Opinion ID: 751696
Heading Depth: 4
Heading Rank: 1

Heading: Legal error in finding fiduciary duty breach

Text: 54 Rothenberg's challenge to the findings of specific breaches of fiduciary duty is a narrow one. It addresses only the finding that he improperly usurped AFG's relationship with THB. And it challenges that finding only on the legal basis that, as a matter of law AFG lacked the requisite 'tangible expectancy' in retaining the THB relationship, to meet the requirements of the corporate opportunity doctrine. Specifically, the contention is that in the highly competitive insurance industry in which they were engaged, AFG had no tangible expectancy that it could indefinitely retain the usurped THB relationship, so that to usurp it violated no fiduciary duty. 11 Appellant's Br. at 18, 31-36. 55 To the extent Rothenberg's contention is that the lack of tangible expectancy, hence of corporate opportunity, in AFG's maintenance of the THB relationship was established as a matter of law on the evidence of record, we disagree. Rothenberg relies principally upon S.W. Scott & Co., Inc. v. Scott, 186 A.D. 518, 174 N.Y.S. 583 (1919), for the proposition that in a highly competitive insurance brokerage business such as that involved in this case, there can be no tangible expectancy in the indefinite continuation of such relationships. We do not understand Scott to lay down any such general rule for the insurance--or any other concededly competitive--industry. Scott did reject a breach of fiduciary duty claim based upon allegations of improper solicitations by a corporate officer of his employer's insurance clients. But, it did not do so on the basis that a tangible expectancy could never exist in the insurance industry because of its highly competitive nature. Special relationships giving rise to the requisite expectancies may of course arise even in highly competitive business contexts. In Scott, no such special relationship was suggested; the only expectancy of continued corporate opportunity was whatever could be inferred from general business practices, and in that highly competitive business, those did not rise to the level of tangible expectancy. See Abbott Redmont, 475 F.2d at 88-89 (so distinguishing Scott from case involving diversion of corporate opportunity by former employee who was, as to that particular opportunity, the sole competitor). 56 We therefore reject Rothenberg's contention that Rothenberg's usurpation of the THB relationship could not, as a matter of law, constitute a breach of fiduciary duty. We do not, however, hold to the contrary that as a matter of law it did. Whether it did or did not depends upon whether, as a matter of fact, the requisite expectancy existed by virtue of any special relationship that may have developed between AFG and THB. Presumably because he had concluded to base liability upon breach of implied covenant, the magistrate judge did not address that factual issue--certainly not as directly as was needed, Rothenberg having raised the issue. 57 On the present record, this remains an open, unresolved issue of fact to whose resolution in further proceedings we will return. 58