Ruling in Shareholders' Lawsuit Against Life Insurance Company of Alabama

We've mentioned in recent posts about Life Insurance Company of Alabama that the shareholders' lawsuit against the company was awaiting the court's ruling on the motion to dismiss. The court dismissed the derivative claims, but the direct claims, including the claim for dissolution of LICOA, survived and will proceed in federal court.

This matter comes before the court on Defendants’ motion to dismiss Plaintiffs’ third amended consolidated complaint. (Doc. 57). For the reasons stated in the Memorandum Opinion issued contemporaneously with this Order, the court rules as follows.

The court GRANTS IN PART and DENIES IN PART Defendants’ motion to dismiss. As to the derivative claims, the court DISMISSES all Plaintiffs’ derivative claims WITH PREJUDICE because LICOA’s independent directors validly exercised their business judgment in rejecting Plaintiffs’ claims after a thorough and good faith investigation. See Roberts, 404 So. 2d at 632. If the court were not dismissing the derivative claims on that ground, the court would alternatively dismiss with prejudice any of Plaintiffs’ derivative claims arising from facts occurring before August 28, 2017—two years before the filing of Plaintiffs’ complaint—because the statute of limitations as to those claims has expired.

But the court DENIES Defendants’ motion to dismiss Plaintiffs’ individual direct claims because the court finds no merit to Defendants’ challenges to those claims.

So the only claims remaining in the case are the direct claim for dissolution, brought by all Plaintiffs against all Defendants (Count 2) and the direct claim for violation of shareholder rights, brought by Plaintiffs Trondheim and MTP against all Defendants (Count 3).

The full order is below:

LICOA Order Order by Nate Tobik on Scribd