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Metro Commercial Management Services, Inc. v. Nancy Van Istendal

Superior Court of New Jersey, Appellate Division

November 19, 2018

METRO COMMERCIAL MANAGEMENT SERVICES, INC., and DANIEL HUGHES, Plaintiffs-Respondents,
v.
NANCY VAN ISTENDAL, Defendant-Appellant.

          Argued October 10, 2018

          On appeal from Superior Court of New Jersey, Chancery Division, Burlington County, Docket No. C-000036-16.

          Steven C. Forman argued the cause for appellant (Steven C. Forman, attorney; Steven C. Forman, of counsel and on the briefs; Jeffrey Zajac, on the briefs).

          Benjamin W. Spang argued the cause for respondents (Dilworth Paxson LLP, attorneys; Thomas S. Biemer, Benjamin W. Spang, and Nicholas M. Donzuso, on the brief).

          Before Judges Hoffman, Suter and Firko.

          OPINION

          FIRKO, J.S.C.

         Defendant Nancy Van Istendal appeals from an order granting summary judgment dismissal of her counterclaim asserting claims of minority shareholder oppression while employed as an at-will employee. She contends that she had a reasonable expectation of continued employment after a thirteen-year history with her former employer, and that her at-will designation was irrelevant and erroneous, even though she stipulated by way of a Consent Order that the parties' Shareholder Agreement was valid and states that she contracted to be an employee at-will. Therefore, we conclude that she could not have a reasonable expectation of continued employment and we affirm.

         I.

         The facts derived from the summary judgment record, viewed "in the light most favorable to [defendant, ] the non-moving party[, ]" Globe Motor Co. v. Igdalev, 225 N.J. 469, 479 (2016) (citing Rule 4:46-2(c)), are summarized as follows. Plaintiff Metro Commercial Management Service, Inc. (Metro) is a closely held real estate management company. In 1993, plaintiff Daniel Hughes (Hughes) incorporated Metro and became its president and sole shareholder. Defendant, an accountant, was a Metro employee at that time. As an incentive, in 2001 Hughes allowed her to become a twelve percent shareholder pursuant to a Stock Purchase and Transfer Restriction Agreement and Metro's Chief Financial Officer (CFO). In 2002, the parties and Nina Kilroy (Kilroy), a non-party to this action, entered into a Shareholders Agreement (Agreement) providing for Metro to issue stock options to defendant for the purchase of nine shares of common stock, paid through bonuses. Her salary was $125, 040 for 2003, plus annual increases based upon the lesser value of a five percent increase or the annual increase set by the Consumer Price Index. In pertinent part, the Agreement contained in the shareholder's stipulation that they were "employee[s]-at[-]will" and that they could be "terminated by [Metro] at any time for any reason." Each shareholder also agreed that upon termination of employment, the shareholder would be "deemed to have made an offer to sell the shares to Hughes, the non-selling [S]hareholder and/or [Metro] in accordance with the time and conditions of section five," which sets forth the process for selling shares. Fair market value was to be determined by averaging the appraisals chosen by each party and a neutral appraiser. Metro was entitled to redeem the outstanding shares based upon the appraisal methodology described.

         In September 2015, defendant was terminated; three months later, she instituted suit seeking reinstatement of her employment with Metro and position as CFO. In her complaint, defendant alleged she was an "oppressed shareholder" under N.J.S.A. 14A:12-7(1)(c), based upon her reasonable expectation of continued employment, notwithstanding her at-will status. Her complaint[1] was dismissed, without prejudice, with the trial court finding that her termination did not constitute shareholder oppression because her termination was authorized under the Agreement, and she had no reasonable expectation of continued employment based, in part, upon her at-will status. In April 2016, Metro filed the subject action to compel defendant to sell her shares in accordance with the appraisal method noted above.[2] Defendant filed a counterclaim, again seeking reinstatement and alleging shareholder oppression by Hughes for:

(1) making a third-party a [ten] percent shareholder of Metro without the knowledge and consent of [d]efendant;
(2) unilaterally deciding to rebrand the company including a new logo and web[]site;
(3) unilaterally deciding to terminate the director of operations and human resources director;
(4) unilaterally revising the employee handbook;
(5) unilaterally deciding to move the Pennsylvania office ...

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