Howe v. Links Club Condo. Ass'n, Inc.

IN THE COURT OF APPEALS OF NORTH CAROLINA

No. COA18-150

Filed: 18 December 2018

Wake County, No. 17 CVS 6880

DIANE GAIL HOWE; WILLIAM BUTLER BAILEY, TRUSTEE OF THE WILLIAM
BUTLER BAILEY REVOCABLE TRUST AGREEMENT DATED MAY 25, 2011;
WILLIAM T. BAILEY and wife, ALLISON ANN BAILEY; WILLIAM B. BAILEY, and
wife, CATHERINE E. BAILEY; JOHN C. BEGENY, III; JACK D. CALLISHER and
wife, KATHRYN K. CALLISHER; WEIQUN CHEN and wife, YAN SUN and
QICHUAN CHEN (unmarried); MARTIN E. FRAZIER and wife, BARBARA M.
FRAZIER; GILBERT R. GRISHAM and wife, JAE YOUN GRISHAM; JOSEPH
TREVOR HARGIS; ELENA HOPPER; GLORIA A. PEIRSOL-MARINO and
husband, CHARLES J. MARINO; FABRICE MEUNIER; ROBERT OLIVA and wife,
SHEILA K. OLIVA; PHAN INVESTMENTS, LLC; TARA PREZIOSO; KENNETH E.
RICKARD; JONATHAN M. SCHADE; KIMMY YANG and wife, ELIZABETH YANG;
MICHAEL YANG and wife, SUSANA YANG, Plaintiffs,

v.

THE LINKS CLUB CONDOMINIUM ASSOCIATION, INC., a North Carolina non-
profit corporation; FCP FUND III TRUST, a Maryland real estate investment trust
by THOMAS A. CARR, authorized Trustee; LINKS RALEIGH, LLC, a Delaware
limited liability company and GREENS AT TRYON, LLC, a Delaware limited
liability company; NASON KHOMASSI; ALEX CATHCART and BRYAN M. KANE,
Defendants.

Appeal by plaintiffs from order entered 14 November 2017 by Judge R. Allen

Baddour, Jr. in Wake County Superior Court. Heard in the Court of Appeals 5

September 2018.

Harris & Hilton, P.A., by Nelson G. Harris, for plaintiffs-appellants.

Parker Poe Adams & Bernstein LLP, by Kevin L. Chignell and Collier R. Marsh,
for defendants-appellees The Links Club Condominium Association, Inc.,
Nason Khomassi, Alex Cathcart, and Bryan M. Kane.
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Shanahan McDougal, PLLC, by John E. Branch III, Kieran J. Shanahan,
Tonya B. Powell, and Jeffrey M. Kelly, for defendants-appellees FCP Fund III
Trust, Thomas A. Carr, Links Raleigh, LLC, and Greens at Tryon, LLC.

ZACHARY, Judge.

Plaintiffs, minority unit owners in a condominium complex, appeal from the

trial court’s order granting defendants’ motions to dismiss plaintiffs’ claims for breach

of contract, breach of statutory obligations, breach of fiduciary duty, piercing the

corporate veil, and unfair and deceptive trade practices. We reverse the trial court’s

dismissal of plaintiffs’ claims for breach of fiduciary duty and piercing the corporate

veil, but affirm as to the trial court’s dismissal of the claims for breach of contract,

breach of statutory obligations, and unfair and deceptive trade practices.

Background

I. The North Carolina Condominium Act

The instant dispute arose in the context of Chapter 47C of the North Carolina

General Statutes (“the Condominium Act”), which provides, inter alia, a process by

which condominium unit owners may terminate and sell a condominium

development. Pursuant thereto, “a condominium may be terminated only by

agreement of unit owners of units to which at least eighty percent (80%) of the votes

in the association are allocated, or any larger percentage the declaration specifies.”

N.C. Gen. Stat. § 47C-2-118(a) (2017). The “agreement to terminate must be

evidenced by the execution of a termination agreement . . . in the same manner as a

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deed, by the requisite number of unit owners.” N.C. Gen. Stat. § 47C-2-118(b). In

addition, the termination agreement “must be recorded in every county in which a

portion of the condominium is situated, and is effective only upon recordation.” Id.

In the event that “any real estate in the condominium is to be sold following

termination, title to that real estate, upon termination, vests in the association as

trustee for the holders of all interests in the units. Thereafter, the association has all

powers necessary and appropriate to effect the sale.” N.C. Gen. Stat. § 47C-2-118(e).

“[T]he minimum terms of the sale” must also be set forth in the termination

agreement. N.C. Gen. Stat. § 47C-2-118(c). “Proceeds of the sale must be distributed

to unit owners and lienholders as their interests may appear, in proportion to the

respective interests of unit owners as provided in subsection (h).” N.C. Gen. Stat. §

47C-2-118(e). Subsection (h) provides, in relevant part:

(1) Except as provided in paragraph (2), the respective
interests of unit owners are the fair market value of their
units, limited common elements, and common element
interests immediately before the termination, as
determined by one or more independent appraisers
selected by the association. The decision of the independent
appraisers shall be distributed to the unit owners and
becomes final unless disapproved within 30 days after
distribution by unit owners of units to which twenty-five
percent (25%) of the votes in the association are allocated.
The proportion of any unit owner’s interest to that of all
unit owners is determined by dividing the fair market
value of that unit owner’s unit and common element
interest by the total fair market values of all the units and
common elements.

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N.C. Gen. Stat. § 47C-2-118(h)(1).

II. Termination and Sale of the Links Club Condominium

On 25 April 2001, the Links Club Condominium (“the Condominium”) was

created by recording a Declaration of Covenants, Conditions, and Restrictions in the

Wake County Register of Deeds. At the same time, Links Club Condominium

Association (“the Association”) was created pursuant to the Condominium Act “to

manage the Condominium on behalf of all of the condominium unit owners.” As of

September 2009, there were 264 units within the Condominium. By July 2016, close

to eighty percent of the Condominium units were owned by affiliated entities known

as the Fairway Apartments, LLC, “which collectively operated a portion of the

Condominium as an apartment complex.” The remaining units were owned by

individual unit owners, some of whom are the plaintiffs in the instant case (hereafter

“minority owners” or “plaintiffs”).

On 26 July 2016, defendant FCP Fund III Trust (“FCP Fund”), a Maryland

real estate investment trust operated by defendant Thomas A. Carr, formed

defendant Links Raleigh, LLC. Plaintiffs allege that before FCP Fund formed Links

Raleigh, FCP Fund had “arranged for or contracted with Fairway Apartments to

purchase their units in the Condominium” and “intended to purchase, through Links

Raleigh or some other entity under its control, the units owned by Fairway

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Apartments” as well as “additional units until it owned 80 percent of the units in the

Condominium.”

Plaintiffs allege that on 31 August 2016, defendant Alex Cathcart, “in

furtherance of FCP Fund’s plan, acting as a representative of Links Raleigh, and with

proxies provided by Fairway Apartments, conducted a special meeting of the

Association[.]” At that meeting, all members of the Association’s Board of Directors

were removed, and the number of Directors was reduced to three. Defendants

Cathcart, FCP employee Nason Khomassi, and Senior Vice-President of FCP Bryan

M. Kane were elected as the new members of the Association’s Board of Directors.

By 28 February 2017, Links Raleigh had purchased 212 of the 264

Condominium units, giving it an 80.3% ownership interest. At that point, Links

Raleigh, under the control of FCP Fund, had obtained a sufficient ownership interest

to terminate the Condominium pursuant to N.C. Gen. Stat. § 47C-2-118. Accordingly,

also on 28 February 2017, Links Raleigh sent a letter to the owners of the remaining

units alerting them that it intended to terminate the Condominium and that upon

termination, “all 264 units and common elements . . . will be sold to an entity owned

and controlled by an affiliate of Links Raleigh, LLC and converted into a rental

apartment community.” Links Raleigh “offered . . . to permit owners to remain at the

Links as [tenants], and . . . offered to honor existing third party leases by unit owners,

so long as they were at market rates and terms.”

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On 17 May 2017, in accordance with the provisions of N.C. Gen. Stat. § 47C-2-

118(b), Links Raleigh prepared and recorded a Plan of Termination of Condominium

and Agreement (“Termination Agreement”). In addition to memorializing the

termination, the Termination Agreement set forth various provisions concerning the

sale and valuation of the Condominium. Particularly, Section 2 of the Termination

Agreement provided, in pertinent part, that:

The Association shall offer to sell the Property for a price
of not less than $26,000,000.00 Twenty-Six Million Dollars,
or for the Appraised Value (as that value is determined by
the method set forth in Section 6), whichever is greater,
and may contract for sale of the Property to any qualified
purchaser, on commercially reasonable terms, for any
amount in excess of $26,000,000.00 (Twenty-Six Million
Dollars).

As referenced above, Section 6, titled “Determination Of Value Of the Property As A

Whole,” provided that “[t]he Association shall contract with one or more independent

appraisers licensed in the state of North Carolina to determine the fair market value

of the Property as a whole . . . .” Section 5 governed the “Determination Of Respective

Interests” subsequent to sale, and provided, inter alia, that “the respective interests

of the unit owners, for purposes of distribution of the net proceeds of the sale of the

Property” shall be determined by an allocation appraisal—that is, an appraisal “of

the fair market value of the units, limited common elements, and common element

interests, immediately before the termination” as provided for under N.C. Gen. Stat.

§ 47C-2-118(h).

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In accordance with N.C. Gen. Stat. § 47C-2-118(h) and Section 5 of the

Termination Agreement, on 2 May 2017 Links Raleigh hired a third-party appraiser

to independently and separately value each of the 51 units still owned by the minority

owners (“Owners Appraisal”). A separate, limited appraisal of the independent values

of some of the units owned by Links Raleigh was also conducted (“Links Raleigh

Appraisal”). Collectively, both appraisals constituted the Allocation Appraisal—i.e.,

the appraisal of “the fair market value of the units, limited common elements, and

common element interests, immediately before termination”—for purposes of

distributing the net sale proceeds pursuant to N.C. Gen. Stat. § 47C-2-118(h) and

Section 5 of the Termination Agreement. Together, the Allocation Appraisal values

totaled $27,080,000.00. Pursuant to Section 5 of the Termination Agreement, the

Allocation Appraisal was to be used “only for purposes of distribution of the net

proceeds of the sale of the Property.”

The Association, however, never secured an appraisal of the fair market value

of the Condominium as a whole, as required by Sections 2 and 6 of the Termination

Agreement. Instead, on 31 May 2017, the Association sold the Condominium to

Greens at Tryon, LLC—another company wholly owned by FCP Fund—for the

Allocation Appraisal values: $27,080,000.00. Plaintiffs contend that the value

reflected in the Allocation Appraisals was not an accurate measure of the value of the

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Condominium as a whole, and that the Association therefore contracted to sell their

property for a wholly inadequate price.

The Association then distributed to the minority owners their portion of the

sales proceeds according to the Allocation Appraisal values. Plaintiffs contend,

however, that in addition to failing to secure a second appraisal of the fair market

value of the Condominium as a whole, Links Raleigh had only selected a sample of

its units for inclusion in the Allocation Appraisal. Plaintiffs allege that the units

selected “were not occupied by tenants; had been prepared for re-leasing, and,

therefore, were, in a general sense, in better condition tha[n] other units owned by

Links Raleigh having the same or similar size.” According to plaintiffs, the biased

selection of Links Raleigh units for appraisal skewed the distribution of the ultimate

sales proceeds—which plaintiffs maintain was already inadequate—by “inflat[ing]

the value of the units owned by Links Raleigh, and therefore, increas[ing] the pro

rata share of the purchase price of the entire Condominium allocable to Links

Raleigh.”

Plaintiffs filed suit against defendants on 5 June 2017 for (1) failing to obtain

a fair market value appraisal and instead selling the Condominium for the amount

reflected in the Allocation Appraisals—which plaintiffs maintain was an insufficient

price and well below the Condominium’s fair market value; and (2) manipulating the

Links Raleigh Appraisal in order to reduce the amount of the sales proceeds

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distributed to plaintiffs. Plaintiffs asserted two counts of breach of fiduciary duty

against the Association and two counts of unfair trade practices against all

defendants. Plaintiffs then filed an amended complaint on 18 August 2017, adding

counts of breach of contract and breach of statutory obligations against the

Association. Though stated as an independent claim, plaintiffs also sought to pierce

the corporate veil of the Association as an additional remedy on the claims for breach

of contract, breach of statutory obligations, and breach of fiduciary duties.

On 7 September 2017, the Association and its directors Khomassi, Kane, and

Cathcart filed a motion to dismiss plaintiffs’ complaint pursuant to Rules 12(b)(1) and

(6) of the North Carolina Rules of Civil Procedure. FCP Fund, along with Carr, Links

Raleigh, and Greens at Tryon, filed a motion to dismiss pursuant to Rules 12(b)(1),

(2) and (6) on 20 September 2017.

On 14 November 2017, the trial court entered an order granting both motions

to dismiss plaintiffs’ complaint entirely. The trial court’s order does not contain

findings of fact or conclusions of law, nor does it indicate the specific grounds upon

which its dismissal was based. The order instead provides only that “having reviewed

and considered the pleadings, the applicable statutes, case law, and other materials,

and having heard oral arguments of counsel for all parties, the Court GRANTS

Defendants’ Motions to Dismiss and hereby dismisses all of Plaintiffs’ claims with

prejudice.” Plaintiffs filed notice of appeal on 29 November 2017.

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Standard of Review

“In reviewing a trial court’s Rule 12(b)(6) dismissal, the appellate court must

inquire whether, as a matter of law, the allegations of the complaint, treated as true,

are sufficient to state a claim upon which relief may be granted under some legal

theory.” Newberne v. Dep’t of Crime Control & Pub. Safety, 359 N.C. 782, 784, 618

S.E.2d 201, 203 (2005) (citation and quotation marks omitted).

Dismissal is proper . . . 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.

Id. at 784, 618 S.E.2d at 204 (citations and quotation marks omitted). Otherwise, it

is error for a trial court to grant a defendant’s motion to dismiss “if the complaint,

liberally construed, shows no insurmountable bar to recovery.” Jenkins v. Wheeler,

69 N.C. App. 140, 142, 316 S.E.2d 354, 356, disc. review denied, 311 N.C. 758, 321

S.E.2d 136 (1984). “The effect of a motion to dismiss under Rule 12(b)(6) is to test the

legal sufficiency of the complaint by presenting the question of whether the

complaint’s allegations are sufficient to state a claim upon which relief can be granted

under any recognized legal theory.” Woolard v. Davenport, 166 N.C. App. 129, 133,

601 S.E.2d 319, 322 (2004) (emphasis added) (citation omitted). Thus, when a

defendant files a motion to dismiss, the issue for the court “is not whether [the]

plaintiff will ultimately prevail but whether the plaintiff is entitled to offer evidence

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to support the claim.” Brown v. Lumbermens Mut. Casualty Co., 90 N.C. App. 464,

471, 369 S.E.2d 367, 371 (1988), aff’d in part and rev’d in part, 326 N.C. 387, 390

S.E.2d 150 (1990).

“The standard of review to be applied by a trial court in deciding a motion

under Rule 12(b)(2) depends upon the procedural context confronting the court.”

Parker v. Town of Erwin, 243 N.C. App. 84, 95, 776 S.E.2d 710, 720 (2015). When the

defendant “makes a motion to dismiss without submitting any opposing evidence,”

id. at 96, 776 S.E.2d at 720, then “the allegations of the [plaintiff’s] complaint must

disclose jurisdiction although the particulars of jurisdiction need not be alleged.” Id.

at 96, 776 S.E.2d at 721. “The trial judge must decide whether the complaint contains

allegations that, if taken as true, set forth a sufficient basis for the court’s exercise of

personal jurisdiction.” Id.

Discussion

Plaintiffs do not dispute that Links Raleigh—of which FCP Fund was the sole

member—had the authority to terminate the Condominium upon obtaining an 80%

ownership interest therein, or that the Association—of which FCP employees elected

themselves the sole directors—was thereafter empowered to sell the entire

Condominium to Greens at Tryon—of which FCP Fund was the sole member. Rather,

the thrust of plaintiffs’ complaint is that defendants illicitly orchestrated the minority

owners’ forced relinquishment of their property for a price below market value so that

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FCP Fund could purchase those units at a below-market rate. Moreover, plaintiffs

allege that the purposeful selection bias in the Links Raleigh Appraisal further

diminished plaintiffs’ respective shares of the already inadequate sales price.

In their complaint, plaintiffs assert that the Association’s actions in

effectuating the sale and distributing the proceeds constituted a breach of its

contractual obligations under the Termination Agreement (Count One), a breach of

its statutory obligations under the Condominium Act (Count Two), and a breach of

its fiduciary duties owed to plaintiffs (Counts Three and Four). Further, plaintiffs

seek to pierce the corporate veil of the Association (Count Five) as to the above Counts

in order to also recover from defendants FCP Fund, Carr, Links Raleigh, Greens at

Tryon, Khomassi, Cathcart, and Kane. Lastly, plaintiffs allege that all defendants

committed an unfair trade practice in violation of N.C. Gen. Stat. § 75-1.1 (Counts

Six and Seven).

I. Count One: Breach of Termination Agreement Against the Association

We first address the legal sufficiency of Count One of plaintiffs’ complaint for

breach of contractual obligations under the Termination Agreement against the

Association.

“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.” Poor v. Hill, 138 N.C. App. 19,

26, 530 S.E.2d 838, 843 (2000) (citation omitted). Thus, in any breach of contract

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action, “the complaint must allege the existence of a contract between [the] plaintiff

and [the] defendant, the specific provisions breached, the facts constituting the

breach, and the amount of damages resulting to [the] plaintiff from such breach.”

RGK, Inc. v. U.S. Fid. & Guar. Co., 292 N.C. 668, 675, 235 S.E.2d 234, 238 (1977)

(citation, quotation marks, and emphasis omitted).

In order for a valid contract to exist between two parties,

an offer and acceptance are essential elements; they
constitute the agreement of the parties. The offer must be
communicated, must be complete, and must be accepted in
its exact terms. Mutuality of agreement is indispensable;
the parties must assent to the same thing in the same
sense, idem re et sensu, and their minds must meet as to all
the terms.

Yeager v. Dobbins, 252 N.C. 824, 828, 114 S.E.2d 820, 823-24 (1960) (citations and

quotation marks omitted). Additionally, as a matter of law, a non-party to a contract

“cannot be held liable for any breach that may have occurred.” Canady v. Mann, 107

N.C. App. 252, 259, 419 S.E.2d 597, 601 (1992), disc. review improvidently allowed,

333 N.C. 569, 429 S.E.2d 348 (1993).

In the instant case, the substance of plaintiffs’ breach of contract claim is that

the Association breached the provisions of the Termination Agreement when it

neglected to secure an independent appraisal of the fair market value of the

Condominium as a whole and instead used the sum of the Allocation Appraisal values

to determine the purchase price for the Condominium.

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Pertaining to the element of breach, plaintiffs’ complaint contains the following

allegations:

69. . . . Section 2 of the Termination Agreement
provided:

The Association shall offer to sell the Property
for a price of not less than $26,000,000.00
Twenty-Six Million Dollars, or for the
Appraised Value (as that value is determined
by the method set forth in Section 6),
whichever is greater, and may contract for
sale of the Property to any qualified
purchaser, on commercially reasonable terms,
for any amount in excess of $26,000,000.00
(Twenty-Six Million Dollars).

70. Section 5 of the Termination Agreement provided for
an appraisal to permit the allocation of the net proceeds
among the various unit owners, [and] in particular,
provid[ed]:

. . . The appraisal of the fair market value of
the units, limited common elements, and
common element interests, immediately
before termination, shall be used only for
purposes of distribution of the net proceeds of
the sale of the Property.

71. Section 6 of the Termination Agreement provided for
the appraisal to be used as part of establishing the sale
price for the entire condominium, providing:

The Association shall contract with one or
more independent appraisers . . . to determine
the fair market value of the Property as a
whole . . . .
....

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73. Although . . . the specific language of Section 5 of the
Termination Agreement[] provide[s] that the Allocation
Appraisal shall be used only for purposes of distribution of
the net proceeds of the sale of the Property, the Association
used the sum of the Allocation Appraisal values as the
amount to be paid by Greens at Tryon for the entire
Condominium.

74. Use of the Allocation Appraisal values as the
purchase price (and the amount to be allocated to each
unit) is in violation of the specific provisions of Section 5 of
the Termination Agreement.

75. The Association did not have an independent
appraiser determine the fair market value of the
Condominium as a whole, as required by Section 6 of the
Termination Agreement.

76. Because the Association did not have an
independent appraiser determine the fair market value of
the Condominium as a whole, its sale of the entire
Condominium, for the sum of the Allocation Appraisal
values, violated the requirements of Section 2 of the
Termination Agreement.

Defendants, on the other hand, construe Section 2 of the Termination

Agreement as simply providing that the Condominium was to be sold “for any amount

in excess of $26,000,000.00[.]” Because the Association ultimately sold the

Condominium for $27,080,000.00, defendants maintain that there was no breach of

the Termination Agreement and that the trial court therefore properly dismissed

Count One of plaintiffs’ complaint. However, Section 6 of the Termination Agreement

required the Association to obtain an appraisal of the fair market value of the

Condominium as a whole, and Section 5 provided that the Allocation Appraisal was

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to be used “only for purposes of distribution of the net proceeds of the sale of the”

Condominium. Thus, when construed as true, plaintiffs’ allegations are adequate to

allege a breach of the Termination Agreement, notwithstanding defendants’

references to the latter clause contained in Section 2. See Woolard, 166 N.C. App. at

134, 601 S.E.2d at 323.

More fundamentally, however, defendants argue that the trial court properly

dismissed plaintiffs’ claim for breach of contract because “neither [plaintiffs] nor the

Association executed the Termination Agreement” or were parties thereto.

Nevertheless, plaintiffs maintain that dismissal was improper because the

Termination Agreement is “by its form and style a contract” that is binding upon the

Association, and that plaintiffs have standing to enforce its provisions against the

Association because they were the intended third-party beneficiaries thereof.

We agree with defendants that, despite having adequately alleged a breach of

the terms of the Termination Agreement, the trial court properly dismissed plaintiffs’

claim for breach of contract against the Association. Absent from the complaint are

allegations setting forth the other necessary element of plaintiffs’ breach of contract

claim—that is, that the Termination Agreement constituted a binding contract to

which the Association was in fact a party. The Termination Agreement explicitly

states that it was “made . . . by Links Raleigh” only. The Association did not execute

the Termination Agreement, nor is the Association named as a party thereto. The

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particular breaches for which plaintiffs’ complaint seeks to hold the Association liable

are preceded by a declaration that only “Links Raleigh, being the owners of more than

eighty (80) percent of the condominium units within the Links Club Condominiums .

. . hereby agrees as follows[.]”1

In seeking to hold the Association liable as a party to the Termination

Agreement, plaintiffs’ complaint only contains the following allegations:

63. On May 17, 2017, Links Raleigh, as the owner of
more than eighty (80) percent of the units within the
Condominium, executed [the Termination Agreement] . . .
.
....

77. . . . [T]he Association breached its contractual and
other obligations by failing to comply with the specific
requirements of the Termination Agreement.

Beyond the conclusory statement in paragraph 77 that the Association had

“contractual and other obligations” under the Termination Agreement, plaintiffs’

complaint is devoid of allegations that the Association was a party to, or otherwise

bound by, the Termination Agreement, thereby rendering the Association liable for a

breach of its terms.

Nevertheless, “a complaint should not be dismissed for insufficiency unless it

appears to a certainty that [the] plaintiff is entitled to no relief under any state of

1 This language is in accordance with the requirements of N.C. Gen. Stat. § 47C-2-118, which
directs that a termination agreement shall be executed “by the requisite number of unit owners”—i.e.,
in the instant case, Links Raleigh, as the eighty-percent owners, rather than between the requisite
number of owners and some other entity, such as the Association. N.C. Gen. Stat. § 47C-2-118(b).

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facts which could be proved in support of the claim.” Snyder v. Freeman, 300 N.C.

204, 209, 266 S.E.2d 593, 597 (1980) (citation, quotation marks, and emphasis

omitted). Thus, in the instant case, the question is not whether plaintiffs have

affirmatively alleged the Association to be a party to the Termination Agreement, but

whether the complaint alleges facts which, if true, would be sufficient to establish the

same. See id. (“The question is, then, whether under any set of facts which [the]

plaintiff may be able to prove relevant to the agreement on which she relies, there is

some legal theory available by which she can establish liability against [the]

defendants . . . .”).

In the instant case, while the complaint and attached documents reveal that

the Termination Agreement does not name the Association as a party and that the

Association did not otherwise manifest an assent to its terms via signature, we note

that the facts alleged in plaintiffs’ complaint do permit the possibility that the

Association had nonetheless manifested an assent to the Termination Agreement by

virtue of beginning performance thereunder. See, e.g., id. at 218, 266 S.E.2d at 602

(“Acceptance by conduct is a valid acceptance.” (citations omitted)); Burden Pallet

Co. v. Ryder Truck Rental, Inc., 49 N.C. App. 286, 289, 271 S.E.2d 96, 97 (1980) (“The

object of a signature to a contract is to show assent, but the signing of a written

contract is not necessarily essential to its validity. Assent may be shown in other

ways, such as acts or conduct . . . .” (citations omitted)), disc. review denied, 301 N.C.

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722, 276 S.E.2d 282 (1981). Here, plaintiffs’ complaint contains allegations that the

Association performed in accordance with the provisions of the Termination

Agreement. In particular, the Association secured the Allocation Appraisal,

effectuated the Condominium’s sale, and held title to the units as trustee for all of

the unit owners, all of which the Association was compelled to do pursuant to the

terms of the Termination Agreement.

The Association’s performance, however, was limited to those acts which it was

statutorily required to discharge pursuant to the Condominium Act. See, e.g., N.C.

Gen. Stat. § 47C-2-118(e) (providing, inter alia, that “[t]he association, on behalf of

the unit owners, may contract for the sale of real estate in the condominium”; “[i]f

any real estate in the condominium is to be sold following termination, title to that

real estate, upon termination, vests in the association as trustee for the holders of all

interests in the units”; and “[p]roceeds of the sale must be distributed to unit owners

and lienholders as their interests may appear [pursuant to the Allocation Appraisal]

as provided in subsection (h)”).

Plaintiffs’ complaint is devoid of facts establishing that the Association

performed any act specifically in furtherance of the Termination Agreement above

and beyond that which it was required to do by statute. In fact, the only provisions of

the Termination Agreement beyond the purview of the Condominium Act are those

provisions which plaintiffs allege the Association to have breached. Thus, the

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allegations reveal that the Association’s conduct in the instant case represented an

abidance by the statutory obligations under the Condominium Act, rather than

indicating an assent to be independently bound by the Termination Agreement.

We are unable to divine any additional theories, and plaintiffs have proffered

none, that would otherwise establish that the Association had assented to be bound

by the terms of the Termination Agreement above and beyond the scope of its

statutory duties under N.C. Gen. Stat. § 47C-2-118. Accordingly, even when taken as

true, we conclude that the allegations in plaintiffs’ complaint are insufficient to

establish that the Termination Agreement constituted a valid contract between the

Association and Links Raleigh.

Because we conclude that plaintiffs’ complaint fails to establish that the

Termination Agreement was a valid contract binding on the Association, the trial

court did not err in granting defendants’ motions to dismiss this claim. Moreover, we

need not address the issue of whether plaintiffs had standing to sue for breach of the

Termination Agreement as the alleged intended third-party beneficiaries thereof.

II. Count Two: Breach of Statutory Obligations Against the Association

In Count Two of their amended complaint, plaintiffs allege that “[t]he

Association is statutorily obligated, pursuant to the provisions of N.C.G.S. § 47C-2-

118, to comply with the provisions of the Termination Agreement; and to comply with

the provisions of that statute, and by failing to so comply, violated N.C.G.S. § 47C-2-

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118.” Further, while N.C. Gen. Stat. § 47C-2-118 does not provide for a private right

of action that would allow plaintiffs to assert a breach of statutory obligations claim

against the Association, plaintiffs contend that “[t]he language, structure and context

of the act imply that unit owners have a private right of action for violation of the

act.”

We need not determine whether N.C. Gen. Stat. § 47C-2-118 implies a private

right of action. Even assuming that it does, the allegations in plaintiffs’ complaint do

not support their claim for breach of statutory obligations.

First, plaintiffs do not identify any particular provision of N.C. Gen. Stat. §

47C-2-118 that the Association has violated. The only indication of a specific statutory

violation is found in paragraph 73 of the complaint, which alleges that “[a]lthough

the structure of the Condominium Act . . . provide[s] that the Allocation Appraisal

shall be used only for purposes of distribution of the net proceeds of the sale of the

Property, the Association used the sum of the Allocation Appraisal values as the

amount to be paid . . . for the entire Condominium.” (First emphasis added). However,

the text of N.C. Gen. Stat. § 47C-2-118 does not delineate any particular method by

which a condominium’s sale price must be determined. See Correll v. Div. of Soc.

Servs., 332 N.C. 141, 144, 418 S.E.2d 232, 235 (1992) (“Statutory interpretation

properly begins with an examination of the plain words of the statute.” (citation

omitted)).

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Moreover, notwithstanding the admittedly logical “structure” proposed by

plaintiffs, the only provision contained in N.C. Gen. Stat. § 47C-2-118 that addresses

the use of an appraisal is Subsection (h), which merely requires that an appraisal be

obtained of the “fair market value of [the owners’] units, limited common elements,

and common elements interests” for the sole purpose of establishing how the sale

proceeds are to be allocated among unit owners. N.C. Gen. Stat. § 47C-2-118(h)(1).

The General Assembly’s explicit inclusion of a requirement that a particular

appraisal be obtained in order to determine the appropriate allocation of proceeds

suggests that its exclusion of any prescribed mechanism for establishing a

condominium’s ultimate sale price was intentional. See Mangum v. Raleigh Bd. of

Adjustment, 196 N.C. App. 249, 255, 674 S.E.2d 742, 747 (2009) (“One of the long-

standing rules of interpretation and construction in this state is expressio unius est

exclusio alterius, the expression of one thing is the exclusion of another.” (citations

omitted)). Indeed, N.C. Gen. Stat. § 47C-2-118 explicitly provides that “the

association has all powers necessary and appropriate to effect the sale.” N.C. Gen.

Stat. § 47C-2-118(e). Absent a specific statutory provision limiting those powers,

there is no support for plaintiffs’ contention that the Association violated its

obligations under N.C. Gen. Stat. § 47C-2-118 when it failed to obtain a separate

appraisal and instead used the Allocation Appraisal as the basis for the

Condominium’s sale price. Cf. Correll, 332 N.C. at 145, 418 S.E.2d at 235 (“If our

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General Assembly had intended to require that applicants own their primary places

of residence before receiving the advantage of the contiguous property exclusion

contained in N.C.G.S. § 108A-55, we must assume that it would have included plain

language to that effect in the other plain language of the statute.” (citation omitted)).

Next, plaintiffs attempt to circumvent the absence of a statutory requirement

governing the sale price of a condominium terminated under the Act by arguing that

N.C. Gen. Stat. § 47C-2-118 nevertheless required the Association “to comply with

the provisions of the Termination Agreement[,]” which did contain such a

requirement. Thus, because the Association did not sell the Condominium in a

manner consonant with the procedures provided in the Termination Agreement,

plaintiffs maintain that it was error for the trial court to dismiss Count Two of their

complaint for breach of statutory obligations. However, this contention is likewise

unsupported by law.

Again, plaintiffs do not identify the provision of N.C. Gen. Stat. § 47C-2-118

that they allege requires a condominium association to abide by the terms of a

termination agreement. Subsection (b) addresses execution of a termination

agreement, but provides only that “[a]n agreement to terminate must be evidenced

by the execution of a termination agreement . . . by the requisite number of unit

owners.” N.C. Gen. Stat. § 47C-2-118(b) (emphasis added). Subsection (c) does

provide that “[i]f, pursuant to the agreement, any real estate in the condominium is

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to be sold following termination, the termination agreement must set forth the

minimum terms of the sale.” N.C. Gen. Stat. § 47C-2-118(c). However, when read in

conjunction with the requirements of Subsection (b) that (1) “[a] termination

agreement and all ratifications thereof must be recorded . . . and is effective only upon

recordation[,]” and (2) a termination agreement “must specify a date after which the

agreement will be void unless recorded before that date[,]” it appears that the purpose

of setting forth the minimum terms of the sale under Subsection (c) is not to hold a

condominium association liable with respect thereto, but instead to provide the public

with adequate notice of the transaction. Cf. Hill v. Pinelawn Mem’l Park, Inc., 304

N.C. 159, 163, 282 S.E.2d 779, 782 (1981) (“The purpose of [our recording] statute is

to enable intending purchasers and encumbrancers to rely with safety on the public

record concerning the status of land titles.” (citations omitted)). Quite plainly, N.C.

Gen. Stat. § 47C-2-118 imposes no explicit statutory duty upon a condominium

association to abide by the provisions that the requisite number of unit owners have

specified in a termination agreement. This Court cannot require otherwise, however

provident doing so might be. Fagundes v. Ammons Dev. Grp., Inc., ___ N.C. App. ___,

___, 796 S.E.2d 529, 533 (“We lack the authority to change the law on the ground that

it might make good policy sense to do so.”), disc. review denied, 370 N.C. 66, 803

S.E.2d 626 (2017).

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Accordingly, we conclude that the trial court did not err by dismissing Count

Two of plaintiffs’ complaint for breach of statutory obligations against the

Association, in that the allegations of plaintiffs’ complaint are insufficient to state a

claim upon which relief can be granted.

III. Counts Six and Seven: Unfair Trade Practices Against All Defendants

We next address plaintiffs’ argument that the trial court erred in dismissing

Counts Six and Seven of the amended complaint for unfair trade practices in violation

of N.C. Gen. Stat. § 75-1.1. Defendants contend that the trial court properly

dismissed plaintiffs’ unfair trade practices claims against all defendants because the

allegations in plaintiffs’ complaint “do not relate to business activities that were in or

affecting commerce.” We agree.

“The elements of a claim for unfair and deceptive practices in violation of G.S.

§ 75-1.1 are: (1) an unfair or deceptive act or practice, or an unfair method of

competition, (2) in or affecting commerce, (3) which proximately caused actual injury

to the plaintiff . . . .” Furr v. Fonville Morisey Realty, Inc., 130 N.C. App. 541, 551,

503 S.E.2d 401, 408 (1998) (citation and quotation marks omitted), disc. review

improvidently allowed, 351 N.C. 41, 519 S.E.2d 314 (1999). In analyzing the second

element of “in or affecting commerce,” our Supreme Court has explained that “our

General Assembly sought to prohibit unfair or deceptive conduct in interactions

between different market participants. The General Assembly did not intend for the

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Act to regulate purely internal business operations[,]” or “to intrude into the internal

operations of a single market participant.” White v. Thompson, 364 N.C. 47, 47-48,

53, 691 S.E.2d 676, 676, 680 (2010). Accordingly, “any unfair or deceptive conduct

contained solely within a single [market participant] is not covered by the Act.” Id.

at 53, 691 S.E.2d at 680.

In the instant case, the alleged unfair and deceptive conduct on the part of

defendants all occurred within the Condominium Association of which plaintiffs were

members. While plaintiffs maintain that defendants’ acts went “well beyond the

internal operations of the Association” and “involve[d] interactions with and affecting

the public,” they do not identify any particular member of the public—beyond the

members of the Association itself—affected by defendants’ conduct. Rather, each of

the acts of which plaintiffs complain involved the “internal conduct of individuals

within a single market participant”—that is, the Association. Id.

Because defendants “unfairly and deceptively interacted only with” fellow

members of the Condominium Association, plaintiffs cannot establish that

defendants’ actions were “in or affecting commerce.” Id. at 54, 691 S.E.2d at 680.

Accordingly, the allegations contained in Counts Six and Seven of plaintiffs’ amended

complaint fall outside of the scope of N.C. Gen. Stat. § 75-1.1, and the trial court

therefore properly granted defendants’ motions to dismiss those claims.

IV. Counts Three and Four: Breach of Fiduciary Duty Against the Association

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Finally, after establishing that the law does not support plaintiffs’ claims for

breach of contract, breach of statutory obligations, and unfair trade practices, we

nevertheless agree with plaintiffs that they have stated a claim for breach of fiduciary

duty against the Association.

a. Fiduciary Relationship

It is axiomatic that “[f]or a breach of fiduciary duty to exist, there must first be

a fiduciary relationship between the parties.” Dalton v. Camp, 353 N.C. 647, 651,

548 S.E.2d 704, 707 (2001) (citations omitted).

[T]here are two types of fiduciary relationships: (1) those
that arise from legal relations such as attorney and client,
broker and client . . . , partners, principal and agent,
trustee and cestui que trust, and (2) those that exist as a
fact, in which there is confidence reposed on one side, and
the resulting superiority and influence on the other.

S.N.R. Mgmt. Corp. v. Danube Partners 141, LLC, 189 N.C. App. 601, 613, 659 S.E.2d

442, 451 (2008) (citation and internal quotation marks omitted). For example, it is

well established “that the trustee of a trust has a fiduciary obligation to the

beneficiary of the trust.” Melvin v. Home Fed. Savings & Loan Ass’n, 125 N.C. App.

660, 664, 482 S.E.2d 6, 8, disc. review denied, 346 N.C. 281, 487 S.E.2d 551 (1997).

By asserting that a fiduciary relationship existed between plaintiffs and the

Association, plaintiffs have not, as defendants contend, attempted to hold the

Association liable pursuant to N.C. Gen. Stat. § 55A-8-30 (2017), which defendants

note “vests the fiduciary duty obligations of a nonprofit corporation like the

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Association in its Board of Directors.” Rather, Counts Three and Four of plaintiffs’

complaint explicitly reference N.C. Gen. Stat. § 47C-2-118, and implicitly reference

Subsection (e), by alleging that “[t]he Association, by virtue of its position as Trustee

for all of the unit owners, owed a fiduciary duty, to each and every one of the unit

owners” in effectuating the Condominium’s sale.

Indeed, N.C. Gen. Stat. § 47C-2-118(e) explicitly provides that when a

condominium is terminated pursuant thereto and is thereafter to be sold, title to all

of the units “vests in the association as trustee for the holders of all interests in the

units.” N.C. Gen. Stat. § 47C-2-118(e) (emphasis added). Moreover, an association’s

independent status as a fiduciary is further evidenced by N.C. Gen. Stat. § 47C-3-

119—quite aptly titled “Association as Trustee”—which provides that “[w]ith respect

to a third person dealing with the association in the association’s capacity as a trustee

under G.S. 47C-2-118 following termination . . . , the existence of trust powers and

their proper exercise by the association may be assumed without inquiry.” N.C. Gen.

Stat. § 47C-3-119 (2017). The Condominium Act thus makes clear that an association

will separately and independently owe certain fiduciary duties as trustee in the sale

of a condominium pursuant to N.C. Gen. Stat. § 47C-2-118. This statutorily imposed

fiduciary relationship is the basis of plaintiff’s complaint.2 Accordingly, plaintiffs

2 We also note that even absent the specific statutory language implicating the Association as
“trustee,” upon agreement by the majority owner to terminate the Condominium, plaintiffs were
divested of any and all power to participate in negotiations for the sale of their property, and were left

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have adequately alleged the existence of a fiduciary relationship between themselves

and the Association so as to survive dismissal.

b. Breach

Having determined that plaintiffs sufficiently pleaded a fiduciary relationship,

we next examine whether plaintiffs have adequately alleged facts necessary to

establish a breach of the Association’s duties associated therewith.

As our Supreme Court has stated, “one of the most fundamental duties of [a]

trustee throughout [a] trust relationship is to maintain complete loyalty to the

interests of his [beneficiaries].” Wachovia Bank & Trust Co. v. Johnston, 269 N.C.

701, 711, 153 S.E.2d 449, 457 (1967). Trustees may “never paramount their personal

interest over the interest of those for whom they have assumed to act.” Miller v.

McLean, 252 N.C. 171, 174, 113 S.E.2d 359, 362 (1960) (citations omitted). For

instance, “[i]t is a well established principle, that a trustee cannot buy at his own

sale. He cannot be vendor and vendee at the same time of trust property[.]” Wachovia

Bank & Trust Co., 269 N.C. at 713, 153 S.E.2d at 458 (citation and quotation marks

omitted). The North Carolina Uniform Trust Code also illustrates that a trustee’s

sale of trust property is “rebuttably presumed to be affected by a conflict of interest

if the trustee enters into the transaction with[,]” inter alia, an “officer, director,

instead to the will of the Association. See Lockerman v. South River Elec. Membership Corp., ___ N.C.
App. ___, ___, 794 S.E.2d 346, 352 (2016) (“[W]hen one party figuratively holds all the cards—all the
financial power or technical information, . . . North Carolina courts [have] found that the special
circumstance of a fiduciary relationship has arisen.” (citation and quotation marks omitted)).

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member, manager, or partner of the trustee, or an entity that controls, is controlled

by, or is under common control with the trustee;” or “[a]ny other person or entity in

which the trustee, or a person that owns a significant interest in the trust, has an

interest or relationship that might affect the trustee’s best judgment.” N.C. Gen.

Stat. § 36C-8-802(c)(3)&(4) (2017).

The reasons for the loyalty rule are evident. A man cannot
serve two masters. He cannot fairly act for his interest and
the interest of others in the same transaction. Consciously
or unconsciously, he will favor one side or the other, and
where placed in this position of temptation, there is always
the danger that he will yield to the call of self-interest.

Wachovia Bank & Trust Co., 269 N.C. at 715, 153 S.E.2d at 459-60 (emphasis added).

There are, however, “rare and justifiable exceptions” when a self-interested

transaction might not run afoul of a trustee’s fiduciary duties, including where it is

found that “(1) complete disclosure of all facts was made by the trustee, (2) the sale .

. . materially promote[d] the best interests of the trust and its beneficiaries, and (3)

there [were] no other purchasers willing to pay the same or a greater price[.]” Id. at

715, 153 S.E.2d at 460. In other words, where a trustee is alleged to have made a

self-interested transaction involving property held in trust in breach of its fiduciary

duties, the trustee must be able to demonstrate that it nevertheless “affirmatively

put forth real and good faith endeavors to find the most advantageous purchaser and

that there [were] no other available purchasers willing to pay the same price[.]” Id.

at 716, 153 S.E.2d at 460. “This precaution must be taken, not because there is

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fraud[,]” id., but because “[t]he trustee, because of his fiduciary relationship, is

skating on the thin and slippery ice of presumed fraud, which he must rebut by proof

that no fraud was committed and no undue influence . . . exerted[,]” id. at 715, 153

S.E.2d at 460.

In the instant case, plaintiffs alleged in their complaint that “[t]he Association

breached its fiduciary duty to Plaintiffs by arranging for, approving, and proceeding

with the forced sale of the entire Condominium to FCP Fund (through its subsidiary,

Greens at Tryon), for an inadequate price[,]” and “by failing to have an independent

appraiser generate the Allocation Appraisal, ensure that the appraisal used was

without bias, and distribute it within the time frame specified by N.C.G.S. Section

47C-2-118.” Plaintiffs additionally set forth various particular allegations, including

the following:

80. [T]he Links Raleigh Appraisal was deficient in that
Williams Appraisers, Inc. only looked at a subset of the
units owned by Links Raleigh, with those units having
been selected by Links Raleigh. On information and belief,
the units made available . . . for inspection were not
occupied by tenants; had been prepared for re-leasing, and,
therefore, were, in a general sense, in better condition
tha[n] other units owned by Links Raleigh having the same
or similar size. This selection bias creates a persistent
appraisal bias which inflates the value of the units owned
by Links Raleigh, and therefore, increased the pro rata
share of the purchase price of the entire Condominium
allocable to Links Raleigh. . . .

....

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88. The Association could and should have attempted to
fulfill its duty to each and every one of the unit owners by
listing and exposing the Condominium for sale; by offering
the same to potential third party apartment complex
owners for a price no less than that determined by an
independent third party appraisal, or by otherwise acting
in a way consistent with attempting to maximize the sales
price for the benefit of all unit owners.

....

90. On information and belief, [the Association’s Board
Members] Khomassi; Cathcart and Kane each also had a
financial interest in completing the transaction resulting
in the sale of the entire Condominium to Greens at Tryon;
and the Association was similarly prioritizing their
interests by proceeding with the sale to Greens at Tryon.

....

99. Although N.C.G.S. Section 47C-2-118 provides that
the Allocation Appraisal shall be distributed to the unit
owners, who shall then have thirty (30) days to object to
the same; Links Raleigh distributed the Other Owners
Appraisal on May 2, 2017, and the Association proceeded
with the closing on May 31, 2017; not allowing the unit
owners thirty (30) days to object.

100. The Association did not distribute the Links Raleigh
Appraisal to the Other Owners, although it apparently
used the same (with the Other Owners Appraisal) as the
Allocation Appraisal.

We conclude that these allegations are more than sufficient to withstand

defendants’ motions to dismiss plaintiffs’ breach of fiduciary duty claims against the

Association. The trial court thus erred when it dismissed Counts Three and Four of

plaintiffs’ complaint for breach of fiduciary duty against the Association.

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c. Veil Piercing

Likewise, the amended complaint alleges appropriate facts and circumstances

sufficient to withstand dismissal of veil piercing as a potential remedy on plaintiffs’

breach of fiduciary duty claims.3

“Piercing the corporate veil . . . allows a plaintiff to impose legal liability for a

corporation’s obligations . . . upon some other company or individual that controls and

dominates the corporation.” Green, 367 N.C. at 145, 749 S.E.2d at 270 (citation

omitted). “It is well recognized that courts will disregard the corporate form or ‘pierce

the corporate veil,’ and extend liability for corporate obligations beyond the confines

of a corporation’s separate entity, whenever necessary to prevent fraud or to achieve

equity.” Glenn v. Wagner, 313 N.C. 450, 454, 329 S.E.2d 326, 330 (1985) (citation

omitted).

The Supreme Court has explained that “[e]vidence upon which [our courts]

have relied to justify piercing the corporate veil includes inadequate capitalization,

noncompliance with corporate formalities, lack of a separate corporate identity,

excessive fragmentation, siphoning of funds by the dominant shareholder,

nonfunctioning officers and directors, and absence of corporate records.” Green, 367

N.C. at 145, 749 S.E.2d at 270 (citation omitted). Ultimately, “[t]he aggrieved party

must show that the corporation is so operated that it is a mere instrumentality or

3 We need not examine plaintiffs’ “claims” for veil piercing as to the other counts, as those
counts were properly dismissed. See Green v. Freeman, 367 N.C. 136, 146, 749 S.E.2d 262, 271 (2013).

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alter ego of the sole or dominant shareholder and a shield for his activities in violation

of the declared public policy or statute of the State.” Id. (citation and quotation marks

omitted).

The circumstances pleaded in plaintiffs’ complaint demonstrate that the

instant case is one in which it would be appropriate to pierce the corporate veil, and

the allegations are sufficient to survive defendants’ motions to dismiss. Plaintiffs

alleged that the Association was entirely dominated by FCP Fund, through its

subsidiary Links Raleigh. The Association’s Board was fully composed of FCP

personnel Khomassi, Cathcart, and Kane. Moreover, it appears that the Association

is wholly uncapitalized, in that the Termination Agreement provided for dissolution

of the Association upon sale of the Condominium and distribution of the net proceeds,

according to statute. A judgment against the Association would be indexed in the

name of the Condominium and the Association; yet, upon termination, all of the

Association’s assets were presumably distributed amongst the unit owners—over

eighty percent of which to defendants—and any preexisting lienholders. See N.C.

Gen. Stat. §§ 47C-2-118(g), 47C-3-117(d) (2017). It would be inequitable to allow

dominant shareholders to shield themselves from liability through use of a corporate

entity, the dissolution of which was intended from the outset of their course of action.

Next, because the allegations, if true, are sufficient to allow a fact finder to

determine “that the corporate identity should be disregarded” in the present case,

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“the next inquiry is whether [the] noncorporate defendant[s] may be held liable for

[their] personal actions as an officer or director.” Green, 367 N.C. at 145, 749 S.E.2d

at 270. Plaintiffs’ complaint must contain allegations sufficient to establish three

elements:

(1) Control, not mere majority or complete
stock control, but complete domination, not
only of finances, but of policy and business
practice in respect to the transaction attacked
so that the corporate entity as to this
transaction had at the time no separate mind,
will or existence of its own; and

(2) Such control must have been used by the
defendant to commit fraud or wrong, to
perpetrate the violation of a statutory or other
positive legal duty, or a dishonest and unjust
act in contravention of a plaintiff’s legal
rights; and

(3) The aforesaid control and breach of duty
must proximately cause the injury or unjust
loss complained of.

Id. at 145-46, 749 S.E.2d at 270 (emphases added) (citation, quotation marks, and

alteration omitted).

Plaintiffs’ complaint contains the following allegations relevant to piercing the

corporate veil of the Association in order to hold defendants FCP Fund, Carr, Links

Raleigh, Greens at Tryon, Khomassi, Cathcart, and Kane personally liable for the

Association’s alleged breaches of fiduciary duty:

22. On information and belief, Defendant Thomas A. Carr

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Opinion of the Court

. . . is an Authorized Trustee for FCP Fund . . . . On further
information and belief, the acts of FCP Fund, complained
herein, were at the direction, and under the control of Carr.

....

25. On information and belief, Defendant Nason Khomassi
. . . has been, since prior to August 31, 2016, employed by
[FCP] . . . . On further information and belief, Khomassi
has been, since August 31, 2016, a member of the Board of
Directors of the Association; and the President of the
Association.

26. On information and belief, Defendant Alex Cathcart . .
. has been, since prior to August 31, 2016, employed by
[FCP] . . . . On further information and belief, Cathcart has
been, since August 31, 2016, a member of the Board of
Directors of the Association; and the Vice-President and
Secretary of the Association.

27. On information and belief, Defendant Bryan M. Kane .
. . has been, since prior to August 31, 2016, Senior Vice-
President—Acquisitions for [FCP] . . . . On further
information and belief, Kane has been, since August 31,
2016, a member of the Board of Directors of the
Association; and the Treasurer of the Association.

28. On information and belief, FCP Fund is the sole
member of both Links Raleigh and Greens at Tryon.

....

38. On July 26, 2016, FCP Fund caused Links Raleigh to
be formed by recording Articles of Incorporation with the
Delaware Secretary of State.

....

39. On information and belief, prior to July 26, 2016, FCP
Fund had, either directly or through an entity that it

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controlled, arranged for or contracted with Fairway
Apartments to purchase their units in the Condominium.

....

41. FCP Fund intended to purchase 80 percent of the units
in the Condominium through Links Raleigh (or some other
entity under its control) so that it could, acting through the
unit purchasing entity, terminate the Condominium . . . .

42. FCP Fund intended to terminate the Condominium so
that the entire Condominium would be available for
purchase; and so that it, acting through Links Raleigh, or
some other entity under its control, could purchase the
entire Condominium at a below market price[.]

....

44. FCP Fund and its Trustee intended to ensure that it,
acting through Links Raleigh, or another entity under its
control, would purchase the entire Condominium, by
having Links Raleigh . . . use its majority of the voting
interests in the condominium to elect a compliant board,
who would have the Association contract to sell the entire
Condominium to an entity under FCP Fund’s control.

45. FCP Fund and its Trustee intended to use its control
over the Board of the Association to secure, as a purchase
price for an entity under its control, a non-market price for
the entire condominium, and terms otherwise favorable to
it.

46. On August 31, 2016, Cathcart, in furtherance of FCP
Fund’s plan, acting as a representative of Links Raleigh,
and with proxies provided by Fairway Apartments,
conducted a special meeting of the Association, at which
time: (a) all of the then current Directors of the Board were
removed; (b) the number of authorized Directors was
reduced to three (3); and (c) Khomassi[,] Cathcart and
Kane were elected as the Directors of the reduced

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Association Board.

....

65. On May 31, 2017, the Association, acting on behalf
through its Board, Khomassi, Cathcart and Kane, and on
behalf of FCP Fund III and the other Defendants, sold the
entire Condominium to Greens at Tryon for
$27,080,000.00[.]

....

75. The Association did not have an independent appraiser
determine the fair market value of the Condominium as a
whole, as required by Section 6 of the Termination
Agreement.

....

111. The Association was operated as a mere
instrumentality or alter ego of FCP Fund; Carr; Links
Raleigh; Greens at Tryon; Khomassi[,] Cathcart and Kane,
who collectively exercised such complete domination and
control of the Association that it had no independent will
or identity.

112. FCP Fund; Carr; Links Raleigh; Greens at Tryon;
Khomassi; Cathcart and Kane used their domination of the
Association to perpetuate a series of wrongs, including the
forced sale of the units owned by Plaintiffs, to FCP Fund,
through its wholly owned subsidiary Greens at Tryon, for
an inadequate price, and in an improper percentage
amount, in violation of the Association’s fiduciary duties.

Taken as a whole and viewed in the light most favorable to plaintiffs, we

conclude that the above allegations, together with those setting forth a breach of

fiduciary duty, allege domination and control sufficient to establish a theory of

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liability upon which to hold defendants FCP Fund, Carr, Links Raleigh, Greens at

Tryon, Khomassi, Cathcart, and Kane personally liable for the Association’s alleged

breaches of fiduciary duty. Plaintiffs are entitled to offer evidence to support the

appropriateness of that remedy. Brown, 90 N.C. App. at 471, 369 S.E.2d at 371.

As plaintiffs’ complaint demonstrates no insurmountable bar to piercing the

corporate veil on Counts Three and Four of plaintiffs’ complaint, we conclude that the

trial court erred to the extent that it dismissed the same.

d. Personal Jurisdiction

Lastly, defendants FCP Fund, Carr, Links Raleigh, and Greens at Tryon’s

motion to dismiss also cited Rule 12(b)(2), maintaining that plaintiffs’ complaint

failed to allege sufficient facts to support the proper exercise of personal jurisdiction

over defendant Carr, an out-of-state resident, by a Court of this State. On appeal,

defendants argue that “[plaintiffs] failed to establish personal jurisdiction over

defendant Thomas Carr and have failed to preserve its appeal of that determination

by the trial court.” Accordingly, defendants maintain that this Court must “affirm

dismissal of the [complaint] against Carr pursuant to Rule 12(b)(2).” However, the

trial court’s order reveals no such determination, nor does the transcript of the

hearing indicate the same.

It is axiomatic that “[a]bsent a request by the parties,” the trial court need not

include findings of fact or conclusions of law in its order on a motion to dismiss under

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Rule 12(b)(2). J.M. Thompson Co. v. Doral Mfg. Co., 72 N.C. App. 419, 423-24, 324

S.E.2d 909, 912, disc. review denied, 313 N.C. 602, 330 S.E.2d 611 (1985). Here,

neither party requested that the trial court include specific findings in its order. The

trial court granted defendants’ motions to dismiss by entering a general, one-sentence

order, thereby tasking this Court with determining whether the trial court’s

dismissal should be upheld under any of the grounds alleged. Cf. Helm v.

Appalachian State Univ., 194 N.C. App. 239, 250, 670 S.E.2d 571, 578 (2008) (holding

that a trial court need not provide “conclusions of law explaining its decision to

dismiss [a] plaintiff’s complaint” because, under de novo review, this Court

“disregard[s] any . . . conclusions of law drafted by the trial court”), rev’d on other

grounds, 363 N.C. 366, 677 S.E.2d 454 (2009). Accordingly, because we conclude that

dismissal of Counts Three, Four, and Five of plaintiffs’ complaint was improper under

Rule 12(b)(6), we next determine whether that dismissal must nevertheless be upheld

as to defendant Carr pursuant to Rule 12(b)(2).

A complaint against a non-resident defendant should not be dismissed for lack

of personal jurisdiction if the complaint reveals that there exists “certain minimum

contacts between the non-resident defendant and the forum such that the

maintenance of the suit does not offend traditional notions of fair play and substantial

justice.” Tom Togs, Inc., v. Ben Elias Indus. Corp., 318 N.C. 361, 365, 348 S.E.2d 782,

786 (1986) (citation and quotation marks omitted); see also J.M. Thompson Co., 72

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N.C. App. at 424, 324 S.E.2d at 913 (“[T]he critical inquiry in determining whether

North Carolina may assert in personam jurisdiction over a defendant is whether the

assertion comports with due process.”). “In each case, there must be some act by

which the defendant purposefully avails himself of the privilege of conducting

activities within the forum state, thus invoking the benefits and protections of its

laws[.]” Tom Togs, Inc., 318 N.C. at 365, 348 S.E.2d at 786. Where the particular

controversy at issue “arises out of the defendant’s contacts with the forum state, the

state is said to be exercising ‘specific’ jurisdiction.” Id. at 366, 348 S.E.2d at 786. To

establish “specific” jurisdiction, it must be evident that “a defendant has ‘fair

warning’ that he may be sued in a state for injuries arising from activities that he

‘purposefully directed’ toward that state’s residents.” Id. (citation omitted).

In the instant case, because the controversy arises from defendant Carr’s

alleged contacts with North Carolina, specific jurisdiction is at issue.

Plaintiffs’ complaint alleges, in pertinent part, that “Defendant Thomas A.

Carr . . . is an Authorized Trustee for FCP Fund” and that “the acts of FCP Fund,

complained of herein, were at the direction, and under the control of Carr.”

Defendants did not attach to their motion to dismiss any evidence purporting to

establish otherwise. Plaintiffs’ allegation is therefore “accepted as true and deemed

controlling.” Parker, 243 N.C. App. at 97, 776 S.E.2d at 721. In that plaintiffs allege

that defendant Carr directed and controlled each of the acts complained of in the

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instant case, plaintiffs have sufficiently disclosed the existence of personal

jurisdiction over defendant Carr so as to survive dismissal under Rule 12(b)(2). See

Wyatt v. Walt Disney World Co., 151 N.C. App. 158, 165, 565 S.E.2d 705, 710 (2002)

(“Specific jurisdiction exists if the defendant has purposely directed its activities

toward the resident[s] of the forum and the cause of action relates to such activities.”);

Inspirational Network, Inc. v. Combs, 131 N.C. App. 231, 236, 506 S.E.2d 754, 758

(1998) (holding that the trial court properly denied the motion to dismiss for lack of

personal jurisdiction over the individual defendants where the complaint included

uncontroverted allegations that the principal corporation “was a sham and facade

controlled and directed by” the individual defendants).

Accordingly, we likewise reverse the trial court’s dismissal of Counts Three,

Four, and Five of plaintiffs’ complaint to the extent that it was based in part upon a

lack of personal jurisdiction against defendant Carr.

Conclusion

For the reasoning contained herein, the trial court’s order granting defendants’

motions to dismiss plaintiffs’ claims for breach of contract, breach of statutory

obligations, and unfair and deceptive trade practices is affirmed. We reverse the

dismissal of plaintiffs’ Counts Three, Four, and Five, plaintiffs’ claims for breach of

fiduciary duty and piercing the corporate veil, and remand to the trial court.

AFFIRMED IN PART; REVERSED IN PART AND REMANDED.

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Judges STROUD and MURPHY concur.

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