ÿWPCeJ þ›h‚ÆPÒâ³j‰>|¹¤5cóâ Îâç ¶ ƒhÔ䚎бvȶJÒߦh Èú‹šVîÞrKþ^}ÂiÊÁC›ÅCŒäQ5íå Ã{A›|½Ñà–8¿s® ¹“ùËJr\û°?¶¸_@7¼ao޵6NŸ’ëRäGÍ×3Õ¨+žOw%*tï )Hu˜Àª·™Ä­Ž,£´°» ‚í‰I*7Ü0»fúqŠ0Â["uQÑöGþ¶äùã-“ž´È]+zÐT»±tî߯Ÿða4nÇ’Ù—í3š¶’}:n¹Ñ°MJ‘NÁô‡"ZŽ}È1œ†}Úª6¥PGÛ˜àzTà°ÈäÏ·ËÆÔpžÈ0_ž_G•ù}%²¦Ýëç™i4.5è÷ÔäÒQ'ª—½³û£iÅ…Sߤ¹&eáû¦7:;ò ~Œ­¤_U—ÈùüÿÅÜ.µÝ½ Sçꎌ¶ ;‚0ŒHÙ`)zã4~V ^ hÌ3 ¾?/««¯ò‚*/­59ï‰2îÂ"€Ç&€µYO\;%´b×)ÿ%§M›jn{%Íûs‡jÎ<îèsÖ Jpš3OÐH_`BX a©Ü8« ~_œŒ†o#Á %Ó 0DÙ 0G U:d 0¨ž U8F nT~ NÒ UNÔ UF" ^ h wt 4x Œ › E fŸ a¡ mµ UBÌ bU>3T‚‡Í ôÖ&Ê™ð.‰ ·$K8*8*$ƒ0æ§0o3Èü6nÄ8 B2:2:2:2:2:çO:ã6<6<Ç???????âàBÈÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÂEÛŠG˜HP LaserJet 5/5M - StandardÈÈ,,,,ÈÈ0X(#Ã$òòÚ  Ú0Ú  Úóó($¡¡Ô€Xœ·XXXÔ<þ6X9`("Courier NewTT(F:2£ó$¤¤Ý ƒ!ÝÔ€XIÔXXXÔÝ  ÝÓ  Óà  àÓÓòòÚ  Ú0Ú  Úóó<4šÛ 9Z+‹ Courier New «<þ6X9`("Courier NewTTXXxþ6X@ÉDQX@<þ6X9`(CourierTTXXwþ6X@ÉüQX@(ÎáA Z‹6Times New Roman Regular´¾½Q 9Z+‹.Courier New RegularB†c/s €M/y File3|xøÀTABLE AÿU‹ÿÀÀÀ<þ6X9`(*Courier 12pt10cpi- ù-´è\( 9Z+&Courier Regular )Ý ƒ£ó$ÝÔ€XH$XXXÔÓ  Óà  àÓÓòòÚ  Ú1Ú  ÚóóÝ  ÝÔ_ÔÓ=€H$ˆÐXdÐd=Óà ` àStuart€is€Robert's€brother€and€Lawrence€is€Robert'sÐ ° Ðcousin.€ Ó  ! ' Turner0Turner .    ÃÝ ƒ£ó$ÝÔ€XH$XXXÔÓ  Óà  àÓÓòòÚ  Ú4Ú  ÚóóÝ  ÝÔ_ÔÓ=€H$ˆÐXdÐd=Óà ` àSeveral€agreements€were€executed€ancillary€to€the€Mi„LorÐ ° Ðstock€redemption€agreement.€€Pursuant€to€a€consulting€agreement,Ð †Ö Ðfor€example,€Robert€remained€connected€to€Mi„Lor.€€Within€a€year€ofÐ \¬ Ðthe€stock€transaction,€Robert€instituted€an€arbitration€proceedingÐ 2‚ Ðto€force€Mi„Lor€to€pay€him€according€to€the€terms€of€the€consultingÐ X Ðagreement.€€The€parties€settled€and€Mi„Lor€agreed€to€pay€Robert.€ êÝ ƒ£ó$ÝÔ€XH$XXXÔÓ  Óà  àÓÓòòÚ  Ú8Ú  ÚóóÝ  ÝÔ_ÔÓ=€H$ˆÐXdÐd=Óà ` àThe€plaintiffs€argued€that€no€one€had€signed€the€ReleaseÐ ° Ðspecifically€on€behalf€of€Mi„Lor.€€The€plaintiffs'€attack€isÐ †Ö Ðwithout€merit.€€There€was€ample€evidence€to€support€the€districtÐ \¬ Ðcourt's€factual€determination. Ý ƒ£ó$ÝÔ€XH$XXXÔÓ  Óà  àÓÓòòÚ  Ú13Ú  ÚóóÝ  ÝÔ_ÔÓ=€H$ˆÐXdÐd=Óà ` àIt€is€unclear€from€the€quoted€language€from€òòÔ_ÔDemoulasÔ_ÔóóÐ ° Ðwhether€the€term€"disinterested"€modifies€only€"directors"€orÐ †Ö Ðmodifies€both€"directors"€and€"shareholders."€€That€is,€canÐ \¬ Ðshareholders€assent€only€if€they€are€disinterested?€€If€theÐ 2‚ Ðmodifier€applies€to€both€words,€then,€apparently,€òòinterestedóóÐ X Ðshareholders€cannot,€even€upon€full€disclosure€and€unanimousÐ Þ. Ðagreement,€approve€self„dealing€by€corporate€fiduciaries. Ý ƒ£ó$ÝÔ€XH$XXXÔÓ  Óà  àÓÓòòÚ  Ú14Ú  ÚóóÝ  ÝÔ_ÔÓ=€H$ˆÐXdÐd=Óà ` àIt€is€true€that€Massachusetts€has€not€always€followedÐ ° ÐDelaware€law€on€corporations.€€òòCompareóó€òòDonahueóó,€328€N.E.2d€at€515Ð †Ö Ð&€n.17€(creating€a€new€fiduciary€duty€of€utmost€good€faith€andÐ \¬  Ðloyalty€among€the€stockholders€of€Massachusetts€close€corporationsÐ ° Ðthat€is€more€exacting€than€the€duty€traditionally€owed€by€corporateÐ †Ö Ðdirectors€and€officers),€òòwithóó€òòNixonóó€v.€òòBlackwellóó,€626€A.2d€1366,Ð \¬ Ð1379„81€(Del.€1993)€(noting€that€directors€have€the€same€fiduciaryÐ 2‚ Ðduties€under€Delaware€law€whether€or€not€a€corporation€is€closelyÐ X Ðheld€and€declining€to€fashion€"a€special€judicially„created€ruleÐ Þ. Ðfor€minority€investors"€in€close€corporations).€€Massachusetts'€Ð ´  Ðindependent€view€expressed€in€òòDonahueóó€does€not€address€how€theÐ Š Ú Ðduties€imposed€on€fiduciaries€in€close€corporations€might€beÐ ` ° Ðaffected€where€there€is€unanimous€ratification€by€informedÐ 6 †  Ðshareholders.€€The€applications€of€fiduciary€duties€in€òòDonahueóó€andÐ  \  Ðin€òòÔ_ÔDemoulasÔ_Ôóó€do€not€involve€second„guessing€the€unanimous€decisionÐ â 2  Ðof€informed€shareholders,€so€neither€of€those€cases€òòóóreaches€as€farÐ ¸  Ðas€this€case€requires. $Ý ƒ£ó$ÝÔ€XH$XXXÔÓ  Óà  àÓÓòòÚ  Ú15Ú  ÚóóÝ  ÝÔ_ÔÓ=€H$ˆÐXdÐd=Óà ` àUnder€the€Delaware€statute,€a€self„dealing€transactionÐ ° Ðmay€be€approved€by€the€consent€of€a€majority€of€fully„informed€andÐ †Ö Ðdisinterested€directors;€by€the€consent€of€fully„informedÐ \¬ Ðshareholders;€or€by€a€showing€that€"the€contract€or€transaction€isÐ 2‚ Ðfair€to€the€corporation€as€of€the€time€it€is€authorized,€approvedÐ X Ðor€ratified,€by€the€board€of€directors,€a€committee€or€theÐ Þ. Ðshareholders."€€Del.€Code€Ann.€tit.€8,€ðð€144(a)(3).€€Delaware€caseÐ ´  Ðlaw€suggests€that€the€approval€of€a€majority€of€informedÐ Š Ú Ðshareholders€is€sufficient€under€the€statute,€but€the€casesÐ ` ° Ðdisagree€about€whether€interested€shareholders€may€be€countedÐ 6 †  Ðtowards€the€majority. wÝ ƒ£ó$ÝÔ€XH$XXXÔÓ  Óà  àÓÓòòÚ  Ú18Ú  ÚóóÝ  ÝÔ_ÔÓ=€H$ˆÐXdÐd=Óà ` àEven€were€it€not€waived,€the€ruling€is€fully€supportable.€Ð ° ÐA€director€or€officer€may€be€"interested"€under€Massachusetts€lawÐ †Ö Ðif€she€is€a€party€to€the€transaction;€has€a€business,€financial,€orÐ \¬  Ðfamilial€relationship€with€a€party€to€the€transaction;€has€aÐ ° Ðmaterial€pecuniary€interest€in€the€transaction;€or€is€subject€to€aÐ †Ö Ðcontrolling€influence€by€a€party€to€the€transaction€who€has€aÐ \¬ Ðmaterial€pecuniary€interest.€€òòÔ_ÔHarhenÔ_Ôóó€v.€òòBrownóó,€730€N.E.2d€859,€864Ð 2‚ Ð&€n.5€(Mass.€2000)€(adopting€the€definition€of€"interested"€statedÐ X Ðin€1€ALI€Principles€of€Corporate€Governance€ðð€1.23€(1994)).€€AÐ Þ. Ðshareholder€is€"interested"€if€she€is€a€party€to€the€transaction€orÐ ´  Ðis€also€an€interested€director€or€officer.€€òòId.óó€€The€directors€andÐ Š Ú Ðshareholders€who€approved€the€Release€had€interconnected€familial,Ð ` ° Ðfinancial,€and€business€relationships€with€parties€on€both€sides€ofÐ 6 †  Ðthe€Release.€€ AÝ ƒ£ó$ÝÔ€XH$XXXÔÓ  Óà  àÓÓòòÚ  Ú12Ú  ÚóóÝ  ÝÔ_ÔÓ=€H$ˆÐXdÐd=Óà ` àMassachusetts€does€not€prohibit€a€company€from€releasingÐ ° Ðdirectors€from€claims€of€self„dealing.€€Massachusetts€does€prohibitÐ †Ö Ða€corporation€from€including€in€its€articles€of€organization€aÐ \¬ Ðprovision€that€eliminates€or€limits€the€liability€of€a€director:Ð 2‚ Ð(1)€for€any€breach€of€the€director's€duty€of€loyalty€to€theÐ X Ðcorporation€or€its€stockholders;€(2)€for€acts€or€omissions€not€inÐ Þ. Ðgood€faith€or€that€involve€intentional€misconduct€or€a€knowingÐ ´  Ðviolation€of€law;€(3)€for€illegal€distributions€to€stockholders€andÐ Š Ú Ðimproper€loans€to€directors€or€officers;€or€(4)€for€anyÐ ` ° Ðtransactions€from€which€the€director€derived€an€improper€personalÐ 6 †  Ðbenefit.€€Mass.€Gen.€Laws€ch.€156B,€ðð€13(B)(1.5).€€And€aÐ  \  ÐMassachusetts€corporation€may€not€enact€a€by„law€that€conflictsÐ â 2  Ðwith€either€a€statute€or€its€articles€of€organization.€€Ch.€156B,Ð ¸  Ððð€16;€òòAssessors€of€Bostonóó€v.€òòWorld€Wide€Broadcasting€Foundation€ofÐ ŽÞ  ÐMass.,€Inc.óó,€59€N.E.2d€188,€191€(Mass.€1945)€(noting€that€by„lawsÐ d´  Ðmay€not€enlarge€or€alter€the€powers€conferred€by€the€articles€ofÐ :Š  Ðorganization€or€by€statute). Ñ ° ÑØØ ÜÝ ƒ£ó$ÝÔ€XH$XXXÔÓ  Óà  àÓÓòòÚ  Ú9Ú  ÚóóÝ  ÝÔ_ÔÓ=€H$ˆÐXdÐd=Óà ` àFrequently,€the€statute€of€limitations€will€bar€claims€byÐ ° Ðcreditors€pursuing€actions€in€the€capacity€of€the€corporation€whenÐ †Ö Ðthose€claims€reach€back€to€transactions€from€years€earlier.€€InÐ \¬ Ðaddition,€some€claims€of€this€sort€may€trigger€a€successful€lachesÐ 2‚ Ðdefense.€€But€here,€the€district€court€correctly€determined€thatÐ X Ðthe€statute€of€limitations€was€no€bar,€and€no€laches€defense€wasÐ Þ. Ðraised.€€ eÝ ƒ£ó$ÝÔ€XH$XXXÔÓ  Óà  àÓÓòòÚ  Ú11Ú  ÚóóÝ  ÝÔ_ÔÓ=€H$ˆÐXdÐd=Óà ` àThis€result€explains€why€the€plaintiff€in€òòBessetteóóÐ ° Ðrefused€to€assert€a€derivative€rather€than€a€direct€claim.€Ð †Ö ÐòòBessetteóó€involved€a€company€on€the€verge€of€bankruptcy,€and€as€oneÐ \¬ Ðcommentator€explained:€"The€plaintiff€presumably€wanted€personalÐ 2‚ Ðrelief€because€he€feared€the€corporation's€creditors,€not€itsÐ X Ðstockholders,€would€reap€the€benefits€of€any€recovery€in€aÐ Þ. Ðderivative€action."€€Richard€W.€Southgate€&€Donald€W.€Glazer,Ð ´  ÐòòMassachusetts€Corporation€Law€&€Practiceóó€ðð€16.5(b)€(2003€Supp.). ¾Ý ƒ£ó$ÝÔ€XH$XXXÔÓ  Óà  àÓÓòòÚ  Ú16Ú  ÚóóÝ  ÝÔ_ÔÓ=€H$ˆÐXdÐd=Óà ` àOne€commentator€has€noted€the€weaknesses€of€relying€onÐ ° Ðshareholder€approval€in€public€corporations€to€protect€investors'Ð †Ö Ðinterests.€€òòSeeóó€R.€Clark,€òòCorporate€Lawóó€180„183€(1986). dÝ ƒ£ó$ÝÔ€XH$XXXÔÓ  Óà  àÓÓòòÚ  Ú2Ú  ÚóóÝ  ÝÔ_ÔÓ=€H$ˆÐXdÐd=Óà ` àArthur€Gottsegen,€John€Bambera,€and€Anthony€Glydon€wereÐ ° Ðstockholders€initially,€but€they€sold€their€stock€in€the€1980s. d ÝÝ ƒ£ó$ÝÔ€XH$XXXÔÓ  Óà  àÓÓòòÚ  Ú5Ú  ÚóóÝ  ÝÔ_ÔÓ=€H$ˆÐXdÐd=Óà ` àThe€remaining€principals€were€Wald,€Stuart,€Lawrence,Ð ° ÐJoan€Gottsegen,€Steven€Gottsegen,€and€four€trusts€(two€for€whichÐ †Ö ÐLawrence€served€as€trustee€and€two€for€which€Sandra€GottsegenÐ \¬ Ðserved€as€trustee). ÙÝ ƒ£ó$ÝÔ€XH$XXXÔÓ  Óà  àÓÓòòÚ  Ú3Ú  ÚóóÝ  ÝÔ_ÔÓ=€H$ˆÐXdÐd=Óà ` àInitially,€Wald€became€president€and€Lawrence€filled€theÐ ° Ðdirector€position€vacated€by€Robert.€€Then,€after€Wald€died€inÐ †Ö Ð1991,€Stuart€became€president€and€Steven,€Lawrence's€son,€filledÐ \¬ Ðthe€vacant€director€position.€€After€Wald's€death,€LawrenceÐ 2‚ Ðallegedly€first€discovered€and€investigated€Wald's€misuse€ofÐ X Ðcorporate€funds.€€Mi„Lor€filed€suit€in€state€court€against€Wald'sÐ Þ. Ðestate€in€July€1992. ½Ý ƒ£ó$ÝÔ€XH$XXXÔÓ  Óà  àÓÓòòÚ  Ú10Ú  ÚóóÝ  ÝÔ_ÔÓ=€H$ˆÐXdÐd=Óà ` àIn€some€circumstances,€the€òòDonahueóó€doctrine€permitsÐ ° Ðstockholders€of€close€corporations€to€sue€for€direct€injuries€andÐ †Ö Ðrecover€personal€relief€for€breaches€of€fiduciary€duties€owedÐ \¬ Ðdirectly€to€them.€€òòSeeóó€òòDonahueóó€v.€òòRodd€Electrotype€Co.óó,€328€N.E.2dÐ 2‚ Ð505,€515€(Mass.€1975).€€Such€a€suit€for€personal€relief€isÐ X Ðappropriate€where€it€would€be€difficult€to€establish€a€breach€ofÐ Þ. Ðduty€owed€to€the€corporation,€as€in€the€case€of€a€freeze„out€ofÐ ´  Ðminority€shareholders.€€òòId.óó€at€514„15.€€The€Creditors€Trustees,Ð Š Ú Ðhowever,€do€not€sue€as€òòDonahueóó€plaintiffs.€€ ØÝ ƒ£ó$ÝÔ€XH$XXXÔÓ  Óà  àÓÓòòÚ  Ú7Ú  ÚóóÝ  ÝÔ_ÔÓ=€H$ˆÐXdÐd=Óà ` àThe€special€verdict€did€not€specifically€characterize€theÐ ° Ðfinding€as€one€of€"unjust€enrichment."€€The€district€court's€AugustÐ †Ö Ð17,€2001€memorandum€and€order€stated€that€the€"jury€found€in€favorÐ \¬ Ðof€the€plaintiffs€on€the€unjust€enrichment€claim."€€The€defendantsÐ 2‚ Ðdid€not€raise€an€objection€to€the€characterization€of€the€juryÐ X Ðverdict€as€a€finding€of€unjust€enrichment€and€have€waived€theÐ Þ. Ðissue. ¾Ý ƒ£ó$ÝÔ€XH$XXXÔÓ  Óà  àÓÓòòÚ  Ú6Ú  ÚóóÝ  ÝÔ_ÔÓ=€H$ˆÐXdÐd=Óà ` àIt€was€through€the€discovery€proceeding€in€the€state€suitÐ ° Ðagainst€Wald's€estate€(òòseeóó€òòsupraóó€note€3)€that€Lawrence€claims€toÐ †Ö Ðhave€first€learned€of€Robert's€misuse€of€Mi„Lor€funds. ÑÝ ƒ£ó$ÝÔ€XH$XXXÔÓ  Óà  àÓÓòòÚ  Ú17Ú  ÚóóÝ  ÝÔ_ÔÓ=€H$ˆÐXdÐd=Óà ` àWe€need€not€decide€who€has€the€burden€of€showingÐ ° Ðenforceability€when€there€is€an€unadjudicated€claim€of€anÐ †Ö Ðunderlying€breach€of€fiduciary€duty€by€the€corporate€fiduciary.€€AsÐ \¬ Ða€federal€court€sitting€in€diversity,€we€prefer€to€make€narrowÐ 2‚ Ðrulings€on€issues€of€state€law.€€òòSee,€e.g.óó,€òòV.€Suarez€&€Co.,€Inc.óóÐ X  Ðv.€òòDow€Brands,€Inc.óó,€337€F.3d€1,€8„9€(1st€Cir.€2003).à x àà Ð àÝ ƒ!ÝÔ€XH$XXXÔÝ  ÝÔ_ÔÑTRY,3Ø'Xà3Ø' Letter 3Ø' Letterÿ3Ø'TÑÑ ? ÑÙ*ƒ !ÙÔ€ X­NXXXH$ÔÔ€ °vj°X X­NÔò òÓ  ÓÓ  ÓÑ€"‹ÑUnited€States€Court€of€AppealsÔ€ „Óg„° °vjÔÐ ° ÐFor€the€First€Circuitó óÔ€ „õÌ„„ „ÓgÔÔ€ XH$X„ „õÌÔÐ „Ô ÐÓÓÌßA€') °°` dE<¹` AßÐ º  ÐÌà  àà ` àà ¸ àà  àà h àÌNos.€02„2578,€02„2659€Ð u Å ÐÌà@¬¬ìàIN€RE:€MI„LOR€CORP.;€PROFESSIONAL€BRUSHES,€INC.,ˆÐ ! q ÐÌà@  &ìàDebtors.ˆÐ Í   Ðà  àà ` àà ¸ àà  àà h àà À àà  àÌÌßA€') °°` dE<N` AßÐ OŸ  Ðà  àà ` àà ¸ àÌÓ  ÓJAMES€M.€LISTON;€JOHN€J.€MONAGHAN,€as€Creditors€Trustees,Ð 4„  ÐÌPlaintiffs„Appellants,€Cross„Appellees,Ð à0 ÐÌv.à @ àà @` àà @¸ àà @ àà @h àà @À àà @ àÐ ŒÜ ÐÓÓà@ìì*ìàˆ¹Ó  ÓROBERT€GOTTSEGEN;€MICHAEL€GOTTSEGEN;Ð 8ˆ ÐLORI€GOTTSEGEN€ZINMAN;€DOROTHY€GOTTSEGEN,Ð ^ ÐÌÓBÓÓ  ÓDefendants„Appellees,€Cross„Appellants.Ð º  ÐÓÖÓÌßA€') °°` dE<e` AßÐ f¶ ÐÌà@øøìàCROSS„APPEALS€FROM€THE€UNITED€STATES€DISTRICT€COURTˆÐ K› ÐÓ  ÓFOR€THE€DISTRICT€OF€MASSACHUSETTSÐ !q ÐÓáÓà@ìì*ìàˆ¹Ó  Ó[Hon.€Rya€W.€Zobel,€òòU.S.€District€Judgeóó]Ð Í ÐÌßA€') °°` dE<x` AßÐ yÉ! ÐÌà@@„„'ìàBeforeÐ ^ ®# ÐÌà@@((ìà€Boudin,€òòChief€Judgeóó,Ð  "Z% ÐSiler,*€òòCircuit€Judgeóó,Ð à"0& Ðand€Lynch,€òòCircuit€Judgeóó€Ð ¶#' ÐÌÌßA€') °°` dE<7&` AßÐ 8&ˆ!* ÐÌÓ  ÓÓ  Óà  àòòHoward€M.€Brownóó,€with€whom€òòFrank€F.€McGinnóó€and€òòBartlettÐ 'm", ÐHackett€Feinberg€P.C.óó€were€on€brief€for€plaintiffs„appellants,Ð ó'C#- Ðcross„appellees.Ð É($. Ðà  àòòStephen€F.€Gordonóó,€with€whom€òòRonald€W.€Dunbar,€Jr.óó,€òòLeslie€F.Ð Ÿ)ï$/ ÐSuóó,€òòGordon€Haley€LLPóó€and€òòHenry€Mark€Holzeróó€were€on€brief€forÐ u*Å%0 Ðdefendants„appellees,€cross„appellants.Ð K+›&1 ÐÌâ âÐ ÷,G(3?Ÿ ÐÔ*‹ƒ'ddd Xdd Xdd X°(#°(#‹ÔÔ,( dd ÔÔ,( dd ÔÔ,( dd ÔÔ+  ÔÐ °° ‹‹Ðâ âÓ( ÓÐ SId à„â@37927„„‰à„â@‰‹‹SÐÌNovember€3,€2003Ð ê: ÐÐ RHCÀ" à„â@37927 à„â@ ‹‹RÐÐ(d  (ÐÓ  ÓÙ* !ÙÌÌÌÌÌÌÌÌÌÌÌÌÌÌÌÌÌÌÌÌÌÌÌÌÌÌÌÌÌÌÌÌÌÌÌÌÌÌÌÌÌÌÓ  Ó_____________________Ð â*2&/ Ðà  à*Of€the€United€States€Court€of€Appeals€for€the€Sixth€Circuit,Ð ¸+'0 Ðsitting€by€designation.Ð Ž,Þ'1 ÐÐ d-´(2 ÐÑ"‹Ñâ "âѰ°ÑØØâ "âÑ  ÑÑ  ÑÓÓÑ8€H$XXdÖXXdÖ8ÑÑ€ÑÓ*°,X°` ¨ ƒX°œX*Óò òó óÔ‡XH$XX XH$ÔÓ=€H$XÐXdÐd=Óà ` àò òòòóóLYNCH,€òòCircuit€Judgeó óóó.€€This€case€explores€theÐ ° ÐMassachusetts€law€of€close€corporations€and€the€ability€of€thoseÐ xÈ Ðcorporations€to€give€releases€of€claims€of€self„dealing.€€A€juryÐ $t Ðfound€that€the€defendants,€an€officer/director€and€the€controllingÐ Ð  Ðshareholders€in€two€close€family€corporations,€had€unjustlyÐ | Ì Ðenriched€themselves€from€corporate€funds€in€the€sum€of€overÐ ( x  Ð$380,000.€€This€appeal€concerns€whether€that€liability€wasÐ Ô$  Ðextinguished€by€a€release€in€favor€of€the€defendants€that€wasÐ €Ð  Ðexecuted€by€the€corporation€and€its€remaining€directors€andÐ ,|  Ðshareholders€on€March€31,€1990,€as€part€of€mutual€releases€given€inÐ Ø( Ðconnection€with€a€stock€redemption€of€the€defendants'€shares.€€IfÐ „Ô Ðliability€is€extinguished,€then€the€plaintiffs,€who€are€creditorsÐ 0€ Ðin€bankruptcy€standing€in€the€shoes€of€the€corporation,€cannotÐ Ü, Ðrecover€on€the€jury€verdict.Ð ˆØ Ðà ` àThe€district€court€did€not€reach€the€questions€about€theÐ 4„ Ðvalidity€and€enforceability€of€the€release€because€it€ruled€thatÐ à0 Ðthe€creditors€could€not€assert€such€claims€„„€essentially,€thatÐ ŒÜ  Ðthey€lacked€standing.€€While€that€standing€analysis€has€someÐ 8!ˆ" Ðattraction,€it€is€ultimately€unpersuasive.€€The€questions€about€theÐ ä"4$ Ðrelease€will€have€to€be€addressed€on€remand€because€this€recordÐ $à& Ðdoes€not€permit€their€resolution.€€No€Massachusetts€case€isÐ <&Œ!( Ðdirectly€on€point€as€to€the€standards€to€be€used.€€This€opinionÐ è'8#* Ðattempts€to€provide€guidance€for€the€case€on€remand,€in€an€area€ofÐ ”)ä$, Ðlaw€marked€by€ambiguity€and€inconsistency.Ð @+&. Ðà@tt)ìàò òIó ó.ˆÐ ° Ðà ` àMi„Lor€Corporation€was€in€the€business€of€manufacturing,Ð xÈ Ðdistributing,€and€selling€plastic€dental€and€hair€products,€such€asÐ $t Ðtoothbrushes€and€combs.€€The€company€was€formed€under€MassachusettsÐ Ð  Ðlaw€in€1977€by€three€family€groupings€„„€the€Robert€GottsegenÐ | Ì Ðfamily,€the€Stuart€Gottsegen€family,€and€the€Lawrence€GottsegenÐ ( x  Ðfamily׃×Ý ƒ#ÃÝòòÚ  Ú1Ú  ÚóóÝ  Ý×  ×€„„€and€an€individual€named€Larry€Wald.€€Robert€was€theÐ Ô$  Ðpresident€of€the€company,€and€he,€Stuart,€and€Wald€served€as€Mi„Ð €Ð  ÐLor's€directors.€€Lawrence€was€primarily€responsible€for€sales;Ð ,|  ÐWald€was€responsible€for€Mi„Lor's€financial€operations.€Ð Ø( Ðà ` àRobert's€children,€Lori€and€Michael,€and€Robert's€ex„Ð „Ô Ðwife,€Dorothy,€were€stockholders€of€the€company,€as€were€Stuart,Ð 0€ ÐLawrence,€and€Wald.׃&<×Ý ƒ#ÃÝòòÚ  Ú2Ú  ÚóóÝ  Ý×  ×€€Two€trusts,€one€for€the€benefit€of€MichaelÐ Ü, Ðand€one€for€the€benefit€of€Lori,€also€owned€Mi„Lor€stock.€€LawrenceÐ ˆØ Ðwas€the€trustee€of€both€trusts.€€Although€Robert€did€not€own€Mi„LorÐ 4„ Ðstock,€he€effectively€controlled€the€company€in€his€capacity€as€theÐ à0 Ðsole€voting€trustee€of€a€voting€trust€that€owned€sixty„five€percentÐ ŒÜ  Ðof€Mi„Lor's€voting€stock.€€Wald€was€the€only€stockholder€who€wasÐ 8!ˆ" Ðnot€a€member€of€the€voting€trust.€€The€voting€trust€included€all€ofÐ ä"4$ Ðthe€stock€held€by€Dorothy,€Lori,€Michael,€and€the€two€trusts.€€ToÐ $à& Ðthe€extent€that€Robert's€interests€were€aligned€with€the€interestsÐ <&Œ!( Ðof€the€other€members€of€his€family€unit,€the€Robert€Gottsegen€groupÐ ° Ðeffectively€functioned€as€one€unit€in€three€intertwined€capacities:Ð \¬ Ðas€the€president,€as€a€director,€and€as€the€majority€shareholder€ofÐ X ÐMi„Lor.€Ð ´  Ðà ` àProfessional€Brush,€Inc.€("Pro€Brush")€was€formed€in€1987Ð ` ° Ðand€was€in€the€business€of€manufacturing,€distributing,€and€sellingÐ  \  Ðtoothbrushes€and€other€dental€care€products.€€Robert€was€presidentÐ ¸  Ðand€a€director€of€the€company;€Lawrence,€Stuart,€and€Wald€were€theÐ d´  Ðother€directors.€€Michael€and€Lori€owned€Pro€Brush€stock,€as€didÐ `  ÐSteven€Gottsegen,€Stuart,€and€Wald.€€Ð ¼  Ðà ` àIn€1989,€Robert€suffered€a€heart€attack.€€On€March€31,Ð h¸ Ð1990,€pursuant€to€a€stock€redemption€agreement,€Mi„Lor€redeemed€allÐ d Ðof€the€shares€held€by€Michael,€Lori,€Dorothy,€and€the€two€trusts.€Ð À ÐAs€of€the€same€date,€the€voting€trust€was€terminated,€RobertÐ l¼ Ðresigned€as€both€president€and€director,€and€the€management€of€theÐ h Ðcorporation€changed€accordingly.׃-×Ý ƒ#ÃÝòòÚ  Ú3Ú  ÚóóÝ  Ý×  ×€€As€part€of€the€redemptionÐ Ä Ðagreement,€in€exchange€for€2,480€shares€of€stock€and€for€otherÐ pÀ  Ðconsideration€(including€"consulting,€confidentiality€andÐ !l" Ðnoncompetition"€agreements€with€Robert€and€Dorothy,€andÐ È"$ Ð"confidentiality€and€noncompetition"€agreements€with€Lori€andÐ t$Ä& ÐMichael),€Mi„Lor€assigned€to€Michael,€Lori,€Dorothy,€and€theÐ ° Ðtrustee€of€the€two€trusts€the€proceeds€(totaling€approximately€$1Ð \¬ Ðmillion)€from€the€merger€of€Solo€Products,€Inc.€into€Mi„Lor€andÐ X Ðgranted€them€entitlements€to€receive€certain€other€payments.Ð ´  Ðà ` àAlso€on€March€31,€1990,€Michael€and€Lori€entered€into€aÐ ` ° Ðstock€redemption€agreement€with€Pro€Brush,€whereby€Michael€and€LoriÐ  \  Ðeach€received€twenty„five€dollars€in€exchange€for€the€625€shares€ofÐ ¸  ÐPro€Brush€stock€that€each€held.€€Pursuant€to€a€provision€in€thisÐ d´  Ðredemption€agreement,€Robert€resigned€as€president€and€director€ofÐ `  ÐPro€Brush.Ð ¼  Ðà ` àAs€part€of€the€Mi„Lor€stock€redemption€agreement,׃×Ý ƒ#ÃÝòòÚ  Ú4Ú  ÚóóÝ  Ý×  ×Ð h¸ ÐRobert,€Dorothy,€Lori,€Michael,€and€the€two€trusts€(the€"RedeemingÐ d ÐPrincipals"€or€the€"Robert€Gottsegen€group")€also€entered€into€anÐ À ÐAgreement€of€Mutual€Release€(the€"Release")€with€the€company€andÐ l¼ Ðits€remaining€principals׃,”×Ý ƒ#ÃÝòòÚ  Ú5Ú  ÚóóÝ  Ý×  ×€on€March€31,€1990.€€Under€its€terms,€Mi„Ð h ÐLor€and€its€remaining€shareholders€agreed€to€release€the€RedeemingÐ Ä ÐPrincipals€from€"any€and€all€actions,€causes€of€action,€damages,€.Ð pÀ  Ð.€.€claims€or€demands€of€whatever€kind€or€nature€.€.€.€which€theÐ !l" ÐCompany€and€Remaining€Principals€ever€had€or€claimed€to€have"Ð ° Ðrelating€to€"any€act,€omission,€cause€or€thing€done€or€omitted"Ð \¬ Ðwith€respect€to€the€"formation,€incorporation€or€operation€of€theÐ X ÐCompany€.€.€.€."€€The€Release€excluded€claims€related€to€"theÐ ´  Ðcontinuing€obligations€owed€by€the€Redeeming€Principals€.€.€.€underÐ ` ° Ðthe€terms€.€.€.€of€the€Redemption€Agreement€...€and€the€collateralÐ  \  Ð.€.€.€agreements"€and€claims€arising€from€"any€legal€proceedingÐ ¸  Ðinitiated€by€Alfred€Stauble."€€The€Release€was€signed€by€all€of€Mi„Ð d´  ÐLor's€shareholders€and€all€of€its€directors.€€It€is€this€releaseÐ `  Ðthat€is€at€issue€here.Ð ¼  Ðà ` àIn€June€1994,€the€Redeeming€Principals€sued€Mi„Lor€inÐ h¸ Ðstate€court€alleging€that€they€were€owed€additional€payments€underÐ d Ðthe€stock€redemption€agreement€based€on€Mi„Lor's€attainment€of€aÐ À Ðspecified€level€of€pre„tax€earnings.€€They€also€alleged€fraud€onÐ l¼ Ðthe€part€of€Mi„Lor€in€the€termination€of€the€voting€trust.€€AÐ h Ðdefault€judgment€was€entered€against€Mi„Lor€for€$226,984.80,€andÐ Ä Ðthe€voting€trust€was€reinstated.€€On€February€10,€1995,€theÐ pÀ  ÐRedeeming€Principals€and€Mi„Lor€entered€into€a€settlement€agreementÐ !l" Ðwhereby€the€voting€trust€was€again€terminated€and€Robert€wasÐ È"$ Ðelected€a€director€but€agreed€not€to€prevent€Mi„Lor€from€filing€forÐ t$Ä& Ðbankruptcy.€€Ð  &p!( Ðà ` àOn€March€3,€1995,€Mi„Lor€and€Pro€Brush€voluntarily€filedÐ Ì'#* ÐChapter€11€petitions.€€On€February€28,€1997,€Mi„Lor€and€Pro€Brush,Ð x)È$, Ðas€debtors„in„possession,€brought€an€adversary€proceeding€againstÐ $+t&. Ðthe€Redeeming€Principals€alleging€a€host€of€claims.€€Among€otherÐ ° Ðthings,€the€complaint€alleged€that€the€Redeeming€Principals€hadÐ \¬ Ðcaused€Mi„Lor€to€pay€for€their€personal€expenses€and€make€otherÐ X Ðexpenditures€for€their€benefit€that€had€no€legitimate€corporateÐ ´  Ðpurpose.׃7×Ý ƒ#ÃÝòòÚ  Ú6Ú  ÚóóÝ  Ý×  ×€€The€defendants'€affirmative€defenses€included€theÐ ` ° ÐRelease€and€the€statute€of€limitations.Ð  \  Ðà ` àOn€November€2,€1998,€the€bankruptcy€court€confirmed€theÐ ¸  ÐSecond€Amended€Liquidating€Joint€Plan€of€Reorganization€of€theÐ d´  ÐDebtors.€€The€court's€order€established€that€all€property€of€theÐ `  ÐMi„Lor€and€Pro€Brush€bankruptcy€estates€would€thereafter€be€vestedÐ ¼  Ðin€the€Creditors€Trust€and€that€the€trustees€of€the€Creditors€TrustÐ h¸ Ðwould€succeed€to€the€debtors'€right€to€bring€or€continue€causes€ofÐ d Ðaction.€€Subsequently,€James€M.€Liston€and€John€J.€Monaghan,€inÐ À Ðtheir€capacity€as€Creditors€Trustees,€replaced€Mi„Lor€and€Pro€BrushÐ l¼ Ðas€plaintiffs€in€the€corporations'€suit€against€the€RedeemingÐ h ÐPrincipals.Ð Ä ÐÒe°Òà ` àThe€defendants€moved€for€summary€judgment€based€on€theÐ pÀ  Ðrelease€and€statute€of€limitations€defenses,€and€the€bankruptcyÐ !l" Ðcourt€denied€the€motion€on€February€26,€1999.€€On€May€7,€1999,€theÐ È"$ Ðbankruptcy€court€òòsua€sponteóó€vacated€its€February€26€order€andÐ t$Ä& Ðgranted€partial€summary€judgment€to€the€plaintiffs€on€the€statuteÐ  &p!( Ðof€limitations€defense.€€Discovery€ensued.€€The€defendants€filed€aÐ Ì'#* Ðmotion€to€vacate€the€May€7€order€in€December€2000,€and€the€districtÐ ° Ðcourt€denied€that€motion€on€January€25,€2001€after€òòde€novoóó€review.Ð \¬ Ðà ` àDuring€the€five€day€trial€in€April€2001,€the€partiesÐ X Ðdisagreed,€among€other€things,€about€the€extent€to€which€theÐ ´  Ðdefendants€had€received€personal€payments,€about€whether€theÐ ` ° Ðdefendants€had€reimbursed€the€company€for€the€payments€of€personalÐ  \  Ðexpenses€they€did€receive,€and€about€whether€the€defendants€had€madeÐ ¸  Ðloans€to€the€company.€€There€was€general€agreement,€however,€thatÐ d´  ÐMi„Lor€funds€were€indeed€used€to€pay€the€personal€expenses€of€theÐ `  Ðdefendants€in€the€first€instance,€and€that€otherÐ ¼  Ðdirectors/shareholders€in€Mi„Lor€also€received€payments€of€personalÐ h¸ Ðexpenses.€€By€agreement,€the€release€defense€was€not€submitted€toÐ d Ðthe€jury.Ð À Ðà ` àIn€a€special€verdict,€the€jury€found€that€Mi„Lor€had€paidÐ l¼ Ð$380,807.66€of€the€Redeeming€Principals'€personal,€non„businessÐ h Ðexpenses€and€that€the€Redeeming€Principals€had€not€reimbursed€Mi„LorÐ Ä Ðfor€such€payments.׃6×Ý ƒ#ÃÝòòÚ  Ú7Ú  ÚóóÝ  Ý×  ×€€Among€the€allegedly€unreimbursed€payments€shownÐ pÀ  Ðto€have€been€made€to€Robert€and€other€members€of€his€family€unitÐ !l" Ðwere€country€club€dues€and€expenses;€payments€to€pharmacies€forÐ È"$ Ðmedications;€automobile€expenses;€payments€for€telephone€calls€fromÐ t$Ä& ÐRobert's€home€in€Bermuda;€legal€fees€for€litigation€to€which€Mi„LorÐ ° Ðwas€not€a€party;€payments€to€Robert's€divorce€lawyers;€monthlyÐ \¬ Ðpayments€to€Robert's€mother;€rent€payments€for€an€apartment€occupiedÐ X Ðby€Michael;€and€monthly€payments€to€Dorothy.€Ð ´  Ðà ` àThe€parties€filed€motions€for€judgment€as€a€matter€of€lawÐ ` ° Ðunder€Rule€50€regarding€whether€the€Release€should€bar€the€unjustÐ  \  Ðenrichment€claim,€and€the€district€court€scheduled€an€evidentiaryÐ ¸  Ðhearing€on€that€issue.€€The€parties€then€agreed€to€have€the€districtÐ d´  Ðcourt€decide€the€issues€pertaining€to€the€Release€without€hearingÐ `  Ðfurther€evidence,€so€the€district€court€cancelled€the€hearing.Ð ¼  Ðà ` àThe€district€court's€memorandum€and€order€on€the€parties'Ð h¸ Ðrespective€motions€for€judgment€as€a€matter€of€law€concluded,Ð d Ðagainst€the€plaintiffs,€that€the€Release€was€(1)€executed€by€Mi„Lor,Ð À Ðbecause€there€was€sufficient€evidence€that€Mi„Lor€had€assented€toÐ l¼ Ðit,€despite€its€formal€shortcomings,€and€(2)€enforceable,€becauseÐ h Ðit€was€executed€at€a€time€when€no€duties€were€owed€to€Mi„Lor'sÐ Ä Ðcreditors.€€The€district€court€entered€judgment€in€favor€of€theÐ pÀ  Ðdefendants.€€€Ð !l" Ðà ` àThe€Creditors€Trustees€appeal€the€district€court'sÐ È"$ Ðdecisions€to€deny€their€motion€for€judgment€as€a€matter€of€lawÐ t$Ä& Ðregarding€the€Release€and€to€allow€the€defendants'€motion€forÐ  &p!( Ðjudgment€as€a€matter€of€law.€€The€defendants'€cross„appeal€on€theÐ Ì'#* Ðâ âstatute€of€limitations€ruling€argues€that€their€statutory€andÐ x)È$, Ðconstitutional€rights€were€violated€when€the€bankruptcy€court€òòsuaÐ ° Ðsponteóó€granted€summary€judgment€to€the€plaintiffs€on€May€7,€1999.€Ð \¬ Ðâ âà@]])àò òIIó ó.ˆÐ X Ðò òA.ó ó€€ò òCreditors€Trustees€as€Plaintiffsó óÐ Ð  Ðà ` àThe€district€court€construed€the€question€of€the€validityÐ ˜ è Ðand€enforceability€of€the€Release€as€an€issue€of€law.€€It€firstÐ D ”  Ðdetermined€that€the€Release€had€been€executed€by€the€corporation,Ð ð@  Ðeven€though€no€signature€qua€corporation€was€designated.׃×Ý ƒ#ÃÝòòÚ  Ú8Ú  ÚóóÝ  Ý×  ×€€It€alsoÐ œì  Ðdetermined€that€the€broad€scope€of€the€Release€would€cover€theÐ H˜  Ðunjust€enrichment€claims,€if€the€Release€was€deemed€valid€andÐ ôD Ðenforceable.€€Ð  ð Ðà ` àThe€district€court€then€explained€that€the€corporation'sÐ Lœ Ðshareholders€could€have€brought€a€derivative€action€if€the€unjustlyÐ øH Ðenriched€participants€had€acted€to€the€detriment€of€the€corporationÐ ¤ô Ðin€executing€the€Release.€€However,€the€court€held€that€theÐ P  Ðplaintiffs€here€were€creditors€and€could€not€bring€an€actionÐ üL Ðchallenging€the€Release€unless€its€execution€contributed€to€theÐ ¨ø  Ðcorporation's€insolvency€or€took€place€while€the€corporation€wasÐ T!¤" Ðinsolvent.€€Because€the€corporation€was€not€insolvent€at€the€timeÐ #P$ Ðof€the€Release€and€there€was€no€evidence€suggesting€that€the€ReleaseÐ ¬$ü& Ðcontributed€to€its€subsequent€insolvency,€the€court€ruled:Ð X&¨!( ÐÓÓà0 ` àWhile€shareholders€may€have€been€able€to€object€to€theÐ ° ÐRelease,€in€fact,€every€shareholder€signed€it.€€The€factÐ †Ö Ðthat€Mi„Lor€is€presently€insolvent€does€not€mean€that€theÐ \¬ ÐRelease€suddenly€becomes€invalid€as€a€result€of€dutiesÐ 2‚ Ðowed€to€creditors€or€to€the€corporation€on€behalf€of€theÐ X Ðcreditors.€€Invalidating€the€Release€years€after€itsÐ Þ. Ðexecution€because€of€its€adverse€effects€on€creditors'Ð ´  Ðinterests€would€create€fiduciary€duties€to€creditorsÐ Š Ú Ðwhere€they€simply€do€not€exist.€Ð` °` s#` s# ÐÌÓPQÓAccordingly,€the€court€did€not€reach€the€questions€raised€about€theÐ  \  Ðvalidity€and€enforceability€of€the€Release.€€Ð ¸  Ðà ` àOn€appeal,€the€plaintiffs€argue€that€the€court€applied€theÐ d´  Ðwrong€analytical€principles€in€choosing€to€deny€creditors€theÐ `  Ðability€to€pursue€claims€as€substitute€plaintiffs€for€theÐ ¼  Ðcorporation.€€They€argue€that€the€company,€as€debtor„in„possession,Ð h¸ Ðproperly€filed€an€adversary€proceeding€against€the€defendantsÐ d Ðpursuant€to€the€rules€of€the€federal€bankruptcy€system.€€ThisÐ À Ðposition€is€correct.€€A€corporation€may€bring€an€action€against€itsÐ l¼ Ðdirectors,€current€or€former,€for€self„dealing.€€òòSeeóó€òòBostonÐ h ÐChildren's€Heart€Foundation,€Inc.óó€v.€òòNadal„Ginardóó,€73€F.3d€429€(1stÐ Ä ÐCir.€1996)€(applying€Massachusetts€law).€€And€a€debtor„in„possessionÐ pÀ  Ðmay€commence€an€action€without€court€approval.€€òòCollier€onÐ !l" ÐBankruptcyóó€ðð€323.01€(15th€ed.€rev.).€€Ð È"$ Ðà ` àThe€Creditors€Trustees€then€argue€that,€by€order€of€theÐ t$Ä& Ðbankruptcy€court,€they€properly€stepped€into€the€shoes€of€theÐ  &p!( Ðcorporation€as€plaintiffs.€€In€those€shoes,€they€are€asserting€theÐ Ì'#* Ðcorporation's€right€to€recover€to€the€estate€the€amount€of€theÐ x)È$, Ðunjust€enrichment.€€That€they,€as€creditors,€would€be€the€realÐ $+t&. Ðbeneficiaries€of€any€recovery€is,€they€say,€happenstance€and€doesÐ ° Ðnot€alter€the€fact€that€they€sue€in€the€shoes€of€the€company.€€TheÐ \¬ Ðdefendants€do€not€contest€this€proposition;€indeed,€no€objection€wasÐ X Ðmade€to€the€bankruptcy€court€when€it€permitted€the€creditors€to€sue,Ð ´  Ðand€the€case€was€characterized€to€the€jury€as€just€explained.€Ð ` ° Ðà ` àWhile€the€district€court's€contrary€view€is€a€well„Ð  \  Ðreasoned€position,׃#×Ý ƒ#ÃÝòòÚ  Ú9Ú  ÚóóÝ  Ý×  ×€it€ultimately€must€give€way€on€the€question€ofÐ ¸  Ðstanding.€€The€court's€intuition€does,€though,€inform€the€analysisÐ d´  Ðlater.€Ð `  Ðà ` àThe€Creditors€Trustees€may€properly€stand€in€the€shoes€ofÐ ¼  Ðthe€corporation€and€its€shareholders€for€purposes€of€the€suitÐ h¸ Ðbecause€they€are€continuing€the€corporation's€cause€of€action,€notÐ d Ðinitiating€a€separate€action€on€behalf€of€creditors.€€òòSeeóó€òòCollierÐ À Ðon€Bankruptcyóó€ðð€541.08€(15th€ed.€rev.)€("The€trustee€.€.€.€standsÐ l¼ Ðin€the€shoes€of€the€debtor€corporation€in€prosecuting€a€cause€ofÐ h Ðaction€belonging€to€the€debtor€.€.€.€.");€òòid.óó€ðð€323.01€("A€trusteeÐ Ä Ðappointed€in€a€chapter€11€case€.€.€.€is€automatically€substitutedÐ pÀ  Ðas€a€party€in€any€pending€action,€proceeding€or€matter€and€thereforeÐ !l" Ðhas€the€same€rights€and€obligations€as€the€.€.€.€debtor€inÐ È"$ Ðpossession.").€€When€a€corporation€sues€its€fiduciaries€or€aÐ t$Ä& Ðstockholder€brings€a€derivative€suit€against€corporate€fiduciariesÐ ° Ðto€enforce€the€corporation's€rights,€any€recovery€for€the€fiduciaryÐ \¬ Ðbreach€belongs€to€the€corporation.׃/×Ý ƒ#ÃÝòòÚ  Ú10Ú  ÚóóÝ  Ý×  ×€€òòSee,€e.g.óó,€òòBessetteóó€v.Ð X ÐòòBessetteóó,€434€N.E.2d€206,€208€(Mass.€1982)€("It€is€a€basic€principleÐ ´  Ðof€corporate€law€that€if€a€majority€shareholder€receives€corporateÐ ` ° Ðcash€distributions€and€a€salary€in€excess€of€the€reasonable€valueÐ  \  Ðof€services€rendered,€the€right€to€recover€the€overpayments€belongsÐ ¸  Ðto€the€corporation.")òòóó.€€Sums€recovered€by€a€corporation€in€suchÐ d´  Ðsuits€are€paid€first€to€creditors,€before€any€distributions€are€madeÐ `  Ðto€shareholders.׃$ ×Ý ƒ#ÃÝòòÚ  Ú11Ú  ÚóóÝ  Ý×  ×€€òòSeeóó€òòBagdonóó€v.€òòBridgestone/Firestone,€Inc.óó,€916Ð ¼  ÐF.2d€379,€383€(7th€Cir.€1990)€("Recoveries€[in€derivative€suits]Ð h¸ Ðpass€through€the€corporate€treasury,€a€process€that€both€protectsÐ d Ðcreditors€(who€get€first€dibs)€and€avoids€questions€of€apportionmentÐ À Ð.€.€.€.").€€As€a€result,€the€issues€pretermitted€by€the€districtÐ l¼ Ðcourt€about€the€validity€and€enforceability€of€the€release€must€beÐ ° Ðreached.Ð \¬ Ðà ` àIn€one€sense€it€is€quite€true€that€the€other€shareholdersÐ X Ðwere€the€victims€of€the€unjust€enrichment€and€of€any€failure€to€makeÐ ´  Ðadequate€disclosure€to€them€in€securing€the€Release,€and€they€areÐ ` ° Ðnot€complaining€about€either.€€But€to€the€extent€that€unjustÐ  \  Ðenrichment€occurred,€it€was€through€a€misuse€of€the€òòcorporation'sóóÐ ¸  Ðassets;€and€the€Release,€although€ratified€by€the€shareholders,€wasÐ d´  Ða€òòcorporateóó€act€surrendering€a€claim€of€the€corporation.€€WhateverÐ `  Ðright€the€corporation€may€have€to€recover€for€unjust€enrichment,Ð ¼  Ðthrough€the€invalidation€of€the€Release,€is€an€asset€of€theÐ h¸ Ðcorporation€and€now€belongs€to€the€creditors.Ð d Ðò òB.ó ó€€ò òStandard€for€Determining€the€Enforceability€of€the€Releaseó óÐ À Ðà ` àIn€essence,€this€case€involves€two€claims€of€fiduciaryÐ ˆØ Ðbreach.€€The€first,€on€which€the€jury€found€for€the€plaintiffs,€isÐ 4„ Ðthat€the€Redeeming€Principals€had€unjustly€enriched€themselves€fromÐ à0 Ðthe€corporation's€coffers.€€The€second€claim€is€that€the€RedeemingÐ ŒÜ  ÐPrincipals€committed€a€fiduciary€breach€that€renders€the€ReleaseÐ 8!ˆ" Ðunenforceable.€€The€plaintiffs€argue€that€the€Release€isÐ ä"4$ Ðunenforceable€at€a€minimum€because€the€defendants€failed€to€discloseÐ $à& Ðthe€material€details€of€their€unjust€enrichment€to€Mi„Lor'sÐ <&Œ!( Ðremaining€shareholders€and€directors€when€seeking€the€Release.€€TheyÐ è'8#* Ðalso€argue€that€the€Release€is€unenforceable€because€the€defendantsÐ ”)ä$, Ðhave€not€demonstrated€that€the€Release€was€fair€to€the€company.Ð @+&. Ðà ` àAt€issue,€then,€is€the€standard€for€determining€theÐ ° Ðenforceability€of€a€release,€executed€by€a€close€corporation€and€itsÐ \¬ Ðdirectors€and€shareholders,€of€claims€later€proven€to€a€jury€thatÐ X Ðcertain€corporate€directors€and€shareholders€unjustly€enrichedÐ ´  Ðthemselves€at€the€expense€of€the€corporation.€€There€is€noÐ ` ° ÐMassachusetts€case€directly€on€point.Ð  \  Ðà ` àCorporations,€whether€close€or€public,€have€a€strongÐ ¸  Ðinterest€in€being€able€to€give€valid€and€enforceable€releases.€€AÐ d´  Ðrelease€of€claims€by€a€close€corporation€in€particular,€even€aÐ `  Ðrelease€of€self„dealing€claims€against€its€controlling€shareholders,Ð ¼  Ðmay€benefit€the€close€corporation€by€allowing€it€to€resolve€internalÐ h¸ Ðdisputes€in€a€swift€and€cost„effective€manner€and€by€enabling€it€toÐ d Ðfacilitate€the€termination€of€the€involvement€of€its€principals.׃ ×Ý ƒ#ÃÝòòÚ  Ú12Ú  ÚóóÝ  Ý×  ׀РÀ ÐClose€corporations€like€Mi„Lor€also€present€fewer€concerns€aboutÐ l¼ Ðpossible€injury€to€the€investing€public€from€the€actions€ofÐ h Ðcorporate€directors€and€shareholders€than€do€public€corporations€orÐ ° Ðcharitable€corporations.€€And€where€òòallóó€of€the€shareholders€(asÐ \¬ Ðopposed€to€the€directors)€of€a€close€corporation€execute€a€releaseÐ X Ðafter€having€received€full€disclosure,€there€are€self„evident€policyÐ ´  Ðreasons€to€enforce€such€a€release.€€Ð ` ° Ðà ` àEven€so,€within€close€corporations€there€are€fiduciaryÐ  \  Ðduties€imposed€on€directors,€officers,€and,€for€some€purposes,Ð ¸  Ðshareholders,€in€connection€with€their€respective€dealings€with,€andÐ d´  Ðon€behalf€of,€the€close€corporation€and€its€shareholders.€€òòSeeóóÐ `  ÐòòDemoulasóó€v.€òòDemoulas€Super€Mkts.,€Inc.óó,€677€N.E.€2d€159,€179„80Ð ¼  Ð(Mass.€1997);€òòDonahueóó€v.€òòRodd€Electrotype€Co.óó,€328€N.E.€2d€505,€515„Ð h¸ Ð16€(Mass.€1975).€€The€release€transaction€involved€here€was€notÐ d Ðentered€into€by€two€or€more€independent€business€entities,€butÐ À Ðrather,€was€an€entirely€intra„corporation€transaction€„„€enteredÐ l¼ Ðinto€by€the€close€corporation€itself€(acting€through€theÐ h Ðratification€of€its€shareholders)€with€its€own€principals.€€TheÐ Ä Ðintra„corporation€nature€of€the€transaction,€the€plaintiffs€argue,Ð pÀ  Ðgave€rise€to€certain€fiduciary€obligations€by€the€RedeemingÐ !l" ÐPrincipals.€€€€€Ð È"$ Ðà ` àIn€òòDemoulasóó,€the€most€recent€Massachusetts€case€aboutÐ t$Ä& Ðself„dealing,€the€plaintiff€brought€a€derivative€action€against€theÐ  &p!( Ðpresident/director/voting€trustee€of€a€close€corporation€and€certainÐ Ì'#* Ðaffiliated€persons€and€entities,€alleging€that€the€defendants€hadÐ x)È$, Ðdiverted€corporate€opportunities€and€engaged€in€self„dealing.€€677Ð $+t&. ÐN.E.2d€at€165„66.€€The€Supreme€Judicial€Court€explained€that€aÐ ° Ðcorporate€fiduciary€is€not€entirely€barred€from€pursuing€a€corporateÐ \¬ Ðopportunity€or€entering€into€a€self„dealing€transaction.€€When€suchÐ X Ðactions€are€taken,€though,€the€corporate€fiduciary€has€a€duty€toÐ ´  Ðdisclose€the€details€of€the€opportunity/transaction€to€the€corporateÐ ` ° Ðdecision„makers€and,€at€least€when€the€decision„makers€areÐ  \  Ðinterested€directors,€has€the€burden€of€proving€that€the€opportunityÐ ¸  Ðor€transaction€is€fair.€€òòId.óó€at€180„82.€€The€court€summarized€theÐ d´  Ðstandard€as€follows:Ð `  ÐÓÓà0 ` àIn€short,€to€meet€a€fiduciary's€duty€of€loyalty,€aÐ ¼  Ðdirector€or€officer€who€wishes€to€take€advantage€of€aÐ ’â Ðcorporate€opportunity€or€engage€in€self„dealing€mustÐ h¸ Ðfirst€disclose€material€details€of€the€venture€to€theÐ >Ž Ðcorporation,€and€then€either€receive€the€assent€ofÐ d Ðdisinterested€directors€or€shareholders,€or€otherwiseÐ ê: Ðprove€that€the€decision€is€fair€to€the€corporation.ÐÀ` s#` s# ÐÌÓˆ~ÓòòId.óó€at€182.€€Ð l¼ Ðà ` àIt€is€clear€from€òòDemoulasóó€that€Massachusetts€imposes€onÐ h Ðcorporate€fiduciaries€a€duty€of€full€disclosure€of€material€factsÐ Ä Ðin€connection€with€self„dealing.€€Material€information€about€theÐ pÀ  Ðself„dealing€transaction€is€needed€to€make€an€educated€decisionÐ !l" Ðabout€whether€to€allow€it,€and€in€the€case€of€a€self„dealingÐ È"$ Ðrelease,€information€about€the€conduct€of€the€potential€recipientsÐ t$Ä& Ðof€the€release€is€necessary€for€deciding€whether€to€grant€theÐ  &p!( Ðrelease€encompassing€such€conduct.€€Thus,€the€òòDemoulasóó€rule€protectsÐ Ì'#* Ðâ âdecision„makers€by€giving€them€information.€Ð x)È$, Ðà ` àBut€òòDemoulasóó€does€not€explicitly€address€the€question€ofÐ ° Ðâ âwhether€full€disclosure€to€òòinterestedóó€òòshareholdersóó€suffices€in€theÐ \¬ Ðcontext€of€a€release€given€with€unanimous€shareholder€consent.׃×Ý ƒ#ÃÝòòÚ  Ú13Ú  ÚóóÝ  Ý×  ׀РX ÐAnd€more€generally,€òòDemoulasóó€leaves€open€the€question€of€the€effectÐ ´  Ðof€ratification€by€interested€shareholders€and€the€question€of€whatÐ ` ° Ðrole€fairness€plays€when€interested€shareholders€have€ratified.€€€Ð  \  Ðà ` àThe€law€in€this€area€is€a€tangled€web.€€Language€fromÐ ¸  Ðcases€in€both€the€Supreme€Judicial€Court€and€in€this€court€could,Ð d´  Ðif€lifted€out€of€context,€be€taken€to€mean€that€a€showing€ofÐ `  Ðfairness€is€always€a€requirement.€€òòSeeóó€òòWinchellóó€v.€òòPlywood€Corp.óó,Ð ¼  Ð85€N.E.2d€313,€316„17€(Mass.€1949)€(requiring€a€self„dealingÐ h¸ Ðcorporate€fiduciary€to€prove€full€disclosure€òòandóó€fairness€to€theÐ d Ðcorporation);€òòBoston€Children's€Heart€Foundation,€Inc.óó€v.€òòNadal„Ð À ÐGinardóó,€73€F.3d€429,€433„34€(1st€Cir.€1996)€(same,€applyingÐ l¼ ÐMassachusetts€law).€€This€language€in€modern€opinions,€which€seemsÐ h Ðto€invoke€a€universal€requirement€of€showing€fairness,€is€at€oddsÐ Ä Ðwith€older€cases€saying€that€transactions€between€corporations€andÐ pÀ  Ðtheir€fiduciaries€that€are€open€and€informed€may€be€approved€by€theÐ !l" Ðexpress€"consent€of€all€the€stockholders."€€òòWarrenóó€v.€òòPara€RubberÐ È"$ ÐShoe€Co.óó,€44€N.E.€112,€113€(Mass.€1896)€(holding€that€a€corporationÐ t$Ä& Ðcould€contract€with€directors€when€the€contract€was€made€openly€andÐ ° Ðwith€the€assent€of€all€the€stockholders€and€the€stockholders€wereÐ \¬ Ðnot€ignorant€of€the€terms€of€the€contract€or€of€the€self„dealingÐ X Ðrelationship€between€the€contracting€parties).€€Until€MassachusettsÐ ´  Ðaddresses€these€questions€directly,€we€are€left€to€work€out€theÐ ` ° Ðissue.Ð  \  Ðà ` àOn€balance,€we€conclude€the€wiser€rule€is€that€where€thereÐ ¸  Ðis€unanimous€and€fully€informed€shareholder€approval€in€a€closeÐ d´  Ðcorporation,€such€approval€suffices€(subject€to€special€rules€forÐ `  Ðinsolvency).€€If€there€is€not€full€disclosure€and€unanimousÐ ¼  Ðapproval,€the€question€arises€whether€a€showing€of€fairness€aloneÐ h¸ Ðwould€suffice€to€validate€the€Release.€€This€appears€to€be€the€ruleÐ d Ðin€most€jurisdictions,€Gevurtz,€òòCorporation€Lawóó€324€(2000);€yet€aÐ À Ðvery€literal€reading€of€òòDemoulasóó'€language€quoted€above€mightÐ l¼ Ðsuggest€the€need€for€both€full€disclosure€and€fairness€„„€althoughÐ h Ðthis€variation€was€not€decided€there.€€Quite€possibly€the€questionÐ Ä Ðneed€not€be€answered€in€the€present€case€(and€we€do€not€seek€to€doÐ pÀ  Ðso)€because,€if€the€transaction€embracing€the€Release€was€fair,Ð !l" Ðarguably€this€means€that€the€corporation€has€already€been€properlyÐ È"$ Ðcompensated€for€its€unjust€enrichment€claim.€€Ð t$Ä& Ðà ` àThe€rule€we€adopt€is€close€to€the€non„exclusive€rule€inÐ  &p!( Ðthe€Delaware€statute׃×Ý ƒ#ÃÝòòÚ  Ú14Ú  ÚóóÝ  Ý×  ×€that€a€self„dealing€transaction€may€beÐ Ì'#* Ðapproved€by€the€consent€of€all€shareholders€„„€whether€interestedÐ ° Ðor€not€„„€so€long€as€there€is€disclosure€to€those€shareholders€ofÐ \¬ Ðall€material€facts€concerning€the€self„dealing.׃D ×Ý ƒ#ÃÝòòÚ  Ú15Ú  ÚóóÝ  Ý×  ×€€òòSeeóó€Del.€CodeÐ X ÐAnn.€tit.€8,€ðð€144(a);€R.€Clark,€òòCorporate€Lawóó€168€(1986).€€ThatÐ ´  Ðstatutory€rule€is€modified€by€Delaware€case€law,€but€the€case€lawÐ ` ° Ðregarding€the€effect€of€the€fully€informed€consent€of€shareholdersÐ  \  Ðâ âin€various€contexts׃%>×Ý ƒ#ÃÝòòÚ  Ú16Ú  ÚóóÝ  Ý×  ×€has€been€described€by€the€Delaware€ChanceryÐ ¸  ÐCourt€as€"not€a€model€of€clarity."€€òòSolomonóó€v.€òòArmstrongóó,€747€A.2dÐ ° Ð1098,€1113€(Del.€Ch.€1999).€€€€Ð \¬ Ðâ âà ` àHere,€there€was€unanimous€shareholder€approval,€so€theÐ X Ðcase€does€not€present€the€question€of€what€to€do€where€a€majorityÐ ´  Ðof€shareholders€approve€but€that€majority€is€controlled€by€orÐ ` ° Ðcomposed€of€the€defendants.€€If€fully€informed€shareholder€approvalÐ  \  Ðwere€simply€by€a€majority,€then€different€rules€and€shifting€burdensÐ ¸  Ðmight€apply,€òòsee,€e.g.óó,€òòWachsler,€Inc.óó€v.€òòFlorafax€Int'l,€Inc.óó,€778Ð d´  ÐF.2d€547,€552€(10th€Cir.€1985),€because€then,€"even€an€informedÐ `  Ðshareholder€vote€may€not€afford€the€minority€sufficient€protectionÐ ¼  Ðto€obviate€the€judicial€oversight€role."€€òòIn€re€Wheelabrator€Techs.,Ð h¸ ÐInc.€S'holders€Litig.óó,€663€A.2d€1194,€1204€(Del.€Ch.€1995).€€ThatÐ d Ðrationale€for€requiring€an€additional€fairness€showing€„„€theÐ À Ðprotection€of€dissenting€minority€shareholders€who,€perforce,€haveÐ l¼ Ðbrought€a€derivative€action€„„€is€inapplicable€where€the€fullyÐ h Ðinformed€shareholder€owners€of€a€close€corporation,€even€ifÐ Ä Ðinterested,€unanimously€consent€to€the€giving€of€a€release.Ð pÀ  Ðà ` àAs€a€practical€matter,€many€close€corporations€are€familyÐ !l" Ðcorporations€and/or€do€not€have€any€disinterested€shareholders€orÐ È"$ Ðdisinterested€directors.€€Because€the€shareholders€are€the€owners,Ð t$Ä& Ðif€òòallóó€of€the€owners,€"interested"€or€not,€of€a€close€corporationÐ  &p!( Ðagree€to€allow€a€release€of€claims€of€self„dealing€after€receivingÐ Ì'#* Ðfull€information€about€it,€then€they€have€had€the€opportunity€toÐ x)È$, Ðprotect€their€own€interests€and€there€are€no€dissenting€shareholdersÐ $+t&. Ðwho€may€need€further€protection.€€It€would€ordinarily€be€unwise€toÐ ° Ðinvolve€courts€in€reviewing€the€informed€and€unanimous€decisions€ofÐ \¬ Ðthe€owners,€absent€special€circumstances.Ð X Ðà ` àMassachusetts,€of€course,€may€choose€a€different€path€inÐ ´  Ðthe€future.€€It€may,€for€example,€feel€that€creditors€of€closeÐ ` ° Ðcorporations€deserve€protection€against€the€mutual€looting€ofÐ  \  Ðcorporate€assets€by€all€of€a€close€corporation's€shareholders.€€TheÐ ¸  Ðlaw,€however,€already€provides€a€degree€of€such€protection.€€As€theÐ d´  Ðdistrict€court€aptly€recognized,€a€corporation€may€not€act€toÐ `  Ðrelease€claims€when€that€action€would€cause€the€corporation€to€goÐ ¼  Ðinto€insolvency€or€would€take€place€during€insolvency.€€òòSeeóó€Mass.Ð h¸ ÐGen.€Laws€ch.€109A,€ðð€5;€òòIn€re€Tufts€Elecs.,€Inc.óó,€746€F.2d€915,€917Ð d Ð(Mass.€App.€Ct.€1984)€(explaining€that€"prejudice€[to€creditors]Ð À Ðarises€where€the€transaction€is€a€fraudulent€conveyance€or€one€whichÐ l¼ Ðled€to€corporate€insolvency").€Ð h Ðà ` àIf€there€has€not€been€adequate€disclosure€to€the€remainingÐ Ä ÐMi„Lor€shareholders,€then€there€may€be€defenses€available€such€asÐ pÀ  Ðlack€of€causation€or€lack€of€damages,€the€availability€or€force€ofÐ !l" Ðwhich€we€need€not€determine.Ð È"$ Ðò òC.ó ó€€ò òBurden€of€Proving€the€Enforceability€of€the€Releaseó óÐ t$Ä& Ðà ` àThe€fact€of€a€release€is€an€affirmative€defense,€and€theÐ <&Œ!( Ðparty€seeking€to€have€a€release€enforced€usually€bears€the€initialÐ è'8#* Ðâ âburden€of€pleading€and€proving€the€existence€of€that€release.€€òòSeeóóÐ ”)ä$, ÐòòSharonóó€v.€òòCity€of€Newtonóó,€769€N.E.2d€738,€742„43€(Mass.€2002).€€ThatÐ ° Ðwas€done€here.€€Ð \¬ Ðâ âà ` àOnce€the€burden€of€proving€the€existence€of€an€executedÐ X Ðrelease€has€been€met,€the€burden€of€proving€or€disproving€itsÐ ´  Ðenforceability€may€lie€with€either€party,€depending€on€the€contextÐ ` ° Ðin€which€the€release€was€given.€€The€defendants€argue€that€theÐ  \  ÐRelease€is€a€contract€and€cannot€be€nullified€absent€the€plaintiff'sÐ ¸  Ðproving€"fraud,€misrepresentation,€mutual€mistake,€breach€ofÐ d´  Ðfiduciary€duty,€or€undue€influence"€or€"that€at€the€time€the€releaseÐ `  Ðwas€given€the€corporation€was€insolvent€or€became€insolvent€as€aÐ ¼  Ðresult€of€the€release."€€The€last€ground€for€nullification€does€notÐ h¸ Ðapply€on€the€facts€here.€€As€to€the€other€grounds€for€nullification,Ð d Ðthe€burden€of€proof€is€generally€on€the€plaintiff€in€non„fiduciaryÐ À Ðduty€situations.€€òòSee,€e.g.óó,€òòSharonóó,€769€N.E.2d€at€743€n.6.€€TheÐ l¼ Ðdefendants€argue€that€the€plaintiffs€have€the€burden€on€theÐ h Ðenforceability€issue€here.€€Ð Ä Ðà ` àThe€defendants'€argument€ignores€the€special€fiduciaryÐ pÀ  Ðcontext€of€the€Release:€€that€the€Release€goes€to€a€proven€breachÐ !l" Ðof€fiduciary€duty€by€a€corporate€officer/director€and€shareholders.€Ð È"$ ÐAt€least€where€an€underlying€claim€of€breach€of€fiduciary€duty€hasÐ t$Ä& Ðbeen€proven,׃n×Ý ƒ#ÃÝòòÚ  Ú17Ú  ÚóóÝ  Ý×  ×€we€conclude€that€Massachusetts€would€place€the€burdenÐ  &p!( Ðof€showing€the€enforceability€of€a€release€on€the€corporateÐ ° Ðfiduciary€who€relies€on€that€release€to€extinguish€any€recovery€forÐ \¬ Ðthe€underlying€breach.€€Two€doctrines€converge€to€place€this€burdenÐ X Ðon€the€corporate€fiduciary.€€First,€Massachusetts€adopts€the€ruleÐ ´  Ðthat€"[a]€release€executed€in€favor€of€one€standing€in€a€fiduciaryÐ ` ° Ðrelation€to€the€one€executing€the€release€will€be€subjected€to€theÐ  \  Ðclosest€scrutiny€by€the€court."€€òòAllenóó€v.€òòMoushegianóó,€71€N.E.2d€393,Ð ¸  Ð400€(Mass.€1947)€(involving€a€release€issued€by€a€client€to€herÐ d´  Ðattorney).€€Second,€Massachusetts€refers€to€the€law€of€trusts€inÐ `  Ðcases€involving€corporate€fiduciaries,€òòsee,€e.g.óó,€òòDemoulasóó,€677Ð ¼  ÐN.E.2d€at€171€("Trust€law€applies€.€.€.€to€the€management€ofÐ h¸ Ðcorporations."),€and€under€trust€law,€a€release€of€a€trustee€isÐ d Ð"subjected€to€the€closest€scrutiny,"€òòAkinóó€v.€òòWarneróó,€63€N.E.2d€566,Ð À Ð570€(Mass.€1945);€Restatement€(Second)€of€Trusts€ðð€217(2).€€Ð l¼ Ðò òD.€€Application€of€the€Standards€to€the€Mi„Lor€Releaseó óÐ h Ðà ` àThe€trial€court€held€in€an€earlier€order,€on€August€17,Ð à0 Ð2001,€that€those€who€executed€the€Release€were€not€disinterested.€Ð ŒÜ  ÐThe€defendants€have€not€argued€this€issue€on€appeal,€other€thanÐ 8!ˆ" Ðsimply€stating€in€a€footnote€that€"there€òòwasóó€adequate€evidence€inÐ ä"4$ Ðthe€record€to€show€.€.€.€that€the€recipients€of€the€release€wereÐ $à& Ðdisinterested."€€The€issue€is€waived.׃f×Ý ƒ#ÃÝòòÚ  Ú18Ú  ÚóóÝ  Ý×  ×Ð <&Œ!( Ðà ` àDefendants€argue€that€the€record€establishes€that€theyÐ ° Ðmade€full€disclosure€of€all€material€facts€about€the€Release.€€ThereÐ \¬ Ðis€no€formal€ruling€on€this€issue,€either€in€the€November€20,€2002Ð X Ðmemorandum€entering€judgment€for€defendants€on€the€Release€orÐ ´  Ðelsewhere.€€Defendants€point€to€the€following€comment€made€by€theÐ ` ° Ðtrial€judge€during€a€colloquy€with€counsel€on€April€20,€2001:€€"FullÐ  \  Ðdisclosure€as€to€what?€€.€.€.€[T]hey€all€played€the€same€game.€Ð ¸  ÐThere€certainly€was€full€disclosure.€€Everybody€knew€that€everybodyÐ d´  Ðwas€doing€'it,'€whatever€it€is."€€This€comment€is€far€from€a€rulingÐ `  Ðand,€in€any€event,€does€not€foreclose€the€disclosure€issue.Ð ¼  Ðà ` àFirst,€the€defendants'€argument€does€not€logically€follow.€Ð h¸ ÐThe€fact€that€Mi„Lor's€remaining€directors€and€shareholders€also€hadÐ d Ðexpenses€paid€by€the€corporation€means€that€they€were€most€likelyÐ À Ðnot€disinterested,€because€they€benefitted€from€a€practice€ofÐ l¼ Ðcorporate€largesse.€€But€it€certainly€does€not€mean€that€theÐ h ÐRedeeming€Principals€fully€disclosed€all€material€details€regardingÐ Ä Ðâ âtheir€own€self„dealing.€€Ð pÀ  Ðà ` àSecond,€we€cannot€say€that€the€record€establishes€fullÐ ° Ðâ âdisclosure,€thus€resolving€the€issue.€€At€oral€argument,€this€courtÐ \¬ Ðasked€defendants'€counsel€to€indicate€what€evidence€was€in€theÐ X Ðrecord€to€show€that€the€defendants€had€made€full€disclosure.€Ð ´  ÐCounsel€replied€that€Mi„Lor's€bookkeeper€had€testified€that€he€knewÐ ` ° Ðof€the€details€of€the€unjust€enrichment.€€The€bookkeeper's€knowledgeÐ  \  Ðdoes€not€even€come€close€to€establishing€full€disclosure,€which€mustÐ ¸  Ðbe€made€to€the€remaining€shareholders.Ð d´  Ðà ` àThe€plaintiffs,€in€turn,€contend€that€they€are€entitledÐ `  Ðto€judgment€because€the€defendants€have€the€burden€of€proof€and€didÐ ¼  Ðnot€prove€that€they€made€full€disclosure€of€their€self„dealing.€€TheÐ h¸ Ðargument€is€premature.€€No€one€yet€has€had€the€benefit€of€the€fullÐ d Ðanalysis€of€this€issue€from€the€distinguished€judge€who€sat€throughÐ À Ðthe€trial€and€has€lived€with€this€case€for€some€years.€€This€opinionÐ l¼ Ðclarifies€the€applicable€standards€and€burdens,€and€whether€toÐ h Ðaccept€additional€evidence€on€this€or€any€other€matter€is€an€issueÐ Ä Ðfor€the€trial€judge.€€The€defendants€bear€the€burden€on€remand€ofÐ pÀ  Ðestablishing€full€disclosure.Ð !l" Ðà ` àPlaintiffs€also€urge€us€to€hold€as€a€matter€of€law€thatÐ È"$ Ðthe€Release€was€unfair€because€there€was€no€consideration€given€forÐ t$Ä& Ðit.€€They€cite€cases€which€they€say€hold€that€redemption€of€stockÐ  &p!( Ðnever€benefits€a€corporation.€€òòSeeóó€òòIn€re€Roco€Corp.óó,€701€F.2d€978Ð Ì'#* Ð(1st€Cir.€1983);€òòIn€re€Main€St.€Brewing€Co.,€Ltd.óó,€210€B.R.€662Ð x)È$, Ð(Bankr.€D.€Mass.€1997).€€Those€cases€do€not€stand€for€thatÐ $+t&. Ðproposition€at€all.€€Instead,€òòRocoóó€essentially€says€that€when€aÐ ° Ðcorporation€is€insolvent€on€the€date€it€redeems€shares€of€its€stock,Ð \¬ Ðthe€corporation€receives€nothing€of€value,€701€F.2d€at€982,€and€òòMainÐ X ÐSt.€Brewingóó€says€that€stock€redemption€claims€in€bankruptcy€areÐ ´  Ðsubordinated€to€the€claims€of€creditors,€210€B.R.€at€664„65.€€InÐ ` ° ÐMarch€1990,€when€Mi„Lor€redeemed€the€stock€of€the€defendants,€theÐ  \  Ðcompany€was€not€insolvent€and€its€stock€was€not€worthless.€€And€theÐ ¸  Ðequitable€subordination€issue€in€òòMain€St.€Brewingóó€is€not€at€allÐ d´  Ðrelevant€to€the€fairness€of€the€Release.€€Furthermore,€agreementsÐ `  Ðby€a€corporation€to€purchase€its€own€stock€are€generallyÐ ¼  Ðenforceable.€€òòWinchellóó,€85€N.E.2d€at€317.Ð h¸ Ðà ` àThere€was€no€finding€on€fairness€by€the€district€judge€andÐ d Ðthe€record€does€not,€from€our€reading€of€it,€readily€provide€anÐ À Ðanswer.€€In€theory,€the€Release€could€have€benefitted€both€parties.€Ð l¼ ÐThe€corporation,€for€its€part,€received€stock€back,€which€enhancedÐ h Ðthe€value€of€its€remaining€shares€and€which€conceivably€could€haveÐ Ä Ðled€to€some€benefit€to€it;€it€also€received€cooperation€and€non„Ð pÀ  Ðcompete€agreements€from€the€defendants,€a€release€from€theÐ !l" Ðdefendants€of€claims€against€it,€and€miscellaneous€benefits.€€InÐ È"$ Ðturn,€the€corporation€paid€out€$1€million€for€the€redeemed€sharesÐ t$Ä& Ðand€other€consideration€and€gave€up€claims€that,€eleven€years€later,Ð  &p!( Ðled€to€a€judgment€of€$380,807.66€(exclusive€of€interest).€€It€is€notÐ Ì'#* Ðclear€what€the€value€of€the€shares€was€or€how€to€assess€the€expectedÐ x)È$, Ðvalue€of€the€unjust€enrichment€claim€at€the€time€the€Release€wasÐ $+t&. Ðsigned,€given€the€risks€and€costs€of€litigation€and€other€factors.€Ð ° ÐIn€short,€it€is€better€to€have€the€trial€court€determine€this€matterÐ \¬ Ðon€remand.€€òòCf.óó€òòLawtonóó€v.€òòNymanóó,€327€F.3d€30,€51€(1st€Cir.€2003).Ð X Ðà@!!(àò òIIIó ó.ˆÐ ´  Ðà ` àIn€their€cross„appeal,€the€defendants€argue€that€theirÐ | Ì Ðstatutory€and€constitutional€rights€were€violated€when€theÐ ( x  Ðbankruptcy€court€òòsua€sponteóó€granted€summary€judgment€to€theÐ Ô$  Ðplaintiffs€on€the€statute€of€limitations€defense€in€response€to€theÐ €Ð  Ðsame€defendants'€motion€that€the€bankruptcy€court€had€denied€overÐ ,|  Ðtwo€months€earlier.€€Ð Ø( Ðà ` àThe€cross„appeal€is€close€to€frivolous.€€The€districtÐ „Ô Ðcourt€reviewed€the€bankruptcy€court's€summary€judgment€ruling€òòdeÐ 0€ Ðnovoóó€after€both€a€hearing€and€the€completion€of€discovery€andÐ Ü, Ðaffirmed€the€bankruptcy€court's€order.€€Any€deficiency€in€the€òòsuaÐ ˆØ Ðsponteóó€nature€of€the€bankruptcy€court's€decision€was€cured€by€theÐ 4„ Ðdistrict€court's€òòde€novoóó€review.€€Ð à0 ÐÓ  Óò òIV.ó óÐ ŒÜ  ÐÓ»ÎÓò òConclusionó óÐ T!¤" Ðà ` àThe€underlying€sum€involved€here€is€approximatelyÐ #l$ Ð$380,000,€and€considerable€counsel€fees€have€been€spent€to€thisÐ È$ & Ðpoint.€€We€urge€the€parties€to€settle€this€case€before€theÐ t&Ä!( Ðadditional€costs€of€further€proceedings€become€a€reality.Ð  (p#* Ѐà ` àThe€decision€of€the€district€court€that€the€Release€isÐ Ì)%, Ðvalid€and€enforceable€is€ò òòòreversedóóó ó;€entry€of€judgment€for€theÐ x+È&. Ðdefendants€is€ò òòòvacatedóóó ó;€the€decision€of€the€district€court€on€theÐ ° Ðstatute€of€limitations€is€ò òòòaffirmedóóó ó;€and€the€case€is€ò òòòremandedóóó ó€to€theÐ xÈ Ðdistrict€court€for€further€proceedings€consistent€with€this€opinion.€Ð @ ÐCosts€are€awarded€to€the€Creditors€Trustees.€€So€ordered.Ô#† XH$XXXH$d#Ô