U-Haul 2008 Annual Report Download - page 91

AMERCO AND CONSOLIDATED ENTITIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Note 17: Contingencies
Shoen
In September 2002, Paul F. Shoen filed a shareholder derivative lawsuit in the Second Judicial District Court of the State
of Nevada, Washoe County, captioned Paul F. Shoen vs. SAC Holding Corporation et al., CV02-05602, seeking damages
and equitable relief on behalf of AMERCO from SAC Holdings and certain current and former members of the AMERCO
Board of Directors, including Edward J. Shoen, Mark V. Shoen and James P. Shoen as Defendants. AMERCO is named as
a nominal Defendant in the case. The complaint alleges breach of fiduciary duty, self-dealing, usurpation of corporate
opportunities, wrongful interference with prospective economic advantage and unjust enrichment and seeks the unwinding
of sales of self-storage properties by subsidiaries of AMERCO to SAC prior to the filing of the complaint. The complaint
seeks a declaration that such transfers are void as well as unspecified damages. In October 2002, the Defendants filed
motions to dismiss the complaint. Also in October 2002, Ron Belec filed a derivative action in the Second Judicial District
Court of the State of Nevada, Washoe County, captioned Ron Belec vs. William E. Carty, et al., CV 02-06331 and in
January 2003, M.S. Management Company, Inc. filed a derivative action in the Second Judicial District Court of the State
of Nevada, Washoe County, captioned M.S. Management Company, Inc. vs. William E. Carty, et al., CV 03-00386. Two
additional derivative suits were also filed against these parties. Each of these suits is substantially similar to the Paul F.
Shoen case. The Court consolidated the five cases and thereafter dismissed these actions in May 2003, concluding that the
AMERCO Board of Directors had the requisite level of independence required in order to have these claims resolved by the
Board. Plaintiffs appealed this decision and, in July 2006, the Nevada Supreme Court reviewed and remanded the case to
the trial court for proceedings consistent with its ruling, allowing the Plaintiffs to file an amended complaint and plead in
addition to substantive claims, demand futility.
In November 2006, the Plaintiffs filed an amended complaint. In December 2006, the Defendants filed motions to
dismiss, based on various legal theories. In March 2007, the Court denied AMERCO’ s motion to dismiss regarding the
issue of demand futility, stating that “Plaintiffs have satisfied the heightened pleading requirements of demand futility by
showing a majority of the members of the AMERCO Board of Directors were interested parties in the SAC transactions.”
The Court heard oral argument on the remainder of the Defendants’ motions to dismiss, including the motion (“Goldwasser
Motion”) based on the fact that the subject matter of the lawsuit had been settled and dismissed in earlier litigation known
as Goldwasser v. Shoen, CV 0205602, Washoe County, Nevada. In addition, in September and October 2007, the
Defendants filed Motions for Judgment on the Pleadings or in the Alternative Summary Judgment, based on the fact that
the stockholders of the Company had ratified the underlying transactions at the 2007 annual meeting of stockholders of
AMERCO. In December 2007, the Court denied this motion. This ruling does not preclude a renewed motion for summary
judgment after discovery and further proceedings on these issues. On April 7, 2008, the litigation was dismissed, on the
basis of the Goldwasser Motion. On May 8, 2008, the Plaintiffs filed a notice of appeal of such dismissal to the Nevada
Supreme Court. On May 20, 2008, AMERCO filed a cross appeal relating to the denial of its Motion to Dismiss in regards
to Demand Futility. The appeals are currently pending.
Environmental
In the normal course of business, AMERCO is a defendant in a number of suits and claims. AMERCO is also a party to
several administrative proceedings arising from state and local provisions that regulate the removal and/or cleanup of
underground fuel storage tanks. It is the opinion of management, that none of these suits, claims or proceedings involving
AMERCO, individually or in the aggregate, are expected to result in a material adverse effect on AMERCO’ s financial
position or results of operations.
Compliance with environmental requirements of federal, state and local governments significantly affects Real Estate’ s
business operations. Among other things, these requirements regulate the discharge of materials into the water, air and land
and govern the use and disposal of hazardous substances. Real Estate is aware of issues regarding hazardous substances on
some of its properties. Real Estate regularly makes capital and operating expenditures to stay in compliance with
environmental laws and has put in place a remedial plan at each site where it believes such a plan is necessary. Since 1988,
Real Estate has managed a testing and removal program for underground storage tanks.
Based upon the information currently available to Real Estate, compliance with the environmental laws and its share of
the costs of investigation and cleanup of known hazardous waste sites are not expected to result in a material adverse effect
on AMERCO’ s financial position or results of operations. Real Estate expects to spend approximately $5.7 million in total
through 2011 to remediate these properties.
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