Bell v. Pine Needles Country Club, Inc.

Bell v. Pine Needles Country Club, Inc., 2019 NCBC 26.

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
MOORE COUNTY 18 CVS 374

WARREN KIRK BELL,

Plaintiff,

v.
ORDER AND OPINION ON
PINE NEEDLES COUNTRY CLUB, DEFENDANTS’ MOTION IN THE
INC.; BONNIE MCGOWAN; PAT CAUSE FOR SPECIFIC
MCGOWAN; MICHAEL
MCGOWAN; SCOTTI MCGOWAN; PERFORMANCE, PLAINTIFF’S
PEGGY ANN MILLER; KELLY MOTION TO PARTIALLY MODIFY
MILLER; BLAIR MILLER; MELODY AND TO ENFORCE INCORPORATED
MILLER; KELLY ANN MILLER; SETTLEMENT AGREEMENTS, AND
and KNOLLWOOD PARTNERS, PLAINTIFF’S MOTION TO STRIKE
LLC,

Defendants.

1. THIS MATTER is before the Court upon (i) Defendants’ Motion in the

Cause for Specific Performance of Settlement Agreements and for Injunctive Relief

(the “Motion in the Cause”), (ii) Plaintiff’s Motion to Partially Modify and to Enforce

Incorporated Settlement Agreements (the “Motion to Modify and Enforce”), and (iii)

Plaintiff’s Motion to Strike Bosworth and Hawkins Affidavits (the “Motion to Strike,”

and collectively with the other motions, the “Pending Motions”) in the above-

captioned case.

2. After reviewing the parties’ briefs in support of and in opposition to the

Pending Motions, the arguments of counsel at the April 10, 2019 hearing on the

Pending Motions, and other appropriate matters of record, the Court decides these

matters as set forth herein.

Wilson, Reives & Silverman, PLLC, by Jonathan Silverman, for Plaintiff
Warren Kirk Bell.
James, McElroy & Diehl, P.A., by Fred B. Monroe and Christopher
Thomas Hood, for Defendants Pine Needles Country Club, Inc., Bonnie
McGowan, Pat McGowan, Michael McGowan, Scotti McGowan, Peggy
Ann Miller, Kelly Miller, Blair Miller, Melody Miller, Kelly Ann Miller,
and Knollwood Partners, LLC.

Bledsoe, Chief Judge.

I.

BACKGROUND

3. Plaintiff Warren Kirk Bell (“Bell”) initiated this action against Defendants

on April 4, 2018, seeking judicial relief in connection with his minority membership

and ownership interests in Pine Needles Country Club, Inc. (“Pine Needles”) and

Knollwood Partners, LLC. Before Defendants filed responsive pleadings, both sides

reached agreements fully and finally resolving all matters in controversy. These

agreements were memorialized in three settlement agreements (the “Settlement

Agreements”), which were signed by all parties.

4. As part of their settlement, the parties contemplated that the Court would

incorporate the terms of the Settlement Agreements into a court order and stipulated

to the Court’s retention of jurisdiction to enforce the Settlement Agreements through

the Court’s contempt powers. The parties jointly moved the Court for the entry of a

consent order adopting their Settlement Agreements on August 10, 2018.

5. After considering the parties’ joint motion, the Court concluded that good

cause existed to grant the parties their requested relief. The Court therefore entered

a consent order incorporating and adopting the terms of the Settlement Agreements

on August 14, 2018 (the “Consent Order”). The Consent Order stated that it “fully
and finally resolved all matters in controversy in this action,” with an exception for

“those executory matters to be performed pursuant to the Settlement Agreements[.]”

(Consent Order Adopting and Incorporating Settlement Agreements 4 [hereinafter

“Consent Order”], ECF No. 32.) The Court retained jurisdiction to enforce the

Settlement Agreements. (Consent Order 4.)

6. The first of the Settlement Agreements (the “Pine Needles Agreement”)

provided for Defendants to purchase Bell’s shares (and Bell’s children’s shares) in

Pine Needles and laid out a process by which the appraisal and sale of those shares

would occur. The parties agreed that the price for Bell’s shares would be determined

by a panel of three business appraisers (the “Qualified Appraisers”). (Consent Order

Ex. 1 ¶ 4 [hereinafter “Pine Needles Agreement”], ECF No. 32.1.) This panel would

be made up of one appraiser selected by Bell, one appraiser selected by Defendants,

and a third appraiser chosen by the parties’ appointed appraisers. (Pine Needles

Agreement ¶ 4.) After gathering any needed information, each of the Qualified

Appraisers would tender an independent report containing their appraisal to the

parties. (Pine Needles Agreement ¶ 4.) Following a thirty-day period for comments

on these reports, during which the parties could agree to a purchase price, the final

appraised price of Bell’s shares would be determined by a majority vote of the

Qualified Appraisers. (Pine Needles Agreement ¶ 4.)

7. The parties also agreed to certain standards by which the Qualified

Appraisers would value Bell’s shares. Specifically, the Pine Needles Agreement

provided that “[t]he Fair Market Value standard of value shall be applied to
determine the Appraised Value of the Stock.” (Pine Needles Agreement ¶ 4.) The

agreement further stated that the Qualified Appraisers would apply a “going concern

premise of value, assume no material change in either the operation of the Company,

or the use of its assets, and assume a valuation date of June 30, 2018.” (Pine Needles

Agreement ¶ 4.)

8. Additionally, the Pine Needles Agreement allowed the Qualified Appraisers,

by a majority vote, to retain a licensed real estate appraiser “to determine the fair

market value of the real estate and improvements, as is, . . . owned by [Pine Needles]

as a going concern as of June 30, 2018.” (Pine Needles Agreement ¶ 4.) Should a real

estate appraiser be retained, the agreement provided that the Qualified Appraisers

were to “utilize the appraisal performed by the [real estate appraiser]” while

performing their own valuations. (Pine Needles Agreement ¶ 4.)

9. The parties appointed their Qualified Appraisers, and a third Qualified

Appraiser was agreed upon, by October 5, 2018. The Qualified Appraisers then voted

to employ the services of a real estate appraiser, and a candidate was selected by

November 19, 2018.

10. On January 15, 2019, Defendants filed their Motion in the Cause.

Defendants allege that Bell’s selected Qualified Appraiser, Ankura Consulting Group

(“Ankura”), and the non-party-appointed Qualified Appraiser, Mark Zyla (“Zyla”),

insist that the Qualified Appraisers should be able to direct the retained real estate

appraiser to conduct a valuation that considers the “highest and best use” of “excess”

or “surplus” land owned by Pine Needles and Mid-Pines Development Group, LLC
(“Mid-Pines”), a golf course and resort in which Pine Needles owns a 50% membership

interest. Defendants argue that the real estate appraiser and Qualified Appraisers

may not consider the highest and best use of company assets under the terms of the

Pine Needles Agreement.

11. Defendants’ Motion in the Cause therefore requests that the Court (i) order

the Qualified Appraisers to conform their work to the terms of the Pine Needles

Agreement and direct any retained real estate appraiser to value Pine Needles’ real

estate assets using a going concern premise of value and assuming no material

change in company operation or use of assets, and (ii) order Bell to mandate that

Ankura so complies with the Pine Needles Agreement. Defendants also ask that the

Court extend the deadline for completion of the appraisal process by ninety days,

order that Defendants shall not be required to produce further documents or

information to Ankura (excluding previously-agreed-to management interviews), and

tax the cost of these enforcement proceedings against Bell.

12. In response to Defendants’ motion, Bell filed his Motion to Modify and

Enforce. Bell argues that the Pine Needles Agreement does not limit the information

the Qualified Appraisers can consider in arriving at their independent valuations of

Bell’s shares and that Ankura and Zyla should be able to consider the highest and

best use of Pine Needles’ and Mid-Pines’ unused real estate assets to the extent they

find such information instructive to their appraisals. Bell also contends that

Defendants should not be allowed to interfere with the appraisal process under the

Pine Needles Agreement, which states that “the parties waive any right they may
have to contest the determination of the purchase price by the Qualified Appraisers.”

(Pl.’s Br. Supp. Mot. Partially Modify and Enforce Incorporated Settlement

Agreements and Opp’n Defs.’ Mot. Specific Performance and Injunctive Relief 4

[hereinafter “Pl.’s Br.”], ECF No. 49 (quoting Pine Needles Agreement ¶ 4).)

13. Bell thus asks the Court to order Defendants to cease any efforts to interfere

with the appraisal process and to not attempt to dictate further the terms of the

Qualified Appraisers’ engagements or methodologies. Bell also requests that the

Court require Defendants to produce additional documents identified by Ankura and

deny Defendants’ request for expenses and attorneys’ fees. Finally, while Bell agrees

that an extension of the appraisal process deadline is required, Bell asks that the

Court not set a hard deadline but instead order that the process be completed seventy-

five days after the real estate appraisal is finished.

II.

ANALYSIS

14. A party seeking enforcement of a settlement agreement may seek specific

performance of that agreement by petition or motion in the original action. State ex

rel. Howes v. Ormond Oil & Gas. Co., 128 N.C. App. 130, 136–37, 493 S.E.2d 793,

796–97 (1997). Where that party is entitled to have the settlement agreement

enforced, the trial court may enter a judgment in accordance with the terms found in

the settlement agreement. Id.

15. “Interpreting a contract requires the court to examine the language of

the contract itself for indications of the parties’ intent at the moment of execution.”
State v. Philip Morris USA Inc., 359 N.C. 763, 773, 618 S.E.2d 219, 225 (2005) (citing

Lane v. Scarborough, 284 N.C. 407, 409–10, 200 S.E.2d 622, 624 (1973)). When a

written contract clearly expresses the parties’ intent such that no ambiguities exist

“requiring resort to extrinsic evidence or consideration of disputed facts, the contract

may be interpreted as a matter of law.” Morrell v. Hardin Creek, Inc., 371 N.C. 672,

691, 821 S.E.2d 360, 372 (2018) (citing Lane, 284 N.C. at 410, 200 S.E.2d at 624).

A. Compliance with the Pine Needles Agreement’s Limiting Assumptions

16. Looking first at Defendants’ concerns about the Qualified Appraisers’

chosen methodologies, the Court concludes that the plain meaning of the Pine

Needles Agreement’s limiting language precludes the Qualified Appraisers, and any

selected real estate appraiser, from considering the highest and best use of assets

while determining the Fair Market Value of Bell’s shares.

17. The Pine Needles Agreement clearly instructs the Qualified Appraisers that

they are to assume “no material change in . . . the use of [Pine Needles’] assets” while

appraising Bell’s shares. (Pine Needles Agreement ¶ 4.) Thus, while John Levitske,

the Senior Managing Director of Ankura, is theoretically correct in his affidavit

testimony that a “potential buyer of a company could re-deploy or sell unused,

surplus, [or] excess” real estate, (Pl.’s Br. Ex. 1 ¶ 45(d)(ii) [hereinafter “Levitske Aff.”],

ECF No. 49.2), and that a buyer of a minority position in a company might “assume

economically rational and responsible management and deployment of assets,”

(Levitske Aff. ¶ 45(d)(iii)), in this instance, the parties have contracted that the

Qualified Appraisers cannot entertain such potential measures for valuation.
Selling, re-deploying, or changing the use of the real estate assets of Pine Needles

and Mid-Pines would necessarily constitute “material change in . . . the use” of those

assets, and the parties have agreed that the Qualified Appraisers shall assume no

such change will occur while valuing Bell’s shares.

18. As to restrictions placed upon the real estate appraiser, the Pine Needles

Agreement provides that any selected real estate appraiser is to determine “the fair

market value of the real estate and improvements, as is, that are owned by [Pine

Needles] as a going concern as of June 30, 2018.” (Pine Needles Agreement ¶ 4

(emphasis added).) On its own, the plain meaning of the phrase “as is” constricts the

real estate appraiser’s analysis to a valuation of Pine Needles’ and Mid-Pines’ real

estate assets “[i]n [their] existing condition without modification.” As Is, Black’s Law

Dictionary (8th ed. 2004). This language is incompatible with an appraisal

considering the real estate assets’ highest and best use.

19. Further, when one considers that the Pine Needles Agreement requires the

Qualified Appraisers to “utilize the appraisal performed by the [real estate

appraiser],” (Pine Needles Agreement ¶ 4), but prohibits the Qualified Appraisers

from considering potential changes in asset use, the phrase “as is” can only be read

as providing that the real estate appraiser shall assume that Pine Needles’ and Mid-

Pines’ real estate assets will not be altered or used differently in the future. To

conclude otherwise would result in contradictory terms: on the one hand allowing a

real estate appraiser to conduct a highest-and-best-use valuation and telling the

Qualified Appraisers to utilize that valuation, while on the other hand
simultaneously providing that the Qualified Appraisers should assume no change in

the use of assets. The Court declines to embrace such an internally inconsistent

construction of the Pine Needles Agreement. See Fairbanks, Morse & Co. v. Twin

City Supply Co., 170 N.C. 315, 321, 86 S.E. 1051, 1054 (1915) (“All instruments should

receive a sensible and reasonable construction, and not such a one as will lead to

absurd consequences[.]”).

20. For these reasons, the Court concludes that the Pine Needles Agreement

provides that neither the Qualified Appraisers nor their selected real estate appraiser

are to consider the highest and best use of Pine Needles’ or Mid-Pines’ real estate

assets in performing their engagements under the Pine Needles Agreement. While,

as Bell argues, the parties agreed to waive any right to contest the determined price

of Bell’s shares, the parties also agreed to a specific process for the appraisal of those

shares and are entitled to have the Pine Needles Agreement performed. See Ormond

Oil & Gas Co., 128 N.C. App. at 136–37, 493 S.E.2d at 797. The Court will therefore

order that the Qualified Appraisers and their selected real estate appraiser are not

to consider the highest and best use of Pine Needles’ or Mid-Pines’ real estate assets—

regardless of whether those real estate assets are considered used, unused, excess, or

surplus—while valuing Pine Needles’ assets or Bell’s shares.

21. Accordingly, the Court will grant Defendants’ Motion in the Cause to the

extent it seeks the Qualified Appraisers’ compliance with the terms of the Pine

Needles Agreement and deny Bell’s Motion to Modify and Enforce to the extent it
requests that the Court order Defendants not to challenge the Qualified Appraisers’

forecast methodologies.

B. Further Requests for Documents and Information

22. The Court turns next to Defendants and Bell’s dispute concerning further

disclosures of documents and information, beginning with Defendants’ requested

relief.

23. Defendants ask that the Court order that Defendants will not be required to

produce further documents or information in response to inquiries from Ankura. In

support of this request, Defendants argue that it would be inequitable to require them

to turn over further documents to Ankura now that the original deadline for the end

of the appraisal process has passed. Defendants also contend that some of the

document and information requests made by Ankura are motivated by bad faith.

Defendants do not object, however, to providing the selected real estate appraiser

with further documents and information or to Ankura interviewing the management

of Pine Needles or Mid-Pines to gather more information.

24. Bell argues that the Court should deny Defendants their requested relief

and presents affidavit testimony from Ankura explaining the proper purpose behind

each of Ankura’s document and information requests. (Levitske Aff. ¶ 52.) This

affidavit testimony goes on to states that while Ankura believes Defendants have not

fully responded to its document or information requests, it is willing to address any

remaining topics in management interviews in lieu of further information requests.

(Levitske Aff. ¶ 53.)
25. In resolving this dispute, the Court again begins with the language of the

Pine Needles Agreement, which states that the “Qualified Appraisers may view any

of the books or records of [Pine Needles] in conducting their respective valuations

including, but not limited to historical and current financial information for [Pine

Needles] and [Pine Needles’] assets[.]” (Pine Needles Agreement ¶ 4.) The

Agreement also allows the Qualified Appraisers to conduct interviews with the

parties to obtain information. (Pine Needles Agreement ¶ 4.) The parties agreed to

“cooperate fully with providing documents, interviews, and information requested by

any of the Qualified Appraisers.” (Pine Needles Agreement ¶ 4.)

26. The wording of the Pine Needles Agreement shows that the parties agreed

to give the Qualified Appraisers broad access to a wide range of information about

Pine Needles and to cooperate fully with requests for such information. Considering

this, the Court concludes Defendants have failed to show that Ankura’s document or

information requests have strayed outside the scope of information that Defendants

agreed to readily provide under the Pine Needles Agreement. Rather, while the Court

understands that certain requests made by Ankura may feel personal (such as

requests related to family weddings held at Pine Needles’ facilities), based upon the

evidence before the Court, Ankura appears to have had a valid, appraisal-related

reason for making such requests. (Levitske Aff. ¶ 52(c).)

27. Further, the Court concludes Defendants have failed to show how “it would

be inequitable for Defendants to be compelled to provide additional documents, or

other information” to Ankura “after the original deadline contemplated by the
settlement agreements,” (Defs.’ Mot. Cause Specific Performance Settlement

Agreements and Injunctive Relief 5, ECF No. 35), when Defendants acknowledge that

the deadline for the completion of the appraisal process should be extended and have

requested such an extension themselves.

28. Accordingly, in light of the plain language of the Pine Needles Agreement,

Defendants’ and Bell’s requests for an extension of the appraisal process, and

Defendants’ current failure to show that they will be prejudiced by providing further

information, the Court will not enter an order prohibiting Ankura, or the other

Qualified Appraisers, from making further reasonable requests for documents or

information from Defendants. The Court will therefore deny Defendants’ Motion in

the Cause to the extent it seeks such relief.

29. Turning to Bell’s request that the Court require Defendants to produce

further documents, the Court notes that certain representations by the parties and

Ankura appear to have resolved, for the moment, any need for court involvement.

Specifically, (i) Defendants represent they have turned over all responsive documents

in their control and possession, (ii) Ankura indicates that it is agreeable to addressing

areas of open inquiry through upcoming management interviews, and (iii) counsel for

Bell has agreed that there are no documents Ankura currently needs so long as

management interviews are allowed and appropriate follow-up information requests

are fulfilled.

30. Based upon these representations, and in light of the Court’s decision not to

prohibit the Qualified Appraisers from making further reasonable requests for
documents or information, the Court will deny Bell’s Motion to Modify and Enforce

to the extent it seeks to compel Defendants to produce records, documents, or

information based on the current record.

C. Extension of Deadline for Appraisal Process

31. The Court next examines the parties’ differing requests for an extension of

time to complete the appraisal process.

32. Defendants request that the deadline for the appraisal process be extended

ninety days. Bell asks that the Court set a deadline seventy-five days from the

completion of the real estate appraiser’s work.

33. At the April 10, 2019 hearing, the Court instructed counsel for both sides to

contact the selected real estate appraiser and obtain an estimate of the time it would

take to perform the requested real estate appraisal or appraisals. On April 12, 2019,

counsel informed the Court by e-mail that the real estate appraiser estimates he will

need seventy days to complete his engagement.

34. Considering the real estate appraiser’s seventy-day estimate, the Court

concludes that Bell’s proposed extension of time better allows for the real estate

appraiser, the Qualified Appraisers, and the parties to efficiently conclude the

appraisal process provided for in the Pine Needles Agreement. The Court will thus

grant Bell’s Motion to Modify and Enforce to the extent it requests such an extension,

deny Defendants Motion in the Cause to the extent it requests a differing extension

of time, and extend the deadline for the conclusion of the appraisal process through
and including seventy-five days after the completion of the real estate appraiser’s

work.

D. Defendants’ Request for Expenses and Attorneys’ Fees

35. Defendants’ Motion in the Cause also requests that the Court tax the cost of

this enforcement proceeding, including reasonable attorneys’ fees, against Bell, citing

the Pine Needles Agreement’s reciprocal attorneys’ fees provision. Defendants argue

they are entitled to such an award because Plaintiff, despite Defendants multiple

demands, “refused to instruct [Ankura] to follow the Pine Needles Agreement” while

having “the ability and capacity to instruct [Ankura] to abide by the Pine Needles

Agreement[.]” (Defs.’ Br. Supp. Mot. Cause Specific Performance Settlement

Agreements and Injunctive Relief 13, ECF No. 36.) After a review of the Pine Needles

Agreement and the parties’ arguments, the Court disagrees.

36. Under North Carolina law, “[i]f a business contract governed by the laws of

this State contains a reciprocal attorneys’ fees provision, the court . . . in

any . . . proceeding . . . involving the business contract may award reasonable

attorneys’ fees in accordance with the terms of the business contract.” N.C. Gen. Stat.

§ 6-21.6(c).

37. The Pine Needles Agreement contains the following reciprocal attorneys’

fees provision:

If, in any suit, action, proceeding, or arbitration between the Parties involving
this Agreement, it shall become necessary for either party to employ an
attorney to enforce or defend any of such party’s rights, remedies, or
obligations hereunder in a court of law . . . , the party substantially prevailing
in any such action or proceeding as determined by the court . . . shall be
entitled to an award of all reasonable attorneys’ fees and expenses incurred[.]
(Pine Needles Agreement ¶ 21.) As used in this paragraph, the designated term

“Parties” means the individuals comprising the “Bell Shareholders, the Miller

Shareholders, and the McGowan Shareholders,” as well as Pine Needles. (Pine

Needles Agreement 1.)

38. Reviewing this language, the Court notes that the Pine Needles Agreement

does not expressly state which party shall be obligated to pay awarded expenses or

attorneys’ fees. The Court also notes, however, that while there are multiple parties

to the contract, the parties deemed to use the non-designated, binary phrase “either

party” to describe the party employing an attorney to enforce or defend that party’s

rights. The Court concludes that this phrase implies that the attorneys’ fees provision

contemplates a situation in which at least two of the identified “Parties” are in a

dispute involving the Pine Needles Agreement and the action or inaction of one side

has necessitated the other’s commencing a suit, action, or proceeding, or defending

against the same. In essence, the Court concludes paragraph twenty-one of the Pine

Needles Agreement provides that where one party or set of parties substantially

prevails in a proceeding related to the Pine Needles Agreement, the party or parties

whose conduct resulted in the prevailing party or parties litigating the issue must

pay awarded expenses and attorneys’ fees. See Bicycle Transit Auth., Inc. v. Bell, 314

N.C. 219, 227, 333 S.E.2d 299, 304 (1985) (“Intention or meaning in a contract may

be manifested or conveyed either expressly or impliedly, and it is fundamental that

that which is plainly or necessarily implied in the language of a contract is as much
a part of it as that which is expressed.” (quoting Lane, 284 N.C. at 410, 200 S.E.2d at

625)).

39. The question before the Court then is whether Bell’s action or inaction here

necessitated Defendants’ Motion in the Cause. After a review of the record, the Court

must answer this question in the negative.

40. Contrary to Defendants’ arguments, regardless of whether Bell agreed or

disagreed with Ankura’s approach to its engagement, Bell did not have control over

Ankura such that Defendants’ Motion in the Cause could have been avoided.

Arbitrators, and appraisers serving in arbitration-like proceedings, are generally not

agents of the parties that appoint them, but neutral and disinterested third parties.

See Niagara Fire Ins. Co. v. Bishop, 39 N.E. 1102, 1106 (Ill. 1894) (“The arbitrators

selected, one by each side, ought not to consider themselves the agents or advocates

of the party who appoints them. When once nominated they ought to perform the

duty of deciding impartially between the parties, and they will be looked upon as

acting corruptly if they act as agents or take instructions from the other side.”); Conn.

Fire Ins. Co. v. Cohen, 55 A. 675, 677 (Md. 1903) (“It is fundamental to the conception

of such an appraisement, which is in effect an arbitration, that the persons selected

to make it should be free from the control or direction of the respective parties whose

interests have been confided to them and should act independently and upon their

own judgment.”); L.D. Jennings Co. v. N. River Ins. Co., 172 S.E. 700, 701 (S.C. 1934)

(“[A]rbitrators or appraisers are not agents, representatives, or advocates of the party

by whom they are selected[.]”); Martin v. Vansant, 168 P. 990, 994 (Wash. 1917) (“To
call an arbitrator an agent is an egregious misnomer, and any attempt to apply to

arbitration the rules pertaining to agency is far fetched and impractical.”); see also

Carolina-Va. Fashion Exhibitors, Inc. v. Gunter, 291 N.C. 208, 220, 230 S.E.2d 380,

389 (1976) (“An arbitrator acts in a quasi-judicial capacity and must render a faithful,

honest and disinterested opinion upon the testimony submitted to him.” (quoting

Fred J. Brotherton, Inc. v. Kreielsheimer, 83 A.2d 707, 709 (N.J. 1951))). Defendants

have not shown an exception to this rule existed here between Bell and Ankura.

41. Indeed, the Pine Needles Agreement provides no method for either

Defendants or Bell to exercise control over their respective Qualified Appraisers once

each selection was made and does not obligate either side to oversee the performance

of its chosen appraiser’s duties. Rather, once appointed, each Qualified Appraiser’s

work is subject to the terms of the Pine Needles Agreement, any engagement

documents between the parties and the Qualified Appraiser, and any applicable

professional rules of conduct or ethics. Thus, on the basis of the record before the

Court, the Court concludes that Ankura is not Bell’s agent, see State v. Weaver, 359

N.C. 246, 258, 607 S.E.2d 599, 606 (2005) (stating that “the principal’s control over

the agent” is an essential element of an agency relationship), and that Bell had no

ability to unilaterally compel Ankura to change its methodology in response to

Defendants’ demands.

42. Accordingly, the Court concludes that it was Ankura’s and Zyla’s forecast

failure to follow the Pine Needles Agreement’s terms, and not Bell’s conduct, that

necessitated Defendants’ Motion in the Cause. As a result, the Court concludes it
would be improper to require Bell to pay Defendants’ expenses, including attorneys’

fees, under the Pine Needles Agreement’s reciprocal attorneys’ fees provision. The

Court will thus deny Defendants’ Motion in the Cause to the extent it requests an

award of such expenses.

E. Bell’s Motion to Strike

43. Bell moves the Court to strike the affidavits of John T. Bosworth and George

Banister Hawkins (the “Bosworth and Hawkins Affidavits”), which were submitted

to the Court as exhibits to Defendants’ reply brief in support of Defendants’ Motion

in the Cause. Bell argues that the Bosworth and Hawkins Affidavits introduce new

opinions and arguments to the Court in violation of Business Court Rule (“BCR”) 7.7,

which provides “a reply brief must be limited to discussion of matters newly raised in

the responsive brief.” BCR 7.7.

44. Defendants respond to Bell’s Motion to Strike by contending that the

Bosworth and Hawkins Affidavits reply directly to Bell’s arguments supporting his

Motion to Modify and Enforce and opposing Defendants’ Motion in the Cause.

Defendants also ask the Court to summarily deny Bell’s Motion to Strike under BCR

7.2 for lack of accompanying brief and BCR 7.3 for failure to consult with opposing

counsel before filing.

45. A trial court’s ruling on a motion to strike an affidavit will not be disturbed

absent an abuse of discretion. Blair Concrete Servs., Inc. v. Van-Allen Steel Co., 152

N.C. App. 215, 219, 566 S.E.2d 766, 768 (2002).
46. Having carefully reviewed (i) Bell’s brief in support of his Motion to Modify

and Enforce and in opposition to Defendants’ Motion in the Cause, (ii) Defendants’

reply brief in support of their Motion in the Cause, and (iii) the Bosworth and

Hawkins Affidavits, the Court concludes that the Bosworth and Hawkins Affidavits

directly address arguments Bell raised in opposition to Defendants’ Motion in the

Cause and in support of his Motion to Modify and Enforce. The Court will therefore

deny Bell’s Motion to Strike.

III.

CONCLUSION

47. WHEREFORE, the Court hereby ORDERS as follows:

a. Defendants’ Motion in the Cause is GRANTED in part and DENIED

in part as follows:

i. To the extent the Defendants seek the Qualified Appraisers’

compliance with the terms of the Pine Needles Agreement,

Defendants’ Motion in the Cause is GRANTED. The Qualified

Appraisers and their selected real estate appraiser are hereby

ordered not to consider the highest and best use of Pine Needles’

or Mid-Pines’ real estate assets—regardless of whether those real

estate assets are considered used, unused, excess, or surplus—in

carrying out their engagements. Instead, consistent with the

Court’s reading of the Pine Needles Agreement, they are hereby

ordered to (i) assume a going concern premise of value, (ii) assume
no material change in the operations of Pine Needles or Mid-

Pines, (iii) assume no change in the use of Pine Needles’ or Mid-

Pines’ real estate assets, and (iv) assume a valuation date of June

30, 2018.

ii. For the reasons explained above, Ankura is not Bell’s agent, and

so to the extent Defendants seek an order requiring Bell to

mandate that Ankura will comply with the Pine Needles

Agreement, Defendants’ Motion in the Cause is DENIED.

iii. To the extent Defendants request an order providing that

Defendants will not be required to respond to further document

or information requests from Ankura, or any of the other

Qualified Appraisers, Defendants’ Motion in the Cause is

DENIED.

iv. To the extent Defendants request an extension of the appraisal

process deadline, Defendants’ Motion in the Cause is DENIED.

v. To the extent Defendants request an award of their expenses,

including reasonable attorneys’ fees, Defendants’ Motion in the

Cause is DENIED.

b. Bell’s Motion to Modify and Enforce is GRANTED in part and

DENIED in part as follows:

i. To the extent Bell seeks an order from the Court prohibiting

Defendants from challenging the Qualified Appraisers’ forecast
noncompliance with the terms of the Pine Needles Agreement,

Bell’s Motion to Modify and Enforce is DENIED.

ii. To the extent Bell asks the Court to order Defendants to respond

to Ankura’s document or information requests, Bell’s Motion to

Modify and Enforce is DENIED based on the current record.

iii. To the extent Bell requests an extension of the appraisal process

deadline, Bell’s Motion to Modify and Enforce is GRANTED. The

parties and Qualified Appraisers shall have through and

including seventy-five days after the selected real estate

appraiser tenders his final appraisal to complete the appraisal

process outlined in the Pine Needles Agreement. This extension

includes both the time for the Qualified Appraisers to tender their

independent reports and the time for the thirty-day comment

period provided for by the Pine Needles Agreement.

c. In the exercise of the Court’s discretion, Bell’s Motion to Strike is

DENIED.

d. The parties are hereby ordered to provide a copy of this Order to each

Qualified Appraiser as soon as practicable.

SO ORDERED, this the 23rd day of April, 2019.

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