{ "id": 11712098, "name": "JAMES MICHAEL ROBBINS, as a Shareholder of Tweetsie Railroad, Inc., Plaintiff v. TWEETSIE RAILROAD, INC., a North Carolina Corporation; REVALLE B. COURTLEY; E. SPENCER ROBBINS; T. BRAGG McLEOD; H. BRILL HUNTLEY; GRACE F. LIEBHART; JERALD C. LIEBHART, JR.; RICHARD L. LIEBHART; CHRISTOPHER B. ROBBINS; and R. FRANK COFFEY, Defendants", "name_abbreviation": "Robbins v. Tweetsie Railroad, Inc.", "decision_date": "1997-07-01", "docket_number": "No. COA96-587", "first_page": "572", "last_page": "581", "citations": [ { "type": "official", "cite": "126 N.C. App. 572" } ], "court": { "name_abbreviation": "N.C. Ct. App.", "id": 14983, "name": "North Carolina Court of Appeals" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "15 ALR Fed. 954", "category": "reporters:federal", "reporter": "A.L.R. Fed.", "weight": 3, "opinion_index": -1 }, { "cite": "2 ALR Fed. 1027", "category": "reporters:federal", "reporter": "A.L.R. Fed.", "opinion_index": -1 }, { "cite": "259 S.E.2d 11", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1979, "pin_cites": [ { "page": "13" } ], "opinion_index": 0 }, { "cite": "43 N.C. App. 296", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8551289 ], "year": 1979, "pin_cites": [ { "page": "298" } ], "opinion_index": 0, "case_paths": [ "/nc-app/43/0296-01" ] }, { "cite": "295 S.E.2d 444", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1982, "pin_cites": [ { "page": "448", "parenthetical": "quoting Edwards v. Edwards, 43 N.C. App. 296, 298, 259 S.E.2d 11, 13 (1979)" } ], "opinion_index": 0 }, { "cite": "306 N.C. 664", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8573386 ], "year": 1982, "pin_cites": [ { "page": "671", "parenthetical": "quoting Edwards v. Edwards, 43 N.C. App. 296, 298, 259 S.E.2d 11, 13 (1979)" } ], "opinion_index": 0, "case_paths": [ "/nc/306/0664-01" ] }, { "cite": "454 S.E.2d 250", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1995, "opinion_index": 0 }, { "cite": "339 N.C. 612", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2558242, 2557640, 2558539, 2558899, 2557052 ], "year": 1995, "opinion_index": 0, "case_paths": [ "/nc/339/0612-01", "/nc/339/0612-04", "/nc/339/0612-03", "/nc/339/0612-02", "/nc/339/0612-05" ] }, { "cite": "424 S.E.2d 918", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1993, "opinion_index": 0 }, { "cite": "333 N.C. 254", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2549314, 2546630, 2549526, 2549465, 2547486 ], "year": 1993, "opinion_index": 0, "case_paths": [ "/nc/333/0254-02", "/nc/333/0254-05", "/nc/333/0254-04", "/nc/333/0254-03", "/nc/333/0254-01" ] }, { "cite": "419 S.E.2d 195", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1992, "pin_cites": [ { "page": "197" } ], "opinion_index": 0 }, { "cite": "107 N.C. App. 174", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8527303 ], "year": 1992, "pin_cites": [ { "page": "178" } ], "opinion_index": 0, "case_paths": [ "/nc-app/107/0174-01" ] }, { "cite": "444 S.E.2d 685", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1994, "pin_cites": [ { "page": "687", "parenthetical": "quoting Borg-Warner Acceptance Corp. v. Johnston, 107 N.C. App. 174, 178, 419 S.E.2d 195, 197 (1992), disc. review denied, 333 N.C. 254, 424 S.E.2d 918 (1993)" } ], "opinion_index": 0 }, { "cite": "115 N.C. App. 331", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 12127930 ], "year": 1994, "pin_cites": [ { "page": "334", "parenthetical": "quoting Borg-Warner Acceptance Corp. v. Johnston, 107 N.C. App. 174, 178, 419 S.E.2d 195, 197 (1992), disc. review denied, 333 N.C. 254, 424 S.E.2d 918 (1993)" } ], "opinion_index": 0, "case_paths": [ "/nc-app/115/0331-01" ] }, { "cite": "42 L. 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Ed. 2d", "year": 1974, "opinion_index": 0 }, { "cite": "419 U.S. 873", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 6355648, 6354727, 6354280, 6355216, 6355862, 6354489, 6355418, 6354940 ], "year": 1974, "opinion_index": 0, "case_paths": [ "/us/419/0873-07", "/us/419/0873-03", "/us/419/0873-01", "/us/419/0873-05", "/us/419/0873-08", "/us/419/0873-02", "/us/419/0873-06", "/us/419/0873-04" ] }, { "cite": "489 F.2d 579", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 207876 ], "opinion_index": 0, "case_paths": [ "/f2d/489/0579-01" ] }, { "cite": "535 F.2d 550", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 1062277 ], "year": 1976, "pin_cites": [ { "page": "552" } ], "opinion_index": 0, "case_paths": [ "/f2d/535/0550-01" ] }, { "cite": "667 F.2d 958", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 463832 ], "year": 1982, "pin_cites": [ { "page": "961" } ], "opinion_index": 0, "case_paths": [ "/f2d/667/0958-01" ] }, { "cite": "74 L. 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App. 77", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8550498 ], "year": 1978, "pin_cites": [ { "page": "100", "parenthetical": "referring to \"insufficient representation of shareholders\" as a defense to a derivative action" } ], "opinion_index": 0, "case_paths": [ "/nc-app/39/0077-01" ] }, { "cite": "N.C. Gen. Stat. \u00a7 55-7-41", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "weight": 2, "year": 1996, "opinion_index": 0 }, { "cite": "N.C. Gen. Stat. \u00a7 55-7-40", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "year": 1990, "pin_cites": [ { "page": "(a)" } ], "opinion_index": 0 }, { "cite": "93 L. Ed. 1528", "category": "reporters:federal", "reporter": "L. Ed.", "weight": 2, "year": 1949, "pin_cites": [ { "page": "1538" } ], "opinion_index": 0 }, { "cite": "337 U.S. 541", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 572420 ], "weight": 2, "year": 1949, "pin_cites": [ { "page": "549-50" } ], "opinion_index": 0, "case_paths": [ "/us/337/0541-01" ] }, { "cite": "259 S.E.2d 301", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 3, "year": 1979, "opinion_index": 0 }, { "cite": "298 N.C. 296", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8570816, 8570863, 8570767, 8570650, 8570687 ], "year": 1979, "opinion_index": 0, "case_paths": [ "/nc/298/0296-04", "/nc/298/0296-05", "/nc/298/0296-03", "/nc/298/0296-01", "/nc/298/0296-02" ] }, { "cite": "257 S.E.2d 50", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1979, "pin_cites": [ { "page": "53" } ], "opinion_index": 0 }, { "cite": "42 N.C. App. 259", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8553908 ], "year": 1979, "pin_cites": [ { "page": "262" } ], "opinion_index": 0, "case_paths": [ "/nc-app/42/0259-01" ] } ], "analysis": { "cardinality": 882, "char_count": 21854, "ocr_confidence": 0.744, "pagerank": { "raw": 2.0889550762004062e-07, "percentile": 0.7600900670270738 }, "sha256": "406cb1dff3134dc768798460ad7220bca7785cbc0a5755f1e1b08b21605c3629", "simhash": "1:397b4828548cdfca", "word_count": 3462 }, "last_updated": "2023-07-14T19:11:14.463583+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Chief Judge ARNOLD and MARTIN, John C. concur." ], "parties": [ "JAMES MICHAEL ROBBINS, as a Shareholder of Tweetsie Railroad, Inc., Plaintiff v. TWEETSIE RAILROAD, INC., a North Carolina Corporation; REVALLE B. COURTLEY; E. SPENCER ROBBINS; T. BRAGG McLEOD; H. BRILL HUNTLEY; GRACE F. LIEBHART; JERALD C. LIEBHART, JR.; RICHARD L. LIEBHART; CHRISTOPHER B. ROBBINS; and R. FRANK COFFEY, Defendants" ], "opinions": [ { "text": "SMITH, Judge.\nPlaintiff James Michael Robbins is a minority shareholder of defendant Tweetsie Railroad, Inc. (hereinafter \u201cTweetsie\u201d) Class B non-voting common stock. Plaintiff also owns an interest in a tract of land leased to defendant Tweetsie. The individual defendants are officers, directors, and shareholders of defendant Tweetsie, and include the owners of Class A shares who control the corporation. Plaintiff was made aware of some disturbing transactions between defendant corporation and some of its officers and directors by William J. Bair, the organizer of an investment group which had an interest in purchasing defendant Tweetsie\u2019s outstanding shares of stock. In response to Mr. Bair\u2019s information, plaintiff employed the accounting firm of McMillan, Pate and Robertson to conduct an examination of defendant Tweetsie\u2019s books and records. After receiving the firm\u2019s report, on 10 July 1995, plaintiff instituted this shareholder derivative action against defendant Tweetsie and several of its officers and directors pursuant to North Carolina General Statutes section 55-7-40.\nIn his complaint, plaintiff alleged that, over a period of years, the corporation made loans and cash advances to certain officers and directors without proper documentation or approval by the Board of Directors, and that the directors had failed to take appropriate action to recover these funds. Plaintiff further alleged that the making of these loans and advances, along with the failure to collect these funds, constituted a violation of the individual defendants\u2019 fiduciary duties to the corporation and its shareholders.\nOn 18 August 1995, defendant Christopher B. Robbins filed a verified motion to dismiss plaintiff\u2019s complaint pursuant to Rule 12(b)(6) of the North Carolina Rules of Civil Procedure. Defendant Robbins also submitted a transcript of his deposition taken in another action, as well as other matters outside of the pleadings, in support of his motion. Thereafter, on 22 August 1995, defendant Revalle B. Courtley filed a motion to dismiss plaintiff\u2019s complaint pursuant to Rules 12(b)(4) and (5) of the Rules of Civil Procedure for insufficiency of process and insufficiency of service of process. On 31 August 1995, defendant Tweetsie filed a motion to dismiss pursuant to Rule 12(b)(6), supported by the affidavit of Linda Wise. Finally, on 5 September 1995, defendants H. Brill Huntley, Grace F. Liebhart, Richard L. Liebhart and T. Bragg McLeod filed a motion to dismiss pursuant to Rules 12(b)(6) and (7) of the Rules of Civil Procedure. Subsequently, plaintiffs amended complaint, filed 6 September 1995, was deemed properly filed and served and proceedings were stayed for sixty (60) days by order entered 27 September 1995 by Judge James U. Downs. On 22 December 1995, defendants Tweetsie, Robbins and Courtley renewed their motions to dismiss; and these motions were scheduled for hearing on 29 January 1996. Plaintiff filed a motion for continuance of this hearing on 17 January 1996, and on 24 January 1996, plaintiff filed a motion for leave to amend complaint and add additional parties plaintiff and defendant.\nThis matter came on for hearing before Judge Loto G. Caviness on defendants\u2019 and plaintiff\u2019s respective motions. Defendants presented evidence which tended to show that plaintiff had sold William Bair an option to purchase the land leased to defendant Tweetsie, and used the proceeds to fund this shareholder derivative action. Further, defendants\u2019 evidence tended to show that plaintiff filed this action as a part of Mr. Bair\u2019s plan to purchase defendant Tweetsie\u2019s outstanding shares. Plaintiff, however, presented evidence that his objectives in filing this action were to halt defendants\u2019 practice of making unsecured, undocumented loans to favored directors and officers, and to cause the corporation to collect the outstanding loans in order to \u201cget the money back into the company.\u201d\nAfter reviewing all of the evidence, Judge Caviness entered an order on 1 February 1996 denying plaintiffs motion for continuance and motion to amend, granting defendants\u2019 motions to dismiss for failure to state a claim upon which relief can be granted, and granting defendant Courtley\u2019s motion to dismiss for lack of personal jurisdiction. Plaintiff appeals.\nAt the outset, we must determine the proper procedural posture of this action on appeal. In the instant action, defendants made 12(b)(6) motions to dismiss for failure to state a claim for which relief can be granted. However, the trial court, in ruling upon the motion, admitted and considered matters outside of the pleadings. Accordingly, defendants\u2019 12(b)(6) motions to dismiss were converted to Rule 56 motions for summary judgment. See Industries, Inc. v. Construction Co., 42 N.C. App. 259, 262, 257 S.E.2d 50, 53, disc. review denied, 298 N.C. 296, 259 S.E.2d 301 (1979). Consequently, the inquiry becomes whether there is any genuine issue as to any material fact and whether the moving party is entitled to judgment as a matter of law. See id.\nOn appeal, plaintiff first argues that the former section 55-7-40(a) of the North Carolina General Statutes does not require that a shareholder derivative plaintiff be a \u201cfair and adequate representative\u201d of the corporate interest. Defendants, however, argue that this requirement is implicit in the statute, by the very nature of a shareholder derivative action. For the reasons stated herein, we find defendants\u2019 argument to be persuasive.\nDerivative actions are actions brought by one or more shareholders to enforce the rights of the corporation. N.C. Gen. Stat. \u00a7 1A-1, Rule 23 (b) (1990). North Carolina courts have expressly rejected the argument that a shareholder has any individual right of action for the loss in the value of his shares resulting from wrongs committed against the corporation. Russell Robinson, Robinson on North Carolina Corporation Law \u00a7 17.2(a) at p. 333 (5th ed. 1995). That is to say that there is no individual recovery where a shareholder alleges mere injury to the corporation and nothing more \u2014 he must seek relief derivatively. Id.\nBy its very nature, a derivative action requires that the shareholder bringing such an action have proper standing to bring the action. See Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 93 L. Ed. 1528 (1949). While North Carolina\u2019s statutory scheme has long required a shareholder to have been a shareholder at the time of the act or omission complained of, or have become a shareholder by operation of law from one who was a shareholder at that time, see N.C. Gen. Stat. \u00a7 55-7-40(a) (1990), it was not until recently that the General Assembly codified the requirement that a shareholder be a fair and adequate representative of the corporate interest in enforcing the right of the corporation. See N.C. Gen. Stat. \u00a7 55-7-41 (Cum. Supp. 1996). Effective 1 October 1995, any shareholder must meet both of these requirements to have standing to bring a derivative action in the state courts of North Carolina. See id. Prior to its codification, however, the requirement of fair and adequate representation was hinted at in case law. See Swenson v. Thibaut, 39 N.C. App. 77, 100, 250 S.E.2d 279, 294 (1978) (referring to \u201cinsufficient representation of shareholders\u201d as a defense to a derivative action), appeal dismissed and disc, review denied, 296 N.C. 740, 254 S.E.2d 181 (1979).\nPlaintiff argues that as the defense of inadequate representation was not actually raised in Swenson, that case can not govern the outcome in the instant action. We do not agree. Plaintiff further argues that the General Assembly, in patterning our Rules of Civil Procedure after the Federal Rules, but declining to adopt Rule 23.1 of the Federal Rules of Civil Procedure, indicated its intent to require no more than that the shareholder own shares at the time of the transaction of which he complains or to have acquired his shares from someone who owned the shares at that time. Again, we do not agree. There is nothing to indicate that the General Assembly intended that a minority shareholder, who has uppermost a personal agenda rather than the best interests of the corporation, would have standing to file and maintain a shareholder derivative action under section 55-7-40 of our General Statutes.\nThe United States Supreme Court has long held that the shareholder who brings a derivative action is a \u201cself-chosen representative and a volunteer champion,\u201d and as such, must bear some responsibility, or have some liability and accountability which will protect the interests he elects himself to represent. Cohen, 337 U.S. at 549-50, 93 L. Ed. at 1538. Accordingly, while plaintiff argues to the contrary, we find this Court\u2019s reference in Swenson persuasive; and recognize the implicit requirement in section 55-7-40 of our General Statutes that a shareholder fairly and adequately represent the interest of the corporation in order to maintain a shareholder derivative action. Accord Barrett v. Southern Conn. Gas Co., 374 A.2d 1051 (Conn. 1977); Youngman v. Tahmoush, 457 A.2d 376 (Del. Ch. 1983); Adiel v. Electronic Financial Sys., 513 So.2d 1347 (Fla. Dist. Ct. App. 1987); Palmer v. U.S. Savings Bank of America, 553 A.2d 781 (N.H. 1989).\nIn light of our finding in this regard, we now address plaintiffs next argument that he fairly and adequately represented the interests of the corporation with respect to matters alleged in the amended complaint. This is an issue of first impression, and there is no North Carolina law addressing this contention. Significantly, however, there is a body of federal case law interpreting Rule 23.1 of the Federal Rules of Civil Procedure\u2019s requirement that a plaintiff be a fair and adequate representative of a corporation in order to maintain a shareholder derivative suit in federal court. As we have recognized that there is a similar implicit requirement in section 55-7-40 of our General Statutes which governs derivative actions in our state courts, we adopt and apply the federal standard for assessing whether a shareholder may fairly and adequately represent a corporation under section 23.1 of the Federal Rules of Civil-Procedure.\nFederal case law provides that a determination of whether a shareholder fairly and adequately may represent a corporation under section 23.1 of the Federal Rules of Civil Procedure is to be decided on a case by case basis, and is reviewable on an abuse of discretion standard. See Lewis v. Curtis, 671 F.2d 779, 788 (3d. Cir.) (citing Owen v. Modern Diversified Indus., Inc., 643 F.2d 441, 443 (6th Cir. 1981)), cert. denied, 459 U.S. 880, 74 L. Ed. 2d 144 (1982); Rothenberg v. Security Management Co., Inc., 667 F.2d 958, 961 (11th Cir. 1982); Hornreich v. Plant Industries, Inc., 535 F.2d 550, 552 (9th Cir. 1976). A defendant bears the burden of demonstrating that the representation will be inadequate. Lewis, 671 F.2d at 788 (citing Smallwood v. Pearl Brewing Company, 489 F.2d 579, 592-93 n.15 (5th Cir.), cert. denied, 419 U.S. 873, 42 L. Ed. 2d 113 (1974)).\nThe evidence in the instant case tends to show that plaintiff is a minority shareholder of nonvoting shares in defendant Tweetsie, a company that was once partly owned by his father. Plaintiff candidly confesses that he has personal animus against the present officers and/or directors of defendant corporation. Plaintiff also owns an undivided twenty-four percent (24%) interest in certain realty which defendant corporation leases from plaintiff and his co-tenants. Plaintiff was approached by William Bair and made aware of certain loans and cash advances made by the corporation to certain officers and directors, that have not been paid back.\nMr. Bair is a Durham, North Carolina attorney who had previously expressed an interest in purchasing defendant corporation. Mr. Bair had developed a \u201cBusiness Plan\u201d in which he noted that the acquisition of defendant corporation would \u201centail a certain progression of activities\u201d which included the following litigation scheme:\nRetain lawyers to prepare a stockholders derivative complaint and to be prepared to file same if needed. I would use that complaint for additional leverage in negotiating with Harry [Robbins] and Rev[alle] [Courtley] for their shares.\nSubsequently, Mr. Bair submitted proposals to defendant Tweetsie\u2019s Board of Directors for the purchase of the stock or assets of defendant corporation. When the Board rejected Mr. Bair\u2019s offer as not being in the best interests of defendant corporation or its shareholders, Mr. Bair contacted defendants Robbins and Courtley about the purchase of their Tweetsie stock. Plaintiff accompanied Mr. Bair when he met with defendants Robbins and Courtley. Plaintiff was identified by Mr. Bair as a disgruntled shareholder who was considering filing a derivative action. In addition, plaintiff indicated at that time that if defendants Robbins and Courtley would not sell their shares to Mr. Bair, he would not renew the lease of the property to defendant corporation when it expired. In spite of these warnings, defendants Robbins and Courtley rejected Mr. Bair\u2019s offer to purchase their Tweetsie stock.\nConsequently, plaintiff commenced this derivative action on 10 July 1995 against defendants. Plaintiff admits that he entered into an agreement with Mr. Bair in order to finance this action. This agreement granted Mr. Bair an option to purchase plaintiffs twenty-four percent (24%) interest in the property currently leased to defendant corporation by plaintiff and his co-tenants, for the sum of $30,000.00. Plaintiff insists, however, that his purpose in initiating this action is to halt defendants\u2019 practice of making unsecured, undocumented loans to favored directors and officers and to aid the corporation in collecting the outstanding loans to \u201cget the money back into the company.\u201d Plaintiff also contends that he did not file this action as a part of Mr. Bair\u2019s plan to purchase defendant corporation\u2019s outstanding shares; and that this suit may be detrimental to Mr. Bair\u2019s efforts.\nAfter reviewing all of the evidence and hearing the arguments of counsel, the trial court found that as a matter of law, plaintiff did not fairly and adequately represent the interests of the defendant corporation, and as such dismissed this action. As noted above, federal courts have utilized an abuse of discretion standard in analyzing a trial court\u2019s decision to dismiss a shareholder derivative action for lack of standing. \u201c \u2018An abuse of discretion occurs when the trial court\u2019s ruling is so arbitrary that it could not have been the result of a reasoned decision.\u2019 \u201d Gunter v. Anders, 115 N.C. App. 331, 334, 444 S.E.2d 685, 687 (1994) (quoting Borg-Warner Acceptance Corp. v. Johnston, 107 N.C. App. 174, 178, 419 S.E.2d 195, 197 (1992), disc. review denied, 333 N.C. 254, 424 S.E.2d 918 (1993)), disc. review denied, 339 N.C. 612, 454 S.E.2d 250 (1995). Adopting this standard and employing said standard to the facts in this case, we find plenary evidence in the record to support the trial court\u2019s finding that plaintiff does not fairly and adequately represent the interest of defendant corporation, and therefore, lacks standing to maintain this action. As plaintiff fails to show an abuse of discretion, the trial court\u2019s finding in this respect will not be disturbed on appeal.\nPlaintiff next assigns as error the trial court\u2019s denial of his motion to add an additional party plaintiff. This assignment of error also fails.\nA motion to amend pursuant to Rule 15(a) of the North Carolina Rules of Civil Procedure \u201c \u2018is addressed to the sound discretion of the trial judge and the denial of such motion is not reviewable absent a clear showing of an abuse of discretion.\u2019 \u201d Smith v. McRary, 306 N.C. 664, 671, 295 S.E.2d 444, 448 (1982) (quoting Edwards v. Edwards, 43 N.C. App. 296, 298, 259 S.E.2d 11, 13 (1979)).\nIn response to the allegations of defendants\u2019 motion to dismiss, plaintiff filed a motion to amend his complaint for a second time to include James Patrick Locke as a party plaintiff. While plaintiff\u2019s first motion to amend was allowed, his second motion to amend to add Mr. Locke as a party plaintiff was denied. Notably, Locke was the owner of but one share of Class B stock of defendant corporation, and could add little to legitimate plaintiff\u2019s derivative suit. As plaintiff fails to show any prejudice by the trial court\u2019s action and we find no abuse of discretion, this assignment of error is overruled.\nSince plaintiff cannot fairly and adequately represent defendant corporation, we need not address plaintiff\u2019s remaining arguments on appeal; and affirm the decision of the trial court.\nAffirm.\nChief Judge ARNOLD and MARTIN, John C. concur.", "type": "majority", "author": "SMITH, Judge." } ], "attorneys": [ "Elliot, Pishlco, Gelbin & Morgan, P.A., by David C. Pishko, for plaintiff-appellant.", "Robinson, Bradshaw & Hinson, P.A.,'by Garland S. Cassada, for defendants-appellees Revalle B. Gourtley and Christopher B. Robbins.", "Rayburn, Moon & Smith, P.A., by James B. Gatehouse, for defendant-appellee Tweetsie Railroad, Inc.", "Anderson, Rutherford, Geil & Scherer, L.L.P., by John M. Geil, for defendant-appellee Jerald C. Liebhart, Jr.", "Byrd, Byrd, Ervin, Whisnant, McMahon & Ervin, P.A., by Robert C. Ervin, for defendants-appellees T. Bragg McLeod, H. Brill Huntley, Richard L. Liebhart and Grace F. Liebhart.", "James H. Henderson, P.C., by James H. Henderson, for defendant-appellee E. Spencer Robbins." ], "corrections": "", "head_matter": "JAMES MICHAEL ROBBINS, as a Shareholder of Tweetsie Railroad, Inc., Plaintiff v. TWEETSIE RAILROAD, INC., a North Carolina Corporation; REVALLE B. COURTLEY; E. SPENCER ROBBINS; T. BRAGG McLEOD; H. BRILL HUNTLEY; GRACE F. LIEBHART; JERALD C. LIEBHART, JR.; RICHARD L. LIEBHART; CHRISTOPHER B. ROBBINS; and R. FRANK COFFEY, Defendants\nNo. COA96-587\n(Filed 1 July 1997)\n1. Trial \u00a7 45 (NCI4th)\u2014 motion to dismiss \u2014 consideration of matters outside pleadings \u2014 treated as motion for summary judgment\nThe proper inquiry on appeal of a shareholders\u2019 derivative action was whether there was any genuine issue as to any material fact and whether the moving party was entitled to judgment as a matter of law where defendants made 12(b)(6) motions to dismiss but the trial court admitted and considered matters outside of the pleadings, so that defendants\u2019 motions to dismiss were converted to Rule 56 motions for summary judgment.\nAm Jur 2d, Summary Judgment \u00a7 13.\nWhat, other than affidavits, constitutes \u201cmatters outside the pleadings,\u201d which may convert motion under Federal Rule of Civil Procedure 12(b), (c), into Motion for Summary Judgment. 2 ALR Fed. 1027.\n2. Corporations \u00a7 146 (NCI4th)\u2014 shareholder derivative plaintiff \u2014 required to be fair and adequate representative of corporate interest\nThe requirement that a shareholder derivative plaintiff be a fair and adequate representative of the corporate interest is implicit in N.C.G.S. \u00a7 55-7-40. There is nothing to indicate that the General Assembly intended that a minority shareholder, who has uppermost a personal agenda rather than the best interests of the corporation, would have standing to file and maintain a shareholder derivative action under N.C.G.S. \u00a7 55-7-40, and the U.S. Supreme Court has long held that the shareholder who brings a derivative action is a self-chosen representative and a volunteer champion and, as such, must bear some responsibility or have some liability and accountability which will protect the interests he elects himself to represent.\nAm Jur 2d, Corporations \u00a7\u00a7 2353-2365.\nRequirement of Rule 23.1 of Federal Rules of Civil Procedure that plaintiff in shareholder derivative action \u201cfairly and adequately represent\u201d shareholders\u2019 interests in enforcing corporation\u2019s right. 15 ALR Fed. 954.\n3. Corporations \u00a7 146 (NCI4th)\u2014 shareholder derivative plaintiff \u2014 no standing \u2014 did not fairly and adequately represent corporate interest\nThere was no abuse of discretion in a shareholders\u2019 derivative action in the trial court\u2019s finding that plaintiff does not fairly and adequately represent the interest of defendant corporation and therefore lacks standing to maintain this action. This is an issue of first impression with no North Carolina law addressing this contention, but the federal standard for assessing whether a shareholder may fairly and adequately represent a corporation under section 23.1 of the Federal Rules of Civil Procedure is adopted. Under that standard, whether a shareholder fairly and adequately may represent a corporation is to be decided on a case by case basis and is reviewable on an abuse of discretion standard. In this case, there is plenary evidence in the record to support the trial court\u2019s finding and that finding will not be disturbed on appeal.\nAm Jur 2d, Corporations \u00a7\u00a7 2353-2365.\nRequirement of Rule 23.1 of Federal Rules of Civil Procedure that plaintiff in shareholder derivative action \u201cfairly and adequately represent\u201d shareholders\u2019 interests in enforcing corporation\u2019s right. 15 ALR Fed. 954.\n4. Pleadings \u00a7 378 (NCI4th)\u2014 shareholder derivative action \u2014 motion to add party \u2014 denied\u2014holder of one nonvoting share \u2014 no prejudice\nThere was no abuse of discretion in the trial court\u2019s denial of a shareholder derivative plaintiffs motion to amend to add a party where the party whom plaintiff wished to add was the owner of but one Class B share and could add little to legitimate plaintiff\u2019s derivative suit. Plaintiff failed to show any prejudice.\nAm Jur 2d, Corporations \u00a7\u00a7 2353-2365.\nRequirement of Rule 23.1 of Federal Rules of Civil Procedure that plaintiff in shareholder derivative action \u201cfairly and adequately represent\u201d shareholders\u2019 interests in enforcing corporation\u2019s right. 15 ALR Fed. 954.\nAppeal by plaintiff from order entered 1 February 1996 by Judge Loto G. Caviness in Watauga County Superior Court. Heard in the Court of Appeals 17 February 1997.\nElliot, Pishlco, Gelbin & Morgan, P.A., by David C. Pishko, for plaintiff-appellant.\nRobinson, Bradshaw & Hinson, P.A.,'by Garland S. Cassada, for defendants-appellees Revalle B. Gourtley and Christopher B. Robbins.\nRayburn, Moon & Smith, P.A., by James B. Gatehouse, for defendant-appellee Tweetsie Railroad, Inc.\nAnderson, Rutherford, Geil & Scherer, L.L.P., by John M. Geil, for defendant-appellee Jerald C. Liebhart, Jr.\nByrd, Byrd, Ervin, Whisnant, McMahon & Ervin, P.A., by Robert C. Ervin, for defendants-appellees T. Bragg McLeod, H. Brill Huntley, Richard L. Liebhart and Grace F. Liebhart.\nJames H. Henderson, P.C., by James H. Henderson, for defendant-appellee E. Spencer Robbins." }, "file_name": "0572-01", "first_page_order": 610, "last_page_order": 619 }