EXTRA CARE, LLC v. CAROLINAS ALL. FOR RESIDENTIAL EXCELLENCE, LLC, 2024 NCBC 41

STATE OF NORTH CAROLINA
COUNTY OF BRUNSWICK
IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
23 CVS 2191
EXTRA CARE, LLC,
Plaintiff,
v. 	ORDER AND OPINION ON
DEFENDANTS’ MOTION TO
DISMISS
CAROLINAS ALLIANCE FOR
RESIDENTIAL EXCELLENCE,
LLC; CAROLINAS ALLIANCE FOR
RESIDENTIAL EXCELLENCE –
ELKIN, LLC; C.A.R.E. HOLDINGS –
INDIAN RIVER, LLC; and C.A.R.E.
HOLDINGS – ELKIN, LLC,
Defendants.
I. 	INTRODUCTION
1. 	Extra Care, LLC (“Extra Care”) is a member of each of the North
Carolina limited liability companies named as defendants in this action: 	Carolinas
Alliance 	for 	Residential 	Excellence, 	LLC, 	Carolinas 	Alliance 	for 	Residential
Excellence – Elkin, LLC, C.A.R.E. Holdings – Indian River, LLC, and C.A.R.E.
Holdings – Elkin, LLC, (collectively “the Companies”). 	This matter is before the
Court on the Companies’ motion to dismiss Extra Care’s claim with respect to records
inspection rights afforded members of an LLC by Section 57D-3-04 of the North
Carolina General Statutes. (Am. Mot. Dismiss [“Motion”], ECF No. 21.) The Motion
is brought pursuant to both Rules 12(b)(1) and 12(b)(6) of the North Carolina Rules
of Civil Procedure (“Rule[s]”).
Extra Care, LLC v. Carolinas All. for Residential Excellence, LLC, 2024 NCBC 41.

2. 	Having considered the parties’ briefs and the arguments of counsel at a
hearing held on 10 June 2024, the Court, in its discretion, hereby GRANTS the
Motion and DISMISSES this action.
Ward and Smith, P.A., by Christopher Edwards, Hannah Morgan Daigle, and
Payton Bullard, for Plaintiff Extra Care, LLC
Miller Monroe & Plyler, PLLC, by John W. Holton and Jason A. Miller for
Defendants Carolinas Alliance for Residential Excellence, LLC, Carolinas
Alliance for Residential Excellence–Elkin, LLC, C.A.R.E. Holdings – Indian
River, LLC, and C.A.R.E. Holdings – Elkin, LLC
Earp, Judge.
I. 	FINDINGS OF FACT
3. 	The Court does not make findings of fact when ruling on a motion to
dismiss under Rule 12(b)(6). 	Rather, the Court tests the legal sufficiency of the
complaint by determining whether the factual allegations, construed in the plaintiff’s
favor, state a claim. 	Concrete Serv. Corp. v. Invs. Grp., Inc., 79 N.C. App. 678, 681
(1986).
4. 	With respect to Rule 12(b)(1), the Court is required to make findings of
fact only when requested to do so by the parties. See Rule 52(a)(2). No such request
has been made here. Nevertheless, the Court makes the following findings of fact, all
of which are undisputed and supported by filings on the Court’s docket.
5. 	Extra Care is a North Carolina limited liability company with its
principal office in Calabash, North Carolina. 	Extra Care is a member of each
Defendant. (Compl. ¶¶ 1, 5, ECF No. 3.)

6. 	Defendants 	are 	all 	North 	Carolina 	limited 	liability 	companies
(collectively, the “Companies”), each having its principal place of business in Tabor
City, North Carolina. (Compl. ¶¶ 6-9.)
7. 	In January 2020, Extra Care became a preferred member of each of the
Companies in exchange for a $1,000,000 capital contribution. As a preferred member,
Extra Care alleges that it is entitled to monthly distributions. 	However, it also
alleges that it has not received distributions for months. (Compl. ¶¶ 13-17.) Seeking
an explanation, Extra Care made two written demands on the Companies for
information pursuant to Section 57D-3-04, one in June 2023, and a second in
November 2023.
8. 	The first demand was signed by Extra Care’s counsel on 16 June 2023.
It was delivered by mail to the Companies’ registered agent, Littlewood Law, PLLC,
and requested that the information demanded be provided via email or sent via UPS
overnight delivery within fourteen days. 	(Compl., Ex. A [“June Demand”].) 	The
Companies responded to the June Demand by producing documents via email on 29
June 2023 and by Dropbox1 on 14 July 2023 and 2 October 2023. (Aff. of Jane Francis
Nowell [“Nowell Aff.”] ¶¶ 6-10, ECF No. 24.)
9. 	When documents were added to Dropbox on 14 July 2023, counsel for
the Companies alerted Extra Care’s counsel by letter that the records were available.
He added that if further inspection was required, the Companies would hold Extra
1 Dropbox is a file hosting and sharing service that allows a provider party to make documents
available to another party for inspection and printing. See Dropbox, www.dropbox.com (last
visited June 18, 2024).

Care responsible for both inspecting and copying the records at the LLCs’ principal
office “or other location designated by the company” and for the associated costs. (Aff.
of G. Grey Littlewood, Esq. [“Littlewood Aff.”], Ex. 1 [“July Response Letter”], ECF
No. 19.5.)
10. 	Following 	discussions 	between 	counsel, 	on 	2 	October 	2023, 	the
Companies agreed to add additional bank statements and tax returns to Dropbox in
response to the June Demand. (Nowell Aff., Ex. C.)
11. 	Thereafter, on 3 November 2023, in a letter again signed by its counsel,
(the “November Demand”), Extra Care issued a second inspection demand, this time
seeking both documents that it contended were missing from the Companies’ earlier
responses, as well as newly identified information. The November Demand requested
that Defendants “produce records within ten business days of the date of the letter.”
(Nov. Demand, ECF No. 19.4.)
12. 	The November Demand was emailed to the Companies’ counsel, Grey
Littlewood, at his work email address, but no other attempts were made to deliver it
to the Companies.2 	Mr. Littlewood testified that he was unaware of the November
Demand until it was presented to him in January 2024, after this lawsuit was filed.3
(Littlewood Aff. ¶¶ 5-7.)
2 The November Demand says that it was sent via Federal Express, but Plaintiff’s counsel
later confirmed that this was said in error. (Littlewood Aff., Ex. 2.)
3 In email traffic between counsel attached to Mr. Littlewood’s affidavit, Mr. Littlewood wrote
that he discovered the November Demand in his “junk” folder. (Littlewood Aff., Ex. 2.)

13. 	On 22 December 2023, Extra Care brought this lawsuit asking the Court
to exercise its mandamus power to require the Companies to permit inspection of
information demanded in the November Demand pursuant to N.C.G.S. § 57D-3-04.4
(Compl., ECF No. 3.) Service of process upon the Companies was not perfected until
6 February 2024. (Aff. Serv. Designated Delivery Serv. as to Defs., ECF No. 6.) On
19 February 2024, the Court granted the Companies’ request for an additional thirty
days to respond to the Complaint, extending the time to respond to 8 April 2024.
(Order Granting Defs.’ Mot. Enlargement Time, ECF No. 11.) 	The case was
designated to this Court on 5 January 2024 and assigned to the undersigned the same
day. (ECF Nos. 1, 2.)
14. 	On 8 April 2024, Defendants filed the instant Motion pursuant to Rules
12(b)(1) and 12(b)(6). After full briefing, the Court held a hearing on the Motion on
10 June 2024. It is now ripe for determination.
III. 	CONCLUSIONS OF LAW
15. 	Defendants move to dismiss Plaintiff’s single-claim complaint arguing
both that the Court lacks subject matter jurisdiction and that no claim has been
stated. 	When considering whether the Court has subject matter jurisdiction, “the
court need not confine its evaluation . . . to the face of the pleadings, but may review
or accept any evidence, such as affidavits, or it may hold an evidentiary hearing.”
Smith v. Privette, 128 N.C. App. 490, 493 (1998) (quoting 2 James W. Moore et al.,
4 The claim in this action pertains solely to the November Demand. Plaintiff did not petition
the Court to compel the Companies to complete their response to the June Demand, and the
Court does not opine regarding the June Demand.

Moore’s Federal Practice § 12.30(3) (3d ed. 1997)). Should the plaintiff fail to satisfy
its burden to establish subject matter jurisdiction, the Court “cannot enter a
judgment in favor of either party; it can only dismiss the proceeding or case for want
of jurisdiction.” Richards v. Nationwide Homes, 263 N.C. 295, 303 (1965).
16. 	Pursuant to Rule 12(b)(6), dismissal of a claim is proper if “(1) the
complaint on its face reveals that no law supports the plaintiff’s claim; (2) the
complaint on its face reveals the absence of facts sufficient to make a good claim; or
(3) the complaint discloses some fact that necessarily defeats the plaintiff’s claim.”
Corwin v. Brit. Am. Tobacco, PLC, 371 N.C. 605, 615 (2018) (quoting Wood v. Guilford
Cnty., 355 N.C. 161, 166 (2002)). 	Under Rule 12(b)(6), the Court reviews the
allegations of the pleading at issue in the light most favorable to the nonmoving party,
Christenbury Eye Ctr., P.A. v. Medflow, Inc., 370 N.C. 1, 5 (2017), but it is not required
“to accept as true allegations that are merely conclusory, unwarranted deductions of
fact, or unreasonable inferences.” Good Hope Hosp., Inc. v. N.C. Dept. of Health and
Hum. Servs., Div. of Facility Servs., 174 N.C. App. 266, 274 (2005) (quoting Veney v.
Wyche, 293 F.3d 726, 730 (4th Cir. 2002) (internal quotation marks omitted)).
Further, when ruling on a Rule 12(b)(6) motion, the Court may consider documents
that are the subject of the complaint and to which the complaint specifically
refers. Krawiec v. Manly, 370 N.C. 602, 606 (2018); N.C. R. Civ. P. 10(c).
17. 	The Companies contend that because Extra Care did not comply with
the statutory requirements of Section 57D-3-04, it cannot petition the Court for an
order mandating the Companies’ compliance. Specifically, the Companies argue that

Extra Care’s November Demand (1) was not signed by a member of each LLC, (2) was
not delivered to the LLCs, and (3) requested that it “produce” documents as opposed
to providing them for inspection. 	(Mem. L. Supp. Defs.’ Mot. Dismiss [“Defs.’ Br.”],
ECF No. 20.) These failures, the Companies maintain, render the November Demand
defective, making it an inadequate basis upon which to invoke the Court’s subject
matter jurisdiction. 	Alternatively, the Companies move to dismiss Plaintiff’s claim
to enforce its statutory inspection rights pursuant to Rule 12(b)(6) for failure to state
a claim.
A. The Member Signature Requirement
18. 	Defendants first contend that Section 57D-3-04(d) provides that only a
member of an LLC may sign an inspection demand to that LLC. Because Extra Care’s
counsel signed the November Demand and it was not signed by Extra Care itself,
Defendants conclude that the November Demand does not satisfy this statutory
requirement. 	Therefore, they argue, the Court is without jurisdiction to rule on
Plaintiff’s 	claim 	or, 	alternatively, 	Plaintiff’s 	allegations 	admitting 	this 	failure
preclude the existence of its claim. (Defs.’ Br. 5-6.)
19. 	Extra Care reads the statute differently. 	According to it, Section 57D-
3-04(c)’s provision that “[i]nspection rights and rights to copy LLC records may be
exercised through a member’s agent,” read in conjunction with subsection (d), permits
a member to grant its agent authority to do all things necessary to exercise the
member’s inspection rights, including authority to sign a demand on the member’s
behalf. (Pl.’s Resp. Opp. Defs.’ Am. Mot. Dismiss 4-6 [“Pl.’s Br.”], ECF No. 23.)

20. 	The Court concludes that the Companies’ position on this issue is
correct. 	In Miller v. Burlington Chem. Co., LLC, 2016 NCBC LEXIS 190, at **15
(N.C. Super. Ct. Sept. 7, 2016), this Court observed that the language of Section 57D-
3-04 was amended in 2014 to require the member, not the member’s agent (here its
attorney), to sign the written “notice of exercise.” 	Although the holding in Miller
ultimately turned on the language of the statute prior to the 2014 amendment, the
Court declines Extra Care’s invitation to disregard the Court’s observation that the
2014 amendment changed the signature requirement going forward.
21. 	When amending the statute, the General Assembly specified that the
member must sign a written demand “[t]o exercise inspection and other information
rights.” 	N.C.G.S. § 57D-3-04(d) (emphasis added). 	Once the demand is signed and
delivered, however, inspection rights and rights to copy LLC records may be exercised
by the member’s agent. 	N.C.G.S. § 57D-3-04(c) (emphasis added). 	“[I]t is always
presumed that the legislature acted with care and deliberation[.]” State v. Coffey, 336
N.C. 412, 418 (1994) (citations omitted) (cleaned up); see also State v. Moraitis, 141
N.C. App. 538, 541 (2000) (“We presume that the use of a word in a statute is not
superfluous and must be accorded meaning, if possible.”). 	It is the work of the
General Assembly, not this Court, to rewrite the statute to delete the member
signature requirement if that, as Plaintiff argues, was its intent.5
5 The General Assembly has provided for such a result in the statute governing shareholders’
inspection rights. 	Qualified shareholders of a corporation must “give[] the corporation
written notice of the qualified shareholder’s demand at least five business days before the
date on which the qualified shareholder wishes to inspect and copy.” N.C.G.S. § 55-16-02(a).
Unlike Section 57D-3-04 in the LLC context, there is no requirement in the Corporations Act
that a shareholder sign the notice. See, e.g., Erwin v. Myers Park Country Club, Inc., 2021

22. 	Here, counsel for Extra Care signed both the June and November
Demands. Because the Demands were not signed by Extra Care, the member, the
requirements of Section 57D-3-04(d) were not met. Nevertheless, citing Brown v.
Onslow Bay Marine Grp., 2022 NCBC LEXIS 154 (N.C. Super. Ct. Dec. 12, 2022),
Extra Care argues that the Companies waived their objection to the member
signature requirement because they responded without objecting to Extra Care
counsel’s signature on the June Demand. (Pl.’s Br. 5.) 	The Court disagrees.
23. 	In 	Brown, 	the 	plaintiff 	contended 	that 	the 	defendant, 	an 	LLC,
inadequately responded to the plaintiff’s inspection demand. The LLC challenged the
validity 	of 	the 	demand 	because 	it 	requested 	that 	corporate 	records 	be 	sent
electronically or by overnight mail rather than produced in-person at the LLC’s
principal office as stated in Section 57D-3-04(e). This Court, however, concluded that
the LLC had waived this objection by repeatedly producing records in response to the
demand over the course of six months, at least twice by mail, without objection.
Therefore, this Court held that the LLC could not challenge the validity of the
inspection demand simply because it had requested that the documents be sent to the
plaintiffs. The LLC’s “repeated course of conduct and failure to object” resulted in a
waiver of the LLC’s objection to plaintiffs’ failure to satisfy the requirements of
Section 57D-3-04. Brown, 2022 NCBC LEXIS 154 at **9-10.
NCBC LEXIS 66, at **3-4, 13 (N.C. Super. Ct. July 17, 2021) (recognizing that a letter signed
by plaintiff’s counsel was sufficient to constitute written notice of plaintiff’s demand for
inspection of a corporation’s records).

24. 	Unlike Brown, the Companies in this case were presented with a second
inspection demand in November 2023. 	While they may have waived their objection
to 	the 	member 	signature 	requirement 	with 	respect 	to 	the 	June 	Demand 	by
responding, the Court does not conclude that the Companies’ actions with respect to
the June Demand waived their right to object to insufficiencies in the November
Demand.
25. 	Because 	Extra 	Care 	did 	not 	satisfy 	Section 	57D-3-04’s 	member
signature requirement with respect to the November Demand, Extra Care may not
come to the Court to enforce its inspection rights with respect to that demand.
Accordingly, 	as 	to 	the 	November 	Demand 	upon 	which 	this 	action 	is 	based,
Defendants’ motion to dismiss for lack of subject matter jurisdiction is hereby
GRANTED.
B. The Delivery Requirement
26. 	Even had the member signature requirement been met, the Court
concludes that the November Demand was not delivered to the Companies in
accordance with Section 57D-3-04(d). To be sure, the problem was not Extra Care’s
decision to use email as its method of delivery. Rather, the problem is that, prior to
sending the November Demand, Extra Care did not ensure that the email address it
used was one that the Companies had identified for this purpose.
27. 	The statute makes it incumbent on the member to ensure that its
demand is delivered to the LLC at least seven days before the date on which the
inspection is to take place. 	N.C.G.S. § 57D-3-04(d). 	The parties agreed by virtue of

the Companies’ operating agreement6 that notice to the Companies was to be
delivered either “by hand, facsimile or electronic mail (at an address provided by the
person being notified for such purpose) or . . . by mail or Federal Express or similar
expedited commercial carrier[.]” 	In addition, “[a]ll such notices, demands and
requests shall be addressed, if to the Company, at its principal executive offices[.]”
(Am. and Restated Operating Agreement Carolinas Alliance Residential Excellence
– Elkin, LLC Section 11.1, ECF No. 19.1.) Extra Care chose the electronic mail route.
28. 	Unfortunately for Extra Care, it assumed that sending the November
Demand to the work email address for the Companies’ counsel was sufficient to
ensure its delivery. It wasn’t. 	The email address Extra Care used was not one used
by the Companies at their principal executive offices, nor was it one provided by Extra
Care’s counsel for that purpose. Because delivery was improper, Defendants had no
notice of the November Demand Letter until after the lawsuit was filed – precisely
the situation the statute was designed to prevent.7
IV. CONCLUSION
29. 	For these reasons, Defendants’ Amended Motion to Dismiss, (ECF No.
21), is GRANTED. This case is DISMISSED with prejudice.
6 Defendants represent, and Plaintiff does not contest, that the relevant provision of each
Defendant’s operating agreement is the same. (Defs.’ Reply 4 n.1.) Therefore, the Court refers
to the Companies’ operating agreements in the singular.
7 Contrary to Extra Care’s argument that Section 57D-2-30 limits the Companies’ ability to
rely on the notice provision in the Operating Agreement, the provision in no way “diminishes
the rights and protections of members under Section 57D-3-04(a),” which speaks to the types
of information subject to an inspection demand, not to the method of its delivery.

IT IS SO ORDERED, this 18th day of June, 2024.
/s/ Julianna Theall Earp
Julianna Theall Earp
Special Superior Court Judge
for Complex Business Cases