An unpublished opinion of the North Carolina Court of Appeals does not constitute
controlling legal authority. Citation is disfavored, but may be permitted in accordance
with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.



                                NO. COA13-622
                       NORTH CAROLINA COURT OF APPEALS

                               Filed: 4 March 2014


REEGER BUILDERS, INC. and KITCHEN
CREATIONS OF GASTONIA, INC.,
     Plaintiffs,

      v.                                      Gaston County
                                              No. 08 CVS 5609
J.C. DEMO INSURANCE GROUP, INC.,
JCD INSURANCE GROUP, LLC, J.C.
DEMO & ASSOCIATES, J.C. DEMO &
ASSOCIATES, INC., JEFFREY C. DEMO,
individually, CENTRAL MUTUAL
INSURANCE COMPANY and ALL AMERICA
INSURANCE COMPANY,
     Defendants.


      Appeal by plaintiffs from order entered 1 February 2013 by

Judge Yvonne Mims Evans in Gaston County Superior Court.                      Heard

in the Court of Appeals 22 October 2013.


      Gray, Layton, Kersh, Solomon, Furr,                  & Smith, P.A., by
      William E. Moore, Jr., and Marcus                    R. Carpenter, for
      plaintiff-appellants.

      Weaver, Bennett & Bland, P.A., by Trent M. Grissom, for
      defendant-appellees.


      BRYANT, Judge.


      Where the trial court entered a default judgment against

defendant Jeffrey C. Demo as to all of plaintiffs’ claims and
                                             -2-
plaintiffs’         allegations       were    sufficient           to    establish        that

defendant J.C. Demo Insurance Group Inc. operated as an alter-

ego   of    defendant       Jeffrey    C.    Demo,     the    trial      court       erred   in

granting      defendant       J.C.     Demo        Insurance       Group       Inc.’s    Rule

12(b)(6) motion to dismiss.

      On     31    October     2008,    in    Gaston       County       Superior        Court,

plaintiffs Reeger Builders Inc. (Reeger Builders) and Kitchen

Creations of Gastonia Inc. (Kitchen Creations) filed a verified

complaint         against    defendants       J.C.    Demo     &    Associates,          Inc.;

Jeffrey C. Demo, individually; and Central Insurance Companies.

Plaintiffs sought recovery for losses sustained as a result of a

fire occurring on 6 June 2006 at 154 Superior Stainless Road, a

property     owned     by    plaintiff       Reeger    Builders         and    occupied      by

plaintiff Kitchen Creations.

      In    their     complaint,       plaintiffs       alleged         that    in    October

2003,      defendants       acting    through       J.C.     Demo   and       J.C.    Demo   &

Associates, Inc. issued two insurance policies: one policy for

Kitchen Creations and one for Reeger Builders.                           Each policy had

an aggregate limit of $1,000,000.00.                    The policies were renewed

annually and were both in effect on 6 June 2006.                           No limitations

as to coverage were disclosed.
                                        -3-
     Between    October       2003    and     June    2006,    plaintiff       Kitchen

Creations leased several pieces of large equipment.                            Kitchen

Creations’    insurance       policy    was     amended       to    cover   potential

damage to the equipment and the financiers were also listed as

insured under the same policy.                 Plaintiffs alleged that J.C.

Demo gave his assurance that the insurance policy, as modified,

was sufficient to cover the replacement of the leased equipment

in the event of loss.

     On 6 June 2006, a fire broke out at 154 Superior Stainless

Road.    The building and its contents were completely destroyed.

Kitchen Creations, which operated a business on the property,

asserted $32,532.00 in business income losses.                      Reeger Builders,

which owned the building, asserted $816,894.01 in losses.                           When

notified,     defendants       informed       plaintiffs           that   losses     for

business income under Kitchen Creation’s policy were capped at

$25,000.00    and    that    the     applicable      limit    for     damage   to    the

building     under   Reeger’s        policy    was    capped        at    $358,448.00.

Plaintiffs alleged uninsured damages amounting to $465,978.00.

     In their complaint, plaintiffs sought recovery for breach

of      contract/negligence,            breach        of       fiduciary           duty,

fraud/constructive          fraud,     negligent       misrepresentation,            and

unfair insurance practices/unfair or deceptive trade practices.
                                           -4-
On   25   November      2008,      plaintiffs      amended        their    complaint     to

include a claim for punitive damages.

      The record before us reflects that on                            16 January 2008,

Articles of Incorporation were filed with the Department of the

Secretary     of    State    for    J.C.    Demo        Insurance      Group    Inc.,    the

defendant-appellant in this action.                     On 14 April 2009, Articles

of Dissolution were filed with the Department of the Secretary

of   State    for     JC    Demo    and    Associates,          Inc.,     the    defendant

insurance      broker       that    plaintiffs           allege     sold       them    their

respective policies.

      On 18 May 2011, having been granted a motion to allow for

joinder of additional parties, plaintiffs filed a second amended

complaint naming as defendants J.C. Demo Insurance Group Inc.;

JCD Insurance Group LLC; J.C. Demo & Associates; J.C. Demo &

Associates Inc.; Jeffrey C. Demo, individually; Central Mutual

Insurance Company; and All America Insurance Company.

      The    record     before     us     shows    that    on     23    September      2011,

plaintiffs filed a motion for entry of default judgment as to

defendants JCD Insurance Group LLC, J.C. Demo & Associates, J.C.

Demo & Associates Inc., and Jeffrey C. Demo.                           Entry of default

against      the    named     defendants          was     entered       the     same    day.

Following a hearing on the matter, the trial court entered a 24
                                            -5-
October 2011 order in which it found that the named defendants

each failed to file an answer or other responsive pleadings to

plaintiffs’ second amended complaint.                     The trial court entered

default    judgment         against    defendants       JCD    Insurance    Group    LLC,

J.C.   Demo     &    Associates       Inc.,   J.C.      Demo   and   Associates,      and

Jeffrey    C.       Demo,     individually,       and    found    each     jointly    and

severally liable to plaintiffs                 for      damages in the amount of

$465,978.00.                Furthermore,       as       plaintiffs    claimed        that

defendants’         actions    in    or   affecting      commerce    were    unfair   or

deceptive in violation of General Statutes, section 75.1-1, the

trial court determined that plaintiffs were entitled to treble

damages on the asserted claims for $465,978.00, amounting to

$1,397,934.00, plus attorney fees in the amount of $12,670.50,

and court costs of $3,331.93.

       Defendant J.C. Demo Insurance Group Inc. submitted a motion

to dismiss plaintiffs’ second amended complaint pursuant to Rule

12(b)(6) for failure to state a claim for which relief may be

granted.      The matter came on for hearing during the 14 January

2013    civil       session     of    Gaston        County     Superior     Court,    the

Honorable Yvonne Mims Evans, Judge presiding.                         On 1 February

2013, the trial court filed its order granting defendant J.C.
                                             -6-
Demo      Insurance     Group     Inc.’s      motion      to    dismiss         plaintiffs’

claims.     Plaintiffs appeal.

                           _________________________________

       Initially,      we    note     that   plaintiffs        appeal     from     a    trial

court order dismissing one but not all of the parties to the

action.         The record before us indicates that plaintiffs’ claims

as   to    defendants       Central     Mutual      Insurance        Company      and     All

America Insurance Company are still outstanding.                          In their brief

to this Court, plaintiffs state in a footnote that on 26 October

2011,      defendants       Central     Mutual      Insurance        Company      and     All

America Insurance Company entered into a settlement agreement

with plaintiffs.           And, on 26 October 2011, plaintiffs entered a

voluntary        dismissal     with    prejudice       as      to   those       defendants.

However,        the   record      contains     no    evidence        of     a     voluntary

dismissal of defendants Central Mutual Insurance Company and All

America Insurance Company.              Thus, plaintiffs’ appeal appears to

be interlocutory.           See Veazey v. Durham, 231 N.C. 357, 362, 57

S.E.2d 377, 381 (1950)              (“An interlocutory order is one made

during the pendency of an action, which does not dispose of the

case, but leaves it for further action by the trial court in

order      to     settle    and     determine       the     entire      controversy.”).

Presuming such, we consider plaintiffs’ brief as a petition for
                                       -7-
writ of certiorari.         See N.C.R. App. P. 21 (2013) (“The writ of

certiorari may be issued in appropriate circumstances by either

appellate court to permit review of the judgments and orders of

trial tribunals when the right to prosecute an appeal has been

lost by failure to take timely action, or when no right of

appeal   from   an   interlocutory        order   exists,   or    for     review

pursuant to N.C.G.S. § 15A-1422(c)(3) of an order of the trial

court denying a motion for appropriate relief.”); Legacy Vulcan

Corp. v. Garren, ___ N.C. App. ___, ___, 731 S.E.2d 223, 225

(2012) (“We believe that dismissing this appeal as interlocutory

would likely waste judicial resources. . . . We exercise our

authority   under    Rule    2   to   consider    Plaintiff's    appeal    as   a

petition for certiorari, and we grant certiorari to review the

trial court's interlocutory order.” (citation omitted)).

    Plaintiffs argue that the trial court erred in granting

defendant J.C. Demo Insurance Group Inc.’s Rule 12(b)(6) motion

to dismiss plaintiffs’ claims for failure to state a claim upon

which relief may be granted.          We agree.

    When reviewing a trial court’s dismissal of a complaint

pursuant to Rule 12(b)(6) of our Rules of Civil Procedure, we

conduct a de novo review.             See State Employees Ass'n of N.C.,

Inc. v. N.C. Dep't of State Treasurer, 364 N.C. 205, 210, 695
                                       -8-
S.E.2d 91, 95 (2010).       “[W]e determine whether, as a matter of

law, the allegations of the complaint, treated as true, are

sufficient to state a claim upon which relief may be granted

under   some   legal   theory.    In   ruling     upon   such   a    motion,   the

complaint is to be liberally construed . . . .”                     Id. (citation

omitted).

            Dismissal under Rule 12(b)(6) is proper when
            one of the following three conditions is
            satisfied: (1) the complaint on its face
            reveals that no law supports the plaintiff's
            claim; (2) the complaint on its face reveals
            the absence of facts sufficient to make a
            good claim; or (3) the complaint discloses
            some fact that necessarily defeats the
            plaintiff's claim.

Schlieper v. Johnson, 195 N.C. App. 257, 261, 672 S.E.2d 548,

551 (2009) (citation omitted).

      On appeal, defendant J.C. Demo Insurance Group Inc. asserts

that the trial court’s dismissal of plaintiffs’ complaint as to

them was proper because J.C. Demo Insurance Group Inc. did not

exist at the time of the fire which damaged plaintiffs’ property

and business interests.        Articles of Incorporation for J.C. Demo

Insurance Group, Inc. were filed with the Secretary of State on

16   January   2008,   after     the   6   June   2006   fire   which     damaged

plaintiffs’ respective properties.            Furthermore, defendant J.C.
                                           -9-
Demo Insurance Group Inc. argues that all of plaintiffs’ claims

are barred by statutes of limitation.

       In   response,       plaintiffs      argue     that    defendant     J.C.    Demo

Insurance Group Inc. like all of the “Demo-defendants,” is an

alter-ego     of     defendant     Jeffrey       C.   Demo.      As   an    alter-ego,

plaintiffs contend they may “reverse-pierce” the corporate veil

to reach the assets of any Demo-defendant, including defendant

J.C. Demo Insurance Group Inc., to satisfy Jeffrey C. Demo’s

liability.

       Though beyond the pleadings, the record before us shows

that   the    trial     court      has    already      entered    judgment     against

defendants JCD Insurance Group LLC, J.C. Demo & Associates Inc.,

J.C. Demo and Associates, and Jeffrey C. Demo, individually,

finding for plaintiffs as to each claim as a matter of law and

finding      these    defendants         jointly      and    severally     liable    for

plaintiffs’ damages.          The trial court awarded plaintiffs damages

of   $465,978.00      and    due    to    the    asserted     claim   of    unfair   or

deceptive trade practices, trebled this amount to $1,397,934.00.

We reiterate that defendant J.C. Demo Insurance Group Inc. was

not incorporated until after the fire that damaged plaintiffs’

respective properties.           Based on this record evidence, we do not

consider whether defendant J.C. Demo Insurance Group Inc. is
                                          -10-
liable    to    plaintiffs       for     the    claims         asserted.             Rather,       we

consider      whether    the     corporate       veil          of    defendant        J.C.       Demo

Insurance Group Inc. can be disregarded by reverse piercing to

satisfy the obligations of the remaining Demo Defendants.                                          We

hold that it can be.

       “The     doctrine    of    piercing       the       corporate         veil     is     not   a

theory of liability. Rather, it provides an avenue to pursue

legal claims against corporate officers or directors who would

otherwise be shielded by the corporate form.”                              Green v. Freeman,

___    N.C.     ___,    ___,      ___     S.E.2d          ___,       ___     (8     Nov.     2013)

(No.424A12).       “The general rule is that in the ordinary course

of    business,    a    corporation       is     treated            as    distinct        from    its

shareholders.”          State v. Ridgeway Brands Mfg., LLC, 362 N.C.

431,     438,    666    S.E.2d     107,        112    (2008)             (citation    omitted).

However, “courts will disregard the corporate form or ‘pierce

the    corporate       veil,’      and     extend          liability          for     corporate

obligations       beyond    the    confines          of    a     corporation's            separate

entity,    whenever        necessary      to     prevent            fraud     or     to    achieve

equity.”        Glenn v. Wagner, 313 N.C. 450, 454, 329 S.E.2d 326,

330    (1985)    (citation       omitted);       see      also       Acceptance           Corp.    v.

Spencer, 268 N.C. 1, 9, 149 S.E.2d 570, 576 (1966) (discussing
                                      -11-
the basis for disregarding the corporate form or piercing the

corporate veil, the “Instrumentality Rule”).

             [I]f “the corporation is so operated that it
             is a mere instrumentality or alter ego of
             the sole or dominant shareholder and a
             shield for his activities in violation of
             the declared public policy or statute of the
             State . . . the corporate entity [may] be
             disregarded and the corporation and the
             shareholder treated as one and the same
             person.

Ridgeway Brands Mfg., LLC, 362 N.C. at 440-41, 666 S.E.2d at

113-14 (citation and quotations omitted).

       To    pierce   the    corporate     veil    by   establishing   that    a

corporate entity is a mere instrumentality or alter ego of a

sole    or    dominate      shareholder,    a     plaintiff   must   prove    the

following three elements:

             (1) Control, not mere majority or complete
             stock control, but complete domination, not
             only of finances, but of policy and business
             practice in respect to the transaction
             attacked so that the corporate entity as to
             this transaction had at the time no separate
             mind, will or existence of its own; and

             (2) Such control must have been used by the
             defendant to commit fraud or wrong, to
             perpetrate the violation of a statutory or
             other positive legal duty, or a dishonest
             and   unjust   act    in   contravention of
             plaintiff's legal rights; and

             (3) The aforesaid control and breach of duty
             must proximately cause the injury or unjust
             loss complained of.”
                                          -12-


Acceptance Corp., 268 N.C. at 9, 149 S.E.2d at 576, as quoted by

Fischer Inv. Capital, Inc. v. Catawba Dev. Corp., 200 N.C. App.

644, 650, 689 S.E.2d 143, 147 (2009).

      On appeal, plaintiffs ask this Court to determine whether

the   allegations        of     their    complaint,     treated     as   true,     are

sufficient to allow a court to disregard the corporate form of

defendant J.C. Demo Insurance Group Inc. in order to satisfy the

debts of defendant Jeffrey C. Demo.                  This is known as reverse-

piercing.       See Fischer Inv. Capital, Inc., 200 N.C. App. 644,

689 S.E.2d 143.

      On 31 October 2008, plaintiffs filed a complaint against

defendants J.C. Demo & Associates, Inc., and Jeffrey C. Demo.

On 25 November 2008, plaintiffs filed an amended complaint to

include     a    claim    for     punitive       damages.      On   18   May     2011,

plaintiffs filed a second amended complaint incorporating the

claims for relief filed in their first amended complaint but

adding    additional          parties,     including        defendant    J.C.     Demo

Insurance       Group    Inc.      In    their    amended     and   second     amended

complaints,       plaintiffs      refer    to     defendants     which   used     some

derivation of J.C. Demo’s name as “Demo Defendants.”                     Plaintiffs

allege    that     the     Demo    Defendants       acted     interchangeably      as

plaintiffs’ insurance broker.
                    -13-
7(h).     Defendants   co-mingle   and   share
employees and assets, and place or produce
insurance    policies    from    e.g.    [sic]
Defendants Central and American beginning
with initial contacts with customers such as
Plaintiffs and throughout other phases of
obtaining insurance coverage and claims as
if they were one entity; employees of one or
more of the Demo Defendants are subject to
the direction and control of one or more of
the Demo Defendants are subject to the
direction   and   control   of    other   Demo
Defendants,   and   particularly   under   the
direction, control, and supervision of J.C.
Demo.

7(i).     Upon information and belief, [the
Demo Defendants] all engage in significant
financial interactions and debt exchange,
operate out of the same locations, produce,
manage and maintain insurance policies for a
customer using the various and diverse names
of the Demo Defendants as authorized agents
of Central and American.

7(j).     [The Demo Defendants] share common
officers,    directors,   shareholders    or
members, and are all owned, operated and/or
managed by J.C. Demo.

. . .

7(l).     There   is    no   true   corporate
separateness between the Demo Defendants.

7(m).      The Demo Defendants are without
separate corporate mind, will or existence,
and    are    operated  as    mere  shells,
instrumentalities and/or alter egos of, and
to perform solely for the benefit of J.C.
Demo and/or each other.

7(n).     The Demo Defendants are a single
enterprise that is excessively fragmented
                                            -14-
              into separate legal entities.

       Taking       plaintiffs’     allegations       as    true      and     reading    the

instrumentality test liberally, plaintiffs sufficiently contend

that the Demo Defendants were controlled by defendant Jeffrey C.

Demo; that the Demo Defendants represent a single enterprise

excessively fragmented for the improper purpose of obscuring an

agent or broker responsible when policy claims are contested;

and    that   plaintiffs       have    been       harmed    as    a    result     of    this

excessive fragmentation.              See id. at 650, 689 S.E.2d at 147

(discussing three elements of the instrumentality test).                                  As

such, defendant J.C. Demo Insurance Group Inc. may be deemed an

instrumentality within the Demo enterprise and an alter-ego of

Jeffrey C. Demo.

       As the trial court has entered a default judgment against

defendants JCD Insurance Group LLC, J.C. Demo & Associates Inc.,

J.C.   Demo     &    Associates,      and    Jeffrey       C.    Demo,       individually,

finding each jointly and severally liable, we hold that the

corporate veil of defendant J.C. Demo Insurance Group Inc. can

be reverse pierced to satisfy the liability of the remaining

Demo    defendants.            Because       we    determine          that    plaintiffs’

allegations,         treated   as   true,      are   sufficient          to    provide    an

avenue by which recovery of damages awarded may be acquired, we
                                       -15-
reverse the trial court’s grant of defendant J.C Demo Insurance

Group’s Rule 12(b)(6) motion.             See State Employees Ass'n of

N.C.,   364   N.C.   at   210,   695    S.E.2d   at   95   (“[W]e   determine

whether, as a matter of law, the allegations of the complaint,

treated as true, are sufficient to state a claim upon which

relief may be granted under some legal theory. In ruling upon

such a motion, the complaint is to be liberally construed . . .

.” (citation omitted)).

     Reversed.

     Judges McGEE and STROUD concur.

     Report per Rule 30(e).
