Saturday, November 23, 2013

Harris v. Carter case brief

Harris v. Carter case brief summary
582 A.2d 222 (1990)


CASE SYNOPSIS
Plaintiff, minority shareholder, sued defendants, old shareholders, new owners, and directors, alleging that the new owners looted the corporation and that the selling shareholders were negligent and that their negligence breached a duty they owed the corporation. Defendants moved to dismiss the amended and supplemental complaint.

CASE FACTS
Plaintiff, minority shareholder, sued defendants, old shareholders/directors, new owners/directors, alleging that the old shareholders/director were negligent and that their negligence breached a duty to the corporation. The minority shareholder also asserted that the new owners/directors looted the corporation. The defendants moved to dismiss the amended and supplemental complaint, asserting that the action was not properly instituted as a derivative action because the shareholder suit was filed after the change of control occurred; that the amended complaint did not state a claim upon which relief could be granted; and, that with respect to certain defendants the court lacked personal jurisdiction.

DISCUSSION
  • The court held that pre-suit demand on the directors was excused, and the consent statute authorized service of process on the old shareholders/directors. 
  • Further, the complaint stated a claim for breach of duty of care owed by the old shareholders/directors. 
  • Accordingly, the motions were denied.

CONCLUSION
The motions to dismiss were denied. The court concluded that plaintiff's, shareholder, amended complaint stated a claim upon which relief could be granted against those defendants who negligently sold control of the corporation. Further, all the defendants were properly served with process; thus, the motion to dismiss for want of personal jurisdiction was denied.


Recommended Supplements for Corporations and Business Associations Law

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