Court Opinion

ID: 4203337
Source: CourtListenerOpinion
Date Created: 2017-09-14 14:11:44.799556+00
Date Added: 2024-06-11T14:40:59.049068
License: Public Domain

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SJC-12222

                GEORGE T. KOSHY   vs.   ANUPAM SACHDEV.

         Middlesex.      May 2, 2017. - September 14, 2017.

    Present:    Gants, C.J., Lenk, Hines, Gaziano, Lowy, Budd,
                           & Cypher, JJ.1

Corporation, Dissolution, Officers and agents.      Practice, Civil,
     Contempt. Contempt.

     Civil action commenced in the Superior Court Department on
June 28, 2012.

     The case was heard by Bruce R. Henry, J., and a complaint
for contempt, filed on March 2, 2015, was also heard by him.

     The Supreme Judicial Court on its own initiative
transferred the case from the Appeals Court.

     Charles M. Waters for the plaintiff.
     Maureen Mulligan (Timothy M. Pomarole also present) for the
defendant.
     Thomas J. Carey, Jr., for Brian JM Quinn & others, amici
curiae, submitted a brief.

     LENK, J.   We are called upon in this case to construe for

     1
       Justice Hines participated in the deliberation on this
case prior to her retirement.
                                                                    2

the first time G. L. c. 156D, § 14.30, the corporate dissolution

statute.   That statute allows a shareholder to petition a judge

of the Superior Court to dissolve a corporation in the event of

a deadlock between its directors.    See G. L. c. 156D,

§ 14.30 (2) (i).

    George T. Koshy and Anupam Sachdev are the sole

shareholders and directors of Indus Systems, Inc. (Indus).

After years of deepening dissension and acrimony between the

two, Koshy filed a petition in the Superior Court in 2012,

pursuant to the corporate dissolution statute, seeking to

dissolve Indus.    Koshy also brought claims against Sachdev for

breach of fiduciary duties and, after a jury-waived trial had

taken place, but prior to the issuance of the judge's decision,

filed a separate claim for contempt of court.    The judge

rejected all of Koshy's claims and Sachdev's counterclaims, and

dismissed Koshy's complaint for contempt.    Koshy appealed, and

we transferred the matter to this court on our own motion.

    We conclude that the utter impasse as to fundamental

matters of corporate governance and operations shown to exist in

these circumstances gave rise to a state of "true deadlock" such

that the remedy of dissolution provided by the statute is

permissible.   See comment to G. L. c. 156D, § 14.30, 25A Mass.

Gen. Laws Ann. at 71 (Thomson/West 2005).    Since dissolution is

a discretionary remedy, however, we remand the matter to the
                                                                      3

Superior Court for a determination whether it is the appropriate

remedy in these circumstances.     In addition, because a number of

the claims in the complaint for contempt were not raised at

trial, we vacate and set aside the judgment dismissing that

complaint, and remand the matter for consideration of the

allegations in the complaint concerning conduct that occurred

after the trial.2

     1.   Background.    We recite the facts found by the trial

judge,3 supplemented with references to undisputed facts in the

record.

     a.   Formation and growth of Indus.    As one of the motion

judges observed, "[t]his case concerns the demise of a long-

standing business relationship between two men who were once

close friends."     The parties formed Indus in April, 1987, after

working together for several years at another company.     Indus

provides "computer aided design" (CAD) services, creating and

storing digital renderings of "existing manual drawings,

sketches and other information supplied by client

organizations."     Koshy and Sachdev each own fifty per cent of

Indus's shares and serve as its sole directors.     They are both

authorized to act on the company's behalf.

     2
       We acknowledge the amicus brief submitted by Brian JM
Quinn, Niloufar Abae, and Alex Pena.
     3
       At argument before us, the parties acknowledged that they
do not contest the judge's factual findings.
                                                                       4

     After a few years of growing pains, Indus developed a

steady market for its services.   By the end of 1997, the company

was generating revenues of approximately $700,000 annually.       In

June, 1999, Indus was awarded a United States Government

Services Administration contract, which allowed it to bid on

projects for agencies of the Federal government.   To help meet

the new wave of demand created by this contract, the parties

established eSystems Software Pvt. Ltd. (eSystems), an Indian

corporation, to provide support services to Indus.4

     Building upon its success, Indus obtained a Federal

"streamlined technology acquisition resources for services"

contract (STARS contract) in 2004.   It allowed government

clients to purchase products and services from Indus without

having to go through a competitive bidding process.     The STARS

contract, which was effective through November 30, 2011, gave

Indus access to a new client base and provided approximately

sixty per cent of the company's revenue from 2004 to 2010.       By

2007, Indus's revenues exceeded $2 million annually.

     b.   Parties' dispute.   Sometime in the late 2000s, the

relationship between the parties began to fall apart.     They

developed a fundamental difference of opinion concerning the

future of Indus.   While Koshy wanted the company to focus

     4
       George T. Koshy and Anupam Sachdev each own 49.9 per cent
of eSystems Software Pvt. Ltd. (eSystems). It is not apparent
from the record who owns the remaining shares.
                                                                    5

primarily on its existing services for government agencies,

Sachdev believed that it should explore new markets.      Both

parties viewed their counterpart's vision of Indus's future as

gravely flawed.   Koshy saw Sachdev's efforts to develop new

markets as quixotic and costly, while Sachdev considered Koshy's

focus on existing clients myopic and shortsighted.    This

difference in viewpoints bred growing distrust as well, as is

evident from a dispute arising around 2010 in connection with

payments made from Indus to eSystems.   While Sachdev preferred

to make prepayments to eSystems for services to be performed,

Koshy favored payments only for services rendered.    Koshy

believed that prepayments, which could not easily be recovered

due to jurisdictional obstacles, provided Sachdev with a means

clandestinely to direct company resources into new projects.

Notwithstanding Koshy's stated concerns, Sachdev routinely made

prepayments to eSystems without consulting with Koshy.

    As these disagreements strained the parties' relationship,

an incident in the fall of 2011 furthered its disintegration.

At that time, Indus had approximately $1.4 million in retained

earnings.   Koshy wanted this money to be paid out to himself and

Sachdev as a distribution, while Sachdev did not.    In

November, 2011, Koshy wrote himself a check from Indus's

corporate account, in the amount of $690,000, as a distribution,

without Sachdev's consent.   Koshy encouraged Sachdev, who was in
                                                                   6

India at the time, to take a matching distribution.   Sachdev

instead reacted by effectively locking Koshy out of the company.

He initiated a lawsuit against Koshy on behalf of Indus, seeking

a return of the distribution; stopped payment of Koshy's salary;

terminated his company credit cards; and changed the locks on

the door of Indus's offices.   He also refused to consent to a

tax distribution to the parties, as had been the practice in

prior years.   Koshy subsequently placed the $690,000 in an

escrow account.

    As this dispute was ongoing, each party offered to buy out

the other, based on evaluations of Indus's worth created by

consultants that each had hired.   Sachdev offered to purchase

Koshy's shares for $480,000.   Koshy rejected that offer and

tendered his own offer to purchase Sachdev's shares for

approximately $2.8 million; Sachdev rejected that proposal.

Ultimately, the $690,000 was returned to Indus, and in

June, 2012, the complaint was dismissed.   Koshy's salary,

company credit cards, and access to his office were restored.

The relationship between the parties however, continued to

spiral downward.

    The parties' welling antipathy for and toxic distrust of

each other inevitably began to impinge upon the day-to-day

operations of Indus.   In December, 2011, without consulting

Koshy, Sachdev hired Michael Xifaras to help with the company's
                                                                   7

sales.   Xifaras replaced Roger Geilen, a long-time Indus

salesperson, who had worked largely with Koshy.    Koshy and

Xifaras did not get along, as Koshy believed that Sachdev had

hired Xifaras, in effect, as his replacement.     The hostility

between the two broke out into open conflict when Xifaras sent

an extremely critical electronic mail message to Koshy, with a

copy to Sachdev, which included a variety of insults.5    In

response, Koshy informed Sachdev that he would be firing

Xifaras, and provided Xifaras notice of the termination.

Sachdev responded by saying that he agreed with Xifaras's

criticisms and that Koshy had no authority to fire employees

without Sachdev's consent; Xifaras retained his position at

Indus.   A few months later, Koshy again attempted to terminate

Xifaras, with the same result.   At the time of trial in October,

2013, Xifaras still worked for Indus.

     Finally, in June, 2012, Koshy commenced in the Superior

Court the underlying action in this case.   The complaint

asserted that Sachdev had committed a breach of his fiduciary

duty to Koshy, as well as the implied covenant of good faith and

fair dealing; the complaint also asserted that the parties were

deadlocked and sought corporate dissolution on that ground.

     5
       Among other things, Xifaras called Koshy "the greatest
impediment for the company achieving its potential" and
"dishonest and self serving." He also said that Koshy did "not
have the experience and knowledge to lead."
                                                                    8

Sachdev filed counterclaims alleging breach of fiduciary duties

by Koshy and abuse of process.

    Koshy also sought a preliminary injunction enjoining

Sachdev from taking certain actions purportedly intended to

freeze out Koshy.   A Superior Court judge (who was not the trial

judge) granted the motion in part, enjoining Sachdev from

(1) blocking or impeding regular tax distributions to Koshy;

(2) making any non-payroll-related disbursement or expenditure

in excess of $5,000 on behalf of Indus without providing written

notice to Koshy in advance; (3) hiring or firing any employee

without providing written notice to Koshy in advance; (4) making

any payments on behalf of Indus to eSystems for services not yet

performed without Koshy's prior written consent; and (5) taking

any action for the purpose of "forcing or pressuring [Koshy] to

sell his shares for less than fair market value."   Shortly

thereafter, Sachdev approved a tax distribution to the parties.

In September, 2012, Sachdev sought to have the preliminary

injunction dissolved.   The judge denied the motion, and instead

modified the order such that the same provisions also were

applicable to Koshy.

    In March, 2015, nearly one and one-half years after the

trial in October, 2013, and while a decision on the issues

raised at trial was still pending, Koshy filed a complaint

seeking a judgment of contempt against Sachdev for asserted
                                                                      9

repeated violations of the preliminary injunction.    The trial

judge ultimately dismissed the complaint for contempt when he

issued his ruling in August, 2015, on the claims litigated at

trial.

     c.   Trial proceedings.   Following an eight-day, jury-waived

trial, the judge denied all of Koshy's claims and Sachdev's

counterclaims.   He rejected Koshy's claim that the parties were

deadlocked such that dissolution was appropriate.    He also

concluded that Sachdev had not committed a breach of his

fiduciary duty to Koshy, because Sachdev had had a "legitimate

business purpose" for all of the conduct Koshy challenged.      For

similar reasons, the judge denied Koshy's claim for breach of

the covenant of good faith and fair dealing.   The judge also

dismissed Koshy's complaint for contempt on the ground that it

"rehash[ed]" issues that had been litigated at trial.

Concluding that Koshy had neither committed a breach of his

fiduciary duty to Sachdev nor brought his claims for an ulterior

or illegitimate purpose, the judge also denied Sachdev's

counterclaims.

     Koshy appealed from the judgment,6 and we transferred the

case to this court on our own motion.

     6
       Sachdev initially cross-appealed from the trial judge's
dismissal of his claims against Koshy for breach of fiduciary
duties and abuse of process. He ultimately decided not to
pursue the appeal.
                                                                      10

     2.   Discussion.   On appeal, Koshy raises three arguments.

He contends that the trial judge erred in concluding that the

parties were not deadlocked; in denying Koshy's claim for breach

of fiduciary duty; and in dismissing the complaint for contempt.

We address each in turn.

     a.   True deadlock.   i.   Statutory overview.   The corporate

dissolution statute, G. L. c. 156D, § 14.30, provides "grounds

for the judicial dissolution of corporations at the request of

the [C]ommonwealth, a shareholder, a creditor, or a corporation

which has commenced voluntary dissolution."    See comment to

G. L. c. 156D, § 14.30, 25A Mass. Gen. Laws Ann. at 70.7     The

statute allows any shareholder or group of shareholders who hold

forty per cent of "the total combined voting power of all the

shares of [a] corporation's stock outstanding" and are "entitled

to vote on the question of dissolution" to petition the Superior

Court for dissolution of the corporation on the basis of

director or shareholder deadlock.    See G. L. c. 156D,

§ 14.30 (2).

     A judge may allow a petition for dissolution due to

deadlock between a corporation's directors only in cases of

     7
       The corporate dissolution statute, G. L. c. 156D, is part
of the Massachusetts Business Corporation Act. In interpreting
the statute, we are guided by the "comments prepared by the task
force . . . that drafted the act, 'which included more than
fifty experienced Massachusetts corporate lawyers.'" See
Chitwood v. Vertex Pharms., Inc., 476 Mass. 667, 669 (2017),
quoting Halebian v. Berv, 457 Mass. 620, 625 (2010).
                                                                      11

"true deadlock."    See comment to G. L. c. 156D, § 14.30, 25A

Mass. Gen. Laws Ann. at 71 ("the general policy of Massachusetts

corporation law [is] that involuntary dissolution should be

available as a mechanism for resolving internal corporate

disputes only in the case of true deadlock").      To establish the

existence of a "true deadlock" between directors, the

petitioning party must prove that (1) "the directors are

deadlocked in the management of the corporate affairs"; (2) "the

shareholders are unable to break the deadlock"; and (3)

"irreparable injury to the corporation is threatened or being

suffered."    See G. L. c. 156D, § 14.30 (2) (i)

(§ 14.30 [2] [i]).8    If the petitioning party can establish a

"true deadlock," then the statute vests the judge with the

discretion to order dissolution as a remedy.    G. L. c. 156D,

§ 14.30.

     A judge's determination whether a true deadlock exists is a

matter of law, reviewed de novo.    Cf. Merola v. Exergen Corp.,

423 Mass. 461, 463 (1996) (determination whether actions

constituted breach of fiduciary duties was matter of law).

Whether such deadlock warrants dissolution is a matter of

discretion.    See comment to G. L. c. 156D, § 14.30, 25A Mass.

Gen. Laws Ann. at 70 ("This section states that a court 'may'

order dissolution if a ground for dissolution exists.      Thus

     8
         The statute does not define any of these terms.
                                                                        12

there is discretion on the part of the court as to whether

dissolution is appropriate even though grounds exist under the

specific circumstances").

    ii.    Analysis.     We have not previously had occasion to

address the corporate dissolution statute.       As with all

statutes, "[o]ur primary duty in interpreting [it] is 'to

effectuate the intent of the Legislature in enacting it.'"

MacLaurin v. Holyoke, 475 Mass. 231, 238 (2016), quoting

Wheatley v. Massachusetts Insurers Insolvency Fund, 456 Mass.
594, 601 (2010), S.C., 465 Mass. 297 (2013).

    A.     Deadlock.    The first part of the test for "true

deadlock" concerns whether the "directors are deadlocked in the

management of the corporate affairs."      G. L. c. 156D,

§ 14.30 (2) (i).       Since neither the statute nor the drafters'

comment defines the term "deadlock," we look to its ordinary

meaning.   See International Fid. Ins. Co. v. Wilson, 387 Mass.
841, 853 (1983) ("We begin with the canon of statutory

construction that the primary source of insight into the intent

of the Legislature is the language of the statute").        The plain

meaning of "deadlock" is "a state in which progress is

impossible, as in a dispute, produced by the counteraction of

opposing forces."      Webster's New Universal Unabridged Dictionary

512 (2003).   Other courts to have considered the matter have

reached a comparable understanding of the term.       See Donovan v.
                                                                    13

Quade, 830 F. Supp. 2d 460, 489 (N.D. Ill. 2011) (deadlock

existed due to directors' mutual distrust, lack of

communication, and inability harmoniously to manage affairs of

corporation); Belio v. Panorama Optics, Inc., 33 Cal. App. 4th
1096, 1103-1104 (1995) (deadlock exists when board has even

number of directors who are equally divided or incapable of

electing successor board); Black v. Graham, 266 Ga. 154, 155

(1996) (deadlock occurs when corporation has two shareholders

who are "wholly unable to agree on the management of the

business").

    Based on this common definition, we conclude that at least

four factors are relevant in determining whether a deadlock

exists.   The first factor is whether irreconcilable differences

between the directors of a corporation have resulted in

"corporate paralysis."    See Laskey v. L. & L. Manchester Drive-

In, Inc., 216 A.2d 310, 314-315 (Me. 1966); Petition of Collins-

Doan Co., 3 N.J. 382, 395 (1949); Kim, The Provisional Director

Remedy for Corporate Deadlock:     A Proposed Model Statute, 60

Wash. & Lee L. Rev. 111, 119 (2003) (Kim) ("Deadlock generally

refers to 'an impasse in corporate decisional processes'"

[citation omitted]).     By "corporate paralysis," we refer to a

stalemate between the directors concerning "one of the primary

functions of management."    See Laskey, supra at 314.   Examples

of such primary functions include payroll, client services,
                                                                  14

hiring and retention of employees, and corporate strategy.

     A second factor in discerning whether a deadlock exists is

the size of the corporation at issue.   A deadlock is more likely

to occur in a small or closely held corporation, particularly

one where ownership is divided on an even basis between two

shareholder-directors.   See comment to G. L. c. 156D, § 14.30,

25A Mass. Gen. Laws Ann. at 72 (dissolution remedy "particularly

important in small or family-held corporations in which share

ownership may be divided on a [fifty-fifty] basis"); Kim, supra

at 121 ("The distinguishing features of close corporations make

them particularly vulnerable to deadlock").   Moreover, in

closely held corporations, the lack of a ready market for a

shareholder's stock, and the greater likelihood that a

shareholder is reliant on the corporation for a salary, tends to

increase the potential for deadlock and accompanying oppressive

tactics.   See Donahue v. Rodd Electrotype Co. of New England,

367 Mass. 578, 588-589 (1975) (structure of close corporation

can lend itself to oppressive conduct); Kim, supra at 121-122.9

     A third relevant factor in determining whether deadlock has

occurred is an indication that a party has manufactured a

     9
       A claim of oppressive shareholder conduct of the sort
described in Donahue v. Rodd Electrotype Co. of New England, 367
Mass. 578, 580-584 (1975), however, is not a necessary
prerequisite to a finding of deadlock. While a breach of the
directors' fiduciary duties would be relevant to whether a
deadlock exists between them, a deadlock could result even in
instances where the directors are acting in good faith.
                                                                    15

dispute in order to engineer a deadlock.    In such circumstances,

a court should view the party's claim with skepticism.     See

comment to G. L. c. 156D, § 14.30, 25A Mass. Gen. Laws Ann. at

71 (corporate dissolution statute not intended to permit

dissolution in instances of "gamesmanship in the negotiation of

internal corporate disputes"); Smith-Shrader Co. v. Smith, 136
Ill. App. 3d 571, 582 (1985) (rejecting claim of shareholder who

committed breach of fiduciary duty to company to force its

dissolution); Lien v. Lien, 2004 S.D. 8, ¶¶ 10, 23 (rejecting

claim of director who boycotted directors' election meeting and

then claimed deadlock due to failure of corporation to elect

directors).

    A fourth factor in determining whether a deadlock exists is

the degree and extent of distrust and antipathy between the

directors.    See, e.g., Shawe v. Elting, 157 A.3d 152, 158 (Del.

2017) (distrust between directors of corporation contributed to

deadlock); Black, 266 Ga. at 155 ("hostile and static situation"

constituted deadlock).    Mutual antipathy can transform what may

begin as a run of the mill disagreement into irreconcilable

conflict and stalemate where hostility precludes compromise.

See Misita v. Distillers Corp., 54 Cal. App. 2d 244, 250 (1942)

(dispute between parties calcified into deadlock meriting

dissolution as result of "ill-feeling, dissension, hatred,

mutual hostility and distrust" between board members).
                                                                    16

    Given the undisputed evidence, the conclusion that the

conflict between the parties constitutes a deadlock is

inescapable.    Applying the first factor, the acknowledged facts

underscore corporate paralysis with respect to a number of key

matters.   The parties have profoundly different opinions

regarding both Indus's daily operations and its future.     They

disagree on such basic matters as staffing needs, as well as

dividend and tax distributions, and even more fundamentally,

hold diametrically opposed views as to long-term corporate

strategies and goals.   The areas of disagreement between the

parties appear to far outweigh the few areas of agreement.        Over

the past few years, the parties appear to have agreed only on

the matter of employee raises and the need to hire a new

salesperson.    As the Xifaras incident demonstrates, their

agreement on the latter issue was superficial at best.      The

parties are diametrically opposed on nearly every issue of

importance concerning Indus's current operations and its future.

    The second factor also argues in favor of deadlock.       Since

the parties each own fifty per cent of Indus, each has the

ability to prevent the other from enacting any policy with which

he disagrees, on any subject; their stalemate thereby

effectively paralyzes Indus on all of the issues on which the

two disagree.   As to the third factor, we discern no indication

in the judge's findings that either party engineered the dispute
                                                                     17

in bad faith.    Rather, the facts reflect a genuine disagreement

between the parties concerning the most basic aspects of company

policy.

    Looking to the final factor, the parties do not contest the

trial judge's finding that they operate based on a relationship

of mutual distrust and antipathy.    The judge was well warranted

in concluding that Koshy "views all of Sachdev's actions as an

attempt to freeze him out of the management of the company" and

that "Sachdev questions all of Koshy's actions."     The record is

replete with personal insults, questioning of motives, and

general acrimony between the parties.    This mutual antipathy in

a two-director corporation has prevented the parties from

compromising and has inspired increasing levels of

brinksmanship.   Accordingly, we conclude that Koshy has met his

burden to show that the parties are deadlocked within the

meaning of § 14.30 (2) (i).

    B.    Irreconcilability of the deadlock.   The second part of

the test for "true deadlock" under § 14.30 (2) (i) requires that

the "shareholders are unable to break the deadlock."     The

critical inquiry with respect to this part of the test is

whether the shareholders are able to work around the deadlocked

directors.   See, e.g., Goldstein v. Studley, 452 S.W.2d 75, 80

(Mo. 1970) (shareholders unable to break deadlock where shares

evenly divided and board contained four directors).     If the
                                                                    18

shareholders are able to do so, then there is no need for a

court to dissolve the company in order to break the deadlock.

    In making this determination, a reviewing court must decide

whether there is a mechanism by which the deadlock can be

broken.     In closely held corporations, two of the more common

such mechanisms are buy-sell agreements and agreements providing

for methods of alternative dispute resolution such as third-

party mediation of disputes.     A buy-sell agreement is a contract

or other legal mechanism that provides for "the mandatory or

optional repurchase of a stockholder's shares by the corporation

or by the other stockholders upon the occurrence of a certain

event," such as a deadlock.     See Stephenson v. Drever, 16 Cal.
4th 1167, 1173 (1997).     See also Hoberman, Practical

Considerations for Drafting and Utilizing Deadlock Solutions for

Non-Corporate Business Entities, 2001 Colum. Bus. L. Rev. 231,

232 (2001) (Hoberman) ("Perhaps the most common deadlock

solution . . . is the 'buy-sell agreement' . . .").       An

agreement requiring alternative dispute resolution in instances

of deadlock also may provide shareholders with a mechanism to

break it.    See Hoberman, supra at 233.

    The record contains no indication that such a mechanism

exists in this case.     Sachdev points to section five of the

articles as a potential means by which the deadlock could be
                                                                      19

broken.10    That provision, however, requires the parties to agree

upon an arbitrator who then will value the selling shareholder's

stock.    We discern no indication in the record that the parties

would agree upon such an arbitrator, particularly given their

previously demonstrated inability to agree on the price for a

buyout of each other's shares.     In light of this, Koshy has met

his burden of establishing that the shareholders are unable to

break the deadlock.

     C.     Irreparable injury.   The final part of the "true

deadlock" test requires that "irreparable injury to the

corporation is threatened or being suffered."      Since the term

"irreparable injury" is not defined in the statute, but has a

long-standing meaning at common law, we assume that the

Legislature intended to incorporate the common-law meaning.         See

Commonwealth v. Wynton W., 459 Mass. 745, 747 (2011) ("Where the

Legislature does not define a term, we presume that its intent

is to incorporate the common-law definition of that term,

'unless the intent to alter it is clearly expressed'" [citation

     10
       Under section five of the articles, a shareholder who
desires to divest himself of his shares first must notify the
directors of the price at which he is willing to sell and
provide the name of an arbitrator. Within thirty days, the
directors either must accept the offer or notify the shareholder
of the name of another arbitrator. The two arbitrators then
select a third; after this panel of arbitrators is constituted,
it may ascertain the value of the stock. Following the
evaluation, the directors have thirty days in which to purchase
the stock at the set price; if they do not, the shareholder may
dispose of the stock as he sees fit.
                                                                     20

omitted]).

    At common law, an irreparable injury is a harm which cannot

be vindicated by litigation on the merits.    See Packaging Indus.

Group, Inc. v. Cheney, 380 Mass. 609, 616 (1980) (irreparable

injury occurs when party "suffer[s] a loss of rights that cannot

be vindicated should it prevail after a full hearing on the

merits").    An irreparable injury need not be financial in

nature.     See Mordka v. Mordka Enterprises, Inc., 143 Ariz. 298,

305 (Ct. App. 1984) (profitability not sole criterion in

considering irreparable injury); comment to G. L. c. 156D,

§ 14.30, 25A Mass. Gen. Laws Ann. at 72 (irreparable injury

standard "may be met in a corporation that is operating at a

profit").    A corporation may suffer irreparable injury due to

severe corporate dysfunction or a frustration of the company's

purpose, or by placing the company's business in jeopardy.     See

Shawe, 157 A.3d at 159 (profitable company subject to

irreparable harm due to "irretrievably dysfunctional" management

structure); Fernandez v. Yates, 145 So. 3d 141, 146 (Fla. Dist.

Ct. App. 2014) (deadlock preventing effective use of company's

sole asset created irreparable injury); Black, 266 Ga. at 155

(inability of sole and equal shareholders to agree on management

of business presented threat of irreparable injury).     A court

may also consider "harm to a corporation's reputation, goodwill,

customer relationships, and employee morale" (citation omitted).
                                                                   21

See Shawe, 157 A.3d at 161.

    The plain meaning of the term "threatened" implicates an

assessment of the substantial likelihood that irreparable harm

will occur.    See Webster's New Universal Unabridged Dictionary

1975 (2003) (defining "threaten" as "to be a menace or source of

danger to").    In this respect, the term is analogous to the

concept of "substantial risk" in our jurisprudence on

preliminary injunctions.    See Packaging Indus. Group, Inc., 380
Mass. at 617 (preliminary injunction requires showing of

"substantial risk of irreparable harm").

    In determining whether a corporation is "threatened" with

irreparable injury, a court must look beyond its current, short-

term status.   While a presently declining revenue stream, the

departure of employees, or the depletion of clients may signal a

threat of irreparable injury, the present well-being of a

corporation does not preclude such a threat.    A deadlock that

prevents corporate management from effectively addressing the

vital functions of the corporation creates a threat of

irreparable injury even if the company appears financially

profitable.    Accordingly, a court must examine the nature and

impact of a deadlock to determine if the company can remain

viable in the long term.    If not, then the corporation is

threatened with irreparable injury.

    In the circumstances here, we conclude that the fundamental
                                                                     22

nature of the deadlock between the parties threatens irreparable

injury to Indus, because the parties' mutual antipathy renders

them unable effectively to manage the company.     Their impasse

regarding nearly every major corporate decision has cast a cloud

on Indus's future.    The parties cannot agree on anything of

substance and, as the Xifaras situation demonstrates, the

palpably corrosive acrimony between them prevents them from

functioning even in areas of theoretical agreement.     Meanwhile,

as their dysfunctional relationship continues to deteriorate,

the parties repeatedly have resorted to costly litigation, in

efforts to outmaneuver each other and gain the upper hand in

steering the corporation.    Resort to management by litigation is

neither a viable means of corporate governance nor an adequate

substitute for functional management and planning.     On the

record before us, the trajectory of Indus plainly points south

and a threat of irreparable injury has been shown.     We therefore

conclude that the parties' dispute constitutes a "true deadlock"

within the meaning of § 14.30 (2) (i).

    D.    Remedy.    The corporate dissolution statute provides

that a Superior Court judge "may dissolve a corporation" if the

three-part test for "true deadlock" set forth in § 14.30 (2) (i)

is met.   Given that the statute authorizes the "extreme" remedy

of dissolution, see comment to G. L. c. 156D, § 14.30, 25A Mass.

Gen. Laws Ann. at 71-72, we conclude that it also authorizes
                                                                  23

lesser remedies, such as a buyout or the sale of the company as

an ongoing entity.   See Brodie v. Jordan, 447 Mass. 866, 873 n.7

(2006) ("In most of these States, statutes authorize the more

drastic remedy of involuntary dissolution, and thus courts have

understandably inferred the power to order the lesser remedy of

a buyout"); Shawe, 157 A.3d at 160 (affirming Court of

Chancery's decision to appoint custodian to hold public auction

of company in light of director deadlock); Sauer v. Moffitt, 363
N.W.2d 269, 275 (Iowa Ct. App. 1984) (statute which provided for

dissolution allowed for other equitable relief); 21 West, Inc.

v. Meadowgreen Trails, Inc., 913 S.W.2d 858, 867 (Mo. Ct. App.

1995) ("Courts are not limited to the remedy of dissolution and

may, in equity, consider appropriate alternative forms of

relief, including ordering the corporation to pay the

petitioning shareholders their proportionate share in money").

    The appropriate remedy should be decided in the first

instance by the trial judge, and we remand the matter for such a

determination.

    b.   Breach of fiduciary duties.   Koshy contends that

Sachdev committed a breach his fiduciary duty to Koshy by

refusing to consent to tax and dividend distributions in late

2011 and early 2012, and by making an unreasonably low offer for

Koshy's shares in early 2012.

    Shareholders in a close corporation owe fiduciary duties to
                                                                       24

both their fellow shareholders and the corporation itself.      See

Demoulas v. Demoulas Super Mkts., Inc., 424 Mass. 501, 528-529

(1997); Donahue, 367 Mass. at 593.    Like partners, they owe to

one another a duty of "utmost good faith and loyalty."     Donahue,

supra.   Accordingly, they may not "act out of avarice,

expediency or self-interest" towards their fellow shareholders.

Id.   If a shareholder is able to demonstrate a "legitimate

business purpose" for a challenged action, however, he or she

will not be liable "unless the wronged shareholder succeeds in

showing that the proffered legitimate objective could have been

achieved through a less harmful, reasonably practicable,

alternative mode of action."     Zimmerman v. Bogoff, 402 Mass.
650, 657 (1988).

      The trial judge concluded that Sachdev had a legitimate

business purpose for the actions that Koshy challenged.       In his

findings of fact, the judge credited Sachdev's reasons for

declining to agree to tax and dividend distributions and

rejected Koshy's assertion that those reasons were a pretext to

freeze him out of the company.    The judge also found that

Sachdev's buy-out offer was a "low-ball" offer, but that it was

not advanced in bad faith.   We review the judge's factual

determinations for clear error, but we review de novo his

determination that Sachdev did not commit a breach of his

fiduciary duties to Koshy.     See Merola, 423 Mass. at 464.
                                                                    25

    At trial, Sachdev testified that he had refused to agree to

dividend distributions in 2012 because of his concern over the

loss of revenue following the expiration of the STARS contract

in 2011.   Sachdev also testified that he would not agree to a

tax distribution because of the fiscal uncertainty caused by

Koshy's unilateral $690,000 distribution to himself.    We discern

no error in the trial judge's rulings of law that these actions

did not constitute a breach of fiduciary duty, because Sachdev

had a "legitimate business purpose" for his conduct.    See

Zimmerman, 402 Mass. at 657.   Sachdev's objection to a dividend

distribution on the eve of the expiration of one of Indus's

chief contracts was not unreasonable, and Koshy does not suggest

a plausible "alternative mode of action" given these

circumstances.   See id.   The same holds true for Sachdev's

reluctance to sign off on a tax distribution when nearly three-

quarters million dollars of Indus's retained cash was in escrow.

There is no indication that Sachdev acted out of the "avarice,

expediency or self-interest" that undergirds a breach of

fiduciary duty in taking these actions.    See Donahue, 367 Mass.

at 593.

    With regard to Sachdev's "low-ball" offer, the judge found

that it was not made in bad faith.   Absent an agreement

establishing such obligations, a shareholder in a close

corporation does not owe a fiduciary duty to a fellow
                                                                     26

shareholder in purchasing the other's shares in the corporation.

See Goode v. Ryan, 397 Mass. 85, 90-91 (1986) (no obligation for

shareholders to purchase other shareholders' stock in

corporation in absence of agreement to the contrary).      No such

obligation is contained in Indus's articles of incorporation,

nor do these circumstances suggest any compelling reason to

extend to the present case the duty set out in Donahue.

Accordingly, we conclude that Sachdev did not commit a breach of

his fiduciary duties to Koshy.

    c.   Contempt.     Koshy maintains also that the judge erred in

dismissing his complaint for contempt.     In that complaint, Koshy

asserted that Sachdev repeatedly had violated the terms of the

preliminary injunction, both before and after the trial.

    The "purpose of civil contempt proceedings is remedial."

Demoulas, 424 Mass. at 571.     A complaint for contempt "is

'intended to achieve compliance with the court's orders for the

benefit of the complainant.'"    Mahoney v. Mahoney, 65 Mass. App.

Ct. 537, 540 (2006), quoting Furtado v. Furtado, 380 Mass. 137,

141 (1980).   We review the decision to dismiss the complaint for

abuse of discretion.    See Massachusetts Comm'n Against

Discrimination v. Wattendorf, 353 Mass. 315, 317 (1967).

    The judge dismissed the complaint, determining that it

"rehash[ed] many of the issues and arguments made during the

trial of the underlying claims" in the case, and discerning "no
                                                                  27

reason to revisit those matters by way of a trial on the

complaint for contempt."   While some of the claims indeed

reiterated issues litigated at trial, several others asserted

violations that took place between the end of the trial in

October, 2013, and the expiration of the preliminary injunction,

which remained in effect through the entry of judgment in

August, 2015.   Among these are assertions that, in

January, 2014, Sachdev canceled checks that Koshy had written to

a subcontractor; in March, 2014, Sachdev made a payment in

excess of the limits in the injunction; in December, 2014,

Sachdev executed a contract with a third-party vendor without

Koshy's consent; during all of 2014, Sachdev refused to

authorize a tax distribution; and, in February, 2015, Sachdev

denied Koshy access to payroll.

    While claims duplicative of a prior action are subject to

dismissal as improper claim splitting, see Mass. R. Civ.

P. 12 (b) (9), as amended, 450 Mass. 1403 (2008), this

proscription extends only to claims which raise the same issues

as did the prior action.   See M.J. Flaherty Co. v. United States

Fid. & Guar. Co., 61 Mass. App. Ct. 337, 339 (2004) ("Rule

12 [b] [9] provides for the dismissal of a second action in

which the parties and the issues are the same as those in a

prior action still pending in a court of this Commonwealth").

Given that the complaint for contempt asserted a number of
                                                                  28

violations of the preliminary injunction that occurred after the

trial, the judge should not have dismissed the complaint on the

ground that it merely rehashed issues raised at trial.   On

remand, the trial judge should consider separately those issues

involving conduct after the end of trial but during the pendency

of the proceedings.

    3.   Conclusion.   The judgment is vacated and set aside.

The matter is remanded to the Superior Court for entry of a

judgment that the parties have reached a "true deadlock" within

the meaning of G. L. c. 156D, § 14.30, and for further

proceedings consistent with this opinion.

                                    So ordered.