*697 MEMORANDUM OPINION
Plaintiff, Myrna Firestone, was a one-fifth owner of Middleburg Training Center, Inc. (“MTC”), a Virginia corporation that operated a horse farm in scenic Lou-don County, Virginia. When MTC’s other shareholders voted to sell MTC’s assets, plaintiff objected on the ground that the sale price, in her view, was well below the fair market value. The sale nonetheless went forward and plaintiff is currently litigating her appraisal rights in a Virginia state court, as required by the applicable provisions of the Virginia Stock Corporation Act (“VSCA”). 1 Yet, appraisal rights are not the sole remedy plaintiff seeks; in addition, in this diversity action, she asserts a number of state law personal and shareholder derivative claims against MTC and her former fellow MTC shareholders. Defendants collectively moved for dismissal of all claims and, as the motion has been fully briefed and argued, it is now ripe for disposition. For the reasons stated herein, all of plaintiffs claims fail at the threshold.
I. 2
Plaintiff, Myrna Firestone, a citizen of Washington, D.C., purchased one share of MTC in May 1987, which, at all times relevant here, represented a 20% interest in MTC. In addition, throughout this period plaintiff served as a member of MTC’s Board of Directors. She sues here MTC, a Virginia corporation, and each of the other four MTC shareholders, namely (i) Lewis S. Wiley, a Virginia citizen, and president, director, and shareholder of MTC; (ii) Eve D. Fout, a Virginia citizen, and secretary-treasurer, director, and shareholder of MTC; (iii) Barbara C. Graham, a Virginia citizen, and vice president, director, and shareholder of MTC; and (iv) James W. Murphy, a Virginia citizen, and director and shareholder of MTC.
MTC was incorporated in 1975 for the purpose of operating a horse farm. Its principal assets were approximately 149.5 acres of land in Loudon County, Virginia, which included horse farm-related improvements and farm-related personal property. Plaintiff alleges that in 1999, Wiley caused MTC’s real property to be included in the “Middleburg West” Agricultural and Forestal District, thus subjecting the property to development restrictions through July 2009, and thereby diminishing MTC’s fair market value.
Beginning at least as early as 2003, MTC’s directors and shareholders considered selling either MTC’s assets, or alternatively, their shares in MTC. At that time, plaintiff alleges that she personally paid for an appraisal that valued MTC’s real property at approximately $7 million. Thereafter, on December 4, 2003, MTC obtained an appraisal that valued MTC’s real property at $5.35 million.
MTC continued to consider a sale of its real property through 2006. In particular, in February 2006, the Board and shareholders declined a contingent offer to purchase the MTC Training Center for $3,250,000.00 and in May 2006, the Board and shareholders declined Wiley’s offer to purchase MTC’s shares at $700,000 per *698 share. Also in May 2006, plaintiff alleges that Wiley received an appraisal of MTC’s real property valuing it at $6,684,890. A week after this appraisal was received, another local realtor advised MTC that the MTC Training Center should be priced in the range between $4.3 and $4.5 million. Plaintiff alleges that following receipt of this appraisal, MTC paid the realtor a $200,000 fee “for acting as the agent of the buyer and MTC,” and that Wiley’s wife was the realtor’s employee or agent.
Approximately two weeks later, on July 18, 2006, MTC held a special shareholders’ meeting to consider an offer by Randolph D. Rouse to purchase MTC’s assets for $4 million. Plaintiff opposed the sale, arguing (i) that the price was too low and (ii) that, for tax purposes, a sale of stock was preferable to a sale of assets. Instead of accepting the Rouse offer, plaintiff suggested engaging a realtor to sell MTC’s stock for $6.7 million, an amount based on the appraisal sent to Wiley. The Board did not accept plaintiffs suggestion. Accordingly, on July 28, 2006, plaintiff notified MTC of her intent to exercise her appraisal rights and to demand payment of the fair value of her 20% share in the event the Rouse asset sale was approved by the Board of Directors.
On that same day, July 28, 2006, the Board of Director’s held a meeting, with plaintiff present, to consider Rouse’s offer. During the meeting, Wiley presented a professional appraisal valuing MTC’s real estate at $4.35 million. Additionally, Wiley noticed a special meeting of MTC’s directors and shareholders for August 7, 2006 to act on Rouse’s offer, stating:
Since consummation of the Purchase Contract would leave Middleburg Training Center, Inc. without a significant continuing business activity, you as a shareholder are entitled to vote on the proposed Purchase Contract and also are entitled to appraisal rights pursuant to Article 15 of the Virginia Stock Corporation Act, § 13.1-729, et seq. of the Code of Virginia....
In response, plaintiff again notified Wiley of her intent to exercise her appraisal rights in the event the proposed sale was approved. In addition, plaintiff then obtained an update of the December 4, 2003 appraisal of MTC’s real property, which valued the property at $7 million. Plaintiff stated she did so “[u]sing her own funds to ascertain that her opposition to the Rouse sale was justified .... ”
At the August 7, 2006 meeting, the sale of MTC’s assets to Rouse was approved with Firestone as the only dissenting director or shareholder. Two days later, Wiley informed the shareholders that the sale was complete and that MTC would receive net proceeds of $3,760,942.00, 3 minus any federal corporate income taxes.
On August 17, 2006, MTC mailed plaintiff an appraisal notice, as required by Va.Code § 13.1-734. 4 Because this appraisal notice omitted information required by the statute, MTC mailed plaintiff an amended appraisal notice on October 6, 2006, resolving most, if not all, of the deficiencies of the earlier notice and stating that MTC had determined the estimated value of plaintiffs share to be $563,477.00. 5 The amended notice further stated that plaintiff was required to com- *699 píete and return the appraisal form by-November 15, 2006, certifying (i) that she owned a share in MTC and (ii) that she desired to seek appraisal rights. Plaintiff returned the appraisal form on October 17, 2006, providing the requested information and notifying MTC that she believed the estimated valuation of her share was inadequate. On October 16, 2006, one day before returning her appraisal form, plaintiff filed the instant civil action alleging nine claims against MTC and its directors and shareholders. Specifically, plaintiffs amended complaint asserts the following nine claims:
(i) Count I: seeking declaratory judgment as to her appraisal rights;
(ii) Count II: seeking declaratory judgment as to the proposed dissolution of MTC;
(iii) Counts III and TV: asserting derivative and personal claims for breach of fiduciary duties;
(iv) Count V: asserting a derivative claim for waste of MTC’s assets;
(v) Counts VI and VII: asserting derivative and personal claims for civil conspiracy;
(vi) Count VIII: asserting a personal claim for unjust enrichment; and
(vii) Count IX: seeking declaratory judgment regarding inspection of MTC’s books and records.
Each of these claims is separately addressed.
II.
A. Count I
In Count I, plaintiff seeks a declaratory judgment as to her appraisal rights and the fair value of her share in MTC. As plaintiffs counsel conceded in oral argument, the remedy sought in this claim, namely the valuation of plaintiffs share, is the same remedy sought
in
the appraisal proceeding recently remanded to the Circuit Court of Loudon County, Virginia. Significantly, the basis for the remand was the conclusion that the state court has exclusive jurisdiction over plaintiffs appraisal remedy.
See Middleburg,
B. Count II
In Count II, plaintiff seeks a second declaratory judgment, this one declaring that MTC may not distribute its assets upon dissolution until plaintiffs appraisal proceeding is concluded. In essence, plaintiff argues that if MTC’s dissolution is approved by its shareholders and MTC proceeds to distribute its assets, sufficient funds may not remain to compensate her for the damages she proves in the appraisal rights proceeding. Thus, plaintiff seeks a declaratory judgment enjoining any distribution of assets until the fair value of her share is ascertained in the state court proceeding and it is clear that MTC has sufficient assets to make the required payment to plaintiff.
This claim fails jurisdictionally because the Declaratory Judgment Act, 28 U.S.C. § 2201, is not a jurisdictional grant.
See Shelly Oil Co. v. Phillips Petroleum Co.,
In this case, plaintiffs claim fails to satisfy the first requirement, namely the presence of a case or controversy. The facts alleged do not show a controversy “of sufficient immediacy and reality to warrant issuance of a declaratory judgment.”
Maryland Cas. Co. v. Pacific Coal & Oil Co.,
C. Counts III, Y, and VI
In Counts III, V, and VI, plaintiff asserts shareholder derivative claims: Count III for breach of fiduciary duties by the individual defendants; Count V for waste of MTC’s assets; and, Count VI for civil conspiracy. All of these shareholder derivative claims fail at the threshold.
The VSCA provides that “a shareholder may not commence or maintain a derivative proceeding unless the shareholder ... [w\as a shareholder of the corporation at the time of the act or commission complained of’ and “[a] written demand has been made on the corporation to take suitable action.” Va.Code 13.1-672.1.A-B (emphasis added). Thus, to maintain a derivative action a plaintiff must satisfy three requirements: (i) she must currently be a shareholder, (ii) she must have been a shareholder at time of the act complained of, and (iii) there must have been a written demand on the corporation. Plaintiffs claim fails because she does not satisfy the first or third requirement.
To begin with, plaintiff cannot maintain these shareholder derivative claims because she is no longer a shareholder of MTC. The centrality of shareholder status to derivative actions is obvious: Only a shareholder may sue on the corporation’s behalf, and, as the VSCA provides, once a shareholder returns an executed appraisal form or surrenders her shares, “the shareholder loses all rights as a shareholder.” Va.Code 13.1-751.A. Indeed, it is a well-recognized axiom of private corporation law in Virginia and elsewhere 6 that “a shareholder who has *701 elected to pursue his or her appraisal rights cannot later maintain a derivative action on behalf of the corporation.” Fletcher’s Cyclopedia of the Law of Private Corporations § 5906.110 (2006). And, as Fletcher’s further notes, “[t]his is because the effect of the appraisal action is to convert the person from a shareholder into a creditor,” id., and a creditor, of course, is adverse to the debtor corporation and may not sue on the corporation’s behalf.
In this case, plaintiff concedes, as she must, that she “lost her status as a shareholder [in] mid-November, 2006.” Given this, it follows that she cannot maintain any shareholder derivative claims against MTC.
Quite apart from this bar to her derivative claims, these claims fail because it is undisputed that she did not make the statutorily-required written demand on MTC. The VSCA specifically provides, without exception, that a shareholder must make a written demand on the corporation prior to initiating a derivative action. Va.Code § 18.1-672. l.B; 7 see Goolsby, Virginia Corporation Law & Practice § 8.2 (1998) (“[D]emand is required in every case.”).
Although plaintiff concedes she did not make the required demand, she argues that despite the plain statutory language, demand is not required where such demand would be futile. In support of this argument plaintiff cites federal decisions excusing demand as futile, pursuant to Rule 23. 1, Fed.R.Civ.P., which provides that a shareholder bringing a derivative suit must allege any efforts to make a demand on the corporation or “the reasons for the failure to obtain the action or for not making the effort.” The fatal flaw in plaintiffs argument is that it overlooks the Supreme Court’s decision in
Kamen v. Kemper Financial Svcs. Inc.,
Despite the VSCA’s plain statutory text, plaintiff persists in this argument, citing three Virginia circuit cases, that have excused the demand requirement where demand would be futile.
See Schrager v. Isquith,
D. Count IV
In Count IV, plaintiff asserts a personal claim for breach of fiduciary duties by the individual defendants. In particular, plaintiff alleges that the defendants breached their fiduciary duties when (i) they “acted to oppress and harass plaintiff and hindered her ability to perform her duties” on the Board; (ii) they did not comply with Virginia law relating to shareholders’ rights and appraisal rights; and (iii) Wiley and Fout noticed a Board meeting and shareholder meeting to dissolve MTC and distribute its assets, “without taking account of MTC’s liabilities to [plaintiff].”
This claims fails as a matter of law because the Supreme Court of Virginia has held that “suits for breach of fiduciary duty against officers and directors
must be brought derivatively
on behalf of the corporation and
not as individual shareholder claims.” Simmons v. Miller,
E. Count VII
In Count VII, plaintiff asserts a personal civil conspiracy claim against the individual shareholders, alleging simply that they “acted in combination with each other with willful and malicious intent to conspire to breach duties owed to MTC.” The most obvious defect is that this Count is explicitly based on breaches of duties “owed to MTC,” which, of course, afford plaintiff no basis for asserting a claim. Indeed, as noted in Parts II.C and II.D supra, plaintiff is an MTC creditor, not an MTC shareholder, and accordingly, has no standing to sue for breaches of duties owed to MTC.
Nor is this the only defect in this claim, it also fails under settled Virginia conspiracy law. In Virginia, the elements of a common law civil conspiracy claim are (i) an agreement between two or more persons (ii) to accomplish an unlawful purpose or to accomplish a lawful purpose by unlawful means, which (iii) results in damage to plaintiff.
Glass v. Glass,
This principle, applied here, compels the conclusion that Count VII must be dismissed. In this Count, plaintiff simply alleges that defendants “acted in combination with each other with willful and malicious intent to conspire to breach duties owed to MTC.” As already explained, however, plaintiff has not asserted any viable claim against defendants for breach of fiduciary duties. See Part II.C and II.D, supra. In these circumstances, where there is no actionable claim for the underlying alleged wrong, plaintiff cannot maintain a claim for civil conspiracy. Accordingly, this claim must be dismissed.
Additionally, even assuming plaintiff had alleged an actionable underlying claim, her civil conspiracy claim would fail because her complaint contains only con-clusory or general allegations of conspiracy, which are insufficient to withstand a motion to dismiss.
See Bay Tobacco, LLC v. Bell Quality Tobacco Prods., LLC,
F. Count VIII
In Count VIII, plaintiff asserts a personal claim for unjust enrichment against all defendants, alleging specifically that she incurred professional fees and expenses in obtaining the 2006 appraisal for the benefit of defendants. The only factual allegations in the amended complaint regarding the 2006 appraisal are contained in paragraph 38, which states:
Using her own funds to ascertain that her opposition to the Rouse sale was justified and would benefit MTC and its directors and shareholders, Firestone sought and obtained an updated appraisal from Ruffner, the same firm that provided MTC with an appraisal in 2003, which opined that the fair market value of MTC’s real property was $7 million. Moreover, that appraisal did not include the value of the personal property owned by MTC.
Amended Compl. ¶ 38. The amended complaint does not contain any factual allegations asserting that the defendants requested that plaintiff obtain this appraisal or that defendants received, accepted, or benefitted from this appraisal. Given this, the claim fails.
In Virginia, a plaintiff alleging unjust enrichment must establish the following elements:
(1) a benefit conferred on the defendant by the plaintiff; (2) knowledge on the part of the defendant of the conferring of the benefit; and (3) acceptance or retention of the benefit by the defendant in circumstances that render it inequitable for the defendant to retain the benefit without paying for its value.
Nossen v. Hoy,
*705 G. Count IX
In Count IX, plaintiff seeks a declaratory judgment regarding the Inspection of MTC's books and records. In particular, plaintiff alleges that MTC improperly denied her access to its corporate books and records, in contravention of Va.Code § 13.1-771, which provides that a director or shareholder may demand inspection of corporate books and records. She seeks a declaration that she is entitled by law to such an inspection.
To be sure, once plaintiff demanded her appraisal rights, turned in her MTC stock, and ceased to be a shareholder, she had no inspection right under Va.Code § 13.1-771. And, assuming she made an inspection demand prior to this event, her declaratory judgment claim still fails, as her sole remedy, as defendants correctly note, is under the VSCA, which provides that where a shareholder alleges that the corporation has not complied with her demand for access to corporate books and records, the shareholder "may apply to the circuit court in the city or county where the corporation's principal office is located ... to permit inspection and copying of the records demanded." Va.Code § 13.1-773. Thus, the VSCA provided a remedy for plaintiff if she demanded inspection while still a shareholder. But importantly, the VSCA specifically provides that such remedy is available in "the circuit court in the city or county where the corporation's principal office is located." Id. Because the VSCA is deemed a part of the contract between a corporation and its shareholders, it follows that when plaintiff acquired her shares of MTC she agreed to this forum selection provision providing a statutory remedy in the circuit court in the city or county where the corporation's principal office is located, in accordance with Va.Code § 13.1-773. See Middleburg,
An appropriate Order will issue.
Notes
. Plaintiff failed in her effort to litigate her appraisal rights in federal court, as the matter was remanded to state court.
See Middleburg Training Center, Inc. v. Firestone,
. As settled law requires, the facts recited herein are derived from plaintiff’s amended complaint and construed in the light most favorable to plaintiff.
See Revene v. Charles County Comm’rs,
. This figure presumably reflects the difference between the $4 million sale price and the fees and costs associated with the sale.
. This provision requires a corporation to deliver to a dissenting shareholder a written appraisal notice and form within 10 days of a corporate action entitling a shareholder to appraisal rights.
.It is worth noting that MTC elected to calculate the value of plaintiff's share based on the $4.35 million figure in MTC’s appraisal, rather than on the actual $4 million sales price.
. Although the Supreme Court of Virginia has not had occasion to address this point, numerous cases from other jurisdictions interpreting statutes essentially similar to the VSCA have found that stock ownership is a requirement for a derivative action.
See e.g., Schilling v. Belcher,
. In particular, the statute provides that "[n]o shareholder may commence a derivative proceeding until: 1. A written demand has been made on the corporation to take suitable action; and 2. Ninety days have expired from the date the demand was made.... ”
. In particular, before 1992, the predecessor statute to Va.Code § 13.1-672 provided that a plaintiff asserting a derivative claim must allege "why demand was excused or that demand was made to obtain action by the board of directors.”
. Although not decided here, it is worth noting nonetheless that, with respect to Count III, the alleged breaches of fiduciary duties related to the Rouse sale may also be subject to dismissal on yet another ground, namely that a dissenting shareholder challenging a corporate action has only two avenues for relief: (i) asserting appraisal rights or (ii) setting aside the challenged corporate action by alleging fraud or illegality.
See Adams v. United States Distributing Corp.,
.See also Gabriel v. Preble,
.
See Almy v. Grisham,
. Moreover, even assuming plaintiff's amended complaint were read to imply that the 2006 appraisal was sent to defendants, receipt of the appraisal alone is insufficient to state a claim for unjust enrichment.
See Eckstone & Assoc. Ltd. v. Keilp,