Husband Not Allowed to Dismiss Request for Judicial Dissolution of Family Firm

Be careful what you request in your complaint, particularly if it's a request for judicial dissolution.  According to a Court of Appeals opinion this week, you'll be stuck with that request if your defendant asks for the same thing.

In Bradley v. Bradley, a husband-wife team were the shareholders and officers of a legal recruiting firm, Laura Segal & Associates ("LSA").  When the couple separated, the business basically did too -- the wife asserted that the husband misappropriated corporate funds and denied her access to the company's books, records, and accounting software.  The husband alleged that the wife was trying to usurp the intellectual property of LSA, freeze the husband out of the business, and terminate his employment.

The husband filed a complaint seeking judicial dissolution, appointment of a receiver, and damages for breach of fiduciary duty.  The wife counterclaimed for judicial dissolution or appointment of a receiver.  The trial court entered a TRO and later a preliminary injunction preventing the parties from taking various actions against each other and "established a procedure allowing the management of LSA’s accounts receivable and payable without the parties having to directly interact with each other."

The husband filed a notice of voluntary dismissal of his dissolution and receivership claims.  The trial court set aside the voluntary dismissal and granted summary judgment on the defendant's counterclaims for judicial dissolution and appointed a receiver.

Three legal issues of note arose in the Court of Appeals opinion:

  • The trial court properly set aside the husband's voluntary dismissal of his dissolution and receivership claims.  The voluntary dismissal was void on its face because, once the wife asserted counterclaims arising from the exact same transactions, the husband lost the authority to voluntarily dismiss claims without the wife's consent.
  • The husband could not challenge the wife's right to dissolution because his own complaint pled facts supporting dissolution (and, of course, he requested dissolution himself).  The husband was not allowed to contradict his judicial admissions.
  • The Court rejected the husband's assertion that the appointment of a receiver should be reviewed de novo.  Instead, the Court followed earlier cases reviewing such appointments for abuse of discretion.

 Full Opinion