## Facts

- Fletcher Granite Company, LLC (FGC), a closely held LLC formed to acquire a granite business, was owned by Bernard Pointer (minority) and Victor Castellani, Paul Woodberry, and Kathleen Herbert (majority).
- Pointer, the only member with substantial quarrying experience, served as FGC’s president under an employment arrangement described as permitting removal only “for cause.”
- Pointer also held a 50% interest in separate entities (Stone Ridge Investments, LLC and Stone Ridge Management, LLC) involved in real-estate and financing transactions connected to FGC property and operations.
- As FGC experienced operational and financial difficulties, the majority members became dissatisfied with Pointer’s management and raised concerns about conflicts and related-party dealings.
- Without informing Pointer, the majority members hired an outside executive to replace him, suspended Pointer, excluded him from facilities, and terminated him without a meaningful chance to respond.
- Pointer sued for freeze-out/breach of fiduciary duty, breach of his employment contract, breach of the implied covenant of good faith and fair dealing, and interference with his advantageous employment relationship.
- The majority members counterclaimed that Pointer engaged in self-dealing and usurped corporate opportunities through the Stone Ridge entities.
- After a lengthy bench trial, the trial judge found for Pointer on all claims, rejected the counterclaims, and entered judgment; both sides appealed, and the Supreme Judicial Court (SJC) took direct review.

## Issues

1. Whether the majority members’ covert replacement and exclusion of Pointer constituted a freeze-out and breach of heightened fiduciary duties in a closely held entity.
2. Whether Pointer’s termination violated an employment agreement requiring cause and the implied covenant of good faith and fair dealing.
3. Whether Pointer usurped a corporate opportunity or committed actionable self-dealing in transactions involving FGC property and financing.
4. Whether the majority members tortiously interfered with Pointer’s advantageous employment relationship with FGC.
5. What remedies are permitted for a freeze-out under the remedial approach articulated in *Brodie v. Jordan*.

## Decision

- The SJC affirmed the trial court’s liability findings that the majority members froze out Pointer and breached fiduciary duties owed in a close corporation/close-entity setting.
- The SJC affirmed findings of breach of Pointer’s employment contract, breach of the implied covenant of good faith and fair dealing, and interference with Pointer’s advantageous relationship.
- The SJC affirmed the rejection of defendants’ counterclaims for corporate opportunity and self-dealing.
- The SJC remanded for determination of damages or other equitable relief on the freeze-out claim consistent with *Brodie v. Jordan*’s remedial framework.

## Legal Principles

- Owners who control a closely held enterprise owe stringent fiduciary duties comparable to partner-like obligations and may not use control to freeze out a minority owner from employment, participation, or economic benefits without legitimate, good-faith justification.
- In reviewing bench-trial findings, appellate courts defer to the factfinder’s credibility choices and will not overturn findings where the evidence supports more than one permissible view.
- When an executive’s employment is protected by a “for cause” standard, termination must satisfy the contract and must be carried out consistent with the implied covenant of good faith and fair dealing.
- Corporate opportunity and self-dealing claims depend on governing agreements, disclosure and knowledge of interested relationships, and whether the enterprise approved, acquiesced in, or benefited from the challenged transactions.
- Remedies for freeze-out should restore the minority owner, as nearly as possible, to the position that would have existed absent wrongdoing; courts should avoid unconsented structural remedies (such as forced sales or compelled buy-outs of others’ interests) not authorized by the owners.

## Conclusion

The SJC upheld findings that the majority owners wrongfully excluded and terminated the minority owner in a closely held enterprise, breaching fiduciary and contractual duties and failing on counterclaims alleging corporate-opportunity theft and self-dealing; it remanded to craft a remedy for the freeze-out that restores the minority owner’s lost position without unauthorized restructuring of ownership.


Pointer v. Castellani, 455 Mass. 537, 918 N.E.2d 805 (Mass. 2009)