On March 13, 2012, Justice Burdick, in writing for the Court, held where the actions of the corporation and its directors harm a minority shareholder, the minority may directly sue the directors without need to give formal demand.   In the present case, the majority shareholders worked together to deny the minority shareholder dividends or benefits allowed to the other shareholders.  The Court explained that when controlling shareholders act to deprive a minority shareholder of his “reasonable expectation” in the business or a fair return on his investment, as directors, the controlling majority may be sued for breach of fiduciary duty.

The McCann decision is important because it clarified previously conflicting Court precedent, with the effect of expanding remedies available to minority shareholders who have been “frozen out” of the corporation.  Prior to this decision, it was unclear whether Idaho only allowed derivative actions for claims alleging injury to the corporation, which are far more difficult to bring to trial.  However, in McCann, the Court distinguished derivative shareholder actions from cases where the shareholder alleges harm to himself, personally, noting that the controlling majority has a “heightened fiduciary duty” to the minority and cannot utilize its control of the corporation for their own advantage.

Click here for a link to the decision.  For more information about the legal consequences of McCann v. McCann and rights of minority and majority shareholders in direct and derivative actions, contact Terri R. Pickens or Tami E. Springer.

Terri argued that summary judgment was proper because Adams County completely failed to comply with the Idaho Road Creation Statute and failed to prove that the road in question had ever been dedicated to public use.

In a unanimous opinion, the Court agreed with Terri and determined that the grant of summary judgment was proper.    The Court found that Adams County had not complied with Idaho’s Road Creation Statute, in fact there was no evidence that it had ever attempted to comply with the road creation statute;  Adams County never initiated validation proceedings and failed to maintain the road for the requisite 5 years (in fact, the Idaho Supreme Court pointed out that Adams County failed to demonstrate that it had ever maintined the road).  The Court also determined that the road had never been dedicated to public use. Due to the lack of any legal or factual basis for bring the appeal, the Court awarded fees attorney’s fees to the Respondents.

Congratulations to Terri for another success in front of the Idaho Supreme Court.