McMILLAN v. UNIQUE PLACES, LLC

McMillan v. Unique Places, LLC, 2015 NCBC 46.

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
CATAWBA COUNTY 14 CVS 2179

GEORGE “ERIK” McMILLAN, ENIGMA
UNIVERSAL TECHNOLOGIES, LLC
d/b/a ENIGMA LED, and KISA
McMILLAN, ORDER AND OPINION ON
DEFENDANTS’ MOTION TO DISMISS
Plaintiffs, PLAINTIFFS’ APPEAL AND MOTION
TO DISJOIN PLAINTIFF ENIGMA
v. UNIVERSAL TECHNOLOGIES, LLC
AND/OR REMOVE COUNSEL
UNIQUE PLACES, LLC, JOSH HAWN,
JEFFREY SCOTT, JEFF FISHER, UP
PROPERTY 1, LLC, ANN SHY, and
WARREN HENRY HUNTSMAN,

Defendants.

{1} THIS MATTER is before the Court upon Defendants Unique Places, LLC,
Jeffrey Scott, Jeff Fisher (“Mr. Fisher”), and UP Property 1, LLC’s (collectively, the
“Moving Defendants”) Motion to Dismiss Plaintiffs’ Appeal (“Motion to Dismiss
Appeal”) and Motion to Disjoin Plaintiff Enigma Universal Technologies, LLC
(“Enigma”) and/or Remove Counsel (“Motion to Disjoin”) (collectively, the “Motions”)
in the above-captioned case.
{2} Upon review of the parties’ briefs in support of and in opposition to the
Motions and the relevant evidence of record,1 the Court hereby GRANTS the
Moving Defendants’ Motion to Dismiss Appeal and DEFERS consideration and
resolution of the Moving Defendants’ Motion to Disjoin to a properly-selected
arbitrator in arbitration.
Law Offices of Matthew K. Rogers, PLLC, by Matthew K. Rogers, for
Plaintiffs.

Patrick, Harper & Dixon, LLP, by Michael J. Barnett, for Defendants Unique
Places, LLC, Jeffrey Scott, Jeff Fisher, and UP Property 1, LLC.

1 In its discretion and at the request of Moving Defendants, the Court elects not to hold a hearing on

the Motions. See BCR 15.4 (motions may be decided without oral argument unless ordered by the
Court).
York Williams, LLP, by Gregory C. York, for Defendants Unique Places, LLC,
Jeffrey Scott, Jeff Fisher, and UP Property 1, LLC.

Bledsoe, Judge.
I.
BACKGROUND FACTS
{3} On January 13, 2015, the Court entered an Order and Opinion granting
the Moving Defendants’ Motions to Stay Proceedings and Compel Arbitration
(“Order to Stay and Compel Arbitration”).
{4} On January 14, 2015, the Court entered an Amended Order and Opinion
to the same effect (“Amended Order to Stay and Compel Arbitration”).
{5} The factual and procedural background of this case is recited in detail in
the Amended Order to Stay and Compel Arbitration. See McMillan v. Unique
Places, LLC, 2015 NCBC 4 (N.C. Super. Ct. Jan. 14, 2015),
www.ncbusinesscourt.net/opinions/2015_NCBC_4.pdf.
{6} On February 12, 2015, Plaintiffs George “Erik” McMillan (“Mr.
McMillan”) and Kisa McMillan (collectively, the “McMillan Plaintiffs”) electronically
filed in this Court through the Court’s e-filing system a Notice of Appeal of the
Order to Stay and Compel Arbitration and Amended Order to Stay and Compel
Arbitration. A notice of electronic filing was issued.
{7} On February 17, 2015, thirty-four (34) days after the Court entered its
Amended Order to Stay and Compel Arbitration, the McMillan Plaintiffs filed their
Notice of Appeal with the Catawba County Clerk of Superior Court (“Notice of
Appeal”). (Moving Defs.’ Mot. Dismiss Appeal ¶ 4; Moving Defs.’ Br. Supp. Mot.
Dismiss Appeal, p. 1.)
{8} On March 6, 2015, the Moving Defendants filed the Motions. The
Motions have been fully briefed and are ripe for resolution.
II.
MOTION TO DISMISS APPEAL
{9} The Moving Defendants contend in their Motion to Dismiss Appeal that
the McMillan Plaintiffs’ Notice of Appeal should be dismissed for failure to comply
with the thirty-day filing requirement of Rule 3 of the North Carolina Rules of
Appellate Procedure (“Appellate Rule 3”) and because the McMillan Plaintiffs failed
to timely respond or object to the Moving Defendants’ Motion to Dismiss Appeal.2
{10} Appellate Rule 3 provides:
(a) Filing the Notice of Appeal. Any party entitled by law to appeal
from a judgment or order of a superior or district court rendered in a
civil action or special proceeding may take appeal by filing notice of
appeal with the clerk of superior court and serving copies thereof upon
all other parties within the time prescribed by subsection (c) of this
rule.

...

(c) Time for Taking Appeal. In civil actions and special proceedings, a
party must file and serve a notice of appeal:

1) within thirty days after entry of judgment if the party has been
served with a copy of the judgment within the three day period
prescribed by Rule 58 of the Rules of Civil Procedure . . . .

{11} As an initial matter, where, as here, “an appeal has not yet been docketed
with the appellate court, the trial court retains jurisdiction over the case and may
determine whether a Notice of Appeal was timely filed.” Carter v. Clements Walker
PLLC, 2014 NCBC 12 ¶ 12 (N.C. Super. Ct. Apr. 30, 2014),
http://www.ncbusinesscourt.net/opinions/2014_NCBC_12.pdf (construing Rule 25 of
the North Carolina Rules of Appellate Procedure and relevant case law).

2 The McMillan Plaintiffs have not filed a response brief or any other form of opposition to the
Moving Defendants’ Motion to Dismiss Appeal. Business Court Rule 15.11 provides that when “a
respondent fails to file a response within the time required by this rule, the motion will be
considered and decided as an uncontested motion, and ordinarily will be granted without further
notice.” Because the McMillan Plaintiffs have not filed a response within the time required by BCR
15.11, the Court considers and decides the Moving Defendants’ Motion to Dismiss Appeal as
uncontested.
{12} It appears undisputed that the McMillan Plaintiffs did not file their
Notice of Appeal with the Catawba County Clerk of Superior Court until thirty-four
(34) days after the Court entered the Amended Order to Stay and Compel
Arbitration. (Moving Defs.’ Br. Supp. Mot. Dismiss Appeal, p. 1.) As a result, the
McMillan Plaintiffs failed to comply with the strict requirements of Appellate Rule
3, a failure which this Court lacks the authority to excuse. See, e.g., Carter, 2014
NCBC 12 ¶ 21 (“[T]he authority to excuse compliance with Appellate Rule 3 rests
solely with the appellate courts. Appellate decisions make clear that Appellate Rule
3’s time requirements are to be strictly construed . . . .”).
{13} Consequently, the McMillan Plaintiffs’ appeal contains “a fatal
jurisdictional failure which requires dismissal of the appeal.” Id. at ¶ 21
(dismissing appeal for failure to comply with the time requirements of Appellate
Rule 3); see, e.g., Saieed v. Bradshaw, 110 N.C. App. 855, 861, 431 S.E.2d 233, 236
(1993) (affirming trial court’s dismissal of appeals taken more than thirty days after
entry of judgment); Ehrenhaus v. Baker, 2014 NCBC 30 ¶ 8 (N.C. Super. Ct. July
16, 2014), http://www.ncbusinesscourt.net/opinions/2014_NCBC_30.pdf (“A party
appealing an order must file a notice of appeal with the clerk of superior court . . .
within the time prescribed by [Appellate Rule 3(c)].”) (quotations and citation
omitted) (alteration in original); Blitz v. Xpress Image, Inc., 2007 NCBC 9 ¶¶ 34–35
(N.C. Super. Ct. Apr. 13, 2007),
http://www.ncbusinesscourt.net/opinions/2007%20NCBC%209.pdf (dismissing
appeal for failing to timely file notice of appeal within 30-day time period under
Appellate Rule 3). The Court therefore concludes that the Moving Defendants’
Motion to Dismiss the Appeal should be granted based on the McMillan Plaintiffs’
failure to comply with Appellate Rule 3.
III.
MOTION TO DISJOIN
{14} In their Motion to Disjoin, the Moving Defendants contend that Enigma
is not a proper party plaintiff and that attorney Matthew K. Rogers (“Mr. Rogers”)
should be removed as Enigma’s counsel because the McMillan Plaintiffs did not
have the authority to file this action on behalf of Enigma or to retain Mr. Rogers.3
The Moving Defendants argue in particular that (i) under Enigma’s Amended and
Restated Operating Agreement (the “Operating Agreement”), Mr. Fisher was the
sole Manager of Enigma authorized to bring an action or retain counsel for Enigma,
(Mot. to Disjoin, ¶¶ 2–3), and (ii) in any event, the McMillan Plaintiffs did not own
the requisite majority interest in Enigma required under the Operating Agreement
to bring this action or retain Mr. Rogers on Enigma’s behalf. (Mot. to Disjoin, ¶ 4.)
{15} The McMillan Plaintiffs argue in response that Enigma is identified only
as a nominal party plaintiff in this lawsuit and that Mr. Rogers represents Enigma
solely through the assertion of Mr. McMillan’s derivative claims on behalf of the
company. The McMillan Plaintiffs further contend that Mr. Rogers’s
disqualification or removal as their counsel would cause them unfair prejudice and
unnecessarily increase their costs and attorney’s fees. (See Pls.’ Resp. Opp. Mot.
Disjoin, pp. 7–8, 10.)
{16} Before the merits may be addressed, the Motion to Disjoin first requires
the Court to decide, in light of the January 14, 2015 Amended Order to Stay and
Compel Arbitration, whether the Motion to Disjoin is properly decided by this Court
or by an arbitrator. It is the Court’s understanding that an arbitration proceeding
has not yet been filed, an arbitrator has not yet been appointed, and an arbitrator is
not otherwise authorized and able to act at this time.
{17} The Moving Defendants contend that N.C. Gen. Stat. § 1-569.8(a) permits
the Court to consider the Motion to Disjoin because they seek “provisional remedies”
– dismissal of a party and/or removal of counsel – that will protect the effectiveness
of the arbitration proceeding. The relevant statutory provision provides as follows:
Before an arbitrator is appointed and is authorized and able to act, the
court, upon motion of a party to an arbitration proceeding and for good
cause shown, may enter an order for provisional remedies to protect
the effectiveness of the arbitration proceeding to the same extent and

3 The Moving Defendants request the “removal” of Mr. Rogers as counsel for Enigma, but specifically

not his “disqualification.” (Defs.’ Reply Supp. Mot. Disjoin, pp. 4–5.) Regardless of the terminology
chosen, the Moving Defendants seek to have the Court order that Mr. Rogers no longer represent
Enigma in this action.
under the same conditions as if the controversy were the subject of a
civil action.

N.C. Gen. Stat. § 1-569.8(a) (2014) (emphasis added).
{18} The Court’s research has not revealed a North Carolina decision
addressing whether dismissal of a party or disqualification of an attorney is a
provisional remedy for purposes of N.C. Gen. Stat. § 1-569.8(a). The Delaware
Chancery Court, however – a court this Court frequently finds to be persuasive
authority on various issues of business and corporate law – addressed whether
dismissal of a party’s claims or defenses and disqualification of an attorney are
“provisional remedies,” as that term was used in an arbitration agreement, in SOC-
SMG, Inc. v. Day & Zimmerman, Inc., 2010 Del. Ch. LEXIS 195 (Del. Ch. 2010).
The specific arbitration provision at issue in SOC-SMG provided that
notwithstanding the agreement to arbitrate, the agreement “shall not preclude the
Parties from seeking provisional remedies in aid of arbitration from a court of
appropriate jurisdiction.” Id. at *16, fn. 24 (emphasis in original). The Court finds
that the context in which the term “provisional remedies” is used in the arbitration
agreement in SOC-SMG is very similar to the context in which the term
“provisional remedies” is used in N.C. Gen. Stat. § 1-569.8(a), which provides that
the court “may enter an order for provisional remedies to protect the effectiveness of
the arbitration proceeding.” As a result, the Court finds it appropriate to consider
the Delaware Chancery Court’s analysis of “provisional remedies” in SOC-SMG in
resolving the current Motion to Disjoin.
{19} In SOC-SMG, the Delaware Chancery Court persuasively observed that:
[A] motion to disqualify counsel can hardly be characterized as a
provisional remedy . . . . A [provisional] remedy provide[s] for [a]
present need for the immediate occasion; one adapted to meet a
particular exigency. Particularly, [it is] a temporary process available
to a plaintiff in a civil action, which secures him against loss,
irreparable injury, dissipation of the property, etc., while the action is
pending. Such include the remedies of injunction, appointment of a
receiver, attachment, or arrest.
SOC-SMG, 2010 Del. Ch. LEXIS 195, at *16–17, fn. 24 (emphasis in original)
(citation omitted).
{20} The Chancery Court further noted in SOC-SMG that entering the
requested relief in that case – relief similar to that requested by the Moving
Defendants here, i.e., disqualifying opposing counsel and dismissing parties or
claims – would, “far from protecting [plaintiff] from any irreparable injury while the
action is pending or aiding the [a]rbitration, would [instead] hand [plaintiff] a
victory in the [a]rbitration.” Id. at *17, fn. 24 (quotations omitted). The Chancery
Court thus concluded that “the relief sought . . . cannot be deemed ‘provisional’ in
any rational sense of the word.” Id.
{21} In deciding to defer the dismissal and disqualification motions to the
arbitrator, the Chancery Court also convincingly observed that arbitrators are well-
equipped to handle such motions and noted that “courts have refused to intervene
on an interlocutory basis to either first-or second-guess those rulings.” Id. at *8, fn.
13 (citing In the Matter of the Arbitration Between Routien and Raymond James
Financial Services, Inc., 2004 NASD Arb. LEXIS 966 (May 4, 2004) (arbitrator
deciding disqualification motion); In the Matter of the Arbitration Between Sharp
and The Thornwater Company L.P., 2003 NASD Arb. LEXIS 1907 (Oct. 27, 2003)
(same); Wurttembergische Fire Ins. Co. v. Republic Ins. Co, 1986 U.S. Dist Lexis
23032, *1 (S.D.N.Y. Jul. 9, 1986) (declining to issue an injunction disqualifying
counsel in a pending arbitration on the grounds that were the court to do so, it
“would interfere directly in a pending arbitration, to which [the parties] agreed by
contract. That interference would . . . bring[] the arbitration to a dead stop.”);
Canaan Venture Partners, L.P. v. Salzman, 1996 Conn. Super. LEXIS 245, *7
(Conn. Super. Jan. 28, 1996) (dismissing motion to disqualify counsel in pending
arbitration because “court will not interfere with and interrupt the process of
arbitration . . . . [A]ttorney disqualification is not within the scope of the [narrow
public policy exception] . . . .”)). See also, Cook v. Chocolate Co. v. Salomon Inc., No.
87 CIV. 5705 (RWS) (S.D.N.Y. Oct. 28, 1988) (declining to review decision by
arbitration panel denying request to disqualify defendant’s attorney).
{22} Similarly, a federal magistrate judge in Hawaii considered whether
attorney disqualification is a “provisional remedy” under Hawaii’s Uniform
Arbitration Act in Warne Keahi Young v. County of Haw., 2012 U.S. Dist. LEXIS
84565, at *27–28 (D. Haw. Apr. 3, 2012). There, the federal magistrate judge relied
upon Black’s Law Dictionary, noting that “‘provisional remedy’ [is defined] as, ‘[a]
temporary remedy awarded before judgment and pending the action’s disposition,
such as a temporary restraining order, a preliminary injunction, a prejudgment
receivership, or an attachment. Such a remedy is intended to maintain the status
quo by protecting a person’s safety or preserving property.’” Id. at *27–28 (quoting
Black's Law Dictionary 1408 (9th ed. 2009)). Based on this authority, the federal
magistrate judge determined that provisional remedies under the Hawaii
arbitration statute are thus limited to those “intended to maintain the status quo
and prevent irreparable harm only until an arbitration proceeding could be
concluded.” Id. at *28 (citations omitted). Evaluating the requested relief under
this standard, the federal magistrate judge in Hawaii concluded that attorney
disqualification was not a provisional remedy because it changed, rather than
maintained, the status quo. See id. at *28–29 (“it does not appear that the drafters
of the Uniform Arbitration Act intended to include disqualification of counsel as a
‘provisional remedy,’ as other jurisdictions defining this term have interpreted
‘provisional remedy’ to mean a remedy that is temporary and intended to maintain
the status quo.”).
{23} Courts from around the country have engaged in a similar analysis in
determining whether a party’s requested relief constitutes a provisional remedy
that may be properly entered pending arbitration. Id. at *28 (citing Salvucci v.
Sheehan, 212 N.E.2d 243 (Mass. 1965) (finding temporary restraining order a
provisional remedy)); Bancamerica Commercial Corp. v. Brown, 806 P.2d 897 (Ariz.
Ct. App. 1990) (attachment same); Lambert v. Super. Ct., 279 Cal. Rptr. 32 (Cal. Ct.
App. 1991) (mechanic's lien same); Hughley v. Rocky Mountain Health Maint. Org.,
927 P.2d 1325, 1331–32 (Colo. 1996) (finding preliminary injunction necessary to
“ensure that the promise of arbitration is not hollow and that if successful, an
award by the arbitrator is not an empty victory because conditions permitting a
remedy have changed”)).
{24} Applying these considerations here, the Court concludes that neither
dismissal of Enigma nor disqualification or removal of Mr. Rogers is a “provisional
remedy” for purposes of N.C. Gen. Stat. § 1-569.8(a). To the contrary, both remedies
would plainly alter the status quo between the parties, and the Moving Defendants
have not shown that either measure is necessary here to avoid irreparable harm
before an arbitrator can act. The Court believes that the arbitrator that will handle
the arbitration proceeding between these parties should be well-positioned to
consider the issues of Enigma’s dismissal and Mr. Rogers’ disqualification or
removal as counsel for Enigma, and the Moving Defendants have not suggested that
an arbitrator cannot competently or timely resolve either of the current Motions.
Indeed, particularly in light of the strong North Carolina public policy favoring
arbitration, the Court is of the same view as the Delaware Chancery Court in SOC-
SMG – that judicial resolution of these Motions “would show disrespect toward the
[a]rbitration [proceeding], which has the broad authority to decide these issues in
the first instance, and would be contrary to our state’s – and our nation’s – strong
public policy favoring arbitration.” SOC-SMG, 2010 Del. Ch. LEXIS 195, at *13;
see, e.g., Westmoreland v. High Point Healthcare Inc., 218 N.C. App. 76, 79, 721
S.E.2d 712, 716 (2012) (“North Carolina has a strong public policy favoring
arbitration.”). When also considering our appellate courts’ directive that trial courts
should “take a hands-off attitude during the arbitration proceeding,” Henderson v.
Herman, 104 N.C. App. 482, 486, 409 S.E.2d 739, 741 (1991), the Court concludes
that it should defer consideration and resolution of the issues raised in the Motion
to Disjoin to a properly-selected arbitrator in arbitration.
IV.
CONCLUSION
{25} WHEREFORE, the Court hereby GRANTS the Moving Defendants’
Motion to Dismiss Appeal and DEFERS consideration and resolution of the Moving
Defendants’ Motion to Disjoin to a properly-selected arbitrator in arbitration.

SO ORDERED, this the 7th day of May, 2015.

/s/ Louis A. Bledsoe, III
Louis A. Bledsoe, III
Special Superior Court Judge
for Complex Business Cases