Sunday, December 1, 2013

Jara v. Suprema Meats, Inc. case brief

Jara v. Suprema Meats, Inc. case brief summary
121 Cal.App. 4th 1238 (Cal. App. 2004)

Plaintiff minority shareholder and defendants, a corporation and the two majority shareholders, appealed from a judgment of the Superior Court of Alameda County (California), which awarded the corporation damages to be paid by the majority shareholders and ordered the corporation to comply with the disclosure requirements of Cal. Corp. Code § 1601 and to pay the minority shareholder reasonable attorney fees in enforcing his rights of disclosure.

The minority shareholder, the father of one of the majority shareholders, alleged that the majority shareholders paid themselves excessive compensation, denied the minority shareholder a fair share of corporate profits, and refused the minority shareholder's requests to inspect and copy corporate records.


  • The court held that the testimony of the minority shareholder revealed that his son's promise not to increase compensation without unanimous shareholder agreement was unsolicited. 
  • The son's promise was gratuitous, despite his subjective state of mind. 
  • Because of the lack of consideration, there was no contract and thus no breach of contract. 
  • The minority shareholder was not barred from bringing an individual action, however, claiming damages for the breach of fiduciary duty of majority shareholders. 
  • Cal. Corp. Code § 1601 did not impose on the corporation an affirmative duty to respond to written requests for modes of disclosure falling outside the scope of the statute. 
  • The statute guaranteed a shareholder's right to inspect accounting books and records at the company office at a reasonable time during usual business hours when such inspection was requested by a written demand.

The court reversed the judgment and the order granting the minority shareholder's motion for attorney fees and order compelling compliance with judgment. The court granted the request for judicial notice filed by the corporation.

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