Corporate – Breach of Fiduciary Duty – Removal of a Director

The complaint amply alleges fraudulent or dishonest conduct and gross abuse of authority or discretion.

The Court denied the motion to dismiss the claims for breach of fiduciary duty, constructive fraud, unjust enrichment, and removal of a director. The Court granted the motion to dismiss the claims for an equitable accounting and punitive damages.

This case involved a dispute among shareholders of Sherbrooke Corporate Ltd. Gabriel Mayer and Matthew Queen, both minority shareholders, accused Samuel Goldner, the majority shareholder, of crippling the company through self-dealing and dereliction of duty. Goldner moved to dismiss several claims under Rule 12(b)(6) of the North Carolina Rules of Civil Procedure.

Sherbrooke is a captive insurance company. Goldner, Mayer, and Queen are its only shareholders and, until recently, were all officers and directors. Sherbrooke’s business is to reinsure insurance policies that provide coverage to nursing homes owned by Goldner. Because Sherbrooke’s sole purpose is to reinsure Goldner’s nursing homes, it has no revenue other than the nursing homes’ insurance premiums. Mayer and Queen alleged that this revenue source became unreliable and that Goldner is to blame. For the 2022-2023 policy year, Goldner underpaid premiums by nearly $6 million. Then, in late 2022, he shut off the spigot completely. Despite assuring Mayer and Queen that he could and would pay the balance, neither Goldner nor his nursing homes have since paid any premiums to Sherbrooke. This revenue drought imperiled Sherbrooke’s solvency. According to Mayer and Queen, Goldner pushed the company over the brink in 2024.

Mayer and Queen believe that Goldner cares little about Sherbrooke’s interests, aiming instead to use its assets to solve his own financial crisis. As alleged, Goldner faces at least a dozen civil judgments totaling more than $50 million. Since seizing control of Sherbrooke, he has taken money from its accounts to pay his personal legal expenses. Having been stripped of power, Mayer and Queen lack the ability to safeguard what remains of the company’s assets from similar misuse.

The complaint included six claims for relief based on these allegations. Mayer asserted derivative claims on Sherbrooke’s behalf for breach of fiduciary duty, constructive fraud, and unjust enrichment. Mayer and Queen also asserted a claim to remove Goldner as a director under N.C.G.S. § 55-8-09, along with two purported claims for an equitable accounting and punitive damages. Goldner moved to dismiss the complaint, with some limited exceptions.

Goldner conceded he owes fiduciary duties to Sherbrooke as its sole director. He also conceded that the complaint’s allegations of self-dealing are sufficient to support Mayer’s derivative claims for breach of fiduciary duty, constructive fraud, and unjust enrichment. But Goldner urged the Court to dismiss these claims to the extent they are based on the nonpayment of insurance premiums. As Goldner sees it, the premiums are his nursing homes’ responsibility, not his personal responsibility. By seeking to hold him liable for failing to pay the premiums, he contends, the complaint improperly imputes to him obligations owed by these separate entities. This argument misreads Mayer’s allegations. The complaint does not allege that Goldner personally owes insurance premiums to Sherbrooke. Nor does it impute his nursing homes’ obligations to him. Rather, taken in the light most favorable to Mayer, the allegations show that Goldner controlled the nursing homes’ purse strings, decided when and whether they paid premiums, and chose to shortchange Sherbrooke without a legitimate reason. Mayer’s derivative demand, which is attached to the complaint and therefore part of it, says much the same thing. What’s more, the allegations support a reasonable inference that Goldner kept Sherbrooke from securing its finances by first lulling Mayer and Queen (his fellow directors) with false assurances that payment was forthcoming and later sidelining them entirely. Left unchecked, Goldner has allegedly suspended Sherbrooke’s legal, commercial, and administrative activities—all while intending to use its remaining assets to ease his own financial troubles. Thus, the thrust of the complaint is that Goldner used his position on both sides of the reinsurance transaction to benefit himself and his nursing homes at Sherbrooke’s expense. Goldner offered no other reason to conclude that the complaint fails to state claims for breach of fiduciary duty, constructive fraud, and unjust enrichment. The Court therefore denied the motion to dismiss these claims.

Finally, Mayer and Queen purported to assert claims for an equitable accounting and punitive damages. These are remedies, not independent causes of action. Accordingly, the Court granted the motion to dismiss the claims for an equitable accounting and punitive damages without prejudice to Mayer’s and Queen’s right to pursue these remedies, if appropriate, at a later stage.

Granted in part, denied in part.

Mayer v. Goldner (Lawyers’ Weekly No. 020-012-25, 9 pp.) (Adam M. Conrad, J.) 2025 NCBC 12. Parker Poe Adams & Bernstein LLP, by Scott E. Bayzle and Andrew Tabeling, for Plaintiffs Gabriel Judah Mayer and Matthew Queen; McGuireWoods LLP, by Elisabeth Briand, Zachary L. McCamey, and Brian A. Kahn, for Defendant Samuel Goldner and Nominal Defendant Sherbrooke Corporate Ltd. North Carolina Business Court