WahlcoMetroflex, Inc. v. Baldwin

Alexander Baldwin (defendant) was the chief executive officer, a director, and a shareholder of WahlcoMetroflex, Inc. (plaintiff), an industrial manufacturer. WahlcoMetroflex had a bank loan that was personally guaranteed by each of seven shareholders. Each shareholder was required to submit an annual personal financial statement to the bank, or else the bank could fine WahlcoMetroflex $200 per day for each late statement. Baldwin submitted his financial statements in 2001 and 2002 but inadvertently failed to submit them in 2003 and 2004, causing the bank to fine the company. In 2003, WahlcoMetroflex experienced financial difficulties. Baldwin agreed to take a significant pay cut and, the following year, accepted a consulting position for British Petroleum (BP) on an as-needed basis. BP was not a competitor of WahlcoMetroflex, and Baldwin did not usurp any WahlcoMetroflex customers or opportunities by working for BP. In March 2004, Baldwin resigned from WahlcoMetroflex. In 2007, WahlcoMetroflex sued Baldwin based on two categories of conduct: (1) his failure to provide financial statements to the bank and (2) his work for BP. WahlcoMetroflex claimed a breach of fiduciary duty for Baldwin’s failure to provide financial statements (count 1). The jury was instructed that Baldwin could have breached his duty of care if “he did not act with care, competence and diligence.” Regarding Baldwin’s work for BP, WahlcoMetroflex claimed Baldwin both breached a fiduciary duty (count 6) and was unjustly enriched (count 7). The jury returned a verdict for WahlcoMetroflex on count 1 but found in Baldwin’s favor on count 6. Regarding count 7’s nonjury claim for unjust enrichment, the court awarded damages to WahlcoMetroflex. Baldwin appealed.