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Zymes, LLC v. Benjamin D. Mamola and Bruce

January 26, 2011

ZYMES, LLC, PLAINTIFF-APPELLANT,
v.
BENJAMIN D. MAMOLA AND BRUCE H. LIPSHUTZ, DEFENDANTS-RESPONDENTS.



On appeal from the Superior Court of New Jersey, Chancery Division, Civil Part, Bergen County, Docket No. C-226-09.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued November 9, 2010 - Decided Before Judges Carchman and Messano.

Plaintiff Zymes, LLC (Zymes or plaintiff) appeals from a Chancery Division order holding that the issue of plaintiff's entitlement to permanent injunctive relief was a claim subject to arbitration. The judge further concluded that plaintiff was entitled to preliminary injunctive relief to be determined by the court. We affirm.

The underlying facts are not in significant dispute. Zymes is a bioscience company with four founding members. The ownership interests of the members evolved over time, but at the time of the lawsuit, the membership interests were: Vincent A. Morano (Morano), Chief Executive Officer and President of Zymes, 55%; Bruce H. Lipshutz, Ph.D. (Lipshutz), 25%; and Benjamin D. Mamola (Mamola), 20%. Zymes is suing Mamola and Lipshutz (collectively referred to as defendants) in their individual capacities for allegedly violating non-competition restrictive covenants.

Zymes, founded in September 2005, "focus[es] primarily on providing enabling technologies for the development of innovative products and efficient processes in the consumer, food and beverage, pharmaceutical, and industrial/chemical industries." On August 21, 2006, Zymes entered into a licensing agreement with the National Research Council of Canada, (NRC) "whereby [Zymes] acquired the exclusive worldwide license rights" to "a family of compounds, known as Ubisol-Aqua, that is capable of solubilizing a variety of water-insoluble, biologically active compounds." This license is vital to Zymes' business operations and is "referred to within the company as the 'mother patent.'"

At the time Zymes was formed, Morano, Mamola, and Lipshutz executed an agreement (the Agreement), which includes the following relevant provisions:

3.4 Duty of Loyalty.

A Member's duty of loyalty to the Company and the other Members is limited to the following:

(c) To refrain from competing with Company in the conduct of Company's business before Company's dissolution.

3.5 Duty of Care.

A Member's duty of care to Company and the other Members in the conduct and winding up of Company's business is limited to refraining from engaging in grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of law.

3.6 Obligation of Good Faith and Fair Dealing.

A Member shall discharge the duties to Company and the other Members under this Agreement . . . and exercise any rights consistently with the obligation of good faith and fair dealing.

10. Announcements: Confidentiality. . . . .

Each Member agrees to maintain all confidential Company business information in confidence, and agrees not to use or disclose any Company business information, trade secrets, processes or confidences in competition with the Company.

In addition to the Agreement, defendants also simultaneously executed "Nondisclosure, Non-Competition & Inventions Agreement[s],"*fn1 which ...

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