Bair v. Purcell

500 F. Supp. 2d 468, 2007 U.S. Dist. LEXIS 56201, 2007 WL 2219306
CourtDistrict Court, M.D. Pennsylvania
DecidedAugust 2, 2007
DocketCivil Action 1:04-CV-1357
StatusPublished
Cited by32 cases

This text of 500 F. Supp. 2d 468 (Bair v. Purcell) is published on Counsel Stack Legal Research, covering District Court, M.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bair v. Purcell, 500 F. Supp. 2d 468, 2007 U.S. Dist. LEXIS 56201, 2007 WL 2219306 (M.D. Pa. 2007).

Opinion

MEMORANDUM

KANE, Chief Judge.

Before the Court are Defendants’ Motion for Summary Judgment (Doc. No. 32), seeking judgment in their favor on all counts of the amended complaint, and Plaintiffs’ Motion for Partial Summary Judgment (Doc. No. 34), seeking judgment in their favor on Count III of the amended complaint. The motions have been fully briefed and are ripe for adjudication.

I. BACKGROUND 1

In 1998, Defendant Francis “Corky” Purcell incorporated Defendant Appala- *473 ehian Baking Company, Inc. (“Appalachian Baking”) under Pennsylvania law as a closely-held business corporation. Appalachian Baking maintains a business office and conducts business operations in Harrisburg, Pennsylvania. That same year, Appalachian Baking entered into a ten-year franchise agreement with the Atlanta Bread Company International, Inc., pursuant to which Appalachian Baking was granted exclusive development rights for Atlanta Bread Company stores in Dauphin, Cumberland, and Lebanon counties, the State College, Pennsylvania region, and the Baltimore, Maryland area. At the time, Francis Purcell was the sole shareholder of Appalachian Baking.

Prior to their involvement with Appalachian Baking, Plaintiffs Curtis Bam and Patrice Bair (husband and wife) lived and worked in Atlanta, Georgia. Curtis Bair and Francis Purcell were friends and had previously worked together, primarily on a Peachtree Pretzel Time, Inc., franchise. (Curtis Bair First Supp. Decl. ¶ 7, Doc. No. 55-4.) Curtis Bair held a ten-percent ownership in the franchise, and both he and his wife worked for the pretzel franchise operation. (Id. ¶¶ 7-8, 20.) During a Peachtree Pretzel Time stockholders meeting in May 1998, Francis Purcell, his wife Norma Purcell, Plaintiffs, and Deborah and Jay James (future shareholders of Appalachian Baking) began discussing various franchise opportunities, including Atlanta Bread Company. Later that year, Francis Purcell informed Plaintiffs that he had decided to pursue an Atlanta Bread Company franchise, and Curtis Bair agreed to allow Francis Purcell to use part of their equity in Peachtree Pretzel Time to pay the franchise fee and other start-up expenses of Appalachian Baking. (Id. ¶20.) During this time, Plaintiffs claim that Francis Purcell represented to them that he planned to open ten to fifteen Atlanta Bread Company stores and that Plaintiffs would play a long-term role in the company. (Id. ¶ 12.)

In June 2000, Francis Purcell sent Curtis Bair a packet of documents to be circulated to potential investors in Appalachian Baking. The packet included an offering and subscription memorandum, a confidential descriptive memorandum, a form subscription agreement, a form shareholder joinder, and a form shareholders agreement. (Pl.Exs.4.1, 4.2, 20, 22, Doc. No. 43.) The confidential descriptive memorandum stated that the company planned to “operate one or more retail bakery and café restaurants under the name Atlanta Bread Company” within their exclusive development territory. (Pl.Ex.4.2.) The form shareholders agreement, dated June 1, 2000, listed Curtis Bair as a shareholder in the company and as a member of the board of directors. 2 (Pl.Ex.22.) However, this form agreement was circulated unsigned *474 and contained blanks spaces where additional information was to be filled in later. (Id.) Specifically, the form agreement does not indicate how many of the total shares of the company were owned by the parties and reserved space to add the names of additional investors. (Id.) Plaintiffs allege that Curtis Bair signed ten copies of the form shareholders agreement, returned the copies to Fran•cis Purcell, and became a party to the shareholders agreement. 3 (Doc. No. 36, ¶47.) Defendants dispute this allegation. (Doc. No. 67, ¶ 47.)

The corporate records of Appalachian Baking contain a different June 1, 2000, shareholders agreement. (Pl.Ex.23, Doc. No. 35.) This agreement lists Francis Purcell as the sole shareholder of Appalachian Baking, although an attached exhibit lists Francis and Norma Purcell as co-owning one hundred percent of the company’s shares, or 77 shares. 4 (Id.) The agreement is signed by Francis and Norma Purcell, as witnessed by their daughter Jessica Purcell. 5 (Id.) Notwithstanding the other differences between this agreement and the form shareholders agreement contained in the packet of documents provided to potential investors, this agreement still listed Curtis Bair as a member of the board of directors and provided that all board members must be shareholders. (Id. §§ 2.02-2.03.) Curtis Bair signed neither this agreement nor a joinder agreement. Defendants allege that they asked Curtis Bair to sign, but that he refused. (Doc. No. 67, ¶ 53; see also Stuart Sacks Affidavit ¶¶ 5-6, Def. Ex. Y, Doc. No. 60-3.) Plaintiffs allege that the first time Curtis Bair was informed that he was not a party to the shareholders agreement was on December 12, 2003, during the meeting in which he was voted off the board of directors. (Doc. No. 36, ¶¶ 54, 94.)

On June 7, 2000, Appalachian Baking entered into a ten-year lease for a restaurant location in Harrisburg, Pennsylvania. On June 20, 2000, Robert and Lori Green- — friends of the Purcells — executed a shareholder joinder to the Appalachian Baking shareholders agreement and agreed to purchase six shares of the company’s stock for $100,000, or approximately $16,666 per share. On July 28, 2000, Deborah and Jay James — Norma Purcell’s sister and brother-in-law — executed a shareholder joinder to the Appalachian Baking shareholders agreement and agreed to purchase two shares of the company’s stock for $40,000, or $20,000 a share. Appalachian Baking issued the above shares of stock on February 5, 2001. On August 8, 2001, the company issued Curtis Bair fifteen shares of stock at no price. (Doc. No. 36, ¶ 28.)

On February 5, 2001, Norma Purcell became co-owner of Francis Purcell’s majority shareholding in Appalachian Baking. (Doc. Nos. 36, ¶ 12; 67, ¶ 12.)

The parties agree that on May 22, 2001, Appalachian Baking held its first shareholders and board meeting in Las Vegas, Nevada, during which the officers and directors of the company were elected. (Doc. Nos. 36, ¶ 30; 67, ¶ 30.) The parties further agree that the company’s records contain no minutes from the May 22, 2001, meeting; rather, the corporate records in *475 dicate that the company’s officers and directors were elected at a shareholders meeting held on December 20, 2001. (PI. Ex.18, Doc. No. 35.) According to the minutes, Francis Purcell, Norma Purcell, and Curtis Bair were elected as directors of the company, and the directors elected the following officers: Francis Purcell, president and treasurer; Norma Purcell, vice president; and Curtis Bair, secretary. (Id.)

Appalachian Baking’s first and only Atlanta Bread Company restaurant (“the restaurant”) opened in July 2001 with John Krulock as store manager.

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Bluebook (online)
500 F. Supp. 2d 468, 2007 U.S. Dist. LEXIS 56201, 2007 WL 2219306, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bair-v-purcell-pamd-2007.