## Facts

- Michael H. Meiselman was a minority shareholder in several closely held, family-owned corporations formed from enterprises built by the parties’ father.
- Ira S. Meiselman, Michael’s brother, was the controlling shareholder in the family corporate group, including Eastern Federal Corporation and related entities.
- Michael sued under N.C. Gen. Stat. §§ 55-125(a)(4) and 55-125.1, seeking dissolution or alternative equitable relief to protect his shareholder “rights or interests.”
- Michael also alleged breach of fiduciary duty, asserting Ira usurped a corporate opportunity through his sole ownership of Republic Management Corporation, which held a management contract with a family corporation.
- The trial court granted summary judgment to defendants, rejecting statutory relief and finding no actionable fiduciary-duty breach.
- The Court of Appeals reversed in substantial part.
- The Supreme Court of North Carolina granted discretionary review and addressed the proper analysis under the close-corporation relief statutes.

## Issues

1. What analytical standard governs claims under N.C. Gen. Stat. §§ 55-125(a)(4) and 55-125.1 by a minority shareholder seeking dissolution or alternative equitable relief in a closely held corporation?
2. Whether the trial court erred by granting summary judgment without defining and evaluating the plaintiff’s shareholder “rights or interests,” including his reasonable expectations.
3. Whether the fiduciary-duty/corporate-opportunity claim was properly resolved without further factual findings and legal analysis.

## Decision

- The Supreme Court vacated the trial court’s summary judgment and remanded for an evidentiary hearing.
- The Court held that the statutory phrase “rights or interests” includes a minority shareholder’s substantial reasonable expectations arising from the participants’ understandings and the enterprise’s history.
- The Court directed trial courts to (1) define the complaining shareholder’s rights or interests (including reasonable expectations) and (2) determine whether relief is reasonably necessary to protect them.
- The Court stated that to obtain relief, the plaintiff must prove: (1) one or more substantial reasonable expectations known to or assumed by the other participants; (2) frustration of those expectations; (3) frustration without the plaintiff’s fault and largely beyond his control; and (4) entitlement to equitable relief under all circumstances.
- The Court held the trial court’s treatment of the corporate-opportunity theory was inadequate and required further development and application of the corporate-opportunity doctrine on remand.

## Legal Principles

- In closely held corporation disputes under N.C. Gen. Stat. §§ 55-125(a)(4) and 55-125.1, a court must identify the minority shareholder’s “rights or interests” and then determine whether equitable relief is reasonably necessary to protect them.
- A shareholder’s “rights or interests” include substantial reasonable expectations that were known to or assumed by other participants when they entered the venture, as shown by the parties’ relationship history and course of dealing.
- Typical reasonable expectations in close corporations may include continued employment, participation in management, and other financial or personal benefits, if supported by the parties’ understandings.
- A request for relief based on frustrated expectations requires proof of substantial expectations, frustration, lack of plaintiff fault, and circumstances warranting equitable relief.
- A corporate-opportunity claim requires analysis of whether the opportunity was functionally related to the corporation’s business or whether the corporation had an interest or expectancy in it, supported by specific findings.

## Conclusion

The court required North Carolina trial courts to evaluate minority-shareholder claims in close corporations through a reasonable-expectations analysis and vacated summary judgment because the trial court failed to define and assess the plaintiff’s rights or interests and inadequately addressed the corporate-opportunity allegations.


Meiselman v. Meiselman, 309 N.C. 279, 307 S.E.2d 551 (1983)