SW Legal Educational Publishing

Corporate Attorney Could Be Liable for Participating in Breach of Fiduciary Duty to Shareholder
Description The high court of Oregon held that the attorney for a corporate board of directors that breached its fiduciary duty to a minority shareholder, by squeezing him out of the firm, could be jointly liable for the losses suffered by the shareholder as he knowingly participated in the commission of a tort.
Topic Business Organization
Key Words Minority Shareholder; Squeeze Out; Company Lawyers
C A S E   S U M M A R Y
Facts Granewich, a minority shareholder in a closely-held corporation, sued for damages suffered from a squeeze out. Controlling shareholders amended the corporate by-laws to exclude Granewich from the corporation and issued themselves new shares of stock to dilute Granewich's ownership interest. Granewich sued the lawyer who did the legal work for the corporation, asserting that he participated in the conspiracy to squeeze him out. The lower courts held that the lawyer owed no fiduciary duty to Granewich, so he could not be liable for the majority shareholders' breach of fiduciary duty. Granewich appealed.
Decision Reversed. A corporate attorney who knew of and participated in a scheme to squeeze out a minority shareholder, which resulted in a breach of fiduciary duties for the controlling shareholders, could be liable under a joint liability theory in tort for losses suffered by Granewich. One who knowingly aids another in the breach of a fiduciary duty is liable to the one harmed.
Citation Granewich v. Harding, 985 P.2d 788 (Sup. Ct., Ore., 1999)

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