HomeMy WebLinkAbout02-5469JTH TAX SERVICES LLC, JAMES S.
HARRIS AND TERRI HARRIS, Husband
and Wife,
VS.
Applicants,
G.H. HARRIS ASSOCIATES, INC.,
Respondent.
: IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
.'
CIVIL ACTION - LAW
PETITION IN THE FORM OF AN APPLICATION TO STAY ARBITRATION
Applicants JTH Tax Services LLC, James S. Harris and Terri Harris, husband and
wife, make application to this Court pursuant to 42 Pa. C.S. § 7304(b) (Court proceedings to
compel or stay arbitration; stay of arbitration), 42 Pa. C.S. § 7317, and 42 Pa. C.S. § 7342
(Procedure) for an order staying arbitration, and in support of their application aver the
following:
PARTIES
1. Applicant JTH Tax Services LLC ("JTH") is a corporation organized
under the laws of the Commonwealth of Pennsylvania with its office located at 70 Marfield
Circle, Hanover, Pennsylvania 17331, and conducting business in Cumberland County.
2. Applicants James S. Harris and Terri Harris, husband and wife, are adult
individuals residing at 70 Marfield Cimle, Hanover, Pennsylvania 17331.
3. Respondent G.H. Harris Associates, Inc. ("G.H. Harris") is a corporation
organized and existing under the laws of the Commonwealth of Pennsylvania, having its
principal place of business at R.R. 4, P.O. Box 216, Dallas, Pennsylvania 18612, and conducting
business in Cumberland County.
4. G.H. Harris is in the business of collecting delinquent taxes and also
serving as deputy tax collector for various nmnicipal taxing authorities in Pennsylvania,
including a portion of the Cumberland Valley School District. (See Demand for Arbitration,
attached to this Application as Exhibit A, ~ 6).
VENUE
5. This Court has jurisdiction over this application pursuant to 42 Pa. C.S. §
7319 (venue of court proceedings) and Pa. R.C.P. 2179 because: (1) Cumberland County is a
county where G.H. Harris regularly conducts its business; (2) is a county where a transaction or
occurrence took place out of which the demand for arbitration arose; and (3) because the
Purchase Agreement between G.H. Harris and James P. Harris does not prescribe where the
arbitration hearing shall be held.
FACTS
6. On or about October 31, 2002, G.H. Harris served upon JTH, James S.
Harris and Terri Harris a copy of its Demand for Arbitration,~ in which G.H. Harris requests,
inter alia, an injunction against JTH by a three member arbitration panel for an alleged violation
of a "non-compete" provision in a contract to which JTH, James S. Harris and Terri Harris are
not a party. A copy of the Demand for Arbitration is attached to this Application as Exhibit A.
7. This Court has authority to stay the arbitration of G.H. Harris's demand
for arbitration against JTH, James S. Harris, and Terri Harris, pursuant to 42 Pa. C.S. §§ 7304(b),
(d) and 42 Pa. C.S. § 7342.
8. This Court's inquiry in determining whether to stay the arbitration
involves determining: (I) whether a valid arbitration agreement was entered into, and, if so, (2)
whether the dispute in question is within the scope of the arbitration provision. See PBS Coal,
~ On November 7, 2002, the American Arbitration Association ( AA ) acknowledged receipt of G.H.
Harris's Demand for Arbitration that includes as parties: G.H. Harris, JTH, James S. Harris, Terri Harris, James P.
Harris, Kathy Harris, and J.P. Harris Associates, LLC. The AAA case number 14-199-02058-02.
-2-
Inc. v. Hardhat Min., Inc., 429 Pa. Super. 372, 632 A.2d 903 (1993) (citing Flightways Corp. v.
Keystone Helicopter Co., 459 Pa. 660, 663,331 A.2d 184, 185 (1975)).
9. JTH, James S. Harris and Terri Harris did not enter into an arbitration
agreement with G.H. Harris.
10. On August 25, 2000, G.H. Harris allegedly entered into a "Market Region
Purchase Agreement" ("Pumhase Agreement") with Mr. and Mrs. James P. Harris, individuals,2
in which G.H. Harris sold a portion of its tax collection business to Mr. and Mrs. James P.
Harris. A true and correct copy of the Purchase Agreement is attached to this Application as
Exhibit B, and made a part hereof as if incorporated in full herein.
11. The Purchase Agreement is between G.H. Harris and Mr. and Mrs. James
P. Harris, individuals; it is signed by G.H. Harris, individually and as President of G.H. Harris
Associates, Inc., and James P. Harris, individually and for his associated business entities.
Exhibit B, p. 7.
12. The Purchase Agreement has attached to it a "Consent of Spouses &
Affected Family Members," to which are affixed the signatures of Kathy Harris, Viola Harris,
Paul Adamshick, and Patricia Adamshick. The attachment also is initialed by G.H. Harris.
Exhibit B, p. 8.
13. The Purchase Agreement contains a provision requiring that disputes
"between the Parties''3 be submitted to "final and binding arbitration with exclusive venue,
2 James P. Harris is the son of G.H. Harris and the father of James S. Harris.
3 The term "Parties" is never defined in the Purchase Agreement but a thorough reading of the Purchase
Agreement appears to indicate that the term meant G.H. Harris and James P. Harris.
-3-
personal jurisdiction, and hearing authority vested in AAA, Philadelphia, Pennsylvania, under its
Commemial Rules using a panel of three arbitrators." Exhibit B, § 4.6.2, p. 5.
14. The Pumhase Agreement arbitration provision is initialed by James P.
Harris, as buyer, G.H. Harris, as seller, G.H. Harris, individually, Viola Harris, individually, Paul
Adamshick, individually, Patricia Adamshick, individually, and Kathy Harris, individually.
Exhibit B, p. 6.
15. JTH, James P. Harris and Terri Harris are not parties to the Purchase
Agreement.
16. JTH, James P. Harris and Terri Harris are not signatories to the Purchase
Agreement.
17. JTH, James P. Harris and Terri Harris have not entered into an arbitration
agreement with G.H. Harris.
18. A contract cannot legally bind persons not a party thereto. Cumberland-
Perry Area Vocational-Technical Sch. Auth. v. Bogar & Bink, 396 A.2d 433, 435 (Pa. Super.
1978).
19. The arbitration clause in a contract can be enforced only by signatories to
a contract. See, e.g., Dayhofflnc. v. H.J. Heinz Co., 86 F. 3d 1287, 1296 (3d Cir. 1996).
20. Counsel for Applicants JTH Tax Services LLC, James S. Harris and Terri
Harris, husband and wife, contacted counsel for G.H. Harris Associates, Inc., and he does not
concur.
-4-
WHEREFORE, Applicants JTH Tax Services LLC and James S. Harris and
Terri Harris, husband and wife, request that this Court issue an order staying the commenced
arbitration proceeding against them, with all proceedings to be stayed pending a determination of
this Application.
Date: November 12, 2002
Respectfully submitted,
NNAL. FISHER (39410)
pAe~ eXrAHNaD~iAo nM~AL pK O S K Y (80267)
200 One Keystone Plaza
North Front and Market Streets
P.O. Box 1181
Harrisburg, PA 17108-1181
(717) 255-1155
(717) 238-0575 (Fax)
Attorneys for Applicants JTH Tax Services LLC,
James S. Harris and Terri Harris, Husband and Wife
-5-
Exhibit A
AMERICAN ARBITRATION ASSOCIATION
COIHMERCLA l: ARBITRATION RULES
DEMA=.ND FOR ARBITRATION
~ON 1.~ ct nonblndlng proc~$, the mediator c$~M~t~ the parHr~ tn workl, mit a ~o/ution th
wish/or the ~ to contact the otfier -artl~ to .......... L .... . · . n~. . at is acceptable to th~m Z 'v
~ addltl°ncd admi~istratlvzrf;, or th'~;~:;"' ='='n'r mcy wt$~ to madlate tlti~ matter, plea~, ol~ck this box o~
Name
Sac Attached List of Partial
Address
City State
Phone No. ·
Fax No.
Zip Code
Namo of Firm (if applicablo)
City State
Phone No Fax No.
Zip Code
The aaraed cia/mast, a party to an ' ' ·
08/28/00 a~bitrauon agreemant contained i~ a written contract, dated
· . _ and providing for arb/Ixa~ion under the Commercial Arbitration Rul~ of
~ dema~d~ arbi/ration there,ruder.
15 THIS A DisPl/n~ BETWl~L=N A BUS.ESS AND A CONSUMER? ~ Yes ~ No
TI~E NATURE OF THE DISPUTE
See Attached Demaud for Arbitration
THE CLAIM OR Rg_r:n~F SOUGHT {~o
Preliminary and P~rmananC I~Juncr.~on., plus liquidated d~ges in excess of
$5,000, comPenaatory da~ge8 of approxi~tely $38,000, punitive d~$es, and all
DOES ~ DISP~ ~SE OUT OF AN ~LOM~ ~LATION$~ ~ Y~ ~ No
T~ES OF BUS.SS
Cl~t~elinquen~ tax co~ l~c~ors Re~on~nt Delinquent ~ collectors
You aro h~rcby no~fi~d ~t copies ~f o~ ~b~fion ~ ~ ~ ~8 ~ ~i~ filed wi~ ~ ~eric~
~bi~afion. Under the roles, y~u may file ~ ~efing ' office, w~.a request ~t ~t co~enco a~s~on of~e
~e of Cla~nt ~'
9,~. ~arrip 6~sociate$, Inc.I Steven E, Gruhh
· .~at~u~u$~lnC~n~gonw hThisCa~) ~ ....... , i .. ~r , - ..... a~W'"'~'L~- ·
p.O. Box 216 ]320 Market $treet
~i~la~, ] pi , ] 18612 ~Harrtsburg ~Pl
,'-,
O~G~AL DE.ND ........ f~ ~o r~uv~m rU~ ~N T~ RULES, TO ~E A~ S~D THE
Au i~ ~sFO~E~T. '
Po~ FC2.02/0
J.P, Harris Associates, LLC
P.O. Box 226 .
101 Rich. Valley Road
Mechanicsburg, Pennsylvania 17,055
James P. Harris and Kathy Harris, husband and Wife
1'01 Rich Valley Road
Meehanicsburg, PA 17055.
JTH Tax.ServiCes, LLC '
Mailing address: P.O. Box 327
Mechanicsburg, Pennsylvania 17055'
Street address: . 70 Marfield Circle
Hanover, Pennsylvania 1733 I. ·
lames $. Harris and Terri Harris. husband and wife
70 Mantle, id Circle
Hanover, Pennsylvania 17331
Representative:
Anna. Marie Sossong, Esq.
Skarlatos and Zonarich
204 State Street
Harrisburg, PA 17101
DEMAND FOP. ARBITRATION
Plaintiff, G.H. Harris AssOciates, Inc., demands arbitration and judgment in its favor
based on the following facts:
1. . Plaintiff, G.H. Harris Associates, Inc. ('~G.H. Harris"), is a Pennsylvania
Corporation with a principal place of business in Dallas, Pennsylvania.
2. Defendant, LP, Harria:A~sociates, LLC CJPH"), is a Pennsylvania limited
liability company with a mailing address of P.O; Box 226, Mechanicsburg, Pennsylvania 17055
and a street address of 101 Rich Valley Road', Mechanicsburg' Pennsylvania 17055.
Defondants, James P. Harris and Kathy Harris, husband and wife, are adult
'individuals with a mailing address of I01 Rich Valley Road, Mechanicsburg, PA 17055. ·
4. Defendant, JT[-[ Tax Services, LLC (!'JTH'), is a Pennsylvania limited liability
company With a mailing address of P.O. Box 327, M~chaniosburg, Pennsylvania 17055 and a
street addr*ss of 70 Marfield Circle, Hanover, Permsylvania 17331.
5. Defendants, Jam~s S. Harris and Terri Harris, husband and wife, are adult
individUals residing at 70 Marfiold Circle, Hanover, P~nmylvania 17331.
6. O.H. Harris collects delinquent taxes, and also serves as deputy tax collector for
various municipal taxing authorities.
7. James P. and Kathy Harris previously were employed by G.H. Harris.
8. On or about August'28, 2000, G.H. Harris entered into ,~ Market Region Purchase
Agreement (the "Agreement") with James P. Harris, a copy of which is attached hereto as
Exhibit "A".
9. The Agreement was intended to formalize James P. and Kathy ltarris' tbrmation
ora new bminess which would effectuate a split from G.H. Harris.
10. The parties wished !~o define the parameters of the business split and memorialize
which customers would remain wi~:each business.
1 l. Exhibits 1 and 2 to the Agreement detail who would service which account.
12. Each party agreed not to solicit, or in any way compete, for the accounts divided
by the parties, per ttie Agreement. ~ Soction 1.1 oft.he Agreement.
13. The division of accounts, and. covenant not-to-compete was of the "essence" and
perhaps the most important component of.the overall Agreement. See Section 3.4 of the
Agreement.
14. The Agreement is binding and inures to the benefit 0fthe signatories, their
representatives, administrators, assigns md/or successors-in-interest. It is also binding upon
James P~ 'and Kathy Harris~ childrer~ and all business.entities in which they have a direct or
indirect ovmemlaip interest. ~1~ Section 4:7 0fthe Agreement. Gee_ also the signature line for
James P. Harris where he signs for his "wife, children and ~ssoeiated business entities.")
15. James ?. Harris warranted that he had full authority to bind his children. (~
Section 4.7' o£the AgreemenL)
16. On or ~bout October 25, 2001, JTH was organized, purportedly by James S. and
Terd' L, Harris.
17.. James S. Harris is the only son of James P. and Kathy Harris, and Terri Harris is
the daughter-in-law of James P. and Kathy Harris,
t 8, James S. Harris is a civil engineer by trade and maintains a flail time job with an
engineering firm in Maryland.
~9. JTH's registered address and office is in Hanover, Pennsylvania, as indicated
above.
20. Despito their registered office being in Hanover, Pennsylvania, JTH maintains a
post office box at the same post office as JPH.
21. ' James p. Harris regularly picks up mail for JTH at the Mechanicsburg Post Office.
22, JTH is using the exact same delinquent tax forms used by JPH and G.H. Harris.
23. JPH designed and l~roduced the delinquent tax forms for JTH.
24. JTH and JPH use the same deputy tax collector employees - Christopher Freitas
and William Nievus.
25. Mssrs. Freitas and Nievus are the only deputy tax collector employees employed
by both. JTH and JPH.
26. Kathy. Harris trained Terri Harris in administrative matters pertaining to how JTH
should be rtm~ including the use ofcomputex, sofiware that JPH provided or copied over to JTH.
27, Kathy Harris prepared proposals for potential customers of JTH's
28. James P. H&rris trained and assisted James S, Harris in how to effectively give a
sales presentation to potential clients,
29. James P, Harris attended Sales presentations given by James $. Harris, on behalf
of JTH.
30. James P. and Kathy Harris have been actively marketing JTH and introducing
JTH to various municipalities and tax colleCtors throughout Central Pennsylvania, all of which
are municipalities JPH is prohibited from doing business with under the Agreement.
31. Silver Spring and Middlesex Townships, within the Cui>aberland Valley School
District, no longer use G.H. Harris for tax collection services.
32. Silver Spring and Middlesex Townships now use JTH for tax collection services.
33. Silver Spring and Middlesex Townships had been cliems of G.H. Harris for over
forty (40)years
34. On or about June 18, 2002, Tuscarora School District informed G.H. Harris that it
was not renewing its agreement for tax collection services.
35. Tuscarora had been a client of G.H, Harris for ten (l 0) years.
36. Tuscarora School Disu'ict now utilizes JTH.for tax collection services.
37. Farmett Township and Metal Township, within the Fannett-Metal School District,
now use JTH'for tax collection services.
38. Farmett and Metal Townships had been clients of G.H. Harris for over forty (40)
years,
39. Tuscarora, Silver Spring, Middlesex; Fannett and Metal Townships were all G.H.
H~ris customers under the Agreement.
40. It is believed, and ~herefore averred, that Cumberland Valley School District will
assign Hampden and Monroe Townshlp accounts to JTH in the coming year.
41. JTH is a front set up by ~H, James ?. Harris and Kathy Harris to attempt to avoid
the restrictive covenants of the Agreement and injure the business interests of his father.
42. James P. and Kathy Harris' actions through JTH. are deliberate and intentional and
done with the intent of ir0uring the business, of G.H. Harris, and take G.H. Harris' business,
through tl~ ~ontrived JTH business entity.
43. JTH has not solicited or competed for any account ' '
of JPH s.
44. It is believed that JTH, aided and abetted by James P. and Kathy I-tan'is, continues
to solicit.O.H. Harris' clients in an,effort to harm the business interests of James P. Harris' father
and James S. Harris' grandfather.
45. James P. and Kathy Harris, jointly and severally, have guaranteed compliance
with the terms of the Agreement on behalf of any person or business entity through which he or
she may xvork, consult, manage or have any ownership interest..See Section 3.4 of the
Agreement.
46. Arbitration of this dispute by a panel of 3 is mandated by Section 4.6.2 of the
aaached Agreement.
47. $TH, James S. and Ten4 Harris, as. the agent.and alter ego of JPH, organized to
avoid the terms of the Restrictive Covenant, is bound by the terms of the Arbitration Clause,
48. Inmaediate heating on the equitable portion of this claim is demanded within ten
~10) daya of submission per Section 4,6.4 of the Agreement,
49, Final hearing on the merits is demanded w/th thirty (30) days of submission per
Section 4.6.3 of the Agreement.
50.
COUNT I. BREACH OF RESTRICTIVE COVENANT~;
The allegations of 1-49 are incorporated by references as if set out in full.
~.~1. The actions of James P. and Kathy Harris, their children, and associated business
entitie~ a~e in-violation of the Agreement, in' that they have solicited and taken business, namely
Silver Spring, Middlesen, Metal and Farmett Townships and the Tuscarora School District, in
violation of the restrictive covenants contained in the Agreement
52. G.H. Harris has abided by the Agreement in all respects.
53. The. continued solicitation of G.H. Harris' clients by JPH and JTH constitutes
irreparable harm for which there is no adequate remedy at law.
54. An in. junction is demanded to prohibit this future conduct, which is reasonably
tailored to abate Defendants' conduct.
55. An immediate preliminary iqjunction is demanded since G.H. Harris has a strong
likelihood of success on the merits.
56. An immediate preliminary iqjuncfion will maintain the status quo and prohibit
Defendants' conduc~ which is contrary to the Agreement.
57. Greater harm will result fi.om denial of an injunction, than the granting of the
injunction in that without granting the injunction, JPH and JTI-I will continue to solicit and rake
G.H. Harris' clients~ contrary to the terms of the Agreement. It is believed that Hampden and
Monroe Township accounts will soon be turned over to JTH through the efforts of~H and
James P. and Kathy Harris.
58. The parties have vested the arbitration panel with the ability to accord these
remedies. (See Section 4.6.2 of the Agreement)
WHEREFORE, the following relief is requested:
{A) The Arbitration Panel enter an order which preliminarily aad permaneatly
~.njOins all defendants from soliciting those accounts, which are properly G.H. Harris', as
identified in the Agreement, for the duration of the Agreement.
(B) JTH and James S, and Terri Harris terminate their agreements to collect
delinqtmnt taxes with the Tuscarora School District and Fannett, Metal, Silver Spring and
Middlesex Townships.
(C) Pursuant to the terms of the Agreement, at Section 4.6.8, all costs,
including reasonable attorneys fees necessary to enfor~ this Agreement, be awarded in thvor of
O.H. Harris,
(D) All Defendants be required to pay, as damages to G.H. Harris, all lost
reveaues O.H. Harris sustained as a ~;esult of Defendants' violation of the contract.
(E) The Arbitrator award liquidated damages in excess of $1,000.00 per
incident of solicitation, which presently is known to be five incidents, and which shall not be
deemed compensatory Or punitive, pursuant to' Section 3.4 of the Agreement.
(F) Whatever other remedy the Arbitrators deem proper under the
circumstances,
COUNT II- TORTIOUS INTERFERENCE WITH CONTRACTUAL RELATIONS
59. The allegations of 1-58 are incorporated by references as if set out in full.
60. Tuscarora School District and Silver Spring, Middlesex, Farmeu and Metal
Townships had contractual relations with G.H. Harris for the collection of delinquent taxes.
61. By breazhing the Agreement, all defendants, acting as one, have inlerfered with
rite Prel;ent and gu'rare contractual relationships G.H. Hatxis had with these school districts and
municipalities.
62. Such interfirence was done with the intent of injuring the business of G.H. Harris.
63. Such interference is contrary to the Agreement and unjustified.
64; Collectively; Tuscal;ora School District and Silver Spring, Middlesex, Fannett and
Metal Townships r~sulted in approximately $38,000.00 in profits per year to G.H. Harris.
WHEREFORE, the following relief is requested:
(A) The Arbitration Panel enter an order which preliminarily and permanently
enjoins ail defendants from soliciting those accounts, which are properly G.H. Harris',' as
· identified in the Agreement, for the duration of the Agreement.
(B) .~TI-I and james S. and Terri Harris terminate their agreements to collect
delinquent taxes with the Tuscarora School District and Fannett, Metal, Silvtn' Spring and
Middlesex To.wnships.
(C). Pursuant to' the terms of the Agrcement, at Section 4.6.8, all cost~,
including r~.u_sonable attorneys re% necessary to enforce this Agreement, be awarded in favor of
G.H. Harris,
(D) Ail Defen~ont~ be required to pay, as damages to G.H. Harris, all lost
revenue.~ O,H. Harris suatained a~ a resuit of Defendanta' violation of the contract.
(E) The Arbilrat0r award liquidated damages in excess of $1,000.00 per
incident of ~olicitation, which presently is known to be five incidents, and which shall not be
deemed compensatory or punitive, pursuant to Section 3.4 of the Agreement.
(F) Due to the outrageous, intentional and improper conduct, punitive
damages are demanded.
(0) Whatever other remedy the Arbitrators deem proper under the
circumstances.
COUNT III - BREACH OF REP ~I~ESENTATION AND WARRANTI~?;
65. The allegations of 1-64 are incorporated by references as if set out in full.
66. Alternatively, ifJTH is held not to be r~lated to `IPH, ,lames P. and Kathy Harris
represented and warranted in Section 4.7 of the Agreement that they had full authority to bind
their ohildren to the terms of the Agreement, especially the restrictive covenants.
2ames P. and Kathy Harris guaranteed, personally, compliance with the
67,
Agreement. ·
68,
JTH, James S. and Terri Harris' obvious competition with G.H. Harris manifests
that JTH is not abiding by the Agreement and doesnot believe it is bound by the Agreement.
69. James P. and Kathy Harris, thus, have breached the representation and warranty of
Section 4.7 of the Agreement.
WHIgREFORJg, G.H. Harris demands:
(A) That the Arbitration Panel order James P. and Kathy Harris, jointly and
severally, to pay G.H. Harris all amounts it has lost as a result of James P. and Kathy Harris'
children breaching the Agreement, including all revenues and profits t3.H. Harris has lost as a
result of losing customers to/TH.
(B) The mount remain open, and periodically adjusted, based on the further
busines~ that JTH procures, 'to the detriment of G.H. Harris.
(C) All COSTS, including attorneys fees, associated with this action per Section
4,6.8 of the Agreement.
(D) Any other romedy the Arbitration Panel deems proper under the
c~'cumst~noe$.'
Exhibit B
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4~4. ~ ~is A~em~t. may be ~ecuted
ail ~ ~ P~e9' ~vc n~ ~gn~ the
dc~ed ~ oHg~ for a~osc~. ~ ~n~a~ Si~m~ Page. A faos~ile may be
P' O' B°x216, ~ PA
101 ~& V~, M~h~oa~, PA 17050
to:
Fa~imlle: 717-766-8039
t~mard Walter, Esq,
8h,.~rto~, PA 18708. i422
Te!epho~e: $70,696-9090
4,6,3
laterro~a:orte~, sad Jingle request for prodaotioa of document, a~d ~o arbitrator p~eJ
Facsimile: 800-2~0.~26 Faoa/mile: 717-233-6740
All no~os abel ~ d~m~ del~ u~ pc~ do~v~ or ~.~ (72)'houri
~Y ~ ch"~ ~ time ~ ,fi~ ~r. ~d~' f~ ~ of no~e
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Marlmt Region Purchase Agreement
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VERIFICATION
I, Donna L. Fisher, state that I am an attorney for JTH Services LLC, and James
S. Harris and Terri Harris, that I am authorized to make this verification on their behalf, that they
were unavailable to provide a verification within the time allowed for filing this pleading, and
that this verification is made upon information and belief. This verification is made subject to
the pen al ties of 18 Pa. C.S. § 4904.
Dated: November 12, 2002
DONNA L. FiSHeR" -
CERTIFICATE OF SERVICE
I hereby certify that on November 12, 2002, a copy of the foregoing document
was served by first class mail, postage prepaid, addressed as follows:
Steven E. Grubb, Esquire
Goldberg Katzman & Shipman, P.C.
320 Market Street, Strawberry Square
P.O. Box 1268
Harrisburg, PA 17108-1268
John R. Zonarich, Esquire
Skarlatos and Zonarich
204 State Street
Harrisburg, PA 17101
Katharine LeGeros, Case Manager
American Arbitration Association
950 Warren Avenue
East Providence, RI 02914
MAKOSKY (80267~
GOLDBERG, KATZMAN & SHIPMAN, P,C.
Steven E. Grubb, Esq. I.D.# 75897
320 Market Street, Strawberry Square
P. O. Box 1268
Harrisburg, PA 17108-1268
(717) 234-4161
Attorneys for Movants
JTH TAX SERVICES, LLC, JAMES S.
AND TERRI HARRIS, HUSBAND AND
WIFE,
Applicants
Vo
G.H. HARRIS ASSOCIATES, INC.,
Respondent
IN THE COURT OF COMMON PLEAS
CUMBERLAND COUNTY,
PENNSYLVANIA
02-5469 CIVIL TERM
MOTION FOR CLARIFICATION AND TO LIFT STAY
Movant, G.H. Harris Associates, Inc., by and through their counsel, Goldberg, Katzman
& Shipman, P.C., allege the following in support of this Motion for Clarification and to Lift
Stay:
1. Movant is G.H. Harris Associates, Inc. (G.H. Harris).
2. Respondents are JTH Tax Services, LLC and James and Terri Harris,
husband and wife (hereinafter collectively referred to as "JTH").
3. On October 31, 2002, G.H. Harris filed a ,demand for arbitration with the
American Arbitration Association (AAA), which is attached hereto as Exhibit A.
4. The demand named JTH as a party, but also named James P. and Kathy
Harris, as well as James P: Harris Associates, LLC as parties (hereinafter collectively referred to
as "JPH.").
5. It is beyond conjecture that section 4.6 et seq. of the Market Region
Purchase Agreement (the "Agreement") requires G.H. Harris and JPH to submit all disputes
between them to arbitration. The Agreement is attached hereto as Exhibit B.
6. While the demand speaks for itself, one of the major issues in the demand
was the enforcement of a covenant not-to-compete.
7. As alleged in the demand for arbitration, G.H. Harris believes that JTH is
nothing more than a front for JPH and a means by which JPH could harm G.H. Harris by taking
its clients. What JPH could not do directly, it did through a company set up by James P. and
Kathy Harris, using their only child, James S. Harris, as a front. (See paragraphs 16-30 of
Exhibit A).
8. JTH was named in the arbitration on the basis that it is nothing more than
the alter ego and agent of JPH and because James P. and Kathy Harris represented they were
binding their "children" to the non-competition agreement. See Section 4.7 of the Agreement.
(See also the signature line for James P. Harris where he signs fbr his "wife, children and
associated business entities.")
9. Considering the nature of the claim, G.H Harris exercised its right to an
immediate hearing to obtain a preliminary injunction per Section 4.6.4 of the Agreement.
10. Obviously, time is of the essence in matters such as this since the
consequences of JPH and JTH's actions could be destructive to G.H. Harris' business.
11. AAA scheduled an administrative conference call for November 13 at 2
p.m. to set a schedule for the preliminary injunction hearing.
2
12. JTH filed its "Petition in the Form of an Application to Stay Arbitration"
late on the afternoon of November 12, 2002.
The next morning, the court issued an Order of Court attached hereto as
13.
Exhibit C.
14.
Paragraph 1 of the order directs G.H. Harris to show cause why "American
Arbitration Association, Case Number 14-199-02058-02 should, not be stayed for JTH Tax
Services LLC and James S. Harris and Terri Harris, husband and wife."
15. The court, in paragraph six, at the request of JTH, made an ex parte order
enjoining the JTH's involvement in the arbitration as follows: "All proceedings in this matter are
stayed pending further order of this court."
16. An issue has arisen as to whether the reference to "all proceedings in this
matter" refers to the entirety of Case Number 14-199-02058-02, including G.H. Harris' claims
against JPH, or just those matters between G.H. Harris and JTH.
17. The AAA arbitrators have interpreted the court's order to stay only those
arbitration proceedings between G.H. Harris and JTH and have proceeded to schedule a
preliminary injunction arbitration hearing on November 18, 2002. AAA's decision is attached
hereto as Exhibit D.
18. The words of the order, considered in the full context of the order, and the
fact that the "proceedings" referenced therein could only refer to "proceedings" involving the
only parties to the order, JTH, are clear that the order can, and only, applies to proceedings
between G.H. Harris and JTH.
19. The court also ordered that discovery, briefs and argument on JTH's
motion be completed by February 20, 2003.
20. Attached hereto as Exhibit E is §7304 of Pennsylvania's Arbitration Act.
21. As is clear in the act, stays of arbitration are governed by subsection b and
stays of judicial proceedings are governed by subsection d.
22. §7304(b) provides that the issue of arbitrability is to be "forthwith and
summarily tried and determined and a stay of the arbitration proceedings shall be ordered if the
court finds for the moving party_."
23. §7304(b) does not permit an interim stay of an arbitration absent the court
"find[lng] for the moving party."
24. §7304(d) requires that this issue be tried :summarily, as opposed to the
process the court has ordered which will take four months.
25. The court, by granting JTH's ex parte request to enjoin the arbitration
between JTH and G.H. Harris, without giving G.H. Harris the opportunity to be heard, has
ordered a special injunction under Pa. R.C.P. 1531 (a), which must be dissolved in five (5) days,
absent a heating on JTH's request. Pa. R.C.P. 1531(d).
26. JTH relies on §7304(d) in its petition as the grounds for the automatic, ex
parte stay the court has ordered.
27. JTH's reliance is misplaced since §7304(d) only pertains to a stay of a
judicial proceeding. §7304(d) would only be applicable if a party were seeking to stay a court
4
action involving an "issue subject to arbitration." The filing of an application to stay the court
action is the only circumstance where the ex parte stay might be,' effectuated by the filing of a
petition as JTH has done in this case.
28. Concurrence in this motion was sought ~rnd not granted by counsel for JTH
and JPH.
29. Based on the above, the following relief is requested:
The court clarify that the intent of its order was to only stay the
proceedings between G.H. Harris and JTH, leaving G.H. Harris the ability
to proceed in this time sensitive case with the preliminary injunction
arbitration heating on November 18, as now scheduled.
Pursuant to the clear words of §7304(b) which does not permit a stay
absent a holding by the court in favor of the moving party after a summary
trial on the issues, the court strike paragraph six of its November 13, 2002
order as having been improvidently granted due to the misleading
arguments of JTH,
Altematively, pursuant to §7304(b) the court "forthwith and summarily"
try the arbitrability issues in this highly time sensitive case, well in
advance of the February 20, 2003 date now stated in the court's order. It is
suggested that the issue of arbitrability be tried no later than the end of
November.
Respectfully submitted,
By:
GOLDBERG, KATZMAN & SHIPMAN, P.C.
Attorney I.D. No. 75897
320 Market Street, Strawberry Square
P.O. Box 1268
Harrisburg, PA 17108-1268
Telephone: (717) :!34-4161
Attorney for Movant
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that I served a true and correct copy of the foregoing document
upon all parties or counsel of record via facsimile and by depositing a copy of same in the United
States Mail at Harrisburg, Pennsylvania, with first-class postage prepaid, addressed to the
following:
John R. Zonarich, Esq.
Skarlatos & Zonarich
204 State Street
Harrisburg, PA 17101
Date:
Alexandra Makosky, Esq.
Pepper Hamilton LLP
P.O. Box 1181
Harrisburg, PA 17108-1181
st~¢-en K Grubb t,/ ....
AMERICAN ARBITRATION ASSOCIATION
COMMERCIAL ARBITRATION RULES
DEMAND FOR ARBITRATION
MEDI/i TION is a nonbinding process. The mediator assists the parties in working out a solution that is acceptable to them.
wish for the .4MA to contact the other parties to ascertain whether they wish to mediate this mailer, please check this box
(there is no additional administrative fee for this service)
TO: Name ~ Name of Representative (if known) I Name of Firm (if applicable)
See Attached List of Partie
Address
City State [ Zip Code
Phone No. [ Fax No.
Representative's Address
City I State I Zip Code
Phone No Fax No.
The named claimant, a party to an arbitration agreement contained in a written contract, dated
08/28/00 and providing for arbitration under the Commercial Arbitration Rules of the
American Arbitration Association, hereby demands arbitration thereunder.
IS THIS A DISPUTE BETWEEN A BUSINESS AND A CONSUMER? [~ Yes ~ No
THE NATURE OF THE DISPUTE
See Attached Demand for Arbitration
THE CLAIM ORRELIEFSOUGHT(m~^mou,[if^ny}
Preliminary and Permanent Injunction, plus liquidated damages in excess of
$5,000, compensatory damages of approximately $38,000, punitive damages, and all
o~e~ mhd F~m~: JncludSn~ attornevs fees, associated herewith.
DOEST HIS DISPUTE ARISE OUT OFAN EMPLOYMENTRELATIONSHIP? [2YesUNo
TYPES OF BUSINESS
Claimant Delinquent tax collectors
Respondent Delinquent tax collectors
HEARING LOCALE REQUESI'~zo Harrisburg
You arc hereby notified that copies of our arbitration agreement and this demand arc being filed with the American
Arbitration Association at its Philadelphia office, with a request that it commence administration of the
arbitration. Under the rules, you may file an answering statement within fif~ean days after notice from the AAA.
Signa.~.~si~~?~' si a ntative) [ Title/~.r.
Name of Claimant Inc. Name of Representative
G.H. Harris Associates~ Steven E. Grubb,
Address (to ae Used in Connection with This Case}
P.O. Box 216
City State I Zip Code
Dallas PA I 18612
Phone No.
(570) 639-5005
Fax No.
(570) 639-2964
Date
Esquire
Represenmtive'sAddress
320 Market Street
NameofFirm(ifAppli~ble)
Goldberg, Kat~m~n & Shipman,
City I State [ Zip Code
Harrisburg PA 17108
Phone No. Fax No.
(717) 234-4161 (717) 234-6808
TO INS I'litJTE PROCEEDINGS, PLEASE SEND TW( COPIES OF THIS DEMAND AND THE ARBITRATION
AGREEMENT, WITH THE FILING FEE AS PROVIDED FOR IN THE RULES, TO THE AAA. SEND THE
ORIGINAL DEMAND TO THE RESPONDENT.
Form FC2-02/02
Parties
J.P. Harris Associates, LLC
P.O. Box 226
101 Rich Valley Road
Mechanicsburg, Pennsylvania 17055
James P. Harris and Kathy Harris, husband and wife
101 Rich Valley Road
Mechanicsburg, PA 17055.
JTH Tax Services, LLC
Mailing address: P.O. Box 327
Mechanicsburg, Pennsylvania 17055
Street address: 70 Marfield Circle
Hanover, Pennsylvania 17331.
James S. Harris and Terri Harris, husband and wife
70 Marfield Circle
Hanover, Pennsylvania 17331
Representative:
Anna Marie Sossong, Esq.
Skarlatos and Zonarich
204 State Street
Harrisburg, PA 17101
DEMAND FOR ARBITRATION
Plaintiff, G.H. Harris Associates, Inc., demands arbitration and judgment in its favor
based on the following facts:
1. Plaintiff, G.H. Harris Associates, Inc. ("G.H. Harris"), is a Pennsylvania
corporation with a principal place of business in Dallas, Pennsylvania.
2. Defendant, J.P. Harris Associates, LLC ("JPH"), is a Pennsylvania limited
liability company with a mailing address of P.O. Box 226, Mechanicsburg, Pennsylvania 17055
and a street address of 101 Rich Valley Road, Mechanicsburg, Pennsylvania 17055.
3. Defendants, James P. Harris and Kathy Harris, husband and wife, are adult
individuals with a mailing address of 101 Rich Valley Road, Mechanicsburg, PA 17055.
4. Defendant, JTH Tax Services, LLC ("JTH"), is a Pennsylvania limited liability
company with a mailing address of P.O. Box 327, Mechanicsburg, Pennsylvania 17055 and a
street address of 70 Marfield Circle, Hanover, Pennsylvania 17!331.
5. Defendants, James S. Harris and Terri Harris, husband and wife, are adult
individuals residing at 70 Marfield Circle, Hanover, Pennsylvania 17331.
6. G.H. Harris collects delinquent taxes and also serves as deputy tax collector for
various municipal taxing authorities.
7. James P. and Kathy Harris previously were employed by G.H. Harris.
8. On or about August 28, 2000, G.H. Harris entered into a Market Region Purchase
Agreement (the "Agreement") with James P. Harris, a copy of which is attached hereto as
Exhibit "A".
9. The Agreement was intended to formalize James P. and Kathy Harris' formation
of a new business which would effectuate a split from G.H. Harris.
10. The parties wished to define the parameters of the business split and memorialize
which customers would remain with each business.
11. Exhibits 1 and 2 to the Agreement detail who would service which account.
12. Each party agreed not to solicit, or in any way compete, for the accounts divided
by the parties, per the Agreement. See Section 1.1 of the Agreement.
13. The division of accounts and covenant not-to-compete was of the "essence" and
perhaps the most important component of the overall Agreement. See Section 3.4 of the
Agreement.
14.
The Agreement is binding and inures to the benefit of the signatories, their
representatives, administrators, assigns and/or successors-in-interest. It is also binding upon
James P. and Kathy Harris' children, and all business entities in which they have a direct or
indirect ownership interest. See Section 4.7 of the Agreement. (See also the signature line for
James P. Harris where he signs for his "wife, children and associated business entities.")
15. James P. Harris warranted that he had full authority to bind his children. (See
Section 4.7 of the Agreement.)
16. On or about October 25, 2001, JTH was organized, purportedly by James S. and
Terri L. Harris.
17. James S. Harris is the only son of James P. and Kathy Harris, and Terri Harris is
the daughter-in-law of James P. and Kathy Harris.
18. James S. Harris is a civil engineer by trade and maintains a full time job with an
engineering finn in Maryland.
19. JTH's registered address and office is in Hanover, Pennsylvania, as indicated
above.
20. Despite their registered office being in Hanover, Pennsylvania, JTH maintains a
post office box at the same post office as JPH.
21. James P. Harris regularly picks up mail for JTH at the Mechanicsburg Post Office.
22. JTH is using the exact same delinquent tax forms used by JPH and G.H. Harris.
23. JPH designed and produced the delinquent tax fi>rms for JTH.
24. JTH and JPH use the same deputy tax collector employees - Christopher Freitas
and William Nievus.
25. Mssrs. Freitas and Nievus are the only deputy t~[x collector employees employed
by both JTH and JPH.
26. Kathy Harris trained Terri Harris in administrative matters pertaining to how JTH
should be run, including the use of computer software that JPH provided or copied over to JTH.
27. Kathy Harris prepared proposals for potential customers of JTH's
28. James P. Harris trained and assisted James S. Harris in how to effectively give a
sales presentation to potential clients.
29. James P. Harris attended sales presentations given by James S. Harris, on behalf
of JTH.
30. James P. and Kathy Harris have been actively marketing JTH and introducing
JTH to various municipalities and tax collectors throughout Central Pennsylvania, all of which
are municipalities JPH is prohibited from doing business with under the Agreement.
31. Silver Spring and Middlesex Townships, within the Cumberland Valley School
District, no longer use G.H. Harris for tax collection services.
32. Silver Spring and Middlesex Townships now use JTH for tax collection services.
33. Silver Spring and Middlesex Townships had beem clients of G.H. Harris for over
forty (40) years.
34. On or about June 18, 2002, Tuscarora School District informed G.H. Harris that it
was not renewing its agreement for tax collection services.
35. Tuscarora had been a client of G.H. Harris for ten (10) years.
36. Tuscarora School District now utilizes JTH for tax collection services.
37. Fannett Township and Metal Township, within the Farmett-Metal School District,
now use JTH for tax collection services.
38. Fannett and Metal Townships had been clients o:f G.H. Harris for over forty (40)
years.
39. Tuscarora, Silver Spring, Middlesex, Fannett and Metal Townships were all G.H.
Harris customers under the Agreement.
40. It is believed, and therefore averred, that Cumberland Valley School District will
assign Hampden and Monroe Township accounts to JTH in the coming year.
41. JTH is a front set up by JPH, James P. Harris and Kathy Harris to attempt to avoid
the restrictive covenants of the Agreement and injure the business interests of his father.
42. James P. and Kathy Harris' actions through JTH are deliberate and intentional and
done with the intent of injuring the business of G.H. Harris, and take G.H. Harris' business,
through the contrived JTH business entity.
43. JTH has not solicited or competed for any account of JPH's.
44. It is believed that JTH, aided and abetted by James P. and Kathy Harris, continues
to solicit G.H. Harris' clients in an effort to harm the business interests of James P. Harris' father
and James S. Harris' grandfather.
45. James P. and Kathy Harris, jointly and severally:, have guaranteed compliance
with the terms of the Agreement on behalf of any person or business entity through which he or
she may work, consult, manage or have any ownership interest. See Section 3.4 of the
Agreement.
46. Arbitration of this dispute by a panel of 3 is mandated by Section 4.6.2 of the
attached Agreement.
47. JTH, James S. and Tend Harris, as the agent and alter ego o£JPH, organized to
avoid the terms of the Restrictive Covenant, is bound by the terms of the Arbitration Clause.
48. Immediate hearing on the equitable portion of this claim is demanded within ten
(10) days of submission per Section 4.6.4 of the Agreement.
49. Final hearing on the merits is demanded with thirty (30) days of submission per
Section 4.6.3 of the Agreement.
COUNT I - BREACH OF RESTRICTIVE COVENANTS
50. The allegations of 1-49 are incorporated by references as if set out in full.
51. The actions of James P. and Kathy Harris, their children, and associated business
entities are in violation of the Agreement, in that they have solicited and taken business, namely
Silver Spring, Middlesex, Metal and Farmett Townships and the Tuscarora School District, in
violation of the restrictive covenants contained in the Agreement
52. G.H. Harris has abided by the Agreement in all respects.
53. The continued solicitation of G.H. Harris' clients by JPH and JTH constitutes
irreparable harm for which there is no adequate remedy at law.
54. An injunction is demanded to prohibit this future conduct, which is reasonably
tailored to abate Defendants' conduct.
55. An immediate preliminary injunction is demanded since G.H. Harris has a strong
likelihood of success on the merits.
56. An immediate preliminary injunction will maintain the status quo and prohibit
Defendants' conduct which is contrary to the Agreement.
57. Greater harm will result from denial of an injunction, than the granting of the
injunction in that without granting the injunction, JPH and JTH will continue to solicit and take
G.H. Harris' clients, contrary to the terms of the Agreement. It is believed that Hampden and
Monroe Township accounts will soon be turned over to JTH tlu'ough the efforts of JPH and
James P. and Kathy Harris.
58. The parties have vested the arbitration panel with the ability to accord these
remedies. (See Section 4.6.2 of the Agreement)
WHEREFORE, the following relief is requested:
(A) The Arbitration Panel enter an order which preliminarily and permanently
enjoins all defendants from soliciting those accounts, which are properly G.H. Harris', as
identified in the Agreement, for the duration of the Agreement.
(B) JTH and James S. and Terri Harris terminate their agreements to collect
delinquent taxes with the Tuscarora School District and Fannett, Metal, Silver Spring and
Middlesex Townships.
(C) Pursuant to the terms of the Agreement, at Section 4.6.8, all costs,
including reasonable attorneys fees necessary to enforce this Agreement, be awarded in favor of
G.H. Harris.
(D) All Defendants be required to pay, as dmnages to G.H. Harris, all lost
revenues G.H. Harris sustained as a result of Defendants' violation of the contract.
(E) The Arbitrator award liquidated damages in excess of $1,000.00 per
incident of solicitation, which presently is known to be five incidents, and which shall not be
deemed compensatory or punitive, pursuant to Section 3.4 of the Agreement.
(F) Whatever other remedy the Arbitrators deem proper under the
circumstances.
COUNT II - TORTIOUS INTERFERENCE WITH CONTRACTUAL RELATIONS
59. The allegations of 1-58 are incorporated by references as if set out in full.
60. Tuscarora School District and Silver Spring, Middlesex, Fannett and Metal
Townships had contractual relations with G.H. Harris for the collection of delinquent taxes.
61. By breaching the Agreement, all defendants, acting as one, have interfered with
the present and future contractual relationships G.H. Harris had. with these school districts and
municipalities.
62. Such interference was done with the intent of in.'iuring the business of G.H. Harris.
63. Such interference is contrary to the Agreement and unjustified.
64. Collectively, Tuscarora School District and Silver Spring, Middlesex, Fannett and
Metal Townships resulted in approximately $38,000.00 in profits per year to G.H. Harris.
WItEREFORE, the following relief is requested:
(A) The Arbitration Panel enter an order which preliminarily and permanently
enjoins all defendants from soliciting those accounts, which are properly G.H. Harris', as
identified in the Agreement, for the duration of the Agreement.
(B) JTH and James S. and Terri Harris terminate their agreements to collect
delinquent taxes with the Tuscarora School District and Fannet~:, Metal, Silver Spring and
Middlesex Townships.
(C) Pursuant to the terms of the Agreement, at Section 4.6.8, all costs,
including reasonable attorneys fees necessary to enforce this Agreement, be awarded in favor of
G.H. Harris.
(D) All Defendants be required to pay, as damages to G.H. Harris, all lost
revenues G.H. Harris sustained as a result of Defendants' violation of the contract.
(E) The Arbitrator award liquidated damages in excess of $1,000.00 per
incident of solicitation, which presently is known to be five incidents, and which shall not be
deemed compensatory or punitive, pursuant to Section 3.4 of the Agreement.
(F) Due to the outrageous, intentional and improper conduct, punitive
damages are demanded.
(G) Whatever other remedy the Arbitrators deem proper under the
circumstances.
COUNT HI - BREACH OF REPRESENTATION AND WARRANTIES
65. The allegations of 1-64 are incorporated by references as if set out in full.
66. Alternatively, ifJTH is held not to be related to JPH, James P. and Kathy Harris
represented and warranted in Section 4.7 of the Agreement that they had full authority to bind
their children to the tenus of the Agreement, especially the restrictive covenants.
James P. and Kathy Harris guaranteed, personally, compliance w/th the
67.
Agreement.
68.
JTH, James S. and Terri Harris' obvious competition with G.H. Harris manifests
that JTH is not abiding by the Agreement and does not believe :it is bound by the Agreement.
69. James P. and Kathy Harris, thus, have breached the representation and warranty of
Section 4.7 of the Agreement.
WHEREFORE, G.H. Harris demands:
(A) That the Arbitration Panel order James P. and Kathy Harris, jointly and
severally, to pay G.H. Harris all amounts it has lost as a result of James P. and Kathy Harris'
children breaching the Agreement, including all revenues and profits G.H. Harris has lost as a
result of losing customers to JTH.
(B) The amount remain open, and periodically adjusted, based on the further
business that JTH procures,'to the detriment of G.H. Harris.
(C) All costs, including attorneys fees, associated with this action per Section
4.6.8 of the Agreement.
(D) Any other remedy the Arbitration Panel deems proper under the
circumstances.
82334.1 10
MA~W~.T RKGION PURCHASE
This Ag~e~ is m~de effe~ti~ ~st ~2000 (thc "E~= Dat~"), by
~twc~ G, H, Harm ~iatc~ ~,, a P~yl~co~mti~ ("Scllc~ ~ ~ p~clp~
pl~ce of ~a/ness ~ D~las. P~eyl~a, ~d Mr. & Mrs, J~es P, H~ ("B~'),
~ER~ 8~11~ h~s bu~ess ~oiNties Ioc~ed ~ ~e homes of bo~ Buyer ~d
~ERE~ B~ez h~s ~gN ~ bus.ss ~oh of ~e ~sN~a op~ai~d from his
home (&o "Mech~io~u~ ~ge") ~ now desks ~o ~roh~ ~t ~ of ~e ~ss
Se~eG ~d
WH~E~ ~e m~mi~d P~s ~o~e the m~ long-term ~ofim of
sale ~ tho ~s ~d ~fi~ set f~ ~ ~[s
NOW T~ORE, ~ ~demti~ of ~ pmm~ gt fo~ ~[ow, ~
of whlah is hereby ae~ledg~, ~o P~ ~ ag~ ~ ~ows:
[. L A~ ~ bt Tr*n~ferr~ tubj~ ~o ~is ~m~g 8ell~ ~B ~d~ all i~
obligafims ~d~ its ~a~m~ ~ ~ on E~i~t i m Burr, m~g ~ [tse~
~stom~s [~ed on Exhibi~ 2. Buyer ag~es to sssume fully ~ ~mpl~e~ all ~on~
a~oo~ed ~ E~ibit 1 ~ers, ~d 8~er s~ to ~t ~ B~ ~clu~ve o~o~p
For ~c ~ of cl~ ~d ~ ~e ia~s of ~v~ng ~ omafion of overh~ng
geo~hi~ ~ss that would ~ co~g to cnstamers, ~yem, ~ perhaps ~e
· em~elv~, ~e ougomo~ ~ on ~o ~ve E~ibRs shall be ~e~ ~clusively
~vemm~ ~fios ~ ~at dis~i~ ~, ~' c~stomer ~sted ~ ~e ~MM~ ~ is ~ ciW,
bomu~, to~ to~sMp, or school dis~ sh~l ~olude dl ~te~ ~soo~ oil. bomu~,
Mec~ics~rg O~ce s~ be ~v~ be~ ~e ]?~es ~ ~clu~g ~u~o To~ip,
How~ T~p, ~1~ To. ship, N~ Bomu8~ Ju~ ~ Oliv~ To--hip,
To~hlp, La~y, the 0elision of ~ ~ of ~ for ~ ~ ~omer i~hi~s dl ~e~ of
mxc~ for ~c l~ed c~mm, F~ ~mpl~, ~= coll~ of B=lld~ Bo~ ~xcs
that te~phi~ ~a ~clu~g ~d h~ ~cs, pm~ ~, ~in~s ~e8=
~oupafio~ privilege ~, ~o. The o~d~ ~d hc~ is m ~ni~ ~ mu~ as ~s~ibte
~y possible ~s~t ~d ~re po~ of ~o~on or ~flict ~e~ ~e ~s.
1,2. T~f~ ~ Le~: The P~es ~ ~ the Iea~c ~I ~ d~mcd ~;-~ted
elos~g, ~d Buyer agrees ~ ~ the p~ises ~ee oFcla~s against Sager or i~
1,3. Wa~6es ~ Rep~s~don~: ~e Me&a~o~ O~ is ~ mid "a.~ is"
o~s~g lmbifi~:g, ~o~ ~d u-k-own, ~ t~t Bt~ h~ worked ~ g~ m~g~
Mar~t R~on ~h~e A~ement
~P~I~ 1
pr~smnecI lmowledg~ab[e abou~ any ~xistiug liabili~i~s associated therewith. T~e Parties agr~ to
coop~mt~ promptly wi~ m~y accoanting r~que~s associated with t~x and r~gulatory r~po~ting
no~s and,Mth any oth~r reasonab]~ ~qne~ ~o fa~ilitat~ and to implement this Agreement.
Article 2 - Co=~dera~
In consideration for this Agreement, Buyer agrees m pay 8etler as follows:
2,1. No down pa)meat is sought or reqttirod by Seller except non-s~u-y operations experls0s
tach as water, elecU'icity, etc, for tho fall month of Aunt,
2.2, The purctucs, price shall be ~100,000 payable in sixty (60) monlhly paymet~ cf
$1,666.67 beginning September I, 2000, and ending with a b~loon payment for the
2.3. Monthly payments shall b: mai[cd ~o Seller's address o~' record and m~st he r~eelved
within the first five (5) days of each calendar month until paid fit full. lin the eve.~t that
any payment i-~ late, a late fee equal to tea peroent (10%) of the late payment shall apply
and be payable within ten (10) days of Seller's writ~.en demand, the Pm'tie; agreeing that
this is a reasonable ass~arment of the admlnis~tive cosls of dealing wilh the
delinquency. A check dishonored for any reason :ghall autoraatically be deemed lat~ and
subject to the late fee, la the ev~t that any paymem becomes more than thirty (30) days
~ due. tho emire balauc~ shall immed_~mly become due iud payabl0 withou~ demand
or other pi-esentmcn~ and without waiver of any other Seller right~. Simple annual
interest of' ten pcr~cnt (10%), instead of thc IRS in~pu~ed rat~, shall at, mc m ~c unpaid
balance thereafter un'-til paid in full. Buyer gra~ts geller fa-st prioHB, llen on its accounts
receivable and bank aceount~ a~ securiw for prompt payment.
2.4, As of the affect/ye date. Buyer wamms that it 'trill pay all post F-ff~ve Date staff
~sal~ and ~'neflts incladi~ instance, all suppliers, all taxes, and ev,rff other aspect of
its ow-he~d previously paid by Sdlcr,
Article 3 - Tramsttton~l mad lhrim-e Bn.l~m,s llelsttons
3,1 ~; The Pmle~ a~ree In ke~p ~e t~rms and oono~pt~ of thi~ ~ranasotlon
s~tly confidential md revealed ordy t~ Itlo .~tvisory prof~ssiol~s needed l~ uonsummaIe this
tnmsa~on until aft,e lhe effective date. Befor~ that d~t¢, the Parties shall a~e upc~ the
wording md d~rilmtlon channels for a joint press rel~s;, aftor svhid~ the Psrfl,s are fr~e to
disolose the terr~ of this a~r,emont s~ approl~r~, wilh third Ps.rti~s. ~onsistently ill a light rhat
portrays thn Parfi~, their family m~abers, th, business prs~fiee~, in ~ thvomble light. E~?
Party agre~ not tn d/~rage, doraean, or oth~'wi~ lmrtray any ~ta~ psr~ ~o thi~ Asr=nmer~t m
urdlattcrlng terms with any third party except as may Im compelled by legal pmee~.
3.2, ,Pm~t~' R~tlnn,~p: Buyer and his mmpany shall be ma independent business entity
entirely respomibl, for it~ own taxes, insurance, m~d expms,$, Exc0pt as otherarise Irrovided
herein, this is a non-exclusive relationship. <d nothing ¢ontain,d in this As~em~ sh~ll
oons~tnte the Partiea ~ partner% joint vea~rers, emplo)~r .~,,~1 employee, frmaohiser md
lYm-~hisee, or otherwise ~ s~gent~ of the other after the effeofi,ic date.
3,3 Lo~tztiqs or Customer Tr,,~fe~: The P~des agm~ to advise ali oustomers transfeived
under this Agr~mcnt of this change in-operstions and agvls¢ th~m in a joint commur~qu~ that
t~ sh?l ha¥¢ the option of continuing th,ir businesa rela~ionthip with Sell~r. but only if notice
Fins] P~g. ~
:of ~ueh a request ia made in writing to both Seller and Buyer wil~hin fifteen (15) days £olIowing
the date of the notice. Buyer agrees go dragt and present his proposed notice immediately to
Seller for approval and ~he final version will bc in mutually m:ccptablc language sent at the
curliest possible date af~ez the sigakLR of this Ailrccmeflt. Tn the event that the Parties are urmble
to agree upon m~alally aceeptabie language, Seller shall have fatal discretion regarding the
wording of said joint notioe with duo rcspe~.t for the Buyer's preferences and the intent that the
Exhibit I custoiiier~ dire~t their business to Buyer. Seller agrees to mail said notice to all
customers ti~ted on Exhibit 1 within fly: (5) business ,days of the date of ~r~ment
th= lett,r wording and ia any :vent not later than fi¥c days after receipt of BayeFa dra_,~, geller
agrees not to initiate ccatacts with customers for the purpose of preventing the transfer of their
busincas to Buyer darius thc fiftc~-a (15) day transition period following th~ mailing af the letter,
stipttlating that sanctions a~alnst thc non-oompete olausc below shall apply to any such contacL
Scllcr vdli advi~ Buyer of such amen~knents to Exhibi,; 1 as may result from r~spon~s tn this
notice, fn thc croat that Bu'y~r que~ons any amcndmmats to Exhibit 1 based upo~ customer
initiated responses to th~ ~rensition notice, Buyer end ;~cller shell an'huge for joint oonK're~e
calls to the affected customer(s) and confer jointly only w/th such customer(s) until the
allocation qucslion i~ msolved. With regard to accounting, flnar~iaI obllga~ons, mad lo~istleal
iss~,~s, thc Partita agree to cooperate reasonably as n~dcd and to £~l[~:w thc gcr~:ral pro~-durea
dcscrlb~d in Exl~it 3 tn inaludc provision for compensation to 8~II¢r ami Buyer e. amcd to
3.4 Culstonmr ltelatio~ During fred After the Ti:~?,lti, : Thc controlling rule is that
Parties agre~ not to do any business with any customer li~ed on tho customer list of the other,
except as provided he, in, cyan if a customer Sl~Cifically deaL-cs to shi~ M~incss relations
directly or indirectly to th: othcr party tn this Agre~n~cnt, the only exception being during thc
transition phase when customers on F, xh/bit 1 shall have the option to continue business
relations with Seller.
After the lifteen (153 day I~-ansiiion period wha: customers will be responding to the
reorganization notice, thc Parties agree that changes in the Customer lists may be made in
writing by mutual eonseng but neither party nor its agents, directly or indir,-Cdy, shall appmanh,
solicit, have any oontaot w/th. or o~er end/or perform any services for customers listed on
other party's list. even if thc change is requestcxl end/or e~ively sought ~ the customer. In
such a situation,
a. tho Parties eg~e simply to advise, th~ prospective customer politely that the non-compete
prov/sions ~ oontraotual relations bcmve~ the c~npanies prevent thc acceptance of the
new business; or
b. under exceptional oircumatanccs, the Part/es may agree upon an equitable exchange of
customers with thc affected customers' consent.
These non-compote provisions are of the essenoe, and the Parties agree that an5, violation
of this provision may do irreparable and serious damag~ wa:Tanting immcdlate £njunctlve rclin£
under the arbitration provisic&g of this Agreement. ~
· ,-¢~ke-lt~' , the Part/es
· agree ~ rain/mum liquidated dan~ag~s 0£ $I,000: whioh shall not he deemed compea.~atnry or
ptm/t/ve damages that may also he awarded. Any sanctions shall apply on ~ per hacldent basis
related to solicitation or other conduct violative of this provision and includc prompt res;oration
m thc other party, nf any ~ua~om~ ht thc event of oba~d relations. Thc goaJ here is simply to
~er// M'rk¢' Re,ton Pttrcha.c A~r~mcn,
"discourage any imp~flse to violate and actively to encourage compliance wi~ the reruns of ~is ~ieable w~-Mn ~fi~ b~ f~y m~bers.
G. ~. H~s ~d Viola H~fis, Paul ~s~ek md Pa~eia ~s~e~
~d Ka~y H~s each ~r~ to be jo~fly ~d ~eve~Hy as c~ples ~to~ or' ~mp~ce by
each ~s~cfi~ ~plc ~ ~e ~s o~ ~s ~m~t ~ ~y pc~on ~ bus'ss
t~ough which he or she my wo~ cons~ m~a~, or hsve my o~ership ~re~. '
3.5 O~er Bas,ess .Rflafi0~: Be~ cf ~e P~' f~li~W ~ fl~e o~'s business
~d thc ~t~fial ~ies of eon~d eoo~mtion ~ ~e ~o offmes, ~e P~es may
a~ee from time to time ~ ~ ~ hoe ~i~ ~ w~gs ~ng ~tb Panics' si~a~r~, but
~ way oblig~ to ~end ~er the a~ched ~i~, to ~chmge or p~ehase
~en4~s, ~ se~ces, or ~er ~ofi~ ~si~, ~ each c~e ~xdd~g for eompe~afim
~n t~ s~cifi~ ~ ~ ~ advice ~d ~ ail cases i~oiced ~ pai~ wi~ ten
~VOI~.
3.6 .~ Par~ ~z~s~ei: This ~t is f~ ~z b~fit of ~e ~d~ed
~d, exee~ lbr ~e ~ni~cafi~ ob~gati~, not for the ~efi~ of nor may ~y
3,7 ~: ~yer ag~s ~ ~ndu~ its bus~; ~re~ u~er a n~ ~ame of
~ devis~g (pms~ e~mplaed to M J, p, Hajji Ass~ia~s hm.) fl~at is
~se &c pub~, suppli~, ~s~em, or deblum, ~d S~ ~ to o~ate recently
~sis~g Burr ~ ideai~ ~ secu~g such a ~e ~ ~11 ~ly m~e Buy~'s
m~ p~. Burr a~es ~t ~ usc thc nas of G, H. ~r/s ~ ~y of SeWer's prior
~es for ~y purest ~t ~t ~ ~ ~e~c ~ ~at ~ each ~fl eve~ use,
3,g Tern: E~ for ~ pa~ obNga~ons ~ ~nh ~ove, ~e obli~ms
agmm~t sMll ccn~e ~ ~ rome ~ ~ f~ ~t l~s ~ ~W (20) ~
~iRen a~omem ~ ~e con~ b~ ~e P~s, No ~ my aelI or assi~
~sfe~fl ~er ~is ~m~t ~thout tho ~R~ ~s~t of~e o~er p~,
3.9 Res~aflon & ~1~ Buyer ~ membe~ of Ms f~fly h~e~ ~ ~m
employment, posts, or pos~ w~ Seller ~ a ~H ~le~o of ~1 o~, ~. or
~nte~ e~ for ~mpi~ wi~ ~e ~s ~ ~is ~m~t ~ ~ym~ f~ w~k
eomplet~ before ~e effe~w da~ of ~i.~
~de 4- ~neom
4.1, ~ ~s ~eem~t eoic~as ~e ~[ ~d ~mplete ~er~d~g
rcp~s~fi~, wfiu~cr ~, ~ ~ ~, ~s ~m~ may ~ m~fi~ or ~d
~e~ret~ f~ or aS~a ei~ P~, ~oh of ~e ~Me~i~ ha~ ~ep~d~ co. el.
4.2, Severa~, of P~s. If ~y oro~si~ of ~ Agreem~ s~ be held to
~v~id or unenf~le for ~, ~, ~e ~g pro~s s~l co~e ~ be
e~o~eable. M a ce~ or ~h~or fmd~ tat ~ ~slm m' fils Ag~e~ is inv~id or
un~orceab]e, hot ~t ~ ~g ~ch p~on i~ would, b~me v~d ~fl ~force~le.
such pro.ion shall ho d~mefl to be ~en, c~[u~ed, ~fl ~or~ aa so li~, The
b~ of ~is Ag~m~ ~ pa~s the~of sh~l not bc ~ff~icd ~cmby, ~c pro~sio~
eonstmcd ~ serial ~d
~~~ M~ke' Re.on Purchase A..m.t
~ Page 4
Buyar:
4.6,2
4.3.' Apl~lieable Law. This Agreement shall be construed ~nd enforced in accordance with
the laws of the Comn~onweallh of ?eal~ylvania appliceble to contrasts ~o be wMIly performed
with/n said ,qtate.
4.4. ~, This Agreem~t may be executed in counterpa~ and all
eoua~e~pm-ts shall consiltu~- e~c a~eement binding c~a all Parties hereto, n~ithaanding ~a~:
all of the Parties have not ~igaed the same eouaterpar~ $igr~ture Page. A
deemed a~ original for al/purposes.
4.5. N..oilc,s, Ail notices purmant to this Agreemm~ .4~all be i~ writing a~cI shall be sent hy
certified mail, postage £ully prepaid, adclre,sed as follow~:
Seller, Mr. ~. H. HarrY, ?r~sident
G, H. I-Isrris/t~oel,~s lac.
P. O. Box 216, Dallas, PA
Telephone:
Faeslmfle;
Mr, & Mrs. J. P. Harrls
101 ~ct Valley p~, Me~hani~sburg, PA 170!0
Telepl~one: 717-76fi-~77
· ~i~h ia each ease to:
Facsimile: 717-766-8039
Bernard Waiter~ Esq,
20 North Memorial l~ighway
Shavertown, PA 18708.1422
Teleph~e: 570-696-9090
Facsimile: ~00-~30-6~6
Ama Marie 8os~ong, Esq,
Sks~t~ & Zon~ieh, 204
Harrisburg, PA 17101
Telephone: 717-233-1000
Faosimil¢; 717-233-6740
4.6,3
i~terrosatofies, and single request for prod~tion of documents, trod the arbitrator panel
Buyer/~ t
All not/cos shall be deemed delivered ~ personal del/very or sevmty-tw~ (72) hours
~fier ma/ling, postage pretafich whichever shell first occur. Addresses for purposes of notice
may be ch~-ged from time m time by notice in writing sent ~ provided alm~e. [h~til
nofie, is received by the other Partios, the ~ove ~dresses hereto shall be dee~efl corm,[ The
undersigned each ~peeifically agree that servi~ under rids provis/on slmll be effe~ve to
personal ~ufisflictio~ for mediation and/or arbitration.
4,6, Disgn~ R~solufion & M--,'l,s~ry
4,6.1 In the ex,ant at' a dispute between the Parti.m, each Party agrees to attempt msoluilcm
through mediation with a m~diator provided by the American Arbitration .4~oeiation
("AAA") in Philadelphia, Pennsylvania, in aceordanoe with the the~ exi~ag .4.AA
CommerrJaI Rules, Absent favorable remits, aflitration aatice may b~ ~ within thirty
(30) days of the request for mediali-,a, Claims for equitable n: '
llef nmnt not be medla~ad,
In the int.-rests at' e.o~omy, pr/vaay, and expedifiour, resolu~on, ia the evenI of a breaoh,
defaulL or dispute based on oontmet, tort. or stalut~ between the Partios arising out of or
r*lated to th/s Agreement including without limitation cia/ms for equitable relief
svhethcr an issue is ~bit,~b!~ ea~h Party eonsen~ I~ f;--! ~d binding ar~trafion
exclusive '~enue, p~rsc~ jurisdi~on, and he~h~g authorily ve~ in AAA,
Philadelphia, Penasylvatfia, ander its Cammerelal Rules us/ng a panel of three arbitrators.
Each Paxty may serve a single act of requests f~r admissiam, a aingle set
Market Region Purchase Agreement
Final Page 5
~eller
................. ~u-.:.~u-ecr. li~ Te~ &'Inl Mmfl~ 2~oNon~ Dill: I],~5/0D T',,,.~: :DS i~M Page~nf~
shall h~ve sole and complete discr~on to determine any discovery disputes, Each Party
agrees actively to expedite the dispute resolution w/th ~11 re~somble effo~ to secure a
hem4_ng within Ihirty (30) c~ys ~r servi~e of ~e Arbitration dcmmzd, or ~s ;con
their as possible, w~ivi~g jury trial and appeal rights.
4.6.4 In thc e~t of an applioafio~ for a teml~rary restralni~E order, e~h P~m'y egrees tn any
and all me. urea neo~ssery to mm a hearing with/n t~n (10) lmsine~ days of thc Notice
which may proceed even without the responding Par~y. 's presence.
4.6.5 Thc arbitrator panel shaft deliver a written oplnlon'.setfi, v forth factual ftadlngs and the
decision rationale thug m~y be reduced witen final to ~ ~flgmenI and filed in any court
having jurladicfioa. At thc expenso of thc moving party, the arbitrator panel shall
reeonmider the opinion o~e upon a written motion submitted and ~rved
busineg.~ days of th~ opinlon'g mailing,
4.6,6 Any complaint, adversarial claim, or snti~n l~lat~d to this Agrecmct~ prosecuted in any
other jurisdictlnn or i'orum than as provided herein shall be null and void.
4.6.7 In the event of litig~on betva~n a Party to tiffs Agreement and a third tmrty for which
indemni~cafion or eonl~ibution is d~sired, ~oh iadenmifioafion or con~n'buiion shall
sought alter that liti§~tion through ~ separate mediation/arbitration rather than by cro.~s
complaint or ~olnder.
4.5,8 In ~ddition to any olfler form of re~ovez3; the preys/ling Party shall be entitled to re~over
reasonable attorneys' fc~s and co~ ne~e~s~3, to enfi~rce this Agreement, wen/n thc
~.~.~e of arbitration.
4.?. i~tiilLF.,ff~: This Agreement supersedes alt prior agreements, written or oral,
betwem the ?arti~s concerning thc sub~.t matter o£ this Agreement. It shall be binding upon
and inure tn the bene~it of the undersigned mad their s ' ' '
and/or successors-in-interest. This Agreement and the non-compete provisions in particular
shall be binding upon l!]uycr, Buyer's wife and children, and gpm any and all buldncss e~titics
in which Buyer has any ownership ire'crest, ~ or indirect Th~ person signing for ea~h party
warraaiz that h~ has the full a~thor[ty to bind thc Party
4,8. Waivers; Nc waiver of ~ay ~ov~aat, condition, or limitation hc~4n oontalned shall be
valid unless the same is made in v~iiiing and duly executed by the Party making the waiver, No
waiver oi' any pmvislon of this Agreement shall be deemed or shall continue a w~.vicr
other pmvlsicm, whether or sot similar, The fifilum or neglect of ~ Party ~ any oceaslon
enforce any provision of this Agreement shah not restrain or limit such Party from enforcing
such provisions upon any other occa,i~n or occasions, if such ?arty elects to do s~, and
written waiver of' any breach of this Agreerncrit shall bo deemed to be a conilrming waiver of
such breach urlless so expressly stated. Ali remedies, rights, underaldngs, and obligations
hereunder shall bc cumulatiw and nor~ shall opgratc a~ a limit~llon or my other rernedy~ right~
undermklng, or obllgstLnn hereunder. The Parties further agree to waive any oonflint of ~ntcr,-st
or any other olaia~ against any attorney involved in the negotiation ~d/or Ix~paration of this
r n ent.
4.9. . ~illl~lilli~l: Given that B,u. 3~r will be operating a completel
F/.-~P.~5~ ct' the eff, ctive d~e with ,ts own payroll, creditnr r~l,tlons, ~k separate business
~'~ Market Region Purchase Agreement a~oounts, and tax
' ¥in l Page 6
obligatio.~ but working with long tern clients of S~]ler, clie~ se~oed ~Iy ~ Buyer,
P~es ague to ~e follm~g ~d~f~fi~:
4.9.1 B~er a~es ~ defmd, ~dem~;~, ~ hold hamless ~er, meeesmrs, ~d a~i~s
("P~i~s") ag~ ~ action, pmcee~gs, ~its, ~d clams ~'C~s") ~at may
fr~ (1) Buy~'s b~ of ~ ~ment, (2) B~'s failure at ~ time ~ oomp~
wi~ ~te or red,al t~fion m~mm~ts ~clud~ ~t cf c~ t~cs on ~e
eomp~sa~on described hem~ it ~ agreed ~a~ said oompliamo ~ paymeg are of
~* essm~, ~d (3) ~1 Clams of ~he Mcch~es~ ~cc'a c~mers, uppers,
~ate~ic ~ers. le~s, ~ ~ o~ ~tor ~ght s~in~ Sefl~ caus~ ~ or
gfrom opemfio~ ~ c~m~ tlst~ ~ [~ibit 1 ~clnd~g ~ose ~isin 'or
e eff~ve date of ~i~ A~at..omsid~flm that j~fies p~ ~ the ~n~d
'pumhdse Pfi~ of ~s
4.9.2 Solar ~es m d~md, ~de~, ~ hoS h~es~ Buy~, hs a~, ~o~ssora, md
m~y ~se ~m (I) Sell,r's ~ach of ~s ~m~ (2) Seller'~ ~um to comply
s~ ~d f~ ~xafim m~imm~ ~ehd~g ~yment of ~divid~l i~me taxes on
· e eomp~a~on d~sefi~d h~n, it b~ a~ ~at said eomp~ ~ parrot
· e obI~afim of ~e Seller, ~d 0) ~ Ct~ of ~e Seller's m~omem,
l~lo~s, s~a~ic pamers, ~fl~, ~8 my ~er om~r bmght ~a~ Burr cm~sed
~ ~ ~g ~ operafi~ ~g ~e effective ~ f~s Ag~emmt.
4.9.3 ~eh ~emnffieafion ~ded ~ ~is seo~m s~l ~lude ~1 defoe ms*s md
m~o~lc x~m~s' ~es ~is~ ~ eo~c,fim wi~ tim el~ for wM~
ha~ ~ pm~s~ ~ong w~ ind~nit~'s
inrle~. Each demmfiea~ ~o~ded ~ ~s seefi~ s~l ~ehde ~l r~s~le
~ . . m~mble eons of ~fore~ ~e a~h~le
eo~ ~ masonic e~me~' f~ ~slng ~ oomcofim wi~ the ~l~m for w~eh
· d*~eaflm ~s b~ ~msed ~d ~ the ~de~tee's ~ble ~s~ of
~ore~g the ~p~eable ide~. Each ~i~du~ P~eip~ m be ~cd ~
~5' ~e~ under ~fs ~t~t is a ~ird p~ b~efioi~ of such ~ndem~.
4.10, W~ver 0f Conffiet of Inter~t, Each P~, und~m~ ~ v~ of ~e~ ~h
has pla~ ~ a~t~g the P~es ~ ~s yompl~ ~d m~fifac~d ~sitiom
pmfessi~l a~ee~ m ~y ~di~du~s or comply inmms~ ~eeted ~ ~a
c~enc~g upoa ~c d~ of his ~ ~ ~ ~ ~ ~[s A~em~L
4.ll. ~e & S~ Title~. ~eM ~ ~m titles ~ for ~sofipfi~ ~se~ ~y ~
sh~ not ~1 or al~r ~c me~ of IM~ A~mmt a~ set ~ ~ ~e ~,
~, 2000.
Seller
~3. H. Harris, indhddually and a~ Pre~ide~
G. H. Harris Associates,
Final Page
~$ENT 0F ~POUSEs & AFFECTED FAMILY ME~E~S
As a f~ly m~ber of ~e fo~g ~divid~ls sing a~, ! ~owl~e that I
have read ~c f~go~ sev~ page A~e~ent ~ ~at I ~ow i,~ ~. I am aw~e flint, by
its pmvislm~, ~e fo~o~g ~d~d~ ha~ ~ ~ a m~f~ of c~ assc~ or ~ym~s
in oxvh~g~ for ~, sp~ifi~ oonsido~fion ~th ~e li~,d tonns ~d con,flora ~at my ~f~t
my mplm;mmk m~dffi pm~dy: ~ pcm~ bus~ ~, Wi~ ~wlcdg~ ~at I m~
~e~ r,la~ md ~ ~at I shall ~e no ~tlon ~ my time ~ h~d~, ~, or viol~
· c t~z of ~ A~cmmt.
PALrL ADAMSHICK
PATItlCIA ~SHICK
- Market R*gton Purchase Agreement
Buyer Final _l~ge 8 Seller
MECEAJ~IC~UBG
FOLLOWING ~R~ COUN:"~' W~rD;~ T~I~RITCLm. rF.~
M~CH&N~O~BUR~ OFFIOE
COUNTy
............ --, . .,. :~ '1 ~-~um G. H. HC~RR~ A~E~C, [NC, TO 171~740 p,pJ~
MEC~IANIC$BURG OF~'ICE
~ELLEPONTE BOEOUGE
]PORT MATILD;} BOROUGH
CARROLL TOWNSHIP
DI£LSBURG BOROUGH
TO
~.07
......... ~,.-',.,,:~Jr~'l r~ur, G. H. HF4P. RIS R5~OC, INC, TO ~?:L?23"36'Tala p.la8
TH~ FOLLOWII~G AR~ COUNTYi WIDE
COUNTY
ti',
~ ?J
SCHOOL
SCHOOL
~i. H. PIRRR[S R-SS~C. [~C, TO
BU~KS CO~r~'
P, ~-0
SCHUOL
SCHOOL + TOWN~I~
SCHOOL ~ BOROU~
SC"~3£ + TOWNBBiI~
SCHOOL +
SCHOOL + BOROUG~
PHILIP~BU~OROUGH
$CA~QOL -~ TOWNSHIP
c~ ~
TOWNSHIP'
FRANKLIN ~
BCHOOL & TOWNSHIP
mOROUC47
TDWN~!P
TOWNShIp
SCI;COL ~ ~OWN~!~
SCHOOL
tOWNship
BOROUGH
TOWNSHI~
TOWNSEIp
BOROU~B
~s ~' '
p
ON ~.WE ~FF~Tt~E D~ OF T~ ~G~, T~ ~C~ICSBU~ OFFIC~ WILL ~ A
COS~ ~R~, WITHIN ~IV~ DAYS ~IS R~PORT SH~ 9~ ~ ~ T~ MAIN OFFICE
IBT~RZST. ~IRTY D~YS LATER TB~ ~CH~NICSBURG OFFICE WI~.n RUN ~ FINAL COST
AR~ TBS ~NICSBU~ OFFiCE'~ ~/OR THE DEPLOY'
LONGER MaK~ DE~BITg ~ ~IS ~OU~ ~R ~LL T~E M~H~NICBBU~ OFPICE ~IT~
~ OUTE~I~ ~K ~BB. ~FT~ THE FIN~ CO~ ~$~ HA~ BE~ S~. ANY
U~ ~ ~ ~CL~ZNG TS~ F~AA ~ RE~, A~ CO~S
<.,,_............ .-~.~ ~:.:~x.. ]NC, TO ~,?~.723'3G?~!~ p.~?
P~S~ O~ C~S ~Y'T~ ~C~NICS~ OFF~OE
[J P ~ARRIS~ ON ~ ~ER ~ SI~G OF ~FIS
~.D C~CKS'RECEIV~D F~ D~Q~ T~XABLE~
OFFICE ~
FOR ~ P~Y~D OF S~l'~ DRY~, ~ MECH~NIC~B~G OFFICE
t~R~' a6~SOC!A~S INC ST~, ~ORS~ ~
~/OB G ~ N~IS ASSOCIATE ~C I~ED ~ ~ ~CHA~csBu~ OFFICE=
~CK ~Dff OUF ~ T~ M~N~CS~ OFFICE
E~R T~T ~ I~ FOR G N ~S A~I~ES
i?17233~740 P.18
G. H. ~R~ ~0~. ]NC, T~ i?I?2~'~674G P,l-q
NOV-13-2002 12:18 PEPPER,HAMILTON P.0~/04
JTH TAX SERVICES LLC. JAMES S. : IN THE COURT OF COMMON PLF. AS OF
HARRIS AND TERRI HARRIS. Husband: CUMBERLAND COUNTY, PENNSYLVANIA
and Wife,
APPLICANTS :
G.H. HARRIS ASSOCIATES. INC.,
RESPONDENT
AND NOW, this
the petition in the I~orm of an application to stay arbitration, I1' I$ ORDERED:
1. A rule is issued upon Responc~ent G.H. Harris Associates, Inc., to show
cause why the arbitration Pending before the American Arbitration Association, Case
Number 14-199-02058-02, should not be stayed for JTH Tax Services LLC, and. James
S. Harris and Terri Harris. husband and wife.
2. Plaintiff shall file an answer to the petition within twenty (20) days of
service.
· 02-546g CIVIL TERM
_ORDER OF COURT
· / ~'~. _ _day of November, 2002, upon consideration of
4.
sen~fce.
The petition shall be decided pursuant to Pa.R.C.P. 206.7.
Deposition, il~ any, shall be completed within sixty (60) days of the date of
5. Briefs shall be filed in chambers not later than Tuesday, February 18,
2003. Oral argument shall be conducted in Courtroom Number 2. Cumberland County
Courthouse, Carlisle, Pennsylvania at 8:4S a.m.. Thursday, Februan/20, 2003.
6. All proceedings in this maffer are stayed pending further order of this
court.
NOU-13-2002 12:18 PEPPER, HAMILTON P.04~04
petitioner.
:sal
Notice of the entry of this order shall be provided to all parties by the
Edgar B. Bayley, J.~
TOTAL P.04
NOV, lq-. 20U2 ll:~/AM
November 14, 2002
AMEkICAN ARBITRATION
AMERICAN ARBITRATION ASSOCIATION
Notice of Hearing
N0.2439
P, 4/7
Steven Grubb, Esq.
Goldbcrg, Kai~an & Shipman, P.C.
320 Market Strcct
Harri-~burg, PA 17108
John R. Zonarich, Esq.
Skarlatos & Zonarich
2(~ State Street
Harrisburg, PA 17101
Pepper Hamilton
200 One Keystone pl.?.
North Front and Market Struts
Harrisburg, PA 17101
Re: 14 199 02058 02
G.H. Hams Associa~s, Inc.
and
James P. Hams & Kathy Hams and
J.P. Harris Associates, LLC
and
ITH Tax Services, I. LC
and
James S. Harris & Terri Hams
PLEASE TAKE NOTICE that hearings in the above-entitled arbilxation will be held as follows:
Place: Schurnack~r and Lunkenheimer
1400 Liberty Ridge Drive
Suite 103
Wayne, PA 19087
Date: November 18, 2002
Time: 10:00 AM
Date: November 25, 2002
Time: 10:00 AM
Bcforc: Robert A. Ahton
Harry T. Mondoil
James J. Zaydon, Jr.
NO]E:
Please attend promptly with your wimesses and be prepared to present your proofs.
Katharine M. Legeros
Case Manager
401 431 4714
NOTICE: The arbitrator(s) have arranged their schedule and reserved the above date(s). Therefore, every effot~ should be
made to appear on the date(s) scheduled. In the event that unforeseen circumstances make it ;mposs,]~le to a~cnd the hearing
as schcduled, a party requesting a pos~poncmen~ should obtain the a~reer~nt of thc other par~s). If there is no n'mtual
agreement, the arbi~s) will make a detcrmmafion~ All requests for postponements mu~t be comw--icated to the Case
Manager, not thc arbiWator. Therc should be no commumcalion bem, een the parties and the neuual arbitrator(s) other than as
outlined in the parties' agreemen! to the Accelerated Exchange procedures. In some instances, postponements ar~ subject to
NUV, I~,ZUU2 II:J/AM AM~KICAN AKBiIKAIION
NO, 2439 P. 5/7
~n~cllation ~ees by the arbitra~c~(s). Any psny wishinl~ a s~ndllrapbi¢ record must make ana~eme~ direly wi~h ~
s~eno~rapher ~d notify ~h~ oliler party(s) of the srran~ement~ i~ advance or,he hearings.
cc; R. obcx*~ .A. ls~n
Hnn*~ T. ~ondoil
Sames Zaydon, Jr.
42 Pa.C.S.A. § 7303 CML ACTIONS & PROCEEDIN~
Note 21
indicated that arbitration should be had by performance, breach or other'wi
only during Performance of the contract, Bangev. Harrisburg West Motor Inn,
and not after the contract was terminated York 155 (1967).
§ 7304. Court proceedings to compel or stay arbitration
(a) Compelling arbitration.--On application to a court to comp.
arbitration made by a party showing an agreement described i
section 7303 (relating to validity of agreement to arbitrate) and
showing that an opposing party refused to arbitrate, the court sba
order the parties to proceed with arbitration~ If the opposing par~
denies the existence of an agreement to arbitrate, the court shal
proceed summarily to determine the issue so raised and shall orde
the parties to proceed with arbitration if it finds'for the moving party
Otherwise, the application shall be denied.
(b) Stay of arbitration.--On application of a party to a court tc
stay an arbitration proceeding threatened or commenced the cour~
may stay an arbitration on a showing that there is no agreement to
arbitrate. When in substantial and bona fide dispute, such an issue
shall be forthwith and summarily tried and determined and a stay of
the arbitration proceedings shall be ordered if the court finds for the
moving party. If the court finds for the opposing party, the court
shall order the parties to proceed with arbitration.
(c) Venue.--If a controversy alleged to be or not to be referable to
arbitration under the agreement is also involved in an action or
proceeding pending in a court having jurisdiction to hear applica-
tions to compel or stay arbitration, the application shall be made to
that court. Otherwise, subject to section 7319 (relating to venue of
court proceedings), the application may be made in any court of
competent jurisdiction.
(d) Stay of Judicial proceedings.--An action or proceeding, alleg-
edly involving an issue subject to arbitration, shall be stayed if a
court order to proceed with arbitration has been made or an applica-
tion for such an order has been made under this section. If the issue
allegedly subject to arbitration is severable, the stay of the court
action or proceeding may be made with respect to the severable issue
only. If the application for an order to proceed with arbitration is
made in such action or proceeding and is granted, the court order to
proceed with arbitration, shall include a stay of the action or proceed-
ing.
(e) No examination of merlts.~An application for a court order to
proceed with arbitration shall not be refused, nor shall an application
to stay arbitration be granted, by the court on the grc~und that the
52
JTH TAX SERVICES LLC, JAMES S.
HARRIS AND TERRI HARRIS, Husband
and Wife,
VS.
Applicants,
G.H. HARRIS ASSOCIATES, INC.,
Respondent.
IN THECOURT OFCOMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
NO. 02-5469 CIV1L
CIVIL ACTION - LAW
PRAECIPE TO SUBSTITUTE
TO THE PROTHONOTARY:
Please substitute the attached verifications for the verification originally attached
to the Petition in the Form of an Application to Stay Arbitration.
Please substitute the attached page 4 for page 4 originally attached to the Petition
in the Form of an Application to Stay Arbitration.
Date: November 13, 2002
DOI~NA L FIrSI~ER'~3941b)
ALEXANDRA MAKOSKY (80267)
Pepper Hamilton LLP
200 One Keystone Plaza
North Front and Market Streets
P.O. Box 1181
Harrisburg, PA 17108-1181
(717) 255-1155
(717) 238-0575 (Fax)
Attorneys for Applicants JTH Tax Services LLC,
James S. Harris and Terri Harris, Husband and Wife
I, Ian~a S. Harris, hereby verify that tho statements made in tl~ foregOlnt~
Application to Stay Arbitration are trt~ and ootre~t to the bcst of my kn;wled~, information and
belief. I understand tha~ tt~ statements in said answer are made subJec~ to t1~ pentltle.~ of 18
Pa.C..q. §. 4~)09 relating to un~wom falsification to nmhoritks.
D~d: November 12, 2002
~li~on m Stay Arbitration ~
~Iief. ~ ~d=r~d ~= the s=te~n~ ln.~d anawer =e m~e ~ to the ~nal~s of i 8
P~C.S. ~ 4909 relatin8 m unswom f~dflc~n to aU~odties..
personal jurisdiction, and hearing authority vested in AAA, Philadelphia, Pennsylvania, under its
Commercial Rules using a panel of three arbitrators." Exhibit B, § 4.6.2, p. 5.
14. The Purchase Agreement arbitration provision is initialed by James P.
Harris, as buyer, G.H. Harris, as seller, G.H. Harris, individually, Viola Harris, individually, Paul
Adamshick, individually, Patricia Adamshick, individually, and Kathy Harris, individually.
Exhibit B, p. 6.
Agreement.
15. JTH, James S. Harris and Terri Harris are not parties to the Purchase
16. JTH, James S. Harris and Terri Harris are not signatories to the Purchase
Agreement.
17. JTH, James S. Harris and Terri Harris have not entered into an arbitration
agreement with G.H. Harris.
18. A contract cannot legally bind persons not a party thereto. Cumberland-
Perry Area Vocational-Technical Sch. Auth. v. Bogar & Bink, 396 A.2d 433,435 (Pa. Super.
1978).
19. The arbitration clause in a contract can be enforced only by signatories to
a contract. See, e.g., Dayhofflnc. v. H.J. Heinz Co., 86 F.3d 1287, 1296 (3d Cir. 1996).
20. Counsel for Applicants JTH Tax Services LLC, James S. Harris and Terri
Harris, husband and wife, contacted counsel for G.H. Harris Associates, Inc., and he does not
concur.
-4-
_CERTIFICATE OF SERVICE
I hereby certify that on November 13, 2002, a copy of the foregoing document
was served by first class mail, postage prepaid, addressed as follows:
Steven E. Gmbb, Esquire
Goldberg Katzman & Shipman, P.C.
320 Market Street, Strawberry Square
P.O. Box 1268
Harrisburg, PA 17108-1268
John R. Zonarich, Esquire
Skarlatos and Zonarich
204 State Street
Harrisburg, PA 17101
Katharine LeGeros, Case Manager
American Arbitration Association
950 Warren Avenue
East Providence, RI 02914
DONNA L FISHER (39410)
JTH TAX SERVICES LLC, JAMES S. : IN THE COURT OF COMMON PLEAS OF
HARRIS AND TERRI HARRIS, Husband: CUMBERLAND COUNTY, PENNSYLVANIA
and Wife,
APPLICANTS
V.
G.H. HARRIS ASSOCIATES, INC.,
RESPONDENT : 02-5469 CIVIL TERM
ORDER OF COURT
AND NOW, thisl'l~' day of November, 2002, based upon the motion of G.H.
Harris Associates, Inc. for clarification and modification of this court's order of
November 13, 2002, IT IS ORDERED:
(1) Paragraph 6 of the order of November 13, 2002, providing temporarily that
"all proceedings in this matter are stayed pending further order of this court," shall
remain in effect and refers to any pending arbitration between G.H. Harris Associates,
Inc., and any of the following parties: JTH Tax Services LLC, James S. Harris and Terri
Harris, husband and wife?
(2) Pursuant to the Judicial Code at 42 Pa.C.S. § 7304(b), the order of
November 13, 2002, providing for the petition to show cause why an arbitration should
not be permanently stayed to be decided pursuant to Pa. Rule of Civil Procedure 206.7,
IS VACATED as improvidently granted.
(3) The issue of whether an arbitration between G.H. Harris Associates, Inc.,
and JTH Tax Services LLC, James D. Harris and Terri Harris, shall be permanently
stayed shall be summarily tried pursuant to Section 7304(b) of the Judicial Code, at
' This stay order is not a preliminary injunction issued under Pa. Rule of Civil
Procedure 1531(a).
10:45 a.m., Monday, December 2, 2002, in Courtroom Number 2, Cumberland County
Courthouse, Carlisle, Pennsylvania.
~Alexandra Makosky, Esquire
//~teven E. Grubb, Esquire
/,,~ohn R. Zonarich, Esquire
:sal
JTH TAX SERVICES LLC, JAMES S.
HARRIS AND TERRI HARRIS, Husband
and Wife,
VS.
Applicants,
G.H. HARRIS ASSOCIATES, INC.,
Respondent.
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
NO. 02-5469 CIVIL TERM
CIVIL ACTION - LAW
AFFIDAVIT OF SERVICE
COMMONWEALTH OF PENNSYLVANIA :
: SS:
COUNTY OF DAUPHIN :
THE UNDERSIGNED, being duly sworn according to law, does depose and say
as follows:
1. That she is a competent adult and an attomey duly admitted to the Bar of
the Supreme Court of the Commonwealth of Pennsylvania, having Attorney Identification
Number 80267;
2. That on the 14th day of November, 2002, she caused the Order dated
November 13, 2002, in the above-captioned action to be served upon the following individuals
by mailing a true and correct copy thereof to them by first class United States Mail, postage
prepaid, addressed as follows:
Steven E. Grubb, Esquire
Goldberg Katzman & Shipman, P.C.
320 Market Street, Strawberry Square
P.O. Box 1268
Harrisburg, PA 17108-1268
John R. Zonarich, Esquire
Skarlatos and Zonarich
204 State Street
Harrisburg, PA 17101
Katharine LeGeros, Case Manager
American Arbitration Association
950 Warren Avenue
East Providence, RI 02914
ALEXANDRA MAKOSK
Sworn to and subscribed before me
this 14th day of November, 2002
a notary public, in and for the
Commonwealth of Pennsylvania.
-2-
CERTIFICATE OF SERVICE
I hereby certify that on November 14, 2002, I served the foregoing Affidavit of
Service by placing a tree and correct copy thereof in the United States Mail, first class postage
prepaid, addressed as follows:
Steven E. Grubb, Esquire
Goldberg Katzman & Shipman, P.C.
320 Market Street, Strawberry Square
P.O. Box 1268
Harrisburg, PA 17108-1268
John R. Zonarich, Esquire
Skarlatos and Zonarich
204 State Street
Harrisburg, PA 17101
Katharine LeGeros, Case Manager
American Arbitration Association
950 Warren Avenue
East Providence, RI 02914
XANDRA MAKOSKY~
JTH TAX SERVICES LLC, JAMES S.
HARRIS AND TERRI HARRIS, Husband
and Wife,
Applicants,
VS.
G.H. HARRIS ASSOCIATES, INC.,
Respondent.
IN THE COURT OF COMMON PLEAS OF
CUMBERLAiND COUNTY, PENNSYLVANIA
NO. 02-5469 CIVIL
CIVIL ACTION - LAW
ACCEPTANCE OF SERVICE
I accept service of Petition in the Form of an Application to Stay Arbitration on
behalf Respondent G.H. Harris Associates, Inc., effective ~J,a/~,,[~" ./l~. _,z'~,?. and
certify that I am authorized to do so.
-~S~h-E. Gmbb,'~squire
Attorney for Respondent
G.H. Harris Associates, Inc.
JTH TAX SERVICES LLC, JAMES S.
HARRIS and TERRI HARRIS, Husband
and Wife,
Applicants,
VS.
G.It. tlARRIS ASSOCIATES, 1NC.,
Respondent.
IN THE COURT OF COMMON PLEAS
DAUPHIN COUNTY, PENNSYLVANIA
NO. 02-5469 CIVIL
CIVIL ACTION--LAW
PETITION TO INTERVENE
AND NOW come Petitioners James P. Harris & Kathy Harris, husband and wife, and J.P.
Harris Associates, LLC, by and through their counsel, Skarlatos & Zonarich LLP, to file this
Petition to Intervene in the above-captioned matter and in support thereof aver the following:
1. Petitioners James P. Harris & Kathy Harris, husband and wife, are adult
individuals residing at 101 Rich Valley Road, Mechanicsburg, Cumberland County,
Pennsylvania, 17050.
2. Petitioner J.P. Harris Associates, LLC is a corporation organized under the laws
of the Commonwealth of Pennsylvania with its office located at 101 Rich Valley Road,
Mechanicsburg, Cumberland County, Pennsylvania, 17050.
3. Petitioners James P. Harris & Kathy Harris, husband and wife, and J.P. Harris
Associates, LLC (hereinafter "JPH "), along with Applicants JTH Tax Services LLC, James S.
Harris and Terri Harris, husband and wife (hereinafter "JTH ") are subjects of a Demand for
Arbitration issued by Respondent G.H. Harris Associates, Inc. (hereinafter G.H. Harris).
4. The Demand for Arbitration issued by G.H. Harris was pursuant to alleged
violations of a covenant not to compete contained within a "Market Region Pumhase
Agreement" executed between G.H. Harris and JPH on or about August 25, 2000.
5. On November 12, 2002, JTH presented to this Court a Petition in the form of an
Application to Stay Arbitration pursuant to 42 Pa.C.S.A. {} 7304(b) requesting that the Court stay
arbitration against JTH because there is no agreement between JTH and G.H. Harris to arbitrate;
i.e., JYH are not and never were a party to the Market Purchase Agreement between JPH and
G.H. Harris.
6. On November 13, 2002, this Court entered an Order containing a Rule to Show
Cause why the arbitration should not be stayed, set forth a briefing schedule and set a date for
oral argument. A true and correct copy of the November 13, 2002 Order is attached hereto and
incorporated hcrcin as Exhibit "1".
7. Thereafter, on or about November 14, 2002, G.H. Harris filed a Motion for
Clarification and to Lift Stay.
8. On November 14, 2002, this Court entered an Order setting December 2, 2002 at
10:45 a.m. as the time when the issue of whether an arbitration between G.H. Harris and JTH
shall be permanently stayed shall be summarily tried pursuant to Section 7304(b) of the Judicial
Code. A true and correct copy of the November 14, 2002 Order is attached hereto and
incorporated herein as Exhibit "2".
9. It is the contention of JPH that the sole issue to be decided at the December 2
proceeding is whether JTH Tax Services LLC, James S. Harris and Terri Harris are parties to and
legally bound by the terms of the Market Purchase Agreement between JPH and G.H. Harris.
10. It is the contention of JPH that the issue of whether JTH is a party to and legally
bound by the terms of the Market Purchase Agreement between JPH and G.H. Harris is a narrow
issue of contract law to be decided by the court.
11. Subpoenas have been issued by counsel for G.H. Harris to a variety of
individuals, including James P. Harris, Kathy Harris and Christopher J. Freitas, which concern
counsel for JPH that this legal issue may be substantially expanded.
12. If the Court allows this narrow legal issue to be expanded, the legally enforceable
interests of JPH at a subsequent arbitration may be affected by the outcome of the December 2
proceeding.
13. If the Court allows this narrow legal issue to be expanded, any testimony offered
may be used as evidence against JPH in later proceedings as statements previously recorded.
14. If the Court allows this narrow legal issue to be expanded, any resulting decision
b3 the Court may be offered by counsel for G.H. Harris and accepted at subsequent proceedings
as matters previously adjudicated.
15. In light of the concerns set forth above, it is imperative that JPH be permitted to
intervene in this matter so that its counsel may have an opportunity to participate in the
proceeding and effectively represent and protect the legal interests of JPH that may be affected
through the course of this proceeding.
WHEREFORE, Petitioners James P. Harris & Kathy Harris, husband and wife, and J.P.
Harris Associates, LLC respectfully request this Honorable Court to grant this Petition to
Intervene in the above-captioned matter.
Respectfully Submitted,
SKARLATOS & ZONARICH LLP
B-~~n~ ~-~-~
I.D. No. 83302
204 State Street
Harrisburg, PA 17101
(717) 233- 1000
4
FROM ' FAX NO. : Nov, 22 2~02 03:~0PM P2
NOV-22-2002 FRI 0~:15 Pti SI<aRLATO$ & ZO~IARIOH LLP
ha~ ~n Enamored by ~u~ol taxi/or othe~
lhB ~o¢~}~l~t i~ ~ O~ eO~n$Cl 8t~ not o~r o~
it ts ba~l ~il~i~ t~ormnQon t~at w~ have
kno<edgc, ~nbrnlatlon m~d bel~f ~ th~ exam t~t ~e e~t~tt of th~ d~ument i$ ~hot of
co~ms~l, ~ have celled tl~n coU~OI in makin$ ,hia Vcrifl~on. We bO~ aCkllOwled~ ~mt
the fact~ mot fo~h in ~ a¢~id d~ul~t
Exhibit 1
NOV-13-2882 12:18 PEPPER,HAMILTON P.03~0Zl
~'
JTH TAX SERVICES LLC, JAMES S. : IN THE COURT OF COMMON PLEAS OF
HARRIS AND TERRI HARRIS, Husband: CUMBERLAND COUNTY, PENNSYLVANIA
and VVife,
APPLICANTS :
G.H. HARRIS ASSOCIATES, INC.,
RESPONDENT
: 02-5469 CIVIL TERM
ORDER OF COURT
AND NOW, this ~~---~dal/of November, 2002, upon consideration of
the petition in the form of an application to stay arbitration, IT IS ORDERED:
1. A rule is issued upon Respondent G.H. Harris Associates, Inc., to show
cause why the arbitration - .
Pending before the American Arbitration Association, Case
Number 14-199-02058.02, should not be stayed for JTH Tax Services LLC, and James
S. Ha~s and Terri Herds, husband and wife.
2. Plaintiff shall file an answer to the petition within twenty (20) days of
service.
4.
sen~fce.
The petition shall be decided pursuant to Pa.R.C.P. 206.7.
Deposition, if any, shall be completed within sixty (60) days of the date of
5. Briefs shall be filed in chambers not later than Tuesday, February 18,
2003. Oral argument shall be Conducted in Courtroom Number 2. Cumberland County
Courthouse, Carlisle, Pennsylvania at 8:45 a.m., Thursday, February 20, 2003.
6. All proceedings in this matter are stayed Pending further orcle~' of this
court.
NOU-13-2002.. 12:18 PEPPER,HAMILTON P.04~04
petitioner.
:sal
Notice of the entry of this order shall be provided to all parties by the
Edgar B. Bayley. J.>
TOTAL P.04
Exhibit 2
JTH TAX SERVICES LLC, JAMES S. : IN THE COURT OF COMMON PLEAS OF
HARRIS AND TERRI HARRIS, Husband: CUMBERLAND COUNTY, PENNSYLVANIA
and Wife,
APPLICANTS
V.
G.H. HARRIS ASSOCIATES, INC.,
RESPONDENT : 02-5469 CIVIL TERM
ORDER OF COURT
AND NOW, this ~'1~ day of November, 2002, based upon the motion of G.H.
Harris Associates, Inc. for clarification and modification of this court's order of
November 13, 2002, IT I$ ORDERED:
(1) Paragraph 6 of the order of November 13, 2002, providing temporarily that
"all proceedings in this matter are stayed pending further order of this court," shall
remain in effect and refers to any pending arbitration between G.H. Harris Associates,
Inc., and any of the following parties: JTH Tax Services LLC, James S. Harris and Terri
Harris, husband and wife?
(2) Pursuant to the Judicial Code at 42 Pa.C.S. § 7304(b), the order of
November 13, 2002, providing for the petition to show cause why an arbitration should
not be permanently stayed to be decided pursuant to P~r. Rule of Civil Procedure 206.7,
IS VACATED as improvidently granted.
(3) The issue of whether an arbitration between G.H. Harris Associates, Inc.,
and JTH Tax Services LLC, James D. Harris and Terri Harris, shall be permanently
stayed shall be summarily tried pursuant to Section 7304(b) of the Judicial Code, at
' This stay order is not a preliminary injunction issued under Pa. Rule of Civil
Procedure 1531(a).
10:45 a.m., Monday, December 2, 2002, in Courtroom Number 2, Cumberland County
Courthouse, Carlisle, Pennsylvania.
Alexandra Makosky, Esquire
Steven E. Grubb, Esquire
John R. Zonarich, Esquire
:sal
J'I'H 'FAX SERVICES LLC, JAMES S.
HARRIS and TERRI HARRIS, Husband
and Wife,
Applicants,
VS.
G.H. HARRIS ASSOCIATES, INC.,
Respondent.
IN THE COURT OF COMMON PLEAS
DAUPHIN COUNTY, PENNSYLVANIA
NO. 02-5469 CIVIL
CIVIL ACTION--LAW
CERTIFICATE OF SERVICE
I, Todd F. Tmntz, Esquire, attorney for Petitioners James P. Harris & Kathy Harris,
husband and wife, and J.P. Harris Associates, LLC, hereby certify that I this day served a copy of
the foregoing Petition upon the person(s) indicated below by facsimile transmission and by
depositing a copy of the same in the United States Mail, postage prepaid, at Harrisburg,
Pennsylvania, and addressed as follows:
Steven E. Grubb, Esquire
Goldberg, Katzman & Shipman, P.C.
320 Market Street, Strawberry Square
P.O. Box 1268
Harrisburg, PA 17108-1268
Donna L. Fisher
Alexandra Makosky
pepper Hamilton LLP
200 One Keystone Plaza
North Front & Market Streets
P.O. Box 1181
Harrisburg, PA 17108-I 181
Dated:
SKARLATOS & ZONARICH LLP
Todd F. Tmntz, Esquire
I.D. No. 83302
204 State Street
Harrisburg, PA 17101
(717) 233- 1000
JTH TAX SERVICES LLC, JAMES S.
HARRIS and TERRI HARRIS, Husband
and Wife,
Applicants,
VS.
G.H. HARRIS ASSOCIATES, 1NC.,
Respondent.
IN THE COURT OF COMMON PLEAS
DAUPHIN COUNTY, PENNSYLVANIA
NO. 02-5469 CIVIL
CIVIL ACTION--LAW
ORDER
AND NOW, this ~_~:~ day of November, 2002, upon consideration of the Petition to
Intervene submitted by Petitioners James P. Harris & Kathy Harris, husband and wife, and J.P.
Harris Associates, LLC, said petition is hereby GRANTED.
BY THE COURT:
Edgar B. Bayleyl~"~e
JTH TAX SERVICES, LLC,
JAMES S. HARRIS AND
TERRI HARRIS,
HUSBAND AND WIFE,
APPLICANTS
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
G.H. HARRIS ASSOCIATES, INC.,
RESPONDENT
JAMES P. HARRIS AND KATHY
HARRIS, HUSBAND AND WIFE, AND
J.P. HARRIS ASSOCIATES, LLC,
INTERVENERS
· 02-5469 CIVIL TERM
IN RE: PETITION TO STAY ARBITRATION
BEFORE BAYLEY, J.
INTERIM ORDER OF COURT
AND NOW, this ~'jL. day of December, 2002, IT IS ORDERED that a
continuation of the hearing of December 2, 2002, shall be conducted in Courtroom
Number 2, Cumberland County Courthouse, Carlisle, Pennsylvania, at 8:45 a.m.,
Friday, December 27, 2002. A final order with respect to all claims of the applicants
will be entered thereafter.
02-5469 CIVIL TERM
V~lexandra Makosky, Esquire
For ^pplicants
v/Steven E. Grubb, Esquire
For Respondent
j//~[John R. Zonarich, Esquire
For Interveners
:sal
JTH TAX SERVICES, LLC,
JAMES S. HARRIS AND
TERRI HARRIS,
HUSBAND AND WIFE,
APPLICANTS
G.H. HARRIS ASSOCIATES, INC.,
RESPONDENT
JAMES P. HARRIS AND KATHY
HARRIS, HUSBAND AND WIFE, AND
J.P. HARRIS ASSOCIATES, LLC,
INTERVENERS
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
IN RE: PETITION TO STAY ARBITRATION
BEFORE BAYLEY~ J.
OPINION AND INTERIM ORDER OF COURT
Bayley, J., December 13, 2002:-
James S. Harris is the son of James P. Harris. G.H. Harris is the father of James
P. Harris and the grandfather of James S. Harris. On August 25, 2000, "G.H. Harris
Associates, Inc. (seller)," of Dallas, Pennsylvania, and "Mr. and Mrs. James P. Harris
(buyer)," of Mechanicsburg, Pennsylvania, entered into a written Market Region
Purchase Agreement. Both the seller and buyer are in the business of collecting
delinquent taxes. The buyer purchased a part of the seller's tax collection business.
The Agreement prohibits competition and solicitation by the buyer with respect to
certain clients of the seller. Paragraph 4.6.1 of the Agreement provides:
02-5469 CIVIL TERM
02-5469 CIVIL TERM
In the event of a dispute between the Parties, each Party agrees to
attempt resolution through mediation with a mediator provided by the
American Arbitration Association ("AAA") in Philadelphia, Pennsylvania, in
accordance with the then existing AAA Commercial Rules. Absent
favorable results, arbitration notice may be sent within thirty {30)
days of the request for mediation. Claims for equitable relief need not
be mediated. (Emphasis added.)
Paragraph 4.7 of the Agreement provides:
Binding Effect: This agreement supersedes all prior agreements,
written or oral, between the Parties concerniing the subject matter of this
Agreement. It shall be binding upon and inure to the benefit of the
undersigned and their representatives, administrators, assigns, and/or
successors-in-interest. This Agreement and the non-compete
provisions in particular shall be binding upon Buyer, Buyer's wife
and children, and upon any and all business entities in which Buyer has
any ownership interest, direct or indirect. The person signing for each
party warrants that he has the full authority to bind the Party
represented. (Emphasis added.)
The Agreement was executed as follows:
(1) G.H. Harris signed for "G.H. Harris, individually and as President G.H. Harris
Associates, Inc."
(2) James P. Harris signed for "JAMES P. HARRIS, individually and for his
wife, children, and associated business activities." (I--mphasis added.)
On October 31, 2002, G.H. Harris Associates, In(:., filed with the American
Arbitration Association a Demand for Arbitration against (1) J.P. Harris Associates, LLC,
(2) James P. Harris and Kathy Harris, husband and wife, (3) JTH Tax Service, LLC, and
(4) James S. Harris and Terri Harris, husband and wife. The Demand seeks relief for
(1) an alleged violation by defendants of the restrictive covenant in the Market Region
-2-
02-5469 CIVIL TERM
Purchase Agreement of August 25, 2000, (2) tortuous interference with contractual
relations, and (3) breach of representation and warranties. On November 12, 2002,
JTH Tax Service, LLC, and James S. Harris and Terri Harris, filed an application in this
court against G.H. Harris Associates, Inc., to stay the arbitration as to them. James P.
Harris and Kathy Harris, husband and wife, and J.P. Harris Associates, LLC, has
intervened. The Judicial Code at 42 Pa.C.S. Section 730,4(b) provides:
On application of a party to a court to stay an arbitration proceeding
threatened or commenced the court may stay an arbitration on a
showing that there is no agreement to arbitrate. When in substantial
and bona fide dispute, such an issue shall be forthwith and summarily
tried and determined and a stay of arbitration proceedings shall be
ordered if the court finds for the moving pad¥. If the court finds for the
opposing party, the court shall order the parties to proceed with
arbitration. (Emphasis added.)
The application to stay the arbitration was tried on December 2, 2002.' The
applicants maintain that they are not bound by the arbitration clause in the Market
Region Purchase Agreement because they are not a parlly to that Agreement. They did
not execute the Agreement, and they maintain that James P. Harris did not have
authority to bind them to the Agreement. A question of whether a party has agreed to
arbitrate a dispute is a jurisdictional question to be decided by a court. Smith v.
Cumberland Group LTD, 687 A.2d 1167 (Pa. Super. 1997). A party who can establish
that there was no agreement to arbitrate is entitled to enjoin an arbitration. Id. In the
case sub judice, none of the applicants signed the Market Region Purchase
The arbitration is scheduled for mid-January, 2003.
-3-
02-5469 CIVIL TERM
Agreement of August 25, 2000, that contains the arbitration clause. However, James
P. Harris signed for his "children, and associated business activities." G.H. Harris
Associates, Inc., maintains that the applicants are subject to the arbitration clause in the
Market Region Purchase Agreement because James P. Harris bound them to the
Agreement as their agent. In Reifsnyder v. Dougherty, 301 Pa. 328 (1930), the
Supreme Court of Pennsylvania stated that there are four grounds upon which an
agency relationship can be established:
The liability of a principal to third parties for the acts of an agent
may rest on the following grounds: (1) Express authority, or that which is
directly granted; (2) implied authority, to do all that is proper, usual, and
necessary to the exercise of the authority actually granted; (3) apparent
authority, as where the principal holds one ()ut as agent by words or
conduct; and (4) agency by estoppel, which arises where the principal, by
his culpable negligence in failing to supervise the affairs of his agent,
allows him to exercise powers not granted to him, and so justifies others
in believing he possesses the requisite authority.
James S. Harris, age 27, testified that he and his wife Terri Harris, have lived in
Columbia, Maryland since 1996. He is a graduate of West Virginia University, and a
professional engineer. Since before 2000, he has worked full-time as an engineer on
propulsion systems for Carlton Technologies in Maryland. He and his wife incorporated
JTH Tax Services, LLC, in Pennsylvania, on October 25, 2001. They are the sole
owners of the corporation which is in the business of coll,~-cting delinquent taxes for
municipalities in Pennsylvania, the same business as those operated by his father and
grandfather. Terri Harris operates the company on a daily basis out of an office in
Hanover, Pennsylvania. James S. Harris testified that neither his father nor his
-4-
02-5469 CIVIL TERM
grandfather's delinquent tax collections business, or any of his relatives, have any
interest or working relationship with JTH Tax Services, LLC. The company employs
two part-time deputy tax collectors who are also part-time employees of the father's tax
collection company, J.P. Harris Associates, LLC. From 1!;)91 to 1994, until he
graduated from college, James S. Harris worked part-time during summer school
breaks and vacation periods in his grandfather's tax collection business, G.H. Harris
Associates, LLC. His wife worked for that company over one Christmas break. She
has other experience in debt collection and management. Neither James S. Harris or
Terri Harris have ever worked for his father's tax collectio~n business, J.P. Harris
Associates, LLC. James S. Harris testified that prior to ^ugust 25, 2000, he was told by
his father that his father and grandfather were negotiating an agreement with respect to
their businesses, and that his grandfather wanted the agreement to bind him. He told
his father that he would not be bound.
James P. Harris testified that he signed the Market Region Purchase Agreement
for his "children and associated business activities," although he has only one child,
James S. Harris. He testified that despite having warranted in the agreement that he
has full authority to bind his son, his attorney told him (1) that his signature was not
binding on his son, and (2) that his father, G.H. Harris, understood that but he would not
allow the language to be taken out of the Agreement. G.H. Harris did not present any
testimony to the contrary, nor did he testify on what basis he may have reasonably
believed that James P. Harris had authority to bind his son to the Agreement.
-5-
02-5469 CIVIL TERM
There is clearly no basis upon which Terri Harris can be bound by the arbitration
clause in the Market Region Purchase Agreement. Weighing the credibility of all of the
witnesses, and considering all of the evidence, we find that James S. Harris did not give
his father, James P. Harris, express authority to bind him 'to the Market Region
Purchase Agreement. There is no evidence that James P. Harris had implied authority
to bind his son to the Agreement as he had no express a[]thority from his son whereby
he could act in a necessary, proper and usual exercise of such authority. There is no
evidence of any authority that James S. Harris is estopped to deny. In Bennett v.
Juzelenos, 791 A.2d 403 (Pa. Super 2002), the Superior Court of Pennsylvania stated:
Apparent authority is power to bind a pri~ncipal which the principal has
not actually granted but which he leads persons with whom his agent
deals to believe that he has granted. Persons with whom the agent
deals can reasonably believe that the agent has power to bind his
principal if, for instance, the principal knowingly permits the agent to
exercise such power or if the principal holds the agent out as possessing
such power. (Emphasis added.)
In determining the apparent authority of an agent ~ve must look to the actions of
the principal, not the agent. Turnway Corp. v. Softer, 461 Pa. 447 (1975). There is
nothing in the evidence that would warrant our concluding that James S. Harris did
anything which could have led G.H. Harris to reasonably believe that James P. Harris
had authority to bind him to the Market Region Purchase Agreement. James S. Harris
never worked in his father's tax collection business. He only did some part-time work
for G.H. Harris Associates, Inc., when he was in college. He was married and living in
Maryland and working as a full-time professional engineer when the Market Region
-6-
02-5469 CIVIL TERM
Purchase Agreement was signed on August 25, 2000. JTH Tax Services, LLC, did not
start business until it was incorporated on October 25, 2001, one year and two months
after the Market Region Purchase Agreement was signed. Despite the duplicity of
James P. Harris signing the Market Region Purchase Agreement "for his.., children,"
we find that he did not have apparent authority to bind his son, James S. Harris, to the
Agreement.
Notwithstanding that James P. Harris is not an officer, director or shareholder in
JTH Tax Services, LLC, which was incorporated by his son and daughter-in-law over a
year after the Market Region Purchase Agreement was executed, G.H. Harris
Associates, Inc., maintains that the corporation is the alter ego of James P. Harris and
thus is bound by the arbitration clause in the Agreement. There are federal cases
which have held when considering enforcement of an arbitration agreement against
non-signatories, the question is whether the non-signatory is bound by the agreement
under traditional common law principles of contract and agency law. See BeI-Ray
Company, In¢. v. Chemrite, Ltd., 181 F.3d 435 (3d Cir. 1999); E.I. Dupont
deNemours and Company v. Rhone Poulenc Fiber and Resin Intermediates,
S.A.S., 269 F.3d 187 (3d Cir. 2001). This alter ego argument that JTH Tax Services,
LLC is a front/subterfuge/facade for James P. Harris can also be considered as it being
an associated business activity of his; therefore, the corporation is bound by the
arbitration clause in the Market Region Purchase Agreement signed by him, inter alia,
-7-
02-5469 CIVIL TERM
"for his.., associated business activities," a party to the Agreement? In retrospect, we
believe that at the hearing on December 2"d, we wrongly sustained objections to
allowing G.H. Harris Associates, Inc., to present a full record in support of this position.
Accordingly, we will schedule another hearing to allow development of a complete
record limited to the issue of whether JTH Tax Services, [_LC, is subject to the
arbitration provision contained in the Market Region Purchase Agreement of August 25,
2000, because it is the alter ego of James P. Harris and/or is his associated business
activity.
INTERIM ORDER OF COURT
AND NOW, this ~'~"~ day of December, 2002, IT IS ORDERED that a
continuation of the hearing of December 2, 2002, shall be conducted in Courtroom
Number 2, Cumberland County Courthouse, Carlisle, Pennsylvania, at 8:45 a.m.,
Friday, December 27, 2002. A final order with respect to all claims of the applicants
will be entered thereafter.
2 In Sklaroff v. Sklaroff, 263 Pa. 421 (1919), two men sold a business and entered into
a non-competition agreement with the buyer. The sellers later sued the buyers
maintaining that they were violating the non-compete agreement by using a company to
operate the same kind of business through the agency of' two men who held
themselves out as the owners. The trial court held that the company was in reality the
business of the two sellers, that the two men were acting as their agents, and that this
plan was conceived for the purpose of avoiding the non-competition clause in the
contract. An injunction was issued restraining the buyers from competing through the
operation of the company. The injunction was upheld by the Supreme Court of
Pennsylvania.
-8-
02-5469 CIVIL TERM
Alexandra Makosky, Esquire
For Applicants
Steven E. Grubb, Esquire
For Respondent
John R. Zonarich, Esquire
For Interveners
:sal
By the ~
Edgar B. Bayley, J. ~,
-9-
JTH TAX SERVICES LLC, JAMES S. '
HARRIS AND TERRI HARRIS, Husband:
and Wife,
APPLICANTS
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
G.H. HARRIS ASSOCIATES, INC.,
RESPONDENT
JAMES P. HARRIS AND KATHY
HARRIS, HUSBAND AND WIFE, AND
J.P. HARRIS ASSOCIATES, LLC,
INTERVENERS
02-5469 CIVIL TERM
ORDER OF COURT
AND NOW, this ~,'~ ~ay of December, 2002, upon agreement of all the
parties, the hearing currently scheduled for December 27, 2002, IS CANCELLED. The
hearing is rescheduled to Friday, January 3, 2003, at 8:45 a.m., in Courtroom Number
2, Cumberland County Courthouse, Carlisle, Pennsylvania.
By the~
Edgar B. Bayley, .
/Alexandra Makosky, Esquire
For Applicants
¢/Steven E. Grubb, Esquire
For Respondents
C/John R. Zonarich, Esquire
For Interveners
:sal
JTH TAX SERVICES, LLC,
JAMES S. HARRIS AND
TERRI HARRIS, HUSBAND
AND WIFE,
Applicants
Vo
G.H. HARRIS ASSOCIATES,
INC.,
Respondent
Vo
JAMES P. HARRIS AND
KATHY HARRIS, HUSBAND
AND WIFE, AND J.P. HARRIS:
ASSOCIATES, LLC, :
Interveners :
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
CIVIL ACTION - LAW
NO. 02-5469 CIVIL TERM
IN RE: TRANSCRIPT OF PROCEEDINGS
Proceedings held before the
HONORABLE EDGAR B. BAYLEY, J.,
Cumberland County Courthouse, Carlisle, Pennsylvania,
on December 2, 2002, at 10:56 a.m.
in Courtroom Number Two.
APPEARANCES:
ALEXANDRA MAKOSKY, Esquire
For the Applicants
STEVEN E. GRUBB, Esquire
For the Respondent
JOHN R. ZONARICH, Esquire
For James and Kathy Harris
FOR THE PETITIONERS
1. James S. Harris
FOR THE RESPONDENT
1. James P. Harris
INDEX TO WITNESSES
DIRECT
6
54
CROSS
24
2
FOR THE PETITIONERS
INDEX TO EXHIBITS
MARKED
1. Market Region Purchase Agreement 7
2. Forms to file for company within 15
State of Pennsylvania
3. Employee Dishonesty Bond 19
4. JTH Tax Services, LLC, check 20
5. JTH Tax Services, LLC, letterhead 21
FOR THE RESPONDENT
1. JTH Tax Services, LLC, document 35
2. J.P. Harris Associates, LLC, document 37
3. Information sheet on JTH Tax 40
Services, LLC
ADMITTED
60
60
60
60
60
60
60
60
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December 2, 2002, 10:56 a.m.
Carlisle, Pennsylvania
(Whereupon, the following proceedings
were held:)
THE COURT:
arbitration, right?
MS. MAKOSKY:
MR. GRUBB:
THE COURT:
This is a petition to stay an
That's right.
Correct.
Just introduce yourselves, and
tell me who is representing whom in this so that I get an
understanding. The petitioner is represented by?
MS. MAKOSKY: Alexandra Makosky, Your Honor,
representing JTH Tax Services, James S. Harris and Terri
Harris.
MR. GRUBB: Steven Grubb for the
respondents.
THE COURT:
MR. GRUBB:
THE COURT:
MR. GRUBB:
THE COURT:
Your last name again?
Grubb.
For respondents?
G.H. Harris.
Is anybody else involved?
MR. ZONARICH: Yes, Your Honor.
THE COURT: Intervener.
MR. ZONARICH: John Zonarich, and we filed a
petition to intervene on behalf of James and Kathy Harris.
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THE COURT: Now, petitioner is moving then
to stay the arbitration as it relates to what parties?
MS. MAKOSKY: Your Honor, we're asking for
it to stay the arbitration for us, for JTH Tax Services,
James S. Harris and Terri Harris.
THE COURT: Do they run the tax service?
MS. MAKOSKY: We run JTH Tax Services.
THE COURT: And those are the only issues I
have before me, right?
MS. MAKOSKY: Yes.
THE COURT: That's the only issue?
MS. MAKOSKY: Yes, sir.
THE COURT: And I have this motion in
limine. I am not going to listen to the merits of the
controversy. The issue is whether or not legally the
arbitration should proceed.
MS. MAKOSKY:
THE COURT:
MR. GRUBB:
Yes, Your Honor.
Everybody agree?
Yes, Your Honor.
MR. ZONARICH:
THE COURT:
MS. MAKOSKY:
in an opening statement?
THE COURT:
opening statement.
Yes.
Let's do it. First witness.
Your Honor, are you interested
Go ahead, I will listen to an
Off the record.
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(Whereupon, opening statements were held
off the record.)
THE COURT: You may proceed.
MS. MAKOSKY: We would like to call James S.
Harris then to the stand, Your Honor.
Whereupon,
JAMES S. HARRIS,
having been duly sworn, testified as follows:
DIRECT EXAMINATION
BY MS. MAKOSKY:
Q Jim, will you please give us your full name.
A James Scott Harris.
Q And where do you live?
A I live at 70 Marfield Circle, Hanover, PA.
Q Who else lives there with you?
A My wife and my two children.
Q And how long have you lived in Hanover?
A I've lived in Hanover approximately a year,
a little over a year.
Q And prior to living in your Hanover address,
where did you live prior to that?
A I lived in Columbia, Maryland, which is
between Baltimore and Washington D.C.
Q And how long did you live there?
A A little over five years.
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Q
A
Carlton Technologies, Incorporated.
the Baltimore/Washington Airport.
Services.
And where are you working?
I'm currently working at a company called
They are located near
witness?
Q And I think Mr. Zonarich has already
explained to the Court, but can you please on the record
tell us how are you related to James P. Harris?
A
James P. Harris is my father.
And how are you related to Mr. G.H. Harris?
He is my grandfather.
MS. MAKOSKY: Your Honor, may I approach the
THE COURT: Sure.
(Whereupon, Petitioners' Exhibit No. 1 was
marked for identification.)
BY MS. MAKOSKY:
Q Jim, I've handed to you what's been marked
as Petitioners' Exhibit No. 1.
document?
A
Q
A
Do you recognize this
Yes.
What is it?
It's a Market Region Purchase Agreement, at
Q And are you employed with any other company?
A Yes, I'm a partner in a company JTH Tax
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least what it's titled.
agreement.
Q
I believe it's a non-compete
A
agreement ?
A
What is the date of the agreement?
August 25th, 2000.
When was the first time you saw this
The first time I saw this agreement was
October of 2002 when it was served to us as a complaint for
arbitration.
Q Can you flip through that document. I
believe you've read that. First of all, have you read this
document prior to coming here today?
A Yes, I've read it several times.
Q Can you just flip through one more time now
that it's marked as an exhibit, and tell me do you see your
name appearing anywhere on that document?
A No, I do not.
Q Do you see your wife's name anywhere
appearing on that document?
A No, I do not.
THE COURT:
THE WITNESS:
THE COURT:
BY MS. MAKOSKY:
Q
Your wife is Terri?
Terri Harris.
Go ahead.
Do you see your signature on that agreement?
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A No, I do not.
Q Do you see your wife Terri Harris' signature
on that agreement?
No, I do not.
Did you agree, Jim, to be bound to this
A
agreement?
A
Q
agreement?
A
Q
No, I did not.
And did your wife agree to be bound by this
No, she did not.
And did you agree to arbitrate any issues
before the American Arbitration Association?
A No, I did not.
Q And I know this is redundant, but did your
wife, to the best of your knowledge, agree to arbitrate any
disputes before the American Arbitration Association?
A No, she did not.
Q Can you turn to Section 4.6 of that
agreement, which I believe begins on page 5, and if I'm
correct it has to do -- that is the section that is dealing
with Dispute Resolution and Mandatory Arbitration.
A Can you repeat that.
Q Sure. Under Section 4.6, I'm starting on
page 5 of the agreement, do you see where it's headed --
the heading says Dispute Resolution and Mandatory
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Arbitration?
A Yes.
Q Is it fair to characterize this section
being the area of the contract that is specifically dealing
with the parties' agreement as to how arbitration was to
be -- was to proceed to the best of your recollection?
A Yes.
Q On page 6 of the agreement under Section
4.6.8, there is a series of, I believe, seven sets of
initials. Are your initials there or your signature of
your initials?
A
Q
No, they are not.
Is your wife Terri Harris' signature -- are
her initials there?
A No, they are not.
Q Can you also flip for me on page 8 of that
agreement where it says Consent. of Spouses and Affected
Family Members. Page 8.
A I'm sorry.
Q That's all right.
A I'm there.
Q Under this heading of Consent of Spouses and
Affected Family Members, does your signature appear on this
page?
A No, it does not.
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Q
Does your wife's signature appear?
No, it does not.
To the best of your knowledge, Jim, have you
A
beneficiary?
A
Q
been a third party beneficiary of this agreement between
G.H. Harris and James P. Harris?
No, I have not.
Has your wife been a third party
No.
When you were served a copy of the demand
for arbitration that had this agreement attached to it,
what did you do?
A We received it actually on.a Friday
afternoon. My wife called me at work and came home and
read it several times. The first thing we did is we called
one of my wife's best friends who is an attorney in the
Washington area and discussed this with her and asked if
she knew of any attorneys --
THE COURT: Wait a minute. We are here. I
got what happened. One way or the other, here we go.
BY MS. MAKOSKY:
MS. MAKOSKY:
THE COURT:
Okay.
You are petitioner.
Q Jim, have you ever discussed the terms of
this agreement with your grandfather?
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A
With my grandfather?
With your grandfather.
No.
Did you ever discuss any of the terms of
this agreement with your father?
A No.
Q Did you ever give your father power of
attorney to sign on your behalf for this agreement?
A No.
Q Did you ever tell your father that he could
sign this agreement for you on your behalf?
A No.
Q Jim, how old were you in August of 2000?
A Twenty-seven years old.
Q And where were you living at that time?
A Columbia, Maryland.
Q And when -- I think you had testified
earlier that you had been in Columbia for several years.
But when did you move to Columbia?
A We moved to Columbia July or -- July and/or
August of 1996.
Q So how many years had you been living away
from your parents' home as of August 2000?
A At least five years. I was in college for
five years, in grad school for one year where I did not --
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I was a resident of West Virginia. So it was at least five
years, five and half years or more, maybe six years that I
didn't live at home.
2000?
Q
Were you married in August of 2000?
Yes.
You had a child by that time?
Yes.
And where were you working in August of
A The same company I stated earlier, Carlton
Technologies, Incorporated.
Q Were you an employee of your father's
company in August of 2000?
A Of?
Q Of your father's, J.P. -- this is where
we're going to start getting a little bit confused -- J.P.
Harris Associates, LLC, your father's company?
company?
company?
A
NO.
Are you an employee of his company now?
No.
Have you ever been an employee of his
A
NO.
Were you an officer of your father's
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A No.
Q Have you ever been an officer of your
father's company?
A No.
Q Jim, did you have any conversations with
your grandfather -- I think you mentioned it, but let me
make sure I've gone over this one more time. Have you had
any conversations or discussions with your grandfather
before this agreement was signed regarding the breakup of
the business between G.H. Harris and James P. Harris?
A No.
Q Before this agreement was signed in August
of 2000, when was the last time you had a discussion or any
contact with your grandfather?
I believe it was the November, December time
A
frame of '99.
Q
And at that time did you have any
discussions about the business?
A No.
Q Have you had any contact with your
grandfather since August of 2000?
A
NO.
Have you corresponded with him?
We have sent Christmas cards, things of that
nature.
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Q Let's just now turn to the focus of JTH Tax
Services a little bit.
A Okay.
Q First of all, can you tell the Court what
type of business is JTH Tax Services in?
A JTH Tax Services is a delinquent tax
collection agency that works for the local municipalities
in the State of Pennsylvania, primarily collecting
deliquent taxes, per capita taxes, and school and
occupation taxes and earned income taxes, as I stated, for
townships, counties, and school districts.
Q Was JTH Tax Services in existence in August
of 2000?
2001.
A
In August of 2000?
Yes.
No.
When was JTH Tax Services formed?
JTH Tax Services was formed late October of
MS. MAKOSKY:
approach the witness?
THE COURT:
Your Honor, again, may I
Yes
(Whereupon, Petitioners' Exhibit No. 2 was
marked for identification.)
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BY MS. MAKOSKY:
Q Jim, I've handed to you a copy of what's
been marked as Petitioner's Exhibit No. 2. Do you
recognize this document?
A Yes.
Q What is it?
A This was our forms to file for our company
within the State of Pennsylvania.
Q Were any amendments filed to this Articles
of Incorporation?
A No.
Q Prior to you filing this Articles of
Incorporation, was there any other business entity in which
you were operating under for your tax business?
A No.
Q Who are the owners of JTH Tax Services?
A Myself, James Scott Harris, and my wife,
Terri Lynne Harris.
Q Jim, can you tell us a little bit about your
experience in collecting delinquent taxes?
A I kind of grew up in this business with both
my grandfather and father. My father ran a office for his
father out of their own home, so I grew up with that
basically. My grandfather ran an office out of northern
Pennsylvania.
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I worked for my grandfather, I believe it
is, between the years of 1991 and 1994 collecting
delinquent taxes in Adams County, Perry County, Franklin
County, York County, Dauphin County. I may have missed a
couple there, but doing delinquent tax collections over
Christmas breaks and summer breaks between '91 and '94 in
college.
Q And who manages the day-to-day operations
now of JTH Tax Services?
A My wife does most of the daily operations.
Q And what is her experience?
A Her experience. She actually also worked
over one Christmas break collecting delinquent taxes for
G.H. Harris. In addition to that, her background, at least
where she worked before we moved to the Pennsylvania area,
was in debt management and collections.
Q Does James P. Harris, your father, have any
ownership interest in your company?
A
No.
Is he an employee of your company?
No.
Does he manage your company?
No.
Has he received any profits from your
company?
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A No.
Q Does Kathy Harris, your mother, have an
ownership interest in your company?
company?
A
No.
Is she an employee of your company?
No.
Has she managed your company?
No.
Has she received any profits from your
A No.
Q Does your father's co~)any, J.P. Harris
Associates, LLC, have any ownership interest in JTH Tax
Services?
A No.
Q Have they received -- has that company --
your father's company received any profits from your
company?
A No.
Q Is it required as part of your services to
your clients to file a bond?
A Excuse me?
Q As part of your -- has a client required you
to apply for a bond?
A Yes.
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witness?
MS. MAKOSKY: Your Honor, may I approach the
THE COURT: Yes
(Whereupon, Petitioners' Exhibit No. 3 was
marked for identification.)
BY MS. MAKOSKY:
Q Jim, I've handed to you what's been marked
as Petitioners' Exhibit No. 3. Are you familiar with this
exhibit?
A Yes.
Q What is it?
A It is a bond so that we could -- it's
basically a bond.
account?
banking.
Q
Your Honor?
And in whose name has it been taken out?
Under JTH Tax Services..
Does JTH Tax Services have a bank account?
Yes.
And where do they maintain that bank
A It's the same bank that we use for our home
It's Allfirst Bank.
MS. MAKOSKY: May I approach the witness,
THE COURT: Yes.
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BY MS. MAKOSKY:
Q
(Whereupon, Petitioners' Exhibit No. 4 was
marked for identification.)
Jim, I've handed to you what's been marked
as Petitioners' Exhibit No. 4.
A
Q
A
Q
account?
business?
A
A
Are you familiar with that?
Yes.
And what is it?
This is our company check.
And who has authorization to sign that
My wife and I.
And have you used those checks in your
Excuse me?
Have you used those checks in your business?
Yes.
And when -- for instance, can you give an
example of when you have used those checks?
A If we were paying for stationery or any type
of things for the company.
Q
Do you send monthly reports to your clients?
Yes.
And what goes in those monthly reports?
A check will go in those monthly reports.
You mentioned that you do have stationery,
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that you've had to purchase stationery?
A Yes.
MS. MAKOSKY:
I approach the witness?
THE COURT: Yes.
Your Honor, one more time, may
Continue to do so.
(Whereupon, Petitioners' Exhibit No. 5 was
marked for identification.)
BY MS. MAKOSKY:
Q I've now handed you what's been marked as
Petitioners' Exhibit No. 5. Are you familiar with what
that document is?
A Yes.
Q And what is it?
A This is our letterhead.
Q Now, I notice there's two pages to that.
Can you tell me that you have -- can you tell me why you've
got different addresses on your letterhead?
A When we received our one account, the
business manager for that account re~lested that we had a
local mailbox. He said it was a good selling point for us
to basically -- with him within his organization, because
this is something that has to be voted on, that if it was a
local mailing address that we would have a better chance of
actually getting the account.
Q So it was an unofficial requirement of -- is
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this the Cumberland Valley School District?
A Yes, this is the Cumberland V~lley account.
Q That they were strongly requesting you to
have a post office box in the Mechanicsburg area?
A Yes.
Q And do you use that post office box for all
of your work or how do you decide?
A On a percentage basis, I would say
probably -- most of our work, I mean, primarily about 50
percent, maybe 60 percent, is through the mail, meaning
people will respond to the mail and directly pay their
delinquent taxes.
So out of the four accounts that we have,
three of them go to our Hanover post office box, and
everything else, which would just be the Cumberland Valley
account, goes to the Mechanicsburg address.
So on a percentage basis, it's probably
around 30 percent of our mailing goes to that address, and
that would be just the delinquents. All correspondence
with the Cumberland Valley School District goes through our
Hanover post office box.
Q So if I just understand correctly, your
testimony is that about 30 percent of your work is being
sent to the Mechanicsburg office, and 70 percent is going
to your Hanover address?
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A Yes.
Q And the 30 percent that's going to your
Mechanicsburg address is the -- is the delinquent taxpayers
sending their money into that post office box?
A Yes.
Q And that's at the request of the Cumberland
Valley School District manager?
A Yes.
Q But when you are corresponding with that
Cumberland Valley --
THE COURT: You are just repeating yourself.
I got it the first time. Go ahead.
BY MS. MAKOSKY:
Q Jim, do you have a computer system set up
for your business?
A Yes.
Q And do you have a licensing agreement with a
company to manage the software?
A Yes, we have a maintenance agreement.
Q Is it my understanding that you also have a
private business phone line for your business?
A Yes, we have a private phone and fax.
Q And that's operating under regular business
hours?
A Yes, that's through 8:00 to 5:00. We have
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actually three numbers. We have a fax number. We have a
regular business number, and we have a 1-800 number which
is only for all of our clients to actually call in, not the
delinquent taxpayers.
MS. MAKOSKY: Thank you.
THE COURT: Cross.
CROSS EXAMINATION
BY MR. GRUBB:
Q Mr. Harris, if we could turn to the Exhibit
1 that should be in front of you which is the Market Region
Purchase Agreement. Is that in front of you, sir?
A Yes.
Q If you could please turn to Section 4.7 of
that agreement. Let me ask you this ~estion first, Mr.
Harris. On the very first page of that document where the
buyer is identified, would you agree with me that the
buyer, according to this document, is Mr. and Mrs. James P.
Harris?
A
Q
A
Q
A
Q
A
Yes.
And they are your father and mother?
Yes.
And you are their only child?
I'm their son, yes.
You don't have any brothers or sisters?
No.
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Q In Section 4.7, I want to direct your
attention to the third sentence which reads --
A The third sentence of ~at section?
Q Section 4.7 on page 6.
A Sorry.
Q Do you see where I am?
A Yes.
Q It begins with, This agreement and the
non-compete provisions in particular shall be binding upon
buyer, buyer's wife and children, and upon any and all
business entities in which buyer has any ownership
interest, so on and so forth through the end.
Is it your testimony today that your father
and mother could not bind you through this statement in
Section 4.7 that I just read to you?
A Can you elaborate on that? I don't really
understand your question.
THE COURT: You are asking him a legal
question.
BY MR. GRUBB:
Q Is it your testimony today that you had no
conversations at all with your father or mother about being
bound to this agreement?
A Can you -- I'm confused with what you're
actually asking. I'm sorry.
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Q You had no discussions with your father and
mother about this agreement in general.?
A No, I had no discussions with my father
about this agreement, the terms of this agreement.
Q So is it your testimony then that your
father, identified as the buyer, could not bind you to this
agreement?
A Yes.
Q And when he says buyer"s wife -- this
agreement non-compete shall be binding upon buyer, buyer's
wife and children, it's your testimo~f today that your
father was overstepping his bounds in that respect? Is
He should not have represented that he was
that accurate?
binding you?
A
Q
Yes.
The same holds true for the signature block
which is on page 7, James P. Harris individually and for
his wife, children, and associated business entities?
A What section? I'm sorry.
Q Page 7, the signature block at the bottom of
the page on the right-hand side where you see your father's
signature. Are you with me now?
A Yes.
Q It says James P. Harris individually and for
his wife, children, and associated business entities. Your
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testimony is that your father never spoke to you about
binding you to this agreement?
A My father mentioned when they were in
negotiations that my grandfather was trying to bind me in a
contract, and that I said I would never be a part of it,
and that was it. So if you're asking directly did he ever
ask anything, no, he did not.
Q But you did have discussions with your
father about being bound to this agreement?
A He only mentioned that there was an
agreement that they were negotiating and that my
grandfather was trying to bind me by it. I said I did not
want to be a part of it.
Q And was that before the August 28, 2000,
time period?
A Yes.
Q So you affirmatively conveyed to your father
you did not want to be bound by this agreement?
A I conveyed that I did not want my
grandfather to bind me to this agreement.
But you did not want to be bound to this
Q
agreement ?
A
Q
Yes.
And you did know about it, you did know
about this agreement?
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A No, I did not know about the agreement at
all. Ail I knew was that my grandfather and my father were
going through some type of an agreement or negotiations of
a contract and that my grandfather wanted me included, and
I said I did not want to be a part of it.
Q When James P. Harris refers to his children
here, you in fact testified earlier that you are the only
child, correct?
A That is correct, I'm the only child.
Q So this reference to children here, to your
knowledge, could refer to no other child of James P.
Harris'?
A
Q
That is correct.
Your counsel asked one of your questions
whether you -- one of the questions your counsel asked you
is whether you considered yourself a third party
beneficiary of the agreement.
A Yes.
Q Exhibit 1. What does it mean to you to be a
third party beneficiary?
THE COURT: Oh, gosh, I don't even know what
a third party beneficiary is without going back and looking
in the law books every time I am asked. That is just too
complicated.
MR. GRUBB:
Judge, the only reason I asked
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is he did affirmatively say he didn't consider --
THE COURT: It went over me like water going
over a dam. It means nothing.
MR. GRUBB: Okay, as long as I know that,
Judge.
BY MR. GRUBB:
Q
THE COURT: Don't worry about it.
Your testimony earlier was you were never an
employee of James P. Harris Associates, LLC, correct?
A Yes.
Q The extent of your working at James P.
Harris Associates was just those summer breaks, Christmas
breaks?
A I never worked for James P. Harris. I
worked for G.H. Harris Associates.
Q Okay. Then the extent of your work for G.H.
Harris Associates was just the summer breaks, the Christmas
breaks, et cetera?
A Yes.
Q And that was before August of 2000?
A Yes.
Q Prior to August of 2000, James P. Harris
Associates -- James P. Harris did not exist at that point?
A What are you -- I'm confused with what
you're asking.
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Q Before August of 2000, there was no James P.
Harris Associates?
A Yes, that is correct.
Q It used to be all G.H. Harris?
A Yes.
Q And they operated out of two offices, one in
Dallas, one in Mechanicsburg, is that correct?
A That is correct.
Q And you operated out of the Mechanicsburg
office?
A No. The work that I did I worked in
Cumberland County including the Cumberland Valley School
District area which I grew up in. I worked in Franklin
County. I worked in -- did work in Dauphin County in the
City of Harrisburg, actually, which was run out of the G.H.
Harris Associates' main office.
The accounts that I worked that were out of
the south office were out of my parents' office in their
house was Adams County and Perry County. I also worked in
York County, I'm sorry, which was out of the main office.
Q When you say main office, you're referring
to the Dallas office?
A Yes, the Dallas office.
Q The south office is the Mechanicsburg
office?
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A Yes.
Q Then is it fair to say that your work for
G.H. Harris would have been a little bit of both?
A Yes.
Q Main office --
A Yes. It's been so long it may be 50/50. I
mean, I can't really let you know. I don't know.
Q Okay. How many summers did you work?
A I believe it was three summers.
Q And I think you also talked about Christmas
break. How many Christmas breaks?
A Christmas breaks, Thanksgiving breaks, and
spring breaks if I was home I would do work.
Q Do you remember how many breaks?
A It was every one in between until I was
probably a senior in college.
Q You were in college four years?
A Yes. My undergrad was four years.
Q And then did you continue to work during the
breaks during your graduate studies?
A
university.
Q
breaks?
A
No, I was a full-time employee at the
So, no, I did not.
So for four years you would work on your
Yeah, I would work sum~ners and holidays or
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whatever.
Q
You went to West Virginia University?
Yes, West Virginia University.
And your degree is in?
Mechanical and aerospace engineering.
Is that the type of work that you do at, I
think it was, Carlton Technologies?
A Yes. I'm a senior project engineer who
designs propulsion systems for spacecraft applications.
work?
Q
Is that a full-time job?
That is a full-time job.
How many hours a week would you say you
A
That would be a 40 hour a week job.
Do you ever work over 40 hours a week?
Occasionally if I'm on travel I would.
Do you travel a lot?
It really comes and goes. It's however the
projects are going. So it's pretty infrequent.
Q And that is an operation that is down near
the BWI Airport?
A
Yes, it's adjacent to the BWI Airport.
How long a commute is that?
Excuse me?
How long a commute is that?
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A I drive 42 miles one way. It's anywhere
between 45 minutes and 60 minutes to get there.
Q Regular nine to five hours?
A 7:30 to 4:00.
Q 7:30 to 4:00. What time do you usually get
home from work?
I usually get home around 5:00, depending on
A
traffic.
Q
At West Virginia -- you had some graduate
studies I understand?
A Yes.
Q And were they in the same field?
A Mechanical and aerospace engineering, yes.
Q In any of your education, did you have any
experience in tax collection or anything of that nature?
A In college, not directly. I mean, I took
many different classes that would be in communications,
different types of philosophy, psychology classes,
basically the humanities which is all that you would
probably need at the most to do this type of job.
Q And you have not put in your notice or
anything at Carlton Technologies or anything of that
nature, a notice to quit that job?
A No.
Q Do you have any plans to quit that job?
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A That's a very difficult question to answer
at this time, so I don't have an answer to that.
Right now do you have any plans to leave
Q
that j ob?
A
Q
Right now, no. At this instance, no.
I think you said that your wife runs the
day-to-day operations at JTH?
Yes.
What types of day-to-day operations are
A
there?
A
data entry.
Q
present time?
A
Q
Primarily just answering the phone and doing
That's about it.
Do you have anyone working for JTH at the
Just my wife and I.
Is there anyone -- do you have any deputy
tax collectors who are out knocking on doors?
A We have two part-time deputy tax collectors
that are contractors.
Q And they are?
A Chris Freitas and William Nieves.
Q They also work for your father?
A That I don't know. To add to that, from
what I've read or what has been petitioned, I can answer
yes. But before that, I would say I don't know.
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Q Do you know if they are the only two that
your father employs?
A That I don't know.
Q They are the only two deputy tax collectors
you use, that JTH uses?
A Yes.
Q In terms of starting up your business, the
JTH business, did you have any help from your father or
mother in starting up that business?
A That's a pretty genera[[ question, but, no.
Q None at all?
A No.
Q You didn't have any help in designing any of
your forms or anything of that nature?
A No.
Q You did that all yourself?
Honor?
A
Yes.
MR. GRUBB:
this?
May I approach the witness, Your
(Whereupon, Respondent's Exhibit No. 1 was
marked for identification.)
MR. GRUBB: Judge, would you like a copy of
THE COURT: Yes.
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BY MR. GRUBB:
Q
Respondent's Exhibit 1.
MR. GRUBB:
I've handed you what we've marked
The redacted part, Your Honor,
is just that is the name of the delin(~ent, if you will.
In the interest of privacy we've redacted that.
THE COURT: Sure.
BY MR. GRUBB:
Q
A
Q
A
Q
Do you recognize that document?
Is that addressed to me?
Yes, sir.
Yes.
And that is a document JTH Tax Services,
LLC. It appears to be an F-1 in the upper left-hand
corner?
A Yes.
Q In the lower left-hand corner of that
document there is in capital letters JTH and then a slash
Kh. Do you know what that is?
A No, I do not.
Q Do you know if they are the initials for
anything or anyone?
A
No, I do not.
Did you prepare this document?
My wife and I did, yes.
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Q Did you have any help from Kathy Harris?
A No, I did not.
MR. GRUBB: If you could mark this
Respondent's Exhibit 2.
(Whereupon, Respondent's Exhibit No. 2 was
marked for identification.)
BY MR. GRUBB:
Q I'm handing you what we've marked
Respondent's Exhibit 2, Mr. Harris.
MR. GRUBB: That again with the redactions,
Your Honor, in the interest of privacy.
Do you recognize that document?
No, I do not.
You've never seen this before?
No, I have not.
In the lower left-hand corner, that says
JPH/Kh. Do you know what that stands for?
A No, I do not.
Q Take a minute to look at those, Mr. Harris,
and then the question I want to leave to you, and I do not
want you to answer this until you've looked at them, but is
this not word for word the exact same document?
THE COURT: Is that what you are
representing it to be?
BY MR. GRUBB:
Q
A
Q
A
Q
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BY FiR. GRUBB:
Q
the address?
A
Q
FLR. GRUBB:
THE COURT:
Yes, as Respondent's Exhibit 1.
Do you take his word for it?
Other than the J.P. Harris Associates and
Yes.
And you're saying when you and your wife
designed Respondent's Exhibit 1 you did so without any
reference or assistance or even looking at Respondent's
Exhibit 2?
A What we did is we actually called the
printer, Capital Business Forms, and instructed the
gentleman that we were starting a company. And he sent us
a form which then we put our name and basically designed
the form so that it would work for our company and then
faxed it back to him, and then he did the printing of the
forms.
Q Even the accreditations in the lower
left-hand corner, the JTH/Kh, JPH/Kh, that had to have been
changed, correct?
A No.
Q You didn't change that?
A I'm confused with what you're --
Q Well, you're saying -- are you saying
Respondent's 2 is a form faxed to you by the guy at the
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print shop?
A Yes. Form 2 was faxed to us, and then we
basically set everything up so that it would be to our
company and then faxed it back to him..
Q And you changed -- did you change the JPH in
the lower left-hand corner to JTH?
Yes.
And you have no idea what that Kh stands
A
for?
A
Q
Exhibit 2?
A
Forms.
Q
A
Q
A
not.
Q
A
Q
No, I do not.
Who was the guy who faxed you Respondent's
Ed Cervance (phonetic) from Capital Business
Ed Hermance?
No, it's Cervance.
Could you spell that?
My wife would know how to spell that, I do
It's Ed Caravan (phonetic), isn't it?
That may be correct.
Mr. Hermance works at the Cumberland Valley
School District?
A I did not say Hermance..
Q You represented that Petitioners' Exhibit 5,
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and take a look at that in front of you, was your
letterhead.
A
Q
different letterhead previously?
A No.
Q You didn't?
A No.
MR. GRUBB:
Yes.
That wasn't always the case, was it, you had
Mark this Respondent's Exhibit
(Whereupon, Respondent's Exhibit No. 3 was
marked for identification.)
BY MR. GRUBB:
Q That says -- I'll give you a minute to look
at that. Do you recognize that document?
MR. GRUBB: I'm sorry, Judge, I didn't give
you a copy.
BY MR. GRUBB:
Q My question to you was whether or not you
recognized that document?
A I don't believe so.
Q Isn't this a document that you sent out with
various business proposals to some of the school districts
who were solicited?
A No, it was not.
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anyone?
Q
A
designed this?
You never believed that you sent this out to
No.
Do you have any idea ~lat this document is?
I believe -- unfortunately, no.
Do you know whether your wife might have
A Yeah, this would be something better
answered by her, not me.
Q But as far as you know~, you don't know
whether this ever went out?
A That I do not know.
Q Did you ever send out any other letters on
this letterhead, Mr. Harris? And I'm referring to
Respondent's Exhibit 3.
A Not that I know of, no..
Q Is it your testimony that you've used
Petitioners' Exhibit 5 from the start of your business and
no other letterhead?
A Yes. Once again, that would actually be
better answered by my wife who's actually usually sending
the reports out.
Q I think in your testimony you referenced,
Mr. Harris, that you had given business presentations?
A Yes.
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Q
had you given?
A
Q
And about how many business presentations
Probably a half dozen, six maybe.
How did you go about getting a contact who
would call you and ask for a business presentation?
A Actually I did the calling and I
contacted -- the first person I contacted was Charlotte
McGowan who was having a tax collectors' meeting, a
Franklin County tax collectors' meeting, which was more of
a social gathering, and my wife and I were invited to that
and sat down and gave a brief five or ten minute overview
of our company.
At that time our company was not even
formed. We were basically giving a presentation trying to
see if we would be able to get some work, and if we would,
then we would proceed with actually filing for the company.
Q Was your father there?
A Excuse me?
Q Was your father there?
A He was at the tax collectors' meeting, yes.
Q Did he introduce you at that meeting?
A No, he did not.
Q He has accompanied you to at least that
business presentation?
A Yes.
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attended?
Q What other business presentations have you
A
dozen business presentations.
were the other ones?
Excuse me?
You said you attended about six, a half
You talked about one. What
A I went to -- every job that we -- well, not
every job. The tax collectors' meeting was one, and from
that meeting we got two jobs out of it and was given a
contact for the Tuscarora School District to give Mr.
Richard Lopella a call because of some poor service that we
heard about. So that then I called Richard Lopella and met
with him and also met with Mr. Hermance.
Q Hermance?
A Ed Hermance of Cumberland Valley School
District.
Q So the Franklin County Tax Collectors
Association we have Mr. Hermance. Did your father
accompany you to that meeting with Mr. Hermance?
A Excuse me?
Q You said you never -- did you meet with Mr.
A
Yes. I thought you said Franklin County.
Tax Collectors Association.
At the Franklin County Tax Collectors
Hermance?
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Association I did not meet with Ed Hermance, no.
Q I'm saying you did attend that and you
attended that with your father?
A Yes.
Q And now Mr. Hermance. Did you attend that
meeting with your father?
A Did I -- I'm --
MR. ZONARICH: Your Honor, I'm going to
object to this line of questioning. I think we're straying
from this petition on the stay as to whether it applies --
the arbitration applies to these clients.
THE COURT: What is the relevancy? What is
the relevancy of this line of questioning?
MR. GRUBB: Judge, as explained to you
earlier, we believe that JPH is acting through JTH. He's
accompanying him, and I think accompanying him to these
meetings is very relevant to this inquiry.
THE COURT: Wait a minute. The underlying
arbitration is an effort by whom to try to enforce the
non-compete agreement?
MR. GRUBB:
THE COURT:
G.H. Harris, my client.
And the non-compete agreement is
signed by James P. Harris and reportedly includes his
children?
MR. GRUBB: Correct.
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THE COURT: So even though he is a party to
the contract, the agreement, J.P. during the course of this
negotiation and finalization of this agreement purported to
bind him, right?
MR. GRUBB:
THE COURT:
James P. did.
James P. did.
Why is that not
arbitrable? The issue of whether or not this witness is
bound goes to whether or not there was authority to bind
him which there is purported authority set forth in the
agreement that his father bound him. Why doesn't that go
to arbitration? What am I doing trying to decide
independently whether or not he is bound or not? I am
asking the petitioner.
MS. MAKOSKY: I'm sorry, I thought you were
asking him.
THE COURT: I am asking you. You are the
one that is trying to keep --
MS. MAKOSKY: I'm sorry.
THE COURT: I am asking you. You are the
one that is trying to keep him out of arbitration.
MS. MAKOSKY: Because, Your Honor, by
contract law he has not signed it, and it's very clear that
you must be a signatory to a contract in order to be bound
to arbitration.
THE COURT: If that is the case, that is
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strictly a legal issue, and all this business is really not
relevant, is it?
MR. GRUBB: Judge, we are trying to apply
the non-compete. In other words, we're trying to apply
this contract to Mr. Harris and to the JTH defendants.
THE COURT:
purported the binding.
MR. GRUBB:
Sure, because his father
Correct. But also the secondary
argument we have is that not only did his father purport to
bind him, but also we believe that the JTH Corporation,
which is where we're going with things like -- with this
line of questioning, the JTH Corporation we believe is
nothing more than a front for the JPH Corporation.
THE COURT: Now, that having been said, why
isn't that all subject to arbitration since he is purported
to be bound in the agreement? First of all, I want to ask
you, you are telling me the answer to that is because
either he is a party to the contract or he isn't and if he
isn't -- and he isn't a party to the contract except if you
argue that he is bound by it under this apparent authority,
and you are saying that that isn't good enough to get this
client into arbitration.
MS. MAKOSKY:
Your Honor.
THE COURT:
No, we don't believe it is,
Let me hear from the back, from
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the intervener on that issue.
MR. ZONARICH: Your Honor, if there is a
violation of this agreement by the signatories, the buyers,
which were JPH and J.P. Harris Associates --
THE COURT: That is what your client, the
grandfather, is saying?
MR. ZONARICH: That's correct.
MR. GRUBB: His client is the father. I'm
sorry. I think we need to be real clear about that. Your
client is the father.
MR. ZONARICH: My client is the father.
THE COURT: It is tough for me to keep these
Harrises separated.
MR. GRUBB: That's why I interrupted. I
apologize.
THE COURT: Go ahead.
MR. ZONARICH: This gentleman and his client
have all the remedies of -- civil remedies and injunctive
relief in arbitration against my client that they need and
that's -- these issues that he's bringing up here go to --
think so.
THE COURT:
MR. ZONARICH:
I don't know that. He doesn't
But, Judge, for him to be
able to bind JTH Harris to succumb to a very expensive
arbitration that he was not a contract to and to withhold
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his rights to a civil proceeding in the Court of Common
Pleas of Cumberland County, or wherew~r, I feel that it's a
broad extension -- it's a violation of his rights. He is
not a party to that contract, and all his remedies rely in
the arbitration against my client JPH,. J.P. Harris
Associates.
THE COURT: My problem here is going back to
the initial objection is how -- all this stuff I don't see
how it is relevant on that issue of whether or not this man
is subject to being brought into this arbitration.
MR. GRUBB: Let me explain it to you this
way, Judge. We are trying to enforce a non-compete. One
of the parties we're trying to enforce that against is JTH.
We believe that is because JPH has set up marketed support
at JTH.
THE COURT:
MR. GRUBB:
I understand that.
Now, we're trying to enforce
this provision in this agreement. In doing that, if we're
going to enforce this agreement, or attempt to enforce this
agreement against JTH, do we not need to be bound by
everything within this agreement including the arbitration
clause? If we were just to have gone and sued JTH --
THE COURT: I understand your position a
hundred percent. I am just saying ali. this business -- how
does this collateral testimony help me on the issue of
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whether or not under this agreement he is subject to
arbitration?
It seems to me the original statement made
by petitioners' counsel is true, whether this man is
subject to arbitration, and this man means his wife and his
company, be strictly decided under the terms of this
agreement. It is in there. Either he is or he isn't.
At least argumentatively, without getting to
the merits of that yet, you are saying he is because he is
purported to be bound by it whether he is a signatory or
not, and you are telling me without him being a party to
it, a signatory to it, he isn't. Is there anything more
that is relevant testimony wise now that I am into this on
that issue?
MR. GRUBB:
we're asking is relevant.
Judge, here's why we think what
We think the two companies are
so intimately related there is no difference between the
two companies.
THE COURT: But it doesn't make any
difference, does it, if in fact he's either subject to
arbitration or he isn't under the terms of the non-compete
agreement? The arbitration clause covers whether he is or
not. I sustain the objection.
MR. GRUBB: Okay.
THE COURT: To this line of questioning that
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you are on.
MR. GRUBB:
THE COURT:
MR. GRUBB:
Okay.
Anything else?
Judge, if ~[ could ask for
clarification on that. Are you saying that the
arbitrability or the arbitration clause should be decided
by the arbitrators?
THE COURT: I am saying that is the issue.
The issue, as I see it, now that I am into it and have
learned all of these parties' involvement is does this --
does this agreement, that arbitration clause in this
agreement in which his father purported to bind him, get
him into the arbitration or not get him into the
arbitration? That is the issue as I see it.
MR. GRUBB:
THE COURT:
Correct.
I do not see it at the moment as
being anymore complicated than me interpreting this
agreement. We will discuss the merits of that in a moment,
but that is what I see the issue as.
MR. GRUBB: But, Judge,. if I would have sued
JTH in a civil action in equity in Cumberland County, okay,
that would have been my alternative had I not initiated an
arbitration, the argument then would have been by JTH,
well, you're trying to bind me to this agreement then you
should be suing me in arbitration.
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THE COURT: That is the life of litigation.
I understand your position. What I am simply doing now is
sustaining the objection to any further line of this
questioning, and I am not discussing the merits of the
arbitration clause at the moment. I am just saying that
this is not relevant to what I have to decide which is
who's in and who's out based on this arbitration clause.
MR. GRUBB: So the Judge would not want to
hear testimony about the link between the JTH and JPH?
THE COURT:
that offer, that's right.
~R. GRUBB:
I sustained the objection to
Judge, just so I don't incur
your wrath, you would want questions specifically
pertaining to the arbitration clause and his knowledge or
involvement in the --
THE COURT: I don't want anything. All I am
saying is what you can't do, and what you can't do is the
line of questioning that you were working on trying to show
a relationship between his company and the prior entities
because I do not see the relevancy as to whether or not he
is in or out of this arbitration under this clause.
MR. GRUBB: That's all I have then, Your
Honor.
offer of proof though.
THE COURT:
For purposes of the record, I would like to make an
Go ahead.
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MR. GRUBB: As to what questioning I would
have liked to have asked Mr. Harris.
THE COURT: You are trying to link him -- go
ahead.
doing.
I will let you make the offer.. I know what you are
MR. GRUBB: Right, you do, and I just want
to put that on the record.
THE COURT:
MR. GRUBB:
Make your offer.
Our offer of proof would be to
show that Mr. Harris was working -- would be to ask
questions because we believe there is a link between JPH
defendants as well as the JTH defendants.
The questions along those lines such as any
assistance that the father might have provided to the son
or the daughter-in-law would have been asked, including
attendance at meetings, any marketing efforts, any forms as
we saw earlier, also the shared deputy tax collectors, Mr.
Freitas and Mr. Nieves. We believe that they are the only
two deputy tax collectors used by both companies, again
showing the link.
Also to ask questions about the cover sheet
that we had sent up to Mr. Harris as Respondent's Exhibit
3, which is the cover page, to ask him questions about that
document as well, basically how he can represent that he
knows these townships and boroughs, how he can make the
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statement that JTH knows your people as stated on
Respondent's Exhibit 3. All again, Your Honor, in an
effort to link the two -- to show the relationship -- to
show the relationship in an effort to establish that they
are bound by every portion of this agreement, including the
non-compete and the arbitration clause.
THE COURT:
still outstanding?
MR. ZONARICH:
THE COURT:
MS. MAKOSKY:
THE COURT:
water on down with you.
THE WITNESS:
THE COURT:
petitioner?
MS. MAKOSKY:
THE COURT:
I understand.
Is the objection
Yes, it is, Your Honor.
Sustained. Any redirect?
Not at this time, Your Honor.
I did get you out. Take your
limited.
P. Harris.
Thank you.
Any further testimony,
No, Your Honor.
Now, I haw~ got you greatly
Any testimony, respondent?
MR. GRUBB: Yes. I would like to call James
Your Honor, I would also ask
MR. ZONARICH:
for an offer, please.
THE COURT:
MR. GRUBB:
What are you going to show?
I'm going to ask him about the
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arbitration clause, Judge, and Section 4.7, who he was
binding.
THE COURT: Well, to the extent that -- I
will let him testify. We will deal with relevancy or
admissibility when you come up. Go ahead.
Whereupon,
JAMES P. HARRIS,
having been duly sworn, testified as follows:
DIRECT EXAMINATION
BY MR. GRUBB:
Q Good afternoon, Mr. Harris. Could you
please state your name.
A James P. Harris.
Q And you are the James P. Harris of the James
P. Harris Associates Tax Collection Agency --
A Yes.
Q -- we've been speaking of? And you were a
party to the contract which we have, I believe, up in front
of you as Petitioners' Exhibit 17
MR. JAMES S. HARRIS: Your Honor, I took
these. Should these exhibits stay up there?
THE COURT: Yes.
MR. JAMES S. HARRIS: I'm sorry.
THE WITNESS: Yes, I was.
BY FiR. GRUBB:
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Q And you are involved in an arbitration at
present with G.H. Harris Associates?
A Yes.
Q And you are involved on behalf of you and
your wife as well as James P. Harris Associates, the LLC
company?
A Yes.
Q And that is pursuant to Section 4.6 of the
Dispute Resolution and Mandatory Arbitration?
A Yes, it is.
Q And within this document you made
representations that you were binding your children,
correct?
A I signed it only with the understanding from
my attorney that if my children -- my one child did not
sign it that I could not bind him. My attorney furthermore
instructed me that there was some lengthy discussions about
this issue with G.H. Harris Associates' attorney at the
time, and that he had informed Mr. Harris, Mr. G.H. Harris,
that just because the word children is in there and I
signed it that I was not binding my child. It was not
binding upon him.
So it was my understanding that both parties
agreed just because of that language the word child
wanted -- G.H. Harris wanted that left in there that even
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though I signed it that I was not binded -- I was not
binding my child.
Q James S. Harris is your only child?
A Yes, he is.
Q And after that conversation with your
attorney, you did not take the language out of the
document?
A
of the document. He wanted it to stay even though he
understood that if I signed it my child was still not
bound.
Q But you did sign a document referring to
page 7 James P. Harris, individually and for his wife,
children, and associated business entities?
A Well, I just explained I signed it because I
understood that it would not bind my child.
Q When you signed this document, you are
identified as the buyer?
A That's correct.
Q And when you signed this document, you were
committing you, yourself, James P. Harris, to all of the
terms of this document, were you not?
MR. ZONARICH: Your Honor, objection, asked
and answered.
Mr. G.H. Harris didn't take the language out
THE COURT: He did. He signed it. It is
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binding on you, right?
THE WITNESS:
BY MR. GRUBB:
Q
That' s correct, Your Honor.
Sir, then it's your testimony, Mr. Harris,
that this document as it stands, Respondent's Exhibit 1,
where it refers to your children is inaccurate?
That's correct, especially since I just have
A
one child.
Q
So that could only mean one thing when you
refer children in there, right?
A Right, that I signed it knowing that he was
not bound.
MR. GRUBB: Judge, I don't have anything
further on the arbitration clause. I would like to renew
the offer of proof I made before. I would ask this witness
questions about his relationship with JTH, the same reason
as with the offer that we had stated pertaining to James S.
Harris. I presume that you would have sustained that
objection so I would like to convey that.
THE COURT: You are making the offer. Any
Yes, Your Honor.
Sustained.
objection?
MR. ZONARICH:
THE COURT:
Judge?
MR. GRUBB: May I make the offer of proof,
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same?
again.
THE COURT: The offer is essentially the
MR. GRUBB:
THE COURT:
Is essentially the same.
You do not have to formalize it
MR. GRUBB: Right. Judge, I have questions
for other witnesses that I would have intended to call
today pertaining to the relationship between JPH and JTH.
I would like to call those witnesses.
THE COURT: Well, you need not call those
witnesses because I will not allow any questioning on the
similar lines with whether it is this father or any other
witnesses. So you need not call them individually.
MR. GRUBB: Okay.
THE COURT: Any further questions of this
witness?
MR. GRUBB:
THE COURT:
Now, any cross?
MS. MAKOSKY:
THE COURT:
None of this witness.
Let's get this wrapped up first.
None, Your Honor.
Intervener?
MR. ZONARICH: No, Your Honor.
THE COURT: Now, you may step down. Why
don't you identify the other witnesses and what their
positions are.
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Harris.
MR. GRUBB: I would intend to call Terri
She is of JTH Tax Services.
THE COURT:
MR. GRUBB:
THE COURT:
MR. GRUBB:
THE COURT:
Okay.
Would you like me to identify --
Same general offer?
Same general offer.
Identify every one of the people
that you want to call so your record is complete.
the wife of the son?
MR. GRUBB:
yes.
this.
THE COURT:
Terri is
Terri is the wife of James S.,
I am getting pretty good at
MR. GRUBB: Judge, we also had subpoenaed
the two deputy tax collectors, Christopher Freitas,
F-r-e-i-t-a-s, as well as William, I qon't know if I'm
saying this right, but Nieves, N-i-e-v-e-s, I believe.
They are out here? One, two.
And I also intended to call
THE COURT:
We got them.
MR. GRUBB:
Kathy Harris, the wife of James P. Harris --
Okay.
-- who is the father.
And the offer is the same?
Same offer..
THE COURT:
MR. GRUBB:
THE COURT:
MR. GRUBB:
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THE COURT: Same objection?
MR. ZONARICH: Yes, Your Honor.
THE COURT: The objection is sustained.
are protected on the record.
MR. GRUBB: Thank you.
THE COURT: Any testimony, intervener?
MR. ZONARICH: No, Your Honor, I have no
testimony.
You
THE COURT: Any rebuttal., petitioner?
MS. MAKOSKY: No rebuttal, Your Honor, other
than we would like to -- we would join in the objection.
THE COURT: Now, do both petitioner and
respondent move for the admission of their exhibits that
have been marked and testified to so far?
MS. MAKOSKY:
We move for their admission,
Respondent also?
We do.
Any objections?
THE COURT:
MR. GRUBB:
THE COURT:
No, Your Honor.
No.
Excuse me?
I was just going to say no
MR. ZONARICH:
MR. GRUBB:
THE COURT:
MR. GRUBB:
please.
objection from us to the petitioners'
THE COURT: Ail exhibits already marked
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petitioner and respondent are admitted[. The record is
closed. Argument, moving party, off the record.
(Whereupon, argument was held off the
record.)
THE COURT:
end of the week.
counsel.
I will have this decided by the
I understand it. Well presented,
Thank you very much.
(Whereupon, the hearing was concluded
at 12:28 p.m.)
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CERTIFICATION
I hereby certify that the proceedings are
contained fully and accurately in the notes taken by me on
the above cause and that this is a correct transcript of
same.
Pamela R. Sh~af~er
Official Court Reporte~_~_~
The foregoing record of the proceedings on
the hearing of the within matter is hereby approved and
directed to be filed.
Edgar B. ]~a~.l'~ J.
Ninth Judicial ~istrict
62
JTH TAX SERVICES, LLC,
JAMES S. HARRIS AND
TERRI HARRIS,
HUSBAND AND WIFE,
APPLICANTS
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
G.H. HARRIS ASSOCIATES, INC.,
RESPONDENT
JAMES P. HARRIS AND KATHY
HARRIS, HUSBAND AND WIFE, AND
J.P. HARRIS ASSOCIATES, LLC,
I NTERVENERS
02-5469 CIVIL TERM
IN RE: PETITION TO STAY ARBITRATION
BEFORE BAYLEY, J.
AND NOW, this
ORDER OF COURT
~ day of January, 2003, the application of JTH Tax
Services, LLC, James S. Harris and Terri Harris to stay an arbitration filed by G.H.
Harris Associates, Inc., with the American Arbitration Association, IS GRANTED. THE
ARBITRATION IS STAYED AGAINST JTH TAX SERVICES, LLC, JAMES S. HARRIS
AND TERRI HARRIS.
__~Edgar B. Bay~.y~ J.
/
02-5469 CIVIL TERM
Alexandra Makosky, Esquire
For Applicants
Steven E. Grubb, Esquire
For Respondent
John R. Zonarich, Esquire
For Interveners
:sal
JTH TAX SERVICES, LLC,
JAMES S. HARRIS AND
TERRI HARRIS,
HUSBAND AND WIFE,
APPLICANTS
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
G.H. HARRIS ASSOCIATES, INC.,
RESPONDENT
JAMES P. HARRIS AND KATHY
HARRIS, HUSBAND AND WIFE, AND
J.P. HARRIS ASSOCIATES, LLC,
I NTERVENERS
02-5469 CIVIL TERM
IN RE: PETITION TO STAY ARBITRATION
BEFORE BAYLEY, J.
OPINION AND ORDER OF COURT
Bayley, J., January 8, 2003:--
Pursuant to an opinion in support of an interim order dated December 13, 2002,
a hearing was conducted on January 3, 2003, for the purpose of determining whether
JTH Tax Services, LLC is an alter ego/associated business activity of James P. Harris.
The prior opinion is incorporated herein. We find that:
(1) James P. Harris, individually and through J.P. Harris Associates, LLC,
provided James S. Harris and Terri Harris with information (a) that helped them start
JTH Tax Services, LLC, (b) how to market JTH Tax Services, LLC, and (c) where to
solicit business.
02-5469 CIVIL TERM
(2) JTH Tax Services, LLC, uses the same computer software and same forms
provided by the same suppliers to J.P. Harris Associates, LLC.
(3) JTH Tax Services, LLC employs two part-time deputy tax collectors who are
full-time employees of J.P. Harris Associates, LLC. JTH Tax Services, LLC pays the
two deputies for all of the work they do for that corporation.
(4) James P. Harris has on many occasions, for the convenience of James S.
Harris and Terri Harris, picked up mail for JTH Tax Services, LLC at a Mechanicsburg
post office box used by the corporation to service a client, the Cumberland County
School District.
(5) James P. Harris assisted James S. Harris and Terri Harris in soliciting clients
of G.H. Harris Associates, Inc., that James P. Harris and Kathy Harris operating as J.P.
Harris Associates, LLC are prevented from servicing because of the restrictive covenant
in the Market Region Purchase Agreement dated August 25, 2000.
(6) James P. Harris has encouraged clients of G.H. Harris Associates, Inc., to
hire JTH Tax Services, LLC. Four such clients have changed to JTH Tax Services,
LLC.
(7) JTH Tax Services, LLC has not solicited any business from clients of J.P.
Harris Associates, LLC.
(8) Neither James P. Harris nor Kathy Harris nor J.P. Harris Associates, LLC
have any financial interest in or control over JTH Tax Services, LLC.
(9) James S. Harris and Terri Harris have skills and the knowledge necessary to
-2-
02-5469 CIVIL TERM
operate JTH Tax Services, LLC.
(10) JTH Tax Services, LLC is operated solely by its owners James S. Harris
and Terri Harris.
(11) Neither James P. Harris nor Kathy Harris nor J.P. Harris Associates, LLC
have received any financial or other type of benefit from the operation of JTH Tax
Services, LLC, by James S. Harris and Terri Harris.
DISCUSSION
We conclude that JTH Tax Services, LLC is not the alter ego or an asSociated
business activity of James P. Harris. JTH Tax Services, LLC is solely owned and
operated by James S. Harris and Terri Harris. Although James P. Harris has assisted
his son and daughter-in-law in their business, and has encouraged clients of G.H.
Harris Associates, Inc., to change to JTH Tax Services, LLC, that does not mean that
JTH Tax Services, LLC is a front/subterfuge/facade of James P. Harris. There is no
intermingling of finances between James P. Harris and J.P. Harris Associates, LLC with
JTH Tax Services, LLC. The close relationship between James P. Harris and James S.
Harris and Terri Harris does not translate into his operating, controlling, dominating, or
having a financial interest of JTH Tax Services, LLC? Even though that close
relationship has been detrimental to the business interest of G.H. Harris Associates,
Inc., JTH Tax Services, LLC, a non-signatory to the Market Region Purchase
See Thomson - CSF, S.A.v. American Arbitration Association, 64 F.3d 773
(1995).
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02-5469 CIVIL TERM
Agreement, cannot be forced into arbitration on the application of G.H. Harris
Associates, Inc. before the American Arbitration Association?
For the reasons set forth herein and in the opinion in support of the interim order
dated December 13, 2002, the following order is entered.
ORDER OF COURT
AND NOW, this ~ day of January, 2003, the application of JTH Tax
Services, LLC, James S. Harris and Terri Harris to stay an arbitration filed by G.H.
Harris Associates, Inc., with the American Arbitration Association, IS GRANTED. THE
ARBITRATION IS STAYED AGAINST JTH TAX SERVICES, LLC, JAMES S. HARRIS
AND TERRI HARRIS.
Alexandra Makosky, Esquire
For Applicants
Steven E. Grubb, Esquire
For Respondent
John R. Zonarich, Esquire
For Interveners
:sal
2 This familial dispute shows that the old adage--blood is thicker than water--does not
apply when money is at stake.
JTH TAX SERVICES, LLC,
JAMES S. HARRIS AND
TERRI HARRIS, HUSBAND
AND WIFE,
Applicants
Vo
G.H. HARRIS ASSOCIATES,
INC.,
Respondent
Vo
JAMES P. HARRIS AND
KATHY HARRIS, HUSBAND :
AND WIFE, AND J.P. HARRIS:
ASSOCIATES, LLC, :
Interveners :
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
CIVIL ACTION - LAW
NO. 02-5469' CIVIL TERM
IN RE: TESTIMONY OF ~WARD F. CARABIN
Proceedings held before the
HONORABLE EDGAR B. BAYLEY, J.,
Cumberland County Courthouse, Carlisle, Pennsylvania,
on January 3, 2003,
in Courtroom Number Two.
APPEARANCES:
ALEXANDRA MAKOSKY, Esquire
For the Applicants
STEVEN E. GRUBB, Esquire
For the Respondent
JOHN R. ZONARICH, Esquire
For James and Kathy Harris
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January 3, 2003
Carlisle., Pennsylvania
(Whereupon, thefollowing~testimony
was requested.)
MS. MAKOSKY: Your Honor, I would like to
call Ed Carabin to the stand, please.
Whereupon,
EDWARD F. CARABINj.
having been duly sworn, testified as follows:
DIRECT EXAMINATION
BY MS. MAKOSKY:
Q
name for the record.
A Yes, Edward F. Carabin.
Q And where do you live?
A I live at 6548 Devonshire Heights Road.
Q Do you want a glass of water up there?
A Yes, that would help. 6548 Devonshire
Heights Road, Harrisburg.
Q
A
New Cumberland.
Q
A
Q
Mr. Carabin, can you please state your full
And where do you work?
I'm employed with Capital Business Forms in
What's your position there?
I'm a salesman.
And how long have you been at Capital
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Business Forms?
I've been employed there since January of
A
1965.
Q
A
Q
19657
1995.
You're a loyal employee.
As a salesman,
what are some of your duties?
A Well, normally I would take a prospect and
turn him into a customer by soliciting their business and
helping them design forms, print them up and deliver them
to help them with their business.
Q And have you helped JTH Tax Services in
getting their forms drafted and ready for print?
A Well, Terri called me, I believe it was, the
last week in February of this year and stated that they
were starting a company, and it was a delinquent tax
service, and that she would like to ore, er some forms. So
we talked, and she said that she was the daughter-in-law of
Kathy and Jim Harris, and so I suggested that we start with
their forms as a starting point.
Is that something common that you do in your
Yes.
Obtain forms from other companies and then
help out the starting business?
Q
business?
A
Q
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A Yes, that's very common. Forms are specific
by industry, but a lot of companies within each industry
use very similar forms, almost identical.
Q You don't have other customers sign an
agreement that you have the right to slhare the forms
without their knowledge?
A I have never had that.
Q And there is no copyriglht, to the best of
your knowledge, on these forms?
A No, not to my knowledge.
Q And have you assisted James -- J.P. Harris
Associates with their forms?
A Yes, since 1995.
Q Well, at that point in '95 they were G.H.
Harris, correct?
A They were G.H. Harris, that's correct.
Q And then when J.P. Harris was formed you
also assisted them with their forms?
A Correct.
Q Can you tell me now when Terri called you
and asked you to assist her with getting these forms,
what -- take me through the process of what you did.
A Okay. Terri called and said she was
interested in working with me to get some forms. And so I
asked her, do you know exactly what you want? And she
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said, well, no, but they would probably be similar to other
delinquent tax collectors.
So I suggested that J.P. Harris forms are
available, perhaps we could use that as a starting point.
So she sent me the information by a fax that she needed
changed. Basically it was the name and address and phone
number and fax number that she needed.
Q And so you marked up the form?
A Yes. I took her information, marked it up
on the form, and we sent it in and had. it printed.
Q You marked it up, you sent it back to her,
and she then --
A I think I did.
Q -- and then she approved it and got it off
and printed it?
A Right. The reason I say that is because
they were all rush orders at first. So we didn't have a
lot of -- we didn't have the luxury of time.
Q And so there was at least one mistake on
that form that Terri later discovered?
A Yes, we found that out later.
Q And that was the phone number?
A Right.
Q Who else orders the forlms -- is it just
Terri that's ordering the forms for JTH?
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A Right.
Q Has James P. or Kathy Harris ever called you
to order forms on behalf of JTH Tax Services?
A Not for JTH, no.
Q Who paid for the forms that Terri had
ordered?
A JTH pays for their own forms.
Q Does Capital Business Forms treat JTH Tax
Services and J.P. Harris Associates as two separate
customers?
A
Q
A
Yes.
And how do they do that?
Well, we have a customer code in our
computer, and each one is a separate account with a
different account number and different, information.
MS. MAKOSKY: No further questions.
CROSS EXAMINATION'
BY MR. GRUBB:
Q Is it Mr. Carabin?
A Yes.
Q I apologize.
Caravan all day long.
A
Q
I've been calling you Mr.
No problem.
Mr. Carabin, do you have any other customers
that are delinquent tax collectors?
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A Not outside of J.P. Harris.
Q And when Terri Harris contacted you, she
identified herself as the daughter-in-law of James P.
Harris, correct?
A Yes.
Q And you knew she was the daughter-in-law
when you recommended that we use the J.P. Harris forms as a
starting point?
A I thought she probably was, so we used them
as a starting point, yes.
Q Now, if this had been anyone else, say, for
example, I called you up and said I want to start a
delinquent tax collection agency and I want to order some
forms, would you have provided me James P. Harris
Associates' forms?
A
Q
A
Perhaps.
Perhaps. Why do you say perhaps?
It all depends on the circumstances.
Perhaps I would pick theirs. Perhaps I would pick another
one. I could call a factory and ask them to send me some
samples if we had time. You know, it depends on the
circumstances. If you had a rush order, I couldn't do
that.
Q Is the reason you picked James P. Harris
forms in this case because Terri Harris was James P.
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Harris' daughter-in-law?
A Perhaps.
Q When Terri Harris contacted you, I think
your testimony was she had no idea what to order?
A That's correct.
Q She couldn't name a single form that she
wanted to order?
A Well, that's true. She knew what she
wanted, but she didn't know any of the details.
Q When you send the initial form to JTH, does
it have the James P. Harris Associates at the top still
when you sent that to them?
A Yes.
Q You were in the courtroom, I believe, most
of the day today, and you heard Kathy Harris testify, I
believe?
A Yes.
Q And she said that their forms needed to
match, I believe, the software program that they had?
A Correct.
Q Were you aware when you talked to Terri
Harris that JTH also had that software program?
A No.
Q And in terms of giving the final okay to go
ahead and print those forms, that was Terri Harris?
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A Yes. I informed Terri that they were
designed for a specific computer program, and I said you
have to make sure they work on your system. If they
didn't, you could make adjustments.
Q You were there since 1!)95, and therefore I
presume you would have also worked when this entity was
known as G.H. Harris?
Yes.
And you did not think to send up G.H. Harris
A
forms to JTH?
A
I didn't have too many of them left.
clean our files pretty regularly.
MR. GRUBB: That's all.
Carabin.
BY MR. ZONARICH:
THE COURT: Intervener.
CROSS EXAMINATION
Thank you, Mr.
We
Q Is it safe to say that anybody can get these
forms, Mr. Carabin?
A Yes, in that industry.
Q From you or anybody else?
A Yes. Frequently the factories that we have
them printed will send them out to other people for
samples.
MR. ZONARICH: Nothing else.
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excused.
Next.
THE COURT: Anything further?
MS. MAKOSKY: Nothing.
THE COURT: Sir, you may step down.
(Whereupon, the requested testimony
was concluded.)
You are
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CERTIFICATION
I hereby certify that the proceedings are
contained fully and accurately in the notes taken by me on
the above cause and that this is a correct transcript of
same.
Off'icj. al Court Reporter ~
The forego±ng record of the proceed±rigs on
the hearing of the within matter is hereby approved and
directed to be filed.
11