Hensler, W. v. Becker Wholesale Mine Supply

J-A22005-23
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT O.P. 65.37
WILLIAM H. HENSLER JR., : IN THE SUPERIOR COURT OF
WHOLESALE MINE SUPPLY, L.P., : PENNSYLVANIA
WSAJT PROPERTIES, L.P. :
:
v. :
:
BECKER/WHOLESALE MINE SUPPLY, :
LLC, BECKER GLOBAL-AMERICA, INC. :
(AKA/FKA/SUCCESSOR-IN-INTEREST : No. 293 WDA 2023
TO BECKER MINING AMERICA, INC.), :
BECKER MINING SYSTEMS, A.G., :
GREGORY A. SANDERS, FRANZ :
BECKER, WOLFGANG WEGNER, AND :
MAX BRINCKMANN :
_____________________ :
:
BECKER/WHOLESALE MINE SUPPLY, :
LLC AND BECKER GLOBAL-AMERICA, :
INC. :
:
v. :
:
WILLIAM H. HENSLER JR., SUSAN J. :
HENSLER, WHOLESALE MINE SUPPLY, :
L.P., COMTROL CORP., ALAN J. :
QUINN, JOSEPH A. DIBRIDGE, AND :
HENSLER COMMUNICATIONS :
CONSULTANTS, L.P. D/B/A/ HC :
GLOBAL, AND COMTROL-WEST, LLC :
:
:
APPEAL OF: ALAN J. QUINN, :
COMTROL CORPORATION, AND :
COMTROL-WEST. LLC :
Appeal from the Order Entered February 17, 2023
In the Court of Common Pleas of Westmoreland County Civil Division at
No(s): 5219
BEFORE: BOWES, J., OLSON, J., and KING, J.
MEMORANDUM BY BOWES, J.: FILED: November 15, 2023
J-A22005-23
Alan J. Quinn, Comtrol Corporation (“Comtrol”), and Comtrol-West, LLC
(collectively, the “Quinn Parties”) appeal from the order granting the motion
to compel and for sanctions filed by Becker/Wholesale Mine Supply, LLC and
Becker Global America, Inc. (collectively, the “Becker Parties”). We reverse
and remand for further proceedings.
By way of background, this matter involves complex cross-cases filed
by the Quinn Parties, the Becker Parties, and several other non-participants
on appeal. After a lengthy, consolidated non-jury trial, the trial court found
the Quinn Parties liable for damages as to several of the counts raised in the
complaints. While post-trial motions were pending, the Becker Parties filed a
motion for preliminary injunctive relief, seeking an order prohibiting the Quinn
Parties from dissipating their assets and requesting appointment of a receiver
to monitor Comtrol’s financial status.
After negotiation, the parties resolved the motion by filing a consent
order to appoint a limited receiver for Comtrol (“Consent Injunction Order”).
Relevant to this appeal, paragraphs 6 and 7 of the Consent Injunction Order
outlined the duties of Comtrol concerning the receiver. Paragraph 6 stated in
whole as follows:
By the seventh day of each month, Comtrol shall send the receiver
electronically financial and accounting data for the immediate
prior month, including without limitation producing the
QuickBooks backup file for Comtrol (i.e. the .qbb file) or any
equivalent file for other accounting software utilized by Comtrol,
to enable the receiver to (i) analyze Comtrol’s sales, expenses,
overhead, net profit, gross profit, liabilities and equity and (ii)
develop income statements, balance sheets and cash flow
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statements. In addition, Comtrol will be required to produce to
the receiver on a monthly basis any contract/agreement entered
into by Comtrol during the prior month, and, on an annual basis,
produce Comtrol’s federal and state tax returns. The receiver will
be compensated by [the Becker Parties].
Consent Injunction Order, 12/30/22, at ¶ 6 (cleaned up). Paragraph 7 of the
Consent Injunction Order provided that, “To the extent the receiver has
questions regarding data he/she is reviewing, the receiver shall be permitted
to communicate with, and ask questions to, Alan Quinn, President of Comtrol,
and Mr. Quinn shall promptly respond to the questions truthfully and
accurately.” Id. at ¶ 7.
Following entry of the Consent Injunction Order, the court appointed
Thomas Pratt of Schneider Downs & Co., Inc. as the limited receiver. Mr. Pratt
then requested certain historical documents from Comtrol, including annual
financial statements, tax returns, key employee compensation, and sales
information, from years 2019 through 2022. Mr. Pratt indicated that he
needed this information to provide context for his evaluation and analysis of
the accounting data received by Comtrol. The Quinn Parties refused to provide
the bulk of the documents sought, asserting that they were beyond the scope
of the Consent Injunction Order since they related to matters preceding the
receiver’s appointment.
The Becker Parties consequently filed a motion to compel and for
sanctions. The Quinn Parties filed an opposition, and the court entertained
oral argument. On February 17, 2023, the trial court granted the motion in
whole, directing the Quinn Parties to provide the documentation requested by
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the limited receiver and imposing sanctions on the Quinn Parties and their
counsel, finding that they “lacked a good faith basis to oppose the motion.”
Order of Court, 2/17/23, at ¶ 2.
The Quinn Parties filed a timely appeal. Both the Quinn Parties and the
trial court complied with Pa.R.A.P. 1925. The Quinn Parties raise the following
two issues on appeal:
I. Whether the trial court abused its discretion and committed an
error of law by improperly modifying and expanding the scope
of the Quinn Parties’ and Becker Parties’ Consent Injunction
Order contrary to its plain language and the parties’ intent?
II. Whether the trial court abused its discretion and committed an
error of law by imposing sanctions against the Quinn Parties
and their counsel based upon its erroneous conclusion that they
“lacked a good faith basis” in opposing the Becker Parties’
motion to compel and for sanctions and where the mandatory
procedures of Pa.R.C.P. 1023.2 were not followed?
Quinn Parties’ brief at 4 (cleaned up).
Before addressing the merits of this appeal, we first consider the
appealability of the order in question, as it impacts this Court’s jurisdiction.
See Calabretta v. Guidi Homes, Inc., 241 A.3d 436, 441 n.6 (Pa.Super.
2020) (stating that “[b]ecause we lack jurisdiction over an unappealable
order, it is incumbent on us to determine, sua sponte when necessary,
whether the appeal is taken from an appealable order.” (cleaned up)). On
June 30, 2023, this Court issued a rule for the Quinn Parties to show cause
why the order appealed from either satisfied the three-prong test of a
collateral order set forth in Pa.R.A.P. 313(b), or was appealable as an order
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modifying an injunction pursuant to Rule 311(a)(4). The Quinn Parties filed a
timely response, asserting that the order was appealable under both sections
in question. The rule was discharged, and the parties were advised that this
issue may be revisited by this panel.
Rule 311 provides in pertinent part as follows:
(a) General Rule. An appeal may be taken as of right and
without reference to Pa.R.A.P. 341(c) from the following types of
orders:
....
(4) Injunctions. An order that grants or denies, modifies or
refuses to modify, continues or refuses to continue, or dissolves
or refuses to dissolve an injunction unless the order was entered:
(i) Pursuant to [certain provisions of the Divorce Code]; or
(ii) After a trial but before entry of the final order. Such
order is immediately appealable, however, if the order enjoins
conduct previously permitted or mandated or permits or
mandates conduct not previously mandated or permitted,
and is effective before entry of the final order.
Pa.R.A.P. 311(a) (emphasis added).
This Court has stated that pursuant to subsection (ii) above, “an appeal
may be taken from an order that (because a final judgment has not yet been
entered) is not otherwise appealable . . . if (1) the order enjoins conduct
previously allowed or allows conduct previously prohibited, and (2) the
injunction takes effect before entry of a final judgment.” Thomas A.
Robinson Family Ltd. P’ship v. Bioni, 178 A.3d 839, 847 (Pa.Super. 2017).
The clear purpose of this subsection to the rule “is to permit an immediate
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appeal if an immediately-effective permanent injunction makes such a change
to the status quo that the aggrieved party needs quick appellate recourse
without incurring delays from post-trial proceedings in the trial court.” Id.In their response to the rule to show cause, the Quinn Parties asserted
that the order in question satisfies Rule 311 above and is appealable because
it (1) modified the scope of the Consent Injunction Order, (2) mandated new
conduct by compelling the Quinn Parties to produce documents to a limited
receiver, and (3) was entered and made effective before entry of the final
order. See Quinn Parties’ response to rule to show cause at 7-12. Upon
review, we agree that the order is appealable pursuant to 311(a)(4)(ii). It
clearly “mandates conduct not previously mandated” from the Quinn Parties,
and there is no dispute that the order was effective before entry of a final
order, since it was entered while post-trial motions were still pending before
the court. Pa.R.A.P. 311(a)(4)(ii); see also Thomas A. Robinson Family
Ltd. P’ship, supra at 846. Moreover, we determine that the order is
appealable insofar as it imposes sanctions on the Quinn Parties and their
attorneys. See Stewart v. Foxworth, 65 A.3d 468, 471 (Pa.Super. 2013)
(stating that “[a]n order imposing sanctions, including one that imposes
sanctions on an attorney, is considered a final order and is therefore
appealable.”).
Having determined that this appeal is properly before us, we now turn
to the merits. The Quinn Parties’ first contention is that the trial court erred
by expanding the obligations of the parties pursuant to the Consent Injunction
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Order. See Quinn Parties’ brief at 15-22. A consent order “is a contract which
has been given judicial sanction, and, as such, it must be interpreted in
accordance with the general principles governing the interpretation of all
contracts.” Com. ex rel. Kane v. UPMC, 129 A.3d 441, 463 (Pa. 2015)
(citation omitted).
This Court has stated thusly concerning contract disputes:
[W]hen interpreting the language of a contract, the intention of
the parties is a paramount consideration. In determining the
intent of the parties to a written agreement, the court looks to
what they have clearly expressed, for the law does not assume
that the language of the contract was chosen carelessly.
When interpreting agreements containing clear and unambiguous
terms, we need only examine the writing itself to give effect to
the parties’ intent. The language of a contract is unambiguous if
we can determine its meaning without any guide other than a
knowledge of the simple facts on which, from the nature of the
language in general, its meaning depends. When terms in a
contract are not defined, we must construe the words in
accordance with their natural, plain, and ordinary meaning. As
the parties have the right to make their own contract, we will not
modify the plain meaning of the words under the guise of
interpretation or give the language a construction in conflict with
the accepted meaning of the language used.
On the contrary, the terms of a contract are ambiguous if the
terms are reasonably or fairly susceptible of different
constructions and are capable of being understood in more than
one sense. Additionally, we will determine that the language is
ambiguous if the language is obscure in meaning through
indefiniteness of expression or has a double meaning. Where the
language of the contract is ambiguous, the provision is to be
construed against the drafter.
Riverview Carpet & Flooring, Inc. v. Presbyterian SeniorCare, 299 A.3d
937, 983-84 (Pa.Super. 2023) (citation omitted).
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The Quinn Parties argue that the trial court ignored the plain language
of the Consent Injunction Order and expanded the scope of the limited
receivership. See Quinn Parties’ brief at 18-20. They focus primarily on
paragraph 6 of the order, which they assert clearly delineates an obligation to
produce only particular accounting and financial documents to the receiver
relating to the preceding month. Id. at 18-19. The Quinn Parties aver that
this language imposes solely “forward looking” duties on Comtrol, which do
not include producing historical documents. Id. at 18. As such, they contend
that the court was in error by compelling them to produce the financial
statements, tax returns, and other documents from 2019 through 2022
identified in the court’s order.
In rejecting this claim, the trial court looked to the purpose of the
agreement, determining that the goal was “to allow Comtrol to continue
operating its business while preventing the dissipation of assets to preserve
the value of the company at the time of the judgments in which it was
implicated.” Trial Court Opinion, 5/3/23, at 3. Based on this, the court stated
that “the receiver must have some baseline information to assess any
changes” to Comtrol’s business value. Id. Therefore, it rejected the Quinn
Parties’ position that the Consent Injunction Order was “forward looking,”
concluding that the objective of the agreement would be rendered moot
because “there would be no cognizable way to assess whether assets have
been dissipated or not.” Id.
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For their part, the Becker Parties likewise assert that the trial court did
not err in compelling production of the documents sought by the limited
receiver. See Becker Parties’ brief at 24-32. Particularly, they cite to
paragraph 7 of the Consent Injunction Order, which allows the receiver to ask
questions to Comtrol’s president, Mr. Quinn, about any documents distributed,
and mandates that Mr. Quinn provide prompt and truthful answers. Id. at 26.
The Becker Parties interpret this language as setting no limitation on the
questions that the limited receiver may ask or the form of information he may
request. Id. Additionally, they argue that when this language is construed
within the context of the order as a whole, it is plainly necessary for the
receiver to obtain this information so that he can monitor Comtrol’s obligations
to continue operating “in the ordinary course of business” pursuant to the
Consent Injunction Order. Id. at 26-27. Similar to the trial court, the Becker
Parties contend that the only reasonable way to interpret the Consent
Injunction Order is to permit the limited receiver to acquire the historical
documents in question. Id. at 29-32.
After careful review of the certified record and the applicable law, we
conclude the court erred in compelling the Quinn Parties to produce the
documents requested by the limited receiver. Initially, we determine that the
terms of the Consent Injunction Order are clear and unambiguous on their
face, and therefore we need not look beyond the writing itself to determine
the intent of the parties. See Riverview, supra at 983. As the Quinn Parties
highlight, paragraph 6 of the Consent Injunction Order provides that by the
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seventh day of a given month, Comtrol “shall send the receiver electronically
financial and accounting data for the immediate prior month[.]” Consent
Injunction Order, 12/30/22, at ¶ 6 (emphasis added). Nowhere does it require
that Comtrol produce any documents prior to the month of the limited
receiver’s appointment, let alone ones dating back to 2019. The language
employed by the parties clearly expressed an intent to give a narrower scope
of powers to the limited receiver.
Moreover, we are not persuaded by the Becker Parties’ reliance on
paragraph 7 of the Consent Injunction Order to support its position that
Comtrol was required to produce historic documents from 2019 through 2022.
That provision permitted the limited receiver to ask questions of Mr. Quinn
“regarding data he/she is reviewing” and mandated that he respond truthfully,
but it did not impose any duty to produce documents other than those
identified in the agreement. Id. at ¶ 7. This process is wholly consistent with
the parties’ negotiated agreement for appointment of a limited receiver, and
this interpretation does not render the purpose of the Consent Injunction
Order moot, as the trial court concluded.
In short, by compelling production of documents not encompassed by
the plain language of the Consent Injunction Order, the trial court expanded
the scope of the agreement under the guise of interpretation. We cannot
countenance this result when the law necessitates a presumption that the
written words used by these sophisticated parties were chosen with care. See
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Riverview, supra at 983. Based on the above, the order granting the motion
to compel must be reversed.
The Quinn Parties next contend that, among other reasons, the court
erred in granting sanctions against them and their counsel when it determined
that they lacked a good faith basis in opposing the Becker Parties’ motion to
compel. See Quinn Parties’ brief at 38-42. Concerning sanctions, our
standard of review “is one of abuse of discretion by the trial court.” ACE
American Ins. Co. v. Underwriters at Lloyds and Companies, 939 A.2d
935, 945 (Pa.Super. 2007). We note that “[a]n abuse of discretion is not
merely an error of judgment. It requires a showing of manifest
unreasonableness, partiality, ill-will, or such lack of support as to be clearly
erroneous.” SLT Holdings, LLC v. Mitch-Well Energy, Inc., 217 A.3d 1248,
1251 (Pa.Super. 2019).
Here, the trial court ascertained that sanctions were appropriate
because it had “ample basis to find that the Quinn [P]arties had no good faith
basis for opposing the motion to compel.” Trial Court Opinion, 5/3/23, at 5.
As such, it concluded that the sanctions were allowable pursuant to Pa.R.C.P.
1023.1(c) and (d), where parties “knowingly raise, in bad faith, frivolous
claims which have no reasonable possibility of success, for the purpose of
harassing, obstructing or delaying the opposing party.” Id. (discussing
Pa.R.C.P. 1023.1).
As discussed in detail above, the Quinn Parties not only had a good faith
basis in which to oppose the motion to compel, but their claim in opposition
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warranted denial of that motion. Accordingly, we conclude that the court
abused its discretion by imposing sanctions against the Quinn Parties and their
counsel when its decision rested upon an incorrect finding. Therefore, the
court’s order granting sanctions against the Quinn Parties cannot stand.1
Order reversed. Case remanded. Jurisdiction relinquished.
DATE: 11/15/2023
____________________________________________
1 Since we grant relief to the Quinn Parties for the reasons stated supra, we
do not address their alternative argument concerning the Becker Parties’
alleged failure to properly request sanctions in accordance with Pa.R.C.P.
1023.2. See Quinn Parties’ brief at 31-38.
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