Elon Law professors Haile and Molony continue “Business Law Developments” series in N.C. Bar Association’s quarterly publication
Elon Law professors Andrew Haile and Thomas Molony analyzed two recent rulings of the North Carolina Court of Appeals and one from the North Carolina Business Court as they continued their "Business Law Developments" series in the June, 2009 edition of Notes Bearing Interest, a quarterly publication of the N.C. Bar Association.
In their review of Walmart Stores East, Inc. v. Hinton, a case decided by the Wake County Superior Court and upheld by the N.C. Court of Appeals, Haile and Molony express concern about the ruling, writing, “The Court’s interpretation of N.C. Gen. Stat. § 105-130.6 offers the Secretary of Revenue sweeping authority to require related companies to consolidate their returns and leaves taxpayers with little guidance as to when the Secretary may do so.” The case centered around Walmart’s 1996 move to transfer all of its North Carolina stores to a Delaware real estate investment trust, resulting in the underpayment of its N.C. taxes by $30 million between 1998 and 2002.
Haile and Molony also reviewed Kaplan v. O.K. Technologies, LLC, a N.C. Business Court case upheld by the N.C. Court of Appeals addressing the issue of whether members of North Carolina limited liability companies owe a fiduciary duty to one another. The Appellate Court found that they do not owe such a duty, to which Haile and Molony respond “Kaplan underscores once again that the fiduciary duties of a member/creditor of an LLC mirror those of a shareholder/creditor of a corporation.”
In their final commentary of Mitchell, Brewer, Richardson, Adams, Burge & Boughman, PLLC v. Brewer, Haile and Molony, commenting on the N.C. Business Court’s interpretation of the LLC Act, write, “The Business Court appears to have reached the correct result in Mitchell, Brewer by resorting to equity. The General Assembly should amend the LLC Act . . . absent an amendment, it is critical that parties address voluntary member withdrawal in an LLC’s articles of organization or written operating agreement, and even if the LLC Act is amended, it still will be a good idea for parties to do so.”
To read “Business Law Developments” in its entirety, click on the E-Cast link to the right of this article.
- Tiffany N. Dyson, L'11