Court Opinion

ID: 9703132
Source: CourtListenerOpinion
Date Created: 2023-08-25 23:41:43.151605+00
Date Added: 2024-06-11T18:21:45.924049
License: Public Domain

MINGE, Judge,
concurring specially.
I join in the decision and opinion of the court and concur specially to address the question of an officer’s fiduciary duty to a corporation. A material breach of a fiduciary duty should constitute a material breach of an employment contract between an officer and the corporation. Just as Minnesota recognizes that “[t]he obligations of good faith, diligence, reasonableness, and care prescribed by the Uniform Commercial Code may not be disclaimed by agreement,” Minn.Stat. § 336.1-302(b) (2004), so too, a corporate officer’s fiduciary duty should not be subject to explicit or implicit disclaimer and should be an implied term of every contract between the officer and the corporation.
Minnesota’s Business Corporation Act recognizes that officers have a duty of “good faith” to the corporation. Minn. Stat. § 302A.361 (2004). “Good faith” is defined as “honesty in fact in the conduct of the act or transaction concerned.” Minn.Stat. § 302A.011, subd. 13 (2004). This obligation of good faith is not subject to modification in the articles or bylaws of the corporation. See Minn.Stat. §§ 302A.111, .251, subd. 4(b) (2004).
Although analogous, a fiduciary duty goes beyond the good-faith focus on honesty to encompass loyalty and care. See Wenzel v. Mathies, 542 N.W.2d 634, 641 (Minn.App.1996) (noting that fiduciary duty encompasses a duty to act “fairly and evenly”); Black’s Law Dictionary, 523 (7th ed.1999) (defining fiduciary duty as “a duty to act with the highest degree of honesty and loyalty toward another person”). Although this state’s corporation law allows for limitations on a director’s fiduciary duty, such limits must be in the articles of incorporation. Minn.Stat. § 302A.111, subd. 4(u) (2004). And the articles cannot eliminate director liability for the duty of loyalty. Minn.Stat. § 302A.251, subd. 4(a) (2004). Officer conduct should be subject to parallel, if not more, exacting requirements.
Nothing in the record in this case indicates that CB&S’s articles of incorporation attempt to limit an officer’s liability. As CB&S argues, other jurisdictions have found that corporate officers have an implied fiduciary duty that is a term of their contract with the corporation and cannot be disclaimed. See Backus v. Finkelstein, 23 F.2d 357, 361 (D.Minn.1927); Prozinski v. Ne. Real Estate Servs., LLC, 59 Mass.App.Ct. 599, 797 N.E.2d 415, 424 (2003); Zakibe v. Ahrens & McCarron, Inc., 28 S.W.3d 373, 385 (Mo.Ct.App.2000).
I would hold that Bruce owed a fiduciary duty to CB&S as a corporate officer and that to the extent his conduct in unilaterally borrowing almost $350,000 from CB&S constituted a material breach of his fiduciary duty, he violated his employment contract with CB&S.