Pee Dee Electric Membership Corp. v. King (NCBC – Mar. 15, 2018)


Plaintiff Pee Dee Electric Membership Corporation (“Pee Dee”) is the only party to make an appearance in this action, so for the purposes of entry of default and default judgment, the court has deemed that Defendants have admitted the allegations in Pee Dee’s complaint.

In November 2012, Pee Dee purchased software licenses and support services for a software called VMware from Defendant TriTech Direct Corporation (“TriTech”).  Defendant Bryan King (“King”) was TriTech’s CEO.  King then incorporated Defendant AccuKing, Inc. (“AccuKing”) and transferred TriTech’s business to AccuKing, which sold additional licenses to Pee Dee.  Pee Dee paid a total of $96,623.06 to TriTech and AccuKing for the various licenses.

In May 2016, Pee Dee was told by VMware that Pee Dee’s only license was for version 4.0 of the software and that license expired in 2012.  TriTech had initially invoiced Pee Dee for licenses for version 5.0 of the VMware software, and Pee Dee was at that time using version 5.5 or 6.0.  Pee Dee ultimately learned that the licenses for the software that was installed on Pee Dee’s system were registered and linked to a nearby electric cooperative, rather than to Pee Dee’s account.  King did not respond to Pee Dee’s attempts to resolve the issue for two months, upon which time he told Pee Dee that the licenses were actually held with VMware’s parent company, Dell.  After stating several times that he was working with Dell to remedy the issue, King eventually cut off contact with Pee Dee’s representatives.

Pee Dee filed this action against King, AccuKing, and TriTech on October 4, 2017, bringing claims of breach of contract, fraud, and unfair or deceptive trade practices.  Defendants did not respond.  Upon Pee Dee’s motion, the court entered default against Defendants on December 1, 2017.  Pee Dee moved for default judgment against all Defendants on December 18, 2017.  The action against King is stayed until resolution of King’s Chapter 7 bankruptcy, which he filed on February 6, 2018.

Notable Analysis:

  • King’s representations that he had purchased the licenses, King’s multiple attempts to conceal or explain the installation of incorrect software on Pee Dee’s system, and AccuKing’s and TriTech’s multiple invoices for software licenses and support subscriptions that they may have never intended to deliver, among other allegations, were sufficient to support Pee Dee’s fraud claim.
  • One party’s deception during the formation of a contract, whereby one party induces the other to enter into a contract while having no intention to uphold his or her end of the bargain, is an “aggravating circumstance” that can cause a breach-of-contract claim to raise it to the level of a claim for unfair or deceptive trade practices.  Op. ¶ 48.
  • A corporate successor traditionally constitutes a “mere continuation” of its predecessor, and is therefore liable for the predecessor’s debts or liabilities, if there is “identity of stockholders and directors between the two corporations.”  Op. ¶ 52 (quoting L.J. Best Furniture Distribs., Inc. v. Capital Delivery Serv., Inc., 111 N.C. App. 405, 408, 432 S.E.2d 437, 440 (1993); then quoting G.P. Publ’ns, Inc. v. Quebecor Printing—St. Paul, Inc., 125 N.C. App. 424, 434, 481 S.E.2d 674, 680 (1997)).  However, a corporation can also constitute a mere continuation of its successor in a circumstance where the transfer of ownership was intra-family, there was no formal purchase, and insufficient consideration was given.  Op. ¶ 55.
  • A party may not recover treble damages under Chapter 75 and punitive damages based on the same conduct underlying the Chapter 75 claim.

Disposition (Motion(s)):

Motion for Default Judgment: GRANTED

Disposition (Claim(s)):

Judgment on All Claims GRANTED.

Plaintiff’s actual damages of $96,623.06 trebled pursuant to N.C. Gen. Stat. § 75-16.

TriTech and AccuKing jointly and severally liable for the total of $289,869.18.

 

For more detail, you can read the full opinion HERE.

Cite: Pee Dee Elec. Membership Corp. v. King, No. 17 CVS 367, 2018 WL 1358969 (N.C. Super. Ct. Mar. 15, 2018). 

 

Your email address will not be published. Required fields are marked *

*