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HomeMy WebLinkAbout02-6190 v. : IN THE COURT OF COMMON PLEAS OF : CUMBERLAND C<)VN)'Y, PENNSYLVANIA : b4-Ui-ry : CIVIL ACTION .. ~_&I f )/'iC ; NO. O~ '&/9tJ ~ RICHARD L. GLADWELL, Plaintiff, PAUL L. FERNBAUGH, and NORTHGATE ANTIQUE MALL, INC. Defendants. NOTICE TO DEFEND You have been sued in court. If you wish to defend against the claims set forth in the following pages, you must take action within twenty (20) days after this complaint, order and notice are served, by entering a written appearance personally or by attorney and by filing in writing with the court your defenses or objections to the claims set forth against you. You are warned that if you fail to do so the case may proceed without you and a judgment may be entered against you by the court without further notice for any money claimed in the complaint or for any other claim or relief requested by the plaintiff. You may lose money or property or other rights important to you. YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER, OR CANNOT AFFORD ONE, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW TO FIND OUT WHERE YOU CAN GET LEGAL HELP. Cumberland County Lawyer Referral Service 2 Liberty Avenue Carlisle, Pennsylvania 17013 (717) 249-3166 Americans with Disabilities Act of 1990 The Court of Common Pleas of Cumberland County is required by law to comply with the Americans with Disabilities Act of 1990. For information about accessible facilities and reasonable accommodations available to disabled individuals having business before the court, please contact our office. All arrangements must be made at least 72 hours prior to any hearing or business before the court. You must attend the scheduled conference or hearing. RICHARD L. GLADWELL, Plaintiff, : IN THE COURT OF COMMON PLEAS OF : CUMBERLAND COUNTY, PENNSYLVANIA v. : CIVIL ACTION - LAW PAUL L. FERNBAUGH, and : NO. O;J.. - (PJ C;.c NORTHGATE ANTIQUE MALL, INC. Defendants. E yu-, 1-.., - l<::::or-IV\. COMPLAINT AND NOW COMES the Plaintiff, Richard L. Gladwell, by and through his attorneys, Irwin, McKnight & Hughes, to make the following Complaint, and in support thereof avers as follows: 1. Plaintiff Richard L. Gladwell, is an adult individual currently residing at 823 West Keller Street, Mechanicsburg, Cumberland County, Pennsylvania 17055. 2. Defendant, Paul L. Fembaugh, is an adult individual currently residing at 1075 Trindle Road, Mechanicsburg, Cumberland County, Pennsylvania 17055, 3. Defendant Northgate Antique Mall, Inc. ("Corporation"), is a Pennsylvania business corporation with its registered address and principal offices at 726 North Hanover Street, Carlisle, Pennsylvania 17013. 4. The business of the Corporation is primarily the operation of an antique store at the Corporation's registered address which includes the renting of space to vendors who buy and sell antiques. 5. Plaintiff Gladwell and Defendant Fembaugh are the sole shareholders in the Corporation. 1 6. Each party is listed in the corporate records of Northgate Antique Mall, Inc. as owning fifty percent (50%) of the outstanding shares of stock. 7. Plaintiff holds the offices of President and Secretary of Northgate Antique Mall, Inc., and is a member of the Board of Directors of the Corporation. 8. Defendant holds the office of Vice-President of Northgate Antique Mall, Inc., and is also a member of the Board of Directors of the Corporation. 9. Prior to the incorporation of Northgate Antique Mall, Inc., Plaintiff approached Defendant with a business proposition to include Defendant in the purchase of the antique business and real estate located at 726 North Hanover Street, Carlisle, Pennsylvania 17013. 10. Plaintiff's initial proposal was that in exchange for payment of $25,000.00, Defendant would receive ten percent (10%) of the shares and ownership of the Corporation. 11. Defendant verbally accepted Plaintiff's initial proposal. 12. At a later date, Plaintiff then approached Defendant and verbally offered him an additional forty percent (40%) of the shares of the Corporation without additional consideration, so that each party would have fifty percent (50%) of the outstanding shares of stock. 13. At or about the time the business was incorporated, the Corporation also purchased the real estate located at 726 North Hanover Street, Carlisle, pennsylvania 17013. 14. Despite repeated requests by Plaintiff for the parties to enter into a shareholder agreement to provide for the orderly disposition of stock in the Corporation in the event of death, disability, or disagreement among the shareholders, Defendant Fembaugh has only agreed to an amendment of the Corporation's Bylaws applicable in the event of the death of a shareholder. A 2 true and correct copy of said amendment is attached hereto and incorporated herein as Exhibit "A." COUNT I - CORPORATE DISSOLUTION 15. The averments contained in paragraphs one (1) through fourteen (14) are hereby incorporated by reference and are made part of this Count I. 16. Plaintiff and Defendant Fembaugh are unable to communicate and are deadlocked regarding the continued operation and management of Northgate Antique Mall, Inc., and it is beneficial to the interests of the shareholders that the Corporation be wound up and dissolved. 17. Defendant Fembaugh has failed and refused to sign documentation necessary for the Corporation to refmance its existing obligations to take advantage of lower interest rates. 18. In violation of the terms of the financial documents signed by both parties, Defendant Fembaugh has previously failed and refused to submit copies of his recent financial statements to Pennsylvania State Bank, the financial lender of the Corporation. 19. In addition, the parties had agreed to post a list for vendors waiting to obtain more favorable locations within the Corporation's antique store, which list has been posted by the Corporation for more than one (1) year. 20. Defendant Fembaugh has refused to abide by the established list and instead offered preferred space to other individuals. 21. The actions of Defendant Fembaugh directly resulted in the loss of several vendors, causing a loss of rental income and negative publicity to other vendors and antique dealers both within the antique store and in the broader antique community. 3 22. It is believed and therefore averred that Defendant Fernbaugh has also discouraged the leasing of additional space in order to increase the amount of space utilized by him personally, for which he does not pay any rent. 23. Upon information and belief, Defendant Fernbaugh has also directly or indirectly provided confidential corporate information to various antique dealers, and has refused to keep legal disputes and other concerns within the management and structure of the Corporation. 24. It is believed, and therefore averred, that the corporate assets are being misapplied or wasted by virtue of Defendant Fernbaugh's actions and omissions, and it is beneficial to the interests of the shareholders that the Corporation be wound up and dissolved. 25. Defendant, by and through his legal counsel, previously threatened the dissolution of the Corporation. 26. The parties are currently deadlocked in the direction of the management of the business and affairs of the Corporation and the shareholders are unable to break the deadlock and irreparable injury to the Corporation is being suffered and additional irreparable injury is threatened. WHEREFORE, Plaintiff Gladwell respectfully requests that this Honorable Court enter and order appointing a liquidating receiver for Northgate Antique Mall, Inc., and providing for the dissolution and winding up of corporate affairs and subsequent distribution of the proceeds of its remaining assets to the shareholders as this Court shall deem just and equitable under the circumstances. 4 COUNT II - BREACH OF FIDUCIARY DUTY 27. The averments contained in paragraphs one (1) through twenty-six (26) are hereby incorporated by reference and are made part of this Count II. 28. Plaintiff Gladwell seeks damages for the diminution in value to his shares as a result of Defendant Fernbaugh's fundamentally unfair and destructive conduct as set forth above. 29. As a fifty percent shareholder in the Corporation, Defendant Fernbaugh owes a fiduciary duty to both the Corporation and Plaintiff Gladwell, the remaining fifty percent shareholder. 30. The acts and omissions of Defendant Fernbaugh as set forth above constitute breaches of his fiduciary duties. 31. As a direct and proximate result of Defendant Fembaugh's breaches of fiduciary duties, Plaintiff Gladwell has suffered and will suffer damages in the nature of diminution in the value of his shares in the Corporation, losses of rental income, and losses of potential business opportunities, the amount of which remains unliquidated. WHEREFORE, Plaintiff Gladwell respectfully requests that this Honorable Court enter judgment in his favor in an amount exceeding the arbitration limit of $25,000.00, together with pre-judgment interest, the costs of his action such other remedies as this Court shall deem just and equitable under the circumstances. 5 COUNT III - SHAREHOLDER DERIVATIVE ACTION 32. The averments contained in paragraphs one (1) through thirty-one (31) are hereby incorporated by reference and are made part of this Count III. 33. As an officer and director of the Corporation, Defendant Fernbaugh owes a fiduciary duty to the Corporation and its shareholders to perform at all times in the best interests of the Corporation. 34. By reason of the acts and omissions set forth above, Defendant Fembaugh has breached his fiduciary duties to the Corporation. 35. Plaintiff Gladwell refrained from demanding action by the Board of Directors of the Corporation to remedy the breaches of fiduciary duty by Defendant only because such demand would have been futile under the circumstances given that the parties are the sole directors of the Corporation and they are evenly divided. 36. As a direct and proximate result of Defendant Fembaugh's breaches of fiduciary duty, the Corporation has suffered and will suffer damages including, but not limited to, alienation of good will of existing vendors and customers, loss of rental income, loss of business opportunities, and diminution to the value of the Corporation. 37. The damages suffered by the Corporation as set forth above are as yet unliquidated but are in excess of$25,000.00. 6 WHEREFORE, Plaintiff Gladwell, in his capacity as a shareholder of North gate Antique Mall, Inc., respectfully requests that this Honorable Court enter judgment in his favor in an amount exceeding the arbitration limit of $25,000.00, together with pre-judgment interest, the costs of his action such other remedies as this Court shall deem just and equitable under the circumstances. IRWIN, McKNIGHT & HUGHES Hughes, sq e Suprem Court J.D. No. 58884 Douglas G. Miller, Esquire Supreme Court I.D. No. 83776 60 West Pomfret Street Carlisle, Pennsylvania 17013 (717) 249-2353 Attorneys for Plaintiff, Richard L. Gladwell Date: December 31,2002 7 VERIFICATION The foregoing document is based upon information which has been gathered by my counsel and myself in the preparation of this action. I have read the statements made in this document and they are true and correct to the best of my knowledge, information and belief. I understand that false statements herein made are subject to the penalties of 18 Pa.C.S.A. Section 4904, relating to unsworn falsification to authorities. Date: /c2- /1 ,M EXHIBIT" A" AMENDMENT TO TIfE BYLAWS OF NOR1RGA'ffi ANTIQUE MALL, INe. AS A RESULT OF TIlE ANNUAL SHAREHOLDERS MEETING ON APRIL 3,2001 THE FOLLOWING AMENDMENT TO THE CURRENT BYLAWS HAS BEEN AGREED UPON BY ALL SHAREHOLDERS, AMENDMENT TO SECTION 6.06. RESTIUCTION ON lRANSFER OF SHARES (b) CURRENIL Y READS: OFFER UPON DEATH OF A SHAREHOLDER UPON TIm DEAlH OF A SHAREHOLDER, THE EXECUTOR OR ADMINISTRATOR OF THE DECEASED SHAREHOLDER, AS SOON AS POSsmLE THEREAFTER, SHALL OFFER THE DECEDENT'S SHARES TO THE CORPORATTON AND ITS SHAREHOLDERS BY NOTICE IN WRITING TO THE SECRETARY OF 1lfE CORPORATION. AMENDED VERSION AGREED UPON BY ALL SHAREHOLDERS READS: UPON 1HE DEATH OF A SHAREHOLDER, TIm EXECUTOR OR ADMINISTRATOR OF THE DECEASED SHAREHOLDER SHALL HAVE THE RIGHT TO RETAIN TIlE SHARES, OR OFFER lliEM TO THE CORPORATION AND ITS SHAREHOLDERS BY NOTICE IN WRITING TO TIlE SECRETARY OF TIIE CORPORATION. TInS AMENDMENT HAS BEEN PRESENTED AND AGREED UPON BY mE SHAREHOLDERS OF TInS CORPORATION. TIm SHAREHOLDERS DULY NOTE THIS WITH lEE SIGNING OF nns DOCUMENT BEFORE A NOTARY. IT IS AGREED BY ALL SHAREHOLDERS THAT THTS DOCUMENT IS TO BE UPHELD TN A COURT OF LAW. p~ ~s,f- -5-2O.0z.. ( PAULFEARNI3AUGH ) ~' ~" ,. J' r. 7-t-az RICK GLADWELL ~~ '\ ~. ....... \.; Vj ~ ~ ~ ~ --oJ ~ ~,~ ~.. ~ ~ ~ "\, '\ ~ ~ ~ ~ ~.~ r:o --,,'" ~'., o~ ::i .~ ~l -... (~ --.... ~ r-j ) "I ., ~,...) :.-J, ;-'...) ~ SHERIFF'S RETURN - REGULAR CASE NO: 2002-06190 P COMMONWEALTH OF PENNSYLVANIA: COUNTY OF CUMBERLAND GLADWELL RICHARD L VS FERNBAUGH PAUL L ET AL VALERIE WEARY , Sheriff or Deputy Sheriff of Cumberland County, Pennsylvania, who being duly sworn according to law, says, the within COMPLAINT & NOTICE was served upon FERNBAUGH PAUL L the DEFENDANT , at 2129:00 HOURS, on the 7th day of January , 2003 at 1075 TRINDLE ROAD MECHANICSBURG, PA 17055 by handing to KATHY FERNBAUGH, WIFE a true and attested copy of COMPLAINT & NOTICE together with and at the same time directing Her attention to the contents thereof. Sheriff's Costs: Docketing Service Affidavit Surcharge So Answers: 18.00 6.21 .00 10.00 .00 34.21 ~. ~ ~ ,'""i,,.~9~ ." b . .r~.,~~'>;;;;;,,<;~</. ~ .' R. Thomas Kline 01/08/2003 IRWIN MCKNIGHT HUGHES Sworn and Subscribed to before !/t;;t; k~ Deputy Sner' By: me this tV JD ~" day of /"1 C;6...~ 2M3 A.D. ~1 11 Q ~ ~~'thonotary ,~ v. : IN THE COURT OF COMMON PLEAS OF : CUMBERLAND COUNTY, PENNSYLVANIA : CIVIL ACTION - EQUITY : NO. 02-6190 RICHARD L. GLADWELL, Plaintiff, PAUL L. FERNBAUGH, and NORTHGA TE ANTIQUE MALL, INC. Defendants. PRAECIPE TO SETTLE AND DISCONTINUE TO CURTIS R. LONG, PROTHONOTARY: Please mark the above-captioned case settled and discontinued. Respectfully submitted, IRWIN & McKNIGHT Date: October 23,2006 By: Douglas . Miller, Esquire Supreme Court ill #83776 60 West Pomfret Street Carlisle, Pennsylvania 17013 (717) 249-2353 Attorney for Plaintiff (':\ c: s- -0 eLl \"T1\' , ~~. '2:",,/ ~- C.' "PC: -z :2. ~ ~ cr o :3 N .r:- ~ .-\ ~-n fl'r: -o~ ~,:lY {,J(-l f~) jj Z}{1 Q\' ?q ;...:. -0 :;3!:. N ., o .r;-