Title: Bontempo v. Lare

State: maryland

Issuer: Maryland Supreme Court

Document:

David S. Bontempo, Individually and on Behalf of Quotient, Inc. v. Clark J. Lare, et al.
No. 55, September Term 2014
Corporations – Dissolution Statute – Oppression of Minority Shareholder – Reasonable
Expectations Doctrine.  Under the Maryland General Corporation Law, a minority
shareholder may seek dissolution of a corporation on the ground that those in control of the
corporation have engaged in illegal, oppressive, or fraudulent conduct as to the minority
shareholder.  Oppression is measured by the “reasonable expectations” of the minority
shareholder at the time the shareholder obtained an interest in the corporation.  
Maryland Code, Corporations & Associations Article, §3-413. 
Corporations – Dissolution Statute – Oppression of Minority Shareholder – Other
Equitable Remedies.  When a claim is brought by a minority shareholder under the
Maryland General Corporation Law for dissolution of a corporation on the ground that those
in control of the corporation have engaged in oppressive conduct as to the minority
shareholder, a court may consider other equitable remedies less drastic than dissolution of
the corporation, taking into account the interests of others associated with the corporation. 
A trial court’s decision as to what, if any, equitable relief to grant is reviewed on appeal for
abuse of discretion.  Employment-related relief, such as pay-related monetary damages or a
requirement that the corporation employ the minority shareholder is unlikely to be
appropriate, however, unless the oppressive conduct involved a breach of a written or oral
employment agreement.
Corporations – Fraudulent Conduct – Punitive Damages.  Neither oppressive conduct as
to a minority shareholder for purposes of the corporate dissolution provision of the Maryland
General Corporation Law nor a breach of fiduciary duty as to the corporation by those in
control of the corporation necessarily constitute fraudulent conduct entitling the minority
shareholder to punitive damages.  A trial court’s determination that conduct was not
fraudulent will not be overturned unless clearly erroneous.
Circuit Court for Howard County
Case No. 13-C-10-081915
Argued:  March 10, 2015
IN THE COURT OF APPEALS
OF MARYLAND
No. 55
September Term, 2014
DAVID S. BONTEMPO, INDIVIDUALLY
AND ON BEHALF OF QUOTIENT, INC.
v.
CLARK J. LARE, et al.
Barbera, C.J.
          *Harrell
Battaglia
Greene
Adkins
McDonald
Wilner, Alan J. (Retired,
Specially Assigned)
JJ.
Opinion by McDonald, J.
Harrell and Adkins, JJ., dissent
Filed: August 6, 2015
*Harrell, J., now retired, participated in the
hearing and conference of the case while an active
member of this Court; after being recalled
pursuant to the Constitution, Article IV, Section
3A, he also participated in the decision and
adoption of this opinion. 
Under the Maryland General Corporation Law,  a minority shareholder of a closely
1
held corporation who has been “oppressed” by those who control the corporation may ask
a court of equity to dissolve the corporation.  Many courts have measured oppression by
looking to the “reasonable expectations” of minority shareholders at the time they join the
venture.  The Court of Special Appeals is one of those courts,  and now by virtue of this
2
decision, so are we.  Many courts in other jurisdictions – and the Court of Special Appeals,
as well – have held that a court of equity may employ other equitable tools, short of
dissolution, to remedy shareholder oppression.  By virtue of this decision, so do we.  This
case requires us to consider the limit of those remedies when a minority shareholder, who
also was an employee, seeks employment-related damages under the dissolution statute. 
Petitioner David Bontempo, a minority shareholder in, and former employee of,
Respondent Quotient, Inc., successfully proved in the trial court that he had been oppressed
by Respondent Clark Lare, whose shares together with those owned by his wife Jodi Lare,
also a Respondent, are the majority interest in Quotient.  While the trial court ordered an
accounting and awarded Mr. Bontempo damages, unpaid corporate distributions, and
attorneys’ fees, it declined to dissolve Quotient, to require Quotient to reinstate Mr.
Bontempo as an employee, or to award other employment-related relief.  In addition, the trial
court was unpersuaded that the actions of Mr. Lare constituted fraudulent conduct meriting
an award of punitive damages to Mr. Bontempo.
 Maryland Code, Corporations & Associations Article, §1-101 through §3-907.
1
 Edenbaum v. Schwarcz-Osztreicherne, 165 Md. App. 233, 885 A.2d 365 (2005).
2
We hold that the measuring stick for “oppression” of a minority shareholder – the
shareholder’s “reasonable expectations” upon becoming an owner of the company – does not
dictate the nature of equitable relief (short of corporate dissolution) that a trial court must
impose.  In fashioning relief, the trial court may properly take account of the viability of the
corporation, and the impact of the relief on others associated with the corporation, including
other shareholders, management, employees, and customers.  Employment-related relief,
such as pay-related monetary damages or a requirement that the corporation employ the
minority shareholder, is unlikely to be appropriate in the absence of a written or oral
employment agreement.  We hold that the trial court in this case did not abuse its discretion
in deciding on appropriate relief.
I
Background
A.
Bontempo, the Lares, and Quotient
Formation of  Quotient
Mr. Bontempo and Mr. Lare worked together during the 1990s at Maxim Healthcare,
a health care staffing company, in Chicago, Illinois.  They shared the idea of running a
business together.  By the late 1990s, they had separately left Maxim and returned to the
Baltimore-Washington area.  
In 1999, Mr. Lare and his wife founded Quotient, a company that would recruit
information technology professionals for placement as consultants at government entities and
2
private employers.  Ms. Lare was, and remained, employed as a pharmacist at Watermont
Pharmacy (which she owned with her mother).  The Lares initially operated Quotient out of
their home and funded it with their personal savings and credit cards.  A Stockholders
Agreement dated November 15, 2000 recited the ownership of the company’s shares by the
Lares.  Among other things, the Agreement also designated certain “triggering events” that
would require a shareholder to sell (to the corporation or to the remaining shareholders) the
shareholder’s interest.  Among the triggering events was termination of the shareholder’s
employment with Quotient “for good cause.”3
Mr. Bontempo joins Quotient as an Employee and Shareholder
Mr. Lare and Mr. Bontempo had stayed in touch, and Mr. Bontempo made a referral
to Mr. Lare that resulted in a contract between Quotient and the United States Census
Bureau.  Soon thereafter, Mr. Bontempo himself joined Quotient as Vice-President of
Business Development.  Mr. Bontempo agreed to leave his $85,000 salary at another
company to become a 45% shareholder in Quotient and draw a salary of $20,000 from the
company beginning in February 2000.  The parties did not enter into a written employment
contract.  It was understood that the Lares would continue to take no salary, and would adjust
their ownership so that Mr. Lare owned 4% and Ms. Lare owned 51% of the shares
(apparently an effort to qualify for government contracting preferences for woman-owned
 The Stockholders Agreement listed some examples of good cause:  “theft from the
3
Corporation, conviction of a felony, fraud on the Corporation.”
3
and managed small businesses).  The Circuit Court later found that the parties had essentially
entered into a “handshake deal” under which Mr. Bontempo would join the company, but
without an employment contract that set out any particulars of his employment.
In early 2001, the parties formalized the arrangement to a certain extent.  In January
2001, the Lares and Mr. Bontempo executed an attachment to the Stockholders Agreement
in which Mr. Bontempo assented to the terms of the earlier Agreement.  Minutes of a
contemporaneous board meeting stated that Mr. Lare had transferred stock to Mr. Bontempo
“in recognition of his efforts on behalf of the Corporation since becoming an employee of
the Corporation.”  Coincident with the transfer of shares to him in March 2001, Mr.
Bontempo also signed a promissory note to Mr. Lare in the amount of $46,800 to be paid in
installments over a five-year period.  The parties later differed on the purpose of the note,
although they agreed that it was related to the stock transfer.  Mr. Bontempo testified that the
note was never meant to be repaid, but was simply an “accounting record” and that he
executed it for the company’s books when he received his shares.  Mr. Lare testified that Mr.
Bontempo was expected to repay the note.  It was undisputed that Mr. and Ms. Lare reported
a capital gain as a result of the note and had paid approximately $12,000 in taxes on that
gain.  Mr. Bontempo never made a payment on the promissory note.  
In December 2001, the Lares began to draw a salary from the company.  Mr.
Bontempo testified that he had an oral agreement with the Lares that his salary would match
the Lares’ combined salaries, once they started to take a salary, but the Lares contended that
4
there was no such agreement.  The trial court found that there was not “a meeting of the
minds” on this issue and that it was not part of any employment agreement.  In fact, over the
10-year period that Mr. Bontempo spent as an employee of Quotient, Mr. and Ms. Lare’s
combined salaries roughly equaled Mr. Bontempo’s salary for approximately four years,
while the salaries were significantly different in both the early and later years of his
employment. 
In 2004, the Lares and Mr. Bontempo executed an Amended and Restated
Stockholders Agreement (ARSA), which acknowledged Mr. Bontempo as a 45% owner,
noted that he had owned the shares since 2001, and made other minor changes not relevant
here.  Mr. Bontempo had not contributed any capital to Quotient.
At first, both Mr. Bontempo and Mr. Lare focused on acquiring business for Quotient. 
As the company grew, Mr. Bontempo focused on sales and client relationships, and Mr. Lare
focused on executive management and operations.  At the time of trial in 2011, the parties
agreed that Jodi Lare had not been involved in Quotient for four or five years.
The company eventually qualified for a General Services Administration (“GSA”)
schedule, which significantly improved its ability to obtain federal government contracts. 
The Circuit Court found that Mr. Bontempo had a critical role in obtaining certain
government contracts for the company.  The company added more employees, moved into
its own office space, and relocated several times to accommodate its growth. 
5
Personal Expenses Paid by Quotient
As Quotient grew, the company paid for various personal expenses for both the Lares
and the Bontempos, including cell phones, vehicles, and automobile insurance.  Quotient
purchased a late model SUV and provided a cell phone and credit card for Mr. Bontempo’s
wife, who never had any role in the company.  Both the Bontempos and the Lares used
company credit cards for personal expenses, including gas, meals, and entertainment.  Mr.
Bontempo testified that he would reimburse the company for personal expenses if Mr. Lare
asked him to do so.
Beginning in 2007, Mr. Lare approached Mr. Bontempo about making short-term
interest-free loans to Watermont Pharmacy, the pharmacy where Jodi Lare worked and was
part-owner.  Mr. Bontempo approved those loans but, according to Mr. Bontempo, he was
not aware that Quotient funds continued to be used for short-term loans to Watermont for
several years beyond the loans he had approved.  In 2006, the Lares placed their household
employees on Quotient’s payroll,  and company funds were used to pay for the Lares’
4
personal trainers and personal legal fees (for a dispute not related to this litigation).  Quotient
also made short-term interest-free loans to Broadway Equities, LLC, a company formed by
 Mr. Bontempo testified that he knew that Mr. Lare had considered placing his
4
household employees on the company’s health insurance policy, but he assumed that Mr.
Lare would cover the cost of the health insurance, and did not know that the household
employees would be included on Quotient’s payroll.  Testimony at trial established that the
payments to the household employees were recorded in company records available to Mr.
Bontempo and that other Quotient employees were aware of the payments.
6
Mr. Lare and his brother to purchase real estate in Cape May, New Jersey.  The Circuit Court
found that Quotient’s financial statements did not reflect the loans. 
In December 2007, the Lares borrowed more than $200,000 from Quotient in
connection with a renovation of their home.  The note that they provided to the company in
connection with that loan was to be paid in full by March 1, 2009.  But, instead of paying off
the loan, they executed a new note on February 1, 2009, with a balance of nearly $500,000
due on January 1, 2016.  
5
Mr. Bontempo’s Departure 
What apparently began as an amicable collaboration between Mr. Lare and Mr.
Bontempo deteriorated over time.  Mr. Lare felt that he was shouldering more of the burden
as the company grew and that Mr. Bontempo was spending too much time pursuing his
interests in jazz and in a separate business with his brother.  Following discussion with a
management consultant, in June 2009, he cut Mr. Bontempo’s salary.  At the same time, Mr.
Bontempo was concerned that the Lares were taking distributions as shareholders without
notifying him or providing him with his proportionate distribution.
 The dissenting opinion recites several “facts” concerning the Lares’ use of corporate
5
funds not found by the trial court, but apparently derived from a report by Mr. Bontempo’s
forensic accountant.  Dissenting Opinion at pp. 3-4 & nn.4, 6.  At trial, the accountant was
cross-examined at length about certain assumptions and decisions made in connection with
that report, which likely explains why the trial court did not make the findings that the
dissenting opinion would make on appeal.
7
By the fall of 2009, the relationship had soured significantly.  In September 2009, Mr.
Lare rejected a hiring suggestion made by Mr. Bontempo on the ground that the company did
not have the funds to hire an additional business development employee (although Mr. Lare
at the time was lending company funds to Watermont and Broadway Equities).  Other
disagreements about business strategy, salaries, shareholder distributions, and Mr.
Bontempo’s job performance came to a head.  At a meeting in November 2009, Mr. Lare
expressed his concerns about Mr. Bontempo’s job performance and gave him a list of
suggestions for improvement; Mr. Bontempo in turn raised his concerns about Mr. Lare’s
management of the company’s finances. 
At a later meeting in January 2010, they failed to reach agreement on salaries and
distributions.  Mr. Bontempo told Mr. Lare that they needed an “exit strategy” and suggested
that they split the company.  Mr. Lare urged Mr. Bontempo to let the Lares buy out his shares
and to “name a price.”  Mr. Lare later gave Mr. Bontempo a proposal for a negotiated
departure from the company which Mr. Bontempo rejected.  
At a meeting on March 26, 2010, Mr. Lare proposed a separation agreement, which
Mr. Bontempo again declined to consider and refused to sell his shares.  In response, Mr.
Lare fired him.  At the time, Mr. Lare did not tell Mr. Bontempo that his employment was
terminated for cause.  Mr. Lare later testified that he fired Mr. Bontempo because of the
latter’s declining job performance, but several current and former Quotient employees
testified at trial that Mr. Bontempo had remained a productive employee.  The Circuit Court
8
found that Mr. Lare’s testimony in this regard was not credible.  In particular, the court found
that Mr. Lare’s claim that Mr. Bontempo’s performance had declined and led to his
termination for cause “strains credulity and is totally against the weight of the evidence.”  
Although Mr. Bontempo was no longer an employee of Quotient, he remained an
officer, director, and shareholder of the company.  Within a week of his firing, Mr.
Bontempo revoked his personal guarantee of Quotient’s financing at BB&T Bank.  Shortly
thereafter, he initiated this litigation.  BB&T Bank declared that Quotient was in default for
violation of the terms of its financing, based on Mr. Bontempo’s revocation of his guarantee,
his filing of this lawsuit, and Quotient’s loans to Watermont and its shareholders.  As a
result, Quotient had to obtain a new financing source at a cost of $85,000 in additional
finance charges.  
In August 2010, Mr. Bontempo resigned from his position as an officer and director
of Quotient because he felt disconnected from the daily operations of the company and
believed that the board meetings were a “farce.”  We are advised that Mr. Bontempo still
owns 45% of Quotient’s shares.  The Circuit Court found that throughout this litigation he
has received proportionate distributions from the company.  
After he left Quotient, Mr. Bontempo started a new company known as Siloquent LLC
with his wife.  He thereafter met with various contacts at clients of Quotient, but claimed that
he was not soliciting business in competition with Quotient.  Because Siloquent has not been
9
approved for a GSA schedule and Mr. Bontempo lacks a security clearance, Siloquent would
have difficulty competing for Quotient’s customers.
B.
Bontempo versus the Lares and Quotient 
Complaint and Pre-Trial Motions
Mr. Bontempo filed this action in the Circuit Court for Howard County on April 2,
2010.  The complaint was amended twice prior to trial.  In its final iteration it included five
counts, including two counts asserting direct claims against the Lares and Quotient,
respectively, and three counts asserting derivative claims on behalf of Quotient against the
Lares.   
6
Direct claims.  Count One was a direct claim against the Lares under Maryland Code,
Corporations & Associations (“CA”), §§3-413, seeking a panoply of equitable relief for Mr.
Bontempo under that statute based on his status as a shareholder of Quotient and the alleged
“illegal, fraudulent, and oppressive” conduct of the Lares with respect to him.  Count Five
was a direct claim against Quotient for breach of contract and sought compensatory damages
for Mr. Bontempo related to unpaid salary and distributions based on his status as both an
employee and a shareholder. 
 The opinion of the Court of Special Appeals in this case contains an excellent
6
summary of the remedies available under Maryland law to a minority shareholder in a
Maryland corporation, including direct and derivative claims, which we will not repeat here. 
217 Md. App. 81, 112-14, 90 A.3d 559 (2014).
10
Derivative Claims on behalf of Quotient.  The three derivative claims sought various
types of relief against the Lares based on alleged breaches of fiduciary duties owed to the
corporation and the diversion of corporate funds for their personal purposes.  Count Two
asked the court to impose a constructive trust on the Lares for the benefit of Quotient with
respect to funds improperly diverted from Quotient.  Count Three asked the court to award
compensatory and punitive damages against the Lares in favor of Quotient for the alleged
breaches of fiduciary duty to the corporation and diversions of corporate funds.  Count Four,
labeled “Constructive Fraud,” alleged that the Lares had acted with “fraud, actual malice, and
an intent to injure Quotient” and sought compensatory and punitive damages on behalf of the
corporation. 
Counterclaim.  Quotient counterclaimed against Mr. Bontempo, seeking a declaratory
judgment that he had been fired for good cause, and thus was required to sell his stock to the
company.  It also sought damages for his alleged breach of fiduciary duties to Quotient.  
Prior to trial the Circuit Court granted summary judgment in favor of the Lares
individually with respect to employment-related damages sought by Mr. Bontempo in his
direct claim based on CA §4-313 against them in Count One.  It held that employment-based
remedies were not available from a shareholder individually without a clear allegation of
fraud committed by the shareholder.  Mr. Bontempo potentially could still obtain such relief
under his direct claim against the corporation in Count Five.
11
After some initial skirmishing as to whether the case should be heard by a jury, the
parties agreed that the case should be tried before a judge alone. 
Trial
Following a nine-day trial in March 2011, the Circuit Court issued an opinion that
detailed its findings of fact and applied the law pertinent to the various counts to those facts.
With respect to Mr. Bontempo’s direct claim under CA §3-413, the trial court looked
to the “reasonable expectations” test articulated in Edenbaum v. Schwarcz-Osztreicherne,
165 Md. App. 233, 885 A.2d 365 (2005), to assess whether Mr. Bontempo, in his status as
a minority shareholder, had been oppressed with respect to his investment in Quotient.  In
Edenbaum, the Court of Special Appeals explained:
[A] minority shareholder who reasonably expects that ownership
in the corporation would entitle him to a job, a share of the
corporate earnings, and a place in corporate management would
be “oppressed” ... when the majority seeks to defeat those
expectations and there exists no effective means of salvaging the
investment.
165 Md. App. at 258 (quoting Balvik v. Sylvester, 411 N.W.2d 383, 387 (N.D. 1987)..  
Applying that standard, the Circuit Court found that:
Bontempo’s reasonable expectations were that this start-up
company would employ him, that he would participate (as a
stockholder) in the company’s profit distributions and that he
would not be terminated for subjective reasons.  Bontempo was
more than a mere employee of Quotient – he was, in all respects,
a founding member of the company and made significant
contributions to the company’s later success.
12
The trial court found that Mr. Lare oppressed Mr. Bontempo by firing him for refusing to sell
his shares, but the court found that the conduct did not involve fraud or illegality that
warranted a dissolution of the company under the statute.  
With respect to remedy, the Circuit Court explained that, under Edenbaum, dissolution
should be avoided where less drastic remedies are available.  The court observed that it was
“patently obvious” that the parties would not be able to resolve their differences “without
court direction and intervention” and concluded that reinstatement of Mr. Bontempo as an
employee was not a viable remedy.  But it also noted that the company was currently thriving
and that, as a result of Mr. Bontempo’s voluntary resignation, the current directors of
Quotient were not divided.   In the trial court’s view, a more appropriate remedy for Mr.
Lare’s oppressive conduct was to order an accounting of the Lares’ personal use of Quotient
funds unrelated to Quotient’s business purposes.  The court also ordered reimbursement of
a portion of Mr. Bontempo’s legal fees and litigation expenses.  Although Count One did not
explicitly seek punitive damages, the court stated that, because it did not find fraud, it would
deny any request for punitive damages under that count. 
With respect to the derivative claims on behalf of Quotient, the trial court declined to
order imposition of the constructive trust sought in Count Two, as it was unable to ascertain
the amount misappropriated by the Lares until the completion of the accounting that it had
ordered with respect to the Count One.  With respect to Count Three, it entered judgment in
favor of Quotient on the breach of fiduciary duty claim as to the Lares, but found that the
13
damages would be the same as those it awarded with respect to Count One.  With respect to
Count Four, the court found that Mr. Bontempo failed to meet the burden of proving that Mr.
Lare’s actions were fraudulent – as opposed to the product of mismanagement and poor
judgment –  and accordingly declined to award compensatory or punitive damages on that
count.
With respect to the direct claim in Count Five against Quotient for breach of contract,
the court held that Mr. Bontempo had not met his burden of showing that there was an
agreement that his salary would equal the combined salaries of the Lares and declined to
award salary-related damages to him.  The court did find, however, that he was entitled to
$118,000 in unpaid distributions from the corporation, and ruled that he was entitled to a
proportionate share of future distributions as a shareholder. 
Finally, the Circuit Court found that Quotient’s counterclaim was without merit. 
Consistent with its other findings, the court determined that Mr. Bontempo was an at-will
employee, but that he had not been fired for cause that would have triggered an obligation
to sell his stock in Quotient.  Accordingly, the court declined to issue the declaratory
judgment requested by Quotient.  In addition, it found that Quotient had not met its burden
of proof that Mr. Bontempo had violated a fiduciary duty to the company in revoking his
guarantee with its lenders.  
14
Post-Trial Motions and Rulings
After the trial court issued its opinion, Mr. Bontempo filed a Motion to Alter or
Amend Judgment asking the court to reverse its adverse rulings; he also made new requests
for relief – among other things, that the court order:  Jodi Lare to fire Clark Lare, the forced
sale of the Lares’ stock, and the reallocation of Quotient’s contracts between Mr. Bontempo
and the Lares under a court-appointed agent.  Mr. Bontempo did not specifically ask that the
judgment be modified to reinstate him as an employee of Quotient.  The Lares and Quotient
also filed a Motion to Alter or Amend Judgment, asking that the court clarify the order for
an accounting of funds, modify the judgment to avoid double-counting damages, and
eliminate the award of litigation costs.
After conducting a hearing at which it took additional evidence, the Circuit Court
issued a detailed post-trial memorandum and order in May 2012 in which it reviewed and
denied most of the relief sought by Mr. Bontempo.  It reiterated that, while it had found
oppressive conduct by Mr. Lare, it did not find that the Lares had defrauded Mr. Bontempo
or Quotient.  It reiterated its finding that Mr. Bontempo was an at-will employee of the
corporation and noted that, although his employment had been terminated and he had
voluntarily resigned from his positions as an officer and director, he remained a shareholder
of the corporation.  In denying Mr. Bontempo’s request that it allocate Quotient’s contracts
between him and Mr. Lare as a way of dividing the corporate assets, the court also noted “the
15
undisputed testimony” that none of Mr. Bontempo’s distributions had been withheld  and that
7
nothing new had been presented during the post-trial hearing to change the court’s previous
conclusions.  The court stated that Mr. Bontempo’s “reasonable expectations” when he
joined Quotient were “with the knowledge that he was a minority stockholder and an at-will
employee,” and that he had no expectation  of “lifetime employment with the company.”  It
thus rejected any additional employment-based relief.  The court also denied all of Mr.
Bontempo’s renewed requests for additional equitable relief.  It found that Quotient was a
prospering company that did not need micromanagement, dissolution, or forced contract
reallocation.  Finally, the court held that Mr. Bontempo had relinquished his say in
management decisions when he voluntarily resigned from his position as a director of the
company.
In its post-trial order, the court also clarified that the accounting it required from the
Lares related to Quotient payments for the Lares’ household employees and personal
litigation expenses.  It directed that the accounting be completed by August 15, 2012, that
the amount determined be regarded as a distribution to the Lares, and that Mr. Bontempo
receive a proportionate distribution from Quotient.  It reduced the figure for unpaid
 In his reply brief to us, Mr. Bontempo suggested that the company has subsequently
7
failed to make appropriate distributions to him.  As the Circuit Court will be conducting
further proceedings on remand and as the information he refers to is outside the record of this
appeal, we refrain from expressing any view on the merits of that contention in this opinion.
16
distributions in its previous order to more accurately reflect Mr. Bontempo’s proportionate
share of distributions.  
Finally, the Circuit Court also vacated its prior award of attorneys’ fees and expert
witness fees in favor of Mr. Bontempo because it had not yet held a hearing on those awards. 
After holding a hearing, the court issued a supplemental memorandum opinion in which it
ordered an award of attorneys’ fees and costs in favor of Mr. Bontempo against Quotient
with respect to the derivative claim on which he had prevailed (Count Three) under the
“common fund doctrine,” which allows a court to award attorneys’ fees from a fund
recovered as part of a successful derivative action.   The amount of that award, following
8
correction of a computation error, was $109,012.76.
The Lares completed the required accounting of misappropriated funds.  As of
September 2012, Quotient had paid Mr. Bontempo $167,638 as damages for Mr. Lare’s
oppressive acts, $109,012.76 in attorneys’ fees, and $81,818.18 in unpaid distributions.
Appeal
Mr. Bontempo appealed; Quotient and the Lares cross-appealed.  The Court of Special
Appeals, in a thorough and well-reasoned opinion, affirmed all but one of the trial court’s
rulings challenged on appeal.  217 Md. App. 81, 90 A.3d 559 (2014).   With respect to the
9
 See Boeing Co. v. Van Gemert, 444 U.S. 472, 478 (1980).
8
 The Court of Special Appeals also re-characterized one of the trial court’s rulings.
9
Although it did not quarrel with the substance of the ruling, the intermediate appellate court
noted that, as a technical matter, the trial court’s decision not to impose a constructive trust
in favor of Quotient on funds held by the Lares should be regarded as a judgment in favor
17
trial court’s order that Quotient treat the Lares’ personal use of company money as a
distribution, and make a proportionate distribution to Mr. Bontempo, the intermediate
appellate court expressed the view that the payments made as a result of the accounting
should recognize that Quotient exists as an entity separate from the Lares.  Accordingly, it
held that, because Quotient was the injured party with respect to the Lares’ misuse of
corporate funds, the monetary remedy should make Quotient whole.  Once Quotient was
made whole by the Lares, it would be up to the company to decide whether to make a
distribution to its shareholders.  217 Md. App. at 126-30.  Accordingly, the court vacated that
portion of the trial court’s judgment and remanded for further proceedings.   
10
of the Lares as against Quotient, rather than a judgment in favor of Quotient as against Mr.
Bontempo.  217 Md. App. at 126 n. 23.
 The insistence by the Court of Special Appeals that the parties recognize the
10
separate existence of Quotient and honor the corporate formalities also resolved an issue
concerning the trial court’s award of attorneys’ fees and expenses to Mr. Bontempo.  The
Lares contended in their cross-appeal that the trial court had erred in relying on the common
fund theory to award attorneys’ fees and expenses to Mr. Bontempo with respect to his
derivative claims on behalf of Quotient because the litigation had not resulted in the creation
of a “common fund.”  The intermediate appellate court noted that repayment to Quotient by
the Lares of the misappropriated corporate funds would result in a common fund belonging
to the corporation.  It remanded the issue to the Circuit Court to reconsider the award of
attorneys’ fees in light of the common fund that would be recovered.  217 Md. App. at 135-
36.
The holding of the Court of Special Appeals in this regard is apt, as much of the
misconduct in this case is attributable to the apparent inability of the parties to distinguish
the corporation from its owners.  It may be that the current board of Quotient can properly
ratify the payments already made as a result of the accounting and that appropriate tax
reporting and any other compliance issues can be resolved.  But we are not in a position to
provide advice on those subjects.   
18
We granted Mr. Bontempo’s petition for a writ of certiorari to consider two issues: 
(1) whether the Circuit Court erred in declining to order employment-related relief – e.g., an
order that Mr. Bontempo be re-employed by Quotient and be awarded back pay and a salary
into the future  – as part of the relief for the oppressive conduct it had found by one of the
controlling shareholders of the corporation; and (2) whether the Circuit Court erred when it
determined that the Lares had not engaged in “fraudulent” conduct.
II
Discussion
A.
Standard of Review
In an appeal of a bench trial, an appellate court will not disturb the trial court’s
findings of fact unless they are clearly erroneous, giving “due regard to the opportunity of
the trial court to judge the credibility of the witnesses.”  Maryland Rule 8-131(c).  Findings
are not clearly erroneous if “any competent material evidence exists in support of the trial
court’s factual findings[.]”  Webb v. Nowak, 433 Md. 666, 678, 72 A.3d 587 (2013); Figgins
v. Cochrane, 403 Md. 392, 409, 942 A.2d 736 (2008).  The appellate court considers
questions of law without deference, or de novo.  See Breeding v. Koste, 443 Md. 15, 27, 115
A.3d 106 (2015).  A trial court’s decision whether to award particular forms of equitable
relief based on its fact findings and the applicable legal standards is reviewed for abuse of
discretion.  Commission on Human Relations v. Talbot County Detention Center, 370 Md.
115, 127, 803 A.2d 527 (2002).
19
B.
Shareholder Oppression and Employment - Related Relief
As noted above, the trial court found that Mr. Bontempo did not meet his burden of
proof on Count Five to establish a breach of contract by Quotient with respect to his
employment and found that he was an at-will employee of the company.  Although he does
not contest that ruling before us, Mr. Bontempo argues that his successful showing of
oppressive conduct by Mr. Lare against him as a minority shareholder in his claim under CA
§3-413 entitled him to employment-related relief with Quotient.  His argument on appeal thus
focuses on relief available under the corporate dissolution statute for oppression of a minority
shareholder. 
At-Will Employment
There is a presumption in Maryland law that an employment relationship is “at-will”
– i.e., terminable by either party at any time, with or without cause.  This Court recently
referred to this presumption as “one of our most venerated common law precepts.” 
Spacesaver Systems, Inc. v. Adam, 440 Md. 1, 11, 98 A.3d 264 (2014).  Nothing in that
doctrine, however, precludes parties from contracting otherwise, either by specifying a clear
duration of employment or by spelling out reasons for termination, such as “just cause.”  440
Md. at 12.  
This Court recently examined how the owners of a closely held corporation might
contract otherwise in Spacesaver.  In that case, three siblings – a brother and two sisters –
owned a company.  Each also had an employment agreement with the company.  When the
20
two sisters began to suspect their brother of stealing from the company, they had their
respective employment agreements revised to include for-cause termination, including a list
of examples of conduct that would constitute “cause.”  At the same time, each of the siblings’
stock purchase agreements was similarly revised to provide that a shareholder could be
forced to sell his or her shares to the company if the shareholder engaged in certain
“prohibited acts” – a list that mirrored the examples of “cause” in the employment agreement. 
The brother soon resigned and voluntarily sold his shares to the company without any need
to resort to the forced sale provision.  The two sisters soon found themselves in conflict over
their respective responsibilities and compensation at the company.  Eventually one sister
terminated the other, who then sued, alleging that her termination without cause violated her
employment agreement.
To determine whether the terminated sister was an at-will employee, the Court looked
to the language of the employment agreement.  440 Md. at 15.  Relying on Towson
University v. Conte, 384 Md. 68, 862 A.2d 941 (2004), a case concerning the employment
status of a university president, the Court construed the “for cause” provision in the
employment agreement to negate the notion that the sister was an at-will employee.  440 Md.
at 16-17.  This Court held that the shareholder’s employment with her company in
Spacesaver was “continuous for-cause” employment, based on the terms of the employment
agreement.  The Court emphasized that “the presumption for at-will employment persists and
is only defeated when the parties explicitly negotiate and provide for a definite term of
21
employment or a clear for-cause provision.”  Spacesaver, 440 Md. at 25.  While the Court
also referred to the list of “prohibited acts” in the stock purchase agreement, it was in the
context of interpreting the written employment agreement.  There was no suggestion that the
stock purchase agreement itself provided for tenure for the sister as an employee.    
Oppression in a Closely-Held Corporation and its Remedy
CA §3-413 provides for the involuntary dissolution of a Maryland corporation.  That
statute states in relevant part: 
(b) ... any stockholder entitled to vote in the election of
directors of a corporation may petition a court of equity to
dissolve the corporation on grounds that:
* * *
(2) 
The acts of the directors or those in control
of the corporation are illegal, oppressive, or fraudulent.
The statute does not define “oppressive” acts, although it is a term commonly used to
describe adverse treatment of minority shareholders in a closely-held corporation by those
who wield power within the company.  See, e.g., Black’s Law Dictionary (9  ed. 2009) at
th
1203 (defining “oppression” as “[u]nfair treatment of minority shareholders (esp. in a close
corporation) by the directors or those in control of the corporation”).  As the Circuit Court
noted, the Court of Special Appeals has embraced an approach adopted in a number of
jurisdictions that is known as the “reasonable expectations doctrine.”  Under that doctrine,
to determine whether a majority shareholder’s misconduct vis-a-vis a minority shareholder
has been so severe as to trigger the possible demise of the  corporation, a court measures that
22
conduct against the “reasonable expectations” of the minority shareholder when the minority 
shareholder obtained his or her interest in the company.  The intermediate appellate court has
elaborated:  
“Oppression” … has also been defined by one Maryland
commentator as “conduct that substantially defeats the
reasonable expectations of a stockholder.”  James J. Hanks, Jr.
Maryland Corporation Law § 11.7(b) (1990, 2004 Supp.).  Or,
in the more precise terminology of one of our sister states,
“conduct that substantially defeats the ‘reasonable expectations’
held by minority shareholders in committing their capital to the
particular enterprise.”
 Edenbaum, 165 Md. App. at 256 (citations omitted).   The court clarified that the concept
11
of oppression is not measured solely by the subjective expectations or desires of the minority
shareholder:  it “should be deemed to arise only when the majority conduct substantially
defeats expectations that, objectively viewed, were both reasonable under the circumstances
and were central to the [minority shareholder]’s decision to join the venture.”  Id. at 258
(quoting Matter of Kemp & Beatley, Inc., 473 N.E.2d 1173, 1179 (N.Y. 1984)).  In other
words, “disappointment alone should not necessarily be equated with oppression.”  Id.
Edenbaum involved a closely-held corporation that operated an adult care facility. 
The majority shareholder, an experienced manager of assisted living facilities, was in charge
of admissions, hiring, billing, and administration of the facility.  The minority shareholder
 Although Mr. Bontempo did not commit any capital to Quotient, presumably the
11
“sweat equity” he invested in the company in its early years served the same purpose for
application of the “reasonable expectations” doctrine.
23
was a geriatric nurse who provided patient care and house maintenance at the facility.  The
parties did not execute a separate employment agreement, but their shareholders agreement
contained specific details about their respective job titles, responsibilities, and salaries. 
Under the agreement, the majority shareholder had the authority to make all business
decisions for the corporation.  After he became dissatisfied with the minority shareholder’s
operation of the facility, he terminated the employment of the minority shareholder, who then
sued the majority shareholder and the corporation for breach of contract.  The minority
shareholder also sought dissolution of the corporation under CA §3-413, on the basis of
“illegal, oppressive and/or fraudulent” conduct by the majority shareholder.  
The corporation and majority shareholder contended that, insofar as the shareholders
agreement spelled out the job descriptions, salaries, and work duties of the shareholders as
employees of the facility, it functioned as an employment agreement – an argument that the
Court of Special Appeals accepted while also noting that the agreement was “more modest
in scope” as to their rights as shareholders.  165 Md. App. at 248.  The trial court had found
that the minority shareholder was properly discharged under that agreement.  As the minority
shareholder had not appealed that ruling, the Court of Special Appeals had no occasion to
discuss whether she was an at-will employee.  But the intermediate appellate court reversed
the circuit court’s decision that the minority shareholder was entitled to post-termination
salary.  The Court of Special Appeals held that, in her status as a minority shareholder, she
24
was not entitled to employment-related relief – i.e., salary – as opposed to profits owing to
the owners of the corporation.  165 Md. App. at 250-51.
Although the Court of Special Appeals held that the minority shareholder was not
entitled to employment-related relief as a shareholder, the court held that she had been
oppressed by the majority shareholder when her termination “defeated her reasonable
expectations that she would be employed by the corporation, receive a salary, and take part
in its management.”  Id. at 259.  The court remanded the case to the circuit court to consider
other possible equitable remedies.  Id. at 261.  Thus, the court looked to her expectation of
employment with the company (together with her expected role in management) as a gauge
for measuring oppression, even though it held that she was not entitled to employment-
related relief in the form of a post-termination salary.
What remedy, then, is available to the minority shareholder in such a circumstance? 
The only remedy for oppressive conduct mentioned in the statute is dissolution of the
corporation.  CA §3-413.  But the statute also refers to the court acting as a “court of equity,”
which indicates that the Legislature intended for a court to exercise its equitable powers in
such a case.   In Edenbaum, the Court of Special Appeals observed that dissolution is an
12
 Courts in other jurisdictions have similarly recognized that a legislative provision
12
authorizing the demise of a corporation would allow courts to fashion less drastic solutions. 
See McCann v. McCann, 275 P.3d 824, 833-34 (Idaho 2012); Scott v. Trans-System, Inc., 64
P.3d 1, 9-10 (Wash. 2003); Balvik v. Sylvester, 411 N.W.2d 383, 388-89 (N.D. 1987);
Maddox v. Norman, 669 P.2d 230 (Mont. 1983); Alaska Plastics, Inc. v. Coppock, 621 P.2d
270, 274-75 (Ak. 1980); Masinter v. WEBCO Co., 262 S.E.2d 433, 438-39 (W.Va. 1980); 
(continued...)
25
extreme remedy and should be avoided if less drastic equitable remedies are available. 
Edenbaum, 165 Md. App. at 259-60.   In its discussion of possible alternative remedies, it
listed a non-exhaustive set of alternatives to dissolution that might be appropriate in a
particular case:  
(a) 
The entry of an order requiring dissolution of the
corporation at a specified future date, to become
effective only in the event that the stockholders fail to
resolve their differences prior to that date;
(b) 
The appointment of a receiver, not for the purposes of
dissolution, but to continue the operation of the
corporation for the benefit of all the stockholders, both
majority and minority, until differences are resolved or
“oppressive” conduct ceases;
(c) 
The appointment of a “special fiscal agent” to report to
the court relating to the continued operation of the
corporation, as a protection to its minority stockholders,
and the retention of jurisdiction of the case by the court
for that purpose;
(d) 
The retention of jurisdiction of the case by the court for
the protection of the minority stockholders without
appointment of a receiver or “special fiscal agent”;
(e)
The ordering of an accounting by the majority in control
of the corporation for funds alleged to have been
misappropriated;
 (...continued)
12
Baker v. Commercial Body Builders, Inc., 507 P.2d 387, 394-96 (Or. 1973) (compiling a list
of alternate remedies); but see Ritchie v. Rupe, 443 S.W.3d 856, 872-97 (Tex. 2014)
(declining to interpret corporate statute to allow lesser remedies). 
26
(f) 
The issuance of an injunction to prohibit continuing acts
of “oppressive” conduct and which may include the
reduction of salaries or bonus payments found to be
unjustified or excessive;
(g) 
The ordering of affirmative relief by the required
declaration of a dividend or a reduction and distribution
of capital;
(h) 
The ordering of affirmative relief by the entry of an order
requiring the corporation or a majority of its stockholders
to purchase the stock of the minority stockholders at a
price to be determined according to a specified formula
or at a price determined by the court to be a fair and
reasonable price;
(i) 
The ordering of affirmative relief by the entry of an order
permitting minority stockholders to purchase additional
stock under conditions specified by the court;
(j) 
An award of damages to minority stockholders as
compensation for any injury suffered by them as the
result of “oppressive” conduct by the majority in control
of the corporation.
Edenbaum, 165 Md. App. at 260-61 (quoting Baker v. Commercial Body Builders, Inc., 507
P.2d 387, 395-96 (Or. 1973)).  Notably, this list of alternative equitable remedies did not
refer to employment-related relief, although the Edenbaum case itself arose out of a situation
where a minority shareholder was an employee of the corporation. 
A court acting under CA §3-413 to fashion a remedy less drastic than dissolution is
not required to match its remedy to an expectation of the minority shareholder.  (Indeed, the
default remedy – dissolution – may bear no correlation to any expectation of a shareholder.) 
In particular, a court should take into account not only the reasonable expectations of the
27
oppressed minority shareholder, but also the expectations and interests of others associated
with the company.  Inherent in the notion that a court of equity may devise a remedy other
than the statutory remedy invoked by the minority shareholder is that there are other interests
at stake besides those of the oppressed or disaffected shareholder.  The existence and
operation of the corporation – an entity that is legally distinct from any of its owners – affects
not only the complaining and controlling shareholders, but also many others who may be
associated with or depend on the company – other shareholders, its management, employees,
and customers.  Dissolution – capital punishment for the corporation – affects those parties
as well.  For example, in Edenbaum, although the court found that reasonable expectations
of the minority shareholder had been “defeated,” it cited the fact that the company was an
ongoing business and that the majority shareholder had not been found to have acted in bad
faith when it upheld the decision not to dissolve the corporation and remanded for
consideration of lesser equitable remedies.  165 Md. App. at 259, 261.  
This Court has favorably alluded to the discussion of “oppression” and the reasonable
expectations doctrine in Edenbaum, although we have not been called upon to apply it until
this case.  See Boland v. Boland, 423 Md. 296, 317-18, 31 A.3d 529 (2011) (quoting
Edenbaum for a definition of oppression, but not reaching the merits of the oppression claim
in the case before it).  We agree with the Circuit Court and the Court of Special Appeals that
the “reasonable expectations” doctrine is the test for oppressive conduct and that dissolution
is not the only remedy if oppression is found.  We proceed to the question before us –
28
whether an employment-related remedy was required as a result of the finding of oppression
in this case. 
Analysis
Mr. Bontempo does not claim that he had a lifetime employment contract or even
continuous for-cause employment as in Spacesaver.  It is undisputed that there was no
written employment contract and no oral agreement as to specific terms of employment.  To
the extent that Mr. Bontempo asserted that there was agreement on key elements of his work
with Quotient – i.e., that his salary was to equal the combined salaries of the Lares, once they
started to draw a salary – the trial court found otherwise.  The trial court found that he was
an at-will employee and, on this record, there is no basis to conclude that the finding is
clearly erroneous.  
Instead, Mr. Bontempo relies on the Circuit Court’s findings, in determining whether
there was oppression for purposes of the corporate dissolution statute, as to his reasonable
expectations when he became a minority shareholder.  He argues that the court’s statement
that he had a reasonable expectation of future employment at the time he became a
shareholder superseded his at-will employment status.  In essence, he would leverage the
court’s assessment of his expectations for purposes of the dissolution remedy into an
employment-related remedy for a non-existent employment contract.  Mr. Bontempo
describes this as an equitable remedy that is only necessary when employment law does not
adequately compensate someone in his position who has been fired without cause.  
29
A “reasonable expectation” for purposes of the corporate dissolution statute is simply
a way of detecting oppression, but it does not dictate the relief that an equity court is to grant. 
While Mr. Bontempo may have had a reasonable expectation of a future relationship with
Quotient that included a connection to the corporation as an employee, officer, director, and
shareholder, that is a far cry from an employment agreement that entitles him to a specific
employment-related relief – i.e., a specific position within the company with specific duties,
pay, and conditions of employment.  One might envision a situation in which a minority
shareholder reasonably believed, upon committing capital to an entity, that one day he would
advance to an executive position with the enterprise and in which, as a result of oppressive
conduct of the majority shareholder, the minority shareholder has never been considered for
any management position.  A court acting under the authority of the corporate dissolution
statute would be venturing far afield to order the company to hire the shareholder into a
particular position with particular duties at a specified salary.
Even in circumstances where a shareholder has previously held a position with the
company, as Mr. Bontempo did, reinstatement of Mr. Bontempo to a position with Quotient
appears impractical and untenable.  It is five years since his departure from the company. 
Because Mr. Bontempo can point to none of the detail that appeared in the shareholder’s
agreement in Edenbaum, reinstatement would be to an unspecified position with unknown
duties at no specific pay scale (unless we are to find clearly erroneous the trial court’s
rejection of his contention that his salary was to equal the combined salaries of the Lares). 
30
The trial court found that reinstatement of Mr. Bontempo was not a viable option as
it found that he and Mr. Lare could not run a business together.  Instead, the Circuit Court
wisely sought, as Edenbaum suggested, to craft a remedy short of dissolution in light of the
fact that Quotient appeared to be functioning well as business operation.  Mr. Bontempo
seems to agree, at least implicitly, that a reinstatement of employment with Quotient would
not be a practical resolution.  He did not include reinstatement in the laundry list of equitable
relief he sought in his Motion to Alter or Amend Judgment in the trial court.  In his briefs to
this Court, he urges us to remand the case to the Circuit Court for an award of back pay and
future payments of $225,000 per year “until this matter’s final resolution,” but does not
mention reinstatement.   In essence, he asks that the court enhance the return he receives
13
from his ownership interest by awarding pay-related damages that multiply the monetary
award many fold without need for him to have performed any work.  
14
While Mr. Bontempo refrains from arguing that he was not an at-will employee or that
he had an employment contract with Quotient – a difficult argument to make given the
 When pressed on the issue at oral argument, Mr. Bontempo’s counsel stated that he
13
was not suggesting that Mr. Bontempo was entitled to “reinstatement per se” as a result of
the trial court’s finding as to “reasonable expectations” under the corporate dissolution
statute and that, in fact, reinstatement was “at the bottom of the menu” of the relief sought.
 The dissenting opinion “takes issue” with this description of Mr. Bontempo’s
14
request for monetary relief on the basis that a wrongfully discharged employee has an
obligation to find other suitable employment and mitigate damages.  Dissenting Opinion at
p. 14 n.12.  The dissenting opinion is correct that Mr. Bontempo would have an obligation
to mitigate if he had been awarded such damages.  What the dissenting opinion takes issue
with is Mr. Bontempo’s description of his request for monetary damages, which did not
acknowledge an obligation to mitigate.  See Petitioner’s Brief at p. 30.   
31
evidence at trial and the Circuit Court’s findings – he seeks to convert it into a rationale for
employment-related relief here.  Indeed, he argues that, under Edenbaum “[e]quity allows
recovery because of, not in spite of, the absence of an express employment contract.”  This
seems quite a stretch.  While the intermediate appellate court in Edenbaum endorsed the use
of equitable remedies short of dissolution, it found that the detailed agreement concerning
the terms and conditions of employment in that case was an employment agreement but, in
remanding the case for further consideration of equitable relief, did not suggest employment-
related relief as an option.  Moreover, the Court of Special Appeals reversed the lower
court’s award of other employment-based relief of post-termination salary that had been
based on the minority shareholder’s status as a shareholder.  The intermediate appellate court
did not suggest that the circuit court could re-award that relief on remand.
Mr. Bontempo suggests that employment-related relief would be equitable because
the ARSA - the Quotient amended stockholder agreement – refers to termination of
shareholder-employees “for cause” in a provision that requires shareholders to sell their stock
under particular circumstances.  But the reference to a “for cause” termination in a forced
sale provision of the ARSA is quite different from an employment agreement.  When an
owner-employee’s job with the company is terminated for cause, it indicates such a rift
among those in control of the company that a forced buy-out would likely be necessary to
oust the terminated employee of his shares and preserve the ability of the corporation to
operate.  The fact that a buy-out is mandated when one of the owner-employees is terminated
32
for cause does not imply that an owner-employee may only be terminated for cause.  It does
mean that the forced buy-out is not triggered if the owner-employee is not terminated for
cause.  In this case, in ruling on Quotient’s counterclaim, the Circuit Court found that he was
not terminated for cause and, accordingly, he was not required to sell his shares.   
The Circuit Court in this case appropriately considered the fact that Quotient was a
thriving business, growing in the number of employees and contracts and that its majority
shareholder – Jodi Lare – had not oppressed Mr. Bontempo, in deciding that dissolution was
an inappropriate remedy for Mr. Lare’s oppression.  In fashioning a lesser remedy, the court
acted well within its discretion when it decided not to require employment-related relief
without an oral or written agreement to support that relief.  To hold that the court abused its
discretion and that Mr. Bontempo was entitled to employment-related relief – whether
reinstatement or the monetary damages he is primarily interested in – would be to convert a
discretionary equitable remedy into a substantive legal right.
C.
Fraud and Constructive Fraud
The second issue raised by Mr. Bontempo before us concerns his unsuccessful
allegations of fraud in the Circuit Court.  Those allegations appear in several places in the
pleadings for different purposes.  In his direct claim in Count One, brought under the
corporate dissolution statute (CA §3-413), he alleged that the Lares had engaged in “illegal,
oppressive, and fraudulent” conduct that triggered his right as a minority shareholder to seek
dissolution of Quotient (or a less drastic equitable remedy).  As noted above, the Circuit
33
Court found that Mr. Lare had oppressed Mr. Bontempo, but found that neither of the Lares
had committed fraud as to him.   
In two of the derivative counts of the complaint, Mr. Bontempo also alleged fraud
and, on that basis, sought punitive damages from the Lares on behalf of Quotient.  Count
Three alleged breach of fiduciary duty by the Lares in the form of “fraudulent” actions. 
Count Four, labeled “Constructive Fraud,” stated that the Lares’ conduct “has been and
continues to be marked by fraud.”  As noted above, the Circuit Court found that Mr. Lare
(but again not Ms. Lare ) had breached his fiduciary duty to Quotient, but found that his
15
conduct did not amount to fraud.  It thus granted judgment in favor of Quotient on Count
Three as to breach of fiduciary duty (but not Count Four as to constructive fraud) and
declined to award punitive damages in favor of Quotient.
In his Motion to Alter or Amend Judgment, Mr. Bontempo asked the Circuit Court
to award punitive damages to himself under CA §3-413 on Count One (the Second Amended
Complaint had only mentioned compensatory damages for that cause of action ).  In its
16
 Throughout his briefs, Mr. Bontempo refers to fraudulent conduct of “the Lares.” 
15
He asserts that Mr. Lare acted “with Jodi Lare’s actual or implied authority,” and therefore
Ms. Lare is also liable for his breach of fiduciary duty and fraud.  However, Mr. Lare
testified, and the Circuit Court found, that Jodi Lare had not been involved in the company
for “four or five years” at the time of trial, and that Mr. Lare had “made the unilateral
decision to utilize corporate funds for personal purposes.”  The Circuit Court’s finding was
not clearly erroneous.  Therefore, we limit this discussion to Mr. Lare’s conduct.
 As the Court of Special Appeals noted in its opinion in this case, the alternative
16
remedies to dissolution under CA §3-413 listed in Edenbaum, which Count One of the
complaint sought to invoke, did not include punitive damages.  217 Md. App. at 123.
34
detailed Memorandum Opinion on that motion, the Circuit Court reiterated its conclusion that
Mr. Lare’s conduct, while clearly “bad judgment,” oppressive, and a breach of his fiduciary
duty to the corporation, did not amount to fraud as to Mr. Bontempo or as to Quotient, and
declined to make any award of punitive damages.  The court explained:
All of the transactions at issue were recorded on the
books of the corporation and it is undisputed that Bontempo had
access to those books and records. The Lares’ household
employee’s names were recorded on the payroll records and
several of the employees testified that they were aware of this
and had never been told to not mention it to Bontempo.  Some
of the evidence presented was to the effect that Bontempo was
not only aware of some of these improper transactions but had,
in fact, given his approval for them.
Based upon the extensive testimony and evidence
presented at the trial, the Court found that although Clark Lare’s
actions were oppressive, they were not fraudulent.  There was
nothing new that was presented during the [post-trial] motions
argument to convince the Court that the Plaintiff was defrauded. 
Bontempo failed to meet his burden of showing, by clear and
convincing evidence, that a fraud was perpetrated upon him or
Quotient.
The Court of Special Appeals reviewed the Circuit Court’s analysis of the fraud
allegations with respect to the direct claim and found “no clear error” in the trial court’s
finding of oppressive, but not fraudulent, conduct.  217 Md. App. At 124.  With respect to
the derivative counts, the intermediate appellate court noted that not every breach of fiduciary
duty to a corporation is attributable to fraud and that the trial court was not clearly erroneous
in finding one, but not the other, in this case.  Id. at 130-31.  After reviewing carefully the
35
record and the trial court’s analysis, that court concluded that it found “no reason to second-
guess the court’s finding that the Lares did not commit fraud.”  Id. at 132.  Neither do we. 
Mr. Bontempo argues that the trial court used the wrong legal standards in its fraud,
constructive fraud, and punitive damages rulings.  With respect to the fraud and constructive
fraud allegations, Mr. Bontempo needed to show concealment or deception – or at least the
failure to disclose material information – on the part of the Lares.  As the trial court noted,
the self-dealing transactions were entered on Quotient’s books, and Mr. Bontempo had
access to those books.  Several employees also knew about the transactions and were never
told to conceal them from Mr. Bontempo.  Mr. Bontempo argues that, in effect, Mr. Lare hid
the self-dealing transactions from him in plain sight.  We cannot say that the Circuit Court’s
factual findings were clearly erroneous, and on those facts the court was legally correct in
finding that Mr. Bontempo did not prove fraud or constructive fraud. 
With respect to the Circuit Court’s decision not to award punitive damages to him, it
is notable that this claim, first made in a post-trial motion, is based on the court’s equitable
power to award a remedy short of dissolution under CA §3-413.  However, this Court has
repeatedly held that an award of punitive damages is not available as an equitable remedy. 
Kann v. Kann, 344 Md. 689, 712, 690 A.2d 509 (1997) (“punitive damages are not at all
available in equity”); St. Luke Evangelical Lutheran Church, Inc. v. Smith, 318 Md. 337, 348,
568 A.2d 35 (1990) (“a court of equity may not award punitive damages”).  Nor would a
finding of constructive fraud generally support an award of punitive damages.  See Ellerin
36
v. Fairfax Savings, F.S.B., 337 Md. 216, 236, 652 A.2d 1117 (1995) (identifying
“constructive fraud” as a type of conduct that “falls short of the act of deliberate deception
required for actual malice” and that does not support an award of punitive damages).  Finally,
the finder of fact – here, the Circuit Court – has discretion not to award punitive damages
even when the underlying facts would support an award.  Philip Morris Inc. v. Angeletti, 358
Md. 689, 774-75, 752 A.2d 200 (2000); Adams v. Coates, 331 Md. 1, 15, 626 A.2d 36
(1993).  There is no need to further explore those principles, because the trial court’s finding
as to fraud is not clearly erroneous and, accordingly, there was no predicate for a punitive
damages award, in any event.17
D.
Written Declaratory Judgment
Finally, we address an issue not raised by the parties, but rather by the Court at oral
argument – the absence of a written declaratory judgment.  In its counterclaim, Quotient
requested a declaratory judgment that Mr. Bontempo had been terminated for cause.  As
noted above, in its first memorandum opinion, the Circuit Court found that he had not been
 The dissenting opinion would remand to the Circuit Court for consideration of other
17
equitable relief – some of which was not requested by Mr. Bontempo.  Dissenting Opinion
at pp. 19-20.  The trial court gave careful consideration to the lengthy lists of remedies
requested by Mr. Bontempo in his complaints and in his Motion to Alter or Amend
Judgment.  Moreover, as noted above, before us Mr. Bontempo primarily seeks monetary
relief in the form of pay-related damages and punitive damages.  While some of the dissent’s
suggested remedies – e.g., re-defining excessive salaries as constructive dividends – might
be appropriate to resolve a future controversy, there is no need for the trial court to revisit
alternate equitable remedies for a third time on the current record.  
37
terminated for cause and accordingly entered judgment against Quotient on the counterclaim.
But the court did not issue a declaratory judgment in Mr. Bontempo’s favor.  
This Court has held that, when a party seeks a declaratory judgment, the court must
issue one, even if it rejects the proposition advanced by the party seeking declaratory relief. 
That obligation has been succinctly stated as follows:
... when a declaratory judgment action is brought and the
controversy is appropriate for resolution by declaratory
judgment, the court must enter a declaratory judgment, defining
the rights and obligations of the parties or the status of the thing
in controversy, and that judgment must be in writing and in a
separate document. That requirement is applicable even if the
action is not decided in favor of the party seeking the
declaratory judgment. 
 
Lovell Land, Inc. v. State Highway Admin., 408 Md. 242, 256, 969 A.2d 284, 292 (2009)
(quotation marks and citations omitted).  This defect does not affect our review of this case. 
This Court has explained:  “The failure to enter a proper declaratory judgment is not a
jurisdictional defect, however.  This Court, in its discretion, may review the merits of the
controversy and remand for entry of an appropriate declaratory judgment by the circuit
court.”  Id. (quotation marks and citation omitted).  On remand, the Circuit Court will be able
to cure this defect by entering a brief declaratory judgment.18
 As to whether the failure to enter a separate declaratory judgment would render this
18
appeal premature under the rule requiring that a final judgment be incorporated in a separate
document to trigger the time to appeal, see Maryland Rule 2-601, that requirement may be
waived when it does not mislead or prejudice a party and prevents the loss of a right to
appeal.  See Hiob v. Progressive American Insurance, 440 Md. 466, 475, 480, 103 A.3d 596
(2014).  That is the case here.
38
III
Conclusion
As the Court of Special Appeals aptly observed “Overall, nobody is wholly pleased
with the decision below, which in a complicated and heated case like this is usually a sign
that the circuit court was on to something.”   We agree.  The Circuit Court ably handled a
19
complex case, and on review of the particular issues before us –  the finding of oppression
but not of fraud, the equitable remedies selected, and the decision not to award employment-
related relief or punitive damages – we find no error. 
JUDGMENT OF THE COURT OF SPECIAL APPEALS
AFFIRMED.  CASE REMANDED TO THAT COURT TO
REMAND THIS CASE TO THE CIRCUIT COURT FOR
HOWARD COUNTY FOR ENTRY OF A DECLARATORY
JUDGMENT 
AND 
FOR 
OTHER PROCEEDINGS
CONSISTENT WITH THIS OPINION.  COSTS IN THIS
COURT AND IN THE COURT OF SPECIAL APPEALS TO BE
PAID ONE-HALF BY PETITIONER AND ONE-HALF BY
RESPONDENTS CLARK LARE AND JODI LARE.  
 217 Md. App. at 109.
19
39
Circuit Court for Howard County 
Case No.: 13-C-10-81915 
Argued: March 10, 2015 
IN THE COURT OF APPEALS 
OF MARYLAND 
 
 
 
 
 
 
 
 
No. 55 
September Term, 2014 
 
 
 
 
 
 
 
 
DAVID S. BONTEMPO, INDIVIDUALLY 
AND ON BEHALF OF QUOTIENT, INC. 
 
v. 
CLARK J. LARE, et al. 
 
 
 
 
 
 
 
 
 
Barbera, C.J. 
*Harrell 
Battaglia 
Greene 
Adkins 
McDonald 
Wilner, Alan M. (Retired, 
 
Specially Assigned),  
 
JJ. 
 
 
 
 
 
 
 
 
 
Dissenting Opinion by Adkins, J., which 
Harrell, J., joins. 
 
 
 
 
 
 
 
 
 
Filed: August 6, 2015 
 
* Harrell, J., now retired, participated in the 
hearing and conference of this case while an 
active member of this Court; after being recalled 
pursuant to the Constitution, Article IV, Section 
3A, he also participated in the decision and 
adoption of this opinion. 
 
“In all situations and under all circumstances, whether new or old, the principles of 
equity will point the way to justice where legal remedies are infirm.”  Joseph Story, 1 
Commentaries on Equity Jurisprudence as Administered in England and America §4, at 5 
(14th ed. 1918).  Respectfully, I dissent because I think the Chancellor erred in failing to 
exercise her discretion in fashioning available equitable relief to remedy the oppression by 
the majority shareholders.  The Chancellor erred in deducing there was “no legal basis” for 
Bontempo’s claim that he is entitled to employment-based damages.  Equally important, 
the Chancellor limited relief to a money judgement for past defalcations of a 55% 
shareholder, plus attorneys’ fees, without considering how to provide any protection going 
forward.  Bontempo requested various equitable remedies that would offer him protection 
against Respondents’ continuing to funnel corporate earnings to their personal benefit.  
Although finding oppression, and defeat of Bontempo’s reasonable expectations as a 
shareholder and employee, her memorandum opinions suggest she did not fully consider 
the alternative equitable remedies.  I would vacate and remand for consideration of these 
equitable remedies, including damages for lost employment. 
FACTS 
 
In 1999, husband and wife Clark and Jodi Lare formed Quotient, Inc. (“Quotient”), 
an information technology services company focused on fulfilling government and private 
contracts.  In an effort to gain favor in obtaining government contracts as a majority female-
owned company, Clark Lare owned a 49% share of the company, and Jodi owned the 
remaining 51% of the shares.  While Quotient was still in its infancy, Clark Lare invited 
his former coworker, David Bontempo, to join the firm as a minority shareholder and 
2 
 
employee.  Pursuant to the amended shareholders’ agreement, executed in 2000, Bontempo 
owned 45% of the company, Clark Lare owned 4%, and Jodi Lare retained her 51% 
interest.  They never reduced an employment agreement to writing.   
Over the years, Quotient grew, eventually obtaining a General Services 
Administration schedule.1  As a result of Quotient’s success,2 the three owners enjoyed 
larger salaries and corporate perks, including having Quotient pay for cell phone and credit 
card expenses, automobiles, and personal physical trainers.   
But the Lares went further in their use of corporate assets for personal use, brazenly 
treating Quotient funds as if they resided in their own personal bank accounts.3  Beginning 
in 2006, they used corporate funds to pay household employees and personal legal fees.  
The household employee expenses were disguised in Quotient’s books and on its financial 
statements as “general and administrative expenses.”  Bontempo testified that 
                                              
1 The United States General Services Administration “establishes long-term 
governmentwide contracts with commercial firms to provide access to millions of 
commercial products and services at volume discount pricing.”  GSA Schedules, 
http://www.gsa.gov/portal/content/197989 (last visited July 16, 2015).   
 
2 Quotient secured lucrative contracts with a number of large public and private 
entities, including: “the United States Census Bureau, Lockheed Martin Corporation, the 
Internal Revenue Service, the United States Patent and Trademark Office, the Maryland 
Department of Education, the Smithsonian Institution, the National Library of Medicine 
and the Clinical Center (each a division of the National Institutes of Health), AARP, the 
United States Department of Homeland Security, the University of Maryland Medical 
Systems, and TAJ Technologies, Inc.”  Bontempo v. Lare, 217 Md. App. 81, 94 n.6, 90 
A.3d 559, 566 n.6 (2014). 
 
3 “Although Ms. Lare was Quotient’s majority shareholder, she had little to no role 
in Quotient’s business.  When the circuit court used the term ‘Lare’ in the singular, it 
referred to Mr. Lare.”  Id. 93 n.5, 90 A.3d at 566 n.5.  Henceforth, for this reason, “Lare” 
shall refer to Clark Lare. 
3 
 
notwithstanding his position as a 45% shareholder, Lare never asked Bontempo for 
permission to use Quotient funds for these expenses.4   
The Lares also advanced loans to themselves5—some of them interest-free loans to 
separate companies they owned and in which Quotient had no ownership interest.  The 
Expert Witness Report prepared by a forensic accountant hired by Bontempo during this 
litigation found that between 2001 and May 2010, Quotient loaned approximately 
$1,204,000 to these companies on an unsecured basis.6  Bontempo testified that there was 
no legitimate business purpose for any of these loans.  He also testified that Lare never 
asked for his permission to make these loans.   
Not only did the Lares use Quotients funds for personal expenses without 
Bontempo’s knowledge or authorization, but also these transactions rarely, if ever, 
                                              
4 A forensic accountant hired by Bontempo reported that Lare also used Quotient 
funds to pay for the following personal expenses: 
 $67,000 for antiques 
 $75,000 for home remodeling 
 $3,599 for fitness equipment 
 
5 In December 2007, Lare placed a strain on Quotient’s liquidity when he borrowed 
$205,586 from Quotient to pay expenses related to a home remodel and difficulties the 
Lares were having with the contractors they hired.  Although the note was to be paid in full 
by March 2009, Lare instead executed another note in February 2009 in the amount of 
$497,267, with the balance due in January 2016.  Lare’s year-end loan balances between 
2006 and 2009 were as high as $556,564, and Bontempo testified that the Lares borrowed 
“well in excess of a [m]illion dollars” from Quotient.  Although Bontempo authorized at 
least one of the loans to Lare, he testified that Lare ignored the terms of the promissory 
note.  Bontempo also testified that Lare “had the habit of taking money out of the company” 
and “all of the sudden” deciding to “just create a loan for it.”  
 
6 The forensic accountant also identified a number of disbursements from Quotient 
to a separate company in which Jodi Lare owned a 60% interest that appeared to have no 
business purpose but were nevertheless charged to Quotient expense accounts.   
4 
 
appeared on Quotient’s financial statements.  What is more, despite significant sums being 
diverted to these personal uses, Lare rejected Bontempo’s request that they hire a new 
business development employee, “claiming that Quotient did not have the funds” to do so. 
Bontempo and Lare’s relationship first began to crumble in 2007, when—Bontempo 
alleged—Clark Lare took a $100,000 distribution and asked Bontempo to wait until the 
end of the year to take his own distribution.  But when Lare converted his distribution to a 
loan, Quotient was no longer compelled to make an equivalent distribution to Bontempo.  
Bontempo alleged similar behavior in 2008 and 2009, and also a salary imbalance7 between 
the two men.  Conversely, Lare blamed Bontempo’s poor job performance for the strained 
relationship and asserted he reduced Bontempo’s salary in an effort to motivate him.  
At a meeting in November 2009, Lare raised the issue of Bontempo’s performance.  
In January 2010, the two met again—this time to discuss their salaries and distributions.  
At this meeting, Bontempo suggested they create an exit strategy, proposing that they split 
the company.  Lare refused and informed Bontempo that he should sell his stock back. 
In March 2010, after Lare provided Bontempo with a separation agreement that 
Bontempo refused to sign, Lare informed Bontempo that he was being terminated.  At this 
time, Bontempo received no indication that his termination was for cause.  At trial, Lare 
contended that the termination was a result of poor job performance. 
                                              
7 Bontempo asserted—and the Circuit Court rejected—that the parties orally agreed 
that he would draw a salary equal to the combined salaries of Clark and Jodi Lare. 
5 
 
Litigation 
Bontempo filed a Complaint in the Circuit Court for Howard County seeking relief 
pursuant to Maryland Code (1975, 2007 Repl. Vol.), §§ 3-413 and 3-414 of the 
Corporations and Associations Article (“CA”), which provide for involuntary dissolution 
and the appointment of a receiver, respectively.  In response, Quotient and the Lares filed 
a counterclaim, seeking a declaratory judgment that Quotient terminated Bontempo for 
good cause and that Bontempo must resell his stock to Quotient, and seeking to hold 
Bontempo liable for breaching his fiduciary duties to Quotient.  Bontempo filed two 
amended complaints that alleged new counts, and Quotient and the Lares responded with 
counterclaims.8  Bontempo brought suit both personally and derivatively on behalf of 
Quotient, naming the Lares and Quotient as defendants.  On cross-motions for summary 
judgment, the Circuit Court dismissed Bontempo’s request for employment-based 
remedies from the Lares personally. 
The Chancellor held a nine-day bench trial, resulting in three memorandum opinions 
and four orders.  In its first opinion, entered September 29, 2011, the court found that 
“[t]here was substantial and credible evidence . . . establishing that Bontempo joined 
Quotient . . . with the express intention of playing a substantial part in the company’s 
                                              
8 In his First Amended Complaint, Bontempo added claims for constructive trust, 
breach of fiduciary duty, and constructive fraud.  In his Second Amended Complaint, he 
added a claim for breach of contract.  Thus, his Second Amended Complaint—the 
operative complaint in this litigation—contained five counts: Involuntary Dissolution 
(Count I); Constructive Trust (Count II); Breach of Fiduciary Duty (Count III); 
Constructive Fraud (Count IV); and Breach of Contract (Count V).  
6 
 
growth and financial success.”  In spite of Bontempo being a “responsible and dedicated 
employee,” he was terminated without cause.  The trial court opined: 
Lare’s actions were oppressive, particularly as they related to 
the credible testimony that Bontempo would be fired if he did 
not voluntarily resign and sell his shares of Quotient stock.  
Bontempo’s reasonable expectations were that this start-up 
company would employ him, that he would participate (as a 
stockholder) in the company’s profit distributions and that he 
would not be terminated for subjective reasons. 
 
The court found “Bontempo’s expectations to be objectively reasonable,” including “that 
he would be an owner of the company, work for the company and would have a role in the 
company as long as he was a stockholder.”  The court also concluded that Lare’s actions 
were oppressive because “[t]here [was] no support for Lare’s position that Bontempo was 
well aware of—and approved—the multitude of transactions” in which Lare misused 
corporate funds for his personal benefit.   
Ruling that dissolution was too drastic a remedy, the Chancellor considered the 
equitable remedies “available to it under Edenbaum [v. Schwarcz-Osztreicherne, 165 Md. 
App. 233, 885 A.2d 365 (2005)].”  It ordered an accounting of all misappropriated funds 
and reimbursement of legal and expert witness fees incurred by Bontempo.9  But despite 
finding Lare’s conduct regarding Bontempo’s “reasonable expectations . . . that he would 
                                              
9 Additionally, in its first memorandum opinion, the Circuit Court declined to order 
a constructive trust and ruled in favor of Bontempo—on behalf of Quotient—on the breach 
of fiduciary duty claim but not on his constructive fraud claim.  It ruled against Bontempo 
in his claim seeking damages for the unequal salaries between him and the Lares but 
awarded him damages for the distributions to which he was entitled.  Lastly, the court 
denied Quotient’s request for a declaratory judgment that Bontempo was fired for cause 
and its claim against Bontempo for breach of fiduciary duty. 
7 
 
not be terminated for subjective reasons” oppressive, the trial court failed to address how 
Bontempo’s loss of employment should be remedied. 
Following the Chancellor’s initial decision, the parties filed cross-motions to alter 
or amend the judgment.  In his motion, Bontempo urged the court to grant additional relief, 
arguing that the original decision did not grant sufficient relief to protect his interests.  He 
asked the court to grant various forms of broad equitable relief.10  Bontempo contended 
that “none of the items of monetary relief awarded by the [Circuit] Court address[ed] his 
                                              
10 These were as follows: 
[a] Appoint an agent to supervise, and to report to the Court, 
concerning a Court-ordered allocation of Quotient’s accounts 
and other assets on a 55/45 basis, with the Court retaining 
equitable jurisdiction to grant further relief at a later date or, 
alternatively direct the Lares to sell their stock to Bontempo 
under the provisions of the Amended and Restated 
Stockholders Agreement . . . . 
[b] Establish accounting procedures. 
[c] Allocate certain Quotient . . . contracts to Bontempo as a 
subcontractor to Quotient. 
[d] Award Bontempo the salary he has not received since 
March 2010, in an amount equal to the combined salaries of 
Clark Lare and Jodi Lare. 
[e] Award Bontempo additional attorneys’ fees and litigation 
expenses. 
[f] Make a finding of fraud and award Bontempo punitive 
damages. 
[g] Require Jodi Lare (majority shareholder) to terminate Clark 
Lare (minority shareholder) for cause. 
[h] Impose personal liability on Clark Lare and Jodi Lare for 
the damages the Court awarded to Bontempo under Count I of 
the Second Amended Complaint. 
[i] Impos[e] a constructive trust. 
[j] Make a finding of constructive fraud. 
[k] Award other various forms of short term relief. 
8 
 
objectively reasonable expectation that he would remain employed as a 45% owner, 
director, officer and employee of Quotient.”  
Regarding Bontempo’s request for damages from lost salary arising out of his 
termination, the court reasoned: 
The court found that Bontempo was an at-will employee, and 
as such, could be terminated at any time for any reason.  In 
spite of those findings, Bontempo requests that the Court 
award him back-pay since March 26, 2010 in the annual 
amount of $225,000.  The Court finds that no legal basis 
exists for Bontempo’s claim that he is entitled to 
employment-based damages for the Lares’ breaches of 
their fiduciary duties. 
 
* * * 
 
There is no dispute that Bontempo received salary, bonus and 
distribution income from Quotient for a significant period of 
time.  Although he had reasonable expectations when he 
took the risk to join Quotient more than ten (10) years ago, 
it was with the knowledge that he was a minority 
stockholder and an at-will employee.  It would be 
unreasonable to assume that his expectancy interests 
included lifetime employment with the company.  Although 
he was terminated and the Court found that Clark Lare’s 
actions were oppressive, the facts do not support Bontempo’s 
receipt of salary and bonus monies after the cessation of his 
employment with Quotient. 
 
(Emphasis added.)  To further bolster its conclusion that the equitable remedies provided 
would redress Bontempo’s injury, the Circuit Court highlighted that Bontempo “continues 
to receive his share of stockholder distributions, none of which have ever been withheld.  
As long as the company remains viable and profitable, Bontempo will continue to receive 
distributions by virtue of being a stockholder.”  In light of the past actions of the Lares, the 
reliability of this assumption by the Chancellor going forward is questionable. 
9 
 
Equitable Relief For Shareholder-Employee Under CA § 3-413  
 
CA § 3-413 permits a court to consider other remedies short of dissolution when 
crafting equitable relief to rectify a majority shareholder’s oppressive conduct in a close 
corporation.  Edenbaum, 165 Md. App. at 261, 885 A.2d at 380.  In Edenbaum, the Court 
of Special Appeals applied the reasonable expectations view of oppressive conduct.  Id. at 
259, 885 A.2d at 379.  Relying on the reasoning of the Court of Appeals of New York, our 
intermediate appellate court stated that “oppression should be deemed to arise only when 
the majority conduct substantially defeats expectations that, objectively viewed, were both 
reasonable under the circumstances and were central to the petitioner’s decision to join the 
venture.”  Id. at 258, 885 A.2d at 379 (quoting Matter of Kemp & Beatley, Inc., 64 N.Y.2d 
63, 73, 473 N.E.2d 1173, 1179 (1984)) (internal quotation marks omitted).  The Court of 
Special Appeals also relied on Balvik v. Sylvester, a case from the Supreme Court of North 
Dakota, for the proposition that “a minority shareholder who reasonably expects that 
ownership in the corporation would entitle him to a job, a share of the corporate earnings, 
and a place in corporate management would be ‘oppressed’ in a very real sense . . . when 
the majority seeks to defeat those expectations and there exists no effective means of 
salvaging the investment.”  Id. (quoting Balvik v. Sylvester, 411 N.W.2d 383, 387 (N.D. 
1987)) (internal quotation marks omitted).  I agree with the guidance offered by our sister 
states and embraced by the Court of Special Appeals. 
The Lares do not dispute at this juncture of this litigation that there was oppression. 
The Chancellor found that 
10 
 
Lare’s actions were oppressive, particularly as they related to 
the credible testimony that Bontempo would be fired if he did 
not voluntarily resign and sell his shares of Quotient stock.  
Bontempo’s reasonable expectations were that this start-up 
company would employ him, that he would participate (as a 
stockholder) in the company’s profit distributions and that he 
would not be terminated for subjective reasons.  Bontempo was 
more than a mere employee of Quotient—he was, in all 
respects, a founding member of the company and made 
significant contributions to the company’s later successes. 
 
Although the Circuit Court found that “Bontempo’s reasonable expectations were 
that [Quotient] would employ him, that he would participate (as a stockholder) in the 
company’s profit distributions and that he would not be terminated for subjective reasons,” 
its judgment provided no relief to Bontempo other than a money judgment for corporate 
funds misappropriated in the past by the majority shareholders and reimbursement for 
attorneys’ fees and litigation expenses.  When a court makes a finding of oppressive 
conduct (as was done here), Edenbaum teaches that the proper course of action for a trial 
judge in formulating appropriate relief (especially where requested to consider such), is to 
grant equitable relief to correct the wrongs found to have occurred.  See Edenbaum, 165 
Md. App. at 260, 261, 885 A.2d at 380, 381 (remanding for consideration of equitable 
remedies when minority shareholder’s employment was terminated, frustrating her 
reasonable expectations); Balvik, 411 N.W.2d at 388, 389 (remanding for consideration of 
equitable remedies short of dissolution when minority shareholder’s employment 
terminated); McCauley v. Tom McCauley & Son, Inc., 104 N.M. 523, 527, 532, 724 P.2d 
232, 236, 241 (1986) (affirming equitable remedies granted to minority shareholder who 
was ousted from membership on board of directors, removed from her office as Secretary-
11 
 
Treasurer, and denied personal benefits authorized for other shareholders); Alaska Plastics, 
Inc. v. Coppock, 621 P.2d 270, 275, 278 (Alaska 1980) (remanding for consideration of 
equitable remedies less drastic than dissolution when minority shareholder was allegedly 
denied benefits accorded to other shareholders).  
Here, the Chancellor—sensing some tension between the equitable relief available 
under CA § 3-413 and the doctrine of at will employment—elected not to test those waters.  
In doing so, the Chancellor believed that she could not award damages for loss of 
employment as a matter of law.  I submit that this decision was an error of law, even though 
not necessarily one a conscientious judge could have foreseen. The at-will employment 
doctrine—a creature of employment law—does not necessarily erase Bontempo’s 
reasonable expectations as a shareholder that he be employed absent reason to terminate 
him.  The at-will doctrine and reasonable expectations have been seen as distinct areas of 
law which authorize different sources of relief.  The reasoning of the Court of Appeals of 
Minnesota is instructive on this point:  
The doctrine of employment-based shareholder oppression 
is distinct from the wrongful-termination doctrine, and the 
analysis under the separate doctrines should attempt to protect 
close-corporation employment and, at the same time, respect 
the legitimate sphere of the at-will rule. 
 
The wrongful-termination doctrine affords discharged 
employees of all corporations a remedy in the form of 
wages and/or reinstatement, regardless of whether they are 
also shareholders, if they can establish the existence of an 
express or an implied contractual agreement or a promise 
inducing reliance.  The threshold question in wrongful-
termination cases, therefore, is whether a contractual 
agreement or a promise inducing reliance existed. 
 
12 
 
The oppression doctrine, on the other hand, affords closely-
held-corporation shareholders relief when the controlling 
shareholders frustrate their reasonable expectations as 
shareholder-employees.  Accordingly, the threshold question 
in the context of a claim of shareholder oppression based on 
the termination of employment is whether a minority 
shareholder’s expectation of continuing employment is 
reasonable. 
 
Gunderson v. Alliance of Computer Prof’ls, Inc., 628 N.W.2d 173, 190 (Minn. Ct. App. 
2001) (emphasis added) (internal citations omitted).  The source of Bontempo’s claim lies 
not in a written or oral contract between Bontempo and Quotient but in the oppression of 
his reasonable expectations as a shareholder in a close corporation whose primary return 
on investment was his employment.  See Kortum v. Johnson, 755 N.W.2d 432, 440–41 
(N.D. 2008) (“Even though Kortum was an at-will employee, and therefore could be 
terminated with or without cause, the termination of her employment triggers an inquiry 
into whether the Corporation acted in a manner unfairly prejudicial toward Kortum in her 
capacity as a shareholder-employee.” (citing Gunderson, 628 N.W.2d at 190)); Hayes v. 
Olmsted & Assocs., 173 Or. App. 259, 266, 21 P.3d 178, 182 (2001) (“The ‘squeeze-out’ 
tactics of majority shareholders often deprive minority shareholders of management 
participation, employment income or other advantages that they reasonably have come to 
expect, and which are the essential benefits of their investment.”); Bonavita v. Corbo, 300 
N.J. Super. 179, 197, 692 A.2d 119, 128 (1996) (ordering a buy-out of oppressed 
shareholder’s stock because “[a] shareholder who reasonably expected that ownership in 
the corporation would entitle him or her to a job, a share of corporate earnings, a place in 
corporate management, or some other form of security, would be oppressed in a very real 
13 
 
sense when others in the corporation seek to defeat those expectations and there exists no 
effective means of salvaging the investment.” (quoting In re Kemp & Beatley, Inc., 484 
N.Y.S.2d at 805, 473 N.E.2d at 1179)); In re Topper, 433 N.Y.S.2d 359, 365 (1980) 
(stating that “reasonable expectations constitute the bargain of the parties in light of which 
subsequent conduct must be appraised,” and protecting shareholder’s employment despite 
no such guarantee in shareholder agreement and no explicit state statutory protection of 
shareholder employment because “generally, there is an expectation on the part of some 
participants that their interest is to be recognized in the form of a salary derived from 
employment with the corporation.” (citation and internal quotation marks omitted)); Wilkes 
v. Springside Nursing Home, Inc., 370 Mass. 842, 850, 353 N.E.2d 657, 662–63 (1976) 
(“[B]y terminating a minority stockholder’s employment or by severing him from a 
position as an officer or director, the majority effectively frustrate the minority 
stockholder’s purposes in entering on the corporate venture and also deny him an equal 
return on his investment.”); 1 F. Hodge O’Neal & Robert B. Thompson, Close 
Corporations and LLCs: Law and Practice §6:2, at 6-4 (3d ed. 2014) (“Increasingly, courts 
have come to recognize that within many closely held enterprises it is not as easy to 
separate out the employment relationship from the ownership relationship, and have 
applied the reasonable expectations approach used more generally in close corporations.”). 
This reasoning is consistent with our recent holding in Spacesaver Systems, Inc. v. 
Adam, 440 Md. 1, 98 A.3d 264 (2014).11  In that case, we recognized continuous for-cause 
                                              
11 We had not decided Spacesaver when the Chancellor made her decision in this 
case.  
14 
 
employment security in a close corporation where a shareholder-employee had a for-cause 
provision in her employment agreement.  Id. at 21, 98 A.3d at 276.  Because of that written 
employment agreement, our discussion in that case revolved around contract-based 
employment security—both written and oral.  If we were to adopt the Gunderson analysis, 
as I advocate, we would still leave wholly intact this reasoning while supplementing it with 
job security born not of contract but of employment-based oppression of a shareholder’s 
reasonable expectations. 
 
Based on these authorities, I would hold that the Chancellor erred in concluding that 
there was “no legal basis” for Bontempo’s claim for damages from his lost employment.  I 
would vacate the Circuit Court’s decision and direct that the case be remanded to that Court 
for consideration of damages or other relief from the Lares’ defeat of his reasonable 
expectation of continued employment, based on the Chancellor’s findings that “Bontempo 
joined Quotient . . . with the express intention of playing a substantial part in the company’s 
growth and financial success” and that he was terminated without cause.12  
                                              
12 I take issue with the Majority’s statement that Bontempo “asks that the court 
enhance the return he receives from his ownership interest by awarding pay-related 
damages that multiply the monetary award many fold without need for him to have 
performed any work.”  Maj. Slip Op. at 31.  Of course, wrongfully discharged employees 
“have a legal obligation to use reasonable diligence in finding other suitable employment 
and thereby mitigating their damages.”  Stanley Mazaroff, Maryland Employment Law § 
5.01[8], at 333 (2d ed. 2001).  Thus, Quotient would be entitled to “setoff from the wages 
and benefits that [Bontempo] lost by reason of the wrongful discharge in the amount of any 
wages and benefits actually earned following termination, as well as any compensation that 
[Bontempo] could earn by the exercise of reasonable diligence.”  Id. at 333–34.   
15 
 
OTHER EQUITABLE RELIEF 
 
The Chancellor’s decree, although awarding him damages for the Lares’ past 
defalcations, stopped short of protecting Bontempo’s future rights to distribution of profits.  
“[T]he peculiar duty of a Court of Equity is to supply the defects of the common law, and 
next, to correct its rigor or injustice.”  1 Commentaries on Equity Jurisprudence §17, at 17.  
That Bontempo received distributions during the course of the trial is no surprise.  
Bontempo, 217 Md. App. at 97, 90 A.3d at 568.  But the Chancellor’s decree offers no 
meaningful protection against continued oppressive conduct on the part of the Lares once 
this litigation ceases to be a threat.13  Once this litigation ends, the Lares are free to return 
to their previous conduct, giving themselves loans and distributions while stripping 
Bontempo of the financial fruits of his investment.  Or, the Lares may seek to disguise 
corporate earnings by increasing their own salaries unreasonably, thus decreasing the 
amounts otherwise available for shareholder distribution.  The facts already found by the 
Chancellor are highly suggestive that such conduct is more than mere fortune-telling. 
The tenuous position of the minority shareholder in a close corporation—such as 
Bontempo—merits special attention when considering the majority’s oppressive conduct 
and the frustration of the minority’s reasonable expectations.  For this reason, courts often 
consider all owners in close corporations to have fiduciary duties similar to partnerships.  
See, e.g., Walta v. Gallegos Law Firm, P.C., 40 P.3d 449, 456 (N.M. Ct. App. 2001) (“To 
combat such tactics, courts have, over the years, recognized various versions of fiduciary 
                                              
13 The threat of possibly having to pay Bontempo’s legal fees is not much protection, 
considering the sizable profits earned by this small company. 
16 
 
duties that majority or controlling shareholders owe to minority shareholders.”); Hayes, 
173 Or. App. at 265, 21 P.3d at 181–82 (“As is the case among partners, those in control 
of the affairs of a closely held corporation have fiduciary duties of good faith, fair dealing, 
and full disclosure toward minority shareholders.”); James M. Van Vliet Jr. & Mark D. 
Snider, The Evolving Fiduciary Duty Solution for Shareholders Caught in a Closely Held 
Corporation Trap, 18 N. Ill. U. L. Rev. 239 (1998) (“Over the years, in a growing number 
of states where the courts have considered the matter, shareholders in at least certain types 
of closely held corporations have been held to owe a partner-like fiduciary duty to each 
other.”).  In this way, minority shareholders gain some protection from being the victims 
of a “squeeze-out,” like Bontempo.  See, Balvik, 411 N.W.2d at 387 (“Because of the 
predicament in which minority shareholders in a close corporation are placed by a ‘freeze 
out’ situation, courts have analyzed alleged ‘oppressive’ conduct by those in control in 
terms of ‘fiduciary duties’ owed by the majority shareholders to the minority and the 
‘reasonable expectations’ held by the minority shareholders in committing their capital and 
labor to the particular enterprise.”).  The Lares, in complete disregard of their corporate 
partner, and without notice to him, misappropriated large sums of money from the 
corporation for their own personal use.  This conduct merits relief that not only requires 
return of the misappropriated money, but guards against future abuse of their majority 
shareholder power. 
We have recognized the maxim that “equity will not suffer a wrong to be without a 
remedy.”  Manning v. Potomac Elec. Power Co., 230 Md. 415, 421, 187 A.2d 468, 472 
(1963).  In Edenbaum, the Court of Special Appeals adopted from Baker v. Commercial 
17 
 
Body Builders, Inc., 264 Or. 614, 632–33, 507 P.2d 387, 395–96 (1973), a list of potential 
equitable remedies: 
(a) The entry of an order requiring dissolution of the 
corporation at a specified future date, to become effective 
only in the event that the stockholders fail to resolve their 
differences prior to that date; 
(b) The appointment of a receiver, not for the purposes of 
dissolution, but to continue the operation of the corporation 
for the benefit of all the stockholders, both majority and 
minority, until differences are resolved or “oppressive” 
conduct ceases; 
(c) The appointment of a “special fiscal agent” to report to 
the court relating to the continued operation of the 
corporation, as a protection to its minority stockholders, 
and the retention of jurisdiction of the case by the court for 
that purpose; 
(d) The retention of jurisdiction of the case by the court for the 
protection 
of 
the 
minority 
stockholders 
without 
appointment of a receiver or “special fiscal agent”; 
(e) The ordering of an accounting by the majority in control of 
the corporation for funds alleged to have been 
misappropriated; 
(f) The issuance of an injunction to prohibit continuing acts 
of “oppressive” conduct and which may include the 
reduction of salaries or bonus payments found to be 
unjustified or excessive; 
(g) The ordering of affirmative relief by the required 
declaration of a dividend or a reduction and distribution 
of capital; 
(h) The ordering of affirmative relief by the entry of an order 
requiring the corporation or a majority of its 
stockholders to purchase the stock of the minority 
stockholders at a price to be determined according to a 
specified formula or at a price determined by the court to 
be a fair and reasonable price; 
(i) The ordering of affirmative relief by the entry of an order 
permitting 
minority 
stockholders 
to 
purchase 
additional stock under conditions specified by the court; 
(j) An award of damages to minority stockholders as 
compensation for any injury suffered by them as the result 
18 
 
of “oppressive” conduct by the majority in control of the 
corporation. 
 
165 Md. App. at 260–61, 885 A.2d at 380–81 (emphasis added).  The equitable relief 
highlighted above in bolded script provides many alternatives the Chancellor could have 
considered, but did not.  Bontempo asked for appointment of receivers, entry of an order 
reinstating him, dissolution, an injunction, an order permitting him to purchase additional 
stock, damages, and attorney’s fees.  Instead, the Circuit Court seemed to focus primarily 
on the employment-based relief requested by Bontempo, which it erroneously rejected as 
a matter of law, or alternatively, dissolution. 
In its second memorandum opinion, the Circuit Court responded to cross-motions 
to alter or amend its previous judgment.  Bontempo asserted that the court’s initial ruling 
did not grant sufficient relief pursuant to Edenbaum.14  Specifically, Bontempo sought the 
following relief:  
[a] Appoint an agent to supervise, and to report to the Court, 
concerning a Court-ordered allocation of Quotient’s 
accounts and other assets on a 55/45 basis, with the Court 
retaining equitable jurisdiction to grant further relief at a 
later date or, alternatively direct the Lares to sell their stock 
to Bontempo under the provisions of the Amended and 
Restated Stockholders Agreement (ARSA).[15] 
                                              
14 In each of the three iterations of his complaint, Bontempo had also explicitly 
referred to Edenbaum—along with CA §§ 3-413 and 3-414—as a source of relief.  
 
15 The Circuit Court rejected this form of relief, stating that “[t]he corporation is not 
on the brink of insolvency and, in fact, has managed to prosper financially while dealing 
with this litigation and the strife it has caused all the employees during its pendency.”  
Quotient’s financial health has nothing to do with Bontempo’s request for an agent to 
protect his ownership interest from Lare’s oppressive actions.  Failure to consider whether 
an agent was necessary to protect Bontempo from oppression was error.   
 
19 
 
[b] Establish accounting procedures. 
[c] Allocate certain [Quotient] contracts to Bontempo as a 
subcontractor to Quotient. 
[d] Award Bontempo the salary he has not received since 
March 2010, in an amount equal to the combined salaries 
of Clark Lare and Jodi Lare. 
[e] Award Bontempo additional attorney’s fees and litigation 
expenses. 
[f] Make a finding of fraud and award Bontempo punitive 
damages. 
[g] Require Jodi Lare (majority shareholder) to terminate Clark 
Lare (minority shareholder) for cause. 
[h] Impose personal liability on Clark Lare and Jodi Lare for 
the damages the Court awarded to Bontempo under Count 
I of the Second Amended Complaint. 
[i] Imposition of a constructive trust. 
[j] Make a finding of constructive fraud. 
[k] Award other various forms of short term relief. 
 
In addition to the ten equitable remedies advanced by Edenbaum (only three of 
which were expressly addressed by the Circuit Court in its May 8 memorandum opinion), 
there are a number of other equitable remedies a court could consider in the context of 
shareholder oppression:16 
 Cancelling or altering any provision of the articles of 
incorporation or the bylaws. 
 
 Cancelling, altering or enjoining any resolution or other act 
of the corporation. 
 
 Directing or prohibiting any act of the corporation or of the 
shareholders, directors, officers or other persons party to 
the action. 
 
                                              
16 2 F. Hodge O’Neal & Robert B. Thompson, Oppression of Minority Shareholders 
and LLC Members § 7:24, at 7-200–7-201 (2nd ed. 2014); 2 F. Hodge O’Neal & Robert B. 
Thompson, Close Corporations and LLCs: Law and Practice § 9:41, at 9-277, 9-278 (3d 
ed. 2014).  
20 
 
 Providing for the sale of all the property and franchises of 
the corporation to a single purchaser. 
 
 Ordering access to corporate records. 
 
 Defining as constructive dividends any amount paid by the 
corporation to the controlling shareholders above a 
“reasonable salary” and ordering the corporation to pay a 
shareholder discharged without cause an amount per share 
equal to the constructive dividend. 
 
 Ordering issued stock to be cancelled or redeemed in order 
to achieve a 50/50 balance or some other ownership 
structure fair to the shareholders. 
 
 Rescinding a particular corporate act that is unfair to the 
minority.   
 
 Awarding punitive damages. 
 
 Removing the majority shareholders and putting day to day 
operation in the hands of employees. 
 
 Awarding plaintiff the value, as nearly as possible, of the 
plaintiff’s rights under the management agreement by 
giving plaintiff her share of retained earnings, the sum total 
of profits made since the inception of the company. 
 
 Appointing provisional directors. 
 
In Bonavita, supra, the New Jersey Superior Court offered a thorough discussion of 
the alternative remedies in a case involving two 50% shareholders, one of whom was the 
widow of a former employee of the corporation.  The court held that the other 50% 
shareholder—the company president, who, along with his children, was employed by the 
corporation—oppressed the widow.  Bonavita, 300 N.J. Super. at 197, 692 A.2d at 128.  
21 
 
After thoroughly considering the options, the Chancery Court ordered a buy-out via the use 
of a special fiscal agent: 
The order to be entered at this time will direct that the 
corporation buy the stock.  However, Brenner v. Berkowitz 
indicated that in an appropriate case, where there is a need to 
do so, a court may order that the purchase be made by another 
shareholder.  So here, while a purchase by the corporation is 
preferable and will be the first option, it is possible that a 
purchase by Alan Corbo may require consideration.  That too 
cannot now be resolved. 
 
To investigate and consider all of these issues, and any others 
that must be resolved in order to effect the purchase of the 
Bonavita stock, this court will appoint a special fiscal agent.  
The agent will consult with the attorneys for the parties; make 
such independent investigation as may be deemed necessary or 
appropriate; and may consult with banks, other possible 
lending sources, accountants, and anyone else deemed helpful.  
The agent will then submit a proposal as to the terms and 
conditions on which the sale will take place.  The parties will 
have an opportunity to be heard concerning the agent’s report, 
and thereafter, the court will enter a final order fixing the terms 
and conditions of sale. 
 
Id. at 201, 692 A.2d at 130 (emphasis added). 
Many of the above forms of equitable relief—either in isolation or operating in 
tandem—could offer Bontempo meaningful relief such that his objectively reasonable 
expectations would be met.  Not only would they rectify the oppressive conduct that forced 
Bontempo out of his job, but also these remedies could guard against continued oppressive 
conduct on the part of the Lares vis-à-vis shareholder distributions.  I would remand with 
instructions that the Chancellor consider these remedies against continued oppressive 
conduct.  Although none of these equitable remedies must be granted, the Chancellor 
22 
 
should consider them free from the strictures of at-will employment she imposed upon 
herself. 
Judge Harrell has authorized me to state that he joins in the views expressed in this 
dissenting opinion.