York Group, Inc. v. Yorktowne Caskets, Inc.

924 A.2d 1234
CourtSuperior Court of Pennsylvania
DecidedApril 23, 2007
StatusPublished
Cited by42 cases

This text of 924 A.2d 1234 (York Group, Inc. v. Yorktowne Caskets, Inc.) 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
York Group, Inc. v. Yorktowne Caskets, Inc., 924 A.2d 1234 (Pa. Ct. App. 2007).

Opinions

OPINION BY

BOWES, J.:

¶ 1 In this appeal, we consider whether the trial court had any apparently reasonable grounds to enjoin Yorktowne Caskets, Inc. (“Yorktowne”) from breaching a contract that it had with Appellee, York Group, Inc. (“York”), and to enjoin Bates-ville Casket Company, Inc. (“Batesville”) and the individual defendants listed below from intentionally interfering with the contract between Yorktowne and York. After careful review of the record and mindful of our applicable standard of review, we hereby affirm.

¶ 2 The three business entities involved in this action include: 1) York, which is the number two casket manufacturer in America; 2) Yorktowne, which sells caskets and other funeral products to funeral directors in the northeastern United States and accounts for thirty percent of York’s sales; and 3) Batesville, York’s primary competitor and the number one casket manufacturer in America. Yorktowne is owned by six individuals, who are also individual defendants in this action. Four of the shareholders are married couples: Neil and Vic[1238]*1238toria Crispo (fifty-one percent), and Bryan E. and Beth Elicker (twenty-four percent). Geoffrey S. Abendschoen owns twenty-four percent, and Mark Stiner owns the remaining one percent. Messrs. Crispo, El-icker, and Abendschoen, who together with their spouses hold ninety-nine percent of Yorktowne’s stock, also serve as the key employees of Yorktowne, and all three sit on its board of directors. Specifically, Mr. Crispo is the company’s chief executive officer, Mr. Elicker is its chief operating officer, and Mr. Abendschoen is the chief financial officer. The individual defendants will be referred to collectively as the shareholders.

¶ 3 In 1988, York and Yorktowne entered into a distributorship agreement whereby Yorktowne agreed to sell and promote York caskets. Effective August 7, 2004, this agreement was terminated by Yorktowne based on its dissatisfaction with the discount that it was receiving from York. After unsuccessfully attempting to market Chinese-manufactured caskets to funeral directors, Yorktowne returned to discussions with York about a renewal of their contractual relationship. Messrs. Crispo, Elicker, and Abendschoen were personally involved in the negotiations, which culminated in a two-year distributorship agreement executed on April 15, 2005 (the “2005 distributor agreement”).

¶ 4 The 2005 distributor agreement contains a number of contractual provisions germane to the trial court’s grant of the preliminary injunction. In return for the desired discounts, Yorktowne, as distributor, agreed to purchase all of its caskets from York for the contractual term of two years. The 2005 distributor agreement provides that Yorktowne shall use its best efforts to promote and sell York products and that Yorktowne, “its shareholders and all of its employees shall not during the Term of this Agreement, either directly or indirectly, (i) order, sell, distribute or market products of the same style or functionality” as York caskets. Distributor Agreement, 4/15/05, at § 1.2(b) (emphasis added) (sometimes referred to as the “exclusivity provision”). After specific negotiations on this point, York retained the right in the 2005 distributor agreement to use another entity to disseminate its products within the territory granted to York-towne. Yorktowne acknowledged in that same agreement that it may be privy to business product pricing, financial, marketing, technical and other proprietary and sensitive information and agreed not to disclose that information to third parties. Id. at § 8.2 (sometimes referred to as the “confidentiality provision.”).

¶ 5 In the agreement, Yorktowne acknowledged that York had an interest in the control and management of the entities authorized to sell it products, and as a result, Yorktowne expressly agreed that 1) the 2005 distributor agreement was not assignable without York’s prior, written consent; 2) any such assignment was null and void; 3) York had the right of first refusal if Yorktowne proposed to sell its stock or assets; and 4) York’s failure to exercise its right of first refusal did not waive the non-assignment provision of the agreement. Assignment was defined to include a sale of a specified percentage of the stock of Yorktowne. The contract states, “A substantial change of control, direct or indirect of [Yorktowne] shall constitute an assignment for purpose of this Agreement,” and a substantial change of control “shall be deemed to have occurred when any person ... secures a fifteen percent (15%) increase of an ownership interest in” Yorktowne. Id. at § 8.9. (sometimes referred to as the “non-assignment provision.”).

¶ 6 Section 3.3 of the agreement provides that Yorktowne “agrees that in the event any direct or indirect owner or bene[1239]*1239ficial owner of any interest in [Yorktowne] shall sell, offer to sell, or transfer such interest, or [Yorktowne] shall sell, offer to sell, dispose of or transfer all or any substantial part of its assets, in each such case to any person other than [Yorktowne] ... York shall have the right of first refus-al_” In addition, Yorktowne’s by-laws provide Yorktowne with the ability to prevent any assignment as defined by the 2005 distributor agreement due to a change in stock ownership by vesting Yorktowne with the right to buy, at a price Yorktowne was to have already established, the shares of stock of any York-towne shareholder who sought to sell that stock.

¶7 While the 2005 distributor agreement contains a liquidated damages clause, it also includes a provision that the liquidated damages clause “does not preclude the right of York to pursue specific performance of the Agreement as an additional remedy.” Id. at § 8.2. The contract further states that “a breach of Section 1.2(b),” the exclusivity provision, and “Section 8.2,” the confidentiality provision, “will give rise to irreparable injury, inadequately compensable in damages.” Id. at § 8.4. Finally, Yorktowne consented to York’s right to obtain injunctive relief for “the breach or threatened breach of the undertakings of the parties contained in this Agreement.” Id.

¶ 8 After the 2005 distributor agreement was negotiated, York acquired a competitor of Yorktowne, which, as noted, it was specifically empowered to do pursuant to the terms of the 2005 distributor agreement. In response, Yorktowne’s shareholders entered into negotiations for the sale of their stock to Batesville, which is York’s primary competitor. In an effort to avoid the provisions of the 2005 distributor agreement, the sale was structured as a sale of stock to Batesville by Mr. Crispo and his wife, Mr. Elicker and his wife, Mr. Abendschoen, and Mr. Stiner. The corporation did not elect to exercise its right of first refusal to purchase the stock; rather, the shareholders expressly waived their rights to do so, and Yorktowne never exercised its right. The negotiations culminated in a stock purchase agreement entered among the shareholders of Yorktowne and Batesville. The terms of the agreement provide that it is enforceable both against Yorktowne’s shareholders and against Yorktowne itself. Stock Purchase Agreement, 9/21/05, at § 3.2.

¶ 9 Once aware of the existence of the stock purchase agreement, York instituted this action, setting forth causes of action for breach of contract, promissory estop-pel, and intentional interference with contractual relations. It obtained an ex parte

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Cite This Page — Counsel Stack

Bluebook (online)
924 A.2d 1234, Counsel Stack Legal Research, https://law.counselstack.com/opinion/york-group-inc-v-yorktowne-caskets-inc-pasuperct-2007.