Opinion ID: 1034091
Heading Depth: 2
Heading Rank: 3

Heading: The Nature of Newsome’s Lawsuit

Text: After receiving his charge to administer Mahalo USA’s legal claims for the benefit of its creditors, Newsome brought suit against seven Canadian citizens and a Canadian law firm, all domiciled in Alberta. The individual defendants— James Burns, David Butler, Duncan Chisholm, Gary Dundas, William Gallacher, Jeff Lawson, and Kevin Wolfe—generally had overlapping roles as directors or officers (or both) at Mahalo Canada or Mahalo USA (or both). All have equity stakes in Mahalo Canada. Jeff Lawson was also a partner at the law firm (Burnet, Duckworth & Palmer LLP), to which both Mahalo entities frequently turned for legal services. The law firm itself had no equity stake in Mahalo Canada. Newsome claims all defendants breached their fiduciary duties to Mahalo USA with respect to the debt transactions that sank the company. To the extent a defendant did not have a fiduciary duty toward Mahalo USA, Newsome claims the defendant aided and abetted a breach of fiduciary duty. As to the law firm, he claims it represented both Mahalo Canada and Mahalo USA but had an -5- irreconcilable conflict of interest because Mahalo Canada directed the firm to take actions that favored Mahalo Canada at Mahalo USA’s expense. Newsome also asserts that the law firm aided and abetted the individual defendants’ breaches of fiduciary duty.