Plasman v. Decca Furniture (Usa), Inc.

IN THE COURT OF APPEALS OF NORTH CAROLINA

No. COA17-151

Filed: 6 February 2018

Catawba County, No. 12 CVS 2832

CHRISTIAN G. PLASMAN, in his individual capacity and derivatively for the benefit
of, and on behalf of and right of nominal party BOLIER & COMPANY, LLC, Plaintiff,

v.

DECCA FURNITURE (USA), INC.; DECCA CONTRACT FURNITURE, LLC;
RICHARD HERBST; WAI THENG TIN; TSANG C. HUNG; DECCA FURNITURE,
LTD.; DECCA HOSPITALITY FURNISHINGS, LLC; DONGGUAN DECCA
FURNITURE CO. LTD.; DARREN HUDGINS; DECCA HOME, LLC; and ELAN BY
DECCA, LLC, Defendants,

and BOLIER & COMPANY, LLC, Nominal Defendant,

v.

CHRISTIAN J. PLASMAN a/k/a/ BARRETT PLASMAN, Third-Party Defendant.

Appeal by Plaintiff Christian G. Plasman and Third-Party Defendant

Christian J. Plasman from order dated 21 October 2016 by Judge Louis A. Bledsoe,

III, in Superior Court, Catawba County. Heard in the Court of Appeals 21 August

2017.

Nexsen Pruet, PLLC, by David S. Pokela; and Law Offices of Matthew K.
Rogers, PLLC, by Matthew K. Rogers, for Plaintiff-Appellant and Third-Party
Defendant Appellant.
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Opinion of the Court

McGuireWoods LLP, by Robert A. Muckenfuss and Jodie H. Lawson, for
Defendants-Appellees.

McGEE, Chief Judge.

This matter was filed more than five years ago and has been considered by

both state and federal courts. Multiple appeals have been filed from orders of the

trial court to this Court and our Supreme Court, including appeals that have already

been decided by this Court, Bolier & Co., LLC v. Decca Furniture (USA), Inc., __ N.C.

App. __, 792 S.E.2d 865 (2016) (“Bolier I”), disc. review denied, __ N.C. __, 799 S.E.2d

620 (2017); and Plasman v. Decca Furniture (USA), Inc., __ N.C. App. __, 800 S.E.2d

761 (2017) (“Bolier II”). The following factual and procedural background is taken

from the record before us, and from prior opinions of this Court.

Christian G. Plasman (“Plasman”), “in his individual capacity and derivatively

for the benefit of, on behalf of and right of nominal party” Bolier & Company, LLC

(“Bolier” or the “Company”), initiated the present action (the “Action”) by filing a

complaint in Superior Court, Catawba County, on 22 October 2012. The named

Defendants (“Defendants”) in that initial complaint were Defendant Decca Contract

Furniture, LLC (“Decca China”), Decca Furniture (USA), Inc. (“Decca”), a wholly-

owned subsidiary of Decca China, and Richard Herbst (“Herbst”), the president of

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Opinion of the Court

Decca.1 Plasman’s son, Christian J. Plasman, a/k/a Barrett Plasman (“Barrett”)

(together with Plasman, “the Plasmans,” together with Plasman and Bolier,

“Plaintiffs”), is a third-party Defendant, who joins Plasman as an Appellant in this

matter.2

I. Factual and Procedural Background

Bolier is a closely held North Carolina company in the business of selling

furniture. Bolier was originally founded and owned by Plasman. Plasman and Decca

entered into an operating agreement (the “Operating Agreement”) on 31 August 2003,

pursuant to which Plasman conferred a fifty-five percent ownership interest in Bolier

to Decca while retaining a forty-five percent interest for himself. In return, Decca

agreed to supply Bolier with furniture for retail sale. The Operating Agreement also

vested Decca with the authority to make all employment decisions related to Bolier.

Bolier II, __ N.C. App. at __, 800 S.E.2d at 764. According to Plasman, prior to the

execution of the Operating Agreement, Herbst and Tsang represented to him that

while it was necessary for Decca to own a majority ownership interest in Bolier “on

paper,” due to certain rules of the Hong Kong Stock Exchange, Bolier would, in

1 The named Defendants currently include Decca, Decca China, Herbst, Tsang C. Hung
(“Tsang”), the chairman of Decca’s board of directors, Wai Theng Tin (“Tin”), Decca Furniture, LTD
(“Decca Furniture”), Decca Hospitality Furnishings, LLC (“Decca Hospitality”), Dongguan Decca
Furniture Co., LTD, Darren Hudgins (“Hudgins”), and Decca Home, LLC. Bolier is also included as a
“nominal party Defendant.”

2 For this reason, we will be referring to Barrett, along with Plasman and Bolier, when we
refer to “Plaintiffs,” even though Barrett is technically a third-party defendant.

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Opinion of the Court

reality, be operated as a 50/50 partnership between Decca and Plasman. Plasman

and Bolier entered into an employment agreement in November 2003 (the

“Employment Agreement”), which provided, inter alia, that Plasman could be

terminated without cause. Id.

Following execution of the Operating and Employment Agreements, Plasman

served as Bolier’s president and chief executive officer while Barrett worked as

Bolier’s operations manager. According to Decca, despite the significant investments

of Decca and Decca China in Bolier’s operations, Bolier sustained losses in excess of

$2,000,000.00 between 2003 and 2012. As a result, Decca terminated the

employment of Plasman and Barrett on 19 October 2012. Id. The Plasmans,

however, refused to accept their terminations and continued to work out of Bolier’s

office space. During this time, the Plasmans set up a new bank account in Bolier’s

name, and they diverted approximately $600,000.00 in Bolier customer payments to

that account. From these diverted funds, Plasman and Barrett paid themselves,

respectively, approximately $33,170.49 and $17,021.66 in salaries and personal

expenses. Plasman also wrote himself a $12,000.00 check, dated 5 December 2012,

from the new account for “Bolier Legal Fees.” Id. Decca eventually changed the locks

to Bolier’s offices, thereby preventing Plasman and Barrett from entering.

Plaintiffs filed the Action in Catawba County Superior Court on 22 October

2012, alleging claims for dissolution; breach of contract; fraud; constructive fraud;

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Opinion of the Court

misappropriation of corporate opportunities; trademark, trade dress and copyright

infringement; conspiracy to defraud; and unfair trade practices. The Action was

designated as a mandatory complex business case on 24 October 2012, and assigned

to the North Carolina Business Court. Id. Decca removed the Action to the United

States District Court for the Western District of North Carolina on 29 October 2012.

Bolier I, __ N.C. App. at __, 792 S.E.2d at 867. On that same date, Decca filed a

motion for a temporary restraining order and preliminary injunction against the

Plasmans pursuant to Rule 65 of the Federal Rules of Civil Procedure seeking, inter

alia, to prohibit any additional diversion of Bolier funds and to recover the funds that

had already been diverted. Id. Decca moved to dismiss Barrett’s counterclaims on

10 December 2012 and on that same date Defendants Decca, Decca China, and Herbst

filed amended counterclaims, and Decca filed an amended third-party complaint,

which included, inter alia, a request for a temporary restraining order and

preliminary and permanent injunctive relief against the Plasmans. Plaintiffs moved

to “supplement and amend [their] complaint” on 3 January 2013, and attached their

“[P]roposed First Amended Complaint” thereto.

A hearing on Decca’s motion was held before federal district court judge

Richard L. Voorhees (“Judge Voorhees”). Judge Voorhees entered an order (“Judge

Voorhees’ Order”) on 27 February 2013, granting Decca’s motion by entering a

preliminary injunction that barred the Plasmans from taking any further actions on

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Opinion of the Court

Bolier’s behalf, directed the Plasmans to return all diverted funds to Bolier within

five business days, and provide an accounting of those funds to Decca. Id.

Plaintiffs filed a document entitled “Plaintiffs’ and Third Party Defendant’s

Response to Court Order” on 6 March 2013. In this document, they represented that

they had “fully complied to the best of their ability with the Court Order signed on

February 27, 2013.” In addition, they stated that “Plaintiffs[’] response herein is

intended to comply with the spirit of [Judge Voorhees’ Order], and by complying

herein, Plaintiffs are not waiving Plaintiffs’ rights to request reconsideration or

appeal.” Id.

Plaintiffs never made any attempt to appeal Judge Voorhees’ Order to the

United States Court of Appeals for the Fourth Circuit. Nor did they file a motion for

reconsideration of Judge Voorhees’ Order. Id. Plaintiffs filed a “Renewed Motion to

Amend Complaint to Include New Parties, Facts and Claims for Relief” on 6

November 2013, and included therein their “Second Proposed First Amended

Complaint.” Judge Voorhees allowed Plaintiffs motion to amend on 9 January 2014,

and Plaintiffs filed their “First Amended Complaint” on 10 January 2014.

Defendants filed a “Motion to Dismiss the First Amended Complaint” on 24 January

2014, and Plaintiffs filed a “Motion to Remand to Catawba County Superior Court”

on 20 March 2014. Judge Voorhees heard these motions, and entered an order on 19

September 2014, dismissing Plaintiffs’ federal copyright claims and declining to

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Opinion of the Court

exercise supplemental jurisdiction over Plaintiffs’ state law claims. As a result, the

Action was remanded to our Business Court for consideration of “[a]ll remaining

claims and motions[.]” Id.

Upon remand, Plaintiffs filed a “Motion to Amend Complaint” with the

Business Court on 20 January 2015, which included Plaintiffs’ “Draft Proposed

Second Amended Complaint.” Defendants filed a “Motion to Strike Supplemental

Pleadings and Motion to Dismiss Third-Party Defendant [Barrett’s] Counterclaims”

on 23 January 2015. Multiple additional motions were filed by Plaintiffs and

Defendants, including Defendants’ “Motion to Dismiss Petitioners’ First Amended

Complaint,” Defendants’ “Motion to Disqualify Counsel and Motion for Sanctions,”

Defendants’ “Motion to Enforce Order, Motion for Contempt, and Motion for

Sanctions,” and “Plaintiffs’ Motion to Amend Preliminary Injunction, to Dissolve

Portions of the Preliminary Injunction and Award Damages, and Motion for

Sanctions.” The trial court entered an order on 26 May 2015 (the “May 2015 Order”),

granting Plaintiffs’ motion to amend their First Amended Complaint, and deciding

multiple other matters before it.

The Plasmans filed notice of appeal from the May 2015 Order on 25 June 2015,

based upon issues related to the injunction imposed by Judge Voorhees, Bolier II, __

N.C. App. at __, 800 S.E.2d at 765, and on that same day filed their revised Second

Amended Complaint, as allowed by the May 2015 Order. Defendants filed a “Motion

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Opinion of the Court

to Dismiss Plaintiffs’ Second Amended Complaint” on 22 September 2015, and the

trial court heard Defendants’ motion on 17 December 2015. The trial court entered

its fifty-eight page order dismissing the Second Amended Complaint with prejudice

on 21 October 2016 (the “October 2016 Order”). Plaintiffs appeal.

II. Analysis

Plaintiffs argue on appeal that the trial court erred by dismissing their claims

pursuant to Rule 8(a)(1) and Rule 12(b)(6) of the North Carolina Rules of Civil

Procedure. We disagree.

A. Standard of Review and Relevant Law

1. Rule 8 and Rule 41(b)

“Rule 41(b) of the Rules of Civil Procedure allows a court to dismiss an action

‘[f]or failure of the plaintiff to prosecute or to comply with these rules or any order of

court[.]’ N.C. Gen. Stat. § 1A–1, Rule 41(b) (2003).” Lincoln v. N.C. Dep’t of Health

& Human Servs. 172 N.C. App. 567, 572–73, 616 S.E.2d 622, 626 (2005). As a general

proposition, “the trial court may dismiss for failure to comply with the Rules of Civil

Procedure if it has first determined the appropriateness of lesser sanctions. ‘[T]he

trial court must make findings and conclusions which indicate that it has considered

. . . less drastic sanctions.’” Wilder v. Wilder, 146 N.C. App. 574, 577, 553 S.E.2d 425,

427 (2001) (citations omitted). “‘If the trial court undertakes this analysis, its

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Opinion of the Court

resulting order will be reversed on appeal only for an abuse of discretion.’” Id.

(citation omitted).

Rule 8 of our Rules of Civil Procedure sets forth the “General rules of

pleadings[.]” N.C. Gen. Stat. § 1A-1, Rule 8 (2015). Pursuant to Rule 8(a)(1):

A pleading which sets forth a claim for relief, whether an
original claim, counterclaim, crossclaim, or third-party
claim shall contain [a] short and plain statement of the
claim sufficiently particular to give the court and the
parties notice of the transactions, occurrences, or series of
transactions or occurrences, intended to be proved showing
that the pleader is entitled to relief[.]

N.C.G.S. § 1A-1, Rule 8(a)(1).

Although North Carolina is a notice pleading state, our Supreme Court has

cited with approval scholarly analysis that “under the directive of our Rule 8(a)(1) a

complaint need not be as specific as under the former practice, but it must be ‘to some

degree more specific than the federal complaint.’” Sutton v. Duke, 277 N.C. 94, 100,

176 S.E.2d 161, 164 (1970) (citation omitted).

“Under the notice theory of pleading a complainant must
state a claim sufficient to enable the adverse party to
understand the nature of the claim, to answer, and to
prepare for trial.” Ipock v. Gilmore, 73 N.C. App. 182, 188,
326 S.E.2d 271, 276 (1985) (citation omitted) (citing N.C.
Gen. Stat. § 1A–1, Rule 8(a)(1)[.] “While the concept of
notice pleading is liberal in nature, a complaint must
nonetheless state enough to give the substantive elements
of a legally recognized claim or it may be dismissed under
Rule 12(b)(6).”

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Piro v. McKeever, __ N.C. App. __, __, 782 S.E.2d 367, 370 (2016) (quotation marks

and citations omitted). “Merely asserting a grievance is not enough to comply with

. . . Rule 8(a). The first avenue by which a party may properly address the failure to

state a claim is through Rule 12(b)(6) of the North Carolina Rules of Civil Procedure.”

Westover Products, Inc. v. Gateway Roofing, Inc., 94 N.C. App. 63, 70, 380 S.E.2d 369,

374 (1989) (citation omitted).

Our Supreme Court and this Court have recognized that dismissal with

prejudice for violations of the provisions of Rule 8 may be appropriate separate from

a motion to dismiss pursuant to Rule 12(b)(6) for failure to state a claim. See Harris

v. Maready, 311 N.C. 536, 551, 319 S.E.2d 912, 921–22 (1984); Patterson v. Sweatt,

146 N.C. App. 351, 357–59, 553 S.E.2d 404, 408–10 (2001); Miller v. Ferree, 84 N.C.

App. 135, 136–37, 351 S.E.2d 845, 847 (1987). “Appellate courts should not disturb

the trial court’s exercise of discretion unless the challenged action is ‘manifestly

unsupported by reason.’” Id. at 137, 351 S.E.2d at 847.

2. Rule 12(b)(6)

Our Court has articulated the standard of review for a trial court’s grant of a

motion to dismiss for failure to state a claim as follows:

“On appeal of a 12(b)(6) motion to dismiss for failure to
state a claim, our Court conducts a de novo review[.]” “We
consider ‘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.’” “The court
must construe the complaint liberally and should not

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Opinion of the Court

dismiss the complaint unless it appears beyond a doubt
that the plaintiff could not prove any set of facts to support
his claim which would entitle him to relief.”

“Dismissal is proper, however, when one of the following
three conditions is satisfied: (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.”

Hinson v. City of Greensboro, 232 N.C. App. 204, 208, 753 S.E.2d 822, 826 (2014)

(citations omitted).

B. Rule 8

Plaintiffs argue that the trial court erred in dismissing the Second Amended

Complaint for repeated violations of Rule 8. We disagree.

First, Plaintiffs allege that the Second Amended Complaint complied with Rule

8(a)(1) and, therefore, any dismissal on the basis of failure to comply with Rule 8(a)(1)

constituted error. We have undertaken a thorough and laborious review of the

Second Amended Complaint, and agree with the trial court that it “is generally

imprecise, and the peculiarities of this pleading have made this consideration of

Defendants’ Motions exceedingly burdensome.” Generally speaking, Plaintiffs’

claims are vague, misleading, or incorrect with regard to (1) the alleged persons or

entities involved – which Plaintiff is asserting the claim and which Defendants are

alleged to have engaged in any improper conduct; (2) the alleged conduct in support

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Opinion of the Court

of the claim or claims; (3) the legal bases in support of the claim or claims; and (4), in

some instances, which specific claim or claims are being alleged.

None of the issues upon which the trial court based its decision to dismiss the

Second Amended Complaint pursuant to violations of Rule 8 should have come as a

surprise to Plaintiffs. In the May 2015 Order, which resolved numerous motions filed

by both Plaintiffs and Defendants, the trial court considered Defendants’ motion to

dismiss Plaintiffs’ First Amended Complaint, alongside Plaintiffs’ motion to amend

Plaintiffs’ First Amended Complaint. The trial court thoroughly addressed the

deficiencies in Plaintiffs’ First Amended Complaint, and plainly stated that those

deficiencies had not been remedied in Plaintiffs’ Proposed Second Amended

Complaint. Nonetheless, the trial court ruled that it would, in its discretion, allow

Plaintiffs yet another chance to remedy the deficiencies in the First Amended

Complaint by granting Plaintiffs leave to further revise the First Amended Complaint

and/or the Proposed Second Amended Complaint, and granted Plaintiffs the

opportunity to file a corrected Second Amended Complaint. Therefore, the trial court,

relevant to this appeal, denied Defendants’ motion to dismiss Plaintiffs’ First

Amended Complaint. However, the trial court made clear that granting Plaintiffs’

motion to amend their First Amended Complaint would be “without prejudice to

Defendants’ rights to move to dismiss the [S]econd [A]mended [C]omplaint, in whole

or in part, as Defendants may deem appropriate.”

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Opinion of the Court

The following portion of the May 2015 Order demonstrates some of the trial

court’s reasoning and direction to Plaintiffs:

The [trial court] agrees with Defendants that Plaintiffs’
First Amended Complaint and [P]roposed Second
Amended Complaint reveal fatal deficiencies on their face.

....

Plaintiffs current and proposed Complaints also fail to
comply with the requirement under Rule 8 of the North
Carolina Rules of Civil Procedure that a pleading contain
“[a] short and plain statement of the claim sufficiently
particular to give the court and the parties notice of the
transactions, occurrences, or series of transactions or
occurrences, intended to be proved showing that the
pleader is entitled to relief, and [a] demand for judgment
for the relief to which he deems himself entitled.” N.C. R.
Civ. P. 8(a)(1)-(2) (2014). In particular, both Plaintiffs’
First Amended Complaint and [P]roposed Second
Amended Complaint fail to make clear which claims are
brought by [] Plasman and which claims are purportedly
brought by Bolier, and neither specifies against which
Defendant or Defendants the alleged claims are asserted.
Further, the current Complaint and [P]roposed Second
Amended Complaint assert a number of claims for relief in
a confusing, unfocused manner[.]

....

Applying these considerations [addressed above in the 26
May 2015 order] to its review of Plaintiffs’ First Amended
Complaint and to Plaintiffs’ Motion to Amend Complaint,
the [trial court] concludes, in its discretion, that it is
appropriate in these circumstances – where the action is
still in its early stages in this forum, and Plaintiffs have
sought to add parties, claims, and allegations based on
conduct purportedly arising after the filing of the First
Amended Complaint – to provide [] Plasman another

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Opinion of the Court

chance to amend the operative complaint to attempt to
state legally cognizable claims in this action.

In the October 2016 Order dismissing Plaintiffs’ actions, the trial court

discussed Plaintiffs’ failure to cure these defects, despite having been given multiple

opportunities to do so:

3. Plaintiff [] Plasman originally filed this action in October
2012, and Defendants subsequently removed the matter to
the United States District Court for the Western District of
North Carolina[.]

4. Upon remand [from the federal district court], the
parties filed a number of substantive motions, which this
[c]ourt resolved in [the May 2015 Order]. In that [order],
the [c]ourt ruled on Plaintiff’s Motion to Amend Complaint,
[and] Defendants’ Motion to Dismiss Plaintiff’s First
Amended Complaint[.]

5. This [c]ourt concluded in [the May 2015] Order that the
“First Amended Complaint and [P]roposed Second
Amended Complaint reveal[ed] fatal deficiencies on their
face.” The First Amended Complaint also asserted claims
“in a confusing, unfocused manner” by grouping claims
together illogically and failing to make clear whether
claims were brought individually or on Bolier’s behalf and
which Defendants were allegedly liable for which claims.
Nevertheless, the [c]ourt, in the exercise of its discretion
and under the specific circumstances in this case,
determined that it was appropriate “to provide [] Plasman
another chance to amend the operative complaint to
attempt to state legally cognizable claims in this action.”
Therefore, the [c]ourt granted [] Plasman’s Motion to
Amend and denied in part as moot Defendants’ Motion to
Dismiss Plasman’s First Amended Complaint. The [c]ourt
also denied in part as moot Defendants’ Motion to Dismiss
Barrett[’s] Counterclaims.

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Opinion of the Court

6. [] Plasman filed his Second Amended Complaint on June
25, 2015. Barrett [] filed his Supplemented and Amended
Third Party Counterclaims on the same day.[3] In lieu of
filing any answer, Defendants filed the present Motions[.]

....

18. Defendants contend, and the [c]ourt agrees, that the
Second Amended Complaint has failed to fully cure those
defects identified in [the May 2015 Order]. The Second
Amended Complaint still fails to “specify against which
Defendant or Defendants the alleged claims are asserted”
and “asserts a number of claims for relief in a confusing,
unfocused manner.” As an example of the former, Plaintiff
captions his misappropriation of trade secrets claims as
against Decca [], Decca China, Decca Contract, Decca
Hospitality, and Decca Home, but the allegations in
support of that claim for relief fail to identify any
involvement by Decca Contract or Decca Hospitality and
instead focus on conduct by Defendants Tin and
Hudgins.[4] As an example of the latter, the Second
Amended Complaint groups together allegations under the
heading “Seventh and Eight Claims for Relief: Self-Dealing
and Misappropriation of Corporate Opportunities –

3 “The [c]ourt did not technically grant Barrett [] leave to amend. Instead, the [c]ourt
anticipated that Barrett [] would refile any counterclaims at a procedurally appropriate time, if
Defendants elected to file any third-party claims after answering the Second Amended Complaint.
. . . . Nevertheless, Defendants did not challenge the timeliness of Barrett[’s] filing, and the [c]ourt
elects to evaluate Barrett[’s] pleading on the merits.” [Footnote is included in the October 2016 Order].

4 “As a further example, the Second Amended Complaint relies on broad allegations that the
Plaintiff intends to hold most of the Defendants liable for most of the causes of action:”

Herbst, Tin, Hudgins, and Tsang are officers and directors of one or more of Decca
China, Decca [], Decca Contract, Decca Hospitality, Decca Home, Decca Classic, and
Decca China Plant, and do not distinguish between actions taken by or for specific
entities. For most of the allegations herein, each of the foregoing individuals and
purported business entities are jointly and severally liable, and the actions and
omissions of one or more of the named parties is attributable to one or more of the
individuals and business entities because they act as agents and representatives of the
other defendants. [Footnote is included in the October 2016 Order].

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Derivatively for the Benefit of Bolier and Directly on behalf
of Plasman as Minority Member[.]” This convoluted
method of grouping claims is exacerbated by the Second
Amended Complaint’s repeated failure to distinguish
between harm suffered by Bolier and harm suffered by []
Plasman, despite the well-established rule that
“shareholders . . . generally may not bring individual
actions to recover what they consider their share of the
damages suffered by the corporation.”

19. In addition, the Second Amended Complaint has not
fully cured its “fail[ure] to make clear which claims are
brought by [] Plasman and which claims are purportedly
brought by Bolier.” For instance, while Plaintiff has
separately captioned his individual and derivative breach
of fiduciary duty claims, several of the allegations under
each section state that various Defendants breached
“fiduciary duties to Bolier and [] Plasman” without
distinction.

20. As a whole, and despite its length, the Second Amended
Complaint is generally imprecise, and the peculiarities of
this pleading have made this consideration of Defendants’
Motions exceedingly burdensome. The [c]ourt therefore
concludes that the Second Amended Complaint is not
“sufficiently particular to give the court and the parties
notice of the transactions, occurrences, or series of
transactions or occurrences, intended to be proved showing
that the pleader is entitled to relief.” N.C. R. Civ. P. 8(a)(1).
After having already afforded Plaintiff the opportunity to
re-plead his claims and specifically identified the ways in
which Plaintiff’s First Amended Complaint and Proposed
Second Amended Complaint were insufficient, the [c]ourt,
in the exercise of its discretion, concludes that the Second
Amended Complaint’s noncompliance with Rule 8 provides
an alternate basis for dismissal in addition to the grounds
identified under Rule 12(b)(6). [Citations omitted].

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Opinion of the Court

Upon our review of the Second Amended Complaint, we affirm the trial court’s

determination that the Second Amended Complaint continued to violate Rule 8(a)(1).

However, Plaintiffs argue:

Rule 8 prescribes no penalty for violation of its terms, and
dismissal can only occur under N.C. R. Civ. P. 41(b). N.C.
R. Civ. P. 7(b)(1) requires that a motion “shall state with
particularity the grounds therefor[.]” However,
Defendants never moved for dismissal under Rule 41(b) as
required under Rule 7(b)(1), and Appellants never had
notice of same.” Therefore, the trial court erred by
dismissing the [Second Amended Complaint] without
referencing Rule 41(b) and without a motion providing
Appellants with notice they were subject to Rule 41(b)
dismissal.

This Court has recognized in Jones v. Boyce, 60 N.C. App. 585, 299 S.E.2d 298 (1983),

that

Rule 8(a)(2) prescribes no penalty for violation of its
proscription against stating the demand for monetary
relief. Absent application of the Rule 41(b) provision for
dismissal for violation of the rules, litigants could ignore
the proscription with impunity, thereby nullifying the
express legislative purpose for its enactment.

The General Assembly thus must have intended
application of the Rule 41(b) power of dismissal as a
permissible sanction for violation of the Rule 8(a)(2)
proscription.

Id. at 587, 299 S.E.2d at 300. We hold the same analysis applies to Rule 8(a)(1), as it

also “does not identify a particular sanction that may be imposed” upon violation of

its requirements. Patterson, 146 N.C. App. at 357, 553 S.E.2d at 409. Contrary to

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Plaintiffs’ assertion in their brief, Jones does not hold that specific reference to Rule

41(b) is required, only that Rule 41(b) serves as the vehicle for ordering sanctions for

violations of Rule 8. In the present case, Defendants clearly indicated in their motion

to dismiss the Second Amended Complaint that they were seeking dismissal in part

based upon violations of Rule 8. Therefore, Plaintiffs were put on notice that

Defendants were seeking dismissal based on Rule 8 violations through the only

means available – Rule 41(b). See Patterson, 146 N.C. App. 351, 553 S.E.2d 404

(affirming dismissal of the plaintiff’s action based upon violations of Rule 8 where the

defendant’s motion to dismiss did not reference Rule 41(b)).5

Finally, Plaintiffs argue that the trial court erred in dismissing the Second

Amended Complaint “by not making findings of fact and conclusions of law which

indicate that it had considered less drastic sanctions.”

Our [C]ourt [has] held that sanctions may not be imposed
mechanically. Rather, the circumstances of each case must
be carefully weighed so that the sanction properly takes
into account the severity of the party’s disobedience. [See]
Daniels v. Montgomery Mut. Ins. Co., 81 N.C. App. 600, 344
S.E.2d 847 (1986) (in determining whether to dismiss a
case for violation of motion in limine, trial court must
determine the effectiveness of alternative sanctions). Once
the trial court undertakes this analysis, its resulting order
will be reversed on appeal only for an abuse of discretion.

5We have reviewed the record in Patterson and take judicial notice of the fact that the relevant
motion to dismiss in part pursuant to Rule 8 includes no mention of Rule 41(b).

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Opinion of the Court

Patterson, 146 N.C. App. at 357–58, 553 S.E.2d at 409 (citations omitted). Failure of

the trial court to use the labels “finding of fact” or “conclusion of law” will not prevent

this Court from reviewing the trial court’s order to determine if it has appropriately

considered and ruled upon the necessary issues. See Brinn v. Weyerhaeuser Co., 209

N.C. App. 204, 707 S.E.2d 263 (2011) (“although the Commission did not label specific

sentences as either ‘findings of fact’ or ‘conclusions of law’ within its order, the order

was sufficient to allow us to review the Commission’s reasoning”).

As stated in the October 2016 Order, Plaintiffs were allowed to amend their

complaint twice, including having been given two opportunities to draft their Second

Amended Complaint in accordance with the requirements of Rule 8:

This [c]ourt concluded in [the May 2015] Order that the
“First Amended Complaint and [P]roposed Second
Amended Complaint reveal[ed] fatal deficiencies on their
face.” . . . . Nevertheless, the [c]ourt, in the exercise of its
discretion and under the specific circumstances in this
case, determined that it was appropriate “to provide []
Plasman another chance to amend the operative complaint
to attempt to state legally cognizable claims in this action.”
Therefore, the [c]ourt granted [] Plasman’s Motion to
Amend[.]

Despite being given another opportunity to bring their complaint into compliance

with Rule 8, and having been given specific direction concerning how to correct the

deficiencies in their First Amended Complaint and their Proposed Second Amended

Complaint, the trial court found “that the Second Amended Complaint has failed to

fully cure those defects identified in the[c]ourt’s prior order and opinion.” The trial

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court then discussed the specific ways in which the Second Amended Complaint

continued to violate Rule 8, and gave multiple examples from the complaint itself. As

a result:

The [c]ourt therefore conclude[d] that the Second Amended
Complaint [wa]s not “sufficiently particular to give the
court and the parties notice of the transactions,
occurrences, or series of transactions or occurrences,
intended to be proved showing that the pleader is entitled
to relief.” N.C. R. Civ. P. 8(a)(1). After having already
afforded Plaintiff the opportunity to re-plead his claims
and specifically identified the ways in which Plaintiff’s
First Amended Complaint and Proposed Second Amended
Complaint were insufficient, the [c]ourt, in the exercise of
its discretion, concludes that the Second Amended
Complaint’s noncompliance with Rule 8 provides an
alternate basis for dismissal in addition to the grounds
identified under Rule 12(b)(6).

We hold that the trial court’s order contains sufficient findings and

conclusions, though not labeled as such, demonstrating that it had considered lesser

sanctions before deciding to dismiss the Second Amended Complaint for violations of

Rule 8. In fact, the trial court indicates that it had decided not to issue any sanctions

for Plaintiffs’ continuing Rule 8 violations in the May 2015 Order, despite its belief

that it had sufficient grounds to do so. We hold that the trial court took “into account

the severity of [Plaintiffs’] disobedience[,]” and “the effectiveness of alternative

sanctions” before deciding that dismissal of the Second Amended Complaint was

warranted. Patterson, 146 N.C. App. at 357–58, 553 S.E.2d at 409.

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Opinion of the Court

Plaintiffs do not specifically argue that the trial court’s dismissal of the Second

Amended Complaint amounted to an abuse of discretion. However, to the extent that

Plaintiffs arguments could be interpreted to include such an argument, we hold that

the trial court did not abuse its discretion in dismissing the Second Amended

Complaint, pursuant to its authority under Rule 41(b), in response to Plaintiffs’

multitudinous and continued violations of Rule 8. We therefore affirm.

C. Rule 12(b)(6)

Although our holding above is sufficient to affirm the trial court’s order

dismissing the Second Amended Complaint, we have decided to review the trial

court’s alternate basis for dismissal. The trial court also ruled that the Second

Amended Complaint should be dismissed for failure to state a claim pursuant to Rule

12(b)(6).

We first hold that Plaintiffs’ failure to state their claims with “sufficient[]

particular[ity] to give the court and the parties notice of the transactions, occurrences,

or series of transactions or occurrences, intended to be proved showing that the

pleader is entitled to relief[,]” N.C.G.S. § 1A-1, Rule 8(a)(1), warrant dismissal

pursuant to Rule 12(b)(6). Piro, __ N.C. App. at __, 782 S.E.2d at 370 (quotation

marks and citations omitted) (in order to conform with the dictates of Rule 8(a)(1), “a

complaint must . . . state enough to give the substantive elements of a legally

recognized claim or it may be dismissed under Rule 12(b)(6)”). In addition, we have

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Opinion of the Court

methodically reviewed Plaintiffs’ arguments on appeal, which number in excess of

twenty, and hold that none of Plaintiffs’ challenges to the dismissal of certain claims

in the Second Amended Complaint, pursuant to Rule 12(b)(6), have merit.

We note that the disjointed condition of the Second Amended Complaint

rendered this review exceedingly difficult and time consuming, and has resulted in

unnecessary delay in the resolution of this appeal. For instance, the allegations that

Plaintiffs, on appeal, contend support specific claims are often not directly associated

with those claims in any coherent or organized manner. On appeal, Plaintiffs attempt

to cobble together support for individual claims by directing this Court to allegations

scattered throughout the Second Amended Complaint, even though the context

surrounding many of those allegations make clear that they are inapplicable to the

claims to which Plaintiffs now attempt to apply them. As an obvious example of this

practice, in Plaintiffs’ brief they often cite to allegations that are made after the claim

they are alleged to support. Although each new claim in the Second Amended

Complaint includes the regular boilerplate language that “[t]he allegations alleged in

all above paragraphs are alleged herein and incorporated herein by reference[,]” there

is no such boilerplate purporting to incorporate allegations in “all ‘below’ or

‘subsequent’ paragraphs” of the complaint. Nonetheless, on appeal, Plaintiffs

regularly cite to allegations made following a claim in an attempt to provide support

for that claim that is otherwise lacking. As one additional example of the incoherent

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nature of the Second Amended Complaint, the first substantive allegation made in

the Second Amended Complaint in support of Plaintiffs’ derivative claim on behalf of

Bolier for alleged breach of fiduciary duty states: “Decca [] breached fiduciary duties

owed to Plasman by failing to follow [the] Operating Agreement, [and] terminating

Plasman without Member or Manager meeting[.]”

After painstaking review of the Second Amended Complaint, we also affirm

the trial court’s dismissal of the Second Amended Complaint pursuant to Rule

12(b)(6) because, for each of Plaintiffs’ claims, one or more of the following is true: “(1)

the complaint on its face reveals that no law supports [P]laintiff[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 [P]laintiff[s’] claim.”

Hinson, 232 N.C. App. at 208, 753 S.E.2d at 826 (citation omitted).

AFFIRMED.

Judges DIETZ and BERGER concur.

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