# Mukamal

> District Court, W.D. Pennsylvania · July 21, 2026

URL: https://www.frixlaw.com/law-library/cases/11410856

## Case

- **Full name:** Kathleen Mukamal, Individually and Derivatively on Behalf of Onexxx Production & Exploration Corporation and Chartiers Natural Gas Co., Inc.; Theodore Mukamal, Individually and Derivatively on Behalf of Onexxx Production & Exploration Corporation and Chartiers Natural Gas Co., Inc.; and Andrew Mukamal, Individually and Derivatively on Behalf of Onexxx Production & Exploration Corporation and Chartiers Natural Gas Co., Inc. v. Onexxx Production & Exploration Corporation, Chartiers Natural Gas Co., Inc., Anne Weir Bensen, Kimberley Crowell, Sandra L Bitner
- **Court:** District Court, W.D. Pennsylvania
- **Decided:** July 21, 2026
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
PITTSBURGH
KATHLEEN MUKAMAL, )
INDIVIDUALLY AND DERIVATIVELY )
ON BEHALF OF ONEXXX PRODUCTION ) 2:25-CV-01302-MJH
)
& EXPLORATION CORPORATION AND
)
CHARTIERS NATURAL GAS CO., INC.; )
THEODORE MUKAMAL, )

INDIVIDUALLY AND DERIVATIVELY )
ON BEHALF OF ONEXXX PRODUCTION )
& EXPLORATION CORPORATION AND
CHARTIERS NATURAL GAS CO., INC.;
AND ANDREW MUKAMAL,
INDIVIDUALLY AND DERIVATIVELY
ON BEHALF OF ONEXXX PRODUCTION
& EXPLORATION CORPORATION AND
CHARTIERS NATURAL GAS CO., INC.;

Plaintiffs,

vs.

ONEXXX PRODUCTION &
EXPLORATION CORPORATION,
CHARTIERS NATURAL GAS CO., INC.,
ANNE WEIR BENSEN, KIMBERLEY
CROWELL, SANDRA L BITNER,

Defendants,

OPINION AND ORDER
Plaintiffs, Kathleen Mukamal, Theodore Mukamal, and Andrew Mukamal, individually
and derivatively, on behalf of ONEXXX Production & Exploration Corporation and Chartiers
Natural Gas Company, brings the within shareholder suit against Defendants, ONEXXX
Production & Exploration Corporation and Chartiers Natural Gas Company, Anne Weir Bensen,
Kimberly Crowell, and Sandra L. Bitner. (ECF No. 25). Plaintiffs’ Amended Complaint
asserts claims for Breach of Fiduciary Duty (Count I), Appointment of Receiver pursuant to 15
Pa.C.S. § 1767(a)(2) (Count II), Appointment of Receiver pursuant to 15 Pa.C.S. § 1984 (Count
III), Removal of Directors 15 Pa.C.S. § 1767(c) (Count IV), Involuntary Winding Up and
Dissolution pursuant to 15 Pa.C.S. § 1981 (Count V), and Failure to Declare Dividend (Count
VI). Id. Defendants now move for dismissal pursuant to Fed. R. Civ. P. 12(b)(6). (ECF No. 47).
The matter is now ripe for decision.

Upon consideration of Plaintiffs’ Amended Complaint (ECF No. 25), Defendants’
Motion to Dismiss (ECF No. 47), the respective briefs (ECF Nos. 48, 61, and 64), and for the
following reasons, Defendants’ Motion to Dismiss will be granted in part and denied in part.
I. Background
Between 1980 and 1981, Steven Mukamal purchased shares of stocks in the Defendant
Corporations. (ECF No. 25 at ¶ 24). Both Corporate Defendants are closely held corporations
involved in the oil and gas industry. Id at ¶ 1. In 2017, Steven died, and his shares passed to his
wife, Kathleen, and his children, Theodore and Andrew. Id at ¶ 27.
Plaintiffs allege that the Defendants, from their formation through 2016, did not pay any
dividends or make any distributions to shareholders because they were not profitable. Id. at ¶¶

31-32. Plaintiffs aver that, beginning in the year 2016, the Corporate Defendants began to
generate millions of dollars in profits in connection with certain drilling rights. Id. at ¶ 37. From
2016 through 2018, Theodore, on behalf of the Mukamal Family, had a number of discussions
with corporate board members, requesting shareholder distributions of a portion of the profits. Id.
at ¶ 38. Plaintiffs allege that, rather than distribute dividends, Defendants awarded excessive
compensation and redirected corporate funds into investment accounts unrelated to the
Defendants’ oil and gas business. Id. at ¶¶ 39-47. Defendants have allegedly continued to rebuff
Plaintiffs’ requests for dividends. Id. at ¶ 53.
II. Relevant Standard
When reviewing a motion to dismiss, pursuant to Federal Rule of Civil Procedure
12(b)(6), the court must “accept all factual allegations as true, construe the complaint in the light
most favorable to the plaintiff, and determine whether, under any reasonable reading of the

complaint, the plaintiff may be entitled to relief.” Eid v. Thompson, 740 F.3d 118, 122 (3d Cir.
2014) (quoting Phillips v. County of Allegheny, 515 F.3d 224, 233 (3d Cir.2008)). “To survive a
motion to dismiss a complaint must contain sufficient factual matter, accepted as true, to ‘state a
claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility
when the plaintiff pleads factual content that allows the court to draw the reasonable inference
that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing Twombly,
550 U.S. at 556); see also Thompson v. Real Estate Mortg. Network, 748 F.3d 142, 147 (3d Cir.
2014). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory
statements, do not suffice.” Iqbal, 556 U.S. at 678. “Factual allegations of a complaint must be

enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555. A
pleading party need not establish the elements of a prima facie case at this stage; the party must
only “put forth allegations that ‘raise a reasonable expectation that discovery will reveal
evidence of the necessary element[s].’” Fowler v. UPMC Shadyside, 578 F.3d 203, 213 (3d
Cir.2009) (quoting Graff v. Subbiah Cardiology Associates, Ltd., 2008 WL 2312671 (W.D. Pa.
June 4, 2008)); see also Connelly v. Lane Const. Corp., 809 F.3d 780, 790 (3d Cir.2016)
(“Although a reviewing court now affirmatively disregards a pleading’s legal conclusions, it
must still . . . assume all remaining factual allegations to be true, construe those truths in the light
most favorable to the plaintiff, and then draw all reasonable inferences from them.”) (citing
Foglia v. Renal Ventures Mgmt., LLC, 754 F.3d 153, 154 n. 1 (3d Cir.2014)).
Nonetheless, a court need not credit bald assertions, unwarranted inferences, or legal
conclusions cast in the form of factual averments. Morse v. Lower Merion School District, 132

F.3d 902, 906, n. 8 (3d Cir.1997). The primary question in deciding a motion to dismiss is not
whether the Plaintiff will ultimately prevail; but rather, whether he or she is entitled to offer
evidence to establish the facts alleged in the complaint. Maio v. Aetna, 221 F.3d 472, 482 (3d
Cir.2000). The purpose of a motion to dismiss is to “streamline [ ] litigation by dispensing with
needless discovery and factfinding.” Neitzke v. Williams, 490 U.S. 319, 326–327, (1989).
When a court grants a motion to dismiss, the court “must permit a curative amendment unless
such an amendment would be inequitable or futile.” Great Western Mining & Mineral Co. v. Fox
Rothschild LLP, 615 F.3d 159, 174 (3d Cir. 2010) (internal quotations omitted). Further,
amendment is inequitable where there is “undue delay, bad faith, dilatory motive, [or] unfair
prejudice.” Grayson v. Mayview State Hosp., 293 F.3d 103, 108 (3d Cir. 2002). Amendment is

futile “where an amended complaint ‘would fail to state a claim upon which relief could be
granted.’ ” M.U. v. Downingtown High Sch. E., 103 F. Supp. 3d 612, 631 (E.D. Pa. 2015)
(quoting Great Western Mining & Mineral Co., 615 F.3d at 175).
III. Discussion
As a preliminary matter, the Court will briefly discuss the interplay between Plaintiffs’
causes of actions and Defendants’ arguments. Plaintiffs’ Amended Complaint asserts claims for
Breach of Fiduciary Duty (Count I), Appointment of Receiver pursuant to 15 Pa.C.S. §
1767(a)(2) (Count II), Appointment of Receiver pursuant to 15 Pa.C.S. § 1984 (Count III),
Removal of Directors 15 Pa.C.S. § 1767(c) (Count IV), Involuntary Winding Up and Dissolution
pursuant to 15 Pa.C.S. § 1981 (Count V), and Failure to Declare Dividend (Count VI).
Plaintiffs’ Amended Complaint identifies the following categories of conduct in support
of their claims:

(i) failure and refusal to pay any dividends or to make any distributions to
shareholders for more than forty years;

(ii) even after declaring a post-litigation minimal dividend, the individual
Defendants retained millions of dollars in company funds for their own
benefit and excluded Plaintiff shareholders;

(iii) failure to issue annual reports or hold annual meetings for either of the
Corporate Defendants;

(iv) failure to provide Plaintiffs with regular or timely information concerning
the Corporate Defendants;

(v) invested Corporate Defendants’ profits into non-business-related
investment accounts; and

(vi) paid themselves and/or members of their family exorbitant compensation
from Corporate funds.

In their Motion to Dismiss, Defendants argue that Plaintiffs’ claims are derivative, rather
than direct. As regards derivative claims, Defendants contend that pre-suit demand was required,
and absent said demand, Plaintiffs’ Amended Complaint must be dismissed. Second, Defendants
argue that, even if the demand requirement were excused, the business judgment rule bars
Plaintiffs’ claims. Third, regardless of the pre-suit demand requirement or business judgment
rule, Defendants argue that most of Plaintiffs’ requested relief and damages are time-barred.
Fourth, Defendants maintain that Plaintiffs’ claims for corporate reports and/or dissolution under
Pennsylvania law do not apply to Onexx, a Delaware corporation. Finally, Defendants argue
Count VI, failure to declare dividends claim, is not a recognized cause of action under either
Delaware or Pennsylvania law. Defendant, Chartiers, is a Pennsylvania corporation, and
Defendant, Onexx, is Delaware corporation.
A. Onexx
Defendants argue that Onexx, a Delaware Corporation, should be subject to Delaware

corporate laws. In particular, Defendants maintain that Counts II through V, are based upon
Pennsylvania statutes and do not apply to out-of-state corporate entities. Plaintiffs contend that
this Court has discretionary authority to enforce Pennsylvania corporate statutes against Onexx.
“[T]he ‘internal affairs doctrine’ holds that courts look to the law of the state of
incorporation to resolve issues involving the internal affairs of a corporation.” Banjo Buddies,
Inc. v. Renosky, 399 F.3d 168, 179 n. 10 (3d Cir. 2005). “The internal affairs doctrine is a
conflict of laws principle which recognizes that only one State should have the authority to
regulate a corporation's internal affairs—matters peculiar to the relationships among or between
the corporation and its current officers, directors, and shareholders — because otherwise a
corporation could be faced with conflicting demands.” Eddystonc Rail Co., LLC v. Bridger

Logistics, LLC, No. 17-495, 2018 WL 11376024, at *1 n.1 (E.D. Pa. Nov. 20,
2018) (quoting Edgar v. MITE Corp., 457 U.S. 624, 645, 102 S.Ct. 2629, 73 L.Ed.2d 269
(1982)). The internal affairs doctrine applies to “matters which are peculiar to the relationships
among or between the corporation and its current officers, directors, and
shareholders.” Id. (citing Norman v. Elkin, 860 F.3d 111, 122 (3d Cir. 2017)). Pennsylvania has
statutorily codified the internal affairs doctrine. See 15 Pa. Stat. and Cons. Stat. Arm. § 4145(a)
(requiring courts to apply the law of the state of incorporation in actions relating a foreign
corporation’s “internal affairs”).
Here, the Court notes that the types of relief requested, i.e., accounting, dividend
distributions, receiver appointment, director removal, and dissolution, all concern the internal
affairs of Onexx, its board of directors and shareholders. Thus, the “internal affairs” doctrine
applies to these claims against Onexx, such that Delaware corporate laws apply. Accordingly,

as Counts II through V specifically invoke Pennsylvania corporate statutes, said claims fail as to
Onexx. Defendants’ Motion to Dismiss, Counts II through V against Onexx, will be granted.
B. Derivative versus Direct Claim
As regards the question of whether Plaintiffs’ claims are shareholder or derivative claims,
Defendants argue that Plaintiffs’ breach of fiduciary duty claim (Count I), is brought for the
benefit of all the corporations’ minority stockholders, and that the remaining claims (Counts II
through VI) are dependent on the breach of fiduciary claim. Defendants contend that Plaintiffs’
breach of fiduciary claim is derivative, not direct; such that Plaintiffs were required to make a
pre-suit demand or specifically allege that a demand would be futile. Defendants maintain that
the Amended Complaint contains no allegations that Plaintiffs formally demanded the Board of

Directors of either Chartiers or Onexxx to bring any action to enforce the stockholders’ alleged
rights. As such, Defendants argue that all counts of the Amended Complaint be dismissed.
Plaintiffs contend that the crux of their claims is that Defendants wrongfully refused to
declare dividends, to which Plaintiffs were entitled. Thus, Plaintiffs maintain that their claims
allege harm to individual stockholders and not to the corporations. Therefore, Plaintiffs argue
their claims are direct shareholder claims and not derivative claims. Plaintiffs also argue that
their claims are based upon minority shareholder oppression. Therefore, Plaintiffs assert there is
no need for any pre-suit demand or pleading of futility such that defense motion to dismiss
should be denied.
In response, Defendants assert that Plaintiffs’ Amended Complaint sets forth demands
and damages claims that are derivative. (ECF No. 25 at p. 1). Specifically, Defendants contend
that Plaintiffs’ allegations of breach of fiduciary duty seek damages payable to stockholders and
removal of directors, appointment of an independent receiver, and dissolution and sale of the

Defendant companies. Such relief includes the corporations and all stockholders, and not just a
singular cohort of minority stockholders. Thus, the Plaintiffs’ lawsuit presents shareholder and
derivative claims.
1. Chartiers
Under Pennsylvania law, when a shareholder brings suit, the court is to perform an
independent inquiry to determine whether the action is direct or derivative in nature. See Hill v.
Ofalt, 85 A.3d 540, 549 (Pa. Super. Feb. 5, 2014); Kitty Ward Travel, Inc. v. Ward, 2016 WL
1615795 at *7 (Pa. Super. Ct. Apr. 22, 2016); Frost v. Zeff, No. 827, 2015 WL 8552111, at *5
(Pa. Super. Ct. Dec. 11, 2015). Absent a direct injury, a shareholder must seek relief through a
derivative action, which is an action on behalf of the corporation. Pennsylvania law requires

a derivative plaintiff to make a pre-complaint demand on the corporation or its board of
directors, unless he can show “immediate and irreparable harm to the business
corporation.” See 15 Pa. Cons. Stat. § 1781(a) & (b)(1).
In the context of a closely held corporation, courts have generally adopted a relaxed
approach to the demand requirement. Thus, where there are conceivable allegations of a
shareholders’ derivative claim, Pennsylvania corporate case law often looks to the ALI
Principles of Corporate Governance. Section 7.01(d), [of the ALI Principles of Corporate
Governance] excuses the demand requirement for derivative actions that are filed on behalf of
closely held corporations. Grill v. Aversa, 1:12-CV-120, 2014 WL 4672461, at *8 (M.D. Pa.
Sept. 18, 2014); See, e.g., Cooper v. Rucci, 2008 WL 942710 (W.D.Pa.2008) (unpublished
memorandum) (applying Section 7.01(d) of the ALI Principles of Corporate Governance to
excuse the demand requirement for a derivative action that was filed on behalf of a closely held
corporation); Nedler v. Vaisberg, 427 F.Supp.2d 563 (E.D.Pa.2006) (same); White v. George, 66

Pa. D. & C.4th 129 (Pa.Com.Pl.2004) (same); Top Quality Mfg., Inc. v. Sinkow, 2004 WL
2554615 (Pa.Com.Pl.2004) (unpublished memorandum) (same); Levin v. Schiffman, 54 Pa. D. &
C.4th 152 (Pa.Com.Pl.2001) (same).” Hill v. Ofalt, 2014 PA Super 17, 85 A.3d 540, 556
(Pa.Super.Ct.2014).
Section 7.01(d) of the ALI Principles of Corporate Governance provides:
In the case of a closely held corporation, the court in its discretion may treat an
action raising derivative claims as a direct action, exempt it from those
restrictions and defenses applicable only to derivative actions, and order an
individual recovery, if it finds that to do so will not (i) unfairly expose the
corporation of the defendants to a multiplicity of actions, (ii) materially prejudice
the interests of creditors of the corporation, or (iii) interfere with a fair distribution
of the recovery among all interested persons.

ALI Principles § 7.01(d).
Here, the Amended Complaint alleges that Chartiers is a closely held corporation. (ECF
No. 25 at ¶ 1). Because Chartiers is a closely held corporation, the Court has the discretion to
treat this as a direct action. At the core of Plaintiffs’ claim is a request for the individual
Plaintiffs to recover from Chartiers, because it failed to declare dividends payable to Plaintiffs.
Further, nothing in the pleadings suggests that Plaintiffs’ individual recovery would expose
Chartiers to a multiplicity of actions, prejudice the interests of creditors, or interfere with a fair
distribution among interested persons. Therefore, Plaintiffs would not be required to make a
derivative lawsuit demand to Chartiers for those claims that are derivative in nature.
Accordingly, Defendants Motion to Dismiss as to this issue will be denied.
2. Onexx
Under Delaware law, “[a] derivative suit enables a stockholder to bring a suit on behalf of
the corporation for harm done to the corporation.” Brookfield Asset Mgmt., Inc. v. Rosson, 261
A.3d 1251, 1262 (Del. 2021). “Because a derivative suit is brought on behalf of the corporation,

any recovery must go to the corporation.” Id. at 1262-63. However, a stockholder who is
directly injured retains the right to bring an individual action for injuries affecting his or her legal
rights as a stockholder. Id. “If a party brings derivative claims without first making [a] demand,
and demand is not excused, those claims must be dismissed.” Wise v. Biowish Techs., Inc., Civ.
No. 18-676-RGA, 2019 WL 192876, at *3 (D. Del. Jan. 11, 2019) (quoting Albert v. Alex. Brown
Mgmt. Servs., Inc., No. Civ. A. 762-N, Civ. A. 763-N, 2005 WL 2130607, at *13 (Del. Ch. Aug.
26, 2005)).
Here, Plaintiffs’ Amended Complaint and arguments set forth that the core of their claims
arise because they, individually, did not receive the benefits of dividends from the Defendant
corporations. Such dividend claims are direct and not derivative in nature. Therefore, because

Plaintiffs claims are not derivative, no pre-suit demand was necessary. Accordingly, the Court
cannot dismiss Plaintiffs’ claims on the basis that Plaintiffs failed to make a pre-suit demand on
purported derivative claims. Defense Motion to Dismiss on this issue will be denied.
C. Business Judgment Rule
In the alternative, Defendants argue that the business judgment rule serves to preclude
Plaintiffs’ Amended Complaint. Plaintiffs contend that allegations of the Defendants’ minority
shareholder oppression overcome any application of the business judgment rule.
Pennsylvania and Delaware courts are generally loathe to second-guess the reasonable
decision-making of a corporate board of directors, deferring instead to the sound business
judgment of the directors. Cuker v. Mikalauskas, 692 A.2d 1042, 1045 (Pa. 1997); Aronson v.
Lewis, 473 A.2d 805, 812 (Del. 1984); see also, 15 Pa.C.S.A § 1712. Under the business
judgment rule, a corporate officer or majority shareholder may not be held liable for breach of
fiduciary duty “in the absence of fraud or self-dealing, if challenged decisions were within the

scope of the [defendant's] authority, if they exercised reasonable diligence, and if they honestly
and rationally believed their decisions were in the best interests of the company.” Cuker v.
Mikalauskas, 547 Pa. 600, 612 (1997).
Pennsylvania law recognizes an exception to the business judgment rule in cases where a
plaintiff could establish minority stockholder oppression, typically where there is alleged to be a
cascade of decisions to squeeze out minority stockholders, such as withholding certain corporate
information and refusing to declare dividends or return value to stockholders. Ferber v.
American Lamp Corp., 469 A.2d 1046, 1050 (Pa. 1983) (majority stockholders owe duty to
minority stockholders to “prevent[] them from using their power in such a way as to exclude the
minority from their proper share of the benefits accruing from the enterprise.”), quoting Hornsby

v. Lohmeyer, 72 A.2d 294, 298 (Pa. 1950). See also, Grill v. Aversa, 908 F.Supp.2d 573, 592-593
(M.D. Pa. 2012) (describing “tactics” used to freeze out or oppress a minority stockholder to
include “the withholding of dividends, restricting or precluding employment in the corporation,
paying excessive salaries to majority stockholders, withholding information relating to the
operation of the corporation, appropriation of corporate assets, denying dissenting shareholders
appraisal rights, failure to hold meetings and excluding the minority from a meaningful role in
the corporate decision making.”).
Courts in the Third Circuit consider the business judgment rule to be an affirmative
defense and have been reluctant to grant Rule 12(b)(6) motions based upon the business
judgment rule. See In re Tower Air, Inc., 416 F.3d 229, 238 (3d Cir. 2005) (noting, in the context
of the Delaware business judgment rule, “[g]enerally speaking, we will not rely on an affirmative
defense such as the business judgment rule to trigger dismissal of a complaint under Rule
12(b)(6)”); see also Cutillo, 2022 WL 2240037, at *4 (noting the same in the context of the

Pennsylvania business judgment rule); Spear v. Fenkell, No. CIV.A. 13-02391, 2015 WL
3643571, at *26 (E.D. Pa. June 12, 2015) (same); In re Vanguard Chester Funds Litig., No. CV
22-955, 2023 WL 8091999, at *9 n.13 (E.D. Pa. Nov. 20, 2023) (same). A court should not
grant a Rule 12(b)(6) motion on the basis of an affirmative defense unless the complaint alleges
no facts which could counter the application of the affirmative defense. See In re Tower Air, Inc.,
416 F.3d at 238
Here, application of the business judgment rule, at the motion to dismiss stage, is
premature. Therefore, the Court will not presently bar Plaintiffs’ claim based upon this
affirmative defense. Further, despite the prematurity of this affirmative defense at the motion to
dismiss stage, Plaintiffs have averred corporate asset misappropriations, payment of excessive

salaries and bonuses, failure to hold annual meetings, and failure to issue annual reports. (ECF
No. 25 at ¶¶ 5, 6, 8, 33, 34). Such allegations, at this stage, are sufficient to allege minority
shareholder oppression which could plausibly overcome Defendants’ business judgment rule
affirmative defense.
Accordingly, Defendants’ Motion to Dismiss, based upon application of the business
judgment rule, will be denied, without prejudice.
D. Statute of Limitations
Defendants next argue that Plaintiffs’ allegations of wrongdoing are largely barred by the
applicable statute of limitations. In response, Plaintiffs acknowledge Defendants’ statute of
limitations defense for the breach of fiduciary claim, but they argue that the defense would not
apply to Defendants’ failure to issue distributions for Chartiers after April 28, 2023 and for
Onexx after April 28, 2022.
Pennsylvania applies a two-year statute of limitation for breach of fiduciary duty claims.

See, 42 Pa.C.S.A. § 5524(7). The two-year period generally begins to run “as soon as the right to
institute and maintain a suit arises.” Wilson v. El–Daief, 964 A.2d 354, 356 (Pa. 2009).
Delaware law applies a three-year statute of limitations to breach of fiduciary duty claims. See,
10 Del. C. § 8106(a).
Here, Plaintiffs instituted this suit on April 28, 2025. As regards Chartiers, Plaintiffs’
alleged conduct in support of their breach of fiduciary duty that pre-dated April 29, 2023 are
outside the statute of limitations and are time barred. And as regards Onexx, Plaintiffs’ alleged
conduct in support of their breach of fiduciary duty that pre-dated April 28, 2022 are outside the
statute of limitations and are time barred. Accordingly, Defendants’ Motion to dismiss, breach
of fiduciary claims that pre-date the applicable statutes of limitations for each respective

corporation, will be granted.
E. Failure to Declare Dividend Claim (Count VI)
Finally, Defendants argue that Count VI of the Amended Complaint, failure to declare
dividend, is not a recognized cause of action under either Delaware or Pennsylvania law.
Plaintiffs contend that Pennsylvania and Delaware courts have recognized an equitable claim to
compel Defendants to declare dividends. Defendants respond that, even if Plaintiffs have
reframed their claim, the Amended Complaint does not sufficiently allege facts to support such a
claim.
Under Pennsylvania law, “[i]t is an elementary principle of corporation law that the
declaration of dividends out of net profits rests in the discretion of the board of directors.” Knapp
v. Bankers Sec. Corp., 230 F.2d 717, 720 (3d Cir. 1956). However, there are circumstances
under which shareholders may compel the declaration of dividends. Id. If directors have acted

fraudulently or arbitrarily in refusing to declare a dividend from corporate surplus that can be
divided among the shareholders without business detriment, a shareholder may invoke the
equitable powers of a court for relief. Id.
Similarly in Delaware, “[i]t is settled law in this State that the declaration and payment of
a dividend rests in the discretion of the corporation's board of directors in the exercise of its
business judgment; that, before the courts will interfere with the judgment of the board of
directors in such matter, fraud or gross abuse of discretion must be shown.” Gabelli & Co., Inc.
v. Liggett Grp. Inc., 479 A.2d 276, 280 (Del. 1984).
Because fraud is a component of a claim to compel dividends, said claim must conform
to those pleading standards. To plead fraud, the Rules of Civil Procedure provide as follows:

(b) Fraud or Mistake; Conditions of Mind. In alleging fraud or mistake, a party
must state with particularity the circumstances constituting fraud or mistake.
Malice, intent, knowledge, and other conditions of a person's mind may be alleged
generally.

Fed. R. Civ. P. 9(b).
Here, the Amended Complaint avers “fraudulent” actions by Defendants in conclusory
terms without sufficient factual particularity to support that Defendants acted fraudulently in not
declaring dividends. However, with regard to arbitrariness or gross abuse of discretion
components of this claim, Plaintiffs have averred corporate asset misappropriations, payment of
excessive salaries and bonuses, failure to hold annual meetings, and failure to issue annual
reports. (ECF No. 25 at ¶¶ 5, 6, 8, 33, and 34). Such allegations, at this stage, are sufficient to
allege facts to support any arbitrariness or gross abuse of discretion to support Plaintiffs’ claim to
compel dividends under Pennsylvania or Delaware law.
Accordingly, Defendants’ Motion to Dismiss Count VI of the Amended Complaint will
be denied.
TV. Conclusion and Order
For the reasons stated, Defendants Motion to Dismiss will be granted in part and denied
in part. The Court hereby orders as follows:
A. Defendants’ Motion to Dismiss, as regards Counts II, III, [V, V, and VI against
Onexx, is granted. Plaintiffs shall have leave to amend as to those Counts against
Onexx.
B. Defendants’ Motion to Dismiss, as regards derivative demand requirements, is
denied.
C. Defendants’ Motion to Dismiss, as regards the business judgment rule, is denied
without prejudice.
D. Defendants’ Motion to Dismiss, as regard the statute of limitations defense for Count
I, is granted. Any breach of fiduciary duty claims, based upon allegations which pre-
date April 28, 2023 as to Chartiers and April 28, 2022 as to Onexx, are time barred.
E. Defendants’ Motion to Dismiss, as regards Count VI, is denied.
Any Amendment shall be filed on or before August 4, 2026. Should no amendment be
filed, Defendants shall file their Answer on or before August 18, 2026.
DATED this 21st day of July, 2026.
BY THE COURT:
Aeprbyp.
MARILYN J. HORA
United States District Judge
15

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/11410856. Public record. Not legal advice.