Giannotti v. Hamway
Supreme Court of Virginia
387 S.E. 2d 725 (1990)
In 1980, Alexander Hamway, Leroy Steiner, and Louis Adelman (minority stockholders) (plaintiffs) filed a complaint against Libbie Rehabilitation Center, Inc. (Libbie) (defendant), a Virginia close corporation engaged in developing and operating nursing homes, as well as Frank Giannotti and other directors of Libbie (directors) (defendants). The directors had no education or expertise in operating nursing homes. Further, the directors only worked part time for Libbie and had significant other business activities. The minority stockholders alleged that the directors paid themselves excessive and unwarranted salaries from Libbie’s funds. The minority stockholders asked the trial court to appoint a receiver to require the directors to repay the funds that were misspent or mismanaged, and to order liquidation of Libbie. The trial court found in favor of the minority stockholders and ordered the dissolution of Libbie, but did not order the directors to restore any assets to Libbie. The trial court also noted that the directors were oppressive to the minority stockholders. The state supreme court granted the directors’ petition for appeal.
Rule of Law
Holding and Reasoning (Compton, J.)
Dissent (Gordon, J.)
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