Bruster's v. Golden Deer

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
BRUSTER’S L.P., IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellee
v.
GOLDEN DEER CORPORATION, JCG
CHERRIES LLC,
APPEAL OF: GOLDEN DEER
CORPORATION
No. 1927 WDA 2014
Appeal from the Order Entered October 29, 2014
In the Court of Common Pleas of Beaver County
Civil Division at No(s): 11420-2014
BEFORE: FORD ELLIOTT, P.J.E., BOWES AND MUSMANNO, JJ.
MEMORANDUM BY BOWES, J.: FILED JANUARY 12, 2016
Golden Deer Corporation (“Golden Deer”) appeals from the aspects of
an October 29, 2014 preliminary injunction1 pertaining to it. We reverse the
injunction entered against Golden Deer.
Bruster’s L.P. (“Bruster’s”) instituted this breach of contract action2
against Golden Deer and JCG Cherries LLC (“Cherries”). On September 24,
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1
An order granting a preliminary injunction is appealable pursuant to
Pa.R.A.P. 311(a)(4).
2
The contracts in question had a forum selection clause vesting jurisdiction
in Pennsylvania.
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2014, Bruster’s presented a motion seeking injunctive relief against the
named defendants. The matter proceeded to a hearing on October 24,
2014.
The following facts are pertinent. Bruster’s is a Pennsylvania limited
partnership headquartered in Beaver County, Pennsylvania; it operates ice
cream shops in eighteen states. Golden Deer is a Georgia corporation whose
president is Ashwin Manjee. On April 9, 2001, Mr. Manjee, individually, paid
Bruster’s $30,000 to become a Bruster’s franchisee for a ten-year term.
Pursuant to the franchise agreement, Mr. Manjee opened a Bruster’s
franchise in a building located at 2970 Stonecrest Pass, Lithonia, Georgia
(“2970 Stonecrest Pass”), which is owned by the Redwood Company LLC
(“Redwood”).
After the April 9, 2001 accord expired, the franchise was renewed by
Golden Deer and Bruster’s. Specifically, on May 25, 2012, Golden Deer and
Bruster’s executed a new ten-year franchise agreement. Mr. Manjee signed
that contract in his capacity as president of Golden Deer. The May 25, 2012
franchise contract contained a clause whereby Golden Deer agreed that it
would not compete with Bruster’s for three years after the franchise was
terminated for any reason.
Golden Deer decided to cease operating the ice cream shop. In
February 2013, Bruster's approached Cherries to operate the Bruster’s
franchise at 2970 Stonecrest Pass. On March 26, 2013, Bruster’s entered
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into a franchise agreement with Cherries. Golden Deer and Bruster’s
entered into negotiations to terminate the franchise. Bruster’s admitted that
“Golden Deer and Bruster’s mutually terminated the Golden Deer Franchise
Agreement and Golden Deer transferred operations of the Premises[, 2930
Stonecrest Pass,] to Defendant JCG Cherries.” Complaint, 9/17/14, at ¶ 14.
The franchise agreement between Cherries and Bruster’s also contained a
covenant not to compete.
Cherries operated its Bruster’s franchise at 2970 Stonecrest Pass until
July 25, 2014, when it received a letter from Bruster’s that its franchise was
terminated based upon Cherries’ default of its financial obligations. Cherries
closed its Bruster’s store but, on August 9, 2014, it re-opened another ice
cream parlor called Cherries at the same location, 2930 Stonecrest Pass.
Bruster’s initiated this lawsuit against Cherries and Golden Deer,
averring Golden Deer violated the terms of the covenant not to compete
contained in Golden Deer’s franchise agreement with Bruster’s. Bruster’s
made these representations even though Golden Deer did not own 2930
Stonecrest Pass and despite the fact that it had admitted in its complaint
that Golden Deer transferred its operation of the ice cream shop at 2930
Stonecrest Pass to Cherries. Bruster’s alleged that Golden Deer was in
violation of the non-compete clause because it was leasing the property at
2970 Stonecrest Pass to Cherries. The certified record does not contain a
copy of a lease between Golden Deer and Cherries.
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At the hearing, Golden Deer submitted evidence that the record owner
of the property at 2970 Stonecrest Pass is Redwood, which was never joined
as a party in this lawsuit. While Mr. Manjee is the registered agent for the
Redwood in Georgia, Bruster’s submitted no proof that either Golden Deer or
Mr. Manjee owned 2930 Stonecrest Pass. After the hearing, the trial court
issued a preliminary injunction against both Cherries and Golden Deer. It
enjoined Cherries from operating an ice cream shop at 2970 Stonecrest
Pass. Cherries did not appeal the portion of the injunction applying to it.
Additionally, the court entered the following injunction against Golden Deer:
a.) Golden Deer Corp. is enjoined until March 1, 2016 from
either directly or indirectly renting, leasing, subletting, assigning
or otherwise transferring possession of the building located at
2970 Stonecrest Pass, Lithonia, GA 30038 to Cherr[ies] or any
other entity for operating it as an ice cream or yogurt shoppe.
b.) Ashwin Manjee, as the owner of Golden Deer Corp. acting
alone or in conjunction with any other partnership, corporation
or other entity, is enjoined until March 1, 2016 from either
directly or indirectly (including through Redwood, LLC, an entity
of which he is a member) renting, leasing, subletting or
otherwise transferring possession of the building located at
2970 Stonecrest Pass, Lithonia, GA 30038 to Cherry's or any
other entity for operating it as an ice cream or yogurt shoppe.
Accordingly, Golden Deer Corp. is directed to have
Redwood, LLC terminate its lease with Cherr[ies] within
one week from the entry of this Order.
Order of Court, 10/29/14, at 1.
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Golden Deer appealed from the October 29, 2014 order and raises
these issues on appeal:3
A. Whether the trial court erred by failing to consider the
evidence of Bruster's unclean hands which should have
invalidated its right to an equitable remedy as a matter of law.
B. Whether the trial court erred in granting injunctive relief for
Brusters by seeking to compel Golden Deer Corporation to
compel non-parties to take actions in furtherance of preventing
harm to Brusters.
C. The court erred by enjoining property outside the
Commonwealth that is not connected to the party's in the
litigation.
Appellant’s brief at 8.
As we agree with Golden Deer’s second contention,4 we do not address
the remaining ones. We are mindful that “an appellate court reviews an
order granting or denying a preliminary injunction for an abuse of
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3
According to the docket, on December 1, 2014, the trial court issued an
order for a Pa.R.A.P. 1925(b) statement. Golden Deer sent the trial court a
copy of the statement, but it did not file it of record. The trial court
maintains that these issues were waived due to the failure to file the
statement. It is true that the failure to file a Pa.R.A.P. 1925(b) statement,
when one is ordered, will result in waiver. However, the order requiring that
the statement be filed must “specify[, inter alia,] that any issue not properly
included in the Statement timely filed and served pursuant to sub division
(b) shall be deemed waived.” Pa.R.A.P. 1925(a)(3)(iv). Ironically, the order
requiring the Pa.R.A.P. 1925(b) statement is also not in the certified record.
While the docket notes that the order was sent, the docket does not indicate
that this mandated language was included in that order. Hence, we decline
to find the issues herein waived.
4
Additionally, Golden Deer’s first position, pertaining to unclean hands, was
not preserved in the Pa.R.A.P. 1925(b) statement mailed to the trial court,
which did not address it.
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discretion.” SEIU Healthcare Pennsylvania v. Commonwealth, 104
A.3d 495, 501 (Pa. 2014). We do not examine the merits of the lawsuit and,
instead, must determine if “there were any apparently reasonable grounds
for the action of the court below.” Id. (citation omitted). A preliminary
injunction may not be issued unless the party seeking that relief establishes
the following essential prerequisites:
(1) the injunction is necessary to prevent immediate and
irreparable harm that cannot be compensated adequately by
damages; (2) greater injury would result from refusing the
injunction than from granting it, and, concomitantly, the
issuance of an injunction will not substantially harm other
interested parties in the proceedings; (3) the preliminary
injunction will properly restore the parties to their status as it
existed immediately prior to the alleged wrongful conduct; (4)
the party seeking injunctive relief has a clear right to relief and
is likely to prevail on the merits; (5) the injunction is reasonably
suited to abate the offending activity; and, (6) the preliminary
injunction will not adversely affect the public interest.
Id. at 502.
In the present case, Bruster’s failed to establish its right to the relief
granted against Golden Deer, and the trial court had no apparently
reasonable grounds for finding otherwise. Golden Deer was not operating a
franchise in violation of the non-competition clause of its franchise
agreement; Cherries had opened the ice cream shop in violation of its non-
compete clause. Indeed, Golden Deer was not enjoined for operating an ice
cream store, and, instead, was enjoined from granting possession, in any
form, of 2970 Stonecrest Pass to Cherries or any other ice cream or yogurt
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business. It also was ordered to direct Redwood to terminate the lease that
Redwood had entered with Cherries.
As both the trial court and Bruster’s acknowledge, Golden Deer does
not own 2970 Stonecrest Pass. We cannot fathom how either the trial court
or Bruster’s can believe that a party that does not own or occupy a piece of
real estate can be enjoined from conducting activities on it. Indeed,
Bruster’s specifically admitted in its complaint that Golden Deer transferred
its operations on the premises, 2930 Stonecrest Pass, to Cherries. Through
the mechanism of entering an order against one party, Golden Deer, the trial
court has attempted to compel a completely distinct entity, Redwood, from
taking certain actions. Moreover, the trial court has required Redwood to
abide by the terms of an agreement that it did not execute, i.e., the non-
competition clause in the franchise agreement entered by Bruster’s with
Golden Deer. The trial court and Bruster’s have completely disregarded the
basic legal precept that corporations are distinct legal entities.
As we have observed, “Service of process is a mechanism by which a
court obtains jurisdiction of a defendant, and therefore, the rules concerning
service of process must be strictly followed.” Lerner v. Lerner, 954 A.2d
1229, 1237 (Pa.Super. 2008). Redwood was not served herein at all. A
court does not have jurisdiction over a person or entity that was not served
and was not made a party to an action. Redwood did not execute an
agreement consenting to Pennsylvania’s jurisdiction, and there is no
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indication that it was subject to jurisdiction in this Commonwealth through
our long-arm statute, 42 Pa.C.S. § 5301.5 The trial court could not enjoin
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5
That enactment provides:
(a) General rule.--The existence of any of the following relationships
between a person and this Commonwealth shall constitute a
sufficient basis of jurisdiction to enable the tribunals of this
Commonwealth to exercise general personal jurisdiction over
such person, or his personal representative in the case of an
individual, and to enable such tribunals to render personal orders
against such person or representative:
(1) Individuals.--
(i) Presence in this Commonwealth at
the time when process is served.
(ii) Domicile in this Commonwealth at
the time when process is served.
(iii) Consent, to the extent authorized
by the consent.
(2) Corporations.--
(i) Incorporation under or qualification as
a foreign corporation under the
laws of this Commonwealth.
(ii) Consent, to the extent authorized by
the consent.
(iii) The carrying on of a continuous and
systematic part of its general business
within this Commonwealth.
(3) Partnerships, limited partnerships, partnership
associations, professional associations,
unincorporated associations and similar entities.--
(Footnote Continued Next Page)
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the party herein to refrain from actions that only Redwood was capable of
undertaking.
Bruster’s first counters that “at no point before the initiation of this
lawsuit was anyone at Bruster’s aware of this alleged fact,” which was that
Redwood, rather than Golden Deer, owned 2970 Stonecrest Pass. Appellee’s
brief at 7. Bruster’s also suggests that Mr. Manjee represented to it that he
owned the building. Id. at 8. Bruster’s is represented by legal counsel in
this lawsuit, and title to real estate is a matter of public record. In order to
obtain an injunction regarding activities being conducted on a piece of
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(Footnote Continued)
(i) Formation under or qualification as a
foreign entity under the laws of
this Commonwealth.
(ii) Consent, to the extent authorized by
the consent.
(iii) The carrying on of a continuous and
systematic part of its general
business within this
Commonwealth.
(b) Scope of jurisdiction.--When jurisdiction over a person is
based upon this section any cause of action may be
asserted against him, whether or not arising from acts
enumerated in this section. Discontinuance of the acts
enumerated in subsection (a)(2)(i) and (iii) and (3)(i) and
(iii) shall not affect jurisdiction with respect to any act,
transaction or omission occurring during the period such
status existed.
42 Pa.C.S. § 5301.
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property, Bruster’s lawyers had an obligation to ascertain the correct legal
owner of that property and join it as a party to the lawsuit. See Hoare v.
Bell Tel. Co. of Pennsylvania, 500 A.2d 1112 (Pa. 1985) (owner of
business allegedly responsible for maintenance of sidewalk where plaintiff
fell could not be added as a party to lawsuit after statute of limitations had
run where plaintiff originally sued a different and distinct entity claiming that
it was responsible for condition of sidewalk).
Bruster’s also notes that Mr. Manjee, as an officer of Golden Deer,
must abide by the terms of the franchise agreement as well as the
conditions of the injunction. See Belle v. Chieppa, 659 A.2d 1035(Pa.Super. 1995) (officers, directors, and shareholders of a corporation must
abide by injunction entered against the corporation). In leveling this
argument, Bruster’s ignores the fact that Redwood was not enjoined. While
Mr. Manjee, if he was an officer, director, or shareholder of Redwood, would
be obligated to abide by the terms of an injunction entered against
Redwood, Redwood was not a party to this lawsuit and an injunction was not
issued against it. Instead, Golden Deer was enjoined. Meanwhile, Golden
Deer is incapable of abiding by the terms of the injunction entered against it
because it does not own 2970 Stonecrest Pass and there was not a scintilla
of proof presented by Bruster’s that Golden Deer controls Redwood. Thus,
Bruster’s argument in this respect is unavailing. Accordingly, we strike the
portions of the preliminary injunction entered against Golden Deer, as the
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trial court had no apparently reasonable grounds for requiring Golden Deer
to undertake actions outlined in the order with respect to 2970 Stonecrest
Pass.
Order affirmed as to JCG Cherries LLC and reversed as to Golden Deer
Corporation. Case remanded. Jurisdiction relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 1/12/2016
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