Opinion
J-A29043-15 No. 2040 WDA 2014
12-23-2015
ROBERT MANNING, Appellee v. WILLIAM KELLY, PAMELA KELLY, KELLYCARS, INC., NATIONAL BUSINESS BROKERS, INC., GPB HOLDING AUTOMOTIVE, LLC, GPB HOLDING LP, GPB AUTOMOTIVE MANAGEMENT, LLC, GPB CAPITAL HOLDINGS, LLC, AND LASH AUTO GROUP, LLC, APPEAL OF: WILLIAM KELLY, PAMELA KELLY AND KELLYCARS, INC. Appellants
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
Appeal from the Order December 8, 2014 in the Court of Common Pleas of Allegheny County, Civil Division, No. GD 14-010482 BEFORE: FORD ELLIOTT, P.J.E., BOWES and MUSMANNO, JJ. MEMORANDUM BY MUSMANNO, J.:
In this breach of contract dispute, William Kelly ("Kelly"), Pamela Kelly (collectively, "the Kellys"), and KellyCars, Inc. ("KellyCars") (collectively, "the Defendants") appeal from the Order granting the Motion for a preliminary injunction filed by Robert Manning ("Manning"). We affirm.
The trial court thoroughly set forth the relevant factual and procedural history underlying this appeal in its Pa.R.A.P. 1925(a) Opinion. See Trial Court Opinion, 5/27/15, at 1, 4-10. We adopt and incorporate the court's recitation herein by reference. See id.
Following hearings on Manning's Motion and Amended Motion for a preliminary injunction, the trial court entered an Order on December 8, 2014, granting preliminary injunctive relief. The Order states, inter alia, as follows:
Manning [] is currently suffering, and will continue to suffer, immediate and irreparable injury, not otherwise compensable by monetary damages[. A]s a result of [the] Defendants['] ... violation of the Restrictive Share Agreement ("RSA"), and the [] Defendants['] refusal to recognize Manning as a shareholder, injunctive relief is necessary to return the parties to the status quo as it existed at the time of the [] Defendants' breach of the RSA on November 20, 2013[,] and to prevent Manning from suffering immediate, substantial and irreparable injury, including the loss of his right to acquire the outstanding shares of KellyCars [hereinafter "the Kelly shares"] ...; the loss of his ownership interest in KellyCars []; and further oppression through the attempted freeze out by the [] Defendants.Order, 12/8/14, at 1-2 (unnumbered). Concerning the grant of injunctive relief, the Order provided the following, in relevant part:
1. The [] Defendants shall immediately cease and desist from all efforts and actions to convert the ownership of Manning's 125 shares of KellyCars [] from Manning to the [] Defendants.
2. The [] Defendants shall [continue] to recognize Manning as an owner of 125 shares of KellyCars [] stock and shall immediately provide Manning with accounting reports, information and records, including balance statements and profit and loss statements.
3. The [] Defendant[s] shall immediately cease all efforts to sell the Kelly shares.
4. The [] Defendants shall immediately cease all efforts to sell the assets of KellyCars [].
5. The [] Defendants shall immediately comply with the procedure detailed in Section 2.3 of the RSA, which
provides Manning with the opportunity to purchase the Kelly shares[,] and ... [t]he [] Defendants shall order an appraisal of KellyCars[] ....Id. at 2-3, ¶¶ 1-5 (unnumbered).
The Defendants filed a timely Notice of Appeal. In response, the trial court ordered the Defendants to file a Pa.R.A.P. 1925(b) concise statement of errors complained of on appeal. The Defendants timely filed a Concise Statement, which raised sixteen separate issues on appeal. The trial court then issued a Pa.R.A.P. 1925(a) Opinion.
We have jurisdiction over this appeal by virtue of Pa.R.A.P. 311(a)(4), which provides that a party aggrieved by an order granting a preliminary injunction may appeal the order as of right.
On appeal, the Defendants present the following issues for our review:
1. Did the trial court err when it found that [the] Defendants ... violated the ... []RSA[] by failing to provide ... Manning [] with (1) written notice of [Kelly's] intention to sell the Kelly[] shares; (2) an appraisal; and (3) an opportunity to purchase the Kelly[] shares, when credible record evidence indicates otherwise, and when Manning made multiple judicial admissions that he received written notice of Kelly's intention to sell [the Kelly] shares[,] and that Kelly had the option to provide [Manning] with a per[-]share value of KellyCars [], in lieu of an appraisal?
2. Was any alleged breach of Section 2.3 of the RSA by the [] Defendants a material breach as a matter of law[,] when Manning was given all of the financial information necessary to ascertain the per[-]share value of [KellyCars,] and multiple opportunities to purchase the Kelly[] shares before Kelly attempted to sell [the Kelly] shares to a third party, after having given Manning written notice of his intention to do so?
3. Did Manning waive his rights pursuant to Section 2.3 of the RSA by (1) failing to ever request an appraisal; (2)
consenting to Kelly's efforts to sell [the Kelly] shares to the Lash Automotive Group, LLC[,] and GPB Capital Holdings, LLC ("Lash/GPB"); and (3) voluntarily participating in negotiations with Lash/GPB about the terms of his continued employment and retention of his equity interest in [KellyCars]?Brief for Appellants at 4-6 (footnote omitted).
4. Did Manning waive his rights to assert that the [] Defendants' failure to obtain an appraisal upon receipt of the Lash/GPB November 20, 2013 offer to purchase the Kelly[] shares constituted a material breach of the RSA[,] given his continued performance and acceptance of the benefits under the RSA through June 2014?
5. Does the doctrine of estoppel preclude Manning from claiming breach of the RSA?
6. Did Manning demonstrate that greater injury would result from refusing the mandatory injunctive relief than from granting it?
7. Should Manning have been required to post a sufficient injunction bond to cover the difference in the value of Kelly's 75% ownership interest in [KellyCars] as of November 2013[,] and the date of the actual sale of the Kelly[] shares to Manning that is contemplated in paragraph 5 of the appealed Order[,] based upon the uncontroverted evidence of record?
Our scope of review in preliminary injunction matters is plenary. Warehime v. Warehime , 860 A.2d 41, 46 n.7 (Pa. 2004). Our standard of review of a trial court's order granting preliminary injunctive relief is "highly deferential." Id. at 46 (citation omitted). "This highly deferential standard of review states that in reviewing the grant ... of a preliminary injunction, an appellate court is directed to examine the record to determine if there were any apparently reasonable grounds for the action of the court below." Id. (citation, footnote, and internal quotation marks omitted). In order to obtain preliminary injunctive relief, the party must establish all of the following "essential prerequisites":
1) that the injunction is necessary to prevent immediate and irreparable harm that cannot be adequately compensated by damages; 2) that greater injury would result from refusing an injunction than from granting it, and, concomitantly, that issuance of an injunction will not substantially harm other interested parties in the proceedings; 3) that a preliminary injunction will properly restore the parties to their status as it existed immediately prior to the alleged wrongful conduct; 4) that the activity it seeks to restrain is actionable, that its right to relief is clear, and that the wrong is manifest, or, in other words, must show that it is likely to prevail on the merits; 5) that the injunction it seeks is reasonably suited to abate the offending activity; and, 6) that a preliminary injunction will not adversely affect the public interest.Id. at 46-47 (citation and quotation marks omitted). The burden of proof is on the party requesting the preliminary injunctive relief. Id. at 47.
An injunction can be either preventative or mandatory in nature. Overland Enter., Inc. v. Gladstone Partners , LP , 950 A.2d 1015, 1019 (Pa. Super. 2008). "While the purpose of all injunctions is to preserve the status quo, pr[eventative] injunctions do this by forbidding an act or acts[,] while mandatory injunctions command the performance of some specific act that will maintain the relationship between the parties." Ambrogi v. Reber , 932 A.2d 969, 974 (Pa. Super. 2007). Mandatory injunctions are subject to "greater scrutiny," and must be issued "more sparingly" than preventative injunctions. Overland Enter., Inc., 950 A.2d at 1019 (quoting Mazzie v. Commonwealth , 432 A.2d 985, 988 (Pa. 1981) (stating that "in reviewing the grant of a mandatory injunction, we have insisted that a clear right to relief in the plaintiff be established.")).
In the instant case, the trial court's Order granted Manning both preventative and mandatory preliminary injunctive relief. See Order, supra , 12/8/14, at 2-3, ¶¶ 1-5 (unnumbered). Accordingly, to the extent that the Defendants challenge the mandatory injunctive relief awarded, we will review such challenge under the stricter, "clear right to relief" standard. See Mazzie , supra.
We will address the Defendants' first six issues simultaneously, as they are related. In their first issue, the Defendants argue that the trial court erred in determining that Kelly had breached the RSA by failing to give Manning written notice of Kelly's intent to sell the Kelly shares, an appraisal, and an opportunity to purchase the Kelly shares. See Brief for Appellants at 26-27, 32-41. According to the Defendants, "Manning was advised of, and effectively consented to, Kelly's listing for sale of [the Kellys'] interest in [KellyCars], a step Kelly took only after Manning was unable to put together a market-value offer for [the] Kelly[] shares." Id. at 26 (emphasis in original); see also id. at 32-33 (asserting that Kelly's forwarding to Manning a "Listing Agreement" that Kelly had executed in September 2013, concerning the proposed sale of KellyCars to Lash/GPB, constituted written notice of Kelly's intent to sell the Kelly shares under the RSA). The Defendants further contend that Kelly complied with Section 2.3 of the RSA when he gave Manning a per-share value of KellyCars (i.e., via Kelly's discussions with Manning and the provision to Manning of KellyCars financial statements) in lieu of an appraisal. See id. at 33-37; see also id. at 36 (asserting that "the RSA provided Kelly with the option - not the requirement - of an appraisal."). The Defendants additionally challenge the trial court's failure to acknowledge that they had provided Manning with multiple opportunities to purchase the Kelly shares, but Manning was unable to complete the transaction. See id. at 37-39; see also id. at 45 (asserting that "[i]t is undisputed that Kelly and Manning engaged in a number of discussions about the value of [KellyCars]."); id. at 39-40 (describing instances wherein Kelly allegedly disclosed financial information concerning KellyCars to Manning and "potential backers" that Manning was coordinating with in attempts to purchase the Kelly shares).
The Defendants concede that they never provided Manning with an appraisal. See Brief for Appellants at 37.
In their second issue, the Defendants assert that
[e]ven if it could be found that Kelly breached the RSA by failing to give Manning an appraisal, such breach could not possibly be deemed "material." The sole reason for an appraisal was to give Manning a sufficient understanding of the per[-]share value of the Kelly[] shares so that he could fashion an appropriate offer. Kelly, in fact, provided Manning with all of the financial data necessary to ascertain per[-]share value.Id. at 44-45; see also id. at 44-49 (arguing, at length, that any alleged breaches by Kelly were not "material"); see also Reply Brief for Appellants at 20 (asserting that "Kelly did not 'reject' any offer from Manning [to purchase the Kelly shares], as he now alleges, with the exception of the June 2013 lowball offer. Rather, Manning could not amass the financing to present a subsequent offer[,] much less an offer that matched the per[-]share value.").
In their third and fourth issues, the Defendants assert that Manning, by his actions, waived his rights to written notice and an appraisal under the RSA. See Brief for Appellants at 49-50; see also id. at 51-52 (setting forth, at length, Manning's actions that allegedly "overwhelmingly demonstrate[d] that Manning waived his rights under Section 2.3 of the RSA," including, inter alia, that Manning had offered to purchase KellyCars without an appraisal, and participated in negotiations to sell KellyCars to Lash/GPB); see also Reply Brief for Appellants at 22 (asserting that Manning's "failure to [previously] invoke the Section 2.3 rights he now asserts ...[,] despite the numerous opportunities to do so[,] clearly shows that Manning waived his rights under that provision.") (footnote omitted). Additionally, the Defendants argue that "Manning [] waived any right to assert a November 2013 violation of Section 2.3 of the RSA because he continued to behave as though the RSA was in effect for the remainder of 2013[,] and until mid-June 2014, when he finally filed this lawsuit." Brief for Appellants at 56; see also id. at 57 (stating that "Manning took no action to address Kelly's purported breach of Section 2.3 of the RSA[, in November 2013,] for seven months. During this time, Manning continued to accept the benefits of the RSA[,]" i.e., he still received tax distributions (emphasis omitted)).
In their fifth issue, the Defendants argue that the trial court erred in failing to rule that Manning was equitably estopped, by means of his conduct, from asserting a claim for the Defendants' alleged breach of the RSA. Id. at 58; see also id. at 59-61 (setting forth, at length, Manning's conduct upon which Kelly purportedly relied, to his detriment); see also Reply Brief for Appellants at 29 (asserting that "the specific contractual breach that Manning alleges here ... would not have occurred had Manning not consented to it, or otherwise invoked the rights he now claims.") (emphasis omitted).
Finally, the Defendants argue that the trial court erred in determining that the injury to Manning, in the absence of injunctive relief, is greater than the harm to the Defendants, since (1) after Manning's departure from KellyCars in March 2014, KellyCars' profits "dramatically improved"; and (2) "[t]hus, if the [] Defendants are compelled to offer the Kelly shares to Manning at November 2013 values, Manning stands to purchase the Kelly shares at a deep discount, thereby costing Kelly the true current value of [the Kelly] shares." Brief for Appellants at 62.
In its Pa.R.A.P. 1925(a) Opinion, the trial court concisely addressed the Defendants' above-mentioned claims, discussed the relevant law and all of the "essential prerequisites" for the granting of an injunction set forth in Warehime , supra , and concluded that (1) the Defendants had committed a material breach of the terms of the RSA; (2) Manning did not waive his rights under the RSA, nor should he be estopped from claiming breach of contract; and (3) Manning met all of the prerequisites to entitle him to injunctive relief. See Trial Court Opinion, 5/27/15, at 11-16. Our review discloses that the trial court's sound analysis is supported by the record and the law, and we discern no error of law or abuse of discretion by the trial court in granting preventative and mandatory preliminary injunctive relief. Accordingly, we affirm based on the trial court's rationale concerning the Defendants' first six issues. See id.
To the extent that the trial court granted mandatory injunctive relief, we conclude that Manning established a "clear right" to such relief at the trial court level. See Mazzie , supra.
As an addendum, we observe that, in multiple portions of their Argument, the Defendants challenge the trial court's credibility findings. See , e.g., Brief for Appellants at 38, 39 n.3, 40, 52, 53. This Court, however, may not disturb the fact-finder's credibility determinations. See Gillingham v. Consol Energy , Inc., 51 A.3d 841, 861 (Pa. Super. 2012) (observing that the fact-finder is free to believe all, part, or none of the evidence and to determine the credibility of the witnesses). Moreover, to the extent that the Defendants allege that they gave written notice to Manning of Kelly's intent to sell the Kelly shares by means of the September 2013 "Listing Agreement," this claim is waived because the Defendants never raised it in the trial court. See Pa.R.A.P. 302(a) (stating that a claim cannot be raised for the first time on appeal). Nevertheless, even if this claim was not waived, we determine that it lacked merit as being unsupported by the record and the language of the RSA.
In their final issue, the Defendants challenge the trial court's failure to require Manning to post a bond in connection with the preliminary injunction. See Brief for Appellants at 6, 62-63. However, this issue is moot in light of the trial court's foregoing analysis in its Opinion: "[the] Defendants are correct in their position that a bond is required. Therefore, with the issuance of this [O]pinion[, the trial court is] also issuing an order scheduling a hearing on an appropriate bond in this case." Trial Court Opinion, 5/27/15, at 16.
Moreover, the Defendants state in their Reply Brief that the trial court subsequently entered an Order imposing an injunction bond, and that they intend to appeal the Order, believing the amount of the bond imposed to be inadequate. See Reply Brief for Appellants at 30. Accordingly, this issue is not properly before us at this time.
Order affirmed. Judgment Entered. /s/_________
Joseph D. Seletyn, Esq.
Prothonotary Date: 12/23/2015
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