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Family members who go into business together often seem to be auditioning for “The Jerry Springer Show” — the business partners are almost guaranteed an unhappy, divisive experience the details of which lowbrow talk show hosts would love to exploit. Case in point: John Cianci, et al. v. JEM Enterprise Inc. and Jeffrey E. Minner, wherein the Delaware Court of Chancery had to settle a dispute between family members on splitting up a business because the only thing the relatives agreed upon was that they couldn’t get along. Vice Chancellor Stephen P. Lamb ruled that Minner has to pay his father-in-law, Cianci, $120,000 for his part of the business because the two were partners. Edward Eaton, who represented Cianci, said they were “very pleased” with the ruling. Cianci and Minner had independently bought janitorial franchises. They agreed to operate them together, in the summer of 1991, by only a “handshake agreement.” The terms of this included “splitting the profits and losses evenly.” Minner was to handle sales, and Cianci was in charge of operations. Cianci’s wife, Connie, took care of the company books. The business was known as JEM Enterprise Inc. After a while, the “business grew, but so did the tensions.” Cianci began to refuse to handle administrative tasks, and Minner had to take on more responsibility. They took all of the profits out of the business, and so it was hard to make needed capital investments. In 1996, Minner suggested that they take less, but Cianci refused, according to Lamb’s opinion. By Christmas, Minner wrote to Cianci and implied that he take a smaller role and salary. This upset Connie Cianci, who read the letter, and called her daughter, who was married to Minner. Minner’s wife became angry, causing Minner to tell his mother-in-law to destroy the letter. Cianci never saw it. GETTING WORSE The situation worsened, and in 1997, Minner approached Cianci about dissolving their arrangement. He offered him a $50,000 salary plus the use of a car, and Cianci purportedly agreed. But faced again with his wife’s angry reaction to what she saw as “kicking her father out,” Minner instead ignored the agreement. But the business had a cash flow shortfall, and Minner had to take a $25,000 loan from his father to keep it going. Time passed, and then Cianci suggested they meet again to discuss dissolving. He suggested that either man buy out the other with a payment of $500,000. Cianci also said, according to court papers, that “if we don’t do this deal, I will burn the barn down.” Minner suggested that Cianci buy him out, but then Cianci repudiated his proposal. Minner was so scared because of Cianci’s comment that he updated his insurance policies and put gas locks on all of the company cars. After this, the pair met at Stanley’s Restaurant for lunch. By this time, Cianci had consulted with Greg Thompson, a liaison for the franchises. Thompson suggested that the value of the business was three months of receipts, or $150,000. At Stanley’s Cianci offered to receive monthly payments from Minner of $2,500 for five years without interest. Cianci also asked to keep a few small accounts and a small part of the business, the Tallyville, Del., franchise. CLAIMS OF DURESS Cianci told Minner that “this deal, meaning the money, my daughter and your kids, is your bulletproof vest. If anything gets in the way, you take off the vest.” Minner said he was scared, “shaking like a leaf,” so he accepted the Stanley agreement. He claimed he felt he had no other choice. First, the court ruled that Cianci was only a partner, not a stockholder, of JEM. This was because no JEM directors approved the issuance of stock, in accordance with Delaware General Corporation Law. The court then dismissed an argument made by Minner that Cianci was supposed to retire after five years, leaving him the business for free. Lamb wrote that there was no evidence of this, and “unless otherwise provided … upon dissolution, the parties were entitled to share in the partnership’s property in accordance with their interests.” Minner also argued that the Stanley Restaurant agreement was unenforceable because the comments Cianci made amounted to coercion and duress. But Lamb disagreed, and upheld the contract. This decision was “the most difficult question of the case,” stated Lamb. Cianci’s remarks at Stanley’s certainly were “improper” as they were “reasonably understood as a threat of physical harm,” Lamb ruled. But the remarks didn’t “overcome Minner’s will,” and therefore, the “threat didn’t cause the assent” by Minner to the contract. Instead, the court pointed out that Minner was under other external pressures to make a deal with Cianci. These pressures included the fact that Minner’s father had lent the business money and that his family was under the stress of the strained relationship with Cianci. Last, the court explained that even if the Stanley agreement was void because of Minner’s duress, he “ratified it by accepting Cianci’s performance and partially performing himself.” Cianci honored his end of the deal when he and his wife resigned, and he allowed Minner to take all corporate files from his home. Minner partially performed his end of the deal by delivering to Cianci a part of the franchise and some small accounts in accordance with the bargain. Minner didn’t repudiate the deal until it came time to start paying Cianci. The parties agreed at trial that the present value in 1997 of the payments due Cianci was about $120,000. Lamb awarded Cianci that amount plus prejudgment interest “at the legal rate.” Eaton and M. Edward Danberg of Connolly Bove, Lodge & Hutz of Wilmington represented the Cianci family. R. Stokes Nolte of Nolte, Brodoway & Saltz of Wilmington represented Minner and JEM. He had no comment about the opinion.

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