Shareholder’s claims for breach of fiduciary duties; The business judgment rule; Sutton v. FedFirst Fin. Corp. (MD); Oliveira v. Sugarman (MD); A shareholder’s standing; Shenker v. Laureate Educ., Inc. (MD); Duty of candor; In re JP Morgan Chase & Co. Shareholder Litig. (DE); Right result reached for the wrong reason; Gleason v. Michigan Dep’t of Transp.

With “the exception of the claim that defendants breached their duty of candor in preparing the proxy statement,” the court disagreed with plaintiff’s claim that “he was entitled to file a direct (i.e., non-derivative) claim against” them and that the trial court erred by granting them summary disposition. As to the duty of candor claim, the court held that “Maryland law permits such a claim as a direct action, but” it nonetheless found that “the claim was properly dismissed because plaintiff did not allege any individual damages to shareholders as a result of the alleged inaccuracies or omissions in the proxy statement.” Plaintiff was a shareholder of Wolverine Bancorp, “a savings and loan company organized under the laws of the state of Maryland and principally operating in Midland, Michigan. Defendants were directors of Wolverine, and certain defendants were also officers of Wolverine.” Plaintiff alleged that, under Maryland law, they had breached their fiduciary duties to the shareholders. The court found that in both the cases decided before the relevant statute was amended—Shenker and Sutton— and the case decided after the amendment—Oliveira—"Maryland courts have applied the business judgment rule to bar direct actions from shareholders against a corporation’s directors for claims related to the management of the corporation and the effect of management’s actions on share price. To be permitted to bring a direct claim against directors, a shareholder must plead an injury separate and distinct from the corporation, and, when deciding that issue, Delaware cases provide appropriate guidance.” Therefore, “in a situation in which there is a part stock-for-stock and part cash-for-stock merger between two companies that are both traded in ‘in a large, fluid, public market,’ the shareholders can only bring a derivative claim on behalf of the corporation.” Because plaintiff failed to do so here, “he failed to state a claim on which relief could be granted, and the trial court appropriately granted” defendants summary disposition on his breach of fiduciary duty claims. Affirmed.