in the Supreme Court on 20 March 2017.
pursuant to N.C. G.S. § 7A-30(2) from the decision of a
divided panel of the Court of Appeals, 246 N.C.App. 576, 785
S.E.2d 695 (2016), affirming a judgment entered on 13 March
2014 and an order entered on 11 April 2014, both by Judge G.
Bryan Collins, Jr., in Superior Court, Wake County. On 18
August 2016, the Supreme Court allowed defendant's
petition for discretionary review of additional issues.
Spruill LLP, by Steven B. Epstein and Andrew H. Erteschik,
Moore Leatherwood LLP, by Matthew Nis Leerberg and Mark A.
Finkelstein, for defendant-appellant Gregory Brannon.
case, we are called upon to decide whether the Court of
Appeals erred by determining that the trial court did not err
by refusing to grant a new trial to a defendant who was held
liable pursuant to N.C. G.S. § 78A-56(a)(2), which
prohibits a person from selling securities by means of false
and misleading statements of material fact. After carefully
considering the record in light of the applicable law, we
modify and affirm the Court of Appeals' decision to
uphold the trial court's judgment.
Gregory Brannon met plaintiff Lawrence Piazza in 1986,
when they were both students at the University of Chicago
Medical School. After graduating from medical school, Dr.
Piazza became an eye surgeon while defendant practiced
obstetrics and gynecological medicine. Defendant met Robert
Rice in the early 1990s. Defendant, along with Dr. Piazza,
invested in Arckosian, a start-up entity that Mr. Rice had
founded that later went out of business. Following the demise
of Arckosian, Mr. Rice co-founded, with David Kirkbride, a
company called Z Reality. In 2006, defendant met John
Cummings when Mr. Cummings accompanied his wife to a prenatal
appointment. Similarly, defendant met plaintiff Salvatore
Lampuri during defendant's attendance upon Mr.
Lampuri's wife in connection with the birth of the
couple's first child.
2007, Mr. Rice and Mr. Kirkbride founded Neogence
Enterprises, Inc., a technology company that had developed
and was attempting to market an augmented reality application
for smartphones known as Mirascape. The funding upon which
Neogence relied was provided by "angel investors,"
including Dr. Piazza, who received convertible promissory
notes in connection with the making of their investments. Mr.
Rice served as Neogence's Chief Executive Officer, with
responsibility for fundraising and technical development,
while Mr. Kirkbride assisted with Neogence's fundraising
efforts. Defendant became a member of Neogence's board of
directors, upon which he served with Mr. Rice and Mr.
Kirkbride. In 2009, Mr. Cummings joined Neogence as Chief
April 2010, Mr. Cummings attended a social event in New York
at which he met an account executive from McGarry Bowen, an
advertising agency that served a number of clients, including
Verizon Wireless. The McGarry Bowen account executive invited
Mr. Cummings to a meeting with Verizon that had been
scheduled for the following day. At the 30 April 2010
meeting, Mr. Cummings described the work that Neogence was
doing to various McGarry Bowen employees and a Verizon
executive. During the course of this meeting, a McGarry Bowen
account executive told Mr. Cummings that McGarry Bowen would
consider using Mirascape as part of an upcoming advertising
campaign in the event that Neogence was able to develop
Mirascape consistently with McGarry Bowen's expectations.
the meeting ended, Mr. Cummings discussed what had happened
with defendant, Mr. Rice, and Mr. Kirkbride. On the same
date, defendant e-mailed Dr. Piazza for the purpose of
informing him of what had occurred during the McGarry Bowen
meeting and stating that Neogence needed an additional $100,
000.00 to $200, 000.00 as quickly as possible to take
advantage of the opportunity that had arisen during the
McGarry Bowen meeting. Later that day, Mr. Rice sent an
e-mail to Dr. Piazza seeking an additional $200, 000.00 in
"angel funding" relating to this
"opportunity." On 28 May 2010, Dr. Piazza invested
an additional $150, 000.00 in Neogence following a meeting
with Mr. Cummings and Mr. Kirkbride. In addition, defendant,
Mr. Rice, and other Neogence agents discussed what had
happened at the McGarry Bowen meeting with Mr. Lampuri.
Subsequently, Mr. Lampuri made an investment in Neogence as
Neogence was unable to get Mirascape to function properly in
a timely manner. During the following year, Neogence began to
experience financial difficulties. After failing to comply
with Dr. Piazza's request that his investment be returned
in accordance with the provisions of his convertible
promissory notes, Neogence ceased doing business in early
July 2011. Dr. Piazza eventually filed suit against Neogence
to enforce the convertible promissory notes and obtained the
entry of a default judgment.
October 2012, plaintiffs filed a complaint against defendant,
Mr. Kirkbride, and Mr. Rice in which they sought to recover
damages from defendants on the basis of allegations that
defendants had committed material violations of the North
Carolina Securities Act. In apt time, defendants filed
responsive pleadings in which they sought dismissal of
plaintiffs' complaint, denied the material allegations of
plaintiffs' complaint, asserted various counterclaims and
crossclaims, and raised various affirmative defenses,
including, but not limited to, contributory negligence,
failure to mitigate damages, failure to show reasonable
reliance, unclean hands, and waiver and estoppel. On 25
November 2013, Judge Donald W. Stephens entered an order
granting summary judgment in favor of Mr. Kirkbride and
refusing to grant summary judgment in favor of defendant and
issues between plaintiffs and the remaining defendants came
on for trial before the trial court and a jury at the 10
February 2014 civil session of Superior Court, Wake County.
At the conclusion of the trial, the trial court submitted the
following issues to the jury for the purpose of determining
whether plaintiffs were entitled to recover damages from
defendant based upon a violation of N.C. G.S. §
Did Defendant, Gregory Brannon, in soliciting the Plaintiff,
Lawrence Piazza, to pay money for a security, make a
statement which was materially false or misleading, or which
under the circumstances was materially false or misleading
because of the omission of other facts, where the Plaintiff,
Lawrence Piazza, was unaware of the true or omitted facts?
If you answer the first issue "yes," move to the
second issue. If you answer the first issue "no,"
move to the third issue.
Did the Defendant, Gregory Brannon, not know and in the
exercise of reasonable care, could not have known of the
untruth or omission in his offer or sale of a security to the
Plaintiff, Lawrence Piazza?
No matter your verdict on the first and/or second issues,
move to the third issue.
Did the Defendant, Gregory Brannon, in soliciting the
Plaintiff, Salvatore Lampuri, to pay money for a security,
make a statement which was materially false or misleading, or
which under the circumstances was materially false or
misleading because of the omission of other facts, where the
Plaintiff, Salvatore Lampuri, was unaware of the true or
If you answer the third issue "yes," move to the
fourth issue. If you answer the third issue "no,"
move to the fifth issue.
Did the Defendant, Gregory Brannon, not know and in the
exercise of reasonable care, could not have known of the
untruth or omission in his offer or sale of a security to the
Plaintiff, Salvatore Lampuri?
other hand, in answering the same questions regarding Mr.
Rice, the jury determined that Mr. Rice had not made any
false or misleading statements to plaintiffs. On 13 March
2014, the trial court entered a judgment ordering defendant
to pay $150, 000.00 in compensatory damages to Dr. Piazza and
$100, 000.00 in compensatory damages to Mr. Lampuri and to
pay plaintiffs $123, 804.00 in attorney's fees and $8,
493.79 in costs, plus interest. On 17 March 2014, defendant
filed a motion for judgment notwithstanding the verdict or,
in the alternative, for a new trial. On 11 April 2014, the
trial court denied defendant's motion. On 21 April 2014
and 5 May 2014, defendant noted an appeal from the final
judgment, the order awarding costs and attorneys' fees,
and the order denying his motion for judgment notwithstanding
the verdict or a new trial to the Court of Appeals.
challenging the trial court's judgment and orders before
the Court of Appeals, defendant argued that the trial court
had erred by determining that plaintiffs had sufficiently
established that defendant was liable to plaintiffs pursuant
to N.C. G.S. § 78A-56(a)(2), including whether defendant
was primarily or secondarily liable and whether plaintiffs
were required to prove that defendant acted with scienter;
declining to instruct the jury concerning the extent to which
defendant was entitled to rely upon the director safe harbor
provision set out in N.C. G.S. § 55-8-30(b); denying
defendant's motion for a new trial on the grounds that
the verdict was impermissibly inconsistent; and ordering
defendant to pay attorneys' fees to plaintiffs.
Piazza v. Kirkbride, 246 N.C.App. 576, 600-01, 603,
611, 614, 785 S.E.2d 695, 710-12, 717, 719 (2016). On 5 April
2016, the Court of Appeals filed an opinion concluding
that" 'any person' who is a seller or
offeror" of securities is liable pursuant to N.C. G.S.
§ 78A-56(a). Id. at 603, 785 S.E.2d at 712. In
addition, the Court of Appeals held that "a section
78A-56(a)(2) civil plaintiff need not prove
scienter," so that "a materially false or
misleading statement or omission made in connection with a
security offer or sale is actionable even if the person
making the statement or omission did not know it was false,
so long as the person was negligent under section
78A-56(a)(2)," id. at 601, 785 S.E.2d at 711,
and that "a defendant does not have to be a securities
professional to be liable under the" North Carolina
Securities Act, id. at 602, 785 S.E.2d at 712.
Moreover, the Court of Appeals rejected defendant's
contention that the trial court had erred by refusing to
deliver a director safe harbor instruction given that
"the jury found [defendant] liable to Plaintiffs . . .
for his individual representations, which were the product of
his own acts," rather than "his directorial
responsibilities set out by the board," id. at
605-06, 785 S.E.2d at 713-14, and that defendant had
"waived the Safe Harbor affirmative defense" by
failing to plead it, id. at 609, 785 S.E.2d at 716.
Finally, the Court of Appeals observed that "it is not
illogical or inconsistent for two [Securities Act] defendants
to achieve different results in a single action."
Id. at 611, 785 S.E.2d at 717. Although a majority
of the Court of Appeals affirmed the challenged trial court
decisions, Judge Tyson filed a partial dissent in which he
concluded that "[t]he trial court erred by failing to
instruct the jury on the Director Safe Harbor provision as
[defendant] requested in light of the evidence
presented," id. at 615, 785 S. E2d at 719-20
(Tyson, J, concurring in part and dissenting in part), and
that the jury's verdicts with respect to defendant's
liability to Dr. Piazza were impermissibly inconsistent with
the jury's verdict with respect to Mr. Rice's
liability to Dr. Piazza on the grounds that it was
"extreme, legally unsound, and patently illogical"
"[t]o deem [defendant] Brannon's statements to
[plaintiff] Piazza as 'securities fraud,' while
acquitting [defendant] Rice, the Chief Executive,"
id. at 615, 785 S.E.2d at 720.
May 2016, defendant noted an appeal to this Court from the
Court of Appeals' decision based upon Judge Tyson's
dissent. On 18 August 2016, this Court allowed
defendant's petition for discretionary review with
respect to additional issues.
Substantive Legal Analysis
seeking to persuade us to reverse the Court of Appeals'
decision, defendant initially argues that the trial court
erred by denying his motion for a new trial on the grounds
that the jury's determinations that defendant, but not
Mr. Rice, made false and misleading statements to plaintiffs
"are so contradictory as to invalidate the
judgment" given that the statements that defendant and
Mr. Rice made to plaintiffs were essentially identical,
quoting Palmer v. Jennette, 227 N.C. 377, 379, 42
S.E.2d 345, 347 (1947). In defendant's view, the Court of
Appeals erred by reconciling the jury's verdicts based
upon the relative strength of the showings that defendant and
Mr. Rice made with respect to the reasonable care issue.
Although we agree with defendant that the logic upon which
the Court of Appeals relied in upholding the trial
court's decision to deny defendant's new trial motion
was faulty, we do not believe that the trial court abused its
discretion by rejecting defendant's contention that the
jury's verdicts were impermissibly
trial judge has the discretionary power to set aside a
verdict when, in his opinion, it would work injustice to let
it stand; and, if no question of law or legal inference is
involved in the motion, his action in so doing is not subject
to review on appeal in the absence of a clear abuse of
discretion." Selph v. Selph, 267 N.C. 635, 637,
148 S.E.2d 574, 575-76 (1966) (first citing Goldston v.
Wright, 257 N.C. 279, 279, 125 S.E.2d 462, 463 (1962)
(per curiam); then citing Walston v. Greene, 246
N.C. 617, 617, 99 S.E.2d 805, 805-06 (1957) (per curiam);
then citing Roberts v. Hill, 240 N.C. 373, 380, 82
S.E.2d 373, 380 (1954); and then citing Pruitt v.
Ray, 230 N.C. 322, 322-23, 52 S.E.2d 876, 876-77 (1949)
(per curiam)). Inconsistent verdicts in the same actions may
constitute grounds for awarding a new trial. See, e.g.,
Porter v. W. N.C. R.R. Co., 97 N.C. 66, 73-75, 2 S.E.
580, 583-85 (1887) (ordering a new trial when the jury's
answer to one question indicated that the plaintiff did not
negligently contribute to the accident that led to his death
while its answer to another question indicated that the same
plaintiff was contributorily negligent). As defendant
candidly concedes, the decision concerning whether to grant a
new trial on the basis of allegedly inconsistent verdicts is
one of discretion rather than one of law. For that reason,
our review of defendant's challenge to the denial of his
motion for a new trial on the grounds that the jury's
verdicts were impermissibly inconsistent "is strictly
limited to the determination of whether the record
affirmatively demonstrates a manifest abuse of discretion by
the judge." Worthington v. Bynum, 305 N.C. 478,
482, 290 S.E.2d 599, 602 (1982) (citations omitted). An abuse
of discretion has occurred when a trial court's
discretionary decision was "manifestly unsupported by
reason"; for that reason, such a discretionary decision
will not be overturned on appeal absent "a showing that
it was so arbitrary that it could not have been the result of
a reasoned decision." White v. White, 312 N.C.
770, 777, 324 S.E.2d 829, 833 (1985).
prior decisions of this Court suggest that jury verdicts
should not be set aside for inconsistency lightly. For
example, we have stated "that a verdict should be
liberally and favorably construed with a view of sustaining
it, if possible." Guy v. Gould, 202 N.C. 727,
729, 164 S.E. 120, 121 (1932). Our authority to overturn a trial
court's discretionary decision to grant or deny a new
trial motion should be exercised "with great care
and exceeding reluctance," In re Will of
Buck, 350 N.C. 621, 626, 516 S.E.2d 858, 861 (1999),
given our "great faith and confidence in the ability of
our trial judges to make the right decision, fairly and
without partiality, regarding the necessity for a new
trial" in light of "their active participation in
the trial, their firsthand acquaintance with the evidence
presented, their observances of the parties, the witnesses,
the jurors and the attorneys involved,"
Worthington, 305 N.C. at 487, 290 S.E.2d at 605, and
our belief that "the exercise of this discretion sets
aside a jury verdict and, therefore, will always have some
tendency to diminish the fundamental right to trial by jury
in civil cases which is guaranteed by our Constitution."
In re Buck, 350 N.C. at 626, 516 S.E.2d at 861. As a
result, the relevant issue is not whether we would have made
the same decision that the trial court made in ruling upon
defendant's new trial motion; whether we would have made
different credibility determinations, viewed the evidence
differently, or reached a different result than the jury, or
whether there was other evidence upon which the jury could
have relied in resolving the liability issues submitted for
its decision in this case; instead, the issue before us is
whether the trial court had a rational basis for determining
that a reasonable jury could have reached different decisions
with respect to the issue of whether defendant and Mr. Rice
made false and misleading representations to plaintiffs. A
careful review of the record in light of the very deferential
standard of review applicable in this case satisfies us that
the trial court did not abuse its discretion by denying
defendant's motion for a new trial.
Statements to Piazza
April 2010, defendant sent the following e-mail to Dr. Piazza
and a number of other recipients:
Guys John Cummings just had a meeting in NY with Verizon. We
need $100K - $200K ASAP, in 3-4 weeks we go back to Verizon
we have an opportunity to be their featured AR. Rob is going
to send out a summary later today. I know all of you are
BUSY!!! I need you to give a few minutes to look at this
potential. THANK YOU for your TRUST!!
John Cummings 919 601 9090 Rob Rice 919 802
Piazza "became aware of the Verizon opportunity"
when he received this e-mail. A few hours later, Mr. Rice
sent the following e-mail to defendant and the recipients of
defendant's earlier communication, including Dr. Piazza:
John Cummings met with McGarry Bowen (NY Marketing Agency)
and the director of new technologies at Verizon (I believe
that was his title) this afternoon in New York. John can give
you more details directly.
John basically laid out our strategy of "meeting
consumer demand by providing the first social media
marketplace that enables people to buy, sell, and trade
virtual goods for use in mobile and augmented reality.
Mirascape allows consumers to create and sell their own
augmented reality content and experiences for a profit."
This is important because it dramatically distinguishes us
from other startups in the industry that are more focused on
directory AR, single-user experiences, or marketing gimmicks
for the PC.
He described our short term approach with Allied Integrated
Marketing to re-purpose QR codes and turn traditional media
into trigger/activation points for the delivery of media, as
well as the early phase of virtual goods (dynamically linked
and collectible). The next step is the earthmarks, which
allow users to upload all media types to specific locations,
share them with each other, interact, and build influence and
reputation. The next stage of this is letting users link
earthmarks and 3D media together in waypoints, which allows
for drag and drop creation of treasure hunts, tour guides,
and all sorts of engaging promotions and experiences.
Verizon responded extremely well to this and asked how we
differentiate ourselves from others like Layar. The answer,
simply put, is that we are focusing on empowering the user to
create content, as well as building a vibrant virtual goods
marketplace, again centered on the user. Our model is based
on microtransactions and data (where I believe the real value
of this emerging industry is), while others are focusing more
on custom channels or layers that do not support social very
well or are lacking the virtual goods. Layar may have a
content store going live, letting people sell access to
custom layars ("show me the nearest subway"), but
we are the first launching a virtual goods marketplace
(tapping into one of the newest and fastest growing
multi-billion dollar markets).
While we have been seeking $200k in additional angel funding
to meet our milestones and deliverables (June for Allied and
July for a public beta launch), we now have an opportunity to
go back to Verizon in about three weeks to blow their minds
with a demo that shows everything we are doing with Allied,
as well as all of the earthmark stuff (and some of the early
social marketplace functionality). The opportunity here is to
become the featured AR application for Verizon,
OEM'd on all of the DROID smartmobiles, and
leverage their marketing. Even bigger, if we can pull this
off with Verizon, it puts us squarely in the limelight of
catching the eyes of other Fortune 100 companies for
marketing, promotions, and strategic partnerships.
The challenge here, is that we have to jump to warp speed to
accelerate development . . . not only to meet our milestones,
but to WOW Verizon. This is a one-shot opportunity. As things
currently are, we are crawling along to meeting the
milestones, but there is no way we can deliver the perfect
demo for Verizon without immediate funding. I need resources
to bring on additional developers as a strike team to do this
fast, hard, and well. Not only do we need to take the app and
the website to the next level, but we need to make it look
fantastic, as well as the actual demo/presentation . . . .
This is a huge chance and opportunity, but we can't do it
alone. We need help finding additional angel capital that can
make a decision and move quickly.
We need $200k. That's four people at $50k. I know we can
do this. We are perfectly positioned to take down some
phenomenal strategic partnerships and deals (on top of what
we already have done), launch on the market, blow every other
AR company completely out of the water, and take the lead in
this industry. Even beyond that, opportunities like this
emerging industry only happen once a decade or so . . .
unless something major happens in biotech or nanotechnology,
I don't see any other world-changing technologies coming
of age any time soon. Mobile, Social, Local, Virtual is the
magical convergence that we are deep in the middle of with
augmented reality and Mirascape.
I've attached an updated version of our pitch deck that
has some new info in it for those of you that haven't
seen one recently.
As usual, please feel free to call or email me at any time
with any questions. Thank you for everything you have done
for us so far.
CEO Neogence Enterprises
initial matter, we believe that the Court of Appeals'
emphasis upon the extent to which defendant and Mr. Rice took
reasonable care to avoid making materially false or
misleading statements to Dr. Piazza, which was the subject of
the second issue that the trial court submitted for the
jury's consideration with respect to each defendant, as a
justification for the trial court's failure to treat the
jury's verdicts as impermissibly inconsistent overlooks
the fact that the jury found against defendant and in favor
of Mr. Rice on the basis of the "materially false and
misleading statement" issue rather than on the basis of
the "reasonable care" issue. The fact that the
record would support differing treatment of defendant and Mr.
Rice with respect to the "reasonable care" issue
simply sheds no light on the extent to which a reasonable
jury could have found that defendant, but not Mr. Rice, made
materially false and misleading statements to plaintiffs.
Thus, the Court of Appeals erred by upholding the trial
court's decision to deny defendant's new trial motion
on the grounds that defendant and Mr. Rice took differing
levels of care to determine the accuracy of the statements
that they made to Dr. Piazza. Instead, any determination of
the extent, if any, to which the jury's verdicts with
respect to the "materially false and misleading"
statement issue were impermissibly inconsistent necessarily
requires a careful examination of the statements that
defendant and Mr. Rice made to Dr. Piazza and the
circumstances under which those statements were made.
defendant emphasizes, the e-mails that defendant and Mr. Rice
sent to Dr. Piazza both indicate that Mirascape had an
opportunity to become Verizon's featured, pre-loaded
augmented reality application. On the other hand, the e-mail
transmitted by Mr. Rice provided considerably more detail
about the opportunity that had allegedly arisen from the
McGarry Bowen meeting than the e-mail sent by defendant. Mr.
Rice opened his e-mail by noting that Mr. Cummings had met
with employees of McGarry Bowen and Verizon and that Mr.
Cummings "can give you more details directly."
Moreover, Mr. Rice provided specific details concerning the
information that Mr. Cummings had presented at the meeting
and noted that Neogence's work with Allied Integrated
Marketing and the development of earthmarks had generated the
most interest from the attendees. Although Mr. Rice did, as
defendant notes, state that Mirascape could "become the
featured AR application for Verizon, OEM'd on all of the
DROID smartmobiles," he also mentioned the actual
opportunity that stemmed from the McGarry Bowen meeting,
which was to "leverage [Verizon's] marketing."
In addition, Mr. Rice stated that Neogence would first have
to create a "demo" displaying "everything we
are doing with Allied, as well as all of the earthmark
stuff" before mentioning other milestones that Neogence
had been working to achieve, including a public beta launch
scheduled for July 2010, and noting that additional funding
would be needed to complete both the Verizon presentation and
achieve the other pre-existing goals. A trial judge could
have reasonably determined that the jury, after studying
these e-mails, had a rational basis for concluding that
defendant's communication, which mentions only Verizon
and the opportunity "to be their featured AR," was
a materially false or misleading statement and that the
substantial additional information contained in Mr.
Rice's communication, coupled with his open invitation
for the recipients to contact him if they had any questions,
provided a sufficient basis to refrain from the making of
such a determination concerning Mr. Rice's communication.
decision to uphold the Court of Appeals' decision with
respect to the inconsistent verdict issue relating to Dr.
Piazza is bolstered by information contained in Mr.
Rice's trial testimony. Among other things, Mr. Rice
Q. Okay. Just below this specific language, you then go on to
say, "The opportunity here is to become the featured AR
application for Verizon -- for Verizon OEMed on all the Droid
smart mobiles and leverage their marketing." Are these
three separate possibilities that you're discussing in
regard to Verizon?
A. I believe so. I mean, this was kind of bundled together,
but they were all possibilities. They all have different
advantages and disadvantages.
Q. Well, how are they different?
A. Well, leveraging somebody's marketing, for example, if
I have ten dollars to go out and put up some posters that I
printed on my laptop somewhere, that's only going [to]
get me so far. But if I have somebody, say, in a large
company and say, hey, we're going to do this big campaign
for a new car coming out for a new movie, and sure, we'll
stick your logo on the side and include you, you're
basically leveraging all of those dollars to get the exposure
and kind of the brand recognition, as opposed to what you
would do on your own. That's very different from
something where you're, you know, being OEMed or
pre-installed on a mobile device. In that case, you're
not getting the marketing exposure and attention, but
you're getting distribution. So you -- you're in
front of a lot more people, and it's already in the hand.
If I see an ad on TV, I think oh, that's cool maybe
I'll buy the burger or download the app. But if it's
already in my phone or in hand, I have it immediately. People
are much more likely to play and use it. The disadvantage of
OEMing is what people call bloatware.
Q. I'm sorry, what?
A. Bloatware. I don't know how many times I bought a
computer or phone that had stuff on it I didn't want. You
know, TurboTax or Norton Antivirus, whatever tools. So you
have the advantage of more distribution, but there's also
the risk that there may be some negative, you know,
connotations that there's more crap on my phone and get
rid of it. So there's different advantages and
disadvantages depending on how it's structured.
judge could have rationally determined that the jury had a
reasonable basis for concluding that Mr. Rice's statement
that Neogence might be able to "leverage their
marketing" if Neogence was able to successfully
demonstrate Mirascape at a subsequent meeting and his
explanation of the benefits of "leveraging" McGarry
Bowen's marketing efforts on behalf of Verizon, as
compared to preloading Mirascape on Verizon phones,
"significantly altered the total mix of available
information" to a reasonable investor and justified a
finding that Mr. Rice's statements, taken in context and
as a whole, were not materially false and misleading, while
the same could not be said for defendant's statements.
See TSC Indus., Inc. v. Northway, Inc., 426 U.S.
438, 449, 96 S.Ct. 2126, 2132, 48 L.Ed.2d 757, 766 (1976)
(footnote omitted) (explaining that an omission is material
in the event that there is "a substantial likelihood
that the disclosure of the omitted fact would have been
viewed by the reasonable investor as having significantly
altered the 'total mix' of information made
available"); Ehrenhaus v. Baker, 216 N.C.App.
59, 88, 717 S.E.2d 9, 28-29 (2011) (adopting the standard for
materiality set forth in TSC Indus.), appeal dismissed
and disc. rev. denied, 366 N.C. 420, 735 S.E.2d 332
(2012). In other words, given that including Mirascape in
McGarry Bowen's marketing efforts was the opportunity
that was actually discussed at the McGarry Bowen meeting, Mr.
Rice's reference to "leverag[ing] their
marketing" in Mr. Rice's e-mail and his trial
testimony concerning the potential value of that opportunity
could have reasonably persuaded the jury that Mr. Rice's
statement, as a whole, was not materially false or
misleading, see Latta v. Rainey, 202
N.C.App. 587, 599, 689 S.E.2d 898, 909 (2010) (stating that
"[a] misrepresentation or omission is 'material'
if, had it been known to the party, it would have influenced
the party's judgment or decision to act" (quoting
Godfrey v. Res-Care, Inc., 165 N.C.App. 68,
75-76, 598 S.E.2d 396, 402, disc. rev. denied, 359
N.C. 67, 604 S.E.2d 310 (2004))), while defendant's
failure to make a similar statement during his own
communications with Dr. Piazza might have caused a reasonable
jury to reach a contrary result.
Dr. Piazza testified that he spoke to defendant on the
telephone approximately seventy times between 30 April 2010
and 2 June 2010. According to Dr. Piazza, these phone calls
were "more often than not" placed by defendant and
included discussions of
the Verizon opportunity with me primarily . . . describ[ing]
it consistently with his e-mail, that because of a meeting
that John Cummings had in New York and McGarry Bowen, and an
opportunity to have met with a Verizon executive for new
technologies, that John had an opportunity to explain what
was going on at Neogence and what we were doing with
Mirascape, and was intrigued enough to invite John back to
Verizon to present a demo, a demo App, an application. And if
that were acceptable to Verizon, we had an opportunity to be
OEMed or featured AR or pre-installed on every Verizon -
Verizon Droid phone.
Mr. Rice communicated with Dr. Piazza by e-mail on several
occasions concerning the opportunities that had been
discussed at the McGarry Bowen meeting, the e-mails
evidencing these communications were primarily focused upon
the steps that Neogence needed to take to prepare for the
upcoming meeting with Verizon and to accomplish goals that
the company had been working toward before the McGarry Bowen
meeting. We hold that the trial court had a
rational basis for concluding that the jury could have
reasonably determined that defendant, but not Mr. Rice, made
materially false and misleading statements to Dr. Piazza
based, at least in part, upon the frequency with which
defendant and Mr. Rice told Dr. Piazza that there was a
reasonable opportunity for Mirascape to be preloaded onto
result, after carefully reviewing the record, we conclude
that the jury heard evidence from which it could reasonably
conclude that defendant made more direct, less nuanced,
comments to Dr. Piazza concerning the extent to which
Neogence had the opportunity to have Mirascape preloaded onto
Verizon phones than Mr. Rice did; that defendant reiterated
this contention to Dr. Piazza more frequently than Mr. Rice
did; and that Mr. Rice's statements included more
accurate descriptions of the opportunity that had become
available to Neogence than those made by defendant. In light
of this set of circumstances, we are unable to conclude that
the trial court's decision to deny defendant's
request for a new trial on the basis of allegedly
inconsistent verdicts arising from the statements made to Dr.
Piazza by defendant and Mr. Rice, respectively, was "so
arbitrary that it could not have been the result of a
reasoned decision," White, 312 N.C. at 777, 324
S.E.2d at 833, or that the Court of Appeals erred by
declining to set aside the trial court's decision to that
effect. As a result, we hold that defendant's challenge
to the Court of Appeals' decision to uphold the denial of
his motion for a new trial on the grounds that the jury's
verdicts concerning the relative liability of defendant and
Mr. Rice to Dr. Piazza were impermissibly inconsistent lacks
Statements to Lampuri
Lampuri did not receive the e-mails that defendant and Mr.
Rice sent out on 30 April 2010. Instead, Mr. Lampuri first
learned of the opportunity that had been discussed at the
McGarry Bowen meeting on 25 May 2010, when Mr. Lampuri and
his wife went to defendant's office for an obstetrical
appointment. As he examined Ms. Lampuri, defendant
proceeded to have a conversation with [Mr. Lampuri] about
this exciting new opportunity that Neogence, his company
had.... we've got something really exciting going on, our
director of sales just got back from New York City at a
meeting. There were Verizon executives there, and they were
absolutely blown away by our technology that we needed -
Neogence - excuse me, Neogence needed to go back, create this
demo, come back and show Verizon, you know, what they've
been talking about, what they've been showing about this
technology and they're going [to] get OEMed. They're
going pre-installed on all Verizon phones.
Ms. Lampuri testified that defendant had stated during the
medical appointment "that his company had an opportunity
to be featured on Verizon phones directly installed on the
Rice made statements to Mr. Lampuri concerning the
opportunity that had arisen at the McGarry Bowen meeting
during a conference at the Neogence headquarters in mid-July
2010 that was attended by Mr. Lampuri, Mr. Rice, Mr.
Cummings, and Mr. Kirkbride. At that meeting, Mr. Cummings
that he was in New York in a meeting with an advertising
company, and that there were Verizon executives in the room.
And they were, again, absolutely wowed by the technology,
that we need - they needed to go back, create a demo, go back
to Verizon in a couple weeks and if they - if they wowed
Verizon, I like to say, then they have the opportunity to be
preloaded, OEMed on all phones.
the meeting, Mr. Rice said that "the deal was very much
real," that "[i]t was a real opportunity," and
that "the funds that they were seeking were to get this
demo up and doing - up and coming to show Verizon." At
another meeting held at the Neogence headquarters in early
August, which Mr. Lampuri attended along with other members
of his family, Mr. Cummings said "the exact same
thing" that he had said at the prior meeting and Mr.
Rice reiterated "that the deal was very much real."
contends that, given defendant's limited
"interactions with [Mr.] Lampuri" and the fact that
this interaction "did not occur near in time to [Mr.]
Lampuri's actual investment in Neogence" and given
that the two meetings in which Mr. Rice was involved occurred
closer in time to the making of Mr. Lampuri's investment
and that "the opportunity was described [to Mr. Lampuri]
in similar terms as those presented by" defendant, the
jury's verdicts that defendant, but not Mr. Rice, had
made materially false and misleading statements to Mr.
Lampuri were impermissibly inconsistent. A careful review of
the record reflects, however, that defendant and Mr. Rice
made substantially different statements to Mr. Lampuri
concerning the nature of the opportunity that had become
available to Neogence during the McGarry Bowen meeting.
Simply put, defendant told Mr. Lampuri that Neogence had the
opportunity to be preloaded onto Verizon's phones while
Mr. Rice never made any such statement. Although the jury
could have determined that Mr. Rice's statements during
the meetings at which Mr. Lampuri was in attendance that
"the deal was very much real" constituted a
reference to the same opportunity that was described by Mr.
Cummings during those meetings and by defendant during Ms.
Lampuri's medical appointment, a reasonable jury could
have also interpreted this statement in a different
manner. As a result of the fact that the record
discloses ample justification for a jury decision to treat
defendant and Mr. Rice differently with respect to the issue
of whether either of them had made materially false and
misleading statements to Dr. Piazza and Mr. Lampuri, we hold
that the Court of Appeals correctly determined that the trial
court did not abuse its discretion by denying defendant's
request for a new trial based upon the existence of allegedly
impermissible inconsistencies in the jury's verdicts with
respect to the "materially false and misleading"
Safe Harbor Instruction
second challenge to the correctness of the Court of
Appeals' decision, defendant contends that the trial
court erred by failing to instruct the jury in accordance
with N.C. G.S. § 55-8-30(b)(1),  which provides that a
corporate director cannot be held liable "for any action
taken as a director, or any failure to take any action,"
N.C. G.S. § 55-8-30(d), if he or she "rel[ies] on
information, opinions, reports, or statements . . . prepared
or presented by . . . [o]ne or more officers or employees of
the corporation whom the director reasonably believes to be
reliable and competent in the matters presented." N.C.
G.S. § 55-8-30(b)(1) (Supp. 2018). According to
defendant, the Court of Appeals should have construed the
reasonable care standard enunciated in N.C. G.S. §
55-8-30(a)(2) in pari materia with N.C. G.S. §
78A-56(a)(2) or applied the rule of lenity to determine that
the "safe harbor" defense delineated in N.C. G.S.
§ 55-8-30(b) precludes a finding of liability based upon
the making of allegedly false and misleading statements
pursuant to N.C. G.S. § 78A-56(a)(2), citing, inter
alia, Meza v. Division of Social Services, 364
N.C. 61, 66, 692 S.E.2d 96, 100 (2010) (reading the language
of N.C. G.S. § 108A-79(k) in pari materia with
Article 4 of the Administrative Procedure Act);
Dellastatious v. Williams, 242 F.3d 191, 195 (4th
Cir. 2001) (relying upon provisions of Virginia's
corporate governance statutes in determining whether the
defendants used reasonable care to prevent a state law
securities violation); and Vogel v. Reed Supply Co.,
277 N.C. 119, 131, 177 S.E.2d 273, 281 (1970) (applying the
rule of lenity in a civil case when construing a statute that
potentially imposed civil and criminal liability). In view of
the fact that defendant was a Neogence director who claimed
to have merely repeated information that he had received from
Mr. Cummings and that he reasonably believed Mr. Cummings to
be reliable and competent, defendant argues that the Court of
Appeals erred by holding that he was not entitled to have the
jury instructed concerning the "safe harbor"
provisions of N.C. G.S. § 55-8-30. Plaintiffs, on the
other hand, argue that defendant agreed to the trial
court's instruction concerning the circumstances under
which he could be held liable pursuant N.C. G.S. §
78A-56(a)(2) and never properly requested delivery of the
"director safe harbor" instruction to which he now
claims to have been entitled.
Court has long held that '[w]hen charging the jury in a
civil case it is the duty of the trial court to explain the
law and to apply it to the evidence on the substantial issues
of the action.'" Yancey v. Lea, 354 N.C.
48, 52, 550 S.E.2d 155, 157 (2001) (alteration in original)
(first quoting Cockrell v. Cromartie Transp. Co.,
295 N.C. 444, 449, 245 S.E.2d 497, 500 (1978); then citing
Superior Foods, Inc. v. Harris-Teeter Super Mkts.,
Inc., 288 N.C. 213, 218, 217 S.E.2d 566, 571 (1975); and
then citing Inv. Props. of Asheville, Inc. v.
Norburn, 281 N.C. 191, 197, 188 S.E.2d 342, 346
(1972)). As a result, "[i]f a party contends
that certain acts or omissions constitute a claim for relief
or a defense against another, the trial court must submit the
issue with appropriate instructions if there is evidence
which, when viewed in the light most favorable to the
proponent, will support a reasonable inference of each
essential element of the claim or defense asserted."
Cockrell, 295 N.C. at 449, 245 S.E.2d at 500 (first
citing Vernon v. Crist, 291 N.C. 646, 231 S.E.2d 591
(1977); and then citing Atkins v. Moye, 277 N.C.
179, 176 S.E.2d 789 (1970)).
other hand, "[r]equests for special instructions must be
in writing, entitled in the cause, and signed by the counsel
or party submitting them." N.C. G.S. § 1A-1, Rule
51(b) (2017); see also Hanks v. Nationwide Mut. Fire Ins.
Co., 47 N.C.App. 393, 404, 267 S.E.2d 409, 415 (1980)
(citing King v. Powell, 252 N.C. 506, 512, 114
S.E.2d 265, 269-70 (1960), and stating that "[i]t is the
duty of the party desiring instructions on a subordinate
feature of the case or greater elaboration on a particular
point to aptly tender request for special
instructions"). In the event that a party fails to
"comply with the requirements of [ N.C. G.S. §
1A-1, ] Rule 51(b), the trial court act[s] properly within
its discretion in denying the request." Byrd's
Lawn & Landscaping, Inc. v. Smith, 142 N.C.App. 371,
379, 542 S.E.2d 689, 694 (2001) (citing Hord v.
Atkinson, 68 N.C.App. 346, 351, 315 S.E.2d 339, 342
(1984) (holding that the trial court could properly refuse to
instruct the jury concerning its right to consider the
physical evidence in a motor vehicle negligence case on the
grounds that "the plaintiffs request went beyond the
trial judge's general duty of explaining the law arising
on the evidence with respect to the substantial features of
the case" and that, with respect to this
"subordinate feature," "the plaintiff did not
comply with the requirements of Rule 51(b)")); see
also Koutsis v. Waddel, 10 N.C.App. 731, 733-34, 179
S.E.2d 797, 799 (1971) (stating that, "[w]here the court
adequately charges the law on every material aspect of the
case arising on the evidence," "the charge is
sufficient and will not be held error for failure of the
court to give instructions on subordinate features of the
case, since it is the duty of a party desiring instructions
on a subordinate feature, or greater elaboration, to aptly
tender a request therefor" (quoting 7 Strong's North
Carolina Index 2d: Trial § 33, at 329 (1968)
(footnotes omitted))). Assuming that a proper "request
is made for a specific instruction, correct in itself and
supported by evidence, the trial court, while not obliged to
adopt the precise language of the prayer, is nevertheless
required to give the instruction, in substance at
least," with "the failure [to do so] constitut[ing]
reversible error." Minor v. Minor, 366 N.C.
526, 531, 742 S.E.2d 790, 793 (2013) (first quoting
Calhoun v. State Highway & Pub. Works
Comm'n, 208 N.C. 424, 426, 181 S.E.2d 271, 272
(1935); then citing State v. Davis, 291 N.C. 1,
13-14, 229 S.E.2d 285, 293-94 (1976); and then citing
Bass v. Hocutt, 221 N.C. 218, 219-20, 19 S.E.2d 871,
only written request for instructions that defendant
submitted for the trial court's consideration that was at
all relevant to the "safe harbor" issue consisted
of a verbatim recitation of N.C. P.I. Civil 807.50, a pattern
jury instruction intended for use in cases in which a
director is sought to be held liable for breach of his or her
duty to the corporation and which provides that:
(state number) issue reads:
"Was the plaintiff damaged by the failure of the
defendant to discharge his duties as a corporate
On this issue the burden of proof is on the plaintiff. This
means that the plaintiff must prove, by the greater weight of
the evidence, four things:
First, that the defendant failed to act in good
faith. Good faith requires a director to discharge
his duties honestly, conscientiously, fairly and
with undivided loyalty to the corporation. Errors in judgment
alone do not constitute a failure to act in good faith;
however, unless a director honestly believes he is
making a reasonable business decision, he fails to
act in good faith.
Second, that the defendant failed to act as an
ordinarily prudent person in a like position would have acted
under similar circumstances. (Unless he has actual
knowledge to the contrary, a director is entitled to rely on
information, opinions, reports or statements, including
financial statements and other financial data, if prepared or
[one or more employees of the corporation who the director
reasonably believes to be reliable and competent in the
[[a lawyer] [a public accountant] [name other outside
advisor] as to the matter(s) the director reasonably
believes are within such [professional's] [advisor's]
[a committee of the board of directors of which the director
is not a member if he reasonably believes the