Court Opinion

ID: 9619135
Source: CourtListenerOpinion
Date Created: 2023-08-22 05:22:29.2168+00
Date Added: 2024-06-11T18:04:36.980522
License: Public Domain

GREENE, Judge,
concurring in part and dissenting in part.
I disagree with the majority that plaintiffs’ individual claims against the majority shareholders and business defendants are not governed by Barger v. McCoy Hillard & Parks, 346 N.C. 650, 488 S.E.2d 215 (1997). I, therefore, dissent from section I of the majority’s opinion.

*419
Individual claims against majority shareholders

Plaintiffs allege in their complaint individual claims against the majority shareholders of the Company for constructive trust and accounting, breach of fiduciary duty, conversion, civil conspiracy, unfair or deceptive trade practices, and quantum meruit. The majority states Barger has no application to these claims because the majority shareholders are not “third parties” within the meaning of Barger.11 disagree.
In Barger, the North Carolina Supreme Court created two exceptions to the general rule that “shareholders cannot pursue individual causes of action against third parties for wrongs or injuries to the corporation that result in the diminution or destruction of the value of their stock.” Barger, 346 N.C. at 658, 488 S.E.2d at 219. First, a shareholder may bring an individual action against a third party when the third party “owed him a special duty.” Id. at 658-59, 488 S.E.2d at 219. Second, a shareholder may bring an individual action against a third party when the shareholder suffered a “separate and distinct” injury as a result of the alleged wrongful conduct of the third party. Id. Although the Supreme Court did not define the meaning of “third party” in. Barger, the authority cited in support of its opinion suggests “third party” refers to any party other than the corporation and includes officers, directors, and shareholders of the corporation. In support of its statement of the general rule that “shareholders cannot pursue individual causes of action against third parties for wrongs or injuries to the corporation,” Barger relies on Jordan v. Hartness, 230 N.C. 718, 55 S.E.2d 484 (1949), which involved an action by one shareholder against another shareholder. Barger, 346 N.C. at 658, 488 S.E.2d at 219 (emphasis added) (citing Jordan v. Hartness, 230 N.C. 718, 55 S.E.2d 484 (1949)). Moreover, Barger relies in part on an article in the American Law Reports that defines “third parties” to include officers and directors of a corporation. Barger, 346 N.C. at 658, 488 S.E.2d at 219 (citing H.A. Wood, Annotation, Stockholder's Right to Maintain (Personal) Action Against Third Person as Affected by Corporation’s Right of Action for the Same Wrong, 167 A.L.R. 279 (1947)). Accordingly, the majority shareholders in this case are “third parties” within the meaning of Barger, and plaintiffs may bring individual claims against these parties if they owed plaintiffs a “special duty” or plaintiffs suffered a “separate and distinct injury” as a result of their alleged wrongful conduct.
*420A “special duty” is a duty “the alleged wrongdoer owed directly to the shareholder as an individual.” Id. at 659, 488 S.E.2d at 220. A “special duty” does not arise unless defendants owed a duty to plaintiffs that was “personal to plaintiffs as shareholders” and the duty was “separate and distinct” from the duty defendants owed to the corporation. Id.
In this case, plaintiffs allege in their complaint that the majority shareholders owe a fiduciary duty to them based on their status as minority shareholders in the Company. Plaintiffs acknowledge in their complaint, however, that the fiduciary duty owed by the majority shareholders to plaintiffs is the same fiduciary duty of “good faith, due care and/or loyalty” that the majority shareholders owe to the Company. Plaintiffs, therefore, have not alleged in their complaint a “special duty” owed to them by the majority shareholders that is separate and distinct from the duty owed to the corporation. Accordingly, plaintiffs may bring an individual action against the majority shareholders only if they suffered a “separate and distinct injury” as a result of the majority shareholders’ alleged wrongful conduct.
A shareholder suffers a “separate and distinct injury” when “ ‘a legal basis exists to support plaintiffs’ allegations of an individual loss, separate and distinct from any damage suffered by the corporation.’ ” Id. (quoting Howell v. Fisher, 49 N.C. App. 488, 492, 272 S.E.2d 19, 23 (1980), disc. review denied, 302 N.C. 218, 277 S.E.2d 69 (1981)). A diminution or destruction of the value of a plaintiff’s shares is not an injury “separate and distinct” from injury to the corporation. Id.
In this case, plaintiffs allege in their complaint the majority shareholders injured the Company by “diverting opportunities, assets and/or income streams of the Company for their own personal benefit.” Plaintiffs, however, do not allege any individual loss “separate and distinct from any damages suffered by the corporation.” The only loss suffered by plaintiffs is loss caused by the diminution of the value of their shares. Plaintiffs, therefore, may not maintain an individual action against the majority shareholders of the Company pursuant to the Barger exceptions. Accordingly, the trial court properly dismissed plaintiffs’ individual claims against the majority shareholders.

*421
Individual claims against business defendants

In addition to their claims against the majority shareholders, plaintiffs also allege in their complaint individual claims for constructive trust and accounting, conversion, civil conspiracy, unfair and deceptive trade practices, and quantum meruit against several businesses with which the Company engaged in business dealings. As with the claims against the majority shareholders, these claims against the business defendants are claims against “third parties” and are governed by Barger.2 These claims may therefore be brought only if the business defendants owed plaintiffs a “special duty” or plaintiffs suffered a “separate and distinct injury” as a result of the alleged wrongful conduct of the business defendants.
In this case, plaintiffs do not allege in their complaint any duty owed to them by the business defendants that is separate and distinct from the duty these business defendants owed to the Company. Rather, plaintiffs’ sole relationship with the business defendants arose from the business defendants’ dealings with the Company. Plaintiffs, therefore, may not maintain an individual action against the business defendants based on the “special duty” exception of Barger. Additionally, plaintiffs do not allege in their complaint that they suffered any “separate and distinct injury” from the Company as a result of the alleged wrongful conduct of the business defendants. Instead, plaintiffs allege injury resulting from the diversion to the business defendants of “opportunities, assets and/or income streams of the Company.” Any alleged injury to plaintiffs, therefore, arises from the diminution of the value of their shares. Accordingly, plaintiffs may not maintain an action against the business defendants under the Barger exceptions. I, therefore, would affirm the trial court’s order dismissing plaintiffs’ individual claims against the majority shareholders and business defendants.
I fully concur in sections II, III, and IV of the majority’s opinion.

. The majority suggests “third parties,” within the meaning of Barger, are parties other than shareholders, officers, and directors of the corporation.

. The majority states the business defendants in this case are not “third parties” and plaintiffs’ claims against them are, therefore, not governed by Barger. Nevertheless, the majority states, assuming the business defendants are “third parties” and plaintiffs’ claims are consequently governed by Barger, the complaint sufficiently alleges both a “special duty” owed to plaintiffs and “separate and distinct injury” to plaintiffs. I believe the business defendants in this case are “third parties” within the meaning of Barger and plaintiffs’ claims against the business defendants are, consequently, governed by Barger.