Gunzburg v. Gunzburg
| Decision Date | 03 July 1989 |
| Docket Number | ART-LLOYD |
| Citation | 543 N.Y.S.2d 474,152 A.D.2d 537 |
| Parties | Fred GUNZBURG, et al., Respondents, v.METAL PRODUCTS CORP., Defendant, Arthur Gunzburg, et al., Appellants, et al., Defendants. |
| Court | New York Supreme Court — Appellate Division |
Lola S. Lea, New York City (Paula G.A. Ryan, of counsel), for appellants.
Weiss & Kozupsky, New York City (Allen H. Weiss, of counsel), for respondents.
Before THOMPSON, J.P., and LAWRENCE, BALLETTA and ROSENBLATT, JJ.
MEMORANDUM BY THE COURT.
In a shareholders' derivative action, the defendants Arthur Gunzburg, Mildred Savitt and Bernard Gunzburg appeal from so much of an order of the Supreme Court, Kings County (Williams, J.), entered May 8, 1987, as denied their cross motion for summary judgment dismissing the complaint as against them.
ORDERED that the order is affirmed insofar as appealed from, with costs.
This action is one of several actions that has been brought over the past few years by the minority shareholders of a close corporation known as Art-Lloyd Metal Products Corp. (hereinafter the corporation). In one of the prior actions, the minority shareholders initiated a dissolution proceeding based on allegations that the majority shareholders had acted oppressively toward them and had wasted and mismanaged corporate assets. That proceeding was decided in the minority shareholder's favor.
In this action, the minority shareholders sued on behalf of the corporation, seeking, inter alia, reimbursement of corporate funds used by the majority shareholders to pay for the defense of the dissolution proceeding and an accounting based on allegations of waste and mismanagement. The minority shareholders moved for partial summary judgment on the reimbursement cause of action, and the majority shareholders Arthur Gunzburg, Mildred Savitt and Bernard Gunzburg cross-moved for an order dismissing the complaint on the grounds that it failed to comply with the requirements of Business Corporation Law § 626(c) and it was barred under res judicata principles. The Supreme Court held the minority shareholders' motion in abeyance pending the substitution of the court-appointed receiver as a plaintiff, and denied the majority shareholders' cross motion in its entirety. The majority shareholders appeal that branch of the order which denied their cross motion. We affirm.
The Supreme Court did not err when it denied the cross motion to dismiss the complaint on the ground that the complaint failed to comply with Business Corporation Law § 626(c). This provision provides that in any shareholders' derivative action, "the complaint shall set forth with particularity the efforts of the plaintiff to secure the initiation of such action by the board or the reasons for not making...
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