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10/14/94 PLANTATION MANOR v. CARMELITA R. LEE

October 14, 1994

PLANTATION MANOR, INC., ET AL.
v.
CARMELITA R. LEE, A/K/A CARMELITA R. LEE VANCE



Appeal from Jefferson Circuit Court. (CV-94-516). Roger Halcomb, TRIAL JUDGE.

Released for Publication January 17, 1995.

Houston, Maddox, Shores, Steagall, Kennedy, and Ingram, JJ., concur.

The opinion of the court was delivered by: Houston

HOUSTON, JUSTICE.

William G. Allen, Jr., individually, and on behalf of Plantation Manor, Inc., appeals from the trial court's order dissolving a temporary restraining order and denying his motion for a preliminary injunction against Carmelita R. Lee. We affirm.

Plantation Manor is an Alabama corporation engaged in the business of operating a nursing home, an assisted living facility, and retirement apartments for the elderly. Lee owns 63% of the stock in Plantation Manor and is on the corporation's board of directors. Allen, Lee's step-grandson, owns 16% of the corporation's stock, as well as an option to purchase its remaining shares. Allen is also a personal guarantor of various debts owed by the corporation. Lee's adopted son, Robert Neal Lee, owns 21% of the corporation's stock. Until the board of directors terminated his employment, Allen also served as the corporation's administrator of daily operations, pursuant to a written employment contract.

This case basically involves a dispute between the owner of 63% of the stock of a financially sound, closely held family corporation and the owner of 16% of the stock as to exactly how the corporation should be managed. Allen filed an action for a declaratory judgment, seeking temporary and permanent injunctive relief on behalf of himself and the corporation when he came to suspect (correctly, as it turned out) that Lee intended to take steps to restructure the board of directors so as to terminate his employment as administrator. Allen alleged that he had had an agreement with Lee that only the two of them would serve on the corporation's board of directors and that Lee was attempting to "stack" the board with directors who would vote to remove him from his position as administrator. The trial court initially granted an ex parte temporary restraining order affording Allen the relief he had requested. In response, Lee immediately filed an "Emergency Motion to Reconsider and Rescind Temporary Restraining Order." In her motion, Lee denied the allegations of Allen's complaint, stating, in effect, that she had done nothing to warrant the trial court's interference with the corporation's affairs and stating that continued judicial interference would be detrimental to the corporation. Lee also filed an affidavit in which she specifically denied that she had agreed that only she and Allen would serve on the corporation's board of directors. Lee also filed an affidavit of Robert Neal Lee; in it he stated unequivocally that he had no faith in Allen, that he supported his mother in this action, and that, in his opinion, Lee represented the best interests of the corporation. Lee's motion to dissolve the temporary restraining order was submitted to the trial court on the pleadings, the affidavits of Lee and Robert Neal Lee, and documentary evidence consisting of, among other things, the corporation's by-laws, Allen's employment contract, and various items of correspondence between Lee and Allen and their respective attorneys. After a hearing, the trial court entered the following order:

"The temporary restraining order [previously issued] is hereby set aside as having been improvidently issued. The court finds that the complainant, William G. Allen, Jr., has other adequate remedies at law."

Allen immediately filed a motion to stay the order dissolving the temporary restraining order, pending a hearing on his motion for a preliminary injunction, which was scheduled to be held five days later. The day after the trial court entered its order dissolving the temporary restraining order, it entered the following amended order:

"The [previous order of this court] is amended ... to include a finding that the plaintiff, both in his individual capacity and as a stockholder in the derivative action, is not entitled to [injunctive] relief. Therefore, the temporary restraining order is set aside and the request for [a] preliminary injunction is denied. The plaintiff's request for a stay of the setting aside of the temporary restraining order is also denied."

Allen contends that the trial court erred as a matter of law in concluding that he has an adequate remedy at law for the termination of his employment contract. Citing his employment contract, his stock option, and his personal obligation to answer for the corporation's indebtedness, Allen argues that the trial court's finding that he has an adequate remedy at law was both erroneous and the sole basis for its ruling on his motion for injunctive relief; therefore, he argues, the issue of whether the trial court had the discretion to rule as it did need not be addressed. Lee contends that the proper standard for reviewing the trial court's ruling is whether the trial court abused its discretion under the circumstances. Lee argues that the trial court acted within its discretion in dissolving the temporary restraining order and in denying Allen's motion for a preliminary injunction.

In Martin v. First Federal Savings & Loan Association of Andalusia, 559 So.2d 1075, 1079 (Ala. 1990), this Court stated:

"In Howell Pipeline Co. v. Terra Resources, Inc., 454 So.2d 1353, 1356 (Ala. 1984), we noted the development of a three-pronged test by which the trial court can review a motion for a preliminary injunction:

"'(1) "... if [the trial Judge] finds that the party has presented a fair question as to the existence of the right to be protected, and further finds that temporary interference to preserve the status quo is convenient and expedient, ...


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