Superior Court of Massachusetts, Suffolk, Business Litigation Session
Eric STONE, Derivatively ON BEHALF OF TWIN COAST METROLOGY, INC.
Jason REMILLARD et al.
MEMORANDUM AND ORDER ON PLAINTIFFâS PARTIAL MOTION TO
Kenneth W. Salinger, Justice of the Superior Court
Stone and Jason Remillard each own half of a closely-held
corporation called Twin Coast Metrology, Inc. (which the
parties refer to as "TCM").
has asserted counterclaims for breach of fiduciary duty
against Stone and TCM, for declaratory judgment as to whether
Remillard resigned from his positions as Director and
Treasurer of TCM, for indemnity against Stone and TCM as to
certain alleged corporate debts, and for access to certain of
TCMâs books and records pursuant to G.L.c. 156D, §
has moved to dismiss the counterclaims for breach of
fiduciary and for access to TCMâs books and records. Stone
does not move to dismiss the declaratory judgment or
Court will dismiss the breach of fiduciary duty counterclaims
against TCM. Under Massachusetts law, a corporation does not
owe a fiduciary duty to its shareholders. See Merola v.
Exergen Corp., 423 Mass. 461, 463 n.3
Court will deny the motion to dismiss with respect to the
breach of fiduciary duty counterclaims against Mr. Stone.
Since Stone and Remillard are the only owners of a closely
held corporation, they owe each other "and the
corporation itself ... a [fiduciary] duty of âutmost good
faith and loyaltyâ" and therefore "may not âact out
of avarice, expediency or self-interestâ" toward each
other. Koshy v. Sachdev, 477 Mass. 759, 772 (2017),
quoting Donahue v. Rodd Electrotype Co. of New
England, 367 Mass. 578, 593 (1975).
facts alleged in support of Remillardâs counterclaims
plausibly suggest that Stone has tried to freeze out
Remillard and deny him the benefits of his membership
interest in TCM, all in breach of Stoneâs fiduciary duty to
Remillard. See generally Selmark Associates, Inc. v.
Ehrlich, 467 Mass. 525, 536 (2014). Part of Remillardâs
allegations, regarding Stoneâs purported attempt to shift
corporate debts on a credit card account to Remillard by not
paying the bill and leaving Remillard on the hook as
guarantor, may only support injunctive relief and not the
award of money damages, at least at this point in time. But
that is not grounds for dismissing the claims against Stone
for breach of fiduciary duty.
the Court will also deny the motion to dismiss with respect
to the counterclaim seeking access to TCMâs books and
records. Stone and TCM muster quite a few arguments as to
which this claim should be dismissed. None is convincing.
complains that Remillard did not ask "to inspect and
copy" TCM records, as permitted under G.L.c. 156D,
§ 16.02, but instead wrote "to request the review
or provision" of those records. The statute does not
require the incantation of particular magic words, however. A
request to "review" records is no different than a
request to "inspect and copy" them. And the mere
fact that Remillard said he would be happy if Stone instead
provided copies of all the records, rather than having
Remillard inspect them first, does not somehow make
Remillardâs request a legal nullity.
next complains that Remillard must already have the corporate
documents he is seeking. That is no basis for TCM denying its
shareholder access to records covered by the statute,
Court has reviewed Remillardâs request for records and is
satisfied that he made an adequate showing, consistent with
§ 16.02(c)(1)-(3), that he was requesting specified
corporate records in good faith for the purpose of
determining the current financial status of TCM, and that the
records he requested are directly connected with that
purpose. Stone and TCM, in contrast, have not established
that TCM has determined in good faith that disclosure of the
records sought would adversely affect the corporation in the
conduct of its business, and thus are not entitled to invoke
and TCM also assert that they are trying to moot this claim
by producing enough corporate information and records to
satisfy Remillard. That is a fine thing. The parties should
be able to resolve Remillardâs right to access TCMâs
corporate records without further litigation. But an attempt
to settle a claim is not a basis for dismissal of that claim.
partial motion to dismiss Counterclaims I, II, and V is
ALLOWED IN PART and DENIED IN PART. It is allowed with
respect to the counterclaims for breach of fiduciary duty
against Twin Coast Metrology, Inc., which are hereby
dismissed with prejudice. The motion is denied with respect
to the counterclaims for breach of fiduciary duty against