Meyerson v. Coopers & Lybrand
| Citation | 233 Neb. 758,448 N.W.2d 129 |
| Decision Date | 17 November 1989 |
| Docket Number | Nos. 87-1138,s. 87-1138 |
| Parties | Larry B. MEYERSON, Appellant, v. COOPERS & LYBRAND, a Partnership, Appellee. Juan ROQUE, Appellant, v. COOPERS & LYBRAND, a Partnership, Appellee. Malcolm BALLINGER, Appellant, v. COOPERS & LYBRAND, a Partnership, Appellee. to 87-1140. |
| Court | Nebraska Supreme Court |
Syllabus by the Court
1. Demurrer: Pleadings: Appeal and Error. In reviewing an order sustaining a demurrer, this court accepts the truth of facts well pled and the factual and legal inferences which reasonably may be deduced from such facts, but does not accept conclusions of the pleader.
2. Demurrer: Pleadings. In ruling on a demurrer, the petition is to be liberally construed; if as so construed the petition states a cause of action, the demurrer is to be overruled.
3. Demurrer. When a demurrer is interposed stating several grounds, the court should, when sustaining the demurrer, specify the grounds upon which it is sustained.
4. Corporations: Actions: Parties. As a general rule a shareholder may not bring an action in his or her own name to recover for wrongs done to the corporation or its property. Such a cause of action is in the corporation and not the shareholders. The right of a shareholder to sue is derivative in nature and normally can be brought only in a representative capacity for the corporation.
5. Corporations: Actions: Parties: Proof. There is a well-recognized exception to the general rule relating to actions by shareholders: If the shareholder properly establishes an individual cause of action because the harm to the corporation also damaged the shareholder in his or her individual capacity, rather than as a shareholder, such individual action may be maintained. To come within this exception, the shareholder must show that his or her loss is separate and distinct from that of other shareholders of the corporation or that there is a special duty owed by a wrongdoer to a shareholder.
6. Corporations: Actions: Parties. It is only where the injury to a shareholder's stock is peculiar to him or her alone, such as in an action based on a contract in which the shareholder is a party, on a right belonging to him or her, or on a fraud affecting him or her directly, and does not fall alike upon other shareholders, that the shareholder may recover as an individual.
7. Corporations: Actions: Parties: Restitution. When an injury is to the collective rights of shareholders and the corporate property has been augmented by restitution, the shareholders will be fully indemnified. If a shareholder is permitted to bring an action personally to recover his or her proportionate share of the damages suffered by the corporation, a subsequent recovery by or for the corporation would be equivalent to a double recovery for him or her.
8. Corporations: Actions: Parties: Proof. To state a claim for a separate and distinct injury, the shareholder must allege and prove injury separate and distinct from injury suffered by other shareholders, not injury separate and distinct from injury suffered by the corporation.
9. Corporations: Stock. As a general rule, diminution in the value of stock is a direct injury to the corporation and only an indirect or incidental injury to an individual shareholder.
10. Corporations: Actions: Parties. Even though all shares of stock of a corporation may be owned by a small number of shareholders or by one shareholder alone, generally a shareholder cannot sue individually concerning rights which belong to the corporation.
11. Corporations: Actions: Parties. If an injury to a shareholder resulted from the violation of some special duty owed by the wrongdoer to the shareholder, then the shareholder may bring an individual action.
Michael L. Schleich and Amy S. Bones, of Fraser, Stryker, Vaughn, Meusey, Olson, Boyer & Bloch, P.C., Omaha, for appellants.
Maureen E. McGrath and Jeff A. Anderson, of Kutak Rock & Campbell, Omaha, for appellee.
The plaintiffs, shareholders of World Radio Laboratories, Inc., have appealed from orders of the district court which dismissed their amended petitions following the sustaining of defendant's demurrers. Plaintiffs' actions were based on the alleged negligence of the defendant in its capacity as a firm of certified public accountants in rendering improper and inaccurate examinations of various financial statements issued by World Radio. They sought the recovery of damages to them, as shareholders, allegedly separate and distinct from those damages suffered by the corporation itself. The three cases have been consolidated for briefing and argument.
In reviewing an order sustaining a demurrer, this court accepts the truth of facts well pled and the factual and legal inferences which reasonably may be deduced from such facts, but does not accept conclusions of the pleader. S.I.D. No. 272 v. Marquardt, 233 Neb. 39, 443 N.W.2d 877 (1989); Security Inv. Co. v. State, 231 Neb. 536, 437 N.W.2d 439 (1989); Peterson v. Cisper, 231 Neb. 450, 436 N.W.2d 533 (1989).
In ruling on a demurrer, the petition is to be liberally construed; if as so construed the petition states a cause of action, the demurrer is to be overruled. S.I.D. No. 272 v. Marquardt, supra.
The plaintiffs' assignments of error are that the trial court was incorrect in failing to find that the plaintiffs, as shareholders, possessed a cause of action for their own particular injuries separate and distinct from those of the corporation and that if the demurrers were sustained on the basis of the statute of limitations, such actions were improper because the allegations of the amended petitions relate back to the time of the filing of the original petitions.
Plaintiffs' original petitions alleged the collective ownership of something in excess of 90 percent of the capital stock of World Radio; that World Radio for all fiscal years since 1970 had annually engaged the defendant, Coopers & Lybrand, to examine the financial statements of World Radio and to study and evaluate World Radio's system of internal accounting controls; that Coopers did perform such examinations and rendered such opinions to World Radio for each fiscal year up to and including the one ending June 2, 1984; that such reports certified that the financial statements examined presented fairly the consolidated financial position of World Radio; and that Coopers failed to properly perform and performed negligently its obligations with respect to all annual examinations. The petitions further alleged that as a result of such negligence, World Radio is unable to obtain or raise equity capital for expansion purposes, is unable to expand existing credit lines, has lost revenues, and has incurred expenses it would not otherwise have had; that World Radio's stockholders' equity and the value of World Radio's business is less than it would otherwise have been; and that World Radio has inadequate capital to operate. The petitions also alleged that as a natural consequence of Coopers' negligence, the equity of plaintiffs' stock has been reduced, the value of their stock has been reduced, and the plaintiffs have been unable to sell their World Radio stock in a public equity offering or to obtain stock in another entity as a result of a merger or consolidation.
Coopers demurred on the grounds that the facts did not state a cause of action, the plaintiffs had no legal capacity to sue, and there was a defect in parties plaintiff. The demurrers were sustained, and plaintiffs filed amended petitions.
The amended petitions alleged the same facts except that added to those petitions were allegations that the written opinions were furnished to World Radio and plaintiffs, that the written opinions furnished by Coopers were certified to plaintiffs, that the written opinions were delivered by Coopers to World Radio and plaintiffs, and that Coopers knew that plaintiffs were relying on the written opinions to offer the stock they owned in World Radio for sale in a public equity offering and, further, that Coopers knew and advised plaintiffs that plaintiffs would be able to sell their World Radio stock for a price in excess of its actual book value.
The amended petitions concluded with allegations that the equity of plaintiffs' stock has been reduced, the value of such stock has been reduced, plaintiffs "have been unable to sell their World Radio stock in a public equity offering" or to obtain stock in another entity as a result of a merger and have thus been prevented from realizing any amount in excess of the actual book value of the stock, and plaintiffs have lost the opportunity to receive dividends from World Radio.
Coopers again demurred on the same grounds as before and on the additional ground that the causes of action stated, if any, are barred by the statute of limitations.
The trial court gave no reason for its acts of sustaining the demurrers. This makes it somewhat difficult to identify and analyze the question presented. This court, in Clyde v. Buchfinck, 198 Neb. 586, 594, 254 N.W.2d 393, 397-98 (1977) (), stated: " 'When a demurrer is interposed stating several grounds, the court should, when sustaining the demurrer, specify the grounds upon which it is sustained; otherwise, this court is not informed in regards wherein the complaint was deficient....' "
The apparent ground upon which the demurrers were sustained, and the question argued most strenuously by the parties, is the claimed derivative nature of the action.
As a general rule a shareholder may not bring an action in his or her own name to recover for wrongs done to the corporation or its property. Such a cause of action is in the corporation and not the shareholders. The right of a shareholder to sue is derivative in nature...
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