January 18, 2021

Volume XI, Number 18

Advertisement

January 18, 2021

Subscribe to Latest Legal News and Analysis

Director Found To Have Breached His Fiduciary Duty By Sharing Corporation's Privileged Information With His Personal Attorney

A homeowner in a common interest development sued the homeowner association and two of its directors and the directors employers.  The directors' were employed by two related companies engaged in the development and support of common interest developments.  The homeowner association's attorneys advised the association during the course of the litigation.  One of the directors shared this information with his counsel and his employer's counsel.  The plaintiff then amended his complaint to add a cause of action for breach of fiduciary duty to the association.

The trial court awarded the plaintiff his share of the attorney fees paid by the association for the entire trial.  The Court of Appeal found that this was an unreasonable basis for computation of damages. Coley v. Eskaton, 2020 Cal. App. LEXIS 629.  Although the director prevailed on this point, his victory was not complete because the Court of Appeal did not disagree on the finding of liability, only on the calculation of damages.  In this respect, the Court of Appeal appears to assume that the association was damaged by the disclosure, but it does not explicate how.  One wonders, however, if the "damage" caused by the director's disclosure (and, presumably, the resulting waiver) in fact redounded to the benefit the plaintiff and other homeowners.

Advertisement
© 2010-2020 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume X, Number 191
Advertisement

TRENDING LEGAL ANALYSIS

Advertisement
Advertisement

About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
Partner

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...

949-851-5428
Advertisement
Advertisement