Justia U.S. 3rd Circuit Court of Appeals Opinion Summaries

Harold and his son William started a corporation, operated by William. Harold made loans to the corporation. When the corporation ceased operating William and his wife formed PCI-2 to take its place; despite an agreement, Harold's loans were not repaid and Harold made loans to PCI-2, lending about $300,000 to PCI-1 and PCI-2. William and his wife acquired other corporations and substantial real estate holdings. One business, WEL, issued one share of stock to Harold and nine shares to Harold as custodian for William's infant son, L.L. Harold was a director of WEL. William and his wife divorced. In 2004, Harold filed a loan repayment lawsuit against WEL and PCI-2; William did not defend, asserting there was no money. Harold obtained default judgments of $1,107,550 and $1,204,439, commenced execution proceedings against property that WEL owned, and obtained approximately $320,000 in proceeds. In the Bankruptcy Court, a custodian for shares owned by L.L. sought to recover $345,000 from Harold, claiming that Harold breached his fiduciary duties owed to L.L. The Bankruptcy Court and the district court rejected the claim. The Third Circuit reversed. Harold breached his duties as a WEL director and as a custodian for L.L.'s shares. View "In re: Lampe, Jr" on Justia Law

Shareholders implemented a plan to obtain majority ownership and buy out non-participating shareholders. Among other claims, non-participants allege that the participant-directors influenced a special committee formed to consider the fair value of shares held by non-participants. A state appraisal action is ongoing. The federal district court dismissed a suit alleging breach of fiduciary duty and unjust enrichment. The Third Circuit reversed and remanded. The Pennsylvania Supreme Court has not address whether a statute providing for appraisal of the value of shares of minority shareholders who are "squeezed out" in a cash-out merger precludes all other remedies; the court predicted that it would hold that the statute does not exclude the possibility of other claims.