North Carolina Business Litigation Report

Garlock v. Hilliard, 2000 NCBC 11 (N.C. Super. Ct. Aug. 22, 2000)(Tennille)

The Court found that a demand made simultaneously with the filing of a complaint was insufficient to satisfy the derivative action demand requirement of N.C. Gen. Stat. §55-7-42. The purpose of this statutory scheme is to give a Board of Directors the opportunity "to fulfill its duties before the corporation incurs legal expenses or the litigation escalates into counterclaims and crossclaims."

The Court also discussed the plaintiff's conspiracy claim. It focused on the doctrine of intracorporate immunity, which says that a corporation cannot conspire with itself or with its agents, officers, or employees. It found that plaintiff could not state a claim for conspiracy, notwithstanding its allegation that the company's majority shareholder had an "independent personal stake in achieving the corporation's illegal objective."

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Mack Sperling
Brooks Pierce, LLP
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