Fidus Investment Corporation v. McCollum
3:19-cv-00312
W.D.N.C.Nov 1, 2022Background
- Dr. Daniel McCollum founded Oaktree Medical Center (OMC). OMC obtained a revolving loan for expansion and McCollum personally guaranteed roughly $9.6–10 million of debt.
- In 2018 OMC missed payments; loan collateral agent Fidus exercised contractual remedies, removed McCollum from day-to-day control, and appointed Tim Daileader to manage and restructure OMC (with consultants). OMC later filed Chapter 7 bankruptcy.
- In July 2019 Fidus sued to enforce McCollum’s personal guaranty. Fidus later amended to add fraudulent-conveyance claims against Grove 1005, LLC, John Shaw, and McCollum Business LLC for transfers involving a $3.825 million building and subsequent loans.
- McCollum counterclaimed against Fidus (UDTPA, fiduciary breach, fraud, negligence, conspiracy) and filed third-party claims against Daileader, Drivetrain, and Huron, alleging they mismanaged OMC and caused his personal liability under the guaranty.
- The Court concluded South Carolina law governs the tort-like and transfer claims, dismissed McCollum’s counterclaims and third-party complaint as derivative/lacking standing and as improper impleader, denied dismissal of Fidus’s fraudulent-conveyance claim, and struck McCollum’s jury demand based on a contractual waiver.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing for McCollum's counterclaims (direct vs derivative) | McCollum: Fidus assumed control and thus owed him fiduciary duties; he suffered separate personal injuries (squeezed out, exposed to guaranty liability). | Fidus: Claims are corporate mismanagement and derivative; McCollum lacks direct standing. | Dismissed: Claims are derivative; no special fiduciary duty to McCollum and no separate-and-distinct injury. |
| Third-party impleader (Rule 14) | McCollum: Third-party defendants may be liable to him and he expects to be indemnified/ made whole. | Third-party Ds: Impleader improper absent claim that nonparty is legally liable to third-party plaintiff (indemnity/contribution). | Dismissed: Impleader improper because no derivative/indemnity basis pleaded. |
| Fraudulent conveyance claims (choice of law, sufficiency, Rule 9(b)) | Fidus: Transfers (membership transfer, sale, loan back) were designed to hinder creditors; pleaded sufficient facts and intent. | Defendants: North Carolina statute definitions defeat claim; heightened fraud pleading not met. | Denied: South Carolina law applies (Statute of Elizabeth); pleadings sufficiently identify transfers and facts; survive Rule 9(b) scrutiny. |
| Jury-waiver in Guaranty | Fidus: Guaranty contains conspicuous, knowing, contractual jury-waiver. | McCollum: (argued choice-of-law issues) | Granted: Under federal procedural law waiver enforceable; McCollum’s jury demand stricken. |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard: plausible-claim requirement)
- Rivers v. Wachovia Corp., 665 F.3d 610 (4th Cir. 2011) (identifies categories when special duties to shareholders may arise)
- Rice-Marko v. Wachovia Corp., 728 S.E.2d 61 (S.C. Ct. App. 2012) (diminution in corporate value is injury to the corporation, not individual shareholders)
- Barger v. McCoy Hillard & Parks, 488 S.E.2d 215 (N.C. 1997) (guarantors ordinarily may not pursue individual actions for corporate injuries)
- Harrison v. Westinghouse Savannah River Co., 176 F.3d 776 (4th Cir. 1999) (Rule 9(b) allows general allegations of intent; courts should hesitate to dismiss where defendant can prepare a defense)
- Leasing Service Corp. v. Crane, 804 F.2d 828 (4th Cir. 1986) (federal law enforces contractual jury-waiver when knowing and intentional)