Mayer v. Goldner

Mayer v. Goldner, 

.


STATE OF NORTH CAROLINA                  IN THE GENERAL COURT OF JUSTICE
                                             SUPERIOR COURT DIVISION
LINCOLN COUNTY                                      24 CVS 1258

GABRIEL JUDAH MAYER,
individually and derivatively on
behalf of SHERBROOKE
CORPORATE LTD., and
MATTHEW QUEEN,

                      Plaintiffs,

v.
                                                ORDER AND OPINION
SAMUEL GOLDNER,                               ON DEFENDANT’S PARTIAL
                                                 MOTION TO DISMISS
                      Defendant,

and

SHERBROOKE CORPORATE
LTD.,

              Nominal Defendant.


          Parker Poe Adams & Bernstein LLP, by Scott E. Bayzle and Andrew
          Tabeling, for Plaintiffs Gabriel Judah Mayer and Matthew Queen.

          McGuireWoods LLP, by Elisabeth Briand, Zachary L. McCamey, and
          Brian A. Kahn, for Defendant Samuel Goldner and Nominal Defendant
          Sherbrooke Corporate Ltd.

Conrad, Judge.

     1.     This case involves a dispute among the shareholders of Sherbrooke

Corporate Ltd. Gabriel Mayer and Matthew Queen, both minority shareholders,

accuse Samuel Goldner, the majority shareholder, of crippling the company through

self-dealing and dereliction of duty. Goldner has moved to dismiss several claims

under Rule 12(b)(6) of the North Carolina Rules of Civil Procedure. (See ECF No. 14.)

For the following reasons, the Court GRANTS in part and DENIES in part his

motion.
    2.   Background. The Court does not make findings of fact on a Rule 12(b)(6)

motion to dismiss. The following background assumes that the allegations of the

complaint are true.

    3.   Sherbrooke, a North Carolina corporation, is a captive insurance company. *

Goldner, Mayer, and Queen are its only shareholders and, until recently, were all

officers and directors. Sherbrooke’s business is to reinsure insurance policies that

provide coverage to nursing homes owned by Goldner. Under filings made with state

regulatory authorities, the company may reinsure only those policies issued by a

fronting carrier called Victoria Insurance. (See Compl. ¶¶ 10–13, 17, 18, ECF No. 3.)

    4.   Because Sherbrooke’s sole purpose is to reinsure Goldner’s nursing homes,

it has no revenue other than the nursing homes’ insurance premiums. Mayer and

Queen allege that this revenue source became unreliable and that Goldner is to

blame. For the 2022-2023 policy year, Goldner underpaid premiums by nearly $6

million. Then, in late 2022, he shut off the spigot completely. Despite assuring Mayer

and Queen that he could and would pay the balance, neither Goldner nor his nursing

homes have since paid any premiums to Sherbrooke. (See Compl. ¶¶ 25–28, 30, 31,

35; see also Demand Letter, Compl. Ex. C.)

    5.   This revenue drought imperiled Sherbrooke’s solvency. According to Mayer

and Queen, Goldner pushed the company over the brink in 2024. He began by



* “A captive insurance company is an insurance company that is owned by another
organization and whose exclusive purpose is to insure risks of the parent organization and
affiliated companies. Captive insurance companies must be licensed, must meet certain
capital and surplus requirements, and must file annual reports to the Commissioner” of
Insurance. Causey v. Cannon Sur., LLC, 

, 135 (2020) (cleaned up).
removing Mayer and Queen as officers and directors and seizing total control. With

Goldner alone at the helm, Sherbrooke’s operations came to a halt. Goldner did not

complete its annual audit for 2023, coordinate payment of its 2023 taxes, or prepare

mandatory regulatory filings. Worse yet, he ignored Victoria Insurance’s demand for

$3.2 million in overdue payments, as well as its offer to renegotiate its agreement

with Sherbrooke. To that point, Victoria Insurance had covered several litigated

claims despite the unpaid premiums—a windfall to the nursing homes and Goldner.

But Goldner’s silence led Victoria Insurance to stop payment of any claims under

policies reinsured by Sherbrooke.      In the months afterward, Goldner refused to

administer Sherbrooke’s open claims and stymied efforts by the company’s outside

counsel to defend it against ongoing litigation. (See Compl. ¶¶ 33, 46–48, 51–54, 58,

61–66.)

   6.     Mayer and Queen believe that Goldner cares little about Sherbrooke’s

interests, aiming instead to use its assets to solve his own financial crisis. As alleged,

Goldner faces at least a dozen civil judgments totaling more than $50 million. Since

seizing control of Sherbrooke, he has taken money from its accounts to pay his

personal legal expenses. Having been stripped of power, Mayer and Queen lack the

ability to safeguard what remains of the company’s assets from similar misuse. (See

Compl. ¶¶ 42, 44, 45, 67, 70.)

   7.     The complaint includes six claims for relief based on these allegations.

Mayer asserts derivative claims on Sherbrooke’s behalf for breach of fiduciary duty,

constructive fraud, and unjust enrichment. Mayer and Queen also assert a claim to
remove Goldner as a director under N.C.G.S. § 55-8-09, along with two purported

claims for an equitable accounting and punitive damages. (See, e.g., Compl. ¶¶ 79,

85, 92, 101, 106, 111.)

   8.    Goldner has moved to dismiss the complaint, with some limited exceptions.

(See ECF No. 14.) The motion is fully briefed, and the Court held a hearing on 11

March 2025. The motion is ripe for decision.

   9.    Legal Standard. A motion to dismiss under Rule 12(b)(6) “tests the legal

sufficiency of the complaint.” Isenhour v. Hutto, 

 (1999) (citation

and quotation marks omitted). Dismissal is proper 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.” Corwin v. Brit. Am.

Tobacco PLC, 

 (2018) (citation and quotation marks omitted). In

deciding the motion, the Court must treat all well-pleaded allegations as true and

view the facts and permissible inferences in the light most favorable to the nonmoving

party. See, e.g., Sykes v. Health Network Sols., Inc., 

 (2019).

   10.   Derivative Claims. Goldner concedes that he owes fiduciary duties to

Sherbrooke as its sole director. He also concedes that the complaint’s allegations of

self-dealing are sufficient to support Mayer’s derivative claims for breach of fiduciary

duty, constructive fraud, and unjust enrichment. But Goldner urges the Court to

dismiss these claims to the extent they are based on the nonpayment of insurance

premiums. As Goldner sees it, the premiums are his nursing homes’ responsibility,
not his personal responsibility. By seeking to hold him liable for failing to pay the

premiums, he contends, the complaint improperly imputes to him obligations owed

by these separate entities.

   11.   This argument misreads Mayer’s allegations. The complaint does not allege

that Goldner personally owes insurance premiums to Sherbrooke. Nor does it impute

his nursing homes’ obligations to him. Rather, taken in the light most favorable to

Mayer, the allegations show that Goldner controlled the nursing homes’ purse

strings, decided when and whether they paid premiums, and chose to shortchange

Sherbrooke without a legitimate reason. (See Compl. ¶¶ 25 (alleging that Sherbrooke

“reinsured nursing homes owned by . . . Goldner”), 26 (alleging “Goldner’s payment

of premiums”), 27 (alleging that “Goldner arbitrarily underpaid insurance

premiums”), 30 (alleging that “Goldner completely stopped paying premiums”).)

Mayer’s derivative demand, which is attached to the complaint and therefore part of

it, says much the same thing. (See Demand Letter (asserting that “Goldner, through

his operation of Goldner Capital Management, has arbitrarily underpaid insurance

premiums”).)   What’s more, the allegations support a reasonable inference that

Goldner kept Sherbrooke from securing its finances by first lulling Mayer and Queen

(his fellow directors) with false assurances that payment was forthcoming and later

sidelining them entirely. (See Compl. ¶¶ 31, 35, 46, 47.) Left unchecked, Goldner

has allegedly suspended Sherbrooke’s legal, commercial, and administrative

activities—all while intending to use its remaining assets to ease his own financial

troubles. (See Compl. ¶¶ 44, 51, 54, 58.)
   12.   Thus, the thrust of the complaint is that Goldner used his position on both

sides of the reinsurance transaction to benefit himself and his nursing homes at

Sherbrooke’s expense.    Goldner’s argument, however, is limited to his cramped,

partisan reading of the complaint. He offers no other reason to conclude that the

complaint, when construed liberally and taking inferences in Mayer’s favor, fails to

state claims for breach of fiduciary duty, constructive fraud, and unjust enrichment.

The Court therefore denies the motion to dismiss these claims. See, e.g., Duffy v.

Schussler, 

, 56 (2022) (observing that a corporate officer must

“always discharge the responsibilities of the office with undivided loyalty to the

corporation” and “strive to advance the best interests of the corporation” (citation and

quotation marks omitted)).

   13.   Removal of Director. To state a claim for removal of a corporate director,

a complaining shareholder must allege that “[t]he director engaged in fraudulent or

dishonest conduct, or gross abuse of authority or discretion, with respect to the

corporation” and that “[r]emoval is in the best interest of the corporation.” N.C.G.S.

§ 55-8-09(a). This “is an extraordinary remedy.” JT Russell & Sons Inc. v. Russell,

, at *16 (N.C. Super. Ct. Mar. 4, 2025) (citation and quotations

omitted).   The statute “is not intended to permit judicial resolution of internal

corporate struggles for control except in those cases in which a court finds that the

director has been guilty of wrongful conduct of the type described.” Mauck v. Cherry

Oil Co., 

, at *22 (N.C. Super. Ct. May 2, 2022) (citation and

quotation marks omitted).
   14.   Goldner contends that Mayer and Queen have alleged nothing more than a

garden-variety struggle for corporate control. He also contends that the complaint

alleges only in conclusory fashion that his removal is in Sherbrooke’s best interest.

   15.   These arguments are wholly unconvincing. The allegations that underlie

the derivative claims also underlie the claim for removal.          Taken as true, the

allegations show that Goldner misappropriated company funds to pay personal legal

expenses. (See Compl. ¶ 67.) They also show that he deprived Sherbrooke of its only

revenue source while giving false assurances of future payment. (See, e.g., Compl.

¶¶ 30, 31, 36.) And they show that upon taking control of Sherbrooke, Goldner has

been derelict in his duty: failing to complete the company’s 2023 audit, taxes, and

regulatory filings; ignoring Victoria Insurance’s overtures to settle accounts or

renegotiate; and making no effort to administer open claims or defend ongoing

litigation. (See, e.g., Compl. ¶¶ 48, 51, 54, 58, 61, 63–66.) These actions have left

Sherbrooke rudderless and insolvent while exposing it to legal and regulatory

jeopardy.

   16.   The Court concludes that the complaint amply alleges fraudulent or

dishonest conduct and gross abuse of authority or discretion.            So too for the

allegations that Goldner’s removal is in Sherbrooke’s best interest. See JT Russell &

Sons, 

, at *17–18 (denying motion to dismiss claim based on

allegations of self-dealing and unlawful seizure of control by directors); see also Taylor

v. Hinkle, 

 (2004) (finding that director’s “blatant violations of the

franchise agreement” and “clear intentions to commit other actions designed to wrest
control away” were sufficient to show a gross abuse of discretion); cf. Vechery v. Max

Sound Corp., 2023 Cal Super. LEXIS 37059, at *7 (Cal. Super. Ct. Apr. 28, 2023)

(concluding that director’s “failure to adhere to corporate formalities and lack of any

internal restraints or oversight of his management” and “conflicted transactions”

showed a gross abuse of authority).

   17.   For the first time at the hearing, Goldner’s counsel argued that the events

in dispute are too remote in time to support his removal. Some courts have indeed

held “that because judicial removal of directors is a remedy designed, in part, to

prevent future abuse, the acts complained of should be relatively recent.” Neiman v.

Tri R Angus, Inc., 

 (Neb. 2007). Even so, this argument, which

is not in Goldner’s briefs, comes too late. And on these facts, whether Goldner’s

misconduct is too stale to support relief is an issue better suited to summary

judgment.

   18.   Accordingly, the Court denies the motion to dismiss this claim.

   19.   Accounting and Punitive Damages. Finally, Mayer and Queen purport

to assert claims for an equitable accounting and punitive damages.          These are

remedies, not independent causes of action. See Elhulu v. Alshalabi, 

, at *20 (N.C. Super. Ct. Apr. 29, 2021) (stating that an equitable accounting

“is a remedy, not an independent cause of action”); Halikierra Cmty. Servs. LLC v.

N.C. HHS, 

, at *5 (N.C. Super. Ct. Mar. 25, 2021) (stating that

“punitive damages are a remedy rather than a standalone cause of action”).

Accordingly, the Court grants the motion to dismiss the claims for an equitable
accounting and punitive damages without prejudice to Mayer’s and Queen’s right to

pursue these remedies, if appropriate, at a later stage.

   20.   Conclusion. For these reasons, the Court DENIES the motion to dismiss

the claims for breach of fiduciary duty, constructive fraud, unjust enrichment, and

removal of a director. The Court GRANTS the motion to dismiss the claims for an

equitable accounting and punitive damages but concludes that Mayer and Queen may

pursue these remedies, if appropriate, at a later stage.


         SO ORDERED, this the 17th day of March, 2025.


                                        /s/ Adam M. Conrad
                                        Adam M. Conrad
                                        Special Superior Court Judge
                                        for Complex Business Cases