Case Summary

3946 REVIEW DENIED In the absence of a pre-incorporation partnership agreement to the contrary, shareholders in a corporation do not have a fiduciary duty when selling stock to each other; a promise to disclose all facts material to the sale of stock by one shareholder to another results in a duty to do so, the breach of which may result in fraud liability; fraudulent concealment by an officer of a corporation when purchasing stock from a fellow shareholder is within the scope of employment, making the corporation liable to the seller on a respondeat superior theory; a party induced by false representations to execute a contract has the option of rescinding the contract or affirming it and recovering damages for fraud; an undifferentiated offer of compromise made by two defendants may satisfy the requirements of Code of Civil Procedure section 998 if it would permit judgment to be entered against the offerors jointly and severally; an award of attorney fees under a contract clause permitting reasonable fees to the prevailing party can be for an amount greater than what the prevailing party actually owed his/her attorney under a contingent fee agreement.

PERSSON v SMART INVENTIONS (Tap Light) 125 CA4 1141 [See: CivC 3343, 1021; CCP 998; Cavasso v Downey 45 CA 780; Engalla v Permanente 15 C4 951, T/AT 8/97; LiMandri v Judkins 52 CA4 326, T/AT 3/97; Santantonio v Westinghouse 25 CA4 102, T/AT 6/94]