In re Amerco Derivative Litig..Glenbrook Capital Ltd. P'ship

252 P.3d 681

127 Nev. Adv. Op. 17

In re AMERCO DERIVATIVE LITIGATION.Glenbrook Capital Limited Partnership; Alan Kahn; Ron Belec; and Paul F. Shoen, Appellants,

v.John M. Dodds, an Individual; Richard Herrera, an Individual; Aubrey Johnson, an Individual; Charles J. Bayer, an Individual; John P. Brogan, an Individual; James J. Grogan, an Individual; Amerco, a Nevada Corporation; Edward J. Shoen, an Individual; James P. Shoen, an Individual; William E. Carty, an Individual; Mark

v. Shoen, an Individual; SAC Holding Corporation, a Nevada Corporation; SAC Holding Corporation II, a Nevada Corporation; Three SAC Self–Storage Corporation, a Nevada Corporation; Four SAC Self–Storage Corporation, a Nevada Corporation; Five SAC Self–Storage Corporation, a Nevada Corporation; Six SAC Self–Storage Corporation, a Nevada Corporation; Six–A SAC Self–Storage Corporation, a Nevada Corporation; Six–B SAC Self–Storage Corporation, a Nevada Corporation; SIX–C SAC Self–Storage Corporation, a Nevada Corporation; Seven SAC Self–Storage Corporation, a Nevada Corporation; Eight SAC Self–Storage Corporation, a Nevada Corporation; Nine SAC Self–Storage Corporation, a Nevada Corporation; Ten SAC Self–Storage Corporation, a Nevada Corporation; Eleven SAC Self–Storage Corporation, a Nevada Corporation; Twelve SAC Self–Storage Corporation, a Nevada Corporation; Thirteen SAC Self–Storage Corporation, a Nevada Corporation; Fourteen SAC Self–Storage Corporation, a Nevada Corporation; Fifteen SAC Self–Storage Corporation, a Nevada Corporation; Sixteen SAC Self–Storage Corporation, a Nevada Corporation; Seventeen SAC Self–Storage Corporation, a Nevada Corporation; Eighteen SAC Self–Storage Corporation, a Nevada Corporation; Nineteen SAC Self–Storage Limited Partnership, a Nevada Limited Partnership; Twenty SAC Self–Storage Corporation, a Nevada Corporation; Twenty–One SAC Self–Storage Corporation, a Nevada Corporation; Twenty–Two SAC Self–Storage Corporation, a Nevada Corporation; Twenty–Three SAC Self–Storage Corporation, a Nevada Corporation; Twenty–Four SAC Self–Storage Limited Partnership, a Nevada Limited Partnership; Twenty–Five SAC Self–Storage Limited Partnership, a Nevada Limited Partnership; Twenty–Six SAC Self–Storage Limited Partnership, a Nevada Limited Partnership; and Twenty–Seven SAC Self–Storage Limited Partnership, a Nevada Limited Partnership, Respondents.

No. 51629.

Supreme Court of Nevada.

May 12, 2011.

Lewis & Roca LLP and Daniel F. Polsenberg and Jennifer B. Anderson, Las Vegas; Berman DeValerio and Joseph J. Tabacco, Jr., and Christopher T. Heffelfinger, San Francisco, CA; Latham & Watkins LLP and Marc W. Rappel, Brian T. Glennon, and Gene Chang, Los Angeles, CA; Harold B. Obstfeld, New York, NY; Robbins Umeda LLP and Brian J. Robbins, Kevin A. Seely, Kelly McIntyre, and Gregory E. Del Gaizo, San Diego, CA, for Appellants.Parsons Behle & Latimer and Rew R. Goodenow, Reno; Irell & Manella LLP and David Siegel, Daniel P. Lefler, and Charles E. Elder, Los Angeles, CA, for Respondents John M. Dodds, Richard Herrera, Aubrey Johnson, Charles J. Bayer, John P. Brogan, and James J. Grogan.Laxalt & Nomura, Ltd., and Daniel Hayward, Reno; Morrison & Foerster, LLP, and Jack W. Londen, San Francisco, CA, for Respondent AMERCO.McDonald Carano Wilson LLP and Thomas R.C. Wilson and Matthew C. Addison, Reno; Pillsbury Winthrop Shaw Pittman LLP and Walter J. Robinson, Palo Alto, CA, for Respondents Edward J. Shoen, James P. Shoen, and William E. Carty.Law Offices of Calvin R.X. Dunlap and Monique Laxalt and Calvin R.X. Dunlap, Reno; Squire, Sanders & Dempsey L.L.P. and George Brandon and Brian A. Cabianca, Phoenix, AZ, for Respondents Mark V. Shoen and SAC entities.Before the Court En Banc.

OPINION

By the Court, HARDESTY, J.:

AMERCO is a Nevada corporation controlled by the feuding Shoen family. Its main operating subsidiary is U–Haul International, Inc. AMERCO has engaged in numerous business transactions with the SAC entities, which are real estate holding companies controlled by AMERCO shareholder and executive officer Mark Shoen. Based on several of those transactions, appellants filed the underlying shareholder derivative suit in 2002 against AMERCO's former and current directors, Mark, and the SAC entities, primarily for breach of fiduciary duty and aiding and abetting the breach of that fiduciary duty. However, appellants failed to make a demand for corrective action on the AMERCO board of directors, and subsequently, the district court granted respondents' motion to dismiss for failure to adequately allege demand futility. Appellants appealed that decision, and this court reversed and remanded for reconsideration, after clarifying the demand futility standards. See Shoen v. SAC Holding Corp., 122 Nev. 621, 626, 137 P.3d 1171, 1174–75 (2006). On remand, the district court once again granted respondents' motions to dismiss—this time on two grounds distinct from demand futility: (1) a settlement agreement entered into in 1995 by AMERCO and shareholders who are not involved in this case, referred to as the Goldwasser settlement,¹ barred appellants' derivative claims; and (2) appellants could not pursue derivative claims against the SAC entities on behalf of AMERCO based on transactions in which AMERCO itself participated.

In this appeal, we first address whether a claim-release clause contained in the Goldwasser settlement agreement reached by different shareholders several years earlier bars the derivative claims now asserted by appellant shareholders. We conclude that it does not. When a settlement agreement does not contain language exhibiting a clear intent to release future claims, the release clause is limited to the claims that existed at the time the settlement agreement was reached.

Second, we address whether appellant shareholders could bring their derivative claims against the corporation's alleged coconspirators. In doing so, we examine, for the first time, the defense of in pari delicto² in a corporate context, which first requires an analysis of whether an agent's acts are imputed to the corporation. We also clarify the adverse interest exception to imputation, which provides that when the officers have totally abandoned the corporation's interests, their actions are not imputed to the corporation. We further adopt the sole-actor rule, which operates as an exception to the adverse interest exception in limited circumstances. We conclude that the adverse interest exception and sole-actor rule do not apply in this case. Therefore, without more, the AMERCO officers' alleged actions are imputed to the corporation. We then address whether respondents can assert the in pari delicto defense, concluding that this is a question that must be remanded to the district court.

Finally, we address various arguments set forth by respondents regarding alternative grounds for affirming the district court's order of dismissal, including whether the district court properly held that appellants adequately pleaded demand futility, whether appellants sufficiently pleaded their causes of action, and whether appellants' claims are barred by the statute of limitations. We conclude that appellants adequately pleaded demand futility, but the district court must now conduct a proper evidentiary hearing regarding whether the evidence supports appellants' allegations; appellants sufficiently pleaded some, but not all, of their claims; and whether the statute of limitations has run is a question of fact for the district court. Accordingly, we affirm in part, reverse in part, and remand for further proceedings.

FACTS

To put our discussion in context, we present an overview of the factual and procedural background of this case.³ AMERCO, a Nevada corporation, is the parent company of U–Haul, which Leonard Samuel (L.S.) Shoen founded in 1945. Through wholly owned U–Haul centers and other independent dealers, AMERCO rents trucks, trailers, and storage units to the public. AMERCO's other subsidiary, AMERCO Real Estate Corporation (AREC), controls “the purchase, sale and lease of properties used by AMERCO.” Several years before the instant litigation began, L.S. transferred most of his AMERCO stock to his children, leading “to an unfortunate and well-documented family feud between shifting factions for corporate control.” Shoen, 122 Nev. at 627, 137 P.3d at 1175. At the center of the feud are L.S.'s sons, appellant Paul and respondents Edward J. (Joe), James, and Mark Shoen.

Joe, James, and Mark created SAC Self–Storage Corporation and Two SAC Self–Storage Corporation in 1993 to serve as real estate holding corporations. The common stock issued by the two corporations was split evenly between Joe, James, and Mark. However, in December 1994, a short time before Joe and James filed for personal bankruptcy, they sold their shares to Mark, allegedly for $100. After this transaction, Mark Shoen owned and controlled SAC Self–Storage Corporation and Two SAC Self–Storage Corporation. In 1996, these two entities were merged into a new corporation called Three SAC. Since 1996, many additional SAC corporations or partnerships have been formed under Nevada law (referred to here as the SAC entities), and Mark controls each one.

In 2002 and 2003, Paul and other appellant shareholders Ron Belec, Alan Kahn, and Glenbrook Capital Limited Partnership filed individual derivative suits, which were subsequently consolidated, against Joe, James, and Mark, as well as against current and former AMERCO directors Charles Bayer, William Carty, John Dodds, Richard Herrera, Aubrey Johnson, John Brogan, and James Grogan. Appellants alleged that respondents breached their fiduciary obligations to AMERCO by engaging in improper and unfair transactions with the SAC entities to AMERCO's detriment. The district court dismissed the complaints on the ground that demand futility was not pleaded adequately, Shoen, 122 Nev. at 626, 137 P.3d at 1175, and on appeal, this...