Ord_2004340

THE STATE OF NEW HAMPSHIRE

SUPREME COURT

In Case No. 2004-0340, Roland Durham v. Gary Durham & a., the
court on April 20, 2005, issued the following order:

Appellee's motion to strike is granted.

Appellee's motion for reconsideration pursuant to Rule 22 is
denied.

On the appellant's motion to modify or correct, the court

rules as follows. The slip opinion dated February 24, 2005, is
modified in three places.
First, the slip opinion is modified by deleting the words
"the only" from the fifth sentence of the second paragraph of the
opinion, so that said paragraph, as modified, shall state:
The plaintiff's petition alleged the following facts.
The plaintiff and the three defendants, Gary Durham, Martha
Styer and Peter Durham, are the sole shareholders of Sunset
Ranch Camp, Inc., a New Hampshire corporation. The plaintiff
owns 4,000 shares of the corporation's stock and each
defendant owns 2,000 shares. The corporation owns and
operates the Sunset Ranch Camp in Orford. The plaintiff and
the defendants are directors of the corporation. The
defendants are also officers of the corporation. The
plaintiff served as president from July 1996 through July
2000, when he was voted out as president and defendant Gary
Durham was elected.
Second, the slip opinion is modified by adding a new
sentence to the second paragraph on page 4 of the opinion, so
that said paragraph, as modified, shall state:

The plaintiff urges us to expand a minority shareholder's

ability to bring a direct suit against other members of a
close corporation. The corporation here is typical of other
close corporations in that the shareholders are few in number,
know each other, and actively serve in the management of the
business as officers or directors. See Landstrom v. Shaver,
561 N.W.2d 1, 13 n.15 (S.D. 1997). Because the corporation's
shares are not publicly traded, the plaintiff as a minority
shareholder does not have the opportunity to extricate himself
from the corporation by selling his shares on the open market.
See Thomas, 301 S.E.2d at 51. In addition, construing all
reasonable inferences drawn from the well-pleaded facts below
in the plaintiff's favor, we conclude for purposes of this
analysis that the corporation's board of directors is not
disinterested. In these circumstances, the formalities of the
derivative proceeding may be

In Case No. 2004-0340, Roland Durham v. Gary Durham & a., the
court on April 20, 2005, issued the following order:
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impractical and unnecessary because the corporation does not
have a disinterested board of directors and a multiplicity of
suits is unlikely. See 2 F. O'Neal & R. Thompson, O'Neal and
Thompson's Close Corporations and LLCs: Law and Practice
9:22, at 9-138 to 9-140 (3d ed. rev. 2004).

Third, the slip opinion is modified by adding the words

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 Ord_2004340
"it appears that" to the third sentence of the first paragraph on
page 6 of the opinion, so that said paragraph, as modified, shall
state:
On remand, the trial court may, in its discretion, allow
the plaintiff to pursue his claims in a direct suit against
the defendants, taking into account all of the above factors,
including those suggested by the ALI, in making its
determination. A direct action may be appropriate in this
case because all of the corporation's shareholders are before
the court as either the plaintiff or defendants; thus, there
is no risk that a direct suit would expose the corporation to
a multiplicity of actions. Furthermore, it appears that the
corporation does not have a disinterested board of directors
that could evaluate whether a derivative proceeding is in the
best interest of the corporation. See RSA 293-A:7.44. On
the other hand, the trial court should consider, for example,
whether any of the corporation's creditors would be
prejudiced by allowing the plaintiff to pursue a direct
action against the defendants.
Reconsideration denied;
opinion modified.
Broderick, C.J., and Nadeau, Dalianis, Duggan and Galway,
JJ., concurred.

Eileen Fox,
Clerk

Distribution:
Clerk, Grafton County Superior Court 03-E-0219
Honorable Steven M. Houran
Honorable Robert J. Lynn
W.E. Whittington, Esquire
Tim A. Clark, Esquire
Marcia McCormack, Supreme Court
Loretta S. Platt, Supreme Court
Carol A. Belmain, Supreme Court
Irene Dalbec, Supreme Court
Donna R. Craig, Supreme Court
Case Manager
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