Estevez v. C&S Com., LLC

Estevez v. C&S Com., LLC, 2026 NCBC 80. STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE SUPERIOR COURT DIVISION UNION COUNTY 25CV001966-890 JULIAN ESTEVEZ and OSCAR ESTEVEZ, Plaintiffs, ORDER AND OPINION ON v. DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT C&S COMMERCE, LLC and CAMERON CHAD CLAY, Individually and as Sole Manager of C&S COMMERCE, LLC, Defendants. 1. This matter is before the Court on Defendants’ Rule 56 motion for partial summary judgment on Plaintiffs’ third cause of action for unjust enrichment against defendant Cameron Chad Clay and C&S Commerce, LLC, Plaintiffs’ request for various declaratory judgments, and Plaintiffs’ request for punitive damages. (ECF No. 50). 2. Having considered the pleadings, the competent evidence of record, the arguments of counsel, and applicable law, the Court hereby GRANTS IN PART and DENIES IN PART the motion for the reasons set forth below. Vilmer Caudill, PLLC, by Brittney Slade and Sophia Pappalardo, for Plaintiffs Oscar and Julian Estevez. Alexander Ricks, PLLC, by Miller F. Capps and Benjamin Leighton, for Defendants C&S Commerce, LLC and Cameron Chad Clay. Houston, Judge.  I. BACKGROUND 3. The Court does not make findings of fact on a motion for summary judgment. Instead, for background, the Court summarizes the material facts that appear to be uncontested. Chalk v. Chalk, 2026 NCBC LEXIS 80, at *3 (N.C. Super. Ct. Apr. 9, 2026) (citing Vizant Techs., LLC v. YRC Worldwide, Inc., 373 N.C. 549, 551 (2020)). 4. Plaintiffs Julian and Oscar Estevez are brothers who were previously employed by and held managerial positions at Warp Development Corporation. (ECF No. 11, ¶¶ 7–8; ECF No. 14, ¶¶ 7–8). 5. Around October 2023, Plaintiffs, defendant Cameron Clay, and Barbara Chambers founded defendant C&S Commerce, LLC (a North Carolina LLC) to purchase Warp Development’s assets and to carry on Warp Development’s business, which ultimately occurred. (ECF No. 11, ¶¶ 4, 9–10, 14; ECF No. 14, ¶¶ 4, 9, 14). At that time, C&S’s members included Plaintiffs, Clay, and Chambers. (ECF No. 11, ¶ 13 and Ex. A at 31; ECF No. 14, ¶ 13). 6. Around 24 January 2024, approximately three months later, Plaintiffs, Clay, and Chambers signed and entered into an operating agreement for C&S, which the parties agree is a valid contract. (ECF No. 11, ¶¶ 11, 57 and Ex. A; ECF No. 14, ¶¶ 11, 57). Clay signed the Operating Agreement as both the manager and a member of C&S, while Plaintiffs and Chambers all signed as members of C&S. (ECF No. 11, Ex. A at 30). 7. The Operating Agreement lists (i) Clay as the majority owner of C&S with a seventy percent ownership interest, (ii) Plaintiffs as collective owners of twenty percent of C&S, and (iii) Chambers as an owner of ten percent of C&S. (ECF No. 11, ¶ 13 and Ex. A at 31; ECF No. 14, ¶ 13). Clay is designated as the sole manager of C&S, with full and complete authority, power, and discretion to manage and control the business of the Company, to make all decisions regarding those matters, and to perform any and all other acts customary or incident to the management of the Company’s business (including without limitation hiring/firing of any/all employees, employee wages/salaries), except only as to those acts as to which approval by the Members is expressly required by the Articles of Organization, this Agreement, the Act, or other applicable law. (ECF No. 11, Ex. A § 3.1). This includes the authority to transfer the position of manager, unilaterally dissolve C&S, and amend or waive certain terms of the Operating Agreement. (ECF No. 11, Ex. A §§ 3.7, 10.1(b), and 11.5). 8. The Operating Agreement was drafted by Clay’s personal attorney, who included specific disclaimer language in the document explaining that the drafting attorney “represents Chad Clay only and does not represent any Minority Member [i.e., Plaintiffs or Chambers].” (ECF No. 11, ¶ 11 & Ex. A, § 11.15; ECF No. 14, ¶ 11). 9. Before signing the Operating Agreement, however, Julian possessed the final draft of the Operating Agreement for approximately three weeks before signing it, and Oscar possessed the draft for approximately three days before signing it. (ECF No. 55.2 at 38:13–16; ECF No. 52.3 at 63:6–8). During that time, both Plaintiffs were able to read and review the draft Operating Agreement, but both elected not to retain or consult their own legal counsel. (ECF No. 55.2 at 39:5–12; ECF No. 52.3 at 61:11– 16).  10. Ultimately, Plaintiffs signed the Operating Agreement, in which they (i) indicate that they understood that Clay’s attorney did not represent them, and (ii) “warrant and represent that they have been informed and advise [sic] that they had the opportunity to seek counsel of their choosing and by executing this agreement either have or chose not to seek advice of counsel.” (ECF No. 11, Ex. A § 11.15 & at 30). 11. As part of C&S’s Operating Agreement, Plaintiffs, Clay, and Chambers agreed that the “Manager” (i.e., Clay), would not “be liable to [C&S] for monetary damages for an act or omission in such Person’s capacity as a Manager,” except for “(i) acts or omissions which a Manager knew at the time of the acts or omissions were clearly in conflict with the interests of the Company; (ii) any transaction from which a Manager derived an improper personal benefit; or (iii) acts or omissions occurring prior to the date this provision becomes effective” according to the North Carolina Limited Liability Company Act, N.C. Gen. Stat. § 57D-1 et seq. (ECF No. 11, Ex. A, § 3.5). 12. Further, the parties agreed that the “Manager” and the “Majority Member” (i.e., Clay) would not owe a fiduciary duty to “Minority Members” (i.e., Plaintiffs and Chambers), and “the Minority Members waive[d], renounce[d], release[d] and disclaim[ed] the right to file, bring, or maintain an action for breach of fiduciary duty against” the Manager, the Majority Member, and “his heirs successors or assigns.” (ECF No. 11, Ex. A §§ 3.5.1, 4.8).  13. The Operating Agreement also contains covenants not to compete with C&S’s business, to keep confidential certain information, and to refrain from disparaging C&S. (ECF No. 11, Ex. A, § 4.14 and 37–46). For the covenant not to compete, the Operating Agreement provides that, within North Carolina and South Carolina, for a period of one year “from the cessation of [Plaintiffs’] employment” at C&S, Plaintiffs will not (i) engage, in any way or to any extent, in or to any business or activity if such business or activity would compete in any respect with the Business; (ii) own, manage, control or participate in the ownership, management or control of, or render services directly related to, any person, corporation, partnership, proprietorship, firm, association or other business entity primarily engaged in the Business; (iii) induce, request or encourage, or assist or aid any third party to induce, request, or encourage any employee, consultant, officer or director of the Company to terminate or reduce the scope of any such relationship with the company (provided that a general advertisement of employment not targeted to such persons shall not be deemed a violation of this restriction); (iv) assist in or solicit the employment of any employee, consultant, officer or director of the Company, while any such person is providing services to the Company or within six (6) months after any such person ceases providing services to the Company (provided that a general advertisement of employment not targeted to such persons shall not be deemed a violation of this restriction); or (v) solicit, divert or appropriate, or assist in or attempt to solicit, divert or appropriate, any customer or supplier, of the Company for the purpose of competing with the Business, or induce, request or encourage, or assist or aid any third party to induce, request or encourage, any customer or supplier, of the Company to terminate or reduce the scope of its business activity with the Company. (ECF No. 11, Ex. A at 37–38, 42–43). 14. The Operating Agreement’s non-disparagement and confidentiality provisions contain substantively the same geographical and temporal restrictions. (ECF No. 11, Ex. A at 37, 42). Under the non-disparagement provision, Plaintiffs, Clay, and Chambers agreed to refrain from “vilification of or calumny against” one another, C&S, or its former and present employees. (ECF No. 11, Ex. A at 38, 43). As for the confidentiality provision, Plaintiffs agreed to “maintain in confidence” and to not “use, disclose or give to others any fact or information regarding [C&S], which is not generally available to the public[.]” (ECF No. 11, Ex. A at 38, 43). This putative obligation includes, but is not limited to “information and facts concerning business plans, customers, future customers, suppliers, licensors, licensees, partners, investors, affiliates or others, training methods and materials, financial information, sales prospects, client lists, vendor lists, inventions or any other technical, trade or business secret or confidential or proprietary information,” derived from C&S or from other parties during Plaintiffs’ employment at C&S. (ECF No. 11, Ex. A at 38, 43). 15. The Operating Agreement also contains provisions that: a. authorize the transfer of membership interests in C&S (including Plaintiffs’ interests) under specific and limited circumstances, (see generally ECF No. 11, Ex. A arts. VIII, IX); b. permit the immediate transfer and forfeiture of a Minority Member’s interest in C&S upon termination of the Minority Member’s employment for cause (as defined in C&S’s employee handbook) or conviction of a felony, (ECF No. 11, Ex. A art. IXA); and c. permit termination of plaintiff Oscar Estevez’s membership interest in C&S if he fails to obtain U.S. citizenship within four years after “the purchase of the assets of Warp Development Corporation” or  immediately upon his deportation from the country, (ECF No. 11, Ex. A art. IXB). 16. Between January 2024 and the filing of Plaintiffs’ complaint, on multiple occasions, Clay asked Plaintiffs to sell him their respective minority interests in C&S. (ECF No. 11, ¶¶ 17–20, 24–25; ECF No. 14, ¶¶ 17–20, 24–25). 17. After Plaintiffs rebuffed his requests to sell their interests in C&S, Clay purported to terminate Julian’s and Oscar’s1 employment with C&S, though disputed facts remain as to whether sufficient cause existed to terminate for cause and whether an eighty percent vote of C&S’s membership was cast. (ECF No. 11, ¶¶ 25– 26, 30, 33–36 & Ex. B; ECF No. 14, ¶¶ 25–26, 30, 33–36). 18. During this process, Clay barred Plaintiffs from C&S’s property, insisting that they sign and return a proposed membership interest redemption agreement. (ECF No. 11, ¶¶ 27–28; ECF No. 14, ¶¶ 27–28). 19. Plaintiffs assert that Clay’s and C&S’s actions were contrary to the terms of the Operating Agreement, that no basis existed for a for-cause termination, and that Clay otherwise was not authorized to terminate their employment or cause forfeiture of their shares in either his position as Manager or his position as Majority Member. (ECF No. 11, ¶¶ 38–47). 1 Defendants contend that Oscar was not an employee when Julian was fired, (ECF No. 14, ¶ 26), but it is undisputed that Clay’s putative justification for stripping Oscar of his membership interest is pursuant to Article 9A of the Operating Agreement, (ECF No. 14, ¶ 22). Regardless of when Oscar actually was terminated, the Court’s analysis remains unchanged.  20. Plaintiffs filed suit on 4 April 2025. (ECF Nos. 3, 11). With their complaint, Plaintiffs assert causes of action for (i) breach of contract against Clay and C&S, (ii) breach of fiduciary duty against Clay, (iii) unjust enrichment against Clay and C&S, and (iv) a declaratory judgment concerning certain of Plaintiffs’, Clay’s, and Chambers’ respective rights and obligations under the Operating Agreement. (See generally ECF No. 11). Plaintiffs also seek injunctive relief, an award of punitive damages, and the remedy of piercing the corporate veil. (See generally ECF No. 11). 21. Defendants filed a Rule 12(b)(6) motion to dismiss on 25 June 2025, seeking dismissal of only Plaintiffs’ request for the remedy of piercing the corporate veil and Plaintiffs’ cause of action for breach of fiduciary duty. (ECF No. 12). The Court thereafter granted the motion. (ECF No. 28). II. ANALYSIS 22. Summary judgment is appropriate “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law.” N.C. R. Civ. P. 56(c); Morrell v. Hardin Creek, Inc., 371 N.C. 672, 680 (2018) (quoting N.C. R. Civ. P. 56(c)). 23. Genuine issues of material fact are those that “can be maintained by substantial evidence.” Kessing v. Nat’l Mortg. Corp., 278 N.C. 523, 534 (1971). “‘Substantial evidence is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion’ and means ‘more than a scintilla or a permissible inference.’” Daughtridge v. Tanager Land, LLC, 373 N.C. 182, 187 (2019) (quoting Ussery v. Branch Banking & Tr., 368 N.C. 325, 335 (2015)). 24. When reviewing a motion for summary judgment, a court “must view the presented evidence in a light most favorable to the nonmoving party.” Belmont Ass’n v. Farwig, 381 N.C. 306, 310 (2022) (citation omitted). Moreover, the moving party “ultimately has the burden of establishing the lack of any triable issue of fact.” Pembee Mfg. Corp. v. Cape Fear Constr. Co., 313 N.C. 488, 491 (1985) (citation omitted). 25. The moving party may satisfy its burden by showing “an essential element of the opposing party’s claim does not exist, cannot be proven at trial, or would be barred by an affirmative defense, or by showing through discovery that the opposing party cannot produce evidence to support an essential element of [the] claim[.]” Dobson v. Harris, 352 N.C. 77, 83 (2000) (internal citations omitted). If the movant satisfies its burden, “the burden shifts to the non-moving party to ‘set forth specific facts showing that there is a genuine issue for trial.’” Lowe v. Bradford, 305 N.C. 366, 369–70 (1982) (quoting N.C. R. Civ. P. 56(e) (emphasis omitted)). 26. Here, Defendants seek summary judgment as to Plaintiffs’ unjust enrichment cause of action, various requests for declaratory judgment, and request for punitive damages. The Court addresses each in turn. A. Unjust Enrichment 27. Defendants argue that, because there is undisputedly a valid contract between the parties in the form of the C&S Operating Agreement, Defendants are entitled to summary judgment as to Plaintiffs’ alternative cause of action for unjust enrichment. (ECF No. 51 at 6–7; ECF No. 56 at 1–5). 28. While a party may bring an unjust enrichment cause of action in the alternative to a breach of contract cause of action when “services are rendered and expenditures made by one party to or for the benefit of another, without an express contract to pay,” Krawiec v. Manly, 370 N.C. 602, 615 (2018) (citation omitted); McFee v. Presley, 2023 NCBC LEXIS 173, at *20 (N.C. Super. Ct. Dec. 28, 2023), the undisputed existence of “an express contract precludes an implied contract [i.e., an unjust enrichment claim] with reference to the same matter.” Vetco Concrete Co. v. Troy Lumber Co., 256 N.C. 709, 713 (1962) (collecting cases). 29. Accordingly, summary judgment is appropriate when the undisputed evidence of record shows “the parties have made a contract for themselves, covering the whole subject matter” at issue. Id. at 714 (citation omitted); Catoe v. Helms Constr. & Concrete Co., 91 N.C. App. 492, 498 (1988) (“[I]t is error to submit an alternative implied contract claim to the jury when an express contract has been proved.” (citation omitted)). 30. Here, the parties agree that the Operating Agreement, which is undisputedly a valid contract, governs the operation of C&S. (ECF No. 11, ¶¶ 11, 57 and Ex. A; ECF No. 14, ¶¶ 11, 57; ECF No. 51, Ex. 1 at 3 (listing “[t]he Operating Agreement is a valid contract” as an undisputed fact); ECF No. 52, Ex. 1 at 3 (same)). By the Operating Agreement’s express terms, this includes termination of a member and the transfer of that member’s interest, which are the precise issues before the Court with respect to Plaintiffs’ breach of contract action. (ECF No. 11, Ex. A arts. VIII, IXA; ECF No. 11, ¶¶ 75–78). 31. Plaintiffs have expressly pleaded unjust enrichment in the alternative to breach of contract, (ECF No. 11 at 12 (pleading unjust enrichment “[i]n the [a]lternative” to breach of contract)), and it is undisputed at this point that there was, in fact, a binding agreement between the parties, (ECF No. 11, ¶¶ 11, 57 and Ex. A; ECF No. 14, ¶¶ 11, 57; ECF No. 51, Ex. 1 at 3; ECF No. 52, Ex. 1 at 3). 32. Accordingly, with a valid contract between the parties governing the same subject matter encompassed by the unjust enrichment cause of action, there is no genuine issue of material fact as to this cause of action, and summary judgment is appropriate in favor of Defendants.2 33. Therefore, the Court GRANTS the motion as to the unjust enrichment cause of action, and summary judgment is hereby ENTERED against Plaintiffs and in favor of Defendants as to Plaintiffs’ unjust enrichment cause of action. B. Defendants’ Request for Affirmative Declaratory Relief 2 To the extent that Plaintiffs attempt to rely on events not pleaded in, and occurring after the filing of, the complaint in this action to support their cause of action for unjust enrichment, their motion to amend was already denied. (ECF No. 47). Plaintiffs may not use their responsive brief to recast the scarce allegations in the complaint or to create new causes of action. Southern of Rocky Mt., Inc. v. Woodward Specialty Sales, Inc., 52 N.C. App. 549, 553 (1981) (noting that an amendment is needed when “the evidence raises issues not pleaded” (citation omitted)); see Whitaker’s, Inc. of Sumter v. Nicol Arms, 93 N.C. App. 487, 489 (1989) (“[A] party is bound by [its] pleadings and, unless withdrawn, amended, or otherwise altered, the allegations contained in all pleadings ordinarily are conclusive against the pleader. [A party] cannot subsequently take a position contradictory to [its] pleadings.” (citations omitted)).  34. Defendants also request that the Court declare that certain challenged provisions of the Operating Agreement are enforceable—even though Defendants have asserted no affirmative claims in this action for such relief. (ECF No. 51 at 7– 13; see generally, ECF No. 14). 35. The plain language of Rule 56 precludes Defendants’ request. Under Rule 56, “[a] party seeking to recover upon a claim, counterclaim, or crossclaim or to obtain a declaratory judgment” may seek summary judgment “in his favor upon all or any part thereof.” N.C. R. Civ. P. 56(a) (emphasis added). Similarly, “[a] party against whom a claim, counterclaim, or crossclaim is asserted or a declaratory judgment is sought, may, at any time, move with or without supporting affidavits for a summary judgment in his favor as to all or any part thereof.” N.C. R. Civ. P. 56(b) (emphasis added). In each instance, a party may seek summary judgment only as to a claim, counterclaim, crossclaim, or declaratory judgment request that has actually been asserted in the case. N.C. R. Civ. P. 56(a)–(b). 36. Indeed, “[o]ur Court of Appeals has previously held that ‘a declaratory judgment is a separate and independent action’ and may not be ‘commenced by a motion in the cause.’” Woodcock v. Cumberland Cnty. Hosp. Sys., Inc., 2022 NCBC LEXIS 3, at *13 (N.C. Super. Ct. Jan. 20, 2022) (citations omitted) (“Plaintiffs’ ability to seek declaratory relief in this case via a motion cannot exceed the scope of the declaratory relief actually sought in their Complaint.” (citations omitted)). 37. A plaintiff’s failure to meet its burden for a negative determination does not necessarily mean that the defendant has separately met the burden of demonstrating its entitlement to an affirmative determination, as opposed to merely a determination that the plaintiff has failed to meet its burden. Thus, when a plaintiff fails to meet its burden in support of a requested declaration, the appropriate result is a declaration that the plaintiff has failed to meet its burden as to the specific issue raised—not an affirmative, counter-declaration in the defendant’s favor when the defendant did not seek such relief via counterclaim. See, e.g., Sanders v. State Pers. Comm’n, 197 N.C. App. 314, 323 (2009) (recognizing that dismissal of a plaintiff’s requested declaratory judgment—and, thus, ruling against the plaintiff—is not the functional equivalent of a declaratory judgment in favor of the defendant). 38. Here, with their motion, Defendants seek summary judgment for declaratory judgments of the affirmative enforceability of the Operating Agreement, (ECF No. 51 at 7–13), but Defendants have made no affirmative claim for any such declaratory relief. (See generally ECF No. 14). 39. Thus, to the extent that Defendants’ motion seeks a declaration as to the affirmative enforceability of the Operating Agreement, the Court DENIES the motion. C. Defendants’ Request for Summary Judgment as to Plaintiffs’ Declaratory Judgment Causes of Action 40. Separately, Defendants also contend that summary judgment is appropriate in their favor as to each of Plaintiffs’ nine requests for declaratory judgment as to sections 3.5, 3.5.1, 4.8, and 4.14 and articles 9, 9A, and 9B of the Operating Agreement, as well as requests to declare that Plaintiffs “must receive compensation in exchange for Defendants Clay and [C&S] ‘purchasing’ or ‘redeemed’ each of their membership interest” and that Plaintiffs “are permitted to inspect [C&S’s] records and accounts including Defendant [C&S’s] financial records.” (ECF No. 11, ¶¶ 84–95; ECF No. 51 at 7–13). 41. The North Carolina Declaratory Judgment Act provides that “[a]ny person interested under . . . [a] written contract . . . or whose rights, status or other legal relations are affected by a statute, municipal ordinance, contract or franchise, may have determined any question of construction or validity arising under the instrument, statute, ordinance, contract, or franchise, and obtain a declaration of rights, status, or other legal relations thereunder.” N.C. Gen. Stat. § 1-254; Bizrobe Tr. v. InoLife Techs., Inc., 2018 NCBC LEXIS 160, at *10–11 (N.C. Super. Ct. Nov. 30, 2018) (citation omitted). i. Standing and Lack of Case or Controversy 42. Defendants first assert that Plaintiffs lack standing, or has otherwise failed to demonstrate an actual case or controversy, as to all of Plaintiffs’ declaratory judgment causes of action except as to sections 9A.1 and 9A.2 of the Operating Agreement.3 (ECF No. 51 at 4, 12–14). 43. As a prerequisite to any claim for relief “[a] plaintiff must establish standing[.]” United Daughters of the Confederacy v. City of Winston-Salem, 383 N.C. 612, 625, 652 (2022) (citation omitted). “Standing to sue means simply that the party has a sufficient stake in an otherwise justiciable controversy to obtain judicial 3 As to the latter two, as explained above, Defendants seek declaratory relief of its own, requesting that the Court affirmatively declare that the Operating Agreement is valid. (ECF No. 51 at 7–13; see generally, ECF No. 14). The Court has denied that request and does not further address it. resolution of that controversy.” Pugh v. Howard, 288 N.C. App. 576, 580 (2023) (citation omitted); Edwards v. Town of Louisburg, 290 N.C. App. 136, 140 (2023). 44. “While the statute does not expressly so provide, . . . [c]ourts have jurisdiction to render declaratory judgments only when the pleadings and evidence disclose the existence of an actual controversy between parties having adverse interests in the matter in dispute.” Gaston Bd. of Realtors, Inc. v. Harrison, 311 N.C. 230, 234 (1984) (citations omitted). As a result, “an actual controversy [i]s a ‘jurisdictional prerequisite’ for a proceeding under the Declaratory Judgment Act[.]” Id. (citations omitted). 45. While “the definition of a ‘controversy’ must depend on the facts of each case, ‘[a] mere difference of opinion between the parties’” does not constitute a controversy within the meaning of the Declaratory Judgment Act. Id. (quoting Town of Tryon v. Duke Power Co., 222 N.C. 200 (1942)). 46. Absent such an actual controversy, a court lacks subject matter jurisdiction to adjudicate a declaratory judgment request, as courts will not issue advisory opinions or otherwise permit “litigants to fish in judicial ponds for legal advice.” Sharpe v. Park Newspapers of Lumberton, Inc., 317 N.C. 579, 583–84 (1986) (quoting Lide v. Mears, 231 N.C. 111, 117 (1949)). 47. For example, if there is no evidence of record that either party intends to take action that invokes a particular provision of an agreement, a plaintiff seeking a declaration as to that provision generally lacks standing. Sharpe, 317 N.C. at 584.  48. The Court addresses each of Plaintiffs’ requests for declaratory relief in turn. 49. Section 3.5 of the Operating Agreement: Section 3.5 of the Operating Agreement provides, in relevant part, that “[n]o Manager of the Company shall be liable to the Company for monetary damages for an act or omission in such Person’s capacity as a Manager, except as provided in the” North Carolina Limited Liability Company Act or otherwise in the section. (ECF No. 11, Ex. A, § 3.5). Overall, section 3.5 addresses a Manager’s potential liability to C&S, as the “Company” thereunder. (ECF No. 11, Ex. A, § 3.5). 50. With their complaint, Plaintiffs conclusorily allege that they are entitled to a declaratory judgment that “the Operating Agreement’s paragraph 3.5 violates North Carolina law because it purports to limit Defendant Clay’s liability as Sole Manager of the Company for acts or omissions he takes that (a) clearly conflict with the Company’s interests, and (b) give Defendant Clay an improper personal benefit.” (ECF No. 11, ¶ 86). 51. However, Plaintiffs brought this action in their individual capacities and not as a derivative suit on behalf of C&S. (See generally ECF No. 11). 52. On the competent evidence before the Court, Plaintiffs fail to identify any basis to explain how or why they—as opposed to C&S—have an actual controversy or dispute with Defendants with respect to Clay’s fiduciary duties that might be owed to C&S, such that Plaintiffs lack standing to seek such declaratory relief. See generally N.C. Gen. Stat. § 1-254; Gaston Bd. of Realtors, 311 N.C. at 234; Sharpe, 317 N.C. at 583–84. 53. Further, even if Plaintiffs had standing, “[t]he court may refuse to render or enter a declaratory judgment or decree where such judgment or decree, if rendered or entered, would not terminate the uncertainty or controversy giving rise to the proceeding[.]” N.C. Gen. Stat. § 1-257. Here, the Court determines that no such judgment should be entered and alternatively dismisses the cause of action on that basis as well. 54. Accordingly, the Court DISMISSES WITHOUT PREJUDICE Plaintiffs’ request concerning section 3.5 of the Operating Agreement. 55. Sections 3.5.1 and 4.8 of the Operating Agreement: Sections 3.5.1 and 4.8 of the Operating Agreement provide in relevant part that, notwithstanding anything else in the Operating Agreement or applicable law, the Manager and the Majority Member (i.e., Clay) “shall not owe a fiduciary duty to the Minority Members” and that the “Minority Members waive, renounce, release and disclaim” the right to bring suit against him for breach of fiduciary duty. (ECF No. 11, Ex. A, §§ 3.5.1, 4.8). 56. Defendants contend that the “Court has already analyzed and upheld the enforceability of” sections 3.5.1 and 4.8. (ECF No. 51 at 11). This is incorrect. Rather, the Court previously dismissed Plaintiffs’ cause of action for breach of fiduciary duty that was necessarily predicated in part on the argument that sections 3.5.1 and 4.8 are unconscionable and that defendant Clay has breached purported fiduciary duties to Plaintiffs as “members” of C&S that they believe would otherwise exist if not for these provisions of the Operating Agreement. (ECF No. 11, ¶¶ 65–74; ECF No. 28, ¶¶ 59–65). 57. In dismissing Plaintiffs’ cause of action for breach of fiduciary duty, the Court determined that Plaintiffs had failed to plead sufficient facts to support a cause of action for breach of fiduciary duty. Though this entailed an analysis of sections 3.5.1 and 4.8 and Plaintiffs’ unconscionability argument, the Court’s dismissal of the breach of fiduciary duty cause of action was not a determination that, as a matter of law, sections 3.5.1 and 4.8 are valid and enforceable. (ECF No. 28, ¶¶ 59–65); Sanders, 197 N.C. App. at 323. 58. Considering the competent evidence of record, it is apparent that there is an actual controversy between the parties as to the enforceability and alleged unconscionability of sections 3.5.1 and 4.8. Accordingly, though the Court ultimately grants summary judgment in favor of Defendants on those provisions as set forth below, Plaintiffs have standing to seek declaratory relief as to this issue. 59. Section 4.14: Section 4.14 of the Operating Agreement incorporates the parties’ non-compete, non-disparagement, confidentiality, and non-solicitation provisions into the Operating Agreement. (ECF No. 11, Ex. A, § 4.14). 60. Thus, with the complaint, Plaintiffs request that the Court declare that section “4.14 and its attached ‘Non-Compete, Confidentiality and Non- Disparagement Agreements’ violate North Carolina law because it contains overly broad restrictions.” (ECF No. 11, ¶ 89).  61. The record reflects, however, no dispute or controversy between the parties sufficient to invoke the Court’s jurisdiction with respect to this issue. Plaintiffs have not pleaded, nor have they otherwise identified any facts in the record, suggesting that they or Defendants intend to take any action that might violate the terms of the various agreements incorporated into section 4.14. (See generally ECF No. 11). Indeed, the only reference in the complaint to section 4.14 is the request for declaratory relief, (ECF No. 11, ¶ 89), and the record otherwise reflects no related facts creating a dispute as to this issue. 62. With no actual controversy or dispute with Defendants with respect to this issue, Plaintiffs lack standing to seek such declaratory relief. See generally N.C. Gen. Stat. § 1-254; Gaston Bd. of Realtors, 311 N.C. at 234; Sharpe, 317 N.C. at 583–84. 63. Further, even if Plaintiffs had standing and despite the general preference to avoid dismissal of declaratory judgment requests, the complaint fails to state a claim for declaratory relief given the dearth of factual allegations in the complaint supporting the request. See Elhulu v. Alshalabi, 2021 NCBC LEXIS 44, at *13–15 (N.C. Super. Ct. Apr. 29, 2021) (dismissing declaratory relief causes of action). 64. Plaintiffs’ conclusory assertion that they “are entitled to a judicial declaration” as to this issue, with nothing more, fails to state a claim, such that dismissal is appropriate ex mero motu. See N.C. R. Civ. P. 8(a)(1) (requiring a “short and plain statement of the claim sufficiently particular to give the court and the parties notice of the transactions, occurrences, or series of transactions or occurrences, intended to be proved showing that the pleader is entitled to relief”); N.C. R. Civ. P. 12(b)(6); see Tuwamo v. Tuwamo, 248 N.C. App. 441, 445 (2016) (“This Court has found that ‘[c]ourts have continuing power to supervise their jurisdiction over the subject matter before them, including the power to dismiss ex mero motu.’” (alteration in original) (quoting Narron v. Union Camp Corp., 81 N.C. App. 263, 267 (1986))); Maola Ice Cream Co. of N.C., Inc. v. Maola Milk & Ice Cream Co., 238 N.C. 317, 324 (1953) (“If the cause of action, as stated by the plaintiff, is inherently bad, why permit him to proceed further in the case, for if he proves everything that he alleges he must eventually fail in the action.” (citations omitted)). 65. Moreover, inasmuch as the Court retains discretion to “refuse to render or enter a declaratory judgment,” the Court determines here that it is appropriate to do so. N.C. Gen. Stat. § 1-257. 66. Accordingly, the Court DISMISSES WITHOUT PREJUDICE Plaintiffs’ declaratory judgment request concerning section 4.14 of the Operating Agreement. 67. Article IX and Article IXB: Article IX of the Operating Agreement (also referred to as Article 9 in the complaint) sets forth the provisions and mechanisms governing “Buy-Sell Event[s]” of a Minority Member’s interest in C&S. (ECF No. 11, Ex. A, art. IX). For example, the provisions of Article IX generally apply in the event of a Minority Member’s death or incompetence, insolvency, bankruptcy, transfer of an interest in a manner not otherwise provided by the Operating Agreement, uncured material breach of the Operating Agreement, domestic proceedings, or withdrawal from C&S in a manner not otherwise provided by the Operating Agreement. (ECF No. 11, Ex. A, § 9.1(a)–(g)).  68. Further, Article IXB (frequently referred to as 9B) specifically provides for the termination of Oscar Estevez’s interest in C&S if he fails to obtain United States citizenship within a specified period or is otherwise deported. (ECF No. 11, Ex. A, § 9B.1). 69. As above, considering the competent evidence before the Court, Plaintiffs fail to identify any allegations in the complaint, much less facts in the record, suggesting the existence of circumstances that would invoke application of the provisions of Article IX or IXB or indicating that any party has sought to invoke those provisions or that any actual controversy or dispute otherwise exists as to those provisions. See generally N.C. Gen. Stat. § 1-254; Gaston Bd. of Realtors, 311 N.C. at 234; Sharpe, 317 N.C. at 583–84. 70. In short, while a controversy exists between the parties regarding the forfeiture or transfer of Plaintiffs’ interests in C&S under Article IXA (9A), that Article is distinct from Articles IX and IXB and addresses transfers in the event of termination of employment or a felony conviction. (Compare ECF No. 11, Ex. A, arts. IX and IXB, with ECF No. 11, Ex. A, art. IXA). 71. Accordingly, with no indication in the record of an actual outstanding controversy as to Article IX or Article IXB, dismissal is appropriate for lack of standing. As above, the Court alternatively determines in its discretion that a declaratory judgment as to Article IX and Article IXB is otherwise inappropriate and would not terminate the uncertainty at issue, such that this request is appropriately dismissed without prejudice on that basis. N.C. Gen. Stat. § 1-257.  72. Further, even if Plaintiffs had standing, the complaint fails to state a claim for declaratory relief as to Articles IX and IXB, given the dearth of factual allegations in the complaint supporting the request. (ECF No. 11, ¶¶ 90 (asserting that Plaintiffs “are entitled to a judicial declaration that the Operating Agreement’s Article 9 violates North Carolina law”), 92 (asserting that Plaintiffs “are entitled to a judicial declaration that they must receive compensation in exchange for Defendants Clay and Company ‘purchasing’ or ‘redeeming’ each of their membership interest[s]”); see Elhulu, 2021 NCBC LEXIS 44, at *13–15. 73. Accordingly, the Court DISMISSES WITHOUT PREJUDICE Plaintiffs’ declaratory judgment request as to Article IX and Article IXB of the Operating Agreement. (ECF No. 11, ¶ 90). 74. Articles IXA (9A) and Remaining Requests (Compensation and Accounting/Inspection): Article IXA of the Operating Agreement concerns termination of Minority Members’ interests in C&S in the event that they are convicted of a felony or are otherwise terminated from their employment with C&S and requires a vote of eighty percent or more of C&S’s members for termination of employment, which may occur only for violations of the C&S handbook that permit termination for cause. (ECF No. 11, Ex. A, arts. IXA, §§ 9A.1, 9A.2). 75. Here, though there are disputes between the parties as to the validity of such actions, Clay undisputedly purported to terminate Plaintiffs’ employment with C&S and to transfer or terminate Plaintiffs’ interests in C&S based upon the provisions of Article IXA. (ECF No. 11, ¶¶ 25–26, 30, 33–36 & Ex. B; ECF No. 14, ¶¶ 25–26, 30, 33–36). 76. The remaining bases for declaratory judgment, namely that Plaintiffs are entitled to compensation for their membership interests and that Plaintiffs are entitled to an accounting or inspection of C&S’s records, all relate to the dispute at the heart of this case: whether the Operating Agreement could or did allow for the termination of Plaintiffs and the transfer of their membership interests under Article IXA and whether that process was followed. (E.g., ECF No. 11, ¶¶ 91, 93–94). 77. There is a sufficient controversy between the parties as to those issues to invoke the Court’s jurisdiction for declaratory relief. ii. Alleged Unenforceability of Sections 3.5.1 and 4.8 and Unconscionability of Article IXA (9A) of the Operating Agreement 78. As to Plaintiffs’ remaining causes of action, Plaintiffs seek declarations that a. “the Operating Agreement’s paragraph 3.5.1 violates North Carolina law because it eliminates Defendant Clay’s fiduciary duties as Sole Manager,” (ECF No. 11, ¶ 87); b. “the Operating Agreement’s paragraph 4.8 violates North Carolina law because it eliminates Defendant Clay’s fiduciary duties owed to the minority members as the Company’s majority member,” (ECF No. 11, ¶ 88); and c. “the Operating Agreement’s Article 9A violates North Carolina law because it imposes unreasonable and oppressive restrictions o