Abrano, et al. v. Abrano, et al. (Lawyers Weekly No. 12-163-16)
1 COMMONWEALTH OF MASSACHUSETTS SUFFOLK, ss. SUPERIOR COURT SUCV2015-1367-BLS2 BRYAN ABRANO and BRIDGET RODRIGUE, derivatively and on behalf of BRYAN CORPORATION Plaintiffs vs. FRANK ABRANO, KIM ABRANO, EDWARD HOLZEK and GARY TRAINOR Defendants vs. BRYAN CORPORATION, Nominal Defendant MEMORANDUM OF DECISION AND ORDER ON BRYAN CORPORATION’S MOTION TO DISMISS PRUSUANT TO G.L.c 156D §7.44 This is one of three lawsuits involving members of a closely held corporation, the Bryan Corporation (the Company). The instant case is a derivative action brought on behalf of the Company by two minority shareholders, Bryan Abrano (Bryan) and his sister Bridget Rodrigue (Bridget). The Company now moves to dismiss the action on the grounds that a committee of two independent directors has determined, in “good faith” and after “reasonable inquiry,” that pursuing the action would not be in the “best interest” of the corporation. G.L.c. 156D §7.44 (a). After careful review of the parties’ submissions, this Court concludes that the Motion must be DENIED. 2 BACKGROUND The Company is a distributor of pharmaceuticals and medical devices. The defendant Frank Abrano (Frank) is its founder. In 2007, criminal charges were filed against him and the Company that resulted in his conviction and incarceration. Civil proceedings against him and the Company were resolved by way of a settlement agreement with the Food and Drug Admin-istration (FDA). As part of the settlement, Frank agreed not to have any affiliation with the Company or exercise any control over it. To satisfy that condition, Frank transferred his interest in the Company to his two children Bryan and Bridget and his estranged wife Kim, who holds a controlling interest. The Verified Complaint alleges that Frank, in violation of that agreement and with the assistance of Kim, has continued to meddle in the Company’s operations and has enriched himself at the Company’s expense. In support of its motion to dismiss, the Company has submitted three affidavits together with attachments. That material, together with certain other material attached to plaintiffs’ Oppo-sition, reveals the following. Before filing the derivative action, the plaintiffs made a Demand on the Company’s Board of Directors, as required by G.L.c. 156D §7.42. The date of the Demand was July 21, 2014. Pursuant to a resolution dated September 6, 2014, the Company’s Board of Directors ap-pointed a committee consisting of two directors, Edward A. Hlozek and Gary E. Trainor, to in-vestigate the Demand’s allegations. In addition to being named defendants in this action, Hlozek and Trainor are also personal friends of Frank. Both were nominated to the Board by Kim and elected immediately after the ouster of the plaintiffs and just one week before the De-mand was made. Before joining the Board, Hlozek was the CEO of QuantumCor, Inc., which […]