Court Opinion

ID: 8911239
Source: CourtListenerOpinion
Date Created: 2022-11-27 03:05:34.609122+00
Date Added: 2024-06-11T17:08:33.035503
License: Public Domain

LIVELY, Circuit Judge,
concurring.
I concur in the result and write separately to state my understanding of the holding of the court. Though the court states that the plaintiffs’ standing to prosecute this action “could be challenged on the ground that Davis ‘does not fairly and adequately represent the interests of similarly situated shareholders in enforcing the corporation’s rights,’ ” there is no holding that Davis was in fact disqualified from maintaining the action. Such a holding would have required dismissal, since no other shareholders joined in the complaint. Rather, the court finds that Davis, because of conflicts between his personal interests and those of other shareholders and his ulterior motives in bringing the action, should have a limited participation in the fruits of the lawsuit. This is a reasonable provision which is also applicable to the claim for attorney’s fees. Cf. Clark v. Lomas & Nettleton Financial Corp., 79 F.R.D. 641 (N.D.Tex.1978).
The district court had jurisdiction over the parties and the subject matter. Though it developed that the plaintiffs were not “knights in shining armor,” Wolf v. Frank, 477 F.2d 467, 476 (5th Cir.), cert. denied, 414 U.S. 975, 94 S.Ct. 287,38 L.Ed.2d 218 (1973), they were shareholders of Corned at the beginning of the lawsuit and of C.M.S. throughout. Their derivative action brought to light several acts of the defendants which had resulted in illegal withdrawals and diversions of corporate assets. Though the plaintiffs had a selfish motive in bringing the action, the district court acted within its discretion in permitting them to continue to act on behalf of similarly situated shareholders. Having jurisdiction in this equitable action the court was free to decide the entire dispute and order complete relief. Alexander v. Hillman, 296 U.S. 222, 242, 56 S.Ct. 204, 211, 80 L.Ed. 192 (1935).