Demoulas v. Demoulas Super Markets, Inc., 90-P-1284

• Decision Date: 16 October 1992
• Docket Number: No. 90-P-1284,90-P-1284
• Citation: 33 Mass.App.Ct. 939,600 N.E.2d 613
• Parties: Arthur S. DEMOULAS & others 1 v. DEMOULAS SUPER MARKETS, INC. & others. 2
• Court: Appeals Court of Massachusetts

Page 613

600 N.E.2d 613

33 Mass.App.Ct. 939

Arthur S. DEMOULAS & others ¹ v. DEMOULAS SUPER MARKETS, INC. & others. ²

No. 90-P-1284.

Appeals Court of Massachusetts,

Middlesex.

Argued Feb. 7, 1992.

Decided Oct. 16, 1992.

Judith Ashton, Thomas S. Fitzpatrick, Boston, with her, for plaintiffs.

Jerome Gotkin, Shepard Davidson, Boston, with him, for defendants.

Before WARNER, C.J., and PERRETTA and SMITH, JJ.

RESCRIPT.

When the plaintiff Arthur S. Demoulas obtained a preliminary injunction prohibiting the defendant Demoulas Super Markets, Inc. (DSM) from terminating his employment except for cause, DSM sought relief from a single justice of this court under G.L. c. 231, § 118, first par. The single justice modified the injunctive order to provide that DSM give Arthur a leave of absence pending the litigation with "interim" compensation during the leave at the annual rate of $60,000. Arthur appeals under G.L. c. 231, § 118, second par., arguing that the single justice acted without authority and substituted his discretion for that of the Superior Court judge. We conclude that there was a supportable basis for the single justice's order, which we affirm.

1. The preliminary injunction. It appears from the materials before us that the parties are involved in numerous lawsuits, one of which concerns an allegation by the plaintiffs that their stock in DSM was fraudulently converted by the president and chief executive officer of DSM to himself and his family members. This is of some relevance to the present complaint by which the plaintiff shareholders seek to inspect the defendants' books and records under "G.L. c. 156B, § 32, and the common law." The plaintiffs claim to be shareholders as direct owners, or beneficiaries of a constructive trust, or both.

Arthur is a shareholder in and an employee of DSM. He is the assistant produce manager with a claimed annual salary of $500,000. Because he feared that this lawsuit would prompt a retaliatory termination of his employment by DSM, he sought to enjoin DSM from firing him. The Superior Court judge reasoned that Arthur had alleged sufficient facts to show a right to inspect the defendants' books. See Perry v. Perry, 339 Mass. 470, 480, 160 N.E.2d 97 (1959), holding that a "beneficiary of a trust of shares in a family corporation may in appropriate proceedings force an examination of the corporate affairs, and also the equivalent of a stockholders' suit." Inferring that a significant part of Arthur's annual salary of $500,000 "reflects a beneficial ownership position in a closely held corporation," the Superior Court judge concluded that termination of his employment by DSM "could be tantamount to a freeze out." See Wilkes v. Springside Nursing Home, Inc., 370 Mass. 842, 849, 353 N.E.2d 657 (1976), where the court noted that a freeze out is sometimes accomplished by depriving "minority stockholders of corporate offices and of employment with the corporation."

To meet DSM's concern that Arthur was "invulnerable to reasonable standards of employment" and its allegations that his behavior in the workplace was disruptive to business, the Superior Court judge indicated that upon a showing by DSM that there was cause for terminating Arthur's employment, he would modify his injunctive order.

2. The petition for relief. In acting on a petition for relief brought under G.L. c. 231, § 118, the authority of the single justice is "plenary, with the result that his order will be reviewed on appeal in the same manner as if it were an identical order by the trial judge considering the matter in the first instance." Jet-Line Servs. Inc. v. Selectmen of Stoughton, 25 Mass.App.Ct. 645, 646, 521 N.E.2d 1035 (1988). The question before us is "whether the single justice abused his discretion by entering an order without having a supportable basis for doing so." Highland Tap of Boston, Inc. v. Boston, 26 Mass.App.Ct. 239, 240, 526 N.E.2d 253 (1988), citing Jet-Line, supra, and Carabetta Enterprises Inc. v. Schena, 25 Mass.App.Ct. 389, 392, 518 N.E.2d 1163 (1988).

The expressed basis for the single justice's order was to provide an "interim solution" without fanning the flames of this intra-family dispute and to preserve judicial resources. A paid leave of absence for Arthur would eliminate possible, if not probable, disputes and interlocutory proceedings concerning his work performance. Such ancillary proceedings would only prolong the litigation and intensify the animosity among...