2005-737, TOWNSEND THORNDIKE v. CHARLES THORNDIKE

corporation known as Annalee Mobilitee Dolls, Inc. (AMD), which produces and respondent, Charles E. Thorndike, are brothers and shareholders in a of the following facts asserted by the petitioner. The petitioner and the Because the petitioner appeals a motion to dismiss, we assume the truth

petition for equitable relief and damages. We affirm. the Superior Court (Perkins, J.) ruling that the statute of limitations barred his GALWAY, J. The petitioner, Townsend D. Thorndike, appeals an order of

respondent. Thomas J. Schlesinger on the brief, and Mr. Callahan orally), for the Gallagher, Callahan & Gartrell, P.A., of Concord (Michael R.Callahan and

Polubinski, Jr., on the brief and orally), for the petitioner. brief), and Lyne, Woodworth & Evarts, LLP, of Boston, Massachusetts (Edmund to press. Errors may be reported by E-mail at the following address: Wiggin & Nourie, P.A., of Manchester (W. Wright Danenbarger on the

page is: http://www.courts.state.nh.us/supreme. v.

editorial errors in order that corrections may be made before the opinion goes No. 2005-737 Hampshire, One Charles Doe Drive, Concord, New Hampshire 03301, of any Belknap Readers are requested to notify the Reporter, Supreme Court of New ___________________________

a.m. on the morning of their release. The direct address of the court's home reporter@courts.state.nh.us. Opinions are available on the Internet by 9:00

well as formal revision before publication in the New Hampshire Reports. NOTICE: This opinion is subject to motions for rehearing under Rule 22 as voting power and decrease the petitioner’s. p. 2 convertible to voting stock and would, if converted, increase the respondent’s

caused AMD to issue convertible notes to the respondent, which were

meeting; and (7) caused AMD to fail to pay rent to C&T Partnership, a real

of his own money into AMD. In exchange, he and the new board members repayment of loans. In response to these losses, the respondent invested some 1997, AMD’s financing bank terminated AMD’s line of credit and demanded full

petitioner from AMD’s premises; (6) failed to hold the 2004 AMD shareholders’

petitioner and AMD employees.

the income from the business. the petitioner’s removal from management totaled in the millions of dollars. In directors further agreed that the brothers would continue to share equally in petitioner to participate in AMD’s operations; (5) continued to ban the himself a salary and not pay the petitioner; (4) continued to refuse to allow the provide the petitioner with copies of AMD’s tax returns; (3) continued to pay

continued to pay himself and the outside directors. The losses that began after directorship and a significant management position. The shareholders and and the petitioner to zero, due to losses suffered by the company, but management role in AMD. The respondent reduced the salaries of his parents

continued to exclude the petitioner from employment with AMD; (2) refused to

refused to allow the petitioner to participate in the business; and (5) banned (3) continued to pay himself a salary and not pay the petitioner a salary; (4) voting power; (2) denied the petitioner information regarding AMD’s operations;

upon by all shareholders and directors that the petitioner would retain a gave day-to-day control of the business to the respondent, but it was agreed then removed the petitioner from his position as a director and from any that all four family members would be directors of AMD. In 1995, the parents The petitioner alleges that, after February 18, 2002, the respondent: (1)

(1) converted the convertible notes to voting stock, thus diluting the petitioner’s The petitioner alleges that, prior to February 18, 2002, the respondent:

one of the new board members. The respondent and the new board members respondent, leaving 2 percent to each parent. At this time, the family agreed

parents also transferred their voting stock to a voting trust under the control of percent of the business’s voting stock to the petitioner and 48 percent to the shareholders nor Thorndike family members to AMD’s board of directors. The unanimously by all Thorndike family members. In 1992, the parents gave 48 day operations, he and his parents added people who were neither early 1970s to the 1990s, the major business decisions for AMD were made The petitioner alleges that, after the respondent gained control of day-to-

1951, and the brothers began working at AMD in the early 1970s. From the sells collectible dolls. The business was started by the brothers’ parents in limitations imposed upon personal actions. p. 3 correctly ruled that the petitioner’s claim is barred by the three-year statute of

freeze-out is a continuing tort.

filing of the petition on February 18, 2005. occurred and were known to the petitioner more than three years prior to the are actionable as independent torts. The respondent argues that the trial court action, an action will not be barred if it can be based upon the continuance of dismiss, concluding that the petitioner’s claims all arose from facts that

Hampshire. We now address the petitioner’s claim that the tort of corporate

events occurring before February 18, 2002, the events occurring after that date facts pled do not constitute a basis for legal relief. may have occurred longer than the statutory period prior to the filing of an was barred by the statute of limitations. The trial court granted the motion to the alternative that, even if the statute of limitations bars an action based upon the respondent committed are actionable as one tort. The petitioner argues in

assume without deciding that the tort of corporate freeze-out exists in New

although we have assumed its existence

favorable to him, we will uphold the granting of the motion to dismiss if the When a tort is of a continuing nature, “although the initial tortious act AMD. The respondent moved to dismiss the petition, arguing that the petition defeating the petitioner’s reasonable expectations and freezing him out from continuing tort, the petitioner argues, all of the breaches of fiduciary duty that his enhanced fiduciary duty to the petitioner, a minority shareholder, by

N.H. 399, 403 (1989). For the purposes of our discussion below, we will

We have never explicitly adopted the tort of corporate freeze-out,

158, 159-60 (2005).

petitioner’s pleadings and construe all reasonable inferences in the light most 378 (2006). Although we assume the truth of the facts alleged in the thus constituted a continuing tort. Because corporate freeze-out is a construction that would permit recovery. Cadle Co. v. Dejadon, 153 N.H. 376, controlling shareholder of a closely-held corporation, the respondent breached whether or not the petitioner’s allegations are reasonably susceptible of a In reviewing a trial court’s ruling on a motion to dismiss, we consider

18, 2002, were all part of a plan to freeze-out the petitioner from AMD, and relief and damages on February 18, 2005. The petitioner alleged that, as the motion to dismiss because the events that occurred before and after February On appeal, the petitioner argues that the trial court erred in granting the

Based upon the above events, the petitioner filed a petition for equitable

estate to AMD. estate partnership owned by the petitioner and the respondent that leases real p. 4 2002, is barred by the statute of limitations.

ruling that any action based upon events that occurred prior to February 18,

began to run when the acts occurred. Accordingly, we affirm the trial court’s injuries occurred prior to February 18, 2002, and the statute of limitations continues to ban him from AMD’s premises, the acts causing the petitioner’s

continues to refuse to permit him to participate in AMD’s operations, and

declined to extend the continuing wrong doctrine to include freeze-out. at AMD, continues to take a salary without paying a salary to the petitioner, alleges is true, and the respondent continues to exclude him from employment petitioner in this case is not a continuing wrong. Even if all that the petitioner

shareholder of their decision to exclude him from a business venture.

did not transform the alleged wrongdoing into a continuing tort.

continuing tort, Massachusetts courts have directly addressed that issue and

concur with this reasoning and conclude that the wrongdoing alleged by the

arose at a specific time: when the defendant shareholders notified the plaintiff trademark infringement is widely recognized to be of a continuing nature. N.E.2d at 53. The Houle court determined that a cause of action for freeze-out as civil rights, property damage, and antitrust. Houle, 556 Court held that the injuries suffered by a plaintiff alleging corporate freeze-out 1043 (Mass. App. Ct. 1988). In Houle, the Massachusetts Supreme Judicial v. Low, 556 N.E.2d 51, 53 (Mass. 1990); Kirley v. Kirley, 521 N.E.2d 1041,

doctrine is most commonly applied in Minnesota to discrimination cases Although we have never before determined whether freeze-out is a

actions in trespass, nuisance, and civil rights violations); Nordic Inn Condo. Owners’ Assoc., 151 N.H. at 581-82.

an overt act to restart the statute of limitations). We recently stated that violation in which the plaintiff’s interests are repeatedly invaded and requiring although some courts have applied the doctrine to other areas of tort law, such F.3d 462, 467 (6th Cir. 1996) (describing a continuing antitrust violation as a malfunctioning water line); DXS, Inc. v. Siemens Medical Systems, Inc., 100 doctrine to repeated water damage caused by a city’s failure to fix a Geddes, 610 N.W.2d 816, 818 (S.D. 2000) (applying the continuing wrong

712 N.W.2d 190, 209 (Minn. Ct. App. 2006) (stating that the continuing wrong

Michigan Supreme Court’s use of the continuing wrong doctrine as limited to Properties, 673 N.W.2d 805, 810 (Mich. Ct. App. 2003) (summarizing the

long recognized claims for continuing trespass and continuing nuisance), Pioneer Plastics, Inc., 676 A.2d 504, 506 (Me. 1996) (stating that Maine has Massachusetts as limited to actions in nuisance and trespass); Jacques v. 107 (D. Mass. 1999) (summarizing the law of continuing wrong in trespass and nuisance, John Beaudette, Inc. v. Sentry Ins., 94 F. Supp. 2d 77, Id. at 581-82. Courts have traditionally applied this doctrine to the torts of 151 N.H. 571, 581 (2004). This is known as the “continuing wrong” doctrine. that tort within that period.” Nordic Inn Condo. Owners’ Assoc. v. Ventullo, themselves, constituted a freeze-out. p. 5 petitioner’s argument that the events occurring after February 18, 2002, by February 18, 2002 as a freeze-out. Accordingly, we decline to address the

where he asked the trial court to consider solely the events occurring after

Further, the petitioner’s appeal does not refer to any location in the record conduct beginning in 1995 that increasingly excluded the petitioner from AMD. presented to the trial court was that the respondent engaged in a course of

of matters not raised in the forum of trial.” hearing before the trial court. The argument that the petitioner consistently DALIANIS and DUGGAN, JJ., concurred. freeze-out. “It is a long-standing rule that parties may not have judicial review

considered by the court regardless of whether the opposing party objects on

each question presented on appeal was raised below,

demonstrate that the appellant raised those issues before the trial court.

in fact, the petitioner did not mention that date in either the petition or at the that the events occurring after February 18, 2002, by themselves, constitute a distinguish between events occurring before and after February 18, 2002, and,

Bean, 151 N.H. at 250. At trial, the petitioner did not

failure of the moving party to comply with these requirements may be

Because our rules affirmatively require the moving party to demonstrate where

court with a record sufficient to decide the issues raised on appeal and to N.H. 248, 250 (2004). It is the burden of the appealing party to provide this

us, however, it appears that the petitioner never argued before the trial court that occurred thereafter constitute a freeze-out. Based upon the record before consideration of events that occurred prior to February 18, 2002, the events The petitioner next argues that, even if the statute of limitations bars