Saturday, September 08, 2007
Nebraska Supreme Court reverses Thomas County District Court's summary judgment ordering removal of directors of cattle feeding corporation. Neiman v. Tri R Angus, S-06-118, 274 Neb. 252. District court judge ordered corporate officers removed following dispute between shareholders and the directors. Although the defendants did not offer evidence disputing removal, the Supreme Court reverses the removal under 21-2086 proceedings. Because the statute includes grounds for fraud and because fraud requires heightened proof of intent, the Supreme Court concludes all grounds for removal of directors will require heightened proof. "Nebraska's statute on judicial removal of corporate directors, § 21-2086, is an extraordinary remedy. It is not for resolving mere differences of opinion between the shareholders and the directors regarding their exercise of business judgment. Instead, it is an unusual remedy that is to be granted only upon the shareholder’s production of sufficient evidence demonstrating that the director has engaged in “fraudulent or dishonest conduct or gross abuse of authority or discretion with respect to the corporation.” § 21-2086."