At the Fifth Circuit Court of Appeal, Ferguson Braswell Fraser Kubasta’s board certified appellate specialist, J. Beverly, recently obtained reversal of a $410,000 summary judgment against the former CEO of a Houston restaurant group company.  The company claimed that the former CEO stole funds from the company through increased salary payments.  The CEO presented evidence that all payments were authorized.  The Fifth Circuit reversed finding that there were fact issues precluding summary judgment.  The case is also important because it clarifies the standard for applying the discovery rule to toll limitations in cases involving breach of fiduciary duty.  The company argued that it had no duty to investigate or take any steps to protect its interests because the CEO was its fiduciary.  The Fifth Circuit held that regardless of fiduciary status, the statute of limitations begins to run when a party knows or should have known of the allegedly wrongful conduct.  The court concluded there were also fact issues as to when the Company either knew or should have known about the CEO’s additional salary payments.  The case was remanded to district court for a jury trial.

LegacyRG, Inc. v. Harter, No. 16-20506 (5th Cir. 2017)

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