Summary
The Nevada Supreme Court considered shareholder derivative claims arising from alleged self-dealing transactions between AMERCO and entities controlled by an AMERCO officer and shareholder. It held that a prior settlement release did not encompass claims based on post-settlement transactions and distinguished standing from the equitable defense of in pari delicto. The court further addressed corporate-agent imputation, the adverse-interest exception, the sole-actor rule, demand futility, pleading sufficiency, and the statute of limitations, affirming in part, reversing in part, and remanding for further proceedings.
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Practice areas
Questions Presented
- Whether the Goldwasser settlement's release clause barred derivative claims arising from SAC transactions occurring after the settlement.
- Whether AMERCO's alleged participation in the challenged transactions deprived the shareholder plaintiffs of standing to sue the SAC entities derivatively.
- How corporate-agent imputation, the adverse interest exception, and the sole-actor rule apply in analyzing an in pari delicto defense.
- Whether the plaintiffs adequately pleaded demand futility under NRCP 23.1.
- Whether the plaintiffs adequately pleaded their fiduciary-duty, aiding-and-abetting, usurpation, ultra vires, interference, and unjust-enrichment claims.
- Whether the statute of limitations barred the viable claims on the pleadings.
Holdings
- A settlement release does not bar future claims unless the agreement clearly expresses an intent to release them. The Goldwasser release covered claims existing when the settlement was reached, including then-unknown claims, but did not cover claims arising from post-settlement SAC transactions.
- AMERCO's alleged participation in the challenged transactions did not deprive it, or the derivative plaintiffs suing on its behalf, of standing. Standing and the equitable defense of in pari delicto are separate inquiries.
- Corporate agents' acts are generally imputed to the corporation. The adverse interest exception applies only when the agent's actions are completely and totally adverse to the corporation, reflecting total abandonment of the corporation's interests; the exception does not apply if the corporation receives any benefit.
- The court adopted the sole-actor rule as a limited exception to the adverse interest exception: an agent's conduct remains imputable when the agent is the corporation's sole agent or sole shareholder, or when multiple owners and managers are all engaged in the fraud and are effectively indistinguishable from the corporation.
- Whether in pari delicto bars the derivative claims is for the district court to decide after discovery and briefing under the factors identified in Shimrak.
- The amended complaint adequately pleaded demand futility under NRCP 23.1 and the Rales test by alleging particularized facts showing that at least five directors were interested or lacked independence. The district court must conduct an evidentiary hearing to determine whether demand was actually futile.
- The plaintiffs adequately pleaded claims against Mark Shoen for breach of fiduciary duty, usurpation of corporate opportunities, and wrongful interference with prospective economic advantage; against the SAC entities for aiding and abetting breach of fiduciary duty, wrongful interference, and unjust enrichment; and against the other respondents for wrongful interference. The remaining claims were insufficiently pleaded.
- The statute-of-limitations issue could not be resolved on the pleadings because the allegations created a factual question concerning when plaintiffs knew or reasonably should have known of the facts constituting their claims.
Key quotations
“When a settlement agreement does not contain language exhibiting a clear intent to release future claims, the release clause is limited to the claims that existed at the time the settlement agreement was reached.” (206-07)
“We now hold that the agent’s actions must be completely and totally adverse to the corporation to invoke the exception.” (214-15)
“Thus, ‘the collusion of corporate insiders with third parties to injure the corporation does not deprive the corporation of standing to sue the third parties, though it may well give rise to a defense that will be fatal to the action.’” (212-13)
Factual background
AMERCO, a Nevada corporation operating U-Haul, engaged in numerous transactions with SAC entities controlled by AMERCO officer and shareholder Mark Shoen. The transactions allegedly included below-market property sales, more than $600 million in nonrecourse loans, and management agreements under which U-Haul operated SAC facilities. Shareholders brought derivative claims alleging self-dealing, breach of fiduciary duty, aiding and abetting, usurpation of corporate opportunities, interference, and unjust enrichment. A prior 1995 settlement released claims existing at that time, and the district court dismissed the later derivative action based partly on that release.
Procedural history
The derivative actions were filed in 2002 and 2003 and consolidated. The district court initially dismissed for failure to adequately plead demand futility, but the Nevada Supreme Court reversed and remanded in Shoen v. SAC Holding Corp. On remand, plaintiffs filed an amended complaint; the district court found demand futility adequately pleaded but dismissed the claims on the Goldwasser-release and in pari delicto/standing grounds. The Supreme Court affirmed in part, reversed in part, and remanded for an evidentiary hearing on demand futility, further proceedings concerning in pari delicto, and consideration of the statute-of-limitations issue.
Remand instructions
The district court must conduct an evidentiary hearing on whether demand was actually futile; evaluate the Shimrak factors after discovery and briefing to determine whether in pari delicto applies; consider whether the statute of limitations bars the viable claims; and proceed consistently with the Supreme Court's determinations regarding which claims were adequately pleaded and which were properly dismissed.