*(Though Sometimes in Business, Maybe Not)
Friends don’t let friends do business with friends.
Among the key Business Court takeaways here at the blog, this maxim rings loud and clear. So, when decade-long friends Jared Londry and Daniel Farrar went into the real estate business together in Charlotte, it was at least on the bingo card that the Business Court might be a part of their future.
And that’s before even considering that Londry and defendants could not agree on whether Londry ever was a limited partner in the entity he joined onto with Farrar – defendant Stream Realty Partners-Charlotte, L.P. Londry v. Stream Realty Partners, L.P., 2025 NCBC 31, chronicles another friendship tested by enterprise success and failure. Here, the financial untangling of Londry and Stream-Charlotte featured an analysis of what it means to be a business partner, and payment (or not) of commissions for deals in which Londry was involved while at Stream-Charlotte.
At summary judgment, the Court examined dueling claims for breach of contract and tortious interference with contract that called for a judgment on just what Londry’s relationship with Stream-Charlotte actually was. Londry claimed that after Stream declined an immediate partnership interest, Farrar agreed to transfer to Londry half of his 30% interest in Stream-Charlotte. Yet, Judge Earp found the record held a different story: that as Londry came aboard Farrar actually transferred half of his interest back to defendant Stream Realty Partners (the majority owner of Stream-Charlotte). Further, the Court noted that Londry’s employment agreement called for a one-year wait before any partnership eligibility. Id. ¶¶ 11, 14, 52.
Londry argued that because he was paid through a profit-sharing arrangement he still should be considered a partner in Stream-Charlotte. Noting that “partnership requires more than evidence of a compensation arrangement,” the Court reminded that the conditions of a partnership arise when the parties “share the profits and losses in equal or specified proportions.” Id. ¶ 54 (quoting La Familia Cosmovision, Inc. v. Inspiration Networks, 2014 WL 5342583, *6, 2014 NCBC 51, ¶ 34 (N.C. Super. Ct. Oct. 20, 2014)).
Londry also alleged a contractual breach based on his title of co-Market Leader being removed. But the Court briskly noted that as an at-will employee, if his employer could fire him, “it could certainly change his job title.” Id. ¶ 61.
The Court also examined Londry’s contention that he was owed commissions and profit participation for deals in which he was involved at Stream-Charlotte. The record showed numerous emails about the amounts Londry believed he was entitled to from these transactions, but the Court found “there is no indication in the record that Defendants ever agreed with Londry regarding how [he] was to be paid for them.” As to compensation structure and possible amounts due, the Court found material facts in dispute. Id. ¶¶ 62-64.
But it was an evidentiary gap noted by the Court which is of interest to Business Court practitioners. Defendants argued there was no live dispute about what Londry should be paid for the deals because one “fell through” and the remainder hadn’t reached a payout status because they weren’t closed. At hearing, Defendants relied on testimony from Farrar and their expert’s report for these points but the Court declined to consider them because the evidence underlying that argument was not before the Court. Id.
Worth Noting
- Londry also advanced a fraudulent misrepresentation claim over Farrar’s alleged misrepresentation the two would be equal partners in Stream-Charlotte and that “there is no you and me, we’re equal partners, and our success or lack of success in recruiting and profitability is both of ours.” The Court agreed with Defendants these were claims involving alleged breaches of Londry’s employment agreement and the “economic loss rule” barred the claim where tort recovery was sought but a contract existed that provided the applicable standard of conduct. Id. ¶¶ 83-85.
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