HARRISBURG – The Superior Court of Pennsylvania has ruled that a lower court properly dismissed a shareholder's second amended complaint against a Pittsburgh hydrocarbon exploration and pipeline transport company.
Robert Garfield, on behalf of himself and all others similarly situated, filed a complaint in Allegheny County Court of Common Pleas against EQT Corp. over its acquisition of Rice Energy. He alleged the merger was unfair to EQT stockholders.
Garfield had appealed the trial court's decision to dismiss the complaint, arguing that it erred in dismissing his negligence and breach of contract claims.
"We conclude that the trial court did not err in dismissing count four of the (second amended complaint), as it is a derivative claim masked as a direct claim," President Judge Emeritus John T. Bender wrote in the Dec. 6 opinion.
"Finally, EQT compelling recognizes that 'the breach of contract claim is just another improper attempt to bring a derivative claim directly.' We concur."
Bender wrote that Garfield did not analyze the cases that he cited, failed to provide the context in his appeal and also failed to address the trial court’s observation that the statement of the corporate purpose does not create a contract.
Garfield's complaint alleged that EQT "persuaded" its shareholders to support the "unfair acquisition" with Rice by misrepresenting the value of the transaction and concealing or misrepresenting conflicts of interest. He filed the amended complaint in December 2017.
Garfield alleged EQT breached a number of duties that it owed to him by creating a corporate-governance environment and payment structure that harmed the members of the class. The structure led the defendant to make a number of unprofitable acquisitions, Garfield alleged. Despite the arguments made by Garfield, Bender wrote that he failed to provide the proof that is required and has not responded to EQT's arguments.