The Nebraska Court of Appeals recently ruled in a case involving a minority shareholder's claim against a majority shareholder for breach of fiduciary duty. The court affirmed the lower court's decision, stating that the minority shareholder lacked standing to bring the lawsuit. This ruling affects shareholders in closely held corporations and clarifies the requirements for standing in such cases.
The case, Wright v. G & G Sheet Metal Co., was filed on July 14, 2026, under docket number A-25-436. Nanette J. Wright, the appellant, claimed that Richard Greb, the majority shareholder of G & G Sheet Metal Company, breached his fiduciary duty by engaging in self-dealing that diminished the value of her shares. The court's decision is significant for shareholders who may consider legal action against majority shareholders in similar situations.
Background
Wright and Greb are siblings, and their father, Ralph Greb, incorporated G & G in 1971. At the time of Ralph's death in 2010, he owned 301 shares of the company, while Greb owned approximately 579 shares. Ralph's will bequeathed his shares to both Wright and Greb, but disputes arose regarding the ownership of these shares, leading to various legal actions.
After Ralph's death, an interpleader action was filed against his estate, which involved disputes over share ownership among Wright, her creditors, and the estate. Eventually, Wright's shares were assigned to First Nebraska Trust Company (FNTC), which became a record shareholder. However, due to ongoing litigation, Wright did not officially become a shareholder until August 2021, after a settlement agreement.
G & G was dissolved in December 2021, and by that time, the value of Wright's shares had significantly decreased. In April 2022, Wright filed her lawsuit against Greb, claiming that his actions as a majority shareholder harmed her interests as a minority shareholder.
The Ruling
The Nebraska Court of Appeals, led by Chief Judge Riedmann and Judges Bishop and Freeman, reviewed the case and upheld the lower court's ruling. The court found that Wright lacked standing to pursue her claim against Greb because the alleged wrongdoing occurred before she became a shareholder. The court noted, "[Wright] does not have the right to recover damages for claims that accrued before she became a shareholder."
The court explained that generally, a shareholder cannot bring an action in their own name for wrongs done to the corporation. Instead, such actions are typically derivative, meaning they must be brought on behalf of the corporation. The court emphasized that Wright's claims were derivative in nature, as they were based on the actions of Greb that affected the corporation as a whole.
Impact
This ruling has significant implications for minority shareholders in closely held corporations. It clarifies that shareholders must have owned shares at the time of the alleged wrongdoing to have standing to bring a lawsuit. The court's decision reinforces the principle that claims related to corporate actions are generally derivative and must be pursued in a representative capacity for the corporation.
The ruling could deter minority shareholders from pursuing claims against majority shareholders unless they can demonstrate ownership at the time of the alleged misconduct. This may lead to a more cautious approach in corporate governance and shareholder relations within closely held corporations.
What's Next
Wright's case is now concluded with the court's ruling. There is no indication that she plans to appeal the decision. However, the ruling sets a precedent for future cases involving shareholder disputes in closely held corporations, potentially influencing how similar cases are handled in the future.