Superior Court Affirms Elliott Greenleaf' Mandatory Injunction in Favor of Minority Shareholders
As widely reported in the press, Elliott Greenleaf won a significant victory for minority shareholders in a hotly contested dispute among physician shareholders of several entities owning MRI centers throughout the region. In Howard B. Kessler, M.D., et al. v. George J. Broder, M.D., et al., the Pennsylvania Superior Court affirmed the issuance of a mandatory injunction by Philadelphia Commerce Court Judge Albert W. Sheppard, Jr. in favor of Elliott Greenleaf' clients.
Elliott Greenleaf won a mandatory injunction, compelling the majority shareholders to abide by an oral agreement that MRI reads from commonly owned MRI centers be divided two-thirds to the majority group and one-third to the minority group in proportion to the doctors' respective ownership percentages. The majority owners froze out the minority by voting them off of the Board of Directors, refused to provide monthly financial information or payments of a Medical Director fee, and terminated distributions to the minority owners. Agreeing with Elliott Greenleaf, Judge Sheppard, after a hearing, issued a mandatory injunction requiring the majority owners to provide one-third of the reads to the minority, retroactive to the filing of the Complaint. The majority owners appealed to the Pennsylvania Superior Court.
In an omnibus review of the trial record, the Superior Court found the majority owners did not act for the good of all shareholders, had "frozen out" the minority owners, and that the cumulative conduct of the majority breached their fiduciary duties to the minority who had a clear right to mandatory injunctive. The Superior Court found the majority's conduct actionable, a manifest wrong, and that the minority was likely to prevail on the merits at trial. The Court also found that the minority had met each of the prerequisites for the issuance of an injunction, and concluded the threat of impending loss of business opportunity or market advantage was per se proof of "irreparable injury" and the change in "referral patterns" raised doubt in the referral community, creating irreparable harm.
The minority owners were represented by Elliott Greenleaf senior shareholder, Marvin L. Wilenzik (argued), and Dion G. Rassias, Eric P. Wilenzik, Raymond J. Santarelli, and Jodi S. Wilenzik. |
