IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
MARK M. ANDREAE, Custodian, *
GAIL P. ANDREAE, JANE GUISINGER, *
JOHN GUISINGER, CHRISTINE A. *
LIEGL, CHRISTINE A. LIEGL, Cus- *
todian, DAVID P. TAYLOR and *
CHRISTINE A. LIEGL, Co-Trus- *
tees, ANDREAE J. WAANDERS and *
F. HAROLD TAYLOR, IV, **
Plaintiffs, ** Civil Action 1 1 9 0 5
V. *
*
FRANK W. ANDREAE, II; JOHN *
DOE #l; and JOHN DOE #2, **
Defendants, **
and **
PENINSULAR DIESEL, INC., **
Nominal Defendant. *
MEMORANDUM OPINION
Submitted: May 17, 1991
Decided: March 3, 1992
Revised: March 5, 1992
ON DEFENDANTS' MOTION TO DISMISS:
GRANTED IN PART and DENIED IN PART.
Kevin Gross, Esquire, ROSENTHAL, MONHAIT & GROSS, P.A., Wil-
mington, DE 19899-1070; OF COUNSEL: Robert S. Brown,
Esquire, BROWN, CUMMINS & BROWN CO., L.P.A., Cincinnati,
OH 45202, Attorneys for Plaintiffs
Gregory P. Williams, Esquire, Anne C. Foster, Esquire, and
Chris J. Pietrafitta, Esquire, RICHARDS, LAYTON 6 FINGER,
Wilmington, DE 19899-0551, Attorneys for Defendants
Frank W. Andreae, II, and Peninsular Diesel, Inc.
1
HARTNETT, Vice Chancellor
Revised 3//S/92
SNIPPETS:
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
GAIL P. ANDREAE, JANE GUISINGER, *
LIEGL, CHRISTINE A. LIEGL, Cus- *
ON DEFENDANTS' MOTION TO DISMISS:
Kevin Gross, Esquire, ROSENTHAL, MONHAIT & GROSS, P.A., Wilmington, DE 19899-1070; OF
HARTNETT, Vice Chancellor
Although this suit was brought as a stockholder derivative action, it is essentially an
made pursuant to Chancery Rule 23.1 and a motion to dismiss
of the directors of Peninsular Diesel,
the result of the proper exercise of business -judgment and therefore pre-suit demand is
T!he facts, according to the complaint, are that corporate defendant Peninsular
Defendant Frank w.
directors of Peninsular Diesel and with Frank Andreae consti--*!d = 2 The entire Board of
According to the complaint, Clarke Andreae was dismissed
gross mismanagement and his disregard for the best interests
was again cverstated when he att,-ibuted a DDC obsolete invenalso allegedly caused t:he
Frank Andreae suspended the mailing of monthly financial statements to plaintiffs.
The sale transaction closed between October i9 and Octo;.ndreae improperly listed as curren:
moved p,ursuan: to Chancery Rule 23.1 zo dismiss the complain:
was otherwise the product of a valid exercise of business judqment.
:he two aspects of the demand futility test are "two alternative hurdles, either of which a
business judgment in decision-making or that they merely suballegation of domination, and
"understated" by the accounting procedures adopted by the Board.
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