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Berger v. Berger

Decided: March 25, 1991.

MONROE BERGER, PLAINTIFF,
v.
DANIEL BERGER, FRANCES BERGER AND M & R MANUFACTURING CORP., A NEW JERSEY CORPORATION, DEFENDANTS



Bachman, P.J. Ch.

Bachman

This case, which came to the court by way of an application for an order to show cause with Temporary Restraints, involves the break-up of a family business. Plaintiff to this action is the son, Monroe (also known as Monte) Berger. Defendants are the parents, Daniel and Frances Berger, and the company, M & R Manufacturing. The family is in the toy distribution business. They manufacture, package, distribute and sell children's toys. The business is located at 1100 South Second Street in Plainfield, New Jersey. The parents live in Cranbury, New Jersey. The son lives in Edison, New Jersey.

The business appears to have been started in 1961 and was exclusively owned by Daniel Berger. Monroe Berger, at age 14, actively started taking part in the business sometime in the

mid 1970's. In 1985, a variety of stock transfer transactions were effected. This resulted in 98% of the stock in the business going to Monroe Berger, 1% to Frances Berger, and 1% to Daniel Berger. The stock owned by Monroe Berger and Frances Berger, however, was to be held by a voting trust controlled by Daniel Berger.

In 1987, Monroe Berger married his current wife. This resulted in problems with the relationship with his parents. The deterioration in that relationship has affected the family's operation of its business and resulted in this litigation.

Plaintiff alleges that his parents have decided to wind down what appears to be a prosperous ongoing concern. They do this despite the fact that plaintiff was actively involved in the business and wished to continue it. The parents, according to the allegations, have taken advantage of their control of the stock by excluding the son from the business and taking away his privileges as a corporate officer with the company's bank.

With the October 9, 1990 order to show cause, the court ordered the following:

(1) Monroe Berger was given access to books and records;

(2) both parties were restrained from

- removing corporate books and records

- advising parties doing business with the company, that the company was closing down or materially changing its operation,

- interfering with the company's ability to obtain letters of credit, acquire inventory or perform other actions necessary to conduct the business in the ordinary course.

- disbursing company funds and transferring company property other than in the ordinary course of business, and

- repaying loans to company shareholders and officers.

The parties agreed to continue these restraints by consent order on October 29, 1990.

This current motion is brought by defendants to have count four of the verified complaint dismissed,*fn1 pursuant to R.4:6-2(c), for failure to state a claim upon which relief can be granted, as it requests ...


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