## Facts

- A family-owned closely held corporation was reorganized in 1975 so that two family members and their spouses held all voting stock and could redeem stock at periodically set values; those family members served as officers and directors.
- In 1979, one branch of the family sold roughly one-sixth of the company’s shares back to the company for $700,000 after communications from a controlling family member about financial and estate-tax concerns.
- The 1979 written stock-purchase agreement disclosed prior purchase offers, included financial statements reflecting good performance, and expressly disclaimed any obligation to make later “fair share” or true-up payments if other shares sold for more.
- The selling shareholders signed the 1979 agreement without reading or reviewing it and later claimed they relied on an oral promise of an additional payment if later sales occurred at higher prices.
- In 1981, another sibling sold a similar stake; after negotiation, the price increased from an initial $700,000 offer to $1.9 million.
- In 1990, the company was sold to a successor entity for $24 million; later analysis suggested the earlier stakes were worth substantially more at the time of the 1979 and 1981 sales.
- The selling shareholders sued the controlling family members and the successor entity for breach of fiduciary duty, breach of contract, negligent misrepresentation, constructive trust, interference with a legacy, fraud, and fraud in the inducement, asserting they were induced to sell at depressed prices.

## Issues

1. Whether claims arising from the 1979 and 1981 stock sales were barred by applicable statutes of limitations, including under discovery-rule and fraudulent-concealment theories.
2. Whether the summary judgment record created a genuine issue of material fact on fraud and fraud in the inducement where alleged oral assurances conflicted with clear written contract terms and attached financial disclosures.
3. Whether officers/directors in a closely held family corporation breached fiduciary duties of disclosure in connection with repurchasing minority family shares.
4. Whether equitable claims for constructive trust and a claim for interference with a legacy could proceed when the underlying fraud, misrepresentation, and fiduciary-duty theories failed.

## Decision

- The court affirmed dismissal of multiple counts as time-barred under the governing limitations periods.
- The court affirmed summary judgment for defendants on the remaining claims, finding no genuine dispute of material fact and entitlement to judgment as a matter of law.
- The court held that reliance on alleged oral promises inconsistent with the express written terms of the 1979 agreement was unreasonable as a matter of law.
- The court rejected arguments that family relationships or close-corporation status, by themselves, tolled limitations periods or excused failure to act on information disclosed in transaction documents.
- The court concluded the record did not support imposing a constructive trust or finding actionable interference with a legacy independent of the failed underlying theories.

## Legal Principles

- Statutes of limitations are not suspended merely because parties are family members or because the corporation is closely held; accrual and tolling turn on when plaintiffs knew or should have known facts triggering inquiry.
- A party generally cannot establish reasonable reliance on oral representations that directly contradict unambiguous written contract provisions, especially where the contract includes disclosures addressing the disputed subject.
- Fiduciary duties owed by corporate officers/directors do not eliminate a shareholder’s responsibility to read and understand clear transactional documents or to pursue claims with reasonable diligence once on notice of facts requiring investigation.
- Equitable remedies such as constructive trust require a viable underlying basis (e.g., fraud or breach of duty); absent that predicate, equitable relief is unavailable.

## Conclusion

The Maine Supreme Judicial Court affirmed the trial court’s dismissal and summary judgment rulings, holding that most claims were untimely and that the remaining fraud, fiduciary-duty, constructive-trust, and related theories failed because the written stock-sale documents disclosed key information and negated reasonable reliance on contrary oral assurances.


Francis v. Stinson, 760 A.2d 209 (Me. 2000)