Adverse Domination: Tolling the Statute of Limitations in Kentucky Business Organizations

This Online Original is available for download (PDF) here (part 1) and here (part 2).

Article | 99 KY. L. J. ONLINE 3 | Oct. 27, 2011

Mary C. Garris

The doctrine of adverse domination provides that the statute of limitations within which a corporation may bring an action against wrongdoing directors is tolled while those wrongdoers are in control of the corporation. In Wilson v. Paine, a case of first impression, the Supreme Court of Kentucky held that the doctrine of adverse domination would apply to toll the two-year statute of limitations applicable to claims by a corporate plaintiff against directors to recover an impermissible dividend. After an examination of Wilson and a brief review of the rules governing corporate dividends, including the liability imposed upon directors for dividends improperly declared, this Article turns to other issues of corporate and business entity law to which the doctrine may be applied. Specifically, this Article analyzes the possibility of applying adverse domination to the statute of limitations applicable to distribution statutes for other entity forms, as well as applying the doctrine to toll general statutes of limitations. Finally, this Article addresses the use of the doctrine to hold third parties liable where their actions aided the concealment of the directors’ wrongdoing.

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Adverse Domination–Tolling the Statute of Limitations in Kentucky Business Organizations (pt. I)

Citation

Mary C. Garris, Adverse Domination—Tolling the Statute of Limitations in Kentucky Business Organizations (pt. I), 99 Ky.L.J. Online 36 (2011), http://kentuckylawjournal.org/online-originals-2/adverse-domination-pt1/

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http://kentuckylawjournal.org/online-originals-2/adverse-domination-pt1/