Capital Care Corp. v. Hunt

847 A.2d 75, 2004 Pa. Super. 64, 2004 Pa. Super. LEXIS 235
CourtSuperior Court of Pennsylvania
DecidedMarch 15, 2004
StatusPublished
Cited by24 cases

This text of 847 A.2d 75 (Capital Care Corp. v. Hunt) is published on Counsel Stack Legal Research, covering Superior Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Capital Care Corp. v. Hunt, 847 A.2d 75, 2004 Pa. Super. 64, 2004 Pa. Super. LEXIS 235 (Pa. Ct. App. 2004).

Opinion

OPINION BY POPOVICH, J.:

¶ 1 Appellant Capital Care Corporation appeals the entry of judgment non obstan- *78 te verdicto (JNOV) on behalf of Appellee John Frazier Hunt. Upon review, we reverse the entry of JNOV and remand for proceedings consistent with this opinion.

¶ 2 This case arises from an action sounding in legal malpractice and breach of fiduciary duty filed by Appellant against Appellee John F. Hunt. Appellant alleged in its complaint that Appellee acted as counsel for . both Appellant and a group of British investors with interests adverse to Appellant during a sale of Appellant’s assets and that Appellee made false statements prior to the sale that caused Appellant’s assets to be sold for an inadequate price. The tortuous factual and procedural history of this case is set forth partially in Capital Care Corp. v. Lifetime Corp. (Capital Care II), 140 EDA 2000, 766 A.2d 883 (Pa.Super. filed 9/15/2000) (unpublished memorandum), as follows:

The events which precipitated this litigation began in 1984. A group of American investors led by Thomas Fleming [ (Fleming) ] were then in control of [Appellant], which owned and controlled a subsidiary corporation, Metropolitan Home Health Services, Inc., which was engaged in the home health care business in the Philadelphia vicinity. A group of British investors, headed by Michael J. Sinclair[, M.D. (Sinclair) ], owned a similar firm, Hospital Capital Corporation, Ltd., which operated in the British Isles, and which had recently acquired an American subsidiary, Residential Health Care, Inc., located in Tennessee. There were discussions between [Fleming] and [Sinclair] concerning their mutual interest in expanding and combining their residential health care operations in [the United States].
As the first step in carrying out their plan, [Appellant] purchased from [Hospital Capital Corporation, Ltd. (Hospital Care), its subsidiary, Residential Health Care, Inc. (Residential Health)], in exchange for approximately 23% of Appellant’s stock. In addition, efforts were thereafter undertaken to increase the capitalization of the enterprise through the issuance of convertible debentures and other means.
[Appellant] did not prosper, although all concerned remained convinced that its future prospects were bright and that the planned expansion should be pursued. [Appellant’s] operations from 1984 through 1986 were made possible, in large part, by substantial infusions of casíi from the British inyestors. As their substantial financial stake in the enterprise increased, [Sinclair] and his group were granted greater control of [Appellant], both on [its] Board of Directors and [, as a result of certain voting arrangements associated with financing they had arranged, in voting] control among the shareholders.
It had long been the goal of both groups to attempt to acquire [, Superi- or Care, Inc. (Superior Care) ] a large firm engaged in the residential home-care business in the New York [area. The principal of that firm, a gentleman named Rubin,] had initially broached the subject of a possible acquisition with [Sinclair] in 1983. With the consent of all concerned, negotiations were resumed in earnest in 1985. It soon developed, however, that [Rubin] was not interested in any transaction which would involve [Fleming or Appellant], He was, however, very much interested in pursuing the possible acquisition of Superior Care by [Sinclair’s] British firm, [Hospital Care Corporation, Ltd.]. All concerned [with acquiring Appellant], ie., the Sinclair group and the Flem *79 ing group, agreed that the proposed transaction should be carried out in two steps: first, acquisition of [Superi- or Care by Hospital Care] (more specifically, a new corporation to be formed for the purpose of [acquiring Superior Care]), to be followed by a merger between [Appellant] and the acquiring firm.
The acquisition of Superior Care by [Hospital Care] (renamed as Lifetime Corporation) was completed in early 1986, pursuant to a final agreement executed in November 1985.
[On October 23, 1986, Appellant’s directors] signed an agreement to sell all of the then-remaining assets of [Appellant (including two health-care subsidiaries and a separate equipment subsidiary, which equipment subsidiary was sold to a third-party not involved in this litigation) ], in exchange for approximately 359,000 shares of [Appellant’s] stock, which [stock] was valued at $2.50 per share. Shareholder ratification of this transaction was [obtained] at a special meeting held on [June 19,1987].
The record does not fully detail the shifts in management and control of [Appellant] which [occurred] since June 1987. Apparently, although [Appellant was not] in bankruptcy, representatives of [a creditor committee controlled Appellant’s affairs during the pendency of this litigation].
[Appellant commenced this litigation via complaint in the United States District Court for the Eastern District of Pennsylvania] on March 30, 1988. Named as defendants were [Sinclair, Appellee, who served as general counsel of Appellant, and Hazel Garner, an associate in Appellee’s office who assisted in negotiations and document-drafting for the purchase.
Appellant asserted] a wide variety of claims under the federal securities laws, various RICO violations, and a host of state-law claims sounding both in contract and tort.
[The bases of Appellant’s state-law tort allegations were] charges of conversion, fraud, interference with prospective commercial advantage [and, as to Appellee and Garner, legal malpractice].

Capital Care Corporation v. Lifetime Corporation [ (Capital Care I) ], No. 930 Philadelphia 1994, unpublished memorandum at 1-3, 445 Pa.Super. 644, 665 A.2d 1297 (Pa.Super. filed [6/16/95]) (citing U.S. District Court [Memorandum] filed 10/16/90, at 1-6).

The U.S. District Court [dismissed initially] “some federal securities law claims and one of the pendent state law claims” on motions to dismiss, and then disposed of the balance of the case by entering summary judgment in favor of all [... ] defendants and dismissing [Appellant’s] federal claims and all pre-[Oe-tober 23, 1986] state law claims. [Capital Care I, 930 Philadelphia 1994, at 4], The District Count [explained specifically] that its “determination that the [October 23, 1986 release (the release) ] is valid and binding upon [Appellant] also disposes of all pre-[October 23, 1986] claims arising under state law.” U.S. District Court [Memorandum], filed 10/16/90, at 21. The District Court also noted that it “expressed no view as to whether [Appellant had] any claims under state law which survivefd] the foregoing rulings.” Id.

[Appellant] appealed the District Court’s grant of summary judgment which was subsequently affirmed by the Third Circuit Court of Appeals. During the pendency of the appeal, however, [Appellant] also filed an identical com *80 plaint with the Court of Common Pleas of Philadelphia County.

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Bluebook (online)
847 A.2d 75, 2004 Pa. Super. 64, 2004 Pa. Super. LEXIS 235, Counsel Stack Legal Research, https://law.counselstack.com/opinion/capital-care-corp-v-hunt-pasuperct-2004.