Court Opinion

ID: 5704719
Source: CourtListenerOpinion
Date Created: 2022-01-12 15:45:28.167366+00
Date Added: 2024-06-11T08:40:24.023969
License: Public Domain

Per Curiam.

Defendants in a consolidated stockholders’ derivative action appeal from an order granting in part plaintiffs’ motion for their examination before trial.
Rule XI of the New York County Supreme Court Trial Term Rules, while reiterating the requirement of a showing of special circumstances in order to obtain an examination before trial in stockholders’ derivative actions, avowedly did not purport to change the right to or the scope of such examination. Thus, an examination will still be denied or limited ‘ ‘ unless supported by factual allegations of evidentiary value to establish the charges of improper conduct” (Mann v. Luke, 272 App. Div. 19, 23; see, also, Abrahams v. Rand, 279 App. Div. 401; Price v. Groves, 258 App. Div. 35).
The complaint is unverified and all operative acts are alleged on information and belief. In support of their motion plaintiffs state that the facts upon which the complaint is based were gained largely from proxy statements issued by the corporation on whose behalf the action is brought. These proxy statements would appear to have informed the stockholders of the acts of which plaintiffs now complain. It may be that upon trial plaintiffs will be able to sustain the somewhat conelusory claims of improprieties that they attach to defendants’ actions. However, those actions, as recited in the proxy notices, could also reflect innocent and proper dealing. In the absence of additional factual allegations of wrongdoing, the order appealed from should be reversed on the facts and on the law, and in the exercise of discretion, and the motion for examination before trial denied in all respects, with costs.
*291Botein, P. J., Breitel, M. M. Frank, McNally and Stevens, JJ., concur.
Order so far as appealed from unanimously reversed on the facts and on the law, and in the exercise of discretion, with $20 costs and disbursements to the appellants, and the motion for examination before trial is denied in all respects, with $10 costs.