Breach of fiduciary duty.
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Twenty-year relationship between bank branch president and debtors was not sufficient in itself to establish existence of fiduciary relationship with regard to debt. Burgess v. BankPlus, 2002 WL 31619066 (Miss., Nov. 21, 2002). As discussed in greater detail infra with regard to defendant-debtors’ counterclaim for fraud, this action arose from a $32,000 loan that defendants Janet Burgess and C.M. Boyles took out with plaintiff BankPlus in May 1998. The defendants’ consumer note was secured by their pledge of three vehicles owned by them as collateral. After Burgess declared bankruptcy, she voluntarily reaffirmed her debt to BankPlus in the Bankruptcy Court, notwithstanding that this was contrary to the protections she could have received in the bankruptcy proceeding. When Burgess later defaulted on the debt, BankPlus repossessed the collateral, sold the vehicles, and sued for the deficiency that remained–$18,308,81. The defendants counterclaimed for fraud, alleging that the bank had promised to “work with them” to repay the notes. The bank moved for summary judgment both with regard to its claim as well as the counterclaim, and the trial court granted the motion. On appeal to the Mississippi Supreme Court, the judgment was affirmed. With regard to the defendants’ claim that the bank owed them a fiduciary duty, which was breached, the court noted first that a bank ordinarily does not owe a fiduciary duty to its debtors and obligors under the UCC. An arms-length business transaction involving a normal debtor-creditor relationship does not establish a fiduciary relationship. Moreover, the power to foreclose on a security interest does not, without more, create a fiduciary relationship. A fiduciary relationship arises only if the activities of both parties go beyond their operating on their own behalf, and the activity is for the benefit of both of them. In this case, Burgess and Boyles asserted that they had a fiduciary relationship with the bank branch president, because they had known him for more than 20 years. Aside from this fact, however, there was no evidence that the dealings between the parties were other than those of an ordinary creditor and debtor. Further, without some proof that Burgess and Boyles changed their position in reliance on specific assurances made by BankPlus, there was insufficient evidence that the parties’ relationship moved beyond an ordinary creditor-debtor or mortgagor-mortgagee relationship. The court accordingly held that the parties’ relationship was not a fiduciary relationship as a matter of law, and it affirmed the trial court’s grant of summary judgment to the bank. Wronged employer may choose measure of damages for breach of employee’s duty of loyalty employee’s gain from wrongful act or employer’s lost profits. Gomez v. Bicknell, 2002 WL 31890825 (N.Y.A.D., 2d Dept., Dec. 23, 2002). In February 1995, plaintiff Christian Gomez was hired by defendant Bicknell Advisory Services, Inc. (BAS), a company that provides merger and acquisition advisory services, especially in the information services industry, and whose president and sole shareholder was co-defendant Neff C. Bicknell. Gomez was given a salary, subject to an increase in accordance with an incentive formula. By separate agreement, Gomez executed a covenant not to compete, which provided that he would not compete with BAS for two years after termination of his employment. Approximately one year after he went to work for BAS, Gomez requested a more regular working arrangement. At the same time, BAS acquired US Pension Services in a deal that had been pending for several years and that required Bicknell to serve as Chief Executive Officer of the acquired company. In connection with these events, BAS drafted a new working agreement for Gomez, pursuant to which his salary was increased, and he was given a percentage of income “[b]ased on results through calendar year-end,” on the assumption that Bicknell would continue as CEO of U.S. Pension Services. Gomez was to receive one-third of the first $500,000 of income and one-half of any excess. |