All opinions are subject to modification and technical correction prior to official publication in the North Carolina Reports and North Carolina Court of Appeals Reports. In the event of discrepancies between the electronic version of an opinion and the print version appearing in the North Carolina Reports and North Carolina Court of Appeals Reports, the latest print version is to be considered authoritative. NO. COA02-43NORTH CAROLINA COURT OF APPEALSFiled: 1 April 2003BRENDA H. COMPTON AND CURT OLSON, Plaintiffs,v . DAVID M. KIRBY, Defendant. Appeal by defendant from order and judgment entered 2 February 2001 by JudgeRonald L. Stephens in Wake County Superior Court. Heard in the Court of Appeals 21January 2003. Hunton & Williams, by Christopher G. Browning, Jr., for plaintiff appellees. Maupin Taylor & Ellis, P.A., by John I. Mabe, Jr., and Allen F. Reid, II, for defendantappellant. McCULLOUGH, Judge. This case arises out of a business relationship between plaintiffs Brenda Compton and Curt Olson and defendant David Kirby. The evidence at trial showed that defendant worked in Charlotte as the President of Colliers Vinson International Property Consultants of Charlotte, Inc. (Colliers-Charlotte), a real estate brokerage firm owned by his father, Albert Kirby. Colliers-Charlotte was part of a larger entity called Colliers International, a loosely structured organization of independent commercial real estate brokers who cross-refer business to one another. In March 1996, defendant created a real estate brokerage firm called Colliers Vinson International Property Consultants of Raleigh, Inc. (Colliers Vinson of Raleigh). Defendant was the sole owner and President of Colliers Vinson of Raleigh, and plaintiffs were independent brokers who worked for him in Raleigh. For the first nine months of its existence, Colliers Vinson of Raleigh operated without avalid real estate license due to an oversight by defendant's attorneys. On 11 December 1997, Colliers Vinson of Raleigh was administratively dissolved pursuant to N.C. Gen. Stat. § 55-14-21 for failure to file statutorily required annual reports. However, accordingto defendant, the business still existed and operated under the trade name of VinsonProperty Consultants. In the fall of 1996, Colliers International informed defendant that he could not use the Colliers name for his Raleigh corporation. Due to friction between Colliers International and Colliers Vinson of Raleigh and low business volume in Raleigh, defendant and his father considered closing the business and began discussing the matter with plaintiffs in September 1996. On 3 October 1996, plaintiffs met with both defendant and his father in Charlotte and the parties decided to keep the Raleigh office open. Plaintiffs and defendantagreed to change the business's name from Colliers Vinson of Raleigh to Vinson PropertyConsultants, and the appropriate assumed name certificate was filed in the Wake County registry. Mr. Albert Kirby told both defendant and plaintiffs that his company would advance funds to Vinson Property Consultants to reimburse operating expenses while the office attempted to capture part of the Raleigh real estate market. According to plaintiffs,they and defendant agreed upon an arrangement whereby defendant owned 51% of Vinson Property Consultants, and each plaintiff owned 24.5%. Plaintiffs and defendant created a bank account in the name of Vinson Property Consultants, with the understanding that themoney therein would be used to pay regular operating expenses. Plaintiffs deposited $24,000.00 of their personal funds into the account and told defendant that the money was a capital contribution into the partnership the three of them had just created. Each month, Vinson Property Consultants submitted a monthly tally of expenses to Colliers-Charlotte, and each month the Vinson account was reimbursed so that the bank account retained a $24,000.00 balance. Over time, Colliers-Charlotte advanced over $44,000.00 to Vinson Property Consultants. One of the main goals of Vinson Property Consultants was to handle referrals from Colliers-Charlotte and to win approval as a referral agency for business associated with the Colliers International network. As the business got underway, plaintiffs and defendantagreed that Vinson Property Consultants should be registered as a limited liability company. Plaintiffs prepared a draft of an operating agreement, but it was never finalized and no written agreement was ever made or signed by the parties. On 12 March 1997, plaintiff Curt Olson wrote a letter to defendant and confirmed the terms of the partnershipagreement that he alleged existed between himself, defendant, and Ms. Compton. Defendant called Mr. Olson the same day and expressly recognized that the terms of the partnership set out in the letter were correct. Plaintiffs signed contracts with third parties and became personally liable for the obligations of Vinson Property Consultants. After speaking with defendant, plaintiffs obtained approval for business cards which showed each plaintiff to be a “principal” in Vinson Property Consultants. Plaintiffs maintained that, in the real estate industry, the term “principal” is synonymous with “partner” and signifies ownership and control. Throughout the trial, plaintiffs pointed to numerous instances in which defendant referred to and treated them as his partners. In late 1996, defendant approved an announcement in Commercial Real Estate Today, a regional real estate publication, whichstated: David Kirby, President of Colliers Vinson International of Charlotte, North Carolina, announces the formation of Vinson Property Consultants, L.L.C. in Raleigh. Mr. Kirby is also very pleased to announce the addition of R. Curt Olson, CCIM and Brenda H. Compton as Principals in the firm.Plaintiffs also presented the testimony of Mr. Ray McCrary, a prospective job applicant who spoke to defendant in early 1997. Mr. McCrary testified that defendant referred to plaintiffs as his partners and indicated that plaintiffs owned 49% of Vinson Property Consultants, while he owned the remaining 51%. Plaintiffs also introduced a number of documents approved (and, in some instances, signed) by defendant in which he recognized that plaintiffs were co-owners of Vinson Property Consultants. Additionally, plaintiffs were described as “partners” on
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