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3, all or nbout December 7, 1998, Petitioner, PNC Bllllk, N,A., Executor ef
the Estllt/! ofWlIlllIlll G, MlIgllro, flied IIn Allswel' to the Hule to Show Clluse dllted
November 10, 1998 1I1ld moved this Court for blful'Clltloll on tho Issue llfpllynwlIl of
lIuorney's fees IInd expellses In the 1I11l0UlIl of $,11 ,952,:.18,
4, By two sepnrllte Ol'(h~I's dUled Dl!cembel' 8, !flfl8, this Courtupprovl!d the
Petition 1'01' ApprovlII of Seulelllclltlnvolvlng dcccdl!nt's l!~tutcs but sHlycd IIIlY pllymCnl
for IIltomeys' fees pending flll'thcl' Ol'dor of Court.
5, As thc rcsult of this COUl't'S Ordcl'~ of DCCelllbl!r 8, 1998 IIpprovlng the
PI'opo~ed sculement, counsel for Pin In tilT rccelvl!d In Dccelllber 1998 the totnl sUIll of
$fl05,854,67,
6. After discussions with coullscl for PhlllllllT, thl! underslgncd counsel
prcpllred nnd fOl'Wllrdcd In J'lllU'lry 1999 II proposed sllpulnllon permlulng the
distribution of $463,902,29 In uccordullcc with the l'cspectlvc pnl'tllcrshlp Interests of
the estute of WlIlhulI G. Mllgul'O (75%) ulld the esllllc of Duvld W, Mugllro (25%) In the
gelleral partnership known liS Varlcty Investlllents, Said sllpulallon proposed that the
remallllng $41,952.38 (plus Interestllccrulng during the period of cscrow) stay In the
escrow uccount of Gntes & Assoclntes pelldlllg furthcr Order of Court,
7, Counsel for Plaintiff ulso IIgreed to provide Itemized bUls for services
rendered In connection wlth this lIlaUer for review by ulllnterested purlles,
2
8, On Februllry II, IOf)!), till! undurHIKnl!d coullHcl COITI!HllOlldl!d with
counsel for Plnlntlff IIl1d nlll!lllptud tll duterlllllll! tho HlUtUH of tho PI'lIlJOHCd stlpUllIllolI
liS well ns tho stntus of Plllhnlll'H counHol'H Ihlllllzcd HtlltlllllelllH lill' Hlll'vlccs rlllldorlld III
conllllctlolI with thlH IIHllll!I',
0, l3y IClllll' dllllld FllIll'UII1'}':l:l, lfmO, thll UUdlll'HIKlled clIunHell'clJUllstlld
coulIslll for Plllllltlll' to l')(pcdlte thu plU'l11l1 dlHll'lhutlon clIlltclllpllltllll by till! pl'oposlld
sllpulllllon nH well ns thll (ll'llductlon of Illlllll~,ed stllllllnuntH (01' thll l'ulllnlnlnl4lBBUll of
nttor/IllY's flles hlclII'l'ed hy Ihe Pllllnlll1', A Il'ue IllId COl'rllct cUPY uf Bllld ClIl'l'I!S(lOlldllnCe
Is nllnched herelo IInd lllinlll II plll't hUl'euf ns Exhlhlt "A,"
10, Dcspllll the pllBBlIl4e of over two nlollths, counsd fill' Plllhnlll' hilS (hlled to
tllke IIllY Ilctlonlo dlstrlhulll thll pl'ocecdB of till! (ll'O(lUBlld sCllllllllllllltO PulIllollel' who
Is enlltled to I'ecetve 75% of the proceeds, CoulIsel fill' Plnlllllll' hns IIlso refused lllld
contlllues to l'efuse to produce III1Y Itellllzed HlnlelllelllS fur sel'vtces rUlldel'ed III
conneclloll with thllllllnller despite Plaintiffs request fOI' l'ellllburselllent III the nmoulll
of $41 ,052,38,
II, Pellllrmer Is enlltled to II Imrllnl distribution of the settlelllellt proceedR In
the wtnl 1I1l10Ulll of $347,026,72 plus ncorued IlIlerest thereoll,
12, Petitioner Is elllltled to Ilellllzed stlltelllellts uf the nttorney's fellS cltllllled
by Plnlntlff III her petition for npprovnl of Helllement Involving decedent's estlltes.
3
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MARII K. KAQARO, ADHINIBTRATRIX I IN THI COURT 0' CONNON 'LIAS
C.T.A. or THB IBTATI 01" DAVID I CUHBBRLAND COUNTY, 'JlNNBY1NMIA
W. KAQARO, DBCSABBD, LIQUIDATOR I
0' DAVID W. HAQARO, CICSABID, I CIVIL ACTION . LAW
MD WILLIAM G. HAGARO, I
DICSABID, late tradinq a. I
VARIBTY INVIBTMBNTS, a general I NO. 96.4256 CIVIL TIRN 1996
partnerlhip, I
Plaintiff, I
I
VI. I
I
I'HBLAJtO, INC., et a1., I
Defendant.. I
ANBweR ~O PBTITION 01" PNe BANK, N,A, FOR
PARTIAL DISTRIBUTION OF BBTTLIUIBNT PROellDB
ANP NOW, comes Marie K. Maqaro (hereinafter "Plaintiff"),
administratrix c.t.a, of the estate of David W. Maqaro, by and
throuqh her attorneys, Gates & Associates, P,C., and makes the
fOllowing answer to the Petition of PNC Bank, N.A. (hereinafter
"PNC Bank") for Partial Distribution of Settlement Proceeds and the
Rule issued on said petition on March 11, 19991
1. Admi t ted.
2.
Admitted.
By way of further answer, the settlement
agreement referenced in the RUle provided for a lump sum payment in
the amount of $505,854.67 f rom Defendants to Plaintif f in her
capacity as liquidating partner of the variety Investments
partnership. As more fully explained in Plaintiff's underlying
petition for Approval of Settlement InVOlving Decedents' Estates,
the Variety Investments partnership is owned by the estate of
William G. Maqaro, deceased, and the estate of David W. Magaro,
deoeased, in 75\ and 25\ shareB, respectively, The .41,952,3B in
loqal fees and expenses, which are referred to in the RUle and for
whioh reimbursement is souqht, are the leqal fees and expenses
incurred by Plaintiff solely in connection with the above-oaptioned.
litiqation.
3. Admitted. See ~4, below.
4. Admitted. By way of further answer, in the morning of
December B, 199B, Plaintiff'S counsel filed a petition to makG the
settlement approval RUle absolute and presented the petition to
Hon. J. WeSley Oler who reviewed the petition and signed an order
makinq the Rule abllolut.e. Unbeknownst to ei ther Plaintiff 's
counselor JUdge Oler, PNC Bank had filed an answer to the Rule on
December ?, 1998, The answer had apparently been "clocked in" by
the Prothonotary but had been left at the chambers of Hon. George
E. Hoffer before being entered on the docket. Upon learning of PNC
Bank's answer, JUdge Oler issued a modified order approvinq the
settlement with instructions that the legal fees and expenses not
be paid from the settlement proceeds until further order.
5. Admitted. By way of further answer, the settlement
proceeds were placed in an escrow account maintained by Plaintiff'S
attorneys, Gates & Associates, P.C.
6. Admitted.
7. Denied. Plaintiff'S counse 1 never aqreed to provide
itemized statements, but there were discussions between counsel
that such stataments might be exchanged for an accountinq of PNC
2
Bank's transaotions vis-a'vis Va~iety Investments' assets from the
death of William Q, Magaro to the present,
8. Admitted.
9. Admitted that the attached l.etter was sent and that sald
lette~ speaks for it~elf.
10. Admitted in part, and denied in pa~t. It is admitted
that Plaintiff has not distributed any porLion of the settlement
p~ooeeds to PNC Bank or provided PNC Bank wlth any billing
statements. It is further admitted that PNC Bank, as executor of
the estate of William G. Magaro, deceased, has a 75\ ownership
inte~est in the Variety Investments partnership. It is denied that
PNC Bank is entitled to receive 75\ of thu settlement proceeds held
in escrow by Plaintl.f f I S counsel.
11. Denied. PNC Bank, as executor of the William G. Magaro
estate, is entitled to receive 75\ of the net settlement p~oceeds
remaining after payment of all attorney fees and othe~ costs
incur~ed by Plaintiff in liquidating the Va~iQty Investments
pa~tne~ship, including but not limited to the attorney fees and
expenses associated with the above-captioned litigation. The total
amount of such fees and costs cannot yet be det,ermined as the
pa~tnership liquidation is not complete. Plaintiff proposes to
dist~ibute the sum of $444,000.00 pro rata to the William G. Maga~o
estate (75\) and David W. Magaro estate (25\) pending final
liquidation of the Va~iety Investments pa~tnership. Plaintiff
anticipates that the liquidation process will include, but not
3
neoessarily be limited to, the negotiation and settlement of the
partnership's remaining claims, an acoountinl1 of I?NC Bank'o
transactions vis.a.vis partnership assets, and the preparation of
the partnerships' final tax return.
12. Denied as a conclusion of law rOQuirinq no response. 'ro
the extent a response is reQuirod, PNC Bank's counsel has
represented to Plaintiff's counsel that PNC Bank has no objeotion
to Plaintiff's legal fees and expenses and that the itemized f.ee
statements are intended to be shared with the William G. Maqaro
estate beneficiaries so that they can evaluate the fees and
expenses and determine whether to object to the same. However,
this procedure is unnecessary and redundant. Plaintiff's Petition
for Approval of Settlement Involving Decedents' Estate, and the
RUle issued thereon, were served upon all persons beneficially
interested in either the William G. Maqaro estate or David W.
Magaro estate. Said petition requested approval to pay Pldntiff' s
le'lal fees and expenses from the qross settlement proceeds. None
of. the benef iciaries in either estate obj ected to the petition
'lenerally or to the leqal fees and expenses specifically, and they
need not be given another opportunity to do so now that the
settlement with Defendants is completed. Furthermore, PNC Bank aa
executor has no beneficial inter'est in the William G. Ma'laro
estate's share of the settlement proceeds and should not be heard
to object to Plaintiff's leqal fees and expenses when the estate's
beneficiaries have not so objected.
4
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'7UIUIU..I\OOI) 17111 YIUHNlIl
hf'P 1/WNw IflIlI. corn
AJlI'Il 2, 1999
The Honorable J, Wesley aiel', Jr,
Cumberland CoulllY Coul'thouse
I Courthouse Squnl'e
Carlisle, PA 17013
R.e: Mam K. Manam, Admlnmtratrix C,'I'.A. oftIUJ Estate ofDavtd W, Manam,
Deceased, UquWntor of David W, Manam, lJecewied., and WlUlam G, Magam,
lJececued, late tra.cUng as Vartety lnvestmenm v. 11helam, Inc" et aL
Petition of PNC Bank for PnJ11al DIsUibutlon of Settlement ProntworlN
Denr Judge aleI':
As youI' HOllOI' may I'ecall, the undel'slglled Is counsel to PNC Blll1k, N,A"
Executor of the Estnte of WJIIlnm G. Magnl"o, On behalf of PNC Bnllk, we flied n
Petition fol' Pnrtlnl Distribution of Seulemelll Pl'oceeds nnd soughtltellllzed stntements
of Gntes & AssochHes on the Issue of allorneys' fees. PUl'sunlllto the Petition, Q rule to
show CIluse wns Issued 011 Mal'ch 11, 1999,
On March 31, 1999, Mark E. Halhl'uner, Esqull'e, of Gates & Associates, coullsel
to the IIquld'Hlng pal'tnel', Mal'ie K. Mag,ll'O, Admlnlstratl'lx C,T,A, of the Estate of
David W, Magaro, flied an Answer to PNC Bank's Petllloll,
On behalf of Pelltloncl' PNC B'lIlk, I respectfully I'equestthat your Honor
schedule this mauel' fol' a bl'lef meetlngllll'gtImelll on the two subjects set forth In the
Petition and Answel', to wit:
(I) The pal'lIal distribution of proceeds (which have been held In the escrow
account of Gates & Assoclntes for approximately fOUl' months);
(2) itemized statements of Gates & Assoclntes for the $41,952,38 In legal fees
Ilnd eXJlenses,
APR - 5 Il99
HAlII K. HAQARO, ADMINISTRATRIX
C.T.A. or THI IBTATI 0' DAVID
W. KAOARO, DICSABID, LIQUIDATOR
or DAVID W. MAGARO, DICSASID,
AND WILLIAN G. KAGARO,
DICIASBD, late tradinq al
VARIBTY INVISTMBNTS, a 'leneral
partnerlhip,
IN THB COURT or COMMON 'LIAS
CUNBBRLANDCOUNTY, 'INNSYLVAHIA
CIVIL ACTION
LAW
NO. 'If.. ./.) f...
CIVIL TIIUI 199&
Plaintiff ,
VI.
PHILARO, INC., a Pennlylvania
corporation, PABT IDDIB'S
BILLIARD PARLOR' SALOON, INC.,
a 'ennlylvania oorporation,
RICHARD B. PHlLAN, LIQUIDATOR
0' RICHARD I. PHBLAN AND
WILLIAM G. MAGMO, tJBCBASID,
late tradin'l al HAGARO'PHlLAN,
a general partnerBhip, and
RICHARD B. PHlLAN, individually,
DefendantB.
COMPLAINT
AND NOW, cornea the plaintiff, Marie K. Magaro, in her oapa9ity
as administratrix c, to a. of the estate of David W. Ma'laro,
decessed, liquidator of Variety Investments, a general partnenhip,
by and throuqh her counael, Gates & Associates, P.C., and makes the
following complaintl
1. Variety Investments was a general partnership registered
as a fictitious name with the Pennsylvania Department of State,
Corporation Bureau, and having its principal place of business at
354 Sturnpstown Road, Mechanicsburq, Cumberland County, Pennsylvania
17055.
2. Variety Investments was owned by David W. Maqaro as 25\
general partneJ:' and by William o. MagaJ:'o as 75\ general paJ:'tner.
3, William G. Magaro died Juna 6, 1990, leaving David W.
Maqaro the sole surviving partner.
4, David W, Maqaro died October 10, 1995.
5, Plaintiff ia the administratrix c.t.a. of the estate of
David W. Magaro.
6. Upon information and belief, Defendant PhelarQ, Inc. is
a Pennsylvania corporation with ita principal offices at 114 East
Allen Street, Mechanicsburq, Cumberland County, Pennsylvania 17055.
7, Upon information and belief, Defendant Fast Eddie's
Billisrd Parlor & Saloon, Inc. (hereinafter "Fast Eddie's") is a
Pennllylvania corporation wi th its principal of f ices at 114 East
Allen Street, Mechanicsburg, Cumberland Cotmty, Pennsylvania 17055.
6, Magaro - Phelan was a general partnership which had its
principal place of business at 114 East Allen street,
Mechenicsburq, Cumberland county, Pennsylvania 17055.
9, Defendant Richar.d E. Phelan is an adult individual now
residing at 735 South Hanover Street, carlisle, Cumberland county,
Pennsylvania 17013.
10. Upon information and belief, Magaro-Phelan was owned by
Richard E. Phelan as 50% general partner and by William G. Magaro
as 50% general partner.
11. Upon the death of William G. Magaro, Magaro-Phelan was
dissolved, and Richard E. Phelan assumed the duty of winding up the
partnerShip's affairs.
2
COUN'l' I
BibeR or CONTRACT BY PHILARO, INC.
12. Paral1raphs 1 throu9h 11 of this complaint are herein
inoorporated by reference.
13, On or about April 16, 1979, variety Investments loaned
$30,000,00 to Phelaro, Inc,
14. On or about December 14, 1979, Variety Investments loaned
$10,000.00 to Phelaro, Inc.
15. In or about April, 1980, varioty Investments loaned
.30,000.00 to Phelaro, Inc.
16. In or about May, 1980, Variety Investments loaned
.25,000,00 to Phelaro, Inc.
17, In or about June, 1980, Variety Investments loaned
.30,000.00 to Phelaro, Inc.
lB. In or about June, 19BO, variety Investments loaned an
additional $3,000.00 to Phelaro, Inc.
19, In or about August, 1980, Variety Investments loaned
$15,000.00 to Phelaro, Inc.
20. On or about December 4, 1980, Variety Investments loaned
$15,000.00 to Phelaro, Inc.
21. On or about September 1, 19B1, Variety Investments loaned
$0,000.00 to Phelaro, Inc.
22. On or about September 17, 1981, Variety Investments
loaned $3,000.00 to Phelaro, Inc.
23. On or about October 16, 19B1, Variety Investments loaned
3
. r ~..~
.5,000.00 to Phelaro, IIIe.
24. on or about AugUBt 2, 1982, Variety Investments loaned
.6,000.00 to Phelaro, Inc.
25. On or about September 7, 1982, Variety Invostments loaned
.10,000.00 to Phelaro, Inc.
26. In or about September, 1982, Variety Investments loaned
an additional $8,000.00 to Phelaro, Inc.
27. On or about October 16, 1982, Variety Investments loaned
$10,000.00 to Phelaro, Inc.
28. On or about November 8, 1982, Variety Investments loaned
$10,000.00 to Phelaro, Inc.
29. On or about December 14, 1982, Variety Investments loaned
$10,000.00 to Phelaro, Inc.
30. On or about February 11, 1983, Variety Investments loaned
$10,000.00 to Phelaro, Inc.
31. On or about July 14, 1963, Variety Investments loaned
$7,000.00 to Phelaro, Inc.
32. On or about August 11, 1963, Variety Investments loaned
$8,000.00 to Phelaro, Inc.
33. On or about November 15, 1963, Variety Investments loaned
$5,000.00 to Phelaro, Inc.
34, On or about December 19, 1963, Variety Investments loaned
$6,000.00 to Phelaro, Inc.
35. On or about February 6, 1964, variety Investments loaned
$46,000.00 to Phelaro, Inc.
4
36, On or about May 11l, 1984, Variety Investments loaned
,
.120,000,00 to Phelaro, Inc.
37, On May 31, 1996, Variety Investments demanded payment of
the principal amount of the loans plus simple interest at 6\
calculated from the date of the loans.
38. '1'0 date, Phelaro, Inc. has made no payments of pri ncipal
or interest.
""IRIPOII.II, Plnintiff demands jUdgment against Phelaro, Ino.
for principal and interest in the amount of .796, B80 ,00, plus
costs, attorney fees and additional interest accruinq durinq the
pendency of this action.
COUNT II
BRBACH OP CONTRACT BY PAST BOOII'S
BI~~IARP PAR~OR , aALOON. INC.
39. Paragraphs 1 through 38 of this complaint are herein
incorporated by reference.
40. On or about May 3, 1990, Variety Investments loaned
.40,000.00 to Fast Eddie's.
41. The principal amount of the loan, toqether with interest
thereon at the rate of ten percent (10\) per year I was to be repaid
in equal monthly installments based on a fifteen (15) year
amorti zatj,on.
42. Fast Eddie's is in default of its r~payment obliqations,
43. The current balance of principal and accrued interest is
.59,328.33.
""IRIPORI, Plaint if f demands judgment against Fast Eddie's for
5
prinoipal and interest in the umount of $59,328.33, plus cOltl,
attorney feel and additional interest accruing during the pendency
of this action,
COUNT X II
BRIACH OP CONTRACT JlY MAGMO. PHlt.AN
44. Paragraphs 1 through 43 of. this complaint are herein
inoorporated by reference.
45. In or about May 1990, Variety Investments loaned
$40,000.00 to Magaro.Phelan.
46. On May 31, 1996, Plaintiff demanded payment from Richard
E. Phelan of the principal amount of the loan plus simple interest
at 6\ calculated from the data of the loan.
47. To date, no pa~nents of principal or interest have been
made on the loan.
WHBRBPORB, Plaintiff demands jUdgment against Richard l!l.
Phelan as J. iquidator of Magaro. Phelan for principal and interest in
the amount of $54,600.00, plus costa, attorney fees and additional
interest accruing during the pendency of this action.
COUNT IV
BRBACH OF CONTRACT BY RICHARD B. PHBLAN
48. Pat'agraphs 1 through 47 of this complaint are herein
incorporated by reference.
49. On or about September 6, 1983, Variety Investments loaned
$5,000.00 to Richard E. Phelan.
50. On May 31, 1996, Variety Investments demanded payment of
the principal amount of the loans plus simple interest at 6\
6
calculatfld from the date of the loans.
51. To date, Richard E. Phelan hils made no payments of
principal or interest,
""IRlrORB, Plaintiff demands Judgment against Richard E.
Phelan for principal and interest in the amount of $8,850.00, plus
costs, attorney fees and additional interest accruing during the
pendency of this action.
COUNT V
INDIVIDUAL LIABILITY or RICHARD B. PHBLAN
rOR OBLIGATIONS or PHBLARO, IN~.
52. Paragraphs 1 through 51 of this complaint are herein
incorporated by reference.
53. Upon information and belief, Richard E. Phelan is the
majority stockholder, sole director and president of Phelaro, Inc.
54. At all times relevant hereto, Richard E. Phelan has
individually controlled the operations and affairs of Phelaro, Inc.
55. Upon information and belief, Phelaro, Inc. has failed to
pay dividends to its shareholders during the time period relevant
hereto.
56. Upon information and belief, wi th the exception of
Richard E. Phelan, no other officers or directors have taken part
in the management of Phelaro, Inc. during the time period relevant
hereto.
57. Upon information and belief, durinq the time period
relevant hereto, Phelaro, Inc. has failed to observe corporate
formalities incLUding, without limitation, the hOldinq of annual
7
directors' and shareholder.s' meetinqs, the eleotion of direotors,
and the keepinq of corporate minutes and ot.her reGords,
58. upon information and bollef, Ilichard J!l. Phelan has
comminqled his personal funds with the funds of Phelaro, Ino. and
has siphoned off corporate funds for his personal use.
59. Richard E. Phelan has operated Phelaro, Inc. as an alter
eqo of himself and should, therefore, be required to individually
satisfy the corporation'S obligations to variety Investments.
WHIRlrORB, plaintiff: domands judgment against Richard E.
Phelan for principal and interest in the amount of $796,880.00,
plus costs, attorney fOos and additional interest accruing during
the pendency of this action,
gOUNT VI
.mpIVIDU~~ILITY 011' RICHARD B. ~t.Mi
rOR OBLIGATIONS 011' rAST BDDIB'S BILL~
PARLOR' SALOON. INC,
60. Paragraphs 1 throu'lh 59 of this complaint are herein
incorporated by reference.
61. upon information and belief, Richard E. Phelan is the
majority stockholder, sole director and president of Fast Eddie'S.
62. At all times relevant hereto, Richard E. Phelan has
individually controlled the operations and affairs of Fast Eddie'S.
63. upon information and belief, Fast Eddie'S has failed to
pay dividends to its shareholders during the time periOd relevant
hereto.
64. upon information and bellef, with the exception of
B
Richard m, Phelan, no other officers or direotors have taken part
in the manaQement of Past Eddie's during the time period relevant
hereto.
65. Upon information and belief, durinq the time pe~iod
relevant hereto, Fast Bddie I s has fa lled to observe corporate
fOrJnali tios includinq, wi thout limitation, the hOldinq of annusl
directors' and shareholders' meetings, the election of directors,
ftnd the keepinq of corpor.ate minutes and other records.
66. Upon information and belief, Richard Ill. Phelan has
conuninq led his personal funds wi th the funds of Fast Eddie's and
has siphoned off corporate funds for his personal use.
67. Richard E. Phelan has operated Fast Eddie's as an alter
ego of himself and should, therefore, be required to individually
satisfy the corporation'S obligations to Variety Investments.
WHIlRBPOR2, Plaintiff demands Judgment against Richard E.
Phelan for principal and interest in the amount of $59,328.33, plus
costs, attorney fees and additional interest accruing during the
pendency of this action.
Respectfully submitted,
GATES &
DATED I
7-L~
t'{ ::..'"
Mark E. albruncr, Bquire
Supreme Court I.D. n66737
1013 Mumma Road, Suite 100
L~moyne, PA 17043
(717) 731-9600
(Attorneys for Plaintiff)
, 1996
9
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MARIE K. MAGARO, ADMINISTRATRIX : IN 'l'HE COURT OF COMMON PLEAS
C,T.A. OF THE ESTATE OF DAVID : CUMBERLAND COUN'l'Y, PA
W, MAGARO, DECEASED, LIQUIDATOR
OF DAVID W, MAGARO, DECEASED, CIVIL AC'rlON. LAW
AND WILLIAM G, MAGARO,
DECEASED, late trndlng as
VARIETY INVESTMENTS, n general NO, 96.4256 CIVIL TERM 1996
partncrBhlp,
PlnlntllTs
v,
PHELARO, INC., 11 Pennsylvania
corporntlon, FAST EDDlE'S
BILLIARD PARLOR & SALOON, INC"
a Pennsylvnnla corporation,
RICHARD E. PHELAN, LIQUIDATOR
OF RICHARD E. PHELAN AND
WILLIAM G. MAGARO, DECEASED,
late trading as MAGARO.PHELAN,
a general partnership, and
RICHARD E, PHELAN, Indivldually,
Defendants
RUff TO SHO~ C1!!}!
AND NOW, this ~ty of ~~1.996, a Rule Is hereby Issued
to I3how cause why the Petition to Interve}l~ PNC Bank. N,A" should not be
').0 \)o..~..) ~...s lM,.V I ..-. .
granted. Rule returnable ' 1996, al 8'8181311 ,M,
-
BY THE COUltTI
/J~/~ ,jt~~J,
f'
,
I
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MARlm K. MAGARO, ADMINIS'l'RATRIX
C.T,A. OF THE ESTATE OF DAVID
W. MAGARO, DECEASED, LIQUIDATOR
OF DAVID W. MAGARO, DECEASED,
AND WILLIAM G, MAGARO,
DECEASED, late trnding all
VARIETY INVES'l'MEN'l'S, a gcmerol
portnorship,
: iN THill COURT OF COMMON PLEAS
: CUMBIllRLAND COUNTY, PA
,
,
: CIVIL ACTION. LAW
,
,
: NO, 96.4256 CIVIL TERM 1996
PlolntifTll
v.
PHELARO, INC" a Ponnllylvanlo
corporation, FAST EDDIE'S
BILLIARD PARLOR & SALOON, INC"
a Ponnllylvania corporation,
RICHARD E, PHELAN, LIQUIDATOR
OF RICHARD E. PHELAN AND
WILLIAM G, MAGARO, DECEASED,
late trading all MAGARO-PHELAN,
a genoral partnerllhip, lInd
lUCHARD E, PHELAN, individually,
Defendantll
PETITION TO IN1'ERVENE OF PNC BANK, N.A. AS EXECUTOR
OF THE ESTATE OF WILLIAM G. MAGARO
PNC Bonk, N,A. <horelnafter .PNC Bank") all executor of the Estate of
William G, Magaro, by ond through It II ottorneys, Mette, Evons & Woodside, tUes
this petition to intervone pursuant to Po, R,C,P, 2326 ot. soq,. based upon the
following:
1, Petitioner PNC Bank Is the successor-In-Interest to The First Bank
and Trust Company of Mechanlcaburg, Pennsylvania.
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MARII K. MAGARO, ADMINISTRATRIX
C.T.A. or THB ISTATR or DAVID
W. MAQARO, DBCBASBD, LIQUIDATOR
or DAVID W. MAGARO, DBCBASBD,
AND WILLIAM G. MAClARO,
DRCBASBD, late trading as
VARIBTY INVBSTMBNTS, a general
partnership,
IN THI COURT or COMMON '~BAS
CUHBBRLAND COUNTY I PIUfflSYLVANIA
CIVIL ACTION - LAW
NO. 96-4256 CIVIL TRRM 1996
Plailltiff ,
VII.
PHBLARO, INC./ et al.,
Defendants.
PLAINTIFF'S ANSWBR TO PBTITION TO INTIRVBNB
AND NOW, comelS tho Plaint,lff, Marie K. Maqaro, In her capacity
aa adminiBtratrix c.t.a. of the elltate of David W. Magar.o,
decealled, liquidator of Variety InvClstmenta, a goneral partnership,
by and through hl3r counaeL, Gatea & Aaaociatea, P.C., and makell the
followitlq answer to the pell tlon to intervene filed in the above'
captioned action by PNC Bank, N.A. (hereinafter "PNC Bank") f
1. throuqh 9. Admitted.
10. Denied. UnlasB otherwiBe agreed, the legal repreBenta'
tive of the laBt Burviving partner has the right to wind up the
partnerBhip affairB. 15 Pa.C.S. ~B359. A lawBuit by a liquidating
partner must be proBecuted in the name of the liquidating partner
in the manner Bhown in the above caption. Pa.R.C.P. 2127(b).
11. Admitted.
12. After reaBonable inveBtlgatlon, plaintiff iB without
knowledge or information sufficient to form a be1J.ef aB to the
truth of the avermentB set forth In paragraph 12, and proof thereof
is demanded if relevant.
13, Denied as a conolusion of law requ.irlnq no responsive
pleadinq,
14. Denied, Intervention by PNC Bank will both unduly delay
the trial of this action and prejudice t.ho rights of Variety
Investments, W.lth respect to Varlety Invostmontu, Plaintiff and
PNC Bank havo tho same lnterest in this action, i. e" to obtain tho
maximum recovery possiblo on the debt.s alle<Jed in the complaint.
Intervention by PNC will only duplicato and complicate the
presentation of Plaintiff'S coso. As the executor of the estate of
William G. Magaro, PNC nank is a 50% genoral partner in defendant
Magaro-Phelan. In Count III of the complaint, Plaintiff has
demanded jUdgment against Magaro-Phelan for the entire principal
balance plus interest owing on a $40,000,00 loan made by Variety
Investments to Maqaro-Phelan. This creates a conflict of interest
for PNC Bank that may prejUdice the presentation of L'laintiff' s
case. Also, PNC Bank currently controls the checking accounts for
defendant Phelaro, Inc. and its whOlly-owned subsidiary, Phelaro of
Allentown, Inc. PNC Bank has filed a separate action against
Phelaro, Inc., Phelaro of Alle~town, Inc, and Richard E. Phelan for
the purpose of recovering certain loans allegedly made to them by
William G. Magaro during his lifetime. In order to preserve
sufficient funds in the Phelaro corporations' checking accounts to
satisfy the loans allegedly owed to William G. Magaro's estate, and
perhaps for other reasons unknown to Plaintiff, PNC Bank has
delayed in releasing funds from the Checking accounts for payment
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HARII It. NAOMO, ADMINISTRATRIX I IN TKII COURT or COMMON 'LIA.
C.T.A. or TKI ISTATI or DAVID I CUNBIRLAND COUNTY, 'lIHNSYLVMXA
". MAOAKO, DIOBABID, LIQUIDATOR I
or DAVID W. MAOMO, DBCKABID, I CIVIL ACTION . LA"
AND WILLIAM G. MAGMO, I
DICBABBD, late tradinq aD I
VMIITY INVBS'~BNTS, a qeneral I NO. 9&-425& CIVIL TIltH 1995
partnership, I
Plaintiff, I
I
VI. I
I
PIIBLARO, INC., a pennsylvania
oorporation, FAST BDDIB'S
BILLIARD PMLOR 6 SALOON, INC.,
~ pennsylvania corporation,
RICHARD B. PHBLAN, LIQI1IDATOR
or RICHARD B. PHBLAN AlfD
WILLIAM G. MAGMO, DBCBASBD,
late tradinq al MAGARO'PHBLAN,
a qeneral partnerlhip, RICHARD
B. PHBLAN, individually, and
LINDA L. PHBLAN,
Defendsnts.
AMBNDBD COMPLAINT
AND NOW, comes the Plaintiff, Marie K. Maqaro, in her capacity
as administratrix c.t.a. of the estate of David W. Maqaro,
deceased, liquidator of Variety Investments, a general partnership,
by and through her counsel, Gates & Associates, P.C., and makes the
following complaint I
1. Variety Investments was a general partnership reqistered
as a ~ictitious name with the Pennsylvania Department of State,
Corporation Bureau, and having its principal place of business at
354 Stumpstown Road, Mechanicsburg, Cumberland County, pennsylvania
17055.
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2. Variety Investments was owned by David W. Magaro as 26\
9Gneral partner and by william G. Maqaro as 75\ qeneral partner.
3. William G. Magaro died June 6, 1990, leavinq David W.
Magaro the sole surviving partner.
4. David W. Maqaro died October 10, 1995.
5. Plaintiff is the administratrix c.t.a. of the estate of
David W. Magaro.
6. Upon information and belief, Defendant Phelaro, Inc.
(hereinafter "Phelaro") is a Pennsylvania corporation with its
principal offices at 114 East Allen Street, Mechanicsburq,
Cumberland County, Pennsylvania 17055.
7. Upon information and belief, Defendant Fast Eddie'S
Billiard Parlor & Saloon, Inc. (hereinafter "Fast Eddie'S") is a
Pennsylvania corporation with its principal offices at 114 East
Allen Street, Mechanicsburg, Cumberland County, Pennsylvania 17055.
B. Maqaro- Phelan was a qeneral partnership which had its
principal place of business at 114 East Allen Street,
Mechanicsburq, Cumberland County, Pennsylvania 17055.
9. Defendants Richard E. Phelan and Linda L. Phelan are a
husband and wife now residinq at 735 South Hanover Street,
Carlisle, Cumberland County, Pennsylvania 17013.
10. Upon information and belief, Maqaro-Phelan was owned by
Richard E. Phelan as 50% general partner and by William G. Maqaro
as 50% qeneral partner.
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11. Upon the death of William Q, Mogaro, Magaro.Phelan was
dissolved, and Riohard m, Phelan assumed the duty of winding up the
partnership's affairs.
COUNT I
BRBACH or CONTRA!;:T BY PHlIllARO, INC.
12. Paraqraphs 1 throuqh 11 of this compll.\int are hermin
inoorporated by referenco.
13. On or about April 20, 1979, Variety Investments loaned
'30,000.00 to Pholaro.
14. On or about December 14, 1979, Variety Inves tments loaned
'10,000.00 to Pholaro.
15. On or about April 29, 1980, Variety Investments loaned
'30,000.00 to Phelaro.
16. On or about May 27, 1980, Varioty Investments loaned
'25,000.00 to Phelaro.
17. On or about June 3, 1980, Variety Investments loaned
'30,000.00 to Phelaro.
18. On or about June 15, 1980, Variety Investments loaned
'3,000.00 to Phelaro.
19. On or about Auqust 25, 1980, Variety Investments loaned
'15,000.00 to Phelaro.
20. On or about November 24, 1980, variety Investments loaned
'10,000.00 to Phelaro.
21. On or about December 4, 1980, Variety Investments loaned
'15,000.00 to Phelaro.
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22. 01\ or about September 1, 1981/ Variety Investments loaned
.8,000.00 to Phelaro.
23. On or about September 17/ 1981/ Variety Investments
loaned .3/000.00 to Phelaro.
24. On <)r about October 16/ 1981/ Variety Investments loaned
.5/000.00 to Phelaro.
25. On or about ^uqust 2, 1982/ Variety Investments loaned
.6/000.00 to Phelaro.
26. On or about September 7/ 1982/ Variety Investments loaned
.10/000.00 to Phelaro.
27. On or about September 22/ 1982, Variety InveBtments
loaned $8/000.00 to Phelaro.
28. On or about October 15/ 1982, Variety Investments loaned
$10,000.00 to Pholaro.
29. On or about November 8, 1982/ Variety Investments loaned
$10,000.00 to Phelaro.
30. On or about December 14, 1982, Variety Invelltments loaned
'10,000.00 to Phelaro.
31. On or about Febru.ary 11, 1983, Variety Investments loaned
.10/000.00 to Pholaro.
12. On or about July 14, 1983, Var~ety Investments loaned
$7/000.00 to Phelaro.
33. On or about ^uqust 11, 1983/ Variety Investments loaned
.8,000.00 to Phelaro.
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34. On or about November 15/ 1983/ Variety Investments loaned
.5/000.00 to Phelaro.
35. On or about December 19/ 1983/ Variety Investments loaned
.8,000.00 to Phelaro.
36. On or about February 6, 1984, Variety Investments loaned
'46,000.00 to Phelaro.
37. On or about May 18, 1984, Variety Invelltments loaned
'120,000.00 to Phelaro by satisfying a debt in said amount owed by
Phelaro to Cen-Pen Industrial Park, Inc.
38. Attached hereto all Exhibit "A" and incorporated herein by
reference are copies of the cancelled checks by which the foregoing
loans were made.
39. Phelaro has made payments to Variety Investments
totalling '24,900.00 as interest owing on the foregoing loans.
40. On or about May 3, 1990, Phelaro paid Variety Investments
'40,000.00 in partial satisfaction of the principal balance of the
foregoing loans.
41. On May 31, 1996, Variety Investments demanded payment of
the prinCipal amount of the loans plus simple interest at 6\ per
year calculated from the date of the loans.
42. Except as described above, Phelaro has made no payments
of principal or interest to Variety Investments.
KHBRBPORB, Plaintiff demands jUdgment against Phelaro, Inc.
for principal and interest in the amount of '756,680.00, plus
costs, attorney fees and additional interest accruing during the
5
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pendency of this action.
COtJN'l1 II
~~~I:CC~~:~T,B~,l~g~.a~~~~'s
43. Paragraphs 1 through 42 of this complaint are herein
incorporated by reference.
44. Upon information and belief, Variety Investments loaned
'40/000.00 to Fast Eddie'S on or about May 3, 1990.
45. To date, Plaintiff has been unable to locate any writing
to document the making of the foreqoin<J loan.
46. The principal amount of. the loan, toqether with interest
thereon at the rate of 10% per year, was to be repaid in equal
monthly installments based on a fifteen (15) yoar amortization.
47. Fallt Eddie's is in default of its repayment obligations.
4B. The current balance of principal and accrued interest is
$56,000.00.
WHBRBPORB, Plaintiff demands jUdgment against Fast Eddie'S for
principal and interest in the amount of $56,000.00, plus costs,
attorney fees and additional interest accruing during the pendency
of this action.
COUNT I U
BREACH or CONTRACT BY MAGMO - PHBLAN
49. Paragraphs 1 through 4B of this complaint are herein
incorporated by reference.
50. On or about May 3, 1990/ Variety Investments loaned
$40,000.00 to Magaro.Phelan.
6
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51. Attaohed hereto as I!:lthibi t "B" and inoorporated herein by
reference is a copy of the cancelled check by which the f.oreqoin~
loan wes made.
52. On May 31, 1996, Plaintiff demanded paymont from Richard
E. Phelan of the principa 1 amount of the loan plus simple interest
at 6\ per year calculated from the date of the loan.
53. Magaro.Phelan has made no payments of principal or
interest to Variety Investments.
WHIRBPORI, Plaintiff demands jUdgmont against Richard E.
Phelan as liquidator of Magaro-Phelan for principal and interest in
the amount of $56,800.00. plus costs, attornoy fees and additional
interest accruing during the p~ndency of this action.
COUNT IV
sancK or CONTRACT BY RICKARD B. l'HBx...\N
54. Paragraphs 1 through 53 of this complaint are herein
incorporated by reference.
55. On or about September 6, 1983, Variety Investments loaned
$5/000.00 to Richard E. Phelan.
56. Attached hereto as Exhibit "C" and incorporated herein by
reference is a photocopy of the cancelled check by which the
foregoing loan was made.
57. On May 31, 1996, Variety Investmonts demanded payment of
the principal amount of the loan plus simple interest at 6\ per
year calculated from the date of the loan.
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58. Mr. Phelan has made no payments of principal or interest
to Vadety Investments,
WHBUrORB, Plaintiff demands jud9ment against Richard m.
Phelan for principal and interest in the amount of $9,100.00, plus
coats, attorney fees and additional intorest accruing durin9 the
pendency of this action.
COUNT V
BRBACH or CON~~CT BY RICHARD B. PHBLAN ANP LINPA L. PHBLAN
59. Paragraphs 1 through 58 of. this complaint are herein
incorporated by reference.
60. On or about January 7, 1996. Variety Investments loaned
'20/000.00 to Richard E. Phelan and Linda L. Phelan.
61. On or about January 22, 1986, variety Investments loaned
$15/000.00 to Richard E. Phelan and Linda L. Phelan.
62. On or abol!t June 10, 1998, Variety Investments loaned
$50/000.00 to Richard E. Phelan and Linda L. Phelan.
63. Attached hereto as Exhibit liD" and incorporated herein by
reference are copies of the cancelled checks by which the foregoinq
loans were made.
64. Mr. and Mrs. Phelan have made no payments of. principal or
interest to Variety Investments.
KHBRBFORB, Plaintiff demands jUdgment against Richard E.
Phelan and Linda L. Phelan, jointly and severally, for principal
and interest in the amount of $135,550.00, plus costs, attorney
fees and additional interest accruing during the pendency of this
8
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action.
COUN'l' vr
INDrVrOU.\L x.rUIx.XTY 01" lUC~ 1I...!HIlLAN
POR OSx.raATIONS or PHII~~. J~~~
65. Paraqraphs 1 through 64 of this complaint are herein
incorporated by reference.
66. Upon information and belief, Richard E. Phelan j.s the
majority stockholder, sole director and president of Phelaro.
67. At all times relevant hereto, Richard m. Phelan has
individually contI'ollad the operationf:l and affairs of Phelaro.
69. Upon information and belief, Phalaro has failed to pay
di vidends to its shareholders during the time period relevant
hereto.
69. Upon information and belief, wi th the exception of
Richard E. Phelan, no other officers or directors have taken part
in the management of Phelaro during the time period relevant
hereto.
70. Upon information and belief, during the time periOd
l;'elevant hereto, Phelaro has failed to observe corporate
formalitieB inClUding, without limitation, the holding of annual
directors' and sharehOlders' meetings, the election of direotors,
and the keeping of corporate minutes and other records.
71. Upon information and. belief, Richard E. Phelan has
commingled his personal funds with the funds of Phelaro and hall
siphoned off corporate funds for his personal use.
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72. Richard E. Phelan has operated PheJ.aro aD an alter eqo of
himself and should, therefore, be required to individually satisfy
the corporation's obligations to Variety Investments.
WHBRBrORB, Plaintiff demands jUdgment against Richard E.
Phelan for principal and interest in the amount of $756,680.00,
plus costs, attorney fees and additional interest accruing durioq
the pendency of this action.
COON?:' VII
INRlVIDU~ LIABILITY or RICHARD B. PHBLAN
POR OBLIGATIONS OF VAST BDDIB'S BILLI~
PARLOR & SALOON. IN~
73. Paragraphs 1 through 72 of this complaint are herein
incorporated by reference.
74. Upon information and belief, Richard E. Phelan is the
majority stockholder, Bole director and president of Fast Eddie'S.
75. At aU times relevant hereto, Richard E. Phelan has
individually controlled the operations and affairs of Fast Eddie'S.
76. Upon information and belief, Fast Eddie's has failed to
pay dividends to its shareholders during the time period relevant
hereto.
77. Upon information and belief, wi th the exception of
Richard E. Phelan, no other officers or directors have taken part
in the management of Fast Eddie's during the time period relevant
hereto.
78. Upon information and belief., during the time period
relevant hereto, Fast Eddie's has failed to observe corporate
10
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43. Purullruphs 1 through 42 of IhlN AnNwcr Wllh Ncw MUllcr IIrc Incurpurutcd
herein by reft'rcnce us Ihough fully NCI forth hcreln.
44. Dcnlcd. TOlhc WllIrllry, VllrlclY InVCNIII1cnlN louncd $40,()()().OO lothc
Mallaru/Phclan pllrlncrNhlp on 01' IIhout MIlY 3. 1')1)0. liS Is rcllcclCdon Exhlhlt "I]" to
Plalnllff's FirM AlI1cndcd COll1pllllm IInd In Coum IIllhcrcof. This sall1c $40,000.00 wos
suhsequcmly trnnsfcrrcd hy MCNsrs. MlIglIl'll IInd PhclllnlOIl crcditor of Fast Eddie's I]lIl1anl
Parlor & Saloon, Inc., 10 pay for parl of thc huild-oulof Ihul rcslUUranl.
45. Adll1lttl~d. By wuy of furlhcr unswcr, 1IIIIInllff hils hccnunuhlc tolocalc any
writing documcmlngthc IlHlklng of Ihc IIl1cgcd forcgolng loun hCCllusc no Nuch IllUn was cver
extended dircctly 10 Fasl EddlcN hy VIll'iclY Invcslmcnls.
46. Dcnlcd. No 10lln WIIS cvcr cXlcndcd dlrcctly hy Varicly InvcSlll1ems to Fast
Eddie's Illlllard Parlor IInd Saloon, Inc. II Is further denied Ihllltherc Is any promissory note
In favor of Variety InveNlll1ems reflecting Ihls May 3, 1990 $40,000.00 10lln, whether from
Fast Eddie's l3illlanlParlor and Saloon, Inc. or from Ihe Magaw-Phelan pllrtnership.
47. Denied. Fasl Eddies has no repayment ohllgUlions 10 Variety Investments. By
wuy of further answer, Defendants IncorporUle hy refcrcnce Ihelr responses to paragraphs 44
through 46 as though set forth fully herehl.
48. Denlcd. Defendants Incorporale hy reference Ihelr responses to paragraphs 44
through 47 as though set forlh fully herein. By way of further answer. to the exteJllthere
was every any ohllgatlon owing hy Fast [:udics to Plaintiff, such claim was harred by the
statute of limitations as of the filing of thc Complaint.
4
NEW MA'."n:R
81. De:fendoms Incorporate: herein hy reference us their First Ml1rlllatlve Dufense:
the responsive averments se:t forth In answers 10 l1urollraphs I through SO of 1)lalmlfl"s First
Amended Complailll,
82, Plulllll""'s Complulnt fulls to stule a clahn allalnS! uny Defendam.
83, None: of the louns for which repay men I Is SOullhlthrnullh Plahnlff's First
Amended Complulnt were Imerest-bearlng,
84. Plalllliff has no documelll executed by uny Defendam hereon whereby any
Defendllnt ugreed to PIlY Interest ut uny sIDled rute:,
8~, Upon infonnlltlonllnd belief. Plulntll"'s' books do J\llt rel1ectlhe accrual of
interest on Ilny Joan referenced In Plaintiff's FirS! Amended Compluhll,
86, At no time: did Pllllmlff forward slutemems of UCCrlUm to uny Defendant
reflecting the accrual of Inte:rest, or otherwise Indlcallnll an expeclatlonthal Intere:st would be
paid,
87, The books and records of Defendant Phelaro, Inc, were kepi at the offlces of
Variety Investments unlll May. 1990,
88, The books and records of Deflmdant Phelaro, Inc. were kept by employees of
Variety Inveslments unlll May, 1990,
89, With respecllo Count I of Plaintiff's Complaintagalnsl Phelaro, Inc.,
Plaintiff's Complaint sels fonh loans made 10 Defendant. Phelllro, Inc" belween April 20,
1979 and May 18. 1984,
II
90. The only documenls memorlull1.lnglhe muklns 01' Ihe luuns rutim:nced In
Cuuntl which ure executed ur endoned hy Defendallll'helarn. Inc. are the checks aUDched
to the Plrst Amended Complaint as ElIhlhlt "A".
l) I, Plulntlft' has nu promissory mlle ellecuted by any authurl1.ed ofl1cer 01'
Defendant, Phelaro, Inc. Which cllndltluns I'helaro's ohllgtlllon 10 rel'uy upon the muklnguf
u formul demand by Plaintiff.
92. Plullltiff has no documentmemorlall1.lngthe lerms of the loans referenced In
Count I of Plaintiff's First Amended Compluint which wuuld tolllhc running of the statutc of
limitations pending the making of a furmal demund.
93. Plulntlfl"s First Amendcd Complaint allegcs Ihat on ur about May 3, 1990.
Pheluro paid Variety Investmenls $40,000.00 In partial satisfaction of the principal balance 01'
the foregoing loans.
94, Defendant Phelaro. Inc. made nu paymelll 10 Variety Investments. whether
characterized as principal, Interest or otherwlsc, following May 3. 1990.
95, This action was not commenced until July 26, 1996.
96, All amounts claimed by Plaintiff. Variety Investments In Coullll. whether
characterized as principal or Interest. arc barred by the appllcahle statute of limitations,
97, With respect to Count II of Plaintiff's First Amended Cumplalnt. Plaintiff
concedes that It hus no documentation of any alleged loan made by Plaintiff to Fast Eddie's
Billiard Parlor & Saloon. Inc,
12
98, Upon In(orllllulolI ulILl helieI', Ihc: only loullof $411,OOO Oil Muy 3. 1990
relleclc:L1ullthc: huoks u( Vurlely IlIveslmems Is Ihl! luulI hI Ihe Muguru-l'helulI Purlnershlp
rel1ecleLlun Ihe check ulluch~'IlIU Ihe Flrsl AmenLleLl Cumplulnl us Exhlhlt "0",
99. IIlulllllff hus IIU prumls8Ury 1I0le execuleLl hy ullY uUlhurl1.eLlofllcer of
De(eIlLlunt. Pusl ELIL1Ic:'s II1111urLl Purlur & SUIUOII, IIIC,
100, Plulllllff hus muLle nu limnul L1emunLl ,ilr rcpuyme11l upon FUSI 1~L1le's since
uUegedly muklng Ihls loun on Muy 3, I 9911,
10 I. Arl/uc:1.llI.u FUsl ELIL1lcs hull uny uhllgullon whuIsul!vcr 10 Plulllllff, the sume wus
burreLl by Ihe upplh;uble slulUle of IImltullons us of Ihe nllng of lhe Complulnl In this uCllon.
102. Plulntlff hus no promissory nole execuleLl hy uny purlner of lhl! Muguro-Phelun
purtnershlp.
103, Plulnllff hus 110 L10cument memorlull7.lng Ihe lerms of lhe Iou II referenceLlln
Counllll of Plulmiff's Flrsl AmenLleLl Complnilll which condillons Ihe Muguro-Phelun
partnership's obllgullolllo rel'uy upon the making of II formul L1emunLl hy Plulnlifl,
104. Plalnliff hus no L1ocumenlmemorlull7.lnl! Ihe lelms uf lhe loun referenced In
Count III of Plaintlff's First AmenLled Cumplulnl which would tolllhe running PI' the slatule
of IImllallons pending Ihe muklng of u formul demund,
10S. Plulnliff hus mude no formul del1lund for rel'uymelll from Muguro-Phelun since
mUking Ihe loun on Muy 3. 1990.
106. All umoul1ls clulmed by Plulntlff. Varlely Investments III CoulIllII. whelher
characterized as prlnclpul or interesl, are barred by the uppllcable stulute of limitations.
13
107, With rcspccllll Cuum IV, Plulmiff did '1ll1 even mllke un Inlllul demund tilr
repuymenl unlll Muy 31, 1996, neurly Ihlrleen (13) ycurs fl)lll)wlnlllhc muklng ul' the Joun,
und ncurly Ihlrlccn yelll'S I'olll)wlnll repllymcnl.
108, 6nwcndq uny I)ulstnmllng lIuhllllY, ulluml)unls c1ulmcd hy Pluinllll, Vuricty
Investmcnts In CounllV, whether churuclel'11.cd us prlndpulul' Interesl, wcre hurred by the
UPllllcuble stutulc of IImltulll)ns us <Jt' the filing 1)1' the Cl)mfllullll,
109, Alluml)unts c1ulmed hy Plulnllff. VurlelY Invcstmcnls, un Cuunt V were
repuld us of Junuury. 1990,
110, With respcct 10 COUIll V, PIlIlrlllff hus never mude IIny dcmllnd for repuyment
whutsoever durlnglhe IlIlervenlngten 10 twelve yeurs from the dUle 1)1' Ihe milking uf the
loans,
Ill. Al'lwendu uny rcmulnlng obllgutluns by Rlchurd E, lInd L1ndu L, Phelun, ull
amounts claimed by Plulnllff, Vurlety Investmcnts In Cl)ulll V, whether churactr,rized as
principal or IlllerCNl. are burred hy Ihe uppllcuble stntute 1)1' IImilutiuns,
112. With respect tl) Count VI, lIrllUendl) uny Ilahlllty on the purt of Phelaro. Ine,
to Plaintiff, Pheluro. Inc, hus sufficlelllussets to sutlsfy the sume,
113, Plulllliff cunnlll identify u single Instance of ulleged "co-mingling" of funds as
between Richard Phelun und Pheluro, Inc,
114, !'Julnl.!ff cannlll identify u single Instnnce of Richard Phelan "siphoning off"
corporute funds for his personul use from Pheluro, Inc,
liS, With respect tl) Count VII, fust Eddies owes no money to Plaintiff, Variety
Investments,
14
VP.RIPICATION
I, Richard E, PhelM, hereby verify Iharl alii I're~ld\!nt of Jlhehlro, Ine" President of
PIIII Eddie's Billiard Parlor and Sllloon, Inc. IIlld alll Ihe ~urvlvlllll/llquldlltlng partner of the
Magara Phelall Parlnershlp, And alii lIulhorl7.cd to IlIl1ke Ihl~ verll1catloll on the foregoing
entitles' behalf, as well as on illY OWIl behlllf IIlld 011 behalf of illY wife IIl1d IIIYllI!lf.
I understand Ihlll allY fal~e statelllellts herelllllre llIade subJeclto penalties of 18 Pa.
C.S. 04904, relatlllg to ullsworn falslf1catlollto aUlhorltle~,
~,,~) C ~ \-.~~ ~v-:J
Richard E, Phelan
DATEt t.t.~'18
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HARII X. HAGARO, ADMINISTRATRIX
c.T.A. or THI BSTATB OP DAVID
W. HAQARO, DBcBASBD, ~IQUIDATOR
OP DAVID W. HAQARO. DBCBAsBD.
AND "I~~IAM G. HAGARO,
DBCBASBD. late tradinq a.
VARIBTY INVBSTMBNTS, a qeneral
partnenhip,
IN TKB COURT or CONNON '~1A8
CUMBIRLAND COUNTY, 'INNSY~VANIA
CIVI~ ACTION - LAW
NO. 9&-435& cIVI~ TIRN 199&
Plaintiff ,
VI.
AND NOW,
et at.,
Defendantl.
thi. i' d'~ J1rtr:
1998, upon
PHBLARO, INC.,
consideration of the forogoinq Petition for Approval of Settlement
Involving Decedents' Estates, all parties interested in the estate
of David W. Magaru, deceased, or the estate of William G. Maqaro,
deoeased, are hereby directed to show cause why this Court should
not approve the following I (1) the settlement agreement which is
attached to said petition and under which plaintiff releases all
claims raised in this action in exchange for a total payment from
Defendants in the amount of $505,854.67, and (2) payment of
$41,952.38 from the qross settlement proceeds to Plaintiff, as
administratrix c. La. of the David W. Magaro estate/ as
reimbursement for legal fees and. out-of-pocket expenses which she
has incurred in connection with this action.
This rule shall be returnable twenty (20) days after service
hereof.
~ fl'~1
"./.1'111
J.
HARIa K. MAOARO, ADMINISTRATRIX
c.T.A. OP THB BSTATB OF DAVID
w. MAOARO, DBCBASBD, LIQUIDATOR
OP DAVID W. MAOARO, DBCBASBD/
AND WILLIAM G. MAOARO,
DBCBASBD, late trading as
VARIBTY INVBSTMBNTB/ a general
partnanhip,
IN THB COURT OP COMMON PLlAs
CUMBBRLAND COUNTY. PBNNsYLVANIA
CIVIL ACTION . LAW
NO. 96-4256 CIVIL TBRN 1996
Plaintiff,
VI,
PHBLARO, INC., et al.,
Defendants.
PBTITION FOR APPROVAL OF BBTTLBMBNT
INVOLVING DBCBDBNTS' BSTATBS
AND NOW, comes Marie K. Magaro (hereinafter "Plaintiff") /
admillistratrix c. to a. of the estate of David W. Magaro, by and
through her attorneys, Gates & Associates, P.c., and makes the
following petitionl
1. This petition is brought pursuant to 20 Pa.C.S. 53323(b)
for the approval of an agreement to settle a pending action in
which recovery is sought on behalf of the est,ate of David W.
Magaro, deceased, and the estate of William G. Magaro, deceased.
2. Plaintiff is David W. Magaro's surviving spouse and the
administratrix c.t.a. of his estate.
3. David W. Magaro was a 25% partner in a general
partnership operating under the fictitious name "Variety
Investments".
4. William G. Magaro was a 75\ partner in the Variety
Investments partnership.
5. William G. MaQaro died on June 10/ 1990, and David W.
MaQaro died on Ootober 10, 1995.
6. By way of a complaint filed July ::16, 1996, and an Amended
COmplaint filed on May 29, 1997, Plaintiff instituted this action
to recover the following sums believed to be owed to the Variety
Investments partnership I
(a) Outstanding loans totalling $402,000.00 made to
Defendant Phelaro, Inc. plus $354,690.00 in accrued
interellt,
(b) An outstanding loan in the amount of $40,000.00
made to Defendant Fast Eddie's Billiard Parlor & Saloon,
Inc. plus $16,000.00 in accrued interest,
(c) An outstanding loan ill the amount of $40,000.00
made to Defendant Magaro-Phelan general partnership plus
$16,800.00 in accrued interest, and
(dl Outstanding loans totalling $90,000.00 made to
Defendant Richard E. Phelan. either individually or
jointly with his wife, Defendant Lind~ L. Phelan, plus
$54/650.00 in accruod interest.
7. After good faith negotiations, the parties hereto have
reached a settlement agreement (a copy of which is attached hereto
as Exhibit "A" and incorporated herein by reference), which is
subj ect to this Court's approval, and under which plaintiff, as
liquidating partner of Variety Investments, will receive the
following sums in exchange for a release of all claims raised in
2
thils action I
(a) $457/000.00 for the loans made to Phelaro,
Inc" plus
(b) $48/854.67 for the loan made to Fast Eddie's
Billiard Parlor & Saloon, Inc.
B. The settlement agreement provides for payment in full of
the principal amount now believed to be owed by Phelaro, Ino. plus
$60,000.00 in excess of the principal amount.
9. The claim a<]ainst Phelaro, Inc. for the rE!mllining acorued
interest is doubtful because (i) Plaintiff hilS found no written
agreement for the payment of interest, (ii) neither of the Variety
Investments partners is available to testify as to whether thore
was an agreement for the paymont of interest and (iii) collection
of some or all of the remaining interest may be barred by the
applicablE! statute of limitations.
10. The settlement aqreement provides for the payment in full
of all principal and interest now believed to be owed by Fast
Eddie'S Billiard Parlor & Saloon, Inc.
11. The claim against the Maqaro-Phelan partnership is
doubtful because it now appears that the alleged loan to the
partnership was the same loan made to Fast Eddie's Billiard parlor
& Saloon, Inc.
12. The claims against Richard E. Phelan and Linda L. Phelan
are doubtful because the Phelans have produced documentation
indioating that they paid the loans in full.
3
13. The settlement agreement is equitable and will promote
the interests of the decadents' estates by avoidinq the time /
expense and uncertainty of further litigation.
14. Plaintiff has paid or has agreed to pay her attorneYlI/
Gates & Associates, P.C., the sum of $41,952.38 for legal fees and
out-of-pOCket expenses incurred in connection with this action.
15. Plaintiff proposes to reimburse herself from the g~oss
settlement proceedB for all leqal fees and expenses she has
incurred in connection with this action.
16. In addition to Plaintiff, the followin9 are all of the
partiell interested in the estate of David W. Magarol
(a) Angela K. Magaro, c/o Wildlife Trails Inn, P.O.
Box 145, GaineB, PA 16921,
(b) Antonio W. Magaro, 926-1\ West Trindle Road,
Mechanicsburg, PA 170551
(c) David W. Magaro, Jr., 169 WJ,llow Mill Park
Road, MechanicBburq, PA 17055,
(d) Randy L. Magaro, 169 Willow Mill Park Road,
Mechanicsburg, PA 17055/
(e) Tina M. Mestlin,
PURCELL, KRUG & HALLER,
Harrisburg, PA 17102-2392,
c/o Jill M. Wineka,
1719 North Front
and
Esquire,
Street,
(f) JanaBia I. shay,
Mechanicsburg, PA 17055.
17. The fOllowing are all of the parties interested in the
317 Stumpstown Road,
estate of WJ.lliam G, Magarol
(a) PNC Bank, N.A., executor and testamentary
trustee, c/o Christopher C. conner, Esquire, METTE, EVANS
& WOODSIDE, 3401 North Front Street, P.O. Box 5950,
Harrisburg, PA 17110-09501
4
(b) Gayle A. Maqaro, 5911 Stephens Crossing,
Msahaniaaburg, PA 170551
(c) Estate of David W. Magaro, deceased, c/o Marie
K. Maqaro, administratrix c.t.s., Plaintiff hereinl
(d) Joseph R. Magaro, 5911 Stephens Crossing,
Mechanicsburg, PA 17055/
(e) Irene M. Gall, 19222 County Road n97, Woodland,
CA 95695, and
(f) Richard J. Magaro, 1000 Highfield Court,
Mechanicsburg, PA 17055.
lB. All of the above-named interested parties are 6u1 jur16.
WHBRBFORB, Plaintiff respectfully requests that the Court
issue a rule directing those parties interested in the David W.
Maqaro estate or the Willianl G. Magaro estate to show cause why the
Court should not approve (i) the settlement agreement reached
between Plaintiff and Defendants and (ii)
the proposed
reimbursement of legal fees and expenses from the gross settlement
proceeds.
Respectfully SUbmitted,
GATES & ASSOCIATES, P.C.
1 ~)
aY'~(M-41 ?i:. ":>/
M ~k E. Halbrun r, Esquire
Supreme Court I.D. #66737
1013 Mumma Road, Suite 100
Lemoyne, PA 17043
(7:1.7) 731-9600
(Attorneys for Plaintiff)
OATl!lDI ~, 1998
5
.
.ITTLRKlNT AOR.1HInT AND RILIABI
'fhl. Agrl!ll!l1nel1t:, dated the :J1~ day of October, 199B,
by and among VARIIE'l'Y INVIW'l'MIEN'rS (hereinafter "VI") and
PHIlLARO, INC" PIlIELAIW 01,' AI.LIEN'l'OWN, me" FAST EDDIES BILLIARD
PARLOR " SALOON, INC" MA<lARO - PHELAN PARTNERSHIP, RICHARD E.
PHELAN, and LINDA PIIE!.J\N (hereinafter collectively "DEFENDANTS"),
"TNES'STH, CbA
WHEREAS, VI and DEFENDANTS entered into cer.tain 'i'
agreement. Whereby VI advanoed, from time to time, certain funds
for the Uae of DEFENDANTS (hereinafter the "Advances") / and
WHlEREAS, curtain disputes and disagreements have arisen
between the parties with regard to the parties' performanoe of
their respective obligations relating to the Advances,
.peoifically inclUding litigation involving, inter alia, whether
the Advanoes were repaid to VI by DEF~NDANTS timely and in
aooordanoe with any applicable terms, which disputes have
re.ulted in litigation between the parties docketed at No. 96-
4~B6 in the Court of Common Pleas of cumberland County,
Pennsylvania (the "Action")/
WHEREAS, the parties desire hereby to amicably resolve
by .ettlement any and all claims advanced in the Action upon the
terms and conditions hereinafter Bet forth,
NOW/ THEREFORE, for and in oonsideration of the
promises and oovenants hereinafter set forth, for other good and
valuable oonsideration, reoeipt whereof is hereby aoknowledged,
and intending to be legally bound hereby, the partiell hereto
agree and COVenant by and among themselves as followsr
(1) VI, for itself, its officers, directors,
shareholders, partners/ heirs, executors,
administrators, successors and ~asigns, jointly or
severally, does hereby compromise, settle and rellolve
fully and finally and does hereby remise, release,
acquit, quitclaim and forever dillcharge DEFENDANTS,
their officers, directors, shareholders, successors and
assigns, and each of them jointly and severally of and
from all actions, causes of action, suits, claims,
demande, losses or damages vested or contingent, known
or unknown/ which it has, may have had, or may yet
have, relating to the subject matter of the Action.
This Release shall specifically include any claim by VI
against DEFENDANTS arising out of or relating to the
parties' respective performance relating to the
Advances.
(2) DEFENDANTS, for themselves, their heirs,
executors, adminilltrators, successors and assigns, as
well as the officers, directors, shareholders of
2
PHI~O, INC,/PHSLARO OF ALLENTOWN, INC. and PAST
SDDIIS BILLIARD PARLOR & SALOON, INC., and the
Liquidating Partner of MAOARO-PHELAN PARTNSRSHIP,
jointly or .everally, do hereby compromise, settle and
reaolve fully and finally and do hereby remisa,
r.lea.e, acquit, quitclaim and forever diacharge VI,
it. officer., directors, partners, shareholders,
IUccellors and allsigns, of and from any and all
action., causes of action, suits, claims, demands,
lo..e. or damages of whatsoever kind, in law or in
equity, vellted or contingent, known or unknown, which
it ha. / may have had, or may yet have, relating to the
lubject matter described herein, including the Action
and any claims which DEFENDANTS, or any of them, have
regarding the propriety of VI's conduct in bringing the
Action.
(3) The parties acknOWledge that implementation
of this Agreement will require court approval. Within five
(S) days of the entry of any necessary 'court orders,
PHE~O, INC. and/or PHELARO OF ALLENTOWN, INC. will payor
caUBe to be paid to VI the sum of Four Hundred Fifty-Seven
Thousand Dollars ($457/000.00~ Within five (5) days of the
entry of any necessary court orders, FAST EDDIES BILLIARD
PARLOR AND SALOON, INC. will payor cause to be paid to VI
the sum of Forty Eight Thoulland Eight Hundred and Fifty-Four
3
KARl. K. KAGARO, ADMINISTRATRIX I IN THI COURT or OOHMON .LIAS
C. T. A. or THe ISTATB OP DAVID I CUHllIRLAND COtJN'l1Y, PIINNsYLVANIA
W. HAGARO/ DeCIASID, LIQUIDATOR I
or DAVID W. HAGARO, D!CPASID, I CIVIL ACTION . LAW
AND WILLIAM G. NAGAnO, I
DICSAsBD, late trading al I
VARIeTY INVBSTMINTB, a general I NO. 96'4~56 CIVIL TI~ 1996
partnership, I
Plaintiff, I
I
VI. I
I
PHBLARO, INC., et al., I
Defendantl. I
&lid
AND NOW, this I~Y~ day of '1ht)
199 B / upon
consideration of the foregoing petition for Approval of Settlement
Involving Decedents' Estates, all parties interested in the estate
of David W. Magaro, deceased, or the estate of William G. Magar.o,
decease"', aX'EI hereby directed to show cause why thh Court should
not approve the following I (1) the settlement agreement which is
attached to said petition and under which Plaintiff releases all
claims raised in this action in exchanQe for a total payment from
Defendants in the amount of $505,854.67/ and (2) payment of
$41,952.39 from the gross sattlement proceeds to Plaintiff, all
administratrix c.t.a. of the David W. Magaro estate, as
reimbursement for legal fees and out'of-pocket expenses which she
has incurred in connection with this action.
This rule shall be returnable twenty (20) days after service
hereof.
BY THre COURT /
-1/ vi",?,,, ~ "I'1&lf
W- (J J.
5. William a. Magaro died on June 10, 1990, and David W.
Maqaro died on Ootober 10/ 1995.
6. By way of a Complaint filed JUly 26, 1996, and an Amended
complaint filed on May 29, 1997, Plaintiff instituted this action
to recover the fOllowing sums believed to be owed to the Variety
Investments partnership I
(a) OutDtanding loans totalling $402,000.00 made to
Defendant Phelaro, Inc. plus $354,680.00 in accrued
interest,
(b) An outstandinqloan in the amount of .40,000.00
made to Defendant Fast Eddie'S Billiard Parlor & Saloon,
Inc. plus $16,000.00 in accrued interest,
(c) An outstanding loan in the amount of $40/000.00
made to Defendant Magaro.Phelan general partnership plus
$16,800.00 in accrued interest, and
(d) Outstanding loans totalling $90,000.00 made to
Defendant Richard E. Phel.an, either individually or
jointly with his wife, Defendant Linda L. Phelan, plus
$54,650.00 in accrued interest.
7. After good faith negotiations, the parties hereto have
reached a settlement agreement (a copy of which is attached hereto
as Exhibit "A" and incorporated herein by reference), which is
subj ect to this Court's approval, and under which plaintiff, 8.S
liquidating partner of Variety Investments, will receive the
fOllowing sums in exchange for a release of all claims raised in
2
this action,
.
(a) $457,000.00 for the loans made to Phelaro,
Ino. I plus
(b) $48,954.67 for the loan made to Past Eddie's
Billiard Parlor & Saloon, Inc.
9. The settlement a9reement provides for payment in full of
the principal amount now believed to be owed by Phelaro, Inc. plus
$60,000.00 in excoss of the principal amount.
9. The claim against Phelaro, Inc. for the remaininq accrued
interest is doubtful because (i) Plaintiff has found no written
,
agreement for the payment of interest, (H) neither of the Variety
Investments partners is available to testify as to whether there
was an agreement for the payment of inte.rest and (iii) collection
of Borne or all of the remaining interest may I:>e barred by the
applicable statute of limitations.
10. The settlement agreement provides for the payment in full
of all principal and interest now believed to be owed by Past
Eddie's Billiard Parlor & Saloon, Inc.
11. 'rhe claim against the Magaro.Phelan partnership is
doubtful because it now appears that the alleged loan to the
partnership was the same loan made to Fast Eddie'S Billiard Parlor
& Saloon, Inc.
12. The claims against Richard E. Phelan and Linda L. Phelan
are doubtful because the Phelans have produced documentation
indicating that they paid the loans in full.
3
13. The lettlement agreement is equitable and will promote
the interests of the decedents I estates by avoiding the time,
expenle and uncertainty of further litigation.
14. Plaintiff has paid or has agreed to pay her attorneys,
Oates & AlIsociates, P.C., the sum of .41,952.39 for logal fees and
out-of-pOCket expenses incurred in connection with this action.
15. Plaintiff proposes to reimburse herself from the grolS
settlement proceeds for all legal fees and expenses lIhe has
incurred in connection with this action.
16. In addition to Plaintiff, the fOllowing are all of the
parties interested in the estate of David W. Maqarol
(a) Anqela K. Magaro, c/o Wildlife Trails Inn, P.O.
Box 145, Oaines, PA 16921,
(b) Antonio W. Magaro, 826 -A West Trindle Road,
Mechanicsburg, PA 17055,
(c) David W. Magaro, Jr., 169 Willow Mill Park
Road, MechanicBburg, PA 17055,
(d) Randy L. Magaro, 169 Willow Mill Park Road,
Mechanicsburg, PA 17055,
(e) Tina M. Mestlin,
PURCELL, KRUO & HALLER.
Harrisburq, PA 17102-2392,
c/o Jill M. Wineka, Esquire,
1719 North Front Street,
and
(f) Janasia I. Shay, 317 Stumpstown Road,
Mechanicsburg, PA 17055.
17. The fOllowing are all of the parties interested in the
estate of William O. Magarol
(a) PNC Bank, N.A., executor and testamentary
trustee, c/o Christopher C. Conner, Esquire, METTE, EVANS
& WOODSIDE, 3401 North Front Street, P.O. Box 5950/
HarriSburg, PA 17110-0950,
4
(b) Gayle A. Maqero, 5911 Stephens crossinq,
MeahaniasburQ, PA 17055,
(a) Estate of David W. Maqaro, deceased, c/o Marie
K. MaQaro, administratrix a.t.a., Plaintiff herein,
(d) Joseph R. MaQarQ, 5911 Stephens crossinq,
Mechaniasburg, PA 17055/
(e) Irene M. Gall, 18222 County Road K97, Woodland,
CA 95695, and
(f) Richard J. MaQaro, 1000 Highfield Court,
Meahanicsburq, PA 17055.
lB. All of the above-named interested parties are sui juris.
9fKBRBFORB, Plaintiff respectfully requests that the Court
iBsua a rule directing those parties' lntereated in the David W.
MaQaro estate or the William G. Magaro estate to ahow cause why the
Court lIhould not approve (i) the settlement aqreement reached
between Plaintiff and Defendants and (ii)
the proposed
reimbursement of legal fees and expenses from the qross settlement
proceeds.
Respectfully submitted,
GATES & ASSOCIATES, P.C.
BYI 1/1/1~ II~
M!~brun r, Esquire
Supreme Court 1.0. #66737
1013 Mumma Road, Suite 100
Lemoyne, PA 17043
(717) 731-9600
(Attorneys for Plaintiff)
DATED I ~/ 1998
5
.
.
IITTLIMBNT AaRB~ AND R.LIASI
This Agreement, dated the :J1~ day of Ootober, 1998/
by and among VARIETY INVESTMENTS (hereinafter "VI 10) and
PHELARO, INC., PHELARO OF ALLENTOWN, ~., FAST EDDIES BILLIARD
PARLOR & SALOON, INC., MAGARO-PHELAN PARTNERSHIP, RICHARD E.
PHELAN, and LINDA PHELAN (h~reinafter collectively
WITNESSETHl
"DEFENDANTS") I
C'Q
certain ,0;-..
WHEREAS, VI and DEFENDANTS entered into
agreements Whereby VI advanced, from time to time, certain funds
for the use of DEFENDANTS (hereinafte-r the "Advances"), and
WHEREAS, certain disputes and disagreements have arisen
between the par.ties with regard to the parties' performance of
their respective obligations relating to the Advances,
specifically including litigation involving, inter alia, whether
the Advances were repaid to VI by DEFENDANTS timely and in
aocordance with any applicable termB, which disputes have
resulted in litigation between the'parties dcpketed at No. 96-
4256 in the Court of Common Pleas of cumberland County/
Pennsylvania (the "Action"),
WHEREAS, the parties desire hereby to amicably resolve
by eettloment any and all claims advanced in the Aotion upon the
terms and conditions hereinafter eet forthr
NOW, THEREFORE, for and in consideration of the
promises and covenant I hereinafter let forth, for other good and
valuable consideration, receipt where~f is hereby acknowlldged,
and intending to be legally bound hereby, the parties hereto
agr.e and covenant by and among themselves as followel
(1) VI, for itself, its officers, directorl,
Ihareholders, partners, haire, executors,
administrators, IUccessors and assigns, jointly or
severally, does hereby oompromise, settle and resolve
fully and finally and does hereby remise, release,
acquit, quitclaim and forever discharge DEFENDANTS,
cheir officers, directors, shareholders, BUcceSlors and
assigns, and each of them jointly and severally of and
from all actions, causes of action, suits, claims,
demands, losees or damages vested or contingent, known
or unknown/ which it has, may have had, or may yet
have, relating to the subject matter of the Action.
This Release shall specifically include any claim by VI
against DEFENDANTS arising out of or relating to the
parties' respective performance rslating to the
Advances.
(2) DEFENDANTS, for themeelves, their heirs,
executors, administrators, successors and assigns, as
well as the officers, directors, shareholders of
2
PHELARO, INC./PHELARO OF ALLENTOWN, INC. and FAST
aDDlES BILLIARD PARLOR & SALOON, INC" and the
Liquidating Partner of MAGARO-PH~LAN PAR'rNERSHIP,
jointly or severally, do h~reby compromise, settle and
~e80lve fully and finally and do hereby remise,
~elease, acquit, quitclaim and forever discharge VI,
its officers, directors, partners, shareholders,
successors ana assigns, of and from any and all
actions, Gause~ of action, euits, claims, demands,
losses or damages of whatsoever kind, in law or in
equity, vested or contingent, known or unknown, which
it has, may have had, or may yetl have, relating to the
subject matter described herein, including the Action
and any claims which OEFEND~rS, or any of them, have
~egarding the pr.opriety of VI's conduct in bringing the
Action.
(3) The parties acknowledge that implementation
of this Agreement will require court approval. Within five
(5) days of the entry of any necessary court orders,
PHELARO, INC. and/or PHELARO OF ALLENTOWN, INC. will payor
cause to be paid to VI the sum of Four Hundred Fifty-Seven
Thousand Dollars ($457,OOO,OO~ Within five (5) days of the
entry of any necessary court orders, FAST EDDIES BILLIARD
PARLOR AND SALOON, INC. will payor cause to be paid to VI
the sum of Forty Eight Thousand Eight Hundred and Fifty-Four
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CER77FlCATE OF SERVICE
I hereby certlfy that I am this dllY serving a COllY of the foregoing
document upon the persor.(s) and In the manner Indicated below, which service
saUsRes the requlremunts of the Pennsylvallhl Rules of Civil Procedure, by hand
delivery, os follows:
Angela K. Magnro
c/o Wildlife Trnlls Inn
P.O. Box 145
Gnlnes, PA 16921
Antonio W. Mngnro
826.A West Trlndle Rond
Mechanlcsburg, PA 17055
David W. Magllro, Jr.
169 Wlllow Mlll Park Road
Mechalllcsburg, PA 17055
Randy L. Mngllro
169 Wlllow Mill Rond
Mechanlcsburg, PA 17055
Tina M. Mestllll
c/o Jill M. Wllleka, Esquire
Purcell, Krug & Haller
1719 North Front Street
Harrisburg, PA 17102-2392
Jannsla I. Shay
317 Stumpstown Road
Mechanlcsburg, PA 17055
Gayle A. Magara
5911 Stephens Crossing
Mechanlcsburg, PA 17055
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twtII It. NAOMO, I IN THI COURT or COMMON PLIAS
Plaintiff, I CUKSIllLAND COUN'l'Y, PlINNSYLVANIA
I
VI. I CIVIL ACTION - LAW
I
'HILMO, INC., .t al. I NO. 96-4~56 CIVIL TBRM 19915
Defendant I . I
AfFIDAVIT or saRVIoa
COMMONWEALTH OF PENNS'iIJVANIA
COUNTY Oli' CUMBERLAND
SSI
ae it known, that on tho '7th day of December, 1998, before me,
the subscriber, a Notary Public, personally appeared NARIt B.
HALBRUNBR, who, being duly sworn according to law, did depose and
state as followsl
1. I am an attorney licensed to practice law in the
Commonwealth of Pennsylvania, and I am employed by the law firm of
Gates & Associates, P.c., Lemoyne, Pennsylvania.
2. My law firm represents Marie K. Magaro, plaintiff in the
above-referenced matter.
3. On November 16, 1998, I personally served a true and
correct copy of the "Petition for Approval of Settlement InVOlving
Decedents I Estates" and the RUle issued thereon in the above-
referenced matter by certified mail to each of the fOllowing
persons, and the certified mail receipts are attached hereto as
Exhibit "A"I
Michael L. Bangs, Esquire
302 South 18th Street
Camp Hill, PA 1'7011
(Attorney for Angela K. Magaro)
Christopher c. Conner, Esquire
METTE EVANS & WOODSIDE
3401 North Front Street
P.O. Box 5950
HarriSburg, PA 1'7110-0950
(Attorneys for PNC Bank, N.A.)
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NAlIB It. MAGARO, ADMINISTRATRIX
C.T.A. or THB BSTATB or DAVID
W. HAGARO, DBCBASBD, LIQUIDATOR
or DAVID If. HAGARO, DaCBASBD,
AND WILLIAM G. HAGARO,
DICBASBD, late tradinq a.
VARIaTY INVBSTHBNTS, a qenaral
partnenhip,
XN THB aOUJ\T OF COMMON 'LDS
CUMBBRLAND COUNTY, PlINNSYLVANXA
CIVIL ACTION . LAW
NO. 96-4256 CIVIL TIRN 1996
Plllintiff ,
VI.
PHBLMO, INC., et 81.,
Defendants.
AND NOW,
this
OlUJaR
~ t~ day of ..J;2~ u..... bd ,
1998,
upon
/).- '(-1f
consideration of the foreqoinljJ petition, the rule iBsued in this
matter on November 10, 1998, is hereby made absolute, and the
fOllowinq are hereby approved I (1) the partieB' settlement
aqreement dated October 22, 199B, which was attached to the
Petition for Approvai of Settlement Involving Decedents' Estates
filed in this action on November 10, 199B, and under which
Plaintiff releases all claims raised in this action in exchanqe [or
a total payment from Defendants in the amount of $505,854.67/ and
(2) payment of $41,952. 3B from the qro8s settlement amount to
Plaintiff, as administratrix c.t.a. of the Dsvid W. Maqaro estato,
as reimbursement for legal fees and out-of-pocket expenses which
she has incurred in connection with this action. This action and
all counts raised herein shall be dismissed with prejudice upon
payment of the aforesaid settlement amount.
BY TJHE 7~RT ,,/ ~;;
[V(/J ' . Ot.
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f.~d Iii Ll(I/U r
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If C~j-t'l (1U.l~.I,L,Ms 0
MAlII K. NAGARO, ADMINIaTRATRIX
C.T.A. OF THI BSTATB or DAVID
W. NAGARO, DICBABBD, LIQUIDATOR
or DAVID W. MAGARO, DleI!ASID,
AND WILLIAM G. MAGARO,
DICBASID, late tr.adinq al
VMIftTY INVRS'l'MBNTS, a qeneral
partner.hip,
IN THI COURT or OOHMON PLIAS
CUMBBRLAND COUNTY, PIINNSYLVANXA
CIVIL ACTION . LAW
NO. 96-4256 CIVIL TIRN 1996
Plaintiff ,
VI.
'HlLARO, INC., et al.,
Defendants.
PBTITION TO MAKa RULI ASSO~UTB
AND NOW, comes Marie K. Magaro (hereinafter "Plaintiff"),
adminiotratrix c. t. a. of the estate of David W. Magaro, by and
through her attorneys, Gates & Associates, P.c., and makes the
fOllowing petitionl
1. On Novl3mber 10, 199B, Plaintiff filed a Petition for
Approval of Settlement InVOlving Decedents' Estates, and the Court
issued a rule upon those parties beneficially interested in the
estate of David W. Magaro, deceased, or the estate of William G.
Maqaro, deceased, to show cause why the petition should not be
granted. A copy of the rule is attached hereto as Exhibit "A".
2. The rule was made returnable twenty days after. service
thereof.
3. Plaintiff served the rule and petition on all such
parties, and an affidavit of service has been filed.
4. Twenty days have passed since service of the rule and
petition, and no answers have been filed.
, .
NAaII K. HAaARO, ADMINISTRATRIX
C.T.A. 0' THI ISTATI or DAVID
W. HAOAKO, OICIASID, LIQUIDATOR
0' DAVIe W. HAGlUlO, DBCIASID,
AND WILLIAM G. HAGMO,
DICIASID, late tradinq a.
VAAIITY INVBSTNBNTS, a qeneral
partnenhip,
IN THB COl1J\'1' 0' COHllON 'LIAS
CUNBBIILAMJ OOt1N'l'Y, PINNSYLVANIA
CIVIL ACTION . LAW
NO. 96.4~56 CIVIL TIRN 1996
Plaintiff ,
VB.
'HBLMO, INC., et a1.,
Cefendantl.
AND NOW, this
BYLI
I~ day of
'71",) I
1998, upon
consideration of the foreqoinq Petition for Approval of Settlement
"
Involvinq Decedents' Estates, all parties interested in the estate
of David W. Maqaro, deceased, or the estate of William G. Maqaro,
deceased, are hereby directed tc show cause Why this COurt should
not approve the fOllowinql (1) the settlement aqreement which is
attached to said petition and under which Plaintiff releases all
claims raised in this action in exchanqe for a total payment from
Defendants in the amount of $505,854 I 67, and (2) payment of
*41, 9!l2. 38 from the qross settlement proceeds to Plaintiif, as
administratrix c. t.a. of the David W. Maqaro estate, as
reimbursement for leqal fees and out-Of-pocket expenses which she
has incurred in connection with this action.
This rule ~,hall be returnable twenty (20) days after service
.....'.",. ".1'-',...../
hereof. ,.-,"~., '"r,"
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BY THE COURT,
/5' Y:::J;4ft?p r .#'eI""A
J7 /T,r? J.
.
MARIE K. MAOARO,
ADMINISTRATRIX C.T.A OF
THE ESTATE OF DAVID W.
MAOARO, DECEASED,
LIQUIDATOR OF DAVID W.
MAGARO, DECEASED, AND
WILLIAM G. MAOARO,
DECEASED, late trading
VARIETY INVESTMENTS, a
General partnership,
Plaint iff
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PHELARO, INC., a I
Pennsylvania Corporation, I
FAST EDDIE'J BILLIARD I
PARLOR & SALOON, INC. I
A Pennsylvania I
Corporation, RICHARD E. I
PHELAN, LIQUIDATOR OF I
RICHARD E. PHELAN AND I
WILLIAM O. MAOARO" I
DECEASED, late trading aSI
MAOARO-PHELAN, a general I
Partnership, and RICHARD I
E. PHELAN, individaully, I
Defendant
V.
IN TH$ COURT OF COMMON PLEAS OF
CUMaSRL~p COUNTY, PSNNSYLVANIA
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96-4256 CIVIL TERM
ORDER OF COURT
AND NOW, this 30th day of April, 1999, upon
consideration of t.he Petition of P.N.C. Bank N.A. for
Partial Distribution of Settlement Proceeds, and pursuant
to an agreement reached in open court between counsel for
the Petitioner and Respondent, and it being represented to
the Court that as of March 31, 1999, a balance in the
escrow account held by Oates and Associates in this matter
is $1511/179.915/ it is orderlld and dirlloted as follows I
1. Counoel for Plaintiff, Oates and
Assooiatlls/ P.c./ shall distribute ~460/179,915 of the
amount currently held in e09row to the following parties in
the following amounts I
(a) $JJ7/15J4.97 to petitioner P,N,r..
Bankl N.A., Exeoutor of the estate of William O. Maaarol
(b) $112/544.99 to Mary K. Mdgaro,
Administratrix c. t. a, of the estate of David W. Mn,garo.
2. The remaining $61,000.00 plus aocrued
interest after March Jl, 1999, shall remain in the escrow
account of Oates and Associates, P.C., pending further
Order of Court.
J. Within 15 days, the law firm of Oates &
Associates, P.C. shall submit itemi~ed statements for
attorneys fees and expenses ao claimed in Plaintiff's
Petition for Approval of Settlement Involving Decedent's
Estate to Christopher C. Conner, Esquire, counsel for
P.N.c. Bank. Within 20 days after receipt of said
statements, Attorney Conner shall notify the Court whether
there is a dispute over the amount of attorney's fees and
expenses claimed, If a dispute exists, the Court will
schedule a hearing to resolve the issue. If there is not a
dispute, the Court will order the distrubution of fees to
Oates & Associates, as requested in Plaintiff's petition
2. On April 30, 1999, on ogreement wos reoched In open court between
the undel'llllned counsel for PNC Bonk ond Gotes & Astlolllotes, counsel to Marlo K.
Mogaro, Administratrix C.T.A. of the Estote of Dovld W. Mogoro. This agreement
was memorlall~cd In the form of on Order of Court doted April 30, 1999. A true and
correllt copy of sold Order Is attached hereto ond mode 0 port hereof as Exhibit "A,"
3. By letter doted Moy 11, 1999, the undersigned counsel wrote to counsel
for Morle Mognro, Gates & Associates, to determine the t1tatulS of the $337.634.97
distribution required by the Apr1l30lh Court Order. By letter doted May 18, 1999,
the undersigned counsel ogllln reminded counsel for Marie Magal'o of the
obligations of Gates & AssQclates under the Order of April 30, 1900. Speclllcally,
the May 181h correspondence requested Information os to the whereabouts of the
distribution check in the amount of $337,634.97 os well as the status of the Itemized
statements. True and correct copies of said correspondence are attached hereto
and made a part hereof as Exhibit "B."
4. After repeated requests by the undersigned counsel for distribution of
the $337,634.97, counsel for Marie Magaro foxed a photocopy of the required
distribution check on May 25, 1099, Buggestlng the need for direction aB tl) the
delivery of the check. A true and correct copy of counsel for Marie Magaro's fax of
May 25, 1999 is attached hereto ond made a port hereof as Exhibit "C" for the
2
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MARIE 1<' MAGARO,
ADMINISTRATRIX C,'r./L OF
THE ESTATE OF DAVID W.
MAGARO, DECEASED,
LIQUIDATOR OF DAVID W,
MAGARO, DECEASED, AND
WILLIAM G. MAOARO,
DECEASELl, late trading as
VARIETY INV8STMEN'l'S, a
general partnership,
Plaintiff
IN THE COURT OF COMMON PLaAS OF
CUMBERLAND ~OUNTY, PENNSYLVANIA
CIVIL ACTION . LAW
v.
PHELARO, INC., s
Pennsylvania corporation,
FAST EODIB'S BILLIARD
PARLOR & SALOON, INC" a
Pennsylvania corporation,
RICHARD E, PHELAN,
LIQUIDATOR OF RICHARD E.
PHELAN AND WILLIAM G,
MAGARO, DECEASED, late
trading as MAGARO-PHELAN,
a general partnership,
and RICHARD E. PHELAN,
individually,
Defendants
Pl~.'aSE:, 'Pt::;cC
I D p, tL
J. OLf ~
NO. 96.4266 CIVIL TERM
ORDER OF COURT
AND NOW, this 28th day of June, 1999, upon
consideration of the motion of PNC Bank, N.A., for sanctions,
and following a conference in the chambers of the undersigned
judge in which the moving party, PNC Bank, N.A.. executor of the
estate of William G. Magaro, deceased, was represented by
Christopher C. Conner, EsqUire, and the Plaintiff Marie K.
Magaro was represented by Lowell R, Gates, Esquire, it is
ordered and directed as follow~1
1. Mr. Gates shall furnish a copy of his firm's
fee agreement in this matter to Mr. Conner within ten days of
today's date.
2. Mr, Conner and Mr. Gates shall meet within
twenty days of today's date for the purpose of going over the
....
MARIE K. MAOARO,
ADMINISTRATRIX C.T,A, OF
I)ENNSYLVANIA
THE ESTATE OF DAVID W.
MAGARO, DECEASED,
LIQUIDATOR OF DAVID W.
MAC/ARO, DECEASED, AND
WILLIAM (J, MAGARO,
DECEASED, IUlc lrading os
VARIETY INVESTMENTS, II
gencrnl pal1nership,
Plaintll1;
v.
PHELARO, INC., II
Pennsylvllnill corporation, FAST
EDDIE'S BILLIARD PARLOR &:
SALOON, 1NC" [\ Pcnnsylvnnia
corpornlion, RICHARD E.
1)I-IELAN, LIQUIDATOR OF
RICHARD E. PHELAN AND
WILLIAM (j, MAGARO,
DECEASED, Iutc trnding us
MAGARO-PHELAN, u gcncml
portncrship, and RICHARD E,
PHELAN, individuully,
Delcndants
'.
IN THE COURT OF COMMON I'LEAS OF
CUMBERLAND COUNTY,
CIVIL ACTION. LAW
NO. 96-4256 CIVIL TERM
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ORDER OF COURT
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AND NOW. this 5". I, day of August, 1999, duc to a conlllct in the Court's
schedule, thc hearing previously scheduled In this mailer lor August II, 1999, Is
RESCHEDULED to Thursday, Scptember 2, 1999, at 10:00 a,Jn" in Courtroom No, 1.
Cumberland County Courthouse. Carlisle, Pennsylvania,
BY THE COURT,
.
MARIE K, MAGARO,
ADMINISTRATRIX C:r,A. OF
THE ESTATE OF DAVID W.
MAGARO, DECEASED,
LIQUIDATOR OF DAVID W.
MAGARO, DECEASED, AND
WILLIAM G. MAGARO,
DECEASED, lllte truding liS
VARIETY INVESTMENTS. a
gencrul partnership,
Pllllntin;
v,
PHELARO, INC" II
Pcnnsylvania corporutlon, FAST
EDDIE'S BILLIARD PARLOR &:
SALOON, INC" II Penn sylvan ill
corporation, RICHARD E.
PHELAN, LIQUIDATOR OF
RICHARD E, PHELAN AND
WILLIAM G, MAGARO,
DECEASED, lutc tmding liS
MAGARO.PHELAN, II gcncrul
partncrship, IInd RICHARD E,
PHELAN, individually,
Dclimdants
,.
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYL VANIA
CIVIL ACTlON . LAW
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NO. 96.4256 CIVIL TERM
ORD~R OF COURT
AND NOW, this .2Jday of Scptcmbcr, 1999, upon consideration of the attached lctter
from Christophcr C. Conncr, Esq" allomcy lor PNC BWlk, thc hearing previously scheduled
In thl~ matter for Scptember 2, 1999, is CANCELLED,
BY HIE COURT,
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September 2. 1999
VIA FACSIMILE (240-6462)
and U,S. MAlL
The 1-Ionorable J, Wesley Oler, Jr,
Cumb(!rland County Courthouse
1 Courthouse Square
Carlisle. PA 17013
lie: Marie K ManllTO, Administra.trl.x C, T.A. afthe Estate of DavId W, Manaro,
Dtcea.~ed, Uqui.dn.tor of David W, Magaro. DeuCl6ed, and Wi/Uam G. Magaro,
DeceCl6ed, wte lTading as Vanny ImJf!1!ments 'u, Ph.elaro,lnc" et al,
Dear Judge Oler;
This wlll conl'irm my telephone convcl'satlon with your Honor's olllce In which I
Indicated that opposing counsel, Gates & Associates, and 1 have reached a settlemt'nt
ngreement over the Issue of IlttofllllYS' fees, This m:ner was scheduled for a hearing
before your Honor III 10:00 n.m, this morning,
The parties have agreed to execute a stipulation reflecting an agreed-upon
payment of attorneys' fees and costs In the totnl amount of $33,500,00. In addition, the
amount of attorneys' fees and costs for all additional matters pertaining fa the wrap.up
of the VCltiety Investments partnership is capped at $20.000,00, My client, PNC Bank,
has reserved the right to challenge the reasonableness of wrap-up fees and expenses by
flUng objections to the accounting or by filing a separate motion challenging the
reasonableness of fees and costs charged by Gates & Associates,
This agreement will be pl'l,:sented to your Honor in the form of a stipulation of
counsel within thc next severril da.ys, Mr, Gates has assumed responslblllly for
preparation of the same,
SEP ~ 2 .