moorehead I defaulted; plaintiffs filed suit in 2008 for breach of contract, fraud, and UDTP; jury verdict in 2011 held Blackmon as alter ego; damages awarded to plaintiffs; Blackmon moved for JNOV; appeal followed.
- Court reviewed: de novo on law issues; affirmed trial court’s judgment holding Blackmon alter ego and joint/separate liability for breach and UDTP; some defendants’ appeals dismissed due to timing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Blackmon’s personal liability for breach of contract was proper | Blackmon controlled Moorehead I under instrumentality rule; alter ego liability proper | No fraud/actual damages against Blackmon individually; veil piercing unsupported | Yes; alter ego liability proper; personal liability affirmed |
| Whether UDTP liability can attach to Blackmon and Moorehead I despite no fraud actual damages | UDTP acts proven by deceptive conduct; proximate injury shown | No fraud or actual damages against Blackmon; improper liability | Yes; nominal damages affirm UDTP liability against Blackmon and Moorehead I |
| Whether judgment improperly expanded the jury’s verdict | Judgment justified by verdicts under veil-piercing and UDTP law | Judgment expanded beyond verdict scope | No; judgments supported by verdicts and law |
| Whether the jury’s verdict was inconsistent | Fraud and UDTP findings separate; consistency preserved | Injury/punitive findings conflict with fraud/nominal damages | No; verdict logical and consistent; affirm |
| Whether the dismissal of other defendants on appeal was proper | N/A | N/A | Appeal dismissed for Moorehead I, Park West entities due to timing |
Key Cases Cited
- Glenn v. Wagner, 313 N.C. 450, 329 S.E.2d 326 (1985) (instrumentality rule framework and factors for piercing veil)
- Cooper v. Ridgeway Brands Mfg., LLC, 362 N.C. 431, 666 S.E.2d 107 (2008) (veil-piercing elements and equitable basis)
- Henderson v. Sec. Mortgage & Fin. Co., 273 N.C. 253, 160 S.E.2d 39 (1968) (early articulation of instrumentality concept)
- White v. Collins Bldg., Inc., 209 N.C. App. 48, 704 S.E.2d 307 (2011) (treatment of corporate veil and ownership control)
- Glen v. Wagner, Glenn v. Wagner (1985) (instrumentality rule factors and control standard)
- B-W Acceptance Corp. v. Spencer, 268 N.C. 1, 149 S.E.2d 570 (1966) (control, breach, and causation for veil piercing)