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A Brand Co, Inc. v. Roy

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

May 8, 2017

A BRAND COMPANY, INC., Plaintiff,
v.
MARC ROY, Defendant.

          ORDER

          David S. Cayer United States Magistrate Judge

         THIS MATTER is before the Court on Defendant's “Motion to Stay Litigation Pending Arbitration” (document #3) as well as the parties' briefs and exhibits.

         This matter has been referred to the undersigned Magistrate Judge pursuant to 28 U.S.C. § 636(b)(1), and this Motion is now ripe for consideration.

         Plaintiff's claims arise from the June 30, 2015 merger between A Brand Company, LLC, and Brand Alliance, Inc., and their respective shareholders. These entities executed a Merger Agreement. In its Complaint, Plaintiff alleges that it is “the successor entity arising out of” the subject merger. Document #1-1 at 10.

         Article 5, Section 5.3 of the Merger Agreement expressly states that the parties:

will first attempt to settle for a period of ten days any dispute arising out of or relating to this Agreement through good faith negotiation in the spirit of mutual cooperation between their respective Representatives with authority to resolve the dispute. If the Parties are unable to settle or resolve any dispute, the dispute shall be arbitrated and finally resolved pursuant to JAMS Expedited Arbitration procedures.

         Plaintiff's predecessors also agreed to submit to the jurisdiction of the Province of Ontario courts, with any disputes arising from the Merger Agreement being governed by the laws of the Province of Ontario and the laws of Canada applicable in that Province without regard to conflict of laws.

         Prior to the merger, Roy was employed by Plaintiff's Canadian predecessor as its Chief Executive Officer. He negotiated the Merger Agreement on behalf of that entity and its shareholders. After the merger, Roy became Plaintiff's Executive Chairman pursuant to a two-year employment agreement.

         On December 21, 2016, Plaintiff and its U.S. shareholders served a notice of claims pursuant to Article 6, Section 6.3 of the Merger Agreement. In the notice of claims, Plaintiff asserted claims for fraud and misrepresentation in connection with the merger negotiations. The notice specifically sought the rescission of various executives' employment agreements, including Roy's. In short, Plaintiff's claims arise from and relate to the Merger Agreement.

         On January 30, 2017, Plaintiff's Board of Directors terminated Roy's employment agreement for “cause.”

         On January 31, 2017, Plaintiff initiated the present action in Mecklenburg County Superior Court by filing an Application and Order Extending Time to File Complaint.

         On February 6, 2017, Roy filed a Notice of Action with the Superior Court of Ontario, seeking damages for breach of contract and wrongful dismissal.

         On February 20, 2017, Plaintiff filed its Complaint in state court, asserting claims for fraud, breach of fiduciary duty, breach of employment agreement, breach of implied covenant of good faith and fair dealing, unjust enrichment and violation of North Carolina's Unfair and Deceptive Trade Practices Act. Plaintiff's Complaint further seeks to declare Roy's employment agreement void pursuant to the North Carolina Declaratory Judgment Act.

         On March 28, 2017, Defendant removed Plaintiff's state court action to this Court on the basis of diversity jurisdiction ...


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