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CloudWyze Bankruptcy Filing Follows Wage Dispute

By Cece Nunn, posted Aug 30, 2017
Leland-based CloudWyze Inc. filed for bankruptcy this month after a June court case over an employee’s wages resulted in a judgment of nearly $500,000 against the company, according to court documents.
 
CloudWyze Inc. is a separate legal entity from the company that offers internet and other technology services to clients in the Wilmington area, said Cloudwyze President Shaun Olsen and CloudWyze Inc.’s attorney, David Ennis. That company is Olsen Enterprises, doing business as CloudWyze, Olsen and Ennis said.
 
In the Chapter 11 reorganization filing signed by Olsen on Aug. 7, CloudWyze Inc. of Suite 203, 503 Waterford Way in Leland, is listed as having no assets and one creditor, Phillip Everhart, a former CloudWyze employee. The defendant in a lawsuit filed by CloudWyze Inc., Everhart was awarded about $484,000 in New Hanover County Superior Court after a trial that ended June 12.
 
Everhart was hired in 2013 to manage sales and product marketing for CloudWyze with a base salary of $72,000, according to an offer letter dated Aug. 6, 2013, in court documents. His annual compensation, including commissions, was $97,420, Olsen said.

Everhart resigned in April 2015 and filed a complaint with the N.C. Department of Labor, claiming he was owed unpaid wages. But before the state complaint was resolved, CloudWyze Inc. filed a lawsuit against Everhart in September 2015.

The CloudWyze Inc. complaint against Everhart said that a company audit had shown that Everhart had been overpaid by more than $20,000. The court ended up dismissing Cloudwyze’s complaint, but as the defendant in the CloudWyze lawsuit, Everhart had countersued, saying among other counterclaims that the company owed him $90,000.

At the end of the trial in June, the jury’s verdict awarded Everhart more than $268,000, which in addition to the nearly $90,000 in wages, commissions and vacation pay Everhart sought, also included nearly $80,000 "for breach of contract" and $100,000 in punitive damages, the judgment says. Superior Court Judge Imelda J. Pate also later ordered CloudWyze to pay court costs and attorney’s fees and expenses, for a total judgment of about $484,000, according to court documents.
 
That is the same and only amount in Cloudwyze Inc.’s bankruptcy filing, which lists Everhart’s disputed employment wages as its sole debt.
 
CloudWyze appealed the Superior Court judgment in July – an appeal that is still in place, CloudWyze’s attorney said. At the same time, the bankruptcy is moving forward, Ennis said.

CloudWyze’s appeal argues that during pretrial proceedings, Pate had ruled that CloudWyze Inc. was precluded from offering any evidence, witness testimony or arguments to the jury about the defendant’s job performance.

Everhart’s attorney, Grady Richardson, said in an interview this week that not only did Everhart dispute CloudWyze’s claims, all of those claims were successfully defeated in the June court case.

“It’s clear to me the bankruptcy petition was done solely to avoid having to pay Mr. Everhart yet again the money to which he’s entitled,” Richardson said.

Richardson said George Oliver of New Bern is Everhart’s bankruptcy counsel and that he and Oliver are working together to get a full recovery for Everhart.

Despite the ongoing dispute and bankruptcy filing in the U.S. Bankruptcy Court for the Eastern District of North Carolina, the CloudWyze that provides internet and other technology services to local businesses and organizations remains in operation, Olsen said.

“At the end of the day, from a client standpoint, nothing changes,” he said. “They still get serviced. Our employees are getting paid, our vendors are still getting paid and we’re still receiving payments from our customers. And none of that’s changed, and it won’t change – no matter which direction this goes.”
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