On October 30, 2013, the Second Department issued a decision in Varveris v. Zacharakos, 2013 N.Y. Slip Op. 07028, examining when a corporate officer/director owes a fiduciary duty to the corporation’s shareholders.
In Varveris, the defendant was “a director, officer, shareholder, and managing agent of” a close corporation of which plaintiff was a shareholder. Defendant purchased another shareholder’s shares in the corporation. Plaintiff sued defendant for breach of fiduciary duty in connection with the sale, claiming that defendant had a duty to allow plaintiff to participate in the purchase. The Second Department held that defendant had no fiduciary duty to plaintiff in this situation, writing:
Contrary to the plaintiff’s contention, [defendant]’s status as an officer, director, or shareholder of a close corporation does not, by itself, create a fiduciary relationship as to his individual purchase of another shareholder’s stock.
(Emphasis added) (citations and internal quotations omitted).
Varveris illustrates the importance of context in determining whether someone is a fiduciary.