United States District Court, E.D. North Carolina, Western Division
W. FLANAGAN, UNITED STATES DISTRICT JUDGE.
matter is before the court on defendants’ motion (DE
266) to withdraw reference to the bankruptcy court of
adversary proceeding captioned Walid El Khoury, Edward El
Khoury, and Hope Comercio E. Industria Limitada v. Insaf
George Nehme, No. 5:19-AP-00033-SWH (Bankr. E.D. N.C. )
(the “adversary proceeding”). Upon
defendants’ request, the motion, originally filed in
the bankruptcy court, was transmitted to this court and filed
in the instant related matter, which presently is stayed
pending Chapter 7 bankruptcy proceedings in the case In
re: Insaf George Nehme, No. 18-05725-5-SWH (Bankr. E.D.
N.C. ) (“the Chapter 7 case”). Plaintiff
responded in opposition to the motion. In this posture, the
issues raised are ripe for ruling. For the following reasons,
the motion is denied.
case arises out of an intra-family dispute over the
management of a joint venture, defendant Hope Comercio E
Industria Limitada (“Hope Comercio”). Plaintiff,
Insaf Nehme (“Nehme”) and former plaintiff NOA,
LLC (“NOA”), a North Carolina limited liability
company of which plaintiff Nehme is the sole member,
initiated this case by complaint filed February 28, 2014.
Plaintiffs sued defendants Walid El Khoury
(“Walid”), who is plaintiff Nehme’s cousin
and a resident of Angola and Lebanon; Edward El Khoury
(“Edward”), who is plaintiff Nehme’s
nephew, defendant Walid’s son, and a resident of both
Angola and Lebanon; and Hope Comercio, a limited liability
company organized and existing under the laws of Angola,
asserting various tort and breach of contract claims. In
particular, plaintiffs asserted claims for breach of
partnership agreement, breach of fiduciary duty, conversion,
and unjust enrichment against defendant Walid. Plaintiffs
asserted a conversion claim against defendant Edward.
Finally, plaintiffs asserted a breach of contract claim
against defendant Hope Comercio, in addition to an action for
an accounting of defendant Hope Comercio’s assets.
court dismissed all of plaintiff’s claims for failure
to prosecute on August 15, 2018, due to plaintiff’s
failure to file notice of self-representation and other
delays including failure by plaintiff’s counsel to file
timely notice of appearance. Claims by and against former
plaintiff NOA were voluntarily dismissed November 7,
2017. This left counterclaims remaining asserted
by defendants against plaintiff, adjudication of which is
Walid and Hope Comercio filed counterclaims on June 29, 2015,
wherein they asserted four causes of action: breach of
partnership agreement; constructive fraud; unfair and
deceptive trade practices; and unjust enrichment. This court
previously summarized the alleged facts underlying the
counterclaims as follows:
[P]laintiff and defendant Walid agreed in spring 2008 to form
a partnership to sell used clothing in Angola though Hope
Comercio. (DE 94 at 13 ¶ 15). Defendant Walid agreed to
invest $500, 000 immediately upon formation of the
partnership, and plaintiff agreed to invest a similar amount
in the future. (Id. at 14 ¶ 16). Plaintiff
agreed to work with suppliers in the United States to obtain
merchandise, and Walid agreed to operate the retail store in
Angola. (Id.). Both parties agreed to reinvest the
profits earned by the partnership, and if their intended
agreement was fulfilled, they would share profits.
After the partnership began operations in October 2008, Walid
transferred to plaintiff $400, 000 to purchase three vehicles
and to ship several used clothing containers to Hope
Comercio. (Id. ¶ 17). At some point, plaintiff
contributed less than $150, 000 worth of used clothing to the
partnership, by shipping to Angola four containers of items
he could not sell at his Liberian store, River Way Stores.
Plaintiff never invested the remaining amount. (Id.
In approximately August 2009, the partnership needed
additional funding due to a new policy in Angola that made it
necessary to clear numerous containers of clothing from the
port in Luanda immediately. (Id. at 15 ¶ 19).
At that time, Walid asked plaintiff to provide his investment
in the partnership, but plaintiff refused, and Walid
ultimately borrowed $200, 000 from a friend to rescue Hope
Comercio and the partnership. (Id. at ¶¶
During the following years, the business carried on as Walid
and Hope Comercio sent money to plaintiff and NOA to use the
money to purchase used clothing. (Id. ¶ 22).
Eventually, a dispute arose between the parties involving a
company that plaintiff and NOA used to source clothing called
Carolina International Trading ("CIT"), based in
South Carolina. Specifically, plaintiff pai[d] CIT in advance
for clothing where his practice with other suppliers was to
pay on delivery. (Id. ¶ 23). By October 2011,
plaintiff had caused Hope Comercio to advance more than $340,
000 to CIT, even as Hope Comercio's suppliers in Texas
were complaining that plaintiff failed to pay them.
(Id. ¶ 24). In or around October 2011, Walid
accompanied plaintiff to visit CIT and, at that time,
discovered that CIT's inventory was worth less than $50,
000. (Id. at 16 ¶ 25).
Several weeks later, plaintiff informed Walid that "we
started the process to take [CIT's owner] to court."
(Id. ¶ 26). On or around February 29, 2012,
plaintiff informed Walid that CIT had filed bankruptcy, and
that this would result in a loss to Home Comercio of roughly
$330, 000. (Id.). Nonetheless, plaintiff continued
to do business with CIT and never filed a lawsuit against
CIT. (Id. ¶ 27).
Defendants allege, on information and belief, that plaintiff
used Hope Comercio's prepayment to fund CIT's
shipment of several containers of used clothing to Liberia,
for sale in plaintiff's separate River Way Stores
venture. (Id. ¶ 28). During 2012, plaintiff
began operating a used clothing supply and sorting company
under the name Sanford Rag Company ("SRC") and
began supplying Hope Comercio with used clothing from SRC, as
well as from the previously existing suppliers. (Id.
¶¶ 29–30). In 2013, plaintiff began using
Hope Comercio's money to prepay SRC for its used clothing
while failing to pay Hope Comercio's other suppliers.
(Id. at 16–17 ¶ 31). Defendants allege,
on information and belief, that plaintiff used payments from
Hope Comercio to purchase used clothing for River Way Stores.
(Id. at 17 ¶ 31).
In or around November 2013, six containers arrived to the
port in Angola without documentation. (Id. ¶
34). Defendant Walid learned that the suppliers withdrew
documentation because plaintiff failed to pay them.
(Id.). Over the course of 2013, up to and including
June 29, 2015, plaintiff held between $148, 000 and $600, 000
of Hope Comercio's money, which does not include amounts
plaintiff used to fund his separate business interests.
(Id. ¶¶ 32, 35).
(Order (DE 244) 11-13).
August 15, 2018, the court granted defendants’ motion
for entry of default as to the counterclaims, leaving open
for final resolution defendants’ motion for default
judgment. (DE 223). The court determined that a hearing for
determination of default judgment was necessary on several
1) “[A] damages hearing is necessary where the court
may enter judgment only to the extent defendants carry their
burden to prove damages by a preponderance of the