Boland v. Boland Trane Associates, Inc.

Court of Appeals of Maryland

31 A.3d 529 (Md. 2011)

Special litigation committees (SLCs) are not afforded a presumption of acting in good faith, being independent, or that the SLC follows reasonable procedures.

Relevant Facts

Boland Trane Associates, Inc. (the defendant) was a family business owned by eight siblings, three of whom sat on the board of directors. The defendant underwent several transactions in which the three directors obtained additional stock.

John and Kevin Boland (the plaintiffs), two non-director siblings, brought a demand for litigation. The defendant appointed a special litigation committee (SLC) to review the claims, and the SLC determined that the transactions were appropriate. Subsequently, the plaintiffs brought a derivative suit alleging self-dealing and breach of fiduciary duty.

At trial, the defendant filed a motion for summary judgment, but failed to disclose its methodology in choosing the SLC and did not state that the members of the SLC were free from any conflicts of interest with the directors. Additionally, the SLC provided its methodology to the court, but did not provide any justification for its methodology.

The circuit court granted the defendants summary judgment based on the findings of the SLC, providing for a presumption of reasonableness. The court of special appeals affirmed and the plaintiffs appealed.

Issue

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Holding & Reasoning

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Concurrence

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Dissent

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Last updated:

December 29, 2020

Judicial Opinion

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Procedural History

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Citations

31 A.3d 529 (Md. 2011)