Grill v. Gregg R. Aversa & the Sage Corp.

Decision Date18 September 2014
Docket NumberCivil No. 1:12-CV-120
CourtU.S. District Court — Middle District of Pennsylvania

(Magistrate Judge Carlson)

I. Statement of Facts and of The Case

This corporate minority shareholder lawsuit, which arises in the context of a toxic, tragic intra-family dispute, has previously caused us to reflect upon the wisdom of Tolstoy's observation that "Happy families are all alike; every unhappy family is unhappy in its own way." Grill v. Aversa, 908 F. Supp. 2d 573, 576 (M.D. Pa. 2012)(quoting Leo Tolstoy, as 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).)

This matter now comes before the Court on a motion for summary judgment filed by the defendants, a summary judgment motion which is cast against the backdrop of an "unhappy family [that] is unhappy in its own way." The protagonists in this lawsuit, 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-owned corporation that provides education and training to commercial truck drivers and has in the past through Lewis Grill provided consulting and expert witness services to trucking companies. Aversa owns a majority interest in Sage and Grill is a minority shareholder in this corporation.

As we have previously observed: "'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 [litigation of claims relating to the alleged] exploitation of minority shareholders when the personal relationship has gone sour.' Orchard v. Covelli, 590 F.Supp. at 1557 (citations omitted)." Grill v. Aversa, 908 F. Supp. 2d 573, 577 (M.D. Pa. 2012). This is certainly true in the instant case, a lawsuit which constitutes an acrimoniouscoda to a family and business relationship which has spanned decades, and by all accounts for many years was mutually rewarding and beneficial for all parties.

The plaintiffs, Lewis J. Grill and Carmela C. Grill, husband and wife, as 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, the Grills claimed that Aversa was mismanaging Sage, engaging in corporate malfeasance, and indulging in shareholder oppression. The Grills 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.)

Following initial proceedings in this case, including a motion for preliminary injunction brought by Lewis Grill, which unsuccessfully sought reinstatement of his employment at Sage after he was discharged by Aversa, see Grill v. Aversa, 908 F. Supp. 2d 573 (M.D. Pa. 2012), the 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 theGrills' 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, the Grills 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.)

Aversa and Sage responded to this wholesale assault upon their corporate governance and conduct by, inter alia, bringing a third party complaint against Atlantic Pacific Resource Group, Inc., (APRG), a corporation owned and operated by the Grills. (Doc. 51.) This third party complaint alleges that the Grills and APRG have engaged in corporate misconduct by surreptitiously diverting corporate opportunities and revenues of Sage in the consulting and expert witness fields to their own benefit. (Id.)

Thus, in its current form this lawsuit involves family members who are now locked in intractable corporate conflict, conflict marked by mutual distrust and recriminations, aa well as multi-faceted assertions of corporate and personal misconduct. The degree of this acrimony, and the depth of this mutual distrust and suspicion is aptly illustrated by the summary judgment motion which is presently before this Court. (Doc. 101.) The defendants have supported their summary judgment motion with a detailed 149-paragraph factual recital, describing in close detail what the defendants regard as undisputed facts relating to many aspects of the disputes which now disrupt this corporation, and family. (Doc. 102.) This recital, describing these conflicts from the perspective of Gregg Aversa, has now inspired a 186-paragraph factual rebuttal from Aversa's brother-in-law, Lewis Grill, contesting Aversa's statement of undisputed facts, and positing a competing factual narrative regarding the deterioration of this family and corporate relationship from Grill's perspective. (Doc. 109.) Not surprisingly, the two narrative threads cast the protagonists' conduct and the issues of corporate governance at Sage in two entirely different lights.

While each party has invited us to find that their competing factual narratives are undisputed, upon a careful consideration of the parties' submissions we conclude that the parties' contrasting factual exegesis simply highlight sharply disputed factualpositions regarding the management of Sage Corporation, and utterly divergent views regarding the inferences we should drawn concerning the motivation, intent, and state of mind of these relatives, and corporate protagonists, over the span of many years. We further find that these contrasting, and often diametrically opposed, narratives regarding the actions, and more importantly, the motives of these various family members simply are not amenable to summary judgment resolution, but rather must be resolved through trial. Moreover, since the record is replete with factual conflicts between the parties, all of which must be determined by the Court following trial, we believe that no useful purpose is served by engaging in our own extended exegesis detailing these divergent narrative. Instead, for the reasons set forth below, we will deny this motion for summary judgment, and will resolve these issues at trial.

A. Rule 56-The Legal Standard

The defendants have moved for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure, which provides that "[t]he court shall grant summary judgment if the movant shows that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P., Rule 56 (a). Through summary adjudication a court is empowered to dispose of those claims that do not present a "genuine issue as to any material fact," Fed. R.Civ. P. 56, and for which a trial would be "an empty and unnecessary formality." Univac Dental Co. v. Dentsply Int'l, Inc., No. 07-0493, 2010 U.S. Dist. LEXIS 31615, at *4 (M.D. Pa. Mar. 31, 2010).

The substantive law identifies which facts are material, and "[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In this case, we are obliged to apply the substantive corporate and employment law of Pennsylvania and Montana to this dispute, a diversity lawsuit between residents of Pennsylvania and Montana. Chamberlain v. Giampapa, 210 F.3d 154, 158 (3d. Cir. 2000). Applying this state law, a dispute about a material fact is genuine only if there is a sufficient evidentiary basis that would allow a reasonable fact finder to return a verdict for the non-moving party. Id. at 248-49.

The moving party has the initial burden of identifying evidence that it believes shows an absence of a genuine issue of material fact. Conoshenti v. Pub. Serv. Elec. & Gas Co., 364 F.3d 135, 145-46 (3d Cir. 2004). Once the moving party has shown that there is an absence of evidence to support the nonmoving party's claims, "the non-moving party must rebut the motion with facts in the record and cannot rest solely on assertions made in the pleadings, legal memoranda, or oral argument."Berckeley Inv. Group. Ltd. v. Colkitt, 455 F.3d 195, 201 (3d Cir. 2006); accord Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). If the nonmoving party "fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden at trial," summary judgment is appropriate. Celotex, 477 U.S. at 322. Summary...

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