The opinion of the court was delivered by: WADDY
In this case the plaintiffs who are investing and borrowing members of Perpetual Building Association, sued said Association, its nine directors individually, and the Fidelity Investment Company, a partnership, all of the general partners of which are the same directors of Perpetual, for injunctive and other relief. All of plaintiffs' claims with the exception of one were disposed of by Judge George L. Hart of this Court by order dated March 7, 1968, granting partial summary judgment for all of the defendants. Plaintiffs' remaining claim is that: "Fidelity receives and unlawfully retains commissions for writing insurance on property securing the repayment of loans made by Perpetual." They predicate their claim upon the contention that the directors of Perpetual have unlawfully deprived Perpetual of a "corporate opportunity"* and violated their fiduciary duty by failing to qualify Perpetual to place hazard insurance on loans made by it and receive commissions therefor and by diverting such business to Fidelity. It is the position of the defendants that:
(1) Plaintiffs have no standing to maintain this suit;
(2) Plaintiffs have not exhausted their administrative remedies;
(3) The doctrine of primary jurisdiction requires that this matter be first considered by the Federal Home Loan Bank Board;
(4) That it would be ultra vires for Perpetual to take out insurance license;
(5) That District of Columbia law precluded and still precludes Perpetual from engaging in the insurance business as agent or broker.
This is a derivative suit in the nature of a class action maintainable under Rule 23(a) and (b)(2) of the Federal Rules of Civil Procedure brought by two plaintiffs, Leonard S. Goodman and Barbara L. Goodman, his wife. Plaintiffs and the class they represent are investing and/or borrowing members of Perpetual Building Association. Plaintiffs have been investing (depositing) members of defendant Perpetual Building Association (hereinafter "Perpetual") since October 6, 1964, and borrowing members of Perpetual since August 16, 1962.
The defendant Perpetual, is a voluntary unincorporated association of depositing and borrowing members organized in 1881 under the laws of the District of Columbia and engaged in the business of a building and loan association in the District of Columbia and, since about 1949, in Maryland, maintaining offices in both jurisdictions. Although Perpetual does not maintain an office in the State of Virginia, it does make loans which are secured by first deeds of trust on properties located in the State of Virginia. The Virginia State Corporation Commission has stipulated with Perpetual that the above-described Virginia-related activities of Perpetual do not constitute doing business in Virginia.
The defendant Fidelity Investment Company (hereinafter "Fidelity") is a partnership engaged in the business of managing properties, making short term loans, and acting as an insurance agent or broker in the District of Columbia, Maryland and Virginia. Fidelity was organized in 1947. It is the successor to the Fidelity Mortgage and Investment Company (hereinafter referred to as "Fidelity Corporation"), a Delaware corporation that was organized on May 31, 1927, at the suggestion of the defendant, Edward C. Baltz, who was then Perpetual's Assistant Secretary and a director, and who is the present Chairman of Perpetual's Board of Directors. Prior to its dissolution on January 1, 1947, Fidelity Corporation conducted a general real estate business, which included acting as a licensed insurance broker in the District of Columbia. During its existence each of the stockholders of Fidelity Corporation was also a director of Perpetual.
The nine individual defendants are members of and together comprise the entire Board of Directors of Perpetual. These same nine individual defendants are also general partners of Fidelity. Fidelity has no other general partners. Over the years as the directors of Perpetual have changed, the partners of Fidelity have similarly changed. As general partners, the nine individual defendants provide Fidelity with general supervision and share equally in the net profits earned by Fidelity from all sources of business conducted by that partnership, including business generated through Perpetual.
Seven of Perpetual's nine directors have met informally on a daily basis for a number of years to discuss matters of importance to the Association. Formal meetings of the Board of Directors are held once a month. The minutes of such monthly meetings do not include ...