One Advance Opinion for 5-23-24

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1 month 4 weeks ago #249 by Joseph Allan Tommasino
Capital Advisors, LLC v. Cai C/W 85378,





140 Nev. Adv. Op. No. 34



May 23, 2024



nvcourts.gov/supreme/decisions/advance_opinions




Consolidated appeals from district court orders granting a motion for judgment as a matter of law and awarding attorney fees and costs. Eighth Judicial District Court, Clark County; Nancy L. Allf, Judge. 



Affirmed
in part, reversed in part, vacated in part, and remanded.



BEFORE THE SUPREME COURT, HERNDON, LEE, and BELL, JJ.



By the Court, LEE, J.:



Issues:



“It is well recognized that a corporation should be treated as a separate legal entity unless the corporate veil is pierced and the corporation is shown to be the alter ego of a controlling individual. 



Likewise, we have recognized the use of the alter ego doctrine where a subsidiary company is shown to be the alter ego of the parent company.



We have yet to consider, however, whether officers and directors of a parent company can be held liable for actions taken by a wholly owned subsidiary of a wholly owned subsidiary without the use of the alter ego doctrine.



We also have yet to consider whether shareholders may file derivative suits that compel the company to sue its own officers and directors based on actions implemented through a wholly owned subsidiary of a wholly owned subsidiary to the parent.”



Brief Answers:



“We conclude that officers and directors of a parent company who allow a wholly owned subsidiary to take action adverse to the parent can be held liable without use of the alter ego doctrine. Such liability is imposed because directors and officers have a fiduciary duty to act in the best interests of the parent company and its stockholders and thus cannot intentionally cause or knowingly fail to stop adverse actions by a wholly owned subsidiary company.



We likewise hold that shareholders may file derivative suits against officers and directors of a parent company based on wrongful actions that occurred at a wholly owned subsidiary of a wholly owned subsidiary without asserting alter ego. As a result, fiduciaries at a parent company have a duty not to intentionally implement or knowingly permit a wholly owned subsidiary to effect a transaction that is unfair to the parent company on whose board they serve, regardless of the presence of intermediate subsidiaries between the parent and the subsidiary where the challenged action is alleged to have taken place. 



Because the district court found that officers and directors of a parent company cannot be held liable for actions taken by a wholly owned subsidiary without piercing the corporate veil, and because appellants presented sufficient evidence to defeat a motion for judgment as a matter of law as to some of their causes of action, we affirm in part, reverse in part, vacate in part, and remand the matter for further proceedings.”






Joe T.

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