Denver Prop. Partners, LLC v. Sisson

Denver Prop. Partners, LLC v. Sisson, 2020 NCBC 34.

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
LINCOLN COUNTY 18 CVS 725

DENVER PROPERTY PARTNERS,
LLC; and BAYPORT HOLDINGS,
INC. d/b/a DENVER DEFENSE
RANGE & FIREARMS,

Plaintiffs,

v.

BRIAN P. SISSON; LAKE NORMAN FINAL ORDER AND JUDGMENT
SPORTING ARMS AND RANGE,
INC. d/b/a THE RANGE AT LAKE
NORMAN, d/b/a THE RANGE AT
BALLANTYNE, d/b/a PINEVILLE
GUN SHOP; and THE RANGE AT
DENVER, INC.,

Defendants.

1. THIS CASE was designated as a mandatory complex business case by

Order of the Chief Justice of the North Carolina Supreme Court pursuant to

N.C.G.S. § 7A-45.4(b) and assigned to the undersigned Special Superior Court Judge

for Complex Business Cases on July 11, 2018. (See ECF Nos. 1, 2.)

2. This case came on for trial before a jury duly empaneled on Monday,

January 13, 2020 in the Superior Court of Lincoln County. Plaintiff Bayport

Holdings, Inc. d/b/a Denver Defense Range & Firearms’s (“Plaintiff”) 1 claims for

breach of contract, conversion, constructive fraud, breach of fiduciary duty, and

misappropriation of trade secrets, and Defendants Brian P. Sisson’s (“Sisson”) and

1 Summary Judgment against Denver Property Partners, LLC’s claim for breach of contract

was entered by the Court on April 1, 2019, (ECF No. 42), and therefore there were no
remaining claims to submit to the jury as to this plaintiff.
Lake Norman Sporting Arms and Range Inc.’s (“LNSAR”) (together, “Defendants”) 2

claims for breach of contract, fraudulent misrepresentation, constructive fraud,

negligent misrepresentation, and conversion were tried to the jury.

3. The Court denied all motions for directed verdict. On January 17, 2020,

the jury returned its verdict on the issues of liability and damages submitted as

follows:

Issue No. 1. Did Defendant Brian P. Sisson breach a material term of the
Management Agreement?
YES.

Issue No. 2. Did Plaintiff Bayport Holdings, Inc. breach a material term of
the Management Agreement?
YES.

Issue No. 3. If your answer to Issue No. 1 and Issue No. 2 are both YES, who
breached a material term of the Management Agreement first?

PLAINTIFF BAYPORT HOLDINGS, INC.

Issue No. 4. If either: (a) your answer to Issue No. 1 is YES and your answer
to Issue No. 2 is NO; or (b) your answer to Issue No. 1 is YES and your answer
to Issue No. 3 is DEFENDANT BRIAN P. SISSON, what amount of damages,
if any, is Plaintiff Bayport Holdings, Inc. entitled to recover from Defendant
Brian P. Sisson for breach of the Management Agreement?

$ 0.00

Issue No. 5. If either: (a) your answer to Issue No. 2 is YES and your answer
to Issue No. 1 is NO; or your answer to Issue No. 2 is YES and your answer to
Issue No. 3 is PLAINTIFF BAYPORT HOLDINGS, INC., what amount of
damages, if any, is Defendant Brian P. Sisson entitled to recover from
Plaintiff Bayport Holdings, Inc. for breach of the Management Agreement?

$ 0.00

2 The Range at Denver, Inc. did not have any claims, nor did Plaintiff request that the Court

submit any claims against this defendant to the jury.
Issue No. 6. Did Defendant Brian P. Sisson owe Plaintiff Bayport Holdings,
Inc. a fiduciary duty?
YES.

Issue No. 7. If your answer to Issue No. 6 is YES, did Defendant Brian P.
Sisson breach a fiduciary duty owed to Plaintiff Bayport Holdings, Inc.?

NO.

Issue No. 8. If your answer to Issue No. 7 is YES, what amount of damages,
if any, is Plaintiff Bayport Holdings, Inc. entitled to recover from Defendant
Brian P. Sisson for breach of fiduciary duty?

N/A

Issue No. 9. If your answer to Issue No. 7 is YES, did Defendant Brian P.
Sisson use his position of trust and confidence with Plaintiff Bayport Holdings,
Inc. to Plaintiff Bayport Holdings, Inc.’s detriment and for the benefit of
Defendant Brian P. Sisson?

N/A

Issue No. 10. If your answer to Issue No. 9 is YES, what amount of damages,
if any, is Plaintiff Bayport Holdings, Inc. entitled to recover from Defendant
Brian P. Sisson for using his position of trust and confidence with Plaintiff
Bayport Holdings, Inc. for his benefit?

N/A

Issue No. 11. Did Defendant Brian P. Sisson convert Plaintiff Bayport
Holdings, Inc.’s property?

NO.

Issue No. 12. If your answer to Issue No. 11 is YES, what amount of damages,
if any, is Plaintiff Bayport Holdings, Inc. entitled to recover from Defendant
Brian P. Sisson for converting Plaintiff Bayport Holdings, Inc.’s property?

N/A

Issue No. 13. If your answer to Issue No. 11 is YES, was Defendant Brian P.
Sisson acting as the agent of Lake Norman Sporting Arms and Range, Inc. at
the time he engaged in the conduct in question?

N/A
Issue No. 14. Did Defendant Brian P. Sisson misappropriate Plaintiff Bayport
Holdings, Inc.’s trade secrets?
NO.
Issue No. 15. If your answer to Issue No. 14 is YES, what amount of damages,
if any, is Plaintiff Bayport Holdings, Inc. entitled to recover from Defendant
Brian P. Sisson for misappropriation of Plaintiff Bayport Holdings, Inc.’s
trade secrets?
N/A
Issue No. 16. If your answer to Issue No. 14 is YES, was Defendant Brian P.
Sisson acting as the agent of Lake Norman Sporting Arms and Range, Inc. at
the time he engaged in the conduct in question?

N/A
Issue No. 17. If your answer to one or more of Issue No. 7, or Issue No. 9, or
Issue No. 11, or Issue No. 14 is YES, was Defendant Brian P. Sisson’s conduct
fraudulent, willful, or wanton thereby justifying the award of punitive
damages to Plaintiff Bayport Holdings, Inc.?

NO.
Issue No. 18. If your answer to Issue No. 17 is YES, what amount, if any, is
Plaintiff Bayport Holdings, Inc. entitled to recover from Defendant Brian P.
Sisson as punitive damage?
N/A
Issue No. 19. If your answer to Issue No. 13 is YES, what amount, if any, is
Plaintiff Bayport Holdings, Inc. entitled to recover from Defendant Lake
Norman Sporting Arms and Range, Inc. as punitive damages for the conduct
identified in Issue No. 11?
N/A
Issue No. 20. If your answer to Issue No. 16 is YES, what amount, if any, is
Plaintiff Bayport Holdings, Inc. entitled to recover from Defendant Lake
Norman Sporting Arms and Range, Inc. as punitive damages for the conduct
identified in Issue No. 14?
N/A
Issue No. 21. Did Plaintiff Bayport Holdings, Inc. convert property belonging
to Defendant Lake Norman Sporting Arms and Range, Inc.?

YES.
Issue No. 22. If your answer to Issue No. 21 is YES, what amount of damages,
if any, is Defendant Lake Norman Sporting Arms and Range, Inc. entitled to
recover from Plaintiff Bayport Holdings, Inc. for converting Defendant Lake
Norman Sporting Arms and Range, Inc.’s property?

$18,500.00
Issue No. 23. Did Plaintiff Bayport Holdings, Inc. fraudulently misrepresent
information, either by making an affirmative misrepresentation to Defendant
Brian P. Sisson or by concealing a material fact from Defendant Brian P.
Sisson, regarding the sale of Denver Defense?

NO.
Issue No. 24. If your answer to Issue No. 23 is YES, what amount of damages,
if any, is Defendant Brian P. Sisson entitled to recover from Plaintiff Bayport
Holdings, Inc. as a result of Plaintiff Bayport Holdings, Inc.’s fraudulent
conduct?
N/A

Issue No. 25. Did Plaintiff Bayport Holdings, Inc. negligently misrepresent
information to Defendant Brian P. Sisson regarding the sale of Denver
Defense?
YES.

Issue No. 26. If your answer to Issue No. 25 is YES, what amount of damages,
if any, is Defendant Brian P. Sisson entitled to recover from Plaintiff Bayport
Holdings, Inc. for Plaintiff Bayport Holdings, Inc.’s negligent
misrepresentation?
$3,000.00
Issue No. 27. Did Plaintiff Bayport Holdings, Inc. owe Defendant Brian P.
Sisson a fiduciary duty?
NO.
Issue No. 28. If your answer to Issue No. 27 is YES, did Plaintiff Bayport
Holdings, Inc. breach its fiduciary duty owed to Defendant Brian P. Sisson?

N/A
Issue No. 29. If your answer to Issue No. 28 is YES, did Plaintiff Bayport
Holdings, Inc. use its position of trust and confidence with Defendant Brian
P. Sisson to Defendant Brian P. Sisson’s detriment and for the benefit of
Plaintiff Bayport Holdings, Inc.?
N/A
Issue No. 30. If your answer to Issue No. 29 is YES, what amount of damages,
if any, is Defendant Brian P. Sisson entitled to recover from Plaintiff Bayport
Holdings, Inc. for Plaintiff Bayport Holdings, Inc.’s constructive fraud?

N/A
Issue No. 31. If your answer to Issue No. 21 is YES, was Plaintiff Bayport
Holdings, Inc.’s conduct fraudulent, willful, or wanton thereby justifying the
award of punitive damages to Defendant Lake Norman Sporting Arms and
Range, Inc.?
YES.
Issue No. 32. If your answer to Issue No. 31 is YES, what amount, if any, is
Defendant Lake Norman Sporting Arms and Range, Inc. entitled to recover
from Plaintiff Bayport Holdings, Inc. as punitive damages?

NONE.
Issue No. 33. If your answer to one or more of Issue No. 23, Issue No. 25, or
Issue No. 29 is YES, was Plaintiff Bayport Holdings, Inc.’s conduct
fraudulent, willful, or wanton thereby justifying the award of punitive
damages to Defendant Brian P. Sisson?

NO.
Issue No. 34. If your answer to Issue No. 33 is YES, what amount, if any, is
Defendant Brian P. Sisson entitled to recover from Plaintiff Bayport Holdings,
Inc. as punitive damages?
N/A
Issue No. 35. Did Defendant Brian P. Sisson take advantage of a position of
trust and confidence to do one or more of the following:
a. Take hard copies or electronically stored version of Plaintiff Bayport
Holdings, Inc.’s customer list?

YES.
b. Bring about the closing of Denver Defense (the business)?

NO.
c. Operate Denver Defense (the business) under Defendant Lake Norman
Sporting Arms and Range, Inc. bank account?

YES.
d. Purchase serialized inventory under Plaintiff Bayport Holdings, Inc.’s
Federal Firearms License while paying for that inventory with
Defendant Lake Norman Sporting Arms and Range, Inc.’s funds?

NO.
e. Commingle Plaintiff Bayport Holdings, Inc.’s operating finances with
Defendant Lake Norman Sporting Arms and Range, Inc.’s funds?

YES.
f. Eliminate Plaintiff Bayport Holdings, Inc. as a competitor?

NO.
Issue No. 36. If your answer to any subpart of Issue No. 35 is YES, what
amount of damages, if any, is Plaintiff Bayport Holdings, Inc. entitled to
recover from Defendant Brian P. Sisson?

$1.00
Issue No. 37. If your answer to any subpart of Issue No. 35 is YES, was
Defendant Brian P. Sisson acting as the agent of Defendant Lake Norman
Sporting Arms and Range, Inc. at the time he engaged in the conduct in
question?
NO.
Issue No. 38. Did Plaintiff Bayport Holdings, Inc. provide misleading
inventory numbers to Defendant Brian P. Sisson in order to entice him to
enter into the Management Agreement?

YES.
Issue No. 39. Did Plaintiff Bayport Holdings, Inc. provide misleading revenue
numbers to Defendant Brian P. Sisson in order to entice him to enter into the
Management Agreement?
NO.

Issue No. 40. Did Plaintiff Bayport Holdings, Inc. fail to notify Defendant
Brian P. Sisson prior to signing the Management Agreement that Plaintiff
Bayport Holdings, Inc. was in default on the bank loans?

YES.
Issue No. 41. Did Plaintiff Bayport Holdings, Inc. fail to notify Defendant
Brian P. Sisson prior to signing the Management Agreement that Plaintiff
Bayport Holdings, Inc. had not paid several vendors and these vendors would
no longer ship to Plaintiff Bayport Holdings, Inc.?

YES.
Issue No. 42. Did Plaintiff Bayport Holdings, Inc. fail to notify Defendant
Brian P. Sisson prior to signing the Management Agreement that Plaintiff
Bayport Holdings, Inc.’s shareholders had contributed in excess of $207,000
into Plaintiff Bayport Holdings, Inc. in 2017 to keep the business alive?

YES.
Issue No. 43. If your answer to one or more of Issue Nos. 38 – 42 is YES, what
amount of damages, if any, is Defendant Brian P. Sisson entitled to recover
from Plaintiff Bayport Holdings, Inc. for the conduct of Plaintiff Bayport
Holdings, Inc. as you have found occurred in answering YES to one or more
of Issue Nos. 38 – 42?
$4.50

4. Both Plaintiff and Defendants brought claims for unfair or deceptive trade

practices pursuant to N.C.G.S. § 75-1.1, et. seq. While all factual issues were

submitted to the jury, “it is a question of law for the court as to whether [the] proven

facts constitute an unfair or deceptive trade practice.” United Labs., Inc. v.

Kuykendall (Kuykendall I), 322 N.C. 643, 664, 370 S.E.2d 375, 389 (1988) (citation

omitted). Accordingly, whether the proven conduct of either Plaintiff or Defendants

was unfair or deceptive is an issue appropriate for the Court to determine in this

Final Judgment.

5. The parties stipulated on the record that, during all relevant times, the

parties’ conduct was “in or affecting commerce.” Therefore, the sole question before

the Court is whether any party’s conduct was unfair or deceptive. An act or practice

is considered unfair when “it offends established public policy as well as when the

practice is immoral, unethical, oppressive, unscrupulous, or substantially injurious
to consumers.” Marshall v. Miller, 302 N.C. 539, 548, 276 S.E.2d 397, 403 (1981).

An act or practice is deceptive when it has the tendency to deceive. Id.

6. Unfairness and deception, thus, are gauged by consideration of the effect

of the conduct on the marketplace. Wilder v. Squires, 68 N.C. App. 310, 316, 315

S.E.2d 63, 66 (1984). Therefore, “it follows that the intent of the actor is irrelevant;

good faith is equally irrelevant. What is relevant is the effect of the actor’s conduct

on the consuming public.” Id.; see also Edwards v. West, 128 N.C. App. 570, 575, 495

S.E.2d 920, 924 (1998) (“[D]eliberate acts of deceit or bad faith do not have to be

shown. Instead, [a] plaintiff[ ] must demonstrate the act possessed the tendency or

capacity to mislead, or created the likelihood of deception.” (internal citations and

quotation marks omitted)).

7. If proven conduct is determined to be unfair or deceptive pursuant to

section 75-1.1, “and if damages are assessed[,] in such case judgment shall be

rendered in favor of the plaintiff and against the defendant for treble the amount

fixed by the verdict.” N.C.G.S. § 75-16. Further, in the Court’s discretion, attorneys’

fees may be awarded to the prevailing party if “[t]he party charged with the violation

has willfully engaged in the act or practice, and there was an unwarranted refusal

by such party to fully resolve the matter which constitutes the basis of such suit[.]”

Id. § 75-16.1.

8. Following the jury’s return of the verdict, the Court entered a Briefing

Order Regarding Post-Trial Matters, (ECF No. 78), giving both Plaintiff and

Defendants an opportunity to file briefs in further support of their respective UTDP

claims and motions for award of attorneys’ fees and set a deadline of March 4, 2020
for any submissions in this regard. Thereafter, on March 4, 2020, Defendants filed

Defendants’ Memorandum in Support of Defendants’ Sixth Counterclaim for Unfair

and Deceptive Trade Practices, (ECF No. 79), Defendants’ Motion for Attorney’s

Fees, (ECF No. 80), and Defendants’ Memorandum in Support of Motion for

Attorney’s Fees, (ECF No. 81). Defendants did not timely submit any affidavits or

other evidence in support of their Motion for Attorney’s Fees. Rather, nine days

later, on March 13, 2020, Defendants submitted two affidavits: one from Mr.

Christopher P. Gelwicks, (ECF No. 84), and one from Mr. Kevin M. Sisson, (ECF No.

84).

9. On March 4, 2020, Plaintiff filed Plaintiffs’ [sic] Motion to Tax Costs and

Attorneys’ Fees, (ECF No. 82), and Memorandum of Law in Support of Plaintiffs’

[sic] Motion to Tax Costs and Attorney’s Fees, (ECF No. 83). Plaintiff filed as Exhibit

A to its Motion to Tax Costs and Attorney’s Fees the Affidavit of Michael K. Elliot.

(See ECF No. 83.) Plaintiff did not file a brief in further support of its UDTP claim.

10. The Court first addresses whether the parties have demonstrated that the

opposing side engaged in unfair or deceptive acts consistent with section 75-1.1. A

number of the issues submitted to the jury regarding other substantive claims

potentially implicate section 75-1.1. In addition, at the request of the respective

parties, the Court submitted to the jury a number of issues requesting that the jury

determine whether the opposing party or parties had engaged in specific conduct

that was claimed to be unfair or deceptive. For purposes of determining whether

any conduct found by the jury was unfair or deceptive, the Court has considered each

of the issues where the jury found some misconduct resulting in damage.
11. First, as to Plaintiff’s UDTP claim against Sisson and LNSAR, in answer

to Issue No. 35, the jury found that Sisson took advantage of a position of trust and

confidence 3 with Plaintiff by taking hard copies or electronically stored version(s) of

Plaintiff’s customer list, by operating Denver Defense (the business) under LNSAR’s

bank account, and by commingling Plaintiff’s operating finances with LNSAR’s

funds. The Court concludes that these acts are “unfair” for purposes of section 75-

1.1. By commingling the funds of Plaintiff’s with that of a competing business,

Sisson was acting in an unethical manner, and confusing the public as to with whom

Plaintiff’s customers were engaging in business—Plaintiff or LNSAR. Accordingly,

the Court finds that Sisson’s conduct was unfair and that damages awarded in this

regard should be trebled. In answer to Issue No. 36, the jury found that the amount

of damages Plaintiff was entitled to recover from Sisson was one dollar ($1.00).

Accordingly, the damages Plaintiff is entitled to recover from Sisson pursuant to

section 75-16 is three dollars ($3.00). 4 In answer to Issue No. 37, the jury did not

find that Sisson was acting as an agent of LNSAR at the time he engaged in the

conduct in question. Accordingly, Plaintiff has not proven its UDTP claim against

LNSAR and is not entitled to recover from that defendant.

3 In answer to Issue No. 6, the jury found that Sisson owed Plaintiff a fiduciary duty, but

that there was no breach of that duty. Accordingly, based on the jury verdict, these findings
do not support Plaintiff’s breach of fiduciary duty or constructive fraud claims.
4 “Although certain [causes of action], standing alone, may evoke the action, a claim for

unfair and deceptive trade practices pursuant to N.C.G.S. § 75-1.1 is an independent claim
that stands alone as a distinct action[.]” Sunbelt Rentals, Inc. v. Head & Engquist Equip.,
L.L.C., 2003 NCBC LEXIS 6, at *139 (N.C. Super. Ct. May 2, 2003). Accordingly, Plaintiff
can succeed on its UDTP claim even if the jury returned a verdict against it on all other
claims.
12. As to Sisson’s and LNSAR’s UDTP claims against Plaintiff, in answer to

Issue Nos. 21 and 22, the jury found that Plaintiff converted property belonging to

LNSAR and that LNSAR was entitled to recover $18,500 for this conduct. While the

conversion of property can be an unfair or deceptive act, see, e.g., Faucette v. 6303

Carmel Rd., LLC, 242 N.C. App. 267, 276, 775 S.E.2d 316, 323 (2015), it is not per

se unfair or deceptive. 5

13. The Court determines that Plaintiff’s conversion of LNSAR’s property was

not unfair or deceptive. Upon the record as a whole, including the evidence

presented by Defendants regarding the handling by Plaintiff of Defendant’s

property, the Court concludes that Plaintiff did not act in any way that was immoral,

unethical, oppressive, unscrupulous, or substantially injurious to consumers, nor did

Plaintiff’s acts in this regard have the tendency or capacity to mislead. The jury’s

finding that Sisson operated Denver Defense (the business) under LNSAR’s bank

account and commingled Plaintiff’ operating finances with LNSAR’s funds indicates

that who owned what guns at relevant periods was subject to uncertainty, and does

5 The Court notes that the jury, in answer to Issue No. 31, found that Plaintiff’s conversion

of LNSAR’s property was “fraudulent, willful, or wanton” for purposes of punitive damages.
Notwithstanding this finding, the jury declined—in its discretion—to award punitive
damages regarding LNSAR’s conversion counterclaim. While a plaintiff (or, in this case, a
counterclaimant) is permitted to recover punitive damages and damages stemming from a
UDTP claim regarding the same conduct, the plaintiff is not entitled to both awards and
must choose between the two if both are awarded. Compton v. Kirby, 157 N.C. App. 1, 21,
577 S.E.2d 905, 918 (2003). In this case, the jury elected not to award LNSAR any punitive
damages, and therefore, if the Court determines that Plaintiff’s conversion of LNSAR
property was unfair or deceptive under section 75-1.1, then LNSAR would be entitled to an
award pursuant to section 75-16. A finding by the jury that Plaintiff’s conduct was
“fraudulent, willful, or wanton” to warrant the imposition, in its discretion, of punitive
damages bears no consideration on the Court’s decision to find (or not find) that same
conduct unfair or deceptive. See Estate of Hurst v. Moorehead I, LLC, 228 N.C. App. 571,
585, 748 S.E.2d 568, 578 (2013) (“[T]he issues of fraud and punitive damages are separate
and distinct claims from the issue of unfair and deceptive trade practices.”).
not, in the Court’s discretion, support the conclusion that Plaintiff acted unfairly or

deceptively by selling certain guns left in its store after the deterioration of the

parties’ business relationship. Accordingly, the Court concludes that LNSAR is not

entitled to recover on its UDTP claim against Plaintiff in this regard.

14. In answer to Issue Nos. 25 and 26, the jury found that Plaintiff negligently

misrepresented information to Sisson regarding the sale of Denver Defense and that,

for this conduct, Sisson was entitled to recover $3,000 from Plaintiff. Upon the

record as a whole, the Court concludes that Plaintiff acted in a way that had the

capacity to mislead, or created the likelihood of deception, even if not intentional, by

engaging in this conduct and Plaintiff’s conduct, thus, was “deceptive” for purposes

of section 75-1.1. Therefore, the Court concludes that Sisson is entitled to recover

on his UDTP claim against Plaintiff in this regard and is entitled to treble damages.

Accordingly, the damages Sisson is entitled to recover from Plaintiff pursuant to

section 75-16 is $9,000.000.

15. In answer to Issue No. 38, the jury found that Plaintiff provided

misleading inventory numbers to Sisson in order to entice him to enter into the

Management Agreement. The jury also found that Plaintiff failed to notify Sisson

prior to signing the Management Agreement that: (a) Plaintiff was in default on its

bank loans (Issue No. 40); (b) Plaintiff had not paid several vendors and these

vendors would no longer ship to Plaintiff (Issue No. 41); and that (c) Plaintiff’s

shareholders had contributed in excess of $207,000 into Plaintiff in 2017 to keep the

business alive (Issue No. 42). As to the conduct proven in Issue Nos. 38, 40, 41, and

42, the jury found that Sisson was entitled to recover $4.50 from Plaintiff. Upon the
record as a whole, the Court concludes that the jury’s finding in answer to Issue No.

38 that Plaintiff provided misleading inventory numbers to Sisson in order to entice

him to enter into the Management Agreement had the capacity to deceive and

therefore was “deceptive” for purposes of section 75-1.1. The Court concludes,

however, that Plaintiff’s failure to disclose all of Plaintiff’s business struggles, as set

forth in Issue Nos. 40, 41, and 42, were neither unfair nor deceptive for purposes of

section 75-1.1. In answer to Issue No. 43, the jury found Defendants were entitled

to $4.50 for the conduct set forth in Issue No. 38. Accordingly, the damages Sisson

is entitled to recover from Plaintiff pursuant to section 75-16 is $13.50 for this

conduct.

16. In sum, the Court concludes that Plaintiff has proven its UDTP claim

against Sisson and is entitled to trebled damages of three dollars ($3.00) for Sisson’s

unfair conduct. Further, Sisson has proven his UDTP claim against Plaintiff and is

entitled to trebled damages of $9,013.50. LNSAR, however, has not proven its UDTP

claim against Plaintiff and therefore LNSAR is not entitled to recover for its

counterclaim in this regard, nor is LNSAR entitled to attorneys’ fees arising from

pursing its UDTP counterclaim.

17. The Court next addresses whether either Plaintiff or Sisson is entitled to

their attorneys’ fees for their respective UDTP claims pursuant to section 75-16.1.

Under this statutory provision, a “plaintiff [or counterclaimant] must also show [in

addition to a violation of section 75-1.1] that there was an unwarranted refusal by

the defendant to fully resolve the matter which constitutes the basis of the suit.”

United Labs., Inc. v. Kuykendall (Kuykendall II), 335 N.C. 183, 190, 437 S.E.2d 374,
378 (1993). The Court does not believe either side was unwarranted in refusing to

resolve this matter. In fact, both sides presented evidence in support of their

positions, and ultimately the parties’ underlying conduct required the jury to resolve

disputed issues of material fact that could have supported, or refuted, Plaintiff’s and

Sisson’s conduct that ultimately supported the parties’ respective UDTP claims.

Accordingly, the Court, in its discretion, declines to award attorneys’ fees to Plaintiff

or Sisson pursuant to section 75-16.1.

18. Finally, the Court turns to Defendants’ argument that they are entitled to

attorneys’ fees because Paragraph 18 of the Management Agreement between

“Denver Defense/ Bayport Holdings[,]” on the one hand, and Sisson, on the other

hand, (Ex. B to Compl., ECF No. 3), contains a “reciprocal attorney’s fees provision”

which states that if the Management Agreement “needs to be enforced[,] the winning

party is entitled to receive costs and reasonable attorney’s fees.” In support of their

position, Defendants cite to N.C.G.S. § 6-21.6(c), which provides that if “a business

contract governed by the laws of this State contains a reciprocal attorneys’ fees

provision, the court or arbitrator in any suit, action, proceeding, or arbitration

involving the business contract may award reasonable attorneys’ fees in accordance

with the terms of the business contract.”

19. In response to this argument, Plaintiff points to the definition of “business

contract” under section 6-21.6(a)(1), which expressly excludes an “employment

contract.” An “employment contract is defined in section 6-21.6(a)(3) as “[a] contract

between an individual and another party to provide personal services by that

individual to the other party, whether the relationship is in the nature of employee-
employer or principal-independent contractor.” Plaintiff also contends that, based

on the parties’ stipulations and the evidence submitted at trial, the Management

Agreement was an agreement between Plaintiff and Sisson whereby Sisson would

manage Plaintiff’s business.

20. The Court concludes that paragraph 18 of the Management Agreement

does not entitle either Sisson or LNSAR to payment of any or all of their attorneys’

fees. First, at best, the contract is ambiguous as to whether it is a business contract

or an employment contract. Where an ambiguity exists, “the court is to construe the

ambiguity against the drafter[.]” Sears Roebuck & Co. v. Avery, 163 N.C. App. 207,

221, 593 S.E.2d 424, 434 (2004). In this case, the parties stipulated that Sisson was

the drafter of the Management Agreement. The Court, therefore, concludes that the

Management Agreement is an employment contract expressly excluded from section

6-21.6.

21. Moreover, the Court concludes that even if the Management Agreement

was a “business contract,” the language of Paragraph 18 is unenforceable as written.

Section 6-21(b)(4) provides that a reciprocal attorneys’ fees provision is a provision

in a

written business contract by which each party to the contract agrees
. . . upon the terms and subject to the conditions set forth in the contract
that are made applicable to all parties, to pay or reimburse the other
parties for attorneys’ fees and expenses incurred by reason of any suit,
action, proceeding, or arbitration involving the business contract.

Id. § 6-21.6(b) (emphasis added).

22. Paragraph 18 does not set forth any terms or conditions regarding the

payment or reimbursement for attorneys’ fees and expenses, nor does the provision
expressly incorporate the factors set forth in 6-21.6(c) to guide the Court in its

analysis. Accordingly, the Court concludes that it cannot enforce the reciprocal

attorney’s fees provision as drafted and Defendants are not entitled to attorneys’

fees on that basis.

23. Lastly, Defendants’ Memorandum in Support of Motion for Attorney’s Fees

was not properly supported by affidavits setting forth the costs and fees incurred by

Defendants in pursing their counterclaims. As noted above, the Court gave the

parties a deadline of March 4, 2020 to file their motions for attorneys’ fees. While

Defendants timely filed their motion, that motion was not accompanied by any

affidavits from counsel. Instead, nine days after the deadline, Defendants’ counsel

untimely submitted two affidavits for the Court’s consideration. Not only were these

filings late pursuant to an express order of this Court, but Rule 6(d) of the North

Carolina Rules of Civil Procedure provides that “[w]hen a motion is supported by

affidavit, the affidavit shall be served with the motion[.]” Id. § 1A-1, Rule 6(d).

Defendants failed to comply with both the Rules of Civil Procedure and an order of

this Court. Accordingly, the Court, in its discretion, declines to consider the

affidavits submitted in support of Defendants’ Motion for Attorney’s Fees and,

therefore, has no basis upon which to determine an award of attorneys’ fees. 6

6 Even if the Court was disposed to consider the affidavits, and even if Paragraph 18 of the

Management Agreement otherwise provided a proper basis for an award of attorneys’ fees,
the Court concludes that the affidavits submitted fail to explain what portion of the work
performed by counsel for Defendants related to Sisson’s enforcement of the Management
Agreement as opposed to other issues involved. The Court also notes that Defendants’
counsel performed services for both Sisson and LNSAR but, as between them, only Sisson
was a party to the Management Agreement and only he would have arguably been entitled
to recover attorneys’ fees.
24. IT IS THEREFORE ORDERED, based on the verdict of the jury and the

Court’s conclusions of law as set forth herein:

A. That judgment is entered for Plaintiff as to its claim for unfair and

deceptive trade practices against Sisson in the amount of $3.00.

B. That judgment is entered for Defendant LNSAR as to its conversion of

property claim against Plaintiff and Plaintiff shall pay to LNSAR

damages in the amount of $18,500.00.

C. That judgment is entered for Sisson as to his claim for negligent

misrepresentation against Plaintiff, which constitutes as an unfair or

deceptive trade practice, and accordingly Plaintiff shall pay to Sisson

damages in the amount of $9,000.00.

D. That judgment is otherwise entered for Sisson as to his UDTP claim

against Plaintiff for Plaintiff misleading its inventory numbers to Sisson

in order to entice him to enter into the Management Agreement, and

Plaintiff shall pay to Sisson damages in the amount of $13.50.

E. That all other claims brought by the parties to this lawsuit, except as

those explicitly set forth in subparagraphs A–D of this paragraph, are

hereby entered in favor of the defending party thereto and these claims

are DISMISSED WITH PREJUDICE.

F. The foregoing represents a complete and final disposition of all claims in

this case.

G. The Court shall address, if necessary, the taxation of costs as may be

submitted by a party claiming entitlement to the same based on this Final
Judgment. Any such submission shall be made by separate motion

supported by one or more affidavits, documentary receipts, and a brief in

support.

SO ORDERED, this the 23rd day of April, 2020.

/s/ Michael L. Robinson
Michael L. Robinson
Special Superior Court Judge
for Complex Business Cases