§ 57C-8-01. Members' derivative actions.
Article 8.
Derivative Actions.
§ 57C‑8‑01. Members' derivative actions.
(a) A member may bringan action in the superior court of this State in the right of any domestic orforeign limited liability company to recover a judgment in its favor if thefollowing conditions are met:
(1) The plaintiff doesnot have the authority to cause the limited liability company to sue in its ownright; and
(2) The plaintiff (i) isa member of the limited liability company at the time of bringing the action,and (ii) was a member of the limited liability company at the time of thetransaction of which the plaintiff complains, or the plaintiff's status as amember of the limited liability company thereafter devolved upon the plaintiffpursuant to the terms of the operating agreement from a person who was a memberat such time.
(b) The complaint shallallege with particularity the efforts, if any, made by the plaintiff to obtainthe action the plaintiff desires from the managers, directors, or otherapplicable authority and the reasons for the plaintiff's failure to obtain theaction, or for not making the effort. Whether or not a demand for action wasmade, if the limited liability company commences an investigation of thecharges made in the demand or complaint, the court may stay any proceedinguntil the investigation is completed.
(c) Upon motion of thelimited liability company, the court may appoint a committee composed of two ormore disinterested managers, directors, or other disinterested persons,acceptable to the limited liability company, to determine whether it is in thebest interest of the limited liability company to pursue a particular legalright or remedy. The committee shall report its findings to the court. Afterconsidering the report and any other relevant evidence, the court shalldetermine whether the proceeding should be continued or not.
(d) No action on behalfof a limited liability company shall be discontinued, dismissed, compromised,or settled without the approval of the court. If the court shall determine thatthe interest of the members or any class or classes thereof or of the creditorsof the limited liability company will be substantially affected by suchdiscontinuance, dismissal, compromise, or settlement, the court, in itsdiscretion, may direct that notice, by publication or otherwise, shall be givento such members or creditors whose interests it determines will be so affected.If notice is so directed to be given, the court may determine which one or moreof the parties to the action shall bear the expense of giving the same, in suchamount as the court shall determine and find to be reasonable in thecircumstances, and the amount of such expense shall be awarded as costs of theaction.
(e) If the action onbehalf of the limited liability company is successful, in whole or in part,whether by means of a compromise and settlement or by a judgment, the court mayaward the plaintiff the reasonable expenses of maintaining the action,including reasonable attorneys' fees, and shall direct the plaintiff to accountto the limited liability company for the remainder of any proceeds of theaction.
(f) In any such actionthe court, upon final judgment and a finding that the action was broughtwithout reasonable cause, may require the plaintiff or plaintiffs to pay to thedefendant or defendants the reasonable expenses, including attorneys' fees,incurred by them in the defense of the action.
(g) In proceedingshereunder, no member shall be entitled to obtain or have access to anycommunication within the scope of the limited liability company's attorney‑clientprivilege which could not be obtained by or would not be accessible to a partyin an action other than on behalf of the limited liability company. (1993, c. 354, s. 1; 2001‑387,ss. 90, 91.)