Business disputes can be as simple as a customer’s failure to pay an invoice on time or as complex as trying to unravel a multi-party, multi-million dollar business transaction that has gone bad. Whether you are an individual, a local business or a multi-national corporation who needs help in resolving a business dispute in North Carolina (either as a plaintiff or a defendant) we have likely handled a dispute similar to yours. Because business disputes come in all shapes and sizes, we cannot possibly describe them all here, but the following is a brief description of some of the kinds of cases we typically handle.
Disputes among owners of closely held businesses are, unfortunately, common. These disputes are frequently tinged with personal rancor due to the close working or family relationships often involved in closely held businesses. We represent minority shareholders, majority shareholders and businesses in these types of disputes, and we have a wealth of experience in helping clients resolve ownership and management disputes, either through negotiation or, if necessary, litigation. We have helped structure buyouts of minority interests, sales of entire businesses, and have recovered millions of dollars for minority shareholders through litigation when other avenues failed.
We have represented officers and directors in litigation accusing them of breaches of their fiduciary obligations to the corporation. For example, we represented the former officers and directors of a property and casualty insurance company who allegedly made improper business decisions that resulted in a $40 million insolvency and liquidation. In a 70-page opinion, the Chief Judge of the North Carolina Business Court granted the officers and directors complete summary judgment, concluding that officers and directors are immune from personal liability in the absence of a “showing of reckless indifference, improper motive, personal advantage, or deliberate disregard of corporate interests.” State ex. rel. Commissioner of Insurance v. Custard, 2010 NCBC 6, ¶ 84 (Mar. 19, 2010).
We regularly represent accounting firms, such as McGladrey & Pullen and its affiliate, RSM McGladrey, Inc., in claims arising from auditing and business valuation services. Often these cases have involved allegations that the accounting firm failed to detect fraud, or aided in the commission of a fraud, when valuing the business, auditing the financial records, or assisting a client with its books.
We also represent purchasers and sellers of businesses in post-purchase disputes that involve accounting issues. For example, we represented a large commercial bank in a $23 million action brought by the purchaser of a technology leasing subsidiary of the bank. The purchaser alleged that the bank’s subsidiary had misrepresented the financial condition of the subsidiary, resulting in an alleged overpayment of $23 million. The case settled for a small fraction of the claim on the eve of a two week arbitration.
North Carolina has a particularly potent Unfair and Deceptive Trade Practices Act. Claims under this Act (commonly known as “Chapter 75 claims”) allow for the recovery of treble damages and attorneys’ fees, and are frequently asserted in business disputes along with claims of common law fraud. We have defended and asserted these types of claims countless times on behalf of clients.
For example, we represented the seller, a major mobile home dealer, in a $50 million valuation and fraud dispute with General Electric over GE’s purchase of a mobile home retail sales business in North Carolina. Both buyer and seller claimed they were defrauded by the other in the transaction. The case was simultaneously litigated in three different courts in the state and federal courts in North Carolina and Delaware. The case settled at mediation after the 4th Circuit affirmed the dismissal of GE’s RICO and securities claims against the seller. See Parker v. General Electric, 247 F.3d 543 (4th Cir., 2001).
We have litigated many kinds of cases involving real and personal property rights, including condemnation actions, rights of parties in real estate buy-sell agreements and development contracts, and landlord/tenant disputes involving commercial leases. The firm represents a number of developers of commercial space and shopping centers, as well as property managers for such space, and attorneys in each of our offices have been involved in representing landlords in disputes with tenants, condemning authorities, and contractors.
Representative cases include:
We were counsel for IBM in a $10 million lease dispute over IBM’s alleged improper termination of a lease for 280,000 square feet of warehouse and manufacturing space. The case settled for a fraction of the claim at mediation.
The firm represented Royal Insurance throughout the United States in commercial office lease negotiations, and often our litigation section has been involved in disputes arising under those leases. For example, through negotiation and threatened litigation, the firm assisted Royal Insurance in avoiding $500,000 of contested common area maintenance and tax pass-through charges claimed by landlord under an office lease in Massachusetts.
We successfully defended a large retail grocery chain in a seven-figure action brought by a shopping center developer/landlord, based upon the validity and interpretation of contractual provisions in a lease that the landlord claimed imposed geographical restrictions on the tenant’s right to conduct retail grocery operations within a certain radius of the landlord’s shopping center.
The duty of an insurer to defend a claim against an insured in North Carolina is extremely broad, and the consequences of failing to defend an insured on a claim that is potentially covered by an insurance policy can be significant. We represent both insurers and insureds in disputes over coverage and the duty to defend. For examples of the consequences to insurers for guessing wrong on the duty to defend issue, take a look at the following cases:
Glennview Memorial Park, Inc. v. Nationwide Mutual Insurance Co. (Wake County Superior Court) (2005)
Granutec, Inc. v. Aetna and St. Paul Fire & Marine Ins. Co., 1998 U.S. Dist. LEXIS 3527 (1998) (U.S. District Court, Eastern District of North Carolina)