Boland v. Boland Trane Assocs.

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These two consolidated appeals involved two lawsuits, a derivative claim and a direct shareholder action, both arising from a series of stock transactions in two family corporations owned primarily by eight siblings. After the death of one of the sisters, the corporations attempted to repurchase her stock pursuant to the terms of a stock purchase agreement. The sister's estate refused. The corporations filed a declaratory judgment action, seeking enforcement of the agreement. Meanwhile, two siblings, aggrieved by an earlier stock transaction, filed a derivative action, alleging self-dealing and breach of fiduciary duty. The circuit court (1) granted summary judgment in favor of the corporations on the derivative action after deferring to the judgment of a special litigation committee (SLC); and (2) granted summary judgment to the corporation in the declaratory judgment proceeding. The Supreme Court (1) reversed the circuit court's judgment in the derivative action, holding that the court made an inadequate inquiry into the SLC's independence and the reasonableness of its procedures; and (2) reversed in part the circuit court's grant of summary judgment in the declaratory judgment action, holding that the circuit court erroneously applied res judicata to the issue.