The existence of a fiduciary duty is a question of law for the court to decide, while whether a breach of fiduciary duty occurs is a fact question. Scanwell Freight Express STL, Inc. v. Chan, 162 S.W.3d 477, 481 (Mo. 2005). So, in any fiduciary litigation, there are two main steps: (1) establishing that a…
Legal Articles
General Partnerships, Death & Dissolution
General, common law partnerships are not as prevalent as corporations, limited liability companies, limited liability partnerships, or other statutory entities registered with the Missouri Secretary of State. A partnership may arise legally, however, if parties are not careful. Co-ownership and sharing of profits between one or more persons, without anything more formal (written or otherwise),…
Alter Ego Theories; Piercing the Corporate Veil
Corporations and limited liability companies are oft-utilized because they generally insulate the owners of the business from business liabilities. A “corporation is regarded as a wholly and separate legal entity, distinct from the members who compose it.” Blanks v. Fluor Corp., 450 S.W.3d 308, 375 (Mo. Ct. App. 2014). An exception to this rule is…
Limited Liability Company Derivative Actions
Derivative lawsuits generally refer to claims made relating to the mismanagement of a corporation or limited liability company. It is brought by a shareholder, as the corporation’s representative. Nickell v. Shanahan, 439 S.W.3d 223, 227 (Mo. 2014). The shareholder is only a nominal plaintiff, and the corporation or limited liability company is the real party…
Corporate Liability, Personal Liability on Personal Guaranty Agreements
Many times a lender or creditor will enter into a contract with a corporation or business entity and request that the signer or owner of the business personally guaranty all amounts due. There is a very specific legal way this should be done for the guaranty to be enforceable. When weighing whether a signatory intended…
Personal Jurisdiction: General and Specific
A court’s personal jurisdiction of a corporation may be general (i.e., all-purpose) or specific (i.e., conduct-linked). General jurisdiction over a corporation typically in the (1) place of incorporation, (2) its principal place of business and/or (3) in places where the corporation’s activities are substantial. In contract, specific consideration requires consideration of the “relationship among the…
Asset Purchase, Liability Assumption
When one business purchases the equity (e.g., shares, ownership interest, etc.) of another business, the purchasing business typically obtains the liabilities of the business as well. In contrast, when a business generally purchases the assets of another business, the liabilities are usually not transferred. There are at least four exceptions to this rule regarding asset…
Shareholder Oppression, Fiduciary Duties
If a plaintiff in a corporation can demonstrate that there is shareholder oppression, then the plaintiff may be entitled to equitable relief. When does shareholder oppression exist? It typically occurs when an action by the majority suggests burdensome, harsh and wrongful conduct; a lack of honesty and fair dealing in the affairs of the company;…
Trust Law versus Corporate Law, Controlling Duties
When a trust owns corporate shares, do corporate fiduciary obligations or trustee obligations prevail? The answer is that generally a trustee’s obligations take priority. Upon incorporation of trust assets, the corporation becomes the alter ego of the trustees and the trustee’s acts are determined in the light of the trust. Weldon Revocable Trust v. Weldon, 231 S.W.3d 158, 171…
Nonprofit Corporation Derivative Actions
A corporate derivative action is one in which a shareholder or member sues on behalf of the corporation and against a director — usually for mismanagement, breach of fiduciary duty and/or some other malfeasance. The reasoning is that the injury is to the corporation and that the corporation, not its members/shareholders, must bring the suit…