Corporate – Misconduct – Breach of Fiduciary Duty – Jointly and Severally – Financial Damage – Unfair and Deceptive Trade Practices

The individual defendant engaged in misconduct that badly damaged defendant corporation and that proximately resulted in significant financial damage. The individual defendant’s misconduct was engaged in his capacity as agent of defendant corporation, which is jointly and severally liable for his misconduct.

The court entered final judgment against defendants jointly and severally.

The court entered default against defendants Matthew Bolesky and Conservation Technology & Solutions, LLC. Plaintiff CSI contended Bolesky is liable to CSI for breach of fiduciary duty, fraud, and constructive fraud; defendants are liable to CSI for conversion and tortious interference; and defendants have admitted to the conduct that underlies plaintiff’s claim for unfair and deceptive trade practices pursuant to N.C.G.S. §75-1.1.

Mr. Bolesky, an officer of CSI, engaged in misconduct that badly damaged CSI and that proximately resulted in significant financial damage. Bolesky’s misconduct, as alleged, was engaged in his capacity as agent of CTS and CTS is jointly and severally liable for Bolesky’s misconduct. CSI requested actual damages in the amount of $8,048,593.91, contending its damages are the lost profits it would have earned but for the actions of defendants, which included intentionally harming CSI’s relationships with its supplier and customers.

While we determined that the lost profit requested by CSI is too speculative, we concluded that Bolesky’s conduct as an officer of CSI caused significant financial damage to CSI. CSI is entitled to recover $200,000.00 in damages from Bolesky and CTS for the breach of fiduciary duty and constructive fraud claims. CSI failed to satisfy its burden of proving that its damages were more than the amount determined.

CSI also sought punitive damages pursuant to N.C.G.S. §1D-15 for Bolesky’s breach of fiduciary duty. As a result, we next considered whether there was sufficient evidence to support an award of punitive damages.

CSI alleged Bolesky’s breaches of fiduciary duty and other misconduct were “willful, wanton, malicious, and in reckless disregard of CSI’s rights[.]” We held that Bolesky is liable for punitive damages. We were struck by the severity of the misconduct engaged in by Bolesky as agent of CTS. The breaches of fiduciary duty appear from the evidence to have been carefully calculated and intended to destroy CSI’s ability to compete in an otherwise lucrative market built by Ms. Michaud, as its agent. Whether as a result of the animosity between the pair arising from their marital discord or otherwise, Bolesky’s conduct, as proven by the admissions of record and documentary evidence, clearly justifies the imposition of substantial punitive damages. Therefore, we awarded CSI $600,000.00 in punitive damages.

CSI alleged that Bolesky is liable to it for fraud. CSI failed to adequately state a cause of action for fraud, as the complaint did not include allegations of how this statement was reasonably calculated to deceive.

CSI also alleged Bolesky made “material misrepresentations to CSI’s customers regarding the relationship between CSI and CTS and the reasons to shift their business to CTS from CSI.” The Complaint did not allege the time, place, and content of the fraudulent representation by Bolesky. There are numerous statements by Bolesky deemed admitted, but the complaint failed to set forth which of those statements provides the basis for this cause of action for fraud. Therefore, the Court CSI is not entitled to recover on this claim for fraud because the allegations are deficient.

Final judgment entered against defendants jointly and severally.

Conservation Station Inc. v. Bolesky (Lawyers’ Weekly No. 020-085-23, 27 pp.) (Michael L. Robinson, J.) 2023 NCBC 85. Revolution Law Group, by C. Scott Meyers, for plaintiff; Defendant Matthew Bolesky, pro se. North Carolina Business Court