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Corporate Law

April - June 2013

Fiduciary duty
Under Delaware law, a breach of fiduciary duty is not considered a mere tort, but its own distinct cause of action.
Menezes v. W.L. Ross & Company, Op. No. 27254 (S.C. Sup. Ct. filed May 22, 2013) (Shearouse Adv. Sh. No. 23 at 66).

Statute of limitations
Under Delaware law, a shareholder’s claim for breach of fiduciary duty accrues at the time corporate directors or officers breach their fiduciary duties.
Menezes v. W.L. Ross & Company, Op. No. 27254 (S.C. Sup. Ct. filed May 22, 2013) (Shearouse Adv. Sh. No. 23 at 66).


May - June 2012

Corporations
There is no fiduciary duty between the officers and directors of a corporation and that corporation’s shareholders. Unless a special duty exists or the shareholders can bring a direct claim because they have a separate and distinct injury, shareholders cannot recover against a corporation for allegedly misrepresenting the financial stability of stocks.
Rice-Marko v. Wachovia Corp., No. 4993 (S.C. Ct. App. June 27, 2012) (Shearouse Adv. Sh. No. 22)

Limited liability companies
The manager of a limited liability company cannot be held individually liable in tort for a contract that the company breached when there is not evidence that the manager exceeded his authority and acted in an individual capacity.
Dutch Fork Dev. Group II, LLC v. SEL Prop., LLC, No. 27139 (S.C. Sup. Ct. June 27, 2012) (Shearouse Adv. Sh. No. 22) 

Limited liability corporations
A member of a limited liability corporation (LLC) signing a statement to pay the LLC’s debts and personally guaranteeing the LLC’s loans does not constitute a vote for additional capital contributions, dependent on the terms of the LLC’s operating agreement.
Clary v. Borrell, No. 4991 (S.C. Ct. App. June 13, 2012) (Shearouse Adv. Sh. No. 20)


Jan. - March 2012

Amalgamation
Where corporations share a location, telephone number, board members, officers and employees and have a warranty where one entity represents itself to be the one responsible, amalgamation of the corporations is proper.
Magnolia North POA v. Heritage Communities, Inc., No. 4943 (S.C. Ct. App., Feb. 15, 2012) (Shearouse Adv. Sh. No. 6)