While the court recognized this cause of action, it upheld the trial court’s finding that the plaintiff failed to prove the claim. In addition to initiating litigation against the majority owners, the minority shareholder sued the third-party purchaser of the company’s assets under the theory that the purchaser aided and abetted the majority’s breach of fiduciary duty. ![]() Specifically, the plaintiff alleged that those in control of the company sold the company’s assets to a third party and improperly allocated a significant portion of the purchase price as compensation to the majority shareholders for their non-competes. In that case, a minority shareholder claimed that the majority owners breached their fiduciary obligations to him by, among other things, improperly allocating the proceeds of the sale of the company’s assets. When I discussed aiding and abetting breach of fiduciary duty claims in Pennsylvania, I noted that the first time an aiding and abetting claim in this context was recognized in Pennsylvania was by the Pennsylvania Superior Court in Potok v. When that party has actual knowledge of the breach.Īctual knowledge > Circumstantial evidence With knowledge of a breach of fiduciary duty such an important factor in aiding and abetting claims, when under Pennsylvania law will an alleged aider and abettor be deemed to know that the underlying breach was occurring? One framework requires “knowledge of the breach by the aider and abettor.” The other requires that the alleged aider and abettor “knows that the other’s conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other so to conduct himself.” ![]() In that post, I explained the two different frameworks for these claims that have been established by Pennsylvania courts. ![]() I recently covered whether parties can be liable for a claim of aiding and abetting breach of fiduciary duty in Pennsylvania.
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