Musselwhite v. CheshireÂ

IN THE COURT OF APPEALS OF NORTH CAROLINA

No. COA18-1083

Filed: 2 July 2019

New Hanover County, No. 16-CVS-301

MICHAEL MUSSELWHITE, Plaintiff,

v.

L. BRIAN CHESHIRE, Defendant.

Appeal by Plaintiff from order entered 14 February 2018 by Judge R. Kent

Harrell in New Hanover County Superior Court. Heard in the Court of Appeals 10

April 2019.

The Lea/Schultz Law Firm, P.C., by James W. Lea, III, for Plaintiff-Appellant.

Shipman & Wright, LLP, by James T. Moore, for Defendant-Appellee.

COLLINS, Judge.

Plaintiff appeals from an order dismissing his claims with prejudice pursuant

to North Carolina Rule of Civil Procedure 41(b). Plaintiff contends that the trial court

erred by making unsupported findings of fact and erroneous conclusions of law in

determining that Plaintiff had not shown a right to relief on his various causes of

action. We affirm.

I. Background

Plaintiff worked in the foodservice industry from the 1970s until 2015, when

the transaction at issue in this case took place. From 1994 to 2015, Plaintiff worked
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at and managed a number of restaurants affiliated with Smithfield’s Chicken ‘N Bar-

B-Q (“Smithfield’s”), a restaurant chain owned by Mid-Atlantic Restaurant

Corporation (“MARC”) and managed by Smithfield Management Corporation

(“SMC”) and, later, Cary Keisler, Inc.

Plaintiff and Defendant have had a personal and professional relationship that

began when they met while working together in the mid-1970s. In the late 1990s,

Plaintiff approached Defendant about partnering to purchase and thereafter operate

a Smithfield’s franchise in Ogden. Defendant agreed, and the parties created two

entities to own (Flamingo Properties, LLC) and operate (Whiteshire Foods, Inc.) the

restaurant. Flamingo Properties purchased the real property, and Whiteshire Foods

acquired the franchise and rented the property from Flamingo Properties.

Each of the parties owned a 50% interest in each entity. As with the other

restaurants subsequently purchased as described below, Plaintiff was responsible for

managing the Ogden restaurant and liaising with Smithfield’s corporate

management at SMC/Cary Keisler, and Defendant provided the collateral necessary

to secure financing to purchase the property (which was also secured by personal

guarantees from both Plaintiff and Defendant) but otherwise had a largely passive

role in the joint ventures.

Several years later, through Flamingo Properties, the parties purchased

another property in Wilmington, and Whiteshire Foods began to operate a

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Smithfield’s franchise thereupon pursuant to a franchise agreement with

Smithfield’s. In 2007, the parties created Flamingo South, LLC (together with

Flamingo Properties, the “LLCs”), for the purpose of acquiring and operating another

Smithfield’s restaurant in Leland. As with Flamingo Properties, each of the parties

owned a 50% interest in Flamingo South. Flamingo South purchased the Leland

property, and the parties began operating a Smithfield’s franchise thereupon in 2008

through a separate operating entity they created and pursuant to a franchise

agreement with Smithfield’s. Flamingo South purchased another property in

Shallotte in 2013, and the parties began operating another Smithfield’s franchise

thereupon in 2014 through another operating entity they created and pursuant to a

franchise agreement with Smithfield’s.

In 2010, Smithfield’s sent a notice to the parties that their franchises were not

being operated in compliance with the applicable franchise agreements as required.

Plaintiff responded to Smithfield’s that he would address the deficiencies.

In early February 2015, the parties met with David Harris, a Cary Keisler

executive, who told them that their franchises were not being operated in compliance

with the applicable franchise agreements. Rather than invoke Smithfield’s rights to

terminate the franchises, Harris proposed (1) purchasing the Leland and Shallotte

franchises from the operating entities, and renting those properties from the LLCs,

and (2) allowing the parties (through the relevant operating entities) to continue to

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operate the Ogden and Wilmington franchises, contingent upon Plaintiff’s increased

attention to the operational deficiencies in those locations. The parties agreed to

Harris’ proposed deal.

In late May 2015, Harris visited the Ogden and Wilmington franchises, and

found them in unacceptably-poor condition. On 23 May 2015, Harris met with

Plaintiff at the Ogden franchise, and physically barred Plaintiff from the premises,

telling Plaintiff that (1) the Ogden franchise was terminated effective immediately,

(2) Plaintiff was to have no further contact with Smithfield’s or its employees, and

further communication with Smithfield’s would have to be through Defendant, and

(3) Plaintiff would get no “golden parachute” from the company. Plaintiff contacted

Defendant the same day and told him about the incident. On 26 May 2015,

Smithfield’s formally notified the parties by letter that the parties’ remaining

franchises were being terminated.

Defendant decided to end his business relationship with Plaintiff. Defendant

consulted Jeffrey Keeter, the attorney to the parties’ joint ventures, and Keeter

advised Defendant to try to buy Plaintiff out of his interests in the LLCs. Defendant

and Plaintiff met multiple times and negotiated the terms of Plaintiff’s buyout, by

which Plaintiff agreed to assign his interests in the LLCs back to the LLCs in

exchange for a promissory note signed by the LLCs entitling Plaintiff to (1) $375,000

paid in monthly payments over five years, (2) car and car insurance payments for two

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years, (3) health insurance payments for two years, and (4) cellular telephone

payments for two years. Defendant had Keeter draft a Membership Redemption

Agreement providing for the assignment of the LLC interests in exchange for the

consideration described above, including a promissory note entitling Plaintiff to

$375,000 in payments from the LLCs over a period of 60 months (collectively, the

“Redemption Agreement”). Keeter reviewed the Redemption Agreement with

Plaintiff, explained the legal effect of the Redemption Agreement to Plaintiff, and

asked Plaintiff whether he had any questions about the Redemption Agreement;

Plaintiff told Keeter that he had none. The parties executed the Redemption

Agreement on 29 May 2015, which contained a merger clause stating that it

comprised the entire agreement between the parties.

At no time prior to executing the Redemption Agreement did Plaintiff contact

Harris or anyone else at Smithfield’s to inquire as to what Smithfield’s might do if

Plaintiff retained an interest in the LLCs. Plaintiff has received all benefits

contemplated by the Redemption Agreement.

Plaintiff filed a complaint against Defendant and the LLCs on 26 January 2016

bringing causes of action for breach of contract, fraud and misrepresentation,

constructive fraud, breach of fiduciary duty, unjust enrichment, unfair and deceptive

trade acts, and breach of the implied covenant of good faith and fair dealing in

connection with the Redemption Agreement transaction. Plaintiff also purported to

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bring causes of action for specific performance and constructive trust, and filed a

notice of lis pendens against the land held by the LLCs. Distilled to its essence, the

complaint alleged that Plaintiff was tricked by Defendant into believing that

Smithfield’s had told Defendant that Plaintiff was required to divest himself of his

interests in the LLCs, and that in inducing Plaintiff to execute the Redemption

Agreement, Defendant had represented to him that the Redemption Agreement was

a meaningless transaction necessary to appease Smithfield’s that Plaintiff was no

longer involved with what had been the parties’ joint venture.

On 2 May 2016, Defendant and the LLCs moved to dismiss under N.C. Gen.

Stat. § 1A-1, Rule 12(b)(6) (2016). On 6 July 2016, Defendant withdrew the Rule 12

motion in his individual capacity, and on 12 July 2016 the trial court granted the

LLCs’ Rule 12 motion, leaving only Plaintiff’s causes of action as alleged against

Defendant personally. The 12 July 2016 order also struck the notices of lis pendens

filed by Plaintiff.

On 29 July 2016, Defendant answered, asserted a number of affirmative

defenses, and filed counterclaims against Plaintiff for breach of contract and breach

of fiduciary duty. Plaintiff replied to Defendant’s counterclaims on 2 and 9 September

2016.

On 27 February 2017, following discovery, Defendant moved the trial court

under N.C. Gen. Stat. § 1A-1, Rule 56 (2017), for summary judgment. Plaintiff then

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moved the trial court pursuant to N.C. Gen. Stat. § 1A-1, Rule 15 (2017), for leave to

amend his complaint and reply to Defendant’s counterclaims on 22 May 2017.

On 15 August 2017, the trial court ruled on Defendant’s Rule 56 motion,

granting Defendant summary judgment as to Plaintiff’s cause of action for unfair and

deceptive trade acts, but denying Defendant’s motion as to Plaintiff’s other causes of

action. On 18 December 2017, based on agreement of the parties, the trial court

granted Plaintiff’s motion to amend the complaint, and set the matter for bench trial.

Plaintiff’s amended complaint added causes of action for fraud in the inducement,

mutual mistake, unilateral mistake, and unconscionability.

On 22 December 2017, Defendant moved to dismiss Plaintiff’s amended

complaint under N.C. Gen. Stat. § 1A-1, Rules 9(b) and 12(b)(6) (2017), and again

moved the trial court for summary judgment under Rule 56. The trial court denied

Defendant’s motions on 7 February 2018.

A trial on the issues was held on 12 February 2018, and on 14 February 2018

the trial court entered an order dismissing all of Plaintiff’s causes of action with

prejudice pursuant to N.C. Gen. Stat. § 1A-1, Rule 41(b) (2018). The trial court

concluded that Plaintiff had not shown a right to relief under any of his causes of

action, and that Plaintiff had ratified the Redemption Agreement by accepting the

benefits thereof after learning that Smithfield’s had not required Plaintiff to divest

himself of his interests in the LLCs. Defendant voluntarily dismissed his

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counterclaims pursuant to N.C. Gen. Stat. § 1A-1, Rule 41(a) and (c) (2018), the

following day. Plaintiff timely appealed.

II. Discussion

On appeal, Plaintiff contends that the trial court erred by (1) making findings

of fact unsupported by competent evidence in the record and (2) making erroneous

conclusions of law in dismissing Plaintiff’s causes of action sounding in fraud,

mistake, breach of fiduciary duty, unjust enrichment, constructive trust, breach of

the implied covenant of good faith and fair dealing, and unconscionability.

a. Standard of Review

Rule 41(b)—pursuant to which the trial court involuntarily dismissed

Plaintiff’s causes of action—reads in relevant part as follows:

After the plaintiff, in an action tried by the court without a
jury, has completed the presentation of his evidence, the
defendant, without waiving his right to offer evidence in
the event the motion is not granted, may move for a
dismissal on the ground that upon the facts and the law the
plaintiff has shown no right to relief. The court as trier of
the facts may then determine them and render judgment
against the plaintiff or may decline to render any judgment
until the close of all the evidence. If the court renders
judgment on the merits against the plaintiff, the court shall
make findings as provided in Rule 52(a).

N.C. Gen. Stat. § 1A-1, Rule 41(b).

Our Supreme Court has elaborated:

[T]he trial judge has the power under Rule 41(b) to
adjudicate the case on the merits at the conclusion of the

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plaintiff’s evidence; and is not obliged to consider plaintiff’s
evidence in a light most favorable to plaintiff as he would
have to do in a jury case. . . . When a motion to dismiss
pursuant to 41(b) is made, the judge becomes both the
judge and the jury and he must consider and weigh all
competent evidence before him. He passes upon the
credibility of the witnesses and the weight to be given to
their testimony.

Dealers Specialties, Inc. v. Neighborhood Hous. Servs., Inc., 305 N.C. 633, 639-40, 291

S.E.2d 137, 141 (1982) (internal quotation marks and citations omitted).

We review a trial court’s dismissal under Rule 41(b) to determine (1) whether

the trial court’s findings of fact are supported by competent evidence, and (2) whether

the findings of fact support the trial court’s conclusions of law and the judgment.

Cohen v. McLawhorn, 208 N.C. App. 492, 498, 704 S.E.2d 519, 524 (2010). The trial

court’s findings of fact are conclusive on appeal if supported by competent evidence,

even if there is evidence to support findings to the contrary. McNeely v. S. Ry. Co.,

19 N.C. App. 502, 505, 199 S.E.2d 164, 167 (1973). Where findings of fact are not

disputed on appeal, we deem them supported by competent evidence, and they are

binding on appeal. State v. McLamb, 186 N.C. App. 124, 125, 649 S.E.2d 902, 903

(2007). We review the trial court’s conclusions of law de novo. Shear v. Stevens Bldg.

Co., 107 N.C. App. 154, 160, 418 S.E.2d 841, 845 (1992).

b. Findings of Fact

Plaintiff first argues that the trial court made a number of findings of fact that

are unsupported by competent evidence in the record. In his brief, Plaintiff

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“specifically assigns error” in a single sentence to a list of 19 of the trial court’s

findings of fact, but provides no rationale as to why Plaintiff believes any of those

findings, except for findings of fact 24 and 31, were erroneous. Although Plaintiff

elsewhere in his brief again mentions findings of fact 25, 33, 39, and 43, Plaintiff does

not explain why these findings are erroneous, and even cites to one of them to support

his own argument, see Pl. Br. 16 (“The Court’s finding of fact 25 backs up this

contention.”). Accordingly, Plaintiff’s arguments regarding all but findings of fact 24

and 31 are deemed abandoned. N.C. R. App. P. 28(b)(6) (2018) (“Issues not presented

in a party’s brief, or in support of which no reason or argument is stated, will be taken

as abandoned.”); Cox v. Cox, 238 N.C. App. 22, 29, 768 S.E.2d 308, 313 (2014) (“As to

the remaining findings of fact listed in this subsection of defendant’s argument,

defendant does not specifically support her challenge with any contention, and we

deem those arguments abandoned.”).

We conclude that finding of fact 24—to wit, that the Leland and Shallotte

franchises were underperforming and that Plaintiff was not properly overseeing the

franchises generally—is not material to any of the trial court’s legal conclusions

appealed by Plaintiff, and as such, cannot be the basis for reversal. In re Custody of

Stancil, 10 N.C. App. 545, 549, 179 S.E.2d 844, 847 (1971) (“Immaterial findings of

fact are to be disregarded.”). Plaintiff’s argument regarding finding of fact 24 is

accordingly unavailing.

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The contested portion of finding of fact 31 states that “Defendant stood to lose

substantially more in the event of a loan default and foreclosure, having placed his

separately owned property and cash as collateral.” This finding is supported by

Plaintiff’s own testimony that it was Defendant who provided the collateral necessary

to obtain financing for the parties’ joint ventures, and that Defendant would be most

impacted in the event of foreclosure.

Plaintiff argues that he “stood to lose his entire income” in such a scenario,

which he considers “substantially more,” ostensibly on a relative basis. But Plaintiff’s

reading of finding of fact 31 misconstrues the finding. The trial court found that

Defendant stood to lose more than Plaintiff, without any qualifier that it calculated

the values of the parties’ prospective individual losses in relation to the parties’

individual wealth or other individual income. Thus, assuming arguendo that finding

of fact 31 is not immaterial to the trial court’s conclusions of law, we conclude that it

is supported by competent evidence in the record.

Accordingly, the trial court’s relevant findings of fact are supported by

competent record evidence, and are thus binding for purposes of our analysis.1

1 In the section of his brief regarding the trial court’s findings of fact, Plaintiff also argues that
“nowhere in the findings of fact is the most crucial portion of the case,” i.e., “whether or not [Defendant]
made specific representations to [Plaintiff which] induced [Plaintiff] to sign the Redemption
Agreement.” A trial court’s failure to find a fact is not error unless the fact is necessary to support the
trial court’s order. Graybar Elec. Co. v. Shook, 283 N.C. 213, 217, 195 S.E.2d 514, 516 (1973) (“When
findings of fact sufficient to determine the entire controversy are made by the court, failure to find
other facts is not error.”). As such, we address Plaintiff’s argument in section II(c), in which we analyze

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c. Fraud

Although Plaintiff has appealed the dismissal of his causes of action for both

fraud and misrepresentation2 and fraud in the inducement, both causes of action

concern Plaintiff’s allegation that Defendant told Plaintiff that Smithfield’s required

Plaintiff to divest his LLC interests, which Plaintiff alleges fraudulently induced

Plaintiff to execute the Redemption Agreement. Under North Carolina law, a

plaintiff bringing causes of action under either fraud and misrepresentation or fraud

in the inducement theories are required to convince the fact finder to find that the

defendant falsely represented or concealed a material fact.3 Since (1) the alleged facts

underlying both of the fraud-based causes of action here before us are the same, (2)

both causes of action require the fact finder to find that the defendant falsely

represented or concealed a material fact, and (3) as discussed below, we discern no

error from the trial court’s failure to find that Defendant falsely represented or

concealed anything from Plaintiff and thus discern no error with respect to the

the trial court’s conclusions of law that Plaintiff did not show a right to relief on his causes of action
sounding in fraud.

2 North Carolina courts analyze a cause of action alleging fraud and misrepresentation as a
cause of action alleging fraud. See, e.g., Folmar v. Kesiah, 235 N.C. App. 20, 25, 760 S.E.2d 365, 367
(2014) (analyzing the plaintiff’s “fraud and misrepresentation claim” as alleging fraud).

3 Compare Broughton v. McClatchy Newspapers, Inc., 161 N.C. App. 20, 31, 588 S.E.2d 20, 29
(2003) (elements of fraud), with Harton v. Harton, 81 N.C. App. 295, 298-99, 344 S.E.2d 117, 119-20
(1986) (elements of fraud in the inducement).

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dismissal of either of the fraud-based causes of action, we analyze Plaintiff’s fraud-

based causes of action together as a cause of action alleging fraud.

“To establish a claim for fraud, plaintiff must show that: (1) defendant[] made

a representation of a material past or existing fact; (2) the representation was false;

(3) defendant[] knew the representation was false or made it recklessly without

regard to its truth or falsity; (4) the representation was made with the intention that

it would be relied upon; (5) plaintiff did rely on it and that her reliance was

reasonable; and (6) plaintiff suffered damages because of her reliance.” Broughton,

161 N.C. App. at 31, 588 S.E.2d at 29 (citation omitted).

In support of his argument that the trial court erred in dismissing his fraud-

based causes of action, Plaintiff points to three alleged misrepresentations by which

he argues Defendant fraudulently caused him to enter into the Redemption

Agreement: (1) Defendant’s telling Plaintiff that Smithfield’s required Plaintiff to

divest his interests in the LLCs, (2) that the parties “just had to get some agreement

on paper” in order to appease Smithfield’s, and (3) that “everything would be okay” if

they did so.

Regarding the second and third alleged misrepresentations, such statements

are not actionable as fraud because neither are a representation of a material past or

existing fact upon which Plaintiff could have reasonably relied. See Broughton, 161

N.C. App. at 31, 588 S.E.2d at 29 (“To establish a claim for fraud, plaintiff must show

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that: (1) defendants made a representation of a material past or existing fact; . . .

[and] (5) plaintiff did rely on [the representation] and that her reliance was

reasonable” (citation omitted)); see also State v. Williams, 98 N.C. App. 274, 280, 390

S.E.2d 746, 749 (1990) (in the securities fraud context, a fact is material when “there

is a substantial likelihood that a reasonable [purchaser] would consider [the fact]

important in deciding” whether or not to make the purchase (quoting TSC Industries,

Inc. v. Northway, Inc., 426 U.S. 438, 449 (1976))).

Regarding the first alleged misrepresentation, Plaintiff asserts on appeal that

“it is uncontested that [Defendant] represent[ed] to [Plaintiff]: (1) that [Plaintiff]

would have to divest his interest in both the businesses and land-holding entities in

order for the businesses to continue[.]” But Plaintiff’s assertion is not accurate. The

record shows that Defendant, in his answer, denied Plaintiff’s allegation that

Defendant made such a representation to Plaintiff, and Defendant argues on appeal

that the only evidence that such a statement was made is Plaintiff’s own testimony.

Plaintiff does not rebut Defendant’s argument in a reply brief, see N.C. R. App. P.

28(h), by citing to record evidence that corroborates Plaintiff’s testimony, and our

review of the record reveals none.

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It was the trial court’s prerogative to weigh all of the evidence and to decide

whether it was convinced that Defendant made such a statement to Plaintiff.4 See In

re Patron, 250 N.C. App. 375, 384, 792 S.E.2d 853, 860 (2016) (“[W]hen a trial judge

sits as both judge and juror, as he or she does in a non-jury proceeding, it is that

judge’s duty to weigh and consider all competent evidence, and pass upon the

credibility of the witnesses, the weight to be given their testimony and the reasonable

inferences to be drawn therefrom[.]” (citation omitted)). Moreover, it was within the

trial court’s discretion to determine Plaintiff’s testimony was not credible, and to

decline to find facts based upon Plaintiff’s testimony. See id. (holding no error for

failure to find a fact, reasoning that “[i]f the trial court did not make a finding of fact

with regards to Appellant’s self-defense claim, it simply means that the trial court

was not convinced that it was valid.”); see also Agee v. Thomasville Furniture Prods.,

119 N.C. App. 77, 83, 457 S.E.2d 886, 890 (1995) (holding trial court’s finding of the

absence of a fact testified to by the plaintiff was supported by competent evidence

where the trial court found the plaintiff not credible).

4 Plaintiff argues in his brief that Defendant told Keeter that Plaintiff “had to be out of both
the restaurants and land ownership” in an attempt to support his fraud arguments. But because
Plaintiff does not allege that Plaintiff relied upon the alleged statement to Keeter—let alone that
Plaintiff did so reasonably—this alleged statement cannot be actionable as fraud. Broughton, 161 N.C.
App. at 31, 588 S.E.2d at 29 (“To establish a claim for fraud, plaintiff must show that: . . . (4) the
representation was made with the intention that it would be relied upon; [and] (5) plaintiff did rely on
it and that her reliance was reasonable.” (citation omitted)).

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As such, we conclude that the trial court did not err in determining that

Plaintiff did not show a right to relief on his fraud-based causes of action.

d. Mistake

Plaintiff argues that the trial court erred by dismissing Plaintiff’s causes of

action seeking to set aside the Redemption Agreement under the doctrines of

unilateral mistake and mutual mistake.

i. Unilateral mistake

Under the doctrine of unilateral mistake, a contract may be avoided when one

party makes a mistake induced by “fraud, imposition, undue influence, or like

oppressive circumstances” attributable to his counterparty. Marriott Fin. Servs., Inc.

v. Capitol Funds, Inc., 288 N.C. 122, 136, 217 S.E.2d 551, 560 (1975).

As explained above, we discern no error in the trial court’s conclusion that

Plaintiff has not shown that Defendant defrauded him. Plaintiff makes no argument

that he was subjected to imposition or undue influence, and his arguments regarding

other oppressive circumstances—e.g., that Plaintiff was placed under duress by

virtue of Defendant’s alleged misrepresentation, and that Defendant breached a

fiduciary duty owed to him—are unavailing as a matter of law. See Link v. Link, 278

N.C. 181, 194, 179 S.E.2d 697, 705 (1971) (duress requires wrongful act of another);

Section II(e)(i) infra (holding no breach of fiduciary duty). Accordingly, we conclude

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that the trial court did not err in determining that Plaintiff did not show a right to

relief under the doctrine of unilateral mistake.

ii. Mutual mistake

Under the doctrine of mutual mistake, “a contract may be avoided on the

ground of mutual mistake of fact when there is a mutual mistake of the parties as to

an existing or past fact that is material and enters into and forms the basis of the

contract or is ‘of the essence of the agreement.’” Creech v. Melnik, 347 N.C. 520, 527,

495 S.E.2d 907, 912 (1998) (citation omitted). Plaintiff argues that Defendant “was

mistakenly operating under the fact that Smithfield had directed him that [Plaintiff]

could no longer be involved in the business in any capacity, even as landlord.”

Plaintiff thus alleges a mistake as to an existing or past fact—i.e., that Smithfield’s

had directed Defendant that Plaintiff could not hold interests in the LLCs going

forward—which became a mutual mistake of fact that formed the “entire basis of

signing the [Redemption] Agreement” when Defendant communicated that fact to

Plaintiff in negotiating the Redemption Agreement.

But the trial court did not find that Defendant believed that Smithfield’s had

given him any direction about Plaintiff’s involvement with the LLCs, let alone that

Defendant told Plaintiff that he had been so directed. Before the trial court,

Defendant gave the following testimony:

Q. You never told [Plaintiff] that Mr. Harris told you
that [Plaintiff] had to get out of the real estate LLCs,

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did you?
A. No, sir.

As finder of fact, the trial court was free to believe Defendant’s testimony. And as

discussed above in section II(c), the trial court was also free to disbelieve the only

evidence to the contrary: Plaintiff’s own testimony. Since a fact finder’s

determinations regarding weight and credibility of evidence are conclusive on appeal,

Chloride, Inc. v. Honeycutt, 71 N.C. App. 805, 806, 323 S.E.2d 368, 369 (1984) (“It is

not for us, as an appellate court, to determine the weight and credibility to be given

evidence in the record.”), by believing Defendant and disbelieving Plaintiff, the trial

court conclusively rejected Plaintiff’s argument that there was a mutual mistake as

to a past or existing fact here.

We accordingly conclude that the trial court did not err in determining that

Plaintiff had not shown a right to relief under the doctrine of mutual mistake.

e. Plaintiff’s Remaining Causes of Action

Plaintiff also argues that the trial court erred by dismissing Plaintiff’s causes

of action alleging breach of fiduciary duty, unjust enrichment, breach of the implied

covenant of good faith and fair dealing, unconscionability, and constructive trust.

i. Breach of fiduciary duty

The elements of a breach of fiduciary duty cause of action are: (1) a fiduciary

relationship existed between the parties; (2) the defendant breached the fiduciary

duty owed to the plaintiff; and (3) the breach proximately caused the plaintiff injury.

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See Green v. Freeman, 367 N.C. 136, 141, 749 S.E.2d 262, 268 (2013). Members of a

North Carolina limited liability company, like the parties to this lawsuit, do not owe

fiduciary duties to each other that can be breached. Kaplan v. O.K. Techs., L.L.C.,

196 N.C. App. 469, 473, 675 S.E.2d 133, 137 (2009) (“Members of a limited liability

company are like shareholders in a corporation in that members do not owe a

fiduciary duty to each other or to the company.”). Accordingly, we conclude that the

trial court did not err in determining that Plaintiff did not show a right to relief on

his cause of action alleging breach of fiduciary duty.

ii. Unjust enrichment

“The general rule of unjust enrichment is that where services are rendered and

expenditures made by one party to or for the benefit of another, without an express

contract to pay, the law will imply a promise to pay a fair compensation therefor.”

Krawiec v. Manly, 370 N.C. 602, 615, 811 S.E.2d 542, 551 (2018) (citation omitted).

However, where “a contract exists between the parties, the law will not imply a

contract.” Se. Shelter Corp. v. Btu, Inc., 154 N.C. App. 321, 331, 572 S.E.2d 200, 207

(2002). Because Plaintiff and Defendant are contractual counterparties, the trial

court did not err in determining that Plaintiff did not show a right to relief on his

unjust enrichment cause of action.

iii. Breach of implied covenant of good faith and fair dealing

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“There is implied in every contract a covenant by each party not to do anything

which will deprive the other parties thereto of the benefits of the contract.” Bicycle

Transit Auth. v. Bell, 314 N.C. 219, 228, 333 S.E.2d 299, 305 (1985) (citation omitted).

But Plaintiff makes no allegation that he has been deprived of the benefits of the

Redemption Agreement. Indeed, the record shows that Plaintiff admitted that he has

received the benefits bargained for, including cashing every one of the checks

remitted to him by the LLCs in accordance with the Redemption Agreement’s

provisions.

Since the record does not reflect that Plaintiff was deprived of the benefits of

the Redemption Agreement, we conclude that the trial court did not err in

determining that Plaintiff did not show a right to relief on his cause of action alleging

breach of the implied covenant of good faith and fair dealing.

iv. Unconscionability

A court will find a contract to be unconscionable only when
the inequality of the bargain is so manifest as to shock the
judgment of a person of common sense, and where the
terms are so oppressive that no reasonable person would
make them on the one hand, and no honest and fair person
would accept them on the other. An inquiry into
unconscionability requires that a court consider all the
facts and circumstances of a particular case, and if the
provisions are then viewed as so one-sided that the
contracting party is denied any opportunity for a
meaningful choice, the contract should be found
unconscionable. . . . A party asserting that a contract is
unconscionable must prove both procedural and
substantive unconscionability. . . . [P]rocedural

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Opinion of the Court

unconscionability involves bargaining naughtiness in the
form of unfair surprise, lack of meaningful choice, and an
inequality of bargaining power. Substantive
unconscionability, on the other hand, refers to harsh, one-
sided, and oppressive contract terms.

Tillman v. Commer. Credit Loans, Inc., 362 N.C. 93, 101-03, 655 S.E.2d 362, 369-70

(2008) (internal quotation marks, brackets, and citations omitted), abrogated as

discussed in Torrence v. Nationwide Budget Fin., 232 N.C. App. 306, 322-23, 753

S.E.2d 802, 811-12 (2014).

Plaintiff’s sole argument in support of his unconscionability cause of action is

that signing the Redemption Agreement caused him to earn less than he allegedly

would have earned had he not done so. “The question of unconscionability is

determined as of the date the contract was executed[,]” Weaver v. St. Joseph of the

Pines, Inc., 187 N.C. App. 198, 212, 652 S.E.2d 701, 712 (2007), meaning that a court

will not adjudge a contract based upon how uncertain events unfolded following the

contract’s execution. As such, even presuming that Plaintiff established at trial that

the LLCs brought in income following the Redemption Agreement’s execution

sufficient to render the bargain Plaintiff made relatively uneconomical, a bad bargain

does not render a contract unconscionable absent evidence that the contract was

tainted by, e.g., unequal bargaining positions, oppression, and the like. See

Westmoreland v. High Point Healthcare Inc., 218 N.C. App. 76, 90, 721 S.E.2d 712,

722 (2012) (“People should be entitled to contract on their own terms without the

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Opinion of the Court

indulgence of paternalism by courts in the alleviation of one side or another from the

effects of a bad bargain.” (citation omitted)).

The record here shows that Plaintiff negotiated the Redemption Agreement

with Defendant based upon the same information and upon equal terms, that

Plaintiff admitted that the terms of the contract were all true and that he understood

what he was signing, and that Plaintiff walked away with hundreds of thousands of

dollars and various benefits guaranteed in exchange for his share of the LLCs’

uncertain future profits.

We accordingly conclude that the trial court did not err in determining that

Plaintiff did not show a right to relief on his unconscionability cause of action.

v. Constructive trust

As the trial court correctly noted, a constructive trust is a remedy, not a cause

of action, and is “merely a procedural device by which a court of equity may rectify

certain wrongs.” Weatherford v. Keenan, 128 N.C. App. 178, 179, 493 S.E.2d 812, 813

(1997) (citation omitted); see Sara Lee Corp. v. Carter, 351 N.C. 27, 35, 519 S.E.2d

308, 313 (1999) (“Courts of equity will impose a constructive trust to prevent the

unjust enrichment of the holder of the legal title to property acquired through a

breach of duty, fraud, or other circumstances which make it inequitable for him to

retain it against the claim of the beneficiary of the constructive trust.” (citation

omitted)). Since, as discussed above, we conclude that the trial court did not err by

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Opinion of the Court

determining that Plaintiff has not shown any fraud or breach of fiduciary duty by

Defendant, and since we discern no other circumstances justifying the imposition of

a constructive trust upon Defendant, we conclude that the trial court did not err in

dismissing Plaintiff’s cause of action for constructive trust.

f. Ratification

Because we conclude that the trial court did not err in determining that

Plaintiff has not shown any right to relief, we need not address Defendant’s

affirmative defense of ratification.

III. Conclusion

Because we conclude that the trial court did not err in its findings of fact or in

determining that Plaintiff did not show a right to relief under any of his various

causes of action, we affirm.

AFFIRMED.

Judges BRYANT and STROUD concur.

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