Sahni v. Hock

TAYLOR, Judge,

concurring in part and dissenting in part.

I concur with the majority in the reversal of the trial court’s order of November 15,- 2007, awarding Sahni attorney fees in this case. Given that Hock prevailed upon at least one of the alternative theories plead in this case, Sahni is not entitled to an award of any attorney fees incurred, in my opinion.

I also concur with majority in affirming the judgment in favor of EMS against Sahni.

As concerns the reversal of the trial court’s judgment in favor of Hock made final by order entered August 10, 2007, I respectfully dissent. The majority concludes that the allegations set forth in the complaint that Sahni breached fiduciary duties to the shareholders and corporation did not constitute an allegation of willful misconduct required by KRS 271B.8-300 to assert an actionable claim against Sahni. I disagree.

In Kentucky it is black letter law that the breach of a fiduciary duty is equivalent to fraud. Steelvest, Inc. v. Scansteel Service Center, Inc., 807 S.W.2d 476 (Ky. 1991). Kentucky courts have also concluded that fraud and intentional misrepresentation have the same meaning under the common law. Morton v. Bank of the Bluegrass & Trust, 18 S.W.3d 353 (Ky.App. 1999). In Commonwealth v. Smith, 242 *50Ky. 865, 46 S.W.2d 474 (1923), the Court observed that fraud is:

[A] generic term which embraces all the multifarious means which human ingenuity can devise and are resorted to by one individual to get an advantage over another. No definite and invariable rule can be laid down as a general proposition defining fraud, as it includes all surprise, trick, cunning, dissembling and unfair ways by which another is cheated.

Id. at 478 (citations omitted). Black’s Law Dictionary 1593 (7th ed. 1999), defines willful as “[v]oluntary and intentional, but not necessarily malicious.” Clearly the fraud or breach of fiduciary duty by Sahni constituted intentional or willful acts that caused damage to Hock and EMS.

Accordingly, I believe that the allegations of breach of fiduciary duty in the complaint are sufficient to allege the willful “intentional” misconduct of Sahni under KRS 271B.8-300 and otherwise support the jury verdict and judgment in this case. Given that EMS was a closely held corporation, the damages sustained by Hock and EMS were both foreseeable and sufficiently specific to support the jury verdict and judgment in this case. Semantics in pleading cannot be allowed to defeat an otherwise sufficiently pled and proven claim allowed under KRS 271B.8-300. Cf. Vulcan Coals, Inc. v. Howard, 946 F.2d 1226 (6th Cir.1991).

Therefore, I would affirm the trial court’s judgment in favor of Hock in its entirety.