The opinion of the court was delivered by: JOYNER
We address today the motion for a preliminary injunction filed by the plaintiff in this dispute arising from a struggle for control of Inofast Manufacturing, Inc., a Pennsylvania company engaged in the manufacture of fasteners. The plaintiff is Norman Bardsley ("Norman"), a United States citizen domiciled in Austria, and a shareholder and director of Inofast. Norman commenced this action by filing a complaint on April 19, 1995, naming as defendants Powell, Trachtman, Logan, Carrle & Bowman, P.C. ("Powell, Trachtman"), a Montgomery County law firm that served as corporate counsel to Inofast; Joel P. Perilstein and Jonathan K. Hollin, who are members of the Powell, Trachtman firm; Scott Bardsley ("Scott"), who is Norman's twin brother and a shareholder of Inofast; Leigh Bardsley ("Leigh"), who is Scott and Norman's father; and David Miller. Inofast has been named as a nominal defendant.
The gravamen of Norman's complaint is that Scott and the other defendants entered into a series of unlawful transactions for the purpose of divesting Norman of his majority shareholder status. Norman has set forth claims under the Securities Exchange Act of 1934 and the Racketeer Influenced and Corrupt Organizations Act, as well as a number of common law claims. In the instant motion, Norman asks this Court primarily to set aside the elections of Inofast officers and directors conducted during the previous three annual shareholders' meetings and issue an order voiding the disputed transactions and restoring him to his majority status. A hearing on the motion was conducted on October 5, 1995 and January 3, 1996. The parties have since submitted their proposed findings of fact and conclusions of law. Accordingly, the matter is now ripe for decision.
1. Inofast was incorporated in 1981. Its stock was owned by Norman, who held 18,750 shares; Scott, who owned 11,250 shares; and Mr. Miller, Guy Mallick, Jonathan Price and Klaus Neuber, who collectively held 45,000 shares. Tr., 10/5/95, p. 3.
2. Scott had ten years' experience in the fastener industry prior to Inofast's formation, and was responsible for its day-to-day operation. Norman was a passive investor. Tr., 10/5/95, p. 52; 1/3/96, p. 105.
3. As of 1985, Messrs. Miller, Mallick, Price and Neuber had sold their shares back to Inofast. Thus, Norman's 18,750 shares represented 62.5% of Inofast's issued stock, while Scott's 11,250 shares accounted for the remaining 37.5% of the issued stock. Tr., 1/3/96, p. 43.
6. The same five individuals signed shareholders' agreements in 1987 and 1989. The agreements are identical to the 1986 agreement with respect to the stock ownership arrangement. Plaintiff's Exs. 14, 15.
7. The transfer of shares to Leigh and Messrs. Mallick and Miller was to be achieved via gifting from Norman and Scott. Tr., 1/3/96, p. 10. Scott testified that there was a plan "to gift shares over a number of years to the various recipients." Tr., 1/3/96, p. 53.
8. There arose a dispute, however, regarding who would be liable for the gift tax associated with the transactions. Leigh and Messrs. Mallick and Miller indicated that they were unwilling to ...