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Suspicious Directors v. Carole et al
Issue
Is Carole, Bob and other directors liable for breach of fiduciary duty to SI?
Rule of Law
The fiduciary duty is a responsibility that employees have to be loyal and act in good faith on behalf of the entities they are working for. It needs a level of loyalty as well as care that does not permit any violation without predisposing the violator to individual liability. A fiduciary duty is applicable even when the employees have not expressly agreed to be mandated by it (Beale 31). It needs full sincerity and disclosure of any significant information from the fiduciary to the individual or entity to which it is indebted. The remedies available for such a breach of fiduciary duty include lost profits as a possible result of the breach. In the case between suspicious shareholders versus Carole, Bob, and other directors, their investigation is to determine whether these staff members owed SI the fiduciary duty. The lawsuit is to determine if Carole and other joint trustees or directors breached their obligation to protect the interest of the entity, which resulted in a loss of profits. If they are found to have breached this duty, then each of them will be personally liable for the whole loss incurred.
Analysis
In the case, Carole, Bob, and other directors could not be held liable because it is not clear how they failed to exercise due care in protecting the company. Bob and all the co-accused did not breach their fiduciary duty to the extent that Carole did not disclose to the board the reason why he withdrew from the contract. If they were aware of Carole’s motivation to withdraw from the contract, they could have made informed decisions in that regard that would have profited the company. It is similar to the case of Hodgkinson v. Simms et al. (1994) in which Hodgkinson sought advice from the defendant that expressed that he knew a lot of investments (Beale 36). The advice made the plaintiff invest in many projects that made him lose after the real estate market dropped. The defendant was liable for breach of fiduciary duty as well as of the contract.
On the other hand, as far as the corporation is concerned, Carole could by law be prevented from being involved in the business transactions relating to the place of work. Any director whose business involves a transaction with an entity makes written disclosure to the board of directors. He or she also deliberately does not join or is not permitted to vote in the board meetings relating to the transaction which involves him or her. Bob should have inquired to know the reason Carole was withdrawing from the contract. Bob could also be accused of vested interest because he heard rumors concerning the planned mall development, which should have prompted him to investigate this proposal. All the seven board members were involved in the decision to back up Bob’s recommendation to release Carole from her contract with SI. Corporations could allow such specific recommendations so that it is not harder for those with fiduciary obligations to overcome circumstances that they have an interest on. The directors had the obligation to seek for legal advice since this was extremely significant before any transaction happens. The directors could have allowed both Carole as the fiduciary and the company that acquired the property and later sold it back to SI at a higher fee of $1000,000 to acquire distinct legal counsel to advise on this process.
Conclusion
Carole, Bob, and other directors are held liable for the loss of $500,000 because of their suspicious deals that did not involve a legal counsel. Bob failed to probe Carole for the reason of her withdrawal from the contract.
Patricia v. Up-scale
Issue
Will Building Trust and/or Patricia Passerby be able to recover from Jerome Fenimore personally?
Rule of Law
Accidents in a construction site are examined under the “negligence” cause of action. For the construction accident case to be categorized as one involving negligence, the plaintiff ought to verify some facts. First, he or she must determine if the defendant owed the public or plaintiff in question a duty of care (Beale 50). Secondly, the plaintiff has to prove that the defendant (in this case, Fenimore) breached the duty of care by way of being negligent. Lastly, it has to be proved that the negligence of the defendant was a significant aspect leading to injury or death. Once the plaintiff is able to demonstrate that the defendant neglected this responsibility of preventing harm and injury in a construction site, the defendant would be held accountable for the damages of the plaintiff. There is also a rule of law that relates to premise liability involving also Up-Scale Corporation. As the property owner, they are held accountable for any accident witnessed on the building being constructed. The property owner owes a duty of care to people to ensure that the property is secure from risky situations.
Analysis
The legal duty of care assigned to the defendant is one that emerges independently of contractual responsibility, and expressly, in the absence of a contract. Therefore, the major task in the case in question is to establish a scenario where a duty of care emerged. A reasonable level of care must be shown by the developer, contractor, and all those involved in the process. In Andrews et al. v. Grand and Toy (Alberta) Ltd. et al. (1978), Grand and Toy Alberta Ltd. were held partially accountable for the traffic accident that rendered the plaintiff a quadriplegic (Beale 52). Even though the plaintiff was responsible for himself, Grand and Toy Alberta Ltd. had not demonstrated due care for the safety of the residents and employees. A person who is injured through foreseeable ways is addressed in this duty of care that is catered for by the hired individuals for the construction project. Based on the rule of the contract of this nature, the general contractor and developer will be accountable for any negligence from the subcontractor (Beale 50). The rental arrangement between Fenimore and Up-Scale, Inc. also does not follow corporate procedures but the relationship was stamped by the company’s Board of Directors. Fenimore can find a defense only on the grounds of the unfollowed corporate procedures but may be liable if he agreed to the Board of Directors’ terms of him taking responsibility.
Under the legal model of vicarious liability and respondent superior, the corporation will be held accountable for the injuries within the sites and in the course of the construction. On the other hand, a corporation is able to shield the shareholders from business-related liabilities. If a construction company is a corporation, unless in very minor cases, the shareholders will always be treated independently for any eventualities. It also implies that the owners of the company or shareholders may not be sued personally for any business’s wrongful acts. Up-Scale, Inc. had the duty of care during the construction process for any residents and passersby around the site in itself. Jerome Fenimore cannot be held accountable personally either by Building Trust for its losses or Patricia Passerby for her injuries. It is Up-Scale as a corporation that ought to have ensured that they employ safety measures around the construction site so that no one is exposed to injuries.
Conclusion
Up-Scale, Inc. and not Jerome Fenimore is liable for the injury of Patricia Passerby. The corporation is also held responsible to repay Building Trust that lent them money.
Work Cited
Beale, Hugh, et al. “Cases, Materials and Text on Contract Law.” Bloomsbury Publishing, 2019.
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