EGAN v. BUENA VISTA, INC., 2024 NCBC 69

STATE OF NORTH CAROLINA
ONSLOW COUNTY
IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
24 CVS 2547
MICHAEL EGAN,
Plaintiff,
v.
BUENA VISTA, INC. d/b/a Saltwater
Grill, and TIMOTHY W. ANDERSON,
Defendants.
ORDER AND OPINION ON
DEFENDANTS’ MOTION FOR
ENFORCEMENT OF SETTLEMENT
AGREEMENT, TO STRIKE
COMPLAINT, AND FOR SANCTIONS
1. 	This is the second time this case has been in this Court. The individual
parties are both shareholders in Buena Vista, Inc., which does business as a
restaurant known as Saltwater Grill. 	After the parties reported the case settled in
Spring 2023, Plaintiff filed a voluntary dismissal without prejudice. 	He now brings
suit a second time, within a year of his dismissal, pursuant to Rule 41(a)(1) of the
North Carolina Rules of Civil Procedure (the “Rule[s]”). In response, Defendants have
jointly filed a Motion for Enforcement of Settlement Agreement, to Strike Complaint,
and for Sanctions (the “Motion”), (ECF No. 15).1
2. 	Having considered the Motion, the related briefing, the arguments of
counsel at a hearing on the Motion held 23 September 2024, and other relevant
1 The Court observes that the Motion is in fact three motions. Pursuant to Business Court
Rule 7.2, “[e]ach motion must be set out in a separate document” and “[a]ll motions must be
accompanied by a brief[.]” 	Given the Court’s determination below, it has considered
Defendants request for sanctions. However, the Court cautions counsel to adhere to this rule
in future filings.
Egan v. Buena Vista, Inc., 2024 NCBC 69.

matters of record, the Court hereby GRANTS in part and DENIES in part the
Motion.
Harvell and Collins, P.A., by Wesley A. Collins, for Plaintiff Michael
Egan.
Brooks, Pierce, McLendon, Humphrey & Leonard LLP, by Andrew L.
Rodenbough, Graham Whittington, and Thomas Glenn Varnum, for
Defendant Buena Vista, Inc. d/b/a Saltwater Grill.
Mewborn & DeSelms, Attorneys at Law, by Brett Joseph DeSelms, for
Defendant Timothy Anderson.
Earp, Judge.
I. 	FACTUAL AND PROCEDURAL BACKGROUND
3. 	Plaintiff 	Michael 	Egan 	and 	Defendant 	Timothy 	W. 	Anderson 	are
shareholders of Defendant Buena Vista, Inc. d/b/a Saltwater Grill (“Buena Vista”).
(Compl. ¶¶ 8-9, ECF No. 3.) 	On 14 September 2022, Mr. Egan was arrested and
charged with multiple counts of embezzlement from Buena Vista. 	(See Aff. of Brett
J. DeSelms [“DeSelms Aff.”] Ex. A, ECF No. 17.1.)
4. 	Two days after his arrest, Mr. Egan sued both Mr. Anderson and Buena
Vista alleging that he had been excluded from Buena Vista’s business and that Mr.
Anderson failed to cause Buena Vista to make distributions to Mr. Egan. 	See Egan
v. Buena Vista, Inc., 2022-CVS-828 (the “Original Suit”). 	The Complaint in the
Original Suit contained claims for fraud, breach of by-laws, conversion, breach of
fiduciary duty, aiding and abetting, unfair and deceptive trade acts and practices,
constructive trust, accounting, appointment of referee and receiver and distribution

of corporate assets, and piercing the corporate veil. (See generally, Original Suit, ECF
No. 3.)
5. 	On 12 December 2022, Mr. Anderson and Buena Vista separately moved
to dismiss the Original Complaint. (Original Suit, ECF Nos. 13, 15.) On 24 January
2023, while the motions to dismiss were pending, Mr. Egan’s counsel (“Mr. Collins”)
emailed Defendants’ counsel stating:
My client is willing to settle all matters upon receipt of $25,000.00
conditioned 	upon 	all 	criminal 	charges 	being 	dismissal 	[sic] 	with
prejudice. Obviously, your client only has but so much control over what
the DA will do, but I would expect that if he informs the DA that he
wants all charged dropped, that they will agree.
(DeSelms Aff. Ex. C at 4, ECF No. 17.3.) On 27 January 2023, Mr. Anderson’s counsel
(“Mr. DeSelms”) responded:
[I]t sounds like we have a deal. Our client is willing to pay $25k in
exchange for Egan relinquishing any and all ownership/positions in the
company, and all parties executing a global mutual release. I called
Walter Rodriguez (Egan’s criminal attorney) and he is going to check
with the DA’s office to see if they will dismiss the charges if our client
advises that he is no longer interested in pursuing the charges (or
something to that effect).
(DeSelms Aff. Ex. C at 3.)
6. 	Ultimately, the DA was unwilling to dismiss the charges against Mr.
Egan, but he was willing to allow Mr. Egan to enter into a deferred prosecution
agreement that provided for dismissal after Mr. Egan’s completion of community
service and a probationary period. 	(DeSelms Aff. Ex. C. at 3.) 	Mr. Collins did not
object to a resolution on this basis, as long as Mr. Egan agreed to it after consulting

with his criminal defense attorney, Mr. Rodriguez. (Aff. of Wesley A. Collins [“Collins
Aff.”] ¶ 21, ECF No. 38.1.)
7. 	On 9 February 2023, Mr. DeSelms emailed Mr. Collins asking whether
Mr. Egan had agreed to settle with deferred prosecution rather than dismissal. Mr.
DeSelms stated that Defendants “would certainly agree to deferred prosecution and
seek no restitution as part of that arrangement[,]” if it would settle the case.
(DeSelms Aff. Ex. D at 2, ECF No. 17.4.) 	The same day, Mr. Collins responded: “I
think we are settled. [Mr. Rodriguez] is supposed to be calling me about this[.]”
(DeSelms Aff. Ex. D at 1.)
8. 	Accordingly, on 10 February 2023, Mr. DeSelms emailed the Court’s law
clerk stating: “I happy [sic] to report that the parties have reached a settlement in
principle. We will need to draft the settlement agreement and circulate it before the
settlement is final. 	I imagine we can accomplish this in the next two weeks.”
(DeSelms Aff. Ex. E at 3, ECF No. 17.5.) 	Mr. Collins then responded: “This is
correct . . . [w]e will file the dismissal once the settlement is finalized.” (DeSelms Aff.
Ex. E at 1.) 	Mr. Collins then texted Mr. DeSelms on 11 February 2023 to confirm
that the case was settled “at 25k paid to Egan along with the other elements we have
discussed and emailed about.” (DeSelms Aff. Ex. B, ECF No. 17.2.)
9. 	Mr. DeSelms sent a proposed settlement agreement to Mr. Collins on
20 February 2023. 	(See DeSelms Aff. Ex. F, ECF No. 17.6; DeSelms Aff. Ex. G
[“Settlement Agreement”], ECF No. 17.7.) 	With respect to the civil suit, the
Settlement Agreement provided, among other things, that Buena Vista would pay

Mr. Egan a lump sum of $25,000 and that within five days of receiving the funds, Mr.
Egan would voluntarily dismiss the lawsuit with prejudice. (Settlement Agreement
§§ 3-4.) 	With respect to Mr. Egan’s criminal charges, the Settlement Agreement
provided:
[Buena Vista] and Anderson consent to Egan participating in a deferred
prosecution with respect to those certain criminal charges pending
against Egan . . . in the District Court Division of Onslow County, North
Carolina. [Buena Vista] and Anderson further warrant that . . . they
will not seek restitution from Egan as part of any such deferred
prosecution. Neither 	Anderson 	nor 	[Buena 	Vista] 	make 	any
representation that they have the power or ability to bind or influence
the Onslow County District Attorney to take any particular action, or
impose or not impose any particular requirement, with respect to any
prosecution of Egan.
(Settlement Agreement § 7(e).)
10. 	On 28 February 2023, Mr. Collins contacted ethics counsel at the State
Bar seeking to confirm that the Settlement Agreement referencing both the civil and
criminal claims was ethically proper. 	Ethics counsel responded that the settlement
agreement was proper “provided everyone understands that only the DA can decide
whether criminal charges will be dropped.” (DeSelms Aff. Ex. I at 4-5, ECF No. 17.9.)
After receiving confirmation from the State Bar, Mr. Collins emailed Mr. DeSelms:
“We . . . were able to determine that there were no changes needed to the proposed
settlement agreement. So, I think we are good to go. [Mr. Rodriguez] just needs to
review it and then I think we are ready to execute after his approval and discussion
with the DA.” 	(DeSelms Aff. Ex. H, ECF No. 17.8.) 	Mr. DeSelms then sent the
proposed Settlement Agreement to Mr. Rodriguez for his review. 	(DeSelms Aff.
Ex. H.)

11. 	On 1 March 2023, Mr. Rodriquez emailed Mr. DeSelms stating:
I cannot involve myself in the civil aspect of this matter. The
agreement 	made 	between 	the 	State 	and 	my 	client 	for 	deferred
prosecution is irrespective of the pending civil matter. Crossing over
lines of criminal and civil with what can be construed as potential
leverage of one case for another make [sic] us all very uncomfortable.
(Aff. of Wesley A. Collins [“Collins Aff.”] Ex. 14, ECF No. 38.2 (emphasis added).) Mr.
Collins was copied on the email and responded by forwarding the response he had
received from the State Bar. Mr. Collins stated: “See below from ethics counsel at the
State Bar. This should resolve any concerns.” (DeSelms Aff. Ex. I at 3.) Mr. DeSelms
then emailed Mr. Collins stating:
I 	am 	going 	to 	go 	ahead 	and 	have 	[Mr. 	Anderson] 	come 	in 	and
review/execute the settlement documents. I am not sure I understand
fully the reason [Mr. Rodriguez] is so concerned with reviewing the
settlement document, but with that said, I think your client has already
initiated the deferred prosecution process. I would encourage you to
discuss this matter with [Mr. Rodriquez] if you have any lingering
concerns on that issue . . . I would hope we could have signatures this
week.
(Collins Aff. Ex. 16, ECF No. 38.2.) 	Mr. Collins responded: “OK. Send over [the
executed Settlement Agreement] with the check.” (DeSelms Aff. Ex. I at 1.)
12. 	The executed Settlement Agreement as well as the check were sent to
Mr. Collins on 3 March 2023. (DeSelms Aff. Ex. I at 1; DeSelms Aff. Ex. J, ECF No.
17.10.) Mr. Collins deposited the settlement funds in the firm trust account pending
final execution of the Settlement Agreement and directed his paralegal, Ms. Turner,
to communicate with Mr. Egan regarding execution of the Settlement Agreement and
to confirm through Mr. Egan that Mr. Rodriguez had approved the settlement.
(Collins Aff. ¶¶ 35, 37.)

13. 	On 13 March 2023, the Court’s law clerk emailed counsel for the parties
requesting an update on the status of the settlement. (DeSelms Aff. Ex. K at 4, ECF
No. 17.11.) 	Mr. Collins responded the next day: “The case is settled. I believe the
settlement agreement is fully executed.” (DeSelms Aff. Ex. K at 3 (emphasis added).)
On 16 March 2023, Mr. DeSelms responded: “I wanted to confirm that this matter is
settled. The defendants have performed all of their obligations in accordance with the
settlement terms, and therefore agree that a dismissal with prejudice should be
forthcoming from the Plaintiff.” (DeSelms Aff. Ex. K at 2.) The Court requested that
the dismissal be filed on or before 6 April 2023. (DeSelms Aff. Ex. K. at 1.)
14. 	Despite Mr. Collins’ representation to the Court on 14 March 2023 that
he believed the Settlement Agreement was fully executed, Mr. Collins later learned
that Mr. Egan had not responded to Ms. Turner’s attempts to contact him, and that
the Settlement Agreement had not been executed. (Collins Aff. ¶ 39, Ex. 19.) On 15
March 2023, Mr. Collins emailed Mr. Egan stating: “The court keeps asking for the
status of the settlement and I keep telling them it is settled. Therefore, the court
wants the dismissal filed. I cannot file the dismissal until you sign the agreement.”
(Second Aff. Wesley A. Collins [“Second Collins Aff.”] Ex 2, ECF No. 44.1 (emphasis
added).)
15. 	By 27 March 2023, Mr. Egan still had not executed the Settlement
Agreement. (Collins Aff. Ex. 21, ECF No. 38.2.) Accordingly, on 28 March 2023, Mr.
Collins again contacted Mr. Egan stating:
I am happy to answer any questions you may have, but you told me
specifically that you wanted the criminal matter to be resolved and you

did not care if you got any money out of the civil matter and directed me
to try to make that happen. We agreed that I would offer the $25K
paid to you on the civil matter along with the victim doing all he
could do to drop all charges, with the understanding that the
final decision is with the DA. I did as you said and reached that
settlement.
The settlement agreement and $25K is here at my office and has been
for weeks.
Can you come see me at 3:00 today?
(Second Collins Aff. Ex. 2, ECF No. 44.1 (emphasis added).) 	Mr. Egan responded:
“[W]hen is a good time to set up a conference call so I can set some time aside. I’m not
able to come in at 3pm today. Yes the criminal matter was my main concern and the
agreement was based on that being dismissed.” (Second Collins Aff. Ex. 2, ECF No.
44.1.)
16. 	On 29 March 2023, Mr. Collins then emailed both Mr. Egan and Mr.
Rodriguez:
The court is very concerned that the settlement agreement has not yet
been signed and the dismissal filed. I understand that the case is
settled but you have questions about the terms of the settlement
agreement. I have been trying to reach you about this but have not been
able to get through to you. I need you to call me immediately.
[Mr. Rodriguez], do you know what is going on here? What concerns
[Mr. Egan] has?
(Second 	Collins 	Aff. 	Ex. 	2, 	ECF 	No. 	44.1 	(emphasis 	added).) 	Mr. 	Rodriguez
responded:
I have attempted to remain out of the civil matter for the very issues I
discussed with you and [Mr. DeSelms]. I advised both of you as well as
Mr. Egan that both the DA and I were uncomfortable with moving
forward 	on 	a 	leveraged 	civil 	v 	criminal 	issue. The 	DA 	was 	very
clear. They would not enter into any agreement for dismissal for the

criminal charge in relation to the civil matter. After speaking to the DA,
he agreed, irrespective of the civil matter, that they would treat this case
no different than they would treat any other criminal case similarly
situated. The disposition of the charges has not been by dismissal as
contemplated by the agreement tendered by opposing counsel. The
charges were disposed of in accordance with the conversations I had
with the prosecutor and the chief ADA by deferred prosecution. Mr.
Egan has relayed to me that he is unhappy with the resolution of this
case as the agreement was that the charges be dismissed. These charges
have not been dismissed. This is an ethical line the prosecutor indicated
he was not willing to cross. That said, I am not sure the agreement as
contemplated has been fulfilled by the opposing counsel. Moreover, and
on a personal note, I am surprised with a settlement that leaves Mr.
Egan with over $80,000 in business credit card bills, attorney fees for
the criminal charges and the majority of the settlement proposed going
to civil attorney fees. I have relayed this concern to Mr. Egan. I am
further concerned that if opposing counsel or his client made statements
that if Mr. Egan dismissed the civil suit, they would not pursue criminal
charges, that there has been no investigation into potential felonious
activity 	by 	the 	other 	side 	under 	[N.C.G.S.] 	14-118.4 	and 	State 	v
Greenspan, 29 N.C. App. 583. If, as you and Mr. Egan have relayed to
me, this statement did occur, I believe it would be prudent to have an
investigation addressed under this or one of the lesser included felony
charges.
(Collins Aff. Ex. 22, ECF No. 38.2; see also Tr. of Walter Rodriquez Dep. [“Rodriguez
Dep.”] 16:14-17:8, 24:10-13, 25:5-13, ECF No. 43.) 	Mr. Rodriguez also represented
that he “explicitly explained” to Mr. DeSelms “that the state (Chief ADA) refused to
address anything related or seeming to look like a quid pro quo regarding the civil
case[]” and “that the DA was providing deferred prosecution for the purpose of
disposing of the criminal case irrespective of the civil action pending.” 	(Collins Aff.
Ex. 24, ECF No. 38.2.)
17. 	Mr. Collins asserts that the above email from Mr. Rodriquez on 29
March 2023 was the first time he learned “that the proposed civil resolution did not
improve the criminal matter.” 	(Collins Aff. Ex. 25, ECF No. 38.2.) 	Instead, Mr.

Collins “understood that the resolution of the criminal matter was in part based on
the fact that the victim would not further ‘press charges’ and that there would be no
restitution required through the criminal matter.” 	(Second Collins Aff. Ex. 2, ECF
No. 44.1.)
18. 	Mr. Rodriguez testified that the DA’s office consistently offers deferred
prosecution “provided that there are not excessive restitution matters and provided
that the victim is on board.” 	(Rodriguez Dep. 19:18-22.) 	Mr. Rodriguez further
testified that it is standard for these judgments to include restitution if the victim is
seeking restitution. (Rodriguez Dep. 40:8-11.) However, no restitution was ordered
in this case. 	(Rodriguez Dep. 36:14-16, 37:1-4.) 	According to Mr. Rodriguez, the
prosecutor “made it very clear that with the civil things going on, he was not entering
a request for restitution because that was going to have to be settled by the civil case.”
(Rodriguez Dep. 37:16-21.)
19. 	After learning that Messrs. Egan and Rodriguez did not, in fact, approve
the terms of the Settlement Agreement, Mr. Collins advised Mr. Egan that if he
wanted to “back out of the settlement,” that could be accomplished. (Second Collins
Aff. Ex. 2, ECF No. 44.1.) A notice of voluntary dismissal without prejudice was then
filed on 5 April 2023. (See Original Suit, ECF No. 22 [“Voluntary Dismissal”].) The
Voluntary Dismissal provided:
The undersigned counsel believed that Plaintiff and Plaintiff’s criminal
defense counsel approved the terms of the settlement and were waiving
the condition that the district attorney dismiss the criminal charges
outright and understood that a deferred prosecution program may be
required. The undersigned, mistakenly believing that the instant case
was resolved, emailed to the Court that the case is settled. On March

29, 2023, the undersigned counsel contacted Plaintiff’s criminal defense
counsel 	and inquired as 	to 	why 	Plaintiff 	had not 	yet 	signed the
settlement agreement. On that same day, for the first time, Plaintiff’s
criminal defense counsel advised the undersigned that the Plaintiff did
not agree with the terms of the settlement because the district attorney
was unwilling to dismiss the criminal charges with prejudice. In other
words, Plaintiff and Plaintiff’s criminal defense attorney had not, in fact,
agreed to waive the condition that the criminal charges be dismissed for
the settlement to be binding on all parties. For a period of time prior to
March 29, 2023, the undersigned counsel believed that the instant case
was settled, but has since learned that this was never the case.
Mr. Egan formally entered into a deferred prosecution agreement on 15 May 2023.
(DeSelms Aff. Ex. A.)
20. 	Subsequently, Mr. Egan initiated this action by filing the Complaint on
5 April 2024. 	The Complaint alleges the same central facts as the complaint in the
Original Suit. (Compare Compl., ECF No. 3, with Original Suit, ECF No. 3.)
21. 	The case was designated as a mandatory complex business case on
8 May 2024 and assigned to the undersigned the same day. (ECF Nos. 1, 2.)
22. 	Defendants filed the Motion on 17 June 2024. 	After full briefing, the
Court held a hearing on the Motion on 23 September 2024, at which all parties were
represented by counsel. (See Not. Hr’g., ECF No. 48.)
23. 	The Motion is now ripe for disposition.
II. 	LEGAL STANDARD
24. 	A party seeking to enforce a settlement agreement may either file a
motion in the pending action or bring a separate proceeding to enforce the agreement.
Hardin v. KCS Int’l, Inc., 199 N.C. App. 687, 694 (2009). When enforcement is sought
by motion in a pending action, “the summary judgment standard of review applies.”

McCarthy v. Hampton, 2015 NCBC LEXIS 70, at *9 (N.C. Super. Ct. July 1, 2015)
(citing Hardin, 199 N.C. App. at 695).
25. 	“Summary 	judgment 	is 	appropriate 	‘if 	the 	pleadings, 	depositions,
answers to interrogatories, and admissions on file, together with the affidavits, if any,
show that there is no genuine issue as to any material fact and that any party is
entitled to a judgment as a matter of law.’ ” 	Da Silva v. WakeMed, 375 N.C. 1, 10
(2020) (quoting N.C. R. Civ. P. 56(c)). 	“A genuine issue of material fact ‘is one that
can be maintained by substantial evidence.’ ” 	Curlee v. Johnson, 377 N.C. 97, 101
(2021) (quoting Ussery v. Branch Banking & Tr. Co., 368 N.C. 325, 335 (2015)).
“Substantial evidence is such relevant evidence as a reasonable mind might accept
as adequate to support a conclusion and means more than a scintilla or a permissible
inference.” DeWitt v. Eveready Battery Co., 355 N.C. 672, 681 (2002) (cleaned up).
26. 	The 	party 	moving 	for 	summary 	judgment 	“bears 	the 	burden 	of
establishing that there is no triable issue of material fact[.]” 	Cummings v. Carroll,
379 N.C. 347, 358 (2021) (citation and quotation marks omitted). 	“[T]he trial judge
must view the presented evidence in a light most favorable to the nonmoving party.”
Belmont Ass’n v. Farwig, 381 N.C. 306, 310 (2022) (quoting Dalton v. Camp, 353 N.C.
647, 651 (2001)).
III. 	ANALYSIS
27. 	Defendants ask the Court to “hold Egan and his counsel to the deal they
negotiated and accepted, and from which they have already received the benefit of
the bargain, by enforcing the settlement agreement, striking Egan’s Complaint, and

entering sanctions against Egan and his counsel pursuant to Rule 11 and the Court’s
inherent authority.” 	(Br. Supp. Mot. Enforcement Settlement Agreement, to Strike
Compl., and for Sanctions [“Defs.’ Br. Supp.”] 2, ECF No. 16.)
28. 	Plaintiff responds that a settlement was always dependent on his
criminal attorney (Mr. Rodriquez) agreeing to its terms and, because that condition
was never satisfied, no settlement agreement was reached. 	Therefore, Plaintiff
concludes there is no agreement to enforce, and this Motion should be denied. (Pl.’s
Mem. Opp. Defs.’ Mot. Enforcement of Settlement Agreement, to Strike Compl., and
for Sanctions [“Pl.’s Br. Opp.”] 9, ECF No. 38.)
A. Existence of a Settlement Agreement
29. 	Defendants 	argue 	that 	the 	Court 	should 	enforce 	the 	Settlement
Agreement because: (1) the parties’ correspondence proves that a settlement was
reached; (2) Mr. Egan is bound by his counsel’s representations to Defendants and to
the Court, and (3) Mr. Egan ratified the terms of the settlement. (Defs.’ Br. Supp. 11-
18.) In response, Mr. Egan asserts that there are genuine issues of material fact that
preclude the Court from determining that a settlement agreement exists. 	(Pl.’s Br.
Opp. 2-13.)
30. 	“A compromise and settlement agreement terminating or purporting to
terminate a controversy is a contract, to be interpreted and tested by established
rules relating to contracts.” 	Harris v. Ray Johnson Constr. Co., 139 N.C. App. 827,
829 (2000). 	A valid contract requires assent, mutuality of obligation, and definite

terms. 	Charlotte Motor Speedway, LLC v. Cnty. of Cabarrus, 230 N.C. App. 1, 7
(2013).
31. 	In addition, “[f]or an agreement to constitute a valid contract, the
parties’ minds must meet as to all the terms. If any portion of the proposed terms is
not settled, or no mode agreed on by which they may be settled, there is no
agreement.” Chappell v. Roth, 353 N.C. 690, 692 (2001) (quoting Boyce v. McMahan,
285 N.C. 730, 734 (1974)); see also Snyder v. Freeman, 300 N.C. 204, 218 (1980) (“The
essence of any contract is the mutual assent of both parties to the terms of the
agreement so as to establish a meeting of the minds.”). 	In determining whether
mutual assent exists, the Court considers the parties’ words and acts from the
perspective of a reasonable person. Howell v. Smith, 258 N.C. 150, 153 (1962).
32. 	Here, Mr. Egan argues that there is a genuine issue of material fact
regarding his agreement to deferred prosecution, rather than dismissal, of the
criminal charges brought against him. 	The Voluntary Dismissal states that “[Mr.
Egan] did not agree with the terms of the settlement because the district attorney
was unwilling to dismiss the criminal charges with prejudice.” 	(See Voluntary
Dismissal at 2.)
33. 	It is undisputed that Mr. Egan’s initial offer to settle all claims in the
civil suit was conditioned upon the criminal charges against him being dismissed with
prejudice. 	(See DeSelms Aff. Ex. C at 4 (“My client is willing to settle all matters
upon receipt of $25,000 conditioned upon all criminal charges being dismissal [sic]
with prejudice.”). 	However, by 30 January 2023, after it was apparent that the DA

was not willing to dismiss the charges, the evidence is undisputed that “the parties
never again discussed . . . the dismissal of criminal charges as part of any settlement.”
(DeSelms Aff. Ex. C at 3; Defs.’ Br. Supp. 11.)
34. 	Nevertheless, Mr. Egan contends that once the deferred prosecution
term was proposed, Mr. Rodriguez’s consent was a condition precedent to an
agreement. 	(Pl.’s Br. Opp. 7.) 	He argues that his counsel, Mr. Collins, mistakenly
believed that Defendants’ counsel had secured Mr. Rodriguez’s approval but later
learned “in hindsight” that he did not. 	Mr. Egan maintains that his counsel never
agreed that Mr. Rodriguez’s approval was not a condition precedent to a settlement.
(Pl.’s Br. Opp. 9.)
35. 	The Court concludes that the parties reached a settlement agreement.
There is no dispute that Mr. Egan hired Mr. Collins and vested Mr. Collins with
authority to negotiate a settlement on his behalf. 	On 14 March 2023, Mr. Collins
unequivocally represented to both the Court and Defendants’ counsel that the case
was settled. (DeSelms Aff. Ex. K at 3.) Importantly, this statement was made after
Mr. Rodriguez made it clear in his 1 March 2023 email that he could not involve
himself in the civil aspect of this case. 	(See Collins Aff. Ex. 14, ECF No. 38.2.)
Nothing about Mr. Collins’ statement to the Court and Defendants on 14 March
signaled that the settlement was still conditioned on Mr. Rodriguez’s approval.2
2 To the extent Mr. Egan argues that there was no consideration for the Settlement
Agreement because he had already agreed with the DA to enter a deferred prosecution
agreement by 1 March 2023, (see Collins Aff. Ex. 14, ECF No. 38.2), Mr. Egan fails to
understand the nature of the consideration Defendants agreed to provide. Defendants agreed
that they would consent to deferred prosecution and would not seek restitution, both of which
they did. (Settlement Agreement § 7(e).) They also agreed to pay Egan $25,000.

36. 	As the Voluntary Dismissal reflects, any misunderstanding regarding
the settlement was unilateral, occurring only between Plaintiff and his own counsel,
and not between the parties. 	(See Voluntary Dismissal at 2 (“The undersigned,
mistakenly believing that the instant case was resolved, emailed to the Court that
the case is settled.”).)
37. 	There is other evidence of a misunderstanding between Mr. Collins and
Mr. Egan in the record. (See Collins Aff. Ex. 25, ECF No. 38.2 (29 March 2023 email
from Mr. Collins to Mr. Rodriguez stating, “I was under the impression that you were
ok with the agreement[.]”); Second Collins Aff. Ex. 2, ECF No. 44.1 (29 March 2023
email from Mr. Collins to Messrs. Rodriguez and Egan stating, “I thought we were
settled.”); Collins Aff. Ex. 26, ECF No. 38.2 (30 March 2023 email from Mr. Collins to
Mr. Rodriguez stating, “I thought we were all on the same page, but apparently, we
were not.”); Second Collins Aff. Ex. 2, ECF No. 44.1 (29 March 2023 email from Mr.
Collins advising Mr. Egan that he could “back out of the settlement.”).) Unfortunately
for Plaintiff, however, a misunderstanding between a client and his counsel does not
prevent the formation of a contract between Plaintiff and Defendants when, after
receiving the draft Settlement Agreement, Mr. Collins unequivocally told both
Defendants and the Court, “the case is settled.”
38. 	“[T]here is a presumption in North Carolina in favor of an attorney’s
authority to act for the client he professes to represent.” 	Smith v. Young Moving &
Storage, Inc., 167 N.C. App. 487, 493 (2004) (citation and quotation marks omitted).
Unless Plaintiff meets his burden of rebutting this presumption, Defendants are

entitled to rely on it. 	Here, as in Smith, Plaintiff does not argue that his attorney
was without authority to settle his claim. 	Id. 	Consequently, when Mr. Collins told
Defendants and the Court, “the case is settled,” it was.
39. 	In Harris v. Ray Johnson Constr. Co., 139 N.C. App. 827 (2000), the
plaintiff argued that she was not bound by a settlement agreement because, although
she authorized her attorney to negotiate on her behalf, there was a misunderstanding
between them as to the amount she was to receive from the settlement. Specifically,
the plaintiff intended to net $2,000, and her attorney thought she meant he could
settle for the gross amount of $2,000. The Court of Appeals held:
Plaintiff’s evidence here establishes Mr. Adams had actual authority to
settle her claim for an amount of $ 2000. Plaintiff retained Mr. Adams
as her counsel in this matter and expressly authorized him to settle the
claim for an amount in which plaintiff and her counsel thought they had
agreed on at the time . . . . Mr. Adams “understood” that he was to settle
the claim for $ 2000. Only in hindsight did it become clear that Mr.
Adams and his client had not reached a clear agreement as to the proper
amount. From this evidence we conclude that Mr. Adams reasonably
believed at the time of negotiation that he could settle the case for
$ 2,000. Thus, he possessed actual authority to settle in that amount,
though it was unfortunately conferred by want of ordinary care. Plaintiff
has failed to meet her burden of proving Mr. Adams lacked authority
and she is bound by his acceptance of defendant’s settlement offer[.]
Id. at 830.
40. 	Similarly, in Purcell Int’l Textile Grp., Inc. v. Algemene AFW N.V., 185
N.C. App. 135 (2007), the defendants’ counsel agreed to the terms of a settlement in
which the defendants would pay the plaintiff $ 850,000.00 in three payments over a
six-month period. While the defendants’ counsel represented to the plaintiff that he
had obtained his clients’ approval, the total amount ($ 850,000.00) exceeded the

authority the defendants had given him. 	To make matters worse, the defendants’
counsel never informed the defendants of the agreement, never sent the defendants
the written agreement, forged the signatures of the defendants on the agreement,
and did not obtain a signed confession of judgment. 	Nevertheless, the trial court
enforced the settlement over the defendants’ objections, and the defendants appealed.
185 N.C. App. at 137-38. In upholding the trial court’s decision, the Court of Appeals
held:
Hinnant’s actions were binding on defendants, who hired him to act as
their 	agent 	in 	handling 	the 	case 	and 	negotiating 	a
settlement. Defendants granted Hinnant the authority to settle the case
and never stripped him of that authority. Based on his actual authority,
Hinnant 	engaged 	in 	negotiations 	offering 	settlement 	figures 	of
$ 400,000.00 and $ 500,000.00, and plaintiff declined both offers. Each
time plaintiff declined a settlement offer, Hinnant established a pattern
of 	following 	up 	with 	a 	new 	offer 	featuring 	a 	larger 	amount 	of
money. Thus, when Hinnant offered a settlement of $ 850,000, which
exceeded 	his 	actual 	authority, 	plaintiff 	could 	have 	reasonably
assumed that offer was within Hinnant’s authority and had no
reason to know that Hinnant had exceeded his limits. Thus, the
agreement negotiated by Hinnant bound defendants despite the fact
that 	Hinnant 	exceeded 	his 	authority 	and 	violated 	his 	duty 	to
defendants.
Id. at 139.
41. 	The record in this case shows that Mr. Egan authorized his counsel to
negotiate a settlement on his behalf. 	On 14 March 2023, Mr. Collins unequivocally
represented to both Defendants’ counsel and the Court that the case was settled. As
in Harris and Purcell, the fact that Mr. Collins learned in hindsight that Mr. Egan
did not approve the settlement because it did not include a dismissal of the criminal

charges against him does not change the fact that a settlement was reached when
Mr. Collins, acting as Mr. Egan’s agent, said so.3
42. 	Accordingly, the Court determines that a settlement was reached in this
matter. 	Remaining to be determined are the terms of that settlement.4 	The
undisputed facts establish them, as well.
B. Terms of the Settlement Agreement
43. 	On 20 February 2023, Defendants’ counsel forwarded a draft Settlement
Agreement to Mr. Collins for review. 	(Settlement Agreement, ECF No. 17.7.) 	The
draft Settlement Agreement included a release providing that Mr. Egan would:
release[] and forever discharge[] Anderson and [Buena Vista] . . . from
any and all actions, suits, charges, claims, appeals, damages, liabilities,
and complaints that Egan has or may have . . . relating to or resulting
from any acts, occurrences, omissions, or events arising on or before the
date of this Agreement, including without limitation, all claims relating
to or arising out of: (1) Egan’s acts or involvement as a shareholder,
director, officer, and/or employee of [Buena Vista]; (2) any tax liabilities
related to the Redemption and Settlement Funds and/or Egan’s prior
status as a shareholder of [Buena Vista]; and/or (3) those claims that are
asserted, or could have been asserted, and all claims involving the
continuing effects of such acts, occurrences, or events, whether known
or unknown, asserted or unasserted, and including but not limited to
any and all claims made or which could have been made in the [Original
Suit], as well as any other claims based on constitutional, statutory,
common law, or regulatory grounds, which Egan now has, owns, or
holds, or claims to have, own or hold, or which he had, owned, or held or
claimed to own at any time before execution of this Agreement, against
any and all of the Buena Vista Released Parties.
3 To be sure, dismissal of the criminal charges was a term over which Defendants had no
control and which Defendants could not provide, as they made clear in the draft settlement
agreement they prepared and sent to Mr. Collins.
4 Given the Court’s determination that a settlement was reached based on Mr. Collins’
statement to the Court and Defendants’ counsel on 14 March 2023, the Court does not
consider Defendants’ argument that Plaintiff ratified an agreement or that Plaintiff is
judicially estopped from arguing the absence of an agreement.

(Settlement Agreement § 6(e).)
44. 	A few days later, on 1 March 2023, Mr. Rodriquez made it clear that he
would not be involved with the civil settlement. 	And on 3 March 2023, Defendants’
counsel, at Mr. Collins’ request, transmitted the Settlement Agreement, executed by
his clients, along with a $25,000 check to Mr. Collins. (DeSelms Aff. Exs. I-J.) It was
only after all of this had occurred that Mr. Collins emailed the Court and Defendants’
counsel 	on 	14 	March 	2023 	agreeing 	that 	the 	case 	was 	settled. 	He 	did 	not
communicate any remaining precondition.
45. 	After Mr. Collins sent his 14 March 2023 email, he continued in his
belief that the draft Settlement Agreement was final. 	Over the next two days, he
sent multiple emails to Mr. Egan instructing him to sign the Settlement Agreement
that Defendants’ counsel had prepared. 	(Second Collins Aff. Ex. 2, ECF No. 44.1.)
On 28 March 2023, Mr. Collins emailed his client: “We agreed that I would offer the
$25K paid to you on the civil matter along with the victim doing all he could do to
drop all charges, with the understanding that the final decision is with the DA. I did
as you said and reached that settlement.” (Second Collins Aff. Ex. 2, ECF No.
44.1, emphasis added.)
46. 	The undisputed evidence presented establishes that the terms of the
parties’ settlement are as stated in the document prepared by Defendants’ counsel
and forwarded to Mr. Collins on 20 February 2023. 	Section 6(e) of the Settlement
Agreement bars the claims in this action. Mr. Egan has released Defendants “from
any 	and 	all 	actions, 	suits, 	charges, 	claims, 	appeals, 	damages, 	liabilities, 	and

complaints . . . relating to or resulting from any acts, occurrences, omissions, or
events arising on or before the date of this Agreement.”
47. 	The allegations in the Complaint describe events that took place well
before the Settlement Agreement was reached. The claims attempted arise from Mr.
Egan’s involvement with Saltwater Grill (Buena Vista, Inc.), a relationship that
ended in March 2020. 	Because Mr. Egan’s claims are barred by the terms of the
Settlement Agreement, they are hereby DISMISSED with prejudice.
C. Sanctions
48. 	Given this outcome, Defendants assert that the Court should sanction
Mr. Egan and his counsel under Rule 11 of the North Carolina Rules of Civil
Procedure (the “Rule(s)”). 	Defendants argue that both Mr. Collins (who signed the
Complaint) and Mr. Egan (who verified the Complaint) should be sanctioned under
Rule 11 for signing a pleading without a good-faith basis for believing it was valid.
(Defs.’ Br. Supp. 20-23.)
49. 	Further, Defendants assert that both Plaintiff and his counsel should be
sanctioned pursuant to the Court’s inherent authority “for their manipulation and
abuse of the legal process.” (Defs.’ Br. Supp. 23.) Defendants contend that Plaintiff
and his counsel failed to brief motions to dismiss filed in the earlier action and, in an
effort to avoid the Court’s ruling on those uncontested motions, Plaintiff said the case
was settled, and then dismissed and refiled his claims. 	(Defs.’ Br. Supp. 25.) 	In
addition, Defendants maintain that they have been prejudiced by Plaintiff’s action

because they gave up the right to seek restitution by relying on the representations
of Plaintiff’s counsel that doing so would settle the case. (Defs.’ Br. Supp. 26.)
50. 	Mr. Egan responds that he had a “good faith and honest belief that no
settlement agreement was reached such that it is proper to bring the suit again
pursuant to Rule 41.” (Pl.’s Br. Opp. 14.)
Findings of Fact5
51. 	Based 	on 	the 	record 	before 	it, 	the 	Court 	finds 	that 	a 	lapse 	in
communication occurred between Plaintiff and his counsel. 	That lapse, combined
with Mr. Collins’ confusion regarding the state of affairs with respect to the criminal
charges, Mr. Rodriquez’s hesitance to clarify matters for Mr. Collins out of concern
that linking resolution of the civil and criminal matters could lead to ethical
violations,6 and Mr. Collins’ assumption that Mr. DeSelms was aware of Mr.
5 To the extent any finding of fact is more appropriately characterized as a conclusion of law
or vice-versa, it should be reclassified. See N.C. State Bar v. Key, 189 N.C. App. 80, 88 (2008)
(“[C]lassification of an item within [an] order is not determinative[.]”).
6 For example, 2008 Formal Ethics Opinion 15 cautions:
[A] lawyer must be careful to avoid the criminal offense of compounding a
crime, which in turn would violate the prohibition in Rule 8.4(b) against
“criminal act[s] that reflect adversely on the lawyer’s honesty, trustworthiness,
or fitness as a lawyer in other respects.” This means that the amount paid to
settle the civil claim may not exceed the amount to which the plaintiff would
be entitled under applicable law; in other words, no compensation may be paid
to the plaintiff for the plaintiff’s silence. Moreover, the lawyers for both the
plaintiff and the defendant must also be careful to avoid any implication that
the settlement includes the client’s agreement to testify falsely or to evade a
subpoena in a criminal proceeding should criminal charges subsequently be
brought by the authorities. Such conduct clearly violates the prohibitions in
Rule 3.4(a) and (b) on counseling or assisting another to destroy or hide
evidence, testify falsely, or avoid serving as a witness. Finally, if there is a legal
requirement to report certain conduct to the authorities, as, for example, there
is with child abuse and neglect, a lawyer may not participate in a settlement

Rodriquez’s position with respect to the terms of the settlement, all led Mr. Collins to
represent to Defendants and the Court that the case was settled when, in fact, he did
not have his client’s approval to settle the case.
52. 	The Court further finds that it was important to Mr. Collins that Mr.
Rodriquez review and approve the Settlement Agreement before it was final, that he
communicated this condition to Mr. DeSelms, and that on 14 March 2023, when he
said that the case was settled, Mr. Collins genuinely believed that Mr. Rodriquez had
approved – or at least had no objection to – the settlement.
53. 	The Court finds that Mr. Collins did not discover his mistake until 29
March 2023, at which time he concluded that he was the only one not “in the know”
agreement that includes a non-reporting provision that is illegal. See, e.g,
N.C.G.S. 7B-301.
(08 FEO 15, www.ncbar.gov/for-lawyers/ethics/adopted-opinions/2008-formal-ethics-
opinion-15/.)
Likewise, 98 Formal Ethics Opinion 19 provides:
Although the rule prohibiting threats of criminal prosecution to gain an
advantage in a civil matter was omitted from the Revised Rules of Professional
Conduct, a lawyer representing a client with a civil claim that also constitutes
a crime should adhere to the following guidelines: (1) a threat to present
criminal charges or the presentation of criminal charges may only be made if
the lawyer reasonably believes that both the civil claim and the criminal
charges are well-grounded in fact and warranted by law and the client’s
objective is not wrongful; (2) the proposed settlement of the civil claim may not
exceed the amount to which the victim may be entitled under applicable law;
(3) the lawyer may not imply an ability to influence the district attorney, the
judge, or the criminal justice system improperly; and (4) the lawyer may not
imply that the lawyer has the ability to interfere with the due administration
of justice and the criminal proceedings or that the client will enter into any
agreement to falsify evidence.
(98 FEO 19, www.ncbar.gov/for-lawyers/ethics/adopted-opinions/98-formal-ethics-opinion-
19/.)

regarding Mr. Rodriquez’s position. 	The Court finds that Mr. Collins assumed
incorrectly that Mr. DeSelms knew that Mr. Rodriquez had not approved the terms
and, therefore, knew that the condition Mr. Collins had established had yet to be met.
Once aware of his mistake, the Court finds that Mr. Collins advised Mr. Egan to take
a voluntary dismissal without prejudice and to start anew by refiling his case.
54. 	The Court finds that the Voluntary Dismissal Without Prejudice filed in
the initial action reflects Plaintiff’s belief that no settlement was reached but that a
dismissal was being taken to allow Plaintiff time to reevaluate his claims. The Court
further finds that this action was brought within the one–year savings provision
prescribed by Rule 41(a).
55. 	Finally, the Court finds that when Mr. Collins reported to the Court and
Defendants’ counsel that the case was settled, he believed that he was doing as his
client had instructed, that Mr. Rodriquez was in agreement, that Mr. DeSelms was
aware of the circumstances, and that he had secured a settlement that was in his
client’s best interests.
Conclusions of Law
56. 	Rule 11 provides:
(a) Signing by Attorney. — Every pleading, motion, and other paper
of a party represented by an attorney shall be signed by at least one
attorney of record in his individual name, whose address shall be
stated . . . . The signature of an attorney or party constitutes a
certificate by him that he has read the pleading, motion, or other
paper; that to the best of his knowledge, information, and belief
formed after reasonable inquiry it is well grounded in fact and
is warranted by existing law or a good faith argument for the
extension, modification, or reversal of existing law, and that it
is not interposed for any improper purpose, such as to harass or to

cause 	unnecessary 	delay 	or 	needless 	increase 	in 	the 	cost 	of
litigation . . . . If a pleading, motion, or other paper is signed in violation
of this rule, the court, upon motion or upon its own initiative, shall
impose upon the person who signed it, a represented party, or both, an
appropriate sanction, which may include an order to pay to the other
party or parties the amount of the reasonable expenses incurred because
of 	the 	filing of the pleading, 	motion, or other paper, 	including 	a
reasonable attorney’s fee.
N.C. R. Civ. P. 11(a).
57. 	Thus, by signing a pleading, a person certifies that three things are true:
the pleading is (1) well-grounded in fact (factual sufficiency); (2) warranted by
existing law, or a good faith argument for the extension, modification, or reversal of
existing law (legal sufficiency); and (3) not interposed for any improper purpose.
Bryson v. Sullivan, 330 N.C. 644, 655 (1992). 	Subjective bad faith is unnecessary;
instead, the standard is one of “objective reasonableness under the circumstances.”
Turner v. Duke University, 325 N.C. 152, 164 (1989). “A breach of the certification as
to any one of these three prongs is a violation of the Rule.” Bryson, 330 N.C. at 655.
58. 	Defendants argue that the Complaint is legally insufficient because a
settlement agreement releasing the claims in this action was reached in March 2023.
As this Court has observed, “[a] two-prong analysis is . . . used to determine whether
a complaint is well-grounded in law. This approach looks first to the facial plausibility
of the pleading and only then, if the pleading is implausible under existing law, to the
issues of whether to the best of the signer’s knowledge, information, and belief formed
after reasonable inquiry, the complaint was warranted by existing law.” 	NC
Bioremediation, LLC v. Sea Winds, LLC, 2015 NCBC LEXIS 97, at *12 (N.C. Super.
Ct. Oct. 15, 2015) (cleaned up).

59. 	When deciding whether a pleading is facially plausible, “reference
should be made to the document itself, and the reasonableness of the belief that it is
warranted by existing law should be judged as of the time the document was
signed. Responsive pleadings are not to be considered.” 	Bryson, 330 N.C. at 656
(citing Thomas v. Capital Sec. Servs., Inc., 836 F.2d 866, 874 (5th Cir. 1988) (“Like a
snapshot, Rule 11 review focuses upon the instant when the picture is taken -- when
the signature is placed on the document.”)). 	Cf. Sunamerica Fin. Corp. v. Bonham,
328 N.C. 254, 258 (1991) (N.C.G.S. § 6-21.5 permits the trial court to look at
responsive pleadings).
60. 	Further, the Court recognizes the importance of proceeding with care.
“In determining compliance with Rule 11, courts should avoid hindsight and resolve
all doubts in favor of the signer.” Twaddell v. Anderson, 136 N.C. App. 56, 70 (1999)
(cleaned up).
61. 	The Court concludes that the Complaint itself is facially plausible.
Nothing on the face of that pleading speaks to a release of the claims.
62. 	The Court further concludes that, in bringing this action, neither
Plaintiff nor his counsel acted in bad faith or with an intent to manipulate the legal
process.
63. 	The Court concludes that this is not a case in which the imposition of
Rule 11 sanctions would further the Rule’s purpose of “prevent[ing] abuse of the legal
system[.]” 	Grover v. Norris, 137 N.C. App. 487, 495 (2000). 	It likewise declines to
exercise its inherent authority to impose sanctions. Window World of Baton Rouge,

LLC v. Window World, Inc., 2019 NCBC LEXIS 54, at *94 (N.C. Super. Ct. Aug. 16,
2019), aff’d, 377 N.C. 551 (2021) (“The imposition of sanctions . . . pursuant to a
court’s inherent authority is in the sound discretion of the trial judge[.]”); see also
Beard v. N.C. State Bar, 320 N.C. 126, 129 (1987) (Trial courts retain inherent
authority 	“to 	do 	all 	things 	that 	are 	reasonably 	necessary 	for 	the 	proper
administration of justice.”).
64. 	Dismissal of the action brings it to an end. 	Defendants’ motion for
sanctions is DENIED.
IV. 	CONCLUSION
65. 	WHEREFORE, Defendants’ Motion for Enforcement of Settlement
Agreement, to Strike Complaint, and for Sanctions is GRANTED in part and
DENIED in part as follows:
a. 	Defendants’ 	motion 	to 	enforce 	the 	settlement 	agreement 	that 	is
included in the record at ECF No. 17.7 is GRANTED, and this case is
DISMISSED with prejudice.
b. 	Defendants’ motion to strike the Complaint is DENIED as Moot.
c. 	Defendants’ motion for sanctions is DENIED.
d. 	Defendant Anderson’s Motion to Dismiss, (ECF No. 11), and Defendant
Buena Vista, Inc.’s Motion to Dismiss, (ECF No. 13), are both DENIED
as Moot.

SO ORDERED, this 9th day of October, 2024.
/s/ Julianna Theall Earp
Julianna Theall Earp
Special Superior Court Judge
for Complex Business Cases