Ingle v. Glamore Motor Sales, Inc.
535 N.E.2d 1311 (N.Y. 1989)



PROCEDURE: Appellant former employee filed suit against appellees, car company and its owners, alleging breach of good faith and fair dealing, breach of fiduciary duties, wrongful interference with employment, and wrongful termination. After judgment largely for appellees was affirmed by the Appellate Division of the Supreme Court in the Second Judicial Department (New York), appellant sought review.

FACTS: Ingle (P) was hired as a sale manager for Glamore (D) with no express agreement between the parties establishing duration of conditions of employment. Two years later, P entered into an written agreement with D to purchase 22 of 100 shares with a five year option to purchase 18 more shares. The agreement also gave D the right to repurchase the shares if employment of P was to cease for any reason. Eventually P purchased his 18 additional shares under a similar agreement but 60 more shares were issued by D and they were purchased by D and his sons. A third shareholder agreement was made giving D the right to purchase within 30 days any shareholders' interests upon termination of employment for any reason. In 1983, P was voted out and D notified P that he wanted to purchase P's shares. P sued for breach of fiduciary duty, and breach of contract. All causes of action were dismissed. P appealed.

ISSUE: If a shareholder has agreed to a shareholder agreement's terms providing for repurchase of his shares upon termination for any reason, does the shareholder have the right to damages for breach of fiduciary duty if his employment is terminated other than for cause?

RULE: A minority shareholder in a close corporation does not acquire any right from the corporation or majority shareholders against discharge from his employment in the corporation.

HOLDING:A former employee filed suit in two separate actions against a car company and its owners, alleging that he had been improperly terminated in violation of duties of good faith and fair dealing and claiming breach of fiduciary duties and wrongful interference with his employment. The court found that (1) the term of employment had not been definite and therefore the employment had been at will, (2) a contractual agreement to the repurchase upon termination for any reason of the shares in the company owned by the former employee barred him from receiving any rights against at-will discharge, (3) the payment given to the former employee for his shares in the company had been fair value, (4) therefore there had been no breach of fiduciary duties or wrongful interference with employment in the termination.
The order of the lower court was affirmed, with costs awarded to car company and owners.