Rule 15-1601. Derivative Actions

(a) Applicability. This Rule applies to a derivative action against a business entity to enforce a right that properly may be asserted by that entity. Cross reference: See Werbowsky v. Collomb , 362 Md. 581 (2001) pertaining to corporations; Plank v. Cherneski , 469 Md. 548 (2020) and Code, Corporations and Associations Article, Title 4A, Subtitle 8 pertaining to limited liability companies; and Code, Corporations and Associations Article, Title 10, Subtitle 10 pertaining to limited partnerships. (b) Complaint. Notwithstanding the provisions of Rule 2-304, the complaint shall state: (1) facts supporting that the plaintiff is entitled to bring each derivative cause of action on behalf of the business entity nominal defendant; (2) that the plaintiff was so entitled at the time of the transaction or conduct complained of and at the time the derivative action is brought, or that the plaintiff's entitlement devolved on the plaintiff by operation of law; and (3) with particularity, (A) the attempts, if any, of the plaintiff to obtain the desired action from the business entity, and, if known, the reasons the desired action was not obtained, or (B) the reasons for not making an attempt to obtain the desired action. Committee note: A court may consider the use of Rule 2-502 when appropriate. See Bender v. Schwartz, 172 Md. App. 648 (2007). (c) Plaintiff as Representative. The derivative action may be maintained only if it appears, under applicable law, that the plaintiff fairly and adequately represents the interests of the business entity in pursuing the derivative action. tempt to obtain the desired action. Committee note: A court may consider the use of Rule 2-502 when appropriate. See Bender v. Schwartz, 172 Md. App. 648 (2007). (c) Plaintiff as Representative. The derivative action may be maintained only if it appears, under applicable law, that the plaintiff fairly and adequately represents the interests of the business entity in pursuing the derivative action. (d) Settlement, Dismissal, and Compromise. Unless all equity holders consent to a proposed settlement, voluntary dismissal, or compromise of the derivative action, a derivative action may be settled, voluntarily dismissed, or compromised only with the court's approval, after notice of the proposed settlement, voluntary dismissal, or compromise has been given to all equity holders in the manner ordered by the court and an opportunity for a hearing has been provided. Unless specified by the court, the consent may be either in writing or on the record in open court. (e) Fees and Costs. A court may award reasonable attorneys' fees and costs as permitted by law. Cross reference: For the ability of the court to award attorneys' fees and costs, see Boland v. Boland , 423 Md. 296, 317 (2011) pertaining to corporations; Code, Corporations and Associations Article, § 4A-804 pertaining to limited liability companies; and Code, Corporations and Associations Article, § 10- 1004, pertaining to limited partnerships.