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Contract – Real Property Development – LLC Operating Agreement

Even though individual defendant Crider is not a party to plaintiff Mary Annette, LLC’s operating agreement, defendants’ breach of contract counterclaim concerns an alleged breach, not of the Mary Annette operating agreement, but of an alleged oral agreement relating to capital funding of Mary Annette and development of the disputed real property that Crider transferred to Mary Annette. Plaintiffs’ arguments, which focus entirely on the operating agreement, do not address that oral agreement and therefore provide no basis to dismiss the counterclaim for its breach.

The court grants in part and denies in part plaintiffs’ motion to dismiss defendants’ counterclaims.

Defendants allege that plaintiffs offered to buy out Crider’s brother’s share of real property. Crider would then transfer the property to an LLC (Mary Annette), in which Crider’s company, defendant Mountain Girl Ventures, LLC, would own a two-thirds interest and the individual plaintiffs’ companies, Twilight Developments, Inc., and Ozzie 1, LLC, would own a one-third interest. At the closing on Crider’s brother’s interest in the real property, Crider learned that plaintiffs were mortgaging Crider’s property to finance the buy-out of Crider’s brother, and Crider later learned that the Mary Annette operating agreement gave Mountain Girl only a one-third interest.

Defendants’ counterclaims fail to allege that plaintiffs owed them a fiduciary duty; consequently, defendants have failed to state a claim for breach of fiduciary duty.

Defendants allege that plaintiff Jorge Cure made the misrepresentations set out above in the summer of 2020. Plaintiffs have failed to sufficiently argue that defendants’ fraud counterclaim is inadequately pled. While plaintiffs do argue that the claim is barred by the economic loss doctrine, that doctrine does not apply to fraud claims.

Plaintiffs are correct that, since Crider is not a party to the Mary Annette operating agreement, she lacks standing to seek reformation of the operating agreement. However, plaintiffs raise no argument as to why Mountain Girl’s claim should be dismissed.

Defendants’ unfair trade practices counterclaim fails because it concerns only a single market participant.

Motion granted in part, denied in part.

Mary Annette, LLC v. Crider (Lawyers Weekly No. 020-016-23, 15 pp.) (Adam Conrad, J.) Russell McLean for plaintiffs; Patrick Smathers for defendants. 2023 NCBC 16

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