Boyd v. Cooper

410 A.2d 860, 269 Pa. Super. 594, 1979 Pa. Super. LEXIS 2944

• Court: Superior Court of Pennsylvania
• Decided: September 21, 1979
• Docket: 2910
• Status: Published

Opinions

GATES, Judge:

This is an appeal from a final order of the Court of Common Pleas of Monroe County denying appellants’ motion for a preliminary injunction.

On or about February 15, 1978 appellants and appellees entered into an agreement with Gerald A. Pozniak to purchase all the shares of stock and, thereupon, own and manage a pizza restaurant business known as the Village Pizzeria and Restaurant, Inc. located in Mt. Pocono, Monroe County, Pennsylvania. Appellants and appellees became equal and sole shareholders as well as the sole officers and directors of the corporation.

From 1976 the appellees leased and operated a golf course and restaurant known as Pine Hollow Golf Center located in Canadensis, Monroe County, Pennsylvania approximately ten miles from the Village Pizzeria and Restaurant.

After appellants and appellees took over the operation of the Village Pizzeria the parties began to quarrel and, in May 1978, appellees left the active management of Village Pizzeria and devoted their total time to operating the Pine Hollow Golf Center and Restaurant. Appellees resigned as officers and directors of Village Pizzeria and Restaurant.

On August 31, 1978 appellants filed a motion in equity seeking a preliminary injunction to prevent appellees from manufacturing or selling pizza or pizza related items at the Pine Hollow Golf Center and Restaurant pending the outcome of the equitable action instituted by appellants averring that the conduct of the pizzeria business at the golf center and restaurant was without the permission or consent of the appellants and was in derogation of the appellants’ rights and the appellees’ duties as co-tenants and co-officers and directors of Village Pizzeria and Restaurant, Inc.

At the time of the hearing on the preliminary injunction on November 13, 1978, the appellants acknowledged that they had already instituted a trespass action seeking damages for tortious interference with business relationships against the appellees. After listening to arguments of counsel, the Chancellor granted appellees’ motion to dismiss the application for a preliminary injunction on the ground that appellants have an adequate remedy at law which they were pursuing. The Chancellor noted that there were no fact issues and, therefore, no necessity for taking testimony. This appeal followed.

The scope of appellate review of the refusal to enter a preliminary injunction is limited to determining if there are any reasonable grounds for the action of the lower court. Safeguard Mutual Insurance Co. v. Williams, 463 Pa. 567, 345 A.2d 664 (1975). However, the issue on the present appeal is not whether the court erred in refusing to enter an injunction, but whether the court erred in refusing to accord appellants an evidentiary hearing on their injunction request. On reviewing the pleadings and the sparse record before the Chancellor we believe he erred in refusing to accord appellants an evidentiary hearing on their injunction request.

Contrary to the conclusion that no written covenant not to compete existed, the appellees’ request for injunctive relief was based upon an alleged breach of the fiduciary duty owed by officers, directors, employees or stockholders of a corporation. Thus, where such a person acquires information in confidence and adopts or uses it for his own private benefit and personal profit to the exclusion and detriment of the corporation, he may be enjoined at the instance of the corporation and he may be required to account to the corporation for any profits derived therefrom as well as be subject to liability for damages sustained as a result of such breach of his fiduciary duties.

The record discloses that the appellants filed a motion for the preliminary injunction on August 31, 1978 and the initial hearing was continued in an effort to effect an amicable settlement. It is set forth in the appellees’ brief that they resigned as officers and directors of the corporation on September 6, 1978 and the abbreviated hearing was held on November 13, 1978. Nonetheless, under appropriate circumstances, a corporation may obtain injunctive or other appropriate relief against the abuse or misuse of confidential or inside information by a former officer or employee. Vol. 3 Fletcher Cyclopedia Corporations, Ch. 11, Sec. 857.1. Thus we conclude that the trial judge erred in not completing its scheduled hearing on appellants’ request for the purpose of developing a factual basis for the requested relief.

Therefore we reverse and remand for a proper hearing on the injunction requested.

PRICE, J., files a concurring opinion.