SCOTT F. LINDE, SHAREHOLDER AND DIRECTOR OF LINDE ENTERPRISES, INC. AND JOHN PIEPOLI, DIRECTOR OF LINDE ENTERPRISES, INC., Appellants
LINDE ENTERPRISES, INC., BARBARA LINDE, ERIC LINDE, AND GARY LINDE, Appellees
Submitted January 5, 2015
Appeal from the Order Entered January 10, 2014, Court of Common Pleas, Wayne County, Civil Division, No(s): 18-CV-2013; 109-CV-2013. Before HAMILL, J.
Sean P. McDonough, Moosic and Ronald M. Rugaj, Honesdale, for appellants.
John J. McGovern, Jr., Scranton, for Linde Enterprises, appellee.
Charles A. Shaffer, Kingston, for Linde, B., appellee.
George A. Reihner, Scranton, for Linde, E., appellee.
Gary Linde, appellee, pro se.
BEFORE: MUNDY, OLSON and WECHT, JJ.
Appellants, Scott F. Linde, shareholder and director of Linde Enterprises, Inc., and John Piepoli, director of Linde Enterprises, Inc., appeal from the order entered on January 10, 2014. The subject order denied Appellants' motions for partial summary judgment and granted the joint motion for summary judgment that was filed on behalf of Linde Enterprises, Inc., Barbara Linde, Eric Linde, and Gary Linde (hereinafter, collectively, " the Defendants" ). We affirm.
On January 14, 2013, Appellants filed a " Complaint in Equity for a Declaratory Judgment and Injunctive Relief" against the Defendants at docket number 18-CV-2013. Within the complaint, Appellants averred that: Linde Enterprises, Inc. (hereinafter " LEI" ) is a Pennsylvania corporation, with its principal place of business in Wayne County, Pennsylvania; Scott Linde is " both  a shareholder and director of [LEI]; " and John Piepoli is " a member of the board of directors of [LEI]." Appellants' Complaint, 1/14/13, at ¶ ¶ 1-3. According to the complaint, on December 3, 2012, Barbara Linde, Eric Linde, and Scott Linde together owned 100% of the total, 735 shares that were issued by LEI. Id. at ¶ 7. On that date, LEI's 735 shares were owned as follows: Scott Linde owned 320 shares of LEI common stock; Barbara Linde owned 115 shares of LEI common stock; and, Eric Linde owned 300 shares of LEI common stock. Id.
Pursuant to LEI's bylaws, the annual LEI shareholders' meeting was to occur on the second Tuesday of March; special shareholders' meetings could be called " by ten [days'] notice given by the President or a majority of the outstanding shares." Id. at ¶ 10; LEI Bylaws, dated 2/7/97, at Art. III, ¶ ¶ 1-2; see also 15 Pa.C.S.A. § 1704
(titled: " [p]lace and notice of meetings of shareholders; " declaring: " Notice in record form of every meeting of the shareholders shall be given by, or at the direction of, the secretary or other authorized person to each shareholder of record entitled to vote at the meeting at least: (1) ten days prior to the day named for a meeting that will consider a fundamental change . . . ; or (2) five days prior to the day named for the meeting in any other case" ). Notwithstanding the bylaws and Pennsylvania's Business Corporation Law (hereinafter " BCL" ) notice statutes, Barbara and Eric Linde called a special meeting of LEI's shareholders without providing Scott Linde with any notice of the special meeting. Appellants' Complaint, 1/14/13, at ¶ 9.
On December 3, 2012, Barbara and Eric Linde attended the special shareholders' meeting; Scott Linde was absent. During this special meeting, Barbara and Eric Linde purported to adopt the following resolutions:
a) Scott  Linde, an officer, director, employee and shareholder of the Corporation is hereby removed as an officer[,] director[,] and employee of the Corporation as a result of his fraudulent conduct with respect to the Corporation and the illegal use and abuse of the Corporation's assets;
b) Robert Hessling, an employee of the Corporation is hereby removed as an employee of the Corporation as a result of his fraudulent conduct with respect to the Corporation and the illegal use and abuse of the Corporation's assets; and
c) Barbara Linde is elected to serve as President and Secretary of the Corporation.
Id. at ¶ 8; see also Shareholder Resolution, 12/3/12, at 1.
Ten days later -- on December 13, 2012 -- LEI conducted a shareholders' meeting and a directors' meeting. Appellants admit that the requisite (and proper) ten-day notice of the shareholders' meeting was provided to all these shareholders prior to the December 13, 2012 meeting. Appellants' Complaint, 1/14/13, at ¶ 24. Appellants also admit that Scott Linde attended the December 13, 2012 shareholders' meeting. Appellants' Answer to Joint Motion for Summary Judgment, 12/11/13, at 3. The minutes from December 13, 2012
shareholders' meeting declare the following:
Meeting was called to order at 1:00 PM on December 13, 2012 by Barbara Linde. In attendance were Barbara Linde, Eric Linde and Scott Linde.
. . .
1. Motion was made by Barbara Linde and seconded by Eric Linde to affirm the resolution for the special shareholders meeting on December 3, 2012. Voting for the motion was Barbara Linde and Eric Linde and voting against the motion was Scott Linde. Motion Passed.
2. Motion was made to elect the Board of Directors for the remaining calendar year 2012 and for 2013 or until the next annual meeting to be held. . . .
Individual Ballots were distributed. The following four individuals were nominated to fill three positions on the Board of Directors: Eric Linde, Barbara Linde, Gary Linde and Scott Linde.
Voting was as follows: 415 votes for Eric Linde; 415 votes for Barbara Linde and 415 votes for Gary Linde. Scott Linde received one vote for each director position.
It was resolved that based upon the voting, the Board of Directors for the remaining calendar year 2012 and for 2013 or until the next annual meeting to be held shall consist of Eric Linde, Barbara Linde and Gary Linde. Motion passed.
December 13, 2012 LEI Shareholders' Meeting Minutes at 1 (internal italics omitted).
As Appellants' complaint claimed, all of the above actions were invalid, as Scott Linde was not given notice of the initial, December 3, 2012 special shareholders' meeting. Therefore, according to Appellants, the December 3, 2012 special shareholders' meeting was illegal and the resolutions passed during the December 3, 2012 shareholders' meeting were " null and void." Appellants' Complaint, 1/14/13, at ¶ ¶ 18 and 25-26. Further, Appellants claimed, since the resolutions were void, the resolutions could not have been ratified at the December 13, 2012 shareholders' meeting. Id. Appellants also claimed that " Scott [Linde] never gave his written consent to the [December 3, 2012 r]esolution . . . as required by [15 Pa.C.S.A. § 1766] and therefore the [r]esolution is void ab initio, for lack of written consent to the [r]esolution by all shareholders without a meeting." Id. at ¶ 16 (emphasis in original). Finally, Appellants claimed that the December 13, 2012 election of Eric and Gary Linde to the board of directors was invalid because " Scott Linde and John Piepoli were not removed from their position[s]" as directors of LEI and " there were no vacancies on the Board to which Eric Linde and Gary Linde could be elected." Id. at ¶ ¶ 25-26.
Appellants did not request monetary relief in their complaint. Rather, Appellants requested " a judicial determination that the actions of [LEI] and [d]efendants Barbara Linde and Eric Linde taken on December 3, 2012, be declared null and void . . . and that all actions taken by Barbara Linde, Eric Linde and Gary Linde as the Board of Directors of [LEI] . . . be declared null and void." Id. at " Wherefore" Clause.
On January 31, 2013 -- which was approximately two weeks after Appellants filed the above complaint -- LEI's shareholders convened another special shareholders' meeting. The minutes from that special meeting reflect that Barbara and
Eric Linde appeared at the meeting in person and that Scott Linde was represented at the meeting via proxy. January 31, 2013 LEI Shareholders' Meeting Minutes at 1. In relevant part, the minutes from the January 31, 2013 meeting declare:
The first order of business was the discharge of all currently serving directors, except for Barbara J. Linde and the election of new directors. The following individuals were nominated to serve with Barbara J. Linde as directors of the Corporation:
Eric R. Linde
Upon motion duly made, seconded and by a vote of 415 in favor and 320 against, it was,
RESOLVED, all currently serving directors, except for Barbara J. Linde, are immediately discharged and the above-named individuals are elected as the directors of the Corporation to serve with Barbara J. Linde in accordance with the Bylaws until the next annual election of directors and until successors are duly-elected and have qualified or until earlier death, resignation or removal.
The next order of business was ratification of prior transactions taken ...