Glenbrook Capital Ltd. Partnership v. Dodds
252 P.3d 681
Nev.2011Background
- AMERCO is a Nevada parent of U-Haul with extensive SAC entities controlled by Mark Shoen; alleged self-dealing transactions between AMERCO and SACs led to derivative suits by Paul Shoen and others.
- The district court dismissed the derivative action for lack of adequate demand futility pleading and for purported release under the Goldwasser settlement, and the parties appealed.
- The Goldwasser settlement (1995) involved Goldwasser plaintiffs and released claims “existing at the time” of the settlement, but the court considered whether post-Goldwasser SAC transactions were released.
- The amended complaint asserted multiple theories against AMERCO directors and SAC entities, including self-dealing, aiding and abetting, and usurpation of corporate opportunities; it also alleged misstatements in AMERCO filings.
- The Nevada Supreme Court held that the Goldwasser release does not bar post-Goldwasser SAC-transaction claims, that imputation and in pari delicto issues require remand for discovery, and that demand futility must be, on remand, re-evaluated with proper evidentiary standards; it affirmed some claims, reversed others, and remanded for further proceedings.
- The concurrence discusses demand futility timing and suggests further briefing on whether demand should be assessed as of 2002 or 2006, and expresses concerns about the sufficiency of pleadings under NRCP 23.1 and NRCP 9(b).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Scope of Goldwasser release | Goldwasser release limited to existing claims at signing | Release covers broader range including post-settlement claims? | Goldwasser release excludes post-Goldwasser SAC transactions; claims post-date remain permissible |
| Imputation and in pari delicto defenses | AMERCO officers' acts imputed; in pari delicto may permit relief | Adverse interest and sole actor limits apply; in pari delicto bars claims in certain contexts | Imputation generally applies; in pari delicto to be decided on remand under Shimrak factors; sole-actor and adverse-interest limitations do not resolve at pleading stage |
| Demand futility pleading standard | Amended complaint shows substantial facts showing futility under Rales test | District court misapplied standard; need stricter showing of independence/interest | Demand futility not finally resolved; remand for evidentiary hearing to determine futility under appropriate standard |
| Sufficiency of pleaded claims against Mark and SAC entities | Claims for loyalty breach, usurpation, wrongful interference, and unjust enrichment are pled with sufficient particularity | Some claims fail NRCP 9(b) specificity or fail as to certain individuals | Some claims survive (Mark and SACs for certain theories); others dismissed; remand for further proceedings on remaining claims |
Key Cases Cited
- Shoen v. SAC Holding Corp., 122 Nev. 621 (Nev. 2006) (clarified pleading standards for shareholder derivative suits and demand futility)
- Clark v. Columbia/HCA Info. Servs., 117 Nev. 468 (Nev. 2001) (contract-based release interpretation; de novo contract interpretation)
- Rales v. Blasband, 634 A.2d 927 (Del. 1993) (demand futility analysis when board not implicated in a challenged transaction)
- Aronson v. Lewis, 473 A.2d 805 (Del. 1984) (demand futility standard; business decision context)
- Shimrak v. Garcia-Mendoza, 112 Nev. 246 (Nev. 1996) (in pari delicto factors and public policy considerations guidance)
- In re Bear Stearns Companies, Inc., 763 F. Supp. 2d 423 (S.D.N.Y. 2011) (impact of demand futility analysis on claims surviving dismissal)