Jacuzzi v. Jacuzzi Bros Inc

In Jacuzzi v. Jacuzzi Bros., Inc. (1966) 243 Cal.App.2d 1, the derivative shareholders sued the corporation and five individuals identified as directors and employees of the corporation who together controlled a majority of the company's shares. Filed in October 1961, plaintiffs' complaint was principally directed at the sale of corporate assets to a Swiss company controlled by the individual defendants. After their attempts at discovery were repeatedly thwarted, plaintiffs sought and won sanctions against defendants, including the striking of defendants' answer to the first cause of action. In August 1963, a default judgment of $ 6,123,974.56 was entered, and plaintiffs thereafter dismissed all other causes of action. Defendants moved to vacate the order striking their answer, and to vacate and set aside the default and judgment. The trial court granted these motions on the condition that defendants deposit certain assets with the court, provide additional security, and consent to the appointment of an independent auditor. On November 20, 1963, defendants sought an order affirming that they had satisfied the conditions. On November 26, plaintiffs filed a notice of motion for an order enjoining the attorneys for defendants from representing the corporation. The trial court denied the disqualification motion, vacated the judgment, set aside the default and reinstated the answer.