Case 3:08-cv-00113-RRE-KKK Document 170 Filed 01/05/12 Page 1 of 16 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NORTH DAKOTA SOUTHEASTERN DIVISION Bernard McKay, on behalf of himself, individually, and on behalf of all others similarly situated, vs. Gary D. Tharaldson, and Plaintiff, Defendant, Tharaldson Motels, Inc. Employee Stock Ownership Plan, Nominal Defendant. Civil No. 3:08-cv-113 REDACTED MEMORANDUM OPINION AND ORDER ON SUMMARY JUDGMENT MOTIONS Defendant Gary D. Tharaldson (hereafter Tharaldson moves for judgment on the pleadings, or in the alternative, for summary judgment (Docs. #103 & 105. Plaintiff Bernard 1 McKay (hereafter McKay moves for partial summary judgment on Tharaldson s Second, Third, Fifth, Sixth, and Eleventh Affirmative Defenses (Doc. #132. On November 9, 2011, the Court heard arguments from the parties and took the motions under advisement. Having considered the briefs and arguments of the parties, the Court issues this memorandum opinion and order. 1 The Court previously granted Plaintiff Bernard McKay s motion to certify this action as a class action (Doc. #102. Thus, the designation of Plaintiffs in this Order refers to McKay and others similarly situated, including All persons who were participants of the Tharaldson Motels, Inc. ( TMI, Employee Stock Ownership Plan (the TMI ESOP or the Plan at any time from December 30, 1998 to the present and who received an allocation of Plan assets to their accounts which they did not subsequently forfeit under the terms of the Plan and the beneficiaries of such participants. 1
Case 3:08-cv-00113-RRE-KKK Document 170 Filed 01/05/12 Page 2 of 16 SUMMARY OF DECISION In order to prove a breach of fiduciary duty under ERISA for failure to pursue a shareholder derivative action, the plaintiff must prove that the lawsuit would have been successful. Herman v. Mercantile Bank, N.A., 137 F.3d 584, 587 (8th Cir. 1998; Martin v. Feilen, 965 F.2d 660, 667 (8th Cir. 1992. Under North Dakota s Business Corporation Act, a derivative action asserting a right of a corporation may not be brought unless the plaintiff is a holder of record of shares at the time of the transaction of which the plaintiff complains or that the plaintiff s shares devolved by operation of law from a person who was a holder of record at such time. N.D. Cent. Code 10-19.1-86. Because Plaintiffs do not fall into either category, they cannot establish that the claim they assert should have been brought by the fiduciary would have been successful. Moreover, Plaintiffs have failed to persuade the Court than any equitable doctrine, including the continuing harm exception to the contemporaneous ownership requirement, is applicable under the circumstances of this case. Defendant Gary Tharaldson s motion for summary judgment is granted. Tharaldson s alternative motion for judgment on the pleadings and Plaintiffs motion for partial summary judgment on certain affirmative defenses are dismissed as moot. BACKGROUND This is an action brought under ERISA 502(a(2, 29 U.S.C. 1132(a(2, and ERISA 409, 29 U.S.C. 1109. Plaintiff Bernard McKay is a beneficiary of the Tharaldson Motels, Inc. Employee Stock Ownership Plan (hereafter TMI ESOP or Plan. Defendant Gary D. Tharaldson, the sole director of TMI at the time, appointed himself trustee of the TMI ESOP on 2
Case 3:08-cv-00113-RRE-KKK Document 170 Filed 01/05/12 Page 3 of 16 December 17, 1998, and remained trustee until August 2006, when he was forced to resign (Doc. #1, 7; Doc. #15, 7. Linda Tharaldson is the former wife of Gary Tharaldson (Doc. #1, 11; Doc. #15, 11. The central issue in this case is a term made part of a Settlement Agreement (hereafter Agreement dated March 28, 1998, and signed by Gary Tharaldson, individually; Gary Tharaldson, President of TMI; Gary Tharaldson, President of Tharaldson Motels II, Inc.; and Linda Tharaldson (Doc. #34-1. The Agreement provides, in relevant part, as follows: IV. 2 That Tharaldson Property Management Company will retain Linda 2 Tharaldson Property Management Company ( TPM is a wholly-owned subsidiary of TMI and is responsible for managing motels and other related non-tmi motel properties (Doc. #1, 10; Doc. #15, 10. 3
Case 3:08-cv-00113-RRE-KKK Document 170 Filed 01/05/12 Page 4 of 16 for a period of twenty (20 years as a consultant, and Linda will provide consulting services for marketing operations of the company. That said service shall include assistance in future international marketing and research. It is agreed that Linda will receive Five Hundred Thousand Dollars ($500,000.00 a year for said services to be paid in equal monthly payments of Forty-one Thousand Six Hundred Sixty-six Dollars ($41,666.00 commencing January 1, 1998, with payment becoming due on January 31, 1998. That Linda shall be allowed use of the corporate plane a maximum of six (6 trips a year for U.S. travel. (Doc. #34-1 (information redacted by the Court as it contains confidential information filed under seal. The parties dispute the implications of the Agreement s terms. Tharaldson asserts the consulting agreement (provision IV of the Agreement was a no-cut contract that was not part of the divorce, but rather was executed by TPM to compensate Linda for past, present, and future work (Doc. #104, p. 6. In contrast, Plaintiffs believe that Linda Tharaldson was required to provide something of value in return for payments. Plaintiffs further believe, as part of the divorce settlement, Linda Tharaldson transferred her interest in common stock in exchange for the sham 20-year consulting contract with TPM. Plaintiffs reference handwritten and draft versions of the Agreement as evidence that the consulting agreement was part of Gary and Linda s divorce. The plain language of the Settlement Agreement belies Tharaldson s contention that the 4
Case 3:08-cv-00113-RRE-KKK Document 170 Filed 01/05/12 Page 5 of 16 consulting agreement was not part of the divorce settlement. The introductory recitals refer to the marriage and divorce of Linda and Gary Tharaldson. Following the terms of the Agreement, the parties agree the document is intended to be a full and final compromise, adjustment, and settlement of any and all claims, disputes or otherwise between the parties. (Doc. #34-1. Nonetheless, the many tangential issues raised by Plaintiffs, including whether the consulting agreement was part of the divorce or not, whether Linda Tharaldson simply was required to make herself available for consulting or was contractually obligated to provide something of value in return for her salary, and whether the consulting agreement is voidable do not need to be decided for purposes of this motion. These issues are not material to the ultimate determination of whether Gary Tharaldson breached his fiduciary duties, as alleged in this action. Plaintiffs assert that Linda Tharaldson performed little or no services to justify monthly payments of approximately $40,000.00 (Doc. #1, 19. They claim Tharaldson violated his corporate fiduciary duty under N.D. Cent. Code 10-19.1-50 and 10-19.1-60 by failing to bring a derivative action against himself for the misuse, dissipation and misappropriation of approximately $4 million in TMI assets that were paid to his ex-wife. Id. at 1. Plaintiffs contend this dissipation and waste of TMI assets from 1998 until 2007 resulted in a diminution in the value of TMI stock. Id. at 22. They contend the ESOP, as holder of almost all of the common shares of TMI stock, was entitled to bring an action under N.D. Cent. Code 10-19.1-85.1 for equitable relief against Gary Tharaldson for the violation of North Dakota law. They argue that Tharaldson s failure to sue himself on behalf of the ESOP violated ERISA 404(a(1. In a companion case, Hans v. Tharaldson, 3:05-cv-115 (D.N.D., the Court determined 5
Case 3:08-cv-00113-RRE-KKK Document 170 Filed 01/05/12 Page 6 of 16 that the TMI ESOP acquired company stock on December 27, 1999. The contested issue was decided as part of the parties summary judgment motions in that case. As of the date of this Order, there has been no final determination on the merits of the alleged breach of fiduciary duty claims against Gary Tharaldson pertaining to the sale of the stock in the Hans case. In this case, however, the finding that the shares were acquired on December 27, 1999, makes plain that the TMI ESOP did not own any shares of company stock on March 28, 1998, the time the consulting agreement was entered into. Gary Tharaldson became trustee of the ESOP on December 17, 1998, approximately nine months after the consulting agreement had been executed. Tharaldson brings the instant motion for judgment on the pleadings or, alternatively, for summary judgment, claiming the complaint in this action fails because (1 the TMI ESOP did not own any shares of company stock at the time the consulting agreement was executed and, as a result, the ESOP never had a viable derivative claim under North Dakota law, and (2 Tharaldson was not a fiduciary when the consulting agreement was executed and, therefore, there is no viable cause of action under ERISA. ANALYSIS I. Summary Judgment Standard Summary judgment is appropriate when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c; Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986. The burden is on the moving party to establish the basis for its motion. Donovan v. Harrah s Md. Heights Corp., 289 F.3d 527, 529 (8th Cir. 2002. Evidence must be viewed in the light most favorable to the nonmoving party, and the nonmoving party enjoys the benefit of all reasonable inferences to be drawn from the facts. 6
Case 3:08-cv-00113-RRE-KKK Document 170 Filed 01/05/12 Page 7 of 16 Quinn v. St. Louis County, 653 F.3d 745, 750 (8th Cir. 2011. If the moving party shows there are no genuine issues of material fact, the burden shifts to the non-moving party to set forth facts showing a genuine issue for trial. Donovan, 289 F.3d at 529. II. Application 1. Precise Nature of Plaintiffs Claim The Court s first task is to ascertain the specific nature of Plaintiffs claim. Plaintiffs complaint alleges this action is brought to remedy ERISA breaches of fiduciary duty by the Defendant Gary D. Tharaldson arising out of his failure, as the Trustee of the ESOP, to bring a derivative action against himself as the sole Director, President and Chief Executive Officer of TMI for breaches of corporate fiduciary duties owed to the shareholders of TMI, including the ESOP. (Doc. #1, 1 (emphasis added. For relief, Plaintiffs seek to recover any losses to the Plan resulting from this breach and other equitable and remedial relief as the Court deems just. Id. at 2 (emphasis added. The single count identified in the complaint mirrors the introductory allegations recited above: Defendant Gary Tharaldson breached his fiduciary duties under ERISA by failing to discharge their [sic] duties with respect to the Plan solely in the interest of the participants and beneficiaries... by failing to bring a derivative action against himself as the sole Director, President and Chief Executive Officer of TMI to recover losses to TMI and its subsidiary TPM for breaches of corporate fiduciary duties owed to the shareholders of TMI, including the ESOP... (Doc. #1, 39 (emphasis added. Moreover, as to the specifically enumerated corporate fiduciary breach, Plaintiffs allege Tharaldson failed to act in good faith in violation of N.D. Cent. Code 10-19.1-50 and 10-19.1-7
Case 3:08-cv-00113-RRE-KKK Document 170 Filed 01/05/12 Page 8 of 16 60. Sections 10-19.1-50 and 10-19.1-60, N.D. Cent. Code, set forth the standards of conduct for officers and directors of North Dakota corporations. Brandt v. Somerville, 692 N.W.2d 144, 149 (N.D. 2005. If a shareholder seeks to sue individually, he must allege an injury that is separate and distinct from other shareholders or a wrong involving a contractual right that exists independently of any right of the corporation. Nodak Mut. Ins. Co. v. Ward County Farm Bureau, 676 N.W.2d 752, 759 (N.D. 2004 (quotation and citation omitted. On the other hand, a shareholder alleging an injury to the corporation may bring a derivative action on behalf of the corporation where the shareholder suffers only derivatively through the decreased value of his investment. Id. In this case the Plaintiffs have only alleged aclaim that generally applies to all shareholders i.e. that the value of their investment was diminished by the trustee malfeasance, and thus the proper legal framework falls within the context of a derivative action. Consistent with the allegations in the complaint, McKay repeatedly informed the Court in his memorandum in support of his motion for class certification that there was a single claim for relief, specifically that [T]he Complaint alleges a single count of breach of fiduciary duty against Gary Tharaldson for failing to bring a derivative action against himself for his improper dissipation, misuse and waste of TMI assets. (Doc. #37, p. 3. Several pages later, Plaintiff stated: In this case, the sole claim under ERISA 502(a(2 is brought on behalf of the Plan against its then-fiduciary Gary Tharaldson for any losses or profits attributable to his breach (or other relief.... The Complaint alleges that Gary Tharaldson breached his ERISA fiduciary duties... by failing to take steps to prevent the dissipation of the ESOP s assets (i.e. TMI and its subsidiary, including by failing to bring a derivative action against himself... for misusing corporate assets by improperly paying his ex-wife for his own obligation. Id. at p. 10. Plaintiff 8
Case 3:08-cv-00113-RRE-KKK Document 170 Filed 01/05/12 Page 9 of 16 advised that [t]his claim requires proof that (1 Gary Tharaldson, as the fiduciary of the TMI ESOP, breached his fiduciary duties by failing to bring such a claim, and (2 the underlying derivative suit against him as President of TMI would have been successful. Id. Plaintiffs now set forth a newly minted interpretation of their claim and a different legal analysis for the claim in their brief in opposition to Defendant s summary judgment motion. They assert the claim is that Tharaldson failed to take any actions whatsoever to protect the ESOP s sole asset (TMI, including but not limited to a derivative action. (Doc. #117, p. 9 of 49. They now broadly contend this case is brought under ERISA [and] Plaintiff s sole claim is based on Defendant s failure, in his capacity as ESOP Trustee, to protect the Plan s assets. Id. at 14. In their brief, they now revise their previous analysis and contend there is no legal requirement that they prove a shareholder derivative suit would have been successful. Id. The deadline to amend pleadings in this case was October 1, 2010 (Doc. #24, Scheduling Order. Plaintiffs have never properly moved to amend the complaint to include such a broad 3 sweeping claim. When a party seeks to amend pleadings beyond the district court s scheduling order, he must show good cause. Morrison Enterprises, LLC v. Dravo Corp., 638 F.3d 594, 610 (8th Cir. 2011. The primary measure of good cause is the movant s diligence in attempting to meet the order s requirements. Id. (citation and quotation omitted. Plaintiffs have neither followed the proper channels to amend their pleadings nor attempted to establish good cause justifying leave to amend the complaint. Moreover, [p]ost-dismissal motions to amend are disfavored because [m]uch of the 3 Plaintiffs merely drop a footnote in their brief in which they say the Court should allow them to amend the complaint if the Court construes Plaintiff s Complaint narrowly (i.e. that his fiduciary breach claim under ERISA is based solely on the Defendant s failure to bring a derivative suit under N.D.C.C. 10-19.1-86. (Doc. #117, p.26 of 49 n. 27. 9
Case 3:08-cv-00113-RRE-KKK Document 170 Filed 01/05/12 Page 10 of 16 value of summary judgment... would be dissipated if a party were free to rely on one theory in an attempt to defeat a summary judgment and then, should that theory prove unsound, come back... and fight on the basis of some other theory. Morrison Enterprises, LLC, 638 F.3d at 610 (citations omitted. Here, that is precisely what Plaintiffs are attempting to do. Until the filing of their brief in opposition to summary judgment, Plaintiffs continuously construed the nature of the breach of fiduciary duty as Tharaldson s failure to bring a derivative action against himself. This was a tactical choice. If Plaintiffs believed their claim against Tharaldson was broader than simply the failure to bring a derivative action, they could have made that clear in the complaint and, more importantly, should have informed the Court, prior to their summary judgment response, of all potentially viable claims. In order to maintain an actionable claim, a plaintiff must do more than merely refer to it in an obscure way. See Huggins v. FedEx Ground Package System, Inc., 592 F.3d 853, 863 (8th Cir. 2010 (finding complaint did not state a vicarious liability claim when such a claim was only referred to in an obscure way and the defendant did not have fair notice that the plaintiff was making such a claim. The precise claim before the Court, as construed by all parties prior to the summary judgment motion, is whether Tharaldson breached his fiduciary duty by failing to bring a shareholder derivative action to recover alleged losses to the ESOP caused when Tharaldson entered into a consulting contract with his ex-wife prior to the formation of the ESOP. Tharaldson has moved for judgment on the pleadings or, alternatively, summary judgment on this claim. 2. Law Applicable to Plaintiffs Claim The Eighth Circuit has expressly determined that in order to prove a breach of fiduciary duty under ERISA for failure to pursue any lawsuit, the plaintiff must prove a lawsuit would 10
Case 3:08-cv-00113-RRE-KKK Document 170 Filed 01/05/12 Page 11 of 16 have been successful and advantage the beneficiaries of the plan. Herman v. Mercantile Bank, N.A., 137 F.3d 584, 587 (8th Cir. 1998; Martin v. Feilen, 965 F.2d 660, 667 (8th Cir. 1992 (suit against ERISA fiduciary for failing to assert a derivative claim requires proof of a breach of fiduciary duty and that the derivative suit would have prevailed. In order to determine if Plaintiffs have met their burden, the Court must examine North Dakota law. Generally, the fiduciary duties of a corporation s officers and directors are governed by the law of the state of incorporation. Potter v. Pohlad, 560 N.W.2d 389, 391 (Minn. Ct. App. 1997. Sections 10-19.1-50 and 10-19.1-60, N.D. Cent. Code, set forth the standards of conduct for officers and directors of North Dakota corporations. Brandt v. Somerville, 692 N.W.2d 144, 149 (N.D. 2005. They require corporate officers and directors to discharge their duties in good faith, in a manner reasonably believed to be in the best interest of the corporation, and with the care an ordinary prudent person in a like position would exercise under similar circumstances. Id. The North Dakota Legislature enacted an expansive definition of the best interest of the corporation while providing directors with a significant amount of latitude in determining whether an action is in the corporation s best interest. See N.D. Cent. Code 10-19.1-50(6. A director is allowed to consider the interests of: (1 the corporation; (2 the corporation s employees, customers, suppliers, and creditors; (3 the economy; (4 community and societal considerations; and (5 long-term and short-term interests of the corporation and its shareholders. Id. In order to bring an action against a corporate director, the North Dakota Business Corporation Act provides, in relevant part: No action may be brought in this state by a shareholder in the right of a domestic or foreign corporation unless the plaintiff is a holder of record of shares or voting trust certificates at the time of the transaction of which the plaintiff complains, or the 11
Case 3:08-cv-00113-RRE-KKK Document 170 Filed 01/05/12 Page 12 of 16 plaintiff's shares or voting trust certificates thereafter devolved upon the plaintiff by operation of law from a person who was a holder of record at such time. 4 N.D. Cent. Code 10-19.1-86. Similarly, Rule 23.1(b(1, Fed. R. Civ. P., requires that a complaint brought in federal court as a derivative suit seeking to enforce a right of a corporation must allege that the plaintiff was a shareholder at the time of the transaction complained of, or that the plaintiff s share or membership later devolved on it by operation of law. North Dakota s statute and Rule 23.1 are commonly referred to as the contemporaneous ownership rule. See 7C Charles Alan Wright & Arthur R. Miller, et al., Federal Practice and Procedure 1828 (3d ed. 2007. The contemporaneous ownership requirement was initially viewed as a means of discouraging collusive practices, such as transferring stock to a nonresident for the purposes of manufacturing federal diversity jurisdiction. Id. (citations omitted. The requirement is now often described in terms of a principle of equity aimed at preventing courts from interfering with purchased grievances. Id. (citations omitted. At the time of the transaction at issue - the execution of the consulting agreement - the ESOP was not yet formed. Thus, it is indisputable that Plaintiffs were neither participants in the ESOP at the time of the transaction nor did the ESOP own shares of company stock at the time of the alleged wrongful transaction. Unless Plaintiffs can show they acquired shares after the transaction at issue by operation of law, they cannot satisfy their burden of demonstrating the claim they believe Tharaldson should have brought would have been successful under North Dakota law. 4 The complaint alleges a violation of N.D. Cent. Code 10-19.1-85.1, which allows for equitable relief in an action brought by a shareholder of the corporation. Because the complaint seeks monetary damages and alleges a claim actionable in a shareholder derivative suit, the Court believes N.D. Cent. Code 10-19.1-86 frames the proper analysis. 12
Case 3:08-cv-00113-RRE-KKK Document 170 Filed 01/05/12 Page 13 of 16 North Dakota has not addressed the meaning of the phrase by operation of law in this context. Other courts have construed it as any nonconsensual transaction by which the plaintiff acquired the stock. 7C Charles Alan Wright & Arthur R. Miller, et al., Federal Practice and Procedure 1828 (3d ed. 2007 (citing examples of cases where wife acquired shares after husband s death pursuant to a settlement agreement and decree, where stock was obtained by will, and where plaintiff obtained shares pursuant to a consent decree in a federal antitrust suit. Shares that are acquired through a will or intestacy are held to devolve by operation of law since neither the decedent nor recipient had control over the transfer following the death. Pessin v. Chris-Craft Industries, Inc., 586 N.Y.2d 584, 578 (N.Y. App. Div. 1992 (citations omitted. On the other hand, shares that are obtained through some deliberate act, such as by gift or contract, do not devolve by operation of law. Id. (citations omitted. Plaintiffs, as employees of TMI, acquired shares of company stock, not by operation of law, but by the affirmative act of Gary Tharaldson who decided to create an ESOP for the benefit of TMI employees and in doing so made a contractual arrangement favorable to the employees, giving them a retirement benefit that they would not otherwise possess. The creation of the ESOP and Plaintiffs ownership of company stock came, therefore, by way of contract and not under the circumstances that would ordinarily be considered a transfer by operation of law. Neither Plaintiffs nor the ESOP were holders of shares of stock at the time of the transaction at issue and did not acquire shares by operation of law from a holder of record at such time. Because Plaintiffs have not proven that either one of the statutory requirements necessary for a shareholder derivative brought under North Dakota law are present, they have failed to establish an essential element of their claim - that is, that the lawsuit Tharaldson should have brought would have been successful. 13
Case 3:08-cv-00113-RRE-KKK Document 170 Filed 01/05/12 Page 14 of 16 Plaintiffs attempt to avoid these unambiguous statutory requirements by asserting the continuing harm or continuing wrong exception to the contemporaneous ownership requirement. North Dakota has never adopted or rejected the continuing harm doctrine, nor has the Eighth Circuit decided this issue in the context of Rule 23.1. The continuing harm doctrine is often considered an equitable doctrine. In re Bank of New York Derivative Litigation, 320 F.3d 291, 298 (2d Cir. 2003. The continuing harm doctrine has not been universally adopted by the federal courts, and those that have invoked it, have done so sparingly. In re Bank of New York Derivative Litigation, 173 F.Supp.2d 193, 198 (S.D.N.Y. 2001 (quotation and citation omitted. Assuming for purposes of analysis that this Circuit or North Dakota would recognize the continuing harm doctrine, this Court believes the doctrine is inapplicable under the circumstances of this case because the alleged wrongdoings occurring after the ESOP was formed (the ongoing payments to Linda Tharaldson are simply the effects of the prior wrongdoing (the execution of the consulting agreement. A key fact in determining whether there is a continuing wrong is when the specific acts of alleged wrongdoing occurred, and not when their effect is felt. Schreiber v. Bryan, 396 A.2d 512, 516 (Del. Ch. 1978. The limitation is necessary because every wrongful transaction may be viewed as a continuing wrong to the corporation until remedied. Blasband v. Rales, 971 F.2d 1034, 1046 (3d Cir. 1992. In this case, the specific alleged wrongdoing occurred before the ESOP was formed and Plaintiffs were participants in the Plan. At the time the 20-year consulting agreement was executed, the alleged wrongdoing was consummated. If the contractual obligation to make the payments was construed as continuing, the contemporaneous ownership requirement of Rule 14
Case 3:08-cv-00113-RRE-KKK Document 170 Filed 01/05/12 Page 15 of 16 23.1 and North Dakota law would be substantially subverted. Even if this Circuit or North Dakota adopted the continuing harm doctrine, it would not be applicable under the circumstances of this case. See In re Bank of New York Derivative Litigation, 320 F.3d at 298 (in order for the continuing harm doctrine to apply a plaintiff is not required to own stock in the company during the entire course of all relevant events; however, a plaintiff must have acquired his or her stock in the corporation before the core of the allegedly wrongful conduct transpired. ; Lowell Wiper Supply Co. V. Helen Shop, Inc., 235 F.Supp. 640, 647 (D.C.N.Y. 1964 (dividends paid on the stock subsequent to the time the plaintiffs became stockholders were not a continuing wrong. DECISION In order to establish a breach of fiduciary duty under ERISA for failure to pursue a lawsuit, the plaintiff must prove the lawsuit would have been successful. Herman, 137 F.3d at 587; Martin, 965 F.2d at 667. Here, the derivative action contemplated by Plaintiffs would not have succeeded under the plain language of North Dakota law. Moreover, when a plaintiff would not be entitled to maintain a derivative suit in a court of the forum state because the plaintiff is not considered a shareholder under the governing law, the same result will be reached in a federal court. 7C Charles Alan Wright & Arthur R. Miller, et al., Federal Practice & Procedure: Civil 1826 (3d ed. 2007. Plaintiff has not persuaded this Court that there is some other recognized equitable doctrine, including the continuing harm doctrine, that demands a different result. Defendant Gary Tharaldson s motion for summary judgment is GRANTED, and his alternative motion for judgment on the pleadings is dismissed as moot. Plaintiffs motion to adjudicate certain affirmative defenses is dismissed as moot. 15
Case 3:08-cv-00113-RRE-KKK Document 170 Filed 01/05/12 Page 16 of 16 IT IS SO ORDERED. LET JUDGMENT BE ENTERED ACCORDINGLY. Dated this 5th day of January, 2012. /s/ Ralph R. Erickson Ralph R. Erickson, Chief Judge United States District Court 16