                              In the
 United States Court of Appeals
               For the Seventh Circuit
                          ____________

No. 04-2936
CURTIS WEINSTEIN,
                                                  Plaintiff-Appellant,
                                  v.

JAMES L. SCHWARTZ, MICHAEL
WEINSTEIN, and LISSA WEINSTEIN,
                                               Defendants-Appellees.
                          ____________
            Appeal from the United States District Court
        for the Northern District of Illinois, Eastern Division.
             No. 03 C 7972—Suzanne B. Conlon, Judge.
                          ____________
      ARGUED MAY 5, 2005—DECIDED SEPTEMBER 1, 2005
                          ____________

  Before BAUER, EASTERBROOK, and MANION, Circuit Judges.
  MANION, Circuit Judge. Herbert Weinstein, the founder of
Parsons Tanning Company, transferred all of the company
stock to his four children in equal shares. A dispute arose
among the siblings over whether to sell a farm that the
company owned. Curtis Weinstein, who opposed the sale,
sued for a declaratory judgment that his brother and sister,
Michael and Lissa, do not own the shares they pledged as
collateral for a loan. The District Court for the Northern
District of Illinois granted summary judgment in favor of
Michael and Lissa, as well as in favor of company attorney
2                                                   No. 04-2936
                                                                 1
James Schwartz on Curtis’s claim of attorney malpractice.
Curtis appeals and we affirm.


                                I.
  Herbert Weinstein formed Parsons Tanning Company
(Parsons), a Delaware corporation, in 1964. Herbert was the
sole shareholder of Parsons until 1990 when he transferred
all 600 outstanding shares in equal amounts to his four
children, Curtis, Richey, Michael, and Lissa.
  Parsons owns an 88-acre farm (the “Upper Farm”) near
Lake Geneva, Wisconsin. Parsons does not operate the
Upper Farm any longer, but, instead, rents the farm to
Curtis who runs his own horse breeding business.
  Lissa and Michael are interested in selling the farm and
intended to propose the sale at a shareholder meeting. It
appears that Richey (who is not a party to this litigation)
would have voted his shares to sell the farm, thus giving
Lissa and Michael the necessary votes to approve the sale.
  Before a shareholder vote could take place, Curtis, who
opposes the proposed sale, filed this suit. In it, he seeks a


1
  Curtis’s appeal with respect to Schwartz is waived for failure
to adequately develop his argument. His treatment of the matter
in his opening brief is cursory, and he fails in both his opening
and reply briefs to cite to any legal authority setting forth the
appropriate legal standard for resolving his claim. The failure to
develop an argument constitutes a waiver. See Kramer v. Banc of
Am. Sec., LLC, 355 F.3d 961, 964 n.1 (7th Cir. 2004) (“We have
repeatedly made clear that perfunctory and undeveloped
arguments, and arguments that are unsupported by pertinent
authority, are waived (even where those arguments raise
constitutional issues).”) (quoting United States v. Berkowitz, 927
F.2d 1376, 1384 (7th Cir. 1991)).
No. 04-2936                                                  3

declaratory judgment that Michael and Lissa do not actually
own shares of Parsons. Curtis claims that Michael conveyed
his shares to Lissa in 1995 in an effort to avoid creditors. He
further alleges that Lissa then pledged the 300 shares as
collateral to secure a loan to Lissa and Michael from a
second company owned by family members, Grenier
Corporation International (“GCI”). In 2000, GCI sent Lissa
and Michael a notice of default on the loan and, in 2001, a
notice of sale of the collateral. The shares, however, have
never been sold.
  Curtis, Richey, and their stepmother Joan own all the
outstanding shares of GCI. According to Curtis, there are
650 outstanding shares of GCI—he and Richey each own
200, and Joan owns 250. Apparently, however, Curtis
believes he has effective control of GCI (presumably he
knows, or believes, that Joan will side with him in this
matter) such that if GCI is the owner of the 300 shares of
Parsons that Lissa pledged, he can direct it to vote its shares
against the sale of the Upper Farm. With all of this maneu-
vering, the issue comes down to this: if GCI owns the
shares, Curtis can block a sale of the Upper Farm; if Michael
and Lissa (or Lissa alone) own the disputed shares, they can
force a sale of the Upper Farm.
  Michael and Lissa moved for summary judgment, and the
district court granted the motion. The court ruled that,
although Curtis could show that there was a dispute as to
whether Michael or Lissa owned the 150 shares originally
belonging to Michael, Curtis could not show that GCI
owned the 300 disputed shares because no sale of the shares
had taken place. This appeal followed.
4                                                  No. 04-2936

                               II.
A. Subject Matter Jurisdiction
  Before we can address the subject of this appeal, the
summary judgment ruling of the district court, we must
resolve a matter of jurisdiction we raised sua sponte at oral
argument. Curtis filed this case as a derivative suit, that is,
Curtis sued Lissa and Michael on behalf of Parsons. Curtis
asserted that the district court and this court had jurisdic-
tion to entertain this suit pursuant to 28 U.S.C. § 1332 based
on the diverse citizenship of the parties: Curtis is a citizen of
Wisconsin; Lissa and Michael are citizens of Illinois; and
Parsons is a citizen (for diversity purposes) of Delaware and
Wisconsin.
  Pursuant to Smith v. Sperling, 354 U.S. 91, 97-98 (1957),
however, a corporation is aligned as a defendant in a
shareholder’s derivative suit. Accordingly, if the suit
remains as it is, there is not complete diversity of the
parties—Parsons, a Wisconsin citizen, would be treated as
a defendant opposed to Curtis, another Wisconsin citizen.
  Must the suit continue as a derivative action, however?
That is, under Delaware law (the governing law on this
issue, Bagdon v. Bridgestone/Firestone, Inc., 916 F.2d 379, 382-
83 (7th Cir. 1990)), must a shareholder seeking declaratory
judgment as to the ownership of the shares of a Delaware
corporation proceed derivatively? We do not believe he
must.
  A derivative suit “enables a stockholder to bring suit on
behalf of the corporation for harm done to the corporation.”
Tooley v. Donaldson, Lufkin & Jenrette, Inc., 845 A.2d 1031,
1036 (Del. 2004). “The fundamental purpose of a derivative
action is to enforce a corporate right that the corporation has
refused for one reason or another to assert.” R. Franklin
Balotti & Jesse A. Finkelstein, The Delaware Law of Corpora-
No. 04-2936                                                     5

tions & Business Organizations § 13.9 (3d ed. 1997 & 2005
supp.).
  In a derivative suit, “the recovery, if any, must go to the
corporation.” Tooley, 845 A.2d at 1036. This is in contrast
with a direct suit by a shareholder. “Such a claim [an
individual suit] is distinct from an injury caused to the
corporation alone. In such individual suits, the recovery or
other relief flows directly to the stockholders, not to the
corporation.” Id.
  The Delaware Supreme Court recently clarified the
analysis for determining whether an action should be
classified as direct or derivative: “The analysis must be
based solely on the following questions: Who suffered the
alleged harm—the corporation or the suing stockholder
individually—and who would receive the benefit of the
recovery or other remedy?” Id. at 1035.
  Using this analysis, it is apparent that Curtis’s claim is a
direct claim. The alleged harm is to Curtis—he will, accord-
ing to his complaint, be deprived of the use of the Upper
Farm for his horse business if Michael and Lissa own the
disputed shares because they will approve the sale of the
Upper Farm. Likewise, the “remedy” would inure to
Curtis’s benefit—if GCI is declared to be the party entitled
to vote the disputed shares, Curtis can block the sale of the
Upper Farm. Because Curtis’s claim is not a derivative
claim, we have, as did the district court, jurisdiction to
             2
consider it.


2
  Curtis has moved this court (without objection from the
defendants) to dismiss Parsons as a dispensable nondiverse
party. Because Curtis’s claim is not derivative, Parsons is not an
indispensable party. Curtis’s motion, therefore, is permissible
                                                    (continued...)
6                                                  No. 04-2936

B. Summary Judgment
  Having resolved the jurisdictional question, we proceed
to the merits of the district court’s decision. Curtis has all
but conceded the crucial element of his case: GCI does not
own the disputed shares. Curtis concedes that a sale of the
disputed shares never took place. In other words, even
assuming that Curtis is right and Michael and Lissa pledged
their shares as collateral for a loan from GCI, none of this
matters because GCI does not own the shares.
  GCI, as the secured party, has not sold or otherwise
disposed of the shares. Simply taking the shares and
keeping them (retention) is not a permissible means of
disposing of collateral under Delaware’s version of the
Uniform Commercial Code. 6 Del. C. § 9-610; In re Copeland,
531 F.2d 1195, 1207 (3d Cir. 1976) (decided under prior law).
A secured party does not acquire ownership of pledged
collateral simply because the debtor defaults on a loan.
There is a process for transferring ownership that must be
followed. That process has not been completed in this case.
  Further, under Delaware law, shares pledged as collateral
by a shareholder can still be voted by the shareholder. 8 Del.
C. § 217(a) (“Persons whose stock is pledged shall be
entitled to vote, unless in the transfer by the pledgor on the
books of the corporation such person has expressly empow-
ered the pledgee to vote thereon, in which case only the
pledgee, or such pledgee’s proxy, may represent such stock


2
  (...continued)
pursuant to Newman-Green v. Alfonzo-Larrain, 490 U.S. 826, 837
(1989). Accordingly, we GRANT the motion and dismiss Parsons
as a party. We have recaptioned the case to reflect only the
current parties: Curtis, Michael, and Lissa Weinstein, and James
Schwartz.
No. 04-2936                                                   7

and vote thereon.”). As the district court put it, Curtis’s real
dispute is with GCI for failing to act when Michael and
Lissa defaulted on its loan to them. Until GCI does act (by
disposing of the shares), Michael and Lissa (or Lissa if she
has control of all the shares—an issue we need not resolve)
remain free to vote the shares as they please. The district
court did not err in granting summary judgment.
                                                     AFFIRMED

A true Copy:
        Teste:

                           _____________________________
                            Clerk of the United States Court of
                              Appeals for the Seventh Circuit




                     USCA-02-C-0072—9-1-05
