Litigation and Business Torts
Before we talk about Business Torts, we need to talk about the Hopkins Centrich litigation philosophy:
When you have a serious legal issue that seems destined for a lawsuit, there is one thing you need to hear from your attorneys: “We will tell you the truth even if it’s unpleasant.”
That’s hard for a lot of lawyers to do because the last thing a client wants to hear is, “You don’t have a case,” “It’s time to pull the plug and walk away,” or “It’s not worth the expense just to prove you’re right.”
You need to know because you need to do whatever is best for your business. And to do that you need straight facts.
Hopkins Centrich PLLC gives you the facts . . . along with cutting-edge, high-quality, creative legal solutions to businesses in The Woodlands and beyond.
Types of Business Torts
It’s an unfortunate fact of business life that sometimes the owners, shareholders, employees, and others in a closely held company do not act in the best interest of that company. Sometimes this is manifested by a recognizable business tort, a wrong that adversely impacts your ownership rights and equity.
These are some potential torts that can occur in a closely held company:
Breach of fiduciary duty - Majority shareholders, directors, or officers can breach their fiduciary duties owed to the minority shareholders and the corporation. This includes self-dealing, usurping corporate opportunities, etc.
Fraud - Majority shareholders or directors could commit fraud by making false representations about the company’s finances, operations, etc. to benefit themselves over the minority.
Conversion - Misappropriating corporate assets or diverting them for personal use by the majority owners.
Self-dealing - Majority owners engage in unfair self-interested transactions with the company.
Conflicts of interest - Directors or officers take actions or have interests that conflict with the company’s interests.
Misrepresentation - Majority shareholders or directors make false or misleading statements to induce the minority to act in reliance.
Tortious interference - Intentionally damaging relations between the company and a third party like a supplier or customer.
Defamation - Making false, damaging statements about the minority owners that harm their reputations.
Infliction of emotional distress - Intentionally or recklessly taking actions that inflict mental anguish on the minority owners.
Misappropriation of trade secrets - Disclosing or using the company’s confidential information and trade secrets without authorization.
Corporate waste - Majority shareholders diverting corporate assets for unnecessary, unreasonable, or unprofitable purposes.
The minority shareholders - Could potentially sue for these torts and recover damages if they can prove the elements required for each claim. Consultation with a business attorney is advisable.
Unjust enrichment - Majority shareholders could be unjustly enriched through excessive compensation, usurping business opportunities, etc.
Accounting malpractice - Company accountants could negligently or intentionally provide inaccurate financial information.
Legal malpractice - Attorneys retained by the majority owners could give negligent or fraudulent legal advice.
Breach of contract - The majority owners could cause the company to breach contracts with the minority owners or third parties.
Promissory estoppel - The minority relies on promises made by the majority, causing detriment.
Negligent misrepresentation - The majority carelessly provides the minority with incorrect information influencing their decisions.
Fraudulent concealment - The majority conceals essential information from the minority that should have been disclosed.
False imprisonment - Restricting the physical movement of the minority owners against their will.
Invasion of privacy - Violating the minority owners' privacy rights by intruding upon their solitude.
Harassment - Severe, pervasive harassment creates a hostile environment for minority owners.
Civil conspiracy - Majority owners conspire together to injure the minority owners through unlawful, overt acts.
Neglect of corporate formalities - Causing the company to disregard important corporate formalities and procedures.
