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Pallot v. Peltz

Appellate Division of the Supreme Court of New York, First Department
Dec 13, 2001
289 A.D.2d 85 (N.Y. App. Div. 2001)

Opinion

5628

December 13, 2001.

Order, Supreme Court, New York County (Helen Freedman, J.), entered November 2, 2000, which granted the motion of defendants-respondents, members of nominal defendant-respondent Triarc's board of directors, to dismiss plaintiff's shareholder derivative action for failure to state a cause of action, unanimously affirmed, with costs.

David F. Dobbins, for plaintiff-appellant.

Jonathan H. Hurwitz, for defendants-respondents.

Jonathan H. Hurwitz, for nominal defendant-respondent

Before: Sullivan, P.J., Rosenberger, Williams, Tom, Friedman, JJ.


This shareholder derivative action involving a Delaware corporation and governed by Delaware law was properly dismissed since plaintiff failed to plead particularized facts that would, if proved, suffice to raise a reasonable doubt that defendant board members were disinterested and independent, or that their approval of challenged transactions was other than the result of a valid exercise of business judgment, and, accordingly, failed to allege grounds for dispensing with a prelitigation demand upon the subject corporation's directors as an exercise in futility (see, Delaware Chancery Rule 23.1; White v. Panic, 783 A.2d 543, 2001 Del LEXIS 421; Aronson v. Lewis, 473 A.2d 805, 814-815 [Del]). Plaintiff's allegations of self-dealing by a minority of defendant corporation's board were insufficient to shift the burden of proof to the Triarc defendants to demonstrate "utmost good faith" under the entire fairness of the transaction rule noted in Mills Acquisition Co., v. MacMillan, Inc. ( 559 A.2d 1261, 1280). A determination of whether a board is properly disinterested at the time a transaction is voted on turns on whether the majority, not the minority, of the board participating in the vote was disinterested and independent (see,Brehm v. Eisner, 746 A.2d 244, 257; see also,Marx v. Akers, 88 N.Y.2d 189, 200), and plaintiff has failed to allege in any but the most general and conclusory way that the majority of defendant board acted without the requisite independence and disinterestedness when it approved the challenged transactions.

THIS CONSTITUTES THE DECISION AND ORDER OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.


Summaries of

Pallot v. Peltz

Appellate Division of the Supreme Court of New York, First Department
Dec 13, 2001
289 A.D.2d 85 (N.Y. App. Div. 2001)
Case details for

Pallot v. Peltz

Case Details

Full title:WILLIAM J. PALLOT, ETC., PLAINTIFF-APPELLANT, v. NELSON PELTZ, ET AL.…

Court:Appellate Division of the Supreme Court of New York, First Department

Date published: Dec 13, 2001

Citations

289 A.D.2d 85 (N.Y. App. Div. 2001)
734 N.Y.S.2d 62

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