Jesse Shaver alleges that a founder and CEO of Raleigh-based defense contractor Vadum, Inc., “tricked him into losing his right to equity” in the company. In Shaver v. Walker, 2023 NCBC 27, he claimed that Aaron Walker and another company executive, Gary Edge, made false statements designed to lure him not to exercise vested stock options.

Believing the company would make good on representations that he’d not be harmed by electing not to exercise his options, Shaver passed on the chance. It was a choice he alleges left him without 6,500 shares in Vadum, Walker as its sole shareholder after Edge departed, and more than a few hurt feelings about the family campsite. Id. ¶¶ 24, 27.

The campsite? That’s where Shaver claims that Walker, his brother-in-law, echoed guidance from then-CEO Edge that Shaver needn’t be concerned about exercising his options before a stated deadline. Shaver claims Walker told him: (i) there was no benefit to exercising the options before an IPO, (ii) he didn’t need to worry about the expiration date of the options, (iii) the “tax paperwork was too complex for the options to be exercised,” and (iv) Shaver should “[t]rust him.” Id. ¶ 23.

Walker married Shaver’s sister, Emily, when Shaver was a teenager. He said he “looked up to [Walker],” that the relationship “grew stronger” as they worked together at Vadum, and that “[t]he families had great affection for each other, trusted each other, and turned to each other for assistance and advice in times of need.” Id. ¶¶ 7, 15.

Walker opposed his relative’s fraud claim by asserting that his statements were not about material facts, that it wasn’t reasonable for Shaver to reply upon them, and that he didn’t adequately allege that Walker intended to deceive him.

Judge Earp rejected the contention that the Walker/Edge statements were “the type of hyperbolic language used in sales pitches” or merely expressions of “opinion or legal position.” Id. ¶ 40. Finding them “sufficiently definite and specific to constitute representations of fact,” the Court held they made “flat statement[s] about the worth of the options at the time,” and regarding the possible interference of “paperwork” in exercising the options. Id. ¶ 39. These facts were “material” because they “dissuaded Shaver from exercising his options before the stated expiration date.” Id. ¶ 41, citing Keith v. Wilder, 241 N.C. 672, 675 (1955).

Walker argued it wasn’t reasonable for Shaver to rely on his statements because he ignored the explicit terms associated with the options, was well educated, and could have “easily” uncovered the truth, or not, of the statements. Id. ¶ 43. But the Court identified a “power imbalance” between Shaver and Walker fueled by the latter’s access to relevant knowledge “and control over the company’s financial matters” which support Shaver’s reliance on the statements (Id. ¶¶ 45-46):

“[W]here, as here, the parties are not on equal footing, and a defendant possessing superior knowledge and/or experience makes a representation without giving the plaintiff reason to suspect the representation is false, the plaintiff may rely upon that representation.”


  • The Court frequently sees business acrimony hinged on allegations of trust, or a lack thereof, among individuals who thought their existing ties would result in better, fairer, or at least more transparent interactions. We’ve written about it recently, here.
  • The Court’s analyses in alleged “broken trust” settings are often fact-specific, but Judge Earp’s decision is careful to cite authority that commends close scrutiny to situations where actors on unequal footing battle over whether statements of fact can be relied upon. Id. ¶ 46, citing White Sewing Machine, Co. v. Bullock, 161 N.C. 1, 8 (1912) (“no excuse” lies where its theme is, “You trusted me; therefore, I had the right to betray you.”).

Brad Risinger is a partner in the Raleigh office of Fox Rothschild LLP.