Can a Judge in a Divorce Proceeding Order a Spouse Not to Compete with the Other Spouse?

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.

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