Practice point: The motion to dismiss was granted after plaintiff failed to allege that a pre-suit demand would have been
futile. A shareholder may not institute a derivative action unless the
complaint sets forth with particularity the shareholder's efforts
to secure the initiation of that action by the board of directors, or
sets forth sufficient and particular reasons for not making such efforts, pursuant to Business Corporation Law § 626[c]. A pre-suit demand is
similarly required in a derivative action involving a limited liability
company.
Student note: A plaintiff is unable to bring a derivative action when the interests at issue are
personal to it, not corporate.
Case: Najjar Group, LLC v. West 56th Hotel LLC, NY Slip Op 07123 (1st Dept. 2013).
Here is the decision.
Tomorrow's issue: Pleading fraud.
