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Mirra v. Mirra

Superior Court of Massachusetts, Suffolk

January 31, 2017

Leonard Mirra et al. Individually and Derivatively on Behalf of Mirra Co., Inc.
v.
Norino Mirra et al No. 135852

         Filed February 1, 2017

          MEMORANDUM AND ORDER ON DEFENDANTS' MOTIONS FOR PARTIAL SUMMARY JUDGMENT

          Kenneth W. Salinger, Justice of the Superior Court.

         Mirra Co., Inc., is a closely-held corporation. Leonard Mirra (known as Lenny) and his sister Sandra Capo are minority shareholders. Norino Mirra and his deceased brother Ralph Mirra together were the majority shareholders and ran the Company during the relevant period. Lenny and Sandra claim in Counts I to III of their second amended complaint that Norino (who is their grand uncle, because he was their father's uncle) is liable to them personally for breach of fiduciary duty, breach of contract, and tortious interference with their advantageous relationships with the Company. Count IV seeks an accounting of all transactions between the Company and either Norino, Ralph, or entities they or their immediate family controlled.

         The pending motions for summary judgment concern Plaintiffs' other claims. Count V seeks a declaration that Norino's transfers of new shares of Company stock to his children Christopher Mirra and Natalie Wright violated stock transfer restrictions that were agreed to by Norino and all other shareholders. The Court will DENY Chris and Natalie's motion for summary judgment on this claim, and instead order declaratory relief in favor of Lenny and Sandra, because the shareholders' Redemption Agreement barred the challenged transfers. Count VI asserts a derivative claim on behalf of the Company alleging that Norino breached his fiduciary duties by usurping a corporate opportunity to develop the Longview apartments and by failing to pay the Company all it was reasonably owed for its work on and other contributions to the Longview project. The Court will ALLOW Norino's motion for summary judgment on this claim because Plaintiffs lack standing to assert it. Lenny and Sandra do not meet the statutory requirement that derivative claims may only be asserted on behalf of a corporation by someone who owned company stock at the time of the alleged wrongdoing. The undisputed facts show that Norino's alleged breaches of fiduciary duty to the Company all took place before Lenny and Sandra acquired their Company stock. There is no evidence that Norino engaged in any continuing wrong thereafter. And there is no fraudulent concealment exception to the contemporaneous ownership requirement for asserting corporate derivative claims.

         1. Count V-Transfer of Shares to Chris Mirra and Natalie Wright

         1.1. Undisputed Material Facts

         Norino Mirra, Sr., founded the Mirra Co., Inc., in 1953. At first he was the sole owner of the Company. Over time Norino Sr. transferred a 20 percent ownership interest to his nephew Antonio Mirra. At some point thereafter, before 2001, Norino Sr. transferred his remaining 80 percent interest to his sons Norino and Ralph, giving each half. In January 2005 Antonio transferred his 20 percent interest to his children Lenny, Sandra, and Anthony, giving each one-third of his stock or a 6.666 percent interest in the Company.

         Around the same time that Antonio transferred his stock to his children, the five resulting Company owners--Norino, Ralph, Lenny, Sandra, and Anthony--entered into a " Corporate Stock Redemption Agreement" to govern future ownership of Company stock. This contract recites that there were a total of 100 shares of Company stock at the time the contract was executed, that Norino and Ralph each owned 40 shares, and that Lenny, Sandra, and Anthony each owned 6.666 shares. It also recites that the parties intended " that ownership of stock in the Corporation remain in and be restricted to the parties hereto." Section 1 of this Redemption Agreement provides that " [u]pon the death of a Stockholder, the Corporation shall purchase and the personal representative of the deceased Stockholder shall sell to the Corporation" all of the stockholder's shares in the Company, at the price and on the terms spelled out later in the contract. Section 3 provides that " [t]he certificate or certificates of stock subject to this Agreement shall not be assigned or otherwise disposed of during the continuance of this Agreement except as herein provided." It also required that each stock certificate contain an endorsement stating that the certificate " and any disposition of it are subject to the terms of an Agreement . . ."

         When Ralph died in 2014, the Company repurchased Ralph's shares as provided in the Redemption Agreement. That left 60 shares of stock outstanding. As a result, Norino now owned 66.67 percent of the Company (40 of 60 remaining shares), and Lenny, Sandra, and Anthony each owned 11.11 percent (6.666 of 60 shares).

         In January 2015, Norino caused the Company to issue new stock and distribute a " stock dividend" of three new shares for each existing share. In other words, the Company issued 180 new shares of stock and distributed them in proportion to the then-existing ownership of the 60 shares that remained of the original stock. As a result, Norino now owned 160 shares of stock in the Company and Lenny, Sandra, and Anthony each owned 26.666 shares.

         A few weeks later Norino transferred his 120 new shares to his children Chris and Natalie. After this transfer Norino retained 40 shares of Company stock (a 16.67 percent interest), Chris and Natalie owned 60 shares each (25.0 percent interests), and Lenny, Sandra, and Anthony owned 26.666 shares each (11.11 percent interests).

         1.2. Construing the Redemption Agreement

         Lenny and Sandra claim that Norino violated the Redemption Agreement when he transferred his new shares of stock to his children in January 2015. They seek a declaration that these transfers are null and void and that Chris and Natalie are not stockholders of the Company.[1]

         The parties disagree about the proper interpretation of the first sentence of Section 3 of the Redemption Agreement, which provides that " [t]he certificate or certificates of stock subject to this Agreement shall not be assigned or otherwise disposed of during the continuance of this Agreement except as herein provided." Chris and Natalie argue that the phrase " certificates of stock subject to this Agreement" refers only to the original 100 shares of Company stock that are discussed in the first " Whereas" clause of the contract, and thus that Section 3 did not bar the transfer or other disposition of new shares issued after the Redemption Agreement was executed. Lenny and Sandra argue that any and all shares of Company stock are subject to the Redemption Agreement, even if new shares are issued later, and that therefore Section 3 barred Norino from ...


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