LANGLEY v. AUTOCRAFT, INC., 2023 NCBC 53

STATE OF NORTH CAROLINA
GUILFORD COUNTY
IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
22 CVS 9346
JOSHUA T. LANGLEY,
Plaintiff/Counterclaim
Defendant
v.
AUTOCRAFT, INC.,
Defendant
v.
LB METALWORX, LLC,
Counterclaim Defendant.
ORDER AND OPINION ON
COUNTERCLAIM DEFENDANTS’
MOTION FOR JUDGMENT ON THE
PLEADINGS
1. 	Autocraft, 	Inc. 	(“Autocraft”) 	hired 	Joshua 	Langley 	(“Langley”) 	to
manage its business. While employed, Langley established a competing business, LB
Metalworx, LLC (“LBM”), and allegedly funneled customer orders and other work
from Autocraft to that new business, violating his employer’s trust. 	After Langley
sued Autocraft for breach of his employment agreement, Autocraft counterclaimed
for breach of fiduciary duty, constructive fraud, and unfair and deceptive trade
practices.
2. 	Langley and LBM move pursuant to Rule 12(c) of the North Carolina
Rules of Civil Procedure (the “Rule(s)”) for judgment on the pleadings with respect to
Autocraft’s counterclaims (“Motion”), (ECF No. 20). 	For the following reasons, the
Court GRANTS the Motion.
Langley v. Autocraft, Inc., 2023 NCBC 53.

Carruthers & Roth, P.A., by Kevin A. Rust, for Plaintiff Joshua T.
Langley and Counterclaim Defendant LB Metalworx, LLC.
Tuggle Duggins P.A., by Daniel D. Stratton, Brandy L. Mansouraty,
Denis E. Jacobson, and Alexandria B. Morgan, for Defendant Autocraft,
Inc.
Earp, Judge.
I. 	FACTUAL BACKGROUND
3. 	On a motion for judgment on the pleadings, the Court does not find
facts but rather recites the facts alleged in the pleadings that are relevant to the
Court’s determination of the Motion. 	E.g., Erickson v. Starling, 235 N.C. 643, 657
(1952); Agarwal v. Estate of Agarwal, 2022 NCBC LEXIS 10, at **2 (N.C. Super. Ct.
Feb. 9, 2022).
4. 	Autocraft is a North Carolina corporation with its principal place of
business in Randolph County, North Carolina. 	(Answer, Affirmative Defs., and
Countercl. 8-22 [“Counterclaims”], ECF No. 11, ¶ 3.)1
5. 	Autocraft’s Annual Report for fiscal year 2022 filed with the North
Carolina Secretary of State on 11 April 2023 reflects that Keith Clapp is the President
of Autocraft and its Registered Agent.2
1 For clarity, the Court refers to pages 1-7 of Autocraft’s Answer, Affirmative Defenses, and
Counterclaims as Autocraft’s “Answer” and to pages 8-22 of the same document as Autocraft’s
“Counterclaims.”
2See https://www.sosnc.gov/online_services/business_registration/flow_annual 	report/5261981 (last
visited 7 August 2023). 	When deciding a Rule 12(c) motion, the Court “must consider the
complaint in its entirety, as well as other sources courts ordinarily examine when ruling on
Rule 12(b)(6) motions to dismiss, in particular, documents incorporated into the complaint
by reference, and matters of which a court may take judicial notice.” QUB Studios, LLC v.
Marsh, 262 N.C. App. 251, 260 (2018) (quoting Tellabs, Inc. v. Makor Issues & Rights, Ltd.,

6. 	Langley is a resident of Randolph County, North Carolina. 	He was
formerly employed by Autocraft and is an owner of LBM. (Countercls. ¶¶ 1, 5, 8.)
7. 	LBM is a North Carolina limited liability company with a principal place
of business in Randolph County, North Carolina. (Countercls. ¶¶ 7-8.)
8. 	Both Autocraft and LBM are in the business of providing precision
machined components. 	(Countercls. ¶¶ 4, 9.) 	The two companies are competitors.
(Countercls. ¶ 10.)
9. 	Autocraft has extensive experience and expertise in the niche market of
precision 	machined components. 	(Countercls. 	¶ 11.) 	The machinery 	used 	by
Autocraft requires a high level of technical expertise. (Countercls. ¶ 11.)
10. 	Autocraft has invested a substantial amount of time, money, and effort
to 	develop 	productive 	business 	relationships 	and 	goodwill 	with 	customers,
prospective customers, vendors, employees, referral sources, and others. (Countercl.
¶ 12.) 	It invested in training Langley, who ultimately ran all aspects of Autocraft’s
business prior to his termination. 	(Countercls. ¶ 13.)
11. 	Autocraft employed Langley from on or around 28 December 2016 until
22 August 2022. 	(Countercl. ¶ 14.) 	Autocraft alleges that he was employed at will.
(Answer at 7, [“Seventeenth Affirmative Defense”].)
551 U.S. 308, 322 (2007)). Cf. BB&T Boli Plan Trust v. Mass. Mut. Life Ins. Co., 2016 NCBC
LEXIS 36, at **27 (N.C. Super. Ct. Apr. 29, 2016) (citing Wood v. J.P. Stevens & Co., 297
N.C. 636, 641 (1979) (“[I]t is clear that judicial notice can be used in rulings on . . . motions
to dismiss for failure to state a claim[.]”)).

12. 	During his employment Langley was granted access to all aspects of
Autocraft’s business and had substantial responsibility for its overall operations.
(Countercls. ¶ 15.)
13. 	Among other duties, Langley was responsible for overseeing employees,
customer relationships, supplier relationships, and production facilities. (Countercls.
¶ 16.) On a daily basis, Autocraft entrusted Langley with:
a. 	Oversight of Autocraft’s facilities;
b. 	Developing 	relationships 	with 	Autocraft’s 	customers, 	potential
customers, and referral sources;
c. 	Managing Autocraft’s employees;
d. 	Interacting with Autocraft’s suppliers, including by anticipating
Autocraft’s supply needs and placing orders.
(Countercls. ¶ 17.)
14. 	Langley 	also 	had 	access 	to 	Autocraft’s 	training 	and 	development
materials for its management and operating personnel, as well as to its other
confidential and proprietary business information, including information regarding
Autocraft’s machinery, equipment, customers, marketing, and pricing. 	(Countercls.
¶¶ 19-20.)
15. 	Autocraft trusted Langley to manage its operations. (Countercls. ¶ 21.)
16. 	On or about 28 December 2016, Langley, Keith Clapp, and Sharon
Clapp3 executed a document titled, “Josh Langley’s Autocraft Contract.” 	The
3 Sharon Clapp is not identified in the pleadings.

document purports to provide Langley the ability to review the company’s financial
records after four years of employment, and the option to become a 10% owner of
“Autocraft Technologies” after he was employed for five years.4 (Compl., Ex. A., ECF
No. 3.)
17. 	Langley was never permitted to review the company’s finances even
though he worked for Autocraft for more than four years. 	(Countercls. ¶ 10.)
Autocraft denies that Langley ever had or, prior to his discharge, ever attempted to
exercise the option to become an owner. 	(Countercls. ¶¶ 8, 12, 14, 15, 28.) 	No
Autocraft stock has been conveyed to Langley. (Countercls. ¶ 20.)
18. 	In 	January 	2022, 	Langley 	opened 	LBM, 	a 	competitive 	business.
(Countercls. ¶ 23.) 	Autocraft alleges that, while Langley was still employed, he
purchased machining equipment capable of producing the same or similar products
to those produced by Autocraft in order to compete with Autocraft. 	(Countercls.
¶¶ 24-25.)
19. 	Langley did not disclose to Autocraft that he had purchased this
equipment, and it was not his job to operate such equipment. (Countercls. ¶¶ 26-27.)
20. 	Autocraft alleges that from January 2022 through the time of his
discharge from employment, Langley took orders on behalf of LBM (and perhaps
other competing companies) while on Autocraft company time. 	(Countercls. ¶¶ 29-
30.)
4 Neither party addresses the inconsistency between the name of the defendant, Autocraft,
Inc., and the reference in Exhibit A to “Autocraft Technologies.”

21. 	Autocraft further alleges that, while Langley was still employed by it,
he began using knowledge that he acquired on the job to perform work for customers
and potential customers of Autocraft in competition with Autocraft. 	(Countercls.
¶ 31.)
22. 	Langley also allegedly used Autocraft’s business relationships and
confidential 	information 	to 	undermine 	Autocraft’s 	relationships 	with 	its 	key
employees and encourage those employees to leave Autocraft and work for LBM.
(Countercls. ¶ 32.) 	Langley similarly undermined Autocraft’s relationships with its
potential and current customers. (Countercls. ¶ 33.)
23. 	Langley did not disclose either his financial interest in LBM or his
competitive activities on behalf of LBM while he was employed by Autocraft.
(Countercls. ¶ 34.)
24. 	Langley engaged in the activities alleged for his own personal gain.
(Countercls. ¶ 35.)
25. 	Autocraft 	terminated 	Langley’s 	employment 	immediately 	after
discovering his conduct on or around 22 August 2022. (Countercls. ¶ 36.)
II. 	PROCEDURAL HISTORY
26. 	Plaintiff initiated this action with the filing of his Complaint on 19
December 2022. 	(ECF No. 3.) 	The matter was designated to the North Carolina
Business Court and assigned to the undersigned on 6 January 2023. (ECF Nos. 1, 6.)
27. 	On 22 February 2023, Defendant filed its responsive pleading and
asserted three (3) counterclaims: (1) breach of fiduciary duty against Langley; (2)

constructive fraud against Langley; and (3) unfair and deceptive trade practices
against both Langley and LBM.
28. 	On 13 March 2023, the Court issued an Order adding LBM as a
counterclaim defendant. (ECF No. 17.)
29. 	On 20 March 2023, Langley and LBM filed a motion for judgment on the
pleadings seeking dismissal of all three counterclaims. 	(ECF No. 20.) 	The Motion
was fully briefed, and on 13 June 2023, the Court entertained arguments at a hearing
on the Motion, during which all parties were present. (See ECF No. 33.) The Motion
is now ripe for disposition.
III. 	LEGAL STANDARD
30. 	On a motion for judgment on the pleadings pursuant to Rule 12(c), the
Court must view the facts and permissible inferences in the light most favorable to
the nonmoving party:
[a]ll well pleaded factual allegations in the nonmoving party’s pleadings
are taken as true and all contravening assertions in the movant’s
pleadings are taken as false. 	All allegations in the nonmovant’s
pleadings, 	except 	conclusions 	of 	law, 	legally 	impossible 	facts, 	and
matters not admissible in evidence at the trial, are deemed admitted by
the movant for purposes of the motion.
Ragsdale 	v. 	Kennedy, 	286 	N.C. 	130, 	137 	(1974) 	(citations 	omitted). 	“Legal
conclusions, however, are not entitled to a presumption of validity.” Charlotte Motor
Speedway, LLC v. Cty of Cabarrus, 230 N.C. App. 1, 6 (2013) (quoting Guyton v. FM
Lending Servs., Inc., 1999 N.C. App. 30, 33 (2009)).
31. 	The movant is held to a “strict standard.” Ragsdale, 286 N.C. at 137. 	A
Rule 12(c) motion should not be granted “unless the movant clearly establishes that

no material issue of fact remains to be resolved and that he is entitled to judgment
as a matter of law.” Carpenter v. Carpenter, 189 N.C. App. 755, 761 (2008).
32. 	“[J]udgment on the pleadings is not appropriate merely because the
claimant’s case is weak and he is unlikely to prevail on the merits.” Huss v. Huss, 31
N.C. App. 463, 469 (1976). The function of Rule 12(c) “is to dispose of baseless claims
or defenses when the formal pleadings reveal their lack of merit.” Ragsdale, 286 N.C.
at 137.
IV. 	ANALYSIS
A. Breach of Fiduciary Duty (Langley)
33. 	Plaintiff and LBM contend that Autocraft has failed to state a claim for
breach of fiduciary duty because “an employee does not owe an employer a fiduciary
duty.” (Br. Supp. Mot. J. Pldgs. 5, [“Pl.’s Br.”], ECF No. 21.) In their view, insufficient
facts have been alleged to give rise to a de facto fiduciary duty, and they cite Dalton
v. Camp, 353 N.C. 647 (2001), in support of their position that an employee will not
be found to be a fiduciary of his employer absent the employee’s ability to exercise
“dominance and control over his employer.” (Pl.’s Br. 6.)
34. 	Conversely, Autocraft’s position is that Langley’s alleged power within
the company justifies imposing fiduciary duties on him. (Def. Autocraft, Inc.’s Resp.
Opp. Joshua T. Langley and LB Metalworkx, LLC’s Mot. J. Pldgs. [“Defs.’ Br.”] 2,
ECF No. 30.) 	Autocraft argues that Langley was “entrusted with managerial control
and [exercised] independent judgment over all aspects of Autocraft’s business.”
(Defs.’ Br. 12.) Autocraft further contends that Langley “overgeneralizes the holding

of Dalton, and fails to recognize that . . . there is not a ‘one-size-fits-all’ rule.” (Defs.’
Br. 14.)
35. 	Autocraft alleges that Langley “willfully, maliciously, and consciously
breached his fiduciary duty to Autocraft” by:
a. 	Opening 	up 	businesses 	in 	direct 	competition 	with 	Autocraft’s
business;
b. 	Actively concealing his competing business entities;
c. 	Usurping corporate opportunities;
d. 	Misappropriating 	Autocraft’s 	Business 	Relationships 	and
Expectancies and confidential information;
e. 	Working on company time and using company resources to build his
competing businesses;
f. 	Engaging in self-dealing;
g. 	Recruiting employees of Autocraft for employment by Langley and/or
LBM; and
h. Causing himself and LBM to gain an unfair competitive advantage
and head-start in the marketplace including based on the foregoing.
(Countercls. ¶ 45.)
36. 	To state a claim for breach of fiduciary duty, Plaintiff must plead the
existence of a fiduciary duty, a breach of that duty, and injury proximately caused by
the breach. 	E.g., Green v. Freeman, 367 N.C. 136, 141 (2013). 	Where there is no
fiduciary duty, there can be no claim for its breach. Governor’s Club Inc. v. Governors
Club Ltd. P’ship, 152 N.C. App. 240, 247 (2002).
37. 	A fiduciary relationship is one in which “there has been a special
confidence reposed in one who in equity and good conscience is bound to act in good

faith 	and 	with 	due 	regard 	to 	the 	interests 	of 	the 	one 	reposing 	confidence.”
CommScope Credit Union v. Butler & Burke, LLP, 369 N.C. 48, 52 (2016). 	“[I]t
extends to any possible case in which a fiduciary relationship exists in fact, and in
which there is confidence reposed on one side, and resulting domination and influence
on the other.” 	Dalton, 353 N.C. at 651-52 (quoting Abbitt v. Gregory, 201 N.C. 577,
598 (1931)).
38. 	“North Carolina recognizes two types of fiduciary relationships: de jure,
or those imposed by operation of law, and de facto, or those arising from the particular
facts and circumstances constituting and surrounding the relationship.” 	Hager v.
Smithfield E. Health Holdings, LLC, 264 N.C. App. 350, 355 (2019) (citing Lockerman
v. S. River Elec. Mbrshp. Corp., 250 N.C. App. 631, 635 (2016)).
39. 	“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.”
Lockerman, 250 N.C. App. at 636 (citation and internal quotation marks omitted). It
is insufficient to allege mere influence over another’s affairs. 	Hartsell v. Mindpath
Care Ctrs., 2022 NCBC LEXIS 130, at **11 (N.C. Super. Ct. Nov. 2, 2022).
40. 	A fiduciary relationship does not arise between an employee and his or
her employer by operation of law, and only in rare circumstances does such a duty
arise from the particular facts of an employment relationship. 	Dalton, 353 N.C. at

652 (“Under the general rule, the relation of employer and employee is not one of
those regarded as confidential.” (citations omitted)).
41. 	In 	Dalton 	v. 	Camp, 	the 	employer, 	Dalton, 	produced 	an 	employee
newspaper for a client. Camp, Dalton’s employee, was primarily responsible for the
publication. Unbeknownst to Dalton, Camp negotiated a deal with the client to start
his own business and continue the publication there. 	Thereafter, when Dalton’s
contract with the client expired, Camp, while still employed by Dalton, entered into
a contract with the client to produce its newspaper at his competing business. Camp
resigned from his position with Dalton two weeks later, and the client moved its work
with Camp to his new competing business. Dalton, 353 N.C. at 654.
42. 	Dalton then sued Camp for, among other things, breach of fiduciary
duty. 	But the Supreme Court upheld summary judgment for defendants on the claim
because Camp’s duties “were not unlike those of employees in other businesses and
can hardly be construed as uniquely positioning him to exercise dominion over
Dalton.” Id. at 652.
43. 	Such is the case here. 	While undoubtedly important as a manager of
the enterprise, Autocraft does not allege that Langley was in such a position of control
over it that it was “subjugated” to his “improper influences or dominion.” Id. at 652.
Indeed, our Supreme Court has observed that, as a general proposition, such a
scenario would be unlikely. Id. This is particularly true where, as here, the employee
is not alleged to be a corporate officer, director, or even a shareholder of the entity
employing him.

44. 	That, after five years of employment, Langley may have had the ability
to acquire a 10% ownership interest in “Autocraft Technologies” and finance the
remaining 90% —all allegations Autocraft contests—does not mean that Langley had
the requisite level of control over Autocraft during the time in question to give rise to
fiduciary obligations. 	To the contrary, his lack of control is underscored by the fact
that he was summarily terminated, that he was denied the opportunity to review the
company’s finances, and that Autocraft does not recognize him as an owner of any
percentage interest.
45. 	Moreover, alleging in a conclusory fashion that Langley had “substantial
responsibility” and ran “all aspects” of the business is not enough. Autocraft does not
allege, for example, that Langley controlled the flow of essential information such
that he was able to cripple its operations by withholding it. Nor do they allege that
he had authority to sign Autocraft’s tax returns, to issue and sign its checks, to hire
and fire its employees, to price its products, to cash and deposit its money, to negotiate
and execute contracts on its behalf, or to settle its debts. 	Compare Kinesis Adver.,
Inc. v. Hill, 187 N.C. App. 1, 15-16 (2007) (finding that one defendant was a de facto
officer); Timbercreek Land & Timber Co., LLC v. Robbins, 2017 NCBC LEXIS 64, at
*14-15 (N.C. Super. Ct. July 28, 2017) (alleged duties sufficient to plead that
defendant was a company official at Rule 12(b)(6) stage); Tai Sports, Inc. v. Hall, 2012
NCBC LEXIS 64 (N.C. Super, Ct. Dec. 28, 2012) (employee’s duties rose to level of de
facto officer).

46. 	Autocraft likens this situation to the facts of Sara Lee Corp. v. Carter,
129 N.C. App. 464 (1998), rev’d on other grounds, 351 N.C. 27 (1999), and Global
Textile Alliance, Inc. v. TDI Worldwide, LLC, 2018 NCBC LEXIS 159 (N.C. Super.
Ct. Nov. 29, 2018). After close review, however, the Court is not convinced that the
holdings in these cases control the outcome here.
47. 	In Sara Lee, Carter, an employee who was entrusted with responsibility
for purchasing computer parts for the company at the lowest possible price, secretly
“developed four separate businesses through which he engaged in self-dealing by
supplying Sara Lee with computer parts and services at allegedly excessive cost while
concealing his interest in these businesses.” 351 N.C. at 29. Finding that Carter had
discretion to obtain computer parts and services from “whatever source he thought
best” and that his supervisors “trusted [Carter] implicitly” with respect to this duty,
the trial court concluded that Carter owed Sara Lee a fiduciary duty with respect to
the purchase of computer parts and related services, and the Court of Appeals
affirmed. Sara Lee Corp., 129 N.C. App. at 472.
48. 	On appeal to the Supreme Court, however, the focus of the case was on
the claim for unfair and deceptive trade practices. 	The Court found that Carter’s
status as an employee did not defeat the Chapter 75 claim because he was also acting
as the seller of computer parts and services in commerce. 	Sara Lee Corp., 351 N.C.
at 33.
49. 	Autocraft’s reliance on the analysis of the fiduciary duty claim in Sara
Lee is misplaced given both the factual dissimilarities between Sara Lee and this case,

and the Supreme Court’s later analysis of fiduciary duty claims in Dalton.5 There is
no allegation here that Langley was both Autocraft’s employee and its vendor.
Rather, it is alleged that Langley was, at most, a high-level manager. 	North
Carolina’s courts have consistently held that such a position does not give rise to
fiduciary responsibilities absent allegations of extraordinary facts that, if proven,
would establish that the employee controlled his employer to the point of domination.
See, e.g., Reichhold Chems., Inc. v. Goel, 146 N.C. App. 137, 155 (2001) (no fiduciary
duty for company vice president because “[a] managerial position alone does not
demonstrate the requisite domination and influence on the other required to create a
fiduciary obligation”); Battleground Veterinary Hosp., P.C. v. McGeough, 2007 NCBC
LEXIS 33, at **16 (N.C. Super. Ct. Oct. 1, 2007) (“Even when an employee is
entrusted with substantial managerial authority, a fiduciary relationship will not
exist absent evidence that such authority led to the employer being subjugated to the
‘improper influences or domination of [its] employee.’ ” (citation omitted)); Southeast
Air Charter, Inc. v. Stroud, 2015 NCBC LEXIS 82, at **16 (N.C. Super. Ct. Aug. 17,
2015) (“Where an employee is neither an officer nor a director, extraordinary
circumstances are necessary to impose a fiduciary duty[.]”).
5 Other courts have recognized that the holding in Sara Lee has limited application. See, e.g.,
William Ives Consulting, Inc. v. Guardian IT Sys., LLC, 2020 U.S. Dist. LEXIS 206538
(W.D.N.C. 2020) (“While Sara Lee Corp. illustrates that there are times when an employee
may have a fiduciary duty to his employer, courts have noted that its holding is narrow.”);
Helms v. SellEthics Mktg. Grp. Inc., 2006 U.S. Dist. LEXIS 87726 (W.D.N.C. 2006) (“In Sara
Lee, the employee engaged in fraudulent buyer-seller transactions that were clearly covered
by the NCUDTPA. 	The court held that the employee should not be shielded from liability
simply because he was an employee of the company he defrauded.”).

50. 	In Global Textile v. TDI Worldwide, Inc., 2018 NCBC LEXIS 159 (N.C.
Super. Ct. Nov. 29, 2018), Ryan was employed by Global Textile Alliance, Inc. (“Global
Textile”), a North Carolina corporation. 	He was responsible for setting up an office
in China and overseeing Global Textile’s business in Asia. Eventually, Global Textile
created “GTA Asia,” a wholly-owned foreign enterprise, and named Ryan as its
Director and legal representative. Global Textile essentially ceded responsibility for
GTA Asia to Ryan. His job was to “[o]versee all aspects of [Plaintiff’s] business with
[sic] the Asia corridor.” 	He had “vast control over Plaintiff’s Asia operation,”
including control over its cash and capital, the authority to enter binding contracts,
responsibility as the legal representative, and the power to set pricing and payment
terms for goods bought and sold. 	Importantly, he was his employer’s source of
“extensive and detailed knowledge about all aspects of Plaintiff’s Asia operations.”
Global Textile All., Inc. 2018 NCBC LEXIS 159, at *5-6 (N.C. Super Ct. Nov. 29,
2018). When he later decided to leverage that knowledge to open a competing Chinese
company, the court found that Ryan had sufficiently dominated Global Textile’s Asian
operations to give rise to fiduciary responsibilities. Id. at *20.6
6 In contrast, in a second opinion, Global Textile Alliance, Inc. v. TDI Worldwide, LLC, 2018
NCBC LEXIS 104 (N.C. Super. Oct. 9, 2018), the court addressed a claim for breach of
fiduciary duty by Garrett, Ryan’s brother, and his successor as the Director of GTA Asia.
While the court observed that Garrett had “substantial managerial authority,” the scope of
Garrett’s control was not as wide as that afforded Ryan. Instead, Garrett was supervised by
both Ryan and another executive, who had “overall managerial responsibility” and served as
“head of Asia Operations.” On these facts, the court found that Garrett did not have the level
of control over the company that his brother did, and no fiduciary duty arose. Id. at **16.

51. 	The degree of control exerted by Ryan over his employer’s Asian
operations and the impact of that control on the employer in Global Textile is several
orders 	of 	magnitude 	greater 	than 	Langley’s 	alleged 	managerial 	control 	over
Autocraft. Ryan’s control over essential information regarding the customer, vendor,
and financial aspects of his employer’s business as it developed halfway around the
world allowed him to dominate his employer and warranted a deviation from the
general rule that the employer-employee relationship is not a fiduciary one. 	See
Dalton, 353 N.C. at 652.
52. 	The same conclusion may not be drawn from the allegations in the
present case. 	The analysis focuses not only on the authority afforded the employee
but also on the employee’s ability to use that authority to create a situation in which
his employer is essentially helpless without him.
53. 	Autocraft’s allegations focus on the former but not the latter. It alleges,
generally, that Langley ultimately ran “all aspects of Autocraft’s business,” was
“provided 	access 	to 	all 	aspects 	of 	Autocraft’s 	business 	and 	had 	substantial
responsibility for Autocraft’s overall operations,” was “entrusted with managing
Autocraft’s business and running Autocraft’s day-to-day operations,” and “oversaw
the management of Autocraft’s employees, as well as its customer relationships,
production facilities, and supplier relationships.” 	It does not allege, however, that
Autocraft, a corporation with officers, directors, shareholders, and apparently other
managers7 depended solely on Langley for the skills or information necessary to
7 Autocraft alleges that Langley had “access to . . . integration of Autocraft’s management,”
among other things. (Countercl. ¶ 19.)

sustain its operations. Indeed, when Langley’s allegedly covert competitive activity
was unveiled, Autocraft wasted no time in terminating the employment relationship.
54. 	In short, Autocraft’s allegations are that Langley was a high-level
manager, but not that Autocraft was subjugated to his control. 	No fiduciary duty
arises under these circumstances. 	See, e.g., DSM Dyneema, LLC v. Thagard, 2015
NCBC LEXIS 50, at *21 (N.C. Super. Ct. May 12, 2015) (dismissing claim for breach
of fiduciary duty where Plaintiff failed to allege facts supporting a conclusion that
lead scientist who was aware of employer’s technical information held “all the cards”
in the employment relationship).
55. 	Because Plaintiff's allegations do not elevate Langley’s status within
Autocraft 	to 	the 	extraordinary 	level 	required 	to 	impose 	de 	facto 	fiduciary
responsibilities, the Motion as to the claim against Langley for breach of fiduciary
duties shall be GRANTED. 	See Bourgeois v. Lapelusa, 2022 NCBC LEXIS 111, at
**15 	(N.C. 	Super. 	Ct. 	Sept. 	23, 	2022) 	(“Without 	the 	existence 	of 	a 	fiduciary
relationship there can be no claim for breach.”).
B. Constructive Fraud (Langley)
56. 	“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
(2004). Autocraft sufficiently alleges self-dealing. But because Langley does not owe
Autocraft a fiduciary duty, Autocraft’s constructive fraud claim—which is premised
on the existence of a fiduciary relationship—also fails. 	See, e.g., Plasman v. Decca

Furniture (USA), Inc., 2016 NCBC LEXIS 80, at **30 (N.C. Super. Ct. Oct. 21, 2016)
(when a plaintiff fully premises his constructive fraud claims on his breach of
fiduciary duty claims and breach of fiduciary duty claims fail, constructive fraud
claims must also fail); Levin v. Jacobson, 2016 NCBC LEXIS 66, at *12 (N.C. Super.
Ct. Aug. 25, 2016) (dismissing constructive fraud claim when breach of fiduciary
claim upon which it relied failed).
57. 	Accordingly, the Motion as to the claim against Langley for constructive
fraud shall be GRANTED.
C. Unfair or Deceptive Trade Practices (Langley and LBM)
58. 	To bring a claim for unfair or deceptive trade practices under Section
75-1.1 of the North Carolina General Statutes, (the “UDTPA”), a party must allege
“(1) an unfair or deceptive act or practice, or an unfair method of competition, (2) in
or affecting commerce, (3) which proximately caused actual injury to the plaintiff or
to his business.” McLamb v. T.P. Inc., 173 N.C. App. 586, 593 (2005); see also N.C.G.S.
§ 75-1.1.
59. 	The UDTPA does not apply to unfair or deceptive conduct contained
within a single business because the conduct has no impact on the marketplace and
therefore is not “in or affecting commerce.” Nobel v. Foxmoor Grp., 380 N.C. 116, 121
(2022) (“The internal operations of a business entity are not within the purview of the
Act.”); White v. Thompson, 364 N.C. 47, 51 (2010) (“[A] plaintiff must prove, inter
alia, that a defendant’s unfair or deceptive action was ‘in or affecting commerce’
before the plaintiff may be awarded treble damages under N.C.G.S. § 75-16.”); Bhatti

v. Buckland, 328 N.C. 240, 245-46 (1991) (the Act regulates unfair and deceptive
conduct in interactions between market participants); Wheeler v. Wheeler, 2018
NCBC LEXIS 38, at *12 (N.C. Super. Ct. Apr. 25, 2018) (“Section 75-1.1 does not
apply to the internal conduct of individuals within a single market participant.
Rather, the General Assembly intended section 75-1.1 to apply to interactions
between market participants.” (cleaned up)).
60. 	Autocraft alleges that the following conduct constitutes the basis for its
Chapter 75 claim:
a. 	Langley opening up businesses in direct competition with Autocraft’s
business (including LBM), while an Autocraft fiduciary;
b. 	Langley 	actively 	concealing 	his 	competing 	business 	entities
(including LBM) from Autocraft, while an Autocraft fiduciary;
c. 	Langley usurping corporate opportunities;
d. 	Langley 	and 	LBM 	misappropriating 	Autocraft’s 	Business
Relationships and Expectancies8 and confidential information, and
using the aforementioned information in the operation of LBM’s
business;
e. 	Langley 	and 	LBM 	acquiring 	and 	using 	Autocraft’s 	Business
Relationship 	and 	Expectancies 	and 	Autocraft’s 	Confidential
Information to their unfair competitive advantage and to Autocraft’s
detriment;
f. 	Langley, on behalf of himself and LBM, promoting dissatisfaction
and 	distrust 	of 	Autocraft 	and 	its 	current 	management 	among
Autocraft’s present and potential customers;
8 Autocraft defines its “Business Relationships and Expectancies” as the “productive
relationships, goodwill, and business relationships and expectancies [it has] with its
customers, prospective customers, vendors, lenders, insurers, employees, and business
referral sources.” (Countercls. ¶ 12.)

g. 	Langley, on behalf of himself and LBM, fomenting dissatisfaction
and 	distrust 	of 	Autocraft 	and 	its 	current 	management 	among
Autocraft’s key employees and other employees;
h. Langley, on behalf of himself and LBM, recruiting employees of
Autocraft for employment (including while Langley was an Autocrat
fiduciary);
i. 	Langley engaging in self-dealing while an Autocraft fiduciary;
j. 	Langley working on company time and using company resources to
build his competing businesses (including LBM); and
k. LBM otherwise obtaining an unfair competitive advantage and head-
start in the marketplace including based on the foregoing.
(Countercls. ¶ 61(a)-(k).)
61. 	The fundamental weakness in Autocraft’s pleading is that the wrongs
Langley allegedly committed are alleged to have harmed Autocraft itself, not external
market participants. Alexander v. Alexander, 250 N.C. App. 511, 516 (2016) (UDTPA
not implicated when “the unfairness of [Defendant’s] conduct did not occur in his
dealings with other market participants” (citation omitted)); McKee v. James, 2014
NCBC LEXIS 74, at **40-41 (N.C. Super. Ct. Dec. 31, 2014) (“Matters of internal
corporate management. . . do not affect commerce as defined by Chapter 75 and our
Supreme Court.”).
62. 	Moreover, the fact that Langley formed LBM and used that entity to
usurp some of Autocraft’s opportunities does not transform the misconduct into an
unfair or deceptive trade practice that affected commerce. “The mere presence of [a
separate entity] as a potential beneficiary of [the] alleged wrongful conduct does not
alter the fundamental character of [an] internal dispute.” 	Poluka v. Willette, 2021

NCBC LEXIS 105, at **18 (N.C. Super. Ct. Dec. 2, 2021) (internal business dispute
not covered by UDTPA) (collecting cases); see Howard v. IOMAXIS, LLC, 2021 NCBC
LEXIS 116, at *31 (N.C. Super. Ct. Dec. 22, 2021) (“While the caselaw with respect
to intracompany and intercompany disputes can be confusing, the distinction lies in
the nature of the second entity’s involvement with the first. 	If the harm is to the
second entity or to the flow of commerce between the first and second entities,
commerce is impacted. However, if the second entity is used merely as an instrument
or ‘shell’ to facilitate harm within the first entity, the dispute is intracorporate, and
the UDTPA is not implicated.”). Such is the case here. LBM was “used merely as an
instrument to facilitate harm” within Autocraft. Id. at *31.
63. 	Autocraft again turns unsuccessfully to the Supreme Court’s opinion in
Sara Lee for support. 	In Sara Lee, the Supreme Court determined that the
wrongdoer, Carter, was more than just an employee acting to harm his own employer.
He was also a vendor who had engaged with the company in commercial transactions
in the marketplace. 	In this unusual fact scenario, the Court found that Carter’s
status as an employee could not be used as a shield against his liability as a vendor.
Sara Lee Corp., 351 N.C. at 33.
64. 	There are no such allegations here. 	This case is more appropriately
compared to Dalton, in which the Supreme Court concluded that the defendant
employee “did not serve his employer in the capacity of either a buyer or a seller. Nor
did he serve in any alternative capacity suggesting that his employment was such
that it otherwise qualified as ‘in or affecting commerce.’ ” 	Dalton, 353 N.C. at 658.

See Hajmm Co. v. House of Raeford Farms, Inc., 328 N.C. 578, 593 (1991) (“Although
[the] statutory definition of commerce is expansive, the Act is not intended to apply
to all wrongs in a business setting. For instance, it does not cover employer-employee
relations[.]” 	(citing 	Buie 	v. 	Daniel 	International, 	56 	N.C. 	App. 	445 	(1982))).9
Accordingly, the Motion as to the claim against Langley for violation of the UDTPA
shall be GRANTED.
V. 	CONCLUSION
65. 	The facts alleged in this case paint a portrait of an unfortunate company
that claims it was duped by an unscrupulous employee. 	As morally wrong as the
employer may believe the former employee’s purported conduct may be, on the facts
alleged, Autocraft’s attempted claims cannot be stretched to address it.10
66. 	WHEREFORE, 	the 	Court 	GRANTS 	the 	Motion. 	Autocraft’s
counterclaims are DISMISSED with prejudice.
9 While our courts have long recognized that claims for misappropriation of trade secrets may
form the basis of a UDTP claim, see, e.g., Ge Betz, Inc. v. Conrad, 231 N.C. App. 214, 235
(2013); S. Fastening Sys. v. Grabber Constr. Prods., 2015 NCBC LEXIS 42, at *28 (N.C.
Super. Ct. Apr. 28, 2015), Autocraft does not attempt a misappropriation of trade secrets
claim in this case. 	Although it alleges that Langley used its confidential information to
catapult his competing venture into a position of unfair advantage, not all confidential
information is a trade secret, and therefore not all use of confidential information in a
competing venture constitutes misappropriation of a trade secret. 	See Kadis v. Britt, 224
N.C. 154 (1944) (subjective knowledge acquired in the course of employment may not be a
trade secret). Rather, the standard for pleading a misappropriation of trade secret is more
exacting and requires that the pleading party plead both the trade secret at issue and the
facts supporting misappropriation with particularity. Krawiec v. Manly, 370 N.C. 602 (2018).
10 The Court observes that contractual protections including nondisclosure provisions, non-
competition covenants, and non-solicitation provisions are absent from this record.

IT IS SO ORDERED, this 7th day of August, 2023.
/s/ Julianna Theall Earp
Julianna Theall Earp
Special Superior Court Judge
for Complex Business Cases