There are numerous business entities, including C-corporations, S-corporations, general
partnerships, limited partnerships, LLCs, and LLPs. People in a position of trust generally owe
each other and the business entity fiduciary duties, including the duty of care and the duty of
loyalty. Conflicts sometimes arise between the owners, managers, and others over corporate
governance and business decisions, and these sometimes result in litigation. Courts are
generally deferential to ordinary business decisions under the business judgment rule, but
carefully examine decisions involving a conflict of interest. And once a decision is reached in
the trial court, it is critically important to properly frame these issues on appeal
Everest Properties II v. Prometheus Development Co. (A114305)
(2007)
California Court of Appeal
First Appellate District, Division One
Bruce represented limited partners in a complex breach of fiduciary duty action
arising from the general partner’s merger and subsequent liquidation of a real
estate partnership. The trial court found that the general partner misled
limited partners in several ways, resulting in an unfairly low merger price and
thus an improper benefit to the general partner. Bruce’s clients were awarded
damages of almost $23 million, along with other equitable remedies. On appeal,
Bruce successfully defended almost all of the judgment. The Court of Appeal
affirmed the key finding of breach of fiduciary duty and the amount of damages,
reversed some of the equitable remedies, and remanded for a slight recalculation
of pre-judgment interest.
This case involved complex valuation disputes and insider transactions. Bruce’s
appellate advocacy and his knowledge of economics and finance helped preserve a
damages award of well more than $20 million for his clients.
