Court Opinion

ID: 3207468
Source: CourtListenerOpinion
Date Created: 2016-05-27 14:05:00.324965+00
Date Added: 2024-06-11T12:58:58.486884
License: Public Domain

Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
05/27/2016 09:05 AM CDT

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                                           Nebraska A dvance Sheets
                                            293 Nebraska R eports
                                                  LINDSAY v. FITL
                                                 Cite as 293 Neb. 677

                                 Stephen Lindsay, Special A dministrator
                                 of the Estate of M ary F. Lindsay, et al.,
                                 appellants, v. Patricia M. Fitl, Personal
                                     R epresentative of the Estate of
                                          James G. Fitl, appellee.
                                                   ___ N.W.2d ___

                                          Filed May 27, 2016.     No. S-15-757.

                1.	 Summary Judgment: Appeal and Error. An appellate court will
                     affirm a lower court’s grant of summary judgment if the pleadings
                     and admitted evidence show that there is no genuine issue as to any
                     material facts or as to the ultimate inferences that may be drawn from
                     the facts and that the moving party is entitled to judgment as a matter
                     of law.
                 2.	 ____: ____. In reviewing a summary judgment, an appellate court views
                     the evidence in the light most favorable to the party against whom the
                     judgment was granted and gives that party the benefit of all reasonable
                     inferences deducible from the evidence.
                3.	 Summary Judgment: Motions to Dismiss: Claims: Parties. If, on
                     a motion asserting the defense to dismiss for failure of the pleading
                     to state a claim upon which relief can be granted, matters outside the
                     pleading are presented to and not excluded by the court, the motion shall
                     be treated as one for summary judgment and disposed of as provided in
                     Neb. Rev. Stat. §§ 25-1330 to 25-1336 (Reissue 2008), and all parties
                     shall be given reasonable opportunity to present all material made perti-
                     nent to such a motion by statute.
                4.	 Standing: Jurisdiction. Standing requires that a litigant have a personal
                     stake in the outcome of a controversy that warrants invocation of a
                     court’s jurisdiction and justifies exercise of the court’s remedial powers
                     on the litigant’s behalf.
                5.	 Standing: Claims: Parties: Proof. To have standing, a litigant must
                     assert its own rights and interests and demonstrate an injury in fact,
                     which is concrete in both a qualitative and temporal sense.
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                       Nebraska A dvance Sheets
                        293 Nebraska R eports
                              LINDSAY v. FITL
                             Cite as 293 Neb. 677

 6.	 Corporations: Actions: Parties: Proof. In order to establish an indi-
     vidual harm to support a claim, the shareholder must allege a separate
     and distinct injury or a special duty owed by the party to the individ-
     ual shareholder.
 7.	 Corporations: Actions: Parties: Damages. Even if a shareholder estab-
     lishes that there was a special duty, he or she may only recover for dam-
     ages suffered in his or her individual capacity, and not injuries common
     to all the shareholders.
 8.	 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, a shareholder cannot sue individually concerning
     rights which belong to the corporation.

  Appeal from the District Court for Douglas County: M arlon
A. Polk, Judge. Affirmed.

   Thomas M. White, C. Thomas White, and Amy S. Jorgensen,
of White & Jorgensen, for appellants.

   Michael S. Degan, of Husch Blackwell, L.L.P., for appellee.

  Heavican, C.J., Wright, Connolly, Miller-Lerman, Cassel,
Stacy, and K elch, JJ.

   K elch, J.
                      NATURE OF CASE
   Mary F. Lindsay, Mary H. Lindsay, Daniel Lindsay, Michael
Lindsay, Alice Lindsay, Stephen Lindsay, and Marguerite Ford
(collectively the Lindsays) filed suit against James G. Fitl (Fitl)
for breach of various fiduciary duties. A motion to dismiss was
granted on the bases that the Lindsays’ claims were deriva-
tive and that they were divested of their standing when the
Federal Deposit Insurance Corporation (FDIC) filed an action
in federal court. Now, the Lindsays have appealed to this court.
We affirm.

                            FACTS
  This case arises out of the Lindsays’ claim that Fitl, another
minority shareholder, breached fiduciary duties in connection
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                   Nebraska A dvance Sheets
                    293 Nebraska R eports
                         LINDSAY v. FITL
                        Cite as 293 Neb. 677

with his role as an officer and director of Mid City Bank, Inc.,
and the 304 Corporation. The Lindsays were minority share-
holders of the 304 Corporation, a Nebraska corporation, its
principal asset being Mid City Bank.
   Although unrelated to issues presented in this appeal, we
note that the Lindsays have twice amended their complaint
to reflect substitutions of the parties. Mary F. Lindsay passed
away in 2013, and in August 2014, Stephen Lindsay, as
the special administrator of her estate, was substituted in
her place. Defendant Fitl also passed away, and in the third
amended complaint, Patricia M. Fitl, the personal representa-
tive of Fitl’s estate (personal representative), was substituted
in his place.
   In August 2010, the Nebraska Department of Banking and
Finance and the FDIC began a joint examination of the condi-
tion of Mid City Bank. On November 4, 2011, the Department
of Banking and Finance appointed the FDIC as receiver of the
bank, stating as its reason that “‘large commercial real estate
loan and poor management practices . . . led to a deterioration
of the bank’s capital’” and that the department was left with
“‘no option but to declare the insolvent institution receiver-
ship.’” After some time, the bank reopened, and the receiver
continued to operate the bank, which was in good standing as
of the date of the hearing. The FDIC did not place any of the
304 Corporation’s other assets into receivership.
   On July 17, 2012, the Lindsays filed their first complaint
against defendant Fitl, now defendant personal representa-
tive, alleging breach of fiduciary duties. The complaint was
amended with minor changes in August and October 2014 and
in April 2015. The Lindsays did not allege breach of contract
in any version of the complaint.
   On November 4, 2014, the FDIC filed a federal action
against Fitl’s estate in the U.S. District Court for the District
of Nebraska, in case No. 8:14-cv-00346, alleging, among other
things, that Fitl “was grossly negligent and breached his fidu-
ciary duties” and that because of the receivership, and pursuant
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                   Nebraska A dvance Sheets
                    293 Nebraska R eports
                         LINDSAY v. FITL
                        Cite as 293 Neb. 677

to 12 U.S.C. § 1821(d)(2)(A)(i) (2012), the FDIC succeeded
to all rights, titles, powers, and privileges of Mid City Bank
and its shareholders, accountholders, and depositors, “includ-
ing, but not limited to, [the bank’s] claims against [its] former
directors and officers.”
   On April 16, 2015, the personal representative filed a
motion to dismiss the third amended complaint pursuant to
Neb. Ct. R. Pldg. § 6-1112(b)(6). In support of this motion,
the personal representative alleged that all the claims asserted
by the Lindsays in their third amended complaint were “the
exclusive province of the [FDIC], as receiver for Mid-City
Bank,” and were the subject of pending litigation in fed-
eral court.
   On May 27, 2015, before the hearing on the personal rep-
resentative’s motion to dismiss, the Lindsays filed a motion
for leave to file a fourth amended complaint. The proposed
fourth amended complaint merely added an allegation that the
Lindsays filed a claim with the personal representative, which
was disallowed.
   The hearing on the personal representative’s motion to dis-
miss was held on June 16, 2015. Although the Lindsays had
not previously alleged a breach of contract, they argued at the
hearing that Fitl breached the “Fitl Lindsay 304 Corporation
Buy-Sell Agreement” (Buy-Sell Agreement).
   On July 29, 2015, the district court granted the personal
representative’s motion to dismiss, finding that the Lindsays’
claims were derivative of the corporation and that as a result
of the FDIC’s federal action, the Lindsays’ claims were exclu-
sively vested with the FDIC. Therefore, the Lindsays had no
standing to pursue them. The district court also denied the
Lindsays’ motion to amend and found that any further amend-
ments would be futile due to the FDIC’s federal action. The
trial court signed and filed the same order again on August 3,
without any explanation. The Lindsays appeal from both the
July 29 and August 3 orders.
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                   Nebraska A dvance Sheets
                    293 Nebraska R eports
                          LINDSAY v. FITL
                         Cite as 293 Neb. 677

                 ASSIGNMENTS OF ERROR
   The Lindsays assign, combined and restated, that the district
court erred (1) in finding that their claims were derivative of
the corporation, (2) in finding that the FDIC’s federal action
divested them of their standing, and (3) in stating that further
amendment would be futile.
                  STANDARD OF REVIEW
   [1,2] An appellate court will affirm a lower court’s grant
of summary judgment if the pleadings and admitted evidence
show that there is no genuine issue as to any material facts
or as to the ultimate inferences that may be drawn from the
facts and that the moving party is entitled to judgment as a
matter of law. Waldron v. Roark, 292 Neb. 889, 874 N.W.2d
850 (2016). In reviewing a summary judgment, an appellate
court views the evidence in the light most favorable to the
party against whom the judgment was granted and gives that
party the benefit of all reasonable inferences deducible from
the evidence. Id.
                           ANALYSIS
   [3] As an initial matter, we must determine whether the
district court’s decision to receive the Buy-Sell Agreement
transformed the motion to dismiss into a motion for summary
judgment. Section 6-1112(b) provides, in relevant part:
         If, on a motion asserting the defense . . . to dismiss for
      failure of the pleading to state a claim upon which relief
      can be granted, matters outside the pleading are presented
      to and not excluded by the court, the motion shall be
      treated as one for summary judgment and disposed of as
      provided in §§ 25-1330 to 25-1336, and all parties shall
      be given reasonable opportunity to present all material
      made pertinent to such a motion by statute.
At the commencement of the hearing, the district court took
judicial notice of documents within the public record. However,
later in the proceedings, the district court received an affidavit
of Stephen Lindsay and the Buy-Sell Agreement.
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                  Nebraska A dvance Sheets
                   293 Nebraska R eports
                         LINDSAY v. FITL
                        Cite as 293 Neb. 677

   For purposes of a motion to dismiss, “‘“the court gener-
ally must ignore materials outside the pleadings, but it may
consider some materials that are part of the public record or
do not contradict the complaint, as well as materials that are
necessarily embraced by the pleadings.”’” DMK Biodiesel
v. McCoy, 285 Neb. 974, 980, 830 N.W.2d 490, 496 (2013),
quoting Miller v. Redwood Toxicology Laboratory, Inc., 688
F.3d 928 (8th Cir. 2012). These documents embraced by
the complaint are not considered matters outside the plead-
ing. Documents embraced by the pleadings are materials
“‘“alleged in a complaint and whose authenticity no party
questions, but which are not physically attached to the plead-
ing.”’” Id., citing Enervations, Inc. v. Minnesota Mining,
380 F.3d 1066 (8th Cir. 2004), and quoting Ashanti v. City of
Golden Valley, 666 F.3d 1148 (8th Cir. 2012). The Buy-Sell
Agreement would be a “matter outside the pleading,” since
it was not referenced by the third amended complaint. With
this court’s having already determined that the word “shall”
is mandatory and not permissive, in regard to § 6-1112(b),
see DMK Biodiesel v. McCoy, supra, the personal repre-
sentative’s motion to dismiss became a motion for sum-
mary judgment.
   We now consider the Lindsays’ first two assignments that
the district court erred in finding (1) that their claims were
derivative of the corporation and (2) that the FDIC’s federal
action divested them of their standing.
   [4,5] Standing requires that a litigant have a personal stake
in the outcome of a controversy that warrants invocation of a
court’s jurisdiction and justifies exercise of the court’s reme-
dial powers on the litigant’s behalf. In re Invol. Dissolution
of Wiles Bros., 285 Neb. 920, 830 N.W.2d 474 (2013). To
have standing, a litigant must assert its own rights and inter-
ests and demonstrate an injury in fact, which is concrete
in both a qualitative and temporal sense. Butler Cty. Sch.
Dist. v. Freeholder Petitioners, 283 Neb. 903, 814 N.W.2d
724 (2012).
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                   Nebraska A dvance Sheets
                    293 Nebraska R eports
                         LINDSAY v. FITL
                        Cite as 293 Neb. 677

   Both parties agree that the FDIC took control of Mid City
Bank pursuant to 12 U.S.C. § 1821, which provides:
         (d) Powers and duties of Corporation as conservator
      or receiver
         ....
         (2) General powers
         (A) Successor to institution
         The Corporation shall, as conservator or receiver, and
      by operation of law, succeed to—
         (i) all rights, titles, powers, and privileges of the
      insured depository institution, and of any stockholder,
      member, accountholder, depositor, officer, or director of
      such institution with respect to the institution and the
      assets of the institution[.]
   [6,7] The personal representative argues that 12 U.S.C.
§ 1821(d)(2)(A)(i) grants exclusive jurisdiction of shareholder
claims to the FDIC and that because the FDIC filed its law-
suit, the Lindsays now lack standing to bring an action which
is derivative in nature. A derivative action is an action brought
by a shareholder to enforce a cause of action belonging to
the corporation. McGill v. Lion Place Condo. Assn., 291
Neb. 70, 864 N.W.2d 642 (2015). In countering, the Lindsays
argue that their claims are direct, not derivative, by stating
in their brief: “Fitl breached the [Buy-Sell] Agreement by
fraudulently misrepresenting facts affecting the value of the
304 Corporation . . . . These breaches create direct claims for
breach of contract which are separate and distinct from the
claims of other shareholders.” Brief for appellants at 6. They
assert that if a shareholder can establish an individual cause
of action because the harm to the corporation also damaged
the shareholder in his or her individual capacity, then the
individual can pursue his or her claims. In order to establish
an individual harm to support a claim, the shareholder must
allege a separate and distinct injury or a special duty owed by
the party to the individual shareholder. Freedom Fin. Group
v. Woolley, 280 Neb. 825, 792 N.W.2d 134 (2010). Even
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                   Nebraska A dvance Sheets
                    293 Nebraska R eports
                         LINDSAY v. FITL
                        Cite as 293 Neb. 677

if a shareholder establishes that there was a special duty,
he or she may only recover for damages suffered in his or
her individual capacity, and not injuries common to all the
shareholders. Id. The Lindsays contend that the breach of the
Buy-Sell Agreement is a distinct injury and not common to
all shareholders.
   The personal representative points out that not one of
the Lindsays’ four filed complaints or the proposed fourth
amended complaint alleges the existence of or breach of a
Buy-Sell Agreement. The Lindsays’ complaint places the per-
sonal representative on notice that their claim is in tort for
breach of fiduciary duty, not a contract action. Although the
rules of notice pleading have now been liberalized, the plead-
ing must give fair notice of the claims asserted. See, Davio v.
Nebraska Dept. of Health & Human Servs., 280 Neb. 263, 786
N.W.2d 655 (2010); Mahmood v. Mahmud, 279 Neb. 390, 778
N.W.2d 426 (2010). The Lindsays argued for the first time at
the hearing on the personal representative’s motion to dismiss
that their theory of recovery was for contract, not tort. With the
Lindsays’ third amended complaint clearly alleging a breach
of fiduciary duty, it did not provide “fair” notice of a contract
claim. The district court properly proceeded to evaluate the
Lindsays’ third amended complaint as alleging a breach of
fiduciary duty.
   [8] The Lindsays’ third amended complaint alleges that
as shareholders, they incurred injury due to the loss in value
of their 304 Corporation stock caused by the breach of fidu-
ciary duties by Fitl as an officer and director of Mid City
Bank and the 304 Corporation. Previously, this court stated
that “‘[e]ven though all shares of stock of a corporation
may be owned by a small number of shareholders or by one
shareholder alone, a shareholder cannot sue individually con-
cerning rights which belong to the corporation.’” Freedom
Fin. Group v. Woolley, 280 Neb. at 833, 792 N.W.2d at 141,
quoting Meyerson v. Coopers & Lybrand, 233 Neb. 758, 448
N.W.2d 129 (1989). Further, a “‘“diminution in value of a
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                  Nebraska A dvance Sheets
                   293 Nebraska R eports
                         LINDSAY v. FITL
                        Cite as 293 Neb. 677

stockholder’s investment is a concomitant of the corporate
injuries resulting in lost profits.”’” Id. In this instance, the
Lindsays’ breach of fiduciary duties claim as alleged is similar
to all other shareholders and did not arise from a special duty,
since the injury was not “separate and distinct.” Accordingly,
the district court correctly concluded that the Lindsays’ claims
were derivative in nature and that as a result of the FDIC
lawsuit, the Lindsays had no standing to bring a derivative
action on behalf of the corporation. See, Womble v. Dixon, 752
F.2d 80 (4th Cir. 1984); American Cas. Co. of Reading, Pa.
v. FDIC, 713 F. Supp. 311 (N.D. Iowa 1988); Freedom Fin.
Group v. Woolley, supra.
   After viewing the pleadings and evidence admitted at the
hearing in a light most favorable to the party against whom
judgment was granted and giving such party the benefit of
all reasonable inferences deducible from the evidence, we
perceive no genuine issue as to any material facts or as to
the ultimate inferences that may be drawn from those facts.
Thus, the personal representative was entitled to judgment
as a matter of law. Although the district court followed a
different standard in regard to the third amended complaint,
no error was committed. See Hamilton Cty. EMS Assn. v.
Hamilton Cty., 291 Neb. 495, 866 N.W.2d 523 (2015) (where
record demonstrates that decision of trial court is ultimately
correct, although such correctness is based on ground or rea-
son different from that assigned by trial court, appellate court
will affirm).
   Lastly, the Lindsays contend that the district court erred
when it stated that further amendment would be futile. We read
this assignment of error to effectively be a claim that the dis-
trict court erred when it denied the Lindsays an opportunity to
amend their complaint yet again to allege a contract cause of
action. We reject this assignment of error.
   The Lindsays first raised the contract theory in argument
at the summary judgment hearing. However, the record shows
no motion seeking to set aside the judgment or for leave to
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                  Nebraska A dvance Sheets
                   293 Nebraska R eports
                       LINDSAY v. FITL
                      Cite as 293 Neb. 677

amend based on contract either before or after summary judg-
ment had been entered. So there was no matter on which to
rule. The district court did not err when it merely commented
on a hypothetical amended complaint.
                      CONCLUSION
   We determine that the district court did not err in grant-
ing a judgment which dismissed the Lindsays’ third amended
complaint.
                                                  A ffirmed.