Frey, J. v. Gold, B. Appeal of: Slurry
1120 WDA 2016
| Pa. Super. Ct. | Oct 31, 2017Background
- Plaintiffs John and Elaine Frey were minority owners/employees of Slurry Technologies Operating (STO); Dennis and Bonny Gold were president and majority owner. John worked as an engineer; Elaine contributed capital.
- Pilgrim (and related Muse parties) loaned money to STO; STO defaulted and Pilgrim obtained a confessed judgment and purchased STO assets at a sheriff’s sale.
- Plaintiffs alleged the Golds and the Muse defendants conspired to deprive the Freys of employment and ownership interests, using the sheriff’s sale as part of the scheme.
- Multiple claims were tried to a jury (fraud, fraudulent transfer under the UFTA, tortious interference, civil conspiracy, breach of fiduciary duty, WPCL claims, etc.); the jury returned large verdicts for the Freys on many counts.
- The trial court precluded the Gold defendants from contesting liability at trial due to discovery sanctions. Post-trial motions were denied; defendants appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Valuation of STO for UFTA damages | STO (principally the Hanson contract) was worth substantial sums; jury should value it at $1,000,000 | Valuation was speculative; Hanson contract unprofitable and STO was a new, distressed business | Court affirmed jury valuation; some speculation permissible where supported by evidence (invoices, contract, testimony) |
| Tortious interference with contracts | Freys had enforceable pre-incorporation/employment agreements and defendants intentionally interfered, causing damages | No valid contract existed to be interfered with | Court held sufficient evidence of the pre-incorporation agreement and employment contract; jury verdict stands |
| Civil conspiracy (Muse/Pilgrim + Golds) | Defendants conspired to freeze out Freys and to use the sheriff’s sale for unlawful purpose | Officer-corporation rule and lawful sheriff’s sale negate conspiracy; complaint unclear | Court found sufficient evidence of conspiracy between distinct parties and permissible to infer unlawful purpose despite lawful sale |
| Prejudgment interest on non-contract claims and fraud sufficiency | Prejudgment interest proper to compensate for delay and unjust enrichment; fraud claims supported by evidence | Interest inappropriate for unliquidated tort damages; fraud evidence insufficient | Court upheld prejudgment interest under equitable Rizzo considerations and found fraud/fraudulent misrepresentation claims supported by record |
Key Cases Cited
- Sears, Roebuck & Co. v. 69th St. Retail Mall, L.P., 126 A.3d 959 (Pa. Super. 2015) (standard of review for JNOV and view of evidence in light most favorable to verdict winner)
- Delahanty v. First Pennsylvania Bank, N.A., 464 A.2d 1243 (Pa. Super. 1983) (limits on recovery for speculative lost profits; more caution for new businesses)
- Betz v. Erie Ins. Exch., 957 A.2d 1244 (Pa. Super. 2008) (deference to factfinder on damages and credibility)
- Strickland v. Univ. of Scranton, 700 A.2d 979 (Pa. Super. 1997) (elements of tortious interference with contractual relations)
- Phillips v. Selig, 959 A.2d 420 (Pa. Super. 2008) (elements and proof standard for civil conspiracy)
- Thompson Coal Co. v. Pike Coal Co., 412 A.2d 466 (Pa. 1979) (officer/corporation cannot conspire with the corporation when sole actor—distinguished here)
- Rizzo v. Haines, 555 A.2d 58 (Pa. 1989) (prejudgment interest in tort/unliquidated damages governed by equity and fairness)