Citation. Fassihi v. Sommers, Schwartz, Silver, Schwartz & Tyler, P. C., 107 Mich. App. 509, 309 N.W.2d 645, 1981)
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Brief Fact Summary.
Plaintiff was a 50% shareholder in a corporation represented by Defendant law firm. His corporate partner retained Defendants to advise him on how to safely oust him from the partnership, and he
Synopsis of Rule of Law.
Counsel to a closely-held corporation have a fiduciary duty to shareholders.
Facts.
Plaintiff, radiologist Dr. Fassihi, formed a business partnership with Dr. Rudolfo Lopez to open and run a radiology practice. The doctors practiced together at a local hospital for about 18 months before Lopez came to Defendant law firm seeking advice on how to end his association with Plaintiff and oust him from the corporation. Once this was accomplished, Plaintiff sued Defendant on the theory that the firm had breached a fiduciary duty to him by representing Lopez exclusively while claiming to be acting on behalf of the corporation.
Issue.
The court is primarily examining the nature of Defendant’s duty, if any, to Plaintiff.
Was there an attorney-client relationship between Plaintiff and Defendant?
If not, what duty of care, if any, did Defendant owe Plaintiff?
Held.
Although not acting as his attorney, Defendant still owed Plaintiff a basic duty of care.
No. Although there was no attorney-client relationship between Plaintiff and Defendant, Defendant still owed him a fiduciary duty as a 50% shareholder.
As a fiduciary, Defendant owed him the duty of care that any such confidential relationship would create.
Discussion.
This is a somewhat-ambiguous decision, as it does not elaborate on important factors such as how much weight should be given to claims made by minority shareholders (what if Dr. Fassihi had only held a 5% interest in the corporation?) or just how closely-held a corporation must be for this rule to apply.
