Wilmington restaurant wins jury verdict on recipes taken and deleted by employees
October 29, 2021-Wilmington, NC-A New Hanover County jury found a trio of former employees of the Eternal Sunshine Café, LLC jointly liable for computer trespass, misappropriation of trade secrets, breach of contract, and civil conspiracy on Thursday.
The jury awarded the restaurant $65,000 in compensatory and punitive damages.
Eternal Sunshine, which opened on Eastwood Road in 2014, began expansion with the opening of a second location in Leland in 2019. Owner and Executive Chef Michael Pellegrino planned to open additional locations serving signature dishes and innovative specials developed in a test kitchen established at the second location.
COVID-19 forced Pellegrino to close the Leland location in May of 2020 and furlough employees there until it could feasibly reopen. The jury found that on the day of closing, employees Samantha Paswaters Frye, Paul Chris Frye, and Edgar Santos-Cardenas conspired to take most of the restaurant’s database of proprietary recipes and related information and to delete Eternal Sunshine’s password protected data for about 70 dishes.
“Especially with the restaurant already on its heels from COVID, the misconduct of these employees was a major blow to the café,” said W. Cory Reiss of the Wilmington firm Reiss & Nutt, which represents the café. “It also set back Mike’s plans to expand because these recipes and methods associated with them were his foundation for growth in this region and beyond. Mike has been busy recreating what these defendants deleted. But the verdict sends a clear message that such egregious conduct won’t be tolerated.”
Eternal Sunshine specializes in innovative and original breakfast and brunch dishes largely conceived by Pellegrino.
UPDATE-November 23, 2021-The Trial Court entered an Order adding more than $46,000 in attorney's fees and costs to the judgment against the defendants today. For more, see our blog on attorney's fee awards here.
Texas storm chasers hit with $11.6 million in judgments from Hurricane Florence fraud claims
October 14, 2021-Wilmington, NC-Superior Court judges in New Hanover and Brunswick counties this month have awarded nine property owners more than $11.6 million in judgments against a Texas-based disaster response company that posed as a licensed North Carolina general contractor in the wake of Hurricane Florence.
Reiss & Nutt, PLLC represents the owners in multiple actions against Disaster America USA, LLC, Disaster America of North Carolina, LLC, owner Donald Husk, and chief operating officer Jason Husk in southeastern North Carolina courts. Property owners alleged fraud, violations of the state’s RICO statute, and other claims arising from the defendants’ illegal use of a license held by a Greensboro contractor that had nothing to do with the projects.
The evidence showed that Disaster America had allowed its North Carolina contractor’s license to lapse but planned to respond to Hurricane Florence anyway. Disaster America obtained a copy of the North Carolina license from a middleman in Louisiana. Any contract for construction worth $30,000 or more requires a general contractor’s license. It is a misdemeanor to impersonate a licensed general contractor in this state.
In the aftermath of Florence, Disaster America traveled here with contracts showing the name and license number of the licensed North Carolina contractor. Disaster America targeted damaged high-end homes on Bald Head Island and in the Figure Eight Island area. Owners alleged that Disaster America proceeded to extract unwarranted concessions from insurance companies, collected millions of dollars in revenues, and reaped excessive profits. The owners complained of shoddy and incomplete work that required substantial repairs and caused major delays in rebuilding their homes.
Disaster America actively defended the claims until earlier this year when its attorneys withdrew and the defendants ceased participating. By then, discovery was largely complete. Superior Court judges on October 4 and October 11 received the evidence and entered summary judgment orders in favor of the owners, granting treble damages for unfair and deceptive trade practices.
Claims by three other owners and the innocent North Carolina contractor remain pending before the North Carolina Business Court.
After obtaining dozens of contracts using the North Carolina contractor’s name and license number, Disaster America of North Carolina, LLC obtained its own license, which remains in good standing with the North Carolina Licensing Board for General Contractors.
Lawsuit defends expert witness's First Amendment rights
June 10, 2021-Wilmington, NC-Reiss & Nutt this week teamed with a national public interest law firm, the Institute for Justice, in filing a federal lawsuit to protect the First Amendment rights of an expert witness threatened with criminal sanctions for doing math without a license.
That’s right, for doing math without a license.
Wayne Nutt, a retiree who was a practicing engineer for more than 40 years, volunteered his services as an expert witness in a case against Bill Clark Homes, a constellation of development and construction companies operating in Southeastern North Carolina. Reiss & Nutt represents homeowners whose properties were flooded during Hurricane Florence because a drainpipe in the development that had not been maintained was allowed to clog. Nutt, the father of firm partner Kyle J. Nutt, used his vast experience with hydraulics and pipe design to confirm with mathematical calculations that the clogged pipe caused the flooding.
Lawyers for Bill Clark Homes informed the elder Nutt during his deposition that if he testified, they might report him to the North Carolina Board of Examiners for Engineers and Surveyors, which regulates the “practice of engineering.” Nutt never needed a license during his career because he worked for a manufacturer under an exemption to state licensing laws.
Comfortable that he was merely applying his engineering discipline to analyze a past event, and therefore was doing nothing that might involve public safety or other licensing rationales, Nutt testified anyway. The Board received the threatened report from Bill Clark Homes’s expert witness, a licensed engineer challenged with rebutting Nutt’s work. The Board informed Nutt he was under investigation and that speaking about engineering without a license is a misdemeanor.
Which means Nutt must choose between giving up his speech rights or using his vast engineering knowledge to help victims of a flood that was no fault of theirs by testifying at trial at the risk of jail or fines.
Reiss & Nutt contacted the Institute for Justice, which has prevailed in similar First Amendment cases involving overreach by state licensing boards around the country. The Institute’s attorneys agreed to represent Wayne to vindicate his rights, with W. Cory Reiss acting as local counsel in the action filed in U.S. District Court for the Eastern District of North Carolina.
Nutt is seeking injunctive relief to prevent the Board from threatening him and other engineers with punishment for speaking about their field of expertise.
Court of Appeals frees elderly client from alleged deal
May 18, 2021-Wilmington, NC-The North Carolina Court of Appeals affirmed a ruling today that halted a man's campaign to force an elderly cancer patient to sell his real estate for a song.
The appeals court affirmed a summary judgment order obtained by Reiss & Nutt on behalf of a client who became the target of an effort by Christopher Murray, a Wilmington-area self-proclaimed real estate dealmaker, to cram down the price that the owner would accept for three properties in New Hanover and Pender counties. With multiple visits and handwritten “contracts” and “amendments,” Murray made it appear the owner was willing to sell for hundreds of thousands of dollars less than originally agreed at a time he was undergoing cancer treatments in the shadow of a terminal diagnosis.
The Court of Appeals ruled that the last document signed by Reiss & Nutt’s client was nothing more than an agreement giving Murray the option to buy one or more of the properties, without any obligation on Murray to do so. Such an agreement is revocable at will by the property owner, which occurred in this case when Murray went back to demand further concessions than he already had seemingly obtained, including a requirement that the seller throw virtually all his personal possessions into the bargain.
When the property owner found a buyer willing to pay fair prices, Murray sued in January 2019 and filed liens to thwart the transactions. The unanimous decision of the appeals panel likely means Reiss & Nutt’s client will be free to arrange his affairs as he wishes.
Nutt Joins Board of Non-Profit for Children
March 18, 2021 - Wilmington, NC - Kyle J. Nutt was recently elected to the Board of Directors of Child Development Center, Inc., a Wilmington-based non-profit organization that provides pre-K services to children with special needs.
The Child Development Center has existed for over 50 years and enjoys partnerships with New Hanover County Schools, Brunswick County Schools, and Pender County Schools, as well as several community supporters, such as the CIty of Wilmington, New Hanover County, the New Hanover Regional Medical Center, the Cape Fear Memorial Foundation, and the United Way.
For more information about the Child Development Center, including how you can support its mission, please follow this link: http://www.cdcwilmington.org/partners.html
Reiss Appointed to Bar Association Committee
September 3, 2020 - Wilmington, NC - The President of the North Carolina Bar Association and Foundation on Wednesday appointed W. Cory Reiss to the Association’s Communications Committee.
Members of the committee make recommendations for enhancing the Association’s communications with attorneys and the public. Members also judge the Association’s Media and the Law Awards presented annually at the N.C. Press Association’s winter conference.
Reiss, a former journalist, has always advocated a freer dialogue between lawyers and the public about legal issues, our system of justice, and potential improvements toward more equitable processes and procedures. This is especially important when the Covid pandemic is hindering or complicating many aspects of civil and criminal justice.
Business Court Nixes Damages in Corporate Dispute
March 11, 2020 - Wilmington, NC - A North Carolina Business Court judge on Wednesday snuffed claims for breach of fiduciary duties by a minority corporate shareholder because he failed to prove the other owners owed him those duties, dismissing his only claims for damages against Powell Bail Bonding, Inc.
W. Cory Reiss represented Powell, the defendant in an action brought by a part-owner against fellow shareholders, in the summary judgment argument. The Plaintiff, Raul Brewster, claimed Powell fired him as an employee despite his expectation that he had a right to employment as an owner. Powell denied Brewster was owed permanent employment and denied any impropriety.
Fiduciary obligations include duties of loyalty and good faith toward another person or a business, which may arise by law or the existence of a special relationship of trust and confidence. In the corporate context, majority and controlling shareholders do owe such duties to minority shareholders, but minority shareholders do not generally owe those duties to each other.
Business Court Judge Adam Conrad issued an opinion that highlighted Brewster’s failure to meet his evidentiary burdens. Judge Conrad also agreed with Reiss on a principal argument that Brewster raised in his effort to obtain damages, which was that multiple minority shareholders adding up to a majority or exerting joint control over the company owe a minority shareholder fiduciary duties. Judge Conrad concluded that even if that was the law in North Carolina, which remains undecided, Brewster failed to meet the very demanding burden of proof that other jurisdictions with that rule have required. He also dismissed a related claim for civil conspiracy.
Brewster’s claim for damages for unfair and deceptive trade practices was dismissed earlier in the case. His only remaining claim is to dissolve the company, the necessity for which he would need to prove at trial. With evidence.
Tested Trial Lawyers Launch Reiss & Nutt, PLLC
Feb. 4, 2020 - Wilmington, NC - Litigation attorneys W. Cory Reiss and Kyle J. Nutt launched their Wilmington-based law firm, Reiss & Nutt, PLLC to serve clients throughout North Carolina.
Reiss and Nutt both have substantial experience taking cases to trial before judges and juries in various forums, including the North Carolina Business Court and District and Superior Courts throughout southeastern North Carolina. They created their firm to put economical and tested courtroom experience to work for their clients.
Reiss and Nutt bring their experience in prior careers to bear on their litigation practice. Reiss spent nearly 15 years as a journalist in Virginia, North Carolina, and Washington, D.C. He was a news reporter for the Wilmington Star-News in the late 1990s before leading Washington coverage for 14 papers owned by the New York Times from 2000 to 2007.
"I covered a lot of ground as a journalist, but the courts beat was always my favorite," Reiss said. "I'm fortunate to have spent so many years learning how to gather and use information to tell a compelling story before turning to the law. Those are skills that a trial lawyer has to use every day."
Nutt holds an accounting degree and spent his first career as an accountant. But he was driven to take that business background to the next level.
"In so many of our cases, an understanding of accounting practices and business organizations is incredibly important," Nutt said. "I think it's a great asset to have a past that can propel your future work."
Reiss & Nutt, PLLC is a diverse litigation practice that represents businesses as general counsel and in commercial litigation; it represents individuals in cases involving contracts, medical and nursing home negligence, personal injury, and divorce, custody and other family law matters. Reiss & Nutt looks forward to serving communities in Southeastern North Carolina and beyond.