Fusion Capital Find II, LLC. v. Ham
Fusion Capital Find II, LLC. v. Ham, 09-3723
In an insolvent corporation’s suit against defendant-corporation for tortious interference with its merger agreement, district court’s judgment awarding defendant about $1.2 million in legal fees after ruling in favor of defendant and holding the insolvent corporation’s board of directors personally liable is reversed as, under Nev. Rev. Stat. section 78.747, there isn’t any fraud as plaintiff’s thin capitalization was both the reason why the deal had been proposed and the dominant feature in the deal’s structure. Furthermore, when plaintiff signed a contract promising to reimburse defendant’s legal expenses if litigation ensued, defendant knew beyond doubt that plaintiff would be unable to keep that promise unless the merger closed. Thus, the court is not aware of any statute or decision holding that investors in a thinly capitalized corporation are personally liable for its debts to a contracting partner when that partner, with knowledge of the corporation’s insolvency, signs without getting a guaranty from the investors.
- Argued 06/02/2010
- Submitted 08/02/2010
- Decided 08/02/2010
- Published 08/02/2010
- United States Seventh Circuit