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. The sad thing is that no fish were thrown overboard The "greenhorn" who had never fished before those 5 days was interrogated for over 4 hours by 5 officers until his statement was illicited, "I don't want to go to prison....." The truth is that these fish were measured frozen off shore and thawed on shore. The FWC (state) officer did not know fish shrink, so the only reason that these fish could be bigger was a swap. There is no difference between a 19 1/2 fish or 19 3/4 fish, short fish is short fish, the ticket was written. In addition the FWC officer testified at trial, he does not measure fish in accordance with federal law. There was a document prepared by the FWC expert that said yes, fish shrink and if these had been measured correctly they averaged over 20 inches (offshore frozen). This was a smoke and mirror prosecution.

  2. I love this, Dave! Many congrats to you! We've come a long way from studying for the bar together! :)

  3. This outbreak illustrates the absurdity of the extreme positions taken by today's liberalism, specifically individualism and the modern cult of endless personal "freedom." Ebola reminds us that at some point the person's own "freedom" to do this and that comes into contact with the needs of the common good and "freedom" must be curtailed. This is not rocket science, except, today there is nonstop propaganda elevating individual preferences over the common good, so some pundits have a hard time fathoming the obvious necessity of quarantine in some situations....or even NATIONAL BORDERS...propagandists have also amazingly used this as another chance to accuse Western nations of "racism" which is preposterous and offensive. So one the one hand the idolatry of individualism has to stop and on the other hand facts people don't like that intersect with race-- remain facts nonetheless. People who respond to facts over propaganda do better in the long run. We call it Truth. Sometimes it seems hard to find.

  4. It would be hard not to feel the Kramers' anguish. But Catholic Charities, by definition, performed due diligence and held to the statutory standard of care. No good can come from punishing them for doing their duty. Should Indiana wish to change its laws regarding adoption agreements and or putative fathers, the place for that is the legislature and can only apply to future cases. We do not apply new laws to past actions, as the Kramers seem intent on doing, to no helpful end.

  5. I am saddened to hear about the loss of Zeff Weiss. He was an outstanding member of the Indianapolis legal community. My thoughts are with his family.

ADVERTISEMENT