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HomeMy WebLinkAbout03-0834SMITH LAND & IMPROVEMENT CORPORATION, 6375 Mercury Drive Mechanicsburg, PA 17055 Plaintiffs V. LAMAR L. LIGHT, 1528 High Meadow Lane Mechanicsburg, PA 17055 Defendant IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION LAW NO. Q3 - Pay Gi u L : JURY TRIAL DEMANDED PRAECIPE FOR WRIT OF SUMMONS TO THE PROTHONOTARY OF CUMBERLAND COUNTY: Please issue a Writ of Summons in the above-captioned action. X Writ of Summons shall be issued and forwarded to Attorney. Dean F. Piermattei RHOADS & SINON LLP P.O. Box 1146 Harrisburg, PA 17108-1146 (717) 231-6635 orney I.D. No. 53847 Date: February 24, 2003 WRIT OF SUMMONS TO THE ABOVE NAMED DEFENDANT YOU ARE NOTIFIED THAT THE ABOVE-NAMED PLAINTIFF HAS COMMENCED AN ACTION AGAINST YOU. Prothonotary Date: r 3 O 462078.1 Dean F. Piennattei, Esquire Attorney I.D. No. 53847 RHOADS & SINON LLP One South Market Square, 12th Floor P.O. Box 1146 Harrisburg, PA 17108-1146 (717) 233-5731 Attorneys for Plaintiff SMITH LAND & IMPROVEMENT IN THE COURT OF COMMON PLEAS CORPORATION, CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff No. 03-834-Civil Term V. CIVIL ACTION - LAW LAMAR L. LIGHT, Defendant PRAECIPE TO REINSTATE WRIT OF SUMMONS To: The Prothonotary Kindly reinstate the Writ of Summons against the above Defendant, which was originally issued on February 25, 2003. Respectfully submitted, Date: March 24, 2003 RHOADS & SSIINON LLP On6 South Market Square ? k3. Box 1146 41arrisburg, PA 17108-1146 (717) 233•-5731 Attorneys for Plaintiff 465820.1 C} a.'.' ?._3 {- c_, Z} ? ?=: f'?"1 ! "' ?'' .. r' .. __ -? - - ?- ?. _, J \ ?. l 1 :,") SMITH LAND & IMPROVEMENT CORPORATION, Plaintiff V. LAMAR L. LIGHT, Defendant IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA No. 03-834-Civil Term CIVIL ACTION - LAW ACCEPTANCE OF SERVICE I, James R. Clippinger, Esquire accept service of Smith Land & Improvement Corporation's Praecipe for Writ of Summons in this matter on behalf of Lamar L. Light, in my capacity as counsel for Lamar L. Light and certify that I am authorized to do so. Date Qas R. Cli Esquire well & K North Front Street Harrisburg, PA 17110-1533 465763.1 r rr SMITH LAND & IMPROVEMENT CORPORATION, Plaintiff V. LAMAR LIGHT, Defendant IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA NO. 03-834 Civil Term CIVIL ACTION -LAW 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 and Notice are served, by entering a written appearance personally or by attorney and 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 COURT ADMINISTRATOR Courthouse, Fourth Floor Carlisle, PA 17013 (717) 240-6200 491997.1 SMITH LAND & IMPROVEMENT : IN THE COURT OF COMMON PLEAS OF CORPORATION, : CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff V. . NO. 03-834 Civil Term LAMAR LIGHT, Defendant CIVIL ACTION -LAW AVISO USTED HA SIDE DEMANDADO/A EN CORT'E. Si usted desea defenderse de las demandas que se presentan mas adelante en las siguientes paginas, debe tomar accion dentro de los proximos veinte (20) dias despues de la notificacion de esta Demanda y Aviso radicando personalmente o por medio de un abogado una comparecencia escrita y radicando en la Corte por escrito sus defensas de, y objecciones a, las demandas presentadas aqui en contra suya. Se le advierte de que si usted falla de tomar accion como se describe anteriormente, el caso puede proceder sin usted y un fallo por cualquier suma de dinero reclamada en la demanda o cualquier otra reclamacion o remedio solicitado por el demandante puede ser dictado en contra suya por la Corte sin mas aviso adicional. Usted puede perder dinero o propiedad u otros derechos importantes para usted. USTED DEBE LLEVAR ESTE DOCUMENTO A SU ABOGADO INMEDIATAMENTE. SI USTED NO TIENE UN ABOGADO O NO PUEDE PAGARLE A UNO, LLAME O VAYA A LA SIGUIENTE OFICINA PARA AVERIGUAR DONDE PUEDE ENCONTRAR ASISTENCIA LEGAL. CUMBERLAND COUNTY COURT ADMINISTRATOR Courthouse, Fourth Floor Carlisle, PA 17013 (717) 240-6200 SMITH LAND & IMPROVEMENT CORPORATION Plaintiff V. IN THE COURT OF COMMON PLEAS CUMBERLAND COURT-PENNSYLVANIA NO. 03-834-Civil Term LAMAR L. LIGHT Defendant CIVIL ACTION - LAW COMPLAINT NOW COMES Smith Land & Improvement Corporation ("Smith Land") through its attorneys Rhoads & Sinon LLP and files this Complaint and in support thereof avers the following: 1. At all relevant times, Lamar Light ("Light') was an adult individual who resides at 1528 High Meadow Lane, Mechanicsburg, Lower Allen Township, Cumberland County, Pennsylvania. 2. Smith Land is a Delaware Corporation which has a principal place of business at 2010 State Road, Camp Hill, Cumberland County, Pennsylvania. 3. At all relevant times, L.B. Smith, Inc. ("L.B. Smith") was in the business of selling, leasing and servicing construction equipment, including but not limited to heavy equipment, road building equipment and construction equipment. 4. At all relevant times, L.B. Smith was a who ly owned subsidiary of Smith Land. 5. From January 29, 1986 through January 26, 1989, Light was the Executive Vice President and Chief Operating Officer of L.B. Smith and from January 27, 1989 476792.1 through the end of 2000, Light was the President and Chief Operating Officer of L. B. Smith. Furthermore, at all relevant times, Light was on the Board of Directors for Smith Land and L. B. Smith. 6. As the President and Chief Operating Officer ("COO") of L.B. Smith, Light was responsible for L.B. Smith's day-to-day operations including but not limited to establishing and overseeing the implementation of company policy governing the day-to- day operations including sales, procurement and the leasing of L. B Smith equipment. Furthermore, Light was responsible for valuing inventory, establishing proper policies and procedures for all operations of the company. 7. At all relevant times as the President and COO for L.B. Smith, Light had a duty and responsibility to exercise reasonable judgment and act in the best interest of the company. 8. At all relevant times, Light owned a significant amount of common stock in Smith Land. The stock was subject to an Amended Stockholder's Agreement which obligated Smith Land to repurchase the stock at a price per share that was based upon the book value of Smith Land, which included its subsidiaries. L. B. Smith was the largest single subsidiary which affected Smith Land's book value. COUNTI BREACH OF FIDUCIARY DUTY Overvalued Inventories 9. Smith Land incorporates by reference paragraphs 1 through 8 above. 10. As the President and COO, Light was involved in establishing policies, practices and procedures for ordering and valuing all of L. B. Smith's inventory including the used equipment available for leasing. -2- It. Light would frequently review the book valuation of the used inventory to ensure that these values were accurate and exceed net realizable value for these pieces of equipment. 12. Light was also responsible for establishing the level of inventory for both new and used equipment. In annual meetings with the L. B. Smith auditors Light maintained that book values of the equipment reflected fair market value and discouraged its auditors from seeking independent determinations of the fair market value. 13. After Light's departure from L. B. Smith, it was discovered that Light's method for valuing the used inventory was erroneous in that it resulted in a valuation which was significantly higher than the market value of the equipment. Furthermore it was discovered that L. B. Smith was maintaining excessively high inventories. 14. Light's act of maintaining excessively high. used equipment inventory at inflated book values caused L. B. Smith to realize significant financial losses when it sold the equipment. Additionally, had the auditors been aware that the book value for the equipment exceeded its fair market value, they would have required the equipment to be written down to fair market value thus significantly lowering the book value of Smith Land. These losses and write downs were recognized after Light departed from L. B. Smith and the book value of Smith Land for purposes of establishing a repurchase price pursuant to the Amended Stockholder Agreement was fixed. 15. Light breached his fiduciary duty owed to L.B. Smith by failing to exercise reasonable skill, diligence and the ordinary prudence someone in his position would normally exercise when establishing the valuation for the L. B. Smith inventory. Furthermore, it is believed that Light failed to act in good faith and in the manner which -3- would reasonably be in the best interest of L.B. Smith when Light instituted a course of conduct which resulted in excessively high inventories which were overvalued. 16. It is believed and therefore averred that Light's actions as set forth above were part of a pattern of conduct designed to overstate the book value for L.B. Smith and ultimately for Smith Land with the goal of requiring Smith Land to pay Light a higher purchase for the Smith Land stock held by Light. Failure to Recognize The Cost Associated With Equipment Sales 17. As a part of his responsibilities for overseeing and managing the sales for L.B. Smith, Light used an account known as the "3332 Account" which was used for the payment of last minute costs associated with the sale of L.B. Smith equipment and other unrecorded items. 18. At all relevant times, Light's son-in-law was a Vice President for L. B. Smith and like Light, used the 3332 Account to defer cost associated with L.B.Smith sales. 19. However, Light failed to apply proper procedures to clear the 3332 Account by accounting for the expenses in this account. 20. Over time, the cost accumulated in Light's 3332 Account, approximated $1.5 million much of which could not be attributed to the L. B. Smith sales. 21. The result of Light's failure to properly account for these expenses allowed Light to falsely inflate the profits of L. B. Smith. 22. Light breached his fiduciary duty owed to L.B. Smith by failing to exercise reasonable skill, diligence and ordinary prudence as would a person in his, position and by failing to take the necessary steps to attribute the cost contained in the -4- 3332 account to the sales of L. B. Smith or to properly expense these items. This would have enabled Light to ensure that the profits of L. B. Smith were accurately reported. 23. It is believed and therefore, averred that Light's actions as set forth above were part of a pattern of conduct designed to establish a higher book value for L.B. Smith and ultimately established an inaccurate higher book value for Smith Land which would result in Smith Land being obligated to pay Light a larger purchase price for the redemption of Light's Smith Land stock pursuant to the Amended Stockholder's Agreement. Furthermore, it is believed Light's action of overstating profits was done with the objective of overstating the performance of L. B. Smith thus allowing Light to receive greater bonus compensation. Recourse Sales 24. While President and COO of L. B. Smith, Light authorized and encouraged a number of sales transactions whereby equipment was sold to customers under special terms which would allow the customer to use the equipment for a number of years and then sell it back to L. B. Smith (hereinafter known as "recourse sales"). Pursuant to the recourse sales arrangement, Light obligated L. B. Smith to repurchase the equipment at a percentage of the original sales price which clearly would have been above the market value, regardless of the condition of the equipment or the actual book value of the equipment at the time of the repurchase. Light knew or reasonably should have known if he made reasonable inquires or exercised the skill and diligence of an ordinary prudent person in his position that the value of the equipment given the projected use by the customer, would not be equal to the percentage of the original -5- purchase price which he obligated L. B. Smith to pay. Light failed to disclose the existence or extent of the recourse sales to Smith Land or the auditors. 25. Had the existence of the recourse sales been known to the auditors, the auditors would have required a liability to be recorded on the books of L. B. Smith, thus ultimately reducing the book value of Smith Land. 26. Since Light's departure, L. B. Smith has been required to repurchase a number of pieces of equipment at a percentage of the original sale price which has resulted in L. B. Smith paying in excess of $700,000 for equipment which has a significantly lower market value. 27. Light breached his fiduciary obligations to L. B. Smith and acted in bad faith and in a manner which was not in the best interest of L. B. Smith by entering into recourse sales. 28. It is believed that Light committed L. B. Smith to the terms of the recourse sales for purposes of "booking a sale" of L. B. Smith's equipment and obtaining the personal short term financial rewards associated with such sales while ignoring the long term financial detriment to L. B. Smith as a result of the buy-back obligations. Failure to Properly Account for Expenses Related to L.B. Smith and EquipCo Cranes, Inc. Sales 29. At all relevant times, Equipco Cranes, Inc. ("Equipco") was an a subsidiary of L. B. Smith and an affiliate of Smith Land. 30. While President and COO for L. B. Smith, Light established a practice and procedure whereby costs associated with the sales of Equipco would be defined in the L.B. Smith 3332 Account and another L. B. Smith corporate account, rather then allowing Equipco to recognize these costs. -6- 31. At all relevant times, Light's son-in-law was engaged as a manager for Equipco and was compensated in large part based on a profit sharing basis for Equipco. 32. It is believed that Light deliberately failed to properly account for the costs associated with the sales of Equipco equipment to Equipco as it would have the affect of decreasing the profitability of Equipco and ultimately would decrease the financial compensation paid to Light's son-in-law. 33. As a result of Light's actions of establishing a practice of failing to properly account for expenses related to his son-in-law's sales of Equipco, it is believed and averred that Light's son-in-law was paid excessive amounts of compensation both in the form of a salary and bonuses which would not have otherwise been paid had there been a proper accounting for these expenses. 34. Light breached his fiduciary responsibilities by engaging in the aforementioned practice which ultimately resulted in damages in the form of excessive salaries and bonuses being paid to Light's family member. WHEREFORE, Smith Land & Improvement Corporation respectfully requests that this Court enter judgment in its favor and against Lamar Light in the amount in excess of $25,000.00, the compulsory arbitration amount, together with costs and interests allowed by law. COUNT II TORTIOUS INTERFERENCE 35. Smith Land incorporates by reference paragraphs 1 through 33 above. 36. From approximately January through May of 2003, Smith Land engaged in discussions with a third party regarding the sale of a portion of L. B. Smith's business operations and assets. -7- 37. It is believed and therefore averred that at all relevant times, Light was keenly aware of the aforementioned business discussions and negotiations being conducted by Smith Land. 38. On or about April 22, 2003, Light, through his counsel, entered an improper Confessed Judgment against Bald Eagle Insurance Co., Ltd. (`Bald Eagle") and Smith Land pursuant to Pa. R. Civ. P. 2958.1. Pursuant to Rule 2958.1 both Bald Eagle and Smith Land were entitled to file a Petition to Open and. Strike the Judgment within 30 days from the date the Confession of Judgment was filed. During this 30 day period, Light is precluded from taking any actions to execute on the confessed judgment. 39. Toward the end of April, 2003 and the beginning of May, 2003, Smith Land was finalizing its negotiations for the sale. It is believed and therefore averred, that Light was again keenly aware that these negotiations were being finalized based on conversations between counsel for the parties. 40. On or about May 6, 2003, the third party interested in purchasing the aforementioned portion of the L. B. Smith business, was at: the offices of Smith Land and L. B. Smith to finalize the sale transaction. It is believed and therefore averred, that Light was aware of this fact. 41. Acting through his counsel, Light confessed judgment a second time against Bald Eagle and Smith Land this time under Pa. R. Civ. P. 2958.3 and pursuant to that section obtained a Writ of Execution and attempted to levy on the assets of Smith Land, including the assets of L. B. Smith to satisfy the Writ of Execution prior to expiration of the 30 day period mentioned above. As part of this process, Light, directed -8- that the Sheriff appear at the offices of Smith Land on May 6, 2003 and begin levying upon the assets of L. B. Smith. 42. In fact, on May 6, 2003 during the meeting between Smith Land, L. B. Smith and the third party buyer, the Sheriff did appear and begin the levy process. 43. Light, through his counsel, knew that pursuing a confession of judgment and execution proceedings pursuant to Pa. R. Civ. P. 2958.3 after a party has already begun confession of judgment proceedings under Pa. R. Civ. P. 2958.1, is contrary to the Rules of Civil Procedure and an abuse of civil process. 44. It is believed and therefore averred that Light's improper civil legal proceedings and abuse of the legal process was done solely for the purpose of interfering with Smith Land's sale of L. B Smith. 45. Light's actions, as noted above, caused damage to Smith Land including damage to its reputation, and caused Smith Land to incur legal expenses associated with defending the abusive legal process and removing the confessed judgment. -9- WHEREFORE, Smith Land & Improvement Corporation respectfully requests that this Court enter judgment in its favor and against Lamar Light in the amount in excess of $25,000.00, the compulsory arbitration amoimt, together with costs and interests allowed by law. Respectfully submitted, RHOADS & SINON LLP By: iermattei One South Market Square P. O. Box 1146 Harrisburg, PA 17108-1146 (717) 233-5731 Attorneys for Plaintiff -10- SMITH LAND & IMPROVEMENT : IN THE COURT OF COMMON PLEAS OF CORPORATION, : CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff VS. : NO. 03-834 CIVIL TERM LAMAR L. LIGHT, Defendant : CIVIL ACTION - LAW NOTICE TO PLEAD To: Smith Land & Improvement Corporation c/o Dean F. Piermattei, Esquire Rhoads & Sinon, LLP One South Market Square, 12th Floor P. O. Box 1146 Harrisburg, PA 17108-1146 YOU ARE HEREBY NOTIFIED to file a written response to the enclosed Answer with New Matter within twenty (20) days from service hereof or a judgment may be entered against you. Respectfully submitted, CALDWELL & KEARNS Dated: 1?t - ? 3012?? By: Ja s . Ch ? ger, Esquire Att rn I. o. 07159 Jeffre T. MeGhire, Esquire Attorney L D. No. 73617 3631 North Front Street Harrisburg, PA 17110 (717) 233-7661 SMITH LAND & IMPROVEMENT CORPORATION, Plaintiff VS. IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA NO. 03-834 CIVIL TERM LAMAR L. LIGHT, Defendant CIVIL ACTION - LAW ANSWER WITH NEW MATTER AND NOW COMES Defendant, Lamar L. Light, hereinafter "Light, by and through his attorneys, Caldwell & Kearns, and files this Answer with New Matter to the Plaintiff, Smith Land & Improvement Corporation, stating in support thereof as follows: 1. Admitted. 2. Admitted. 3. Admitted. 4. Admitted. 5. Admitted in part. It is admitted that for approximately such periods of time as stated, Light held the positions set forth in paragraph no. 5, although the exact dates are not presently known by Light. 6. Admitted in part, denied as stated and denied. It is admitted that, in such capacity, Light had general supervisory responsibility for L. B. Smith, to include establishment and supervising of company policy concerning such operations, although any policy involving any matter of significance would be only established and communicated upon consultation with the Board of Directors of Smith Land and L. B. Smith and their operating officers, to specifically include the Chief Executive Officer of L. B. Smith. As hereinafter stated, Light did not establish or exercise supervisory control over certain accounts or financial accounting/reporting as such was the responsibility of the accounting department and financial executives/officers of L. B. Smith and Smith Land. Light specifically had no supervisory responsibility or control over the accounting or financial staff, whose employees and executives did not report to Light. With regard to valuation of inventory, it is denied that Light had the responsibility, authority or the ability, to value inventory himself when it came into L. B. Smith, as such was either established by purchase price or trade-in price, for which Light did not have advance knowledge, in most cases, control or input. Indeed, Light, with regard to valuation, did set up a program of determination of condition of equipment for valuation, but the implementation of same was by branch managers or other vice presidents of L. B. Smith, and Light's role, if any, was to review and, when any inappropriate valuations would be observed, after the fact, discuss same with the appropriate managers or vice-presidents to attempt to avoid any such similar situations or conditions. Indeed, if equipment was bought as a trade-in, valuations were established by managers or vice presidents, and that policy valuing at the exact cost of purchase was established by the Chief Executive Officer and implemented via accounting or financial officers/ employees of L. B. Smith and not Light. It is further noted that Light, throughout his career at L. B. Smith, on a regular and consistent basis, attempted to properly adjust valuation of equipment, but such was limited by an annual allocation limit as established by the Chief Executive Officer of L. B. Smith, Inc., presumably upon the consultation with the company's accountants and the company's financial officers/employees. With regard to those averments of paragraph no. 6 that assert that Light was responsible for also establishing proper policy and procedures for all operations of the company, Light's establishment of policies and procedures of any matters of significance was performed only after consultation with other executive officers of L. B. Smith and Smith Land and such policies and procedures were implemented and followed only with the knowledge and approval of the other executive officers of L. B. Smith and Smith Land. Denied as a conclusion of law. The averments of paragraph no. 7 set forth a conclusion of law or fact to which no further response is required or appropriate. In the event and to the extent any or all of the averments of paragraph no. 7 do not constitute a conclusion of law of fact, Light did at all relevant times exercise reasonable judgment and act in the best interest of the company to the extent reasonably possible and appropriate based upon the limitations imposed upon him from time to time and proof to the contrary is specifically demanded. 8. Admitted in part. It is admitted that Light was a party to a Stockholder's Agreement of August 1, 1986, as amended by Amended Stockholder's Agreement of June 27, 1998, the terms of which speak for themselves. With regard to the portion of paragraph no. 8 that deals with L. B. Smith being the largest subsidiary which affected Smith Land's book value, it is admitted that, in terms of valuation of assets, L. B. Smith was the largest subsidiary, but on the other hand, the value of other subsidiaries was not insignificant and, thus, likewise could in any period substantially affect Smith Land's book value. COUNTI BREACH OF FIDUCIARY DUTY 9. Defendant Smith incorporates by reference his responses to paragraph nos. 1 through 8, above. 10. Admitted in part and denied in part. It is admitted that Light established a policy with regard to ordering new equipment for inventory and new equipment for lease known and approved by all executive officers of L. B. Smith, to include the Chief Executive Officer of L. B. Smith, Inc., and Smith Land, all of which information and data was on an order board available to all management employees of Smith Land and L. B. Smith at all relevant times. With regard to used equipment, Light was not involved in the acceptance and trade or valuation of used equipment whatsoever, as in the vast majority of transactions, Light only learned of the acquisition of used equipment into inventory after the transaction was completed and, presumably, approved by the branch manager or a relevant vice president of L. B. Smith. 11. Admitted in part. It is admitted, with some frequency, Light would review the book valuation of the used inventory, attempting to ensure that the accounting department accurately depreciated the equipment, and managers/vice-presidents had not added unjustified costs, and that virtually all of the used equipment came into inventory without Light's approval, and Light was absolutely limited to a very large extent in the amount and or degree he could revise or reduce valuation of any inventory. 12. Admitted in part and denied in part. It is admitted only that Light was generally responsible for establishing a level of inventory for new equipment which, however, was subject to review, input and consensus upon other executive officers of L. B. Smith and Smith Land, to include the financial officers/department. With regard to establishing a level of inventory for used equipment, it is specifically denied that Light established said inventory level and such was established in large part by the branch managers and vice presidents with regard to the transactions they sanctioned and approved. Throughout Light's career at L. B. Smith, he continually attempted to supervise inappropriate valuations established by others. With regard to the averments concerning annual meetings with auditors, very rarely was Light permitted or 4 requested to speak with auditors, but was, alternatively, given equipment lists on occasion and was requested to respond with justifications on cost. On some occasions, Light was able to justify costs, and on other occasions he was unable to do so, and attempted to resolve issues concerning valuation to the best of his knowledge and ability. Defendant Light categorically denies that he discouraged auditors from seeking independent determinations of fair market value, and proof to the contrary is specifically demanded, if relevant. It is noted that in all such discussions concerning valuation, such was shared with the Chief Executive Officer of L. B. Smith and other executive officers of L. B. Smith, to include the financial officers/department. 13. Denied. After reasonable investigation, Defendant Light is without knowledge or information sufficient to form a belief as to the truth of the averments of paragraph no. 13, and proof thereof is demanded, if relevant. However, Light does state that, at all relevant times, valuation of inventory was a continuing and constant business struggle in which all executive officers of L. B. Smith, to include the Chief Executive Officer of L. B. Smith, and to include various vice presidents and managers, were acutely aware and Light attempted to address, with varying degrees of success, over his period of tenure. In further response, it is averred that Light had no control over used equipment, as he normally had no notice of same, until after equipment was purchased or otherwise acquired. In further response, Defendant Light incorporates his responses to paragraph nos. 10 and 12 by reference thereto. 14. Denied. It is denied that Defendant Light was responsible for maintaining excessively high used equipment inventories and/or at inappropriate book values. As hereinbefore stated, Light had no control over the initial valuation of used equipment and was thereafter limited in his ability to write down equipment to appropriate market valuations. Light did have some control in those instances where the executive vice-presidents made requests for acquisition of equipment, in which event it was Light's practice to critically discuss the number, type and kind of equipment requested, attempting to permit acquisition of only such type, kind and quantity of equipment that would be of benefit to L. B. Smith. The factors for sustaining a loss on sale of equipment could be many and varied, all of which were not under the direction or control of Light, and proof thereof is specifically demanded. With regard to the actions or inactions of the auditors, Defendant Light, after reasonable investigation is without knowledge or information sufficient to form a belief as to the truth of the averments of paragraph no. 14, and proof thereof is demanded, if relevant. In further response, at all times Light attempted to act honestly and professionally with regard to all of his responsibilities, and proof to the contrary is demanded. With regard to readjustment of book value for Smith Land for establishing a purchase price, again, after reasonable investigation Defendant Light is without knowledge or information sufficient to form a belief as to the truth of the averment, and proof thereof is demanded, if relevant. In further response, however, Light does note, at the deposition of Robert Sherwood, previously Chief Financial Officer of Smith Land and L. B. Smith, held on February 20, 2003, Mr. Sherwood expressed other, more significant, from a dollar standpoint, reasons for re-evaluation of book value, other than such as alleged in paragraph no. 14. 15. Denied as a conclusion of law. The averments of paragraph no. 15 set forth a conclusion of law or fact to which no further response is required or appropriate. In the event and to the extent any or all of the averments of paragraph no. 15 do not constitute a conclusion of law or fact, it is specifically and categorically denied that Light breached his fiduciary duty and at all relevant times attempted to use his best skill, diligence and judgment in his position with the limitations and conditions that existed from time to time. It is furthermore specifically denied that at any time Defendant Light failed to act in good faith or participated any course of conduct which resulted in excessively high and overvalued inventories. At all times, the issue of amount and valuation of inventories was repeatedly discussed. with the other executives of Smith Land and L. B. Smith, to include the Chief Executive Officer of L. B. Smith, so that there was full and regular disclosure of the facts and issues at all relevant times. 16. Denied as a conclusion of law. The averments of paragraph no. 16 set forth a conclusion of law or fact to which no further response is required or appropriate. In the event and to the extent any or all of the averments of paragraph no. 16 do not constitute a conclusion of law or fact, it is specifically denied that Defendant Light performed or participated in any inappropriate or improper actions designed to overstate the book value, and proof to the contrary is specifically demanded. It is furthermore noted that, in large part throughout the years, Light did not participate in any significant amount of exchange with auditors nor was he directly permitted to meet with the auditors or auditing department of L. B. Smith to any great extent, thereby limiting his knowledge and input with regard to audit valuations, concerns or what information they were not provided by other executives of L. B. Smith and Smith Land who did regularly meet with auditors. 17. Admitted in part and denied in part. It is acknowledged that such an account identified as the "3332 Account" existed, and such was used for a number of items, to include last minute costs and credits associated with the equipment. It is believed the account was primarily utilized by branch managers following their consultation with their vice-presidents, branch managers and the L. B. Smith accounting department.. Defendant Light did not establish the account and was not responsible for its management or supervision, and proof to the contrary is specifically demanded, if relevant. 18. Denied. It is denied that Light used the 3332 Account to defer costs associated with sales, which was, as stated, done not by Light, but by branch managers, vice presidents of L. B. Smith, or other financial executives of L. B. Smith, and proof to the contrary is demanded, if relevant. With regard to Light's son-in-law, it is admitted that he was a vice president at certain periods with L. B. Smith, but at this time it is not specifically known what actions Light's son-in-law had with regard to said account, and therefore, after reasonable investigation with regard that said portion of paragraph no. 18, Light is without knowledge or information sufficient to form a belief as to the truth of the averment, and proof thereof is demanded, if relevant. 19. Denied and denied as stated. Defendant Light did not establish said account, nor was he responsible for its administration and management. Defendant Light was aware of the existence of the account and received information on the account from time to time, but such was administered or managed by persons other than Light in the L. B. Smith and Smith Land financial/accounting department. It is furthermore believed that the information regarding this account was available at all relevant times to all executives of Smith Land and L. B. Smith, to certainly include the financial and accounting department, who had responsibility for the account. 20. Denied and denied as stated. It is denied that said accounts was "Light's 3332 Account" for the reasons as hereinbefore set forth. Such was not Light's account, but was an account maintained by the accounting/bookkeeping department, for which Light was aware and had access to review, as did many other executive officers of Smith Land and L. B. Smith. Light never made any entries into said account. In further response, with regard to the portion of the averments contained in this paragraph concerning $1.5 million, which cannot be attributed to L. B. Smith sales, Defendant Light is, after reasonable investigation without knowledge or information sufficient to form a belief as to the truth of said averment and proof thereof is demanded, if relevant. 21. Denied. The placing of expenses and/or the accounting of expenses in the 3332 Account was not the responsibility of Light, regardless of his position, and such was administered, controlled and the responsibility of the financial officers and department of L. B. Smith and Smith Land. Light did not establish any policy or supervise any policy regarding such 3332 Account. In further response, Defendant Light, after reasonable investigation, is without knowledge or information sufficient to form a belief as to the averment concerning inflation of profits, and proof to the contrary is demanded, if relevant. 22. Denied as a conclusion of law. The averments of paragraph no. 22 set forth a conclusion of law or fact to which no further response is required or appropriate. It is, however, specifically and categorically denied that Light knowingly breached his fiduciary duty at any relevant time. 23. Denied as a conclusion of law. The averments of paragraph no. 23 set forth a conclusion of law or fact to which no further response is required or appropriate. In the event and to the extent any or all of the averments of paragraph no. 23 do not constitute a conclusion of law or fact, it is furthermore stated that Light did not engage in any pattern of conduct designed to improperly establish higher values. To the contrary, at all relevant times, Light worked actively and continuously to attempt to address the issue of inventory levels and valuation with 9 varying degrees of success, all of which was well known by executives of L. B. Smith and Smith Land. 24. Denied and denied as stated. Although he was, on occasion, aware of some, but not all, of such transactions, much of which knowledge came into his possession after the deal had been made by others. It is believed that any and all recourse transactions were known and approved in advance by the financial and other executive officers of L. B. Smith, to include the Chief Executive Officer. In further response, without specific examples, further specific response is, in turn, impossible, but it is again noted that for most of the recourse transactions, Light did not have advance knowledge or provided approval of same, which was not sought or required, but was, in turn, approved and authorized by other executive officers of L. B. Smith, to include the financial officers and Chief Executive Officer. It is believed that the terms of recourse sales differed and were varying with regard to what events or actions would result in a recourse obligation of L. B. Smith. Indeed, some of the recourse transactions were triggered by actions to include the closing of facilities or withdrawing supports services by L. B. Smith or product sales lines, which decisions were made by persons other than Light without his approval and, in all instances, after his departure from L. B. Smith. In further response, Light did use, to a reasonable degree possible, his judgment as an ordinary prudent person in his position, noting that he did not specifically authorize or encourage such transactions and many, if not all, of such transactions were effected and agreed to prior to his knowledge of same. Furthermore, all such recourse transactions that did come to Light's knowledge were furthermore well known, or should have been well known, by all executives of L. B. Smith., to include the Chief Executive Officer of L. B. Smith, and to include the financial and accounting department. Indeed, to 10 Light's recollection and present knowledge, there was no such transaction that was not disclosed or not known by all of the executive officers of Smith Land, L. B. Smith, to include the Chief Executive Officer of L. B. Smith and the financial officers of same. To Light's recollection, he was not requested, nor did he sign any papers, documents, or approvals of any proposed recourse transactions. Light, it is his present recollection, furthermore fully shared any information that he understood was his obligation to share with the limited contacts that he was provided with the auditors, and certainly did not knowingly withhold or fail to disclose any information that he understood he had an obligation to so disclose and specific proof to the contrary is demanded, if relevant. In further response, it is averred that, to the best of Light's recollection, all recourse transactions were approved by the Chief Executive Officer and/or the Chief Financial Officer of L. B. Smith. 25. Denied. After reasonable investigation, Defendant Light is without knowledge or information sufficient to form a belief as to the truth of any of the averments of paragraph no. 25, to include what knowledge the auditors did or did not have, and specific proof thereof is demanded, if relevant. In further response, Defendant Light believes that the Chief Executive Officer and the financial officers of L. B. Smith were well aware of all recourse transactions and were the primary point of contact with L. B. Smith's auditors. At no time was Defendant Light ever requested to assemble or provide any information concerning any recourse transactions. 26. Denied. After reasonable investigation, Defendant Light is without specific factual knowledge or information sufficient to form a belief as to the truth of the averments of paragraph no. 26 and proof thereof is demanded, if relevant. 11 27. Denied as a conclusion of law. The averments of paragraph no. 27 set forth a conclusion of law or fact to which no further response is required or appropriate. In further response, in the event and to the extent such does not constitute conclusions of law or fact, it is specifically and categorically denied that at any time Defendant Light knowingly acted in bad faith or in a manner not in the best interest of his employer. As stated, Defendant Light himself did not enter into recourse sales, but in large part such were entered into by various other managers and vice presidents of L. B. Smith without Light's advance knowledge and/or approval. 28. Denied as a conclusion of law. The averments of paragraph no. 28 set forth a conclusion of law and /or fact to which no further response is required or appropriate. In the event and to the extent any or all of the averments are found not to be a conclusion of law or fact, same are denied. By virtue of Light's limited involvement with such sales, and full disclosure to all relevant parties, it is specifically denied that any limited role that Light had with regard to such sales was knowingly or intentionally to obtain financial rewards to Light whatsoever, and proof to the contrary is specifically demanded, if relevant. Specifically, Light did not, and it was not his responsibility, to "book a sale", and he did not do so at any relevant time. However, on one occasion he was requested by the vice-presidents to approve a deal upon their recommendation and, in all cases, he used his best judgment in approving such deals that were presented to him for approval from time to time. 29. Admitted. It is admitted that, from the late 1990's, Equipco became owned by L. B. Smith or Smith Land, the specific details of which Defendant Light is not presently aware. 12 30. Denied as stated. While a practice was established to transfer sales costs of Equipco to L. B. Smith to, in large part, to assist in addressing tax issues of which Light was not directly familiar or engaged, Light, with this information, did support such practice in order to encourage sales for Equipco and compensation for its dedicated sales persons. Such practice, procedure and policy was well known and approved by the Chief Executive Officer and the Chief Financial Officer of L. B. Smith. With regard to how or where such funds were accounted from a bookkeeping or financial standpoint, Defendant Light was not involved and has no knowledge or information, nor did he supervise such. In sum, Defendant Light had merely suggested a program to properly compensate salespersons and such program dovetailed with tax considerations of Equipco and L. B. Smith communicated to Eight, whereupon the actual implementation and supervision of the accounting of such practice and procedure was performed by others not under Defendant's Light's supervision or control. 31. Denied. At all relevant times, it is believed that the manager for Equipco was James Mackinson, and not Light's son-in-law. To Light's knowledge, Light's son-in-law was never in such capacity. 32. Denied. As hereinbefore stated, the policy and practice was not created or implemented by Light, but by the financial and accounting officers and other executives of L. B. Smith and Smith Land for reasons which Light assumed they deemed prudent, reasonable and appropriate. It is further noted that Light's son-in-law was employed by L. B. Smith prior to becoming Light's son-in-law and, as stated, to Light's knowledge, was not involved with regard to the Equipco operation or shared in its profits. It is furthermore noted that at no relevant time 13 did Defendant Light have direct supervision of his son-in-law. Any and all other averments of paragraph no. 32 are therefore denied. 33. Denied. For the reasons set forth in Light's responses to paragraph nos. 31-32, which are all incorporated herein by reference thereto, the averments of paragraph no. 33 are denied, and proof to the contrary is demanded. 34. Denied as a conclusion of law. The averments of paragraph no. 34 set forth a conclusion of law and /or fact to which no further response is required or appropriate. WHEREFORE, Defendant, Lamar L. Light, respectfully requests that Count I of the Complaint of Smith Land & Improvement Corporation be dismissed, together with costs and fees as allowed by law. COUNT II TORTIOUS INTERFERENCE 35. Defendant Smith incorporates by reference his responses to paragraph nos. 1 through 34, above. 36. Admitted in part and denied in part. While Defendant Light is aware that such negotiations were occurring, he was not employed by L. B. Smith at that time and, therefore, had no direct knowledge of the specific period of time or specific substance of such discussions, and proof to the contrary is demanded, if relevant. 37. Denied. To the contrary, Defendant Light was only generally aware of the business discussions and was not aware of any particulars of the negotiations, to include the details or specifics of timing thereof. Furthermore, Light was not aware of the sale of assets at this time owned by Bald Eagle or Smith Land. 14 38. Admitted in part and denied in part. It is admitted that on or about said date, a confessed judgment was entered against Bald Eagle and Smith Land. It is denied that, when entered, it was reasonably believed that the judgment was improper, but was taken in good faith, but upon further subsequent legal research, it was determined that the guaranty language of Smith Land in all probability may not have permitted the entry of a judgment by confession against Smith Land, and said judgment was promptly opened by stipulation. With regard to precluding taking any action, it is acknowledge there was a procedural rule concerning service of the Writ and that once one service option is selected, the other option for service should not be utilized. 39. Denied. Defendant Light was not aware of the exact status of negotiations and had, in fact, was of the belief that in early May the transaction of which he had limited knowledge had already been concluded, and proof to the contrary is demanded, if relevant. 40. Denied. Defendant Light had no such knowledge, nor had Defendant Light communicated same to his counsel, and proof to the contrary is specifically demanded, if relevant. 41. Denied. It is denied that judgment was confessed a second time against Bald Eagle and Smith Land, but that notice of the filing of the Writ was effected pursuant to Pa. R.C.P. 2958.3. At no time did Defendant Light direct the Sheriff to appear at the office of Smith Land on any particular date and time. 42. Denied. After reasonable investigation, Defendant Light is without knowledge or information sufficient to form a belief as to the truth of the averments of paragraph no. 42, and proof thereof is demanded, if relevant. 15 43. Denied. Light was not aware that such action was inappropriate, other than a violation of a procedural rule, and certainly not that such constitute an abuse of process, and proof to the contrary is demanded, if relevant. 44. Denied. The averments of paragraph no. 44 set forth a conclusion of law to which no further response is required or appropriate. In the event and to the extent such are deemed not to be conclusion of law, any and all actions of Light were taken in order to enforce his legal rights following a default by Bald Eagle and Smith Land in the repurchase of his stock in Smith Land, and proof to the contrary is specifically demanded, if relevant. 45. Denied. After reasonable investigation, Defendant Light is without knowledge or information sufficient to form a belief as to the truth of the averments of paragraph no. 45, and proof thereof is demanded. In the alternative, the averments of paragraph no. 45 constitute a conclusion of law or fact to which no further response is required or appropriate. WHEREFORE, Defendant, Lamar L. Light, respectfully requests that Count I of the Complaint of Smith Land & Improvement Corporation be dismissed, together with costs and fees as allowed by law. NEW MATTER In further response to the Complaint of Plaintiff, Smith Land & Improvement Corporation, Defendant Lamar L. Light avers the following new matter: 46. At all relevant times, Light attempted to and did conduct himself in a proper and professional manner acting at all times for the good of L. B. Smith and to be best of his ability made full disclosure of all relevant matters with which he was involved, which he understood and reasonably believed had a financial significance with regard to Smith Land or L. B. Smith or 16 had a duty to disclose to the corporate executives of L. B. Smith, Smith Land, and the auditors of same upon request or question. 47. While Light had little or no written policies, practices or procedures with regard to valuation of used equipment available for leasing, he did put in place a valuation system of sorts, which was not always honored by the vice presidents and branch managers, which policy and procedures were known and approved by all of the executive officers of L. B. Smith and Smith Land. 48. Light did not know of or approve transactions in advance involving acquisition of used equipment or the trade-in price or allocation given thereby. Indeed, in the vast majority of instances, Light only learned of such transactions after the fact. 49. Light did not have any degree of measurable control over the inventory of used equipment, such being under the control or supervision of the respective sales person, branch managers and regional vice-presidents, who approved each transaction, and the initial valuation of same was dictated by the financial bookkeeping personnel of L. B. Smith. 50. The subject of inventory and valuation, to include the difficulty encountered in reducing same, was a frequent topic of discussion between Light, the Chief Operating Officer of L. B. Smith and other upper level executives. 51. The valuation of equipment, new and used, was materially affected by changes in manufacturer's pricing, which did occur from time to time. 52. The valuation of equipment, new or used, was frequently affected by competitors' pricing and equipment on the market, which did occur from time to time. 17 53. Light participated in, at all relevant periods, quarterly meetings with vice presidents and managers, and to include the Chief Financial Officer of the companies and the Chief Executive Officer of L. B. Smith, to discuss the subject of equipment classifications, valuations and the limitations of Light as expressed in paragraph nos. 47-52 of this New Matter. 54. Periodic, to include weekly reports, of what was sold, the cost, the profit, to include in some entries the trade-in, were generated and provided to all executive officers of the companies and available to the auditors. 55. On any number of occasions, Light reprimanded the vice presidents and branch managers to take a more active supervisory role with regard to trade-ins for overvalued equipment. 56. At all relevant times, Light was specifically directed in what writedowns he could have in valuation of inventory, new and used, by direction of the Chief Executive Officer of Smith Land, with consultation of the Chief Financial Officer of L. B. Smith and Smith Land, which was limited in all cases to reduce profits. 57. Light's ability to effect writedowns of valuation as he would otherwise deem appropriate was furthermore limited by writedowns on occasion of quarry equipment, as directed by the Chief Executive Officer of L. B. Smith, who was also the Chief Executive Officer of Smith Land at all relevant times. 58. Except for rare occasion, Light was kept out of meetings with auditors other than a listing that the Chief Executive Officer would give him from time to time concerning particular equipment for which he was to provide further information. 18 59. The initial determination of value on trade-ins and used equipment was the responsibility of the regional vice presidents and branch managers, and not Light. Light did attempt to have a limitation and policy with regard to new equipment, which was not to permit purchases of more than sold in the previous year, absent unusual circumstances, upgraded models, and technological advances, all of which information was regularly available to all executive officers of L. B. Smith and Smith Land. 60. Light believes some of the issues now raised by Smith Land due to valuation and arbitrary writeoffs was raised by the inappropriate and arbitrary actions of Light's immediate successor. 61. Light, at relevant times, attempted to implement policies with regard to new valuations for repossessed vehicles, but such was objected to and not permitted to occur until the last several years of Light's employment. Indeed, the policy imposed by others was that the value that would be assigned was the balance owed on the equipment regardless of the market value of the particular piece of equipment. 62. At certain relevant times, other manufacturers', to include Terex and Volvo, arbitrarily would lower prices materially on certain equipment, which had a rippling affect and materially reduced the value of existing inventory of L. B. Smith equipment. 63. Certain inappropriate actions of Smith Land and L. B. Smith were taken with regard to equipment inventory after Light's departure, which is believed had, or will have, an adverse material affect upon the value of L. B. Smith and the Smith Land stock to the detriment of L. B. Smith, Smith Land and Defendant Light, to include sale of equipment at prices less than market value and entry into further recourse transactions which could have a future adverse 19 impact, all of which actions are indicative of a failure to use reasonable skill, judgment and ordinary prudence that should normally be exercised in such matters. 64. Following Light's departure from the company, L. B. Smith discontinued some of its business with Terex New England and other manufacturers, which was a substantial part of L. B. Smith's business and which had a material impact upon valuation of L. B. Smith, the equipment inventory of L. B. Smith and its parts business. 65. As stated in Light's answer, he did not establish, nor was he responsible for, supervision of the 3332 Account. 66. Light therefore avers he is of the belief that his immediate successor wrote off many items that were incorporated in this 3332 Account, inappropriately and arbitrarily, some of which were recovered in subsequent periods and now forms the basis of Smith Land's inaccurate and improper allegations. 67. Light believes that certain substantial rebates or credits would be received from manufacturers that should have been allocated to the 3332 Account, but were not allocated by direction of others, which would have substantially reduced any negative effect of the account. 68. In large part, Light was not aware of, and did not approve in advance, any recourse transactions, but became aware of same after the fact, for which his ability to resolve any valuation issues was limited. 69. By reason of the knowledge and actions/inaction of other corporate executives of L. B. Smith and Smith Land, if any actions of Light are found to be improper, which is specifically denied, Light asserts the defense of waiver. 20 70. By reason of the knowledge and actions/inactions of other corporate executives of L. B. Smith and Smith Land, if any actions of Light are found to be improper, which is specifically denied, Light asserts the defense of release. 71. By reason of the knowledge and actions/inactions of other corporate executives of L. B. Smith and Smith Land, if any actions of Light are found to be improper, which is specifically denied, Light asserts the defense of estoppel. 72. By reason of the knowledge and actions/inactions of other corporate executives of L. B. Smith and Smith Land, if any actions of Light are found to be improper, which is specifically denied, Light asserts the defense of justifiable reliance. 73. At all relevant times, all corporate executives of L. B. Smith and Smith Land had knowledge of Light's supervisory actions, the limitations of his office, and expressed no material displeasure, complaint or dissatisfaction. 74. Light believe, and therefore avers, that the instant action was commenced for improper purposes without material basis in fact and/or fails to set forth sufficient or proper facts to support such causes of action as alleged. 75. Although Light's knowledge, supervision and role in recourse transactions, at all relevant times, was limited, it is common knowledge in the industry that in order to sell certain equipment that market conditions and competition mandate that recourse transactions be offered to customers of such equipment as marked by L. B. Smith. 21 WHEREFORE, Defendant Lamar L. Light respectfully requests that the Court enter judgment in his favor and against Plaintiff Smith Land & Improvement Corporation, together with costs and fees as may be allowed by law. Respectfully submitted, & KEARNS By: Dated: ?0tZC?? Jams . Clip roger, Esquire Atto e I.D. 07159 Jeffre . Mc re, Esquire Attorney I.D. No. 73617 3631 North Front Street Harrisburg, PA 17110 (717) 232-7661 VERIFICATION I, LAMAR L. LIGHT, verify that the averments made in this Answer with New Matter are true and correct to the best of my knowledge, information and belief. I understand that false statements herein are made subject to the penalties of 18 Pa. C.S. 4904, relating to unsworn falsification to authorities. Date: November 20,2003 Lamar L. Light CERTIFICATE OF SERVICE I hereby certify that on this day of I k4 ? ss__, 2003, a true and correct copy of the foregoing document was served by means of United States mail, postage prepaid, upon the following: Dean F. Piermattei, Esquire Rhoads & Sinon, LLP One South Market Square, 12"' Floor P. O. Box 1146 Harrisburg, PA 17108-1146 ?n _ !> r? n F.J 1 ? C... __ ? [ ? ? ?? ..i _ '-i1 .. ? A' -- -< LAMAR L. LIGHT, IN THE COURT OF COMMON PLEAS Plaintiff CUMBERLAND COUNTY, PENNSYLVANIA V. NO. 01-5053 SMITH LAND & IMPROVEMENT CORPORATION & BALD EAGLE INSURANCE CO., LTD., Defendants CIVIL ACTION - LAW and SMITH LAND & IMPROVEME NT CORPORATION IN THE COURT OF COMMON PL ' , EAS CUMBERLAND COUNTY, PENNSYLVANI A Plaintiff JUDGE HESS n o C) V. / '? (1? NO. 03-834 Civil Term ? T= S.. m LAMAR LIGHT G vm , , =- T o Defendant CIVIL ACTION LAW m V and -< c', c:) LAMAR L. LIGHT , IN THE COURT OF COMMON PL Plaintiff EAS CUMBERLAND COUNTY, PENNSYLVANIA V. NO. 03-1849 BALD EAGLE INSURANCE CO., LTD. : JUDGE HESS & SMITH LAND & DEVELOPMENT CORP. Defendants CIVIL ACTION-LAW PLAINTIFF, SMITH LAND & IMPROVEMENT CORPORATION'S REPLY TO NEW MATTER OF DEFENDANT LAMAR LIGHT 500252.1 NOW COMES plaintiff, Smith Land & Improvement Corporation ("Smith Land"), by and through its attorneys, Rhoads & Sinon LLP and files this Reply to New Matter of Defendant, Lamar Light ("Light") as follows: 46. Denied. The allegations of this paragraph are specifically denied. Rather to the contrary, Light failed to act in an appropriate manner and breached his fiduciary obligations for the reasons set forth in the complaint. 47. Admitted in part and denied in part. It is admitted that Light was responsible as chief operating officer of L.B.Smith, Inc. ("Smith") for developing and implementing valuation policies, practices and procedures with respect to the inventory for Smith. One of Light's primary responsibilities as an officer of Smith was to properly and profitably manage Smith's inventory which included monitoring and overseeing the actions of the vice presidents and branch managers and ensuring that these individuals followed Light's inventory practice, procedures and policies. While Light periodically advised officers of Smith and Smith Land of his policies, practices and procedures, these officers relied solely on Light's judgment to ensure that Light developed, maintained and implemented prudent and profitable policies, practices and procedures with respect to the operations of Smith, and in particular the inventory of Smith, so as to ensure that the best interest of the company were served. The remaining allegations in this paragraph are specifically denied. 48. Denied. It is specifically denied that Light did not know of or approve transactions involving acquisition of used equipment or trade-ins. Rather, the acquisition of used equipment whether through purchases or trade-ins, was one of the primary responsibilities of Light who was responsible for overseeing, managing, and maintaining appropriate inventory for Smith. Often times, -2- Light was involved in transactions involving used equipment before, during and after the transaction. Particularly in instances where the transaction involved larger dollar amounts. 49. Denied. The allegations in this paragraph are specifically denied for the reasons set forth in paragraphs 47 and 48 above. By way of further answer, Light would frequently converse with the Vice President and Branch Managers regarding the equipment transactions taking place. This was one of Lights primary responsibilities as Chief Operating Officer. 50. Denied as stated. It is admitted that Rick Jordan would tell Light on a regular basis that he must reduce the levels of inventory. Light continually represented that he was properly managing inventory levels. The remaining allegations in this paragraph are specifically denied and specific proof thereof is demanded at trial. 51. It is admitted that the valuation of equipment could be effected by changes in manufacturer's pricing, however, generally manufacturers had price increases on a yearly basis with a few exceptions. The remaining allegations are specifically denied and proof of the same is demanded at trial. 52. It is admitted that the valuation of the equipment could be effected by competitors' Pricing of equipment. The remaining allegations in this paragraph are specifically denied and proof of the same is demanded at trial. 53. Admitted in part and denied in part. It is admitted that quarterly meetings did occur, however, very little time during these meetings was allocated towards discussing equipment valuations. Rather, Light continually reassured the officers of Smith and Smith Land that he was competently and appropriately managing the inventory of Smith in a manner that was in the best interest of the company. Accordingly, the other officers of Smith and Smith Land relied upon Light -3- as the Chief Operating Officer ("COO") with respect to this area of corporate affairs. The remaining allegations in this paragraph are specifically denied and proof of the same is demanded at trial. 54. Denied. To the extent that weekly reports were generated, they are documents which speak for themselves, and any attempt on Light's part to misconstrue the same is specifically denied. On the occasion when weekly reports were generated, there were few trade-ins listed on the reports. Furthermore, as a Chief Operating Officer for Smith, Light was primarily responsible for appropriately valuing the inventory of Smith. 55. Denied. After reasonable investigation, Smith Land is without knowledge or information sufficient to form a belief as to the truth of the averments in this paragraph and the same are denied and proof thereof is demanded 56. Denied. The allegations in this paragraph are specifically denied for the reasons forth above. By way of further answer, as Chief Operating Off set cer and the person primarily responsible for overseeing the inventory of Smith, Light was the only person who knew inventory values. Light was responsible for selecting the machines which would receive "writedowns" and was responsible for determining the amount of the writedowns. 57. Denied. The allegations in this paragraph are specifically denied. Specific proof of the same is demanded of Light. 58. It is admitted that Light was annually involved in meetings with auditors. Any and all information for the valuation of inventory for Smith which was provided to the auditors, came solely from Light. -4- 59. Denied. The allegations in this paragraph are specifically denied as set forth in paragraph 48 above. The remaining allegations in this paragraph are specifically denied and proof thereof is demanded at trial. 60. Denied. After reasonable investigation Smith Land is without sufficient information or knowledge to form a belief as to what "Light believes" and accordingly, these allegations are denied. By way of further answer, Light's successor sufficiently, prudently and appropriately managed the affairs of Smith with the objective of pursing the best interest of the company, given the circumstances existing as a result of Light's actions. 61. Denied. The allegations in this paragraph are specifically denied for the reasons set forth above. By way of further answer, Light was solely responsible for developing, implementing and overseeing all policies, practices, and procedures associated with the valuation and managing of the inventory. The remaining allegations are denied. After reasonable investigation, Smith Land is without sufficient information or knowledge to form a belief as to the truth of the averments in this paragraph and therefore the same are denied and proof thereof is demanded at trial. 62. Admitted in part. It is admitted that on one occasion TEREX and VOLVO each changed the content of their equipment so as to lessen the value of the equipment. However, these companies as well as other manufacturers which Smith dealt with, increased prices on a regular basis. Any adverse affect on the valuation of Smith's inventory was primarily as a result of Light's improper valuation policy and practices. The remaining allegations are denied since after reasonable investigation, Smith Land is without sufficient information or knowledge to form a belief as to the truth of these averments and proof thereof is demanded at trial. -5- 63. Denied. Smith is without sufficient information or knowledge after reasonable investigation to understand the "inappropriate action" which Light is referring to and accordingly, the allegations of this paragraph are denied and specific proof is demanded at trial. By way of further answer, any actions taken by Smith after Light's departure were done solely to correct the improper business actions taken by Light and were done with the objective of pursuing the best interest of the company. 64. Denied. The allegations in this paragraph are specifically denied and proof of the same is demanded from Light at trial. By way of further answer, TEREX ceased doing business with Smith because of Smith's expansion into the VOLVO equipment market place which began when Light was Chief Operating Officer at Smith. 65. Denied. It is specifically denied that Light was not responsible for the 3332 account. By way of further answer, Light as COO had responsibility for the 3332 account. 66. Denied. After reasonable investigation, Smith is without sufficient information or knowledge to form a belief as to Light's beliefs and accordingly, the allegations in this paragraph are specifically denied. By way of further answer, any actions taken by. Light's successor were necessitated by Light's failure to act in Smith's best interest as detailed in the Complaint and this Reply. Light's successor did not act inappropriately or arbitrarily in dealing with the 3332 accounts. 67. Denied. After reasonable investigation Smith is without sufficient information or knowledge to know of the rebates or credits that were to be received from manufacturers and accordingly, is unable to verify the accuracy of these allegations and the same are denied. 68. Denied. It is specifically denied that Light was not aware or did not approve in advance any recourse transaction before the transactions took place. Rather, Light was involved with -6- regional vice presidents and branch managers regarding these transactions and ultimately was responsible for authorizing all such transactions. 69-72. These paragraphs contain a conclusion of law and do not require a response. To the extent these paragraphs contain factual averments, they are denied for the reasons set forth in the Complaint and Reply. Furthermore, any factually allegations in these paragraphs are denied since after reasonable investigation, Smith is without sufficient information or knowledge to form a believe as to the truth of these averments and proof there of is demanded. at trial. 73. Denied. The allegations in this paragraph are specifically denied. Rather, the executives at Smith and Smith Land relied upon Light as COO to maintain, manage and appropriately evaluate Smith's inventory. By way of further answer, Light was frequently told to reduce inventory levels however, Light continually reassured corporate executives of Smith and Smith Land that he was appropriately managing this inventory. 74. Denied. The allegations in this paragraph are specifically denied for the reasons set forth in the Complaint and this Reply. 75. Denied. Recourse transactions are not common practices of Smith. By way of further answer, Light's authorizations of such transactions were poor business decisions and a violation of his fiduciary obligations to Smith. Said transactions were not structured to be in the best interest of Smith, but rather to benefit Light either directly or indirectly. -7- WHEREFORE, L.B. Smith respectfully requests that this Court enter judgment in favor of the Smith Land & Improvement Corporation and against Defendant, Lamar Light together with costs and fees as may be allowed by law. Respectfully submitted, RHOADS & SINON P By. Dean F. Piermattei, Esquire One South Market Square P. O. Box 1146 Harrisburg, PA 17108-1146 (717) 233-5731 Attorneys for Plaintiff, Smith Land & Improvement Corporation -8- JAN-06-2004 TUE 03:06 PM L B SMITH CORPORATE 01/uG/04 TUE 14:33 FAY 717 231 6637+ PAIR NO. 7177955303 R110AOS SINON LLP VERIm TIO re Richard B' Jordan' doses and says, subject to the penalties of 1 g Pa, relating to unsworn falsification to authorities that I am the Ch Smith land & atnnan, CEO and C,SPresident of Improvement Corporation and that I make this verification by its authority and that the facts set forth in the foregoing are true and cotzecl and belief. to the best of rr,y knowledge, information Date: 'ohard rdan II?"-----? P. 02/02 Q002 CERTIFICATE OF SERVICE I hereby certify that on this 6t' day of January, 2004, a true and correct copy of the foregoing was served by means of facsimile and United States Mail, Postage Prepaid upon the following; James R. Clippinger, Esquire Caldwell & Kearns 3631 North Front Street Harrisburg, PA 17110 Teresa L`. aulhamus LAMAR L. LIGHT, : IN THE COURT OF COMMON PLEAS : CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff V. : NO. 01-5053 SMITH LAND & IMPROVEMENT CORPORATION & BALD EAGLE INSURANCE CO., LTD., Defendants . CIVIL ACTION - LAW and SMITH LAND & IMPROVEMENT IN THE COURT OF COMMON PLEAS CORPORATION, CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff JUDGE HESS V. NO. 03-834 Civil Term LAMAR LIGHT, Defendant CIVIL ACTION - LAW and LAMAR L. LIGHT, IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff V. NO. 03-1849 BALD EAGLE INSURANCE CO., LTD. JUDGE HESS & SMITH LAND & DEVELOPMENT CORP. Defendants CIVIL ACTION - LAW MOTION TO AMEND THE PLEADINGS NOW COME Smith Land & Improvement Corporation and Bald Eagle Insurance Co., Ltd. (collectively "Smith Land"), by and through their attorneys, Rhoads & Sinon LLP, and file the following Motion to Amend the Pleadings stating as follows: 1. On August 29, 2001, Lamar Light ("Light") filed a Complaint against Smith Land seeking damages allegedly owed by Smith Land pursuant to a Judgment Promissory Note issued 566866 1 in connection with Light's employment at Smith Land, Cumberland County Docket No. 01- 5053. 2. Specifically, Light alleged that pursuant to an Amended Stockholder's Agreement between Light and Smith Land, Smith Land was obligated to purchase all shares in Smith Land held by Light upon his resignation. (Complaint, ¶9). 3. In the Complaint, Light asserts that Smith Land represented that the value of these shares would reach $4,000,000, the ceiling set forth in the Stockholder's Agreement. (Complaint, 111). 4. On October 2, 2001, Smith Land filed an Answer and New Matter denying any liability to Light. In the Answer, Smith Land explains that the Stockholder's Agreement sets forth a floor and ceiling with respect to the purchase price of Light's stock, $2,500,000 and $4,000,000, respectively. (Answer & New Matter, 19). 5. In the Answer and New Matter, Smith Land also asserts that the true book value of Light's stock, based on its Auditors' determination, was $3,415,094. (Answer & New Matter, ¶¶18, 20). 6. Since that time, Light's action has been consolidated with litigation by Smith Land against Light, Cumberland County Docket No. 03-834, and a Confession of Judgment Action filed by Light against Smith Land, Docket No. 03-1849. T The parties have engaged in discovery in these consolidated actions. -2- 8. This discovery and further accountings on behalf of Smith Land have revealed that the actual book value of Light's stock is not $3,415,094. Instead, the further accounting has discovered that there were liabilities not properly accounted for in the $3,415,094 determination. 9. Once these liabilities were correctly computed, the actual book value of the Light stock to be repurchased under the Amended Stockholder's Agreement is zero or a negative number. As a result, the valuation puts into effect the floor value of the stock, $2,500,000, as set forth in the Amended Stockholder's Agreement. 10. Smith Land seeks to amend the Answer and New Matter to properly state the actual value of the Light stock as zero or a negative number and implicate the floor set forth in the Amended Stockholder's Agreement. IL Under Rule 1033 of the Pennsylvania Rules of Civil Procedure, amendment of pleadings is allowed at any time. Pa. R. Civ. P. 1033. 12. Courts are clear, moreover, that leave to amend a pleading should be liberally granted at any stage of the pleadings unless there is an error of law or resulting prejudice to an adverse party. Connor v. Allegheny General Hospital, 501 Pa. 306, 310, 461 A.2d 600, 602 (1983). Further, the right to amend pleadings is normally granted with liberality so as to secure the determination of cases on their merits whenever possible. 13. In the present matter, amendment of the Answer & New Matter is not an error of law and no prejudice will result from the modification of these allegations. Further, this amendment does not implicate any statute of limitations and does not add parties to the litigation. -3- 14. Despite the Rule and caselaw requiring liberal amendment of pleadings, counsel for Smith Land contacted counsel for Light and counsel refused to agree to permit Smith Land to amend the Answer & New Matter, requiring Court Order. WHEREFORE, Smith Land & Improvement Corporation and Bald Eagle Insurance Co., Ltd. respectfully request that this Honorable Court grant their Motion to Amend the Pleadings and enter an Order permitting them to amend the Answer & New Matter within twenty (20) days of the date of the Order. Respectfully submitted, RHOADS & SINON LLP By. Del ??N^ e {f (5 4'? Dean F. Piermattei, Esquire Stephanie E. DiVittore, Esquire One South Market Square P. O. Box 1146 Harrisburg, PA 17108-1146 (717) 233-5731 Attorneys for Smith Land & Improvement Corporation & Bald Eagle Insurance Co., Ltd. -4- CERTIFICATE OF SERVICE I hereby certify that on this day of June, 2005, a true and correct copy of the foregoing Motion to Amend the Pleadings was served by means of facsimile and United States Mail, postage prepaid upon the following: James R. Clippinger, Esquire Caldwell & Kearns 3631 North Front Street Harrisburg, PA 17110 n v ,?Q Teresa L. Paulhamus j T C1' w .: ,.. {?y ' 4? '- _^" •6`a `?"7 .v ?3 c,v. r ,, . =? s . ,>? -_ c, r yJ, r ,.- . ; u, LAMAR L. LIGHT, : IN THE COURT OF COMMON PLEAS : CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff V. : NO. 01-5053 SMITH LAND & IMPROVEMENT CORPORATION & BALD EAGLE INSURANCE CO., LTD., Defendants . CIVIL ACTION - LAW and SMITH LAND & IMPROVEMENT IN THE COURT OF COMMON PLEAS CORPORATION, CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff JUDGE HESS V. NO. 03-834 Civil Term LAMAR LIGHT, Defendant CIVIL ACTION- LAW and LAMAR L. LIGHT, IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff V. NO. 03-1849 BALD EAGLE INSURANCE CO., LTD. JUDGE HESS & SMITH LAND & DEVELOPMENT CORP. Defendants CIVIL ACTION - LAW MOTION FOR ISSUANCE OF SCHEDULING ORDER NOW COME Smith Land & Improvement Corporation and Bald Eagle Insurance Co., Ltd. (collectively "Smith Land"), by and through their attorneys, Rhoads & Sinon LLP, and file the following Motion for Issuance of Scheduling Order stating as follows: 566826.1 1. On October 22, 2003, Smith Land filed a Complaint against Lamar Light ("Light") seeking damages based on Light's breach of fiduciary duty and tortious interference in connection with his resignation as an officer and employee of Smith Land, Cumberland County Docket No. 03-834. 2. Prior to that time, on August 29, 2001, Light had filed an action against Smith Land seeking a declaration that a Promissory Note, issued by Bald Eagle in connection with an Amended Shareholders' Agreement between Smith Land and Light, was valid and enforceable, Cumberland County Docket No. 01-5053. 3. On April 22, 2003, Light filed a Confession of Judgment Complaint confessing judgment, under the Promissory Note, against Smith Land in the amount of $2,674,220.93, Cumberland County Docket No. 03-1849. 4. These three actions were consolidated by Court Order dated December 5, 2003. 5. In the December 5, 2003 Order issued by this Court, this Court directed that the parties should proceed with discovery "through March 31, 2004 and thereafter as appropriate... " (December 5, 2003 Court Order). 6. Based on the volume of documents produced in this case, however, as well as the availability of witnesses, the parties agreed they would attempt to complete factual discovery by the end of June, 2005, provided the necessary depositions could be completed by that time. (A copy of February 23, 2005 correspondence from Light's counsel confirming the same is attached hereto as Exhibit "A" and incorporated herein by reference). -2- 7. Since that time, the parties have moved forward with discovery, conducting written discovery and depositions in accordance with the Pennsylvania Rules of Civil Procedure and direction of this Court. 8. In that respect, the parties proceeded with document production and exchanging interrogatories. This included production of extensive corporate records from Smith Land, a company which closed over 2 years ago requiring retrieval of those records from storage. 9. Light then proceeded with scheduling depositions of Smith Land witnesses. Specifically, Light's first round of depositions of Smith Land witnesses included the depositions of Nicole Broscius, Ryan Sherwood, Richard E. Jordan, II, and Tim Hanlon. These depositions began February 17, 2005 and were completed February 21, 2005. 10. Light scheduled his second round of depositions of Smith Land witnesses, Michael Kline, Kevin Mitchell, James McGrew and Scott Rumberger. These depositions were completed in April, 2005. it. Thereafter, Smith Land proceeded to schedule depositions of individuals identified by Light in his discovery responses as individuals with knowledge of the facts at issue in this litigation and individuals he intends to call as witnesses during the trial in this litigation. Smith Land identified the following witnesses for the first round of depositions: Jeffrey Troutman, Sean Collins, James Mackinson, Chris Wilmont, John Banes, Robert Somers, Craig Adams and Chad Hollinger. Smith Land also indicated it would conduct a second round of depositions, deposing Lamar Light and Mike Savastio. -3- 12. These depositions were scheduled for the weeks of May 9, 2005 and June 13, 2005. The first week of depositions were cancelled, however, as the parties were discussing mutual resolution of this action. 13. With respect to the second week of depositions, Light's counsel indicated that, to the extent the matter could not be resolved through settlement, he would discuss the availability of the witnesses for the depositions at a settlement conference the parties were conducting on June 7, 2005. 14. At the settlement conference, when no settlement could be reached, Light's counsel expressly represented that he took steps to have the witnesses available for deposition the week of June 13, 2005. Consistent with these representations, counsel for Smith Land forwarded a letter confirming this schedule June 7, 2005, the date of the settlement conference. (A copy of this correspondence is attached hereto as Exhibit "B" and incorporated herein by reference). 15. Despite these representations, on June 8, 2005, Light's counsel forwarded correspondence indicating that they would produce only Somers, Banes, Light and Savastio. The correspondence states that because Light no longer anticipates calling the remaining individuals as witnesses, they will not produce them for deposition. (A copy of the June 8, 2005 correspondence is attached hereto as Exhibit "C" and incorporated herein by reference). 16. Instead, Light's counsel requires Smith Land's counsel to contact these individuals, most of whom are located outside the Commonwealth including Florida and North Carolina, and arrange for the depositions. Further, Light indicated subpoenas would be required for two of the witnesses he agreed to produce. -4- 17. Based on Light's refusal to produce individuals with knowledge as identified by him in discovery, and his failure to inform Smith Land of the same until June 8, 2005, Smith Land requires additional time to complete factual discovery. 18. Counsel for Smith Land also has scheduling conflicts, as he is scheduled for an arbitration in Baltimore, Maryland beginning Sunday, June 19, 2005, depositions in Philadelphia the week of July 11, 2005 and a jury trial in Lancaster County the week of July 25, 2005. Counsel reasonably believes, though, that factual discovery can be completed by August 31, 2005. 19. As a result, Smith Land requests that this Court issue a scheduling order setting forth the following deadlines in this matter: completion of factual discovery August 31, 2005, expert reports due September 30, 2005, rebuttal reports due October 15, 2005 and trial thereafter. 20. Smith Land submits that this request is made for good cause and is reasonable in light of the fact that it seeks an additional two month period to complete factual discovery where Light's depositions were only completed in April, 2005. 21. Smith Land contacted counsel for Light, Jeffrey McGuire, Esquire, and counsel refused to agree to these scheduling deadlines. -5- WHEREFORE, Smith Land & Improvement Corporation and Bald Eagle Insurance Co., Ltd. respectfully request that this Honorable Court grant their Motion for Scheduling Order and enter an Order permitting them to continue with discovery, setting the deadline for completion of factual discovery for August 31, 2005, the deadline for exchange of expert reports of September 30, 2005, and the deadline for exchange of rebuttal reports of October 15, 2005. Respectfully submitted, RHOADS & SINON LLP By: '?3rp Ie?r7??tju ISLE Dean F. Piermattei, Esquire Stephanie E. DiVittore, Esquire One South Market Square P. O. Box 1146 Harrisburg, PA 17108-1146 (717) 233-5731 Attorneys for Smith Land & Improvement Corporation & Bald Eagle Insurance Co., Ltd. -6- EXHIBIT "A" CALDWELL & KEARNS A PROFESSIONAL CORPORATION JAMES R. CLIPPINGER ATTORNEYS AT LAW CHARLES J. DEHART. III JAMES D. CAMPBELL. JR. 3631 NORTH FRONT STREET JAMES L. GOLDSMITH P. DANIEL ALTLAND HARRISBURG, PENNSYLVANIA 17110-1533 JEFFREY T. MCGU1RE• STANLEY J. A. LASKOWSKI DOUGLAS K. MARSICO BRETT M. WOODBURN RAY J. MICHALOWSKI DOUGLAS L. CASSEL February 23 2005 `ALSO A MEMBER OF NJ OAR , Dean F. Piermattei , Esquire Rhoads & Smon, LLP One South Market Square, 12Th Floor P. O. Box 1146 Harrisburg, PA 17108-1146 Re: Light vs. Smith Land & Improvement, et al. Cumberland County Civil Action No. 01-053 Smith Land & Improvement Corporation vs. Light Cumberland County Civil Action No. 03-834 Light vs. Bald Eagle Insurance Co., et al. Cumberland County Civil Action No. 03-1849 Dear Dean: OF COUNSEL RICHARD L. KEARNS CARL G. WASS THOMAS D. CALDWELL. JR. N9 2 8-2 0011 717-232-7661 FAX: 717-232-2768 thefirmOcaldwellkearns.c m At depositions we discussed further discovery and a discovery deadline in this case. You are going to hold March 30t1i, 3 and April 151, as well as the week of May 9fh and the week of June 13`h for depositions so that we can conclude the discovery in this case on or before June 30`h. Please let me know if any of these dates do not work for you or your clients. At this point, Mr. Rumsberger has indicated that he is available for his deposition on Wednesday, March 30Th at 1:00 p.m. I have spoken with Attorney DeMarco who is checking on the availability of the accountants. EARNS JTM:dlj cc: Lamar L. Light 01-283/84747 EXHIBIT "B" RHOADS & SINON LLP James R. Clippinger, Esquire Caldwell & Kearns 3631 North Front Street Harrisburg, PA 17110 nu xo. 1299/148 June 7, 2005 Re: Dear Jim: Dean F. Piermattei ph (717) 233-5731 fx (717) 231-6637 dpierTnattei@rboads-sinon.com Light v. Smith Land & Improvement et al. VIA FACSIMILE (717) 232-2766 & REGULAR MAIL Assuming settlement is not going to take place as per my letter of June 7, 2005, I would like to begin taking depositions in our offices on June 14, 2005. 1 would like to take the depositions of the following individuals: Jeffrey Troutman, Sean Collins, James Mackinson, Chris Wilmont, John Banes, Robert Somers, Craig Adams and Chad Hollinger. Thereafter I intend to produce their transcripts to some experts who are assisting in this matter and I would like to conduct the second round involving the deposition of Lamar Light and Mike Savastio and any other witnesses deemed to be relevant in this matter. Furthermore, I am unable to conclude our discovery by the end of June as we originally contemplated. I am currently working with several experts and they are in the process of reviewing the deposition transcripts from the most recent round of depositions. Additionally, I wish to provide them with the deposition transcripts for the above-mentioned individuals. To the extent any additional paper discovery is required based on the depositions, I will request the same from you and thereafter, I will provide you with our expert reports. I would also request that you provide me in advance with any expert reports that you have in light of the fact that I have requested the same through our discovery. I anticipate that the time period required to conclude depositions and any other paper discovery along with producing expert reports would take several more months putting discovery to the end of August. I do not believe this is unreasonable and if you are unwilling to work with me on this time-frame, I will move forward with requesting a scheduling conference with the Court. Very truly yours, RHOADS & SINON LLP ?By ;_- _ - - Deap F. Piermattei DFP/tlp 562302.1 Rhoads & Sinon LLP • Attorneys at Law • Twelfth Floor • One South Market Square • P.O. Box 1146 Harrisburg, PA 17108-1146 • ph (717) 233-5731 • fx (717) 232-1459 • www.rhoads-sinon.com EXHIBIT "C" JUN-08-2005 WED 03119 PM FAX NO. N. uuue CALDWI=LI n PROFEe S10N JAMES R. CLIPPINOER ATTORNE CHARLES J, OEHART. 111 - JAMES D. CAMPBELL. JR. 3631 NORTH JAMES L. GOLDSMITH P. DANIEL ALTLAND HARRISBURG, PENI JEFFREY T, Mc GUIPV STANLEY J. A. LASKOWSKI DOUOLAZ K. MARSICO BRETT M. WOODBURN RAY J. MICHALOWSKI June 8, 201 POUQLA5 L. CASSEL -ALGA A MEMBER OF NJ BAR VIA FAX @ 231-6637 Dean F. Piermattei , Esquire Rhoads &c Sinon, LLP One South Market Square, 12f° Floor P. O. Box 1146 Han-isburg, PA 17108-1146 Re: Light vs. Smith Land At Improvement. et al. Cumberland County Civil Action No. 01-053 Dear Dean: UN5EL KEARNS WASS \LDWELL, JR, 40011 ,2-Deal 232-also .Ilkaama.c We have received your faxes of Tune 7, and tune 8, concerning settlement, discovery and amending the pleadings in this case. It seerns clear to us that this case is not going to settle at this point. We believe that after trial, we will receive a judgment in excess of $4,000,000 and the only reason we are willing to discuss settlement is because we understand that collection will be difficult. We need to move forward with discovery. We will be tiling a motion with the Court in an effort to preclude any discovery by your clients, after June 30. In addition, we will be opposing your motion to amend the pleadings at this time. We believe this is merely a further delaying tactic. With regard to the specific depositions, Mr. Somers is available at 9:00 a.m. on Tuesday morning. Mr. Banes is available at 9:00 a.m. on Wednesday morning. With regard to the other individuals you have listed, we do not anticipate calling them to the trial of this matter, therefore, if you wish to depose them you will need to contact tbcm to make the arrangements. Mr. Light and Mike Savastio can be available on a Thursday or Friday, if you want me to schedule them. With regard to Mr. Banes and Mr. Somers, you will need to provide me with subpoenas in advance so that I can deliver the subpoenas to them (so they can provide them to their employers, if necessary). Very;Ctlly yours, ALDWELL &c KEARNS ITM:se / cc: Lamar Light 01283/88855 CERTIF CATE OF SERVICE I hereby certify that on this day of June, 2005, a true and correct copy of the foregoing Motion for Issuance of Scheduling Order was served by means of facsimile and United States Mail, postage prepaid upon the following: James R. Clippinger, Esquire Caldwell & Kearns 3631 North Front Street Harrisburg, PA 17110 Teresa L. Paulhamus r ?? "' a ? ? 4.' 'L T ? ? ? ? T'tl ?? - _ t9: . `,r`i -? r i?. Ci i. 7 ."J _..1e_ Y ?'_ C? _` ?T1 ?. "? `_l `TJ ? L^? ? LAMAR L. LIGHT, Plaintiff vs. IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO. 01-543 CIVIL SMITH LAND & IMPROVEMENT : CORPORATION & BALD EAGLE INSURANCE CO., LTD., Defendants SMITH LAND & IMPROVEMENT CORPORATION, Plaintiffs IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA VS. NO. 03-834 CIVIL LAMAR LIGHT, Defendant LAMAR L. LIGHT, Plaintiff IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA vs. BALD EAGLE INSURANCE CO., LTD. & SMITH LAND & DEVELOPMENT CORP., Defendants CIVIL ACTION - LAW CIVIL ACTION - LAW NO. 03-1949 CIVIL IN RE: MOTION FOR SCHEDULING ORDER ORDER AND NOW, this Ir day of June, 2005, argument on the within motion for scheduling order is set for Thursday, August 4, 2005, at 4:00 p.m. in Courtroom Number 4, Cumberland County Courthouse, Carlisle, PA. BY THE COURT, 4z )Kevi Al. ess, J. '?? r ? ?, ?\ ? ? w a ?° ? ? ? James R. Clippinger, Esquire For the Lamar L. Light Dean F. Piermattei,Esquire For Smith Land & Improvement Corporation & Bald Eagle Insurance Co., Ltd. Arn A LAMAR L. LIGHT, Plaintiff, V. SMITH LAND & IMPROVEMENT CORPORATION & BALD EAGLE INSURANCE CO., LTD., Defendant SMITH LAND & IMPROVEMENT CORPORATION, Plaintiff, V. LAMAR LIGHT, Defendant, LAMAR LIGHT, Plaintiff, V. BALD EAGLE INSURANCE CO., LTD & SMITH LAND & DEVELOPMENT CORP., Defendant. IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA NO. 01-5053 -- : CIVIL ACTION-LAW And IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA JUDGE HESS NO. 03-834 CIVIL TERM : CIVIL ACTION - LAW And IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA NO. 03-1849 JUDGE HESS CIVIL ACTION - LAW LAMAR LIGHT'S REPLY TO SMITH LAND'S MOTION TO AMEND THE PLEADINGS AND NOW comes Lamar L. Light, by and through his attorneys, Caldwell & Kearns, reply to Smith Land & Improvement Corporation's (hereinafter, "Smith") Motion to Amend the Pleadings and avers the following: 1. Admitted. 2. Admitted. 3. Admitted. By way of further answer, Richard E. Jordan, II, the Chairman and CEO of Smith Land and Improvement Corporation admitted that it was his belief that the value of the shares would exceed Four Million Dollars ($4,000,000.00) and it was his decision to pay Lamar Light Four Million Dollars ($4,000,000.00). See Deposition of Richard E. Jordan, II, page 62. A true and correct copy of this page is attached hereto as Exhibit "A" and incorporated herein by reference. 4. Admitted. 5. Admitted. 6. Admitted. 7. Admitted. S. Denied. By way of further answer, the auditors testified and there has been no discovery indicating the auditor's valuation was incorrect. By way of further answer, there has been no discovery conducted by Smith Land that revealed any change in the actual book value of Light's stock. 9. Denied. 10. Admitted. 11. Admitted. 12. Admitted. 13. Denied. It is believed and therefore alleged that this is merely a further attempt to delay the trial of this matter. 14. Admitted. 2 WHEREFORE, Lamar L. Light requests that Your Honorable Court deny Smith Land's Motion to Amend the Pleadings. Date: June 17, 2005 By: Respectfully submitted, & KKE?AR?NS McGuire, Esquire ID No. #73617 lames R. Clippinger, Esquire Attorney ID No. 07159 3631 North Front Street Harrisburg, PA 17110-1533 (717) 232-7661 Attorneys for Plaintiff/Respondent, Lamar Light 01-283/89168 62 3 4 s s 7 a 9 =o 11 12 13 14 15 17 1e 19 20 21 22 23 24 25 some way? A Not at the 3.4. Q At the $4 million number? A It was not calculated at the four. It was a guesstimate. We guessed that it would be there. It was the most expeditious way to get them into a payment mode of starting to receive payments for the equity in the company that we owed them. I never sat and calculated it. I can tell you that. Q Okay. Do you know who did the calculation? A I don't believe anybody did. I believe it was my instruction to Mr. Sherwood to do the note for 4 million. And I honestly thought that's how we would end up. I thought we would end up, and it would be done. Because we were at a point that we would have -- it would have been 4 million. And -- but as we got into year end adjustments and so forth, it was reduced. Q Okay. A We shouldn't have done it. I mean, I'll be the first one to say. And I'll take full blame for issuing it because it was the wrong thing to do because we did not make the calculation. It was not our place to do it. That's the place of the auditors doing the year end financial statements. CERTIFICATE OF SERVICE i n7yl AND NOW, this day of ,1tiu.X_ 2005, I hereby certify that I have served a copy of the within document on the following by depositing a true and correct copy of the same in the U.S. Mails at Harrisburg, Pennsylvania, postage prepaid, addressed to: Dean F. Piermattei, Esquire Rhoads & Sinon, LLP One South Market Square, 12`" Floor P. O. Box 1146 Harrisburg, PA 17108-1146 CALDWELL & KEARNS By: 01/283/89168 ^? C' 7 "1 n it C...- 't' ^I'i. L? < ?,,7 C,7 -,1 --.. CJ { t 1 LAMAR L. LIGHT, Plaintiff, V. SMITH LAND & IMPROVEMENT CORPORATION & BALD EAGLE INSURANCE CO., LTD., Defendant SMITH LAND & IMPROVEMENT CORPORATION, Plaintiff, V. LAMAR LIGHT, Defendant, LAMAR LIGHT, Plaintiff, V. BALD EAGLE INSURANCE CO., LTD. & SMITH LAND & DEVELOPMENT CORP., Defendant. r . I IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA NO. 01-5053 : CIVIL ACTION - LAW And IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA JUDGE HESS NO. 03-834 CIVIL TERM : CIVIL ACTION - LAW And IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA NO. 03-1849 JUDGE HESS CIVIL ACTION - LAW LAMAR LIGHT'S REPLY IN OPPOSITION TO SMITH LAND'S REQUESTED SCHEDULING ORDER AND NOW comes Lamar Light a/kfa Lamar L. Light, by and through his attorneys, Caldwell & Kearns, and files the within Reply in opposition to Smith Land & Improvement Corporation's (hereinafter, "Smith Land") requested Scheduling Order and avers the following: Admitted. 2. Admitted. 3. Admitted. . . , 4. Admitted. 5. Admitted. 6. Admitted in part. It is admitted that the parties have agreed that factual discovery would be completed by June 30, 2005. Exhibit "A" is a true and correct copy of the undersigned's February 23,2005, correspondence. 7. Admitted. 8. Admitted in part. It is admitted that Smith Land produced extensive records. It is unknown whether those records were retrieved from storage. 9. Admitted. 10. Admitted. 11. Admitted in part. It is admitted that Smith Land has identified the listed witnesses for a "first round of depositions" for the first time on June 7, 2005. By way of further answer, only two ofthe witnesses listed in the "first round of depositions" are witnesses which Light presently intends to call at the trial of this matter. 12. Admitted in part. It is admitted that per our March 14,2005, correspondence, the weeks of May 12, and June 13,2005, were being held for depositions in this case. Smith Land cancelled the depositions the week of May 9, allegedly because an effort would be made to settle the case; although, no offer was ever made in this matter until June 7, 2005. By way of further answer, Light agreed to the canceling of the depositions the week of May 9 with the understanding that discovery would still be completed by the June 30 deadline. 13. Admitted. By way of further answer, we had requested that the witnesses Smith Land wished to depose be identified several times prior to the settlement conference. 2 14. Admitted. By way of further answer, Light asked all the witnesses he listed to try to be available during the weeks of May 9, and June 13,2005. Light will make every effort to cooperate with obtaining the witness depositions. However, the only witnesses that we have any actual control over, are Mr. Light and Mr. Savastio whom Smith Land has not deposed despite their availability. IS. Denied as stated. See paragraph 14. By way of further answer, see the March 14, 2005, correspondence from the undersigned, which is a letter indicating which witnesses we intend to call to the trial ofthis matter as requested by Smith Land's counsel in order to streamline the depositions. A copy of the March 14, 2005, correspondence is attached hereto as Exhibit "A" and incorporated herein by reference. 16. Denied as stated. It is not clear under what basis Smith Land's counsel believes depositions of the additional witnesses are necessary as they are not currently listed as witnesses by any party in this matter. 17. Denied. By way of further answer, Smith Land first identified what witnesses they wished to depose on June 8, 2005, and included nUmerous witnesses that the undersigned previously indicated would not be called at the trial of this matter. By way offurther answer, this side has requested numerous times to move forward with and schedule the depositions, both during the week of May 9, and June 13,2005. By way of example, see the undersigned's letter dated April 28, 2005, a copy of which is attached hereto as Exhibit "B" and incorporated herein by reference as well as a letter of May 10, 2005, attached hereto as Exhibit "c" and incorporated herein by reference. 18. Admitted based on information and belief. 19. It is admitted that Smith Land is requesting a Scheduling Order as set forth. By way of further answer, Lamar Light would request a Scheduling Order setting forth that factual discovery be 3 '. completed by June 30, 2005, expert reports by July 30,2005, and rebuttal reports by August 30, 2005, with trial to commence in September. 20. Denied. 21. Denied by way offurther answer. This case has been pending since 2001. Discovery deadlines have previously been set and modified on numerous occasions and two weeks were set aside for Smith Land to conduct the depositions. Of the ten days set aside, Smith Land cancelled one full week and took only two depositions. It is believed that this is merely another attempt to delay the trial ofthis matter. WHEREFORE, Lamar Light requests that Your Honorable Court enter a scheduling order setting a deadline for completion of factual discovery for June 30, 2005, the deadline for exchange of expert reports of July 30,2005, and a deadline for exchange of rebuttal reports for August 30, 2005. Respectfully submitted, Date: June 17, 2005 L & KEARNS ~.. By: J . McGuire, Esquire Attorney ID No. #73617 James R. Clippinger, Esquire Attorney ID No. 07159 3631 North Front Street Harrisburg,PA 17110-1533 (717) 232-7661 Attorneys for Respondent, Lamar Light 01-283/89164 4 je?kk,rl? ( JAMES R. CLIPPINGER CHARLES J. DEHART. III JAMES D. CAMPBELL. JR. JAMES L GOLDSMITH P. DANIEL ALTLAND JEFFREY T. MCGUIRE' STANLEY J. A. LASKOWSKI DOUGLAS K. MARSICO BRETT M. WOODBURN RAY J. MICHALOWSKI DOUGLAS L. CASSEL 'ALSO A MEMBER OF NJ BAR CALDWELL & KEARNS'' A PROFE5SIONAL CORPORATION ATTORNEYS AT LAW 3631 NORTH FRONT STREET HARRISBURG. PENNSYLVANIA 17110-1533 Dean F. Piermattei , Esquire Rhoads & Sinon, LLP One South Market Square, 12th Floor P. O. Box 1146 Harrisburg, PA 17108-1146 March 14, 2005 Re: Light vs. Smith Land & Improvement. et al. Cumberland County Civil Action No. 01-053 Smith Land & Improvement Corporation vs. Light Cumberland County Civil Action No. 03-834 Light vs. Bald Eagle Insurance Co., et al. Cumberland County Civil Action No. 03-1849 Dear Dean: , I OF COUNSEL RICHARD L KEARNS CARL G. WASS THOMAS D. CALDWELL. JR. 119 2 8-20011 717-232-7661 FAX 717-232-2766 thefirm@caldweilkearns.com Based upon the information we have at this point regarding your client's claims in this matter, we anticipate calling the following witnesses at the trial of this matter: John Banes, Craig Cleary, Pat Sherwood, Bob Summers, Mark Dowdell, John Seroskie, Troy Abel, Mike Savastio and Lamar Light. In addition to the previously listed witnesses, we reserve the right to call Rocky Cherno, Jim Dodle, and Collin Robinson, in addition to any witnesses you have previously identified, whether or not we depose them. I hope this is helpful. Obviously, if you are willing to advise us who are calling at trial, and for what issues, or if you are willing to drop some of the allegations in your Complaint, we may be able to further narrow our witness list. Very truly yours, Jeffrey T. McGuire CALDWELL & KEARNS JTM:dlj 01-283/85547 , , I CALDWELL &KEARNS A PROFESSIONAL CORPORATION JAMES R. CLIPPINGER ATTORNEYS AT LAW CHARLES J. DeHART. III JAMES O. CAMPBELL. JR. JAMES L. GOLDSMITH 3631 NORTH FRONT STREET P. DANIEL ALTLAND HARRISBURG, PENNSYLVANIA 17110-1533 JEFFREY T. Mc GUIRE' STANLEY J. A. LASKOWSKI DOUGLAS K. MARSICO BRETT M. WOODBURN RAY J. MICHALOWSKI DOUGLAS L. CASSEL p /? April 28 2005 'ALSO A MEMBER OF NJ BAR , VIA FAX @ 231-6637 Dean F. Piermattei , Esquire Rhoads & Sirion, LLP One South Market Square, 12"' Floor P. O Box 1146 Harrisburg, PA 17108-1146 Re: Light vs. Smith Land & Improvement et al. Cumberland County Civil Action No. 01-053 Smith Land & Improvement Corporation vs. Light Cumberland County Civil Action No. 03-834 Light vs. Bald Eagle Insurance Co., et al. Cumberland County Civil Action No. 03-1849 Dear Dean: e ? 1 OF COUNSEL RICHARD L. KEARNS CARL G. WASS THOMAS D. CALDWELL. JR. 11928 - 20010 717-232-7661 FAX. 717 - 232-2765 thef irT®caldwellkearns.com I need to know whether you are planning to proceed with any depositions the week of May 9"'. My client and 1 are attempting to hold the entire week, but we have not heard ;'r-nn you. nor have you given us an opportunity to contact any of the potential witnesses to determine their availability. I know you indicated a desire to talk settlement; however, we want to maintain our agreement to conclude discovery by the end of June, and it is our firni intention to list this matter for trial upon completion of discovery and no later than the end of June. Please let me know whether we are going forward with any depositions in May or any depositions during the week of June 13`h, which week I am also holding. JTMAIj 87,50 3ARNS JAMES R. CLIPPINGER CHARLES J. DEHART, III JAMES O. CAMPBELL. JR. JAMES L GOLDSMITH P. DANIEL ALTLAND JEFFREY T. MCGUIRE' STANLEY J. A. LASKOWSKI DOUGLAS K. MARSICO BRETT M. WOODBURN RAY J. MICHALOWSKI DOUGLAS L. CASSEL 'ALSO A MEMBER OF NJ BAR CALDWELL & KEARNS A PROFESSIONAL CORPORATION ATTORNEYS AT LAW 3631 NORTH FRONT STREET HARRISBURG, PENNSYLVANIA 17110-1533 VIA FAX lo% 231-6637 & U.S. Mail Dean F. Piermattci, Fsqurre Rhoads & Sinon, LIT One South Market Square, 12°i Floor P. O. Box 1 146 Harrisburg, PA 17108-1146 May 10, 2005 Re: Light vs. Smith Land & Imnrovement. et at Cumberland County Civil Action No. 01-053 Smith Land & Improvement Corporation vs. Light Cumberland County Civil Action No. 03-834 Light vs. 11ald Eagle Insurance Co., et A. Cumberland Countv Civil Action No. 03-1849 Dear Dean: OF COUNSEL RICHARD L. KEARNS CARL G. WASS THOMAS D. CALDWELL. JR. 119 2 8-2 0011 717-232-7661 FAX. 717-232-2766 thefirm®caldwellkearns Conn In response to your letter of May (), 2005, I have sat down with Mr- light and we cannot agree to your evaluation that the starting point for any settlement discussion would be that the Class D stock had an equity cable of $0 at the time Lamar Light's stock was to be purchased. We remain interested in settlement discussions and look forward to a genuine settlement offer from your clients. However, this case needs to move forward as it has been pending for several years with no settlement offer made by your clients. With regard to the upcoming depositions, obviously Tve will produce Lamar Light, and [believe as long as you provide us with a subpoena. that we can produce his son-in-law, Mike Savastio. Otherwise, with regard to any other witnesses, I have no control over them, and you will need to subpoena them. It is my hclief that your client has all of the addresses; however, we are in the process of trying to determine current addresses for these witnesses. We will Lio our best to work with you regarding the scheduling of the depositions. Very trUly yours. Jeffrey 1'. McGuire CALDWLLL & KLARNS JTM:dIj cc: Farrar Light (via fax) 87698 CERTIFICATE OF SERVICE i I 1 AND NOW, this q0day of 2005, I hereby certify that I have served a copy of the within document on the following by depositing a true and correct copy of the same in the U.S. Mails at Harrisburg, Pennsylvania, postage prepaid, addressed to: Dean F. Piermattei, Esquire Rhoads & Sinon, LLP One South Market Square, 12`h Floor P. O. Box 1146 Harrisburg, PA 17108-1146 CALDWELL & KEARNS By: i X 01/283/89164 JJ ri n LAMAR L. LIGHT, Plaintiff vs. SMITH LAND & IMPROVEMENT : CORPORATION & BALD EAGLE INSURANCE CO., LTD., Defendants SMITH LAND & IMPROVEMENT CORPORATION, Plaintiffs vs. LAMAR LIGHT, Defendant LAMAR L. LIGHT, Plaintiff Vs. BALD EAGLE INSURANCE CO., LTD. & SMITH LAND & DEVELOPMENT CORP., Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO. 01-5053 CIVIL_>--? IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO. 03-834 CIVIL IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO. 03-1949 CIVIL IN RE: MOTION TO AMEND THE PLEADINGS ORDER AND NOW, this 2 z !? day of June, 2005, a brief argument on the within motion to amend the pleadings is set for Thursday, August 4, 2005, at 4:00 p.m., in Courtroom Number 4, Cumberland County Courthouse, Carlisle, PA. BY THE COURT, ??cY ov Hess, J. folk-IU ` vloUlltljj k.l ?J r James R. Clippinger, Esquire For the Lamar L. Light Dean F. Piermattei,Esquire For Smith Land & Improvement Corporation & Bald Eagle Insurance Co., Ltd. Am LAMAR L. LIGHT, Plaintiff vs. SMITH LAND & IMPROVEMENT : CORPORATION & BALD EAGLE : INSURANCE CO., LTD., Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO. 01-5053 CIVIL SMITH LAND & IMPROVEMENT : IN THE COURT OF COMMON PLEAS OF CORPORATION, CUMBERLAND COUNTY, PENNSYLVANIA Plaintiffs NO.I03-834 ACTION - LAW vs. / CIVIL LAMAR LIGHT, Defendant LAMAR L. LIGHT, Plaintiff vs. BALD EAGLE INSURANCE CO., LTD. & SMITH LAND & DEVELOPMENT CORP., Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO. 03-1949 CIVIL IN RE: MOTION TO AMEND THE PLEADINGS ORDER AND NOW, this Y ` day of August, 2005, the motion of Smith Land to amend the pleadings is granted and it is directed that the amendment be filed within seven (7) days. BY THE COURT, o? Affrey McGuire, Esquire For Lamar L. Light v6ean F. Piermattei,Esquire For Smith Land & Improvement Corporation & Bald Eagle Insurance Co., Ltd. xlm LAMAR L. LIGHT, Plaintiff VS. SMITH LAND & IMPROVEMENT : CORPORATION & BALD EAGLE INSURANCE CO., LTD., Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO. 01-5053 CIVIL SMITH LAND & IMPROVEMENT : IN THE COURT OF COMMON PLEAS OF CORPORATION, CUMBERLAND COUNTY, PENNSYLVANIA Plaintiffs CIV 51 ACTION - LAW VS. 03-834 CIVIL LAMAR LIGHT, Defendant LAMAR L. LIGHT, Plaintiff IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA VS. BALD EAGLE INSURANCE CO., LTD. & SMITH LAND & DEVELOPMENT CORP., Defendants CIVIL ACTION - LAW NO. 03-1949 CIVIL IN RE: STATUS CONFERENCE ORDER AND NOW, this day of August, 2005, following conference call with counsel, it is ordered and directed that the parties adhere to the following case management order: 1. All discovery, other than the furnishing of expert reports, shall be completed on or before August 31, 2005. 2. All expert reports shall be forthcoming no later than September 23, 2005. 3. Any rebuttal expert reports shall be furnished on or before October 21, 2005. /441. S? 5-,,RO05- 4. Any surrebuttal expert reports shall be due on or beiFore October 28, 2005. Either party is authorized to list this case for trial during the term commencing November 7, 2005. The court notes that the last day for setting down cases for this trial term is September 19,2005. BY THE COURT, /Jeffrey McGuire, Esquire For Lamar L. Light veean F. Piermattei,Esquire For Smith Land & Improvement Corporation & Bald Eagle Insurance Co., Ltd. :rlm J •,?? V? LAMAR L. LIGHT, Plaintiff V. SMITH LAND & IMPROVEMENT CORPORATION & BALD EAGLE INSURANCE CO., LTD., Defendants SMITH LAND & IMPROVEMENT CORPORATION, Plaintiff V. LAMAR LIGHT, Defendant LAMAR L. LIGHT, Plaintiff V. BALD EAGLE INSURANCE CO., LTD. & SMITH LAND & DEVELOPMENT CORP. Defendants and and IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA NO. 01-5053 CIVIL ACTION - LAW IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY,, PENNSYLVANIA NO. 03-834 Civil Term CIVIL ACTION - LAW IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA NO. 03-1849 CIVIL ACTION - LAW CERTIFICATE PREREQUISITE TO SERVICE OF A SUBPOENA PURSUANT TO RULE 4009.22 As a prerequisite to service of a subpoena for documents and things pursuant to Rule 4009.22, Smith Land & Improvement Corporation certifies that: 1. a notice of intent to serve a subpoena with a copy of the subpoena attached thereto was originally faxed to each party at least twenty days prior to the date on which the subpoena was sought to be served; 2. counsel for Lamar L. Light agreed to waive objections to the subpoena; 3. a copy of the August 10, 2005 letter from counsel for Lamar L. Light is attached to this certificate as Exhibit "A"; 4. changes to the Subpoena requested by counsel for Lamar L. Light were made; 573811.1 5. a notice of intent with the revised subpoena attached was faxed to each party on August 30,2005; 6, a copy of the re-served notice of intent, including the revised subpoena, is attached to this certificate at Exhibit "B"; and 7, the subpoena which will be served is identical to the subpoena which is attached to the notice of intent which was served on August 30, 2005. RHOADS & SINON LLP By: R-7 [ Zti l '4 6 Dean F. Piermattei Stephanie E. DiVittore One South Market Square P.O. Box 1146 Harrisburg, PA 17108-1146 (717) 233-5731 Attorneys for Smith Land & Improvement Corporation Date: August 30, 2005 C, ?D, ??• rte r? PRAECIPE FOR LISTING CASE FOR TRIAL (Must be typewritten and submitted in duplicate) TO THE PROTONOTARY OF CUMBERLAND COUNTY Please list the following case: ? for JURY trial at the next term of civil court. ? for trial without a jury. CAPTION OF CASE (entire caption must be stated in full) (check one) ® Civil Action - Law n ? Appeal from arbitrati& (other) r N cn ? -n t„ <n ni _ z ?D r- LAMAR L. LIGHT, Plaintiff, v. SMITH LAND & IMPROVEMENT CORPORATION & BALD EAGLE INSURANCE CO., LTD., Defendant SMITH LAND & IMPROVEMENT CORPORATION, Plaintiff, v. LAMAR LIGHT, Defendant, LAMAR LIGHT, Plaintiff, V. BALD EAGLE INSURANCE CO., LTD & SMITH LAND & DEVELOPMENT CORP., Defendant. IN THE COURT OF COMMON FT-VAS ? CUMBERLAND COUNTY, PEN*VLVA;V 0 NO. 01-5053 : CIVIL ACTION - LAW And IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA JUDGE HESS NO. 03-834 CIVIL TERM : CIVIL ACTION - LAW And IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA NO. 03-1849 JUDGE HESS CIVIL ACTION -- LAW The trial list will be called on N/A and Trials commence on 11/07/05 Pretrials will be held on 10/19/05 (Briefs are due 5 days before pretrials) No.: See Consolidated Actions listed above, Civil Tenn Indicate the attorney who will try case for the party who files this Praccipe. Jeffrey T. McGuire. Esquire, 3631 North Front Street Harrisburg PA 17110-1533 Indicate trial counsel for other parties if known: Dean F. Piennattei, Esquire. One South Market Square, 12"' Floor, Hanisbur-. PA 17108-1146. This case is ready for trial. Date: September 19, 2005 Signed: Print Na ?e: Jeffrey T. McGuire Attorney for: Lamar L. Light 92910 N {7 C'? ^-1'1 i V'1 ?,- ' r?} rn? ( -? l ?? ` ,.?. , .n r_?i?, r, -c} ??-?, c7 ,. :> ?fn 1? C' N `c ?: ? :-t ut 4 1' LAMAR L. LIGHT, Plaintiff vs. SMITH LAND & IMPROVEMENT : CORPORATION & BALD EAGLE INSURANCE CO., LTD., Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO. 01-5053 CIVIL SMITH LAND & IMPROVEMENT : IN THE COURT OF COMMON PLEAS OF CORPORATION, CUMBERLAND COUNTY, PENNSYLVANIA Plaintiffs vs. LAMAR LIGHT, Defendant LAMAR L. LIGHT, Plaintiff VS. BALD EAGLE INSURANCE CO., LTD. & SMITH LAND & DEVELOPMENT CORP., Defendants CIVIL ACTION-LAW NO. 03-834 CIVIL IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO. 03-1949 CIVIL IN RE: NONJURY TRIAL ORDER AND NOW, this z T • day of October, 2005, a pretrial conference in the above captioned matter is set for Wednesday, November 16, 2005, at 9:00 a.m. in the Chambers of the undersigned. BY THE COURT, Kevin,Y.'Hess, J. Jeffrey McGuire, Esquire For Lamar L. Light Dean F. Piennattei,Esquire For Smith Land & Improvement Corporation & Bald Eagle Insurance Co., Ltd. Am RECEIVED OCT 0 6 2005 LAMAR L. LIGHT, IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff v. NO. 01-5053 SMITH LAND & IMPROVEMENT CORPORATION & BALD EAGLE INSURANCE CO., LTD., Defendants . CIVIL ACTION - LAW and SMITH LAND & IMPROVEMENT IN THE COURT OF COMMON PLEAS CORPORATION, CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff JUDGE HESS / V. NO. 03-834 Civil Term ? LAMAR LIGHT, Defendant CIVIL ACTION - LAW and LAMAR L. LIGHT, IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff V. NO. 03-1849 BALD EAGLE INSURANCE CO., LTD. JUDGE HESS & SMITH LAND & DEVELOPMENT CORP. Defendants CIVIL ACTION - LAW ORDER AND NOW, this _ day of October, 2005, upon consideration of the Objections to Listing Case for Trial filed on behalf of Smith Land & Development Corporation and Bald Eagle Insurance Co., Ltd., it is hereby ORDERED that this case is stricken from the November 7, 2005 trial term. The parties are directed to communicate regarding future trial terms and list this matter for a mutually available date. BY THE COURT: , J. 580741.1 Dean F. Piermattei, Esquire Attorney I.D. No. 53847 Stephanie E. DiVittore, Esquire Attorney I.D. No. 85906 RHOADS & SINON LLP One South Market Square, 12th Floor P.O. Box 1146 Harrisburg, PA 17108-1146 (717) 233-5731 Attorneys for Defendants LAMAR L. LIGHT IN THE COURT OF COMMON PLEAS Plaintiff CUMBERLAND COUNTY, PENNSYLVANIA V. CIVIL ACTION -LAW NO. 01-5053 SMITH LAND & IMPROVEMENT CORPORATION and BALD EAGLE ACTION FOR DECLARATORY JUDGMENT INSURANCE CO., LTD. Defendants DEFENDANTS' OBJECTIONS TO LISTING CASE FOR TRIAL NOW COME Defendants Smith Land & Improvement Corporation and Bald Eagle Insurance Co., Ltd. (collectively "Smith Land"), by and through their attorneys, Rhoads & Sinon LLP, and file the within Objections to Listing Case for Trial for the November 7, 2005 term and states the following in support thereof: On October 22, 2003, Smith Land filed a Complaint against Lamar Light ("Light") seeking damages based on Light's breach of fiduciary duty and tortious interference in connection with his resignation as an officer and employee of Smith Land, Cumberland County Docket No. 03-834. 2. Prior to that time, on August 29, 2001, Light had filed an action against Smith Land seeking a declaration that a Promissory Note, issued by Bald Eagle in connection with an 580736.1 Amended Shareholders' Agreement between Smith Land and Light, was valid and enforceable, Cumberland County Docket No. 01-5053. 3. On April 22, 2003, Light filed a Confession of Judgment Complaint confessing judgment, under the Promissory Note, against Smith Land in the amount of $2,674,220.93, Cumberland County Docket No. 03-1849. 4. These three actions were consolidated by Court Order dated December 5, 2003. 5. Since that time, the parties have moved forward with discovery, conducting written discovery and depositions in accordance with the Pennsylvania Rules of Civil Procedure and direction of this Court. 6. Counsel for Plaintiff filed a Praecipe for Listing Case for Trial on September 19, 2005, seeking to have this matter tried beginning on November 7, 2005. 7. Smith Land acknowledges that discovery in this matter is complete. The difficulty with this listing, however, is that lead counsel and the associate involved in this case are currently scheduled for trial beginning October 31, 2005 in the Dauphin Comity Court of Common Pleas. (A copy of the July 29, 2005 Order from the Honorable Lawrence F. Clark, Jr. scheduling Pendolino v. Hess, Docket No. 2003-CV-2969 for trial beginning October 31, 2005 is attached hereto as Exhibit "A" and incorporated herein by reference). 8. It is not certain that the Pendolino trial will be completed in order to begin trial in this case on November 7, 2005. Even if complete, however, trial the week preceding this matter will not present sufficient time for preparation. 9. The schedule for completion of this case was discussed (luring a conference call pursuant to Motions filed on behalf of Smith Land. At that time, the parties agreed to a discovery schedule which has been met and a schedule for production of expert reports which Smith Land has met. Additionally, at that time we agreed the parties could most likely list the case for the November terns. At the time counsel for Smith Land made that comment, however, he was unaware the trial term began November 7, 2005. Currently trial counsel is expecting the birth of his son for that same week, with a November 9, 2005 due date. 10. This continuance is requested in good faith, based on prior conflicts, and not designed to unnecessarily delay resolution of this case. WHEREFORE, Defendants Smith Land & Improvement Corporation and Bald Eagle Insurance Co., Ltd. respectfully request that this Court remove the above-captioned action from the November 7, 2005 civil trial term. Respectfully submitted, RHOADS & SINON LLP By:[ f V GG A `i? K c, ?? ( r? Dean F. Piermattei Stephanie E. DiVittore One South Market Square P. O. Box 1146 Harrisburg, PA 17108-1146 (717) 233-5731 Attorneys for Defendants EXHIBIT "A" JODI PENDOLINO : IN THE COURT OF COMMON PLEAS VS OF DAUPHIN COUNTY, PENNSYLVANIA MICHAEL HESS, INDIVIDUALLY and: MICHAEL and CATHY HESS AS TRUSTEES OF MICHAEL B. HESS TRUST : NO. 2003-CV-2969 MICHAEL HESS AND CATHY HESS, TRUSTEES OF THE MICHAEL B. HESS LIVING TRUST VS JODI E. PENDOLINO : IN THE COURT OF COMMON PLEAS OF DAUPHIN COUNTY, NO. 2004-NT-113 O R D E R PENNSYLVANIA AND NOW, this 29th day of July, 2005, the above-captioned cases are stricken from the August, 2005 Civil Court Term. The Deputy Court Administrator is directed to automatically list the cases for the October, 2005 Civil Court Term. C. -t, Distribution M a Thomas E. Brenner, Esquire D c Dean Piermattei, Esquire C ®eborah Freeman, Esquire, Deputy Court Administrator-, SEP ` 2005 N O ?n rn N a N max. m orn< C=) M a CERTIFICATE OF SERVICE I hereby certify that on this day of October, 2005, a true and correct copy of the foregoing Defendants' Objections to Listing Case for Trial was served by means of United States mail, first class, postage prepaid, upon the following: Jeffrey T. McGuire, Esquire Caldwell & Kearns 3631 North Front Street Harrisburg, PA 17110 -4- r.? ? t:) 5't ? ? `i.? ? ' .. r?`. ) x ` ? ? ; ? _ ' ) ? ?? :G COMMONWEALTH OF PENNSYLVANIA COUNTY OF: Mag. Dist. No.: 19-2-01 DJ Name: Hon. HAROLD D. KESSLER Address: 110 PLEASANT ACRES ROAD YORK, PA Telephone: (717) 840-7233 17402 oa NOTICE OF JUDGMENT/TRANSCRIPT PLAINTIFF: CIVIL CASE NAME and ADDRESS FSWOPE, ESQ, DONALD B. 50 E MARKET ST HELLAM, PA 17406 L J VS. DEFENDANT: NAME and ADDRESS rTHOMAS, SCOTT 9 OAK AVENUE ENOLA, PA 17025 L J DONALD B. SWOPE, ESQ 50 E MARKET ST DocketNo.: CV-0000213-02 HELLAM, PA 17406 Date Filed: 3/13/02 a?4 THIS IS TO NOTIFY YOU THAT: nTrvnrrT.m JUDGMENT 21-1 Judgment: 0 Judgment was entered for: (Name) SNOPR RGn, T1nNAT n R ?X Judgment was entered against: (Name) npmm C_, s nTT in the amount of $ 2, n3n - n2 on: (Date of Judgment) g; In9 J n2 7 Defendants are jointly and severally liable. 0 Damages will be assessed on: This case dismissed without prejudice Amount of Judgment Subject to Attachment/Act 5 of 1996 $- 7 Levy is stayed for days or [-] generally stayed. ? Objection to levy has been filed and hearing will be held: (Date & Time) Amount of Judgment Judgment Costs Interest on Judgment Attorney Fees Total Post Judgment Credits $ Post Judgment Costs $ ------------ Certified Judgment Total $ Date: Place: Time: ANY PARTY HAS THE RIGHT TO APPEAL WITHIN 30 DAYS AFTER THE ENTRY OF JUDGMENT BY FILING A NOTICE OF APPEAL WITH THE PROTHONOTARY/CLERK OF.. THE COURT OF COMMON PLEAS, CIVIL DIVISION. YOU MUST-INCLUDE A COPY OF THIS NOTICE OF JUDGMENT/TRANSCRIPT FORM WITH YOUR NOTICE OF APPEAL. (-? ?- `Date District Justice I?certifyy that This is a'frue and co`r ct copy. oft e record&of'the proceedings containing the judgment. S--c -Vc)- Date District Justice My commission expires first Monday of January, 2004 SEAL AOPC 315-99 AFFIDAVIT OF NO APPEAL District Justice Docket Number: Donald B. Swcce, Esq. CV-0000213-02 Plaintiff VS. Scott Thomas Defendant As of January 21, 2003 A District Justice appeal has not been filed in the Court of Common Pleas of York e County in the above captioned matter. t STACIA N. GATES, PROTHONOTARY MY COMMISSION EXPIRES nNUARY 5, 2004 ,..,. ? ? ? ? ?- ?- w w ? ? ?, ? ? ??> r'' ? _.:. E' C.% • !; !- ?1 • 1 ...! -< u Prothonotary PRAECIPE FOR WRIT OF EXECUTION (MONEY JUDGMENTS) P.R.C.P. 3101 to 3149 .. DONALD, B.., , SKRE,,., ES.QUIPIE .......... vs. .. S.OQTT .TH.0.MAS .......................... IN THE COURT OF COMMON PLEAS OF YOXX COUNTY, PENNSYLVANIA CUMBERLAND Judgment No. (DJ ... ...f....Term . 19 ..... PRAECIPE FOR WRIT OF EXECUTION (MONEY JUDGMENT) To the Prothonotary: ISSUE WRIT OF EXECUTION IN THE ABOVE MATTER, (1) Directed to the Sheriff of...... Cambe.r.1 and ............ County, Penna.; (2) against .5Cptt,ThQR45 ........................................................................ .............................................................................Defendant(s); (3) and against .......................................................................... Garnishee(s); (4) and index this writ (a) against....5C.Qtt..Thomas .................................................................. ............................. ........................................Defendant(s)and (b) against ..................................................................................... ............. ...... ................................ ...................... Garnishee(s), as a lis pendens against the real property of the Defendant(s) in the name of the Garnishee(s) as follows: (Specifically describe property)" Any and all personal property located at 9 Oak Avenue, Enola, PA 17025 (5) Amount due s. 2,;030,02,,..,,,,, Interest from Dated .... Ij?V4-? ............ . Total . 2.,.030. 02 ........ Plus costs. .. . ..................................... Attorney for Plaintiff(s) t,OT B Under paragraph (1) when the write dnect.d to ire site„(f of another corm, as authorized h> Rule 3103(b), the county should be indicated. Under Rule 3103(c) a writ issued on a tranferrred judgment may be directed to the sheriff of the county in which issued. Paragraph (3) above should be completed only if a named garnishee is to be included in the writ. Paragraph (4) (a) above should be completed only if indexing of the execution h, the counts d ,.,... de-ilrtd as authorized by Rule 3104(a). When the writ issues to another county indexing is requited as of course in that ccunty b, me prothonotat y. Sce Rule 3104(b). Paragraph (4) (b) should be completed only if real property in the name of the garnishee is attached and indexing as a hs pendes is desired. See Rule 3104(c). •A description of specific properly to be levied upon or attached maybe set forth in the praecipe or included by exhibit attached. -.-.--.-------Judgment entered by confession ___._-------Judgment no entered by confession -Notice given b o :o n n O n 3 :o :W oC v s :n aO m n :N ? b z n p m C4 .C O Z H 7Q > ° > O _2z _ o o -? ` a j a i rR `? z 0 a rt ?O WRIT OF EXECUTION and/or ATTACHMENT COMMONWEALTH OF PENNSYLVANIA) COUNTY OF CUMBERLAND) NO 03-384 Civil CIVIL ACTION - LAW TO THE SHERIFF OF CUMBERLAND COUNTY: To satisfy the debt, interest and costs due DONALD B. SWOPE, ESQUIRE, Plaintiff (s) From SCOTT THOMAS, 9 OAK AVENUE, ENOLA, PA 17025 (1) You are directed to levy upon the property of the defendant (s)and to sell ANY AND ALL PERSONAL PROPERTY LOCATED AT 9 OAK AVENUE, ENOLA, PA 17025. (2) You are also directed to attach the property of the defendant(s) not levied upon in the possession of GARNISHEE(S) as follows: and to notify the garnishee(s) that: (a) an attachment has been issued; (b) the garnishee(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 levied 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 garnishee and is enjoined as above stated. Amount Due $2,030.02 L.L. $.50 Interest Atty's Comm % Due Prothy $1.00 Atty Paid $36.75 Other Costs Plaintiff Paid Date: JANUARY 24, 2003 CURTIS R. LONG Prothonota (Seal) ?Y ° Deputy REQUESTING PARTY: Name DONALD B. SWOPE, ESQUIRE Address: 50 EAST MARKET STREET HELLAM, PA 17406 Attorney for: PLAINTIFF Telephone: 717-840-0110 Supreme Court ID No. WRIT OF EXECUTION and/or ATTACHMENT COMMONWEALTH OF PENNSYLVANIA) COUNTY OF CUMBERLAND) NO 03-384 Civil CIVIL ACTION - LAW TO THE SHERIFF OF CUMBERLAND COUNTY: To satisfy the debt, interest and costs due DONALD B. SWOPE, ESQUIRE, Plaintiff (s) From SCOTT THOMAS, 9 OAK AVENUE, ENOLA, PA 17025 (1) You are directed to levy upon the property of the defendant (s)and to sell ANY AND ALL PERSONAL PROPERTY LOCATED AT 9 OAK AVENUE, ENOLA, PA 17025. (2) You are also directed to attach the property of the defendant(s) not levied upon in the possession of GARNISHEE(S) as follows: an attachment has been issued; (b) the garnishee(s) is enjoined from and notify debt o or fore that: the ef defendant (s) and from delivering any property of the defendant paying any (s) or otherwise disposing thereof; possession (3) If property of the defendant(s) not levied been added as a directed to notify him/her that he/she has of anyone other than a named garnishee, you are garnishee and is enjoined as above stated. Amount Due $2,030.02 Interest Atty's Comm % Atty Paid $36.75 Plaintiff Paid Date: JANUARY 24, 2003 L.L. $.50 Due Prothy $1.00 Other Costs CURTIS R. LONG Prothonota (Seal) Deputy REQUESTING PARTY: Name DONALD B. SWOPE, ESQUIRE Address: 50 EAST MARKET STREET HELLAM, PA 17406 Attorney for: PLAINTIFF Telephone: 717-840-0110 Supreme Court ID No. r R. Thomas Kline, Sheriff, who being duly sworn according to law, states this writ is returned STAYED. Sheriff's Costs: Advance Costs: 150.00 Docketing 18.00 Sheriffs Costs: 74.77 75 2 Poundage 1.47 . Advertising Law Library .50 Prothonotary 1.00 Mileage 13.80 Refunded to Atty on 4 / 2 / 0 3 Misc. Surcharge 20.00 Levy 20.00 Post Pone Sale Garnishee Sworn and Subscribed to before me c Lie So Answers; This day of W r 2003 A.D. o as Kline, S eriff T 6-1 yUv?t ? LAMAR L. LIGHT, IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff V, : NO. 01-5053 SMITH LAND & IMPROVEMENT CORPORATION & BALD EAGLE INSURANCE CO., LTD., Defendants . CIVIL ACTION - LAW and SMITH LAND & IMPROVEMENT IN THE COURT OF COMMON PLEAS CORPORATION, CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff JUDGE HESS / V. NO. 03-834 Civil Tenn ? LAMAR LIGHT, Defendant CIVIL ACTION - LAW and LAMAR L. LIGHT, IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff V. NO. 03-1849 BALD EAGLE INSURANCE CO., LTD. JUDGE HESS & SMITH LAND & DEVELOPMENT CORP. Defendants CIVIL ACTION - LAW PRAECIPE FOR ENTRY OF APPEARANCE To the Prothonotary: Please enter my appearance on behalf of Smith Land & Improvement Corporation, Bald Eagle Insurance Co., Ltd., and Smith Land & Development Corp. Papers may be served at the address set forth below. 575783.1 Respectfully submitted, Date: e7 , RHOADS & SINON LLP V a4? By:? David J. Sia&ff- Pa. Sup. Ct. I. D. 84236 RHOADS & SINON LLP C)ne South Market Square, 12`h Floor F.larrisburg, PA 17108-1146 (717) 233-5731 Attorneys for Defendant Smith Land & Improvement Corporation, Bald Eagle Insurance Co., Ltd., and Smith Land & Development Corp. CERTIFICATE OF SERVICE I hereby certify that on this.A day of ?, 2005, a true and correct copy of the foregoing Praecipe for Entry of Appearance, was served by means of United States mail, first class, postage prepaid, upon the following: Jeffrey T. McGuire, Esquire Caldwell & Kearns 3631 North Front Street Harrisburg, PA 17110-1533 Attorney for Lamar L. Light Teresa Laughead ? ? = ? t ? .? F+. T -n ?"? ? ?,,? [) C' =;i ;, ?T `i Q J `. . LAMAR L. LIGHT, IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff v, NO. 01-5053 SMITH LAND & IMPROVEMENT CORPORATION & BALD EAGLE INSURANCE CO., LTD., Defendants . CIVIL ACTION - LAW and SMITH LAND & IMPROVEMENT IN THE COURT OF COMMON PLEAS CORPORATION, CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff JUDGE HESS / V. NO. 03-834 Civil Term LAMAR LIGHT, Defendant CIVIL ACTION - LAW and LAMAR L. LIGHT, IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff V. NO. 03-1849 BALD EAGLE INSURANCE CO., LTD. JUDGE HESS & SMITH LAND & DEVELOPMENT CORP. Defendants CIVIL ACTION - LAW OBJECTIONS TO SUBPOENA DIRECTED TO MICHAEL J. ROMANO, ESQUIRE, PURSUANT TO RULE 4009.21 575778.1 Smith Land & Improvement Corporation, Smith Land & Development Corp., and Bald Eagle Insurance Company, Ltd., come pursuant to Pa. R. C. P. 4009.21 (c) and jointly object to Plaintiff Lamar Light's Subpoena to Produce Documents or Things Directed to Attorney Michael J. Romano, Esquire. These parties object to the subpoena that is attached as Exhibit A to this Objection for the following reasons: The information sought by the subpoena has previously been made the object of a Protective Order issued by Hon. Ann Marie Donio, U. S. M. J., in the matter of Financial Federal Credit, Inc., v. L. B. Smith, Inc. Volvo Construction Equipment North America, Inc., and/or Volvo Construction Eaupment Finance North America, Inc., No. 04-2080 (D. N. J.) ("FFCI" . Attached as Exhibit B is a copy of that Protective Order. 2. Attorney Michael J. Romano, Esquire, is counsel for Plaintiff Financial Federal Credit, Inc. in FFCI and received what documents he possesses from Defendant L. B. Smith, Inc., pursuant to the Protective Order. 3. The information requested also includes information that the Protective Order describes as "relating to the confidential business operations and/or confidential financial information of. . . related entities," namely, Smith Land & Improvement Corporation. Exhibit B, 11. 4. The Protective Order makes no exception or provision for reproducing this information to parties in other litigation pursuant to subpoena. Date: -? Dean-F.-Pi ermattr Pa. Sup. Ct. I. D. 53847 David J. Staudt Pa. Sup. Ct. I. D. 84236 RHOADS & SINON LLP One South Market Square, 12`h Floor Harrisburg, PA 17108-1146 (717) 233-5731 Attorneys for Defendant Smith Land & Improvement Corporation and Bald Eagle Insurance Co., Ltd. CERTIFICATE OF SERVICE I hereby certify that on this c? 3rd day of, 2005, a true and correct copy of the foregoing Objection to Subpoena Directed to Attorney Michael F. Romano, Esquire, was served by means of United States mail, first class, postage prepaid, upon the following: Jeffrey T. McGuire, Esquire Caldwell & Kearns 3631 North Front Street Harrisburg, PA 17110-1533 Attorney for Lamar L. Light J)-Xt ? i O-A-k Teresa Laughead LAMAR L. LIGHT, Plaintiff, V. SMITH LAND & IMPROVEMENT CORPORATION & BALD EAGLE INSURANCE CO., LTD., Defendant SMITH LAND & IMPROVEMENT CORPORATION, Plaintiff, V. LAMAR LIGHT, Defendant, LAMAR LIGHT, Plaintiff, V. BALD EAGLE INSURANCE CO., LTD. & SMITH LAND & DEVELOPMENT CORP., Defendant. IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA NO. 01-5053 : CIVIL ACTION - LAW And IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA JUDGE HESS NO. 03-834 CIVIL TERM CIVIL ACTION - LAW And IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA NO. 03-1849 JUDGE HESS CIVIL ACTION - LAW NOTICE OF INTENT TO SERVE A SUBPOENA TO PRODUCE DOCUMENTS AND THINGS FOR DISCOVERY PURSUANT TO RULE 4009.21 Lamar Light intends to serve a subpoena identical to the one that is attached to this notice. You have twenty (20) days from the date listed below in which to file of record and serve upon the undersigned an objection to the subpoena. If no objection is made the subpoena may be served. Date: «i 6J By. F 7NNorth cGuire, Esquire o .D. No. 73617 63 Front Street Harrisburg, PA 17110 (717) 232-7661 Attorneys for Plaintiff, Lamar Light COMMONWEALTH OF PENNSYLVANIA COUNTY OF CUMBERLAND LAMAR L. LIGHT, Plaintiff. V. SMITH LAND & IMPROVEMENT CORPORATION & BALD EAGLE INSURANCE CO., LTD., Defendant SMITH LAND & IMPROVEMENT CORPORATION, Plaintiff, V. LAMAR LIGHT, Defendant, LAMAR LIGHT, Plaintiff, V. NO. 01-5053 CIVIL ACTION - LAW And JUDGE HESS NO. 03-834 CIVIL TERM : CIVIL ACTION - LAW And NO. 03-1849 BALD EAGLE INSURANCE CO., LTD. JUDGE HESS & SMITH LAND & DEVELOPMENT CORP., CIVIL ACTION - LAW Defendant. ALL THREE ACTIONS CONSOLIDATED SUBPOENA TO PRODUCE DOCUMENTS OR THINGS FOR DISCOVERY PURSUANT TO RULE 4009.22 TO: Michael J. Romano, Esquire 52 Newton Avenue Woodbury, NJ 08096 Within twenty (20) days after service of this subpoena, you are ordered by the Court to produce the following documents or things: All records received in the discovery from L. B. Smith, Inc. in the litigation case titled Financial Federal Credit, Inc. v. L. B. Smith. Inc., Volvo constructions Equipment North America. Inc., and/or Volvo Construction Equipment Finance North America, Inc. Re: Case No. 04-2080 (JHR) and your File No. 014-FFCI-007-(LBS). In particular, copies of all deposition transcripts. interrogatory responses and documents produced at: 3631 North Front Street, Harrisburg, PA 17110-1533. You may deliver or mail legible copies of the documents or produce things by this subpoena, together with the certificate of compliance; to the party making this request at the address listed above. You have the right to seek in advance the reasonable cost of preparing the copies or producing the things sought. If you fail to produce the documents or things required by this subpoena within twenty (20) days after its service, the party serving this subpoena may seek a court order compelling you to comply with it. THIS SUBPOENA WAS ISSUED AT THE REQUEST OF THE FOLLOWING PERSON: Name: Jeffrey T. McGuire, Esquire Address: 3631 North Front Street Harrisburg, PA 17110-1533 Telephone: 717-232-7661 Supreme Court I.D # 73617 Attorney For: Lamar Light Date: S al of the Court BY THE COURT: Prothonotary, Civil ?jDiiv' ' n Deputy __ iiiovo g pj? .2+?6g?3FIFQ6gT?FD DodElWr" 2144ON Wd 11 /03/2004 Page 1 of 6 Z003 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY FINANCIAL FEDERAL CREDIT, INC., . Civil No. 04-2080 Plaintiff V. L.B.SMITH, INC., VOLVO CONSTRUCTION EQUIPMENT NORTH AMERICA, INC. and/or VOLVO CONSTRUCTION EQUIPMENT FINANCE NORTH AMERICA, INC., Defendants PROTECTIVE ORDER AND NOW, this r/l day of J1IA/N??? 2004, IT IS HEREBY ORDERED: 1. All documents or any other information produced by either Party relating to the confidential business operations and/or confidential financial information of said Party or any related entities (exclusive of any documents which either party already has in the opposing Party's possession, and/or which could be acquired in the ordinary course of business, and/or are a matter of public record) shall be deemed to be Confidential Information. Such documents and information are hereinafter referred to as "Confidential Information", and shall be masked "Confidential." 576619.2 11/01i04C4§b II§ W-cK&Mff023W6ATAD DoOW1 M 2BgDN Wd 11/03/2004 Page 2 of 6 8004 2. Confidential Information shall be used solely for the purpose of conducting this litigation and not for any business or other purpose whatsoever, including but not limited to any other pending or future litigation. Confidential Information may be disclosed to the following persons only: (a) The Parties. (b) Attorneys of record and other attorneys retained by the Parties .(the "Attorneys") in the above entitled matter and the Attorneys' legal assistants, secretarial and clerical personnel. (c) Outside investigators and experts, including but not limited to expert witnesses, and their clerical assistants who are engaged in assisting the Attorneys in the preparation of conduct of this case, but only upon the signature by such person prior to such disclosure of an affidavit in the form attached hereto as Attachment A, which affidavit shall be retained by the Attorneys for the party that discloses such Confidential Information. (d) Any deposition or trial witness who, in the judgment of the Attorneys is required to be shown such material in order to assist such attorney in the preparation for or the conduct of this litigation, but only upon the signature by such person prior to such disclosure of an affidavit in the form attached hereto as -2- - 11111-'YCIA P6VcW2"tK0JHMAMD DAl RW §$ION Fwd 11/03/2004 Page 3 of 6 16005 Attachment A, which affidavit shall be retained by the Attorneys of record for the Party that discloses such Confidential Information. 3. Confidential Information shall be kept in a secure location when not in use, and access to those facilities shall be given only to the Attorneys described above and their associated lawyers, legal assistants, secretarial and clerical personnel who are engaged in assisting them in this litigation. 4. All Confidential Information that is filed with the Court shall be filed under seal, pursuant to the rules and/or procedures of the Court. 5. Material designated Confidential pursuant to this Order may be disclosed in the course of a deposition to a deponent who by virtue of his or her position has access to or knowledge of such Confidential Information. In all other circumstances, disclosure of material designated Confidential pursuant to this Order may be made to a deponent in the course of a deposition, but only upon the signature by the deponent prior to such disclosure of an affidavit in the form attached hereto as Attachment A, which affidavit shall be retained by the Attorney of record for the Party that discloses such Confidential Information. A deponent shalt be permitted to examine any portion of the transcript of hi s or her deposition (including exhibits) that contains Confidential Information prior to signing the deposition transcript, but shall not be permitted to retain a copy of any Confidential Information. -3. _ vovoaCase Jb0W4cv'62bWOzJrlri4MA D Doc?'?°r?t ? "F?i?'?d 11/03/2004 Page 4 of 6 (nos 6. Prior to oral hearings, or testimony at the trial of this case, the Patties, in the event that it is known reasonably in advance of such hearing or testimony that matters involving Confidential Information will be raised, shall so advise each other. If such Confidential Information is expected to be referred to or discussed, the parties may ask the Court to consider measures to ensure the preservation of the confidentiality of the Confidential Information. 7. Unless modified or vacated by the Court, this Order shall retrain in effect from the date hereof until the termination of this litigation, at which time all Confidential Information and any and all copies thereof must be returned by the Parties to the opposing Parties' Attorneys or destroyed by the opposing Parties' Attorneys, except that the Attorneys may retain one copy of all pleadings filed with the Court which contain or refer to Confidential Information. 8. In the event that any Party designates documents as Confidential Information, and any other Party disputes said designation, the Party which disputes said designation shall first contact the Party that designated the Confidential Information and articulate the reasons that said designation is disputed, and provide the Party which designated the documents as Confidential Information with the opportunity to remove said designation. If, after good faith efforts among counsel, the Parties are unable to come to mutual agreement as to whether certain documents 4- _ it/01/04cM 16WcN:ZdMJI'iKWA D Document ?P Fi e'd 11/03/2004 Page 5 of 6 constitute Confidential Information, the Party disputing the designation may contact to the Court to resolve the Parties' dispute. 9. This Order shall be binding on all Parties to this Litigation, as well as individuals that review and sign Exhibit A. BY J. us< -5- 11/01/04 CMG* 9609WcR"2A80UHFR6A?AD DojdI* A3tMON Ued 11/03/2004 Page 6 of 6 2098 STATE OF _ COUNTY OF My name is 1 live at I am employed as (state position) employer) by (state name and address of 2. 1 am aware that an Order regarding the confidentiality of certain documents and other information produced by the parties has been executed in the case of Financial Federal Credit, Inc. v. L.B. Smith. Inc.. Volvo Construction Eguipment North America. Inc. and/or Volvo Construction Eauinment Finance North America,_Inc., Civil Action No. 04-CV-2080/JHR; 3. I promise that documents and information designated as Confidential under the Order entered in the above litigation will be used by me only in connection with the above referenced case and not for any business or other purpose whatsoever, including but not limited to any other pending or future litigation. 4. 1 understand that any use by me of documents or information designated as Confidential under the Order, or any portion or summaries thereof, in any manner contrary to the provisions of the Order may render me in contempt of Court. I declare under penalty of perjury that the foregoing is true and correct. Executed this day of _ , 200_ ATTACHMENT A (Signature) r? ra =-_; LAMAR L. LIGHT Plaintiff vs. qON PLEAS Y, PENNSYLVANIA ORIGINAL FM SMITH LAND & IMPROVEMENT CORPORATION & BALD EAGLE INSURANCE CO., LTD. Defendants CIVIL ACTION- LAW and SMITH LAND & IMPROVEMENT : IN THE COURT OF COMMON PLEAS CORPORATION, CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff vs. LAMAR LIGHT, Defendant NO. 03-834 Civil Term CIVIL ACTION - LAW and LAMAR L. LIGHT IN THE COURT OF COMMON PLEAS Plaintiff CUMBERLAND COUNTY, PENNSYLVANIA vs. NO. 03-1849 BALD EAGLE INSURANCE CO., LTD & SMITH LAND & DEVELOPMENT CORP. Defendants CIVIL ACTION -LAW DEFENDANT'S MOTION INLIMINE AS TO EXPERT TESTIMONY AND NOW, comes the Defendant, Lamar Light, by and through his attorneys, Caldwell & Kearns, and files this Motion in Limine to preclude the admission of the expert testimony described more fully below, and in support thereof avers as follows. Smith Land instituted its action against Defendant by Writ of Summons filed on or about February 25, 2003. 2. A subsequent Complaint was filed on or about October 22, 2003, and alleged that Defendant's breach of fiduciary duties to Plaintiff resulted in damages in the form of excessive salaries and bonuses being paid to Light's family members. 3. Additionally, the Complaint alleged that Defendant's tortuous interference with third parties regarding the sale of a portion of Plaintiffs business operation and assets resulted in damage to Plaintiffs reputation and legal expenses. I. Motion to Exclude the Expert Report of Hunyady Appraisal Services 4. Defendant incorporates by reference paragraphs (1) - (3) above. 5. In the course of their discovery, Plaintiff identified Hunyady Appraisal Service as one of their experts. On or about September 6, 2005, Hunyady Appraisal Services issued a report in which it offered a `retroactive hypothetical `desktop' valuation." A true and correct copy is attached hereto as Exhibit "A. " 7. This "retroactive hypothetical `desktop' valuation" was completed by Hunyady without inspection or verification of any of the information provided to them. 8. In fact, the "retroactive hypothetical `desktop' valuation" specifically states that it was assigned by assumption made solely through information provided by Plaintiff and is reported by the expert to be hypothetical and speculative. 9. Hypothetical reports may only be used where the facts assumed in the hypothetical were all established by competent evidence. Commonwealth v. Rollins, 738 A.2d 435 (Pa. 1999). 2 10. No matter how skilled or experienced a witness may be, he will not be permitted to guess or to state judgment based on mere conjecture or assumption. Mauer and Co. v. A.C.A.B, 598 A.2d 1035 (Pa.Comwlth. 1991). 11. Hunyady Appraisal Services specifically states in the "Desktop Appraisal Report" that the appraisal is a "hypothetical `desktop' valuation" based on assumption and is merely speculative. 12. The Hunyady Appraisal Report fails to state that the facts used in the hypothetical are based on competent evidence which appear on the record. 13. Further, the number assignment given to the equipment in the Hunyady Appraisal Report was never established on the record. 14. An expert may not state a conclusion based on evidence not found in the record. Commonwealth v. Blasioli, 685 A.2d 151 (Pa.Super 1996). 15. The Hunyady Appraisal Report states in the "valuation methodology" portion of the report that the values have been determined by (1) information provided by L.B. Smith, (2) own personal experiences in similar circumstances, (3) opinions of others in the industry who are considered knowledgeable in the field, and (4) various guides and publications used and accepted in the industry to help determine value. 16. The data described in (3) and (4) above are too vague to be considered "disclosure" because the opposing party has no way to determine whether the persons and/or publications used by Hunyady are of the type reasonably relied on by others in the field. 17. The Disclosure Rule mandates that an expert state the facts or data upon which an opinion is based. Pa. FRE 705. 18. Expert testimony that is expressed in a deficient manner is considered incompetent. Kally v. Thackary Crane Rental, 874 A.2d 649 (2005). 19. The Hunyady Appraisal Report is expressed in a deficient manner due to its failure to base the hypothetical and speculative report on facts which are established by competent evidence and that appear on the record. 20. The Hunyady Appraisal Report is also expressed in a deficient manner due to its failure to base the number assignment used in the report on evidence found in the record. 21. Finally, the Hunyady Appraisal Report is expressed in a deficient manner due to its failure to state that facts or data upon which an opinion is based. WHEREFORE, Defendant, Lamar Light, respectfully request that this Honorable Court prohibit Plaintiffs from introducing evidence or testimony based on the report of Hunyady Appraisal Services. II. Motion to Exclude the Expert Testimony of Marc S. Dickler, CPA 22. Defendant incorporates by reference paragraphs (1) - (21) above. 23. In the course of discovery, Plaintiff identified Marc S. Dicklar, CPA, as another one of their experts. 24. In 2005, Marc S. Dicklar, CPA, from American Express Tax and Business Services, Inc. prepared a report and analysis regarding this case. 25. This report and analysis written by Marc S. Dicklar relied in part on the hypothetical and speculative "Desktop Appraisal Report" written by Hunyady Appraisal Services. 26. In Pennsylvania, there are no legal restrictions on the information relied upon by 4 an expert, except that the information itself is admissible or is of a type reasonably relied upon by experts in the field. Readinger v. W.C.A.B (Epley Masonary), 855 A.2d 952. 27. Hunyady's report is not of the type reasonably relied on by experts nor is the information relied upon in the report are not established by competent evidence because the report is hypothetical and speculative. 28. Marc S. Dicklar's reliance on the Hunyady Appraisal Report is in violation of FRE 703, which requires that the data in which an expert bases his opinion must be the type that is either admissible itself or reasonably relied upon by experts in the field. 29. Additionally, an expert may not state a conclusion which is based on evidence not found in the record. Commonwealth v. Blasioli, 685 A.2d 151 (Pa.Super 1996). 30. The inventory data provided in the chart which was included in Marc S. Dicklar's expert report does not match with the inventory list which Defendant was provided with in discovery. 31. The expert report of Marc S. Dicklar relies on data that is not based on evidence found in the record. 32, The expert report of Marc S. Dicklar is expressed in a deficient manner due to its reliance on the Hunyady Appraisal Report. 33. The expert report of Marc S. Dicklar is expressed in a deficient manner due to its reliance on evidence not found in the record. 34. Marc S. Dicklar's report should therefore be considered incompetent. WHEREFORE, Defendant, Lamar Light, respectfully request that this Honorable Court prohibit Plaintiffs from introducing evidence or testimony based on the report and analysis of Marc S. Dicklar, CPA. III. Motion to Exclude Any Evidence of Light's Duty or Breach Thereof. 35. Plaintiff has identified no expert as to what Mr. Light's duties were or as to how he breached his duties. 36. Mr. Light served as the President and Chief Operating Officer of L. B. Smith as a heavy construction equipment dealer. 37. Expert testimony is necessary to establish negligent practice in any profession. Storm v. Golden, 538 A.2d 61 (Pa. Super. 1988). 38. The allegation here is that Mr. Light breeched his fiduciary duty which is more than mere negligence. 39. The issues in this case are beyond the common knowledge, intelligence, training and experience of the average juror and requires expert testimony. See, Marlin v. W.W. Babcock, 1990 W.L. 902461 (Phila.). WHEREFORE, Defendant, Lamar Light, respectfully request that this Honorable Court prohibit Plaintiffs from introducing evidence or testimony based on the report and analysis of Marc S. Dicklar, CPA. Respectfully submitted, CA ELL &?nKEAARNS Date: 3 a? ?w By: Je . McGuire, Esquire to ey ID No. #73617 James R, Clippinger, Esquire Attorney ID No. 07159 3631 North Front Street Harrisburg, PA 17110-1533 (717) 232-7661 01-283/94249 Attorneys for Plaintiff/Respondent, Lamar Light 6 CERTIFICATE OF SERVICE AND NOW, this 22"d day of March, 2006, I hereby certify that I have served a copy of the within document on the following by providing a true and correct copy of the same by hand delivery to: Dean F. Piermattei, Esquire Rhoads & Sinon, LLP One South Market Square, 12`h Floor P. O. Box 1146 Harrisburg, PA 17108-1146 & KEARNS By: ?Z? -z44 1? _? lL C V ?? ?}r `li ...' -1 3 Curtis R. Long Prothonotary office of the Protbonotarp Cumberlanb Countp Renee K. Simpson Deputy Prothonotary John E. Slike Solicitor 03 -834 CVIL TERM ORDER OF TERMINATION OF COURT CASES AND NOW THIS 28TH DAY OF OCTOBER, 2009, AFTER MAILING NOTICE OF INTENTION TO PROCEED AND RECEIVING NO RESPONSE - THE ABOVE CASE IS HEREBY TERMINATED WITH PREJUDICE IN ACCORDANCE WITH PA R C P 230.2. BY THE COURT, CURTIS R. LONG PROTHONOTARY One Courthouse Square • Carlisle, Pennsylvania 17013 • (717) 240-6195 • Fax (717) 240-6573