Court Opinion

ID: 4963236
Source: CourtListenerOpinion
Date Created: 2021-09-24 15:25:29.469427+00
Date Added: 2024-06-11T08:15:56.876802
License: Public Domain

DISSENTING OPINION BY
POPOVICH, J.:
¶ 1 I agree with the majority’s conclusion that the injunction binding York-towne and Batesville should be affirmed. However, I write separately to express my belief that the prohibitory and mandatory injunction issued against the individual shareholders should be reversed. Unlike the majority, I find that the individual shareholders’ interference with the distributor agreement was justified and, accordingly, did not establish a claim for intentional interference with contractual relations.
¶ 2 The majority concludes that the review of whether individual shareholders were privileged or justified in interfering with the distributor agreement between York and Yorktowne is not warranted because the appealing party, the shareholders, did not raise this issue in their brief. However, despite the individual shareholders’ failure to address this argument specifically in their brief, I believe the issue is reviewable because our review of a trial court’s order granting or denying preliminary injunctive relief is “highly deferential.” Warehime v. Warehime, 580 Pa. 201, 209, 860 A.2d 41, 46 (2004) (citation omitted). This “highly deferential” standard of review provides that in reviewing the grant or denial 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., at 209, 860 A.2d at 46 (citation omitted). Further, I note that this Court’s scope of review in preliminary injunction matters is plenary. Id., at 209, 860 A.2d at 46 (citing Summit Towne Centre, Inc. v. Shoe Show of Rocky Mount Inc., 573 Pa. 637, 645-46, 828 A.2d 995, 1000 (2003)). With the above principles in mind, I feel that this Court must examine the record to determine if the trial court had reasonable grounds for enjoining the individual shareholders. For this reason, I turn to the elements necessary to establish a cause of action for intentional interference with a contractual relation.
¶ 3 The elements of a cause of action for intentional interference with a contractual relation, whether existing or prospective, are as follows:
(1) the existence of a contractual, or prospective contractual relation between the complainant and a third party;
(2) purposeful action on the part of the defendant, specifically intended to harm the existing relation, or to prevent a prospective relation from occurring;
(3) the absence of privilege or justification on the part of the defendant; and
*1249(4) the occasioning of actual legal damage as a result of the defendant’s conduct.
Reading Radio, Inc. v. Fink, 833 A.2d 199, 211 (Pa.Super.2003) (citation omitted).
¶ 4 I agree with the majority that elements one, two, and four of this cause of action were satisfied. However, I do not find that the third element was satisfied. I note that Pennsylvania requires that a lack of justification be pleaded by the plaintiff.3 Yaindl v. Ingersoll-Rand Co. Standard Pump-Aldrich Div., 281 Pa.Super. 560, 422 A.2d 611, 625 (1980) (citation omitted); see also Iron Age Corp. v. Dvorak, 880 A.2d 657, 662 (Pa.Super.2005) (The burden of proof is on the party who requested the preliminary injunctive relief.). In determining the absence of privilege or justification on the part of the defendant, I consider the following applicable law. Reading Radio, Inc., 833 A.2d at 211 (emphasis added).
¶ 5 It merits mention that this Court in the case of Ruffing v. Lumber Co., 410 Pa.Super. 459, 600 A.2d 545, 549 (1991), appeal denied, 530 Pa. 666, 610 A.2d 46 (1992), provided a common law analysis regarding the question of privilege as it relates to the party accused of interfering with a prospective contract and cited to the following excerpt from comment b to § 767 of the Restatement (Second) of Torts, as germane:
Unlike other intentional torts such as intentional injury to property, or defamation, this branch of tort law has not developed a crystallized set of definite rules as to the existence or non-existence of a privilege to act in the matter stated in §§ 766, 766A, or 766B [relating to interference with contracts]. Because of this fact, this Section [§ 767 Factors in Determining Whether Interference is Improper] is expressed in terms of whether the interference is improper or not, rather than in terms of whether there was a specific privilege to act in the manner specified. The issue in each case is whether the interference is improper or not under the circumstances; [sic] whether, upon a consideration of the relative factors involved, the conduct should be permitted without liability, despite its effect of harm to another.
Ruffing, 600 A.2d at 549 (citation omitted).
¶ 6 Further, the absence of privilege or justification on the part of the defendant is merely another way of stating that the defendant’s conduct must be improper. Cloverleaf Dev., Inc. v. Horizon Financial F.A., 347 Pa.Super. 75, 500 A.2d 163, 168 (1985) (citation and quotation marks omitted). Where a defendant acts at least in part for the purpose of protecting some legitimate interest which conflicts with that of the plaintiff, a line must be drawn and interests must be evaluated. Id., 500 A.2d at 168. This process results in according or denying a privilege which, in turn, determines liability. Id., 500 A.2d at 168 (quotation marks omitted). What is or is not privileged conduct is not susceptible of precise definition. Id., 500 A.2d at 168 *1250(citations and quotation marks omitted). Interferences which are sanctioned by the rules of the game which society has adopted are considered proper. Id., 500 A.2d at 168 (citations and quotation marks omitted).
¶ 7 In determining whether a defendant’s conduct in intentionally interfering with a contract or a prospective contractual relation of another is improper or not, consideration is given to the following factors:
(a) the nature of the actor’s conduct,
(b) the actor’s motive,
(c) the interests of the other with which the actor’s conduct interferes,
(d) the interests sought to be advanced by the actor,
(e) the social interests in protecting the freedom of action of the actor and the contractual interests of the other,
(f) the proximity or remoteness of the actor’s conduct to the interference[,] and
(g) the relations between the parties.
Ruffing, 600 A.2d at 549 (citing § 767 Restatement (Second) of Torts).
¶ 8 Accordingly, I apply the above factors to these circumstances. The nature of the individual shareholders’ conduct was that they intentionally entered into a stock purchase agreement with Batesville that will result in the sale of all shares of Yorktowne to Batesville and, consequently, a change of ownership for Yorktowne. The individual shareholders’ stated motive in entering into this contract was to secure a long term agreement to supply its customers with quality caskets, and to allow Yorktowne customers to have access to quality Batesville products. See Communication Plan for Yorktowne Announcement, 9/14/05, at 9.4 York’s interest was to maintain the existing contractual relationship between itself and Yorktowne so that Yorktowne will continue to be a distributor of York’s products. The interests sought to be advanced by the individual shareholders were the interests of each individual shareholder in addition to the interests of Yorktowne and its maintenance of customer relationships. Specifically, the individual shareholders believed that Bates-ville was better equipped to provide its customers with updated products, and the assurance of a long term agreement. Further, in contracting with Batesville, York-towne would not face competition in selling products in their territory unlike their current contractual relationship in which they must compete with Milso.5 As I discuss further infra, absent a restrictive provision to the contrary, an individual shareholder’s rights to alienate their stock are to be enforced by the courts. Seven Springs Farm v. Croker, 569 Pa. 202, 210, 801 A.2d 1212, 1217 (2002). Additionally, this Court has an interest in construing a contract to give effect to the intention of the parties, i.e., the intention of York to retain York-*1251towne as its distributor of caskets as per the 2005 distributor agreement. See Sanders v. Allegheny Hosp.-Parkview Div., 833 A.2d 179, 182 (Pa.Super.2003) (citation omitted). The individual shareholders’ actions in entering into a contract with Batesville would directly and proximately relate to the loss of business relations between York and Yorktowne. Finally, the relationship between the parties was that the individual shareholders own ninety-nine percent of the stock in York-towne and that Yorktowne was contractually bound to York by the 2005 distributor agreement.
¶ 9 After my consideration of the above factors, I would conclude that the third element necessary to establish a cause of action for intentional interference with a contractual relation, the absence of privilege or justification on the part of the defendant, was not satisfied. Reading Radio, Inc., 833 A.2d at 211 (emphasis added). I believe that the individual shareholders did not breach the 2005 distributor agreement by entering into the stock purchase agreement with Batesville because, as was determined previously, the individual shareholders were not a signatory to this agreement. Although section 1.2(b) of the 2005 distributor agreement states that “Distributor, its shareholders and all of its employees shall not during the Term of this Agreement, either directly or indirectly, (i) order, sell distribute or market products of the same style or functionality ..I find that this section was not breached by the individual shareholders. This is because the individual shareholders were to sell their shares to Batesville, and Batesville has agreed to be bound by the 2005 distributor agreement during the time period that it begins to market its own products. Accordingly, it is my conclusion that this provision had not been violated by the individual shareholders because they would not be the “shareholders” who will “order, sell distribute or market products of the same style or functionality ...,” after the sale of their stock to Batesville.
¶ 10 Further, despite the numerous letters and press releases signed by the individual shareholders informing customers and the public of the anticipated sale of Yorktowne stock to Batesville, I find no evidence in the record to demonstrate that the individual shareholders have engaged in an actual order, sale, distribution, or marketing of Batesville’s products to York-towne’s customers. The individual shareholders maintained that they intended to honor the 2005 distributor agreement upon the consummation of the transaction with Batesville. In fact, section 6.2 (Exclusivity) of the stock purchase agreement among Batesville and the individual shareholders required exclusivity to Batesville, “except for any actions taken pursuant to or under a Distributor Agreement between [Yorktowne] and York dated April 15, 2005.... ” See Stock purchase agreement, 9/21/05, at 27. Additionally, Mr. Elicker testified that Yorktowne had not purchased one casket from Batesville, and, in fact, had placed an order for 2,000 more caskets from York. See N.T. 10/26/05, at 161. Mr. Elicker testified that “[the individual shareholders] are fulfilling [their] obligations of the Distributor Agreement and intend to [continue to] do so.” Id., at 161.
¶ 11 Further, regarding the confidentiality clause contained in section 8.2, Mr. Crispo testified that he intended to share Yorktowne’s business information with Batesville if the transaction was consummated. See N.T. 10/25/05, at 159. Section 8.2 provided that “[b]oth parties shall use commercially reasonable efforts to keep confidential all information concerning customers, trade secrets, methods, processes or procedures and any other confidential, financial and business information *1252(the “Confidential Information ”) of the other party with the same standard of care as it uses for its own Confidential Information.” See 2005 distributor agreement, section 8.2 (emphasis added). Section 8.2 did not prohibit the dissemination of York-towne’s confidential information that the individual shareholders intended to share with Batesville if the transaction was consummated.
¶ 12 Additionally, my review of the 2005 distributor agreement reveals that it contained no provision restricting the individual shareholders’ ability to alienate their stock freely. In fact, sections 3.2 (Changes in Ownership) and 3.3 (Right of First Refusal) set forth a specific course of action if change in ownership is either contemplated or achieved.6 Further, as noted above, Pennsylvania law characterizes alienation as an inherent attribute of corporate stock, and in the absence of a particular restriction, no intent to impose such a restriction will be inferred. Seven Springs Farm, at 210, 801 A.2d at 1217. As the individual shareholders did not violate any law or breach the 2005 distributor agreement by entering into the stock purchase agreement with Batesville, I would find that their actions in alienating their stock were not improper as the individual shareholders acted, at least in part, for the purpose of protecting their legitimate interest in the alienability of their stock. As noted above, I find no provision in the 2005 distributor agreement that restrains the individual shareholders from alienating their stock and, in fact, section 3.2 and 3.3 provide options for York in the event of a transfer of ownership. Although this action conflicts with the interests of York, I find the individual shareholders’ actions to be justified based upon the evaluation of the factors enumerated in § 767 Restatement (Second) of Torts. See Hillis Adjustment Agency, Inc. v. Graham Co., 911 A.2d 1008, 1013 (Pa.Super.2006). Therefore, I would find no cause of action exists for intentional interference with a contractual relation because I believe the third element had not been satisfied, and, consequently, I would reverse the grant of preliminary injunctive relief against the individual shareholders. Reading Radio, Inc., 833 A.2d at 211.
¶ 13 Accordingly, I respectfully dissent.

. In its initial complaint, York baldly asserts that ”[t]here is no privilege or justification for [the individual shareholders’] purposeful and wrongful conduct under these circumstances.” See York’s complaint, 10/11/05, at 17. However, York failed to back up its assertion with any relevant facts. Additionally, York has failed to argue the absence of privilege or justification to this Court on appeal. See CGB Occupational Therapy v. RHA Health Servs., 357 F.3d 375 (3d Cir.2004) ([I]n order to make out a claim of tortious interference with contractual relations, a plaintiff must show “the absence of privilege or justification on the part of the defendant”) (citation omitted). Despite York's bald assertion, I address this element due to our "highly deferential” standard of review that directs us to examine the record to determine if there were any apparently reasonable grounds for the enjoining of the individual shareholders. Warehime, at 209, 860 A.2d at 46.

. This proposed document reads, in pertinent part, as follows:
Q: Why is (Batesville’s acquisition of Yorktowne’s stock] happening? A: York-towne initiated discussions with Batesville in an effort to secure a long-term agreement to supply its customers with quality caskets— this is something we could not get from our current casket supplier. Recent actions by York accelerated these discussions — specifically their acquisition of Milso and the canceling of our YMS seminars. Very quickly, these supply agreement conversations turned to a discussion on a possible acquisition. This acquisition will allow Yorktowne customers to have access to quality Batesville products, innovative personalization features and a comprehensive cremation product line.

. In addition to its contract with Yorktowne, York also acquired the assets of Milso, one of Yorktowne's primary competitors. As a result of this acquisition, Yorktowne was forced to compete with Milso in the same distribution territories.

. I note that section 3.2 gave York the option of terminating the 2005 distributor agreement immediately without penalty if it was disinterested in, opposed to, or incapable of pursuing a professional relationship with Batesville. Additionally, section 3.3 gave York the option of purchasing the individual shareholders’ stock under the terms of shareholders' agreement with Batesville. York declined to exercise either one of the options provided for in the 2005 distributor agreement.