Welcome to Boston Business Divorce, a blog by Attorney Tara Myslinski. We are located in Burlington, MA, and represent many individuals and small companies involved in shareholder disputes. All of our clients start their businesses with the best of intentions and expectations. All of them have involved some degree of trust in their business partners. They come to us because their trust has faltered, or in some cases, the relationship has entirely deteriorated and they are ready to file suit. In many cases, unfortunately, the relationship becomes pure animosity once litigation begins.
This blog is intended as a resource for those who are considering forming a small business, currently pursuing a healthy venture, or discovering differences among business partners. We can help you with analyzing your partnership agreement, limited liability company operating agreement, or by-laws. We are here to mediate a burgeoning dispute you have with your partners. If you have a dispute that has already come to a head, we are experienced trial lawyers who are here to litigate your case with the intensity necessary in a business divorce.
Tell me about your small business! I am constantly looking for topics for this blog and always looking to help out small business owners. Tell me about yours. Are you solidly protected by your operating agreement? Are you worried about the ownership structure or control of your company? How have you resolved potential conflicts among your company’s owners? What kinds of topics would you like to hear about in this blog? Click here to tell me about your business.
We are experienced in business divorce. The earlier you seek advice, the better. Please feel free to call us with any of your concerns, and check our blog frequently to learn about the latest in Massachusetts law on business divorce.
In a recent Business Litigation Session case, Tkhilaishvili v. Torosyan, Judge Kaplan enjoined the defendant from transferring the shares of an LLC pending the outcome of the case even though the Plaintiffs had failed to establish that they were likely to succeed on the merits. The details in the reported decision are scant, but lurid. In 2014, the parties opened a suboxone clinic called Allied Health and entered an operating agreement defining their rights. Torosyan, who had provided all of the financing to open the clinic, had a unilateral right under the operating agreement to manage Allied until his contributions … Continue reading
Many actions between members of small businesses are brought as derivative suits, which means that the individual bringing the action is suing on the corporation’s behalf and seeks damages for harm that has been done to the corporation. Any shareholder may theoretically bring a derivative suit, but Massachusetts law requires that the shareholder first demand that the corporation take suitable action to correct the misconduct at issue. Only if the corporation rejects or ignores this demand may the shareholder commence the derivative litigation. It should be noted that members of limited liability companies do not have to deliver a written … Continue reading
Judge Roach issued a rare decision after trial in a business divorce last year that is worth a review, mainly for purposes of understanding damages available in litigation over a failed joint venture. For those interested in doing further research after reading this post, the full name of the case is Advanced Healthcare Mgmt. Servs., LLC v. VHS Acquisition Subsidiary No. 9, Inc. The Plaintiff, Dr. Sagun Tuli (“Dr. Tuli”), is a well-credentialed spinal neurosurgeon who conceived of a business plan for a Brain & Spine Institute (“the Institute”) which she envisioned to be more efficient and effective than traditional … Continue reading
2015 was a busy year at OCM, which is partially why it’s been a while since I’ve posted on BBD. Here’s one of the products of our busy year: I edited the 2015 updated MCLE book entitled Damages, Interest and Attorneys’ Fees in Massachusetts. My partner Sean Carnathan and I updated Chapter 10 and added an entirely new section on damages available in corporate freeze out cases. If you’d like a copy, let me know – we have a few extras! I’d love to share them. Here’s the MCLE link for more information: http://www.mcle.org/product/catalog/code/1930278B00. Continue reading
On March 26, 2015, Judge Dennis Saylor of the United States District Court for the District of Massachusetts, in an over 200-page opinion, decided a complex dispute between shareholders in a closely held cell phone tower business. The origins of this particular tale of corporate disharmony date back to 2002, when John Strachan (“Strachan”) and Matthew Sanford (“Sanford”) decided to create a company to develop towers for the cell phone industry. Strachan and Sanford did not have adequate financial resources on their own, so they joined forces with two wealthy businessmen, Edward Moore (“Moore”) and Lawrence Rosenfeld (“Rosenfeld”). Together, the … Continue reading
We’ve learned of yet another woeful tale of business divorce involving a closely-held corporation. The story starts back in 1997, when Peter Trowt (“Trowt”) and Richard Silva (“Silva”) incorporated a company called Beverly Storage Warehouse & Trailer Leasing, Inc. (“Beverly Storage”). Beverly Storage made money by renting out storage rooms at its warehouse in Beverly, MA and by renting out trailers. Both Trowt and Silva were fifty percent owners of Beverly Storage and, from the outset, agreed to split all business profits and losses equally. They also agreed that Silva would handle the financial aspects of the business, while Trowt … Continue reading
I have written a great deal on this blog about the heightened fiduciary duties that exist between shareholders in a close corporation. There is no doubt that these special duties are important and will govern many disputes between warring factions of a small business. However, before either party starts lodging accusations of breach of fiduciary duty, it is wise for both sides to ascertain whether there is a written provision of the corporation’s articles of organization (or a shareholder agreement) that expressly governs the conduct or circumstances at issue. Better yet, well before tensions arise – ideally, when relations are … Continue reading
For LLC members facing allegations of breach of fiduciary duty, the negotiation table is often a far more hospitable environment than a Massachusetts courtroom. This is the lesson learned by the defendants in a recent Massachusetts Superior Court case, Beninati v. Borghi, in which Judge Sanders imposed millions of dollars in damages and equitable relief on several individuals who she found had breached their fiduciary duties to the business organization known collectively as “Work Out World.” This particular tale of business divorce began in 1999, when Anthony Beninati (“Tony”), Steven Borghi (‘Borghi”), and Joseph Masotta (“Masotta”) opened the first of … Continue reading
In the latest iteration of the Market Basket boardroom saga, Arthur T. Demoulas was ousted as Market Basket’s CEO during this week’s election of corporate officers. In his place, company consultants Felicia Thornton and James Gooch were elected as co-CEOs, effective immediately. In a statement issued by the Board of Directors, the Board stated that Arthur T. Demoulas will not retain any management responsibilities moving forward but remains a shareholder of the corporation. The Demoulas family drama came to a head last year, when Arthur T. Demoulas’s cousin, Arthur S. Demoulas, gained control of the Board of Directors and won a … Continue reading
As I have previously discussed on this blog, in Massachusetts, members of close corporations owe fiduciary duties to one another and to the corporation. In Selmark Associates, Inc. v. Ehrlich, the Massachusetts Supreme Judicial Court (“SJC”) recently made clear that a shareholder who has been “frozen out” of a close corporation, but who retains an ownership interest in it, cannot compete with that corporation in violation of his continuing fiduciary duties. Selmark involved two Massachusetts close corporations, Selmark and Marathon, that provided outsourced sales support to companies lacking their own sales force. Starting in 1997, Evan Ehrlich (“Ehrlich”) worked as … Continue reading