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Amabile v. Lerner

Decided: November 23, 1960.

ANTHONY AMABILE, INDIVIDUALLY, &C., PLAINTIFF,
v.
HARRY LERNER, DAVID OXFELD, ET AL., &C., DEFENDANTS



Collester, J.s.c. (orally).

Collester

[64 NJSuper Page 508] This matter comes before the court on a motion for summary judgment on behalf of the defendants to dismiss the complaint and the amendments thereto, pursuant to R.R. 4:58, on the ground that the allegations set forth therein do not constitute causes of action

under R.R. 4:36-2 and the law of this State, that there is no genuine issue as to any material fact challenged, and that the defendants are entitled to a judgment of dismissal as a matter of law. Defendants in support of the motion have submitted affidavits and the deposition of the plaintiff. Plaintiff relies upon his verified complaint as amended.

Briefly, the facts are that the plaintiff is a policyholder of the defendant Lincoln Mutual Casualty Company, a company organized in this State under Title 17 of the Revised Statutes. The complaint alleges that this company, the Lincoln Mutual Casualty Insurance Company (which I will refer to hereafter as the Casualty Company), was organized on August 27, 1947; that the individual defendants, Harry Lerner, David Oxfeld, Arthur Lerner, Joseph Dunsky and Herman Feldman are directors thereof, and that Harry Lerner, David Oxfeld, Arthur Lerner, and Joseph Dunsky are officers thereof.

The complaint also alleges that in May 1957 the individual defendants organized the defendant Lincoln Company, Inc., a brokerage corporation, and that Harry Lerner, David Oxfeld and Arthur Lerner are directors, officers, and the sole stockholders thereof.

It also alleges that in April 1958 the five individual defendants organized a corporation known as the Broad Finance Corp., the name of which was later changed to Lenox Finance Co., Inc., and that the five individual defendants are the directors, officers and sole stockholders thereof.

The complaint further alleges that the individual defendants also formed a corporation known as Safe Drivers Club, Inc., and are the directors, principal officers and sole stockholders thereof.

It is alleged in the complaint that Lenox is engaged solely in financing insurance policies issued by the Casualty Company; that Lincoln Co. is an insurance brokerage corporation engaged solely for the brokerage of policies of the Casualty Company; that Safe Drivers, Inc. is engaged in the business of selling some type of service policy to provide various

services for automobile drivers exclusively to the Casualty Company's policyholders, and that all three of these corporations derive their entire income from the Casualty Company.

The complaint, in brief, charges that the defendants as directors of the Casualty Company breached their fiduciary obligations as directors by reason of dealings with the other defendant corporations and that they diverted assets of the Casualty Company for their personal benefit.

This suit is a derivative action against the Casualty Company, its directors, and the other defendant corporations for an accounting of moneys allegedly wrongfully diverted, a judgment in money damages against the individual and corporate defendants for moneys allegedly due to the Casualty Company, seeking the removal of the individual defendants as directors of the Casualty Company, and seeking the appointment of a receiver for the Casualty Company.

The undisputed evidence shows the plaintiff purchased his insurance policy from the Casualty Company on September 15, 1960, and the amended complaint which was filed on October 4, 1960 charged that the individual defendants wrongfully used funds of the Casualty Company to incorporate, establish, and promote the three other corporate defendants -- the Lincoln Co., Lenox, and Safe Drivers Club. It is apparent from the complaint, ...


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