Last Friday the Appeals Court posted a new decision on its website which broadens the authority of Probate and Family Court judges. In Cesar vs. Sundering, slip opinion No. 11-P-351, the Court held that a Probate and Family Court judge, in a case where the division of a family business is at issue, has the authority to prohibit the spouse who doesn’t get the business from “operating” a competing business. In effect, the Probate and Family Court judges can now impose a non-compete on a divorcing spouse, that will continue after the divorce.
The authority for this comes from M.G.L. Chapter 215, section 6, which says:
“[Probate and Family Courts] shall, after the divorce judgment has become absolute, also have concurrent jurisdiction to grant equitable relief in controversies over property between persons who have been divorced.”
However, a non-compete is basically restraining economic behavior, which is seldom done post- divorce.
Many litigated divorce cases involve family businesses, often because the valuation can be hotly contested. These cases also often have two reasonably co-equal partners. One generally receives the business, and the other gets cash or other assets for the value of the business. Since goodwill can be a large component of the value, and intimate competition could certainly dilute that, I can see where the thought came from. However, this seems to have more pitfalls than positives. Divorce is already a huge involvement of the government in family life post-divorce. Now, in addition to support orders, there is a real probability of limitations on income earning ability.
One thing I can be sure of is that creative divorce lawyers are thinking of where and how they could use this new “tool” in their current cases.