Pointer v. Castellani

Fletcher Granite Company, LLC (Fletcher) operated a quarry. Victor Castellani and two other partners (defendants) owned most of Fletcher’s shares. The three partners contracted with the fourth partner, Bernard Pointer (plaintiff), to serve as Fletcher’s president. As the only partner with quarrying experience, Pointer could reasonably hope that at the end of his seven-year employment contract, the majority partners would renew Pointer’s contract indefinitely, and that eventually Pointer could take control of the firm. Fletcher eventually suffered business reverses. However, two years before Pointer’s employment contract was due to expire, the majority partners surreptitiously hired an outsider to replace Pointer as president. Once the outsider was in place, the majority partners fired Pointer, who sued for breach of fiduciary duty. In their defense, the majority partners argued that Pointer had improperly conducted a side business in real estate, that Pointer’s real estate firm bought land and loaned money to Fletcher on terms unfavorable to Fletcher, and that Pointer had made several questionable business decisions and engaged in unethical behavior. The trial court found that Pointer’s real estate activities were permissible under Fletcher’s operating agreement and Pointer’s contract; that although the land purchase and loans favored Pointer’s real estate firm, they were either reasonable or beneficial to Fletcher; and that the majority partners’ concerns over Pointer’s business and ethical decisions might have been resolved had they bothered to discuss those concerns with Pointer. The trial court ruled that the majority partners acted oppressively and unlawfully in ousting Pointer. However, the trial court also entered judgment for the majority partners on their counterclaims against Pointer. Both sides appealed to the Massachusetts Supreme Judicial Court. As threshold matters, the appellate court accepted the trial court’s fact-findings and its judgment on the majority partners’ counterclaims.