## Facts

- Karen L. Mancinelli worked for a Duke University clinical-research group in North Carolina.
- She alleged that she left her position to help form and work for Momentum Research, Inc. based on Dr. Gad Cotter’s oral promise that she would receive a 15% ownership interest in the new company.
- The alleged promise was made in North Carolina, before Momentum was incorporated.
- Momentum was later incorporated in Delaware, while its operations were centered in North Carolina.
- Mancinelli claimed that a few months after the oral promise, she signed a written shareholder or stock agreement reflecting issuance of 15% of Momentum’s stock and returned the signed document to Momentum’s vice president, Philip Lemons.
- Mancinelli could not produce a copy of the signed agreement.
- Momentum disputed that any executed written agreement existed and denied that Mancinelli ever became a shareholder.
- Cotter and Lemons sent Mancinelli emails that, in substance, confirmed she had a 15% interest in Momentum.
- The parties disputed whether North Carolina law or Delaware law governed Mancinelli’s claim to shareholder status and stock ownership.

## Issues

1. Whether a dispute over claimed shareholder status and the issuance of shares in a Delaware corporation is governed by Delaware law under the internal affairs doctrine, even though the alleged promise and much of the parties’ conduct occurred in North Carolina.
2. If Delaware law governs, whether an alleged oral promise to issue stock—supported by later emails and an unproduced signed agreement—can establish enforceable shareholder rights.

## Decision

- The court treated the controversy as involving a corporation’s internal affairs because it required deciding whether Momentum issued shares to Mancinelli and whether she was a shareholder.
- Applying the internal affairs doctrine, the court held that Delaware law—the law of Momentum’s state of incorporation—governed the stock-ownership and share-issuance questions.
- The court rejected applying ordinary contract choice-of-law approaches (such as place-of-contracting or “most significant relationship”) because the claim turned on corporate share issuance and shareholder status.
- Under Delaware law, Mancinelli’s allegations (an oral promise, informal email confirmations, and the claim that she signed and returned a stock document she could not produce) did not establish a valid issuance of shares or enforceable shareholder rights.
- The court dismissed Mancinelli’s claim seeking recognition and enforcement of a 15% stock interest in Momentum.

## Legal Principles

- The internal affairs doctrine provides that matters involving a corporation’s internal relationships—such as share issuance and who qualifies as a shareholder—are governed by the law of the state of incorporation.
- Courts generally do not apply standard contract conflicts rules when resolving claims that require determining stock issuance and shareholder status, because those determinations are internal corporate matters.
- Under Delaware corporate law, stock issuance and ownership depend on compliance with statutory and corporate requirements; informal communications (including emails) do not substitute for a valid issuance reflected through required corporate action and records.
- An alleged oral commitment to provide equity, without proof of a valid issuance under Delaware corporate law, does not create shareholder status.

## Conclusion

The North Carolina Business Court held that Mancinelli’s attempt to enforce an alleged 15% equity interest in Momentum raised an internal-affairs question governed by Delaware law, and it dismissed her ownership-based claim because the alleged oral promise and informal confirmations did not show a valid issuance of shares under Delaware requirements.


Mancinelli v. Momentum Research, Inc., 2012 North Carolina Business Court 28 (2012)