Weatherspoon Fam. LLC v. Hatteras Inv. Partners, L.P.

Weatherspoon Fam. LLC v. Hatteras Inv. Partners, L.P., 2026 NCBC 12.

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
WAKE COUNTY 24CVS038870-910

WEATHERSPOON FAMILY LLC,

Plaintiff,

v.

HATTERAS INVESTMENT ORDER AND OPINION ON
PARTNERS, L.P. and DAVID B. DEFENDANTS’ MOTION TO DISMISS
PERKINS,
PLAINTIFF’S FIRST AMENDED
Defendants, COMPLAINT

and

HATTERAS EVERGREEN PRIVATE
EQUITY FUND, LLC,

Nominal Defendant.

1. This matter is before the Court a second time on a motion to dismiss—this

time on Defendants’ and Nominal Defendant’s Rule 12(b)(1) motion to dismiss

Plaintiff’s first amended complaint. (ECF No. 66).

2. After Defendants and Nominal Defendant moved to dismiss Plaintiff’s

initial complaint in this action, (ECF No. 24), Plaintiff purported to take a voluntary

dismissal without prejudice without leave of the Court, (ECF No. 49), and

alternatively sought leave to file an amended complaint, (ECF No. 54). Thereafter, as

no answer had been filed and Plaintiff had not previously amended its original

complaint, Plaintiff was permitted to file an amended complaint as a matter of right,

and the motion to dismiss the original complaint was denied as moot. (ECF No. 63).

3. Defendants and Nominal Defendant have now moved to dismiss the

amended complaint pursuant to Rule 12(b)(1). (ECF No. 66).
4. As explained below, and for substantially similar reasons to those set out by

the Court in its initial Order and Opinion in this matter, (ECF No. 63), the Court

GRANTS the motion and dismisses this action without prejudice. 1

Malmfeldt Law Group P.C., by Paul D. Malmfeldt; Milberg
Coleman Bryson Phillips Grossman, PLLC, by Matthew E. Lee,
Eric G. Steber, and Jeremy R. Williams; and Silver Law Group,
by Scott L. Silver, for Plaintiff Weatherspoon Family LLC.

Parker Poe Adams & Bernstein, LLP, by Melanie Black Dubis,
Jack K. Belk, Jr., and Corri A. Hopkins, for Defendants Hatteras
Investment Partners, L.P. and David B. Perkins.

Brooks, Pierce, McLendon, Humphrey & Leonard, LLP, by Greg
Gaught, Gabrielle E. Supak, and Jennifer K. Van Zant, for
Nominal Defendant Hatteras Evergreen Private Equity Fund,
LLC.

Houston, Judge.

I. FACTUAL BACKGROUND

5. The Court does not make findings of fact but instead summarizes the factual

allegations relevant to its determination of the motion. Meyer v. Hatteras Inv.

Partners, L.P., 2025 NCBC LEXIS 140, *3 (N.C. Super. Ct. Oct. 10, 2025) (addressing

Rule 12(b)(1) motion); Deleuran v. Thompson, 2025 NCBC LEXIS 109, *1 (N.C. Super.

Ct. Aug. 22, 2025) (addressing Rule 12(b)(1) and Rule 12(b)(6) motion). Though the

Court has previously addressed the alleged facts of this case, and Plaintiff’s amended

1 As the Court previously noted, in a putative derivative action, an entity named as a nominal

defendant generally may not “defend” itself against claims brought on its behalf. E.g.,
Swenson v. Thibaut, 39 N.C. App. 77, 101 (1978). Here, however, Plaintiff has not contested
Evergreen Fund’s right or ability to join in the motion to dismiss, and any such dispute is
moot inasmuch as the same Rule 12(b)(1) arguments are appropriately raised by Defendants
and considered by the Court accordingly.
complaint reasserts substantially the same facts, the Court nonetheless summarizes

the relevant factual allegations again for ease of reference.

6. Plaintiff Weatherspoon Family LLC (“Plaintiff”) is a North Carolina

limited liability company. (ECF No. 55.1, ¶ 19).

7. Since at least 2017, Plaintiff has been a member of, and a minority investor

in, Nominal Defendant Hatteras Evergreen Private Equity Fund, LLC (“Evergreen

Fund” or “Nominal Defendant”), a Delaware limited liability company that

historically invested primarily in private equity limited partnerships. (ECF No. 55.1,

¶¶ 1, 19, 30).

8. Evergreen Fund’s “stated business objective is to achieve long-term capital

appreciation by investing in a diversified portfolio of private investments.” (ECF No.

55.1, ¶ 4). In 2017, Plaintiff invested approximately $2 million in Evergreen Fund,

receiving membership interests in Evergreen Fund in return. (ECF No. 55.1, ¶ 19).

9. From its inception through 7 December 2021, Evergreen Fund “held a

diversified portfolio of alternative assets, including private equity limited

partnership interests.” (ECF No. 55.1, ¶ 4).

10. Throughout that time and to the present, defendant Hatteras Investment

Partners, L.P. (“HIP”), a Delaware limited partnership, has served as manager of

Evergreen Fund. HIP’s majority owner and manager, defendant David B. Perkins,

has maintained functional control over Evergreen Fund via HIP’s role as its manager.

(ECF No. 55.1, ¶¶ 2–21).
11. HIP and Evergreen Fund are parties to an advisory agreement pursuant to

which HIP is compensated in fees based on the stated value of Evergreen Fund’s

assets. (ECF No. 55.1, ¶ 2).

12. In late 2021, in a transaction spearheaded by HIP and Perkins, Evergreen

Fund—with a then-diversified portfolio of approximately $42.9 million in alternative

assets—“use[d] substantially all of its assets to purchase preferred equity shares” in

The Beneficient Company Group, LLP (“Ben”), a startup that is not a party to this

action and that “had little value at the time of the transaction.” (ECF No. 55.1, ¶¶ 5,

30–31, 59–62). In addition to exchanging its alternative asset portfolio, Evergreen

fund also paid approximately $3.5 million in cash. (ECF No. 55.1, ¶ 6). Thus,

Evergreen Fund’s total investment in Ben was approximately $46 million. (ECF No.

55.1, ¶ 6).

13. At the same time, the Hatteras Master Fund, L.P. (“HMF”), also a “HIP-

sponsored fund” and not a party to this action, separately purchased Ben securities.

HMF’s relationship with HIP was similar to Evergreen Fund’s relationship with

HIP––paying fees “based on the stated value of its assets according to an advisory

agreement.” (ECF No. 55.1, ¶ 7). In that instance, the consideration for HMF’s

purchase of Ben securities was HMF’s alternative asset portfolio, valued at around

$400 million, and Ben contracted with HIP to manage the alternative assets that

HMF contributed to Ben (the “HMF Advisory Contract”), while HIP also retained

its existing advisory contracts. (ECF No. 55.1, ¶¶ 7–10). Though Plaintiff alleges that

Ben “promised the Adviser an investment advisory contract” generally, Plaintiff does
not contend that any such contract existed or was otherwise consummated between

Ben and HIP with respect to Evergreen Fund’s transaction and assets, as opposed to

the HMF Advisory Contract. (ECF No. 55.1, ¶ 38; see generally ECF No. 55.1).

Instead, the “promised” contract was apparently a promise of “advisory fees for

managing the assets that Hatteras Master Fund [not Evergreen Fund] would

contribute to Ben.” (ECF No. 55.1, ¶ 39).2

14. At the time of Evergreen Fund’s and HMF’s respective investments, Ben

was an early-stage startup company with a limited operating history. Though Ben

advertised its business model as one generating interest and fees by offering liquidity

products to holders of alternative assets, Ben’s primary business model was

ultimately to invest directly in alternative assets. (ECF No. 55.1 ¶¶ 8, 11, 31).

15. Ben’s parent company was GWG Holdings, Inc., a publicly traded company.

(ECF No. 55.1, ¶ 13). On 5 November 2021, GWG disclosed in its annual Form 10-K

(for the 2020 reporting year) that the Securities and Exchange Commission was

investigating GWG and Ben, with a focus on Ben’s accounting practices. (ECF No.

55.1, ¶¶ 31–32). The filing also indicated that Ben was historically unprofitable as an

entity, with a declining portfolio over the course of several years. (ECF No. 55.1, ¶¶

32–35).

2 Though Plaintiff treats the “Ben Transaction” as a single overall transaction in its briefing,

Plaintiff defines the “Ben Transaction” by reference only to the Ben-Evergreen Fund
transaction. (ECF No. 55.1, ¶ 5 (defining “Ben Transaction” as “the transaction” in which
“Perkins and HIP caused Evergreen Fund to use substantially all of its assets to purchase
preferred equity securities in a singular startup company”)). Further, Plaintiff’s complaint
makes clear that the HMF transaction with Ben and the Evergreen Fund transaction with
Ben were two separate purchases of securities—one by Evergreen Fund, (ECF No. 55.1, ¶ 5),
and one by HMF, (ECF No. 55.1, ¶ 7), an entirely separate entity.
16. Shortly thereafter, on 29 November 2021 and in light of debate regarding

GWG’s viability as a going concern, Ben was spun off from GWG, and the transaction

was publicly announced several days later. (ECF No. 55.1, ¶¶ 35–36).

17. On 7 December 2021, after Ben was spun off from GWG, Evergreen Fund

nonetheless exchanged its portfolio of alternative assets for preferred equity interests

in Ben. (ECF No. 55.1, ¶¶ 5, 30). HIP, as manager of Evergreen Fund, effectuated the

transaction via Perkins. According to Plaintiff, Evergreen Fund’s portfolio was

“reported” to be valued at $43 million and “consisted primarily of private equity

limited partnerships.” (ECF No. 55.1, ¶¶ 5, 30).

18. At approximately the same time, Plaintiff contends that HIP and Ben

entered into contracts under which HIP had an “opportunity” to “co-sponsor new

investment funds” and “obtained the right to require Ben to seed these funds” with

alternative assets that were to be contributed by Evergreen Fund and HMF in their

respective transactions. This arrangement was publicly disclosed in Ben’s SEC filings

made in 2023. (ECF No. 55.1, ¶ 11).

19. Plaintiff also asserts that Ben agreed to pay “the Adviser” (an undefined

term apparently used in the complaint in reference to HIP—also at times spelled

“Advisor”) advisory fees “for managing the assets that Hatteras Master Fund would

contribute to Ben.” (ECF No. 55.1, ¶ 39; see generally ECF No. 55.1, ¶¶ 37–40).

20. Plaintiff asserts that these “extraordinary business opportunities” between

HIP and Ben “were contingent on Evergreen Fund’s completion of” its investment in
Ben. This arrangement was publicly disclosed in Ben’s SEC filings made in 2023.

(ECF No. 55.1, ¶ 12).

21. In the several years after the 7 December 2021 transaction between

Evergreen Fund and Ben, GWG (Ben’s former parent company) went bankrupt.

GWG’s founder and several of its officers and directors were sued in connection with

the alleged diversion of cash that was purportedly invested by GWG in Ben, and

various other allegations have been raised regarding perceived internal wrongdoing

between GWG and Ben between 2017 and 2021. (ECF No. 55.1, ¶¶ 54–55).

22. Ultimately, Evergreen Fund’s investment in Ben resulted in the loss of most

of the value of Evergreen Fund’s assets. (ECF No. 55.1, ¶¶ 14, 62). Ben’s value

dropped precipitously, with its shares falling from approximately $8 per share to

approximately $.02 per share by the time this suit was filed. (ECF No. 55.1, ¶ 60).

Thus, as a result of the Ben Transaction, the value of Evergreen Fund’s alternative

asset portfolio decreased by more than $40 million. (ECF No. 55.1, ¶ 62).

23. Plaintiff contends that HIP and Perkins ignored numerous “red flags” in

causing Evergreen Fund to transact with Ben, that they consummated the

transaction due to personal interests, and that their conduct was otherwise wrongful

and harmful to Evergreen Fund. (ECF No. 55.1, ¶¶ 13, 30–53). For example, Plaintiff

asserts that unidentified representatives of Ben provided offering documents and

other information disclosing that Ben had a limited operating history, that it lacked

an established customer base and interests in it were illiquid, and that there were
otherwise significant and inherent risks in investing in such securities. (ECF No.

55.1, ¶¶ 41–43).

24. Plaintiff asserts that, ignoring many of these red flags, Perkins made

various false statements to HMF’s board of directors to convince HMF to enter into

its transaction with Ben and to allow HIP to enter into the HMF Advisory Contract.

(ECF No. 55.1, ¶¶ 44–53, 73). As noted above, however, HMF is not a party to this

action.

25. Plaintiff also contends that Defendants breached their purported fiduciary

duty to Evergreen Fund by causing Evergreen Fund to enter into its transaction with

Ben in an effort to “pursue business opportunities and profits for themselves that

would not be shared with Evergreen Fund.” (ECF No. 55.1, ¶ 73).

26. Thus, Plaintiff filed this putative derivative suit but declined to make a pre-

suit demand on HIP (or Perkins) to investigate or otherwise to assert claims. (ECF

No. 55.1, ¶¶ 15–16, 68). Plaintiff instead contends that such a demand would have

been futile because “HIP and Perkins each face a substantial risk of personal liability

on account of Evergreen Fund’s claims” and “acted in bad faith and breached their

duty of loyalty to Evergreen Fund by using Evergreen Fund’s assets to pursue

lucrative business opportunities for themselves” and not for Evergreen Fund. (ECF

No. 55.1, ¶ 16).

27. However, Evergreen Fund’s Amended and Restated Limited Liability

Company Agreement dated 1 April 2020 (the “LLC Agreement”), the operative

company agreement, grants HIP the “full and exclusive right, power and authority to
manage and conduct the business and affairs of the Fund.” (ECF No. 55.1, ¶¶ 25–26;

ECF No. 67.3, § 2.6(a)).3 That same LLC Agreement provides that the manager of

Evergreen Fund (in this case, HIP) generally may not be held liable for its conduct

under the agreement absent “willful misfeasance, bad faith or gross negligence.”

(ECF No. 67.3, § 3.4(a); ECF No. 55.1, ¶ 28). Though HIP is permitted to delegate its

“rights, powers and authority” to others in its discretion and subject to applicable law,

it has not done so. (ECF No. 55.1, ¶ 26; ECF No. 67.3, § 2.6(a)).

28. Under the LLC Agreement, the parties also expressly agreed that:

[a]ny Member, Manager, or any of their Affiliates, may engage in
or possess an interest in other business ventures or commercial
dealings of every kind and description, independently or with
others, including, but not limited to, . . . provision of investment
advisory or brokerage services, . . . or entering into any other
commercial arrangements. No other Member or Manager shall
have any rights in or to such activities, or any profits derived
therefrom.

(ECF No. 67.3, § 3.3(b)).

29. In its amended complaint, Plaintiff asserts a single cause of action for breach

of fiduciary duty against Defendants on behalf of Evergreen Fund. (See generally ECF

No. 55.1).

30. Defendants and Evergreen Fund have moved to dismiss the first amended

complaint under Rule 12(b)(1) on the basis that Plaintiff has failed to adequately

plead demand futility in accordance with applicable law. (See generally ECF No. 67).

3 The Court may, and properly does, consider the text of the LLC Agreement, (ECF No. 67.3),

which is referenced, incorporated into, and integral to the allegations of the amended
complaint. (ECF No. 55.1, ¶¶ 25–29). See State ex rel. Cooper v. Seneca-Cayuga Tobacco Co.,
197 N.C. App. 176, 181 (2009); Oberlin Cap., L.P. v. Slavin, 147 N.C. App. 52, 60–61 (2001).
II. ANALYSIS

a. Rule 12(b)(1) Legal Standards and Delaware Law

31. A Rule 12(b)(1) motion presents “a challenge to the trial court’s subject

matter jurisdiction over a plaintiff’s claims.” Marlow v. TCS Designs, Inc., 288 N.C.

App. 567, 572 (2023); N.C. R. Civ. P. 12(b)(1).

32. Ultimately, “[t]he plaintiff bears the burden of establishing subject matter

jurisdiction.” Lau v. Constable, 2022 NCBC LEXIS 75, *10 (N.C. Super. Ct. July 11,

2022) (citations omitted). In considering a challenge to subject matter jurisdiction,

the Court “may consider matters outside the pleadings.” Harris v. Matthews, 361 N.C.

265, 271 (2007).

33. In the context of a putative derivative action, “[t]he challenge to the

adequacy of any pre-suit demand is, inter alia, a challenge to the Court’s subject

matter jurisdiction over the derivative claims.” Petty v. Morris, 2014 NCBC LEXIS

67, *4 (N.C. Super. Ct. Dec. 16, 2014); Meyer, 2025 NCBC LEXIS 140, at *28

(addressing motion to dismiss on standing grounds for putative derivative action

under Delaware law).

34. Under Article 8 of the North Carolina Limited Liability Act, “[i]n any

derivative proceeding in the right of a foreign LLC, the matters covered by [Article 8]

will be governed by the law of the jurisdiction of the foreign LLC’s organization” with

limited exceptions not applicable here. N.C. Gen. Stat. § 57D–8–06; Egelhof v. Szulik,

2006 NCBC LEXIS 5, *41 (N.C. Super. Ct. Mar. 13, 2006); see also Banyan Mezzanine

Fund II, LP v. Rowe, 2016 NCBC LEXIS 38, *8–9 (N.C. Super. Ct. May 10, 2016).
35. Evergreen Fund is a Delaware limited liability company, and its LLC

Agreement is governed by Delaware law. (ECF No. 67.3, § 9.5(a)).

36. Thus, Plaintiff’s cause of action is governed by Delaware law. N.C. Gen. Stat.

§ 57D–8–06; Egelhof, 2006 NCBC LEXIS 5, at *17; Banyan, 2016 NCBC LEXIS 38,

at *8–9.

37. Under Delaware law, before filing a derivative action, a shareholder or

member generally must make a demand on the entity’s board of directors, manager,

or comparable managerial authority to investigate or to take other action concerning

the entity’s claims. Del. Ch. Ct. R. 23.1 (Delaware rule governing requirements for

derivative actions); see, e.g., United Food & Com. Workers Union & Participating

Food Indus. Emps. Tri-State Pension Fund v. Zuckerberg, 262 A.3d 1034, 1047–48

(Del. 2021).

38. The “demand requirement is a substantive requirement” in derivative

actions governed by Delaware law. Zuckerberg, 262 A.3d at 1047.

39. Thus, absent a pre-suit demand, the shareholder or member “must plead

facts with particularity that demonstrate the reasons why demand would have been

futile” such that the failure to make a demand should be excused. Egelhof, 2006

NCBC LEXIS 5, at *18–19 (emphasis in original); see also Del. Ch. Ct. R. 23.1; Brehm

v. Eisner, 746 A.2d 244, 254 (Del. 2000).

40. If the plaintiff fails to do so, “the complaint must be dismissed, regardless of

the strength of his claim on the merits.” Egelhof, 2006 NCBC LEXIS 5, at *18–19

(noting also that “[p]leadings in derivative suits . . . must comply with stringent
requirements of factual particularity that differ substantially from . . . permissive

notice pleading” (alteration in original) (citation omitted)).

41. Delaware law requires courts to consider three factors to determine whether

a plaintiff has made adequate factual allegations of demand futility:

(i) whether the director received a material personal benefit from
the alleged misconduct that is the subject of the litigation
demand;

(ii) whether the director faces a substantial likelihood of liability
on any of the claims that would be the subject of the litigation
demand; and

(iii) whether the director lacks independence from someone who
received a material personal benefit from the alleged
misconduct that would be the subject of the litigation demand
or who would face a substantial likelihood of liability on any
of the claims that are the subject of the litigation demand.

Zuckerberg, 262 A.3d at 1059. The latter factor requires a plaintiff to plead

particularized facts justifying a “reasonable doubt” that the individual to whom

demand would be made lacks independence. Id. at 1060–61.

42. “[T]he reasonable doubt standard used in a demand futility analysis

provides a higher hurdle for a plaintiff than the relatively lenient standard of review

pursuant to Rule 12(b)(6).” In re Trade Desk, Inc. Derivative Litig., 2025 Del. Ch.

LEXIS 40, at *34 n.120 (Del. Ch. Feb. 14, 2025) (unpublished) (citation omitted).

43. The plaintiff’s “pleadings must comply with stringent requirements of

factual particularity that differ substantially from the permissive notice pleadings”

in other contexts and must include “particularized factual statements that are

essential to the claim,” known as “ultimate facts,” “principal facts” or “elemental
facts.” Brehm, 746 A.2d at 254 (“A prolix complaint larded with conclusory language

. . . does not comply with these fundamental pleading mandates.”).

44. Ultimately, an affirmative answer to any of the three Zuckerberg factors as

to at least half of the relevant decision makers excuses the demand requirement as

futile. Zuckerberg, 262 A.3d at 1059.

b. Defendants’ and Nominal Defendant’s Rule 12(b)(1) Motion to
Dismiss

45. Plaintiff affirmatively pleads and admits that it did not make a demand of

HIP (as manager of Evergreen Fund) or Perkins (as manager of HIP), nor did Plaintiff

make any other pre-suit demand concerning its breach of fiduciary duty cause of

action asserted in this action. (ECF No. 55.1, ¶ 68). Defendant and Evergreen Fund

contend that Plaintiff has failed to adequately plead that its pre-suit demand

obligation was excused. (ECF Nos. 66, 67, and 70).

46. After evaluating each of the three Zuckerberg prongs, the Court determines

that Plaintiff has failed to plead facts demonstrating that demand would have been

futile or that the demand requirement should otherwise be excused.

i. Material Personal Benefit to Defendants

47. The Court first considers whether Plaintiff has adequately and particularly

pleaded facts suggesting that Defendants received a “material personal benefit” from

the transaction between Ben and Evergreen Fund. Zuckerberg, 262 A.3d at 1058.

48. Plaintiff contends that Defendants both received “immediate material

financial benefits” from “causing Evergreen Fund” to enter into the Ben Transaction.

(ECF No. 55.1, ¶¶ 10, 15). These benefits were allegedly in the form of (i) the HMF
Advisory Contract and advisory fees that HIP (or the “Adviser”) was promised in

connection with the HMF transaction with Ben, and (ii) the general ability to co-

sponsor new funds and to require Ben to seed such funds. (See ECF No. 55.1, ¶¶ 8–

12).

49. Defendants, on the other hand, contend that these purported benefits were

not material personal benefits because (i) the alleged benefit from the HMF Advisory

Contract was separate and apart from any alleged benefit arising from Evergreen

Fund’s distinct transaction with Ben, (ii) the complaint does not otherwise plead non-

conclusory factual allegations demonstrating that the HMF Advisory Contract was

material to Evergreen Fund’s transaction with Ben, and (iii) Plaintiff’s allegations

are conclusory and fail to plead with specificity the particular benefits to Defendants

arising from the Evergreen Fund transaction. (ECF No. 67 at 10–14).

50. Construing the allegations of the complaint in the light most favorable to

Plaintiff, the Court determines that Plaintiff has failed to adequately plead

particularized facts demonstrating a material personal benefit to Defendants in

connection with the Evergreen Fund transaction as opposed to the HMF transaction.

See, e.g., City of Birmingham Ret. & Relief Sys. v. Good, 177 A.3d 47, 59 (Del. 2017)

(declining to excuse demand).

51. As Defendants correctly observe, the Court’s inquiry is whether Plaintiff

adequately pleads that the manager “received a material personal benefit from the

alleged misconduct that is the subject of the litigation demand.” Zuckerberg, 262 A.3d

at 1058 (emphasis added); see also Orman v. Cullman, 794 A.2d 5, 30 (Del. Ch. 2002)
(determining plaintiff failed to adequately allege any “benefit from the transaction

being challenged” (emphasis in original)); (ECF No. 67 at 10–11).

52. Here, the alleged wrongdoing (and, thus, the basis for this action) is

Evergreen Fund’s transaction with Ben––not HMF’s transaction with Ben or the

HMF Advisory Contract. HMF is not a party to this action, and Plaintiff’s lone

putative derivative cause of action is for breach of a fiduciary duty allegedly owed to

Evergreen. While Plaintiff’s allegations concerning the HMF Advisory Contract

successfully paint Defendants in a poor light, they are also largely immaterial to, and

do not support, the underlying cause of action.

53. Ultimately, Plaintiff’s allegations concerning Evergreen Fund’s transaction

amount to assertions that (i) “Ben offered the Adviser lucrative business

opportunities contingent on the completion of the transaction,” and (ii) “Ben promised

the Adviser an investment advisory contract” as a result of which the “Adviser would

receive a base fee as well as a performance allocation.” (ECF No. 55.1, ¶¶ 37–38).

However, Plaintiff expressly claims that these specific purported fees would be

“advisory fees from the Master Fund based on the stated value of the Ben securities

held by [HMF]; the Adviser would also receive advisory fees for managing the assets

that [HMF] would contribute to Ben”––all of which concern funds to be received from

HMF (advisory fees) and from Ben for managing funds contributed by HMF. (ECF

No. 55.1, ¶ 39).4

4 Plaintiff alleges that HIP already “receive[d] advisory fees on the basis of the stated value

of Evergreen Fund’s assets.” (ECF No. 55.1, ¶ 2). Those advisory fees are not, based on the
pleading, specifically tied to the Ben-Evergreen Fund transaction or the HMF-Ben
transaction.
54. In its brief, Plaintiff focuses on these same alleged benefits flowing to

Defendants––i.e., those potential funds flowing to Defendants from the HMF

Advisory Contract and transaction rather than from the Evergreen Fund transaction.

(ECF No. 69 at 12–18).

55. Thus, the Court determines that the allegations in the complaint fail to

particularly and specifically plead facts or even reasonable inferences of a benefit to

Defendants as a result of the Evergreen Fund transaction, much less a material

personal benefit. Zuckerberg, 262 A.3d at 1059; Orman, 794 A.2d at 30.

56. The Court further determines that, even if Plaintiff had adequately alleged

a benefit to Defendants, Plaintiff has failed to demonstrate that it was “material” to

these particular Defendants.

57. Plaintiff’s arguments concerning the materiality of the alleged benefit to

Defendants largely hinge on two bases: (i) the overall amount of money involved in

the transactions, and (ii) the allegation that Perkins made misrepresentations to

HMF’s board in connection with the HMF transaction. (ECF No. 69 at 12–18). These

arguments do not, however, rely on pleaded and particularized facts concerning the

specific alleged benefits to Defendants.

58. Plaintiff alleges that the eventual assets contributed to Ben totaled

approximately $446 million––around $400 million of which was specifically

attributable only to the HMF transaction and only around $46 million of which was

attributable to the Evergreen Fund transaction. (ECF No. 55.1, ¶¶ 6–10, 40).
59. Despite Plaintiff’s amended efforts to insert eye-poppingly-large sums of

money in its allegations, “there is no bright-line dollar amount at which” amounts

received by a manager “become material” for purposes of excusing the demand

requirement in a derivative action. Orman, 794 A.2d at 30; (see also ECF No. 32 at

18–19). For precisely this reason, the size of the transaction alone does not render an

alleged benefit “material” to the recipient; instead, the plaintiff must make a

particularized showing of how and why the benefit is allegedly material. See Horman

v. Abney, 2017 Del. Ch. LEXIS 13, at *39 (Del. Ch. Jan. 19, 2017) (unpublished)

(holding that alleged wrongdoing and futility of demand could not be reasonably

inferred “based solely upon the size or duration of the alleged wrongdoing”); In re

Goldman Sachs Grp., Inc. S’holder Litig., 2011 Del. Ch. LEXIS 151, at *36–37 (Del.

Ch. Oct. 12, 2011) (unpublished) (concluding that $670 million size of transaction was

insufficient to excuse pre-suit demand requirement, particularly when coupled with

conclusory allegations); see also Trade Desk, 2025 Del. Ch. LEXIS 40, at *34 n.120.

60. Though the transaction here involved an investment by Evergreen Fund

into Ben of more than $40 million, (ECF No. 55.1, ¶ 6), Plaintiff’s complaint fails to

quantify in any particularized way the alleged benefit to Defendants from the Ben-

Evergreen Fund transaction (i.e., the amount of the advisory fees or other similar

alleged benefits). (See generally ECF No. 55.1, ¶¶ 6; see also ECF No. 69 at 12–14).

61. Plaintiff does not, for example, specify any percentage of the funds under

management, the “base fee,” or the “performance allocation” that HIP (or, in turn,

Perkins) allegedly would receive, nor does Plaintiff otherwise provide specific
information concerning the actual amounts to be received by Defendants or how those

amounts would be material to these particular Defendants. See Orman, 794 A.2d at

23 (explaining that materiality is analyzed and determined “in the context of the

director’s economic circumstances” (emphasis, citations, and internal quotation

marks omitted)).

62. Rather, Plaintiff pleads in conclusory terms that the proposed agreement

between Ben and HIP was “lucrative” or for “lucrative business opportunities.” (ECF

No. 55.1, ¶¶ 8, 16, 37). These allegations are not sufficient to particularly plead the

materiality of the alleged benefit. Brehm, 746 A.2d at 254.

63. Plaintiff further contends that Perkins made misrepresentations to HMF’s

board in connection with HMF’s transaction with Ben and that the act of making

misrepresentations to HMF’s board necessarily means that there was a material

benefit to Defendants from the distinct Evergreen Fund transaction. (ECF No. 69 at

17–18).

64. Specifically, Plaintiff asserts that “Perkins would not have made false

statements to [HMF’s] Board to obtain approval of the Ben Transaction if the benefits

that Defendants were to receive were immaterial to them,” such that “[t]he only

reasonable explanation” is that Perkins lied for the purportedly material benefit of

these “lucrative business opportunities.” (ECF No. 69 at 17–18).

65. People, of course, lie frequently—often about the most mundane of things—

and those lies are often immaterial. See, e.g., Wetherington v. NC Dep’t of Pub. Safety,

270 N.C. App. 161, 191 (2020) (determining that a State Trooper’s knowingly false
statements this his hat blew off of his head, rather than that he left it on the light

bar of his car and lost it, were “not a severe violation of the [North Carolina State

Highway Patrol’s] truthfulness policy” that warranted termination for cause).

66. In fact, under both Delaware and North Carolina law, for example, one

element of fraud is that the misrepresentation be of a “material fact.” Gloucester

Holding Corp. v. U.S. Tape & Sticky Prods., LLC, 832 A.2d 116, 124 (Del. Ch. 2003);

In re Est. of Heiman, 235 N.C. App. 53, 57–58 (2014).

67. Using Plaintiff’s reasoning, this requirement would be redundant and

unnecessary because people must lie only about issues that are material or for which

there is a material benefit. (See ECF No. 69 at 17–18). This does not align with reality

or applicable case law and is not convincing for purposes of its defense against the

motion at issue.

68. Considering the requirements of Delaware law and the need for

particularized pleading, the Court concludes that the amended complaint fails to

adequately and particularly plead facts reflecting that either Defendant received a

material personal benefit with respect to Evergreen Fund’s transaction with Ben, and

Plaintiff has therefore failed to demonstrate that pre-suit demand should be excused

on the basis of the first prong of the Zuckerberg test.

ii. “Substantial Likelihood” of Liability

69. The Court next considers whether Plaintiff has adequately pleaded that

Defendants face a substantial likelihood of liability with respect to Plaintiff’s lone
cause of action in the case—one for breach of fiduciary duty. (ECF No. 55.1, ¶¶ 70–

74).

70. Again considering the allegations of the complaint in the light most

favorable to Plaintiff, the Court concludes that Plaintiff has failed to do so and that

Plaintiff therefore may not rely on the second prong of the Zuckerberg test to excuse

its failure to make a pre-suit demand.

71. In connection with the “substantial likelihood of liability” prong of

Zuckerberg, “[t]he mere threat of personal liability for approving a questioned

transaction, standing alone, is insufficient to challenge either the independence or

disinterestedness of” a manager. Rather, “[t]he court ‘must be satisfied that . . .

plaintiff[s] ha[ve] alleged facts with particularity which, taken as true, support a

reasonable doubt that the challenged transaction was the product of a valid exercise

of business judgment.’” Cent. Laborers’ Pension Fund v. Karp, 2025 Del. Ch. LEXIS

99, at *17 (Ch. Apr. 25, 2025) (explaining that “Plaintiffs must make a threshold

showing, through the allegation of particularized facts, that their claim[] has some

merit.” (citations and internal quotation marks omitted)).

72. In this case, though the Ben-Evergreen Fund transaction “turn[ed] out

poorly in hindsight,” In re Cornerstone Therapeutics Inc. S’holder Litig., 115 A.3d

1173, 1186–87 (Del. 2015), Plaintiff has failed to plead particularized facts

demonstrating that Defendants face a substantial likelihood of liability with respect

to Plaintiff’s breach of fiduciary duty cause of action.
73. Among Delaware’s robust protections for those with authority over a limited

liability company is the business judgment rule, which presumes that corporate

directors, officers, and managers are discharging their duties “in good faith and with

reasonable care, even if their actions turn out poorly in hindsight.” In re TransUnion

Derivative S’holder Litig., 324 A.3d 869, 884 (Del. 2024).

74. Where an LLC agreement limits the manager’s liability—as is the case here

with respect to HIP—the plaintiff generally must demonstrate that the claims are

not excluded by the terms of the LLC agreement. Cornerstone, 115 A.3d at 1186–87;

(see ECF No. 67.3, § 3.4(a) (providing that “No Manager, former Manager, officer or

former officer of [Evergreen Fund] shall be liable to the Fund or to any of its Members

for any loss or damage occasioned by any act or omission in the performance of such

person’s services under this Agreement, unless it shall be determined by final judicial

decision on the merits from which there is no further right to appeal that such loss is

due to an act or omission of such person constituting willful misfeasance, bad faith or

gross negligence involved in the conduct of such person’s office or as otherwise

required by applicable law.”).

75. Though Plaintiff asserts in its briefing that “HIP Owes Evergreen the

Fiduciary Duties of Loyalty and Care,” Plaintiff also expressly waives in its briefing

any alleged duty of care violation by Defendants, confirming that its complaint

“alleges a duty of loyalty violation, not a duty of care violation” with respect to its

cause of action for breach of fiduciary duty. (ECF No. 69 at 22 n.13; see also ECF No.

69 at 19 n.12 (“The Amended Complaint does not allege that Perkins owes Evergreen
a duty of care.”), 21 (asserting that Perkins faces liability because he “breached his

duty of loyalty”) and 23 (asserting that HIP “acted in bad faith and in violation of its

duty of loyalty”)).

76. Accordingly, in light of this waiver by Plaintiff, the Court will only consider

whether Plaintiff has demonstrated that Defendants face a substantial likelihood of

liability for breach of fiduciary duty under a theory of violating their purported duty

of loyalty. See Welch v. Welch, 288 N.C. App. 627, 630 (2023) (matters waived or

abandoned before the trial court are generally deemed waived for all purposes,

including appeal). In doing so, the Court considers whether the facts pleaded would

be sufficient to overcome a presumption that Defendants reasonably exercised their

business judgment under the business judgment rule. See Emerald Partners v. Berlin,

787 A.2d 85, 91 (Del. 2001) (indicating that the business judgment rule applies to the

duty of loyalty).

77. “[T]he duty of loyalty mandates that the best interest of the [organization]

and its shareholders takes precedence over any interest possessed by a director,

officer or controlling shareholder and not shared by the stockholders generally.”

Metro Storage Int’l LLC v. Harron, 275 A.3d 810, 842 (Del. Ch. 2022) (citations and

internal quotation marks omitted).

78. “The duty of loyalty includes a requirement to act in good faith, which is ‘a

subsidiary element, i.e., a condition, of the fundamental duty of loyalty’. . . . ‘A failure

to act in good faith may be shown, for instance, where the fiduciary intentionally acts

with a purpose other than that of advancing the best interests of the corporation.’”
Id. (citations omitted); see also Feeley v. NHAOCG, LCC, 62 A.3d 649, 670-71 (Del.

Ch. 2012) (explaining that the duty of loyalty applies in the LLC context).

79. However, Delaware law “permits a limited liability company to limit or

eliminate the liability that a fiduciary will face in the event of breach” of that

fiduciary duty:

A limited liability company agreement may provide for the
limitation or elimination of any and all liabilities for breach of
contract and breach of duties (including fiduciary duties) of a
member, manager or other person to a limited liability company
or to another member or manager or to another person that is a
party to or is otherwise bound by a limited liability company
agreement; provided, that a limited liability company agreement
may not limit or eliminate liability for any act or omission that
constitutes a bad faith violation of the implied contractual
covenant of good faith and fair dealing.

Feeley, 62 A.3d at 663–64 (emphasis in original) (quoting Del. Code tit. 6, § 18-

1101(c)).

80. “Limiting or eliminating liability is different than limiting or eliminating

the underlying duty. A provision that limits or eliminates liability only addresses one

of the available remedies for breach of duty, i.e., liability for money damages. It does

not limit or eliminate the duty itself.” Metro Storage, 275 A.3d at 846–47 (citations

omitted).

81. The standard for pleading and providing a breach of the duty of loyalty is

higher than for the duty of care:

Directors’ decisions must be reasonable, not perfect. “In the
transactional context, [an] extreme set of facts [is] required to
sustain a disloyalty claim premised on the notion that
disinterested directors were intentionally disregarding their
duties.” . . . [I]f the directors failed to do all that they should have
under the circumstances, they breached their duty of care. Only
if they knowingly and completely failed to undertake their
responsibilities would they breach their duty of loyalty.

Lyondell Chem. Co. v. Ryan, 970 A.2d 235, 243–44 (Del. 2009) (citation omitted).

82. Thus, to state a claim (and otherwise to demonstrate a substantial likelihood

of liability), a plaintiff must plead facts indicating that the defendant consciously and

knowingly failed to carry out the defendant’s duties to the organization—i.e., that it

acted in bad faith, with similarly improper motives, or otherwise not in good faith.

UFCW & Participating Food Indus. Empls Tri-State Pension Fund v. Zuckerberg, 250

A.3d 862, 897 (Del. Ch. 2020) (determining plaintiff failed to plead futility of demand

where plaintiff failed to allege facts showing defendant acted “in bad faith” or that it

was otherwise “reasonable to think that [the defendant] would be held liable after

trial”); McElrath v. Kalanick, 224 A.3d 982, 993 (Del. 2020) (“As we have noted before,

‘there is a vast difference between an inadequate or flawed effort to carry out

fiduciary duties and a conscious disregard for those duties.’” (citation omitted));

Firefighters’ Pension Sys., 251 A.3d at 253; Guttman v. Jen-Hsun Huang, 823 A.2d

492, 506 n.34 (Del. Ch. 2003) (explaining that the duty of loyalty requires a director

to “act[] in the good faith belief that her actions are in the corporation’s best

interest.”).

83. Thus, where an LLC agreement exculpates individuals from liability except

for bad faith or fraudulent or illegal conduct, the plaintiff should “plead particularized

facts that demonstrate that the directors acted with scienter, i.e., that they had

‘actual or constructive knowledge’ that their conduct was legally improper.” Wood v.
Baum, 953 A.2d 136, 141 (Del. 2008) (determining plaintiff failed to particularly

plead breach of duty where agreement at issue exculpated director “except for claims

based on ‘fraudulent,’ ‘illegal’ or ‘bad faith’ conduct”); Ibew Local Union 481 Defined

Contribution Plan & Tr. v. Winborne, 301 A.3d 596, 619 (Del. Ch. 2023) (“Delaware

decisions have read those rules together to require that a plaintiff plead

particularized facts that can support a reasonable inference about the directors’ state

of mind.”); Newman v. KKR Phorm Invs., L.P., 2023 Del. Ch. LEXIS 699, at *13–14

(Del. Ch. Sep. 5, 2023) (“This Court has held on numerous occasions that to state a

bad-faith claim, a plaintiff must show . . . that the decision under attack is so far

beyond the bounds of reasonable judgment that it seems essentially inexplicable on

any ground other than bad faith.” (citation omitted)); Cygnus Opportunity Fund, LLC

v. Wash. Prime Grp., LLC, 302 A.3d 430, 463 (Del. Ch. 2023) (“‘[W]illful misconduct’

. . . involves either malicious conduct or ‘conduct designed to defraud or seek an

unconscionable advantage.’” (citation omitted)); see also Meyer, 2025 NCBC LEXIS

140, at *26–27.

84. Here, in support of its argument, Plaintiff contends that Defendants acted

wrongfully in three primary ways: (i) ignoring purported “red flags” about the Ben-

Evergreen Fund transaction, (ii) making alleged misrepresentations to HMF’s board

in connection with the HMF transaction or purchase, and (iii) procuring the HMF

Advisory Contract and the general ability to co-sponsor new funds and to require Ben

to seed such funds. (See ECF No. 55.1, ¶¶ 13, 33, 37–40).
85. The “red flags” on which Plaintiff relies to support its claim for breach of

fiduciary duty, however, are primarily that Defendants caused Evergreen Fund to

invest in Ben despite (i) a disclosure in another entity’s Form 10-K filing about an

investigation into Ben’s accounting practices, (ii) Evergreen Fund’s stated business

objective of investing in a “diversified portfolio of private investments,” particularly

“alternative” assets, (iii) Defendants’ vaguely described alleged agreements to co-

sponsor or co-manager new funds with Ben, and (iv) numerous events that occurred

after the Ben-Evergreen Fund transaction, such as the bankruptcy of GWG. (See ECF

No. 55.1, ¶¶ 30-58).

86. While they might demonstrate exceptionally poor business judgment, these

allegations fail to demonstrate willful misfeasance or bad faith, largely for the

reasons set forth in Defendants’ briefing. (See, e.g., ECF Nos. 67 and 70); see, e.g., In

re Molycorp, Inc. S’holder Derivative Litig., 2015 Del. Ch. LEXIS 152, at *29, *38 (Del.

Ch. May 27, 2015) (unpublished) (explaining that a party generally may not rely on

hindsight to create an inference of wrongful conduct); Cent. Laborers’ Pension Fund,

2025 Del. Ch. LEXIS 99, at *17; In re TransUnion, 324 A.3d at 884–85.

87. Inasmuch as Plaintiff relies on Perkins’s alleged misrepresentations to

HMF’s board, (ECF No. 55.1, ¶¶ 44–53), HMF is not a party to this action, nor are

there non-conclusory factual allegations that the Ben-Evergreen Fund transaction

was contingent on the HMF transaction.5 Even if the alleged misrepresentations were

5 Plaintiff alleges that “HIP’s extraordinary business opportunities were contingent on
Evergreen Fund’s completion of the Ben Transaction,” (ECF No. 55.1, ¶¶ 12, 37 (emphasis
added)), but not that the Ben-Evergreen Fund transaction was contingent on the HMF
transaction. Though Plaintiff alleges that HMF’s board “approved” the “Ben Transaction,”
sufficient to demonstrate bad faith in connection with the Ben-HMF transaction or

purchase, there are not factual allegations explaining how they would have any

bearing on the Ben-Evergreen Fund transaction, and the current allegations do not

give rise to a reasonable inference that Defendants face a substantial likelihood of

liability in connection with the Ben-Evergreen Fund transaction.

88. The events occurring after the Ben-Evergreen Fund transaction, such as

GWG’s bankruptcy, similarly do not bolster Plaintiff’s claim. Molycorp, 2015 Del. Ch.

LEXIS 152, at *38; Cent. Laborers’ Pension Fund, 2025 Del. Ch. LEXIS 99, at *17.

89. Further, with respect to the HMF Advisory Contract and the agreements to

sponsor new funds, the Evergreen Fund LLC Agreement expressly authorizes

members, managers, and their affiliates, like Defendants, to “engage in or possess an

interest in other business ventures or commercial dealings of every kind and

description, independently or with others.” (ECF No. 67.3, § 3.3(b)). Thus, the parties

expressly contemplated, and permitted, such situations.

90. In short, while Defendants’ alleged conduct might justify questions as to

HIP’s ultimate competence as manager (and Perkins’s qualifications to manage any

entity), the conduct alleged—particularly when combined with the language of the

LLC Agreement—does not give rise to a reasonable inference that Defendants face a

“substantial likelihood” of liability. See Wood, 953 A.2d at 141 n.11 (explaining that

(ECF No. 55.1, ¶ 53), Plaintiff does not allege that the HMF board’s approval was required to
effectuate the Evergreen Fund transaction, nor are there factual allegations for why this
might be the case. Even allegations in the complaint that the HMF-Ben Transaction was “[i]n
the Ben Transaction” or that it was effectuated “[a]s a result of the Ben Transaction” do not
suggest that the two transactions were conditional or contingent on each other or otherwise
were unable to be completed independently. (ECF No. 55.1, ¶¶ 7, 9).
the “mere threat of personal liability . . . is insufficient to challenge either the

independence or disinterestedness of directors”) (citation omitted); Melbourne Mun.

Firefighters’ Pension Tr. Fund v. Jacobs, 2016 Del. Ch. LEXIS 114, at *37–39 (Del.

Ch. Aug. 1, 2016) (unpublished) (determining that plaintiff’s failure to plead

particularized facts permitting a reasonable inference that directors faced a

substantial likelihood of liability warranted dismissal).

91. Plaintiff’s obligation to make a pre-suit demand is therefore not excused on

the basis of this second prong of the Zuckerberg test.

iii. Lack of Independence from Others Receiving a Material
Personal Benefit or Facing a Substantial Likelihood of
Liability

92. Finally, the Court addresses the third Zuckerberg prong—whether

Defendants lack independence from others receiving a material personal benefit or

facing a substantial likelihood of liability in connection with the unmade pre-

litigation demand or the cause of action at issue. Zuckerberg, 262 A.3d at 1059.

93. Plaintiff does not allege in its amended complaint that Defendants lack

independence from any other person or entity receiving a material personal benefit

or who would allegedly face a substantial likelihood of liability based on Plaintiff’s

cause of action. (See generally ECF No. 55.1). Plaintiff also makes no such argument

in its briefing. (See generally ECF No. 69).

94. The Court therefore determines that this prong is inapplicable, that Plaintiff

has failed to raise it for consideration, and that Plaintiff otherwise has failed to meet
its burden with respect to this prong, such that it does not provide a viable basis on

which Plaintiff may claim that its obligation to make a pre-suit demand was excused.

95. Accordingly, having considered the amended complaint and the parties’

arguments, the Court determines that the amended complaint fails to plead with the

requisite particularity the facts necessary to establish that its pre-suit demand

obligation was or should be excused. It is therefore appropriate to dismiss Plaintiff’s

complaint and this action. See Alford, 327 N.C. at 540 (addressing considerations for

dismissal of derivative actions under § 57D–8–04); Zuckerberg, 262 A.3d at 1058

(articulating tests for demand futility pleading in derivative actions under Delaware

law).

c. Nature of Dismissal

96. Having determined that Plaintiff’s amended complaint should be dismissed,

the Court finally considers whether the dismissal should be with prejudice, as

Defendants argue, or without prejudice, as Plaintiff has previously argued. Compare

ECF No. 67 at 28 with ECF No. 69 at 1 n.1.6

97. Under Rule 12 of the North Carolina Rules of Civil Procedure, a court is

required to dismiss an action when the court lacks subject matter jurisdiction. N.C.

R. Civ. P. 12(h)(3); Meyer, 2025 NCBC LEXIS 140, at *10 (dismissing derivative

6 Without substantive analysis, Plaintiff points in a footnote to arguments made in briefing

on an earlier motion. To the extent Plaintiff seeks to incorporate those arguments by
reference or otherwise have the Court consider those arguments without inclusion in the brief
before the Court, this violates Rule 7.8 of the Business Court Rules, and the Court declines
to consider arguments made in earlier briefing that is not before the Court. See BCR 7.8 (“A
party may not incorporate by reference arguments made in another brief…”).
action under Delaware law without prejudice for lack of subject matter jurisdiction

and lack of standing).

98. “[S]tanding is a necessary prerequisite to a court’s proper exercise of subject

matter jurisdiction.” Soc’y for the Hist. Pres. of the Twenty-Sixth N.C. Troops, Inc. v.

City of Asheville, 385 N.C. 744, 748 (2024) (citation omitted); In re Z.G.J., 378 N.C.

500, 504 (2021).

99. Under Delaware law, a putative derivative plaintiff has no cause of action

or claim to assert (and, thus, no standing) until the plaintiff either complies with the

pre-suit demand requirement or establishes that demand would be futile. Egelhof,

2006 NCBC LEXIS 5, at *18 (“The right of a Delaware corporation’s shareholder to

bring a derivative action does not come into existence until (1) he has made a demand

on the corporation to institute the action itself, (2) his demand has been refused, or

(3) he demonstrates that demand on the corporation would have been futile.”).

100. In the context of putative derivative actions proceeding under Delaware law

in North Carolina, when dismissing such actions for lack of subject matter

jurisdiction, this Court’s case law is split as to whether dismissal should be with or

without prejudice for lack of subject matter jurisdiction. More recent cases, however,

have generally dismissed such actions without prejudice. Compare In re Pozen

S’holders Litig., 2005 NCBC LEXIS 7, *44 & n.4 (N.C. Super. Ct. Nov. 10, 2005)

(declining to excuse demand and dismissing complaint with prejudice) (citing White

v. Panic, 783 A.2d 543, 557 (Del. 2001); Smith v. Raymond, 2010 NCBC LEXIS 20,

*13 (N.C. Super. Ct. Oct. 21, 2010) (dismissing putative derivative complaint with
prejudice under Delaware law on demand futility grounds); Egelhof, 2006 NCBC

LEXIS 5, at *18 & n.5 (same), with Meyer, 2025 NCBC LEXIS 140, at *28 (dismissing

putative Delaware derivative suit without prejudice); Kane v. Moore, 2018 NCBC

LEXIS 157, *36 (N.C. Super. Ct. Nov. 26, 2018) (dismissing both putative Delaware

and North Carolina derivative claims without prejudice).

101. At least some case law suggests that dismissal with prejudice may be

appropriate for lack of subject matter jurisdiction when the plaintiff is precluded from

filing in another forum. E.g., Forsythe v. N.C. Dep’t of Revenue, 2022 NCBC LEXIS

106, *10–11 (N.C. Super. Ct. September 9, 2022) (“Although ‘[a] dismissal for lack of

jurisdiction is generally a dismissal without prejudice’ to permit a plaintiff to pursue

the dismissed claims in a different forum,” it is appropriate under North Carolina law

to dismiss such an action with prejudice when a plaintiff “cannot cure [its] procedural

default or proceed in any other forum.” (citations omitted)).

102. However, as our appellate courts have made clear, when a court lacks

subject matter jurisdiction, dismissal should be without prejudice. Pugh v. Howard,

288 N.C. App. 576, 588 (2023) (“[W]hen a trial court determines that it lacks subject-

matter jurisdiction over a matter because of the plaintiff's failure to establish

standing, the court may not dismiss the matter with prejudice pursuant to Rule

12(b)(6). Rather, in such circumstances, the matter is properly dismissed without

prejudice pursuant to Rule 12(b)(1).” (internal citation omitted) (emphasis added));

Lee v. Lee, 296 N.C. App. LEXIS 860, at *11 (2024) (unpublished) (“The trial court

found that it lacked subject matter jurisdiction, which necessarily prevented it from
reaching the merits of the case, a pre-requisite for both an application of Rule

12(b)(6) and dismissal with prejudice.” (emphasis added)); Holton v. Holton, 258 N.C.

App. 408, 415 (2018) (“[A] dismissal under Rule 12(b)(1) must be made without

prejudice, since a trial court without jurisdiction would lack authority to adjudicate

the matter.” (emphasis added)); see also United Daughters of the Confederacy v. City

of Winston-Salem, 383 N.C. 612, 650 (2022) (“[W]hen a complaint is dismissed for lack

of subject matter jurisdiction, that decision does not result in a final judgment on the

merits . . .” (citation omitted)).

103. Here, as the Court determines that Plaintiff lacks standing and that the

Court lacks subject matter jurisdiction pursuant to Rule 12(b)(1), as in Meyer, the

Court, in the exercise of its discretion, will grant the motion to dismiss without

prejudice. Meyer, 2025 NCBC LEXIS 140, at *28.

III. CONCLUSION

104. Accordingly, the Court GRANTS Defendants’ and Nominal Defendant’s

motion to dismiss, (ECF No. 66), and this action is DISMISSED WITHOUT

PREJUDICE.

SO ORDERED, this 11th day of February 2026.

/s/ Matthew T. Houston
Matthew T. Houston
Special Superior Court Judge
for Complex Business Cases