Mar. Advisors, LLC v. HC Composites, LLC

• Court: Court of Appeals of North Carolina
• Decided: October 15, 2025
• Docket: 25-40
• Status: Published

Opinion

IN THE COURT OF APPEALS OF NORTH CAROLINA

No. COA25-40

Filed 15 October 2025

Edgecombe County, No. 22CVS000007-320

MARITIME ADVISORS, LLC (formerly MARINE INDUSTRY ADVISORS, LLC), Plaintiff,

v.

HC COMPOSITES, LLC, Defendant.

Appeal by plaintiff from order entered 24 June 2024 by Judge Timothy W.

Wilson in Edgecombe County Superior Court. Heard in the Court of Appeals 13

August 2025.

Pritchett & Burch, PLLC, by L. Clifton Smith, III, for plaintiff-appellant.

Bryant Duke Paris III PLLC, by Bryant Duke Paris III; and Scialdone Law Firm, by Katherine Walton Halliday, for defendant-appellee.

FLOOD, Judge.

Plaintiff Maritime Advisors, LLC1 appeals from the trial court’s order granting

Defendant HC Composites, LLC’s motion to dismiss, and denying Plaintiff’s motion

to amend for substitution or alternatively for joinder of a proper plaintiff (hereinafter

Plaintiff’s “motion to substitute”). On appeal, Plaintiff argues that the trial court

erred in failing to grant Plaintiff’s motion to substitute Marine Industry Advisors,

1 Plaintiff’s caption in this case is “Maritime Advisors, LLC (formerly Marine Industry Advisors, LLC)”; Plaintiff, however, is a distinct entity from Marine Industry Advisors, LLC. MAR. ADVISORS, LLC V. HC COMPOSITES, LLC

Opinion of the Court

LLC (“MIA”) as the “real party in interest[,]” pursuant to Rule 17 of the North

Carolina Rules of Civil Procedure. Upon review, we conclude: first, Plaintiff lacked

standing to bring the underlying action; and second, because MIA also lacked

standing, the trial court did not abuse its discretion in denying Plaintiff’s motion to

substitute pursuant to Rule 17 and properly granted Defendant’s motion to dismiss.

We therefore affirm the trial court’s order.

I. Factual and Procedural Background

On 31 October 2011, MIA was organized under the laws of the Commonwealth

of Massachusetts, and Henry Chris Lufkin was listed as the sole managing member

of the limited liability company (“LLC”). On 30 June 2016, MIA was involuntarily

dissolved. On 26 July 2018, MIA and Defendant entered into a contract titled

“Authorized Sales Representation Agreement” (the “Agreement”), which concerned

boat sales. MIA and Defendant entered into the Agreement more than two years after

MIA was involuntarily dissolved. On 21 October 2018, Plaintiff was formed under the

laws of the Commonwealth of Massachusetts as “Maritime Advisors, LLC[,]” and

Lufkin was listed as the sole managing member. On 30 June 2021, Plaintiff was also

involuntarily dissolved. Plaintiff and MIA had never merged and remain separate

entities.

On 4 January 2022, several months following its dissolution, Plaintiff filed a

complaint for breach of contract and quantum meruit against Defendant, alleging

Defendant breached the Agreement. On 11 March 2024, Defendant filed a motion to

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dismiss, arguing Plaintiff lacked standing to file its complaint, and the trial court

therefore lacked subject matter jurisdiction. On 25 March 2024, Plaintiff filed its

motion to substitute, seeking to substitute or join MIA on the basis that, as of 22

March 2024, MIA had been reinstated. On 24 June 2024, the trial court entered an

order granting Defendant’s motion to dismiss and denying Plaintiff’s motion to

substitute. Plaintiff timely appealed.

II. Jurisdiction

This Court has jurisdiction to review this appeal from a final judgment of a

superior court, pursuant to N.C.G.S. § 7A-27(b) (2023).

III. Standard of Review

“A ruling on a motion to dismiss for want of standing is reviewed de novo.”

Ring v. Moore Cnty., 257 N.C. App. 168, 170 (2017) (citation omitted).

“Under a de novo review, the court considers the matter anew and freely substitutes

its own judgment for that of the lower tribunal.” In re S.W., 914 S.E.2d 457, 461 (N.C.

Ct. App. 2025) (citation omitted). “In our de novo review of a motion to dismiss for

lack of standing, we view the allegations as true and the supporting record in the

light most favorable to the non-moving party.” Ring, 257 N.C. App. at 170 (citation

omitted).

“A trial court’s order denying a motion to substitute a party is reviewed for an

abuse of discretion.” Key Risk Ins. Co. v. Peck, 252 N.C. App. 127, 129 (2017). “The

test for abuse of discretion requires the reviewing court to determine whether a

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decision is manifestly unsupported by reason, or so arbitrary that it could not have

been the result of a reasoned decision.” Troublefield v. AutoMoney, Inc., 284 N.C. App.

494, 511 (2022) (citation and internal quotation marks omitted).

IV. Analysis

On appeal, Plaintiff argues the trial court erred in failing to grant Plaintiff’s

motion to substitute MIA as the “real party in interest[,]” pursuant to Rule 17 of the

North Carolina Rules of Civil Procedure. We address initially whether Plaintiff or

MIA, as Plaintiff’s alleged substitute, had standing to bring the underlying action.

A. Plaintiff’s Standing

As a preliminary matter, we must address Plaintiff’s standing, because “the

substantive issues cannot be considered unless the party raising them has the

capacity to do so.” Beech Mountain Prop. Owners’ Ass’n v. Current, 35 N.C. App. 135,

136 (1978); see also Prevette v. Elsner, 917 S.E.2d 275, 280 (N.C. Ct. App. 2025)

(“Before reaching these merits, however, we must first determine whether Plaintiffs

have standing to bring this action.”).

“Standing refers to whether a party has a sufficient stake in an otherwise

justiciable controversy so as to properly seek adjudication of the matter.” Coderre v.

Futrell, 224 N.C. App. 454, 457 (2012) (citation omitted). “Standing is a necessary

prerequisite to a court’s proper exercise of subject matter jurisdiction.” Ring, 257 N.C.

App. at 170; see also Coderre, 224 N.C. App. at 457 (citation omitted) (“If a party does

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not have standing to bring a claim, a court has no subject matter jurisdiction to hear

the claim.”).

Under Rule 17 of the North Carolina Rules of Civil Procedure, “[e]very claim

shall be prosecuted in the name of the real party in interest[.]” N.C.R. Civ. P. 17(a).

“In the context of a breach of contract claim, the parties who execute an agreement

are real parties in interest and have standing to sue.” King Fa, LLC v. Ming Xen

Chen, 248 N.C. App. 221, 224–25 (2016) (emphasis in original). Rule 17 further

provides, however, that

[n]o action shall be dismissed on the ground that it is not prosecuted in the name of the real party in interest until a reasonable time has been allowed after objection for ratification of commencement of the action by, or joinder or substitution of, the real party in interest; and such ratification, joinder, or substitution shall have the same effect as if the action had been commenced in the name of the real party in interest.

N.C.R. Civ. P. 17(a).

Here, Plaintiff lacked standing “so as to properly seek adjudication of the

matter.” Coderre, 224 N.C. App. at 457 (citation omitted). The Agreement was entered

between MIA and Defendant; Plaintiff was not a party to the Agreement, was not

named in the Agreement, and did not exist at the time of the formation of the

Agreement. Additionally, although Lufkin was the sole managing member of both

Plaintiff and MIA and signed the Agreement, Lufkin was not a party to the

Agreement. Accordingly, because Plaintiff did not execute the Agreement, Plaintiff

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was not a “real party in interest,” and therefore lacked standing. See King Fa, LLC,

248 N.C. App. at 224–25; see also Coderre, 224 N.C. App. at 457.

B. MIA’s Standing Pursuant to Motion to Substitute

We next address whether MIA could be substituted in as a “real part[y] in

interest and ha[s] standing to sue.” King Fa, LLC, 248 N.C. App. at 224–25. Plaintiff

argues that the trial court erred in failing to grant Plaintiff’s motion to substitute,

specifically contending MIA is “not subject to the terms of N.C.G.S. § 105-231”; and

that the “Internal Affairs Doctrine” required the trial court to apply the law of

Massachusetts “to determine the corporate status and powers of” MIA; and that law

allows for ratification of MIA’s act of entering into the Agreement with Defendant

during the period of MIA’s suspension. We agree that MIA is “not subject to the terms

of N.C.G.S. § 105-231[,]” and disagree with Plaintiff’s argument concerning the

internal affairs doctrine.

1. Agreement Ratification Pursuant to North Carolina Law

a. Applicability of N.C.G.S. § 105-230(b)

Under N.C.G.S. § 105-230(b), “[a]ny act performed or attempted to be

performed during the period of suspension is invalid and of no effect, unless the

Secretary of State reinstates the corporation or limited liability company . . . .”

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N.C.G.S. § 105-230(b) (2023).2 This statute “applies only to entities whose articles of

incorporation, articles of organization, or certificate of authority have been suspended

by the State of North Carolina. It does not apply to entities that have been subject to

similar actions in other states.” Griffith v. Glen Wood Co., 184 N.C. App. 206, 211–12

(2007) (citation and internal quotation marks omitted) (emphasis in original).

Here, while North Carolina law permits ratification of acts taken by an LLC

during a period of suspension, as Plaintiff correctly contends in its brief, this

provision applies only to LLCs or corporations suspended by the State of North

Carolina. See id. at 211–12; see also N.C.G.S. § 105-230(b). Accordingly, because MIA

was involuntarily dissolved by the Commonwealth of Massachusetts, we agree with

Plaintiff that MIA is not subject to N.C.G.S. § 105-230(b). See Griffith, 184 N.C. App.

at 211–12; see also N.C.G.S. § 105-230(b).

b. Internal Affairs Doctrine

Under North Carolina law:

The internal affairs doctrine is a conflict of laws principle which recognizes that only one State should have the authority to regulate a corporation’s internal affairs— matters peculiar to the relationships among or between the corporation and its current officers, directors, and shareholders—because otherwise a corporation could be faced with conflicting demands.

2 In its brief, Plaintiff cites to the incorrect statute, as N.C.G.S. § 105-231 was recodified as

N.C.G.S. § 105-230(b), pursuant to Session Law 1998-212, effective 1 January 1999. See N.C.G.S. § 105-231 (2023) (recodified as N.C.G.S. § 105-230(b)).

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Bluebird Corp. v. Aubin, 188 N.C. App. 671, 680 (2008). The internal affairs doctrine

requires application of the law of the jurisdiction where the foreign corporation is

incorporated. See N.C.G.S. § 55-7-47 (2023) (“In any derivative proceeding in the right

of a foreign corporation, the matters covered by this Part shall be governed by the

laws of the jurisdiction of incorporation of the foreign corporation . . . .”); see also

Bluebird Corp., 188 N.C. App. at 673, 680—81 (applying the law of New York under

the internal affairs doctrine where the plaintiff was a New York corporation);

Atherton v. F.D.I.C., 519 U.S. 213, 224 (1997) (“States normally look to the State of a

business’ incorporation for the law that provides the relevant corporate governance

general standard of care.”).

Here, the internal affairs doctrine is inapplicable, because the doctrine applies

specifically to the internal affairs of corporations—namely, to “matters peculiar to the

relationships among or between the corporation and its current officers, directors,

and shareholders”—rather than to the internal affairs of LLCs, which are entities

separate and distinct from corporations and differing in management structures,

operating formalities, and tax statuses. See Bluebird Corp., 188 N.C. App. at 680; see

also Hamby v. Profile Prods., L.L.C., 361 N.C. 630, 636 (2007) (“An LLC is a statutory

form of business organization . . . that combines characteristics of business

corporations and partnerships . . . . [T]he North Carolina Limited Liability Company

Act provides for the formation of a business entity combining the limited liability of

a corporation and the more simplified taxation model of a partnership.”) (citation and

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internal quotation marks omitted). Because MIA is an LLC rather than a corporation,

the internal affairs doctrine does not apply to the “internal affairs” of MIA. See

Bluebird Corp., 188 N.C. App. at 680; see also Hamby, 361 N.C. at 636. Because the

internal affairs doctrine is inapplicable, we are not “require[d to] appl[y] the law of

the jurisdiction where the foreign corporation is incorporated”—in this instance, the

law of Massachusetts—and therefore do not reach Plaintiff’s argument concerning

ratification of MIA’s acts under Massachusetts law. See N.C.G.S. § 55-7-47.

2. Motion to Substitute

Here, although MIA entered into the Agreement with Defendant, MIA had

been involuntarily dissolved prior to the execution of the Agreement, and as explained

previously, MIA’s act of entering into the Agreement cannot be ratified pursuant to

North Carolina law. See N.C.G.S. § 105-230(b); Bluebird Corp., 188 N.C. App. at 680.

MIA was thus, like Plaintiff, not a “real party in interest,” and therefore lacked

standing in the underlying action. See King Fa, LLC, 248 N.C. App. at 224–25; see

also Coderre, 224 N.C. App. at 457.

Accordingly, because MIA was not a real party in interest, and thus lacked

standing, the trial court did not abuse its discretion in denying Plaintiff’s motion to

substitute. See Key Risk Ins. Co., 252 N.C. App. at 129. Further, viewing the

allegations as true and in a light most favorable to Plaintiff, because both Plaintiff

and MIA lacked standing, the trial court lacked subject matter jurisdiction, and

therefore properly granted Defendant’s motion to dismiss. See Ring, 257 N.C. App. at

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170; see also Coderre, 224 N.C. App. at 457; N.C.R. Civ. P. 17(a); King Fa, LLC, 248

N.C. App. at 224–25. We therefore affirm the trial court’s order.

V. Conclusion

Upon review, we conclude: first, Plaintiff lacked standing to bring the

underlying action; and second, because MIA also lacked standing, the trial court did

not abuse its discretion in denying Plaintiff’s motion to substitute pursuant to Rule

17 and properly granted Defendant’s motion to dismiss. We therefore affirm the trial

court’s order.

AFFIRMED.

Judges STROUD and FREEMAN concur.

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