Steinberg v. Carey

285 A.D. 1131, 140 N.Y.S.2d 574

• Court: Appellate Division of the Supreme Court of the State of New York
• Decided: May 17, 1955
• Status: Published

Opinion

Per Curiam.

In a stockholder’s derivative suit like the present, wherein a corporate defendant and its officers and directors might be subject to lengthy and expensive examinations before trial, and the corporation assessed for payment of litigation expenses under article 6-A of the General Corporation Law, the courts require plaintiffs suing derivatively to set forth something more than vague general charges of wrongdoing (Gerdes v. Reynolds, 281 N. Y. 180; Kalmanash v. Smith, 291 N. Y. 142; Weinberger v. Quinn, 264 App. Div. 405, affd. 290 N. Y. 635). The charges must be supported by factual assertions of specific wrongdoing rather than conclusory allegations of breaches of fiduciary duty. There should be something to show more than de minimis damage to the corporation. The individual parties, who are claimed to have committed wrong, should be identified. Generalizations and vague references to wrongdoing, such as allegations that others (including the plaintiff) brought suits against the company, add nothing. Matters depending on business judgment are not actionable. To allege, as here, that an officer used the corporate offices or facilities for personal advantage or took his wife on a vacation at corporate expense, without any showing that the terms of his employment did not include these privileges, is not sufficient. Such allegations, in fact, might fall within the de minimis rule.

The order appealed from should be reversed, with $20 costs and disbursements, and the motion granted, with leave to serve a second amended complaint.

Peck, P. J., Callahan, Breitel, Bastow and Rabin, JJ., concur.

Order unanimously reversed, with $20 costs and disbursements to the appellants, and the motion granted, with leave to serve a second amended complaint.