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Decision of Note: <b>Legends President Owes SC Corp. No Fiduciary Duty</b>
The Supreme Court of South Carolina ruled that the president of the Nevada-based Legends In Concert owed no fiduciary duty to a corporation formed by an entrepreneur to raise the capital needed to produce a Legends musical in Myrtle Beach. Pittman v. Grand Strand Entertainment Inc., 25969.
Plaintiff Ben Pittman formed Grand Strand to mount a public stock offering. Grand Strand then entered into a licensing agreement with Legends In Concert but never made the stock offering or raised funds cited in the licensing agreement. After Legends president John Stuart terminated the agreement, an arbitrator ruled in favor of Legends. Pittman then proceeded with a suit against Stuart himself.
Grand Strand had issued 120,000 shares of stock to Stuart (at no cost), but the state supreme court noted there was no evidence that had made Stuart a majority shareholder. The court also noted there had been no resolution or shareholder vote making Stuart a Grand Strand director or officer. Stuart had sent letters to and signed an agreement with the bank in which Grand Strand kept its accounts, citing himself as Grand Strand CEO. But the court concluded that, although inappropriate “it did not transform Stuart into Grand Strand's CEO, with duties attendant to that position. … If anything, it was Pittman, not Stuart, whose actions were detrimental to Grand Strand.”
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