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[U] In re Irex Corporation

Superior Court of Pennsylvania

December 5, 2013

IN RE: IREX CORPORATION, Appellee
v.
MITCHELL PARTNERS, LTD., ET AL., Appellants IREX CORPORATION,
v.
MITCHELL PARTNERS, LTD.; JAMES E. MITCHELL, AS GENERAL PARTNER OF J.E. MITCHELL & CO., L.P.; J.E. MITCHELL & CO., L.P., AS GENERAL PARTNER, TRADING AS MITCHELL PARTNERS, L.P.; GARY L. SAMPLE; JOYCE A. SAMPLE; JOSEPHINE A. FEAGLEY; GLS PARTNERS; AND LONG ORTHODONITIC ASSOCIATES, P.C. RETIREMENT PLAN APPEAL OF: SAMPLE, GARY; SAMPLE, JOYCE; FEAGLEY, JOSEPHINE; GLS PARTNERS; LONG ORTHODONTICS, PC RETIREMENT PLAN APPEAL OF: SAMPLE, GARY; SAMPLE, JOYCE; FEAGLEY, JOSEPHINE; GLS PARTNERS; LONG ORTHODONTICS, PC RETIREMENT PLAN

NON-PRECEDENTIAL DECISION

Appeal from the Judgment Entered March 28, 2013 In the Court of Common Pleas of Lancaster County Civil Division at No.: CI-07-01322

BEFORE: BENDER, P.J., WECHT, J. AND FITZGERALD, J. [*]

MEMORANDUM

BENDER, P.J.

Irex Corporation (Irex) commenced this dissenters' rights action pursuant to the Pennsylvania Business Corporations Law (BCL), 15 Pa.C.S. §§ 1571-80. Following a non-jury trial, judgment was entered on March 28, 2013, in favor of Irex. Respondents-below appeal from the judgment in two groups: (1) Mitchell Partners, LTD; James E. Mitchell, as general partner of J.E. Mitchell & Co., L.P.; J.E. Mitchell & Co., L.P., as general partner trading as Mitchell Partners, L.P. (collectively, the Mitchell Partners); and (2) Gary L. Sample; Joyce A. Sample; Josephine A. Feagley; GLS Partners; and Long Orthodontic Associates, P.C., Retirement Plan (collectively, the Sample Parties). We affirm.

The Mitchell Partners raise the following issues on appeal:

[1.] Whether the trial court's stated bases (including its weighing of the trial evidence and its credibility decisions) for its determination that the fair value of Irex common stock on October 20, 2006[, ] was $66.00 per share are predicated upon erroneous conclusions of law and the manifestly unreasonable and capricious disregard of competent evidence.
[2.] Whether the trial court erred as a matter of law in applying an "asbestos discount" to its conclusion of value regarding the fair value of Irex stock on October 20, 2006, where the "asbestos discount" was calculated using ipse dixit formulations proffered by Irex's analysts that find no support in the financial community or in Pennsylvania law.
[3.] Whether the trial court erred as a matter of law in excluding evidence of Irex's actual financial performance following the October 20, 2006 Merger that was offered for the sole purpose of assessing the reasonableness of the cash flow projections prepared by the conflicted insiders comprising Irex's senior management and subsequently used in the discounted cash flow analyses offered by Irex at trial as proof of fair value. In view of Irex's post-trial assertion highlighting the absence of any evidence of Irex's post-Merger financial performance, this Question includes the issue of whether Irex is now estopped from contesting the consideration of the evidence demonstrating Irex's post-Merger performance proffered by the Mitchell Partners Respondents at trial.
[4.] Whether the trial court erred as a matter of law and/or abused its discretion in its analysis and conclusions regarding the interest awarded to the Mitchell Partners Respondents in connection with the deferred payment received for their Irex common stock.

Mitchell Partners brief at 4. In addition, the Sample Parties raise the following issue:

Whether Joyce Sample retained her rights as a dissenting shareholder when a third party custodian inadvertently and without authorization tendered her shares to Irex approximately one year after the merger[.]

Sample Parties brief at 3.

In addressing these issues, our review is ...

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