LORAY MILL DEVS., LLC v. CAMDEN LORAY MILL PHASE 1, LLC, 2023 NCBC 12A

STATE OF NORTH CAROLINA
GASTON COUNTY
IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
21 CVS 725
LORAY MILL DEVELOPERS, LLC,
LORAY MILL MANAGER, LLC,
LORAY COMMERCIAL TENANT,
LLC, LORAY MILL
REDEVELOPMENT PHASE II, LLC,
JBS VENTURES, LLC, and JOSEPH
LENIHAN,
Plaintiffs,
v.
CAMDEN LORAY MILL PHASE 1,
LLC and JOHN GUMPERT,
Defendants.
AMENDED ORDER AND OPINION
ON CROSS-MOTIONS FOR
SUMMARY JUDGMENT1
1. 	THIS 	MATTER is before the Court upon (i) Defendants’ Motion for
Summary Judgment as to Plaintiffs’ Claims and as to Defendants’ Counterclaim for
Declaratory Judgment (“Defendants’ Motion”), (ECF No. 30), and (ii) Plaintiffs’
Motion for Summary Judgment (“Plaintiffs’ Motion”), (ECF No. 32), (together with
Defendants’ Motion, the “Motions”), each filed 15 March 2022 in the above-captioned
case.
1 The Court enters this amended order and opinion to amend its Order and Opinion on Cross-
Motions for Summary Judgment entered on 7 February 2023 [hereinafter “February Order”],
(ECF No. 91), primarily to amend and clarify certain of the Court’s rulings on Plaintiffs’
Motion on Defendants’ counterclaim for declaratory judgment, (see February Order ¶¶ 2, 78,
79, 102(b), n.58 (n.59 infra), n.82 (n.84 infra) and newly added footnotes 107, 108, 110, 111,
and 115 infra), to correct the summary of its ruling in paragraph two, and to clarify the
entities to which certain rulings apply, (see February Order ¶¶ 27, 31, 36, 38, 57–59, 69, 78,
79, 84, 102(b), n.56 (n.57 infra), 123 (n.130 infra)). See also, e.g., Vizant Techs., LLC v. YRC
Worldwide, Inc., 2018 NCBC LEXIS 155, at *9 (N.C. Super. Ct. Nov. 15, 2018) (recognizing
that “a trial court judge has the authority to reconsider his or her own summary judgment
ruling” and citing cases), aff’d per curiam, 373 N.C. 549, 554 (2020).
Loray Mill Devs., LLC v. Camden Loray Mill Phase 1, LLC, 2023 NCBC 12A.

2. 	Having considered the Motions, the briefs and related materials in support
of and in opposition to the Motions, the arguments of counsel at the hearing on the
Motions, and other appropriate matters of record, the Court hereby DENIES
Defendants’ Motion and GRANTS in part and DENIES in part Plaintiffs’ Motion
as set forth below.
Rosenwood, Rose & Litwak, PLLC, by Erik M. Rosenwood, for Plaintiffs-
Counterclaim 	Defendants 	Loray 	Mill 	Developers, 	LLC, 	Loray 	Mill
Manager, 	LLC, 	Loray 	Commercial 	Tenant, 	LLC, 	Loray 	Mill
Redevelopment Phase II, LLC, JBS Ventures, LLC, and Joseph Lenihan.
Berman Fink Van Horn P.C., by William J. Piercy and Daniel H. Park,
and McGuire Wood & Bissette, P.A., by Matthew S. Roberson, for
Defendants-Counterclaim Plaintiffs Camden Loray Mill Phase I, LLC
and John Gumpert.
Bledsoe, Chief Judge.
I.
FACTUAL AND PROCEDURAL BACKGROUND
3. 	The Court does not make findings of fact in ruling on motions for summary
judgment. The following background, drawn from the evidence submitted in support
of and in opposition to the Motions, is intended only to provide context for the Court’s
analysis and ruling.
4. 	This case involves a dispute between the two principal owners of the Loray
Mill (the “Mill”) project, a large-scale, mixed-use urban revitalization and historic
preservation project located at a 120-year-old, six-story brick building in Gastonia,
North Carolina. The Mill formerly contained a textile mill known as Loray Mill (the
“Property”) and was owned by Firestone Textile and Fibers (“Firestone”) from the

1930s to the 1990s.2 	In 1998, Firestone donated the Property to The Historic
Preservation Foundation of North Carolina, Inc. (“PNC”), and PNC then sought to
find a developer to preserve and develop the Property (the “Project”).
5. 	In 2003, Defendant John Gumpert (“Gumpert”), through his company,
Camden Management Partners, Inc., put the Property under contract and attempted
to develop the Project. The Project failed to close, however, due to a lack of financing
during the recession of the late 2000s.3
6. 	At some point in the late 2000s, Gumpert met Plaintiff Joseph Lenihan
(“Lenihan”).4 	Lenihan, through his company, Plaintiff JBS Ventures, LLC (“JBS”),
agreed to invest capital in the Project and guarantee Project loans, and thereafter the
Project secured financing and closed in 2012 or 2013.5 By this time, Lenihan, JBS,
Gumpert, and Gumpert’s company, Defendant Camden Loray Mill Phase I, LLC
(“Camden”), had begun working together to develop the Project and each had incurred
hundreds of thousands of dollars in pre-construction costs.6
2 (Defs.’ Br. Supp. Mot. Summ. J. Pls.’ Claims and Defs.’ Countercl. Declaratory J. Ex. 1, Aff.
John Gumpert, dated 14 Mar. 2022, ¶ 6 [hereinafter “Gumpert Aff.”], ECF No. 31.2; Verified
Compl. ¶¶ 13–14 [hereinafter “Compl.”], ECF No. 3; Defs.’ Answer and Verified Countercls.
¶¶ 13–14, ECF No. 4.) Defendants’ Answer and Verified Counterclaims contain separately
numbered sections for affirmative defenses and counterclaims. 	The Court will refer to the
former section as “Answer” and to the latter as “Countercls.”
3 (Gumpert Aff. ¶ 8; Compl. ¶ 18.)
4 (Gumpert Aff. ¶ 9 (stating the introduction was in 2009); Compl. ¶ 17 (placing the
introduction in 2007).)
5 (Gumpert Aff. ¶ 9; Compl. ¶ 18.)
6 (Answer ¶ 18; Compl. ¶ 19.) According to Lenihan JBS had made contributions of $747,500
and a loan of $395,393.69, and Camden had contributed $402,500 to cover construction costs
as of 1 November 2012. (Compl. ¶ 19.) Gumpert avers that Camden had incurred hundreds

7. 	The Project ultimately cost well over $40,000,000 and generated more than
$16,000,000 in federal and state tax credits.7
8. 	The Project was divided into two phases. Phase I has been completed; Phase
II has not yet begun.
9. 	The owner of Phase I of the Project was Loray Mill Redevelopment, LLC
(“LMR”). The manager of LMR was Plaintiff Loray Mill Manager, LLC (“LMM”), and
LMM owned 90% of LMR. The remaining 10% of LMR was owned by Loray Master
Tenant, LLC (“LMT”).8 	LMM’s manager is JBS, and JBS’s manager is Lenihan.
LMM was initially owned 64.995% by JBS, 34.995% by Camden, and .01% by
Centurion Construction Company, Inc.
10. 	The owner of Phase II was Plaintiff Loray Mill Redevelopment Phase II, LLC
(“LMR2”).9 	LMR2’s manager is LMM, and LMR2 was initially owned 50% by JBS
and 50% by Camden.
of thousands of dollars more in additional pre-construction costs as of this date. 	(Answer
¶ 19.)
7 (Compl. ¶ 22; Answer ¶ 22.)
8 LMT is the entity through which the Project was leased. LMM was the manager of LMT,
and LMT was owned .01% by LMM and 99.99% owned by the Project’s tax credit investors.
Chevron TCI, Inc., the Project’s federal tax credit investor, owned 98.99%, and Foss N.C. Mill
Credit 2011 Fund I, LLC and Foss N.C. Mill Credit 2014 Fund I, LLC, the Project’s North
Carolina state tax credit investors, each owned .5%. (Gumpert Aff. ¶ 14(e); Defs.’ Br. Supp.
Mot. Summ. J. Pls.’ Claims and Defs.’ Countercl. Declaratory J. Ex. A, ECF No. 31.3; Compl.
¶¶ 23, 24.)
9 (Gumpert Aff. ¶¶ 14(c), (d); Compl. ¶ 24.)

11. 	The developer of the Project was Plaintiff Loray Mill Developers, LLC
(“LMD”). 	LMD was owned 65% by JBS and 35% by Camden, and JBS was LMD’s
manager.10
12. 	Plaintiff Loray Commercial Tenant, LLC (“LCT”) leases out the commercial
and retail portions of the Project.11 LCT was initially owned 65% by JBS and 35% by
Camden, and JBS served as LCT’s manager.
13. 	Finally, former defendant HPP, LLC,12 a Gumpert and Camden-affiliated
entity, served as the construction manager for the Project.13 	Gumpert acted as on-
site representative during construction between 2013 and 201614 and worked with
Centurion and other subcontractors on the Project.15
14. 	JBS and Camden entered into substantially identical operating agreements
for LMD, LMM, LCT, LMR, and LMR2 (collectively, the “Loray Entities”), each of
10 (Gumpert Aff. ¶ 14(a); Compl. ¶ 24.)
11 (Gumpert Aff. ¶ 14(f); Compl. ¶ 24.)
12 HPP, LLC was voluntarily dismissed from this action on 29 April 2021. (ECF No. 11.)
13 (Countercls. ¶ 35; Pls.’ Resp. Defs.’ Verified Countercls. ¶ 35, ECF No. 12.) Gumpert also
testified that Camden was the construction manager for the Project from 2013 to 2016.
(Gumpert Aff. ¶ 11.)
14 (See Gumpert Aff. ¶ 11; Countercls. ¶ 35; Compl. ¶ 26.)
15 (Compl. ¶¶ 27–28.)

which, except for LMR,16 was governed by Georgia law.17 	Among other provisions,
the operating agreements for the Loray Entities (the “Operating Agreements”)
permitted JBS, as the LLC’s manager (or as manager of the LLCs’ manager), to issue
a capital call in writing to JBS and Camden in the following circumstances:
Additional Contributions. If at any time, and from time to time, the
Manager in good faith believes that the Company is, or at any time
within the following ninety (90) days will be, in the position of having
payment obligations in excess of cash including reserves or equivalent
resources with which to fund such obligations, including available
borrowed funds from third party sources (although the Manager is not
obligated to cause the Company, or to attempt to cause the Company, to
borrow such funds), the Manager shall make such situation, and in
particular the amount of the excess of obligations over resources so
determined (the “cash need amount”) known to the Members in writing
(a “Capital Call”). If the Manager issues a Capital Call to the Members,
each Member shall make an Additional Contribution to the Company
within thirty (30) days following receipt of the Capital Call from the
16 The LMR Operating Agreement provided that LMR was organized under the laws of the
State of North Carolina. 	(Compl. Ex. E, Operating Agreement Loray Mill Redevelopment,
LLC 1 [hereinafter “LMR Agreement”].)
17 (Gumpert Aff. ¶ 15; Aff. Erik M. Rosenwood, dated 15 Mar. 2022, Ex. 2, Operating
Agreement Loray Mill Developer, LLC Art. 2.1 [hereinafter “LMD Agreement”], ECF No.
33.2; Aff. Erik M. Rosenwood, dated 15 Mar. 2022, Ex. 1, Operating Agreement Loray Mill
Manager, LLC Art. 2.1 [hereinafter “LMM Agreement”], ECF No. 33.1; Aff. Erik M.
Rosenwood, dated 15 Mar. 2022, Ex. 3, Operating Agreement Loray Commercial Tenant, LLC
Art. 2.1 [hereinafter “LCT Agreement”], ECF. No. 33.3; Defs.’ Br. Supp. Mot. Summ. J. Pls.’
Claims and Defs.’ Countercl. Declaratory J. Ex. D, Operating Agreement Loray Mill
Redevelopment Phase II, LLC Art. 2.1 [hereinafter “LMR2 Agreement”], ECF No. 31.6.)
Collectively, the LMR, LMD, LMM, LCT, and LMR2 Agreements will be referred to as the
“Operating Agreements.” 	The Operating Agreements have been filed in multiple locations
on the docket. The LMD Agreement also appears at Complaint Exhibit B and Defendants’
Response Brief in Opposition to Plaintiffs’ Motion for Summary Judgment Exhibit A. 	The
LMM Agreement also appears at Complaint Exhibit A and Defendants’ Index of Materials
accompanying their Brief in Support of their Motion for Summary Judgment Exhibit 1. The
LCT Agreement also appears at Complaint Exhibit C and Defendants’ Index Materials
Supporting Motion for Summary Judgment Exhibit 3. For ease of reference, when citing an
Article included in all Operating Agreements, the citation will reference “Operating
Agreements.”

Manager in an amount equal to such Member’s Residual Percentage
multiplied by the cash need amount.18
15. 	The Operating Agreements further provided that if a member failed to make
an Additional Contribution consistent with the Capital Call within 60 days (and
thereby 	became 	a 	“Shortfall 	Member”), 	any 	other 	member 	(a 	“Non-Shortfall
Member”) was permitted, but not required, to “loan or contribute to the Company the
amount of the entire Additional Contribution for such Member and the Shortfall
Member.”19 The Non-Shortfall Member could then treat the loan or contribution:
as either a debt owing by the Company to the Non-Shortfall Member (a
“Shortfall Loan”), or as a capital contribution to the Company by the
Non-Shortfall 	Member, 	in 	either 	case 	pursuant 	to 	the 	terms 	and
conditions of Section 4.3(b); provided, however, that prior to the time
that Chevron reserve is released at the Project Entity level, the Non-
Shortfall Member may only make a Shortfall Loan to the Company and
may not make a capital contribution to the Company.20
16. 	If the Non-Shortfall Member elected to treat the Additional Contribution as
a capital contribution, the Operating Agreements provided that the members’
ownership interests would be adjusted in accordance with the contributions each had
made.21
17. 	The Operating Agreements gave JBS, as manager of each entity, broad
authority to manage the entity:
18 (Operating Agreements Art. 4.2.)
19 (Operating Agreements Art. 4.3(a).)
20 (Operating Agreements Art. 4.3(a).)
21 (Operating Agreements Art. 4.3(b).)

3.1 Authority of Manager. Subject to provisions hereof limiting its
authority; the Manager shall have full charge at its sole discretion of the
management, conduct and operation of the Company’s business, within
the confines of such business, and its decisions shall be binding on the
Company, and in particular, without limitation upon the generality of
the foregoing, the Manager shall have authority to cause the Company:
to employ or engage the services of such agents, employees, independent
contractors, 	attorneys, 	and 	accountants, 	as 	it 	deems 	reasonably
necessary; to create, by grant or otherwise, easements and servitudes;
to alter, improve, repair, raze, replace, and rebuild Company property;
to effect insurance for the Company and the Members; to pay, collect,
compromise, 	arbitrate, 	or 	otherwise 	adjust 	any 	and 	all 	claims 	or
demands of or against the Company; to enter into any and all other
transactions involving the Company’s property, real or personal, or
business affairs; and to abandon any unconsummated transaction, even
if consent thereto by other Members has been obtained (whether or not
any such consent was required). Without limiting the generality of the
foregoing, 	the 	Manager 	shall 	have 	full, 	complete 	and 	exclusive
authority, power, and discretion to act as a Member and Manager of the
Project Entity and in such capacities and subject to the Operating
Agreement for the Project Entity to manage and control the business,
property 	and 	affairs 	of 	the 	Project 	Entity, 	to 	make 	all 	decisions
regarding those matters and to perform or cause to be performed any
and all other acts or activities customary or incident to the management
of the Project Entity’s business, property and affairs.22
18. 	The Operating Agreements restricted JBS, as manager, in certain ways as
well, including by requiring JBS to “use reasonable, good faith efforts to consult with
Camden on all material management issues”23 and prohibiting JBS from taking “any
action which ha[d] the effect of altering, modifying, changing or amending [the
Operating Agreements]”; “commingl[ing] the funds of the Company with funds of the
22 (Operating Agreements, Art. 3.1.)
23 (Operating Agreements Art. 3.1.)

Manager or any other person”; or “materially chang[ing] or add[ing] to the approved
construction scope of the Project.”24
19. 	Although the Operating Agreements also required the preparation and
submission of operating budgets for each Loray Entity, it is undisputed that the
parties subsequently agreed that such budgets were only necessary for LMT and LCT
since the operations of the other Loray Entities were included within the budgets of
those entities.25 The Operating Agreements required JBS to prepare and submit the
proposed operating budgets to the respective LLC’s members for their approval not
later than 45 days before the end of each entity’s fiscal year.26 The members agreed
to “consider the proposed Operating Budget in good faith and consult with each other
as necessary in an effort to resolve any differences” and to “not . . . unreasonably
with[o]ld, condition[ ] or delay[ ]” their approval.
20. 	Approval under the Operating Agreements required the consent of those
“Members, 	including 	the 	Manager, 	holding 	Residual 	Percentages 	which 	taken
together exceed fifty percent (50%) of the aggregate of all Residual Percentages owned
by all of the Members, including the Manager.”27 Once approved, JBS, as manager,
had “the right, power and authority to expend funds on behalf of the Company (with
Company funds) for any of the items set forth in, and with respect to, the Accounting
24 (Operating Agreements Art. 3.2.)
25 (Gumpert Aff. ¶¶ 44–45; Aff. Joseph Lenihan ¶ 9 [hereinafter Lenihan Aff.], ECF No. 38.)
26 Only the LMR Operating Agreement omitted this 45-day period.
27 (Operating Agreement Art. 11.8.)

Period covered by an approved Operating Budget, without the further consent [of] the
Members.”28 In addition, the parties agreed that the manager was “entitled to incur
de minimus [sic] expenditures not provided in the Operating Budget which [did] not
exceed (i) the sum of $25,000 as to any single expenditure, and (ii) the sum of $100,000
as to any such expenditures in the aggregate for any fiscal year.”29
21. 	Construction 	of 	Phase 	I 	of 	the 	Project 	began 	on 	27 	March 	2013.30
Disagreements between Gumpert and Lenihan began to emerge not long after and
persisted throughout the course of construction. 	In particular, Lenihan initiated a
number of design changes to the Project that Gumpert did not support.31 Gumpert
documented his opposition to these changes as early as 4 February 2014.32 When the
Project began to run over budget, Gumpert blamed Lenihan’s redesigns. For his part,
Lenihan contended that Gumpert grossly mismanaged the Project’s construction and
blamed Gumpert for causing the Project to incur vast cost overruns.33
28 (Operating Agreement Art. 3.3(c).) 	In the event that the members did not approve an
operating budget, the Operating Agreement gave JBS, as manager, and without the consent
of any other member, the authority to spend up to 110% of the line items in the last approved
operating budget as well as the authority to incur emergency expenditures to “prevent
imminent damage to persons or property on or about the Project.” 	(Operating Agreement
Art. 3.3(b), (d).)
29 (Operating Agreement Art. 3.3(e).)
30 (Countercls. ¶ 44.)
31 (Countercls. ¶ 47.)
32 (Aff. Erik M. Rosenwood, dated 15 Mar. 2022, Ex. 5, ECF No. 33.5.)
33 (Compl. ¶ 32; Countercls. ¶ 54.)

22. 	In response to these increased costs, Lenihan and Gumpert took various
actions 	to 	keep 	the 	Project 	afloat. 	During 	2014, 	Lenihan 	made 	loans 	and
guarantees,34 and Camden deferred a portion of its construction management fee.35
As a result of these actions, Lenihan and Gumpert agreed in early 2015 to increase
JBS’s LMR2 ownership interest from 50% to 65% and to reduce Camden’s LMR2
ownership interest from 50% to 35%.36
23. 	Over time, matters worsened, and the Project struggled to stay afloat. It is
undisputed that by 2016, the Project was behind schedule and over budget by
$8,000,000.37 JBS, as manager of the Loray Entities and pursuant to Article 4.2 of
the Operating Agreements, issued a series of capital calls to raise funds to save the
Project and to reimburse itself for funds it advanced to the Project. Camden did not
participate in these calls, contending variously that the calls were procedurally
improper, issued for unbudgeted items, and otherwise invalid. 	These capital calls,
their validity, and their effect on JBS’s and Camden’s respective ownership of each of
the Loray Entities lie at the heart of Plaintiffs’ claims and Defendants’ counterclaims.
34 For example, in March 2014, JBS loaned LMR2 $100,000, (Aff. Erik Rosenwood, dated 15
Mar. 2022, Ex. 16, ECF No. 33.16), and on 8 December 2014, Lenihan guaranteed a bridge
loan and agreed to put $1,000,000 in escrow as collateral. (Compl. ¶ 33.)
35 (Countercls. ¶ 55; Aff. Erik M. Rosenwood, dated 15 Mar. 2022, Ex. 17, Dep. Camden Loray
Mill Phase I 30(b)(6), dated 15 Dec. 2021, 249:19–24 [hereinafter “Camden Dep.”], ECF No.
33.17.)
36 (Defs.’ Br. Supp. Mot. Summ. J. Pls.’ Claims and Defs.’ Countercl. Declaratory J. Ex. E,
[hereinafter “February 2015 Call”], ECF No. 31.7.) The February 2015 Call can also be found
at Aff. Erik M. Rosenwood, Ex. 6, ECF No. 33.6 and Compl. Ex. F.
37 (Compl. ¶ 30, Countercls. ¶ 48.)

24. 	The capital calls at issue in this litigation include those made by JBS: (i) in
December 2015 for $855,166.63 (the “December 2015 Call”)38; (ii) in June 2017 for
$150,000 (the “June 2017 Call”),39 (iii) in February 2019 for $2,304,93440 and
$130,50041 (the “2019 Calls”), and (iv) in July 2020 for $478,000 (the “July 2020 Call”)
(collectively, the “Capital Calls” or the “Calls”). Camden did not participate in any of
these Calls.42
25. 	Plaintiffs assert that as a result of Camden’s failure to participate in these
Capital Calls, and consistent with JBS’s election under Article 4.3 of the Operating
Agreements, Camden’s ownership interests in LMM, LCT, and LMR2 have been
lawfully reduced to less than 1% in each.43 Defendants contend that Camden’s failure
38 (Defs.’ Br. Supp. Mot. Summ. J. Pls.’ Claims and Defs.’ Countercl. Declaratory J. Ex. I
[hereinafter “December 2015 Call”], ECF No. 31.11; Compl. ¶ 48; Countercls. ¶¶ 83–84.) The
December 2015 Call can also be found at Compl. Ex. G and Aff. Erik M. Rosenwood, dated 15
Mar. 2022, Ex. 7, ECF No. 33.7.
39 (Compl. ¶ 53.)
40 (Compl. ¶ 56; Countercls. ¶ 98; Defs.’ Br. Supp. Mot. Summ. J. Pls.’ Claims and Defs.’
Countercl. Declaratory J. Ex. K, ECF No. 31.13.)
41 (Compl. ¶ 58; Countercls. ¶ 99; Defs.’ Br. Supp. Mot. Summ. J. Pls.’ Claims and Defs.’
Countercl. Declaratory J. Ex. L, ECF No. 31.14.)
42 (Compl. ¶¶ 53, 57, 60; Countercls. ¶¶ 101, 109.)
43 (Compl. ¶ 63.) In particular, Plaintiffs assert that for LMM, JBS contributed $2,957,066
and Camden contributed $35; for LCT, JBS contributed $681,100 and Camden contributed
$35; for LMR2, JBS contributed $281,000 and Camden contributed $35; and for LMD, JBS
contributed $747,500 and Camden contributed $402,500. (Compl. ¶ 63.) Lenihan bases his
ownership calculations on the parties’ relative contributions to each entity. (Compl. Ex. M
[hereinafter “July 2020 Ownership Letter”]). The July 2020 Ownership Letter is also found
at Exhibit F to Defendants’ Brief in Support of Their Motion for Summary Judgment as to
Plaintiffs’ Claims and as to Defendants’ Counterclaim for Declaratory Judgment. (ECF No.
31.8.)

to participate in the Capital Calls did not impair its 30% interest in these three
entities.44 	Plaintiffs and Defendants agree that Camden retains a 30% interest in
LMD.
26. 	In 	addition 	to 	their 	contention 	that 	the 	Capital 	Calls 	were 	invalid,
Defendants also seek to recover funds they contend JBS and Lenihan spent without
Camden’s approval and which were in excess of the Project’s approved budgets.
Plaintiffs contend that the challenged expenditures were for Project improvements,
payroll expenses, and management and consulting (“oversight”) fees that benefited
the Project and were permitted under the Operating Agreements and applicable
law.45
27. 	On 23 February 2021, Plaintiffs initiated this action, asserting claims (i) for
declaratory 	judgment 	determining 	JBS’s 	and 	Camden’s 	respective 	ownership
interests and rights in the Loray Entities and (ii) for breach of contract.46 On 5 April
2021, Defendants answered the Complaint and asserted counterclaims against
Plaintiffs for (i) declaratory judgment, (ii) breach of contract, (iii) derivative and direct
claims for breach of fiduciary duty, (iv) unjust enrichment, (v) derivative and direct
claims for constructive fraud, (vi) conversion, and (vii) civil conspiracy.47
44 (Countercls. ¶ 112.)
45 (Gumpert Aff. ¶ 43.)
46 (Compl.)
47 (Countercls.)

28. 	After the completion of discovery, the parties filed their respective Motions
on 15 March 2022. After full briefing, the Court held a hearing on the Motions on 11
May 2022 (the “Hearing”), at which all parties were represented by counsel.
29. 	On or about 26 August 2022, the Loray Mill was sold for $44,750,000 (the
“Sale”). Plaintiffs informed Defendants of the Sale by letter dated 8 September 2022
(the “Letter”). While Defendants did not oppose the Sale, they objected to Plaintiffs’
plan for distribution of the proceeds of the Sale (the “Sale Proceeds”) and therefore
filed a Motion for Preliminary Injunction48 (“PI Motion”) on 19 September 2022. On
1 November 2022, after full briefing and hearing, and with Plaintiffs’ consent, the
Court granted the PI Motion and ordered Plaintiffs to escrow $6,245,810.36 of the
Sale Proceeds in Plaintiffs’ counsel’s trust account pending further order of the
Court.49
30. 	Thereafter, on 11 November 2022, Defendants filed a Supplemental Reply
in Support of Defendants’ Motion to Reopen Discovery,50 to which Plaintiffs filed a
response on 29 November 2022.51 	Defendants filed a surreply in response52 which
stated, in part, that Plaintiffs produced to Defendants on 2 December 2022 LCT’s
48 (ECF No. 47.)
49 (Order on Defs.’ Mot. Prelim. Inj., ECF No. 64.)
50 (ECF No. 65.)
51 (Pls.’ Reply Defs.’ Suppl. Reply Supp. Defs’ Mot. Reopen Disc., ECF No. 68.)
52 (Suppl. Surreply Supp. Defs’ Mot. Reopen Disc., ECF No. 70.)

2021 K-1 tax form (the “K-1”)53 reflecting that Camden owns 35% of LCT.54 Because
no party had advanced summary judgment arguments based on Camden’s reported
ownership in LCT’s K-1 tax form, the Court, acting sua sponte, ordered supplemental
briefing on 9 December 2022 concerning the K-1’s relevance to the Motions.55
31. 	In addition, on 6 December 2022, the Court, also acting sua sponte, ordered
supplemental briefing to address whether, under Georgia and North Carolina law,
the economic loss rule bars Defendants’ counterclaims for breach of fiduciary duty
and constructive fraud based on Plaintiffs’ alleged payment of unbudgeted payroll
expenses, oversight fees, and commercial tenant improvements.56
32. 	After full supplemental briefing as described above, the Court held a further
hearing on the Motions on 18 January 2023, at which all parties were represented by
counsel.
33. 	The Motions are now ripe for resolution.
II.
LEGAL STANDARD
34. 	Under Rule 56, “[s]ummary judgment is appropriate ‘if the pleadings,
depositions, answers to interrogatories, and admissions on file, together with the
53 (ECF No. 72.)
54 The Court subsequently learned that similar representations are made in LMM’s 2017 K-
1, (ECF No. 31.29), LCT’s 2019 K-1, (ECF No. 31.30), and LMD’s 2020 K-1, (ECF No. 79).
55 (Second Order Suppl. Briefing Mots. Summ. J., ECF No. 74.)
56 (Order Suppl. Briefing Mots. Summ. J., ECF No. 73.)

affidavits, if any, show that there is no genuine issue as to any material fact and that
any party is entitled to a judgment as a matter of law.’ ” Da Silva v. WakeMed, 375
N.C. 1, 10 (2020) (quoting N.C. R. Civ. P. 56(c)). 	“An issue is genuine if it can be
proven by substantial evidence and a fact is material if it would constitute or
irrevocably establish any material element of a claim or a defense.” Lowe v. Bradford,
305 N.C. 366, 369 (1982). 	“Substantial evidence is such relevant evidence as a
reasonable mind might accept as adequate to support a conclusion and means more
than a scintilla or a permissible inference.” Curlee v. Johnson, 377 N.C. 97, 101 (2021)
(cleaned up). “The summary judgment standard requires the trial court to construe
evidence in the light most favorable to the nonmoving party.” Draughon v. Evening
Star Holiness Church of Dunn, 374 N.C. 479, 482 (2020).
35. 	“The 	party 	seeking 	summary 	judgment 	bears 	the 	initial 	burden 	of
demonstrating the absence of a genuine issue of material fact.” Liberty Mut. Ins. Co.
v. Pennington, 356 N.C. 571, 579 (2002). 	The movant may meet this burden either
(1) “by proving an essential element of the opposing party’s claim does not exist,
cannot be proven at trial, or would be barred by an affirmative defense” or (2) “by
showing through discovery that the opposing party cannot produce evidence to
support an essential element of [its] claim[.]” 	Dobson v. Harris, 352 N.C. 77, 83
(2000). 	If the movant meets this burden, “the burden then shifts to the nonmovant
to come forward with specific facts establishing the presence of a genuine factual
dispute for trial.” Pennington, 356 N.C. at 579; see N.C. R. Civ. P. 56(e) (“[A]n adverse
party may not rest upon the mere allegations or denials of his pleadings, but his

response, by affidavits or as otherwise provided in this rule, must set forth specific
facts showing that there is a genuine issue for trial.”).
III.
ANALYSIS
A. 	Defendants’ Motion
36. 	Each side seeks a declaratory judgment determining the ownership interests
and rights JBS and Camden have in the Loray Entities.57 Defendants seek summary
judgment on both sides’ declaratory judgment claims, contending that the undisputed
evidence establishes as a matter of law that Camden has a 30% ownership interest
in 	the Loray Entities.58 Plaintiffs argue that Defendants’ Motion should be denied
because the undisputed evidence shows that Camden’s failure to participate in JBS’s
various Capital Calls has reduced Camden’s ownership interests in LMM, LCT, and
LMR2 to less than 1% in each.59 	Defendants also seek summary judgment on
Plaintiffs’ claim that Defendants breached the various Operating Agreements by
disputing the legitimacy of JBS’s Capital Calls and by interfering with Plaintiffs’
57 The parties’ pleadings are somewhat imprecise, but it is clear that Plaintiffs seek a
declaratory judgment at least as to LMM, LCT, LMR2, and LMD, (see Compl. ¶¶ 63, 74, 77),
and that Defendants seek a declaratory judgment at least as to LMM, LCT, and LMD, (see
Countercls. ¶ 190, 193–94). 	In addition, Plaintiffs initially sought a declaration regarding
JBS’s “authority to move ahead with refinancing or other restructuring of the Project’s
finances,” (Compl. ¶ 75), but Plaintiffs’ counsel conceded at the hearing on the PI Motion that
the sale mooted this aspect of Plaintiffs’ declaratory judgment claim.
58 (Defs.’ Br. Supp. Mot. Summ. J. Pls.’ Claims and Defs.’ Countercl. Declaratory J. 14–15
[hereinafter “Defs.’ Supp. Br.”], ECF No. 31.)
59 (Pls.’ Mem. Law Opp’n Defs.’ Mot. Summ. J. Pls.’ Claims and Summ. J. Their Countercls.
5 [hereinafter “Pls.’ Opp’n Br.”], ECF No. 37; Compl. ¶ 63.) Unlike Defendants, Plaintiffs do
not seek summary judgment on their affirmative claim for relief.

operations, 	refinancing 	efforts, 	and 	negotiations 	with 	the 	Project’s 	tax 	credit
investors.60
1. 	Declaratory Judgment Claims
37. 	As noted above, the Operating Agreements provide JBS with the power and
authority to make capital calls on behalf of a Loray Entity and allow a member of the
entity to cover a non-contributing member’s portion of the capital call, which the
member may convert into equity and thereby reduce the non-contributing member’s
equity interest in the entity.61 	Plaintiffs allege that they properly exercised these
powers, resulting in the dilution of Defendants’ ownership interests in LMM, LCT,
and LMR2 to less than 1% in each.
38. 	Defendants 	argue, 	however, 	that the 	undisputed evidence 	shows 	that
Camden’s ownership interests in LMM, LCT, and LMR2 were not diluted by JBS’s
Capital Calls because (i) the Calls were made before the “Chevron reserve” had been
released and only after JBS made contributions to the Project, not before, which were
required for a valid capital call under the Operating Agreements;62 (ii) JBS did not
issue a capital call for LCT;63 and (iii) the Capital Calls to LMM and LMR2 were
60 (Pls.’ Opp’n Br. 3.) Plaintiffs have abandoned their breach of contract claim to the extent
it is based on Gumpert’s work as the Project’s construction manager or on Defendants’ alleged
interference with the “operations of the general contractor and various subcontractors,”
except to the extent that they may serve as offsets or as estoppel against Defendants’ claims.
(Pls.’ Opp’n Br. 3.)
61 (Defs.’ Supp. Br. 6; Pls. Opp’n Br. 3–4; Operating Agreements Arts. 4.2 and 4.3.)
62 (Defs.’ Supp. Br. 9–12, 16–19.)
63 (Defs.’ Supp. Br. 15–16.)

made 	to 	recoup 	Plaintiffs’ 	improper 	and 	unapproved 	expenses.64 	Defendants
therefore argue that they are entitled to summary judgment against Plaintiffs’
claims.
39. 	For their part, Plaintiffs contend that they have offered evidence showing
that the Capital Calls were consistent with the Operating Agreements and, to the
extent they were not, were consistent with the course of dealing between the
parties.65
40. 	After a careful review of the record, the Court concludes that genuine issues
of material fact preclude summary judgment for Defendants on Plaintiffs’ declaratory
judgment claim.
a. 	Choice of Law
41. 	The Court first turns to choice of law. The Operating Agreements for LMM
and LMR2 each provide that the Agreements “shall be construed in accordance with
and governed by the law of Georgia, and particularly by the [Georgia Limited
Liability Company] Act.”66 The LCT Operating Agreement likewise provides that it
“shall be construed in accordance with and governed by the law of Georgia,” but, in
apparent conflict, goes on to state “and particularly by the [North Carolina Limited
Liability Company] Act.” 	Because our courts recognize that “where parties to a
contract have agreed that a given jurisdiction’s substantive law shall govern the
64 (Defs.’ Supp. Br. 19–21.)
65 (Pls.’ Opp’n Br. 5, 10, 12.)
66 (LMM Agreement Art. 2.1; LMR2 Agreement Art. 2.1.)

interpretation of the contract, such a contractual provision will be given effect,”
Tanglewood Land Co. v. Byrd, 299 N.C. 260, 262 (1980), the Court will apply Georgia
law to the LMM and LMR2 Operating Agreements and both Georgia and North
Carolina law to the LCT Operating Agreement.
b. 	The “Chevron Reserve”
42. 	The parties dispute the meaning of the term “Chevron reserve” in Article 4.3
of the Operating Agreement. The term is not defined or otherwise referenced in the
Agreement, and its meaning cannot be discerned from the four corners of the
document. Accordingly, the Court finds that the term is ambiguous. See, e.g., Unified
Gov’t of Athens-Clarke Cnty. v. Stiles Apartments, Inc., 295 Ga. 829, 832 (2014)
(“When the terms of a contract are clear and unambiguous, the reviewing court looks
only to the contract itself to determine the parties’ intent.” ); Richard Haney Ford,
Inc. v. Ford Dealer Comput. Servs., 218 Ga. App. 315, 316 (1995) (“[T]he existence or
nonexistence of an ambiguity is [ ] a question of law for the court.”); see also, e.g.,
Jones v. Casstevens, 222 N.C. 411, 413 (1942) (“If there be no dispute as to the terms,
and they are plain and unambiguous, there is no room for construction. The contract
is to be interpreted as written.”); Myers v. Myers, 213 N.C. App. 171, 175 (2011)
(“[W]hether . . . the language of a contract is ambiguous or unambiguous is a question
for the court to determine.”).
43. 	The Court further concludes that the pertinent rules of contract construction
do not supply the term’s meaning as a matter of either Georgia or North Carolina law
given the single use of the term in the Operating Agreements. 	See, e.g., City of

Baldwin v. Woodard & Curran, Inc., 293 Ga. 19, 30 (2013) (“[I]f the contract is
ambiguous in some respect, the court must apply the rules of contract construction to
resolve the ambiguity.”); Johnston Cnty. v. R.N. Rouse & Co., 331 N.C. 88, 94 (1992)
(“[I]t is a fundamental rule of contract construction that the courts construe an
ambiguous contract in a manner that gives effect to all of its provisions, if the court
is reasonably able to do so.”).
44. 	Finally, the Court concludes that the parties’ proffered extrinsic evidence is
in conflict and is not susceptible to a single interpretation. See, e.g., Claussen v. Aetna
Casualty & Sur. Co., 259 Ga. 333, 334 (1989) (“Extrinsic evidence to explain
ambiguity in a contract becomes admissible only when a contract remains ambiguous
after the pertinent rules of construction have been applied.”); Cogdill v. Sylva Supply
Co., 265 N.C. App. 129, 142 (2019) (“Where the language of a contract is ambiguous,
courts consider other relevant and material extrinsic evidence to ascertain the
parties’ intent[.]”). 	In particular, Gumpert avers that the “Chevron reserve” is the
funding 	Chevron 	provided to 	the 	Project, 	which 	was 	finally exhausted on 	24
December 2020.67 In contrast, Lenihan has testified that the term “refers to ‘Tenant
Reserve’ as outlined in the [LMT] Operating Agreement” and was an account that
had been exhausted by 2016.68
45. 	The parties’ competing contentions about their pattern and practice and
course of dealing regarding the “Chevron reserve” is similarly in conflict. In the face
67 (Defs.’ Supp. Br. 17 n.18; Gumpert Aff. ¶ 12.)
68 (Lenihan Aff. ¶ 5; Pls.’ Opp’n Br. 8–9; Compl. Ex. H.)

of this disputed evidence, the Court concludes that the meaning of the term “Chevron
reserve” must be resolved by the factfinder69 at trial. 	Accordingly, Defendants’
Motion must be denied to the extent it is based on Defendants’ contention that the
Operating Agreements required that the “Chevron reserve” be released before a valid
Capital Call could issue.
c. 	Capital Calls for Reimbursement of Advanced Funds
46. 	The 	Court 	next 	considers 	Defendants’ 	contention 	that 	the 	Operating
Agreements required JBS to make capital calls before it made contributions to the
Project 	and 	thereby 	prohibited 	JBS 	from 	making 	a 	capital 	call 	to 	obtain
reimbursement for advanced funds. Defendants rely on Article 4.2 of the Operating
Agreements for support, which provides that JBS may make capital calls when it “in
good faith believes that the Company is, or at any time within the following ninety
(90) days will be, in the position of having payment obligations in excess of cash[.]”
47. 	Plaintiffs, however, point to section 3.1 of the Operating Agreements, which
broadly grants JBS “full charge at its sole discretion of the management, conduct and
operation of the Company’s business,” and argue that the Agreements do not restrict
JBS from loaning money to any of the Loray Entities, calling the loan due at a date
in the future, and then seeking reimbursement through a capital call. 	Plaintiffs
argue that this construction describes a process that fully complied with Article 4.2,
69 In the February Order, the Court referenced that certain issues would be resolved by a
jury. However, in e-mail correspondence with the Court, the parties requested a bench trial
of this matter, which the Court subsequently noticed on 17 February 2023. 	(ECF No. 95.)
The Court therefore has replaced the references to a “jury” in the February Order with
“factfinder” in this amended order and opinion.

was well established by the parties’ regular course of conduct, and occurred with
respect to each Capital Call.
48. 	Based on the above, the Court concludes that, at a minimum, both sides have
proffered reasonable interpretations of the Operating Agreement, thereby requiring
the denial of Defendants’ Motion to this extent under Rule 56. See, e.g., Schenkel &
Shultz, Inc. v. Hermon F. Fox & Assocs., P.C., 362 N.C. 269, 275 (2008) (concluding
summary judgment was inappropriate where contract was “susceptible to differing
yet reasonable interpretations”); see also, e.g., Bowers v. Today’s Bank, 347 Ga. App.
615, 618 (2018) (“A contract is ambiguous if the words used therein leave the intent
of the parties in question—i.e., that intent is uncertain, unclear, or is open to various
interpretations.”).
d. 	Capital Calls on LCT
49. 	Defendants next contend that JBS never issued a capital call to LCT and
thus that Camden continues to own 30% of that entity. For their support, Defendants
rely upon Gumpert’s affidavit averments to that effect70 and point to a letter dated 6
July 2020 in which Lenihan stated that “Loray Mill Developer [sic] and Loray
Commercial Tenant have not received capital calls and I am working on those now.”71
50. 	Plaintiffs respond in opposition that Defendants “ignore [ ] the course of
conduct between the parties, whereunder from the beginning capital calls would be
70 (Gumpert Aff. ¶ 19.)
71 (July 2020 Ownership Letter.)

issued through [LMM] and the funds disbursed to the various entities.”72 Plaintiffs
acknowledge, however, that “beginning in 2017, various capital calls were made on
behalf of specific companies,” limiting Plaintiffs’ alleged course of conduct to the first
two capital calls at issue: the February 2015 Call, which Defendants admit was valid,
and the December 2015 Call, through which Plaintiffs offer evidence suggesting that
LCT received $681,175 of the $885,000 raised in the Call.73
51. 	In considering these competing contentions, the Court first notes that
Defendants mischaracterize the quoted passage from Lenihan’s 6 July 2020 letter to
Gumpert to imply that Lenihan recognized that company-specific capital calls were
required under the Operating Agreements. 	Lenihan, however, began his letter by
stating the following:
It has come to my attention that you now are stating that all the Loray
entities are to be treated individually and not as a group of companies.
This is not what you and I agreed too [sic] and has not been the way we
have been treating these entities since inception of the project. 	When
capital was needed, with your approval and actual request, I did not
identify each individual company we were putting money into as we
agreed that all capital was for the entire group of companies and we
used the money that came into the group to pay invoices for which ever
company needed the cash at that time to keep from having to call capital
for the entities that had no income like Loray Mill Manager, Loray Mill
Developer and Loray Mill Manager.74
52. 	He then stated:
Now that it appears you are calling this into question and are asserting
that each individual company should be treated as a stand-alone entity,
72 (Pls. Opp’n Br. 12.)
73 (Pls. Opp’n Br. 12–13; July 2020 Ownership Letter.)
74 (July 2020 Ownership Letter.)

therefore I would need to establish percentage ownership of each entity
based on the capital calls that were made.
If this were in fact the way we had agreed, the facts would look like
this:75
It was in this context—in framing a scenario with which Lenihan did not agree—that
Lenihan stated that LCT had not received a capital call. As such, while the evidence
is undisputed that Plaintiffs did not make a capital call specifically on behalf of LCT,
Lenihan’s testimony is not fairly characterized to suggest that he admitted that such
a company-specific capital call was a requirement of the Operating Agreements.
53. 	Shorn of this implication, the evidence before the Court is in sharp dispute
with respect to the December 2015 Call. 	Defendants point to the requirement of a
capital call on LCT for an equity conversion under section 4.3 of the LCT Operating
Agreement and the undisputed fact that no capital call was specifically made on
behalf of LCT. 	Plaintiffs rely on the above-stated course of conduct, which is
supported by Lenihan’s testimony, contemporaneous writings, and JBS’s conduct in
making the unchallenged February 2015 Call on behalf of LMM for all Loray Entities,
to 	have 	effected 	a 	modification 	of 	the 	Operating 	Agreements’ 	specific 	terms
concerning capital calls.
54. 	Both North Carolina and Georgia law recognize that “[a] contract may be
modified or waived . . . by conduct which naturally and justly leads the other party to
believe the provisions of the contract are modified or waived . . . even where the
instrument provides for any modification of the contract to be in writing.” Childress
75 (July 2020 Ownership Letter.)

v. C.W. Myers Trading Post, Inc., 247 N.C. 150, 154 (1957); see, e.g., Glimcher Props.,
L.P. v. Bi-Lo, LLC, 271 Ga. App. 322, 324 (2005) (“parties may modify a written
agreement through their conduct, even when the contract itself contains a merger
clause or a ‘No Waiver’ provision”). As a result, the Court concludes that the parties’
conflicting evidence creates a genuine issue of material fact as to whether the
December 2015 Call was made on behalf of LCT, precluding summary judgment for
Defendants on this ground.76
e. 	Capital Calls for Allegedly Improper and Unapproved Expenses
55. 	Defendants’ next contention is that JBS initiated capital calls to raise funds
to pay for unbudgeted payroll expenses, oversight fees, and commercial tenant
improvements, as well as to recoup funds that benefited Plaintiffs rather than the
Loray Entities.77
56. 	Plaintiffs offer testimony from Lenihan, however, that many of the payroll
expenses and oversight fees that Defendants challenge as unbudgeted were included
in the budget for LMT, which is not a party to the lawsuit, and that the payments
Defendants allege to be improper self-dealing were approved by Defendants and
made for proper business purposes.78 	In particular, Lenihan addresses each of the
76 According to Lenihan, Camden’s failure to participate in the December 2015 Capital Call
resulted in ownership adjustments leaving JBS with 99.98532% and Camden with .005138%
of LCT. (July 2020 Ownership Letter.)
77 (Defs.’ Supp. Br. 13.) These contentions allege improper expenditures from 2013 to 2021.
(Gumpert Aff. ¶¶ 46–48.)
78 (Second Aff. Joseph Lenihan, dated 21 Apr. 2022, Ex. B, ECF No. 41.2.)

expenses 	Defendants 	challenge 	and 	attests 	to 	specific 	facts 	rebutting 	each 	of
Defendants’ claims. Accordingly, viewing this evidence in the light most favorable to
Plaintiffs, the Court concludes that Plaintiffs have offered sufficient evidence to
preclude summary judgment for Defendants on this ground.79
f. 	Quasi-Estoppel Based on the K-1 Tax Forms
57. 	Finally, Defendants invoke the doctrine of quasi-estoppel to contend that the
K-1 representations of LCT, LMR2, LMD, and LMM should preclude Plaintiffs from
contending in this litigation that Camden has less than a 35% interest in these
entities.
Under quasi-estoppel doctrine one is not permitted to injure another by
taking a position inconsistent with prior conduct, regardless of whether
the person had actually relied upon that conduct. 	Likewise, under a
quasi-estoppel theory, a party who accepts a transaction or instrument
and then accepts benefits under it may be estopped to take a later
position inconsistent with the prior acceptance of that same transaction
or instrument. 	The essential purpose of quasi-estoppel is to prevent a
party from benefitting by taking two clearly inconsistent positions.
Snow Enter., LLC v. Bankers Ins. Co., 282 N.C. App. 132, 142 (2022) (cleaned up).
“Quasi-estoppel is thus directly grounded upon a party’s acquiescence or acceptance
of payment or benefits, by virtue of which that party is thereafter prevented from
maintaining a position inconsistent with those acts.” Id. at 142–43 (cleaned up).
58. 	Defendants argue that the doctrine should apply because Plaintiffs “have
accepted tax benefits” from the representations of Camden’s ownership in the K-1s.80
79 	As 	discussed 	below, 	the 	Court 	concludes 	on 	Plaintiffs’ 	Motion 	that 	Defendants’
counterclaims for breach of fiduciary duty and constructive fraud based on Plaintiffs’ alleged
self-dealing must be dismissed.
80 (Defs.’ Suppl. Br. Mots. Summ. J. Addressing Impact LCT K-1 4, ECF No. 83.)

Plaintiffs argue in opposition that JBS and Lenihan were not responsible for the K-1
representations because they were prepared by an independent accounting firm
without their input, and, in any event, the percentage ownership figures reflected in
the K-1s neither harm nor benefit the Loray Entities.81 JBS and Lenihan also argue
that the representations were made to reflect Defendants’ position in light of the
parties’ current dispute and are subject to amendment upon a judicial determination
of Lenihan’s and Gumpert’s respective ownership shares in the course of this
litigation. In the face of these conflicting positions and evidence, the Court concludes
that the facts necessary to determine the potential application of quasi-estoppel are
in dispute and must await a factfinder’s determination at trial.
59. 	For each of these reasons, therefore, the Court concludes that Defendants’
Motion seeking summary judgment on the parties’ declaratory judgment claims must
be denied.
2. 	Plaintiffs’ Breach of Contract Claim
60. 	Plaintiffs 	allege 	that 	Defendants 	breached 	the 	various 	Operating
Agreements by improperly interfering with the Loray Entities’ operations after
Plaintiffs made, and Defendants failed to respond to, valid capital calls that diluted
Camden’s investment. 	Defendants respond that their conduct was consistent with
their rights as 30% owners of these various entities. 	So framed, the parties appear
to agree that Plaintiffs’ claim for breach of contract thus depends upon the resolution
81 (Pls.’ Reply Defs.’ Suppl. Br. Mots. Summ. J. Addressing Impact 2021 LCT K-1 3, ECF No.
86; Pls.’ Reply Defs.’ Suppl. Br. Mots. Summ. J. Addressing Impact 2021 LCT K-1 Ex. A, ECF
No. 86.1.)

of the parties’ competing claims for declaratory judgment. 	Since the Court has
concluded that the claims for declaratory relief must be resolved at trial, the Court
reaches the same conclusion concerning Plaintiffs’ claim for breach of contract.
Accordingly, Defendants’ Motion as to this claim must also be denied.
B. 	Plaintiffs’ Motion
61. 	Apart from its request for declaratory judgment, Camden has asserted
counterclaims directly against (i) JBS for breach of the Operating Agreements and
for breach of fiduciary duty, (ii) LMM for breach of the LMM Operating Agreement,82
and (iii) JBS and Lenihan for constructive fraud and unjust enrichment. 	Camden
has also asserted counterclaims derivatively (i) on behalf of LMM, LMD, and LCT
against JBS for breach of fiduciary duty and (ii) on behalf of LMR against Lenihan
for conversion.83 	Finally, Defendants together have asserted a direct counterclaim
against Plaintiffs for civil conspiracy.
82 Defendants base this claim on LMM’s alleged breach of Article 5.4(d) of the LMM Operating
Agreement by failing to pay Camden a “construction management fee associated with the
project.” (Countercls. ¶ 187.) The LMM Operating Agreement, however, does not contain an
Article 5.4(d), and no other provision requires a “construction management fee” be paid to
Camden. In any event, Defendants have not offered any evidence or argument in opposition
to Plaintiffs’ motion seeking summary judgment on this claim. The Court therefore will grant
Plaintiffs’ Motion and enter summary judgment for Plaintiffs on this counterclaim as
pleaded.
83 The Court notes that LMR does not appear in the caption and is not identified as a party
in Defendants’ 	counterclaims. 	Plaintiffs have not 	challenged Defendants’ purported
derivative claim for LMR on this ground, however, and the Court will therefore consider
Plaintiffs’ Motion against this claim solely on the grounds asserted in the Motion and
supporting briefs.

62. 	Plaintiffs move to dismiss all counterclaims,84 contending that Defendants’
counterclaims for breach of contract and breach of fiduciary duty are time-barred by
the applicable statute of limitations and further that all of Defendants’ counterclaims
must be dismissed in light of the undisputed evidence of record.
1. 	Defendants’ Breach of Contract and Breach of Fiduciary Duty
Counterclaims
a. 	Statutes of Limitations85
63. 	As an initial matter, the Court notes that North Carolina’s “traditional
conflict of laws rule is that matters affecting the substantial rights of the parties are
determined by lex loci, the law of the situs of the claim, and remedial or procedural
rights are determined by lex fori, the law of the forum.” Boudreau v. Baughman, 322
N.C. 331, 335 (1988). 	“Ordinary statutes of limitation are clearly procedural,
affecting only the remedy directly and not the right to recover.” 	Id. at 340.
Accordingly, although the Operating Agreements provide that they will be governed
by Georgia law, North Carolina’s statutes of limitations will be applied to Defendants’
counterclaims.
84 Plaintiffs do not advance arguments specific to Defendants’ declaratory judgment claim
(Count IX), despite stating in their supporting briefs that they seek dismissal of all claims.
(See Defs.’ Resp. Opp’n Pls.’ Mot. Summ. J. 2 [hereinafter “Defs.’ Opp’n Br.”], ECF No. 39.)
Because the declaratory judgment counterclaim is based on the same facts and allegations
as certain of Defendants’ breach of contract counterclaims, however, the Court will consider
Plaintiffs’ Motion to seek dismissal of Defendants’ declaratory judgment counterclaim based
on the same arguments Plaintiffs advance to dismiss the relevant portions of Defendants’
breach of contract counterclaims.
85 As discussed in further detail, infra Sec. 3.a., the Court concludes that Defendants’
derivative counterclaims for breach of fiduciary duty should be dismissed for lack of standing.
Accordingly, the discussion that follows only addresses the applicable statutes of limitations
for Defendants’ direct claims for breach of contract and breach of fiduciary duty.

64. 	Under North Carolina law, Defendants’ claims for breach of contract and
breach of fiduciary duty each have a three-year statute of limitations. See, e.g., Ussery
v. Branch Banking & Tr. Co., 368 N.C. 325, 335 n.5 (2015) (recognizing three-year
statute of limitations for breach of contract and breach of fiduciary duty claims)
(citing N.C.G.S. § 1-52(1), (5), (9) (2017)).86 	For both claims, “the statute [of
limitations] begins to run when the claim accrues.” Miller v. Randolph, 124 N.C. App.
779, 781 (1996). A “cause of action generally accrues when the right to institute and
maintain a suit arises.” 	Ocean Hill Joint Venture v. N.C. Dep’t of Env’t, Health &
Nat. Res., 333 N.C. 318, 323 (1993) (cleaned up). The right to sue for both breach of
contract and breach of fiduciary duty arises when the plaintiff knew or should have
known of the alleged breach. 	See, e.g., Chisum v. Campagna (Chisum I), 376 N.C.
680, 702 (2021) (for breach of contract claims); Toomer v. Branch Banking & Tr. Co.,
171 N.C. App. 58, 69 (2005) (for breach of fiduciary duty claims). In short, “as soon
as the injury becomes apparent to the claimant or should reasonably become
86 In deciding which statute of limitations should be applied to a declaratory judgment claim,
the Court is “guided by the principle that the statute of limitations is not determined by the
remedy sought, but by the substantive right asserted by plaintiffs.” Baars v. Campbell Univ.,
Inc., 148 N.C. App. 408, 414 (2002). Since Defendants’ declaratory judgment counterclaim
seeks a determination of contract rights, the three-year statute of limitations for breach of
contract applies. See, e.g., Penley v. Penley, 65 N.C. App. 711, 723 (1984) (“Although in form
the complaint asked for relief through a declaratory judgment, in substance, as represented
by the evidence produced and the issue submitted to the jury, the action is based on
contract.”), rev’d on other grounds, 314 N.C. 1 (1985); see also, e.g., Ludlum v. State, 227 N.C.
App. 92, 95 (2013) (holding that “[b]ecause plaintiff waited too long to file his claim [based on
contract], he is barred from a determination that he is owed any benefits at all [pursuant to
that contract]” under his declaratory judgment claim).

apparent, the cause of action is complete and the limitation period begins to run.”
Chisum I, 376 N.C. at 701.
65. 	Plaintiffs argue that the actions upon which Defendants base their breach-
based 	counterclaims—Plaintiffs’ 	alleged 	unbudgeted 	commercial 	tenant 	upfits,
improper capital calls, failure to accept an offer for purchase of a tax credit, unpaid
development fee, and Camden’s loss of investment partners and financing—were all
known 	to 	Defendants 	more 	than 	three 	years 	before 	Defendants 	filed 	their
counterclaims for breach of fiduciary duty and breach of contract on 5 April 2021.87
66. 	In particular, Plaintiffs contend, and the undisputed evidence shows, that
Defendants were on notice of Plaintiffs’ alleged breaches of fiduciary duty and
contract (i) no later than the end of construction in 2016 as to JBS’s design changes
in 2013 and 201488 that led to the unbudgeted commercial tenant upfit expenditures
in 2015 and 2016 about which Defendants complain;89 (ii) in 2015 as to JBS’s failure
to pay the development fee when it became due at that time;90 (iii) in 2016 as to
LMM’s failure to pay the construction management fee when it became due at
construction completion;91 (iv) in 2016 as to JBS’s failure to reach an agreement with
87 (Pls.’ Supp. Br. 9–12.)
88 (Aff. Erik M. Rosenwood Ex. 5.)
89 (Aff. Erik M. Rosenwood Ex. 10, ECF No. 33.10.)
90 (Camden Dep. 68:17–74:9.)
91 (Camden Dep. 249:19–24.)

Foss regarding tax credits;92 (v) in 2016 as to Gumpert’s lost financing;93 (vi) in 2015
as to Lenihan’s alleged self-dealing;94 and (vi) on 8 December 2015 and 6 June 2017
as to the Capital Calls initiated and communicated to Defendants on those dates.95
67. 	Rather than challenge this undisputed evidence, Defendants rely upon the
continuing wrong doctrine, the discovery rule, and equitable estoppel principles to
argue that their counterclaims should survive dismissal.96 The Court examines each
contention in turn.
b. 	Continuing Wrong Doctrine
68. 	Defendants first contend that Plaintiffs’ alleged breaches “remain a constant
and continuing theme” and therefore that the statute of limitations has not yet
expired by operation of the continuing wrong doctrine.97 “When this doctrine applies,
a statute of limitations does not begin to run until the violative act ceases.” Williams
v. Blue Cross Blue Shield, 357 N.C. 170, 179 (2003). 	To determine whether
Defendants have suffered from a “continuing wrong,” the Court considers “[t]he
particular policies of the statute of limitations in question, as well as the nature of
the wrongful conduct and harm alleged.” Id. In particular, the Court “must examine
92 (Camden Dep. 242:13–246:11.)
93 (Camden Dep. 247:19–248:9.)
94 (Countercls. ¶¶ 119–21.)
95 (Defs.’ Supp. Br. Exs. I–J, ECF Nos. 31.11–.12.)
96 (Defs.’ Opp’n Br. 2.)
97 (Defs.’ Opp’n Br. 2, 8–9.)

the wrong alleged by the plaintiff to determine if the purported violation is the result
of continual unlawful acts, each of which restarts the running of the statute of
limitations, or if the alleged wrong is instead merely the continual ill effects from an
original violation.” 	Quality Built Homes, Inc. v. Town of Carthage, 371 N.C. 60, 70
(2018) (cleaned up). As a result, “the ‘continuing wrong’ doctrine does nothing more
than provide that the applicable limitations period starts anew in the event that an
allegedly unlawful act is repeated.” Id.
69. 	Here, the conduct on which Defendants base their claims for breach involved
separate discrete acts rather than continual ill effects from an original breach of
contract or an original breach of fiduciary duty. The undisputed evidence shows that
the payment of unbudgeted commercial tenant upfit expenditures, the failure to pay
a development or construction management fee, the failure to reach an agreement
with Foss, Gumpert’s loss of financing, and the pre-5-April-2018 capital calls were (i)
non-repetitive and occurred at a specific, identified time well before 5 April 2018, (ii)
the alleged injuries to Defendants resulting from these actions occurred at the time
of the events, and (iii) the events and Defendants’ injuries were known by Defendants
prior to 5 April 2018. 	Accordingly, the Court concludes that Defendants’ breach of
contract and breach of fiduciary duty claims are untimely and that the continuing
wrong doctrine does not apply to save Defendants’ late-filed claims.
c. 	“Discovery Rule”
70. 	Under the “discovery rule,” “a party must initiate an action within a certain
statutorily prescribed period after discovering its injury to avoid dismissal of a claim.”

Christenbury Eye Ctr., P.A. v. Medflow, Inc., 370 N.C. 1, 5 (2017). 	As noted above,
the rule applies to both breach of contract and breach of fiduciary duty claims and
states that the statute of limitations begins to run only when the injured party
discovers, or should have discovered, the injury. See, e.g., Chisum I, 376 N.C. at 699–
702; Toomer, 171 N.C. App. at 68–69.
71. 	Plaintiffs argue that the same evidence that defeats Defendants’ continuing
wrong argument requires the rejection of Defendants’ defense based on the discovery
rule. Defendants disagree, contending that, despite having pleaded claims based on
Plaintiffs’ alleged financial misconduct, they were not on notice of Plaintiffs’ specific
financial misconduct until Plaintiffs produced the Loray Entities’ financial records as
QuickBooks files (“QuickBooks”) in discovery in this action on 11 January 2022.98
They argue that the QuickBooks production revealed, for the first time, the specific
self-dealing transactions on which their claims are based, specific unbudgeted
expenditures on tenant improvements, payroll expenses, oversight fees, and the
amount of cash available to pay the development fee,99 and, as a result, their claims
should be saved by the discovery rule.
72. 	Plaintiffs assert that the QuickBooks production provided Defendants with
additional information that only supplemented the information already available to
98 (Defs.’ Opp’n Br. 3.)
99 (Defs.’ Opp’n Br. 3–4.)

Defendants.100 The Court agrees with Plaintiffs. Defendants were sufficiently aware
of Plaintiffs’ alleged financial misconduct to assert their counterclaims in 2021, and
they based those claims on the very misconduct Defendants contend they only
recently discovered. 	At most, the QuickBooks production provides further evidence
to 	support 	Defendants’ 	counterclaims 	and 	the 	extent 	of 	Defendants’ 	alleged
injuries,101 not evidence of new claims that may be asserted with a new statute of
limitations. See Pembee Mfg. Corp. v. Cape Fear Constr. Co., 313 N.C. 488, 494 (1985)
(“The fact that further damage which plaintiff did not expect was discovered does not
bring about a new cause of action, it merely aggravates the original injury.”). Indeed,
Defendants have not sought to amend their counterclaims or file a separate action
based on the QuickBooks production, a confirmation that Defendants’ counterclaims,
as 	originally 	pleaded, 	embrace 	the 	information 	gleaned 	from 	the 	QuickBooks
production.
73. 	Accordingly, the Court concludes that the discovery rule does not salvage
Defendants’ contract and breach of fiduciary duty claims to the extent they are based
on Plaintiffs’ alleged conduct before 5 April 2018.
100 (Pls.’ Reply Defs.’ Resp. Opp’n Pls.’ Mot. Summ. J. 9 [hereinafter “Pls.’ Reply Br.”], ECF
No. 40.) Citations to the page numbers in Pls.’ Reply Br. are to the electronic filing’s PDF
page numbers as the brief itself is not paginated.
101 Indeed, Defendants asserted in their Opposition Brief that “it was not until this Court
forced JBS to make the Loray Entities QuickBooks available in January 2022 that
Defendants became aware of the details and extent of JBS’[s] self-dealing and the unbudgeted
expenditure of Loray Entity money.” (Defs.’ Opp’n Br. 13 (emphasis added).)

d. 	Estoppel
74. 	Finally, 	Defendants 	contend 	that 	Plaintiffs 	should 	be 	estopped 	from
advancing a statute of limitations defense because Plaintiffs did not provide the
QuickBooks production until ordered by the Court in January 2022.102
75. 	“Equitable estoppel may be invoked, in a proper case, to bar a defendant
from relying upon the statute of limitations.” Duke Univ. v. Stainback, 320 N.C. 337,
341 (1987). The party seeking the application of equitable estoppel must demonstrate
the following:
[T]he essential elements of an equitable estoppel as related to the party
estopped are: (1) Conduct which amounts to a false representation or
concealment of material facts, or at least, which is reasonably calculated
to 	convey 	the 	impression 	that 	the 	facts 	are 	otherwise 	than, 	and
inconsistent with, those which the party afterwards attempts to assert;
(2) intention or expectation that such conduct shall be acted upon by the
other 	party, 	or 	conduct 	which 	at 	least 	is 	calculated 	to 	induce 	a
reasonably prudent person to believe such conduct was intended or
expected 	to 	be 	relied 	and 	acted 	upon; 	(3) 	knowledge, 	actual 	or
constructive, of the real facts. As related to the party claiming the
estoppel, they are: (1) lack of knowledge and the means of knowledge of
the truth as to the facts in question; (2) reliance upon the conduct of the
party sought to be estopped; and (3) action based thereon of such a
character as to change his position prejudicially[.]
Gore v. Myrtle/Mueller, 362 N.C. 27, 33–34 (2007) (first alteration in original)
(quoting Hawkins v. M. & J. Fin. Corp., 238 N.C. 174, 177–178 (1953)).
76. 	“The 	party 	asserting 	the 	claim 	must 	plead 	the 	necessary 	facts 	with
particularity and demonstrate that the [opposing party’s] representations delayed it
from filing suit.” Christenbury Eye Ctr., P.A. v. Medflow, Inc., 2015 NCBC LEXIS 64,
at *8 (N.C. Super. Ct. June 19, 2015). “The court need not find bad faith, fraud nor
102 (Defs.’ Opp’n Br. 11–12.)

intent to deceive to apply the doctrine of equitable estoppel.” 	Blythe v. Bell, 2013
NCBC LEXIS 7, at *47 (N.C. Super. Ct. Feb. 4, 2013). 	However, “[a] party cannot
rely on equitable estoppel if it was put on inquiry as to the truth and had available
the means for ascertaining it.” 	Christenbury Eye Ctr., P.A., 2015 NCBC LEXIS 64,
at *8 (cleaned up).
77. 	Defendants 	contend 	that 	Plaintiffs 	withheld 	important 	financial
information from Camden despite Gumpert’s requests, which began in 2013.103 The
undisputed evidence demonstrates, however, that the Project’s property manager
regularly provided annual budgets and monthly financial statements to Defendants
beginning in 2015.104 Defendants have not challenged this fact, and it is undisputed
that Defendants did not seek additional information from the project manager prior
to June 2020.105 	Moreover, there is no evidence that Plaintiffs sought to limit the
information the property manager provided to Defendants,106 and Defendants have
not 	offered 	evidence 	that 	Camden 	relied 	in 	any 	way 	on 	any 	alleged
103 (Defs.’ Opp’n Br. 2; Defs.’ Opp’n Br. Ex. 1, Second Aff. John Gumpert, dated 12 Apr. 2022
¶¶ 8, 11.)
104 (Camden Dep. 143:25–144:13; Aff. Stephanie Harrison, dated 25 Apr. 2022 ¶ 5 [hereinafter
“Harrison Aff.”], ECF No. 42.)
105 (Harrison Aff. ¶ 7; Second Aff. Joseph Lenihan, dated 21 Apr. 2022, ¶ 13 [hereinafter “2d
Lenihan Aff”], ECF No. 41.)
106 (2d Lenihan Aff. ¶ 11.)

misrepresentations made by JBS. The Court concludes, in these circumstances, that
equitable estoppel does not apply.107
78. 	Accordingly, based on the above, the Court concludes that the applicable
statutes of limitations bar Defendants’ claims for breach of contract and breach of
fiduciary duty related to (i) JBS’s alleged failure to pay the development fee,108 (ii)
LMM’s alleged failure to pay the construction management fee,109 (iii) unbudgeted
commercial tenant upfit expenditures flowing from JBS’s design changes in 2013 and
2014,110 (iv) JBS’s failure to reach an agreement with Foss regarding tax credits, (v)
Gumpert’s lost financing,111 (vi) Lenihan’s alleged self-dealing prior to 5 April 2018,
and (vii) the Capital Calls on 8 December 2015 and 6 June 2017. The Court further
concludes 	that 	the 	applicable 	statute 	of 	limitations 	likewise 	bars 	Defendants’
declaratory judgment claim concerning Camden’s alleged right to payment of the
development fee given that claim’s close correlation to Defendants’ breach of contract
claim 	based 	on 	the 	same 	conduct 	and 	seeking 	essentially 	the 	same 	relief.
107 For these same reasons, the Court concludes, separate and apart from its statute of
limitations rulings, that Camden’s breach of fiduciary duty claim based on JBS’s alleged
withholding of information, (see Countercls. ¶179), necessarily fails.
108 (Countercls. ¶¶ 151–52.)
109 (Countercls. ¶¶ 186–188.)
110 (See Countercls. ¶¶ 157–61.)
111 (Countercls. ¶ 177.)

Accordingly, Plaintiffs’ Motion will be granted to this extent and the foregoing claims
will be dismissed with prejudice.112
2. 	Defendants’ Breach of Contract Counterclaims – Post-5 April 2018
79. 	The Court next turns to Plaintiffs’ Motion to the extent it seeks dismissal of
Defendants’ counterclaims for Plaintiffs’ alleged breach of contract after 5 April
2018.113 	To support those claims, Defendants allege that JBS breached multiple
provisions of the Operating Agreements, including (i) Article 3.1, by “failing to use
reasonable, good faith efforts to consult with Camden on all material management
issues of the entity”; (ii) Article 3.2, by “acting on multiple occasions in excess of the
limitations on its powers as Manager”; (iii) Article 3.5, by “obtaining reimbursement
of other than out-of-pocket expenses incurred by JBS”; (iv) Articles 4.2 and 4.3, by
“purporting to dilute Camden’s ownership interest therein through improper capital
calls”; and (v) Article 4.5, by “failing to apply the capital of each of [LMD, LMM, and
LCT] . . . in accordance with the applicable operating budget.”114 	The Court has
already concluded that issues of fact remain concerning the alleged breaches of
112 In light of the Court’s ruling, the Court need not address Plaintiffs’ further contention that
Defendants have failed to offer sufficient evidence to sustain their breach of contract and
breach of fiduciary duty claims based on Plaintiffs’ alleged conduct prior to 5 April 2018,
although that evidence is discussed in connection with Defendants’ counterclaim for
constructive fraud below.
113 The elements of a claim for breach of contract are similar in North Carolina and Georgia.
See, e.g., Harper v. Vohra Wound Physicians of N.Y., PLLC, 270 N.C. App. 396, 400 (2020)
(requiring “(1) existence of a valid contract and (2) breach of the terms of that contract”);
McAlister v. Clifton, 313 Ga. 737, 742 (2022) (requiring “(1) breach and the (2) resultant
damages (3) to the party who has the right to complain about the contract being broken”
(quoting Norton v. Budget Rent a Car Sys., Inc., 307 Ga. App. 501, 502 (2010))).
114 (Countercls ¶¶ 129–41; Defs.’ Opp’n Br. 14.)

Articles 3.5, 4.2, 4.3, and 4.5 relating to whether Plaintiffs’ Capital Calls were
properly issued, whether Camden’s ownership interest was improperly diluted, and
whether Plaintiffs made unauthorized reimbursements and improperly incurred
unbudgeted expenses after 5 April 2018. Defendants have also offered evidence that
JBS commingled funds during this period in violation of Articles 3.2(e) and (f). As a
result, summary judgment on these issues is not proper, and the Court will therefore
deny Plaintiffs’ Motion as to Defendants’ breach of contract counterclaims based on
conduct occurring after 5 April 2018.115
3. 	Defendants’ Counterclaims for Breach of Fiduciary Duty and
Constructive Fraud Against JBS
80. 	Next, Plaintiffs seek to dismiss all derivative and direct counterclaims
against JBS for breach of fiduciary duty and constructive fraud. Defendants premise
their constructive fraud claims on the same conduct as the breach of fiduciary duty
claims, so where appropriate, the Court will consider these claims together.
81. 	North Carolina and Georgia law both require that a plaintiff claiming breach
of fiduciary duty must show (1) a fiduciary duty, (2) a breach of that duty, and (3)
injury proximately caused by the alleged breach. Sykes v. Health Network Sols., Inc.,
372 N.C. 326, 339 (2019); Niloy & Rohan, LLC v. Sechler, 335 Ga. App. 507, 510 n.5
(2016).116
115 As noted in Section III.A.1 above, issues of fact preclude summary judgment for Plaintiffs
dismissing Defendants’ declaratory judgment counterclaim for the period prior to 5 April
2018.
116 The choice of law for Defendants’ breach of fiduciary duty and constructive fraud claims
differs by entity and by claim. 	Because LMM and LRM2 are Georgia LLCs, Defendants’
derivative claims on behalf of these entities shall be governed by Georgia law. See N.C.G.S.

82. 	Under both North Carolina and Georgia law, a claim for constructive fraud
requires a fiduciary or confidential relationship between the parties. 	See, e.g.,
Crumley & Assocs., P.C. v. Charles Peed & Assocs., P.A., 219 N.C. App. 615, 620
(2012); Thunderbolt Harbour Phase II Condo. Ass’n v. Ryan, 326 Ga. App. 580, 581–
82 (2014); see also OCGA § 23-2-58.
a. 	Defendants’ Derivative Counterclaims Based on the Capital Calls
83. 	Plaintiffs first challenge Defendants’ standing to assert derivative claims
based on the Capital Calls, contending that any injury caused by Plaintiffs’ conduct
was suffered by Defendants, individually, and not by any of the Loray Entities. As a
result, Plaintiffs argue that Defendants lack standing to assert their breach of
fiduciary duty and constructive fraud claims derivatively. 	See, e.g., Aubin v. Susi,
149 N.C. App. 320, 324 (2002) (“Standing is a necessary prerequisite to a court’s
proper exercise of subject matter jurisdiction.”); Sons of Confederate Veterans v.
Henry Cnty. Bd. of Comm’rs, 315 Ga. 39, 44 (2022) (“Standing is a jurisdictional
prerequisite to a plaintiff’s right to sue.”). The Court agrees.
84. 	Defendants allege that the sole injury arising from Plaintiffs’ unlawful
Capital Calls was the reduction in Camden’s ownership interests in LMM, LMR2,
§ 57D-8-06 (“In any derivative proceeding in the right of a foreign LLC, the matters covered
by this Article will be governed by the laws of the jurisdiction of the foreign LLC’s
organization except for the matters governed by G.S. 57D-8-02, 57D-8-04, and 57D-8-05.”).
In contrast, Defendants’ derivative claim on behalf of LCT, a North Carolina LLC, and
Defendants’ direct claims for breach of fiduciary duty and constructive fraud are governed by
North Carolina law since our courts have held that tort claims are generally governed by the
law of the state where the alleged injury occurred. 	See Boudreau, 322 N.C. at 335 (“For
actions sounding in tort, the state where the injury occurred is considered the situs of the
claim.”); Camacho v. McCallum, 2016 NCBC LEXIS 81, at *17 (N.C. Super. Ct. Oct. 25, 2016)
(considering breach of fiduciary duty claim to sound in tort).

LMD, and LCT under the Operating Agreements. 	These injuries to Camden’s
ownership interests, however, are specific to Camden, not shared by Plaintiffs, and
do not include injury to any of the affected LLCs. 	Since Defendants’ counterclaims
seek only to remedy Defendants’ own injuries, the counterclaims are necessarily
direct, not derivative. 	See, e.g., 759 Ventures, LLC v. GCP Apartment Invs., LLC,
2018 NCBC LEXIS 82, at *8 (N.C. Super. Ct. Aug. 13, 2018) (noting that whether a
claim is direct or derivative “ ‘turns on whether the alleged injuries were caused
directly to [the member/manager] or instead are a consequence of breaches of
fiduciary duty that harmed’ [the LLCs]”) (quoting Russell M. Robinson, II, Robinson
on North Carolina Corporation Law § 34.04[5], (7th ed. 2017)).
85. 	As a result, the Court concludes that Defendants’ derivative counterclaims
for breach of fiduciary duty and constructive fraud arising from the Capital Calls
must be dismissed for lack of standing. See, e.g., Chisum v. Campagna (Chisum II),
2017 NCBC LEXIS 102, at *17, *19 (N.C. Super. Ct. Nov. 7, 2017) (dismissing a
derivative breach of fiduciary duty claim where capital calls for additional capital
contributions and “freezing” out the plaintiff were not alleged by plaintiff to have
harmed the LLC); N. Walhalla Props., LLC v. Kennestone Gates Condo. Ass’n, Inc.,
358 Ga. App. 272, 274 (2021) (“The purpose of a derivative action is to protect the
corporation and its assets.”).
b. 	Defendants’ Derivative Counterclaims Based on Unbudgeted Expenses
86. 	The Court next turns to Defendants’ derivative counterclaims for breach of
fiduciary duty and constructive fraud based on JBS’s alleged payment of unbudgeted

payroll expenses, oversight fees, and commercial tenant improvements.117 	At the
Court’s request, the parties submitted briefing on 15 December 2022 addressing
whether these claims are barred by the economic loss rule under Georgia and North
Carolina law. 	See, e.g., Gen. Elec., Co. v. Lowe’s Home Ctrs., Inc., 279 Ga. 77, 78
(2005) (“The ‘economic loss rule’ generally provides that a contracting party who
suffers purely economic losses must seek his remedy in contract and not in tort.”);
Perry v. Frigi-Temp Frigeration, Inc., 2020 NCBC LEXIS 100, at *18 (N.C. Super. Ct.
Sept. 3, 2020) (concluding economic loss rule barred breach of fiduciary duty claim
where plaintiff sought enforcement of a right existing only in contract).
87. 	Here, the injury Defendants claim to have suffered was caused by Plaintiffs’
alleged failure to abide by the Operating Agreements. The right Defendants seek to
vindicate is created by contract, and the remedy Defendants seek to impose is defined
by that same contract. 	Under North Carolina law, such a claim is barred by the
economic loss rule. See, e.g., Wilkins v. Wachovia Corp., No. 5:10-CV-249, 2011 U.S.
Dist. LEXIS 30896, at *6 (E.D.N.C. Mar. 24, 2011) (applying North Carolina’s
economic loss rule to bar breach of fiduciary duty claims which arose “out of the duties
in the . . . agreement and relate to contract performance”); Haigh v. Superior Ins.
Mgmt. Grp., Inc., 2017 NCBC LEXIS 100, at *19 (N.C. Super. Ct. Oct. 24, 2017)
(dismissing breach of fiduciary duty claim where alleged wrongdoing was “a result of
the parties’ contractual relationship, not as a result of a fiduciary relationship” and
117 (See Defs.’ Supp. Br. Exs. T, U.)

would be “better resolved through contract principles, rather than general principles
of fiduciary relationships” (emphasis in original)).
88. 	The outcome is the same under Georgia law. As under North Carolina law,
Georgia law provides that “if the tort results from the violation of a duty which is
itself the consequence of a contract, the right of action is confined to [the contract],
except in cases where the party would have a right of action . . . independently of the
contract[.]” 	O.C.G.A. § 51-1-11(a). 	As discussed above, the alleged breaches of
fiduciary duty here are based on Plaintiffs’ alleged breaches of the Operating
Agreements—specific, identified duties which arise under those contracts and not
from any fiduciary relationship between the parties. 	As a result, Defendants’
counterclaims for breach of fiduciary duty and constructive fraud must be dismissed
under both North Carolina and Georgia law to the extent they seek recovery for JBS’s
alleged payment for unbudgeted items. 118
89. 	Camden’s direct claim against JBS for breach of fiduciary duty based on this
same alleged conduct119 is premised on the same allegations and conduct as its
derivative claims. 	Thus, to the extent that Defendants’ direct counterclaims are
based on JBS’s alleged payment of unbudgeted payroll expenses, oversight fees, and
commercial tenant improvements, those direct claims are dismissed for the same
reasons set forth above.
118 The Court notes that its ruling provides a separate ground, in addition to statute of
limitations, for the dismissal of Defendants’ breach of fiduciary duty counterclaim based on
Plaintiffs’ alleged payment of unbudgeted items before 5 April 2018.
119 (See Countercls. ¶¶ 176, 182.)

c. 	Defendants’ Direct Counterclaims Based on the Capital Calls
90. 	Defendants’ 	direct 	breach 	of 	fiduciary 	duty 	and 	constructive 	fraud
counterclaims based on Plaintiffs’ Capital Calls require that Defendants establish
that Plaintiffs owed Camden a fiduciary duty. But even if the Court were to conclude
that JBS owed a fiduciary duty to Camden as a matter of law on the present record,
Defendants have failed to offer evidence showing that Plaintiffs have breached that
fiduciary duty by issuing the Capital Calls. 	In particular, while the Court has
concluded that there are disputed issues of material fact as to whether the Capital
Calls were properly issued under the Operating Agreements, Defendants have not
offered competent evidence that Plaintiffs sought to harm Defendants, acted in bad
faith, or acted without due regard to Camden’s interests in issuing the Calls. 	See,
e.g., Dallaire v. Bank of Am., N.A., 367 N.C. 363, 367 (2014); O.C.G.A. § 14-11-35.
91. 	To the contrary, it is undisputed that Plaintiffs announced each Capital
Call, identified its purpose, explained the consequences of failing to participate, and
otherwise provided necessary information to Camden to permit Camden to evaluate
its participation in the Call. 	While Camden vigorously disagrees with Plaintiffs’
reasons for the Capital Calls and the uses of the proceeds of those Calls, it has not
offered evidence showing that Plaintiffs breached a fiduciary duty in deciding to issue
the Calls or to use the proceeds of the Calls as it did. JBS, as manager, had the right
to initiate the Calls under the Operating Agreements, and there is no evidence that
Plaintiffs knowingly issued the Calls for unlawful purposes or through improper
means. At its core, Defendants complain that the Calls were used to pay for expenses

other than the development fee. But Defendants have not shown that Plaintiffs’ use
of the Call proceeds in this fashion was in breach of a fiduciary duty. 	At most,
Defendants’ complaint, and resulting remedy, are grounded in contract—in Camden’s
bargained 	for 	rights 	under 	the 	Operating 	Agreements—and 	not 	through 	any
fiduciary duty that JBS may have owed to Camden. 	As such, Defendants’ direct
breach of fiduciary duty and constructive fraud claims based on the Calls must be
dismissed.120
d. 	Defendants’ Derivative Counterclaims Based on Alleged Self-Dealing
92. 	Defendants also assert derivative counterclaims for breach of fiduciary duty
and constructive fraud based on JBS’s 	alleged self-dealing.121 	Plaintiffs seek
summary judgment, contending that the undisputed evidence shows that JBS’s
challenged payments were for proper corporate purposes and further that JBS’s
decision to pay oversight fees and payroll expenses of various LLCs was protected
conduct under the business judgment rule.
120 As with Defendants’ counterclaim for breach of fiduciary duty based on Plaintiffs’ alleged
payment of unbudgeted items above, and as a result of the Court’s dismissal of the fiduciary
duty counterclaim on statute of limitations grounds, the foregoing provides an additional
basis for the dismissal of Defendants’ fiduciary duty counterclaim to the extent it is based on
Plaintiffs’ Capital Calls prior to 5 April 2018.
121 (Countercls. ¶¶ 173, 182.) See N.C.G.S § 57D-3-21(b) (“Each manager shall discharge that
person’s duties (i) in good faith, (ii) with the care an ordinary prudent person in a like position
would exercise under similar circumstances, and (iii) subject to the operating agreement, in
a manner the manager believes to be in the best interests of the LLC.”); Ga. Code Ann. § 14-
11-305(1) (“[A managing member of an LLC] shall act in a manner he or she believes in good
faith to be in the best interests of the limited liability company and with the care an ordinarily
prudent person in a like position would exercise under similar circumstances.”).

93. 	Because the Court’s statute of limitations ruling limits Defendants’ breach
of fiduciary duty counterclaim to Plaintiffs’ alleged conduct after 5 April 2018,122 the
Court examines that conduct first.
94. 	It appears to the Court that the only specific transactions occurring after 5
April 2018 that Defendants challenge as improper self-dealing are identified in
Exhibits S and X to Defendants’ supplemental brief.123 	In response to Plaintiffs’
Motion, Defendants make conclusory arguments without record citations but appear
to rely upon Gumpert’s affidavit testimony to show that issues of fact preclude
summary judgment. 	But while Gumpert offers evidence that JBS and Lenihan
caused LCT and LMM to pay various sums to JBS, Lenihan, and JBS-related
entities,124 Defendants offer no response to Plaintiffs’ evidence showing that the
payments at issue were made for proper purposes and in the best interest of the Loray
Entities.125
95. 	The same is true for JBS’s alleged self-dealing prior to 5 April 2018.
Defendants contend that JBS made distributions to itself and related entities during
this period “for its own personal benefit, and to the detriment of [LMM, LCT, LMD,]
122 Defendants’ counterclaim for constructive fraud is subject to a ten-year statute of
limitations, see Chisum I, 376 N.C. at 707 (citing N.C.G.S. § 1-56(a)), and thus is unaffected
by the Court’s statute of limitations rulings above.
123 (ECF Nos. 31.21, .26.)
124 (Gumpert Aff. ¶¶ 40–43; Defs.’ Supp. Br. Exs. N–S [hereinafter “Cash Accounts Ledgers”],
ECF Nos. 31.15–.21; Defs.’ Supp. Br. Ex. G, ECF No. 31.9.)
125 (Lenihan Aff. Ex. B, ECF No. 38.2; Pls.’ Reply Br. 11.)

and Camden.”126 	In particular, Defendants offer evidence showing that JBS and
Lenihan caused the Loray Entities to pay over $1.1 million to Lenihan, JBS, and JBS-
related entities.127 	Relying upon these payments, Defendants assert that “there is
more than sufficient evidence of JBS’s willful misconduct, knowing violations of the
law, and conflict-of-interest transactions for which JBS received benefits in violation
of the Operating Agreements.”128
96. 	For their part, Plaintiffs do not deny that these payments were made but
instead offer substantial evidence showing that Lenihan and JBS made the payments
to repay loans and advances to the various Loray Entities consistent with the terms
of each loan or advance.129 As with the post-5-April-2018 payments, Defendants do
not grapple with this evidence and fail to point to any evidence from which a
reasonable factfinder could conclude that Plaintiffs made the challenged payments in
bad faith, in knowing violation of the law, or without an honest belief that they were
acting in the best interests of the Loray Entities.
97. 	Absent such evidence, Plaintiffs’ conduct is protected by the business
judgment rule, requiring dismissal of Defendants’ counterclaim for constructive fraud
based on Plaintiffs’ alleged self-dealing.130 	See, e.g., Fed. Deposit Ins. Corp. v.
126 (Defs.’ Opp’n Br. 16.)
127 (Gumpert Aff. ¶ 41; Defs.’ Supp. Br. Ex. N, ECF No. 31.16.)
128 (Defs.’ Opp’n Br. 20.)
129 (Pls.’ Reply Br. 11; Defs.’ Br. Supp. Exs. E, I–M, ECF Nos. 31.7, .11–.15.)
130 Defendants assert their constructive fraud claims not only against JBS, but also against
Lenihan. 	(Countercls. ¶¶ 181–85.) 	Yet Lenihan was neither a manager nor a majority

Loudermilk, 295 Ga. 579, 585 (2014) ([T]he business judgment rule . . . generally
precludes claims against officers and directors for their business decisions that sound
in ordinary negligence, except to the extent that those decisions are shown to have
been made without deliberation, without the requisite diligence to ascertain and
assess the facts and circumstances upon which the decisions are based, or in bad
faith.”); State v. Custard, 2010 NCBC LEXIS 9, at *58 (N.C. Super. Ct. Mar. 19, 2010)
(“Absent proof of bad faith, conflict of interest, or disloyalty, the business decisions of
officers and directors will not be second-guessed if they are the product of a rational
process, and the officers and directors availed themselves of all material and
reasonably available information and honestly believed they were acting in the best
interest of the corporation.” (cleaned up)).
4. 	Defendants’ Conversion Counterclaim
98. 	Defendants base their derivative counterclaim for conversion on Lenihan’s
alleged use of LMR’s tax credits. Under North Carolina law,131 however, “only goods
and personal property are properly the subjects of a claim for conversion.” 	Norman
v. Nash Johnson & Sons’ Farms, Inc., 140 N.C. App. 390, 414 (2000). “[A]n intangible
member of LCT, LMM, or LMD, and Defendants have not shown that he otherwise owed
either Defendant a fiduciary duty. Accordingly, Plaintiffs are entitled to summary judgment
on Defendants’ constructive fraud claims against Lenihan on this separate, additional
ground.
131 North Carolina “favors the use of the lex loci test in cases involving tort or tort-like claims.”
SciGrip, Inc. v. Osae, 373 N.C. 409, 420 (2020). “According to the lex loci test, the substantive
law of the state where the injury or harm was sustained or suffered [applies], which is,
ordinarily, the state where the last event necessary to make the actor liable or the last event
required to constitute the tort takes place.” Id. (cleaned up). Since Defendants assert that
Lenihan “moved from California to North Carolina and then claimed the tax credits for
himself,” (Countercls. ¶ 121), North Carolina is the place of Defendants’ alleged injury. North
Carolina law shall therefore apply to Defendants’ conversion claim.

interest cannot provide the basis for a conversion claim.” 	Window World of N.
Atlanta, Inc. v. Window World, Inc., 2018 NCBC LEXIS 111, at *8–9 (N.C. Super. Ct.
Oct. 22, 2018). Because Defendants allege that the converted property interests here
are tax credits—intangible interests—Defendants’ conversion claim necessarily fails.
The 	Court 	will 	therefore 	grant 	Plaintiffs’ 	Motion 	seeking 	dismissal 	of 	this
counterclaim.
5. 	Defendants’ Unjust Enrichment Counterclaim
99. 	Because all parties agree that the parties are bound by the Operating
Agreements 	and 	that 	those 	Agreements 	govern 	the 	parties’ 	contract 	claims,
Defendants’ counterclaim for unjust enrichment necessarily fails under either North
Carolina or Georgia law. 	See, e.g., Booe v. Shadrick, 322 N.C. 567, 570 (1988) (“If
there is a contract between the parties the contract governs the claim and the law
will not imply a contract.”); Tuvim v. United Jewish Cmtys., Inc., 285 Ga. 632, 635
(2009) (“Unjust enrichment applies when as a matter of fact there is no legal
contract[.]”). 	Accordingly, the Court will grant Plaintiffs’ Motion seeking summary
judgment on this counterclaim.
6. 	Defendants’ Civil Conspiracy Counterclaim
100. 	Neither North Carolina nor Georgia recognizes an independent cause of
action for civil conspiracy. See, e.g., Toomer v. Garrett, 155 N.C. App. 462, 483 (2002)
(“There is no independent cause of action for civil conspiracy.”); O’Neal v. Home Town
Bank of Villa Rica, 237 Ga. App. 325, 330 (1999) (“Absent the underlying tort, there
can be no liability for civil conspiracy.”). 	Rather, each state requires that a civil

conspiracy claim be based on the conspiring parties’ agreement to carry out alleged
misconduct that supports a separate, underlying claim. 	See, e.g., Toomer, 155 N.C.
App. at 483 (“Only where there is an underlying claim for unlawful conduct can a
plaintiff state a claim for civil conspiracy by also alleging the agreement of two or
more parties to carry out the conduct and injury resulting from that agreement”);
Elliott v. Savannah Int’l Motors, Inc., 360 Ga. App. 281, 285 (2021) (“To recover
damages for a civil conspiracy claim, a plaintiff must show that two or more persons,
acting in concert, engaged in conduct that constitutes a tort.”).
101. 	Defendants allege that LMD, LMM, and LCT, joined by JBS and Lenihan,
conspired to engage in the alleged misconduct that forms 	the basis for their
counterclaims for breach of fiduciary duty and constructive fraud.132 	Because the
Court has concluded that those counterclaims must be dismissed in their entirety, so
too must Defendants’ counterclaim for civil conspiracy.
IV.
CONCLUSION
102. 	WHEREFORE, for the reasons set forth above, the Court hereby ORDERS
as follows:
a. 	Defendants’ Motion is hereby DENIED;
b. 	Plaintiffs’ Motion is DENIED as to (i) Defendants’ breach of contract
counterclaims to the extent those claims are based on Plaintiffs’ conduct
after 	5 	April 	2018; 	and 	(ii) 	Defendants’ 	declaratory 	judgment
132 (Defs. Opp’n Br. 18.)

counterclaim to the extent that claim seeks to establish the parties’
respective ownership rights in LMM, LCT, and LMD; and
c. 	Plaintiffs’ Motion is hereby GRANTED as to Defendants’ remaining
counterclaims, and those counterclaims are hereby DISMISSED with
prejudice.
SO ORDERED, this the 27th day of March, 2023.
/s/ Louis A. Bledsoe, III
Louis A. Bledsoe, III
Chief Business Court Judge