VISTA HORTICULTURAL, INC. v. JOHNSON PRICE SPRINKLE, PA, 2024 NCBC 4

STATE OF NORTH CAROLINA
BUNCOMBE COUNTY
IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
23 CVS 1594
VISTA HORTICULTURAL, INC.
d/b/a EDEN BROTHERS,
Plaintiff,
v.
JOHNSON PRICE SPRINKLE, PA,
Defendant.
ORDER AND OPINION ON
PLAINTIFF’S MOTION FOR LEAVE
TO AMEND COMPLAINT TO
INCLUDE ADDITIONAL PARTY
1. 	THIS MATTER is before the Court upon Plaintiff’s Motion for Leave to
Amend to Include Additional Party (the “Motion”), filed 20 December 2023 in the
above captioned case.1
2. 	Having considered the Motion, the parties’ briefs, affidavits, and materials
offered in support of and in opposition to the Motion, the arguments of counsel at the
hearing on the Motion, and other relevant matters of record, the Court hereby
GRANTS in part and DENIES in part the Motion.
Tonkon Torp LLP, by Samantha Taylor and Caroline Harris Crowne,
and DeVore, Acton & Stafford, PA, by F. William DeVore, IV, for Plaintiff
Vista Horticultural, Inc. d/b/a Eden Brothers.
Ragsdale Liggett PLLC, by Melissa Dewey Brumback and John M.
Nunnally, for Defendant Johnson Price Sprinkle, PA.
Bledsoe, Chief Judge.
1 (Pl.’s Mot. Amend Compl. Include Additional Party, [hereinafter, “Mot.”], ECF No. 30.)
Vista Horticultural, Inc. v. Johnson Price Sprinkle, PA, 2024 NCBC 4.

I.
FACTUAL AND PROCEDURAL BACKGROUND
3. 	Plaintiff Vista Horticultural, Inc. d/b/a Eden Brothers initiated this action
in Buncombe County Superior Court on 25 April 2023 alleging malpractice against
an accounting firm, DMJPS, PLLC (“DMJPS”),2 and shortly thereafter filed an
Amended Complaint on 9 May 2023 adding another accounting firm, Johnson Price
Sprinkle, PA (“JPS”; together with DMJPS, “Defendants”), as a party-defendant.3
Both the original and amended complaints assert claims, the former against DMJPS
and the latter against both DMJPS and JPS, for breach of contract, professional
malpractice/professional 	negligence, 	common 	law 	negligence, 	gross
negligence/punitive damages, and breach of fiduciary duty. Defendants filed separate
answers to the Amended Complaint on 13 June 2023.4
4. 	On 13 August 2023, Defendants’ original lead counsel passed away, and
Defendants’ current lead counsel entered notices of appearance on 28 August 2023.5
Thereafter, the Court held a BCR 9.3 Case Management Conference on 26 September
20236 and entered the Case Management Order in this case on 27 September 2023.7
2 (Compl., ECF Nos. 3, 5.) ECF Nos. 3 and 5 are identical.
3 (Am. Compl., ECF No. 4.)
4 (Answer DMJPS, PLLC Am. Compl., ECF No. 8; Answer Johnson Price Sprinkle, PA Am.
Compl., ECF No. 9.)
5 (Notice Appearance, ECF No. 19 (Melissa Dewey Brumback); Notice Appearance, ECF No.
20 (John Nunnally).)
6 (Am. Notice BCR 9.3 Case Management Conference, ECF No. 22.)
7 (Case Management Order, ECF No. 26.)

5. 	The parties exchanged document discovery and produced documents to one
another in November and December 2023, and Plaintiff filed the Motion to add Sok
Heang Cheng (“Cheng”), JPS’s lead shareholder and owner, as a party-defendant on
20 December 2023 after determining that JPS’s insurance coverage was insufficient
to cover the full extent of Plaintiff’s damages claim.8 On 24 January 2024, the parties
filed a Stipulated Notice of Dismissal of all claims against DMJPS without prejudice.9
6. 	After full briefing, the Court held a hearing on the Motion on 30 January
2024, at which all parties were represented by counsel (the “Hearing”). The Motion
is now ripe for resolution.
II.
LEGAL STANDARD
7. 	When a party seeks leave of court to amend a pleading, “leave shall be
freely given when justice so requires.” 	N.C.R. Civ. P. 15(a). 	“A motion to amend is
addressed to the sound discretion of the trial [court]” and is reviewable only for abuse
of discretion. House of Raeford Farms, Inc. v. City of Raeford, 104 N.C. App. 280, 282
(1991). A motion to amend may be denied for “(a) undue delay, (b) bad faith, (c) undue
prejudice, (d) futility of amendment, and (e) repeated failure to cure defects by
previous amendments.” Id. at 282–83.
8. 	“The futility standard under Rule 15 is essentially the same standard used
in reviewing a motion to dismiss under Rule 12(b)(6)[.]” Simply the Best Movers, LLC
8 (Mot. Ex. A, Aff. Samantha Taylor Supp. Pl.’s Mot. Leave File Am. Compl., dated Dec. 18,
2023, at ¶¶ 7–9 [hereinafter “Taylor Aff.”].)
9 (ECF No. 37.)

v. Marrins’ Moving Sys., Ltd., 2016 NCBC LEXIS 28, at *5 (N.C. Super. Ct. Apr. 6,
2016). 	When considering a motion to dismiss under Rule 12(b)(6), the Court views
the allegations in the pleading at issue “in the light most favorable to the non-moving
party[,]” Christenbury Eye Ctr., P.A. v. Medflow, Inc., 370 N.C. 1, 5 (2017) (cleaned
up), and determines “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. British Am. Tobacco PLC, 371 N.C. 605, 615 (2018) (quoting CommScope
Credit Union v. Butler & Burke, LLP, 369 N.C. 48, 51 (2016)).
9. 	“[T]he [pleading] is to be liberally construed, and the trial court should not
dismiss the [pleading] unless it appears beyond doubt that [the] [claimant] could
prove no set of facts in support of his claim which would entitle him to relief.” State
ex rel. Cooper v. Ridgeway Brands Mfg., LLC, 362 N.C. 431, 444 (2008) (fourth
alteration in original) (quoting Meyer v. Walls, 347 N.C. 97, 111–12 (1997)). Dismissal
of a pleading under Rule 12(b)(6) is proper only: “(1) when the [pleading] on its face
reveals that no law supports [the] claim; (2) when the [pleading] reveals on its face
the absence of fact sufficient to make a good claim; [or] (3) when some fact disclosed
in the [pleading] necessarily defeats the [ ] claim.” Oates v. JAG, Inc., 314 N.C. 276,
278 (1985).
III.
ANALYSIS
10. 	Plaintiff’s Motion seeks leave to amend its First Amended Complaint to add
Cheng, a Certified Public Accountant, as a party-defendant in this action. 	For the

most part, Plaintiff’s proposed amendments seek to assert against Cheng many of the
factual allegations asserted against JPS (mostly by changing “JPS” to “Defendants”)
and to assert against Cheng the same claims it has asserted against JPS (breach of
contract, professional malpractice/professional negligence, common law negligence,
gross negligence/punitive damages, and breach of fiduciary duty).10
11. 	JPS 	opposes 	the 	Motion 	on grounds 	of 	undue 	delay, ulterior tactical
advantage/bad faith, and futility.11
12. 	After careful consideration and review, the Court, in the exercise of its
discretion, will grant the Motion in part and deny the Motion in part for the reasons
set forth below.
A. 	Undue Delay
13. 	First, the Court is not persuaded, in the circumstances of this case, that
Plaintiff has unduly delayed in bringing the Motion.12 Plaintiff has offered evidence
that it did not file the Motion until eight months after it filed the initial Complaint
because, 	despite 	its 	diligence 	in 	seeking 	information 	concerning 	Defendant’s
insurance coverage in discovery, it did not succeed in obtaining relevant coverage
information 	until 	Defendant 	produced 	documents 	on 	13 	October 	2023 	and 	9
November 2023. Plaintiff thereafter promptly sought JPS’s consent to add Cheng as
10 (See Mot., Ex. A-1, proposed Second Am. Compl. [hereinafter, “SAC”]; Mot. Ex. B, Redline
Comparison Proposed Second Am. Compl. and First Am. Compl., ECF No. 30.)
11 (Defs.’ Br. Opp’n Pl.’s Mot. Amend Compl. Include Additional Party 3–12 [hereinafter,
“Defs.’ Br. Opp’n Mot.”], ECF No. 33.)
12 (Defs.’ Br. Opp’n Mot. 3–5.)

a party-defendant, but JPS declined to consent on 30 November 2023. 	Plaintiff
thereafter filed the Motion with its supporting brief and materials.13 The Court notes
that, typically, North Carolina courts have found undue delay in situations where
there is far more delay than that alleged here. See, e.g., Wilkerson v. Duke Univ., 229
N.C. App. 670, 679 (2013) (thirteen months); Carmayer, LLC v. Koury Aviation, Inc.,
2017 NCBC LEXIS 82, at *21 (N.C. Super. Ct. Sept. 11, 2017) (seventeen months);
Alkemal Sing. PTE Ltd. v. DEW Global Fin., LLC, 2017 NCBC LEXIS 112, at *31
(N.C. Super. Ct. Dec. 12, 2017) (collecting cases to similar effect)).
14. 	Moreover, discovery in this case is ongoing; the discovery period does not
expire until 28 May 2024.14 	Indeed, JPS’s counsel admitted at the Hearing that
Cheng’s addition as a party-defendant would not prejudice or change JPS’s litigation
conduct in any respect, and the Court concludes that, while Cheng’s addition may
prompt additional motion practice, it will not result in any discovery in addition to
that already planned. 	For all these reasons, therefore, the Court concludes that
Defendant’s objection based on undue delay is without merit.
B. 	Bad Faith/Ulterior Tactical Advantage
15. 	Defendant’s 	bad 	faith/ulterior 	tactical 	advantage 	argument 	fares 	no
better.15 	Although JPS argued at the Hearing that adding Cheng to the case and
exposing her personal assets to liability would create unnecessary “tension” between
13 (Taylor Aff. ¶¶ 3–9.)
14 (Case Management Order 4.)
15 (Defs.’ Br. Opp’n Mot. 5–6.)

Cheng and JPS’s shareholders concerning settlement, Plaintiff’s allegations are
supported by facts that must be taken as true, and the Court cannot conclude that
Plaintiff has engaged in bad faith or any other unfair or inappropriate tactical or
strategic action through the Second Amended Complaint. 	See, e.g., Bundy v. Com.
Credit Co., 202 N.C. 604, 607 (1932) (“[B]ad faith . . . implies a false motive or a false
purpose, and hence it is a species of fraudulent conduct.”); Vitaform, Inc. v. Aeroflow,
Inc., 2021 NCBC LEXIS 79, at **15–16 (N.C. Super. Ct. Sept. 16, 2021) (“Bad faith
amendments are those which may be abusive or made in order to secure some ulterior
tactical advantage.”) (quoting GSS Props., Inc. v. Kendale Shopping Ctr., Inc., 119
F.R.D. 379, 381 (M.D.N.C. 1988)).
C. 	Futility
16. 	Defendant makes several arguments based on the alleged futility of the
proposed amendment.
17. 	First, Defendant contends that “any claim against Ms. Cheng personally for
disgorgement [of fees paid to JPS] is futile on its face.”16 	Perhaps in recognition of
the strength of Defendant’s argument, Plaintiff conceded at the Hearing that it no
longer seeks disgorgement from Cheng of the fees Plaintiff paid to JPS for its services.
Accordingly, the Court will exercise its discretion to deny the Motion to the extent
Plaintiff seeks to add Cheng to its request for disgorgement.
16 (Defs.’ Br. Opp’n Mot. 10–11.)

18. 	The Court next turns to Defendant’s contention that Plaintiff’s claims are
barred by the economic loss rule and finds that contention without merit.17
19. 	First, “the economic loss rule, in its simplest form, holds that purely
economic losses are not ordinarily recoverable under tort law.” 	Crescent Univ. City
Venture, LLC v. AP Atl., Inc., 2019 NCBC LEXIS 49, at *14 (N.C. Super. Ct. Aug. 14,
2019) (citation omitted), aff’d, 376 N.C. 54 (2020). 	Consequently, the rule does not
bar Plaintiff’s breach of contract claim.
20. 	Neither 	does 	the 	rule 	bar 	Plaintiff’s 	claims 	for 	professional
malpractice/professional negligence, common law negligence, and gross negligence
because North Carolina law is clear that an accountant, like Cheng, “owes a duty to
competently perform [her] services independent of the contractual engagements
between the parties.” 	Provectus Biopharms., Inc. v. RSM US LLP, 2018 NCBC
LEXIS 101, *55 (N.C. Super. Ct. Sept. 28, 2018). Because the economic loss rule does
not bar tort claims that are based on a duty “that is separate and apart from any duty
owed under a contract,” Akzo Nobel Coatings, Inc. v. Rogers, 2011 NCBC LEXIS 42,
at *48 (N.C. Super. Ct. Nov. 3, 2011), Plaintiff’s proposed negligence-based claims
against Cheng survive JPS’s futility challenge based on the economic loss rule.
21. 	Finally, although JPS initially asserts that all proposed claims against
Cheng are barred by operation of the economic loss rule,18 JPS subsequently asserts
in the same brief that the rule bars Plaintiff’s claims for negligence, gross negligence,
17 (Defs.’ Br. Opp’n Mot. 11–12.)
18 (Defs.’ Br. Opp’n Mot. 9.)

and disgorgement and nowhere mentions Plaintiff’s breach of fiduciary duty claim.19
Nor did Defendants’ counsel mention that claim at the Hearing. 	The Court thus
concludes that Defendant has abandoned any contention that leave to amend should
be denied as to Plaintiff’s claim for breach of fiduciary duty and will grant the Motion
on that basis. Cf. Cohen Schatz Assocs., Inc. v. Perry, 169 N.C. App. 834, 837 (2005)
(“Issues raised in defendant’s brief, but not supported by argument or authority, are
deemed abandoned.”) (quoting Pharmarsch. Corp. v. Mash, 163 N.C. App. 419, 428
(2004))).
22. 	Defendants also contend that Plaintiff’s request for leave to assert its gross
negligence/punitive damages claim should be denied as futile because Plaintiff has
failed to allege sufficient facts to sustain a gross negligence claim.20 	“Gross
negligence has been defined as ‘wanton conduct done with conscious or reckless
disregard for the rights and safety of others.’ ” Toomer v. Garrett, 155 N.C. App. 462,
482 (2002) (quoting Bullins v. Schmidt, 322 N.C. 580, 583 (1988)). “An act is wanton
when it is done of wicked purpose, or when done needlessly, manifesting a reckless
indifference to the rights of others.” Yancey v. Lea, 354 N.C. 48, 52 (2001) (internal
citation omitted). 	“An act or conduct rises to the level of gross negligence when the
act is done purposely and with knowledge that such act is a breach of duty to others,
i.e., a conscious disregard of the safety of others.” 	Id. at 53 (emphasis in original).
“Aside from allegations of wanton conduct, a claim for gross negligence requires that
19 (Defs. Br. Opp’n Mot. 10.)
20 (Defs.’ Br. Opp’n Mot. 7–9.)

plaintiff plead facts on each of the elements of negligence, including duty, causation,
proximate cause, and damages.” Toomer, 155 N.C. App. at 482 (cleaned up).
23. 	Plaintiff pleads here that Cheng had “professional and legal duties” to
provide her professional services to Plaintiff, that she “was fully aware that Plaintiff
would rely on [her] services,”21 that she “knew about the [the United States Supreme
Court’s] Wayfair decision,22 and that she failed to “properly advise [Plaintiff] of its
state tax liability after the Wayfair decision in 2018, despite the significance of this
change in the law and the specific significance for online retailers” like Plaintiff.23
Plaintiff further alleges that Cheng “had in [her] possession information from
[Plaintiff] showing substantial sales revenues outside of North Carolina,” and that
21 (SAC ¶ 64.)
22 (SAC ¶ 66.) Plaintiff alleges the following concerning the Wayfair decision:
17. On June 21, 2018, the U.S. Supreme Court announced its decision in South
Dakota v. Wayfair, Inc., 138 S.Ct. 2080 (2018), overruling past precedent to
hold that states had the authority to assess taxes on online merchants—with
no physical presence in the taxing state—based on sales to the state’s
residents.
18. 	The Wayfair decision was a major development in the accounting world
due to its far-reaching implications for businesses of all sizes engaged in online
sales. Firms like JPS issued urgent alerts to their clients who sold goods out
of state, warning them that they could now be obligated to pay sales taxes in
other states.
19. 	Specifically, as to Eden Brothers, the Wayfair decision meant that the
advice JPS had given Eden Brothers at the beginning of the engagement—that
it was only necessary to collect and remit tax on sales to North Carolina
residents— was no longer correct.”
(SAC ¶¶ 17–19.)
23 (SAC ¶ 64.)

she “willfully or recklessly failed to inform [Plaintiff] that it could have liability for
sales taxes to states other than North Carolina, and failed to take any action to help
[Plaintiff] avoid continuing and increasing sales tax liability in those other states,
despite being armed with this knowledge.”24 Plaintiff otherwise alleges facts showing
causation, proximate cause, and damages.
24. 	Although Plaintiff’s gross negligence claim may face a different fate at
summary judgment, the Court concludes that these allegations are sufficient to allege
that Cheng engaged in “intentional wrongdoing or deliberate misconduct affecting
the safety of others,” Yancey, 354 N.C. at 53, and thus that she engaged in “wanton
conduct.” As a result, since the Court concludes that Plaintiff has pleaded all required
elements of its gross negligence claim against Cheng, the Court will grant the Motion
to the extent Plaintiff seeks leave to assert its gross negligence/punitive damages
claim against Cheng in the proposed Second Amended Complaint.
25. 	Defendants also raised a futility challenge at the Hearing as to Plaintiff’s
breach of contract claim against Cheng. The Court will deny the Motion to the extent
Plaintiff seeks to add Cheng as a party-defendant to its breach of contract claim
against JPS because Plaintiff does not allege in its proposed Second Amended
Complaint that Plaintiff entered into a contract with Cheng. 	See, e.g., Supplee v.
Miller-Motte Bus. Coll., Inc., 239 N.C. App. 208, 216 (2015) (“The elements of a claim
for breach of contract are (1) existence of a valid contract and (2) breach of the terms
of that contract.”) (cleaned up) (emphasis added).
24 (SAC ¶ 65.)

26. 	To 	the 	contrary, 	Plaintiff 	alleges 	that 	it 	“engaged 	JPS’s 	accounting
services,”25 that “[Plaintiff] and JPS would execute specific engagement letters for
annual tax return preparation,” that “JPS was involved in all of [Plaintiff’s] financial
and accounting functions,” and that “JPS’s invoices to [Plaintiff] from 2017 through
the course of the engagement reflect that JPS provided regular business consulting
services, monthly accounting and bookkeeping services, federal and state tax return
preparation, and period sales tax assistance.”26 	Plaintiff nowhere alleges that it
entered into a contract, oral or written, with Cheng, that Cheng is a third-party
beneficiary of a contract with Plaintiff, or that Cheng is JPS’s alter ego through veil-
piercing allegations. 	Accordingly, the Court will exercise its discretion to deny the
Motion and disallow Plaintiff’s proposed Second Amended Complaint to the extent
Plaintiff seeks to add Cheng to its breach of contract claim against JPS.
IV.
CONCLUSION
27. 	WHEREFORE, the Court hereby GRANTS in part and DENIES in part
the Motion as follows:
a. 	Plaintiff’s Motion is hereby DENIED as to Plaintiff’s proposed claims
against Cheng for disgorgement and for breach of contract, and those
25 (SAC ¶ 9.)
26 (SAC ¶ 10.) The Court notes, but does not rely upon, the fact that the engagement letters
attached to JPS’s opposition brief show that each was entered into by JPS, not Cheng in her
individual capacity. (See ECF No. 33.1.)

claims and the allegations supporting them shall be excluded from the
Second Amended Complaint.
b. 	Plaintiff’s Motion is otherwise GRANTED, and Plaintiff’s proposed
claims 	against 	Cheng 	for 	professional 	malpractice/professional
negligence, common law negligence, gross negligence/punitive damages,
and breach of fiduciary duty, with supporting allegations, may be
included in the Second Amended Complaint.
c. 	Plaintiff shall file the proposed Second Amended Complaint, modified to
reflect the Court’s rulings hereunder, no later than 9 February 2024.
SO ORDERED, this the 5th day of February, 2024.
/s/ Louis A. Bledsoe, III
Louis A. Bledsoe, III
Chief Business Court Judge