The opinion of the court was delivered by: Richard Mills, District Judge:
A hearing was conducted on Plaintiff's Complaint for Derivative
Shareholder's Action and Petition for Preliminary Injunction, for
Appointment of a Temporary Receiver, and Defendant Nejmanowski's
motion to Dismiss Plaintiff's Complaint.
Plaintiff Evelyn Nejmanowski and Defendant Del Nejmanowski are
the sole shareholders of Jack-Rich Inc., an Illinois business
with its principal place of business in Illinois. Del owns 51% of
the outstanding shares of Jack-Rich, Inc. while Evelyn owns the
remaining 49%. Although Plaintiff and Defendant are married, they
have not lived together for approximately ten years. Currently,
Evelyn is a resident of Texas and Del is a resident of Illinois.
Evelyn brought this shareholder's derivative action against Del
and Jack-Rich, Inc. claiming that Del had engaged in several
wrongful or illegal acts which were harmful to Evelyn's minority
interest in Jack-Rich, Inc. Evelyn requested an emergency hearing
for the issuance of a Preliminary Injunction and the appointment
of a Temporary Receiver.
Del filed a motion to dismiss claiming as one ground for
dismissal lack of subject matter jurisdiction. Del argued that
Defendant Jack-Rich, Inc. should be realigned as a Plaintiff,
since it was the real party in interest, which would destroy
complete diversity of citizenship.
In ruling on a motion to dismiss, the Court "must accept the
well pleaded allegations of the complaint as true. In addition,
the Court must view these allegations in the light most favorable
to the Plaintiff." Gomez v. Ill. State Bd. of Educ.,
811 F.2d 1030, 1039 (7th Cir. 1987). The applicable rules do not
necessitate a detailed outline of the claim's basis. Ellsworth
v. City of Racine, 774 F.2d 182, 184 (7th Cir. 1985), cert.
denied, 475 U.S. 1047, 106 S.Ct. 1265, 89 L.Ed.2d 574 (1986).
Still, a "complaint must contain either direct or inferential
allegations respecting all the material elements necessary to
sustain a recovery under some viable legal theory." Car
Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101, 1106 (7th Cir.
1984), cert. denied, 470 U.S. 1054, 105 S.Ct. 1758, 84 L.Ed.2d
821 (1985). Applying the above standards, the Court now turns to
the case at bar.
In a shareholder derivative suit, the corporation is always
initially named as a defendant as it is an indispensable party to
the litigation. Liddy v. Urbanek, 707 F.2d 1222 (11th Cir.
1983). The named plaintiff, however, is only the nominal
plaintiff. The corporation is the real party in interest. Once
joined and present before the court, the corporation is then
realigned, if necessary, according to its real interests. Id.
most cases the corporation will be realigned as a plaintiff. In
the case at bar, if the corporation is realigned as a plaintiff
there is no diversity of parties and, therefore, no subject
matter jurisdiction in this Court.
There is an exception to the rule. If the corporate management
is "antagonistic" to the plaintiff shareholder, the corporation
remains a defendant. Smith v. Sperling, 354 U.S. 91, 77 S.Ct.
1112, 1 L.Ed.2d 1205 (1957). Therefore, if the management of the
corporation is actively aligned against the plaintiff and his
lawsuit, then the shareholder and the corporation are actually on
opposing sides of the controversy and the corporation is properly
named as a defendant. Young v. Colgate-Palmolive Co.,
790 F.2d 567, 568 (7th Cir. 1986). "This is a practical not a mechanical
determination and is resolved by the pleadings and the nature of
the dispute." Sperling, 354 U.S. at 97, 77 S.Ct. at 1116. In
the case at bar, therefore, the central question in determining
jurisdiction is, as of January 14, 1994, is the corporation
"antagonistic" to this lawsuit?
At this point, some additional facts must be outlined. The
Board of Directors of Jack-Rich, Inc. is comprised of Del,
Evelyn, and Jackie Brandenburg-Rees, their daughter. The officers
of Jack-Rich, Inc. are Del Nejmanowski President, Evelyn
Nejmanowski Vice-President, and Jackie Brandenburg-Rees
Evelyn Nejmanowski and Jackie Brandenburg-Rees are both in
favor of this lawsuit. Del is opposed. As a result of this
alignment, the majority stockholder and controlling officer of
the corporation opposes the lawsuit, while two out of the three
directors of the corporation favor the lawsuit.
This Court could not locate any case law that specifically
defines the term "management" as it is used in deciding if "the
management of the corporation" is antagonistic to a shareholder
derivative suit. The cases located merely state that the
"management" of the company must be antagonistic to the suit.
See Sperling, 354 U.S. at 97, 77 S.Ct. at 1116, Young, 790
F.2d at 568, Liddy, 707 F.2d at 1224. Management can be defined
as either the directors of the company, the officers of the
company, or theoretically the controlling shareholder. It ...