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WEISS v. SUNASCO

January 24, 1969

Leonard Weiss, on his own behalf as a stockholder of Sunasco Incorporated and on behalf of all other stockholders similarly situated, Plaintiff,
v.
Sunasco Inc., (presently known as Scientific Resources Corporation), Kleiner, Bell & Co., Incorporated, Sunset International Petroleum Corporation, J.L. Wolgin, Sidney Wolgin, Norman Wolgin, Paul Hallingby, Jr., David H. Solms, Thomas T. Fleming, Wilbur L. Ross, Jr. and Wentworth P. Johnson, Defendants


Mansfield, District Judge.


The opinion of the court was delivered by: MANSFIELD

MANSFIELD, District Judge:

This action by a stockholder of Sunasco Incorporated ("Sunasco"), a Pennsylvania corporation, against the corporation, eight of its directors and officers (the three Wolgins, Hallingby, Solms, Johnson, Fleming and Ross) and three other parties (Kleiner, Bell & Co., Inc., Commonwealth United Corporation and Sunset International Petroleum Corporation) was commenced by the filing of a complaint containing the following five separate counts:

 
FIRST: A class action on behalf of Sunasco's $1.65 preferred shareholders against Sunasco only, claiming that the preferred shareholders would be irreparably injured if a proposed Sunasco agreement with defendants Commonwealth United Corporation ("United") and Kleiner, Bell & Co., Inc. ("Kleiner") should be consummated.
 
SECOND: A derivative suit on behalf of Sunasco against all defendants except Sunset International Petroleum Corporation ("Sunset") alleging a conspiracy to waste corporate assets.
 
THIRD: A derivative suit on behalf of Sunasco against all defendants except United, Kleiner, Johnson, Fleming and Ross alleging that a certain transaction was ultra vires and a waste of Sunasco's assets.
 
FOURTH: A derivative suit on Sunasco's behalf against all defendants except United, Kleiner, Johnson, Fleming and Ross alleging a violation of § 14(a) of the Securities Exchange Act of 1934.
 
FIFTH: A derivative suit on behalf of Sunasco against defendant Sunset only alleging a violation of § 16(b) of the Securities Act of 1934.

 Jurisdiction over the first three counts was invoked on grounds of diversity (plaintiff is a resident of New Jersey) and pendency, the fourth and fifth counts claiming federal question jurisdiction.

 Following a battery of motions filed by the defendants attacking various counts for lack of jurisdiction and/or insufficiency, plaintiff moved to serve a "proposed amended complaint," the filing of which was not objected to by defendants. Accordingly, pursuant to Rule 15(a), F.R.C.P., plaintiff's motion is granted.

 The amended complaint seeks to cure the jurisdictional defects of the original action by: (a) dropping count one of the original complaint; (b) dropping defendant Ross from the second and third counts of the original complaint (first and second counts of the amended complaint), since Ross is a citizen of New Jersey, which would defeat diversity, *fn1" and dropping the individual defendants J. L. Wolgin, Sidney Wolgin, Norman Wolgin, Solms, Johnson and Fleming, from these two counts. As a result of these changes the amended complaint contains four counts:

 
FIRST: A derivative diversity suit against defendants Kleiner, United, Hallingby and Sunasco only, charging a conspiracy to waste Sunasco's assets to the enrichment of Kleiner and United by causing Sunasco to sell 1,400,000 shares of United stock to Kleiner at $8 per share.
 
SECOND: Another derivative diversity suit against Hallingby and Sunasco only, attacking another transaction (the accrual of unpaid dividends on Sunasco preferred issuable upon exercise of certain warrants) as ultra vires and a waste of Sunasco's assets.
 
THIRD: A purported derivative action seeking to enforce a liability under § 14(a) of the Securities Exchange Act of 1934.
 
FOURTH: A derivative suit alleging a violation of § 16(b) of the Securities Exchange Act of ...

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