Sunbelt Rentals, Inc. v. Niagara Mach., Inc., 2026 NCBC 65.
STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
WAKE COUNTY 24CV027482-910
SUNBELT RENTALS, INC., ACE
AMERICAN INSURANCE
COMPANY, and ACE PROPERTY
AND CASUALTY INSURANCE
COMPANY,
Plaintiffs,
ORDER AND OPINION ON
v. DEFENDANT NIAGARA MACHINE
INC.’S MOTION TO DISMISS
NIAGARA MACHINE, INC., THE
PHOENIX INSURANCE COMPANY,
TRAVELERS PROPERTY
CASUALTY COMPANY OF
AMERICA, and THE TRAVELERS
INDEMNITY COMPANY,
Defendants.
1. This matter is before the Court on defendant Niagara Machine, Inc.’s motion
to dismiss each of the causes of action asserted in Plaintiffs’ amended complaint
against Niagara. (ECF No. 55).
2. The parties have fully briefed the motion, (ECF Nos. 56, 69, 77), and the
Court dispenses with oral argument pursuant to Rule 7.4 of the Business Court
Rules.
3. Having considered the amended complaint, the written arguments of
counsel, and applicable law, the Court GRANTS IN PART and DENIES IN PART
the motion to dismiss for the reasons set forth in this Order and Opinion.
Carlton Fields, LLP, by Steven J. Brodie and James Robert
MacAneney, and Parry Law, by K. Alan Parry and Valentin
Joachim Bruder, for Plaintiffs Sunbelt Rentals, Inc., ACE
Property and Casualty Insurance Company, and ACE
American Insurance Company.
Gardner Skelton PLLC, by Nicole K. Haynes and Jon P.
Carroll; James deNobriga, PLLC, by Adam R. deNobriga;
Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan,
LLP by John E. Harris and Christopher R. Kiger; and
Hedrick Gardner Kincheloe & Garofalo, LLP, by Kristy
Marie D’Ambrosio and David Levy for Defendant Niagara
Machine, Inc.
Houston, Judge.
I. BACKGROUND
4. The Court does not make findings of fact when resolving a Rule 12(b)(6)
motion to dismiss. Instead, for background, the Court summarizes the complaint’s
factual allegations that are most relevant to the Court’s decision and accepts the wellpleaded allegations as true for purposes of this Order and Opinion.
5. Plaintiff Sunbelt Rentals, Inc. is an “equipment and tool rental company”
doing business in North and South Carolina. (ECF No. 41, ¶¶ 4, 21).
6. Plaintiffs ACE American Insurance Company (“ACE American”) and ACE
Property and Casualty Insurance Company (“ACE P&C”) are Pennsylvania insurers
that issued certain insurance policies to Sunbelt, with ACE American’s policy serving
as a primary liability policy containing a $1.5 million per-occurrence limit for “Bodily
Injury and Property Damage Liability” and ACE P&C’s policy serving as an umbrella
policy with a $25 million per-occurrence limit. (ECF No. 41, ¶¶ 5–8; ECF Nos. 41.4
and 41.5).
7. Defendant Niagara Machine, Inc. is a “national distributor of concrete
preparation equipment” based in Pennsylvania but doing business in North Carolina
as well. (ECF No. 41, ¶¶ 9, 22).
8. In March 2018, Sunbelt purchased from Niagara a Shot Blaster, which is a
“commercial concrete resurfacing machine with a propane-powered combustion
engine that emits carbon monoxide.” (ECF No. 41, ¶¶ 23–24).
9. Sunbelt alleges that it and Niagara entered into a contract for the purchase
and sale of the Shot Blaster, (ECF No. 41, ¶ 4), as documented by an unsigned
purchase order containing language in fine print at the bottom as follows:
1. This Order is not valid unless priced.
2. All invoices and statements must be sent as directed.
3. All questions should be addressed to the profit center
issuing the order.
4. Purchase order is subject to the terms and conditions
found at http://www.sunbeltrentals.com/purchaseterms
(ECF No. 41.3 at 2).
10. The “terms and conditions” expressly referenced in paragraph 4 of the
purchase order were linked via the referenced URL and are attached to Sunbelt’s
amended complaint. (ECF No. 41, ¶ 3 (incorporating the entirety of “Exhibit C”); ECF
No. 41.3 (including as part of Exhibit C the “Terms and Conditions of Purchase”)).
11. The terms and conditions contain, in relevant part, the following
indemnification clause:
7. Indemnification. Seller will indemnify and hold Buyer
harmless, and defend Buyer, with counsel of Buyer’s
choosing, from all claims, demands, suits, actions,
liabilities, damages, losses, penalties, costs and expenses,
including legal fees and expenses, arising out of or relating
to (a) Seller’s breach of the Order, including inaccuracy of
any warranty in these Terms, (b) any defect in the Goods
or any failure of the Goods to comply with the
Specifications of the Order, (c) any product liability claim
or failure to warn with respect to the Goods, (d) any
voluntary or required recall of any Goods, and (e) any
claims that the Goods or Buyer’s use or possession of the
Goods infringes or misappropriates any patent, copyright,
trade secret or other intellectual property right of any
person or entity.
(ECF No. 41.3, Ex. C, Terms and Conditions of Purchase, ¶ 7).
12. Plaintiffs contend that the agreement between Niagara and Sunbelt, as
documented by the purchase order, includes this indemnification provision as part of
the incorporated terms and conditions. As a result, Plaintiffs assert that Niagara was
required to indemnify and defend Sunbelt in the event of lawsuit related to the Shot
Blaster. (ECF No. 41, ¶¶ 24−25).
13. In July 2019, Sunbelt rented the Shot Blaster to Matthew Burns, who used
it to refinish his business’s floors. (ECF No. 41, ¶ 26). The next day, Burns died, and
his colleague fell seriously ill, as a result of carbon monoxide emissions from the Shot
Blaster. (ECF No. 41, ¶ 27).
14. Thereafter, Burns’s estate and Burns’s colleague, Robert Lemoine,
separately sued Sunbelt and Niagara, asserting product-defect and failure-to-warn
causes of action. (ECF No. 41, ¶¶ 28–32).
15. Sunbelt alerted ACE American, ACE P&C, and Niagara of both lawsuits
and requested indemnification from Niagara in both cases pursuant to the
indemnification clause. (ECF No. 41, ¶¶ 29–30).
16. Niagara reported the incidents to “Travelers,” 1 but “neither Travelers nor
Niagara provided Sunbelt with a coverage position,” such that “ACE was required to
continue providing legal defense to Sunbelt.” 2 (ECF No. 41, ¶¶ 31, 34).
17. In April 2023, in response to a settlement demand from the Burns estate,
the ACE entities authorized a settlement offer, and defense counsel in that action
notified the Travelers defendants of the settlement offer “to give Niagara a chance to
object or to take over the settlement negotiations altogether.” (ECF No. 41, ¶¶ 37−38).
18. The next day, the claims handlers for the Travelers entities emailed defense
counsel, notifying them that those entities were “prepared on behalf of Niagara
Machine to accept defense and indemnity for the Burns and Lemoine cases,” with no
reservation of rights. (ECF No. 41, ¶ 39; ECF No. 41.7).
1 Plaintiffs’ amended complaint uses the defined term “Travelers” to collectively refer to three
defendants: The Phoenix Insurance Company, Travelers Property Casualty Company of America, and the Travelers Indemnity Company. (ECF No. 41 at 1−2, n.3). Given the defined terms, it is unclear to which of the Travelers entities the notice was allegedly delivered or to which specific entity Plaintiffs are generally referring or whether Plaintiffs intend to assert these allegations against all three entities.
2 As with their use of the term “Travelers,” Plaintiffs refer to two separate entities—ACE
American and ACE P&C—as “ACE” and treat them as a single entity for pleading purposes. While collectively defined terms can be appropriate under certain circumstances, this Court (across multiple judges) has consistently observed that group pleading is not compliant with the North Carolina Rules of Civil Procedure when it obfuscates, intentionally or not, the identity of the person or entity allegedly taking an action. Hui Zhang v. CapitalNexus, LLC, 2026 NCBC LEXIS 133, at *19 (N.C. Super. Ct. June 25, 2026) (“Jumbling parties together in this way frustrates the basic purpose of pleading, which is to give defendants in litigation notice of what they are supposed to have done wrong.”); DT Lulana Gardens LLC v. SDCK I LLC, 2026 NCBC LEXIS 99, at *2 n.1 (N.C. Super. Ct. Apr. 28, 2026) (“express[ing] its strong disapproval of this practice”); Spring v. Lawson, 2026 NCBC LEXIS 97, at *8 (N.C. Super. Ct. Apr. 27, 2026) (disapproving of “improper group pleading”).
19. The claims handlers for the Travelers entities thereafter affirmatively
represented that they were not reserving any rights or defenses to coverage in the
two pending actions. (ECF No. 41, ¶ 40).
20. The Travelers entities thereafter assumed control of the defense in both
cases and declined to convey the settlement offer initially approved by the ACE
entities in the Burns estate matter. (ECF No. 41, ¶ 43).
21. Ultimately, despite multiple settlement demands from the plaintiff in the
Burns case and despite Plaintiffs’ repeated entreaties, the Travelers entities refused
to respond to settlement offers and declined to extend settlement offers, instead
proceeding to trial. (ECF No. 41, ¶¶ 43–53).
22. Immediately prior to trial, the Travelers entities purported to issue a
“formal response” to Sunbelt’s tender with respect to the Burns estate’s case, agreeing
to defend and indemnity Sunbelt but with “boilerplate reservation of rights”
language. (ECF No. 41, ¶ 49).
23. On 18 July 2026, nearing the close of trial and after the case had been
submitted to the jury, representatives of the Travelers entities sent an email
indicating that certain theories of liability against Sunbelt that had been submitted
to the jury were outside the scope of potential coverage and that neither Niagara nor
Travelers would provide indemnification for a judgment entered in accordance with
those theories of liability against Sunbelt. (ECF No. 41, ¶ 59). Ultimately, Travelers
purported to disclaim coverage for the negligence cause of action but not for the
product-liability cause of action. (ECF No. 41, ¶ 62).
24. Thereafter, a jury found Sunbelt liable for negligence, and a judgment of
$8,904,430.68 was ultimately entered against Sunbelt. (ECF No. 41, ¶ 61; ECF No.
41.10).
25. Ultimately, the Burns estate’s action was settled for an amount above the
limits of the Travelers entities’ policies, and the Travelers entities and Niagara
refused to indemnify Sunbelt in connection with that action, with all Plaintiffs
thereafter contributing “millions of dollars” towards the settlement as a result. (ECF
No. 41, ¶¶ 66–69).
26. Similarly, without involving Sunbelt in the discussions, all Defendants
ultimately negotiated a resolution with Lemoine, “using the majority of the Travelers
Policies’ remaining policy limits to settle the Lemoine Action on behalf of Niagara
only, leaving Sunbelt out of the settlement entirely.” (ECF No. 41, ¶ 70).
27. Plaintiffs then commenced this action, ultimately asserting five causes of
action against Niagara: (i) a declaratory judgment regarding the Burns estate’s
action, (ii) a declaratory judgement regarding the Lemoine action, (iii)
“restitution/equitable subrogation, implied indemnity” and a declaratory judgment
regarding repayment for both the Burns estate’s and Lemoine actions, (iv) breach of
the covenant of good faith and fair dealing, and (v) breach of contract. (ECF No. 41 at
14−29). Plaintiffs also asserted various other causes of action against the Travelers
entities. (See generally ECF No. 41).
28. Pursuant to Rule 12(b)(6) of the North Carolina Rules of Civil Procedure,
Niagara has moved to dismiss each of these causes of action against it. (ECF No. 55).
II. ANALYSIS
29. When considering a Rule 12(b)(6) motion, the Court treats the well-pleaded
factual allegations as true and views them “in the light most favorable to the nonmoving party.” Sykes v. Health Network Sols., Inc., 372 N.C. 326, 332 (2019) (citation
omitted); Christenbury Eye Ctr., P.A. v. Medflow, Inc., 370 N.C. 1, 5 (2017). The Court
must determine “whether the allegations of the complaint, if treated as true, are
sufficient to state a claim upon which relief can be granted under some legal theory.”
Corwin v. Brit. Am. Tobacco PLC, 371 N.C. 605, 615 (2018) (citation omitted); Forsyth
Mem’l Hosp. v. Armstrong World Indus., 336 N.C. 438, 442 (1994).
30. As the basis for its suit against Niagara, Sunbelt contends in essence that
Niagara is bound by the indemnification clause contained in the terms and conditions
of the parties’ contract documented via the purchase order. (ECF No. 41, ¶ 24).
31. In support of its motion, Niagara counters that the indemnification clause
and the other terms and conditions linked in the Sunbelt-Niagara purchase order
“are not binding on Niagara because they were not properly made part of the contract
for the sale of the Shot Blaster.” (ECF No. 56 at 2; see generally ECF No. 69).
a. Breach of Contract
32. As Plaintiffs’ causes of action are premised on the existence of a contract––
and particularly a valid indemnification provision––between Sunbelt and Niagara,
the Court first addresses Plaintiffs’ breach of contract cause of action, which is
asserted as their ninth cause of action.
33. To state a claim for breach of contract, a plaintiff generally must allege the
“(1) existence of a valid contract and (2) breach of the terms of the contract.” Highland
Paving Co. v. First Bank, 227 N.C. App. 36, 40 (2013) (citations and internal quotation
marks omitted).
34. Here, Plaintiffs affirmatively allege that (i) Sunbelt and Niagara entered
into a contractual agreement, (ii) the indemnification provision was part of that
agreement, (iii) the purchase order reflects the terms of the parties’ agreement, and
(iv) Niagara breached the contract “by refusing to pay the full costs of Sunbelt’s
defense and indemnity” in the Burns and Lemoine Actions. (ECF No. 41, ¶¶ 3, 24,
107–08, 135–39).
35. This adequately states a claim for breach of contract by Sunbelt against
Niagara, 3 and Niagara does not argue otherwise. Rather, Niagara argues only that
the indemnification provision was not, as a matter of law, properly incorporated as
part of that contract. (ECF No. 56 at 8 (conceding that the parties “entered into a
valid and enforceable contract by which Niagara sold Sunbelt the Shot Blaster it
ordered at a given price”); ECF No. 77 at 7−8).
36. On the other hand, Plaintiffs assert that the terms and conditions were
validly incorporated by reference into the Sunbelt-Niagara agreement, (see generally
3 The contract is only alleged to be between Sunbelt and Niagara, yet Plaintiffs seek damages
to “indemnify [all] Plaintiffs for breach of the Niagara-Sunbelt Contract.” (ECF No. 41, ¶¶ 3, 24, 139). Nonetheless, Niagara also does not move to dismiss the breach of contract or the implied covenant of good faith and fair dealing causes of action on the basis that ACE American and ACE P&C were not parties to the contract. The Court therefore makes no determination at this stage as to whether Plaintiffs have adequately alleged a valid breach of contract or implied covenant claim as between all Plaintiffs and Niagara. ECF Nos. 41 and 69), while Niagara––relying largely on Texas and Florida law––
asserts that an unsigned purchase order, “with no evidence or indication that Niagara
assented to [the terms and conditions],” cannot incorporate such terms by reference,
even where it indicates that the agreement is “subject to” those terms and conditions.
(ECF No. 56 at 2, 9−10, 19−22).
37. Where a contract “expressly include[s]” or incorporates external terms by
reference, those terms may form part of the contract. Hoaglin v. Duke Univ. Health
Sys., Inc., 293 N.C. App. 517, 523 (2024); Montessori Children’s House of Durham v.
Blizzard, 244 N.C. App. 633, 637 (2016) (“When a contract expressly incorporates a
document by reference . . . that document becomes a part of the parties’ agreement.”);
Schenkel & Shultz, Inc. v. Hermon F. Fox & Assocs., P.C., 362 N.C. 269, 273 (2008)
(“To incorporate a separate document by reference is to declare that the former
document shall be taken as part of the document in which the declaration is made,
as much as if it were set out at length therein.” (citation and internal quotation marks
omitted)).
38. Generally, incorporation by reference requires that “the paper to be
incorporated into a written instrument by reference must be so referred to and
described in the instrument that the paper may be identified beyond all reasonable
doubt.” Smith v. Marez, 217 N.C. App. 267, 277 (2011) (citation omitted).
39. For example, the inclusion of language that the primary document or
agreement is “subject to” other terms and conditions can be sufficient to incorporate
those terms and conditions by reference. E.g., Supplee v. Miller-Motte Bus. Coll., Inc., 239 N.C. App. 208, 211–12, 220 (2015) (concluding that an enrollment agreement’s
provision that the student’s enrollment was “subject to all terms and conditions set
forth in” the school’s catalog was sufficient to incorporate those terms and conditions
into the agreement).
40. Here, as explained above, Plaintiffs affirmatively allege the existence of a
contract between Niagara and Sunbelt. They also assert that the indemnification
clause and other terms and conditions were included in that contract and that the
purchase order documented the parties’ agreement. (ECF No. 41, ¶¶ 3, 24, 107–08,
135–39).
41. Indeed, the purchase order expressly provides that the “Purchase Order is
subject to the terms and conditions found at
http://www.sunbeltrentals.com/purchaseorderterms.” (ECF No. 41.3 at 2 (emphasis
added)).
42. As the North Carolina Court of Appeals concluded in Supplee, such “subject
to” language is sufficient to “incorporate[] the terms and conditions set forth in” the
referenced document or at the referenced link. Supplee, 239 N.C. App. at 211–12,
219−20.
43. Even absent the Supplee court’s direct guidance, the plain language of the
purchase order clearly and unambiguously predicates the entire purchase order on
the “terms and conditions,” including the indemnification clause, found at the listed
URL. (ECF No. 41.3 at 2).
44. Further, to the extent Niagara contends that the unsigned nature of the
purchase order somehow prevents the terms and conditions from being incorporated
into the parties’ overall agreement, the Court disagrees and determines that
Plaintiffs have adequately alleged the existence of a valid contract between Niagara
and Sunbelt that Niagara has purportedly breached. (ECF No. 41, ¶¶ 3, 24, 107–08,
135–39; ECF No. 41.3 at 2).
45. Thus, inasmuch as Niagara moves to dismiss Plaintiffs’ breach of contract
cause of action on the basis that the indemnification clause was not included within
the terms of the parties’ contract, the Court DENIES the motion. 4
b. Declaratory Judgment Causes of Action
46. With their first, second, and third causes of action, Plaintiffs seek
declaratory relief with respect to Niagara’s purported payment, indemnity, and other
obligations under the Niagara-Sunbelt contract. (See generally ECF No. 41,
¶¶ 71−84).
47. Under North Carolina law, “[c]ourts of record within their respective
jurisdictions shall have power to declare rights, status, and other legal relations,
whether or not further relief is or could be claimed.” N.C. Gen. Stat. § 1-253. Further,
[a]ny person interested under a deed, will, written contract
or other writings constituting a contract, or whose rights,
status or other legal relations are affected by a . . . contract
. . . may have determined any question of construction or
validity arising under the . . . contract . . . and obtain a
declaration of rights, status, or other legal relations
4 As explained above, however, the Court makes no determination that Plaintiffs have adequately alleged a breach of contract claim by all Defendants. Rather, the Court limits its review to the arguments raised by Niagara. See BCR 7.2 (“The parties must brief the matters they intend to discuss at a hearing on the motion.”).
thereunder. A contract may be construed either before or
after there has been a breach thereof.
N.C. Gen. Stat. § 1-254.
48. It is not a high bar to state a claim for declaratory relief, so a “motion to
dismiss for failure to state a claim is seldom appropriate in actions for declaratory
judgments[.]” Morris v. Plyler Paper Stock Co., 89 N.C. App. 555, 557 (1988). “Rather,
a motion to dismiss a declaratory-judgment claim is appropriate only ‘when the
complaint does not allege an actual, genuine existing controversy.’” Gvest Real Estate,
LLC v. JS Real Estate Invs., LLC, 2017 NCBC LEXIS 32, at *9 (N.C. Super. Ct. Apr.
6, 2017) (quoting Legalzoom.com, Inc. v. N.C. State Bar, 2012 NCBC LEXIS 49, at *9
(N.C. Super. Ct. Aug. 27, 2012)); La Familia Cosmovision, Inc. v. Inspiration
Networks, 2014 NCBC LEXIS 52, at *14−15 (N.C. Super. Ct. Oct. 20, 2014) (“Simply
stated, a declaratory judgment claim is subject to dismissal where the relevant
pleadings do not contain allegations upon which the sought declaratory relief may be
granted.”).
49. Here, Niagara once again does not dispute that Plaintiffs have adequately
pleaded the elements of a claim for declaratory relief but, instead, bases the entirety
of its argument on alleged deficiencies in the Niagara-Sunbelt contract and its
purported incorporation of the indemnification provision and other terms and
conditions. (See ECF No. 56 at 1–2 (focusing exclusively on arguments that the
indemnification provision and other terms and conditions were not made part of the
contract at issue)).
50. For purposes of resolving the motion to dismiss, Plaintiffs’ complaint alleges
an actual, existing controversy between the parties regarding Niagara’s purported
breach of the contract, its failure and refusal to provide indemnification, and the
parties’ differing interpretations of the contract and their resulting obligations, if any.
(See generally ECF No. 41).
51. Further, as set forth above, Plaintiffs have adequately alleged facts to
suggest, and the documents filed with the complaint indicate, that the
indemnification provision was incorporated into the agreement at issue. (ECF No. 41,
¶¶ 3, 24, 107–08, 135–39; ECF No. 41.3 at 2).
52. At the motion to dismiss stage, Plaintiffs have adequately pleaded actual
controversies to support claims for declaratory judgments, and the Court therefore
DENIES Niagara’s motion to dismiss as to Plaintiffs’ first, second, and third causes
of action against Niagara.
c. Restitution, Implied Indemnity, and Equitable Subrogation
53. With their third cause of action, in addition to the request for declaratory
relief addressed above, Plaintiffs take a questionable shotgun approach, asserting
purported causes of action for restitution, implied indemnity, and equitable
subrogation. (ECF No. 41, ¶¶ 79–84).
54. Niagara argues that these causes of action fail because (i) restitution is a
remedy rather than a cause of action, (ii) Niagara had no indemnity obligation under
the Niagara-Sunbelt contract, and (iii) the Niagara-Sunbelt contract bars an
equitable cause of action and relief. (ECF No. 56 at 23–27).
55. As to Plaintiffs’ putative cause of action or “claim” for restitution, as Niagara
explains, restitution is a remedy rather than an independent cause of action, and
Plaintiff offers no response in its briefing. Holmes v. Solon Automated Servs., 231
N.C. App. 44, 53 (2013) (addressing “the remedy of restitution”). Thus, the Court
GRANTS the motion and DISMISSES the putative cause of action for restitution
without prejudice to Plaintiffs’ ability to seek restitution as a remedy at a later stage
of the case if appropriate.
56. As to Plaintiffs’ causes of action or “claims” for implied indemnity and
equitable subrogation, “[e]quitable subrogation is a doctrine whereby ‘an insurance
company, pursuant to the terms of its contract of insurance, indemnifies the insured
for loss resulting from a wrongful act of a third person, it is by operation of law
subrogated to the extent of such payment to the rights of its insured against the tortfeasor.’” Grp. Health Plan v. Integon Nat’l Ins. Co., 2011 N.C. App. LEXIS 1762, at
*10 (Aug. 16, 2011) (citation omitted).
57. However, equitable subrogation “is not a separate cause of action on its own;
rather, equitable subrogation is a mechanism whereby an insurer that pays for the
claims of its insured becomes subrogated to the rights of the insured against the
tortfeasor that caused the injuries. Thus, the insurer has a right to pursue those
causes of action which otherwise would have been brought by the insured against the
tortfeasor.” Id. at *12 (emphasis added) (internal citations omitted); see also Bank of
N.Y. Mellon v. Withers, 240 N.C. App. 300, 302 (2015) (explaining that equitable
subrogation “applies when one person has been compelled to pay a debt which ought to have been paid by another and for which the other party was primarily liable”
(citation omitted)).
58. To the extent that Plaintiffs therefore purport to assert a “claim” for
equitable subrogation rather than asserting causes of action to which they have been
equitably subrogated, the Court GRANTS the motion and DISMISSES this putative
“claim” without prejudice to the ability to pursue appropriate causes of action and
claims to which they might appropriately be subrogated.
59. Further, indemnity implied in fact 5 “stems from the existence of a binding
contract between two parties that necessarily implies the right. The implication is
derived from the relationship between the parties, circumstances of the parties’
conduct, and that the creation of the indemnitor/indemnitee relationship is derivative
of the contracting parties’ intended agreement.” In re Southeastern Eye Ctr.-Pending
Matters, 2019 NCBC LEXIS 29, at *151 (N.C. Super. Ct. May 7, 2019) (citations
omitted).
60. While Plaintiffs plead the existence of a valid contract between Niagara and
Sunbelt without expressly pleading their implied indemnity cause of action in the
alternative, the Court cannot conclude “beyond doubt” at this stage that Plaintiffs
“could prove no set of facts in support of [their] claim which would entitle [them] to
relief” with respect to their cause of action for indemnity implied in fact, and the
Court therefore DENIES the motion as to implied indemnity. Meyer v. Walls, 347
5 Plaintiffs argued in their brief only indemnity implied in fact and not indemnity implied in
law, and the Court limits its analysis accordingly. (ECF No. 69 at 25–26). N.C. 97, 111–12 (1997) (citation omitted); McDonald v. Scarboro, 91 N.C. App. 13, 22
(1988) (addressing implied-in-fact indemnity).
d. Implied Covenant of Good Faith and Fair Dealing
61. With their sixth overall cause of action, Plaintiffs allege that Niagara has
breached the covenant of good faith and fair dealing implied in the Niagara-Sunbelt
contract by unreasonably and indifferently refusing to defend and indemnify Sunbelt,
failing and refusing to engage in good-faith efforts to settle the Burns and Lemoine
cases, failing to properly investigate and evaluate the claims against Sunbelt in those
cases, failing to inform Sunbelt about settlement demands and otherwise to keep it
apprised of developments, instructing the Travelers entities not to contribute certain
amounts to settlement of the Burns case, negotiating a settlement of the Lemoine
case without involving Sunbelt, and misrepresenting to Sunbelt that amounts were
being withheld for Sunbelt’s defense before using those funds to settle claims against
Niagara only. (ECF No. 41, ¶¶ 115–16).
62. Niagara once again argues only that this cause of action should be dismissed
because there can be no breach of the implied covenant of good faith and fair dealing
when the underlying contract into which it is implied is otherwise allegedly invalid.
(ECF No. 56 at 22−23).
63. “In every contract there is an implied covenant of good faith and fair dealing
that neither party will do anything which injures the right of the other to receive the
benefits of the agreement.” Governor’s Club Inc. v. Governors Club Ltd. P’ship, 152
N.C. App. 240, 251 (2002) (citation omitted).
64. “To state a valid claim for breach of the implied covenant of good faith and
fair dealing, a plaintiff must plead that the party charged took action which injure[d]
the right of the other to receive the benefits of the agreement, thus depriv[ing] the
other of the fruits of [the] bargain.” McDonald v. Bank of N.Y. Mellon Trust Co., 259
N.C. App. 582, 586−87 (2018) (citations and internal quotation marks omitted).
65. Plainly stated, Plaintiffs’ allegations sufficiently allege a valid contract
between Niagara and Sunbelt and a breach of the implied covenant of good faith and
fair dealing by Niagara.
66. The Court therefore DENIES Niagara’s motion to dismiss as to this issue. 6
e. Punitive Damages
67. Finally, as part of their implied covenant of good faith and fair dealing
allegations, Plaintiffs also assert that “because Niagara has engaged and is
continuing to engage in a pattern of aggravating or outrageous conduct, reflecting
malicious, wanton or reckless disregarding of Plaintiffs’ rights . . . Sunbelt is
entitled to punitive damages against Niagara.” (ECF No. 41, ¶ 117).
68. As Niagara argues in its brief, however, Plaintiffs’ amended complaint
fails to identify any allegedly tortious act by Niagara that would allegedly support a
request for the remedy of punitive damages. (ECF No. 56 at 23 n.1). And, once
6 Though Plaintiffs frame the two as distinct causes of action in their amended complaint,
(ECF No. 41, ¶¶ 106–17, 134–39), a breach of the implied covenant of good faith and fair dealing is generally subsumed within a contemporaneously pleaded breach of contract cause of action. See Cordaro v. Harrington Bank, FSB, 260 N.C. App. 26, 39 (2018); Intersal, Inc. v. Wilson, 2023 NCBC LEXIS 29, at *66–70 (N.C. Super. Ct. Feb. 23, 2023). Regardless, Niagara raises no argument concerning Plaintiffs’ separate pleading of the two, and the Court construes them as part of the same ultimate breach of contract cause of action, regardless of their separate headings.
again, Plaintiffs fail to respond in any way in their brief, with no mention of
punitive damages. (See generally ECF No. 69).
69. Ultimately, the Court agrees with Niagara and concludes that Plaintiffs
have failed to allege any “tortious act” by Niagara that might support a request for
punitive damages. Shore v. Farmer, 351 N.C. 166, 170 (1999) (citation and internal
quotation marks omitted); see also N.C. Gen. Stat. § 1D-15(d).
70. The Court therefore GRANTS Niagara’s motion to dismiss as to Plaintiffs’
request for punitive damages against Niagara and DISMISSES that request without
prejudice. 7
III. CONCLUSION
71. Accordingly, the Court GRANTS IN PART and DENIES IN PART
Niagara’s motion to dismiss as set forth above.
SO ORDERED, this 22nd day of July 2026.
/s/ Matthew T. Houston
Matthew T. Houston
Special Superior Court Judge
for Complex Business Cases
7 Ordinarily, “[t]he decision to dismiss an action with or without prejudice is in the discretion
of the trial court[.]” First Fed. Bank v. Aldridge, 230 N.C. App. 187, 191 (2013).