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HomeMy WebLinkAbout99-05871 t Y j J iV tt COMMONWEALTH OF PENNSYLVANIA NINTH JUDICIAL DISTRICT CUMBERLAND COUNTY EDWARD E. GUIDO JUDGE May 16, 2000 Brenda L. Gacki, Esquire 210 Walnut Street P.O. Box 11963 Harrisburg, Pa. 17108 Thomas J. Williams, Esquire 10 East High Street Carlisle, Pa. 17013 IN RE: GEORGE V. MARIETTA Dear Counsel: copy COURTHOUSE ONE COURTHOUSE SQUARE CARLISLE. PA 17013.3387 (717) 240-6290 FAX (717) 240-6462 Our Order of April 18, 2000, provided that we would amend it "to appropriately reflect the agreement intended by the parties ... ". We would request that no further correspondence from either counsel be directed to this office. In light of the provisions of the Order, we will amend it only upon stipulation of counsel. Obviously, the amendment will not appropriately reflect the intention of the parties unless agreed to by both parties. Very t your , Edward E. Guido EEG/sld +MNMSON DEARDORFF WILLIAMS & O"r'I'O MDW&O INFORMATION • AMice. • Anv TEN EAST HICH S7'RErr CARLISLE, PENNSYLVANIA 17013 TEIYmow (717) 243-3341 FAcsimnt (717) 243-1850 INTERNET www.mdwoxom May 10, 2000 The Honorable Edward E. Guido Cumberland County Courthouse One Courthouse Square Carlisle, PA 17013 MAY 1 12000 ,j;? r•JAY 12 2000 ?J ATn)RNEYS & COUNSELLORS AT IAW WILLIAM F. MART:SON JOHN R. F(Milit In DANIEL K. DEAROORFF THOMAS J. WILLIAMS NO V. Orm III GFOR,;F B. FALLER JR.' CARL C. Riscu BENJAMIN T. WARNER MARK A. DF"NLINGER 'BIKRO CFRrFICp CINL TRIAL 5rFaA1.ITr RE: Joseph P. George v. Martin Marietta and Classic Rags, a Pennsylvania general partnership No. 99-5871 - Cumberland County C.C.P. Our File No. 9912.1 Dear Judge Guido: This is in response to the May 4, 2000 letter to you from Attorney Gacki, a copy of which is attached for your convenient reference. With regard to Paragraph 5 of your Order, I am in general agreement with the interpretation set forth in the May 4, 2000 letter of Attorney Gacki. I'm not sure your Order needs to be amended since we do agree with Plaintiffs interpretation; however, if you are going to amend it, then there is one item of clarification: any assets not sold by June 30, 2000 will be discarded, and there may be a cost associated with that. We do not agree with the balance of the requested changes set forth in the May 4, 2000 letter from Plaintiffs counsel. Classic Rags became a sole proprietorship in February of 1999. If there is a security deposit refund, or if there is a tort recovery arising out of the fire, Plaintiff does not share in that. The settlement was premised solely on the disposition of proceeds from the sale of assets and was a compromise. Defendant does not agree that it should be changed. Having said that, I should probably add that, to the best of my knowledge, and after consultation with my client, there will be no refund of a security deposit and it is unlikely that any tort claim arising out of the fire will be initiated. We certainly have no plans to do that. Similarly, any government benefits or charity received by the Defendant as a result of the fire is not part of this settlement, nor subject to any claim of the Plaintiff. It is no secret that Defendant has received disaster assistance from the American Red Cross in the form of food, shelter, clothing and the like. He is not going to share that with Plaintiff. Defendant may apply for SBA loans. If he does, and if these are approved, he is not willing to share any of the proceeds of these loans with INFORMATION • ADVICE R AI)VOCACY''At The Honorable Edward E. Guido May 10, 2000 Page 2 the Plaintiff. I mention these things only in the interest of full disclosure; however, our position should be clear that these are separate interests of the Defendant and not part of the settlement of this case. These latter requests do not constitute a clarification of the settlement order, but rather a change to it. Defendant does not agree to these changes. Very truly yours, MARTSON DEARDORFF WILLIAMS & OTTO Thomas Iliams TJW/tde Enclosure cc: Brenda L. Gacki, Esquire FdFMUZATAFILZC.1I .ee"12.$1 c .y ?.F r'•fj .r tF. INFORMATION • ADVICE • ADVOCACY'' .4i =:IIA!1 1?J {t ,."I 1 05/04/00 16:52 N0.419 P002i004 "RAML ALLAN KEEFER WOOD ALLEN & RAHAL, LLP aaTAaLIaMa01N love N nAVID RAMAL 01ARLCO W NuacNOALL N 210 WALNUT STREET ?- AOSSRrL WSLDCN P. 0. BOX 1198•.) LIIOCNE C PCPINOAY, JA Or OONNHAL 64MU14 0 MARRY TMOMA9¦ WOOD HARRISBURG. PA 17108-19e3 IGM.J M AMC* 111 GARY a •RaMCM PHONE (717) 288.8000 WaST SMOR9 OPP10a: 414 FALWWF196P ROAD DONNA 0 WCLDON FAX (717) 280.8050 CANA MILL. PA 11011 aRAPPOR0 aDAMANOr 17101617.9600 JCrrnlY 9 STCACS KIN N4. 77.0704177 N000ArR CMNACII - AT6PNSN L ORGOE WRITER'S DIRCCTDIAL- n SCOTT OMEAACA WAYNE M PSCM DONALDM LEWISW May 4, 2000 255-8037 BRIDOEr M WMITLEY 11-A7ll, AMANDA L. GACAI bDAekl0k9AterWmd.DOR ALLAN V ROSSI TL MOST EA71 795.6003 J041NA PPONTEL OTCPANIC A L1nMIDON via hl-AND-NIUL The Honorable Edward E. Guido Court of Common Pleas Cumberland county courthouse One Courthouse Square Carlisle, PA 17013-3387 Re: Joseph George v. Martin Marietta, at al. Net- 44-5971 Civil Dear Judge Guido: On April 21, 2000, I received your order dated April 18, 2000, wherein you set forth the agreement of the parties for the above-referenced action. In your order, you stated that you will amend this order to appropriately reflect the agreement intended 0 by the parties if requested by counsel within fifteen days of receipt of this order. Paragraph 5 of the order provides that Martin Marietta ("Marietta") shall sell all remaining assets of the business on or before June 30, 2000. I simply wish to clarify that by requiring Marietta to "sell all remaining assets of the business u on or before June 30, 2000," the Court is directing Marietta to sell all remaining assets. Therefore, if Marietta is unable to sell assets of the business to "industry' buyers, he will be required to liquidate the assets, through an auctioneer or otherwise, on or before June 30, 2000, in order to comply with the Court's order to "sell all remaining assets." Furthermore, I wish to clarify that "all remaining assets" means all assets of the business, including, but not limited to inventory, racks, hardware, sewing machines, the forklift and any other items used in the operation of the business or owned by it. Paragraph 6 of the order provides that Marietta shall provide Joseph George ("George) with an accounting covering all ire \ 05/04/00 16:52 N0.419 P003/004 The Honorable Edward B. Guido Page 2 May 4, 2000 receipts and expenditures from April 18, 2000, forward. I wish to clarify that in the event that Classic Rags receives money from sources other then the sale of assets, such as a return of a security deposit from a landlord or other, then that amount should be included as a receipt and accounted for in the accounting as well. By copy of this letter, I am requesting that Thomas J. Williams, Esquire, notify me and the Court immediately if he or his client disagrees with our interpretation of paragraphs 5 and 6. One point that was not addressed by the parties is the possibility of future recovery of damages relating to the fire lose suffered by Classic Rags on December 18, 1999. George proposes that if Classic Rags or Marietta receives any money for losses sustained as a result of the fire on December 18, 2000, whether such money is received from some sort of relief fund, charity, or award or settlement paid by a person or entity alleged to be responsible for the fire, then George shall be entitled to receive $22,743.68 or fifty percent of the amount received, whichever is less. (Please note that $22,743.68 is the amount of the claim by George and his family members that was compromised in order to settle this action.) If Marietta in agreeable to such a division of future money recovered, then we will be requesting the Court to amend this order to set forth that agreement. Thank you for your interest in this matter. Counsel will timely notify you if there are any changes that must be made to the order regarding the items mentioned above. Respectfully yours, K'EEFER WOOD ALLEN ka RACIAL yGF / By `?// A Gam' Brenda L. Gacki BLG/s cc:homae J. Williams, Esquire (via fax and mail) (see B.P.B. on following page) 05/WOO 16:53 NO.419 P004/004 The Honorable Edward B. Guido Page 3 May 4, 2000 N.F.B. to Tons I understand that one of the assets of the business is a laptop computer. Although Joseph desires that all assets be sold (and the Court has ordered such), he believes that Martin may wish to keep the laptop computer rather than sell it. Joseph is agreeable to allowing Martin to retain the laptop computer in exchange for a payment of $200. Please advise whether Martin wishes to accept this proposal. Thanks. Brenda MAY - 8 2000A HEATH L. ALLEN N. DAVID RAHAL CHARLES W. RUBENDALLn ROBERT L. WELDON EUGENE E. PEPINSNY, JR. THOMAS E. WOOD JOHN H. ENOS M GARY E. FRENCH DONNA S. WELDON BRADFORD DORRANCE JEFFREY S. STONES ROBERT R. CHURCH STEPHEN L. GROSE R. SCOTT SHEARER WAYNE M. PECHT DONALD M. LEWIS III BMOOGET M. WHITLEY BRENDA 1- GACRI ALLAN J. ROSS, JOHN A. FEICHTEL STEFANIE A. MORRISON KEEFER WOOD ALLEN & RAHAL, LLP 210 WALNUT STREET P.O. BOX 11963 HARRISBURG, PA 17106-1963 PHONE (717) 266.6000 FAX (717) 255.5050 EIN No. 23.0716135 May 4, 2000 ESTABLISHED IN 1676 OF COUNSEL. SAMUEL C. HARRY WEST SHORE OFFICE: 419 FALLOWFIELO ROAD CAMP HILL, PA 17011 (717) BI FBNOO WRITER'S DIRECT DIAL: 255-8037 E-men. bgackiSkeeferwood.com 2n° Floor Fax: 255-5003 The Honorable Edward E. Guido Court of Common Pleas Cumberland County Courthouse One Courthouse Square Carlisle, PA 17013-3387 Re: Joseph George v. Martin Marietta, et al. No. 99-5871 riyil Dear Judge Guido: On April 21, 2000, I received your order dated April 18, 2000, wherein you set forth the agreement of the parties for the above-referenced action. In your order, you stated that you will amend this order to appropriately reflect the agreement intended by the parties if requested by counsel within fifteen days of receipt of this order. Paragraph 5 of the order provides that Martin Marietta ("Marietta") shall sell all remaining assets of the business on or before June 30, 2000. I simply wish to clarify that by requiring Marietta to "sell all remaining assets of the business on or before June 30, 2000," the Court is directing Marietta to sell all remaining assets. Therefore, if Marietta is unable to sell assets of the business to "industry" buyers, he will be required to liquidate the assets, through an auctioneer or otherwise, on or before June 30, 2000, in order to comply with the Court's order to "sell all remaining assets." Furthermore, wish to clarify that "all remaining assets" means &U assets of the business, including, but not limited to inventory, racks, hardware, sewing machines, the forklift and any other items used in the operation of the business or owned by it. Paragraph 6 of the order provides that Marietta shall provide Joseph George ("George) with an accounting covering all The Honorable Edward E. Guido Page 2 May 4, 2000 receipts and expenditures from April 18, 2000, forward. I wish to clarify that in the event that Classic Rags receives money from sources other than the sale of assets, such as a return of a security deposit from a landlord or other, then that amount should be included as a receipt and accounted for in the accounting as well. By copy of this letter, I am requesting that Thomas J. Williams, Esquire, notify me and the Court immediately if he or his client disagrees with our interpretation of paragraphs 5 and 6. one point that was not addressed by the parties is the possibility of future recovery of damages relating to the fire loss suffered by Classic Rags on December 18, 1999. George proposes that if Classic Rags or Marietta receives any money for losses sustained as a result of the fire on December 18, 2000, whether such money is received from some sort of relief fund, charity, or award or settlement paid by a person or entity alleged to be responsible for the fire, then George shall be entitled to receive $22,743.68 or fifty percent of the amount received, whichever is less. (Please note that $22,743.68 is the amount of the claim by George and his family members that was compromised in order to settle this action.) If Marietta is agreeable to such a division of future money recovered, then we will be requesting the Court to amend this order to set forth that agreement. Thank you for your interest in this matter. Counsel will timely notify you if there are any changes that must be made to the order regarding the items mentioned above. Respectfully yours, KEEFER W00 ALLE`NN& & RAHA , LLP By °? • 70-4?& Brenda L. Gacki BLG/sg CC: Thomas J. Williams, Esquire (via fax and mail) 05/04/00 16:43 r MCATM L. ALLCM KEEPER W000 ALLEN & RAHAL, LLP M. CAVID RAMAL 210 WALNUT STRCCT CNARLCe W. ReeLNOALLII O 16 BOX II067 RONIT L. "COON , . 9IIe1M11. ?1?INeNT. JR. HARRISBURG, PA 17108.1903 7400" C. WOOD JOHN M. OMOO m PHONC f7171 255.0000 GARY C. FRCMOM /A% 17171 161.4090 DONNA e. WCLDOM _ GRAD/ORD OOOAAMCC elm me. 13.0710131 JO?MOT e. OTORN ROOM R. CNWICH 0TC?MUM L. ORose A. OCOTV eNCMRR WAYNC M. RCOMT CONALO M. LEWIS lII ORIOOCT M. WHITLCY ORewpJ L. LIAR COVER SHEET ALMN J. RO"1 JOHN A. YCICMTCL May 4, 2000 Y eT17AM11 A. MORRISON NO.41e P001/003 COTAOLIOMCD IN 1070 OF COYNOCL, OAMYCL C. NARAT WCOT among OFFIC9. AIR /ALLOW?ICLO 110-0 CAMP MILL. ?A 17011 17171 011.8600 WRITCA'O DIRCCT DIAL, 255-8037 a-mall. hawklNkAAt Arwod.anm 2" 716Ur PAC, 235 and.i TO: The Honorable Edward E. Guido 240-6462 FROM: Brenda Gacki N0. SHEETS BEING SENT: 3, including cover sheet. This transmission is being made on an OKIFAX 2600. if you do not receive all of the pages being sent, please call 717-255- 8047, and ask for Sharon. ..... CONFIDENTIALITY NOTE•'•" The dacumenfs accompanying this folawpy transmission contain confidential endror legally pnYlleged Information from the law firm of Keeler Wood Allen A Rehal, ua. The Information Is Intended only for the uss of the Individual or entity named on this transmission shoot. If you are not the Intended rerJpbnl, you are notaby notified that any disclosure, copying, disnlbullon CH O !eking of any action in reliance on the contents of this tolecopled Information Is stdolly prohibited, end that Ins documents should be returned to this firm immediately. In this regard, if you haw mcetwd this Islecopy transmission in snort pie*$@ nobly us by telephone Immediately so that we can arrange for the return of the lalecopled documents to us at no cost to you. Thank you, KWAAR 05/04/00 16:43 "RATM L. ALLEN N. DAVID RONAL CNNNdS W. RURNDALLU ROE[RT L. WELDOR EUO[NL [. PE?IMSNY, in, THOMAS E. WOOD JON" M. CMOs la OAR/ L. PMENCN oONNA S. WELDON DRAOFORO OORRANCC JePPRCT S. STOMES ROEERT R. CHURCH STC?MCN L, SROSC R. SCOTT SMCAR[M WATNL M. PCCMT DONALD M. LCWIS M SRIOSCT M. WMRLEY DR[MOA L. SACNI ALLAN J. ROSSI JOAN A. PCICMTCL STCPANIC A. MORRISON KEEFER WOOD ALLEN 6 RAHAL, LLP 210 WALNUT STRCCT P.O. BOX 11003 NARRISSURO, PA 17100.1003 PHON[ 1717) S00.5000 rAX (7171 9060000 CIN ND. 27.0710135 May 4, 2000 The Honorable Edward E. Guido Court of Common Pleas Cumberland County Courthouse One Courthouse Square Carlisle, PA 17013-3387 Re: Joseph George v. Martin Marietta, et al. Nn_ 99-9971 civil Dear Judge Guido: NO.418 P002/003 [DYAD LIDMLD IM IS7S O? COUNSEL/ SAMLRL C. MARRY WEST SMORC OPPICC, A'6 FALLOWn[LO ROAD CAMP MILL, PA 17011 17171 S 1 PSS00 WNITCR'C DIR[CT DIAU 255-8037 S moll, b9SOkl2keele"ood. eom 2'8 floor ?RR, 256-1003 On April 21, 2000, 1 received your order dated April 18, 2000, wherein you set forth the agreement of the parties for the above-referenced action. In your order, you stated that you will amend this order to appropriately reflect the agreement intended by the parties if requested by counsel within fifteen days of receipt of this order. Paragraph 5 of the order provides that Martin Marietta ("Marietta") shall sell all remain?,ng assets of the business on or before June 30, 2000, I simply wish to clarify that by requiring Marietta to "sell all remaining assets of the business on or before June 30, 2000,11 the Court is directing Marietta to sell all remaining assets. Therefore, if Marietta is unable to sell assets of the business to "industry" buyers, he will be required to liquidate the assets, through an auctioneer or otherwise, on or before June 30, 2000, in order to comply with the court's order to "sell all remaining assets." Furthermore, wish to clarify that "all remaining assets" means 311 assets of the business, including, but not limited to inventory, racks, hardware, sewing machines, the forklift and any other items used in the operation of the business or owned by it. Paragraph 6 of the order provides that Marietta shall provide Joseph George ("George) with an accounting covering all 05/04/00 16:43 The Honorable Edward E. Guido Page 2 May 4, 2000 N0.418 P003/003 receipts and expenditures from April 18, 2000, forward. I wish to clarify that in the event that Classic Rage receives money from sources other than the sale of assets, such as a return of a security deposit from a landlord or other, then that amount should be included as a receipt and accounted for in the accounting as well. By copy of this letter, I am requesting that Thomas J. Williams, Esquire, notify me and the Court immediately if he or his client disagrees with our interpretation of paragraphs 5 and 6. One point that was not addressed by the parties is the possibility of future recovery of damages relating to the fire loss suffered by Classic Rags on December 18, 1999. George proposes that if Classic Rags or Marietta receives any money for losses sustained as a result of the fire on December 18, 2000, whether such money is received from some sort of relief fund, charity, or award or settlement paid by a person or entity alleged to be responsible for the fire, then George shall be entitled to receive $22,143.68 or fifty percent of the amount received, whichever is less. (Please note that $22,743.68 is the amount of the claim by George and his family members that was compromised in order to settle this action.) If Marietta is agreeable to such a division of future money recovered, then we will be requesting the Court to amend this order to set forth that agreement. Thank you for your interest in this matter. Counsel will timely notify you if there are any changes that must be made to the order regarding the items mentioned above. Respectfully yours, KEEFER WO0 ALLEN & RA LLP By Brenda L. Gacki BLG/sg CC: Thomas J. Williams, Esquire (via fax and mail) JOSEPH P. GEORGE, Plaintiff V. MARTIN H. MARIETTA, and CLASSIC RAGS, a Pennsylvania general partnership, Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO. 99-5871 CIVIL TERM ORDER OF COURT AND NOW, this 18th day of April, 2000, by agreement of the parties, it is ordered and directed as follows: 1. Marietta shall pay to George the sum of $5,685.92 from business assets as follows: a. $1,000.00 on or before April 24th, 2000. b. The balance on or before May 18, 2000. 2. Upon timely payment of the sum set forth in No. 1 above, George will hold Marietta harmless and shall indemnify him from any loss in connection with the partnership debts to Barrie Ann George, Susan George, Stephen George, and Dorothy Lewis. Furthermore, George shall secure releases from those creditors within 30 days of payment of said sums releasing the business and Marietta from any liability. s^ 3. The partnership was terminated effective February 24, 1999, at which time George left the €y partnership and Marietta continued to run the business Y'A known as Classic Rags. Marietta shall be responsible for all debts incurred by or on behalf of the partnership after said date and shall indemnify and hold George harmless from any loss in connection therewith. Effective said date, George transfers and assigns his partnership interest to Marietta. 4. Marietta shall file partnership tax returns for the 1996, 1997, and 1998 tax years within 30 days of today's date and shall provide copies thereof to George. Marietta shall file partnership tax returns for the 1999 tax year within 60 days of today's date and shall provide a copy thereof to George. 5. Marietta shall sell all remaining assets of the business on or before June 30, 2000. For each sale of inventory or assets after today's date, Marietta shall obtain a written receipt which shall include an identification of the item sold, the amount paid, and the identity of the purchaser. Copies of said receipts shall be supplied to George along with the accounting hereinafter mentioned. 6. Marietta shall provide George with an accounting covering all receipts and expenditures from today's date forward. Said accounting to be provided on or before July 31st, 2000. 7. Marietta shall not pay any creditors of the business until all sums set forth in paragraph No. 1 above are paid. Provided, however, that he may pay necessary operating expenses, excluding compensation for himself. 6. After all sums due in paragraph No. 1 above have been paid in full, Marietta may begin drawing $400.00 every two weeks as compensation for liquidating business assets. 9. Upon payment of $1,000.00 from business assets to William R. Marietta, Marietta shall assume full responsibility for and indemnify both the partnership and George from any loss in connection with any sums of money owed by the partnership to William R. Marietta. Marietta shall secure a release from William R. Marietta within 30 days after said $1,000.00 has been paid releasing the partnership and George from any liability. 10. If sufficient business assets have not been sold to enable the payment of the sums due in No. 1 within 30 days, Marietta shall still be obligated to pay said sum. If he is required to borrow funds from an outside source, including his father, notwithstanding any provisions herein to the contrary, any future sale of assets shall be used to liquidate that entire debt before any other debts are paid, including any compensation to Marietta. 11. After all sums due hereunder are paid and after all other debts of the partnership and/or business have been paid or resolved, any remaining proceeds from the sale of the business assets shall be divided equally between George and Marietta. 12. This agreed upon order resolves all pending claims between and among the parties. Provided, however, that if Marietta or the business files for bankruptcy within 91 days after final payment of the sums due in paragraph No. 1 above, George's obligations hereunder shall be null and void and George and/or his family members may pursue any and all claims against either Marietta or the business, without regard to the provisions of this order. We will amend this order to appropriately reflect the agreement intended by the parties if requested by counsel within 15 days of receipt of this order. By the Court Edward E. Guido, J. Brenda L. Gacki, Esquire For the Plaintiff Thomas J. Williams, Esquire For the Defendant :lfh U. 00 JOSEPH P. GEORGE, Plaintiff, V. MARTIN H. MARIETTA, and CLASSIC RAGS, a Pennsylvania general partnership, Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW No. 99-5871 Civil ORDER AND NOW, this day of 2000, upon consideration of plaintiff's motion for evidentiary hearing relating to emergency petition for liquidation of assets, IT IS HEREBY ORDERED that said motion is GRANTED. An evidentiary hearing is hereby scheduled for the ID 0 day of *oiL L , 2000, at ?.m., in Courtroom No.? at the Cumberland County Courthouse, Carlisle, Pennsylvania, at which time the parties shall present evidence in support and/or opposition to plaintiff's emergency petition for liquidation of assets. The parties are relieved from any obligations under Local Rule 209.1, Pennsylvania Rule of Civil Procedure 206.7 or otherwise. BY THE CO C 'D b J. ? ?? (? ? 1 I11 7• ????. ?11? l.^.. J ? ? JOSEPH P. GEORGE, Plaintiff, V. MARTIN H. MARIETTA, and CLASSIC RAGS, a Pennsylvania general partnership, Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW No. 99-5871 Civil PL•ATNTrgFLS MOTION FOR EVIDENTIARY HEARING RELATING TO EMERGENCY PETITION FOR LIQUIDATION OF ASSETS Plaintiff Joseph P. George, by and through his counsel, Keefer Wood Allen & Rahal, LLP, files this motion for evidentiary hearing relating to emergency petition for liquidation of assets, averring as follows: 1. On September 23, 1999, plaintiff Joseph P. George ("George") filed a civil action against defendant Martin H. Marietta ("Marietta") and Classic Rags (referred to herein as "Classic Rags" or the "Partnership"), a Pennsylvania general partnership consisting of George and Marietta. 2. The complaint, which contains counts for breach of partnership agreement, violation of the Pennsylvania Uniform Partnership Act and conversion, requests the court to enter judgment in George's favor and against defendants, and to enter an order (1) dissolving the partnership; (2) requiring defendants to provide an accounting to plaintiff as to partnership profits, losses and affairs; (3) ordering the sale of all partnership assets and property, the payment of all partnership debts and liabilities, the return to the partnership of any money and/or assets wrongfully diverted, and a division of any surplus between George and Marietta; and (4) for such further relief as may be just and proper. 3. On March 2, 2000, as a result of Marietta's failure to wind up the business of Classic Rags, his repeated failures to pay creditors, his diversion and/or conversion of partnership funds and/or assets, his failure to protect assets of the partnership, and a fire that destroyed most of the assets of the Partnership of December 18, 1999, George filed an emergency petition for liquidation of assets seeking court involvement in the winding up of the Partnership. 4. On March 9, 2000, the Honorable Edward Guido issued upon Marietta a rule to show cause why plaintiff's petition for liquidation of assets should not be granted; said rule was returnable 15 days from service. - 2 - 5. George served the rule to show cause on Marietta on March 13, 2000. 6. On March 23, 2000, Marietta filed an answer to plaintiff's emergency petition for liquidation of assets, objecting to the requested relief of George. 7. Counsel for George and counsel for Marietta spoke via telephone on March 28, 2000, and agreed that the appropriate and best course of action would be to have an mid n ;ar hearing scheduled for this matter, so that the Court could fashion appropriate relief for the winding up of the Partnership. 8. George does not believe that testimony provided via depositions of the parties will be sufficient for purposes of deciding the petition for emergency liquidation of assets; live testimony will allow the Court to determine the credibility of the witnesses and to ask questions of the parties, if appropriate or necessary. 9. George does not believe that depositions will be necessary in order to conduct an evidentiary hearing, as the parties are well aware of each other's views on the subject. WHEREFORE, plaintiff Joseph George respectfully requests that this Honorable Court grant plaintiff's motion for an - 3 - evidentiary hearing relating to petition for liquidation of assets, and enter an order promptly scheduling an evidentiary hearing and relieving the parties of any obligations to conduct depositions as provided in Local Rule 209-1, Pennsylvania Rule of Civil Procedure 206.7 or otherwise. Respectfully submitted, KEEFER WOOD ALLEN & RAHAL, LLB Dated: March 30, 2000 By 794-LIZ Wayne M. Pecht Brenda L. Gacki 210 Walnut Street P. 0. Box 11963 Harrisburg, PA 17108-1963 717-612-5802 and 255-8037 Attorneys for plaintiff - 4 - I, Brenda L. Gacki, Esquire, one of the attorneys for plaintiff, hereby certify that I have served the foregoing paper upon counsel of record this date by depositing a true and correct copy of the same in the United States mail, first-class postage prepaid, addressed as follows: Thomas J. Williams, Esquire Martson Deardorff Williams & Otto 10 East High Street Carlisle, PA 17013 KEEFER WOOD ALLEN & RAHAL, LLP By / /J"Brenda L. Gacki Dated: March 30, 2000 i" : 1. J ?J LL lJ ? i'.l F WILE ATAFILMGm a6W12-ANS VW Cmmd 1WI91W W W dB AM RemN 03128 093919AM WI21 JOSEPH P. GEORGE, Plaintiff V. MARTIN H. MARIETTA, and CLASSIC RAGS, a Pennsylvania general partnership, Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA NO. 99-5871 CIVIL ACTION - LAW JURY TRIAL DEMANDED DEFENDANT'S ANSWER TO PLAINTIFF'S EMERGENCY PETITION FOR LIQUIDATION OF ASSETS AND NOW, comes Defendant Martin H. Marietta d/b/a Classic Rags, by and through his attorneys, MARTSON DEARDORFF WILLIAMS & OTTO and avers as follows in answer Plaintiff's Petition: Denied as stated. While the recitation of Plaintiff's Complaint is literally accurate, since at least February 1999, Classic Rags had been a fictitious name for a sole proprietorship under which Defendant Martin H. Marietta had done business. By way of further answer, Defendant Marietta incorporates his Answer to Plaintiffs Complaint, particularly paragraph 3. 2. Admitted. 3. Admitted. By way of further answer, Defendant Marietta no longer resides at 52 West High Street. Since the fire of December 17, 1999, he has been forced to reside at several different addresses. He presently resides at 538 West Louther Street, Carlisle, Pennsylvania. 4. Denied for the reasons previously stated. Defendant Marietta incorporates his Answer to Plaintiffs Complaint. 5. Denied as stated. Classic Rags was in the business of, among other things, the purchase and sale of new and vintage clothing and fashion accessories. Since December 17, 1999, it has been out of business and expects to remain out of business. 6. Admitted that paragraph 6 accurately reflects the claims of Plaintiff's Complaint. By way of further answer, Defendant Marietta filed a detailed Answer to Plaintiffs Complaint which is incorporated herein by reference thereto. By way of further answer, the circumstances of this business has changed dramatically since the fire of December 17, 1999. Much of what Plaintiff had demanded is now impossible even if Defendant Marietta wanted to do it. 7. Denied as stated. Until August 1998, when Plaintiff had a mental breakdown after a prolonged and excessive substance abuse, and was out of the business in rehab, Plaintiff was responsible for the business and financial records of Classic Rags. As more fully stated in Defendant Marietta's Answer to Plaintiff's Complaint, which is incorporated herein by reference thereto, Defendant Marietta did not have the business and financial records, nor the funds to hire a permanent, full time bookkeeper, nor an accountant, nor did either party have the funds to pay the business debts in full, including the taxes. Since Plaintiffs breakdown in August 1998 and since Plaintiff s withdrawal from the partnership in February 1999, Plaintiff, or Plaintiff's representative, had access to any and all business or financial records of Classic Rags with the only stipulation being that Defendant Marietta be present during such examination since he felt Plaintiff could not be trusted to have sole custody of these records. By way of further answer, most, if not all, of the business and financial records of Class Rags were destroyed in the fire of December 17, 1999. 8. Denied as stated. Defendant Marietta has expended substantial efforts, including money borrowed from his family, towards getting the financial records of Classic Rags completed properly. There is not now, and never was, sufficient income and/or assets of Classic Rags to pay all of the business debts; nevertheless, Defendant Marietta has been actively negotiating with trade creditors since the fire to accept less than 100 cents on the dollar and has met with substantial success in that regard. No one is going to get paid in full. 9. Admitted. 10. Admitted. 11. Admitted. 12. Denied as stated. Defendant Marietta did not "fail" to maintain fire and/or other insurance. This renewal came up around September 1999, was for an approximate premium of $3,000.00 and was a sum that the business simply could not afford. 1) 13. Admitted. By way of further answer, Defendant Marietta believes that the inventory in said warehouse could be sold for anywhere from $3,000.00 (auction) to $15,000.00 (sold in the trade). 14. Admitted. By way of further answer, the business was such that Defendant Marietta had not been paid for six weeks. He had not cashed three of his bi-weekly paychecks. The reason, of course, was that there was insufficient monies in the business to pay him. Nevertheless, he continued to work on a full time basis. Of the withdraws referred to in paragraph 14, approximately $2,000.00 was used by Defendant Marietta to compensate himself, not only for paychecks that he could not cash, but also for the obvious work that would be necessary related to the fire, for which he would likely receive no other compensation. The balance of the withdraws were used for ordinary business expenses. By way of further answer, Defendant Marietta has actually added to the business with funds that he borrowed from his father, William R. Marietta. He deposited $1,000.00 on February 10, 2000 and $2,500.00 on March 18, 2000. 15. Denied. Paragraph 14 hereof is incorporated herein by reference thereto. 16-17. Admitted that a letter referred to in Paragraph 16-17 was sent. It is denied that it has any legal effect. By way of further answer, Defendant Marietta has been v irking diligently to wind up the business, including: a. Inventories, which were on the computer, were lost in the fire of December 17, 1999. Defendant Marietta has been preparing a new inventory of the 4,500 square foot warehouse, which is almost complete. b. Defendant Marietta was able to salvage a few things from the store and bring them over to the warehouse. C. Defendant Marietta has been dealing with pre-paid customers and negotiating satisfactory resolutions of those claims. d. Defendant Marietta has been paying operating expenses. e. Defendant Marietta has been negotiating with trade creditors to settle their accounts. His goal has been to pay them 20 cents on the dollar in full settlement and he has been successful in almost 50% of the cases so far. 18. Denied as stated. What Plaintiff is apparently referring to is merchandise from the warehouse that was shipped to a customer in Germany. This had been ordered and amid, by the customer prior to the fire and, in effect, was merchandise owned by the customer. Moreover, Plaintiff was present at the warehouse at the time and all this was explained to him. 19, Admitted that the letter referred to in paragraph 19 of the Petition was sent. Denied that it has any relevancy to any issue before the Court. It is only a part of ongoing settlement negotiations between the parties. As mentioned previously, Plaintiff walked out of this partnership in February 1999 and Defendant Marietta has operated it as a sole proprietorship ever since. Since Plaintiff left, his attorneys have been negotiating with the attorneys for Defendant Marietta with regard to what, if anything, Plaintiff might be entitled as a result of his withdrawal from the partnership. The letter referred to in paragraph 19 was part of those negotiations. The partnership and the business had little, if any, value aside from the knowledge and abilities of the owner, and whatever good will there was. Plaintiff has demanded tens of thousands of dollars for his interest in the partnership, which is unrealistic, is not going to happen, and has resulted in the instant litigation. 20. Denied. Paragraphs 16-17 hereof are incorporated herein by reference thereto. Additionally, Plaintiff has been lining up buyers to inspect the inventory with the idea that they will bid and/or negotiate a price that will be close to market value, rather than fire sale. This cannot occur until the warehouse has been organized, and, particularly, not until the inventory has been completed so potential buyers will know on what they are bidding. In addition to these major endeavors, there have been numerous details as in any business in which Defendant Marietta had to attend to. 21. Denied. As previously stated, Defendant Marietta has not "diverted" any partnership assets for his own personal benefit. By way of further answer, there is not now sufficient assets available to satisfy all of the obligations of the partnership to its creditors. There never was. The only way all of the creditors would have been paid in full was for Classic Rags to continue in business, an effort that has now been rendered impossible by the fire of December 17, 1999. 22. Depending upon what is meant by "minimal," this allegation is probably correct. 4 23. Admitted that Defendant Marietta does not have sufficient personal assets to pay the business and partnership debts. 24. Admitted. By way of further answer, the value of the remaining assets would be substantially diminished if they were sold at auction or at a "fire sale." 25. This is a conclusion of law which requires no answer. 26. Denied as stated. The partnership has been dissolved by the fact of Plaintiffs withdrawal. The parties are involved in winding up the partnership and have been for some time. 27-28. This is a conclusion of law which requires no answer. 29. Denied. Defendant Marietta has been working diligently since December 17, 1999 to wind up this business. This is primarily focused on creditors of the business. His dispute with Plaintiff will have to be resolved by the lawyers, and, possibly, by the Court. 30. Denied that the use of escrow is necessary or desirable in this case. It would be a needlessly burdensome procedure. Moreover, much of the old partnership debt is to Plaintiff's family and Defendant Marietta believes that Plaintiff would likely prefer his family over other creditors. 31. Defendant Marietta has no objection to an Order being entered that provides him 90 days to dispose of the remaining inventory, to negotiate a settlement with trade creditors who provided the inventory, and to account for what he has done at the conclusion of the 90 days. Moreover, a requirement that Plaintiff or an escrow agent approve every sale of remaining inventory would be impractical. Defendant would agree that his sale of remaining inventory be in a commercially reasonable manner and to account for all proceeds. WHEREFORE, Defendant Marietta prays Your Honorable Court to enter an Order as outlined above. Respectfully submitted, MARTSO/N DEARDOR11FF WILLIAMS & OTTO BY ? • W ? v-? Thomas J. Wi i s, Esquire Ten East High Street Carlisle, PA 17013-3093 (717) 243-3341 Attorneys for Defendant Martin H. Marietta Date: March 22, 2000 d/b/a Classic Rags 5 VERIFICATION The foregoing Answer is based upon information which has been gathered by my counsel in the preparation of the lawsuit. The language of the document is that of counsel and not my own. I have read the document and to the extent that it is based upon information which I have given to my counsel, it is true and correct to the best of my knowledge, information and belief. To the extent that the content of the document is that of counsel, I have relied upon counsel in making this verification. This statement and verification are made subject to the penalties of 18 Pa. C.S. Section 4904 relating to unswom falsification to authorities, which provides that if I make knowingly false averments, I may be subject to criminal penalties. rtin H.? tta d/ 1 s Rags 6 CERTIFICATE OF SERVICE I, Tricia D. Eckenroad, an authorized agent for Martson Deardorff Williams & Otto, hereby certify that a copy of the foregoing Answer was served this date by depositing same in the Post Office at Carlisle, PA, first class mail, postage prepaid, addressed as follows: Brenda L. Gacki, Esquire 210 Walnut Street PO Box 11963 Harrisburg, PA 17108 MARTSON DEARDORFF WILLIAMS & OTTO 6ial).Eckenroad Ten East High Street Carlisle, PA 17013 (717) 243-3341 Dated: March 22, 2000 6 4J? _ `,Q i_.. M N ' V7 ?]Z ""• un. v 5 o q VY, Xv, uw ?n ' ;a .......... . JOSEPH P. GEORGE, Plaintiff, V. IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW MARTIN H. MARIETTA, and CLASSIC RAGS, a Pennsylvania general partnership, Defendants No. Q? - 5871 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. Lawyer Referral Service Cumberland County Bar Association 2 Liberty Avenue Carlisle, PA 17013 717-249-3166 Le han demandado a usted en la corte. Si usted quiere defenderse de estas demandas expuestas en las paginas siguientes, usted tiene viente (20) dial de plazo al partir de la fecha de la demanda y la notifcacion. Usted debe presentar una apariencia escrita o en persona o por abodago y archivar en la corte en forma escrita sus defensas o sus objeciones a las demandas en contra de su persona. Sea avisado que si usted no se defiende, la corte tomara medidas y puede entrar una orden contra usted sin previo aviso o notificacion y por cualquier queja o alivio que es pedido en la peticion de demanda. Usted puede perder dinero o sus propiedades o ostros derechos importantes Para usted. LLEVE ESTA DEMANDA A UN ABODAGO IMMEDIATAMENTE. SI NO TIENT ABOGADO 0 SI NO TIENE EL DINERO SUFICIENTE DE PAGAR TAL SERVICIO, VAYA EN PERSONA 0 LLAME POR TELEFONO A LA OFICINA CUYA DIRECCION SE ENCUENTRA ESCRITA ABAJO PARA AVERIGUAR DONDE SE PUEDE CONSEGUIR ASISTENCIA LEGAL. Lawyer Referral Service Cumberland County Bar Association 2 Liberty Avenue Carlisle, PA 17013 717-249-3166 r ? JOSEPH P. GEORGE, IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff, V. CIVIL ACTION - LAW MARTIN H. MARIETTA, and CLASSIC RAGS, a Pennsylvania general partnership, Defendants No. qQ_ ri$?7? Plaintiff Joseph P. George by and through his counsel, Keefer Wood Allen & Rahal, LLP, files this complaint against defendants Martin H. Marietta and Classic Rags, a Pennsylvania general partnership, averring as follows: 1. Plaintiff Joseph P. George ("George") is an adult individual residing at 150 South Pitt Street, Carlisle, Cumberland County, Pennsylvania 17013. 2. Defendant Martin H. Marietta ("Marietta") is an adult individual residing at 52 West High Street, Carlisle, Cumberland County, Pennsylvania 17013. 3. Defendant Classic Rags (referred to herein as "Classic Rags" or the "Partnership") is a Pennsylvania general partnership, with its principal place of business at 54 West High Street, Carlisle, Cumberland County, Pennsylvania 17013. T1,?.v ..,y.9y.C!X+?1L"?'h'Wmm.<ayrA(Meyi .4 r 4. The Partnership is organized pursuant to the laws of the Commonwealth of Pennsylvania, and the rights and liabilities of the Partners shall be as provided therein, except as otherwise provided in the partnership agreement. 5. Classic Rags engages in the purchase and sale of new and vintage clothing and fashion accessories. 6. Pursuant to a partnership agreement (the "Partnership Agreement") executed in or around 1990, George and Marietta (collectively referred to as the "Partners") are the only partners of Classic Rags. A true and correct copy of the Partnership Agreement is attached hereto as exhibit "A" and incorporated herein by reference. 7. George and Marietta each have a 50% interest in Classic Rags, as paragraph 8 of the Partnership Agreement provides that "common expenses shall be borne equally by the Partners," ... and "[p]rofits and losses shall be charged or credited equally to the separate income account of each Partner." 8. The initial capital contributions made by the Partners to the Partnership were $10,000.00 in cash from George and $10,000.00 in the form of inventory and assets from Marietta. - 2 - r 9. On March 25, 1996, Marietta and George, acting together as Partners of Classic Rags, executed a promissory note in favor of The Financial Trust Company, Main Office, One West High Street, Carlisle, Cumberland County, Pennsylvania, in the amount of $30,000.00, which was repaid in full in or around March of 1999. 10. The property known as 150 South Pitt Street, Carlisle, Cumberland County, Pennsylvania 17013 (the "South Pitt Street Property"), which is owned by George and his parents, Stephen and Susan George, and occupied by George and his wife, Barrie Ann George, was used as collateral for the above-described loan from The Financial Trust Company. 11. The Partnership agreed to pay the taxes relating to the South Pitt Street Property in exchange for George allowing said property to be used as collateral for the above-described loan from The Financial Trust Company. 12. On June 11, 1997, Marietta and George, acting together as Partners of Classic Rags, executed a note for $25,000.00 to Susan M. George for a loan she made to Classic Rags (hereinafter referred to as "Note One"); payments on Note one were to be made to Dorothy Lewis. - 3 - °, r 13. The terms of Note One stated that it was to be repaid at the rate of $166.67 per month as interest only for 12 months starting on July 1, 1997, and the balance to be paid at a rate of $1,130.68 per month for the following two years. 14. Note One has not completely been repaid and payments are now past due; the outstanding balance of Note One is believed to be approximately $14,689.84. 15. On June 10, 1998, Marietta and George, acting together as Partners of Classic Rags, executed a note to repay Stephen George or Susan George, the amount of $554.45, which was used to pay the delinquent property taxes on 150 South Pitt Street, Carlisle, Cumberland County, Pennsylvania 17013, that were past due as of May 15, 1998 (hereinafter referred to as "Note Two"). 16. Note Two was payable in 120 days from June 10, 1998, and it has not been repaid. 17. On April 8, 1998, Marietta and George, acting together as Partners of Classic Rags, executed a note payable to Stephen J. George (hereinafter referred to as "Note Three") for the following: (1) a $500.00 advance to pay health insurance starting on April 1, 1998; (2) an $800.00 advance to pay for liability insurance for a store operated by Classic Rags and located at 54 - 4 - West High Street, Carlisle, Cumberland County, Pennsylvania (the "Classic Rags Store") and a warehouse operated by Classic Rags and located at 112 Chestnut/150 South Pitt Street, Carlisle, Cumberland County, Pennsylvania (the "Classic Rags Warehouse"); and (3) a $450.00 advance to pay for workers' compensation insurance. 18. Note Three was to be repaid 60 days from April 1, 1998, and it has not been repaid. 19. Various credit cards in the name of Barrie Ann George, George's wife, were used to purchase various items and/or inventory for Classic Rags totaling in excess of $7,000.00 (hereinafter referred to as the "Credit Card Purchases"). 20. The Partnership had been making payments toward said Credit Card Purchases until several months ago when the Partnership, through Marietta, ceased making payments. 21. Barrie Ann George and George have made payments towards the Credit Card Purchases to prevent the account from becoming delinquent; to date, they have made payments totaling approximately $418.00, and they have not been reimbursed by the Partnership for said payments. - 5 - A 22. During the course of Classic Rags, business, a liability was incurred with HRS/Silo for computer and electronic equipment, the current balance for which is approximately $2,000.00. 23. The Partnership had been making payments toward the HRS/Silo account until several months ago when the Partnership, through Marietta, ceased making payments. 24. Barrie Ann George and George have made a payment towards the HRS/Silo account to prevent said account from becoming delinquent; to date, they have paid $57.00, and they have not been reimbursed by the Partnership for said payment. 25. In the event that Marietta continues to fail to make payments on the above-described accounts, George and his wife, Barrie Ann George, may be required to make future payments on behalf of the Partnership so that the above-described accounts do not become delinquent again. 26. In or around 1997, Marietta and George, acting together as Partners of Classic Rags, borrowed approximately $6,776.64, together with costs and interest, from Susan George, mother of George, which the Partnership has failed to repay. - 6 - Y . 27. In or around February of 1998, George loaned $1,200.00 to the Partnership, which George obtained by taking a cash advance on a credit card, of which approximately $700.00 has not been repaid to him by the Partnership 28. Classic Rags has incurred and continues to incur rental payments for leasing the Classic Rags Store at the rate of approximately $1,825.00 per month. 29. Marietta and George are both parties to the lease agreement for the Classic Rags Store, as Partners of Classic Rags. 30. Classic Rags has current inventory at the Classic Rags Store, including new and vintage clothing and fashion accessories. 31. Classic Rags has current inventory at the Classic Rags Warehouse, including new and vintage clothing and fashion accessories. 32. George personally paid the liability due to Keefer Wood Allen & Rahal, LLP of $2,304.45 for work completed in 1998 for Classic Rags; such debt was a liability incurred by the Partnership. - 7 - 33. George has riot been repaid by Classic Rags for the f Classic Rags to Keefer wood Allen & amount. he paid on behalf o Rahal, LLP. 34. Carlisle Area School District personal taxes were paid by George and his wife, Barrie Ann, for the South Pitt Street Property in the amount of $481.40 for 1997-1998 tax year; such taxes were to be paid by Classic Rags as consideration for said property being used as collateral for the loan from The Financial Trust Company, as described above. 35. Classic Rags has not reimbursed George and his wife, Barrie Ann George, the amount of $481.40 that they personally expended for Carlisle Area School District Personal Taxes (occupational assessment, residence and per capita taxes) for 1997-1998 tax year. for the South Pitt street Property . Real estate taxes 36 were paid by George and Barrie Ann George, his wife, in the 1998-1999 tax year; such taxes were to amount of $558.07 for the be paid by Classic Rags as consideration for said property being used as collateral for the loan from The Financial Trust Company, as described above. is i 8 w 33. George has not been repaid by Classic Rags for the amount he paid on behalf of Classic Rags to Keefer Wood Allen & Rahal, LLP. 34. Carlisle Area School District personal taxes were paid by George and his wife, Barrie Ann, for the South Pitt Street Property in the amount of $481.40 for 1997-1998 tax year; such taxes were to be paid by Classic Rags as consideration for said property being used as collateral for the loan from The Financial Trust Company, as described above. 35. Classic Rags has not reimbursed George and his wife, Barrie Ann George, the amount of $481.40 that they personally expended for Carlisle Area School District Personal Taxes (occupational assessment, residence and per capita taxes) for 1997-1998 tax year. 36. Real estate taxes for the South Pitt Street Property were paid by George and Barrie Ann George, his wife, in the amount of $558.07 for the 1998-1999 tax year; such taxes were to be paid by classic Rags as consideration for said property being used as collateral for the loan from The Financial Trust Company, as described above. - 8 - 37. Classic Rags has not reimbursed George and his wife, Barrie Ann George, the amount of $558.07 that they personally expended for real estate taxes for the South Pitt Street Property for the 1998-1999 tax year. 38. Carlisle School District personal taxes (occupational assessment, residence and per capita taxes) for the South Pitt Street Property for the 1998-1999 tax year in the amount of $222.93 were paid by George and his wife, Barrie Ann George; such taxes were to be paid by Classic Rags as consideration for said property being used as collateral for the loan from The Financial Trust Company, as described above. 39. Classic Rags has not reimbursed George and his wife, Barrie Ann George, the amount of $222.93 that they personally expended for Carlisle School District personal taxes relating to the South Pitt Street Property for the 1998-1999 tax year. 40. Carlisle Borough and Cumberland County real estate taxes for the South Pitt Street Property for 1998-1999 tax year in the amount of $250.23 were paid by George and his wife, Barrie Ann George; such taxes were to be paid by Classic Rags as consideration for said property being used as collateral for the loan from The Financial Trust Company, as described above - 9 - 41. The income tax returns for Classic Rags have not been completed for the years 1996, 1997, 1998 and 1999. 42. The income taxes for the 1995 year were delinquent in the amount of $15,907.13, which amount was personally paid by George on behalf of the Partnership. 43. George has not been reimbursed by Classic Rags for the amount he paid toward the delinquent 1995 income taxes, although such tax was a liability incurred by the Partnership. 44. George took numerous CDs belonging to him to Classic Rags for use in the operation of the business of the Partnership, and he has not removed said CDs from Classic Rags. 45. Upon information and belief, plaintiff avers that on numerous occasions, Marietta improperly diverted and/or converted money and assets of the Partnership to himself for personal use, including the payment of residential rent, residential utilities and personal expenses. 46. Upon information and belief, plaintiff avers that Marietta has failed to reimburse the Partnership for the money and assets of the Partnership that he diverted and/or converted. 47. Pursuant to paragraph 6 of the Partnership Agreement, "[t]he Partners must agree before binding the Partnership in any - 10 - t contract, agreement, promise or undertaking," ... and "[n]o expense in excess of Five Hundred ($500.00) Dollars shall be incurred without the mutual consent of the Partners." 48. Upon information and belief, plaintiff avers that since February of 1999 Marietta has and is continuing to incur expenses in excess of Five Hundred ($500.00) Dollars without the mutual consent of the Partners. 49. In addition, paragraph 9 of the Partnership Agreement provides, inter alia, that: Hooka of Account. There shall be maintained during the continuance of this Partnership an accurate set of books of the accounts of all transactions, assets and liabilities of the Partnership. The books shall be balanced and closed at the end of each year, and at any other time on reasonable request of either Partner. The books are to be kept at the principal place of business of the Partnership and are to be opened for inspection by any Partner at all reasonable times.... 50. In or around 1998, Marietta placed many of the financial and business records of the Partnership under lock, and since then has prevented George from gaining unrestricted access to those records. 51. In addition, Marietta refuses to cooperate with the accountant in the preparation of the outstanding tax returns described above. - 11 - 52. Marietta has not provided his tax information and K-1 for the 1998 tax year, which is needed to complete the 1998 income tax return for Classic Rags. 53. On numerous occasions, George has demanded that Marietta pay the debts of the Partnership on a timely basis, provide George with financial information and business records, provide the Partnership's accountants with information necessary for the preparation of tax returns, file the tax returns with proper payments, return money and/or partnership assets to the Partnership that were diverted and/or converted to Marietta for his personal use, and reimburse George and his wife for monies expended by them on behalf of the Partnership; Marietta wrongfully refused and continues to refuse to do so. 54. For some time now, the parties have been unable to agree upon the proper and reasonable management of the Partnership's affairs, and as a result of such continuing disagreement, George has found it impossible to carry on the business of the Partnership with Marietta. 55. Over the course of time, Marietta made the work environment intolerable for George, and in February of 1999 - 12 - George was forced to remove himself from the day-to-day operations of the Partnership business. 56. By letter dated February 24, 1999, George, through counsel, requested that the Partners consent to the termination of the Partnership. A true and correct copy of said letter is attached hereto as exhibit "B" and incorporated herein by reference. 57. By letter dated July 26, 1999, Marietta, through his counsel, agreed that it is "desirable to terminate the partnership and wind up the business," and that Marietta "will continue to wind up the business and pay the creditors to the extent possible." A true and correct copy of said letter is attached hereto as exhibit "C" and incorporated herein by reference. 58. Despite Marietta and George's apparent agreement that the Partnership should be terminated and the business wound up, the parties have been unable to come to an agreement regarding the termination. 59. Upon information and belief, Marietta has not taken any steps to wind up the business and pay creditors, and continues to divert funds of the Partnership for his own personal use. - 13 - 60. In or around July of 1999, Marietta caused and/or allowed the health insurance of George and his son, which was provided through the Partnership, to be canceled due to non- payment of premiums, causing George to have to obtain health insurance coverage on his own and incur health insurance premiums that he otherwise would not have incurred. COUNT I BREACH OF PARTNERSHIP AGREEMENT (=FOR • , v. D .F .ND N q 61. The averments of paragraphs 1 through 60 of plaintiff's complaint are incorporated herein by reference. 62. Upon information and belief, plaintiff avers that Marietta has and is continuing to incur expenses in excess of Five Hundred ($500.00) Dollars without the mutual consent of the Partners, thereby breaching paragraph 6 of the Partnership Agreement. `s. 4 63. Upon information and belief, plaintiff avers that Marietta has and continues to pay for his personal expenses, such as residential rent, utilities and expenses, from funds of the w Partnership, and that he treats such personal expenses as --; expenses of the Partnership, despite the fact that such payments - 14 - should be treated as withdrawals from his separate income account. 64. Upon information and belief, plaintiff avers that Marietta has failed and continues to fail to properly proportion profits and losses of the Partnership between the Partners and has and is ccntinuing to divert and/or convert monies and/or assets from the Partnership to his own personal use through means including, but not limited to, those described in the paragraph immediately preceding this paragraph, thereby breaching paragraph 8 of the Partnership Agreement. 65. Marietta's failure to allow George unrestricted access to the financial books and records of the Partnership constitutes a breach of paragraph 9 of the Partnership Agreement. 66. Upon information and belief, plaintiff avers that Marietta's breaches of the Partnership Agreement were and will continue to be willful and persistent. 67. Without an accounting, George is unable to determine the exact amount that Marietta owes the Partnership. WHEREFORE, plaintiff Joseph George respectfully requests that this Honorable Court enter judgment in his favor and against defendants Martin Marietta and Classic Rags, and enter an order - 15 - (1) dissolving the partnership; (2) requiring defendant Martin Marietta to provide an accounting to plaintiff as to partnership profits, losses and affairs; (3) ordering the sale of all partnership assets and property, the payment of all partnership debts and liabilities, the return to the partnership of any money and/or assets wrongfully diverted, and a division of any surplus between plaintiff and defendant Martin Marietta; and (4) for such further relief as may be just and proper. COUNT II VIOLATION OF THE PENNSYLVANIA UNIFORM PARTNERSHIP ACT OR D FFNDA Tmc 68. The averments of paragraphs 1 through 67 of plaintiff's complaint are incorporated herein by reference. 69. Section 8354 of the Pennsylvania Uniform Partnership Act, 15 Pa.C.S.A. §8301 et seq., provides, in relevant part, that on application by or for a partner, the court shall decree a dissolution whenever (i) a partner has been guilty of such conduct as tends to affect prejudicially the carrying on of the business, (ii) a partner willfully or persistently commits a breach of the partnership agreement or otherwise so conducts himself in matters relating to the partnership business that it - 16 - is not reasonably practicable to carry on the business in partnership with him, or (iii) other circumstances render a dissolution equitable. 70. In violation of the Partnership Agreement, Marietta from time to time wrongfully misappropriated funds and/or profits and failed to account to plaintiff for any part of such profits, though George has repeatedly demanded such accounting. 71. The Partnership, in the normal course of business, purchased items, established credit, numerous obligations and liabilities Partnership, and Marietta has failed those obligations and liabilities on despite the repeated demands of the and George. obtained loans, and incurred on behalf of the and continues to fail to pay behalf of the Partnership, :reditors of the Partnership 72. Upon information and belief, plaintiff avers that the failures described above were and will continue to be willful and persistent. 73. Upon information and belief, plaintiff avers that an accounting of the Partnership assets held by Marietta would show that Marietta has withdrawn substantial sums of money from the Partnership for his own use and benefit. - 17 - 74. Upon information and belief, plaintiff avers that such an accounting would show assets sufficient to discharge all obligations of the Partnership. 75. George fears that Marietta may not properly remit his share of the partnership profits as they are realized and that the assets of the Partnership are in danger of being lost by Marietta's failure to pay creditors, his wrongful diversion and/or conversion of monies and/or assets of the Partnership, and his unauthorized withdrawals of Partnership funds. 76. Marietta's refusal to consent to an accounting and winding up of the affairs of the Partnership places its assets in immediate danger of being dissipated and jeopardizes the goodwill of the Partnership. 77. Marietta's conduct relating to the Partnership tends to affect prejudicially the carrying on of the business of the Partnership. 78. Upon information and belief, Marietta willfully and persistently has committed and will continue to commit breaches of the Partnership Agreement. - 18 - 79. Marietta's conduct relating to the business of the Partnership is such that it is not reasonably practicable for George to carry on the Partnership with him. 80. The circumstances of this matter render a dissolution appropriate. WHEREFORE, plaintiff Joseph George respectfully requests that this Honorable Court enter judgment in his favor and against defendant Martin Marietta, and enter an order (1) dissolving the partnership; (2) requiring defendant to provide an accounting to plaintiff as to partnership profits, losses and affairs; (3) ordering the sale of all partnership assets and property, the payment of all partnership debts and liabilities, the return to the partnership of any money and/or assets wrongfully diverted, and a division of any surplus between plaintiff and defendant Martin Marietta; and (4) for such further relief as may be just and proper. COUNT III CONVERSION QFO r, I nFF .NDANTS 81. The averments of paragraphs 1 through 80 of plaintiff's complaint are incorporated herein by reference. - 19 - 82. Upon information and belief, plaintiff avers that Marietta wrongfully acquired money and/or assets of the Partnership with an intent to assert a right over them, such right being adverse to that of George and/or Classic Rages. 83. As a Partner of Classic Rags, George has a right to any monies and assets wrongfully converted by Marietta for use by the Partnership to pay liabilities and obligations to creditors and to pay profits to the Partners, including George. 84. Marietta's conversion of monies and assets of the Partnership was without George's consent and without lawful justification. 85. An accounting should reveal the amount of monies and/or value of assets converted by Marietta. WHEREFORE, plaintiff Joseph George respectfully requests that this Honorable Court enter judgment in his favor and against defendant Martin Marietta, and enter an order (1) dissolving the partnership; (2) requiring defendant to provide an accounting to plaintiff as to partnership profits, losses and affairs; (3) ordering the sale of all partnership assets and property, the payment of all partnership debts and liabilities, the return to the partnership of any money and/or assets wrongfully diverted, - 20 - and a division of any surplus between plaintiff and defendant Martin Marietta; and (4) for such further relief as may be just and proper. Respectfully submitted, KEEFER WOOD ALLEN & RAHAL, LLP Dated: September 22, 1999 By 7J Oc Wayne M. Pecht Brenda L. Gacki 210 Walnut Street P. 0. Box 11963 Harrisburg, PA 17108-1963 717-612-5802 and 255-8037 Attorneys for plaintiff - 21 - I, Joseph P. George, acknowledge that: I. I am the Plaintiff named herein; 2. The facts set forth in the foregoing document are true and correct to the best of my knowledge, information, and belief; and 3. I am aware that false statements herein are made subject to the penalties of 18 Pa. C.S. Section 4904, relating to unswom falsification to authorities. Dated: September 1999 ?oplhPlGelorge Exhibit A .....: . '. :. :?? ;; ,.?;.. ,?' ., 3d C?i ..yt r PARTNaRSHIP AORlIuRNT THIS Agreement made this' day of, 1999, by and between WAhTIN MARIETTA, of ' and .IOSQpN (IEOROR, of (hereinafter referred to as the "Partners MURAS, the parties desire to enter into a partnership to engage in the buying and ee111nq new and vintage clothing; and vritl NHIREAS, .they desire to set forth their agreement In nq. NON. THERIVORE, in consideration of the mutual covenants contained heroin,, the parties agree as,follow2j 1. Goneral Provisions. The Partnership is organized pursuant to the law of the State of Pennsylvania, and the rights and liabilities of the Partners shall be as provided therein, except as herein otherwise stated. be ClassicNRags, (hereinafter referredmtooan theP'Partnership"). 3. Business of Partnership. The purpose of the Partnership is to engage in the purchase. and sale of new and vintage clothing and fashion sccesscqea. 0. Prineinal Place of Business. The principal place of business of the pertnerahlp shall be at 54 Weat High Street, Carlisle, Pennsylvania. The Partnership shall also have other places of business as from time to time shall be -determined b the Partners. y b.' Capital"Cont'rlbufton it of Partners. The 'initial"caplk?l• contributions of Partners shall be as follows: Name Martin Marietta Joseph George Amount 510,000.00, in theform avast= and inventory of Classic Rags $10,000.00 1q• sp Receipt o£. the' 'Capital contcibutlon from each Partner as specified above in acknowledged by the Partnership. 6. Duties and Rights of partners. The Partners 3ha11 diligently apply themselves in and about the .promises of the Partnership to the utmoat or skill and to the extent required for the sound management of the business. The specific duties of Martin Marietta shall be to negotiate inventory.purchsass of vintage clothing, to conduct off-site and wholesale sales, to act as general manager includinq ' bookkeeping and to engage in research and development for the benefit of the business. The duties of Joseph George shall be to act as in-store salesperson, to engage in community relations, to manage in-store inventory, to perform creative design and promotion for the buminssa, and to organize incoming bills and mail. The parties shall mutually decide upon purchases of new/contemporary inventory. The Partners must agree before binding the Partnership in any contract, agreement, promise or undertaking. All checks or payments made on behalf of the Partnership must have the signature of one (1) of the Partners. No expense in excess of Five Hundred ($500.001 Dollars shall bo incurred without the mutual consent of the Partners. 7. Managing Partner. The Partners agree that in the event of a deadlock, the decision of Martin Marietta shall prevail except where mutual consent is required under this Agreement. a. Profits and Losses. Common expenses shall be borne equally by the Partners. Partnership profits and losses shall be charged or credited equally to the separate income account of each Partner. 9. Books of Account. There shall be maintained during the continuance of this Partnership an accurate set of books of accounts of all transactions, assets and liabilities of -the.-- Partnership. The books shall be balanced and closed at the and of each year, and at any other time on reasonable request of either Partner. The books are to be kept at the principal place of business of the Partnership and are to be opened for inspection by any Partner at all reasonable times. The profits and losses of the Partnership and its books of accounts shall be maintained on a fiscal year basis, terminating annually -on December 31, unless otherwise determined by the Partners. 10. Substitutes, Assignments and Admissions of 'Additional Partners. No additional Partners shall be admitted to the Partnership other than by addendum to this Agreement with the unanimous consent of the Partners. i 2 11.-Tore of Partnership and Dissolution. The Partnership term commences 19 and shall and on (1) the dissolution of the Partnership by operation of law, (2) dissolution at any time designated by all Partners. 12. Withdrawal of Partner. The parties agree that in the event any 'party desires to withdraw from the Partnership, the remaining Partners, or any one of them, shall have the option to purchase the interest of the withdrawing Partner upon the following terms and conditions. The purchase shall be determined annually by the Partners on or before April 16 which figure shall control for the succeeding year. The purchase price shall be payable together with interest thereon at the rate of ten (104) percent per annum, or at New York prime, whichever is less, payable in monthly installments sufficient to amortize over a five (6) year period. The option to purchase created hereunder shall be exercised by notifying the withdrawing Partner of their intent within sixty (60) days of the receipt of notice by the withdrawing Partner of his intent to withdraw. . The parties hereto expressly waive the right to partition unless the non-withdrawing Partners should elect not to exercise the option created hereunder. In the event the non- withdrawing Partner exercises the right to purchase the interest of the withdrawing Partner, the withdrawing Partner agrees for a period of one (1) year and within a radius of twenty (20) miles not to compete directly 'or indirectly either as an owner, partner, employee, shareholder or otherwise in the sale of vintage clothing. 13. Disability of Partner. In the event a Partner is unable for a period of sixty (60) consecutive days to perform his duties, the remaining Partner shall have the option to purchase the interest of the disabled Partner in accordance with the provisions of Paragraph L2. 14. Death of Partner. In the event of the death of a Partner, the surviving Partner shall purchase the interest of the deceased Partner and his estate shall sell said interest at a price determined in accordance with Paragraph 12 payable in a lump sum upon receipt by the survivors of the proceeds of the company owned insurance policy on the deceased. 15. Amendments. This Agreement may not be altered or amended unless in writing signed by the parties hereto. 16. Binding Effect of Agreement. This Agreement shall be binding on the parties hereto and their respective heirs, executors, administrators, successors and assigns. 1N VXTDIRSI; RBRRROB, the parties have this executed Partnership Agreement, consistinq of three (3) pages including this signature page, the day and year first above wrl?ten. Massa: Martin Marietta Joseph George 4 ?J IR r ' ??. ? pry ? r'I,r a?1? t N-:r t r ?+eb.? t ,? Exhibit B February 24, 1999 717-612-5802 Martin H. Marietta 52 West High Street Carlisle, PA 17013 Dear Mr. Marietta: This letter is formal notice that Joseph George desires to terminate the Classic Rags Partnership. The Partnership Agreement signed by Mr. George and you, pursuant to paragraph 11, subparagraph 2, provides that the partnership term shall end at any time designated by all the partners. Thus, Mr. George hereby requests that you mutually consent to the termination of the partnership. In the event you are unwilling to terminate this partnership voluntarily, Mr. George is prepared to petition the Court to dissolve the partnership and to use the assets of the partnership to pay debts. At that time, you will be required to make an accounting of partnership monies spent by you. Petitioning the Court for dissolution of the partnership will be costly both in time and money to you and to Mr. George Please advise me immediately concerning your willingness to dissolve the partnership voluntarily. If I do not hear from you within ten (10) days after the date of this letter, we will proceed with filing our action. Thank you for your anticipated cooperation in this matter. Very truly yours, KEEFER WOOD ALLEN & RAHAL, LLP By Wayne M. Pecht WMP:cjr bcc:Joseph George e Exhibit C Sent 9y: ; 7172402935; Jul-31.99 9:33Ptt; Page 1/2 July 31. 1999 To: Wayne Pooht From: Joseph Paul George i received the letter of July 30 to Martson, Deedorff, Williams, and Otto. I have several points that are relevant to your further discussions with Mr. Otto. 1. It was Mattis who initiated the discussion of dissolution ofthe partnership in August of 1998 and we use& attempts to come to tams prior to my leaving the business. 2. After offering to came back and help out in February of 1999. Martin told me he did not want my help in wrapping up loose ands related to operations of business and "wanted it clean break." In area related to financial dab and operations, I have been cooperative and helpful in resolving many Issues, especially related to credit card debt 3. Martin is not paying debt on time. i spoke with my aunt, and as of today site has not received the payment for July or August, which is due tomorrow. Moreover, Martin has not paid on oar credit card (see attached). As I explained to you. we had to put a S 138.00 payment on the bill to make sure the bill was not turned ova to a collection agency. Theta credit card bills must be paid in a timely manner as to not to negatively affect our credit rating. Martin has all relevant data regarding this deb- therefore there are no excuses that he is not paying it. 4. Martins legal expenses sbdukt not be paid by company funds unless my own are reimbursed as they are incurred. S. Martin's personal expenses are not company expenses: apartment rent, utilities, et al. 6. 19% accounting fees have been paid to Steve Gift. I look forward to hearing from you in reference to your ftudw conversations with Mr. Otto. I would Was to we this resolved in an maremely timely manner. c Q uJ47 i?t a ?. [? W ;. c7 ? v ? l w ? N I eft ? 4J Q v U ti ?V I.i s4z FW1LWDATAFILMCNIDC99\9912 AN\ 111de Owcd IW19MMM SIAM RevieN. IW3 090745AM M21 JOSEPH P. GEORGE, Plaintiff IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA V. MARTIN H. MARIETTA, and CLASSIC RAGS, a Pennsylvania general partnership, Defendants NO. 99-5871 CIVIL ACTION - LAW JURY TRIAL DEMANDED ANSWER AND NOW, comes Defendant, Martin H. Marietta d/b/a Classic Rags, by and through his attorneys, MARTSON DEARDORFF WILLIAMS & OTTO, and avers as follows in answer to Plaintiffs Complaint: 1. Admitted. 2. Admitted except that Defendants' mailing address is 54 West High Street. 3. Denied as stated. Classic Rags Vintage Clothing was a partnership between Plaintiff and Defendant; however, it is believed that Plaintiff dissolved the partnership on or before February 1999. 4. Denied as stated for the reasons set forth in Paragraph 3. 5. Admitted. By way of further answer, Defendant does much more than buy and sell clothing, including the manufacture of clothing and the leasing of clothing to theatrical productions. 6. Denied. Exhibit A was never adopted by either party of the Partnership Agreement, nor was it ever followed by either party during their partnership. 7. Denied for the reasons set forth in Paragraphs 3 and 6 hereof. By way of further answer, during their partnership the parties set salaries for themselves, which were not equal. 8. Denied. Classic Rags was a business owned and operated by Defendant. Defendant sold an interest in the business to Plaintiff for S 10,000.00. 9. Admitted, except as set forth in Paragraphs 3 and 6 hereof. 10. Admitted. 11. Denied. 12-13. Admitted as to the note only. 14. Paragraphs 12 and 13 hereof are incorporated herein by reference thereto. Defendant admits there is a balance remaining on a note similar to the one described in Paragraphs 12 and 13, but believes it is $13,568.14. 15. Admitted that Defendant agreed to repay Plaintiffs parents for certain property taxes they paid on Plaintiffs residence out of the business and executed a note to the parents for that purpose. The balance of the averment is denied. 16. Admitted. By way of further answer, it was always understood that this was a "family" loan and that other debts and expenses of the business would have priority of repayment. 17. Admitted in part, denied in part. Plaintiff s father decided that the business should have health and liability insurance and workers' compensation and, without authorization of Defendant, obtained and paid for same, then sought reimbursement of said payments from the business. It is admitted that Defendant agreed, albeit reluctantly, to reimburse Plaintiffs father for those payments out of the business, and signed a note presented by the father for the purpose. 18. Admitted. By way of further answer, it was always understood that this was a "family" loan and that other debts and expenses of the business would have priority of repayment. 19. Admitted in part and denied in part. Defendant has no recollection of a credit card of Plaintiffs wife being used by Plaintiff to purchase items and/or inventory; however, this was done by Plaintiff without knowledge of Defendant and Defendant has no records as to the amount of such charges. Defendant does recall a decision by the parties to use a credit card (believed to be that of Plaintiff) to pay off some debts of the business. 20. Denied. Defendant believes, and therefore avers, that Plaintiff made payments on his credit card balance using checks drawn on a business account. Defendant believes, and therefore avers, that said charges on Plaintiffs credit card may have been personal, rather than business expenses. Defendant did not approve or condone these payments, but did acquiesce in them after the fact. 21. After reasonable investigation, Defendant is without knowledge or information sufficient to form a belief as to what payments were made by Plaintiff and his wife towards what credit card purchases. 2 22-23. Denied. Any charges incurred with HRS/Silo have been paid in full and the current balance is zero. 24. After reasonable investigation, Defendant is without knowledge or information sufficient to form a belief as to what, if any, payments were made by Plaintiff and his wife towards the HRS/Silo account. 25. Denied. Paragraphs 22 and 23 hereof are incorporated herein by reference thereto. 26. Denied. Defendant did not borrow any money from Plaintiff's mother and has no knowledge of any such borrowing. 27. Denied. Defendant has no knowledge of a "loan" made by Plaintiff to the business. 28-29. Denied. There is no lease for the Classic Rags store. By way of further answer, Defendant is paying $2,195.00 per month to the owner of the store as rent. 30-31. Admitted. 32-33. Denied. Keefer Wood Allen & Rahal, LLP has never provided legal services to Defendant or to the business, Classic Rags. 34-40. Denied. Neither Defendant nor the business ever agreed to pay any personal or real estate taxes for Plaintiff and his wife, with the sole exception of the reimbursement to Plaintiffs parents out of the business as more fully set forth in Paragraph 15 hereof which is incorporated herein by reference thereto. 41. Admitted. By way of further answer, the reason why the partnership tax returns have not yet been filed is that the records needed to prepare such return were in such a state of disorganization after Plaintiffs hasty departure in February 1999 that it required hundreds of hours to locate and organize. Some of these records are still missing as of this date. 42-43. Denied. Plaintiff never paid any taxes on behalf of Defendant or the business. By way of answer, a partnership incurs no income tax liability and files only an informational return, 44. Admitted in part, denied in part. It is admitted that Plaintiff took an unknown number of CDS belonging to him into the store for use in the business; however, he also took some of these out of the store. It is admitted that some of Plaintiff's CDS remain in store. 3 45-46. Denied. Defendant never improperly diverted and/or converted money and assets of the partnership for his personal use. It is admitted that Plaintiff resides in an apartment adjacent to the store, the rent and expenses of which are paid by the business; however, it is averred that Defendant resides there solely for business purposes and with the specific agreement and approval of Plaintiff who, until his departure(s), wrote the checks for same. 47-48. Denied. Paragraphs 3 and 6 hereof are incorporated herein by reference thereto. By way of further answer, there was never an agreement between Plaintiff and Defendant that expenses in excess of $500.00 required the mutual consent of the partners; on the contrary, Plaintiff well knew that many expenditures, such as bulk inventory purchases, were well in excess of $500.00 and left to the discretion of Defendant. 49. Denied for the reasons set forth in Paragraphs 3 and 6 hereof which are incorporated herein by reference. 50. Admitted. Paragraph 41 hereof is incorporated herein by reference thereto. By way of further answer, Defendant permitted Plaintiff complete access to all ofthe business records during business hours and while Defendant was present on the premises. It is admitted that Defendant did not permit Plaintiff to have access to the business records when no one was there at the business. 51. Defendant is actively working with the accountant in the preparation of outstanding tax returns and has been for quite some time. By way of further answer, Paragraph 41 hereof is incorporated herein by reference thereto. 52. Denied. Neither Defendant's tax information nor a KI is needed to complete the 1998 income tax return for Classic Rags. 53. Denied. Plaintiff never made the demands described in Paragraph 53 of the Complaint, except as set forth in Paragraph 50 hereof which is incorporated herein by reference thereto. By way of further answer, Defendant has paid, and continues to pay, debts and expenses of the business, not only out of business review, but, occasionally, out of his own pocket; however, it is admitted that business revenue has not been sufficient to pay off the family debts previously referred to. 54. Denied as stated. For the past few years, Plaintiff has been unable and/or unwilling to perform any duties or to carry out any responsibilities with regard to the business in a competent manner. Further, Defendant has been specifically instructed by Plaintiffs parents and by Plaintiff's lawyer to not communicate directly with Plaintiff. By way of further answer, Defendant has been advised by Plaintiffs family that Plaintiff is under a disability that prevents him from functioning in the business, and Defendant's own observations of Plaintiff over the past few years lead him to agree with that conclusion. 55. Denied. Paragraph 54 hereof is incorporated herein by reference thereto. An incident that occurred in February 1999 was only the latest in a series of similar incidents supporting the conclusion that Plaintiff was disabled from performing any duties responsibly. In February 1999, Defendant had been negotiating with a Hollywood production company to provide the wardrobe firr a movie to be produced in Central Pennsylvania. The producers called the store to arrange a meeting with Defendant at the store to review their wardrobe requirements. Plaintiff took the call in Defendant's absence, but never passed the message to Defendant. When Defendant found out about this (quite by accident, on the day before the meeting) he spoke critically to Plaitttifl'ahoaat this, ats well as similar prior, incidents, following which Plaintiff left the store, never to return. 56. Admitted in part, denied in part. Admitted that Defendant received the letter front Plaintiffs counsel dated February 24, 1999 that is attached to the Complaint its Exhibit 13. Any implication that Defendant refused to terminate the partnership is denied; on the contrary, Defendant spoke personally with Plaintiffs lawyer after that letter. 57. Admitted in part, denied in part. It is admitted that counsel f'or Defendant wrote to counsel for Plaintiff on July 26, 1999. It is denied that Exhibit C to the Complaint is it true and correct copy of said letter. 58. Denied as stated. Since last February 1999, both parties agreed that the partnership be terminated. The disagreement between the parties apparently concerns the extent of business related debt as is more fully set forth in Plaintiffs Complaint. 59. Denied. As more fully set forth herein. Defendant continues to operate the business to generate revenue to pay debts and expenses and to preserve the value ol'Ihc business assets, principally the inventory, which would be sold at a fraction of its value at a liquidation. Defendant not only has not diverted funds of the partnership for his own personal use, but, on the contrary, has used his own personal funds when needed to pay essential business expenses. By way of further answer, the liabilities of this business far exceed its assets and the only way for these liabilities to be paid is for Defendant to continue working 60+ hours per week at essentially less than minimum wage to generate revenue to pay the debts and expenses, as well as to gather and organize the records needed to prepare partnership income tax returns. 60. Denied as stated. For the reasons set forth herein before, the business could not afford to provide health insurance and certainly not health insurance for someone like Plaintiff who is not an employee of the business. It is specifically denied that Defendant had any obligations to provided health insurance to Plaintiff. COUNTI BREACH OF PARTNERSHIP AGREEMENT 61. Paragraphs I through 60 hereof are incorporated herein by reference thereto. 62. Denied for the reasons set forth in Paragraphs 47 and 48 which are incorporated herein by reference thereto. 63. Denied for the reasons set forth in Paragraphs 45 and 46 which are incorporated herein by reference thereto. 64. Denied for the reasons set forth in Paragraphs 3, 6, 7, 62 and 63 hereof which are incorporated herein by reference thereto. 65. Denied for the reasons set forth in Paragraphs 3, 6, and 50 hereof which are incorporated by reference thereto. 66. Denied for the reasons set forth in Paragraphs 3 and 6. It is specifically denied that Defendant breached any Partnership Agreement. Byway of further answer, Defendant avers that all of his actions referred to herein were reasonable. 67. Denied that Defendant "owes the partnership" anything. 6 WHEREFORE, Defendant demandsjudgmentagainst Plaintiff. To the extent the partnership is not already dissolved, Defendant has no objection to an Order of Court setting the rights and obligations of the parties. As previously mentioned, Defendant is actively working with an accountant to prepare the partnership income tax returns for 1996, 1997 and 1998 which Defendant believes will include an income and expense statements, as well as balance sheets for those years. As previously mentioned, the liabilities greatly exceed the assets of this business, thus creating a negative net worth which would be even greater if there was a liquidation of the inventory. COUNT II VIOLATION OF THE PENNSYLVANIA UNIFORM PARTNERSHIP ACT 68. Paragraphs I through 67 hereof are incorporated herein by reference thereto. 69. Paragraph 69 of Plaintiffs Complaint states a conclusion of law to which no answer is required. To the extent an answer is required, Defendant denies Section 8354 of the Pennsylvania Uniform Partnership Act applies to the circumstances of this case. 70. Denied for the reasons set forth in Paragraphs 3, 6 as well as other paragraphs hereof. It is specifically denied that Defendant wrongfully misappropriated funds and/or profits. It is denied that Defendant has any obligation to account to Plaintiff with respect thereto. 71-72. Denied and denied as stated. While it is admitted that the partnership did incur financial obligations in the normal course of business, it is denied that any inability of the business, or Defendant acting on behalf of the business, to pay these obligations was willful or persistent; on the contrary, as stated herein before, Defendant, and Defendant alone, has used his best efforts to generate revenue to pay ah obligations of the business. It is specifically denied that many of the alleged obligations/debts set forth in Plaintiffs Complaint are obligations/debts of the business, nor incurred in the normal course of business, and the paragraphs relating to those obligations are incorporated herein by reference thereto. 73. Denied for the reasons set forth herein before. It is specifically denied that Defendant "has withdrawn substantial sums of money from the partnership for his own use and benefit." 74. Denied. As previously noted, the liabilities greatly exceed the assets of the business. 75. Denied. The business has not generated a profit to be distributed to anyone, nor has Defendant diverted, converted, or withdrew partnership funds/assets. 76-77. Denied. Defendant has never refused an accounting; on the contrary, as previously stated, Defendant is actively working with an accountant for that purpose. By way of further answer, Defendant, and Defendant alone, is continuing to work at the business to generate revenue to pay liabilities, and preserve the good will of the business. 78. Denied for the reasons set forth in Paragraphs 3 and 6 hereof which are incorporated herein by reference thereto. It is specifically denied that Defendant breached any Partnership Agreement. 79. Denied for the reasons herein before set forth; in fact, the reverse is true. 80. Admitted. WHEREFORE, Defendant demandsjudgmentagainst Plaintiff. To the extent the partnership is not already dissolved, Defendant has no objection to an Order of Court setting the rights and obligations of the parties. As previously mentioned, Defendant is actively working with an accountant to prepare the partnership income tax returns for 1996, 1997 and 1998 which Defendant believes will include an income and expense statements, as well as balance sheets for those years. As previously mentioned, the liabilities greatly exceed the assets of this business, thus creating a negative net worth which would be even greater if there was a liquidation of the inventory. COUNT 111 CONVERSION 81. Paragraphs 1 through 80 hereof are incorporated herein by reference thereto. 82-85. Denied for the reasons herein before set forth. Paragraphs 75, 76, and 77 specifically incorporated herein by reference thereto. WHEREFORE, Defendant demandsjudgmentagainst Plaintiff. To the extent the partnership is not already dissolved, Defendant has no objection to an Order of Court setting the rights and obligations of the parties. As previously mentioned, Defendant is actively working with an accountant to prepare the partnership income tax returns for 1996, 1997 and 1998 which Defendant 8 believes will include an income and expense statements, as well as balance sheets for those years. As previously mentioned, the liabilities greatly exceed the assets of this business, thus creating a negative net worth which would be even greater if there was a liquidation of the inventory. Respectfully submitted, MARTSOO/N DEARDORFF WILLIAMS & OTTO By Ik t W Thomas J. VQiarfis, Esquire Ten East High Street Carlisle, PA 17013-3093 (717) 243-3341 Attorneys for Defendant Martin H. Marietta d/b/a Classic Rags Date: Octobev?s1999 The foregoing Answer is based upon information which has been gathered by my counsel in the preparation of the lawsuit. The language of the document is that of counsel and not my own. I have read the document and to the extent that it is based upon information which I have given to my counsel, it is true and correct to the best of my knowledge, information and belief. To the extent that the content of the document is that of counsel, I have relied upon counsel in making this verification. This statement and verification are made subject to the penalties of 18 Pa. C.S. Section 4904 relating to unswom falsification to authorities, which provides that if I make knowingly false averments, I may be subject to criminal penalties. rtin H. ssic Rags 10 CERTIFICATE OF SERVICE I, Nichole L. Myers, an authorized agent for Martson Deardorff Williams & Otto, hereby certify that a copy of the foregoing Answer was served this date by depositing same in the Post Office at Carlisle, PA, first class mail, postage prepaid, addressed as follows: Brenda L. Gacki, Esquire 210 Walnut Street PO Box 11963 Harrisburg, PA 17108 MARTSON DEARDORFF WILLIAMS & OTTO By I Nichole L. Myers Ten East High Street Carlisle, PA 17013 (717) 243-3341 Dated: October 25, 1999 co n P r jh ib a SHERIFF'S RETURN - REGULAR CASE NO: 1999-05871 P COMMONWEALTH OF PENNSYLVANIA: COUNTY OF CUMBERLAND GEORGE JOSEPH P VS. MARIETTA MARTIN H ET AL BRIAN BARRICK , Sheriff or Deputy Sheriff of CUMBERLAND County, Pennsylvania, who being duly sworn according to law, says, the within COMPLAINT was served upon MARIETTA MARTIN H the defendant, at 13:43 HOURS, on the 24th day of September 1999 at 54 WEST HIGH STREET CARLISLE, PA 17013 ,CUMBERLAND County, Pennsylvania, by handing to ALLISON CLARKE (SALES ASSOC.) a true and attested copy of the COMPLAINT together with NOTICE and at the same time directing Her attention to the contents thereof. Sheriff's Cost So answers: Docketing 18.00 Service 3.10 Affidavit .00 Surcharge 8.00 $$ RR ?u09/24/?9WOOD, AALLLE?EN?f& RAHAL eD-piny SIY€?i by and subscribed to before me this g a _A day of ate... . 19_2?_ A.D. CASE NO: 1999-05871 P SHERIFF'S RETURN - REGULAR COMMONWEALTH OF PENNSYLVANIA: COUNTY OF CUMBERLAND GEORGE JOSEPH P VS. MARIETTA MARTIN H ET AL BRIAN BARRICK , Sheriff or Deputy Sheriff of CUMBERLAND County, Pennsylvania, who being duly sworn according to law, says, the within COMPLAINT was served upon CLASSIC RAGS the defendant, at 13:43 HOURS, on the 24th day of September 1.999 at 54 WEST HIGH STREET CARLISLE, PA 17013 CUMBERLAND County, Pennsylvania, by handing to ALLISON CLARKE (SALES ASSOC.) a true and attested copy of the COMPLAINT together with NOTICE and at the same time directing Her attention to the contents thereof. Sheriff's Costs: So answers: Docketing 6.00" ' Service .00 Affidavit .00 Surcharge 8.00 X. Ill etas K Ine, SFezizL _09M 19990D, (A?L/L,E?N,& RAHA/? by epu y SnerlFP Sworn and subscribed to before me this o?a 4s A day of (Vcu. 199_ A.D. ?? C4, JOSEPH P. GEORGE, Plaintiff, V. MARTIN H. MARIETTA, and CLASSIC RAGS, a Pennsylvania general partnership, Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW No. 99-5871 Civil RULE TO SHOE CAUSE AND NOW, this r- day of M P-'a , 2000, a rule is hereby issued upon defendant Martin H. Marietta to show cause why plaintiff Joseph P. George's emergency petition for liquidation of assets should not be granted. This rule is returnable /5? days from service. BY THE CO J. R I<S 00 P!F,R -9 Pi; 1: 30. pENNSYLVANIA JOSEPH P. GEORGE, Plaintiff, V. MARTIN H. MARIETTA, and CLASSIC RAGS, a Pennsylvania general partnership, Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW No. 99-5871 Civil AND NOW, this day of 2000, upon consideration of plaintiff's emergency petition for liquidation of assets, IT IS HEREBY ORDERED that said emergency petition is GRANTED. The parties are directed as follows: 1. Joseph P. George and/or Martin H. Marietta (the "Partners") are hereby prohibited from selling or otherwise transferring any assets of. Classic Rags, a Pennsylvania general partnership (the "Partnership"), without the written consent of the other Partner; 2. The Partners shall have thirty (30) days from the date of this Order to sell any or all assets of the Partnership, subject to the requirement set forth above; 3. In the event that assets of the Partnership have not been sold within the thirty (30) day period set forth above, Joseph P. George shall retain the services of an auctioneer to liquidate said assets, the fee for such services being deducted from the proceeds thereof; and 4. Any and all proceeds received pursuant to a sale of assets as authorized herein shall be payable to the Partnership and shall be deposited in the escrow account of Keefer Wood Allen & Rahal, LLP, for payment to creditors and/or Partners, as agreed upon by the Partners or as directed by a court. 5. Within five (5) days from the date of this Order, the Partners shall provide each other with a written list of all debts and/or liabilities of the Partnership that are known to the Partner, setting forth the name, address and telephone number of the person and/or entity to whom the debt or liability is owed, and the amount of said debt or liability. BY THE COURT: J. - 2 - JOSEPH P. GEORGE, Plaintiff, V. MARTIN H. MARIETTA, and CLASSIC RAGS, a Pennsylvania general partnership, Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW No. 99-5871 Civil PLAINTIFF'S EMERGENCY PETITION FOR LIQUIDATION OF ASSETS Plaintiff Joseph P. George, by and through his counsel, Keefer Wood Allen & Rahal, LLP, files this emergency petition for liquidation of assets, averring as follows: 1. On September 23, 1999, plaintiff Joseph P. George ("George") filed a civil action against defendant Martin H. Marietta ("Marietta") and Classic Rags (referred to herein as "Classic Rags" or the "Partnership"), a Pennsylvania general partnership consisting of George and Marietta. 2. George is an adult individual residing at 150 South Pitt Street, Carlisle, Cumberland County, Pennsylvania 17013. 3. Marietta is an adult individual formerly residing at 52 West High Street, Carlisle, Cumberland County, Pennsylvania 17013. 4. Classic Rags is a Pennsylvania general partnership, with its principal place of business at 54 West High Street, Carlisle, Cumberland County, Pennsylvania 17013 (the "Classic Rags Store"). 5. Classic Rags engages in the purchase and sale of new and vintage clothing and fashion accessories. 6. The complaint, which contains counts for breach of partnership agreement, violation of the Pennsylvania Uniform Partnership Act and conversion, requests the court to enter judgment in George's favor and against defendants, and to enter an order (1) dissolving the partnership; (2) requiring defendants to provide an accounting to plaintiff as to partnership profits, losses and affairs; (3) ordering the sale of all partnership assets and property, the payment of all partnership debts and liabilities, the return to the partnership of any money and/or assets wrongfully diverted, and a division of any surplus between George and Marietta; and (4) for such further relief as may be just and proper. 7. on numerous occasions beginning in 1998 and continuing to the present, George has demanded that Marietta pay the debts of the Partnership on a timely basis, provide George with - 2 - financial information and business records, provide the Partnership's accountants with information necessary for the preparation of tax returns for 1996, 1997, 1998 (and now 1999), file the tax returns with proper payments, return money and/or partnership assets to the Partnership that were diverted and/or converted to Marietta for his personal use, and reimburse George and his wife for monies expended by them on behalf of the Partnership. 8. Although recently some progress has been made regarding the preparation of income tax returns for some of the years mentioned above, Marietta has failed to address the other matters set forth above. 9. On or about December 18, 1999, subsequent to the filing of the complaint, a fire destroyed the Classic Rags Store in which Classic Rags operated its retail location. 10. As a result of the fire, most all the inventory and assets of Classic Rags were destroyed. 11. As a result of the fire, the business is no longer operating and has closed. 12. Upon information and belief, it is averred that Marietta failed to maintain fire and/or other insurance that - 3 - would provide coverage for the losses described above, thereby failing to properly protect the assets of the Partnership. 13. Some remaining inventory and other assets are in storage at a warehouse rented by Classic Rags, located at 112 Chestnut/100 West South Street, Carlisle, Cumberland County, Pennsylvania (the "Classic Rags Warehouse"), for which Classic Rags continues to incur rental obligations on a month-to-month basis. 14. On or about December 20, 1999, Marietta withdrew funds in the amount of $1,926.47 and $1,168.08, from two of the four bank accounts of Classic Rags, which represented most all the funds available in Classic Rags' bank accounts; the total amount in Classic Rags' bank accounts as of February 25, 2000 is approximately $217.71. 15. Upon information and belief, funds from the bank accounts of Classic Rags were diverted for the personal use of Marietta and were not used for purposes of the business of Classic Rags. 16. By letter dated January 6, 2000, to defendant's counsel from plaintiff's counsel, Marietta was informed that George objects to any further operation of the business by Marietta (at - 4 - the old location or a new location) and that he does not authorize Marietta to enter into any contracts binding the Partnership or its assets. A true and correct copy of said letter is attached hereto as Exhibit "A" and incorporated herein by reference. 17. By same letter dated January 6, 2000, Marietta was informed that it is George's position that all the assets of the Partnership must be sold immediately and the proceeds be placed into escrow for payment to creditors, and asked that Marietta raise any objections thereto within seven (7) days thereof; Marietta has not objected to that course of action, but he has not concurred with it either. 18. In January of 2000, a truck was parked outside of Classic Rags' Warehouse and certain inventory and/or assets of the Partnership were removed and/or transferred to a third party. 19. More than seven (7) months ago, by letter dated July 26, 1999, Marietta, through his counsel, agreed that it is "desirable to terminate the partnership and wind up the business," and that he would "continue to wind up the business and pay the creditors to the extent possible." A true and - 5 - correct copy of the letter is attached hereto as Exhibit "B" and incorporated herein by reference. 20. Upon information and belief, Marietta has not taken any steps to wind up the business and pay creditors, and continues to divert funds of the Partnership for his own personal use. 21. George is concerned that Marietta will continue to divert partnership assets for his own personal benefit and that if the court does not intervene, there may be no assets available to satisfy obligations of the Partnership to creditors and/or George. 22. Upon information and belief, the value of Marietta's personal assets is minimal. 23. Upon information and belief, in the event that the court determines that Marietta has improperly diverted and/or converted partnership funds and/or assets and that he owes money to the Partnership and/or George, Marietta's assets will be insufficient to repay such money, and said money will not be available for payment to the Partnership's creditors or George. 24. Upon information and belief, the value of the assets of the Partnership may be less than the amount of the liabilities of the Partnership. - 6 - 25. Subchapter P of the Pennsylvania Uniform Partnership Act, 15 Pa. C.S.A. § 8301 et seq. (the "Act"), provides for the dissolution and winding up of general partnerships such as Classic Rags. 26. The parties have already agreed to dissolve the Partnership. 27. Moreover, dissolution of the Partnership is proper and not wrongful under § 8353(1)(ii). 28. Under § 8359 of the Act, partners who have not wrongfully dissolved a partnership have the right to wind up the partnership affairs, and any partner, upon cause shown, may obtain winding up by the court. 29. Because of Marietta's failure to wind up the business of Classic Rags for over seven (7) months, his repeated failures to pay creditors, his diversion and/or conversion of partnership funds and/or assets, and his failure to protect assets of the partnership, George believes that court involvement in the winding up of the Partnership is appropriate and necessary to preserve the assets of the Partnership and to make sure that creditors (and partners, should sufficient assets exist) are paid to the fullest extent possible. - 7 - 30. George believes that it will be in the best interest of the Partners and creditors if the assets of the Partnership are immediately sold and the money placed in escrow for payment to creditors. 31. George requests that the court enter an order, as follows: (a) prohibiting either party from selling or otherwise transferring an asset of the Partnership without the written consent of the other party; (b) allowing the parties 30 days from the date of the order to sell assets of the Partnership, subject to the requirement set forth above; (c) in the event that assets of the Partnership have not been sold within the 30-day period set forth above, directing George to retain the services of an auctioneer to liquidate said assets, the fee for such services being deducted from the proceeds thereof; (d) requiring that any and all proceeds received pursuant to a sale of assets as authorized therein 4 shall be payable to the Partnership and shall be deposited in the escrow account of Keefer Wood Allen & 8 - `ifi Rahal, LLP, for payment to creditors and/or partners, as agreed upon by the parties or as directed by a court; and (e) requiring that within five (5) days from the date of this order, the parties shall provide each other with a written list of all debts and/or liabilities of the Partnership that are known to the party, setting forth the name, addresses and telephone number of the person and/or entity to whom the debt or liability is owed, and the amount of said debt or liability. WHEREFORE, plaintiff Joseph George requests this Honorable Court to issue a rule to show cause why plaintiff's emergency petition for liquidation of assets should not be granted against defendants, and an order entered as set forth above. Respectfully submitted, KEEFER WOOD ALLEN & RAHAL, LLP Dated: March 1, 2000 Byly"?- / A ? Wayne M. Pecht Brenda L. Gacki 210 Walnut Street P. 0. Box 11963 Harrisburg, PA 17108-1963 717-612-5802 and 255-8037 Attorneys for plaintiff - 9 - The undersigned, Joseph P. George, hereby verifies and states that: 1. He is plaintiff herein; 2. The facts set forth in the foregoing petition for liquidation of assets are true and correct to the best of his knowledge, information, and belief; and 3. He is aware that false statements herein are made subject to the penalties of 18 Pa.C.S. Sec. 4904, relating to unsworn falsification to authorities. J eph P. George Dated: February Z6 1 2000 C 255-8037 a-Mil. bgnckiakmmfervocd.com January 6, 2000 Thomas J. Williams, Esquire Martson Deardorff Williams & Otto 10 East High Street Carlisle, PA 17013 Re: Joseph George v. Martin Marietta, et al. C.C.P. Cumberland County No. 99-SA71 Civil Dear Tom: Due to the fire that destroyed the Classic Rags store and the destruction of inventory located therein, we believe that it is unlikely that Martin Marietta will be able to successfully continue the business and pay obligations of the partnership. Moreover, as we have been attempting to negotiate a termination of the partnership for some time, it is now more imperative than ever that all business operations under the name of Classic Rags cease. Mr. and Mrs. George have heard rumors that Mr. Marietta plans to reopen Classic Rags. Please be advised that Joseph George hereby objects to any further operation of the business of Classic Rags and/or use of partnership assets. Mr. George does not authorize Mr. Marietta to enter into any contracts in the name of or on behalf of the partnership or to bind the partnership or its assets in any manner. Furthermore, Mr. George does not authorize any actions to be taken by Mr. Marietta to- establish a business operation using the name Classic Rags or using the assets of the partnership. Any unauthorized actions taken by Mr. Marietta shall be deemed as having been conducted Emmi A Thomas J. Williams, Esquire Page 2 January 6, 2000 outside the scope of the partnership and in violation of the partnership agreement. It is our position that the assets of the partnership should be sold immediately and that all of the proceeds from such sales should be placed into escrow for payment to creditors. We request that Mr. Marietta contact us within seven (7) days if he has any objections thereto. If we do not hear from Mr. Marietta, we will consider his silence as agreement with our proposed course of action, and we immediately will begin the process of selling the assets and placing money into escrow. I look forward to hearing from you regarding this matter. If you have any questions, please do not hesitate to contact me at the direct-dial number shown above. Very truly yours, KEEFER WOOD ALLEN & RAHAL, LLP By Brenda L. Gacki bcc: Joseph P. George Wayne M. Pecht, Esquire .$FNP 9Y:NDWO 7-26-99 ; 1:42PM IDW?t 717 612 5605:9 1/ 2 MARTSON Danaou"Y WjuAA 1s 6r Orro MD 0 IN,nI WR*-MNAT.AMprvT Tm PAT MuN s'rllaer CARL! a. P044MVANM 17013 Tfumow (717) 243.3341 FAcNNne (717) 2431650 INnam www.mdwo.mm July 26,1999 Wayne M. Pecht, Esquire KEEFER WOOD ALLEN & RAHAL, LLP 415 Fallowficld Road, Suite 102 Camp Hill, PA 17011-4906 RE: Classic Rags Our File No. 9912.1 Dear Wayne: Annmen err Couweuuws m Iaw VAUJu F. MAanON Ju B. Pewin III DAmn K Domomr TNowu Vftwws - IVOM Orro III Gsnr:a B. PALL= JAf CARLG.RULV B/NtANM T. WAxwA 'Steno Oitmm, 0".TN .SNamvr I have been consulted by Martin Marietta in respect to the partnership known as Classic Rags. We understand that Mr. George has absented himself from the business for some time. We lather understand that Mr. George believes it desirable to terminate the partnership and wind up the business. Mr. Marietta is in agreement with that however, there is the-practical consideration of who will be responsible for seeing to the orderly liquidation of the business. In the absence of Mr. George's assistance, Mr. Marietta has and will continue to wind up the business and pay the creditors to the extent possible. As -1 am slue you can appreciate, Mr. Marietta will invest a substantial amount of time in seeing that the business is properly wound up. He will certainly, as has been the can in the part, expect to be paid for his effort. In any event, if Mr. George has difficulty with Mr. Marietta's continued management and wind down of the business, we would simply suggest that Mr. Marietta will happily turn these manors over to Mr. George in exchange for a complete release from all liability. INFORMATION • ADvicr, • ADVOCACY'" 0726 '99 13:45 gal 8 • .,SINf BY:At0110 7-28-99 1:43Pt! : NX90» 717 612 5805:# 2/ 2 Wayne M. Pecht, Esquire July 26,1999 Page 2 Please let us know your client's position on then maum. Very truly your, TSONDEARDORFF WILUAM$ & OT TO i . Otto III IVOhed cc: Mr. Martin Marietta (via facsimile: 258-1290) e LWWAMMWnUW MI WpI INFORMATION • ADvIcc 0 ADVOCACY" 0726 '99 13:45 I, Brenda L. Gacki, Esquire, one of the attorneys for plaintiff, hereby certify that I have served the foregoing paper upon counsel of record this date by depositing a true and correct copy of the same in the United States mail, first-class postage prepaid, addressed as follows: Thomas J. Williams, Esquire Martson Deardorff Williams & Otto 10 East High Street Carlisle, PA 17013 KEEFER WOOD ALLEN & RAHAL, LLP By / Brenda L. Gacki Dated: March 1, 2000 Vim' ? V=i c s E "t C? Cl ll_ N 1 ?y C U) F C.0 tl CD C.) 06,123/00 12:22 JOSEPH P. GEORGE, Plaintiff, V. MARTIN H. MARIETTA, and CLASSIC RAGS, a Pennsylvania general partnership, Defendants NO. 896 P002,1005 JUN 2 8 20QA IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW No. 99-5871 Civil NOW COME plaintiff, Joseph P. George (hereinafter referred to as "George"), by and through his attorneys, Keefer Wood Allen & Rahal, LLP, and defendant Martin H. Marietta (hereinafter referred to as "Marietta"), by and through his attorneys, Marteon Deardorff Williams & Otto, to stipulate and agree as follows: a. The portion of paragraph 5 of the Order of court, dated April 18, 2000, which reads "Marietta shall sell all remaining assets of the business on or before June 30, 2000," shall be amended to read "Marietta shall sell all remaining assets of the business on or before July 31, 2000." ` 06/23/00 12:22 NO. 898 P003/005 b. The portion of paragraph 6 of the order of Court, dated April le, 2000, which reads "said accounting to be provided on or before July 31, 2000,° shall be amended to read "Said accounting to be provided on or before August 10, 2000." C. The parties desire to negotiate a settlement of sales tax owed to the Pennsylvania Department of Revenue relating to the operation of Classic Rage. To that end, Marietta shall give Keefer Wood Allen & Rahal, LLP, to hold in escrow, the sum of three thousand dollars ($3,000) from the business of Classic Rags (hereinafter referred to as the "Escrow Money"), and Marietta and George hereby (1) authorize Keefer Wood Allen & Rahal, LLP, and George to negotiate a complete settlement of said tax obligation (Court of Common Pleas of Cumberland county, docket no. 2000-1928) ; (2) authorize Keefer Wood Allen & Rahal, LLP, to pay the Escrow Money, or a portion thereof, to the Department of Revenue in settlement of said tax obligation, if such a settlement may be achieved prior to July 24, 2000, provided that in no event shall Marietta pay more than 50V 2 - 66/23/00 12:22 N0.898 P004/005 of any settlement so negotiated, with the remaining amount of the settlement to be paid by George; and (3) authorize Keefer Wood Allen & Rahal, LLP, in the event that a settlement with Department of Revenue is not achieved prior to July 24, 2000, to pay the Escrow Money to satisfy other ( nclus; ve o; Tax-e,1 /4-t S- e,04 or C O,12 • P o. /V Joint debtsAof the parties on or before July 31, 2000, provided that George must pay toward joint debts an amount at least equal to any amount paid by Marietta. In the event that there is remaining Escrow money after July 31, 2000, said Escrow money shall be returned to Marietta. d. The parties further agree that: (1) Marietta shall have until August 10, 2000, to pay and/or resolve debts of the partnership and/or business; (2) George shall be permitted to inspect the financial information gathered by Marietta throughout the course of selling the assets of classic Rags; (3) Marietta shall be permitted to retain possession of the laptop computer and other computer salvage items; and (4) Marietta will not seek to recover amounts paid for insurance for the benefit of George or his family 3 - 06/23/00 12:22 NO. 89B P005/OO5 after February 24, 1999, the date of the termination of their partnership. The parties desire this stipulation to be entered as an Order of Court. IT IS SO STIPULATED AND AGREED. )6?EPH P. GEORGE MA, KIN H. M Dated: June 23 , 2000 Dated: June 23, 2000 SO ORDERED Y THE COURT: J. Dated: b 14 a 2000 ` L -30-00 WIS 4 - LF fd ? .C )TMY 00 T1" 29 PH G: 14 Cii/11,LC ,'.,io l,{jul,,ny PENNSYU/ANIA 07/24/00 16:32 KEEFER WOOD ALLEN & RAHAL -> 7172431850 NO.898 P002/005 ft JUL 28 20Q? JOSEPH P. GEORGE, Plaintiff, V. MARTIN H. MARIETTA, and CLASSIC RAGS, a Pennsylvania general partnership, Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW No. 99-5971 Civil NOW COME Plaintiff, Joseph P. George (hereinafter referred to as "George'), by and through his attorneys, Keefer Wood Allen & Rahal, LLP, and defendant Martin H. Marietta (hereinafter referred to as "Marietta"), by and through his attorneys, Martson Deardorff Williams & Otto, to stipulate and agree as follows; a. The portion of paragraph 5 of the Order of Court, dated April 18, 2000, which reads "Marietta shall sell all remaining assets of the business on or before June 30, 2000,' shall be amended to read "Marietta shall sell all remaining assets of the business on or before August 14, 2000." 07/24/00 16:32 KEEFER WOOD ALLEN 8 RAHRL 4 7172431850 NO.SM P003/005 b. The portion of paragraph 6 of the order of Court, dated April 18, 2000, which reads "Said accounting to be provided on or before July 31, 20001" shall be amended to read 'Said accounting to be provided on or before August 28, 2000." c. The parties desire to negotiate a settlement of sales tax owed to the Pennsylvania Department of Revenue relating to the operation of classic Rags. To that and, Marietta shall give Keefer Wood Allen 6 Rahal, LLP, to hold in escrow, the sum of three thousand dollars ($3,000) from the business of Classic Rags (hereinafter referred to as the "Escrow Money"), and Marietta and George hereby (1) authorize Keefer Wood Allen & Rahal, LLP, and George to negotiate a complete settlement of said tax obligation (Court of Common Pleas of Cumberland County, docket no. 2000-1928) ; (2) authorize Keefer Wood Allen & Rahal, LLP, to pay the Escrow Money, or a portion thereof, to the Department of Revenue in settlement of said tax obligation, if such a settlement may be achieved prior to August 7, 2000, provided that in no event shall Marietta pay more than 50% of any settlement so negotiated, with the remaining amount of the settlement to be paid by George; and (3) authorize Keefer Wood Allen & Rahal, LLP, in the event that 0724/00 16:32 KEEFER WOOD ALLEN & RAHAL a 7172431850 NO. MS P004/005 a settlement with Department of Revenue is not achieved prior to August 7, 2000, to pay the Escrow Money to satisfy other joint debts (inclusive of taxes, Hot steps or C.O.R.P. only) of the parties on or before August 14, 2000, provided that George must pay toward joint debts an amount at least equal to any amount paid by Marietta. In the event that there is remaining Escrow Money after August 14, 2000, said Escrow Money shall be returned to Marietta. d. The parties further agree that: (1) Marietta shall have until August 28, 2000, to pay and/or resolve debts of the partnership and/or business; (2) George shall be permitted to inspect the financial information gathered by Marietta throughout the course of selling the assets of Classic Rags; (3) Marietta shall be permitted to retain possession of the laptop computer and other computer salvage items; and (4) Marietta will not seek to recover amounts paid for insurance for the benefit of George or his family after February 24, 1999, the date of the termination of their partnership. - 3 - 07/24/00 16:32 KEEFER WOOD ALLEN & RAHAL -) 7172431850 NO.898 P005/m The parties desire this stipulation to be entered as an Order of court. This stipulation is intended to supercede and replace the previous stipulation and order entered by the Court on June 28, 2000. IT IS SO STIPULATED AND AGREED. Wit, paj _ J EPH P. GEORGE Dated: July 2Lf, 2000 M?ATIX H. Dated: July Z1, 2000 SO ORDER Y TH£ COURTt J. Dated: 31 , 2000 - 4 - e