Bontempo v. Lare
90 A.3d 559
Md. Ct. Spec. App.2014Background
- Two minority shareholder (Bontempo) and majority shareholders (Lares) run Quotient, an IT firm; dispute arises after Bontempo is terminated and sues under CA § 3-413(b)(2) and for derivative/equitable relief.
- ARSA and shareholder agreement define ownership percentages and trigger events, including potential buyouts; Bontempo alleges oppressive conduct by Lares and misallocation of Quotient funds.
- Trial court found oppressive conduct by Lare, declined to dissolve Quotient, and awarded monetary relief (accounting, distributions, and fees) and partial relief on Counts I and III; Counts II, IV, V resolved unfavorably for Bontempo.
- Post-trial motions led to amended judgments: Court vacated/modified awards, reduced some damages, and later remanded Count III damages to ensure Quotient’ s full restitution.
- This Maryland Court of Special Appeals affirm(s) most findings of oppression, reverse the structuring of Count III damages, and remand for proper restitution, while keeping other rulings intact.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the court erred in ordering relief short of dissolution for oppressive conduct | Bontempo showed oppression; dissolution or similar relief warranted | Edenbaum permits alternatives; dissolution unnecessary | No abuse; alternatives appropriate; no dissolution required |
| Whether Lares can be liable personally under CA § 3-413(b)(2) | Lares engaged in oppression harming Quotient | No fraud; no personal liability under § 3-413 | Lares not personally liable under § 3-413(b)(2) |
| Whether damages under Count III (derivative claim) properly remedied Quotient | Remedies should restore Quotient, not merely compensate Bontempo | Remedies framed as distributions appropriate to Bontempo | Count III damages vacated and remanded for proper restitution to Quotient |
| Whether punitive damages were appropriate for Count IV | Constructive fraud warranted punitive damages | No fraud proven; punitive damages improper | No punitive damages; affirmed denial |
| Whether equal-compensation claim (Count V) was properly proven | Oral agreement to equalize salary existed | Evidence insufficient; no meeting of the minds | No error; equal-compensation claim not proven |
Key Cases Cited
- Edenbaum v. Schwarcz-Osztreicherne, 165 Md. App. 233 (Md. 2005) (limits dissolution; permits alternative remedies for oppression)
- Storetrax.com, Inc. v. Gurland, 397 Md. 37 (Md. 2007) (fiduciary duties; oppression context in close corporations)
- Lerner v. Lerner Corp., 132 Md. App. 32 (Md. 2000) (majority owe fiduciary duty to minority)
- Mona Elec. Grp., Inc. v. Mona, 176 Md. App. 672 (Md. 2007) (cannot ignore corporate boundaries; minority protections)
- Baker v. Commercial Body Builders, Inc., 507 P.2d 387 (Ore. 1973) (enumerates alternative equitable remedies)