Mauck v. Cherry Oil Co.: Put/Call Shareholder Agreements Can Defeat Meiselman Dissolution Absent Pleaded “Reasonable Necessity” Under N.C.G.S. § 55-14-30(2)(ii)

Introduction

This North Carolina Supreme Court decision addresses when a minority shareholder in a closely held corporation may obtain judicial dissolution under N.C.G.S. § 55-14-30(2)(ii) despite having a bargained-for exit right in a shareholder agreement. Cherry Oil Co., a family-owned fuel distribution company, became the locus of a governance and control dispute between two branches of the Cherry family: Armistead and Louise Mauck (34% shareholders) and Jay and Ann Cherry (66% shareholders).

After the majority removed Louise from the board and invoked a call provision to repurchase the Maucks’ shares at fair market value under a 1998 Shareholder Agreement, the relationship deteriorated and the buyout did not close. The Maucks sued, seeking, among other relief, judicial dissolution on a Meiselman theory that their reasonable expectations had been frustrated. The Business Court dismissed the dissolution claim for lack of standing and later granted summary judgment on the remaining claims. On appeal, the Supreme Court clarifies both the standing framework and the substantive pleading requirements for dissolution in light of contractual put/call rights.

Key issues included:

Whether minority shareholders have standing to seek dissolution under § 55-14-30(2)(ii) where a shareholder agreement provides a put/call buyout at fair market value.
Whether, at the pleadings stage, a Meiselman-style claim for dissolution can proceed when the complaint itself discloses a contractually guaranteed liquidity mechanism materially equivalent (to the plaintiffs) to dissolution.
How statutory changes to the North Carolina Business Corporation Act since Meiselman affect the remedies available and the allegations required to state a claim for dissolution.

Summary of the Opinion

The Supreme Court modified and affirmed the Business Court’s rulings. It held:

Standing exists: The Maucks, as shareholders invoking a statutory right under § 55-14-30(2)(ii), fall within the class of persons authorized to sue and alleged a cognizable legal injury. The Business Court erred in dismissing for lack of standing.
But the dissolution claim fails on the merits at the pleading stage (Rule 12(b)(6)): The complaint, read with the 1998 Shareholder Agreement, did not allege facts showing that dissolution—rather than the contractually guaranteed buyout—was “reasonably necessary” to protect the plaintiffs’ rights or interests. Because the put/call mechanism afforded materially equivalent liquidity to the plaintiffs without the collateral harms of winding up the enterprise, the complaint failed to plead the fourth element of a Meiselman claim.
Scope is narrow: The Court did not hold that buy/sell provisions defeat dissolution claims in all cases, nor that reasonable expectations are confined to the four corners of corporate documents. Rather, where a complaint discloses a guaranteed buyout remedy and pleads no facts showing why dissolution itself is necessary under all the circumstances, dismissal is appropriate.
Other claims affirmed: The Supreme Court affirmed the Business Court’s dismissals and summary judgment on the remaining claims, noting they were highly fact-bound and did not warrant further elaboration.

Chief Justice Newby concurred in part and in the result in part. He agreed dismissal was proper under Rule 12(b)(6) and emphasized that, by virtue of § 55-7-31(b)(8), shareholder agreements in non-public corporations can define and protect shareholders’ rights; where a put/call provision exists, dissolution is not “reasonably necessary,” and the complaint discloses a fact that defeats the claim.

Analysis

Precedents Cited and How They Shaped the Decision

Meiselman v. Meiselman, 309 N.C. 279 (1983): The cornerstone of minority shareholder protection in closely held corporations. Meiselman recognized that minority shareholders’ “reasonable expectations,” including participation in management, are protectable under what is now § 55-14-30(2)(ii). The Supreme Court here adopts a four-part framing: (1) a reasonable expectation known to or assumed by the majority; (2) frustration of that expectation; (3) frustration not caused by the plaintiff; and (4) that, under all the circumstances, judicial dissolution is reasonably necessary to protect the shareholder’s interests. The Court emphasizes that, given statutory amendments since Meiselman, a plaintiff must now plead entitlement to dissolution itself, not merely alternative equitable relief.
Brady v. Van Vlaanderen, 261 N.C. App. 1 (2018), disc. rev. denied, 372 N.C. 57 (2019): Cited to underscore that, under the current Act, “the only equitable remedy a trial court may award is dissolution,” with a corporation’s post-determination right to elect a buyout at “fair value” under § 55-14-31(d). This reinforces that plaintiffs must plead why dissolution is warranted; the court no longer has broad authority to craft non-dissolution equitable remedies in the first instance.
Committee to Elect Dan Forest v. Employees Political Action Committee, 376 N.C. 558 (2021): Clarifies standing in statutory causes of action. If a plaintiff alleges infringement of a statutorily created right and is within the statute’s protected class, standing is satisfied. Applied here, the Maucks had standing because § 55-14-30(2) authorizes “a proceeding by a shareholder” alleging impairment of rights or interests.
United Daughters of the Confederacy, N.C. Div. v. City of Winston-Salem, 383 N.C. 612 (2022): On standards for Rule 12(b)(1) vs. 12(b)(6) review. Standing is jurisdictional, but merits sufficiency belongs under Rule 12(b)(6). The Business Court conflated the two.
Orlando Residence, Ltd. v. Alliance Hospital Management, LLC, 375 N.C. 140 (2020): Appellate courts may affirm on alternate grounds. The Supreme Court used this to affirm dismissal under Rule 12(b)(6) though the Business Court relied on Rule 12(b)(1).
Bridges v. Parrish, 366 N.C. 539 (2013); Jackson v. Bumgardner, 318 N.C. 172 (1986); Stanback v. Stanback, 297 N.C. 181 (1979); Wray v. City of Greensboro, 370 N.C. 41 (2017): Classical Rule 12(b)(6) authorities. They support dismissing when the complaint fails to allege essential elements, is defeated by its own facts, or rests on unwarranted legal conclusions. The Court also cites Ladd v. Estate of Kellenberger, 314 N.C. 477 (1985), permitting consideration of documents attached to or incorporated into the complaint—in this case, the controlling Shareholder Agreement with the put/call rights.
Christenbury Eye Center, P.A. v. Medflow, Inc., 370 N.C. 1 (2017): Cited below on limitations for an unrelated contract claim; also referenced regarding the liberal pleading lens for a Rule 12(b)(6) motion.
Sykes v. Health Network Solutions, Inc., 372 N.C. 326 (2019): Standard of review for summary judgment and de novo legal conclusions.
Fearrington v. City of Greenville, 386 N.C. 38 (2024): North Carolina’s liberal approach to standing—the “courthouse doors” remain open to those alleging legal injury.
Vanguard Pai Lung, LLC v. Moody, 387 N.C. 376 (2025): The Court uses it to decline extended discussion on fact-bound rulings that add little to jurisprudence; supports affirming other Business Court rulings without elaboration.

Legal Reasoning

1) Standing is distinct from merits

The Court corrects the Business Court’s standing analysis. Section 55-14-30(2) creates a cause of action for dissolution “in a proceeding by a shareholder” based on impairment of the shareholder’s “rights or interests.” The Maucks alleged precisely that. Whether a shareholder agreement ultimately defeats relief is a merits question, not a jurisdictional one. Thus, standing was satisfied.

2) Pleading a Meiselman claim now requires pleading why dissolution itself is “reasonably necessary”

The Court integrates Meiselman’s reasonable-expectations framework with the post-1989 Business Corporation Act. Under the current statute, trial courts do not fashion non-dissolution equitable remedies as an initial matter, and a corporation’s statutory right to opt for a buyout at “fair value” arises only after the court determines dissolution would otherwise be appropriate. Consequently, plaintiffs must plead facts showing why judicial dissolution—rather than some other outcome—is “reasonably necessary” to protect their rights or interests.

The Court’s four-element articulation focuses the inquiry:

Existence of a reasonable expectation known to the majority.
Frustration of that expectation.
Lack of fault by the plaintiff.
Under all the circumstances, judicial dissolution is warranted and reasonably necessary to protect the shareholder’s interests.

3) Why the Maucks’ complaint failed the fourth element

The complaint revealed a critical fact: a comprehensive, enforceable put/call mechanism in the 1998 Shareholder Agreement that guarantees a buyout at fair market value, with a valuation process and the availability of specific performance. Cherry Oil had already invoked the call. This contractual pathway provided the very liquidity dissolution is designed to provide to trapped minority shareholders, without the broader harms of liquidation: firing employees, selling assets, and destroying the going concern.

The Court notes that the plaintiffs’ claimed expectation of continued management participation, even if cognizable, is not vindicated by dissolution—dissolution eliminates the entity (and any management role) altogether. In both buyout and dissolution scenarios, the plaintiffs part ways with the company. Because the complaint did not explain why dissolution is necessary notwithstanding the existing buyout mechanism, it failed to plead the fourth element.

4) The holding is narrow

The Court is explicit: this is not a categorical rule that buy-sell provisions always bar dissolution. Reasonable expectations are not confined to corporate documents. But where a complaint discloses a guaranteed buyout remedy materially equivalent to dissolution for the complaining shareholder, and fails to allege facts showing why dissolution is still “reasonably necessary” under all the circumstances, dismissal under Rule 12(b)(6) is appropriate.

5) The concurrence’s emphasis on shareholder agreements

Chief Justice Newby would resolve the case on an even more straightforward basis: Rule 12(b)(6) dismissal is warranted because the complaint discloses a put/call provision that protects the plaintiffs’ rights and interests, making dissolution not “reasonably necessary” as a matter of law. He grounds this in § 55-7-31(b)(8), which validates shareholder agreements in non-public corporations even when they reallocate or govern corporate powers and internal relations, so long as not contrary to public policy. He also observes that while “fair market value” (contract) and “fair value” (statutory buyout under § 55-14-31(d)) are distinct concepts, the difference is not determinative here.

Impact

This decision will significantly influence the pleading and litigation of minority oppression claims in North Carolina:

Pleading burden rises when buy-sell rights exist: Plaintiffs must plead specific facts explaining why dissolution, not just liquidity, is necessary to protect their rights. Mere frustration of expectations—without allegations that the contractual exit is unavailable, illusory, being thwarted in bad faith, or otherwise inadequate—will likely be insufficient.
Contract enforcement will be front and center: Courts will steer parties toward enforcing bargained-for exit mechanisms (including specific performance) rather than dismantling ongoing businesses absent compelling necessity.
Drafting implications: Closely held companies should expect increased emphasis on robust buy-sell provisions. Clear procedures for valuation, timing, financing, dispute resolution, and specific performance will be pivotal. Boards and counsel should maintain documented efforts to effectuate buyouts to blunt claims that dissolution is necessary.
Standing clarity: The opinion reinforces that statutory standing is satisfied when plaintiffs fall within the protected class and allege infringement of the statutory right. Trial courts should avoid conflating standing with the merits.
Reasonable expectations beyond documents—but remedies must fit: While expectations can arise from conduct, course of dealing, and understandings, the relief must match the injury. Where the expectation is continued participation in management, plaintiffs must articulate how dissolution (which ends the entity) protects that expectation better than a buyout or contract remedy.
Business Court practice: Parties should anticipate early Rule 12(b)(6) challenges pegged to shareholder agreements attached to complaints. If a put/call exists, plaintiffs must plead why it does not protect their rights in the circumstances (e.g., non-enforceability, impossibility, bad faith obstruction, inadequate valuation method, or unique harms only addressable by dissolution).

Complex Concepts Simplified

Judicial dissolution: A court-ordered process to wind up and terminate a corporation, sell assets, pay creditors, and distribute remaining value to shareholders. It is an extreme, equitable remedy.
Meiselman claim: A minority shareholder action in a closely held corporation asserting that the majority frustrated the shareholder’s reasonable expectations (e.g., a role in management, employment, profit participation). Relief is now channeled through § 55-14-30(2)(ii) and must be dissolution (subject to a later corporate election to buy out under § 55-14-31(d)).
“Reasonably necessary” under § 55-14-30(2)(ii): The plaintiff must show that dissolution itself, not merely a buyout or other remedy, is necessary to protect their rights or interests in light of all circumstances.
Put/Call provision: A contractual mechanism allowing either the shareholder (put) to force the company to buy their shares, or the company (call) to compel the shareholder to sell, typically at a defined valuation (here, fair market value) and on specified terms. These provisions create liquidity for otherwise illiquid minority interests.
Fair market value vs. fair value: Fair market value generally reflects the price a willing buyer and seller would agree on in an open market, often incorporating discounts for minority status or lack of marketability. Fair value (as used in appraisal and § 55-14-31(d)) is a statutory term that typically excludes such discounts unless the court decides otherwise. The concurrence notes this distinction but deems it non-dispositive here.
Rule 12(b)(1) vs. Rule 12(b)(6): Rule 12(b)(1) addresses the court’s power to hear the case (jurisdiction, including standing). Rule 12(b)(6) tests the legal sufficiency of the complaint. Here, the Supreme Court found standing but concluded the complaint did not state a claim for dissolution.
Documents considered on a motion to dismiss: Courts may consider documents attached to or incorporated into the complaint (e.g., the shareholder agreement) when deciding Rule 12(b)(6) motions.
§ 55-7-31(b)(8) agreements: In non-public corporations, shareholder agreements that govern internal powers and relationships are enforceable even if they depart from default corporate rules, so long as they do not violate public policy.
Business judgment rule: A presumption that directors act in good faith and in the best interests of the corporation; plaintiffs must plead facts rebutting the presumption to sustain certain claims. The Business Court found the complaint insufficient in this respect on derivative claims.
Derivative vs. individual claims: Derivative claims seek redress for harm to the corporation; individual claims address harm to the shareholder personally. The Business Court characterized many of the Maucks’ allegations as a family power struggle without corporate injury, undercutting derivative standing.

Practice Pointers

For minority shareholders: If a buy-sell agreement exists, plead specific facts showing why dissolution, not the contract remedy, is necessary (e.g., buyout is illusory; majority is thwarting or cannot perform; valuation method ensures unfairness; unique harms can only be addressed through dissolution).
For majority owners and boards: Maintain clear records showing good-faith efforts to execute contractual buyouts, follow valuation procedures, and offer closing within agreed timelines. This strengthens arguments that dissolution is unnecessary.
Drafting shareholder agreements: Incorporate detailed valuation procedures, timelines, financing terms, dispute-resolution mechanisms, and an express right to specific performance. Consider how “fair market value” vs. “fair value” aligns with the parties’ expectations.
Pleadings strategy: Attach the operative shareholder agreements if you intend to rely on them. Plaintiffs should prepare to address them head-on; defendants should use them to support Rule 12(b)(6) motions.

Conclusion

Mauck v. Cherry Oil Co. delivers two clarifications of statewide importance. First, it reaffirms that statutory standing is satisfied when the plaintiff alleges a legal injury recognized by statute and falls within the class authorized to sue; courts should not convert merits determinations into jurisdictional dismissals. Second, and more consequential for closely held corporate disputes, it tightens the Meiselman pleading standard in the era of the revised Business Corporation Act: plaintiffs must allege why judicial dissolution itself is reasonably necessary to protect their rights or interests, especially where a shareholder agreement affords a guaranteed buyout remedy.

The Court’s narrow holding respects shareholder autonomy to pre-negotiate orderly exits and reserves dissolution—“strong medicine”—for those cases where a contractual buyout cannot or does not protect minority rights. While it does not make buy-sell provisions an absolute bar to dissolution, it requires a concrete, fact-based explanation of necessity that goes beyond general allegations of frustration. The decision will likely channel future disputes toward enforcing shareholder agreements and away from the corporate death penalty, unless plaintiffs can plead and prove that only dissolution can cure the injury.