N.M. R. Civ. P. Dist. Ct. 1-023.1
In a derivative action brought by one or more shareholders or members to enforce a right of a corporation or of an unincorporated association, the corporation or association having failed to enforce a right which may properly be asserted by it, the complaint shall be verified and shall allege that the plaintiff was a shareholder or member at the time of the transaction of which the plaintiff complains or that the plaintiff's share or membership thereafter devolved on the plaintiff by operation of law. The complaint shall also allege with particularity the efforts, if any, made by the plaintiff to obtain the action the plaintiff desires from the directors or comparable authority and, if necessary, from the shareholders or members, and the reasons for the plaintiff's failure to obtain the action or for not making the effort. The derivative action may not be maintained if it appears that the plaintiff does not fairly and adequately represent the interests of the shareholders or members similarly situated in enforcing the right of the corporation or association. The action shall not be dismissed or compromised without the approval of the court, and notice of the proposed dismissal or compromise shall be given to shareholders or members in such manner as the court directs.
N.M. R. Civ. P. Dist. Ct. 1-023.1
ANNOTATIONS The 1995 amendment, effective July 1, 1995, made gender neutral changes throughout the rule. Standing to bring individual action. - Where plaintiffs and defendant were equal shareholders in a closely held corporation; the corporation purchased residential property where defendant could reside and run the corporate business; defendant made all payments on the purchase price of the residential property; the corporation ceased to operate, but the corporation was not dissolved and the assets were not divided among the shareholders; defendant, as president of the corporation, executed a deed conveying the residential property to defendant, and defendant took cash out of the residential property through the refinancing of the residential property, plaintiffs had standing to sue defendant on individual claims for a breach of fiduciary duty in the sale of corporate assets in violation of Section 53-15-1 NMSA 1978. Clark v. Sims, 2009-NMCA-118, 147 N.M. 252, 219 P.3d 20. A stockholder who directly attacks the fairness or validity of a merger alleges a direct injury to the stockholders, not the corporation, and has standing to pursue the shareholder's direct claims. Rael v. Page, 2009-NMCA-123, 147 N.M. 306, 222 P.3d 678. Where plaintiff, who was a shareholder in a corporation that had been merged out of existence, claimed that the merger was unfair and resulted in an unfair share price paid to shareholders because the directors of the corporation breached fiduciary duties by engaging in self-interested negotiations with potential buyers of the corporation, devaluing the corporation for personal gain, and conducting unfair and misleading voting processes, plaintiff alleged a direct injury to the shareholders and plaintiff had standing to pursue plaintiff's direct claims against the directors for damages. Rael v. Page, 2009-NMCA-123, 147 N.M. 306, 222 P.3d 678. Action for accounting should not be maintained by shareholders in their individual capacities. A derivative action is required. Schwartzman v. Schwartzman Packing Co., 1983-NMSC-010, 99 N.M. 436, 659 P.2d 888. Procedural safeguards of rule received. - Assuming that this rule applied to a "derivative" action by trust beneficiaries, the beneficiaries received all the procedural safeguards required by the rule, including notice and the opportunity to object, where they were properly served with notice of the trial court's hearing and were advised of its purposes. In re Norwest Bank of N.M., N.A., 2003-NMCA-128, 134 N.M. 516, 80 P.3d 98, cert. denied, 2003-NMCERT-002. Failure to apply rule not prejudicial where party objected under another rule. - Where the record demonstrated that the notice and opportunity to be heard given to trust beneficiaries more than comported with due process and the purposes of this rule, a determination by the Court that the rule should have been applied would make no difference, because the beneficiaries were given the benefits of a hearing under the rule. In re Norwest Bank of N.M., N.A., 2003-NMCA-128, 134 N.M. 516, 80 P.3d 98, cert. denied, 2003-NMCERT-002. Law reviews. - For article, "The Impact of the Revised New Mexico Class Action Rules Upon Consumers," see 9 N.M.L. Rev. 263 (1979). Am. Jur. 2d, A.L.R. and C.J.S. references. - 59 Am. Jur. 2d Parties §§43 to 91. Diversity of citizenship as ground of jurisdiction of federal courts in stockholders' derivative action against directors where corporation is a citizen of same state as plaintiffs, under 28 U.S.C. § 1401, 18 A.L.R.2d 1022. Pending action or existing cause of action, statute regulating stockholders' actions as applicable to, 32 A.L.R.2d 851. Specific performance of compromise and settlement agreement, 48 A.L.R.2d 1211. Diversity of citizenship for purposes of federal jurisdiction, in stockholders' derivative action, 68 A.L.R.2d 824. Intervention by other stockholders in stockholder's derivative action, 69 A.L.R.2d 562. Second or successive stockholder's derivative action, 70 A.L.R.2d 1305. Propriety and prejudicial effect of suggestion or comments by judge as to compromise or settlement of civil case, 6 A.L.R.3d 1457. Communications by corporation as privileged in stockholders' action, 34 A.L.R.3d 1106. Attorneys' fees in class actions, 38 A.L.R.3d 1384. Amount of attorney's compensation in absence of contract or statute fixing amount, 57 A.L.R.3d 475. Allowance of punitive damages in stockholder's derivative action, 67 A.L.R.3d 350. Construction of provision in compromise and settlement agreement for payment of costs as part of settlement, 71 A.L.R.3d 909. Negligence, nonfeasance, or ratification of wrongdoing as excusing demand on directors as prerequisite to bringing of stockholder's derivative suit on behalf of corporation, 99 A.L.R.3d 1034. Propriety of termination of properly initiated derivative action by "independent committee" appointed by board of directors whose actions (or inaction) are under attack, 22 A.L.R.4th 1206. Right to jury trial in stockholder's derivative action, 32 A.L.R.4th 1111. 18 C.J.S. Corporations §§ 397 to 413; 67A C.J.S. Parties §§ 21 to 32.