United States:
Can A Judge In A Divorce Proceeding Order A Spouse Not To Compete With The Other Spouse?
22 May 2012
Foley Hoag LLP
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The answer, at least in Massachusetts, is yes. In
Cesar v. Sundelin, the Massachusetts
Appeals Court recently ruled that, in dividing a marital estate
that includes a family business, a judge of the Probate and Family
Court has the authority to enjoin the party that no longer will
have any ownership in the business from operating a competing
business. The Appeals Court reasoned that a business's
"good will" is part of the martial property subject to
equitable distribution. Without a non-compete order, that good
will would be lost or the parties would be left to compete in
"recapturing" the good will.
This case shows that, just like in employment relationships,
good will is important and can be protected in a divorce.
When property is distributed in a divorce, good will can be
protected through a "reasonable" non-compete order that
is "no broader than necessary to protect the good will,"
just like a "reasonable" non-compete agreement
between an employer and employee will be enforced.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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