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Court won't recognize non-fiduciary liability

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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.
 

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  1. Major social engineering imposed by judicial order well in advance of democratic change, has been the story of the whole post ww2 period. Contraception, desegregation, abortion, gay marriage: all rammed down the throats of Americans who didn't vote to change existing laws on any such thing, by the unelected lifetime tenure Supreme court heirarchs. Maybe people came to accept those things once imposed upon them, but, that's accommodation not acceptance; and surely not democracy. So let's quit lying to the kids telling them this is a democracy. Some sort of oligarchy, but no democracy that's for sure, and it never was. A bourgeois republic from day one.

  2. JD Massur, yes, brings to mind a similar stand at a Texas Mission in 1836. Or Vladivostok in 1918. As you seemingly gloat, to the victors go the spoils ... let the looting begin, right?

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  5. With today's ruling, AG Zoeller's arguments in the cases of Obamacare and Same-sex Marriage can be relegated to the ash heap of history. 0-fer

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