Divorce judge could resolve dispute involving family businesses in Massachusetts

A divorce judge could have the final say about a business dispute between a couple who used to operate a family business together, according to the Pennsylvania Superior Court.

The couple had owned a company that operated a motel. The husband was the president and the wife was the treasurer. One day, the husband fired the wife and replaced her with his daughter. He also changed the locks, removed the wife from the company checking account, and told the police not to allow her onto company property.

Not surprisingly, the wife responded by filing for divorce.

The divorce judge announced a plan to resolve all disputes pertaining to the business as part of the divorce, and issued a deadline for filing any claims.

A year after the deadline had passed, however, the corporation filed a lawsuit against the wife, saying she had misappropriated funds. The lawsuit claimed the wife had removed furniture belonging to the company, used company assets to reimburse herself for personal expenses, and even helped herself to change out of the motel’s vending machines.

The husband argued that even though the lawsuit was filed a year after the deadline, it didn’t matter because he wasn’t personally suing his ex-wife; the lawsuit was brought solely by the corporation.

But the Pennsylvania Superior Court said that, in reality, the husband was the corporation, since he was the president and majority owner. The fact that the corporation’s name was on the lawsuit rather than the husband’s didn’t matter, and the lawsuit had to be thrown out because any business claims against the ex-wife had to be resolved in the divorce case.