231 A.3d 20
Pa. Super. Ct.2020Background
- Crusader Servicing Corp. (CSC) was a Pennsylvania tax-lien purchaser; shareholders’ agreement (1996) gave Snyder 20% and required CSC to buy back a shareholder’s shares on death/permanent disability using a mandatory appraisal procedure (¶8(c)).
- Snyder was declared totally disabled as of December 1, 2006; he did not notify CSC or formally offer to sell his shares under the agreement, and no buyback occurred.
- Disputes followed; Snyder sued in 2007 alleging freeze‑out/wrongful discharge and related claims; defendants later counterclaimed seeking enforcement of the shareholders’ appraisal procedure and other relief.
- At bench trial the court found CSC breached the buy‑back obligation and awarded Snyder $2.19 million (adopting Snyder’s expert valuation and awarding prejudgment interest), and rejected defendants’ counterclaims including specific performance of the appraisal process.
- The Superior Court held the trial court erred by refusing to enforce the shareholders’ mandatory valuation procedure (¶8(c)), vacated the damages award and denial of specific performance, and remanded for compliance with the appraisal process; it affirmed rejection of defendants’ fiduciary‑duty counterclaims.
Issues
| Issue | Plaintiff's Argument (Snyder) | Defendant's Argument (CSC/Royal Bank) | Held |
|---|---|---|---|
| 1. Whether court should enforce shareholders’ appraisal procedure (¶8(c)) instead of awarding damages | Snyder argued CSC breached buy‑back and court could independently fix fair value | Defendants argued remedy MUST be the mandatory appraisal in ¶8(c) | Held: Defendants correct — trial court erred; parties must follow ¶8(c) appraisal; damages vacated |
| 2. Whether $2.19M valuation was correct | Snyder relied on his expert’s valuation (accepted by trial court) | Defendants argued trial court misvalued and plaintiff’s expert didn’t meet ¶8(c) qualifications | Held: Superior Court did not decide valuation merits because appraisal procedure governs; trial court’s valuation vacated |
| 3. Whether Snyder is barred from recovery by his wrongdoing (in pari delicto) | Snyder: recovery for share value is not redress for bid‑rigging/SMI misconduct | Defendants: Snyder’s misconduct should bar relief | Held: In pari delicto inapplicable here; issue largely moot given enforcement of appraisal; even on theory it wouldn’t bar buy‑back claim |
| 4. Whether trial court erred in denying defendants’ breach‑of‑fiduciary counterclaims (SMI transaction, bid‑rigging) | Snyder: lacked liability; no proof Defendants’ alleged damages caused by him | Defendants: Snyder breached duties causing CSC losses and fine | Held: Affirmed for Snyder — defendants failed to prove requisite elements (notably causation/quantified damages and sufficient involvement in bid‑rigging) |
Key Cases Cited
- Hornberger v. Dave Gutelius Excavating, Inc., 176 A.3d 939 (Pa. Super. 2017) (enforceable buy‑sell appraisal provisions control valuation remedy)
- Osborne v. Carmichaels Mining Machine Repair, Inc., 628 A.2d 874 (Pa. Super. 1993) (contract language determines valuation; courts interpret buy‑back provisions)
- McCabe v. McCabe, 575 A.2d 87 (Pa. 1990) (agreement governs partners’/shareholders’ substantive rights and valuation)
- Official Committee of Unsecured Creditors v. PriceWaterhouseCoopers, LLP, 989 A.2d 313 (Pa. 2010) (doctrine of in pari delicto requires active, voluntary participation and comparative fault)
- Kirschner v. K & L Gates LLP, 46 A.3d 737 (Pa. Super. 2012) (elements of corporate fiduciary‑duty claim)
- Printed Image of York, Inc. v. Mifflin Press, Ltd., 133 A.3d 55 (Pa. Super. 2016) (no damages award where evidence insufficient to quantify loss)
- Boehm v. Riversource Life Insurance Co., 117 A.3d 308 (Pa. Super. 2015) (appellate review standards for nonjury/factfinder determinations)