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HomeMy WebLinkAbout96-06078 .. ".~... :i...... '.',.;. f>. ' '~ . . \; '" ~ ~ ....( ~ :1 ~ .t. l/) + .~ ct \ 0- / / ~ ( ... ~ .r '1 01 c..., . ...,...-- "- GIANT ~'OOD STORES, INC., plaintiff IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - EQUITY v. DAVID MICHAEL LEONHARD, Administrator of the Estate of BARRY L. LEONHARD, Defendant NO. 96-6078 CIVIL TERM NOTICE You have been sued in Court. If you wish to defend against the claims set forth in the following pages, you must take action within twenty (20) days after the pleadings and Notice are served, filing in writing with the Court your defenses or objections to the claims set forth against you. You are warned that if you fail to do so the case may proceed without you and a judgment may be entered against you by the Court without further notice for any money claimed in the pleadings or for any other claim of relief requested by the plaintiff. You may lose money or property or other rights important to you. YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER OR CANNOT AFFORD ONE, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW TO FIND OUT WHERE YOU CAN GET LEGAL HELP. Court AdministratoJ:' Fourth Floor cumberland county Courthouse Carlisle, Pennsylvania 17013 Telephone: (717) 240-6200 wa~~h~~re supreme Court No. 15712 53 West Pomfret Street Carli~le, pennsylvania 17013 Telephone: 717-243-0220 Attorney for plaintiff WAVN\! F. SHAD\! Al10mty at t.aw H Well Pumfrel SlIm l'&lIi.lt. l'ntn.ylnni.l 17013 WAYNll F. SHAUll Allum,,)' II Law 5J WClt Pom(rtt Slrtd l'.,lialc. Pt'MI)'lvania 1101l 8. In obtaining said approval of Technicomp as a vendor for Plaintiff, Defendant's Decedent did not inform Plaintiff that Technicomp was not even registered as a fictitious name in the Commonwealth of Pennsylvania. 9. As soon as Defendant's Dp.cedent obtained approval of Technicomp as a vendor for Plaintiff, Defendant's Decedent began creating purchase orders which purported to be for architectural/engineering services and architectural/engineering comp~ter aided drafting design services from Technicomp for various projects at various store locations of Plaintiff. 10. Defendant's Decedent would assign the purchase orders to the various specific projects at specific store locations of Plaintiff and then invoice those purported services to Plaintiff. 11. Between December of 1994 and August of 1995, Defendant's Decedent submitted seventy-seven invoices to Plaintiff in a total amount of $359,757.40. 12. Defendant's Decedent even used Plaintiff's computers at the corporate general offices of Plaintiff to generate some or all of the invoices which were submitted to Plaintiff. 13. Technicomp never did any work for Plaintiff whatsoever. -3- WAYN!! F. SHAllI! Auumcy at Law 53 Wul pomrrt'1 S!.trt( Carlialc. PtMI)'lvania 17U13 25. As the result of the filing of said charges, the aforesaid items of tangible personal property together with cash in the amount of $112,514.17 for a total value of approximately $170,000 came under the custody or control of the District Attorney of Cumberland county, Pennsylvania, in the form of bail and evidence of the fruits of the misappropriations of Defendant's Decedent. 26. At the time of the death of Defendant's Decedent, the criminal charges against him had not yet come to trial. 27. As a result of the death of Defendant's Decedent, Plaintiff filed a Petition in the Orphans' Court Division of this Court on April 10, 1996, in which Plaintiff averred that all of the assets which were then under the custody or control of the District Attorney of cumberland county, Pennsylvania, and attributable to Defendant's Decedent were never the lawful property of Defendant's Decedent but were the direct fruits of his misappropriation of the funds of Plaintiff. 28. Because no one had applied for Letters Testamentary or Administration on the Estate of Defendant's Decedent by that time, plaintiff requested that the Court maintain continuing control over the aforesaid assets to assure proper application of those assets to Plaintiff as the rightful owner thereof. -6- WAVN!! F. SHAD1! AtlOmey at Law 'JWclt Pool(rrl Slrccl Carli.le. Ptnnlyl\lanil 1701l 29. A conferen~e call was conducted among counsel for the parties hereto and the Honorable J. Wesley Oler, Jr., J., on April 18, 1996, concerning the Petition of April 10, 1996. 30. As a result of that telephone conference call, two separate Orders were entered on April 18, 1996. 31. The first of said Orders was docketed to the criminal case of Commonwealth v. Barry Lee Leonhard at No. 95-1509 Criminal Term and provided that the evidence seized by the Commonwealth in the form of tangible or intangible personalty in the criminal case should not be transferred to or otherwise disposed of by the Office of the District Attorney or Clerk of Courts pending further Order of Court. 32. The second of said Orders was docketed to the Estate of Barry L. Leonhard at No. 21-96-338 in the Orphans' Court Division of this Court and confirmed the withdrawal of Plaintiff's Petition of April 10, 1996, in anticipation of the prompt filing of a Petition for Letters of Administration in the Estate of Barry L. Leonhard by a member of the Decedent's family as well as in consideration of the aforesaid Order at No. 95-1509 Criminal Term in this Court. 33. On May 24, 1996, Defendant filed his Petition for Letters of Administration in the Estate of Barry L. Leonhard at No. 21-96- -7- WAYN!! F. SHAD!! Aaomey al law .53 Wul rum(rtl Surd C.dillc. rnu\lylvani.l 1701l 338 in the Orphans' Court Division of this Court, and Letters of Administration were issued to him that same day. 34. Plaintiff believes and therefore avers that all of the assets under the custody or control of the District Attornsy of Cumberland County, Pennsylvania, and attributable to the said Barry L. Leonhard, never were the lawful property of the said Barry L. Leonhard but rather were the direct fruits of his misappropriation of the funds of GIANT FOOD STORES, INC. 35. During the pendency of these proceedings certain of the aforesaid items of tangible personal property are being liquidated with the addition of the proceeds thereof to the cash funds under the control of this Court. 36. Plaintiff has demanded Defendant's acknowledgment of Plaintiff's rightful ownership of the aforesaid assets which remain under the control of this court, but Defendant has refused to acknowledge the same. WHEREFORE, Plaintiff prays that your Honorable Court order, as follows: (a) declaration of a constructive trust with ~espect to the aforesaid assets Which remain under the control of the Court; (b) distribution of said assets and all interest accrued thereon to Plaintiff as the rightful owner thereof; (c) award to Plaintiff of any other assets of Defendant's Decedent up to the remainder of the fraudulently obtained -8- ~ C) r:: .;.: c; 1-- -, .. -. ~~; - "J.r" it' ) .-- ~ : J:-.-' .l.. , . , ) :',1 ,. '.n 'r, .' ! u. I ] " 1ft' , t.!l -. rl.-; :.-:..1 ".'I,'J ... ~ . ~ '-'. t3 -" , r-- iJ c..-, o ~~ I"<CI) ~~ ~~ o ~t:: u~..O't-l IOlH !j I~ o U E-<~U Z !~~ o E-<C U u<O <I ~~;:l~ 1'9>, ZSHO HU UZ U Z H . tJl \:;lll4 Oll4 E-<'M tJl+J I'l j::l'M O<1l O~ ""'I"< ~ l:.:l ll4 o III +J <1l +J .111 Ii . ~'t:~~ t-l"'~<1l ~OC"tl ~~ ~ '" ll4 >' H+J~1ll ;:i:;lI1....j::l 'M si~ j::l<~ ~ j ~ U j::l :g ~ .... - ~ ~ ~ ~ oS <II i ~ ~ i ~ ~ ~ ~ ~ ~ ! ~ ! ~ .... on . .... ,~ WAVNH F. SIIAUH At1cmty .1 I....... 51 We.at l'om(1Tl SInd C..lidc, rrnnl)'IVlIliA 17011 25. As the result of the filing of said charges, the aforesaid items of tangible personal property together with cash in the amount of $112,514.17 for a total value of approximately $170,000 came under the custody or control of the District Attorney of Cumberland County, Pennsylvania, in the form of bail and evidence of the fruits of the misappropriations of Defendant's Decedent. 26. At the time of the death of Defendant's Decedent, the criminal charges against him had not yet come to trial. 27. As a result of the death of Defendant's Decedent, Plaintiff filed a Petition in the orphans' Court Division of this Court on April 10, 1996, in which Plaintiff averred that all of the assets which were then under the custody or control of the District Attorney of Cumberland county, Pennsylvania, and attributable ~o Defendant's Decedent were never the lawful property of Defendant's Decedent but were the direct fruits of his misappropriation of the funds of Plaintiff. 28. Because no one had applied for Letters Testamentary or Administration on the Estate of Defendant's Decedent by that time, Plaintiff requested that the Court maintain continuing control over the aforesaid assets to assure proper application of those assets to Plaintiff as the rightful owne~ thereof. -6- WAYNH F. SHADE Altorot)' .1 lIw '1 Weal Pomlrcl Slncl c.ulilSe, Pauu)'lvlnil l1011 338 in the Orphans' Court Division of this Court, and Letters of Administration were issued to him that same day. 34. Plaintiff believes and therefore avers that all of the assets under the custody or control of the District Attorney of Cumberland County, Pennsylvania, and attributable to the said Barry L. Leonhard, never were the lawful property of the said Barry L. Leonhard but rather were the direct fruits of his misappropriation of the funds of GIANT FOOD STORES, INC. 35. During the pendency of these proceedings certain of the aforesaid items of tangible personal property are being liquidated with the addition of the proceeds thereof to the cash funds under the control of this Court. 36. Plaintiff has demanded Defendant's acknowledgment of Plaintiff's rightful ownership of the aforesaid assets which remain under the control of this Court, but Defendant has refused to acknowledge the same. WHEREFORE, Plaintiff prays that your Honorable Court order, as follows: (a) declaration of a constructive trust with respect to the aforesaid assets which remain under the control of the Court; (b) distribution of said assets and all interest accrued thereon to Plaintiff as the rightful owner thereof; (c) award to Plaintiff of any other assets of Defendant's Decedent up to the remainder of the fraudulently obtained -8- . Z 332 1154 'lb/l us Pallal S.rvic. Recelpl tor Certified Mall No Inauranee Coverago Provided. 00 not use for Inlemattonal Mall S.II reVSI3B II. D ~~~ruce Street, Ap . 1 POll . le,4 ZIP ode Le anon PA 17046 POIIa1IO S ,32 1. 35 Cer1lftedFee Sped" OeIMlry F.. Refltlctld IleIvery F U'l 81 Relum Rec . .. 'MonA 0 'l!""", .:r 01.... g TllTALP l!l POIlmIrlI.. ~ Ie ([", :":.::;~''''-'''.IJc__ ..' .'. I.... WfaIt'IO, ,;:'ih. 'fTi 'tr.,CtmjlIootIloooo"....40.-" , .". 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Shade, Esquire, to Mr. David Michael Leonhard November 9, 1998 Page 2 We will be sending ~ copy of the Pre-Trial Conference Order to you when il is available. If you do not intend to attend the trial or to further defend, it would be helpful if you would provide us with written notice to that effect. . In view of the sensitive nature of this matter and in view of your representation by counsel of record, we would request that any communications with this office be in writing. Very truly yours, Wayne F. Shade WFS/cjt cc: Ordinary Mail John G. Dileonardo, Esquire - . .- Lr; -' _~J ( .. ,. . I ! ! , c:.;. (,. I '" r , L " , .... L , 5, Admitted, 6, Admitted in part. It is admitted that Plaintiff approved Technicomp as an outside vendor to perfonn certain work for the Plaintiff, Defendant is without sufficient knowledge of the truth or falseness of the remaining allegations of 1 6 of th~ Complaint. Therefore. these same allegations are denied and strict proof thereof is demanded at the time of trial. 7. Denied as stated. After reasonable investigation. Defendant is without sufficient knowledge to fonn a belief as to the truth of the allegations contained in 1 7 of Plaintiffs Complaint. Therefore. these same allegations are denied and strict proof thereof is demanded at the time of trial. 8. Denied as stated. After reasonable investigation. Defendant is without sufficient knowledge to fonn a belief as to the truth of the allegations contained in 1 8 of Plaintiff's Complaint. Therefore. these same allegations are denied and strict proof thereof is demanded at the time of trial. 9, Denied as stated. To the contrary. defendant avers upon infonnation and belief that Defendant's decedent invoiced the Plaintiff properly for actual work perfonned which work was specified to be perfonned by Technicomp in accordance with Plaintiff's outside vendor agreement with Technicomp. 10. Denied as stated, To the contrary, Defendant avers upon infonnation and belief that Defendant's decedent invoiced the Plaintiff properly for actual work perfomled which work was specified to be perfonned by Technicomp in accordance with Plaintiff's outside vendor agreement with Technicomp. 11. Denied as stated. After reasonable investigation. Defendant is without sufficient knowledge to form a belief as to the truth of the allegations contained in , 11 of Plaintiff's Complaint. Therefore, these same allegations are denied and strict proof thereof is demanded at the time of trial. It is further averred to the contrary that defendant's decedent andlor Technicomp submitted invoices for work performed on behalf of Plaintiff and in accordance with Plaintiff's approved outside vendor request for same and that all invoices acc'Jrate1y reflected actual work performed and further reflected the agreed upon price for such work, 12, Denied as stated, After reasonable investigation, Defendant is without sufficient knowledge to form a belief as to the truth of the allegations contained in , 11 of Plaintiff's Complaint. Therefore, these same allegations are denied and strict proof thereof is demanded at the time of trial. 13, Denied as stated, To the contrary, it is averred that Technicomp andlor Defendant's decedent performed all of the work specified in the various invoices submitted to Plaintiff by TechnicomplDefend&nt's decedent. 14, Admitted, 15, Denied as stated, To the contrary it is averred that no fraud was perpetrated by Defendant's decedent against Plaintiff and that all monies received by decedent on behalf of Technicomp was for work actually performed and invoiced at the price agreed to between Plaintiff and Technicomp. 16-20. Denied as stated. After reasonable investigation, Defendant is without sufficient knowledge to form a belief as to the truth of the allegations contained in ", 16-20 of Plaintiff's Complaint. Therefore, these same allegations are denied and strict proof thereof is demanded at the time of trial. 21. Denied as stated, To the contrary it is averred that no fraud was perpetrated by Defendant's decedent against Plaintiff and that all monies received by decedent on behalf of Technicomp was for work actually perfonned and invoiced at the price agreed to between Plaintiff and Technicomp. 22, It is admitted that Defendant's decedent died on March 23, 1996. The remaining allegations of this paragraph are irrelevant to the adjudication of the matters raised in Plaintiffs complaint. 23. Denied as stated. To the contrary it is averred that no fraud was perpetrated by Defendant's decedent against Plaintiff and that all monies received by decedent on behalf of Technicomp was for work actually perfonned and invoiced at the price agreed to between Plaintiff and Technicomp. Accordingly, it is funher averred to the contrary that no monies are due and owing to Plaintiff from the estate of defendant's decedent. WHEREFORE, Defendant demands that this cause of action filed against him be dismissed and that all costs be taxed against the Plaintiff, NEW MATIER AND NOW, comes the Defendant, David M. Leonhard - Administrator of the Estate of Barry L, Leonhard, with this New Matter in further response to Plaintiffs Complaint, averring in support thereof as follows: 24, The responses and allegations of the Defendant t paragraphs 1-23 of Plaintiffs Complaint are incorporated herein by reference with the same force and effect as if these same allegations were set forth herein at length. 25, The Plaintiff is barred from recovery for the damages it alleges to have sustained, either in whole or in part, by operation of the doctrine of Ouantum Meruit, 26, The Plaintiff is barred from recovery for the damages it alleges to have sustained, either in whole or in part. by operation of the doctrine of estoppel. WHEREFORE, Defendant demands that this cause of action filed against him be dismissed and that all costs be taxed against the Plaintiff. COUNTERCLAIM AND NOW, comes the Defendant, David M. Leonhard - Administrator of the Estate of Barry L, Leonhard, with this Counterclaim against the Plaintiff, averring in support thereof as follows: 27. The responses and allegations of the Defendant to paragraphs 1-26 of Plaintiffs Complaint are incorporated herein by reference with the same force and effect as if these same allegations were set forth herein at length. 28, On or about August 18, 1995, the Plaintiff issued a check to Technicomp in the amount of $80,000.00 which check represented payment to Technicomp for design work performed for, submitted to and approved by the Plaintiff, 29. Following the arrest of Defendant's decedent, Defendant believes and, therefore, avers that Defendant's decedant was required to return this check to Plaintiff as a condition of bail for the offense with which he was charged, 30. Defendant's decedant had performed or caused to be performed all work required of Technicomp in accordance with the outside vendor contract between Technicomp, which work represented the underlying basis for the issuance of the $80,000.00 check by Plaintiff to Technicomp and/or Defendant's decedent. untimely death prevented the matter from ever coming to trial. The instant Petition of Plaintiff to amend his Complaint seeks to transfer this matter from the law side to the equity side of the Court. Presumably, this is to facilitate Plaintiff's stat-:d intent to thereafter file a Petition or otherwise request that the court place the assets in question in a constructive trust. It is without question under Pennsylvania law that the establishment and maintenance of a constructive trust are within the equitable powers of a Court of Common Pleas, Similarly, however, it is also without question under Penn~ylvania law that the equity jurisdiction and equitable powers of a Court should not be sought or exercised unless and until it is clear that there is no adequate remedy at law. In the instant matter there is an adequate remedy at law and, indeed. this Court has already acted to secure the assets and prevent their diminution in any fashion before a resolution can be reached as to the rightful and lawful ownership of such assets , As correctly referenced in both Plaintiffs Complaint and in his Brief in Support of his Petition to Amend Complaint. this Court has issued two Orders which, in combination. already have placed these assets under the jurisdiction of the Court and the Court has directed that such assets not be distributed without further express direction from it. Thus, the central purpose of a constructive trust has already been served. Moreover, the claim of Plaintiff, Giant Food Stores, Inc. and the Counter-Claim of Defendant on behalf of his decedent, are classic issues which should be resolved at law. under contract principles, and not through resort to equity. Accordingly, as the Plaintiff has failed to articulate any immediate need or reason to resort to the equitable side of the Court, and as the claims brought by Plaintiff at 96-6078 of the civil term of this Court as weli as the counter-claims brought by Defendant are matters which sound at law v. IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION. LAW NO. 96-6078 CIVIL TERM GIANT FOOD STORES, INC. Plaintiff DAVID MICHAEL LEONHARD Administrator of the Estate of BARRY L. LEONHARD, Defendant RESPONSE TO PLAINTIFF'S PETITION TO AMEND COMPLAINT 1-24, Defendant/Respondent incorporates herein the Answer and New Matter filed by it, and responds to Plaintiffs original complaint filed herein. 25. Admitted. 26. Admitted, 27. Admitted. 28. Admitted, 29. Admitted. 30, Admitted. 31. Admitted, 32. Admitted. 33, Admitted, 34, Admitted, 35. Denied as stated. To the contrary, Defendant/Respondent avers that he is currently conducting an investigation marshalling assets and/or potential assets of the estate and is willtout sufficient infonnation, therefore, to accurately a5sess the total value of the assets and/or potential WAYIIll 1', SUAIlU A_ "lAw 51 w... Panlm '""" CarlWe, I'aw)'tvu.lI 17011 GIANT FOOD STORES, INC., Plaintiff IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW v. DAVID MICHAEL LEONHARD, Administrator of the Estate of BARRY L. LEONHARD, Defendant . NO. 96-6078 CIVIL TERM PLAINTIFF'S BRIEF IN SUPPORT OF PETITION TO AMEND COMPLAINT STATEMENT OF THE CASE Plaintiff's complaint and Petition to Amend Complaint herein set forth the following factual background of this case. In February of 1994, Defendant's Decedent Barry L. Leonhard (hereinafter "Leonhard") became employed with Giant Food stores, Inc. (hereinafter "Giant") as the manager of facility planning. In December of 1994, in his capacity as manager of facility planning for Giant, Leonhard obtained approval frtm the Vice President of Real Estate/construction for Giant to engage a business known as Technicomp as a vendor to Giant. In obtaining the approval of Technicomp as a vendor for Giant, Leonhard did not inform Giant that Technicomp was nothing more than a name which Leonhard had assigned to a nonexistent entity. Also, in obtaining the approval, Leonhard did not inform Giant that Technicomp was not even registered as a fictitious name in the Commonwealth of Pennsylvania. As soon as Leonhard obtained approval of Technicomp as a vondor for Giant, Leonhard began creating purchase orders which WAYII1! F. SIIAOD A_ II Law llWUlI'<xoI"'sum CIlliIIe, l'l>aoI)'~uJa 17013 purported to be for architectural/engineering services and architectural/engineering computer aided drafting design services from Technicomp for various projects at various store locations of Giant. Leonhard would assign the purchase orders to the various specific projects at specific store locations of Giant and then invoice those purported services to Giant. Between December of 1994 and August of 1995, Leonhard submitted seventy- seven invoices to Giant in a total amount of $359,757.40. Leonhard even used Giant's computers at the corporate general offices of Giant to generate some or all of the invoices which were submitted to Giant. However, Technicomp never did any work for Giant whatsoever; and on July 28, 1995, Leonhard voluntarily terminated his employment with Giant. Prior to learning of Leonhard's fraud, Giant had issued checks for all of the invoices in the tot~l amount of $359,757.40. The final check from Giant to Technicomp was dated August 18, 1995, in the amount of $80,040. Leonhard deposited all of the checks prior to the final check in the Technicomp account which he had opened at Orrstown Bank for that purpose. However, Leonhard attempted to cash the final check rather than depositing it. When he attempted to cash the final check, Orrstown Bank contacted Giant to confirm Leonhard's authorization to cash a check in that amount. The inquiry by orrstown Bank precipitated an immediate investigation which revealed the fraud, and payment was stopped on the final check so that the total amount that Leonhard received in the name of Technicomp was $279,717.40. Giant has averred that the sum of $279,717.40 was -2- received by Leonhard on the basis of a deliberate fraud on the part of Leonhard against Giant. On March 23, 1996, Leonhard was found dead QS a result of a cocaine overdose secondary to chronic drug abuse. Prior to his death, an investigation by the District Attorney of cumberland county, Pennsylvania, developed substantial evidence that Leonhard had misappropriated the aforesaid sums. 'As a result of the investigation, charges of theft by deception and theft by unlawful taking were filed against Leonhard at No. 95-1509 criminal Term in this Court and graded as felonies of the third degree. As a result of the filing of the charges, approximately $170,000 of cash and other assets carne under the custody or control of the District Attorney in the form of bail and evidence of the fruits of Leonhard's fraud. At the time of Leonhard's death, the criminal charges against him had not yet corne to trial. As a result of Leonhard's death, Giant filed a Petition in the orphans' Court Division of this court on April 10, 1996, in which Giant averred that all of the assets which were then under the control of the District Attorney and attributable to Leonhard were never the lawful property of Leonhard but were the direct fruits of his misappropriation of the funds of Giant. Because no one had , WAYII1! F. SHAD8 AlIDmc)'all.&w II W... 1'omI'" _ c.ru.1e, 1'alAIyt<1Illa nOIl applied for Letters Testamentary or Administration in Leonhard's Estate by that time, Giant requested that this Court maintain continuing control over the assets to assure their proper applination to Giant as their rightful owner. A conference call was conducted among counsel for the parties hereto and the -3- WAYNB F. SHADD ACb:Imq It Llw Jl W... Poonf.... s.... CartllIo, 1'aIoJy1...... 17013 . , Honorable J. Wesley Oler, Jr., J., on April 18, 1996, concerning Gian~s Petition of April 10, 1996. As a result of that telephone conference call, two separate Orders were entered on April 18, 1996. The first of said Orders was docketed to the criminal case of Commonwealth v. Barry Lee Leonhard at No. 95-1509 Criminal Term and provided that the evidence seized by the Commonwealth in the criminal case should not be transferred or otherwise disposed of by the District Attorney or Clerk of Courts pending further Order of Court. The second of the Orders was docketed to the Estate of Barry L. Leonhard at No. 21-96-338 in the Orphans' Court Divislon of this Court and confirmed the withdrawal of Giant's Petition of April 10, 1996, in anticipation of the prompt filing of a Petition for Letters of Administration in the Leonhard estate by a member of Leonhard's family. On May 24, 1996, the Defendant herein filed his Petition for Letters of Administration, and Letters of Administration were issued to him that same day. On November 6, 1996, Giant filed its Complaint at law herein. On January 3, 1997, Defendant filed his Answer with New Matter and Counterclaim. In reviewing Defendant's responsive pleadings, it became evident to Giant that the more appropriate resolution of. this case would be through imposition of a constructive trust in equity as a foundation for transfer of the assets in question from the control of the District Attorney to the proper owner as opposed to the pending action at law which is limited to money -4- WAYNB F. SIIADD ^lIonMlyalt.lw S3 W... Pomtrd 8l/'Cd CartIIIo,_Iv..1a 17013 damages and would not facilitate an order of transfer from the District Attorney where the assets are in the custody of the District Attorney under the unusual procedural posture of this unusual case. Therefore, Giant requested the agreement of Defendant to amend the Complaint accordingly without leave of Court. Defendant declined to agree, and Giant filed the Petition to Amend Complaint and transfer this case to the equity side of the Court which is now before your Honorable court for disposition. ARGUMENT IN THE ABSENCE OF PREJUDICE TO THE ADVERSE PARTY, THE RIGHT TO AMEND PLEADINGS SHOULD BE LIBERALLY GRANTED. Rule 1033 of the Pennsylvania Rules of civil Procedure provides in pertinent part, as follows: A party, either by filed consent of the adverse party or by leave of court, may at anytime change the form of action, correct the name of a party or amend his pleading. The amended pleading may aver transactions or occurrences which have happened before or after the filing of the original pleading, even though they give rise to a new cause of action or defense. (Emphasis supplied) In construing this Rule, the Pennsylvania supreme Court has stated that the right to amend should be liberally granted at any stage of the proceedings unless there is an error of law or reSUlting prejudice to an adverse party. Werner ~.-Zazyczny, 545 Pa. 570, 584, 681 A2d 1331, 1338 (1996). At the time of filing of the Petition to Amend complaint and since that time, there has been no discovery or other activity in -5- WAYNB F, SHADD AUomey at Law s] W... PantRl S_ CartWo, 1'aloJy"'" 1701l this case beyond the filing of the initial pleadings. Moreover, we specifically averred in Paragraph 37 of our Petition to Amend the Complaint that Defendant would not be prejudiced by Petitioner's amendment of its complaint to include a prayer for imposition of a constructive trust and for transfer of this case to the equity side of this Court. That averment was not denied. Therefore, it is admitted. We have averred in our Petition to Amend complaint th~t the Leonhard estate is without assets other than its claims to the assets which are under the Court Orders in this case. Defendant is unable to specifically deny that. He simply says that, more than ten months after the issuance of letters of administration, he is still looking for assets. We submit that it would be the duty of the administrator to promptly determine the existence or nonexistence of any assets of the estate and that his failure to locate any such assets within ten months of the issuance of letters would go a long way toward establishing that the estat.e is insolvent. Therefore, this case is not about a money judgment against nonexistent assets but about the proper application of funds which were fraudulently received by the decedent. A constructive trust arises when a person holding title to property is subject to an equitable duty to convey it to another on the ground that he would be unjustly enriched if he were permitted to retain it. The necessity for such a trust may arise from circumstances evidencing fraud. Hercules v. Jones, 415 Pa. Super. 449, 457-458, 609 A2d 837, 841 (1992). A request for the establishment and enforcement of a constructive trust is a matter -6- fraud, and payment was stopped on the final check so that the total amount that Leonhard received in the nome ofTechnicomp was $279,717.40. Giant has averred that the sum of $279,717.40 was received by Leonhard on the basis ofa delibcrate fraud on the port of Leonhard against Giant. On March 23, 1996, Leonhard was found dead as a result of a cocaine overdose secondaty to chronic drug abuse. Prior to his d<<ath, an investigation by the District Attorney of Cumberland County, Pennsylvania, developed substantial evidence thai Leonhard had misappropriatcd the aforesaid sums. As a result of the investigation, charges of theft by deception and theft by unlawful taking were filed against Leonhard at No. 95-1509 Criminal Tenn in this Court and graded as felonies of the third degree, As a result of the filing of the charges, approximately $170,000 of cash and other assets came under the custody or control of the District Attorney in the fonn of bail and evidence of the fruits ofLconhard's fraud. At the time of Leonhard's death, the criminal charges against him had not yet " come to trial. As a result of Leonhnrd's death, Giant filed a Petition in the Orphans' Court Division of this Court on April 10, 1996, in which Giant averred that all of the assets which were then under the control ofthe District Attorney and auributable to Leonhard were never the lawful property of Leonhard but were the direct fruits of his misappropriation of the funds of Giant. Bccause no one had applied for Letters Testamcntary or Administration in Leonhard's Estate by that time, Giant requcstcd that WAYNE F, SIIADE Attorney 1\ Law Ihis Court maintain continuing control over the asscts to assure their proper application to Sl Wcs1 Pomfrct Strcl:t CarlidC,PCMI)h'lnil I lOll .J. 8. In obtaining said approval of Technicomp as a vendor for plaintiff, Defendant's Decedent did not inform plaintiff that Technicomp was not even registered as a fictitious name in the commonwealth of Pennsylvania. 9. As soon as Defendant's Decedent obtained approval of Technicomp as a vendor for plaintiff, Defendant's Decedent began creating purchase orders which purported to be for architectural/engineering services and architectural/engineering computer aided drafting design services from Technicomp for various projects at various store locations of Plaintiff. 10. Defendant's Decedent would assign the purchase orders to the various specific projects at specific store locations of Plaintiff and then invoice those purported services to Plaintiff. 11. Between December of 1994 and August of 1995, Defendant's Decedent submitted seventy-seven invoices to Plaintiff in a total amount of $359,757.40. 12. Defendant's Decedent even used Plaintiff's computers at the corporate general offices of Plaintiff to generate some or all of the invoices which were submitted to plaintiff. 13. Technicomp never did any work for Plaintiff whatsoever. WAYNE F. SHADE AUoomt)'.tLaw ji] Wed Pom(rd SlrCd Cadit~, ~Iyania 11013 -3- ~ -. .... f r .:2 I,. tv ~ N ,j :5. ;.-: ') ';:.d ..f-; :r~ ,J:,~ - >', u.. .}~ ~ ~ f' L \D :.'J) Q2 I ;.,1(; ~ "I" - ..... , . Iii! f'.: (".;; :1,: ''',l 11 It ., ~ U 'D :.:J 1:1 01 U ~ ~ d. ;1 P.CIlifi O~:Z:~~ P.t-1 -H Uf::i:7 ro.E'3U 00 ~U ~!~ ~1zl0l . :z: 0 . U ~ - CIl ~'H O'H E-<or! CIl-IJ ~.;l 011l 0.-1 ro.p., ~ 'H o Ql -IJ I1l -IJ -., i~ - ~~~-IJ ..ll-l~~ ~OOrcl ii! tJ~Hi U I-l 'H H.w . QJ :> ): "..l~ .... ~ j::>< ~~ ~ H ;S ~ U . . . . . .. " ~ '" ~ 3 j i : ~ i j ~ Ii J Puge I l'()R ~:mJCATIONAI. USE ON!.\' ellalum Search Result .100 A.2d 122'1 (C1le us; 46 1'..Cmwllh. 621, .634, 406 A.2d 1229, "1236) Rank 30 of 86 O.1Uhase PA.CS.ALL November 28. I 'In, the Hmeau withdrew its pelition for review at No. 1824 C. 0.197'1. ...HI The petillon for review at No. 1829 C.D.1977, requesting. in essence, clarification of the August 10, 19/'1, order sn that it ilpplics back to all ratC.i since prl3. rl~ll1ilins outstanding. Yet another round uf litigation was spawned nn March 2, \918, when the Commissioner, in disposing nf an unanswered petition i"tled by the Coal Mine Compensation Rating Bureau, stayed all applicatinn of the August 10 orller unlll Ilmty 13ll) days after dispositinn hy this Cnurt nf the outstanding preliminary nbjectinl\s to No. 912 CD 1977. TillS stay orller was the subjeetnf yet a third petitinn fnr review docketed at Nn. 502 C.D 1918, which p"1I1101\ snughtlU va"ale Ihe COllllllissioner's stay order. This, lUO, was wilhdrawnlll Fehruary of 19'19. [I01111J Several eorullaries nf the same basic tenet uf equity jurisdietinn are involved in this case. Equity has jurisdiction only In Ihe ahsence nf a full, complete and adequate remedy at law. Sexton v, Stine, 456 Pa. 301,319 A.2d 666 (1914); 51. J,,,, Minerals Corp. v. Goddard, 14 Pa.Cmwlth. 624, 314k.:t<l8.fiO (1914). This axiom will hold to negale a caUse of action in equity when the legal remedy has been4gn O(Jf'See e. g., Lilian v. Comlllonwealth, 461 Pa. 15,354 A.2d 250 (1916); Commonwealth v. Glen Alden Corp., 418 Pa. 57. 210 A.2d 256 (1965); when it has heen pursued, but with results unsatisfactory to a c1aimanl, SI. Joe Minerals Cnrp. v. Goddard, supra 14 Fa.Cmwlth. at 629, 324 A.2d at 80); Cf. Pennsylvania Life Insurance Cu. v. Pennsylvania National Life Insurance Co., 411 Pa. 168,208 A.2d 180 (1965) (statutory proceedings instituted, adjudication had, no appeal taken, equity will nnt assume jurisdiction); or when it is in the midst of being resolved, Aldine Apartments, Inc. v. Department of Revenue, 32 Pa.Cmwlth. 296, 319 A.2d 333 (1911); 51. Joe Minerals Cnrp. v, Goddard,supra. (12) The Statutory Cnnstruction Act of 1972, I Pa.C.S. s 1504, demands slrict compliance with statutorily prescribed procedures. This rule is panicularly cogent within the context nf proceedings hefore a quasi.judicial administrative agency. "When the legislature has seton fit to enact a pervasive regulatory scheme and to establish a governmental agency possessing expertise and broad regulatory alld remedial powers to administer that statutory scheme a cuurt should be reluctant to interfere in those matters and disputes which were intended by the Legislature to be considered, al least initially, hy the administrative agency. Full utili711tion of the expertise derived from the development of various administrative hodies would be frustrated by indiscriminate judicial intrusions into matters within the various agencies' respective domains." Feingnld v. Bell of Pennsylvania, 411 Pa. 1,6.383 A.2d 191,193 (1918) (footnote omitted). Copr. '" West 1991 No claim to nrig U.S. gnvl. works . . .-oR EOUCATIONAI. USE ONI.Y Page I Citalion 389 A.2d 1160 Found Oocument Rank I uf I Oatabase PA.CS Page I (Clle us: 256 Po.Super, 353, 389 A,2d 1160) JOSTAN ALUMINUM PRODUCTS CO" INC. and Alumo Products Co" Inc. v. MOUNT CARMEl. DISTRICT INDUSTRIAL HJND, John F. Miles Co., Celote. Corporation, and Travelers Indemnity Company, Appellants. Superior Cnurt of Pennsylvania, Argued Oec. 1, 1917. Oecided July 12, 1918. Lessee and sublessee of industrial huilding hrought suit in equity 10 ohlain a mandatory injunction directing varinus defendants, including Ihe lessor of the huilding, to construct and install a new roof. The Cnurt of Cnmmun Pleas, Northumherland Cnunty, Nn. 11.1207, Krehel, J.. decreed thai a mandatory preliminary injunction he issued, and defendants appealed. The Superior Court. Philadelphia District No. 2038 Oetoher Term, 1911, Cercone, J., held that: (I) the evidence adduced at the hearing was iusufficient 10 eSlablish a clear right to injunctive relief; (2) where the righls of the parties were less than entirely clear, a preliminary mandatory injunctinn would not lie; (3) the circumstances did nnt estahlish that the lessee and suhlessee lacked an adequale remedy allaw; (4) the circumstances did nut eSlablish lhatthe slatute of Iimilations barred any action at law, and (5) even if the lessee and Page 9 (Clle us: 256 Pa,Super. 353, 389 A.2d 1160) Jostan Aluminum Producls Co., Inc. v, Mount Carmel Disl. Indus. Fund [6J ISO EQUITY 1501 Jurisdiction, Principles, and Maxims ISOI(B) Remedy at Law and Multi~'icity of SuilS 150k 13 k. Exlslenee of remedy at law and effect in generaL Pa.S' per.,1918. EquilY will entertain jurisdiction only in the absence of an adequate remedy at law. (Per Cercone, J" with two Judges cnncurring and three Judges concurring in the resull.)-- Page 14 (Cite us: 256 Pa,Super. 353, 389 A.2d 1160) "1162 .356 Oavid B. Disney, Harrishurg, for appellants. A. Stephen Cnhen, Sunbury, for appellees. Before WATKINS, President Judge, and JACOBS, HOFFMAN, CERCONE, PRICE, VAN der VOORT and SPAETH, J1. CERCONE, Judge: This is an appeal from the order of the Court of Commun Pleas of Nnrthumherland Cnunty, sitting in equity, granting a mandatory preliminary injunctinn tnthe plaintiffs, Jostan Aluminum ProdUClS Co. ("Jostan") and Alumo Products Co. ("Alumo"), directing the several defenll.1nts, Mount Carmel Dislrict Industrial Fund ("Mount Carmel"), Jnhn F. Miles Cn. ("Miles"), CelOlex Corp. ("Celolex") and Travelers Indemnity Co. ("Travelers"), 10 ennstruct and install a new ",of upon an industrial huilding occupied hy Alumo. The factual and procedural events giving rise Iuthis appeal are as fullnws. On February 25, 1911, plainliffs filed a complaint in equity against Mnunt Carmel, Miles. and CelOlex requesting the issuance of a preliminary mandalOry injunction ordering defendanls, alllong other things, tn res lore or replace a leaking roof on a plant leased by Mounl Carmel to Jostan and subleased by lhe latter to Alullln, A hearing nn the cnmplainl was Cupr. {, West 1991 No claim to orig. U.S. gnvl. works " '-C- , FOR Jo:llUCATWNAI. USE ONI.Y l'uge 2 WI A.2d II(~) Rank I of I PA.CS scheduled for March 7, 191'1. At the appointed lime, hnwever, it was discovered Ihat defendalll Miles had nnl P' . _.~__~.._. ______ ----- ~~ .-.-----------------~--- Ptlgc I H (Cite as; 256 ~a.Sup<r, 3<;3, 0358, 389 A,2d 1160, "1163) Thus, under the terms of the parties' lease. defendants would not he ohligated to make any repairs 10 the damaged roof unless the ditmage was allributahle tn faulty or defective ennstruetion. At the only bearing conducted belnw, hnwever, plaintiffs failed In present any evidence estahlishing that the damage to the roof was a result of faulty or defective construction. Accordingly, there was no clear right to injunctive relief on plaintiffs' part because of the 0359 lack of evidence on the hasie 'Iues'ion of liability on the Jlart of defend.1nlS. In short, the rights of the parties arc less than entirely clear and, therefore, a preliminary mandatory injnnetion will nO! lie. McMullan, supra; lid. of Dir.. S, Dlst.. Scranton 1,/. Roberts ct al.. supra. 161111181 Although we have concluded that the ins:alll order muSl be vacated due III a deficiency in plaintiffs' proof. it is also our opinion that even if plaintiffs had supplied the requisite cvidcm:c the faCIS would still not warralll equitable relief. For it is axiomatic that equity will entertain jurisdlctinn only In the ah.ence of an adequate remedy of law. Barco, Inc. v. Sleel Crest Hnmes, Inc.. 420 Pa. 553, 218 A.2d 221 (1966); Harris. Walsh,lnc v. Bnrough of Dieksnn City, 420 Pa. 259, 216 A.2d 329 (1966); Marshlllek v. Marshnlek, 415 Pa. 582, 204 A.2d 211 (1964); Pye v. Comm. et aL, 29 Cmwlth. 545, 312 A.2d 33 (1911). Instantly, plaintiffs' complaint in equity seeks, in effect, reSloratinn or replacement of a roof under the tenns nf a lease agreement. We perceive no reason why this claim cannm be pursued at law -_.--------------~-~--~--- ~____~______________.____~_ Page 20 (Cite lL" 256 l'u,Sup<r, 353, .360, 389 A,7.d 1160, "\164) persons who may avail themselves nf this stalule's pnlleetiun. We there held that the crilieal tesl "is whether the individual in fact lawfully furnished nr perfnrmed any of the listed activities." Leach, supra, 234 Pa.Super. at 491, 340 A.2d at 493. In additinn, we furuter nmed "that under Section 4 nf ule Act [12 P.S. s 65.4) the owner of the improvement 'al the time any deficiel\ey in such an improvement constitutes the proximate cause nf the injury' cannot take advantage nf the statule." Leach, supra. 234 Pa.Super. at 491. 340 A.2d al 493. Aecnrdingly, while we ohviously eannnt here decide whether the instant defendants can lake advanlage of this statute, we deem this issue of suflicienlmerit to reject plaintiffs' hald assert inn that the statu Ie bars any action allaw. 110) Finally, even if we could now delermine Ihat plaintiffs are precluded from resorting to an assumpsit action by virtue nf the stalute of limitations, we are not dispused 10 rule that tbis entitles them In seek equitable relief. For, "(u)nder most authorilles, tbe mere fact that the statule of limitations wnuld bar a remedy allaw Is no ground In itself for aFplying to eqully for relicI' unless plaintiff was prevented from suing by defendanl's act." 30 CJ.S. Equity s 24d; See also 27 AmJur.2d Equity s 93; Kane v. Morrison el aI., 352 Pa. 611, 44 A.2d 53 (1945); Home Owners' Loan Corp. v. Murdock, 36 Luz.Leg.Reg. 210, aflinned 150 Pa.Super. <84, 28 A.2d 498 (1942); Comm. ex reI. Reno v. Smith, 48 Oauphin 211 [1940). In the case at band, however, the Page 21 (Cite "-" 7.56 re.Sup<r, 353, .360, 389 A,2d 1160, "1164) record docs not reveal the reasons why plaintiffs have refrained from instituting litigation until now when the roof has apparently he en in a Slate uf disrejlair fnr seventeen yea" 0361 Assuming Ule statute nf limitalions docs bar plaintiffs from reeoveril\g at law, it may develop Ilull defendants were in some manner resJlunsihle for uds omissinn in which case equity may afford the plaintiffs relief. Thus the instant recnrd provides no basis for eomplelely terminaling plainliffs' cause of aetiol\. In conclusion then, we do not decide the merits of this controversy nor express any opinions thereon, We find only Ihat Ihe present pleadings and record furnish nn hasis for imposing a mandalnry preliminary injuoelinn. We do fl:el, however, that plaintiffs may very well have an adequate remedy at law. We shall, therefore, vacate the lIliln(!atory preliminary injunction and remand the matter tn the court below with directions that it be certified to th~: law ~ide of lhe court. Order vacated Case ami record remanded for certilicatioll 10 the law side of the court and proceedings consistent with this opinion. Each party to hear own cnsts, JACOBS, Preslul'nt Judge, alld 1I0FI;MAN aod PRICE, JJ., concur io the resulL Copr,l~ West 191)" No e1airn to orig, U,S, guvt. works ... l'()R .r:mJO;nONAI. USE ONLY i'age I Citation 644 A.2d 1232 Found Ooeument Rank I of I Database PA.CS Pag" I (Cite us: 435 l'a,Supcr. 54, 644 A,2d 1232) AMERICAN MOTORISTS INSURANCE COMPANY, Appellant, v, ~'AIlMERS ilANK AND TRUST CO, OF HANOVl<:R, Guardian of Nancy E, Sterner, an beompclent. Superior Cuurt of Pennsylvania. Argued Feb. 9, 199,1. Filed JUl\e Ill, 199,1. AUlUmohile insurer hrnught action for declaralllry judgment that it was no looger required to pay for care of injured insured in nursing home. (nsurer's motion to amend petition was denied by the Court of Common Picas of York Cnunty, Civil Division, No. 88.SU.()()186.08, IInm. J., and mntinn by guardian of the ins"red for judgment nn the pleadil\gs was granted, and insurer appealed. The Superinr Court, Nn. 497 Harrisburg 1993, Cavanaugh, J., held that: (I) there was no genuine issue nf fact which would preclude entry of judgment on the pleadings where insurer raised issue of whether eontillued oare of insured was custodial rather than rehabilitative, hut not issue of whether lite care was related to the accident, but (2) where installment or periodic payments were owed, fnur.year statute of limitatinns did not bar insurer from contesting current and fUlUre ohligations as well as those payments which were Page 14 (Cite a." .135 lPa.Super. 54, .59, 64,.; A,2d 1232, ""1234) the applicable no.fault automohile pnlicy under the No. Fault Act, so long as it was necessary due to accident related injuries. Id. at 51.52, 601 A.2d at80\. Thus, the fact that an insured is receiving custodial care docs not, of itself, relieve the insurer of the respunsibility of the enst of this care. Rather, the insurer must, in tenns of a motion for judgment on the pleadings, allege not only that the care is custodial, hut also that the care is unrelated to the acciden., in nrder to be relieved of financial responsihility fnr the costs uf this type of care. [3) A review of the pleadings in this case reveals that the sole issue raised hy American is whether the care provided to Nancy Sterner was cusllldial rather than rehahilitative in nature. The legal theory underlying American's p"tition wa, "60 that the can, was custudial, and therefnre, was nnt its responsibility under the tenns of Ihe pnlicy and rhe Nn.Fault Act. The iS3ue nf whether the care was accident relaled was not raised in American's petition. Thus, there did nnt exist a genllil\e issue of fact which wuuld preclude the entry of judgment on the pleadings; American's argument is mcritlcss. However, because of our resolution of American's second issue, mfra, we find that the trial court's grant of judgment on the pleadings was premature in this case. We now turn our attention to American's second issue. American contend" that the trial court erred in denying its motion tn amend because the proposed Page 15 (Cite as: 435 Pa,Supc., 54, "60, 644 A,2d 1232, "123.!) amendment did not introduce a new cause of action; or nltematively, that even if the amendment did introduce a new cause of action, its duty to pay benefits is in the nature of a continuing contract, and as such, the stiHute of limitations does not prevent it from contesting its current and future obligations under tht'. policy. 141 Pa.R.C.P. 1033 provides, in pertinent parI, that: "1235 A party, either IlY med consenlnf the adverse party or hy I"ave uf court, may at any time change the form of action, correct the name of a part) or amend his pleading. The amended pleading may aver transactions or llCeurrel\ecs which have happened hefnre or after the i"tling of the original pleading, even thnugh they give rise to il new cau!lc of actinn or defense. Pa.R.C.P 1033 (emphasis added). However, an amendmem will not he allnwed after the statute of Iimitatinns has "xpired if it lIltroduces a new cause of actinn. Shaffer v. Pennsylvania Assigned Claims Plan, 359 Pa.Supcr. DR. ""I, 5tH t\.:'d 1213.1220 (1986). An amendmel\t stales il new "ause nf aetinl\ where Ihe amendment rests on a ~hffcrcnt legal thcory, hasis for recovery or relationship between the parties than did the original pleading. Copr. \(, West }l.)(rt No claim to orig. U.S. govt. works ,'Olt E.l:Jt'Ai'lONAL USI': ONLY -1-1\ A it! III (CII" ,.>: J.'N Pa.Super. 129, 4-13 A,2d 333) Elal.,,, l'. DENNY, Appellanl, ,'. Mllr.l(Jrll' M. CAVAliJ~:tU, !:i/k/a Marjorie Man~c M"Call, alkla Marjorl" M. Rudolr and WllIlam Cavalieri. Superior Court of Pennsylvania. Argued May 6. 1981. Hied March 19.1982. Action was brought set'king accounting and seeking IInposiwlfl of constructive trust. The Court of COllumm Picas, Civil Division, Montgomery CnulllY, No, 18.(Xl995, Cirillo, 1., emered judgmem sustaining preliminary nhjeetinns and dismissed enmplainl, and appeal was taken. The Superior Court, No. 1748 Philadelphia, 1980, Cavanaugh, J., held that complaint alleged sufficienl facls which, if proven, would sustain cause or action in equity where enmplaint alleged existence of fiduciary r"lationship and Ihat "financial advisnrs" defrauded plainliff and vinlaled their pnsition nf cnnfidence, and "financial advisnrs," if alleged facts were true, would be unjustly enriched if permiued III relain funds they had ohtained. Order reversed and case remanded 10 court below to reinstate complaint in equity. [I) Ti\tlSTSljp 91 )90k91 A "constructive trust" arises where persnn holding tille to property is subject 10 equitahle duty to convey it to anulher on ground that he would be unjustly enriched if he were permitted to retain it. l1.) 'fkl.'JS'~'S<'o~ 91 190k91 There is no rigid standard for determining whether facts of particular case require cnurt nf equity III impose constructive trust; test is whether unjust enrichment can thereby be avnided. [3J ~':-tA.U':-:QP 'll \84k41 Pleading of con fllJcIll ial relationship unnecessary further spedt1cation of fraud, Civl'mc , Rule 1019lb). 42 Pa.C.S.A makes Rules t,r.l iH,A.'J~)~ ~C Page I 18,lk50 Fraudulent intention at time of transaction can he inferred from totality of circumstances surrounding the transaction, including subsequent conduct on part of defendant. [5] FRAUI><<l= 41 184k41 Cnmplaint alleged sufficient facts which, if prnven, would sustain calIse of action in equity where complaint alleged existence of fiduciary relationship and thai "i"tnancial advisurs" defrauded plaintiff and vinlated thcir posllinn of confidence, and "financial advisors," if alleged facts were lrue, would be unjustly enriched if permilted tn retain fUl\ds they had oblained. Rule, Civ,Prnc., Rules 1019(b), 1509(e). 42 Pa.C.S.A. [5J IMPLIED AND CONSTRUCTIVE CONTRACTS~ 81 205Hk8\ Complaint alleged sufficient facts wbich, if proven, wnuld sustain cause nf action in equity where cnmplaint alleged existence of fiduciary relationship and that "financial advisors" defrauded plaintiff and vinlated lheir position of confidence, and "financial advisors," if alleged facts Were true, would be unjustly enriched if permilled to retain funds they had ohtalned. Rules Civ.Prnc" Rules 1019(h), 1509(c), 42 Pa.C.S.A. [6] EQUITY<<l= 43 150k43 Equity will not attach where t11ere is adequate remedy at law. Rules Civ.Prnc., Rules 1019(b), 1509(c), 42 Pa.C,S.A. "334 .\3- Oonnld Strum 1'1', Bryn Mawr, for appellant. .131 Marjorie and William Cavalieri, io pro. per. Befnre SPAETH, CAVANAUGH and L1PEZ, JJ. CAVANAUGH, Judge: 11\ January, 1918, lhe appellant, Elaine P. Denny, liled a enmplaint in equity against the appellees, Marjorie M Cavalieri and William Cavalieri. The complaint descrihed in detai! the lengthy relationship hetween the appellant and appellees which began in 1968 and continued until the filing of the complaint some ten years later. At the time the parties became CtJpr. D West 199" No claim to orig. U,S. govt. works fOR EmJCATJONAL US.: ONLY 443 A.2d 333 (Cite.." 297 !'a,SuP<'r. 129, .131, 443 A.2d 333, "330\) friends the appellant was a widow approximalely twenty-six years of age. The complaint alleges that hcgmnll1g in 1973 the appellant hecame vcry dependent in financial matters upon the defendants. Mr. and Mrs. Cavalieri. The appellant remarried un February 10, 1913 and the wedding reception was held at the apnellees' hnuse. By Ihis time it is alleged the appellant cnnsidered Mrs. Cavalieri her e1oseS! p"rsnnal friend and an indispensahle eompal\ion. In April of 1973 the appellam and Mrs. Cavalieri went away together to Miami all vacation and during this vacation Mrs. Cavalieri questioned the appdlant as III her financial situation. The appellant believed that she had a close cnnfidemial relationship with Mrs. Cavalieri and disclnsed her finances in full to her. Appellant wid Mrs. Cavalieri that she was financially naive and Ihat since the time her late hushand, Wayne Denny, passed away Ihat she placed all of her financial mallers in the control nf a financial advisor, Earl Killian, who had been a friend and partner of her deceased husband. The appellam disclosed to Mrs. Cavalieri 1l1at amnng her assets was an obligation in the amount of $285,000 owed by the Bishnp Nursing Home, Inc. tn the appellanl. In the spring nf 1913 it is alleged that Mrs. Cavalieri wid the appellanl Ihat Mr. Cavalieri was a financial advisor fnr weallhy penple and that it wuuld be a gond idea if he invesled appellant's money for her. Mrs. Cavalieri also insisted that the appellant nnt tell her financial aovisnr, Earl Killian, of this suggestinn. Thereafter nn almost a weekly .132 basis Mrs. Cavalieri suggeSled to the appellant that her husband becnme appellam's Iinancial advisnr. It was alleged that in March nf 1914 Mrs. Cavalieri heeame insistent thai the appellant invest her mnney with Mr. Cavalieri. On May 15, 1914, Mrs. Cavalieri came to the appellant's hnme and had the appellam write a $10,000 check payahle In Mrs. Cavalieri. She then wid Ihe appellam Ihat Mr. Cavalieri would he the appellant's investment advisnr from then on and that she should nnttell Mr. Killian uf the $IO,O<Xl investmel\l. The enr.,plainl further all"ges Ihat in September, 1914, the appellant and her husbal\d "335 separated and the appellant h(~camc even more dependent on Mrs. Cavalieri for comfort ami advice. Mrs. Cavalieri continued to insist almost daily thaI the appellant accelerate the obligation which was owed tn her by the Bishup Nursing Hnmes, Inc. In September of 1914 the appellant had the ohligation accelerated to the extent of $8S,cXXl and on I'age 2 September II, 19'14 it is alleged thut Mrs. Cavalieri c;unt: to the pl:IITlliff's house and had her write a $50,lXXl check payahle III William Cavalieri. Again, Mrs. Cavalieri stressed III the plaintiff that the plaintiff wuuld benei"tt and that she should not discuss with Earl Killian the $50,000 paymem III lite defendants. It is alleged thaI from May 14, 1914, through Seplember 16, 1916, the appellant gave a Illlal of $135,000 Inlhe appellees and that only abnlll $11,000 was repaid 10 Ihe appellaot. It is further alleged that the "plaintiff believes Ihal me moneys given hy her III dcfendal\lS had been used in part or in whole fur Ihe persol\al benefit of defendams and each of them". The complaint further alleges: 138. Plaimiff believes Ihat the moneys given hy her In ddendanlS have been used in whole nr in part for purchase of items of persnnal cnnsumptinn fnr defendams and each nf them and fnr th" improvement of dtfendants' residence. 139. Plaimiff believes that the mnneys given hy her tn dcfendams have been used in whnle or in part to increase wife.dcfendam's equily in defendams' residence. .133 140. The representalions and actinns of defendams and each of them as set forth in Ihis Cnmplaint with respect to plainliff nnd III the use of plaimiff's money constitute a fraud. The prayer of the eomplaim requested Ihat Ihe appellees, defendams in the court below, be declared trustees ex maleficio under a constructive trusl for the benefit of the appellanl nnd 1l1nt an a"counting be direeled. The prayer also requested that Ihe appellees be directed III pay punitive damages in the amount of $300,000. T~e appellees filed preliminary objections on the ground, inter alia. that the appellam had an adequale remedy at law and requested that the case be certified tn the law side of Ihe court. The court below sustained the preliminary nhjections and dismissed the cnmplaint. It is from this order that an appeal has been tllken. In its upininn in support of the urder the court helow slated: "The primary reasnn for the order of the court dismissing Ihe complaim was that the plaintiff has an adequale remedy at law". It is ohvious from reading through the complaint that alt the plaintiff seeks is a relurn of her mnney. That clearly gives rise to a suit in assumpsit and not an equity action. " Copr." West 1991 No c1aill1lll orig. U.S. gOVl. works FOR U)UCATlONAI. USE ONLY 443 A.2d :U3 (Cite 11." 291 ,'a:;uper. 129, .i33, 443 A,2d 33J, "335) 111121 We disagree wIth thIS analysis nf the appellant's complaint. Appellant is seeking an accounting, a traditional remedy in equity. and is alsu requesltng that the appellees be declared trustees ex maleficio under a constructive trust. A constructive trust arises where a person holding title III property is subject III an equitahle duty to convey It III another on the ground that he would he unjustly enriched if he were p'~rmittcd to retain it. Vohe 'V. Yohe, 466 Pa 4{)5, .\5.\ A.2d 417 (\916). "Such a trust m"y arise where there is a hrcach of eoni"tdenltal relatlllnship by the transferee, or it may arise out of circumstances evidencing fraud. duress, undue influence ur mistake." Chambers v. Chambers, 406 Pa. SO, 54, 176 A.2d 613, 615 (1962). There is no rigid st^ndard for determining whether the facts nf a particula' .134 case require a court of equity to impose a constructive trust; the test is whether unjust enrichment can thereby be avoided. Stauffer v. Stauffer, 465 Pa. 558, 351 A.2d 236 (1916). See also Scott v. Purcell, 264 Pa.Super. 354,399 A.2d IOR8 (l979j. 13114)[5)[6] Pa.R.C.P. 10l9(h) requires Ihat fraud he averred with particularity. Nevertheless, Ihe relation of the parties and the inference of fraud may arise from the attendant circumstances. Keehn v. Granite Run, Inc. (Oel. County) 73 D. & C.2nd 301 (1916). Further, the pleading of a confidential relationship makes unnecessary the further specification of fraud. Auman v. Auman, 51 Northumberland Legal J. 36 (1918). A fraudulent inlention at the time of "33~ transaetinn ~an he inferred from the tOlality of the circumstances surrnunding the transaction, including subsequent Puge 3 cnnduet nn the pari of the defendalll. Stauffer v. Stauffer, supra. We believe thai the appellalll has alleged sufficient facts which if prnven would sustain a cause uf aetinn in equity. The complaint alleges the existence of a Iiduciary relatinnship and that the appellees defrauded the appellant and violated their pnsilinn of ennfidenee. Ii the facts as alleged are true the appellees wnuld he unjustly enriched if pennined to retain the property which they have nhtained under the circumstances set fnrth. Under the facts alleged the remedy at law is nnt adequate.IFN II I;N 1. Equity will nut attach where then: is an adequate remedy at law. Herr Abstract Company v. Vane" 284 Pa.Super. 111,425 A.2d 444 (\980). Even If the remedy at law were adequate, however. the court below erred in dismissing the complainl. Pa.R.C.P. 1509(e) Provi~es: (c) The objcction of the cl(isu:nce uf a full, cumplcu: and adequillt: non. statutory remedy at law shall he raisell by preliminary objection. If the nbjccti0l1 is sustained. the court shall certify the action to the law side of the court. If not so pleaded. the objection is waived. If the objection of adequate remedy at law is raised by the dcfcm.lant and sustaineLl as valid. the court is given 110 option, The certification to the law side is mandatory. GtKxJrich.Amram, 2n~, VuL 5 page 12S. See also Klemnw v, Time. Incorporated. 46~ Pa. 189, 352 A.2~ 12 (1976). Order reversed and case remanded to the court helow tn reinstate the complaint in equity. ENO OF OOCUMENT Copr. .n VIes! 1991 No claim to mit~ U.S. gnvt. works >- CJ .. C'; ,. r:'" .. -; .< c w- ''--~ o. -} :, , fE' -' u... , ;.~ ~; c c:J i') l. .1:: "- ._, ~JII =="', if,] u... . c.-; _.JCl- l~; - :_) u. '0 CJ O' ,.) .. ..... . \ '. No. 20 GIANr RXD Sl'ORES, IJIC. Wayne F. Shade, Esq. vs. Ilt\VIO MIOlAEL LFXNIARD, ADfiNISTRATOR OF 'lllE ESTATE OF ~ L. LEXNIARD John G. DiLeonardo, Esq. No. 96-6078 Civil Tenn Plaintiff's Petition to Amend Complaint Listed March 24, 1997, by Wayne F. Shade, Esq. " ... ~ '20 Plaintiff's Petition to Amend Complaint Facts: Barry Leonhard was charged with theft by deception and theft by unlawful taking in connection with the fraudulent misappropriation of $359,757.40 from his employer, Giant Food stores (plaintiff). As a result, $170,00 in cash and assets came under the control of the District Attorney's Office in the form of bail and evidence. Leonhard died of a drug overdose before the case went to trial. Plaintiff Giant filed a petition in Orphan's Court alleging that the money and assets were never Leonhard's lawful property and were the direct fruit of his misappropriation of Giant's funds. Following a conference call with Judge Oler, an order was issued providing that evidence seized in the criminal case should not be transferred pending further order of court. A second order was filed withdrawing Giant's petition to the Orphan's Court. Letters of Administration were filed by defendant (Administrator of Leonhard's estate). Giant then filed a complaint at law asking for money damages. Issue: Should plaintiff (Giant) be allowed to amend plaintiff's complaint to change the form of action from law to equity? Plaintiff's Legal Argument: Under Pa.R.C.P. 1033 the right to amend should be liberally granted. Leonhard's estate is insolvent. Therefore, plaintiff would like a constructive to be granted as the most appropriate form of addressing the fraud committed against it. Such a remedy can only be granted by equity. Defendant's Position: there is an adequate remedy at law. The j - GIANT FOOD STORSS, INC., Plaintiff IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA v. CIVIL ACTION - EQUITY DAVID MICHAEL LEONHARO, Administrator of the Estate of BARRY L. LEONHARO, Defendant NO. 96-6078 EQUITY TERM AND NOW, this ORDER OF COURT ~ rJ day of September, 1998, a pretrial conference in the above matter is SCHEDULED for Thursday, November 5,1998, at 9:00 p.m., in Chambers of the undersigned judge, Cumberland County Courthouse, Carlisle, Pennsylvania. Pretrial memoranda shall be submitted by counsel in accordance with C.C.R.P. 212-4, at least five days prior to the pretrial conference. TRIAL in the above matter is SCHEDULED for Wednesday, December 16, 1998, at 9:00 a.m., in Courtroom No.1, Cumberland County Courthouse, Carlisle, Pennsylvania. ,>. r-. " I"; ! .. BY THE COURT, to: , , , , ( " tl~ i. , 1- - ~ . L I L , , , , ... -:-~ ". ..._~ t\ u '.' , Wayne F. Shade, Esq. 53 West Pomfret Street Carlisle, PA 17013 Attorney for Plaintiff ~~ s ~I ~ 0 t h. ~ '" ~~ ~ ~ - ~ Q ;;! r.l .... 8 ~ ~ ~ ~ ~ ~ . ~8:i~ ~ ~~~~ ~ ~~II ~ ~ PI ~J "- 8' ~ ; ~f~ "-"- ,; ~I.J" ~ < ~! 2i ~~ ~ ~' >e!! ~~~ C) <!Xl "- - J . . .OCT 3 0 1995t!> : .' .. '. v. IN THE COURT OF COMMON PLEAS OF CUMBERLMlD COUNTY, PENNSYLVANIA CIVIL ACTION - EQUITY GIANT FOOD STORES, INC., plaintiff DAVID MICHAEL LEONHARD, Administrator of the Estate of BARRY L. LEONHARO, Defendant NO. 96-607B EQUITY TERM AND NOW, this tl. OROER OF COURT (& day of February, 199B, upon consideration of Plaintiff's Motion for Rule Absolute with respect to the Rule issued by this court on December 2, 1997, and following a telephone conference in which Plaintiff was represented by Wayne F. Shade, Esq., and Oefendant was represented by John G. DiLeonardo, Esq., and Defendant's counsel having indicated that his present address is 4650 Fritchey Street, Harrisburg, PA 17109, and that he will file a praecipe to place this change of address on the record, Oefendant is given 10 days from the date of this order to provide answers to Plaintiff's interrogatories and requests for admissions. In default of the same, the relief requested in Plaintiff's proposed order accompanying the Motion for Rule Absolute will be granted. BY THE COURT, J :", , : ') Wayne F. Shade, Esq. , 53 West Pomfret Street " , 1 Carlisle, PA 17013 ) n 'IP " Attorney for Plaintiff .1h.a.....(t...,.... c..jU'--- .I. ,)0 ... I~' [ t ,-}.- ) ," ).S;.t I t-J\..-ll~- 11.(,). " 6 1 ~L... )J. 1 " ..-0 ) " .. ~ --: UJ .q -, ir- ..:1' f':: :z ('4 .' h .. ~~~ :: UJ..~ - c"l" ~ :<?'~ i-c, h-l u_ .~. r 9" ~() . . ,;) ill" .''1~,. 'i" i',.:;;~ lj;;\., ~ . j ,11) ~ .( ,~l~ -, , ". CO '.j 0 (J\ U o ~~ p.~ ~~ ><ifi liP<~~ e .S U~O'..l IzlH to. l> o IH o U E-<u:z: ~!S~ o ~o U U\O <, ~Izl~~ :z:~~O HUU:Z: 'H o Gl .u I1l .u . . Ul ~ Ii . ~~ ~~~~ E-<or! ..ll-l~ I1l CIl-IJ ~ 00"1:1 ~.~ ii!tJ~HI o I1l U I-l ~ ~~ :> !i!~...i2l .... E-< ~ s:l~>< ~ ~~ t!l ~< . p:: o ro. s~ E-<..l 00 ):CIl Ul~ ro.lzl ~~ :z: 3 p., ....., . , '. JAN {. n lCJ9StP '" ~ 3! i ~ ~ i ~ ~ ~ ~ ! ~ ~ ~ ~ ~ < ~ ~ u . . . WAYNE F, SHAtlI! Al\I.wncy III lAW 5) Wul Pumrrt( SlI"' (".,Ii,k, l'mnlylVlniA I1UIl in this case are annulled as a result of the deliberate fraud of Defendant's Decedent as more specifically averred in the Amended Complaint herein. WHEREFORE, Plaintiff demands that the New Matter of Defendant be dismissed and that judgment be entered in favor of Plaintiff and against Defendant. ANSWER TO COUNTERCLAIM 40. The averments and responses to Paragraphs 1 through 39 of the pleadings are at issue. Therefore, no further response is required. 41. The averments of Paragraph 41 of Defendant's Counterclaim are admitted in part and denied in part. It is admitted that on or about August 1B, 1995, Plaintiff issued a check to a non- existent entity designated by Defendant's Decedent as Technicomp in the amount of $BO,OOO, but it is denied that the check represented payment to Technicomp for design work performed or submitted to and approved by Plaintiff. On the contrary, Plaintiff avers that the check was drawn to the nonexistent entity on the basis of the fraudulent representations of Defendant's Decedent that the nonexistent entity had performed design work for Plaintiff. 42. The averments of Paragraph 42 of Defendant's Counterclaim are denied. On the contrary, Plaintiff avers that Defendant's Decedent was required to deposit the check in the amount of -2- ~;:S 3~ P.CIl :z:!ii! :E: ~f:l~~ o -::J U~O'..:I ro. Izl~ o I H o U ~!U~~ U U\Q <, ~Izl::l~ :z: 1:70 >- \0 ... ~ ,,, (- ,. '. '" Ig N ..1..1'" ().....: .~ (...1.('" 0: ~ Cl~ ..:r ''-:r 1 0.: .~), n. N i':-~ I" n. 'Biil F UJ l-. u.. en -'" 15 f- a C'\ . U :z: H - CIl l:l'H O'H E-<.... CIl-IJ j:: ~.... 011l 0.-1 ro.P. ~ 'H o Ql -IJ I1l -IJ -U) ii . ~~~j:j ..:I1-l~t1l ~OOrcl tJ~Hi I-l 'H :> !iJ t:...i~ or! ~j~ ~ ~~ ~d ~ ~~ ..:10 P.U l:lo E-< !fl~ ~~ ~~ 3 '" Iol ~ ~ ~ ~ ~ I roo: ~ ~ ! ! ~ Ii u .' ; ~ . WAYNE F, SHADP. Ad.omc)'at Law 'J Weal Pumfm Slrrd earn.Le, rmn.ylunia 17011 4. On September 26, 1997, Plaintiff's Interrogatories and Request for Admissions wer~ served upon Defendant through his said counsel of record. 5. Said written discovery inquired specifically into th~ issues of the case as pleaded in the Amended Complaint and required responses within thirty days from the date of service. 6. After two months, Defendant has provided no responses whatever to the pending discovery or any indication as to his intentions with respect to the pending discovery. 7. Plaintiff avers that complete responses to its written discovery are absolutely essential to its advancement of its legitimate claims herein. WHEREFORE, Plaintiff requests that your Honorable Court issue a Rule upon Oefendant to show cause, as follows: (a) Why this Motion to Compel Discovery should not be granted and Plaintiff's Request for Admissions be deemed admitted and why Defendant should not be ordered to file his Answers to Plaintif~s Interrogatories; (b) Why Defendant should not be precluded from introducing evidence in opposition to Plaintiff's claims ugainst Defendant; and (c) Why Defendant should not be ordered to pay Plaintiff's reasonable counsel fees at the rate of $150 per hour incurred in -2- obtaining an Order compelling discovery and imposing sanctions, it any. Respecttully sUbmitted, ~~,~ Wayne . Shade, Esquire Attorney for Plaintift WAYNe F, SHADE A.....,... 1.0.. SJw........,"'...... CarfUlc, Pm.uyh.... 1'0/3 -3- . ~ ". - .;1.:. L:; 1-' "I - U"r\ ~ r I , < I~.' . . . fr(' \:; ,,- I , ;, V\", , {' .l GJ; JJ." ('.1 I . t.-J, . , "Ii ~>; f'.. J ~ L. ." :.t: ;...~ II. ,~ ~J (.) c,'" \.J ;1 'H 0 Ql -IJ 0 I1l E-< '" P.CIl -IJ - ~~f::ifi . 0" s~ ~ g u i~ 0 III 3 in i :z: HIzl ~ ~P. H ~ H e-<:> 00 o o~ 0 ;:::u 00 ~ i j u~CY..:I CIl ~~i~ tIl r.:o: IzlH ~'H CIlH ro. :> . ~ ~ I ~ ~ o I H O'H ~..:I o U E-<or! ..:II-< I1l E-tu:z: CIl-IJ ~00"'tl HIzl ~ ~ ; ~ O~ j:: ~~s:: ~~ ~.... I1l QI 8!t,~ 0", u I-l 'H 58 0.-1 . !iJ -IJ . QI U <, ro.p., :> "..:I~ ~Izl~~ .... p., E-< ~s::>< ~ H~ ~:> . ~ :z: HO ,. I~OV 2 li 1~9ld/l'\ . 6, Admitted in part. It is admitted that Plaintiff approved Technicomp as an outside vcndor to perform ce:1ain work for the Plaintiff, Defendant Is without sufficient knowledge of the truth or falseness of thc remaining allegations of 1 6 of the Complaint, Therefore, these same allcgations arc dcnied and strict proof thereof is demanded at the time of trial. 7. Denied as slated, Afler reasonable investigation, Defendant is without sufficient knowledge to form a belief as to the truth of lhe allegations contained in 1 7 of Plaintiffs Complaint. Therefore, these same allegations are denied and strict proof thereof is demanded at the time of trial. 8. Denied as stated, After reasonable investigation, Defendant is without sufficient knowledge to form a belief as to the truth of the allegations contained in 1 8 of Plaintiffs Complaint. Therefore, these same allegations are denied and strict proof thereof is demanded at the time of trial. 9. Denied as stated, To the contrary, defendant avers upon information and belief that Defendant's decedent invoiced the Plaintiff properly for actual work performed which work was specified to be performed by Technicomp in accordance with Plaintiffs outside vendor agreement with Technicomp. 10. Denied as stated, To the contrary, Defendant avers upon information and belief that Defendant's decedent invoiced the Plaintiff properly for actual work performed which work was specified to be performed by Technicomp in accordance with Plaintiffs outsid>: vendor agreement with Technicomp. 11, Denied as stated. After reasonable investigation, Defendant is without sufficient knowledge to form a belief as to the truth of the allegations contained in 1 II of Plaintiffs Complaint. Therefore, these same allegations are denied and strict proof thereof is demanded at the time of trial. It is further averred to the contrary that defendant's decedent and/or Technicomp submitted invoices for work performed on behalf of Plaimiff and in accordance with Plaintiff's approved outside vendor request for same and that all invoices accurately reflected actual work performed and further retlected the agreed upon price for such work, 12, Denied as stated, After reasonable investigation, Defendant is without sufficient knowledge to form a belief as to the tnuh of the allegalions contained in 1 12 of Plaintiff's Complaim, Therefore, these same allegalions are denied and strict proof thereof is demanded at the time of trial, 13. Denied as stated, To the comrary, it is averred that Technicomp and/or Defendant's decedent performed all of the work specified in the various invoices submitted to Plaintiff by TechnicomplDefendant's decedent. 14. Admitted, 15. Denied as stated. To the contrary it is averred that no fraud was perpetrated by Defendant's decedent against Plaintiff and that all monies received by decedent on behalf of Technicomp was for work actually performed and invoiced at the price agreed to between Plaintiff and Tcchnicomp, 16-20, Denied as stated. After reasonable investigation, Defendant is without sufficient knowledge to form a belief as to the truth of the allegations contained in 11 16-20 of Plaintiffs Complaint, Therefore, these same allegations are denied and strict proof thereof is demanded at the time of trial. 21. Denied as stated. To the contrary it is averred that no fraud was perpetrated by Defendant's decedent against Plaintiff and that all monies received by decedent on behalf of Technicomp was for work actually performed and invoiced at the price agreed to between Plaintiff and Technlcomp, 22, It is admilted that Defendant's decedent died on Mar.::h 23, 1996. The remaining allegations of this paragraph are denied as stated. After reasonable Investigation, Defendant is whhout sufficient knowledge to fonn a belief as to the truth of the remaining allegations In 122 of Plaintiff's Complaint. Therefore, these same allegations are denied and strict proof thereof is demanded at the time of trial. 23, Denied as stated. After reasonable investigation, Defendant is without sufficient knowledge to fonn a belief as to the truth of the allegations contained in 123 of Plaintiffs Complaint. Therefore, these same allegations are denied and strict proof thereof is demanded at the time of trial. 24, Admilled In part, It Is ad milled that these charges were lodged against Defendant's decedent. It is averred to the contrary, however, that Defendant's decedent had a meritorious legal and factual defense which would have resulted in his acquittal on all charges, 25. Denied as stated. After reasonable investigation, Defendant is withDut sufficient knowledge to fonn a belief as to the truth of the allegations contained in 125 of Plaintiffs Complaint. Therefore, these same allegations are denied and strict proof thereof is demanded at the time of trial. 26. Denied as stated. After reasonable investigation, Defendant is without sufficient knowledge to fonn a belief as to the truth of the allegations contained in 126 of Plaintiffs Complaint. Therefore, these same allegations are denied and strict proof thereof is demanded at the time of trial. 27, Admilled, 28. Denied as stated, After reasonable investigation, Defendant is without sufficient knowledge to fonn a belief as to the truth of the allegations contained in 128 of Plaintiff's , ' . . knowledge to form a belief as to the truth of the allegations contained in '28 of Plaintiffs Complaint. Therefore, these same allegations are denied and strict proof thereof is demanded at the time of trial. 29. Admilled. 30. Admilled. 31. Admitted. 32. Admilled. 33. Admilled. 34. Denied as stated, After reasonable investigation, Defendant is without sufficient knowledge to form a belief as to the truth of the allegations contained in '34 of Plaintiffs Complaint. Therefore, these same allegations are denied and strict proof thereof is demanded at the time of trial. 35. Denied as stated. After reasonable investigation, Defendant is without sufficient knowledge to form a belief as to the truth of the allegations contained in '35 of Plaintiffs Complaint. Therefore, these same allegations are denied and strict proof thereof is demanded at the time of trial. 36, Denied as stated, To the contrary it is averred that no fraud was perpetrated by Defendant's decedent against Plaintiff and that all monies received by decedent on behalf of Technicomp was for work actually performed and invoiced at the price agreed to between Plaintiff and Technicomp. WHEREFORE, Defendant demands that this cause of action filed against him be dismissed and that all costs be taxed against the Plaintiff, NEW MATIER AND NOW, comes the Defendant, David M. Leonhard - Administrator of the Estate of Barry L, Leonhard, with Ihis New Maller in further response to Plaintifrs Complaint, averring in support thereof as follows: 37, The responses and allegations of the Defendant t paragraphs 1-36 of Plaintiffs Complaint are incorporated herein by reference with the same force and effect as if these same allegations were set forth herein at length, 38. The Plaintiff is barred from recovery for the damages it alleges to have sustained, either in whole or in part, by operation of the doctrine of Quantum Meruit, 39. The Plaintiff is barred from recovery for the damages it alleges to have sustained, either in whole or in part, by operation of the doctrine of estoppel. WHEREFORE, Defendant demands that this cause of action filed against him be dismissed and that all costs be taxed against the Plaintiff, COUNTERCLAIM AND NOW, comes the Defendant, David M, LeDnhard - Administrator of the Estate of Barry L. Leonhard, with this Counterclaim against the PlaiOliff, averring in support thereof as follows: 40. The responses and allegations of the Defendant to paragraphs 1-39 of Plaintiffs Complaint are incorporated herein by reference with the same force and effect as if these same allegations were set forth herein at length. 41. On or about August 18, 1995, the Plaintiff issued a check to Technicomp in the amount of $80,000,00 which check represented paymenttD Technicomp for design work performed GIANT FOOD STORES, INC,. Plalntlrr IN THE COURT OF COMMOM PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION. LAW I v. DAVID MICHAEL LEONHARD, Administrator or the Estate or BARRY L. LEONHARD, Ddendant NO. 96-6078 CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the foregoing Answer and New MaUer was served via U.S. Mail, postage prepaid this day of September 8, 1997 on counsel of Plaintiff at the following address: Wayne F, Shade, Esquire 53 West Pomfret Street Carlisle, PA 17013 YtJ. 1 G. Dileonardo ticker Arensberg, P.C, 105 Locust Street, Third Floor Harrisburg, PA 17101 (717) 238-2007 GIANT FOOD STORES, INC., : plaintiff IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA . . V. : : : : NO. 96-6078 CIVIL TERM DAVID MICHAEL LEONHARD, Administrator of the Estate of BARRY L. LEONHARD, Defendllnt . . . . CIVIL ACTION - LAW IN REI PLAINTIFF'S PETITION TO ~ND COMPLAINT BEFORE SHEELY. P.J. OPINION AND ORDER OP COURT In this opinion, we address plaintiff's Petition to Amend Complaint. This petition was argued on April 16, 1997. The facts are as follows: Barry L. Leonhard ("Leonhard") was charged with theft by deception and theft by unlawful taking for a checking scam perpetrated on Giant Food stores, Inc. ("plaintiff" or "Giant"). The total amount of this fraud is alleged to be $279,717.40. However, before Leonhard could be brought to trial he passed away. Giant is now suing Leonhard's estate to regain the alleged stolen money. As a result of charges brought against Leonhard, approximately $170,000 came under the custody of the District Attorney of Cumberland County. An order was placed on the money by Judge J. Wesley Oler, Jr. stating that the property should not be transferred or disposed of by the District Attorney pending further order of the court. On November 6, 1996, Giant filed a complaint at law requesting an award of monetary damages. Leonhard's estate filed its answer with new matter and a NO. 96-6078 CIVIL TERM counterclaim. Plaintiff now petitions this court requesting permission to amend its complaint to include a request for the imposition of a constructive trust and to transfer this case to equity. (Plaintiff's Complaint, 11-06-96.) DISCUSSION The Pennsylvania Rules of Civil Procedure provide thatl A party, either by filed consent of the adverse party or by leave of court, may at any time change the form of action, change the name of a party or amend his pleading. The amended pleading may aver transactions or occurrences which have happened before or after the filing of the original pleading, even though they give rise to a new cause of action or defense. 42 PA. STAT. ANN. Section 1033 (1987). The courts have construed this rule fairly liberally when determining whether a party should be given leave to amend. Gedekoh v. Peoples Natural Gas Co., 183 Pa. Super. 511, 133 A.2d 283 (1957). "Amendments should be freely allowed from law to equity as from one form of action at law to another." Id. at 515, 285 (quoting Littler v. Dunbar, 365 Pa. 277, 279, 74 A.2d 650, 651 (1950)). "Refusal to permit an amendment of the form of action...is an abuse of discretion." Id. An example of this liberality can be found in Zalewski v. YMH, 7 D&C 3rd 231 (1978). In this case, the plaintiff filed her employment discharge case at law. She then voluntarily asked to amend it to equity. The court granted this relief and noted that the assimilation of equity by the Rules of Civil Procedure 2 NO. 96-6078 CIVIL TERM require amendments from law to equity to be as freely done as those from law to law. ~ at 233 (citing DuPuy Estate, 373 Pa. 423, 96 A.2d 318 (1983)). Additionally, "[t]he policy of Pennsylvania courts is that amendments to pleadings should be allowed...except in those instances where surprise or prejudice to the other party would result, or where the proposed amendment is against a positive rule of law." Tanner v. Allstate Ins. Co., 321 Pa. Super. 132, 138, 467 A.2d 1164, 1167 (1983). The court held that it would be futile to allow an amendment which was against a positive rule of law since it would cause delay and waste the resources of the court. In Tanner, the proposed amendment addressed an issue which had already been decided by the court and was binding on the instant case. ~ For that reason, the court found that the amendment was against a positive rule of law. In the case at bar, we find no valid reason to refuse Plaintiff's request to amend. This is Giant's first request to amend it's complaint. Additionally, Pennsylvania courts have been very liberal in allowing amendments to complaints, including those requests to transfer from law to equity. Furthermore, we find nothing in the amendment which is against positive law nor would this amendment be prejudicial to the Defendant in any way. For these reasons, Plaintiff's Petition to Amend Complaint is granted. 3 that the payment did not represent a repayment of the loans to tht: corporations but, instead, was intended to be a distribution of future profits. II The court's verdict supported the PlaintilT on this point, and a number of matters in evidence may be mentioned in this regard, First, the loans to which the $80,000.00 was supposedly applied remained unchanged on the corporate books as outstanding corporate obligations after the payment. Second, substantial interest payments were made on the loan to Phelaro, Inc" after the payment. Third, a substantial payment of principal was made on the loan to Phelaro of Allentown, Inc" after the payment. Fourth, the amount of loans outstanding did not correspond to the amount ofthe payment. Fil\h, the payment, which was made by Pheluro of Allentown, Inc" far exceeded the amount ofthe outstanding loan to that corporation, and no corporate records suggested that one corporation had undertaken to pay the debts ofanother,ll Sixth, the payment to Plaintiff's decedent and the payment to Mr. Phelan were treated on books of Phelaro of Allentown, Inc,. as advances; neither was shown as a loan repayment.ll Seventh, thc apparent symmetry of an equal division of the certificate of deposit between shareholders would have been broken by treating one payment (to PlaintilT's decedent) as reimbursement for a loan--a financially neutral occurrenee--and the other payment (to Mr. Phelan) as a distribution of incomel4--a financially positive occurrence. Finally, one of Deftndants' witnesses at trial, a certified public accountant who performed accounting services for the corporations at the time onhe payments and whose duties included preparation of the corporate ledger sheets,JS replied "absolutely not" when II N,T. 80,176. II N.T. 98-99, JJ N.T, 97-98. l4 Mr. Phelan was owed nothing by Pheluro of Allentown, Inc" and about $27,000.00 by Phelaro, Inc. N.T, 94-95; Plaintiffs Exhibit 5 (general ledger ofPhelaro, Inc.). lIN.T.99, v. IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - EQUITY GIANT FOOD STORES, INC., plaintiff DAVID MICHAEL LEONHARD, Administrator of the Estate of BARRY L. LEONHARD, Defendant NO, 96-6078 EQUITY TERM IN REI PRETRIAL CONFERENCE A pretrial conference in the above-captioned case was held in the chambers of Judge Oler on Thursday, November 5, 1998. Present on behalf of the Plaintiff was Wayne F. Shade, Esquire. Defendant's counsel, John G. DiLeonardo, Esquire, did not appear at the conference or submit a pretrial memorandum. This is an action for a constructive trust based upon receipt by Defendant's decedent, a nonexistent company, of $279,717.40 from Plaintiff for purported, but not actual, services. The decedent was an employee of Plaintiff who allegedly was in a position to create this fraud. This will be a nonjury equity trial of an estimated duration of one day. No unusual issues are expected to arise during the trial. It is anticipated that Plaintiff's counsel at trial will assume that no objection will be raised to the presentation of various items of documentary evidence without the necessity for calling a records custodian by virtue of the lack of appearance of an active defense in this case. These items are referred to in Plaintiff's pretrial memorandum. In the event that such an objection is raised, the Court would consider granting a request .' ,. GIANT FOOO STORES, INC., Plaintiff IN THE COURT OF COMMON PLEAS OF CUMBERLANO COUNTY, PENNSYLVANIA v. CIVIL ACTION - EQUITY DAVID MICHAEL LEONHARD, Administrator of the Estate of BARRY L. LEONHARD, Defendant NO. 96-6078 EQUITY TERM AND NOW, this tl. OROER OF COURT ,~ day of February, 1998, upon consideration of Plaintiff's Motion for Rule Absolute with respect to the Rule issued by this court on December 2, 1997, and following a telephone conference in which Plaintiff was represented by Wayne F. Shade, Esq., and Defendant was represented by John G. DiLeonardo, Esq., and Defendant's counsel having indicated that his present address is 4650 Fritchey Street, Harrisburg, PA 17109, and that he will file a praecipe to place this change of address on the record, Defendant is given 10 days from the date of this order to provide answers to Plaintiff's interrogatories and requests for admissions. In default of the same, the relief requested in Plaintiff's proposed order accompanying the Motion for Rule Absolute will be granted. BY THE COURT, ~. F. Sh.d., E.q. I 53 West Pomfret Street Carlisle, PA 17013 Attorney for Plaintiff J rAOe COpy FROM RECORD In Te,ltImony whllreof, J here unto &et my hand and IhlI q".eal of said c~ at Carlisle PI. ~hlS I?( }..;a~ ;t':;::"'~i:.\~ ~. Prothonotary ,... Ch c (, .- ...: li. r , . .. .' tH!-:~ ~~ , ,_f' l.:" f~: ( . ~... .. 1.'-., . S" 't I f.21:,.. t.' I G:.'(, . (' L -~ r' - j'j :lo. l ~L. " c: .' t.:' '.1 C-' U ~~ ~ ~I ~ hi ~ '" ~I.~ tl - ~ Q i!5 ~ r.l .... I ... ~ j ~ i ~ :s~ ~ ~ i IE ~~~ ~~ 6 5~ ~J .pl " ~ .e! ~ ~ < ~ ~ ~~<~ ,.: ~ ~ ~' >- ~ ~ ~d i!5 ;z: 0 ~. ! u -. .. . . . MAR 0 5ll9f1&.~ --- .. ~.... / . / GIANT FOOD STORES. INC.. Plaintiff : IN TI IE COURT OF COMMON PLEAS OF : CUMI1ERLAND COUNTY. PENNSYLVANIA v, : CIVIL ACTION--EQUITY DAVID MICHAEL LEONHARD. Administrator of the Estate ofOARRY L. LEONARD. Defendant : No, 96.6078 EQUITY TERM IN RE: ADJUDICATION BEFORE OLER, J. DECREE NISI AND NOW. this 23rd day of December. 1998. upon consideration of Plaintiffs amended complaint in the above-captioned matter. I(lllowing an equity trial held on December 16. 1998, and lor the reasons stated in the accompanying opinion, the court finds in lavor of Plaintiff and against Defendant in the amount of$279,71 7.40. with interest see, leg, from July 28, 1995. and it is further ordered. adjudged and decreed as follows: 1. A constructive trust in favor of Plainti 1'1' is imposed upon the loll owing property formerly possessed by Delendant's decedent and presently in the possession of the Cumberland County Clerk of Courts. the Cumberland County District Attorney, and/or the Pennsylvania State Police: $1 12.514.17. and the proceeds of the sale ofa certain ring. in cash or on deposit. plus any interest accrued and less any poundage charged by the Clerk of Courts as of the time of release of the lunds to Plaintiff; a 1995 Chevrolet Blazer truck (VIN 2GCEK I 9H5S I (98466); a 1993 Harley-Davidson motorcycle (VIN I HD 1 BKL I OPY035095); and a computer. This property shall be distributed to PlaintilT. 2, Plaintiffis authorized 10 exel:ute the certificate of title to the al(lresaid Chevrolet Blazer as seller. subject to any liens of record, ), Plaintiff is authorized to secure issuance from thc Pennsylvania Department of Transportation of a certificatc of titlc to the al(lrCsaid Harley-Davidson motorcycle in its name. subject to any liens of record. and to execute the certificate of IiI Ie lherealler as seller, -' GIANT FOOD STORES, INC,. Plaintiff : IN THE COURT OF COMMON PLEAS OF : CUMBERLAND COUNTY. PENNSYL VANIA v. : CIVIL ACTION--EQUITY DA VID MICIIAEL LEONHARD. Administrator of the Estate of BARRY L. LEONI lARD, Defendant : No, 96-6078 EQUITY TERM IN RE: ADJUDICATION BEFORE OLER, J. OPINION and DECREE NISI Oler. J,. December 23. 1998, In this equity case, Plaintiff Giant Food Stores, Inc,. has brought suit against the personal representative of a former employee as the result of an alleged fraudulent scheme perpetrated by the employee, Relief requested includes a constructive trust upon proceeds ofthe scheme and an award of other assets in the estate to the extent of the fraud. Trial in the mailer was held on Wednesday, December 16, 1998. For the reasons stated in this opinion, the court will find in favor of Plaintiff in the amount of$279,727.40, plus interest see leg., and will impose a constructive trust upon those funds and items shown to have been proceeds of the tort. FINDINGS OF FACTS I. Plaintiff is Giant Food Stores, Inc" a corporation operating a number of stores throughout the country, 2, At all times pertinent to this case. Defendant's decedent was an employee of Plaintil't: with responsibilities in the area of certain computer operations. 3, Defendant's decedent delrauded Plaintiff of $279,7 17.40 by means ofa scheme whereby PlaintilTwas billed by a nonexistent company for computer work not pcrfonned by that company; the scheme ended on or about July 28. 1995. 4. D.:Icndanl's decedent wus urrested und churged with :hett us u result of the scheme, but died on Murch 23. 1996. before the cuse cUl11e to trial. 5, Proceeds directly traceable to the thell were placed in the possession of the Cumberland County Clerk of Courts. the Cumberland County District Attorney's Office and/or the Pennsylvania State Police in the limn of cush in the amount 01'$112.514,17 und proceeds of the sale of a certuin ring, u 1995 Chevrolet n1uzer truck (VIN 2GCEK 19H5S 1198466), a 1993 Harley-Davidson Motorcycle (VIN IHDIBKLlOPY035095). and u computer. DISCllSSION Fraud must be proven by clear and convincing evidence, Sewak v, Lockhart, 699 A.2d 755 (Pa. Super, Ct. 1997), A constructive trust is un uppropriate remedy where traceable unjust enrichment has resulted from the perpetration of u frnud, Robbins v. Krislojic, 434 Pa. Super, 392, 643 A.2d 1079 (1994), Preverdict interest in a frnud cuse involving unjust enrichment muy be awurded, Sack v. Fein, 489 Pa. 152,413 A,2d 1059 (1980). In the present case, Plaintiff has proven by clear und convincing evidence that Delendant's decedent defrauded PlaintilT 01'$279, 717.40 in a scheme which ended ubout July 28, 1995, PlaintilT has ulso shown that the items of personalty enumerated in the Findings of Fact ubove were direct proceeds of the frnudulent conduct. CONCI.USIONS OF LAW l. The court has jurisdiction over the parties and subject matter of this litigation, 2, PlaintilTis entitled to relief in the lonn of an award of dam ages and the imposition ofa constructive trust on proceeds of the fraudulent conduct of Defendant"s decedent. ORDER OF COURT AND NOW. this 23rd day of December, 1998. upon consideration of Plaintiffs amended compluint in the ubove-captioned matter. lollowing an equity triul held on December 16. 1998. und liJr the reasons stated in the accompanying opinion. the court tinds in fuvor of Pluintiff und uguinst Delcndunt in the amount of $279.717 ,40. with interest sec. ., leg. from July 28. 1995, and it is further ordered. adjudged and decrced as fiJllows: I, A constructive trust in favor of Plaintiff is imposed upon the following property formerly possessed by Defendant"s decedent and presently in the possession of the Cumberland County Clerk of Courts, the Cumberland County District Attorney, and/or the Pennsylvania State Police: $112,514,17. and the proceeds of the sale ofa certain ring, in cash or on deposit, plus any interest m:crued and less any poundage charged by the Clerk of Courts as of the time of release of the funds to PlaintitT; a 1995 Chevrolet Blazer truck (V IN 2GCEKI9H5SI198466); a 1993 Harley-Davidson motorcycle (VIN IHDIBKL IOPY035095); and a computer, 2, Plaintiff is authorized to execute the certilicate of title to the aforesaid Chevrolet Blazer as seller. subject to any licns of record, 3, Plaintiff is authorized to secure issuance from the Pennsylvania Department of Transportation of a certiticate of title to the aforesaid Harley-Davidson motorcycle in its name, sucject to any liens of record, and to execute the certilicate of title thereafter as seller, PlaintilT is authorized to execute a bill of sale for the aforesaid computer, subject to any liens of record, This dceree nisi shall automatically become a linal decree in the event that no motion for post-trial reliefis liIed pursuant to Pennsylvania Rule of Civil Procedure 227.1 within the IO-day time period provided for therein. BY THE COURT. /s/ J. Wesley Olcr. Jr. J Wayne F. Shade, Esq. 53 West Pomfret Street Carlisle, PA 17013 3 '. .. David Michael Leonhard Administrator of the Estsate of Barry L. Leonhard Apartment I 542 Spruce Street Lebanon. PA 17046 John G. DiLeonardo, Esq, 4650 Fritchey Street Harrisburg, PA 17109 27 South Arlene Street Harrisburg, PA 17112 4 , ~ ~ J ~. (. -J ~ ~ '- :' ' . . ~ ~ . . ~ ~ L Q ~ " I . 0 ~ L_ ~ ~ ~ . . . . ~ ~ , fL /" ~' ~ , = ~ J -1 "I ~ -:J-- . . ~ 1; - -I ~ -..J ~ J 0 , ~ '-.J '< ...... '. i ~ . (t:. <'\:) r"' c..... \ , I i. \ ,.. ~ 2 \) '\) 0 0 () & '1J ~J ' , <." \J . o ~ t.., ~ '.:... . r:L ,..- 1J".d-~ C)' ..... . :~ !-J' i\; ~; , ' ('. ~ IJ': , ." ,. . , , . Ll ,.