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Breach of Fiduciary Duty
Officer and Director Liability
Competition with Entity

Desert Hospital Corporation v. Mark A. Smith, M.D. and Erwin C. Demiany, M.D.

Published: Mar. 16, 1996 | Result Date: Oct. 16, 1995 | Filing Date: Jan. 1, 1900 |

Case number: 65391 –  $13,450,000

Judge

Eugene R. Bishop

Court

Riverside Superior Indio


Attorneys

Plaintiff

Scott D. Bertzyk
(Greenberg Traurig)

Robert M. Gilchrest
(Gilchrest Law Group)

Frederick L. McKnight
(Jones Day)


Defendant

David S. Richman

Richard J. Decker
(Prospera Law LLP)


Experts

Plaintiff

David E. Nolte
(technical)

Facts

The plaintiff, Desert Hospital Corporation, is a Palm Springs hospital. The defendants, Mark A. Smith, M.D. and Erwin C. Demiany, M.D., were former fiduciaries of the hospital who served on the hospital's board of directors and/or various board committees. As fiduciaries, the defendants were entrusted with access to the hospital's strategic plans to establish and expand certain medical facilities. Desert Hospital Corporation alleged that from 1987 to 1990, the defendants placed identical facilities across the street in competition with the hospital. The plaintiff brought this action against the defendants based on breach of fiduciary duty, misappropriation of trade secrets and unfair competition theories of recovery.

Settlement Discussions

The plaintiff made a $2,000,000 settlement demand and the defendants offered $125,000.

Damages

The plaintiff claimed compensatory damages (joint and several liability for conspiracy to breach fiduciary duties) against the defendants.

Other Information

The verdict was reached approximately four years after the case was filed.

Deliberation

5 hours

Poll

11-1 (compensatory damages), 12-0 (all other issues)

Length

3+ weeks


#78614

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