Birch v. Sharer
In this shareholder derivative action, plaintiff alleged she made a written demand on the board of directors to remedy the board’s repeated breach of its fiduciary duty to shareholders and, in response, the board failed to investigate and remedy the alleged wrongdoing. Plaintiff named the company as the nominal defendant, and named as individual defendants fourteen current and former officers and directors. After bringing an unsuccessful demurrer, defendants filed an answer.
Subsequently, defendants filed a motion for judgment on the pleadings, contending they had responded to plaintiff’s demand and properly refused it, as reflected in letters sent to plaintiff after this action was filed. The trial court took judicial notice of the letters and granted the motion on the ground that the evidence proved the board had taken appropriate steps in response to the demand. Judgment was entered for defendants.
On appeal, plaintiff argues that the trial court not only took judicial notice of the company’s letters but improperly accepted their contents as true. We conclude the trial court erred in accepting the letters for the truth of their contents. Further, even if the trial court acted properly in that respect, the correspondence merely created a factual conflict in light of the contrary allegations of the complaint. That conflict could not be resolved by way of a motion for judgment on the pleadings. Accordingly, we reverse the judgment.
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