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P, was a shareholder in a closely held corporation called Billings Generation, Inc. (BGI). The four other shareholders in BGI were Smith, Blendu, Orndorff, and Roberts. All five shareholders have expertise and experience in the area of power production. The group has been involved with several projects, corporations, and partnerships. Each shareholder owned 20% of the shares in BGI. All five were directors of BGI; Orndorff, Roberts and Smith were officers. Blendu and P had both been removed as officers by vote of 60 percent of the shareholders, i.e., Orndorff, Roberts and Smith. Orndorff and Roberts are attorneys. Neither is licensed to practice in the state of Montana. P has been employed for over 18 years as an investment banker, and is a law school graduate who is licensed to practice law in New York. Exxon Billings Cogeneration, Inc. (EBCI) is a Montana Corporation which is a solely owned subsidiary of Exxon U.S.A., Inc. The Yellowstone Energy Limited Partnership (YELP) is a partnership between BGI and EBCI. In YELP, BGI is the general partner and holds a 35% interest, and EBCI is the limited partner with a 65% interest. In the process of establishing a cogeneration plant in Billings, Montana, for YELP, Orndorff and Roberts rendered legal services and billed YELP for these services. YELP paid a total of $633,000 to the two of them between mid-1993 and February 1996. Each charged a rate of $225 per hour. Sletteland and Blendu (Ps) brought an action individually and on behalf of BGI and YELP seeking recovery of excessive legal fees charged by Roberts and Orndorff (Ds) and for removal of Ds from the board of directors of BGI. Roberts, Orndorff, and Smith (Ds) filed a counterclaim alleging that the filing of the initial lawsuit by Ps derailed the financing of an energy project of the partnership in which all parties are involved. Ds argue that this action amounted to a breach of fiduciary duty and negligence. Blendu (P) was involved with the initial action, but settled with Ds prior to appeal. When Ps filed the lawsuit, YELP was having financial trouble due to technical problems with the plant and high-interest debts. YELP was attempting to refinance these high-interest debts with lower interest financing. Ds alleged that the timing of the lawsuit by P was specifically intended to derail financing. The refinancing fell through. The District Court found that the attorneys had overcharged and required repayment based on a reduced hourly rate, but did not find evidence of fraud and did not remove them as directors. On the counterclaim, the District Court found that P was negligent and breached his fiduciary duties to BGI and his fellow shareholders by the timing of his filing of the main action. P was found liable to Ds in the amount of $3,027,939. Ps appealed from this judgment and Ds cross-appealed.

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