MacKay v. Pierce

• Decision Date: 29 January 1982
• Citation: MacKay v. Pierce, 446 N.Y.S.2d 403, 86 A.D.2d 655 (N.Y. App. Div. 1982)
• Parties: Douglas S. MacKAY, etc., Respondent, v. Charles R. PIERCE et al., Appellants.
• Court: New York Supreme Court — Appellate Division

Page 403

446 N.Y.S.2d 403

86 A.D.2d 655

Douglas S. MacKAY, etc., Respondent, v.Charles R. PIERCE et al., Appellants.

Supreme Court, Appellate Division Second Department.

Jan. 29, 1982.

Cadwalader, Wickersham & Taft, New York City(Richard J. Wiener, New York City, of counsel), for appellants.

Lowey, Dannenberg & Knapp, P. C., New York City(Henry A. Brachtl, Richard B. Dannenberg and Neil L. Selinger, New York City, of counsel), for respondent.

Before MOLLEN, P. J., and TITONE, O'CONNOR and THOMPSON, JJ.

MEMORANDUM BY THE COURT.

In a shareholder's derivative suit, defendants appeal from so much of an order of the Supreme Court, Nassau County, entered October 16, 1981, as (1) denied the branch of their motion which sought to dismiss the amended complaint for failure to state a cause of action and (2) granted the branch of plaintiff's cross motion which sought to disqualify defendants' attorneys from representing the corporate defendant.

Order affirmed insofar as appealed from, with $50 costs and disbursements.

On a motion to dismiss for failure to state a cause of action, the facts alleged in the complaint must be assumed to be true and the complaint liberally construed in plaintiff's favor (Barr v. Wackman, 36 N.Y.2d 371, 368 N.Y.S.2d 497, 329 N.E.2d 180).The complaint charges, inter alia, that the individual defendants, as officers and directors of the corporate defendant, Long Island Lighting Company(LILCO), were negligent and breached their fiduciary duties in approving certain transactions between LILCO and Bokum Resources Corporation, in connection with agreements under which Bokum was to supply LILCO with uranium concentrates.The complaint charges waste of corporate assets in an amount in excess of $77 million.

Defendants assert that plaintiff's demand upon the Board of Directors of LILCO, pursuant to section 626(subd. ) of the Business Corporation Law, was unsatisfactory in that the board was not afforded a reasonable time within which to evaluate the charges and consider what course to take.In response to the demand, defendant Pierce, on behalf of the Board of Directors, informed plaintiff that the matter would be taken up at the next regular meeting of the board, two weeks hence.Plaintiff rejected this response as inadequate, and immediately commenced suit.

Special Term found that plaintiff had satisfactorily complied with the requirements of the aforesaid statute.

While under certain circumstances such a precipitate...