Winograd v. Siebrecht
Allegations that officers or directors of a corporation engaged in self-dealing may be brought as a shareholder derivative action. The plaintiff shareholders alleged that Alliance Energy Solutions Inc., a private corporation with 10 shareholders, hoped to sell its assets for $20 million and eventually sold its assets for $25 million. The plaintiffs alleged that the defendants planned to distribute the proportionate proceeds of sale as if the corporation had sold for $20 million and to keep any amount above $20 million for themselves. The plaintiffs' complaint alleged breach of fiduciary duty, fraud, theft and unjust enrichment. The defendants moved to dismiss and argued that the plaintiffs were required to file a suit in a shareholder derivative capacity, pursuant to Connecticut General Statutes §52-572j, and were not permitted to file a suit in their individual capacities. The court agreed with the defendants that the corporation is the primary injured party. "In the case of one or more shareholders of a corporation who claim that directors or officers of the corporation engaged in self-dealing," wrote the court, "the injury is to the corporation." The rights of other shareholders who are not named as plaintiffs or defendants could be affected by the plaintiffs' claims. If the plaintiffs prove their claims, other shareholders will also have suffered injuries. The court granted the defendants' motion to dismiss.