J-A24008-23
2024 PA Super 84
EUGENE SCHRIVER, IV : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellant :
:
:
v. :
:
:
LAURA SCHRIVER AND LANGUAGE : No. 1896 EDA 2022
SERVICES ASSOCIATES :
Appeal from the Order Entered July 1, 2022
In the Court of Common Pleas of Montgomery County
Civil Division at No: 2021-14959
BEFORE: STABILE, J., KING, J., and SULLIVAN, J.
OPINION BY STABILE, J.: FILED APRIL 25, 2024
Appellant, Eugene Schriver, IV, appeals from the July 1, 2022 order
sustaining the preliminary objections of Appellees, Laura Schriver (“Laura”)
and Language Services Associates (“LSA”). We affirm in part, vacate in part,
and remand.
LSA is a language translation company. Laura is LSA’s president and
CEO, and Appellant, Laura’s son, was LSA’s executive vice-president prior to
his resignation in August of 2009. This appeal arises from the second of two
actions filed by Appellant against Appellees. The first was filed in 2018 (the
“2018 Complaint”). In it, Appellant claimed that he owned 12 shares of LSA
stock, and that LSA had the right, under the parties’ Stock Restriction
Agreement (“SRA”) to purchase those shares upon his “termination” (as
opposed to resignation) from LSA’s employment. In any event, Appellees did
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not move to repurchase the stock until 2011, at which time they claimed the
right under the SRA to repurchase Appellant’s shares for $600,000.00.
Appellant disputed that claim, countering that the SRA permitted Appellees to
repurchase Appellant’s shares upon his termination or not at all. Appellant
also claimed that $600,000.00 was a below-market price for his stock.
The 2018 Complaint alleges that the parties eventually reached a
settlement of their dispute (the “Settlement Agreement”).1 Exhibit B to the
2018 Complaint is a draft written settlement agreement never signed by
Appellees. Appellant claims Appellees represented to him that the written
draft substantially sets forth the terms of the parties’ Settlement Agreement.
The written draft contemplated that Appellees would pay Appellant
$600,000.00 for six shares of his stock and the greater of $600,000.00 or six
percent of the fair market value of LSA in 2017. 2018 Complaint, at ¶ 22.
Appellant alleged that Appellees partially performed their obligations under
the Settlement Agreement and then breached. Appellant then filed the 2018
Complaint alleging causes of action for breach of the Settlement Agreement,
detrimental reliance, unjust enrichment, and conversion. The civil action on
the 2018 Complaint remained pending as of the filing of this appeal.2
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1 We are cognizant that Appellees contest the existence and validity of a
Settlement Agreement in their defense of the 2018 Complaint. Nothing in this
opinion is intended to express an opinion on that issue.
2 Appellees represent in their brief that discovery is ongoing in that case.
Appellees’ Brief at 4, 8.
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On July 9, 2021, Appellant filed the instant action (the “2021
Complaint”), alleging counts of fraud, minority shareholder oppression, and
declaratory judgment. These claims, per Appellant’s brief, “involve many of
the same background allegations that are referenced in the 2018
Complaint[.]” Appellant’s Brief at 7. But Appellant claims he could not have
known in 2018 of Appellee’s alleged fraudulent scheme, in Appellant’s words,
“fraudulently inducing Appellant into believing that there was an enforceable
Settlement Agreement […] when, in fact, as was discovered during [Laura’s]
deposition, taken in discovery in the litigation of the 2018 Complaint, that
Appellees never had any intention of fully performing their obligations under
the Settlement Agreement[.]” Appellant’s Brief at 7-8. For that reason,
Appellant posits that the causes of action in the 2021 Complaint are distinct
from those of the 2018 Complaint and could not have been joined in the 2018
Complaint.
On August 9, 2021, Appellees filed preliminary objections to the 2021
Complaint, in which they alleged that Appellant waived all the claims in his
2021 Complaint pursuant to Pa.R.C.P. 1020(d),3 and pursuant to the gist of
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3 Rule 1020(d) provides:
(d) Failure to Join--Waiver. If a transaction or occurrence gives
rise to more than one cause of action heretofore asserted in
assumpsit and trespass, against the same person, including
causes of action in the alternative, they shall be joined in separate
counts in the action against any such person. Failure to join a
(Footnote Continued Next Page)
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the action doctrine. Appellant answered the preliminary objections on
September 3, 2021. The parties filed competing briefs, and on June 27, 2022,
the trial court entered an order sustaining Appellees’ preliminary objections
and dismissing Appellant’s 2021 Complaint. The trial court amended that
order on July 2, 2022. This timely appeal followed.
In its Pa.R.A.P. 1925(a) opinion, the trial court reasoned that Appellant’s
minority shareholder oppression and declaratory judgment causes of action
were waived because they sought monetary, rather than equitable, relief.
Trial Court Opinion, 11/21/22, at 2-3. The court agreed with Appellees that
1020(d) required Appellant in this case to allege all his causes of action in his
2018 Complaint, and that he therefore waived the causes of action in his 2021
Complaint. The trial court noted that Appellant’s minority shareholder
oppression and declaratory judgment causes of action expressly requested an
award of damages in excess of $50,000.00.4 Trial Court Opinion, 11/21/22,
at 3; 2021 Complaint, Ad Damnum clauses following ¶¶ 95 and 101.5 The
trial therefore reasoned that these two causes of action are not equitable in
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cause of action as required by this subdivision shall be deemed a
waiver of that cause of action as against all parties to the action.
Pa.R.C.P. 1020(d).
4 Likewise, the cover page of the 2021 Complaint describes the action as an
intentional tort.
5 The parties refer to these clauses as the ad damnum clauses.
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nature because an adequate remedy exists at law. Trial Court Opinion,
11/21/22, at 3.
As to Appellant’s fraud claim, the trial court found it barred by Rule
1020(d) and by the gist of the action doctrine. The trial court reasoned that
Appellant’s fraud claim arises out of Laura’s alleged breach of the Settlement
Agreement. “[I]f the [Settlement Agreement] is a valid and enforceable
contract […] Appellees’ non-performance, even if based upon an intent never
to perform, constitutes a breach of contract, not fraud.” Trial Court Opinion,
11/21/22, at 5. The trial court further noted that Appellant used nearly
identical language to assert his 2018 breach of contract claim and his 2021
fraud claim. Id. at 6-7.
Appellant took this timely appeal from the trial court’s order, presenting
the following questions:
I. Whether Appellant’s claims asserted […] for minority
shareholder oppression and […] declaratory judgment
constituted equitable claims which were not required to
have been brought by Appellant pursuant to Pa.R.C.P.
1020(d) in his earlier 2018 Complaint.
II. Whether Appellant should have been afforded the
opportunity to amend Counts II [Minority Shareholder
Oppression] and III [Declaratory Judgment] of his 2021
Complaint to clarify any ambiguity that may have existed as
to the equitable nature of such claims, given that such
amendments are supposed to be liberally permitted.
III. Whether Appellant’s claim for fraud (intentional
misrepresentation) is not barred by the gist of the action
doctrine where it does not assert an alternative claim for
Appellees’ failure to perform under the Settlement
Agreement, but instead asserts that Appellees intentionally
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“tricked” Appellant into believing that Appellees intended to
perform on the purported Settlement Agreement when, in
fact, Appellees never had such an intention.
IV. Whether Appellant’s claim for fraud (intentional
misrepresentation) in Count I of Appellant’s 2021 Complaint
is waived pursuant to either [Pa.R.C.P.] 1020(d) or […]
1033(a) where Appellant filed his 2021 Complaint asserting
his new fraud claim that was predicated upon a set of facts
and circumstances that were not previously known and were
distinct from those asserted in his 2018 Complaint.
Appellant’s Brief at 3-4.
On review of an order sustaining preliminary objections, we must
determine whether the averments in the complaint, along with any attached
exhibits and documents, would support recovery if proven. McNaughton
Prop., LP v. Barr, 981 A.2d 222, 224 (Pa. Super. 2009). We must consider
all the material facts alleged in the complaint, as well as all inferences
reasonably deducible therefrom, as true. Feingold v. Hendrzak, 15 A.3d
937, 941 (Pa. Super. 2011). Where, as here, an order sustaining preliminary
objections will result in the dismissal of a suit, the trial court may sustain
preliminary objections only if the case is free and clear from doubt. Godlove
v. Humes, 303 A.3d 477, 481 (Pa. super. 2023). We reverse the trial court
only in the event of an error of law or abuse of discretion. McNaughton
Prop., LP, 981 A.2d at 224. An abuse of discretion may occur, for example,
where the trial court dismisses a case without leave to amend in a case where
an amended complaint would not be futile. Hill v. Ofalt, 85 A.3d 540, 557
(Pa. Super. 2014).
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We consider Appellant’s first two questions together. Appellant claims
his declaratory judgment and minority shareholder oppression claims were
equitable in nature, and that the trial court erred in finding otherwise. Both
claims, according to Appellant, request from the trial court a legal declaration
that Appellant remains the owner of 12 shares of LSA stock that were his at
the time of his resignation from LSA. Appellant claims the SRA gave Laura
the right to repurchase his LSA stock upon his “termination” but not upon his
“resignation.” Appellant’s Brief at 14. And, in that circumstance, Appellant
was obligated to sell the stock upon Laura’s election to redeem. Appellant
also challenges the timing of Laura’s election to repurchase and cancel
Appellant’s shares of LSA stock, approximately a year and a half after
Appellant’s departure from LSA. Appellant’s Brief at 15. Given Appellees’
partial performance and payment under the Settlement Agreement, Appellant
believes a declaration of his continued status as a minority owner of LSA, and
protection of his rights as such, is necessary.
“[E]quity has jurisdiction only in the absence of full, complete, and
adequate remedy at law.” City of Philadelphia v. Armstrong, 271 A.3d
555 (Pa. Cmwlth. 2022). Thus, if the trial court is correct that Appellant’s
shareholder oppression and declaratory judgment actions have a full remedy
at law, we must affirm its order as to these counts. Appellant’s minority
shareholder oppression claim rests on the principle that majority shareholders
have a duty to protect the interests of minority shareholder. See Hill, 85
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A.3d at 550 (noting the “long-recognized principle of Pennsylvania law that
‘majority shareholders have a duty to protect the interests of the
minority.’”) (quoting Ferber v. Am. Lamp Corp., 469 A.2d 1046, 1050 (Pa.
1983) (emphasis added in Hill). Moreover, “[a] claim of oppressive conduct,
like a claim of breach of fiduciary duty, ‘sounds in equity[.]” Ford v. Ford,
878 A.2d 894, 899 (Pa. Super. 2005).6
Our review of the 2021 Complaint reveals that Count II of the 2021
Complaint (minority shareholder oppression), alleges, among other things,
that Appellees have excluded Appellant from “receiving the true value of
[Appellant’s] LSA stock, including without limitation, [Appellant’s] rights as a
minority shareholder, including actual and de facto shareholder distributions
to which [Appellant] has been entitled but denied.” 2021 Complaint, at ¶ 87.
Appellant further alleges that Appellants “have systematically and
intentionally frustrated [Appellant’s] reasonable expectations and legal
entitlements as a current minority shareholder of [LSA].” Id. at ¶ 89. At the
conclusion of Count II, Appellant requests financial damages and a court order
for Appellees to acquire his shares of LSA stock at market value. Id. at the
Ad Damnum clause following ¶ 95. In Count III of the 2021 Complaint
(Declaratory Judgment), Appellant requests a declaration that he remains the
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6 Ford involved the appointment of a custodian, pursuant to 15 Pa.C.S.A.
§ 1767(a) in response to the minority shareholders’ claim of oppressive
conduct by the majority shareholder.
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owner of his 12 shares of LSA stock. 2021 Complaint at ¶ 101 and the Ad
Damnum clause following ¶ 101.
We are cognizant that both ad damnum clauses include a boilerplate
request for damages in an amount greater than $50,000.00. Count II, as
noted just above, seeks an order directing Appellees’ to complete their
acquisition of Appellant’s LSA stock at market value. In essence, Appellant
wants money, and money can be recovered in an action at law. Hence, the
trial court’s finding that these counts do not sound in equity.
But despite Appellant’s inartful pleading, we conclude that the trial court
erred in dismissing Appellant’s declaratory judgment and minority shareholder
oppression causes of action. Both causes of action sound in equity.7 Both
counts, separately and in tandem, allege harms for which there is no adequate
remedy at law. Reading the facts alleged in the complaint along with all
reasonable inferences therefrom, as we must under the applicable standard
of review, Appellant claims Appellees acted in disregard of his rights as a
minority shareholder in LSA and seeks a declaration that he remains a minority
shareholder. While Appellant may have sustained financial damages due to
Appellees’ alleged disregard of his minority shareholder status, the 2021
Complaint seeks to establish his continued status as a minority shareholder of
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7 We are aware that the fiduciary duty of majority shareholders has been
construed variously as an action sounding in equity or tort. Linde v. Linde,
220 A.3d 1119, 1147-48 (Pa. Super. 2019), appeal denied, 236 A.3d 1048
(Pa. 2020). In either case, equitable relief is available. Id. at 1148.
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LSA, to whom the majority shareholders owe a duty. These requests are not
remediable by money damages. Indeed, the nub of Appellant’s argument
appears to be that he did not contest the Appellees’ repurchase of his 12
shares of LSA stock, in accordance with his obligations under the Settlement
Agreement, so long as Appellees were performing their obligations by making
payments thereunder. Because Appellees’ payments ceased earlier than
Appellant believes they should have, and because there is an ongoing dispute
as to the validity and terms of the Settlement Agreement, Appellant has
sought a declaration of his continued ownership of 12 shares of LSA.
Based on the foregoing, we conclude that Counts II and III seek forms
of relief not remediable at law, and further that an amended complaint could
address any confusion in this regard.8 Perhaps, as Appellees argue,
Appellant’s ultimate aim is not equitable relief but the monetary damages he
sought in the 2018 Complaint. And perhaps a final resolution of the litigation
of the 2018 Complaint will obviate the need for further litigation of the case
before us. In the future, the parties may address these issues with any
appropriate motions. At the pleadings stage however, we do not believe
dismissal of Appellant’s shareholder oppression and declaratory judgment
causes of action was appropriate, as both claims request some relief for which
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8An ad damnum clause is permitted at any point in the litigation. R.P. Clarke
Personnel, Inc. v. Commonwealth Nat’l Bank, 559 A.2d 560, 566 (Pa.
Super. 1989).
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no adequate remedy is available at law. Appellant’s request for some
remedies more appropriate to an action at law can be addressed in an
amended complaint.
It follows from the foregoing that Appellant has not waived his equitable
claims under Rule 1020(d), because that rule applies only to tort and contract
actions: “If a transaction or occurrence gives rise to more than one cause of
action heretofore asserted in assumpsit and trespass, against the same
person, including causes of action in the alternative, they shall be joined in
separate counts[.]” Pa.R.C.P. 1020(d)(emphasis added). Our Supreme Court
has recognized that “Rule 1020(d) concerns causes of action sounding in
assumpsit and trespass, not equity.” D’Allesandro v. Wassel, 587 A.2d
724, 726 n.2 (Pa. 1991) (emphasis added). Rule 1020(d) therefore does not
bar the causes of action at Counts II and III of Appellant’s 2021 Complaint
insofar as they seek equitable relief.
Having disposed of the first two questions presented, we now turn our
attention to the third and fourth, in which Appellant challenges the trial court’s
conclusions that his fraud claim was waived under Rule 1020(d) and/or barred
by the gist of the action doctrine. We begin with Rule 1020(d). As noted
above, Rule 1020(d) requires joinder of trespass and assumpsit actions arising
out of the same occurrence. The 2018 Complaint includes a cause of action
for breach of the Settlement Agreement, and the fraud claim in the 2021
Complaint alleges fraud based on allegedly newfound evidence that Appellees
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never intended to perform their obligations under the Settlement Agreement.
Because the former claim sounds in assumpsit and the latter in trespass, Rule
1020(d) mandated joinder if the two causes of action arose from the same
occurrence.
This Court considered this issue in Hineline v. Stroudsburg Elec.
Supply Co., Inc., 586 A.2d 455 (Pa. Super. 1991), appeal denied, 598 A.2d
284 (Pa. 1991). This Court first noted that
Rule 1020(d) is to “be liberally construed to secure the just,
speedy and inexpensive determination of every action or
proceeding” to which it is applicable. Pa.R.C.P. 126. The purpose
of Rule 1020(d) is to avoid multiplicity of suits, thereby ensuring
the prompt disposition of all rights and liabilities of the parties in
a single suit.
Id. at 456.9 Cases arise out of the same transaction or occurrence “where
they involve ‘a common factual background or common factual or legal
questions.’” Id. (quoting Stokes v. Local Order of Moose Lodge No. 696,
466 A.2d 1341, 1345 (Pa. 1983)). Likewise, the Hineline Court quoted with
approval the following definition of transaction:
A ‘transaction’ within the statutes as to counterclaims is
defined as the act of transacting or conducting any business,
negotiation, management, or proceeding. The word, as used in
counterclaim statutes, is broad and comprehensive, and is
construed liberally and according to its natural and ordinary
signification. In other words, the term is not a technical one and
must be construed according to the context and approved usage.
It is broader in meaning than ‘contract’ or ‘tort,’ and it may include
either or both. It means any act as affecting legal rights or
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9We are cognizant that Rule 1020(d) has been amended since Hineline. The
amendment does not affect Hineline’s applicability to the present case.
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obligations, and properly embraces an entire occurrence out of
which a legal right springs or on which a legal obligation is
predicated, although it has been held that the term is not
synonymous with ‘accident’ or ‘occurrence.’
Id. at 457 (quoting U.S. Nat’l Ins. Co. v. M. London, Inc., 487 A.2d 385,
393 (Pa. Super. 1985)).
The plaintiff in Hineline filed suit for wrongful termination after he was
fired for disabling the audio/video surveillance system his company used on
employees. He filed a separate lawsuit alleging, among other things, a
violation of the Wiretap Act10 and invasion of privacy. The Hineline Court
noted that both complaints involved “identical or substantially the same
factual allegations[.]” Id. at 458. Thus, both cases would involve proof of
the employer’s aural monitoring of its employees and customers and the
plaintiff’s disconnection of the equipment. Pretrial discovery would have been
duplicative and two separate juries would have considered the same evidence
and many of the same legal questions. The Hineline Court concluded, for
these reasons, that both cases arose out of the same occurrence and that Rule
1020(d) barred the latter. Id. at 459. This Court rejected the plaintiff’s
argument that the employer’s use of surveillance equipment and the plaintiff’s
subsequent termination for disconnecting it arose from different occurrences.
“But for [the employer’s] use of the illegal equipment, [plaintiff] would not
have a cause of action for wrongful discharge.” Id. “We disagree that the
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10 18 Pa.C.S.A. § 5701, et. seq.
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phrase ‘same transaction or occurrence’ within the meaning of Rule 1020(d)
should be so stringently interpreted as to mean a single fact or instantaneous
event, rather than a combination of acts and events giving rise to a right to
judicial relief.” Id.
A careful review of both of Appellant’s complaints reveals that they
describe the same facts—Appellant’s resignation from LSA, followed by a
dispute as to the terms of Appellees’ repurchase of Appellant’s LSA stock,
followed by the alleged negotiation, partial execution, and breach of the
Settlement Agreement. 2018 Complaint at ¶¶ 7-36, 2021 Complaint at ¶¶ 6-
72. The 2021 Complaint is longer and more detailed because it expounds on
some of the underlying facts, such as by clarifying that Appellant’s 2009
departure from LSA was a resignation, not an involuntary termination. 2021
Complaint at ¶¶ 6-7. Likewise, the 2021 Complaint includes a detailed
account of the terms of the SRA and Appellees’ alleged failure to comply
therewith in their attempts to repurchase Appellant’s stock. Id. at ¶¶ 9-36,
65-69. The detailed account of the SRA terms was absent from the 2018
Complaint. Likewise, the 2021 Complaint provides a more detailed factual
account of the alleged Settlement Agreement, Appellees’ alleged partial
performance, and the alleged subsequent breach, than did the 2018
Complaint. Compare 2021 Complaint, at ¶¶ 37-64, with 2018 Complaint,
¶¶ 20-36. Nonetheless, the operative facts are the same, and they were
known to Appellant prior to the filing of the 2018 Complaint.
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Most significant, for present purposes, is that the 2018 Complaint
alleges that, in 2017, Appellees, after they ceased making payments under
the Settlement Agreement, “claimed to be ‘unaware’ of [the Settlement
Agreement] or any additional payments to be made to [Appellant].” 2018
Complaint, at ¶ 36. Similarly, the 2021 Complaint alleges that,
“In November of 2017, despite the above Settlement, and
notwithstanding [Appellees’] partial performance of the specific
terms of that Settlement which [Appellant] has now learned was
part of the Fraudulent Scheme, [Appellees] repudiated the
Settlement and denied any obligation to make a final payment
to [Appellant] as provided by the Written Settlement Agreement.”
2021 Complaint, at ¶ 64 (emphasis added). Thus, it is clear from both
complaints that Appellees disputed the existence (and/or terms) of the alleged
Settlement Agreement prior to the filing of the 2018 Complaint. The 2021
Complaint simply recharacterizes Appellees’ pre-existing intent not to comply
with the Settlement Agreement as a “fraudulent scheme,” as seen in ¶ 64 and
elsewhere throughout that document.
Appellant now argues that he was not aware of Laura’s deception until
her deposition during the litigation of the 2018 Complaint. But the allegations
in both the 2018 and 2021 Complaints belie that claim. Both complaints
expressly allege that Appellees informed Appellant in 2017 that they did not
intend to do what Appellant believed they had agreed to do under the
Settlement Agreement.
In Hineline, this Court explained that a “transaction,” within the
meaning of 1020(d), is broader in meaning than either a contract or tort and
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can include both. Further, the term encompasses an entire occurrence out of
which a legal right arises. Hineline, 586 A.2d 457. Instantly, the entire
occurrence out of which the 2018 and 2021 Complaints spring is the parties
negotiation, execution, and performance of the Settlement Agreement. And
while Appellant alleges both contract and tort causes of action arising out of
that transaction, Hineline makes clear that a transaction can encompass
both.
Likewise, Appellant’s 2021 fraud cause of action depends on the same
operative set of facts as the causes of action in the 2018 Complaint. Here, as
in Hineline, discovery will likely be duplicative, and juries would decide the
same or substantially similar legal and factual questions. The instant fraud
cause of action turns on Appellant’s allegation that Appellees entered into the
Settlement Agreement with no intention of performing their obligations. But,
as the trial court noted, Appellees have disputed their assent to the Settlement
Agreement and its terms. And even if Appellees are unsuccessful in
establishing that no Settlement Agreement existed, their nonperformance of
the Settlement Agreement sounds in breach of contract, not in fraud. Here,
just as in Hineline, the cause of action in the second complaint would never
exist but for the events that led to the first complaint. Here, just as in
Hineline, the single instantaneous event of Laura’s deposition testimony does
not remove the fraud cause of action from the combination of acts and events
that gave rise to the relief requested in the 2018 Complaint. For these
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reasons, we conclude that the fraud count arises from the same transaction
or occurrence as the causes of action in the 2018 Complaint, and that
Appellant has waived his fraud claim under Rule 1020(d).
In summary, we have concluded that the declaratory judgment and
minority shareholder oppression causes of action in the 2021 Complaint sound
in equity and therefore can go forward. The trial court erred in sustaining
Appellees’ preliminary objections to those counts. The fraud cause of action
in the 2021 Complaint is barred under Rule 1020(d). We affirm the trial
court’s order insofar as it sustained Appellees’ preliminary objection to the
fraud count. We remand for further proceedings consistent with this opinion.
Order affirmed in part and reversed in part. Case remanded.
Jurisdiction relinquished.
Date: 4/25/2024
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