DiMaggio v. Rosario

Victor DiMaggio III (plaintiff) and Elias Rosario (defendant) were shareholders of Galleria Realty Corporation (Galleria), an Indiana closely held corporation in the real estate development business. Thereafter, Rosario formed Liberty Lake Estates, LLC (LLE) (defendant), an Indiana limited-liability company, with Mark Nevel and William Haak (the other LLE members) (defendants) to pursue real estate development. DiMaggio sued Rosario, LLE, and the other LLE members for allegedly usurping a corporate opportunity from Galleria. The complaint alleged that the other LLE members actively participated with Rosario, who owed a fiduciary duty to DiMaggio as a fellow shareholder in Galleria, in usurping Galleria’s corporate opportunity. However, the complaint did not allege that the other LLE members had acted knowingly. LLE and the other LLE members moved to dismiss the action against them. The trial court granted their motion on the ground that Indiana did not recognize a cause of action against a third-party nonfiduciary for usurpation of a closely held corporation’s corporate opportunity. On appeal, DiMaggio argued that the trial court erred in granting the motion because the Indiana Court of Appeals had implicitly recognized a cause of action against a third-party nonfiduciary for usurpation of a closely held corporation’s corporate opportunity in a previous case in which it did not address a trial court’s denial of a motion to dismiss the same. However, in the previous case, the party had not appealed the trial court’s denial of the motion to dismiss. Additionally, DiMaggio argued that other jurisdictions had held a third-party nonfiduciary jointly and severally liable for knowingly assisting a fiduciary of a closely held corporation with usurping a corporate opportunity.