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HomeMy WebLinkAbout03-0207IN THE COURT OF COMMON PLEAS FOR CUMBERLAND COUNTY, PENNSYLVANIA ALLFIRST BANK 25 S. Charles Street Baltimore, Maryland 21201, Plaintiff, Civil Action - Law O.~ · ¢zO '7 ~ Term, 2003 ORRSTOWN BANK 121 Lurgan Ave. Shippensburg, PA 17257, Defendant. Case No.: NOTICE TO DEFEND TO: ORRSTOWN BANK NOTICE You have been sued in court. If you wish to defend against the claims set forth in the following pages, you must take action within twenty (20) days after this complaint and notice are served, by entering a written appearance personally or by attorney and filing in writing with the court your defenses and 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 Bar Association 2 Liberty Avenue Carlisle, Pennsylvania 717-249-3166 IN THE COURT OF COMMON PLEAS FOR CUMBERLAND COUNTY, PENNSYLVANIA ALLFIRST BANK 25 S. Charles Street Baltimore, Maryland 21201, Mo Plaintiff, Civil Action - Law Term, 2003 ORRSTOWN BANK 121 Lurgan Ave. Shippensburg, PA 17257, Case No.: Defendant. * sues the Defendant, Orrstown Bank follows: COMPLAINT IN CIVIL ACTION Plaintiff, AIIfirst Bank ("AIIfirst"), by and through its undersigned counsel, hereby ("Orrstown"), and for its cause of action states as Parties, Jurisdiction and Venue AIIfirst is a Maryland state chartered banking corporation with its principal place of business in the State of Maryland. 2. Orrstown is a commercial bank doing business at 121 Lurgan Avenue, Shippensburg, Pennsylvania, 17257, Cumberland County. 3. Jurisdiction and venue are proper in this court. Factual Background of Claim 4. On October 15, 2002, Orrstown drew and issued a check in the amount of $25,238.22 ("Check") to Teaming Associates, Inc. ("Teaming"). A true and correct copy of the Check is attached hereto as Exhibit A. Orrstown is both the Drawer and the Drawee AIIfirst. 6. bank on the Check. On October 16, 2002, Teaming deposited the Check in its account with On October 16, 2002, AIIfirst provisionally credited Teaming's account in the amount of $25,238.22 and forward presented the Check to Orrstown. 7. The Check was presented to Orrstown in a cash letter that was processed through the Federal Reserve Bank - Philadelphia ("FRB"). The Check was received by Orrstown on or about October 17, 2002. 8. Orrstown did not return the check nor send written notice of dishonor or nonpayment of the Check within its "midnight deadline." As a consequence, Orrstown became accountable under U.C.C. § 4-302 to pay the item. 9. Orrstown held the Check and remained silent about return or dishonor until November 1, 2002 when the Check was returned to AIIfirst. 10. Orrstown gave no explanation for its untimely return. 11. Thus, on November 5, 2002, AIIfirst made a claim of late return with the FRB ("Claim"). A true and correct copy of AIIfirst's Claim of Late Return is attached hereto as Exhibit B. Upon receipt of the Claim the FRB credited AIIfirst's Reserve bank account in the amount of the Check. 12. On November 16, 2002, Orrstown filed a response to the claim of late return with the FRB ("Response"). A true and correct copy of Orrstown Response to Claim of Late Return is attached hereto as Exhibit C. Upon receipt the Response, the FRB debited AIIfirst's Reserve bank account in the amount of the Check - $25,238.22. 13. Orrstown's Response, however, provided no legitimate basis for the untimely 2 return of the Check. Orrstown merely asserted that it had dishonored the Check because the payee of the Check, Teaming, had presented other checks to Orrstown that were returned for insufficient funds. 14. Orrstown. 15. 16. Cause of Action Untimely Return of Item On or about October 17, 2002 the Check was presented to and received by Orrstown retained the Check and did not give any notice of dishonor. Instead, Orrstown waited well after its midnight deadline to return the Check to AIIfirst on or about November 1,2002. 17. By not returning the Check or sending notice of dishonor before its midnight deadline, Orrstown became accountable for the amount of the Check. See U.C.C. § 4- 302. 18. Orrstown's liability is strict and Orrstown is obliged to pay the amount of the Check - $25,238.22. 19. Even though Orrstown's liability is strict, it should be noted that as a direct and proximate result of Orrstown's untimely return of the Check, AIIfirst suffered damages in that it's account at the FRB was debited in the amount of $25,238.22. 20. Subsequently, Teaming filed for bankruptcy, thereby limiting AIIfirst's recourse against Teaming. WHEREFORE, Plaintiff, AIIfirst Bank respectfully requests that this Court enter judgment in its favor and against the Defendant, Orrstown Bank, in the amount of $25,238.22. plus interests and costs and order such other and further relief as the Court deems just and proper. Date: January 13, 2003 Respectfully su.bmitted, R~Say~lVI'. WhitWo-r~t~ Pennsylvania Bar No. 85208 Gebhardt & Smith LLP The World Trade Center 401 E. Pratt Street, 9th Floor Baltimore, Maryland 21202 (41 O) 385-5101 Attorneys for Plaintiff, AIIfirst Bank VERIFICATION Understanding that false statements made in this verification are subject to the penalties of 18 Pa.C.S.A., § 4904 relating to unsworn falsification of authorities, I verify that I am the attorney for the Plaintiff in the above-captioned matter and that to my personal knowledge, information and belief the statements made in the foregoing document are true and correct and that I am authorized to make this verification on the Plaintiff's behalf. Due to the urgency in filing this document, Verification by the Plaintiff could not be obtained prior to its filing but such Verification shall be filed as soon as it is obtained. Date: January/.~, 2002 ~ / /~/ -//]~ /'~,~ ~ 1~ ~ Rams~'~; M; VYhi{v~r{h Page 1 of 1 No. 56953 OimsrowN ]~,~ ~ ~10-15o:~13 CHECK NO. ~-.o..ox =s. 5 6 9 5 3 **Twenty Five Thousand Two Hundred Thirty Eight & 2~[00 Dollars 1U/15/20U2 PAY TOmE TEAMING ASSOC/_ATES INC. oRo£~ 200 S. SPRING GARDEN ST. oF CARLISLE PA 17013 SUITE 14 E~PENSE CHECK ,,'000 2 5 2 &B 2 2/ Posting Date 2002 Oct 16 Bank # 999 Research Seq # 2100568052 Account # 900052 Dollar Amount $25,238.22 Check/Store 56953 DB/CR DB Entry Number 1436 RTABA 03131503 · ../inquiry?CONTEXT=printloggin g&ACTION=log&postingdate=2002+Oct+ 16&acct_no=9(11/21/2002 TO: Check Collection Department Federal Reserve Bank of BANK'S CLAIM OF LATE RETURN DATE: BALTIMORE 1115/2002 The returned check ("item") described below and attached hereto is being delivered to you: 1. Amount $25,238.22 2. Dated 10/15/2002 3. Paying Bank ORRSTOWN BANK 4. Paying Bank R/T No. 31315036 5. Paying Bank Location SHIPPENSBURG 6. Drawn By (drawee) ORRSTOWN BANK 7. Payable To (payee) TEAMING ASSOCIATES 8. Check No. 56953 We sent this item to FIRST UNION 10/16/2002 totaling $ 6,254,586.39 listed between items for This item was apparently returned by the paying bank on We received the item from FRB PHILADELPHIA return item letter dated 11/1/2002 $66,257.67 , listed between items for $29.92 11/112002 , in a cash letter dated , tape total $ $96,635.67 and on 11/1/2002 , totaling $ $66,275.67 55.46 ina , tape total and We cia m that, according to our records and the data on the item, the paying bank did not take all action necessary to recover its payment within the deadline in Regulations J and CC, and we certify that, as to notice of non-payment of the item, we received: (CHECK ONE) [] advice by (method) no advice other than the returned check. on This late return caused us to incur financial loss. Please provisionally credit our account and advise. AIIfirst Bank BANK BY: Officer's Signature * This form may be submitted only with respect to the first time the item was sent for collection and must be sent in duplicate within two (2) months after the date you received the item as a returned check. In addition, the item must have been collected and/or returned through the Federal Reserve check collection system. Failure to provide all information requested will result in the claim being rejected. Knowingly making a false statement to influence the action of a Federal Reserve Bank may sub.leer the signing party to criminal penalties under federal and/or state law. ** Letter should be addressed to your local Federal Reserve Office. *** Must be $100.1}0 or more~ 'DOC 1189 (Rev. 1-98} PAYING BANK'S RESPONSE TO CLAIM OF LATE RETURN To: Check Collection Department , Federal Reserve BankBf. Office (ADDRESS OF YOUR LOCAL FEDERAL RESERVE OFFICE) Date: With your advice of debit dated / '//'"'~7 ~ , y~)u forwarded to us a claim of late return with respect to a returned check ("item") in the amount of $ ~.~-", a~, S~. ~ ~ , We ce~ify~ur '~cords indicate that this item was received by us or our processor fro~' ~ ~ ~/ ~E~ PY ¢~ ~~~ as a cash item of (banking day) ] ~ ~ I ~ ~V ~ ~ ,~ in a cash letter dated in the amount of tape total listed between items for r~ . and that the item was returned to in our return item letter dated in the amount of $ tape total $' listed between items for $ Notice of non-payment of this item was given to :b oo .ariaS. on (Enter "none" ii no notice was given. If notice was given, enter method and date.) If the number of banking days between the banking day of receipt and the date of return.~xceeds one banking day, the explanat,on for_th_Be delay.is as follows: ~/~,1 ,~/'J~ ~ ~//z,*,~%'D/'4 ~. ,~. I~1~..,,,,0~z,¢ ..l~:x~O. ~7'41t~ ~I~I/F_~ ,¢/~"FJ C;~ We took all action necessary to entitle us to recover our payment within the deadline in Regulations J and d:;'.~.~. Pl~&se credit our account and advise. Paying Bank 0 ~ ~ F ~ ~Officers Signature 2 Prepare and submit In duplicate, If the Reserve Bank does not receive all of the information requested within 20 business days after the date the Reserve Bank sent this form to the paying bank, the prov[siona~ credit given the claimant and the debit to the paying bank's account will become final. In that casev the paying bank may be able to recover the amount of the item from the claimant II its return of the item was in fact timely, but It must deal directly with the claimant. Knowingly making a false statement to influence action of a Federal Reserve Bank may subject the signing party to criminal penatlJes under federal and/or state law. Effective January L 1998 SHERIFF,s RETURN _ CASE NO: 2003-00207 p COMMONWEALTH OF COUNTY OF PENNSYLVANIA: CUMBERLAND ALLFIRST BANK VS ORRSTOWN BANK REGULAR CPL. MICHAEL BARRICK Cumberland County, Pennsylvania, who being duly says, the within COMPLAINT & NOTICE was ORRSTOWN BANK DEFENDANT _, at 0945:00 HOURS, on the at 22 S HANOVER STREET CARLISLE, PA 17013 KATHY COHICK, MANAGER a true and attested copy of COMPLAINT & NOTICE Sheriff or Deputy Sheriff of SWorn according to law, served upon the 12t____n day of , by handing to ADULT IN CHARGE together with and at the same time directing He~r attention to the contents thereof. Sheriff,s Costs: Docketing Service Affidavit Surcharge 18.00 3.45 .00 10.00 .00 31.45 Sworn and Subscribed to before me this ~. ~. ~ day of So Answers: 02/12/2003 GEBHARDT & SMi T~-~/7 Allfirst Bank, Plaintiff Orrstown Bank, Defendant · IN THE COURT OF COMMON PLEAS OF · CUMBERLAND COUNTY, PENNSYLVANIA · NO. 03-207 CIVIL TERM NOTICE TO PLEAD TO: Allfirst Bank You are hereby notified to file a written response to the enclosed Answer, New Matter and Counterclaim within twenty (20) days from service hereof or a judgment may be entered against you. Date Respectfully Submitted TURO LAW OFFICES Ron Turo, Esquire 28 South Pitt Street Carlisle, PA 17013 (717) 245-9688 Attorney for Orrstown Bank AIIfirst Bank, Plaintiff Orrstown Bank, Defendant · IN THE COURT OF COMMON PLEAS OF · CUMBERLAND COUNTY, PENNSYLVANIA · NO. 03-207 CIVIL TERM ANSWER, NEW MATTER AND COUNTER-CLAIM 1. Admitted. 2. Admitted and denied. It is admitted that Orrstown Bank is a commercial bank; however, it is denied that its address is as stated. By way of further answer, the correct address for Orrstown Bank is 77 East King Street, Shippensburg, PA 17257. 3. Admitted. 4. Admitted. 5. Admitted. 6. Neither admitted nor denied. Orrstown Bank is without sufficient information to determine what "provisionally" means and proof of the same is demanded at Trial. 7. Admitted. 8. Neither admitted nor denied. The allegations in this paragraph are legal conclusions to which no responsive pleading is required. If a responsive pleading is required, it is denied that the Defendant is accountable to pay the item in question. 9. Admitted and denied. It is admitted that Orrstown Bank returned the check; however, it is denied that it remained silent because it did not know that AIIfirst would not honor the check in question. 10. Admitted and denied. Orrstown Bank did give an explanation for its return· 11. Neither admitted nor denied. Orrstown Bank is without sufficien; information to answer this allegation and proof of the same is demanded at Trial. 12. Admitted and denied. It is admitted that Orrstown Bank filed a response to the claim of AIIfirst Bank; however, it is denied that FRB debited AIIfirst account and proof of the same is demanded at Trial. 13. Denied. Orrstown Bank's response did provide a legitimate basis for return of the check. 14. Admitted. 15. Denied. By way of further answer, Orrstown Bank did return the check with a notice. 16. The allegations of this paragraph are legal conclusions to which no responsive pleading is required. 17. The allegations of this paragraph are legal conclusions to which no responsive pleading is required. 18. The allegations of this paragraph are legal conclusions to which no responsive pleading is required. 19. Denied. Orrstown Bank is without sufficient information to effectively answer this allegation and, therefore, proof of the same is demanded at Trial. 20. Admitted and denied. It is admitted that Teaming filed for Bankruptcy; however, it is denied that Allfirst's recourse against Teaming was removed as AIIfirst has appropriate safeguards under the Bankruptcy Code. WHEREFORE, Defendant, Orrstown Bank, respectfully requests that this Court enter judgment in its favor and against the Plaintiff, Allfirst Bank. NEW MATTER 21. Teaming Associates, Inc., hereinafter "Teaming," was a Pennsylvania Corporation that entered into a contract with Orrstown Bank in January 2002. 22. The contract between Teaming and Orrstown Bank involved Teaming g telephone services, billing services, audit services and management services to Orrstown Bank for its telecommunications needs. 23. As part of its contract, Teaming would consolidate all Orrstown'~ telecommunications billings into one (1) bill, pay the bills, thus receiving volum, discounts and charge for their professional services after the payment of all bills. 24. In approximately August 2002, Orrstown Bank became aware that certain communications services had been terminated by its primary carrier, Sprint, when certain security phone lines were disconnected at a Branch Office, thus causing office to be without security for a period of time. 25. Upon discovery that the phone services had been terminated, Bank promptly made contact with Sprint and determined that the last several bills had not been paid by Teaming Associates. 26. Immediately upon receipt of this information, Orrstown Bank representatives met with Teaming and determined that approximately $25,000 in past due bills had not been paid. 27. Teaming indicated to Orrstown Bank that they had experienced a cash flow problem and that as a result of this, they met with their bank, Plaintiff Allfirst herein, which had set up a line of credit for them, allowing them to make payments on these bills. 28. Teaming was advised by Allfirst that any checks that they wrote as part of their ongoing business operations would be covered by Allfirst on a line of credit, even funds were not directly and immediately available to Teaming to cover these checks. 29. Teaming Associates and Orrstown Bank, relying on AIIfirst's representations, did write checks to Sprint to pay the outstanding obligations on behalf of Teaming's customer, Orrstown Bank. 30. Teaming, relying on these representations from AIIfirst Bank, sent a ch, to Sprint to cover the bills, which checks were not covered by Allfirst. 31. Teaming Associates later discovered that Allfirst Bank would sweep all Teaming's accounts each day, thus causing the checks written to Sprint, on and for the interest of Orrstown Bank, to be returned as insufficient funds and unpaid. 32. When this continued for a period of time, Sprint contacted Orrstown Bank and again indicated that their bills had not been paid and Orrstown agreed to pay Sprin! approximately $25,000 to cover the outstanding indebtedness. At the same time having just issued a check to Teaming Associates, the check at issue in this lawsuit Orrstown Bank returned the check due to the failure of Allfirst Bank to cover the same. even though it had provided positive assurances to Teaming Associates and ultimatel to Orrstown Bank, that Teaming's checks would be honored. 33. As a direct and proximate result of Allfirst's fraud and misrepresentations to its customer, Teaming, Orrstown Bank has suffered the loss of $25,000 in that AIIfirst has caused Orrstown Bank to not only pay Sprint $25,000, but is attempting, through this lawsuit, to recover the same check owed to Teaming Associates in the amount of $25,000 thus causing a double payment by Orrstown Bank on its indebtedness to Sprint. 34. The misrepresentations made by Allfirst to its customer, Teaming, was the sole and proximate cause of this loss to Orrstown Bank. COUNTER CLAIM FRAUD AND MISREPRESENTATION 35. The Plaintiff, AIIfirst Bank, did, with the intent to defraud and misrepresent its actions to its customer, Teaming, did indicate to Teaming that a line of credit was in place to cover its business debts and would, as a result of the placement of this line of credit, cover all checks written by Teaming on its business account. 36. As a direct and proximate result of this misrepresentation and fraud, Teaming Associates did, in reliance of such representations, issue checks to Sprint on behalf of its customer, Orrstown Bank, which checks were not honored by AIIfirst Bank in direct contravention of the representations made to Teaming by AIIfirst Bank. 37. As a direct and proximate result of the fraud and misrepresentation made by Allfirst Bank to its customer, Teaming, Orrstown Bank did, in reliance on Teaming's assertions that all checks would be covered, issued a check to Teaming Associates based on its representations that it had paid bills owed to Sprint on behalf of Orrstowr Bank and, subsequently, Orrstown Bank determined that the bills had not been paid ant was required to pay Sprint directly and thereafter did put a stop on the check paid by Orrstown Bank to Teaming Associates, all as a result of the fraud an( misrepresentations of Allfirst Bank. 38. The actions or inactions complained of above were solely as a result o the fraud and misrepresentation made by AIIfirst Bank to Teaming, which has now cost Orrstown Bank the amount of $25,000. WHEREFORE, for all the above reasons, Orrstown Bank requests this Honorable Court to enter judgment in its favor and against Allfirst Bank in the amount of $25,000, plus interest and costs of this action. Date Respectfully Submitted TURO LAW OFFICES 28 South Pitt Street Carlisle, PA 17013 (717) 245-9688 Attorney for Orrstown Bank VERIFICATION I verify that the statements made in the foregoing Answer, New Matter and Counterclaim are true and correct. I understand that false statements herein made are subject to the penalties of Pa.C.S. {}4904 relating to unsworn falsification to authorities. , // S~phen C. Oldt Executive Vice President and Chief Operating Officer CERTIFICATE OF SERVICE I hereby certify that I served a true and correct copy of the Answer, New Matter and Counterclaim upon Ramsay Whitworth, Esquire, by depositing Same in the United States Mail, first class, postage pre-paid on the ~/~ day of //J'?/'f/'7~'/7/ ,2003, from Carlisle, Pennsylvania, addressed as follows: Ramsay M. Whitworth, Esquire Gebhardt & Smith, LLP The Wodd Trade Center 401 East Pratt Street, 9th Floor Baltimore, MD 21202 TURO LAW OFFICES on Turo, Esquire · 28 South Pitt Street Carlisle, PA 17013 (717) 245-9688 Attorney for Orrstown Bank IN THE COURT OF COMMON PLEAS FOR CUMBERLAND COUNTY, PENNSYLVANIA ALLFIRST BANK Plaintiff, * NO. 03-207 CIVIL TERM ORRSTOWN BANK Defendant, Orrstown Bank's ("Orrstown"), New Pa.R.C.P. 1028(4) as follows: Defendant. , * * * * * * ~ 11¢ '/r . . '/C ALLFIRST'S PRELIMINARY OBJECTIONS TO ORRSTOWN'S NEW MATTER AND COUNTERCLAI ,la Plaintiff, Allfirst Bank ("AIIfirst"), by its undersigned counsel, preliminarily objects to Matter and Counterclaim pursuant to PRELIMINARY OBJECTION RAISING FAILURE TO STATE A CLAIM (Demurrer) AIIfirst for Fraud and Misrepresentation. and Counterclaim. 2. In its Counterclaim, misrepresentation ("Teaming). 3. Orrstown has filed, through its New Matter and Counterclaim, a claim against See Exhibit A, Orrstown's Answer, New Matter Orrstown seeks damages for an alleged made by AIIfirst to one of AIIfirst's customers, Teaming Associates Orrstown claims that AIIfirst allegedly misrepresented to Teaming "that a line of credit was in place to cover [Teaming's] business debts and [AIIfirst] would, as a result of the placement of this line of credit, cover all checks written by Teaming on its business account." Exhibit A, I[ 35. 4. Orrstown alleges that Teaming relied on this representation and wrote checks on behalf of Orrstown to Sprint which ultimately were not honored by AIIfirst, causing damage to Orrstown. Exhibit A, ¶ 36. 5. Orrstown, therefore, attempts to state a claim for fraud based on Teaming's reliance on Allfirst's alleged misrepresentation. Exhibit A, ¶ 36. 6. It is well settled in Pennsylvania, however, that a "plaintiff cannot state a claim for fraud based on a third party's reliance on a misrepresentation, even when it was made to influence the third party foreseeably to act in a manner detrimental to the plaintiff." Westwood-Booth v. Davey-Lowey, Ltd., 1999 U.S.Dist. LEXIS 4809, '14 (E.D. Pa. 1999), citing Kurtz v. American Motorists Ins. Co., 1995 U.S.Dist. LEXIS 17417 (E.D. Pa. 1995); Ella v. Erie Ins. Exch., 398 Pa. Super. 433, 581 A.2d 209,212 (Pa. Super 1990)(no cause of action for fraud absent misrepresentation intended to cause plaintiff to act and subsequent justifiable reliance by plaintiff); See also Pulchaski v. Sch. Dist. of Springfield, 161 F.Supp.2d 395, 405 n. 3 (E.D. Pa. 2001)(plaintiff could not "maintain a misrepresentation claim for harm he may have sustained as a result of the reliance by another on a false statement concerning him"). 7. Because Orrstown is claiming damages as a result of Teaming's reliance on AIIfirst's alleged misrepresentations, AIIfirst preliminarily objects to the New Matter and Counterclaim on the grounds that it fails to properly state a cause of action for fraud and misrepresentation. 10. AIIfirst. 11. II. PRELIMINARY OBJECTION RAISING FAILURE TO STATE A CLAIM (Demurrer) 8. Allfirst incorporates by reference the averments set forth in paragraphs 1 through 7 above, as if set forth herein at length. 9. In an apparent attempt to circumvent the above-stated rule, Orrstown alleges that it suffered damages due to its reliance upon Teaming's assertions "that all checks would be covered" and therefore issued a check to Teaming, "based on [Teaming's] representations that it had paid bills owed to Sprint on behalf of Orrstown." Exhibit A, ¶ 37. Such allegations, however, are insufficient to state a claim for fraud against "To be liable for a fraudulent misrepresentation made to a third party, the maker of the misrepresentation must intend or have reason to expect that the misrepresentation will be repeated to the recipient and the recipient will rely on it." Woodward v. Dietrich, 378 Pa. Super. 111,548 A.2d 301,309 (1988); Kurtz, 1995 U.S. Dist. LEXIS at *5. 12. Orrstown has not claimed that Allfirst intended or had reason to expect that the alleged misrepresentation that it made to Teaming would be repeated to and relied upon by Orrstown. 13. More importantly, Orrstown has not claimed that AIIfirst's alleged misrepresentation was ever repeated to or relied upon by Orrstown. Orrstown alleges that it relied upon Teaming's representations, not AIIfirst's. Orrstown never alleges that Teaming repeated AIIfirst's alleged misrepresentation. 3 14. Therefore, AIIfirst preliminarily objects to the New Matter and Counterclaim on the grounds that it fails to properly state a cause of action for fraud and misrepresentation. III. PRELIMINARY OBJECTION RAISING FAILURE TO STATE A CLAIM (Demurrer) 15. AIIfirst incorporates by reference the averments set forth in paragraphs 1 through 14 above, as if set forth herein at length. 16. Orrstown's Counterclaim should be dismissed because Orrstown has failed to allege that either it or Teaming justifiably relied upon AIIfirst alleged misrepresentation. 17. Under Pennsylvania law, to state a claim for fraudulent misrepresentation, a plaintiff must plead: "(1) a misrepresentation; (2) a fraudulent utterance thereof; (3) an intention by the maker that the recipient will thereby be induced to act; (4) justifiable reliance by the recipient on the misrepresentation; and (5) damages to the recipient as a proximate result." Scaife Co. v. Rockwell-Standard Corp., 446 Pa. 280,285 A.2d 451,454 (1971). 18. Justifiable reliance is an essential element of common law fraud. J/H Real Estate, Inc. v. Abramson, 901 F.Supp. 952 (E.D. Pa. 1995). 19. Therefore, assuming that Orrstown's damages were a result of its reliance on Teaming's representations, Orrstown, has failed to plead that either it or Teaming justifiably relied on the alleged misrepresentation made by AIIfirst. 20. AIIfirst, therefore, preliminarily objects to the New Matter and Counterclaim on the grounds that it fails properly state a cause of action for fraud and misrepresentation. 4 IV. PRELIMINARY OBJECTION RAISING FAILURE TO STATE A CLAIM (Demurrer) 21. AIIfirst incorporates by reference the averments set forth in paragraphs 1 through 20 above, as if set forth herein at length. 22. Orrstown attempts to hold AIIfirst liable for fraud based on AIIfirst's alleged breach of a promise to do something in the future, i.e. "to cover all checks written by Teaming on its business account." Exhibit A, ¶ 35. 23. However, "it is well-established that the breach of a promise to do something in the future is not actionable in fraud." Shoemaker v. Commonwealth Bank, 700 A.2d 10003, 1006 (Pa. Super. 1997); Manning v. Barber's Chemicals Inc., 50 Pa. D. & C.4th 420, 431 (2000). 24. AIIfirst, therefore, preliminarily objects to the New Matter and Counterclaim on the grounds that it fails properly state a cause of action for fraud and misrepresentation. V. PRELIMINARY OBJECTION RAISING FAILURE TO STATE A CLAIM (Demurrer) 25. AIIfirst incorporates by reference the averments set forth in paragraphs 1 through 24 above, as if set forth herein at length. 26. As stated above, in order to allege a cause of action in fraud a plaintiff must prove damages. Scaife Co. v. Rockwell-Standard Corp., 446 Pa. 280, 285 A.2d 451,454 (1971). 27. Orrstown, however, has not suffered damages as a result of Allfirst's alleged misrepresentations. 28. Orrstown alleges that it put a stop on the check that it paid to Teaming and that it subsequently paid Sprint the amounts that it admittedly owed to Sprint. Exhibit A, ¶37. 29. Therefore, Orrstown has not sustained any damages as a result issuing a check to Teaming which it ultimately dishonored. 30. Indeed, AIIfirst has brought this action against Orrstown for damages that AIIfirst has sustained as a result of Orrstown's improperly "stopping payment" of its own check by means of dishonoring the check after the midnight deadline established by U.C.C. § 4-302. 31. Therefore, Allfirst preliminarily objects to the New Matter and Counterclaim on the grounds that it fails properly state a cause of action for fraud and misrepresentation. VI. PRELIMINARY OBJECTION RAISING FAILURE TO STATE A CLAIM (Demurrer) 32. AIIfirst incorporates by reference the averments set forth in paragraphs 1 through 31 above, as if set forth herein at length. 33. Orrstown's Counterclaim should be dismissed because it is barred by the "gist of the action" doctrine. 34. "The 'gist of the action' doctrine bars claims for allegedly tortious conduct where the gist of the conduct sounds in contract rather than tort." The Brickham Group, Ltd. v. CGU Ins. Co., 53 Pa. D. & C.4th 71, 83 (2001); Redevelopment Authority of Cambria v. International Ins. Co., 454 Pa. Super. 374, 391-92, 685 A.2d 581,590 (1996) 35. "To be construed as a tort action, the wrong ascribed to the defendant must be the gist of the action with the contract being collateral. In addition,.., a contract action may not be converted into a tort action simply by alleging that the conduct in question was done wantonlly." Philco Ins. Co. v. Presbyterian Med. Services Corp., 444 Pa. Super. 221, 229, 663 A.2d 753, 757 (1995). 36. The gist of Orrstown's Counterclaim is that AIIfirst breached its alleged contract with Teaming by failing to "to cover all checks written by Teaming on its business account," as AIIfirst had allegedly promised. Exhibit A, ¶ 35. 37. Perhaps recognizing that it could not assert a breach of contract claim against AIIfirst as an intended third-party beneficiary, Orrstown has attempted to convert what is essentially a breach of contract action into a cause of action for fraud. The "gist of the action" doctrine is specifically designed to bar this type of mischaracterization and to "maintain the conceptual distinction between breach of contract and tort claims." Bash v. Bell TeL Co., 411 Pa. Super. 347, 601 A.2d 825, 829 (1992). 38. For these reasons, Allfirst preliminarily objects to the New Matter and Counterclaim on the grounds that it fails properly state a cause of action for fraud and misrepresentation. WHEREFORE, AIIfirst Bank respectfully requests this Court grant its Preliminary Objections by way of demurrer and dismiss Plaintiffs' New Matter and Counterclaim. Date: April 3, 2003 Respectfully submitted, Ramsay M. Whitworth Pennsylvania Bar No. 85208 Gebhardt & Smith LLP 401 E. Pratt Street, 9th Floor Baltimore, Maryland 21202 (410) 385-5101 Attorneys for Plaintiff, Allfirst Bank CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the foregoing Preliminary Objections to Orrstown's New Matterand Counterclaim were mailed, first class, postage pre-paid on this day of April, 2003 to: Ron Turo, Esquire, 28 South Pitt Streer, Carlisle, PA 17013, attorney for Orrstown Bank. Ramsay M. Whitworth Exhibit A Allflrst Bank, Plaintiff · IN THE COURT OF COMMON PLEAS OF · CUMBERLAND COUNTY, PENNSYLVANIA Vo Orrstown Bank, Defendant TO: Allfirst Bank · NO. 03-207 NOTICE TO PLEAD You are hereby notified to file a written response to the enclosed Answer, New Matter and Counterclaim within twenty (20) days from service hereof or a judgment may be entered against you. Respectfully Submitted TURO LAW OFFICES Date Ron Turo, Esquire 28 South Pitt Street Carlisle, PA 17013 (717) 245-9688 Attorney for Orrstown Bank AIlfirst Bank, Plaintiff Vo Orrstown Bank, Defendant · IN THE COURT OF COMMON PLEAS OF · CUMBERLAND COUNTY, PENNSYLVANIA · NO. 03-207 CIVIL TERM ANSWER, NEW MATTER AND COUNTER-CLAIIt' 1. Admitted. 2. Admitted and denied· It is admitted that Orrstown Bank is a commercial bank; however, it is denied that its address is as stated. By way of further answer, the correct address for Orrstown Bank is 77 East King Street, Shippensburg, PA 17257. 3. Admitted. 4. Admitted. 5. Admitted. 6. Neither admitted nor denied. Orrstown Bank is without sufficient information to determine what "provisionally" means and proof of the same is demanded at Trial. 7. Admitted. 8. Neither admitted nor denied· The allegations in this paragraph are legal conclusions to which no responsive pleading is required. If a responsive pleading is required, it is denied that the Defendant is accountable to pay the item in question. 9. Admitted and denied. It is admitted that Orrstown Bank returned the check; however, it is denied that it remained silent because it did not know that Allfirst would not honor the check in question. 10. Admitted and denied. Orrstown Bank did give an explanation for its return. 11. Neither admitted nor denied· Orrstown Bank is without sufficienl information to answer this allegation and proof of the same is demanded at Trial. 12. Admitted and denied. It is admitted that Orrstown Bank filed a response to the claim of Allfirst Bank; hoWever, it is denied' that FRB debited Allfirst account and proof of the same is demanded at Trial. 13. Denied. Orrstown Bank's response did provide a legitimate basis for return of the check. 14. Admitted. 15. Denied. By way of further answer, Orrstown Bank did return the chec~ with a notice. 16. The allegations of this paragraph are legal conclusions to which nc responsive pleading is required. 17. The allegations of this paragraph responsive pleading is required. 18. The allegations of this responsive pleading is required.- are legal conclusions to which no paragraph are legal conclusions to which no 19. Denied. Orrstown Bank is without sufficient information to effectively answer this allegation and, therefore, proof of the same is demanded at Trial. 20. ^dmitted and denied. It is admitted that Teaming filed for Bankruptcy; however, it is denied that Allfirst's recourse against Teaming was removed as Allfirs! has appropriate safeguards under the Bankruptcy Code. WHEREFORE, Defendant, Orrstown Bank, respectfully requests that this Court enter judgment in its favor and against the Plaintiff, ^llfirst Bank. NEW MATTER 21. Teaming Associates, Inc., hereinafter "Teaming," was a Pennsylvania Corporation that entered into a contract with Orrstown Bank in January 2002. 22. The contract between Teaming and Orrstown Bank involved Teaming g telephone services, billing services, audit services and management services to Orrstown Bank for its telecommunications needs. 23. As part of its contract, Teaming would consolidate all Orrstown'~ telecommunications 'billings into one (1) bill, pay the bills, thus receiving volum discounts and charge for their professional services after the payment of all bills. 24. In approximately August 2002, Orrstown Bank became aware that certain communications services had been terminated by its primary carrier, Sprint, when certain security phone lines were disconnected at a Branch Office, thus causing the office to be without security for a period of time. 25. Upon discovery that the phone services had been terminated, Orrstown Bank promptly made contact with Sprint and determined that the last several bills had not been paid by Teaming Associates. 26. Immediately upon receipt of this information, Orrstown Bank representatives met with Teaming and determined that approximately $25,000 in past due bills had not been paid. 27. Teaming indicated to Orrstown Bank that they had experienced a cash flow problem and that as a result of this, they met with their bank, Plaintiff AIIfirst herein, which had set up a line of credit for them, allowing them to make payments or' these bills. 28. Teaming was advised by Allfirst that any checks that they wrote as part of their ongoing business operations would be covered by Allfirst on a line of credit, even if funds were not directly and immediately available to Teaming to cover these checks. 29. Teaming Associates and Orrstown Bank, relying on AIlfirst's representations, did write checks to Sprint to pay the outstanding obligations on behalf of Teaming's customer, Orrstown Bank. 30. Teaming, relying on these representations from Allfirst Bank, sent ach, to Sprint to cover the bills, which checks were not covered by Allfirst. 31. Teaming Associates later discovered that Allfirst Bank would sweep all Teaming's accounts each day, thus causing the checks written to Sprint, on and for the interest of Orrstown Bank, to be returned as insufficient funds and unpaid. 32. When this continued for a period of time, Sprint contacted Orrstown Bar .and again indicated that their bills had not been paid and Orrstown agreed to pay Sprin! approximately $25,000 to cover the outstanding indebtedness. At the same time having just issued a check to Teaming Associates, the check at issue in this lawsuit, Orrstown Bank returned the check due to the failure of Allfirst Bank to cover the same even though it had provided positive assurances to Teaming Associates and ultimatel~ to Orrstown Bank, that Teaming's checks would be honored. 33. As a direct and proximate result of Allfirst's fraud and misrepresentation~ to its customer, Teaming, Orrstown Bank has suffered the loss of $25,000 in that AIIf has caused Orrstown Bank to not only pay Sprint $25,000, but is attempting, through this lawsuit, to recover the same check owed to Teaming Associates in the amount of $25,000 thus causing a double payment by Orrstown Bank on its indebtedness to Sprint. 34. The misrepresentations made by Allfirst to its customer, Teaming, was the sole and proximate cause of this loss to Orrstown Bank. COUNTER CLAIM FRAUD AND MISREPRESENTATION 35. The Plaintiff, Allfirst Bank, did, with the intent to defraud and misrepresent its actions to its customer, Teaming, did indicate to Teaming that a line of credit was in to cover its business debts and would, as a result of the placement of this line credit, cover all checks written by Teaming on its business account. 36. As a direct and proximate result of this misrepresentation and fraud Teaming Associates did, in reliance of such representations, issue checks to Sprint on behalf of its customer, Orrstown Bank, which checks were not honored by Allfirst Bank in direct contravention of the representations made to Teaming by Allfirst Bank. 37. As a direct and proximate result of the fraud and misrepresentation made by Allfirst Bank to its customer, Teaming, Orrstown Bank did, in reliance on Teaming's assertions that all checks would be covered, issued a check to Teaming Associates based on its representations that it had paid bills owed to Sprint on behalf of Bank and, subsequently, Orrstown Bank determined that the bills had not been paid was required to pay Sprint directly and thereafter did put a stop on the check paid by Orrstown Bank to Teaming Associates, all as a result of the fraud and misrepresentations of Allfirst Bank. 38. The actions or inactions complained of above were solely as a result of the fraud and misrepresentation made by Allfirst Bank to Teaming, which has now cost Orrstown Bank the amount of $25,000. WHEREFORE, for all the above reasons, OrrstoWn Bank requests this Honorable Court to enter judgment in its favor and against AIIfirst Bank in the amount of $25,000, plus interest and costs of this action. Date Respectfully Submitted TURO LAW OFFICES Rbn Turo, Esquire- 28 South Pitt Street Carlisle, PA 17013 (717) 245-9688 Attorney for Orrstown Bank VERIFICATION I verify that the statements made in the foregoing Answer, New Matter and Counterclaim are true and correct. I understand that false statements herein made are subject to the penalties of Pa.C.S. §4904 relating to unsworn falsification to authorities. 'Date Executive Vice President and Chief Operating Officer CERTIFICATE OF SERVICF I hereby certify that I served a true and correct copy of the Answer, New M. and Counterclaim upon Ramsay Whitworth, Esquire, by depositing Same in the United States Mail, first class, postage pre-paid on the ~/z?" day of ,//~-/f/q~Y7z' 2003, from Carlisle, Pennsylvania, addressed as follows: Ramsay M. Whitworth, Esquire Gebhardt & Smith, LLP The Wodd Trade Center 401 East Pratt Street, 9th Floor Baltimore, MD 21202 TURO LAW OFFICES .~. on Turo, Esquire 28 South Pitt Street Carlisle, PA 17013 (717) 245-9688 Attorney for Orrstown Bank IN THE COURT OF COMMON PLEAS FOR CUMBERLAND COUNTY, PENNSYLVANIA ALLFIRST BANK Plaintiff, V. ORRSTOWN BANK Defendant. * NO. 03-207 CIVIL TERM ORDER Upon consideration of Plaintiff, AIIfirst Bank's, Preliminary Objections to Orrstown Bank's New Matter and Counterclaim by way of demurrer, and any/no response thereto, it is this day of .., 2003, hereby ORDERED that Plaintiff's Preliminary Objections are sustained and Defendant, Orrstown Bank's New Matter and Counterclaim is DISMISSED. Judge, Court of Common Pleas for Cumberland County, Pennsylvania AIIfirst Bank, Plaintiff Mo · Orrstown Bank, Defendant · IN THE COURT OF COMMON PLEAS OF · CUMBERLAND COUNTY, PENNSYLVANIA · NO. 03-207 CIVIL TERM REPLY TO PLAINTIFF'S PRELIMINARY OBJECTIONS Plaintiff, AIIfirst Bank, Counterclaim. 1. 2. 3. 4. 5. 6. Defendant, Orrstown Bank, through its counsel Turo Law Preliminary Objection to Defendant's Offices replies to New Matter and Admitted. Admitted. Admitted. Admitted. Admitted. Neither admitted nor denied. The allegations in this paragraph are legal conclusions to which no responsive pleading is required. 7. Denied· The allegations in this paragraph are legal conclusions to which no responsive pleading is required. 8. No response required. 9. Admitted and denied. Orrstown Bank admits that it suffered damage due to its reliance on Teaming's assertions "that all checks would be covered"· 10. Denied· The allegations in this paragraph are legal conclusions to which no responsive pleading is required. 11. Denied· The allegations in this paragraph are legal conclusions to which no responsive pleading is required. 12. Denied· By way of further answer AIIfirst should have had reason to expect that the misrepresentation made to Teaming would be repeated to and relied upon by Orrstown a customer of Teaming· 13. Denied· By way of further response Orrstown Bank relied upon AIIfirst's representations as related by Teaming· 14. Denied. The allegations in this paragraph are legal conclusions to whicl~ no responsive pleading is required. 15. No response required. 16. Denied. The allegations in this paragraph are legal conclusions to which no responsive pleading is required. 17. Neither admitted nor denied. The allegations in this paragraph are legal conclusions to which no responsive pleading is required. 18. Neither admitted nor denied. The allegations in this paragraph are legal conclusions to which no responsive pleading is required. 19. Denied. Orrstown Bank relied upon representation of ^llfirst Bank, which were related to Orrstown Bank by Teaming. 20. Denied. The allegations in this paragraph are legal conclusions to whit no responsive pleading is required. 21. No response required. 22. Admitted. It is admitted that Orrstown Bank attempts to hold AIIfirst liable for fraud. 23. Neither admitted nor denied. The allegations in this paragraph are legal conclusions to which no responsive pleading is required. 24. Denied. The allegations in this paragraph are legal conclusions to which no responsive pleading is required. 25. No response required. 26. Neither admitted nor denied. The allegations in this paragraph are legal conclusions to which no responsive pleading is required. 27. Denied. Orrstown Bank has suffered damages as a result of Allfirst Bank mispresentations. 28. Admitted. 29. Denied. dishonoring the check. 30. Denied. its check. Orrstown Bank has sustained damages resulting from AIIfirst It is denied that Orrstown Bank improperly stopped payment on 31. Denied. The allegations in this paragraph are legal conclusions to which no responsive pleading is required. 32. No response required. 33. Denied. The allegations in this paragraph are legal conclusions to whict no responsive pleading is required. 34. Neither admitted nor denied. The allegations in this paragraph are lega conclusions to which no responsive pleading is required. 35. Neither admitted nor denied. The allegations in this paragraph are legal conclusions to which no responsive pleading is required. 36. Admitted. It is admitted that Allfirst breached its contract with Teaming b failing to cover all checks written by Teaming on its business account. 37. Denied. The allegations in this paragraph are legal conclusions to which no responsive pleading is required. 38. Denied. The allegations in this paragraph are legal conclusions to which no responsive pleading is required. WHEREFORE, Defendant, Orrstown Bank, respectfully requests that this Court deny Plaintiff's Preliminary Objections to Plaintiffs New Matter and Counter Claim. Respectfully Submitted Ron Tur°, Esqui~,~ 28 South Pitt Street Carlisle, PA 17013 (717) 245-9688 ^ttorney for Orrstown Bank CERTIFICATE OF SERVlCF I hereby certify that I served a true and correct copy of Defendant's Reply to Plaintiff's Preliminary Objections upon Ramsay Whitworth, Esquire, by depositing same in the United States Mail, first class, postage pre-paid on the ~ ~' day of ,2003, from Carlisle, Pennsylvania, addressed as follows: Ramsay M. Whitworth, Esquire Gebhardt & Smith, LLP The World Trade Center 401 East Pratt Street, 9th Floor Baltimore, MD 21202 Ro)h Turo, Esquire 28/South Pitt Street ~ Cjadisle, PA 17013 "-(717) 245-9688 Attorney for Orrstown Bank PRAECIPE FOR LISTING CASE FOR ARGUMENT (Must be typewritten and su~nitted in duplicate) TO THE PROTHONOTARY OF CUMBERLAND COUNTY: Please I i-~t the within matter for the next Ar~t Court. CAPTION OF CASE (entire caption must be stated in full) Allfirst Bank ( Plaintiff ) Orrstown Bank ( Defendant ) No. 03-207 civil Term xl~ 2003 1. State matter to be argued (i.e., plaintiff's motion for new trim], defendant's d~u~£er to ccm~plaint, etc. ): Allfirst's Preliminary Objections to 0rrstown's New Mateer and Counterclaim e Identify counsel whow~]l argue case: (a) for p]mintiff: Ramsay M. Whitworth D~ldress: GEBHARDT & SMITH LLP The World Trade Center, 9th Floor Baltimore, MD 21202 (b) for deferxtant: Ron Turo _~dr~ss: 28 South Pitt Street Carlisle, PA 17013 3. I w~ 11 notify ml I parties in writing within two days that this case has been 1 i mted for ~t. 4. ~t Court Date: Attorney/./f6r Plaintiff ALLFIRST BANK, Plaintiff : IN THE COURT OF COMMON PLEAS : OF CUMBERLAND COUNTY, : PENNSYLVANIA ORRSTOWN BANK Defendant : NO. 03-207 CIVIL TERM IN RE: PLAINTIFF'S PRELIMINARY OBJECTIONS TO DEFENDANT'S NEW MATTER AND COUNTERCLAIM Before HOFFER~ P. J. and HESS~ J. ORDER AND NOW, this .~day of ,2003, upon careful consideration of the plaintiff's Preliminary Objections to the defendant's New Matter and Counterclaim, IT IS ORDERED that the plaintiff's Preliminary Objections are sustained. By the Court, Ramsay M. Whitworth, Esquire Gebhardt & Smith, LLP The World Trade Center 401 East Pratt Street, 9th Floor Baltimore, Md 21202 For Allfirst Bank Ron Turo, Esquire 28 South Pitt Street Carlisle, PA 17013 For Orrstown Bank ALLFIRST BANK, Plaintiff : IN THE COURT OF COMMON PLEAS : OF CUMBERLAND COUNTY, : PENNSYLVANIA ORRSTOWN BANK Defendant : NO. 03-207 CIVIL TERM IN RE: PLAINTIFF'S PRELIMINARY OBJECTIONS TO DEFENDANT'S NEW MATTER AND COUNTERCLAIM Before HOFFER~ P. J. and HESS~ J. HOFFER, P.J.: Before the court are the preliminary objections of the plaintiff, Allfirst Bank, to the New Matter and Counterclaim of the defendant, Orrstown Bank. Allflrst commenced this suit against Orrstown regarding a $25,000 check that Orrstown gave to its vendor, Teaming Associates. Orrstown Bank answered the Complaint and raised a New Matter and Counterclaim, seeking damages for the alleged misrepresentations that were made to Orrstown. Subsequently, AIIfirst raised Preliminary Objections to Orrstown's New Matter and Counterclaim. AIIfirst contends that Orrstown cannot recover from Allflrst for an alleged misrepresentation made by a party other than AIIfirst. FACTS In January 2002, Orrstown Bank entered into a contract with a vendor, Teaming Associates. Orrstown contracted Teaming to provide telephone, billing, audit, and management services to meet the telecommunication needs of Orrstown Bank. Under the contract, Teaming would consolidate Orrstown's telecommunications billings into one bill and then pay the individual bills. On October 15, 2002, Orrstown drew and issued a check in the amount of $25,238.22 to Teaming in payment of services rendered. On October 16, 2002, Teaming deposited this check with Allfirst Bank. The complaint against Orrstown continues with the following allegations: On the same day, Allflrst credited Teaming's account in the amount of the check and forward-presented the check to Orrstown. The check was presented to Orrstown in a cash letter. The cash letter was processed through the Federal Reserve Bank in Philadelphia (FRB). Orrstown received the check on or about October 17, 2002. However, Orrstown did not return the check nor send written notice of dishonor or nonpayment of the check within its "midnight deadline." As a result, AIIfirst claims Orrstown became accountable under U.C.C. 4- 302. On November 5, 2002, Allfirst made a claim of late return with the Federal Reserve Bank, in Philadelphia. Upon receipt of the claim, the FRB credited Allfirst's Reserve Bank in the amount of the check. Orrstown then filed a response on November 16, 2002 to the claim of late return with the Federal Reserve Bank, which then debited Allfirst's Reserve bank account in the amount of the check. In its response to the claim of late return, Orrstown made the blanket assertion that Teaming had defrauded it, and that Teaming had presented other checks to Orrstown that were returned for insufficient funds. Orrstown answered Allfirst's Complaint and raised a New Matter and a Counterclaim, claiming that Allflrst should be held liable for Fraud and Mispresentation based on alleged misrepresentations that were made either by Allfirst to Teaming or by Teaming to Orrstown. Subsequently, Allflrst raised Preliminary Objections to Orrstown's New Matter and Counterclaim, which are before the court today. The alleged facts involving the New Matter and Counterclaim of Orrstown are as follows: In the fall of 2002, Orrstown discovered that Teaming had a cash flow problem and had not paid the Sprint bill that it was under contract to pay on behalf of Orrstown. Teaming assured Orrstown that despite its cash flow problem, AIlfirst had set up a line of credit for Teaming. Allegedly, Teaming was told by Allfirst that the line of credit would cover checks that Teaming wrote. Therefore, Teaming sent a check to Sprint on behalf of Orrstown. However, the check was returned for insufficient funds. Orrstown then agreed to pay Sprint directly and put a stop on the check that it had issued to Teaming. DISCUSSION The plaintiff, AIIfirst, has filed several Preliminary Objections. Allfirst's main Preliminary Objections are as follows: 1. Orrstown cannot state a claim for fraud or misrepresentation based on alleged statements made by Allfirst to Teaming. Orrstown, in its counterclaim, seeks damages for an alleged misrepresentation made by Allfirst to Teaming. Orrstown contends that AIIfirst allegedly misrepresented to Teaming that a line of credit was available to cover the checks written on its business account. Orrstown claims that Teaming relied on this representation when it wrote checks on behalf of Orrstown to Sprint, which ultimately were not honored by AIIfirst. Therefore, Orrstown is attempting to state a claim for fraud which is based on Teaming's reliance on AIIfirst's alleged misrepresentation.1 However, it is well-settled law in Pennsylvania that a "plaintiff cannot state a claim for fraud based on a third party's reliance on a misrepresentation, even when it is made to influence the third party foreseeably to act in a manner detrimental to the plaintiff." Westwood-Booth v. Davey-Lowey, Ltd., 1999 U.S. Dist. LEXIS 4809, '14 (E.D. Pa. 1999) (citing Kurtz v. American Motorists Ins. Co, 1995 U.S. Dist. LEXIS 17417 (E.D. Pa. 1995). ] Teaming's admitted "cash flow problem" may indicate an important reason that Teaming was not joined as an additional defendant in this case. See Defendant's Brief Opposing Plaintiffs Preliminary Objections, page 1. 4 In Westwood-Booth, the agreement under refurbishment of a plaintiff and the defendant entered into an which the defendant would aid in the acquisition and plant owned by the plaintiff. Westwood-Boot___b.h, 1999 WL 219897 at '1. The defendant agreed to provide the recourse guarantee for 10 percent of the costs to acquire and refurbish, so long as the plaintiff obtained the 90 percent subject to guarantee of the United States Economic Development Administration (EDA). The plaintiff received a repayment guarantee from the EDA for $55 million, which was subject to the defendant's final agreement. Id._: at *2. However, before finalizing the plaintiff's application to the EDA, the defendant's finance manager announced that the defendant was withdrawing from its commitment to acquire and refurbish. The reason given by the defendant's finance manager for withdrawing was an underhanded scheme to withdraw from the project so that the defendant could acquire a different company. However, as a result of this scheme, the EDA then also withdrew from the plaintiff's project. In its complaint, the plaintiff suggested that it could state a claim for fraud based on the reliance of the EDA on the misrepresentation. However, the court held that the plaintiff failed to state a cognizable claim for fraud. Id__~. at *4. In its reasoning, the court in Westwood-Booth cited Kurtz v. American Motorists Insurance Co., 1995 WL 695111 (E.D. Pa.). In Kurtz v. American Motorists Insurance Co., 1995 WL 695111 at '1 (E.D. Pa.), the plaintiff bought an insurance policy from AMI, which falsely told AMI that it had issued a formal non-renewal notice to the plaintiff and the reason for non- renewal was a result of the plaintiff's accident record. As a result of AMI's representations, the plaintiff filed a complaint with the Pennsylvania Insurance Department, but it was dismissed because the AMI falsely represented to the Insurance Department that it had sent the plaintiff a non-renewal notice. However, the Insurance Commissioner found that AMI had not sent the plaintiff the notice and that, in not doing so, violated Pennsylvania law. Id__~. The court held that the plaintiff had not stated a cause of action upon which relief may be granted for AMI's representation to the Insurance Department. Id...~. at *4. One of the cases the court relied upon was Ella v. Erie Insurance Exchanqe, 581 A.2d 209 (Pa. Super 1990). In Elia, 581 A.2d 209, 211 (Pa. Super 1990), the plaintiff sued a physician who had been hired by an insurance company to examine the plaintiff. The plaintiff argued that physician's report submitted to the insurance company contained fraudulent statements. Consequently, the plaintiff claimed the insurance company terminated his benefit payments as a result of the report. Elia, 581 A.2d at 211. The court in Elia found that the plaintiff did not state a cause of action against the physician for fraud because the physician's examination was only done to enable the insurance company to better evaluate the plaintiff, and was not performed to treat the plaintiff, nor was it performed to induce the plaintiff to act. Id~ at 212. Similarly, in the present case, AIIfirst's alleged misrepresentation was only given to Teaming in providing Teaming a line of credit, and was not made by Allfirst to induce Orrstown to act. It may have been passed onto Orrstown by Teaming, but the claim is not against Teaming. It is against Allflrst, who cannot be legally responsible for an alleged misrepresentation made to a third party. These cases are analogous to the present case. In each case, a misrepresentation was made to a third party with the intent to influence the third party, or with the foreseeable consequence that the third party's action would be detrimental to the plaintiff. In each similar case, the court found that the plaintiff had not stated a cause of action for fraudulent misrepresentation. Therefore Orrstown has not stated a cause of action upon which relief may be granted. 2. Orrstown has not suffered any damages. In order to allege a cause of action in fraud, a plaintiff must prove damages. Scaife Co. v. Rockwell-Standard Corp,, 285 A.2d 451,454 (Pa. 1971). However, Orrstown has not suffered damages as a result of Allfirst's alleged misrepresentations because Orrstown alleges that it put a stop on the check that it had paid to Teaming. Subsequently, Orrstown paid Sprint the amounts that it already owned Sprint. As a result, Orrstown has not sustained any damages by issuing a check to Teaming which it ultimately dishonored. Having no damages, Orrstown is either right or wrong in its actions, but there is no more to the case than that. PRAECIPE FOR LISTING CASE FOR ARGUMENT (Bt be typewritten and su~mtitted :in duplicate) TO THE PROTHONOTARY OF CUMBERLAND cOUNTY: Please list the within matter for the next Argument Couz-t. CAPTION OF CASE (entire caption must be stated in Allfirst Bank ( pi a 4 ntiff ) Orrstown Bank ( De fer~mnt ) NO. 03-207 civil Term x19 2003 1. State ~atter to be argued (i.e., plaintiff's motion for new tr~m], defendan~ de~--rer to cc~]a~nt, etc.): Allfirst's Motion for Judgment on the Pleadings and Proposed Court Order Identify counsel whow~ll argue c~se: (a) for p]m~ntiff: Ramsay M. Whitworth ~]d~ess: GEBHARDT & SMITH LLP The World Trade Center, 9th Floor Baltimore, MD 21202 (b) for defendant: Ron Turo ~r~S: 28 South Pitt Street Carlisle, PA 17013 3. I wiL1 notify all parties in writingwithin t~dmys that this case has been listed for mt. 4. ~t Court Date: IN THE COURT OF COMMON PLEAS FOR CUMBERLAND COUNTY, PENNSYLVANIA ALLFIRST BANK * Plaintiff, * NO. 03-207 CIVIL TERM v. * (Preliminary Objections previously ruled on by Judge George E. Hoffer) ORRSTOWN BANK * Defendant. * ALLFIRST'S MOTION FOR JUDGMENT ON THE PLEADINGS Plaintiff, Allfirst Bank ("AIIfirst"), by its undersigned counsel, moves pursuant to Pa. R.C.P. 1034, for judgment on the pleadings in its favor and against the Defendant, Orrstown Bank ("Orrstown"), and in support states as follows: I. INTRODUCTION This is a case involving the obligations that banks owe one another when presenting and paying checks. In direct violation of the Midnight Deadline Rule and with total disregard for its obligations under Article 4 of the UCC, Orrstown returned a check to AIIfirst fifteen days after it was presented to Orrstown. Section 4302 of the UCC explicitly states that a bank that fails to return a check by its midnight deadline is strictly liable on the check. The reason for this rule is to promote certainty in commercial paper transactions and to punish banks that do not fulfill their statutory obligations. Orrstown has blatantly violated its obligations and should, therefore, be held strictly liable for the amount of the check. As discussed below, there are no disputes of material fact and Allfirst is entitled to judgment as a matter of law. II. UNDISPUTED FACTS AS ADMITTED IN THE PLEADINGS On October 15, 2002, Orrstown drew and issued a check in the amount of $25,238.22 to one of its vendors, Teaming Associates, in payment of services rendered (the "Check"). On October 16, 2002, Teaming deposited the Check with AIIfirst. On the same day, Allflrst credited Teaming's account in the amount of the Check and forward- presented the Check to Orrstown. The Check was presented to Orrstown in a cash letter. The cash letter was processed through the Federal Rese~¥e Bank in Philadelphia (FRB). Orrstown received the Check on or about October 17, 2002. However, Orrstown did not return the Check until November 1,2002, fifteen days after it had received the Check. Orrstown has presented several excuses for returning the Check? None of these excuses, however, address Orrstown's failure to meet its midnight deadline. In any event, the only material facts relevant to Orrstown's liability on the Check pursuant to Section 4302 are these: (1) Orrstown drew and issued the Check on October 15, 2002; (2) Teaming deposited the Check on October 16, 2002; (3) Orrstown received the Check on October 17, 2002; and (4) Orrstown did not return the check until November 1, 2002, fifteen days after it had received the Check. As discussed below, Pursuant to 13 Pa. C.S.A. § 4302, Orrstown is strictly liable for the Check for failing to return the check within its Midnight Deadline. ] Orrstown's New Matter and Counter-claim against Allflrst for fraud was dismissed by this Court on December 30, 2003 for failing ilo state a claim upon which relief can be granted. III. DISCUSSION A. Standard of Review. Where the facts in a case are not in dispute and the only question to be decided is a question of law, a motion for judgment on the pleadings is proper. Richards v. Schuylkill County, 399 Pa. 552, 161 A.2d 26 (1960). A motion for judgment on the pleadings is similar to a demurrer, it may be entered where there are nc, disputed issues of fact and the moving party is entitled to judgment as a matter of law. Booker v. Olczak, 797 A.2d 342 (Pa. Super. 2002). Judgment on the pleadings should be granted in those cases where the moving party's right to relief is certain. Pilotti v. Mobil Oil Corp., 388 Pa. Super. 514, 565 A.2d 1227 (1989).. When a complaint sufficiently pleads a cause of action and the answer fails to present a meritorious legal defense, judgment for the plaintiff should be entered on the pleadings in the interest of expediting justice. Gantman v. Paul, 203 Pa. Super. 158, 199 A.2d 519 (1964); See also 380 Pa. 512, 112 A.2d 340 (same). The decision to grant a motion for judgment on the pleadings lies within the soL, nd province of the trial court. Conrad v. Bundy, 777 A.2d 108 (Pa. Super. 2001) B. Orrstown violated the Midnight Deadline Rule. By failing to return the Check until fifteen days after it was received, Orrstown violated the Midnight Deadline Rule. Pursuant to the Uniform Commercial Code, Orrstown is, therefore, strictly liable for the Check. Section 4302 of the Uniform Commercial Code provides that a payor bank must pay, return or dishonor' a check within the midnight deadline following presentment to or receipt by the bank. 13 Pa.C.S.A. § 4302(1 )(2004); Chrysler Credit Corp. v. First National Bank and Trust Co. of Washington, 746 F.2d 200, 203 (3rd Cir. 1984). Section 4302 provides, in pertinent part: If an item is presented to and received by a payor bank the bank is accountable for the amount of: (1) a demand item.., if the bank, in any case in which it is not also the depositary bank, retains the item beyond midnight of the banking day of receipt without settling for it or, whether or not it is also the depositary bank, does not pay or return the item or send notice of dishonor until after its midnight deadline. 13 Pa.C.S.A. § 4302 (2004). The Code defines a bank's midnight deadline as "midnight on its next banking day following the banking day on which it receives the relevant item." 13 Pa.C.S.A. § 1404(a). See also, Chrysler, 746 F.2d at 203. In this case, Orrstown received the Check on Thursday, October 17, 2002. Its midnight deadline was, therefore, midnight on Friday, October 18, 2002. Orrstown did not return the item until November 1, 2002. Therefore, Orrstown unquestionably violated the Midnight Deadline Rule and is liable for the amount of the Check. See Hanna v. First Nat. Bank of Rochester, 637 N.Y.S.2d 953, 957, (citing UCC 4-212, cmt. 1 )("The midnight deadline - requiring dishonor or return of the item by the payor bank by midnight of the next day - results in final payment of the item 'simply with the lapse of time.'") C. Orrstown is strictly liable for the amount of the Check. The Uniform Commercial Code holds a bank strictly liable for failing to meet its midnight deadline. Third Century Recycling,/nc. v. Bank of Baroda, 704 F.Supp. 417, 419 (S.D.N.Y. 1989). Under section 4302, a payor bank becomes liable "to the payee of a check for the face amount of the check, plus any actual damages suffered, if the bank fails 4 to return or pay the check before its midnight deadline." Chew-BittelAssociates,/nc. v. Crusader Savings Bank, 430 Pa. Super. 631,637,635 A.2d 653, 656 (1993); See also National Check v. First Fidelity Bank, 442 Pa. Super. 211,215, 658 A.2d 1375, 1378 (1995)(same). Orrstown failed to meet its midnight deadline and is, therefore, strictly liable to AIIfirst for the amount of the Check. Third Century, 704 F.Supp. at 419 ("If, for any reason, the bank fails to make this firm [midnight] deadline, the bank is liable for the face amount of the check."). D. The policy underlying the Midnight Deadline Rule requires Orrstown to be held strictly liable for the amount of the Check, Section 4302 of the UCC is "intended to sanction institutions failing to meet the requirements for posting and dishonoring items." Hanna, 637 N.Y.S.2d at 957. It does so by "imposing liability for the amount of an item as a penalty upon a payor bank that fails to comply with ... the midnight requirements." Id. The heavy burden Section 4302 imposes on payor banks "serves important commercial purposes: it 'expedites the collection process by motivating banks to process instruments quickly, and it firms up the provisional credits received by each bank in the collection chain, thereby supplying a key element of certainty in commercial paper transactions." Id. (quoting SOS Oil Corp. v. Norstar Bank, 563 N.E.2d. 258, 76 N.Y.2d 561,567). The Superior Court of Pennsylvania has set forth the rationale for imposing strict liability on a payor bank who fails to meet its midnight deadline: Allowing a bank to retain a check for an indefinite period without incurring liability would hamper normal commeroial practices, for a payee would never be certain that the funds represented by the check were available for use. As one court has 5 observed, "failure of a bank] to meet the midnight deadline authorizes the person presenting the check to assume that it has been honored and will be paid. Banking practices require prompt settlement of such items because of the chain of credit dependent thereon." Chew-BittelAssociates, Inc. v. CrusaderSavings Bank, 43,0 Pa. Super. 631,637,635 A.2d 653, 656 (1993)(citations omitted). In the context of the Midnight Deadline Rule, it is "important to keep in mind that the UCC is designed to banish from the law governing timely return of dishonored checks such fact-based theories of liability and defense as negligence., fault, estoppel, intentional tort, or illegality of the underlying transaction in the overriding public interest of promulgating the integrity, certainty, and finality of commercial transactions." Chicago Title Ins. Co. v. California Canadian Bank, 2 CaI.Rptr.2d 422, 428, 1 Cal. App.4th 798, 811 (1992). For these reasons, '~he UCC establishes a more mechanical system, characterized by certainty and finality, and based only upon facts unlikely to be disputed in litigation - such as the date stamped on a check upon its receipt, the date it was returned as dishonored, or the fact of whether the check was not readable by computer c,r was presented posthumously for payment. "Id. As stated by the court in Chicago Title, "The plain fact is that in the modern world of check collection a clear cut, mechanical rule of check acceptance is necessary." Id. (quoting Huntmix, Inc. v. Bank of America, 184 CaI.Rptr. 551,562,134 Cal. App.3d 347, 359 (1982)). IV. CONCLUSION For all the foregoing reasons, AIIfirst Bank respectfully requests this Court grant its Motion for Judgment on the Pleadings and enter judgment in favor of AIIfirst Bank and against Orrstown Bank. Date: April 14, 2004 ~7~F~ ,'/~-~~ R .e.sPectfl~ubmitted, Ramsay M. Whitworth Pennsylvania Bar No. 85208 Gebhardt & Smith LLP 401 E. Pratt Street, 9th Floor Baltimore, Maryland 21202 (410) 385-5101 Attorneys for Plaintiff, AIIfirst Bank CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the foregoing Motion for Judgment on the Pleadings was mailed, first class, postage pre-paid on this//'/'//'day of April, 2004 to.' Ron Turo, Esquire, 28 South Pitt Street, Carlis~7013, a~torney for Orrstown Bank. Ra s Whitworth ~ ALLFiRST BANK Plaintiff, V, ORRSTOWN BANK Defendant. IN THE COURT OF COMMON PLEAS FOR CUMBERLAND COUNTY, PENNSYLVANIA * NO. 03-2:07 CIVIL TERM ORDER Upon consideration of Plaintiff, AIIfirst Bank's, Motion for Judgment on the Pleadings, and any/no response thereto, and for good cause shown, it is this day of ,2004, hereby ORDERED that Plaintiff's Motion for Judgment on the Pleadings is GRANTED; and it is further, ORDERED that Judgment is hereby entered in favor of AIIfirst Bank and against Orrstown Bank in the amount of $25,238.22 plus interest at the legal rate of __%, and court costs in the amount of $. Judge, Court of Common Pleas for Cumberland County, Pennsylvania ALLFIRST BANK, PLAINTIFF IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA ORRSTOWN BANK, DEFENDANT : 03-0207 CIVIL TERM IN RE: MOTION OF PLAINTIFF FOR JUDGMENT ON THE PLEADING,~ BEFORE BAYLEY~J. ORDER OFCOURT AND NOW, this ~) dayofJune, 2004: (1) The motion of plaintiff, AIIfirst Bank, for judgment on the pleadings against defendant, Orrstown Bank, IS GRANTED. (2) Judgment is entered in favor of plaintiff against defendant in the amount of Ramsay M. Whitworth, Esquire For Plaintiff $25,238.22 plus legal interest from October 17, 200Z/~  ,~y the 7 Edgar B. Ron Turo, Esquire For Defendant :sal ALLFIRST BANK, PLAINTIFF : IN THE COUF;',T OF COMMON PLEAS OF : CUMBERLAND COUNTY, PENNSYLVANIA ORRSTOWN BANK, DEFENDANT : 03-0207 CIVIL TERM IN RE: MOTION OF PLAINTIFF FOR JUDGMENT ON THE PLEADINGff BEFORE BAYLEY. J. OPINION AND ORDER OF COURT Bayley, J., June 15, 2004:.. On January 4, 2003, plaintiff, AIIfirst Bank, filed a complaint against defendant, Orrstown Bank. Allflrst alleges that on October 15, 2002, Orrstown drew and issued a check for $25,238.22 to Teaming Associates, Inc. On October 16, 2002, Teaming deposited the check in its account with Allfirst. The check was presented to Orrstown in a cash letter that was processed through a Federal Reserve Bank in Philadelphia. The check was received by Orrstown on October 17, 2002. On Novembe[ 1,2002, Orrstown returned the check as dishonored to Allfirst. These allegations are admitted in Orrstown's answer to the complaint. Allfirst filed a motion for judgment on the pleadings 'which was briefed and argued on June 9, 2004. It claims that Orrstown is liable to it for $25,238.22 pursuant to the Uniform Commercial Code at 13 Pa.C.$. Section 4302(a)(1 ), which provides: Responsibility of payor bank for late return of item (a) General rule.--If an item is presented to and received by a payor bank the bank is accountable for the amount of: (1) a demand item, other than a documentary draft, whether 03-0207 CIVIL TERM properly payable or not, if the bank, in any case in which it is not also the depositary bank, retains the item beyond midnight of the banking day of receipt without settling for it or, whether or not it is also the depositary bank, does not pay or return the item or send notice of dishonor until after its midnight deadline .... (Emphasis added.) Section 1404(a) defines a bank's midnight deadline as "midnight on its next banking day following the banking day on which it receives the relevant item." In Chew. Bittel Associates, Inc. v. Crusader Savings Bank, 430 Pa. Super. 631 (1993), the Superior Court of Pennsylvania set forth the rational for the midnight deadline: Allowing a bank to retain a check for an indefinite period without incurring liability would hamper normal commercial practices, for a payee would never be certain that the funds represented by the check were available for use. As one court has observed, "failure [of a bank] to meet the midnight deadline authorizes the person presenting the check to assume that it has been honored and will be paid. Banking practices require prompt settlement of such items because of the chain of credit dependent thereon." (Citations omitted.) As admitted by Orrstown, it was November 1, 2002, that it returned to Allfirst as dishonored the $25,238.22 check it received on October 17, 2002. Thus, it did not meet the midnight deadline in Section 4302(a)(1). Notwithstanding, Orrstown maintains it has asserted a defense of fraud under Section 4302(b) which rises factual issues that precludes entry of a judgment on the pleadings. Judgment on the pleadings "is only appropriate where no material facts remain in dispute... [and] the moving party's right to prevail is so clear that a trial would be a fruitless exercise .... "Williams v, Lewis, 319 Pa. Super. 552 (1983). Section 4302(b) of the UCC provides: (b) Liability of payor bank subject to certain defenses.--The liability of a payor bank to pay an item pun~uant to subsection (a) is -2- 03-0207 CIVIL TERM subject to defenses based on breach of a presentment warranty (section 4208) or proof that the person seeking enforcement of the liability presented or transferred the item for the purpose of defrauding the payor bank. (Emphasis added.) Pursuant to Pa. Rule of Civil Procedure 1030, Orrstown filed new matter to AIIfirst's complaint which alleged: 21. Teaming Associates, Inc., hereinafter 'Team'ng," was a Pennsylvania Corporation that entered into a contract with Orrstown Bank in January 2002. 22. The contract between Teaming and Orrstown Bank involved Teaming providing telephone services, billing services, audit services and management services to Orrstown Bank for its telecommunications needs. 23. As part of its contract, Teaming would consolidate all Orrstown's telecommunications billings into one (1) bill, pay the bills, thus receiving volume discounts and charge for their professional services after the payment of all bills. 24. In approximately August 2002, Orrstown Bank became aware that certain communications services had been terminated by its primary carrier, Sprint, when certain security phone liines were disconnected at a Branch Office, thus causing the office to be without security for a period of time. 25. Upon discovery that the phone services had been terminated, Orrstown Bank promptly made contact with Sprint and determined that the last several bills had not been paid by Teaming Associates. 26. Immediately upon receipt of this information, Orrstown Bank representatives met with Teaming and determined that approximately $25,000 in past due bills had not been paid. 27. Teaming indicated to Orrstown Bank that they had experienced a cash flow problem and that as a result of this, they met with their bank, Plaintiff Allfirst Bank herein, which had set up a line of credit for them, allowing them to make payments on these bills. 28. Teaming was advised by AIIfirst that any checks that they wrote as part of their ongoing business operations would be covered by AIIfirst on a line of credit, even if funds were not directly and immediately available to Teaming to cover these checks. 29. Teaming Associates and Orrstown Bank, relying on AIIfirst's representations, did write checks to Sprint to pay the outstanding obligations on behalf of Teaming's customer, Orrstown Bank. -3- 03-0207 CIVIL TERM 30. Teaming, relying on these representations from AIIfirst Bank, sent a check to Sprint to cover the bills, which checks were not covered by Ail first. 31. Teaming Associates later discovered that Allfirst Bank would sweep all of Teaming's accounts each day, thus causing the checks written to Sprint, on and for the interest of Orrstown Bank, to be returned as insufficient funds and unpaid. 32. When this continued for a period of time, Sprint contacted Orrstown Bank and again indicated that their bills had not been paid and Orrstown agreed to pay Spdnt approximately $25,000 to cover the outstanding indebtedness. At the same time, having just issued a check to Teaming Associates, the check at issue in this lawsuit, Orrstown Bank returned the check due to the failure of AIIfirst Bank to cover the same, even though it had provided positive assurances to Teaming Associates and ultimately to Orrstown Bank, that Teaming's checks would be honored. 33. As a direct and proximate result of Allfirst's fraud and misrepresentations to its customer, Teaming, Orrstown Bank has suffered the loss of $25,000 in that AIlfirst has caused Orrstown Bank to not only pay Sprint $25,000, but is attempting, through this lawsuit, to recover the same check owed to Teaming Associates in the amount of $25,000 thus causing a double payment by Orrstown Bank on its indebtedness to Sprint. 34. The misrepresentations made hy Allfirst to its customer, Teaming, was the sole and proximate cause of this loss to Orrstown Bank. (Emphasis added.) Allfirst filed preliminary objections to this new matter as well as a counterclaim. It maintained that Orrstown failed to state a valid claim against it for fraud. On December 30, 2003, the relief was granted in an order, supported by a written opinion by Hoffer, P.J., for a court en banc with Hess, J. The court concluded that Orrstown did not state a claim for fraud, stating: [A]llfirst's alleged misrepresentation was only given to Teaming in providing Teaming a line of credit and was nol: made by AIIfirst to induce Orrstown to act. It may have been passed onlto Orrstown by Teaming, but 03-0207 CIVIL TERM the claim is not against Teaming. It is against AIIfirst, who cannot be legally responsible for an alleged misrepresentation made to the third- party. In its brief Orrstown seeks to revisit that decision arguing that it was wrongly decided under Pennsylvania law. Although in a different posture we are presented with the same question as the court en banc because if Orrstown has not set forth a claim of fraud against AIIfirst it has no arguable defense to AIIfirst's claim. Our review of the coordinate jurisdiction rule as analyzed in Gerrow v. John Rowle & Sons, 813 A.2d 778 (Pa. 2002), satisfies us that we should not consider overruling the order of the court en banc on December 30, 2003. Therefore, Orrstown having no defense of fraud under Section 4302(b) of the Uniform Commemial Code, Allfirst ils entitled to judgment on the pleadings under Section 4302(a)(1). ORDER OF COURT AND NOW, this J~"~' day of June, 2004: (1) The motion of plaintiff, AIIfirst Bank, for judgment on the pleadings against defendant, Orrstown Bank, IS GRANTED. (2) Judgment is entered in favor of plaintiff against defendant in the amount of $25,238.22 plus legal interest from October 17, 2.00.2. By the'Court, Edgar B. Bayley, J. ~,,~ -5- 03-0207 CIVIL TERM Ramsay M. Whitworth, Esquire For Plaintiff Ron Turo, Esquire For Defendant :sal -6- IN THE COURT OF COMMON PLEAS FOR CUMBERLAND COUNTY, PENNSYLVANIA ALLFIRST BANK Plaintiff, V. ORRSTOWN BANK Defendant. * NO. 03-207 PR~EClPE FOR ENTRY OF JUDGMENT CIVIL TERM The Plaintiff, AIIfirst Bank, requests pursuant to Pennsylvania Rule 227.4, the entry of judgment upon the decision of the judge in favor of AIIfirst Bank and against the Defendant, Orrstown Bank in the amount of $25, 238.22 plus Pre-Judgment interest from October 17, 2002. Respectfully submitted, Pennsylvania Bar No. 85208 Gebhardt & Smith LLP The World Trade Center 401 E. Pratt Street, 9th Floor Baltimore, Maryland 21202 (410) 385-5053 Counsel for Plaintiff/Judgment Creditor, AIIfirst Bank IN THE COURT OF COMMON PLEAS FOR CUMBERLAND COUNTY, PENNSYLVANIA ALLFIRST BANK Plaintiff, NO. 03-207 CIVIL TERM ORRSTOWN BANK Defendant. PRAECIPE FOR WRIT OF EXECUTION To the Prothonotary: Please issue writ of execution in the above matter, (1) (2) (3) directed to the sheriff of Cumberland County; against Orrstown Bank; and index this writ (a) against Orrstown Bank, defendant. Amount owed under the judgment: (4) Original Amount of Judgment Entered by This Court on June 15, 2004: Plus Pre-Judgment Interest from October 17, 2002: $25,238.22 $ 2,580,84 Interest from June 15, 2004: $ 68.59 Total amount owed under Judgment as of June 30, 2004: $27,887.65 Respectfully submitted, Ramsay M. vvmtworzn Pennsylvania Bar No. 85208 Gebhardt & Smith LLP The World Trade Center 401 E. Pratt Street, 9th Floor Baltimore, Maryland 21202 (410) 385-5053 Counsel for Plaintiff/Judgment Creditor, Allfirst Bank IN THE COURT OF COMMON PLEAS FOR CUMBERLAND COUNTY, PENNSYLVANIA ALLFIRST BANK Plaintiff, NO. 03-207 CIVIL TERM ORRSTOWN BANK Defendant. INSTRUCTIONS TO SHERIFF REGARDING WRIT OF EXECUTION To: Sheriff, Cumberland County The Defendant/Judgment debtor is a commercial bank that has business personal property located in Cumberland County. The property owned by the Defendant within Cumberland County includes the following: All business personal property located at 121 Lurgan Avenue, Shippensburg, Pennsylvania, 17257, including cash sufficient to satisfy the judgment. All business personal property located at the Orrstown Bank branch situated at 22 S. Hanover Street, Carlisle, Pennsylvania, 17013, including cash sufficient to satisfy the judgment. Please Levy upon, seize and take into your possession cash sufficient to satisfy the money judgment. If you have any questions or concerns please contact me at the number listed below. Ramsay M. Whitworth Pennsylvania Bar No. 85208 Gebhardt & Smith LLP The World Trade Center 401 E. Pratt Street, 9th Floor Baltimore, Maryland 21202 (410) 385-5101 Counsel for Plaintiff/Judgment Creditor, Allfirst Bank · - WRIT OF EXECUTION and/or ATTACHMENT COMMONWEALTH OF PENNSYLVANIA) NO 03-207 Civil COUNTY OF CUMBERLAND) CIVIL ACTION - LAW TO THE SHERIFF OF CUMBER.LAND COUNTY: To satisfy the debt, interest and costs due ALLFIRST BANK, Plaintiff (s) From ORRSTOWN BANK, 121 LURGAN AVENUE, SHIPENSBURG, PA AND 22 S. HANOVER STREET, CARLISLE, PA 17013 (1) You are directed to levy upon the property oftha defendant (s)and to sell ALL BUSINESS PERSONAL PROPERTY LOCATED AT 121 LURGAN AVENUE, SHIPPENSUBRG, PA INCLUDING CASH SUFFICIENT TO SATISFY THE JUDGEMENT - ALL BUSINESS PERSONAL PROPERTY LOCATED AT ORRSTOWN BANK BRANCH SITUATED AT 22 S, HANOVER STREET, CARLISLE, PA 17013 INCLUDING CASH SUFFICIENT TO SATISFY THE JUDGMENT. (2) You are also cFarected to attach the property of the defendant(s) not levied upon in the possession of GARNISHEE(S) as follows: and to notify the ganfxshee(s) that: (a) an attachment has been issued; (b) the garrfishee(s) is enjoined from paying any debt to or for the account of the defendant (s) and from delivering any property of the defendant (s) or otherwise disposing thereof; (3) If property of the defendant(s) not Ievied upon an subject to attachment is found in the possession of anyone other than a named garnishee, you are directed to notify him/her that he/she has been added as a garff~shee and is enjoined as above stated. Amount Due $25,238.22 L.L. $.50 Interest PRE-JUDGMENT INTEREST FROM 10/17/02 - $2,580.84 -- INTEREST FROM 6/15/04 - $68.59 Atty's Comm % Atty Paid $113.45 Plaintiff Paid Date: JULY 13, 2004 (Seal) Due Prothy Other Costs $1.00 REQUESTING PARTY: Name RAMSAY M. WHITWORTH, ESQUIRE Address: GEBHARDT & SMITH LLP THE WORLD TRADE CENTER 401 E. PRATT STREET, 9TM FLOOR BALTIMORE, MARYLAND 21202 Attorney for: PLAINTIFF CURTIS R. LONG Prothon~.z~ ~B¥: ~-~5~,x ~ DepuW Telephone: 410-385-5053 Supreme Court ID No. 85208