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The Wellness Group, LLC v. King Bio, Inc.

United States District Court, W.D. North Carolina, Asheville Division

April 24, 2014

THE WELLNESS GROUP, LLC, Plaintiff,
v.
KING BIO, INC., DR. FRANK J. KING, JR., SUZIE R. KING, DAVID GERHARDT, and MICHAEL D. WHITTAKER, Defendants.

MEMORANDUM OF DECISION AND ORDER

MARTIN REIDINER, District Judge.

THIS MATTER is before the Court on the Defendants' Motions for Summary Judgment [Docs. 69, 74, 77, 79, 81].

I. PROCEDURAL BACKGROUND

The Plaintiff The Wellness Group, LLC (TWG) initiated this action on September 10, 2012 against the Defendant King Bio, Inc. (King Bio) and its corporate officers for claims arising out of the alleged breach of the parties Sales Management Agreement (SMA). In its Amended Complaint, TWG seeks a declaratory judgment as to the amount of commissions due and owing to the Plaintiff under the SMA (Count I), as well as a declaratory judgment that the Non-Competition Agreement executed by TWG in connection with the SMA is invalid and unenforceable (Count VII). [Doc. 45]. In the remaining counts of the Amended Complaint, TWG asserts claims for: breach of contract (Count II); unjust enrichment (Count III); breach of the covenant of good faith and fair dealing (Count IV); tortious interference with business relations (Count V); violations of N.C. Gen. Stat. § 75.1, et seq. (Count VI); civil conspiracy (Count IX); fraud (Count XI). TWG further seeks an accounting under the SMA (Count X) and seeks to hold the individual officers liable for the alleged wrongful acts of the corporate defendant by piercing the corporate veil (Count XII). In addition to seeking compensatory damages, TWG seeks punitive damages (Count VIII).

The Defendants now move for the entry of summary judgment on the majority of TWG's claims. Specifically, the Defendants seek the dismissal of TWG's claims for breach of the covenant of good faith and fair dealing; tortious interference with business relations, fraud, violations of Chapter 75; civil conspiracy; unjust enrichment; accounting; and piercing the corporate veil. [Docs. 69, 74, 77, 79, 81]. While King Bio does not seek dismissal of the breach of contract claim asserted against it, it argues that it is entitled to summary judgment on the following issues: (1) that King Bio terminated the SMA effective no later than September 13, 2012 and (2) that the SMA directs that TWG's commissions are to be paid monthly for a period of 18 months following termination of the SMA. [Doc. 69]. The Court heard oral argument on these motions on January 3, 2014.[1]

Having been fully briefed and argued, this matter is now ripe for review.

II. STANDARD OF REVIEW

Summary judgment is proper "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). A fact is "material" if it "might affect the outcome of the case." News and Observer Pub. Co. v. Raleigh-Durham Airport Auth. , 597 F.3d 570, 576 (4th Cir. 2010). A "genuine dispute" exists "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248 (1986).

A party asserting that a fact cannot be genuinely disputed must support its assertion with citations to the record. Fed.R.Civ.P. 56(c)(1). "Regardless of whether he may ultimately be responsible for proof and persuasion, the party seeking summary judgment bears an initial burden of demonstrating the absence of a genuine issue of material fact." Bouchat v. Baltimore Ravens Football Club, Inc. , 346 F.3d 514, 522 (4th Cir. 2003). If this showing is made, the burden then shifts to the non-moving party who must convince the Court that a triable issue does exist. Id.

In considering the facts for the purposes of a summary judgment motion, the Court must view the pleadings and materials presented in the light most favorable to the nonmoving party and must draw all reasonable inferences in the nonmoving party's favor. Adams v. Trustees of the Univ. of N.C. -Wilmington , 640 F.3d 550, 556 (4th Cir. 2011).

III. FACTUAL BACKGROUND

A. The Parties

TWG is a limited liability corporation organized and existing under the laws of the State of Pennsylvania with its principal place of business in Virginia. TWG is a sales management company that helps launch and manage product lines for consumer product companies through a network of broker representatives in the United States and Canada. Michael Lupacchini ("Lupacchini") is the founder and member of TWG and assumed primary responsibility for the business relationship with King Bio. [Amended Complaint, Doc. 45 at ¶ 6].

King Bio is a corporation organized and existing under the laws of the State of North Carolina with its principal place of business in Asheville, North Carolina. King Bio is an FDA-registered pharmaceutical manufacturing company engaged in the research, development, and sale of homeopathic medicines. [Id. at ¶ 7; Answer, Doc. 56 at ¶ 7]. Defendant Dr. Frank J. King, Jr. ("Dr. King") is the founder and President of King Bio. [Amended Complaint, Doc. 45 at ¶ 8]. Defendant Suzie R. King ("Mrs. King") is Dr. King's wife and the Vice President of King Bio. [Amended Complaint, Doc. 45 at ¶ 9; Answer, Doc. 57 at ¶ 9]. Defendant David Gerhardt ("Gerhardt") is the Vice President of Sales of King Bio. [Amended Complaint, Doc. 45 at ¶ 10; Answer, Doc. 59 at ¶ 10]. Defendant Michael N. Whittaker ("Whittaker") is the General Manager of King Bio. [Amended Complaint, Doc. 45 at ¶ 11; Answer, Doc. 58 at ¶ 11].

B. The Sales Management Agreement

The following facts are not in dispute, or if disputed are taken in the light most favorable to the Plaintiff as the non-moving party. On November 22, 2011, King Bio and TWG entered into a Sales Management Agreement ("SMA") regarding the launch and management of King Bio's Food Drug and Mass. ("FDM") market business. Specifically, TWG agreed to act as a "national sales manager" for King Bio and develop its FDM business in exchange for a percentage of King Bio's earnings as commission.

TWG spent ten months developing the FDM market by promoting and selling King Bio's products. By mid-July of 2012, however, tensions between the parties were high. King Bio began reviewing the termination provisions of the SMA and assessing its options for ending the relationship. Ultimately, King Bio sent a termination notice to TWG on ...


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