Moderator: This is SJC-13180,
John L. Tocci v. Michael J. Tocci.
Waiting for Attorney McCarthy to turn on your video, please.
-: Sorry about that, Your Honors.
-: There he is.
Okay, we're ready for you.
-: Good morning, Your Honors.
May it please the court.
Gavin McCarthy for William Tocci and Tocci Corporation.
There's a number of different issues in this case.
So I'll start with surcharge.
But, of course, jump in on whatever issues
the court is interested in.
This attorney's fees question here,
at least the narrow issue,
is an issue of first impression of this court.
It's well established that surcharge
is an available, equitable remedy.
But the court has never had the opportunity to consider
whether it can be applied to require the reimbursement
of attorney's fees spent by a closed corporation
in prosecuting a breach of fiduciary duty claim.
That's a purely legal question.
Ultimately, there would be a discretionary question
for the trial court, if they're authorized to consider this,
to look at all the factors that trial courts consider
in deciding whether to grant fees and to what extent.
But the first step has to be the authorizing question.
Do they have the power to do this
if they think it's warranted on the facts?
And that's not a question this court has yet
had the opportunity to consider.
I would suggest though-
-: We have definitely addressed a lot
of shareholder derivative suits,
both this court, as well as the federal,
our federal counterparts.
And are you aware of any cases
where the award of attorney fees is available
as a surcharge in any of those cases?
-: In the shareholder derivative cases,
I've never seen it addressed one way or the other.
And the reason for-
-: I guess I'm wondering why you think that's the case,
given the plethora of those kind of cases that exists.
-: Because most of the time,
the common fund doctrine as a practical matter
is good enough for the beneficiaries.
So most of these cases, you have a minority shareholder
who owns 5% or 10% or 15% of the company suing.
And so if the company reimburses
that person's attorney's fees,
they're getting virtually everything
that they would get from surcharge.
So there's no need to fight the separate fight
to get the extra 10%.
You're basically getting yourself there
and you have a well worn track of law to follow.
There are lots of cases, including the Restatement
and dozens of cases collected there,
in which fees are awarded in the trust context
in these exact circumstances.
So you sue for breach of fiduciary duty by the trustee.
And surcharge is applied to allow reimbursement
from the breaching fiduciary to the trustee.
I've never seen any court ever reject
that application of surcharge,
neither in Massachusetts nor any place else.
-: Right, so it seems to me,
it makes sense in the trust context.
It makes sense in the bankruptcy context
where there's a bankruptcy receiver appointed.
It makes sense in the ERISA pension plan context.
But why do you think we should extend it
to allow shareholders,
or to allow the company to reap these attorney's fees?
Isn't that just encouraging
these kind of suits
in contrast to the ordinary American Rule
where everybody pays their own way?
-: I would say quite the opposite,
that the policy provisions point toward
allowing attorney's fees here.
Because this is-
-: But you're just saying that, you know,
in all these cases for the last,
you know, X hundreds numbers of years,
nobody's ever awarded attorney's fees.
And it's good enough to have the common fund doctrine.
Why isn't it good enough in this context?
-: Because when the corporation itself is suing
and when it's majority owned by the folks
who did not commit the breach of fiduciary duty,
almost all of the recovery is gonna be eaten up
by the need to spend eight years of litigation
chasing the wrongdoer.
So unlike in those common fund cases,
the derivative suit, they get 90%, let's say,
of their monies reimbursed.
And so the company gets its money back.
And the beneficiaries are made essentially whole.
In this case, the innocent shareholders
own 2/3 of the company.
And so when the million dollars plus interest comes back
and they've spent eight years going through two trials
and an evidentiary preliminary injunction proceeding,
and I can't even remember how many discovery disputes
and all the stuff that goes along
with litigating for eight years,
there's very little left for the beneficiaries.
And they're eating up 2/3 of this because
unlike the typical case, they own 2/3 of the company.
-: Can I ask a backup question?
I've read these surcharge cases.
But because they're allowing surcharge,
I don't see them allowing attorney's fees
in these other contexts either.
I understand shareholder derivative suits are different.
But I looked at the cases cited
where there's surcharge allowed.
They're not giving attorney's fees.
The ERISA case by the U.S. Supreme Court,
there's nothing about attorney's fees in there.
The trust cases that are cited,
I don't see there's attorney's fees award.
There's a surcharge,
but I don't see they're giving out attorney's fees.
-: So there's two different categories of cases.
There's one category of case in which surcharge is applied
specifically to authorize attorney's fees.
-: Can you gimme a citation?
'Cause I'd like to actually see a case
where a surcharge gives you attorney's fees.
I've read a number of the cases in people's briefs.
There's no attorney's fees in any of those.
-: So there's at least three cases I can think of
off the top of my head: Crutcher v. Joyce.
-: And where is Crutcher? From where?
-: I don't remember all the jurisdictions.
They're non-Massachusetts cases.
One of them is, I think, from Washington.
One of them is from the 10th Circuit.
I think Crutcher is a 10th Circuit case.
-: And they gave attorney's fees in what context?
-: They are breach of trust cases,
so beneficiaries suing a trustee
for breach of fiduciary duty
in connection with the administration of the trust.
-: And there's not a contractual right somewhere
or something expressly provided?
They're using this surcharge doctrine
to create an attorney's fee right.
-: That exactly right.
So the Heller case from Colorado does that.
The Crutcher case, which I think is from the 10th Circuit.
The Allard case from Washington.
And the Restatement of Trusts, Section 100,
not a case obviously but it's the Restatement,
describes expressly that this is a well understood use
of surcharge, that historically it has been used
for exactly this purpose.
-: To provide attorney's fees.
-: That's exactly right.
The comment, and I think it's Comment B,
but the citation is in our brief.
It is absolutely expressed in the Restatement
that one proper application of surcharge
is to require a breaching trustee to reimburse
the attorney's fees spent proving the breach of trust.
-: Are these cases, though, different?
I mean, here we have, you know, a family feud
where both sides have fiduciary duties to the corporation.
Like I understand, like ERISA seems different to me.
We've got these sort of defenseless employees
whose pensions are at stake.
Are these trust cases also examples where you've got
sort of, you know, someone who's entitled to protection
and another person who's required to protect them?
As opposed to here where we've got
both sides of the corporation a duty.
They both owe fiduciary duties to each other.
And it's just, you know, again, family fighting.
-: Well, certainly, both sides owe fiduciary duties
to each other.
But only one side is said
to have taken money from the company.
And it's the company that's suing here.
So in that respect, they're just a company.
-: The company is fully reimbursed.
The company is back to where the company was before.
The only issue is one of you has expended attorney's fees
to create that reimbursement.
One of you is outta luck.
But the company's back to square one, right?
-: Well, not on a net basis.
'Cause the company spends the money
to get the reimbursement.
And so on a net basis, it pays for the attorney's fees.
It spends eight years doing it.
And now, it is ordered to get money back.
But then it has to pay its lawyers and its experts
and, you know, its vendors and all this stuff.
And on a net basis, it's much, much worse off
than it would have been.
And I would just note on the policy front there
that both this court
and the First Circuit applying Massachusetts law
has noted the importance of having a liberal attitude
about fees in these contexts.
-: Mr. McCarthy, I wanna go back
to Justice Wendlandt's question though.
Because as a Superior Court judge,
there's no more difficult cases
than civil cases when families are fighting
about how much they hate each other
and litigating how much they hate each other.
And what's going to happen to those type of cases
if we add the ingredient of
not only do you have an opportunity in litigation
to manifest your feelings about your family members,
you might also get attorney's fees for doing so?
-: Well, if you prove a breach of trust by one of the people.
This isn't like a family law case where
they're fighting about: Did I get fired from the company?
-: No, those aren't the type of cases I'm referring to.
I'm referring to the many, many, many cases like this
that I had in the Superior Court
where the underlying
ingredient for the litigation
wasn't often the amount of money at stake.
-: Well, often I would say a lot of those cases
are oppression cases and freeze out cases.
Those wouldn't come within this doctrine.
Those are not analogous to the breach of trust cases.
What makes this analogous to the breach of trust
is the taking of money.
And so it is, it's closely analogous to a pension trustee
who's supposed to be responsible for managing money,
and who instead takes it.
So I don't think it's all those cases.
It's not just gonna lead to a proliferation
of litigation among family spats.
It really is limited to closed corporations,
breach of the duty of loyalty
where you have a taking of money.
-: Won't you get in every case
where there's an allegation of excess compensation?
Like Justice Lowy, I had a lot of these cases,
these closed corporation cases, you know,
and family businesses.
And one person's in charge.
The other ones allegedly don't do the work.
And the other person gets paid too much.
We've seen this movie.
-: Certainly, an excess compensation case
would be one variety, one manner of taking.
I agree that the principles could apply in those cases.
But, again, you'd have to prove it.
And so, you know, we should not be cutting off
the beneficiary who can ultimately win
and show that there was excessive compensation
or that there was a wrongful taking by making it impossible.
-: To what extent do we count or just look at the value
of the corporation that was largely driven by the defendant?
-: I'm not sure what Your Honor means,
to what extent do you look at the value of the company.
-: You're talking about the diminution of the company.
But the argument I think you're gonna hear
from the other side is that the brother who ran it
actually built the company.
-: And that might be a defense on the merits
to some excessive compensation cases, right?
Plaintiff comes in and says, "You paid yourself $100,000.
"It should have been $30,000."
And the defendant says, "No, $100,000 was appropriate.
"Look what a great job I did
"in building the value of the company."
That person wins on the merits if that's true
and there's no attorney's fees award.
So attorney's fees only get awarded if a plaintiff proves
that there has been a wrongful taking
in violation of these strict duties of good faith.
So the floodgates are not just open.
These are hard things to prove as this case shows.
And it takes a long time and a lot of evidence
and a lot of money to get to the point
where you can prove a wrongful taking,
especially of the magnitude proven here.
-: Counsel, can I ask you to switch gears for a second?
I know that time is up.
But with the Chief's permission, I'll ask the question.
Why is the cross claim not right here?
I mean, it seems like your client had for over a decade.
You know, these breaches happened in the 80s and 90s.
And the case was brought by your clients in 2016,
I guess was when the relevant complaint issued.
And as Justice Kafker pointed out,
one of your clients had a fiduciary duty
to the corporation to monitor the books.
I just don't understand why we're here.
You know, why has the statute of limitations not run?
-: Well, you have to have actual knowledge of the breach.
-: Right, but you also have a fiduciary duty,
one of your clients does, to monitor the books.
And some of these things happened,
I think all of them happened more than a decade ago.
So can you just address why this is ripe?
-: Yeah.
Let me start from the beginning.
The case laws really-
-: No, no, let's not start from the beginning.
I guess I'm trying to figure out
why a 1984 taking of $500,000,
it wasn't your client's obligation to figure that out,
look at the books, and that one's gone.
The latest one happened in 1995.
-: Because the discovery rule does not apply, right?
So when you say they have a duty to monitor the books,
that's a discovery rule obligation.
And the law couldn't be more clear
that that is not the obligation
for breaches of fiduciary duty.
It's actual knowledge of the wrongdoing.
-: So you can be a fiduciary of a closely held corporation
and stick your head in the sand,
not look at the books, and then recover two decades later?
Is that your position that the law is?
-: I would say yes, first of all.
But that's not what factually happened here.
They didn't stick their heads in the sand.
And the jury heard all the evidence about this, right?
-: And the statute of limitations is a legal question, right?
It's not really...
-: It's a legal question except to the extent
that it depends on disputed facts.
And so the jury hears disputed facts.
The other side made essentially the same argument
that Your Honor is making.
And the jury heard our side say:
We didn't stick our head in the sand.
We were told expressly by John Tocci
that the assets were being preserved.
Our folks believed that.
And they asked for the books and weren't given them.
And so, they're not under a duty.
It is a discovery rule duty to go beyond that.
And the jury was permitted to listen to both sides
and conclude that our folks did what they were supposed to.
They did enough.
Aand that they didn't actually know about the breach.
Otherwise, what you do
if you elevate a breach of fiduciary duty claim
and apply the discovery rule,
then you undermine the beneficiary's right
to rely on these folks who you're supposed to be...
-: Even in the context when the beneficiary
has a fiduciary duty him or herself?
-: Yeah.
Maybe they breached their fiduciary duty to the company.
But if that's true,
that doesn't make the statute of limitations run.
Theoretically, one could sue them for breach.
-: Should we apply the same thought process then
to the damages remedy,
which is the jury heard all of this?
It may have taken into account Justice Gaziano's point
that one person was doing all the work
and the others were basically free riding.
And they came up with a million dollars.
And same reason the statute of limitations is okay.
We shouldn't mess with the damages remedy here.
-: I just think you have to look at the facts separately.
And so when one considers the facts,
if there is a factual basis that the jury
could have believed either on statute of limitations
or on our motion for a new trial,
then those issues would be affirmed.
But you have to look at the separate facts.
And I would suggest on the motion for a new trial,
the key there is that it's John's burden
to prove these things.
And for the reasons we've explained in the brief,
we don't think there's any evidence
of the value of the services that he provided.
-: Okay, thank you.
Mr. Tocci.
You're on mute.
-: That better?
Thank you.
Honorable court, good morning.
My case is a little more straightforward.
I just haven't had my day in court.
The original complaint
was lodged against me by my brother, John,
when I discovered
that he had dissolved the corporation surreptitiously.
I discovered that in 2013.
He had promised me all through the interim years
that everything was being kept
in secluded, sequestered, whatever,
all the assets were being kept and preserved
as Attorney McCarthy alluded to.
And
when we engaged in a settlement of Tocci Corporation,
I came up from Virginia to work with his company,
Tocci Building Corporation.
Well, we worked out a settlement.
In the course of that working out,
I discovered that through a situation
that I did a spontaneous, whatever you wanna call it,
examination of the Secretary of Commonwealth's online file
and found out that Tocci Corporation
had actually been dissolved in 1995,
contrary to all the representations of my brother, John,
and any information that we had.
So on that basis, I went to John and I said,
"Listen, you know, we're gonna have to do something
"about this and get done."
We were in the course of negotiating settlement
of what we knew were assets, were promissory notes,
held by my brother, Bill, and myself.
Ultimately, John let me go from Tocci Building Corporation.
I'd finished my work with him there.
At that point, I had discovered it.
And I said: I'm just gonna revive Tocci Corporation,
go around to our clients.
I was, more or less, a lot of the face of the corporation.
I wasn't a freeloader as has been implied here,
building the corporation.
John had nothing to do with the first several years
of that corporation.
It was my father and myself doing a lot of jobs,
getting it going.
I was the face of the corporation onsite.
I was the one collecting all the money
at the end of the job, doing the punchless work,
doing all the dirty work necessary to get the job done.
I went to law school at a certain point in time.
And in that period of being in school,
John set up a separate corporation,
Tocci Building Corporation,
and over the course of the next year or so
diverted all the assets and all the business opportunities
to that without disclosing that.
So that's where we're at
as far as a little background is concerned.
-: Can I ask you about your motion to amend?
That's after the trial, right?
When do you file this motion to amend?
And isn't it too late?
-: The trial was between two parties
and that's pretty expressed.
It was Tocci Corporation versus John Tocci.
There were two counts at that trial:
number one, breach of fiduciary duty
and number two, conversion.
Okay, those are the only two counts.
You can look at the transcripts, look at the records,
look at the briefs.
The court, Judge Kazanjian, reiterates it
time and time again.
When Mr. Croft starts dealing from the bottom of the deck
and starts talking about counterclaims and abandonment
and things like that, the judge steps in and says,
"Wait a minute, that's not at issue here."
-: But isn't that consistent with
you should have brought your claims?
I mean, we don't usually amend complaints
after trials, do we?
-: Well, again, like I said,
as Attorney McCarthy said,
this has been broken into several phases.
Number one, the first phase was before Judge Connolly
was simply John's action against me, a declaratory judgment.
-: I understand that part.
But once we start going into it, sorting everything out,
you don't have any obligation
to bring your claims at that point?
-: None; none, Your Honor.
The judge expressed in the pretrial.
That was in August.
In March of 2020, we had the jury trial,
which was Tocci Corporation, single plaintiff,
Tocci Corporation against a single defendant
being John Tocci.
The two claims, again, I don't wanna get into it.
But the two claims were
breach of fiduciary duty and conversion.
Those are the only two in the pretrial conference.
On page 33 of my brief here, I give the, you know,
the transcript references of this pretrial conference.
And on February 28th, it says,
"I'm claiming that Tocci Building Corporation
"is nothing more than a mere continuation
"of Tocci Corporation."
So the court says, "All right,
"so you're asking (indistinct) in that claim
"that's personal to you.
"Are you asking for a declaratory judgment,
"which is something the court would do, correct?"
"Correct."
So in other words, that was excluded
from the jury portion of the trial.
Again, at the end of the trial, the last concluding thing,
I said, "Your Honor, may I say one thing?"
The court says, "Yes."
"About my matter, should I wait till the conference call
"to take that up or what should I do?"
The court says, "Obviously, you have matters pending.
"You're gonna be part of that conference call
"with the lawyers?"
"I will."
"So why don't we between now
"you figure out what you want me to do next
"with your matters that are pending."
At that point in time, that's when I made my second motion
to amend my complaint.
My first motion was back in 2018, identical basically,
because the trial was scheduled.
Close on, the judge said, "No, it's too close to trial."
Well, two years later,
the judge, you know, two years later,
we finally get to trial with the matter.
I hope I answered your questions.
But that's where we're at with that situation.
So it was supposed to be basically a three-part thing.
Number one, John gets his declaratory judgment action
heard against me.
It gets denied.
Tocci Corporation gets its two legal elements,
which are the breach of fiduciary duty
and conversion, heard.
And then the third phase
is the equitable portions of my complaints
and possibly Tocci Corporation's complaints.
I'm not sure about that,
but definitely my equitable complaints
which are very substantial,
which is basically sounding
de facto merger, mere continuation.
That was in my original complaint.
My original counterclaim was what stated those grounds.
Excuse me.
So that's where we're at with my case.
And I just haven't had my day in court.
Everybody else has had their day in court.
I just haven't had mine.
-: Okay, does anyone have any further questions?
Thank you.
Attorney Croft.
-: Thank you, Your Honor.
Bradley Croft for Appellee John Tocci.
May it please the court.
Tocci Corporation mounts three primary attacks
to the jury verdict in the case,
none of which warrant reversal.
The first has been discussed
is the application of surcharge.
The application of surcharge in trust law
cannot be used as a fee-shifting mechanism
or an exception to the American Rule.
And it has no application to a corporate fiduciary case.
The second basis is the handling by Judge Kazanjian
in a jury trial of certain findings
that were made in a bench trial.
And finally was Judge Kazanjian's
whether or not she abused her discretion
in determining that there was sufficient evidence at trial
to support the jury's verdict.
With respect to surcharge, it is not recognized
in Massachusetts as a fee-shifting device.
It's only a fee reimbursement
from the trust or the corporation.
So at most, it provides a mechanism in a trust case
to return fees back into the trust
that the trustee may have used to pay for his or her defense
of a fiduciary duty breach claim.
There are no Massachusetts cases
applying surcharge in the trust context
to award attorney's fees from the breaching fiduciary
in Massachusetts.
All of the cases cited deal with the reimbursement
from the trust to the beneficiary,
not from the breaching fiduciary
to the beneficiary or the trust.
-: So can I ask you, Counsel,
to address the make-whole provision of the surcharge idea
that monetary compensation can come from the fiduciary
who's breached their duty to make whole the beneficiary?
So here, I guess the analogy would be:
Your client was the breaching fiduciary
and his obligation is to make whole Tocci Corporation,
which has now expended attorney's fees.
-: So the make-whole objective in this comes verbatim
from the Restatement of Trust,
which is relied upon by Tocci Corporation.
It says, "The make-whole objective of recovery
"from a trustee may include in an appropriate case
"the attorney's fees and other litigation costs
"of a successful plaintiff
"who qualifies for reimbursement from the trust."
So again, even in those cases,
it always comes from the trust,
not from the breaching fiduciary.
And it further states that, it says that,
"While this element of recovery
"is a matter of judicial discretion, however,
"and not a routine part of trustee liability
"for breach of trust."
So that's a very important piece here too.
It's the exception even in trust cases and not the rule.
So with respect to how that might relate
to Your Honor's question regarding corporate fiduciary,
again, that concept has never,
there is not a single case in Massachusetts
or in the United States which has applied that concept
to the breaching corporate fiduciary.
And again, as counsel agreed,
cases of this nature,
I mean, courts throughout the country
and in the Commonwealth are just awash
with corporate fiduciary duty breach cases.
One would think that if, in fact,
this was a fair application of the law,
it would have found its way by now
into precisely these kinds of cases.
And it hasn't except in the derivative plaintiff context.
And there, it makes sense.
Again, the critical difference between-
-: And why does it make sense there?
-: Sure, in a make-whole analysis,
what we're saying is that for a corporation
in the derivative context to recover a judgment,
it took that derivative plaintiff effort,
expenses, attorneys fees
to require the corporation to do something
which the corporation itself didn't do.
In the trust context, a trust cannot by definition
initiate litigation.
So in every instance in which a trust
is pursuing a claim against a trustee,
it requires the beneficiary to act.
So those are very similar that in both of those contexts,
that beneficiary, or that derivative plaintiff,
makes sense to require that the trust or the corporation
pay that person back for what the corporation
should have done in the first place.
In our case, the corporation did act.
So there was no common fund issue.
And when a corporation sues a third party
because they felt they were wronged by a fiduciary
or because they thought a third party breached a contract
or because a landlord
in a lease dispute with a corporation,
whatever the case might be,
if they recover funds, those funds are making it whole.
It's the judgment.
And it's not unlike any other litigation
where a litigant, a corporate litigant,
expends attorney's fees
in order to recover for some wrongdoing.
So in addition-
-: Except I think your opposing counsel would say that
in the third party breach-of-contract context,
there isn't this fiduciary duty.
Whereas here, you know, your client had a fiduciary duty
to the corporation.
And that element of trust is what brings up the idea
of attorney's fees being recoverable.
-: Sure, and I think you can look at just the notion
that a duty is owed in attorney malpractice cases,
in financial advisor and client cases.
There are many different instances
where a party is required to,
or decides to sue a fiduciary based upon a breach
of a fiduciary duty.
But that doesn't mean they're entitled
to recover their attorney's fees.
It would be an exception to the American Rule,
and it would have to apply
not only in the corporate fiduciary context,
but in all of those other cases in which that duty exists
if that's the policy behind it.
And that's the reason we have the American Rule
in the first place.
It would essentially eviscerate the American Rule.
I believe one of the questions posed was:
Have any cases on those two cases,
and there are only two cases that were cited
for the proposition in the trust context,
that attorney's fees would be appropriately paid
by the breaching trustee?
Those two cases: one was out of Washington State,
one was out of Colorado, both in the early 80s,
they have not been adopted by other jurisdictions
that we have found.
They certainly have not been adopted in Massachusetts.
And in fact, we did identify,
and I believe it was Justice Kafker's question,
we did actually identify one case from Arizona,
Arizona Court of Appeals,
which expressly rejected those two cases.
It's an unpublished decision,
but it does directly say that those two decisions
are not going to be adopted in Arizona.
It's Galbasini versus Bauer,
and it's a 2010 Arizona unpublished decision.
And they said we're not going to adopt it
because that would create a whole new exception
for the American Rule.
So even in those cases, Your Honor,
they are the exception still.
And that was 45 years ago.
One would think with the proliferation of these cases
throughout courtrooms in America,
it would have been adopted by now.
There were certain arguments which were also made by counsel
that it wouldn't open the floodgates,
that we would be characterizing these a very narrow subset.
There is a cure to this issue, which is that number one,
the parties to a corporation, a closely held corporation,
could include a provision in their Articles of Organization
that allows for the recovery of attorney's fees
in the event of a breach of fiduciary duty.
Number two is the legislature
as it has with several other types of relationships
including Chapter 215.
So in probate court disputes,
there's a fee-shifting provision.
Same thing in 110A for securities fraud,
93A, 176D.
The legislature certainly knows how to
create a fee-shifting mechanism.
And there is none in Chapter 156D.
-: In the shareholder derivative,
is that provided by statute, the attorney fee payment?
-: I believe so, Your Honor, in Section of 110A,
I believe it's Section 400.
-: Sorry, could you say that again?
-: I believe it's Section 400 of Chapter 110A.
But there's countless other statutes
where the legislature has fee shifting:
Wage Act, Truth in Lending cases under 140D.
And the list could go on.
Fee shifting is really not appropriate in this case.
And it would also, I believe, include a disincentive
for fiduciaries to actually in this context
take on that responsibility.
Remember that breach of fiduciary duty and conversion claims
are not necessarily intent-type claims.
You don't have to have a malicious intent.
It can be an honest mistake that you thought you were able
or authorized to take money, or compensation in this case,
and in fact, it's determined that you weren't.
So to punish the fiduciary in that instance
wouldn't serve any ends in so far as a disincentive
to do that in the future.
-: Can you address Mr. Michael Tocci's argument
about the emotional mend,
that he wasn't given his day in court?
-: Sure.
This action has been pending since 2014.
Mr. Tocci was a very active pro se litigant.
He was formerly an attorney.
And he has, I believe it was 2018,
he had filed a motion.
This predates my involvement.
But he filed a motion to amend, to include new claims,
to include new parties.
And Judge Leibensperger denied that on the basis that
these were claims that could have been brought prior,
and that the action had been pending at that point
for four years.
Michael Tocci's claims were subsumed
by the Tocci Corporation taking on this case.
So to the extent that he had those fiduciary duty claims,
they were now Tocci Corporation's claims,
and Tocci Corporation had agreed to go forward with them.
At the beginning of the jury trial,
Judge Kazanjian offered Michael Tocci
the opportunity to examine witnesses.
He spoke up and said, "I am putting my case
"in Attorney McCarthy's hands."
The case was tried.
The verdict was rendered.
And Judge Kazanjian thereafter said,
"Mr. Tocci, to the extent that you have
"these two additional claims for abandonment
"and de facto merger, present briefs to me
"on what those claims are and I'll take them up."
And she essentially considered those claims,
determined that neither of those claims
stated a cause of action
that were recognized in Massachusetts
and essentially rendered judgment on those two claims.
To the extent that Michael Tocci,
he has more than had his day in court.
He has since filed, I believe, another action
against Tocci Corporation's former law firm
for malpractice.
And I'm not sure what the status of that case is,
but he certainly has had his day in court.
If I may, Your Honor, switch to our affirmative appeal
regarding the statute of limitations.
Justice Wendlandt had it exactly right,
which is the harm here had come home to Michael Tocci
and William Tocci back in the 1980s.
We're not talking even about a 10-year lapse.
We're talking about a 25-year lapse
between the time of the events in question
and the date that they actually filed suit on them.
This is not a situation where they just didn't know
what the transactions were.
They both had testified at various points
that they realized that John Tocci was not going
to recognize their ownership interest at all.
And in fact, in 1991, they wrote a letter to John
asking him for the books and records
so that they can understand the financial accountings
of the company.
John did not respond to that,
and he didn't give it to them.
At that point in time, for a fiduciary not to say,
"Okay, we don't have the information.
"It's being withheld from us."
You're on notice.
You have actual notice that your ownership interests,
your rights as a fiduciary, your rights as a shareholder
are not being recognized.
And it is on you to go forward.
With Doe versus Harbor, Doe versus Harbor Schools,
the court had said that you cannot...
We have this rule, it's a balancing.
And we can't have people be perpetual defendants in waiting.
A shareholder in a closely held corporation
has actual notice when they realize
that their ownership interests are being repudiated
by their partner.
And for them to say, "Well, I didn't realize that
"until I saw the specifics of certain transactions
"that were occurring," really doesn't jibe
with the general notion that the harm
had come home to them decades ago.
So on that particular issue,
the court should have directed the verdict
in favor of John Tocci
under the statute of limitations analysis.
I'm happy to answer any other questions
that the court might have.
I know that there was a lot presented in the briefs.