Habjan v. Habjan
73 A.3d 630
| Pa. Super. Ct. | 2013Background
- Husband and Wife divorced after executing a Marital Settlement Agreement (MSA) allocating ownership of Monroe Heights Development Corporation (MHD) to Husband and including broad mutual releases and indemnities.
- MHD was formed in 1991; parties each owned 50% initially; Wife managed operations, Husband managed building/financing; by the MSA Husband assumed sole ownership as of June 30, 2008.
- Husband repeatedly raised claims during divorce proceedings that Wife misappropriated corporate funds; those claims were included in the negotiations that produced the MSA.
- MSA contained a deadline that undisclosed corporate-debt claims expire effective June 30, 2009, and a general mutual release of claims between the parties.
- In August 2010 MHD (with Husband as president/majority owner) sued Wife in Clarion County for essentially the same misconduct claims previously raised in the divorce. Wife petitioned to enforce the MSA and for contempt; Husband counter-petitioned.
- Trial court found Husband had effectively used MHD as his alter ego to evade the MSA and prior court orders, held him in contempt for the Clarion suit, ordered him to discontinue it or face incarceration, awarded attorney fees to Wife, and denied Husband’s post-deadline corporate-debt claims as expired.
Issues
| Issue | Habjan's Argument | Knight's Argument | Held |
|---|---|---|---|
| Whether trial court erred in piercing MHD’s corporate veil and treating MHD as Husband’s alter ego | MHD was a separate corporation; corporate formalities were followed; Wife controlled MHD earlier in marriage | Husband used MHD to pursue claims precluded by MSA; he formed/used corporate action to evade obligations | Court affirmed veil-piercing; Husband used control of MHD to further personal interest and evade MSA, so corporate form disregarded |
| Whether MSA releases bind MHD (a non-signatory) | Release language applies only to the parties, not the corporation | Release + veil-piercing means the corporation’s claims are covered and cannot circumvent the MSA | Court held release applied (especially given alter-ego finding) and barred MHD’s claims against Wife |
| Whether Husband was in contempt for filing the Clarion County suit | Filing was proper corporate action, not contempt | Filing violated August 17, 2009 order and MSA; it was volitional and wrongful attempt to evade obligations | Court found contempt proven (notice, volitional act, wrongful intent) and imposed remedies including discontinuance or incarceration and fee awards |
| Whether Husband’s late-noticed claims for certain corporate debts survived the MSA deadline | Husband gave notice on deadline and was diligently finalizing figures; claims should survive | MSA set an absolute deadline June 30, 2009; Husband waited and failed to prove amounts | Court found claims expired per MSA and Husband failed to prove amounts; claims forfeited |
Key Cases Cited
- Rinck v. Rinck, 526 A.2d 1221 (Pa. Super. 1987) (corporate entity may be disregarded where corporation formed or used to escape an existing legal obligation)
- Ashley v. Ashley, 393 A.2d 637 (Pa. 1978) (separate corporate identity may be ignored when controller uses corporation to further personal interests)
- Ford Motor Co. v. Buseman, 954 A.2d 580 (Pa. Super. 2008) (release construction focuses on parties’ intent as expressed in the document; broad releases can bind unnamed tortfeasors)
- Stahl v. Redcay, 897 A.2d 478 (Pa. Super. 2006) (elements required to establish civil contempt: notice, volitional act, wrongful intent)