Facts
O’Sullivans and Harrison formed a business and in stock ownership agreement O’Sullivan received 4.5 million shares, Harrison 2.9 million shares, and other O’Sullivan 1.5 million shares. Harrison’s stock agreement stated that if Harrison ceased to be employed for any reason, the company had the right to buy back Harrison’s unvested shares. Harrison was terminated and 55% of his shares were not vested. NetCentric sought to repurchase unvested shares.
Procedural History
Harrison alleged NetCentric breached fiduciary duty, implied covenant of good faith and wrongful termination. Summary judgment was entered against Harrison.
Issue(s)
Did the trial court err in granting summary judgment to NetCentric?
Holding(s)
No.
Reasoning/Analysis
The Court found that the state of incorporation dictates the choice of law and because Delaware law does not impose a heightened fiduciary standard on shareholders in a close corporation, summary judgment was properly granted. NetCentric did not deprive Harrison of income and his unvested shares are not earned compensation, merely earned over time.
Judgment/Outcome
The Court affirmed the judgment of the trial court.
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