Brief Fact Summary. Plaintiff, Phillip Ingle, sued Defendants, Glamore Motor Sales, Inc. et al., for wrongful termination and a breach of a fiduciary duty owed to Plaintiff through his status as a minority shareholder.
Synopsis of Rule of Law. Absent an employment contract, an employee is an at-will employee when his shareholder agreement provides a buyback provision of his shares if they are terminated for any reason.
However, in denying an employee's claim of intentional infliction emotional distress, the Court of Appeals has stated that in light of our holding that there is no cause of action in tort in New York for abusive or wrongful discharge of an at-will employee, plaintiff should not be allowed to evade that conclusion or to subvert the traditional at-will contract rule by casting his cause of action in terms of a tort of intentional infliction of emotional distress.View Full Point of Law
Issue. The issue is whether Plaintiff minority shareholder is owed a fiduciary duty by the majority to keep Plaintiff in his position at Defendant company.
Held. Defendants do no owe Plaintiff a duty to keep Plaintiff indefinitely as an employee as a result of his minority shareholder status. Traditionally, an employee is an at-will employee if he does not have an employment agreement that gives a duration for the employment. This situation does not change when an employee attains shareholder status, especially when there is a provision in the shareholder agreement that allows the majority shareholder to buy back Plaintiff’s share if he is terminated for any reason. Plaintiff never asserted that the buyback amount was unfair, and therefore he suffered no harm.
Dissent. The dissent argues that the majority gives the minority shareholder in a close corporation no rights at all when they enforce the at-will principle over the rights as a minority shareholder. This leads to a minority shareholder having no redress for any egregious behavior by the majority shareholders. In this case, that includes a $96,000 buyback on a $75,000 investment made at least 15 years ago, a period of time wherein Plaintiff sometimes advanced his own funds to help the business.
Discussion. The majority allowed Plaintiff to, in a sense, agree to give up any rights he had as a minority shareholder when he agreed to purchasing shares with a termination buyback provision. The distinguishing feature in this case compared to Wilkes v. Springside Nursing Home, Inc. is that in this case the plaintiff was an employee before he was a shareholder, and here the court uses that timing to justify his at-will employment status.