United States District Court, District of Columbia
P. Mehta, United States District Court Judge.
Marion Coster, a shareholder of UIP Companies, Inc.
(“UIP”) brings direct and derivative claims
against Defendants Steven Schwat, Peter Bonnell, Stephen
Cox-Directors of UIP-and Defendant Schwat Realty LLC-a
shareholder of UIP-for breach of fiduciary duty, aiding and
abetting the breach of fiduciary duty, and civil conspiracy.
See generally Am. Compl., ECF No. 5 [hereinafter
Compl.]. Plaintiff claims that “Defendants have engaged
in a brazen and unlawful scheme to deny [her], an elderly
widow, any financial remuneration from her 50% ownership in
UIP, any role in the affairs and governance of UIP, and any
real visibility into the considerable financial success of
the Company.” See Id. ¶ 3. Defendants
moved to dismiss, arguing that (1) the court does not have
subject matter jurisdiction because Plaintiff fails to
properly plead the amount in controversy and (2) Plaintiff
fails to state plausible claims. See generally
Defs.' Mot., ECF No. 8, Defs.' Mem., ECF No. 8-1
[hereinafter Defs.' Mem.]. Defendants also ask the court
to abstain from hearing this case because Plaintiff brought
separate actions for appointment of a custodian and
cancellation of a UIP stock sale, which remain pending.
See Id. at 29-33; see also Defs.' Mem,
Exs. A and B. For the following reasons, the court denies
question of jurisdiction, Plaintiff adequately pleads the
amount in controversy. For a court to dismiss a case for
failure to meet the amount in controversy, it must
“appear to a legal certainty that the [alleged] claim
is really for less than the jurisdictional amount.”
Information Strategies, Inc. v. Dumosch, 13
F.Supp.3d 135, 140 (D.D.C. 2014). Put differently, a court
must “be very confident that a party cannot recover the
jurisdictional amount before dismissing the case for want of
jurisdiction.” Rosenboro v. Kim, 994 F.2d 13,
17 (D.C. Cir. 1993). Here, Plaintiff pleads that she
“suffered damages in excess of $5 million, ”
Compl. ¶ 61, and she supports the statement with
allegations of recent “high-dollar real estate
transactions” from which she received no entitled
remuneration, see Id. ¶ 23. To be sure,
Plaintiff could have pleaded the amount in controversy with
greater particularity. But her complaint is sufficient at
this stage to survive a motion to dismiss, because the court
cannot say “to a legal certainty” that her claim
is for a less than the jurisdictional amount.
respect to their assertion that the complaint fails to state
a plausible claim, Defendants begin by contending that
Plaintiff's aiding and abetting claims (Counts 5-8) and
civil conspiracy claims (Counts 9-10) must fail because such
actions require participation from a non-fiduciary, and all
Defendants are alleged to be fiduciaries. See
Defs.' Mem. at 14-15. Plaintiff responds that these
claims are alternative theories of liability, because
Defendants may contend that they owed her no fiduciary duty,
making these secondary theories primary. See
Pl.'s Opp'n to Defs.' Mem., ECF No. 9
[hereinafter Pl.'s Opp'n], at 14-15. As Plaintiff may
plead in the alternative, see Fed. R. Civ. P.
8(d)(2), these claims cannot be dismissed at this time.
also erroneously argue that Plaintiff fails to plausibly
plead her breach of fiduciary duty claims (Counts 1-4).
See Defs.' Mem. at 15-28. In her complaint,
Plaintiff sets forth a host of allegations that, when taken
together, plausibly allege a breach of fiduciary duty. These
allegations include restructuring of UIP's finances to
prevent a profit accruing to Plaintiff, redirecting real
estate projects, improperly using UIP's resources,
foregoing annual meetings, preventing access to UIP's
records, incurring substantial liabilities, and effecting a
sham stock sale. See Compl. ¶ 57. To rebut
these allegations, Defendants rely on evidence regarding
UIP's corporate structure and practices. See,
e.g. Defs.' Mem. at 20 (breaking down the total
income of UIP subsidiaries); see, e.g. Id. at 26
(reframing Mr. Bruggen's stock sale). Such evidence may
ultimately support winning defenses. But, at this stage, the
court must view all non-conclusory allegations in the light
most favorable to Plaintiff and draw all reasonable
inferences in her favor. Applying that standard, Plaintiff
“state[s] a claim to relief that is plausible on its
face.” Ashcroft v. Iqbal, 556 U.S. 662, 678
also seem to assert that Plaintiff cannot bring her
derivative claims because she failed to plead futility.
See Defs.' Mem. at 8. To show whether a demand
to a board of directors would be futile, a plaintiff must
offer particularized facts to “create a reasonable
doubt that: 1) the directors are disinterested and
independent; or 2) the challenged transaction was otherwise
the product of a valid exercise of business judgment.”
Aronson v. Lewis, 473 A.2d 805, 814 (Del. 1984).
Plaintiff has met this standard. For instance, Plaintiff
contends that, facilitated by an alleged sham stock sale by
which Director Bonnell acquired 1/3 of UIP's stock, the
remaining directors formed a voting block to thwart and
undermine Plaintiff's interests. See Compl.
¶¶ 69- 70. If these allegations are true,
presenting derivative claims to these directors would be
futile. Further, Plaintiff has raised doubts that the stock
sale was a product of business judgment. See Id.
¶ 47 (alleging sale was “a small fraction of its
fair market value”). Plaintiff therefore has adequately
pleaded the futility of presenting her derivative claims to
Defendants ask the court to exercise Younger or
Colorado Valley abstention, or to stay the case
until the parallel Delaware proceedings are resolved.
See Defs.' Mem. at 29-33; see also
Defs.' Reply, ECF No. 10, at 17-19. Neither abstention
doctrine is applicable here, and the court will not exercise
its discretion to issue a stay.
foregoing reasons, Defendants' Motion to Dismiss, ECF No.
8, is denied. The parties shall submit a Joint Status Report
to the court by May 6, 2019, updating the court on the