USCA1 Opinion

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT
____________________

No. 95-1053

BOSTON CHILDREN'S HEART

FOUNDATION, INC.,

Plaintiff - Appellee,

v.

BERNARDO NADAL-GINARD,

Defendant - Appellant.

____________________

No. 95-1136

BOSTON CHILDREN'S HEART

FOUNDATION, INC.,

Plaintiff - Appellant,

v.

BERNARDO NADAL-GINARD,

Defendant - Appellee.

____________________

APPEALS FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Robert E. Keeton, U.S. District Judge]

___________________

____________________

Before

Selya and Boudin, Circuit Judges,

______________

and Lisi,* District Judge.

______________

_____________________
____________________

Of the District of Rhode Island, sitting by designation.

Laura Steinberg,
_______________

with whom Cynthia M. Clarke, Katherine J.

__________________ ____________

Ross, Lisa F. Sherman and Sullivan & Worcester were on brief for
____ ________________
____________________
Bernardo Nadal-Ginard.

Alexander H. Pratt, Jr.,

_______________________

with whom Paul R. Devin,

_____________

James H.
________

Belanger, Robin E. Folsom, William M. Cowan and Peabody & Arnold,

________ _______________ ________________
________________
were on brief for Boston Children's Heart Foundation, Inc.

____________________

January 12, 1996

____________________

-2-

LISI, District Judge.

LISI, District Judge.
______________

I.
I.

These appeals present

INTRODUCTION
INTRODUCTION

us with

the classic tale

of a

corporate

officer who, when caught using corporate funds for personal gain,

resists

making amends for his

Bernardo Nadal-Ginard

funds of

officer

was alleged

the corporation

and director,

misdeeds.

the

of

to

which he

Boston

In

this instance, Dr.

have misappropriated

had

served as

Children's Heart

both

the

an

Foundation

("BCHF").

Following an

court found

BCHF,

eighteen-day bench trial,

that Nadal-Ginard

and entered

$6,562,283.02.

judgment

the district

violated his fiduciary

in

Notwithstanding

its

favor

allegations

in

duties to

the

amount

of error

by

of

both

parties, we affirm the district court s decision.

II.
II.

BACKGROUND
BACKGROUND

Plaintiff-appellee BCHF is a non-profit corporation organized for

the

purposes

cardiology and

of conducting

medical

providing medical services to

Children's Hospital ("Hospital"),

with Harvard

of Directors

of

the

field of

patients at Boston

a teaching hospital affiliated

Medical School ("Medical School").

appellant, Nadal-Ginard,

Board

research in

was the president

BCHF ("Board").

The defendant-

and a member

Nadal-Ginard

of the

was also

Chairman of

Hospital,

the Department

as well

as a

of Cardiology ("Department")

member

of the

faculty of

at the

the Medical

School.

Nadal-Ginard

entities in 1982,

first

became

associated

when he accepted the chairmanship

with

these

and faculty

-3-

position.

Approximately one year later, with

the assistance of

Boston attorney Douglas Nadeau,

corporation

created

activities,

was

explicitly

foundation.

the

Like

Department's

the

other

Operating Agreement between

acknowledged

Indeed, control

BCHF's three directors:

Freed.2

conduct

organized.1

corporations, the

BCHF

to

BCHF, a tax-exempt Massachusetts

Nadal-Ginard

clinical

departments'

the Hospital

the

independent

status

of

the foundation

was

and

of

the

given to

Nadal-Ginard, Donald Fyler, and Michael

also served

as president

of BCHF

until

1993, when the circumstances leading to this litigation began

to

surface.

In

School,

and

addition to

BCHF,

his

duties at

Nadal-Ginard

the Hospital,

accepted

position

Medical

as

an

investigator with the Howard Hughes Medical Institute ("HHMI") in

1986.

In this position, he directed the activities of the Howard

Hughes

Medical Institute

Laboratory of

Cardiology at the Hospital.

Cellular and

Molecular

Nadal-Ginard received a substantial

salary and some optional fringe

benefits as compensation for his

services.
____________________

In 1980, the Hospital's Board of Trustees had

Practice

Policy

individual

Statement

departments

to

which
conduct

through tax-exempt corporations

180 of

formed,

all

with

their

the

Hospital's

clinical

activities

established pursuant to

the Massachusetts General

established in 1983, several

permitted

adopted a Group

Laws.

At the

chapter

time BCHF

was

other corporations already had been

the assistance

of

Nadeau.

Twelve of

the

Hospital's fifteen departments ultimately established chapter 180

corporations.

Fyler served on the

December

31,

1989,

Board until his retirement in

James

E.

replacement.

-4-

Lock

was

named

1989.
as

On

Fyler's

There

were never

any questions

as to

qualifications as a scientist and a physician.

did arise, however, with

Nadal-Ginard's

Several questions

respect to certain actions Nadal-Ginard

took with respect to setting his salary, establishing a severance

benefit plan, and

November

12, 1993,

using BCHF

BCHF filed

breached his fiduciary duties

bench

funds for personal

suit claiming

expenses.

On

that Nadal-Ginard

to the corporation.3

Following a

trial, the district court found most of the allegations to

be true and awarded damages to BCHF.

On appeal, Nadal-Ginard alleges that the district court

committed

BCHF

a plethora

of errors

cross-appeals on

decided

in

favor of

in deciding

several issues

Nadal-Ginard.

in favor

which the

We

of BCHF.

district court

examine each

of these

alleged errors in the context of their common factual bases.

III.
III.

BCHF SALARY CLAIMS

BCHF SALARY CLAIMS

Nadal-Ginard's first allegation of error relates to the

district court's finding that he violated his fiduciary duties to

BCHF

by setting his BCHF salary without making any disclosure to

the Board of his receipt of an annual salary from HHMI.

Articles of

Organization authorized

the

compensation to its employees and members.

payment of

The

The BCHF

reasonable

Hospital's Group

Practice Policy Statement

calculating

the BCHF

defined the procedures

the compensation, delegating

president to determine

to be used

in

exclusive authority to

the compensation levels

of all

____________________

BCHF

Pursuant

filed

its complaint

in Massachusetts

to Nadal-Ginard's motion,

the case was

Superior Court.

removed to the

United States District Court on November 29, 1993.

-5-

BCHF

members, including his or her own compensation.

During his

tenure,

Nadal-Ginard acted

in

accordance

with the

provisions

contained in these documents.

The

his own

district court

found that

salary constituted a

Massachusetts law.

on whether the

Nadal-Ginard's setting

self-interested transaction

under

As such, the validity of this action depended

other Board

action after receiving all

Finding that Nadal-Ginard

members had

approved the

corporate

information relevant to the decision.

failed to disclose his

HHMI income to

the other Board members, information the court found material

any discussion by

the Board regarding the

his BCHF compensation, the

his

equal

fiduciary duties.

to

three years

to

appropriate amount of

court held that Nadal-Ginard violated

Accordingly,

of his

BCHF

the court

awarded damages

salary, an

amount totaling

$801,172.90.

Nadal-Ginard

alleges that the district court committed

two errors relating to his BCHF salary.

First, he challenges the

court s finding that he breached any fiduciary duties through his

participation in the Board's salary decision.

that

Second, he

argues

the district court erred in denying a quantum meruit offset

______________

to any

liability arising from

such participation.

We

address

these contentions separately.

A.
A.

Breach of Fiduciary Duty

Breach of Fiduciary Duty
________________________

Nadal-Ginard contends

"well-established law

breached

that the district

and stipulated

his fiduciary duties to

court ignored

facts" in finding

BCHF with respect

that he

to his BCHF

-6-

salary.

Specifically, he argues that his compensation was at all

times "fair and reasonable" in light of the services he rendered,

precluding any such finding.

The

We disagree.

basic standard

directors

is

well-established

essence,

it is

the "standard

exercise

of

of care

under

of corporate

Massachusetts

of complete

reasonable intelligence."

officers or

good faith

Murphy
______

law.

In

plus the

v. Hanlon,
______

79

N.E.2d 292, 293 (Mass.

1948).

Under this standard,

officers or

directors are not responsible for mere errors of judgment or want

of prudence in the performance of

their duties.

See Sagalyn
___ _______

Meekins, Packard & Wheat, Inc., 195 N.E. 769, 771

_______________________________

Further,

if officers

imprudently, they

clear

and gross

or

are not

directors act

in

negligence in

(Mass. 1935).

good faith,

subject to personal

their conduct.

v.

albeit

liability absent

See
___

Spiegel v.
_______

Beacon Participations, Inc., 8 N.E.2d 895, 904 (Mass. 1937).

___________________________

This basic

standard of care is

enhanced in situations

when an officer or director engages in self-dealing.

v. Witkowski,
_________

See Johnson
___ _______

573 N.E.2d 513, 522 (Mass. App. Ct. 1991).

Courts

subject these transactions to "vigorous scrutiny," obligating the

officers or directors

officer

or

to prove

director acted

two elements:

in good

faith

first, that

with respect

the

to the

transaction; and, second, that the transaction is inherently fair

from

the

corporation s

point

of

view.4

Crowley
_______

v.

____________________

We stop at this point to note the fact that the district court

correctly found
interest
individual

by

its

that

corporate bylaws

officers

or

permitting conflicts

directors

of his obligation to

do

act in good

not relieve
faith.

of

that

See, e.g.,
___ ____

Spiegel v. Beacon Participations, Inc., 8 N.E.2d 895, 907 (Mass.

_______
____________________________

-7-

Communications for Hospitals, Inc., 573 N.E.2d

___________________________________

App. Ct. 1991);

see also
________

313, 317 (Mass. 1949).

officer to

to the

maker

Winchell v. Plywood Corp., 85

________
______________

The former element requires

N.E.2d

a corporate

fully and honestly disclose

any information relevant

transaction, thereby permitting

a disinterested decision

to exercise informed judgment.

508 N.E.2d

Co.,
___

996, 1000 (Mass.

1371, 1378 (Mass. 1987);

640 N.E.2d

786, 791

element emanates from the

"to refrain

See, e.g., Dynan v. Fritz,

___ ____ _____
_____

Cooke v. Lynn Sand & Stone

_____
__________________

(Mass. App.

Ct. 1994).

The

latter

officer's or director's responsibility

from taking an undue advantage

of the corporation,"

and gives rise

officer

to a

determines

fiduciary breach

his or

salary exceeds the fair

her

in a

salary

situation where

when that

individual s

value of services rendered.

Meekins, Packard & Wheat, Inc.,

______________________________

an

Sagalyn v.
_______

195 N.E. at 771; see also

________

Heise
_____

v. Earnshaw Publications, 130 F. Supp. 38, 40 (D. Mass. 1955).

_____________________

The

Nadal-Ginard's

district

court found

lack of

good

faith on

part as a result of two factual findings:

first,

that Nadal-Ginard failed to disclose his HHMI salary and benefits

to the

was

other BCHF directors; and, second,

material to

any decision

Ginard's BCHF salary.

that this information

concerning the

We accept the

amount of

former as true,

Nadal-

as Nadal-

____________________

1937) (stating

that organic documents which

create conflicts of

interests for directors or officers provide no immunity

individuals for acting in

bad faith).

We need

to those

not elaborate on

this finding, as it is not challenged on appeal.

-8-

Ginard

alleges no error with

respect to this

Ginard

suggests

respect

error

with

to

the

finding.5

latter

Nadal-

finding,

however, arguing that the

district court reached this conclusion

because it erroneously believed

the same

Ginard

or related

research activities.

him for

Specifically, Nadal-

argues that the district court "grossly mischaracterized"

the services

In so

that BCHF and HHMI paid

Nadal-Ginard rendered

doing, we

believe that

to BCHF and

it is

its affiliates.

Nadal-Ginard who

offers a

mischaracterization.

The

information

district court

"was material

compensation paid

by

activities . . . ."

BCHF

found

to

for

or related

any decision

the same

the HHMI

on the

or

work

for both

salary

appropriate

related

Trial Court Opinion, p. 32.

opinion did the court conclude

same

only that

research

Nowhere in its

that Nadal-Ginard engaged in

BCHF

and HHMI.

statement merely indicates that the court

the

Rather, this

believed that the BCHF

Board,

have

armed with the

found

research.

that

information about the

Nadal-Ginard

engaged in

HHMI salary, might

similar

or

related

Indeed, in the succeeding paragraph, the court

stated

____________________

At one

with

point, Nadal-Ginard did suggest that

his relationship

HHMI amounted to an outside business activity, one that did

not constitute an usurpation of a BCHF corporate opportunity.

argues that
need
issue

the absence

of any

for the disclosure of the

at bar does

relationship

with HHMI.

that Nadal-Ginard
agreement

not concern

such usurpation eliminates

the

relationship.

We disagree.

the propriety

of Nadal-Ginard's

Indeed, there

has been

entered this relationship in

with BCHF.

He

The

no suggestion

violation of his

As a result, his disclosure obligation did

not arise from the fact of his relationship with HHMI, but rather
because of his involvement in a self-interested transaction.
note,

however,

that

the

terms

of

his

agreement

precluded Nadal-Ginard from accepting his BCHF salary.

-9-

with

We

HHMI

that "[i]f the

defendant had disclosed

his salary from

[HHMI],

BCHF may have determined"

___________________

that it could have used part of Nadal-

Ginard's salary for other

purposes.

(emphasis added).

Trial Court Opinion,

p. 32

Because we believe that the district court did

not make the finding Nadal-Ginard suggests is

erroneous, we find

no error on the part of the district court.

Notwithstanding

the district

court's

finding

of

an

absence of good faith, Nadal-Ginard argues that he could not have

breached his fiduciary duties

to BCHF because his salary

was at

all

times fair

Ginard

neglects to

analysis.

failed

and reasonable.

When,

address

so doing,

the first

need to

however, Nadal-

predicate

as in this case, a court

to act in good faith, it

exists, and the

In

of the

legal

finds that an officer

follows that a fiduciary breach

determine whether or

not an

officer's

salary is objectively reasonable is obviated.

B.
B.

Quantum Meruit Offset

Quantum Meruit Offset
_____________________

Nadal-Ginard next suggests

court correctly found

that he breached his

erroneously calculated his

total

1990.6

compensation

that, even if the

Nadal-Ginard

contends

specifically the theory of

fiduciary duties, it

liability for this

he received

from

that

BCHF

district

breach to be

the

after November

12,

principles

of

equity,

quantum meruit, required the district

______________

____________________

BCHF

argues

in its

incorrectly applied
cause

of

action,

amounts equal to the

November 12,

cross-appeal

a three-year
and

that the

district

statute of limitations

therefore, its

damages

should

court

on its

include

compensation Nadal-Ginard received prior to

1990, as well.

We address this claim

below.

See
___

infra part VII.A.

_____

-10-

court

to

exclude from

BCHF's

damages that

portion

of Nadal-

Ginard's

salary which

represented the

services he rendered to

BCHF.

reasonable value

Nadal-Ginard alleges two

of the

ways in

which the district court erred with respect this issue.

First,

Nadal-Ginard

erroneously decided that it

offset in cases in

reveal

expressly

district court

was precluded from applying such

the district court's

pronouncement.

assumed

considerations:

the

an

an unexcused

We dispense with this allegation forthwith, as

a cursory review of

such

that

which a defendant has committed

fiduciary breach.

even

argues

that

it

Indeed,

was

"I assume, without

the

permitted

opinion fails to

district

to

deciding, that a

weigh

court

such

court has

authority when determining the appropriate measure of damages for

breach of fiduciary duty, in a context such as this, to weigh the

harm

caused by the defendant's

plaintiff

duties."

from

the

breach with the

defendant s

overall

benefits to the

performance

of

his

Trial Court Opinion, pp. 46-47.

Nadal-Ginard next asserts that the district court erred

in factoring the harm to BCHF's reputation that resulted from his

fiduciary

breach into

its

damages equation.

Although

Nadal-

Ginard couches this claim in terms

of a denial of what he refers

to as a quantum meruit offset, in

______________

reality, he is challenging the

method

by which the

analysis.

district court

applied the

quantum meruit
______________

In whatever light this allegation is viewed, however,

it must fail.

-11-

Under Massachusetts

the discretion to

breaches

case.

327

determine the amount of

according to

the peculiar

(Mass.

vested with

damages for fiduciary

factors of

each individual

See Chelsea Industries, Inc. v. Gaffney, 449

___ _________________________
_______

N.E.2d 320,

1983); Lydia E. Pinkham Medicine Co. v.

________________________________

N.E.2d 482, 486 (Mass.

this

law, trial courts are

discretion, courts

1939).

have

Gove, 20
____

Notwithstanding the existence

consistently

followed

the

of

same

routine in determining whether

examine

such an offset is warranted.

Nadal-Ginard's allegation

of

error after

We

synthesizing

this routine.

Most courts

proposition

director,

retain

or

that

or trust

receive

violation of his

Industries, Inc.
_________________

begin

their analyses

court

can

agent or

his

or

or her

employee to

her

the

baseline

corporate

officer,

forfeit the

right to

compensation

fiduciary duties.

v. Gaffney,
_______

Pinkham Medicine Co.

______________________

require

with

v.

449

Gove,
____

for

N.E.2d

in

See, e.g.,
___ ____

Chelsea
_______

326-27;

Lydia E.
________

N.E.2d at

20

conduct

at

486.

Such

forfeiture can be required even absent a showing of actual injury

to

the employer.

See
___

Chelsea Industries, Inc.

________________________

v. Gaffney, 449
_______

N.E.2d

trust

at 327.

or an

imperils

Indeed, "[a]

agent

who is

trustee who

guilty

commits a

of disloyal

his right to compensation."

breach of

conduct
_______

. .

Lydia E. Pinkham Medicine

_________________________

Co. v. Gove, 20 N.E.2d at 486 (emphasis added).

___
____

The

courts

next

proceed

to determine

whether

they

should stray from the baseline and require a disloyal employee to

repay

only that portion of

his or her

-12-

compensation, if any, in

excess of the value

of his or her service to the employer.

e.g., Chelsea Industries, Inc.

____ _________________________

v. Gaffney,
_______

449 N.E.2d

See,
___

at 327;

Anderson Corp. v. Blanch, 162 N.E.2d 825, 830 (Mass. 1959); Lydia
______________
______
_____

E. Pinkham Medicine Co. v. Gove, 20 N.E.2d at 486.

_______________________
____

two

factors

warranted:

when

contemplating

first, whether

burden of establishing

v.

second,

the

nature

the defendant

the value of

Chelsea Industries, Inc.

________________________

the

whether such

of

Courts weigh

has

deviation

met his

or her

the services rendered,

Gaffney, 449 N.E.2d

_________

defendant's

conduct,

Production Mach. Co. v. Howe, 99 N.E.2d at 36.

____________________
____

is

see
___

at 327;

and,

see,
___

e.g.,
____

It is only when a

court

is satisfied that a defendant has established the value of

his services, and that his or her conduct was not egregious, that

such an offset is factored into the damage equation.

Nadal-Ginard asserts

examining the

BCHF

that

that the district court erred in

harm to the reputation, services, and functions of

would naturally

flow from

the public

disclosure of

Nadal-Ginard's conduct because the plaintiff failed to prove such

harm.

In so asserting,

Nadal-Ginard has the

right church, but

wrong pew.

Nadal-Ginard

is

correct

in

his

assertion

that

plaintiff normally can recover only those damages which he or she

has proven to

Daewoo Corp.,
_____________

have incurred.

923 F.2d

See
___

209, 217

Hendricks & Assocs., Inc.

_________________________

(1st

Cir. 1991);

v.

Snelling &
__________

Snelling of Mass., Inc.

_________________________

1963).

In

factoring

v. Wall,
____

this instance,

189

N.E.2d 231,

however, the district

the reputational

harm

into its

232 (Mass.

court was

not

damage calculations.

-13-

Rather,

the court considered this

whether

an equitable

entitled

offset to

was warranted.

The

harm only in

the damages

its analysis of

to which

court committed no

BCHF was

error in doing

so.7

In charging

proving damages,

that

BCHF failed

Nadal-Ginard overlooks

to meet

its burden

the fact that

in

the main

reason the district court denied the offset was because he failed

to meet his.

presented

That

with

respect

"conflicting and

33.

that

is, the district court found the

to the

value

speculative at best."

of

his

Trial

evidence he

services to

be

Court Opinion, p.

Close examination of the record evidences nothing to suggest

the district

court

erred in

reaching such

a conclusion.

Nowhere in the record is there any evidence of the specific value

of Nadal-Ginard's services.

Indeed, Nadal-Ginard relies only on

broad, self-aggrandizing statements in support of his argument.

Having addressed all

of Nadal-Ginard's allegations

of

error relating to his BCHF salary, we turn our sights to the next

area in

which he

alleges error,

that is, with

respect to

his

claim of entitlement to indemnification from BCHF.

IV.
IV.

INDEMNIFICATION CLAIM
INDEMNIFICATION CLAIM

Nadal-Ginard contends

rush to judgment,"

that the

failed to thoroughly

district court, "in

address his claims

for

____________________

Even if the court's actions could be construed as invoking the

general damages rule, the

That

is, a

plaintiff

officer s

fiduciary

suffered

any

compensation.

injury

exception to the rule is at work here.

whose
breach
in

cause of
is not
order

action

required
to

recover

See Chelsea Industries, Inc.

___ __________________________

N.E.2d at 328.

-14-

is
to

based on

an

show that

it

the

officer's

v. Gaffney,
_______

449

indemnification by BCHF.

Specifically, he argues that the

court

neglected to review the facts underlying two BCHF decisions, both

instances in which

to

this

the court found Nadal-Ginard's

amount to fiduciary breaches.

court

reverse

indemnification

claims

the

with

participation

Accordingly, he requests that

district

respect

court's

denial

to each

decision.

of

his

For

several reasons, we decline the invitation.

A thorough examination of

does not bear out Nadal-Ginard's

the district court's opinion

main contention.

Indeed, while

the

district court

did not

include a

recitation of

underlying these decisions in its indemnification

had no reason to do so,

incorporated

discussion, it

as it had examined both circumstances in

great detail in previous

it

sections of the opinion.

these

findings

by

The fact that

reference

indemnification discussion

does not constitute error.

we

validity

turn

to

examine

the facts

the

of

the

into

district

the

As such,

court's

conclusions.

We begin our

which Nadal-Ginard

analysis by examining the

asserts his entitlement.

two grounds on

Nadal-Ginard first

claims a right to indemnification from BCHF based on Article VIII

of

the BCHF

Bylaws.8

This provision

provides that

BCHF will

____________________

Article VIII of the BCHF Bylaws provides, in pertinent part:

Any

person threatened

party

to

any

proceeding by
.

. .

employee

is

action,

or

suit

made
or

other

reason of the fact that he

or was
or

with

a Director,

other

agent

officer,
of

the

Corporation . . . shall be indemnified by

the

Corporation against

all liabilities

-15-

indemnify any liabilities and expenses incurred by an officer

director

because of the

position he or

she holds.

or

There is a

prerequisite

that must be satisfied

indemnification,

however:

employee must have acted

the

in order to

BCHF

be entitled to

director,

in good faith in the

officer,

or

reasonable belief

that his or her action was in the best interests of BCHF.

Nadal-Ginard turns

Massachusetts

General

indemnification claim.

director

of a

to Chapter 180, Section

Laws

for

further

support

This statute provides that

corporation

shall not

performance of his or her duties if

be

6C, of the

of

his

a officer or

held liable

for

the

performed "in good faith and

in a manner he reasonably believes to be in the best interests of

the

corporation, and

person

in

like

circumstances."

provides

that an

with such

position

Mass.

Gen.

officer or

care as

an

. would

L. ch.

180,

director acts

ordinarily prudent

use

under

6C.

in good

similar

The statute

faith when

acting on,

providing

inter alia,
___________

the

officer

the

or

advice

or

director

did

opinions

not

of

have

counsel,

knowledge

regarding his or her actions that would cause such reliance to be

unwarranted.

See id.
___ ___

____________________

and

expenses,

except that no
________________

indemnification shall be provided for any

_________________________________________
person with respect to any matter as to
_________________________________________
which he shall have been adjudicated in
_________________________________________
any proceeding not to have acted in good
_________________________________________
faith in the reasonable belief that his
_________________________________________
action was in the best interests of the
_________________________________________
Corporation . . . .
___________

Plaintiff's Exhibit #4, p. 17 (emphasis added).

-16-

It is

the latter portion of

on which Nadal-Ginard relies

that BCHF should

attorney.

We

in asserting his claim.

indemnify him

transactions, as,

in both cases,

examine the

the Massachusetts statute

for damages arising

he acted on

merits of

He argues

out of

the advice of

these claims

two

an

after first

reviewing the underpinnings of the transactions in question.

The first fiduciary breach arose out of his involvement

in determining his

BCHF salary.

We need not

tarry in reviewing

the circumstances underlying this transaction, as we have already

devoted a good

part III.

Ginard

portion of the

opinion to doing

so.

See
___

We need only make note of the new wrinkle that

adds

contention

in

his

effort

to

obtain

supra
_____

Nadal-

indemnification:

his

that he acted as he did because Nadeau represented to

him that to do so was legal.

The

second

fiduciary

claims a right

to indemnification

directing BCHF

funds

Insurance Escrow

premiums to

to

be

breach for

which

arose out of

deposited

into

Account, established for the

the Guardian Life Insurance Company

life insurance policy

in Nadal-Ginard's name.9

Nadal-Ginard

his actions

Guardian

in

Life

purpose of paying

on a $6,000,000

The court found

that Nadal-Ginard did not, at any time, disclose the existence of

the Escrow Account

obtain

to the other BCHF

authorization

to

make

Board members, nor did

payments

to

such

an

he

account.

____________________

In its opinion,

the district

showed that, in addition

for

to being used to make

the life insurance policy,

were used to

court noted that

the funds in

the evidence

premium payments

the Escrow Account

pay Nadal-Ginard's federal and state

income taxes,

as well Nadal-Ginard's personal mortgage loan application fee.

-17-

Because this

held

that

transaction was clearly self-interested,

the

amounted to a

loyalty,

payment of

breach by

BCHF

funds

to

Nadal-Ginard of his

the court

the Escrow

Account

fiduciary duty

of

and therefore included the sum total of the payments in

its judgment for BCHF.

The basis for Nadal-Ginard's indemnification argument

for the Escrow Account

compensation.

damages mirrors that with respect

He argues

that the Guardian

"the brainchild" of Gary Banks,

turned for

Banks

should

advice in

created the

have

conformity

1987.

Guardian

been

able to

with the

law.

to his

Escrow Account

was

an attorney to whom Nadal-Ginard

Nadal-Ginard

claims that

Life Insurance

assume

As a

that

it

result, he

because

Escrow Account,

he

was structured

in

argues that

he is

entitled

to

indemnification

for

the portion

of

the

damages

equaling the BCHF payments to the Escrow Account.

At

argument.

First,

contention

Second,

trial,

that he

the

affirmatively

Nadal-Ginard

did

not

prevail

the district court discredited

relied

upon the

district court

found

advised Nadal-Ginard

advice

that

as

on

either

Nadal-Ginard's

of the

attorneys.

neither attorney

to the

legality of

ever

his

actions in either transaction.

On appeal, Nadal-Ginard

challenge the district court's

interpretation of either the BCHF

Bylaw

or the Massachusetts

statute.

there was insufficient evidence

conclusions.

Instead,

does not

he contends that

on which to support the

court's

-18-

In reviewing this claim, we are mindful that we

findings

of fact for clear error.

v. Department of Consumer Affairs,

_______________________________

1995).

of

See Texaco Puerto Rico, Inc.

___ ________________________

60 F.3d 867,

875 (1st

Cir.

When those findings of fact are based on the credibility

witnesses, great deference

findings.

review

is given to

the district court's

See Maness v. Star-Kist Foods, Inc., 7 F.3d 704, 708

___ ______
______________________

(8th Cir. 1993), cert. denied, 114 S. Ct. 2678 (1994); cf. Inwood
____________
___ ______

Lab., Inc. v. Ives Lab., Inc., 456 U.S. 844, 855 (1982).
__________
_______________

"[i]n

the absence

of

egregious lapses

appellate courts leave it undisturbed."

in

such a

Indeed,

perception,

Charves v. Western Union

_______
_____________

Telegraph Co., 711 F.2d 462, 464-65 (1st Cir. 1983).

_____________

Here, we find no error.

in the record,

that

the

nor do we

district

find anything on

court's

testimony is egregious.

as

interpretations

he

discrediting

our own, to

of

suggest

Nadal-Ginard's

Indeed, the district court pointed

that Nadal-Ginard failed to

documents

Nadal-Ginard points to nothing

comply with the requirements

understood

offered by

them,

counsel.

never

mind

Further,

comply

there is

out

in the

with

ample

evidence

in the

record

unrelated to

these transactions

which

lends support to the district court's findings.

Even assuming

that Nadal-Ginard's credibility

at issue, Nadal-Ginard fails to clear the

Nadal-Ginard

fails

record evidencing

Ginard

that

attorney's

to direct

the fact

he was

legally

representation as

this court

next hurdle.

to

to

-19-

act
___

the legality

That is,

any place

that either attorney

entitled to

was not

in the

advised Nadal-

as he

of a

did.

An

particular

corporate structure does not mean that an officer or director can

act in any manner he

structure.

Indeed, an

of the law.

So it

advised Nadal-Ginard

were legally

incurred

on the

or she chooses within the confines

officer is bound further by

valid does not absolve

by his improper actions.

part of the

the confines

is here: the fact that both Nadeau

that the corporate

district court,

of that

structures in

and Banks

question

Nadal-Ginard from liability

Accordingly, we find no error

and now proceed

to address

Nadal-Ginard's two remaining allegations of error.

V.
V.

THE BANKS PLAN

THE BANKS PLAN

In 1985 or early 1986, the Board of Directors adopted a

severance

written

Board

benefit plan,

consent.10

with what

referred

In early

he claims

was a

Ginard did not inform the Board

was lost.

upon

Nadal-Ginard's

Plan," by

presented the

reconstruction of

the Nadeau

In so doing, Nadal-

that the Banks Plan provided far

in benefits for Nadal-Ginard than

1992,

the "Nadeau

1987, Nadal-Ginard

Plan, a document that he contends

more

to as

initiative,

the Nadeau Plan had.

the

Banks

Plan

In

was

terminated and Nadal-Ginard received benefits in the form of cash

and securities valued at over $4,000,000.

The district court made

several findings with

to the creation and adoption of the Banks Plan.

respect

First, it found

the terms of the plan to be so markedly different from the Nadeau

____________________

10

The district court found no evidence as to the exact date the

directors adopted

this plan.

evidence to conclude that

However, it

did find

it was legally adopted.

sufficient

This finding

is not challenged on appeal.

-20-

Plan that

genuine

Nadal-Ginard's actions

effort to

reconstruct

could

not be

the Nadeau

Plan.

construed as

Second,

the

district court found that Nadal-Ginard's benefits under the Banks

Plan were of such a magnitude, and structured in such a way, that

had they been disclosed at the time the plan was presented to the

Board, the plan

would not have been approved by

the Board.

The

district court concluded that Nadal-Ginard breached his fiduciary

duties to BCHF with respect to his involvement in the creation of

the plan and

its presentation

to the Board.

Accordingly,

the

court awarded damages to BCHF in the amount of $4,082,273.50.

While

factual

Nadal-Ginard

disputes

the

district

findings, he does not challenge them on appeal.

Nadal-Ginard contends that

of severance

benefit plans

ERISA explicitly exempts

from its fiduciary

Further, he alleges that 29 U.S.C.

preemption of state

law by

Nadal-Ginard's actions

defined by state law.

in

Rather,

these types

duty provisions.

1144, which provides for the

ERISA, precludes

light of

court's

fiduciary

the evaluation

of

responsibilities

The

whether the

district court

fiduciary provisions of

Plan or whether

which

did not address

it fell

The court did find that

Massachusetts law

of the

the Banks

of unfunded

plans

scope of those fiduciary standards.

the fiduciary obligations created

Massachusetts law were more

imposed by ERISA, and,

ERISA applied to

within the category

are excluded from the

the issue

under

favorable to Nadal-Ginard than those

therefore, that a fiduciary

would necessarily

-21-

breach under

constitute a breach

of the

ERISA

fiduciary obligations,

challenges

the conclusion

if applicable.

that the

ERISA's fiduciary provisions,

As

Banks plan

we concentrate

neither party

is exempt

solely on

from

whether

ERISA preempts the application of state law in this instance.

"'ERISA is a comprehensive statute designed to

the interests

of employees

benefit plans.'"

Ingersoll-Rand Co. v.
__________________

137 (1990) (quoting

90

(1983)).

funding,

and

and their beneficiaries

In

detail,

vesting requirements

establishes uniform

standards

ERISA

on

in employee

McClendon, 498 U.S. 133,

_________

Shaw v. Delta Air Lines, Inc.,

____
_____________________

vast

promote

imposes

463 U.S. 85,

participation,

such plans,

for pension

and

as

welfare

well as

plans,

including rules

concerning reporting, disclosure,

responsibility.

See id.
___ __

An

inherent part

and fiduciary

of this system

is

section 514(a), which provides that ERISA supersedes "any and all

State laws

insofar as they

employee benefit plan

. . .

may now or

."

29

Ingersoll-Rand Co. v. McClendon, 498

___________________
_________

defines the

term "State

rules, regulations, or

law, of

any State."

law" to

included

U.S.C.

U.S. at 137.

other State action

29

U.S.C.

any

1144(a); see also

_________

include "all

The statute

laws, decisions,

having the effect

of

1144(c)(1); see also Carlo v.

_________ _____

Reed Rolled Thread Die Co., 49 F.3d

____________________________

Congress

hereafter relate to

790, 793 (1st

Cir. 1995).

514(a) to ensure uniformity in such plans by

preventing states from imposing

divergent obligations upon them.

See Simas v.
___ _____

Quaker Fabric Corp. of Fall River,

_________________________________

6 F.3d 849, 852

(1st Cir. 1993).

-22-

The

Supreme

preemption

provision

connection

with or

Court

to

has

cover

reference to"

repeatedly

any

state

an ERISA

interpreted

law

plan.

that

"has

the

District of
___________

Columbia v. Greater Washington Board of Trade, 506 U.S. 125,

,
________
_________________________________
___

113 S. Ct. 580, 583 (1992);

see also Mackey v. Lanier Collection

________ ______
_________________

Agency & Service, Inc., 486 U.S.

_______________________

825, 829 (1988); Shaw v. Delta

____
_____

Air Lines, Inc.,

_________________

96-97

provision

is

463 U.S.

to be

read

85,

expansively,

Crowley Towing & Transp. Co., 46 F.3d

_____________________________

(1983).

Indeed,

see Rosario-Cordero
___ _______________

this

v.

120, 122 (1st Cir. 1995),

and has the effect of preempting any state law that refers to, or

has a connection with, covered benefit plans, "even if the law is

not

specifically designed to affect such plans, or the effect is

only indirect."

of Trade, 506
________

District of Columbia v. Greater Washington Board

____________________
________________________

U.S. at

, 113
____

S. Ct. at

583 (citations

and

internal

quotation marks

omitted).

Such a preemption

is also

worked "regardless of whether there is a 'comfortable fit between

state statute

and ERISA's

Fabric Corp. of Fall River, 6

__________________________

950

F.2d 13,

18 (1st

overall aims.'"

Simas
_____

v. Quaker
______

F.3d at 852 (quoting McCoy v. MIT,

_____
___

Cir. 1991),

cert. denied,
____________

504 U.S.

910

(1992)).

State

laws that

peripheral connection

preempted by ERISA.

Co.,
___

46

omitted).

general

F.3d

with a

merely a

"tenuous, remote,

covered benefit

plan" may not

or

be

Rosario-Cordero v. Crowley Towing & Transp.

_______________
_________________________

at 123

Such is

have

(citation

normally the

applicability.

See
___

and

internal

case with

quotation marks

respect to

laws of

District of Columbia v.
______________________

Greater
_______

-23-

Washington Board of Trade, 506 U.S. at

n.1, 113 S. Ct. at 583
_________________________
___

n.1;

Rosario-Cordero v. Crowley Towing & Transp. Co., 46 F.3d at

_______________
____________________________

123; Combined Mgt, Inc.

____________________

v.

Superintendent of the Bureau of

__________________________________

Insurance, 22 F.3d 1, 3 (1st Cir.), cert. denied, 115

_________
____________

(1994).

court cannot

conclude that

a state

S. Ct. 350

law is

one of

general

applicability, and

based on the

as such

form or label

is not preempted

of the law,

Reed Rolled Thread Die Co., 49

___________________________

F.3d at 794 n.3;

Cross and Blue Shield of Michigan, 52

__________________________________

1995).

Absent

precedent

on

however.

by ERISA,

See Carlo
___ _____

v.

Zuniga v. Blue
______
____

F.3d 1395, 1401 (6th Cir.

closely related

problem,

the

inquiry into whether a state law "relates to" an ERISA plan or is

merely "tenuous, remote, or peripheral" requires a court

at

the facts of particular case.

to look

See Rosario-Cordero v. Crowley

___ _______________
_______

Towing & Transp. Co., 46 F.3d at 125 n.2.

____________________

Here, the

Nadal-Ginard's

alleged breach of fiduciary

action in

establishing

the

disclosing information that a self-interested

required

to

reveal to

his

fellow

duty relates to

Banks Plan

without

fiduciary would be

directors.

Nadal-Ginard's

misconduct preceded the formal

adoption of the plan.

The legal

determination that Nadal-Ginard's conduct constitutes a fiduciary

breach does not require

interpretation

or

the resolution of any dispute

administration of

the

plan.

about the

Further,

the

application of state law in this instance does not raise the core

concern

underlying

ERISA preemption.

Nadal-Ginard chose an ERISA

Indeed,

the fact

plan rather than some other

-24-

that

form of

compensation is

peripheral to

the underlying claim

that Nadal-

Ginard breached his corporate responsibilities.

This

being

the

Massachusetts fiduciary

case,

it

cannot

law must be preempted

be

said

that

in this instance.

Therefore,

we turn to address the merits of the district court's

conclusion

that Nadal-Ginard's

actions

violated his

fiduciary

duties.

As Nadal-Ginard

the

law

which

the

does not allege error

district

court

applied

with respect to

in

reaching

its

conclusion, we need not revisit the duties of good faith and full

disclosure

arising in self-interested

transactions.

See supra
___ _____

part

III.A.

Instead, we

turn

without

delay

to review

the

validity of the district court's factual findings which served as

the

basis for its legal conclusion, keeping in mind, once again,

that we

do so in light

of the clearly erroneous

standard.

Texaco Puerto Rico, Inc. v. Department of Consumer Affairs,

_________________________
_______________________________

See
___

60

F.3d at 874.

The

which it

fiduciary

the

made several

grounded its conclusion that

duties.

intentionally

that

district court

Chief

among these

had the Banks plan

other Board

members

findings of

Nadal-Ginard breached his

was

that

drafted in two

might

fact on

enact

the

Nadal-Ginard

parts in order

plan

without

learning of the magnitude of his blatantly disproportionate share

of the benefits.

The court determined that this effort met with

success, as it found that

all the

terms of

the other Board members did not

the Banks plan

until the fall

of 1993.

learn

The

-25-

court

reached

these factual

conclusions

on the

basis

of the

testimony of the witnesses and an examination of the plan itself.

Further,

assertions.

the

court

expressly

discredited

Nadal-Ginard's

In reviewing

we

the vast record from

find that Nadal-Ginard fails

the law

places on him.

to suggest

error.

that the

the district court,

to meet the

heavy burden which

That is, Nadal-Ginard offers no evidence

district court's findings

were clearly

As much of the court's findings are based

determinations

of

the

witnesses

who testified

in

on credibility

at

trial,

we

decline to reverse the conclusions reached below.

VI.
VI.

DAMAGE CALCULATIONS
DAMAGE CALCULATIONS

In the fall of 1993, additional misdeeds on the part of

Nadal-Ginard were

parties bore

deposited

Ginard

discovered.

Four

checks made

questionable endorsements,

into Nadal-Ginard's

out to

each of which

personal bank

accounts.

third

had been

Nadal-

thereafter wrote checks to BCHF to replace the funds that

had been traced to his accounts.

On October 22, 1993, the Board

met

At this

to discuss

this situation.

allegedly informed the Board

leave of

absence from his

of his intention to seek

various Hospital

positions, as well as from his duties

Ginard

meeting, Nadal-Ginard

a medical

and Medical

School

as BCHF president.

Nadal-

alleges that the Board approved this request, and that he

was subsequently hospitalized for treatment of acute depression.

Nadal-Ginard's final two

the

allegations of error

concern

methods employed by the district court in calculating BCHF's

-26-

damages arising out of these facts.

First, Nadal-Ginard

that

denying

the

district court

erred in

alleges

his request

for an

offset in an amount equal to the disability

payments to which he

claims

Plan because

he

was entitled

medical

condition.

district

court

equivalent

to

under the

Second,

impermissibly

the

interest

Nadeau

Nadal-Ginard

awarded

BCHF

damages

would

misappropriated funds absent Nadal-Ginard's

each of these allegations in turn.

A.
A.

contends

Disability Benefits
Disability Benefits
___________________

have

in

that

an

earned

actions.

of his

the

amount

on

the

We address

At trial, Nadal-Ginard argued that because the district

court

nullified

existence

that,

the Banks

of the

as a

Plan,

Nadeau plan.11

result

of his

reduce

the

Nadeau plan.

amount

transgressions

of

implicitly confirmed

Nadal-Ginard

medical

disabled and therefore eligible

terms of the

it

further claimed

condition, he

was

totally

for severance benefits under the

Accordingly, Nadal-Ginard sought

damages

the

attributed

to

his

to

fiduciary

with respect to the Banks plan in an amount equal

to the Nadeau plan severance benefits.

____________________

11

As BCHF

notes

in its

brief, the

district

court did

definitively establish the existence of the Nadeau plan.

the court prefaced its analysis
claim

of the merits of

not

Rather,

Nadal-Ginard's

by stating merely that "[a] plausible argument can be made

that the Nadeau plan is in effect . . . ."

explicitly addresses the validity of
as

the fact

that we

agree with

Because neither party

such an assumption, as well

the district

court's ultimate

finding that Nadal-Ginard is not entitled to such benefits, we do

not

address the issues

surrounding the viability

of the Nadeau

plan.

-27-

The district

grounds.

Ginard's

First, it

court denied Nadal-Ginard's claim

found evidence

BCHF employment

that suggested

was involuntarily

on two

that Nadal-

terminated, thereby

working

a forfeiture of any benefits to which he otherwise would

have been eligible.

Ginard

Second, the district court found that Nadal-

had failed to prove

therefore was not

Nadal-Ginard

analysis

that he was

eligible to receive

challenges both findings

by detailing

the

"totally disabled," and

benefits under the

on appeal.

severance benefit

plan.

We begin our

framework of

the

Nadeau plan.

Under

eligible for
________

section

4.1

of

severance benefits

this plan,

participant

upon "Total Disability."

is

This

condition is defined in section 2.13 of the plan as an "inability

to perform usual and customary duties for [BCHF] as a result of a

medically

Section

determinable physical

2.13

Participant

further

of payments

or mental

provides

under any

that

impairment . .

"[t]he

long term

receipt

. ."

by

disability income

insurance policy . . .

evidence

shall be deemed to

of such Total Disability

be . . . prima

in the absence

facie

of a contrary

finding by [a] physician."

The mere fact that an individual is eligible to receive

severance benefits as a result of a disability does not necessary

entitle him to those

_______

benefits, however.

the

provides

for

in

certain

plan

participants

the

Indeed, section

forfeiture

circumstances,

termination of a participant's employment.

-28-

of

all

4.2 of

benefits

including

by

BCHF's

The

involuntarily

section

district

court

terminated

from

found

his

that

position

4.2 contains no language limiting

which this

provision applies,

we find

Nadal-Ginard

at

BCHF.12

was

As

the time frame during

that the district

court

correctly interpreted the provision as barring the receipt of any

benefits

by Nadal-Ginard.

As

such, we need

not address Nadal-

Ginard's claim of eligibility for the benefits as a result of his

medical condition, and we turn to address his final allegation of

error.

B.
B.

Misappropriated Checks
Misappropriated Checks

______________________

As we noted

Nadal-Ginard had

drafted

misappropriated a

Nadal-Ginard's actions

constituted breaches

fact that

amounts

of his

Nadal-Ginard

Board discovered that

number of BCHF

between 1991 and 1992, for his

found that

the

above, in 1993, the

checks, each

personal use.

with respect to

fiduciary duties.

reimbursed BCHF

The court

these checks

Notwithstanding

for the

principal

of these checks, the district court awarded BCHF damages

for these breaches in

would have earned

an amount equivalent to the

on the money between the time

interest BCHF

the checks were

drafted and the time Nadal-Ginard reimbursed the funds.

In alleging

Nadal-Ginard

equal

to

the

error with

respect to this

does not contest BCHF's

interest

which

it

damage award,

right to recover an amount

would

have

earned

on

the

misappropriated funds.

failed to meet

Rather, Nadal-Ginard contends that

its burden

of submitting evidence

BCHF

to prove

the

____________________

12

Nadal-Ginard does not challenge this finding on appeal.

-29-

amount of its

damages, as it introduced no

prevailing market rate was

evidence of what the

during the time in question.

Nadal-

Ginard contends that the trial court erred by awarding damages in

an

amount equal to the market interest rate, which it calculated

based

on the auction

prices of

52-week United

States Treasury

bills.

Interest is compensation

money or,

alternatively,

fixed by law

as damages

for

for the use

its detention.

Perkins School for the Blind v. Rate Setting Comm'n,

_____________________________
___________________

765, 771-72

170 (Mass.

(Mass. 1981); Begelfer v. Najarian,

________
________

1980).

types of interest:

Massachusetts law

of

See
___

423 N.E.2d

409 N.E.2d 167,

differentiates between two

interest reserved by the terms of a

contract

and interest awarded by law.

See Perkins School for the Blind v.

___ ____________________________

Rate
Setting Comm'n,
______________________

N.E.2d

traditionally seen in the

423

at

772.

The

latter

is

context of prejudgment or postjudgment

interest, the rate of which is traditionally fixed by statute and

which

is calculated based on the

amount of damages that a party

has sustained.

In this case, there

burden of

interest

is no question that BCHF

proving it was injured in

it

would have

Indeed, it sought

it

provided

by statute.

BCHF, however.

on

an amount equivalent to the

the misappropriated

to recover damages in

interest

would have

application of that

earned

received

See
___

using

Mass. Gen. L.

rate would

bore its

funds.

an amount based on

the prejudgment

ch. 231,

have resulted in

the

rates

6H.

a windfall

The

to

In light of the fact that the interest is awarded

-30-

to ensure that a party is fully compensated for its injuries, the

fact that the district court relied on the United States Treasury

bill rates

to determine the

prejudice either

the district

applicable interest

Nadal-Ginard or

court's

ruling with

BCHF.13

rates did

Therefore,

respect

this aspect

not

we affirm

of

the

damage award.

VII.
VII.

BCHF'S CROSS-APPEAL
BCHF'S CROSS-APPEAL

Notwithstanding its agreement with most of the district

court's findings and conclusions, BCHF

it alleges the

issues

in

court committed.

its cross-appeal.

already addressed

We

Based

raises a number of errors

note that BCHF

on the

the appropriate interest

raises four

fact that

rate to

we have

be used

in

calculating its damages for the misappropriated checks, see supra

___ _____

part VI.B, as well as the fact that in its brief it concedes that

this

court need

Freed's testimony

not address

if we find

the circumstances

in its

surrounding Dr.

favor with respect

to the

Banks plan, we address its two remaining claims below.

A.
A.

Statute of Limitations
Statute of Limitations
______________________

BCHF first challenges the

court applied

its

manner in which the district

the Massachusetts statute of

damages arising out of Nadal-Ginard's

limitations to limit

breaches.

While BCHF

does

not challenge

imposes a

three

claims, see
___

the court's

finding that

year limitation

Mass. Gen. L. ch.

on

260,

Massachusetts law

breach of

2A, BCHF

fiduciary

duty

alleges that the

____________________

13
erred

BCHF, in its
in not

cross-appeal, alleges that

applying

the prejudgment

the district court

interest rate

under Massachusetts law with respect to these funds.

-31-

provided

district

court should have found the statute to have been tolled

because Nadal-Ginard concealed his misdeeds.

As such, BCHF asks

this court to reverse the district court's judgment insofar as it

precludes the

recovery of

damages arising

from its salary

Escrow Account claims prior to November 12, 1990.

The general

rule in Massachusetts

We decline.

is that a

cause of

action in tort, in this case a claim based on the violation

fiduciary

the breach

and

of a

duty, must be commenced within three years of the time

occurs.

See
___

id.
__

As

with any rule,

however, there

exists at least one exception, which, in this case, is defined by

statute:

If a

person liable to

a personal action

fraudulently conceals the

action from the

cause of

knowledge of the

such
person

entitled to bring it, the period prior to

the discovery of his

the

cause of action

by

person so entitled shall be excluded

in determining

the time limited

for the

commencement of the action.

Mass. Gen. L. ch. 260,

12.

In general, this statute

an affirmative act of

defendant."

130

exists.

of the

Gerard Freezer & Ice Co., 824 F.2d 123,

_________________________

Once again, however,

a relevant exception

In cases where "a fiduciary relationship exists between

plaintiff

information

. . .

fraudulent concealment on the part

Maggio v.
______

(1st Cir. 1987).

"requires a plaintiff to show

."

and defendant

may be
___

. .

[the]

mere failure

sufficient to constitute

to

reveal

fraudulent conduct

Id. (emphasis added); see also Puritan Medical Center,

__
________ _______________________

Inc. v. Cashman, 596 N.E.2d 1004, 1010 (Mass. 1992).

____
_______

-32-

The district court applied

and the relevant case

it

recognized

that

both the statutory language

law to the facts at hand.

Massachusetts

law

no

That is, while

longer

required

plaintiff to show active concealment on the part of the defendant

in order

law did

to toll the statute

not require a

of limitations, it found

tolling per se
______

when the cause

that the

of action

concerned

the

breach

of

fiduciary

duty

of

disclosure.

Concluding that the facts below differed from those in Puritan in

_______

that the information in question

or easily accessible to

was either of general knowledge

the other Board members, it

declined to

apply the statute's tolling provisions.

We find no error in the district court's interpretation

of the

applicable Massachusetts tolling provisions.

the court pointed out below, the cases hold

of a

duty to disclose

provisions.

See
___

may be sufficient
___

130.

There is

only that the breach

to invoke the

Puritan Medical Center, Inc.

_____________________________

N.E.2d at 1010; Maggio v.

______

Indeed, as

v. Cashman,
_______

Gerard Freezer & Ice Co., 824

________________________

no suggestion

that such a

tolling

596

F.2d at

breach requires

the

tolling provisions

to be applied in

all cases.

Indeed,

such a

conclusion would be counterintuitive.14

An examination of the record reveals nothing to suggest

that the district

court erred

in refusing to

find the

statute

____________________

14

This would be

so in a case in which Board members learned of

the non-disclosed information on their own, yet chose not to act.

In that case,
traditional

they would be

able to recover damages

statute of limitations

inaction.

-33-

beyond the

period notwithstanding their

tolled.

As such, we turn to address the final

issue BCHF raises

in its cross-appeal.

B.
B.

BCHF's

district court's

BCHF Fringe Benefits

BCHF Fringe Benefits
____________________

second allegation

findings that Nadal-Ginard

his HHMI employment to the Board.

the

district

of error

court

erred

by

arises out

failed to

of the

disclose

Specifically, BCHF argues that

not

finding

that

Nadal-Ginard

breached his fiduciary duties by failing to disclose to the Board

the fact that

HHMI.

court.

he was

receiving a fringe

Once again, we find

benefits package

no error on the part of the

from

district

The district court,

fiduciary obligations

part

III.A,

found

benefits were

by

BCHF.

that we

that BCHF

Thus, the

information

Board's

determination

package.

Therefore,

with

have already detailed,

failed

to

prove

see supra
___ _____

what the

HHMI

and whether they were comparable to those provided

benefit

evidence

applying the principles underlying

court found

would

of

nothing to

have

affected the

Nadal-Ginard's BCHF

it concluded

to find that Nadal-Ginard

respect to

the

suggest the

that there

outcome

fringe

and

the

benefits

was insufficient

failed to act

fringe benefits,

of

HHMI

in good faith

thus no

basis

for

finding he breached his fiduciary duties in this regard.

Having found nothing in the record to

district court's factual finding

suggest that the

with respect to the sufficiency

of

the fringe benefit evidence was clearly erroneous, we find no

need to disrupt the district court's finding.

-34-

VIII.
VIII.

CONCLUSION
CONCLUSION

For the foregoing reasons, the judgment of the district

court is affirmed. Two-thirds costs in favor of BCHF.

affirmed. Two-thirds costs in favor of BCHF
____________________________________________

-35-