No Unfair or Deceptive Trade Practices Claim for Shareholder Disputes
The North Carolina Business Court has clearly held that unfair or deceptive trade practices claims do not include shareholder disputes. Brewster v. Powell Bail Bonding, Inc., 2018 NCBC 74 (July 26, 2018).
A Classic Shareholder DisputeBrewster involved "a classic shareholder dispute" in which a minority shareholder sued the corporation and other shareholders claiming that he had been pushed out of the business operations and the value of his shares was diminished. Among the legal claims that the shareholder filed was a claim for unfair or deceptive trade practices under N.C. Gen. Stat. Section 75-1.1. The defendants filed a motion to dismiss that claim.
Business Court Dismissed Claim for Unfair or Deceptive Trade PracticesThe Business Court granted the defendants' motion to dismiss and noted that "[b]y now, the message should be clear: section 75-1.1 plays no role in resolving these internal corporate disputes." In following the North Carolina Supreme Court's decision in White v. Thompson, 364 N.C. 47, 691 S.E.2d 676 (2010), the Business Court held that "any unfair or deceptive conduct contained solely within a single business is not covered by" section 75-1.1.
The Business Court noted that the shareholder's claim "is part of a regrettable trend in North Carolina business litigation[.] . . . to turn every shareholder dispute or disagreement between members of a limited liability company into a section 75-1.1 claim."