Wilkes v. Springside Nursing Home, Inc.

Wilkes (plaintiff) and three other equal shareholder-directors ran Springside Nursing Home (defendant) together, but after their relationship soured, the other three voted to pay themselves salaries from the now-profitable corporation while excluding Wilkes, then failed to reelect him as director and told him he was no longer wanted in management -- all despite no showing that he had performed poorly or engaged in misconduct. Wilkes sued for breach of fiduciary duty; the lower court dismissed his complaint, and he appealed.

Whether majority shareholders in a close corporation who remove a minority shareholder from office and cut off his salary, without any showing of misconduct, are liable for breach of fiduciary duty absent a legitimate business purpose.