Grill v. Aversa

• Decision Date: 08 November 2012
• Docket Number: Civil No. 1:12–CV–00120.
• Court: U.S. District Court — Middle District of Pennsylvania
• Parties: Lewis J. GRILL and Carmela C. Grill, Plaintiffs v. Gregg R. AVERSA and the Sage Corporation, Defendants.

908 F.Supp.2d 573

Lewis J. GRILL and Carmela C. Grill, Plaintiffs
v.
Gregg R. AVERSA and the Sage Corporation, Defendants.

Civil No. 1:12–CV–00120.

United States District Court,
M.D. Pennsylvania.

Nov. 8, 2012.

[908 F.Supp.2d 576]

Eugene Mattioni, Michael Mattioni, Mattioni, Ltd., Philadelphia, PA, for Plaintiffs.

Carol Steinour Young, Dana W. Chilson, James P. DeAngelo, Kimberly A. Selemba, McNees, Wallace & Nurick, Harrisburg, PA, for Defendants.

MEMORANDUM OPINION
MARTIN C. CARLSON, United States Magistrate Judge.
I. INTRODUCTION

“Happy families are all alike; every unhappy family is unhappy in its own way.” Leo Tolstoy, quoted in Orchard v. Covelli, 590 F.Supp. 1548, 1550 (W.D.Pa.1984)aff'd sub nom. Appeal of Orchard, 802 F.2d 448 (3d Cir.1986) and aff'd,802 F.2d 448 (3d Cir.1986).

Three decades ago, Gerald J. Weber, a renowned federal judge in Pennsylvania who was confronted with a familial dispute which erupted in the context of a closely-held family corporation perceptively noted that Tolstoy's philosophical paradigm regarding the nature of unhappy families bore “an alarming similarity in the demise of such [corporate] entities where the survival of a business association is so perilously tied to the continuing vitality of intimate personal relationships. Many lawsuits arising from disputes among shareholders in closely-held corporations are characterized by the parties' inability to separate the business and personal aspects of their relationship.” Id.

Today we are called upon to consider anew the wisdom of Judge Weber, and Tolstoy, as we examine another corporate dispute cast against the backdrop of an “unhappy family [that] is unhappy in its own way.” The protagonists in this lawsuit,

[908 F.Supp.2d 577]

Lewis Grill and Greg Aversa, are brothers-in-law. Grill's sister is Aversa's wife. However, these familial ties are not the only bounds that link Grill and Aversa to one another. Grill and Aversa are also shareholders in Sage Corporation, a closely held family corporation in which Aversa owns a majority interest and Grill is a minority shareholder.

These parties, and relatives, are now embroiled in a lawsuit in which each accuses the other of misappropriation of corporate assets and opportunities, and each contests claims of shareholder oppression. Such claims by parties who share familial ties, sadly, are not new to the law. Quite the contrary: “Frequently, closed corporations originate in the context of relationships personal in nature, often undertaken by family members or friends. It is ironic that these enterprises become a most frequent setting for the exploitation of minority shareholders when the personal relationship has gone sour” Orchard v. Covelli, 590 F.Supp. at 1557 (citations omitted).

Before the Court is Plaintiffs' motion for a preliminary injunction in the form of a Court order requiring Defendants to reinstate the employment of Lewis J. Grill pending the resolution of this lawsuit. Defendants oppose the motion, asserting that Grill's employment was properly terminated in August 2012, during the pendency of this litigation, after it was discovered that Grill was refusing to follow corporate policy and the specific directives of Sage's President; was improperly competing with his former employer by diverting corporate opportunities; and had improperly deposited funds payable to Sage into accounts of other business concerns that Lew Grill controls. The Court held two days of evidentiary hearings on the motion on October 16 and 25, 2012. Upon consideration of the motion, and the evidence that was developed during the hearings, we find that Plaintiffs have failed to sustain their motion for preliminary injunctive relief, and the motion will be denied.

II. PROCEDURAL BACKGROUND

The Sage Corporation is a private company, a closely-held, family-owned corporation that provides education and training to commercial truck drivers. Plaintiff's Lewis J. Grill and Carmela C. Grill, husband and wife, and minority shareholders of the Sage Corporation, commenced this action on January 23, 2012, seeking injunctive relief against Sage and its President and majority shareholder, Gregg R. Aversa. In the original complaint, Plaintiffs claimed that Aversa was mismanaging Sage, engaging in corporate malfeasance, and indulging in shareholder oppression. Plaintiffs accordingly sought equitable relief in the form of a court order requiring Defendants to produce, or permit Plaintiffs, their agents, and representatives, to gain access to corporate records in accordance with Pennsylvania law. (Doc. 1.)

On January 24, 2012, Plaintiffs moved for a preliminary injunction to permit, inter alia, the inspection of Sage's corporate books and records. (Doc. 3.) After being granted an extension of time to respond, Defendants filed a brief opposing the motion on February 17, 2012. (Doc. 14.) On May 30, 2012, the Court held an evidentiary hearing on the motion. Following testimony by Lew Grill and Joseph Barbagallo, a forensic accountant that the Grills retained to examine Sage's corporate, accounting, and financial records, the parties engaged in settlement discussions outside the Court's presence, and ultimately reached an agreement that resulted in the motion for a preliminary injunction being withdrawn.

From this initial dispute the litigation proceeded forward solely as a shareholder disclosure case until September 14, 2012,

[908 F.Supp.2d 578]

when the Grills filed the motion for preliminary injunctive relief that is currently awaiting resolution. (Doc. 38.) In this motion, Lew Grill alleges that he was improperly terminated from his employment with Sage in August of 2012, during the pendency of this litigation. The Grills seeks a court order directing Defendants to reinstate Lew Grill to his employment with Sage pending the resolution of this lawsuit. Grill argues that this equitable relief is warranted under the circumstances of this case, arguing that he is likely to prevail on the merits of the lawsuit; that money damages cannot compensate him for the injuries caused by his termination; that the injunction would not be injurious to other interested parties; and that the requested relief is in the public's interest.

After filing their motion for a preliminary injunction, Plaintiffs also moved for leave to file an amended complaint to include new claims and additional legal and equitable theories of relief. That amended complaint was filed on September 20, 2012 (Doc. 43.), and includes claims for shareholder oppression under Pennsylvania statutory law (Count I); claims for injunctive relief that would permanently prohibit Defendants from terminating the Grills' employment and would require Defendants to cease conducting all business without consulting with and obtaining the consent of the Grills (Count II); claims for breach of fiduciary, loyalty and good-faith duties (Count III); claims that Aversa engaged in legal and equitable fraud by deliberately and materially misleading Plaintiffs as minority shareholders of Sage (Count IV); claims for conversion and unjust enrichment (Counts V and VI); a claim that the Court should impose a constructive trust over all of Sage's assets (Count VII); and a claim for wrongful and retaliatory termination of Lew Grill (Count VIII). In the amended complaint, Plaintiffs seek a range of equitable and legal relief, including compensatory and punitive damages, attorneys' fees, costs and expenses, front and back pay, the reinstatement of Lewis Grill to employment with Sage, “and that he continue to receive his salary as an employee of Sage.” (Doc. 43, at 33.)

It is this last claim for wrongful and retaliatory discharge that forms the primary basis for Plaintiff's motion for preliminary injunctive relief. Defendants filed a brief in opposition to the motion on October 4, 2012, and the Court promptly scheduled an initial hearing on October 16, 2012. At the close of that first day of testimony, the parties advised the Court that they would require at least one additional day of evidentiary presentation and argument. Accordingly, the Court reconvened the hearing on October 25, 2012. At the conclusion of these two days of hearings, the Court took the matter under advisement.

III. FACTUAL BACKGROUND

The following represents a summary of the evidence presented during the two days of hearings held on the motion.

A. Lew Grill is an Established and Recognized Expert Witness.

Lewis J. Grill represents himself as a renowned figure in the truck driving and education industry, who has built a particular niche as an accident reconstruction expert witness in truck driving litigation throughout the United States. In this regard, the proceedings opened with brief testimony by David B. Dowling, Esq., a Harrisburg lawyer who testified that he has retained Lew Grill's services as an expert witness for the plaintiffs in a personal injury action captioned Anh Nguyen, et al. v. McCammon Trucking, Inc., which is currently pending in the Court of Common Pleas of Berks County. (Doc. 56,

[908 F.Supp.2d 579]

Notes of Testimony, at 8) (hereafter “N.T. at ___.”).

Mr. Dowling testified that when he retained Grill's services, he believed he was retaining Grill alone, although he appears to have found Grill through a website maintained by Sage. ( Id. at 9.) Dowling testified that Grill struck him as someone who had experience as a truck driving educator, someone who had experience testifying in court, and who was articulate about truck driving standards of care. ( Id.) Finding this mix of skills and experience made Grill “the ideal expert”, Dowling engaged his services in the Nguyen case. ( Id.)

When Dowling was presented with a series of questions about the potential consequences to his clients if Grill was unable to testify as an expert in the Nguyen case, Dowling offered that his chances of winning the action would be diminished and “impacted significantly”. ( Id. at 10.) Indeed, Dowling represented that given the...