Posts by Richard Burt
Court Holds Business Judgment Rule Does Not Protect Officer’s Decisions
The business judgment rule insulates directors from liability from bad decisions if certain conditions are met. A recent U.S. District Court opinion holds that the business judgment rule does not apply to corporate officers. Federal Deposit Insurance Corp. v. Perry In Federal Deposit Insurance Corp. v. Perry (C.D. CA December 13, 2011) (Case No. CV…
Read MoreLicensed Clinical Counselors Allowed to Form Professional Corporations
Under the Moscone-Knox Professional Corporation Act, lawyers, physicians, and others engaged in occupations specified by the act may organize their practices as professional corporations. By reason of Chapter 381 of the Statutes of 2011, the Moscone-Knox Professional Corporation Act has been amended to allow professional clinical counselors licensed by the California Board of Behavioral Sciences…
Read MoreCorporations and LLC’s May Elect to Receive Notices From the Secretary of State via E-Mail
Existing law requires corporations and limited liability companies to file with the Secretary of State annual statements of information with specified information. To aid these entities in filing timely, the Secretary of State mails a notice to them three months prior to the end of the filing period. To save on postage and paper, Chapter…
Read MoreArchitects Granted Reprieve on LLP’s
Persons licensed to engage in the practice architecture, public accountancy, engineering, land surveying, or law may form a limited liability partnership to engage in those professions. A limited liability partnership is a general partnership that limits the liablity of the partners for the obligations of the firm so long as they provide security (as specified…
Read MoreLabor Code section 2802 Does Not Apply to Employer’s Unsuccessful Suit Against Employee
In Nicholas Laboratories, LLC v. Chen (October 12, 2011) 11 C.D.O.S. 12769, the court decided that an employer was not obligated to indemnify its employee for expenses the employee incurred in successfully defending himself against employer’s lawsuit for breach of contract and other claims. Nicholas Laboratories, LLC (“Nicholas Labs”), a Delaware limited liability company, sued…
Read MoreMinority Shareholder Can Not Bring Claims Against the Corporation’s Counsel
In Reilly v. Greenwald & Hoffman, LLP (2011) 196 Cal. App. 4th 891, the court held that a minority shareholder could not bring a derivative action against the corporation’s outside counsel for misrepresentation, malpractice, or breach of contract. In March 2003, Mark Reilly and Lena Brion agreed to operate Brion Reilly, Inc. (BRI), to provide…
Read MoreZalkind v. Ceradyne, Inc.
In Zalkind v. Ceradyne, Inc. (2011) 194 Cal. App. 4th 1010, Ceradyne, Inc. (Ceradyne), entered into an asset purchase agreement (asset purchase agreement) with Stanley and Elizabeth Zalkind (the Zalkinds) and Quest Technology, LP (Quest), a limited partnership owned by the Zalkinds. Under the terms of the asset purchase agreement, Ceradyne purchased all of Quest’s…
Read MoreDemise of the Notion That Alter Ego Claims Belong to the Bankruptcy Estate
Shaoxing County Huayue Import & Export v. Bhaumik In Shaoxing County Huayue Import & Export v. Bhaumik (2011) 191Cal.App. 4th 1189, a creditor of a bankrupt corporation sued in state court to recover payment from an individual based on an alter ego theory of liability. The individual argued that the alter ego claim belonged to…
Read MoreDealing With a Financially Weak Corporation
Knowingly dealing with a thinly capitalized corporation and not asking for a guaranty will make it tough to pierce the corporate veil. This is illustrated by the case of Fusion Capital Fund II, LLC, v. Ham, 614 F.3d 698 (7th Cir. 2010), a case decided under Nevada law. Millenium Holding Group, Inc., a Nevada corporation,…
Read MoreAlter Ego Claims of Creditors Do Not Belong to Bankruptcy Trustee
In Ahcom, Ltd. v. Smeding, 623 F.3d 1248 (9th Cir. 2010), the U.S. Court of Appeals for the Ninth Circuit decided the question whether a creditor of a corporation that is in bankruptcy has standing to pursue a claim against the corporation’s shareholders on an alter ego theory or whether alter ego claims of creditors…
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