Under the Knife: Failed Brain Surgery Joint Venture Results in Large Damages Award for Plaintiff


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

Happy New Year from BBD

Damages, Interest, and Attorney Fees in Massachusetts Litigation

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

Calling for Trouble:  Federal Court Finds Members of Closely-Held Cell Phone Tower Company Breached their Fiduciary Duties


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

The Power of Corporate Documents

The Power of Corporate Documents

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

Work It Out: Massachusetts Business Litigation Session Decision Highlights the Wisdom of Settlement

Work it out

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

Fractured Family: Market Basket Ousts CEO Arthur T. Demoulas

abandoned cart

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

Frozen in Place: SJC Rejects Shareholder’s Attempt to Compete with Close Corporation after “Freeze Out”


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

No Way Out, Part II: Minority Shareholders Not Entitled to Buy-out


The Delaware Supreme Court recently affirmed the Court of Chancery’s dismissal of a suit seeking a corporate buy-out of a minority shareholder’s interest in a closely-held corporation. In Blaustein v. Lord Baltimore Capital Corp., the plaintiff owned about 17% of the voting stock of a closely-held corporation called Lord Baltimore Capital Corporation (“LBCC”).  The plaintiff alleged that she invested in LBCC based on the controlling shareholder’s oral promise to repurchase her shares at full value after 10 years.  However, this arrangement was never incorporated into the corporate shareholders’ agreement.  Ten years came and went, and when plaintiff sought to enforce … Continue reading

No Way Out? Delaware Court of Chancery Finds LLC Agreement Waived Members’ Right to Judicial Dissolution

Delaware Road Sign

The Delaware Court of Chancery recently took the concept of freedom of contract to a new level.   Under Delaware’s LLC statute, 6 Del. C. § 18-802, an LLC member may apply to the Court of Chancery for judicial dissolution of an LLC “whenever it is not reasonably practicable to carry on the business in conformity with a limited liability company agreement.”  The Court of Chancery has already determined that this statutory right to judicial dissolution is not mandatory, but, instead, may be expressly waived by the terms of an LLC agreement.  But what happens when waiver language in an … Continue reading

Everyone Wants a Say: Determining Who Gets to Vote on an LLC Derivative Suit


The Massachusetts Appeals Court recently issued an interesting decision concerning the authority a group of LLC members needs to bring a derivative suit under Massachusetts law. The case, Williams v. Charles, involved an LLC called Frowmica, which was organized for the purpose of negotiating and financing the purchase of a taxicab business.  Within a year after entering into the operating agreement, relations between the LLC members began to deteriorate.  Some members claimed that the managing member, Jean Bernard Charles (“Charles”), had taken various actions adverse to Frowmica, such as terminating the operations manager without cause, wrongly paying himself a salary … Continue reading