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Merola v. Exergen Corp.

Massachusetts Supreme Judicial Court
668 N.E.2d 351 (1996)



Exergen Corp. (defendant) is a close corporation that has been controlled since its inception by its president and founder, Francesco Pompei (defendant). Steven Merola (plaintiff) began working full-time at Exergen in 1982, with the understanding that he would have the opportunity to become a major shareholder of the company. During the years 1982 and 1983, Merola purchased over 5,000 shares of Exergen stock, first at $2.25 a share and then at $5 per share. He was later terminated without cause, though this was permissible under his contract. He sold his stock back to the company in 1991 for $17 per share. Merola sued Exergen and Pompei, arguing that by terminating him, Pompei breached the duty owed to Merola as a minority shareholder. The trial court found in Merola’s favor as to both parties. The appellate court affirmed the judgment against Pompei but dismissed the case as to Exergen. Pompei appealed.

Rule of Law


Holding and Reasoning (Lynch, J.)

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