Hendricks v. Hendricks
175 A.3d 323
| Pa. Super. Ct. | 2017Background
- W. Todd Hendricks and affiliated companies (Appellees) filed suit against Timothy Paul Hendricks and his wholly owned company ARED #1, LLC (Appellants), alleging breach of a Separation Agreement, breach of fiduciary duty, and tortious interference related to the Northgate residential development.
- A prior bankruptcy reorganization and a Transfer and Development Agreement (TDA) required proceeds from Northgate V sales to be split with creditors (via GSRE) and enjoined parties from acting inconsistent with the Bankruptcy Plan.
- The Separation Agreement (confirmed by the bankruptcy court) required Timothy Paul to “protect and defend” W. Todd’s rights to develop all phases of Northgate.
- In June–August 2016, ARED negotiated to buy GSRE’s interest in Northgate V; ARED/Timothy Paul sent letters and made communications asserting rights to the land and threatening to displace TH Properties’ contractors.
- Appellees obtained an August 24, 2016 interim special injunction enjoining Appellants from purchasing GSRE’s interest or communicating with Northgate participants; Appellants later moved to dissolve that injunction.
- After hearings, the trial court denied dissolution and entered a second interim special injunction on February 24, 2017; Appellants appealed and the Superior Court affirmed.
Issues
| Issue | Plaintiff's Argument (W. Todd) | Defendant's Argument (Timothy Paul/ARED) | Held |
|---|---|---|---|
| Whether failure to join GSRE and related entities deprived the court of subject-matter jurisdiction | GSRE not necessary; relief enforces contract between the Hendricks brothers and does not impair nonparties' rights | GSRE and other entities are indispensable parties whose rights are intertwined with the dispute, so court lacks jurisdiction | Court held GSRE and others are not indispensable; jurisdiction proper and injunctions may issue |
| Whether the injunction met standards for a preliminary/special injunction (six-factor test) | Injunction necessary to prevent immediate, irreparable harm to development and creditor payments; likely success on the merits because Timothy Paul breached Separation Agreement and interfered with development | Argued misrepresentations, omissions, failure to join indispensable parties, and lack of grounds for injunction; ARED (not Timothy Paul personally) was purchaser | Court found apparently reasonable grounds for injunction: credibility of appellees, likelihood of success, irreparable harm, status quo preserved, and public interest served; denial of dissolution affirmed |
| Whether ARED’s separate corporate status shields Timothy Paul’s conduct | ARED argued it was the purchaser and distinct from Timothy Paul | Appellees argued Timothy Paul controls ARED and cannot do indirectly what he is barred from doing directly | Court credited evidence Timothy Paul is sole owner of ARED and enjoined ARED and Timothy Paul accordingly |
| Whether the injunction would harm creditors or public interest | Appellees contended injunction preserves bankruptcy plan and creditors' recovery | Appellants suggested injunction unfairly restrained commerce and ARED’s purchase rights | Court held injunction favored greater public and creditor interest by preserving bankruptcy distribution scheme and status quo |
Key Cases Cited
- Orman v. Mortgage I.T., 118 A.3d 403 (Pa. Super. 2015) (failure to join indispensable parties can deprive court of subject-matter jurisdiction and court must apply multi-factor test)
- Summit Towne Centre, Inc. v. Shoe Show of Rocky Mount, Inc., 828 A.2d 995 (Pa. 2003) (outlines the six essential factors for preliminary injunctions and standard of appellate review)
- Warehime v. Warehime, 860 A.2d 41 (Pa. 2004) (scope of review in preliminary injunction matters is plenary)
- Morgan Trailer Mft. Co. v. Hydraroll, Ltd., 759 A.2d 926 (Pa. Super. 2000) (appellate court will reverse preliminary injunction only for abuse of discretion or misapplication of law)