The Court of Appeals split yesterday on whether a Plaintiff and his lawyers who continued with a lawsuit after they should have determined that it was not well grounded in fact or law could be hit with non-monetary sanctions.  The majority reversed, saying that the trial court should not have considered events occurring after the

The Court dismissed the derivative claim of a minority shareholder who alleged that the majority shareholders of the corporation had breached their fiduciary duty to the minority shareholders by failing to make distributions, failing to investigate allegations on that subject, and terminating the minority shareholder’s employment. 

The Court held that this was not a proper

The person elected as liquidator to oversee the liquidation of the assets of two general partnerships was not entitled to limit his responsibility to the pursuit of a derivative action lawsuit against the auditor for the partnerships, as opposed to the general winding up of the affairs of the partnerships.  The Court held:

the substantive problem

A counterclaim by a member of a North Carolina LLC against the LLC’s lender for aiding and abetting a breach of fiduciary duty was derivative, not direct.

The Court relied on “[t]he well-established general rule . . . that shareholders cannot pursue individual causes of action against third parties for wrongs or injuries to the corporation that

A manager of an limited liability company may not, as a condition of the payment of consideration from a merger of the LLC, require that the member receiving the consideration execute a general release exonerating the manager and insiders from any misconduct.  Holding the consideration "hostage" in exchange for such a release might amount to willful and