SUMMARY JUDGMENT AND UNCLEAN HANDS: SUTER V. MAZYCH (COA 4/13/2007)

SUTER V. MAZYCH
CIVIL PROCEDURE:  Summary Judgment
2006-CA-000506
PUBLISHED: VACATING AND REMANDING; THOMPSON
DATE RENDERED: 4/13/2007

The Plaintiffs sued individually and as shareholders of a closely held corporation. The case was factually complex and hotly litigated. A mere six weeks after Defendants provided thousands of pages of discovery (much of which was irrelevant and non-responsive to the Plaintiffs’ request for information), they moved for Summary Judgment on several grounds, including unclean hands. The circuit court granted the motion.

COA discussed the unclean hands doctrine, noting that in a shareholder’s derivative action, the plaintiff must not have engaged in conduct which would forfeit his right to seek equitable relief for the malfeasance of directors, officers or majority shareholders. Here, there was no question that the Plaintiffs engaged in some behavior that could implicate them: they took trips on the company dime, used corporate employees for personal use and took bonuses from the company. However, "when the plaintiff has engaged in conduct less offensive than that of the defendant, the [unclean hands doctrine] will not preclude the plaintiff’s recovery."

The COA held that the plaintiffs’ behavior did not warrant the application of unclean hands at the summary judgment stage of litigation. Moreover, the COA held that while discovery deadlines should not be limitless, the Plaintiffs herein did not have sufficient time to conduct discovery. The judgment was vacated and remanded.

Digested by
Cherry A-E Henault
Staff Attorney
Jefferson Circuit Court
Division Eleven
CherryHenault@kycourts.net

Please note: I reserve the right to delete comments that are inappropriate, offensive or off-topic.

Leave a Reply

Your email address will not be published.