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Allen v. Ferrera12/29/2000
Appeal by plaintiff from order of dismissal entered 7 June 1999 by Judge Jack A. Thompson in Cumberland County Superior Court. Heard in the Court of Appeals 25 August 2000.
The issue in this case is whether the trial court erred in dismissing plaintiff's claims pursuant to N.C. Gen. Stat. § 1A-1, Rule 12(b)(6) for failure to satisfy the shareholder derivative action demand requirement of N.C. Gen. Stat. § 55-7-42.
Plaintiff alleges in his complaint that he, an employee of the City of Raeford's utility department with some residential construction experience, formed a company along with defendants Eddie and Harold Brock, realtors, to build and sell residential houses. The three named their corporation Allen & Brock Construction Company, Inc. (A&B; and funded it with $10,000 from plaintiff, $5,000 from defendant Harold Brock, and $5,000 from defendant Brock Realty, Inc., the real estate business run by defendants Eddie and Harold Brock. The stock in A&B;was owned fifty percent by plaintiff and fifty percent by defendant Brock Realty. The officers of the corporation were plaintiff as president, defendant Eddie Brock as vice-president, and defendant Harold Brock as secretary/treasurer. A checking account for A&B;was opened and both plaintiff and defendant Eddie Brock were authorized to sign checks. Although plaintiff and defendants Eddie and Harold Brock did not promise to devote their exclusive time and talents to A&B; each agreed to devote "sweat equity" to the corporation, and as field supervisor and general contractor for A&B;s construction projects, plaintiff gave up his job with the City of Raeford.
Plaintiff alleges that defendants Eddie and Harold Brock controlled the company books and internal management, and that plaintiff relied on defendant Harold Brock when he told plaintiff that A&B;needed additional funds. Plaintiff therefore agreed to co-guarantee with defendant Harold Brock a series of loans to A&B;made by defendant Marlene Ferrera. Plaintiff subsequently became concerned about the management of A&B;and demanded to see the check register maintained by defendants Eddie and Harold Brock. After examining the check register, plaintiff became convinced that defendants Eddie and Harold Brock and defendant Ferrera had conspired to divert corporate opportunities from A&B;to their own benefit.
Plaintiff alleges he demanded $50,000 in individual compensation for injuries to A&B;in a letter written by plaintiff's attorney on 12 August 1998 to defendants Eddie and Harold Brock and defendant Brock Realty. Defendants Eddie and Harold Brock responded on 21 August 1998 denying plaintiff's claims and raising allegations of their own against plaintiff. Defendants' letter was signed by defendants Eddie and Harold Brock in their individual capacities, and by defendant Harold Brock as president of defendant Brock Realty.
Plaintiff filed a complaint against defendants on 2 November 1998 seeking four claims for relief, on behalf of both himself and A&B; (1) a declaratory judgment that his personal guarantee on the loans from defendant Ferrera was unenforceable; (2) recovery for civil conspiracy by all of the defendants; (3) recovery for breach of the fiduciary duty owed by defendants Eddie and Harold Brock to A&B; and (4) recovery for unfair and deceptive trade practices by all of the defendants. The trial court dismissed plaintiff's claims on 7 June 1999 pursuant to N.C. Gen. Stat. § 1A-1, Rule 12(b)(6) for failure to state a claim upon which relief could be granted. Plaintiff appeals.
I.
Plaintiff's four claims for relief were each raised as both individual claims and as sharehold
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