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[U] Scalzo v. Thomas

Superior Court of Pennsylvania

November 26, 2013

SALVATORE SCALZO Appellant
v.
ROBERT J. THOMAS, DAVID FUSCO AND JEFFREY THOMAS, ELAINE COOK AND JAMME-K, INC. Appellee SALVATORE SCALZO Appellant
v.
ROBERT J. THOMAS, DAVID FUSCO AND JEFFREY THOMAS, ELAINE COOK AND JAMME-K, INC. Appellees

NON-PRECEDENTIAL DECISION

Appeal from the Order Entered June 4, 2012 In the Court of Common Pleas of Lackawanna County Civil Division at No(s): 10-CV-4323

Appeal from the Order Entered December 14, 2012 In the Court of Common Pleas of Lackawanna County Civil Division at No(s): 10-CV-4323

BEFORE: FORD ELLIOTT, P.J.E., PANELLA, J., and FITZGERALD, J. [*]

MEMORANDUM

PANELLA, J.

In these consolidated appeals, we are asked to review two decisions rendered by the Honorable Harold A. Thomson, Jr., Court of Common Pleas of Lackawanna County, arising from a dispute between shareholders in a close corporation known as Jamme-K, Inc. Initially, Appellants Robert J. Thomas, David Fusco, and Jeffery Thomas challenge Judge Thomson's order granting Salvatore Scalzo's request for the appointment of a custodian for Jamme-K, Inc, entered June 4, 2012. This appeal was docketed at 1263 MDA 2012. In that appeal, we conclude that since a custodian had not been named, Pa.R.A.P., Rule 311(a)(2) does not apply and therefore we do not have jurisdiction to entertain the appeal.

Subsequently, Judge Thomson granted Appellants' request for a stay of the June 4th order pending appeal. In the appeal docketed at 54 MDA 2013, Scalzo appeals from Judge Thomson's December 14, 2012, order enforcing the stay and invalidating actions taken by Jamme-K, Inc. during the pendency of the initial appeal. In that appeal, we conclude that our Rules of Appellate Procedure do not require that a trial court impose a bond when ordering a stay pending appeal, and therefore affirm the trial court's order.

Jamme-K was formed in 2003 with the intent to construct and operate a gentleman's club. The original articles of incorporation for Jamme-K stated that there were 100 authorized shares of the corporation, and declared no special provisions for voting rights. Scalzo was the sole shareholder.

It took over two years from the inception of Jamme-K until the building was renovated and the club was opened for business. During that time, Scalzo sought investors to provide new capital to support the renovation of the building. To this end, Scalzo sold shares of Jamme-K to Fusco, the Thomas brothers, and Elaine Cook, Esquire. As of March 1, 2006, Fusco owned 12 shares of Jamme-K, Robert Thomas owned 14 shares, Jeff Thomas owned 10, and Cook owned six.

Disagreements arose between the shareholders concerning various accounting and financial issues. Fusco and the Thomas brothers alleged that at a shareholder meeting on July 3, 2007, Jamme-K's Board passed a resolution directing that the articles of incorporation would be amended to designate Appellants, Attorney Cook, and Scalzo as "charter" shareholders, and that all new shareholders would hold non-voting stock.

Thereafter, on July 22, 2008, Scalzo called a special meeting of the shareholders of Jamme-K. Scalzo sought to set the number of directors of the corporation at five, nominate and elect new directors, and set the date for Jamme-K's annual shareholder meeting. Robert and Jeff Thomas responded by indicating that Jamme-K operated under a system referred to as "common-law voting, " where each shareholder was entitled to one vote; the number of shares owned was irrelevant in the voting process. The meeting was adjourned with no consensus reach on the issues raised.

On February 10, 2009, the extant voting shareholders, minus Scalzo, met to discuss an invoice submitted to the corporation by a plumbing contractor. The corporate secretary of Jamme-K, Jeff Thomas, did not send written notice or an agenda to the board members prior to the meeting. Furthermore, he did not inform Scalzo a resolution to amend the articles of incorporation for Jamme-K would be discussed at the meeting.

At the February 10, 2009, meeting, Fusco, the Thomas brothers, and Attorney Cook discussed several of the financial and accounting disputes that had arisen from the operation of Jamme-K. The four board members then voted to remove Scalzo from his positions as president and general manager of Jamme-K and replace him with Robert Thomas. They further resolved that Jamme-K had always operated under a regime of common-law voting, but through an oversight, this was not reflected in the articles of incorporation. Accordingly, the four board members directed the officers of Jamme-K to file an amendment to the articles of incorporation clarifying the use of common-law voting. On that same date, an amendment to Jamme-K's articles of incorporation was filed, indicating that Appellants, Attorney Cook, and Scalzo were "Charter Shareholders, " entitled to voting rights, and that each Charter Shareholder was entitled to one vote, regardless of shares owned. Since that date, Scalzo has been denied entry to the premises of the gentleman's club and has not had access to corporate financial information.

Approximately one and one-half years later, Scalzo filed a complaint against Appellants and Attorney Cook. Shortly thereafter, Scalzo filed a motion for the expedited appointment of a custodian for Jamme-K pending resolution of his complaint. After receiving testimony and argument, the trial court granted Scalzo's motion for appointment of a custodian. The parties were unable to agree upon a custodian, and the trial court set a date for a hearing to resolve the dispute. In the meantime, Appellants filed the appeal docketed at 1263 MDA 2012.

Shortly before the hearing, Fusco and the Thomas brothers filed a motion seeking a stay of the order granting the request for an appointment of a custodian. In place of the hearing, the trial court heard argument on Fusco and the Thomas brothers' request for a stay, which it ultimately granted. The trial court did not set a bond for the stay.

Scalzo filed multiple requests for reconsideration and informed the court of his legal position that, since the Appellants had not paid a bond, the stay was not in effect pursuant to Pa.R.A.P., Rule 1733. Pursuant to this belief, Scalzo purported to hold an annual meeting of shareholders on November 6, 2012, replacing the existing board of directors with his own designees. Furthermore, Scalzo changed ...


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