D. ALLEN HORNBERGER Appellant
DAVE GUTELIUS EXCAVATING, INC. Appellee
from the Judgment Entered December 19, 2016 In the Court of
Common Pleas of Union County Civil Division at No(s): 15-085
BEFORE: MOULTON, J., SOLANO, J., and MUSMANNO, J.
Allen Hornberger appeals from the December 19, 2016 judgment
entered in the Court of Common Pleas of the 17th Judicial
District (Union County Branch) in favor of Dave Gutelius
Excavating, Inc. ("DGE") following a non-jury
trial. We affirm.
a closely held Pennsylvania corporation that operates an
excavation construction business. Hornberger worked as a land
surveyor for DGE from March 1999 until November 2011. In
February 2006, Hornberger bought 10 shares of common capital
stock in DGE pursuant to a stock purchase agreement. On
February 16, 2006, Hornberger also entered into a
shareholders' agreement ("Agreement") with DGE
and other shareholders. Under paragraph 3 of the Agreement,
DGE retained the right to redeem Hornberger's 10 shares
if he ceased being an employee:
In the event that Hurst, Gramly, Beaver, Shaffer, or
Hornberger resign[s], retires, or otherwise voluntarily
or involuntarily terminates his employment with [DGE], [DGE]
shall have the right to redeem all or part of the shares of
stock of [DGE] owned by such Stockholder within
thirty (30) days of the Stockholder's
termination as to whether it desires to redeem all or part of
the stock of [DGE] owned by the Stockholder and, if
so, the number of shares which it desires to purchase at a
price to be determined and paid in accordance with the
provisions of Paragraph 5 hereof. . . .
¶ 3 (emphases in original). Paragraph 5 of the Agreement
With respect to the purchase price for any shares in [DGE] of
Hurst, Gramly, Beaver, Shaffer, or Hornberger
purchased pursuant to Paragraphs 2, 3 and 13 hereof relating
to the voluntary or involuntary relinquishment of a
Stockholder's shares in [DGE] shall be
calculated by reference to the "Adjusted Net Book
Value." The term "Adjusted Net Book
Value" shall mean the value of [DGE's] shares
as of the end of the month immediately preceding the sale or
transfer, as determined by [DGE's] independent certified
public accountants, subject to the following provisions:
(i) No allowance shall be made for the goodwill or trade name
(ii) Accounts payable shall be taken at face amounts less
discounts deductible therefrom, and accounts receivable shall
be taken at face amount less discounts less a reasonable
reserve for bad debts.
(iii) All real property . . . and all tangible personal
property . . . shall be taken into account at their fair
market value as of the date of the proposed sale or transfer.
. . .
Id. ¶ 5 (emphases in original).
voluntarily quit his employment with DGE on November 30,
2011. After obtaining a valuation from Bradley D. Kellett, an
independent certified public accountant ("CPA"),
DGE sought to redeem Hornberger's 10 shares of stock for
the purchase price of $42, 800. Kellett's valuation
I have calculated the adjusted net book value of [DGE] as of
August 31, 2013 for use in determining the value to be paid
to Allen Hornberger who currently owns 10 shares of common
stock of the corporation. . . .
The net book value as of August 31, 2013 is calculated as $6,
436 per share before discounts for a minority interest and
lack of marketability. These types of discounts are widely
used in valuation methodologies . . . .
. . . I used a conservative minority discount of 30% and a
conservative lack of marketability discount of 5%, as
appropriate. As a result, the minority interest discount is
$1, 931 per share and the ...