Digital Camera International, Ltd. v. Antebi, et al., 11-cv-1823 (E.D.N,.Y. July 13, 2017)
Statutes: N.J.S.A. 14A:12-7(1)(c)
Facts:Shareholders of a New Jersey corporation participated in a variety of activities that would be classified as oppressive behavior, including the payment of persona expenses with corporate funds, operating a competing business, insider contracts at inflated prices and corporate payments of personal tax liabilities
After a falling out among the shareholders, the corporation brought suit alleging fraud and breach of fiduciary by a shareholder previously in control of the operations. The shareholder counterclaimed for oppression.
Held:
- A fidudiary violates no duty to his employer by acting for his own benefit if a full disclosure of the facts is made to an employer who acquiesces and the employee takes no unfair advantage.
- Where shareholders know about misconduct and take steps that further the use of corporate funds for personal expenses, doctrine of ratification by which corporate actions ratified by majority are presumed correct, precludes lawsuit alleging breach of duty. Citing Fox v. Millman,210 NJ 401, 417 (2012).
- Minority shareholder that knows of misconduct and has failed to object may not based claim of oppression on the same wrongful conduct. The prior waiver cannot be withdrawn.
State of Organization: New Jersey
Further Discussion: