My last few posts have been devoted to the Court of Appeal's opinion in Tuli v. Specialty Surgical Center of Thousand Oaks, LLC, 2024 WL 4499271 (Oct. 16, 2024). The case relates to the plaintiff's "decade-long litigation campaign against his former business colleagues". The plaintiff claimed, among other things, that one of the individual defendants personally breached his fiduciary duty by "usurping an opportunity for himself that should have belonged to Parthenon," which was the limited liability company that was co-equally owned by the plaintiff and the defendant.
The trial court granted granted summary judgment for the defendant, reasoning that the plaintiff could bring this claim only as a derivative action on behalf of Parthenon, which plaintiff had expressly refused to do. The Court of Appeal agreed, finding that a corporate opportunity is an asset. Misappropriation of a corporate opportunity is misappropriation of a corporate asset. An action is deemed derivative if it seeks to recover assets for the corporation. The court's opinion repeatedly used the term "corporate", but noted that the corporate principles governing derivative actions apply to limited liability companies (citing Cal. Corp. Code, § 17709.02).
[View source.]
