In this niche area of the Business Litigation practice, SKO attorneys represent companies and owners in disputes concerning fiduciary claims and business relationship breakups. A highlight for SKO is our firm’s role in creating a new law in Kentucky, after securing an opinion from the Kentucky Court of Appeals declaring that shareholders in closely held companies do not owe one another fiduciary duties as shareholders. SKO attorneys have also overseen and litigated numerous law firm dissolutions, as well as cases involving corporate embezzlement and the separation of owners from businesses.
SKO’s team of nationally recognized litigators has handled a number of derivative actions, typically on behalf of the company. Our team represented Kentucky Retirement Systems in a significant derivative action involving investments and fiduciary operations. SKO attorneys have also represented large and small companies in claims brought by shareholders or members related to corporate governance and fiduciary obligations.
Protecting Corporation’s Control of Assets from Shareholder Interference
Paul R. Plante, Jr. v. Frank D. Marcum, et al., Civil Action No. 12-CI-0040 (Fayette Circuit Court)
When minority shareholders in a closely-held corporation caused a bank to file an interpleader action regarding control of the corporation’s funds, SKO represented the corporation, and over the objection of the minority shareholders, ensured that the corporation controlled its funds, allowing the business to continue to operate.
Defense of Alleged Breach of Fiduciary Duty in an LLC
SKO defended the majority member of a medical billing company from multiple claims of usurping corporate opportunities and breach of fiduciary duty. Counterclaims were filed against the plaintiffs alleging breach of fiduciary. The case was quickly settled on favorable terms to SKO's client, resulting in the majority member being the sole owner of the company.
Defense of Majority Shareholder Against Breach of Fiduciary Duty Charges
SKO defended a majority shareholder against multiple claims of breach of fiduciary duty, self-dealing and fraud stemming from multiple construction and land use projects. The case was litigated over the course of four years, with the plaintiffs eventually agreeing to settle the dispute for a small fraction of their demand.
Suit Brought on Behalf of LLC Member to Follow Operating Agreement
When a faction of an LLC purported to take control of its board notwithstanding the absence of a vote of the members, SKO represented a group of members in litigation insisting that the requirements of the operating agreement be satisfied.
Terminated Shareholder Sued for Breach of Fiduciary Duty & Employment Agreements
A terminated shareholder/corporate officer was sued on a number of grounds, including breach of fiduciary duty and breach of an employment agreement. SKO represented the defendant corporation and its founding shareholder. SKO obtained a jury verdict substantially in favor of the defendant.
Defending a Shareholder Derivative Action
When a single, dissident shareholder brought both derivative claims on behalf of the corporation and direct claims against certain directors, SKO successfully argued in litigation that the dissident shareholder had no standing to assert claims and lacked the ability to bring a derivative action for failure to satisfy the statutory requirements for doing so. The litigation continued to the enforcement of a stock buy-sell agreement, upon which our client was successful in both its enforcement and the valuation of the minority member’s shares.
Ending a Derivative Action by a Merger and Dissenter Rights
When a small minority of the shareholders prevailed in derivative action, SKO was brought in to advise the majority owners. A merger transaction both ended the derivative action by depriving the minority of standing and provided a means of redeeming their shares so similar suits may not be brought in the future. The minority shareholders initiated a dissenter rights action, which was resolved on a valuation favorable to our client.
Defending Against a Threatened Change in Control
When a dissident group of shareholders threatened to alter the structure of the board and thereby take control of the corporation, SKO advised the incumbent board on how to structure an asset sale to a related company that preserved existing relationships.
Competing Venture by an LLC Member
When a minority member of an LLC organized a competing venture, SKO brought suit and obtained injunctive relief on behalf of our client based upon minority member’s breach of his statutory duty of loyalty. After a two-week jury trial, obtained favorable settlement for client.
LLC Member’s “Salary”
When a terminated member argued that he was still entitled to his “salary,” SKO prevailed in the lawsuit, demonstrating that the “salary” was a distribution and that under state law the LLC was prohibited from making a distribution under existing circumstances.