Shareholder Derivative Lawsuits Asserting Breach of Fiduciary Duty Claims Against Corporations, Limited Liability Companies, Partnerships and their Directors, Officers and Managers
We assist shareholders in bringing a lawsuit on behalf of the corporation against third parties, commonly known as shareholder derivative lawsuits. Oftentimes, the third parties involved in the lawsuit are corporate insiders, directors or executive officers of the corporation.
In the United States, directors, officers and managers generally owe a duty of care and duty of loyalty to the company, whether it is a limited liability company, partnership or corporation, because they occupy a fiduciary position in the company. The duty of care stands for the principle that officers, directors, managers or other executives of a company in making all the decisions as fiduciaries, act in the same manner as a reasonable prudent person would in their position. The duty of loyalty, however, stands for the principle that company fiduciaries must act only in the best interests of the company and its collective shareholders or owners. Of course, the duty of loyalty is a more general obligation of employees, other agents and fiduciaries, and applies to shareholders (owners) to the extent that a shareholder holds the power to control the corporation.
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The duty of loyalty is the kind of duty associated not only with employees, but with trustees, brokers, lawyers and a whole host of other kind of people who undertake to accomplish some objective for another person. Breach of duty of loyalty includes acts of self-dealing such as stealing, cheating, shirking and lavish use of expense accounts, taking a business opportunity that belonged to the corporation and competing with the corporation. Problems regarding a company fiduciary’s faithfulness, loyalty and devotion to his or her duty are especially troublesome because they are difficult to define and even more difficult and costly to monitor. But most modern corporate statutes provide procedures by which to sanitize transactions between a company fiduciary and the corporation.
When corporate fiduciaries breached their fiduciary duties, shareholders can bring a shareholder derivative lawsuit on behalf of the corporation against them. Other shareholder derivative actions can also be filed against accountants and other advisers who have somehow harmed the company. But only shareholder of a corporation can bring a derivative lawsuit and this action is governed by state law and can be filed in state or federal court. In nearly all jurisdictions, any damages or other proceeds collected as a result of a successful shareholder derivative lawsuit are retained by the corporation, rather than the shareholder who initiated the suit.
In addition to shareholder derivative lawsuits, we assist in lawsuits involving partners or limited partners in a partnership, or business partners in limited liability companies and their outside management. Partnerships of any kind, whether in general partnerships, limited partnerships or limited liability companies, come with responsibilities and when one business partner fails to carry their share of the load, or acts self-interested, the possibility for litigation arises.
Contact us, your corporate lawyer in Florida to assist you with shareholder derivative lawsuits asserting breach of fiduciary duty claims against corporations, limited liability companies, partnerships and their directors, officers and managers.