Opinion ID: 6260603
Heading Depth: 2
Heading Rank: 4

Heading: The Trial Court’s Order of February 3, 1970

Text: Subsequent to this Court’s decision in Bata II, appellee filed a motion entitled “Petition for Further Enforcement of the Final Decree of October 18, 1965.” In this petition appellee described a series of breaches of the comprehensive settlement agreement which appellant had committed subsequent to September 9, 1965, the date that the trial court entered the adjudication which was the basis of its Final Decree. These breaches were the result of appellant’s disregard of his agreements concerning the control and operation of BataBest. These agreements were specifically contained in the document dated March 14,1962, which was included as a part of the comprehensive settlement agreement, 8 and appellee requested that appellant be enjoined from continuing these breaches. First, appellee described how beginning on October 4, 1965, appellant, acting through his Swiss counsel, made extensive efforts to reopen certain litigation which had been conducted in the Swiss courts and had been concluded prior to the settlement agreement. 9 In this litigation appellant had sought to establish that a mandate or control relationship existed between himself and a Swiss partnership which through its control of Leader A. G-. controlled the majority interest in BataBest. The Swiss courts denied appellant’s claim and instead held that the Swiss partnership was to act in accordance with the instructions of appellee. By his efforts to reopen the Swiss litigation, appellant contravened his express waiver in the settlement agreement of “any and all interest” in the Swiss partnership. In addition since the purpose of appellant’s attempts to reopen the Swiss litigation was to secure control of Bata-Best, 10 appellant was also violating his undertaking in Article VII of the March 14, 1962, document not to “commence . . . any laivsuit concerning any affairs of Bata-Best,” and his recognition in Article IV of that same document that he owned only 45% of Bata-Best. 11 Appellee’s petition for further enforcement also described how appellant, acting through his counsel in the Netherlands; asserted in a series of letters commencing on October 5, 1965, that the comprehensive settlement agreement was invalid and that he was the rightful OAvner of 100% of the shares of Bata-Best. These claims were also in direct contradiction of appellant’s stipulation in Article IV of the March 14, 1962, agreement, that he owned only 45% of the BataBest shares. Finally, appellee’s petition for further enforcement described appellant’s vote at the November 29, 1968, general meeting of the shareholders of Bata-Best against the capitalization of the earned surplus of BataBest. Appellant held 45% of the shares of Bata-Best, and under the bylaws of that company an increase in the authorized capital could only be effected by a two-thirds vote of the outstanding shares. Appellant’s vote was in direct violation of his undertaking in Article IV of the March 14, 1962, agreement to cooperate in effectuating the capitalization of the earned surplus of BataBest. On June 25 through June 27, 1969, the trial court held hearings to receive evidence with respect to appellee’s petition for further enforcement. At these same hearings the trial court also received evidence in support of an application for the assessment of damages which appellee had filed. In this application, appellee specified the injuries which he had suffered as a result of appellant’s breaches of the settlement agreement and his contempt of the Final Decree. On February 3, 1970, the trial court issued the decree which is the subject of appellant’s appeal at No. 491 January Term, 1970. This decree had three main aspects. First, the decree dismissed appellee’s petition for further enforcement. The court noted: “This court has heard enough testimony to be convinced that this defendant has no genuine intention of ever terminating litigation with the plaintiff in one forum or another in all the courts of the world, and probably never had any such intention even at the moment of executing the March 1962 agreement designed for that purpose. At the very most, what can be conceded the defendant Bata is a willingness to end the contest only at some point in the distant future when plaintiff delivers up some mythical number of millions in money or property, until which time any solemn agreement or any court’s decree is but a way station, or one lost battle to be disregarded as a momentary check, on the path toward final and victorious confrontation .... “... With the most extreme reluctance, nevertheless, the court is compelled to conclude that the present proceeding cannot be permitted the scope sought for by the plaintiff.” In dismissing appellee’s petition for further enforcement the trial court found that appellee’s original complaint had alleged only two specific breaches of the 1962 settlement agreement—failure to cooperate in terminating the English litigation and failure to cooperate in registering the Bata-Best shares. However, the court found, appellee’s petition for further enforcement alleged additional breaches—revival of the Swiss litigation, claims to ownership of 100% of Bata-Best, and failure to cooperate to capitalize the Bata-Best surplus. Since the original complaint “in neither pleadings nor prayer, had been framed to include those [additional] alleged wrongful acts of defendant Bata within its scope,” 12 the trial court concluded that appellee’s request for further enforcement could not be granted. The second aspect of the trial court’s February 3, 1970, decree was its remission of $200,000 of the $250,-000 in fines for civil contempt that it had imposed upon appellant. The court noted: “The testimony is quite clear and convincing that defendant did nothing to bring about termination of the litigation in England, but that he did at length cooperate in effecting registration of the bearer shares of the Dutch Bata company. The court is informed that the effective date of such registration was November 9, 1968. Defendant Bata, on this showing, has complied with a half-portion of the court’s order, and has ignored the remainder. The termination of the English litigation was effected by plaintiff alone in an extremely roundabout and burdensome fashion. The fine imposed upon defendant Bata is remitted to the extent of $200,000; the remaining portion of the fine stands.” The court directed Central-Penn to pay the unremitted fine of $50,000 from the escrow to the Commonwealth of Pennsylvania. The third and final aspect of the trial court’s February 8,1970, decree was its award to appellee of $260,-361.85 in compensatory damages. These damages were awarded to compensate appellee for the injuries he suffered between April 17, 1967 (the date that the United States Supreme Court denied certiorari to review this Court’s decision in Bata I affirming the Final Decree), and June 25, 1969 (the date of the hearings on appellee’s application for the assessment of damages), as a result of appellant’s failure, in direct contempt of the Final Decree, to cooperate in terminating the English litigation and in registering the Bata-Best shares. These damages were based upon the following expenses and losses incurred by appellee and established at the June 25 to 27, 1969, hearings: (1) $202,950.26 for services of New York and Philadelphia counsel for enforcement of the Final Decree; (2) $47,818.55 for services of English counsel for termination of the English litigation without defendant’s cooperation; (3) $9,598.04 in interest on cash dividends wrongfully kept from appellee by the English litigation. The court directed Central-Penn to pay the $260,361.85 in damages to appellee from the escrow. E. Appellee’s Motion To Amend His Pleadings and the Trial Court’s Supplementary Decree of October 5, 1971 In light of the trial court’s decree of February 3, 1970, appellee sought permission to amend his complaint. On March 12, 1970, after a hearing, appellee’s motion to amend was granted. Appellee amended his complaint to include specific allegations of the three additional breaches of the settlement agreement—revival of the Swiss litigation, claims to ownership of 100% of Bata-Best, and failure to capitalize the BataBest surplus—which the trial court had felt unable to remedy on the state of the original pleadings. After appellee had filed his amended pleadings, and in fact after appellant had filed an answer with new matter and a counterclaim to appellee’s amended complaint and appellee had replied, appellant appealed to this Court from the trial court’s February 3, 1970, decree. On January 26, 1971, this Court issued an order retaining the appeal but remanding the case to the trial court for an expeditious decision of “all . . . pending issues which had not been disposed of by agreement of the parties or by the lower Court.” In obedience to this Court’s order the trial court held a hearing to receive additional testimony in relation to appellee’s motion for summary judgment on the amended complaint. This motion had been filed by appellee on May 26, 1970, during the time that appellant’s appeal from the trial court’s order of February 3, 1970, was pending in this Court. On October 5, 1971, the trial court issued the supplementary decree which is the subject of appellant’s appeal at No. 135 January Term, 1972. This decree granted appellee’s motion for summary judgment on his amended complaint and ordered appellant to refrain from attempting to reopen the Swiss litigation, to refrain from making any claims to ownership of 100% of Bata-Best, and to procure the vote of his 45% holding in Bata-Best in favor of the capitalization of that company’s surplus. The supplementary decree also ordered appellant to refrain from asserting the invalidity of the comprehensive settlement agreement in any action in any court of any nation. In addition, the trial court’s October 5, 1971, decree awarded appellee an additional $507,954.86 in damages. The court held: “As the direct result of the defendant Bata’s advancing such claims, instituting or reviving litigation, and failure or refusal to perform the terms of the March 27, 1962 comprehensive settlement agreement, plaintiff has been caused to suffer damages, including counsel fees, costs and disbursements, in the amount of $507,954.86.” These damages consisted specifically of the following expenses incurred by appellee: (1) fees and disbursements of New York and Philadelphia counsel from January 1, 1963, to April 17, 1967 ($283,737.85)—these fees and disbursements were necessitated by (a) appellee’s efforts, from January 1, 1963, to April 37, 1967, to remedy appellant’s refusal, in violation of the settlement agreement, to cooperate in terminating the English litigation and in registering the Bata-Best shares, and (b) appellee’s efforts, from October 1965 to April 17, 1967, to remedy appellant’s attempts to revise the Swiss litigation, claims to 100% ownership of Bata-Best, and refusal to cooperate in capitalization of the Bata-Best surplus; (2) fees for Swiss counsel from October 1965 to December 1968 to defend against appellant’s attempts, in violation of the settlement agreement, to reopen the Swiss litigation ($134,567.57) ; and (3) fees and disbursements of New York and Philadelphia counsel from June 25, 1969, to May 18, 1971, to remedy appellant’s attempts to reopen the Swiss litigation, claims to ownership of 100% of Bata-Best, and refusal to capitalize the Bata-Best surplus, all in violation of the comprehensive settlement agreement ($89,649.44). Appellant’s appeal from this October 5, 1971, decree of the trial court was consolidated with his earlier appeal from the February 3, 1970, decree of the trial court.