Brodie v. Jordan
447 Mass. 866, 857 N.E.2d 1076 (2006).
Brodie, Jordan, and Barbuto each owned 1/3 of the shares of Malden, a Massachusetts corporation. After various disagreements, Brodie requested that the company purchase his shares, but the requests were rejected. Neither the articles of organization nor any corporate bylaw required a buyout.
- Brodie later died and his wife inherited his 1/3 interest.
- She sued for breach of fiduciary duty after the defendants voted against her election to the board, and refused to provide her with various financial information.
- This is known as a freeze-out.
Whether the plaintiff was entitled to the remedy of a forced buyout of her shares by the majority.
The remedy for a freeze-out is to restore to the minority shareholder the benefits which she reasonably expected, but has not received because of the fiduciary breach.
- Here, a forced buyout would place the plaintiff in a significantly better position because it creates an artificial market for the plaintiff’s shares in a close corporation – an asset that, by definition has little or no market value.
- Also, as stated, nothing in any agreement obligated the defendants to purchase the plaintiff’s shares.