Judge Houston Wrestles with a Non-Existent Plaintiff (And Wins!)
The case of High Point BBC, LLC v. Arvelo, 2026 NCBC 79 (Houston, J.) Is a dispute over the operation of a gym located in High Point, North Carolina doing business under the name High Point Burn Boot Camp.
The Plaintiff High Point BBC, LLC represented in its Complaint that it was "a registered North Carolina limited liability company with its principal office” in Raleigh North Carolina. The problem for this Plaintiff was that it was not a registered entity with the state. Furthermore, plaintiff conceded that it was not a registered assumed name when the Plaintiff commenced its action.
The Problem Could Not be Cured by Presenting it as a Typographical Error
The name of the Plaintiff in the complaint caption might have been a mere typographical error, as there was a registered entity under the name of Highpoint BBC, LLC. Judge Houston acknowledged that the single space of difference between High Point BBC, LLC and Highpoint BBC, LLC “might potentially be explained as a misnomer or typographical error,” but he said that “Plaintiff has declined to pursue that route, and the Court therefore does not do so either.” Op. ¶34.
A “Doing Business As” Argument Did not Suffice
Plaintiff instead argued that the properly spaced High Point entity was a DBA for the un-spaced Highpoint entity. Judge Houston was not willing to accept this argument, as Plaintiff had conceded that “it was not a registered assumed name (i.e., “d/b/a”) when Plaintiff commenced this action.” Op. ¶6. The DBA was filed two months after the case was initiated. The Court pointed out that jurisdiction had to be assessed at the time of the filing of the complaint. Op. ¶ 37. In my favorite line of the Opinion, Judge Houston said that ”jurisdiction is not a lightbulb which can be turned off or on during the course of the trial.” Id. (quoting WLAE, LLC v. Edwards, 257 N.C. App. 251, 258 (2017)).
The Operating Agreement Referenced in the Complaint was not for the Non-Existent LLC
Further compounding Plaintiff's pleading problems, they had rested their claims not on the Operating Agreement of the non-existent High Point BBC, LLC, but instead on the Operating Agreement of Burn Boot Camp High Point, NC which included High Point LLC North Carolina limited liability company as a member. In that Agreement, neither High Point BBC with a space nor Highpoint BBC without a space was defined as the “Company.” The “Company” designated under that Operating Agreement was High Point, LLC an entity that was formed in 2016 and administratively dissolved in 2018.
Plaintiff counsel's summary of this situation was to concede that “Plaintiff's paperwork is ‘messy’” Op. ¶19.
Plaintiffs Last Ditch Effort to save its Complaint Didn't Work Either
Plaintiff's final argument to save its Complaint was that the Defendant had ““admitted . . . that Plaintiff is a legal person” in depositions and through the Gym’s financial transactions.” Op. ¶35.
This also was not persuasive to the Court. Judge Houston said “the parties cannot. . . enforceably stipulate to the existence of an entity that does not exist as a matter of law or to subject matter jurisdiction where it does not otherwise exist.” Op. ¶ 35 (emphasis added).
Dismissal for Lack of Standing
Judge Houston summarized the essential ingredient of standing as follows: ““Standing, put simply, is a person’s right to assert ‘a legal claim or seek judicial enforcement of a duty or right.’” Op. ¶22 (quoting Mauck v. Cherry Oil Co., 388 N.C. 325, 331 (2025)).
Having already determined that the Plaintiff did not exist, it was a short step for Judge Houston to grant the Motion to Dismiss for lack of standing.
Salt in the Wound
Rubbing salt in the wound, Judge Houston went on to rule that he would have dismissed the Complaint pursuant to Rule 12(b)(6) even if a properly existing Plaintiff was before him.
Why? two reasons which will be of interest to those who file lawsuits on behalf of actually existing LLCs.
First, The Plaintiff was not the “Company” identified in the Operating Agreement that it was suing under. That was High Point LLC or either of the entities with BBC in their names (High Point BBC or Highpoint BBC).
Second, although a member of a limited liability company can make claims for breach of an operating agreement, “those claims must be premised on harm to the member individually rather than to the company as a whole.” Op. ¶50. Plaintiff’s complaint made claims only for harm against the “Company” but did not make any claims asserting harm as a member of the company.
Adding a little bit more salt, Judge Houston dismissed Plaintiff's remaining claim for a declaratory judgment. That claim was for “a declaratory judgment to determine that Defendant has no authority to act on behalf of the Company without the consent or approval of enough member manager to constitute a majority interest in the Company.” Cpt. ¶23.
He did that because he determined that: “rendering a declaratory judgment under the procedural circumstances of this action would not “terminate the uncertainty or controversy giving rise to the proceeding.” Op. ¶56.
The dismissal granted by Judge Houston was without prejudice, although I don't see where the Plaintiff without standing has anywhere to go with a second effort.
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