Superior Court of New Jersey
92 A.2d 119 (Ch. Div. 1996)
Corbo Jewelers, Inc. (defendant) was incorporated by Michael and Dominic Corbo and Gerald Bonavita (plaintiff). Since 1984, Alan Corbo (defendant), Michael Corbo’s son, and Bonavita each owned 50 percent of the stock. Alan and his four children worked for the company and received nice salaries. Bonavita and his wife used to work for the company and received similar salaries. As Bonavita aged, however, he became less active in the corporation and wanted to retire. Bonavita continued to receive the salary even after he retired. Bonavita had no children to take over his position in the company. The corporation stopped paying the salary after Bonavita died in late 1994. In 1991, Bonavita had filed the complaint, alleging a corporate deadlock and shareholder oppression under New Jersey law. N.J.S.A. 14A:12-7. The essence of Bonavita's claim was that the corporation provided substantial benefits to the Corbos, including their salaries and other advantages, but provided no benefits to the Bonavitas. If the corporation refused to buy back Bonavita's stock, the stock became a worthless asset. The court appointed a provisional director as interim relief. In early 1994, Bonavita requested the corporation to pay a dividend of $650,000. This request and a later request for a smaller dividend were denied by Alan and the provisional director, despite the great financial condition of the corporation. Alan made clear that no dividend of any significant size would be approved.
Rule of Law
Holding and Reasoning (Lesemann, J.)
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