Stone St. Partners, LLC v. the Estate of Richard C. Siskey

Stone St. Partners, LLC v. The Estate of Richard C. Siskey, 2018 NCBC 75.

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
MECKLENBURG COUNTY 17 CVS 15265

STONE STREET PARTNERS, LLC,
f/k/a Siskey Capital, LLC; PAUL G.
PORTER; and DAWN E. KING,

Plaintiffs,

v.

F. LANE WILLIAMSON,
ADMINISTRATOR FOR THE ORDER AND OPINION ON DIANE
ESTATE OF RICHARD C. SISKEY; SISKEY’S AND THE METLIFE
DIANE M. SISKEY; DEFENDANTS’ MOTIONS
METROPOLITAN LIFE TO DISMISS
INSURANCE COMPANY; and MSI
FINANCIAL SERVICES, INC. f/k/a
METLIFE SECURITIES, INC.,

Defendants.

1. THIS MATTER is before the Court on (i) Defendant Diane M. Siskey’s

(“Diane Siskey”) Motion to Dismiss Plaintiffs’ Amended Complaint (the “Siskey

Motion”) and (ii) Defendants Metropolitan Life Insurance Company and MSI

Financial Services, Inc. f/k/a MetLife Securities, Inc.’s (collectively, the “MetLife

Defendants”) Motion to Dismiss Plaintiffs’ Amended Complaint (the “MetLife

Motion”) (collectively with the Siskey Motion, the “Motions”) in the above-captioned

matter.

2. After considering the Motions, the parties’ briefs in support of and in

opposition to the Motions, and the arguments of counsel at the April 4, 2018 hearing

on the Motions, the Court hereby GRANTS the Motions and dismisses Plaintiffs’

claims against Diane Siskey and the MetLife Defendants with prejudice.
Nexsen Pruet, PLLC, by James C. Smith, Kathleen D. B. Burchette, and
Samantha K. Lloyd, for Plaintiffs Stone Street Partners, LLC f/k/a
Siskey Capital, LLC, Paul G. Porter, and Dawn E. King.

Alston & Bird LLP, by Thomas G. Walker, Matthew P. McGuire, and
Caitlin Counts, for Defendant Diane M. Siskey.

Parker, Poe, Adams & Bernstein LLP, by Charles E. Raynal, IV and
Stephen V. Carey, and Morgan, Lewis & Bockius LLP, by Amy J. Greer
and John A. Vassallo, III, for Defendants Metropolitan Life Insurance
Company and MSI Financial Services, Inc. f/k/a MetLife Securities,
Inc.

Tin, Fulton, Walker & Owen, PLLC, by F. Lane Williamson, for
Defendant F. Lane Williamson, Administrator for the Estate of Richard
C. Siskey.

Bledsoe, Chief Judge.

I.

FACTUAL BACKGROUND

3. The Court does not make findings of fact when ruling on a motion to dismiss

under Rule 12(b)(6) of the North Carolina Rules of Civil Procedure. See, e.g., Concrete

Serv. Corp. v. Inv’rs Grp., Inc., 79 N.C. App. 678, 681, 340 S.E.2d 755, 758 (1986).

Rather, the Court recites the relevant allegations in the pleading asserting the

challenged claims—here, Plaintiffs’ Amended Complaint.
4. This case is one of many lawsuits and claims arising out of several alleged

Ponzi schemes1 operated by Charlotte, North Carolina businessman Richard C.

Siskey (“Rick Siskey”) for a number of years prior to his death on December 28, 2016.2

5. Plaintiffs Paul G. Porter (“Porter”) and Dawn E. King (“King”) were business

associates of Rick Siskey and his wife, Diane Siskey (together, the “Siskeys”), in

Plaintiff Stone Street Partners, LLC (f/k/a Siskey Capital, LLC) (“Siskey Capital,”

“Stone Street,” or the “Company”), a private equity firm based in Charlotte, North

Carolina. From early 2015 until April 1, 2017, Porter was a managing director,

business advisor, and consultant for Stone Street. King served as Stone Street’s Chief

Financial Officer from early 2015 through at least the date of the Amended

Complaint. (Am. Compl. ¶ 12.)

1 “A Ponzi scheme is a scam whereby early investors are paid returns from money contributed

by later investors in order to entice more investors.” Blyth v. McCrary, 184 N.C. App. 654,
657 n.1, 646 S.E.2d 813, 815 n.1 (2007); see also United States v. Loayza, 107 F.3d 257, 259
n.1 (4th Cir. 1997) (defining “Ponzi scheme” as a form of fraud “in which early investors are
paid off with money received from later investors to prevent discovery and to encourage
additional and larger investments”); Ponzi Scheme, Oxford English Dictionary (2013) (“form
of fraud in which belief in the success of a non-existent enterprise is fostered by payment of
quick returns to first investors using money invested by others”).
2 See, e.g., In re WSC Holdings, LLC, Petition No. 17-30338 (Bankr. W.D.N.C), In re
SouthPark Partners, LLC, Petition No. 17-30339 (Bankr. W.D.N.C.), In re TSI Holdings,
LLC, No. 17-30132 (Bankr. W.D.N.C.); Robinson v. Estate of Richard C. Siskey, 2017 CVS
5843 (Mecklenburg County, N.C. Super. Ct.); Aldridge v. Metropolitan Life Ins. Co., 2018 CVS
1050 (Union County, N.C. Super. Ct.); Aldridge v. Metropolitan Life Ins. Co., 2018 CVS 1124
(Union County, N.C. Super. Ct.); Kelly v. Metropolitan Life Ins. Co., 2018 CVS 4978 (Guilford
County, N.C. Super. Ct.); Peterson v. Metropolitan Life Ins. Co., 2018 CVS 528 (Lincoln
County, N.C. Super. Ct.); Williams v. Metropolitan Life Ins. Co., 2018 CVS 307 (Yadkin
County, N.C. Super. Ct.); Goulet v. Metropolitan Life Ins. Co., 2018 CVS 12201 (Mecklenburg
County, N.C. Super. Ct.). Each of the North Carolina state court cases listed above has been
designated as a complex business case by the Chief Justice of the Supreme Court of North
Carolina and is pending before the undersigned.
6. Plaintiffs allege that “[a]fter [Rick] Siskey began work for [the MetLife

Defendants], he formed a series of limited liability companies, which he used to

establish and implement several elaborate Ponzi schemes.” (Am. Compl. ¶ 24, ECF

No. 50.) According to Plaintiffs, Rick Siskey fraudulently induced his clients to invest

vast sums in his Ponzi schemes, and rather than invest his clients’ funds in legitimate

investments, he transferred the invested funds to “the Siskeys’ personal accounts” to

“pay for the Siskeys’ lavish personal lifestyle, to pay Rick Siskey’s huge gambling

debts, and to pay other investors when they sought the return of their money.” (Am.

Compl. ¶ 25.) Plaintiffs allege that during the fifteen years preceding his death, Rick

Siskey’s Ponzi schemes “defrauded investors of over $35 million.” (Am. Compl. ¶ 2.)

7. Plaintiffs further allege that Rick Siskey induced Porter and King to leave

“lucrative and prestigious professional practices”3 to join Siskey Capital “in reliance

on [Rick] Siskey’s representations of acumen and success.” (Am. Compl. ¶ 3A.)4

According to Plaintiffs, during his attempts to recruit Porter and King, Rick Siskey

never disclosed that he was engaged in fraudulent schemes to defraud his clients and

instead “touted his reputation and success as a MetLife broker and his status as a

philanthropist and a pillar of the Charlotte community.” (Am. Compl. ¶ 3A.)

Although alleging that Siskey Capital “was and still is a legitimate business, with

3 Prior to joining Stone Street, Porter was a corporate partner in the law firm of
McGuireWoods LLP, and King, a certified public accountant, had a successful solo accounting
practice. Both worked in Charlotte. (Am. Compl. ¶¶ 58, 59.) Porter is now a lawyer in solo
practice in Charlotte. (Am. Compl. ¶ 11.)

4 The Amended Complaint contains two paragraphs labeled with the number “3.” For
citation purposes, the first paragraph shall be designated herein as “3A” and the second
paragraph shall be designated as “3B.”
real assets, real investments, audited financial statements, and an honest business

purpose,” (Am. Compl. ¶ 55), Plaintiffs assert that the “taint of [Rick] Siskey’s fraud

caused a loss of client confidence that effectively destroyed the Company,” (Am.

Compl. ¶ 3B).

8. According to Plaintiffs, the MetLife Defendants were “reaping millions of

dollars from [Rick] Siskey’s sale of [their] financial and insurance products” and, “[t]o

protect those revenues, [the] MetLife [Defendants] turned a blind eye to Siskey’s

repeated brushes with regulators and unorthodox business practices which should

have alerted [the MetLife Defendants to] the frauds being carried out under [their]

very nose, and under [the] MetLife umbrella.” (Am. Compl. ¶ 4.) As alleged, the

MetLife Defendants “simply ignored the red flags and allowed Siskey to operate

under [their] imprimatur in order to protect [their] substantial revenues flowing from

Siskey’s operations.” (Am. Compl. ¶ 7.) Although Plaintiffs do not allege that they

were customers or clients of the MetLife Defendants or that they ever had any

business or contract relationship with them, Plaintiffs contend that the MetLife

Defendants had a duty to protect Plaintiffs from Rick Siskey’s fraud and thus are

liable for Plaintiffs’ alleged losses.

9. Plaintiffs further aver that Diane Siskey “was integrally involved in the

operation, finances and day-to-day management of all [Rick] Siskey’s enterprises,

both legal and illegal,” (Am. Compl. ¶ 4), and “worked hand in glove with [Rick] Siskey

in all his business endeavors,” (Am. Compl. ¶ 8). According to Plaintiffs, from 2001

until late 2016, Diane Siskey was employed by the MetLife Defendants, held various
insurance and securities licenses under state and federal law, and was responsible

for the MetLife Defendants’ regulatory compliance functions in North and South

Carolina. Plaintiffs contend that Diane Siskey “did far more than turn a blind eye”

to Rick Siskey’s Ponzi schemes; rather, Plaintiffs allege that “she actively

participated in her husband’s schemes and the [various] Ponzi [e]ntities,” (Am.

Compl. ¶ 40), and thus is liable to Plaintiffs’ for their alleged injuries.

10. On or about December 12, 2016, the Federal Bureau of Investigation (“FBI”)

seized Rick Siskey’s assets and publicly disclosed Rick Siskey’s alleged Ponzi

schemes. (Am. Compl. ¶ 61.) Plaintiffs aver that they had no knowledge of Rick

Siskey’s illegal activities until the asset seizure and were “completely blindsided” by

the FBI’s disclosures. (Am. Compl. ¶ 62.) Plaintiffs assert that “as a direct and

proximate result of Rick Siskey’s fraudulent Ponzi scheme activities, (i) [Porter’s and

King’s] present and future business prospects have been devastated,” (Am. Compl. ¶

76), (ii) their “reputation and employability in the Charlotte business and

professional communities have been [irretrievably damaged],” (Am. Compl. ¶¶ 78,

79), and (iii) “the business of Stone Street Partners has been destroyed,” forcing

Plaintiffs to wind up the Company, (Am. Compl. ¶ 77).

II.

PROCEDURAL BACKGROUND

11. Plaintiffs initiated this action on August 22, 2017, asserting claims against

Diane Siskey, the MetLife Defendants, and Defendant F. Lane Williamson in his

capacity as the Administrator for the Estate of Richard C. Siskey (the “Estate”). The
case was thereafter designated a mandatory complex business case under N.C. Gen.

Stat. § 7A-45.4(a) by order of Chief Justice Mark R. Martin and assigned to the

undersigned.

12. Upon proper motion, the Court permitted Plaintiffs to file an Amended

Complaint on January 22, 2018. In the Amended Complaint, Plaintiffs contend that

“[a]s a result of [Rick] Siskey’s financial crimes, and the concealment of his illegal

activities, Plaintiffs have suffered substantial monetary losses, as well as the loss of

their business and professional reputations.” (Am. Compl. ¶ 2.) Of particular

relevance to the Motions, Plaintiffs asserted claims against Diane Siskey for breach

of fiduciary duty and constructive fraud and against Diane Siskey and the MetLife

Defendants for negligence and aiding and abetting breach of fiduciary duty.5 Diane

Siskey and the MetLife Defendants each moved to dismiss the claims asserted

against them through separate motions filed on February 26, 2018.6

13. The Court held a hearing on the Motions on April 4, 2018, at which all

parties were represented by counsel. The Court stayed the initiation of discovery

pending the Court’s resolution of the Motions.

14. The Motions are now ripe for resolution.

5 The Amended Complaint also sets forth claims against the Estate for breach of fiduciary
duty, constructive fraud, breach of contract, fraud, unfair and deceptive trade practices under
N.C. Gen. Stat. § 75-1.1, and interference with prospective economic relations.

6
The Estate filed its Answer to the Amended Complaint on February 20, 2018. The Estate
did not file a motion to dismiss and is not a party to either of the Motions.
III.

LEGAL STANDARD

15. In deciding a Rule 12(b)(6) motion, the Court’s inquiry is “whether the

allegations of the complaint, treated as true, are sufficient to state a claim upon which

relief may be granted under some legal theory, whether properly labeled or not.”

Enoch v. Inman, 164 N.C. App. 415, 417, 596 S.E.2d 361, 363 (2004); see Sutton v.

Duke, 277 N.C. 94, 98–99, 176 S.E.2d 161, 163 (1970). The Court views the facts

pleaded and permissible inferences in a light most favorable to the non-moving party.

Goodman v. Holmes & McLaurin, 192 N.C. App. 467, 473, 665 S.E.2d 526, 531 (2008).

The Court is not required, however, “to accept as true allegations that are merely

conclusory, unwarranted deductions of fact, or unreasonable inferences.” Good Hope

Hosp., Inc. v. N.C. HHS, Div. of Facility Servs., 174 N.C. App. 266, 274, 620 S.E.2d

873, 880 (2005).

16. In addition, the Court “may properly consider documents which are the

subject of a plaintiff’s complaint and to which the complaint specifically refers[.]”

Oberlin Capital, L.P. v. Slavin, 147 N.C. App. 52, 60, 554 S.E.2d 840, 847 (2001).

Dismissal under Rule 12(b)(6) is proper “(1) when the complaint on its face reveals

that no law supports plaintiff's claim; (2) when the complaint reveals on its face the

absence of fact sufficient to make a good claim; [or] (3) when some fact disclosed in

the complaint necessarily defeats the plaintiff’s claim.” Oates v. JAG, Inc., 314 N.C.

276, 278, 333 S.E.2d 222, 224 (1985).
IV.

ANALYSIS

17. As noted above, Plaintiffs assert claims against Diane Siskey for breach of

fiduciary duty and constructive fraud and against Diane Siskey and the MetLife

Defendants for negligence and aiding and abetting breach of fiduciary duty. The

moving Defendants seek the dismissal of each of these claims.

A. Negligence Against Diane Siskey and the MetLife Defendants Based on a
Special Relationship

18. Plaintiffs contend that the MetLife Defendants and Diane Siskey (i) “owed

a duty to Plaintiffs, to protect them from the illegal, fraudulent and rogue behavior

engaged in by Rick Siskey,” (Am. Compl. ¶ 82), (ii) “had a duty and the ability to

effectively supervise and control the activities of Rick Siskey to ensure that he

complied with the rules and regulations of [the MetLife Defendants] and to ensure

that he complied with the laws applicable to him as an agent and broker working for

[the MetLife Defendants],” (Am. Compl. ¶ 83), and (iii) “flagrantly breached their

duties of care by turning a blind eye toward and failing to investigate and prevent

Rick Siskey’s illegal and fraudulent conduct,” (Am. Compl. ¶ 89), thereby causing

Plaintiffs to “suffer serious and irreversible damage,” (Am. Compl. ¶ 90).

19. “To state a claim for common law negligence, a plaintiff must allege: (1) a

legal duty; (2) a breach thereof; and (3) injury proximately caused by the

breach.” Stein v. Asheville City Bd. of Educ., 360 N.C. 321, 328, 626 S.E.2d 263, 267

(2006). A negligence claim “necessarily fails if there is no legal duty owed to the
plaintiff by the defendant.” Bridges v. Parrish, 222 N.C. App. 320, 324, 731 S.E.2d

262, 265 (2012).

The duty may arise specifically by mandate of statute, or it may arise
generally by operation of law under application of the basic rule of the
common law which imposes on every person engaged in the prosecution of
any undertaking an obligation to use due care, or to so govern his actions as
not to endanger the person or property of others.

Pinnix v. Toomey, 242 N.C. 358, 362, 87 S.E.2d 893, 897 (1955); see, e.g., Guthrie v.

Conroy, 152 N.C. App. 15, 25, 567 S.E.2d 403, 411 (2002) (“A duty is defined as an

obligation, recognized by the law, requiring the person to conform to a certain

standard of conduct, for the protection of others against unreasonable risks.”).

20. “No legal duty exists unless the injury to the plaintiff was foreseeable and

avoidable through due care,” and the foreseeability of the plaintiff’s injuries “depends

on the facts of the particular case.” Stein, 360 N.C. at 328, 626 S.E.2d at 267–68.

“Thus, the preliminary question is whether defendant owed a duty of care to plaintiff

under the circumstances.” Davidson v. Univ. of N.C. at Chapel Hill, 142 N.C. App.

544, 553, 543 S.E.2d 920, 926 (2001). “When there is no dispute as to the facts . . . the

issue of whether a duty exists is a question of law for the court.” Mozingo v. Pitt Cty.

Mem’l Hosp., Inc., 101 N.C. App. 578, 588, 400 S.E.2d 747, 753 (1991), aff’d, 331 N.C.

182, 415 S.E.2d 341 (1992).

21. The MetLife Defendants and Diane Siskey each contend that, on the facts

alleged, they did not owe a duty to Plaintiffs on which a negligence claim may be

based. The Court agrees.
22. Plaintiffs’ negligence claims posit that Diane Siskey and the MetLife

Defendants each owed a duty to Plaintiffs to prevent Rick Siskey from causing harm

to Plaintiffs through his tortious conduct. Our appellate courts have held, however,

that “[i]n general, there is neither a duty to control the actions of a third party, nor

to protect another from a third party.” Scadden v. Holt, 222 N.C. App. 799, 802, 733

S.E.2d 90, 92 (2012); accord Harris v. DaimlerChrysler Corp., 180 N.C. App. 551, 555,

638 S.E.2d 260, 265 (2006) (“Generally, there is no duty to take action to prevent the

tortious conduct of third persons against the injured party.”); Hall v. Toreros, II, Inc.,

176 N.C. App. 309, 325, 626 S.E.2d 861, 871 (2006) (to similar effect).

23. There are exceptions to this general rule, however, “arising typically when

the defendant has a special relationship to the plaintiff or to the tortfeasor.” Harris,

180 N.C. App. at 555–56, 638 S.E.2d at 265. As explained by our Court of Appeals:

A special relationship between the defendant and the tortfeasor imposes a
duty upon the defendant to control the tortfeasor’s conduct, or a special
relationship between the defendant and the injured party gives the injured
party a right to protection. In such event, there is a duty upon the actor to
control the tortfeasor’s conduct, and to guard other persons against his
dangerous propensities. Some recognized examples of special relationships
include: (1) parent-child; (2) master-servant; (3) landowner-licensee; (4)
custodian-prisoner; and (5) institution-involuntarily committed mental
patient. In each example, the chief factors justifying imposition of liability
are 1) the ability to control the person and 2) knowledge of the person’s
propensity for violence.

Id. at 556, 638 S.E.2d at 265 (citations and quotation marks omitted); see, e.g.,

Hedrick v. Rains, 121 N.C. App. 466, 469, 466 S.E.2d 281, 283 (1996) (to similar

effect); King v. Durham Cty. Mental Health Developmental Disabilities & Substance

Abuse Auth., 113 N.C. App. 341, 345–46, 439 S.E.2d 771, 774 (1994) (to similar effect).
24. Significantly for this case, the North Carolina courts have declined to hold

that a special relationship exists between spouses as a matter of law. See, e.g., Shoe

v. Hood, 251 N.C. 719, 724, 112 S.E.2d 543, 548 (1960) (“A husband is not the agent

of his wife merely because of the marital relationship and neither a husband or wife

is ordinarily responsible for the torts of the other.”). Thus, Diane Siskey does not

have a special relationship with Rick Siskey based simply on their marital

relationship.

25. To invoke the exception to the general rule here, Plaintiffs have sought to

plead the existence of a special relationship with each of the moving Defendants as

follows:

86. [The MetLife Defendants] had a special relationship with [their] agent
and employee, Rick Siskey, and knew or had reason to know of his
dangerous propensities, which imposed upon [the MetLife Defendants] a
duty to control Siskey’s conduct and to protect others, including Plaintiffs,
from harm resulting from the Siskey’s [sic] illegal activities engaged in
under the MetLife aegis.

87. By virtue of her roles as Risk Siskey’s supervisor and wife, Diane Siskey
had a special relationship with Rick Siskey and knew of his dangerous,
fraudulent propensities, which imposed upon Diane Siskey a duty to
control Rick Siskey’s conduct and to protect others, including Plaintiffs,
from harm resulting from Siskey’s illegal activities engaged in the MetLife
aegis.

88. Diane Siskey also had a special relationship with Siskey Capital, LLC,
which imposed upon her a duty to protect Siskey Capital and its principals
from harm resulting from Rick Siskey’s illegal activities as engaged in
under the MetLife aegis.

(Am. Compl. ¶¶ 86–88.)
26. The Court concludes that Plaintiffs’ allegations are insufficient to sustain

their negligence claims against either Diane Siskey or the MetLife Defendants as a

matter of law.

27. The Supreme Court of North Carolina has held that “for common law

negligence purposes, no special relationship exists between a defendant and a third

person unless (1) the defendant knows or should know of the third person’s violent

propensities and (2) the defendant has the ability and opportunity to control the third

person at the time of the third person’s criminal acts.” Stein, 360 N.C. at 330, 626

S.E.2d at 269; accord Harris, 180 N.C. App. at 556, 638 S.E.2d at 265 (“[T]he chief

factors justifying imposition of liability are 1) the ability to control the person and 2)

knowledge of the person’s propensity for violence.”); Hedrick, 121 N.C. App. at 469,

466 S.E.2d at 284 (reversing denial of Rule 12(c) motion where “the complaint alleges

no facts from which it may be inferred that [the third party] possessed . . . violent

propensities, or that, if he did, defendant . . . knew or had any reason to know of those

propensities” and citing Restatement (Second) of Torts § 315); see Restatement

(Second) of Torts § 315 (Am. Law Inst. 1965) (providing general principles for a duty

to prevent a third party “from causing physical harm to another” (emphasis added)).

28. The moving Defendants contend that the special relationship exception, as

recognized in North Carolina, is limited to situations involving physical harm or

bodily injury and that, because Plaintiffs have only pleaded economic loss, the special

relationship exception does not apply. Plaintiffs argue in response that a special

relationship justifying the imposition of liability for conduct of a third party is not
limited to situations involving physical harm and that, in any event, Plaintiffs have

pleaded sufficient facts from which a factfinder could reasonably conclude that the

moving Defendants each owed Plaintiffs a duty to protect Plaintiffs from Rick

Siskey’s illegal activities.

29. It does not appear that any North Carolina appellate court has expressly

declared that a special relationship for common law negligence purposes only exists

where a plaintiff has suffered physical harm or bodily injury. That said, the parties

have not cited, and the Court’s research has not identified, any North Carolina

appellate decisions finding the existence of a special relationship in circumstances

other than those in which the plaintiff was alleged to have suffered a physical injury.

See, e.g., Harris, 180 N.C. App. at 552–53, 638 S.E.2d at 263 (death and injuries from

auto accident); Scadden, 222 N.C. App. at 800, 733 S.E.2d at 91 (back injuries from

restrained patient); Hedrick, 121 N.C. App. at 469–70, 466 S.E.2d at 283–84

(murder); King, 113 N.C. App. at 342, 439 S.E.2d at 772 (death by shooting); see also,

e.g., Stein, 360 N.C. at 324, 626 S.E.2d at 265 (injury by shooting).

30. Although Plaintiffs argue that this Court recognized “a limited duty arising

from a special relationship, despite the fact that the claimants suffered pecuniary,

not physical, injury,” (Mem. Law Opp’n Diane Siskey’s Mot. Dismiss 12, ECF No. 64),

in Bradshaw v. Maiden, 2015 NCBC LEXIS 80 (N.C. Super. Ct. Aug. 10, 2015), the

Bradshaw case involved a substantively different claim—gross negligence rather

than common law negligence—and the claim was not based on an alleged duty to

control the actions of a third party or to protect another from a third party as
Plaintiffs allege here. Rather, in Bradshaw, the Court held that the defendant—

which was acting under contract and was alleged to have willfully and knowingly

forwarded information to plaintiffs that the defendant knew was false or inaccurate

and upon which it knew plaintiffs would rely to their detriment—had a general duty

of care under the law to refrain from sending knowingly false information so “as not

to injure another” in those circumstances. Bradshaw, 2015 NCBC LEXIS 80, at *21–

22; see, e.g., Olympic Prods. Co., Div. of Cone Mills Corp. v. Roof Sys., Inc., 88 N.C.

App. 315, 323, 363 S.E.2d 367, 372 (1988) (“This duty to protect third parties from

harm arises under circumstances where the party is in a position so that ‘anyone of

ordinary sense who thinks will at once recognize that if he does not use ordinary care

and skill in his own conduct with regard to those circumstances, he will cause danger

of injury to the person or property of the other.’”). As such, Bradshaw involved a

defendant’s affirmative act that harmed a third party, not, as here, a defendant’s

failure to prevent harm caused by a third party. Bradshaw is thus inapposite to the

issue under review.

31. Significant to the current inquiry is the fact that North Carolina’s reported

decisions examining the special relationship exception derive directly, or rely upon

decisions that derive directly, from the Restatement (Second) of Torts § 315 and its

related provisions,7 which recognize that the special relationship exception is in

derogation of the general principle that “[t]here is no duty so to control the conduct of

7 See, for example, Restatement (Second) of Torts § 319, titled “Duty of Those in Charge of
Person Having Dangerous Propensities,” which applies to a defendant who fails to “take[]
charge of a third person to whom he knows or should know to be likely to cause bodily harm
to other if not controlled[.]” Restatement (Second) of Torts § 319 (emphasis added).
a third person so as to prevent him from causing physical harm to another.”

Restatement (Second) of Torts § 315 (emphasis added); see, e.g., Davidson, 142 N.C.

App. at 555, 543 S.E.2d at 927; Hedrick, 121 N.C. App. at 469–70, 466 S.E.2d at 283–

84; King, 113 N.C. App. at 345–46, 439 S.E.2d at 774–75 (citing cases); see also, e.g.,

Bridges, 366 N.C. at 542, 742 S.E.2d at 797. Considering the Restatement together

with the Supreme Court’s determination that a defendant’s knowledge of “the third

person’s violent propensities” is a necessary finding for application of the exception,

Stein, 360 N.C. at 330, 626 S.E.2d at 269 (emphasis added), it appears to the Court

that our appellate courts intend the special relationship exception to apply only

where the plaintiff has suffered physical harm or bodily injury.

32. Here, Plaintiffs do not allege that Rick Siskey had a propensity for violence

or caused Plaintiffs physical harm, much less that Plaintiffs suffered physical harm

or that the moving Defendants knew or should have known of any of Rick Siskey’s

purported “violent propensities.” As a result, the Court concludes that, as alleged,

Defendants do not fall within the special relationship exception to the general

common law negligence rule that “there is neither a duty to control the actions of a

third party, nor to protect another from a third party.” Scadden, 222 N.C. App. at

802, 733 S.E.2d at 92.

33. The Court further concludes that, even if the Court were to find that the

special relationship exception could apply in circumstances without physical harm or

injury, Plaintiffs have failed to allege facts showing that Defendants had the “ability

to control” Rick Siskey sufficient to permit the application of the exception here. See,
e.g., Stein, 360 N.C. at 330, 626 S.E.2d at 269 (holding that a defendant owes a duty

to control the actions of a third party where “the defendant has the ability and

opportunity to control the third person at the time of the third person’s criminal

acts”).

34. Although Plaintiffs repeatedly allege that Defendants had a duty to control

Rick Siskey’s conduct and ensure his compliance with the MetLife Defendants’ rules

and regulations and applicable law, (Am. Compl. ¶¶ 83, 86, 87), Plaintiffs allege only

in a conclusory fashion that either Diane Siskey or the MetLife Defendants had the

ability, rather than the duty, to control Rick Siskey’s actions, (Am. Compl. ¶ 83). How

Defendants had the ability to control Rick Siskey and how that alleged control could

have been exercised by Defendants to prevent Rick Siskey from engaging in his Ponzi

schemes, the public disclosure of which allegedly caused Plaintiffs’ injuries, is left

unpleaded.

35. The most Plaintiffs plead to tie Defendants’ exercise of alleged control to the

prevention of Plaintiffs’ alleged harm is their allegation that “[i]f [the MetLife

Defendants] had maintained proper internal controls and conducted a proper

investigation . . . Siskey’s Ponzi scheme would have been detected and stopped.” (Am.

Compl. ¶ 31.) Not only is Diane Siskey absent from this allegation, but the allegation

itself smacks more of “supervision” than “control” and is nonetheless built upon a

chain of attenuated inferences that the Court concludes are too speculative and

conjectural to sustain Plaintiffs’ claim for negligence. See, e.g., Kingsdown, Inc. v.
Hinshaw, 2015 NCBC LEXIS 30, at *26 (N.C. Super. Ct. Mar. 25, 2015) (dismissing

claim based on “speculative and conjectural” allegations under Rule 12(b)(6)).

36. Accordingly, for this separate and independent reason, the Court concludes

that Plaintiffs have failed to plead facts permitting the application of the special

relationship exception to create the legal duty on which Plaintiffs seek to base their

claim for negligence.

B. Negligence Against Diane Siskey and the MetLife Defendants Based on a
MetLife Corporate Code of Conduct

37. Plaintiffs also contend that the MetLife Defendants’ corporate codes of

conduct imposed a legal duty running from Diane Siskey and the MetLife Defendants

to Plaintiffs. North Carolina law is clear, however, that while internal corporate

policies may be some evidence of alleged negligence, they are “irrelevant to the

question of whether a legal duty [is] owed.” Hall, 176 N.C. App. at 317, 626 S.E.2d

at 867. Accordingly, the Court concludes that the MetLife Defendants’ corporate

codes of conduct do not create a legal duty on which Plaintiffs’ negligence claims may

be sustained.

C. Negligence Against the MetLife Defendants Based on Negligent Retention
and Supervision

38. To the extent Plaintiffs seek to advance a negligent retention and

supervision claim against the MetLife Defendants, Plaintiffs’ claim fails because

Plaintiffs have not alleged a nexus or causal connection between Rick Siskey’s

employment relationship with the MetLife Defendants and Plaintiffs’ alleged injury.

See, e.g., Little v. Omega Meats I, Inc., 171 N.C. App. 583, 589, 615 S.E.2d 45, 49
(requiring plaintiff advancing a negligent retention and supervision claim to show “a

nexus between the employment relationship and the injury”), aff’d, 360 N.C. 164, 622

S.E.2d 494 (2005).

39. Here, Plaintiffs do not allege that they had a business, contractual, or other

relationship with the MetLife Defendants. Nor do Plaintiffs allege that the Siskeys

took action in the Siskeys’ capacities as employees or representatives of the MetLife

Defendants to harm Plaintiffs, that the MetLife Defendants made any

misrepresentations to, or concealed material facts from, Plaintiffs, or that the Siskeys

caused Plaintiffs to believe that they were doing business with the MetLife

Defendants when they did business with either Siskey. Neither do Plaintiffs allege

that the MetLife Defendants knew of Rick Siskey’s Ponzi schemes or ratified his

conduct nor allege any nexus between Diane Siskey’s role in Stone Street and her

relationship with the MetLife Defendants.

40. Rather, Plaintiffs allege that (i) “[t]he support of [the MetLife Defendants]

was essential to the establishment of [Rick] Siskey’s new business operations,”

through the lease of space and the provision of office furnishings and office staff, (Am.

Compl. ¶ 22), (ii) the MetLife Defendants “provided [Rick] Siskey with the established

and trusted MetLife brand,” by permitting him to use MetLife

“signage, . . . stationery, business cards[,] and other marketing materials” and “to sell

MetLife insurance products, annuities and other MetLife products,” (Am. Compl. ¶

22), (iii) the “MetLife brand gave [Rick] Siskey’s operation stature and credibility

throughout the Charlotte insurance and financial services marketplace” and “access
to the investors he needed for his Ponzi schemes,” (Am. Compl. ¶ 22), (iv) after Rick

Siskey began working for the MetLife Defendants under the name Wall Street

Capitol and selling MetLife products, he established the LLCs that he used in his

alleged Ponzi schemes, (Am. Compl. ¶¶ 23–24), (v) the MetLife Defendants did not

investigate Rick Siskey’s activities after his 2004 NASD suspension for selling high

risk promissory notes issued by two of the Ponzi scheme entities without disclosing

his participation (although MetLife Securities terminated his affiliation as a

registered representative at that time in response to the suspension), (Am. Compl ¶

27), (vi) the MetLife Defendants did not meaningfully investigate Rick Siskey’s

activities after his 2011 ERISA violation and NASD fine for investing employee

benefit plan assets in these same Ponzi scheme entities, (Am. Compl ¶¶ 29–33), (vii)

despite his disciplinary record, the MetLife Defendants reinstated Rick Siskey as a

MetLife affiliated broker in 2013 and permitted him to sell MetLife products, (Am.

Compl. ¶ 33), and (viii) the MetLife Defendants initiated but quickly terminated an

investigation of the Siskeys’ insurance activities in 2015, (Am. Compl. ¶ 34).

41. At their core, Plaintiffs’ allegations against the MetLife Defendants are

premised on the MetLife Defendants’ decisions in 2004, 2011, 2013, and 2015 to

permit Rick Siskey to continue to associate himself with the MetLife brand. These

allegations are not based on any direct relationship between Plaintiffs and the

MetLife Defendants or on any specific conduct Rick Siskey directed against Plaintiffs

while acting as an agent of the MetLife Defendants. As pleaded, Plaintiffs’ claimed

injury arises not from Rick Siskey’s alleged misconduct, but rather from the alleged
negative perception among investors and persons in the Charlotte community

concerning Plaintiffs’ relationship with, and connection to, Rick Siskey, resulting

from the public disclosure of Rick Siskey’s Ponzi schemes.

42. As such, Plaintiffs’ allegations, taken as true, fail to show a nexus or causal

connection between Rick Siskey’s relationship with the MetLife Defendants—and the

MetLife Defendants’ alleged failure to act against Rick Siskey—and the reputational

harm and pecuniary loss Plaintiffs seek to recover arising from the public disclosure

of Rick Siskey’s alleged Ponzi schemes in December 2016 and the resulting demise of

his Ponzi scheme entities. Without that nexus, and in the absence of a legally

recognized special or other relationship giving rise to a legal duty owing to Plaintiffs

from the MetLife Defendants, Plaintiffs’ negligent retention and supervision claim

against the MetLife Defendants must necessarily fail for failure to plead a legal duty

sufficient to support that claim.8 See, e.g., Little, 171 N.C. App. at 589–90, 615 S.E.2d

at 50 (requiring nexus).

D. Negligence Against Diane Siskey Based on Breach of Fiduciary Duty

43. Plaintiffs contend that Diane Siskey owed a fiduciary duty to Stone Street

to protect Stone Street from Rick Siskey’s illegal conduct and that this fiduciary duty

8 The MetLife Defendants also argue that Plaintiffs’ negligence claim should be dismissed
because reputational harm is generally unavailable in a negligence action, citing Tyson v.
L’Eggs Products, Inc., 84 N.C. App. 1, 351 S.E.2d 834 (1987), and cases from other
jurisdictions. In light of the Court’s dismissal of the negligence claim and Plaintiffs’
contention that they seek damages for pecuniary loss in addition to damages for reputational
harm, the Court does not find it necessary to address this additional argument at this time.
serves as a legal duty upon which Plaintiffs’ negligence claim against her may

proceed. The Court disagrees.

44. As an initial matter, Plaintiffs have not alleged that, at the time of the

events at issue, Diane Siskey was a manager, officer, director, or company official of

Stone Street, or that she had a specific title or a formal position with the Company of

any kind. Chapter 57D of the North Carolina General Statutes determines “the

rights and duties of interest owners, managers, and other company officials” of

limited liability companies organized under North Carolina law. N.C. Gen. Stat.

§ 57D-1-02. Under Chapter 57D, an LLC’s operating agreement “governs the internal

affairs of [the] LLC,” including the “rights, duties, and obligations of . . . company

officials in relation to each other, the LLC, and the interest owners.” N.C. Gen. Stat.

§ 57D-2-30(a). Where Chapter 57D’s “default” provisions conflict with an LLC’s

operating agreement, the operating agreement controls. See, e.g., Stainless Valve Co.

v. Safefresh Techs., LLC, 231 N.C. App. 286, 291, 753 S.E. 2d 331, 335 (2013) (“‘The

[LLC] Act contains numerous “default” provisions or rules that will govern an LLC

only in the absence of an explicitly different arrangement in the LLC’s articles of

organization or written operating agreement.’” (quoting Russell M. Robinson, II,

Robinson on North Carolina Corporation Law § 34.01 (7th ed. 2012))).

45. Here, the Stone Street Operating Agreement expressly provides, in relevant

part, that “[t]he Managers . . . shall have the full right, power and authority to

manage the day-to-day business and affairs of the LLC,” (Mem. Law Supp. Diane

Siskey’s Mot. Dismiss Ex. 1, at § 5.1(a) [hereinafter “Operating Agreement”], ECF
No. 56.1), and further, that “no Person (other than a Manager or Officer) shall have

the authority to represent, bind or otherwise act on behalf of the LLC,” (Operating

Agreement § 5.1(c)). Because Diane Siskey is not pleaded to have been a Manager or

Officer of Stone Street, the Court concludes that the language of the Operating

Agreement does not give rise to a fiduciary duty owing from Diane Siskey to Stone

Street.

46. Faced with this fact, and independent of the Operating Agreement,

Plaintiffs contend that Diane Siskey owed Stone Street a legal or fiduciary duty as

both a “company official” and “de facto” officer of Stone Street based on her exercise

of authority over the Company in the operation of its business. The Court finds

neither contention supported by the pleaded allegations.

47. Plaintiffs allege that Diane Siskey (i) was “actively involved in the business

operations of [Stone Street]”; (ii) was “actively involved in [its] day-to-day

management”; (iii) “handled all of its leasing and insurance matters, and much of its

administrative operations”; (iv) was “actively involved in all aspects of [Stone

Street’s] interactions with its investors”; (v) “regularly attended” meetings with Stone

Street’s managers and company officials and “existing and prospective investors” and

clients; (vi) was a “key member” of the management “team”; (vii) had to “approve”

“virtually all major decisions regarding the corporate governance of Siskey Capital,”

(Am. Compl. ¶¶ 56–57); (viii) “worked hand in glove with [Rick] Siskey in all his

business endeavors,” (Am. Compl. ¶ 8); and (ix) “actively participated in her

husband’s schemes and the [various] Ponzi [e]ntities,” (Am. Compl. ¶ 40).
48. Under Chapter 57D, a “manager” of an LLC owes a fiduciary duty to the

LLC, N.C. Gen. Stat. § 57D-3-21, and non-manager “company officials” have the same

fiduciary duty as managers, N.C. Gen. Stat. § 57D-3-23. These duties are spelled out

in N.C. Gen. Stat. § 57D-3-21(b).

49. Chapter 57D defines a “company official” as “[a]ny person exercising any

management authority over the limited liability company whether the person is a

manager or referred to as a manager, director, or officer or given any other title.”

N.C. Gen. Stat. § 57D-1-03(5). Although no North Carolina appellate court has

interpreted this definition, Judge Robinson of this Court has recently catalogued

relevant definitions of “management” and “authority” in determining whether a

person is a “company official” under section 57D-1-03(5):

The current edition of Black’s Law Dictionary defines “management” as “[t]he
people in an organization who are vested with a certain amount of discretion
and independent judgment in managing its affairs” and “[t]he act or system
of controlling and making decisions for a business[.]” Black’s Law
Dictionary (10th ed. 2014). Webster’s Dictionary defines “management” as
“the conducting or supervising of something (such as a business)” and “the
collective body of those who manage or direct any enterprise or
interest[.]” Webster’s Third New International Dictionary 1372
(1981). Black’s Law Dictionary defines “authority” as “[t]he official right or
permission to act” and “the power delegated by a principal to an
agent[.]” Black’s Law Dictionary (10th ed. 2014). Webster’s
Dictionary defines “authority” as “delegated power over others” and “freedom
granted by one in authority[.]” Webster’s Third New International
Dictionary 146 (1981).

Timbercreek Land & Timber Co., LLC v. Robbins, 2017 NCBC LEXIS 64, at *14 (N.C.

Super. Ct. July 28, 2017).

50. Guided by these definitions here, the Court concludes that Plaintiffs’

allegations do not allege facts showing that Diane Siskey exercised management
authority over Stone Street such that a fact finder could conclude that she was a

“company official” of Stone Street under N.C. Gen. Stat. § 57D-1-03(5). The activities

identified in paragraph 47(i)—(vi) above are the sorts of activities in which many non-

officer employees participate and do not permit a conclusion that Diane Siskey was

“vested with discretion and independent judgment in managing and operating” Stone

Street, see id. at *15, or that she “controlled and made decisions” for the Company,

id. Nor do they show that Diane Siskey was “delegated” or “entrusted” with

“authority” or “permission” to act on behalf of the Company as one supervising or

controlling the Company. Id. In particular, that she was “involved” in Stone Street’s

“business operations,” “day-to-day management,” and “interactions with . . .

investors,” does not permit a conclusion that Diane Siskey actually exercised

management authority over Stone Street, including by controlling and making

decisions for the Company. While the allegations outlined in paragraph 47(i)—(vi)

above certainly plead Diane Siskey was “actively involved” in Stone Street’s business,

the Court concludes that the pleaded facts do not show that she exercised

management authority over Stone Street as required under section 57D-1-03(5) to

impose upon her a fiduciary duty to Stone Street identical to that owed by Stone

Street’s managers, directors, and officers.

51. Likewise, Plaintiffs other allegations, as relayed in paragraph 47(vii)—(ix)

above, make conclusory assertions that the Court concludes do not show that Diane

Siskey exercised management authority over Stone Street. Although Plaintiffs allege

Diane Siskey had to “approve . . . virtually all major decisions regarding [Stone
Street’s] corporate governance,” they do not allege that Diane Siskey made or

approved a single decision for Stone Street or that any corporate governance decisions

were, in fact, made by the Company with (or without) Diane Siskey’s approval.

Similarly, that Diane Siskey may have “worked hand in glove with [Rick] Siskey in

all his business endeavors,” as Plaintiffs allege, does not equate to her exercising

management authority over Stone Street sufficient to satisfy section 57D-1-03(5).

Finally, that Diane Siskey may have allegedly participated in Rick Siskey’s Ponzi

schemes, as Plaintiffs variously contend, provides no support for Plaintiffs’ contention

that she exercised management authority over Stone Street.

52. As such, the Court concludes that Plaintiffs have failed to allege facts

showing that Diane Siskey owed a legal or fiduciary duty to Plaintiffs as a “company

official” of Stone Street sufficient to sustain their negligence claim against her. Cf.

Timbercreek Land & Timber Co., LLC, 2017 NCBC LEXIS 64, at *15 (finding

defendant a “company official” where defendant was appointed a manager, had

specific authority to act through a signed addendum to the operating agreement, and

exclusively managed day-to-day operations of the business pursuant to that

authority).

53. The Court similarly concludes that Plaintiffs’ allegations are insufficient to

permit a conclusion that Diane Siskey owed Plaintiffs a legal or fiduciary duty as a

“de facto” officer of Stone Street. Even assuming that Chapter 57D permits

recognition of a de facto officer in the limited liability context, which the Court

assumes on these Motions but does not decide, the North Carolina appellate courts
have recognized that a de facto officer of a corporation under North Carolina law must

“hold office under some degree of notoriety or color of title[,] . . . continuously exercise

the functions of the office[,]” and “appear to hold an actual office[.]” Havelock Yacht

Club, Inc. v. Crystal Lake Yacht Club, Inc., 215 N.C. App. 153, 156, 714 S.E.2d 788,

790 (2011). Moreover, where a de facto corporate officer has been recognized under

North Carolina law, our courts have required the de facto officer to have “authority

for tasks such as signing tax returns, offering major input as to the company’s

formation and operation, or managing the company.” Ehmann v. Medflow, Inc., 2017

NCBC LEXIS 88, at *43–44 (N.C. Super. Ct. Sept. 26, 2017) (quoting Kinesis Advert.,

Inc. v. Hill, 187 N.C. App. 1, 15–16, 652 S.E.2d 284, 295 (2007)). Plaintiffs have not

alleged facts showing that Diane Siskey did any of these sorts of things here.

54. While Plaintiffs have alleged that Diane Siskey “handled all of [Stone

Street’s] leasing and insurance matters, and much of its administrative operations,”

(Am. Compl. ¶ 56), Plaintiffs do not allege that Diane Siskey possessed or exercised

authority to sign Stone Street’s tax returns, see Lowder v. All Star Mills, Inc., 75 N.C.

App. 233, 241, 330 S.E.2d 649, 655 (1985), hire and fire Stone Street employees, make

purchases on behalf of Stone Street, see Tai Sports, Inc. v. Hall, 2012 NCBC LEXIS

64, at *48 (N.C. Super. Ct. Dec. 28, 2002), or engage in management activity on behalf

of Stone Street utilizing “discretion and independent judgment,” Timbercreek Land

& Timber Co., LLC, 2017 NCBC LEXIS 64, at *15. Similarly, although Plaintiffs

allege that Diane Siskey “regularly attended” important meetings and had to

“approve” certain “major decisions regarding the corporate governance of [Stone
Street],” (Am. Compl. ¶¶ 56–57), Plaintiffs do not allege that Diane Siskey offered

major input at any meetings she attended or that she actually approved any decisions

of any kind. Finally, while Plaintiffs allege that Diane Siskey was “actively involved

in the day-to-day management” of Stone Street, (Am. Compl. ¶ 56), Plaintiffs have

not alleged that she actually managed the company, was delegated such authority, or

made any significant decisions for the Company at any time, cf. Lowder, 75 N.C. App.

at 241, 330 S.E.2d at 654–55 (finding de facto officer where officer “took over

management of the companies”).

55. As a result, the Court concludes that, while Plaintiffs have alleged Diane

Siskey’s active involvement in Stone Street, Plaintiffs have failed to allege that Diane

Siskey had the type of management authority and engaged in the sort of management

activity that our courts have required for her to be deemed a de facto officer of Stone

Street under North Carolina law.

56. Based on these same considerations, the Court further concludes that

Plaintiffs’ allegations are insufficient to show that Diane Siskey had the requisite

domination and control of Stone Street that our appellate courts have otherwise found

necessary for the creation of a de facto fiduciary duty. See, e.g., Lockerman v. S. River

Elec. Membership Corp., 794 S.E.2d 346, 352 (N.C. Ct. App. 2016) (“The standard for

finding a de facto fiduciary relationship is a demanding one: ‘Only when one party

figuratively holds all the cards—all the financial power or technical information, for

example—have North Carolina courts found that the special circumstance of a
fiduciary relationship has arisen.’” (quoting S.N.R. Mgmt. Corp. v. Danube Partners

141, LLC, 189 N.C. App. 601, 613, 659 S.E.2d 442, 451 (2008)).

57. For each of these reasons, therefore, the Court concludes that Plaintiffs have

failed to allege that Diane Siskey owed a legal or fiduciary duty to Plaintiffs sufficient

to sustain their negligence claim against her. Accordingly, the Court concludes that

Plaintiffs’ negligence claim against Diane Siskey must be dismissed. See, e.g., Prince

v. Wright, 141 N.C. App. 262, 266, 541 S.E.2d 191, 195 (2000) (“If there is no duty,

there can be no liability.”).

E. Breach of Fiduciary Duty Against Diane Siskey

58. Plaintiffs’ breach of fiduciary duty claim against Diane Siskey also rests on

Plaintiffs’ contention that she is a “company official” and de facto officer of Stone

Street. In light of the Court’s conclusion that Plaintiffs have failed to allege facts

showing that she is either, the Court concludes that Plaintiffs’ claim for breach of

fiduciary duty against Diane Siskey must likewise be dismissed.

F. Constructive Fraud Against Diane Siskey

59. To survive a motion to dismiss, a cause of action for constructive fraud must

allege (1) a relationship of trust and confidence, (2) that the defendant took advantage

of that position of trust in order to benefit himself, and (3) that plaintiff was, as a

result, injured. Sterner v. Penn, 159 N.C. App. 626, 631, 583 S.E.2d 670, 674 (2003).

Intent to deceive is not an element of constructive fraud. Link v. Link, 278 N.C. 181,

192, 179 S.E.2d 697, 704 (1971). “The primary difference between pleading a claim

for constructive fraud and one for breach of fiduciary duty is the constructive fraud
requirement that the defendant benefit himself.” White v. Consol. Planning, Inc., 166

N.C. App. 283, 294, 603 S.E.2d 147, 156 (2004).

60. Having concluded that Plaintiffs have failed to allege facts showing that

Diane Siskey owed a fiduciary duty to Plaintiffs, the Court concludes that Plaintiffs’

claim for constructive fraud must therefore be dismissed.

G. Aiding and Abetting Breach of Fiduciary Duty Against Diane Siskey and the
MetLife Defendants

61. Judge Gale of this Court recently concluded and held in a very thorough and

thoughtful opinion that “North Carolina does not recognize a claim of aiding and

abetting breach of fiduciary duty.” Zloop, Inc. v. Parker Poe Adams & Bernstein, LLP,

2018 NCBC LEXIS 16, at *32–34 (N.C. Super. Ct. Feb. 16, 2018). This Court finds

Judge Gale’s analysis persuasive and reaches the same conclusion. Accordingly, the

Court concludes that Plaintiffs’ claim for aiding and abetting breach of fiduciary duty

under North Carolina law should be dismissed.9

V.

CONCLUSION

62. WHEREFORE, for the foregoing reasons, the Court hereby ORDERS as

follows:

a. Diane Siskey’s Motion to Dismiss is GRANTED, and Plaintiffs’ claims

against her are dismissed with prejudice.

9 Judge Gale further determined that in the event the Supreme Court of North Carolina
recognized such a claim, it would require the following prerequisites to establish aiding and
abetting liability: “(1) the existence of a . . . violation by the primary party; (2) knowledge of
the violation on the part of the aider and abettor; and (3) substantial assistance by the aider
and abettor in the achievement of the primary violation.” Zloop, Inc., 2018 NCBC LEXIS 16,
b. The MetLife Defendants’ Motion to Dismiss is GRANTED, and

Plaintiffs’ claims against each MetLife Defendant are dismissed with

prejudice.10

SO ORDERED, this the 26th day of July, 2018.

/s/ Louis A. Bledsoe, III
Louis A. Bledsoe, III
Chief Business Court Judge

at *35–38 (citing Blow v. Shaughnessy, 88 N.C. App. 484, 490–91, 364 S.E.2d 444, 447 (1988)).
To establish “actual knowledge,” Judge Gale concluded that a plaintiff must allege that the
“primary party and the aiding and abetting party must have the same level of culpability or
scienter.” Id. at *38 (quoting Tong v. Dunn, 2012 NCBC LEXIS 16, at *14 (N.C. Super. Ct.
Mar. 19, 2012)). Although the Court finds these conclusions persuasive, the Court declines
to consider at this time whether the Amended Complaint states a claim in the event these
elements later become prerequisites to any claim for aiding and abetting breach of fiduciary
duty that our appellate courts may recognize.

10 “The decision to dismiss an action with or without prejudice is in the discretion of the trial

court and will not be disturbed on appeal absent an abuse of discretion.” First Fed. Bank v.
Aldridge, 230 N.C. App. 187, 191, 749 S.E.2d 289, 292 (2013). In the context of a 12(b)(6)
motion, “the party whose claim is being dismissed has the burden to convince the court that
the party deserves a second chance[.]” Id. at 192, 749 S.E.2d at 293 (quoting Johnson v.
Bollinger, 86 N.C. App. 1, 9, 356 S.E.2d 378, 383 (1987)). Here, the Court is not persuaded
that Plaintiffs should be entitled to a third chance to plead their claims against Diane Siskey
and the MetLife Defendants, particularly because Diane Siskey and the MetLife Defendants
have each now fully briefed two motions to dismiss and because Plaintiffs had the opportunity
to review and consider Diane Siskey’s and the MetLife Defendants’ full briefing on their
initial motions to dismiss in preparing the Amended Complaint.