Tuesday, August 25, 2020

Soliciting Murder is a Breach of Fiduciary Duty: Who Could Have Guessed?

Soliciting Murder is a Breach of Fiduciary Duty:  Who Could Have Guessed?

David Tingstad, blogging on the Beresford Booth website, has reviewed the decision of the Washington Court of Appeals in King and Mockovak Eye Center, Inc., P.S. v. Mockovak, No. 79290-3-I, 2020 WL 1952509 (Wn. App. April 13, 2020).  HERE IS A LINK to that review.

Cutting to the chase, one shareholder in a professional service corporation (hereinafter the “Bad Guy”) solicited the murder of the other (hereinafter the “Good Guy”) in order to collect on the life insurance policy on the Good Guy and thereby recover on the losses suffered by the jointly owned lasik eye surgery clinics.  Well, as often seems to be the case, the Bad Guy was talking not to a “Russian mobster” but rather to an FBI informant.

In an earlier decision, King and Mockovak Eye Center, Inc. v. Mockovak, No. 74544–1–I, 2017 WL 4898237 (Wn. App. Oct. 30, 2017), there was affirmed the trial court’s determination that soliciting the murder of your co-owner is a breach of fiduciary duty.  Someday I need to delve into the arguments made that it was not. As David noted, curiously there was no award of damages from this breach of duty.

This most recent opinion addressed the valuation of the Bad Guy’s interest in the LLC, the trial court accepting and the Court of Appeals affirming a determination of negative value to the effect that nothing would be paid to the Bad Guy.

Again, I commend David’s more detailed review to you.

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