Case Name: Phillip B. Ingle, Appellant, v. Glamore Motor Sales, Inc., et al., Respondents. (Action No. 1.); Phillip B. Ingle, Appellant, v. James H. Glamore et al., Respondents. (Action No. 2.)
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1989-02-21
Citations: 73 N.Y.2d 183
Docket Number: 
Parties: Phillip B. Ingle, Appellant, v Glamore Motor Sales, Inc., et al., Respondents. (Action No. 1.) Phillip B. Ingle, Appellant, v James H. Glamore et al., Respondents. (Action No. 2.)
Judges: 
Reporter: New York Reports
Volume: 73
Pages: 183–202

Head Matter:
Phillip B. Ingle, Appellant, v Glamore Motor Sales, Inc., et al., Respondents. (Action No. 1.) Phillip B. Ingle, Appellant, v James H. Glamore et al., Respondents. (Action No. 2.)
Argued January 12, 1989;
decided February 21, 1989
POINTS OF COUNSEL
Frederic Block and Lane T. Maxson for appellant.
I. As an employee-minority stockholder of a close corporation, Ingle’s employment rights more appropriately should be measured in the context of the high degree of trust, loyalty and good faith owed to him by Glamore as his fellow stockholder and "partner”. (Fender v Prescott, 101 AD2d 418, 64 NY2d 1077; Matter of Ronan Paint Corp., 98 AD2d 413; Matter of Gordon & Weiss [Weiss — Gordon], 32 AD2d 279; Matter of Kemp & Beatley [Gardstein] 64 NY2d 63; Alpert v 28 Williams St. Corp., 63 NY2d 557; Landorf v Glottstein, 131 Misc 2d 432, 127 AD2d 1016; Brown Bros. Elec. Contrs. v Beam Constr. Corp., 41 NY2d 397.) II. Implicit in the parties’ stockholders’ agreement is a covenant of fair dealing and good faith that precludes the termination of plaintiff’s employment for the purpose of triggering the purchase of his stock. (Kirke La Shelle Co. v Armstrong Co., 263 NY 79; Van Valkenburgh, Nooger & Neville v Hayden Publ. Co., 30 NY2d 34; Rowe v Great Atl. & Pac. Tea Co., 46 NY2d 62; Murphy v American Home Prods. Corp., 58 NY2d 293; Downey v General Foods Corp., 37 AD2d 250, 31 NY2d 56; Outlet Embroidery Co. v Derwent Mills, 254 NY 179; Spear v Plaza Sound Studios, 59 AD2d 778; Zimmer v Wells Mgt. Corp., 348 F Supp 540; Carter v Bradlee, 245 App Div 49, 269 NY 664.) III. Should the court determine that the covenant of fair dealing and good faith cannot properly be invoked in the present case to preclude the corporation and Glamore from terminating Ingle’s employment for the purpose of triggering the repurchase of his stock, the agreement, taken as a whole, is sufficiently unclear as to the parties’ intent to allow for the introduction of extrinsic evidence. (Web Transmissions v Marcus, 54 AD2d 901.) IV. Regardless of whether Ingle can be lawfully terminated at the will of his employer, defendants, by reason of their special trust relationship, can nonetheless be accountable for wrongfully interfering with plaintiffs employment. (Levine v Styleart Press, 31 Misc 2d 106; Schwartz v Marien, 37 NY2d 487; Case v New York Cent. R. R. Co., 15 NY2d 150; Kavanaugh v Kavanaugh Knitting Co., 226 NY 185; Foley v D’Agostino, 21 AD2d 60; Bevilacque v Ford Motor Co., 125 AD2d 516; Fells v Katz, 256 NY 67; A. S. Rampell, Inc. v Hyster Co., 3 NY2d 369; Federal Waste Paper Corp. v Garment Center Capitol, 268 App Div 230, 294 NY 714; Guard-Life Corp. v Parker Hardware Mfg. Corp., 50 NY2d 183.)
Bradley E. Rock and Patricia C. Delaney for respondents.
I. Where an employee is allowed to purchase a minority stock interest in his corporate employer, and there was never any express promise made to the employee regarding the term of his employment, and the employee repeatedly signs a written stockholders’ agreement stating that his shares can be repurchased if his employment ceases "for any reason”, there is no fiduciary duty which prevents the majority shareholder from causing the corporation to discharge the employee but for good cause. (Bevilacque v Ford Motor Co., 125 AD2d 516; Coleman v Taub, 638 F2d 628; Jenkins v Haworth, Inc., 572 F Supp 591; Sabetay v Sterling Drug, 69 NY2d 329.) II. Even if the majority shareholder in this case owed some kind of fiduciary duty to plaintiff, the scope of that duty could not be such that any of the facts alleged here could amount to a breach of that duty. (Percival v General Motors Corp., 539 F2d 1126.) III. No "implied covenant of good faith” can be read into the repurchase agreement to defeat defendants’ contractual right to repurchase plaintiffs shares in the event plaintiff "shall cease to be an employee of the Corporation for any reason”. (Murphy v American Home Prods. Corp., 58 NY2d 293.) IV. The parol evidence rule bars plaintiffs claims for breach of the repurchase agreement because the terms of the written agreement are clear, the written agreement plainly constitutes the parties’ entire agreement on the subject of the repurchase of plaintiffs stock, and plaintiff has failed to offer any additional terms which are consistent with those of the writing. (Fogelson v Rackfay Constr. Co., 300 NY 334; Higgs v de Maziroff, 263 NY 473; Plum Tree v Winston Corp., 351 F Supp 80; Zugarek v Walck, 54 AD2d 1074; Broten v Bankers Trust Co., 60 NY2d 155; Farm Stores v School Feeding Corp., 79 AD2d 504; Horyczun v County of Nassau, 39 AD2d 705; Katz v American Tech. Indus., 96 AD2d 932; Sutton v East Riv. Sav. Bank, 55 NY2d 550; Schmidt v Magnetic Head Corp., 97 AD2d 151.) V. If plaintiffs causes of action for breach of contract fail, then so must his claim for wrongful inducement of the alleged breach. (Inselman & Co. v FNB Fin. Co., 41 NY2d 1078; Zimmerman v Batz, 59 AD2d 712; Krim Cartage Co. v Courier Servs., 52 AD2d 831; Citera v Chemical Bank, 105 AD2d 636; NRT Metals v Laribee Wire, 102 AD2d 705; A. S. Rampell, Inc. v Hyster Co., 3 NY2d 369; Citicorp Retail Servs. v Wellington Merchantile Servs., 90 AD2d 532; Noah v Daitch & Co., 22 Misc 2d 649; Landorf v Glottstein, 131 Misc 2d 432.)

Opinion:
OPINION OF THE COURT
Bellacosa, J.
Without a contract for a definite period of employment or some other legally recognized limitation on an employer's unqualified right to discharge an at-will employee who also happens to be a minority shareholder in a close corporation, there is no insulation under the contractual and employment relationships alleged in this case from being fired or from having invoked a stock-repurchase option.
In 1964, plaintiff-appellant Ingle sought to purchase an equity interest in respondent Glamore Motor Sales, Inc. from its then sole shareholder, respondent James Glamore. Ingle was not sold an interest in the corporation initially, but he was hired as sales manager. There was no express agreement between the parties establishing either the duration or conditions of employment.
In 1966, Glamore and Ingle entered into a written shareholders' agreement which provided that Ingle would purchase 22 of Glamore's 100 shares in the corporation, that Ingle would have a five-year option to purchase an additional 18 shares, and that Glamore would nominate and vote Ingle as a director and secretary of the corporation. The agreement also gave Glamore the right to repurchase all of Ingle's stock if "Ingle shall cease to be an employee of the Corporation for any reason" (emphasis added). Ingle later purchased the 18 additional shares and the parties executed a new shareholders' agreement, which updated some facets and eliminated outdated ones. The repurchase provision of the 1973 agreement tracked identically the 1966 version.
On January 1, 1982, the corporation issued 60 additional shares of stock. Glamore purchased 22 shares of the new issue and his two sons (respondents William and Robert Glamore) each purchased 19 shares. The three Glamores and Ingle, the only four shareholders, entered into a third agreement reflecting the corporate relationship. The repurchase provision pertinent to this litigation is: "(b) Termination of employment. In the event that any Stockholder shall cease to be an employee of the Corporation for any reason, Glamore shall have the option, for a period of 30 days after such termination of employment, to purchase all of the shares of stock then owned by such Stockholder" (emphasis supplied).
At a special meeting of the board of directors held on May 9, 1983, Ingle was voted out of his corporate posts and fired from his employment as operating manager of the business. The termination was effective May 31, 1983. On June 1, Glamore notified Ingle that he was exercising the repurchase-upon-termination-of-employment option and in due course paid Ingle $96,000 for his 40 shares in the corporation.
Plaintiff argues that as a minority shareholder of a closely held corporation, employed without the benefit of a contract containing a durational employment protection and without any limitation on the employer's right to discharge, he is nevertheless entitled by reason of his minority shareholder status to a fiduciary-rooted protection against being fired. His theory is that his employment status should not be governed by the employment at-will doctrine but, rather, that as a minority shareholder in a close corporation he should be treated as a co-owner, equivalent to a partner, whose employment rights flow from a special duty of loyalty and good faith. He next urges that an implicit covenant of good faith and fair dealing under the shareholders' agreement precluded his termination without cause, despite the express language and nature of the agreement in that regard. He concludes that even if he is an at-will employee, an action properly lies for the respondents' breach of fiduciary duties and for wrongful interference with his employment. Ingle started two separate actions seeking damages via seven causes of action alleging breach of fiduciary duty and of contract. Eventually all causes of action were dismissed — we believe correctly.
A minority shareholder in a close corporation, by that status alone, who contractually agrees to the repurchase of his shares upon termination of his employment for any reason, acquires no right from the corporation or majority shareholders against at-will discharge. There is nothing in law, in the agreement, or in the relationship of the parties to warrant such a contradictory and judicial alteration of the employment relationship or the express agreement. It is necessary in this case to appreciate and keep distinct the duty a corporation owes to a minority shareholder as a shareholder from any duty it might owe him as an employee.
Both lower courts agree, as do we, that Ingle did not sufficiently present facts raising a triable issue regarding the existence of either an oral or written employment contract fixing employment of a definite duration (see, Friends of Animals v Associated Fur Mfrs., 46 NY2d 1065). Under the established common-law rule — and without any reference to the shareholders' agreement — the corporation had the right to discharge plaintiff at will (Sabetay v Sterling Drug, 69 NY2d 329, 333; O'Connor v Eastman Kodak Co., 65 NY2d 724, 725; Murphy v American Home Prods. Corp., 58 NY2d 293, 305; Weiner v McGraw-Hill, Inc., 57 NY2d 458, 465-466; Martin v New York Life Ins. Co., 148 NY 117,121).
The twist in this fact pattern is an asserted liability based on allegations that the corporate officers breached fiduciary duties of good faith and fair dealing arising from the shareholders' agreement and on tortious interference with Ingle's employment. The twist does not support a deviation from the governing principle in this case.
In Murphy v American Home Prods. Corp. (58 NY2d 293, supra), we concluded that there is no implied obligation of good faith and fair dealing in an employment at will, as that would be incongruous to the legally recognized jural relationship in that kind of employment relationship (id., at 304-305; see, Sabetay v Sterling Drug, 69 NY2d 329, 335-336, supra). In holding that there is no cause of action in tort for abusive or wrongful discharge of an at-will employee, we declined to allow the use of substitute nomenclature or causes, such as a prima facie tort or intentional infliction of emotional distress, to bootstrap the threshold deficiency in a wrongful discharge claim (Murphy v American Home Prods. Corp., supra, at 303- 304; see, James v Board of Educ., 37 NY2d 891, 892). Similarly, the plaintiff here cannot be allowed to evade the employment at-will rule and relationship by recasting his cause of action in the garb of a tortious interference with his employment (see, Inselman & Co. v FNB Fin. Co., 41 NY2d 1078,1080).
Plaintiff confuses and tries to avoid the sequential relationship of his employment status to his shareholders' agreement by extracting an obligation from the agreement to manufacture a legally unrecognized employment security. Divestiture of his status as a shareholder, by operation of the repurchase provision, is a contractually agreed to consequence flowing directly from the firing, not vice versa. The dissent similarly confuses and inverts the Appellate Division's and our holding (dissenting opn, at 195).
As noted, Ingle argued that the corporation discharged him because James Glamore would then have a right to repurchase his shares under the terms of the shareholders' agreement. Notably, however, Ingle never asserted that the $2,400 per share paid to him upon termination was not fairly representative of his equity interest in the corporation. He does not contend that the corporation undervalued his shares, and he accepted payment from Glamore without reservation. Indeed, that, too, was fixed by the parties' buy-out agreement. We have no occasion to address issues involved in cases where the minority shareholders may be discharged solely to avoid assertion of the legal rights afforded to them under Business Corporation Law § 1104-a and 1118 and our decision in Matter of Pace Photographers (Rosen) (71 NY2d 737), because no such matter has been pleaded and that is not this case.
Ingle's and the dissent's reliance on Fender v Prescott (101 AD2d 418, 422, expressly affirmed on grounds other than the corporate relationship discussion 64 NY2d 1077, 1078-1079) for an exception based on the close corporate form in which this employer and employee find themselves is unavailing. No duty of loyalty and good faith akin to that between partners, precluding termination except for cause, arises among those operating a business in the corporate form who "have only the rights, duties and obligations of stockholders" and not those of partners (see, Weisman v Awnair Corp., 3 NY2d 444, 449-450).
Finally, the dissent essentially invokes an equity appeal. While we have no quarrel whatsoever with that magnificent juridical jewel applied in its proper setting, this lawsuit does not qualify. Here, fair principles of well-settled law, affecting employment and contractual relationships between private parties, govern and are entitled to respect and efficacy from this court. We cannot merely substitute our preferred notions for those of the parties themselves in such matters.
The pleading here does not support the conclusion that respondents breached a fiduciary duty as corporate officers by dismissing an at-will employee and exercising an agreed-upon repurchase-upon-termination clause (see, Bevilacque v Ford Motor Co., 125 AD2d 516, 519-520). "[Tjhere is no reason why an appeal to general fiduciary law should be used as a pretext for evading contractual obligations" (see, Coleman v Taub, 638 F2d 628, 636; Jenkins v Haworth, Inc., 572 F Supp 591, 601).
If there was no protection against discharge of an at-will employee in Murphy (supra) and Sabetay (supra), where there was no contractual arrangement at all, there surely can be none here where the related contract expressly confirms the unavailability of that protection. Moreover, to hold otherwise on the facts and pleadings of this case would confuse our recent holdings in an area of the law where certainty, predictability and reliability are highly prized common-law goals.
We have carefully and thoroughly considered all of appellant's arguments and additionally conclude that his remaining arguments are also unavailing.
Accordingly, the order of the Appellate Division should be affirmed, with costs.