DEBORAH MUCHER BARR v. PETER SWENSON & Another.

NOTICE: Summary decisions issued by the Appeals Court pursuant to M.A.C. Rule
23.0, as appearing in 97 Mass. App. Ct. 1017 (2020) (formerly known as rule 1:28,
as amended by 73 Mass. App. Ct. 1001 [2009]), are primarily directed to the parties
and, therefore, may not fully address the facts of the case or the panel's
decisional rationale. Moreover, such decisions are not circulated to the entire
court and, therefore, represent only the views of the panel that decided the case.
A summary decision pursuant to rule 23.0 or rule 1:28 issued after February 25,
2008, may be cited for its persuasive value but, because of the limitations noted
above, not as binding precedent. See Chace v. Curran, 71 Mass. App. Ct. 258, 260
n.4 (2008).

COMMONWEALTH OF MASSACHUSETTS

APPEALS COURT

23-P-491

DEBORAH MUCHER BARR

vs.

PETER SWENSON & another.1

MEMORANDUM AND ORDER PURSUANT TO RULE 23.0

This appeal concerns a closely held and family-owned

corporation, John E. Swenson Co., Inc. (company), which operates

the Hawthorne Motel in Chatham. One of the company's

shareholders, plaintiff Deborah Mucher Barr, brought the

underlying complaint alleging that her uncles, defendants Peter

Swenson and David Swenson,2 committed breaches of their fiduciary

1David Swenson. John E. Swenson Co., Inc., is a nominal
defendant on whose behalf the plaintiff, a minority shareholder,
also proceeds derivatively.

2Where Peter and David have the same last name, we refer to
them and other members of their families by their first names to
avoid confusion.
duties while serving on the board of directors.3 Barr's claims

against her uncles were dismissed on cross motions for summary

judgment. Barr appeals, and we affirm.

Background. We take the facts from the summary judgment

record, construing the evidence in the light most favorable to

Barr as the party against whom summary judgment was entered.

See ProQuip Ltd. v. Northmark Bank, 103 Mass App. Ct. 133, 135

(2023).

The Swenson family formed the company in 1948, and it

currently has 120 outstanding shares. The company's bylaws

provide that a shareholder "desiring to sell or transfer . . .

stock . . . shall first offer it to the [company]." However,

the company's bylaws also provide that the board of directors

may waive the requirement that a shareholder must first offer

stock to the company before proceeding with a stock sale, and

there has been a long history of the board doing so.

From 2002 to 2019, the board of directors comprised three

Swenson siblings: Peter, David, and Barr's mother, Eleanor. In

October 2018, Barr had a conversation with Peter during which

Barr expressed an interest in purchasing more of the company's

3 Barr asserted direct and derivative claims for breach of
fiduciary duty. She also asserted a claim for access to
corporate records, but this appeal does not present any issues
regarding Barr's claim for access to corporate records.

2
stock and asked Peter for an estimate of what the stock was

worth. Peter provided an estimated value of $100,000 per share.

Barr told Peter that, if stock became available, she was

"interested in buying." Peter responded that he would "let

[Barr] know." In February 2019, Eleanor died. Her seat on the

board was not filled immediately, leaving Peter and David as the

only members of the board.

Around the time that Eleanor's seat on the board became

vacant, David's children -- John, Kari, and Scott -- decided to

sell shares of company stock that they owned. David discussed

the idea with Peter, and the two agreed that David's children

would sell their shares to members of Peter's family at a price

of $85,000 per share.4 In April 2019, John sold two shares, one

each to Peter's daughter and son-in-law. Also in April 2019,

Kari and Scott each sold one share to Peter's wife. In May

2019, Peter and David, as the only members of the board, voted

to waive the requirement that David's children had to offer the

stock to the company. Thereafter, in August 2019, the board

unanimously elected Barr to fill Eleanor's seat.

4 During his deposition, David testified that he appreciated
how much Peter was involved in running the Hawthorne Motel,
which is why David reached out to Peter when David's children
expressed an interest in selling their shares. It appears that
Peter, in negotiating for members of his family to purchase at
$85,000 per share, did not disclose that Barr may have been
willing to make a better offer.

3
Discussion. On summary judgment, a judge of the Superior

Court concluded that Barr's claims for breach of fiduciary duty

failed as a matter of law because the evidence of harm was too

speculative. We need not reach the question of harm, however,

as we conclude that the evidence, even when viewed in the light

most favorable to Barr, does not show that Peter or David

violated their fiduciary duties. See ProQuip Ltd., 103 Mass

App. Ct. at 135.

"The directors of a corporation stand in a fiduciary

relationship to the corporation" and "owe to the corporation

both a duty of care and . . . a paramount duty of loyalty."

Demoulas v. Demoulas Super Mkts., Inc., 424 Mass. 501, 528

(1997). As pertinent here, a fiduciary may not "tak[e], for

personal benefit, an opportunity or advantage that belongs to

the corporation," id. at 529, or transfer resources from the

corporation to another corporation, see, e.g., Tocci v. Tocci,

490 Mass. 1, 16 (2022).

Barr argues that Peter and David violated fiduciary duties

owed to the company when they arranged for David's children to

sell their shares to members of Peter's family. Barr argues

that, where the company had a right to buy the shares and Barr

would have paid $100,000 per share, Peter and David should have

arranged for David's children to sell their shares to the

company at $85,000 per share and for the company to resell those

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shares to Barr at $100,000 per share, thereby netting the

company $60,000 total for the four shares sold. The argument is

rooted in the idea that Peter and David impermissibly "t[ook],

for personal benefit, an opportunity . . . that belong[ed] to

the [company]." Demoulas, 424 Mass. at 529. However, for the

stock sales to present an opportunity for the company, Peter and

David would have needed to orchestrate a scheme whereby the

company purchased the shares for less than the company could

resell them -- whether by purchasing the shares from David's

children below value, reselling the shares to Barr above value,

or some combination of the two. Either way, a shareholder would

have been harmed, and Barr has not provided any support for the

proposition that Peter and David had an obligation to exploit

shareholders in this manner to make money for the company.5 See

International Bhd. of Elec. Workers Local No. 129 Benefit Fund

v. Tucci, 476 Mass. 553, 561 (2017) (directors in close

corporations owe fiduciary duties to shareholders).6

5 As a factual matter, the evidence does not show that
David's children would have sold at $85,000 per share had they
known that Barr was willing to buy at $100,000 per share or that
Barr would have been willing to buy at $100,000 per share had
she known that David's children were willing to sell at $85,000
per share.

6 A director's fiduciary duties to shareholders do not
extend to personal transactions not involving matters of
corporate governance. See Adelson v. Adelson, 60 Mass. App. Ct.
753, 767-768 (2004). Thus, as this court has held, in a private
stock sale between a director and a shareholder, the director

5
Barr also argues that Peter violated his fiduciary duties

by diverting assets away from the company to other competing

motels that Peter and his family owned –- the Chatham Motel and

Pilgrim Village. See, e.g., Tocci, 490 Mass. at 16. On appeal,

Barr does not provide record support for the allegation that

Peter diverted assets away from the company. Barr cites to

evidence showing the various interests that Peter's family had

in the competing motels. Of course Peter cannot divert assets

from the company. However, the mere fact that Peter's family

had interests in the Chatham Motel and Pilgrim Village does not

mean that Peter diverted assets away to those motels.7 Barr also

cites to several pages of Peter's deposition testimony during

which he was asked how supplies were acquired for the Hawthorne

Motel. Peter explained that the Hawthorne Motel, the Chatham

Motel, and Pilgrim Village all had separate credit cards and

that, while supplies for the Hawthorne Motel were sometimes

does not owe fiduciary duties to the shareholder. See id. at
768. Here, however, Barr asserts that the company should have
bought and resold stock to turn a profit, which would have been
a transaction involving a matter of corporate governance.

7 Barr also asserts that Peter's daughter, Jennifer, who was
a general manager of all three motels, booked rooms from the
Chatham Motel while working for the Hawthorne Motel. Assuming
without deciding that the summary judgment record supports such
an inference, Barr does not explain how Jennifer's booking of
rooms for the Chatham Motel while working for the Hawthorne
Motel shows a breach of Peter's fiduciary duties.

6
delivered to Pilgrim Village, those supplies were then taken

over to the Hawthorne Motel.8 This evidence, even when construed

in the light most favorable to Barr, does not show that Peter

diverted assets away to competing motels. See ProQuip Ltd., 103

Mass App. Ct. at 135.9

Judgment affirmed.

By the Court (Green, C.J.,
Henry & Ditkoff, JJ.10),

Clerk

Entered: August 8, 2024.

8 Peter explained that supplies were delivered to Pilgrim
Village because they were less likely to be stolen there.

9 As noted, Barr also claimed that Peter and David violated
fiduciary duties owed to her, directly, as a shareholder. See
note 3, supra. While directors in a close corporation owe
fiduciary duties to shareholders, see International Bhd. of
Elec. Workers Local No. 129 Benefit Fund, 476 Mass. at 561, Barr
has not explained how Peter and David violated any fiduciary
duties owed to her, individually. For example, Barr does not
contend that Peter and David had an obligation to tell her about
the stock sales or that the shares had to be offered to all
shareholders.

10 The panelists are listed in order of seniority.

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