J-A07009-15


NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

TELETRACKING TECHNOLOGIES, INC.                 IN THE SUPERIOR COURT OF
                                                      PENNSYLVANIA
                         Appellant

                    v.

FRANK J. GORI, MARK JULIANO, GENE
NACEY, LORRAINE NACEY, STEPHEN P.
NASH, BRIAN E. SCHULIGER, INSIGHT
VENTURE MANAGEMENT, L.L.C. AND
INSIGHT TTT, LLC.

                         Appellee                     No. 940 WDA 2014


                Appeal from the Order Entered June 6, 2014
            In the Court of Common Pleas of Allegheny County
                   Civil Division at No(s): GD 11-006531


BEFORE: BENDER, P.J.E., LAZARUS, J., and MUNDY, J.

MEMORANDUM BY LAZARUS, J.:                             FILED MAY 28, 2015

      TeleTracking Technologies, Inc. (TeleTracking) appeals from the trial

court’s order:   (1) reaffirming its May 2011 order finding Insight Venture

Management, L.L.C.’s (Insight) Fourth Offer to purchase the Minority

Shareholders’ stock is a bona fide offer; (2) enjoining TeleTracking from

undertaking any further efforts to impede or prevent the closing on the

Fourth Offer; and (3) directing TeleTracking, upon closing of the Fourth

Offer, to register the transfer of shares in the name of Insight and issue new

stock certificates in its name upon surrender of the Minority Shareholders’

stock certificates. Upon careful review, we affirm.
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     In a prior appeal, our Court aptly summarized the relevant facts of the

underlying case as follows:

            On April 7, 2011, TeleTracking instituted this lawsuit by
     filing a complaint against: 1) Frank J. Gori, Mark Juliano, Gene
     Nacey, Lorraine Nacey, Stephen P. Nash, and Brian E. Schuliger
     [the Minority Shareholders/Appellees] [and] 2) Insight []. The
     following allegations appear in the complaint. TeleTracking, a
     privately-held corporation in which the minority shareholders
     hold about twenty-seven percent of the stock, is a health-care
     information technology company that provides patient flow
     solutions to the health care industry.

           Pursuant to a February 15, 1999 shareholder agreement,
     TeleTracking has a right of first refusal to purchase stock on the
     same terms and conditions as any bona fide offer that a
     shareholder receives for his shares. The pertinent provision of
     the shareholder agreement executed among TeleTracking and its
     shareholders, including the minority shareholders, is as follows:

        In the event that any Shareholder shall receive a bona
        fide written offer to buy such Shareholder share, which
        such Shareholder desires to accept, such Shareholder
        shall give written notice thereto to the Corporation and the
        other Shareholders. The notice shall specify that number
        of shares (the “Offered Shares”) the Shareholder intends
        to dispose of [and] the identity and the address of the
        person to whom the Shareholder proposes to dispose of
        such shares. Attached to the notice shall be a copy of the
        written offer, including the price, terms and conditions of
        the proposed disposition.        The notice shall also be
        accompanied by a counterpart of the Agreement, executed
        by the proposed purchaser of the shares. Appellant shall
        have an irrevocable and exclusive first option, but
        not an obligation, to purchase some or all of said
        shares on the same terms and conditions as set forth
        in said offer, exercisable by giving written notice to the
        Shareholder proposing to sell within thirty (30) days after
        receipt of the notice of the proposed offer.

     Exhibit 1 at § 1(a) (emphasis added).

     Insight [is an] investment banking firm[]. On March 31, 2011,
     the minority shareholders indicated to TeleTracking that they

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     had received an offer from Insight, brokered through [another
     investment banking firm], for the purchase of their stock and
     that [they] intended to sell the stock to Insight. They proffered
     that TeleTracking had thirty days to match the offer under the
     shareholder agreement. The offer in question was the fourth
     offer that Insight had made for the stock, after TeleTracking had
     previously maintained that three prior offers from Insight were
     not bona fide and did not trigger its right of first refusal.

           The complaint contained four counts.         In count one,
     TeleTracking set forth a declaratory judgment cause of action. It
     sought a declaration that its obligation to match Insight’s fourth
     offer for the minority shareholders’ stock was not triggered
     under the shareholder agreement. Its position was two-fold. It
     claimed that the offer was not bona fide and also that it was
     impossible for it to purchase the shares on the same terms and
     conditions as those set forth in Insight’s offer. In the second
     count, TeleTracking sought a preliminary injunction preventing
     the minority shareholders from selling the stock to Insight. At
     count three, TeleTracking averred that the minority shareholders
     had breached the shareholder agreement and, in count four, that
     Insight [] had tortuously interfered with that accord.

           Simultaneously with the complaint, TeleTracking filed a
     motion for preliminary injunction.     . . .   After a hearing
     conducted on April 26, 2011, the trial court denied the motion
     for preliminary injunction, thereby resolving count two of the
     complaint in favor of Insight and the minority shareholders,
     Appellees herein.

           On May 10, 2011, Appellees answered the complaint and
     moved for partial summary judgment as to count one of the
     complaint, which, as noted, sought a declaration that Appellant’s
     right of first refusal was not triggered by Insight’s fourth offer
     that was submitted to TeleTracking on March 31, 2011.
     Appellees’ petition[ed] for a ruling that Insight’s fourth offer was
     bona fide and that TeleTracking’s matching rights and obligations
     under the shareholder agreement were triggered when that offer
     was delivered to TeleTracking on March 31, 2011.

           The trial court ordered that discovery relevant to the
     summary judgment motion be conducted. After the submission
     of exhibits and briefs by the parties, on May 26, 2011, the trial
     court granted the motion for partial summary judgment. It ruled
     that the offer in question was a bona fide offer and that


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     Appellant’s matching rights and obligations under the
     shareholder agreement were triggered when that offer was
     delivered to it on March 31, 2011. On June 22, 2011, the court
     entered a final order dismissing the two remaining breach of
     contract and tortious interference claims set forth in the
     complaint. TeleTracking assented, without prejudice, to the
     dismissal of the complaint since the breach of contract and
     tortious interference causes of action were premised upon the
     position that the offer in question did not trigger its right of first
     refusal.

TeleTracking Technologies, Inc., v. Gori, et al., No. 1066 WDA 2011, at

1-5 (Pa. Super. filed April 10, 2013). TeleTracking appealed from the trial

court’s order, asserting that the court erred in determining that the Fourth

Offer was “bona fide” and that it erred in concluding that the Fourth Offer

was structured in such a way that TeleTracking could match it on the same

terms and conditions as Insight.

     On appeal, our Court affirmed the trial court’s order dismissing

TeleTracking’s complaint finding Insight’s offer to be bona fide as between

the offeror and offeree (but does not require that the offer be bona fide in

terms of its effects on TeleTracking) and that TeleTracking’s matching

rights and obligations under the shareholder agreement were triggered

because TeleTracking had been given the right to purchase the shares under

the same terms and conditions outlined in the stock purchase agreement

that the Minority Shareholders had executed with Insight.

     In coming to its decision, our Court found that TeleTracking had

repeatedly obstructed the Minority Shareholders from selling their stock by

not providing any information to potential purchasers in connection with



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prospective sales, id. at 12, indirectly preventing any proposed purchaser

from performing the requisite due diligence procedure applicable to stock

transactions, id. at 13, intentionally failing to support any sales initiative by

not collaborating in the sales processes, id., and amending the company’s

bylaws and articles of incorporation so as to diminish the value of the

minority shares and preclude the election of a board member by the minority

shareholders.     Id. at 14.      In effect, TeleTracking's actions prevented the

minority shareholders from consummating three prior offers to buy their

company stock, as well as the instant Fourth Offer.1

       TeleTracking proceeded to file a reargument petition in this Court,

which was denied on June 7, 2013.                Subsequently, TeleTracking filed a

petition for allowance of appeal with the Pennsylvania Supreme Court, which

was denied on December 27, 2013.

       Following appellate disposition, the Minority Shareholders attempted to

coordinate the transfer of stock with TeleTracking.          However, TeleTracking

again refused to cooperate, asserting that a provision in the parties’

agreement requiring that the Minority Shareholders complete the sale with



____________________________________________


1
  The Fourth Offer, tendered on March 31, 2011, committed to the purchase
of the Minority Shareholders’ stock for $37.35 million, with $16,805,762 to
be placed in escrow. The agreement also provided that Insight would be
compensated $6 million if TeleTracking exercised its right of first refusal,
representing a reimbursement fee for the substantial amount of time and
money Insight had invested in the protracted stock purchase negotiations.



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Insight within 120-days2 had expired and that the Minority Shareholders

were required to re-submit the offer, thus triggering compliance with the

right of first refusal procedures once again.         In April 2014, the Minority

Shareholders filed a motion to enforce the trial court’s prior determinations

so that the Fourth Offer could be consummated.               The court granted the

motion and this appeal ensued.

        On   appeal,    TeleTracking     presents   the   following   issue   for   our

consideration:

        Whether the court erred as a matter of law in ruling that
        Defendants could close on an offer to purchase TeleTracking
        stock, when Defendants were bound by a Shareholder
        Agreement with a right of first refusal provision containing a
        120-day closing deadline, and more than 120 days had passed
        since Defendants had presented the offer to TeleTracking.


____________________________________________


2
    This provision, found in the Shareholder Agreement, states:

        If neither the Corporation nor the remaining Shareholders
        individually or collectively elect to purchase all Offered Shares by
        the end of the twenty day Further Notice period, the Shareholder
        receiving such offer referenced in Section 1(a) [of the
        Shareholder Agreement] may accept the same and sell all
        Offered Shares in accordance with such offer and in accordance
        with the provisions of this Agreement if such sale is completed
        within one hundred twenty days (120) of the giving of notice to
        the Corporation, but if such sale is not completed within said one
        hundred twenty (120) day period, such shares shall not be sold
        without again complying with the terms of this Section.

Shareholder Agreement, 2/15/99, at ¶1(c).




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       The trial court cogently states that the majority shareholder of

TeleTracking, who is also the CEO and chairman of the board of directors,

has “use[d] the legal system to continue to exercise control over

TeleTracking, thus preventing [the Minority Shareholders from] selling the

shares . . . from which they had, for so long, seen no return on their

investment in a successful corporation.” Trial Court Opinion, 8/20/14, at 2-

3.    TeleTracking has repeatedly maintained that offers made to the

shareholders, over the span of a decade, were not bona fide.             When

TeleTracking demanded that the shareholders withdraw the instant offer, its

fourth, the shareholders refused, asserting that the offer was, in fact, bona

fide. TeleTracking claims that Insight’s offer did not provide a definite price

and that its terms were structured to favor the seller and disadvantage the

buyer; hence, the offer was not made in good faith. Despite its claims, the

trial court settled these issues back in May of 2011 in favor of the Minority

Shareholders, when it determined that the Insight offer was bona fide and

that the shareholders’ rights were triggered by the delivery of the offer, thus

denying TeleTracking’s request for an injunction. This decision was handed

down just 57 days after the offer was presented to TeleTracking, well within

the 120-day time frame set forth in the shareholder agreement.3


____________________________________________


3
  The remaining claims in TeleTracking’s underlying lawsuit were finally
dismissed 37 days before the 120-day closing deadline.



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       The trial court concluded that TeleTracking’s intentional protraction of

litigation underlying the sale of the stock by the Minority Shareholders is the

exact reason why the shareholders were not able to consummate the sale

within the prescribed timeframe provided in the parties’ agreement.          To

permit TeleTracking to rely upon this provision now to prevent the sale of

the stock is, in essence, using the contractual 120-day time limit as a sword,

rather than a shield, when the provision’s intent was to eliminate uncertainty

about ownership of company stock when an offer has been tendered.4

       Instantly, TeleTracking refuses to permit Insight to close on the deal

with the Minority Shareholders unless the latter resubmits its offer and

complies with the first refusal procedures again.      In fact, a section of the

instant stock purchase agreement provides that, as a condition of closing a

sale, there be no pending litigation challenging the consummation of the

transactions contemplated.         Therefore, by its commencement of litigation



____________________________________________


4
  While TeleTracking claims that the time has expired within which the sale
had to be consummated and that the minority shareholders were required to
seek a stay pending appeal to stop the 120-day clock from running, it also
acknowledged that “it was impractical for [the minority shareholders] to
close given the appeal.” N.T. Motion to Enforce, 6/3/14, at 21. This
sentiment especially rings true when TeleTracking’s initial appeal to this
Court in 2011 asked us to resolve whether Insight’s Fourth Offer even
triggered TeleTracking’s first refusal obligation. Moreover, as counsel for the
minority shareholders argued at the motion to enforce hearing, TeleTracking
refused to release control of the shares of shareholder Gene Nacey, and his
wife, Lorraine, further frustrating any proposed sale. Id. at 29-33.



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and endless pursuit of appeals, the company effectively created a stalemate

in the transfer of stock between the Minority Shareholders and Insight.5

       Because it is well established that a party who prevents performance

creates an excuse for nonperformance, Iron Trade Products Co. v.

Wilkoff Co., 116 A. 150 (Pa. 1922), the trial court correctly enforced its

prior order directing the sale of the stock after the expiration of the 120-day

time limit. The trial court was well within its authority to grant the motion to

enforce the sale of stock based upon equitable principles.        Goodwin v.

Rodriguez, 554 A.2d 6 (Pa. 1989); see also Valora v. Pennsylvania

Employees Benefit Trust Fund, 939 A.2d 312, 322 (Pa. 2007) (courts are

empowered to examine methods and timing that party to contract resorts to

in attempting to enforce specific terms of agreement). Thus, we affirm.

       Order affirmed.

       MUNDY J., joins the majority.

       BENDER PJE., files a Dissenting Memorandum.




____________________________________________


5
  The defendants sought a third-party purchase for their shares due to the
fact that for several years they saw no return of capital on their
shareholdings despite the company’s monetary success. N.T. Motion to
Enforce, 6/3/14, at 4.



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Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary



Date: 5/28/2015




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