Abreu v. Unica Indus. Sales, Inc.

Zenaida Abreu (plaintiff) owns 50 percent of shares and is the president of Ebro Foods, Inc. Ralph and William Steinbarth (defendants) co-own and are the sole directors of La Preferida, Inc. (defendant), which owns the other 50 percent of Ebro shares. Ralph Steinbarth created Unica Industrial Sales, Inc. to compete with Ebro for Kraft Foods’ business. Abreu brought a shareholder’s derivative action against the Steinbarths, Law Preferida, and Unica (defendants). The trial court found that there had been oppressive conduct and fraudulent self-dealing, and removed Ralph Steinbarth as director on Ebro’s board. The trial court also found that the Steinbarths and La Preferida had breached their fiduciary duties, and ordered relief, including appointing an additional director to oversee Ebro’s new board of directors and to break any deadlocks between the two existing directors, Abreu and La Preferida’s candidate. The court appointed Silvio Vega, Abreu’s son-in-law, as the provisional director. Vega worked for Ebro for more than 17 years, was familiar with the corporation, had a CPA degree, and understood the history of Ebro and La Preferida’s relationship. The Steinbarths and La Preferida appeal, arguing that Vega’s appointment violated the statutory requirement that provisional directors be impartial, and that the trial court erred in refusing to remove Vega for acting in ways that are inconsistent with his duties as provisional director.