Moch v. A.M. Pappas & Assocs.
16-642
N.C. Ct. App.Dec 20, 2016Background
- Kenneth I. Moch was CEO of Chimerix (2010–2014). In October 2014 he sent anonymous emails from pappasventureswhistleblower@gmail.com alleging misuse of funds and misconduct by A.M. Pappas & Associates, Art Pappas, and Ford Worthy.
- Defendants (Pappas entities and principals) sued the anonymous sender (John/Jane Doe) for libel in June 2015.
- In October–November 2015 defendants’ counsel sent settlement demand letters, subpoenas, and threatened to identify and publicly sue the anonymous sender; counsel later amended the Doe complaint to name Moch.
- Moch filed suit (November 2015) alleging abuse of process and unfair or deceptive trade practices (UDTPA) based primarily on defendants’ counsel’s letters and subpoenas.
- Defendants moved to dismiss under Rule 12(b)(6). The trial court granted dismissal with prejudice on February 25, 2016; Moch appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether letters and subpoenas support a UDTPA claim under N.C. Gen. Stat. § 75-1.1 | Moch argued the letters and litigation conduct were unfair or deceptive acts in commerce | Defendants argued the communications were acts of counsel (learned profession) and thus outside § 75-1.1 commerce scope | Court held UDTPA claim fails because alleged misconduct was actions of counsel within the learned-profession exemption; not "in or affecting commerce" |
| Whether defendants’ issuance of subpoenas and settlement letters amounted to abuse of process | Moch argued subpoenas and threatening settlement letters were issued with an ulterior motive (to force settlement) and were abusive when considered in totality | Defendants argued subpoenas and litigation steps were proper use of process tied to the libel suit | Court held abuse-of-process claim not adequately pleaded; plaintiff relied on the totality theory at trial and may not advance new arguments on appeal; issuance of subpoenas and counsel’s letters were within regular litigation function |
| Whether plaintiff alleged acts by defendants (not counsel) that could support UDTPA | Moch pointed to certain complaint paragraphs claiming direct defendant actions | Defendants pointed to complaint attachments and letters showing counsel, not defendants, conducted the challenged acts | Court found plaintiff failed to identify acts undertaken by defendants independent of counsel, and disregarded conclusory or contradicted allegations |
| Applicability of prior authority excluding counsel from UDTPA liability | Moch contended prior cases were limited and distinguishable | Defendants relied on Reid and Davis Lake to bar claims against counsel-driven conduct | Court applied Reid and Davis Lake, rejecting Moch’s attempts to distinguish them and finding those precedents controlling |
Key Cases Cited
- Stanback v. Stanback, 297 N.C. 181 (statement of Rule 12(b)(6) pleading standard and abuse-of-process elements)
- Reid v. Ayers, 138 N.C. App. 261 (learned-profession exemption to UDTPA; law firms/attorneys fall outside "commerce")
- Davis Lake Community Ass’n v. Feldmann, 138 N.C. App. 292 (reaffirming that UDTPA does not reach acts by opposing counsel conducted in attorney role)
- Laster v. Francis, 199 N.C. App. 572 (court may reject allegations contradicted by documents attached to the complaint)