Johnson v. Johnson

272 Neb. 263 (2006)

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Johnson v. Johnson

Nebraska Supreme Court
272 Neb. 263 (2006)

Facts

Richard W. Johnson (Dick) incorporated and was the sole shareholder of Western Securities (defendant), a Delaware corporation. Western Securities bought Modern Equipment Company, Inc. (defendant), a Nebraska corporation, in 1975. Western Securities and Modern Equipment each had its principal place of business in Nebraska. Dick had five children, Richard Johnson, Jr. (Richard) (defendant), Michael Johnson (plaintiff), and three others. In 1998 Dick transferred Western Securities shares to each of his five children, giving the most to Richard, followed by Michael, who worked for Modern Equipment. Dick intended for Richard to succeed him, and for Michael to succeed Richard. Following Dick’s death in November 2001, Richard began making several moves without notifying the other shareholders, and he held no shareholder meetings for two years. Modern Equipment’s profits declined dramatically, while Richard received a significant raise. In August 2002, Richard fired Michael from Modern Equipment. As personal representative of Dick’s estate, Richard voted Dick’s shares along with his own to ratify all his actions. Michael filed suit against Richard, Modern Equipment, and Western Securities in Nebraska state court. Among other things, Michael’s suit sought (1) an accounting from Richard for Modern; (2) the appointment of a receiver to take over Western Securities’ and Modern Equipment’s corporate assets, oversee the sale of those assets, and distribute the proceeds of the sale; or (3) an order finding Western Securities to be the alter ego of Modern Equipment, or vice versa. The court granted Richard, Western Securities, and Modern Equipment’s motion to dismiss, holding that Delaware law applied and that Delaware did not permit the relief sought by Michael. Michael appealed.

Rule of Law

Issue

Holding and Reasoning (Gerrard, J.)

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