New River lawsuit response by mkellen

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These motions and briefs were filed in U.S. District Court on June 1, 2012, in response to a lawsuit against New River Service Authority.

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									                                    IN THE UNITED STATES DISTRICT COURT
                                FOR THE WESTERN DISTRICT OF NORTH CAROLINA
                                              STATESVILLE DIVISION
                                       Civil Action No. 5:12-CV-37-RLV-DCK


OLIVIA BURLESON APPLING, et. al,                                                                                                            )
                                                                                                                                            )
                                   Plaintiffs,                                                                                              )
                                                                                                                                            )                                 M OTI ON
v.                                                                                                                                          )                TO STRI KE PURSUANT TO
                                                                                                                                            )               RULE 12(f) OF THE FEDERAL
ALLEGHANY COUNTY, et. al.,                                                                                                                  )               RULES OF CI VI L PROCEDURE
                                                                                                                                            )
                                   Defendants.                                                                                              )


        NOW COME the Defendants, ALLEGHANY COUNTY, ASHE COUNTY, AVERY

COUNTY, GARY L. BLEVINS, LARRY COX, NATHAN A. MILLER, NEW RIVER

SERVICE AUTHORITY, KENNY R. POTEAT, WILLIAM SANDS, WATAUGA COUNTY

and WILKES COUNTY, by and through their undersigned counsel, and pursuant to Rule 12(f)

of the Federal Rules of Civil Procedure and Rule 7.1 of the Rules of Practice and Procedure of

the United States District Court for the Western District of North Carolina, hereby respectfully

move this Court for an Order striking the immaterial, impertinent and scandalous statements and

                                                                                                                                                                          Specifically, Defendants respectfully

request that the irrelevant and prejudicial language contained in paragraphs 1, 3, 5, 111, 112,



language, be stricken from Pl

respectfully request that this Court enter an Order striking any and all allegations of violations of



        In support of this Motion, Defendants respectfully rely upon the following grounds:




      !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      444777                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      111      ooofff      666
the history and operations of New River Service Authority. Specifically, Plaintiffs describe New



                                                                                                                                                                                                                                                       ¶ 1) (See also

Doc. No. 22, ¶¶ 111 and 140, which contain this language as well). Furthermore, in making



                                                                                                               -

                                                                                                                     ¶ 3, 112, 117).

           At two points in the First Amended Complaint, Plaintiffs describe Defendants as having

 buried                                                                                                                                                                               ¶ 3, 112). Plaintiffs further allege

                                                                                                                                                                                       wiftly come wide awake, trying to



No. 22, ¶¶ 5, 120). Plaintiffs also use dramatic and exaggerated language in alleging that New



                                                         ¶                                                                                                                                                                                                                    ¶ 114).

(See also Doc. No. 22, ¶



           These phrases and allegations have no relevance to any claim set forth by Plaintiffs. The

use of these phrases is prejudicial to Defendants and not proper in a legal pleading filed with the

Court.

                                                                                                       st Amended Complaint includes a claim captioned as




                                                                                                                                          2

         !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      444777                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      222      ooofff      666
arguendo is premised upon 18 U.S.C. § 641, a criminal statute which discusses embezzlement

and stealing. However, the present action alleges a civil claim, and is not a criminal action.

        These Defendants further rely upon their Brief filed in support of this Motion.



but could not reach an agreement that would obviate the need for the instant motion.

        WHEREFORE, Defendants respectfully move this Court for an Order striking the

above-noted references, as well as all other immaterial and scandalous material, contained in

                                              ended Complaint. (Doc. No. 22).

        Respectfully submitted, this the 1st day of June, 2012.

      M ARTI NEAU KI NG PLLC                                                                                                                                     BRUCE L. KAPLAN,
                                                                                                                                                                 ATTORNEY AT LAW
By:   s/ Elizabeth A. Martineau
      Elizabeth A. Martineau                                                                                                                By:                 s/ Bruce Lewis Kaplan
      N.C. State Bar No. 26394                                                                                                                                  Bruce Lewis Kaplan
      P.O. Box 31188                                                                                                                                            N.C. Bar No. 9900
      Charlotte, NC 28231                                                                                                                                       P.O. Box 455
      Telephone: 704.247.8524                                                                                                                                   Boone, NC 28607
      Facsimile: 704.943.0543                                                                                                                                   Telephone: 828.264.7652
      emartineau@martineauking.com                                                                                                                              Facsimile: 828.264.5637
      COUNSEL FOR DEFENDANTS NEW                                                                                                                                bruce.kaplan@att.net
      RIVER SERVICE AUTHORITY, GARY                                                                                                                             COUNSEL FOR DEFENDANT NEW
      L. BLEVINS, LARRY COX, NATHAN A.                                                                                                                          RIVER SERVICE AUTHORITY
      MILLER, KENNY R. POTEAT, AND
      WILLIAM SANDS




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      POYNER SPRUI LL LLP                                                                                                                                        WOM BLE CARLYLE
                                                                                                                                                                 SANDRI DGE & RI CE, LLP
By:   s/ Robert F. Orr
      Robert F. Orr                                                                                                                         By:                 s/ Bradley O. Wood
      N.C. State Bar No. 6798                                                                                                                                   Bradley O. Wood
      P.O. Box 1801                                                                                                                                             N.C. State Bar No. 22392
      Raleigh, NC 27602-1801                                                                                                                                    One West Fourth Street
      Telephone: 919.783.6400                                                                                                                                   Winston-Salem, NC 27101
      Facsimile: 919.783.1075                                                                                                                                   Telephone: 336.728.7012
      rorr@poynerspruill.com                                                                                                                                    Facsimile: 336.726.6913
                                                                                                                                                                bwood@wcsr.com
                                                                                                                                                                COUNSEL FOR DEFENDANTS
By:   s/ Andrew H. Erteschik                                                                                                                                    ALLEGHANY COUNTY, AVERY
      Andrew H. Erteschik                                                                                                                                       COUNTY AND WATAUGA COUNTY
      N.C. State Bar No. 35269
      P.O. Box 1801
      Raleigh, NC 27602-1801
      Telephone: 919.783.6400
      Facsimile: 919.783.1075
      aerteschik@poynerspruill.com
      COUNSEL FOR DEFENDANTS
      ALLEGHANY COUNTY, ASHE
      COUNTY, AVERY COUNTY,
      WATAUGA COUNTY AND WILKES
      COUNTY




                                                                                                                                       4

      !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      444777                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      444      ooofff      666
      DAVI S & HAM RI CK, LLP                                                                                                                                    CAUDLE & SPEARS, PA


By:   s/ H. Lee Davis, Jr.                                                                                                                  By:                 s/ B. Alexander Correll, Jr.
      H. Lee Davis, Jr.                                                                                                                                         B. Alexander Correll, Jr.
      N.C. State Bar No.: 7683                                                                                                                                  N.C. State Bar No. 38112
      P.O. Drawer 20039                                                                                                                                         121 West Trade Street, Suite 2600
      Winston-Salem, NC 27120-0039                                                                                                                              Charlotte, NC 28202
      Telephone: 336.725.8385, ext. 107                                                                                                                         Telephone: 704.377.1200
      Facsimile: 336.723.8838                                                                                                                                   Facsimile: 704.338.5858
      ldavis@davisandhamrick.com                                                                                                                                acorrell@caudlespears.com
                                                                                                                                                                COUNSEL FOR DEFENDANT
                                                                                                                                                                ASHE COUNTY
By:   s/ Ann Cox Rowe
      Ann Cox Rowe
      N.C. State Bar No.: 26686
      P.O. Drawer 20039
      Winston-Salem, NC 27120-0039
      Telephone: 336.725.8385, ext. 116
      Facsimile: 336.723.8838
      arowe@davisandhamrick.com
      COUNSEL FOR DEFENDANTS
      WILKES COUNTY AND GARY L.
      BLEVINS




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                                                                                     CERTI FI CATE OF SERVI CE

       I hereby certify that I have this day electronically filed the foregoing document with the
Clerk of Court using the CM/ECF system which will send notification of such filing to all
counsel and parties of record as follows:

      Charles A. Oswald                                                                                                                     Elizabeth A. Martineau
      CEO Law PLLC                                                                                                                          Martineau King PLLC
      P.O. Box 6232                                                                                                                         P.O. Box 31188
      Hickory, NC 28601                                                                                                                     Charlotte, NC 28231
      charles.oswald@ceolaw.com                                                                                                             704-247-8524
      Counsel for Plaintiffs                                                                                                                emartineau@martineauking.com
                                                                                                                                            Counsel for Defendants Gary L.
                                                                                                                                            Blevins, Larry Cox, Nathan A. Miller,
                                                                                                                                            New River Service Authority, Kenny R.
                                                                                                                                            Poteat and William Sands

      Bruce Lewis Kaplan                                                                                                                    Bradley Owen Wood
      Bruce L. Kaplan Attorney at Law                                                                                                       Womble, Carlyle, Sandridge & Rice,
      P.O. Box 455                                                                                                                          PLLC
      Boone, NC 28607                                                                                                                       One West Fourth St.
      bruce.kaplan@att.net                                                                                                                  Winston-Salem, NC 27101
      Counsel for Defendant New River                                                                                                       bwood@wcsr.com
      Service Authority                                                                                                                     Counsel for Defendants Alleghany
                                                                                                                                            County, Avery County and Watauga
                                                                                                                                            County

      Ann Cox Rowe                                                                                                                          Boyd Alexander Correll, Jr.
      H. Lee Davis, Jr.                                                                                                                     Caudle & Spears, P.A.
      Davis & Hamrick, LLP                                                                                                                  121 W. Trade St., Suite 2600
      P.O. Box 20039                                                                                                                        Charlotte, NC 28202
      635 West 4th Street                                                                                                                   acorrell@caudlespears.com
      Winston-Salem, NC 27120-0039                                                                                                          Counsel for Defendant Ashe County
      arowe@davisandhamrick.com
      ldavis@davisandhamrick.com
      Counsel for Defendants Gary L. Blevins
      and Wilkes County

        This the 1st day of June, 2012.

                                                                                                                             s/ Andrew H. Erteschik
                                                                                                                             Andrew H. Erteschik




      !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      444777                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      666      ooofff      666
                                    IN THE UNITED STATES DISTRICT COURT
                                FOR THE WESTERN DISTRICT OF NORTH CAROLINA
                                              STATESVILLE DIVISION
                                       Civil Action No. 5:12-CV-37-RLV-DCK


OLIVIA BURLESON APPLING, et. al,                                                                                                            )
                                                                                                                                            )
                               Plaintiffs,                                                                                                  )
                                                                                                                                                               BRI EF I N SUPPORT OF
                                                                                                                                            )
                                                                                                                                                                              M OTI ON
v.                                                                                                                                          )
                                                                                                                                                             TO STRI KE PURSUANT TO
                                                                                                                                            )
                                                                                                                                                            RULE 12(f) OF THE FEDERAL
ALLEGHANY COUNTY, et. al.,                                                                                                                  )
                                                                                                                                                            RULES OF CI VI L PROCEDURE
                                                                                                                                            )
                               Defendants.                                                                                                  )


        Defendants ALLEGHANY COUNTY, ASHE COUNTY, AVERY COUNTY, GARY L.

BLEVINS, LARRY COX, NATHAN A. MILLER, NEW RIVER SERVICE AUTHORITY,

KENNY R. POTEAT, WILLIAM SANDS, WATAUGA COUNTY and WILKES COUNTY, by

and through their undersigned counsel, and pursuant to Rule 12(f) of the Federal Rules of Civil

Procedure and Rule 7.1 of the Rules of Practice and Procedure of the United States District Court

for the Western District of North Carolina, hereby respectfully submit this Brief in Support of



                                                                                   STATEM ENT OF THE FACTS

        The Motion at issue concerns only statements and allegations                                                                                                                                                                                                           First

Amended Complaint. Therefore, this Statement of Facts is limited to those facts relevant to the

particular issue before the Court pursuant to this Motion.



of New River Service Authority, using the following language to note that New River Service




      !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      444888                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      111      ooofff      999
                                                                                                                                              This description, using this same language, is



        Thereafter,

recitation of the history of New River Service Authority. Specifically, in making allegations



                                                                                                            -                                                                     ,

                                                                   (Doc. No. 22, ¶¶ 3, 112, 117). In the Summary of Allegations portion

of the First Amended Complaint, Plaintiffs allege:

                3.     Financial records show, however, that Defendants negligently
        squandered much of the federal and other money funneled to New River Service
        Authority. In fact, Defendants operated New River Service Authority in the red
        year-after-year, bleeding money non-stop as Defendants buried their collective
        heads in the sand, until the mismanaged enterprise withered and


                                                                                                                              ****

                 5.      Asleep at the wheel when it counted, Defendants have swiftly
        come wide awake, trying to avoid blame and shamelessly denying the liability
        that is rightfully, and lawfully, theirs.

(Doc. No. 22, ¶¶ 3, 5). (See also Doc. No. 22, ¶ 120 which restates the allegation contained in

paragraph 5).                       Similarly, Plaintiffs again allege in paragraph 112 that New River Service

                                                                                                     -stop while Defendants buried their collective heads in the

                                                   , ¶ 112). Continuing this recitation, para

thrashed and died                                                                                                                              desperately directed staff to take questionable

                                                                                                                                                                                                                                         -managed NRSA

enterprise collapsed                                                                                                             . 22, ¶ 114).

carelessly squandered much of what they received from the United States Government and




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elsewhere, having woefully mismanaged

staggered to its knees and



                                                                                                                                                                                              . In this claim, Plaintiffs fail to

allege or identify the violation of any federal statute or authority that would give rise to a claim

                                                                                                                                                                                       arguendo

                                                                                                                                                                                                   § 641, a criminal statute which

discusses embezzlement and stealing.

                                                                                                                    ARGUM ENT

I.
           SHOULD BE STRI CKEN PURSUANT TO RULE 12(f) OF THE FEDERAL
           RULES OF CI VI L PROCEDURE

           Rule 8 of the Federal Rules of Civil Procedure sets forth the requirements for pleadings,

                                                                                                                                                                                                                                                                    short and

plain                                                                                                                                                                                                                         Fed. R. Civ. P. 8(a)(2)

(emphasis added). This Rule fu                                                                                                                                                                                                     simple, concise, and

direct         Fed. R. Civ. P. 8(d)(1) (emphasis added).



from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous

                 Fed. R. Civ. P.                                                                                                       a motion strike on the basis of irrelevancy should

only be granted when it is clear that the material in question can have no possible bearing upon

the subj                                                                                                                                                                                                                                                                Nixon v.

Majors, 2007 U.S. Dist. LEXIS 95698, *7 (2007) (quoting Simann, Inc. v. BP Products North

America, Inc., 395 F. Supp. 2d 271, 278 (M.D.N.C. 2005) (citations omitted)).



                                                                                                                                          3

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        In the present case, Plaintiffs have not complied with Rule 8 of the Federal Rules of Civil



                                                                                                                                                                                                                                 See Fed. R. Civ. P.

8(a)(2) and 8(d)(1).                                          Quite to the contrary, Plaintiffs venture forth on a lengthy and

sensationalized dissertation, using words and phrases which are, by their very nature, prejudicial

and meant to capitalize on emotions. The phrases such as

                                                                                                -

                                                                                                                                                                                                                 a claim. See Fed. R. Civ.

P. 8(a)(2). As such, the use of those phrases is prejudicial to Defendants and not proper in a

legal pleading filed with the Court. Furthermore, these inflammatory phrases and allegations are

completely irrelevant to the issues presented by the First Amended Complaint. These phrases



than an attempt to capitalize on emotions). Because these phrases, and others similarly set forth

in the First Amended Complaint, are prejudicial and irrelevant to the subject matter, these

phrases are properly within the scope of Rule 12(f) of the Federal Rules of Civil Procedure and

should be stricken from the First Amended Complaint.

        Similarly, the allegations and descriptions of New River Service Authority set forth in

paragraphs 1, 3, 5, 111, 112, 113, 114, 117, 120 and 140 of the First Amended Complaint are

nothing more than inflammatory descriptions intended to cast a prejudicial view of Defendants,

all of which would be better suited for a novel or movie, not a legal document.                                                                                                                                                                                                These

descriptions are likewise irrelevant to the claims set forth and have no bearing on or relevance to

any claims set forth by Plaintiffs. These descriptions have no relevancy to any matter pertinent




                                                                                                                                       4

      !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      444888                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      444      ooofff      999
are scandalous. Therefore, these descriptions should be stricken pursuant to Rule 12(f) of the

Federal Rules of Civil Procedure.

II.     THE ALLEGATI ONS I N THE FI RST AM ENDED COM PLAI NT RELATED TO
        PURPORTED CRI M I NAL VI OLATI ONS SHOULD BE STRI CKEN FROM THE
        FI RST AM ENDED COM PLAI NT.

        In the case of Culver v. JBC Legal Group, P.C., 2005 U.S. Dist. LEXIS 45426 (E.D.N.C.

2005), the United States District Court for the Eastern District of North Carolina granted a

motion to strike accusations of criminal violations set forth in the Complaint. The Court noted,



the Fair Debt Collection                                                                                          Id. at 31. In the present case, Plaintiffs appear to make

a claim that Defendants

reportedly face potential cr                                                                                                                                                          Doc. No. 22, ¶ 113). Although

Plaintiffs fail to cite any specific statute, criminal or otherwise, that has purportedly been

violated, Defendants assume arguendo

                                                                                                  § 641, a criminal statute which addresses embezzlement and

stealing. Similar to the Culver case, such accusations are not properly included in a civil claim

and should be stricken pursuant to Rule 12(f) of the Federal Rules of Civil Procedure.

                                                                                                              CONCLUSI ON

        For the reasons set forth in this Brief, Defendants respectfully request that this Court,

pursuant to Rule 12(f) of the Federal Rules of Civil Procedure, enter an Order striking all

irrelevant, immaterial, impertinent and scandalous material from Plaintiffs First Amended

Complaint.                 Specifically, Defendants respectfully request that the irrelevant and prejudicial

language contained in paragraphs 1, 3, 5, 111, 112, 113, 114, 117, 120 and 140, along with any

                                                                                                                                                                                                                                                        Furthermore,



                                                                                                                                       5

      !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      444888                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      555      ooofff      999
Defendants respectfully request that this Court enter an Order striking any and all allegations of

violations of criminal statutes, including Claim VI

        Respectfully submitted, this the 1st day of June, 2012.

      M ARTI NEAU KI NG PLLC                                                                                                                                     BRUCE L. KAPLAN,
                                                                                                                                                                 ATTORNEY AT LAW
By:   s/ Elizabeth A. Martineau
      Elizabeth A. Martineau                                                                                                                By:                 s/ Bruce Lewis Kaplan
      N.C. State Bar No. 26394                                                                                                                                  Bruce Lewis Kaplan
      P.O. Box 31188                                                                                                                                            N.C. Bar No. 9900
      Charlotte, NC 28231                                                                                                                                       P.O. Box 455
      Telephone: 704.247.8524                                                                                                                                   Boone, NC 28607
      Facsimile: 704.943.0543                                                                                                                                   Telephone: 828.264.7652
      emartineau@martineauking.com                                                                                                                              Facsimile: 828.264.5637
      COUNSEL FOR DEFENDANTS NEW                                                                                                                                bruce.kaplan@att.net
      RIVER SERVICE AUTHORITY, GARY                                                                                                                             COUNSEL FOR DEFENDANT NEW
      L. BLEVINS, LARRY COX, NATHAN A.                                                                                                                          RIVER SERVICE AUTHORITY
      MILLER, KENNY R. POTEAT, AND
      WILLIAM SANDS




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      !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      444888                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      666      ooofff      999
      POYNER SPRUI LL LLP                                                                                                                                        WOM BLE CARLYLE
                                                                                                                                                                 SANDRI DGE & RI CE, LLP
By:   s/ Robert F. Orr
      Robert F. Orr                                                                                                                         By:                 s/ Bradley O. Wood
      N.C. State Bar No. 6798                                                                                                                                   Bradley O. Wood
      P.O. Box 1801                                                                                                                                             N.C. State Bar No. 22392
      Raleigh, NC 27602-1801                                                                                                                                    One West Fourth Street
      Telephone: 919.783.6400                                                                                                                                   Winston-Salem, NC 27101
      Facsimile: 919.783.1075                                                                                                                                   Telephone: 336.728.7012
      rorr@poynerspruill.com                                                                                                                                    Facsimile: 336.726.6913
                                                                                                                                                                bwood@wcsr.com
                                                                                                                                                                COUNSEL FOR DEFENDANTS
By:   s/ Andrew H. Erteschik                                                                                                                                    ALLEGHANY COUNTY, AVERY
      Andrew H. Erteschik                                                                                                                                       COUNTY AND WATAUGA COUNTY
      N.C. State Bar No. 35269
      P.O. Box 1801
      Raleigh, NC 27602-1801
      Telephone: 919.783.6400
      Facsimile: 919.783.1075
      aerteschik@poynerspruill.com
      COUNSEL FOR DEFENDANTS
      ALLEGHANY COUNTY, ASHE
      COUNTY, AVERY COUNTY,
      WATAUGA COUNTY AND WILKES
      COUNTY




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      !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      444888                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      777      ooofff      999
      DAVI S & HAM RI CK, LLP                                                                                                                                    CAUDLE & SPEARS, PA


By:   s/ H. Lee Davis, Jr.                                                                                                                  By:                 s/ B. Alexander Correll, Jr.
      H. Lee Davis, Jr.                                                                                                                                         B. Alexander Correll, Jr.
      N.C. State Bar No.: 7683                                                                                                                                  N.C. State Bar No. 38112
      P.O. Drawer 20039                                                                                                                                         121 West Trade Street, Suite 2600
      Winston-Salem, NC 27120-0039                                                                                                                              Charlotte, NC 28202
      Telephone: 336.725.8385, ext. 107                                                                                                                         Telephone: 704.377.1200
      Facsimile: 336.723.8838                                                                                                                                   Facsimile: 704.338.5858
      ldavis@davisandhamrick.com                                                                                                                                acorrell@caudlespears.com
                                                                                                                                                                COUNSEL FOR DEFENDANT
                                                                                                                                                                ASHE COUNTY
By:   s/ Ann Cox Rowe
      Ann Cox Rowe
      N.C. State Bar No.: 26686
      P.O. Drawer 20039
      Winston-Salem, NC 27120-0039
      Telephone: 336.725.8385, ext. 116
      Facsimile: 336.723.8838
      arowe@davisandhamrick.com
      COUNSEL FOR DEFENDANTS
      WILKES COUNTY AND GARY L.
      BLEVINS




                                                                                                                                       8

      !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      444888                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      888      ooofff      999
                                                                                     CERTI FI CATE OF SERVI CE

       I hereby certify that I have this day electronically filed the foregoing document with the
Clerk of Court using the CM/ECF system which will send notification of such filing to all
counsel and parties of record as follows:

      Charles A. Oswald                                                                                                                     Elizabeth A. Martineau
      CEO Law PLLC                                                                                                                          Martineau King PLLC
      P.O. Box 6232                                                                                                                         P.O. Box 31188
      Hickory, NC 28601                                                                                                                     Charlotte, NC 28231
      charles.oswald@ceolaw.com                                                                                                             704-247-8524
      Counsel for Plaintiffs                                                                                                                emartineau@martineauking.com
                                                                                                                                            Counsel for Defendants Gary L.
                                                                                                                                            Blevins, Larry Cox, Nathan A. Miller,
                                                                                                                                            New River Service Authority, Kenny R.
                                                                                                                                            Poteat and William Sands

      Bruce Lewis Kaplan                                                                                                                    Bradley Owen Wood
      Bruce L. Kaplan Attorney at Law                                                                                                       Womble, Carlyle, Sandridge & Rice,
      P.O. Box 455                                                                                                                          PLLC
      Boone, NC 28607                                                                                                                       One West Fourth St.
      bruce.kaplan@att.net                                                                                                                  Winston-Salem, NC 27101
      Counsel for Defendant New River                                                                                                       bwood@wcsr.com
      Service Authority                                                                                                                     Counsel for Defendants Alleghany
                                                                                                                                            County, Avery County and Watauga
                                                                                                                                            County

      Ann Cox Rowe                                                                                                                          Boyd Alexander Correll, Jr.
      H. Lee Davis, Jr.                                                                                                                     Caudle & Spears, P.A.
      Davis & Hamrick, LLP                                                                                                                  121 W. Trade St., Suite 2600
      P.O. Box 20039                                                                                                                        Charlotte, NC 28202
      635 West 4th Street                                                                                                                   acorrell@caudlespears.com
      Winston-Salem, NC 27120-0039                                                                                                          Counsel for Defendant Ashe County
      arowe@davisandhamrick.com
      ldavis@davisandhamrick.com
      Counsel for Defendants Gary L. Blevins
      and Wilkes County

        This the 1st day of June, 2012.

                                                                                                                             s/ Andrew H. Erteschik
                                                                                                                             Andrew H. Erteschik




      !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      444888                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      999      ooofff      999
                                    IN THE UNITED STATES DISTRICT COURT
                                FOR THE WESTERN DISTRICT OF NORTH CAROLINA
                                              STATESVILLE DIVISION
                                       Civil Action No. 5:12-CV-37-RLV-DCK


OLIVIA BURLESON APPLING, et. al,                                                                                                            )
                                                                                                                                            )
                               Plaintiffs,                                                                                                  )
                                                                                                                                                                  M OTI ON TO DI SM I SS
                                                                                                                                            )
                                                                                                                                                                 FOR LACK OF SUBJECT
v.                                                                                                                                          )
                                                                                                                                                                M ATTER JURI SDI CTI ON
                                                                                                                                            )
                                                                                                                                                               PURSUANT TO RULE 12(b)(1)
ALLEGHANY COUNTY, et. al.,                                                                                                                  )
                                                                                                                                                               OF THE FEDERAL RULES OF
                                                                                                                                            )
                                                                                                                                                                   CI VI L PROCEDURE
                               Defendants.                                                                                                  )


        NOW COME Defendants ALLEGHANY COUNTY, ASHE COUNTY, AVERY

COUNTY, GARY L. BLEVINS, LARRY COX, NATHAN A. MILLER, NEW RIVER

SERVICE AUTHORITY, KENNY R. POTEAT, WILLIAM SANDS, WATAUGA COUNTY

and WILKES COUNTY, by and through their undersigned counsel, and pursuant to Rule

12(b)(1) of the Federal Rules of Civil Procedure and Rule 7.1 of the Rules of Practice and

Procedure of the United States District Court for the Western District of North Carolina, hereby

respectfully move this Court for an Order dismissing, with prejudice,

Complaint against them for lack of subject matter jurisdiction.

        In support of this Motion, Defendants respectfully rely upon the following grounds:

        Plaintiffs have failed to establish the existence of subject matter jurisdiction, as there is

no federal question raised or asserted by the First Amended Complaint that is sufficient to confer

jurisdiction pursuant to 28 U.S.C. § 1331. In their First Amended Complaint, Plaintiffs assert

                                                                                                                                                                                                                       § 1331 because claims

herein arise under the Constitution, Federal statutes, or treaties of the United States, as well as




      !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      444999                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      111      ooofff      555
                                                                                                                                                                                        ¶ 97). However, the only federal

law Plaintiffs invoke or assert in the First Amended Complaint (aside from jurisdiction or venue

statutes, to wit 28 U.S. C. § 1331 abd 28 U.S.C. §

                                                                                                    ¶ 103, 111 and footnote 2). This alone does not establish

federal subject matter jurisdiction.

         Furthermore, there is no diversity between the Plaintiffs and various Defendants, all of

whom are either local government entities in North Carolina or residents of North Carolina.

         As there is no federal question raised by Plaintiffs in this matter and no diversity of

citizenship, the Court lacks subject matter jurisdiction over this case.

         Defendants further rely upon the Brief filed in support of this Motion.

         WHEREFORE, Defendants respectfully move this Court for an Order dismissing

                                    Amended Complaint with prejudice against them, pursuant to Rule 12(b)(1) of

the Federal Rules of Civil Procedure.

         Respectfully submitted, this the 1st day of June, 2012.

      M ARTI NEAU KI NG PLLC                                                                                                                                      BRUCE L. KAPLAN,
                                                                                                                                                                  ATTORNEY AT LAW
By:   s/ Elizabeth A. Martineau
      Elizabeth A. Martineau                                                                                                                 By:                 s/ Bruce Lewis Kaplan
      N.C. State Bar No. 26394                                                                                                                                   Bruce Lewis Kaplan
      P.O. Box 31188                                                                                                                                             N.C. Bar No. 9900
      Charlotte, NC 28231                                                                                                                                        P.O. Box 455
      Telephone: 704.247.8524                                                                                                                                    Boone, NC 28607
      Facsimile: 704.943.0543                                                                                                                                    Telephone: 828.264.7652
      emartineau@martineauking.com                                                                                                                               Facsimile: 828.264.5637
      COUNSEL FOR DEFENDANTS NEW                                                                                                                                 bruce.kaplan@att.net
      RIVER SERVICE AUTHORITY, GARY                                                                                                                              COUNSEL FOR DEFENDANT NEW
      L. BLEVINS, LARRY COX, NATHAN A.                                                                                                                           RIVER SERVICE AUTHORITY
      MILLER, KENNY R. POTEAT, AND
      WILLIAM SANDS




                                                                                                                                        2

       !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      444999                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      222      ooofff      555
      POYNER SPRUI LL LLP                                                                                                                                        WOM BLE CARLYLE
                                                                                                                                                                 SANDRI DGE & RI CE, LLP
By:   s/ Robert F. Orr
      Robert F. Orr                                                                                                                         By:                 s/ Bradley O. Wood
      N.C. State Bar No. 6798                                                                                                                                   Bradley O. Wood
      P.O. Box 1801                                                                                                                                             N.C. State Bar No. 22392
      Raleigh, NC 27602-1801                                                                                                                                    One West Fourth Street
      Telephone: 919.783.6400                                                                                                                                   Winston-Salem, NC 27101
      Facsimile: 919.783.1075                                                                                                                                   Telephone: 336.728.7012
      rorr@poynerspruill.com                                                                                                                                    Facsimile: 336.726.6913
                                                                                                                                                                bwood@wcsr.com
                                                                                                                                                                COUNSEL FOR DEFENDANTS
By:   s/ Andrew H. Erteschik                                                                                                                                    ALLEGHANY COUNTY, AVERY
      Andrew H. Erteschik                                                                                                                                       COUNTY AND WATAUGA COUNTY
      N.C. State Bar No. 35269
      P.O. Box 1801
      Raleigh, NC 27602-1801
      Telephone: 919.783.6400
      Facsimile: 919.783.1075
      aerteschik@poynerspruill.com
      COUNSEL FOR DEFENDANTS
      ALLEGHANY COUNTY, ASHE
      COUNTY, AVERY COUNTY,
      WATAUGA COUNTY AND WILKES
      COUNTY




                                                                                                                                       3

      !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      444999                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      333      ooofff      555
      DAVI S & HAM RI CK, LLP                                                                                                                                    CAUDLE & SPEARS, PA


By:   s/ H. Lee Davis, Jr.                                                                                                                  By:                 s/ B. Alexander Correll, Jr.
      H. Lee Davis, Jr.                                                                                                                                         B. Alexander Correll, Jr.
      N.C. State Bar No.: 7683                                                                                                                                  N.C. State Bar No. 38112
      P.O. Drawer 20039                                                                                                                                         121 West Trade Street, Suite 2600
      Winston-Salem, NC 27120-0039                                                                                                                              Charlotte, NC 28202
      Telephone: 336.725.8385, ext. 107                                                                                                                         Telephone: 704.377.1200
      Facsimile: 336.723.8838                                                                                                                                   Facsimile: 704.338.5858
      ldavis@davisandhamrick.com                                                                                                                                acorrell@caudlespears.com
                                                                                                                                                                COUNSEL FOR DEFENDANT
                                                                                                                                                                ASHE COUNTY
By:   s/ Ann Cox Rowe
      Ann Cox Rowe
      N.C. State Bar No.: 26686
      P.O. Drawer 20039
      Winston-Salem, NC 27120-0039
      Telephone: 336.725.8385, ext. 116
      Facsimile: 336.723.8838
      arowe@davisandhamrick.com
      COUNSEL FOR DEFENDANTS
      WILKES COUNTY AND GARY L.
      BLEVINS




                                                                                                                                       4

      !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      444999                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      444      ooofff      555
                                                                                     CERTI FI CATE OF SERVI CE

       I hereby certify that I have this day electronically filed the foregoing document with the
Clerk of Court using the CM/ECF system which will send notification of such filing to all
counsel and parties of record as follows:

      Charles A. Oswald                                                                                                                     Elizabeth A. Martineau
      CEO Law PLLC                                                                                                                          Martineau King PLLC
      P.O. Box 6232                                                                                                                         P.O. Box 31188
      Hickory, NC 28601                                                                                                                     Charlotte, NC 28231
      charles.oswald@ceolaw.com                                                                                                             704-247-8524
      Counsel for Plaintiffs                                                                                                                emartineau@martineauking.com
                                                                                                                                            Counsel for Defendants Gary L.
                                                                                                                                            Blevins, Larry Cox, Nathan A. Miller,
                                                                                                                                            New River Service Authority, Kenny R.
                                                                                                                                            Poteat and William Sands

      Bruce Lewis Kaplan                                                                                                                    Bradley Owen Wood
      Bruce L. Kaplan Attorney at Law                                                                                                       Womble, Carlyle, Sandridge & Rice,
      P.O. Box 455                                                                                                                          PLLC
      Boone, NC 28607                                                                                                                       One West Fourth St.
      bruce.kaplan@att.net                                                                                                                  Winston-Salem, NC 27101
      Counsel for Defendant New River                                                                                                       bwood@wcsr.com
      Service Authority                                                                                                                     Counsel for Defendants Alleghany
                                                                                                                                            County, Avery County and Watauga
                                                                                                                                            County

      Ann Cox Rowe                                                                                                                          Boyd Alexander Correll, Jr.
      H. Lee Davis, Jr.                                                                                                                     Caudle & Spears, P.A.
      Davis & Hamrick, LLP                                                                                                                  121 W. Trade St., Suite 2600
      P.O. Box 20039                                                                                                                        Charlotte, NC 28202
      635 West 4th Street                                                                                                                   acorrell@caudlespears.com
      Winston-Salem, NC 27120-0039                                                                                                          Counsel for Defendant Ashe County
      arowe@davisandhamrick.com
      ldavis@davisandhamrick.com
      Counsel for Defendants Gary L. Blevins
      and Wilkes County

        This the 1st day of June, 2012.

                                                                                                                             s/ Andrew H. Erteschik
                                                                                                                             Andrew H. Erteschik




      !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      444999                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      555      ooofff      555
                                       IN THE UNITED STATES DISTRICT COURT
                                   FOR THE WESTERN DISTRICT OF NORTH CAROLINA
                                                 STATESVILLE DIVISION
                                          Civil Action No. 5:12-CV-37-RLV-DCK


OLIVIA BURLESON APPLING, et. al,                                                                                                               )
                                                                                                                                               )
                                  Plaintiffs,                                                                                                  )
                                                                                                                                               )                     BRI EF I N SUPPORT OF
v.                                                                                                                                             )                   M OTI ON TO DI SM I SS FOR
                                                                                                                                               )                  LACK OF SUBJECT M ATTER
ALLEGHANY COUNTY, et. al.,                                                                                                                     )                         JURI SDI CTI ON
                                                                                                                                               )                  PURSUANT TO RULE 12(b)(1)
                                  Defendants.                                                                                                  )                  OF THE FEDERAL RULES OF
                                                                                                                                               )                      CI VI L PROCEDURE
                                                                                                                                               )



           NOW COME Defendants ALLEGHANY COUNTY, ASHE COUNTY, AVERY

COUNTY, GARY L. BLEVINS, LARRY COX, NATHAN A. MILLER, NEW RIVER

SERVICE AUTHORITY, KENNY R. POTEAT, WILLIAM SANDS, WATAUGA COUNTY,

and WILKES COUNTY, by and through counsel, pursuant to Local Rule 7.1(c), and hereby

submit this brief in support of their Motion to Dismiss pursuant to Rule 12(b)(1) of the Federal

Rules of Civil Procedure filed in this matter.1

                                                                                        STATEM ENT OF THE CASE

           Plaintiffs filed their original Complaint in this matter on April 2, 2012. (Doc. No. 1).

Plaintiffs amended their Complaint as of right on April 23, 2012. (Doc. No. 22). In their

Amended Complaint, Plaintiffs allege North Carolina

frau


1
  The Defendants are concurrently filing a Motion to Dismiss pursuant to Rule 12(b)(6) of the
Federal Rules of Civil Procedure.



       !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555000                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      111      ooofff      111111
    detrimental reliance (Claim III); fraudulent inducement and breach of contract (Claim IV);

breach of fiduciary duty (Claim V); conspiracy, aiding and abetting, and concerted action

(Claim VII); unfair or deceptive acts or practices in or affecting commerce (Claim VIII); and

punitive damages (Claim IX).                                                                             Plaintiffs further assert a cause of action styled as

    Misappropriation of Federal F

            Plaintiffs assert

§ 1331 because claims herein arise under the Constitution, Federal statutes, or treaties of the

United States, as well as pendent jurisdiction over other                                                                                                                                                                                                                           ¶ 97).

However, the only federal law Plaintiffs invoke or assert in their Amended Complaint (aside

from jurisdiction or venue statutes)2                                                                                                                                                                                                                                  See Doc.

No. 22, ¶¶ 103 & 111, and footnote 2). However, this alone does not even remotely establish

federal subject matter jurisdiction. Furthermore, it cannot be disputed that there is no diversity

between the Plaintiffs and various Defendants, all of whom are either local government entities

in North Carolina or residents of North Carolina. (Doc. No. 22, ¶¶ 6-95).

            As there is no federal question raised by Plaintiffs in this matter and no diversity of

citizenship, the Court lacks subject matter jurisdiction over this case.

                                                                                               STANDARD OF REVI EW

            Pursuant to Rule 12(b)(1), a claim for which the Court lacks subject matter jurisdiction

must be dismissed. Fed. R. Civ. P. 12(b)(1). The existence of subject matter jurisdiction is a

threshold issue that the Court must address before considering the merits of the case. Jones v.

Am. Postal Workers Union, 192 F.3d 417, 422 (4th Cir. 1999). The plaintiff bears the burden of




2
    To wit: 28 U.S.C. § 1331 and 28 U.S.C. § 1391(c).
                                                                                                                                          2

        !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555000                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      222      ooofff      111111
proving that subject matter jurisdiction exists. Richmond, Fredericksburg & Potomac R. Co. v.

United States, 945 F.2d 765, 768 (4th Cir. 1991).

                                                                                                                      ARGUM ENT

             PLAI NTI FFS HAVE FAI LED TO ESTABLI SH THE EXI STENCE OF
             SUBJECT M ATTER JURI SDI CTI ON, AS THERE I S NO FEDERAL
             QUESTI ON RAI SED OR ASSERTED BY THE AM ENDED COM PLAI NT
             THAT I S SUFFI CI ENT TO CONFER JURI SDI CTI ON PURSUANT TO 28
             U.S.C. § 1331.

             Plaintiffs assert in their

jurisdiction pursuant to 28 U.S.C. § 1331 because claims herein arise under the Constitution,

Federal statutes, or treaties of the United States, as well as pendent jurisdiction over other claims

herein                                                               ¶ 97). However, the only purported federal question raised by the

Amended Complaint is a fleeting reference to Title 42 of the Code of Federal Regulations,

which Plaintiffs allege                                                                                                                                                                                            (Doc. No. 22, ¶ 103). In



             Defendants were entrusted with millions of dollars from the Government of the
             United States earmarked to pay for provision of the Services mandated by federal
             law, but comingled them with state and local dollars then converted and
             misappropriated [sic] to fund an NRSA enterprise operated to provide all manner
             of support services to a large pool of problematic indigents          often the

             increasing autonomy and functioning that go well beyond services contemplated
             by Title 42 nevertheless routinely referred to NRSA by local authorities. [sic].

(Doc. No. 22, ¶ 111).

             On these convoluted grounds, Plaintiffs assert a purported cause of action that does not

exist:                                                                                                                                                                                         ¶ 159-161 (Count VI)). In this



use for which they were intended and thereby converted and misapp

(Doc. No. 22, ¶ 160). Critically, however, Plaintiffs do not                                                                                                                              and cannot                                   allege or assert any

                                                                                                                                           3

         !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555000                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      333      ooofff      111111
federal statute or authority that has been violated or otherwise implicated in their claim for

    sappropriation of Federal Funds.

          Other than the passing reference to Title 42 of the Code of Federal Regulations as a

whole, Plaintiffs do not offer any federal statute, regulation, or authority in support of their

claims asserted in this lawsuit that could possibly support federal subject matter jurisdiction

pursuant to 28 U.S.C. § 1331.

dismissed.

          A.                     Without a Federal Cause of Action or Federal Private Remedy, There is No
                                 Federal Question Jurisdiction.

          It is well settled that when there is no federal cause of action or federal private remedy,

and the application of a federal statute or federal authority is but an element of a plaintiff s state

cause of action, there is no federal question jurisdiction.                                                                                                                                                   See, e.g., Merrell Dow

Pharmaceuticals, Inc. v. Thompson, 478 U.S. 804, 817 (1986); Pineville Real Estate Operation

Corporation v. Michael, 32 F.3d 88 (4th Cir. 1994); Clark v. Velsicol Chemical Corp., 944 F.2d

196, 198 (4th Cir. 1991).                                                       As noted above, the only reference to any federal authority in

                                                                                                                                                                                      Title 42 of the Code of Federal

Regulations

give rise to a federal cause of action or federal private remedy. Because Plaintiffs Amended

Complaint does not assert a federal cause of action or federal private remedy, Plaintiffs have no

basis for federal subject matter jurisdiction pursuant to 28 U.S.C. § 1331.

          B.                     Plaintiffs Fail to Demonstrate Any Applicable Private Right of Action
                                 Pursuant to Title 42 of the Code of Federal Regulations.

          Plaintiffs make reference to Title 42 of the Code of Federal Regulations in their

Complaint, alleging that D



                                                                                                                                        4

      !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555000                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      444      ooofff      111111
Title 42.            Even assuming arguendo that the Defendants, or any of them, violated any provision

of Title 42 of the Code of Federal Regulations,3 and further assuming arguendo that the

Plaintiffs, or any of them, were damaged by such a violation, it is well settled that the violation

of a federal statute or regulation does not necessarily confer upon an aggrieved party a private

right of action. Instead, a private individual may bring suit under a federal statute only when

Congress specifically intended to create a private right of action. See, e.g., Gonzaga Univ. v.

Doe, 536 U.S. 273, 283 (2002). A plaintiff must show that the violation of the federal law also

amounts to the violation of a federal right possessed by that individual. Id. In determining

whether a statute confers a federal right, a court must consider whether: (1) Congress [has]

intended that the provision in question benefit the plaintiff ; (2) the statute is not so vague and

amorphous that its enforcement would strain judicial competence ; and (3) the statute . . .

unambiguously impose[s] a binding obligation on the States.                                                                                                                                See Wesley Health Care Center,

Inc. v. DeBuono, 244 F.3d 280, 283-84 (2d Cir. 2001) (citing Blessing v. Freestone, 520 U.S.

329, 340 (1997)).

          The Amended Complaint fails to point to any provision within Title 42 of the Code of

Federal Regulations that affords them a private right of action in federal court against any of the

Defendants under the facts as alleged in the Amended Complaint. Thus, to the extent Plaintiffs

rely upon Title 42 of the Code of Federal Regulations as the basis for federal question

jurisdiction pursuant to 28 U.S.C. § 1331, such reliance is seriously misguided. See e.g. Wilson-

Coker v. Thompson, 222 F. Supp. 2d 190, 195-96 (D.                                                                                                                                                              [T]he Court finds that the

plaintiff-intervenors have failed to point to any authority within the Medicare or Medicaid Acts




3
   Plaintiffs do not identify any provision of Title 42 of the Code of Federal Regulations
purportedly violated by any of the Defendants.
                                                                                                                                        5

      !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555000                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      555      ooofff      111111
or interpreting the federal question statute that provides for a private right of action in federal

court on their claims against the State plaintiffs. .

          C.                                                                                                                                                                                                                             Likewise Fails to
                                 Confer Federal Question Jurisdiction.

                                             claim for                                                                                                                                                      likewise does not support

federal jurisdiction pursuant to 28 U.S.C. § 1331. Plaintiffs fail to allege or identify the violation

of any federal statute or authority, criminal or otherwise, that would give rise to a claim for

                                                                                                                                                          ssume

                                                                                                                                                                                                § 641, a criminal statute, which

provides as follows:

          Whoever embezzles, steals, purloins, or knowingly converts to his use or the use
          of another, or without authority, sells, conveys or disposes of any record, voucher,
          money, or thing of value of the United States or of any department or agency
          thereof, or any property made or being made under contract for the United States
          or any department or agency thereof; or

          Whoever receives, conceals, or retains the same with intent to convert it to his use
          or gain, knowing it to have been embezzled, stolen, purloined or converted
          Shall be fined under this title or imprisoned not more than ten years, or both; but
          if the value of such property in the aggregate, combining amounts from all the
          counts for which the defendant is convicted in a single case, does not exceed the
          sum of $1,000, he shall be fined under this title or imprisoned not more than one
          year, or both.


          or retail, whichever is greater.

18 U.S.C. § 641 (2012).

          Even if this assumption is correct, this statute does not give rise to a claim that would

support federal jurisdiction pursuant to 28 U.S.C. § 1331. It is well settled that 18 U.S.C. § 641,

and criminal statutes like it, do not afford a private right of action. See e.g., Chrysler Corp. v.

Brown, 441 U.S. 281, 316 (1979) ( [T]his Court has rarely implied a private right of action



                                                                                                                                        6

      !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555000                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      666      ooofff      111111
under a criminal statute ); Boyd v. Wilmington Trust Co., 630 F. Supp. 2d 379, 385 (D. Del.

2009) (holding that federal criminal statutes relating to embezzlement, theft, misuse of public

funds, and stolen property                                                           which includes Sections 641 and 646                                                                                                  does not give rise to a

private right of action); Ali v. Timmons, 2004 U.S. Dist. LEXIS 14830, *6 (W.D.N.Y. 2004)

(holding that no private right of action, either express or implied, exists under 18 U.S.C. § 641);

Walter T. Martin, Inc. v. Peoples Gas Light & Coke Co., 1986 U.S. Dist. LEXIS 29770, *1

(N.D. Ill. 1986) (holding that 18 U.S.C. § 641 does not create a private right of action).
                                                                                                                                                                                                                                                                                   4
                                                                                                                                                                                                                                                                                       and

otherwise cannot be the basis for federal jurisdiction pursuant to 28 U.S.C. § 1331.

           Acco

basis for federal jurisdiction in this matter pursuant to 28 U.S.C. § 1331.

Complaint should therefore be dismissed for lack of subject matter jurisdiction.

           D.                     I n the Absence of a Federal Question, the Court Should Decline to Exercise


                                                                                                                                                         fails to assert any federal claim or cause of

action for which this Court has federal subject matter jurisdiction pursuant to 28 U.S.C. § 1331,

the Court should dismiss this action, including                                                                                                                                                                                                                          See e.g.

United Mine Workers of America v. Gibbs, 383 U.S. 715, 726 (1966); Bova v. Pipefitters &

Plumbers Local 60, AFL-CIO, 554 F.2d 226 (5th Cir. 1977).




4
    The Defendants are also filing a Motion to Dismiss Pursuant to Rule 12(b)(6) of the Federal


                                                                                                                                         7

       !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555000                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      777      ooofff      111111
                                                                                                                CONCLUSI ON

          For the foregoing reasons, Defendants respectfully submit that the Court lacks subject

matter jurisdiction over the claims set forth in Plaintiffs Amended Complaint, such that



          Respectfully submitted, this the 1st day of June, 2012.

       M ARTI NEAU KI NG PLLC                                                                                                                                     BRUCE L. KAPLAN,
                                                                                                                                                                  ATTORNEY AT LAW
By:    s/ Elizabeth A. Martineau
       Elizabeth A. Martineau                                                                                                                 By:                s/ Bruce Lewis Kaplan
       N.C. State Bar No. 26394                                                                                                                                  Bruce Lewis Kaplan
       P.O. Box 31188                                                                                                                                            N.C. Bar No. 9900
       Charlotte, NC 28231                                                                                                                                       P.O. Box 455
       Telephone: 704.247.8524                                                                                                                                   Boone, NC 28607
       Facsimile: 704.943.0543                                                                                                                                   Telephone: 828.264.7652
       emartineau@martineauking.com                                                                                                                              Facsimile: 828.264.5637
       COUNSEL FOR DEFENDANTS NEW                                                                                                                                bruce.kaplan@att.net
       RIVER SERVICE AUTHORITY, GARY                                                                                                                             COUNSEL FOR DEFENDANT NEW
       L. BLEVINS, LARRY COX, NATHAN A.                                                                                                                          RIVER SERVICE AUTHORITY
       MILLER, KENNY R. POTEAT, AND
       WILLIAM SANDS




                                                                                                                                        8

      !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555000                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      888      ooofff      111111
       POYNER SPRUI LL LLP                                                                                                                                        WOM BLE CARLYLE
                                                                                                                                                                  SANDRI DGE & RI CE, LLP
By:    s/ Robert F. Orr
       Robert F. Orr                                                                                                                          By:                s/ Bradley O. Wood
       N.C. State Bar No. 6798                                                                                                                                   Bradley O. Wood
       P.O. Box 1801                                                                                                                                             N.C. State Bar No. 22392
       Raleigh, NC 27602-1801                                                                                                                                    One West Fourth Street
       Telephone: 919.783.6400                                                                                                                                   Winston-Salem, NC 27101
       Facsimile: 919.783.1075                                                                                                                                   Telephone: 336.728.7012
       rorr@poynerspruill.com                                                                                                                                    Facsimile: 336.726.6913
                                                                                                                                                                 bwood@wcsr.com
                                                                                                                                                                 COUNSEL FOR DEFENDANTS
By:    s/ Andrew H. Erteschik                                                                                                                                    ALLEGHANY COUNTY, AVERY
       Andrew H. Erteschik                                                                                                                                       COUNTY AND WATAUGA COUNTY
       N.C. State Bar No. 35269
       P.O. Box 1801
       Raleigh, NC 27602-1801
       Telephone: 919.783.6400
       Facsimile: 919.783.1075
       aerteschik@poynerspruill.com
       COUNSEL FOR DEFENDANTS
       ALLEGHANY COUNTY, ASHE
       COUNTY, AVERY COUNTY,
       WATAUGA COUNTY AND WILKES
       COUNTY




                                                                                                                                        9

      !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555000                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      999      ooofff      111111
         DAVI S & HAM RI CK, LLP                                                                                                                                   CAUDLE & SPEARS, PA


By:      s/ H. Lee Davis, Jr.                                                                                                                  By:                 s/ B. Alexander Correll, Jr.
         H. Lee Davis, Jr.                                                                                                                                         B. Alexander Correll, Jr.
         N.C. State Bar No.: 7683                                                                                                                                  N.C. State Bar No. 38112
         P.O. Drawer 20039                                                                                                                                         121 West Trade Street, Suite 2600
         Winston-Salem, NC 27120-0039                                                                                                                              Charlotte, NC 28202
         Telephone: 336.725.8385, ext. 107                                                                                                                         Telephone: 704.377.1200
         Facsimile: 336.723.8838                                                                                                                                   Facsimile: 704.338.5858
         ldavis@davisandhamrick.com                                                                                                                                acorrell@caudlespears.com
                                                                                                                                                                   COUNSEL FOR DEFENDANT
                                                                                                                                                                   ASHE COUNTY
By:      s/ Ann Cox Rowe
         Ann Cox Rowe
         N.C. State Bar No.: 26686
         P.O. Drawer 20039
         Winston-Salem, NC 27120-0039
         Telephone: 336.725.8385, ext. 116
         Facsimile: 336.723.8838
         arowe@davisandhamrick.com
         COUNSEL FOR DEFENDANTS
         WILKES COUNTY AND GARY L.
         BLEVINS




                                                                                                                                        10

      !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555000                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      111000      ooofff      111111
                                                                                       CERTI FI CATE OF SERVI CE

       I hereby certify that I have this day electronically filed the foregoing document with the
Clerk of Court using the CM/ECF system which will send notification of such filing to all
counsel and parties of record as follows:

         Charles A. Oswald                                                                                                                    Elizabeth A. Martineau
         CEO Law PLLC                                                                                                                         Martineau King PLLC
         P.O. Box 6232                                                                                                                        P.O. Box 31188
         Hickory, NC 28601                                                                                                                    Charlotte, NC 28231
         charles.oswald@ceolaw.com                                                                                                            704-247-8524
         Counsel for Plaintiffs                                                                                                               emartineau@martineauking.com
                                                                                                                                              Counsel for Defendants Gary L.
                                                                                                                                              Blevins, Larry Cox, Nathan A. Miller,
                                                                                                                                              New River Service Authority, Kenny R.
                                                                                                                                              Poteat and William Sands

         Bruce Lewis Kaplan                                                                                                                   Bradley Owen Wood
         Bruce L. Kaplan Attorney at Law                                                                                                      Womble, Carlyle, Sandridge & Rice,
         P.O. Box 455                                                                                                                         PLLC
         Boone, NC 28607                                                                                                                      One West Fourth St.
         bruce.kaplan@att.net                                                                                                                 Winston-Salem, NC 27101
         Counsel for Defendant New River                                                                                                      bwood@wcsr.com
         Service Authority                                                                                                                    Counsel for Defendants Alleghany
                                                                                                                                              County, Avery County and Watauga
                                                                                                                                              County

         Ann Cox Rowe                                                                                                                         Boyd Alexander Correll, Jr.
         H. Lee Davis, Jr.                                                                                                                    Caudle & Spears, P.A.
         Davis & Hamrick, LLP                                                                                                                 121 W. Trade St., Suite 2600
         P.O. Box 20039                                                                                                                       Charlotte, NC 28202
         635 West 4th Street                                                                                                                  acorrell@caudlespears.com
         Winston-Salem, NC 27120-0039                                                                                                         Counsel for Defendant Ashe County
         arowe@davisandhamrick.com
         ldavis@davisandhamrick.com
         Counsel for Defendants Gary L. Blevins
         and Wilkes County

           This the 1st day of June, 2012.

                                                                                                                               s/ Andrew H. Erteschik
                                                                                                                               Andrew H. Erteschik




     !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555000                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      111111      ooofff      111111
                                    IN THE UNITED STATES DISTRICT COURT
                                FOR THE WESTERN DISTRICT OF NORTH CAROLINA
                                              STATESVILLE DIVISION
                                       Civil Action No. 5:12-CV-37-RLV-DCK


OLIVIA BURLESON APPLING, et. al,                                                                                                            )
                                                                                                                                            )
                               Plaintiffs,                                                                                                  )
                                                                                                                                                                          M OTI ON TO
                                                                                                                                            )
                                                                                                                                                            DI SM I SS PURSUANT TO
v.                                                                                                                                          )
                                                                                                                                                          RULES 8, 9(b) AND 12(b)(6) OF
                                                                                                                                            )
                                                                                                                                                         THE FEDERAL RULES OF CI VI L
ALLEGHANY COUNTY, et. al.,                                                                                                                  )
                                                                                                                                                                  PROCEDURE
                                                                                                                                            )
                               Defendants.                                                                                                  )


        NOW COME the Defendants, ALLEGHANY COUNTY, ASHE COUNTY, AVERY

COUNTY, GARY L. BLEVINS, LARRY COX, NATHAN A. MILLER, NEW RIVER

SERVICE AUTHORITY, KENNY R. POTEAT, WILLIAM SANDS, WATAUGA COUNTY

and WILKES COUNTY, by and through their undersigned counsel, and pursuant to Rules 8,

9(b) and 12(b)(6) of the Federal Rules of Civil Procedure and Rule 7.1 of the Rules of Practice

and Procedure of the United States District Court for the Western District of North Carolina, and

hereby respectfully move this Court for an Order dismissing, with prejudice,

Amended Complaint against them for failure to state a claim upon which relief can be granted.

        In support of this Motion, Defendants respectfully rely upon the following grounds:



Federal Rules of Civil Procedure, and articulated by well-established case law, and fail to meet

the enhanced pleading requirements for fraud claims imposed by Rule 9(b) of the Federal Rules

of Civil Procedure.




      !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555111                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      111      ooofff      666
         In their various claims for relief, Plaintiffs have set forth only conclusory allegations and

have failed to set forth facts to establish the alleged claims. Such conclusory allegations fail to

state a claim upon which relief can be granted and do not satisfy the pleading requirements. In

their various claims for relief, Plaintiffs fail to set forth, in any manner other than conclusory



any claim upon which relief can be granted.

         Furthermore, Plaintiffs have asserted various claims which are not recognized by North




a criminal statute which does not afford a private right of action.




because these claims are not allowed against governmental entities.



capacity and, therefore, are redundant and unnecessary. In the alternative, should this Court

determine that the claims against the individual board members are brought against them in their

individual capacity, then public official immunity applies to the individual board members and



Defendants fail to state a claim upon which relief may be granted as each individual cannot be

held liable for an alleged collective action.

         Defendants further rely upon their Brief filed in support of this Motion.




                                                                                                                                        2

       !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555111                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      222      ooofff      666
        WHEREFORE, Defendants respectfully move this Court for an Order dismissing



the Federal Rules of Civil Procedure.

        Respectfully submitted, this the 1st day of June, 2012.

      M ARTI NEAU KI NG PLLC                                                                                                                                     BRUCE L. KAPLAN,
                                                                                                                                                                 ATTORNEY AT LAW
By:   s/ Elizabeth A. Martineau
      Elizabeth A. Martineau                                                                                                                By:                 s/ Bruce Lewis Kaplan
      N.C. State Bar No. 26394                                                                                                                                  Bruce Lewis Kaplan
      P.O. Box 31188                                                                                                                                            N.C. Bar No. 9900
      Charlotte, NC 28231                                                                                                                                       P.O. Box 455
      Telephone: 704.247.8524                                                                                                                                   Boone, NC 28607
      Facsimile: 704.943.0543                                                                                                                                   Telephone: 828.264.7652
      emartineau@martineauking.com                                                                                                                              Facsimile: 828.264.5637
      COUNSEL FOR DEFENDANTS NEW                                                                                                                                bruce.kaplan@att.net
      RIVER SERVICE AUTHORITY, GARY                                                                                                                             COUNSEL FOR DEFENDANT NEW
      L. BLEVINS, LARRY COX, NATHAN A.                                                                                                                          RIVER SERVICE AUTHORITY
      MILLER, KENNY R. POTEAT, AND
      WILLIAM SANDS




                                                                                                                                       3

      !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555111                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      333      ooofff      666
      POYNER SPRUI LL LLP                                                                                                                                        WOM BLE CARLYLE
                                                                                                                                                                 SANDRI DGE & RI CE, LLP
By:   s/ Robert F. Orr
      Robert F. Orr                                                                                                                         By:                 s/ Bradley O. Wood
      N.C. State Bar No. 6798                                                                                                                                   Bradley O. Wood
      P.O. Box 1801                                                                                                                                             N.C. State Bar No. 22392
      Raleigh, NC 27602-1801                                                                                                                                    One West Fourth Street
      Telephone: 919.783.6400                                                                                                                                   Winston-Salem, NC 27101
      Facsimile: 919.783.1075                                                                                                                                   Telephone: 336.728.7012
      rorr@poynerspruill.com                                                                                                                                    Facsimile: 336.726.6913
                                                                                                                                                                bwood@wcsr.com
                                                                                                                                                                COUNSEL FOR DEFENDANTS
By:   s/ Andrew H. Erteschik                                                                                                                                    ALLEGHANY COUNTY, AVERY
      Andrew H. Erteschik                                                                                                                                       COUNTY AND WATAUGA COUNTY
      N.C. State Bar No. 35269
      P.O. Box 1801
      Raleigh, NC 27602-1801
      Telephone: 919.783.6400
      Facsimile: 919.783.1075
      aerteschik@poynerspruill.com
      COUNSEL FOR DEFENDANTS
      ALLEGHANY COUNTY, ASHE
      COUNTY, AVERY COUNTY,
      WATAUGA COUNTY AND WILKES
      COUNTY




                                                                                                                                       4

      !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555111                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      444      ooofff      666
      DAVI S & HAM RI CK, LLP                                                                                                                                    CAUDLE & SPEARS, PA


By:   s/ H. Lee Davis, Jr.                                                                                                                  By:                 s/ B. Alexander Correll, Jr.
      H. Lee Davis, Jr.                                                                                                                                         B. Alexander Correll, Jr.
      N.C. State Bar No.: 7683                                                                                                                                  N.C. State Bar No. 38112
      P.O. Drawer 20039                                                                                                                                         121 West Trade Street, Suite 2600
      Winston-Salem, NC 27120-0039                                                                                                                              Charlotte, NC 28202
      Telephone: 336.725.8385, ext. 107                                                                                                                         Telephone: 704.377.1200
      Facsimile: 336.723.8838                                                                                                                                   Facsimile: 704.338.5858
      ldavis@davisandhamrick.com                                                                                                                                acorrell@caudlespears.com
                                                                                                                                                                COUNSEL FOR DEFENDANT
                                                                                                                                                                ASHE COUNTY
By:   s/ Ann Cox Rowe
      Ann Cox Rowe
      N.C. State Bar No.: 26686
      P.O. Drawer 20039
      Winston-Salem, NC 27120-0039
      Telephone: 336.725.8385, ext. 116
      Facsimile: 336.723.8838
      arowe@davisandhamrick.com
      COUNSEL FOR DEFENDANTS
      WILKES COUNTY AND GARY L.
      BLEVINS




                                                                                                                                       5

      !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555111                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      555      ooofff      666
                                                                                     CERTI FI CATE OF SERVI CE

       I hereby certify that I have this day electronically filed the foregoing document with the
Clerk of Court using the CM/ECF system which will send notification of such filing to all
counsel and parties of record as follows:

      Charles A. Oswald                                                                                                                     Elizabeth A. Martineau
      CEO Law PLLC                                                                                                                          Martineau King PLLC
      P.O. Box 6232                                                                                                                         P.O. Box 31188
      Hickory, NC 28601                                                                                                                     Charlotte, NC 28231
      charles.oswald@ceolaw.com                                                                                                             704-247-8524
      Counsel for Plaintiffs                                                                                                                emartineau@martineauking.com
                                                                                                                                            Counsel for Defendants Gary L.
                                                                                                                                            Blevins, Larry Cox, Nathan A. Miller,
                                                                                                                                            New River Service Authority, Kenny R.
                                                                                                                                            Poteat and William Sands

      Bruce Lewis Kaplan                                                                                                                    Bradley Owen Wood
      Bruce L. Kaplan Attorney at Law                                                                                                       Womble, Carlyle, Sandridge & Rice,
      P.O. Box 455                                                                                                                          PLLC
      Boone, NC 28607                                                                                                                       One West Fourth St.
      bruce.kaplan@att.net                                                                                                                  Winston-Salem, NC 27101
      Counsel for Defendant New River                                                                                                       bwood@wcsr.com
      Service Authority                                                                                                                     Counsel for Defendants Alleghany
                                                                                                                                            County, Avery County and Watauga
                                                                                                                                            County

      Ann Cox Rowe                                                                                                                          Boyd Alexander Correll, Jr.
      H. Lee Davis, Jr.                                                                                                                     Caudle & Spears, P.A.
      Davis & Hamrick, LLP                                                                                                                  121 W. Trade St., Suite 2600
      P.O. Box 20039                                                                                                                        Charlotte, NC 28202
      635 West 4th Street                                                                                                                   acorrell@caudlespears.com
      Winston-Salem, NC 27120-0039                                                                                                          Counsel for Defendant Ashe County
      arowe@davisandhamrick.com
      ldavis@davisandhamrick.com
      Counsel for Defendants Gary L. Blevins
      and Wilkes County

        This the 1st day of June, 2012.

                                                                                                                             s/ Andrew H. Erteschik
                                                                                                                             Andrew H. Erteschik




      !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555111                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      666      ooofff      666
                                        IN THE UNITED STATES DISTRICT COURT
                                    FOR THE WESTERN DISTRICT OF NORTH CAROLINA
                                                  STATESVILLE DIVISION
                                           Civil Action No. 5:12-CV-37-RLV-DCK

OLIVIA BURLESON APPLING, et al,                                                                                                                 )
                                                                                                                                                )
                                   Plaintiffs,                                                                                                  )               BRI EF I N SUPPORT OF
                                                                                                                                                )             DEFENDANTS M OTI ON TO
v.                                                                                                                                              )              DI SM I SS PURSUANT TO
                                                                                                                                                )            RULES 8, 9(B) AND 12(B)(6) OF
ALLEGHANY COUNTY, et al.,                                                                                                                       )           THE FEDERAL RULES OF CI VI L
                                                                                                                                                )                    PROCEDURE
                                   Defendants.                                                                                                  )


            NOW COME Defendants, ALLEGHANY COUNTY, ASHE COUNTY, AVERY

COUNTY, GARY L. BLEVINS, LARRY COX, NATHAN A. MILLER, NEW RIVER

SERVICE AUTHORITY, KENNY R. POTEAT, WILLIAM SANDS, WATAUGA COUNTY

and WILKES COUNTY, by and through counsel, pursuant to Local Rule 7.1(c), and hereby

submit this brief in support of their Motion to Dismiss pursuant to Rules 8, 9(b) and 12(b)(6) of

the Federal Rules of Civil Procedure filed in this matter.1

                                                                                         STATEM ENT OF THE CASE

            Plaintiffs filed their original Complaint in this matter on April 2, 2012. (Doc. No. 1).

Plaintiffs amended their Complaint as of right on April 23, 2012. (Doc. No. 22). In their

Amended Complaint, Plaintiffs assert North Carolina state law claims for fraud, common law

fraud, fraud by concealment and promissory fraud                                                                                                                               (Claim I); conversion (Claim II);

    detrimental reliance (Claim III); fraudulent inducement and breach of contract (Claim IV);

breach of fiduciary duty (Claim V); conspiracy, aiding and abetting, and concerted action

1
  Defendants have also filed a motion to dismiss pursuant to Rule 12(b)(1) of the Federal Rules
of Civil Procedure, on the grounds that there is no federal jurisdiction over this case, and more
specifically, no federal question jurisdiction as asserted by the Plaintiffs.



        !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555222                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      111      ooofff      222444
(Claim VII); unfair or deceptive acts or practices in or affecting commerce (Claim VIII); and

punitive damages (Claim IX).                                                                           Plaintiffs further assert a cause of action styled as

 Misappropriation of Federal Funds (Claim VI).

          Plaintiffs Amended Complaint fails to comply with the pleading requirements of Rule 8

and Rule 9(b) of the Federal Rules of Civil Procedure. Moreover, Plaintiffs various causes of

action set forth in their Amended Complaint fail to state a claim upon which relief may be

granted. Accordingly, Plaintiffs Amended Complaint and the claims set forth therein should be

dismissed as a matter of law pursuant to Rules 8, 9(b) and 12(b)(6) of the Federal Rules of Civil

Procedure.

                                                                                             STANDARD OF REVI EW

          In reviewing motions to dismiss for failure to state a claim pursuant to Rule 12(b)(6), the

court must take the facts in the light most favorable to the non-moving party. However, the

court need not accept legal conclusions, unwarranted inferences, or sweeping legal conclusions

cast in the form of factual allegations. Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir. 2008)

(quoting Eastern Shore Mkts., Inc. v. J.D. Assocs. Ltd. P ship, 213 F.3d 175, 180 (4th Cir.

2000)); Schatz v. Rosenberg, 943 F.2d 485, 489 (4th Cir. 1991). The Supreme Court has held

that a complaint calls for sufficient factual matter, accepted as true, to state a claim to relief

that is plausible on its face.                                                          Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl.

Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A complaint demands more than an unadorned,

the-defendant-unlawfully-harmed-me accusation. Id. Thus, a pleading that only tenders naked

assertions devoid of further factual enhancement will not suffice. Id.

          As stated by the United States Supreme Court, a plaintiff s obligation to provide the

grounds of his entitlement to relief requires more than labels and conclusions and a formulaic



                                                                                                                                        2

      !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555222                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      222      ooofff      222444
recitation of the elements of a cause of action will not do.                                                                                                                           Twombly, 550 U.S. at 555 (2007).

Furthermore, Factual allegations must be enough to raise a right to relief above the speculative

level. Id. (internal citations omitted) (emphasis added). The Supreme Court has also noted that

    where the well-pleaded facts do not permit the court to infer more than the mere possibility of

misconduct, the complaint has alleged                                                                                      but it has not shown                                                         that the pleader is entitled to

relief.            Iqbal, 556 U.S. at 679. Thus, dismissal of a complaint is proper where a plaintiff s

factual allegations fail to produce an inference of liability strong enough to nudge the plaintiff s

claims              across the line from conceivable to plausible.                                                                                                                                         Nemet Chevrolet, Ltd. v.

Consumeraffairs.com, Inc., 591 F.3d 250, 256 (4th Cir. 2009) (citing Iqbal, 556 U.S. at 683).

              As explained below, Plaintiffs allegations fail to meet the pleading requirements

imposed by Rule 8, as articulated by Twombly and Iqbal, and fail to meet the enhanced pleading

requirements for fraud claims imposed by Rule 9(b).                                                                                                                              Moreover, as also set forth below,

Plaintiffs causes of action asserted in this matter otherwise fail to state a claim upon which relief

may be granted and should be dismissed as a matter of law.

                                                                                                                        ARGUM ENT

I.            PLAI NTI FFS CLAI M FOR FRAUD, COM M ON LAW FRAUD, FRAUD BY
              CONCEALM ENT AND PROM I SSORY FRAUD FAI LS TO COM PLY WI TH
              RULES 8 AND 9(B) AND OTHERWI SE FAI LS TO STATE A CLAI M UPON
              WHI CH RELI EF M AY BE GRANTED.

              As Claim I in their Amended Complaint, Plaintiffs assert a cause of action styled as

    Fraud, Common Law Fraud,2 Fraud by Concealment and Promissory Fraud.3                                                                                                                                                                                (Doc. No. 22,

¶¶ 130-137). As the basis for their scattershot claim for fraud, Plaintiffs allege:



2
  Defendants are unaware of any legal distinction between the claims of fraud and common law
fraud.
3
   To Defendants knowledge, North Carolina does not recognize a cause of action for
  promissory fraud.
                                                                                                                                            3

          !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555222                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      333      ooofff      222444
                  130. Defendants promised Plaintiffs they would be compensated for
          inter alia unpaid leave.

                 131. Defendants did not intend to fully perform the promises when they
          made them, knowing that they could create the false subterfuge that only NRSA,
          and not Defendant counties, would be obligated to pay money to Plaintiffs.

                                                                                                                         ***

                  136. Defendants intended to deceive Plaintiffs by concealing the fact
          that they did not intend to accept responsibility for the money owed Plaintiffs;
          Plaintiffs did not know of the concealed fact that Defendants intended to avoid
          responsibility for the money owed Plaintiffs; Plaintiffs reasonably relied on
          Defendants deception; and, as a direct and proximate result of Defendants
          concealment of an important fact, Plaintiffs have suffered damages.

(Doc. No. 22, ¶¶ 130-131, 136).

          Plaintiffs claim for fraud fails to state a claim as a matter of law, as it fails to comply

with the requirements of Rule 8 and 9(b) and otherwise fails to allege a prima facie case of fraud

and/or fraud by concealment under North Carolina law.

          This Court has held:

          In order to state a claim for fraud under North Carolina law, a plaintiff must
          allege the following essential elements: (1) a false representation or concealment
          of a material fact, (2) that was reasonably calculated to deceive, (3) which was
          made with the intent to deceive, (4) that did in fact deceive, and (5) resulted in
          damage. Breeden v. Richmond Cmty. College, 171 F.R.D. 189, 194 (M.D.N.C.
          1997). Not only must these elements be well pled, but courts construe the Rule
          9(b) requirement to mean that the pleading party must set out the time, place, and
          contents of the alleged fraudulent misrepresentation, as well as the identity of
          each person making the misrepresentation and what was obtained thereby. 4



4
  Moreover, to allege a claim for fraud by concealment, a Plaintiff must further plead: (1) the
relationship [between plaintiff and defendant] giving rise to the duty to speak; (2) the event or
events triggering the duty to speak and/or the general time period over which the relationship
arose and the fraudulent conduct occurred; (3) the general content of the information that was
withheld and the reason for its materiality; (4) the identity of those under a duty who failed to
make such disclosures; (5) what [the defendant] gained by withholding information; (6) why
plaintiff s reliance on the omission was both reasonable and detrimental; and (7) the damages
proximately flowing from such reliance. Breeden v. Richmond Cmty. College, 171 F.R.D. 189,
194 (M.D.N.C. 1997).
                                                                                                                                        4

      !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555222                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      444      ooofff      222444
            Breeden, 171 F.R.D. at 195 (quoting Liner v. DiCresce, 905 F. Supp. 280, 287
            (M.D.N.C. 1994)).

Allied Mfg. Techs., Inc. v. Huron, Inc., 2009 U.S. Dist. LEXIS 71168, *6-7 (W.D.N.C. 2009).5

            Plaintiffs Amended Complaint fails to comply with the requirements of Rule 9(b).

Specifically, Plaintiffs fail to set out the time that any alleged fraudulent representation was

made or alleged fraudulent concealment occurred. Similarly, Plaintiffs do not allege the place

where the alleged fraudulent misrepresentation was purportedly made. Further, Plaintiffs do not

allege the identity of any person who purportedly made any misrepresentation to them, or

fraudulently concealed any information from them. Other than a cursory allegation that an

amorphous group of one or more Defendants purportedly intended to deceive Plaintiffs by

concealing the fact that they did not intend to accept responsibility for the money owed

Plaintiffs,                  Plaintiffs likewise do not allege the contents of any alleged fraudulent

misrepresentation or concealment by Defendants. Accordingly, Plaintiffs fail to satisfy the

requirements of Rule 9(b), such that Plaintiffs fraud claim(s) fail as a matter of law and,

therefore, should be dismissed. See, e.g., Allran v. Branch Banking & Trust Corp., 2011 NCBC

21, 2011 NCBC LEXIS 20 (NCBC 2011) (dismissing plaintiff s fraud claim where the

Complaint contains no specific allegations about the identity of speakers or the time and place

where the fraudulent statements were made).

            Likewise, Plaintiffs purported allegations (or lack thereof) of malice, intent, knowledge,

or state of mind of the Defendants fail to meet the requirements of Rule 8. As noted above,

Plaintiffs merely allege that the Defendants did not intend to fully perform the promises when

they made them, knowing that they could create the false subterfuge that only NRSA, and not

Defendant counties, would be obligated to pay money to Plaintiffs. (Doc. No. 22, ¶ 131). Such

5
    A copy of all unpublished decisions cited are attached hereto.
                                                                                                                                          5

        !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555222                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      555      ooofff      222444
conclusory allegations                                                  that unspecified Defendants never intended to honor unspecified

obligations or promises made at unspecified times, by unspecified individuals, to unspecified

Plaintiffs             fail to state a claim upon which relief may be granted.

          The Fourth Circuit s recent opinion in Mayfield v. NASCAR, 674 F.3d 369 (4th Cir. 2012)

is instructive in demonstrating how Plaintiffs conclusory allegations in the instant case fail to

satisfy the requirements of Iqbal and otherwise fail to state a claim upon which relief may be

granted. In Mayfield, the Fourth Circuit affirmed the dismissal of the plaintiff s claim for

defamation. In its ruling, the Fourth Circuit noted,

          The Appellants argue that allegations of malice need only be articulated in the
          most general terms. Rule 9(b) does say that while allegations of fraud must be
          stated with particularity, malice may be alleged generally. Fed. R. Civ. P. 9(b).
          But in Aschcroft v. Iqbal, the Supreme Court held,

                                 It is true that Rule 9(b) requires particularity when pleading fraud
                                 or mistake, while allowing [m]alice, intent, knowledge, and other
                                 conditions of a person s mind [to] be alleged generally. But
                                  generally is a relative term . . . Rule 9 merely excuses a party
                                 from pleading discriminatory intent under an elevated pleading
                                 standard. It does not give him license to evade the less rigid
                                 though still operative strictures of Rule 8.

          556 U.S. 662. As we noted in the very case cited by the Appellants, the usual
          standards of notice pleading apply in defamation cases. Hatfill v. N.Y. Times
          Co., 416 F.3d 320, 329 (4th Cir. 2005). Rule 9(b) ensures there is no heightened
          pleading standard for malice, but malice must still be alleged in accordance
          with Rule 8 a plausible claim for relief must be articulated.

          Applying the Iqbal standard to this case, we find that the Appellants have not
          stated a claim. To begin with, Appellants assertion that Appellees
          statements were known by [them] to be false at the time they were made,
          were malicious or were made with reckless disregard as to their veracity is
          entirely insufficient. This kind of conclusory allegation a mere recitation of
          the legal standard is precisely the sort of allegations that Twombly and
          I qbal rejected.

Mayfield, 674 F.3d at 377-378 (emphasis added).




                                                                                                                                        6

      !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555222                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      666      ooofff      222444
          Further illustrative is the Fourth Circuit s opinion in Strum v. Exxon Co., USA, 15 F.3d

327 (4th Cir. 1994), in which the Fourth Circuit held:

          The Federal Rules of Civil Procedure require that in all averments of fraud or
          mistake, the circumstances constituting fraud or mistake shall be stated with
          particularity. FED. R. CIV. P. (9)(b). North Carolina law likewise states that
           mere generalities and conclusory allegations of fraud will not suffice to sustain
          a fraud claim. Moore v. Wachovia Bank & Trust Co., 30 N.C. App. 390, 226
          S.E.2d 833, 835 (1976); see also N.C. GEN. STAT. § 1A-1, Rule 9(b) (1990) ( In
          all averments of fraud . . . the circumstances constituting fraud . . . shall be stated
          with particularity. ); In re Estate of Loftin, 285 N.C. 717, 208 S.E.2d 670, 675
          (1974) (applying North Carolina Rule 9(b)). Because [Plaintiff] has done
          nothing more than assert that Exxon never intended to honor its obligations
          under the M arch agreement, the district court s dismissal of the first cause of
          action [for fraudulent inducement] was entirely appropriate.

Id., 15 F.3d at 331 (emphasis added).

          In summary, Plaintiffs fraud claim(s) are comparable to those claims which were

dismissed in Mayfield and Strum, specifically containing only vague conclusions, failing to

comply with the requirements of Rule 8 and Rule 9(b), and otherwise failing to state a claim

upon which relief may be granted. Thus, Plaintiffs claim(s) for fraud set forth in Claim I of the

Amended Complaint must be dismissed.

II.       PLAI NTI FFS CLAI M FOR CONVERSI ON FAI LS TO STATE A CLAI M UPON
          WHI CH RELI EF CAN BE GRANTED AND SHOULD BE DI SM I SSED.

          Plaintiffs assert a claim for conversion as Claim II of their Amended Complaint. (Doc.

No. 22, ¶¶ 138-142). As the basis for their claim for conversion, Plaintiffs allege:

                 139. Defendants had exclusive control over the use of all federal and
          other monies funneled to NRSA and was required to use, but did not use, federal
          monies exclusively for the purposes of funding Services.

                  140. Defendants collected and received money from the federal
          government and knew that money should be used to provide Services. Despite
          this knowledge, Defendants comingled the federal money with other monies then
          converted and misappropriated it to fund an enterprise operated to provide not just
          the required Services but all manner of other services to a pool of problematic
          indigents routinely ordered there by local authorities.

                                                                                                                                        7

      !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555222                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      777      ooofff      222444
(Doc. No. 22, ¶¶ 139-140).

          The Supreme Court of North Carolina has defined the tort of conversion as                                                                                                                                                                                               an

unauthorized assumption and exercise of the right of ownership over goods or personal chattels

belonging to another, to the alteration of their condition or the exclusion of an owner s rights.

Peed v. Burleson s, Inc., 244 N.C. 437, 439, 94 S.E.2d 351, 353 (1956) (citation omitted). In

essence, there are two essential elements of a conversion claim: ownership in the plaintiff and

wrongful possession or conversion by the defendant. See Gadson v. Toney, 69 N.C. App. 244,

246, 316 S.E.2d 320, 321-22 (1984).

          Plaintiffs claim for conversion fails as a matter of law, because the Plaintiffs do not

allege any ownership interest in the                                                                                 federal money [and] other monies                                                                                          they allege the

Defendants converted and misappropriated . . . to fund an enterprise operated to provide not just

the required Services but all manner of other services to a pool of problematic indigents routinely

ordered there by local authorities. (Doc. No. 22, ¶ 140). Indeed, Plaintiffs allegations concede

that they had no ownership interest in the federal and other monies funneled to NRSA. (Doc.

No. 22, ¶ 139).

          Plaintiffs claim for conversion, as asserted against Defendants Alleghany, Ashe, Avery

Watauga and Wilkes counties, and against Defendants Blevins, Cox, Miller, Poteat and Sands,

further fails as to these defendants, as the Plaintiffs do not allege that any of these Defendants did

anything to convert or otherwise exert wrongful possession over anything purportedly owned by

the Plaintiffs sufficient to meet the pleading requirements of Iqbal and Twombly. Accordingly,

Plaintiffs claim for conversion fails as a matter of law and should be dismissed.




                                                                                                                                        8

      !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555222                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      888      ooofff      222444
III.       PLAI NTI FFS CLAI M FOR DETRI M ENTAL RELI ANCE FAI LS TO STATE
           A CLAI M UPON WHI CH RELI EF M AY BE GRANTED.

           Plaintiffs claim for detrimental reliance, identified as Claim III in their Amended

Complaint, fails as a matter of law as North Carolina does not recognize an affirmative tort or

quasi-contractual remedy for detrimental reliance. Rather, detrimental reliance is an element

of the defense of promissory estoppel. See, e.g., Wachovia Bank & Trust Co. v. Rubish, 306

N.C. 417, 427, 293 S.E.2d 749, 756 (1982). While [s]ome courts also recognize a second form

of promissory estoppel known as affirmative or offensive promissory estoppel . . . North

Carolina courts do not recognize a claim for this type of offensive promissory estoppel by

plaintiffs. River s Edge Pharms., LLC v. Gorbec Pharm. Servs., 2012 U.S. Dist. LEXIS 57969,

*32 (M.D.N.C. Apr. 25, 2012); see also Home Electric Co. v. Hall & Underdown Heating & Air

Conditioning Co., 86 N.C. App. 540, 543, 358 S.E.2d 539, 541 (1987) ( The North Carolina

cases which have applied the [promissory estoppel] doctrine have only done so in a defensive

situation, where there has been an intended abandonment of an existing right by the promisee.

North Carolina case law has not approved the doctrine for affirmative relief. ). Accordingly,

Plaintiffs claim for detrimental reliance should be dismissed.

I V.       PLAI NTI FFS CLAI M FOR FRAUDULENT I NDUCEM ENT AND BREACH OF
           CONTRACT FAI LS AS A M ATTER OF LAW.

           As Claim IV set forth in their Amended Complaint, Plaintiffs assert a cause of action

styled as Fraudulent Inducement and Breach of Contract.                                                                                                                                           Therein, Plaintiffs allege that

 Defendants fraudulently induced Plaintiffs to continuously act, or not act, in such a way as to

avoid Defendants having to provide the truth regarding their intent to avoid paying the money

owed Plaintiffs.                                   Plaintiffs further allege that Defendants breached their agreement with

Plaintiffs in that when called upon to pay the money owed them, Defendants did not do so.



                                                                                                                                         9

       !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555222                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      999      ooofff      222444
(Doc. No. 22, ¶¶ 150-151). To the extent that this claim for Fraudulent Inducement and Breach

of Contract asserts an additional theory of fraud separate from Plaintiffs Claim I, which fails as

a matter of law as set forth hereinabove, this claim fails as a matter of law and should be

dismissed.

           The elements of a claim for breach of contract under North Carolina law are: (1) the

existence of a valid contract; and (2) breach of the terms of the contract. See, e.g., Woolard v.

Davenport, 166 N.C. App. 129, 134, 601 S.E.2d 319, 322 (2004). Here, Plaintiffs make the

conclusory allegation that Defendants breached their agreement with Plaintiffs in that when

called upon to pay the money owed them, Defendants did not do so.                                                                                                                                                        (Doc. No. 22, ¶¶ 151).

Other than such unadorned, the-defendant-unlawfully-harmed-me accusations, see Iqbal, 556

U.S. at 678, the Plaintiffs do not allege the existence of any valid contract nor any breach of the

terms thereof. Plaintiffs do not allege that they entered into any valid contract or agreement with

the Defendants collectively or any of them individually. Plaintiffs further do not allege or

demonstrate how any particular Defendant                                                                                             Alleghany County, Ashe County, Avery County,

Watauga County or Wilkes County, New River Service Authority, or Blevins, Cox, Miller,

Poteat, and/or Sands                                         did anything to breach any purportedly valid contract with the Plaintiffs.

The bald, conclusory allegations contained in Claim IV of Plaintiffs Amended Complaint do not

satisfy the pleadings requirements of Iqbal and Twombly.                                                                                                                                             Thus, Plaintiffs claims for

 Fraudulent Inducement and Breach of Contract fail to state a claim upon which relief may be

granted, and such claim should be dismissed as to each of the Defendants.




                                                                                                                                       10

     !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555222                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      111000      ooofff      222444
V.         PLAI NTI FFS CLAI M FOR BREACH OF FI DUCI ARY DUTY FAI LS AS A
           M ATTER OF LAW, AS NO FI DUCI ARY RELATI ONSHI P EXI STED
           BETWEEN THE PLAI NTI FFS AND THE DEFENDANTS, OR ANY OF THEM .

           As Claim V set forth in their Amended Complaint, Plaintiffs assert a cause of action for

 Breach of Fiduciary Duty, alleging that Defendants willfully and/or intentionally disregarded

their fiduciary duties, by means of the conducts described herein in violation of federal laws, and

now attempt to avoid paying compensation lawfully due Plaintiffs.                                                                                                                                                         (Doc. No. 22, ¶ 153).

Plaintiffs further allege that Defendants had and continue to have a duty to refrain from

promoting their personal economic interests above and at the expense of Plaintiffs and that

 Defendants have attempted to conceal their wrongdoing and avoid paying the money due

Plaintiffs. (Doc. No. 22, ¶ 154).

           For a breach of fiduciary duty to exist, there must first be a fiduciary relationship between

the parties. Plaintiffs fail to allege any facts that would give rise to the existence of a fiduciary

duty or a fiduciary relationship. Rather, the Plaintiffs instead only allege, in conclusory fashion,

that the Defendants willfully and/or intentionally disregarded their fiduciary duties.                                                                                                                                                                            (Doc. No.

22, ¶ 153).

           This Court has previously noted that fiduciary relationships are generally not found in the

employment context. Helms v. SellEthics Mktg. Group, Inc., 2006 U.S. Dist. LEXIS 87726

(W.D.N.C. 2006) (citing Dalton v. Camp, 353 N.C. 647, 652, 548 S.E.2d 704, 708 (2001))

(holding that                          the relation of employer and employee is not one of those regarded as

confidential ); see also Jones v. American Tobacco Co., 1989 U.S. Dist. LEXIS 17125, *15

(M.D.N.C. 1989) ( No North Carolina cases have recognized a fiduciary duty arising from a

mere employer-employee relationship, and in fact, other courts have held that this relationship

alone does not give rise to a fiduciary duty. ). Aside from conclusory allegations that are



                                                                                                                                       11

     !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555222                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      111111      ooofff      222444
insufficient to satisfy the requirements of Iqbal and Twombly, Plaintiffs fail to allege how the

Defendants, or any of them, had any fiduciary relationship with, or owed any fiduciary duty to,

the Plaintiffs. Accordingly, Plaintiffs claim for breach of fiduciary duty fails to state a claim

and should be dismissed as a matter of law.

VI .         PLAI NTI FFS CLAI M FOR M I SAPPROPRI ATI ON OF FEDERAL FUNDS
             FAI LS TO STATE A CLAI M UPON WHI CH RELI EF M AY BE GRANTED AND
             SHOULD BE DI SM I SSED.

             As Claim VI set forth in their Amended Complaint, Plaintiffs purport to assert a cause of

action styled as a claim for Misappropriation of Federal Funds.                                                                                                                                        In this claim, Plaintiffs allege

that Defendants negligently failed to put federal funds to the exclusive use for which they were

intended and thereby converted and misappropriated federal funds.                                                                                                                                                           (Doc. No. 22, ¶ 160).

However, Plaintiffs fail to allege or identify the violation of any federal statute or authority,

criminal or otherwise, that would give rise to a claim for misappropriation of federal funds.

Defendants assume arguendo that Plaintiffs claim for Misappropriation of Federal Funds is

premised upon 18 U.S.C. § 641, a criminal statute, which provides as follows:

             Whoever embezzles, steals, purloins, or knowingly converts to his use or the use
             of another, or without authority, sells, conveys or disposes of any record, voucher,
             money, or thing of value of the United States or of any department or agency
             thereof, or any property made or being made under contract for the United States
             or any department or agency thereof; or

             Whoever receives, conceals, or retains the same with intent to convert it to his use
             or gain, knowing it to have been embezzled, stolen, purloined or converted
             Shall be fined under this title or imprisoned not more than ten years, or both; but
             if the value of such property in the aggregate, combining amounts from all the
             counts for which the defendant is convicted in a single case, does not exceed the
             sum of $1,000, he shall be fined under this title or imprisoned not more than one
             year, or both.

             The word value means face, par, or market value, or cost price, either wholesale
             or retail, whichever is greater.

18 U.S.C. § 641 (2012).

                                                                                                                                         12

       !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555222                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      111222      ooofff      222444
               Even if this assumption is correct, this statute does not give rise to a claim upon which

relief may be granted. It is well settled that 18 U.S.C. § 641, and criminal statutes like it, do not

afford a private right of action. See e.g., Chrysler Corp. v. Brown, 441 U.S. 281, 316 (1979)

( [T]his Court has rarely implied a private right of action under a criminal statute. ); Boyd v.

Wilmington Trust Co., 630 F. Supp. 2d 379, 385 (D. Del. 2009) (holding that federal criminal

statutes relating to embezzlement, theft, misuse of public funds, and stolen property                                                                                                                                                                                             which

includes Sections 641 and 646                                                                        do not give rise to a private right of action); Ali v. Timmons,

2004 U.S. Dist. LEXIS 14830, *6 (W.D.N.Y. 2004) (holding that no private right of action,

either express or implied, exists under 18 U.S.C. § 641); Walter T. Martin, Inc. v. Peoples Gas

Light & Coke Co., 1986 U.S. Dist. LEXIS 29770, *1 (N.D. Ill. 1986) (holding that 18 U.S.C.

§ 641 does not create a private right of action).                                                                                                                                 Accordingly, Plaintiffs                                                            claim for

 Misappropriation of Federal Funds fails to state a claim and should be dismissed as a matter of

law.

VI I .         PLAI NTI FFS CLAI M FOR CONSPI RACY, AI DI NG AND ABETTI NG, AND
               CONCERTED ACTI ON FAI LS TO STATE A CLAI M UPON WHI CH RELI EF
               M AY BE GRANTED.

               As Claim VII in their Amended Complaint, Plaintiffs assert a cause of action styled as a

claim for Conspiracy, Aiding and Abetting, and Concerted Action (Doc. No. 22, ¶¶ 162-169),

which Defendants assume is intended as a state law tort claim for civil conspiracy. This claim

should be dismissed on the grounds that North Carolina law does not recognize the tort of civil

conspiracy as an independent cause of action.

               The North Carolina Court of Appeals recently summarized the law concerning purported

claims of civil conspiracy in Piraino Bros., LLC v. Atl. Fin. Group, Inc., 712 S.E.2d 328, 333-

34 (N.C. Ct. App. April 19, 2011). There, the Court explained as follows:

                                                                                                                                           13

         !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555222                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      111333      ooofff      222444
           It is well established that there is not a separate civil action for civil conspiracy in
           North Carolina. Dove v. Harvey, 168 N.C. App. 687, 690, 608 S.E.2d 798, 800
           (2005). Instead, civil conspiracy is premised on the underlying act. Harris v.
           Matthews, 361 N.C. 265, 273, n.2, 643 S.E.2d 566, 571, n.2 (2007). Where this
           Court has found summary judgment for the defendants on the underlying tort
           claims to be proper, we have held that a plaintiff s claim for civil conspiracy must
           also fail. Strickland v. Hedrick, 194 N.C. App. 1, 19, 669 S.E.2d 61, 73 (2008);
           Esposito v. Talbert & Bright, Inc., 181 N.C. App. 742, 747, 641 S.E.2d 695, 698
           (2007).

Accordingly, insofar as all of Plaintiffs other claims should be dismissed, Plaintiffs purported

claim for civil conspiracy should likewise be dismissed.

VI I I . PLAI NTI FFS CLAI M FOR UNFAI R OR DECEPTI VE ACTS OR PRACTI CES
         I N OR AFFECTI NG COM M ERCE FAI LS AS A M ATTER OF LAW.

           In their cause of action identified as Claim VIII, Plaintiffs assert a claim for Unfair or

Deceptive Acts or Practices in or Affecting Commerce.                                                                                                                                Plaintiffs allege that Defendants

engaged in unfair or deceptive acts or practices in or affecting commerce, as described herein

with particularity, which are prohibited by the North Carolina Unfair Trade Practices Act at

N.C.G.S. § 75-1.1, et seq. (2008). (Doc. No. 22, ¶ 171).

           At the outset, it is well established that employer-employee relationships do not fall

within the intended scope of N.C.G.S. § 75-1.1.                                                                                                 See e.g., American Marble Corp. v. Crawford,

84 N.C. App. 86, 351 S.E.2d 848 (1987); Buie v. Daniel International, Corp., 56 N.C. App. 445,

289 S.E.2d 118, disc. rev. denied,                                                                            305 N.C. 759, 292 S.E.2d 574 (1982).                                                                                                      Accordingly,

Plaintiffs amorphous allegations, which appear at their core to allege an employer-employee

dispute, are not properly within the purview of a Chapter 75 claim.

           It is further well-settled that a claim for unfair and deceptive trade practices may not be

brought against governmental entities such as Defendants Ashe, Alleghany, Avery, Wilkes, or

Watauga Counties.                                      North Carolina courts have held that Chapter 75 claims cannot be brought

against state or other governmental agencies. Hairston v. N.C. Agric. & Tech. State Univ., 2005

                                                                                                                                       14

     !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555222                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      111444      ooofff      222444
U.S. Dist. LEXIS 44233 (M.D.N.C. 2005); see also, e.g., Stephenson v. Town of Garner, 136

N.C. App. 444, 524 S.E.2d 608 (2000); Leftwich v. Gaines, 134 N.C. App. 502, 521 S.E.2d 717

(1999); Rea Constr. Co. v. City of Charlotte, 121 N.C. App. 369, 370, 465 S.E.2d 342, 343

(1996); Sperry Corp. v. Patterson, 73 N.C. App. 123, 125, 325 S.E.2d 642, 644 (1985). As

governmental entities established by statute (see, e.g., N.C.G.S. Chapter 153A), counties such as

Defendants Ashe, Alleghany, Avery, Wilkes, and Watauga Counties cannot be sued under

Chapter 75. Similarly, as a governmental agency organized and existing pursuant to N.C.G.S.

§ 122C-141(d) and N.C. Gen. Stat. § 160A-460, et seq., Defendant New River Service Authority

[ NRSA ] likewise cannot be sued under Chapter 75.

           As for the remaining Defendants, Gary L. Blevins, Larry Cox, Nathan A. Miller, Kenny

Poteat, and William Sands, Plaintiffs do not allege any acts or omissions whatsoever on the part

of these Defendants. However, assuming from their allegations set forth in Paragraph 108 of

their Amended Complaint that Plaintiffs contend that these Defendants are the five-member

Board comprised of one member residing in each of Alleghany, Ashe, Avery, Watauga and

Wilkes counties [that managed NRSA] these Defendants likewise cannot be sued under Chapter

75. Plaintiffs contend in their Amended Complaint that these Defendants are purportedly liable

 by virtue of their position and authority as Board Members, for mismanage[ing] their NRSA

enterprise.                   (See e.g. Amended Complaint ¶¶ 116, 117). It is well established under Sperry

Corp., that as long as they act as representatives of a political subdivision, government officials

cannot be held liable for claims asserted pursuant to N.C. Gen. Stat. § 75-1.1. Id.; see also, e.g.,

Golden Rule Insurance Co. v. Long, 113 N.C. App. 187, 439 S.E.2d 599, appeal dismissed and

disc. review denied, 335 N.C. 555, 439 S.E.2d 145 (1993).                                                                                                                                            Plaintiffs do not allege that

Defendants Blevins, Cox, Miller, Poteat, or Sands took any actions inconsistent with their



                                                                                                                                       15

     !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555222                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      111555      ooofff      222444
official duties as members of the Board of NRSA. Accordingly, Plaintiffs unfair and deceptive

trade practice claim against Blevins, Cox, Miller, Poteat, and Sands, to the extent it is asserted

against them in their individual capacities, likewise fails as a matter of law and should be

dismissed.

             In summary, Plaintiffs claim for Unfair or Deceptive Acts or Practices in or Affecting

Commerce fails as a matter of law, and should be dismissed as to each and every Defendant.

I X.         PLAI NTI FFS CLAI M FOR PUNI TI VE DAM AGES FAI LS AS A M ATTER OF
             LAW.

             Set forth as Claim IX in their Amended Complaint, Plaintiffs purport to bring a claim for

punitive damages against the Defendants. It is well established that punitive damages cannot be

recovered against governmental entities or their agents. Long v. City of Charlotte, 306 N.C. 187,

206-208, 293 S.E.2d 101, 113-15 (1982). Moreover, Plaintiffs claim for punitive damages

against Alleghany, Ashe, Avery, Watauga and Wilkes counties, which appear to be founded

upon a theory of vicarious liability, are barred by N.C. Gen. Stat. § 1D-15(d). For these reasons,

Plaintiffs claims for punitive damages against the Defendants fail as a matter of law and should

be dismissed.

X.           PLAI NTI FFS CLAI M S AGAI NST BOARD M EM BER DEFENDANTS FAI L TO
             STATE A CLAI M UPON WHI CH RELI EF M AY BE GRANTED AS THEY ARE
             REDUNDANT AND UNNECESSARY.

             Assuming that Plaintiffs allegations have set forth cognizable causes of action and have

met the pleading requirements imposed by Rule 8 and Rule 9(b), which, as shown above, they

have not, Plaintiffs claims against Defendants Gary L. Blevins, Larry Cox, Nathan Miller,

Kenny R. Poteat, and William Sands (collectively,                                                                                                                         Board Member Defendants ) should

nonetheless be dismissed because such official capacity claims are redundant and unnecessary.




                                                                                                                                         16

       !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555222                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      111666      ooofff      222444
              North Carolina courts have observed that a pleading should clearly state the capacity

in which [a defendants is] being sued.                                                                                      Efird v. Riley, 342 F. Supp. 2d 413, 421 (M.D.N.C.

2004) (citing Warren v. Guilford County, 129 N.C. App. 836, 839, 500 S.E.2d 470, 472 (1998)).

    To this extent, plaintiffs should include a clear statement of capacity in the caption, the

allegations, and the prayer for relief.                                                                            Efird, 342 F. Supp. 2d at 421. In the absence of a clear

statement regarding capacity, courts should look at the nature of relief sought. See id. Finally,

the North Carolina Court of Appeals has noted that in the absence of a clear statement of

defendant s capacity a plaintiff is deemed to have sued a defendant in his official capacity. See

id.

              Here, the caption of Plaintiffs Amended Complaint does not indicate whether the Board

Member Defendants are being sued in their individual or official capacity. Plaintiffs do make the

irrelevant allegation that Board Member Defendants are individually subject to personal liability

for an alleged failure to file an audit report6. (Doc. No. 22, ¶ 113). Furthermore, Plaintiffs allege

that Board Members past and present are individually responsible for the NRSA enterprises

actions and inactions by virtue of their position or authority.                                                                                                                               (Doc. No. 22, ¶ 116). However,

neither of the aforementioned allegations, or other allegations contained in Plaintiffs Amended

Complaint, or prayer for relief provide an indication as to whether Plaintiffs claims arising from

their alleged unpaid wages and wage benefits have been brought against the named Defendants

in their individual or official capacity.                                                                                          Moreover, Plaintiffs Amended Complaint seeks

monetary damages for unpaid wages and wage benefits from all Defendants, including the Board

Member Defendants, suggesting an official capacity suit. See Efird, 342 F. Supp. 2d at 422. As

6
  Plaintiffs allegation is irrelevant because Plaintiffs claims in the instant action do not arise
from any failure to file audits reports, but rather are claims that arise from alleged unpaid earned
wages, wage benefits, as well as various other compensation and benefits. (Doc. No. 22, ¶¶ 118-
119).
                                                                                                                                          17

        !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555222                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      111777      ooofff      222444
such, in the absence of such a clear statement of Defendants capacity, Plaintiffs are deemed to

have sued the Board Member Defendants in their official capacity. See id. (concluding that

defendant sheriff was being sued in his official capacity where the caption did not indicate the

capacity and plaintiff was seeking money damages from defendant sheriff and sheriff s

department).

             Because Plaintiffs claims against the Board Member Defendants are against them in

their official capacity, and because Defendant NRSA is already named in the lawsuit, said claims

against the Board Member Defendants should be dismissed because they are redundant. It is

well-settled that suits against officers in their official capacity represent only another way of

pleading an action against an entity of which an officer is an agent.                                                                                                                                               Monell v. Dept. of Social

Servs., 436 U.S. 658, 691 n.55 (1978). Thus, any official capacity claims asserted by the

Plaintiffs against the Board Member Defendants in their official capacity must be treated as

claims against the NRSA and should be dismissed. See Hicks v. Halifax County Bd. Of Educ., 93

F. Supp. 2d 649, 667 (E.D.N.C. 1999) (dismissing official capacity actions against individual

school officials as duplicative of action against school board).

XI .         ALTERNATI VELY, PUBLI C OFFI CI AL I M M UNI TY APPLI ES TO THE
             BOARD M EM BER DEFENDANTS.

             Alternatively, should this Court determine that the claims against the Board Member

Defendants are brought against them in their individual capacity, Plaintiffs claims should still be

dismissed pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Plaintiffs claims

are barred as against the Board Member Defendants because they are entitled to public official

immunity. It is well-established that public officials enjoy absolute immunity from personal

liability for their discretionary acts done without corruption or malice.                                                                                                                                                      Schlossberg v. Goins,

141 N.C. App. 436, 445, 540 S.E.2d 49, 56 (2000), disc. review denied and dismissed, 355 N.C.

                                                                                                                                         18

       !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555222                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      111888      ooofff      222444
215, 560 S.E.2d 136 (2002).                                                                   Discretionary acts are those requiring personal deliberation,

decision, and judgment.                                                Jones v. Kearns, 120 N.C. App. 301, 306, 462 S.E.2d 245, 248, disc.

review denied, 342 N.C. 414, 465 S.E.2d 541 (1995).

           Aside from Plaintiffs conclusory and inflammatory allegations, Plaintiffs have failed to

set forth allegations in a                                                        simple, concise, and direct                                                                        manner that the Board Member

Defendants conduct was a product of actual malice or corruption or that they acted outside the

scope of their official duties. See Fed. R. Civ. P. 8(d)(1); see Collum v. Charlotte-Mecklenburg

Bd. of Educ., 2009 U.S. Dist. LEXIS 125232 (W.D.N.C. Oct. 2, 2009) (noting that a conclusory

allegation that a public official acted maliciously, with corruption, or outside the scope of their

duties is not enough to overcome their public official immunity). As discussed above, Claim I of

Plaintiffs Amended Complaint styled as fraud, common law fraud, fraud by concealment and

promissory fraud, fails to state a claim upon which relief can be granted because it does not

comply with Rules 8 and 9(b) of Federal Rules of Civil Procedure. That is, Plaintiffs fraud

claims containing only vague conclusions fail to state a claim for relief and fail to state how this

conduct was a product of malice or corruption.                                                                                                                           Similarly, Plaintiffs                                                    Claim VI for

 misappropriation of federal funds                                                                             which merely states that Defendants                                                                                                 converted and

misappropriated federal funds, is a conclusory, insufficient allegation to establish that the Board

Member Defendants acted maliciously or with corruption. See Collum. Plaintiffs conclusory

allegations are not enough to overcome the Board Member Defendants entitlement to public

official immunity and therefore such claims against the Board Member Defendants should be

dismissed for failure to state a claim upon which relief can be granted. See Meyer v. Walls, 347

N.C. 97, 489 S.E.2d 880 (1997) (noting that a conclusory allegation that a public official acted

willfully and wantonly should not be sufficient, by itself, to withstand a Rule 12(b)(6) motion to



                                                                                                                                       19

     !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555222                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      111999      ooofff      222444
dismiss and the facts alleged in the complaint must support such a conclusion); see also Jacobs

v. Sherard, 36 N.C. App. 60, 66, 243 S.E.2d 184, 189, disc. review denied, 295 N.C. 466, 246

S.E.2d 12 (1978) (where complaint does not allege that law enforcement officers exceeded their

authority or acted outside the scope of the duty imposed upon them, dismissal of the officers

under Rule 12(b)(6) is appropriate).

XI I .         PLAI NTI FFS CLAI M S AGAI NST THE BOARD M EM BER DEFENDANTS
               FAI L TO STATE A CLAI M UPON WHI CH RELI EF M AY BE GRANTED AS
               EACH I NDI VI DUAL CANNOT BE HELD LI ABLE FOR AN ALLEGED
               COLLECTI VE ACTI ON.

               Alternatively, Plaintiffs claims against the Board Member Defendants fail to state a

claim upon which relief may be granted as each individual board member cannot be held liable

for a decision made as a collective Board. In their Amended Complaint, Plaintiffs allege that

NRSA is managed by a five-member Board comprised of one member residing in each of

Alleghany, Ashe, Avery, Watauga, and Wilkes counties. (Doc. No. 22, ¶ 108). Furthermore,

Plaintiffs allege that the Board has decided not pay their earned wages and wage benefits.

(Doc. No. 22, ¶ 119). However, none of the Board Member Defendants, in their individual

capacity, had the ability to deprive Plaintiffs of their alleged wage or wage benefits because, by

virtue of Plaintiffs allegations, each Board Member could not affect the alleged decision not to

pay separate and apart from a majority vote of the Board. See Watts-Means v. Prince George s

Family Crisis Center, 7 F.3d 40, 42 (4th Cir. 1993) (holding state employee not acting under

color of state law where he did not control the actions of the board as he had only one of twenty-

one votes of board). As such, Plaintiffs Amended Complaint fails to state a claim upon which

relief can be granted and should be dismissed as to the Board Member Defendants because

Plaintiffs have not alleged, and cannot allege, that the individual Board Member Defendants can

be held liable for actions that required a vote collectively from the Board.

                                                                                                                                           20

         !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555222                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      222000      ooofff      222444
                                                                                                                 CONCLUSI ON

            For the reasons set forth hereinabove, the Defendants respectfully submit that the

Plaintiffs Amended Complaint fails to state a claim upon which relief may be granted and

should be dismissed as to all Defendants.

            Respectfully submitted, this the 1st day of June, 2012.

         M ARTI NEAU KI NG PLLC                                                                                                                                    BRUCE L. KAPLAN,
                                                                                                                                                                   ATTORNEY AT LAW
By:      s/ Elizabeth A. Martineau
         Elizabeth A. Martineau                                                                                                                By:                 s/ Bruce Lewis Kaplan
         N.C. State Bar No. 26394                                                                                                                                  Bruce Lewis Kaplan
         P.O. Box 31188                                                                                                                                            N.C. Bar No. 9900
         Charlotte, NC 28231                                                                                                                                       P.O. Box 455
         Telephone: 704.247.8524                                                                                                                                   Boone, NC 28607
         Facsimile: 704.943.0543                                                                                                                                   Telephone: 828.264.7652
         emartineau@martineauking.com                                                                                                                              Facsimile: 828.264.5637
         COUNSEL FOR DEFENDANTS NEW                                                                                                                                bruce.kaplan@att.net
         RIVER SERVICE AUTHORITY, GARY                                                                                                                             COUNSEL FOR DEFENDANT NEW
         L. BLEVINS, LARRY COX, NATHAN A.                                                                                                                          RIVER SERVICE AUTHORITY
         MILLER, KENNY R. POTEAT, AND
         WILLIAM SANDS




                                                                                                                                        21

      !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555222                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      222111      ooofff      222444
         POYNER SPRUI LL LLP                                                                                                                                       WOM BLE CARLYLE
                                                                                                                                                                   SANDRI DGE & RI CE, LLP
By:      s/ Robert F. Orr
         Robert F. Orr                                                                                                                         By:                 s/ Bradley O. Wood
         N.C. State Bar No. 6798                                                                                                                                   Bradley O. Wood
         P.O. Box 1801                                                                                                                                             N.C. State Bar No. 22392
         Raleigh, NC 27602-1801                                                                                                                                    One West Fourth Street
         Telephone: 919.783.6400                                                                                                                                   Winston-Salem, NC 27101
         Facsimile: 919.783.1075                                                                                                                                   Telephone: 336.728.7012
         rorr@poynerspruill.com                                                                                                                                    Facsimile: 336.726.6913
                                                                                                                                                                   bwood@wcsr.com
                                                                                                                                                                   COUNSEL FOR DEFENDANTS
By:      s/ Andrew H. Erteschik                                                                                                                                    ALLEGHANY COUNTY, AVERY
         Andrew H. Erteschik                                                                                                                                       COUNTY AND WATAUGA COUNTY
         N.C. State Bar No. 35269
         P.O. Box 1801
         Raleigh, NC 27602-1801
         Telephone: 919.783.6400
         Facsimile: 919.783.1075
         aerteschik@poynerspruill.com
         COUNSEL FOR DEFENDANTS
         ALLEGHANY COUNTY, ASHE
         COUNTY, AVERY COUNTY,
         WATAUGA COUNTY AND WILKES
         COUNTY




                                                                                                                                        22

      !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555222                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      222222      ooofff      222444
         DAVI S & HAM RI CK, LLP                                                                                                                                   CAUDLE & SPEARS, PA


By:      s/ H. Lee Davis, Jr.                                                                                                                  By:                 s/ B. Alexander Correll, Jr.
         H. Lee Davis, Jr.                                                                                                                                         B. Alexander Correll, Jr.
         N.C. State Bar No.: 7683                                                                                                                                  N.C. State Bar No. 38112
         P.O. Drawer 20039                                                                                                                                         121 West Trade Street, Suite 2600
         Winston-Salem, NC 27120-0039                                                                                                                              Charlotte, NC 28202
         Telephone: 336.725.8385, ext. 107                                                                                                                         Telephone: 704.377.1200
         Facsimile: 336.723.8838                                                                                                                                   Facsimile: 704.338.5858
         ldavis@davisandhamrick.com                                                                                                                                acorrell@caudlespears.com
                                                                                                                                                                   COUNSEL FOR DEFENDANT
                                                                                                                                                                   ASHE COUNTY
By:      s/ Ann Cox Rowe
         Ann Cox Rowe
         N.C. State Bar No.: 26686
         P.O. Drawer 20039
         Winston-Salem, NC 27120-0039
         Telephone: 336.725.8385, ext. 116
         Facsimile: 336.723.8838
         arowe@davisandhamrick.com
         COUNSEL FOR DEFENDANTS
         WILKES COUNTY AND GARY L.
         BLEVINS




                                                                                                                                        23

      !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555222                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      222333      ooofff      222444
                                                                                       CERTI FI CATE OF SERVI CE

       I hereby certify that I have this day electronically filed the foregoing document with the
Clerk of Court using the CM/ECF system which will send notification of such filing to all
counsel and parties of record as follows:

         Charles A. Oswald                                                                                                                    Elizabeth A. Martineau
         CEO Law PLLC                                                                                                                         Martineau King PLLC
         P.O. Box 6232                                                                                                                        P.O. Box 31188
         Hickory, NC 28601                                                                                                                    Charlotte, NC 28231
         charles.oswald@ceolaw.com                                                                                                            704-247-8524
         Counsel for Plaintiffs                                                                                                               emartineau@martineauking.com
                                                                                                                                              Counsel for Defendants Gary L.
                                                                                                                                              Blevins, Larry Cox, Nathan A. Miller,
                                                                                                                                              New River Service Authority, Kenny R.
                                                                                                                                              Poteat and William Sands

         Bruce Lewis Kaplan                                                                                                                   Bradley Owen Wood
         Bruce L. Kaplan Attorney at Law                                                                                                      Womble, Carlyle, Sandridge & Rice,
         P.O. Box 455                                                                                                                         PLLC
         Boone, NC 28607                                                                                                                      One West Fourth St.
         bruce.kaplan@att.net                                                                                                                 Winston-Salem, NC 27101
         Counsel for Defendant New River                                                                                                      bwood@wcsr.com
         Service Authority                                                                                                                    Counsel for Defendants Alleghany
                                                                                                                                              County, Avery County and Watauga
                                                                                                                                              County

         Ann Cox Rowe                                                                                                                         Boyd Alexander Correll, Jr.
         H. Lee Davis, Jr.                                                                                                                    Caudle & Spears, P.A.
         Davis & Hamrick, LLP                                                                                                                 121 W. Trade St., Suite 2600
         P.O. Box 20039                                                                                                                       Charlotte, NC 28202
         635 West 4th Street                                                                                                                  acorrell@caudlespears.com
         Winston-Salem, NC 27120-0039                                                                                                         Counsel for Defendant Ashe County
         arowe@davisandhamrick.com
         ldavis@davisandhamrick.com
         Counsel for Defendants Gary L. Blevins
         and Wilkes County

           This the 1st day of June, 2012.

                                                                                                                               s/ Andrew H. Erteschik
                                                                                                                               Andrew H. Erteschik




     !aaassseee      555:::111222-­-­-cccvvv-­-­-000000000333777-­-­-RRRLLLVVV-­-­-DDD!KKK                  DDDooocccuuummmeeennnttt      555222                  FFFiiillleeeddd      000666///000111///111222                  PPPaaagggeee      222444      ooofff      222444

								
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