Opinion
No. 306278
April 11, 1995
MEMORANDUM OF DECISION
There is little appellate case law in Connecticut on the criteria for the granting or denial of an application for a temporary injunction. In Olcott v. Pendleton, 128 Conn. 292, 22 A.2d 633 (1941), the court stated: "The principal purpose of such an injunction is to preserve the status quo until the rights of the parties can be finally determined after a hearing on the merits. Deming v. Bradstreet, 85 Conn. 650, 659, 84 A. 116. In deciding whether it should be granted or, if granted, whether it should be continued or dissolved, the court is called upon to balance the results which may be caused to one party or the other, and if it appears that to deny or dissolve it may result in great harm to the plaintiff and little to the defendant, the court may well exercise its discretion in favor of granting or continuing it, unless indeed, it is very clear that the plaintiff is without legal right." Id., 293. Our Supreme Court also has remarked that "[t]his criterion necessarily requires consideration of the probable outcome of the litigation. Decisions of our trial courts have frequently referred to the burden of an applicant to show reasonable degree of probability of success before a temporary injunction to preserve the status quo may be granted. Connecticut State Medical Society v. Connecticut Medical Service, Inc., 29 Conn. Sup. 474, 477-78, 293 A.2d 794 (1971); Hopkins v. Hamden Board of Education, 29 Conn. Sup. 397, 417, 289 A.2d 914 (1971); Torrington Drive-In Corporation v. I.A.T.S.E.M.P.M.O. Local 402, A.F.L., 17 Conn. Sup. 416, 418 (1951)[.] The need to show an irreparable loss unless the status quo is preserved has also been often mentioned. Covenant Radio Corporation v. Ten Eighty Corporation, 35 Conn. Sup. 1, 3, 390 A.2d 949 (1977); Colchester v. Reduction Associates, Inc., 34 Conn. Sup. 177, 185, 382 A.2d 1333 (1977). The cases have also alluded to the harm likely to be sustained by other parties as well as the public from preservation of the status quo. Connecticut Assn. of Clinical Laboratories v. Connecticut Blue Cross, Inc.[,] 31 Conn. Sup. 110, 121, 324 A.2d 288 (1973); Martino v. L. D. DeFelice Son, Inc., 16 Conn. Sup. 18, 19 (1948)." Griffin Hospital v. Commission on Hospitals Health Care, 196 Conn. 451, 457-458, 493 A.2d 229 (1985).
Because of the imminence of the trial of the case on the merits next month and the probability that the two majority shareholders will ultimately purchase the assets of the corporation in any event, little if any harm will be visited on the defendant by the issuance of a temporary injunction. On the other hand, seeing through to the realities of the case; S.E.C. v. Research Automation Corp, 585 F.2d 31, 34 (2d Cir. 1978); real harm indeed may be suffered by the plaintiff if no injunction now issues and the majority shareholders are permitted to dissolve the corporation pursuant to General Statutes § 33-376. Moreover, it cannot be said that "it is very clear that the plaintiff is without legal right"; Olcott v. Pendleton, supra, 128 Conn. 295; with respect to his application for dissolution of the corporation pursuant to General Statutes § 33-382 and the appointment of a receiver.
General Statutes "Sec. 33-376. Dissolution by resolution. (a) A corporation may, at any time before the organization meeting, be dissolved by resolution adopted by at least two-thirds of the incorporators and approved in writing by all subscribers, if any, for shares of such corporation. `(b) A corporation may, in the following cases, be dissolved by resolution adopted by the board of directors: (1) When the corporation has not commenced business and such resolution is approved in writing by all subscribers, if any, for shares of such corporation and all shareholders, if any; (2) when the corporation has been adjudged to be bankrupt; (3) when the corporation has made a general assignment for the benefit of creditors; (4) by leave of court, when a receiver has been appointed in any suit in which the affairs of the corporation are to be wound up. "(c) A corporation may, at any time, be dissolved by resolution adopted by the board of directors and shareholders in the following manner: The board of directors, either before or after shareholder adoption thereof, shall adopt a resolution to dissolve and the shareholders shall adopt such resolution by the affirmative vote of the holders of at least two-thirds of the voting power of the shares entitled to vote thereon, or by such other vote of shareholders, which may be less than a majority, as the certificate of incorporation shall provide. "(d) A certificate of dissolution by resolution shall be filed as provided in section 33-285. If the resolution is adopted by incorporators, the certificate shall be executed as provided in section 33-285 by at least two-thirds thereof and shall either be signed by all subscribers to shares of such corporation or contain a statement that there are no subscribers. If the resolution is adopted by the board of directors acting alone, the certificate shall be executed by the corporation as provided in section 33-285 and, if adopted pursuant to subsection (b)(1), shall either be signed by all subscribers to shares of such corporation and all shareholders or contain a statement that there are no subscribers or shareholders. If the resolution is adopted by the board of directors and shareholders, the certificate shall be executed by the corporation as provided in section 33-285. The certificate of dissolution by resolution shall set forth: (1) The name of the corporation; (2) the resolution; (3) a statement of the manner of adoption under this section; (4) in case of adoption by the board of directors, acting alone, a statement of the number of directors required to take such action and the number of votes for the resolution; (5) in case of adoption by the board of directors and shareholders, a statement of the shareholder vote required to adopt such resolution and the vote for such resolution; and (6) the names and respective residence addresses of the corporation's directors and officers at the date of filing the certificate. "(e) Dissolution shall be effective upon filing the certificate of dissolution in accordance with the provisions of section 33-285."
General Statutes "Sec. 33-382. Petition for wind-up of affairs by superior court. (a) The superior court for the judicial district where the principal office of a corporation is located, or any judge thereof, shall wind up the business and affairs of such corporation on petition of the following persons in the following cases: (1) In a proceeding by a holder or holders of shares having voting power sufficient under the circumstances to dissolve the corporation pursuant to the certificate of incorporation; (2) in a proceeding by a shareholder or a director when it is established that: (i) Under the provisions of this chapter or of the certificate of incorporation or bylaws, the directors are deadlocked in the management of the corporate affairs and the shareholders are unable to break the deadlock, or (ii) the shareholders are deadlocked in voting power for the election of directors and for that reason have been unable at the next preceding annual meeting to agree upon or vote for directors as successors to directors whose term would normally have expired upon the election of their successors. "(b) Without limiting the generality of its or his authority, the superior court for the judicial district where the principal office of a corporation is located, or any judge thereof, may wind up the business and affairs of such corporation on petition of the following persons in the following cases if in his discretion such remedy is under the circumstances necessary or desirable in the interests of the parties involved or the corporation: (1) In a proceeding by holders of shares having at least one-tenth of the voting power at such time for election of directors when it is established that: (i) The corporation has wilfully violated its certificate of incorporation or exceeded its powers; (ii) there has been fraud, collusion or gross mismanagement, in the conduct or control of such corporation; (iii) the corporation's assets are in danger of waste through attachment, litigation or otherwise; (iv) the corporation has abandoned its business and neglected to wind up its affairs and to distribute its assets within a reasonable time; or (v) any good and sufficient reason exists for the winding up of such corporation. (2) In a proceeding by holders of at least one-tenth of the outstanding shares with or without voting rights when it is established that there has been fraud, collusion or gross mismanagement in the conduct or control of such corporation and that it is necessary to wind up the corporation for the protection of the rights or interests of such class. (3) In a proceeding by a creditor: (i) When the claim of the creditor has been reduced to judgment and an execution thereon returned unsatisfied, or (ii) when the corporation admits in writing that the claim of the creditor is due and it is established that the corporation is insolvent. (4) In a proceeding by the attorney general of the state in proceedings in the nature of quo warranto." (c) In proceedings brought pursuant to this section, process shall be served on the corporation as in other civil actions, such notice shall be given to the board of directors and such other interested persons as the court deems proper and it shall not be necessary to make shareholders parties thereto unless relief is sought against them personally.
The application for a temporary injunction is granted.
BY THE COURT
Levin, J.