Court Opinion

ID: 9651619
Source: CourtListenerOpinion
Date Created: 2023-08-23 16:29:06.1879+00
Date Added: 2024-06-11T18:12:36.786001
License: Public Domain

POPOVICH, Judge,
dissenting statement:
When reviewing an appeal from a trial court’s determination of the value of a corporation under § 515 of the Business Corporations Law, 15 Pa.S.A. § 515, our scope of review encompasses only an ascertainment of whether the findings of the trial court are supported by competent evidence. We do not review the credibility of facts. Appeal of O’Connor, 444 Pa. 206, 208, 283 A.2d 279, 280 (1971). See also O'Connor Appeal, 304 A.2d 694. Upon review, I would find that the trial judge based his decision upon credible evidence and did not abuse his discretion in deciding not to consider the market value of the company’s stock as a valuation factor under the circumstances of this case. See In re Spang Industries, Inc., 369 Pa.Super. 133, 535 A.2d 86 (1987) (trial court was within its discretion when it excluded book value as an unreliable indicator of corporate value).
As the majority points out, “market value is to be entirely disregarded where there is competent and substantial evidence to support the conclusion that the value at which the stock is trading is not at all reliable in gauging the stock’s intrinsic going concern value.” Majority Opinion at 135. See In re Jones & Laughlin Steel Corp., 328 Pa.Super. 442, 477 A.2d 527 (1984); In the Matter of Endicott Johnson Corp. v. Bade, 37 N.Y.2d 585, 376 N.Y.S.2d 103, 338 N.E.2d 614 (1975); O'Connor Appeal, 452 Pa. 287, 292 n. 6, 304 A.2d 694, 698 n. 6 (1973). Instantly, the court observed that *213the controlling group held 50-60% of the corporation’s stock, the stock was thinly traded, albeit publicly, and the stock buy-out offer of $20.00 per share was considerably higher than the $14.00 per share market value. Based upon those facts, the trial court determined that the market value of the corporation “did not reflect its true value.” Trial Court Opinion at 3. As stated in Spang Industries, 535 A.2d at 91, “[t]he trial court may reject any factor which he believes to be unreliable.” Thus, I am convinced the trial court sub judice acted well within its discretionary powers.
Presently, the trial court was not the only participant who rejected market value as an accurate indicator of corporate worth. The appellants’ buy-out offer of $20.00 per share for a stock which the market valued at $14.00 per share was, in fact, a potent acknowledgment by the appellants that the trial court was correct in evaluating market value as unreliable. I am unable to find any abuse of discretion in the court’s decision when the appellants freely admit that the market grossly undervalued the corporation’s stock. Therefor, I must dissent from that portion of the majority’s decision which remands the case with instructions “to include market value in its valuation considerations to a degree consistent with this opinion.” Majority Opinion at 192.