Court Opinion

ID: 9698398
Source: CourtListenerOpinion
Date Created: 2023-08-25 19:49:25.506833+00
Date Added: 2024-06-11T18:20:40.685611
License: Public Domain

PRICE, Judge,
concurring:
I agree with the majority that the court erred in denying appellants’ request for an injunction absent a hearing.
First, I would note that appellants’ request for an injunction was brought under a theory that appellees were improperly competing with a business enterprise in which they served as corporate officers and directors. Such a theory of usurpation of a corporate opportunity is founded upon appellees’ fiduciary duties flowing from their corporate positions, see Act of May 5,1933, P.L. 364, art. IV, § 408, as amended, 15 P.S. § 1408 (Supp.1979-80); Lutherland, Inc. v. Dahlen, 357 Pa. 143, 53 A.2d 143 (1947), and a breach of these duties will support an action for injunctive relief.1 Unfortunately, at the November 13, 1978 hearing on the injunction request, the basis for appellants’ suit became obfuscated and the trial court denied the request upon being informed by counsel for both parties that appellees had not signed a written covenant not to compete and had instituted a separate trespass action for conversion of corporate property and tortious interference with the corporate enterprise. The court denied the requested injunction, terminated the hearing without permitting appellants to call any witnesses and ruled that appellants had an adequate remedy at law.
*599A request for a preliminary injunction may be granted after a proper hearing if the plaintiff’s right of recovery is clear, the need for relief is imminent, and the injury that will be suffered if the request is denied is irreparable. See, e. g., Township of South Fayette v. Commonwealth, 477 Pa. 574, 385 A.2d 344 (1978); Safeguard Mutual Ins. Co. v. Williams, 463 Pa. 567, 345 A.2d 664 (1975); Keystone Guild, Inc. v. Pappas, 399 Pa. 46, 159 A.2d 681 (1960). However, if the threatened injury is not imminent or is not permanent and irreparable and the plaintiff has available an adequate remedy at law, then the injunction request will be refused. See, e. g., Credit Alliance Corp. v. Philadelphia Minit-Man Car Wash Corp., 450 Pa. 367, 301 A.2d 816 (1973); Safeguard Mutual Ins. Co. v. Williams, supra.
In the instant case appellants allege a violation by appellees of their fiduciary duties, the inadequacy of a legal remedy, and the suffering of irreparable harm. The determination whether the injunction is needed to prevent irreparable harm and whether appellants have available an adequate legal remedy cannot, in the instant case, be made absent an evidentiary hearing.2 Indeed, in Allegheny County v. Milk Control Commission, 417 Pa. 22, 207 A.2d 838 (1965), the supreme court held that the issue of the adequacy of an available legal remedy is one that should be addressed in an evidentiary hearing. The trial court’s conclusion in that case that such a remedy was available absent such a hearing was held improper, and the case was remanded for reconsideration consistent with the proper procedure. See Commonwealth v. Schall, 6 Pa.Cmwlth. 578, 297 A.2d 190 (1972); cf. Pubusky v. D. M. F. Inc., 428 Pa. 461, 239 A.2d 335 (1968) (injunction vacated when granted pursuant to improper procedure).
*600Instantly, the trial court made a similar determination as to the availability of an adequate remedy at law, without the benefit of an evidentiary hearing, based solely upon the pendency of another action by appellants for conversion and tortious interference with appellants’ business. However, the fact that appellants may have instituted a separate action for monetary damages does not establish that equitable relief is not required. The actions and remedies are not mutually exclusive, and may be brought in conjunction. In fact, a juxtaposition of the two remedies may be beneficial in protecting the legal remedy. Bateman v. Ford Motor Co., 302 F.2d 63 (3d Cir. 1962); Binenstock Trust, 410 Pa. 425, 190 A.2d 288 (1963). Therefore, the mere pendency of an analogous proceeding on the law side of the court does not establish that appellants are not in need of the remedies available in an equity proceeding.
Finally, I feel compelled to comment on the standard of review employed by the majority. I agree with the majority that “appellate review of the refusal to enter a preliminary injunction is limited to determining whether there are any reasonable grounds for the action of the lower court.” (Slip opn. at 3). However, the issue on appeal is not whether the court erred in refusing to enter an injunction, but whether the court erred in refusing to accord appellants an evidentiary hearing on their injunction request. The sparse precedents suggest that the proper standard of review is much less stringent, cf. Allegheny County v. Milk Control Commission, supra; Commonwealth v. Schall, supra, and that a hearing should not be denied if there are any factual disputes. I would conclude that because appellants’ request claimed a breach by appellees of their fiduciary duties, asserted irreparable harm and the absence of an adequate remedy at law, and because these criteria could not be determined absent additional evidence of some form, the trial court erred in not completing its scheduled hearing on appellants’ request.3

. Cf. Render v. Federation Credit Union Local No. 89, 411 Pa. 625, 192 A.2d 679, cert. denied, 375 U.S. 952, 84 S.Ct. 442, 11 L.Ed.2d 312 (1963) (officers enjoined from enforcing policies contrary to statute under which credit union formed); Hagy v. Premier Manufacturing Corp., 404 Pa. 330, 172 A.2d 283 (1961) (injunction to compel corporation to permit shareholder to exercise statutory right to inspect corporate records); Dozor Agency v. Rosenberg, 403 Pa. 237, 169 A.2d 771 (1961) (injunction to restrain former officer from divulging corporate secrets); Weisbecker v. Hosiery Patents, Inc., 356 Pa. 244, 51 A.2d 811 (1947) (majority shareholders may be enjoined from using power to exclude minority shareholders); Carter v. Producers & Refiners Oil Co., 164 Pa. 463, 30 A. 391 (1894) (injunction granted to restrain managers of limited partnership from selling business without consent of all shareholders).

. The conducting of such a hearing would not have proven unduly burdensome in the instant case. The date for such a hearing had been set, and appellants were present and presumably ready to give testimony regarding the relevant issues. It is only when appellees’ counsel made an oral motion to dismiss at the outset of the hearing and the court became enmeshed in the issue as to the existence of a written covenant not to compete that the court dismissed the injunction request without any witnesses being called.

. An additional issue that has not been raised by either party or the trial court is the standing of appellants to present the instant suit in *601their individual capacity. Generally, the usurpation of a corporate opportunity is a wrong against the corporate entity and must be brought by the corporation on its own behalf. A shareholder may bring a derivative action only after a formal request and refusal by corporate management to pursue the suit as a corporate cause of action. An exception exists, however, when such a request would have been a futile gesture as a result of the involvement by corporate management in the wrong committed to the corporate entity. See Evans v. Diamond Alkali Co., 315 Pa. 335, 172 A. 678 (1934); 13 Fletcher Cyc. Corp. § 5945 (1970).
In the instant case, the injunction request was not filed until August 31, 1978, and appellees did not resign as corporate directors until September 6, 1978. Therefore, a request by appellants to the corporation’s directors to authorize the suit probably would have been a futile gesture since appellants and appellees were the only directors. Thus, appellants presentation of the suit in their individual capacities is apparently proper and is within the “futile gesture” exception mentioned above.