Legal Definitions - adverse-domination doctrine

The adverse-domination doctrine is an equitable principle that tolls the statute of limitations on a breach-of-fiduciary-duty claim against officers and directors, especially when a corporation sues its own officers and directors. This doctrine prevents a director or officer from successfully hiding wrongful or fraudulent conduct during the limitations period.

The statute of limitations is tolled until a majority of the disinterested directors discover or are put on notice of the claim against the wrongdoers. This doctrine is available only to benefit the corporation.

Suppose a corporation's officers and directors engage in fraudulent conduct that harms the corporation. The corporation may not immediately discover the fraud, and the statute of limitations may expire before the corporation can bring a claim against the wrongdoers.

However, if the corporation is still controlled by the alleged wrongdoers, the adverse-domination doctrine may apply. The statute of limitations would be tolled until a majority of the disinterested directors discover or are put on notice of the claim against the wrongdoers. This gives the corporation more time to bring a claim against the wrongdoers and seek justice.