Norris v. Greymont Dev., LLC

Norris v. Greymont Dev., LLC, 2022 NCBC 4.

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
WAKE COUNTY 21 CVS 12659

LEE NORRIS,

Plaintiff,

v.
ORDER AND OPINION ON
GREYMONT DEVELOPMENT, LLC; PLAINTIFF NORRIS’S MOTION TO
and JAMES SCHAAFSMA, APPOINT RECEIVER AND
Defendants. INTERVENOR-DEFENDANT
SCHAAFSMA’S MOTION TO DISMISS

1. THIS MATTER is before the Court on Plaintiff Lee Norris’s (“Norris”)

Motion for Appointment of Receiver (the “Receiver Motion”), (ECF No. 6), and

Intervenor-Defendant James Schaafsma’s (“Schaafsma”) Motion to Dismiss (the

“Motion to Dismiss”) under Rules 12(b)(6) and 12(b)(1) of the North Carolina Rules of

Civil Procedure (the “Rule(s)”), (ECF No. 26), (together, the “Motions”).

2. Norris brings this action against Defendant Greymont Development, LLC1

(“Greymont” or the “LLC”), seeking to appoint a receiver for the LLC to terminate

what Norris contends is a frivolous derivative action that Schaafsma has filed on the

LLC’s behalf and to oversee Greymont’s dissolution and winding up. Plaintiff’s

Receiver Motion seeks the immediate appointment of that receiver. Defendant’s

Motion to Dismiss seeks to dismiss Norris’s primary claim for judicial dissolution and

Norris’s alternative claim for the appointment of an independent person under

1 Greymont is unrepresented in this action because Norris and Schaafsma have not
authorized the LLC to have legal representation, a decision that requires a unanimous vote
of the member-managers under Greymont’s operating agreement. (Verified First Am. Compl.
Ex. 1 [hereinafter “Greymont’s Operating Agreement”], ECF No. 18.2.)
N.C.G.S. § 57D-8-03(f) to decide whether Schaafsma’s derivative lawsuit should be

maintained.

3. Having considered the Motions, the related briefing, appropriate matters of

record, and the arguments of counsel at the hearing on the Motions, the Court, in the

exercise of its discretion and for the reasons set forth below, GRANTS Defendant’s

Motion to Dismiss, DISMISSES Plaintiff’s claims with and without prejudice as

provided herein, and DENIES Plaintiff’s Receiver Motion as moot.

Graebe Hanna & Sullivan, PLLC, by Christopher T. Graebe and John
William Graebe, 2 for Plaintiff Lee Norris.

Young Moore and Henderson, P.A., by Walter E. Brock and Rachel H.
Boyd, for Defendant James Schaafsma.

Defendant Greymont Development, LLC is unrepresented and thus did
not participate or appear.

Bledsoe, Chief Judge.
I.

FACTUAL AND PROCEDURAL BACKGROUND

4. Norris and Schaafsma are 50/50 member-managers of Greymont, a North

Carolina limited liability company that develops real estate. (Verified First Am.

Compl. ¶¶ 2, 4–5 [hereinafter “Am. Compl.”], ECF No. 18.) Greymont has no

employees, and its operating agreement, requires practical unanimity on all

decisions. (Am. Compl. ¶¶ 6–8; Greymont’s Operating Agreement ¶ 3.) Norris and

Schaafsma are also two of four member-managers of 4Line, LLC (“4Line”), f/k/a 5

Guys Management, LLC, a North Carolina limited liability company. (Am. Compl.

2 Plaintiff’s counsel joined Morningstar Law Group after the Motions were briefed and
argued. (See ECF Nos. 34, 35.)
¶ 9.) 4Line, in turn, is a member-manager of three limited liability companies that

provide real estate development services on projects of the same name: 512 Gordon

Street, LLC (“512 Gordon”); 522 S Harrington, LLC (“522 Harrington”) and 518

Morehead, LLC (“518 Morehead”). (Am. Compl. ¶ 9.)

5. Norris alleges that Greymont has wound down its services in connection

with 512 Gordon. (Am. Compl. ¶ 12.) He also pleads that “no material work remains

to be done” in connection with 522 Harrington and that the 522 Harrington project is

“substantially complete” (Am. Compl. ¶¶ 13, 54). 3

6. The parties’ dispute has at its core a development agreement that Greymont

entered with 518 Morehead in July 2019 (the “Development Agreement”). (Am.

Compl. ¶ 20.) Norris pleads that the Development Agreement contemplated two

phases and that the first, pre-construction phase was agreed upon and fully funded

while the second, development phase was not. (Am. Coml. ¶¶ 21–27.) Norris alleges

that 518 Morehead timely paid the full development fee of $60,000 for the first, pre-

construction phase, but in February 2021, before the second, development phase

could proceed, 518 Morehead sold the real estate involved because the COVID-19

pandemic made it unfeasible to complete the project. (Am. Compl. ¶¶ 29, 31–34.)

3 In opposing Norris’s Receiver Motion, Schaafsma contends by affidavit that Greymont has

“ongoing obligations” as to 522 Harrington, including an “active dispute with the [property’s]
general contractor” and the disposition of “1,700 square feet of unfinished and unsold
commercial space[.]” (Suppl. Aff. of Schaafsma ¶¶ 6–11, ECF No. 28.) The Court does not
consider these assertions, however, in considering Schaafsma’s motion to dismiss under Rule
12(b)(6) because “[a]s a general proposition, a trial court’s consideration of a motion brought
under Rule 12(b)(6) is limited to examining the legal sufficiency of the allegations contained
within the four corners of the complaint.” Khaja v. Husna, 243 N.C. App. 330, 338–39 (2015)
(cleaned up).
Schaafsma contends that, because the sale of the 518 Morehead project improperly

terminated the Development Agreement, Greymont is therefore owed over $750,000

in development fees. (Am. Compl. ¶¶ 38–39.) Norris disagrees and contends that

Greymont has been paid its full development fee for its work on the 518 Morehead

project. (Am. Compl. ¶ 49.)

7. On 1 June 2021, Schaafsma, acting for Greymont and without Norris’s

consent, filed a lawsuit against 518 Morehead in Wake County Superior Court

seeking to recover the $750,000 in development fees Schaafsma contends 518

Morehead owes to Greymont. (Am. Compl. ¶ 38.) Schaafsma subsequently caused

Greymont to dismiss that litigation, (Am. Compl. ¶ 45), and, on 9 September 2021,

Schaafsma filed a derivative action on behalf of Greymont seeking the same relief.

(Am Compl. ¶ 48.) Norris opposes Schaafsma’s litigation, contending that

Schaafsma’s derivative action is frivolous and asserting that 518 Morehead has paid

all sums due under the Development Agreement. (Am. Compl. ¶ 49.) Norris further

pleads that he is powerless to terminate Schaafsma’s derivative action because he

cannot take unilateral action to that effect under Greymont’s operating agreement.

(Am. Compl. ¶¶ 56, 59.)

8. Based on the parties’ disagreement over the filing and maintenance of the

derivative litigation, Norris alleges that he and Schaafsma are deadlocked in the

management and business operations of Greymont, requiring that Greymont be

dissolved. (Am. Compl. ¶¶ 56–57.) Relying on this contention, Norris filed the

Verified Complaint initiating this action on 16 September 2021 containing a single
claim for judicial dissolution. (Verified Compl. ¶¶ 38–42, ECF No. 3.) He filed the

Receiver Motion soon thereafter and asks this Court to empower the receiver to

“manage the business of [Greymont] pending the Court’s determination on Plaintiff’s

claim for dissolution, including but not limited to acting on behalf of the LLC to

determine whether [maintaining Schaafsma’s derivative suit] is in the best interests

of Greymont under N.C.G.S. 57D-8-03.” (Pl.’s Mot. for Appointment of Receiver

[hereinafter “Receiver Mot.”], ECF No. 6.)

9. Schaafsma intervened in this action on 13 October 2021, (Consent Order

Allowing Intervention and Extension of Time, ECF No. 13), and promptly moved to

dismiss the Verified Complaint, (Intervenor’s Mot. to Dismiss, ECF No. 14). On 10

November 2021, however, Norris filed a Verified Amended First Complaint

(“Amended Complaint”), mooting Schaafsma’s motion, (Order Denying Def. James

Schaafsma’s Mot. to Dismiss, ECF No. 22). In addition to reasserting Norris’s claim

for judicial dissolution, Norris’s Amended Complaint includes an alternative claim

asking the Court to appoint an independent person under section 57D-8-03(f) to

decide whether maintaining the derivative suit against 518 Morehead is in

Greymont’s best interests. (Am. Compl. ¶¶ 60–70.)

10. On 23 November 2021, Schaafsma filed the Motion to Dismiss seeking the

dismissal of both Norris’s claim for dissolution (under Rule 12(b)(6)) and Norris’s

alternative claim under section 57D-8-03(f) (under Rules 12(b)(6) and 12(b)(1)). (Br.

Supp. Mot. Dismiss and Surreply to Pl.’s Mot Appointment of Receiver 23–27
[hereinafter “Schaafsma’s Br. Supp. Mot. Dismiss and Surreply to Receiver Mot.”],

ECF No. 27.)

11. After full briefing, the Court convened a hearing (the “Hearing”) on the

Motions on 8 December 2021, at which all represented parties were represented by

counsel. The Motions are now ripe for resolution.

II.

LEGAL STANDARD

12. “A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the

complaint by presenting ‘the question whether, as a matter of law, the allegations of

the complaint, treated as true, are sufficient to state a claim upon which relief can be

granted under some [recognized] legal theory.’ ” Forsyth Mem’l Hosp., Inc. v.

Armstrong World Indus., Inc., 336 N.C. 438, 442 (1994) (quoting Lynn v. Overlook

Dev., 328 N.C. 689, 692 (1991)). Accordingly, the Court must view the allegations in

the complaint “in the light most favorable to the non-moving party.” Christenbury

Eye Ctr., P.A. v. Medflow, Inc., 370 N.C. 1, 5 (2017) (quoting Kirby v. N.C. Dep’t of

Transp., 368 N.C. 847, 852 (2016)).

13. “When considering a [Rule] 12(b)(6) motion to dismiss, the trial court need

only look to the face of the complaint to determine whether it reveals an

insurmountable bar to plaintiff’s recovery.” Kemp v. Spivey, 166 N.C. App. 456, 461

(2004) (quoting Locus v. Fayetteville State Univ., 102 N.C. App. 522, 527 (1991)).

Further, “the complaint is to be liberally construed, and the trial court should not

dismiss the complaint unless it appears beyond doubt that [the] plaintiff could prove
no set of facts in support of his claim which would entitle him to relief.” State ex rel.

Cooper v. Ridgeway Brands Mfg., LLC, 362 N.C. 431, 444 (2008) (quoting Meyer v.

Walls, 347 N.C. 97, 111–12 (1997)) (alteration in original); see also Strickland v.

Hedrick, 194 N.C. App. 1, 20 (2008) (“[T]o prevent a Rule 12(b)(6) dismissal, a party

must . . . state enough to satisfy the substantive elements of at least some legally

recognized claim.” (citation and internal quotation marks omitted)).

14. Therefore, dismissal of a complaint under Rule 12(b)(6) is proper only when:

“(1) the complaint on its face reveals that no law supports the plaintiff’s claim; (2) the

complaint on its face reveals the absence of facts sufficient to make a good claim; or

(3) the complaint discloses some fact that necessarily defeats the plaintiff’s claim.”

Krawiec v. Manly, 370 N.C. 602, 606 (2018) (quoting Wood v. Guilford Cnty., 355 N.C.

161, 166 (2002)).

III.

ANALYSIS

A. Schaafsma’s Motion to Dismiss

1. Norris’s Claim for Judicial Dissolution

15. A member of a limited liability company may seek judicial dissolution of the

LLC under section 57D-6-02(2) “if it is established that (i) it is not practicable to

conduct the LLC’s business in conformance with the operating agreement and

[Chapter 57D] or (ii) liquidation of the LLC is necessary to protect the rights and
interests of the member.” 4 N.C.G.S. 57D-6-02(2). The Court notes that the first prong

is conjunctive, requiring the member to show impracticability under both the

operating agreement and Chapter 57D to permit dissolution under this subsection.

Norris contends that his pleadings satisfy both prongs of section 57D-6-02(2).

a. Conducting Business in Conformance with Greymont’s Operating
Agreement

16. Norris argues that Greymont cannot continue its business in conformance

with its operating agreement because Schaafsma’s derivative suit is Greymont’s only

material business activity and the parties’ disagreement over whether to pursue that

litigation amounts to a deadlock over Greymont’s day-to-day operations—which

Norris argues is “a well-established basis for dissolution.” (Am. Compl. ¶¶ 54, 56–57,

62.)

17. In seeking dismissal, Schaafsma contends that Norris has failed to establish

his entitlement to dissolution because Norris’s allegations show that the deadlock

Norris complains of is a discrete disagreement that has not prevented Norris and

Schaafsma from effectively managing Greymont’s other daily operations in

accordance with Greymont’s operating agreement. (Schaafsma’s Br. Supp. Mot.

Dismiss and Surreply to Receiver Mot. 14–17.) For his support, Schaafsma points to

portions of the Amended Complaint showing that he and Norris are cooperating on

4 This Court has observed that “[j]udicial dissolution is a remedy left largely to the discretion

of the trial court, and this is so even where a party establishes a statutory ground for
dissolution.” Reid Pointe, LLC v. Stevens, 2008 NCBC LEXIS 16, at *11–12 (N.C. Super. Ct.
Aug. 18, 2008). See, e.g., Brady v. Van Vlaanderen, 261 N.C. App. 1, 4 (2018) (“Judicial
dissolution is a remedy that rests within the trial court’s sound discretion.”) (citation and
internal quotation marks omitted).
daily management decisions about 522 Harrington and that they agreed to terminate

the development agreement for 512 Gordon even after Norris filed this dissolution

action. (Am. Compl. ¶¶ 12, 54; Schaafsma’s Br. Supp. Mot. Dismiss and Surreply to

Receiver Mot. 16–17.)

18. The Court finds that Schaafsma has the better of this dispute on Norris’s

current pleading.

19. First, while Norris alleges that the derivative suit is Greymont’s only

“material continuing business activity[,]” (Am. Compl. ¶ 54 (emphasis added)), the

descriptor “material” is a legal term and its use here states a legal conclusion that

the Court may ignore under Rule 12(b)(6). See, e.g., Simmons v. Kross Lieberman &

Stone, Inc., 228 N.C. App. 425, 428 (2013) (noting that a court need not accept legal

conclusions as true under Rule 12(b)(6)).

20. Next, taking all of Norris’s allegations in the Amended Complaint as true,

Norris has not pleaded that activity relating to Schaafsma’s derivative action

comprises all or even substantially all of Greymont’s current operations at this time.

To the contrary, Norris pleads that Greymont still has a receivable that it must collect

on the 522 Harrington project, (Am. Compl. ¶ 13), and although Norris alleges that

the 522 Harrington project is “essentially complete[,]” (Am. Compl. ¶ 4), or

“substantially complete[,]” (Am. Compl. ¶ 54), he also pleads that work remains to be

done on the 522 Harrington project before Greymont’s responsibilities in connection

with the project are concluded, (Am. Compl. ¶ 13). Significantly, Norris does not
allege that he and Schaafsma disagree, much less are deadlocked, over how to

complete any of the remaining work to be performed on the 522 Harrington project.

21. Finally, some of Norris’s allegations contradict his claim that Norris and

Schaafsma are deadlocked on daily management decision-making for Greymont. In

particular, Norris alleges that, even while the derivative suit was pending, he and

Schaafsma agreed to terminate Greymont’s development services agreement on the

512 Gordon project, and both agree that Greymont should wind down its affairs and

are taking steps to do so. (See Am. Compl. ¶¶ 4, 54). Such cooperative activity refutes

Norris’s claim that the parties’ pleaded disagreement reflects a level of “discord [that]

pervades every aspect of [the parties’] management” of Greymont. See Battles v.

Bywater, LLC, 2014 NCBC LEXIS 54, at *17, 19, 22 (N.C. Super. Ct. Oct. 31, 2014)

(concluding dissolution was appropriate where the LLC’s co-equal member-managers

were “unable to reach agreement with respect to even the most basic management

decisions,” including “day-to-day operations” of the company).

22. Instead, the Court concludes that the parties’ pleaded cooperation and

agreement in managing various aspects of Greymont’s ongoing business operations

show as a matter of law that the parties can conduct Greymont’s business in

conformance with Greymont’s operating agreement. See 759 Ventures, LLC v. GCP

Apt. Inv’rs, LLC, 2018 NCBC LEXIS 44, at *8–11 (N.C Super. Ct. May 9, 2018)

(rejecting dissolution where member-managers “undoubtedly ha[d] their
disagreements” over operations but were still “more or less on the same page as to

two of [their] four properties”). 5

b. Conducting Business in Conformance with Chapter 57D

23. Norris further pleads that it is impracticable to conduct Greymont’s

business in conformance with Chapter 57D because the parties’ disagreement over

the derivative action makes it “impossible for [Greymont] to exercise its statutory

right to move for the appointment of an independent person to make a best interests

determination under [section] 57D-8-03(f).” (Am. Compl. ¶ 63.) That section

provides, in relevant part, that “[t]he court may appoint a panel composed of one or

more independent persons on motion of the LLC to make a determination whether

the maintenance of the derivative proceeding is in the best interest of the LLC.”

N.C.G.S. § 57D-8-03(f) (emphasis added).

24. In moving to dismiss, Schaafsma argues that section 57D-8-03(f), by its plain

language, permits only the LLC, not an LLC member like Norris, to move for the

appointment of an independent person on behalf of the LLC. (Schaafsma’s Reply Br.

Supp. Mot. Dismiss 13, ECF No. 32.) He contends that Norris on his own simply

lacks the voting power to cause Greymont to move for the appointment and that this

failure to meet the statute’s voting requirements does not impair the LLC’s ability to

5 Although Battles and 759 Ventures reviewed motions for the appointment of a receiver, each

decision examined the moving party’s likelihood of success on that party’s dissolution claim
in assessing whether to appoint a receiver. The Court concludes that the analysis in each
case is therefore relevant in evaluating whether Norris’s dissolution claim survives dismissal
under Rule 12(b)(6).
operate in conformance with Chapter 57D. (Schaafsma’s Br. Supp. Mot. Dismiss and

Surreply to Receiver Mot. 17–21).

25. Norris argues in opposition that section 57D-8-03(f) gives Greymont the

right to independent review and that Schaafsma’s intransigence is preventing

Greymont from filing a motion to exercise this statutory “right.” (Pl.’s Br. Opp’n Def.

James Schaafsma’s Mot. Dismiss Verified First Am. Compl. 16, 21 [hereinafter Pl.’s

Br. Opp’n Schaafsma’s Mot. Dismiss Am. Compl.], ECF No. 31.) As such, Norris

argues that operating Greymont in conformance with Chapter 57D is impracticable

in the current circumstances. (Pl.’s Br. Opp’n Schaafsma’s Mot. Dismiss Am. Compl.

20–23.)

26. The Court agrees with Schaafsma. By its plain language, section 57D-8-

03(f) conditions the Court’s right to appoint an independent person on the

presentation of a “motion of the LLC”—not, as Norris argues, on the presentation of

a motion of a member in a deadlocked LLC or through some other device. Indeed,

while Chapter 57D contains numerous provisions by which a member has a right to

take certain legal action, see, e.g., § 57D-6-02 (providing that “a member” may bring

an action to dissolve an LLC); § 57D-8-01 (providing that “a member may bring a

derivative action”), the General Assembly did not elect to include among those rights

the right to present a motion authorizing the Court to appoint an independent person

under section 57D-8-03(f). See, e.g., Town of Pinebluff v. Moore Cnty., 374 N.C. 254,

256 (2020) (noting that courts “assume that the Legislature acted with full knowledge

of prior and existing law”) (cleaned up). The General Assembly vested that right
solely in the LLC, and the fact that an LLC may not reach agreement to bring such a

motion does not deny the LLC a statutory right or reflect the LLC’s inability to

conduct business operations in conformance with Chapter 57D.

27. Therefore, for the reasons set forth above, the Court concludes that Norris

has failed to plead that it is not practicable to conduct Greymont’s business in

conformance with either its operating agreement or Chapter 57D, much less both. As

a result, Norris’s dissolution claim may not be sustained under section 57D-6-02(2)(i).

c. Liquidation as Necessary to Protect the Rights and Interests of Member

28. Although the Court has concluded that Norris has failed to plead that it is

not practicable to conduct Greymont’s business in conformance with its operating

agreement and Chapter 57D, Norris may still satisfy section 57D-6-02(2) if he

successfully pleads that “liquidation of the LLC is necessary to protect [his] rights

and interests[.]” N.C.G.S. § 57D-6-02(2). Norris contends he has met his pleading

burden for several reasons, including that: (i) “518 Morehead must expend funds on

attorney fees in defense of the lawsuit that would otherwise be distributable to

members, including 4Line, in which [he] has a 25% interest”; (ii) he has suffered “the

embarrassment of being associated with the filing of a nuisance lawsuit in the name

of a company that [he] co-founded against a company that is managed by 4Line”; and

(iii) Greymont faces the possibility of Rule 11 sanctions based on Schaafsma’s filing

and maintenance of a frivolous derivative suit. (Pl.’s Br. Opp’n Schaafsma’s Mot.

Dismiss Am. Compl. 23; Am. Compl. ¶¶ 49, 64.)
29. Schaafsma moves to dismiss the claim for judicial dissolution, contending

that section 57D-6-02 only protects a member’s rights and interests in the LLC that

he or she is attempting to dissolve. Schaafsma therefore asserts that Norris’s

contentions that Greymont should be dissolved to spare Norris from professional

embarrassment and to enable 518 Morehead to make distributions to him as a

member of 4Line are irrelevant under section 57D-6-02 because neither consideration

implicates Norris’s rights and interests in Greymont. (Schaafsma’s Br. Supp. Mot.

Dismiss and Surreply to Receiver Mot. 21.) As to Rule 11 exposure, Schaafma noted

at the Hearing that Norris has not pleaded that sanctions have either been

threatened or sought based on the filing and maintenance of Schaafsma’s derivative

action. 6 Accordingly, Schaafsma contends that Norris fails to meet the requirements

of 57D-6-02(ii).

30. The Court again agrees with Schaafsma.

31. First, the North Carolina Court of Appeals has interpreted nearly identical

“rights and interests” language in Chapter 55’s dissolution provision to refer to the

“ ‘rights or interests’ the complaining shareholder has in the corporation” sought to

be dissolved. Foster v. Foster Farms, 112 N.C. App. 700, 709 (1993) (citing Meiselman

v. Meiselman, 309 N.C. 279, 301 (1983)). The Court therefore concludes likewise that

the “rights and interests” referenced in section 57D-6-02(2)(ii) are those that the

complaining member has in the LLC that the member is seeking to dissolve. Thus,

6 Although Schaafsma’s counsel advised the Court at the Hearing that no motions seeking

sanctions against Greymont have been filed in the derivative action, the Court limits its
review to the allegations of the Amended Complaint in ruling upon Defendant’s Motion to
Dismiss under Rule 12(b)(6).
the Court agrees with Schaafsma that Norris’s claims of professional embarrassment

and impairment of his interest in Morehead 518 are insufficient grounds to merit

dissolution of Greymont under section 57D-6-02(ii).

32. Norris’s speculation that Greymont may face sanctions for Schaafsma’s

derivative action is likewise insufficient to satisfy section 57D-6-02(2)(ii). Not only is

it likely that the imposition of any such sanctions would be levied against the filer

and signer Schaafsma, not Greymont, the nominal defendant, but also Norris has not

pleaded that Rule 11 sanctions have been threatened or sought in the nearly five

months since Schaafsma filed his derivative action. As a result, there is no basis to

conclude that liquidation of the LLC is necessary to protect Norris’s rights and

interests in Greymont on this ground. The Court thus concludes that Norris has

failed to meet the requirements of section 57D-6-02(2)(ii).

33. Accordingly, because Norris has failed to plead his entitlement to judicial

dissolution under either prong of N.C.G.S. § 57D-6-02(2), Norris’s claim for judicial

dissolution must be dismissed. 7

2. Norris’s Alternative Claim for Appointment of Independent Person

34. Schaafsma moves under Rules 12(b)(1) and 12(b)(6) to dismiss Norris’s

alternative claim for the appointment of an independent person under section 57D-

8-03(f). He first argues under Rule 12(b)(1) that the Court lacks subject matter

jurisdiction because the authority to appoint an independent person under section

57D-8-03(f) rests with the court in which the derivative action is pending—here the

7 Because conditions permitting Greymont’s dissolution may arise in the future, the Court

will dismiss Norris’s dissolution claim without prejudice.
judges presiding in Schaafsma v. 518 Morehead and Greymont, 21 CVS 12254, now

pending in Wake County Superior Court. (Schaafsma’s Br. Supp. Mot. Dismiss and

Surreply to Receiver Mot. 27.) He also seeks dismissal under Rule 12(b)(6) on the

same grounds he advanced in arguing that Greymont’s business can be conducted in

conformance with Chapter 57D. (Schaafsma’s Reply Br. Supp. Mot. Dismiss 13.)

35. In opposition to the Motion to Dismiss under Rule 12(b)(1), Norris relies on

section 57D-6-03(c), which he argues separately permits the Court to appoint an

independent person. (Pl.’s Br. Opp’n Schaafsma Mot. Dismiss Am. Compl. 27.) That

section provides: “[In a dissolution action under section 57D-6-02,] the court may

issue injunctions, appoint one or more persons to serve as receiver with powers and

duties the court may grant under [section] 57D-6-04, or take other action required to

manage the LLC and its assets.” N.C.G.S. § 57D-6-03(c). Norris argues that the

appointment of an independent person is included within the “other action” permitted

under section 57D-6-03(c). (Pl.’s Br. Opp’n Schaafsma’s Mot. Dismiss Am. Compl.

24.) Additionally, Norris opposes the Motion to Dismiss under Rule 12(b)(6) by

advancing the same arguments he made in opposition to Schaafsma’s motion

concerning whether Greymont could be operated in conformance with Chapter 57D.

36. The Court again agrees with Schaafsma. First, the Court agrees that the

proper forum within which to raise a motion for the appointment of an independent

person under section 57D-8-03(f) is the court in which Schaafsma’s derivative action

is currently pending, not in this separate dissolution action. See Russell M. Robinson,

II, Robinson on North Carolina Corporation Law, 34.04[5] n. 69 (7th ed. 2019) (noting
that a determination concerning whether a suit’s prosecution is in the LLC’s best

interests could be made “directly to the LLC managers or a subset of the managers”

or, “in response to a request by the LLC, the [determination] could also be by a body

appointed by the derivative suit court” under section 57D-8-03(f) (emphasis added)).

37. This conclusion is compelled by section 57D-8-03’s plain language. That

section references “the court” four times: (i) in subsection (a), which provides: “[t]he

court shall dismiss a derivative proceeding on motion of the LLC if [the panel

described in section 57D-8-03(f)] determines after conducting an inquiry upon which

its conclusions are based that the maintenance of the derivative proceeding is not in

the best interest of the LLC”; (ii) in the first sentence of subsection (d), which explains

that in a derivative suit filed after a demand is rejected, “the complaint must allege

particular facts that if proved would preclude the court from dismissing the derivative

proceeding under subsection (a)”; (iii) in the third sentence of subsection (d), which

sets forth discovery limits prior to “the court’s ruling” on a defendant’s motion to

dismiss under subsection (a); and (iv) in subsection (f), which, as noted above,

provides that “[t]he court may appoint a panel composed of one or more independent

persons on motion of the LLC [to make the best interest determination].” (Emphasis

added.)

38. It cannot be reasonably disputed that “the court” referenced in subsections

(a) and (d) is the derivative suit court; indeed, any other reading would be

nonsensical. Reading subsection (f) in the context of the statute as a whole, see, e.g.,

Porsh Builders, Inc. v. City of Winston-Salem, 302 N.C. 550, 556 (1981) (“[A] statute
must be considered as a whole[.]”), and particularly when considering the plain

meaning of the term “the court” in the other subsections of the statute, see, e.g., State

ex rel. Utilities Com. v. Duke Power Co., 305 N.C. 1, 13 (1982) (“All parts of the [same]

act should be considered, and construed together.”), the Court can reach but a single

conclusion—that “the court” authorized to “appoint a panel composed of one or more

independent persons on motion of the LLC” under section 57D-8-03(f) is necessarily

the derivative suit court and no other. Norris’s contention to the contrary is without

merit. See, e.g., Raleigh Hous. Auth. v. Winston, 376 N.C. 790, 795 (2021) (“When the

term in the statute is unambiguous, the term ‘should be understood in accordance

with its plain meaning.’ ” (quoting Fid. Bank v. N.C. Dep’t of Revenue, 370 N.C. 10,

20 (2017))).

39. Next, for the reasons set forth above, the Court concludes that a motion to

appoint an independent person under section 57D-8-03(f) may only be made by the

LLC, not, as Norris seeks to establish here, by an LLC member.

40. And last, Norris’s resort to section 57D-6-03(c) is unavailing because his

alternative claim is premised on the appointment of an independent person through

section 57D-8-03(f), not through section 57D-6-03(c) or any other section of Chapter

57D. Moreover, even if Norris’s invocation of section 57D-6-03(c) was properly before

the Court, there is no evidence in that section’s text or otherwise suggesting that our

legislature intended that section’s broad grant of authority to permit a trial court to

evade specific statutory restrictions on available relief and remedies provided for

elsewhere in Chapter 57D, including in section 57D-8-03(f). See, e.g., State ex rel.
Utils. Comm’n v. Lumbee River Elec. Membership Corp., 275 N.C. 250, 260 (1969) (“It

is a well established [sic] principle of statutory construction that a section of a statute

dealing with a specific situation controls, with respect to that situation, other sections

which are general in their application.”).

41. Accordingly, the Court concludes that Norris’s alternative claim for the

appointment of an independent person under section 57D-8-03(f) should be dismissed,

without prejudice, under both Rules 12(b)(1) and 12(b)(6).

B. Norris’s Motion for Appointment of Receiver

42. In light of the Court’s dismissal of all claims in this action as set forth above,

the Receiver Motion shall therefore be denied as moot.

IV.

CONCLUSION

43. WHEREFORE, the Court, for the reasons set forth above, hereby GRANTS

Defendant’s Motion to Dismiss under Rules 12(b)(6) and 12(b)(1), DISMISSES

Plaintiff’s claim for judicial dissolution and alternative claim under section 57D-8-

03(f) without prejudice, and DENIES Plaintiff’s Receiver Motion as moot.

SO ORDERED, this the 31st day of January, 2022.

/s/ Louis A. Bledsoe, III
Louis A. Bledsoe, III
Chief Business Court Judge