HomeMy WebLinkAbout96-02344
, ,
'1'
~
"
..
I.
"
'"
, ,
'! ','
i i
,I
" ,
~ ,
I
J
I
I , ,I
,
"
\ i,.' " I
"
~ ~ } I,
"
. \
\ 1
,\ I
.'
)
// " 'I
,
;'
! " '
I I' ,
1
I
I
I F
1
1
1
"
I
J I
I
!
I,
j, III,
, ,1\
j "",
"
( ,,<\
",
JASON J. GEHMAN,
Plaintiff
v.
I
I
I
I
I
I
I
I
I
I
I
I
IN THE COURT OF COMMON PLEAS OF
CUMBBRLAND COUNTY, PENNSYLVANIA
CIVIL ACTION - LAW
JAMES E. GALLAGHER,
PETER A. O'SHEA and
RELIABLE FOUNDATION WATER
PROOFING AND RESTORATION,
,INC., and AMERICAN BASEMENT
SYSTEMS, INC.,
Defendants
NO. 96-2344 CIVIL TERM
IN REI DEFENDANTS' PRELIMINARY OQ,~CTIONS
BEFORE HOFFER and OLER. JJ.
OPINION and ORDER OF COURT
O,ler, J.
This civil action, involving corporations and shareholder.,
arises out of an alleged effort by two shareholder. of one
corporation to exclude a third shareholder from various benefits of
corporate ownership, and to divert business to a second
corporation, which they owned alQne. For disposition at this tim.
are Defendants' preliminary objections in the form of (a) a
demurrer to a claim for an accounting, (b) a demurrer to claims for
civil conspiracy, and (c) a motion for a more specific pleading.
For the reasons etated in this opinion, the demurrer to the
claim for an accounting will be sustained and the preliminary
objections will be otherwise denied.
STATEMENT OF FACTS
The allegations of Plaintiff's complaint may be summarized a.
followsl
Plaintiff Jaeon J. Gehman and Defendants James E.
Gallagher and Peter A. O'Shea formed Defendant American Basement
NO. 96-2344 CIVIL TERM
Systems, Inc., in 1993.1 The company engaged in the business of
waterproofing baaements.' Each individual owned a third of the
corporate stock.'
Defendants Gallagher and O'Shea undertook to exclude Plaintiff
from the bueiness.. Paragraph 9 of Plaintiff's complaint state. u
follows.
9. Shortly after the cODUllencement of
business operations, Defendants O'Shea and
Gallagher engaged in a course of unlawful
conduct whose purpose and affect was to
squeeze Plaintiff out of the business and to
enrich and advantage themselves at the expense
of Plaintiff individually, and to the
detriment of ADS, including, inter AliA, as
follows.
a. The individual Defendants
acting in concert with each other
coerced Plaintiff Gehman into
permitting them to establish a
separate corporation, [Defendant]
Reliable [Foundation Water Proofing
and Restoration, Inc.], for the
purpose of performing installation
services for [Defendant American
Basement Systems, Inc.]
b. The individual Defendants
then began a pattern of directing
more and more of the installation
work of ADS to Reliable.
-
1 Plaintiff's complaint, paragraphs 1-6.
, Id., paragraph 6.
, Id.
. Id" paragraph 9.
2
NO. 96-2344 CIVIL TERM
establish his own business, but reneged on the agreement after he
had resigned as an employee of Defendant American Basement.
Paragraph 13 of Plaintiff's complaint alleges as followsl
l3. From July 1994 to the present, the
individual Defendants have failed and refused
to enter into negotiations for the purchase of
Plaintiff's interest; have diverted income due
to ASS to themselves personally have diverted
monies from ASS to their own corporation
Reliable, ostensibly for installation fees but
which fees are groB8ly inflated and thus
serves to divert income from [Defendant
American Basement Systems, Inc.)'
At various points in the complaint, Defendants' actions are
characterized as "illegal, oppressive, and/or fraudulent." See
Plaintiff's complaint, paragraphs 17, 21, 45-47, 52.
Among the fourteen counts in Plaintiff's complaint are a claim
for an accounting by Defendant Reliable (the second corporation)
(count 14), and claims for civil conspiracy against Defendant
Gallagher (Count 9) and Defendant O'Shea (Count lO). Other claime
by Plaintiff are for an accounting by, and dissolution of,
Defendant American Basement (the first corporation),. appointment
of a custodian of Defendant American Basement,' breaches of
,
Id., paragraph l3.
Id., Count 1.
Id., Count 2.
.
.
4
NO. 96-2344 CIVIL TERM
fiduciary duty, 10 usurpations of corporate opportunities, II
convendonu and unjust enrichment.13
Dofendant's preliminary objections are in the form of (a) a
demurrer to the claim for an accounting by Defendant Reliable
(Count 14), (b) a demurrer to the claims for civil conspiracy
against Defendant Gallagher (Count 9) and Defendant O'Shea (Count
10), and (c) a motion for a more specific pleading with respect to
the aspect of fraud contained in the complaint., with regard to the
first demurrer, Plaintiff's counsel indicated at oral argument and
in Plaintiff's brief" that he did not intend to pursue the claim
for an accounting by Defendant Reliable, and Defendants' rationale
for this preliminary objection need not be examined further.
with regard to the second demurrer, Defendants maintain that
the claims for civil conspiracy against Defendants Gallagher and
I. Id., Counts 3 (Defendant Gallagher) and 4 ( Defendant
O'Shea) .
II Id., Counts 5 (Defendant Gallagher) and 6 ( Def.mdant
O'Shea) .
12 Id., Counts 7 (Defendant Gallagher) and 8 (Defendant
O'Shea) .
II Id. , CQunts 11 (Defendant Gllllagher) , l2 ( Defendant
O'Shea) , and 13 (Defendant Reliable).
In reciting the facts alleged in Plaintiff's complaint,
the court is not expressing an opinion ae to the accuracy of the
allegations.
" Plaint.iff' s Brief in Opposition to Defendants' Preliminary
Objections at 7 n.l.
5
NO. 96-2344 CIVIL TERM
O'Shea are based upon "the collective judgment of two individuals
within the same entity' .... "U It is contended that such "conduct,
if challenged, becomes that of the single, corporate entity,"" and
that, consequently, such activity will not 8upport a cause of
action for a con8piracy - a combination of person.."
with, regard to the motion for a more 8pecific pleading,
Defendant8 maintain that tho allegations of fraudulent conduct
contained in the complaint are merely general." It is suggested
that the pleading is therefore violative of Pennsylvania Rule of
Civil Procedure lOl9 (b), which requires that "avltrments of fraud
... be pleaded with particularity.""
PISCUSSIOH
Demurrer to Claim for Accountina bv Defendsnt ReliaQll
Plaintiff'. counsel has indicated that plaintiff does not intend to
pursue hi. claim for an accounting by Defendant Reliable.
Accordingly, Count 14 of plaintiff's complaint will be dismissed.
15 Defendant's Brief in Support of Preliminary Objections at
4.
" rd.
11 rd. at 4-5.
II rd. at 6-9.
" rd.
6
NO. 96-2344 CIVIL TERM
Demurrer to Claims for Civil ConsDiracv aaainst Defendant.
~aaher and O'She~
"In order to sustain a [contested) demurrer, it is es.ential
that an opponent' I!I pleading indicate on its face that hi. claim...
cannot be sustained.
The question to be decided is
.. .
whether,
upon the facts averred, it shows with certainty that the law will
not uphold the pleading." 2 Goodrich-Amram 2d SlOI7(b) 127, at 271
(l99l) .
In Pennsylvania, "[t)o provo a civil conspiracy, it must be
shown that two or more persons combined or agreed with intent to do
an unlawful act or to do an otherwise lawful act by unlawful
means." Thompson Coal Co. v. Pike Coal Co., 488 Pa. 198, 211, 412
A.2d 466, 472 (l979). As a general rule a corporation can not
conspire with its sole owner,'. and an exerciee of judgment on
behalf of an entity s~ch as a state university by a corromittee will
not support a claim of civil conspiracy. Keddie v. Pennsylvania
State University, 412 F. Supp. 1264 (M.D. Pa. 1976).
In this case, Plaintiff has alleged that the individual
dofendants conspired with each other to deprive him of his rights
as a part-owner of one corporate defendant, and to divert business
to a second corporate defendant in which he had no interest. The
rule that a corporation can not conspire with its owner. doe. not
,. Thompson Coal Co. v. Pike Coal Co., 488 Pa. 198, 412 A.2d
466 (l979).
7
NO. 96-2344 CIVIL TERM
preclude the p088ibility of recovery on the part of Plaintiff. Nor
does the rule that an exercise of judgment by a committee of an
educational institution is not a conspiracy preclude such a
possibility.
Motion for a More Soecific Pleadin9
Under Pennsylvania Rule of Civil Procedure 10l9, "[t)he
material facts on which a cause of action ... is based [must) be
stated in a concise and summary form,"" and "[a)vermentlll of fraud
... [must) be averred with particularity. ,," On the other hand,
"[e]vidence from which material facts may be inferred not only need
not but should not be alleged in a pleading." 2 Goodrich-Amram 2d
S10l9(a)16, at 321 (l99l).
"Generally speaking, a pleading should be sufficiently
specific so as to enable an oppoBing party to prepare his or her
response." Id. SlOl914, at 313.
In determining whether fraud has been
pleaded with the required particularity, a
court must examine a complaint as a whole.
Rule l019(b) requires only that the facts
constituting fraud be alleged and that fraud
not be pleaded as a legal conclusion, not that
~he allegations of fact be drawn with pleading
skill and be arranged in logical and proper
sequence.
rd. S1019(b)11, at 330.
21
Pa. R.C.P. 10l9(a).
Pa. R.C.P. 1019(b).
22
8
NO. 96-2344 CIVIL TBRM
In addition, "[ilt hu been held that [al preliminary
objection in the naturo of a motion for a more specific pleading
will be denied ... where the objecting party may be presumed to
have at least as much knowledge of the information sought as does
the pleader ...." Kromer v. Goodling, No. 94-2988 Equity Term,
slip. op. at 5 (Cumberland Co., June 12, 1996); Stone v. Dauphin
DepoBit Bank, No. 3933 Civil 1991, slip. op. at 4 (Cumberland Co.
February 24,1992); Bee 2 Goodrich-Amram 2d Sl019:5, at 314 (199l).
Finally, "when a party states a case in a manner that fully
advises an opponent of the nature of the case and of the matters
with which the opponent will be confronted at trial, there is no
need for a motion for a more specific pleading; the opponent should
seek discovery if he or she needs more information ...... Id.
Sl017(b)124, at 268.
In this case, Plaintiff's complaint does not contain a count
for fraud. Although at various points the complaint characterizes
Defendants' activities as illegal, oppressive and/or .. fraudulent,"
these terms must be read in the context of the allegations
preceding them. In this context, in the court's view, the pleading
a8 it relates to allegedly fraudulent conduct (a) is sufficiently
specific to apprise Defendants of the nature of the case against
them and to enable them to prepare responsos, (b) deals with
matters which are presumably as much within Defendant's knowledge
9
3. Admitted in part and denied in part. It is admitted that
Defendant Peter A. 0' Shea is an adult individual. The correct
address is 1100 Andersontown Road, Mechanicsburg, York Count;y,
Pennsylvania.
4. Admitted.
5. Admitted.
6. Admitted.
7. Denied. It is denied that Jason Gehman was necessary to
establish credentials with the Better Business Bureau or that he
was essential to the viabiJ.ity of the business venture. It is
further denied that Plaintiff had the initial capital necessary to
commence business operations. On the contrary, each of the three
original stockholders put J.n an equal amount of $18,000.00 to start
the business. The remainder of the averments of paragraph 7 are
neither admitted nor denied in that after reasonable investigation
this Defendant is without sufficient information to form a belief
as to the truth of the averments and they are therefore deemed to
be denied and proof thereof is demanded.
8. DenJ.ed. It is specifically denied that the individual
Defendants "had experience in sales generally but only a limited
experience in the sales of waterproofing systems for basements, had
no construction business experience, had no established reputation
or credentials, and would have been unable to establish themselves
in the business had it not been for the involvement, credentials
- 2 -
and moneys of Plaintiff. II On the contrary, Defendant 0' Shea prior
to the formation of ASS was the Regional Manager for Mid-Atlantic
Waterproofing and hired and trained Jason Gehman at Mid-Atlantic
and Jason Gehman was there for less than one year. In addition,
James Gallagher had more experience at Mid-Atlantic than Jason
Gehman and he had extensive experience in construction, By way of
further response, each of the original three (3) stockholders put
up an equal amount of money to start the business and Jason Gehman
did not put up any additional money or p~omise to put up additional
money.
9. It is specifically denied that shortly after the
commencement of business operations Defendants 0' Shea and Gallagher
engaged in a course of unlawful conduct whose purpose and affect
was to squeeze Plaintiff out of the business and to enrich and
advantage themselves at the expense of Plaintiff, individually and
to the detriment of ASS. On the contrary, Defendants O'Shea and
Gallagher at all times acted app.opriately and in the interest of
ABS.
(a) It is specifically denied that the individual
Defendants acting in concert with each other coerced Plaintiff
Gehman into permitting them to establish a separate corporation,
Reliable, for the purpose of performing installation services for
ABS. On the contrary, Jason Gehman freely consented and agreed to
the establishment of Reliable. There was no coercion. It was
- 3 -
agreed that Jason Gehman would concentrate on sales and that the
individual Defendants would assure good quality installation
through the use of Reliable.
(b) It is admitted that ADS directed installation work
to Reliable. This was done to assure good quality installation and
was done in an appropriate manner.
(c) Admitted in part and denied in part. It is admitted
that Defendant Reliable's two shareholders are Peter A. 0' Shea and
James E. Gallagher. It is denied that they took salaries from both
corporat.ions. On the contrary, they were paid salary by Defendant
ASS. It is denied that Gallagher and O'Shea began performing less
services for ASS. On the contrary, it was the efforts of these two
individuals that made ASS a viable corporate entity.
(d) Denied, It is specifically denied that the
individual Defendants engaged in a pattern of conduct constituting
tax fraud, including taking payment in kind from customers and
diverting funds from ASS without properly repo~,ting income. On the
contrary, the individual Defendants acted at all times
appropriately and in accordanr.e with their duties to ADS.
(e) Denied. It is specifically denied that the
individual Defendants directed leads away from Plaintiff and kept
him from information essential to the operations of the business.
On the contrary, Plaintiff Jason Gehman did from time to time limit
himself as to leads he would accept on a geographic basis.
- 4 -
If) Denied, It is 'specifically denied that the
individual Defendants removed and converted assets of ASS to their
own use including income, equipment, receivables, customer lists
and pro~pects, and have paid personal expenses and obligations out
of corporate aasets. On the contrary, the individual Defendants
have acted at all times appropriately and in accordance with the
interests of ASS.
10. Denied. It is specifically denied that the individual
Defendants engaged in the wrongful conduct alleged and it is denied
that Plaintiff voiced concern and objection regarding conduct of
the individual Defendants, It is denied that there was any
wrongful behavior to be altered.
11. Denied. It. is denied that the individual Defendants
engaged in conduct to cause Plaintiff Gehman to not work with the
indi vidual Defendants. On the contrary, Gehman's role in the
Company was as a salesman and he did not want to run leads. He
voluntarily withdrew from the active conduct of the business. It
is admitted that the individual Defendants eventually offered to
buy Gehman's share of the business. Gehman did not respond for an
extended period of time and then asked for an unreasonable amount
for his interest in the business. It is denied that Gehman ever
discussed with Gallagher and O'Shea, establishing his O'tln
waterproofing business and it is denied that Defendants Gallagher
and O'Shea or. ASS agreed to same.
- 5 -
12. Denied. It is denied that in July 1994, Plaintiff Gehman
resigned his position as an employee of ASS on the representation
from the individual Defendants that they would enter into good
faith discussions for a buy-out of his shares in the corporation.
On the contrary, Gehman resigned his position as an officer
(Secretary-Treasurer). He did this in writing by dropping a letter
off at the office. His resignation was never tied to discussion of
a buy-o,ut of his shares in the corporat i.on.
13. Denied. It is denied that Gallagher and O'Shea failed
and refused to enter into negotiations for purchase of Plaintiff's
interest. On the contrary, Gallagher and 0' Shea have tried to
negotiate purchase of Gehman's interest. It is denied that
Gallagher and O'Shea diverted income due to ABS to themselves or
improperly diverted monies from ASS to Reliable. It is denied that
any fees paid to Reliable for installation are grossly inflated and
it is denied that Defendants diverted income from ABS. Fees paid
by ASS to Reliable have been fair and reasonable.
14. Denied. It is specifically denied that Gallagher and
O'Shea promoted their personal interest over the interests of ABS.
On the contrary, Gallagher and 0' Shea have extended great effort to
make ASS a successful business organization,
15. Denied. It is specifically denied that Gallagher and
0' Shea have directly or indirectly used their positions with ASS to
obtain improper personal profit and to gain unjust enrichment. On
- 6 -
the contrary, Gallagher and O'Shea have extended great effort to
make ADS a successful business and have been paid appropriately for
their efforts.
COUNT I
16. The Defendants incorporate by reference their responses
to paragraphs 1 through 15 of Plaintiff's Complaint as if set forth
at length herein.
17. Denied. It is denied that the acts of the individual
Defendants were illegal, oppressive or fraudulent and it is denied
that it is beneficial to the interests of the shareholders that the
Corporation be wound up and dissolved.
18. Denied. It ia specifically denied that corporation
assets are being misapplied or wasted and it is denied that it is
beneficial to the interest of the shareholders that the Corporation
be wound up and dissolved.
WHEREFORE, the Defendants James E. Gallagher, Peter O'Shea and
American Basement Systems, Inc, ask that the relief requested by
Plaintiff Jason J. Gehman be denied.
COUNT II
19, The Defendants incorporate by reference their responses
to paragraphs 1 through 18 of Plaintiff's Complaint as if aet forth
at length herein.
20. Admitted.
- 7 -
21. It is specifically denied that the Directors other than
Plaintiff or those in control of Defendant American Basement
Systems, Inc. havE! acted illegally, oppressively and/or
fraudulently toward Jason J. Gehman in his capacity as shareholder
or in his capacity as Officer and employee of Defendant American
Basement Systems, Inc. It is further denied that h~ is a minority
shareholder. On the contrary, there are three shareholders who
each hold one-third (1/3) of the outstanding shares of stock.
WHEREFORE, the Defendants James E. Gallagher, Peter A. O'Shea
and American Basement Systems, Inc. request that the relief asked
for by Plaintiff Jason J. Gehman be denied.
COUNT III
22. The Defendants incorporate by reference their responses
to paragraphs 1 through 21 of Plaintiff's Complaint as if set forth
at length herein.
23. Denied. It is denied that Gallagher and 0' Shea have
engaged in any unlawf.ul acts and it is denied that any of their
actions constitute breach of fiduciary duty or duties of good
faith, loyalty and fair dealing toward Gehman or ASS.
24. Denied. It is denied that Gallagher and O'Shea engaged
in any unlawful conduct and it is denied that any condu~t on their
part constitutes a failure to exercise reasonable care, skill and
diligence that persons of ordinary prudence in their position would
use with respect to the interests and business of ABS. On the
- 8 -
.
contrary, Gallagher and 0' Shea have at all times IIcted
appropriately and in the interests of ADS.
25. Deni~d. It is denied that Gallagher and O'Shea violated
any duties and it ilil denied that Gehman has suffered or will
continue to suffer any damages, losses or irreparable h~rm.
WHEREFORE, the Defendants James E. Gallagher, Peter A. O'Shea
and American Basement Systems, Inc. demand that Judgment be entered
in their favor and against the Plaintiff Jason J. Gehman.
COUNT IV
26. The Defendants incorporate by reference their responses
to paragraphs 1 through 25 of !?laintiff' s Complaint as if set fort,h
at length herein.
WHEREFORE, the Defendants James E. Gallagher, Peter A. O'Shea
and American Basement Systems, Inc. demand that Judgment be entered
in their favor and against the Plaintiff Jason J. Gehman.
COUNT V
27. The Defendants incorporate by reference their responses
to paragraphs 1 through 26 of Plaintiff's Complaint as if set forth
at length herein.
28. Denied. It is specifically denied that Gallagher and
0' Shea have failed to devote themselves to the corporate af.fairs of
ADS with a view to promoting common interest. On the contrary,
Gallagher and O'Shea have at all time~ acted appropriately and in
the interests of ADS.
- 9 -
29. Denied. It is specifically denied that Gallagher and
O'Shea engaged in self-dealing and diversion of business to their
own account or the account of Reliable or other individuals or
entities constituting an unla....ful usurpation of corporate
opportunity. On the contrary, Gallagher and O'Shea have acted at
all times appropriately and in the interests of ADS.
30. Denied. It is specifically denied that Gallagher and
O'Shea diverted corporate opportunities within the scope of
corporate activities conducted by ADS. On the contrary, Gallagher
and O'Shea had acted at all times appropriately and in accordance
with the interests of ADS.
31. Denied. It is specifically denied that Gallagher and
O'Shea unlawfully usurped or. exploited any corporate opportunities
at the expense of ASS.
32. Denied. It is specifically denied that Gallagher and
O'Shea usurped any corporate opportunities and it is specifically
denied that they have been unjustly enriched and it is specifically
denied that Gehman has suffered or will continue to suffer any
damages, losses or irreparable harm.
WHEREFORE, the Defendants James E. Gallagher, Peter O'Shea and
American Basement Systems, Inc. demand that ,rudgment be entered in
their favor and against the Plaintiff Jason J. Gehman.
- 10 -
COUNT VI
33. The Defendants incorporate by reference their responses
to paragraphs 1 through 32 of Plaintiff's Complaint as if set forth
at length herein.
WHEREFORE, the Defendants James E. Gallagher, Peter A. O'Shea
and American Basement Systems, Inc. demand that Judgment be entered
in their favor and against the Plaintiff Jason J. Gehman.
COUNT VII
34. The Defendants incorporate by reference their responses
to paragraphs 1 through 33 of Plaintiff's Complaint as if set forth
at length herein.
35. Denied, It is specifically denied that Gallagher and
O'Shea have willfully interfered without legal justification with
ADS's dominion and control over its property. On the contrary,
Gallagher and O'Shea acted at all times appropriately and in the
interests of ADS.
36. Denied. It is specifically denied that Gallagher and
O'Shea have unlawfully converted corporate property for their own
use and deprived ABS of its use and possession. On the contrary,
Gallagher and O'Shea have at all times acted appropriately and in
accordance with the interests of ADS,
37. Denied, It is specifically denied that Gallagher and
O'Shea converted corporate property and it is denied that ADS has
suffered and will continue to suffer any damages, losses or
- 11 -
irreparable harm. On the contrary, Defendants Gallagher and 0' Shea
acted at all times appropriately and in accordance with the
interests of ABS.
38. Denied. It is specifically denied that any conversion
was committed by Gallagher and O'Shea and it is specifically denied
that Gehman has suffered or will continue to suffer any damages,
losses or irreparable harm.
WHEREFORE, the Defendants James E. Gallagher, Peter A. O'Shea
and American Basement Systems / Inc. demand that Judgment be entered
in their favor and against the Plaintiff Jason J. Gehman.
COUNT VI II
39. The Defendants incorporate by reference their responses
to paragraphs 1 through 38 of Plaintiff's Complaint as if set forth
at length herein.
WHEREFORE, the Defendants James E. Gallagher, Peter A. O'Shea
and American Basement Systems / Inc. demand that Judgment be entered
in their favor and against the Plaintiff Jason J, Gehman.
COUNT IX
40. The Defendants incorporate by reference their responses
to paragraphs 1 through 39 of Plaintiff's Complaint as if set forth
at length herein.
41. Denied. It is specifically denied that any actions of
Gallagher and 0' Shea in concert with each other constituted any
unlawful conspiracy designed and intended to injure Gehman. On the
- 12 -
contrary, Defendants Gallagher and 0' Shea acted at all times
appropriately and in accordance with the interests of ABS.
42. Denied. It is specificaJ,ly denied that there was any
unlawful conspiracy or acts in furtherance thereof by Gallagher and
O'Shea and it is denied that Gehman has suffered or will continue
to suffer any damages, losses or irreparable harm.
WHEREFORE, Defendants James E. Gallagher, Peter A. O'Shea and
American Basement Systems, Inc. demand that Judgment be entered in
their favor and against the Plaintiff Jason J. Gehman.
COUNT X
43. The Defendants incorporate by reference their responses
to paragraphs 1 through 42 of Plaintiff's Complaint as if set forth
at length herein.
WHEREFORE, the Defendants James E. Gallagher, Peter A. O'Shea
and American Basement Systems, Inc. demand that Judgment be entered
in their favor and againRt the Plaintiff Jason J. Gehman,
COUNT XII
49. The Defendants incorporate by reference their responses
to paragraphs 1 through 48 of Plaintiff's Complaint as if set forth
at length herein.
WHEREFORE, the Defendants James E. Gallagher, Peter A. O'Shea
and American Basement Systems, Inc. demand that Judgment be entered
in their favor and against the plaintiff Jason J. Gehman.
- 13 -
COUNT XIII
50. The Defendants incorporate by reference their responses
to paragraphs 1 through 49 of Plaintiff's Complaint as if set forth
at length herein.
WHEREFORE, the Defendants James E. Gallagher, Peter A, O'Shea
and American Basement Systems, Inc. demand that Judgment be entered
in their favor and against the Plaintiff Jason J. Gehman.
COUNT XIV
51-53. Count XIV of Plaintiff's Complaint has been dismissed
by Order of Court and therefore no response is required.
WHEREFORE, the Oefendants James E. Gallagher, Peter A. O'Shea
and American Basement Systems, Inc. demand that Judgment be entered
in their fav0r and against the Plaintiff Jason J. Gehman.
NBW MATTBR
54. Defendants Gallagher and 0' Shea acted at all times in
good faith.
55. The relation of Defendants O'Shea and Gallagher to
Reliable Foundation Water Proofing and Restoration, Inc. (Reliable)
was disclosed to American Basement Systems, Inc, (ABS) and its
shareholders including Jaoon Gehman.
56. Any transactions between ABS and Reliable were fair and
reasonable.
57. Defendants Gallagher and 0' Shea did not wrongfully profit
at the expense of ABS.
- 14 -
58. Defendants Gallagher and O'Shea have not been in any way
unjustly enriched.
59. Defendants Gallagher and O'Shea did not wrongfully use
corporate resources or their positionB with ABS.
60. Defendants Gallagher and 0' Shea at all times devoted
themselves to the corporate affairs of ADS with a view to promoting
the common interests of ADS and its shareholders.
61. Any and all actions of Defendants Gallagher and 0' Shea
were appropriately ratified by ADS and its shareholders including
Jason Gehman.
62. Defendants Gallagher and 0' Shea have dealt with the
property of ADS in the common interest of all shareholders and ADS
and there was no unjust enrichment to Defendants Gallagher and
0' Shea.
63. Defendants Gallagher and O'Shea have acted at all times
reasonably with due care and good faith in carrying out their
responsibilities with ASS.
64. Defendant Gallagher and 0' Shea acted at all times in
accordance with any fiduciary obligations in regard to ASS and its
shareholders including Jason Gehman.
65. Defendants Gallagher and O'Shea appropriately exercised
their discretion in the conduct of ASS's corporation affairs.
66. Any breach of any fiduciary obligation shown on the part
of defendants Oallagher and O'Shea, was not the proximate or legal
- 15 -
cause of any injury to ABS or its shareholders including Jason
Gehman.
67. Any transactions entered into for ABS by Defendants
Gallagher and O'Shea served legitimate corporate purposes.
68. Any and all actions of Defendants Gallagher and 0' Shea
were based upon sound business judgment.
69. All material facts of the transactions and business of
ABS were known to the shareholders including Jason Gehman.
70. Defendants Gallagher and 0' Shea acted at all times in
compliance with the Pennsylvania Business Corporation Law and
assert all defenses available therein.
71. Defendants Gallagher and O'Shea acted at all times in
accordance with the ABS Articles of Incorporation, By-Laws" and
Corporate Resolutions.
72. ABS, Gallagher and O'Shea at all times exercised good
faith, due care and diligence to protect the interests of Jason
Gehman.
73. All salary or compensation paid by ABS to Defendantll
Gallagher and O'Shea bears a reasonable relation to their ability
and the quantity and quality of their services rendered to ABS.
74. It is not in the best interests of ABS or its
shareholders to have an appointment of a custodian, accounting and
corporation dissolution.
- 16 -
75. Plainti~f' s claims are barred by the applicable statutef..'
of limitation.
76. Plaintiff's claims are barred by laches.
77. Plaintiff's claims should be dismissed based upon the
doctrine of unclean hands.
78. Plaintiff's claims are barred by his own causal
contributory negligence.
79. Plaintiff consented to any alleged conduct of the
Defendants.
80. Plaintiff is estopped from making these claims based upon
his agreement that Gallagher and 0' Shea could form Reliable
Foundation Water Proofing and Restoration, Inc. to do construction
for ADS and Gehman's conduct in forming a directly competing
waterproofing business.
WHEREFORE, the Defendants American Basement Systems, Inc.
James E. Gallagher and Peter O'Shea demand that Plaintiff's action
be dismissed and judgment be entered in favor of the Defendante.
COUNTBRCLAIM
81. Jason Gehman owes ADS $28,000.00 as an unearned draw
against commissions.
82. Jason Gehman is a shareholder in the close corporation
ADS and has violated his fiduciary duty to ASS by starting a
directly competing waterproofing busir.ess In sole pursuit of his
- 17 -
.
own financial interests, and usurping corporate opportunities of
ABS and causing Gehman to be unjustly enriched.
83. As a result of the violation by Jason Gehman of his
duties aforesaid ABS and its shareholders have suffered and will
continue to suffer damages, losses and irreparable harm as set
forth above and as yet to be discovered.
84. Gehman has failed to devote himself to the corporate
affairs of ABS with a view to promoting common interest.
85. Gehman's diversion of business to his own waterproofing
business Absolute Basement Concepts or other entities constitutes
an unlawful usurpation of corporate opportunity.
86. The corporate opportunities diverted by Gehman come
w~thin the scope of corporate activities conducted by ABS.
87. At all times relevant hereto ABS was capable of taking
and exploiting the corporate opportunities usurped by Jason Gehman.
88. As a result of the usurpation of corporate opportunities
as aforesaid Gehman has been unjustly enriched and ABS and its
shareholders have suffered and will continue to suffer damages,
losses and irreparable harm as set forth above and as yet to be
discovered.
89. Jason Gehman should be ordered to disgorge any and all
monies derived from his wrongful conduct as alleged and pay said
monies to ABS t.ogether with interest, costs, and reasonable
- 18 -
.
. .
CIRTI'ICATI 0' SIRVICI
I, RANDALL G. GALl, ISQUIRI, Attorney for Defendants, do
hereby certify that a copy of the foregoing ANSWlR AND NBW HATT8R
~ COUNTIRCLAIM was served upon the following by enclosing a true
and correct copy in envelopes addressed as follows, postage
prepaid, and depositing same in
Harrisburg, Pennsylvania, on the
, 1996:
the United States Mail at
I tt/i day of ~~
Luther E. Milspaw, Jr., Esquire
MILSPAW & BESHORE
130 State Street
P,O. Box 946
Harrisburg, PA 17108-0946
THOMAS, THOMAS & HAFER
By
R~~tf.,6:!:iro
305 North Front Street
P.O. Box 999
Harrisburg, PA 17108
(717) 255-7648
- 20 -
':-- '0
,
i c.;"
~,( .(
r"'
1- - ..... ,,'
~): i
)1, "., "!
.iill I
U:', !I' ,
;~" "Ii i
I,:: 'k~
.' r- ',J
(.,1 ()" \.,)
<5
10.1 E
It:
0 . iii
J ~ Z
1: . w . ~
VI ..J W ~ ~ 0
10.1 ~ << ~
~
CD . II) ~ j
1/1 W ~
'" . ~ ~
~ r . III W E
~ ,a.
II) 0 oj ~
~ ~ 0 .: ~
'" 0
II) ~ al J.
-l 1/1
i ~
<<
~
. .
. ..
HIll"I." lOI" II' "'1"" J"II..'
O'II'.KH 00.1,1 'tH'I1 M"J\Yl"11V
JUOB J. GIIWYU, . IB UI COVll'1' or COIIIIOB .LIU
'laiDtiff . CUDIJILUD COUll'l'Y, .....n.VAlfIa
Y. I
I CIVIL AC'l'IO. - LAW
JUl. I. GALLAGla, .
.nD A. 0' ..D aDeI I BO. UU . un
.ILIUL. 'OUIIDA'1'IOB D'1'D .
'ROOrIBca UD aU'l'OD'1'IOB, IBC..
aDeI AIIIIlICU IUIIIIII'l' IY.'l'IIIa, I
IBC., .
':IefeDeI_Dta
.LAIII'1'Irr'. a.'L Y '1'0 DI.BIIDAIl'l'.' ... IIJl.'1'TIlR AJlD COmITDCLAIII
AND NOW comes the Plaintiff, Jason J. Gehman, by and through
hi. attorney, Luther E. Mil.paw, Jr., Esquire, and replies to the
New Matter and counterclaim of Defendants as follow.:
..'LY '1'0 Bft IIJl.T'1'D
54. Denied. The allegations constitute leqal conclusion. and
110 re.pon.e i. required. In further reply, for the rea.on. stated
in the Co.plai~t, Defendant. Gallaqher and O'Shea did not act in
good faith.
55. Admitted.
56. Denied. The allegations constitute leqal conclusions and
no re.pon.e i. required. In further reply, for the reason. .tated
in the Complaint, the transactions between ASS and Reliable were
not fair and rea.onable.
57. Denied. The allegations con.titute leqal conclusion. and
no re.pon.e i. required. In further reply, for the rea.on. .tated
P:\UlItlIUI'IOA TlIOllIlMANIAlIJlIl....UYS\UPL Y
in the Complaint, Defendant. Gallaqher and 0' Shea wronljJfully
profited at th. expen.e of ABS.
58. Denied. The alleqation. con.titute l.qal conclu.ion. and
no re.pon.e i. required. In further reply, for the rea.on. .tated
in the Complaint, Defendant. Gallagher and O'Shea were unju.tly
enriched.
59. Denied. The allegation. con.titute legal conclu.ion. and
no r..pon.e i. required. In further reply, for the rea.one .tated
in the Complaint, Defendant. Gallagher and O'Shea wrongfully u.ed
corporate re.ource. and their po.itionB with ABS.
60. Denied. The allegation. con.titute legal conclu.ion. and
no re.pon.e i. required. In further reply, for the rea.on. atated
in the Complairt, Defendant. Gallagher and O'Shea did not at all
time. devote them.elvea to the corporate affair. of ABS with a view
to prolDoti~g the common intereat. of ADS and it. .hareholder..
61. D.nied. The allegatione con.titute legal conclu.ion. and
no re.pon.e i. required. In further reply, for the reason. atated
in the Complaint, ABS and it. .hareholdera, including Plaintiff
Gehman, did not ratify Defendant. Gallagher and O'Shea'. action..
62. Denied. The allegation. con.titute legal conclu.ion. and
no re.pon.e i. ~equired. In further reply, tor the rea.on. .tated
in the Complaint, Def.ndanta Gallagher and O'Shea have not dealt
with the property of ABS in the co_on intere.t of all .hareholder.
and ABS and have been unju.tly enriched a. a re.ult.
':\LDIIUl'1OA TI\OEIOtIAIl\AMIlII....UVIW!IL V
:3
63. Denied. The allegation. conatitute legal conclu.iona and
no re.pon.e ia required. In further reply, for the reaaon. atat.d
in the Complaint, Defendant. Gallagher and O'Shea have not acted at
all ti.e. rea.onably with due care and good faith in carrying out
their reapon.ibilitie. with ABS.
64. Denied. The allegation. con.titute legal concluaiona and
no reapon.e ia required. In further reply, for the rea.on. .tated
in the Complaint, Defendanta Gallagher and O'Shea have not acted at
all time. in accordance with their fiduciary obligation to ABS and
it. .hareholder., including Plaintiff Gehman.
65. Denied. The allegation. conatitute legal concluaiona and
no re.pon.e i. required. In further reply, for the rea.on. .tated
in the Complaint, Detendanta Gallagher and O'Shea did not
appropriately exerci.e their di.cretion in the corduct ot ADS'a
corporation affaira.
66. Denied. The allegation. conatitute legal conclu.iona and
no re.pon.e i. ~equired. In further reply, for the rea.on. .tated
in the Complaint, Detendant. Gallagher and O'Shea'. breach of
fiduciary obligation. wa. the proximate and/or legal cause of the
injury to ADS and ita .hareholder., including Plaintitf Gehman.
67. Denied. The allegation. con.titute legal conclueion. and
no reapon.e ia required. In further reply, for the rea.on. .tated
in the Complaint, not all of the tran.action. entered into tor ABS
by Defendant. Gallagher and O'Shea aerved legitimate corporate
P:I1.IIMILmOATI\OI!HMAN\A/oOlII.8AI",YSIIJlPL Y
3
purposes, rather Dafendants Gallaqher and O'Shea entered into
numerous transactions for their own personal benefit.
68. Denied. The alleqations constitute legal conclusions and
no response is required. In furthar raply, for the reasons stated
in the Complaint" the actions of Defendants Gallagher and O'Shea
were not based upon sound business jUdgment.
69. Denied. The allegations constitute legal conclusions and
no response is required. In further reply, for the reasons stated
in the Complaint" Plaintiff Gehman did not know all the material
facts of the transactions and bUlJiness between ABS and Reliable.
70. Denied. The allegations constitute legal conclusions and
no response is required. After reasonable investiqation, the
Plaintiff is without knowledge or information sufficient to form a
belief as to the truth of the averment and the same is therefore
denied.
71. Denied. The allegations constitute legal conclusions and
no re.ponse is required. In further reply, after reasonable
investigation, the Plaintiff is without knowledge or information
8uff,icient to form a beliet as to the truth of the averment and the
same is therefore denied.
72. Denied. The allegations constitute legal conclusions and
no response is required. In further reply, for the reaeons stated
in the Complaint" Defendants Gallagher and O'Shea did not at all
P:\UIoIIUI'tOAT1I01IIDIAM\AMIlR,IAUYSlIlIlPL Y
4
ti.e. exerci.e good f.ith, due care .nd diligence to protect the
intere.t. of Pl.intiff Gehm.n.
73. Deni.d. The all.g.tion. con.titut. leg.l conclu.ion. and
no re.pon.e i. r.quir.d. In further reply, for the r..son. .tated
in the Complaint" all .alary .nd comp.n..tion p.id by ASS to
Def.nd.nt. G.ll.gher and O'Shea doe. not bear a reasonable r.l.tion
to their ability and the quantity and quality of their service.
rendered to ABS.
74. Denied. The allegation. con.titute legal conclu.ion. and
no re.pon.e is r.quir.d. In furth.r r.ply, for the r.a.on. .tated
in the Complaint" it is in the be.t intere.ts .:>f ABS and it.
.harehold.r. that a cu.todian be appointed, an accounting of all
....t., li.bilitie. and transt.r. of ASS be made and the
corporation be di.solved.
75. Deni.d. The allegations constitute legal conclusion. .nd
no re.pon.e i. r.quired. In further reply, The allegations in
P.r.graph 7!,; are conclusions ot law and theretore requit'e no
r..pon.e.
76. D.nied. The all.gation. con.titute legal conclu.ion. .nd
no re.pon.e i. required. In further reply, The allegation. in
Paragraph 76 are conclu.ion. ot law .nd therefore require no
re.pon.e.
77. Denied. The alleg.tion. constitute leg.l conclu.ion. .nd
no re.pon.e i. r.quired.
':ILBM\UI'IOIoTIIOIllOlAlllAMIIa,IIAS,SYSIIUlPI. Y
5
78. Denied. The allegation. constitute legal conclu.ions and
no response i. required.
79. Denied. The allegation. con.titute legal conclusions and
no respon.e i. required. In further reply, tor the reason. stated
in the Complaint, Plaintiff Gehman did not con.ent to the conduct
of Detendant..
80. Deni.d. The allegation. con5titute legal conclu.ion. and
no respon.e i. required.
WHEREFORE, plaintift Jason J. Gehman reque.ts that judgment be
entered in hi. favor.
..PLY ~ COu.rKRCLAIM
81. Denied. Atter reasonable inve.tigation, the Plaintitt i.
without knowledqe or intormation sufficient to form a belief as to
the truth of the averment and the .ame i. therefore denied.
82. Denied. The allegations constitute legal conclu.ions and
no respon.e i. required. In further reply, Jason Gehman has not
violated his fiduciary duty to ADS by startinq a directly competing
waterproofing business in Bole pur.suit ot his own financial
interest and/or usurpinq corporate opportunitie. of ASS which
cau.ed him to be unjustly enriched.
83. Denied. The alleqations constitute leqal conclusions and
no response i. required. In further reply, as .tated above, Ge~an
P:\LIlM\LlrIOATIIOIllOlAN\ANIlIl-IIAUYlII1lPL Y
6
has not violat.d hi. fiduciary duty to ABS and a. a r..ult i. not
liable to ABS and it. .har.holder. for any dllmaq.., lo.... or
irr.parabl. harm.
84. D.ni.d. Th. all.qation. con.titut. l.gal conclu.ion. and
no r..pon.. i. r.quir.d. In furth.r r.ply, G.hman ha. not fail.d to
d.vot. hi...lf to the corporat. affair. of ABS.
85. D.ni.d. Th. alleqation. con.titut. l.qal conclu.ion. and
no r..pon.e i. requir.d. In furth.r r.ply, Gehman ha. not div.rted
the bu.ine.. of ABS to hie own waterproofinq bu.ine.a or other
.ntitiell.
86. Deni.d. The alleqation. con.titute leqal concluaion. and
no re.pon..e ia r.quired. In further reply, G.hman haa not div.rt.d
any corporat. opportunities away from ABS.
87. D.ni.d. Th. alleqation. con.titut. leqal conclu.ion. and
no r..pon.. i. required. In furth.r r.ply, Gehman ha. not u.urp.d
any of ABS'. corporat. opportunitie..
88. Deni.d. The alleqation. cun.titut. l.qal conclu.ion. and
no re.pon.. i. required. In furth.r reply, Gehman ha. not u.urped
any of ABS'. corporat. opportuniti.. which have unju.tly enrich.d
him and cau..d or will cau.. ASS to .uff.r damaq.., lo.... or
irr.parable harm.
89. Deni.d. Th. alleqation. con.titut. l.qal conclu.ion. and
no re.pon.. i. r.quired.
.:ILIlNIUrIOATIIOIlIDWM_.IIAUYSlIEPL Y
7
JASON J. GEHMAN
Plaintiff
IN THE COURT OF COMMON PLEAS
CUMBERLAND COUNTY / PENNSYLVANIA
v.
JAMES E. GALLAGHER, PETER
A. O'SHEA and RELIABLE
FOUNDATION WATER PROOFING
AND RESTORATION, INC. and
AMERICAN BASEMENT SYSTEMS,
INC.
CIVIL ACTION - LAW
NO. 2344 - S - 1996
Defendant
ANSWIlR AND NBW MA'l'TBR OP
DBPBNDANTS RBLIABLB POUNDATION
WATBR PROOPING AND RBSTORATION, INC.
AND NOW, comes the Defendant Reliable Foundation Water
Proofing and Restoration, Inc. and files this Answer and New Matter
to the Complaint of Plaintiff Jason J. Gehman.
1-80. The Defendant Reliable Foundation Water Proofing and
Restoration, Inc. incorporates by reference and adopts the Answer
and New Matter, paragraphs 1 through 80, of Defendants James E.
Gallagher, Peter A. O'Shea and American Basement Systems, Inc.
WHEREFORE, the Defendant Reliable Foundation Water Proofing
and Restoration, Inc. demands that judgment be entered in its favor
and against the Plaintiff Jason J.Gehman.
THOMAS, THOMAS & HAFER
By r:~r:~~
Ran~.{ G. Gale, Esquire
Attorney No. 26149
305 North Front Street
P.O. Box 999
Harrisburg, PA 17108
(717) 255-7648
VERIFICATION
1/ RANDALL G. GALE. ESQUIRE, hava read the foregoing ANSWER AND NEW MATTER
OF DEFENDANT RELIABLE FOUNDATION WATER PROOFING AND RESTORATION. INC. IInd
heraby IIfflrm that It is trua and correct to the best of my personlll knowledge or Informlltion
IInd belief. This Verlflcstlon IInd stetement is made subject to the penslties of 18 PII.C.S.
14904 rllllltlng to unsworn felslflclltion to euthorities; I verify thllt all the statements mllde in
the foregoing are true end correct end thet felse statements mey subject me to the penllltlllll
&~~ec
RANDALL G. GALE. ESQUIRE
of 18 PII.C.S. S4904. This Verificetlon is teken by mil es Veriflcetlon cannot be obtllinlld
within the time allowed for filing the Pleedlng.
Dllted: 'l- (7r C( ?
,.
~ C'J ~~
,'.
"
". ~' .
I~ .. .1:$
N ,)t."
- \" J:-i'
~i'! :t.:
'I::, n.. l:,}~i'
>1, en ";~ .,
, -. ":[-5 ,
"' G~ "Il
" "'J 'i,lQ,.
f u.. a
~) r-
Q\
'I' I'
"
'I",; ,!
II
, ,
"
.';',
a'C1~..OA~"".. 6: 7fa/'~'
. ',71,"""';"~' .fo",
'OllllOln" '110'" lIfll.tf '
,
" o..IOX ...
M~M.'UIlO,JOjl,l7Joa
.':
1,',.\
,.
,)1,1,' ,l
';l:"I! 'I'
,. ,
1'1,.
, '
h
,
"
"
, ,
"
, ,
",
"
,
1&1JmtJ.':' OAfI'*r'& 1f+r
71,,.,,,.,,. ", J'"...
.oil ~M r,lI!l~ lI~lIUf.
ilt 0. .oX ...
"AIIll1l1tU'" JOjl, 1110.
'I,
"
.r
,toL,
,.,I: ii
:",,-;' ,',' },'
,
,,,
~
January 31, 1997, Petitioner has received no fee or reimbursement
for expenses from the Defendanta for repreaenting them in this
action.
3. Petitioner did on several occasiona indicate to Defendanta
that they would have to bring their past due billings up-to-date
and on January 6, 1997 did by letter inform Defendanta that if
their bills for legal services were not brought current by
January 31, 1997/ Petitioner would seek Court permiasion to
withdraw as counsel.
4. No payments have been forthcoming.
5. The continued representation of Defendants without payment
of Petitioner's feee or reimbursement for exp~nses, or the prospect
of such payment, has resulted and will further result in an
unreasonable financial burden on Petitioner, and good cause exists
for Petitioner's withdrawal.
6. This matter is not currently on any trial list and
currently is in the discovery phase of the case; withdrawal at this
time can be accomplished without material adverse effect on the
interests of the client.
- ::I -
. ILl
"
'I,
~ If) i>.;
It: '~
I~ .. <~
,J.(
- Uz
\i r. 'J...r:
< " ~'l
t, . ~ifj
,...,
.~ cr, ~,' I..
'/"
en ~:l(j
L.. C' ~ u.:
~ B
:5 r- , ,
Q'
, "
, ,
,':>.
rr
,,'
ll,l
('<
,'"
'-
,
Ir),
r,j,'
fl~' f I
t
L,
l...,
,..,
''-
C",
I'
~'
,..,
'II
(oj
-:J
W
~ ..
'r-l:
"I ;;
I .l ~j,
/.
" .,/,.'
j::.
.,-1
'>"1)
., ~...
" ~
(i.1
" "-
:.
I....)
0
IoJ ~
It (
0 ~ ~ f iii
J: ( w ( ~
1/1 ..J ~ n 0
IoJ ~ ~ ~
III ( <n d
III W '"
tiI · . ~
~ ~ ( al W E
~ ,"
<n o '
, " ~
~ ~ g .. <<
,
1/1 .:c m I
.J III ..
i ii
<<
(
r
"
,
.
"
...- C')
j''': <,'.
i u"'" , ,r
u/ ',,) "
9' : ~'.':'
f " ,,:j
'-'
'j
9, (? /l
ell ,
eel' " ;'li
-:~'I' (,
u.. . ~ 1.1.-
, :::;.;
LI: r- ~:
v cr
1
I
I
I
I
"
I,
,
.
0,'
, "
FlLr;Q.OFFlCF.
~,~ r~m: 11"1~ 'I')r/~RY
97, APR -7 Mi lOt :1 9
CL,l'd,'I, ' .' ,"~ i i.. "",;\If),
fENN~YLVi\N1A
IMtlft~'~li,I~M~111~\~~i:ttJ:ti\~~iJ%ijll~.~1 '
"''f~\,[l\!\\II:\:I!tr,~!fll~l\i~~~1 '~l~~!\t*,r~r({f!j~~IJ ,1
\...wl'~~/; 'lIi,IM,11 .,,}I.~t;l'~'II't'J\ ,.,'nhl\\"ItJ',. ti,~ ,I~!~7'1\'
t1Hf,\(l!" I, }"Jfj1,1~ "fili ollj PI,.'I.\l' ,h"\'~"I"\'"'{I'H ',. fit H \,\{'~ 'm'I'" , /.~ ,.I,
\' t 'h'l!,.~I.lllt'lJ' "~V'I{ ;'/,.1' '~lt~Flt~{ft \,IL-i/t\l<lI'\III.III'~~~~"h,,,\),,t,I.\\11 A~';,l -;;t"l-,j,>
Ilt,~~16tIN\I'I~"ll'~./-A.\tll'rl, (t"~ I ',/I'I'.\",I~I'jll,/."t/ I I ','J \1\".rI,,,I(..I'r,1~fll
r~'l f \1,\t~ifiJ 'I~'l\ t,llt~,\lJl~I'lt'';1 :'l'l~ LJ~i \,,1 '/ \ 'I '~! I, {'("I.", , ':1;. 'I. ,'" I'" I';. I," ':} II ~,IU~"I~lltlrfl~\~1
_~ "1" "1\\ f'j J~ '1 It l'll " I' . ,. 'd I' j j (I' I " \1 ',' f'(, '1
~ I 'f.ldltr"'lf"~\II--":" ',I. I, "" \ ,\ ",I,," I "l:fl~"fl"@'l""'~
1l5r.'fX;ll!,f"\"o~,jfl,i~\J(.'L\,I.,l'III.l. ',' ". ,'1 " '""~:,'"",, r'rtl't!lt"/l r1,'f};r.,\I'IJ'\I"~lf,tV
ItW]JJrl,i"\~},j'\"r!':"~-:'\'I.I!,'II,\t,,,t' 1\1, J ' ,\ '1'" I" II '1\'I,~",,/'I-."I!t;I'il/'\'flll~~\if
; ,\,ll:~''\ll f"II':t,~))\!l.',It",:~' J J(, , ' " , "I'"." ,I,','ll' "I',t"1'.; ~ ,\1"1 \','IV1,'
"1' t ,It+-,,'J., )":._"'\-"........._,....._~...II.,~_~,,,.~... 'C . . " ~ . j-,\",\'-~...I~\......'!\;.<I.... ,..I~ 't,:J;;c:,,'l"".
.~,\,1~1.1 " I\'tt;'f"i" ,"\\f' ,)1 p. ',' \ , ., J' \ ,I 'I't /1 ' ,. ", ("", '~(: 'I?'/,t~ l'J}'
,fl"\":i,-'I'i,J",;\l.;,l,~,I!, :01.'.'__1 ,"'1 I nl, .1!J""'~ " ~_,!ll I 1,:'1'. ,'II," 'i~;'~'~I'
\',../,",!\'I','it\!,'ili!',',.",',::I.',:.:,.,,'\,',"::,, ',;;,1<,' \" 'I tJ".".... JlltJmlI# c,.r. ,JJ. ,. , ' 1'1' '1 ,'( I . '1~1~\ '\ ,\,I(r,}~j"
!....1.11 [\' "1';.-,,'\"..1.,.." ',,"-1 -, ,. ' 1 "'."1, '\'
'+ii-",/' i'!,,~,i':I'!':I"-."id'<;', ,-',I' 1 "'I 'I ' , \, ., , ' , 'I I " I ,-II/ If j
-'(.'<\'1"""".-\",,,"/"'1', ", ,',. ,', """,' \'1'"
\1-J~!1'~\.-.lj':.l;,:II.,Ji\:,",'.\il'\'.:il,I"f' {", " :.,fJ'''''''''- -'"", , ' .' , II 'ff 11' ~lllt"Ii(1
(~~!,~I,iSIN:~,'Jt'!;!:~ ,i',' ',;\" _' ,-i '.,.' , 1 J' \1,.\\.I;~:,'
1a-~'rJ\_~~I\>J{~.~;I.J:!:~J'I"I'.;/'"l:..lr"t/j '/ ,J4t' ~_.. ,M>>tY,.,.~" I, ',.1 ,I , , I, " ",1 \ \' \'>(lll'~ ~;.:/',~~)lr;"~
.r,~t"r,I..,J'\',',"f.!~I",fl,\,\<,,",!,'I,', ",' ';",") ,'t II I', ,,", :i1),I\""
.,~~I',:~\(j~:\,:t.-:A'lo';''''!'',:,''\'/.'\:' "I..~IoX~.~ ' "1',\'1' \'I"'~'~j\"'~~'l' I':l,l'j,li
,t \ ,"f~ml\'!!'l!~;- ",i~'i'! :,'i~t..'ih,~il !.I';"I;' -j ~. . \ f', 'I, I , ; ,;" " ~"l ',)' .1,', )~ i ','- 11 1"'1'1,
, '\-'."1""'111:')';"'\' M...'....."'-..fO^.. "I' \' . ,< ,"!'/ \ """1"
", ',',.....I'j',..'I,.'-',",.'_I,'. -... -,.....~,..,.. , ' 'I 'I r,~'j) f' '1'>-...
Kf,r;!l!T,'!(,' j\,:_:" -,'_< _.'.'_"1' .) I I' <'),. '\., '~ll~,!t.},
.H:'lJ~\\(.qi:'P'.';,,)':'~:,.;q;\',ol:'~.,' ",,' :'1', ,\1,'1',':"/ '1"JfJp'"hj,:it ~lJlll~~
I:N;~.I,).'k~:"'JI '_'_:,!.1 ':; '/,-':1 ' I I" ' 1,1' 11, ,(' '1 '"" t"..f
'I: I I'
'I"'i~ L,'i;/)i'~
h
,
Fl rc ' C::r::CE
OF 1. rWF!""1!1rARY
, ,
97 ~rp It] r;;.?: ~E
CGi. ""I!)'
PL~.\r',:':; a.\,'~ : 1\':,,\
, '
"
, ,
I,
,
I'
" ,
'I
",
"
,',
~
",
. '
JASON J. GEHMAN
Plaintiff,
.N THE COURT OF COMMON PLEAS
CUMBERLAND COUNTY, PENNSYLVANIA
CIVIL ACTION - LAW
NO. 2344 - S - 1996
v.
JAMES E. GALLAGHER, PETER
A. O'SHEA and RELIABLE
FOUNDATION WATER PROOFING AND
RESTORATION, INC. and AMERICAN
BASEMENT SYSTEMS, INC.
Defendant.
PETITION FOR HEARING
AND NOW, comes Randall G, Gale, Esquire and Thomae, Thomas and Hafer
and files this request for a hearing.
1. On February 19/ 1997 a Petition of Defendants' Counsel for Leave
to Withdraw was tiled by the Attorneys for the Defendante, Randall G.
Gale, Esquire and his firm, Thomas, Thomas and Hafer,
2. On Februar.y 21, 1997 a Rule was issued by Honorable Kevin H.
Hess to Show Cause why the Petition should not be granted,
3. By letter dated March 12/ 1997 Defendant Peter A, 0/ Shea filed
a letter opposing withdrawal,
4. Therefore, Randall G, Gale, Esquire and Thomas, Thomas and Hafer
request a hearing to resolve this mattel.
WHEREFORE, Counsel for the Defendante, Randall G. Gale, Eequire and
Thomas, Thomas and Hafer request that a hearing be set on their petition
to Withdraw.
THOMAS, THOMAS & HAFER
By
17108
ir- C:;) ,.
...1' ..:I r...
,.., .. '.
~" ('1 ~ ,Ij ..t':
8 i, I.J 1,1>
.I.';"'" '.) ..~
",r: ~ J.. "
~( ~ ~.:J
,r\ -. .,'.t .-
~II. ; ,,.)
,:.lLt' 1-'
(, (...
... , :ir()
f ",;
...., \u.
.' r- r' ~
U 7)
~' (,)
!
~
,....
~
ll;
-:;:.,
~
,
I';
I
,
V!,
; , IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
CIVIL ACTION. LAW
JASON J. GEHMAN,
Plaintiff
JAMES E. GALLAGHER,
PETER A, O'SHEA and
RELIABLE FOUNDATION
WATER PROOFING AND
RESTORATION, INC., and
AMERICAN BASEMENT
SYSTEMS, INC.,
, Defendants
Randall G, Gale, Esquire
For the Defendants
e.....~.... ~.~,<l ielfel'l'1-
I ~ ~ ,,0 f',
AJL
96-2344 CIVIL
IN RE: MOTION TO COMPEL
ORDER
AND NOW, this
It.. day of Junc, 1997, upon agreement of the partie!, a
protective order being entered of even datc hercwith, thc motion of the plaintiff to compel
discovery is GRANTED and the defcndants arc directed to respond to thc outstanding requests
of the plaintiff for production of documents on or beforc July ,'11, 1997,
BY THE COURT,
Luther E. Milspaw, Jr" Esquire
For the Plaintiff
:rlm
i ,n
" n
" -I "I,
-,", , , ,
,~\ , . . ~'1
- , 1 I .. ~
, j,i.'f" 1 ,tj
,
, , l',,~ 0\ , '
..~. ' ~
r ", '\
" i "
,I.")
:. ' , ~ '} t'Il
", ,
" , ,
:.11 ".J1
, C.l -.
,
,
"
,'I
,
,
I
I
,
"
,
,
"
i'
I
,\
. ~
.... 0' ~"<,?
n' ll". ........
I':: ,:; .- 1'1'
(\
L',.'. "-
.; ",'
I.'CI " ~. . ',' ...
u
c..,) "~ ", " .,
C"'-
t':',l 'Ill
~_ It
L.l.. .' I ~...
~
'0, \'~: ~
~ L' '.. 4
~
0
III ~
It
0 . Iii
J >- I
:t . '" . ,
U) ., r p <l
III >- >- ~
ED . III · i
~ '" I N
l/J " >- g '" "
~ P Go F.
0 ~ J
Q. ~ g Go I
U) 0( -
oJ
i &
.
:t
, .
i-lMMII.I' ~O"'14." ""ufo' ....."'14.
OH,,"~H O~~,..". .,.,n3111'f11'11\1'
.
rl/-
.
oJUOII oJ. GIIDIUI, I
Plaintiff I
V. I
l
JAMBS I. GALLAGHIR, I
PITIR A. 0'8HEA and I
RlLIABLI FOUNDATION WATBR I
PROOFING AND RlSTORATION, INC.l
and AMBRICAN BASBMINT SYSTIMS,I
INC., I
Defendant.
III TH. COURT OJ' COHllOII PLIAS
CU~.RLAND COUNTY, P."SYLVANIA
CIVIL ACTION ~ LAW
NO. 2344 8 11196
ORDER
AND NOW, this
day of January, 1997, upon presentation
and consideration of the within Motion, it is ordered that
Plaintiff's Motion to Compel Under Pa.R.C,P. 4019(a) is hereby
granted and it is held and ordered that Defendants must permit the
inspection of:
1. All documents which support any allegation Defendants
asserted or will be asserting in their Answer to the complaint;
2, All documents which refer, relate, or pertain to, or in
any way support, Defendants Answers to Plaintiff's Interrogatories;
3. ~he Customer List for Reliable Foundation Water Proofing
and Restoration, Inc.; and
4. All records maintained for each salesperson and utilized
for calculation of their pay and commission.
BY THE COURT:
J.
,,\LI"\LITIGATI\GIHMAN\AHIR'.AS.STS\MOTJON.tOM
JAIOII J. GIIDlAII,
Plaintiff
I
I
I
I
JAIUII I. GALLAGHIR, I
.ITIR A. O'IRIA and I
RlLIABLI rOVIIDATIOII WATIR I
.aoorIIIG AIID "STORATION, INC.I
and AKIRICAII BAI.MINT 8Y8TIM8,1
INC., I
v.
IN THI COURT or CONKOII .LIAS
CUKBIRLAND COUNTY, .IHNIYLVAIIIA
CIVIL ACTION - LAW
NO. 23... 8 1911.
Defendant.
MOTION TO COMPEL U.HDER Pa.R.C. p, 4019 lal,
AND NOW Plaintiff Jason J. Gehman movea the Court for an order
to compel pursuant to Rule 4019(a) of the pennsylvania Rules of
Civil Procedure against Defendants James E. Gallagher, Peter A.
O'Shea, Reliable Foundation Waterproofing and Restoration, Inc, and
American Basement Systems, Inc.
The grounds to support this Motion are:
1. On or about November 21, 1996, Plaintiff served on all of
the Defendants a Rsquest for Production of Documents, A true and
correct copy of Plaintiff's Request for Production of Documents is
attached hereto as Exhibit "A".
2. On or about January 8, 1997, Defendants served on
Plaintiff a Response of Defendants to Plaintiff's Request for
Production. A true and correct copy of the Response of Defendants
to Plaintiff's Request for Production is attached hereto aD Exhibit
"B".
3 . Defendants did not file appropriate obj ections to certain
',\LIM\LITIGATI\GIHMAN\AMIR-IAS,SIS\MOTION.COM
of Plaintiff's Raquests for Production of Documents, as required by
Pa,R,C.P, 4019(a)(2).
4. Defendants' objection to Plaintiff'a requeat for all
documents which support any allegation Defendants asserted or will
be asserting in their Answer to the Complaint and all documents
which refer, relate, or pertain to, or in any way support,
Defendants' Answers to Plaintiff'a Interrogatories is not an
appropriate objection.
a. Plaintiff's request
Plaintiff has requested
documents from Defendants.
b. Plaintiff is not slileking the disclosure of the
mental impressions of Defendants' Attorney or his
conclusions, opinions and legal theoriea.
c. Plaintiff is requesting not only the relevant
records of American Basement Systems, Inc., but is also
request.ing all documents which support any allegation
Defendants asserted or will be asserting in their Answer
to the Complaint and all documents which refer, relate,
or pertain to, or in any way support, Defendanta' Answers
to Plaintiff's Interrogatories.
5. In response to Plaintiff's request for the customer liat
of Reliable Foundation waterproofing and Reatoration, Inc.
Defendants asserted that "(t]he request for the job fHea of
is not general
specific and
and vague.
identifiable
,,\LIM\LITIGATI\GIHMAH\AMIA-8AS.SYS\MOTION,COM
Reliable Foundation Waterproofing and Restoration, Inc, is
appropriately directed to that entity which ia not a party to this
suit." Reliable Foundation Waterproofing and Restoration, Inc. is
a party to this suit. Moreover, Plaintiff requested the customer
list from Reliable Foundation Waterproofing and Restoration, Inc.,
not its job files,
, 6. RUle 4009 (b) (2) states in relevant part that "the
reaponae [to the request for production of documents] shall state,
with respect to each item or category, that inapection and related
activities will be permitted as requested, unless the request is
objected to, in which event the reasons for objection shall be
atated." Defendants have failed to either state that inspection of
all records maintained for each salesperson and utilized for
calculation of their pay and commission will be permitted or to
object to the inspection of thede records.
WHEREFORE, Plaintiff Jason J. Gehman respectfully requests
this Honorable Court to order Defendants to permit the inspection
of:
1. All documents which support any allegation Defendants
aaserted or will be asserting in their Answer to the Complaint I
2, All documents which refer, relate, or pertain to, or in
any way eupport, Defendants Answers to Plaintiff's InterrogatorieSI
3. The Customer List for Rel iable Foundation Water Proofing
and Restoration, Inc.; and
1:\LIM\LITIGATI\GEHMAN\4MIR'iAS,SYS\MOTION.COM
- 3 -
4. All recorde maintained tor each ealesperson and utili.ed
tor calculation ot their pay and commission,
Respecttully Submitted,
Date I January 14, 1997
By
I
Esquire
17108-0946
" ,:
, '
,.\LIM\LITIOATIIGIHMAN\AMlR.'AS.IYS\MOTJON.COM
- 4 -
IldM A
JAIOH J. OIlRKMf,
Plaintiff
I
I
I
I
JAHKI I. OALUOBIR, I
PITla A. O'8BIA and I
RlLIAlLI ~OUKDATlOH .ATIR I
PROO~lHO AND RlITORATION, lNC.1
alld aKBaICAH IA8I1CIl1lT IYITIKI, I
INC., I
v.
IN THI COURT O~ COKMON PLIA.
CllJHllRLAND COUNTY, PllQf8YLVAHlA
CIVIL ACTION ~ UW
NO. UU I 1116
Defendants
PLAINTI..'8 REOUIlST ~OR PRODUCTION O~
QaCUXINT8 DIRECTED TO DIl~ENDANTB
Pursuant to Pennsylvania Rules of Civil Procedure 4001, et al-
and 4009 specifically, you are hereby requested to produce the
below listed dOGuments and items for purposes of discovery, This
material will be examined and photocopied; photograph negatives
will be processed and photographs reproduced. Said documents or
tangible things are to be produced at the offices of MILSPAW &
BESHORE, 130 State street, Harrisburg, PA 17101, within thirty
(30) days of the date of service hereof. Plaintiff's attorney will
be responsible for these documents so long as they are in his
possession. copying will be done at Plaintiff's expense and the
documents will be properly returned after copying has been
completed.
This request is intended tco cover all documents in the
possession, custody and control of Defendants, their agents,
employees, representatives, insurance carriers and attorneys.. This
request is deemed to be continuing so that if any document or
object responsive to these requests later becomes available or
':'LI~'LITIGATI'GIH~'H"~IR.I'S,S'S'RIQOOCS
fall. into the possession, custody and control of the Defendant.,
their agents, employees, representatives, insurance carritir. or
attorney., any response to the.. reque.t. .hall be timely
.upplemented,
DIIJ'INITIOIIS AND INSTRUCTIONS
1. If you object to the production of any document on the
qrounda that the attorney-client, attorney work-product, or any
other privilege is applicable thereto, you shall, with reapect to
that document:
a. State its date,
b. Identify its author:
c. Identity each person who prepared or participated in
the preparation of the document:
d. Identify each person who received it:
e, Identify each person from whom the documont was
received:
f. State the present location of the document and all
copies thereof:
g. Identify each person who has ever had possession,
custody or control of it or a copy thereof: and
h. Provide sutficient information concerning the
document and the circumstances thereof to explain
"\LIM\LITIGATI\GIHMAN\AMI....S,STS\.IQDOCS
DOCUMENTS RBOUZSTBD
1. All documents identified in your Answers to Plaintiff'.
Interrogatorie..
2, All document. which support any allegation you a..erted
or will be asserting in your Answer to the Complaint.
All documents which reter, relate, or pertain to, or in
support, your Answers to Plaintitf's Interrogatories,
All documents you intend to use as exhibits at triftl,
The Customer List for both Amer5can Bas.ment Systems,
Reliable Foundation Water Proofing and Restoration, Inc.
6. All of the job files for which installation was
subcontracted out by American Basement Systems, Inc. to Reliable
Foundation Water PrOOfing and Restoration, Inc.
7. All records maintained for each salesperson and utilized
for calculation of their pay and commission.
3.
any way
4.
5,
Inc. and
Respectfully Submitted,
Date: November 20, 1996
By
Lut r E. Milsp Esquire
Attorney 1.0. No,
130 State Street
P. O. Box 946
Harrisburg, PA 17108-0946
(717) 236-0781
Attorneys for Plaintiff
':\L.M\LlfIGATI\GlH..N\AM..'.AS.S'S\.IQOOCS
- 4 -
IExIIIIlII B
IIU II~ liT I~:~I ",1.\ ;17~:IUII;\1
\111.\"\\\~'II:\III1Hf:
3~80H J. Q.~, I
I
PlaiDtitf I
I
V. I
I
I
JUl. B. ftu.t.ll.O.D, I
Pll'l'd :.. 0'8RO aDd I
aELXAlL- POUWOATXOM WATER :
.ROO'INO 1HP aBBTORATIOH, INC.:
and AKBRICAJII BNlIIKBJIT SYBTmiB,:
INC., I
Defendant.
I. TaB eOU.T OP CONHOM PLIA8
CUJIJIDL,IUID COUIlTY, PZIllll8YLnIII~
CIVIL ACTIO' - LAW
NO. UU 8 19"
P~TIVB Qi!L,Q
AND NOW, this ___ _ day of Jun., 1997, upon the .qr....at or
counsel to enter t.his order, it if! hereby Ordered and decreed t.hat:
1. All documents or any information produced by ont' party in
re"ponsiP. to the other party's requA<<t shall be deemed to be
confidential information subject, to the terms of this Protective
Order (hereinafter referred to ae "cunfidentia I In(orlll(ltion");
shall be uced solely for the purposes of the litigation be,twcen the
parties in the above-captioned action, including use during
testimony ard as exhibits at triaL, or in connection with motions,
depositions or witness prep(iration, subject to the rentrictionr.; of
this protective Order. Plaintiff shall not use any confidential
Information produced by Defendants in his separate businesscn, and
Defendants shall not use any Confidential 1n[ormat.;on produced by
Plaintiff in ~heir neparate businesses.
", "confi.dential rnform"tion" may bfl disl:loscd to the
followinq persona only:
ItIJlIIl;!
IItj 111\ Oi
l2: ~ I F.'" 7' I 'j :!:\tjlli., t
\111 'd' \\\KIII':~lIl1lt1
10111111:1
II. The pl.\rthlR, their directors. officers, partners,
prind,pah and omployees (prov:<ded that each director. oi'ticer.
partner, principal or employee with whom tho "confidential
Intorlllatlon"b to be discussed or to wholll it is to 1:>0 shown. rirst
..xecutes on "Acknowlcdg.lInent" in the form at.tached hare to as
Exhibit "A"t;
b. Attorneys of' rncord for all parties in the Ilbove-
captionod action and their lawyers, legal assistants, secretarial
and clerical personnel who are enqaqcd in assi~tinq them in this
litigation;
c. outside Inve!<tig"tors ftnd expertG, including but not.
limited to expert witnesses and their clerical aGsislants, who are
engaged in Ilsalsting tho attorneys of record in the preparation or
conduct of thio caoe, but only upon tho execution of an
Acknowledgment attached hereto aa Exhibit "A" prior to such
discloilurc, which Acknowledgment shall be retained by the ilttorney
ot record ror the party that dinclo,,;os such "Conf identia 1
Tnformation";
d. The Court and its court personnel;
o. Any deposition or trial witness, who in tho judgment
of an attornoy of records required to be Khown such material in
order to aosist Duch ~ttorney in the preparation for or the conduct
ot thi~ litigation, but onlY upon the exenution by such pArson of
an AcknowlodgelDont in tho form olittnc:hed hnreto U Lxhlbil "A" prior
2
IIIJ 11:\ IIi I:!:~I 1'.\\ ;lj~.')t\lli~1
'IJI.'d'\\\t\III.'lllllIH
I...~ UIl I
to such di~clo..ure which ,t.cknowlod'J"ment shall be retllineu by the
attorney at recol'd for the party thllt discloses euch "Confidential
Inforlllation"I
t. Any in&uranc~ repres~ntative havinq claims handlinq
responsibility or responsibility for evaluation of thIs action.
J. A1l trarulcripts of depositions sha 1 1 be deul!Ied
"Confld",ntilll lnformat.lon" and covered by this prote<.:tlvc Order tor
ten (10) business days following receipt oC the transcript by the
cOWlsel for the party. prior to the expiration of this ten (10)
day per 10<1, the designating p..rty may designate port lonG of the
depo~ltion trans<.:rlpt, at page and line number, whiCh the
designated party bel ieves constitute~ or contains "confld~ntlal
Intorlllation". ThClreafter, such del' 19nat ion discovery lIIatl1r io.1l
lIha11 be deemed "cont identia 1 1nformation" subject to t.he terms ot
t.h is pro-c.oct i ve Order. The ba 1 anee of the transcript which ha'; nol
bflun dQsiqnated "confidential Information" sha 11, after lhe
expiration of thfl ten (10) day period, no longer be qoverned by
this Protective Order.
4" "confidential InforJlliltion" sha 11 be kept in a secure
location when not in use, and accnr.s to thOGe facilities ~h~ll be
qiven only to the attorneys of rocord de$cribod b.dow, and their
a"soci!lted law'fers, legBl accistants, secretarial and cleric~l
personnel who are cn9agr.d in aS8i~tinq thalli in these actions.
5. All "confidential Information" which 1s ti led with the
Court Shall be filed in a sealed onvelope with a notation thereof
:I
that the contnntl> Ill.... t ll.d pur13uant to th i a !'rotcctl ve order Ilnd
that envelup.a shriLl not be openlld cor ittl contents disclosed (other
than to the court) until Order of the court, entered aCter notlcfi
to the part hs In thls case.
6. Cunfidential information may be diocloned in tho course
of 11 deposition to a deponent, who oy virtue of his or hor
position, has aCCQ9S to or knowledge of such confidential
document.s, or of in(orlDl'tion cont.dim''-' thnrein. In I'll other
circumslancQfJ, dlscln13ure or "confidential 1nroI1llation" lIIa)l be made
to a deponent in the course oC the deposition, but only upon the
execution by the d(;pOnent of an I'cknowledgolllent which shall be
reteltned by the attorney ot' n,cord for the party that dincloses
such "Conf identia 1 Informat",ion". A deponent. shall hlo' permitted to
examine a,ny portion of the tranflcript at his or her depot>ition
(including Exhibits) but chall not, be permitted to retain a copy of
any "Confidential Tnformation".
7. In the event any "Cont idcntia 1 1nCormat ion" is included
with or the contents thereof are in any way disclosed in any
pleading, motion, deposition, tramlcript, or other paper fll.ed with
the clerk and/or '-he court, such "Confidential Information" shall
be kept under seal by the clerk until order of t~e court. copies
of such "Confidential Infor.a~ionn, if required to be served upon
opposing counsel, shall be placed In t~e soaled envelope with the
fo.llowing statement. placed upon the outside thereof "confi.dential
!nforlllatiun". Such information sha 1.1 be sorvfld onlY upon the
.
attorneyc of record. AI! oth~r service or informational copies
Khall hl:lve "Confidential Inforllll.'ltion" d<lletnd therefrom. Further,
a dupl \cate copy thereof, with th.. "conf ident 11.'11 Information"
deloted therefrom, may be placed in the public record. Flnl:llly,
any party may slilck rc! ieC from the Court d I reet Lng that d.1scovery
material de6iqnllted "Confidential !nforllllltion" not be discussed in
open court in the prccenco of those not SUbject to this Protective
Order, or. alternatively, that portionc of Court tr~nscript5 vhich
contain testimony or colloquy regardinq discovery material
designated "Confidentia I Information" be given add i tiona 1
protection. Nothing in this provision chal! prnclude Ilny party
from challenqing thl! admissibility of any discovery material
designated "Confidential Information",
H, Prior to oral hearinqc or testimony at the trial of this
case, the parties, in the event that it is known reasonilbly in
advance of suCh hear Lng or teetimony that lDatteI'(; inVOlving
"Confid<mtia! lnform:'ltion" will be raised, shall roo advise ellch
other, If such information is expected to be rcferrnd to or
discussed, the partie.. may ask the Court t.o consider me~SUrefl to
insure the prc6ervHtion of the confidentiality of the information,
9. with respect to any "Conf idential Infot'1llation" covered by
this Protcctivo Order, any part,y to this case may rile a motion
vi th the Court that such mater i alG should not be deemed
confidf!ntilll lind, therefore, not sUbjll>Ct. to the terms of this
Order. Tho execution oC thl.. Ord"r r;hould not be> qlven any weiqht
5
110 II~ liT I~'~I 'F,\,\ TIT~,'III1T~1
\III,';f'\\'~IlI,.';II"llF
.:ru01l J. GIIBJlAII. I
I
uabtirr I
I
". I
I
I
J.JUIJ8 .. O:ALL1oGBBIl. 1
V.TO A. 0'811D and 1
aZLlA8La rOUKDATIOII waTKR ·
vaoorIIIO AND ..8TORA'tIOII, IIIC.I
aDd AJ(IlRlCU 8UDJUIT SYBTIDl8,1
XIIC. .
;ur T" canT or COIOIOII PLBU
cUMBDLAJfO COUM'l''lf, 'ZIUISY'LVU:A
CIVIL ACTIOII - LAW
110. U44 II 1991
Defendants
.
.
M:l9!OnJ,l)lmL~~c.UT~QL
~J~lW1J~2RIILQ" DX~~L~IROT,.~,...sl!Y)g
1, I hereby acknowledge that t have road the
confidentiality provision of the Protective Order entered in the
above-captioned action and agreed upon by and between all counsel
to tho parties involved in that litiqation.
2. In the course of my employment or consultation with
one of the parties in that. lit.i.gation. I will b(l receiving
"Confidential Informiltion" i:Hi defi.ned in that Order.
3, 1 heroby ilccept the confidontiality terms and
provisionn of that order, and agree to bound by such terms and
their proviuion.. in t,hnir entiroty as if I were a party to a
signatory of the Order,
IIDIBXT .....
JASON J. GEHMAN
IN THE COURT OF COMMON PLEAS
CUMBERLAND COUNTY, PENNSYLVANIA
Plaintiff,
v.
JAMES E. GALLAGHER, PETER
A. O'SHEA and AMERICAN
BASEMENT SYSTEMS, INC.
CIVIL ACTION - LAW
NO. 2344 - S - 1996
Defendant.
RBSPONSI OP DBPBNDANTS TO
TO PLAINTlrpS' MOTION TO CONPBL
AND NOW, come the Defendants and file this Response of
Defendants to Plaintiff's Motion to Compel.
1- Admitted.
2. Admitted.
3 .
Denied.
On the contrary, Defendants did assert
appropriate objections to Plaintiff'B Request for Production,
4. Denied. Plaintiff's requests are too general and vague
for rasponse and seek disclosure of the mental impressions of the
Defendants' Attorney or his concluaions, opinions and legal
theories. The Defendants did indicate that corporate recorda were
available for inapection.
5, Defendant Jamea Gallagher has testified at his deposition
of January 13, 1997 at page 60 there are not computerized or other
customer lists maintained. Customers can be aacertaincd from the
job files of the corporationa and Defendants have indicated such
I
Mulli-PlIgc'"
PallO 56 Pag~ 5,X I
!}I($ with .1 Sal':Sl11lm \\111 \.:.111, ~l~k fllr lJ'i, .ullllht."n hJ\'1!
2 111<:" que,uon" In oth<r wor~s .,
3 Q nus is while th<y're ollhe 'ile wilh Ihe
4 ~uslllmer, and lhey <:411 with Iholie klOd of questions'l
, ^ This i~ while,
6 Q Whll" Ih~Y'N Jllli< "I~'!
7 ^ Yt.:nh, 'Whtl~ Ihl,.'y'n: .11 lill! "1111.:
It Q Hut on~ those q~JI,.'SII\)nS ute ~sot\'\,:LJ. lflhl.'rc
9 un: llIIY, th" ..I"smen hJI'e Ih~ aUlhonly from Ihe "ompuny
10 to enter inlo I ~ontlllCI at a set pncc for Ihal job?
II A Correcl, Ihey ~o,
12 Q So Ih~y com" hack 1\llh IIIIS conlraCI III pl,Ie'c,
13 and Ihcy1re ..JUtnlllhc \\ur~ urdl.'r?
14 A Corr""t
IS Q Al that p0101 10 tllnc th" o~luallio.:uml'lll,
6 which is the compony's <opy of Ihe aareemml wilh the
, 7 ~uslomer, 0 copy of thai IS k"pI by Ihe ~ompany, ( assum";
18 is Ihol righ!'1
19 A Contra"t'!
,20 Q Ycah
121 A Yes,
~'I' 2 Q Does Ih" SIllcsml'll kiXp a ~opy'l
J ^ No. no, ~USlom"r gels a ~opY. ond Ihe o(fi~e
nail 4 hIlS nlhe eUSlomer aClually g"IS two copies, hecouse
we S lhere's the rl~h[ of n:SC1SSltlll, lllrw day>; to i.:h.If1!{1,.' yom
Pogo 57 -
JAMES E. OALLAOHEI
JANUARY 13,199
PlIio6t
1 th" g"~s IIlto'! nu Y"U malntolO anylhin8 by ~omputer?
2 A NOllhall'm DWun: of, No hsl. The only lISt
3 thai we would hove of "'2y CUSlomer~ IIl'C people Ihol would
4 be On 0 referenc.: IiSllhal w~'ve ..sked if il would be 011
S nghlto use Ihe" nam~ and th"ir oreo if someone in their
~ aNa wuuld hale a question or woul~ like 10 SllC Ihe job
7 allually In'lalled,
8 In ath<r wonts, w< do 0 job for somebody,
9 Th"y'N satislied, They soY. hey. you did a beauliful
10 Job, My basement wus blah. blah, blah, And lhen we ~ome
II In, Wuuld il h" all righllo go on nur reference Iis!'1
12 n'al's Ihe unly IlsI of customers we would
13 iI,IIC And thaI', nonnally brok"n 11110 llreIIs. Stale
14 Cullege utea, Philadclplua urea, whalever area,
IS Q Now. if you come bock wilh 0 ~onlrOCI for a
16 cUSlomer, whol happens 10 Ihe lead ~urd for Ihol customer?
17 (, IhcN 0 nOlalion made on Ihatlead curd?
18 ^ Yes, wid and Ihe anlOunl of foot.. Ihe amounl
II') of 1''''1, Ihe ,lep"'lllf any, whelher it's a fillanceJob
,
,0 where Ih" people pay al Ihe job completion. and lhe amount
21 of pumps and the ""hedule dale, if possible, If il is
22 scheduled 01 thai time,
23 In otller words. loday's Monday, If you sell 0
24 jllh today, you Wanl Ihe job 10 go in next Monday, that
,5 wUllld h,: p'" IIlllhe lead card, th" day of inslollalion
Page 5~
1 mind, So Ihey kiXp Ih<II copy and 0 rescISSIon CIlPY,
2 where iflhey deCided to Cha"~elhell mind, ('d ilkolo
3 cancellhis Ironsaclion, thoy ~Ign thai and IiC'ld illo us,
4 Should do il by mail.
S Q So the salesmen lom<s hack, he gives all hIS
16 copies of those UOCUIn":IlIS It) thl..' l.:ol1lpJny and l.:Omp/l,,'h:s the.:
17..
, 8 ^ Correcl, Ihe conlrUCI? I~ Ihol whal you're
9 saying?
o Q Yeah,
II A Yes,
,12 Q And those arc Ihen Jiicli separ,'t",y ~omepl,\Cc"
13 A Yes,
14 Q And then he ~omplelcs a work order"
S A Concel.
6 Q And what happens wilh thai work ordcr?
17 A Thai's also wllh Ih" eonlracl 10 a iii"
18 Q "ow do you k,,,p YOllr liles ,II Ihat P"'"!' n,
, Ihe floor
J9 custom..:r'! Do you 11<1\1.: .1 (lhlnt111.:r 1'111..' (11.11 h".; Ih..:
20 aw,reement 10 It plus the \...mk un..lI.:r In It',) \Vh.1t kind (If
1 ntcs arc you malntalnlnw for thl.: \.:u~tomt:rs"
2 A Alphabetical
23 Q Alphabetical by "USlomer"
24 ^ Um'hum,
2' Q Do you hJVI: ;.my ";Llll1l1l1l..'r1/I.:d (ill..:'i llh,:n I!l;!l
::;~M~lUGIIES, ALBRJGtIT, FOLTZ & NATALE
. 17-232'S644/393-S 101
Ih~n a
vith his
.nd, II'S 0
whal he
I then
;wilh
, field
till:
'y of the
11."S
h
lob
ormlnB
nl of Ihe
'81he
'"110
:d by
"uthonty
o do
whal
,Ie
he
all
<or
'r done
.~
Pogo 61
I Q TIlen whal happens 10 thai lead cord?
2 ^ II goes wilh Ihe .. the contrucl and lhe: work
) order In Ihe Ii Ie
4 Q Well, IS Ihere a ""Py ma~" of thuIleod e.rd
IIl...t"!
o ^ No,
7 Q If you don'l get a job. if he comes bock and he
8 hasn'l golten the job with thai pani~ular lead ~ord, whol
9 happens 10 Ihe lead card?
10 A 11101 goes in a tile. totally differenllile.
II card file
i 12 Q Scparale file"
I) A Yeah,
14 Q lead file'!
IS A That's 0 potenliollcod tile, yeah,
16 Q So thai's the file you' ro referrln~ 10 you may
17 go hu,k 10 laler"
" 1:-: A Cilrn.:ct, [0 n:wllrk
, I ') [.I Alld how ar" Ihllse malnlained, alphabetically or
I
20 rc"lonOJlly'.'
21 A Thai's Pele'sjob, I honeslll' don't know, I
22 know Ihere's ~ertaln monlhs, they pUI monlhs, I know they
23 call 30, 60, 90 \\11allh.1t means" IcnalO people you
':4 ,.::.111 JI\l.:r JO days or 'K"\:lOg Iht: ~om"uny or a
: ( rl,:prL''il'tll.lll\t,; from th..: f.:omp.my
Page sa . Page 61
.,
"
" ,
"
~ ,... '.
, .."
~:! ", i.~
~r',~ -7 )e,
", :t: );~
Z;:' 0... 'J ~,j
, , - ' 'Ij
'i": - 1;'".
Cf'" El ' in)
',' in.;
1": ".,. .
~ " '1...)
en 0" ,
I.
"
,"
~1~NI WI':\,'j~i'!9Aii'Ji"';i'.:II:'''' ,:~" ';,' """~',',i:'~;"..r,,,;:;';'I:;,,:.wE:;;""'lnklr~!'
f(j'" i,~,_!\l7fM~~I'mj~,'-'r,';-~."~~'h~~j"I-ff -~;'!\ji:h';'_;'_; ,J ffL'\"VrjL~I, '" W'" -;;;-];Ji:n:1~1i~'~H:t,.~~n;l;jl~
. - "". ..,!..;.-II---.-. i':!' - , - .JI - ;jl,;,~"il(.".!~-""~l-,J'
j-.r.;'.:r;',(),"'," -"ill-'. "_\r.; le!}"I' d;, ,,<',-t'_!', - '-,','1. - ',/"(i' ',i<r.;,;, \L:;':P-,"'-,':" },'r':i:'!:t):~rij ;VL'!l{df.iI.
i;-\;','-~~"~'I\"!J!l_:,\;I'.'i?;':-tJii,_)l,ini! ('-'I'J-r';('.,' ,I , . J:"'i~"!llII'!': '~-- ! ',,' -',-',_'~r;('i'-: 1.':T-,;">,-I!t:'lt~ili~~;HJ.~;,~~-i
. '''''1<.:':.1,'.'..,'-.....,'.'.,_,' I,,'/A....... " .;,f.J/IIIIII, ....,_.:.,. ,'._...i.i,";.-'..~~'''-.,."
,',-;Ifl)_'-" ,- ,'\' L'. L; -'I, l", ,::: _ '; ., I, I,' I,' "., ,':'-_ '-_"1',,'(;,. i;i~'\\ ," h''':d!'~,\jj/\jl\f1'{~ 'I" -' ,1.1... II
V;\;~;:!"f< ,i::'_;t;;~::":,I_;.-~'~i\'):.',',\'., ':.. \" .\(' ~.~ _".,,"1,;, >i,::: ',:I,'t:<I!F::~;f.;)~;IN,;,(,:,!;1l;()f,i~
t ".'!:.' !'i'll:.hL,:,;"{.;,", ,I,.' I, " . 'I," "I" -,.\ ,. '-i',,"~' "'---w, . "q,",>r"':::, ,;;,f, .;~/':t'\'i;tdll.","
~"'HI,-.t')~"I'" 'J''-'"'''' "I. ..~.I "'1'"'' .-'.i;'--I,.j"I;"""{f""I'--jr':;~"
j-~" ,-J',",::. _;')'Jl \" i,I' !'I ,"':" . ",1, -..,'1'.' >. "Iii: ,"--1 'i)',',' ',"1.1. <.-;'t'll',';, 1'1 ,.-'-' J.ii'!i',
..,r''t''\n;'":'''~''' I,"! ;'1 '" -'IilU...UUM......!Htlo.a' """"'(""";1,1;..,.,'",;.,.",1',',."-';',
It;':'!;'!I'I" ,,- i, " I. "r~'''l".-''I''''''''"Tfr; ,.... f, I - .. I. _ -;'
I;',';'!.~'~~, " I!~_,---:~', i '1'1 \' I .'1. I
JASON J. GEHMAN
Plaintiff
IN THE COURT OF COMMON PLEAS
CUMBERLAND COUNTY, PENNSYLVANIA
v,
CIVIL ACTION. LAW
JAMES E. GALLAGHER, PETER
A. O'SHEA Ilnd RELIABLE
FOUNDATiON WATER PROOFING
AND RESTORATION, INC. and
AMERICAN BASEMENT SYSTEMS,
INC.
NO, 2344. S . 1996
Defendant
ORDER
AND NOW, THIS
DA Y OF
/ 1997/ IT IS
ORDERED that the Motion to Compel of Plaintiff Jeson J. Gehman is denied.
BY THE COURT:
J.
"
,
i"
J
~
~ ~ j 3
co E
I l I; co i
co
~ ~ .. ~.
i :)
~ ! i d lD
..
.. i
f ~ ~ ~
%
~
.
, '
.
!\i,l; II ll'iOatt
.
A civil conspiracy is a combination of two or more oersons to an unlawful or criminal
act or do a lawful act by unlawful means or for an unlawful purpose, Baker v. RanllOS, 229 Pa.
Super. 333, __, 324 A,2d 498, 506 (1974), A conspiracy becomes actionable when some overt
act is done in pursuance of the common purpose or design held by the conspirators and actual
legal damage results, 151,
It follows from the definition that a complaint must allege facts showing the existence of
all of the elements indicated above, Specifically, Plaintiffs complaint fails here because it does
not allege a combination of two or more persons.
The general rule in Pennsylvania is that a corporation cannot conspire with itself,
Thomason Coal ComDanv v, Pike Coal ComDany, 488 Pa. 198,412 A,2d 466 (1979), nor with
its officers and agents when they act solely for the corporation and not on their own behalf,
Johnston v, Baker, 445 F,2d 424 (3rd Cir, 1971), However, a corporation can conspire with
its agents or employees if the agents or employees are acting not for the corporation, but for
personal reasons, and one of the panies to the conspiracy is not an agent or employee of the
corporation, Johnston, 445 F,2d at 426-27, More specifically, and applicable here, a
conspiracy also requires more than the collective judgment of two individuals with,in the same
entity, for their conduct, if challenged, becomes that of the single, corporate entity, Ja~ieslki
v, PackalZe Machine Comaw, 489 F. Supp. 232 (E,O. Pa, 1980); see also Keddie v.
Pennsvlvania State Universitv, 412 F, Supp, 1264 (M,O, Pa, 1976).
4
Hue, individual defendants at all times were acting on behalf of the corporation,
Defendant ADS, Plaintiff himself even agreed to the formation of Defendant Reliable by the
individual Defendants, and knew of its stated purpose, Notwithstanding this, the complaint does
not allege that the individual Defendants, hoth officers and/or employees of Defendant ADS,
conspired with someone outside of ADS, an element necessary for the formation of a conspiracy
in this selling, As such, Plaintiff's counts for civil conspiracy are legally insufficient and
Delimdantb' demurrer to the same should be sustained,
2, Accounting of Reliable
Count 14 of Plaintiff's complaint requests the Court to grant an accounting of Defendant
Reliable. Specifically, Plaintiff asks for an accounting of all Defendant Reliable's asset., and
liabilities, including transfers from Defendant ADS to Defendant Reliable,
As a basis for his request, Plaintiff believes and therefore avers that the corporate assets
of Defendant ADS are being "misapplied and/or wasted or illegally used by Defendant Reliable,"
Complaint' 53, An accounting of Defenr.lant Reliable is both improper and unnecessary,
As a factual maller, the cost to Defendant Reliable, or any other subcontractor, in
performing services for or on behalf of Defendant ADS is hardly relevant to the issue of the
fairness of any transactions with Defendant ADS, The market price of services of similar quality
is more relevant to this determination, Given the fact that Plaintiff has set up a business in
direct competition with Defendant ADS, it seems reasonable to assume that Plaintiff would be
in the best position to be aware of the costs of similar services,
5
Plaintiff should be required to specifically plead dates. limes, places, amount, and Individuals
to whom he is referring,
Plaintiff avers further that the individual Defendants directed leads away from the
Plaintiff and kept him from infonnation essential to the operation of the business [Defendant
ADS]. Complaint' 9(e), Again, Plaintiff should be made to plead specifics as to who, where,
when and what is being referred to, and what is meant by the telms "leads" and "infonnation,"
In other words, Plaintiff should be ordered to demonstrate what infonnation, if any was withheld
from Plaintiff with respect to Defendant ADS, Without these more specific factulll avennents,
Plaintiffs allegation of fraud with respect to this malter is legally deficient.
Plaintiff next alleges that individual Defendants ~ngaged in unlawful and/or fraudulent
conduct in that they "removed and convt:rted assets of [Defendant ADS] to their own use
including income, equipment, receivables, customer lists and prospects, and paid personal
expenses and obligations out of corporate assets," Complaint' 9(t). It should be noted that
Plaintiff has not alleged what assets, if any, of Defendant ADS were allegedly removed and/or
converted for the individual Defendants' own use, In addition, Plaintiff has not pled any
specifics as to who, what, where, when or which amounts were allegedly "removed" or
"converted" from Defendant ADS to fulfill their own personal expenses and obligations, For
this reason, paragraph 9(t) of the Complaint should be stricken,
In paragraph 10 of his Complaint, Plaintiff contends that he voiced his concerns and
objections regarding the alleged conduct of individual Defendants directly to the individual
8
Defendants, but they failed and refused to alter their behavior in any manner whatsoever,
Plaintiff has failed to allege what the content of his objections and/or concerns were to individual
Defendants, In addition, Plaintiff fails to allege specifically when he made these statements
and/or objections to individual Defendants and through what medium these objections were
made. Accordingly, this allegation of the Complaint should be stricken,
In addition to the paragraphs referenced above, paragraphs 17. 21, 45, 46, 47 and 52 of
Plaintiff's Complaint also allege various instances of fraud on behalf of individual Defendants
and corporate Defendants, These allegal.ions of fraud, however, refer back to the factual
premises set fonh in the introductory paragraphs of the Complaint. For the reasons stated
above, these allegations of fraud. too, should be stricken from the Complaint as lacking the
requisite specificity pursuant to Pa.R.C,P, 101 9(b) ,
9.
"
. "
u B
'" a
~ ..... Ul
.. " 0
...:l .. . Ul c loJ ;;
p., IIJ C I>- '"
"0'" Ul fl. o I:' II: .
Z .... ~r: .. 0 ~
~ .... .. " IIJ .. ~ :r ~ >- z ~
'... '" a '" '" . w . 0
.. "11 a .. .. 11:. C '... 1/1 oJ w ~ >
8 " C .. 0 0 Kl . 0 S loJ >- ~ . " ~
'... lV I'l:l ,,.., .., ~:i", ,.., '1""4 ...~ >- 01 >
~~ m . OJ) .
" '" ..c .. Ul Ul ....... ~
a..... 0llQ'j"'1IJ.:'j .. '" !: 'M tV '" W . ~I
1p., .. "'''' '" '''' ~ II; .. '" > " 0 ;;
00 ..... ..c c ..... r 0 p., ~ ~ . III 0- ;;
~U~ ""''''''11 a z '" "- " d
8!~ IIJ ra - 0 ra 0'" .., 8'- Ul ..; W
'" OOr,&..njy ..... r. Ul ~ ~ 0 a. ~ z
'... f-<.". .... .. C l') 0
u :> .1.1 0.0 Ir-4 U.". ....1 C C 0 1/1 " I
~"l~ .., >"l <.....CQI <M 'M .,.., C'(J.,.., ..J . a.
.0 '... .\! N .. 11" i ii
a Ul .."'.... ...:l I:: '+.. CJ .
z~~ @ IIJ QI .,..f 0 ..... .... Q) IV QI .
m.......o-gu :> . ru'l"'f I~...., X
'" ~ Q) ~ c Gll. ~ ,.. C1I..o
.....Up., .., ~~~~l'I:Jfoool p..~~O
.:': ~'.. ~~~l~. ~.~\~~~i~~"..
I
. .
I, (
j
JASOIr J. G.KHAN, I IN THI COURT or COKNON 'LIAS
Plaintiff I CUKBIRLAKD COUNTY, PllfJflYLVUIA
V. I
I CIVIL ACTION - LAW
JAMIS I. GALLAGRIR, I
'ITIR A. O'SHBA and I NO. 2344 S 1U6
RlLIABLB rOUNDATION WATIR I
'ROOFING AND RBSTORATION, INC. I
and AIlIRICAN BASIKBNT SYSTBMS,1
INC., I
Defendant. I
PLAINTlrF JASON J. GEHMAN'S BRIE' IN
OPPOSITION TO DEFBNDANTS' PRBLIMIN~RY OBJBCTIONS
'ROCIDURAL HISTORY AND STATEMBNT OF FACTSI
Defendant American Basement Systems, Inc. ("ABS") was formed
in early April, 1993. Its primary business activity is basement
waterproofing systems. In conjunction with its formation Plaintiff
Jason J. Gehman ("Gehman") , Defendant James E, Gallaghar
("Gallagher") and Defendant Peter A. O'Shea ("O'Shea") were each
issued 100 shares of common stock. Gehman, Gallagher and O'Shea
are the sole shareholders in ABS.
At the time of the formation of the ABS, Plaintiff Gehman had
extensive experience in the home building and construction
industry, he had earned an established reputation and sound credit
rating and he was a member of the National Association of
Homebuilders and Association of Pennsylvania Builders, all of which
were required to establish credentials with the Better Business
Bureau, which was essential to the viability of the new business
venture,
Plaintiff also had the initial additional capital
necessary to commence business operations.
While Defendanta
Gallagher and O'Shea had experience in sales generally, they had
only limited experience in the sale of water proofing systems for
basements, had no construction buainess experience and had no
established reputation or credentials. Defendants Gallagher and
O'Shea would not have been able to establish themselves in the
business had it not been for the involvement, credentials and
monieD of Plaintiff.
Shortly after the commencement of business operations,
Defendants Gallagher and O'Shea engaged in a courae of unlawful
conduct whose purpose and effect was to squeeze Plaintiff out of
the business and to enrich and advantage themselves at the expense
of Plaintiff individually, and to the detriment of ABS, including,
inter Alli, as follows: Defendant:; Gallagher and O'Shea acting in
concert with each other coerced Plaintiff Gehman into permitting
them to establish Reliable Foundation Water Proofing and
Restoration, Inc. ("Reliable"), for the purpose of performing
installation services for ABS; they began a pattern of directing
more and morE' of the installation work of ABS to Reliable;
Gallagher and O'Shea began performing less and less services for
ABS while continuing to draw salaries from both ABS, as well as
from their own corporation, Reliable; they engaged in a pattern of
conduct which Plaintiff believed constituted tax fraud, including
taking payment in kind from customers, and diverting funds from
ABS, without properly reporting the income on all relevant income
tax returns; the individual Defendants directed leads away from
2
Plaintiff and kept from him information essential to the operations
of the buainess; and they removed and converted asseta of ABS to
their own use including income, equipment, receivables, customer
lists and prospacts, and paid personal expenses and obligations out
of corporate assets.
Plaintiff Gehman voiced his concern and objection regarding
their conduct to Gallagher and O'Shea, but they failed and refusad
to alter their behavior in any manner whatsoever. As a result, t~e
relationship between the individual partl.es continued to
deteriorate to the point where Plaintiff could no longer in good
conscious continue to work with the individual Defendants and in
July of 1994 discussed with them being bought out of the
corporation as a shareholder and establishing his own busineas.
The individual Defendants agreed and on their representation that
they would enter into good faith diacussions for a buy-out of his
sharas in the corporation, Plaintiff Gehman resigned his position
as an employee of ABS in July, 1994. From July, 1994 to the
present, the individual Defendants have failed and refused to enter
into negotiations for the purchase of Plaintiff's interest; have
diverted income due to ABS to themselves personally; and have
diverted monies from ABS to their own corporation Reliable,
ostensibly for installation fees, however these fees are grossly
inflated and are a means to divert income from ABS.
As a result of Defendants Gallagher and O'Shea having directly
and/or indirectly used their position with ABS to obtain personal
3
ARGUIIINTI
1. fBJ COURT 8HOULD OVIRRULI DlrINDANT8' DIMURRlR TO COUMT8
t AND 10 or PLAINTlrr'8 COMPLAINT BICAU81 PLAINTIFF BA8
8TATID A CLAIM rOR CIVIL CON8PIRACY AGAIN8T TBI
~VIDUAL DBrINDANT8.
In rUling on a demurrer, "a reviewing court must regard a.
true all well-pleaded facts and reasonable inferences deducible
therefrom." Barbet v. Edelstein, :146 Pa.Super. 488, 490, 499 A,2d
1106, 1107 (1985) (citations omitted).
"A demurrer will be
sustllined only when it appears, with certainty, that the law
permits no recovery under the allegations pleade~, any doubts in
the determination should ba resolved by overruling the objection."
Judo. v, Allentown and Sacred Heart Hos~, ~, 90 Pa.Cmwlth. 520,
525, 496 A.2d 92, 95 (1985) (citations omitted), "Therefore, if
any theory of law will support the claim raised by the petition, a
dismissal is improper."
cianfrani v, Commonwealth. State
EmDlovees' Retirement Board, 505 Pa. 294, 297, 479 A,2d 469, 470
(1984) .
Defendants maintain that Plaintiff has failed to state a claim
for civil conspiracy because Plaintiff has not alleged a
combination of two or more persons.
It is, indeed, the general rule in Pennsylvania that a
corporation cannot conspire with itself, ThomDson Coal
Co. rv. Pilce Coal Co.1, [488 Pa. 198, 213-14,] 412 A.2d
[466], 473 [1979], nor with its officers and agents when
they act solely for the corporation and not on their own
behalf. Johnston v. Balcer, 445 F.2d 424, 426 (3d cir.
1971). However, a corporation can conspire with it.
agent. or employees if the agent or employees are acting
not for tho corporation, but for personal reasons, and
one of the parties to the conspiracy is not an agent or
5
employee of the corporation, Johnston, 445 F.2d at 426-
27. This rule has been read eXDansively to allow a claim
for civil consDiracy to co forward where aqents or
.mcloyees act outeide of their roles as otticers and
emcloyees of the corDoration even in the absence of a
coconscirator from outaide of the cor~oration. Sanzone
v. Phoenix Technolocies. Inc., No. 89-5397, 1990 WL
50732, at *10-11, 1990 U.S.Dist. LEXlS 4656, at *33
(E.D.Pa,1983) I O'Neill v, ARA Services. lnc" 457 F.Supp,
182, 188 (E.D.Pa. 1978),
Doe v. Kohn Nast & Graf. P.C., 862 F.Supp. 1310, 1328 (E,D. Pa.
1994) (emphasis added).
Defendants Gallagher and O'Shea were
clearly acting outside of their roles as officers of ABS when they
harmed Plaintiff and ABS and consequently the requirement that one
of the parties to the conspiracy not be an agent or employee of the
corporation is not applicable.
The individual Defendants'
motivation for squeezing Plaintiff out of the business was to
enrich and advantage solely themselves at the expenae of ABS,
After coarcing Plaintiff into permitting them to establish
Reliable, the individual Defendants began directing more and more
of the installation work of ABS to Reliable. Complaint,!! 9(e),
9(b). Defendants Gallagher and O'Shea were not acting in their
roles as officers of ABS when they diverted funds from ABS and
removed and converted assets of ABS to their own use including
income, equipment, receivables, customer lists and prospects,
Complaint, ! 9(f). Nor were they acting in their roles as officer
of ABS when they chose to pay ~ersonal expenses and obligations out
of corporate assets, ~. Because Defendants Gallagher and O'Shea
were acting outside of their rolea as corporate officers, ABS waG
6
not conRpiring with itself, and plaintiff has properly asserted a
claim for civil conspiracy by pleading that "'two or more persons
combined or agreed with intent to do an unlawful act or to do an
otherwise lawful act by unlawful means.'" Doe v, Kohn Nast , Graf.
~, 862 F,Supp. 1310, 1328 (E.D. Pa. 1994) (citing ThOmpson Coal
Co. v. Pike Coal Co., 488 Pa. 198, 412 A.2d 466, 472 (1979)).'
2. THZ COURT SHOULD OVERRULI DBrIHDANTS' MOTION rOR MORB
IIIQIrIC PLIADING AND/OR MOTION TO STRIII .ICAUS.
PA.R.C.P. lOlllb) IS NOT APPLICABLI WHIRl PLAINTlrr HAS
NOT 8TATID A CLAIM rOR rRAUD.
While Defendants are correct that Rule 1019 (b) of the
Pennsylvania Rules of civil Procedure requires that averments of
fraud in a Complaint be averred with particularity, Plaintiff has
not stated a claim for fraud against Defendants in his complaint,
rather, he has stated claims of accounting and corporate
dissolution; appolntment of a custodian, bl'each of fiduciary duty,
duty of good faith, loyalty and fair dealing; usurpation of
corporate opportunities; conversion; civil conspiracy and unjust
enrichment. In support of these claims, Plaintiff has mada many
factual averments, including averments of fraud.
In determining whether the complaint avers fraud with
sufficient apecificity, this Court must look to the
complaint as a whole and ascertain whether it adequately
'Plaintiff at t~ia time withdraws Count 14 of his Complaint.
By withdrawing his claim for an accounting against Defendant
Reliable, Plaintiff by no means submits that the reasons cited by
Defendants in aupport of their preliminary Objection to Count 14
arft accurate statements of law or of fact.
7
explains the nature of the claim to the defendants so
that they may prepare a defense, and whether it is
sufficiently specific to convinca the court that the
averments therein are not merely a subterfuge, Martin v.
Lancaster Batterv Co.. Inc., 530 Pa. 11, 606 A,2d 444
(1992). However, a plaintiff is not required to plead
evidence in his or her complaint, and therefore, need not
allege all of the factual details underlying the claim of
fraud, 3 Standard PennsYlvania Practice 2d 16: 34, at 514
(1981),
Maleski bv Tavlor v. DP Realtv, 653 A.2d 54, 65 (pa. Cmwlth. 1994)
(emphasis added), Because Plaintiff has not stated a claim for
fraud in his Complaint, Rule 1019(b) is not applicable. Defendants
cannot cite isolated paragraphs of Plaintiff's complaint detailing
the material facts of the case and on that baais alone assert that
Plaintiff has atated a claim for fraud that lacks the requisite
sptilcificity,
Moreover, Plaintiff's Complaint is sufficiently specific to
enable Defendants to respond.
"Pennsylvania is a fact-pleading
state.
Pa.R.C.P. 1019(a),
A complaint must not only give the
defendant notice of what the plaintiffs' claim is and the grounds
upon which it rests, but it must alao formulate the issues by
summarizing those fact:!! essential to support the claim." AlDha Tau
Om.aa Fraternity v. University of PennsYlvania, 318 Pa,Super. 293,
298, 464 A.2d 1349, 1352 (1983) (citations omitted). Nevorthaless,
"[i]t is sufficient to identify time in a manner which leaves no
uncertainty as to what is intended, even though there is no exaot
precision." Goodrich Amram 2d U019(f):2.
Plaintiff in paragraphs 9 and 10 of the Complaint has
8
sununarhed the facts essential to support his claims aqainst
Defendants. In Paragraph 9 of tha Complaint Plaintiff described
the actions Defendants Gallaqher and O'Shea enqaqed in since
shortly after the commencement of business operations which harmed
Plaintiff and ABS. These actions includod coercinq Plaintiff into
permittinq them to establish a separate corporation, Reliable, to
perform installation services for ABS: directinq more and more of
the installation work of ABS to Reliable, perfornling less and less
services for ABS while continuing to draw salaries from both ABS as
well as their own corporation Reliable; engaging in a pattern of
conduct which Plaintiff believed constituted tax fraud, includinq
takinq payment in kind from customers, and diverting funds from
ABS, without properly reporting the income on all relevant income
tax returns, directing leads away from Plaintiff and keeping from
him information essential to the operations of the busin.ss, and
removinq and converting assets of ABS to their own use includinq
income, equipment, receivables, customer lists and prospects, and
paying personal expenses and obligations out of corporate assets.
Furthermore, in paragraph 10 Plaintiff described the actions he
took to remedy the situation and the individual Defendants'
response. Consequently, because Pla intiff has clearly assertecJ
facts sufficient to support his claims, no further information is
needed for Defendants to fully respond to Plaintiff's Complaint.
9
JASOII J. GEKHAII, I IN THE COURT or COHMOII PLEA.
Plaintiff I CUMBERLAND COUNTY, PE"SYLVAKIA
v. I
I CIVIL ACTION - LAW
JAJlB8 E. GALLAGSIR, .
PETER A. O'SHEA and I NO. 2344 S 19'"
RELIABLE rOUNDATION WATER .
PROOrING AND RIISTORATION, INC. I
and AIUlRICAH BASEKENT SYSTEMS,.
IlfC. , .
Defendant. I
PLAINTIpr JASON J. GEKMAN'S BRIE' I~
OPPOSITION TO DI'ENDANTS' PReLIMINARY OBJECTIONS
PROCEDURAL HISTORY AND STATIMENT 01' PACTSr
Defendant American Basement systems, Inc. ("ABS") was for.med
in early April, 1993. Its primary business activity is basement
waterproofing systems. III conjunction with its formation Plaintiff
Jason J. Gehman ("Gehman"), Oefendant James E. Gallaqher
("Gallaqher") and Defendant Peter A. O'Shea ("O'Shea") were each
issued 100 shares of common stock. Gehman, Gallagher and O'Shea
are the sole shareholders in ABS.
At the time of the formation of the ABS, Plaintiff Gehman had
extensive experience in the home buildinq and construction
industry, he had earned an established reputation and sound credit
ratinq and he was a member of the National Association of
Homebuilders and Association of Pennsylvania Builders, all of which
were required to establish credentials with the Better Businell.
Bureau, which was essential to the viability of the new business
venture.
Plaintiff also had the initial additional capital
necessary to commence business operations.
While Defendants
Gallagher and O'Shea had experience in sales generally, they had
only limited experience in the sale of water proofing systems for
basements, had no construction business experience and had no
established reputation or credentials. Defendants Gallaqher and
O'Shea would not have been able to establish themselves in the
business had it not beel~ for the involvement, credentials and
monies of Plaintiff.
Shortly after the commencement ut business operations,
Defendants Gallagher and O'Shea engaged in a course of unlawful
conduct whose purpose and effect was to squeeze Plaintiff out of
the business and to enrich and advantage theMselves at the expense
of Plaintitf individually, and to tho detriment of ABS, inclUding,
inter AliA, as follows: Defendants Gallagher and O'Shea acting in
concert with each other coerced Plaintiff Gehman into permittinq
them to establish Reliable Foundation Water proofing and
Restoration, Inc. ("Reliable"), for the purpose of pertorminq
installation services for ABS, they began a pattern of directinq
more and more of the installation work ot ABS to Reliable,
Gallagher and O'Shea began performing less and less services for
ABS while continuing to draw salaries from both ABS, as well as
from their own corporation, Reliable, they enqaged in a pattern of
conduct which Plaintiff believed constituted tax fraud, includinq
taking payment in kind from customers, and divertinq funds from
ABS, without properly reporting the income on all relevant income
tax returns, the individual Defendants directed leads away from
2
Plaintiff and kept from him information essential to the operations
of the business, and they removed and converted assets of ABa to
their own use including income, equipment, receivables, customer
lists and prospects, and paid personal expenses and obliqations out
of corporate assets.
Plaintiff Gehman voiced his concern and objection reqardinq
their conduct to Gallagher and O'Shea, but they failed and refused
to alter their behavior in any manner whatsoever. As a result, the
relationship between the individual parties continued to
deteriorate to the point where Plaintiff could no longer in good
conscious continue to work with the individual Defendants and in
July of 1994 discussed with them being bouqht out of the
corporation BS a shareholder and establishinq his own business.
The individual Defendants agreed and on their representation that
they would enter into good faith discussions for a buy-out of his
shares in the corporation, Plaintiff Gehman resigned his position
as an employee of ABS in July, 1994. From July, 1994 to the
present, the individual Defendants have failed and refused to enter
into negotiations for the purchase of Plaintiff's interest; have
diverted income due to ABS to themselves personally; and have
liiverted monies from ABS to their own corporation Reliable,
ostensiLly for installation fees, however these fees are grossly
inflated and are a means to divert income from ABS.
As a result of Defendants Gallaqher and 0' Shea havinq directly
and/or indirectly used their position with ABS to obtain personal
3
ARGUHBNTl
1. TRE COURT SHOULD OVERRULE DErINDANTS' DEMURRER TO COUNTS
. AHQ 10 or PLAINTIrr's COMPLAINT BICAUSE PLAINTIr. BAa
alATED A CLAIM rOR CIVIL CONSPIRACY AGAINST TR.
INDIVIDUAL DErENDANTS.
In rulinq on a demurrer, "a reviewing court must reqard as
true all well-pleaded facts and reasonable inferences deducible
therefrom." Barbet v. Edelstein, 346 Pa.Super. 488, 490, 499 A.2d
1106, 1107 (1985) (citations omitted).
"A demurrer will be
sustained only when it appears, with certainty, that the law
permits no recovery under the alleg~tions pleaded, any doubts in
the determination should be resolved by overruling the objection."
Judoe v. Allentown and Sacred Heart HOSD. ctr., 90 Pa.cmwlth. 520,
525, 496 A.2d 92, 95 (1985) (citations omitted). "Therefore, if
any theory of law will support the claim raised by the petition, a
dismissal is improper."
cianfrani v. Commonwealth. State
Emnlovees' Retirement Board, 505 Pa. 294, 297, 479 A.2d 469, 470
(1984).
Defendants maintain that Plaintiff has failed to state a claim
for civil conspiracy because Plaintiff has not alleqed a
combination of two or more persons.
It is, indeed, the general rule in Pennsylvania that a
corporation cannot conspire with itself, ~omDson CQAl
Co. rv. pike Coal Co.1, [488 Pa. 198, 213-14,] 412 A.2d
[466), 473 [1979), nor with its officers and aqents wh~n
they act solely for the corporation and not on their own
behalf. Johnston v. Baker, 445 F.2d 424, 426 (3d Cir.
1971). However, a corporation can conspire with its
agents or employees if the agent or employees are actinq
not for the corporation, but for personal reasons, and
one of the parties to the conspiracy is not an aqent or
5
employee of the corporation. ~ohnston, 445 F.2d at 426-
27. This rule has been rea~ exoansivelv to allow 11 ctaim
for civil consoiracv to gO forward where agents or
81'Qnlovees !lct: outside ot their roles as officers and
emDlovees of the corDoration even in the absence of a
coconsDirator frOM outside of the cO:t'ooration. Sanzone
~hoenix Technologies. Inc., No. 89-5397, 1990 WL
50732, at *10-11, 1990 U.s.Dist. LEXIS 4656, at *33
(E.D.Pa.1983) 1 O'Neill v. ARA Services. Inc., 457 F.SUpp.
182, 188 (E.D.Pa. 1978).
Doe v. Kohn Nast & Graf. P.C., 862 F.Supp. 1310, 1328 (E.D. Pa.
1994) (emphasis added).
Defendants Gallagher and 0' Shea were
clearly acting outside of their roles as officers of ABS when they
harmed Plaintiff and ABS and consequently the requirement that one
of the parties to the conspiracy not be an agent or employee of the
corporation is not applicable.
The individual Defendants'
motivation for squeezing Plaintiff out of the business was to
enriCh and advantage solely themselves at the expense of ABS.
After coercing Plaintiff into permitting them to establish
Reliable, the individual Defendants began directing more and more
of the installation work of ABS to Reliable. Complaint,!! 9(a),
9 (b) .
Defendants Gallagher and O'Shea were not acting in their
roles as officers of ABS when they diverted funds from ABS and
removed and converted assets of ABS to their own use including
income, equipment, receivables, customer lists and prospects.
Complaint, '9(f). Nor were they acting in their roles as officer
of ABS when they chose to pay pCllrsonal expenses and obligations out
of corporate assets. ~. Because Oefendants Gallagher and O'Shea
were actinq outside of their roles as corporate officers, ABa was
6
not conspiring with itsolf, and Plaintiff has properly asserted a
claim for civil conspiracy by pleading that lI'two or more persons
combined or agreed with intent to do an unlawful act or to do an
otherwise lawful act by unlawful means.'" Doe v. l{ohn Nast & Graf.
~, 862 F.SUPP. 1310, 1328 (E.D. fa. 1994) (citing Thompson Coal
Co. v. Pike Coal Co., 488 Pa. 198, 412 A.2d 466, 472 (1979)).'
2 . THE COUR'J' SHOULD OVIlRRULB DII'BHDAHTS' MOTIOIf rOR MOD
SPBClrIC PLEADING AND/OR MOTION TO STRIKE BECAU.B
PA.R.C.P. lOlllb) IS NOT APPLICABLB WHIRE PLAINTI,r BAS
NOT STATID A CLAIM rOR rRAUD.
While Defendants are correct that Rule 1019(b) of the
Pennsylvania Rules of Civil Procedure requires that averments of
fraud in a Complaint be averred with particularity, Plaintiff has
not stated a claim for fraud against Defendants in his Complaint,
rather, he has stated claims of accountinq and corporate
dissolution, appointment of a custodian, breach of fiduciary duty,
duty of qood faith, loyalty and fair dealing: usurpation of
corporate opportunities: conversion: civil conspiracy and unjust
enrichment. In support of these claims, Plaintiff has made many
factual averm~nts, including averments of fraud.
In determining whether the complaint avers fraud with
sufficient specificity, this Court must look to the
complaint as a whole and ascertain whether it ad~quately
'Plaintiff at this time withdraws Count 14 of his complaint.
By withdrawing ;~is claim for an accounting against Defendant
Reliable, Plaintiff by no means submits that the reasons cited by
Defendants in support of their Preliminary Objection to Count 14
are accurate statements of law or of fact.
7
explains the nature of the claim t~ the defendants so
that they may prepare a defense, and whether it is
sufficiently specific to convince the court that the
averments therein are not merely a subterfuge. MartinJU..
Lancaster Batterv Co.. Inc., 530 Pa. 11, 606 A.2d 444
(1992). However, a plaintiff is not required to plead
evidence in his or her complaint, and therefore, need not
allege all of the factual details underlying the claim of
fraud. 3 Standard PennsYlvania Practice 2d 16:34, at 514
(1981) .
Maleski bv Tavlor v. DPJRealtv, 653 A.2d 54, 65 (pa. Cmwlth. 1994)
(emphasis added). Because Plaintiff has not stated a claim for
fraud in his Complaint, Rule 1019(b) is not applicable. Defendants
cannot cite isolated paragraphs of Plaintiff's Complaint detailin9
the material facts of the case and on that basis alone assert that
Plaintiff has stated a claim for fraud that lacks the requisite
specificity.
Moreover, Plaintiff's Complaint is sufficiently specific to
enable Defendants to respond. "Pennsylvania is a fact-pleadinq
state. Pa.R.C.P. 1019(a). A complaint must not only give the
defendant notice of what the plaintiffs' claim is and the qrounds
upon Which it rests, but it must also formulate the issues by
summarizing those facts essential to support the claim. II A1Dha Tau
Omeaa Fraternitv v. University of PennsvlvaniA, 318 pa.Super. 293,
298, 464 A.2d 1349, 1352 (1983) (citations omitted). Nevertheless,
"[i]t is sufficient to identify time in a manner Which leavos no
uncertainty as to what is intended, even though there is no exact
precision. II Goodrich Amram ~d H019(f):2.
Plaintiff in Paragraphs 9 and 10 of the Complaint has
8
summarized the facts essential to support his claims aqainst
Defendants. In Paraqraph 9 of the Complaint Plaintiff described
the actions Defendants Gallaqher and O'Shea engaqed in since
shortly after the commencement of business operations which harmed
Plaintiff and ABS. These actions included coercing Plaintiff into
permitting them to establish a separate corporation, Reliable, to
perform installation services for ABS, directing more and more of
the installation work of ABS to Reliable; performing less and less
services for ABS while continuing to draw salaries from both ABa as
well as their own corporation Reliable; engaginq in a pattern of
conduct which Plaintiff believed constituted tax fraud, includinq
takinq payment in kind from customers, and diverting funds from
ABS, without properly reporting the income on all relevant income
tax returns; directing leads away from Plaintiff and keepinq from
him information essential to the operations of the business; and
removing and converting assets of ABS to their own use includinq
income, equipment, receivables, customer lists and prospects, and
paying personal expenses and obligations out of corporate asset..
Furthermore, in Paragraph 10 Plaintiff described the actions he
took to remedy the situation and the individual Defendants'
response. Consequently, because Plaintiff has clearly asserted
facts sufficient to support his claims, no further information is
needed for Defendants to fully respond to Plaintiff's Complaint.
9
Here, individual defendallts at all times were acting on behalf of the corporation,
Defendant ADS. Plaintiff himself even agreed to the formation of Defendant Reliable by the
individual Defendants, and knew of its stated purpose. Notwithstanding this, the complaint does
not allege that the individual Defendants, both officers and/or employees of Defendant ABS,
conspired with someone outside of ABS, an element necessary for the formation of a conspiracy
in this sening. As such, Plaintifrs counts for civil compiracy are legally insufficient and
Defendanlli' demurrer to the same should be sustained.
2. Accountlna of Reliable
Count 14 of Plaintifrs complaint requests the Court to grant an accounting of Defendant
Reliable. Specifically, Plaintiff asks for an accounting of all Defendant Reliable's assets and
liabilities, including transfers from Defendant ADS to Defendant Reliable.
As a basis for his request, Plaintiff believes and therefore avers that the corporate assets
of Defendant ADS are being "misapplied and/or wasted or illegally used by Defendant Reliable."
Complaint 1 S3. An accounting of Defendant Reliable is both improper and uMecessary.
As a factual maner, the cost to Defendant Reliable, or any other subcontractor, in
performing services for or on behalf of Defendant ABS is hardly relevant to the issue of the
fairness of any transactions with Defendant AD:;. The market price of services of similar quality
is more relevant to this determination. Given the fact that Plaintiff has set up a business in
direct competition with Defendant ABS, it seems reasonable to assume that Plaintiff would be
in the best position to be aware of the costs of similar services.
S
Plaintiffs Complaint are insufficient, as Pa.R,C.P. 1019(b) requires averments of fraud or
mistake to be averred with panicularity. ~ Sevin v. Kelshaw, 411 Pa. Super. 1,611 A.2d
1232 (1992).
Pennsylvania is a fact-pleading stale, and thus the Complaint must not only give
Defendants notice of what Plaintiffs claim is and grounds upon which it rests, but it also must
fonnulate issues by summarizing those faclS essential to support the claim. Alpha Tau Omella
FraternilV v, UniversilV of Pennsvlvania, 318 Pa. Super. 293, 464 A.2d 1349 (1983). With
respect to allegations of fraud, Pa,R.C.P. 1019(b) provides that charges offraud must be averred
with particularity and, as such, is one of the expresses bases for a motion for specificity with
its object being to dispel the alluring generality of the tenn "fraud" when it appears without
basic factual allegations. Location No. 163 IntI. Union of United Brewerv. Flower. Cereal.
Softdrink and Distillerv Workers of America v. Watkins, 417 Pa. 120, 207 A.2d 776 (1965).
Allegations of fraud must also consist of more than mere legal conclusions. Bash v, Bell
TeleDhone Company of Pepnsvlvania, 411 Pa. Super. 347, 601 A.2d 825 (1992).
Paragraph 9(d) of the Complaint alleges a panern of conduct constituting tax fraud
including taking payment in kind from customers and diverting funds and not properly reporting
income on relevant income tax returns. Complamt, 1 9(d). This allegation is factually
insufficient in that it does not explain what is meant by "taking payment in kind from customers
and diverting funds from [Defendant) ABS . . . ." hi, Not only is the allegation unclear, but
7
Plaintiff should be required to specifically plead dates, times, places, amounts and individuals
to whom he is referring.
Plaintiff avers further that the individual Defendants directed leads away from the
Plaintiff and kept him from information essential to the operation of the business [Defendant
ABS). Complaint 19(e). Again, Plaintiff should be made to plead specifics as to who, where,
when and what is being referred to, and what Is meant by the tenns 'leads' and 'information.'
In other words, Plaintiff should be ordered to demonstrate whatlnfonnation, If any was withheld
from Plaintiff with respect to Defendant ABS. Withoutlhese more specific factual averments,
Plaintiffs allegation of fraud with respect to this mailer is lellally deficient.
Plaintiff next alleges that individual Defendants engaged in unlawf\JI and/or fraudulent
conduct in that they "removed and converted assets of (Defendant ABSI to their own use
including income, equipment, receivables, customer lists and prospects, and paid personal
expenses and obligations out of corporate assets." Complainl' 9(1). It should be noted thaI
Plaintiff has not alleged what assets, if any, of Defendanl ABS were allegedly removed and/or
converted for tlle individual Defendants' own use. In addition, Plaintiff has not pled any
specifics as to who, what, where, when or which amounts were allegedly "removed' or
"converted' from Defendant ABS to fulfill their own personal expenses and obligations. For
this reason, paragraph 9(t) of the Complaint should be stricken.
In paragraph 10 of his Complaint, Plaintiff contends that he voiced his concerns and
objections regarding the alleged conduct of individual Defendants directly to the individual
8
JUO. J. G.BIIU,
Plaintiff
I. TH. COURT or COMMO. PLaA8
CUIUlDLUD COUIITY, P....YLVAIIIA
v.
CIVIL ACTIO. - LAW
NO.
8
lU'
JAIUl8 .. GALLAGH.R,
P.TIR A. 0'8HIA and
..LIlILB rOUHDATIO. WAT..
p.OOrIMa AKD ..STORATION, INC.
and AHIIlICAH BUU.NT 8Y8TINS,
I.C.,
Defeudants
NOTICIA
Le han demandado a usted en la corte. si usted guiere
defenderse de estas demundas expuestas en las paginas siguienteB,
usted tiene viente (20) dias de plazo al partir de 1ft fecha de la
demanda y la notificacion. Ueted debe pre.entar una apariencia
e.crita 0 en persona 0 por ab09ado y archivar on la corte en forma
escrita sus defensas 0 sus oblecioneB a laB demandas en contra de
su persona. Sea avisado que s usted no se defiende, la sin previo
aviso 0 notificacion y por cualquier queja 0 alivio que es pedido
en la petie ion de demanda. Usted puede perder dinero 0 sus
propiedades 0 otros derechoe importantee para usted.
LLEVE ES'rA DEMANDA A UN ABODAGO IMMEDIATAMENTE. 51 NO TIENE
ABOGADO 0 SI NO TIENE EL DINERO SUFICIENTE DE PAGAR TAL SERVICIO,
VAYA EN PERSONA 0 LLAME POR TEI,EFONO A LA OFICINA CUYA DIRECCION SE
ENCUENTRA ESCRITA ABAJO PARA AVERICUAR DONDE SE PUEDE CONSEGUIR
ASSISTENCIA LEGAL.
DAUPHIN COUNTY LAWYER REFERRAL SERVICE
213 North Front street
Harr1sburq, PA 17101
(717) 232-7536
P1\l.Dl11.1r1l1A7II01IDCANIA1IIIIl.M...V.ICOMftAIIl....
2
JUOII J. GalUlU,
Plaintiff
III THa COURT or COKKOII PLEU
CUIUlIRLAHD COVIITY, p.....nLVUU
Y.
CIVIL ACTIOII - LAW
110. . 1'"
'/(,.- .:J1'/'f &~"fj--
JAMI8 .. GALLAGHER,
PITIR A. 0'8HEA,
AHIRICAIr BA8IXIKT 8Y8TIXS,
I.C., aDd
aaLIABL. rOUHDlrIOII WATER
paOOrIIIQ AID .ISTORATIOII, IIIC.
Defendants
~PLllINT
AND NOW comes the Plaintiff, Jason J. Gehman, by his
attorneys, Milspaw " Beshore, and demands relief against the
Defendants James E. Gallagher, Peter A. O'Shea, American Basement
systems, Inc., and Reliable Foundation Water Proofinq, Inc., upon
the followi.ng grounds:
PARTIIIS
1. Plaintiff Jason J. Gehman is an adult individual with a
residence address of 90 Holman Drive, Duncannon, Perry County,
Pennsylvania.
2. Defendant James E. Gallagher is an adult individual with
an address of 110 Andersontown Road, Mechanicsburq, Cumberland
County, Pennsylvania.
3. Defendant Peter A. O'Shea is an adult individual with an
address of 110 Andersontown Road, Mechanicsburq, Cumberland County,
Pennsylvania.
':ILllN\UfIOA nOI!llMANlAMP.l.BAS.SYSlCOMPIAIH.PIH
3
,
4. Defendant Amsrican Basement systems, Inc. ("ABS") ia a
business corporation orqan!zed and exiating under the laws of
Pennsylvania with ite principal place of business at 75 Utley
Drive, camp Hill, Cumberland county, pennsylvania 17011.
5. Defendant Reliable Foundation Water Proofinq and
Restoration, Inc. ("Reliable") is a Penneylvania corporation duly
existing under the laws of the Commonwealth of Pennsylvania with
its principal place of business at 75 Utley Drive, camp Hill,
Cumberland county, pennsylvania 17011.
6., All the issued and outstandinq shares of ABS are owned by
Plaintiff and the individual Defendants, each owinq 100 shares of
common stock. The corporation was formed and the shares issued in
early April, 1993, and its primary business activity is basement
waterproofing systems.
7. At the time of the formation of the ABS, Plaintiff Gehman
had extensive explllrience in the home building and construction
industry, had earned an established reputation and sound credit
rating, was a member of the National Association of Homebuilder.
and Association of Pennsylvania Builders. All of the foreqoinq were
required to establish credentials with the Better Business Bureau
essential to the viability of the new business venture. Plaintiff
also had the initial additional capital necessary to commence
business operations.
8. The individual Defendants had expecience in sales
P:\LIlaI\UfKL\ rnOBHNANIAMBIl-IIAS.SYSlCOMPtAIN. PIN
4
qenerally but only: limited sxperien~e in the s..les of wabr
proofinq systems for basements, had no construction busine.s
experience, had no established reputation or credentials, and would
have been unable to establish them.elves in the business had it not
been for the invQlvement, credentials and monies of Plaintiff.
9. Shortly after the commencement of business operations,
Defendants 0' Shea and Gallagher enqaged in a course of unhwful
conduct whose purpose and affect was to squeeze Plaintiff out of
the business and to enrich and advantage themselves at the expense
of Plaintiff individually, and to the detriment of ABS, includinq,
inter AliA, as follows:
a. The individual Defendants acting in concert
with each other coerced Plaintiff Gehman into permittinq
them to establish a separate corporatioll, Reliable, for
the purpose of per.forminq installation services for ABS.
b. The individual Defendants then beqan a pattern
of directing more and more of the installation work of
ABS to Raliable.
c. The individual Defendants began performinq less
and less services for ABS while continuinq to draw
salaries from both ABS as well as their own corporation
Rsliable. Reliable has as its only two shareholders the
individual Defendants.
d. The individual Defendants enqaged in a pattern
P:IUlIol\LITIOA1'11OI!HMANlAMEI-IlIlI.IYSICOMPLAIN. fIN
5
of conduct which Plaintiff believed constituted tax
.
ftaud, includinq taking payment in kind from cu.tomers,
and divertinq funds from ABS, without properly reporting
the income on all relevant income tax returns.
e. The individual Defendant. directed leads away from
Plaintiff and kept him from information es.ential to the
operations of the busine.s.
f. The individual Defendant. removed and conv..rted
assets of ABS to their own use including income, equipment,
receivables, customer lists and prospect., and have paid
personal expenses and obliqations out of corporate asset..
10. The Plaintiff voiced his concern and objection regarding
the Defendants' conduct to the individual Defendants but they
failed and refused to alter their behavior in any manner
whatsoever.
11. The relationship between the individual parties continued
to deteriorate to the point where Plaintiff could no longer in good
conscious continue to work with the individual Defendants and in
July of 1994, discussed with the individual Defendants being bought
out of the corporation as a shareholder and establishing his own
business, to which the individual Defendants agreed.
12. In July 1994, Plaintiff Gehman resigned his position as
an employee of ABS, on the representation from the individual
Defe~eants that they would enter into good faith discussions for a
P:\LEMlLrrJOA TMIlIIMAIMMI!R-BAUVS\COMPIAIN .PIN
6
buy-~t ot'his shares in the corporation;'
,
13. ,From July 1994 to the present, the individual Defendant.
have failed and refused to enter into neqotiations for the purchase
of Plaintiff's interest; have diverted income due to ABS to
themselves personally have diverted monies from ABS to their own
corporation Reliable, ostensibly for installation fees but which
fees are qrossly inflated and thus serves to divert income from
ABS.
14. Gallagher and O'Shea have promoted their personal
interest over the interests of ABS.
15. Gallagher and O'Shea have directly and/or indirectly ussd
their position with ABS to obtain personal profit and qain unjust
enrichment.
COUNT 1
GBHHAH v. ANERICAN BASBKINT 8Y8TZMS. INC.
ACCOUNTING AND CORPORATE DISSOLUTION
16. The averments contained in the preceding paragraphs are
incorporated herein by reference as if set forth again in full.
17. The acts ?f the individual Defendants in control of
Defendant American Basement Systems, Inc. are illegal, oppressive,
and/or fraudulent and it is beneficial to the interests of the
shareholders that the corporation be wound up and dissolved.
18. It is believed and therefore averred that the norporate
assets are beinq misapplied or wasted and it is beneficial to the
':\IJlM\LrrIOA TJlOEIfNAN\AMI!II.BAS.SYSICOMPL/lIll.PIN
7
cHssolved.
WHEREFORE, Plaintiff Jaeon J. Gehman respectfully requellte
this 1I0norable Court to enter an Order requirinq an i_ediate
accounting of all assets, liabilities and transfers of Defendant
American Basement Systems, Inc., appoiuting a liquidating receiver
for Defendant American Basement Systems, Inc., I~c., and providing
for the dissolution and winding up of corporate affairs and
subsequent distribution of the proceeds of its remaininq assets to
the shareholders as this Court shall deem just and equitable under
the circumstances.
COUNT 2
GEHHAH v. AHIlRICAH BA8IlN.NT 8Y8TZM8. INC.
APPOINTMINT or A CU8TODI~
19. The averments contained in the precedinq paragraphs are
incorporated herein by reference as if set forth aqain in full.
20. Defendant American Basement Systems, Inc. is a closely
held corporation.
21. The directors other than Plaintiff or those in control of
Defendant Am6rican Basement systems, Inc. have acted illeqally,
oppressively, and/or fraudulently toward Jason J. Gehman, who is a
minority shareholder in his capacity as owner of one-third of the
outstanding shares of stock and so acted toward him in his former
capacity as officer and employee of Defendant American Basement
P:lLU4lLmOAttlOIlllMAN\AMIIa-IAI.IYI'.COMPLAIN .PIN
8
systems, tnc..
WHEREFORE, Plaintiff Jason J. Gehman respectfully requests
thie Honorable Court to enter an Order appointin~ a cus~odian
pursuant to 15 Pa.C.S. 517.7 who shall continue the busine.s ot the
corporation for the benetit of all shareholders as directed and
approved by this Court.
COUNT 3
BREACH or rIDUCIARY DUTY. DUTY or GOOD
rAITH. LOYALITY snd rAta DBALING
GZKMAH V. OALLAGHIR
22. The averments contained in the preceding paragraphs are
incorporated herein by reference as if set forth again in tull.
23. The unlawful acts of Gallagher and O'Shea constitute a
breach of their fiduciary duties and their duties ot good taith,
loyality and fair dealing toward Gehman and ABS.
24. Gallagher and O'Shea's unlawful conduct constitutes a
failure to exercise the reasonable care, skill and diligence that
persons ot ordinary prudence in their position would use with
respect to the interests in business of ABS.
25. As a result of the violation of their dutieo aforesaid,
Gehman has suffered and will continue to sutter damaqes, losses and
irreparable harm as set forth above and as yet to be discovered.
WHEREFORE, Plaintiff Jason J. Gehman requellts that judqrnent be
entered in his favor in the amount in excess of Twenty Thousand
P:ILI!M\LmOA nOIlHJoCAN\AIdP".""S.SYSlCOMP\.AII'I.FIN
9
($20,000.00) Dollars plus interest, costs, reasonable attorneys
fses and such other remedies as this Court deems just.
comrr c
BRBACB or PIDUCIARY DUTY. DUTY or GOOD
.Al~H. LOYALITY an4 ..1. D.ALIHd
OBHMAH v. O'SBEA
26. The averments contained in the preceding paraqraphs are
incorporated herein by reference as if set forth again in full.
WHEREFORE, Plaintiff Jason J. Gehman requests that judqment be
entered in his favor in the amount in excess of Twenty Thousand
($20,000.00) Dollars plus interest, costs, reasonable attorneys
fees and such other remedies as this Court deems just.
COUNT 5
USURPATION or CORPORATB OPPORTUHITI"
GIHMAH v. GALLLAGRIR
27. The averments contained in the preceding paragraphs are
incorporated herein by reference as if set forth again in full.
28. Gallagher and O'Shea have failed to devote themselves to
the corporate affairs of ABS with a view to promoting common
interest.
29. Gallagher and O'Shea's self dealinq and diversion of
business to their own account or the account of Reliable and or
other individuals or entities constitutes an unlawful usurpation of
corporate opportunity.
30. The corporate opportunities diverted by Gallaqher and
O'Shea comes within the scope of corporate activities conducted by
ABS.
P:\UlNILI'l1OA TMIlllMANlAMBIl-8AUYSlt"OMPLAIN.FIN
10
31. At all relevant times her.to, ABS was capabl. of taking
and exploitin9 the corporate opportunities unlawfully usurped by
Gallagher and O'Shea.
32. As a result of tho usurpation of corporate opportunities
aforesaid, Gallagher and O'Shea have been unjustly enriched and
GehmAn has suffered and will continue to suffer damages, loss.s and
irreparable harm as set forth above and as yet to be discovered.
WHEREFORE, Plaintiff Jason J. Gehman requests that judgment be
entered in his favor in the amount in excess of Twenty Thousand
($20,000.00) Dollars plus interest, costs, reasonable attorneys
fees and such other remedies as this Court deems just.
COUNT .
U8URPATION or CORPORAT. OPPORTUHITIB8
GBHMAH Y. O'8HKA
33. The averments contained in the preceding paragraphs are
incorporated herein by reference as if set forth again in full.
WHEREFORE, Plaintiff Jason J. Gehman requests that judgment be
entered in his favor in the amount in excess of Twenty Thousand
($20,000.00) Dollars plus interest, costs, reasonable attorneys
fees and such other remedie~ as this Court deems just.
COUNT i'
CONVBR8ION
GBHHAN v. GALLAGalR
34. The averments contained in the preceding paraqraphs are
incorporated herein by reference as if set forth aqain in full.
P:\LIlIN.II'IOAT~(JIlIIMAN\AIoOlI.IIA.,SY.\COMPlAIN,PIN
11
3~. Gallaqher and O'Shea have willfully int.rfered without
leqaljustification with ABS/. dominion and control over its
prop.rty.
36. Gallaqher and O'Shea have unlawfully converted corporate
property for their own u.e and deprived ABS of its us. and
possession.
37. As a result of Gallagher and O'Shea's conduct in
converting its property, ABS has .uffered and will continue to
suffer damages, lo.ses and irreparable harm.
38. A. a result of the conversion afore.aid, Gehman has
suffered and will continue to suffer damages, lo.s.s and
irreparable as an equal shareholder with Gallagher and O'Shea.
WHEREFORE, Plaintiff Jason J. Gehman requests that judgment be
entered in his favor in the amount in excess of TWenty Thou.and
($20,000.00) Dollars plus intere.t, co.ts, rea.onable attorneys
fees and such other remedies as this Court deems just.
COUNT .
CONVIlRSION
GEHMAN v. O'SHIlA
39. The averments contained in the preceding paragraphs are
incorporated herein by reference as if set forth again in full.
WHEREFORE, plaintiff Jason J. Gehman request. that judgment be
entered in his favor in the amount in excess of Twenty Thousand
($20,000.00) Dollars plus intereet, CORte, reasonable attorn.ys
fees and such other remedies as this Court deems just.
P:\Ll!IoIIuno^T~OEllMANlAMP.R.8A9 ,9Y9\COMPLAIN ,PIN
12
COUHT .
CIVIL COM.PIRACY
a.vu.u v. a.LLAGH..
40. The averments contained in the precedinq paraqraphs
are incorporated herein by reference as if set forth again in full.
41. The actions of Gallagher and O'Shea in concert with each
other constitute and unlawful conspiracy desiqned and intended to
injure Gehman.
42. As a result of the conspiracy and acts in furtherance
thereof of Gallaqher and 0' Shea, Gehmann has suffered and will
continue to suffer damages, losses and irreparable harm as set
forth above and as yet to be cJiscovered.
WHEREFORE, Plaintiff Jason J. Gehman requests that judqment be
entered in his favor in the amount in excess of Twenty Thousand
($20,000.00) Dollars plus interest, costs, reasonable attorneys
fees and such other remedies as this Court deems jUGt.
COUNT 10
CIVIL CONSPIRACY
GIHMAH v. 0'8HIA
43. The averments contained in the precedinq paragraphs are
incorporated herein by reference as if set forth aqain in full.
WHEREFORE, Plaintiff Jason J. Gehman requests that judqment be
sntered in his favor in the amount in excess of Twenty Thousand
($20,000.00) Dollars plus interest, costs, reasonable attorneys
fees and such other remedies as this Court deems just.
P:IUMlurIOAT1IOIlHMANlAMJJa-BAS,SYSlCOMPl-'IN, PIN
13
aomrr 11
d..xAII V. daLLAGR..
UIIJU8T IDIClHMINT
44. The averments contained in the preoedinq paraqraphs are
incorporated herein by reference as if oet forth aqain in full.
45. Defendants O'Shea, Gallagher and Reliable have received
and knowinqly retained the financial benefits conferred by thll
illegal, oppressive, and/or fraudulent conduct aforesaid.
46. The benefits received and retained by Defendants O'Shea,
Gallagher and Reliable as a result of the illeqal, oppr.essive,
and/or fraudulent conduct aforesaid have been far in excess of the
compensation, benefits and distributions made to Plaintiff in his
relationship with Defendant American Basement Systems, Inc..
47. Defendants have been unjustly enriched as a result of the
illeqal, oppressive and/or fraudulent acts aforesaid, to the
detriment of Plaintiff.
48. If relief sought is not granted, resultinq injustice will
occur.
WHEREFORE, Plaintiff Jason J. Gehman requests that judqment be
entered in his favor in the amount in excess of Twenty Thousand
($20,000.00) Dollars plus interest, costs, reasonable attorneys
fees and such other remedies as this Court deems just.
P:I1.UIILmOATJIOIllMANlAIoIIla.......Y.ICOMPlAIN.,..
14
~J1
a.HKaM V. 0'1..&
UNJU8T INRICJOgD
49. The averments contained in the precedinq paraqraphs are
incorporated herein by reference as if set forth aqain in full.
WHEREFORE, Plaintiff Jason :1. Gehman requests that judgment b..
entered in his favor in the amount in excess of Twenty Thousand
($20,,000.00) Dollars plus interest, costs, reasonable attorneys
fees and such other remedies as this Court deems just.
COOlfT U
GEHMAN V. RELIABLI rOUHDATION WATIR
PROOrIHG AND RISTORATIOH. INC.
UNJUST ENRICHMENT
50. The averments contained in the precedinq paraqraphs are
incorporated herein by reference as if set forth aqain in full.
WHEREFORE, Plaintiff Jason J. Gehman request. that judgment be
entered in his favor in the amount in excess of Twenty Thousand
($20,000.00) Dollars plus interest, costs, reasonabls attorneys
fee. and such other remedies as this Court deems just.
COUNT 14
GIHMAN V. RILIABLI rOUHDATION WATIR
PRoorINO AND RI8TORATION INC.
A9COUNTIHG
51. The averments contained in the precedinq paragraphs ars
incorporated herein by reference as if set f~rth again in full.
52. The' acts of Defendant Reliable and those in control
thereof inclUding the ,individual Defendants were illeqal,
oppressive and/or fraudulent.
':\U!M\UI1OATIIOI!llMAlllAMEIl.IlAI,IYIICOMPLAIN,PIN
15
c; e. , ,
"
r- ~ ' ,
i' '.1") -0 '0
i ...:; ~
L\JI ,:) '. ~ "
(. ). ' ;
C' ' , -J
". \....
'oj '"
C! ,~~.) " ~ ~ ~
l.!- li,'''' "
! "i_I ..:J <:l
.. '~ ........
-,
, 'J ..
" " , (\-{ 'ii'
, , 'Y..
'~ J, ) ~~
--- V
, ,
I
I
I
.r
'f
I
I
"
"
, J
"
, , ,
....
v, ~ co ">-
.--
<C 'i~
o'
r .:I j
~ ::r:
Cl... )1
~ r- '.
'J
~ ~ \~fe
~
~ ~
.' ,
JASON J. GEHMAN
Plaintiff
IN THE COURT OF COMMON PLEAS
CUMBERLAND COUNTY, PENNSYLVANIA
v.
JAMES E. GALLAGHER, PETER
A. O'SHEA and RELIABLE
FOUNDATION WATER PROOFING
AND RESTORATION, INC. and
AMERICAN BASEMENT SYSTEMS,
INC.
CIVIL ACTION - LAW
NO. 2344 - S - 1996
Defendant
PRAlCIP. TO STRIX.
'ROM ARGUIOINT LIST
TO: PROTHONOTARY
Pursuant to agreement of Counsel please strike this case from
the Argument List for June 26, 1996.
THOMAS, THOMAS & HAFER
By
~L'
(a~,,4,(/~da-0
~~~~e, Esquire
Attorney No. 26149
305 North Front Street
P.O. Box 999
Harrisburg, PA 17108
(717) 255-7648
Dated: r;"lf46
CERTIrICATE or S.RVICE
I, RANDALL G. GALE, ESQUIRIl, Attorney for Defendants, do
hereby certify that a copy of the foregoing PRAIlCIPE TO STRIK. rROM
ARGUNBNT LIST was served upon the following by enclosing a true and
correct copy in envelopes addressed as follows, postage prepaid,
and depos.i.ting same in the United States Mail
Pepnsylvania, on the Iv/lit day of ~U..f7
Luther E. Milspaw, Jr., Esquire
MILSPAW & BESHORE
130 State Street
P.O. Box 946
Harrisburg, PA 17108-0946
at Harrisburg,
, 1996:
THOMAS, THOMAS & HAFER
By
17108
.2-
','
"
.
i
i
tilL
0'
(I:';
II.
f',
;r\ .
0:'
~~~. ,
r-.
1;';
"
r:~)
.;"'-.'
1'1
l':"'"
,'j"
,
CJ
'.,",
t.'~
.,,/
"
"
",
"
..
, '
"
~.
Id',ll i Ii L
f:i 1:1;11/,1-,
I.
Ii;;
I /\'i1-: IlJi, J'i
Ii'
:.;.1
I f ',,1111, Ir1"~I-: i\l, JII1!r ) 'i ,Ilil" i 1.'1 1\1: /,
lillflTI f i! L i 11-(lIl;;hl ,',~'lt,'
I:,
jilll\q
, ,
, .,
.,
IIII
'i:
f'i\l.I.Mi!/I,,"" IAliL'
1.:1,,1 i\[,
1,1',1,' 'Y II': I
lill"III','I"
,11
I 1, I ,'1!'\ 1.; r., f ,\ n I (', ',' 111\ '. '/ ~'
I, ,'Ii
II ,J I' I ", '~I
""-,
',:
1,:," 'oJ ~ ! ill.ll 1,,111'11.:'-''1) N';
'II" ii
I ,'II.MIII,I':/I ,lA/'ll,':: I':
,j'd/I'111'il!
1.,,1 'IJ)l,r,iL') Illli"ll-
1/1 t.lil
.'
'I ii, 1,'
'I.
i ITL.I','!' 1'1',1 '.)j,:
I /'_:'\!' H ;,/ I [,'\ ':'11,111 ,,! '1'}J'II!f~h'L.A~V.:
" t., "Iill}! './.J,il,\, J:.y I', ill'IUill 1,1' (3H/\H(H~ vt;: ";,\, p.l'}~,l.l,"r:: !'lI\N/t~?Ji:.B.
/1 I,'" I I I'../ll :F '.lF !'.I11' I ,!.I'J' r'r ,~; n:l'
. I .j/I,1 I \ \ .; ~ '. ,I ("1,(:" I , \ h,.
..".._/
i 1]t'IJ"L/\/,riT
, , I,.,t . 'j '" r I' I, !'I' !} I 'I',
,II ,f II'.! ~ ~ 01 011_' I, , 'I'. " I ...}. I I I'll", II,'
"ti.III,I,I'li"i 1'.1 thl ':'"!l':"lll:; thl;'tP"!
h" I I '. ! I;.. I
r " , I li<
,
/1 I "
I\! I ..1;',') I. ,
:1; , !'I;' I I'
'V ~
~.1J:......_~.<. -r __yo. .~
P.. 'I'ilil
i.-, [i';
i;}.,'i
C;'I;\
r
_h"
II ';'1,
1'1 i '.
'11\:1 i,i'
" i~
,
'.
1'111 ,1/\"'1, ,\/;(
I~'I' I ' L -I I' ) I
l.' ' .. ~ ' I
7~~~'
':'-J.;
I I'
I f_, ,I II' I"~.
l,~
'.1.
~
'!
'il,.
Lh'-'-C;~I~'
....'
..,_1..'
.IIi.
II.
I'i IIi! 'i
I; 1,1 ,',1.
. /,
r ~ I
'.'1' .,1-1
"I"'i'I',J' -,1
I I ',1',/",
I! 'II !' I. n ~ I: ,'i! 'i /, rl I i\
Iljllll, ',_1...\ Hll
t'\'f:'!!\!1
,:,r:
V':'
\,,\I.L/,',!II-i' '/\11['. I. ET "~I.
!.,LI1'I,I'!, II rl'f L:IL.' \'lJ-j'I. .' I
t.: l 'I' I \Ii I iJ I lYl:'I,; : >1\'1 111:,IJI\"
" " ., I '''''''1 I.' ('1,.1:\: ,111\ ) V):
, "I': I Ii I ,! ,0. I l"l , j
,
'Ii' II"
\il'l' , 1 J' I 'il 1,1'..'1\" , " ':'~h,;' I I f l: I) 1.
,
I., , 11'1 ,tll I Y .,'I,J1l1 ,', .,ll.!"(lr ,j , nIl
." ;) ; ~ /1;1.'[" '/(,.,01
I h..!
lid ,j,j'" , \ 1'\ '. ~.'
':IIi'!I'I-:I/I.M1.l' ,
,Il/lh/III '/1: , /\1 Ill, I. I 1;:1,': f'I,\Nt"fif':r.,
( '; !r'an:l,' /.: Iii I,;' Ill! j t ~I. I' "'1 'II'; i' "., II Jj. '~.t]l'
,. . ~
J Vi I ; j ~i
I t,l,' '.'\ t Ilil
''.ill 1../\ I 11 r
'1111111
......,.11.;, "I-TI/j\' 1\
. r \ J ~ '
li(; '/l'/'lId..I'::'7 h.HldJI'I,l' t,"
1\'1" .IlfY' i)J\!,P:. 1)/:" [~H"I..I:'.:'I't~~.trJ.
,
"
'"
'llt":,:I,,'..1
p',' ,'I t. L..
,'.'1 Ii'\l'il,.ll 1,1.IT
';'1' Ii
-c, I! ,j NIT/, ILl.'
,.,
III,j ,(1
11'" :).irlll..'
J !Ill..' , ,I 1 I. ~-".' to, J flll I! I I
I! t I 11!'IIi[1
it i .,,-.t'I""'I';;
I p-' I~ I." "I l' .
',' ,. "I,
1.\,:1
1.1(',
'~. ~//-!
, ...,..:;.;.'/.
,;, , 4~~~~""""-:"..~ ...-':.:~~
! , ",' r .1 I ~ . . ii, '.:- I
'I. '::" I I. ',1)
1\/ j 1'/ .\':1 ,.
',11(' !l II dl;:'
'..--'11.,
I,l,l
,F
'1'1'1"11
(,. 'I 'J I I'
'.':0 f,'I'-'/ P,ll ',1 ,.,.,'/ "'II
""i: ',"1 \'1':\'
Ilfi.,'
/7 ~ 1iY'..~~."
.:"",
"
ilL",.! 'I
i ""1'
l.~
If(.
Ch- (1. ~,~at., ,!;J,di
-I',
I4r
..
. 11,,1- IIi "
/ ~ t I I I, I;
1.[-1 III ,\
I II' (, ril': ,. I' H: \.'.' \'l',l I)
1,!!1r-I'!rll,oj'l,'\! III 1'11.' 1',l.:IHI'j'/!.VAh' 1\:
'11'!j!', 11" 1111111/!n ArH;
I d',III':,' t'J ',\'; I,lfl
V: .,
'_it\I.I.,",I:H{' ~~ I Mil: ," 1-: I<T 1\1.
,
I (JI'II",!. 1. I 1\ iI'. i' '.'1,11 \ I
I'll/lIt }"\'J,lIil., \II:
'~,J)I-.I j!" r,ll lll_lP\Jt.j '.:;h,jl~jr( u1'
I; II.<J ,II" \.'/ ;J\II' I'r! "H__", 1)1 jfj 1111
1.1:1.\"" 1111'1'1-,/1' IU'"'" ,II
"
,ll-/. '.;,\ r'; I t, I". 1i, 1 i h I I j I 1 )f111, 1\ I !~ I
\(.\:') :11,.'l"'I'-.,./
l'I,,'n
r,:<I;J/\FlJrE ,r:-I~oI.;tI)'I\ i' ~(/ll ',/,\Tl.:,t. 1'!\t/!:1I") ~J(..
1;1<; 1"",: ," I' {tiN. .1 f1,'
tIll'
,j"I' J,I! ,II'
;j',
'1.~'1/')"';["~,~1, 1lt"1:lh":, "Ii' I',.
. ~ I I' !, '.,.: I '~I '. / 1" /'1.:, i'
I A!l.',\ :: 1 r
.'
UI'IIe'.'( 1,I".I"T
l't, 1 'I,)j
'" H' II
'11/,1'
"I'jll:.'r'\'/"III."I,
1'"
rlllj',flll,'l
. ,II M.:',,Il
I. ('Itlt: 1.,/\ r N r
','1-:
"~'I
11',
, . , I 11[' I: Ii I Mj r~
('1'[" I,' ~:;,11MIf\(;r.:ri.
Ii'
,\Ij:\ . I t. t:',.' t.I,'.,! ''''\1'/ " I I I"
." .. ".11 II' '[ ,.~'I I.
"i' r'"
1111/ .t I
\1"
.'11111'
1 'ill' ,d 1.1 (,,' I ! '1,1 Il,: I
II I ''1,1,1 II t.
1 11, ,'( Ii'!~, I-'It \ 'I
h,:"( I.';) f.
:".1
f~ j I,
,I;!
".1,_',:
1 oj .i'1 j I
'r-, \1, /(.,'
'r',
P/#::-~~~
1 ,~ ! ; " i , ,I. 1.:
ji
'1'1
,I l['ll.:
'., '/I;J
111:'1'
r/Hi)
1"
"'!
" !" , 'II
," "",:" n ~ 1 . ,I ..
i" 1, \
'7 ~ 1I#~'':*4rI3f,
."
f:
(,~
'/I..
l1'\~
\'-h~
a.
I
1\\.. Q.l.
, ' ,
,~
!!:-,I.!! I,', :,III)!.'11
r." 11'.11
I\,.,r. fll': \'.1':1 1,1, II. I'
I l)i")~!"q','j! I\l.l!l r,'l' I i:'NW '{l,VAtll 1'.:
I j ['j '-I In. j (~t1l.11: I,' I ,\ tll'l
[.11' i . 'j,F;!', I.. r r'lll I:~ )'.' I .Y /,
",'
',J,
MI"r:"I,U: n ~ ';.Ii ~ \ r II ',h
j';r:ron.I.I! ,L., (;JI,i lr;rrr
'II ill! '~_' I. I h tlli I 'I j' '.! ',',
, ..
,
::"jj-l'.'( 1 l' t I)~ r>,ljJ\.Ii '/ ~:;tlt..) t (f I) l.
"'llfl;'I,',l:",dpJ,J, wrll: I).-..'ll,/ :~d!~I'
'lIl,II"1 ,j,..,'::I)L di.ll'.l
, ,
I"
1\0,',
",
, '
',I", W J '1"" !"Erl'J'!';!: r [1;iI'l F'li}~1 Al'U:;F
, .... ~. (;~ ~:I.: L' 'J I} d
Ilf"'J/l
l'n::'I'::::,l:lj I'F.lF,h ],' 1.1 .II..
I: hi:.'
.ji_'t'I'li.j,jI1t
,j, I
,.1 ;,"1' \ : \.',11,'\ 1l11l.JI"~ ", I; I. 1_ hi,
.1 nt. ,J,l,/ .i! f1'D',
r '.! ., " , I',: r' I.i.A" ,.:1\',: ,.: ~;
'." 1\ i' ;. I ,( I', [;' A '.' I~l Jt .J ,
,"1111'11.:1\'[ AVI':
, ",-.,,"
, I !,I 11 Br;f1L.11m
"
f' , "J ~ 1 I. 'I ,
rlflL>:tl',';'Jlil'J, tl,/ h'Hiljl,li\~ l,.j IHJhf.'l': ,Il. t11':T::~)r~t, 11'.:,>_.
" '_11.11' .ifll ,jl I ,,;.:I_P'.1 ";"'1',' I) It,ll"
FE')lF:':r 11,111 F'h'!:1 A '111',1';
· ',liJ','l.I,., J ~J \.t' '~I,rlljUlitd;y rRI.IT:::" iTl:rll "I.~lil':1'i
111'-' ..l~ tll'." :jIlH.' I J!lI.~' dll'i"('t inl.. HI. '-J\:l".'I\l.t"'11 t,.' '_h,;
'illl. 'r:1 I t'.tJl;J .>I! ~.
:),'-'J \ if ('/l, t,.
"'""":'. (l,[,'/
'II
",~~~~~
1.11, [",', ':\
I I
':'J ','\
(I,III,fd'.'il'
'.;;ul'_:h i("/('
I.n. 'ill;l
..~. r.1 '~I
. I"l!,~
:.:.,1:)1,'
ll'""II>,;
') ="1, ,n,I,j
l,lIt'.;'I/'(.i,I;,I,11'1;"1
r
.' ", ,'I
c.'t'
ql,. ,
Cj,~
111,_',) t,
,[
l~
c,~ .~..
r ),',,', I .' i ).------,J '
-
JASON J. GEHMAN
Plaintiff
IN TIlE COURT OF COMMOl-r PLEAS
CUMBERLAND COUNTY, PENNSYLVANIA
v.
JAMES E. GALLAGHER, PETER
A. O'SHEA and RELIABLE
FOUNDATION WATER PROOFING
AND RESTORATION, INC. and
AMERICAN BASEMENT SYSTEMS,
INC.
CIVIL ACTION - LAW
NO. 2344 - S - 1996
Defendant
PRABCIPB 'OR BNTRY or APP~\HCE
TO: PROTHONOTARY
Please enter the appearance of the undersigned as attorneys
for the Defendants in the above-captioned matter.
'l'HOMAS, THOMAS & HAFER
By /7;L. /~r;." 2
. ~ Ga~ire
Attorney No. 26149
305 North Front Street
P.O. Box 999
Harrisburg, PA 17108
(717) 255-7648
Dated: f... ~~ -f~
Ii
"
.'
, ,
r:: ,,}
,..
; ;'!J ,
l,l,I' :. .'r;
, ,. "
f'"
.. , I";'
("
Co:.. :1-.1
Ii:') "".t
{
~'\I , 'J " ;
L.: , .' ,j
I"
I ,'...
l'.. , ~ .J
() ;,'
I~, , , J
"
\.,
.
,
MOTION rOR MORE SP.CIrIC PLBADING
3. Plaintiff has made numerous allegations of fraud in the
Complaint which must be pleaded with specificity pursuant to Pa. R.
Civ. P. 1019(b).
4. Plaintiff has not pleaded fraud with the required
r;pecif icity.
5. Paragraph 9. d. of the Complaint alleges a pattern of
conduct constituting tax fraud including taking payment in kind
from customers and diverting funds and not properly reporting
income on relevant income tax returns; Plaintiffs should be made to
specifically plead dates, times, places, amounts, and who is being
referred to.
6. In Paragraph 9.e. of the Complaint it is alieged that the
individual Defendants directed leads away from Plaintiff and kept
information essential to the operations of the business; Plaintiffs
should be made to plead specifica as to who, where, when and what
is being referred to both in terms of "leads" and "informatioll."
7. paragraph 7.f. of the Complaint alleges that the
Defendants removed certain assets of ASS to their own use including
income, equipment, receivables, customer lists and prospects and
paid personal expenses and obligations out of corporate assets
without pleading any specifics ao to who, what, where or when or
amounts.
- 2 -
CBRTIPICATB OP SIRVICI
I, RANDALL G. GALE, IlSgUIRB, Attorney for Defendants, do
hereby certify that a copy of the foregoing PRILIMINARY OBJBCTIONS
or DEPBNDAHTS was served upon the following by enclosing a true and
correct copy in envelopes addressed as follows, postage prepaid,
and deposit.ing same
in the Uni ted
,').g't~ day of
States Mail at Harrisburg,
Luther E. Milspaw, Jr., Esquire
MILSPAW & BESHORE
130 State Street
P.O. Box 946
Harrisburg, PA 17108-0946
?t~ L~7
, 1996:
Pennsylvania, on the
THOMAS, THOMAS & HAFER
BY_&~d{4f~~re
305 North Front Street
P.O. Box 999
Harrisburg, PA 17308
(717) 255-7648
,
- 4 -
. \
. ,
"
I'
, ,
"
~I~ H) .. .
l'
tt/ l OJ, , ,
( .
I .,
I '.
l I
, , :1
, !
t, ,
t -'I' I
I . ,
" .' ,
, , , .,
,. , \
"