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Levy v. Markal Sales Corp. - 268 Ill. App. 3d 355, 205 Ill. Dec. 599, 643 N.E.2d 1206 (1994)

Rule:

Illinois law permits a complete forfeiture of any salary paid by a corporation to its fiduciary during a time when the fiduciary was breaching his duty to the corporation. 

Facts:

Kenneth Levy sued his former company, including its directors,Victor Gust, Jr., and Robert Bakal, after they fired Levy for breach of fiduciary duty. After a lengthy bench trial, the trial judge found that the directors had breached their fiduciary duties to Levy and to the corporations in which all three men owned stock. The judge awarded Levy $3,000,000 in punitive damages and approximately $2,000,000 in compensatory damages. Gust and Bakal raised many issues on appeal, including contentions that the judge erred as a matter of law when awarding damages.

Issue:

Did Gust and Bakal breach their fiduciary duty to the corporation?

Answer:

Yes

Conclusion:

The court affirmed the finding that defendant corporate directors breached their fiduciary duties to plaintiff as well as to defendant corporation in which all three parties owned stock. The court modified the order to give plaintiff 100 percent of the value of his stock that defendant corporate directors had converted, and 40 percent of the other damages awarded for expenses wrongly charged. The court affirmed the complete salary and benefits forfeiture of defendants, but modified the order to award only a sum of money without reference to its source. The court also modified the judge's order to award damages in favor of plaintiff and defendant corporation and against defendants, corporation and directors. The court affirmed the imposition of punitive damages against defendants.

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