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Abrano v. Abrano

Superior Court of Massachusetts, Suffolk, Business Litigation Session

April 20, 2018

Bryan ABRANO et al.
Frank ABRANO et al. Lymol Medical Corporation Bryan Abrano et al.; Bryan Abrano et al. on Behalf of Lymol Medical Corporation Frank Abrano et al.

          File Date: April 24, 2018


          Janet L. Sanders, Justice of the Superior Court

          These three consolidated cases arise out of disputes among members and former members of a closely held corporation. The claims in all three cases were tried to a jury which[1] returned a verdict on December 14, 2017. The parties now disagree as to the form of judgment that should enter in light of the jury’s findings. This Court resolves those differences as follows.

         1. Prejudgment Interest on Back Pay

         Some component of the damages awarded to the plaintiffs on their claims was for their wrongful termination of employment with Lymol. In determining damages, the jury was instructed to consider plaintiffs’ entitlement both to back pay and front pay. The parties agree that prejudgment interest can be collected for that portion of the award representing back pay but not for that portion that relates to front pay. The parties also agree as to the date upon which that prejudgment interest begins to run as to each plaintiff. The question before the Court is what amount of the damages award to plaintiffs on this wrongful termination claim should be allocated to back pay. The plaintiffs contend that the jury awarded back pay up to the date of the verdict, which was December 14, 2017. The defendants argue that the date should instead be November 6, 2017, the date set forth on Trial Exhibit 113. But that exhibit did not prevent the jury from awarding back pay up to the date of the verdict, which was exactly what the jury did, as explained in plaintiffs’ Response at page 2. This Court therefore concludes that the plaintiffs’ calculation as to prejudgment interest on back pay awarded as part of the damages is the correct one.

         2. Interest Due to Frank Abrano on the Promissory Note

         Frank Abrano prevailed on his claim against Bryan Abrano and Bridget Rodrigue that they had failed to pay all that was owed under a promissory note. By its terms, that note imposed a five percent annual interest on amounts not paid. Interest owed on amounts due was therefore part of the damages that could be awarded on this claim in the event that the jury found a breach of contract. The jury’s award apparently did not include that five percent interest as part of the damages, but then (as the plaintiffs argue) that was the jury’s decision to make. To assess an additional five percent on top[2] of that would not be in accord with the jury’s verdict. Moreover, that the jury chose not to award Frank more was not an irrational one, since Frank himself did not take the position that the note was unpaid until after this litigation commenced, stating in his original Answer to the Complaint that the note had been paid in full. In short, the plaintiffs’ calculation as to the judgment to enter on this Count is the correct one.

         3. The Award for Withheld Dividends

         As part of their claim that Kim Abrano breached her fiduciary duty to them, Bryan and Bridget alleged that Kim as the majority shareholder caused Lymol to halt the payment of dividends to them which they say would have been paid had it not been for Kim’s wrongful conduct. At trial, Kim Abrano argued among other things that the jury should find no breach because the corporation never had any money to distribute as dividends in the first place. Rejecting this defense, the jury found for both Bryan and Bridget on this claim. The parties appear to agree that, once the duplicative front and back pay damages are deducted from the amounts awarded to Bryan and Bridget on the breach of fiduciary duty count against Kim, the remaining damages ($1, 755, 453 to Bryan and $851, 128 to Bridget) represent undeclared dividends, including the 2014 checks which the jury found were not wages. Lymol and Kim Abrano now claim that it would be improper to enter a judgment that holds Kim Abrano personally liable for these amounts because plaintiffs are entitled only to an equitable order compelling Lymol to declare dividends. Moreover (the defendants argue) because this would be an equitable order, plaintiffs are not entitled to any prejudgment interest on this amount. This Court disagrees.

          Leading up to trial and then during the trial itself, it was clear that the claim involving unpaid dividends was part of the plaintiffs’ claim that Kim as a majority shareholder had frozen them out of Lymol. The claim was not asserted against the corporation but against Kim[3] personally. The jury was asked to determine not only whether Kim’s conduct in withholding dividends was in breach of her fiduciary duty but also asked to decide what damages flowed from that wrongful conduct. At no time did Kim (or any defendant) suggest that the jury could not award damages against Kim and that the plaintiffs were at most entitled to an equitable order compelling Lymol to declare dividends. Thus, even if the defendants were correct in their assertion that this is an equitable claim, having submitted the claim to the jury, the losing side is not in a position to now contend that this was not a jury issue and that the jury could not award the damages that they did. See Lampert, Hausler & Rodman, P.C. v. Gallant, 67 Mass.App.Ct, 1103, 2006 WL 2336920 (2006) (Rule 1:28 decision) and cases discussed therein. Moreover, Lymol’s financial situation (and its ability to pay dividends in 2014 through 2016) was part of the evidence that the jury was able to consider in determining whether Kim had used her majority stockholder’s position to block dividend distributions that would otherwise have been made. Indeed, this Court instructed the jury that Kim’s actions would not be unlawful if undertaken for a legitimate business purpose and if the plaintiffs could not show any reasonably practicable alternative method of proceeding that would have been less harmful to plaintiffs’ personal interest. Presumably following these instructions, the jury found for the plaintiffs and entered the award that they did. That award was against Kim personally, and should not turn on whether the company now-two years later and after payment of Kim’s legal fees-can afford to make dividend distributions in an amount equal to that award.

         Having concluded that this was a freeze out claim for which Kim can be held personally liable, this Court also concludes that prejudgment interest can be assessed on the amount awarded. Although there is no appellate case directly on point, this Court is of the view that a claim of breach of fiduciary duty sounds in tort and thus falls within G.L.c. 231, § 6B.[4]

         For all the foregoing reasons and for other reasons set forth in plaintiffs’ submissions, this Court adopts the proposed Form of Judgment submitted by plaintiffs with the understanding that certain calculations may have to be updated following issuance of this Order and ...

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