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Business Associations Keyed to Coffee, 9th Ed.
Barth v. Barth
Citation:
659 N.E.2d 559 (1995)Facts
Robert Barth owned 29.8% of shares in Barth Electric Co., Inc., while Michael Barth owned 51% and served as president. Robert filed a direct action against Michael and the corporation, alleging that Michael had taken actions that substantially reduced the value of Robert’s shares. Specifically, Robert claimed that Michael had paid excessive salaries to himself and family members, used corporate employees for personal services without compensation to the corporation, dramatically lowered dividend payments, and appropriated corporate funds for personal investments. Robert also alleged that Michael wrongfully terminated his employment, refused him access to corporate records, and barred him from corporate premises. The defendants moved to dismiss, arguing that such claims required a derivative action. The trial court granted the motion, but the Court of Appeals reversed, finding that requiring a derivative action would “exalt form over substance” since none of the reasons underlying the derivative action requirement were present in this case.
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