January 21, 2021

Volume XI, Number 21

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Court Holds Disgorgement Requires No Pecuniary Harm

There are equitable remedies and there are legal remedies.  A claimant pursuing a breach of fiduciary claim can choose which type of remedy it seeks.  Choices, like elections, have consequences.

In Center for Healthcare Education & Research, Inc. v. Int'l Congress for Joint Reconstruction, Inc., 2020 Cal. App. LEXIS 1133, the defendant obtained a judgment on its cross action for breach of fiduciary duty but the trial court denied recovery because it found that the defendant had not proven that it suffered monetary damages.  The Court of Appeal reversed, holding that because the defendant sought the equitable remedy of disgorgement of secret profits, not the legal remedy of compensatory damages, the defendant was not required to show that it suffered pecuniary harm to establish disgorgement.  The Court of Appeal remanded the case to the trial court to exercise its discretion to balance the equities and fashion an award. 

The word "pecuniary" is derived from the Latin word pecunia, which means wealth.  Pecunia  in turn is derived from the Latin word pecus, meaning cattle.  Interestingly, the meaning  of the word "cattle" has evolved in the opposite direction.  It originally referred to any kind of property, including money, land and livestock.  It was only in the 16th Century that it began to be limited to bovines.   "Cattle" also has Latin roots, being derived from the Latin word caput, meaning head.  The association of cattle with money, however, is not limited to Latin.  The word "fee" is partially derived from the Old English word feoh, meaning livestock.  

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© 2010-2020 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume X, Number 336
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Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
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Keith Bishop works with privately held and publicly traded companies on federal and state corporate and securities transactions, compliance, and governance matters. He is highly-regarded for his in-depth knowledge of the distinctive corporate and regulatory requirements faced by corporations in the state of California.

While many law firms have a great deal of expertise in federal or Delaware corporate law, Keith’s specific focus on California corporate and securities law is uncommon. A former California state regulator of securities and financial institutions, Keith has decades of...

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