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Gillespie v. Madden

2005 WL 975778 (N.J. Super. Ch. Div. 2005) (Unpublished)

CORPORATIONS; SHAREHOLDERS—A court will not, as preliminary relief to one shareholder, force the other shareholder to leave employment with the corporation where money damages would be adequate remedy and where the employee-shareholder depends on the job as his or her chief source of income.

A shareholder claimed that his co-shareholder agreed to sell him his interest in a restaurant and in companies owned by the two men. The shareholder claimed that his co-shareholder was extremely difficult to work with and that as a result of their alleged agreement, the shareholder sold his house and his wife sold her own restaurant to invest in her husband’s. Thus, after the co-shareholder reneged on the alleged agreement, the other shareholder sued for breach of contract and sought a preliminary injunction to force the co-shareholder to stop working at the restaurant and to follow through on his alleged promise to sell. The co-shareholder contended that he never made a promise to sell his interest in the companies, but merely suggested that he would sell.

The Chancery Division held that in order for preliminary injunctive relief to be granted, the applicant must show that monetary damages won’t help and that: 1) irreparable harm would occur if relief is disallowed; 2) there was no substantial dispute over material facts and there was a reasonable chance of eventual success on the merits; 3) denial of relief would bring substantial hardship to the parties; and 4) the underlying applicable law is well settled.

The Court held that harm is considered irreparable if monetary damages cannot adequately redress it and, in the case at bar, the shareholder failed to show that monetary relief would not solve his problems. The Court also held that there was a dispute over whether the co-shareholder agreed to sell his interest in one of the particular companies – and this was a material issue in the case. Finally, the Court held that if it were to force the co-shareholder to stop working at the restaurant this would cause him substantial hardship since the restaurant was his chief source of income. For the foregoing reasons, the Court denied the shareholder’s application for preliminary injunctive relief.

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