HOWARD v. IOMAXIS, LLC, 2023 NCBC 80

STATE OF NORTH CAROLINA
COUNTY OF MECKLENBURG
IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
18 CVS 11679
KELLY C. HOWARD and FIFTH
THIRD BANK, NATIONAL
ASSOCIATION, AS CO-TRUSTEES
OF THE RONALD E. HOWARD
REVOCABLE TRUST U/A DATED
FEBRUARY 9, 2016, AS AMENDED
AND RESTATED,
Plaintiffs,
v.
IOMAXIS, LLC; BRAD C. BOOR a/k/a
BRAD C. BUHR; JOHN SPADE, JR.;
WILLIAM P. GRIFFIN, III;
NICHOLAS HURYSH, JR.; and
ROBERT A. BURLESON,
Defendants.
ORDER AND OPINION ON
PLAINTIFFS’ MOTION FOR LEAVE
TO FILE SUPPLEMENTAL AND
SECOND AMENDED COMPLAINT
1. 	THIS MATTER is before the Court on Plaintiffs’ Motion for Leave to
File Supplemental and Second Amended Complaint (the “Motion”), pursuant to Rule
15 of the North Carolina Rules of Civil Procedure (“Rule[s]”), (ECF No. 360.)
2. 	Plaintiffs seek leave to amend and supplement their First Amended
Complaint to: (a) expand and supplement the facts to include, inter alia, allegations
concerning the sale of a division of IOMAXIS, LLC (“IOMAXIS”) and the transfer of
the IOMAXIS Defendants’1 ownership interests to another LLC; (b) add the other
LLC, Five Insights, LLC (“Five Insights”), as a party; (c) amend existing claims; and
1 The IOMAXIS Defendants include IOMAXIS, LLC, Brad C. Boor a/ka/ Brad C. Buhr, John
Spade, Jr., William P. Griffin, III, and Robert A. Burleson.
Howard v. IOMAXIS, LLC, 2023 NCBC 80.

(d) assert new claims. 	(See generally Motion, Ex. A [“Prop. Am. Compl.”], ECF No.
360.2)
3. 	Having considered the Motion, the related briefing, and the arguments
of counsel at a hearing on the Motion, the Motion is hereby GRANTED in part and
DENIED in part, as stated below.
Johnston, Allison & Hord, P.A., by Greg C. Ahlum, David T. Lewis,
Patrick E. Kelly, and Katie D. Burchette, for Plaintiff Kelly C. Howard,
as co-Trustee of the Ronald E. Howard Revocable Trust u/a dated
February 9, 2016, as Amended and Restated.
Womble Bond Dickinson (US) LLP, by Lawrence A. Moye and Scott D.
Anderson, for Plaintiff Fifth-Third Bank, NA, as co-Trustee of the
Ronald E. Howard Revocable Trust u/a dated February 9, 2016, as
Amended and Restated.
Allen, Chesson & Grimes PLLC, by David Allen, Benjamin S. Chesson,
and Anna Majestro, and Nelson Mullins Riley & Scarborough LLP, by
Travis Bustamante, for Defendants IOMAXIS, LLC, Brad C. Boor a/k/a
Brad C. Buhr, John Spade, Jr., William P. Griffin, III, and Robert A.
Burleson.
Miller Monroe & Plyer, PLLC, by Jason A. Miller, Paul T. Flick, and
Robert B. Rader, III, and Whiteford Taylor Preston, LLP by Steven E.
Tiller, for Defendant Nicholas Hurysh.
Earp, Judge.
I. 	FACTUAL BACKGROUND
4. 	The Court does not make findings of fact when deciding a motion to
amend. 	The following background is derived from Plaintiffs’ allegations in the
Proposed Amended Complaint that are relevant to the Motion before the Court.
5. 	Plaintiffs are trustees of the Ronald E. Howard Revocable Trust (the
“Trust”). Prior to his death on 12 June 2017, Ronald E. Howard (“Ron Howard”) was

the majority member of IOMAXIS with a 51% ownership interest in the company.
(Prop. Am. Compl. ¶ 1.)
6. 	Plaintiffs contend that IOMAXIS is a North Carolina LLC controlled by
a 	November 	2001 	operating 	agreement 	(as 	amended) 	(the 	“N.C. 	Operating
Agreement”), and that attempts in 2015 to convert it to a Texas LLC and adopt a new
operating agreement were ineffective. (Prop. Am. Compl. ¶¶ 18, 33, 61-77.)
7. 	Plaintiffs allege that pursuant to the N.C. Operating Agreement, when
Ron Howard died, his membership interest in IOMAXIS became a 51% economic
interest. 	In addition, his death was considered an involuntary withdrawal that
triggered the N.C. Operating Agreement’s buy-sell provisions. (Compl., Ex. C [“N.C.
Operating Agreement”] §§ 4.6, 8.4, 9.1-9.9, ECF No. 3.)
8. 	Section 9.2 of the N.C. Operating Agreement required the executor of
Ron Howard’s estate (the “Estate”) to give the remaining IOMAXIS members notice
of Ron Howard’s death, a buy-sell event, within ten (10) days of its occurrence.
Section 9.3 of the N.C. Operating Agreement gave IOMAXIS’s members thirty (30)
days following receipt of the buy-sell notice to notify the Estate if they intended to
exercise their option to purchase Ron Howard’s interest. 	Plaintiffs allege that no
member of IOMAXIS exercised the option within the thirty-day period. 	(Prop. Am.
Compl. ¶¶ 79-83.)
9. 	Section 9.5 of the N.C. Operating Agreement, amended in 2004, sets out
the method for valuing a member’s ownership interest for purposes of the buy-sell
provisions. 	If the parties do not agree on a value, the seller (here, the Estate) is

required to present an offer to the remaining members, who then have ten days to
accept or reject the offer. 	If the offer is rejected, the seller is required to buy the
remaining members’ interests at the price the seller offered to sell its own interest.
(Compl., Ex. F [“First Amendment to N.C. Operating Agreement”], ECF No. 3.)
10. 	The parties did not agree on a value for Ron Howard’s interest. But the
Estate did not make the offer contemplated by Section 9.5. 	The Estate complains
that it could not make the offer because IOMAXIS did not provide it with the
necessary financial information to determine the value of the interest. 	(Prop. Am.
Compl. ¶ 92.)
11. 	Section 9.6 of the N.C. Operating Agreement requires that any sale that
takes place pursuant to its buy-sell provisions close within ninety (90) days of the
buy-sell event. (N.C. Operating Agreement § 9.6.)
12. 	After the ninety-day period had elapsed, in late October or early
November 2017, the Estate proposed, and IOMAXIS agreed, to retain RSM US LLP
(f/k/a “RSM McGladrey”) (“RSM”) to appraise Ron Howard’s interest. 	RSM was
selected because it had an existing relationship with IOMAXIS. 	When IOMAXIS
allegedly refused to provide RSM with the financial information it requested,
however, the Estate terminated its effort to retain RSM, and RSM did not complete
the valuation. (Prop. Am. Compl. ¶¶ 94-96.)
13. 	Instead, IOMAXIS unilaterally decided to retain Valuation Services,
Inc. (“VSI”). 	VSI conducted an appraisal but allegedly applied significant minority
and illiquidity discounts when determining the value of Ron Howard’s interest.

Plaintiffs contend that VSI’s valuation was not “full, fair, or accurate.” 	(Prop. Am.
Compl. ¶¶ 97-101).
14. 	Pursuant to his will, on 8 December 2017, Ron Howard’s interest in
IOMAXIS passed as part of his residuary Estate to the Trust. (Prop. Am. Compl. ¶¶
13-14.)
15. 	The dispute before the Court centers on the Trust’s right to the economic
benefits flowing from Ron Howard’s 51% interest in IOMAXIS. 	A central issue is
whether the N.C. Operating Agreement or a Texas operating agreement controls.
II. 	PROCEDURAL HISTORY
16. 	Plaintiffs filed their Complaint on 18 June 2018, asserting claims for (a)
breach of the right to receive interim distributions from IOMAXIS; (b) an accounting
to receive information regarding the value of their interest in IOMAXIS; and (c) a
judgment declaring that the purported conversion of IOMAXIS from a North Carolina
limited liability company to a Texas limited liability company was void and that the
N.C. Operating Agreement controls. 	(Compl. ¶¶ 71-97, ECF No. 3.) 	On 6 August
2018, Defendants filed an Answer to the Complaint. (Answ., ECF No. 14.)
17. 	Since then, discovery in this case has undergone an unusual series of
stops and starts. 	Initially, after discussion with the parties, the Court deferred the
entry of a case management order to allow the parties to explore the possibility of an
early resolution. 	When that effort proved unsuccessful, the Court ordered a six-
month discovery period commencing 1 February 2019. The fact discovery period was

later extended to 16 September 2019. 	(Case Mgmt. Order, ECF No. 32; Order
Granting Second Mot. Modify Case Mgmt. Order, ECF No. 38.)
18. 	During 	depositions 	conducted 	on 	12 	September 	2019, 	the 	parties
engaged 	in 	impromptu 	settlement 	discussions 	that 	resulted 	in 	a 	two-page
memorandum of settlement (“MOS”). (See Pls.’ Joint Mot. Enforce Settlement Memo.,
Ex.1, ECF No. 50.1.) 	At the parties’ request, the Court stayed discovery to allow time
to document the agreement. (Consent Third Am. Case Mgmt. Order, ECF No. 48.)
19. 	Unfortunately, 	the 	parties’ 	efforts 	did 	not 	result 	in 	a 	mutually
acceptable document. On 18 October 2019, after Plaintiffs filed a Motion to Enforce
Memorandum of Settlement, the Court continued to stay discovery while it decided
the motion. (Not. of Hr’g and Order on Pls.’ Joint Mot. File under Seal and Entering
Partial Stay, ¶ 6, ECF No. 53.)
20. 	The Court ruled on the Motion to Enforce Memorandum of Settlement
on 1 May 2020 and directed the parties to submit a case management report
proposing a discovery schedule. 	(Order and Op. on Pls.’ Joint Mot. Enforce Memo.
Settlement, ¶¶ 32-33, 58, ECF No. 70.) Thereafter, the Court lifted the stay and set
30 October 2020 as the deadline for completing fact discovery. 	(Fourth Am. Case
Mgmt. Order, ECF No. 71.)
21. 	On 25 September 2020, almost a month before fact discovery was to
close, Defendants’ counsel sought to withdraw as counsel for Defendant Hurysh.
(Order on Consent Mot. Withdraw and Substitute Counsel, ECF No. 76.) 	After a
status conference, the Court stayed all depositions and expert witness disclosures

until further court order. 	(Scheduling Order, ECF No. 78.) 	On 30 November 2020,
Defendants’ counsel moved to withdraw completely. Discovery remained stayed.
(Mot. Withdraw and Substitute Counsel, ECF No. 93; Order Following Status
Conference, ECF No. 95.)
22. 	Thereafter, on 26 January 2021, Plaintiffs sought the appointment of a
receiver for IOMAXIS. 	(Pls.’ Mot. Appoint Receiver, ECF No. 106.)2 	Defendant
Hurysh, one of IOMAXIS’s former members, filed an affidavit in support of Plaintiffs’
motion 	in 	which 	he 	alleged, 	among 	other 	things, 	that 	Defendant 	Buhr 	had
misappropriated funds from IOMAXIS in the past using separate entities such as
Fast Rabbit, LLC and Global Vector, LLC, and that Buhr was making plans to set up
other entities to continue the misappropriation. 	(Aff. Nicholas Hurysh [“Hurysh
Aff.”] ¶¶ 64-70, 75-78, ECF No. 97.)3
23. 	When his credibility was challenged in a responsive affidavit from Buhr,
Hursyh revealed that he had recorded two July 2020 telephone conferences, one on
17 July 2020 and a second on 22 July 2020, in which the IOMAXIS Defendants
allegedly discussed a plan to siphon IOMAXIS’s assets to other entities in order to
decrease the value of the Trust’s interest and pay themselves disguised distributions.
(Def. Hurysh’s Mot. In Camera Inspection and Leave to File Affs., Recordings, and
2 Plaintiffs subsequently requested that the Court continue the motion pending resolution of
certain issues pertaining to Hurysh’s affidavit. (Order Following H’rg, ECF No. 150.)
3 The case was reassigned from the Honorable James L. Gale to the undersigned on 6 May
2021. (Reassignment Order, ECF No. 137.)

Trans. under Seal, ECF No. 156.) 	IOMAXIS objected to disclosure of the recorded
telephone conferences on grounds of attorney-client privilege.4
24. 	In the meantime, based on Hurysh’s allegations, Plaintiffs sought to
amend their Complaint. (Pls.’ Mot. Leave File First Am. Compl., ECF No. 118.) The
Court permitted the addition of claims for fraud and violation of the Uniform Voidable
Transactions Act, N.C.G.S. § 39-23.1, et seq. (“UVTA”) to the extent these claims arose
after Ron Howard’s death, and it ordered the parties to submit a case management
report proposing a plan for discovery. 	See Howard v. IOMAXIS, LLC, 2021 NCBC
LEXIS 116, at *27-29, 37 (N.C. Super. Ct. Dec. 22, 2021).
25. 	Thereafter, the Court amended the Case Management Order to extend
the deadlines for fact and expert discovery to 5 July 2022 and 7 November 2022,
respectively. 	(Fifth Am. Case Mgmt. Order, ECF No. 214.) 	A flurry of motions
followed, including the IOMAXIS Defendants’ motion to dismiss the newly-amended
complaint. (IOMAXIS Defs.’ Consol. Mot. Dismiss, ECF No. 223.) In addition,
IOMAXIS appealed this Court’s ruling denying its motion for protective order and
permitting disclosure of the 22 July 2020 telephone conference call. (Notice of Appeal,
ECF No. 181.)
26. 	Given the heavy litigation activity, the parties requested additional time
to complete fact discovery in a case management report dated 12 January 2023. (Case
Mgmt. Report, ECF No. 295.) The Court agreed and entered a Sixth Amended Case
Management Order permitting limited discovery with respect to the first three claims
4 It was later determined that an attorney was present on the 22 July 2020 call only.

and setting 15 June 2023 as the deadline for fact discovery. (Sixth Am. Case Mgmt
Order, ECF No. 296.) 	As a result of the interlocutory appeal, however, the Court
entered a stay with respect to the fraud claims. 	(Order Mot. Sever and Stay, ECF
No. 283.) 	The stay remained in place for approximately eighteen months while the
appeal was pending.
27. 	The Supreme Court issued an opinion on 16 June 2023, affirming this
Court’s order regarding the 22 July 2020 telephone conference. 	See Howard v.
IOMAXIS, LLC, 384 N.C. 576, 584 (2023). 	After confirmation that Hurysh had, in
fact, waived the privilege and that he intended for the content of the telephone
conference to be on the record, this Court ordered IOMAXIS, which had taken
possession of the recording in the meantime, to file a transcript of the 22 July 2020
telephone 	conference 	call 	on 	the 	record. 	(Scheduling 	Order, 	ECF 	No. 	320.)
IOMAXIS’s filing of the transcript on 7 August 2023 was Plaintiffs’ first opportunity
to review the content of the 22 July 2020 telephone conference. (IOMAXIS’s Mot.File
under Seal, July 22 Document, ECF No. 334.1.)
28. 	During a status conference on 26 June 2023, Plaintiffs stated that, in
addition to having only recently reviewed the 22 July 2020 telephone conference, they
had discovered during the depositions of Defendants Buhr, Spade, and Griffin that
(a) IOMAXIS had sold one of its divisions, Ingressive, to Millennium, Inc. in April or
May 2023 on undisclosed financial terms that did not result in a distribution to the
Trust, (b) the IOMAXIS Defendants had transferred their ownership interests to
another LLC, Five Insights, in late 2022 or early 2023, making Five Insights

IOMAXIS’s sole member, and (c) Five Insights, with Buhr as its managing member,
was now managing IOMAXIS pursuant to a management agreement that had not
been disclosed to the Trust. (See Pls.’ Am. Mot. Appoint Receiver, Ex. 3 [“Buhr Dep.”]
35:17-21, 57:14-58:4, ECF No. 330.4; Pls.’ Am. Mot. Appoint Receiver, Ex. 4 [“Griffin
Dep.”] 131:15-132:9, ECF No. 330.5.) 	In addition, Spade confirmed that he did not
ratify the Texas conversion and operating agreement until after Ron Howard died.
(Pls.’ Am. Mot. Appoint Receiver, Ex. 2 [“Spade Dep.”] 61:5-14, ECF No. 330.3.)
29. 	As a consequence of these developments and given the staccato nature
of discovery efforts to this point, the Court entered an order affording the parties
forty-five days to file any motions to amend their pleadings. Plaintiffs indicated that
they would file a motion to amend their Complaint. 	Therefore, at the IOMAXIS
Defendants’ request, the Court continued to stay discovery with respect to the fraud
and UVTA claims pending resolution of the anticipated motion. (Scheduling Order ¶
15, ECF No. 320.)
30. 	On 21 September 2023, the Plaintiffs, within the forty-five day period
set forth in the Court’s Scheduling Order, filed this Motion in which they seek to (a)
amend and supplement their factual allegations; (b) add Five Insights as a party; (c)
add claims for conversion and civil conspiracy; and (d) amend their contract and
declaratory judgment claims. (See generally Prop. Am. Compl., ECF No. 360.3.) The
IOMAXIS Defendants oppose the Motion. 	(IOMAXIS Defs.’ Br. Opp’n Mot. Am.
[“Defs.’ Br.”], ECF No. 368.)

31. 	After full briefing, the Court held a hearing on the Motion on 13
November 2023 during which all parties participated through counsel. (Notice of
Hr’g, ECF No. 370.) The Motion is now ripe for disposition.
III. 	LEGAL STANDARD
32. 	Rule 15(a) of the North Carolina Rules of Civil Procedure mandates that
leave to amend “shall be freely given when justice so requires.” 	N.C.G.S. § 1A-1,
R. 15(a). The rule “encourages trial courts to permit amendment liberally and evinces
our State’s ‘general policy of allowing an action to proceed to a determination on the
merits.’ ” 	Duke Energy Carolinas, LLC v. AG Ins. SA/NV, 2019 NCBC LEXIS 105,
at *4 (N.C. Super. Ct. Dec. 10, 2019) (quoting House of Raeford Farms, Inc. v. Raeford,
104 N.C. App. 280, 282 (1991)).
33. 	However, the right to amend is not unfettered. Reasons to deny a motion
to amend include “undue delay, bad faith, dilatory motive, repeated failure to cure
deficiencies, undue prejudice and futility of the amendment.” Bartlett Milling Co.,
L.P. v. Walnut Grove Auction & Realty Co., 192 N.C. App. 74, 89 (2008) (quoting
Nationsbank of N.C., N.A. v. Baines, 116 N.C. App. 263, 268 (1994)).
34. 	As for undue delay, it has long been the law that “a trial court may
appropriately deny a motion for leave to amend on the basis of undue delay where a
party seeks to amend its pleading after a significant period of time has passed since
filing the pleading and where the record or party offers no explanation for the delay.”
Rabon v. Hopkins, 208 N.C. App. 351, 354 (2010) (affirming a trial court’s denial of a
motion to amend when the plaintiff moved to amend nine months after filing the

complaint without providing a sufficient explanation for the delay); Strickland v.
Lawrence, 176 N.C. App. 656, 667 (2006) (affirming trial court’s denial of a motion to
amend when plaintiffs presented no evidence to support their claim that the
amendment was based upon information obtained in discovery).
35. 	As for undue prejudice, it is not uncommon for a proposed amendment
to impact the status quo in a way that the nonmovant opposes. But not every impact
constitutes undue prejudice. 	Further, undue prejudice is not presumed, even when
the proposed amendments are extensive. “The burden is upon the opposing party to
establish that that party would be prejudiced by the amendment.” Mauney v. Morris,
316 N.C. 67, 72 (1986).
36. 	The Court may disallow on grounds of bad faith amendments that are
abusive or “made in order to secure some ulterior tactical advantage.” Columbus Life
Ins. Co. v. Wells Fargo Bank, N.A., 2022 NCBC LEXIS 40, at **11 (N.C. Super. Ct.
May 3, 2022) (quoting Vitaform, Inc. v. Aeroflow, Inc., 2021 NCBC LEXIS 79, at **16
(N.C. Super. Ct. Sept. 16, 2021). Likewise, amendments made with dilatory motive
that 	seek 	improperly 	to 	delay 	the 	Court’s 	administration 	of 	justice 	may 	be
denied. See, e.g., Azure Dolphin, LLC v. Barton, 2017 NCBC LEXIS 229, at *3-4 (N.C.
Super. Ct. May 30, 2017), aff’d, 371 N.C. 579 (2018) (finding dilatory motive when the
proposed amendment made it “impossible” for the defendants to understand the
allegations against them and removed parties that the plaintiffs had added only a
few weeks earlier).

37. 	Finally, “[t]he futility standard under Rule 15 is essentially the same
standard used in reviewing a motion to dismiss under Rule 12(b)(6), but [it] provides
the court liberal discretion to find that an amendment lacks futility.” Simply the Best
Movers, LLC v. Marrins’ Moving Sys., 2016 NCBC LEXIS 28, at **5-6 (N.C. Super.
Ct. Apr. 6, 2016). Thus, a motion to amend is not futile when “the allegations of the
[amendment], treated as true, are sufficient to state a claim upon which relief may
be granted under some legal theory, whether properly labeled or not.” 	Harris v.
NCNB Nat’l Bank, 85 N.C. App. 669, 670 (1987)
38. 	In addition, “upon reasonable notice and upon such terms as are just,”
Rule 15(d) allows a party “to serve a supplemental pleading setting forth transactions
or occurrences or events which may have happened since the date of the pleading
sought to be supplemented[.]” 	N.C.G.S. § 1A-1, R. 15(d). 	The rule for allowing
supplementation 	is 	also 	liberally 	construed, 	and 	supplementation 	should 	be
permitted absent substantial injustice. See Miller v. Ruth’s of N.C., Inc. 69 N.C. App.
153, 156 (1984) (“[M]otions to allow supplemental pleadings should be freely granted
unless their allowance would impose a substantial injustice upon the opposing
party.”); Draughon v. Harnett Cnty. Bd. of Educ., 166 N.C. App. 449, 454 (2004)
(“Motions to allow supplemental pleadings should ordinarily be granted because by
definition they encompass matters that arose after the date of the original pleading,
unless a substantial injustice would result to the opposing party.”).
39. 	In the end, a “motion for leave to amend is addressed to the sound
discretion of the trial judge[.]” Chicopee, Inc. v. Sims Metal Works, Inc., 98 N.C. App.

423, 430 (1990); see House of Raeford Farms, Inc. v. Raeford, 104 N.C. App. 280, 282
(1991).
IV. 	ANALYSIS
A. Standing
40. 	The 	IOMAXIS 	Defendants 	object 	to 	Plaintiffs’ 	Proposed 	Amended
Complaint on the basis of standing. 	They first argue that the Trust lacks standing
to sue because the movement of Howard’s economic interest from his Estate to the
Trust without member approval violated the operating agreement’s provisions on
assignment.5 Additionally, the IOMAXIS Defendants contend that the Trust cannot
bring claims for the alleged devaluing of its interest because the claims are derivative,
and an economic interest holder lacks standing to bring derivative claims.
41. 	“Standing is a necessary prerequisite to a court’s proper exercise of
subject matter jurisdiction.” Aubin v. Susi, 149 N.C. App. 320, 324 (2002). Without
standing, a party lacks a “sufficient stake in an otherwise justiciable controversy such
that he or she may properly seek adjudication of the matter.” Am. Woodland Indus.,
Inc. v. Tolson, 155 N.C. App. 624, 626 (2002). 	Accordingly, before discussing the
merits 	of 	the 	Plaintiffs’ 	amended 	and 	supplemented 	claims, 	the 	Court 	must
determine whether the Plaintiffs have standing to bring them.
5 The IOMAXIS Defendants seek to incorporate their earlier Rule 12(c) motion and brief.
Such a practice is contrary to BCR 7.8 (“A party may not incorporate by reference arguments
made in another brief . . . to circumvent these [word] limits.”). Nevertheless, the Court, in
its discretion, has considered the IOMAXIS Defendants’ earlier brief in this instance.

42. 	The IOMAXIS Defendants’ first argument is repetitive of their earlier
position that the Estate’s transfer of Ron Howard’s interest to the Trust is void
because it violated the “anti-assignment provision” in the operating agreement. They
argue that it was the Estate that breached the buy-sell provision by failing to make
a timely offer of sale, and that it was up to the Estate to take affirmative steps to
obtain the financial information it needed to make that offer before the buy-sell
window closed. 	(Defs.’ Br. 5-6.) 	Having failed to do so, the IOMAXIS Defendants
argue, the Estate was not at liberty to distribute Ron Howard’s interest to the Trust
without their approval. 	Consequently, they contend that the Trust does not have
standing to sue.
43. 	Plaintiffs disagree. They contend that it was incumbent on IOMAXIS’s
members to exercise their option to buy within thirty days of delivery of the buy-sell
notice, and their failure to do so meant that the Estate was free to distribute Ron
Howard’s interest to the Trust without member approval. To the extent the operating
agreement could be read as requiring the Estate to take the first step and make a sell
offer before IOMAXIS’s members decided whether to exercise their option, Plaintiffs
argue that the operating agreement contemplates that IOMAXIS would provide the
Estate with the financial information it needed to do so. When that did not happen,
Plaintiffs contend that the Estate had no further obligation under the buy-sell
provision and was free to distribute Ron Howard’s interest to the Trust. (Pls.’ Reply
Further Supp Mot. Leave File Suppl. and Second Am. Compl. [“Pls.’ Reply”] 1-3, ECF
No. 377.)

44. 	The Court previously determined that the Trust’s allegations were
sufficient to establish standing. See Howard v. IOMAXIS, LLC, 2022 NCBC LEXIS
146, at **13-17 (N.C. Super. Ct. Dec. 5, 2022). 	Nothing about Plaintiffs’ proposed
amendments changes the Court’s determination.
45. 	In the Proposed Amended Complaint, Plaintiffs allege that Ron Howard
died on 12 June 2017. 	Three days later, on 15 June 2017, his executor notified the
IOMAXIS Defendants of Howard’s death. 	It was not until 20 September 2017,
however, that “Buhr sent a Notice to the Estate (“Notice”) purporting to ‘exercise its
option to purchase the Interest formerly held by Ronald Howard.’ ” 	Consequently,
Plaintiffs allege that the thirty-day period for IOMAXIS’s members to elect the
purchase option afforded by the N.C. Operating Agreement had expired well before
Buhr’s 	notice 	was 	sent. 	Plaintiffs 	allege 	that 	“[a]fter 	the 	Estate 	questioned
IOMAXIS’s entitlement to unilaterally exercise a purchase option and asked to
review IOMAXIS’s financial records to assess and respond to the redemption offer,
IOMAXIS declined to provide the requested documents, claiming, among other
things, that the Estate had no right to such information as a non-member.” 	(Prop.
Am. Compl. ¶¶ 79-84, 92.) 	These allegations are sufficient to support the Trust’s
assertion that it has standing.
46. 	Next, the IOMAXIS Defendants assert that the Trust cannot bring its
fraud claim for the alleged devaluing of its economic interest because the harm is to
IOMAXIS generally, and any such claim would be derivative in nature. 	The
IOMAXIS Defendants argue that the Trust has failed to assert the claim derivatively

and, in any event, as an economic interest holder and not a member, the Trust has
no standing to bring a derivative action on behalf of IOMAXIS. 	(Defs.’ Br. 17-18.)
Plaintiffs disagree, citing Barger v. McCoy Hillard & Parks, 346 N.C. 650 (1997), and
contending that the Trust can pursue a direct claim because its injury is separate and
distinct from the any injury suffered by IOMAXIS or its members. 	(Pls.’ Reply 12-
13.)
47. 	Like partners in a limited partnership, an LLC’s members “cannot
pursue individual causes of action against third parties for wrongs or injuries to the
[company].” 	Energy Investors Fund, L.P. v. Metric Constructors, Inc., 351 N.C. 331,
335 (2000) (quoting Barger v. McCoy Hillard & Parks, 346 N.C. 650, 658 (1997)).
Such claims are derivative, and the right to bring them on behalf of the LLC is
reserved to the members. N.C.G.S. § 57D-8-01(a). See Dodge v. Appalachian Energy,
LLC, 2021 NCBC LEXIS 52, at *6 (N.C. Super. Ct. May 27, 2021).
48. 	But when determining whether Plaintiffs’ fraud claim is derivative, the
question is not whether the allegations are that IOMAXIS has been devalued. 	The
question is whether IOMAXIS has suffered an injury resulting from the violation of
a duty owed it. 	In this case, the claim is for fraudulent concealment. 	As discussed
below, Plaintiffs allege that the claim belongs to the Trust alone because only the
Trust was kept in the dark. They allege that Buhr, as manager, and the remaining
members of IOMAXIS were both aware of, and participated in, the actions that
resulted in the transfers of IOMAXIS’s assets. 	Consequently, IOMAXIS, fully
cognizant of what was happening to it, cannot pursue a claim for fraud, and Barger

does not apply. See Panzino v. 5Church, Inc., 2020 NCBC LEXIS 17, at **17-18 (N.C.
Super. Ct. Feb 12, 2020) (determining that the Barger rule was inapplicable because
the plaintiff’s claim was to enforce his own rights, not the company’s rights); see also
Epic Chophouse, LLC v. Morasso, 2019 NCBC LEXIS 55, at *7-9 (N.C. Super. Ct.
Sept. 3, 2019) (discussing standing generally, including the right of an individual
owner to bring a claim for a wrong peculiar to that owner); 759 Ventures, LLC v. GCP
Apt. Investors, LLC, 2018 NCBC LEXIS 82, at * 10-11 (N.C. Super. Ct. Aug. 13, 2018)
(discussing the distinction between individual and derivative claims and observing
as to the latter that “[t]o the extent the relevant term in an operating agreement gives
rise to a duty owed to the company, a claim for breach of that duty is one belonging to
the company[.]” (emphasis added)).
49. 	For these reasons, the Court concludes that Plaintiffs have standing to
assert their fraud claim.6
B. Breach of Contract
50. 	Moving 	to 	the 	proposed 	amendments 	themselves, 	in 	addition 	to
language clarifying and supplementing the facts, Plaintiffs seek to divide their
contract allegations into separate claims for breach of the operating agreement’s
provisions regarding distributions, the buy-sell process, and the implied duty of good
faith and fair dealing. (Prop. Am. Compl. ¶¶ 161-90.) 	Relatedly, they seek a
declaration that IOMAXIS repudiated the N.C. Operating Agreement. 	(Prop. Am.
6 To the extent the IOMAXIS Defendants argue that the Plaintiffs’ UVTA claim is derivative,
the argument fails because the creditor in this instance is the Trust, not IOMAXIS. 	See
N.C.G.S.§ 39-23.1(4).

Compl. ¶¶ 158-60.) 	In response, the IOMAXIS Defendants 	contend that the
requested amendments are too late, made in bad faith, unduly prejudicial, and futile.
(Defs.’ Br. 6-14.) The Court addresses these objections in turn.
51. 	The IOMAXIS Defendants argue that the contract amendments are late,
and therefore unduly prejudicial, because Plaintiffs have long been aware of the facts
they now seek to add and have offered no explanation for their delay. 	(Defs.’ Br. 7-
8.) 	However, 	as 	Plaintiffs 	observe, 	the 	converse 	is 	also 	true: 	the 	IOMAXIS
Defendants have long been on notice of the same facts. “Rule 8(a)(1) requires only
that the Complaint contain a ‘short and plain statement of the claim’ being asserted.”
Wijewickrama v. Christian, 2023 NCBC LEXIS 98, at **9 (N.C. Super. Ct. Aug. 11,
2023) (concluding that claim with “minimal details” adequately alleged breach by
both non-performance and repudiation). IOMAXIS has contended since shortly after
Ron Howard’s death that the Texas Operating Agreement, not the N.C. Operating
Agreement, was in effect and controlled. 	These facts have been the subject of
discovery since the case began. 	Thus, Plaintiffs’ decision to add breach of the N.C.
Operating Agreement by repudiation should come as no surprise.
52. 	Further, it does not offend notions of fairness to allow Plaintiffs to divide
the alleged breaches of the N.C. Operating Agreement into separate claims. In short,
nothing about the amendments would cause the litigation to veer “dangerously close
to going off the rails” as the IOMAXIS Defendants argue on the first page of their
opposition brief.7
7 The IOMAXIS Defendants’ objections based on bad faith are similarly unavailing. 	They
argue that no breach of the N.C. Operating Agreement could have occurred because emails

53. 	As for the timing of Plaintiffs’ motion, the procedural history of this case
demonstrates that it has not progressed in the customary way. 	Discovery has been
stop-and-go to allow for early settlement efforts, Plaintiffs’ motion to enforce a
purported settlement, multiple withdrawals of counsel, and an interlocutory appeal.
Given this unusual procedural history, as well as recent developments that Plaintiffs
contend provide both additional context for, and supplement, their claims, it is
prudent to allow the parties to revisit their pleadings.8
54. 	The IOMAXIS Defendants’ final objection to the Plaintiffs’ amended
contract claims is on the basis of futility. 	Specifically, they assert that adding the
theory of breach by repudiation would be futile because a party cannot plead
repudiation and ask for specific performance as a remedy at the same time. They
contend that to do so would be contrary to the requirement that Plaintiffs treated the
produced in discovery support their contention that Ron Howard ratified the Texas Operating
Agreement. However, issues of fact remain regarding whether the Texas Operating
Agreement was ratified, and these unresolved issues cannot support an argument that the
Motion was brought in bad faith.
8 This Court’s prior decision in United Therapeutics Corp. v. Liquidia Techs., 2023 NCBC
LEXIS 107 (N.C. Super. Ct. Aug. 31, 2023) does not require a different result. 	In United
Therapeutics, the plaintiff referenced the individual defendant’s employment agreement in
its initial complaint but did not include claims against the individual defendant for breach of
that contract. Instead, the case centered on the plaintiff’s misappropriation of trade secrets
theory. Discovery proceeded without breaks and was extended at the request of the plaintiff.
On the eve of discovery closing, the plaintiff sought to backtrack and amend its complaint
against the individual defendant to add claims for breach of the employment contract, as well
as for unfair and deceptive trade practices. 	The Court denied the motion to the extent it
sought to add these claims because the facts were plainly known at the time the lawsuit
began, and the addition of a Chapter 75 claim against the individual defendant, in particular,
would have “greatly change[d] the nature of the defense and greatly increase[d] the stakes of
the lawsuit.” Id. at **7 (quoting Kixsports v. Munn, 2019 NCBC LEXIS 92, at *6 (N.C. Super.
Ct. Jan. 24, 2019)).

IOMAXIS Defendants’ conduct as a repudiation of the N.C. Operating Agreement
from the beginning. (Defs.’ Br. 12-14.)
55. 	As the IOMAXIS Defendants observe, “[r]epudiation is merely a breach
of contract theory. (Defs.’ Br. 12.) See Mills Constr. Co. v. Fairfield Sapphire Valley,
Inc., 86 N.C. App. 506, 510 (1987) (“Repudiation is a positive statement by one party
to the other party indicating that he will not or cannot substantially perform his
contractual duties.”) (citations omitted).
56. 	The IOMAXIS Defendants are also correct that for repudiation to occur,
Plaintiffs are required to treat it as such and bring their action accordingly. See, e.g.,
D.G. II, LLC v. Nix, 211 N.C. App. 332, 338-39 (2011). 	However, the facts alleged
here, viewed in the light most favorable to the nonmovant, would support either a
claim for breach by non-performance seeking specific performance or, alternatively,
a claim for breach by repudiation seeking damages. 	See, e.g., Wijewickrama, 2023
NCBC LEXIS 98, at **15-16 (recognizing a “claim” for specific performance as an
alternative to a claim for breach of contract by repudiation); Brannock v. Fletcher,
271 N.C. 65, 73 (1967) (identifying three avenues a non-breaching party may take to
remedy a breach of contract: (1) sue for damages; (2) seek specific performance; or (3)
treat the breach as abandonment and rescind the contract). At this stage, Plaintiffs
may plead alternatively. 	Further determination will require a fuller record. 	Cf.
Profile Invs. No. 25, LLC v. Ammons East Corp., 207 N.C. App. 232, 241 (2010)
(reversing summary judgment because undisputed facts did not support theory of
repudiation).

57. 	Accordingly, Plaintiffs shall be permitted to amend to allege breach of
the N.C. Operating Agreement by repudiation and to divide their contract allegations
into separate claims for breach of the operating agreement’s provisions regarding
distributions, the buy-sell process, and the implied duty of good faith and fair dealing.
C. Fraudulent Concealment
58. 	Next, the IOMAXIS Defendants assert that the proposed amendments
to Plaintiffs’ fraudulent concealment claims are futile because Plaintiffs do not
adequately allege that (a) the IOMAXIS Defendants had a duty to disclose the
information that Plaintiffs claim was concealed, or (b) Plaintiffs reasonably relied on
the IOMAXIS Defendants’ silence. (Defs.’ Br. 15-17).
59. 	Plaintiffs respond that (1) IOMAXIS had a duty to disclose because it
engaged in affirmative steps to conceal material facts from the Trust; and (2) reliance
on 	the 	IOMAXIS 	Defendants’ 	silence 	was 	reasonable 	because 	the 	IOMAXIS
Defendants’ actions prevented Plaintiffs from discovering the alleged fraud. (Pls.’
Reply 8-10.)
60. 	“[F]raudulent concealment, or fraud by omission is, by its very nature,
difficulty to plead with particularity.” Breeden v. Richmond Cmty. Coll., 171 F.R.D.
189, 195 (M.D.N.C. 1997) (adopted by Lawrence v. UMLIC-Five Corp., 2007 NCBC
LEXIS 20, at *9 (N.C. Super. Ct. June 18, 2007)). Plaintiffs must include:
(1) the relationship giving rise to the duty to speak, (2) the event or
events triggering the duty to speak, and/or the general time period over
which the relationship rose and the fraudulent conduct occurred, (3) the
general content of the information that was withheld and the reason for
its materiality, (4) the identity of those under a duty who failed to make
such 	disclosures, 	(5) 	what 	[the 	defendant] 	gained 	by 	withholding

information, (6) why plaintiff’s reliance on the omission was both
reasonable and detrimental, and (7) the damages proximately flowing
from such reliance.
Id. at 195.
61. 	In 	their 	Proposed 	Amended 	Complaint, 	Plaintiffs 	allege 	that 	the
IOMAXIS Defendants and Five Insights had a duty to disclose “all transactions and
proposed transactions through which IOMAXIS proposed to fundamentally alter the
Trust’s status as economic interest holder.” (Prop. Am. Compl. ¶ 194.) They contend
that the duty arose as a result of affirmative actions the IOMAXIS Defendants and
Five Insights allegedly undertook to conceal material facts from the Trust. Plaintiffs
allege that those affirmative actions range from a conspiracy to create other entities
to which IOMAXIS would divert its assets, to making sham loans and other disguised
distributions to the IOMAXIS Defendants and related parties, to the use of covert
data messaging platforms to keep their plans secret from the Trust and this Court
(all as discussed in the July 2020 telephone conferences recorded by Hurysh), to the
IOMAXIS Defendants’ continued refusal to produce relevant financial information
even in discovery, to the sale of IOMAXIS’s assets and the IOMAXIS Defendants’
refusal to account to the Trust for the value received, to changing the company’s
corporate 	form 	to 	“create 	chaos 	and confusion,” 	to 	“backdating 	and/or forging
documents in an attempt to legitimize bad acts.” (Prop. Am. Compl. ¶¶ 114-28.)
62. 	The 	Court 	determines 	that 	these 	allegations 	of 	affirmative 	steps
undertaken to conceal material facts are sufficient to give rise to a duty to disclose.
See Herrera v. Charlotte Sch. of L., LLC, 2018 NCBC LEXIS 35, at *38-39 (N.C.

Super. Ct. Apr. 20, 2018) (quoting Hardin v. KCS Int'l, Inc., 199 N.C. App. 687, 696
(2009)).
63. 	Moreover, the Plaintiffs have alleged that, despite reasonable diligence,
they have been unable to ascertain the truth. 	They allege that IOMAXIS has been
steadfast in its refusal to provide them information the Trust needs to value its
economic interest, to determine whether and how much it is due in distributions since
Ron Howard’s death more than six years ago, and to confirm the conversion of
IOMAXIS to a Texas LLC. 	(See, e.g, Prop. Am. Compl. ¶ 118.) 	These allegations
suffice to satisfy Plaintiffs’ pleading requirements for fraudulent concealment. 	See
Hartsell v. Mindpath Care Ctrs., 2022 NCBC LEXIS 27, at *15 (N.C. Super. Ct. Apr.
8, 2022) (“where Plaintiff has alleged that information was purposefully kept from
her so that she was unable to learn the truth despite reasonable attempts to
investigate, Plaintiff’s allegations of detrimental reliance are sufficient[.]”); Aldridge
v. Metro. Life Ins. Co., 2019 NCBC LEXIS 116, at *110 (N.C. Super. Ct. Dec. 31, 2019)
(declining to dismiss fraudulent concealment claim for failure to plead reasonable
reliance at the Rule 12(b)(6) stage).
64. 	Accordingly, Plaintiffs shall be permitted to amend their claim for
fraudulent concealment allegedly occurring after Ron Howard’s death.9
9 On the other hand, the Court has previously determined that the Trust’s attempt to assert
a claim for fraudulent concealment allegedly occurring during Ron Howard’s life is futile. See
Howard v. IOMAXIS, LLC, 2021 NCBC LEXIS 116, at *20-22 (N.C. Super. Ct. Dec. 21, 2022.)
In addition to the reasoning in its earlier ruling, the Court observes that Plaintiffs have not
alleged that Ron Howard discovered the secret diversion of IOMAXIS’s assets that allegedly
began in 2013 while he was alive. (Prop. Am. Compl. 6, 47.) Instead, they allege that “[t]hese
diversions of funds were concealed from Howard, and later the Estate and the Trust,” and

D. Uniform Voidable Transactions Act, N.C.G.S. §§ 39-23.1 et seq.
65. 	Plaintiffs seek to expand their UVTA claim to include transfers that
they allege have recently occurred, including, but not limited to, the sale of Ingressive
to Millennium and other transfers of IOMAXIS’s assets to Defendants, “other
insiders, and holding companies, and/or Sham Entities owned by them.” (Prop. Am.
Compl. ¶ 220.)
66. 	Plaintiffs allege that these transfers were undertaken to implement the
alleged “scheme” discussed in the July 2020 telephone conference calls “to move
funds, stocks, and assets out of IOMAXIS to Sham Entities, and to disguise
distributions as other forms of remuneration (the “Conspiracy”).” (Prop. Am. Compl.
¶ 114.)
67. 	The IOMAXIS Defendants argue that the proposed amendments should
be denied on futility grounds. 	They contend that the Five Insights transaction
involved the sale of each member’s ownership interest rather than the transfer of
IOMAXIS’s assets. 	But this assertion is contrary to Plaintiffs’ pleading that
IOMAXIS’s “investment interests” were also transferred. (Prop. Am. Comp. ¶ 127.)
that the “fraudulent diversions continued after Howard’s death[.]” (Prop. Am. Compl. ¶¶ 49,
52.)
By statute, with limited exceptions, the right to prosecute an action existing at the time of
death survives. See N.C.G.S. § 28A-18-1. However, an action for fraud does not accrue until
it is discovered. See N.C.G.S. § 1-52(9); Carlisle v. Keith, 169 N.C. App. 674, 683 (2005) (“A
cause of action alleging fraud is deemed to accrue upon discovery by plaintiff of facts
constituting the fraud.”). Thus, no cause of action survived Ron Howard’s death that could
then have become part of his residuary estate and passed to the Trust. 	To the extent
Plaintiffs move to reassert a claim for fraud occurring prior to Ron Howard’s death, their
motion is DENIED.

Moreover, Plaintiffs allege that management functions shifted from IOMAXIS to Five
Insights, and they question whether the management agreement between Five
Insights and IOMAXIS is being used as a mechanism for the transfer of IOMAXIS’s
assets. (Prop. Am. Compl. ¶ 133.) Plaintiffs conclude that the “Five Insights Transfer
was, at least in part, effected to avoid or attenuate liability to the Trust to pay
distributions and to redeem or recognize its 51% interest in IOMAXIS.” 	(Prop. Am.
Compl. ¶ 130.)
68. 	As for the sale of Ingressive to Millennuim, the IOMAXIS Defendants
argue that Plaintiffs fail to allege that Millennium is owned by any of the IOMAXIS
Defendants 	or 	that 	the 	sold 	assets 	remain 	under 	any 	defendant’s 	control.
Consequently, they argue, the claim fails to allege transfer to an insider. In addition,
the IOMAXIS Defendants point out that the Trust does not allege that proceeds from
the sale were distributed to IOMAXIS’s members or anyone else. (Defs.’ Br. 19-20.)
69. 	Plaintiffs respond that whether the sale was to an insider is only one of
thirteen non-exclusive factors used to ascertain whether a transfer was made with
an intent to “hinder, delay or defraud” under the UVTA. 	N.C.G.S. § 39-23.4(a)(1).
They argue that they have sufficiently alleged, “time and time again” that the
IOMAXIS Defendants pursued, and continue to pursue, a “coordinated scheme to
hinder, delay, and defraud the Trust.” 	(Pls.’ Reply 12.) 	As for the sale proceeds,
Plaintiffs complain that Ingressive was sold without notice to them and without any
explanation for what became of the proceeds. 	They repeatedly allege that the
IOMAXIS Defendants have transferred IOMAXIS’s assets to themselves as disguised

distributions to avoid their obligation to the Trust, IOMAXIS’s creditor. 	(Prop. Am.
Comp. ¶¶ 117-25, 130-38.)
70. 	The Court concludes that Plaintiffs’ allegations are sufficient to survive
the IOMAXIS Defendants’ objection on futility grounds. 	Plaintiffs’ Motion with
respect to the UVTA claim shall be GRANTED.
E. Conversion
71. 	As for Plaintiffs’ proposed new claim for conversion, the IOMAXIS
Defendants contend that because the Trust’s economic interest arises from an
operating agreement, any loss or impairment to that interest implicates a contract
right, not a tort. They contend, therefore, that the proposed conversion claim violates
the economic loss rule and is futile. 	(Defs.’ Br. 20-21.) 	The Plaintiffs disagree,
arguing that (a) the IOMAXIS Defendants violated duties to the Trust that arose
outside of the operating agreement and (b) the economic loss rule should not apply to
an economic interest holder. (Pls.’ Reply 13-14.)
72. 	The economic loss rule limits “recovery in tort when a contract exists
between the parties that defines the standard of conduct[.]” 	Akzo Nobel Coatings,
Inc. v. Rogers, 2011 NCBC LEXIS 42, at **47-48 (N.C. Super. Ct. Nov. 3, 2011).
Therefore, failing to perform pursuant to the terms of a contract cannot ordinarily be
the basis for a tort claim. See N.C. State Ports Auth. v. Lloyd A. Fry Roofing, Co., 294
N.C. 73, 81 (1978) (“Ordinarily, a breach of contract does not give rise to a tort action
by the promisee against the promisor.”); Spillman v. Am. Homes of Mocksville, Inc.,
108 N.C. App. 63, 65 (1992) (“A tort action does not lie against a party to a contract

who simply fails to properly perform the terms of the contract, even if that failure to
properly perform was due to the negligent or intentional conduct of that party[.]”).
73. 	Instead, any tort claim must arise from a duty that the breaching party
owed the promisee by operation of law, distinct from any contractual duty. 	See
Asheville Contracting Co. v. City of Wilson, 62 N.C. App. 329, 342 (1983). The purpose
of the rule is to “encourage[ ] contracting parties to allocate risks for economic loss
themselves, because the promisee has the best opportunity to bargain for coverage of
that risk[.]” Lord v. Customized Consulting Specialty, Inc., 182 N.C. App. 635, 639
(2007).
74. 	When one party to a contract claims that another party to the contract
has wrongfully taken possession of property that is the subject of the contract, the
appropriate claim is for breach of contract, not conversion. 	See, e.g., Window Gang
Ventures, Corp. v. Salinas, 2019 NCBC LEXIS 24, at *28-31 (N.C. Super. Ct. Apr. 2,
2019) (dismissing a conversion claim because the duty to return property arose under
a franchise agreement).
75. 	Here, Plaintiffs assert that the Trust’s “right to capital, income, losses,
credits, and other economic rights and interests” in IOMAXIS has been converted by
the IOMAXIS Defendants. (Pls.’ Reply 13.) But Plaintiffs also allege that this right
exists by virtue of its status as an economic interest holder pursuant to IOMAXIS’s
N.C. Operating Agreement. (Prop. Am. Compl. ¶¶ 35, 162-67.) 	Thus, Plaintiffs’

conversion claim arises from contractual duties that IOMAXIS and its manager owe
the Trust and is therefore barred by the economic loss rule.10
76. 	Because the economic loss rule bars Plaintiffs’ attempted claim for
conversion, Plaintiffs’ proposed amendment to add this claim is futile and shall be
DENIED.
F. Conspiracy
77. 	Finally, the IOMAXIS Defendants oppose Plaintiffs’ civil conspiracy
claim on futility grounds because it is not a standalone claim. 	(Defs.’ Br. 21.)
Plaintiffs concede that civil conspiracy is not itself a claim, but they assert that they
have alleged both the existence of a common scheme to defraud the Trust and acts
committed in furtherance of that common scheme. (Pls.’ Reply 14-15.)
78. 	Civil conspiracy is not an independent claim. 	See Dove v. Harvey, 168
N.C. App. 687, 690 (2005) (“there is not a separate action for civil conspiracy in North
Carolina.”). 	It is a theory that “does nothing more than associate the defendants
together and perhaps liberalize the rules of evidence to the extent that under proper
circumstances the acts and conduct of one might be admissible against all.” Shope v.
Boyer, 268 N.C. 401, 405 (1966). 	By pleading and proving a civil conspiracy, a
plaintiff is able to recover from anyone who facilitated the alleged wrongs “by
10 Plaintiffs argue that the economic loss rule should not be applied to economic interest
holders because economic interest holders do not have an opportunity to negotiate the terms
of an operating agreement. 	(Pls.’ Reply 14.) 	The Trust must recognize, however, that–at
most–it can receive by assignment only that which Ron Howard was able to transfer to his
Estate. In that sense, the Trust steps into Ron Howard’s shoes and is bound to the contract
he negotiated.

agreeing for [the wrongs] to be accomplished.” Nye v. Oates, 96 N.C. App. 343, 346-
47 (1989).
79. 	To plead civil conspiracy, a party must allege “(1) an agreement between
two or more individuals; (2) to do an unlawful act or to do a lawful act in an unlawful
way; (3) resulting in injury to [the] plaintiff inflicted by one or more conspirators; and
(4) pursuant to a common scheme.” 	Privette v. Univ. of N. Carolina at Chapel Hill,
96 N.C. App. 124, 139 (1989).
80. 	Plaintiffs have alleged that the IOMAXIS’ Defendants, along with
proposed Defendant Five Insights, agreed to and engaged in a coordinated scheme to
unlawfully deprive the Trust of distributions and reduce the value of its economic
interest. (Prop. Am. Compl. ¶¶ 114-117, 120-134.) Plaintiffs allege that, among other
things, the IOMAXIS Defendants and Five Insights hid assets in affiliated entities,
sold 	Ingressive, 	backdated 	documents, 	refused 	to 	disclose 	relevant 	financial
information to the Trust, and attempted to retroactively establish IOMAXIS as a
Texas LLC. They claim that as a result of these actions, the Trust has been harmed.
(Prop. Am. Compl. ¶¶ 230-33, 235.) Plaintiffs have sufficiently alleged the existence
of a conspiracy.
G. Addition of Five Insights as a Defendant
81. 	In a footnote, the IOMAXIS Defendants protest the proposed addition of
Five Insights as a defendant because “it is a Delaware company with no connection
to North Carolina” such that the Court lacks personal jurisdiction over Five Insights.
(Defs.’ Br. 14 n.11.) 	Plaintiffs allege, however, that Five Insights is a successor-in-

interest and the sole member of IOMAXIS, which they contend remains a North
Carolina LLC. (Prop. Am. Comp. ¶ 24.)
82. 	“The failure to plead the particulars of jurisdiction is not fatal to the
claim so long as the facts alleged permit the inference of jurisdiction under the
statute." Williams v. Inst. for Computational Stud. at Colo. State Univ., 85 N.C. App.
421, 428 (1987). Given the allegations of the proposed amended complaint, the Court
cannot, at this stage, conclude that the addition of Five Insights would be futile.
83. 	Moreover, given that Plaintiffs allege that the existence of Five Insights,
as well as the common ownership between the individual defendants, IOMAXIS, and
Five Insights, was only recently disclosed to them in discovery, the Court determines
that Plaintiffs’ motion to add Five Insights as a party is timely and not unduly
prejudicial.
84. 	Accordingly, Plaintiffs’ Motion to name Five Insights as a defendant
shall be GRANTED.
V. 	CONCLUSION
85. 	WHEREFORE, the Court in its discretion, hereby ORDERS as
follows:
a. 	Plaintiffs’ Motion is GRANTED in part and DENIED in part. 	No
later than ten (10) days from the date of this Order and Opinion, Plaintiffs
are permitted to file a Second Amended Complaint in the form proposed,
(ECF No. 360.2), except (i) they may not include their proposed claim for
conversion; (ii) they may not include a claim for fraudulent concealment

allegedly occurring prior to Ron Howard’s death; (iii) they may correct
obvious typographical errors in the their pleading; and (iv) they may amend
the factual allegations to reflect receipt of the final version of the VSI
valuation in paragraph 101, as indicated by counsel during the hearing on
this Motion.
b. 	The stay with respect to Plaintiffs’ claims for fraudulent concealment
and violation of the UVTA is lifted. Discovery on all claims may resume.
c. 	The parties shall meet and confer and submit a new Case Management
Report to the Court pursuant to Business Court Rule 9 by 5:00 PM on or
before 22 December 2023.
IT IS SO ORDERED, this the 29th day of November, 2023.
/s/ Julianna Theall Earp
Julianna Theall Earp
Special Superior Court Judge
for Complex Business Cases