ILNews

Court won't recognize non-fiduciary liability

Back to TopCommentsE-mailPrintBookmark and Share

Indiana doesn’t allow people to sue when they’ve had corporate opportunities taken away by business partners who’ve gone off and formed new partnerships with others, and the state Court of Appeals declined to decide whether non-fiduciaries can be held liable for usurping corporate opportunity.

A three-judge appellate panel made that decision in Victor J. DiMaggio III v. Elias Rosario, et al., No. 64-A03-1009-PL-500, a case out of Porter Superior Court involving a Lake County business relationship that went bad.

Victor DiMaggio and Elias Rosario were shareholders in Galleria Reality Corporation in Lake County starting in 1997, and they remained in that real estate business through 2003 when Rosario and two others began Liberty Lake Estates  in Porter County. In March 2008, DiMaggio filed a complaint against Rosario and the other LLE shareholders claiming they’d usurped a corporate opportunity from the original business Galleria and caused damage to DiMaggio.

The suit claimed Rosario owed a fiduciary duty to DiMaggio, his fellow shareholder in Galleria, and that the initial business should have had the chance to develop real estate in Porter County prior to Rosario forming the LLE with the others and servicing that untapped market.

Porter Superior Judge William Alexa granted the requests from Rosario and the appellees to dismiss DiMaggio’s complaint on the grounds it failed to state a claim for which relief could be granted. DiMaggio appealed, asking the Court of Appeals to determine that a shareholder’s fiduciary duty requires he be held liable if he usurps a corporate opportunity in a non-fiduciary manner.

DiMaggio contended that notion is supported, at least by inference, from the decision in Dreyer & Reinbold v. AutoXchange.com, 771 N.E. 2d 764 (Ind. Ct. App. 2002), where the court addressed a partially related topic on corporate opportunity.

But the appellate court disagreed with that caselaw interpretation, saying Dreyer didn’t stand for the proposition that Indiana recognizes a claim that non-fiduciaries can be held liable for usurping corporate opportunity. Specifically, DiMaggio wanted the court to require that in order for a non-fiduciary to be held jointly and severely liable with a fiduciary of a corporation, that person must act knowingly when he or she joins with or aids someone in breaching that existing fiduciary relationship.

“Without deciding at this time whether Indiana should adopt DiMaggio’s proposed cause of action, we conclude that, even if we were to recognize the cause of action existed in Indiana, DiMaggio’s complaint did not state a claim upon which relief can be granted against the Appellees,” Judge James Kirsch wrote, referring to the lack of intentional behavior or knowledge that might be required.

The broader question remains for another day, and the lower court ruling is affirmed.
 

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Indiana State Bar Association

Indianapolis Bar Association

Evansville Bar Association

Allen County Bar Association

Indiana Lawyer on Facebook

facebook
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. I can understand a 10 yr suspension for drinking and driving and not following the rules,but don't you think the people who compleate their sentences and are trying to be good people of their community,and are on the right path should be able to obtain a drivers license to do as they please.We as a state should encourage good behavior instead of saying well you did all your time but we can't give you a license come on.When is a persons time served than cause from where I'm standing,its still a punishment,when u can't have the freedom to go where ever you want to in car,truck ,motorcycle,maybe their should be better programs for people instead of just throwing them away like daily trash,then expecting them to change because they we in jail or prison for x amount of yrs.Everyone should look around because we all pay each others bills,and keep each other in business..better knowledge equals better community equals better people...just my 2 cents

  2. I was wondering about the 6 million put aside for common attorney fees?does that mean that if you are a plaintiff your attorney fees will be partially covered?

  3. I expressed my thought in the title, long as it was. I am shocked that there is ever immunity from accountability for ANY Government agency. That appears to violate every principle in the US Constitution, which exists to limit Government power and to ensure Government accountability. I don't know how many cases of legitimate child abuse exist, but in the few cases in which I knew the people involved, in every example an anonymous caller used DCS as their personal weapon to strike at innocent people over trivial disagreements that had no connection with any facts. Given that the system is vulnerable to abuse, and given the extreme harm any action by DCS causes to families, I would assume any degree of failure to comply with the smallest infraction of personal rights would result in mandatory review. Even one day of parent-child separation in the absence of reasonable cause for a felony arrest should result in severe penalties to those involved in the action. It appears to me, that like all bureaucracies, DCS is prone to interpret every case as legitimate. This is not an accusation against DCS. It is a statement about the nature of bureaucracies, and the need for ADDED scrutiny of all bureaucratic actions. Frankly, I question the constitutionality of bureaucracies in general, because their power is delegated, and therefore unaccountable. No Government action can be unaccountable if we want to avoid its eventual degeneration into irrelevance and lawlessness, and the law of the jungle. Our Constitution is the source of all Government power, and it is the contract that legitimizes all Government power. To the extent that its various protections against intrusion are set aside, so is the power afforded by that contract. Eventually overstepping the limits of power eliminates that power, as a law of nature. Even total tyranny eventually crumbles to nothing.

  4. Being dedicated to a genre keeps it alive until the masses catch up to the "trend." Kent and Bill are keepin' it LIVE!! Thank you gentlemen..you know your JAZZ.

  5. Hemp has very little THC which is needed to kill cancer cells! Growing cannabis plants for THC inside a hemp field will not work...where is the fear? From not really knowing about Cannabis and Hemp or just not listening to the people teaching you through testimonies and packets of info over the last few years! Wake up Hoosier law makers!

ADVERTISEMENT