Corporate – Derivative Demand Prerequisite to Suit – Subject Matter Jurisdiction

Plaintiffs have not adequately pleaded that the Adviser received a material benefit from a transaction such that a derivative demand made on it would have been futile.

The Court granted Defendants’ motion to dismiss for lack of subject matter jurisdiction, without prejudice.

In 2021, Defendants, directors of Nominal Defendant Hatteras Master Fund, L.P. caused the Master Fund to sell its alternative asset portfolio to The Beneficient Company Group, L.P. (Ben) in exchange for near valueless equity in Ben. Plaintiffs, limited partners in the Master Fund’s four feeder funds, alleged Defendants breached their fiduciary duties to the Master Fund by proposing and approving this deal, which purportedly caused the Master Fund to lose approximately 98% of its value.

Plaintiffs brought this action derivatively on behalf of the Master Fund. Defendants argued Plaintiffs lack standing to sue because they are not owners of the Master Fund, and because Plaintiffs have failed to satisfy pre-suit statutory demand requirements.

In support of their argument the Court should dismiss this action, Defendants pointed to their motion to dismiss for lack of standing and argued Plaintiffs’ derivative claim is not legitimate and fails the Alford balancing test. Defendants contended Plaintiffs failed to allege they were partners of the Master Fund at the time of the Ben Transaction. Instead, Plaintiffs alleged only that they were limited partners of the Feeder Funds. Defendants argued Delaware has only permitted double derivative standing in the corporate context. Defendants contended the Master Fund does not qualify as a subsidiary because it is neither wholly owned nor majority controlled by the Feeder Funds owned by Plaintiffs.

Plaintiffs failed to satisfy the derivative demand prerequisite to suit. Plaintiffs failed to allege with particularity sufficient facts to show that Perkins, founder, CEO, and majority owner of Defendant Hatteras Investment Partners, L.P. (the Adviser), controlled the Adviser. Plaintiffs otherwise made no allegations concerning the Adviser’s governance. Instead, the complaint merely stated “the other Directors all approved the Ben Transaction on behalf of the Master Fund . . . and the transaction closed later that day.” While Plaintiffs argued Perkins’ status is sufficient to establish his control over the Adviser, the Court declined to make this inferential leap.

Plaintiffs argued they adequately pleaded that the Adviser received a material personal benefit from the Ben Transaction. Defendants responded that, to the extent Plaintiffs pleaded the receipt of a material benefit, they failed to do so with particularity. They contended Plaintiffs only generally describe the terms of any purported agreements between Ben and the Adviser, and that Plaintiffs failed to allege with particularity facts to show that the benefits were material to the Adviser. The Court agreed with Defendants.

Having found that the Complaint alleges neither a material benefit nor a substantial likelihood of liability as to the Adviser, the Court determines that Plaintiffs have not adequately alleged demand futility. Consequently, Plaintiffs failed to meet a threshold requirement necessary for this Court to have subject matter jurisdiction.

Granted.

Meyer v. Hatteras Investment Partners L.P. (Lawyers’ Weekly No. 020-062-25, 26 pp.) (Julianna Theall Earp, J.) 2025 NCBC 62. Lee Segui PLLC, by Eric Greenlee Steber, Matthew Lee, and Jeremy Williams; Malmfeldt Law Group, P.C., by Paul Malmfeldt; and Silver Law Group, by Scott Silver, for Plaintiffs. Parker Poe Adams & Bernstein LLP, by Melanie Black Dubis and Corri Ann Hopkins, for Defendants David B. Perkins and Hatteras Investment Partners, L.P. Bell, Davis & Pitt, P.A., by Edward B. Davis and Joshua B. Durham, and Pollack Solomon Duffy LLP, by Joshua Solomon, for Defendants Thomas Mann, Gregory S. Sellers, Steve E. Moss, and H. Alexander Holmes. Brooks, Pierce, McLendon, Humphrey & Leonard LLP, by William Gregory Gaught, Jennifer K. Van Zant, Clint S. Morse, and Gabrielle E. Supak, for Nominal Defendant. North Carolina Business Court