Allied v. Herrmann

• Court: District Court, D. New Hampshire
• Decided: December 15, 1995
• Docket: CV-95-535-M
• Status: Published

Opinion

Allied v. Herrmann CV-95-535-M 12/15/95 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Allied Electronic Services, Inc.; and Leonard Appell, Plaintiff,

v. Civil No. 95-535-M

Stefan Herrmann; Peter Heidenfelder; Bonacura, Inc.; Visicom GMBH; Heidenfelder GMBH; Kiuchi Okamoto a/k/a Kenneth Okamoto; Konamatsu USA, Inc.; S. Laurence Shaiman; Noe Ellen Sabal; Cable Corp., Inc.; and Tom Young

O R D E R

Before the court is the Magistrate Judge's Report and

Recommendation, recommending that plaintiffs' complaint be

dismissed because the corporate plaintiff has not complied with

an order of the court directing it to obtain legal

representation. None of the parties has objected to the Report

and Recommendation in the time allowed.

With regard to plaintiff Allied Electronic Services

("Allied"), the court adopts the findings of fact and rulings of

law set forth in the Magistrate Judge's Report and

Recommendation. Although New Hampshire law provides that "a

citizen of good character [who is not licensed to practice law]

may appear on behalf of a corporation" in state court. New England Capital Corp. v. Finlay Co., 137 N.H. 226, 228 (1993),

the law in this circuit is, as noted by the Magistrate Judge,

clear: in federal court a corporation may be represented

exclusively by a licensed attorney. See, e.g., American Metals

Srvc. Export v. Ahrens Aircraft, 666 F.2d 718, 719 n.2 (1st Cir.

1981) ("A corporation may be represented in court only by

gualified counsel"); In re Las Colinas Dev. Corp., 585 F.2d 7,

11-12 (1st Cir. 1978) (same) (citing. In re Victor Publishers,

Inc., 545 F.2d 285, 286 (1st Cir. 1976)).

Although the Report and Recommendation is factually

supported and legally correct (and submitted without objection by

any party), it does not specifically address the basis upon which

the claims of pro se plaintiff Leonard Appell should be

dismissed. Accordingly, a brief discussion of that issue is

warranted.

In their complaint, plaintiffs allege that Appell is the

President and 50% shareholder of Allied. However, the complaint

fails to allege any facts from which the court could infer that

Appell has sustained any injury as a result of defendants'

alleged wrongdoing independent of the alleged injury to Allied.

Stated differently, plaintiffs have failed to allege that Appell

suffered any unigue harm (i.e., not shared by the corporate

plaintiff). Instead, Appell claims that the corporation has been

2 wronged and, as a result, he (as a shareholder and investor) has

also been harmed.

Here, the corporation has pursued its legal remedies against

the named defendants, so no derivative action would lie. Under

these circumstances, Appell is not a real party in interest, see

Fed.R.Civ.P. 17, nor does he have standing to piggy-back his

claims on top of those of Allied. The general rule, followed by

New Hampshire courts and applicable in this case, is that

shareholders do not have authority to bring an action to redress

an injury to the corporation. Appeal of Richards, 134 N.H. 148,

155, cert, denied, 502 U.S. 899 (1991). See Bolivar v.

Pocklinqton, 137 F.R.D. 202, 205 (D.P.R. 1991) ("A stockholder of

a corporation has no personal right to claim as his own the cause

of action arising from an injury to the corporation.") aff'd , 975

F.2d 28 (1st Cir. 1992); see also Arent v. Distribution Sciences,

Inc., 975 F.2d 1370, 1372 (8th Cir. 1992) ("Minnesota adheres to

the general principle that an individual shareholder may not

assert a cause of action which belongs to the corporation.); In

re Sunrise Securities Litigation, 916 F.2d 874, 880 (3rd Cir.

1990) ("Under Florida law, a shareholder may bring an individual

action for injuries suffered directly by the shareholder that are

separate and distinct from injuries to all other shareholders.

. . . a shareholder does not have an individual cause of action

for damages that result from injury to the corporation.").

3 Here, Appell has not alleged a direct, unique injury as a

result of defendants' alleged wrongdoing. Accordingly, he lacks

standing to pursue his claims (which are really claims of the

corporation) and they too must be dismissed.

Conclusion

For the foregoing reasons, the court accepts the Magistrate

Judge's Report and Recommendation dated November 22, 1995

(document no. 6) and the case is dismissed.

SO ORDERED.

Steven J. McAuliffe United States District Judge

December 15, 1995

cc: Allied Electronic Services, Inc. Leonard Appell Stefan Herrmann Peter Heidenfelder Bonacura, Inc. Heidenfelder Gmbh Konamatsu USA, Inc. Anne S. Duncan Cooley, Esq. Jennifer A. Eber, Esq. Noe Ellen Sabal Cable Corp., Inc. Tom Young