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HomeMy WebLinkAbout99-2667 EquityNEEMA THAKRAR, : Plaintiff : V. : WILLIAM H. HOOK, JR.;: CURT E. SUTER; and : JEFFREY A. AUSTIN; : EAGLE DEVELOPMENT: CORPORATION; and : CUMBERLAND MOTOR: INNS, INC., : Defendants : IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - EQUITY NO. 99-2667 EQUITY TERM IN RE: DEFENDANTS' PRELIMINARY OBJECTIONS TO PLAINTIFF' S COMPLAINT BEFORE OLER, J.* ORDER OF COURT AND NOW, this [2-['C'day of November, 1999, upon consideration of Defendants' preliminary objections to Plaintiff's complaint, and for the reasons stated in the accompanying opinion, the preliminary objections are denied. BY THE COURT, esley Oler, J.,~. Allen C. Warshaw, Esq. 305 North Front Street 5th Floor P.O. Box 1003 Harrisburg, PA 17108-1003 Attorney for Plaintiff William A. Duncan, Esq. 1 Irvine Row Carlisle, PA 17013 Attorney for Defendants irc * Hoffer, P.J., did not participate in the consideration or disposition of this case. NEEMA THAKRAR, Plaintiff Vo WILLIAM H. HOOK, JR.; CURT E. SUTER; and JEFFREY A. AUSTIN; EAGLE DEVELOPMENT CORPORATION; and CUMBERLAND MOTOR INNS, INC., Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - EQUITY NO. 99-2667 EQUITY TERM IN RE: DEFENDANTS' PRELIMINARY OBJECTIONS TO PLAINTIFF'S COMPLAINT BEFORE OLER, J.~ OPINION and ORDER OF COURT Oler, J., November 12, 1999. In this civil case in equity, an individual has filed claims against several individual defendants and two corporations for minority shareholder oppression. For disposition at this time are preliminary objections filed by Defendants to PlaintiWs complaint. Defendants' preliminary objections, to the extent being pursued,2 consist of motions to strike two counts of the complaint on the ground that they fail to contain the requisite elements of a stockholder's derivative action and motions to Hoffer, P.J., did not participate in the consideration or disposition of this case. See C.C.R.P 210-7. strike the remaining two counts of the complaint on the grounds that they/hil to contain the requisite elements of a stockholder's derivative action and that a claim cognizable in equity has not been pled. Defendants' preliminary objections were argued on August 11, 1999. For the reasons stated in this opinion, the preliminary objections will be denied. STATEMENT OF FACTS Plaintiff's complaint alleges, in pertinent part, that on June 12, 1980, Plaintiff's husband and the individual defendants entered into a written contract which governed their development, through the corporate defendants, of two portions of a certain tract of land. The complaint avers that she and her husband were minority shareholders of the corporations, that the individual defendants, who were also shareholders, improperly caused her husband to be removed from the corporate boards of directors, and that they proceeded to distribute corporate funds to a third corporation, formed and owned by the individual defendants, for inadequate consideration. Counts 1 and 2 of Plaintiff's complaint seek reinstatement of Plaintiff's husband to the respective boards of directors, and other relief appropriate to the allegedly oppressive behavior. Counts 3 and 4 seek a correction in Plaintiff's favor of the alleged financial irregularities, and other relief appropriate to the allegedly oppressive behavior. 2 DISCUSSION It is well settled in Pennsylvania that "[t]he test on preliminary objections [which would result in dismissal of a claim] is whether it is clear and free from doubt from all of the facts pleaded that the pleader will be unable to prove facts legally sufficient to establish his right to relief." Bower v. Bower, 531 Pa. 54, 57, 611 A.2d 181, 182 (1992). In determining whether to grant such a preliminary objection, the "[c]ourt must consider as true all of the well-pleaded material facts set forth in [the pleading challenged] and all reasonable inferences that may be drawn from those facts." Id. Moreover, such "preliminary objections will only be sustained if clear and free from doubt." Triage, !nc. v. Commonwealth of Pennsylvania, Department of Transportation, 113 Pa. Commw. 348, 354 n.7, 537 A.2d 903,907 n.7 (1988). With respect to Defendants' contention as to each of the four counts referred to above that the elements of a stockholder's derivative action3 have not been pled, and that the counts are unclear as to whether the claims by Plaintiff are "in her own right or whether she is suing to enforce a secondary right,''4 Plaintiff 3 For example, the occurrence of a demand upon the corporate defendants to assert their rights themselves. 4 Defendants' Brief in Support of Preliminary Objections to Plaintiff's Complaint, at 3, 5, 8, 9. 3 represents, and the court accepts the representation, that the action has been brought on her behalf and not on behalf of the corporations.5 With respect to Defendants' contention as to counts 3 and 4 that claims cognizable in equity have not been asserted, Defendants maintain that Plaintiff "seeks monetary damages for a failure to distribute profits,''6 cites the general principle that in the absence of a declaration of a dividend no obligation exists on the part of a corporation to distribute profits,7 and suggests that in the absence of fraud or an abuse of discretion equity will not compel the declaration of a dividend,s However, a review of the complaint tends to support the argument of Plaintiff that "[P]laintiff is not complaining because profits were not distributed. She is complaining that profits were distributed but that she was [unfairly] excluded from that distribution.''9 The court is of the view that sufficient fact~ have been pled by Plaintiff as to counts 3 and 4 to survive a challenge to equitable jurisdiction at this stage of the proceeding. For the foregoing reasons, the following order will be entered: 5 Plaintiff's Brief in Opposition to Defendants' Preliminary Objections to Plaintiff's Complaint, at 6. 6 Defendants' Brief in Support of Preliminary Objections to Plaintiff's Complaint, at 8. 7 /d. 9 Plaintiff's Brief in Opposition to Plaintiff's Complaint, at 7. Defendants' Preliminary Objections to 4 AND NOW, this Defendants' preliminary ORDER OF COURT 12th day of November, 1999, upon consideration of objections to Plaintiff's complaint, and for the reasons stated in the accompanying opinion, the preliminary objections are denied. BY THE COURT, Allen C. Warshaw, Esq. 305 North Front Street 5th Floor P.O. Box 1003 Harrisburg, PA 17108-1003 Attorney for Plaintiff William A. Duncan, Esq. 1 Irvine Row Carlisle, PA 17013 Attorney for Defendants irc s/J. Wesley Oler, Jr. J. Wesley Oler, Jr., J.