North Carolina Lawyers Weekly
Bucci v. Burns (Lawyers Weekly No. 020-088-17, 13 pp.) (Adam Conrad, J.) 2017 NCBC 81
Holding: While plaintiffs have alleged that they invested in the now-bankrupt Predictifyme.com, Inc., based on defendants’ admittedly false representations that Predictifyme had acquired Go-Fig Solutions (Pvt) Ltd. and had a formal relationship with the United Nations “to provide predictive software,” the complaint does not allege who made the alleged misrepresentations or to whom they were made. Consequently, the complaint does not state claims for fraud or negligent misrepresentation.
The court dismisses plaintiffs’ complaint without prejudice and with leave to amend.
Where the thrust of the complaint is that defendants wrongfully induced plaintiffs to become investors in Predictifyme, plaintiffs are not seeking to recover for injuries to Predictifyme. Therefore, plaintiffs have standing.
Plaintiffs’ claim under the North Carolina Securities Act is based on the same allegations as their fraud and negligent misrepresentation claims, along with an allegation that plaintiffs’ purchases of stock or convertible notes also constitute purchases of securities. A claim under the North Carolina Securities Act must be pleaded with particularity, which the complaint fails to do.
Finally, the complaint alleges that defendants had fiduciary duties arising out of their status as the majority owners of Predictifyme. While majority shareholders may owe fiduciary duties to minority shareholders, defendants’ alleged “breach” – representing that Predictifyme and acquired Go-Fig, knowing it had not – took place before plaintiffs became shareholders. A fiduciary relationship must exist before it can be breached.
Dismissed without prejudice.
