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February 14, 1969

George E. JOHNSON, Dwight D. Taylor, Franklin B. Tuttle, Plaintiffs,
AMERICAN GENERAL INSURANCE COMPANY, Variable Annuity Life Insurance Company of America, Equity Annuity Life Insurance Company, Benjamin M. Woodson, Gus S. Wortham, and Harry C. Copeland, Jr., Defendants

The opinion of the court was delivered by: GASCH

 GASCH, District Judge.

 Plaintiffs filed the complaint in this case in two parts: part I is styled as a derivative action; part II as a class action. This matter came on for hearing on defendants' motions: (I) for summary judgment on count one of plaintiffs' complaint; (II) for an order requiring plaintiffs to amend their pleadings to eliminate allegations as to the representation of absent persons and allowing them to proceed in their individual capacities only; and (III), in the alternative, for an order determining and limiting the class and directing notice to the members of the class. *fn1"


 It is alleged that plaintiffs are minority stockholders in the Equity Annuity Life Insurance Company (EALIC) a variable annuity insurance company organized under Title 35 of the District of Columbia Code. Defendant Variable Annuity Life Insurance Company of America (VALIC) is similarly organized under Title 35 of the District of Columbia Code. EALIC and VALIC, nationwide competitors, are leaders in the relatively new and expanding field of variable annuity insurance.

 Defendant American General Insurance Company of Houston, Texas, (American General), a Texas corporation qualified to do business in the District of Columbia, allegedly is a holding company which controls five life insurance companies and seven fire and casualty companies. It owns minority interests in three other life insurance companies. During the years relevant here, American General owned 34.3% of EALIC's capital stock. Persons associated with American General owned an additional 25.8% of EALIC's capital stock creating a combined control of approximately sixty percent.

 Defendant Woodson is the president and a director of both American General and EALIC. *fn2" Five of EALIC's eleven directors are directors or officers of American General or its affiliated companies. Defendant Woodson owns 9,753 shares of EALIC's stock.

 Rapid expansion diminished VALIC's capital. This brought pressure from the Superintendent of Insurance for the District of Columbia on VALIC to seek additional capital. American General, acting through President-Director Woodson, was responsive to VALIC's search and an agreement was established between them on May 5, 1967. Under part one of the agreement American General would purchase 1,325,000 shares (50%) of VALIC's capital stock for $12,735,000 ($9.61 per share) and VALIC would arrange to have Woodson become a director and chairman of the Board of VALIC. Under part two of the agreement and conditioned on the completion of part one of the agreement, American General, again acting through Woodson, would cause EALIC to sell all of its business, 250,000 capital shares, to VALIC in return for 250,000 shares of VALIC (quoted at 20 5/8 to 21 1/8 on 5/4/67).

 It is generally alleged that Woodson, in effect wearing several "hats" at the same time, engineered these transactions from all sides without regard for EALIC's stockholders and with only the interests of American General, his true principal, in mind. Part two of the agreement has not been consummated. EALIC is still in existence.


 Under Rule 56 of the Federal Rules of Civil Procedure, defendants may prevail on their motion for summary judgment of count one of plaintiffs' complaint only if it appears from the entire record that there is no genuine issue as to any material fact and only if on the undisputed facts the defendants are entitled to a judgment as a matter of law. In order to put the issue in focus, local rule 9(h) requires the movant to submit with his Rule 56 motion a particular statement of the material facts as to which there is no dispute. No rule 9(h) statement has been filed. Rather, the defendants have requested the Court to consider a recitation of "uncontroverted facts" appearing in their briefs in support of these motions as the statement required by rule 9(h). *fn3" To the extent possible the Court has done that. *fn4"

 Plaintiffs, however, have challenged defendants' version of the material facts both in general and in the particular. "If one thing is clear about the case at bar, it is that material facts and the inferences to be drawn therefrom are in issue." *fn5" The Court agrees. Moreover, in this case it appears that the legal issues will in part turn on elements such as fiduciary duties, duties of loyalty and conflicts of interest, which elements require for their just resolution a scrutiny of the inferences to be drawn from the facts and from those presenting them. *fn6" In regard to antitrust litigation the Supreme Court has stated:

 For these reasons the Court is at this time, on this state of the record, reluctant to find the material facts undisputed and accordingly, denies this part of defendants' motion for summary judgment.

 Alternatively, the defendants have requested the Court to treat their motion as one in the nature of a motion to dismiss. Defendants argue that regardless of the facts, or assuming arguendo that the facts plaintiffs allege are true, defendants are entitled, as a matter of law, to a dismissal of count I of the complaint on either of two theories.

 First, defendants argue that plaintiffs are now, on the eve of the consummation of the challenged corporate transactions, precluded from bringing this action since, rather than earlier seeking an injunction, they "deliberately chose to forego any type of equitable proceeding to prevent the consummation * * * of the transaction, choosing instead to protect their interests by suit for damages on behalf of the individual stockholders." *fn8" The Court is unable on the complex and factually contradicted record before it to find either that the plaintiffs made such a decision or, even in the event they did, that such a decision would preclude them from changing their strategy from negotiation on personal claims to suit on both personal and derivative claims. *fn9" It appears that this is a matter within the discretion of the Court. *fn10" Noting the plaintiffs allege that they sought all reasonable remedies within the corporate structure and that another stockholder, James K. Sullivan, unsuccessfully sought an injunction in Civil Action 1807-67 to prevent the holding of the stockholders meeting at which the agreement now challenged was subsequently allegedly approved, at this stage, the Court will not on this ground deny the plaintiffs the opportunity to proceed.

 Second, defendants assert that plaintiffs cannot maintain a derivative action "[because] it is clear that attacks by minority shareholders upon mergers or sales of assets ratified by the shareholder majority involving assertions of direct injury to the minority shareholders and do not injure the corporation as such * * *." *fn11" While this proposition has support among the authorities, it is not a statement which the Court ...

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