Software Automation Holdings, LLC v. Insurance Toolkits, LLC
5:23-cv-00140
E.D.N.C.Jul 3, 2025Background
- Software Automation Holdings, Inc. (SAH), a North Carolina LLC, sold insurance underwriting software “Best Plan Pro” (BPP).
- SAH alleged Insurance Toolkits, LLC and its founders fraudulently accessed BPP via fake accounts, breached the End User License Agreement, and misappropriated trade secrets and copyrighted material.
- During discovery, it was revealed that prior to the lawsuit, SAH had assigned all rights in BPP and associated intellectual property to IIP Group Holdings, including the right to sue.
- SAH attempted to cure its lack of standing by seeking to amend the complaint to add IIP Holdings as a plaintiff after discovery closed.
- The court previously dismissed several of SAH’s claims and ordered the remaining claims to proceed; later, defendants moved to dismiss for lack of subject-matter jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing / Real Party in Interest | SAH claimed it retained claims or could cure by adding IIP Holdings as party | Defendants argued SAH assigned all rights and lacked standing | SAH is not the real party in interest; dismissal required |
| Rule 17(a)(3) Amendment | Sought to join IIP Holdings under Rule 17 as real party in interest | Argued Rule 17 does not apply; no understandable mistake—delay inexcusable | Rule 17(a)(3) inapplicable—SAH was not diligent or excusable |
| Amendment (Rule 15 & 16 timeliness) | Amendment timely and should be freely granted | Not timely or diligent, prejudices defendants this late in case | SAH fails to show good cause; amendment denied |
| State-law assignment validity | Some state-law claims (UDTPA, fraud) assignable under NC law | Assignments of personal tort claims void as against NC public policy | Assignments void; SAH cannot establish standing for those claims |
Key Cases Cited
- Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83 (scope of federal court subject-matter jurisdiction)
- Lujan v. Defs. of Wildlife, 504 U.S. 555 (requirements for Article III standing)
- Spokeo, Inc. v. Robins, 578 U.S. 330 (concreteness requirement for standing)
- Petrella v. Metro-Goldwyn-Mayer, Inc., 572 U.S. 663 (accrual of copyright claims)
- Williams v. Blue Cross Blue Shield of N.C., 357 N.C. 170 (accrual of contract claims under NC law)
- Invs. Title Ins. v. Herzig, 330 N.C. 681 (restrictions on assignment of tort claims under NC law)