June 21, 2012

Summary of June 20, 2012 conference report for civil cases

The following is our summary of the Supreme Court’s actions on petitions for review in civil cases from the Court’s conference on Wednesday, June 20, 2012. The summary includes those civil cases in which (1) review has been granted, (2) review has been denied but one or more justices has voted for review, or (3) the Court has ordered depublished an opinion of the Court of Appeal.

Review Granted

Kurwa v. Kislinger, S201619—Review Granted—June 20, 2012

This was an action by an ophthalmologist against another for breach of fiduciary duty, an accounting, and defamation. The plaintiff brought the action after discovering that the corporation both doctors used to provide services to HMO patients was not a professional medical corporation. The trial court entered judgment dismissing the breach of fiduciary duty and accounting causes of action with prejudice and the defamation cause of action without prejudice.

The questions presented are: (1) whether “dismissal without prejudice of the parties’ . . . causes of action, coupled with a waiver of the statute of limitations, renders the judgment interlocutory, as it leaves open the possibility that the parties may litigate those claims in the future”; (2) whether joint venturers owe each other a fiduciary duty when they choose to conduct the joint venture as a corporation; (3) whether a shareholder of a corporation accidentally formed as a general corporation rather than a medical corporation has standing to bring a derivative suit against a director for breach of fiduciary duty; and (4) whether a disqualified shareholder in a professional corporation surrenders his right for an accounting of his interest in the joint enterprise under California.

The Court of Appeal, Second District, Division Five, held in a published decision, Kurwa v. Kislinger (2012) 204 Cal.App.4th 21, that: (1) the judgment was final for purposes of appeal because no causes of action were pending in the court that rendered the judgment, and that court no longer had jurisdiction to do anything other than enter judgment; (2) the choice to conduct a joint venture as a corporation does not absolve the joint venturers of their fiduciary duties to each other; (3) a shareholder had standing to bring the breach of fiduciary duty claim as the director was obliged to amend the articles of incorporation to correct the defective formation; and (4) under the applicable regulation, an accounting is due to the disqualified shareholder, as he has the right to sell his shares to another eligible licensed person.

Justice Sandy Kriegler dissented, disagreeing with the majority’s ruling on appealability and writing that the judgment did not dispose of the entire action.

Review Denied (with dissenting justices)




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