Shareholder's Breach of Fiduciary Duty Suit Addressed in D&J Tire Inc. v. Hercules Tire & Rubber Co.
D&J Tire Inc. v. Hercules Tire & Rubber Co., No. 09-30275, was an action by a minority shareholder for breach of fiduciary duty arising out of defendant-executive's failure to disclose that defendant corporation was in talks to be acquired when the executive served as a mandatary on plaintiff's behalf to redeem his shares. The district court granted summary judgment for defendant.
The court of appeals vacated the judgment, holding that: 1) because Louisiana's prescription statute did not bar plaintiff's rescission claim, the district court needed to determine whether plaintiff could prove that defendant's directors failed to disclose a material fact; 2) because defendant's directors were acting in their official capacity when redeeming plaintiff's stock, Connecticut courts would impose a fiduciary duty to disclose material facts in this situation; and 3) there was no reason, under Louisiana law to apply another prescriptive period merely because defendant was also CFO of the corporation when the claim was based on his duties as mandatary.