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Cargill, Inc. v. WDS, Inc.

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

March 28, 2018

CARGILL, INC., and CARGILL MEAT SOLUTIONS, CORP., Plaintiffs,
v.
WDS, INC., JENNIFER MAIER, and BRIAN EWERT, Defendants.

          ORDER

          Frank D. Whitney, Chief United States District Judge.

         THIS MATTER is before the Court upon the filing of several post-trial motions by Plaintiffs and Defendants and one pending pre-trial motion filed by Plaintiffs. Before trial, Plaintiffs sought default judgment against all Defendants as sanction for abusive litigation practices. (Doc. No. 187). After trial, Plaintiffs filed a Motion for Award of Prejudgment Interest (Doc. No. 320), a Motion for Award of Attorneys' Fees and Costs (Doc. No. 325), and a Memorandum of Law on the Unfair and Deceptive Trade Practice Act (Doc. No. 329).[1]Defendants WDS, Inc. (“WDS”) and Brian Ewert (“Ewert”) move under Rule 50(b) and Rule 59 of the Federal Rules of Civil Procedure for judgment as a matter of law in its favor or in the alternative a new trial. (Doc. No. 322). Defendant Jennifer Maier (“Maier”) also filed a motion seeking judgment as a matter of law in her favor under Rule 50(b) or in the alternative, a new trial or amendment to the judgment under Rule 59. (Doc. No. 323). All motions and matters are now ripe for resolution. The Court addresses each motion but not necessarily in the order filed.

         I. BACKGROUND

         In the interests of judicial economy, the Court provides a general overview of the case here but summarizes the specific background relevant to the issues raised by the parties' motions in the analysis. Plaintiff Cargill, Inc. (“Cargill”) and its wholly owned subsidiary, Cargill Meat Solutions, Corp. (“CMS”), had contractual relations with Defendant WDS. Under these contractual arrangements, Cargill, CMS, and other entities controlled by Cargill (“Cargill Affiliates”) purchased products and related services from WDS, as a supplier that provides warehousing and distribution services. WDS was founded and managed by Defendant Maier, as majority owner (51%) and President, and Defendant Ewert, minority owner (49%) and at times, Vice President of Sales. As alleged, this litigation stems from WDS charging prices in the purchase orders generated throughout the course of the parties' relationship that exceeded the margins provided for in the Select Supplier Agreements (“SSAs”) executed by Cargill and WDS in 2009, 2012, and 2015 and the actions taken by WDS, Ewert, and Maier to misrepresent and conceal the margins. After a seven day trial, the jury found all Defendants liable for conversion, fraud, and conspiracy to defraud Plaintiffs or engage in commercial bribery that damaged Plaintiffs. The jury found Defendant Ewert liable under the Racketeer Influenced and Corrupt Organizations Act (“RICO”) § 1962(a) and (c) and both Defendants Ewert and Maier liable under RICO § 1962(d). The jury found Defendant WDS liable for breach of contract. The jury also found all Defendants misrepresented to Plaintiffs the margins charged on the products WDS supplied to Plaintiffs; falsified business records, including invoices and alleged agreements, in order to further their misrepresentation to Plaintiffs; and engaged in commercial bribery. Defendant Ewert also was found by the jury to have engaged in other misrepresentations causing Plaintiffs to continue the business relationship with WDS. The jury concluded the conduct it found was in or affecting commerce and the proximate cause of Plaintiffs' injury as required by the Unfair and Deceptive Trade Practices Act. On each of the aforementioned claims, the jury concluded Plaintiffs were entitled to recover $35, 177, 269.

         II. ANALYSIS

         A. Defendants' Motions under Rule 50(b) and Rule 59

         Defendants WDS and Ewert renew their motion under Rule 50 of the Federal Rules of Civil Procedure and move for judgment as a matter of law on several claims and in the alternative move for a new trial under Rule 59(a). Defendant Maier also moves under Rule 50 for judgment as a matter of law and alternatively moves for a new trial under Rule 59. Accordingly, the Court considers each of these matters under Rule 50(b) and Rule 59(a), where applicable.

         1. Legal Standard

         a. Federal Rule of Civil Procedure 50(b)

         A motion under Rule 50(b) “assesses whether the claim should succeed or fail because the evidence developed at trial was insufficient as a matter of law to sustain the claim.” Belk, Inc. v. Meyer Corp., 679 F.3d 146, 155 (4th Cir. 2012). The moving party must have moved under Rule 50(a) for relief on similar grounds to move after trial under Rule 50(b). See Fed.R.Civ.P. 50; Exxon Shipping Co. v. Baker, 554 U.S. 471, 485 n.5 (2008). Failure to move under Rule 50(a) and appraise the court of the alleged insufficiency of the suit results in waiver of that unraised insufficiency. See Varghese v. Honeywell Int'l, Inc., 424 F.3d 411, 423 (4th Cir. 2005); Price v. City of Charlotte, N.C. , 93 F.3d 1241, 1248-49 (4th Cir. 1996); Bridgetree, Inc. v. Red F. Marketing LLC, No. 3:10-cv-00228-FDW-DSC, 2013 WL 443698, at *17 (W.D. N.C. Feb. 5, 2013).

         When considering a Rule 50 motion, the court cannot reweigh the evidence or consider the credibility of the witness and must view “all the evidence in the light most favorable to the prevailing party and draw all reasonable inferences in [the prevailing party's] favor.” Konkel v. Bob Evans Farms, Inc., 165 F.3d 275, 279 (4th Cir. 1999). A jury's verdict will withstand a motion under Rule 50 unless the court “determines that the only conclusion a reasonable trier of fact could draw from the evidence is in favor of the moving party.” Tools USA and Equip. Co. v. Champ Frame Straightening Equip., Inc., 87 F.3d 654, 656-57 (4th Cir. 1996) (quoting Winant v. Bostic, 5 F.3d 767, 774 (4th Cir. 1993)); see also Konkel, 165 F.3d at 279. When ruling on a motion under Rule 50(b), the court may allow judgment on the verdict, order a new trial, or direct entry of judgment as a matter of law. Fed.R.Civ.P. 50(b).

         b. Federal Rule of Civil Procedure 59(a)

         “The grant or denial of a motion for new trial is entrusted to the sound discretion of the district court and will be reversed on appeal only upon a showing of abuse of discretion.” Cline v. Wal-Mart Stores, 144 F.3d 294, 305 (4th Cir. 1998) (citing Gasperini v. Center for Humanities, Inc., 518 U.S. 415, 435 (1996)). A court may grant a new trial on some or all of the issues “for any reason for which a new trial has heretofore been granted in an action at law in federal court[.]” Fed.R.Civ.P. 59(a)(1)(A). Acceptable reasons include: “(1) the verdict is against the clear weight of the evidence, or (2) is based upon evidence which is false, or (3) will result in a miscarriage of justice, even though there may be substantial evidence which would prevent the direction of a verdict.” Cline, 144 F.3d at 301 (quoting Atlas Food Sys. & Servs., Inc. v. Crain Nat'l Vendors, Inc., 99 F.3d 587, 594 (4th Cir. 1996)). When making this determination, the court may weigh the evidence and consider the credibility of witnesses. Wilhelm v. Blue Bell, Inc., 773 F.2d 1429, 1433 (4th Cir. 1985) (citing Wyatt v. Interstate & Ocean Transport Co., 623 F.2d 888, 891-92 (4th Cir. 1980)).

         2. Select Supplier Agreements

         a. Enforceability

         Defendants WDS and Ewert maintain that the SSAs are not enforceable contracts. (Doc. No. 322-1 at 8). They contend the SSAs are contracts for the sale of goods between merchants, and the SSAs do not contain a quantity term as required under the Uniform Commercial Code. (Doc. No. 322-1 at 8). Although the Uniform Commercial Code section 2-201(1), as adopted by New York, provides that a writing for “a contract for the sale of goods for the price of $500 or more is not enforceable by way of action or defense” unless a quantity term is included, N.Y. U.C.C. § 2-201(1) (McKinney), the SSAs are not contracts for the sale of goods. Goods are “all things . . . which are movable at the time of identification to the contract for sale . . .” N.Y. U.C.C. § 2-105(1) (McKinney). Meanwhile, “[a] ‘sale' consists in the passing of title from the seller to the buyer for a price[.]” N.Y. U.C.C. § 2-106(1) (McKinney). In the SSAs, Cargill designates WDS as a “Select Supplier” and Cargill and WDS make mutual promises and covenants to govern their relationship. The SSAs contemplate a relationship between Cargill, Cargill Affiliates, and WDS involving the sale of goods to be facilitated by the issuance of purchase orders, but the SSAs contain no promise to pass title for anything. Accordingly, the Uniform Commercial Code does not govern the enforceability of the contract, and the lack of a quantity term does not render the SSAs unenforceable.

         Citing the Alabama Supreme Court decision in Mobil Oil Corp. v. Schlumberger, 598 So.2d. 1341 (Ala. 1992), Defendants WDS and Ewert also argue that the SSAs standing alone are not enforceable. (Doc. No. 322-1 at 8). However, Mobil[2] does not hold that master agreements are never enforceable contracts. The Supreme Court of Alabama in Mobile stated:

A master service agreement is not binding alone. A master service agreement provides the framework for subsequent contracts that result from oral or written work orders. . . . “Such a contract ‘merely sets out the rules of the game in the event the parties decide to play ball.'”

Id. at 1345 (internal citations omitted). Thus, the Court in Mobil considers master agreements unenforceable until subsequent contracts are made. Although breaching a master agreement only providing the framework for subsequent contracts and the rules for those subsequent contracts may not be possible until a subsequent contract is entered, the Court need not consider that here, because it is undisputed that subsequent contracts were entered. See generally Crown Battery Mfg. Co. v. Club Car, Inc., No. 3:12CV2158, 2014 WL 587142, at *5 (N.D. Ohio Feb. 14, 2014) (finding enforceable a master supply agreement that “establish[ed] the terms for future purchase orders of batteries”). As supported by the SSAs' and Purchase Orders' language and evidence of Plaintiffs and WDS's expectations and course of performance, the SSAs set forth the “framework for subsequent contracts” and the rules, through promises and covenants, which would govern those subsequent contracts. The Purchase Orders are the subsequent contracts for the actual sale of goods. Therefore, the Court cannot conclude that the SSAs are not enforceable contracts as a matter of law.

         b. Superseding Contract

         Defendants WDS, Ewert, and Maier submit that they are entitled to judgment as a matter of law on all claims by CMS because the Purchase Orders are unambiguous and supersede any pre-existing agreements, including the SSAs. (Doc. No. 322-1 at 4-6; Doc. No. 323-1 at 18-21). “[W]here the parties have clearly expressed or manifested their intention that a subsequent agreement supersede or substitute for an old agreement, the subsequent agreement extinguishes the old one and the remedy for any breach thereof is to sue on the superseding agreement.” Northville Indus. Corp. v. Fort Neck Oil Terminals Corp., 474 N.Y.S.2d 122, 125 (N.Y.App.Div. 1984) (citations omitted). If intent “is determinable by [the] written agreements, the question is one of law[.]” Mallad Constr. Corp. v. County Fed. Sav. & Loan Assn., 298 N.E.2d 96, 100 (N.Y. 1973) (citations omitted). However, if the intent “must be determined by disputed evidence or inferences outside the written words of the instrument[, ]” it is a “question of fact[.]” Id. (citations omitted). In this case, the Purchase Orders are not clear and unequivocal. There is no express statement that the Purchase Orders supersede the SSAs. Rather, the Purchase Orders contain language that its terms and conditions shall exclusively govern and any terms WDS includes in their standard sale acknowledgment or other form which alter or are inconsistent with CMS's terms and conditions are of no legal force or effect. The terms and conditions referenced then indicate that they supersede prior agreements between WDS and CMS with respect to the subject matter of the Order. From the contract language and the referenced terms and conditions, the Court cannot conclude as a matter of law that the parties expressed and intended the Purchase Orders to supersede the SSAs. As a result, the Court properly submitted the matter to the jury to determine the parties' intent based on the disputed evidence and to construe the ambiguous provisions. In addition to the language in the SSAs and the Purchase Orders, testimony concerning the parties' dealings leading up the execution of the contracts, the purpose and object of the contracts and their provisions, and their course of performance during the parties' contractual relationship, including Ewert's direction to charge prices in accordance with the SSA after confrontation by Plaintiffs and Maier's falsification of the invoices to make the margins match the SSA, provided substantial evidence for the jury's conclusion that the Purchase Orders did not supersede the SSAs.[3]

         c. Construction

         i. Affiliate Participation

         Defendants WDS, Ewert, and Maier claim that CMS's purchases are not governed by the SSAs because CMS did not opt into the SSAs. (Doc. No. 322-1 at 9; Doc. No. 323-1 at 13-15). In other words, Plaintiffs failed to put forth evidence that CMS met the condition precedents for affiliate participation in the SSAs. The SSAs provided that entities controlled by Cargill, Cargill Affiliates, who met WDS's customer credit requirements, could participate in and receive the benefits of the SSA by among other things issuing a purchase order in accordance with the SSA. The contract language does not provide how such terms are applied. Therefore, this ambiguity warranted resolution by the jury. As presented at trial, CMS issued Purchase Orders to WDS, and WDS accepted and fulfilled them. Evidence of the parties' purpose for entering the SSAs, including the notice to suppliers regarding select supplier agreements that accompanied the SSAs, and evidence of other acts, like representing that WDS was not charging more than ten percent and correcting margins in CMS purchases to conform to the SSAs' margins upon confrontation, also support the jury's finding in favor of CMS. Substantial evidence buttresses a conclusion that CMS was a party to the SSAs in accordance with the SSAs provisions.

         ii. Referencing the SSAs

         Defendant Maier asserts Plaintiffs are barred from recovery because Plaintiffs did not reference the SSAs in the Purchase Orders. (Doc. No. 323-1 at 18). However, this argument is waived; Maier did not move for judgment as a matter of law under Rule 50(a) on this or related grounds. It also plainly fails. The plain language cited by Maier does not create a duty, material or otherwise, requiring Plaintiffs to reference the SSAs in the Purchase Orders. (See Doc. No. 323-1 at 18). The clause following the language cited by Maier, which is omitted from her brief, expressly states that the SSAs will govern even if the SSAs are not referenced in the Purchase Orders. (See Doc. No. 347 at 13-14).

         iii. Losses for Cargill's Negligent Act or Omission

         Maier also construes the SSAs to bar recovery in this action because the losses arose out of Plaintiffs' negligence. (Doc. No. 347 at 21-22). In addition to being a waived argument, this interpretation ignores the plain language of the provision, the defined terms, and the context of the provision. Section 12 of the SSAs provide that except as limited in Section 13, WDS agrees to indemnify and hold harmless Cargill from all “Losses” as defined therein. Section 13 reflects that WDS will not be liable for Losses arising out of Cargill's negligent act or omission. From the language of these provisions and considering the contract as whole, the Court cannot conclude as a matter of law that the parties intended to contractually prohibit the liability of third parties, like Maier, for her torts against Plaintiffs. Even if unambiguously expressed, a contractual provision prohibiting liability for intentional torts, as advanced by Maier, would be unenforceable as contrary to public policy. Kalisch-Jarcho, Inc. v. City of New York, 448 N.E.2d 413, 416-17 (N.Y. 1983).

         iv. All Products

         Defendant Maier also argues the SSAs do not cover the sale of all products by WDS. (Doc. No. 323-1 at 16-18). As Maier did not move under Rule 50(a) for judgment in her favor on these grounds, this contention is waived. Nevertheless, the language in the SSAs and the trial record support the jury's determination in favor of Plaintiffs. The SSAs, relevant to the claims, from 2012 and 2015 provide that the Supplier will apply a fixed margin to determine pricing on all products in accordance with a schedule that set margins for specific named suppliers, all other identified trilateral spend, and all other identified non-trilateral spend. As the language is ambiguous, the Court properly delegated to the jury the responsibility of construction. Plaintiffs put forth testimony and evidence from those involved in the negotiation and oversight over the SSAs, testimony and evidence of the purpose of the SSAs, and the parties' actions while operating under the contract supporting a construction in favor of Plaintiffs. Hence, from this evidence and the explicit contractual language of all products, a reasonable jury could find in favor of Plaintiffs.

         d. Conclusion

         For all the foregoing reasons, the Court concludes Defendants are not entitled to judgment as a matter of law in their favor and finds no grounds justifying a new trial.

         3. Economic Loss Rule

         Defendants WDS, Ewert, and Maier[4] aver the Court erred by submitting Plaintiffs' tort claims to the jury when all these claims are premised on WDS's alleged overcharging for products covered by the SSAs. (Doc. No. 322-1 at 10; Doc. No. 323-1 at 3-4). “Ordinarily, a breach of contract does not give rise to a tort action by the promisee against the promisor.” N.C. State Ports Authority v. Lloyd A. Fry Roofing, Co., 240 S.E.2d 345, 350 ( N.C. 1978) (citations omitted). However, there are situations when a promisor will be liable for a tort, such as when “[t]he injury so caused was a wilful injury to or a conversion of the property of the promisee, which was the subject of the contract, by the promisor.” Ports Authority, 240 S.E.2d at 350-51; see also Beaufort Builders, Inc. v. White Plains Church Ministries, Inc., 783 S.E.2d 35, 40 ( N.C. Ct. App. 2016). Hence, North Carolina appellate courts have limited the application of this bar, commonly known as the economic loss rule, to the barring of negligence claims. Bradley Woodcraft, Inc. v. Bodden, 795 S.E.2d 253, 258 ( N.C. Ct. App. 2016). Appellate courts have held that claims of fraud are not barred by this rule. Bradley Woodcraft, 795 S.E.2d at 259 (citing Jones v. Harrelson & Smith Contr'rs, LLC, 670 S.E.2d 242, 250 ( N.C. Ct. App. 2008)). Thus, following the “the final authority on state law” for the tort claims brought in this diversity suit, Fidelity Union Trust Co. v. Field, 311 U.S. 169, 177-78 (1940), the Court concludes and reaffirms its determination that Plaintiffs' tort claims are not barred by the economic loss rule. All of Plaintiffs' tort claims fall into the category recognized as actionable torts in Ports Authority despite a related existing contract. Plaintiffs presented circumstantial and direct evidence of Defendants' conduct, through testimony and exhibits, showing or tending to show intentional false representations and payments of goods and services to pivotal Cargill employees and others in exchange for favorable treatment, including concealment of fraud and breach. On this evidence and other evidence presented at trial, the Court did not err in submitting instructions to the jury on torts.[5]

         4. Fraud

         Defendants WDS and Ewert argue that there was insufficient evidence to support a fraud claim against them.[6] (Doc. No. 322-1 at 11). They appear to argue that Plaintiffs' knowledge of the margins provided for in the SSAs and the costs provided for in its contracts with trilateral product suppliers preclude reasonable reliance. (Doc. No. 322-1 at 11). Meanwhile, Defendant Maier[7] argues that the only evidence supporting her fraud claim is her admitted misrepresentation of invoices sent to Plaintiffs in March 2016, which she contends was not relied on by Plaintiffs. (Doc. No. 323-1 at 7).

         Defendants' narrow view of a claim for fraud and the evidence presented supporting a claim for fraud is not supported by the law or by the evidence. “Fraud has no all-embracing definition . . . [b]ecause of the multifarious means by which human ingenuity is able to devise means to gain advantages by false suggestions and concealment of the truth[.]” Vail v. Vail, 63 S.E.2d 202, 205 ( N.C. 1951). However, the elements of fraud are generally recognized as “(1) [f]alse representation or concealment of a [past or existing] material fact, (2) reasonably calculated to deceive, (3) made with intent to deceive, (4) which does in fact deceive, (5) resulting in damage to the injured party.” Hardin v. KCS Int'l, Inc., 682 S.E.2d 726, 733 ( N.C. Ct. App. 2009) (citations omitted). Thus, “fraud may be based on an ‘affirmative misrepresentation of a material fact, or a failure to disclose a material fact relating to a transaction which the parties had a duty to disclose.'” Id. (quoting Harton v. Harton, 344 S.E.2d 117, 119 ( N.C. Ct. App. 1986)). A duty to disclose arises when “a party has taken affirmative steps to conceal material facts from the other[.]” Id. (quoting Sidden v. Mailman, 529 S.E.2d 266, 270-71 ( N.C. Ct. App. 2000)).

         Here, Plaintiffs presented evidence showing the origination of the price figures used in the purchase orders, including testimony that Ewert and Maier gave to Kerry Uptergrove, the product manager for WDS, the prices, which were then provided to employees of Plaintiffs. The resulting purchase orders charged margins on goods exceeding the margins set in the SSAs. Neither WDS, Ewert, nor Maier informed either Plaintiff of the actual margins charged to Plaintiffs and, at times, misrepresented the margin. Kevin Walker, Plaintiff's expert, testified that the sum of net overcharges during the terms of the 2012 and 2015 SSA equal $35, 177, 269. Ewert directed others to fabricate documents with false information that he or others then provided to employee of Plaintiffs as legitimate. Ewert instructed WDS employees to withhold or misrepresent information about pricing, capabilities of WDS's software, and WDS's relationship to other vendors. Neither WDS, Ewert, nor Maier disclosed their financial interests in other vendors that supplied goods to WDS that were then sold to CMS. Ewert decided to keep all savings from its suppliers lowering prices instead of passing the savings on to CMS. Maier's responsibilities and role, as president of WDS, included overseeing day-to-day management of WDS and participating in the negotiations and executions of contracts. In this capacity and as majority shareholder, she executed the 2008 agreement, which allocated 70.6% of WDS profits to Ewert's wholly owned corporation, ODDS, LLC (“ODDS”) for Ewert's cultivation of business relationships and marketing services. The supervisor of sales, head of human resources, purchasing manager, chief operations officer, and corporate accountant, which included Brian Ewert, all reported to Maier. In addition to the 2016 invoices that Maier admits she falsified, Maier misrepresented an agreement in 2011, rebates owed to SSA, other information provided to Plaintiffs employees that omit certain vendors, and Ewert's departure from WDS.

         Further, evidence tending to show Ewert and Maier took affirmative steps to conceal material facts was put forth. WDS and ODDS, with the authorization of WDS's corporate accountants, paid for trips and gifts for members of Cargill's strategic sourcing division, who were responsible for executing and overseeing the SSAs with WDS, and for a procurement manager. These expenditures included yacht trips costing over $100, 000. WDS, with the consent of Maier and Ewert, also paid for the health insurance under WDS's employee plan for the mother-in-law of Chuong Shawn Nguyen, a member of Cargill's strategic sourcing division. WDS, Maier, and Ewert arranged payment of these bribes through WDS's payment of commissions to ODDS under the 2008 agreement. Additionally, at Ewert's direction, WDS's corporate accountants transferred money from WDS to ODDs to Ewert's personal Money Market Account. Ewert, then, withdrew thousands of dollars of cash. Subsequently, Ewert mailed packages with the FedEx costs, at times invoiced to Maier's American Express, or Ewert traveled to the place of residence of the members of Cargill's strategic sourcing division. The emails and text messages between Ewert and members of Cargill's strategic sourcing division, the procurement manager, and other influential employees of Cargill's customers show a quid pro quo relationship. Further, the timing of the trips, gifts, or cash withdraws often coincide with the consideration of rebates or contracts, to which WDS, Ewert, and Maier had interests in seeing executed in their favor. WDS, Ewert, and Maier did not inform CMS or Cargill of these trips, gifts, or cash payments. The SSAs required WDS to adhere to a Supplier Code of Conduct, which included an obligation to compete fairly for Cargill's business, without any illegal or improper inducements or advantages. Additionally, Cargill had adopted an anti-bribery policy for its employees and employees of all subsidiaries and affiliates. Maier and Ewert also threatened its non-trilateral suppliers' employees like Brian Kincannon to honor their confidentiality obligations or face legal action in order to keep actual invoices out of the Plaintiffs' hands. Without the actual invoices, Plaintiffs could not determine the actual margins being charged in the purchase orders. Ewert also suppressed WDS's own employees like Kerry Uptergrove from raising any concerns by telling them to focus on their job.

         Testimony and evidence on Plaintiffs' inability to reasonably discern the actual costs for products sold by WDS without their cooperation was also shown. Plaintiffs' agreements with suppliers within the trilateral category set pricing formulas, not discrete prices. These formulas resulted in daily price variation preventing Plaintiffs from reasonably knowing the costs charged to WDS and thus inhibiting Plaintiffs from calculating WDS's margins on those products. Plaintiffs were not privy to WDS's contracts with non-trilateral suppliers or their invoices. Defendants employed confidentiality requirements with its suppliers. Even after the initiating of the audit of WDS, Defendants tactically continued to make misrepresentations to stop, delay, and hinder the audit. After receiving Maier's fabricated invoices in 2016, Plaintiffs continued to purchase products from WDS.[8]

         From such evidence, a reasonable jury could conclude that WDS, Ewert, and Maier[9]committed fraud through either or both a false representation or a concealment of a material fact that resulted in injury to Plaintiffs of $35, 177, 269. Therefore, Defendants are not entitled to judgment as a matter of law in their favor on the fraud claim.[10]

         5. Conversion

         Defendants WDS and Ewert contend Plaintiffs' did not present evidence that Plaintiffs retained ownership in the funds sent to WDS, entitling them to judgment on the conversion claim. (Doc. No. 322-1 at 15-16). “Conversion is ‘an unauthorized assumption and exercise of the right of ownership over goods or personal chattels belonging to another, to the alteration of their condition or the exclusion of an owner's rights.'” Wall v. Colvard, Inc., 149 S.E.2d 559, 564 ( N.C. 1966) (citations omitted). “[T]he fact the parties had a contract does not prevent plaintiffs' claim for conversion.” Se. Shelter Corp. v. BTU, Inc., 572 S.E.2d 200, 207 ( N.C. Ct. App. 2002). “A party who comes into possession of . . . converted funds [pursuant to a contract or otherwise] ‘will not be permitted . . . to use [the] funds when he is fully aware of their nature, or there are circumstances to awaken suspicion and put him on inquiry.'” Variety Wholesalers, Inc. v. Salem Logistics Traffic Services, LLC, 723 S.E.2d 749 ( N.C. 2012) (quoting Lavecchia v. N.C. Joint Stock Land Bank of Durham, 1 S.E.2d 119, 120 ( N.C. 1939)). As addressed in Variety Wholesalers, whether the plaintiff retains ownership over funds, as required for a conversion claim, may require establishing ownership of the funds after the plaintiff voluntarily transferred the funds to another. Id. at 747. In that case, whether the plaintiff retained ownership turned on the construction of ambiguous contract language. Id. Here, as well, Plaintiffs' “ownership” and “retained ownership” turned on the jury's construction of the SSAs and the Purchase Orders. The evidence previously discussed supporting the interpretation of the SSAs and the Purchase Orders and the claim for fraud, along with evidence of Plaintiffs' payments through an automatic clearing house (“ACH”) to WDS; Ewert and Maier's ownership of WDS; Ewert and Maier's admitted control and their admitted withdrawal from WDS's accounts, to which Plaintiffs made their payments; and subsequent distributions from WDS to Ewert and Maier provide substantial evidence supporting the jury's verdict for conversion against each Defendant: Plaintiffs “retained ownership” over the $35, 177, 269 assumed by Defendants in excess of the costs and margins established in the SSAs.

         Relying on Variety Wholesalers, Defendant Maier advances that the conversion claim fails because Plaintiffs did not present evidence showing the specific source or specific destination of the converted funds. (Doc. No. 323-1 at 6 (citing Variety Wholesalers, 723 S.E.2d at 751)). As Maier declined to raise this issue in a Rule 50(a) motion, this argument is waived. Maier also did not propose instructions or object to the final jury instructions on these grounds. Further, on this record, it cannot prevail: substantial evidence, as summarized in the previous paragraph, supports Plaintiffs' conversion claim against each Defendant, including Maier.

         Accordingly, the Court denies all Defendants request for judgment as a matter of law and finds no basis for a new trial.

         6. Unfair and ...


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