Hawaii: Lawyer Sued for Breach of Fiduciary Duties

In re Fisher v. Grove Farm Co., 2009 Haw. App. LEXIS 796 (Haw. Ct. App., Dec. 29, 2009), appellant shareholders sued for the breach of fiduciary duties in the sale of a farm. The attorney represented both the shareholders the buyer in the transaction. In this case the buyer happened to be the attorney’s son.

The Circuit Court of the Fifth Circuit, Hawaii granted the motion to dismiss the suit with prejudice and awarded that the attorney be paid costs. The Intermediate Court of Appeals, Hawaii, held that the attorney did breach fiduciary duties because the farm did not retain the attorney to benefit the shareholders. Since the shareholders had no attorney-client relationship with the attorney, they were not able to pursue their claims of constructive and securities fraud. Since this was the case, they were unable to collect punitive damages and unable to recover and attorney’s fees. Haw. Rev. Stat. § 607-14 (Supp. 2008). The original judgment was affirmed.

In this case, the attorney may have acted unethically by selling the farm to his son, however, the shareholders had not retained this attorney themselves and therefore had no relationship giving them the grounds to sue. The attorney’s relationship was with the farm only and since the farm did not bring case against the attorney, there was no case.