Contractual Formalism and No Fiduciary Duty for Majority Coalitions in North Carolina LLCs:
Commentary on Gvest Real Est., LLC v. JS Real Est. Invs., LLC

I. Introduction

The Supreme Court of North Carolina’s decision in Gvest Real Estate, LLC v. JS Real Estate Investments, LLC, No. 308A24 (filed 12 December 2025), is a significant business-law opinion at the intersection of limited liability company (LLC) governance, contractual formalism, and the scope of fiduciary duties among LLC members.

The dispute centers on Yards at NoDa, LLC, a Charlotte real estate development LLC formed by three member entities controlled respectively by Raymond Gee (Gvest), James Shaw (JS Real Estate Investments), and Tyson Rhame (TR Real Estate). What began as a promising redevelopment venture devolved into a classic “freeze-out” conflict: Shaw and Rhame sought to eliminate Gee from management and to realign ownership interests through purported transfers of membership interests to new holding entities (Shaw Capital & Guaranty, LLC and Levan Capital, LLC, collectively the “Capital companies”).

The opinion addresses two principal questions:

1. Whether the alleged 2013 transfers of LLC membership interests from JS Real Estate and TR Real Estate to the Capital companies were valid under Yards at NoDa’s Operating Agreement, such that the original members were divested before they voted in 2014 to remove Gee as manager.
2. Whether North Carolina law recognizes a fiduciary duty owed by a “majority coalition” of LLC members (here, JS and TR collectively owning 75%) to a minority member (Gvest), in order to support claims for breach of fiduciary duty and constructive fraud based on alleged oppressive conduct and self-dealing.

The Business Court granted summary judgment to defendants on (1) Gvest’s declaratory judgment claim regarding the validity of the transfers and Gee’s removal as manager, and (2) Gvest’s claims for breach of fiduciary duty and constructive fraud. The Supreme Court affirms, reinforcing two core principles:

• Strict contractual compliance is required to effectuate membership transfers in an LLC when the operating agreement so provides; tax filings and informal understandings cannot substitute for formally required consents.
• Under current North Carolina law, a group of minority members that forms a voting majority coalition does not, by that fact alone, owe a fiduciary duty to the remaining minority members of an LLC; and self-dealing transactions commonly injure the LLC itself, not individual members directly.

The decision thus reaffirms the “creature of contract” nature of North Carolina LLCs and declines to extend corporate minority oppression doctrines to LLC majority coalitions, while leaving open the possibility of future development in this area.

II. Summary of the Opinion

A. Procedural Posture and Jurisdiction

• The case was designated a mandatory complex business case under N.C.G.S. § 7A‑45.4(b) in 2016 and heard in the North Carolina Business Court.
• On 12 September 2023, the Business Court granted defendants’ motion for summary judgment on Gvest’s declaratory judgment, breach of fiduciary duty, and constructive fraud claims.
• Defendants later voluntarily dismissed their remaining counterclaims in June and August 2024, leaving no claims outstanding. Under Veazey v. City of Durham, 231 N.C. 357 (1950), the 12 September 2023 order thus became a final judgment.
• Defendants moved to dismiss the appeal on the narrow ground that there had been no separate post‑dismissal “entry of judgment” document, but the Supreme Court held that the final judgment requirement was satisfied and exercised jurisdiction under N.C.G.S. § 7A‑27(a)(2).

B. Holdings on the Merits

1. Declaratory Judgment / Membership Transfers
   • Yards at NoDa’s Operating Agreement imposed mandatory conditions for any transfer of membership interests, including:
     • The transferee’s written agreement to be bound by Section VI (subsection 6.1.1.2).
     • Delivery of the transferee’s tax identification number and initial tax basis (subsection 6.1.1.5).
     • Prior written consent of the “Manager,” defined jointly as Gee and Shaw (subsection 6.1.1.6).
   • Failure to comply rendered the transfer “invalid, null and void, and of no force or effect,” and any would‑be transferee could not vote as a member.
   • Gvest waived any argument that there had been compliance with subsections 6.1.1.2 and 6.1.1.5 by failing to raise it in the Business Court and again by failing to challenge the Business Court’s waiver finding on appeal (Business Court Rule 7.2; N.C. R. App. P. 28(a)).
   • Independently, the undisputed evidence showed no compliance with subsection 6.1.1.6: Gee conceded he never gave written consent to any transfer in 2013 or before his removal in August 2014.
   • Accordingly, the attempted transfers from JS and TR to the Capital companies were invalid; JS and TR remained members; and their 2014 vote to remove Gee as manager by majority vote was valid. Summary judgment for defendants on Gvest’s declaratory judgment claim was appropriate.
2. Breach of Fiduciary Duty and Constructive Fraud
   • The court emphasizes that LLCs are fundamentally contractual entities. Under North Carolina law, fiduciary duties among LLC members generally arise only when:
     • A single majority member is granted effective control under the operating agreement (as in Vanguard Pai Lung, LLC v. Moody), or
     • The operating agreement or statute creates specific duties.
   • There is no North Carolina precedent recognizing a fiduciary duty owed by a coalition of minority members that together form a voting majority to other minority members.
   • The court declines Gvest’s invitation to extend corporate minority oppression doctrines to LLCs in this setting, particularly where the alleged “voting agreement” (the Agreement Regarding Managers between the Capital companies) was between entities that were never valid LLC members.
   • Any alleged self-dealing by Shaw and Rhame in providing high‑interest “mezzanine loans” injured Yards at NoDa itself, not Gvest individually. Under Kaplan v. O.K. Technologies, L.L.C., and Chisum v. Campagna, such claims belong to the LLC (derivative claims), absent a separate and distinct injury to the member. Gvest failed to demonstrate such an individualized injury.
   • Because a fiduciary duty is a necessary element of both breach of fiduciary duty and constructive fraud, both claims fail as a matter of law. Summary judgment was properly granted to defendants.

The Supreme Court thus affirms the Business Court’s order in full.

III. Detailed Analysis

A. Procedural Framework, Finality, and Standard of Review

The case begins in the Business Court as a mandatory complex business case under N.C.G.S. § 7A‑45.4(b). This classification is important because N.C.G.S. § 7A‑27(a)(2) gives the Supreme Court direct appellate jurisdiction from final judgments in such cases, bypassing the Court of Appeals.

A central procedural wrinkle was whether a “final judgment” existed for appellate purposes after defendants voluntarily dismissed their remaining counterclaims. Relying on Veazey v. City of Durham, the court clarifies that a final judgment is one that “disposes of the cause as to all the parties, leaving nothing to be judicially determined between them in the trial court.” Once the remaining counterclaims were dismissed in 2024, the 12 September 2023 summary judgment order disposed of all claims and thus functioned as the final judgment, without requiring a separate, post‑dismissal “judgment” document.

The court reviews summary judgment de novo under N.C. Farm Bureau precedents (Martin and Herring), examining the record afresh to determine whether there is any genuine issue of material fact and whether defendants are entitled to judgment as a matter of law.

B. Declaratory Judgment: Formal Transfer Requirements and Waiver

1. The Operating Agreement’s Transfer Restrictions

The Yards at NoDa Operating Agreement is central. It provides that:

• Any transferee must deliver a written instrument agreeing to be bound by Section VI of the Agreement (subsection 6.1.1.2).
• The transferor or transferee must deliver the transferee’s taxpayer identification number and initial tax basis in the transferred interest (subsection 6.1.1.5).
• The transferor must obtain the prior written consent of the “Manager,” defined in the Operating Agreement to mean both Gee and Shaw (subsection 6.1.1.6).

Another pivotal provision, subsection 6.1.3, states that any attempted transfer not in compliance with Section VI is “invalid, null and void, and of no force or effect,” and that the would‑be transferee has no right to vote on member matters.

Contractually, this is a highly formalistic regime. It does not allow informal or implied membership transfers. The parties deliberately chose a structure that requires documented, written compliance to effectuate any change in membership and voting rights.

2. The Record Evidence and Gvest’s Litigation Position

The record shows no direct evidence that the transfer requirements were followed:

• No written instrument from the Capital companies agreeing to be bound by Section VI.
• No documentation of delivery of taxpayer ID numbers and initial tax bases.
• No written consent signed by Gee (or jointly by Gee and Shaw) authorizing the transfers.

What the record does show is evidence of intent and attempt to transfer:

• Yards at NoDa’s 2013 amended, 2014, and 2015 tax returns list the Capital companies—as opposed to JS and TR—as members.
• Two documents titled “Written Consent of Managers” dated 1 January 2013, signed only by Rhame (who was not then a manager), purport to approve the transfers.
• An “Agreement Regarding Managers,” executed by the Capital companies (through Shaw and Rhame), states that the Capital companies are members and that Shaw and Rhame are managers who cannot be removed by the members except with mutual consent.

Gvest’s theory in the declaratory judgment action was that these documents, considered together, constitute compelling circumstantial evidence that the formal transfer requirements were in fact satisfied, even if the actual transfer documents themselves could not be produced.

3. Waiver of Arguments on Subsections 6.1.1.2 and 6.1.1.5

The Business Court, following Business Court Rule 7.2, concluded that Gvest had only argued compliance with subsection 6.1.1.6 (manager’s prior written consent) and had not argued that the evidence showed compliance with subsections 6.1.1.2 and 6.1.1.5. Thus, Gvest had waived any contention that the requirements of subsections 6.1.1.2 and 6.1.1.5 were satisfied.

On appeal, Gvest’s briefing again failed to challenge this waiver determination. Under N.C. R. App. P. 28(a), issues not presented in the appellant’s brief are treated as abandoned. The Supreme Court therefore treats the Business Court’s waiver ruling as unchallenged and dispositive: without an argument that all three transfer prerequisites were met, Gvest cannot sustain a claim that the membership interests validly transferred.

This is a classic example of procedural waiver operating at two levels:

• Trial level: failure to argue specific contractual compliance elements under Business Court pleading and briefing rules.
• Appellate level: failure to assign error to, or brief, the waiver ruling itself.

Either level is independently sufficient to defeat Gvest’s declaratory judgment claim. The Supreme Court explicitly notes that the Business Court’s order “is appropriately affirmed on this basis.”

4. Independent, Substantive Failure: Lack of Gee’s Written Consent

Even assuming arguendo that no waiver had occurred as to subsections 6.1.1.2 and 6.1.1.5, the record plainly defeats compliance with subsection 6.1.1.6. That subsection requires the prior written consent of the “Manager” to any transfer, and the Operating Agreement defines “Manager” to mean both Gee and Shaw.

The evidence on this point is not disputed:

• Gee conceded that he never executed any written consent to a transfer of JS or TR’s membership interests to the Capital companies.
• Gvest’s own pleadings describe the transfers as undertaken “secretly” and “without advising or notifying” Gvest or Gee, and assert that Gee did not become aware of the intent to transfer until at least May 2014—well after the purported January 2013 transfers.

Thus, the court observes that Gvest’s argument that Shaw and Rhame “did everything they needed to do” to effect the transfers is fatally undercut by Gee’s own admission that he did not do what the Operating Agreement required of him. Without Gee’s written consent, the contractual condition precedent to transfer is unsatisfied.

Under subsection 6.1.3, the legal consequence is clear and self-executing: the attempted transfers are “invalid, null and void, and of no force or effect,” and the Capital companies have no voting rights. JS and TR remained members, and their 2014 vote to remove Gee as manager was duly authorized by a majority of the members (two out of three).

5. Circumstantial Evidence, Tax Returns, and Formal LLC Requirements

Gvest urged the court to treat the tax returns, the “Written Consent of Managers” signed by Rhame, and the Agreement Regarding Managers as circumstantial proof that the formal written consents and transfer instruments must have existed, even if not produced. The court firmly rejects that approach, for several reasons:

• Gvest conceded that defendants had produced the requested documents, and the Business Court found no discovery violation or spoliation. In that context, it would be speculative and unwarranted to presume that compliant transfer documents once existed but were destroyed or withheld.
• At best, the evidence shows an intent and a mistaken assumption by Shaw and Rhame that they had successfully transferred membership rights. That is not enough to satisfy express contractual requirements that mandate specific written instruments and consents.
• Gvest’s principal case, Eggleston v. Eggleston, 228 N.C. 668 (1948), involved a partnership, not an LLC. Partnerships may arise by implied contract, including from the conduct of the parties and tax filings. LLCs, by contrast, require formal creation under statute and operate primarily through their operating agreements. Membership in an LLC, and the transfer of such membership, is not ordinarily inferred from conduct alone.

The court also distinguishes other cases Gvest cites—such as Penley v. Penley and Woodward v. Pressley—as dealing with the evidentiary relevance of tax returns in very different contexts (e.g., spousal business interests, fraud in financial statements), not compliance with specific contractual transfer restrictions in an LLC operating agreement.

The opinion thus underscores a critical principle: in the LLC context, especially where the operating agreement contains detailed transfer restrictions and “null and void” language, parties cannot rely on tax returns, informal resolutions, or “course of dealing” to override or substitute for explicit contractual prerequisites to changing membership status.

C. Fiduciary Duty and Constructive Fraud: No Duty for Majority Coalitions

1. Gvest’s Theory: Importing Corporate Oppression Doctrine to LLCs

Gvest’s fiduciary duty and constructive fraud claims rest on the premise that Shaw and Rhame (through JS and TR), collectively owning 75% of Yards at NoDa, owed Gvest—a 25% minority member—a fiduciary duty akin to that owed by controlling shareholders in closely‑held corporations. Gvest alleges:

• Oppression through freezing Gee out as manager and controlling company decisions.
• Self-dealing via the high‑interest mezzanine loans after Yards at NoDa defaulted on its Wells Fargo loan.
• Oppressive use of their supposed control, particularly through the Agreement Regarding Managers, to cement their managerial positions and deprive Gvest of meaningful participation.

Conceding that North Carolina appellate courts had not previously recognized such a fiduciary duty owed by a coalition of minority LLC members to other minority members, Gvest urged the court to:

1. Extend corporate minority oppression doctrine to LLCs more broadly, and
2. Further extend that doctrine to cover majority coalitions formed by minority LLC members.

2. The Vanguard Pai Lung Framework: Control Through a Singular Majority Member

The court situates its analysis within the framework of Vanguard Pai Lung, LLC v. Moody (N.C. Super. Ct. 2019), aff’d, 387 N.C. 376 (2025). In Vanguard, the Business Court held—and the Supreme Court later affirmed—that a fiduciary duty may arise where:

• A single majority member holds a controlling interest and
• The operating agreement gives that majority member effective control over the LLC’s operations.

But Vanguard expressly distinguished that scenario from one where no single member holds such control, and instead a coalition of minority members, acting together, outvotes other minority members. The Vanguard court, and now the Supreme Court in Gvest, decline to treat a majority coalition of minority members as automatically owing fiduciary duties akin to a controlling shareholder in a corporation.

The key rationale is structural and contractual:

• In an LLC, majority “economic” interest does not necessarily equate to managerial control. Control depends on the operating agreement.
• LLCs are contractual entities. Members may:
  • Require supermajority votes for actions.
  • Allocate managerial power independent of ownership percentages.
  • Impose, modify, or eliminate fiduciary duties by agreement (subject to statutory constraints).
• Minority members in LLCs have greater ex ante bargaining power to secure contractual protections than minority shareholders in corporations typically do.

This contractual flexibility undercuts the need to impose an overlay of corporate oppression doctrine by judicial fiat, particularly where the parties have not chosen to embed such protections in their operating agreement.

3. The Agreement Regarding Managers: Legally Irrelevant Voting Pact

Gvest’s strongest equitable argument turns on the Agreement Regarding Managers executed by the Capital companies, which purports to:

• Recognize the Capital companies as members of Yards at NoDa.
• Confirm Shaw and Rhame as managers.
• Bind the Capital companies to vote in a way that prevents removal of Shaw or Rhame as managers without mutual consent.

Gvest characterizes this as a “majority coalition” arrangement that entrenched Shaw and Rhame in managerial control and deprived Gvest of any meaningful say in management removal decisions. It contends this conduct should be viewed as oppressive and as a breach of an implied duty of good faith and fair dealing.

The Supreme Court dismantles this argument at a threshold level: because the attempted transfers to the Capital companies were invalid, the Capital companies were never members of Yards at NoDa. The Agreement Regarding Managers is, therefore, merely an agreement between non‑member entities with no voting rights in the LLC. As a matter of LLC governance, the agreement is a nullity. It did not alter the internal distribution of voting power—only JS, TR, and Gvest remained members.

At most, any “Agreement Regarding Managers” might furnish grounds for a contractual claim (e.g., breach of the implied covenant of good faith as between the parties to that agreement), but:

• It is not a basis to create new fiduciary duties beyond those recognized by statute or by operating agreement.
• Gvest’s appeal did not turn on breach‑of‑contract or implied covenant claims; rather, it attempted to leverage the agreement into a fiduciary duty and constructive fraud theory.

The court thus treats the Agreement Regarding Managers as irrelevant to the question whether a fiduciary relationship existed between JS/TR and Gvest as members of Yards at NoDa.

4. Other Alleged Oppression: Document Requests and Freeze‑Out

Gvest also cites:

• An allegedly “harassing” volume of document requests aimed at Gee.
• Efforts by Shaw and Rhame to “freeze out” Gee and Gvest from the LLC’s operations.

The court finds these allegations too thin and generic to justify creating a fiduciary duty where none exists by law or contract. The opinion implicitly treats discovery‑related friction and internal business reprisals (even if harsh) as a normal byproduct of litigation and governance disputes, not as triggers for judicial engineering of new fiduciary obligations.

The freeze‑out allegations also fail to establish individual injuries distinct from those suffered by the LLC itself, a point the court develops further in its analysis of the mezzanine loans and derivative claims.

5. Mezzanine Loans and the Direct vs. Derivative Distinction

One of Gvest’s main substantive complaints is that, while Shaw and Rhame were under federal indictment and later convicted, they caused Yards at NoDa to:

• Take a roughly $7.9 million mezzanine loan from them at 15% interest.
• Take a subsequent no‑interest loan to retire Wells Fargo’s debt.

Gvest characterizes the 15% mezzanine loan as oppressive, self‑dealing conduct by persons effectively controlling the company, siphoning funds away from Yards at NoDa and indirectly harming Gvest as a minority member.

The Supreme Court, however, treats this as a classic case of injury to the LLC itself:

• The high‑interest loan terms burdened Yards at NoDa’s finances and diminished its net value, which in turn affects all members proportionally through their respective membership interests.
• Under Kaplan v. O.K. Technologies, L.L.C., managers of an LLC owe fiduciary duties to the LLC, not directly to individual members. Breaches of those duties are addressed in derivative actions on behalf of the company.
• Chisum v. Campagna holds that an individual member may maintain a direct claim only when the member has suffered an injury “separate and distinct” from the injury to the LLC—something Gvest has not argued or established here.
• Outen v. Mical similarly forbids awarding individual damages to a shareholder for misappropriation of corporate funds where the injury belongs to the entity.

Gvest essentially argues that because any recovery by Yards at NoDa from Shaw and Rhame would incidentally benefit Shaw and Rhame themselves as majority owners, a derivative remedy is inadequate. The court rejects this as a basis for converting an LLC‑level injury into a personal cause of action for Gvest:

That the majority wrongdoer also benefits from the LLC’s recovery is an unavoidable feature of derivative litigation in closely‑held entities; it does not justify disregarding the entity’s separate legal personality or rewriting the law of direct vs. derivative claims.

6. Constructive Fraud’s Dependency on a Fiduciary Relationship

Constructive fraud in North Carolina requires:

1. A confidential or fiduciary relationship between plaintiff and defendant, and
2. Exploitation of that relationship by the defendant to the plaintiff’s detriment.

Because the court concludes that Shaw and Rhame, as controlling members via a majority coalition, owed no fiduciary duty to Gvest under existing LLC law, the first element of constructive fraud fails. Without a fiduciary or confidential relationship recognized by law, constructive fraud cannot be sustained.

Thus, the constructive fraud claim rises and falls with the breach of fiduciary duty claim and fails for the same reason.

7. The Court’s Cautious Dicta: Possible Future Evolution

Notably, the court does not entirely foreclose the possibility that North Carolina law may, in the future, recognize fiduciary duties owed by majority LLC members (or coalitions) to minority members in some circumstances. It cites a leading LLC treatise (Callison & Sullivan, Limited Liability Companies § 8:7 (2025 ed.)) suggesting that:

• Non‑manager members who can appoint managers may owe fiduciary duties.
• Members owning a majority interest in an LLC “likely have fiduciary duties not to oppress minority members.”

The court comments that “we may eventually, due to changes in business practices and realities, have reason to consider (or reconsider) whether a fiduciary duty arises between majority members and minority members of LLCs, particularly when those majority members control the appointment of managers in a manager‑managed LLC.”

Nevertheless, the court concludes that it need not (and will not) break new ground in this case. On the facts presented—and with the particular operating agreement in place—it is sufficient to:

• Enforce the Operating Agreement’s transfer provisions strictly, and
• Apply existing LLC fiduciary duty doctrine, which does not recognize duties owed by ad hoc majority coalitions to minority members.

D. Complex Concepts Simplified

1. LLCs vs. Corporations

A few structural differences illuminate the court’s reasoning:

• Corporations: Governed primarily by corporate statutes and bylaws; minority shareholders typically cannot negotiate customized protections; courts have developed “minority oppression” doctrines in some contexts to protect them.
• LLCs: Formed by filing articles with the Secretary of State and governed primarily by the operating agreement; members have substantial freedom to contract about governance, distributions, and fiduciary duties.

This contractual flexibility is why the court is reluctant to import corporate oppression doctrines wholesale into LLC law: LLC members could have written those protections into their agreement but did not.

2. Operating Agreements and Transfer Restrictions

An operating agreement is, functionally, a bespoke partnership contract for an LLC. Transfer restrictions like those in Yards at NoDa’s agreement are common. They often:

• Protect against unwanted third‑party members.
• Ensure that all members consent to changes in ownership.
• Specify detailed procedures for transfers and their tax consequences.

When an operating agreement says that non‑compliant transfers are “invalid, null and void, and of no force or effect,” courts will generally take that language seriously—as the Supreme Court does here.

3. Waiver at Trial and on Appeal

“Waiver” in litigation refers to losing the right to make an argument, usually by failing to raise it at the appropriate time or in the appropriate way:

• Trial level: If a party fails to present a legal theory or argue compliance with certain contract provisions in the trial court, the trial judge and opposing party are entitled to treat those issues as abandoned.
• Appellate level: If a party does not assign error to—or brief—an adverse ruling on appeal, the appellate court will decline to consider it.

Gvest suffered both types of waiver here regarding subsections 6.1.1.2 and 6.1.1.5 of the Operating Agreement.

4. Fiduciary Duties in LLCs

A fiduciary duty exists where one party is obliged to act in the best interests of another in matters within the scope of the relationship (e.g., trustee‑beneficiary, lawyer‑client, corporate director‑corporation). In LLCs:

• Managers generally owe fiduciary duties to the LLC (and sometimes to members if specified).
• A majority or controlling member may be found to owe duties to minority members where it has effective unilateral control over the company’s operations.
• Ordinary members without control, or ad hoc coalitions, are not automatically fiduciaries of one another under North Carolina law.

Absent a recognized fiduciary relationship, claims for breach of fiduciary duty or constructive fraud cannot proceed.

5. Direct vs. Derivative Claims

When wrongful acts harm an entity:

• The injured party is the entity itself (the LLC or corporation).
• A member or shareholder typically must bring a derivative action on behalf of the entity, not a direct action for personal damages.

A member may bring a direct action only when:

• The member suffers a separate and distinct injury not shared with the entity or other members, or
• The duty breached runs directly to the member (e.g., a personal contract).

The mezzanine loans harmed Yards at NoDa. Gvest’s economic loss was, in legal terms, a downstream consequence of that entity‑level injury, not a separate direct injury. Therefore, Gvest’s remedy—if any—lay in a derivative claim on behalf of the LLC, not in personal fiduciary‑duty or constructive‑fraud claims.

6. Summary Judgment

Summary judgment is appropriate when:

• There is no genuine dispute of material fact, and
• The moving party is entitled to judgment as a matter of law.

On summary judgment, courts do not weigh credibility or resolve factual disputes; they decide whether any such disputes exist. Here, because key facts (Gee’s lack of written consent, absence of transfer documents, lack of evidence of a fiduciary relationship, and absence of separate individual injury) were undisputed, the court concluded that defendants were entitled to judgment as a matter of law.

IV. Impact and Implications

A. For LLC Governance and Drafting

The decision underscores several practical lessons for North Carolina LLC members, managers, and transactional counsel:

• Strict Compliance with Transfer Provisions: Parties must follow operating agreement procedures to the letter. If the agreement requires written consent from named managers and delivery of specific information, informal understandings or tax return entries will not suffice.
• Document Everything: Managers and members should ensure that all required consents, acknowledgments, and transfer instruments are executed, maintained, and producible. The absence of documentation will be construed against the party claiming a valid transfer.
• Contract for Minority Protections: Minority LLC members should negotiate explicit protections in the operating agreement if they are concerned about future freeze‑outs or self‑dealing. Relying on courts to extend corporate oppression doctrines to LLCs is risky under current law.
• Be Clear About Fiduciary Duties: Operating agreements can specify whether members (especially controlling members) owe fiduciary duties to each other and define the scope of such duties. Absent such provisions, courts are reluctant to create new duties judicially.

B. For Litigation Strategy in Business Disputes

The case also carries important lessons for litigators:

• Preserve All Theories: Arguments about compliance with each contractual element (such as different subsections of a transfer provision) must be made in the trial court and then explicitly preserved and briefed on appeal. Otherwise, they are waived.
• Plead Derivative Claims When Appropriate: Where misconduct primarily harms the LLC, a derivative claim is essential. Attempting to shoehorn such conduct into individual fiduciary duty or constructive fraud claims is unlikely to succeed without proof of a distinct injury.
• Use Corporate Analogies Carefully: Though helpful rhetorically, analogies to corporate minority oppression will not automatically persuade a court to depart from LLC contract principles, especially when the operating agreement is detailed and negotiated.
• Reconsideration Motions Are Not for New Arguments: Gvest’s unsuccessful attempt to raise new arguments on reconsideration is a reminder that reconsideration is not a second chance to present legal theories that could have been raised earlier.

C. For Future Development of North Carolina LLC Law

While the court resists expanding fiduciary duties in this case, it signals that the issue is not closed. As LLCs increasingly displace corporations as the entity of choice for closely‑held businesses, courts may confront situations where:

• A majority (or supermajority) of members controls manager appointment and removal, and
• The operating agreement either is silent on minority protections or is applied in ways that seem plainly opportunistic or oppressive.

In such cases, and perhaps in response to legislative changes, North Carolina courts could revisit whether:

• Majority members in an LLC should owe some form of oppression‑based fiduciary duty to minority members, and
• Members with the power to appoint or remove managers carry fiduciary obligations similar to controlling shareholders in corporations.

For now, however, Gvest solidifies a clear rule: under existing North Carolina law, a coalition of minority members forming a majority does not, by that fact alone, owe a fiduciary duty to minority members. The baseline remains contractual.

V. Conclusion

Gvest Real Estate, LLC v. JS Real Estate Investments, LLC is an important reaffirmation of the contractual character of LLCs in North Carolina and a caution against casually importing corporate minority oppression doctrine into the LLC context.

On the membership transfer issue, the court enforces the Operating Agreement’s formal requirements strictly. Intent to transfer and tax filings cannot substitute for the absence of written consents and other mandated documentation, especially where the agreement explicitly renders non‑compliant transfers “invalid, null and void.”

On the fiduciary duty and constructive fraud claims, the court draws a firm line: absent a recognized fiduciary relationship—whether statutory, contractual, or arising from a singular controlling member—no fiduciary duty exists between a majority coalition of LLC members and a minority member. Injuries from self‑dealing transactions that primarily harm the LLC must be pursued derivatively, not through individual fiduciary duty or constructive fraud claims.

At the same time, the opinion leaves the door ajar for future evolution, hinting that majority members, especially in manager‑managed LLCs where they control manager appointment, might one day be seen as owing duties similar to those of controlling shareholders in corporations. Until then, the burden remains on LLC members to negotiate and document their rights and protections explicitly in their operating agreements, and on litigants to frame their claims within the existing contours of LLC and derivative‑action doctrine.