Fletcher v. Greiner, 106 A.D.2d 504 (1984)

A corporate officer is not personally liable for causing the corporation to terminate an employment contract unless their activity involves individual, separate tortious acts.

Summary

This case addresses the liability of corporate officers for the termination of an employee’s contract and the valuation of a shareholder’s interest in the corporation. The plaintiff, Fletcher, was awarded damages for his interest in the corporation and lost salary following his discharge. The Appellate Division reversed the trial court’s decision, holding that the corporate officers were not personally liable for the salary award because the plaintiff’s employment was with the corporation, not the individuals. Furthermore, there was no basis for awarding the value of Fletcher’s corporate interest in the absence of a contract or a dissolution proceeding.

Facts

Fletcher, the plaintiff, sued individual defendants (Greiner and others) and two corporations, claiming damages for the value of his one-third interest in the corporations and for salary he would have earned in the 52 weeks following his discharge. The trial court awarded Fletcher $39,000 for his corporate interest and $31,200 for lost salary. The defendants had offered to buy out Fletcher’s interest, but no agreement on value was reached.

Procedural History

The trial court awarded judgment to the plaintiff. The individual defendants appealed, and the Appellate Division reversed the trial court’s decision regarding the individual liability of the corporate officers for the salary award and the valuation of the plaintiff’s corporate interest. The appeal was made pursuant to leave granted by the higher court.

Issue(s)

1. Whether corporate officers are personally liable for causing the corporation to terminate an employment contract.
2. Whether a court can determine the value of a shareholder’s interest in a corporation outside of a contract or dissolution action.

Holding

1. No, because a corporate officer is not personally liable for causing the corporation to terminate an employment contract unless their activity involves individual, separate tortious acts.
2. No, because sections 1104-a and 1118 of the Business Corporation Law authorize a determination of value only in an action for dissolution of the corporation.

Court’s Reasoning

The court reasoned that the salary award against the individual defendants could not stand because the plaintiff’s employment was with the corporation. Quoting A. S. Rampell, Inc. v Hyster Co., the court stated that a corporate officer is not personally liable for causing the corporation to terminate an employment contract “unless his activity involves individual separate tortious acts.” The court emphasized that there was no finding of such tortious acts in this case. Further, the award for the value of Fletcher’s interest in the corporation was infirm because there was no agreement as to the value of his interest. The court held that sections 1104-a and 1118 of the Business Corporation Law did not authorize the trial court’s valuation because those sections apply only in actions for corporate dissolution, which was not the case here.