Brewster v. Powell Bail Bonding, Inc., 052416 NCSUP, 16 CVS 274

Docket Nº:16 CVS 274
Opinion Judge:Gregory P. McGuire Special Superior Court Judge for Complex Business Cases
Party Name:RAUL S. BREWSTER, Plaintiff, v. POWELL BAIL BONDING, INC., LARRY JACK POWELL, JOHN E. LEONARD, JR., and CYNTHIA LEE, Defendants.
Case Date:May 24, 2016
Court:Superior Courts of Law and Equity of North Carolina
 
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2016 NCBC 41

RAUL S. BREWSTER, Plaintiff,

v.

POWELL BAIL BONDING, INC., LARRY JACK POWELL, JOHN E. LEONARD, JR., and CYNTHIA LEE, Defendants.

No. 16 CVS 274

Superior Court of North Carolina, New Hanover

May 24, 2016

FINAL ORDER ON MOTION FOR PRELIMINARY INJUNCTION

Gregory P. McGuire Special Superior Court Judge for Complex Business Cases

THIS MATTER comes before the Court on Plaintiff Raul S. Brewster's ("Plaintiff") Motion for Preliminary Injunction ("Motion"). On March 9, 2016, the Court held a hearing on the Motion.1

THE COURT, having considered the Motion, briefs in support of and opposition to the Motion, arguments of counsel, and other appropriate matters of record, FINDS and CONCLUDES as follows.

FACTUAL AND PROCEDURAL BACKGROUND

1. Plaintiff Raul S. Brewster ("Plaintiff") is a shareholder and former employee of Defendant Powell Bail Bonding ("PBB"). Defendants Larry Jack Powell ("Powell"), John E. Leonard, Jr. ("Leonard"), and Cynthia Lee ("Lee") are all shareholders of PBB ("Defendant Shareholders"). PBB has other shareholders who are not named in this action, but Plaintiff alleges that those shareholders are not employed by PBB, nor do they exercise any control over PBB.2 PBB is a North Carolina corporation engaged in the bail bonding business in "multiple counties in North Carolina (primarily New Hanover County) and in one locality in the State of South Carolina."3

2. Plaintiff began working with PBB as a bail bondsman in December 1997. Plaintiff initially worked as a recovery agent, tasked with finding and arresting defendants who skipped bail.4 During the course of his employment with PBB, Plaintiffs responsibilities and efforts to grow PBB's business increased.5 In or around December 2005, Powell offered and Plaintiff accepted a 20% equity interest in PBB.6 Plaintiff also was elected as a director and appointed as a "2nd Vice President."7 Plaintiff alleges that at the time he became a shareholder, "he was already virtually exclusively managing all operations and business development for" PBB.8 Additionally, Plaintiff alleges that he continued to expend substantial efforts and labor to grow PBB's business after becoming an owner, and that "[n]o other owner was performing the quantity or scope of labor and services" on behalf of PBB as Plaintiff.9

3. On December 22, 2005, Plaintiff and Leonard executed an Agency Agreement with Accredited Surety & Casualty Company, Inc. ("Agency Agreement"), pursuant to which he became authorized to execute bail bonds as an agent of Accredited.10 Under the Agency Agreement, Plaintiff and Leonard became personally liable for bonds previously written by PBB and for future bonds written by PBB's associate bondsmen.11

4. Despite his efforts on behalf of PBB, Plaintiff alleges that he was "systematically excluded" from PBB's financial matters, including financial decision-making and planning, and that information regarding PBB's finances was withheld by the Defendant Shareholders.[12] Beginning in 2012 or 2013, Plaintiff repeatedly requested that he be included in these financial matters, but no efforts were ever taken by Defendant Shareholders to increase Plaintiffs involvement in the financial management of PBB.[13] Plaintiff also alleges that the Defendant Shareholders limited his authority in the general management of PBB, and excluded him from "all management discussions and conferences" and that he "was never invited to participate in meetings regarding the direction or management of [ ] PBB."14

5. In September 2015, Plaintiff provided Defendant Shareholders with a letter summarizing Plaintiffs frustrations with his treatment as an owner of PBB.15 The letter also stated, in pertinent part, as follows: I, Raul S. Brewster, have to take control of my own future and destiny. At this time you don't have to change anything. I want to step down and begin my own path. We can decide, as partners, how to proceed from here. I can stay on the payroll, or you can buy me out, whatever is best for you and the company.16

6. In response to the letter, on September 11, 2015, PBB placed Plaintiff on paid leave and terminated his authority to write any additional bonds for PBB.17 A letter provided to Plaintiff also stated that, "concerning your future employment and minority interest in the corporation, we hope to find a long-term agreement as quickly as possible."18 Plaintiff subsequently communicated to PBB that he had not intended to resign his employment, and Plaintiff maintains that he did not quit nor consent to the termination of his employment with PBB.[19] Nevertheless, on September 25, 2015, PBB terminated Plaintiffs employment.20

7. On October 7, 2015, Defendant Shareholders convened a special shareholders' meeting. Plaintiff objected to the meeting, but attended and again asserted that he had not resigned his employment.21 At the meeting, the shareholders elected Powell, Leonard, and Lee as directors and adopted new corporate bylaws for PBB. Plaintiff abstained from these votes.22 In November, 2015, the directors and shareholders voted on an approved a Minority Shareholder Buy-Sell Agreement. Plaintiff voted against the Buy-Sell Agreement.23 Plaintiff contends that the new bylaws and the Minority Shareholder Buy-Sell Agreement each contain provisions that are "unreasonably encumber [Plaintiffs] rights as an owner" of PBB, and frustrate his reasonable expectation of continued involvement in PBB as a shareholder and an employee.24

8. Plaintiff contends that as a result of, his "wrongful termination, " he has not received any distributions, dividends, salary, benefits, or any other form of compensation.25Defendants contend that they have attempted to purchase Plaintiffs interest in PBB, but have been unable to reach agreement to do so.[26] Defendants also contend that PBB has purchased a new insurance policy that excludes Plaintiff from liability for new bonds written by PBB, and that the shareholders have offered to indemnify Plaintiff from liability for bonds written prior to his termination "upon sale or purchase of [Plaintiffs] share in the Corporation."27

9. On January 25, 2016, Plaintiff filed his Verified Complaint, and on April 6, 2016, he filed an Amended Verified Complaint. Plaintiff raises the following causes of action: Motion for Preliminary Injunction - Reinstatement of Plaintiff ("Claim One"); Alternative Motion for Preliminary Injunction - Prohibitory Against Defendant Shareholders ("Claim Two"); Judicial Dissolution or Other Relief Necessary to Protect Plaintiffs Rights ("Claim Three"); Breach of Fiduciary Duty ("Claim Four"); and Civil Conspiracy ("Claim Five").28

10. On March 3, 2016, Plaintiff filed a brief in support of the Motion. Aside from the Verified Complaint, Plaintiff did not file any additional evidentiary materials in support of the Motion. On March 7, 2016, Defendants filed a response to the Motion, as well as the Affidavit of John E. Leonard, Jr.

11. As noted above, on March 9, 2016, the Court held a hearing on the Motion and, following that hearing, held the Motion in abeyance pending the parties' completion of an expedited mediation. The Court now addresses the Motion on its merits.

DISCUSSION

12. A preliminary injunction may be issued during litigation when "it appears by affidavit that a party thereto...

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