In Maurer v. Maurer, 2013 NCBC 44, 2013 WL ________, the North Carolina Business Court revisited the question of when a minority shareholder has an individual right to maintain an action against the controlling majority for a breach of fiduciary duties. Ordinarily, the controlling shareholders owe fiduciary duties to the corporation not to the minority. Properly posed then, the question is when does a controlling interest in a corporation owe a duty to the minority owners as opposed to the corporation itself.

In North Carolina, the general rule is that individual shareholders lack standing to enforce rights accruing to the corporation. Ordinarily the claims must be brought on behalf of the corporation not the individual shareholders. Minority shareholders can bring an action but it must be on behalf of the corporation (a so-called derivative claim) and the shareholder must satisfy the unique prerequisites for a shareholder derivative claim. However, a shareholder can maintain an individual action under two circumstances: (1) when the wrongdoer owed a special duty to the shareholder; and (2) the injury is separate and distinct from the injury suffered by the corporation. See, Barger v. McCoy Hillard & Parks, 346 N.C. 650, 659 (1997).

In Maurer, the Plaintiff and Defendant were each 50% shareholders but because of the circumstances, Defendant had effectively controlled the corporation to the alleged detriment of the Plaintiff. Citing Allen v. Ferrera, 141 N.C. App. 284, 540 S.E. 2d 761 (2000), Judge Gale held that although Barger allows a minority shareholder to bring an individual action for breach of fiduciary duty, a 50% shareholder is not a minority shareholder. As a 50% shareholder no individual action could be brought in spite of the fact that the other shareholder had complete control of the corporation. This is because a 50% owner has the ability to force a deadlock even if it lacks control over the corporation.

It is hard to reconcile the Maurer decision with LeCann v. Cobham, 2011 WL 3329317 (N.C. Super. Ct. Aug 2, 2011), a Business Court case where Judge Jolly held that a 50% shareholder could maintain an individual action for breach of a fiduciary duty. In LeCann, the Defendant moved for summary judgment on the Plaintiff’s individual claims even though she had alleged in her answer that the Plaintiff owed her fiduciary duties. Judge Jolly held that because the shareholders acted more as partners than shareholders and because each alleged fiduciary duties owed by the other that the Plaintiff could maintain an individual action.