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PUBLISHED OPINION
Case No.:                      95-2453
† Petition for Review Filed.
Complete Title
of Case:
BRIAN READ,
Plaintiff-Appellant, †
v.
DONALD READ,
ROBERT READ,
DOME CORPORATION and
HAYES CORPORATION,
Defendants-Respondents,
TOM TUTTLE,
Personal Representative for
the Estate of Kenneth Read,
JOHN DOES 1-10 and
JOHN DOES 11-20,
Defendants,
DOME CORPORATION
and HAYES CORPORATION,
Third Party Plaintiffs,
v.
CHARLES S. READ and
READWOOD, INCORPORATED,
Third Party Defendants.
Submitted on Briefs:           September  3,  1996
Oral Argument: ---
COURT                          COURT OF APPEALS OF WISCONSIN
Opinion Released:              October  22,  1996
Opinion Filed:                 October  22,  1996
Source of APPEAL               Appeal from an order
Full Name JUDGE                COURT:                          Circuit
Lower Court.                   COUNTY:                         Milwaukee
(If "Special",                                                 JUDGE: PATRICK J. MADDEN
so indicate)




JUDGES:                                                              Wedemeyer, P.J., Fine and Curley, JJ.
Concurred:
Dissented:                                                           Fine, J.
Appellant
ATTORNEYSFor  the  plaintiff-appellant  the  cause  was  submitted
on  the  briefs  of  Christopher  T.  Hale  and  K. Scott
Wagner of Hale & Lein, S.C., of Milwaukee.
Respondent
ATTORNEYSFor   the   defendants-respondents   Donald   Read   and
Robert  Read  the  cause  was  submitted  on  the  joint
briefs  of  Michael  R.  Wherry  of  Davis  &  Kuelthau,
S.C., of Milwaukee,  for defendant-respondent Donald
Read,  and  David  P.  Lowe  of  Jacquart  &  Lowe,  S.C.,
of Milwaukee, for defendant-respondent Robert Read.




COURT OF APPEALS
DECISION
DATED AND RELEASED
NOTICE
October 22, 1996
A party may file with the Supreme Court      This opinion is subject to further editing.
a petition to review an adverse decision     If  published,  the  official  version  will
by the Court of Appeals.  See § 808.10 and   appear  in  the  bound  volume  of  the
RULE 809.62, STATS.                          Official Reports.
No.   95-2453
STATE OF WISCONSIN                           IN COURT OF APPEALS
BRIAN READ,
Plaintiff-Appellant,
v.
DONALD READ,
ROBERT READ,
DOME CORPORATION and
HAYES CORPORATION,
Defendants-Respondents,
TOM TUTTLE,
Personal Representative for
the Estate of Kenneth Read,
JOHN DOES 1-10 and
JOHN DOES 11-20,
Defendants,
DOME CORPORATION
and HAYES CORPORATION,
Third Party Plaintiffs,
v.
CHARLES S. READ and
READWOOD, INCORPORATED,
Third Party Defendants.




No.   95-2453
APPEAL from an order of the circuit court for Milwaukee County:
PATRICK J. MADDEN, Judge.  Affirmed.
Before Wedemeyer, P.J., Fine and Curley, JJ.
CURLEY, J.  This is an appeal from a final order incorporating
several earlier decisions of the trial court that dismissed two claims, a derivative
action  claim,  and  a  direct  action  claim,  brought  against  the  controlling
shareholders  and  directors  of  the  Hayes  Corporation  and  the  Dome
Corporation, as well as the corporations themselves.   As to the derivative claim,
the  trial  court  concluded  that  the  plaintiff,  Brian  Read,  was  motivated  by
personal gain and, thus, was an inappropriate derivative plaintiff to represent
the interests of the corporation.   With regard to the individual claim brought
against  the  defendants,  the  trial  court  determined  the  allegations  of  the
complaint, even if amended, did not support a direct cause of action by Read.
Because the trial court properly exercised its discretion in concluding that Read
did  not  qualify  as  a  fair  and  adequate  representative  of  the  corporation's
interests  under                                                                                           § 180.0741(2),  STATS.,  and  because  the  trial  court  properly
exercised its discretion in refusing to allow a third amended complaint, we
affirm.1
I. BACKGROUND.
1  Two matters should be addressed preliminarily.    Pursuant to the dictates of  § 802.06(b),
STATS., the defendants object to the inclusion of material supplied by Read in his appendix, as it
was never considered by the trial court in its determination that Read was an inappropriate plaintiff
to represent the interests of the corporation.   Because the motion to dismiss for lack of standing is
not the procedural equivalent of a summary judgment motion, the record will be limited to that
material utilized by the trial court.   We will not consider additional material which was either
generated after the court's decision or material filed before the court's decision not incorporated into
the motion.  Secondly, Read has argued that subsequent events had rendered some of the arguments
raised by the defendants moot.   Specifically, he argues the corporations have voted to dissolve
themselves so that the corporate interests and his interests are not synchronized.   The current status
of the corporations is in dispute.   We do not decide disputed material facts.   Further, the court will
not consider subsequent actions in making its determination.
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No.   95-2453
Hayes  and  Dome  are  non-public  corporations,  predominantly
owned by members of the Read family who are now engaged in an internecine
battle.   The only outside shareholders are Witech and Monahon Trust.   Brian
Read is the son of Kenneth Read, now deceased, who was a controlling director
and shareholder in both corporations.   Originally Brian Read did not sue his
father's estate; however, the estate was brought into the suit later.   Read is a
minority shareholder in both corporations owning sixteen percent of Hayes and
seven percent of Dome.   On December 31, 1992, he filed suit against both the
directors and controlling stockholders of the corporations and the corporations
claiming misappropriation of corporate assets and self-dealing by the directors
and controlling stockholder through their transactions with other corporations
in which they were stockholders but he was not.  In an amended complaint filed
in 1994, Read added claims seeking damages both for himself based on a claim
of breach of fiduciary duty by the directors and controlling shareholders, as
well as a claim for damages brought on behalf of the corporations.
On October 11, 1994, the trial court concluded that Read was not
an appropriate shareholder to represent the interests of the corporate defendant
and dismissed the derivative claim.    On November  2,  1994, the trial court
determined  that  Read's  cause  of  action  seeking  damages  for  himself  as  a
shareholder of Hayes and of Dome was improper because the complaint did not
allege  that  the  corporations  were  close  corporations.    The  trial  court  later
refused to allow Read to amend his pleadings a third time to incorporate the
close  corporation  allegation,  concluding  that  amendment  would  be  futile
because Wisconsin does not recognize a direct cause of action for breach of
fiduciary duty by controlling shareholders of a non-statutory close corporation.
This appeal follows.
II. ANALYSIS.
The briefs of the parties reflect a difference of opinion on what the
proper  standard  of  review  is  for  whether  a  plaintiff  is  an  appropriate
shareholder  to  maintain  a  derivative  action  under  Wisconsin  law.    Read
suggests the test is a de novo review of the trial court's decision.   The defendants
urge the court to apply an “erroneous exercise of discretion” test to the trial
court decision.   There is no Wisconsin case directly on point explaining the
standard of review when determining whether a plaintiff is an appropriate
shareholder to maintain a derivative action under § 180.0741, STATS.   Section
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No.   95-2453
180.0741, STATS., is a relatively new statute, having been adopted in 1989.   What
can be gleaned from prior case law on this issue, however, is that Wisconsin
treats  shareholder  derivative  suits  as  actions  in  equity.     In  Mulder  v.
Mittelstadt, 120 Wis.2d 103, 352 N.W.2d 223 (Ct. App. 1984), we stated:
Shareholder's derivative actions are actions in equity. Although
we have found no Wisconsin case which expressly
delineates our standard of review for this type of
equitable  remedy,  it  appears  that  the  appropriate
standard is one of abuse of discretion.   An appeal to
equity requires a weighing of the factors or equities
that affect the judgment—a function which requires
the exercise of judicial discretion.                                                  “The basis of all
equitable  rules  is  the  principle  of  discretionary
application.”
Id. at 115, 352 N.W.2d at 228 (citations omitted).
Looking  to  federal  law,  the  appellate  standard  of  review  in
determining  standing  in  shareholder  derivative  litigation  is  an  abuse  of
discretion test, the counterpart to Wisconsin's “erroneous exercise of discretion”
standard.   See Brookfield v. Milwaukee Metro. Sewerage Dist., 171 Wis.2d 400,
423, 491 N.W.2d 484, 493 (1992) (declaring substance of erroneous exercise of
discretion standard is same as abuse of discretion standard).
In Smith v. Ayres, 977 F.2d 946 (5th Cir. 1992), cert. denied, 508 U.S.
910 (1993), the Fifth Circuit Court of Appeals opined:
In order to bring a derivative action, the shareholder plaintiff must
“fairly and adequately represent the interests of the
shareholders  or  members  similarly  situated  in
enforcing the right of the corporation or association.”
Determining   whether   the   plaintiff   meets   this
standard is firmly committed to the discretion of the
trial court, reviewable only for abuse.
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No.   95-2453
Id. at 948 (citation omitted).   While the federal rule differs with the wording of
Wisconsin  § 180.0741(2),  STATS.,  for  standard  of  review  purposes,  they  are
sufficiently alike.   Thus, following the lead of the federal courts, we conclude
our  proper  standard  of  review  on  this  issue  is  whether  the  trial  court
erroneously exercised its discretion.
A. Derivative Claim.
In  Wisconsin,  when  a  party  challenges  the  standing  of  a
shareholder to bring a derivative action on behalf of the corporation, a trial
court has the duty to determine whether the party meets the test set forth in
§ 180.0741, STATS.2
In order for a shareholder or beneficial owner to have standing to
bring a derivative action, § 180.0741(2), STATS., requires that they “[f]airly and
adequately represent[s] the interests of the corporation in enforcing the right of
the corporation.”   While various federal cases have been cited by the parties on
the issue of qualifications to bring a derivative suit, there is a notable difference
in the statutory language between the Wisconsin and federal rules.   Federal
Rule of Civil Procedure 23.1 requires that a derivative representative “represent
the interests of the shareholders or members similarly situated in enforcing the right
of the corporation or association,” while Wisconsin § 180.0741(2) requires that
the shareholder or beneficial owner  “[f]airly and adequately represent[] the
2  Section 180.0741, STATS., provides:
Standing. A shareholder or beneficial owner may not commence or maintain a
derivative proceeding unless the shareholder or beneficial owner
satisfies all of the following:
(1) Was a shareholder or beneficial owner of the corporation at the time of the act
or omission complained of or became a shareholder or beneficial
owner through transfer by operation of law from a person who
was a shareholder or beneficial owner at that time.
(2) Fairly and adequately represents the interests of the corporation in enforcing
the right of the corporation.
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No.   95-2453
interests of the corporation in enforcing the right of the corporation.”                (Emphasis
added.)   There are no cases in Wisconsin distinguishing the two rules.   The
defendants urge us to treat the two statutes as identical.   However, the trial
court saw a distinction and concentrated on the wording of the Wisconsin
statute.   Whether the standards under the federal and Wisconsin rules should
be treated identically, given the different wording of the respective statutes,
need not be decided here, although we do agree that federal case law can
provide us with guidance in determining whether the trial court reached the
proper conclusion in the case before us.
Brian Read argues that the trial court made its determination that
he was an inappropriate plaintiff simply because he engaged in alternative
pleading, in which he pleaded conflicting causes of action.   He claims that the
“court  punished                                                                        [him]  for  cautious  pleading,  and  rewarded  the  Read
Defendants” due to his coupling his derivative action with his personal claims.
A review of the trial court's decision reveals that the trial court did
not grant the motion to dismiss for lack of standing solely on the basis of the
plaintiff's alternative pleading.   Rather, the trial court stated in its October 1,
1994 decision, “A   review of the record shows that [the] plaintiff is using this
proceeding  for  his  personal  advantage.”                                             (Emphasis  added.)    Further,  the
second amended complaint was filed in January of 1994.   Some five months
later, in June 1994, the plaintiff filed a motion seeking dissolution of Hayes or
the appointment of a receiver, and brought a motion asking for a receiver for
Dome Corporation.   These motions were actively pursued by the plaintiff and
scheduled for hearing in July 1994.
In reaching its decision on the standing issue, the trial court found
that the motions advanced by the plaintiff for dissolution and appointment of a
receiver  eliminated  the  prospect  of  the  plaintiff  being  able  to                “fairly  and
adequately represent the corporate interest.”   The trial court reasoned that the
dissolution and receivership motions filed on June 7, 1994, mere months from
the filing of the amended complaint which urged the imminent dissolution or
the immediate appointment of a receiver, were an anathema to the best interests
of the corporation.   In the trial court's October 1, 1994 decision, the court stated
that, “It is hard to conceive of any way in which dissolution would be beneficial
to the corporation in this case.”
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No.   95-2453
Indeed, under § 180.1405, STATS.:   “A dissolved corporation ... may
not carry on any business except that which is appropriate to wind up and
liquidate its business and affairs.”   Although a corporation's interests are not
served by dissolution, a shareholder's interests might be.   As the trial court
wrote in its decision:                                                                   “A plaintiff does not fairly and adequately represent the
interests  of  the  corporation  when  the  proceeding  is  used  for  personal
advantage.”   The trial court's language tracks the test found in federal case law.
For instance, in Smith, the Fifth Circuit stated:                                        “A plaintiff in a shareholder
derivative action owes the corporation his undivided loyalty.  The plaintiff must
not  have  ulterior  motives  and  must  not  be  pursuing  an  external  personal
agenda.”  Smith, 977 F.2d at 949.  The court also noted, however, that: “Whether
or not such a personal agenda exists is determined by the trial court, and we
will not reverse its determination absent clear error.”  Id.
Further, in Davis v. Comed, Inc., 619 F.2d 588 (6th Cir. 1980), the
Sixth Circuit Court of Appeals explored the impact of remedies such as those
requested by Read in this case.   The court disqualified the plaintiff in Davis
from bringing his derivative action because of his conduct and conflicts of
interest.   The court found that the remedy sought by the plaintiff was relevant
in determining whether the plaintiff was an appropriate plaintiff in a derivative
suit.   Id. at 595.   In reaching this conclusion, the Davis court acknowledged that
the  federal                                                                             “courts  have  also  scrutinized  the  remedy  sought,  and  its
implications,   in   assessing   plaintiff's   qualifications   as   a   derivative
representative.”   Id.   In the instant case, the trial court essentially followed the
guidance of the federal courts and correctly determined that the actions which
Read took in furtherance of his personal claims are contrary to the fair and
adequate representation of the corporation.
Read  also  contends  that  dissolution  actually  was  in  the
corporations' best interest as its continued “life” would mean continuing debt
and depletion of assets.   No evidence was presented that the corporations were
insolvent.   Given his allegation, we would anticipate that other shareholders,
even those with stock in the offending interrelated corporations, would join his
suit  for  fear  their  financial  interests  would  be  diminished  by  continued
depletion of assets and continuing debt.   No other shareholders, however, have
aligned themselves with the plaintiff in this suit, including the non-family
shareholders.   In fact, almost all of the other shareholders submitted affidavits
in opposition to plaintiff's actions.   Looking again to federal law, we conclude
that:                                                                                    “The  degree  of  support  a  putative  plaintiff  receives  from  other
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No.   95-2453
shareholders ... is a factor that should be considered in determining adequacy of
representation.”   Larson v. Dumke, 900 F.2d 1363, 1368 (9th Cir.), cert. denied sub
nom, Round Table Pizza, Inc. v. Larson, 498 U.S. 1012 (1990).   Thus, “[o]nly in
the rarest instances may there be a shareholder derivative action with a class of
one.”   Smith, 977 F.2d at 948.   Therefore, the trial court correctly concluded that
Read's “first concern was for his own interests, rather than for the corporate
interests [and that it was] clear from this that [Read's] interests [were] in fact
antagonistic to the corporations.”
Finally, Read asserts that his request for dissolution was prompted
by the fact the trial court adjourned the trial twice and that, once he obtained the
necessary financial information, he withdrew his request.   Regardless of his
reasons, Read's requests for dissolution and receivership prior to trial reflects
the fact that he cannot adequately or fairly represent the corporation.
Accordingly, for the aforementioned reasons, we conclude that the
trial court properly exercised its discretion in determining that Read was an
inappropriate plaintiff in a derivative shareholder suit.
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No.   95-2453
B. Direct action.
In the sixth cause of action in the second amended complaint,
Read   alleges   controlling   directors   and   shareholders   mismanaged   the
corporation and engaged in self-dealing in violation of their fiduciary duty to
him and other minority shareholders.   For this cause of action Read sought
judgment awarding damages to him individually.   The trial court, in granting
the defendants' motion to dismiss, followed the reasoning of Rose v. Schantz, 56
Wis.2d 222, 201 N.W.2d 593 (1972), and McGivern v. Amasa Lumber Co., 77
Wis.2d 241, 252 N.W.2d 371 (1977), which held that in Wisconsin a stockholder
may not bring direct actions against the directors and controlling shareholders
of  a  corporation  unless  some  individual  right  of  the  stockholder  is  being
impaired and, absent an individual right, a shareholder may not bring suit for
actions accruing to the corporation.   Rose, 56 Wis.2d at 229-30, 201 N.W.2d at
597-98; McGivern, 77 Wis.2d at 260, 252 N.W.2d at 380.
Here, as in the Rose case, Read's complaint alleges conduct that, if
true,  means  that  resulting  primary  injury  is  to  the  corporation,  not  the
individual stockholder bringing the suit.   Rose, 56 Wis.2d at 230, 201 N.W.2d at
598.    The trial court correctly concluded that Read could not bring a direct
action against the defendants.
Read next argues that while the dictates of Rose may currently be
the  law  in  Wisconsin,  the modern  trend is to treat  shareholders in  closed
corporations as partners, not shareholders.    Read states in his brief:               “This
fiduciary duty stems from the similarity between closely-held corporations and
partnerships—in either case, an owner of a minority interest is at greater risk
because no ready market exists in which to liquidate their investment.”   Hence,
Read believes he should be afforded the opportunity to change the law to
permit a direct action against the directors and controlling shareholders.   As
evidence of this alleged new trend in Wisconsin, Read cites § 180.1833, STATS.,
titled “The power of court to grant relief.”3   This statute sets forth the many
3  Section 180.1833, STATS., provides:
Power of court to grant relief.   (1) GROUNDS FOR RELIEF.   Subject to sub. (4)(b)
and (c), a shareholder of record, the beneficial owner of shares
held by a nominee or the holder of voting trust certificates of a
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No.   95-2453
(..continued)
statutory close corporation may petition the circuit court for the
county where the corporation's principal office or, if none in this
state, its registered office is located for relief on any of the
following grounds:
(a) That the directors or those in control of the corporation have acted, are acting
or will act in a manner that is illegal oppressive, fraudulent or
unfairly prejudicial to the petitioner in his or her capacity as a
shareholder, director or officer of the corporation.
(b) That the directors or those in control of the corporation are so divided
respecting the management of the corporation's affairs that the
votes required for action cannot be obtained and the shareholders
are unable to break the deadlock, with the consequence that the
corporation is suffering or will suffer irreparable injury or that the
business and affairs of the corporation can no longer be conducted
to the advantage of the shareholders generally.
(c) That conditions exist that would be grounds for judicial dissolution of the
corporation under s. 180.1430(2).
(2) TYPE OF RELIEF.                                                                    (a) If the court finds that one or more of the conditions
specified  in  sub. (1)  exist,  it  shall  grant  appropriate  relief,
including any of the following:
1. Canceling, altering or enjoining any resolution or other act of the statutory
close corporation.
2. Directing  or  prohibiting  any  act  of  the  corporation  or  of  shareholders,
directors, officers or other persons who are party to the action.
3. Canceling or altering the articles of incorporation or bylaws of the corporation.
4. Removing from office any director or officer, or ordering that a person be
appointed a director or officer.
5. Requiring an accounting with respect to any matters in dispute.
6. Appointing a receiver to manage the business and affairs of the corporation.
7. Appointing a provisional director who shall have all of the rights, powers and
duties of a duly elected director and shall serve for the term and
under the conditions established by the court.
8. Ordering the payment of dividends.
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No.   95-2453
remedies the court is permitted to award to a shareholder in suits involving
statutory close corporations.   Included in the list is an award of damages to a
shareholder.  Section 180.1833, STATS., however, is not available to non-statutory
close corporations.   Read, who in the two filed complaints never alleges that
either Dome and Hayes are close corporations, now urges this court to find the
trial court erred in refusing his request for a third complaint.
Section 802.09(1), STATS., controls the amendment of pleadings in
Wisconsin.4   It provides in relevant part :                                          “A party may amend the party's
(..continued)
9. If the court finds that it cannot order appropriate relief, ordering that the
corporation  be  liquidated  and  dissolved  unless  either  the
corporation or one or more of the remaining shareholders purchase
all of the shares of the petitioning shareholder at their fair value by
a designated date, with the fair value and terms of the purchase to
be determined under sub. (3).
10. Ordering dissolution if the court finds that one or more grounds exist for
judicial dissolution under s. 180.1430(2) or that all other relief
ordered by the court has failed to resolve the matters in dispute.
11. Awarding damages to any aggrieved party in addition to, or in lieu of, any
other relief granted.
(b) In determining whether to grant relief under par. (a)9. or 10., the court shall
consider the financial condition of the corporation but may not
refuse  to  order  liquidation  solely  on  the  grounds  that  the
corporation has net worth or current operating profits.
(c) If the court determines that a party to a proceeding brought under this section
has acted arbitrarily, vexatiously or in bad faith, it may award
reasonable expenses, including attorney fees and the costs of any
appraisers or other experts, to one or more of the other parties.
4  Section 802.09(1), STATS., provides:
Amended and supplemental pleadings. (1) AMENDMENTS.   A party may amend
the party's pleading once as a matter of course at any time within 6
months after the summons and complaint are field or within the
time set in a scheduling order under s. 802.10.   Otherwise a party
may amend the pleading only by leave of court or by written
consent of the adverse party; and leave shall be freely given at any
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No.   95-2453
pleading once as a matter of course at any time within  6 months after the
summons  and  complaint  are  filed  ...                                                 Otherwise  a  party  may  amend  the
pleading only by leave of court or by written consent of the adverse party.”
Section 802.09(1), STATS.                                                                “The decision to grant leave to amend a complaint is
within the trial court's discretion.”  Carl v. Spickler Enters., Ltd., 165 Wis.2d 611,
622, 478 N.W.2d 48, 52 (Ct. App. 1991).
Our review of the record shows that Read's request to amend the
pleading came over two years after the commencement of this suit and after the
complaint had already been amended once.    A trial in this case for all the
remaining claims was scheduled to begin less than two weeks from the date the
motion to  amend was heard.    The  amendment sought  would have, in all
likelihood, required a trial adjournment to allow defendant's counsel sufficient
time to file an answer.   Read gave no explanation why he failed to allege that
the corporations were close corporations for over two years.   The corporations'
status was always known and not a result of newly-discovered information.
The trial court reasoned that even if Read were allowed to amend the complaint
to allege that the corporations were closely-held corporations, Read still would
have faced a significant legal hurdle because the relief he sought was available
only  to  statutory  close  corporations.                                                Because  the  Hayes  and  Dome
Corporations have not opted into the statutory close corporation status, see
§ 180.1801, STATS., the authority relied on by Read as authority for direct action
by shareholders would not apply to them.
The trial court determined that Read's desired amendment was of
questionable value given Wisconsin law.  The trial court stated:
Wisconsin  has  not  adopted  the  rule  that  a  shareholder  in  a
nonstatutory close corporation may bring the direct
action.   Brian Read is attempting to bring under the
Rose  and  McGivern  cases  which  have  only  been
previously cited on the record in this case.   Such a
(..continued)
stage of the action when justice so requires.  A party shall plead in
response to an amended pleading within 20 days after service of
the amended pleading unless (a) the court otherwise orders or (b)
no responsive pleading is required or permitted under s. 802.01(1).
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No.   95-2453
cause   of   action   belongs   to   the   corporations.
Therefore, at this time I'm denying the motion to
amend because down the line ... it would be a waste
of time.
We  agree  that  an  adoption  of  Read's  theory  would  eviscerate  the  current
statutes distinguishing between statutory and non-statutory close corporations.
Further, in the face of an imminent trial date in a case over two
years old, the court properly exercised its discretion in refusing to grant the
amendment.   We note that the court had already permitted one amendment of
the pleadings; and the record reveals this was a contentious lawsuit requiring
much  of  the  court's  time.    Given  the  number  of  lawyers  involved,  any
adjournment would have resulted in a substantial delay.    In balancing the
limited value of the proposed amendment against the history of this case, the
court's decision of denial was entirely appropriate.
In sum, we conclude that the trial court properly exercised its
discretion in both issues raised by Read.  Accordingly, we affirm.
By the Court.—Order affirmed.
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No.   95-2453(D)
FINE, J.  (dissenting).    I respectfully dissent from the majority's
decision for two reasons.
1.  The majority opinion ignores the long-standing rule that not
only permits alternative pleading but also specifically provides that the claims
pleaded in the alternative need not be consistent with one another.   See RULE
802.02 (5)                                                                                (b), STATS.5    The trial court did not dismiss Brian Read's derivative
claim on summary judgment, either directly under RULE  802.08, STATS., or
indirectly under RULE 802.06(3), STATS.   See Majority Op. at 2-3 n.1.   Thus, the
trial court was, and we are, limited to the four corners of the complaint viewed
in a light most favorable to sustaining the claims therein asserted.   Morgan v.
Pennsylvania Gen. Ins. Co., 87 Wis.2d  723,  731, 275 N.W.2d  660, 664  (1979)
(Facts alleged in the complaint must be taken as true, and “a claim should be
dismissed as legally insufficient only if `it is quite clear that under no conditions
can the plaintiff recover.'”)  (citation omitted). Moreover, although I do not
necessarily disagree with the majority's conclusion that standing to assert a
derivative   claim   is   reviewed   under   an   erroneous-exercise-of-discretion
standard, a determination of whether a person seeking to assert a derivative
claim  “[f]airly and adequately represents the interests of the corporation in
enforcing  the  right  of  the  corporation,”  § 180.0741(2),  STATS.,  requires  fact-
finding unless the four-corners of the complaint demonstrate conclusively that
the person does not.  See   7C CHARLES A. WRIGHT ET AL., FEDERAL PRACTICE AND
PROCEDURE:   CIVIL  2D § 1836, at 162-163 (1986).   Further, it is the defendants'
burden to show lack of standing.    Id.,  § 1833 at  141.    In my view, it was
improper for the trial court to use materials Read submitted in support of his
alternative claims to knock out his derivative claim.
5  RULE 802.02(5)(b), STATS., provides:
A party may set forth 2 or more statements of a claim or defense alternatively or
hypothetically, either in one claim or defense or in separate claims
or  defenses.    When                                                                     2  or  more  statements  are  made  in  the
alternative and one of them if made independently would be
sufficient,  the  pleading  is  not  made  insufficient  by  the
insufficiency of one or more of the alternative statements.  A party
may also state as many separate claims or defenses as the party
has  regardless  of  consistency and  whether  based  on  legal  or
equitable grounds.   All statements shall be made subject to the
obligations set forth in s. 802.05.




No.   95-2453(D)
2.  I  believe  that  the  trial  court  misused  its  discretion  in  not
permitting Mr. Read to amend his complaint to allege that the corporations
were closed corporations, so that the case could proceed—either on summary
judgment  or  trial—to  determine  the  relationships  between  the  directors,
officers, and shareholders, in light of the trend recognized by § 180.1833, STATS.,
to give shareholders in close corporations greater rights vis a vis their interests in
the corporation.   Cf. Bass v. Ambrosius, 185 Wis.2d 879, 890-891, 520 N.W.2d
625,  629-630  (Ct. App.  1994)  (Resolution of a complex issue of law  “should
await until the facts are more fully developed at trial.”).
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