Bonavita v. Corbo

New Jersey Superior Court

92 A.2d 119 (N.J. Super. Ct. App. Div. 1996)

A court may order an involuntary purchase of stock of a close corporation to remedy the oppression of a minority shareholder where such a remedy is the only practical alternative to dissolution.

Relevant Facts

Corbo Jewelers, Inc. was incorporated by Michael and Dominic Corbo (the defendants) and Gerald Bonavita (the plaintiff). Since 1984, Alan Corbo (the defendant), Michael Corbo’s son, and the plaintiff each owned 50% of the stock. The defendant and his four children worked for the company and received substantial salaries. The plaintiff and his wife also worked for the company and received similar salaries. As the plaintiff aged, he became less active and wanted to retire. The plaintiff continued to receive salaries even after he retired. The plaintiff did not have any children to take over his position in the company. After the plaintiff died in late 1994, the company stopped paying his salary. Prior to his death, the plaintiff in 1991 filed a complaint alleging a corporate deadlock and shareholder oppression under New Jersey law. N.J.S.A. 14A:12-7. The essence of the plaintiff’s claim was that the corporation provided substantial benefits to the defendants but provided no benefits to the plaintiffs. If the corporation refused to buy-back the plaintiff’s stock, the stock would become worthless. The court appointed a provisional director as interim relief. In early 1994, the plaintiff requested the corporation to pay a dividend of $650,000. This request and a later request for a smaller dividend were denied by the defendants, despite the successful financial condition of the corporation. The defendant made it clear that no dividend of any significant size would be approved.

Issue

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Holding & Reasoning

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Concurrence

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Dissent

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Last updated:

December 29, 2020

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Procedural History

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Citations

92 A.2d 119 (N.J. Super. Ct. App. Div. 1996)