Kinzbach Tool Co. V. Corbett-Wallace Case Summary

Alejandro Benavides

FACTS: Forty-nine plaintiffs who were involved in an explosion at a Phillips 66 chemical plant in 1989 sued their attorneys for “breach of fiduciary duty, fraud, violation of the Deceptive Trade Practices – Consumer Protection Act, negligence, and breach of contract” and therefore demanded forfeiture of any of the attorneys’ fees. The plaintiffs alleged that their attorneys breached their fiduciary duty towards them by, among other things, entering into a secret settlement with Phillips regarding the Plaintiffs’ claims, seeking business through an intermediary, and refusing to let their clients know about other offers and demands. The Attorneys argue that they should not be required to forfeit their fees because the Clients

v. Corbett-Wallace Corp. Here, an oil company named Corbett-Wallace, planned to make a sale to Kinzbach Tool Co. However, Corbett-Wallace Corp contacted a Kinzbach Co. employee by the name of Turner in secret and promised to pay him a commission if he was not only able to get Kinzbach Tool to buy into the contract, but also “get as large an offer as possible.” Kinzbach ended up buying into a twenty-five-thousand-dollar contract, which is five thousand dollars more than what Corbett-Wallace Corp was willing to receive. Knowing he’d receive a commission, Turner did not inform Kinzbach of this. Kinzbach eventually found out and sued Turner for “breach of his fiduciary duty to his employer,” to which the court agreed. Instead of the five-thousand-dollar commission going into Turner’s pockets, it was credited to the sales price even though Kinzbach suffered no damages. This is because “if the fiduciary takes any gift, gratuity, or benefit in violation of his duty, or acquires any interest adverse to his principal, without a full disclosure, it is a betrayal of his trust and a breach of confidence, and he must account to his principal for all he has received.” Similarly, it is beside the point that the Clients did not suffer damages; the fact of the matter is that the Attorneys benefited in violation of their duty without the Clients’ approval, and therefore were “in breach of fiduciary duty to