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HomeMy WebLinkAbout98-2942 EquityMICHAEL P. KADILAK and WILLIAM J. MANNA, Individually and as shareholders of EICHELBERGER CONSTRUCTION, INC., ON BEHALF OF EICHELBERGER CONSTRUCTION, INC., Plaintiffs VS. WILLIAM P. EICHELBERGER, LLOYD R. EICHELBERGER and EICHELBERGER CONSTRUCTION, INC., Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA 98-2942 EQUITY CIVIL ACTION - EQUITY IN RE: DEFENDANTS' PRELIMINARY OBJECTIONS TO PLAINTIFFS' AMENDED COMPLAINT BEFORE BAYLEY AND HESS, JJ. ORDER AND NOW, this day of December, 1998, the preliminary objection of the defendants to the plaintiffs' amended complaint in the nature of an objection to venue is SUSTAINED. It is directed that this case be transferred to the County of York. The costs and fees for transfer and removal of the record shall be paid by the plaintiffs. BY THE COURT, MICHAEL P. KADILAK and WILLIAM J. MANNA, Individually and as shareholders of EICHELBERGER CONSTRUCTION, INC., ON BEHALF OF EICHELBERGER CONSTRUCTION, INC., Plaintiffs VS. WILLIAM P. EICHELBERGER, LLOYD R. EICHELBERGER and EICHELBERGER CONSTRUCTION, INC., Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA 98-2942 EQUITY CIVIL ACTION - EQUITY IN RE: DEFENDANTS' PRELIMINARY OBJECTIONS TO PLAINTIFFS' AMENDED COMPLAINT BEFORE BAYLEY AND HESS, JJ. OPINION AND ORDER The individually named plaintiffs and defendants in this case are all shareholders of Eichelberger Construction, Inc. The plaintiffs' amended complaint in equity arises out of the Shareholders' Agreement of Eichelberger Construction, Inc. (hereafter ECI) dated February 1, 1995. In Count I, the plaintiffs seek dissolution of ECI and the appointment of a receiver. In Count II, they seek alternative relief in the appointment of a custodian. Other counts in the complaint include causes of action against defendant William P. Eichelberger for breach of fiduciary duty and breach of duty of care. The defendants have filed several preliminary objections to the plaintiffs' amended complaint. Because we agree with the defendant that venue in Cumberland County is not proper 98-2942 EQUITY and that this matter should be transferred to York County, we do not address the remaining preliminary objections. The individually named defendants in this case reside in York County. In addition, defendant ECI is a Pennsylvania corporation with its registered office in York County. The plaintiffs have brought this action in Cumberland County pursuant to the authority of Pennsylvania Rule of Civil Procedure 2179 allowing actions in counties where the corporation regularly conducts business. The text of the pertinent portion of the rule is as follows: (a) Except as otherwise provided by an Act of Assembly or by subdivision (b) of this rule, a personal action against a corporation or similar entity may be brought in and only in (1) the county where its registered office or principal place of business is located; (2) a county where it regularly conducts business; (3) a county where the cause of action arose; or (4) a county where a transaction or occurrence took place out of which the cause of action arose. Pa.R.C.P. 2179(a). Because ECI does, indeed, regularly conduct business in Cumberland County, the plaintiffs argue that venue is proper here. The defendants argue, however, that venue in this particular case is controlled by an act of the legislature. We agree. Section 1767 of the Business Corporation Law, 15 Pa.C.S.A. Section 1767, entitled "Appointment of Custodian of Corporation on Deadlock or Other Cause," states in pertinent part as follows: 98-2942 EQUITY (a) General rule. - Except as provided in subsection (b), upon application of any shareholder, the court may appoint one or more persons to be custodians of and for any business corporation when it is made to appear that: ... Likewise, Section 1981 of the Business Corporation Law, 15 Pa.C.S.A. Section 1981, entitled "Proceedings upon Application of Shareholder or Director," states in pertinent part as follows: (a) General rule. - Upon application filed by a shareholder or director ora business corporation, the court may entertain proceedings for the involuntary winding up and dissolution of the corporation when any one of the following is made to appear: ... The term "court" is defined in the Business Corporation Law at Section 1103, 15 Pa.C.S.A. Section 1103, as follows: "Court." Subject to any inconsistent general rule prescribed by the Supreme Court of Pennsylvania: (1) the court of common pleas of the judicial district embracing the county where the registered office of the corporation is or is to be located; or (2) where a corporation results from a merger, consolidation, division or other transaction without establishing a registered office in this Commonwealth or withdraws as a foreign corporation, the court of common pleas in which venue would have been laid immediately prior to the transaction or withdrawal. (emphasis added) In this case, the only proper venue, according to the Business Corporation Law, is in York County. Neither counsel cite to a case which discusses the interplay between the rule of 98-2942 EQUITY court and the statute which have application to this case. We, also, have searched in vain for one. It is well established that a statute must be construed in accordance with the plain and ordinary meaning of its words. Borough v. Pennsylvania Labor Relations Boar& 692 A.2d 253, (Pa. Cmmwlth 1997). A similar approach has been prescribed for the construction of rules of procedure. See Pa.R.C.P. 127. In this case, the applicable legislation provides for filing in the county where the corporation is registered "subject to any inconsistent general rule." The current rule, or course, is not inconsistent as it expressly allows the legislature to make exceptions to the stated general rule regarding venue. Read together, the provisions clearly provide that an action can be brought in a county where a corporation regularly conducts business unless the case is of a type where the legislature has set venue elsewhere. As to the matter sub judice, the legislature has provided that actions involving dissolution or the appointment of a receiver or a custodian must be brought in the county where the corporation is registered. This is not surprising. This sort of case gives rise to questions concerning the internal workings of the corporation, including profitability, as well as relationships between shareholders. That these questions would be raised in the forum where the corporation has its registered offices is only logical. The defendant also asks us to take notice of the fact that there is "currently pending in the Court of Common Pleas of York County litigation captioned: Eichelberger Construction Co. Inc. v. Kamand Construction Inc .... The York County lawsuit arose out of the same occurrence as the 4 98-2942 EQUITY case at bar, i.e., the resignation of Messrs. Kadilak and Manna as officers of ECI. The York County lawsuit was filed months before the case at bar. Kadilak and Manna have notified ECI that they intend to file an amended complaint in the York County lawsuit asserting affirmative defenses that include alleged breaches by ECl and its president, William P. Eichelberger, of fiduciary duties owed Kadilak and Manna as well as a claim that ECl, at the direction of Eichelberger, is oppressing their rights as minority shareholders of ECI." (Brief of Defendant at page 4) This assertion has far greater relevance in the context of a forum non conveniens argument. Nonetheless, if true, our transfer of venue will set the stage for consolidation of previously fragmented litigation; clearly an ancillary benefit. ORDER AND NOW, this J> '~ day of December, 1998, the preliminary objection of the defendants to the plaintiffs' amended complaint in the nature of an objection to venue is SUSTAINED. It is directed that this case be transferred to the County of York. The costs and fees for transfer and removal of the record shall be paid by the plaintiffs. BY THE COURT, Kev}~. Hess, J. / 5