The Court denied the entry of a mandatory injunction requiring the Defendant to deliver the title to a motor vehicle to a third party purchaser.
The Court observed that “'[m]andatory injunctions are disfavored as an interlocutory remedy[]’ because, rather than maintaining the status quo (as is the case when a prohibitory injunction issues), a mandatory
The "reasonable expectations" of minority shareholders as to continued employment and continued stock ownership were the issue in Vernon v. Cuomo, 2009 NCBC 6 (N.C. Super. Ct. March 17, 2009), decided yesterday by the North Carolina Business Court.
Judge Tennille ruled after a one week trial that the Plaintiffs did not have a reasonable expectation of continued employment, given extreme animosity that had developed among the shareholders of the Company.
On the dilution issue, however, the Court ruled that Plaintiffs had a reasonable expectation that their ownership interest in the Company would not be diluted, at least not through the means that the Defendants chose to accomplish that dilution. Plaintiffs were restored by the Court to their original ownership position and the Court ordered dissolution of the Company.
The Plaintiffs were two shareholders with a 40% ownership in TriboFilm, Inc., which was developing technology to eliminate silicone as a necessary lubricant in syringes. They had a serious falling out with the Defendants, five other shareholders who controlled the remaining 60% of the Company. The Court described the situation as "intolerable" and "dysfunctional."
The majority stripped the Plaintiffs of their status as employees, officers, and directors. Then, after each faction rejected an offer by the other to be bought out, the Defendants implemented a plan to virtually eliminate the Plaintiffs’ ownership interest. Here’s what happened as the Court described it:
Plaintiffs sued, asserting that their "reasonable expectations" as shareholders to continued employment and continued ownership of their stock had been frustrated. They lost on the first point, but won on the second.Continue Reading Reasonable Expectations Of Minority Shareholders Frustrated By Dilution of Ownership, But Not By Termination Of Employment
The Court struck an Entry of Default which had been signed by an assistant clerk of court in the county where the case had been filed. The entry of default was signed after the case was designated to the Business Court. Judge Diaz cited Business Court Rule 15.1, stating:
Because the above-captioned cases are Business
The Court ruled that Defendants’ appeal, following an adverse judgment on liability, did not affect a substantial right even though the damages phase of the trial remained. The Court found that it had continued jurisdiction over the case and that it could proceed with the damages phase notwithstanding the pendency of the appeal. The Court
The Business Court on its own motion remanded a case which had been designated to the Court based on its mandatory jurisdiction over cases involving unfair competition.
In the Notice of Designation, the Defendant asserted that "as a case between two direct competitors focused on slander and libel claims, this lawsuit meets the criteria for
The Court granted a Motion to Remand, holding that "this litigation is a straight forward contract case. Contract cases are routinely adjudicated in Superior Court."
There weren’t any opinions from the Court of Appeals last week which would have been considered for the legal equivalent of an Oscar, but three cases are worth an honorable mention. They involve arbitration, the statutory requirements for contracting with a municipality, and a healthcare law case involving Certificates of Need.
Arbitration
The arbitration case
Members of a "pretended corporation" may have personal liability as individuals when a plaintiff has extended credit to the corporation, but they are not personally liable for all contractual obligations of the corporation. In this case Defendant, a shareholder of a corporation that had not been formed, was not personally liable for the pretended corporation’s
The Court permitted an insurance carrier, which had reinsured part of the loss suffered by the Plaintiff and which had made payment to the Plaintiff, and which claimed to be subrogated to the rights of the Plaintiff, to intervene in the Plaintiff’s action to recover amounts it had paid paid. The Court found that intervention
The Court denied a Motion to Amend, finding that there was undue delay in seeking the amendment. Discovery in the case had gone on for years and had been completed months before the Motion to Amend was filed. Plaintiff furthermore had the documents on which the Motion was based in its possession for two years.