Corporate Law - Massachusetts Limits Tolling of Statute of Limitations for Breach of Fiduciary Duties in Closely Held Corporations - Aiello V. Aiello

By Leonard, John R. | Suffolk University Law Review, Winter 2007 | Go to article overview

Corporate Law - Massachusetts Limits Tolling of Statute of Limitations for Breach of Fiduciary Duties in Closely Held Corporations - Aiello V. Aiello


Leonard, John R., Suffolk University Law Review


Corporate Law--Massachusetts Limits Tolling of Statute of Limitations for Breach of Fiduciary Duties in Closely Held Corporations--Aiello v. Aiello, 852 N.E.2d 68 (Mass. 2006)

The statute of limitations for claims arising out of an alleged breach of fiduciary duty by members of a corporate board of directors is generally three years from the date the plaintiff knew or should have known of the alleged wrong. (1) For certain equitable reasons, courts and legislatures have provided exceptions to this sometimes harsh rule by tolling the statute of limitations and permitting claims beyond the three year period. (2) In Aiello v. Aiello, (3) the Massachusetts Supreme Judicial Court (SJC) considered whether to apply either the complete domination test or the disinterested majority test in determining adverse domination to toll the statute of limitations when a majority of the board of directors dominated the decision making. (4) The SJC announced that Massachusetts courts must apply the complete domination test when a corporate agent seeks to toll the statute of limitations. (5)

Joy Hyland and her three brothers each owned twenty-five percent of DeLuca's supermarkets, a family-owned supermarket that had been conducting business on Charles Street in Boston since 1966. (6) Each sibling was also a member of the four seat board of directors. (7) After Joy moved to Florida in 1984, the brothers assumed control of DeLuca's by attending to the daily responsibilities of the supermarket operation. (8) Without consulting Joy, the brothers obtained property, opened new locations, and developed separate companies with DeLuca's profits. (9) In March of 1994, Joy confronted her brothers regarding her low compensation, and despite hiring an accountant to examine the corporate books, Joy maintained an amicable relationship with her brothers until 1997. (10)

In 1997, the siblings' uncle died and conveyed the Deluca's supermarket property to Joy and her brothers in unequal shares. (11) Largely based on the unequal distribution of the property, several years of litigation followed, during which time each sibling engaged in suits with or against each other. (12) The judge eventually appointed a receiver to wind up and dissolve the business, and each sibling subsequently submitted a claim demanding an amount in excess of his or her pro rata share. (13) In her submission to the receiver, Joy alleged that her brothers received excessive compensation, diverted corporate opportunities, and engaged in self-dealing. (14)

The receiver conducted his initial investigation and filed his report and recommendations on August 15, 2002. (15) The judge accepted the receiver's report and found the statute of limitations barred all of Joy's claims that accrued before May of 1999. (16) Additionally, the judge accepted the receiver's recommendation from a supplemental report filed in May of 2003, that Joy receive an extra $250,000 over and above her pro rata share as compensation for the alleged abuses that occurred after May 17, 1999. (17) The judge approved the receiver's report, and on January 31, 2004, he dismissed the receiver and entered the judgment from which Joy's appeal follows. (18)

Traditionally, courts have treated closely held corporations the same as larger private or even publicly held corporations. (19) Courts have gradually begun noticing that the specific nature of closely held corporations makes them especially vulnerable to breaches of fiduciary duty, and have thus afforded greater protection to minority interests in such corporations. (20) Massachusetts has been especially sensitive to such issues and became one of the first states to break from traditional corporate theory, affording minority interests in closely held corporations protection by finding a heightened fiduciary duty between shareholders. (21) Virtually all state and federal jurisdictions have now begun treating closely held corporations more like general partnerships and less like publicly held corporations. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Corporate Law - Massachusetts Limits Tolling of Statute of Limitations for Breach of Fiduciary Duties in Closely Held Corporations - Aiello V. Aiello
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.