Boland v. Boland Trane Associates, Inc.

31 A.3d 529 (2011)

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Nature of the Case

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Facts

D was a family business owned primarily by eight siblings. Three brothers served as directors and officers of two family corporations, while the other five siblings were not actively involved in their management. After the death of one of the sisters, D attempted to repurchase her stock pursuant to the terms of a Stock Purchase Agreement. The sister's estate refused on the grounds that the Agreement grossly undervalued the estate's shares. D filed a declaratory judgment action, seeking enforcement of the Stock Purchase Agreement, and named the other, non-director siblings as defendants and interested parties. The non-director siblings learned of an earlier stock transaction in which the three directors had acquired additional corporate stock for themselves. P, two of the non-director siblings, sent a demand for litigation to the corporation, and they eventually filed a derivative action alleging self-dealing and a breach of fiduciary duty. P also filed 'direct' claims, as cross-claims in the declaratory judgment action, on related grounds to the derivative action. D appointed a special litigation committee ('SLC'), consisting of two newly hired 'independent directors,' to examine the claims. The SLC issued a report concluding that the stock transactions were legitimate and that the Stock Purchase Agreement was enforceable. The Circuit Court granted summary judgment in favor of D on the derivative action. In the declaratory judgment proceeding, the Circuit Court, relying on res judicata, dismissed the cross-claims and granted summary judgment to D. The Court of Special Appeals upheld the decision. P appealed. P wants the court to review the SLC under the independent business judgment rule.