Voisine v. Berube
2011 ME 137
Me.2011Background
- Valley Firewood & Tree Farm, Inc. was pursued in a shareholder derivative action by Gary Voisine against Valley and Berube; trial was bench or jury-waived with damages awarded against Berube.
- The court held Berube breached a duty of good faith under former 13-A M.R.S.A. § 716, awarding Valley $1,500,000 with half to Voisine, and Berube appealed.
- Berube challenged standing, as Voisine participated in the division/sale of Valley assets and formed a corporation (G & L) to receive half of those assets.
- Valley’s assets were divided and sold in 2000-2001 (tractors/trailers, building, and personal property), with Voisine signing authorization documents and receiving proceeds.
- Voisine later claimed an arrangement would continue via Kent Packers and G & L, but Berube allegedly terminated the deal and shifted business away; ultimate trial in 2010 found damages and liability, which the court later vacated on standing grounds.
- The Supreme Court vacated the judgment and remanded for dismissal with prejudice because Voisine, as shareholder, lacked standing to pursue the derivative action.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing of Voisine to pursue the derivative action | Voisine contends he can act on Valley’s behalf as a shareholder. | Voisine participated in the sale/distribution of assets and benefitted, so lacks standing. | Voisine lacked standing; derivative action dismissed. |
| Damages recoverable in a derivative action | Valley suffered losses, so damages are recoverable by the corporation. | Damages must flow to the corporation, not the individual; standing requires corporate focus. | Damages not addressed due to lack of standing; judgment vacated. |
| Post-2001 lost profits claim by Valley | Valley continued to be damaged by Berube’s actions post-2001. | No ongoing corporate damages since Valley ceased operations. | Discussion of damages moot due to standing defect; remand for dismissal. |
Key Cases Cited
- Forbes v. Wells Beach Casino, Inc., 307 A.2d 210 (Me. 1973) (stockholder may be estopped if participated in the wrong)
- Hyams v. Old Dominion Co., 113 Me. 294, 93 A. 747 (Me. 1915) (standing limitations for derivative actions)
- Bangor Punta Operations, Inc. v. Bangor & Aroostook R.R. Co., 417 U.S. 703 (U.S. 1974) (standing and fiduciary duty in corporate contexts)
- Quinn v. Anvil Corp., 620 F.3d 1005 (9th Cir. 2010) (same-breach may injure corporation and minority shareholders; derivative/direct claims)
- Spickler v. York, 566 A.2d 1385 (Me. 1989) (limits of derivative claims and standing)
- Lewis v. Chiles, 719 F.2d 1044 (9th Cir. 1983) (standing and representation in derivative actions)
- Gentile v. Rossette, 906 A.2d 91 (Del. 2006) (breach of fiduciary duty; interplay of direct/derivative claims)
- Rosenfeld v. Schwitzer Corp., 251 F.Supp. 758 (S.D.N.Y. 1966) (standing and derivative action principles)