Tort/Negligence – Fraud – Civil Practice – Standing – Bankruptcy – Labor & Employment – Breach of Contract – Personal Jurisdiction

Stec v. Fuzion Investment Capital, LLC (Lawyers Weekly No. 12-15-0514, 31 pp.) (Calvin E. Murphy, J.) 2012 NCBC 24

Holding: Where plaintiff’s fraud claim is based on acts that allegedly occurred prior to the filing of his bankruptcy petition, the acts supporting plaintiff’s fraud claim are rooted in plaintiff’s pre-petition activities and are the property of the bankruptcy estate. Therefore, plaintiff lacks standing to bring his fraud claim.

Defendants’ motion to dismiss is granted as to plaintiff’s claims for fraud, unfair trade practices, usurpation of corporate opportunities, violation of the N.C. Wage and Hour Act as to wages owed after plaintiff’s termination, and intentional infliction of emotional distress. Defendants’ motion to dismiss is denied as to plaintiff’s claims for breach of contract; breach of the implied covenant of good faith and fair dealing; tortious interference with contract and intentional interference with business relations against defendants Allstate Financial Group, Inc., Ron Policeno and John Michael; and violation of the Wage and Hour Act as to wages owed before plaintiff’s termination. The court also grants defendant Michelle Michael’s motion to dismiss for lack of personal jurisdiction.

Plaintiff was in the midst of a six-year employment contract when he filed for bankruptcy. Thus, the employment contract was an executory contract.

As to the membership unit transfer agreement and the asset purchase agreement, it is unclear from the record whether, at the time plaintiff for bankruptcy, there were any continuing obligations owed by any of the parties to those contracts. Accordingly, the court cannot find them to be executory.

Plaintiff listed the employment contract on Schedule G with the bankruptcy court. Because the bankruptcy trustee did not assume the employment contract within 60 days of the filing of plaintiff’s bankruptcy petition, pursuant to 11 U.S.C. § 365d(1), the employment contract is deemed rejected; thus, it is not the property of the bankruptcy estate.

Plaintiff filed his bankruptcy petition on Aug. 11, 2010, and all of his claims except fraud arise from alleged actions taken by defendants on or after Sept. 1, 2010. None of the claims except fraud are property of the bankruptcy estate.

Plaintiff has alleged the existence of a valid employment contract, breach of that contract, and breach of the implied covenant of good faith and fair dealing. Even though defendants Lumous Holdings, LLC’s and Edward Sampson’s names do not appear on the contract, plaintiff has alleged that they become parties to the contract through subsequent ratification. The court denies defendants’ motion to dismiss plaintiff’s breach of contract and breach of the covenant of good faith and fair dealing.

As to plaintiff’s claim of tortious interference with contract, defendants Sampson’s and the Sampson Family Trust’s status as owners and/or managers of the breaching party would make them non-outsiders. The complaint does not allege that these defendants interfered for their own personal gain. Plaintiff has failed to sufficiently plead that defendants Sampson and the Sampson Family trust acted without justification. Their motion to dismiss the claims for tortious interference with contract and intentional interference with business relations is granted without prejudice to plaintiff amending his complaint. The motion to dismiss is denied as to defendants Allstate, Policeno and John Michael.

Plaintiff’s unfair trade practices claim arises out of his breach of contract action; however, he has failed to allege aggravating circumstances. He has also failed to show that he should be excused from the general rule that employment relationships are exempt from unfair trade practices claims. Defendants’ motion to dismiss plaintiff’s unfair trade practice claim is granted.

Plaintiff’s claim for usurpation of corporate opportunities alleges that defendant Sampson individually owed fiduciary duties to plaintiff because of their relationship as co-managers of defendant Fuzion Investment Capital, LLC (FIC). The parties agree that any duties which defendant Sampson would owe plaintiff individually as a co-manager would be determined by Nevada Law, as FIC is a Nevada LLC.

Under Nevada law, there is no support for the proposition that a manager of a corporation owes fiduciary duties to employees or holders of options for membership interests.

This court finds no authority under Nevada law that supports the imposition of an individual duty of good faith from defendant Sampson to plaintiff. Absent a fiduciary relationship between the parties, defendant Sampson owes no fiduciary duties to plaintiff. Accordingly, plaintiff has failed to state a claim for which relief can be granted; therefore, defendants’ motion to dismiss with regard to the claim for usurpation of corporate opportunities is granted.

Plaintiff has alleged that defendant FIC suspended him with pay on Sept. 23, 2010. Plaintiff also alleges that defendant FIC failed to pay him the agreed-upon wages from Sept. 23, 2010, until Nov. 30, 2010, and from the date of his termination through the end of his contract.

The N.C. Wage and Hour Act allows for employees to collect wages that were due to them prior to their termination but does not allow for the collection of wages that had not been earned. Accordingly, plaintiff’s claim for wages after his termination is not allowed under the Act. The court therefore grants defendants’ motion to dismiss to the extent that plaintiff’s claim is for wages allegedly owed after his termination and denies defendants’ motion as to plaintiff’s claim for wages that were owed to him prior to his termination.

In support of his intentional infliction of emotional distress claim, plaintiff alleges that defendants abused their positions of authority in hopes of getting plaintiff to sign away his rights under the employment contract and attempted to “starve out” plaintiff so that he would have no other option but to agree to the terms of his termination. Despite these factual allegations, plaintiff has been unable to cite any legal authority to support his contention that an employer’s method of termination can rise to the level of extreme and outrageous conduct. While defendants’ actions may have been insulting and caused plaintiff to suffer indignities, the conduct, as alleged, does not exceed all bounds of decency tolerated by society. Defendants’ actions as pled do not constitute extreme and outrageous conduct.

In addition to a lack of standing, plaintiff’s fraud claim also fails because it was not pled with sufficient particularity. Plaintiff’s allegations that the representations in the employment contract induced him to enter into the employment contract and the asset purchase agreement fail to specifically identify who signed the employment contract and only state that it was subsequently ratified at some unknown time.

Finally, defendant Michelle Michael is a resident of Washington state, and her only contacts with North Carolina are some phone calls to her husband while he was here. These contacts are insufficient to give N.C. courts personal jurisdiction over her.

Defendants’ motion to dismiss is granted in part and denied in part.