J-A18013-17



NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

ANTHONY HORBAL AND HERC                          IN THE SUPERIOR COURT OF
MANAGEMENT SERVICES, LLC.                              PENNSYLVANIA



                       v.

GIANT EAGLE, INC., GIANT EAGLE OF
DELAWARE INC., DANIEL SHAPIRA,
DAVID SHAPIRA AND LAURA KARET

                            Appellants                No. 1454 WDA 2016


                      Appeal from the Order June 30, 2016
               In the Court of Common Pleas of Allegheny County
                      Civil Division at No(s): GD-14-013654


BEFORE: BOWES, LAZARUS, AND OTT, JJ.

MEMORANDUM BY BOWES, J.:                           FILED JANUARY 17, 2018

       Giant Eagle, Inc., Giant Eagle of Delaware, Inc., Daniel Shapira, David

Shapira, and Laura Karet (collectively “Giant Eagle”), appeal from the June

30, 2016 order sustaining in part, and overruling in part, their preliminary

objections to the second amended complaint filed by Anthony Horbal and

HERC Management Services, LLC (“Horbal”).1 We reverse in part, affirm in

part, and remand for proceedings consistent herewith.



____________________________________________


1
  As set forth in the text, infra, Giant Eagle successfully petitioned for review
of this interlocutory order.
J-A18013-17



      Horbal commenced this action against Giant Eagle by filing a complaint

on August 6, 2014. The complaint alleged the following. Horbal and Giant

Eagle were both investors in an automated guided vehicle company, Seegrid

Corporation (“Seegrid”).     Seegrid achieved some success, but failed to

sustain the revenue necessary to continue operations without regular

infusions of capital. In addition to providing capital, Horbal and Giant Eagle

also purchased debt from the corporation, eventually becoming Seegrid’s

two largest creditors.     However, by late 2013, Horbal could no longer

continue investing additional capital in Seegrid.    Horbal alleged that, in

November 2013, Giant Eagle began taking steps to ensure that Seegrid

remained undercapitalized so that it could increase its stake in the company

at Horbal’s expense.

      Horbal contended that, in furtherance of this endeavor, Giant Eagle

denied Seegrid the opportunity to raise capital from outside investors,

fraudulently removed Anthony Horbal from the Board of Directors, prepared

term sheets to provide Seegrid with added capital which inured solely to

Giant Eagle’s benefit, presented those offers at the last possible instant to

preclude the Board from properly scrutinizing them, and prepared, if

necessary, to force Seegrid into bankruptcy.      Horbal averred that Giant

Eagle pursued this course of action in order to gain full control over Seegrid

while diluting Horbal’s ownership interest.    Horbal maintained that Giant




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J-A18013-17



Eagle, as Seegrid’s controlling shareholder, breached its fiduciary duties to

the other minority shareholders.

      In addition, Horbal contended that Giant Eagle tortiously interfered

with Anthony Horbal’s consulting and management services agreement with

Seegrid.    Anthony Horbal was the company’s President, and then its CEO,

from 2010 until July 2014. Horbal alleged that Giant Eagle exerted undue

influence over the Board of Directors not only to facilitate its fraudulent

conduct, but also to remove Anthony Horbal from his management position

and seat on the Board of Directors.

      On August 8, 2014, two days after filing the instant complaint, Horbal

filed a derivative complaint on behalf of Seegrid raising substantially the

same claims in the Court of Chancery of the State of Delaware. Thereafter,

on October 21, 2014, Seegrid commenced a Chapter 11 bankruptcy case in

the Bankruptcy Court for the District of Delaware, and this Pennsylvania

case and the Delaware action were stayed pending the resolution of the

bankruptcy case. Before the Bankruptcy Court, Seegrid sought confirmation

of its prepackaged reorganization plan wherein, inter alia, Giant Eagle would

purchase $10 million in Series A preferred shares for a 40% interest in a

new company (“New Seegrid”), to which Seegrid would convey all of its

operating assets.   In exchange for conveying its operating assets, Seegrid

would acquire shares of New Seegrid common stock amounting to a 45%

interest.   The remaining 15% interest would be reserved for management

                                      -3-
J-A18013-17



and employees of New Seegrid.              Additional Series A shares beyond Giant

Eagle’s initial $10 million would be offered to Seegrid’s other stockholders

and convertible debt holders.

        On November 17, 2014, Horbal instituted a complaint in adversary

action in the Bankruptcy Court on behalf of itself and other creditors and

non-controlling shareholders seeking subordination of Giant Eagle’s claims

against Seegrid.      That complaint raised substantially similar allegations as

those    outlined    above     regarding     Giant   Eagle’s    conduct   prior   to   the

commencement of the bankruptcy action, including alleged breaches of

fiduciary   duties    owed     to      Seegrid’s   minority    shareholders.      Horbal

subsequently        withdrew     its     complaint    for     equitable   subordination.

Nevertheless, it retained its objection to the reorganization plan, and it

raised allegations against Giant Eagle in its objections to Seegrid’s disclosure

statement as to the valuation utilized in that statement and the one-sided

benefit that Giant Eagle positioned itself to receive for its participation in the

plan.

        Subsequently, the Bankruptcy Court held a combined disclosure

statement and confirmation hearing in which multiple witnesses testified.

On January 20, 2015, the Bankruptcy Court filed its final order approving

Seegrid’s disclosure statement and confirming its reorganization plan. In so

finding, the Bankruptcy Court determined that, pursuant to 11 U.S.C. §




                                            -4-
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1129(a)(3), Seegrid proposed the plan in good faith, and that the plan was

the product of arm’s length negotiation with Giant Eagle.

      Following this determination, Horbal began litigating its shareholder

derivative suit before the Delaware Chancery Court. After a hearing on July

14, 2015, the Chancery Court found that the Bankruptcy Court’s ruling

collaterally estopped Horbal from asserting the factual complaints regarding

Giant Eagle’s purported misconduct, and dismissed the matter with

prejudice. Horbal v. Shapira, 2015 WL 4401337 (Del.Ch. 2015), aff’d 133

A.3d 201 (Del. 2016).

      Meanwhile,   the   Pennsylvania   litigation   resumed.   Prior   to   the

commencement of the bankruptcy case, Giant Eagle had filed preliminary

objections to Horbal’s initial complaint. Horbal filed an amended complaint

on October 28, 2014, before the matter was stayed.          On November 17,

2014, Giant Eagle filed preliminary objections to Horbal’s first amended

complaint. Thereafter, on January 29, 2015, Giant Eagle filed a reply brief in

support of its preliminary objections to Horbal’s first amended complaint

asserting, for the first time, that the Bankruptcy Court’s factual findings in

confirming Seegrid’s reorganization plan collaterally estopped Horbal from

pursuing claims against it in Pennsylvania.      Horbal argued that collateral

estoppel was an affirmative defense, and thus, could not be raised in

preliminary objections. Nonetheless, by order dated February 6, 2015, the

trial court noted that Horbal had waived its procedural objection to Giant

                                    -5-
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Eagle’s preliminary objections on the basis of collateral estoppel and

scheduled a hearing on the issue. On May 12, 2015, the trial court filed an

order overruling Giant Eagle’s preliminary objections.

         Giant Eagle filed a notice of appeal from the trial court’s May 12,

2015 order.        On July 8, 2015, this Court quashed the appeal as

interlocutory. Horbal v. Giant Eagle, Inc., 815 WDA 2015 (Order, July 8,

2015). On August 15, 2015, Giant Eagle filed an answer and new matter to

Horbal’s first amended complaint largely denying the allegations lodged

therein and raising as new matter its claim that Horbal’s averments were

barred by collateral estoppel.         After Horbal replied to Giant Eagle’s new

matter, Giant Eagle moved for judgment on the pleadings. The trial court

denied Giant Eagle’s motion and scheduled the matter for trial beginning on

November 9, 2015.         However, the matter did not proceed to trial as the

parties waited for the Delaware Supreme Court to rule on Horbal’s appeal

pending there, which subsequently affirmed the Delaware Chancery Court’s

ruling that Horbal’s derivative suit was barred by collateral estoppel.

       After that extended delay, Horbal filed a second amended complaint

identical to its previous complaints in all relevant regards, but adding Daniel

Shapira, David Shapira, and Laura Karet as additional defendants.2         Giant

____________________________________________


2
 Giant Eagle appointed Daniel Shapira, who served as its outside counsel, to
Seegrid’s Board of Directors. At various times, David Shapira served as
(Footnote Continued Next Page)


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Eagle then filed preliminary objections to Horbal’s second amended

complaint, contending, inter alia, that the decisions by both the Delaware

Bankruptcy Court and also the Delaware Supreme Court collaterally

estopped Horbal from proceeding with its suit. On June 30, 2016, the court

partially sustained Giant Eagle’s preliminary objections as to certain

scandalous and impertinent material, but overruled, without explanation, the

preliminary objections in all other regards, including that the matter was

barred by collateral estoppel. The trial court did not respond to a request by

Giant Eagle to certify that ruling for immediate appeal pursuant to 42

Pa.C.S. § 702(b), and thus, it was deemed denied on July 30, 2016.

Subsequently, Giant Eagle petitioned this Court for review of the trial court’s

failure to certify for immediate appeal its decision to overrule Giant Eagle’s

preliminary objections based on its allegation that the matter was barred by

collateral estoppel. We granted Giant Eagle’s petition for review.    The trial

court declined to issue a Rule 1925(a) opinion,3 and this matter is now

before us.

      Giant Eagle raises seven questions for our consideration:


                       _______________________
(Footnote Continued)

CEO, President, and Executive Chairman of Giant Eagle. At all times
relevant to this matter, Laura Karet served as CEO of Giant Eagle.
3
  The trial court declined to issue an opinion based on its belief that the
record as it stands was sufficient for review.



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J-A18013-17



      I.     Whether Pennsylvania courts must follow the Delaware
             Supreme Court’s lead in applying collateral estoppel to
             dismiss a breach of fiduciary duty claim identical to the
             one asserted here based on findings made by the
             Bankruptcy Court during a plan confirmation?

      II.    Whether [Horbal] lacks standing to assert a direct claim for
             breach of fiduciary duty where the only loss alleged is a
             diminution of the value of its investment in [Seegrid]?

      III.   Whether [Horbal’s] conclusory allegation that Giant Eagle
             controlled Seegrid must yield to the Bankruptcy Court’s
             findings that Giant Eagle was only a minority investor in
             Seegrid who, at all times, dealt with Seegrid on an arm’s
             length basis?

      IV.    Whether the conclusory allegation by [Horbal] that
             Defendant-Appellants Daniel Shapira, David Shapira, and
             Laura Karet (collectively, the “Shapiras”) control Giant
             Eagle is fatally deficient given the undisputed fact that
             they have only a small fractional ownership interest in
             Giant Eagle?

      V.     Whether the ratification of the Bankruptcy Plan by all
             Seegrid investors, except Mr. [Anthony] Horbal, precludes
             [Horbal’s] breach of fiduciary duty claim based on the
             allegedly unfair treatment they received under the plan?

      VI.    Whether an allegedly controlling shareholder, like Giant
             Eagle, is immune from a claim that it breached its fiduciary
             duty to a minority shareholder by funding a Bankruptcy
             Plan when all other shareholders are offered the
             opportunity to invest in the Plan on precisely the same
             terms and conditions?

      VII.   Whether the Pennsylvania Supreme Court’s decision in
             Hilbert v. Roth, 149 A.2d 648 ([Pa.] 1959) precludes
             [Horbal] from pursuing a claim for punitive damages based
             on alleged tortious interference given that it no longer has
             a claim for compensatory damages after having fully
             recovered them in a prior proceeding?

Appellant’s brief at 4-5.

                                     -8-
J-A18013-17



      As a preliminary matter, Horbal contends that our review should be

limited to the single issue Giant Eagle raised in its petition for review. Giant

Eagle filed a petition for review pursuant to Pa.R.A.P. 1511, seeking our

consideration of the trial court’s refusal to certify its June 30, 2016

interlocutory order for immediate appeal.     It argued that the trial court’s

partial overruling of its preliminary objections presented a controlling

question of law as to which there was substantial ground for difference of

opinion and that an immediate appeal from the order would materially

advance the ultimate termination of the matter. See 42 Pa.C.S. § 702(b).

      In this vein, Giant Eagle contended that the trial court erred in failing

to bar Horbal’s claim based on the Delaware Supreme Court’s determination

that the bankruptcy order collaterally estopped the claims asserted by

Horbal. Giant Eagle argued that “[a]n irreconcilable conflict exists between

the Delaware Supreme Court – which relied on the same Bankruptcy Order

to estop the same Horbal Group Plaintiffs from asserting the same claims in

Delaware Chancery Court – and the trial judge’s refusal to apply collateral

estoppel to [Horbal’s] identical claims in this action.”   Petition for Review,

8/11/16, at 2 (emphasis omitted). Essentially, Giant Eagle posited that both

the Bankruptcy Court’s findings and the          Delaware Supreme Court’s

determination that Horbal was collaterally estopped by those findings,

provided independent bases for determining that Horbal was precluded from

proceeding herein.   We granted Giant Eagle’s petition for review based on

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J-A18013-17



our determination that this argument satisfies the dictates of 42 Pa.C.S. §

702(b) to permit our review of an otherwise interlocutory order.

      The scope of our review following the grant of a petition for review is

limited to the issues raised before the trial court.         Pa.R.A.P. 1551.

Previously, if an issue was not included in the petition for review, or fairly

comprised by it, that issue was waived. See North Hills Passavant Hosp.

v. Department of Health, 674 A.2d 742, 745 (Pa.Cmwlth. 1996).

However, this rule, and the case law interpreting it, was based on a prior

formulation of Pa.R.A.P. 1513. See Graystone Academy Charter School

v. Coatesville Area School Dist., 99 A.3d 125, 132 (Pa.Cmwlth. 2014)

(noting “Issues not raised or ‘fairly comprised’ within the petition for review

are deemed waived.”)).

      The relevant subsection of the Rule was amended in 2014.             The

current formulation of Rule 1513 reads, in pertinent part, “[a]n appellate

jurisdiction petition for review shall contain . . . a general statement of the

objections to the order or other determination, but the omission of an issue

from the statement shall not be the basis for a finding of waiver if the court

is able to address the issue based on the certified record.”         Pa.R.A.P.

1513(d)(5).   Hence, contrary to Horbal’s protestations, we may consider

Giant Eagle’s additional six additional issues if they are otherwise preserved

for our review and the certified record permits us to address those claims.




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Nevertheless, in light of our disposition of this matter, as discussed infra, we

need only consider Giant Eagle’s primary contention.

      Giant Eagle challenges the trial court’s overruling of its preliminary

objection that Horbal’s suit is barred by collateral estoppel. Thus, we adhere

to the following guidelines:

      Our standard of review of an order of the trial court overruling or
      granting preliminary objections is to determine whether the trial
      court committed an error of law.          When considering the
      appropriateness of a ruling on preliminary objections, the
      appellate court must apply the same standard as the trial court.

Perelman v. Perelman, 125 A.3d 1259, 1263 (Pa.Super. 2015) (citation

omitted).

      As noted above, Giant Eagle premised its preliminary objections on the

preclusive effects of the Delaware Supreme Court’s decision in Horbal’s

derivative suit, and the Delaware Bankruptcy Court’s findings of facts and

conclusions of law enunciated when it confirmed Seegrid’s Chapter 11

reorganization plan. We have previously observed, “[c]ollateral estoppel, or

issue preclusion, is a doctrine which prevents re-litigation of an issue in a

later action, despite the fact that it is based on a cause of action different

from the one previously litigated.”    Weissberger v. Myers, 90 A.3d 730,

733 (Pa.Super. 2014) (citation omitted). Collateral estoppel applies to bar

re-litigation of an issue where

      (1) the issue decided in the prior case is identical to one
      presented in the later case; (2) there was a final judgment on
      the merits; (3) the party against whom the plea is asserted was

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J-A18013-17



      a party or in privity with a party in the prior case; (4) the party
      or person privy to the party against whom the doctrine is
      asserted had a full and fair opportunity to litigate the issue in the
      prior proceeding and (5) the determination in the prior
      proceeding was essential to the judgment.

Id.   (citation omitted); Century Indemnity Company v. OneBeacon

Insurance Company, 2017 PA Super 328 (Pa.Super. 2017) at *17-18.

Finally, “[t]he judgments of the federal courts are owed their full force and

effect in state courts.”      Weissberger, supra at 733 (citing In re

Stevenson, 40 A.3d 1212, 1222 (Pa. 2012)).

      Under the Bankruptcy Code, in order to be confirmed, a plan must be

“proposed in good faith and not by any means forbidden by law.” 11 U.S.C.

§ 1129(a)(3).    This standard requires that the plan be “proposed with

honesty, good intentions and a basis for expecting that a reorganization can

be effected with results consistent with the objectives and purposes of the

Bankruptcy Code.”     In re Hercules Offshore, Inc., 565 B.R. 732, 764

(Bankr. Del. 2016) (citation omitted). The Bankruptcy Court evaluates the

totality of the circumstances, and has “considerable judicial discretion in

finding good faith, with the most important feature being an inquiry into the

fundamental fairness of the plan.” Id. (internal quotation marks and citation

omitted). This determination “is made on the information available to the

court at the confirmation hearing, and is not limited to the information

available when the plan was first proposed.”          Id.   Thus, “information




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J-A18013-17



affecting the good faith determination might be added to the record

throughout the process leading up to confirmation.” Id. (brackets omitted).

      We begin our analysis by setting forth the relevant findings of the

Bankruptcy Court for the District of Delaware and the Delaware Chancery

Court. During the confirmation hearing, the Bankruptcy Court observed the

following:

            I turn first to good faith. The burden rests with [Seegrid],
      not Giant Eagle, to demonstrate that [Seegrid] has proposed the
      plan in good faith. When evaluating good faith, the Third Circuit
      has instructed in the W.R. Grace case [(In re WR Grace & Co.,
      et al., 729 F.3d 332 (3rd Cir. 2013)], that the important point of
      inquiry is the plan itself, and whether such plan will fairly
      achieve a result consistent with the objectives and purposes of
      the Bankruptcy Code. And the court finds that [Seegrid] has
      carried its burden in this regard.

             The record detailing [Seegrid’s] actions in the months and
      year leading up to the eventual bankruptcy and solicitation of
      the prepackaged plan have been well developed through the
      testimony of Messrs. Buchanan, Kalson, and Heilman. It is
      undisputed that for a lengthy period of time [Seegrid] needed
      additional liquidity to survive. The record reflects that Giant
      Eagle, and to a lesser extent [Horbal], provided funding over
      many years when Seegrid was in need. [Seegrid] has also
      shown that in the months and year leading up to the bankruptcy
      filing it pursued numerous alternatives available to it under the
      circumstances. The evidence presented details how [Seegrid]
      engaged multiple investment bankers or financial advisors . . . to
      seek out potential investors or purchasers.

             In addition, the record reflects that Adams Capital,
      Riverside Capital, Zouk Capital, Plug Power and other investors
      from the Middle East have engaged in due diligence, or
      expressed at least some interest in investing in [Seegrid].
      Despite all of these efforts, [Seegrid] was unable to secure
      significant or meaningful third-party financing or to find an



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J-A18013-17



     interested purchaser in a context that would resolve its pressing
     economic challenges.

            Having exhausted all avenues, the record reflects that
     Giant Eagle presented [Seegrid] with a term sheet in July 2014
     that ultimately formed the backbone of the existing plan of
     reorganization. [Horbal] has attempted to show that because
     Giant Eagle devised the plan to create New Seegrid and to
     transfer all assets into it and to increase its own control or
     position, [Seegrid’s] plan that memorialized this transaction was
     not in good faith. The record does not support this assertion.

N.T. Delaware Bankruptcy Court, 1/15/15, at 1035-1037.

     The Bankruptcy Court made the following findings in confirming

Seegrid’s reorganization plan:

     15. Plan Proposed in Good Faith (11 U.S.C. § 1129(a)(3)). The
     record demonstrates that [Seegrid] and its board diligently
     searched for other sources of capital, hiring multiple financial
     advisors over a period of years and directly approach numerous
     sources of financing. No viable alternatives to the Plan were
     found; the Plan is the only viable option to continue its business.
     The Plan is the product of good faith, arm’s length negotiations
     between [Seegrid], by and through its directors, officers and
     advisors, and [Giant Eagle].        Following such negotiations,
     [Seegrid], by and through its directors, officers and advisors,
     proposed the Plan in good faith and not by any means forbidden
     by law, thereby satisfying section 1129(a)(3) of the Bankruptcy
     Code. [Seegrid’s] and its board’s good faith in connection with
     the Plan is evidence from the facts and the record of this
     Reorganization Case, the Disclosure Statement and the hearing
     thereon, and the record of the Combined Hearing and other
     proceedings held in this Reorganization Case. The Plan was
     negotiated and proposed with the purpose of maximizing the
     value of [Seegrid’s] Estate for the benefit of all stakeholders and
     effectuating successful reorganization of [Seegrid].

     ....

     35.   Allowance of Giant Eagle’s Claims.      Giant Eagle is
     [Seegrid’s] largest shareholder and lender. Giant Eagle owns

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     approximately 31.5% of [Seegrid’s] outstanding shares and has
     loaned [Seegrid] approximately $34 million. Substantially all of
     the loans made to [Seegrid] by Giant Eagle were open to all
     investors, including [Horbal] on the same terms as available to
     Giant Eagle. None of Giant Eagle’s claims against, or interest in,
     [Seegrid] are subject to any objection, recharacterization or
     equitable subordination action.

Delaware Bankruptcy Court Final Order, 1/20/15, at ¶ 15, 35.

     The Delaware Chancery Court dismissed Horbal’s derivative complaint

on two grounds: that Horbal lacked standing to pursue its claims, and that

its claims were barred by collateral estoppel. In rendering its decision that

Horbal’s derivative action was barred by collateral estoppel, the Delaware

Court of Chancery stated:

            A second ground for disposing of the case today is
     collateral estoppel. Now, this is an issue that was raised in
     reply, but then the plaintiffs filed a sur-reply, such that it was
     fully presented. The essential argument here is that through the
     course of the bankruptcy proceeding, there were findings and
     determinations that have collateral estoppel effects on this
     Court.

           I did read all of [the bankruptcy court] Judge Shannon’s
     rulings, and I looked through the plan. It seemed to me that
     one of the key arguments that [Horbal] made in objecting to the
     plan was that the plan had been proposed in bad faith,
     essentially the culmination of the scheme that he had outlined in
     the complaint in front of me.

            It was my impression from reviewing Judge Shannon’s
     ruling that, during the three-day trial he had – in which there
     were seven witnesses, and there was a video deposition of Mr.
     Horbal that was played live, and I understand from Mr. Nachbar
     that . . . there were also witnesses presented on the papers, for
     a total of 12 witnesses – that Judge Shannon considered the idea
     that the plan was the culmination of these bad acts by Giant
     Eagle. He reviewed the background of the effort. He talked

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     about the efforts that were made. He made comments on what
     was done during the process by the lead director who was left on
     the board. I think that Judge Shannon would not have approved
     the plan had he thought that this was all part of a scheme by
     Giant Eagle culminating in the bad-faith achievement of what
     they ostensibly had sought all along.

           I am specifically relying on not just the [bankruptcy court]
     transcript, but also two paragraphs of the confirmation order
     [(¶¶ 15 and 35)].

           ....

            This seems, to me, to be something that was actually
     litigated and necessary to the plan. I don’t think that I could
     reach a contrary conclusion in this case as to everything that
     happened over the years being a bad-faith breach of a fiduciary
     duty or a self-interested scheme and not reach a result contrary
     to this finding. . . . If this litigation were to go back now and
     undo some of the debt investments made by Giant Eagle on
     fiduciary grounds, that would be a finding that would be directly
     contrary to paragraph 35 of the confirmation order, which
     allowed Giant Eagle’s claims. It’s therefore my view that this
     action is barred by principles of collateral estoppel.

N.T. Delaware Chancery Court, 7/14/15, at 75-79; Order, 7/17/15, at

unnumbered 4.

     Giant Eagle’s argument is two-fold.      First, it asserts that collateral

estoppel applies herein to bar Horbal’s claim that Giant Eagle’s participation

in the formulation, negotiation, and confirmation of Seegrid’s Chapter 11

reorganization plan constituted a breach of its fiduciary duty to other

minority shareholders.    It maintains that this inquiry is the same issue

Horbal presented before the Bankruptcy Court, that the Bankruptcy Court’s

ruling constituted a final order, and that the findings contained therein



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directly contradict the factual basis of Horbal’s present complaint.       Giant

Eagle claims that Horbal was a party to the plan confirmation proceeding,

and that Horbal had a full and fair opportunity to litigate these issues prior to

the confirmation of the plan since the parties conducted discovery,

depositions, and four days of trial before the Bankruptcy Court.         Finally,

Giant Eagle argues that the court’s findings were not merely dicta, but were

essential to the court’s confirmation of the plan.

      Second, Giant Eagle asserts that the Delaware Supreme Court’s

affirmance of the Chancery Court’s application of collateral estoppel to

Horbal’s derivative claims also precludes Horbal from maintaining suit

herein. Giant Eagle designates the effect of the Delaware Supreme Court’s

ruling as “double collateral estoppel,” and argues that this Court “should

respect the Delaware Supreme Court’s decision” based on the principle of

judicial comity. Appellant’s brief at 29-30.

      Since we find that comity necessitates that this Court should defer to

the decision of the Delaware Supreme Court, we need not analyze whether

the findings of the Bankruptcy Court preclude Horbal from maintaining its

direct claims under Pennsylvania law. Judicial comity “refers to the principle

that one state ‘will give effect to laws and judicial decisions of another state

out of deference and mutual respect, rather than out of duty.’” Neyman v.

Buckley, 153 A.3d 1010, 1017 (Pa.Super. 2016) (citation omitted). In this

vein, we have noted:

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      We recognize the demands of comity, and our courts should be,
      as they are, always ready to accede to them; but comity
      requires us that we administer the laws of another state between
      suitors in our courts whenever this becomes necessary to the
      proper administration of justice in the particular case. It does
      not require us to dismiss the parties with directions to proceed to
      Maine or California or some other state in which the contract was
      made, or the parties were domiciled, so that the law of a given
      state may be administered by the courts of that state, but simply
      that we shall apply the same rule that the courts of the proper
      state would apply.

Id. (citation omitted).   Nevertheless, “application of comity is a matter of

judicial discretion.” Id. (citation omitted).

      Instantly, we emphasize that collateral estoppel pertains to issue

preclusion, and that it applies to bar a new cause of action if the factual or

legal predicate underlying those claims has previously been determined by a

court of concurrent jurisdiction.    Weissberger, supra.      Although Horbal

brought a derivative action on behalf of Seegrid in Delaware, and a direct

action here, the factual basis of those complaints is identical, and thus, there

is no impediment to applying the doctrine of collateral estoppel to bar

Horbal’s direct claims herein.      Further, Horbal alleged that Giant Eagle

breached its fiduciary duties to its fellow minority shareholders in Seegrid, a

Delaware corporation.     Claims of this nature are subject to Delaware law.

15 Pa.C.S. § 4145(a); In re Estate of Hall, 731 A.2d 617, 622 (Pa.Super.

1999). The Delaware Supreme Court has long been known for its expertise

in corporate matters, which also militates in favor of acceding to the

demands of comity in this case.

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      In addition, the law regarding collateral estoppel, as applied by the

Delaware Supreme Court, is substantially similar to the test utilized in this

Commonwealth.         Under Delaware law, the “preclusive effect of a foreign

judgment is measured by standards of the rendering forum.”                    Acierno v.

New Castle Cty., 679 A.2d 455, 459 (Del. 1996).                  Since the Bankruptcy

Court issued the disputed opinion, the Delaware Supreme Court relied upon

the law of the United States Court of Appeals for the Third Circuit. The Third

Circuit evaluates the following requirements when determining whether

collateral   estoppel    applies:   “(1)     the    identical   issue   was      previously

adjudicated;    (2)   the   issue   was      actually   litigated;   (3)   the    previous

determination was necessary to the decision; and (4) the party being

precluded from relitigating the issue was fully represented in the prior

action.” Jean Alexander Cosmetics, Inc. v. L’Oreal USA, Inc., 458 F.3d

244, 249 (3rd Cir. 2006). We observe that the test is co-extensive with our

own and, similar to our own standards, dedicated to ensuring that a party’s

due process rights are not violated by the operation of the principle.

      Moreover, in light of the extensive resources expended in the litigation

of this matter in Bankruptcy Court, Delaware state court, arbitration, and

now before the courts of this Commonwealth, we find it would not be an

efficient use of judicial assets to permit the continued pursuit of Horbal’s

claims.   The parties and our sister jurisdictions have exhausted significant

resources in disposing of the very issues before us. Thus, for this additional

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reason, we defer to the ruling of the Delaware Supreme Court that Horbal’s

claim that Giant Eagle breached its fiduciary duties is barred by collateral

estoppel.

        Finally, in its second amended complaint, Horbal alleged that Giant

Eagle    tortiously     interfered   with   Anthony   Horbal’s    consulting   and

management services agreement with Seegrid. This claim was not raised in

the derivative complaint adjudicated before the Delaware Supreme Court,

and thus, our deference to the Delaware Supreme Court’s determination

does not settle that issue. In this regard, Horbal alleged that Giant Eagle

exercised impermissible control over members of Seegrid’s Board of

Directors, and conspired to terminate Anthony Horbal from his position as

Seegrid’s CEO.        Those allegations do not necessarily run counter to the

Bankruptcy Court’s determination that Giant Eagle engaged in fair, arm’s

length negotiations with Seegrid when proposing and formulating the

reorganization plan.

        Instantly, Giant Eagle filed with this Court a supplement to the

certified record pursuant to Pa.R.A.P. 1926, which included a settlement and

release agreement.        Giant Eagle contends that this agreement “fully and

completely” resolved Horbal’s claim for compensatory damages arising from

this alleged tortious conduct.       Appellant’s brief at 44.    It maintains that,

because Horbal has been fully recompensed for compensatory damages, it

cannot now proceed on a “naked claim for punitive damages.”             Id. at 45.

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Horbal does not dispute the existence of the settlement agreement, but

rather, it claims that it has a basis to seek punitive damages since Giant

Eagle may still be found liable for compensatory damages beyond those

owed by Seegrid pursuant to the Bankruptcy Court order, for attorney fees,

and for consequential damages and disgorgement.

      As previously stated, this matter is not disposed of by our analysis

above.   We note that the trial court did not have the benefit of the

settlement   agreement      when       it    considered   Giant   Eagle’s   preliminary

objections, and therefore, it did not determine the effect of that document

on Horbal’s remaining claim. Further, the settlement agreement arose as a

result of a proof of claim regarding post-termination fees owed to Mr. Horbal

by Seegrid, which was litigated in post-confirmation proceedings before the

Bankruptcy Court. The Bankruptcy Court determined that the consulting and

management services agreement was controlling at the time Mr. Horbal was

terminated from his position of CEO of Seegrid in 2014, and, under the

terms of that agreement,           that Mr.          Horbal was owed $282,537.66.

Bankruptcy Court Opinion, 10/27/16, at 11-21.

      Thereafter, Horbal and Seegrid memorialized Seegrid’s agreement to

remunerate Mr. Horbal according to the terms of the Bankruptcy Court post-

confirmation order.     Under the settlement and release agreement, Horbal

agreed to accept $205,843.19 in exchange for the full and complete

resolution   of   his   claim   that        Seegrid   breached    the   consulting   and

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management agreement. However, the settlement and release agreement

expressly provided that the release did “not extinguish or affect [Horbal’s]

claims or allegations asserted or that may be asserted in their Third

Amended Complaint in” this matter.      Settlement and Release Agreement,

11/10/16, ¶ 5. Further, the settlement and release agreement indicated that

it did not extend to “any defenses, claims or counterclaims [Giant Eagle in

the present proceeding] may have against [Horbal].”       Id. at ¶ 6.   Finally,

Horbal argues that the payments made by Seegrid pursuant to the

settlement and release agreement satisfied its breach of contract claim

against Seegrid, but it was not sufficient to satisfy the extent of the alleged

damages caused by Giant Eagle’s tortious interference with that same

contract.

      Questions of fact remain undecided by the trial court with regard to

the extent and effect of the consulting and management agreement as well

as the settlement and release agreement between Horbal and Seegrid. We

find that the certified record is not adequate to address the merits of this

issue at the present juncture. Pa.R.A.P. 1551. Accordingly, we affirm the

trial court’s decision to overrule Giant Eagle’s preliminary objections with

regard to Horbal’s claim for tortious interference with a contract, and reverse

with regard to its ruling that collateral estoppel does not bar the claims for

breach of fiduciary duties.




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      Order affirmed in part and reversed in part.   Case remanded.

Jurisdiction relinquished.

Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary



Date: 1/17/2018




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