Cunningham

Kathleen Cunningham brought this shareholder derivative action on behalf of Royal Airline Linen, Inc. (Royal), against Norman Magidow. The trial court found Magidow liable for breach of fiduciary duty, awarded compensatory and punitive damages, and entered judgment accordingly. Magidow then forgave $452,000 of a loan he had made to Royal and moved for an order compelling Cunningham to acknowledge that the judgment had been partially satisfied in the amount of $452,000. The trial court granted the motion. Cunningham appeals, and we reverse.

BACKGROUND

Cunningham owns half the stock of Royal. Magidow owns the other half and is also an officer and director. Cunningham filed this shareholder derivative action against Magidow and other defendants, alleging claims for breach of fiduciary duty, usurpation of corporate opportunity, and conversion. Cunningham alleged that Magidow arranged for Royal to purchase certain supplies at inflated prices from a separate business owned by Magidow and that he failed to disclose his conflict of interest.

The breach of fiduciary duty claim against Magidow was tried to the court, which found in favor of Cunningham. The court found that…