On August 27, 2020, the First Department issued a decision in Zachariou v. Manios, 2020 NY Slip Op. 04811, holding that a trust beneficiary could not bring an action on behalf of the trust unless she had made a demand on the trustee that had been refused or that such a demand would be futile, explaining:
[T]he court properly dismissed the complaint because the beneficiary of a trust must show either that she asked the trustee to sue and that he refused or that it would have been futile for her to ask him to sue. Plaintiff does not even allege that she asked Sioufas to sue defendant and that Sioufas refused. Nor does the complaint allege that it would have been futile for her to ask him to sue. In addition, plaintiff does not argue on appeal that she sufficiently alleged demand futility.
(Internal citations omitted).
This decision illustrates one of the special pleading requirements for derivative actions (usually where a shareholder brings an action on behalf of a corporation, but here where a beneficiary brings an action on behalf of a trust). Contact Schlam Stone & Dolan partner John Lundin at firstname.lastname@example.org if you or a client have questions regarding bringing an action on behalf of a corporation or other business entity.
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