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Rights of Shareholders. FCR Realty, LLC, and Clifford B. Green & Sons, Inc., were co-owned by three brothers—Frederick, Clifford Jr., and Richard Green. Each brother was a shareholder of the corporation. Frederick was a controlling shareholder, as well as president. Each brother owned a one-third interest in the LLC. Clifford believed that Frederick had misused LLC and corporate funds to pay non- existent debts and liabilities and had diverted LLC assets to the corporation. He also contended that Frederick had dis- bursed about $1.8 million in corporate funds to Frederick’s own separate business. Clifford hired an attorney and filed an action on behalf of the two companies against Frederick for breach of fiduciary duty. Frederick argued that Clifford lacked the knowledge necessary to adequately represent the companies’ interest because he did not understand financial statements. Can Clifford maintain the action against Frederick? If so, and if the suit is successful, who recovers the dam- ages? Explain.

Operation Management, Management Studies

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