DocketNumber: No. CV98-0331117S
Citation Numbers: 1999 Conn. Super. Ct. 7100
Judges: MORAGHAN, JUDGE.
Filed Date: 6/16/1999
Status: Non-Precedential
Modified Date: 4/17/2021
"A motion to dismiss., properly attacks the jurisdiction of the court, essentially asserting that the plaintiff cannot as a matter of law and fact state a cause of action that should be heard by the court." (Emphasis omitted; internal quotation marks omitted.) Gurliacci v. Mayer,
"A shareholder's derivative suit is an equitable action by the corporation as the real party in interest with a stockholder as a nominal plaintiff representing the corporation. . . . [T]he defendants in a derivative action may properly question whether the plaintiff has standing in equity to act as the nominal shareholder acting on behalf of the corporation and the other shareholders." (Citations omitted; internal quotation marks omitted.) Barrett v. Southern Connecticut Gas Co.,
The defendants have moved to dismiss the action arguing that the plaintiff has no standing to bring this action as a result of his failure to make demand upon the Board of Directors before instituting this action and has not sufficiently pleaded facts with particularity as to why such a demand would be futile.
"The rationale for making a demand or, alternatively, offering a sufficient explanation for failure to make a demand, derives from the principle that the management of a corporation is entrusted to its board of directors who are responsible for acting in the name of the corporation and who are often in a position to correct the alleged wrongful acts without resorting to the courts." Goodrich v. Libero, Superior Court, judicial district of Danbury, Docket No. 325566 (May 27, 1997, Moraghan,J.) (
"In determining demand futility the [trial court] . . . must decide whether, under the particularized facts alleged, a CT Page 7103 reasonable doubt is created that: (1) the directors are disinterested and independent and (2) the challenged transaction was otherwise the product of a valid exercise of business judgment." Aronson v. Lewis, supra, 814. "If a derivative plaintiff can demonstrate a reasonable doubt as to the first or second prong of the Aronson test, then he has demonstrated that demand would have been futile." Seminaris v. Landa,
In the present case, the plaintiff pleaded demand futility in five paragraphs of his original complaint. In general terms, the plaintiff states that the defendants lacked independence by allowing the company to violate federal anti-trust securities laws, lacked independence by participating in insider sales, violated their fiduciary duty of care and therefore could not be objective to the claims filed against them, and breached their fiduciary duty of care by ignoring their responsibilities to properly manage the company and avoid the company's involvement in illegal securities transactions. The pleadings do not provide any particularized facts to explain why the defendants were not independent or disinterested nor why their actions were not the result of a valid business judgment.
"It is generally held that allegations must be factually explicit and conclusory allegations are insufficient to show futility." Noble v. Baum, Superior Court, judicial district of Fairfield at Bridgeport, Docket No. 265920 (May 17, 1991, Nigro,J.) (
It is the opinion of this court that the plaintiff has failed to allege enough facts with particularity in the complaint to create a reasonable doubt that the defendants were independent, disinterested and within the purview of the business judgment rule when they allegedly violated the securities statute and CT Page 7104 participated in insider sales. The issue of whether the amended certificate of incorporation immunizes the directors from liability for breach of fiduciary duty is not properly raised on a motion to dismiss and therefore will not be considered at this time.
The defendants' individual motions to dismiss the plaintiff's complaint are, accordingly, granted.
Moraghan, J.
Fed. Sec. L. Rep. P 96,297 Charles Heit v. Walter S. Baird , 567 F.2d 1157 ( 1977 )
rcm-securities-fund-inc-and-max-l-heine-cross-appellees-v-e-douglas , 928 F.2d 1318 ( 1991 )
Barrett v. Southern Connecticut Gas Co. , 172 Conn. 362 ( 1977 )
Pogostin v. Rice , 480 A.2d 619 ( 1984 )