This complex appeal arises from a multi-million dollar commercial real estate fraud perpetrated by Norma and Ronauld Walton over several years.
The appellants (DBDC Applicants) and respondents (Schedule C investors) were all victims of the fraud.
The central issue on appeal concerns the priority of claims against proceeds from the sale of properties acquired as part of the fraudulent scheme.
The appellants sought damages against the Listed Schedule C Companies on the basis of knowing assistance in breach of fiduciary duty, while the respondent DeJong sought constructive trusts over certain properties.
The majority allowed the appeal in part, finding the Listed Schedule C Companies jointly and severally liable for $22.6 million in damages for knowing assistance, but set aside the constructive trust awards to DeJong.
The dissent disagreed with the knowing assistance finding, arguing the net transfer analysis was insufficient to establish participation by the Listed Schedule C Companies in the breach of fiduciary duty owed to the appellants.
