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Management

Metro Commercial Management Services, Inc. v. Van Istendal, 457 N.J. Super. 66 (2018)

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Metro Commercial Management Services, Inc. v. Van Istendal, 457 N.J. Super. 66 (2018)

Facts:

The plaintiff, Metro Commercial Management Service, Inc., was incorporated in 1993 by Daniel Hughes. The Defendant was employed by the plaintiff as the company’s accountant by then. In 2001, Hughes allowed the Defendant to become a 12% shareholder as an incentive according to the Stock Purchase and Transfer Restriction Agreement and Metro’s Chief Financial Officer (CFO). Subsequently, Nina Kilroy, a non-party, and the parties entered into a Shareholders Agreement for the plaintiff to issue stock options to the Defendant, purchasing nine shares of common stock, which was paid through bonuses. The Defendant’s salary was $125,040 for 2003, plus the annual increase. The Agreement contained in the stipulation of the shareholder that they were “employees at-will” and Metro could terminate them at any time for any reason. The parties also agreed that upon termination, they would be “deemed to have made an offer to sell the shares to Hughes.” Fair market value would be determined by averaging appraisals selected by every party and neutral appraiser. In 2015, the Defendant was terminated. She filed a suit seeking reinstatement of her employment, but the trial court dismissed her claims without prejudice. In 2016, Metro filed a civil action compelling her to sell her shares based on the appraisal method. She filed a counterclaim seeking reinstatement, claiming shareholder oppression by Hughes. The Court dismissed Defendant’s complaint without prejudice. She appealed.

 

Issues:

Whether the Defendant had a reasonable expectation of continued employment?

 

Decisions:

No. The Superior Court affirmed the trial Court’s Order granting Metro’s summary judgement.

 

Reason:

The Court argued that the consent order entered between the plaintiff and Defendant in prior litigation validated their shareholder agreement. The case also confirmed the Defendant’s employment being at-will. The Court found that her reliance on Mullenberg v. Bikon Corp. (1996), was unfounded because the evidence did not involve at-will employment status. The Agreement required “the understanding of parties concerning their roles in corporate affairs.” The parties entered into the Shareholders Agreement, which stipulated that she was an at-will employee. The Defendant did not challenge her at-will employment status. She relied on various unpublished out-of-state cases, which did not cite Rule 1:36-3. There were no written employment agreements in those cases and “their holdings differentiate between wrongful termination as being a wholly separate cause of action from an oppressed shareholder’s potential expectation of continued employment.” Therefore, the Court found that she did not have “a reasonable expectation that her opinion would be taken into account” concerning these decisions.

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