Cengage Advantage Books: Fundamentals of Business Law Today 10th Edition by Roger LeRoy Miller

Exercise 22

Duties of Majority Shareholders. Steve and Marie Venturini each owned half the stock of their family corporation, which had operated Steve's Sizzling Steakhouse since the 1930s. Steve, Marie, and her husband, Joe, ran the business until Steve died in 2001, leaving his stock in equal shares to his sons Steve and Gregg. Son Steve had never worked there. Gregg did occasional maintenance work until his father's death. Despite their lack of participation, the sons were paid more than $750 per week each. In 2002, Marie's son Blaise, who had obtained a college degree in restaurant management while working part-time at the steakhouse, took over its management. When his cousins became threatening, Blaise denied them access to the business and its books. Marie refused Gregg and Steve's offer of about $1.4 million for her stock in the restaurant, and they refused her offer of about $800,000 for theirs. They filed a suit against her, claiming, among other things, a breach of fiduciary duty. Should the court order the aunt to buy out the nephews or the nephews to buy out the aunt, or neither? Why? [ Venturini v. Steve's Steakhouse, Inc., 2006 WL 445059 (N.J.Super. Ch.Div. 2006)] (See Shareholders.)