In May 2012, the Massachusetts Appeals Court expanded the equitable authority of Probate and Family Court judges by holding that judges have authority to impose non-compete orders where division of a family business is in controversy. See Cesar v. Sundelin, 81 Mass. App. Ct. 721 (2012).
In this case, divorcing parties each sought sole ownership of a family feed and grain store. The trial judge awarded the business to the husband. The husband sought a non-compete order against the wife, a veterinarian. The judge refused, stating that he lacked authority. The Appeals Court held that the probate judge did have authority to consider whether to order the wife not to compete with the family business, and remanded for consideration of whether it would be appropriate in this case. The Court provided guidance that “the terms of any such order must be reasonable and no broader than necessary to protect the good will included in the valuation and transfer.” Cesar, 81 Mass. App. Ct. at 723.
This decision could have wide-ranging implications. It allows judges to preserve the integrity of property allocations by protecting the good will value of family businesses. However, it raises the question of how a spouse deprived of the opportunity to practice his or her profession is to be compensated. Business valuation and alimony decisions are likely to be affected. The use of non-compete provisions may also be expanded as attorneys work with clients to draft pre-marital, post-marital, and divorce settlement agreements.
If you have a family business and are considering marriage or a divorce, you need an attorney who can help you protect your business, professional, and personal interests. Contact the attorneys at Hutchins Law, P.C. today.