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REPORTED IN THE COURT OF SPECIAL APPEALS OF MARYLAND

No. 1373

September Term, 2004

JONATHAN EDENBAUM, et al. v. KLARA SCHWARCZ-OSZTREICHERNE

Kenney, Krauser, Bloom, Theodore
specially assigned)

G., JJ.

(Retired,

Opinion by Krauser, J.

Filed: October 28, 2005 240274

Appellant Jonathan Edenbaum and appellee Klara SchwarczOsztreicherne ("Schwarcz") comprise the officers, directors and shareholders of Liberty Assisted Living, Inc.

("Liberty"), a closely held Maryland corporation, which owns and operates an eight-bed assisted living facility. When

Edenbaum, as President of Liberty, relieved Schwarcz of her duties as the facility's Director of Operations and

discontinued her salary, Schwarcz filed a complaint in the Circuit Court for Montgomery County, claiming that Edenbaum and Liberty had breached their shareholders' agreement. Having received neither salary nor profits since her

termination, she requested damages and the dissolution of the corporation. Although the circuit court found that Edenbaum had rightfully removed Schwarcz as Director of Operations, it ruled that Schwarcz was, as a shareholder and director, entitled to post-termination salary and profits. Holding

both Edenbaum and Liberty liable for those unpaid sums, it entered a judgment in favor of Schwarcz and against Liberty and Edenbaum, in the amount of $89,880.00. But, as for

Schwarcz's request that Liberty be dissolved, it found that Edenbaum's conduct was not so "oppressive" as to justify Liberty's request. dissolution and, therefore, denied Schwarcz's

Cross-appeals followed, in which Edenbaum and

Liberty questioned the court's award of salary and profits

to Schwarcz, and Schwarcz challenged the denial of her dissolution demand. For issues. our review, Edenbaum and Liberty present four

Reordered, they are: I. Whether Schwarcz was entitled to continue receiving her salary after her employment was terminated. Whether the circuit court erred in awarding Schwarcz corporate profits for years in which, appellants claim, there were no such no profits.

II.

III. Whether the circuit court erred in holding Edenbaum personally liable for profits and salary allegedly owed Schwarcz. IV. Whether the circuit court erred in refusing to apply the "avoidable consequences rule." Schwarcz presents one question.

On

cross-appeal,

Reworded, it is: V. Whether the circuit court abused its discretion in declining to dissolve Liberty. reasons that follow, we shall vacate the

For

the

judgments of the circuit court awarding Schwarcz salary and profits, vacate the denial of Schwarcz's request for

dissolution, and remand this case to the circuit court for it to clarify its findings as to Liberty's profits in 2002 and 2003 and to consider dissolution or other less drastic remedies under Md. Code (1975, 1999 Repl. Vol.),

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Maryland Law