Kadah v. Paladin Drones, Inc.

Kadah v. Paladin Drones, Inc., 2026 NCBC 47.

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
MECKLENBURG COUNTY 25CV050925-590

KHALED KADAH,

Plaintiff/
Counterclaim-
Defendant,
ORDER AND OPINION ON PALADIN
v. DRONES, INC.’S PARTIAL MOTION
TO DISMISS
PALADIN DRONES, INC.,

Defendant/
Counterclaim-
Plaintiff,

1. This matter is before the Court on defendant Paladin Drones, Inc.’s

partial motion to dismiss certain of the causes of action filed by plaintiff Khaled

Kadah. (ECF No. 9).

2. With its motion, Paladin moves to dismiss Kadah’s first cause of action

for breach of contract and fourth cause of action for alleged violations of N.C. Gen.

Stat. § 75–1.1 et seq. (ECF No. 9).

3. Having considered the complaint, the motion, the written arguments of

counsel, and applicable law, the Court hereby GRANTS IN PART and DENIES IN

PART the motion as set forth below.

Womble Bond Dickinson, LLP by Mark Henriques, Michael Ingersoll,
and Philip D. Mayer, for Plaintiff Khaled Kadah.

Grellas Shah, LLP by Dhaivat Shah and Jack Bussell, and Nelson
Mullins Riley & Scarborough, LLP by Joseph Matthew Gorga and
Jordan Koonts, for Defendant Paladin Drones.

Houston, Judge.
BACKGROUND

1. The Court does not make findings of fact on a Rule 12(b)(6) motion to

dismiss. Instead, for background, the Court summarizes the most relevant factual

allegations in the complaint and accepts the well-pleaded factual allegations as true

for purposes of this Order and Opinion.

4. Paladin is a Delaware corporation based in Texas but doing business in

North Carolina, with its business consisting of manufacturing autonomous drone

systems and related technology for public-safety markets. (ECF No. 3, ¶¶ 2, 5).

5. In September 2023, Paladin hired Kadah as its Director of Sales. (ECF

No. 3, ¶ 6). That same year, Kadah opened Paladin’s Charlotte, North Carolina office,

and Paladin posted record sales. (ECF No. 3, ¶ 6–7).

6. In February 2024, Kadah accepted a promotion to the position of Vice-

President of Sales for Paladin. (ECF No. 3, ¶ 8 & Ex. A). In conjunction with that

promotion, Paladin CEO Divyaditya Shrivastava (“Divy”) sent Kadah an undated

offer letter (“2024 Offer Letter”). (ECF No. 3, ¶¶ 8–9 & Ex. A).

7. The primary terms of the 2024 Offer Letter that Kadah accepted were

as follows:

Equity: 4%, and protected against dilution through a Series A
round, backdated to your starting date of Sept 6th 2023,
Salary: $80k
Commission: 10% for deals you personally close, 3% of all other
deals closed.

As discussed, your equity will be subject to you helping the
company achieve at minimum $1.5m signed and closed ARR
before EOY 2024. In your position of VP of Sales, my metric
expectation and your target is for the company to reach $3.5M in
ARR by EOY 2024. If these goals are not met, your equity and
offer will revert to your previously set Sales Director role.

(ECF No. 3, ¶¶ 9–10 & Ex. A).

8. Divy also “verbally reiterated” the “promise of equity and non-dilution.”

(ECF No. 3, ¶ 9).

9. In April 2024, Paladin raised $3 million pursuant to a SAFE agreement

with Gradient Ventures, IV, L.P. However, “no additional equity was issued to”

Kadah. (ECF No. 3, ¶ 12).

10. In May 2025, Paladin sought to raise an additional $9 million in capital

by initiating a Series Seed Preferred round headed by Long Journey Fund IV, L.P.

(“Long Journey” or “Long Journey Financing”). (ECF No. 3, ¶ 14). Kadah alleges

that Long Journey imposed on Paladin a “requirement of ‘leadership alignment.’”

(ECF No. 3, ¶ 15).

11. According to Kadah, this requirement and Paladin’s desire “to ensure

Kadah’s continued cooperation during the Long Journey Financing” led Paladin and

Kadah to enter into an oral agreement in “early June 2025” (“Oral Agreement”).

(ECF No. 3, ¶ 15).

12. According to Kadah, the material terms of the Oral Agreement were

that:

a. Paladin would pay Kadah a cash bonus of $250,000 following the closing

of the Long Journey Financing;

b. Paladin would pay Kadah additional compensation of $160,000 over two

years, paid by “increasing Kadah’s base salary to $80,000 per year,
locked for twenty-four months,” which Kadah would be entitled to

receive even if his employment with Paladin terminated during that

time (“Additional Compensation”); 1

c. following the close of the Long Journey Financing, a “re-up” of Kadah’s

equity in Paladin, such that “Kadah would still hold no less than sixty

percent (60 %) of his originally promised antidilution position (i.e., not

more than forty percent (40 %) dilution)”;

d. Kadah would prospectively waive further anti-dilution rights and

continue working to increase investment in Paladin; and

e. Kadah would remain “aligned” with Paladin’s leadership team and

would not interfere with the Long Journey Financing. (ECF No. 3, ¶ 15).

13. Although Kadah states that a valid Oral Agreement was entered into in

June 2025, he alleges “Kadah and Paladin memorialized the material terms of the

[Oral Agreement] in multiple writings” across subsequent months. (ECF No. 3, ¶ 17).

14. Those subsequent writings (collectively, “Subsequent Writings”)

include:

a. A draft “Offer Letter Agreement” prepared by Paladin’s legal counsel

and dated 11 June 2025 and;

b. “A revised draft circulated between the parties”;

1 While this allegation indicates that Kadah’s salary would be increased to $80,000 per year,

the Court notes that the 2024 Offer Letter stated that Kadah’s salary would be $80,000. (ECF
No. 3, Ex. A). If the Additional Compensation were to total $160,000, as Kadah alleges, and
Kadah’s base salary were “increased to” $80,000, this implies that Kadah’s pre-Additional-
Compensation salary was $0. The record is silent on whether Kadah’s 2024 salary was, in
fact, $80,000, or if that salary was subsequently lowered or altered in some way.
c. Emails between attorneys for the parties from 23–25 July 2025,

“acknowledging the parties’ agreement on the $250,000 Bonus, salary

increase, and equity re-up”; and

d. Kadah’s email to the CEO, Divy, “confirming mutual assent to the

agreed terms” and dated 31 July 2025.

(ECF No. 3, ¶ 17; ECF No. 9, Exs. A–D). 2

15. According to Kadah, Divy acknowledged the Oral Agreement and its

terms on multiple occasions in June and July 2025. Nevertheless, Kadah maintains

that Paladin declined to formalize the Oral Agreement in writing until after the Long

Journey Financing deal closed. (ECF No. 3, ¶¶ 15, 17–18, 20).

16. Kadah maintains that he complied with the terms of the Oral

Agreement but resigned his employment on 4 August 2025 because Paladin declined

to execute a written employment contract. (ECF No. 3, ¶¶ 19, 22).

17. When the Long Journey Financing closed in August 2025, 3 Paladin

received $9 million in new capital. Notwithstanding the successful fundraising,

Kadah contends that Paladin still refused to produce a written contract formalizing

2 While a motion to dismiss considers the sufficiency of the factual allegations in the
complaint, the Court may consider documents that are referenced in, or incorporated into the
complaint, regardless of the party providing the documents. Oberlin Cap., L.P. v. Slavin, 147
N.C. App. 52, 60 (2001); Packard v. Sei Priv. Trust Co., 2025 NCBC LEXIS 69, at *7–8 (N.C.
Super. Ct. June 10, 2025). Accordingly, the Court may appropriately consider the documents
provided by Paladin with its motion to dismiss to the extent that they were referenced and
relied upon in Kadah’s complaint.

3 The complaint is silent as to the specific date in “August 2025” when the Long Journey

Financing closed. (ECF No. 3, ¶ 23). Accordingly, it is unclear on the face of the complaint if
Kadah resigned before or after the Long Journey Financing deal closed.
the Oral Agreement. Moreover, Paladin declined to pay Kadah a $250,000 bonus,

deliver on the equity re-up terms, or honor the non-dilution provision. Instead,

Paladin requested that Kadah execute a written release that eliminated the anti-

dilution protections, required a general release of Kadah’s claims, and imposed new

stock transfer restrictions on Kadah. Kadah rejected the terms enumerated in the

release and demanded that the Oral Agreement be honored. (ECF No. 3, ¶¶ 23–27).

18. Kadah maintains that Paladin’s refusal to execute a written agreement

memorializing the terms of the Oral Agreement was a deliberate tactic that had the

effect of “stringing Kadah along to secure his cooperation, misrepresenting that a

written agreement was forthcoming.” (ECF No. 3, ¶ 31).

19. Kadah initiated this action on 24 September 2025, asserting causes of

action for (i) breach of contract under the Oral Agreement, (ii) violations of the North

Carolina Wage and Hour Act, N.C. Gen. Stat. § 95-25.1 et seq., (iii) breach of contract

for failure to issue stock, and (iv) violations of N.C. Gen. Stat. § 75–1.1 et seq. (See

generally ECF No. 3, ¶¶ 32–53).

20. On 27 October 2025, Paladin filed its partial motion to dismiss pursuant

to Rule 12(b)(6) as to Kadah’s first breach of contract cause of action and his chapter

75 cause of action. (ECF No. 9). Paladin has not moved to dismiss Kadah’s wage and

hour act cause of action or his cause of action for breach of contract for failure to issue

stock.
21. On 28 October 2025, this case was designated as a mandatory complex

business case and assigned to the undersigned Business Court judge. (ECF Nos. 1–

2).

22. The motion is fully briefed and ripe for resolution, and the Court resolves

the motion on the briefing pursuant to Rule 7.4 of the Business Court Rules, with

each party having had a full opportunity to brief the motion.

ANALYSIS

23. When considering a Rule 12(b)(6) motion to dismiss, the Court must

determine “whether the allegations of the complaint, if treated as true, are sufficient

to state a claim upon which relief can be granted under some legal theory.” Corwin v.

Brit. Am. Tobacco PLC, 371 N.C. 605, 615 (2018) (citation omitted).

24. The Court treats the well-pleaded factual allegations as true and views

them “in the light most favorable to the non-moving party.” Sykes v. Health Network

Sols., Inc., 372 N.C. 326, 332 (2019) (citation omitted); Christenbury Eye Ctr., P.A. v.

Medflow, Inc., 370 N.C. 1, 5 (2017). The Court must determine “whether, as a matter

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

upon which relief can be granted under some [recognized] legal theory.” Forsyth

Mem’l Hosp., Inc. v. Armstrong World Indus., 336 N.C. 438, 442 (1994) (quoting Lynn

v. Overlook Dev., 328 N.C. 689, 692 (1991) (alterations in original)).

25. Further, the Court “may properly consider documents which are the

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

regardless of the party that presents them. Oberlin, 147 N.C. App. at 60 (citation
omitted). The Court “can reject allegations that are contradicted by the documents

attached, specifically referred to, or incorporated by reference in the complaint.” Moch

v. A.M. Pappas & Assocs., LLC, 251 N.C. App. 198, 206 (2016) (citations omitted).

26. Dismissal on a Rule 12(b)(6) motion is proper if “(1) the complaint on its

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

reveals the absence of facts sufficient to make a good claim; or (3) the complaint

discloses some fact that necessarily defeats the plaintiff’s claim.” Corwin, 371 N.C. at

615 (citations omitted).

27. The Court addresses the causes of action at issue in turn.

A. Breach of Contract – Oral Agreement

28. In relevant part, Kadah asserts that, regardless of written exchanges,

the parties reached an oral contract in the form of the Oral Agreement. He then

contends that Paladin breached the Oral Agreement “by refusing to pay the $250,000

Bonus, refusing to pay the Additional Compensation, and refusing to issue the Stock.”

(ECF No. 3, ¶¶ 15, 35; ECF No. 21 at 4).

29. In support of its motion to dismiss, Paladin argues that (i) the Oral

Agreement is not a valid, enforceable contract; and (ii) alternatively, even if the Oral

Agreement is valid, Kadah breached the material terms of that agreement because

he did not remain “aligned” with leadership because he threatened to quit if no

written contract was executed. (ECF No. 10 at 3–8).
30. “The elements of a claim for breach of contract are (1) existence of a

valid contract and (2) breach of the terms of [the] contract.” McLamb v. T.P. Inc.,

173 N.C. App. 586, 588 (2005).

31. Ordinarily, to plead the existence of a valid contract, “this means that

the complaint must allege offer, acceptance, and consideration.” Lannan v. Bd. of

Governors of Univ. of N.C., 387 N.C. 239, 250 (2025) (citing Dodds v. St. Louis

Union Tr. Co., 205 N.C. 153, 156 (1933)).

32. Under North Carolina’s notice pleading standard, “stating a claim for

breach of contract is a relatively low bar.” Vanguard Pai Lung, LLC v. Moody, 2019

NCBC LEXIS 39, at *4 (N.C. Super. Ct. June 19, 2019).

33. Kadah alleges that he and Paladin, through its CEO, reached the Oral

Agreement in June 2025 and that the parties agreed on the material terms of the

Oral Agreement, including payment of a $250,000 bonus, payment of the $160,000

Additional Compensation over two years via an increased base salary, a “re-up” of

equity and stock, waiver of anti-dilution rights, and alignment with leadership. (ECF

No. 3, ¶ 15). Kadah identifies the alleged material terms of that Oral Agreement.

(ECF No. 3, ¶ 15(a)–(e)). Kadah also asserts that Paladin breached that Oral

Agreement in various ways—specifically, “by refusing to pay the $250,000 Bonus,

refusing to pay the Additional Compensation, and refusing to issue the Stock.” (ECF

No. 3, ¶¶ 15, 35; ECF No. 21 at 4).

34. This sufficiently alleges a breach of contract claim.
35. While Paladin argues that the Subsequent Writings demonstrate that

there was no Oral Agreement because there was no meeting of the minds and because

those documents contradict Kadah’s allegations, (ECF No. 10 at 4–5), the complaint

alleges that the Subsequent Writings “memorialized the material terms of the” Oral

Agreement—not that those Subsequent Writings were the Oral Agreement or formed

the basis for the Oral Agreement. (ECF No. 3, ¶ 17 (emphasis added)).

36. Further, to the extent that Paladin argues that Kadah’s complaint

reflects that Kadah breached a material term of the Oral Agreement by failing to

“align” with leadership, the Court disagrees that the allegations affirmatively

establish a material breach by Kadah as a matter of law at this stage.

37. Ultimately, the Court cannot conclude “beyond doubt” that Kadah “could

prove no set of facts in support of his claim which would entitle him to relief.” Meyer

v. Walls, 347 N.C. 97, 111–12 (1997).

38. Thus, construing all reasonable factual allegations in Kadah’s favor, the

Court DENIES Paladin’s partial motion to dismiss as to Kadah’s first cause of action

for breach of contract.

B. Alleged Violations of N.C. Gen. Stat. § 75–1.1 et seq.

39. The Court next turns to Kadah’s cause of action for alleged violations of

N.C. Gen. Stat. § 75–1.1 et seq.

40. Kadah alleges in his complaint that Paladin committed unfair or

deceptive acts or practices by “misrepresenting its intention to pay the Bonus,

misrepresenting its intention to honor the anti-dilution protections, using false
promises to secure Plaintiff’s continued performance, and tendering coercive release

documents[.]” (ECF No. 3, ¶ 51).

41. Paladin argues that, because this is an employer-employee and

securities dispute and because Kadah’s cause of action is ultimately one for breach of

contract, a cause of action under N.C. Gen. Stat. § 75–1.1 et seq. fails. (ECF No. 10 at

9–11).

42. To establish a prima facie claim for a violation of that statute, a plaintiff

must show that “(1) [the] defendant committed an unfair or deceptive act or practice,

(2) the action in question was in or affecting commerce, and (3) the act proximately

caused injury to the plaintiff.” Gen. Fid. Ins. v. WFT, Inc., 269 N.C. App. 181, 191

(2020) (citations omitted).

43. As the Supreme Court of North Carolina has explained, the statute “is

not focused on the internal conduct of individuals within a single market participant,

that is, within a single business. To the contrary, . . . the General Assembly intended

the Act’s provisions to apply to interactions between market participants. As a result,

any unfair or deceptive conduct contained solely within a single business is not

covered by the Act.” White v. Thompson, 364 N.C. 47, 53 (2010).

44. Thus, “most employer-employee disputes fall outside the purview” of

N.C. Gen. Stat. § 75–1.1 et seq. Value Health Sols., Inc. v. Pharm. Rsch. Assocs., Inc.,

385 N.C. 250, 277 (2023) (citations omitted); Kinesis Advert., Inc. v. Hill, 187 N.C.

App. 1, 21 (2007) (recognizing that “the employer/employee relationship does not fall

within the intended scope and purpose of” the statute (citations omitted)); Am. Marble
Corp. v. Crawford, 84 N.C. App. 86, 88 (1987) (explaining that the former

employee/defendant’s Chapter 75 counterclaim “lies outside the scope of G.S. § 75-

1.1”).

45. Moreover, “a mere breach of contract, even if intentional, is not

sufficiently unfair or deceptive to sustain an action under N.C.G.S. § 75–1.1.” Branch

Banking & Trust Co. v. Thompson, 107 N.C. App. 53, 62 (1992).

46. Instead, for a breach of contract to also constitute a violation of the

statute, the plaintiff must identify “substantial aggravating circumstances.” Value

Health Sols., 385 N.C. at 277 (citations and quotation marks omitted); SciGrip, Inc.

v. Osae, 373 N.C. 409, 427 (2020).

47. Here, Kadah fails to state a claim upon which relief can be granted.

48. The allegations of the complaint reflect that the dispute was limited to

a single market participant in the context of an employer-employee relationship, was

not in or affecting commerce, and involved alleged contractual breaches between the

employer and employee.

49. Further, even with Kadah having adequately stated a claim for breach

of contract, there are no allegations of substantial aggravating circumstances that

would bring the dispute within the scope of N.C. Gen. Stat. § 75–1.1 et seq.

50. Kadah fails to plead facts suggesting any conduct by Paladin rising to

the level of unfair or deceptive conduct under Chapter 75, and Kadah’s conclusory

allegations of alleged misrepresentations do not support such a claim. Brier Creek

Owners Ass’n v. Brier Creek Country Club Owners Ass’n, 2026 NCBC LEXIS 98, at
*17 (N.C. Super. Ct. Apr. 27, 2026) (dismissing cause of action under Chapter 75

where plaintiff’s limited and conclusory allegations failed to state a claim); Holleman

v. Aiken, 193 N.C. App. 484, 505 (2008) (determining that dismissal of another cause

of action was appropriate where “plaintiff ha[d] not alleged sufficient facts to support

plaintiff’s conclusory allegation”).

51. As Kadah has failed to state a claim upon which relief can be granted,

the Court GRANTS Paladin’s partial motion to dismiss Kadah’s fourth cause of

action and DISMISSES WITH PREJUDICE that cause of action.

CONCLUSION

Accordingly, the Court ORDERS that Paladin’s partial motion to dismiss is

GRANTED IN PART and DENIED IN PART as set forth above.

SO ORDERED, this 11th day of May 2026.

/s/ Matthew T. Houston
Matthew T. Houston
Special Superior Court Judge
for Complex Business Cases