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HomeMy WebLinkAbout07-15-94 . . J. A16039/94 IN THE ESTATE OF: ROBERT M. MUMMA, DECEASED BARBARA MCK. MUMMA AND LISA M. MORGAN, INDIVIDUALLY AND AS EXECUTRICES OF THE ESTATE OF ROBERT M. MUMMA, DECEASED; BARBARA MCCLURE, LINDA M. ROTH, ROBERT M. FREY, GUARDIAN AD LITEM APPEAL OF: ROBERT M. MUMMA, II IN THE SUPERIOR COURT OF PENNSYLVANIA NO. 614 HARRISBURG 1993 Appeal from the Order Entered August 4, 1993, Docketed August 5, 1993, in the Court of Common Pleas, Orphans Division, of Cumberland County, No. 21-86-398. JUDGMENT ON CONSJDEIU170N WHEREOF. it is now here ordered and adjudged l7y this Coun that the judgment of the Coun of Common Pleas of CUMBERLAND Counry be. and the same is herel7y AFFIRMED. BY THE COURT: Dattd: .7111 Y 1 <; 1994 ,J. A16039/94 IN THE ESTATE OF: ROBERT M. MUMMA, DECEASED BARBARA MCK. MUMMA AND LISA M. MORGAN, INDIVIDUALLY AND AS EXECUTRICES OF THE ESTATE OF ROBERT M. MUMMA, DECEASED; BARBARA MCCLURE, LINDA M. ROTH, ROBERT M. FREY, GUARDIAN AD LITEM APPEAL OF: ROBERT M. MUMMA, II IN THE SUPERIOR COURT OF PENNSYLVANIA NO. 614 HARRISBURG 1993 Appeal from the Order Entered August 4, 1993, Docketed August 5, 1993, in the Court of Common Pleas, Orphans Division, of Cumberland County, No. 21-86-398. BEFORE: ROWLEY, P. ,J., and KELLY and POPOVICH, JJ. MEMORANDUM: F I LEO JUl 1 5 199~ Robert M. Mumma II appeals from the order denying his request for a preliminary injunction. Upon careful review, we affirm. In July of 1993, Robert Mumma II ("Robert II"), together with Robert M. Frey, a guardian ad litem for Robert II's minor children, petitioned the trial court for an injunction to interrupt the sale of certain businesses owned by the Mumma family. 1 These businesses were held by the estate of Robert II's deceased father, Robert M. Mumma, Sr. The executrices of the estate, Barbara McK. Mumma, wife, and Lisa Morgan, daughter, have negotiated with and sold the businesses2 to a foreign corpora- 1 Robert II previously disclaimed his interest in the estate, and his minor children were named by the will as beneficiaries to replace him. Robert M. Frey was later appointed to represent the children in this dispute over the sale of the businesses. Subsequently, Robert II validly revoked his disclaimer; therefore, the children, through the guardian ad litem, no longer have an interest in this dispute. 2 At the insistence of the foreign corporation, CRH Industries, and through a series of corporate transfers and transactions, the businesses became one corporation, Kodie Corporation. J. A16039/94 - 2 tion. The efforts of the executrices were opposed by Robert II who had attempted to purchase the businesses himself. Language in the Last wi 11 and Testament of .Robert Mumma Sr. expressed the decedent's wish that the businesses remain within the Mumma family: It is my desire that if expedient and possi- ble, the businesses which I have personally direct:ed during my lifeti.me and of which I have had an interest be continued for the benefi.t of and under the management and con- trol of my immediate family. The trial court properly held in a prior' action that this language was precatory and did not create a right of first refusal in Robert II or in any other family member. It is unfortunate that the wishes of the testator will not be satisfied, but the execu- trices have determined that it is in the estate's best interest to sell the businesses. On appeal, Robert II does not argue that he had a right of first refusal; rather, he argues that, for several reasons, the sale to the foreign corporation was invalid. He asks, as a shareholder of the businesses and a beneficiary under the will, that we remand the n sale transaction n to the trial court n for approval, with directions that (Robert II] be gi ven the opportunity to negotiate with the Estate for the purchase of the family businesses." Brief of Appellant at 49. In accordance with our standard and scope of review, we have considered the arguments of the parties, and we find that the J. A16039!94 - 3 trial court did not err when It denied Robert II's request for a preliminary injunction. On appeal, we are restricted to deter- mining whether grounds exist to support the denial of the injunc- tion, and whether a plain abuse of discretion was exercised by the trial court or an error of law was committed. See Boehm v. Univ. of Pennsvlvania School of Veterinary Medicine, 392 Pa.Super. 502, 505-06, 573 A.2d 575, 577 (1990). The trial court concluded that at least three of the four prerequisites for granting a prelimi. nary injunction were not satisfied. This conclusion was supported by the record. First, the court decided that Robert II had not made a strong showing that his success on the merits was likely. Properly rejected were arguments that the sale was invalid because i) the notice to nonconsenting shareholders was untimely under 15 Pa.C.S.A ~ 1766(c) (effectiveness of action by partial written consent); ii) the notice did not state specifically when the sale would be completed; and iii) court approval was needed for the sale since the executrices had engaged in self-dealing. For reasons clearly and adequately stated by the trial court, these arguments have no merit. Moreover, contrary to Robert II's assertion, the fact that the vote by all of the shareholders occurred after the sale, did not preclude the sale's validity. The vote was only intended to ratify the action already taken through partial shareholder consent of the executrices as majority shareholders of the businesses. Also, financial and other information included with the notice to nonconsenting shareholders was sufficient to J. A16039/94 - 4 inform them of the details of the pending sale. Because there were no other apparent bases for the trial court to conclude that Robert II's claim was likely to succeed, the court's decision with respect to the tlrst prerequisite for a preliminary injunction was correct. Second, the court decided that greater injury would have resulted by refusing the injunction than by granting it. Granting the injunction would have required the trial court to rescind the $32 million sales transaction between the estate and the foreign corporation. Tremendous financial complications and injury to both the selling and purchasing party would have emanated from such a rescission. Worse yet, if the transaction were rescinded, Robert II would not have been under any obligation to purchase the businesses, and it is probable that the estate would have lost its buyer altogether, foreign or otherwise. In addition, the trial court is correct that Robert II had no right of first refusal, and therefore he will not be legally injured if he is not given the opportunity to buy. With these factors in mind, there were rea- sonable grounds for the court's decision that greater injury would have resulted if the injunction were refused than if it were granted. Last, the trial court determined that a preliminary injunc- tion would not restore the parties to the status as it existed prior to the alleged wrongful conduct. Based on the following grounds noted by the court, we agree: first, Robert I I would be in the same legal position if the injunction were granted than if it were denied. Prior to the sale to the foreign corporation, . J. A16039/94 - 5 Robert II had no greater right to purchase the businesses from the estate than he does now. Therefore, Robert II would not be "re- stored" t.O a former statLls by the issuance of an injunction. Second, pri':lr to the sale, the status of both the foreign buyer and the estate was one of a willing buyer and a wiJ.ling seller' If the injunction were granted, the foreign corporat.ion had indicat.ed to the executrices that it would not participate in a costly fight to buy the businesses. Therefore, the injunction would not "restore" the status quo, but rather would produce the loss of a previously willing and assured buyer for the estate. Hence, there were grounds for the court's decision that the injunction would not restore the status quo. Because there were reasonable grounds for the court's finding that three of the prerequisites for a preliminary injunction were unmet, we must affirm the denial of the injunction. There was no abuse of discretion or error of law committed by the trial court. Furthermore, we question whether the relief requested, i .e, a rescission of the sale between the estate and the foreign corpora- tion, is the type of relief obtainable through a preliminary injunction. Rescission, or undoing the sale, is the ultimate relief sought by Robert II, and would not merely hold the parties in abeyance until the final decision, as a preliminary injunction is intended to do. Consequently, the relief sought by Robert II could not have been granted at this stage in the proceedings. Order affirmed.