Justia Corporate Compliance Opinion Summaries

Eric Shapiro founded Hyperheal Hyperbarics, Inc., a medical provider offering hyperbaric oxygen therapy and wound care. He served as a director, controlled day-to-day operations, and was employed as a certified HBOT technician. Hyperheal's charter required indemnification for directors and officers to the fullest extent permitted by Maryland law. Hyperheal sued Shapiro, alleging misconduct that led to significant financial losses. The claims included intentional misrepresentation and common law indemnification, asserting that Shapiro breached fiduciary duties as a director and engaged in improper conduct to increase profits.The Circuit Court for Baltimore County dismissed Shapiro's indemnification claim on summary judgment, concluding that the corporation's claims were based solely on his actions as an employee, not as a director. The Appellate Court of Maryland reversed this decision, finding that the allegations implicated Shapiro's fiduciary duties as a director, thus triggering indemnification under the statute. The Appellate Court held that the claims bore a sufficient nexus to Shapiro's status as a director.The Supreme Court of Maryland affirmed the Appellate Court's judgment. The court held that the indemnification required under subsection 2-418(d) of the Corporations and Associations Article applies when a director is sued "by reason of service" in his capacity as a director and prevails. The court determined that the requisite nexus requirement is established if any of the factual allegations, causes of action, or legal theories implicate the individual's role or status as a director. Therefore, Shapiro was entitled to indemnification for his legal expenses incurred in defending the lawsuit. View "Hyperheal Hyperbarics v. Shapiro" on Justia Law