Title: Tocci v. Tocci

State: massachusetts

Issuer: Massachusetts Supreme Court

Document:

NOTICE:  All slip opinions and orders are subject to formal 
revision and are superseded by the advance sheets and bound 
volumes of the Official Reports.  If you find a typographical 
error or other formal error, please notify the Reporter of 
Decisions, Supreme Judicial Court, John Adams Courthouse, 1 
Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-
1030; SJCReporter@sjc.state.ma.us 
 
SJC-13180 
 
JOHN L. TOCCI & another1  vs.  MICHAEL J. TOCCI & others.2 
 
 
 
Middlesex.     February 4, 2022. - June 17, 2022. 
 
Present:  Budd, C.J., Gaziano, Lowy, Kafker, Wendlandt, 
& Georges, JJ. 
 
 
Corporation, Close corporation.  Conversion.  Limitations, 
Statute of.  Practice, Civil, Findings by judge, Objection, 
Statute of limitations, Additur, Attorney's fees, New 
trial, Counterclaim and cross-claim, Amendment of 
complaint.  Damages, Conversion, Breach of fiduciary duty, 
Additur, Attorney's fees.  Due Process of Law, Right to 
hearing. 
 
 
 
 
Civil action commenced in the Superior Court Department on 
April 4, 2014. 
 
 
The case was tried before Hélène Kazanjian, J., and 
posttrial motions were heard by her. 
 
 
The Supreme Judicial Court granted an application for 
direct appellate review. 
 
 
 
Gavin G. McCarthy for Tocci Corporation & another. 
 
Michael J. Tocci, pro se. 
 
Bradley L. Croft for the plaintiffs. 
 
 
1 Tocci Building Corporation. 
 
 
2 Tocci Corporation and William Tocci, interveners. 
2 
 
 
 
 
GAZIANO, J.  This case arises out of a protracted dispute 
between family members in a closely held corporation over 
asserted conversions of corporate funds.  The corporation and 
one of its shareholders brought suit against an officer, 
claiming that the officer diverted money from the corporation 
for the benefit of himself and his individually owned 
corporation.  The jury found that the officer violated his 
fiduciary duties to the corporation and converted the 
corporation's assets for his own benefit, ultimately awarding $1 
million in damages to the corporation.  The corporation 
appealed, and the shareholder and the officer cross-appealed, 
each claiming error in the course of the jury trial, as well as 
in the judge's decisions on posttrial motions for additur, 
surcharge, and a new trial. 
 
In addressing the parties' claims, we must confront the 
novel question whether a successful plaintiff in an action for a 
breach of fiduciary duty may recover its attorney's fees through 
the use of surcharge, an equitable remedy that holds a fiduciary 
personally liable for the fiscal impact of his or her breach.  
We conclude that surcharge may be used to award a plaintiff 
fiduciary the costs of attorney's fees, where the plaintiff 
brings the litigation on behalf of a separate entity or common 
fund, and not where the litigation directly benefits only the 
3 
 
plaintiff.  Accordingly, because the corporation here brought 
the action for its own benefit, the judge did not err in denying 
the plaintiff's request for surcharge.  After carefully 
considering the parties' remaining arguments, we discern no 
error and therefore affirm the jury's verdict, the trial judge's 
decisions on the motions in limine during the jury trial, and 
the decisions on the posttrial motions for additur, surcharge, 
and a new trial. 
 
1.  Background.  a.  Facts.  We recite the facts the jury 
could have found, reserving certain facts for later discussion.  
Tocci Corporation (TC), a closely held, family-owned 
construction company, was founded in 1975 by Valentino Tocci.3  
Valentino's sons, John Tocci, Michael Tocci, and William Tocci, 
each received a one-third ownership interest in the company and 
were appointed to its board of directors.4  Valentino eventually 
turned over full control to John, who was named as chief 
executive officer.  Michael and William intermittently performed 
work for the company as clerk and laborer, respectively.  John 
directed his brothers' work and determined their salaries. 
 
 
3 Tocci Corporation initially did business under the name 
Will-Mick Construction Company, Inc., and later William Michael 
Corporation.  For simplicity, we refer to the company as Tocci 
Corporation (TC). 
 
 
4 Because they share a last name, we refer to the members of 
the Tocci family by their first names. 
4 
 
 
Sometime in the 1980s, John began to express frustration 
with TC's ownership arrangement.  John felt that it was unfair 
that Michael and William had the same ownership interest as he 
did even though he performed the bulk of the work.  John's 
frustrations came to a head at a family meeting in 1984, when he 
threatened to leave TC unless he was given full ownership.  The 
meeting did not result in any changes in ownership, but, rather, 
dissipated after Michael announced his intention to attend law 
school so that he could return to the company with another 
useful skill. 
 
While Michael attended law school and William worked as a 
laborer, John continued to run the day-to-day operations of the 
business.  In 1984, John paid himself a $500,000 bonus in 
addition to his $36,669 salary.  At that time, the bonus was not 
disclosed to Michael or William, nor did they receive any 
distributions. 
 
At some point prior to 1987, John started a separate 
construction company called Tocci Building Corporation, of which 
he was the sole owner.  Not long thereafter, John purportedly 
borrowed $131,475 from TC to pay the mortgage on his home.  He 
later allegedly transferred $45,750 from TC to Tocci Building 
Corporation. 
 
John eventually decided to stop bidding on new construction 
contracts for TC and began to wind down the corporation's 
5 
 
ongoing affairs, although it continued to exist on paper to 
pursue litigation pertaining to one of its prior jobs, referred 
to as the Park West litigation.  That matter settled in 1991 for 
$2.55 million, netting TC approximately $1.25 million after 
legal fees, although John told Michael and William that the 
settlement "was a wash."  John then distributed approximately 
$1.1 million of the settlement award to Tocci Building 
Corporation.  According to John, the payment from the settlement 
proceeds was to reimburse Tocci Building Corporation for 
resources it expended supporting TC throughout the course of the 
Park West litigation, as well as payments it had made to 
subcontractors on TC's behalf. 
 
In 1993, John asked Michael to backdate a document stating 
that Michael had approved the settlement prior to its acceptance 
in 1991, in order to "satisfy some 'bean counters'" who were 
auditing the settlement.  Michael refused, but he instead 
offered to provide John with a deed of transfer, which purported 
to transfer his entire interest in TC to John.  John assured 
Michael that the document would have no legal effect, and 
Michael believed that he was simply "helping his brother out of 
a jam." 
 
With Michael's deed of transfer in hand, and the Park West 
litigation concluded, in 1995, John unilaterally dissolved TC.  
He then distributed TC's remaining assets, worth approximately 
6 
 
$69,192, to Tocci Building Corporation, without consulting 
Michael or William.  Michael and William were unaware that TC 
had been dissolved until 2013, when Michael spontaneously 
conducted a search through the Commonwealth's corporate record 
system.  Michael then announced his intent to revive the 
company, which spurred the instant litigation. 
 
b.  Procedural background.  In 2014, John filed a complaint 
against Michael in the Superior Court, seeking to enjoin him 
from reviving TC.  The complaint asserted that, as a result of 
the deed of transfer, Michael no longer had any interest in the 
company.  In his opposition, Michael contested the validity of 
the deed of transfer and also raised a number of counterclaims 
against John, including claims for breach of fiduciary duty, 
conversion, and unjust enrichment.  Michael and William 
ultimately were able to revive TC in 2016; TC then intervened in 
the litigation, asserting similar claims against John.5 
 
Because many of the claims against John would be precluded 
if the deed of transfer had been effective, the parties moved to 
bifurcate the trial.  They agreed that first a jury-waived trial 
 
 
5 William also was added as an intervener.  John's wife, 
Lila Tocci, also was added as a party.  Following the jury's 
verdict, the judge entered judgment in favor of Lila on all 
counts against her individually.  She did not appeal from this 
ruling and therefore is not a party to this appeal.  See Mass. 
R. A. P. 3 (a) (1), as appearing in 481 Mass. 1603 (2019).  
William did pursue an appeal and remains a party before this 
court. 
7 
 
would be conducted on the sole issue whether the deed of 
transfer had eliminated Michael's interest in TC.  The remaining 
issues, if any, then would be tried before a jury. 
 
The judge who presided over the first trial issued a 
written decision finding that the deed of transfer was 
fraudulently induced and therefore voidable; accordingly, 
Michael's and TC's claims would be able to proceed.  Most of 
Michael's claims were duplicative of TC's claims, and therefore 
would be resolved implicitly by the jury's decision on TC's 
claims.  After a hearing at which Michael agreed that his claims 
were subsumed by the corporation's, TC became the sole plaintiff 
at the jury trial, and Michael reserved additional equitable 
claims that were personal to him for the court to resolve 
following the jury's verdict. 
 
The claims before the jury were based on five alleged 
conversions of corporate assets:  the $500,000 bonus; the 
$131,475 loan; the $1.1 million settlement payment; the $45,750 
transfer to Tocci Building Corporation; and the $69,192 
dissolution distribution.  The jury were asked to decide 
(1) whether the claims were brought within the applicable 
statute of limitations; (2) whether John committed a breach of 
his fiduciary duties to TC; (3) whether John unlawfully 
converted money or property from TC; (4) the amount of harm 
suffered by TC as a result of John's misconduct, if any; and 
8 
 
(5) the amount of unjust enrichment enjoyed by John as a result 
of his misconduct, if any.  The jury heard testimony from each 
of the Tocci brothers, as well as expert testimony on executive 
compensation and corporate valuation.  Among other evidence, 
many of TC's financial records and some of John's tax returns 
were introduced in evidence. 
 
The jury concluded that the claims were timely commenced, 
and that John had committed a breach of his fiduciary duties and 
had engaged in unlawful conversion.  They determined that TC 
suffered $1 million in harm, but found that John did not obtain 
any unjust enrichment.  TC and William appealed, and John and 
Michael cross-appealed.  We subsequently granted TC and 
William's application for direct appellate review. 
 
2.  Discussion.  The parties assert multiple errors, all 
arising out of rulings at or after the jury trial.  TC contends 
that the second judge erred in declining to provide the jury 
with a comprehensive list of each of the factual findings in the 
first judge's decision following the jury-waived trial.  John 
argues that TC failed to satisfy its burden of proving that its 
claims were timely commenced, and therefore the judge should 
have granted his motions for a directed verdict on the statute 
of limitations issue.  TC also maintains that the judge erred in 
denying two of its posttrial motions.  First, TC contends that 
the judge should have granted its motion for additur because the 
9 
 
jury's award was unreasonable.  Second, with respect to the 
corporation's claims, the judge made an error of law when she 
denied TC's request to hold John personally liable for its 
attorney's fees through the equitable doctrine of surcharge.  
Finally, Michael asserts that the judge should have allowed his 
motion to amend and that her refusal to hold an evidentiary 
hearing on his claims deprived him of his right to due process.  
Discerning no error, we affirm. 
 
a.  Presentation of first judge's findings.  Prior to the 
jury trial, the parties filed a joint motion seeking to 
bifurcate the proceedings.  They requested that a jury-waived 
trial be held prior to the jury trial on the sole issue whether 
Michael had transferred his entire interest in TC to John in 
1993 via the deed of transfer.  The parties believed that 
resolving that issue would "streamline the issues remaining to 
be tried, shorten the length of the jury trial . . . , and 
enhance the potential for a global settlement."  The presiding 
judge allowed the motion but cautioned the parties that, at the 
jury trial, they would not be permitted to relitigate the facts 
as she found them.  The parties agreed, but they did not address 
how the findings would be presented to the jury were there to be 
a second trial. 
 
The judge who conducted the jury-waived trial issued a 
detailed decision and order setting forth her factual findings 
10 
 
and ultimate conclusions of law.  In addition to discussing the 
contested deed of transfer, the decision included a number of 
findings on the history and operation of TC.  The judge 
determined that the deed of transfer was the product of 
fraudulent inducement and therefore voidable, which allowed the 
parties to try the remaining issues at a jury trial; that trial 
ultimately took place before a second judge. 
 
Although the parties acknowledged, to some extent, that the 
first judge's factual findings were binding, they disagreed as 
to which specific findings should be binding and how they should 
be presented to the jury.  TC sought to have the second judge 
open the trial by providing the jury with a list of sixty-one 
factual findings, drawn from the first judge's findings, that 
the jury were to accept as established fact.  John argued that 
the jury should not be provided with specific factual findings 
but, rather, simply should be instructed to accept as fact that 
the deed of transfer was voidable.  When the parties were unable 
to agree on which facts to present to the jury, the second judge 
drafted a list of twelve "basic facts" from the first judge's 
findings, largely pertaining to the formation of TC and the deed 
of transfer, which she instructed the jury to accept as fact.6  
 
 
6 The second judge instructed the jury to accept the 
following as established fact:  (1) Valentino was the father of 
John, Michael, and William; (2) Valentino established a 
successful construction company that predated TC; (3) Valentino 
11 
 
The second judge also decided that all other issues of fact were 
to be presented through testimony or other evidence.  If a 
witness's testimony differed from the first judge's findings, 
the parties either could seek to impeach the witness or could 
ask the second judge to instruct the jury to accept as true the 
fact as found by the first judge.  With one exception,7 the 
parties did not request additional instructions, and the second 
judge did not provide any. 
 
On appeal, TC argues that it was error for the second judge 
to deny its request to provide the jury with all of the factual 
findings in the first judge's decision at the beginning of the 
second trial.  In TC's view, the second judge's method of 
 
established a company for his sons to operate; (4) that company 
was formed on August 12, 1975; (5) the company eventually came 
to be known as Tocci Corporation; (6) John, Michael, and William 
each received a one-third ownership interest in the company; 
(7) Valentino, John, Michael, and William were directors of the 
company; (8) Valentino eventually turned control of the company 
over to John; (9) John established Tocci Building Corporation, 
and neither Michael nor William had an interest in Tocci 
Building Corporation; (10) Michael signed a deed of transfer in 
1993 that purported to transfer his interest in TC to John; 
(11) Michael never believed that the deed of transfer was valid, 
but rather thought that the document would be used only to 
"help[] John out of some sort of legal bind"; and (12) John 
fraudulently induced Michael into signing the deed of transfer, 
and the transfer therefore is voidable. 
 
 
7 Following a question related to Michael's previous legal 
work, TC asked the second judge to instruct the jury on the 
first judge's findings as to why Michael no longer practiced 
law.  The second judge did not give the requested instruction 
but, rather, told the jury to disregard the question. 
12 
 
presenting the facts contravened the parties' agreement that the 
first judge's findings would be binding.  Additionally, TC 
maintains that the second judge's handling of the facts found by 
the first judge violated the principles of issue preclusion.  We 
conclude that the second judge's method of presenting the first 
judge's findings to the jury, while certainly unusual and far 
from straightforward, did not constitute an abuse of discretion. 
 
i.  Whether TC's challenge to the presentation of facts was 
preserved.  John argues that TC did not preserve its challenge 
to the second judge's handling of the first judge's factual 
findings because it did not object at trial and, to the 
contrary, consented to the judge's proposed course of action.  
An issue is preserved so long as counsel "makes known to the 
[trial] court the action which he [or she] desires the court to 
take or [counsel's] objection to the action of the court."  
Commonwealth v. McDonagh, 480 Mass. 131, 138 (2018), quoting 
Commonwealth v. Fowler, 431 Mass. 30, 41 n.19 (2000).  A party 
is not "permitted to raise an issue before the trial court on a 
specific ground, and then . . . present that issue to this court 
on a different ground."  Commonwealth v. Clark, 378 Mass. 392, 
397 (1979), quoting Commonwealth v. Flynn, 362 Mass. 455, 472 
(1972). 
13 
 
 
The record does not support John's contention that TC 
agreed to the court's proposed course of action.8  To the 
contrary, TC multiple times raised concerns about the second 
judge's presentation of the facts.9  Although counsel for TC did 
not use the word "object," he nonetheless clearly and promptly 
made his client's concerns known.  See Commonwealth v. Depina, 
456 Mass. 238, 248 n.8 (2010) ("We look to the substance of [the 
party's] objection rather than [to the party's] use of specific 
language, terms, or phrases").  See also Commonwealth v. 
Almeida, 34 Mass. App. Ct. 901, 902 n.2 (1993) (issue was 
preserved where counsel presented his concerns to judge, even 
though counsel did not say explicitly that he objected to 
judge's actions). 
 
 
8 TC agreed to provide the jury with a mutually drafted set 
of facts that it and John previously had agreed upon, but did 
not agree to the more limited set of facts the second judge 
ultimately presented after John rescinded his agreement.  
Although TC eventually agreed with the second judge that she 
should "limit what [she] instruct[ed] the jury to things that 
were critical to [the first judge's] decision," the company made 
clear that it believed all of the facts it sought to have 
presented to the jury were "critical" to the first judge's 
decision. 
 
 
9 Indeed, TC filed a motion in limine specifically 
requesting the second judge to present all of the first judge's 
findings to the jury.  Once it was clear that the judge was not 
going to do so, TC made its objection apparent by counsel's 
comment that the company had a "problem" with the judge's course 
of action, which it feared would be "unmanageable" and would 
allow the jury to credit testimony that differed from the first 
judge's findings. 
14 
 
 
TC, however, did waive the argument that the first judge's 
findings were binding under our jurisprudence on issue 
preclusion.  TC did not argue at the second trial that the first 
judge's findings were binding as a matter of issue preclusion, 
but rather specifically stated that "issue preclusion does not 
apply."  TC added that it was the parties' "agreement, not the 
operation of issue preclusion, that [made] the findings 
binding."  Therefore, we consider whether the second judge's 
handling of the facts was an abuse of discretion in light of the 
party's agreement, but we do not consider whether it violated 
the principles of issue preclusion.  See Muzzy v. Cahillane 
Motors, Inc., 434 Mass. 409, 416 (2001), quoting 9A C.A. Wright 
& A.R. Miller, Federal Practice and Procedure § 2554 (1995) ("It 
is axiomatic that '[a] party may not state one ground when 
objecting . . . and attempt to rely on a different ground for 
the objection on appeal"). 
 
ii.  Presentation of first judge's findings to the jury.  A 
trial judge has broad discretion in determining which evidence 
should be admitted, Commonwealth v. Silva, 482 Mass. 275, 291 
(2019), as well as "the method by which [such] evidence is 
brought to the jury's attention," Commonwealth v. Morales, 440 
Mass. 536, 549 (2003), quoting Commonwealth v. Amazeen, 375 
Mass. 73, 84 (1978).  The party claiming error bears the "burden 
of showing an abuse of [that] discretion."  Amazeen, supra.  In 
15 
 
applying the abuse of discretion standard, "'we look for 
decisions based on whimsy, caprice, or arbitrary or 
idiosyncratic notions,' and do not disturb the judge's ruling 
'simply because [we] might have reached a different result; the 
standard of review is not substituted judgment'" (quotation 
omitted).  Laramie v. Phillip Morris USA Inc., 488 Mass. 399, 
414 (2021), quoting N.E. Physical Therapy Plus, Inc. v. Liberty 
Mut. Ins. Co., 466 Mass. 358, 363 (2013). 
 
The crux of TC's argument is that it was error for the 
second judge to decline to provide the jury at the outset with 
all of the first judge's factual findings.  We do not agree.  As 
the second judge recognized, some of the facts identified in the 
first judge's decision were irrelevant to the issues before the 
jury and therefore were inadmissible.  See Commonwealth v. 
Mattei, 455 Mass. 840, 850 (2010) ("A judge generally is 
accorded substantial discretion in deciding whether evidence is 
relevant . . ."); Mass. G. Evid. § 402 (2022).  For example, the 
first judge's findings included a detailed discussion of TC's 
corporate record-keeping practices, prior attempts by John to 
purchase Michael's shares of the company, and Michael's previous 
law practice, none of which bore on the issues before the jury.  
Even if the second judge had limited her presentation of the 
facts to those that were relevant, presenting such a large 
number of facts at the beginning of trial -- before the jury had 
16 
 
any context for the facts -- could have resulted in unnecessary 
confusion.  See Commonwealth v. Rosa, 422 Mass. 18, 25 (1996) 
(when determining whether evidence is admissible, judge must 
consider, inter alia, risk of "prejudice, including confusion of 
the jury").  Further, the jury might have afforded more weight 
to the facts that they were instructed to accept than to the 
evidence elicited through testimony, which could have led to 
unfair prejudice against John.  See Commonwealth v. McNulty, 458 
Mass. 305, 322 (2010) (recognizing danger that jurors might give 
undue weight to evidence presented in certain forms).  See also 
Nipper v. Snipes, 7 F.3d 415, 418 (4th Cir. 1993), quoting 
Zenith Radio Corp. v. Matsushita Elec. Indus. Co., Ltd., 505 F. 
Supp. 1125, 1186 (E.D. Pa. 1980), rev'd in part on other 
grounds, 723 F.2d 238 (3d Cir. 1983), and rev'd on other 
grounds, 475 U.S. 574 (1986) ("judicial findings of fact 
'present a rare case where, by virtue of their having been made 
by a judge, they would likely be given undue weight by the jury, 
thus creating a serious danger of unfair prejudice'"). 
 
It certainly might have been preferable for the second 
judge to instruct the jury to accept as fact the first judge's 
relevant findings.  See Bonjorno v. Kaiser Aluminum & Chem. 
Corp., 752 F.2d 802, 813 (3d Cir. 1984), cert. denied, 477 U.S. 
908 (1986) ("It is of course necessary, when conducting a 
bifurcated trial . . . to inform the second jury about some of 
17 
 
the evidence and results of the first trial"); MCI 
Communications Corp. v. American Tel. & Tel. Co., 708 F.2d 1081, 
1168 (7th Cir.), cert. denied, 464 U.S. 891 (1983) (recommending 
that parties in bifurcated trial rely "heavily" on stipulations 
rather than "reintroduce" prior established facts); Torres v. 
Automobile Club of S. Cal., 15 Cal. 4th 771, 781 (1997) (in 
bifurcated trial, second jury may be advised of first jury's 
findings); Equal Employment Opportunity Comm'n vs. JBS USA, LLC, 
U.S. Dist. Ct., No. 10-cv-02103-PAB-KLM (D. Colo. Aug. 8, 2011) 
("the Phase II jury can be specifically instructed not to re-
examine the factual findings of the Phase I jury"). 
 
The second judge's chosen method risked the jury making 
findings that were contrary to those of the first judge if the 
jury were to discredit certain of the witnesses' testimony.  See 
McDonough v. Vozzela, 247 Mass. 552, 558 (1924) ("it is familiar 
law that the jury are not bound to give credit to testimony even 
though uncontradicted").  Moreover, presenting the jury with 
accepted facts would have increased judicial efficiency by 
freeing the parties from the burden and expense of 
reestablishing already established facts.  See Commonwealth v. 
Pariseau, 466 Mass. 805, 813 n.10 (2014), quoting S.J.C. 
Rule 3:09, Canon 3 (B) (8), as appearing in 440 Mass. 1301 
(2003) ("judges in the Commonwealth are expected to 'dispose of 
all judicial matters promptly, efficiently, and fairly'").  
18 
 
Nonetheless, given the legitimate concerns about the jury being 
presented with irrelevant and, in some instances, highly 
prejudicial facts, we cannot say that the judge abused her 
discretion in declining to instruct the jury on all of the first 
judge's findings. 
 
b.  Statute of limitations.  At the close of TC's case at 
the jury trial, and again at the close of all the evidence, John 
moved for a directed verdict on the ground that TC had failed to 
establish that its claims had been brought within the applicable 
period in the statute of limitations.  The second judge denied 
both motions. 
At trial, William agreed to feeling, as early as 1990, that 
"John had reneged on his commitments to [William] as a 
shareholder," and Michael said that he felt that, beginning in 
the 1980s, John had "defrauded" him and had attempted to 
"marginalize [his] position in the business."  Michael also 
conceded that he had been aware as early as 1986 that Tocci 
Building Corporation was using TC's assets as surety and 
testified that, in 1992, he requested, but never received, TC's 
financial records, which would have revealed many of the alleged 
conversions.  Nonetheless, Michael testified that he did not 
suspect any sort of conversion until he discovered in 2013 that 
John had dissolved TC.  William similarly testified that he did 
19 
 
not learn of the conversions of the corporation's assets until 
the present litigation began in 2014. 
 
In reviewing a judge's ruling on a motion for a directed 
verdict, we "must determine, on viewing the evidence in the 
light most favorable to the nonmoving party, whether a 
reasonable inference could be drawn in favor of the nonmoving 
party, or if the moving party is entitled to a judgment as a 
matter of law."  Donaldson v. Farrakhan, 436 Mass. 94, 96 
(2002).  A motion for a directed verdict must be denied if 
"anywhere in the evidence, from whatever source derived, any 
combination of circumstances could be found from which a 
reasonable inference could be made in favor of the [nonmovant]" 
(alteration in original).  O'Brien v. Pearson, 449 Mass. 377, 
383 (2007), quoting Turnpike Motors, Inc. v. Newbury Group, 
Inc., 413 Mass. 119, 121 (1992).  Where a defendant raises the 
statute of limitations as an affirmative defense, the plaintiff 
bears the burden of proving that the action was timely 
commenced.  Parr v. Rosenthal, 475 Mass. 368, 376 (2016). 
 
Claims for breach of fiduciary duty and conversion are 
governed by G. L. c. 260, § 2A, which establishes a three-year 
period of limitation.  See Patsos v. First Albany Corp., 433 
Mass. 323, 327 n.6 (2001).  Where claims arise out of a 
fiduciary relationship, the statute of limitations is tolled 
"until a plaintiff has 'actual knowledge' that [he or] she has 
20 
 
been injured by the fiduciary's conduct."10  Doe v. Harbor Schs., 
Inc., 446 Mass. 245, 254 (2006), quoting Lattuca v. Robsham, 442 
Mass. 205, 213 (2004).  The statute of limitations does not 
begin to toll once a plaintiff gains knowledge of any wrongdoing 
by the fiduciary, but, rather, begins only once the plaintiff 
gains knowledge of the particular harm forming the basis for his 
or her claim.  See Crocker v. Townsend Oil Co., 464 Mass. 1, 9 
(2012) (statute of limitations is tolled until "the plaintiff 
has actual knowledge of the wrong giving rise to his [or her] 
cause of action"); Doe, supra at 255 ("Mere suspicion or mere 
knowledge that the fiduciary has acted improperly does not 
amount to actual knowledge that the plaintiff has suffered 
harm").  Constructive knowledge is irrelevant; "[o]nly when the 
beneficiary's harm at the fiduciary's hands has 'come home' to 
the beneficiary does the limitations clock begin to run" 
(citation omitted).  Doe, supra, quoting Akin v. Warner, 318 
 
10 Under G. L. c. 260, § 12, if a defendant fraudulently 
concealed the cause of action, the statute of limitations is 
tolled until a plaintiff attains actual knowledge of the 
defendant's wrongdoing.  See Puritan Med. Ctr., Inc. v. Cashman, 
413 Mass. 167, 175 (1992).  "Where a fiduciary relationship 
exists, the failure adequately to disclose the facts that would 
give rise to knowledge of a cause of action constitutes 
fraudulent conduct and is equivalent to fraudulent concealment 
for purposes of applying § 12."  See Demoulas v. Demoulas Super 
Mkts., Inc., 424 Mass. 501, 519 (1997) (Demoulas I).  Here, John 
conceded that he did not timely disclose the alleged conversions 
to Michael or William, notwithstanding his duty as a fiduciary 
to do so.  See id. at 530-531.  Accordingly, John properly does 
not contest that the actual knowledge standard is applicable. 
21 
 
Mass. 669, 676 (1945).  Where, as here, the plaintiff is a 
corporation, a disinterested director's or shareholder's 
knowledge is imputed to the corporation.  See Demoulas v. 
Demoulas Super Mkts., Inc., 424 Mass. 501, 518-519 (1997) 
(Demoulas I). 
 
We discern no error in the second judge's decision to deny 
the motions for a directed verdict.  Evidence indicating that 
Michael was aware that Tocci Building Corporation had used TC's 
assets as surety, and that Michael and William both felt that 
John had committed a breach of his duties to them as fellow 
shareholders, is irrelevant, because TC did not seek recovery 
for such misconduct.  See Crocker, 464 Mass. at 9; Doe, 446 
Mass. at 255.  Rather, the statute of limitations only began to 
run once TC acquired actual knowledge of the harm it had 
sustained as a result of the five alleged conversions.  John 
argues that we should infer actual knowledge of such harm from 
Michael's failure to investigate John's refusal to provide TC's 
financial records.  John notes that, as a shareholder and a 
director, Michael owed a fiduciary duty to the corporation and 
therefore should have investigated the withholding of the 
financial records and informed himself of the financial status 
of the corporation.  See Selmark Assocs., Inc. v. Ehrlich, 467 
Mass. 525, 552 (2014) (shareholders and directors of closely 
held corporation owe fiduciary duty to corporation).  In John's 
22 
 
view, the jury could have inferred actual knowledge from the 
combination of the duty to investigate and the failure to do so. 
 
John's argument, however, misconstrues the standard for 
demonstrating actual knowledge in the context of corporate 
fiduciaries.  In determining whether a beneficiary had actual 
knowledge, we do not require the beneficiary "to have made an 
independent investigation" in order to discover a fiduciary's 
breach.  See Demoulas I, 424 Mass. at 520 (rejecting "argument 
that the plaintiff [in action for breach of fiduciary duty] 
should be held to a reasonable diligence standard").  Therefore, 
what a fiduciary not in breach, such as Michael, reasonably 
should have discovered has no bearing on a determination of what 
the beneficiary actually knew at a given time.  See id. at 522 
(concluding corporation did not have actual knowledge of breach, 
even though shareholders not in breach "had signed documents 
alluding to [the breach]," given that "they had not read those 
documents because of the express trust they placed in [the 
fiduciary who committed the breach]").  Even if the evidence 
before the jury could have supported an inference of actual 
knowledge, the jury were entitled to credit Michael's and 
William's statements to the contrary.  See Commonwealth v. 
Webster, 480 Mass. 161, 167 (2018), quoting Commonwealth v. 
Barbosa, 477 Mass. 658, 666 (2017) ("To 'the extent that 
conflicting inferences may be drawn from the evidence, it is for 
23 
 
the jury to decide which version to credit'").  Accordingly, the 
judge did not err in denying John's motions for a directed 
verdict. 
 
c.  Motion for additur.  The jury returned their verdict on 
a special verdict form that asked for, inter alia, "the total 
amount of harm to [TC]" and "the total amount of unjust 
enrichment" that John received as a result of the value of Tocci 
Building Corporation.  See Demoulas I, 424 Mass. at 557-558.  
The special verdict form did not ask the jury to indicate which 
specific conversions they found had occurred.  The jury 
determined that John's misconduct resulted in $1 million of harm 
to TC, but did not find that John retained any unjust 
enrichment.  TC then filed a "Motion for Additur or New Trial on 
Remedy," in which it argued that the jury's verdict was 
unreasonable in light of the evidence.  The judge concluded that 
the verdict was supported by the evidence and accordingly denied 
the motion. 
 
Additur appropriately is granted "where the judge concludes 
that the [jury's] verdict is sound except for the amount of 
damages."  Baudanza v. Comcast of Mass. I, Inc., 454 Mass. 622, 
629-630 (2009), quoting Service Publ., Inc. v. Goverman, 396 
Mass. 567, 580 (1986).  The inadequacy of the award of damages 
must "descend to the level of unreasonableness," Freeman v. 
Wood, 379 Mass. 777, 785 (1980), such that "a miscarriage of 
24 
 
justice [would] result" if the verdict were to stand, Walsh v. 
Chestnut Hill Bank & Trust Co., 414 Mass. 283, 292 (1993), 
quoting Bartley v. Phillips, 317 Mass. 35, 41 (1944). 
 
We review a judge's ruling on a motion for additur for an 
abuse of discretion.  See Baudanza, 454 Mass. at 629.  Because 
"[t]he field of discretion of the trial judge in these matters 
is very broad," Bartley, 317 Mass. at 44, quoting Bresnahan v. 
Proman, 312 Mass. 97, 101 (1942), only in "exceedingly rare" 
cases will we conclude that there was such an abuse, see Loschi 
v. Massachusetts Port Auth., 361 Mass. 714, 715 (1972), quoting 
Hartmann v. Boston Herald-Traveler Corp., 323 Mass. 56, 61 
(1948).  As a general rule, we will decide there was an abuse of 
discretion where there was "no evidence from which the jury 
could have concluded" as it did (emphasis added).  See Thibault 
v. Mack, 19 Mass. App. Ct. 916, 917 (1984). 
 
A jury's "award of damages must stand unless . . . to 
permit it to stand was an abuse of discretion on the part of the 
court below, amounting to an error of law."  Labonte v. Hutchins 
& Wheeler, 424 Mass. 813, 824 (1997), quoting Mirageas v. 
Massachusetts Bay Transp. Auth., 391 Mass. 815, 822 (1984).  "It 
is an error of law if 'the damages awarded were greatly 
disproportionate to the injury proven or represented a 
miscarriage of justice.'"  See Reckis v. Johnson & Johnson, 471 
Mass. 272, 299 (2015), cert. denied, 577 U.S. 1113 (2016), 
25 
 
quoting Labonte, supra.  "Damages are also excessive when they 
are 'so great . . . that it may be reasonably presumed that the 
jury, in assessing them, did not exercise a sound discretion, 
but were influenced by passion, partiality, prejudice or 
corruption'" (alteration in original).  Reckis, supra, quoting 
Bartley, 317 Mass. at 41.  See Baudanza, 454 Mass. at 629-630. 
 
Therefore, in determining whether the judge abused her 
discretion in denying the motion for additur, we look to our 
jurisprudence on the breach of fiduciary duty.  Shareholders, 
directors, and officers of a closely held corporation owe a duty 
of loyalty to the corporation.  See Chokel v. Genzyme Corp., 449 
Mass. 272, 278 (2007); Donahue v. Rodd Electrotype Co. of New 
England, 367 Mass. 578, 593 (1975).  The duty of loyalty 
prohibits fiduciaries from engaging in "self-dealing," which 
occurs when a fiduciary is positioned on both sides of a 
transaction or otherwise stands to benefit personally from the 
transaction.  See Starr v. Fordham, 420 Mass. 178, 183 (1995).  
If a fiduciary engages in self-dealing without the approval of 
disinterested shareholders or directors, he or she bears the 
burden of proving that the transaction was "intrinsically fair" 
and "did not result in harm to the corporation."  See 
Demoulas I, 424 Mass. at 530-532, quoting Meehan v. Shaughnessy, 
404 Mass. 419, 441 (1989).  Failure to satisfy this burden 
26 
 
warrants a finding that the fiduciary committed a breach of his 
or her duty of loyalty.  See Meehan, supra. 
 
If such a breach is established, a plaintiff may be awarded 
either the amount that would place the plaintiff in the position 
the plaintiff would have been in but for the breach, see 
Woodward Sch. for Girls, Inc. v. Quincy, 469 Mass. 151, 174 
(2014), or the amount of unjust enrichment retained by the 
defendant, see Demoulas I, 424 Mass. at 556.  Where the alleged 
breach involves transferring resources from one corporation to 
another, unjust enrichment includes "all gains and profits that 
are attributable to the diversions of corporate assets . . . but 
not the portions of [the recipient corporation's] valuation[] 
that ha[s] a different source."  Id. at 557.  "The burden of 
proof is on the defendant[] to show how much of [the recipient 
corporation's] assets are not the direct or indirect result of 
the violations of fiduciary duty."  Id. at 557-558. 
 
TC argues that John failed to meet his burden11 to establish 
intrinsic fairness with regard to at least three of the alleged 
 
 
11 John bore the burden of proving that each transaction was 
fair to the corporation.  See Meehan v. Shaughnessy, 404 Mass. 
419, 441 (1989).  John conceded that he awarded himself the 
bonus, that he distributed virtually the entirety of the 
settlement payment to his own corporation, and that, at 
dissolution, he distributed the funds to his own corporation; 
thus, he unquestionably engaged in self-dealing.  John also 
agreed that he never told Michael or William that he had 
distributed the settlement payment or that he had issued the 
dissolution distribution to Tocci Building Corporation.  John 
27 
 
conversions:  the $1.1 million settlement payment, the $500,000 
bonus, and the $69,192 distribution upon dissolution.12  Because 
the cumulative total of these amounts exceeds $1 million, TC 
asserts that the jury's verdict was per se unreasonable.  TC 
also argues that it was unreasonable for the jury to find that 
John acquired no amount of unjust enrichment because he did not 
present evidence as to what, if any, amount of Tocci Building 
Corporation's worth was independent of the assets transferred 
from TC. 
 
The reasonableness of the jury's award turns on whether 
John satisfied his burdens of proof, as it would be unreasonable 
for the jury to refuse relief for any breach on which John did 
not meet his burden.  See Robertson v. Gaston Snow & Ely 
Bartlett, 404 Mass. 515, 520, cert. denied, 493 U.S. 894 (1989), 
quoting Hartmann, 323 Mass. at 60 (jury findings should be set 
aside if jury "failed to exercise an honest and reasonable 
judgment in accordance with the controlling principles of law").  
 
argued that he eventually told Michael that he took the bonus, 
and that Michael ratified the transaction.  Michael denied any 
such ratification, but even if he had ratified the transaction, 
it would be without legal significance, as transactions that 
involve self-dealing require the approval of a majority of the 
shareholders or directors.  See Demoulas I, 424 Mass. at 557-
558. 
 
 
12 TC concedes that the jury reasonably could have concluded 
that John repaid the $131,475 loan and that the $45,750 transfer 
to Tocci Building Corporation did not occur. 
28 
 
But, contrary to TC's assertions, the jury reasonably could have 
found that John satisfied his burden of proving that 
transferring the $1.1 million settlement payment to Tocci 
Building Corporation was fair to TC.  John testified that 
$511,000 of the transfer was a "continency payment" to reimburse 
Tocci Building Corporation for resources it expended in support 
of TC throughout the course of the Park West litigation, 
including John's time and that of Tocci Building Corporation's 
staff.  John testified that TC did not pay him between 1986 and 
1991, even though he spent approximately 9,000 hours 
participating in the advancement of the Park West litigation on 
TC's behalf.  Although John did not introduce expert testimony 
indicating what would have constituted reasonable compensation 
for his efforts, he did testify as to the process he used to 
calculate the contingency payment.  If the jury credited John's 
testimony, they reasonably could have concluded that the 
$511,000 transfer constituted fair payment for services.  See 
Berish v. Bornstein, 437 Mass. 252, 273 (2002) ("A person may 
testify as to the value of his [or her] own services.  Expert 
testimony is not necessary to establish the fair value of 
services that a person has rendered" [citation omitted]). 
 
The remainder of the $1.1 million payment to Tocci Building 
Corporation, according to John's testimony, was to reimburse it 
for payments it made to subcontractors on TC's behalf, because 
29 
 
TC was insolvent at the time.  John testified that Tocci 
Building Corporation did not receive any benefit, such as 
interest, from the transfer.  If the jury credited this 
testimony, they reasonably could have found that the transfer 
was a fair repayment.  See Matter of the Estate of Stacy, 96 
Mass. App. Ct. 447, 460 (2019) (2020) ("A witness's testimony 
alone, without corroboration, may meet a party's burden of 
proof").  Because John satisfied his burden of demonstrating 
that the settlement payment was fair, the jury were not, as TC 
asserts, required as a matter of law to award more than $1 
million. 
 
Moreover, the jury reasonably could have determined that 
John did not retain any unjust enrichment as a result of the 
$69,192 dissolution distribution.  John did not dispute that the 
distribution occurred, nor did he argue that it was fair to TC.  
Accordingly, John bore the burden of proving what amount of 
Tocci Building Corporation's value, if any, was independent of 
this distribution.  See Demoulas I, 424 Mass. at 557-558. 
 
Although an expert witness testified that Tocci Building 
Corporation was worth approximately $16 million, the jury were 
not required to accept this valuation and could have concluded 
that the company was worth substantially less.  See Loschi, 361 
Mass. at 716 ("The jury may use their general knowledge and 
experience in evaluating [the value of] property and are not 
30 
 
required to follow blindly the opinions of experts").  Moreover, 
John introduced evidence of other significant contributors to 
Tocci Building Corporation's growth; most notably, surety 
bonding, approximately $500,000 in loans, and John's sweat 
equity.  Taken together, the jury could have concluded that the 
dissolution distribution did not add significant value to Tocci 
Building Corporation.  The jury's findings on both the harm to 
TC and the amount of unjust enrichment retained by John 
therefore were reasonable in light of the evidence adduced at 
trial; accordingly, the judge did not abuse her discretion in 
denying TC's motion for additur. 
 
d.  Motion for surcharge.  Following the jury verdict, TC 
filed a motion for equitable relief.  See Demoulas v. Demoulas, 
428 Mass. 555, 580 (1998) (Demoulas II) ("A court has the power 
to grant equitable relief when there has been a violation of 
fiduciary duty . . .").  Specifically, TC sought to hold John 
liable for its attorney's fees through the use of a surcharge, 
an equitable remedy that originated in the context of trusts, 
whereby a fiduciary is held personally liable "for a loss 
resulting from [his or her] breach of duty, or to prevent [his 
or her] unjust enrichment."  See CIGNA Corp. v. Amara, 563 U.S. 
421, 441-442 (2011) (Amara).  The judge denied TC's motion on 
the ground that there were "no Massachusetts cases applying 
[surcharge] outside the context of trusts and trustees, or to 
31 
 
the payment of attorney's fees."  Although we typically review a 
judge's allowance or denial of equitable relief for abuse of 
discretion, see Cavadi v. DeYeso, 458 Mass. 615, 624 (2011), 
here the judge's ruling was based solely on her conclusion that 
surcharge was unavailable as a matter of law; accordingly, we 
review her determination de novo, see Anastos v. Sable, 443 
Mass. 146, 149 (2004). 
The "usual rule in Massachusetts," colloquially known as 
the American Rule, "is to prohibit successful litigants from 
recovering their attorney's fees and expenses."  Preferred Mut. 
Ins. Co. v. Gamache, 426 Mass. 93, 95 (1997).  Pursuant to their 
equitable powers, however, courts may award attorney's fees 
where justice so requires.  See Sears v. Nahant, 215 Mass. 234, 
240 (1913).  This power "is one of great delicacy and is to be 
applied with caution."  Hayden v. Hayden, 326 Mass. 587, 596 
(1950).  Consequently, "the list of exceptional circumstances in 
which we have sanctioned the departure from our traditional 
approach -- in the absence of a statute or court rule -- is not 
long."  See Bournewood Hosp., Inc. v. Massachusetts Comm'n 
Against Discrimination, 371 Mass. 303, 312 (1976), and cases 
cited. 
 
Although we have affirmed the use of surcharge to remedy a 
fiduciary's breach in the context of trusts, see Matter of the 
Trusts under the Will of Crabtree, 449 Mass. 128, 145-146 
32 
 
(2007), we have not considered whether surcharge can serve as an 
equitable exception to the American Rule where a closely held 
corporation sues a fiduciary for breach of loyalty.  Arguing 
that a fiduciary in breach may be surcharged for a beneficiary's 
attorney's fees where, as here, the applicable law is based on 
trust law, TC urges us to answer in the affirmative. 
 
In the context of trusts, surcharge is used "to repair the 
damage [a fiduciary's] breach of duty inflicted upon the corpus 
he [or she] was charged to protect."  See Acument Global Techs., 
Inc. v. Towers Watson & Co., 998 F. Supp. 2d 111, 114 (S.D.N.Y. 
2014).  See also Jennings v. Murdock, 220 Kan. 182, 214 (1976) 
("Surcharge is a remedy designed to make the trust estate 
whole . . ."); Shelton v. Fairley, 72 N.C. App. 1, 12-13 (1984) 
("the purpose of surcharge is to reimburse the estate for losses 
incurred as a result of some act or omission of the 
representative constituting a breach of trust").  To this end, 
surcharge consistently has been used in other jurisdictions to 
hold a trustee in breach liable for a successful plaintiff's 
attorney's fees.  See, e.g., Estate of Gerber, 73 Cal. App. 3d 
96, 118 (1977); Estate of Stowell, 595 A.2d 1022, 1026 (Me. 
1991); Matter of the Estate of Kerns v. Western Sur. Co., 802 
P.2d 1298, 1299 (Okla. Ct. App. 1990); Allard v. Pacific Nat'l 
Bank, 99 Wash. 2d 394, 407-408 (1983).  See also Restatement 
(Third) of Trusts § 100 comment b(2) (2012) ("The 'make whole' 
33 
 
objective . . . of recovery from a trustee . . . may include, in 
an appropriate case, the attorney fees and other litigation 
costs of a successful plaintiff . . ."); Robinson, Embracing 
Equity:  A New Remedy for Wrongful Health Insurance Denials, 90 
Minn. L. Rev. 1447, 1466 (2006) ("Courts award surcharge not 
only for lost income or gain, but also for costs incurred by the 
beneficiary because of the breach of fiduciary duty, including 
attorney fees").  Such recovery, however, generally is "limited 
to situations in which the [plaintiff's] participation in the 
proceeding is beneficial to the trust . . . rather than merely 
the [plaintiff] in question."  See Restatement (Third) of Trusts 
§ 88 comment d (2007).  See, e.g., Matter of the Estate of 
Rogers, 71 Or. App. 133, 137 (1984) (attorney's fees "may be 
awarded to a party who at his own expense and not for his sole 
benefit successfully brings suit to benefit an estate or trust 
as a whole"); Allard, 99 Wash. 2d at 407 (in determining whether 
to award attorney's fees, "[t]he court's underlying 
consideration must be whether the litigation and the 
participation of the party seeking attorney fees caused a 
benefit to the trust"). 
 
In such situations, surcharge is available because the 
plaintiff's attorney's fees are thought to be necessary for the 
administration of the estate and therefore should be payable 
from the trust estate.  See Dunbar v. Broomfield, 247 Mass. 372, 
34 
 
385 (1924), quoting Trustees v. Greenough, 105 U.S. 527, 532 
(1881) ("It is a general principle that a trust estate must bear 
the expenses of its administration").  See also Bankers Trust 
Co. v. Duffy, 295 A.2d 725, 726 (Del. 1972) (attorney's fees 
should be paid out of trust estate where "the attorneys' 
services were necessary for the proper administration of the 
trust" or "otherwise resulted in a benefit to the trust").  
Because the estate bears the cost of the plaintiff's attorneys, 
the litigation results in a withdrawal from the trust estate, 
occasioned by the trustee's breach, for which the trustee is 
personally liable.  See Estate of Stowell, 595 A.2d at 1026 
(surcharge could be used to reimburse plaintiff's attorney's 
fees because withdrawn attorney's fees constituted "damage or 
loss to the estate directly resulting from [the defendant's] 
breach of fiduciary duties"); Allard, 99 Wash. 2d at 408 
("Ordinarily, the trust estate must bear the general costs of 
administration of the trust, including the expenses of necessary 
litigation.  Where litigation is necessitated by the inexcusable 
conduct of the trustee, however, the trustee individually must 
pay those expenses" [citation omitted]).  See also A. Newman, 
G.G. Bogert, & G.T. Bogert, Trusts and Trustees § 970 (3d ed. 
2010) (Bogert on Trusts) (trustee is liable for damage to trust 
estate caused by trustee's breach of trust). 
35 
 
 
Although some courts have extended the concept of surcharge 
to fiduciaries outside the context of trusts, see, e.g., Amara, 
563 U.S. at 444 (benefit plan administrator); Nedd v. United 
Mine Workers of Am., 556 F.2d 190, 211 (3d Cir. 1977), cert. 
denied, 434 U.S. 1011 (1978) (pension fund administrator); 
Maguire v. Puente, 120 Misc. 2d 871, 873-874 (N.Y. Sup. Ct. 
1983) (debtor in possession of bankrupt corporation), we are 
aware of no court that has used surcharge to award attorney's 
fees where a plaintiff filed a complaint solely for the 
plaintiff's personal benefit.  See Bogert on Trusts, supra at 
§ 871 (award of beneficiary's attorney's fees may be permissible 
where "the successful party benefitted or enhanced the trust 
estate"); 76 Am. Jur. 2d Trusts § 667 (2022) (beneficiary's 
attorney's fees "are properly allowed where [the] action serves 
to protect the entire trust res"); Annot., Allowance of 
Attorneys' Fees in, or Other Costs of, Litigation by Beneficiary 
Respecting Trust, 9 A.L.R.2d 1132, § 36 (1950) ("The propriety 
of an allowance of costs or fees out of the trust estate is 
frequently made to depend upon whether or not the litigation was 
for the benefit of the trust as a whole rather than the 
individual benefit of the trustee or one or more of the 
beneficiaries"). 
 
Indeed, such an award would appear to be contrary to the 
equitable purposes of surcharge.  The equitable rationale 
36 
 
underlying surcharge as an exception to the American Rule is 
twofold:  first, it would be inequitable to require an 
individual plaintiff to bear the cost of attorney's fees where a 
suit primarily benefits a separate entity; and second, failure 
to award attorney's fees would require a successful plaintiff to 
suffer a loss without any direct benefit, which would create 
disincentives for any plaintiff to pursue necessary litigation 
on behalf of all beneficiaries.  See Bogert on Trusts, supra at 
§§ 871, 970. 
 
Where a plaintiff brings suit for the benefit of the trust 
estate, the estate as a whole benefits, not simply the plaintiff 
him- or herself.  Thus, awarding attorney's fees to such a 
plaintiff tracks the long-standing principle of equity in the 
Commonwealth that plaintiffs who bring suit for the benefit of 
others ought not bear the burden of attorney's fees 
singlehandedly.  See Shaw v. Harding, 306 Mass. 441, 450 (1940) 
("an expense incurred by one, resulting in the creation of a 
fund for the general benefit of many other persons, ought not to 
be borne entirely by the one whose action has resulted in the 
realization of such a fund"); Sagalyn v. Meekins, Packard & 
Wheat, Inc., 290 Mass. 434, 440-441 (1935) (court may award 
attorney's fees to plaintiff who brought derivative action on 
behalf of corporation).  See also Boeing Co. v. Van Gemert, 444 
U.S. 472, 478 (1980) ("persons who obtain the benefit of a 
37 
 
lawsuit without contributing to its cost are unjustly enriched," 
and therefore "a court [may] prevent this inequity by assessing 
attorney's fees against the entire fund"). 
 
Moreover, where a suit is brought for the benefit of a 
trust estate, any award typically is paid directly to the estate 
rather than to the plaintiff.  See, e.g., Estate of Blanpied v. 
Robinson, 163 Colo. 433, 437 (1967) ("When a surcharge is 
adjudged against a fiduciary, the amount is required to be paid 
into the estate forthwith"); Jennings, 220 Kan. at 214; Shelton, 
72 N.C. App. at 12-13.  See also 1 J. Story, Commentaries on 
Equity Jurisprudence § 525 (12th ed. 1877) ("A surcharge is 
appropriately applied to the balance of the whole 
account . . ."); Harthill, A Square Peg in a Round Hole:  
Whether Traditional Trust Law "Make-Whole" Relief is Available 
Under ERISA Section 502(A)(3), 61 Okla. L. Rev. 721, 758-759 
(2008) ("Surcharge in an accounting action would . . . have 
typically been paid through the trust estate").  If the 
plaintiffs' attorney's fees were not reimbursed, plaintiffs who 
brought suit for the benefit of the estate would not receive any 
direct benefit, regardless of their success, and would be 
required to pay the attorney's fees out of pocket.  Although the 
American Rule tolerates that a party's "benefit may in practice 
be reduced by attorney's fees," see Wilkinson v. Citation Ins. 
Co., 447 Mass. 663, 671-672 (2006), a successful plaintiff who 
38 
 
sues for the benefit of the trust estate receives no immediate 
benefit -- only immediate loss.  The loss is likely to be 
substantial, as claims for breach of fiduciary duty are "often 
highly complex and heavily litigated proceedings" that may incur 
substantial attorney's fees.  See Matter of the Liquidation of 
Freestone Ins. Co., 143 A.3d 1234, 1257 n.19 (Del. Ch. 2016).  
Thus, without the possibility of their attorney's fees being 
repaid, plaintiffs would have less incentive to pursue a lawsuit 
necessary to rectify breaches of fiduciary duty for all 
beneficiaries, and such breaches more often would go unremedied.  
See In re The Mills Corp. Sec. Litig., 265 F.R.D. 246, 263 (E.D. 
Va. 2009) ("one object of an award of attorneys' fees should be 
to counteract this deterrence and [create incentives for] 
competent attorneys to pursue these cases when necessary"). 
 
These equitable considerations are inapplicable where, as 
here, a plaintiff is suing a fiduciary in breach directly for 
its own benefit.  See Wilkinson, 447 Mass. at 670-671 (declining 
to extend exception to American Rule to situations where policy 
underlying exception did not apply).  See also Fields v. 
District of Columbia, 443 F.2d 740, 743 (D.C. Cir. 1970) 
("Equitable considerations must play a major part in determining 
whether equitable relief should be granted"); Appalachian 
Volunteers, Inc. v. Clark, 432 F.2d 530, 537 (6th Cir. 1970), 
cert. denied, 401 U.S. 939 (1971) (courts "must apply equitable 
39 
 
principles in determining whether [litigants are] entitled to 
equitable relief"); Wilansky v. United States, 326 F. Supp.3d 
784, 790 (D. Minn. 2018), quoting Black Hills Inst. of 
Geological Research v. United States Dep't of Justice, 967 F.2d 
1237, 1239 (8th Cir. 1992) (equitable relief "should be 
exercised cautiously and subject to general equitable 
principles"); Matter of the Estate of Freudmann, 23 Misc. 2d 
763, 769 (N.Y. Surr. Ct. 1959) (equitable relief "should be 
shaped by equitable considerations"). 
 
Here, there is no distinction between the entity benefiting 
from the litigation and the party paying the attorney's fees:  
the award went to TC's own coffers, and the company can pay its 
attorney's fees from those funds.  That TC would not be made 
entirely whole as a result of having to pay its own attorney's 
fees "is the expected (if difficult) result in a jurisdiction 
that follows the American Rule."  Wilkinson, 447 Mass. at 672.  
TC thus is in a position that is no different from that of any 
other plaintiff, and we discern no reason to craft a new 
exception to the American Rule.  Accordingly, while we agree 
that, in some circumstances, surcharge may be used to hold a 
fiduciary liable for a plaintiff's attorney's fees, such a 
40 
 
remedy is not appropriate where, as here, the plaintiff is the 
only entity directly benefiting from the action.13 
 
e.  Motion to amend.  Following the jury's verdict, Michael 
sought leave to amend his counterclaim so that he could seek a 
judgment declaring that, as a result of John's misconduct, 
(1) John abandoned his ownership interest in TC pursuant to the 
Uniform Partnership Act, G. L. c. 108A, § 38, and (2) Michael 
attained a one-third ownership interest in Tocci Building 
Corporation under the doctrine of de facto merger.  The judge 
denied the motion after concluding that the proposed amendments 
were unduly delayed and would have been futile.  In his cross 
appeal, Michael claims that the judge erred in denying his 
motion to amend and that the denial violated his constitutional 
right to due process.  Michael requests a new trial to resolve 
these issues. 
 
"We review the denial of a motion to amend the complaint 
for abuse of discretion."  Nguyen v. Massachusetts Inst. of 
Tech., 479 Mass. 436, 461 (2018).  Under Mass. R. Civ. P. 
15 (a), 365 Mass. 761 (1974), leave to amend should be "freely 
 
 
13 In light of the conclusion we reach, we need not consider 
whether surcharge generally is available to corporations to 
remedy a breach of fiduciary duty.  See Brigade Leveraged 
Capital Structures Fund Ltd. v. PIMCO Income Strategy Fund, 466 
Mass. 368, 376 n.11 (2013) (declining to address party's 
argument where "the answer would not change our analysis or 
conclusion"). 
41 
 
given when justice so requires."  Nonetheless, leave may be 
denied if, inter alia, such a motion was unduly delayed or the 
amendment would be futile.  Doull v. Foster, 487 Mass. 1, 22 
(2021). 
 
General Laws c. 108A, § 38, creates certain rights for 
partners in a partnership as defined by the Uniform Partnership 
Act; those rights, however, are not generally available to 
shareholders of a corporation organized under G. L. c. 156D, the 
Massachusetts Business Corporations Act.  See G. L. c. 108A, 
§ 6 (2) ("any association formed under any other statute of this 
state . . . is not a partnership under this chapter").  Because 
TC is such a corporation, any claim under the Uniform 
Partnership Act would have been unavailing.14 
 
Any claim that Michael were to pursue under the doctrine of 
de facto merger would be similarly unavailing.  De facto merger 
is a common-law doctrine that allows courts to hold a successor 
corporation liable for the debts of its predecessor in order to 
protect the rights of creditors.  See Milliken & Co. v. Duro 
 
 
14 Business associations formed under other statutes may be 
considered partnerships for purposes of the Uniform Partnership 
Act if they "would have been a partnership in [the Commonwealth] 
prior to [January 1, 1923]."  G. L. c. 108A, § 6 (2).  
Corporations, however, have been recognized as distinct from 
partnerships since the Massachusetts Business Corporations Act 
was first enacted in 1903.  See Pacific Wool Growers v. 
Commissioner of Corps. & Taxation, 305 Mass. 197, 203-204 
(1940).  This exception therefore is inapplicable. 
42 
 
Textiles, LLC, 451 Mass. 547, 556 (2008).  Although some courts 
have extended the doctrine of de facto merger to provide certain 
rights to dissenting shareholders following a merger or other 
corporate consolidation, we are aware of no decision that has 
used the doctrine to provide the sort of relief Michael seeks, 
that is, a declaratory judgment that a shareholder of a 
predecessor corporation obtained proportionate shares in a 
successor corporation, and he has not identified any.  See 20 
Am. Jur. Proof of Facts 2d 609, § 1 (2022).  Accordingly, the 
judge did not abuse her discretion in denying Michael's motion 
to amend. 
 
Michael also maintains that the second judge violated his 
constitutional right to due process because he was not afforded 
an evidentiary hearing on his equitable claims, which were 
reserved for judicial disposition following the jury trial.  Due 
process, however, does not require an evidentiary hearing where, 
as here, it is clear from the filings that a plaintiff's claim 
cannot succeed as a matter of law.  See Demoulas II, 428 Mass. 
at 589, quoting Equal Employment Opportunity Comm'n v. Steamship 
Clerks Union, Local 1066, 48 F.3d 594, 609 (1st Cir.), cert. 
denied, 516 U.S. 814 (1995) ("Due process does not require any 
particular type of hearing, and 'many matters can lawfully -- 
and satisfactorily -- be heard on the papers'"). 
43 
 
 
3.  Conclusion.  The second trial judge's denial of TC's 
motion in limine regarding the first trial judge's factual 
findings is affirmed, as are the denials of John's motions for a 
directed verdict on the issue of the statute of limitations.  
The denials of TC's motion for additur or a new trial on remedy, 
TC's motion for surcharge, and Michael's motion to amend and 
special motion for a new trial also are affirmed. 
 
 
 
 
 
 
 
So ordered.