SEARS FARM, LLC v. SAMARITAN HOUS. FOUND., INC., 2024 NCBC 19

STATE OF NORTH CAROLINA
WAKE COUNTY
IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
23 CVS 9526
SEARS FARM, LLC and SEARS,
HACKNEY, KEENER & WILLIAMS,
INCORPORATED,
Plaintiffs,
v.
SAMARITAN HOUSING
FOUNDATION, INC. d/b/a
SEARSTONE RETIREMENT
COMMUNITY,
Defendant.
ORDER AND OPINION ON
DEFENDANT SAMARITAN HOUSING
FOUNDATION, INC.’S MOTION TO
DISMISS OR, ALTERNATIVELY,
STRIKE
THIS 	MATTER 	is 	before 	the 	Court 	on 	Defendant 	Samaritan 	Housing
Foundation, Inc.’s Motion to Dismiss or, Alternatively, Strike (“Motion,” ECF No. 10).
THE COURT, having considered the Motion, the briefs of the parties, the
arguments of counsel, and all appropriate matters of record, CONCLUDES that the
Motion 	to 	Dismiss 	should 	be 	DENIED, 	and 	the 	Motion 	to 	Strike 	should 	be
GRANTED, in part, and DENIED, in part, for the reasons set forth below.
Milberg Coleman Bryson Phillips Grossman, PLLC, by Mark R. Sigmon,
Matthew Lee, and Katharine Batchelor, for Plaintiffs.
K&L Gates LLP, by A. Lee Hogewood III and Robert B. Womble, and
Williams Mullen, by Zachary S. Buckheit, for Defendant.
Davis, Judge.
INTRODUCTION
1. 	This case concerns a complicated series of transactions between the
parties relating to the financing and construction of a retirement community. 	The
defendant seeks dismissal of the plaintiffs’ claims for breach of contract and breach
Sears Farm, LLC v. Samaritan Hous. Found., Inc., 2024 NCBC 19.

of the implied covenant of good faith and fair dealing on the ground that these claims
are premature. 	Because the Court concludes that a more fully developed factual
record is necessary in order to rule on the legal issues presented in this action, the
motion to dismiss must be denied.
FACTUAL AND PROCEDURAL BACKGROUND
2. 	The Court does not make findings of fact in connection with a motion to
dismiss under Rule 12(b)(6) of the North Carolina Rules of Civil Procedure and
instead recites those facts contained in the complaint (and in documents attached to,
referred to, or incorporated by reference in the complaint) that are relevant to the
Court’s determination of the motion. 	See, e.g., Window World of Baton Rouge, LLC
v. Window World, Inc., 2017 NCBC LEXIS 60, at *11 (N.C. Super. Ct. July 12, 2017).
“When reviewing a motion to dismiss for lack of subject matter jurisdiction pursuant
to Rule 12(b)(1), a trial court may consider and weigh matters outside the pleadings.”
DOT v. Blue, 147 N.C. App. 596, 603 (2001) (citing Smith v. Privette, 128 N.C. App.
490, 493 (1998)).
3. 	Neither the complaint nor the parties’ briefs are models of clarity
regarding the numerous transactions at issue in this case and their effect upon one
another. 	What follows is the Court’s attempt to summarize the key events—as the
Court currently understands them—forming the basis for the issues raised by the
present Motion.
4. 	In or around 1998, William “Bill” Sears (“Bill”) sought to build a
retirement community in Wake County, North Carolina. Acting through Sears Farm,

LLC (“Sears Farm”) and Sears, Hackney, Keener & Williams, Incorporated (“SHKW”)
(collectively, “Plaintiffs”), over the next several years, Bill spearheaded the financing
and development of a new luxury retirement community called the SearStone
Continuing Care Retirement Community (“SearStone”). 	(Compl. ¶¶ 1, 11, ECF No.
3; Pls.’ Op. Def.’s Mot. Dismiss Strike, at 2, ECF No. 22.)
5. 	In 2002, the Cary Town Council unanimously approved Bill’s plans for
the SearStone project, which was referred to as the SearStone Planned Development
District (the “SearStone Project Site”). (Compl. ¶¶ 12, 14.)
6. 	In 2003, Bill formed Sears Farm, the entity through which he would
ultimately purchase the land for the SearStone Project Site from his family. (Compl.
¶¶ 13, 15.) 	Sears Farm is a limited liability company that is organized under the
laws of North Carolina with its principal place of business in Wake County. (Compl.
¶ 5.)
7. 	In 2004, Sears Farm purchased the SearStone Project Site from Bill’s
family for $14 million. 	(Compl. ¶ 16.) 	The purchase was partially funded by the
proceeds 	of 	a 	mortgage 	from 	SunTrust 	Bank 	(the 	“First 	SunTrust 	Loan”).
(Compl. ¶ 16.)
8. 	Between 2002 and 2004, Bill searched for a developer who could help
him bring the SearStone project to fruition. (Compl. ¶ 17.) In 2004, Bill met Stanley
G. Brading, an attorney who had experience with bond financing for similar projects.
(Compl. ¶ 17.) 	Brading ultimately joined the SearStone project as both an advisor
and as Sears Farm’s attorney. (Compl. ¶ 18.)

9. 	Based on Brading’s advice, Sears Farm decided to involve Defendant
Samaritan Housing Foundation, Inc. (“Samaritan”) in the project.1 	(Compl. ¶ 19.)
Samaritan is a non-profit corporation that is organized under the laws of the state of
Georgia and has a principal place of business in Georgia. (Compl. ¶ 7.)
10. 	Brading suggested that Sears Farm sell the SearStone Project Site to
Samaritan, who would work to secure financing for SearStone’s construction and,
ultimately, own and operate the community. (Compl. ¶¶ 19–20.) Meanwhile, Sears
Farm 	would 	be 	responsible 	for 	providing 	certain 	services 	to 	Samaritan.
(Compl. ¶ 20.)
11. 	At some point, Sears Farm signed a “Site Transfer Agreement” under
which it agreed to sell the SearStone Project Site to Samaritan at such time as
Samaritan managed to secure the financing necessary to construct Phase I of
SearStone.2 (See ECF No. 3.1, at 2.)
12. 	Before financing for SearStone’s construction could be secured, the
project required extensive “pre-construction” funding for regulatory and marketing
work. (See Compl. ¶¶ 25–28.)
13. 	To that end, on 29 April 2005, Sears Farm, Samaritan, and certain other
entities 	signed 	a 	Pre-Construction 	Funding 	and 	Development 	Agreement.
1 Brading ultimately became Samaritan’s president on 1 July 2011 and continues to serve in
that capacity. (Compl. ¶¶ 10, 103.)
2 The SearStone project was to be financed and constructed in two phases: Phase I and Phase
II. (Compl. ¶ 2.)

(“PCFDA,”3 	ECF 	No. 	3.1). 	The 	PCFDA 	memorialized 	the 	signatories’ 	pre-
construction capital investments in the SearStone project and included details about
how each of the signatories would be repaid for their respective investments. (Compl.
¶ 28.)4
14. 	Over the next several years, the SearStone project suffered significant
delays due to “regulatory hurdles” and the 2008 financial crisis. (Compl. ¶ 29.)
15. 	In February of 2008, Sears Farm refinanced the First SunTrust Loan
via a new SunTrust loan (the “Second SunTrust Loan”). (Compl. ¶ 30.)
16. 	By 2010, construction financing for SearStone had yet to be secured, but
the Second SunTrust Loan was nearing maturity. 	(Compl. ¶ 31.) 	Meanwhile,
Samaritan realized that it would need to defer its repayment of certain pre-
construction debts in order to finalize its purchase of the SearStone Project Site from
Sears Farm and construct Phase I of SearStone. 	(See Restated Pre-Construction
Funding and Development Agreement (“R-PCFDA”), at 3, ECF No. 3.2.)
17. 	In 	light 	of 	these 	circumstances, 	on 	26 	May 	2010, 	Sears 	Farm,
Samaritan, and several other entities signed a Restated Pre-Construction Funding
and Development Agreement (“R-PCFDA,” ECF No. 3.2). 	(Compl. ¶¶ 32–33.)
Pursuant to the R-PCFDA, SunTrust agreed to extend the Second SunTrust Loan’s
3 In the Complaint and in their respective briefs, the parties add confusion to what is already
a complicated set of facts by using different acronyms for the various written agreements
that were executed. For purposes of clarity, the parties are directed in all future filings to
use the acronyms contained in this Opinion.
4 As set out below, the PCFDA was amended several times by the parties. At times in this
Opinion, the Court refers to all of these documents collectively as the “PCFDA Agreements.”

maturity date. 	(Compl. ¶ 32.) 	The signatories also agreed to (1) subordinate and
defer the payments of fees and debts owed to each other regarding the construction
financing that Samaritan anticipated receiving for Phase I of SearStone; and (2)
advance additional capital for the project. (Compl. ¶ 32.)
18. 	By 31 October 2011, Samaritan had made progress in its efforts to
secure financing to construct Phase I of SearStone. (Compl. ¶¶ 36–37.) This progress
led Samaritan, Sears Farm, and others to sign an Amendment to Restated Pre-
Construction Funding and Development Agreement. 	(“A-R-PCFDA,” ECF No. 3.3.)
The A-R-PCFDA “reflected additional agreements regarding the repayment of pre-
finance capital and deferred fees.” (Compl. ¶ 37.)
19. 	Subsequently, Samaritan finalized the financing necessary to complete
its purchase of the SearStone Project Site from Sears Farm and construct Phase I.
(Compl. ¶ 38.) 	This financing consisted of $117,450,000 worth of proceeds from the
sale of a series of revenue bonds issued by the Public Finance Authority (“PFA”)
(individually, the 2012A, 2012B, and 2012C bonds; collectively, the “2012 Bonds”).
(Compl. ¶¶ 38–40.)
20. 	On 1 June 2012, several important events transpired. First, Samaritan
and Sears Farm (along with other parties) signed a Second Amendment to Restated
Pre-Construction Funding and Development Agreement. 	(“2A-R-PCFDA,” ECF No.
3.4.) 	Under 	the 	2A-R-PCFDA, 	the 	parties 	agreed 	to 	defer 	Samaritan’s
reimbursement of Sears Farm for $2,390,000 worth of payments that Sears Farm had
made on the principal of the Second SunTrust Loan. (Compl. ¶ 43; 2A-R-PCFDA, at

1, 	4–5.) 	The 	2A-R-PCFDA 	appears 	to 	refer 	to 	this 	$2,390,000 	deferred
reimbursement as the “Sears Farm Obligation.” 	(Compl. ¶ 44; 2A-R-PCFDA, at 5.)
Additionally, 	under 	the 	2A-R-PCFDA, 	Sears 	Farm 	deferred 	Samaritan’s
reimbursement of $993,000 worth of “services in connection with rezoning the
SearStone Project Site and owner supplied construction.” 	(2A-R-PCFDA, at 7.)
Exhibit 3 to the 2A-R-PCFDA also memorialized an “SHKW Deferred Fee” worth
$711,000 	for 	“architectural, 	development 	consulting 	and 	construction 	period
services.” (2A-R-PCFDA, at 7.)
21. 	The 2A-R-PCFDA amended the terms of the prior PCFDA documents in
three noteworthy ways. First, Exhibit 2 to the 2A-R-PCFDA states, in relevant part,
as follows:
[Samaritan] will be obligated to accrue interest at 6% per annum [on the
principal amount of contributed pre-construction capital] (which will not
exceed 	the . . . original 	principal 	amounts 	of 	the . . . Sears 	Farm
Obligation); however, interest on the . . . Sears Farm Obligation will not
be paid until the Series 2012 Bonds are paid in full.
22. 	Second, the 2A-R-PCFDA added a so-called “Efforts Clause,” which
states:
In the event of a refinancing and payoff of all of the obligations of
[Samaritan] related to the Bond Financing (a “Bond Refinancing”),
[Samaritan] shall use commercially reasonable efforts to negotiate
terms with respect to such Bond Refinancing to reimburse, to the extent
supported by a feasibility study prepared in connection with such Bond
Refinancing, the amount of the pre-financing capital provided by Sears
Farm . . . as feasible, on terms, which are commercially favorable to
Sears Farm[.]
(2A-R-PCFDA, at 2.)

23. 	Third, Exhibit 4 to the 2A-R-PCFDA added, in pertinent part: “[The
Sears Farm Obligation is] subject to payment annually based on meeting the
conditions 	precedent 	to 	payment 	as 	further 	set 	forth 	in . . . Section 	9.01 	[of]
Supplemental Indenture Number 1 dated as of June 1, 2012 between [Samaritan]
and the Master Trustee.”5
24. 	Also on 1 June 2012, Samaritan signed a separate document called a
Master Trust Indenture6 with Wells Fargo Bank, National Association (the “Master
Trustee”)7 in connection with Samaritan’s receipt of the proceeds from the 2012
Bonds. 	(“2012 MTI,” ECF No. 11.4.) 	The 2012 MTI purported to memorialize
Samaritan’s “obligations”8 to repay various parties, including Sears Farm.
25. 	Notably, Sears Farm did not sign the 2012 MTI—a fact that serves as a
fundamental basis for the parties’ dispute in this case.
5 Supplemental Indenture Number 1 (“Supplement 1”) is a separate document that is
discussed below. (ECF No. 3.5)
6 In bond financing parlance, a “trust indenture” is a “contract between a [Bond] Issuer and
a Trustee (normally a commercial bank with trust powers) under which the Issuer issues
Bonds and specifies their Maturities, Interest Rates, Redemption provisions, form, exchange
provisions, security and other terms. The Indenture pledges certain revenues as security for
repayment of the Bonds. The Trustee agrees to act on behalf of the holders of the Bonds and
to represent their interests.” Indenture or Trust Indenture/Agreement, NAT’L ASS’N BOND
LAW., https://www.nabl.org/bond-basics/indenture/ (last visited March 18, 2024).
7 Wells Fargo Bank, National Association, was later succeeded by UMB Bank, National
Association, as the Master Trustee in February of 2016. (Pls.’ Op. Def.’s Mot. Dismiss Strike,
at 5 n.3, ECF No. 22.)
8 The 2012 MTI defines an “Obligation” as “any promissory note, guaranty, lease, contractual
agreement to pay money or other obligation of any Obligated Group Member which is
authenticated and delivered pursuant to [the 2012 MTI] and which is entitled to the benefits
of [the 2012 MTI].” (2012 MTI, at 14.)

26. 	The 2012 MTI required that any “obligations” issued thereunder be
memorialized in the form of supplements9 to the 2012 MTI. (2012 MTI § 2.01(a).)
27. 	Supplement 	1 	was 	the 	initial 	supplement 	to 	the 	2012 	MTI.
(“Supplement 1,” ECF No. 3.5.) 	Supplement 1 provided that the satisfaction of a
simultaneously created promissory note—which was called the “Sears Farm, LLC
Subordinated Obligation,” (“Promissory Note,” ECF No. 3.6)—would be a new
“obligation” of Samaritan under the 2012 MTI. 	(Suppl. 1, at 37.) 	The Promissory
Note memorialized Samaritan’s promise to repay Sears Farm $3,383,000 plus six
percent annual interest on any unpaid principal balance thereof. (Promissory Note,
at 1.) The $3,383,000 amount was calculated by adding Sears Farm’s deferred fee for
services ($993,000) to the amount that Samaritan owed Sears Farm in exchange for
Sears Farm’s partial repayment of the Second SunTrust Loan principal ($2,390,000)
amount.10 (Compl. ¶ 56.)
28. 	Notably, § 9.01 of Supplement 1 states, in relevant part, that “[n]o
payment of principal of the Series 2012 Subordinated Obligations shall be made
unless” a series of conditions precedent listed therein have been met. 	(Suppl. 1
9 A “supplemental indenture” is “[a] supplement to an outstanding Indenture, entered into
pursuant to the terms of an outstanding Indenture and delivered in connection with the
issuance of Additional Bonds, to cure an inconsistency or formal defect in the Indenture or to
amend the Indenture in some manner. 	A Supplemental Indenture becomes part of the
contract with the bondholders.” 	Supplemental Indenture, NAT’L ASS’N BOND LAW.,
https://www.nabl.org/bond-basics/supplemental-indenture/ (last visited March 18, 2024).
10 This $2,390,000 figure appears to correspond to the identical amount that is presumably
the “Sears Farm Obligation” under the 2A-R-PCFDA. 	Oddly, § 8.01 of Supplement 1 also
refers to the Promissory Note as the “Sears Farm Obligation,” even though the Promissory
Note is worth $3,383,000 (plus interest). (Suppl. 1 § 8.01.)

§ 9.01.) These conditions precedent make their first appearance in Supplement 1 and
are not mentioned in any of the other documents between Samaritan and Sears Farm
described herein up to this point. Section 9.01 also states in pertinent part as follows:
“No payment of interest on the Series 2012 Subordinated Obligations shall be made
until the Series 2012 Obligations[11] have been paid in full.” 	(Suppl. 1 § 9.01.)
Supplement 1 defines the “Series 2012 Subordinated Obligations” as including the
Promissory Note along with several other amounts owed to other parties. (Suppl. 1,
at 4.)
29. 	In addition, § 9.02 of Supplement 1 sets forth an order of priority for the
repayment of the Series 2012 Subordinated Obligations (which—again—includes the
Promissory Note among a number of other obligations owed to other parties). (Suppl.
1 § 9.02.) 	Pursuant to the order of priority, the repayment of numerous other
obligations was given priority over repayment of the Promissory Note to Sears Farm.
(Suppl. 1 § 9.02.)
30. 	Neither Supplement 1 nor the Promissory Note contain Sears Farms’
signature.
31. 	Construction on Phase I of SearStone was completed in January of 2014.
(Compl. ¶ 79.)
32. 	Following the completion of Phase I of SearStone, Samaritan began
working on the financing for Phase II. (Compl. ¶ 80.)
11 Supplement 1 defines the “Series 2012 Obligations” as, “collectively, the Series 2012A
Obligation, the Series 2012B Obligation, and the Series 2012C Obligation.” (Suppl. 1, at 4.)

33. 	In order to obtain the financing for Phase II, Samaritan first needed to
refinance the Series 2012A Bonds. (Compl. ¶ 81.) On 1 December 2017, Samaritan
did so through a process called an “advance refunding.” 	(Compl. ¶ 81; Samaritan’s
Br. Supp. Mot. Dismiss Alt. Strike, at 5, ECF No. 12.) 	As part of the advance
refunding process, the PFA issued a second series of bonds worth $77,745,000 (the
“2017 Bonds”) and loaned Samaritan the proceeds from those bonds. (Compl. ¶ 82.)
Samaritan then used the proceeds of the 2017 Bonds to “defease” and refinance the
then-outstanding 2012 Bonds.12 	(Compl. ¶ 82; Samaritan’s Br. Supp. Mot. Dismiss
Alt. Strike, at 5.)
34. 	Contemporaneously with Samaritan’s receipt of the proceeds from the
2017 Bonds, Samaritan and UMB Bank, National Association (“UMB Bank”) signed
an Amended and Restated Master Trust Indenture, within which Samaritan’s
“Obligations” to repay the 2017 Bonds were memorialized. 	(“2017 MTI,” ECF No.
11.3.) Once again, this document was not signed by Sears Farm.
35. 	On 1 March 2018, Sears Farm initiated a bankruptcy proceeding under
Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy
Court for the Eastern District of North Carolina. See In re Sears Farm, LLC, No. 18-
00986-5-SWH (Bankr. E.D.N.C.). 	(Samaritan’s Br. Supp. Mot. Dismiss Alt. Strike,
at 6.)
12 Between November 2021 and March 2023, the PFA also issued an additional $264,605,000
in proceeds from bonds. (Compl. ¶ 83.) Those bonds, however, do not appear to be relevant
to this case.

36. 	On 30 July 2018, Sears Farm filed a reorganization plan, (ECF No.
11.09), 	and 	Disclosure 	Statement, 	(ECF 	No. 	11.10), 	in 	connection 	with 	the
bankruptcy proceeding. 	The Disclosure Statement listed Sears Farm’s anticipated
claims (or rights to payment) against Samaritan for “payment of Pre-Finance
Subordinated Obligations and interest due to Sears Farm, LLC from the Liquidity
Support Fund established under the Series 2012 Bonds and terminated as part of the
refinancing 	of 	the Series 	2012 Bonds,” and for “pre-finance 	capital 	[equaling]
$2,390,000.” (Disclosure Statement, at 15.)
37. 	On 11 February 2019, the Bankruptcy Court ordered mediation after
Samaritan and UMB Bank—creditors entitled to vote on Sears Farm’s reorganization
plan—objected to that plan. (ECF Nos. 11.11–11.13.)
38. 	Sears Farm, Samaritan, and UMB Bank reached a settlement in the
bankruptcy case on 4 March 2019. (ECF No. 11.13, Ex. A.)
39. 	On 	26 	April 	2019, 	Sears 	Farm, 	Samaritan, 	and 	UMB 	were 	all
signatories to a Settlement Agreement reflecting the terms of the agreed-upon
settlement. 	(“Settlement Agreement,” ECF No. 11.15.) 	Notably, in the Settlement
Agreement, 	Sears 	Farm 	agreed 	to 	release 	various 	claims 	against 	Samaritan.
(Settlement Agrmt., App. C, at 17.) However, Sears Farm excluded from this release
its 	claim 	regarding 	“the 	Samaritan-Sears 	Farm 	Subordinated 	Obligation[.]”
(Settlement Agrmt., App. C, at 16–17.)
40. 	On 21 April 2023, Plaintiffs initiated the present lawsuit by filing a
Complaint against Samaritan and Brading in Wake County Superior Court asserting

the following eight claims: (1) breach of contract against Samaritan; (2) breach of the
implied covenant of good faith and fair dealing against Samaritan; (3) fraudulent
misrepresentation against Samaritan and Brading; (4) an alternative claim for
negligent misrepresentation against Samaritan and Brading; (5) a claim for unfair
and deceptive trade practices against Samaritan and Brading; (6) breach of fiduciary
duty against Samaritan and Brading; (7) constructive fraud against Samaritan and
Brading; and (8) civil conspiracy against Samaritan and Brading. 	(Compl. ¶¶ 120–
163.)
41. 	On 14 June 2023, Plaintiffs voluntarily dismissed six of their claims
(which included all of the claims against Brading), leaving only the claims for breach
of contract and breach of the implied covenant of good faith and fair dealing against
Samaritan. (ECF No. 9.)13
42. 	Samaritan filed the present Motion on 10 July 2023, and the parties
subsequently submitted briefs with respect to the Motion. (ECF Nos. 12, 22, 27.)
43. 	The Court held a hearing on Samaritan’s Motion on 21 November 2023.
Over the next few months, the parties submitted supplemental memoranda at the
Court’s direction. (ECF Nos. 29, 30, 35, 36.)
44. 	Samaritan’s Motion is now ripe for resolution.
LEGAL STANDARD
45. 	In its Motion, Samaritan has moved to dismiss both of Plaintiffs’
remaining claims under Rule 12(b)(1) of the North Carolina Rules of Civil Procedure
13 As a result, Brading is no longer a defendant in this action.

for lack of subject matter jurisdiction on the theory that Plaintiffs lack standing to
bring any of the claims they have asserted in this action. 	Samaritan also seeks
dismissal of these claims under Rule 12(b)(6) for failure to state valid claims for relief.
In 	the 	alternative, 	Samaritan 	has 	moved 	to 	strike 	certain 	allegations 	in 	the
Complaint—particularly those concerning Brading—pursuant to Rule 12(f) on the
grounds that those allegations are irrelevant, immaterial, and scandalous.
46. 	“A plaintiff’s standing to assert its claims may be challenged under
either Rule 12(b)(1) or Rule 12(b)(6) of the North Carolina Rules of Civil Procedure.”
Raja v. Patel, 2017 NCBC LEXIS 25, at *11 (N.C. Super. Ct. Mar. 23, 2017). A Rule
12(b)(1) motion challenges a court’s “jurisdiction over the subject matter” of the
plaintiff’s claims. 	N.C. R. Civ. P. 12(b)(1). 	“Subject matter jurisdiction is the
indispensable foundation upon which valid judicial decisions rest,” In re T.R.P., 360
N.C. 588, 590 (2006), and “has been defined as ‘the power to hear and to determine a
legal controversy; to inquire into the facts, apply the law, and to render and enforce
a judgment,’ ” High v. Pearce, 220 N.C. 266, 271 (1941). “[T]he proceedings of a court
without jurisdiction of the subject matter are a nullity.” Burgess v. Gibbs, 262 N.C.
462, 465 (1964) (citation omitted).
47. 	“As the party invoking jurisdiction, plaintiff[] ha[s] the burden of
establishing standing.” 	Queen’s Gap Cmty. Ass’n v. McNamee, 2011 NCBC LEXIS
37, at **3 (N.C. Super. Ct. Sept. 23, 2011) (quoting Marriot v. Chatham Cnty., 187
N.C. 	App. 	491, 	494 	(2007)). 	In 	determining 	the 	existence 	of 	subject 	matter
jurisdiction, the Court may consider matters outside the pleadings. Emory v. Jackson

Chapel First Missionary Baptist Church, 165 N.C. App. 489, 491 (2004). 	“However,
if the trial court confines its evaluation [of standing] to the pleadings, the court must
accept as true the [claimant]’s allegations and construe them in the light most
favorable to the [claimant].” Munger v. State, 202 N.C. App. 404, 410 (2010) (quoting
DOT v. Blue, 147 N.C. App. 596, 603 (2001)).
48. 	“It is well-established that dismissal pursuant to Rule 12(b)(6) is proper
when ‘(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 v. British Am. Tobacco PLC, 371 N.C. 605, 615 (2018) (quoting Wood
v. Guilford Cnty., 355 N.C. 161, 166 (2002)). The Court may also “reject allegations
that 	are 	contradicted 	by 	the 	documents 	attached, 	specifically 	referred 	to, 	or
incorporated by reference in the complaint.” 	Laster v. Francis, 199 N.C. App. 572,
577 (2009).
49. 	Rule 12(f) authorizes a court to “strik[e] from any pleading . . . any
redundant, irrelevant, immaterial, impertinent, or scandalous matter.” N.C. R. Civ.
P. 12(f). 	A motion to strike is addressed to the sound discretion of the trial court.
Broughton v. McClatchy Newspapers, Inc., 161 N.C. App. 20, 25 (2003).
ANALYSIS
A. Samaritan’s Motion to Dismiss
50. 	“The elements of a claim for breach of contract are the existence of a
valid contract and a breach of that contract’s terms.” 	JT Russell & Sons, Inc. v.

Russell, 2024 NCBC LEXIS 35, at **9 (N.C. Super. Ct. Feb. 28, 2024) (citing Poor v.
Hill, 138 N.C. App. 19, 26 (2000)).
51. 	Additionally, “[u]nder North Carolina law, every enforceable contract
contains an underlying implied covenant of good faith and fair dealing ‘that neither
party will do anything which injures the right of the other to receive the benefits of
the agreement.’ ” Kelly v. Nolan, 2022 NCBC LEXIS 78, at **19 (N.C. Super. Ct. Jul.
19, 2022) (citing Bicycle Transit Auth., Inc. v. Bell, 314 N.C. 219, 228 (1985)).
52. 	Plaintiffs’ claims are based upon the PCFDA Agreements. They contend
that Samaritan breached its obligations to them stemming from these agreements in
several respects.
53. 	Specifically, Plaintiffs allege that Samaritan breached its duty to pay
Sears Farm interest due on the sums owed pursuant to these agreements and by
“failing to use commercially reasonable efforts to negotiate terms with respect to
Bond Refinancing to reimburse the amount of principal of pre-finance capital
advanced by Sears Farm on terms which are commercially favorable to Sears Farm”
as required under the “Efforts Clause” contained in the 2A-R-PCFDA. (Compl.
¶¶ 121–124.)
54. 	Plaintiffs’ claim for breach of the implied covenant of good faith and fair
dealing asserts that Samaritan has acted in bad faith to prevent the existence of

certain conditions that would trigger repayment of the principal of the Series 2012
Subordinated Obligations as well as SHKW’s deferred fee. (Compl. ¶ 127.)14
55. 	In a nutshell, Samaritan argues that dismissal of Plaintiffs’ claims is
appropriate 	because 	(1) 	any 	contractual 	obligations 	arising 	from 	the 	PCFDA
Agreements were nullified by the subsequent execution of the 2012 MTI; (2) Plaintiffs
lack standing to bring claims based on the 2012 MTI because they have failed to
satisfy certain existing conditions precedent to the assertion of such claims; and (3)
Sears Farm released Samaritan from any remaining obligations relevant to the
present lawsuit in the Settlement Agreement in the bankruptcy proceeding.15
Samaritan asserts that Sears Farm and SHKW will, in fact, be repaid the sums they
are due but that they must wait their turn based on the priority of payments schedule
contained in the MTI documents.
56. 	Plaintiffs, conversely, contend that they never signed the 2012 MTI (or
any 	of 	the 	ensuing 	MTI-related 	documents) 	and 	that—for 	this 	reason—those
documents are not binding on them and do not supersede their rights under the
PCFDA Agreements. Plaintiffs further argue that for several reasons (which, in the
interest of brevity, the Court will not undertake to summarize) the release of claims
14 Although the Complaint is not entirely clear on this point, it appears that the breach of
contract claim is being asserted only on behalf of Sears Farm while the claim for breach of
the implied covenant of good faith and fair dealing has been pled on behalf of both Sears
Farm and SHKW.
15 Samaritan appears to be making this latter argument solely as to Sears Farm’s claims
given that SHKW was not a party to the bankruptcy proceeding.

in the Settlement Agreement by Sears Farm does not affect its right to bring the
claims it has asserted in this action.
57. 	The Court has conducted an exhaustive and painstaking review of the
Complaint, the parties’ briefs, and the wealth of documents attached to the pleadings.
58. 	The Court concludes that there are simply too many moving parts in this
case for Samaritan to be entitled to the relief it seeks in its Motion to Dismiss at this
early stage of the litigation. Although Samaritan contends that the documents
attached to the pleadings fill in any gaps left by the allegations in the Complaint, the
Court disagrees. Gaps do, in fact, remain, and the Court lacks the authority to fill in
those gaps under the guise of ruling on the present Motion. Discovery will enable the
parties to flesh out the facts regarding the events summarized above, and the Court’s
task in deciding the legal issues raised by the parties will be made considerably easier
at the summary judgment stage at which time the Court will have the benefit of a
more fully developed factual record.
59. 	For these reasons, the Court DENIES Samaritan’s Motion to Dismiss.
B. Motion to Strike
60. 	Finally, 	Samaritan 	moves 	to 	strike 	certain 	portions 	of 	Plaintiffs’
Complaint pursuant to Rule 12(f). 	Specifically, Samaritan requests that the Court
strike paragraphs 3, 90–119, and 129–167 of the Complaint based upon its contention
that those paragraphs—many of which concern the relationship between Bill Sears
and Brading—are likely “to cause continuing professional and personal reputational
harm without any legitimate purpose” and lack relevance given Plaintiffs’ voluntary

dismissal of their claims against Brading. (Samaritan’s Br. Supp. Mot. Dismiss Alt.
Strike, at 27.)
61. 	The 	Court, 	in 	the 	exercise 	of 	its 	discretion, 	CONCLUDES 	that
paragraphs 129–167 of Plaintiffs’ Complaint should be stricken given that those
paragraphs are relevant only to the claims that have been dismissed by Plaintiffs. In
all other respects, the Motion to Strike is DENIED as the remaining paragraphs are
part of the factual narrative of the events giving rise to Plaintiffs’ remaining claims.
CONCLUSION
THEREFORE, it is hereby ORDERED that Samaritan’s Motion to Dismiss
is DENIED, and its Motion to Strike is GRANTED, in part, and DENIED, in part.
Paragraphs 129–167 of Plaintiffs’ Complaint are hereby STRICKEN.16
SO ORDERED, this the 19th day of March, 2024.
/s/ Mark A. Davis
Mark A. Davis
Special Superior Court Judge
for Complex Business Cases
16 Because of the complexity of the transactions and written agreements at issue in this case,
the Court directs the parties to strive for a greater degree of clarity in articulating their
arguments in future briefs than that existing with regard to the briefs attendant to the
present Motion.