Where an employee alleged his employer’s owner and other commonly-owned affiliates had devised a plan to prevent the employee from certain contractually-owed payments, North Carolina law would follow the Fourth Circuit and extend the intracorporate immunity doctrine to those affiliates. Ehmann v. Medflow, Inc., 2022 NCBC 55 (J. […]
Absent contractually created fiduciary duties, a minority member owes a fiduciary duty to other members only if he exercises domination and control over the LLC. Lafayette Village Pub, LLC v. Burnham, 2022 NCBC 50 (J. Davis). Because Plaintiffs’ complaint failed to provide specific factual allegations evidencing Defendant’s domination […]
Where members merely allege acrimony between members and confusion over the size of each member’s ownership but nothing more, such allegations are insufficient to dissolve a corporation. Vanguard Pai Lung, LLC v. Moody, 2022 NCBC 48 (J. Conrad). As a result, the Business Court denied the defendant-members’ request […]
Where limited partners had entered into agreements which, by their terms, contained information that was deemed confidential in nature, the limited partners arguably breached those agreements by disclosing the confidential information in their publicly-filed complaint. Chi v. Northern Riverfront Marina and Hotel, LLC, 2022 NCBC 46 (J. Earp). […]
Where a minority shareholder alleges that two other minority shareholders—whose combined shares constituted a majority of the stock—acted in concert and controlled the company, the minority shareholder had sufficiently alleged she was owed a special duty. Kelly v. Nolan, 2022 NCBC 37 (J. Davis). As a result, the […]
Where the business sold all of its assets “of whatever kind or nature,” this included unknown claims which had caused economic harm to the business. Lau v. Constable, 2022 NCBC 34 (J. Earp). As a result, the company did not have standing to pursue any claim against its […]
When the conditions necessary to form a corporation have occurred, a shareholder will be precluded from alleging merely a general partnership existed. Leonard v. Ast, 2022 NCBC 35 (J. Earp). As a result, the plaintiff’s claim seeking a declaratory judgment that a partnership existed was dismissed with prejudice. […]
Where a former member of an LLC brought conversion claims related to various intangible interests, the Business Court recognized that such claims do not exist under North Carolina law. McFee v. Presley, 2022 NCBC 33 (J. Conrad). As a result, the member could not maintain conversion claims related […]
Where a shareholder of dissolved company claimed to be a creditor, that position alone did not impose a special duty running from one co-owner to the shareholder/creditor so as to create a fiduciary duty. Normet v. Rabon, 2022 NCBC 32 (J. Davis). As a result, the shareholder could […]
Where the business relationship between two individuals was evolving and undefined, the law may recognize a partnership which, by law, imposes fiduciary duties between and among the partners. Loyd v. Griffin, 2022 NCBC 30 (J. Robinson). As a result, one partner could maintain claims for breach of fiduciary […]
Where the directors knew the officers’ high salaries were “outrageous” and well in excess of comparables within the market but nonetheless failed to reduce the salaries, a jury question existed whether the directors engaged in a “rational” process such that the Business Judgment Rule (“BJR”) would protect the […]
When trying to determine which law to apply in a misappropriation case, North Carolina will look to the law of the State where the last “bad act” occurred to make the defendant liable (i.e., lex loci). Environmental Holdings Group, LLC v. Finch, 2022 NCBC 25 (J. Davis). As […]
Where the real party-in-interest was added via an amended complaint after the running of the statute of limitations, the Court may permit the real party-in-interest’s claims to relate back to the original, timely filed complaint. Brakebush Brothers, Inc. v. Certain Underwriters at Lloyds of London, 2022 NCBC 23 […]
Where the corporation’s Shareholder Agreement contained a Put/Call provision, the shareholders necessarily gave up their right to seek a judicial dissolution of the company. Mauck v. Cherry Oil, 2022 NCBC 21 (J. Davis). As a result, the shareholders’ request for a dissolution of the company would be dismissed […]
Where an LLC member voluntarily dismissed all remaining claims after losing summary judgment on many others, the dismissal resulted in the conclusion of the then-pending lawsuit. Clark v. Burnette, 2022 NCBC 17 (J. Davis). As a result, the Business Court had authority to enter final judgment and issue […]
Where a stockholder openly disputed the value of his stock as set forth in a Redemption Agreement, the stockholder was later precluded from arguing that the Redemption Agreement’s stock price was a “mutual mistake of fact.” Oliver v. Brown & Morrison, Ltd., 2022 NCBC 13 and 16 (J. […]
Where a member filed various derivative actions against a co-member and LLC (nominally), those claims were protected by the First Amendment. Emrich Enterprises, LLC v. Hornwood, Inc. and Triangle Automotive, LLC (nominal), 2022 NCBC 11 (J. Robinson). As a result, the LLC’s breach of fiduciary duty claim against […]
Where the Business Court determined that Defendant had not been properly served with the original complaint, personal jurisdiction could nonetheless be established where Defendant made a general appearance in the case post-judgment. Slattery v AppyCity, LLC, 2022 NCBC 8 (J. Robinson). As a result, because Defendant’s Motion to […]
Where the Operating Agreement required certain actions to be taken in a particular situation (i.e., dissolution upon death of a member) but permitted avoidance of that act where all “members” had “mutually agreed,” the sole member of the LLC could not “mutually agree” with himself to avoid the […]
Where a member of an LLC failed to ensure that the LLC timely received his pre-suit demand, the Court necessarily lacked jurisdiction to hear the derivative claims. Robert Barefoot v. Quint Barefoot, et al, 2022 NCBC 5 (J. Bledsoe). As a result, Plaintiff’s derivative claims would be dismissed, […]
Where the sales contract required the buyer to submit a written request to inspect the property, the seller’s refusal to honor buyer’s oral inspection request did not constitute a breach of contract. Miriam Equities v. LB-UBS 2007-C2 Millstream Road, LLC, 2022 NCBC 3 (J.Earp). As a result, the […]
Where the limited partners’ summary judgment motion sought declaratory relief that was more expansive than the relief requested in the complaint itself, the Court would on consider the relief sought in the complaint. Woodcock v. Cumberland County Hospital System, 2022 NCBC 2 (J. Davis). As a result, the […]
Where a company provides the requisite information to prove the recipient is a shareholder, such information may nonetheless be inadequate if not received “within a reasonable time” after shares in the company are issued or transferred. Faw v. Wilkes Sombrero, Inc., 2021 NCBC 80 (J. Earp). Because only […]
An entity created for a single, special purpose does not necessarily mean that piercing the entity’s corporate veil is always appropriate. Loray Master Tenant, LLC v. Foss N.C. Mill Credit 2014 Fund I, LLC, 2021 NCBC 78 (J. Bledsoe). A plaintiff must still assert factual allegations that show […]
To rescind an unfavorable agreement based upon duress, a party must show factors other than the opposing party’s mere threat to breach an agreement. Loyd v. Griffin, 2021 NCBC 77 (J. Robinson). Absent such outside factors, the Business Court held, a shareholder was not entitled to rescind the […]
Where a business had properly come into possession of certain personal property, no claim for conversion could exist unless a demand for the property’s return was refused. Morris International, Inc. v. Packer, 2021 NCBC 66A (J. Davis). Because Plaintiff failed to present any evidence that it had demanded […]
Where a business that might otherwise not be subject to the personal jurisdiction of a North Carolina court nonetheless files a lawsuit in North Carolina, the Court can properly exercise jurisdiction over the company to hear all disputes between the parties without violating any due process rights. Vitaform, […]
Where a corporation’s board of directors decided to take a particular course of action that was unpopular with a shareholder, the board could not invoke the business judgment rule to prevent the shareholder’s statutory right to inspect the corporation’s books and records. Erwin v. Myers Park, 2021 NCBC […]
Where a business’ non-compete employment agreement precluded its former employee from contacting its suppliers, such restriction could constitute a legitimate business interest. KNC Technologies v. Tutton, 2021 NCBC 25 (J. McGuire). This was so, the Business Court held, even though the items the supplier provided were available elsewhere […]
Where members of a joint venture have agreed to its dissolution, the fiduciary duties owed among the members continue through the windup process. Morris International v. Parker, 2021 NCBC 13 (J. McGuire). As a result, Defendants could not dismiss Plaintiff’s breach of fiduciary claim where Defendants had improperly […]
Where a minority shareholder complained about the majority shareholder’s new business ventures, no fiduciary duty was actually owed to the minority shareholder beyond that related to the business’ property. Panzino v. MAP, 2021 NCBC 10 (J. Conrad). Because the new business ventures were unrelated to the company’s property, […]
Where a shareholder sufficiently alleged she owned some interest in the closely held company at the time she filed her lawsuit, the size of her interest was not relevant to her request for dissolution. Flynn v. Pierce, 2020 NCBC 94 (J. Bledsoe). As a result, Plaintiff could maintain […]
Where a business’ agent acknowledged a debt was owed but still refused to allow payment in order to strengthen the business’ negotiating position, any qualified immunity from inducing the business to breach its contract could be lost. Kapur v. IMW EMR, LLC, 2020 NCBC 92 (J. Gale). As […]
Where a business seeks to reform an agreement based upon a unilateral mistake, it must show that the other side caused the error through fraud or omission. TAC Investments LLC v. Rodgers, 2020 NCBC 88 (J. Conrad). Absent such evidence, the business’ only hope to reform the agreement […]
Where an employee makes material misstatements pre- and post-employment, the business must still allege facts showing how its reliance on the employee’s statements was reasonable to maintain certain tort claims. Quidore v. Alliance, 2020 N.C.B.C. 87 (J. Bledsoe). As a result, the business could not maintain claims for […]
Where the common law duty not to interfere in a business’ contracts is separate from any contractual obligation not to compete, a business can maintain an additional tort claim. Gallaher v. Ciszek, 2020 N.C.B.C. 76 (J. Bledsoe). As a result, because the employee’s contractual duty not to compete […]
Phil Mohr authors the North Carolina Business Court Report, crafting engaging posts discussing how recent decisions from the North Carolina Business Court impact companies doing business in North Carolina. He is a Partner at Womble Bond Dickinson (US) LLP.
North Carolina Business Court Report 