Coupounas v. Morad

• Decision Date: 22 February 1980
• Citation: 380 So.2d 800
• Parties: George D. COUPOUNAS v. Joseph F. MORAD et al. 78-724.
• Court: Alabama Supreme Court

Page 800

380 So.2d 800

George D. COUPOUNAS v. Joseph F. MORAD et al.

78-724.

Supreme Court of Alabama.

Feb. 22, 1980.

Michael L. Edwards and Thomas J. Gallo of Berkowitz, Lefkovits & Patrick, Birmingham, for appellant.

Thomas H. Brown of Sirote, Permutt, Friend, Friedman, Held & Apolinsky, Birmingham, for appellees.

PER CURIAM.

This is the second time this case has been here. ¹ Plaintiff George D. Coupounas appeals from the judgment entered after remand from this court, which imposed a constructive trust on the net profits of Med-Lab, Inc., an Alabama corporation, in favor of Bio-Lab, Inc., an Alabama corporation, and from a denial of his rule 59(e), ARCP, motion to amend that judgment. We affirm.

The principal issues are: (1) whether the trial court erred to reversal by imposing a constructive trust for the benefit of Bio-Lab over the net income and profits of Med-Lab, the payment of such profits or income to be secured by the trial court's maintenance of jurisdiction over the cause to impose a constructive trust on Med-Lab's assets if necessary, instead of imposing a constructive trust for the benefit of Bio-Lab over the entire business and assets of Med-Lab, and (2) whether Coupounas' Rule 59(e), ARCP, motion should have been granted and the final decree on remand amended to provide the trial court would maintain its continuing equitable jurisdiction over the cause for the purpose of considering an award of attorneys' fees in favor of Coupounas based upon the alleged benefit conferred upon Bio-Lab by the institution and maintenance of this stockholder's derivative action by Coupounas.

This action was commenced when Coupounas filed a stockholder's derivative action on behalf of himself and for the benefit of Bio-Lab. Med-Lab; Bio-Lab; Joseph F. Morad, a stockholder director and president of Bio-Lab; Joseph A. Thomason, a stockholder and director of Bio-Lab; and Pamela T. Morad, a director of Bio-Lab, are all defendants in this action. Coupounas alleged that the individual defendants breached their fiduciary duty to Bio-Lab by usurping a valuable corporate opportunity of Bio-Lab when they formed another corporation, Med-Lab, which competes with and damages Bio-Lab. Coupounas sought a constructive trust in favor of Bio-Lab to be imposed over the business and assets of Med-Lab, or, in the alternative, the defendants be required to offer Coupounas the same percentage ownership in Med-Lab as he owns in Bio-Lab.

The trial court found the individual defendants had usurped a valuable corporate opportunity belonging to Bio-Lab by their formation and operation of Med-Lab. As a result, in its original final decree, the trial court ordered the individual defendants to offer to Coupounas thirty percent of the stock of Med-Lab at the identical prices per share which they had paid for their stock in it. On the prior appeal of this case, this court affirmed the trial court's finding that the individual defendants had usurped Bio-Lab's corporate opportunity; however, this court also held the trial court's remedy of requiring the defendants to offer one-third of Med-Lab to Coupounas to be improper. See Morad v. Coupounas, supra. The judgment was reversed and the case remanded for the trial court to impose a constructive trust in favor of Bio-Lab.

On remand the trial court conducted a hearing and entered a new final decree which imposed a constructive trust on Med-Lab. That decree reads in pertinent part as follows:

"It is manifest from a reading of the Supreme Court opinion that this court erred in ordering that Plaintiff be made a shareholder of Med-Lab. The Supreme Court stated that this order was not justified, and that courts 'should not force individuals into business arrangements they clearly do not want.'

"Instead, the Court ordered that a constructive trust be imposed for the benefit of Bio-Lab. However, since the parties have been unable to agree on a Consent Order to be entered on the remand, it is necessary for this Court to delineate the constructive trust imposed by the Supreme Court.

"The position advanced on behalf of Plaintiff is that Med-Lab's assets, business, property and stock should be transferred to Bio-Lab. The position of Defendant is that the constructive trust should be imposed on the net profits or income1 of Med-Lab, with the Court maintaining equitable jurisdiction of the cause to insure that the constructive trust is complied with.

"The court finds, and so holds, that Plaintiff is not entitled to demand that Med-Lab's assets, business, property, and stock be turned over to Bio-Lab. For the court to so order would be for it to do indirectly what the Supreme Court has ordered should not be done; that is, since Plaintiff is a thirty percent (30%) shareholder in Bio-Lab, if all the Med-Lab assets, business, property, and stock were transferred to Bio-Lab, Plaintiff would, in effect, own thirty percent (30%) of Med-Lab. The parties would be doing business together, and this result is exactly the contrary of what the Supreme Court has ordered. In addition, the constructive trust is imposed for the benefit of Bio-Lab not George D. Coupounas. George D. Coupounas has proved no right or standing to demand any transfer of the Med-Lab assets, property, business, or stock.

"Accordingly, it is hereby ORDERED, ADJUDGED and DECREED that a Constructive Trust is imposed on Med-Lab for the benefit of Bio-Lab as follows:

"ONE: The net profits or income of Med-Lab, Inc., are payable over to Bio-Lab, Inc., upon its demand.

"TWO: To insure the protection of Bio-Lab, Inc., and Plaintiff, Plaintiff shall have the right regularly to inspect the books and records of Med-Lab, Inc., to insure that all net profits or income are properly declared and paid over upon demand.

"THREE: A constructive trust is not imposed at this time on the assets, business, property, or stock of Med-Lab, Inc., for two reasons: (1) because such an imposition is not...