North Carolina Lawyers Weekly
Even though plaintiff owns, at most, two percent of the shares of the defendant-corporation, G.S. § 55-14-30(2)(ii) does not impose a minimum share ownership requirement on a claim for judicial dissolution. Furthermore, a court is not required to dissolve a corporation, even if a shareholder establishes that judicial dissolution is proper pursuant to § 55-14-30(2); instead, G.S. § 55-14-31(d) expressly permits the corporation “to purchase the shares of the complaining shareholder at their fair value…”
The court denies defendants’ motion to dismiss plaintiff’s claims for breach of fiduciary duty, constructive fraud and judicial dissolution. The court grants defendants’ motion to dismiss plaintiff’s “claims” for constructive trust and punitive damages without prejudice to plaintiff’s right to purse these remedies.
Where plaintiff alleges that the individual defendants (plaintiff’s brother and sister) (1) together own 98 percent of the corporation’s shares; (2) serve as the corporation’s CEO and CFO, respectively; (3) completely dominated and controlled the corporation’s actions at all relevant times; and (4) collaborated to breach their fiduciary duties to plaintiff by paying themselves excessive compensation rather than making pro rata distributions of profits to all shareholders, plaintiff has stated claims for breach of fiduciary duty and constructive fraud against the individual defendants.
Flynn v. Pierce (Lawyers Weekly No. 020-094-20, 15 pp.) (Louis Bledsoe, C.J.) Christopher Edwards and Gary Rickner for plaintiff; Steven Epstein and John Michael Durnovich for defendants. 2020 NCBC 94
