Court Opinion

ID: 9673393
Source: CourtListenerOpinion
Date Created: 2023-08-24 04:10:55.656815+00
Date Added: 2024-06-11T18:16:21.861081
License: Public Domain

Robert L. Brown, Justice, concurring. I disagree with the majority that the trial judge based his finding of liability solely on legal malpractice. Under his February 8, 1988 Findings of Fact and Conclusions of Law, the judge specifically finds that Ted Smith was a shareholder and officer of Shiloh Ranches, Inc., the general partner of Benton Farms Joint Venture and Washington Farms Joint Venture. The judge then, in Conclusion of Law No. 3, determines that Smith violated a fiduciary duty owed to the limited partners as a principal of the general partner, Shiloh. By not disclosing, all pertinent information regarding his self-dealing as a principal of the general partner and by mismanaging the partnership, all of which benefitted Shiloh and Smith personally, he breached his fiduciary duty to the limited partners and violated the partnership agreement. We have recognized that a corporate officer owes a duty not to do an unfair or fraudulent act which will result in his private gain at the expense of the corporation. Godwin v. Churchman, 305 Ark. 520, 810 S.W.2d 34 (1991); Taylor v. Terry, 279 Ark. 97, 649 S.W.2d 392 (1983); Raines v. Toney, 228 Ark. 1170, 313 S.W.2d 802 (1958). When a corporate officer commits such an act, he breaches his fiduciary duty to the shareholders. Id. The same reasoning applies to a limited partnership. The general partner and the principals of that limited partnership should not benefit themselves at the expense of the limited partners in violation of the partnership agreement. That is what Smith is found to have done in the case before us. Therefore, I believe that the trial judge was correct in concluding that a breach of fiduciary duty tied to a violation of the partnership agreement carries with it a five-year statute of limitations. Having said that, I cannot find a provision in the subsequent judgments (as opposed to the Findings of Fact and Conclusions of Law) where the trial judge made an award against Smith based on anything other than legal malpractice. Rather, it appears that the judge specifically premised each of his judgment awards expressly on his Conclusion of Law No. 1, which dealt with Smith’s malpractice, and Conclusion of Law No. 2, which concerns the breach of fiduciary duty by Shiloh Ranches, Inc. Without a judgment award related to Conclusion of Law No. 3, which I read as a conclusion that Smith breached his fiduciary duty to the limited partners as a principal of the general partner — Shiloh — and not as their attorney, there is no basis for applying on a five-year limitations period on Smith’s liability. Accordingly, I concur in the majority decision.