The Business Litigation Blog

Lack of corporate formalities did not prevent suit by shareholders in family business

The court addressed whether the absence of corporate formalities barred a claim against a family member found to have breached his fiduciary duties as an officer. The defendant argued the corporation lacked authority to bring the suit because it had not held a meeting of the directors or conducted a vote to authorize the suit. The court rejected the argument because the complaint was signed by the two remaining directors, who were relatives of the defendant, and there was no evidence the defendant would have participated in the meeting or vote. The court was careful to limit its holding to facts involving disputes among family members within a business and implied that the level of informality tolerated may be less when the suit was brought by a non-officer or minority shareholder.

Houser Buick, Inc. v. Houser, 89 Mass. App. Ct. 1113 (2016)

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