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HomeMy WebLinkAbout04-0166D. MARK THOMAS AND JEANNE M. THOMAS, Plaintiffs v. CHARLES R: DAVIS, KAREN S. DAVIS AND 200 NORTH THIRD, INC., Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA N0. LT y- f~G C.~:n.1 CIVIL ACTION -LAW NOTICE YOU HAVE BEEN SUED IN COURT. If you wish to defend against the claims set forth in the following pages, you must take action within twenty (20) days after this Complaint and Notice are served, by entering a written appearance personally or by attorney and filing in writing with the Court your defenses or objections to the claims set forth against you. You are warned that if you fail to do so the case may proceed without you and a judgment may be entered against you by the Court without further notice for any money claimed in the Complaint or for any other claim or relief requested by the Plaintiff. You may lose money or property or other rights important to you. YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER OR CANNOT AFFORD ONE, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW TO FIND OUT WHERE YOU CAN GET LEGAL HELP. Cumberland County Bar Association Two Liberty Avenue Carlisle, Pennsylvania 17013 (717) 249-3166 or 800-990-9108 AVISO USTED HA SIDO DEMANDADO/A EN CORTE. Si usted desea defenderse de las demandas que se presentan mas adelante en las siguientes paginas, debe tomar action dentro de los proximos veinte (20) Bias despues de la notification de esta Demands y Aviso radicando personalmente o por medio de un abogado una comparecencia escrita y radicando en la Corte por escrito sus defensas de, y objecciones a, las demandas presentadas aqui en contra suya. Se le advierte de que si usted falls de tomar action como se describe anteriormente, el caso puede poceder sin usted y un fallo por cualquier sums de dinero reclamada en la demands o cualquier otra reclamation o remedio solicitado por el demandante puede ser dictato en contra suya por la Corte sin mas aviso adicional. Usted puede perder dinero o propiedad u otros derechos importantes pars usted. USTED DEBE LLEVAR ESTE DOCUMENTO A SU ABOGADO INMEDIATAMENTE. SI USTED NO TIENE UN ABOGADO O NO PUEDE PAGARLE A UNO, LLAME O VAYA A LA SIGUIENTE OFICINA PARR AVERIGUAR DONDE PUEDE ENCONTRAR ASISTENCIA LEGAL. Cumberland County Bar Association Two Liberty Avenue Carlisle, Pennsylvania 17013 (717) 249-3166 or 800-990-9108 Date: January 13, 2004 Respectfully submitted, B y. '~- ~` hn H s Attorney r Plaintiffs Supreme Court I.D. #15312 6121 Stephen's Crossing Mechanicsburg, PA 17050 Tel. No. (717) 979-4840 Fax No. (717) 255-7230 -2- D. MARK THOMAS AND JEANNE M. THOMAS, Plaintiffs v. CHARLES R. DAVIS AND KAREN S. DAVIS AND 200 NORTH THIRD, INC., Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION -LAW COMPLAINT AND NOW, comes the above-named Plaintiffs, by their attorney, John Havas, Esquire, and make the following averments: 1. The Plaintiffs are D. Mark Thomas ("Plaintiff D. Thomas") and Jeanne M. Thomas, his wife ("Plaintiff J. Thomas"), adult individuals who reside at 100 Walnut Street, Lemoyne, Cumberland County, Pennsylvania 17043 (collectively "Plaintiffs"). 2. The Defendants are Charles R. Davis ("Defendant C. Davis") and Karen S. Davis, his wife ("Defendant K. Davis"), adult individuals who reside at 19 Tuscany Court, Camp Hill, Cumberland County, Pennsylvania 17011 (collectively "Defendants Davis"). 3. Defendant, 200 North Third, Inc. ("Defendant 200 North Third"), f/k/a 200 North Third Acquisition, Inc., is a Pennsylvania business corporation with a principal place of business located at 2016 Yale Avenue, Camp Hill, Cumberland County, Pennsylvania 17011. Defendant 200 North Third's primary asset is The Fulton Bank Building, located at the corner of North Third and Locust Streets in Harrisburg, Dauphin County, Pennsylvania 17101. Defendant C. Davis and Defendant K. Davis are respectively the President and Secretary of Defendant 200 North Third and are believed to be the sole shareholders thereof. 4. Upon the urging of Defendant C. Davis, Plaintiffs and Defendants Davis agreed to pursue the purchase of The State Street Building located at 500 North Third, Harrisburg, Dauphin County, Pennsylvania. Thereupon, Plaintiffs and Defendants Davis formed a corporation by the name of The Capitol Steps Associates, Inc. ("Capitol Steps"), for the purpose of acquiring and operating The State Street Building, and filed its Articles of Incorporation with the Department of State on September 9, 1998. Pursuant to the Articles of Incorporation, "the aggregate number of shares authorized" for Capitol Steps was "100" shares. 5. Of the 100 authorized shares of Capitol Steps, fifty (50) shares were issued to Plaintiffs, as tenants by the entireties, and fifty (50) shares were issued to Defendants Davis, as tenants by the entireties. 6. Defendants Davis through their stock ownership in Defendant 200 North Third also have an ownership interest in The Fulton Bank Building. 7. On September 8, 1998, an Agreement of Sale was entered into, by and between Capitol Steps and State and Third Street Associates, the prior owner of The State Street Building, whereby Capitol Steps agreed to acquire The State Street Building. 8. On October 29, 1998, Capitol Steps acquired The State Street Building. Capitol Steps financed the said acquisition through the following: a. The execution of a $1,300,000 mortgage loan and note with Mid Penn Bank as the lender ("Mid-Penn loan") and with Plaintiffs and Defendants Davis guaranteeing the said loan. As part of the loan transaction, Plaintiff D. Thomas was also required to pledge in favor of Mid Penn Bank 5,190 shares of North Pittsburgh Systems, Inc. common stock. -2- b. Capitol Steps' execution of a Judgment Note dated October 29, 1998, agreeing to pay Wayne B. Titus and Health L. Allen, the principals of State and Third Street Associates, the sum of $23,226.30 ("Judgment Note 1 "). Plaintiff D. Thomas and Defendant C. Davis personally guaranteed the full and complete performance of Capitol Steps to fund the said Judgment Note 1. c. Capitol Steps' execution of a Judgment Note dated October 29, 1998, agreeing to pay Wayne B. Titus and Health L. Allen, the principals of State and Third Street Associates, the sum of $160,000 ("Judgment Note 2"). Plaintiff D. Thomas personally guaranteed thefulland complete pertormance of Capitol Steps to fund the said Judgement Note 2. d. Capitol Steps' execution ofa Judgment Note dated October29, 1998, agreeing to pay Para One Corporation the sum of $260,194 under a payment schedule through March 1, 2008 ("Judgment Note 3"). Plaintiff D. Thomas likewise personally guaranteed the full and complete performance of Capitol Steps to fund this Judgment Note 3. A copy of the original Judgment Note 3 and Guarantee is attached hereto and made a part hereof as Exhibit A. (Para One Corporation was subsequently merged with Shell Realty, Inc.) 9. Following the said acquisition of The State Street Building, Defendants Davis assumed full management and operating responsibilities of Capitol Steps, including The State Street Building, and Plaintiffs by check dated January 8, 1999, made a $10,000 equity investment in Capitol Steps. Due to Capitol Steps' initial cash deficiencies as -3- alleged by Defendant C. Davis, Plaintiffs by check dated February 16, 1999, loaned Capitol Steps $50,000, and by check dated September 29, 1999, loaned Capitol Steps another $45,000. No formal loan documents were executed between Plaintiffs and Capitol Steps. However, Plaintiffs believe and allege that the said loans were recorded as loans on Capitol Steps' financial statements and income tax returns. 10. By letter dated July 12, 1999, Defendant C. Davis advised Plaintiff D. Thomas that Capitol Steps had satisfied Judgment Note 1 resulting in the release of both Plaintiff D. Thomas' and Defendant C. Davis' personal guarantees thereon. 11. On November 29, 2000, Capitol Steps secured refinancing through the Commerce Bank, the funds which were employed to fully satisfy the Mid-Penn loan and Judgment Note 2. Plaintiffs and Defendants Davis were required to guarantee Capitol Steps full and complete pertormance under the Commerce Bank loans. 12. In September 2001, Defendant C. Davis informed Plaintiff D. Thomas that Defendants Davis wanted to refinance the outstanding loans of both Capitol Steps, owner of The State Street Building, and Defendant 200 North Third, owner of The Fulton Bank Building, through a joint financing. Defendant C. Davis represented that such joint financing of Capitol Steps and Defendant 200 North Third was imminent, but could not be accomplished without Defendants Davis acquiring full ownership of both corporations. Defendant C. Davis further represented to Plaintiff D. Thomas that the refinancing would be utilized to fully satisfy the Commerce Bank loans and Plaintiff D. Thomas' personal guarantee on Judgment Note 3. Negotiations then immediately ensued between Plaintiff D. Thomas and Defendant C. Davis regarding terms by which Defendants Davis' would -4- acquire full ownership interest of Capitol Steps so that the said financing could be obtained on both buildings. 13. On September 12, 2001, Plaintiffs and Defendants Davis executed the following documents: a. Settlement Agreement -This agreement, which is attached hereto and made a part hereof as Exhibit B, provided for the conveyance of Plaintiffs' fifty (50) shares of stock in Capitol Steps to Defendants Davis for $10,000 to be paid at the time of Defendants' closing on the aforesaid refinancing. The Settlement Agreement specifically required Defendants Davis to remove Plaintiff D. Thomas "as a guarantor of the Corporation's obligations." See Exhibit B, Settlement Agreement, Paragraph 3. The Settlement Agreement was executed by Plaintiffs and Defendants Davis personally and on behalf of Capitol Steps. In recognition of the imminent financing, the Settlement Agreement further required the Plaintiffs "to cooperate in executing any and all documents confirming their withdrawal from the Corporation pursuant to this Agreement." Plaintiffs fully pertormed under this agreement by transferring their 50 shares of Capitol Steps to Defendants Davis so that the Defendants Davis would obtain full ownership of Capitol Steps and could obtain the aforesaid refinancing financing as the owners of the two corporate entities holding ownership interest in both The State Street Building and The Fulton Bank Building and as represented by Defendant C. Davis. -5- b. Promissory Note - As further consideration and to assure Plaintiffs' recovery of the $95,000 in loans to Capitol Steps, Defendant C. Davis personally executed a Promissory Note ($125,000 Note"), a copy of which is attached hereto and made a part hereof as Exhibit C, agreeing to pay Plaintiffs $125,000 in monthly installments of $5,000 for the first five months and then $8,000 per month until the loan was paid in full. The note required the monthly payments to be made on the first day of each month and provided for a monthly $2001ate payment penalty with an additional $20 daily late payment charge. It was Plaintiffs understanding based upon Defendant C. Davis' representations that if the Promissory Note was the obligation of Capitol Steps, the joint refinancing could not be obtained and, therefore, Defendant C. Davis needed to personally assume the responsibility in assuring Plaintiffs the return of their money. 14. Defendants Davis breached the September 12, 2001 Settlement Agreement in, among others, the following respects: a. Defendants Davis never removed Plaintiff D. Thomas "as a guarantor of the Corporation's obligations" as they agreed to do under the Settlement Agreement. To this day, Judgment Note 3, attached hereto as Exhibit A, remains outstanding and Plaintiff D. Thomas remains a guarantor thereon. b. Defendant C. Davis has numerously and continuously defaulted on his obligation under the $125,000 Note by failing and refusing -6- to make timely payments and by failing and refusing to pay the agreed upon penalty and late payment fees. 15. It is also Plaintiffs' belief and they so allege that Defendants Davis did not jointly refinance The State Street Building and Fulton Bank Building as Defendant C. Davis had represented to Plaintiffs, which fraudulent representations were a primary basis in Plaintiffs executing the Settlement Agreement and conveying their ownership in Capitol Steps to Defendants Davis. Defendants Davis did not provide Plaintiffs with any documentation with respect to the refinancing or any notice thereof. Plaintiffs proceeded on the mistaken belief that their guarantees on the Capitol Steps' loan obligations had been terminated with the refinancing. 16. Defendants Davis' counsel, William Miller, Esquire, in or about March, 2003 did in fact advise that Defendants Davis had not removed Plaintiff D. Thomas as a guarantor of Capitol Steps' obligations on Judgment Note 3, as required by the Settlement Agreement, and that Judgment Note 3 had not been satisfied through the aforesaid refinancing. This revelation followed an inquiry by Plaintiff D. Thomas as to why he had received a letter from counsel of Para One Corporation, the payee on Judgment Note 3, noting a default by Capitol Steps and citing Plaintiff D. Thomas still remaining as a guarantor. Prior to that time, Plaintiffs believed that Defendants Davis, through the aforesaid refinancing, had paid off Judgment Note 3 with the refinancing proceeds, thereby removing Plaintiff D. Thomas' obligations as a guarantor thereon, all as Defendants Davis had agreed to do. 17. As noted herein in paragraph 14. b., Defendant C. Davis also remains in default on the $125,000 Note attached as Exhibit C in the following respects: -7- a. The initial $5,000 monthly installment due November 1, 2001, was not received by Plaintiffs until November 29, 2001, and did not include the $200 late payment penalty or the $560 in applicable late charges. b. The second $5,000 monthly instal Iment due December 1, 2001, was not received by Plaintiffs until January 2, 2002, and did not include the $200 late payment or the $620 in applicable late charges. c. The third $5,000 monthly installment due January 1, 2002, was not received by Plaintiffs until February 14, 2002, and did not include the $200 late payment or the $840 in applicable late charges. d. The fourth $5,000 monthly installment due February 1, 2002, was not received by Plaintiffs until April 12, 2002, and did not include the $200 late payment or the $1,380 in applicable late charges. e. Except for those payments listed below in paragraph 18, no further payments have been made by Defendant C. Davis, and late payments charges continue to accrue. 18. Throughout December of 2002, Plaintiffs' counsel, though numerous communications with the Defendants' counsel, William Miller, Esquire, requested and demanded payments pursuant to the said $125,000 Note and demanded protection on Plaintiff D. Thomas' personal guarantee of Judgment Note 3. After numerous communications in this regard, Defendant C. Davis issued a $5,000 check dated December 21, 2002, made payable to "D. Mark Thomas." Defendant C. Davis noted on the check that it was in payment of the December installment. Under the terms of the $125,000 Note, however, the required December 1, 2002 installment payment was $8,000 -8- before application of the $200 late payment and daily $20 late charges. See Exhibit C. Plaintiff D. Thomas endeavored to cash the check but it was denied for insufficient funds. Defendant C. Davis on January 8, 2003, upon being informed that said check had "bounced," did deliver a cashier's check to Plaintiff D. Thomas in the amount of $5,000 (after being informed the amount should be $8,000). Thereafter, upon urging and communication between counsel on each occasion, Defendant C. Davis made sporadic payments to Plaintiff D. Thomas on the following dates and in the following amounts: (a) January 22, 2003 - $8,000 (b) February 20, 2003 - $8,000 (c) March 25, 2003 - $5,000 (d) March 31, 2003 - $3,000 No payments have been received for principal, penalties or late payments, as agreed, since March 31, 2003. Late payment penalties of $200 per month and the daily $20 late payment fee per monthly obligation, together with principal owing less payments made as of January 1, 2004, total $196,540. An additional $220 per day of late charges for every day on and after January 1, 2004 continues to accrue. 19. In face to face communications in early 2003, Defendant C. Davis advised Plaintiff D. Thomas that a sale of The State Street Building and also possibly The Fulton Bank Building was scheduled and that when it was effectuated, Defendants Davis would then satisfy all obligations of Capitol Steps, including Judgment Note 3, and eliminate Plaintiff D. Thomas' personal guarantee thereon. Based upon this representation, Plaintiffs entered into an executory accord with Defendant C. Davis on March 3, 2003, whereby they agreed to forego some penalty and late charges owed under the $125,000 Note attached hereto as Exhibit C, if Defendant C. Davis remained current in his payments under that Note. In the event of default by Defendant C. Davis, the executory accord -9- allowed Plaintiffs to proceed with all available remedies, including all those arising out of the original Settlement Agreement of September 12, 2001. 20. In March of 2003, upon being requested to allow Plaintiffs to receive notice of and attend any settlement on the sale of all rights in The State Street Building, Defendants Davis refused such request, but still represented that a sale of The State Street Building would occur shortly. Subsequently, Defendant C. Davis informed Plaintiff D. Thomas that the new mortgagor on The State Street Building was holding up a sale over a possible prepayment penalty fee which, according to Defendant C. Davis, was not justified. The said sale never took place. 21. On or around June 2003, Defendants Davis, through their counsel, informed Plaintiffs' counsel that a foreclosure action had been filed against The State Street Building, and that Defendants Davis ownership therein was jeopardized. Subsequently, Plaintiffs learned from counsel that The State Street Building was up for sheriff sale. Plaintiffs believe that The State Street Building was sold at sheriff sale and Capitol Steps has lost all ownership interest therein. Upon learning of this happenstance, Plaintiff D. Thomas met with Defendant C. Davis, whereupon Defendant C. Davis informed Plaintiff D. Thomas that he would not leave him "hanging" on the Judgment Note 3 guarantee. 22. On December 19, 2003, a Complaint was filed against Plaintiff D. Thomas, among others, in the Court of Common Pleas of Dauphin County, to enforce the guarantee of Plaintiff D. Thomas on Judgment Note 3, based upon the defaults of monies owed by Capitol Steps, owned wholly by Defendants Davis. -10- 23. In the said Complaint, it is revealed that a Confession of Judgment was taken against Capitol Steps on Judgment Note 3 on September 29, 2003. Defendants Davis had never notified Plaintiffs of that fact. 24. The loan documents on the refinancing of The State Street Building by the Defendants Davis and recent discussions with Defendant C. Davis and his counsel reveal that Defendants Davis refinanced The State Street Building pursuant to extremely disadvantageous terms. Such terms included an extraordinary prepayment penalty in the event of a sale of The State Street Building because the new mortgagor, in exchange for refinancing terms, did not require any personal guarantees from Defendants Davis. Therefore, as a result of this refinancing, Defendants Davis were no longer personally liable on any loans on The State Street Building or Capitol Steps, whereas Plaintiff D. Thomas' personal guarantee on Judgment Note 3 remained outstanding. 25. By protecting themselves from personal liability in exchange for agreeing to an extraordinary prepayment penalty term in the refinancing, all while keeping Plaintiff D. Thomas exposed to personal liability on Judgment Note 3 in breach of the September 12, 2001 Settlement Agreement, Defendants Davis negated Plaintiffs' economic opportunity to realize a profit on the sale of The State Street Building in the amount of approximately $250,000 or more and any opportunity for Capitol Steps to satisfy Judgment Note 3 through the sale of the building. 26. Following the execution of the September 12, 2001 Settlement Agreement and the transfer of Plaintiffs' ownership in Capitol Steps to Defendants Davis, Defendants Davis breached their responsibilities to Plaintiffs under said Settlement Agreement and -11- mismanaged Capitol Steps in breach of their fiduciary duties to Plaintiffs, resulting in the loss of The State Street Building to the direct detriment of Plaintiffs. Count I -Breach of Contract D. Mark Thomas and Jeanne M. Thomas v. Charles R. Davis and Karen S. Davis 27. Paragraphs 1 through 26 of this Complaint are incorporated herein by reference as if set forth fully. 28. Plaintiffs fully pertormed under the Settlement Agreement entered into with the Defendants Davis in that, as required of them, they transferred their shares of stock to Capitol Steps in exchange for the mutual promises set forth in the said Agreement and, based upon their understanding, to permit the Defendants Davis to immediately close on the joint financing removing Plaintiffs as guarantors on all Capitol Steps' loan obligations. 29. The failure and refusal of Defendants Davis to carry out Capitol Steps' satisfaction of Judgment Note 3 or otherwise obtain the removal of Plaintiff D. Thomas as a guarantor thereon constituted a material breach of the September 12, 2001 Settlement Agreement between the parties. 30. As a result of Defendants Davis material breach, Plaintiffs have been required to pay legal fees, which are continuing to this day to protect their interests in respect to the Complaint filed on December 23, 2003, based upon Plaintiff D. Thomas' guarantee under Judgment Note 3. 31. Asa result of Defendants Davis' breach of contract, Defendants Davis should be ordered to pay either the amount stated in the said Complaint, $193,434.07, plus interest, costs and attorneys fees to defend, or any settlement amount agreed to, plus -12- Plaintiffs' interest, costs, and attorneys fees required to be expended by Plaintiffs to defend. WHEREFORE, Plaintiffs respectfully request this Honorable Court to enter a judgment in their favor and in the amount of $193,434.07, plus interest thereon, plus costs and attorneys fees required to defend the Complaint filed against Plaintiff D. Thomas, which is a direct result of the contractual breach of Defendants Davis as stated above or any settlement amount agreed to, plus Plaintiffs' interest and attorneys fees required to be expended by Plaintiffs to defend. Count II -Breach of Contract Plaintiffs D. Thomas and Jeanne M. Thomas v. Defendant C. Davis 32. Paragraphs 1 through 26 are incorporated herein by reference as if set forth fully. 33. Defendant C. Davis is in breach of his contractual obligations under the $125,000 Note dated September 12, 2001, in that he has failed to make the principal payments together with the penalty and late charges set forth therein. As a result, as of the January 1, 2004, Defendant C. Davis owed Plaintiffs damages in the form of principal, penalties, and late charges totaling $196,540.00 as set forth in Exhibit D hereto, with additional damage accruing at $220 per day for each day on and after January 1, 2004. WHEREFORE, Plaintiffs respectfully requests that this Honorable Court enter judgment in their favor in the amount of $196,540.00, plus accruing late charges of $220 per day for each day on and after January 1, 2004. -13- Count III -Breach of Contract and Misrepresentation D. Mark Thomas and Jeanne M. Thomas v. 200 North Third, Inc. 34. Paragraphs 1 through 26 are incorporated herein by reference as if set forth fully. 35. At all times relevant hereto, Defendant C. Davis and Defendant K. Davis were respectively President and Secretary of Defendant 200 North Third, and the sole or majority shareholders thereof. 36. When Defendants C. Davis and K. Davis negotiated, made representations in respect thereto, and executed the Settlement Agreement with Plaintiffs dated September 12, 2001, they were acting, among other things, in their capacity as officers and shareholders in 200 North Third in that they represented that Plaintiffs transfer of ownership shares in Capitol Steps was required for the benefit of Defendant 200 North Third to acquire beneficial financing for that entity and that through such refinancing they would remove Plaintiffs' personal guarantees on the Capitol Steps' loan obligations, which included Plaintiff D. Thomas' guarantee on Judgment Note 3. 37. Following the execution of the Settlement Agreement dated September 12, 2001, Defendants Davis, contrary to their representations to Plaintiffs, did not jointly refinance the Capitol Steps and Defendant 200 North Third properties or remove Plaintiff D. Thomas' personal guarantee on Judgment No. 3. Instead, it is Plaintiffs' belief and they so allege that independent financing was obtained by Defendants Davis for each corporation and property and that Defendants Davis never made the lender aware of Plaintiffs' ownership interest in Capitol Steps or their obligation that Plaintiff D. Thomas' -14- personal guarantee on Judgment No. 3 be removed as a condition to their entitlement to sole ownership of Capitol Steps. 38. In entering into the Settlement Agreement of September 12, 2001, and in executing the transfer of shares of Capitol Steps to Defendants Davis pursuant thereto, Plaintiffs relied on Defendants Davis' misrepresentations regarding the joint refinancing of the Capitol Steps and Defendant 200 North Third properties and the removal of Plaintiff D. Thomas' personal guarantee. 39. In that Defendants Davis acted in their capacities as officers and shareholders of Defendant 200 North Third, as well as in other capacities, in making representations and misrepresentations to Plaintiffs, upon which Plaintiffs relied as aforesaid, and in breaching those representations and the obligations in the said Settlement Agreement, asset forth above, Defendant 200 North Third is liable to Plaintiffs in the amount of any and all damages suffered by Plaintiffs resulting from that breach, including the following: a. $193,434.07, the amount set forth in the Complaint filed against Plaintiff D. Thomas, guarantor on Judgment Note 3, plus all attorneys fees, interest, and costs owing thereon; b. $196,540.00 as of January 1, 2004, the amount of Defendant C. Davis' obligation owed to Plaintiffs under the $125,000 Note dated September 12, 2001, plus late charges accruing at a rate of $220 per day on and after January 1, 2004. WHEREFORE, Plaintiffs respectfully request that this Honorable Court enter judgment in their favor and against Defendant 200 North Third, in the amount of -15- $193,434.07 and $196,540.00, plus $220 per day for each day on and after January 1, 2004, until the fully paid. Count IV -Breach of Fiduciary Duty and Fraud Plaintiffs D. Thomas and Jeanne M. Thomas v. Defendants C. Davis and K. Davis 40. Paragraphs 1 through 26 are incorporated herein by reference as if set forth fully. 41. Defendant C. Davis and Defendant K. Davis were respectively President and Secretary and Treasurer of Capitol Steps and they obtained full ownership therein pursuant to the Settlement Agreement dated September 12, 2001, through false and fraudulent misrepresentationstoPlaintiffsthattheywere obtainingjointrefinancingofThe State Street Building and Fulton Bank Building and would secure the Plaintiffs' release from all personal guarantees on Capitol Steps' loan obligations. 42. Following the execution of the Settlement Agreement dated September 12, 2001, Defendants Davis, contrary to their misrepresentations to Plaintiffs, did not jointly refinance the Capitol Steps and Defendant 200 North Third properties or secure the release of D. Thomas' personal guarantee on Judgment Note 3. Instead, contrary to Plaintiffs' financial opportunities and rights, as well as those of Capitol Steps, and contrary to Defendants Davis' fiduciary duty to Plaintiffs, Defendants Davis entered into a refinancing agreement with an extraordinarily disadvantageous prepayment penalty in exchange for the mortgagor's agreement not to require any personal guarantees from Defendants Davis, all while knowingly failing and refusing to have Plaintiff D. Thomas removed from his personal guarantee on Judgment Note 3, and knowingly failing and refusing to so advise Plaintiffs. -16- 43. Defendants Davis' actions as stated in this count constitute a breach of fiduciary duty to Plaintiffs as shareholders in Capitol Steps and fraud. 44. As a result of Defendants Davis' breach of fiduciary duty and fraud as stated in this count, Plaintiffs lost the financial opportunity to 50% of the net proceeds from a future sale of The State Street Building, which Plaintiffs believe and therefore allege could have benefitted them with a profit of $250,000 or more, and therefore, they claim this amount herein as damages. 45. In the alternative, had Defendants Davis acted in a way consistent with their fiduciary duties and managed Capitol Steps and The State Street Building prudently and pursuant to theirfiduciary duties and without fraud, then in that event Plaintiffs should have and would have realized ongoing and continuous financial profits in the form of both income and rising equity. WHEREFORE, Plaintiffs respectfully request that this Honorable Court enter judgment in their favor in the amount of $250,000 or more for the lost financial business opportunities to sell The State Street Building for a profit or to own Capitol Steps on a profitable basis. Respectfully Jo Havas orney for F Supreme Court ID #15312 6121 Stephens' Crossing Mechanicsburg, PA 17050 Tel. No. (717) 979-4840 Fax No. (717) 255-7230 F \CLIENTSIMISC\CAPITOL\Lew Suil\COmyJeinbLawwpE -17- VERIFICATION I, D. Mark Thomas, Plaintiff, depose and say, subject to the penalties of 18 Pa. C.S.A., Section 4904, relating to unsworn falsification to authorities, that the facts set forth in the foregoing Complaint are true and correct to the best of my knowledge, information and belief. Date: January 13, 2004 ~ ~~~~i~~ D. Mark Thomas F \CLIENC5Yd15C\CgpITOULaw SuifMlWica to CamplaVR-LaW wp0 ,,. ., R , ., ~'. ~,:i .~,. ~, i ,.,,~ r',i Jv Exhibit A ~~p~f $260,194.00 October 29, 1998 Harrisburg, Pennsylvania JODGMRNT NOT$ FOR VALUB RECEIVED and intending to be legally bound, TS8 CAPITOL STEPS ASSOCIATES,-INC., a Pennsylvania corporation with olfices in Harrisburg, Dauphin County, Pennsylvania (hereinafter "Obligor"), promises to pay to PARA ON8 CORPORATION, a Pennsyl- vania corporation with a mailing address c/o Nachman M. Gerber, 4 Jonathans Court, Cockeysville, Maryland 21030, (hereinafter "obligee"), the sus of Two Hundred Sixty Thousand One Hundred Ninety-four Dollars ($260,194.00), together with interest at the rate of six and one-half percent (6.51) per annul, as follows: obligor shall pay interest and principal through a monthly payment of Three Thousand Ninety-one Dollars ($3,091) on the 1st day of each subsequent month pursuant to the amortization sched- ule attached hereto, made apart hereof, and marked Exhibit A. Obligor may prepay principal without penalty upon twelve (12) months' written notice of prepayment, but must prepay all princi- pal then due and owing. Monthly payments shall continua during the period created by notice. obligee may demand payment o! all principal upon twelve (12) months' written notice of demand, but will receive the .monthly payments described above during the period of said notice. In the event of default, defined as failure of Obligor to pay within seven (7) calendar days of a monthly payment date, Obligor further doss hereby authorize and empower any attorney of any court o! record of Pennsylvania or elsewhere to appear for it and to enter judgment against it for the amount of this Note, with or without declaration, together with costs o! suit and reasonable attorneys fees, and with full release of errors. Judgment hereunder may be confessed on executed or photostatic copies of this Note as many times and in as many jurisdictions as is necessary to secure satisfaction of any unpaid balance or balances, and the judgment or judgments confessed shall be without stay of execution. obligor specifically waives any right of inquisition on any real estate that may be levied upon, and voluntarily condemns the same, authorizing the Prothonotary of any county or counties to enter upon the writ of execution its said voluntary condemnation, and hereby waives and releases any and all relie! from any and all appraisement, stay or exemption laws of any state whether currently in force or hereafter to be passed. WITNESS the due execution hereof this 29th day of October, 1998. ATTEST: TH$ CAPITOL STEPS ASSOCIATES, INC. ~ / (~Ct.. ) Ssere}~~ vl ~.y,~,~ ~~(~(rcna ~ ` K ~i~`t> ; c~+~7 ~y1S cG~„~ s ~. ~ ~ ~Lt~v~es ~7,,~v{Vfcer President 1998. WITNESS the due execution hereof this 29th day of October, ATTEST: v1 ~~,4,~ I(~rcvus ~}PaK j~CG-8tar~- TxE CAPITOL STEPS INC. ~-~~ C7 ^i ~vfzet- President IIU~RIfA l l'.R I, D. 2lARR TNOMAS, intending to be legally bound, hereby guarantee the full and complete performance of The Capitol Steps Associates, inc., to fund the obligation as described in the foregoing Judgment Note. WITNESS: .~ ~s ~ ,,~~fiy ~ ~~ ~.} ~/~t.rcjc~~a!{' (SEAL) D. MARK THOMAS -2- Oct !/1991 - - 6fElQ W.O~ 6 M101L, LL9 . . - . fea oet 1/1!!6 U Dse 71/21» lt+O+tw [on x+11 IIr1K. ina. D+e 500 II+tYA Spisd 6tepC, Mal+put6. M lees 10.00 Yilsclp~l~ 2x391.00 - - [+yr+t s]Ori.00 n+u~ 6.50 ~ hlas+t •tagwfayl Ib+tplt CapouneWC 12 - ; . aatsegt hctor~ I.OOS11K67 P+yar+t teUl I+Uwst lta+eaWl Nl++e+ total 2+c Date Mni+[ 9aya++t !+lar+[ Nyar+t Lean !se !pi Nt Die 12/1/199! 1 3093.00 1109.N 1x1.62 n6312.N 110!.76 Ii.11 - 12/3/19» 2 3091.00 3100.21 36)0.72 25x21. ti n0l. cc 16.01 1/3/1999 Sup-Ibt+l t27i.N 1/1/1999 1 3091.00 1]91.32 16».!! nSa2l.lt -76.17 13.11 2/1/1999 / 3091.00 1791.!1 3709.0) 233112. i! 1713.71 15.11 3/1/1999 S Nl1.00 1372.65 7!!1.33 n16N.N 2711.39 15.13 1/1/1999 c 70!1.00 176].71 1727.66 2/!%6N 1%1.71 N./1 5/1/1999 7 70)1.00 135!.9! 1777.01 21!229.67 ~ 5175.72 11.52 6/1/1999 ! 3091.00 3711.36 171!.12 21K63.n 6760.N It.21 7/1/3999 9 3091.00 -1735.12 1755.66 211727,71 6115.12 ~ 17.)0 8/1/1999 30 30ri.00 - 1725.61 1763.7). 213963.97 %Q.07 U.Sf 9/1/3999 11 Nf1.00 1316.01 3771.% 211367.01 10'757,01 13.27 10/3/1999 12 Nri.00 iN6.11 1761.57 239102.11 12063.50 12.% 33/1/3999 13' - Nf3.00 1296.76 17N.21 23760!.21 i37K.26 12.61 12/1/3998 11 3091.00 1n7,01 1603.% 235601.25 11K7.13 12.32 1/1/2000 - SuD-7bt+1 1S%1.19 3/1/2000 13 lOri.00 1271.27 1613.77 277!!0.33 -71.61 12.00 .2/1/2000 16 7091.00 1267,15 16n.5S 232366.97 1272.11 11.67 1/3/2000 17 Nll.oo 1n1.S7 1633.17 27wN.51 2190.11 I1.N -lnnooo 1s 70)!.00 ua.K lu3.N 2261wa6 rN.os u.w s/1/2000 19 Nfl.oo ant.6[ US3.N ~ 236Q6J1 177!.73 10.70 cnnooo zo Nsa.oo 32a.a 1663.36 z2ala.ls uw.u Io.76 vvzooo n 30)!.00 lznsz anl.o z2z6».!6 7120.61 _ 1o.oa 6/1/2000 22 70!1.00 1207.77 1663.q 22101t.N 1626.22 79.70 9/1/2000 23 30)1.00 11!1.17 Itri. tl 119122.57 !623.3! 3f.7i a0/1/2000 21~ 3091.00 1166.11 1906.0! 217211.11 11012.71 39.w 11/1/2000 25 JOn.00 llli.a 1!11.10 215301.01 12166.% 36. c9 12/1/2000 26 Nl1.00 1166.23 3921.77 21737!.27 17755.31 71.75 3/1/2001 Sup-total 1131].69 1/1/2003 31 3091.00 1153.60 1»3.20 211111.07 -]2.» N.00 2/1/2001 26 70n.00 1115.72 INS.a 20»76.10 ~ 1112.36 77,K 7/1/2001 29 3091.00 - 1171.76 195622 -207312.16 2217.16 31J1 1/1/2001 30 70n.00 1121..1! 1%6.61 2w37S.37 7]71.31 36.% 5/1/2001 71 7093.00 311].57 ~ 1977.11 2wS97.% 1161.66 36.n c/1/2001 32 3091.00 3102.62 1966.16 201al.72 5561.70 ]6.26 7/1/2001 37 30n.00 30!2.03 19».» 19!610.77 667). T5 73.91 ennooi 11 7on.oo 1Ma.27 - 2oof.» 1l7a1.o0 na.% lass 9n/zoo! as ]on.oo amo.al zo2o.cc 1»NO.a 6671.32 ]s.ls 10/1/2001 76 7093.00 305).7! 2071.61 1lN1t.73 %70.71 31.63 11/1/2001 37 30!1.00 1016.7! 2012.61 191506.12 1077!. 10 31.17 32/1/2001 36 1091.00 1037.72 2w3.p 169152.11 11!76.12 31.11 1/1/2003 Sup-total 1N37.60 3/1/2002 79 3091.00 1w6.20 20N.60~ 167767.K -31.17 7].71 2/3/2002 10 3091.00 1015.02 2075.% 363711.66 »3.61 33.N ]/3/2002 11 30!1.00 1007.71 2W7.27 367221.13 1967.ri 33.01 ulnoo2 12 3osa.oo m.r zo%sa lnus.fo 2ao.a u.a 5/1/2002 13 70n.00 %1.10 210).90 17%16.00 7%1.16 72.26 6/1/2002 11 30!1.00 %7.67 2121.3] llan.67 19N.tS 71.66 7/1/2002 IS 3091.00 ri6.16 2172.12 1717n.tS St6l.w 31.51 _ 6/1/2002 16 30n.00 916Q 2U1.71 172617.17 a3S.K 71.17 9/1/2002 I7 Nn.00 l7S.ri 2135.» 1701n.1! 7770.67 70.75 10/1/2002 a lon.oo 9n.7a z16•r.a Satri.62 st%.oo N.as 11/1/2002 1f 7091.00 711.5! 217).11 1K111.11 9)05.5! 2l.M 12/1/2002 SO Nf1.00 •».7! 21)3.21 1t7ri3.20 lOSOS.N 2l.S! 1/1/2003 Sub-fetal 11122.56 1/1/2007 !1 70ri.00 )17.92 2207.06 161720.11 -2f.2t 29.20 2/1/3007 S2 Nl1.00 673.% 2215.02 _ 15»05.10 61!.70 26.60 7/1/2007 S7 Nfl.oo t4.» ~ 2uL01 1slr6.a. 1730.a 26.13 ul/2oo7. s1 30)!.00 6sl.ri uas.% 3ssoN.oa na.ri 26.01 sn/tow ss '3091.00 6x9.»: 2zsa.n isz7t7.6o 71oz.u n.a 6/1/2003 S6 70!1.00 627.K up.10 - 350521.10 ~ 13N.01 37.21 1/1/20w 57 30n.00 613.N 2275.61 116216.71 5015.35 26.61 6/1/3003 St JOn.00 t07.w 2217.» 115)x.76 56/6.11 26.11 9/3/20w S! Nn.00 )%.a 270o.N 117sa.N 6sN.% 36.00 30/1/2003 K 70!1.00 716.16 2312.61 311711.31 7/11.11. 23.5! 11/1/2003 ' ri 70!1.00 7a.a 2723.37 139022.17 6162.76 25.16 12/1/2003 a 1091.00 757:01 2731.% 13ia1.21 ~ ~ 6!]5.61 21.71 3/a/2001 Sup-TOUT 9707.13 - 1/1/3001 a 3w1.00 710.77 2350. t7 131777.5! -27.26 21.75 2/1/2001 N 70ri.00 727.N 27p.1t 173!10.22 700.N n.s7 3/1/2001 a 3091.00 711.61 2771.!1 12lSN.06 1135.22 -27.31 V1/2001 K 30!1.00 701.)7 37tl.w 12720S.w 2x17.19 27.06 5/1/2001 67 N91.00 pf.w 2101.97 321607.05 n06.21 22.K 6/1/2001 a 30)1.00 676.02 2111.96 122366.07 •N62.27 22.27 7/3/2001 6! 70ri.OD fa.% ~ 2126.01 119!60.01 1715.17 21.60 B/a/2001 70 70!1.00 Nf.76 2111.22 31751!.79 17)1.» 21.77 9/1/2001 71 3w1.00 636.36 2151.11 ISSON.33 5131.51 20.» ao/1/2001 72 Nfl.oo 627.27 21n.1a a3n%.sa 6w67T 20.30 1a/S/zool l7 3091.00 al.fo 2+!1.x0 11o11s.s3 - c661.s7 x0.01 12/3/2001 l1 7091.00 S%.16 21%.51 IO7Q0.97 7261.17 1f. it 1/1/2005 ~ 6up-toUl 7ta.U 1/1/2005 7S 30!1.00 562.95 2506.05 305112.ri ~ -23.11 19.11 2/1/2003 16 30!1.00 Salt 2521.a lOnri.26 511.21 16.72 a/S/zoos n x0)!.00 sss.7o 2su.N loooss.% to».% 16.n //1/zoos 76 3091.00 511.!7 nlf.w 975%.sS 1611.ri 17.62 3/1/2005 if N91.OO Sn.li 2562.!6 Nl11.11 2170.0! 11.77 Ott !/1199 6btt196• nvrcaaww. 1QEtml HOOD ALLOT 6 ttXtL, LLt tta Oct LIl91 to 0•a 31/21% 9te6t•a tart sMll Wlty, Iae. pe 900 M•[U 2blsd str••t, X6rr16bucq, to 6[1ne19.1= z6o1%.OO tnca sso Cetpo••a•ae 32 hysrne qU Nvb•t 6/1/200s t0 7/1/zoos sl 6/1/zoos sz 9n/zoos s3 to/vzoos s6 un/zoos es 12/1/zoos 66 3/1/2006 1/1/2006 t7 _ z/vzoos s9 a/1/zooc e9 t/1/2001 % s/1/2001 91 c/3/2006 n 7/1/2006 97 1/1/2001 % 9/1/2006 93 10/1/2006 9L 13/1/2006 97 •12/1/2006 % 1/1/zoo? vlrzoo7 % 2/3/2007 100 7/1/2007 101 6/3/2007 102 s/3/3007 103 6/1/2007 106 7/1/2007 30! 6/1/2007 10{ !/1/2007 107 30/1/2007 1% un/zoo! 909 iz/v2oo7 llo In/loos 1/3/2001 131 2/3/2001 112 a/moos lla riwl e•ya.nc erinolw3 r•1a co ass xne•r•rt Paid w D9te roe.! 9.1a co D•q . i O.L. real ryt..nc 3091.00 a091.00 J091.00 ao9l.o0 30n.00 3091.00 7091.00 70n.00 aon.oo 7on.oo 3on.oo 3on.oo wn.oo 7on.oo 3091.00 30n.00 70n.00 aon.oo wn.oo aon.oo 30!1.00 7091.00 JO91.00 3091.00 3on.oo 7091.00 3091.00 3091.00 30n.00 3093.00 3091.00 3091.00 eon. o0 z126.s2 o.oo zw196.o0 nlu.sz 366336.Q 2eter•se hyMnt s16.29 soo.u 6sc.z9 672.11 tst.oo 6u.» 629.3! 616.% 6oo.u a15. n 771.26 396.92 361.71 7z6.ez 711.15 2%.71 211'.61 2K.66 zs1.16 23s.1s 220.29 206.7! 119.11 177.a9 137.39 161.70 135.72 109. % 17.31 n.zs 60. % N.S6 xt.o6 ll.ts •~' 11epe[[ s61•cli0.6 tiler[ t M•rl9.9• fit9rtlt•tia pe• s yz1 Oct 09 16=39=70 19% D•e• I1•nq• s 2rs Oat 1/19% to Doa al/2199 ptr t 661.11 tally, Ina. p t 900 11•rtlt r0era sera!, lYrrx6tYr1, 9A Prioeip•1 t 2001%.00 pb a 6.50 e.y.•ne 7on.oo Y•r t 7.19. %0730 r..r. to.oo 9.r.6ne tao9l.o0 9.y..ne rr•a••oert 6bnebly IOC•[•rt hccort 1.003611617 PriKlp•3 plena rel•1 int P•yi•nC Lan 6•[ ro•r N[ Ols 2971.72 !2367.60 2p6.37 11.91 zslo.w 9nlc.7z a116.c9 u.a 260[.71 97172.01 3p0.99 19.99 2ne.s2 stssa.l! uu.v lssa zsa3.oo elm.!! 6sol.ac ls.oc 2N7.27 7n73.n 5066.!0 16.3! 2661.n 76611.a2 !676.2! 16.13 sub-tool !912.09 2676.02 73939.70 -22.01 17.R 2690.92 x'11216.71 777.61 13.17 270!.0! 613al. i9- 7p.39 12.69 2719.76 6St1l.f6 11!6.16 12.21 27a6.u saas.tl a6n.a7 u.n 276!.29 6o37i.11 1173.0/ 11.26 2766.16 37!72.00 2199.% IO.7S 2779.1s s67M.n3 2671.7s 10.26 27%.21 91!%.6II 27p.S6 9.76 210!.76 6!19!.70 7030.20 9.27 2126.31 IgN.73 771i.N 1.76 2139.11 67326.p a90.79 1.26 ' 2159.26 60%9. sS -20.3s 7.76 3670.71 377%.% 1%.% _ T.2S 2116.26 76n2. c! 601st 6.76 2901.69 72010.10 s97.7! c.22 2917. c1 2Nf7.1! 767.1! 3.11 2977.11 2619!.71 926.77 7.1! 296!.70 27210.66 1066.67 ~ 6.61 2963.21 20263.20 1192.20 1.11 2%3.76 172p.61 1701.16 7.61 2997.69 !1161.37 17!3.77 7.01 3ou.n 11232.63 1672.63 z.ss 7oao.os u2z.so 1s37.w z.n sab-xe61 lsn.n 7061.16 5991.16 -17.76 1.67 3062.% 2137.16 10.70 0.ri z313.11 0.0o z1.7s o.at Exhibit B SETTLEMENT AGREEMENT THIS AGREEMENT, dated the 12°i day of September, 2001, by and between D. MARK THOMAS and JEANNE M. THOMAS, husband and wife, adult individuals residing in Lemoyne, Cumberland County, Pennsylvania. (hereinafter referred to as'Thomas') and CHARLES R. DAMS and KAREN S. DAMS, husband and wife adult individuals residing in Camp Hill, Cumberland County, Pennsylvania (hereinafter referred to as "Davis'. WITNESSETH: WHEREAS, Davis and Thomas own all the issued and outstanding capital stock of THE CAPITOL STEPS ASSOCIATES, INC., a Pennsylvania business corporation, with its prindpal office address located at P.O. Box 901, Camp HiA, Pennsylvania 17001-0901 (hereinafter referred to as the "Corporation"); and WHEREAS, Thomas desires to transfer all of their shares of capital stock of the Corporation to Davis for the consideration provided in this Agrnement; and WHEREAS, the parties desire to provide for the orderlXwithdrawal by Thomas from any and all right, title and interest they have in the Corporation. NOW, THEREFORE, in consideration of the promises and covenants contained herein, and intending to be legally bound, the parties hereto agree as follows: 1. TRANSFER OF INTEREST. Thomas hereby transfers all right, title and interest they have, had or could have in the Corporation to Davis and concurrently with the execution of this Agreement shall transfer all stock they own in the Corporation to Davis. ~: PAYMENT. Davis and the Corporatron shall pay to Thomas Ten Thousand Dollars ($10,000) at the dosing of the fmandng referred to hereafter in paragraph 3 as consideration for the transfer of Thomas' stock in the Corporation and Thomas relinquishing all of their rights in the Corporation. 3. PAYMENT OBLIGATIONS. The Vansfer of interest and payment of any monies puisuant to this Agreement are expressly conditioned on the Corporation and/or Davis obtaining the necessary financing to refinance the Corporation's prindpal asset, the real property and building erected thereon known and numbered as 500 North Third Street, Harrisburg, PA, and removing Thomas as a guarantor of the Corporation's obligations. 7. MODIFICATION. This Agreement cwitains the entire understanding and agreement between the parties hereto with regard to all matters herein and may be amended only in a writing signed by the parties hereto IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties hereto have duly executed this Agreement as of the day and year first above written. WITNESS: 7. MODIFICATION. This Agreement contains the entire understanding and agreement between the parties hereto with regard to all matters herein and may be amended only in a writing signed by the parties hereto. ` IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties hereto have duly executed this Agreement as of the day and year first above written. WITNESS: ~~ ~~i D. MARK THOMAS ~~~ ~~ NE M. THOMAS "Thomas' ~~ 2 CHARL S R DAMS /~ KA EN S. DAMS "pavis" CORPORATION, intending to be legally bound hereby, joins in this Settlement Agreement for the sole purpose of affirming and agreeing to its obligations and representations as set forth in paragraph 6 hereof. ATTEST: (Assis~ cretary THE CAPITOL STEPS ASSOCIATES, INC. By ( ~liL~ r Charles R. Davis, ident -3- Exhibit C $125,000.00 12 September 2001 Camp HiII, Pennsylvania PROMISSORY NOTE E'OR VALUE RECEIVED and intending to be legally bound, CHARLES R DAMS, of Camp Hill, Cumberland County, Pennsylvania (hereinafter "Obligor") promises to pay to D. MARK THOMAS and JEANNE M. THOMAS, of Lemoyne, Cumberland County, Pennsyl- vania, the sum of One Hundred Twenty-eve Thousand Dollars ($125,000), payable in montlily installmems of Five Thousand Dollars ($5,000) each for five (5)' moaths with the first montlily installment being due and payable on the first day of November 2001 and monttily payments thereafter for four (4) months, and then monthly installments of Eight Thousand Dollars ($8,000) each on the first day of each month, until the entire balance due is paid in full. If any monthly payment is not paid on the Srst day of the month when due, there shall be a penalty of Two Hundred Dollars ($200) per such installment payment, together with a daily late charge of Twenty Dollars ($20) per day for each day paymeat is paid late. Obligor may prepay in whole or in part any portion of principal due hereunder without penalty at aay time. WITNESS the due execution hereof the 12th day of September, 2001. WITNESS: ~__--' :~~ tS~) CHARLES R DA Exhibit ~ -~ ~--,,,,,.. ,,,t e~ ~ Dcs. PAR OAS _ PRs~ z.rrrr~' -`~lr~,o ?~~ ~ SpV o ~////c / GCS ~ S ~ DI ~24~01~ ~ Lc~e~ ~.S^G o ~,sQC50 ,211`6/ , ~~pGO C2.~2~02, dZQ(~ y~,Z,d g ~, ~~ , ~, /oZ ~s ~ ~z1,~,~J 6zao ~~-~ o s S,ocx' _ L1//m2.. g.Sl°°o C`~~iL/o2~ S~ZOo '~1~~so ~ S ~ 3 I, ~6 Z, / ~ L~ , 3 y ~! L C'S ~-~ ~,o~ ~1 /e 2 y $ zo® 12, 8~oc~ cz~ $ g~oC~ ,5'~/~aZ - ~ Loo /Z., L° c.' C3J ~$~660 (o// J02 s '~ LOO //, .Sgt C`'rJ '~ ~! ~0 7~ `62 S 20 ~ ~ d~ ~S~ ~ ~~ Esso g /!~o Z ~ LO O /CSL 360 ~6J ~ $ ~o e~ /1`02 '° ?~ o cj~ z'f~ C~J ~ ~;o~ l1/i `oz ~ Zo6 g', Sze C9J ~ ~'~pOV ! 21/ ~O z ~S;v~o ~ I /ec f o3~ ~ ZoC~ 7 ~ g L0 ~1~~ '~ ~,6pU Jl11fz,3 6F',cxi~ Clfu~a3J s LoC~ 4Gd ~11J g g,c~o ~1 lld3 ~'g, ~o ~L~z©~c3-~ a 2c~o 38~ ~(ZJ s ~!°cr' 311 ~~"' 3 ~Q 3/ a~ct3 ~ Z U ® ~ o O C(.~ ~` `~, °~ ° _ .. yl! l~ ...-~ - ~ zoo S,S©c' ~14) ¢ l t,5; oca v ~ 44,0 ~ 3! 606 j 1 G , ~ ~ o ~}/n«~~r ow~D ~/!boy P~~ - ~zAO 3, ~o 0 Q.~,-.~ -^ 4 v~ 1 t 6, 9-~-t a $/965 ~F o P~Nl9-C..7~' C ~-~ t ~9 ~o~s - C!~ . LOCK Z 3 G~ cloys - Sg (_/!/c 2) 306 X Lp _; s x,120 Zoo 3 3 toS'dcys x s2,o z~2 36,5 - g0 Cy/'/o~~ '~ L7s y ~j~ Zc~cs3 3 GSA X gl© C'~ Lc~o 2 365 ~ L Lo ~S/i~~~ = 1-5G5~! Za z.~ 3 3w X t~ CJ Zc'°z- 3 Gs- !g'J (c~~~d2.> = Z1~1 R gto Zc~CS 3 3 c.S"' X d 2a ~~ 2~Z 36s - 1~1 ~'/~1~~ = lS'f~z~ zc~ 3 3~S~C `s`z,a (4~ 2cAZ 36s - L! Z C$'I~la'~ /33 s~io Z~ 3 3 Gs' X'02 0 ~'tJ Lco2 3c,~-_ C93 ~g~1~,2~ ; 7zzXgao LAOZ 36S -Z~3 ~io~l~62,~ =~42 Y2o Isx~ 3 . ~S 2r ~~ ~ 2noZ 3cS - 30+-! ~ 1 ~ ~i~c~~ 61 X&LO 2,003 3c5 x 'Lo ? ~oG /3~ ~~° ~; S6o 7,3c3o _ !L 4 00 S', Pm o 7,.?~ Z L cso ~/~ L@~ _7,.~0® 11~Sga 3, 6So _ 7~ 3c3o ~lo,f $a~ ~~ OG~ T, 30 a ~~ o .3 6 a Z~ V X16 Z--~ ~ Cg,? ~ o 1 ~ c/ c~ T~ 3~c~ 9/~ /, L Ze> '7, 3 c~© ~~ C~ Paz Z°o.3 3 cs~- - 3 3 3 6 ~ ~ ~ p C~Z~i~~ ; ~x~, ~~~ Lao 3 Z ° Jc r, ~ n L \~ ~ 2c,~3 lg ~YS k r2o C!'3~ Lei 3 O~ ~ ~ZO C~~ ZOG 3 3GS~ ~o ~//~1~~ z ~'~ "20 ~~~ ?3pQ d''~2a 4pV ~3s~ \ ~o ~ S, S~ TFiDMAS, TEIUMAS. FIRM`+ThUNG Xs Nf RSF,V .A9`TI1NtiYa"ti A51) tV rt'Y~1 Y,i.LUMy.1'P Ld~C U. A1A RF '1'110AL\ti 'L181.01`ilv'I'sTHNai'P IM1 iw Nn. 71]3f ,AtiMl POtiT ON{eiC1? )iOX J6D0 o`nx No. 411-_an-Ktl% IiANItlSffi~KO. YA ]910N Unnarp Nn. >IZ_459f 19 `t'r_~ ~` O J ~.~ cC',..? .r,1 Y __~ ~; ~1 `~ ; n ~~ lr, .... -,' .. C~ JAM 2004 D. MARK THOMAS AND JEANNE M. THOMAS, Plaintiffs IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA v. CHARLES R. DAMS, KAREN S. DAMS, AND 200 NORTH THIRD, INC., Defendants CIVIL ACTION -LAW NO. 04-166-Civil Term ORDER TO SHOW CAUSE AND NOW, this 28 `day of _, 2004, upon consideration of the Motion for the issuance of a Rule to Show Cause filed by Plaintiffs, D. Mark Thomas and Jeanne M. Thomas, requiring Defendants to show cause why they should not be required to escrow funds from any transfer of The Fulton Bank Building or the transfer of any shares of stock in 200 North Third, Inc., it is hereby ORDERED that such Motion is GRANTED and that Defendants, Charles R. Davis, Karen S. Davis, and 200 North Third, Inc., are hereby o~ szr~; ce. ORDERED to show cause within 3 o days hereof why they should not be ordered to escrow Seven Hundred Fifty Thousand Dollars ($750,000) of funds with an escrow agent mutually satisfactory to all parties hereto, which funds will stay with the escrow agent until the above-captioned litigation is concluded, and thereafterwill be utilized, if applicable, to satisfy any judgment owed Plaintiffs. If Defendants fail to respond within the said time frame, the Rule will become absolute, and the escrow of said funds will be so ordered. Furthermore, in the event Defendants schedule or have scheduled any transfer of title in The Fulton Bank Building, or the shares of 200 North Third, Inc., at any time prior to a decision on this Rule, they are to immediately so notify this Court and Plaintiffs of this fact so that the issues raised in Plaintiffs' Motion can be addressed prior to the consummation of any such transfer. Date: 4a 18 " ~a`~ -2- RY THE COURT: N r ~ .¢ ~> cs z '~ oar ~ ~ o N SHERIFF'S RETURN - REGULAR CASE N0: 2004-00166 P COMMONWEALTH OF PENNSYLVANIA: COUNTY OF CUMBERLAND THOMAS D MARK ET AL VS DAVIS CHARLES R ET AL BRYAN WARD Sheriff or Deputy Sheriff of Cumberland County, Pennsylvania, who being duly sworn according to law, says, the within COMPLAINT & NOTICE was served upon DAVIS CHARLES R the DEFENDANT at 2002:00 HOURS, on the 14th day of January 2004 at 19 TUSCANY COURT CAMP HILL, PA 17011 by handing to CHARLES R DAVIS a true and attested copy of COMPLAINT & NOTICE together with and at the same time directing His attention to the contents thereof. Sheriff s Costs Docketing 18,00 Service 9.66 Affidavit .00 Surcharge 10.00 ,00 37.66 Sworn and Subscribed to before melthis dolma day of ////// ~/Prothonot/var~ So Answers: R. Thomas Kline 01/15/2004 DAVID M & JEANNE THOMAS By: ~ `~/ ~ Dep y Sheriff SHERIFF'S RETURN - REGULAR CASE NO: 2004-00166 P COMMONWEALTH OF PENNSYLVANIA: COUNTY OF CUMBERLAND THOMAS D MARK ET AL VS DAMS CHARLES R ET AL BRYAN WARD Sheriff or Deputy Sheriff of Cumberland County,Pennsylvania, who being duly sworn according to law, says, the within COMPLAINT & NOTICE was served upon DAVIS KAREN S the DEFENDANT at 2002:00 HOURS, on the 14th day of January 2004 at 19 TUSCANY COURT CAMP HILL, PA 17011 by handing to CHARLES R DAM S, ADULT IN CHARGE a true and attested copy of COMPLAINT & NOTICE together with and at the same time directing His attention to the contents thereof. Sheriff's Costs: Docketing 6.00 Service .00 Affidavit .00 Surcharge 10.00 .00 16.00 Sworn and Subscribed to before me this do7 day of L al~~ A.D. A Protnnnonotary So Answers: ~~ - r°°t~ R. Thomas Kline 01/15/2004 DAVID M & JEANNE THOMAS By. G~~ D ~ ty eri f SHERIFF'S RETURN - REGULAR CASE NO: 2004-00166 P COMMONWEALTH OF PENNSYLVANIA: COUNTY OF CUMBERLAND THOMAS D MARK ET AL VS DAVIS CHARLES R ET AL BRYAN WARD Sheriff or Deputy Sheriff of Cumberland County,Pennsylvania, who being duly sworn according to law, says, the within COMPLAINT & NOTICE was served upon 200 NORTH THIRD INC the DEFENDANT at 2002:00 HOURS, on the 14th day of January 2004 at 19 TUSCANY COURT CAMP HILL, PA 17011 by handing to CHARLES R DAVIS, OWNER a true and attested copy of COMPLAINT & NOTICE together with and at the same time directing His attention to the contents thereof. Sheriff's Costs: Docketing Service Affidavit Surcharge So Answers: 6.00 . 0 0 ..-~r^„~ ~ ~ ~'''~ .00 ~ ._ 10.00 R. Thomas Kline .00 16.00 01/15/2004 DAVID M & JEANNE THOMAS Sworn and Subscribed to before me ~t/his a,;l„,cC day of ~PY`othonotary By: / Depot Sh~~f f TO: D. Mark Thomas and .Teanne M. Thomas. Plaintiffs D. MARK THOMAS AND JEANNE M. THOMAS, Plaintiffs, vs. You are hereby notified to file a written response to the below Preliminary Objections within twenty (20) days from service hereof or a judgment may be entered against you. PEPPER HAMIL?p11i LLP BY: ~ / IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA No. 04-0166 CHARLES R. DAMS, KAREN S. DAMS, AND 200 NORTH THIRD STREET, INC., CIVII. ACTION -LAW Defendants. DEFENDANTS' PRELIMINARY OB.TECTIONS Pursuant to Pa. R.C.P. 1028, Defendants Charles R. Davis ("C. Davis"), Karen S. Davis ("K. Davis"), (collectively "Davis"), and 200 North Third Street, Inc. ("200 North Third"), by their undersigned attorneys, assert the following preliminary objections to plaintiffs' complaint: Count I -Breach of Contract D. Mark Thomas and .Teanne M. Thomas vs. Charles R Davis and Karen S Davis Preliminary Objection Pursuant To Pa. R.C.P. 1028(a)(2) The Pennsylvania Rules of Civi] Procedure require that a plaintiff who bases a claim upon a writing attach a copy of the writing or the material part thereof to the complaint. Pa. R.C.P. 1019(1). 2. Plaintiffs base their claim for breach of contract against Davis upon a complaint filed in the Court of Common Pleas of Dauphin County, but do not attach a copy of that writing to the complaint in this matter. 3. C. Davis and K. Davis are not parties in the alleged Dauphin County action. 4. Because plaintiffs have failed to attach a copy of that writing to their complaint, it does not conform to Pa. R.C.P. 1019(1). WHEREFORE, Defendants Davis request that this Court dismiss Count I of the complaint for failure to conform to law or a rule of Court. Preliminary Objection Pursuant To Pa. R.C.P. 1028(a)(4) Pa. R.C.P. 1028(a)(4) authorizes a preliminary objection if a complaint is legally insufficient. 6. Plaintiff Jeanne M. Thomas ("J. Thomas") lacks standing to assert a claim for breach of contract against Davis inasmuch, by the terms of her pleading, she is not a "guarantor" of any obligation that is alleged to be in default, is not a defendant in the alleged Dauphin County action, and had no rights arising by virtue of section 3 of the "settlement agreement" attached as Exhibit B to the complaint in this matter, which is alleged to have been breached. Because Plaintiff J. Thomas has no standing to assert the claim for breach of contract in Count I of the complaint, it is legally insufficient. WHEREFORE, Defendants Davis request that this Court sustain their demurrer and dismiss Count I of the complaint as to plaintiff Jeanne M. Thomas as legally insufficient. 2- Preliminary Objection Pursuant To Pa. R.C.P. No. 1028(a)(4) 8. Plaintiffs' breach of contract claim seeks to recover as damages $193,434.07, alleged to be the debt of Capital Steps Associates, Inc., and the payment of which Plaintiff D. Mark Thomas ("D. Thomas") is alleged to have guaranteed, together with the costs and attorneys' fees associated with defending a separate legal proceeding alleged to be pending in Dauphin County. 9. The obligation to pay the alleged guazantee is alleged to be contested by Plaintiff D. Thomas. 10. Plaintiffs have not sustained any cognizable damages as a consequence of the Dauphin County action. 11. Plaintiffs have not sustained any cognizable damages as a consequence of the alleged breach of contract and, for that reason, their complaint fails to state a claim upon which relief can be granted. WHEREFORE, Defendants Davis request that this Court sustain their demurrer and dismiss Count I of the complaint as legally insufficient. Preliminary Objection Pursuant To Pa. R.C.P. 1028(a)(5) 12. Plaintiffs' complaint alleges that Capital Steps Associates, Inc. has the primary obligation to pay "Judgment Note 3" as alleged by plaintiffs. 13. Capital Steps Associates, Inc. is a necessary party to this litigation. 14. Plaintiffs failed to join Capital Steps Associates, Inc. as a party. WHEREFORE, Defendants Davis request that this Court dismiss Count I of the complaint for plaintiffs' failure to join a necessazy party. -3- Count III -Breach of Contract and Misrepresentation D. Mark Thomas and .Teanne M. Thomas vs. 200 North Third Inc Preliminary Objection Pursuant to Pa. R.C.P. 1028(a)(4) 15. Plaintiffs assert breach of contract and misrepresentation claims against 200 North Third. 16. Plaintiffs' complaint does not allege any contractual relationship with 200 North Third. 17. Plaintiffs' complaint does not allege any misrepresentation by 200 North Third that damaged plaintiffs. WHEREFORE, Defendant 200 North Third requests that this Court sustain their demurrer and dismiss Count III of the complaint as legally insufficient. Preliminary Objection Pursuant to Pa. R.C.P. 1028(a)(2) 18. The Pennsylvania Rules of Civil Procedure require fact pleading and that averments of fraud or mistake be pleaded with particulazity. 19. Plaintiffs' complaint does not plead their misrepresentation claim with sufficient particularity. 20. Because plaintiffs have failed to plead their misrepresentation claim with sufficient particularity, their complaint does not conform to Pa. R.C.P. 1019(a) and (b). WHEREFORE, Defendant 200 North Third requests that this Court dismiss Count III of the complaint for failure to conform to law or a rule of Court. -4- Respectfully fitted, THOMAS B. SCHMIDT, III (19196) Pepper Hamilton LLP 200 One Keystone Plaza North Front & Market Streets Post Office Box 1181 Harrisburg, Pennsylvania 17108-1181 (717)255-1155 (717)238-0575 (Fax) Attorneys for Defendants Charles R. Davis, Kazen S. Davis Date: February 2, 2004 and 200 North Third Street, Inc. -5- CERTIFICATE OF SERVICE I hereby certify that on Februazy 2, 2004, I served a copy of the foregoing Defendants' Preliminazy Objections on counsel of record by United States first class mail, postage prepaid, addressed as follows: John Havas, Esquire 6121 Stephens' Crossing Mechanicsburg, PA 17050 Thomas B. Schmidt, III (19196) C7 0 ca .c --1 "L7lr: r~r{ ~ m (" CC7 ~ ~~ L'!-' ~ N ~`' ~ ~~ Yr~ W 9 ~ ~ D. MARK THOMAS AND JEANNE M. IN THE COURT OF COMMON PLEAS THOMAS, OF CUMBERLAND COUNTY, Plaintiffs PENNSYLVANIA v. CIVIL ACTION -EQUITY CHARLES R. DAVIS, KAREN S. NO. 04-166 CIVIL TERM DAVIS AND 200 NORTH THIRD, INC., Defendants NOTICE YOU HAVE BEEN SUED IN COURT. If you wish to defend against the claims set forth in the following pages, you must take action within twenty (20) days after this Amended 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 Amended Complaint orfor any other claim or relief requested by the Plaintiff. You may lose money or property or other rights important to you. YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER OR CANNOT AFFORD ONE, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW TO FIND OUT WHERE YOU CAN GET LEGAL HELP. Cumberland County Bar Association Two Liberty Avenue Carlisle, Pennsylvania 17013 (717) 249-3166 or 800-990-9108 AVISO USTED HA SIDO DEMANDADO/A EN CORTE. Si usted desea defenderse de las demandas que se presentan mas adelante en las siguientes paginas, debe tomar action dentro de los proximos veinte (20) Bias despues de la notification de esta Demands y Aviso radicando personalmente o por medio de un abogado una comparecencia escrita y radicando en la Corte por escrito sus defensas de, y objecciones a, las demandas presentadas aqui en contra suya. Se le advierte de que si usted falls de tomar action como se describe anteriormente, el caso puede poceder sin usted y un fallo por cualquier sums de dinero reclamada en la demands o cualquier otra reclamation o remedio solicitado por el demandante puede ser dictato en contra suya por la Corte sin mas aviso adicional. Usted puede perder dinero o propiedad u otros derechos importantes Para usted. USTED DEBE LLEVAR ESTE DOCUMENTO A SU ABOGADO INMEDIATAMENTE. SI USTED NO TIENE UN ABOGADO 0 NO PUEDE PAGARLE A UNO, LLAME 0 VAYA A LA SIGUIENTE OFICINA PARR AVERIGUAR DONDE PUEDE ENCONTRAR ASISTENCIA LEGAL. Cumberland County Bar Association Two Liberty Avenue Carlisle, Pennsylvania 17013 (717) 249-3166 or 800-990-9108 Respectfully submitted, Date: February yf, 2004 By: Attc~vfiey for Plaintif Supreme Court I.D. 6121 Stephen's Crossing Mechanicsburg, PA 17050 Tel. No. (717) 979-4840 Fax No. (717) 255-7230 -2- D. MARK THOMAS AND JEANNE M. THOMAS, Plaintiffs v. CHARLES R. DAVIS AND KAREN S. DAVIS AND 200 NORTH THIRD, INC., Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION -LAW NO. 04-166 CIVIL TERM AMENDED COMPLAINT AND NOW, comes the above-named Plaintiffs, by their attorney, John Havas, Esquire, and make the following averments: 1. The Plaintiffs are D. Mark Thomas ("Plaintiff D. Thomas") and Jeanne M. Thomas, his wife ("Plaintiff J. Thomas"), adult individuals who reside at 100 Walnut Street, Lemoyne, Cumberland County, Pennsylvania 17043 (collectively "Plaintiffs"). 2. The Defendants are Charles R. Davis ("Defendant C. Davis") and Karen S. Davis, his wife ("Defendant K. Davis"), adult individuals who reside at 19 Tuscany Court, Camp Hill, Cumberland County, Pennsylvania 17011 (collectively "Defendants Davis"). 3. Defendant, 200 North Third, Inc. ("Defendant 200 North Third"), f/k/a 200 North Third Acquisition, Inc., is a Pennsylvania business corporation with a principal place of business located at 2016 Yale Avenue, Camp Hill, Cumberland County, Pennsylvania 17011. Defendant 200 North Third's primary asset is The Fulton Bank Building, located at the corner of North Third and Locust Streets in Harrisburg, Dauphin County, Pennsylvania 17101. Defendant C. Davis and Defendant K. Davis are respectively the President and Secretary of Defendant 200 North Third and are believed to be the sole shareholders thereof. 4. Upon the urging of Defendant C. Davis, Plaintiffs and Defendants Davis agreed to pursue the purchase of The State Street Building located at 500 North Third, Harrisburg, Dauphin County, Pennsylvania. Thereupon, Plaintiffs and Defendants Davis formed a corporation by the name of The Capitol Steps Associates, Inc. ("Capitol Steps"), for the purpose of acquiring and operating The State Street Building, and filed its Articles of Incorporation with the Department of State on September 9, 1998. Pursuant to the Articles of Incorporation, "the aggregate number of shares authorized" for Capitol Steps was "100" shares. 5. Of the 100 authorized shares of Capitol Steps, fifty (50) shares were issued to Plaintiffs, as tenants by the entireties, and fifty (50) shares were issued to Defendants Davis, as tenants by the entireties. 6. Defendants Davis through their stock ownership in Defendant 200 North Third also have an ownership interest in The Fulton Bank Building. 7. On September 8, 1998, an Agreement of Sale was entered into, by and between Capitol Steps and State and Third Street Associates, the prior owner of The State Street Building, whereby Capitol Steps agreed to acquire The State Street Building. 8. On October 29, 1998, Capitol Steps acquired The State Street Building. Capitol Steps and financed the said acquisition through the following: a. The execution of a $1,300,000 mortgage loan and note with Mid Penn Bank as the lender ("Mid-Penn loan") and with Plaintiffs and Defendants Davis guaranteeing the said loan. As part of the loan transaction, Plaintiff D. Thomas was also required to pledge in favor of Mid Penn Bank 5,190 shares of North Pittsburgh Systems, Inc. common stock. -2- b. Capitol Steps' execution of a Judgment Note dated October 29, 1998, agreeing to pay Wayne B. Titus and Health L. Allen, the principals of State and Third Street Associates, the sum of $23,226.30 ("Judgment Note 1 "). Plaintiff D. Thomas and Defendant C. Davis personally guaranteed the full and complete performance of Capitol Steps to fund the said Judgment Note 1. c. Capitol Steps' execution of a Judgment Note dated October29, 1998, agreeing to pay Wayne B. Titus and Health L. Allen, the principals of State and Third Street Associates, the sum of $160,000 ("Judgment Note 2"). Plaintiff D. Thomas personally guaranteed the ful I and complete performance of Capitol Steps to fund the said Judgement Note 2. d. Capitol Steps' execution of a Judgment Note dated October29, 1998, agreeing to pay Para One Corporation the sum of $260,194 under a payment schedule through March 1, 2008 ("Judgment Note 3"). Through a Fourth Modified Agreement dated October 16, 1998, Wayne B. Titus and Jean S. Titus, his wife, Heath L. Allen and Eleanor M. Allen, his wife, the principals of State and Third Street Associates and Plaintiff D. Thomas guaranteed the full and complete performance of Capitol Steps to repay the $260,194 owed to Para One Corporation. Plaintiff D. Thomas, however, was required to also execute a personal guarantee to hold Wayne B. Titus, Jean S. Titus, Health L. Allen, and Eleanor M. Allen harmless against any loss that they or any of them suffer by the failure of Capitol Steps to fund the obligation described in the Fourth Modification Agreement (Judgment Note -3- 3). A copy of the Fourth Modification Agreement with the aforesaid guarantees and Judgment Note 3 is attached hereto and made a part hereof as Exhibit A. (Para One Corporation was subsequently merged with Shell Realty, Inc.) 9. Following the said acquisition of The State Street Building, Defendants Davis assumed full management and operating responsibilities of Capitol Steps, including The State Street Building, and Plaintiffs by check dated January 8, 1999, made a $10,000 equity investment in Capitol Steps. Due to Capitol Steps' initial cash deficiencies as alleged by Defendant C. Davis, Plaintiffs by check dated February 16, 1999, loaned Capitol Steps $50,000, and by check dated September 29, 1999, loaned Capitol Steps another $45,000. No formal loan documents were executed between Plaintiffs and Capitol Steps. However, Plaintiffs believe and allege that the said loans were recorded as loans on Capitol Steps' financial statements and income tax returns. 10. By letter dated July 12, 1999, Defendant C. Davis advised Plaintiff D. Thomas that Capitol Steps had satisfied Judgment Note 1 resulting in the release of both Plaintiff D. Thomas' and Defendant C. Davis' personal guarantees thereon. 11. On November 29, 2000, Capitol Steps secured refinancing through the Commerce Bank, the funds which were employed to fully satisfy the Mid-Penn loan and Judgment Note 2. Plaintiffs and Defendants Davis were required to guarantee Capitol Steps full and complete pertormance under the Commerce Bank loans. This refinancing was secured based upon financial statements prepared by Defendants Davis which reflected the viability of The State Street Building to sustain itself based upon actual rents and expenses. -4- 12. In September 2001, Defendant C. Davis informed Plaintiff D. Thomas that Defendants Davis wanted to refinance the outstanding loans of both Capitol Steps, owner of The State Street Building, and Defendant 200 North Third, owner of The Fulton Bank Building, through a joint financing. Defendant C. Davis represented that such joint financing of Capitol Steps and Defendant 200 North Third was imminent, but could not be accomplished without Defendants Davis acquiring full ownership of both corporations. Defendant C. Davis further represented to Plaintiff D. Thomas that the refinancing would be utilized to fully satisfy the Commerce Bank loans and Plaintiff D. Thomas' personal guarantees under the Fourth Modification Agreement and Judgment Note 3, but refused to divulge to Plaintiff D. Thomas the name of the proposed lender. Negotiations then immediately ensued between Plaintiff D. Thomas and Defendant C. Davis regarding terms by which Defendants Davis' would acquire full ownership interest of Capitol Steps so that the said financing could be obtained on both buildings, and so that Plaintiffs' personal guarantees in connection with the Capitol Steps' obligations could be extinguished. 13. On September 12, 2001, Plaintiffs and Defendants Davis executed the following documents: a. Settlement Agreement -This agreement, which is attached hereto and made a part hereof as Exhibit B, provided for the conveyance of Plaintiffs' fifty (50) shares of stock in Capitol Steps to Defendants Davis for $10,000 to be paid at the time of Defendants' closing on the aforesaid refinancing. The Settlement Agreement specifically required Defendants Davis to remove Plaintiff D. Thomas "as a guarantor of the Corporation's obligations." See Exhibit B, Settlement Agreement, Paragraph 3. The -5- Settlement Agreement was executed by Plaintiffs and Defendants Davis personally and on behalf of Capitol Steps. In recognition of the imminent financing, the Settlement Agreement further required the Plaintiffs "to cooperate in executing any and all documents confirming theirwithdrawal from the Corporation pursuant to this Agreement." Plaintiffs fully pertormed under this agreement by transferring their 50 shares of Capitol Steps to Defendants Davis so that the Defendants Davis would obtain full ownership of Capitol Steps and could obtain the aforesaid refinancing as the owners of the two corporate entities holding ownership interest in both The State Street Building and The Fulton Bank Building and as represented by Defendant C. Davis. b. Promissory Note - As further consideration and to assure Plaintiffs' recovery of the $95,000 in loans to Capitol Steps, Defendant C. Davis personally executed a Promissory Note ("$125,000 Note"), a copy of which is attached hereto and made a part hereof as Exhibit C, agreeing to pay Plaintiffs $125,000 in monthly installments of $5,000 for the first five months and then $8,000 per month until the loan was paid in full. The note required the monthly payments to be made on the first day of each month and provided for a monthly $200 late payment penalty with an additional $20 daily late payment charge. It was Plaintiffs understanding based upon Defendant C. Davis' representations that if the Promissory Note was the obligation of Capitol Steps, the joint refinancing could not be obtained and, -8- therefore, Defendant C. Davis needed to personally assume the responsibility in assuring Plaintiffs the return of their money. 14. Defendants Davis breached the September 12, 2001 Settlement Agreement in, among others, the following respects: a. Defendants Davis never removed Plaintiff D. Thomas "as a guarantor of the Corporation's obligations" as they agreed to do under the Settlement Agreement. To this day, Judgment Note 3, attached hereto as Exhibit A, remains outstanding and Plaintiff D. Thomas remains a guarantor thereon. b. Defendant C. Davis has numerously and continuously defaulted on his obligation under the $125,000 Note by failing and refusing to make timely payments and by failing and refusing to pay the agreed upon penalty and late payment fees. 15. It is also Plaintiffs' belief and they so allege that Defendants Davis did not jointly refinance The State Street Building and Fulton Bank Building as Defendant C. Davis had represented to Plaintiffs, which fraudulent representations were a primary basis in Plaintiffs executing the Settlement Agreement and conveying their ownership in Capitol Steps to Defendants Davis. Defendants Davis did not provide Plaintiffs with any documentation with respect to the refinancing or any notice thereof. Plaintiffs proceeded on the mistaken belief that their guarantees on the Capitol Steps' loan obligations had been terminated with the refinancing. 16. Defendants Davis' counsel, William Miller, Esquire, in or about March, 2003 did in fact advise that Defendants Davis had not removed Plaintiff D. Thomas as a -7- guarantor of Capitol Steps' obligations on Judgment Note 3, as required by the Settlement Agreement, and that Judgment Note 3 had not been satisfied through the aforesaid refinancing. This revelation followed an inquiry by Plaintiff D. Thomas as to why he had received a letter from counsel of Para One Corporation, the payee on Judgment Note 3, noting a default by Capitol Steps and citing Plaintiff D. Thomas still remaining as a guarantor. Prior to that time, Plaintiffs believed that Defendants Davis, through the aforesaid refinancing, had paid off Judgment Note 3 with the refinancing proceeds, thereby removing Plaintiff D. Thomas' obligations as a guarantor thereon and under the Fourth Modification Agreement, all as Defendants Davis had agreed to do. 17. As noted herein in paragraph 14. b., Defendant C. Davis also remains in default on the $125,000 Note attached as Exhibit C in the following respects: a. The initial $5,000 monthly installment due November 1, 2001, was not received by Plaintiffs until November 29, 2001, and did not include the $200 late payment penalty or the $560 in applicable late charges. b. The second $5,000 monthly installment due December 1, 2001, was not received by Plaintiffs until January 2, 2002, and did not include the $200 late payment or the $620 in applicable late charges. c. The third $5,000 monthly installment due January 1, 2002, was not received by Plaintiffs until February 14, 2002, and did not include the $200 late payment or the $840 in applicable late charges. d. The fourth $5,000 monthly installment due February 1, 2002, was not received by Plaintiffs until April 12, 2002, and did not include the $200 late payment or the $1,380 in applicable late charges. -8- e. Except for those payments listed below in paragraph 18, no further payments have been made by Defendant C. Davis, and late payments charges continue to accrue. 18. Throughout December of 2002, Plaintiffs' counsel, though numerous communications with the Defendants' counsel, William Miller, Esquire, requested and demanded payments pursuant to the said $125,000 Note. After numerous communications in this regard, Defendant C. Davis issued a $5,000 check dated December 21, 2002, made payable to "D. Mark Thomas." Defendant C. Davis noted on the check that it was in payment of the December installment. Under the terms of the $125,000 Note, however, the required December 1, 2002 installment payment was $8,000 before application of the $200 late payment and daily $20 late charges. See Exhibit C. Plaintiff D. Thomas endeavored to cash the check but it was denied for insufficient funds. Defendant C. Davis on January 8, 2003, upon being informed that said check had "bounced," did deliver a cashier's check to Plaintiff D. Thomas in the amount of $5,000 (after being informed the amount should be $8,000). Thereafter, upon urging and communication between counsel on each occasion, Defendant C. Davis made sporadic payments to Plaintiff D. Thomason the following dates and in the following amounts: (a) January 22, 2003 - $8,000 (b) February 20, 2003 - $8,000 ©) March 25, 2003 - $5,000 (d) March 31, 2003 - $3,000 No payments have been received for principal, penalties or late payments, as agreed, since March 31, 2003. Late payment penalties of $200 per month and the daily $20 late payment fee per monthly obligation, togetherwith principal owing less payments made as -9- of January 1, 2004, total $196,540. An additional $220 per day of late charges for every day on and after January 1, 2004 continues to accrue. 19. In face to face communications in early 2003, Defendant C. Davis advised Plaintiff D. Thomas that a sale of The State Street Building and also possibly The Fulton Bank Building was being planned and that when it was effectuated, Defendants Davis would then satisfy all obligations of Capitol Steps, including Judgment Note 3, and eliminate Plaintiff D. Thomas' personal guarantee thereon. Based upon this representation, Plaintiffs entered into an executory accord with Defendant C. Davis on March 3, 2003, whereby they agreed to forego some penalty and late charges owed under the $125,000 Note attached hereto as Exhibit C, if Defendant C. Davis remained current in his payments under that Note. In the event of default by Defendant C. Davis, the executory accord allowed Plaintiffs to proceed with all available remedies, including all those arising out of the original Settlement Agreement of September 12, 2001. 20. In March of 2003, upon being requested to allow Plaintiffs to receive notice of and attend any settlement on the sale of all rights in The State Street Building, Defendants Davis refused such request, but still represented that a sale of The State Street Building would occur shortly. Subsequently, Defendant C. Davis informed Plaintiff D. Thomas that the new mortgagor on The State Street Building was holding up a sale over a possible prepayment penalty fee which, according to Defendant C. Davis, was not justified. The said sale never took place. 21. On or around June 2003, Defendants Davis, through their counsel, informed Plaintiffs' counsel that a foreclosure action had been filed against The State Street Building, and that Defendants Davis ownership therein was jeopardized. Subsequently, -10- Plaintiffs learned from counsel that The State Street Building was up for sheriff sale. Plaintiffs believe that The State Street Building was sold at sheriff sale and Capitol Steps has lost all ownership interest therein. Upon learning of this happenstance, Plaintiff D. Thomas met with Defendant C. Davis, whereupon Defendant C. Davis informed Plaintiff D. Thomas that he would not leave him "hanging" on the Judgment Note 3 guarantee. 22. On December 19, 2003, a Complaint was filed against Plaintiff D. Thomas, among others, in the Court of Common Pleas of Dauphin County, to enforce the guarantee of Plaintiff D. Thomas on Judgment Note 3, based upon the defaults of monies owed by Capitol Steps, owned wholly by Defendants Davis. A copy of the said Complaint is attached as Exhibit D hereto. 23. In the said Complaint, it is revealed that a Confession ofJudgmentwas taken against Capitol Steps on Judgment Note 3 (which Plaintiff D. Thomas was the guarantor) on September 29, 2003. Defendants Davis had never notified Plaintiffs of that fact. 24. The loan documents on the refinancing of The State Street Building and The Fulton Bank Building by the Defendants Davis and recent discussions with Defendant C. Davis and his counsel reveal that Defendants Davis refinanced these buildings pursuant to extremely unusual terms. Such terms included an extraordinary prepayment penalty in the event of a sale of The State Street Building and The Fulton Bank Building because the new mortgagor, in exchange for such refinancing terms, did not require any personal guarantees from Defendants Davis. Therefore, as a result of this refinancing, Defendants Davis were no longer personally liable on any loans on The State Street Building or Capitol Steps, whereas Plaintiff D. Thomas' personal guarantee on Judgment Note 3 remained outstanding because Judgment Note 3 had never been paid and satisfied from -11- or following the refinancing of The State Street Building and The Fulton Bank Building, as Defendants had advised it would. 25. By protecting themselves from personal liability in exchange for agreeing to an extraordinary prepayment penalty term in the refinancing, all while keeping Plaintiff D. Thomas exposed to personal liability on Judgment Note 3 in breach of the September 12, 2001 Settlement Agreement, Defendants Davis negated Plaintiffs' ownership interest in Capitol Steps and negated Plaintiffs' economic opportunity to realize a profit on the sale of The State Street Building in the amount of approximately $250,000 or more and any opportunity for Capitol Steps to satisfy Judgment Note 3 through the sale of the building. 26. Following the execution of the September 12, 2001 Settlement Agreement and the transfer of Plaintiffs' ownership in Capitol Steps to Defendants Davis, Defendants Davis breached their responsibilities to Plaintiffs under said Settlement Agreement and mismanaged Capitol Steps and misapplied funds generated from Capitol Steps in breach of their fiduciary duties to Plaintiffs, resulting in the loss of The State Street Building to the direct detriment of Plaintiffs. 27. It is believed and averred that Defendants Davis at all relevant times hereto purposefully mismanaged and used funds generated by Capitol Steps from The State Street Building to their personal benefit and to the benefit of their interest in 200 North Third and The Fulton Bank Building, and to the purposeful detriment of Plaintiffs and Defendants Davis' obligations to Plaintiffs. -12- Count I -Breach of Contract D. Mark Thomas and Jeanne M. Thomas v. Charles R. Davis and Karen S. Davis 28. Paragraphs 1 through 27 ofthisAmended Complaint are incorporated herein by reference as if set forth fully. 29. Plaintiffs fully pertormed under the Settlement Agreement entered into with the Defendants Davis in that, as required of them, they transferred their shares of stock to Capitol Steps in exchange for the mutual promises set forth in the said Agreement and, based upon their understanding, to permit the Defendants Davis to immediately close on the joint financing and based upon Defendants' commitment that Plaintiffs would be removed as guarantors on all Capitol Steps' loan obligations and make all payments required by the Settlement Agreement. 30. The failure and refusal of Defendants Davis to carry out Capitol Steps' satisfaction of Judgment Note 3 or otherwise obtain the removal of Plaintiff D. Thomas as a guarantor thereon constituted a material breach of the September 12, 2001 Settlement Agreement between the parties. 31. As a result of Defendants Davis material breach, Plaintiff D. Thomas has been required to pay legal fees, which are continuing to this day to protect his interests in respect to the Complaint filed on December 23, 2003, based upon Plaintiff D. Thomas' guarantee under Judgment Note 3. 32. Asa result of Defendants Davis' breach of contract, Defendants Davis should be ordered to pay either the amount stated in the said Complaint, $193,434.07, plus interest, costs and attorneys fees to defend, or any settlement amount agreed to, plus -13- Plaintiff D. Thomas' interest, costs, and attorneys fees required to be expended by Plaintiff D. Thomas to defend. WHEREFORE, Plaintiffs respectfully request this Honorable Court to enter a judgment in theirfavor and in the amount of $193,434.07, plus interest thereon, plus costs and attorneys fees required to defend the Complaint filed against Plaintiff D. Thomas, which is a direct result of the contractual breach of Defendants Davis as stated above or any settlement amount agreed to, plus Plaintiff D. Thomas' interest and attorneys fees. Count II -Breach of Contract Plaintiff D. Thomas and J. Thomas v. Defendants C. Davis and K. Davis 33. Paragraphs 1 through 27 are incorporated herein by reference as if set forth fully. 34. Defendant C. Davis is in breach of his contractual obligations under the $125,000 Note dated September 12, 2001, in that he has failed to make the principal payments together with the penalty and late charges set forth therein. As a result, as of the January 1, 2004, Defendant C. Davis owed Plaintiffs damages in the form of principal, penalties, and late charges totaling $196,540.00 as set forth in Exhibit E hereto, with additional damages accruing at $220 per day for each day on and after January 1, 2004. 35. Defendant K. Davis is liable for the breach of the contractual obligations under the $125,000 Note of September 12, 2001, in that her breach of the obligation to remove Plaintiff D. Mark Thomas as a guarantor of Judgment Note 3 under the Fourth Modification Agreement thereof and her refusal and failure to so notify Plaintiffs of that breach proximately caused Plaintiffs to suffer the losses under the Note dated September 12, 2001. Further, Defendant K. Davis, along with Defendant C. Davis, -14- purposefully mismanaged and misused funds generated by Capitol Steps from The State Street Building for their own benefit and contrary to their obligations to Plaintiffs and Capitol Steps. WHEREFORE, Plaintiffs respectfully requests that this Honorable Court enter judgment in their favor against Defendant C. Davis and Defendant K. Davis in the amount of $196,540.00, plus accruing late charges of $220 per day for each day on and after January 1, 2004, plus interest and attorneys fees. Count III -Fraud and Misrepresentation D. Mark Thomas and Jeanne M. Thomas v. 200 North Third, Inc. 36. Paragraphs 1 through 27 are incorporated herein by reference as if set forth fully. 37. At all times relevant hereto, Defendant C. Davis and Defendant K. Davis were respectively President and Secretary of Defendant 200 North Third, and the sole or majority shareholders thereof. 38. When Defendants C. Davis and K. Davis negotiated, made representations in respect thereto, and executed the Settlement Agreement with Plaintiffs dated September 12, 2001, they were acting, among other things, in their capacity as officers and shareholders in 200 North Third in that they represented that Plaintiffs transfer of ownership shares in Capitol Steps was required for the benefit of Defendant 200 North Third to acquire beneficial financing for that entity and that they would remove Plaintiffs' personal guarantees on the Capitol Steps' loan obligations, which included Plaintiff D. Thomas' guarantee on Judgment Note 3 under the Fourth Modification Agreement. -15- 39. Following the execution of the Settlement Agreement dated September 12, 2001, Defendants Davis, contrary to their representations to Plaintiffs, did not jointly refinance the Capitol Steps and Defendant 200 North Third properties or remove Plaintiff D_ Thomas' personal guarantee on Judgment No. 3. Instead, it is Plaintiffs' belief and they so allege that independent financing was obtained by Defendants Davis for each corporation and property and that Defendants Davis never made the lender aware of Plaintiffs' ownership interest in Capitol Steps or their obligation that Plaintiff D. Thomas' personal guarantee on Judgment No. 3 be removed as a condition to their entitlement to sole ownership of Capitol Steps. 40. In entering into the Settlement Agreement of September 12, 2001, and in executing the transfer of shares of Capitol Steps to Defendants Davis pursuant thereto, Plaintiffs detrimentally relied on Defendants Davis' fraudulent misrepresentations regarding the joint refinancing of the Capitol Steps and Defendant 200 North Third properties and the removal of Plaintiff D. Thomas' personal guarantee. 41. It is believed and therefore averred that the separate refinancing documents on both The Fulton Bank Building and The State Street Building acquired by Defendants Davis did not require their or other personal guarantees in exchange for extraordinary pre- payment penalties. 42. In that Defendants Davis acted in their capacities as officers, shareholders and managers of Defendant 200 North Third, as well as in other capacities, in making the aforesaid fraudulent representations and misrepresentations to Plaintiffs, upon which Plaintiffs detrimentally relied as aforesaid, and in purposefully concealing the purposeful violations of the Settlement Agreement, as set forth above, Defendant 200 North Third is -16- liable to Plaintiffs in the amount of any and all damages suffered by Plaintiffs resulting from the said fraud and misrepresentations, including the following: a. $193,434.07, the amount set forth in the Complaint filed against Plaintiff D. Thomas, guarantor on Judgment Note 3, plus all attorneys fees, interest, and costs owing thereon; b. $196,540.00 as of January 1, 2004, the amount of Defendant C. Davis' obligation owed to Plaintiffs under the $125,000 Note dated September 12, 2001, plus late charges accruing at a rate of $220 per day on and after January 1, 2004. c. Plaintiffs lost opportunity to 50% of the net profits from the future sale or rentals of The State Street Building, which Plaintiffs believe and therefore aver could have benefitted them with a profit of $250,000 or more. WHEREFORE, Plaintiffs respectfully request that this Honorable Court enter judgment in their favor and against Defendant 200 North Third, in the amount of $193,434.07 plus all attorneys fees, costs and interest thereon, and $196,540.00, plus $220 per day for each day on and after January 1, 2004, until fully paid, plus $250,000 or more of Plaintiffs' lost business opportunity in respect to the future sale and rentals of The State Street Building, plus interest and attorneys fees. Count IV -Fraud and Misrepresentation Plaintiffs D. Thomas and J. Thomas v. Defendants C. Davis and K. Davis 43. Paragraphs 1 through 27 are incorporated herein by reference as if set forth fully. -17- 44. Following the execution of the Settlement Agreement dated September 12, 2001, Defendants Davis, contrary to their representations to Plaintiffs, did not jointly refinance the Capitol Steps and Defendant 200 North Third properties or remove Plaintiff D. Thomas' personal guarantee on Judgment No. 3. Instead, it is Plaintiffs' belief and they so allege that independent financing was obtained by Defendants Davis for each corporation and property and that Defendants Davis never made the lender aware of Plaintiffs' ownership interest in Capitol Steps or their obligation that Plaintiff D. Thomas' personal guarantee on Judgment No. 3 be removed as a condition to their entitlement to sole ownership of Capitol Steps. 45. In entering into the Settlement Agreement of September 12, 2001, and in executing the transfer of shares of Capitol Steps to Defendants Davis pursuant thereto, Plaintiffs detrimentally relied on Defendants Davis' fraudulent misrepresentations regarding the joint refinancing of the Capitol Steps and Defendant 200 North Third properties and the removal of Plaintiff D. Thomas' personal guarantee. 46. It is believed and therefore averred that the separate refinancing documents on both The Fulton Bank Building and The State Street Building acquired by Defendants Davis did not require their orother personal guarantees in exchange for extraordinary pre- payment penalties. 47. Plaintiffs detrimentally relied upon Defendants Davis' fraud and misrepresentations in inducing them to enter into the Settlement Agreement of September 12, 2001, based upon their promise to remove Plaintiff D. Thomas from the said guarantee and their continued concealment of that fraud and misrepresentations. As -18- a result, Defendants Davis are liable to Plaintiffs for their fraud and misrepresentations in the following amounts: a. $193,434.07, the amount set forth in the Complaint filed against Plaintiff D. Thomas, guarantor on Judgment Note 3, plus all attorneys fees, interest, and costs owing thereon; b. $196,540.00 as of January 1, 2004, the amount of Defendant C. Davis' obligation owed to Plaintiffs under the $125,000 Note dated September 12, 2001, plus late charges accruing at a rate of $220 per day on and after January 1, 2004. c. Plaintiffs lost opportunity to 50% of the net profits from the future sale or rentals of The State Street Building, which Plaintiffs believe and therefore aver could have benefitted them with a profit of $250,000 or more. WHEREFORE, Plaintiffs respectfully request that this Honorable Court enter judgment in their favor and against Defendants Davis, in the amount of $193,434.07 plus all attorneys fees, costs and interest thereon, and $196,540.00, plus $220 per day for each day on and after January 1, 2004, until fully paid, plus $250,000 or more of Plaintiffs' lost business opportunity in respect to the future sale and rentals of The State Street Building, plus interest and attorneys fees. -19- Count V -Breach of Fiduciary Duty and Fraud Plaintiffs D. Thomas and J. Thomas v. Defendants C. Davis and K. Davis 48. Paragraphs 1 through 27 are incorporated herein by reference as if set forth fully. 49. Defendant C. Davis and Defendant K. Davis were respectively President and Secretary and Treasurer of Capitol Steps and they obtained full ownership therein pursuant to the Settlement Agreement dated September 12, 2001, through false and fraudulent misrepresentationstoPlaintiffsthattheywere obtainingjointrefinancingofThe State Street Buiiding and Fulton Bank Building and would secure the Plaintiffs' release from all personal guarantees on Capitol Steps' loan obligations. 50. Following the execution of the Settlement Agreement dated September 12, 2001, Defendants Davis, contrary to their fraudulent misrepresentations to Plaintiffs, did not jointly refinance the Capitol Steps and Defendant 200 North Third properties or secure the release of D. Thomas' personal guarantee on Judgment Note 3. Instead, contrary to Plaintiffs' financial opportunities and rights, as well as those of Capitol Steps, and contrary to Defendants Davis' fiduciary duty to Plaintiffs, Defendants Davis entered into a refinancing agreement with an extraordinarily disadvantageous prepayment penalty in exchange for the mortgagor's agreement not to require any personal guarantees from Defendants Davis, all while knowingly failing and refusing to have Plaintiff D. Thomas removed from his personal guarantee on Judgment Note 3, and knowingly failing and refusing to so advise Plaintiffs. 51. Defendants Davis' actions as stated in this count constitute a breach of fiduciary duty to Plaintiffs as shareholders in Capitol Steps and fraud. -20- 52. As a result of Defendants Davis' breach of fiduciary duty and fraudulent representations and misrepresentations as stated in this count, Plaintiffs lost the financial opportunity to 50% of the net proceeds from a future sale and rentals of The State Street Building, which Plaintiffs believe and therefore allege could have benefitted them with a profit of $250,000 or more, and therefore, they claim this amount herein as damages. 53. In the alternative, had Defendants Davis acted in a way consistent with their fiduciary duties and managed Capitol Steps and The State Street Building prudently and pursuant to theirfiduciary duties and without fraud, then in that event Plaintiffs should have and would have realized ongoing and continuous financial profits in the form of both income and rising equity. WHEREFORE, Plaintiffs respectfully request that this Honorable Court enter judgment in their favor in the amount of $250,000 or more for the lost financial business opportunities to sell or rent The State Street Building for a profit or to own Capitol Steps on a profitable basis, plus interest and attorneys fees. ;,,, for Plaintiffs Court ID#1`'3312 6121 Stephen's Crossing Mechanicsburg, PA 17050 Tel. No. (717) 979-4840 Fax No. (717) 255-7230 P\CLIEMSMISQCAPITOL\Lew Suil\PbaUlys W mnEetl CamplalM-Law.wpE -21- VERIFICATION I, D. Mark Thomas, Plaintiff, depose and say, subject to the penalties of 18 Pa. C.S.A., Section 4904, relating to unsworn falsification to authorities, that the facts set forth in the foregoing Amended Complaint are true and correct to the best of my knowledge, information and belief. ~-II-b'~ Date D. Mark Thomas '~!A +Ll WHEREAS, Para One Corporation, hereinafter "Para," and State and Third Street Associates, a partnership, hereinafter "Associ- ates," entered into a Modification Agreement, on February 28, 1987, the Second Modification Agreement on February 20, 1992, and the Third Modification Agreement on August 3, 1993, all of which are incorporated herein by reference; and WHEREAS, Para and Associates wish to modify the to s of repayment of the unpaid principal of Two Hundred Sixty Thousand One Hundred Ninety-four Dollars ($260,194.00); and WHEREAS, Associates are selling The State Street Building to The Capitol Steps Associates, Inc. ("CS") and CS will agree to pay the unpaid principal set forth above; and WHEREAS, subsequent to said sale, Associates will be ~ terminated; and WHEREAS, CS is placing a first mortgage on The State Street Building and has assured its lender that said first mortgage will be the only mortgage lien against The State Street Building; and WHEREAS, Wayne B. Titus and Jean S. Titus, his wife, and Heath L. Allen and Eleanor M. Allen, his wife, are willing to guarantee performance by CS hereunder. NOW, THEREFORE, Para, Associates and CS, intending to be legally bound,~agree as follows: 1. The foregoing recitals are incorporated herein by reference. WITNESS the due execution hereof this ~_ day of October, 1998. PARR ONE CORPORATION By ~~c2k~ ~~~ Nachman M. Gerber, President STATE AND THIRD STREET ASSOCIATES Heath L. Allen, Partner THE CAPITOL STEPS ASSOCIATES, INC. By ~~ ~~ D. Thomas,~President y,Lt' -3- f 2. The unpaid principal of Two Hundred Sixty Thousand One Hundred Ninety-four Dollars ($260,194.00) will be funded by CS with monthly payments of Three Thousand Ninety-one Dollars ($3,091) a month, with the initial payment due and owing no later than November 1, 1998. Each monthly payment will include inter- est at the rate of six and one-half percent (6i$) per annum. The amortization schedule is attached hereto as Exhibit A. 3. With twelve (12) months' notice, Para shall have the right to receive the unpaid principal, provided, however, for administrative convenience, Para shall have no right of partial prepayment of principal, but only of total prepayment of princi- pal. 4. with twelve (12) months' notice, CS may prepay the obligation, together with unpaid interest, provided, however, for administrative convenience, CS shall have no right of partial prepayment of principal, but only of total prepayment of princi- pal. 5. Para has delivered to Keefer Wood Allen & Rahal, LLP ("RWAR"), in trust nevertheless, a satisfaction piece for its Mortgage dated October 29, 1982, which KWAR is authorized to deliver to CS at settlement, provided, however, that KWAR mails to Para a fully executed original of this Fourth Modification Agreement. 6. This Agreement shall bind the heirs, personal represen- tatives, successors and assigns of the parties hereto. -2- l~~ I i~~ We, WAYNE B. TITUS, JEAN S. TITUS, HEATH L. ALLEN and ELEANOR M. ALLEN, intending to be legally bound, hereby guarantee the full and complete performance of The Capitol Steps Associ- ates, Inc. to fund the obligation as described in the foregoing Fourth Modification Agreement. WITNESS: "~~ .,.. l 1. Y q .r.-at h.> 4i . ~~ (SEAL) WAYNE TITUS • SEAL) S. TITUS L . (SEAL) TH L. ALLEN Lj~e,~.,~ ~. l~!'YXn~"~ (SEAL) ELEANOR M. ALLEN 3 4 5 6 7 i i~ ~ -4- r~ ,~ €. 'I I, D. MARK THOMAS, am familiar with the Fourth Modification Agreement to which Para one Corporation, State and Third Street Associates and The Capitol Steps Associates, Inc. are parties. To obtain the satisfaction piece and the interest rate from Para One Corporation, Wayne B. Titus, Jean S. Titus, Heath L. Allen, and Eleanor M. Allen have guaranteed the full and complete performance of The Capitol Steps Associates, Inc. to fund the obligation as described in the Fourth Modification Agreement. By this personal guaranty, by which I intend to be legally bound, I confirm to Wayne 8. Titus, Jean S. Titus, Heath L. Allen, and Eleanor M. Allen that the five of us are not Co-Guarantors to Para One Corporation, but that my personal guaranty is designed to hold Wayne B. Titus, Jean S. Titus, Heath L. Allen, and Eleanor M. Allen harmless against any loss that they or any of them suffer by the failure of The Capitol Steps Associates, Inc. to fund the obligation described in the Fourth Modification Agreement. WITNESS the due execution hereof this 29th day of October, 1998. (SEAL) D. THOMAS 6~P~f $260,194.00 October 29, 1998 Harrisburg, Pennsylvania POR VAII<E RECEIVED and intending to be legally bound, T88 CI~PITOL STEPS ASSOCIIITES,~INC., a Pennsylvania corporation xith offices in Her=isburg, Dauphin Cainty, Pennsylvania (hereinafter "Obligor"), Prosises to pay to PARR ONB CORPORATION, a Pennsyl- vania corporation with a sailing address c/o Nachsan M. Gerber. 4 Jonathans Court, Cockeysville, !laryland 21030, (hereina~ter- "obligee"): the sus of Two Hundred Sixty Thousand One Hundred ratetotfs x alone-Atilt ~19percent)(6t5~) per wain inateresll~the Obligor shall pay interest and principal through a aonthly paysent of Three Thousand Ninety-oust tolthe (asortizat o nschad- day of each subsequent south pursuan ule attached .hereto, Bade apart hereof, and narked Exhibit A. Obligor say prepay principal xithout penalty upon twelve (12) sonths' written notice of prepaysent, but gust prepay all princi- pal then due and owing. Nonthiy paysents shall crontiime daring the period created by notice. Obliges say deaand paysent of all principal upon twelve (12) son ~'de~scrtib~ednoab ves odusing ~ but will receive the sonthly paysen period of said notice. In the event of default, defined as failure of Obligor to pay within seven (7) calendar days of a sonthly paysent date, Obligor further doss hereby authorise and sapover any attosney o! any court of record of lvania or elsewhere to appear for it and to enter ju~dgsetit against it for the aaonnt at this Note, with or without declaration, together with costs of snit and reasonable attorney's tees, and with lnil.release of errors. Judcjse~it hereunder say be confessed on executed or photostatic copies of Ibis Note as sany uses and in as sang jnrisdiations as is necessary to secure satisfaction of am- unpaid balance or balances, and the judgsent or judgsents confessed shall be without stay of execution. Obligor specifically waives any right of inquisition on any real estate that say be levied upon, and voluntarily condesns the ease, authorising the Prothonotary of a~ county or counties to enter upon the writ of execution its said voluntary condesnation, and hereby waives and releases any and all relief fros any and all appraisesent, stay or exesution laws of any state whether currently in force or hereafter to be passed. - NIT1i833 the due execution hereol this 29th day o! October,- 1998. - al-rssr: ~~ ~,,/ _/ ~~et~--Sears/~t~ar'Jr T88 CAPITOL S~SPS a3SOCIaT83, ixc. sy/S L`' --,~` s ~ ~ Ares sent C~/1 ~i ~ I~J~ ' I, D. HaR1C TAO!l71S, intending to be legally bo0.uld. hereby . guarantee the loll and coaplste perioraance o! The Capitol steps associates, Ina., to fund the obligation as described in the loregoing Judgsent Note. - iiZT1iB.SS i . 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Iii.2i zco1.71 2Qt 12 - N1S1.1f I1U.17 as.aa 1S.Oi 17S.It ISi N . 2R1.N 11120.1{ IfOl.lt SOII.N 11.3f . 1b.A 2N7.r 7!272.!1 7K12.72 5171.tf 11.12 12l.1s 2cn.n 3 sns.a 111 6 2Ri.02 sa-:ee1 71riS.10 ~ -22.11 377.q is.a ll.r ' . IN.a 2tl0.32 71211.7i ~l N' . 7o.as 12. if liS.ri 270S.os . fl tSill 11N.Ot 12.:1 ' an.x ris.t. . c7eas.n lan.a7 11.» ... »l~etloa 71~sstlr+tlr ~s s KS Oet N Uallsl0 3fN Osb s tsa Ott 3/1!!1 es iwa 31/21M DK~ tires : 2M31 Pstit7. >tw s ^.2s1+eli. M S0011s11). 1llsd >w K/Kipa3 s 2M.3f1.N pu s s i.SO 2N1.M ti71mt s 2.3l.fi0a30 1/K _ SETTLEMENT AGREEMENT THIS AGREEMFJdT, dated the 12'' day of September, 2001, by and between D. MARK T}10MAS and JEANNE M. THOMAS, husband and wffe, aduR irxfividuals residing in Lemoyne. Cunrberk~nd County, Penmsylvania. (der refered b as'fhomas~ and CHARLES R. DAMS and KAREN S. DAMS, husband and wife adult indivi~als residing in Camp Hill, Cumberland County, Pennsylvania (hereinafter referred to as 'Davis" ) WITNESSETH: WHEREAS, Davis aril Thomas own al the issued and outstanding coital stock of THE CAPITOL STEPS ASSOCIATF~, INC., a Perinsyhrarua business corporation, with its pr'uidpal office address located at P.O. Box 901, Camp Hi, Perxisylvar>la 17001-0901(hereinafter referred to as the "CaTxrra6or-"~; and WHEREAS, Thomas desires to transfer aN of their shares of capital stock of the Corporation b Davis for the consideration provided in this Agreerner~ and WHEREAS, the parties desire to provide for the ordertltwitlrdrawal by Thomas from any and al right, title and 'interest they have in the Corporation. NOW, THEREFORE, in consideration of the promises and covenants contained herein, and intendaig b be legagy bound, the parties hereto agree as folovvs: 1. TRANSFER OF INTEREST. Thomas hereby transfers al right, title aril 'interest tiny have. had or could nave in ~tlie Corporation to Davis and conarrrently with the execution of this Agreerrrent sf>atl transferal stock they own in the Corporation b Davis. ~?C PAYMEN7: Davis and the Corporation steal pay b Thomas Ten Thailand Dolars (510;00 at the dosing of the financing referred to hereafter in paragraph 3 as consideration for the transfer of Thomas' stock in the Corporation aril Thomas relinquishing aN of their rights in the ~~- ~3. PAYMENT OBLIGATIONS. The transfer of interest aril payment of any monies pursuant b this Agreement are expressly conditioned on the Corporation and/or Davis obtaaung ~ Y 9 to refir>ance the Corporation's prirrCipal asset. the real property aril bwTdrng erected thereon known and ixrrnbered as 500 North Third Street, Harrisburg, PA, and removing Thomas as a guarantor of the Corporation's oblgations. 4. COOPEF2ATION. Thomas agrees ro cooperate in exearfrtg any and aM doarnerrts confrming their wititdravval from the Corporation pursuant to this Agreement 5. RELEASE BY THOMAS. Thomas does hereby remise, release, quitclaim and' forever disdtarge, for themselves, their heirs and personal representatives, and ati of their successors and assigns, Davis and the Corporation, and its or their heirs, person representatives, directors; officers, agents, employees, successors and assigns, as the case may be, of and from any and aN rrarrter of adios and actions, cause or causes of action, suits; debts, dues, duties, suns, ar sums of money, contracts. redtorrrgs, borxls, bras, specialties. covenants. agreements. promises, variances. damages. judgments, extents,. exerxrtiorts, Balms or demands whatsoever, in law or in equty, in any cotxt or before arty administrative agency, or otherwise howsoever, which against Davis ar the Corporation, Thomas ever had, now has, or witiclt they and their heirs. personal names, successors and assigns. hereinafter can, shall or may have, for, upon or by reason of any matter, cause or thing whatsoever relating to Thomas beoontirtg, berg or ceaskrg ro be S/oddalders of the Corporation. This release does rat appy ro any Bairns or causes of action that may arise out of the performance of this Agreement. Nothing contained herein shah preclude any party from joining another party hereto in any action, cause of action, daim or demand of whatever nature by any third party, except Thomas may not tte joined th a lawsuit regarding arty debts of the Corporafan. 6. RELEASE BY DAMS AND THE CORPORATION. Davis and the Corporation do hereby remise, release, quitclaim and forever tiisltarse for titemselves, and each of their heirs and personal representatives. the Corporation's drectors, officers. agents and employees. and aA of their successors and assigns, Thomas and their heirs, personal representatives, successors and assigns, as the case may be, of and from any and ati mariner of action and actions, cause or caries of adios, suits. debts. dues, duties, sums, or sums of money. corNrads, reckonings. bonds: bitis,. spedal6es, oovenartts, agreements, promises, variances, damages, jtrdgrrtertts, exbertts, ezeartiorts; claims a demands whatsoever, in law ar in equity. in any cant or before arty adrrtTrristrative agertq, or otherwise howsoever, which against Thomas, Davis or the Corporation ever had, raw has, or which they and their heirs, personal representatives, successors and assigns. a R and ~ drectors, officers, agents, employees, successors and assigns, as the case maybe, hereinafter can, shah or may have, for. upon or by reason of arty matter, cause or tltirtg whatsoever relating %Thomas beoorrrrg, being or ceasing ro be Stroddtolders of the Corporation. Nothirg oorthairted herein shah prelude arty party from jorrirtg another party herero in any adios, gtise of action, daim or demand of whatever nature by any third party. ' -2- 7. MOD~ICATION_ This Agreernerrt cor~ains the er-Gre understar-ding and agreement between the parties hereto with regard b ai matters herein aril maybe amended Doty in a writing signed by the parties hereto. ' IN VYITNESS WHEREOF, and intend'mg to be IegaNy bound hereby, the parties hereto have duly executed this Agreement as of the day and year first above written. WITNESS: ~~n ~, D. MARK THOMAS M. THOMAS CHAR! R: DAMS ` KAREN S. DAMS .Davis' CORPORATION. intendrrg b ~ ~Y ~~ ~Y. l~ in this Settlement Agreement for ~e sole purpose of aflimdng and agreeing to its obligations and napreserrtations as set forth in paragraph 6 hereof. ATTEST: (Assistant) Secretary THE CAPITOL STEPS ASSOCWTES, pVC. BY ~~ Charles R. Davis, t -3- 5125,000.00 12 September 2001 Caunp fell, Pamsylvaaia vRni~rrSSORY NOTE w be ~ l ~ ~ DAVLS, of FOR VAI.iJE RECEIVED aid ntt~ to ~ I~IIi , Cumbeda~d CovotY. Peaasyt~' a Pewisyl- D: MARK THOMAS and JEANNIE ewe Thousand Dollars (S12~s1250 00)x.' pa~Ya~e 1R °1O~Y vaoia, the awn of One gundrod Twenty saoot~ wAh the 5rat monthly s of Five Thousand Dollars (55,000) each for five (5) t befog due and payable on the first day ofd oft T~ho~ard '~) thereafter for fiwi (4) moths, and then moatldy of each month, due is 1° ~ H8°5' f T each on the first day until the entire balance P~ ~y,~nt is norpaid on the first day of the month when d~~ w~ a daily Tate dar8e of TwencY gundred Dollars (5200) P~ such installo~ Payment, ~ whole oc in part any Dollars (520) per day for each day payment is Paid late. Obligor may PAY ~~ of Principal due hereunder without penalty at any ~' ~yITNESS the due execution hereof the 12th day of September, 2001. WITNESS= (~). CHARLES R DA Kenneth L. Joel, Esquire Attorney I.D. No. 72370 John M. Coles, Esquire Attorney I.D. No. 87398 BROADS & SINON LLP One South Mazket Square, 12th Floor P.O. Box 1146 Harrisburg, PA 17108-1146 (717)233-5731 Attorneys for Plaintiff SHELL REALTY, INC., f/k/a PARR ONE CORPORATION, Plaintiff v. r-• c cr_~ G> w c~ ~- ,7 ~r r::: ~ ~: :' `` it. ro :::{ N -G ~ . IN THE COURT OF COMMON PLEAS OF DAUPHIN COUNTY, PENNSYLVANIA CIVIL ACTION -LAW D. MARK THOMAS, WAYNE B. TTTUS, JEAN S. TITUS, HEATH L. ALLEN AND ELEANOR NO. ~/~y~ e ~ S C~ ~ ~ e V M. ALLEN, ~"~ Defendants NOTICE YOU HAVE BEEN SUED IN COURT. If you wish to defend against the claim set forth in the following pages, you must take action within twenty (20) days after this Complaint and Notice. aze served, by entering a written appeazance personally or by attorney and filing in writing with the Court your defenses or objections to the claims set forth against. you. You aze warned that ifyou fail to do so the case may proceed without you and a judgment maybe entered against you by the Court without further notice for any money claimed in the Complaint oc 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, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW. THIS OFFICE CAN PROVIDE YOU WITH INFORMATION ABOUT HIItING A LAWYER. IF YOU CANNOT AFFORD TO HIRE A LAWYER, THIS OFFICE MAY BE ABLE TO PROVIDE YOU WffH INFORMATION ABOUT AGENCIES THAT MAY OFFER LEGAL SERVICES TO ELIGIBLE PERSONS AT A REDUCED FEE OR NO FEE. DAUPHIN COUNTY LAWYER REFERRAL SERVICE 213 North Front Street Harrisburg, PA 17101 (717)232-7536 Kenneth L. Joel, Esquire Attorney I.D. No. 72370 John M. Coles, Esquire Attorney [.D. No. 87398 BROADS & SINON LLP One South Market Square, 12th Floor P.O. Box 1146 Harrisburg, PA 17108-1146 (717)233-5731 Attorneys for Plaintiff SHELL REALTY, INC., f/k/a PARR ONE CORPORATION, IN THE COURT OF COMMON PLEAS OF DAUPHIN COUNTY, PENNSYLVANIA Plaintiff CNIL ACTION -LAW v. D. MARK THOMAS, WAYNE B. TTi'US, JEAN S. TITUS, HEATH L. ALLEN AND ELEANOR NO. M. ALLEN, Defendants AVISO USTED HA SIDE DEMANDADO/A EN CORTE. Si usted desea defenderse de las demandas que se presentan mas adelante en las siguientes paginas, debe tomaz accion dentro de los proximos veinte (20) dias despues de la notification de esta Demands y Aviso radicando personahnente o por medio de un abogado una compazecencia escrita y radicando en la Corte por escrito sus defensas de, y objecciones a, las demandas presentadas aqui en contra suya. Se le advierte de que si usted falls de tomaz accion como se describe anteriormente, el caso puede proceder sin usted y un fallo por cualquier soma de dinero reclamada en la demands o cualquier otra reclamation o remedio solicitado por el demandante puede ser dictado en contra suya por la Corte sin mss aviso adicional. Usted puede perder dinero o propiedad u otros derechos importantes pars usted. USTED DEBE LLEVAR ESTE DOCUMENTO A SU ABOGADO INMEDIATAMENTE. SI USTED NO TIENE UN ABOGADO, LLAME O VAYA A LA SIGUIENTE OFICINA. ESTA OFICINA PUEDE PROVEERLE INFORMACION A CERCA DE COMO CONSEGUIR UN ABOGADO. SI USTED NO PUEDE PAGAR POR LOS SERVICIOS DE UN ABOGADO, ES POSIBLE QUE ESTA OFICINA LE PUEDA PROVEER INFORMACION SOBRE AGENCIAS QUE OFREZCAN SERVICIOS LEGALES SIN CARGO O BAJO COSTO A PERSONAS QUE CUALIFICAN. DAUPHIN COUNTY LAWYER REFERRAL SERVICE 213 North Front Street Harrisburg, PA 17101 (717)232-7536 Kemeth L. Jcel, Esquire Attomey I.D. No. 72370 John M. Coles, Esquire Attomey I.D. No. 87398 BROADS & SINON LLP One South Mazket Squaze, 12th Floor P.O. Box 1146 Hamsburg, PA 17108-1146 (717)233-5731 Attorneys for Plaintiff SHELL REALTY, INC., f/k/a PARR ONE CORPORATION, Plaintiff IN THE COURT OF COMMON PLEAS OF DAUPHIN COUNTY, PENNSYLVANIA CIVIL ACTION -LAW v. D. MARK THOMAS, WAYNE B. TITUS, JEAN S. TITUS, HEATH L. ALLEN AND ELEANOR NO. M. ALLEN, Defendants COMPLAINT AND NOW, comes Plaintiff, Shell Realty, Inc., by and through its attorneys, Rhoads & Sinon LLP, and file this Complaint as follows: Plaintiff, Shell Realty, Inc., is a Maryland corporation with a mailing address of 7313 Park Heights Avenue, Apartment #101, Pikesville, Maryland 21208-5469 and is the successor by merger to Para One Corporation ("Para One's. 2. Defendant D. Mazk Thomas is an adult individual with an address at 212 Locust Street, Suite 500, P.O. Box 9500, Harrisburg, Pennsylvania 17108-9500. 3. Defendant Wayne B. Titus is an adult individual with an address of 601 Fernwalk Lane, Osprey, Florida 34229. 486529.1 4. Defendant Jean S. Titus is an adult individual with an address of 601 Femwalk Lane, Osprey, Florida 34229. 5. Defendant Heath L. Allen is an adult individual with an address of 210 Walnut Street, P.O. Box 11963, Harrisburg, Pennsylvania 17108-1963. 6. Defendant Eleanor M. Allen is an adult individual with an address of 210 Walnut Street, P.O. Box 11963, Harrisburg, Pennsylvania 17108-1963. 7. On or about October 29, 1998, The Capitol Steps Associates, Inc. ("Capitol Steps', for value received, executed to the order of, and delivered to Paza One, the predecessor in interest to the Plaintiff, a Judgment Note pursuant to which Capitol Steps promised to pay to Paza One the principal amount of $260,194.00, plus interest at the rate of 6.5% per annum. A true and correct copy of the Judgment Note (the "Note") is attached hereto as Exhibit "A" and incorporated herein by reference. 8. On or about October 16, 1998, Para One and Capitol Steps executed, along with State and Third Street Associates, a general parhnership, a Fourth Modification Agreement in which Capitol Steps agreed to pay to Paza One the obligations evidenced by the Note, which obligations were originally incurred in connection with a series of transactions that occurred in or about 1987 regazding the purchase of certain real estate located in the City of Harrisburg, Dauphin County, Pennsylvania. A true and correct copy of the Fourth Modification Agreement (the "Modification Agreement's is attached hereto as Exhibit "B" and incorporated herein by reference. 9. On or about February 16, 1988, Paza One merged into Shell Realty, Inc., the Plaintiff herein. 10. Over the years, Capitol Steps made its regular loan payments under the Note to the Plaintiff. 11. However, Capitol Steps is now in default under the Note and the Modification Agreement in that Capitol Steps has failed, refused and continues to fail and refuse to. pay the monthly payments of principal and interest due to the Plaintiff under the Note and the Modification Agreement. 12. On September 29, 2003, the Plaintiff confessed judgment against Capitol Steps in the amount of $193,434.07, which amount represents unpaid principal, interest and attorneys' fees, pursuant to the Plaintiff's rights under the Note. A true and correct copy of the confessed judgment entered against Capitol Steps is attached hereto as Exhibit "C" and incorporated herein. 13. Defendant D. Mark Thomas guaranteed Capitol Steps' obligations under the Note. 14. Defendants Wayne B. Titus, Jean S. Titus, Heath L. Allen and Eleanor M. Allen guaranteed Capitol Steps' performance under the Modification Agreement. 15. Due to Capitol Steps' continuing failure to meet its obligations under the Note and the Modification Agreement, the Plaintiff' now brings this action against the Defendants, all guarantors of Capitol Steps' obligations. 16. Defendants are contractually obligated to satisfy the unpaid obligations of Capitol Steps arising under the Note and Modification Agreement, and therefore, are now jointly and severally liable to the Plaintiff in the amount of $193,434.07, plus accrued interest and costs of suit. WHEREFORE, Plaintiff, Shell Realty, Inc. hereby demands judgment against all Defendants in the amount of $193,434.07, together with costs and interest accnring at the rate under the Note, from the date hereof, and all other damages, inciuding attorneys' fees and costs of suit as allowed by Pennsylvania law. Respectfully submitted, Dated: l 2 a 3 One South Market Square, Twelfth Floor P. O. Box 1146 Harrisburg, PA 17108-1146 (717)233-5731 Attorneys for Plaintiff John M. Coles _~1Y: 08i 200J 11: Sd FAX ill 2JJ 1Jd8 KHOADS & si:~u\ LLP ~ OOB _~- VER1F~ 1C Gene A. Gerber hereby deposes ~ says, subject to the penalties of 18 Pa. C.S. § 49U4 relating to imsworn falsification to authorities, that he is the president of Plaintiff Shell Realty, inc., that he makes this verification as such officer by its authority and that the facts set forth in ~~ forogoio8 Complaint an true and wrrect to the best of his Imowledge, information and belief. /a"g'o3 Date: ~ ~ Preside Exhibit A $260,194.00 October 29, 1998 Harrisburg, Pennsylvania FOR VALUE RECEIVED and intending to be legally bound, THE CAPITOL STEPS ASSOCIATES, INC., a Pennsylvania corporation with offices in Harrisburg, Dauphin County, Pennsylvania (hereinafter ^Obligor^), promises to pay to PARR ONE CORPORATION, a Pennsyl- vania corporation with a mailing address c/o Nachman M. Gerber, 4 Jonathans Court, Cockeysville, Maryland 21030, (hereinafter ^Obligee"), the sum of Two Hundred Sixty Thousand One Hundred Ninety-four Dollars ($260,194..00), together with interest at the rate of six and one-half percent (6.5&) per annum, as follows: Obligor shall pay interest and principal through a monthly payment of Three Thousand Ninety-one Dollars ($3,091) on the 1st day of each subsequent month pursuant to the amortization sched- ule attached hereto, made a part hereof; and marked Exhibit A. Obligor may prepay principal without penalty upon twelve (12) months' written notice of prepayment, but must prepay all princi- pal then due and owing. Monthly payments shall continue during the period created by notice. Obligee may demand payment of all principal upon twelve (12) months' written notice of demand, but will receive the monthly payments described above during the period of said notice. In the event of default, defined as failure of Obligor to ~' pay within seven (7) calendar days of a monthly payment date, J"`~ Obligor further does hereby authorize and empower any attorney of any court of record of Pennsylvania or elsewhere to appear for it and to enter judgment against it for the amount of this Note, with or without declaration, together with costs of suit and reasonable attorney's fees, and with full release of errors. Judgment hereunder may be confessed on executed or photostatic copies of this Note as many times and in as many jurisdictions as is necessary to secure satisfaction of any unpaid balance or balances, and the judgment or judgments confessed shall be without stay of execution. Obligor specifically waives any right of inquisition on any real estate that may be levied upon, and voluntarily condemns the same, authorizing the Prothonotary of any county or counties to enter upon the writ of execution its said voluntary condemnation, and hereby waives and releases any and all relief from any and all appraisement, stay or exemption laws of any state whether currently in force or hereafter to be passed. 1998. WITNESS the due execution hereof this 29th day of October, ATTEST: y s,~ ~ terry THE CAPITOL STEPS ASSOCIATES, INC. By President I, D. MARK THOMAS, intending to be legally bound, hereby guarantee the full and complete performance of The Capitol Steps Associates, Inc., to fund the obligation as described in the -2- ~1 ~ (SEAL) D. MARK HOMAS -; 3, ie9G lbtcgege Amorc izatlon Page - KEE[ER Iro00 ALLEN 6 1tAHAL, fSp from Oee 1/1998 Co Dec ]1/ 2399 Kep area For: 9ha11 Realty, Inc. Re: SOC Soxlh ThitA StseOt, Xa uifburg, PA .:Y.- k r.< -L ,~ 7 m< ~ d Yeasf :0.00 ?ri v--!pal: 260 194.00 . /• . ., i ~-_ ~ / ~4[e: 6.50 j } / ^~ peymtot Fregwncy: Monthly Compoun]eG: 12 6..i'.. /•~j(('l .~ ~h•fl Cj .. / Zntetene Factor: 1. 00541666] PeymeRt 2ota1 Inteteet Principal Balance Total int Da to Numbec Payment Payment Payment Loan Per Yea[ Pet DS em 11/1/1998 1 3091.00 1109.38 1681.62 258512.38 1409.38 46. 34 12/1/1949 2 3091.00 1100.28 1690.]2 256821.66 2809.66 46. 01 :/1/1999 Sub-Total 4236.91 1/1!_399 J 3091.00 1]91.12 1699.88 255321.78 -36.1] 45. ]1 YJ 1/:999 4 3091.00 1181.91 1709.09 233412.69 1315.]1 45. 44 3+1/:595 5 ]031.30 1J 12.65 1730 J5 251694.]1 2]38.]9 45. 13 :/:/:595 6 ]09:.00 1]63.]4 Vp.66 24996fi.6B 1081.)9 44. 83 :035 7 a041 A0 1357.99 1]37.01 248229.67 54]5.]2 44. 52 50!:9 F4 B 3091.00 1344.58 3745.42 246483.25 6780.70 41. 21 7/:i 1599 9 3091.00 1735.12 1755.88 244727.]6 9115.42 13. 90 i/:/1954 10 3091.00 1725.61 1765.]9 242961.9? 9441.03_ - 0. 59 9/1!1953 11 3091.00 -I3S6'af "~T777-43- -1118 ]. O1 -~-4.7.0'1 4]. 27 %!1/1999 12 ]091.00 1]06.0 1781.57 2]9102.11 1206].50 42. 96 :; 1/'J 99 l3 M91.00 1296.]6 1794.21 237608.21 1]]40.26 12. 64 12/1/:399 14 ]093.00 1287.04 1803.96 215804.25 14647.31 42. 32 :!1/.CCO Sub-iotel 15959.19 1/1/:'vC0 15 3091.00 127].27 181].7) 3]3990.33 -31.61 42. 00 2/:/:000 16 7091.00 1267.45 182].55 232166.97 - 1232.81 11. 67 3/:/20CD 17 ]091.00 125].57 183].13 230]73.54 2490.13 41. 3$ 1/:/2000 18 ]091.00 1217.61 1843.78 228190.18 7738.05 11. 02 3/1/2060 19 7091.00 1237.66 1853.]1 226636.84 1975.71 10. 70 6/1/2000 20 3091.00 1227.62 1867.38 22177].46 6203.32 10. 36 7/1/2000 21 3091.00 1217.32 IB]J./8 222899.98 ]120.84 40. 07 0/1/2000 22 3091.00 }20?•iL-~ 1887.6.] 221016.33 8628.22 39. 70 3/1/2000 ~3 7091.00 119].17 1893.83 219322.3] 9825.39 39. 36 10/1 /200D 24 ]091.00 1186.91 1901.09 217218.11 11012.31 39. 03 :1/3/2000 25 3091.00 11]6.60 1911.10 2133D/.D4 12188.90 30: 69 12/1/2000 26 3091.00 1166.23 1921.77 21]379.2] 3]355.11 38. 35 1/1/2001 Sub-Total 1151].89 1/1/2001 2T ]091.00 1155.80 1933.20 211144.0] -32.95 ]8. 00 2/:/2001 28 3091.00 1115.32 1915.60 209198.10 1112.38 37. 66 ]/l/2001 29 3091.00 11]1.]8 1956.22 207342.18 2247.16 37. 31 4/:/2001 ~ 30 1091.00 1124.19 1966.81 205575.77 ]371.31 36. 36 i/1/2001 31 3093.00 1113.57 1977.17 203597.90 4181.88 36. 63 G/1/20n1 32 3093.00 1102.9y ~BB. Ifl 201609.72 5507.70 36. 26 7/1/2001 3J ]091.00 1092.05 1998.93 199610.77 6679.75 35. 91 e/18001 34 ]093.00 1081.23 3009.7] 197603_.00.. 7760. y~_ 35. 55 _. 9/1/2002' 35-- ]'091.00 --I'~/ ~ 80.3/ 8831.32 _ 35. _ 19 1C/?/3901 36 709:.00 1059.39 2031.61 193548.7] 9890.71 39. P] :1/:/299: J7 1091 AO 1048.79 2042.61 191505.12 10939.10 34. 1' ::/1/LDC: ?B 3091.00 :03].32 2053.68 189452.44 11976.42 34. :: /:/2J CZ SuD-Total 1301].80 it/:f D2 39 3091.00 1026.20 '<D64 .90 18738E 63 -]1.17 1J. 1< t/:'Y 02 10 3]91.00 1015.02 2075.98 185]11.66 983.84 33. 79 3/'/20?2 I1 3091.00 100].77 208E 23 187224. 1] 1987.61 31. 01 411; 2C )2 12 ]091.00 992.17 2098.53 181125.90 2980.08 32. 61 ~~5/t/2292~~~ ~ _ - 43 3031.00 981.10 2109.90 179016.00 3961.19 32. 26 6/1/:002 11 3091.00 969.67 2121.33 1]6891.67 4930.85 33. 88 7/1/.'002 45 ]091.00 958.18 2132.82 174761.85 5889.0] 71. 51 tl/1/20u2 46 3091.00 916.63 21N .37 172617,17 6835.66 31. 13 ' 9/1/2002 17 ]091.00 935.03 2155.99 170461.49 7]70.7 30. ]5 10/1/2002 48 ]091.00 923.3] 216].67 16829].eI 8691.00 30. 16 11/1/2002 49 ]091.00 911.59 2179.41 366314.41 9605.59 29. 98 12/:/2002 SO ]091.00 899.79 2191.21 163923.20 10503.38 29. 59 1/1/2003 9uMTOG3 31422.58 1/1/200] 51 3091.00 887.92 2203.08 161720.13 -29.28 29. 20 2/3/200] 32 3091.00 873.98 2215.02 139505.10 846.]0 28. 80 3/1/2007 53 3091.00 863.99 2227.01 157278.08 1710.69 28. 11 4/1/2007 34 ]091.00 851.92 2239.08 1!5039.03 2562.61 28. 01 5/1/2003 SS 3091.00 679.79 2251.23 152787.80 ]402.11 27. 61 6/1/2003 56 3091.00 82],60 2263.40 130524.40 12]0.01 2]. 21 ]/1/2603 57 ]091.00 015.34 22]5.66 1/8218.71 5045.75 26. 81 8/1/2003 50 3091.00 803.01 228].99 115960.76 5848.]6 26. 41 3/:/^<C03 59 ]091.00 790.62 2300.]8 143660.78 66]8.98 2fi. 00 10/1/2007 60 3091.00 ]70.16 2332.fi1 141]17.31 7117.31 25. 59 :1/_/2003 61 ]091.00 765.63 2325.37 139012.17 8182.78 25. 10 :2/1/2003 62 3091.00 753.04 2337.96 116601.21 8975.81 29. ]6 l/a 20':4 Sub-Total 9703.45 L :/ICU 6l 7091.00 740.]7 2359. d3 134333.58 -27.26 24 .15 e/t/0004 64 3091.00 727.64 23 G3.J6 1]1970.22 700.38 21. 93 '~i 1./,:C 04 65 3091.00 711.81 2]76.16 329591.06 IA 15.22 23. 51 e, .l /ZC n4 66 3091.00 701.97 23fi 9.03 127205.03 2117.19 23 .08 s/VC:J4 67 3091.00 689.0] 2101.97 12180].05 2806.21 22 .66 .;/l/^': J/ S9 3091.00 676.02 2411.98 122388.07 7182.2] 22. 2] 'il/2004 59 3091.00 662.94 2428.06 119960.01 4145.1] 21. 80 ?/1/iuU4 l0 3091 .OU 6/9.78 2441.22 317510.79 4794.95 21. 77 9/!/2]04 71 7091.00 636.56 2454.11 115064.35 54]1.51 20 .93 ':^./:/20f/ 72 3091.00 623.27 2467.73 112596.63 6054.77 20 .50 11/1/2001 l7 3091.00 609.90 2481.30 110115.53 6661.61 20 .06 12/'/2004 71 3091.00 596.16 249/.34 107620.97 7261.1) 19 .61 _ 1/1/2005 Sub-Total 7869.18 I/1./2005 73 3091.00 582.93 2508.05 105112.92 -25.11 19 .17 2/1/:005 76 3091.00 569.36 2521.N 102591.28 511.26 18 .72 1/1/2005 7] 3091.00 555.70 25 JS.JO 100055.98 ]099.96 18 .2] 1/1/2005 78 3091.00 541.97 2519.0] 97506.95 1641. 9J 17 .82 5/1/2005 ]9 3091.00 528.16 2562.81 9d 9/1.11 2170.09 17 .3] --- - --- --- '-- °/~=~`' Mo rc9a9e Morc iraClon • KEEEER WOOD A:.LEN : p1NA:., LLP ?aqa ` from Cct 1./1999 to Oec 71/ 2199 r;ppare] F ~ :]el'. Real:y. [nc- N.: 9. ': ~^ c.: '_L-] 9cvee c, Ha rrisbur3. PA Yeara :0.00 a: pei: )n ct?1 .Ov -~.ce: ~~ '~ Payment :3091.00 ~c{~cvrce6: C C Paymene Freguene y Mon chl Incezme Factor: 1 .00511666T Paymen< To Cal Intareat Prlnclpal Ba ldnee Toial Int ..~. _ Number PaymanC Paymeot Payment Loan POr TOd[ POr Dlem 6/1/2005 80 7091.00 531.28 29)6.)2 92367.10 2681 37 7/I/2105 B1 3091.00 500.]2 2990.68 897)6.12 . 3181 59 16.91 0/1/2005 R2 ]091.00 486.29 2601.)1 87372.03 . 3670 99 16.15 9/1/2005 03 3091.00 172.18 2618.82 81553.19 . IlIJ 17 19.99 l0/1/2005 81 7091.00 158.00 2633.00 81920.79 . 1601 16 15.97 15 06 11/1/2005 BS 3091.00 9{3.)3 2647.27 ]9212.92 . 5011.90 . 11 59 12/!/2005 B6 3091.00 129.39 2661.61 16611.32 5171.29 . 11 12 1/1/:306 SaC-Total 5912.08 ._ 1/1/20oG d7 )091.00 431.98 2676.02 73935 JO -22.81 13 65 2/:J 200G B8 3091.00 /00.18 2690.52 )1N 1.18 377.68 . 1] 17 3/i/200G B9 ]091.00 389.91 2105.09 68539.69 763.59 . 12 69 x/1/2006 90 7091.00 371.26 2719.71 65819.91 :131.81 . 12.21 1/:12006 91 7091.00 356.52 2731.18 63085.17 :191.3] 11 77 6/1/X06 92 3097.00 741.11 2749.29 603]6.18 :837.08 . 11 21 7/1/2DDi 93 3091.00 326.82 2764.18 51572.00 2159.90 . 10.75 0/1/2006 91 3091.00 311.85 2779.15 51792.85 2171.75 !0.26 9/1/2•,106 95 3091.G0 296.79 2791.21 51998.65 27GB.S1 9 05 10/1/2::05 96 7091.00 283.66 2809.]1 19189. JO 3050.20 . 9.2' 1:/l /2 :06 - 9] ?091.00 266.11 2821.56 16364.19. 3316.61 8.76 12/1/2005 98 3091.00 25 L3/ 2879.86 ]]521.89 156).75 8.25 :: 1/2c pT Sub-Tot sl 7823.90 :/; RCCS 99 ]091.00 235.76 2855.24 90669.65 -20.35 7.16 2111 '.'3C7 100 ]091.90 220.29 2810.71 31798.94 199.91 7.25 3/3/M07 1C1 3091.00 201.71 2806.26 31932.69 101.68 6.71 x/:/2.0.:7 ' :C2 3091.00 189.13 2901.89 32010.80 593.79 6.22 5/ . /2007 30] 3091.00 173.39 2917.61 29093.19 767.19 5.71 d/V2U07 101 7091.00 15).59 2933.11 26159.78 921 J7 . 5:19 /11200) 105 3091.00 111.70 2919.30 23210.98 1066.17 1.66 3/1/2007 106 3091.00 325.72 2965.28 20215.20 1192.20 1.11 9/1/2007 107 3091.00 109.66 2981.71 17263.86 1301.86 . 3.61 .0/1/2007 108 3091.00 93.51 2997.{9 1{266.]7 1395.31 3.00 _1/1/2007 109 3091.00 )7, 28 3013.72 11252.65 1472.65 . 2.55 _2/1/2007 330 3091.00 60.95 3030.05 8222.60 1533.60 2.01 ' :/1/2009 Sub-Toial 1595.8] ;/1/2000 -- 111 - 3091.00 N.N ]016.16 51)6.11 -17.7{ 1.17 </1/2008 112 3091.00 28.04 3062.96 211].18 10.30 0.93 3/t/2000 117 2121.62 31.15 2113.18 0.00 75 21 0 38 . . . lna: Payment 0.00 Pzincipal Paitl Co Dace 260191.00 In[ereac Palo to Date 88122.62 Ioial Paitl co Ds to 318316.62 6 0.E. papor[ 50 L eciiona "' Repurt Mcrrgage Mortization Da ca Fei Oic C9 11:]9:?0 1998 Ja:e pan)O from Oc< 1/!953 to Dee 31/2199 ~~.~~•• Snail Rca ay, Inc. is 500 No rch T..1 rtl 9tzee t, Mazzialwzg, PR :'r: rd pa! Ifi0191.00 ~ 6.50 a}men7. 3091. 00 Car 3.19. 980330 Exhibit B WHEREAS, Para One Corporation, hereinafter "Para," and State and Third Street Associates, a partnership, hereinafter "Associ- ates," entered into a Modification Agreement, on February 28, 1987, the Second Modification Agreement on February 20, 1992, and the Third Modification Agreement on August 3, 1993, all of which are incorporated herein by reference; and WHEREAS, Para and Associates wish to modify the terms of repayment of the unpaid principal of Two Hundred Sixty Thousand One Hundred Ninety-four Dollars ($260,194.00); and WHEREAS, Associates are selling The State Street Building to The Capitol Steps Associates, Inc. ("CS") and CS will agree to pay the unpaid principal set forth above; and WHEREAS, subsequent to said sale, Associates will be terminated; and WHEREAS, CS is placing a first mortgage on The State Street Building and has assured its .lender that said first mortgage will be the only mortgage lien against The State Street Building; and WHEREAS, Wayne B. Titus and Jean S. Titus, his wife, and Heath L. Allen and Eleanor M. Allen, his wife, are willing to guarantee performance by CS hereunder. NOW, THEREFORE, Para, Associates and CS, intending to be legally bound, agree as follows: 1. The foregoing recitals are incorporated herein by reference. 2. The unpaid principal of Two Hundred Sixty Thousand One Hundred Ninety-four Dollars ($260,194.00) will be funded by CS with monthly payments of Three Thousand Ninety-one Dollars ($3,091) a month, with the initial payment due and owing no later than November 1, 1998. Each monthly payment will include inter- est at the rate of six and one-half percent (64$) per annum. The amortization schedule is attached hereto as Exhibit A. 3. With twelve (12) months' notice, Para shall have the right to receive the unpaid principal, provided, however, for administrative convenience, Para shall have no right of partial prepayment of principal, but only of total prepayment of princi- pal. 4. With twelve (12) months' notice, CS may prepay the obligation, together with unpaid interest, provided, however, for administrative convenience, CS shall have no right of partial prepayment of principal, but only of total prepayment of princi- pal. 5. Para has delivered to Keefer Wood Allen & Rahal, LLP (pKWAR"), in trust nevertheless, a satisfaction piece for its Mortgage dated October 29, 1982, which KWAR is authorized to deliver to CS at settlement, provided, however, that KWAR mails to Para a fully executed original of this Fourth Modification Agreement. 6. This Agreement shall bind the heirs, personal represen- tatives, successors and assigns of the parties hereto. -2- WITNESS the due execution hereof this ~ day of October, 1998. PARR ONE CORPORATION By y2-o-G~l~ ~ ~j~~~ G~ Nachman M. Gerber, President STATE AND THIRD STREET ASSOCIATES By~r~~~~~~ Bath L. A len, Partner THE CAPITOL STEPS ASSOCIATES, INC. By~~ D. Ma Thomas,~President Vln~ -3- We, WAYNE B. TITUS, JEAN S. TITUS, HEATH L. ALLEN and ELEANOR M. ALLEN, intending to be legally bound, hereby guarantee the full and complete performance of The Capitol Steps Associ- ates, inc. to fund the obligation as described in the foregoing Fourth Modification Agreement. WITNESS: ~- (SEAL) WAYNE ~: TITUS -" ~, EAL) JE S. TITUS /~Ln.rr~ ~- /~}~'C~.~_ (SEAL) HEATH L. ALLEN (~~J ,.n~.~ ~J_ LYIIQa.~~ (SEAL) ELEANOR M. ALLEN -4- SHELL REALTY, INC-, f/k/a PARR ONE CORPORATION, v. Plaintiff 1N THE COURT OF COMMON PLEAS OF DAUPHIN COUNTY, PENNSYLVANIA CONFESSION OF JUDGMENT FOR MONEY THE CAPITOL STEPS ASSOCIATES, INC., NO. ac~v3- ~~- a 33s Defendant ENTRY OF JUDGMENT AND NO W, this day of - ' ~ ? , 2003, Judgment is hereby entered in favor of the Plaintiff, Shell Realty, Inc., and against the Defendant, The Capitol Steps Associates, Inc., and damages are assessed in the amount of $193,434.07, together with interest from the date of judgment plus costs of collection ` ', _,_ ~ 's ., P[OthOIIOtaiy Exhibit C Kenneth L. Jcel, Esqure Attorney I.D. No. 72370 John M. Coles, Esquire Attorney I.D. No. 87398 BROADS & SINON LLP One South Mazket Square, 12dr Floor P.O. Box 1146 Harrisburg,PA 17108-1146 (717)233-5731 Attorneys for Plaintiff SHELL REALTY, INC., f/Ic/a PARR ONE CORPORATION, Plainfiff v. r• r- ca r_; o ..., ;- o ~ ~j , , ~ n n r:: ~ ~ • o c a %~~' ~ -,;* x. ~c :a': ~{ N r ~ ~ , IN THE COURT OF COMMON PLEAS OF DAUPHIN COUNTY, PENNSYLVANIA CIVIL ACTION -LAW D. MARK THOMAS, WAYNE B. TITUS, JEAN S. TITUS, HEATH L. ALLEN AND ELEANOR NO. C~~~~ ~V SL-I' ~ ~'I e,V M. ALLEN, Defendants NOTICE YOU HAVE BEEN SUED IN COURT. If you wish to defend against the claim set forth in the following pages, you must take action within twenty (20) days after this Complaint and Notice. aze 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 tray proceed without you and a judgment maybe 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, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW. THLS OFFICE CAN PROVIDE YOU WITH INFORMATION ABOUT HII2ING A LAWYER. 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Zc'~a3 3GS- 4~ ~ ylfl°~} ~ ?-75 Y'~o `S,S'~ CERTIFICATE OF SERVICE I hereby certify that I have served the Defendants counsel in this case with a true and correct copy of the attached Amended Complaint by placing the same in the United t3 States Mail at Harrisburg, Pennsylvania, first-class postage prepaid, on the 1 day of February, 2004, addressed as follows: Thomas B. Schmidt, III, Esquire Pepper Hamilton, LLP 200 One Keystone Plaza North Front and Market Streets P.O. Box 1181 Harrisburg, PA 17108-1181 John Havas, Esquire By x U ~1~ Vikki Moore, Secretary C7 rv C... a=a o C3 ~l ' . r d -T)j '~'' .-~ 2 W ~il~ ri, _ < 3:~ 'r "1'~ -n _. ~ >n _ W ~~ITI -~ -r ~~ w -~ D. MARK THOMAS and JEANNE M. THOMAS, Plaintiffs vs. CHARLES R. DAMS and KAREN S. DAMS and 200 NORTH THIRD INC., Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION -LAW 04-166 CIVIL ORDER AND NOW, this ~ ~~ day of February, 2004, on request of counsel, the motion of the plaintiffs for the escrow of funds is WITHDRAWN. BY THE COURT, John Havas, Esquire For the Plaintiffs Thomas B. Schmidt, III, Esquire For the Defendants ,l'r,~uu, ins-a.u'-e-~ ~ - /7-d Y L ~. :rlm A,?~yl~~ ~ r. ;E'IlJ 00 ~ 11 `~ ~' ! ! fl]~ hUUZ i~~i's!lOP10~ (lUcd ~!{1 d0 J!~-'~~-CI=11d TO: D. Mark Thomas and ieanne M Thomas Plaintiffs D. MARK THOMAS AND JEANNE M. THOMAS, Plaintiffs, vs. CHARLES R. DAMS, KAREN S. DAMS, AND 200 NORTH THII2D STREET, INC., Defendants. You are hereby notified to file a written response to the below Preliminary Objections within twenty (20) days from service hereof or a judgment may be entered against you. PEPPER HAMILT LLP BY: IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA No. 04-0166 CIVIL ACTION -LAW DEFENDANTS' PRELIMINARY OB ECTIONS TO AMENDED COMPLAINT Pursuant to Pa. R.C.P. 1028, Defendants Charles R. Davis ("C. Davis"), Karen S. Davis ("K. Davis") (collectively "Davis"), and 200 North Third Street, Inc. ("200 North Third"), by their undersigned attorneys, assert the following preliminary objections to plaintiffs' amended complaint: Count I -Breach Of Contract D. Mark Thomas and .ieanne M Thomas v Charles R Davis and Karen S Davis Preliminary Objection Pursuant To Pa. R.C.P. 1028(a)(4) 1. Pa. R.C.P. 1028(a)(4) authorizes a preliminary objection if a complaint is legally insufficient. 2. Plaintiff Jeanne M. Thomas ("J. Thomas") lacks standing to assert a claim for breach of contract against Davis because, by the terms of her pleading, she is not a "guarantor" of any obligation that is alleged to be in default, is not a defendant in the alleged Dauphin County action (see amended complaint, Ex. D), and had no rights arising by virtue of section 3 of the "settlement agreement" (amended complaint, Ex. B), the alleged breach of which is the premise for Count I. Because Plaintiff J. Thomas has no standing to assert the claim for breach of contract in Count I of the amended complaint, it is legally insufficient. WHEREFORE, Defendants Davis request that this Court sustain their demurrer and dismiss Count I of the amended complaint as to plaintiff Jeanne M. Thomas as legally insufficient. Preliminary Objection Pursuant To Pa. R.C.P. No. 1028(a)(4) 4. Plaintiffs' breach of contract claim seeks to recover as damages $193,434.07, alleged to be the debt of Capitol Steps Associates, Inc. ("Capitol Steps"), and the payment of which Plaintiff D. Mark Thomas ("D. Thomas") is alleged to have guaranteed, together with the costs and attorneys' fees associated with defending a separate legal proceeding alleged to be pending in Dauphin County. 5. The obligation to pay the alleged guarantee is alleged to be contested by Plaintiff D. Thomas. 6. Plaintiffs have not sustained any cognizable damages as a consequence of the Dauphin County action. Plaintiffs have not sustained any cognizable damages as a consequence of the alleged breach of contract and, for that reason, their amended complaint fails to state a claim upon which relief can be granted. -2- WHEREFORE, Defendants Davis request that this Court sustain their demurrer and dismiss Count I of the amended complaint as legally insufficient. Preliminary Objection Pursuant To Pa. R.C.P. 1028(a)(5) 8. Plaintiffs' amended complaint alleges that Capitol Steps has the primazy obligation to pay "Judgment Note 3" as alleged by plaintiffs. Capitol Steps is a necessazy party to this litigation. ] 0. Plaintiffs failed to join Capitol Steps as a party. WHEREFORE, Defendants Davis request that this Court dismiss Count I of the amended complaint for plaintiffs' failure to join a necessary party. Count II -Breach Of Contract Plaintiff D. Thomas and .i. Thomas v Defendants C Davis and K Davis Preliminary Objection Pursuant to Pa. R.C.P. 1028(a)(4) 11. Pa. R.C.P. 1028(a)(4) authorizes a preliminazy objection if a complaint is legally insufficient. 12. Count II of plaintiffs' amended complaint is premised on C. Davis' alleged default on a promissory note (see amended complaint, Ex. C). K. Davis is not alleged to be a maker or guarantor of the promissory note. 13. Because K. Davis has no contractual duty respecting the promissory note, the claim against her for breach of contract in Count II of the amended complaint is legally insufficient. WHEREFORE, Defendants Davis request that this Court sustain their demurrer and dismiss Count II of the amended complaint as legally insufficient. -3- Count III - Fraud and Misrepresentation D. Mark Thomas and Ieanne M Thomas v 200 North Third Inc Preliminary Objection Pursuant to Pa. R.C.P. 1028(a)(4) 14. Plaintiffs assert fraud and misrepresentation claims against 200 North Third. 15. Plaintiffs' amended complaint does not allege any contractual or other legal relationship with 200 North Third. 16. Plaintiffs' amended complaint does not allege any misrepresentation by 200 North Third upon which plaintiffs reasonably relied to their detriment. WHEREFORE, Defendant 200 North Third requests that this Court sustain its demurrer and dismiss Count III of the amended complaint as legally insufficient. Preliminary Objection Pursuant to Pa. R.C.P. 1028(a)(2) 17. The Pennsylvania Rules of Civil Procedure require fact pleading and that averments of fraud or mistake be pleaded with particularity. 18. Plaintiffs' amended complaint does not plead their fraud and misrepresentation claim with sufficient particularity. 19. Because plaintiffs have failed to plead their fraud and misrepresentation claim with sufficient particularity, their amended complaint does not conform to Pa. R.C.P. ]Ol9(a) and (b). WHEREFORE, Defendant 200 North Third requests that this Court dismiss Count III of the amended complaint for failure to conform to law or a rule of Court. -4- Count IV - Fraud and Misrepresentation Preliminary Objection Pursuant to Pa. R.C.P. 1028(a)(4) 20. Plaintiffs assert fraud and misrepresentation claims against C. Davis and K. Davis. 21. Plaintiffs' amended complaint does not allege any misrepresentation by C. Davis or K. Davis upon which plaintiffs reasonably relied to their detriment. WHEREFORE, Defendants Davis requests that this Court sustain their demurrer and dismiss Count IV of the amended complaint as legally insufficient. Preliminary Objection Pursuant to Pa. R.C.P. 1028(a)(2) 22. The Pennsylvania Rules of Civil Procedure require fact pleading and that averments of fraud or mistake be pleaded with particularity. 23. Plaintiffs' amended complaint does not plead their fraud and misrepresentation claim with sufficient particularity. 24. Because plaintiffs have failed to plead their fraud and misrepresentation claim with sufficient particulazity, their amended complaint does not conform to Pa. R.C.P. ]019(a) and (b). WHEREFORE, Defendants Davis request that this Court dismiss Count IV of the amended complaint for failure to conform to law or a rule of Court. -5- Count V -Breach of Fiduciary Duty and Fraud Plaintiffs D. Thomas and T Thomas v Defendants C Davis and K Davis Preliminary Objection Pursuant to Pa. R.C.P. 1028(a)(4) 25. Plaintiffs assert breach of fiduciary and fraud claims against C. Davis and K. Davis. 26. Plaintiffs' amended complaint does not allege any fraud by C. Davis or K. Davis upon which plaintiffs reasonably relied to their detriment. 27. C. Davis and K. Davis cannot have breached any fiduciary duty to plaintiffs after plaintiffs were no longer shareholders in Capitol Steps. WHEREFORE, Defendants Davis request that this Court sustain their demurrer and dismiss Count V of the amended complaint as legally insufficient. Preliminary Objection Pursuant to Pa. R.C.P. 1028(a)(2) 28. The Pennsylvania Rules of Civil Procedure require fact pleading and that averments of breach of fiduciary duty and fraud be pleaded with pazticulazity. 29. Plaintiffs' amended complaint does not plead their breach of fiduciary duty and fraud claim with sufficient particulazity. 30. Because plaintiffs have failed to plead their breach of fduciazy duty and fraud claim with sufficient particularity, their amended complaint does not conform to Pa. R.C.P. 1019(a) and (b). WHEREFORE, Defendants Davis request that this Court dismiss Count V of the amended complaint for failure to conform to law or a rule of Court. -6- Respectfully submitted, ~~ THOMAS B. SCHMIDT, III (19196) Pepper Hamilton LLP 200 One Keystone Plaza North Front & Market Streets Post Office Box 1181 Harrisburg, Pennsylvania 17108-1181 (717)255-1155 (717)238-0575 (Fax) Attorneys for Defendants Charles R. Davis, Karen S. Davis Date: March 4, 2004 and 200 North Third Street, Inc. -7- CERTIFICATE OF SERVICE I hereby certify that on March 4, 2004, I served a copy of the foregoing Defendants' Preliminazy Objections to Amended Complaint on counsel of record by United States mail, first class postage prepaid, addressed as follows: John Havas, Esquire 6121 Stephens' Crossing Mechanicsburg, PA 17050 Attorney for Plaintiffs ~- Thomas B. Schmidt, III (19196) ~,_ ^, b ~ ~~ S :xJ m ~ ~ v r t ' ~~ ~ . C ~ x~ ; f7 ^ ~_: ~~n r ~i hl D. MARK THOMAS AND JEANNE M. THOMAS, Plaintiffs v. CHARLES R. DAVIS AND KAREN S. DAVIS AND 200 NORTH THIRD, INC., Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION -LAW NO. 04-166 CIVIL TERM PLAINTIFFS' RESPONSE TO DEFENDANTS' PRELIMINARY OBJECTIONS TO THE AMENDED COMPLAINT Count I -Breach of Contract Plaintiffs D. Mark Thomas and Jeanne M. Thomas v. Charles R. Davis and Karen S. Davis Preliminary Objection Pursuant to Pa.R.C.P. 1028(a)(4) 1. Pa.R.C.P. 1028(a)(4) speaks for itself. It is denied that Count I of Plaintiffs' Amended Complaint is legally insufficient under that rule. 2. It is denied that Plaintiff Jeanne M. Thomas lacks standing to assert a claim for breach of contract. The Settlement Agreement of September 12, 2001, was between all of the individual parties named in the Complaint, including Jeanne M. Thomas. Paragraph 3 of that Agreement "expressly conditioned' the entire agreement and the effective conveyance of the Thomases' 50% of the shares of Capitol Steps Associates, I nc. ("Capitol Steps") to the Davis Defendants upon the "removing (of) Thomas as a guarantor of the Corporation's obligations." The Davis Defendants breached that condition precedent to both D. Mark Thomas and Jeanne M. Thomas. Furthermore, the result of that breach has an absolutely direct affect upon Plaintiff Jeanne M. Thomas in that she has an interest in the property that is being liquidated to satisfy the claim and confession of judgment that was entered in the amount of $193,434.07. Finally, she also has an interest in monies being expended for legal fees in regard to the action initiated on the guarantee here at issue. These damages to her are the direct and proximate result of the Davis Defendants' breach of their obligations under the September 12, 2001 Agreement. As a result, she clearly has standing under Count I of the Amended Complaint. 3. The Defendants' contractual breach was with both D. Mark Thomas and Jeanne M. Thomas and she has standing to assert the claim, as set forth in paragraph 2 above. WHEREFORE, Plaintiffs request that this Honorable Court deny Defendants' Preliminary Objections regarding Jeanne M. Thomas' legal standing in respect to Count I of the Amended Complaint. Preliminary Objection Pursuant to Pa.R.C.P. 1028(a)(4) 4. Denied as stated. Plaintiffs' breach of contract claim seeks to recover either the $193,434.07, plus interest, plus cost and attorneys fees required to defend the Complaint at No. 2003 C.V. 5419 CV filed in the Court of Common Pleas of Dauphin County alleging that amount as damages, "or any settlement amount agreed to, plus Plaintiff D. Thomas'interestandattnrneys fees." The plaintiffs in the action at No. 2003 C.V. 5419 CV filed in the Court of Common Pleas of Dauphin County, have graciously entered into legal settlement discussions, the recent culmination of which has resulted in a settlement for $175,000 that requires the liquidation of $175,000 in assets by the Thomases to pay that amount to the said plaintiffs on or before April 1, 2004. Additionally, attorneys fees in respect to the defense of that matter continue to accrue. -2- 5. Denied as stated. The Thomases have acknowledged that D. Mark Thomas made the subject guarantee and are liable for it to the plaintiffs in the said Dauphin County action. The amount of the agreed upon payment is now the sum certain of $175,000, plus legal fees expended in connection therewith. 6. Denied. Plaintiffs are accruing ongoing legal fees, and are making arrangements that are deleterious to both of their financial well being to satisfy the Note which is the subject of the Davis Defendants' breach of the agreement of September 12, 2001. 7. Denied. Plaintiffs have and continue to sustain cognizable damages as a consequence of the Davis Defendants breach of contract, as stated above. WHEREFORE, Plaintiffs respectfully request that this Honorable Court deny the Davis Defendants' Preliminary Objection as to Count I pursuant to Pa.R.C.P. 1028(a)(4). Preliminary Objection Pursuant to Pa.R.C.P. 1028(a)(5) 8. Denied as stated. The Capitol Steps Associates, Inc. ("Capitol Steps")was obliged to pay Judgment Note 3, but unbeknown to Plaintiffs, defaulted on about 28 straight payments. The Davis Defendants did not so advise Plaintiffs, and rather than make such payments, unlawfully converted funds from Capitol Steps to theirown personal use. Also unbeknown to Plaintiffs, a confession of judgment was entered against Capitol Steps in the amount of $193,434.07 on the Note on September 29, 2003. The Davis Defendants never notified Plaintiffs of this fact. Capitol Steps' sole and only asset had been The State Street Building in Harrisburg, Pennsylvania. That building was foreclosed upon by the lender, and sold at a sheriff's sale. The Davis Defendants and their prior counsel, William Miller, Esquire, have advised Plaintiffs and their counsel that Capitol Steps is wholly insolvent. A complaint filed by the note holder in Dauphin County at Civil -3- Action No. 2003 C.V. 5419 C.V. does not name Capitol Steps as a defendant, but rather names D. Mark Thomas and other individuals as defendants. Among those "others," Plaintiff D. Mark Thomas has acknowledged that he signed a document that renders him wholly liable and required him to hold the "others' named in the said action harmless. Under these facts, Capitol Steps' prior obligation under the Note is either moot or meaningless, and the Davis Defendants well knowthat because they mismanaged Capitol Steps, fraudulently encumbered Capitol Steps' primary asset, The State Street Building, by representing to the lender that they were the sole owners of Capitol Steps when they were not, unlawfully used Capitol Steps' funds (including funds fraudulently borrowed in a refinancing) fortheir own improper personal use, and fraudulently converted those funds to their own personal use so as to render Capitol Steps insolvent. 9. It is denied that Capitol Steps is a necessary party to this litigation. Furthermore, Plaintiffs respectfully submit that Defendants have made this preliminary objection in bad faith and simply for delay purposes. The Defendants well know the status of Capitol Steps, and know that it is insolvent and incapable of paying any monies to anyone. Furthermore, and perhaps more troubling, Capitol Steps' counsel in many matters - financings, refinancings, negotiations over disputes with lenders, attempts to sell The State Street Building prior to foreclosure and sheriff's sale - is herein requesting that Capitol Steps be sued, an action that would be deleterious to counsel's own client, Capitol Steps. If the Davis Defendants truly want Capitol Steps to be a party to this action, they have the ability to join Capitol Steps themselves. Plaintiffs see no reason to delay this matter and to further confuse it by taking such an action that both the Davis Defendants and their prior counsel have themselves conceded would be fruitless, and which their present counsel -Capitol Steps' attorney -well knows would be fruitless. -4- 10. It is admitted that Plaintiffs have not joined Capitol Steps as a party, and unless directed by the Court to do so, they have no intention to do so. Such joinder would only serve to unnecessarily delaythis action and unnecessarily expend more of everyone's time, including thatofthisHonorableCourt. This preliminary objection has been made with the intention of bad faith delay. WHEREFORE, Plaintiffs respectfully request that this Honorable Court deny the Davis Defendant's preliminary objection pursuant to Pa.R.C.P. 1028(a)(5). Count II -Breach of Contract Plaintiffs D. Mark Thomas and Jeanne M. Thomas v. Defendants Charles R. Davis and Karen S. Davis Preliminary Objection Pursuant to Pa.R.C.P. 1028(a)(4) 11. Pa.R.C.P. 1028(a)(4) speaks for itself. It is denied that Count II of Plaintiffs' Amended Complaint is in any way legally insufficient. 12. Denied as stated. Count II is premised on both of the Davis Defendants' breach of paragraph 3 of the Agreement of September 12, 2001, which required both of them to have Plaintiff D. Mark Thomas removed "as a guarantor of the Corporation's obligations." Indeed, this clause was set forth in the said Agreement as a condition precedent to the effective "transfer of interest and payments of any money to this agreement." Nonetheless, both of the Davis Defendants received the transferred stock certificates in Capitol Steps from the Plaintiffs, and neither of the Davis Defendants ever notifiedPlaintiffsthatthisconditionprecedentobligationhadnotbeensatisfied. Defendant K. Davis had as much of an obligation to so notify Plaintiffs as did Defendant C. Davis. As a result, Defendant K. Davis's actions and inactions, as well as those of Defendant C. Davis, render her legally responsible for all of the damages suffered by Plaintiffs flowing -5- from this breach. In this regard, it is further noted that had Defendant K. Davis not breached her said responsibilities under the said Agreement of September 12, 2001, and had she notified Plaintiffs that Plaintiff D. Mark Thomas had not been removed as a guarantor of Capitol Steps' obligations, then in that event Plaintiffs would not have entrusted their shares constituting a 50% interest in The State Street Building, and would have been wholly capable of selling those shares to another third party well in excess of the amount set forth in the subject Promissory Note. Said contractual breach of Defendant K. Davis was a direct and proximate result of the damages suffered by Plaintiffs. 13. Denied. Defendant K. Davis had a contractual duty underthe agreement of September 12, 2001, to have Plaintiff D. Mark Thomas removed "as a guarantor of (Capitol Steps') obligations." She failed to do this. She failed to notify Plaintiffs that she had failed to do this and that, therefore, this "express condition" for the effective transfer of the Thomases shares had not been met. She went forward and received monies from refinancings based upon fraudulent representations that the Davis Defendants owned 100% of the shares of Capitol Steps, when they did not, and her inactions and actions constitute a breach of contract which resulted in the damages as Plaintiffs have alleged. WHEREFORE, Plaintiffs respectfully requestthat the Davis Defendants' preliminary objection as to Count II be denied. Count III -Fraud and Misrepresentation Plaintiffs D. Mark Thomas and Jeanne M. Thomas v. Defendant 200 North Third, Inc. Preliminary Objection Pursuant to Pa.R.C.P. 1028(a)(4) 14. It is admitted that Plaintiffs have asserted fraud and misrepresentation claims against 200 North Third. -6- 15. Denied. Count III of Plaintiffs' Amended Complaint at paragraph 36 through 42, and in paragraphs 12, 13, 15, 19, 24, 25, and 27, allege that the Davis Defendants, acting as officers of both 200 North Third, Inc., and Capitol Steps, fraudulently represented and induced Plaintiffs to enter into the September 12, 2001 Agreement by misrepresenting that the lender through which they were seeking refinancing was requiring a joint financing and cross collateralization onboth The State Street Building and The Fulton Bank Building, the principal asset of Defendant 200 North Third, Inc., and that that lender was requiring that the Davis Defendants through their stock holdings in 200 North Third, Inc., and Capitol Steps be the sole owner of both corporations in order to receive such financing. It is clearly averred in the Complaint that the Davis Defendants were acting in their capacities as officers of Defendant 200 North Third, Inc., as well as for themselves individually and for Capitol Steps, in making these fraudulent misrepresentations. Furthermore, it is clearly stated in the Amended Complaint that as the officers and owners of 200 North Third, Inc., thatthe Davis Defendants knew that these fraudulent misrepresentations were untrue, and they intended to make such fraudulent misrepresentations so that the Plaintiffs would act to their detriment, which they did. Furthermore, it is alleged in the Complaint that unbeknown to Plaintiffs, the Davis Defendants had negotiated on behalf of both 200 North Third, Inc., and Capitol Steps a provision in their refinancing which amazingly did not require any personal guarantees on their part to effectuate the refinancings. It is also alleged in Plaintiffs Amended Complaint that the Davis Defendants, acting fraudulently, had planned to allude any personal liability under said loans, to surreptitiously defraud the Plaintiffs by not satisfying the Note upon which Plaintiff D. Mark Thomas was the primary guarantor and to purposefully not notify them of this breach, and to misuse funds acquired from the financings of both The State Street Building and The Fulton Bank Building as -7- officers and owners thereof, for their own unlawful purposes, to fraudulently allude and avoid creditors, including Plaintiffs herein. At this stage of the proceeding, Plaintiffs' allegations are to be assumed as true. Plaintiffs have alleged a sufficient cause of action of fraud and misrepresentation as to 200 North Third, Inc., which must be bound by the fraudulent misrepresentations of its officers and managers. 16. Denied. Plaintiffs' Amended Complaint alleges that Plaintiffs detrimentally relied upon the misrepresentations made by 200 North Third, Inc., through the Davis Defendants, its officers, managers and sole owners, as stated above. See paragraphs 40 and 42 of the Amended Complaint. WHEREFORE, Plaintiffs respectfully request that this Honorable Court deny Defendant 200 North Third's preliminary objection based upon Pa.R.C.P. 1028(a)(4). Preliminary Objection Pursuant to Pa.R.C.P. 1028(a)(2) 17. The Pennsylvania Rules of Civil Procedure speak for themselves. The suggestion that Plaintiffs have failed to plead their claim against Defendant 200 North Third, Inc., with sufficient specificity and particularity is denied. 18. Again, it is denied that Plaintiffs' Amended Complaint does not plead their fraud and misrepresentation claim against200 North Third, Inc., with sufficient particularity. 19. Denied. Plaintiffs' Amended Complaint conforms to Pa.R.C.P. 1019(a) and (b), and sufficiently states a cause of action with sufficient particularity. WHEREFORE, Plaintiffs respectfully request that this Honorable Court deny Defendant 200 North Third, Inc.'s preliminary objection as to Count III based upon Pa. R.C. P. 1028(a)(2). -8- Count IV -Fraud and Misrepresentation Plaintiffs D. Mark Thomas and Jeanne M. Thomas v. Defendants Charles R. Davis and Karen S. Davis Preliminary Objection Pursuant to Pa.R.C.P. 1028(a)(4) 20. It is admitted that Plaintiffs have asserted fraud and misrepresentation claims against the Davis Defendants. 21. Denied. The Amended Complaint clearly asserts misrepresentations and fraud upon the part of the Davis Defendants, upon which misrepresentations and fraud Plaintiffs reasonably relied to their detriment. The Davis Defendants represented both verbally and in the written Agreement dated September 12, 2001, that Plaintiff D. Mark Thomas would be removed as a guarantor from all of Capitol Steps' obligations. In transferring over their shares of stock, Plaintiffs relied upon that fraud and misrepresentation. Plaintiffs have alleged that the Davis Defendants, in fact, had no intention of so removing Plaintiff D. Mark Thomas as a said guarantor and had no intention of satisfying the Note which he had guaranteed, as they represented they would do. In fact, after receiving the refinancing funds in the amount of approximately $700,000 in excess of the prior mortgage on The State Street Building, the Davis Defendants not only failed to have Mr. Thomas removed as a guarantor or to satisfy the said Note, but failed to ever notify him that he had not been so removed, thereby effectively nullifying the Thomas stock transfer to the Davis Defendants. It is alleged in the Amended Complaint that the Davis Defendants purposefully and fraudulently did this. It is alleged in the Amended Complaint that theyfraudulentlyentered intothesaid refinancing by representing that they were the sole shareholders of Capitol Steps, when they were not because of their fraudulent refusal to remove Mr. Thomas as a guarantor of Capitol Steps' obligations, and -9- then unlawfully utilized some of the refinancing funds for their own purposes, and negotiated refinancing terms that absolved them from any personal liability on any loans, all the while keeping Plaintiff D. Mark Thomas personally liable on the Note which the Davis Defendants had alleged they would satisfy, but had no intention of satisfying. As noted above, it is also alleged that the Davis Defendants misused funds from the said refinancing fortheirown personal and unlawful purposes, and to the detriment of Plaintiffs' interests. It is specifically alleged that Plaintiffs relied upon the Davis Defendants' misrepresentations totheir detriment, causing them the damages stated in their Amended Complaint. See 45 and 47 of the Amended Complaint. WHEREFORE, Plaintiffs request that this Honorable Court deny the Davis Defendants' preliminary objection pursuant to Pa.R.C.P. 1028(a)(4) as to Court IV of the Amended Complaint. Preliminary Objection Pursuant to Pa.R.C.P. 1028(a)(2) 22. The Pennsylvania Rules of Civil Procedure speak for themselves. 23. Denied. Plaintiffs' Amended Complaint does plead fraud and misrepresentation claims with sufficient particularity, as stated above in paragraph 21. 24. Denied. Plaintiffs' Amended Complaint does plead fraud and misrepresentation claims with sufficient particularity. For that reason, their Amended Complaint does conform to Pa.R.C.P. 1019(a) and (b). WHEREFORE, Plaintiffs respectfully request that this Honorable Court deny the Davis Defendants' preliminary objection pursuant to Pa.R.C.P. 1028(a)(2) as to Count IV. -10- Count V -Breach of Fiduciary Duty and Fraud Plaintiffs D. Mark Thomas and Jeanne M. Thomas v. Defendants Charles R. Davis and Karen S. Davis Preliminary Objection Pursuant to Pa.R.C.P. 1028(a)(4) 25. It is admitted that Plaintiffs have asserted breach of fiduciary duty and fraud claims against the Davis Defendants. 26. Denied. For the reasons already stated above, Plaintiffs have properly pleaded fraud against the Davis Defendants and have properly pleaded their reasonable reliance to their detriment in their Amended Complaint. 27. Denied. The Davis Defendants did commit fraud and did breach their fiduciary duties to Plaintiffs because pursuant to the terms of paragraph 3 of the September 12, 2001 Agreement, a condition precedent to "the transfer of interest," - meaning the effective transfer of shares representing a 50% interest in Capitol Steps Associates, Inc. -was the "removing (of) (D. Mark) Thomas as a guarantor of the Corporation's obligations." As a result, not until D. Mark Thomas was effectively removed as a said guarantor from Judgment Note 3, did the "transfer of interest" -the transfer of the Thomases 50% interest of stock in Capitol Steps -become effective. Asa result, all fraudulent actions and inactions and all self-serving and fraudulent actions committed by the Davises against not only the Thomases, but also Capitol Steps, constituted breaches of fiduciary duties to the Thomases as shareholders of Capitol Steps in that the transfer of the Thomases shares had never been effectuated because that transferwas, pursuant to the terms ofthe September 12, 2001 agreement, "expressly conditioned on"the Davis Defendants' "removing Thomas as a guarantor of the Corporation's obligations." See paragraph 3 of Exhibit B to the Amended Complaint. -11- WHEREFORE, Plaintiffs respectfully request that this Honorable Court deny the preliminary objection filed by the Davis Defendants pursuant to Pa.R.C.P. 1028(a)(4) as to Court V. Preliminary Objection Pursuant to Pa.R.C.P. 1028(a)(2) 28. The Pennsylvania Rules of Civil Procedure speak for themselves. The suggestion that Plaintiffs have not pleaded with sufficient particularity facts addressing breaches of fiduciary duty and fraud are denied. 29. Denied. Plaintiffs' Amended Complaint does plead claims of breach of fiduciary duties and fraud with sufficient particularity. Pursuant to the terms of the Agreement of September 12, 2001, Plaintiffs continued to be shareholders of The Capitol Steps Associates, Inc., through the refinancing and until the present, since the transfer of the Plaintiffs' interest was specifically "expressly conditioned" on the Davis Defendants' "removing Thomas as a guarantor of the Corporation's obligations." In refusing and failing to remove Thomas as a guarantor, in failing and refusing to so notify him, in going forward and acting as if they had done so without ever notifying Plaintiffs, in entering into a refinancing of The State Street Building that included a prepayment clause that was so detrimental to Plaintiffs as shareholders of Capitol Steps and to Capitol Steps, in utilizing funds from the refinancing for their own unlawful purposes, the Davis Defendants clearly breached their fiduciary duties to Plaintiffs and committed fraud. 30. Denied. The Plaintiffs have pleaded their breach of fiduciary duty claim and their fraud claim with sufficient particularity, and therefore their Amended Complaint does conform to Pa.R.C.P. 1019(a) and (b). -12- WHEREFORE, Plaintiffs respectfully request that this Honorable Court deny the Davis Defendants' preliminary objection filed pursuant to Pa. R.C.P. 1028(a)(2) as to Count V. 6121 Stephen's Crossing Mechanicsburg, PA 17050 Tel. No. (717) 979-4840 Fax No. (717) 255-7230 SutlWleaEirysWlalnOfh Response ro Opjegions a AmenOep CpmplalM wyG -13- CERTIFICATE OF SERVICE I hereby certify that I have served the Defendants counsel in this case with a true and correct copy of the attached Plaintiffs' Response to Defendants' Preliminary Objections to the Amended Complaint by placing the same in the United States Mail at Harrisburg, Pennsylvania, first-class postage prepaid, on the 12~~day of March, 2004, addressed as follows: Thomas B. Schmidt, III, Esquire (19196) Pepper Hamilton, LLP 200 One Keystone Plaza North Front and Market Streets P.O. Box 1181 Harrisburg, PA 17108-1181 John Havas, Esquire By ~ ~' VV~i'IX-- Vikki Moore, Secretary ~-~ N r) _ ~ ~ ~- o ' . `Pl t u •il W _~i 'r F~-~~~' ..=J _ -r~ m - v~ ~~~ -a ~_.. -r 'i- _; _ _, v - n c cr. - John Havas, Esquire PA Attorney I.D. No. 15312 6121 Stephen's Crossing Mechanicsburg, PA 17050 (717) 979-0840 Attomey for Plaintiffs D. Mark Thomas and Jeanne M. Thomas D. MARK THOMAS AND JEANNE M. THOMAS, Plaintiffs v. IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA NO. 04-166 CIVIL TERM CHARLES R. DAVIS AND KAREN S. DAVIS AND 200 NORTH THIRD, INC., Defendants :CIVIL ACTION -LAW PLAINTIFFS' PETITION FOR LEAVE TO FILE A SECOND AMENDED COMPLAINT PURSUANT TO PA. R.C.P. NO. 1033 Plaintiffs, D. Mark Thomas ("Plaintiff D. Thomas') .and Jeanne M. Thomas ("Plaintiff J. Thomas") (herein jointly referred to as "Plaintiffs")., by their undersigned counsel, respectfully petition this Honorable Court for leave to file a Second Amended Complaint in the above-captioned matter pursuant to Pa. R.C.P. No. 1033, and in support thereof, state the following: 1. On or about February 13, 2004, Plaintiffs filE~d an Amended Complaint against Defendants Charles R. Davis ("Defendant C. Davis') and Karen S. Davis ("Defendant K. Davis") (hereinafter jointly referred to as "Defendants Davis'), and 200 North Third, Inc. ("Defendant 200 North Third"). 2. On or about March 4, 2004, Defendants filed Preliminary Objections to Plaintiffs' Amended Complaint, and on or about March '13, 2004, Plaintiffs filed Plaintiffs' Response to Defendants' Preliminary Objections to the Amended Complaint ("Response"). In lieu of listing the matter for argument or filing a Second Amended Complaint at that time, Plaintiffs elected to pursue discovery and also seek the resolution of an action filed in the Common Pleas Court of Dauphin County, at Docket No. 203-CV-5419-CV, by Shell Realty, Inc., f/k/a Para One Corporation ("Shell Realty"), arising as a result of Defendants Davis' failure to secure the removal of Plaintiff D. Thomas' guarantee of Judgment Note 3 as discussed below (hereinafter "Dauphin County action"). 3. At the time of the filing of Plaintiffs' Amended Complaint, the Dauphin County action was pending. The Dauphin County action addressed Shell Realty's complaint alleging liability against Plaintiff D. Thomas based upon a confessed judgment entered on or about September 29, 2003, on Judgment Note 3 in the amount of $193,434.07. Plaintiff D. Thomas acknowledged liability under Judgment Note 3 pursuant to a guarantee stated therein, which liability arose as a result of the failure of Defendants Davis, acting in their capacity as officers and shareholders of The Capitol Steps Associates, Inc. ("Capitol Steps"), to satisfy Judgment Note 3 upon a refinancing or to secure the removal of the aforesaid guarantee as agreed in a September 12, 2001 Settlement Agreement with Plaintiffs as consideration for the conditional purchase of their stock in Capitol Steps. 4. At the time of the filing of Plaintiffs' Amended Complaint, Plaintiff D. Thomas did not know the liquidated amount of his liability as a guarantor under Judgment Note 3, which liability arose as the result of the breaches and fraud alleged against Defendants Davis. As a consequence, Defendants in their Preliminary Objections contended that Plaintiff D. Thomas had not sustained any cognizable damage with respect to Judgment Note 3 and moved to dismiss Count 1 of the Amended Complaint. 5. Pursuant to extensive negotiations with principals of Shell Realty, Plaintiff D. Thomas subsequently negotiated a settlement in the liquiidated amount of $175,000.00 to satisfy Judgment Note 3 which he guaranteed and for which he became liable as the result -2- of the contractual default and fraud alleged on the part of Defendants Davis. Consequently, Plaintiffs in this Petition seek leave of the Court to file a Second Amended Complaint, in part, to specifically define the amount of damages arising in connection with Plaintiff D. Thomas bearing liability on the guarantee that Defendants Davis wE;re contractually obligated to have removed or terminated under the September 12, 2001 Settlement Agreement as a condition to their acquisition of Plaintiffs' ownership in Capitol Steps. This amendment would meet Defendants' preliminary objection to Plaintiff D. Thoma:>' Count I claim of the Amended Complaint. 6. The Amended Complaint set forth a cause of action in connection with Defendants Davis' breach of the September 12, 2001 Settlement Agreement addressing Plaintiffs' conditional conveyance of stock in Capitol Steps to Defendants Davis. Such conveyance was contingent upon Plaintiffs' guarantees on all Capitol Steps' obligations, including Plaintiff D. Thomas' guarantee of Judgment Note: 3, first being removed as set forth in paragraph 3 of the September 12, 2001 Settlement Agreement, which specifically provides, as follows: 3. PAYMENT OBLIGATIONS. Thetransferofinterestandpayment of any monies pursuant to this Agreement are expressly conditioned on the Corporation and/or [Defendants] Davis obtaining i:he necessary financing to refinance the Corporation's principal asset, the real property and building erected thereon known and numbered as 500 North Third Street, Harrisburg, PA, and removing Thomas [Plaintiffs] as a guarantor of the Corooration's obligations. (Emphasis added.) 7. Following the filing of the Amended Complaint, Plaintiffs were provided by Defendants' counsel with the opportunity to pursue discovery through the examination of certain documents including the corporate records of Capitol Steps as produced by Defendants Davis. As a result of such discovery and document review, Plaintiffs have learned that Defendants Davis fraudulently proceeded with the refinancing of Capitol Steps -3- without securing the removal of or termination of Plaintiff D. Thomas' guarantee on the aforesaid Judgment Note 3 and, thus, without effectuating the acquisition of Plaintiffs' common stock in Capitol Steps and without lawful corporrate authority to proceed with the said refinancing. Such discovery also revealed that Defendants Davis refinanced Capitol Steps and its primary asset, The State Street Building, through the execution of a $2,200,000 loan from LaSalle National Bank on terms adverse to their fiduciary duty to Capitol Steps and Plaintiffs as corporate shareholders. Fwther, such discovery revealed that The State Street Building had an appraised value of $2,800,000 at the time ofthe fraudulent refinancing, which ultimately resulted in Capitol Steps losing the building through a sheriff's sale and Plaintiffs losing the net value of their ownership share of the building, which they owned through their 50% ownership of Capitol Steps and which was not transferred to Defendants Davis since Plaintiff D. Thomas' guarantee of Judgment Note 3 had not been removed or terminated. 8. By reason of the foregoing, Plaintiffs seek IE;ave of the Court to file a Second Amended Complaint to amend their claim for damages to include damages as measured at the net value of their ownership interest in Capitol Steps inclusive of its primary asset, The State Street Building, which was lost through a sheriffs sale arising as a direct result of Defendants Davis' breach of the September 12, 2001 SettlementAgreement and fraudulent refinancing. Through the aforesaid discovery, Plaintiffs acre now able to calculate said net value. 9. In Count III of the Amended Complaint, Plaintiffs sought damages against Defendant 200 North Third on the basis of fraud and misrepresentation on the part of its owners and officers, Defendants Davis. At the time of the filing of the Amended Complaint, transactions and potential monetary recoveryfor Plaintiffs~aere pending involving Defendant -4- 200 North Third through which the Defendants Davis owned the Fulton Bank Building, located in Harrisburg, Dauphin County, Pennsylvania. Defendants, in their Preliminary Objections, moved to dismiss Count III claiming Plaintiffs did not allege any fraud, misrepresentation, or any contractual or legal relationship to justify a claim against Defendant 200 North Third. 10. Following the filing of the Amended Complaint, Plaintiffs, through the aforesaid discovery, document review, and informal investigation, have learned that while they still believe their causes of action involving the sale of the Fulton Bank Building and Defendant 200 North Third are meritorious, there are no monies to :>atisfy any judgment against said corporate defendant. As a result, Plaintiffs have determined that proceeding against Defendant 200 North Third would simply serve to confuse this matter and make it more complicated, without any benefit to Plaintiffs since Defendant 200 North Third holds no assets which could help the Plaintiffs satisfy any judgment. 11. Accordingly, Plaintiffs seek leave of the C:ourt to file a Second Amended Complaint to eliminate their cause of action against Defendant 200 North Third, which would meet Defendants' preliminary objections to Count III of the Amended Complaint. 12. Plaintiffs also seek leave to file a Second Arnended Complaint to modify their Amended Complaint based upon facts learned through the aforesaid discovery and document review and to address the other preliminary otry'ections raised by Defendants to the Amended Complaint, as follows: A. Defendants, in their Preliminary Objections to the Amended Complaint, moved to dismiss Plaintiff J. Thomas' Count I claim on grounds she was not a "guarantor" on any obligation that was alleged to be in default. In order to meet said objection, Plaintiffs -5- seek leave to file a Second Amended Complaint to remove Plaintiff J. Thomas from the Count I claim. B. Defendants, in their Preliminary Objections to the Amended Complaint, moved to dismiss the Count II claim against Defendant N~. Davis on grounds that she was not a maker or guarantor of the $125,000 Note dated September 12, 2001, executed by Defendant C. Davis. In order to meet said objection, Plaiintiffs seek leave to file a Second Amended Complaint to remove Defendant K. Davis from the Count II claim. C. Defendants, in their Preliminary Objections to Counts IV and V of the Amended Complaint, moved to dismiss Plaintiffs' fraud andl misrepresentation claims against Defendants Davis contending such claims were not pled with sufficient particularity in compliance with Pa. R.C.P. 1019(a) and (b). Plaintiffs disputed this contention in their Response and respectfully argued that their Amended Corplaint did, in fact, plead the fraud and misrepresentation claims against Defendants with sufficient particularity in compliance with Pa.R.C.P. 1019(a) and (b). However, through the aforesaid discovery and document review, Plaintiffs have obtained additional facts and seek leave of the Court to file a Second Amended Complaint to address additional averments of fr<3ud and misrepresentation onthe part of Defendants Davis. With respect to their fraud and misrepresentation claims, these additional facts include thefollowing: (I) Defendants refinanced Capitol Steps and The State Street Building through a $2,200,000 loan from LaSalle Naitional Bank, (ii) the paper closing on the LaSalle National Bank loan was carried-out on September 12, 2001, either prior to or at the same time Defendants were executing the 8~eptember 12, 2001 Settlement Agreement with Plaintiffs agreeing to secure the removal of Plaintiffs' guarantees on all Capitol Steps obligations including Judgment Note 3 befoore Plaintiffs' capital shares and ownership in Capitol Steps were transferred to Defendants Davis, (iii) Defendants in the loan -6- transaction with LaSalle National Bank represented them;selves as 100% owners of Capitol Steps without having secured the removal of Plaintiff D. Thomas' guarantee of Judgment Note 3, did not make LaSalle National Bank aware of the September 12, 2001 Settlement Agreement or Judgment Note 3 or their obligation to have Plaintiffs removed as guarantors on all Capitol Steps obligations including Judgment Note: 3 before acquiring ownership of Plaintiffs' capital shares in Capitol Steps and having 100°a ownership of Capitol Steps, (iv) Defendants proceeded with the LaSalle National Banl< refinancing through false and fraudulent representations regarding ownership, guarantees, loan obligations, officerstatus, and cash flow in wholly wanton disregard of Plaintiffs' rights and ownership in Capitol Steps, and (v) Defendants executed the LaSalle National Bank loan based upon prepayment obligations that were in outright breach of their fiduciary duties to both Capitol Steps and Plaintiffs as shareholders in Capitol Steps. 13. A copy of Plaintiffs' proposed Second Amended Complaint is attached hereto as Exhibit I. This Second Amended Complaint also makes minor modifications in the allegations set forth in the Amended Complaint based upon facts learned through discovery and document review. 14. The final preliminary objection raised by Defendants and not addressed above is Defendants preliminary objection to Count I of the Amended Complaint contending Plaintiffs failed to join Capitol Steps as a necessary panty. Through the discovery and document review, Plaintiffs believe and therefore allege th<~t Defendants on behalf of Capitol Steps filed with the Pennsylvania Department of Revenue an "Out of ExistencelWithdrawal Affidavit" representing that Capitol Steps ceased to transact business and sold, assigned or distributed all its assets as of December 31, 2003. A copy of this Affidavit, which was obtained through discovery, is attached as Exhibit II hen~to. Being out of existence and -7- without any assets, Plaintiffs see no purpose in pursing a claim against Capitol Steps. Further, as alleged in paragraphs 24-26 of the attached proposed Second Amended Complaint, Plaintiffs believe and therefore contend that Defendants also defrauded and breached their fiduciary duty to Capitol Steps in executing loan documents on behalf of the corporation for their personal benefit with prepayment obligations detrimental to Capitol Steps as a corporate entity which precluded Capitol Steps from selling The State Street Building and which resulted in the loss of its primary asset. Consequently, there is no basis for Capitol Steps being included as a defendant in this litigation. 15. Atrial court should liberally allow amendments so as to permit cases to be decided on their merits. Capobianchi v. BIC Coro., 446 Pa.Super. 130, 666 A.2d 344 (1995); Noll by Noll v. Harrisburg Area YMCA, 537 Pa. 274, 643 A,.2d 81 (1994). The amendments sought in this Petition address, for the most part, events that occurred subsequent to the filing of the Amended Complaint, facts discovered by Plaintiffs following the opportunity to pursue discovery after the filing of the Amended Complaint and an attempt to eliminate issues that would ultimately impede the resolution of tfie merits of Plaintiffs' claims for damages. 16. Defendants will not be unduly prejudiced or;surprised by the amendments set forth in the Second Amended Complaint. The approval ofthis Petition is necessaryto permit Plaintiffs to amend their earlier allegations and claims bused upon facts learned through subsequent discovery and document review and to resolves the preliminary objections raised by Defendants. 17. Manifest injustice will result if the aforesaid amendments are not allowed. -8- WHEREFORE, Plaintiffs respectfully requestthatthiisHonorable Court enteran order granting them leave to file a Second Amended Complaint in the form attached as Exhibit I hereto. P A rney I. No. 15312 6 Stephen's sing Mechanicsburg, PA 17050 Tel. No. (7'17) 979-4840 Attorney for Plaintiffs FiOLIENTSVa150~OgPITOLLLax SPMPIea0lnps~2005WeNbn3 b Fib 2nE AmenEetl ComplalM.xyU -9- John Havas, Esquire PA Attorney I.D. No. 15312 6121 Stephen's Crossing Mechanicsburg, PA 17050 (717) 979-4640 Attorney for Plaintiffs D. Mark Thomas and Jeanne M. Thomas D. MARK THOMAS AND JEANNE M. THOMAS, Plaintiffs v. CHARLES R. DAVIS AND KAREN S. DAVIS, Defendants IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA NO. 04-16fi CIVIL TERM CIVIL ACTIION -LAW SECOND AMENDED COMPLAINT AND NOW, comes the above-named Plaintiffs, by their attorney, John Havas, Esquire, and make the following averments: 1. The Plaintiffs are D. Mark Thomas ("Plaint:iff D. Thomas") and Jeanne M. Thomas, his wife ("Plaintiff J. Thomas"), adult individuals ~vho reside at 100 Walnut Street, Lemoyne, Cumberland County, Pennsylvania 17043 (collectively "Plaintiffs"). 2. The Defendants are Charles R. Davis ("Det'endant C. Davis") and Karen S. Davis, his wife ("Defendant K. Davis"), adult individuals who reside at 19 Tuscany Court, Camp Hill, Cumberland County, Pennsylvania 17011 (collectively "Defendants"). 3. Upon the urging of Defendant C. Davis, Plaintiffs and Defendants agreed to pursue the purchase of The State Street Building located at 500 North Third Street, Harrisburg, Dauphin County, Pennsylvania. Thereupon, Plaintiffs and Defendants formed a corporation by the name of The Capitol Steps Associates, Inc. ("Capitol Steps"), for the purpose of acquiring and operating The State Street Building, and filed its Articles of Incorporation with the Department of State on September 9, 1998. Pursuant to the Articles of Incorporation, "the aggregate number of shares authorized" for Capitol Steps was "100" shares. 4. Of the 100 authorized shares of Capitol Steps, fifty (50) shares were issued to Plaintiffs, as tenants by the entireties, and fifty (50) shares were issued to Defendants, as tenants by the entireties. 5. At the time of the incorporation of Capitol i3teps, Defendants through their stock ownership of 200 North Third, Inc. ("200 North Third"), also had ownership of The Fulton Bank Building, located at the corner of North Third and Locust Streets, Harrisburg, Dauphin County, Pennsylvania. 6. On September 8, 1998, an Agreement of Sale was entered into by and between Capitol Steps and State and Third Street Associates, then the owner of The State Street Building, whereby Capitol Steps agreed to acquire: the building. 7. On October 29, 1998, Capitol Steps acquire;d The State Street Building and financed the said acquisition through the following: a. The execution of a $1,300,000 mortgage loan and note with Mid-Penn Bank as the lender ("Mid-Penn loan"), with Plaintift's and Defendants guaranteeing the said loan. As part of the loan transaction, Plaintiff D. Thomas was also required to pledge in favor ofMid-Penn Bank 5,190 shares of North Pittsburgh Systems, Inc. common stock. b. Capitol Steps' execution of a Judgment Note dated October 29, 1998, agreeing to pay Wayne B. Titus and Health L. Allen, the principals of State and Third Street Associates, the sum of $23,226.30 ("Judgme:nt Note 1 "). Plaintiff D. Thomas and Defendant C. Davis personally guaranteed the: full and complete performance of Capitol Steps to fund the said Judgment Note 1. -2- c. Capitol Steps' execution of a Judgment Note dated October 29, 1998, agreeing to pay Wayne B. Titus and Health L. Allen, the principals of State and Third Street Associates, the sum of $160,000 ("Judgment Note 2"). Plaintiff D. Thomas personally guaranteed the full and complete performance of Capitol Steps to fund the said Judgement Note 2. d. Capitol Steps' execution of a Judgment Note dated October 29, 1998, agreeing to pay Para One Corporation the sum of $260,194 under a payment schedule through March 1, 2008 ("Judgment Note 3"). Through a Fourth Modified Agreement dated October 16, 1998, Wayne B. Titus and Jean S. Titus, his wife, Heath L. Allen and Eleanor M. Allen, his wife, the priincipals of State and Third Street Associates and Plaintiff D. Thomas guaranteed tht; full and complete performance of Capitol Steps to fund the said Judgment Note 3. Plaintiff D. Thomas, however, was required to also execute a personal guarantee to hold Wayne B. Titus, Jean S. Titus, Health L. Allen, and Eleanor M. Allen harmless against any loss that they or any of them suffered by the failure of Capitol Steps to fund the obligation described in the Fourth Modification Agreement (Judgment Note 3). A copy of the Fourth Modification Agreement with the aforesaid guarantees and Judgment Note 3 is attached hereto and made a part hereof as Exhibit A. (Para One Corporation was subsequently merged into Shell Realty, Inc.) 8. Following the said acquisition of The State Street Building, Defendants assumed management and operating responsibilities ofCapitol Steps, including The State Street Building, and Plaintiffs by check dated January 8, 1999, made a $10,000 equity investment in Capitol Steps. Due to Capitol Steps' initial cash deficiencies as alleged by Defendant C. Davis, Plaintiffs by check dated February 16, 1999, loaned Capitol Steps -3- $50,000, and by check dated September 29, 1999, loaned Capitol Steps another $45,000. No formal loan documents were executed between Plaintiffs and Capitol Steps, however, it is Plaintiffs' belief and they so allege that the said loans were recorded as loans on Capitol Steps' financial statements and income tax returns. 9. 8y letter dated July 12, 1999, Defendant C. Davis advised Plaintiff D. Thomas that Capitol Steps had satisfied Judgment Note 1 resulting in the release of both Plaintiff D. Thomas' and Defendant C. Davis' personal guarantees thereon. 10. On November 29, 2000, Capitol Steps, through the efforts of Plaintiff D. Thomas, secured refinancing through loans from Commerce Bank with the funds received therefrom being employed to fully satisfy the Mid-Penn loan and Judgment Note 2. This refinancing was obtained based upon financial statements prepared by Defendants which reflected the viability of The State Street Building to sustain itself based upon its rental revenues less expenses. Further, Plaintiffs and Defendants were required to execute second mortgages on their residences to secure a portion of the financing. Capitol Steps' full and complete pertormance under the Commerce Bank loans. 11. In September 2001, Defendant C. Davis informed Plaintiff D. Thomas that Defendants wanted to refinance the outstanding loans on The State Street Building and The Fulton Bank Building. Defendant C. Davis represented that such refinancing could not be accomplished without Defendants acquiring full ownership of Capitol Steps. Defendant C. Davis refused to divulge to Plaintiff D. Thomas the name of the proposed lender. Negotiations then immediately ensued between Plaintiff D. Thomas and DefendantC. Davis regarding terms by which Defendants would acquire full ownership interest of Capitol Steps so that the said refinancing could be obtained, and so than Plaintiffs' personal guarantees -4- in connection with the Capitol Steps' obligations, including Plaintiff D. Thomas' personal guarantee of Judgment Note 3, could be extinguished. 12. On September 12, 2001, Plaintiffs and Defendants executed the following documents: a. Settlement Agreement-This agreement, which is attached hereto and made a part hereof as Exhibit B, provided for the conveyance of Plaintiffs' fifty (50) shares of stock in Capitol Steps to Defendants for $10,000 to be paid at the time of Defendants' closing on the aforesaid refinancing. The Settlement Agreement at Paragraph 3 specifically conditioned the transfer of interest of Plaintiffs' fifty (50) shares to Defendants upon Defendants' obtaining the removal of Plaintiffs as a guarantor of all Capitol Steps obligations, as follows: 3. PAYMENT OBLIGATIONS. 1'he transfer of interest and payment of any monies pursuant to this .Agreement are expressly conditioned on the Corporation and/or Davis obtaining the necessary financing to refinance the Corporation's principal asset, the real property and building erected thereon known and numbered as 500 North Third Street, Harrisburg, PA, and removinq Thomas as a guarantor of the Corporation's obligations. (Emphasis added.) See Exhibit B, Settlement Agreement, Paragraph 3. The SettlementAgreementwas executed by Plaintiffs and Defendants personally ,snd on behalf of Capitol Steps. In recognition of the possible refinancing, ttie Settlement Agreement further required the Plaintiffs "to cooperate in executing any and all documents confirming their withdrawal from the Corporation pursuant to this Agreement." Plaintiffs fully performed under this agreement by executing their Capitol Steps' share certificate so that the Defendants would obtain full ownership cif Capitol Steps conditional upon obtaining the aforesaid refinancing and upon compliance with Defendants' obligations under Paragraph 3 of the Settlement Agreement to secure the removal -5- ofall Plaintiffs' guarantees of Capitol Steps' obligations including Plaintiff D. Thomas' guarantee of Judgment Note 3. b. Promissory Note - As further consideration and to assure Plaintiffs' recovery of their $95,000 in loans to Capitol Steps, Defendant C. Davis personally executed a Promissory Note ("$125,000 Note"), a copy of which is attached hereto and made a part hereof as Exhibit C, agreeing to pay Plaintiffs $125,000 in monthly installments of $5,000 for the first five months anti then $8,000 per month until the loan was paid in full. The note required the monl:hly payments to be made on the first day of each month and provided for a monthly $200 late payment penalty with an additional $20 daily late payment charge. 13. Defendants breached the September 12, 2001 Settlement Agreement in that they never secured the removal of Plaintiff D. Thomas as a guarantor of Judgment Note 3 and proceeded with refinancing representing themselves as 100°/a owners of Capitol Steps without securing the removal of such guarantee. Moreover, Defendant C. Davis has numerously and continuously defaulted on his obligation underthe $125,000 Note byfailing and refusing to make timely payments and by failing and refusing to pay the agreed upon penalty and late payment fees. 14. Defendants did not inform Plaintiffs at the time the September 12, 2001 Settlement Agreement was negotiated and executed that Defendants on the same day had conducted a refinancing or were conducting a paper closiing thereon with LaSalle National Bank, to be effective September 17, 2001, on a $2,200,000 loan to Capitol Steps ("LaSalle National Bank loan") to satisfy the aforesaid Commerce MBank loans, but not to satisfy the Judgment Note 3, which Plaintiff D. Thomas had personally guaranteed. Thus, on the date the September 12, 2001 Settlement Agreement was negotiated and executed, Defendants -li- had no intention of securing the removal of Plaintiff D. Thomas' guarantee of Judgment Note 3 or paying-off the said note through the said refinancing, as Defendants had represented to Plaintiffs. The terms and conditions of the Settlement Agreement were expressly conditioned upon the termination of Plaintiffs' guarantees. Consequently, Defendants, through fraud and misrepresentations relied upon by Plaintiffs, secured Plaintiffs execution ofthe September 12, 2001 Settlement Agreement. Further, Defendants in connection with the LaSalle National Bank loan documents did not reveal Plaintiffs' ownership interest in Capitol Steps and that such ownership would not be conveyed to Defendants without Plaintiffs' guarantees on all Capitol :>teps obligations being removed. Plaintiffs also believe and therefore allege that Defendants did not reveal to LaSalle National Bank that Judgment Note 3 was still outstandinc3 and the necessity for Plaintiff D. Thomas' guarantee thereon to be removed before Defendants had 100% common stock ownership in Capitol Steps. The closing documents on the LaSalle National Bank loan further reveal that Capitol Steps, following the satisfaction of the Commerce Bank loans, received $190,343 in cash, which Defendants, in violation of the September 12, 2001 Settlement Agreement, did not employ to satisfy Capitol SSteps' obligation on Judgment No. 3 in order to extinguish Plaintiff D. Thomas' guarantee thereon. At such time, Defendants did not provide Plaintiffs with any documentation with respect to the refinancing or any notice as to the closing thereon. 15. Plaintiffs mistakenly assumed that Defendants had satisfied Judgment Note 3 and Plaintiff D. Thomas' personal guarantee thereon through the refinancing as Defendants agreed to do as a condition precedent to receiving the effective transfer of Plaintiffs' fifty (50) shares of capital stock in Capitol Steps under the September 12, 2001 Settlement Agreement. -7- 16. Defendants' counsel, William Miller, Esquire;, in orabout March, 2003, advised Plaintiffs that Defendants had not removed Plaintiff D. Thomas as a guarantor of Capitol Steps' obligations on Judgment Note 3, as required by thE~ September 12, 2001 Settlement Agreement, and that Judgment Note 3 had not been satisfied through the aforesaid LaSalle National Bank refinancing. This revelation followed an inquiry by Plaintiff D. Thomas as to why he had received a letterfrom counsel to Shell Realty, Inc., f/k/a Para One Corporation, the payee on Judgment Note 3, declaring a default by Capitol Steps on Judgment Note 3 and citing Plaintiff D. Thomas as still being a guarantorthisreon. Priorto that time, Plaintiffs believed that Defendants, through the refinancing, had paid off Judgment Note 3, or otherwise had Plaintiff D. Thomas removed as a guarantor of Judgment Note 3, as Defendants had agreed under the September 12, 2001 ;settlement Agreement. 17. As noted herein in paragraph 13, Defendant C. Davis also remains in default on the $125,000 Note attached as Exhibit C in the following respects: a. The initial $5,000 monthly installment due November 1, 2001, was not received by Plaintiffs until November 29, 2001, aind did not include the $200 late payment penalty or the $560 in applicable late charges. b. The second $5,000 monthly installment due December 1, 2001, was not received by Plaintiffs until January 2, 2002, and did not include the $200 late payment or the $620 in applicable late charges. c. The third $5,000 monthly installment due January 1, 2002, was not received by Plaintiffs until February 14, 2002, and did not include the $200 late payment or the $840 in applicable late charges. -8- d. The fourth $5,000 monthly installment due February 1, 2002, was not received by Plaintiffs until April 12, 2002, and did riot include the $200 late payment or the $1,380 in applicable late charges. e. Except for those payments listed below in paragraph 18, no further payments have been made by Defendant C. Davis, and late payments charges continue to accrue. 18. Throughout December of 2002, Plaintiffs' counsel, though numerous communications with the Defendants' counsel, William Miller, Esquire, requested and demanded payments pursuant tothesaid$125,000Note. Afternumerouscommunications in this regard, Defendant C. Davis issued a $5,000 check dated December 21, 2002, made payable to "D. Mark Thomas." Defendant C. Davis noted on the check that it was in payment of the Decemberinstallment. Underthetermsolfthe$125,000Note,however,the required December 1, 2002 installment payment was $8,000 before application of the $200 late payment and daily $20 late charges. See Exhibit C. Plaintiff D. Thomas endeavored to cash the December 21, 2002 check but it was denied for insufficient funds. Defendant C. Davis on January 8, 2003, upon being informed that said check had "bounced," did deliver a cashier's check to Plaintiff D. Thomas in the; amount of $5,000 (after being informed the amount should be $8,000). Thereafter, upon urging and communication between counsel on each occasion, Defendant C. Davis made sporadic payments to Plaintiff D. Thomas on the following dates and in the following amounts: (a) January 22, 2003 - $!3,000 (b) February 20, 2003 - $13,000 (c) March 25, 2003 - $:1,000 (d) March 31, 2003 - $3,000 -9- No payments have been received for principal, penalties or late payments since March 31, 2003. Late payment penalties of $200 per month and thie daily $20 late payment fee per monthly obligation, together with principal owing less payments made as of June 30, 2005, total $230,360. See Exhibit D which is attached and made a part hereof. An additional $220 per day of late charges (11 late payments @ $220 Fier day) for every day on and after July 1, 2005, continues to accrue. 19. In face to face communications in early 2003, Defendant C. Davis advised Plaintiff D. Thomas that a sale of The State Street Building (and also possibly The Fulton Bank Building) was being planned and thatwhen itwas efi~ectuated, Defendants would then satisfy all obligations of Capitol Steps, including Judgment Note 3, and eliminate Plaintiff D. Thomas' personal guarantee thereon. Based upon thi~~ representation, Plaintiffs entered into an executory accord with Defendant C. Davison Marrch 3, 2003, whereby they agreed to forego some penalty and late charges owed under this $125,000 Note attached hereto as Exhibit C, if Defendant C. Davis remained current on his payments under that Note. In the event of default by Defendant C. Davis, the executory accord allowed Plaintiffs to proceed with all available remedies, including all those arising out of the September 12, 2001 Settlement Agreement. Defendant C. Davis did not honor such executory accord. 20. In March of 2003, upon being requested to allow Plaintiffs to receive notice of and attend any settlement on the sale of all rights in The; State Street Building, Defendant C. Davis refused such request, but still represented that ai sale of The State Street Building would occur shortly. Subsequently, Defendant C. Davis informed Plaintiff D. Thomas that the mortgagor (LaSalle National Bank) on The State Street Building was holding up the sale over a demand for a prepayment penalty fee which, acce~rding to Defendant C. Davis, was not justified. The said sale never took place. -10- 21. On or around June 2003, Defendants, ilhrough their counsel, informed Plaintiffs' counsel that a foreclosure action had been filed against The State Street Building, and thatCapitol Steps' ownership therein wasjeopardized. Subsequently, Plaintiffs learned from counsel that The State Street Building was subject to sheriff sale. Plaintiffs believe and therefore allege that The State Street Building wa:> sold at sheriff sale and Capitol Steps has lost all ownership interest therein. Upon learniing of this happenstance, Plaintiff D. Thomas met with Defendant C. Davis, whereupon Defendant C. Davis assured Plaintiff D. Thomas that he would not leave him "hanging" on thE: Judgment Note 3 guarantee. 22. On December 19, 2003, Shell Realty, Inc., f/k/a Para One Corporation, filed a Complaint against Plaintiff D. Thomas, among others, in the Court of Common Pleas of Dauphin County, at Civil Action -Law No. 2003 CV5419CV ("Shell Realty Complaint"), to enforce the guarantee of Plaintiff D. Thomas on Judgment Note 3, based upon Capitol Steps defaulting on the loan payments. A copy of the said Complaint is attached hereto and made a part hereof as Exhibit E hereto. 23. In the said Complaint, it was revealed that a Confession of Judgment had actually been taken against Capitol Steps on Judgment Note 3 (which Plaintiff D. Thomas was theguarantor)onSeptember29,2003. Defendants never notified Plaintiffs of that fact, and Plaintiffs were unaware thereof. 24. The loan documents on the LaSalle National Bank loan reveal that Defendants had refinanced The State Street Building puirsuant to terms advantageous to Defendants but extremely adverse to Capitol Steps and Plaintiffs. Such terms included an extraordinary prepayment penalty in the event of a subsequent sale of The State Street Building. Based upon representations byDefendants Davis' counsel William Miller, Esquire, and review of the loan documents, Plaintiffs believe and therefore allege that LaSalle -11- National Bank demanded such prepayment penalty, in part, in exchange for not requiring Defendant K. Davis to personally guarantee the LaSalle National Bank loan. As a result of these financing terms, Defendants' joint assets and Defendant K. Davis' personal assets were not subject to foreclosure if Capitol Steps defaulted on the LaSalle National Bank loan, but Capitol Steps, due to the prepayment penalty, was fiinancially precluded from selling The State Street Building upon advantageous terms to <3void the consequences of such default. At the same time, Plaintiff D. Thomas' personal guarantee of Judgment Note 3 remained outstanding because Defendants had never revealed to LaSalle National Bank that the said loan was outstanding and that Judgment Note 3 had to be paid and satisfied, or that Defendant D. Thomas' guarantee thereon had to be removed before Defendants obtained 100% ownership of Capitol Steps. 25. By protecting the assets of Defendant K. Davis and theirjointly-owned assets in exchange, in part, for agreeing to an extraordinary prepayment penalty clause in the LaSalle National Bank loan refinancing, all while keeping Plaintiff D. Thomas exposed to personal liability on Judgment Note 3 in breach of the :ieptember 12, 2001 Settlement Agreement, Defendants fraudulently negated Plaintiffs' ownership interest in and 50% control of Capitol Steps and negated Plaintiffs' economic opportunity to realize a profit on a sale of The State Street Building and any opportunity for Capitol Steps to satisfy Judgment Note 3 through the sale of the building. At the time of the closing on the LaSalle National Bank loan in the amount of $2,200,000, The State Street Building's market value was appraised by CB Richard Ellis, Inc., to be $2,800,(100. Thus, there was adequate equity in the building to fully satisfy Judgment Note 3 and all Capitol Steps' outstanding obligations, including the amount owing Plaintiffs on their prior $95,000 loans to Capitol Steps, as shown in Exhibit F, which is attached hereto and made a part hereof. -12- 26. Following the execution ofthe September 12, 2001 SettlementAgreement and the transfer of Plaintiffs' ownership in Capitol Steps to Defendants, conditioned upon the refinancing and removal of Plaintiffs' guarantees on all Capitol Steps' obligations, including Judgment Note 3, Defendants breached their fiduciary responsibilities to Plaintiffs as shareholders of Capitol Steps by mismanaging Capitol Steps, misapplying funds generated from Capitol Steps and fraudulently executing the LaSalle; National Bank loan documents as officers and sole shareholders of Capitol Steps on term:> detrimental to the best interests of Capitol Steps and Plaintiffs, all of which resulted in the loss of The State Street Building to the direct detriment of Plaintiffs. 27. Pursuant to a settlement agreement between Plaintiff D. Thomas, Shell Realty, Inc., and the otherguarantors of Judgment No. 3 (":ihell Realty settlement"), Plaintiff D. Thomas, as guarantor, by cashier's check dated March 30, 2004, paid Shell Realty, Inc. $175,000 in satisfaction of Judgment Note 3 and the Shell Realty Complaint. Count I -Breach of Contr:~ct D. Mark Thomas v. Charles R. Davis anti Karen S. Davis 28. Paragraphs 1 through 27 ofthis Second Amended Complaint are incorporated herein by reference as if set forth fully. 29. Plaintiffs fully performed under the September 12, 2001 Settlement Agreement entered into with Defendants by transferring ownership of their shares of stock to Defendants conditioned upon Defendants obtaining rE~financing and the termination of Plaintiffs' guarantees of all Capitol Steps obligations, which included Plaintiff D. Thomas' guarantee of Judgment Note 3. 30. ThefailureofDefendantstoeffectuateCapitolSteps'satisfactionofJudgment Note 3 or otherwise obtain the removal of Plaintiff D. Thomas' guarantee thereon at the time -13- they proceeded on the refinancing constituted a material breach of the September 12, 2001 Settlement Agreement between the parties. 31. Defendants' material breach resulted in Plaintiff D. Thomas being required to honor his guarantee of Judgment Note 3 and pay $175,000 to Shell Realty to obtain the satisfaction thereof. WHEREFORE, Plaintiff, D. Mark Thomas, request:> that this Honorable Court enter judgment in his favor and against Defendants in the amount of $175,000 plus interest thereon and cost of suit. Count II -Breach of Contr:~ct D. Mark Thomas and Jeanne M. Thomas v. Charles R. Davis and Karen S. Davis 32. Paragraphs1through27ofthisSecondAmeindedComplaintareincorporated herein by reference as if set forth fully. 33. Plaintiffs fully performed under the September 12, 2001 Settlement Agreement entered into with Defendants by transferring ownership of their shares of stock to Defendants conditioned upon Defendants obtaining refinancing and effectuating the removal of Plaintiffs' guarantees of all Capitol Steps obligations, which included Plaintiff D. Thomas' guarantee of Judgment Note 3. 34. ThefailureofDefendantstoeffectuateCapitolSteps'satisfactionofJudgment Note 3 or otherwise obtain the removal of Plaintiff D. Thomas' guarantee thereon while closing on the LaSalle National Bank loan constituted a material breach of the September 12, 2001 Settlement Agreement between the parties. 35. As a result of Defendants material breach of the September 12, 2001 Settlement Agreement and execution of the LaSalle National Bank loan based upon their fraudulent representations ofhaving full ownership of Capitol Steps, Plaintiffs lost $281,446. -14- This sum represents Plaintiffs' net 50% interest in the $2„800,000 fair market value of The State Street Building as measured by the CB Richard Ellis, Inc. appraisal, less $2,237,108 in Capitol Steps' outstanding obligations inclusive of the Commerce Bank loans, Judgment Note 3, taxes, and insurance shown in Exhibit F hereto. WHEREFORE, Plaintiffs respectfully request thus Honorable Court to enter a judgment in their favor and against Defendants in the arnount of $281,446, together with interest thereon and cost of suit. Count III -Breach of Contract D. Mark Thomas and Jeanne M. Thomas 'v. Charles R. Davis 36. Paragraphs 1 through 27 are incorporated herein by reference as if set forth fully. 37. Defendant C. Davis is in breach of his contractual obligations under the $125,000 Note dated September 12, 2001, in that he has failed to make the principal payments together with the penalty and late charges set forth therein. As a result, as of the June 30, 2005, Defendant C. Davis owed Plaintiffs daimages in the form of principal, penalties, and late charges totaling $230,360 (as set forth in Exhibit D) with additional damages accruing at $220 per day for each day on and after July 1, 2005. WHEREFORE, Plaintiffs respectfully requests this Honorable Court enterjudgment in their favor against Defendant C. Davis in the amount. of $230,360, plus accruing late charges of $220 per day for each day on and after July 1, 2005. Count IV -Fraud and Misrepresentation D. Mark Thomas and Jeanne M. Thomas v. Charles R. Davis and Karen S. Davis 38. Paragraphs 1 through 27 are incorporated herein by reference as if set forth fully. -15- 39. Defendants secured Plaintiffs' execution of the September 12, 2001 Settlement Agreement,thvough false and fraudulent representations to Plaintiffs in thatthey had not removed and did not intend to remove Plaintiffs sis guarantors on all Capitol Steps obligations including Plaintiff D. Thomas' guarantee one Judgment Note 3, or to satisfy Judgment Note 3 with the refinancing proceeds to accomplish such result, since the paper closing on the said refinancing had taken place prior to or at the same time that the September 12, 2001 Settlement Agreement was execute<fand such closing did not address Plaintiffs' ownership interest in Capitol Steps or provide for the satisfaction of Judgment Note 3. 40. The removal or termination of Plaintiff D. 1"homas' guarantee on Judgment Note 3 was a condition precedent to Defendants' ownership of Plaintiffs' shares and 50% interest in Capitol Steps, but without performing this condition precedent, Defendants fraudulently represented themselves to LaSalle National E3ank on September 12, 2001, and thereafter as 100% owners of Capitol Steps and the sole officers of Capitol Steps, thereby fraudulently proceeding with the refinancing to their personal gain. 41. In entering into the September 12, 2001 Settlement Agreement and in executing the conditional transfer of their Capitol Steps shares to Defendants pursuant thereto, Plaintiffs detrimentally relied upon Defendants' fraudulent misrepresentations that Plaintiff D. Thomas' personal guarantee of Judgment Note 3 would be removed or satisfied at the time the refinancing was consummated. 42. Plaintiffs detrimentally relied upon Defendants' fraud and misrepresentations in inducing them to enter into the September 12, 2001 Settlement Agreement. As a result of Defendants fraud and misrepresentations and Plaintiffs' reliance thereon, Plaintiffs suffered damages in the amount of $281,446, representing the amount of Plaintiffs' net -16- equity interest in the fair market value of The State StreE:t Building arising from their 50% ownership interest in Capitol Steps at the time Defendants secured their execution of the September 12, 2001 Settlement Agreement and fraudulently carried-out the refinancing of Capitol Steps based upon Defendants' fraudulent misrepresentations to LaSalle National Bank that they had 100% ownership interest in Capitol :>teps without having secured the removal or satisfaction of Plaintiff D. Thomas' guaranteE; of Judgment Note 3 and based upon financing terms detrimental to Capitol Steps and Plaintiffs. WHEREFORE, Plaintiffs respectfully request that this Honorable Court enter judgment in their favor and against Defendants Davis in the amount of $281,446 plus interest thereon and cost of suit. Count V -Fraud and Misrepresentation D. Mark Thomas v. Charles R. Davis and Karen S. Davis 43. Paragraphs 1 through 27 are incorporated herein by reference as if set forth fully. 44. Defendants secured Plaintiffs' execution of the September 12, 2001 Settlement Agreement through false and fraudulent representations to Plaintiffs in that they had not removed and did not intend to remove Plaintiffs as guarantors on all Capitol Steps obligations including Plaintiff D. Thomas' guarantee of Judgment Note 3, or to satisfy Judgment Note 3 with the refinancing proceeds to accomplish such result, since the paper closing on the said refinancing had taken place prior 1:0 or at the same time that the September 12, 2001 Settlement Agreement was executed. At no time did Defendants make Plaintiffs aware of such closing. 45. The removal and termination of Plaintiff D. Thomas' guarantee on Judgment Note 3 was a condition precedent to Defendants' ownership of Plaintiffs' shares and 50% -17- ownership interest in Capitol Steps, but without performing this condition precedent, Defendants fraudulently represented themselves to LaSalle National Bank on September 12, 2001, and thereafter as 100% owners of Capitol Steps and the sole officers of Capitol Steps, thereby fraudulently proceeding with the refinancing to their personal gain without satisfying Judgment Note 3 with the refinancing proceeds 46. In entering into the September 12, 200'1 Settlement Agreement and in executing the conditional transfer of Plaintiffs' Capitol Steps shares to Defendants pursuant thereto, Plaintiff D. Thomas detrimentally relied upon Defendants' fraudulent representations that Plaintiff D. Thomas' personal guarantee of Judgment Note 3 would be removed or satisfied at the time the refinancing was consummated. 47. Plaintiff D. Thomas detrimentally relied upon Defendants' fraudulent representations in inducing him to enter into the September 12, 2001 Settlement Agreement. As a result of Defendants fraud and Plaintiff D. Thomas' reliance thereon, Plaintiff D. Thomas suffered damages in the amount of $175,000 representing the amount paid by Plaintiff D. Thomas to Shell Realty in satisfaction of his guarantee of Judgment Note 3. WHEREFORE, Plaintiff D. Thomas respectfully request that this Honorable Court enter judgment in his favor and against Defendants Davis in the amount of $175,000 plus interest thereon and cost of suit. -18- Count VI -Breach of Fiduciary Duty D. Mark Thomas and Jeanne M. Thomas v. Charles R. Davis and Karen S. Davis 48. Paragraphs 1 through 27 are incorporated Therein by reference as if set forth fully. 49. Defendant C. Davis and Defendant K. Davi:> were respectively President and Secretary/Treasurer of Capitol Stepson September 12, 2001. Plaintiff D. Thomas was Vice President of Capitol Stepson September 12, 2001. The conveyance of Plaintiffs' ownership interest in Capitol Steps pursuant to the September 12, :?001 Settlement Agreement was conditioned upon the refinancing of The State Street Building and the removal of Plaintiffs' guarantees of all Capitol Steps obligations, which included D. Thomas' guarantee of Judgment Note 3. 50. In breach of their responsibilities under the September 12, 2001 Settlement Agreement, Defendants did not secure the removal of or carry-out the satisfaction or termination of D. Thomas' personal guarantee of Judgm~snt Note 3. Instead, Defendants fraudulently represented themselves as 100% owners of all of Capitol Steps' shares, executed refinancing agreements with LaSalle National Bank with prepayment penalties detrimental to both Plaintiffs and Capitol Steps in exchange, in part, for LaSalle National Bank's agreement not requiring any personal guarantees from Defendant K. Davis, all while failing to have Plaintiff D. Thomas' personal guarantee off Judgment Note 3 extinguished, and failing to so advise Plaintiffs. Further, Defendants carried-out the refinancing through fraudulent misrepresentations to LaSalle National Bank that they had 100% ownership of Capitol Steps and failing to reveal Capitol Steps' obligation on Judgment Note 3 and their necessity to secure the removal of Plaintiffs' guarantees on all Capitol Steps obligations, -19- including Plaintiff D. Thomas' guarantee of Judgment Note 3, in order to validate Defendants' representation as to having 100% ownership in Capitol Steps. 51. Defendants' actions as stated in this count constitute a breach offiduciary duty to Plaintiffs as shareholders in Capitol Steps. 52. As a result of Defendants' breach of fiduciary duty, Plaintiffs lost their 50% ownership interest in Capitol Steps and its primary asset, The State Street Building, which Plaintiffs believe and therefore allege resulted in lost equity to them of $281,446 as calculated in Exhibit F hereto. WHEREFORE, Plaintiffs respectfully request that this Honorable Court enter judgment in their favor and against Defendants in the amount of $281,446 based upon Defendants' breach of their fiduciary duties. Respectfully submitted, John Havas Attorney for Plaintiffs Supreme Gourt ID #15312 6121 Stephien's Crossing Mechanicsburg, PA 17050 Tel. No. (717} 979-4840 Fax No. (717) F \tt1ENT5M15C~CAPIT°LLLav SuitWlea01~g5~005~3n0 AmeMeO CamO~aim.wp0 _20_ WHEREAS, Para One Corporation, hereinafter "Para," and State and Third Street Associates, a partnership, hereinafter "Associ- ates," entered into a Modification Agreement, on February 28, 1987, the Second Modification Agreement on Fe'.bruary 20, 1992, and the Third Modification Agreement on August 3, 1993, all of which are incorporated herein by reference; and WHEREAS, Para and Associates wish to modify the to s of repayment of the unpaid principal of Two Hundred Sixty Thousand One Hundred Ninety-four Dollars ($260,194.00); and WHEREAS, Associates are~sellinq The State Street Building to The Capitol Steps Associates, Znc. (°CS°) and CS will agree to pay the unpaid principal set forth above; and WHEREAS, subsequent to said sale, Associates will be terminated; and WHEREAS, CS is placing a first mortgage on The state Street Building and has assured its lender that said first mortgage will be the only mortgage lien against The State street Building; and WHEREAS, Wayne B. Titus and Jean S. Titus, his wife, and Heath L. Allen and Eleanor M. Allen, his wife, are willing to guarantee performance by CS hereunder. NOW, THEREFORE, Para, Associates and CS, intending to be .legally bound,.agree as follows: 1. The foregoing recitals are incorporated herein by reference. WITNE$3 the due execution hereof~this,~_ day of October, 1998. PARR ONE CORPORATION ~ '~ ~ N~t31~ ber, Pres dent STATE AND THIRD STREET ASSOCIATES Heath L. A11en, Partner THE CAPITOL STEPS ASSOCIATES, INC. By z_.Yl" ~,~ D. Thomas,~President ~,ce I / -3- 2. The unpaid principal of Two Hundred 33xty Thousand one Hundred Ninety-four Dollars ($260,194.00) will be funded by CS with monthly payments of Three Thousand Ninety-one Dollars ($3,091) a month, with the initial payment due and owing no later than November 1, 2998. Each monthly payment will include inter- est at the rate of six and one-half percent: (6}3) per annum. The amortization schedule is attached hereto as Exhibit A. 3. With twelve (12) months' notice, Para shall have the right to receive the unpaid principal, provided, however, for administrative convenience, Para shall haves no right of partial j prepayment of principal, but only of total prepayment of princi- pal. 4. With twelve (12) months' notice, CS may prepay the obligation, together with unpaid interest, provided, however, for _ administrative com-esnience, CS shall have no right of partial i prepayment of principal, but only of total prepayment of princi- pal. 5. Para has delivered to Keefer Wooci Allen & Rahal, LLP {"KWAR"), in trust nevertheless, a satisfy<:tion piece for its Mortgage dated October 29, 1982, which RWAR is authorized to deliver to CS at settlement, provided, however, that RWAR mails j to Para a fully executed original of this ]Fourth Modification Agreement. 6. This Agreement shall bind the hears, personal represen- tatives, successors and assigns of the parties hereto. -2- We, WAYNE B. TITUS, JEAN S. TITOS, HEATS L. ALLEN and ELEANOR M. ALLEN, intending to be legally bound, hereby guarantee the full and complete performance of The Capitol Steps Associ- ates, Inc. to fund the obligation as described) in the foregoing Fourth Modification Agreement. WITNESS: - ~ 1~ ~ Q i ~ n ,,,. .~. . ,~.~ _ ~ ~.(,~l ./ . (SEAL) WAYNE T]:TIIS ,~~~. .GL ~ ~ SEAL) S. TI7'US L (SEAL) TH L. A7~EN ~/j) . ~(lpe ~ (SEAL) ELEANOR M. ALLEN -4- I, D. MARK THOMAS, am familiar with the Fourth Modification Agreement to which Para One Corporation, State and Third Street Associates and The Capitol Steps Associates, Inc. are parties. To obtain the satisfaction piece and the interest rate from Para One Corporation, Wayne 8. Titus, Jean S. Titus, Heath L. Allen, and Eleanor K. Alien have guaranteed the full. and complete performance of The Capitol Steps Associates, Inc. to fund the obligation as described in the Fourth Modification Agreement. By this personal guaranty, by which I intend to be legally bound, i confirm to Wayne B. Titus, Jean S. Titus, Heath L. Allen, and Eleanor M. Allen that the five of us are not Co-GuarantoYS to Para One Corporation, but that my personal guaranty is designed to hold Wayne B. Titus, Jean S. Titus, Heath L. Allsn, and Eleanor M. Allen haraless against any loss that they or any of them suffer by the failure o! The Capitol Straps Associates, Inc. to fund the obligation described in the Fourth Modification Agreement. 1998. WITNESS the due execution hereof this 29th day of October, ~i /~ r~ ~~!%~~%~/~' (SEAL) D. THOMA3 C~~P~( $260,194.00 October 29, 1998 Harrisbnrq, Pennsylvania POR v11IAH RBCBIVSD and intending to be legally bound,-TNS C71PIR'OL STSP3 1l.SSOCIJlTH3, ' ZNC. , a Pennsjrivania corporation vith officers iir garrisburq, Dauphin County, Pennsylvania (hereinafter "Obligor"), proaises to pay to PAR11 ONB CORPOIt~1TTON, a Peru~syl- vania corporation with a sailing address c/o Nachsan M. Gerber, 4 Jonathans Court, Cockeysville, ryland 21030, (hereinafter• "Obligee'~j; the ems o! Tvo H~mdred Sixty Thousand One ltinety-four-DOilars ($260,194.00), together with interest at the rate of six and one-half percent (6.53) per annul, as follovst Obligor shall pay interest and principal through a sonthly paysent of Three Thousand 1lfuetywne Dollars ($3,092) on the 1st day of each subsequent south pnrsnartt ta the asortiaation sched- ule attached .hereto, sade apart hereof, and narked Exhibit E. obligor nay P~PaY Principal without penalty neon twelve (12) sonths~ written notice of PrePaysent, but suet P~PaY all princi- pal then due and owing. Monthly payssnts shall contfmre daring the period created by Mice. Obliges say desand payseat of all principal upon twelve (12) raonths~ written notios of desand, but will receive the-sonthly paysents described shave during the period of said notice. - In the event of default, defined as failure o! Obligor to -pay within seven (7) calendar days of a: s~thly paysent date, Obligor further does hereby authorise aa4d eaQoasr any attorney o! any ca~nrt of record of lvania or elseWhsrs to for it and to errtar jnag.er-t agar it for the asount of a s Mote, with or vi~hout declaration, together with costs o! snit and reasonable attornsy~s tees, and with-full release of errors. hereunder say be oontessed on executed or photostatic oop es of this Note as sand tiles and i.n as jurisdictions as is necessary to secure satisfaction of arn+ ud balance or balances, end the judgsexft or jndgsent~~ confessed shall bs without stayy of execution. obligor spESCitically naives arn+ right of irygaisition on arty real estate that say be levied upon, and voluntarily condesns the ease, antborixing the Psotborfctary of arty camty or counties to enter upon the writ of execution its said voluntary c~ndesnatio», and hereby waives and releases any and all tells! frog aar~yt and,all appraisesent, stay or exeaptioa- lava of any state whether currently in force or hereafter to be passed. . - NITN&48 the due execution hAreot this 29th dap of October, 1998. - ._ . ATT83Ts - ~ TNS CJIPITOL S~'BPS ~OCII-TBS, - INC. tree dent . - - ' Z, D. ll7lR1C TAOMllS, intending to be lsgallp bound, hereby . guarantee the full. and complete perforawnca o! The Capitol Steps ]-ssoaiates, Zna., to f»nd the obligatfcrn as described in the foregoing JUdpent Note. . - t~iTNB~ss 1s i ~ l~ A,~G.sF„` ~,, ~i~t.~T~,,,.~ cam, D. l~lRX TSOlDIS -2- .. -::d et: varw ~ .... ---- ltgatM lots leala aMelq. 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#.N 4/1/10(1 p ~ aen.N rn.x ml.a4 afls.x 11N.N #.21 ' s/v2oN n aon.N a5s.s: 27at.N cwN.a Y4n.» u.» uv2oos n .af7/.oa • au.n rh.2s itsx.u :ao.N u.24 9!7/2001 » afn.N a2i.f: rN.a s»n.a uss.» le.n - f/v2ooc s. aoa1.N au.N 2»l.is s.9n:N tr1.n lo.x !/1/xos >s aon.N :l0.» rl4.21 slno.ia rN.s4 l.9i aavsoos >s !Ol1.N m:N 2Nl.a4 4ltN.a0 9051.20 a.r wl/zNS » xn.N' 2N.44 If24.Si 4gN.n ans.H 0.K ylt/1/ioei so ~ xn.N is:.li 2tas.N uS2i.q Siii.» f.n vv:o0a » aon.N usai sNS.:4 foal.a -20.sa 9.91 :/i/:0o9 loo asn.N 220.29 20as.n 9995(.54 1lS.Sf 9.25 an120r1 in _ a0ri.N t0f.a0 2ps.x N512.h Ns.p 1.94 i/1/2009 lOZ 701I.N 1».11 3lOl.t) 31i1f.N Sl3.a! i.at s/vxa 110 a0n.N in.» ma.a 2!070.» 9Q.a! s.91 vvaoN 1N lon.N 1sa.s! 2!10.41 xus.» l24.» s.l! ]/1/101! 1N ODn.N 141.90 2Nl.11 21210.N 2011.49 - 1.40 (/1/2009 iN ' 30f1.N 125.92 2fA.x 202N.10 11#.21 I.lf N3/20f9 10'5 ON1.N IN.ii 27(1.04 172Q.fi 1101.(! O.p :al/:o11 IN aNi.N 1u.u :s».n lua.a9 aan.r a.a wv2on iN a0l1.N ».2f 1na.n I12S2.N 11n.a :.S! 12/L2o09 111 1on.N N.f3 xle.fs fJt2.N 23a0.N S.n vvloN en-:eaa n».o9 1/1/20N 111 1/lI.N N.S4 104!.11 S19R31 -29.91 1.11 vvsoN :1z 3on.N 20.N 3fs:.7i 2:la.if lo.a0 0.50 a/1/2oN 111 2u4.4r - 11.N - 21]J.» f.N n.n 0.90 o. rriaclpal rata t. Late zcna4.N l.4er..e eau es au fuat.e2 . :etas rala a ft. l4uac12 . c o. - •« ~n faleetleaf ••• /1ASSC ~ MostOM Aosctsettea !late s ri3 Oe1» 11~»t70 1551 Ate 11~a0e t tsw Oct vin! q Ica »/21» llra s 01(11 M1EY~ Tae. La 4 S00 tMSti tltia ftlfat• lfezlll~ 1]I _ rrtfelO+ ~•N ~ t .R . M t t !.Il.SN000 " . r' SETTLEMENT AGREl=~1ENT TMIS AGREEMENT, dated the 12'" day of September, 2001. by and between D. MARK T~IOMAS and JEANNE M. THOMAS, husband and wife, adult individuals residing in Lemoyne. Currbedand Caxdy, Pennsyl+rar>ia. ~ referred b as'Tlranas") and CFIARLES R. DAMS _ and KAREN S DAMS, husband and vvde adult indviduids residing in Camp Fill, Cwrrberiand County. PernsyHania (hereinafter referred to aS'Davis'). WITNESSETH: WFIEREAS; Davis and Thomas own all Ure issued and otrtstartdrrrg capital stock of THE CAPITt7L STEPS ASSOCIATES, INC., a Perrnsyhrania 6nrsirress corporation, vhlh its prrrrcipal office address boated at P.O. Box 901, Camp Hi, Perxuyi+rartia 17001-0901 (hereirrafterrefeaed bas tlre'+Corporation'~; and WHEREAS. Thomas desires to transfer aN of their shares of stock of .the Corporation b Davis for tl~e conuideration provided in ibis Agreerr~ and VEAS, the parties desire b provide for the orderlyt.rviUrdrarral by Thomas from any and ~ right, title and irerest they have in the C«poration~. NOW, TFORE. in consideration of the promiises and covenants cont~ned trerein, and iM b be IegaMy baxxl, the parties hereto agree as fo1101NS: i. TRANSFER OF INTEREST. Thomas hereby transfers ati right, title and irltef85t they have. had or could have in ills Corporation 1o Davis and oonaxrerrtly)Nltlt the exeartion Of this Agreement Shat transfer aM Sbdr they own in the Cogporation b Davis. ~ Davis and the Caporation sfral pay b Thomas Ten Thatsard Dotiars (510;000 at the dosing of the frtarx~ng referred to hereafhrr in paragraph 3 as consideration far the barrsfer of Thomas' sock in the Corporation andThomas relingrrisi>ing aA of ihelr rights inthe 3. PAYMENT OBLIGATIONS. The transfer of interest and payment of any monies pursuant b this Agreement are expressry oorxfitiared on tli~e Corporation and/or [~vis obtaining . tits necessary finarxwig b refir>arroe the Corporation's principal asset, be neat properly and budding erected thereon known and hurrrbered as 500 North Third Street, Hartisburg. PA, and rerrroving Thomas as a guarantor of the Corporation's obfMga6orrs. 4. COOPERATION. Thomas agrees ~ cooperate in eaaewtirg arty and ati doarnents contunrirrg tl>eir witirdrawal h~srr the Corporation pursuaNt io this Agreement. 5. RELEASE BY THOMAS. Thames does Thereby rem~e. release. oNatclaim and. forever drsdtarge, for tlrernseNes, their heirs and personal represerNati+res, and aN of their sucausors and assigns. Davis. and Ure Corporatist. and its ar tireir heirs. personal represerNatives, diredss,officers, agents. employees. suacessors and assigns, as the case may . be, of and from arty and ati roamer of acres and actions, taros or causes of action, suits; debts, dues. duties. sums. or sums of money. oonYacts, redcawrg~s, bards. br7s, specialties. covenarris, agreements, Promises. wariarrces, damages. judgments, e;deMs~ exea~ions, claims ar demands whatsoever. in law or in equity. in any text or before ar~y adrr~irrisUative agency. or otherwise howsoever, which against Davr3 ar the Corporatiar, Thoma:r everhad, now has. or which they ar-d their heirs. Persona! rte, surocessors and assigru, frereirrafter can, shah or may have. for, upon or by reason of any matter, cause or ~9 whatsoever relating to Thomas becoming. being or ceasing b be Stoddiolders of the Corporation This release does not appy fA any claims or causes of action brat may arise art of the performance ~of tins Agreement Nothing contained herein shah prelude arty party from joining another Party' hereto in any action, cause of adios, claim or demand of whatever nature by any third party, except Thomas may rat be joined in a lawsuit regarding ar-y debts ~ the Corporation. 6. RELEASE BY DAMS AND THE CORPERATION_ Davis and the do hereby remise. release. quitclaim and forever disdrarge for tlrerrrselves, and each of their theirs and personal representatives, ttte Corporation's drrelors, officers, agents and errrPfoyees, and a1 of their suocessars and assigns, Thomas and their heirs. personal representatives. successors and assigns. as the case may be. of and from any and aN manner of action and actions, cause a' causes of adios, suits, debts. dues. duties, sums, or sums of money. carpracts, redconirrgs. bonds. bis,. spelalties. . agreenterrts, promi:res, variances. damages. j<rdgrrrerrts, exienls, e~aecutiorrs; lakrrs or derrrarrds whatsoever. in law ~x in equity. in any oarxt or before any adirc~trative agency. a otherwise wwwsoever, which against Thomas. Davis or the Corporation ever had, now has, or which they and their. heirs. persaral representatives. successors and assigns. or R and its directors. officers, agents. errrployees, successors and assigns, as the case maybe, hereinafter can, shah a may have, for. upon or bi/ reason of any matter, cause or thing vrF>Iatsoever relating ~ Thomas becorrrng, being or ceasing ib be Sloddrolders of the Corporation Nothing corMairted herein shah prelude any party from joining anotirer party here in any adios, cerise of action, dairrr or demand of whatever nature by any third party. -2- u~ arrd a9~~ ~ e~ odY it a si3~ ~ ~~SS ___„~pias d ~ daY Y'~SS' p, Mp~-CT4 _ ~~,,~~c ~~~ ~ - ~~~ ~~ ~ S~'pA~' ,.-.~~ ~S,DA~ ~y~~b9t, ~~ ' as ~f°`R` • t~an~~~~~a~ A.~-~~ST' ~~ ~ pavis> _ ~" (Ash - '~- ~, sizstwooo 12 Septeaiba200[ ~P ~, Peansylvmia FOR VALQE 6tECEIVFA and iateod'igg to be leery bamd, CHARLES R DAYL'S, of ~ >~, arr«,~b«lana ~, P (h«eiw8er "ob6gor'~ P ~ pay w D: MARK THOMAS and JEANNE M. THOMAS. of Lemoyne, (~mbaiand Caranty, Pemrry[- vaaia.the sum of One i Tarnty~iNe Thousand I)oQais (Z125,~).1 ~ ~y imta~ats of Five'[housaad Dotisrs (65,tloo) each Gx fiNe (s) months wilh the first anait4ty iosta~ 6erog due a~ payable on tha Smst day of Novwebix 2001 and mo~hly Payer meceatta Gx Gui (~ , and then moaWy ~m«rts Hof 1lrousard Dollars (68,000) each on the first day ofeach moaW, ud'd the entire bahuice due is paid ~ Gill. If nay mosctily payment is not paid on the first day of the month when due, there shall fie a peaahy of Two Iiimdrrd Dollars (6~0) per skh instaNme~ payment, together with a da8y bite ~r8'e ofTwemy Dollars (S~) per day for each day payment is Paid late- O6G~;or ~3' Ply in whole a is Part anq portion of pcinapal due hereunder without peachy at any time- ii'ITNESS the due exewtion hereof the 12th day of ~5epteruber, 2001. ~ - ~~ CHAIrLF.S R. DA - - °- ~ `i''iw+ t1t~64 ~ yi p f s:Oi6° :Izfl~b/ _~S;aoo ~Zjz)o2J d 2.00 J sow . _... ~t,/i/°~. - - .aS%°.pO.. ..1`~1'zLoz~ . .'~zo° ._._ _... _ .. _.. g~,.?8° - ---- ._ s _.. .a~ifo2... .. .... --- --- ._ t.....- - --- - . . ~ $-~' / aS,C/~D2 ... _ _ . g Loo .. . - -- 1~., LO b _ C3J _ _ 'rg~6aca •~~/`~Z . . .. . _ _ ~ Lo0 .. _. . _. ...f.1.,.5'~~ • _C`~J ggroeo d2 III ; $ 20~ _. _ .._ .... .fd~ ~a .. a .. .a 2S~ o _. _'~ `e~~. . w~il~.. .. •. s Zoo ... 5, lwo ~8'J .. . sQ~o r2~/ feL ftc3eo ~+~~~~ ~ Lob. ._..._7.i4L0. ~r~.. d ~~ . .. l.~r ~~' 6b'iexsb. ~.r~u/o3~ s Lob - -- . tlao ~~.~. . b ~,~ :. 2~rfo3 ~q, ~a ~,1~°~ ~ 2-a° ... 3$d ~(~ - f~tS;fie~a ~'~`t,~ . - `~3,(doe. . .. 116, ~~o. Pt-wt.+M~. ('f t?~aC~ - ~Y ~l~~ 'r76. ~ - -• - - uzc cw~,e (~~~ ~ • s ~e ,ec ~aew ~ ~ G~ gwwaw, - owt~p co t /3olos' ~ s ig 4,s'`+ v ~ r 'R+~.~h-ti P~Yr+t.RS ovrs„M..o~a~c i ~ +f ~ •~ _ ~ Z tc7 boa Ow+ s /4) Di-YS ~'~Lt~ 33,,$20 Tom owc0 As oR c~aof os j.'t3 0, 3 G c ~~ - 3c J _..._ .P~ga~sr_. _ . c,4+-ems L ~ _~-.0,,.~ ... . _.. .....~1~_ _Z'8'@?~ .. 3~sbjS... ~._~/~Q2~~c ,3b~ ~_2~. .~+' .~i~A,20. --- - _...-- .. _... 2cn3 _._. ar°s'a~ts... x 8~ - .- -. _ 7 Sao. . .. _... . _ . _ .:._..... _. .. .. _ .. ..... . _.. _ . _ .... /3 0 .. .. .~_ Zafl;Z.. .. 3C..S_.-.~~~yl~~°.Z~_~.._L7Sy,.~20_ - ~ ~S4Ct ... .. _.,.... . _Zcdn3 3 GS~.X . ~Lo _ ........ ..._ .._ . . _._..... _ . _ .._ . _ ._,,,, 7,360 _ -- . ..~.3J 7o6'L _ . 3~,5 ,_i 2.e> Cs/i/~~ _= 2.~s~r iz~ y, sroc~ _. .. Z ~ cc ~J.. ~.c?o?-. . ~~'- Ig'i._.~~I~oL~_.? 2lStg'~o _ _ ~ Y,2~. . _ ._ .. _ -. I l s" Sa _ _ __ . ~~7 . 2~2. .. 3..6..5,`.- I ~! C?~! j~.> _=.18`f x'~?.a.... _. _ 3~ 68Q ... .. aoc7 3 3GS~ sLo 300 , ~o~1T a'o - _ (~. LPL 3feS - LIZ 1~~~~~~ ; /~33_s{`~0 3, Oy Q _ . _ ..?~3 .3GS . _J['~Lo ~ 300 • -- .. - - _. .. _ X10 3 6 a _.. _ ~'iJ .Z~o2. 3cS'--G43 ~t~ij(62~; 1ZtX~ .. 2 Saks . ~. ... x`1,7 ~t . ZA02- 3GS -- 2?3 die /~<62 ~ X42 Y Lo _ / $' SGO 7~3 , ~r , X =2t7 _ 7 3bo . .. 9~/ S~ l z«~Z sus - ao-{ ~, ~ 1</n'-) = G! X~2o ~ /, i Zv 2.003 3~ x ~L,ia 7 300 8~ Kenneth L. Joel, Esgai[e Attorney I.D. No. 72370 John hL Coles, Fsquue Attorney LD. No. 87398 RHOADS & SINON LLP One South Market Square, 13th Floor P.O. Box l l46 Hamsbutg, PA 17108-1146 (717)233-5731 Attorneys for Plaintiff SHELL REALTY, INC., f14la PARR ONE CORPORATION, Piainfiff v. c-: M1` .., i, : a ~ '7 -o =~ . ~ - n~ n r*~=.. Z C~ . y~,, -v s. ~n -stc iC-' tV ~ --~ -i t11 Co- IN THE COURT OF COMMON PLEAS OF DAUPHIN COUNTY, PENNSYLVANIA CIVII, ACTION -LAW D. MARK THOMAS, WAYNE B. TTTUS, JEAN S. Tl1'CTS, HEATH L. ALLEN AND ELEANOR NO. ~iZ~ J e ~ S~-t~ ~ ~'( t;',V M. ALLEN, Defendants NOTICE YOU HAVE BEEN SUED IN COURT. If you wish to defend against the claim set forth in the following pages, }rou 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 ifyou fail to do so the case may proceed without you and a jwdgmexlt 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 Piainti~ 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, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW. THLS OFFICE CAN PROVIDE YOU WITH INFORMATION ABOUT HIItING A LAWYER. IF YOU CANNOT AFFORD.TO HIRE A LAWYER, THIS OFFICE MAY BE ABLE TO PROVIDE YOU WTTH INFORMATION ABOUT AGENCIES THAT MAY OFFER LEGAL SERVICES TO ELIGIBLE PERSONS AT A REDUCED FEE OR NO FEE. DAUPHIN COUNTY LAWYER REFERRAL SERVICE 213 North Front Street Harrisburg, PA 17101 . (717)232-7535 Kennett L. Joel, Esquire Attorney I.D. No. 72370 John M. Coles, Esqu've Attorney I.D. No. 87398 RHOADS & SB10N LLP One South Market Square, 12th Floor P.O. Box 1146 Hanisburg, PA 17108-1146 (717)233-5731 Attorneys for Plaintiff SHELL REALTY, INC., f/k/a PARR ONE CORPORATION, Plaintiff' v. M1` ~~ C': a -,._ ,., i" a 3 ~~~. n r,:~.. ~'`- ~° 7 ~ -v ~-, `- 3. L~ N -~ tX1 r7rJ IN THE COURT OF COMMON PLEAS OF DAUPHIN COUNTY, PENNSYLVANIA C1VII, ACTION -LAW D. MARK THOMAS, WAYNE B. TTTLIS, JEAN S. TI1'[JS, HEATH L. ALLEN AND ELEANOR NO. C.~~~ ~ V S L-( ~ ct ~V M. ALLEN, . Defendants NOTICE YOU HAVE BEEN SUED IN COURT. If you wish to defend against the claim set forth in the following pages, you must take action within twenty (20) days after this Complaint aad 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 ifyou fail to do so the case may proceed without you and a judgment maybe entered against you by We 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. 1F YOU DO NOT HAVE A LAWYER, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW. THIS OFFICE CAN PROVIDE YOU WITH INFORMATION ABOUT HIItING A LAWYER. 1F YOU CANNOT AFFORD TO HIRE A LAWYER,.THIS OFFICE MAY BE ABLE TO PROVIDE YOU WTfH INFORMATION ABOUT AGENCIES THAT MAY OFFER LEGAL SERVICES TO ELIGIBLE PERSONS AT A REDUCED FEE OR NO FEE. DAUPHIN COUNTY LAWYER REFERRAL SERVICE 213 North Front Street Harrisburg, PA 17101 (717) 232-7536 Kemedr L. Joel, Esquire Attorney I.D. No. 72370 Jolm M. Coles, Esquire Attoroey I.D. No. 87398 BROADS 8c SINON LLP Ooe South Market Square, 12th Floor P.O. Box 1146 Harrisburg, PA 17108-1146 (717)233-5731 Attorncys for Plaintiff _ SHELL REALTY, INC., f/k/a PARR ONE CORPORATION, Plaintiff : IN THE COURT OF COMMON PLEAS OF DAUPHIN COUNTY, PENNSYLVANIA CIVII., ACTION-LAW v. D. MARK THOMAS, WAYNE B. T1TUS> JEAN S. T1TUS, HEATH L. ALLEN AND ELEANOR NO. M. ALLEN, Defendants AVISO USTED HA SIDE DEMANDADO/A EN CORTE. Si usted desea defenderse de las demandas que se presentan mss adelante en 1as siguientes paginas, debe tomar action dentro de los proximos veinte (20) dial despues de la notification de esta Demands y Aviso radicando petsonalmente o por medio de un abogado una comparecencia escrita y radicando en la Corte por escrito sus defenses de, y objecciones a, las demandas presentadas aqui en contra soya. Se le advierte de que si usted falls de tomar action Como se describe anterionnente, el caso puede procedet` sin usted y un fatlo por cuaiquier soma de dinero reclamada en la demands o cualquier otra reclamation o mmedio solicitado por el demandante puede ser dictado ea contra soya por la Corte sin mss aviso adicional. Usted puede perder dinero o propiedad u otros derechos importantes pars usted. USTED DEBE LLEVAR ESTE DOCUMENTO A, SU ABOGADO INMEDIATAMENTE. SI USTED NO TIENE UN ABOGADO, LLAME O VAYA A LA SIGUIENTE OFICINA. ESTA OFICINA PUEDE PROVEERLE INFORMACION A CERCA DE COMO CONSEGUIR UN ABOGADO. SI USTED NO PUEDE PAGAR POR LOS SERVICIOS DE UN ABOGADO, ES POSIBLE QUE ESTA OFICINA LE PUEDA PROVEER INFORMACION SOBRE AGENCIAS QUE OFREZCAN SERVICIOS LEGALES SIN CARGO O BAJO COSTO A PERSONAS QUE CUALIFICAN. DAUPHIN COUNTY LAWYER REFERRAL SERVICE 213 North Front Su+eet Iiarrisbtrtg, PA 17101 (717) 232-7536 Kenneth L. Joel, Esquire Attonxy I.D. No. 72370 John M. Coles, Esquve Attorney LD. No. 87398 BROADS & SINON LLP One South Market Square, 12th Floor P.O. Box 1146 Harrisburg, PA 17108-1146 (717) 233-5731 Attorneys for Plaintiff SHELL REALTY, INC., t7k/a PARA ONE CORPORATION, Plaintiff IN THE COURT OF COMMON PLEAS OF DAUPHIN COUNTY, PENNSYLVANIA CML ACTION-LAW V. D. MARK THOMAS, WAYNE B. TTfUS, JEAN S. TTTCTS, HEATH L. ALLEN AND ELEANOR NO. M. ALLEN, Defendants COMPLAINT AND NOW, wmes Plaintiff, Shell Realty, Inc., by and through its attorneys, Rhoads & Sinon LLP, and file this Complaint as follows: 1. Plaintiff,. Shell Realty, 1nc., is a Maryland corporation with a mailing address of 7313 Park Heights Avenue, Apartment #101, Pikesville, Maryland 21208-5469 and is the successor by merger to Para One Corporation (`~ara One's. Z. Defendant D. Mark Thomas is an adult individual with an address at 212 Locust Stt+eet, Srrite 500, P.O. Box 9500, Harrisburg, Pennsylvania 17108-9500. 3. Defendant Wayne B. Titus is an adult individual with an address of 601 Femwalk Lane, Osprey, Florida 34229. sasszv.i 4. Defendant Jean S. Titus is an adult individual with an address of 601 Femwalk Lane, Osprey, Florida 34229. 5. Defendant Heath L. Alien is an adult individual with an address of 210 Walnut Street, P.O. Box 11963, Harrisburg, Pennsylvania 17108-1963. 6. Defendant Eleanor M. Allen is an adult individual with an address of 210 Walnut Street, P.O. Box 11963, Harrisburg, Pennsylvania 17108-1963. 7. On or about October 29, 1998, The Capitol Steps Associates, Inc. ("Capitol Steps', for value received, executed to the order of, and delivered to Para One, the predecessor in interest to the Plamtif~ a Judgment Note pursuant to which Capitol Steps promised to pay to Para One the principal amount of $260,194.00, plus interest at the rate of 6.5% per annum. A tme and coned copy of the Judgment Note (the "Note's is attached hereto as Exhibit "A" and incorporated herein by reference. 8. On or about October 16, 1998, Para One and Capitol Steps executed, along with State and Third Street Associates, a general parhrership, a Fourth Modification Agreement in which Capitol Steps agreed to pay to Para One the obligations evidenced by the Note, which obligations were originally incurred in connection with a series of transactions that occurred in or about 1987 regarding the purchase of .certain real estate located in ffie City of Harrisburg, Dauphin County, Pennsylvania. A true and correct copy of the Fourth Modification Agreement (the' "Modification Agreement's is attached hereto as Exhibit "B" and incorporated herein by reference. 9. On or about February 16, 1988, Para One merged into Shell Realty, Inc., the Phuntili'herein. 10. Over the years, Capitol Steps made its regulaz loan payments under the Note to the Plaintiff. 11. However, Capitol Steps is now in default under the Note and the Modification Agreement in that Capitol Steps has failed, refused and continues to fail and refuse to pay the monthly payments of principal and interest due to the Plaintiff under the Note and the Modification Agreement. 12. On September 29, 2003, the Plaintiff confessed judgment against Capitol Steps in the amount of $193,434.07, which amount represents unpaid principal, interest and attorneys' fees, pursuant to the Plaintiffs rights under the Note. A true and correct copy of the confessed judgment entered against Capitol Steps is attached hereto as Exhibit "C" and incorporated herein. 13. Defendant D. Mark Thomas guaranteed Capitol Steps' obligations under the Note. 14. Defendants Wayne B. Titus, Jean S. Titus, Heath L. Allen and Eleanor M. Allen guaranteed Capitol Steps' performance under the Modification Agreement. I5. Due to Capitol Steps' continuing failure to meet its obligations under the Note and the Modification Agreement, the Plaintiff now brings this action against rho Defendants, all guarantors of Capitol Steps' obligations. 16. Defendants are contractually obligated to satisfy the unpaid obligations of Capitol Steps arising under the Note and Modification Agreement, and therefore, are now jointly and severally liable to the Plaintiff in the amount of $193,434.07, plus accrued interest and costs of suit. WHEREFORE, P1ainGif; Shell Realty, Inc. hereby demands judgment against all Defendants in ffie amount of $193,434.07, together with costs and interest accruing at the rate under the Note, from the date hereof, and all other damages, including attorneys' fees and costs of suit as allowed by Pennsylvania law. Dated: ~Z- a3 John M. Coles Oae South Market Square, Twelfth Floor P. O. Box 1146 Harrisburg, PA 17108-1146 (717)233-5731 Attorneys for Plaintiff Respectfully submitted, -dY%08i 200J 11:38 FAd 717 ZJ3 1Jd8 ltHOADS & a!\u~ LLp X008 VERIFICATION Gene A. Gerber hereby deposes and says, subject to the penalties of 1B Pa C.S. § 4904 relating to tms~votn fslsifieation to authorities, that he is the President of Plaintiff Shell Realty, Lic» that he makes this verification as such officer by its authority and that the facts set forth in ~e forogoing Cotupbtiru are true and correct to the best of his kmwlodge, infom>ation and beset Due: ~a' $• 0 3 a. .President October 29, 1998 $260,194.00 Harrisburg, Pennsylvania FOR VALUE RECEIVED and intending to be legally bound, THE CAPITOL STEPS ASSOCIATES, INC., a Pennsylvania corporation with offices in Harrisburg, Dauphin County, Pennsylvania (hereinafter ^Obligor^), promises to pay to PARA ONE CORPORATION, a Pennsyl- vania corporation with a mailing address c/o Nachman M. Gerber, 4 Jonathans Court, Cockeysville, Maryland 21030, (hereinafter ^Obligee^), the sum of Two Hundred Sixty Thousand One Hundred Ninety-four Dollars ($260,194..00), together with interest at the rate of six and one-half percent (6.52) per annum, as follows: Obligor shall pay interest and principal through a monthly payment of Three Thousand Ninety-one Dollars ($3,091) on the 1st day of each subsequent month pursuant to the amortization sched- ule attached hereto, made a part hereof; and marked Exhibit A. Obligor may prepay principal without penalty upon twelve (12) months' written notice of prepayment, but must prepay all princi- pal then due and owing. Monthly payments shall continue during the period created by notice. Obligee may demand payment of all principal upon twelve (12) months' written notice of demand, but will receive the monthly payments described above during the period of said notice. .~ In the event of default, defined as failure of Obligor to pay within seven (7) calendar days of a monthly payment date, t' obligor further does hereby authorize and empower any attorney of any court of record of Pennsylvania or elsewhere to appear for it and tq enter judgment against it for the amount of this Note, with or without declaration, together with costs of suit and reasonable attorney's fees, and with full release of errors. Judgment hereunder may be confessed on executed or photostatic copies of this Note as many times and in as many jurisdictions as is necessary to secure satisfaction of any unpaid balance or balances, and the judgment or judgments confessed shall be without stay of execution. Obligor specifically waives any right of inquisition on any real estate that may be levied upon, and vgluntarily condemns the same, authorizing the Prothonotary of any county or counties to enter upon the writ of execution its said voluntary condemnation, and hereby waives and releases any and all relief from any and all appraisement, stay or exemption laws of any state whether currently in force or hereafter to be passed. 1998. WITN~3S the due execution hereof this 29th day of October, ATTEST: THE CAPITOL STEPS ASSOCIATES, INC. i ~ HI- ~~~~~ ~~ ( } President i, D. MARK THOMAS, intending to be legally bound, hereby guarantee the full and complete performance of The Capitol Steps . Associates, inc., to fund the obligation as described in the foregoing Judgment Note. ,,,._...~ .f /~ r t~1 (SEAL) D. C HOMAS -2- Jc: 9/.990 Moccypa Mort itatiea ~ ps9~ KELF6R 1800 a:+tN 6 MMRL. LLY troy Oec 1/1991 [e Dao-31/2}99 Hepacei ..°oe: SbQl Realty. Le. P.e: 500 YoztL Tn lral Sczart/ 260191 1 0 Merrlabury, PA /J "s`Q ,: iY. J.[.t,ft'Y: ~~• // ~ca tz3ne Pa1: .0 30 - R 6 , ~ ~ p t :7091.00 Yaeu1 are: . ia0: 12 :x wun L3 ~ .~1 !. -~' 1 SJ Pay.aat Fcque00Y: MoatOly . . 4 c ' /// N//f . /C'.~_i Letaraat Facter: 1.005616bs1 Paya:ant Tetal 2ate[eat Ptloclpal ea laaee Total Inc 3M to N:a/bec Payaarot Paypet Payees{ I.oaa par Yea[ Per DSea 11/1/1998 1 ]091.00 1109.38 1681.62 258512.38 1409.38 {6.71 L7./1/1999 2 7091.00 1100.28 1690.72 256821.66 2809.86 16.01 :/1/{999 Bub-Total 1276.91 1/1/:399 3 ]091.00 1391.12 16!9.88 255121.18 -16.11 1$.19 2/1/:999 / ]091.00 1381.93 1109.09 237112.69 1315.]1 Iy,11 313/:499 5 7091.]0 1]12.63 1110•]5 231591.76 2)18.79 15.17 :/:/:499 6 ]09:.00 1363.31 1121.66 269966.68 1081.11 16.83 '/:!:394. 7 3091.00 1353.99 1171.01 218229.61 51]5.72 61.32 5/L/:9u9 B 7091.00 1711.58 .1116.12 216183.23 6180.30 a1.21 1/:/1999 9 3091.00 1733.13 1)55.68 2141)1,36 9115.62 13.90 1/:/1949 10 3091.00 1325.61 1165.39 212961. 7 9111.OJ IJ.59 9/1/1949 11 7091.00 -13I3'0'f ~-17TC'$~' 41187.01 _ -"la7T{, pf' {7,71 :`•!1/!497 22 ]091.00 1]06.17 1784.57 219102.64 1206].30 42.96 1:/1/:759 1J 3091.00 1396.16 U91.N 2]7608.21 1JJ60.26 42.64 12/1/:399 l1 ]091.00 1281.0/ 180].96 2]3801.25 11661.]1 13.72 i/1/2CE0 Sub-Total 15!59.19 1/t/2000 13 7091.00 1171.21 181].73 2]]990.57 -74.61 12.00 2/i/20G0 16 )091.00 1267.15 1827.55 272166.97 1272.81 11.67 l/3/2000 ~ 11 7091.00 1251.59 18]3.57 Q70]3].56 2190.41 /1. J5 6/:/2000 38 ]091.00 1247.64 18Q.3i 22N 90.18 ]738.05 11.02 5/1/2000 19 3091.00 1237.66 1833.]1 226676./1 1975.71 {O.TO 6/1/2000 20 ]091.00 1227.62 386].]8 224)13.46 -620].]2 10.]6 1/1/2000 21 ]091.00 1217.52 1877.18 22289!. 98 1120,81 60,07 8/1/2000 22 - 7091.00 }207.7.2..-• }88].63 221016.3! BBM.22 39.10 f/1/2000 'FJ ]0!1.00 1191.17 1893.83 )19322.53 9825.]) 39.36 LG/1/3000 24 - 7091.00 1186.91 1904.09 - 217218.44 13012.31 79.03 it/1/2000 2S 3091.00 1116.60 1911.10 215]01.01 12188.90 38:69 12/3/3000 26 3091.00 1166.23 1926.17 21377!.27 3]753.16 JB. JS - 1/1/2001 Sub-Tots! 1/51].89 1/1/2001 27 7091.00 1335.80 1975.20 211164.07 -32.93 76.00 2/1/2001 21 ]091.00 1115.32 1945.68 2091}8.40 1112.38 71.66 ]/L/2003 29 3091.00 1171.]1 1936.22 207762.18 221 T. 16 31.31 1/3/2001 30 7091.00 1124.1! 1966.81 205313.71 7371.3/ 36.36 5/1/2001 J1 3091_00 1113.53 1977.87 20359)_90 1181.88 36.61 6/I/2001 32 ]091.Op_ 1102.62.. )88.18 20160).72 5381.10 76.26 7/1/2001 73 ]091.00 1092.03 - 1998.95 199610.1] 6619.13 13.91 B/1/2001 9/i/2051~ 71 -33- ]091.00 J0~;: 00 1011.23 ~a7~71 2009.77 ZR ~ 6~6 197f0~00.- ~149553~ 4 1]60,7$ ] ]5.55 _. [ . BC. ] 18 3 .32 X5.19 10/1/29^.: 36 7091.00 1059.39 20]1.61 19351 B. 1] YB 90.71 ?6.81 a /:1200: 11 3091.00 10{8.?9 - 2012.61 193505.12 30939.10 31.6+ ]b:/270] ?B 7091.00 1011 JI 2033.68 189192.16 11916. 12 J1.:: •/i/2v:`c 3aD-Total 1703].80 :/:/1071 39 3091.00 1826.20 2066.80 181381, 64 -31.11 33. 1< .:/1,'20.11 10 3091.00 1015.02 2015.98 185]11.66 987.81 33. J8 3/I/<C02 11 - 3091.00 1007.)1 208E 27 183226.1] 148E 61 J3.O1 VI/2C 72 _ _ , ~^ , ,__~2 ~ 3091.00 992.41 20!8.53 183325.90 2980.08 72.6] 5/1/2232 63 7091.00 981.10 2109.90 119016.00 J%1.39 32.26 6/{/:002 1/ 3091.00 969.67 2321.3) ]T 6891.61 1930.85 31.88 1/L/+002 85 3091.00 956.11 2172.82 PIT63.83 5869.03 31.51 alt/2701 /6 3091.00 916.67 2311.77 172617.47 68]3.66 71.13 9/1/2001 Il - 7093.00 975.01 2155.91 110161.19 1TTq•61 30.15 10/1/2002 , /8 ]091.00 !23.37 2167.p 1682!3.82 8691.00 ]0.16 11/1/2002 19 ]091.00 911.3] 21)1.11 16U 11./1 9601.51 29.98 12/1/2003 10 7093.00 899.1! 21!1.21 367127:20 10303.]8 ~ 29.59 1/1/2003 Sub-Total 11422.58 1/1/200] S1 7093.00 tl7.f2 2207.08 ~ 161720.11- 31.28 29.20 2/1/2003 32 ]091.00 873.!8 2213.01 159505.10 86.70 28.80 3/1/2003 5J - ' 7011.00 867.!9 2227.01 337178.08 1730.69 ~ 28 12 1/{/2001 51 7091.00 a31.l2 3271.06 133031.03 23412.61 . 28.01 3/1/200] 55 ]011.00 87!.79 2251.21 152787. t0 3402.41 21.61 6/1/2003 S6 ]0!1.00 827.60 2267.10 150326.10 12]0.01 27 21 1/1/2003 57 7011.00 815.34 2)75.66 118)/1.1{ 5015.35 . 26 81 e/1/2003 56 3091.00 (07.01 2187.99 115960.16 38{{.36 . 26.41 9/'/IC03 - 5! 3091.00 7!0.62 2300,]8 113660.78 6678.90 26.00 t0/1/2007 60 7091.00 718.16 2332.N 141741 S4 1111.11 23.51 it/_/2003 61 ~ 7091.00 165.63 2725.77 179022.17 8182.78 23.18 :2/1/207 62 7091.00 757.04 2331.96 . 136681.21 8935.81 21.16 1/./20.':1 Sub-Total 9103.65 :/:/20 ~6 67 7091.00 710.11 IJ50. s3 131733.58 -21,26 ~ 26.35 [/:/CU 71 64 3091.00 127.61 2363 Ji 1]1910.22 700.18 23.93 l/1/-: f.7a 65 109t.P0 111.81 2776.16 129591.06 1115.22 23.31 <.1/240< 66 3091.00 701.91 2]19.07 127205.07 211). I9 2].08 ' 5ll/1'176 bt ]091.00 689.07 2101.9) 121607.05 2806.11 22.66 .:/V2':v1 ~ e'8 709E 00 - 616.02 2136.91 322388.07 3182.27 22.23 'it/2001 81 3091.00 662.94 2418.06 119960.01 {1.65.11 21.80 9/1/iuw 70 ]091.00 649.78 2N 1.22 111511.]8 ~ 1791.95 21.37 4/{/20.!6 T1 7091.00 67c.56 2151.11 135061.]3 3171.51 20.93 2^/i/20Ga 12 3091 .p0 627.21 2167.73 132596.{1 605{.11 20.50 !1/1/2001 T3 3091.00 609.90 2181.30 - 110115.31 6664 6l 20.06 12/1/2001 ]/ 7091.00 596.16 2194.54 10)620.11 7261.37 19.61 t/1/2003 - Sub-70{61 1969.18 1/1/1005 TS ]091.00 582.95 1308.05 '105112.92 -23.11 - 19.11 2/3/:005 76 ]091.00 56!.16 '2521.61 102391.28 516.26 18.72 1/1/2005 ll 3091.00 555.70 2535.30 100055.98 3099.96 18.27 1!1!2005 TB 3091.00 513.97 ~ 2319.07 91506.95 1661. 9J 11.82 5/1/2005 79 7091.00 528.16 2562.81 94944.11 2110.09 IT.31 u'J.v W~ ~~: J~~e~ • v4ii - x/13`5 P:xara! ?er: :F~e l: Rea1:Y. [pc. P<: S7•: Sect.: :'.:rd Stwet, AZtri a".u q. YA ?ci pcipa l: 7er.: 7a .60 :cru:GGeC- __ Payaeet Total ace Nuetee PsyRapt Years :0.D0 Payaiept :3091-00 Payaept PceOUencys Nenthly teeexn:C Factoc+ 1.005116667 Total inc !ae Teac !ec Dln ca0e Nort9a3a Norciza tlov t¢2PEA MDOD AbLF1/ f RNfAL. LLP f[m De: 1/1992 to Dec 11/2199 Ia teceat Pciaelpal to lapee PayRevt PayaRMt Iosa 6/l/2005 ~ BO 1093.00 511.29 2376.72 92]67.10 2601.77 16.93 1/1/2005 B1 3091.00 500.]2 2330.60 09176. t2 7111.64 16.13 0/1/M05 t2 ]091.00 166.29 2601.71 07172.01 3670.99 19.99 !/1/200] 63 ]091.00 172.11 2611.32 0995].19 1117.17 13.57 34/1/2005 N 7091.00 IS 9.00 3033.00 11920.19 1601.16 15.06 11/1/200] BS 7091.00 iU.77 2617.27 79272.92 5011.90 24.9] i2/1/2009 86 7091.00 129.]! 2K1.61 76111 J2 3171.29 If .12 1!1!2006 SuG-ToUl 5912.08 1/1/2006 B7 1091.00 a39. 90 - 2616.02 73935.30 -22.01 1].69 1/:/2006 Bt 7091.00 100.41 280.52 71211. tt 377.61 1).17 /1/sWG t9 3091.00 703.93 2703.0! ft379. 6! lq.S9 12.69 ' 1/3/2006 90 30!1.00 771.26 2719.71 65919.91 1171.01 12.21 5/:12006 91 1091.00 156.52 273f.N (7005.0 :191.]7 13.77 6/7/2006 92 1093.00 711.71 2719.29 ~ 6033(.16 :37]•08 71.31 7/t/2001 91 3091.00 326.02 37 N.L - 37372.00 7159.90 10.75 3/1/2006 9/ 3091.00 711.05 2778.13 51792.13 217E 75 10.16 9/1/2006 95 3097.00 196.79 2791.21 51991.65 2761.11 9.76 10/11:::06 96 1091.00 211.(6 2109.]1 19139.70 30SO.Y0 - 9.1' 1:/1/230( 97 3091.00 166.N 2121 .36 1f]p.7S. 7716.61 1.76 Z2/3/200o N 1091.00 251-1/ 21]9.16 11521.09 3567.14 e. S6 Srl/2007 ~ Sub-Total 732].90 - :/3/2:01 99 7091.00 135.76 205!.21 '1066!.65 40.]3 7.76 ' /li .'.'-'JCt 100 7091:00 120.29 20]0.71 )7790.99 19l.N 7.25 1/l/299t 101 7091.00 201.71 2316.16 31912.69 101.63 6-71 03: f/I/^ 302 3091.00 It 9.13 Z901.t9 32030.80 393.79 6.22 . 5/3/2 007 10] 3091.00 177.39 2417.01 ~ 29097.19 7(7.79 1.71. d/1!2007 ~ 101 7091.00 IS7.59 29]9.11 26359.71 921.77 9_39 7/1/2007 105 3091.06 391.70 2919.]0 2]210.11 10(6.17 1.66 ' 2/1/2007 106 3091.00 125.71 2965.28 20313.20 - 1192.20 1.31 . 9/1/2007 307 3091.00 109.66 291 1.N 1T2p.tf 1701.16 ]. 61 :0/1/2007 lOt 10!1.00 11.33 2(17.1! 11266.]7 1793.37 .].O/ :1/1/2007 109 7091.00 .17.2E 1017.72 11292.63 1172.65 2.35 .2f 172007 110 3091.00 60.93 7070:05 1222.60 1313.70 2.01 3/1/2009 Su1s-Total 3595 A7 3/1/2003 Ili 3091.00 U.St 3090.96 5170.11 -1T. T1 1.0 2!1/2008 112 1091.00 21.01 ]062. >6 2117.11 10•]0 0.93 ' ]/1/1008 137 2121.62 1I.~3 213].YB 0.00 21.73 0.30 11sa1 Payeept 0.00 F1oc1W1 Pafd to LSSta - 260191.00 ' Ipterest Pa 10 b Da b 83122.62 Total Pafd !o Date 311316.62 ••• +eP^t[ 7eleec Wna •^ Aaeorc !/ert0a9e 1leorf.(taGloa Ica [ci Oet 09 11:]9:?0 1998 iJ:~ panTn _`t9P Oct 1/1993 to Dae 31!2199 kaxe Shill Reaay. Ine. ap : 500 Mocth T:S rd sttNt, Hartiaberq, PA . `r_rc:Da! 260191.00 . late : 6.50 !w1xnC x 3091.00 . yer x' 3.19.910330 Exhibit B WHEREAS, Para One Corporation, hereinafter "Para," and State and Third Street Associates, a partnership, hereinafter "Associ- ates," entered into a Modification Agreement, on February 28, 1987, the Second Modification Agreement on February 20, 1992,_and the Third Modification Agreement on August 3, 1993, all of which. are incorporated herein by reference; and WHEREAS, Para and Associates wish to modify the terms of repayment of the unpaid princigal of Two Hundred Sixty Thousand One Hundred Ninety-four Dollars ($260,194.00); and WHEREAS, Associates are selling The State Street Building to The Capitol steps Associates, Inc. ("CS") and CS will agree to pay the unpaid principal set forth above; and WHEREAS, subsequent to said sale, Associates will be terminated; and WHEREAS, CS is placing a first mortgage on The State Street Building and has assured its .lender that said first mortgage will be the only mortgage lien against The State Street Building; and WHEREAS, Wayne B. Titus and Jean S. Titus, his wife, and Heath L. Allen and Eleanor M. Allen, his wife, are willing to guarantee performance by CS hereunder. NOW, THEREFORE, Para, Associates and CS, intending to be legally bound, agree as follows: 1. The foregoing recitals are incorporated herein by reference. 2. The unpaid principal of Two Hundred Sixty Thousand One Hundred Ninety-four Dollars ($260,194.00) will be funded by CS with monthly payments of Three.Thousand Ninety-one Dollars ($3,091) a month, with the initial payment due and owing no later than November 1, 1998. Each monthly payment will include inter- est at the rate of six and one-half percent (6~$) per annum. The amortization schedule is attached hereto as Exhibit A. 3. With twelve (12) months' notice, Para shall have the right to receive the unpaid principal, provided, however, for administrative convenience, Para shall have no right of partial prepayment of principal, but only of total prepayment of princi- pal. 4. With twelve (12) months' notice, CS may prepay the obligation, together with unpaid interest, provided, however, for administrative convenience, CS shall have no right of partial prepayment of principal, but only of total prepayment of princi- pal. 5. Para has delivered to Reefer Wood Allen & Rahal, LLP ("RWAR"), in trust nevertheless, a satisfaction piece for .its Mortgage dated October 29, 1982, which KWAR is authorized to deliver to CS at settlement, provided, however, that RWAR mails to Para a fully executed original of this Fourth Modification Agreement. 6. This Agreement shall bind the heirs, personal represen- tatives, successors and assigns of the parties hereto. -2- , WITNESS the due execution hereof this ~ day of October, 1998. PARR ONE CORPORATION BY~~~~~~X;c.Wr~o Nachman M. Gerber, President STATE AND THIRD STREET ASSOCIATES BY~~ eath L. A len, Partner THE CAPITOL STEPS ASSOCIATES, INC. By~~ D. Ma Thomas,~Pres dent ~~ -3- We, WAYNE B. TITUS, JEAN S. TITUS, HEATH L. ALLEN and ELEANOR M. ALLEN, intending to be legally bound, hereby guarantee the full and complete performance of The Capitol Steps Associ- ates, Inc. to fund the obligation as described in the foregoing Fourth Modification Agreement. WITNESS: -~~ ' ~(S~) WA TITUS ~~.~ JEA~S. TITOS /j~...~ L . /~}XY~,..`__ (SEAL, HEATH L. ALLEN -~nucJ )_ OD11~.~ (SEAL) ELEANOR M. ALLEN -4- SHELL REALTY, INC., f/k/a PARR ONE CORPORATION, v. Plaintiff THE CAPITOLBTEPS ASSOCIATES, INC., Defendant IN THE COURT OF COMMON PLEAS OF DAUPHIN COUNTY, PENNSYLVANIA CONFESSION OF JUDGMENT FOR MONEY No. a.cR~3- ~~`- a 3.35 ENTRY OF JUDGMENT AND NOW, this day of ^' ~ -'- ~' ' ~ ~~ .2003, Judgonent is hereby entered in favor of the Plainti$ Shell Realty, Ina, and against the Defendant, The Capitol Steps Associates, Inc., and damages are assessed in the amount of S 193,434.07, together with interest from the date of judgment plus costs of collection. - ~ ; } ~ i ,, i ~2 Prothonotary Appraisal Value (CB Richard Ellis, Inc.) Less: Commerce Bank Loan (2895550) Commerce Bank Loan (2895450) City Real Estate Taxes School Reaf Estate Taxes County Real Estate Taxes First Monroe, Inc. Waypoint Bank Judgment Note 3 Thomas Loans $2,800,000 226,641 1,619,421 19,286 45,645 12,109 11,000 16,500 191,506 95.000 $562,892 Plaintiffs 50% Interest 281 446 (1) See LaSalle National Bank Settlement Statement included herewith. (1) (1) (1) (1) (1) (1) (1) (2) (2) See Exhibit A hereto. Settlement Statement Transactions without Sellers I wiaaAmiwa9amw.r: T'10[ ~rrru2ar4 AuocrAa2, izec. 30o x. 3mD If92sr 1 ihopsrty loae0rc Afd6fsrsree0m a0ow) soo •. aen sauaez wAZCeOAx, rasno3 1. brm NIm.1A r3N4)ni. RESPA U.f.Op~MwLLd MewMp wu~e~.o.Yww..4 l.dazie auu xar3arAt Ax2oczArzox 3]3 20. r.2Aars2Txzar cxzcAao, zs cocoa s aoarcx, mc- 2'l7teL'r 1335 rloOR, /rAd232spp10, rA 37303- Lan Wsnbsr of - N - o2r SsOMmsm Dsb: aa7/cool RsspNsbn Dsb: esslUsrnsrrt M. Dbbunsmsntb OlMn t00. Msmt Y COnnssea wllp LASS 1301. 001. lan W 0 % 002. Lan ~ 1502. 003. b 004. 1307.CGN6JlS xJ11DI, L06x i2IT3730 ~ i22s, N3.2r 005. a06.. b 1604. , 'WT, bMtwlab 1606, NIS0-tCr xYOr, 6011x 2tl31T ,423.N eo9. e1o. 1606.x0lzx, torsscx d nuvsr N,33a.oo en. a00. Wms 6b99bs0 LsnNrb W PMd k Adssna 1507, 901. MO. Nfm OD/37/2003 b 20/03/2003 = 14D6. C3rY xG1L r.sraTS TAxi'2 it ,243. d2 002, 61a19sOs Yupana prwnium br 0 ma0w b 1509, iC200L P:.r xr7A7'i rA7T8 13,611.70 80.1. Hs1sN bsana OrMSbm b. 0 yssr(s) b 1510. COWrs'r rl.1L r2T11Tt rJNTd d3 ,308.33 904. 1060. RSwvp wM6 Wrdw 1511. r3701r emu, zxc. ~ dal, ooo. a0 t00t.HwnlYwsna ~ o.oo ma. a 1002. O.QO m00. i .1512, 1W7. lsrs 0.00 11106. a Oq 1001: iblb 0.00 n10f. a mD 1517. s937OIMr liW! 436,300,00 1005. 0.00 ma. 7 0b 1006. FIOpd bnssrw 0.00 ma, i 15/4. 1007. 0.00 mp. a m0 1006. 0.00 fops, a Oa tS15. 4009. M 4100. TMb 1620. TOTAL OO4BUReFD ,rS3, 3]3.9] 1101. SOMsmsnl V M b r2Tli A06N7Y sn4sr a Noe 1805 tt . Abwsela6b b 1107. TW b . 110/. TMsM n bMsrl .1106. DaumrM asOSrstlOnb 1106, NMS M b 1107. Abprays'fasb 1Lrm1-1P16iT11M Mpm numbers 130,000.00 -1108. TMsallldUlab brxplaaum rl3Zx AOiM.r' , LIC. esm msnWrs 411.216.7! $~ alt Sheet 4109. Lsntlsn r ~ N. ~T 1110. Owners i 1000. ,3s6,r72.13 1111. 1112. 1601. M1s Css11ICMCk kern Bprtawsr . 1115. 1200. OsvsrllnsM 6114 TnOSNs 1602. Ybw iauu SSMSmsnt ChWw 4Y3,19s.71 1204. Nsarr6110 bss: 4210. oo 1 1202. 1tlW., 11Ma TOW DMbsswnsnlb WN11 ':935, 351. r3 207. 1520 1201. 1801. l9us4 TOW dWUrarantbeorrowsr dar0,]tl.7e 1 (sear sprkstlonWSrosppNesbb 1500. AOalesnsliisWs01n1t lsszlssbllPSrb0 rsqu9s0 by Iny t eonpw(al8gnsants>: 504 x . 1506. C4r °~, . ~. 1 X 1 1000. Tabs estlNalsnt CAsrea (snbra Yr 1002) 423,tis.71 ya~ec noa~ ~GIaaONy,EN.TN or Per+fsnvAniA e~irR~uao coarPU~nnci Ovr of flUSTENtEi-1ERGER SEC7rON Derr zea9a7 IIAia715BUli('. PA 17116-0917 TFLEPffforE raxeeR m717e3.sosz Tiy (800) N730201senxa fa Taxpayers wiN Spetial Ilearnp an0lar Speakrtq NeeOS Ony) OUT OF EXISTENCEMIITHDRAWAL AFFIDAVIT PLEASE PRINT OR TYPE INFORMATION DEPARTMENTUSEONLY BOX NUMBER THIS FORM WILL NOT BE PROCESSED iF NOT PROPERLY SIGNED AND NOTARIZED NOTE: Page 2 of this form must be completed. Section A pertains to a PA corporation or a foreign corporation that operated wholly within Pennsylvania Section B pertains to all other foreign corporations. Date of Incorporation or Certificate of Authority 9/09/1998 Account ID 3924-423 State of Incorporation PENNSYLVANIA Entity ID (EtN) 25-1820541 NafnedCarpora6on/Taxpaye THE CAPITOL STEPS ASSOCIATES, INC. On this appeared, 23800011016 day of ,year before me personally who duty swears or affums: 1 was connected with the above corporation and have knowledge of its affairs. Said corporation ceased to transact business in Pennsylvania do or about • 12/31/03 ,and alt assets were sold, PAonlh Day Year assigned or distributed on 12/31/03 ,and since that time, the corporation has not owned any property Month Day Year boated in Pennsylvania, nor maintained an office therein, nor has performed any sales activity, and does not intend to bansact further business in the Commonwealth. - 'If corporation never transacted business or held assets in Pennsylvania, please use the words NEVER TRANSACTED BUSINESS in place of a cessation date. The tiling of this Affidavit does rrol affect the status of the Certificate of IncorporatioNAuthority of this corporatan but does permit the Department of State to relinquish the use of the present name of the corporation to another corporation. PA Swom to and wbscribed belorc me lids day of ,year (Notary PuWiu DisMd Jusgce, or Authorized Agent, Department of Revenue) My commission expires ,year fr+or+n slaww...nd S.h in tskaabn•erAra,efq Tide: P.O. BOX 901 CAMP HILL, PA 17011 t-~e+ewrAea.uaAra.re) Telephone Number PLEASE PRINTOR TYPE INFORMATION NO FILING FEE PacA~ou ruraroa .. _. y C F H W ~ W W J ¢ is ~ > 9 N f O QO ¢ U O ~ CO WS W N - d w CQ W 1 W f 1 4t- ON z O F H ~ a O WS ¢ ~ a~n HF U O 4 O G ~W ~ Q~ ~ x Zm U O U 7 0 o o as = vi w a ¢ m ~ > FW z 1 ~ O f¢ W . O Orc ~ ¢d f w a c p 4 r c 4 4 m Z O ~ Q Z ~ Z p a Q y Wk ~ W }rc ' F o4F a C~ O O J0 2 W~ Z f ¢ I i. W ~ f7 F S W 2 G J ~ WU c W m N N ~`'~ ~ ~ }}N ~ ~ W O O N ~ O F ~ WS pQ w a i~ N wp 9 i v f o n) ~y~ Q F 4 J Oyu }a j ONE o N D ~ O~ W~ = 4 f~l O e-1 f J ; V N 4a. W d O Z 4 W WK CN ~ Vs ~ m y yo ~ 00 N Q o O o F ¢ _ ¢W Y d ~ Oo ~ O ~ a Fo ma m r NN z W 0 N W N LL < ~"' W ND_ 9 ¢S ¢U m j 0 ~ 0 O I i W F O U S ¢N 0 ~ H N W = o t`') ~ W 4 O 4 W W 6 W 20 W O U Q F O ¢S d N Rp 6 8 $7~ J $ 3 V K = ~U ~ N € 1 ~ ~ H r ~ Z N VD r r r ~ ¢ ¢ = ~-'OS O~ y3y to M ~ 'y W U C 2 O¢ K~ ~h r g ~ h ~ ~ ~ ~ ~~ H ~ p N ~ Y f N N ~ N ~ ~ ~ = LL 0. ~ F O h ~ ,,, £¢J W ~ O ~~ O Z ~ H U ~ u ~ Ll Z O = <d F h .~ =u N 3 ~ tv U ~ ~ J ~V O u s U ~ C ~' Z ~ f 4 ~pS t .i a ~ U Q F O a N O Q WSW ~~ a ~ ~ QO ~ F ~ ~ < ¢ Z yO a ~ 0 2 y a 4 G W O~ ~ H » X PO a OC Oy N ~ 5 y o W E ~ t ~ a C vi UyW ¢W 7 Q U a a f ~~ ii OS UF- g'~ q + 7 O F a.~ d 4] ° _ S a o P ~ O» U LL d ~ ¢LLK t N ~ W ~ O ?j ! ~ ¢ ~ y$ W N yY m ~^ N a a ~ 2 F m 44 U V N U 1n3 N N N y~ r Q U X w z a a z a f QO a a O U O a O z° O N w OK ZQ Q W Fw- f N H~ ~O IaN ~~ ~~~ F- Q= ~' N OF Qa as NN 3a ZV O¢ H~ a w'-' ~_ OW U} }m Z QQ LLa F- a Q Z W ~" Q N Z 3 0 y N~ ~ ~Q O ZN p~ ~~ ~ N ~O O ~- Z W= m ON K~ a~ ~ o a aN ZN W ¢ ~U ~ Y zd. a az CERTIFICATE OF SERVICE I hereby certify that I have served the Defendants counsel in this case with a true and correct copy of the attached Plaintiffs' Response to Defendants' Preliminary Objections to the Amended Complaint by placing the same in the United States Mail at i~ Harrisburg, Pennsylvania, first-class postage prepaid, on the 24 day of August, 2005, addressed as follows: Thomas B. Schmidt, III, Esquire (19196) Pepper Hamilton, LLP 200 One Keystone Plaza North Front and Market Streets P.O. Box 1181 Harrisburg, PA 17108-1181 John Havas, Esquire By ~L12,~,u, ~Xi Vikki Moore, Secretary r? `~ ~ ~ i `9 (~ ~` 4Z~ } ~ ~ G c`") + ~ ~ . ~.i `- ' i r , G: _,"' 4 ~~ .. ~„~, a RL __ --.U ~ J 1ti~5 D. MARK THOMAS AND JEANNE M. THOMAS, Plaintiffs v. CHARLES R. DAVIS, KAREN S. DAVIS, AND 200 NORTH THIRD, INC., Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION -LAW NO. 04-166-Civil Term ORDER AND NOW, this 29 `day of ~,w,. " , 2005, upon consideration of the foregoing petition, it is hereby ORDERED that: (1) a rule is issued upon the respondents to show cause why the petitioners are not entitled to the relief requested; (2) the respondents shall file an answer to the petition within 20 days of this date; {3) the petition shall be decided under Pa.R.(:.P. No. 206.7; (4} argument shall be held on 6?G:lfilcv+. / 3 _, 2005, in Courtroom ~ of the ;~ qsa-o4•m_ Cumberland County Courthouse; and (5) notice of the entry of this order shall be provided to all parties by the petitioners. ~~' ~~y l~~c~~s ~-~- fly S'~1,,~,~d~- BY THE COURT: ~i ~7~ ~1 f'~~ - ''!i l~ ~~J~~'iY~CJ~VVi~1Vuu ~Hl ~0 .,~ ~~E~~1C~-Q3l!~ D. MARK THOMAS AND JEANNE M. THOMAS, Plaintiffs, vs. CHARLES R. DAMS, KAREN S. DAMS, AND 200 NORTH THII2D, INC., Defendants. IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA No. 04-0166 CIVIL ACTION -LAW STIPULATIQN Plaintiffs and Defendants, by their undersigned attorneys, stipulate and agree as follows: 1. Plaintiffs' Petition for Leave to File a Second Amended Complaint Pursuant to Pa. R.C.P. No. 1033 ("Petition"), filed August 29, 2005, is hereby withdrawn as moot. 2. Plaintiffs may, pursuant to Pa. R.C.P. 1033, file and serve the Second Amended Complaint attached to the Petition as Exhibit 1. 3. Defendants shall file and serve an answer or otherwise plead in response to plaintiffs' Second Amended Complaint within thirty (30) days of service of the Second Amended Complaint. For 612rf~ephens'~ing Mechanicsburg, PA 17050 (717)979-4840 For Defendants Thomas B. Schmidt, III (PA 19196) PEPPER HAMILTON LLP 200 One Keystone Plaza Front & Market Streets Post Office Box 1181 Harrisburg, PA 17108-1181 (717) 255-1164 ~' ~:, v -~, ~r, ~„ C? ~ fp ~=' -~ ..yfr 6 :. )~7 'f.) t! ~^'j s~ ~' =; " ; . u .--- c~ G. l ~~ . D. MARK THOMAS AND JEANNE M. THOMAS, Petitionerss v. CHARLES R. DAVIS AND KAREN S. DAVIS, Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION -EQUITY NO. 04-166 CIVIL TERM NOTICE YOU HAVE BEEN SUED IN COURT. If you wish to defend against the claims set forth in the following pages, you must take action within twenty (20) days after this Second Amended 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 ajudgment may be entered against you bythe Courtwithout further notice for any money claimed in the Amended Complaint orfor any other claim or relief requested by the Plaintiff. You may lose money or property or other rights important to you. YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER OR CANNOT AFFORD ONE, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW TO FIND OUT WHERE YOU CAN GET LEGAL HELP. Cumberland County Bar Association Two Liberty Avenue Carlisle, Pennsylvania 17013 (717) 249-3166 or 800-990-9108 AVISO USTED HA SIDO DEMANDADO/A EN CORTE. Si usted desea defenderse de las demandas que se presentan mas adelante en las siguientes paginas, debe tomar accion dentro de los proximos veinte (20) digs despues de la notification de esta Demands y Aviso radicando personalmente o por medio de un abogado una comparecencia escrita y radicando en la Corte por escrito sus defensas de, y objecciones a, las demandas presentadas aqui en contra suya. Se le advierte de que si usted falls de tomar accion como se describe anteriormente, el caso puede poceder sin usted y un fallo por cualquier sums de dinero reclamada en la demands o cualquier otra reclamation o remedio solicitado por el demandante puede ser dictato en contra suya por la Corte sin mas aviso adicional. Usted puede perder dinero o propiedad u otros derechos importantes Para usted. LISTED DEBE LLEVAR ESTE DOCUMENTO A SU ABOGADO INMEDIATAMENTE. SI LISTED NO TIENE UN ABOGADO O NO PUEDE PAGARLE A LINO, LLAME O VAYA A LA SIGUIENTE OFICINA PARR AVERIGUAR DONDE PUEDE ENCONTRAR ASISTENCIA LEGAL. Cumberland County Bar Association Two Liberty Avenue Carlisle, Pennsylvania 17013 (717) 249-3166 or 800-990-9108 Respectfully submitted, Date: October _, 2005 By: 6121 Stephen's Crossing Mechanicsburg, PA 17050 Tel. No. (717) 979-4840 -2- Supreme Court I.D. #15312 John Havas, Esquire PA Attorney I.D. No. 15312 6121 Stephen's Crossing Mechanicsburg, PA 17050 (717) 979-4840 D. MARK THOMAS AND JEANNE M. THOMAS, Plaintiffs v. CHARLES R. DAVIS AND KAREN S. DAVIS, Defendants Attomey for Plaintiffs D. Mark Thomas and Jeanne M. Thomas IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA N0.04-166 CIVIL TERM CIVIL ACTION -LAW SECOND AMENDED COMPLAINT AND NOW, comes the above-named Plaintiffs, by their attorney, John Havas, Esquire, and make the following averments: 1. The Plaintiffs are D. Mark Thomas ("Plaintiff D. Thomas") and Jeanne M. Thomas, his wife ("Plaintiff J. Thomas"), adult individuals who reside at 100 Walnut Street, Lemoyne, Cumberland County, Pennsylvania 17043 (collectively "Plaintiffs"). 2. The Defendants are Charles R. Davis ("Defendant C. Davis") and Karen S. Davis, his wife ("Defendant K. Davis"), adult individuals who reside at 19 Tuscany Court, Camp Hill, Cumberland County, Pennsylvania 17011 (collectively "Defendants"). 3. Upon the urging of Defendant C. Davis, Plaintiffs and Defendants agreed to pursue the purchase of The State Street Building located at 500 North Third Street, Harrisburg, Dauphin County, Pennsylvania. Thereupon, Plaintiffs and Defendants formed a corporation by the name of The Capitol Steps Associates, Inc. ("Capitol Steps"), for the purpose of acquiring and operating The State Street Building, and filed its Articles of Incorporation with the Department of State on September 9, 1998. Pursuant to the Articles of Incorporation, "the aggregate number of shares authorized" for Capitol Steps was "100" shares. 4. Of the 100 authorized shares of Capitol Steps, fifty (50) shares were issued to Plaintiffs, as tenants by the entireties, and fifty (50) shares were issued to Defendants, as tenants by the entireties. 5. At the time of the incorporation of Capitol Steps, Defendants through their stock ownership of 200 North Third, Inc. ("200 North Third"), also had ownership of The Fulton Bank Building, located at the corner of North Third and Locust Streets, Harrisburg, Dauphin County, Pennsylvania. 6. On September 8, 1998, an Agreement of Sale was entered into by and between Capitol Steps and State and Third Street Associates, then the owner of The State Street Building, whereby Capitol Steps agreed to acquire the building. 7. On October 29, 1998, Capitol Steps acquired The State Street Building and financed the said acquisition through the following: a. The execution of a $1,300,000 mortgage loan and note with Mid-Penn Bank as the lender ("Mid-Penn loan"), with Plaintiffs and Defendants guaranteeing the said loan. As part of the loan transaction, Plaintiff D. Thomas was also required to pledge infavor ofMid-Penn Bank 5,190 shares of North Pittsburgh Systems, Inc. common stock. b. Capitol Steps' execution of a Judgment Note dated October 29,1998, agreeing to pay Wayne B. Titus and Health L. Allen, the principals of State and Third Street Associates, the sum of $23,226.30 ("Judgment Note 1 "). Plaintiff D. Thomas and Defendant C. Davis personally guaranteed the full and complete performance of Capitol Steps to fund the said Judgment Note 1. -2- c. Capitol Steps' execution of a Judgment Note dated October 29, 1998, agreeing to pay Wayne B. Titus and Health L. Allen, the principals of State and Third Street Associates, the sum of $160,000 ("Judgment Note 2"). Plaintiff D. Thomas personally guaranteed the full and complete performance of Capitol Steps to fund the said Judgement Note 2. d. Capitol Steps' execution of a Judgment Note dated October 29,1998, agreeing to pay Para One Corporation the sum of $260,194 under a payment schedule through March 1, 2008 ("Judgment Note 3"). Through a Fourth Modified Agreement dated October 16, 1998, Wayne B. Titus and Jean S. Titus, his wife, Heath L. Allen and Eleanor M. Allen, his wife, the principals of State and Third Street Associates and Plaintiff D. Thomas guaranteed the full and complete performance of Capitol Steps to fund the said Judgment Note 3. Plaintiff D. Thomas, however, was required to also execute a personal guarantee to hold Wayne B. Titus, Jean S. Titus, Health L. Allen, and Eleanor M. Allen harmless against any loss that they or any of them suffered by the failure of Capitol Steps to fund the obligation described in the Fourth Modification Agreement (Judgment Note 3). A copy of the Fourth Modification Agreement with the aforesaid guarantees and Judgment Note 3 is attached hereto and made a part hereof as Exhibit A. (Para One Corporation was subsequently merged into Shell Realty, Inc.) 8. Following the said acquisition of The State Street Building, Defendants assumed management and operating responsibilities of Capitol Steps, including The State Street Building, and Plaintiffs by check dated January 8, 1999, made a $10,000 equity investment in Capitol Steps. Due to Capitol Steps' initial cash deficiencies as alleged by Defendant C. Davis, Plaintiffs by check dated February 16, 1999, loaned Capitol Steps -3- $50,000, and by check dated September 29, 1999, loaned Capitol Steps another $45,000. No formal loan documents were executed between Plaintiffs and Capitol Steps, however, it is Plaintiffs' belief and they so allege that the said loans were recorded as loans on Capitol Steps' financial statements and income tax returns. 9. By letter dated July 12, 1999, Defendant C. Davis advised Plaintiff D. Thomas that Capitol Steps had satisfied Judgment Note 1 resulting in the release of both Plaintiff D. Thomas' and Defendant C. Davis' personal guarantees thereon. 10. On November 29, 2000, Capitol Steps, through the efforts of Plaintiff D. Thomas, secured refinancing through loans from Commerce Bank with the funds received therefrom being employed to fully satisfy the Mid-Penn loan and Judgment Note 2. This refinancing was obtained based upon financial statements prepared by Defendants which reflected the viability of The State Street Building to sustain itself based upon its rental revenues less expenses. Further, Plaintiffs and Defendants were required to execute second mortgages on their residences to secure a portion of the financing. Capitol Steps' full and complete performance under the Commerce Bank loans. 11. In September 2001, Defendant C. Davis informed Plaintiff D. Thomas that Defendants wanted to refinance the outstanding loans on The State Street Building and The Fulton Bank Building. Defendant C. Davis represented that such refinancing could not be accomplished without Defendants acquiring full ownership of Capitol Steps. Defendant C. Davis refused to divulge to Plaintiff D. Thomas the name of the proposed lender. Negotiations then immediately ensued between Plaintiff D. Thomas and Defendant C. Davis regarding terms by which Defendants would acquire full ownership interest of Capitol Steps so that the said refinancing could be obtained, and so that Plaintiffs' personal guarantees -4- in connection with the Capitol Steps' obligations, including Plaintiff D. Thomas' personal guarantee of Judgment Note 3, could be extinguished. 12. On September 12, 2001, Plaintiffs and Defendants executed the following documents: a. Settlement Agreement-This agreement, which is attached hereto and made a part hereof as Exhibit B, provided for the conveyance of Plaintiffs' fifty (50) shares of stock in Capitol Steps to Defendants for $10,000 to be paid at the time of Defendants' closing on the aforesaid refinancing. The Settlement Agreement at Paragraph 3 specifically conditioned the transfer of interest of Plaintiffs' fifty (50) shares to Defendants upon Defendants' obtaining the removal of Plaintiffs as a guarantor of all Capitol Steps obligations, as follows: 3. PAYMENT OBLIGATIONS. The transferof interest and payment of any monies pursuant to this Agreement are expressly conditioned on the Corporation and/or Davis obtaining the necessary financing to refinance the Corporation's principal asset, the real property and building erected thereon known and numbered as 500 North Third Street, Harrisburg, PA, and removing Thomas as a guarantor of the Corporation's obligations. (Emphasis added.) See Exhibit B, SettlementAgreement, Paragraph 3. The SettlementAgreementwas executed by Plaintiffs and Defendants personally and on behalf of Capitol Steps. In recognition of the possible refinancing, the Settlement Agreement further required the Plaintiffs 'Yo cooperate in executing any and all documents confirming their withdrawal from the Corporation pursuant to this Agreement." Plaintiffs fully performed under this agreement by executing their Capitol Steps' share certificate so that the Defendants would obtain full ownership of Capitol Steps conditional upon obtaining the aforesaid refinancing and upon compliance with Defendants' obligations under Paragraph 3 of the Settlement Agreement to secure the removal -5- of all Plaintiffs' guarantees of Capitol Steps' obligations including Plaintiff D. Thomas' guarantee of Judgment Note 3. b. Promissory Note - As further consideration and to assure Plaintiffs' recovery of their $95,000 in loans to Capitol Steps, Defendant C. Davis personally executed a Promissory Note ("$125,000 Note"), a copy of which is attached hereto and made a part hereof as Exhibit C, agreeing to pay Plaintiffs $125,000 in monthly installments of $5,000 for the first five months and then $8,000 per month until the loan was paid in full. The note required the monthly payments to be made on the first day of each month and provided for a monthly $200 late payment penalty with an additional $20 daily late payment charge. 13. Defendants breached the September 12, 2001 Settlement Agreement in that they never secured the removal of Plaintiff D. Thomas as a guarantor of Judgment Note 3 and proceeded with refinancing representing themselves as 100% owners of Capitol Steps without securing the removal of such guarantee. Moreover, Defendant C. Davis has numerously and continuously defaulted on his obligation underthe $125,000 Note by failing and refusing to make timely payments and by failing and refusing to pay the agreed upon penalty and late payment fees. 14. Defendants did not inform Plaintiffs at the time the September 12, 2001 Settlement Agreement was negotiated and executed that Defendants on the same day had conducted a refinancing or were conducting a paper closing thereon with LaSalle National Bank, to be effective September 17, 2001, on a $2,200,000 loan to Capitol Steps ("LaSalle National Bank loan") to satisfy the aforesaid Commerce Bank loans, but not to satisfy the Judgment Note 3, which Plaintiff D. Thomas had personally guaranteed. Thus, on the date the September 12, 2001 Settlement Agreementwas negotiated and executed, Defendants -6- had no intention of securing the removal of Plaintiff D. Thomas' guarantee of Judgment Note 3 or paying-off the said note through the said refinancing, as Defendants had represented to Plaintiffs. The terms and conditions of the Settlement Agreement were expressly conditioned upon the termination of Plaintiffs' guarantees. Consequently, Defendants, through fraud and misrepresentations relied upon by Plaintiffs, secured Plaintiffs execution of the September 12, 2001 Settlement Agreement. Further, Defendants in connection with the LaSalle National Bank loan documents did not reveal Plaintiffs' ownership interest in Capitol Steps and that such ownership would not be conveyed to Defendants without Plaintiffs' guarantees on all Capitol Steps obligations being removed. Plaintiffs also believe and therefore allege that Defendants did not reveal to LaSalle National Bank that Judgment Note 3 was still outstanding and the necessity for Plaintiff D. Thomas' guarantee thereon to be removed before Defendants had 100% common stock ownership in Capitol Steps. The closing documents on the LaSalle National Bank loan further reveal that Capitol Steps, following the satisfaction of the Commerce Bank loans, received $190,343 in cash, which Defendants, in violation of the September 12, 2001 Settlement Agreement, did not employ to satisfy Capitol Steps' obligation on Judgment No. 3 in order to extinguish Plaintiff D. Thomas' guarantee thereon. At such time, Defendants did not provide Plaintiffs with any documentation with respect to the refinancing or any notice as to the closing thereon. 15. Plaintiffs mistakenly assumed that Defendants had satisfied Judgment Note 3 and Plaintiff D. Thomas' personal guarantee thereon through the refinancing as Defendants agreed to do as a condition precedent to receiving the effective transfer of Plaintiffs' fifty (50) shares of capital stock in Capitol Steps under the September 12, 2001 Settlement Agreement. -7- 16. Defendants' counsel, William Miller, Esquire, in orabout March, 2003, advised Plaintiffs that Defendants had not removed Plaintiff D. Thomas as a guarantor of Capitol Steps' obligations on Judgment Note 3, as required by the September 12, 2001 Settlement Agreement, and that Judgment Note 3 had not been satisfied through the aforesaid LaSalle National Bank refinancing. This revelation followed an inquiry by Plaintiff D. Thomas as to why he had received a letterfrom counsel to Shell Realty, Inc., f/k/a Para One Corporation, the payee on Judgment Note 3, declaring a default by Capitol Steps on Judgment Note 3 and citing Plaintiff D. Thomas as still being a guarantor thereon. Prior to that time, Plaintiffs believed that Defendants, through the refinancing, had paid off Judgment Note 3, or otherwise had Plaintiff D. Thomas removed as a guarantor of Judgment Note 3, as Defendants had agreed under the September 12, 2001 Settlement Agreement. 17. As noted herein in paragraph 13, Defendant C. Davis also remains in default on the $125,000 Note attached as Exhibit C in the following respects: a. The initial $5,000 monthly installment due November 1, 2001, was not received by Plaintiffs until November 29, 2001, and did not include the $200 late payment penalty or the $560 in applicable late charges. b. The second $5,000 monthly installment due December 1, 2001, was not received by Plaintiffs until January 2, 2002, and did not include the $200 late payment or the $620 in applicable late charges. c. The third $5,000 monthly installment due January 1, 2002, was not received by Plaintiffs until February 14, 2002, and did not include the $200 late payment or the $840 in applicable late charges. -8- d. The fourth $5,000 monthly installment due February 1, 2002, was not received by Plaintiffs until April 12, 2002, and did not include the $200 late payment or the $1,380 in applicable late charges. e. Except for those payments listed below in paragraph 18, no further payments have been made by Defendant C. Davis, and late payments charges continue to accrue. 18. Throughout December of 2002, Plaintiffs' counsel, though numerous communications with the Defendants' counsel, William Miller, Esquire, requested and demanded paymentspursuanttothesaid$125,000Note. Afternumerouscommunications in this regard, Defendant C. Davis issued a $5,000 check dated December 21, 2002, made payable to "D. Mark Thomas." Defendant C. Davis noted on the check that it was in payment of the Decemberinstallment. Underthetermsofthe$125,000Note,however,the required December 1, 2002 installment payment was $8,000 before application of the $200 late payment and daily $20 late charges. See Exhibit C. Plaintiff D. Thomas endeavored to cash the December 21, 2002 check but it was denied for insufficient funds. Defendant C. Davis on January 8, 2003, upon being informed that said check had "bounced," did deliver a cashier's check to Plaintiff D. Thomas in the amount of $5,000 (after being informed the amount should be $8,000). Thereafter, upon urging and communication between counsel on each occasion, Defendant C. Davis made sporadic payments to Plaintiff D. Thomas on the following dates and in the following amounts: (a) January 22, 2003 - $8,000 (b) February 20, 2003 - $8,000 (c) March 25, 2003 - $5,000 (d) March 31, 2003 - $3,000 -9- No payments have been received for principal, penalties or late payments since March 31, 2003. Late payment penalties of $200 per month and the daily $20 late payment fee per monthly obligation, together with principal owing less payments made as of June 30, 2005, total $230,360. See Exhibit D which is attached and made a part hereof. An additional $220 per day of late charges (11 late payments @ $220 per day) for every day on and after July 1, 2005, continues to accrue. 19. In face to face communications in early 2003, Defendant C. Davis advised Plaintiff D. Thomas that a sale of The State Street Building (and also possibly The Fulton Bank Building) was being planned and that when it was effectuated, Defendants would then satisfy all obligations of Capitol Steps, including Judgment Note 3, and eliminate Plaintiff D. Thomas' personal guarantee thereon. Based upon this representation, Plaintiffs entered into an executory accord with Defendant C. Davison March 3, 2003, whereby they agreed to forego some penalty and late charges owed under the $125,000 Note attached hereto as Exhibit C, if Defendant C. Davis remained current on his payments under that Note. In the event of default by Defendant C. Davis, the executory accord allowed Plaintiffs to proceed with all available remedies, including all those arising out of the September 12, 2001 Settlement Agreement. Defendant C. Davis did not honor such executory accord. 20. In March of 2003, upon being requested to allow Plaintiffs to receive notice of and attend any settlement on the sale of all rights in The State Street Building, Defendant C. Davis refused such request, but still represented that a sale of The State Street Building would occur shortly. Subsequently, Defendant C. Davis informed Plaintiff D. Thomas that the mortgagor (LaSalle National Bank) on The State Street Building was holding up the sale over a demand for a prepayment penalty fee which, according to Defendant C. Davis, was not justified. The said sale never took place. -10- 21. On or around June 2003, Defendants, through their counsel, informed Plaintiffs' counsel that a foreclosure action had been filed against The State Street Building, and that Capitol Steps'ownershipthereinwasjeopardized. Subsequently, Plaintiffsleamed from counsel that The State Street Building was subject to sheriff sale. Plaintiffs believe and therefore allege that The State Street Building was sold at sheriff sale and Capitol Steps has lost all ownership interest therein. Upon learning of this happenstance, Plaintiff D. Thomas met with Defendant C. Davis, whereupon Defendant C. Davis assured Plaintiff D. Thomas that he would not leave him "hanging" on the Judgment Note 3 guarantee. 22. On December 19, 2003, Shell Realty, Inc., f/k/a Para One Corporation, filed a Complaint against Plaintiff D. Thomas, among others, in the Court of Common Pleas of Dauphin County, at Civil Action -Law No. 2003 CV5419CV ("Shell Realty Complaint"), to enforce the guarantee of Plaintiff D. Thomas on Judgment Note 3, based upon Capitol Steps defaulting on the loan payments. A copy of the said Complaint is attached hereto and made a part hereof as Exhibit E hereto. 23. In the said Complaint, it was revealed that a Confession of Judgment had actually been taken against Capitol Stepson Judgment Note 3 (which Plaintiff D. Thomas was the guarantor) on September29, 2003. Defendants never notified Plaintiffs of thatfact, and Plaintiffs were unaware thereof. 24. The loan documents on the LaSalle National Bank loan reveal that Defendants had refinanced The State Street Building pursuant to terms advantageous to Defendants but extremely adverse to Capitol Steps and Plaintiffs. Such terms included an extraordinary prepayment penalty in the event of a subsequent sale of The State Street Building. Based upon representations byDefendants Davis' counsel William Miller, Esquire, and review of the loan documents, Plaintiffs believe and therefore allege that LaSalle -11- n I / National Bank demancN~d such prepayment penalty, in part, in exchange for not requiring Defendant K. Davis to personally guarantee the LaSalle National Bank loan. As a result of these financing terms, Defendants' joint assets and Defendant K. Davis' personal assets were not subject to foreclosure if Capitol Steps defaulted on the LaSalle National Bank loan, but Capitol Steps, due to the prepayment penalty, was financially precluded from selling The State Street Building upon advantageous terms to avoid the consequences of such default. At the same time, Plaintiff D. Thomas' personal guarantee of Judgment Note 3 remained outstanding because Defendants had never revealed to LaSalle National Bank that the said loan was outstanding and that Judgment Note 3 had to be paid and satisfied, or that Defendant D. Thomas' guarantee thereon had to be removed before Defendants obtained 100% ownership of Capitol Steps. 25. By protecting the assets of Defendant K. Davis and theirjointly-owned assets in exchange, in part, for agreeing to an extraordinary prepayment penalty clause in the LaSalle National Bank loan refinancing, all while keeping Plaintiff D. Thomas exposed to personal liability on Judgment Note 3 in breach of the September 12, 2001 Settlement Agreement, Defendants fraudulently negated Plaintiffs' ownership interest in and 50% control of Capitol Steps and negated Plaintiffs' economic opportunity to realize a profit on a sale of The State Street Building and any opportunity for Capitol Steps to satisfy Judgment Note 3 through the sale of the building. At the time of the closing on the LaSalle National Bank loan in the amount of $2,200,000, The State Street Building's market value was appraised by CB Richard Ellis, Inc., to be $2,800,000. Thus, there was adequate equity in the building to fully satisfy Judgment Note 3 and all Capitol Steps' outstanding obligations, including the amount owing Plaintiffs on their prior $95,000 loans to Capitol Steps, as shown in Exhibit F, which is attached hereto and made a part hereof. -12- 26. Following the execution ofthe September 12, 2001 SettlementAgreement and the transfer of Plaintiffs'. ownership in Capitol Steps to Defendants, conditioned upon the refinancing and removal of Plaintiffs' guarantees on all Capitol Steps' obligations, including Judgment Note 3, Defendants breached their fiduciary responsibilities to Plaintiffs as shareholders of Capitol Steps by mismanaging Capitol Steps, misapplying funds generated from Capitol Steps and fraudulently executing the LaSalle National Bank loan documents as officers and sole shareholders of Capitol Steps on terms detrimental to the best interests of Capitol Steps and Plaintiffs, all of which resulted in the loss of The State Street Building to the direct detriment of Plaintiffs. 27. Pursuant to a settlement agreement between Plaintiff D. Thomas, Shell Realty, Inc., and the otherguarantors of Judgment No. 3 ("Shell Realty settlement"),Plaintiff D. Thomas, as guarantor, by cashier's check dated March 30, 2004, paid Shell Realty, Inc. $175,000 in satisfaction of Judgment Note 3 and the Shell Realty Complaint. Count I -Breach of Contract D. Mark Thomas v. Charles R. Davis and Karen S. Davis 28. Paragraphs 1 through 27 ofthis Second Amended Complaint are incorporated herein by reference as if set forth fully. 29. Plaintiffs fully performed under the September 12, 2001 Settlement Agreement entered into with Defendants by transferring ownership of their shares of stock to Defendants conditioned upon Defendants obtaining refinancing and the termination of Plaintiffs' guarantees of all Capitol Steps obligations, which included Plaintiff D. Thomas' guarantee of Judgment Note 3. 30. The failure of Defendants to effectuate Capitol Steps' satisfaction of Judgment Note 3 or otherwise obtain the removal of Plaintiff D. Thomas' guarantee thereon at the time -13- they proceeded on the refinancing constituted a material breach ofthe September 12, 2001 Settlement Agreement between the parties. 31. Defendants' material breach resulted in Plaintiff D. Thomas being required to honor his guarantee of Judgment Note 3 and pay $175,000 to Shell Realty to obtain the satisfaction thereof. WHEREFORE, Plaintiff, D. Mark Thomas, requests that this Honorable Court enter judgment in his favor and against Defendants in the amount of $175,000 plus interest thereon and cost of suit. Count II -Breach of Contract D. Mark Thomas and Jeanne M. Thomas v. Charles R. Davis and Karen S. Davis 32. Paragraphs 1 through 27 of this Second Amended Complaint are incorporated herein by reference as if set forth fully. 33. Plaintiffs fully performed under the September 12, 2001 Settlement Agreement entered into with Defendants by transferring ownership of their shares of stock to Defendants conditioned upon Defendants obtaining refinancing and effectuating the removal of Plaintiffs' guarantees of all Capitol Steps obligations, which included Plaintiff D. Thomas' guarantee of Judgment Note 3. 34. The failure of Defendants to effectuate Capitol Steps' satisfaction of Judgment Note 3 or otherwise obtain the removal of Plaintiff D. Thomas' guarantee thereon while closing on the LaSalle National Bank loan constituted a material breach of the September 12, 2001 Settlement Agreement between the parties. 35. As a result of Defendants material breach of the September 12, 2001 Settlement Agreement and execution of the LaSalle National Bank loan based upon their fraudulent representations ofhaving full ownership of Capitol Steps, Plaintiffs lost $281,446. -14- This sum represents Plaintiffs' net 50% interest in the $2,800,000 fair market value of The State Street Building as measured by the CB Richard Ellis, Inc. appraisal, less $2,237,108 in Capitol Steps' outstanding obligations inclusive of the Commerce Bank loans, Judgment Note 3, taxes, and insurance shown in Exhibit F hereto. WHEREFORE, Plaintiffs respectfully request this Honorable Court to enter a judgment in their favor and against Defendants in the amount of $281,446, together with interest thereon and cost of suit. Count III -Breach of Contract D. Mark Thomas and Jeanne M. Thomas v. Charles R. Davis 36. Paragraphs 1 through 27 are incorporated herein by reference as if set forth fully. 37. Defendant C. Davis is in breach of his contractual obligations under the $125,000 Note dated September 12, 2001, in that he has failed to make the principal payments together with the penalty and late charges set forth therein. As a result, as of the June 30, 2005, Defendant C. Davis owed Plaintiffs damages in the form of principal, penalties, and late charges totaling $230,360 (as set forth in Exhibit D) with additional damages accruing at $220 per day for each day on and after July 1, 2005. WHEREFORE, Plaintiffs respectfully requests this Honorable Court enter judgment in their favor against Defendant C. Davis in the amount of $230,360, plus accruing late charges of $220 per day for each day on and after July 1, 2005. Count IV -Fraud and Misrepresentation D. Mark Thomas and Jeanne M. Thomas v. Charles R. Davis and Karen S. Davis 38. Paragraphs 1 through 27 are incorporated herein by reference as if set forth fully. -15- 39. Defendants secured Plaintiffs' execution of the September 12, 2001 Settlement Agreement,thrnugh false and fraudulent representations to Plaintiffs in that they had not removed and did not intend to remove Plaintiffs as guarantors on all Capitol Steps obligations including Plaintiff D. Thomas' guarantee on Judgment Note 3, or to satisfy Judgment Note 3 with the refinancing proceeds to accomplish such result, since the paper closing on the said refinancing had taken place prior to or at the same time that the September 12, 2001 SettlementAgreement was executed and such closing did not address Plaintiffs' ownership interest in Capitol Steps or provide for the satisfaction of Judgment Note 3. 40. The removal or termination of Plaintiff D. Thomas' guarantee on Judgment Note 3 was a condition precedent to Defendants' ownership of Plaintiffs' shares and 50% interest in Capitol Steps, but without performing this condition precedent, Defendants fraudulently represented themselves to LaSalle National Bank on September 12, 2001, and thereafter as 100% owners of Capitol Steps and the sole officers of Capitol Steps, thereby fraudulently proceeding with the refinancing to their personal gain. 41. In entering into the September 12, 2001 Settlement Agreement and in executing the conditional transfer of their Capitol Steps shares to Defendants pursuant thereto, Plaintiffs detrimentally relied upon Defendants' fraudulent misrepresentations that Plaintiff D. Thomas' personal guarantee of Judgment Note 3 would be removed or satisfied at the time the refinancing was consummated. 42. Plaintiffs detrimentally relied upon Defendants' fraud and misrepresentations in inducing them to enter into the September 12, 2001 Settlement Agreement. As a result of Defendants fraud and misrepresentations and Plaintiffs' reliance thereon, Plaintiffs suffered damages in the amount of $281,446, representing the amount of Plaintiffs' net -16- equity interest in the fair market value of The State Street Building arising from their 50% ownership interest in Capitol Steps at the time Defendants secured their execution of the September 12, 2001 Settlement Agreement and fraudulently carried-out the refinancing of Capitol Steps based upon Defendants' fraudulent misrepresentations to LaSalle National Bank that they had 100% ownership interest in Capitol Steps without having secured the removal or satisfaction of Plaintiff D. Thomas' guarantee of Judgment Note 3 and based upon financing terms detrimental to Capitol Steps and Plaintiffs. WHEREFORE, Plaintiffs respectfully request that this Honorable Court enter judgment in their favor and against Defendants Davis in the amount of $281,446 plus interest thereon and cost of suit. Count V -Fraud and Misrepresentation D. Mark Thomas v. Charles R. Davis and Karen S. Davis 43. Paragraphs 1 through 27 are incorporated herein by reference as if set forth fully. 44. Defendants secured Plaintiffs' execution of the September 12, 2001 Settlement Agreement through false and fraudulent representations to Plaintiffs in that they had not removed and did not intend to remove Plaintiffs as guarantors on all Capitol Steps obligations including Plaintiff D. Thomas' guarantee of Judgment Note 3, or to satisfy Judgment Note 3 with the refinancing proceeds to accomplish such result, since the paper closing on the said refinancing had taken place prior to or at the same time that the September 12, 2001 Settlement Agreement was executed. At no time did Defendants make Plaintiffs aware of such closing. 45. The removal and termination of Plaintiff D. Thomas' guarantee on Judgment Note 3 was a condition precedent to Defendants' ownership of Plaintiffs' shares and 50% -17- ownership interest in Capitol Steps, but without performing this condition precedent, Defendants fraudulently represented themselves to LaSalle National Bank on September 12, 2001, and thereafter as 100% owners of Capitol Steps and the sole officers of Capitol Steps, thereby fraudulently proceeding with the refinancing to their personal gain without satisfying Judgment Note 3 with the refinancing proceeds 46. In entering into the September 12, 2001 Settlement Agreement and in executing the conditional transfer of Plaintiffs' Capitol Steps shares to Defendants pursuant thereto, Plaintiff D. Thomas detrimentally relied upon Defendants' fraudulent representations that Plaintiff D. Thomas' personal guarantee of Judgment Note 3 would be removed or satisfied at the time the refinancing was consummated. 47. Plaintiff D. Thomas detrimentally relied upon Defendants' fraudulent representations in inducing him to enter into the September 12, 2001 Settlement Agreement. As a result of Defendants fraud and Plaintiff D. Thomas' reliance thereon, Plaintiff D. Thomas suffered damages in the amount of $175,000 representing the amount paid by Plaintiff D. Thomas to Shell Realty in satisfaction of his guarantee of Judgment Note 3. WHEREFORE, Plaintiff D. Thomas respectfully request that this Honorable Court enterjudgment in his favor and against Defendants Davis in the amount of $175,000 plus interest thereon and cost of suit. -18- Count VI -Breach of Fiduciary Duty D. Mark Thomas and Jeanne M. Thomas v. Charles R. Davis and Karen S. Davis 48. Paragraphs 1 through 27 are incorporated herein by reference as if set forth fully. 49. Defendant C. Davis and Defendant K. Davis were respectively President and Secretary/Treasurer ofCapitol Stepson September 12, 2001. Plaintiff D. Thomas was Vice President of Capitol Steps on September 12, 2001. The conveyance of Plaintiffs' ownership interest in Capitol Steps pursuant to the September 12, 2001 Settlement Agreement was conditioned upon the refinancing of The State Street Building and the removal of Plaintiffs' guarantees of all Capitol Steps obligations, which included D. Thomas' guarantee of Judgment Note 3. 50. In breach of their responsibilities under the September 12, 2001 Settlement Agreement, Defendants did not secure the removal of or carry-out the satisfaction or termination of D. Thomas' personal guarantee of Judgment Note 3. Instead, Defendants fraudulently represented themselves as 100% owners of all of Capitol Steps' shares, executed refinancing agreements with LaSalle National Bank with prepayment penalties detrimental to both Plaintiffs and Capitol Steps in exchange, in part, for LaSalle National Bank's agreement not requiring any personal guarantees from Defendant K. Davis, all while failing to have Plaintiff D. Thomas' personal guarantee of Judgment Note 3 extinguished, and failing to so advise Plaintiffs. Further, Defendants carried-out the refinancing through fraudulent misrepresentations to LaSalle National Bank that they had 100% ownership of Capitol Steps and failing to reveal Capitol Steps' obligation on Judgment Note 3 and their necessity to secure the removal of Plaintiffs' guarantees on all Capitol Steps obligations, -19- including Plaintiff D. Thomas' guarantee of Judgment Note 3, in order to validate Defendants' representation as to having 100% ownership in Capitol Steps. 51. Defendants' actions as stated in this count constitute a breach of fiduciary duty to Plaintiffs as shareholders in Capitol Steps. 52. As a result of Defendants' breach of fiduciary duty, Plaintiffs lost their 50% ownership interest in Capitol Steps and its primary asset, The State Street Building, which Plaintiffs believe and therefore allege resulted in lost equity to them of $281,446 as calculated in Exhibit F hereto. WHEREFORE, Plaintiffs respectfully request that this Honorable Court enter judgment in their favor and against Defendants in the amount of $281,446 based upon Defendants' breach of their fiduciary duties. 6121 Stephen's Crossing Mechanicsburg, PA 17050 Tel. No. (717) 979-4840 Fax No. (717) r:~cuerrrswis°cnPirau.av su~nnieaaeq.~zms~zro nm.rom cangein.wae _20_ VERIFICATION I, D. Mark Thomas, Plaintiff, depose and say, subject to the penalties of 18 Pa. C.S.A., Section 4904, relating to unsworn falsification to authorities, that the facts set forth in the foregoing Second Amended Complaint are true and correct to the best of my knowledge, information, and belief. ~~ - l 3-oS Date CL D. Mark Thomas WHEREAS, Para One Corporation, hereinafter "Para," and State and Third Street Associates, a partnership, hereinafter "Associ- ates," entered into a Modification Agreement, on February 28, 1987, the Second Modification Agreement on February 20, 1992, and the Third Modification Agreeaent on August 3, 1993, all of-which are incorporated herein by reference; and WHEREAS, Para and Associates wish to modify the to s of repayment of the unpaid principal of Two Hundred Sixty Thousand One Hundred Ninety-four Dollars ($260,194.00); and WEiEREAS, Associates are selling The State Street Building to The Capitol Steps Associates, Inc. ("CS") and CS will agree to pay the unpaid principal set forth above; and WHEREAS, subsequent to said sale, Associates will be terminated; and WHEREAS, CS is placing a first mortgage on fihe State Street Building and has assured its lender that said first mortgage wi21 be the only mortgage lien against The State Street Building; and WHEREAS, Wayne B. Titus and Jean S. Titus, his wife, and Heath L. Allen and Eleanor M. Allen, his wife, are. willing to guarantee performance by CS hereunder. NOW, THEREFORE, Para, Associates and CS, intending to be .legally bound,_agree as follows: 1. The foregoing recitals are incorporated herein by reference. . , iTITNESS the due execution hereof this ~_ day of October, 1998. PARA ONE CORPORATION Nachman K. Gerber, Pres dent STATS/,AND',T,HI/RD SfT~R~EE~T ASSOCIATES Heath L. A11en, Partner THE CAPITOL STEPS ASSOCIATES, INC. gy . D. Thomas,~President • r,Lf 2. The unpaid principal of Two Hundred-Sixty Thousand .One Hundred Ninety-four Dollars ($260,194.00) will be funded by CS with monthly payments of Three Thousand Ninety-one Dollars ($3,041) a month, with the initial payment due and owing no later .than November 1, 1998. Each monthly payment will include inter- est at the rate of six and one-half percent (6}t) per annum. The amortization schedule is attached hereto as Exhibit A. 3. With twelve (12) months' notice, Para shall have the right to receive the unpaid principal, provided, however, for administrative convenience, Para shall have no right of partial prepayment of principal, but only of total prepayment of princi- pal. 4. With twelve (12) months' notice, CS may prepay the obligation, together with unpaid interest; provided, however, -for administrative convenience, CS shall have no right of partial prepayment of principal, but only of total prepayment of princi- pal. 5. Para has delivered to Keefer Wood Allen S Rahal, LLP ("RWAR"), in trust nevertheless, a satisfaction piece for its ?iortgage dated October 29, 1982, which RWAR is authorized to deliver to CS at settlement, provided, however, that KWAR mails to Para a fully executed original of this Fourth Kodification Agreement. 6. This Agreement shall bind the heirs, personal represen- tatives, successors and assigns of the parties hereto. -2- ~t ,iai: ~. We, WAYNE B. TITQS, JEAN S. TITUS, HEATH L. ALLEN and ELEANOR M. ALLEN, intending to be legally bound, hereby guarantee the full and complete-performance of The Capitol Steps Associ- ates, Inc. to fund the obligation as described in the foregoing Fourth Modification Agreement. WITNESS: ~~ ~~ ~- (S~) WAYNE TITUS SEAL) S. TITUS L.. ~5~~ TH L. ALLEN ~~-~_i ~. ~ pe.-. (SEAL) ELEANOR M. ALLEN ti -4- I, D. MARK THOMAS, am familiar with the Fourth Modification Agreement to which Para One Corporation, State and Third street ; Associates and The Capitol Steps Associates, Inc. are parties. To obtain the satisfaction piece and the interest rate from Para One Corporation, Wayne B. Titus, Jean S. Titus, Heath L. Allen, and Eleanor M. Allen have guaranteed the full and complete performance of The Capitol Steps Associates, Inc. to fund the obligation as described in the Fourth Modification Agreement. By -this personal guaranty, by which I intend to be legally bound, I confirm to Wayne B. Titus, Jean S. Titus, Heath L. Allen, and Eleanor M. Allen that the five of us are not co-Guarantors to Para One Corporation, but that my personal guaranty is designed to hold Wayne B. Titus, Jean S. Titus, Heath L. Allen, and ( Eleanor M. Allen harmless against any loss that they or any of t' them suffer by the failure of The Capitol Steps Associates, Inc. to fund the obligation described iri the Fourth Modification Agreement. WITNESS the due execution hereof this 29th day of October, 1998. _< <~2~~~~/ (sue) D. : THOMAS 6~1?~( $260,194.00 October 29, 1998 Harrisburg, Pennsylvania FOR V71tAB RHCSIVSD and intending to bs legally bound,•THS CJIPITOL 37'SPS 11SSACIIITES, 'INC. , a Pennsylvania corporation with offices in Harrisburg, Dauphin County, Pennsylvania (hereinafter "Obligor"), prosises to pay to P11R11 ONS CORPOR]lTION, a Pennsyl- vania corporation with a sailing address c/o Naclnwn !!. Gesber, 4 Jonathans Court, Cockeysville, gyland 21030, (hereirwfter- "obligee"); the sus of Two HurxUredaSixty Thousand OAB Hundrnd ninety-four•Dollars ($260,194.OOj, together with interest at the rate of six and one--half percent (6.52) per annus, as lollows: Obligor shall pay interest and principal through a sontbly payaent o! Three Thousand Ninety-one Dollars (S3.091j on tbs 1st .day of each subsequent south parsuant to- the amortization sched- ule attached 1-ereto, sale a part hereof, and narked Exhibit 11. Obligor say Prepay principal without penalty npcn twelve (12) months' written notice of prepayment, but suet prepay all pri:-ci- pal then due and owing. Monthly paysems sha22 continue during .the period•created by notice. obligee say desand pageant o! all principal neon twelve (12) sontbs' written notice of desand, but " will recieive the .nonth2y payser-ts described above dnici»g the period of said notice. _ In the event of default, defined as failure of Obligor to -pay within seven (7j plendalr days o! a sonthly payment date, . Obligor lbrther does hereby sutborise and enporer any attorney of a~- court of record of 2vania or elsewhere to far it and to ester jndgiaent agar it for the amount of to lfate, . _ with or wi~bout declaration, together with costs of suit and reasonab2s attorneys tees, and with in12 release of errors. ~udg~e~t hereunder say bs confessed om executed or photostatic copies of this Note as uses and in as jnrisdiatioos as • - is necessary to secure sat faction of any u~d balance or balances, and the jwigasnt or jndgsentn confessed shall bs without etapp of execq~tfon. Obligor specifically waives auy right of ingaisition on any real estate that nay be levied :ipon, and . voim-tarily condemns the same, authorising the protbanotazy of any county or counties to enter upon the writ of execution its • said voluntary coa:deanatioA, and hereby waives and releases auuY and ail relief Eros any and.all appraisesent, stay or ex~ptioh laws of any state whether currently in force or hereafter to De • passed. - - ' 1iI17~R3.4 the due execution hereof this 29th d2lp o! October, 1998. - . - AT'!~S'Pz ~'H8 GlPITOt, S~'8r8 113'SOG.T7l?.BS, _ INC. - - -- ~-.t#,~ ~ ~~ s ta;.-se~etasp Ctiu.-~~ ~-'~„~~ ~ rtes sent I 1~ ~~~>i0~ - - ~ - I, D. ?ARIL ~l3, intending to be lega22Y_, ~r~'Y , . ,, irsc~ to f~ thle abli~ti odescribed in the e~ foregoing Judgaent Note. ' liI'lliSS32 - - D. 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Q K _ »:sa ~:n ~:a ~:n 3_as. d iew.os l,~,e.a _3-.,s e.so a. s i~ i °•n e.ae 3las.so pi u µ.N ~3.% !.!- s..K _ tae u•u r. LM J ,~.~ _ issue ~" 3K~ soon Haa ~" mss' ir..s s ~Zp}lt.M it - ama.rsooa _« - ~f ~ aas.sssooe - - sos •: - - ' ` . - ~ ,• SETTLEMENT AGREEMENT THl.S AGREEMENT, dated the 12'" day of September, 2001, by and between D. MARK T~IOMAS and .IEANNE M. THOMAS, husband and wife, aduk irxtlviduals residing in t_emoyne. Grrtrberk~nd County, PerrayNar>fa_ ~ referred b as'llamas?') and CHARLES R. DAMS _ and l(AREN S. DAMS, husband and wife aduq individuals residing in Camp till, Cumberland County, PernsyHarria (hereinafter referred to as'Davis'). . WITNESSETH: VVFIFREAS, Davis and Thomas-own a~ the issued and outstanding capital stock of Tf~ CAPRaI. STNS ASSOCIATES, MIC., a Pemsylvania business corporation, wsh its principal oTfae address orated at P.U Borc 901, Camp ~ PerxuyNariia 17001-0901 (hereiriafterieferred io as the ~Corporafior-"); and VVFi~tEAS, Thomas desires to transfer all of their shares of capsal stock of the Corporation b Davis for the coruideration provided ~ this Agreerrierik and , . MAS, the parties desire to-provide for the ordedxrvi'tlidrawal by Thomas from any and adl right, title and interest they have At the Corporation. MOAN. 7liEREFOt2E, in atlon of the promises and covenants ooritafried herein. and intencirg b be le9aMY bound, the parries hereto agree as follows: 1. 'TRANSFER OF WTEREST. Thomas hereby transfers aN right, title aril interest tltey have. had or carid have in the Corporation to [Mavis and oonaxrerrby wNh the exeartlor- of tliis Agreement strap transfer all stock they own In the Caporalion to Davis. ~?C PAYMB~IT. Davis and the Cpporalion shat pay fo Thotitas Ten Tf wiuar-d Dorars (S1L7.OOd) at the do~isg of The frtancirrg referred do hereafter in paragraph 3 as coruideraitlorr for the transfer of flrorr>as'stodc rn the Capora6on and Thomas ~ a1 of ihetr rights in the . . '3. PAYMENT OB<kATIONS. The transfer of irkerest and payment of any monies pursuant tD this Agreement are expressry ooriditloried on ltie Corporation and/or [Mavis obtairiiig . ~ ~~Y ~~g ~ refinarioe >fie Corporation's prirtcipaf asset, the real property and buil~rig erected thereon krwwri and tiurribered as 500 North Third Street. Har-isbrirg, PA, and removing Thomas as a guarantor of the Corporatlon's obigatlor>g. . ~ 4. COOPERATION. Thomas agrees b cooperate in e~aecedreg any and aI doarnerNs confrH>itg Heeir w>thdrawal from nee Corporation pursuant fio this Agreement 5. RElF_ASE t3Y TNOINAS. Thomas does hereby remise, release, quftciain and forever disdiarge, for Heemsehres, their heirs and personal reptesentaGves, and all of tlteir - successors and assigns. Davis. and nee .and its or their hers. personal represereCatives, dreeiors, officers. agents. eHrployees, successors and assigns, as Hie case may . be, of and from any and a1 mamer of action and actions. cause or causes of action, suits,- debts. dyu~epsp.~dupt~ies. sans. orstms of matey. ooreYacts, reckonings, bonds, his, speedalties, covenar~ "7""'•^^~. , $, Sr r ~r eJd~r n$, r.Ww11J ~r whatsoever, it law Of i1 elter"ty, iF arty COUft OI' bedore arty adative agency, Of OHtelYYise Il01MSOevef,lRAlid1 agai>st Daw's Or the ~'. abOn, Tt10Rk95 6~/ef lYdd, IiOw (IaS• Or wtliCh Hley and fir' F-`~, t~sorr~F ~, sua~ssors and assignsr i~ir~fter can, sl~ll or may have, for. upon or by reason of arty matter. cause a tirrg vvhafsoevet retorting to Thomas beoore>keg, beitg oroeasig to be Stodd~otders of the Corporafiot>. This release does not appy to ar-y edains or caerses of action chat may arise out of the performance of Htis Agreement NoHiieg wed herein shah ptetieede any party from joining anoHeer' party hereto in any action, cause of action, claim or demand of whatever reattre b!I g-Y Hwrd PAY. Thomas may -~ ~ j~ned in a tawserH regardrey any debts of Hie Corporafiorr. 6. RELEASE f3Y DAMS /WD THE CORPOltAT10N. Davis and the Corporation do hereby remise, release. qurTdairn and forever discharge forHeertuelves, and each of Heir heirs and personal representatives, the Corporation's drectors. officers, agents and employees, and ant of Hieir suooesseits and assigns, Ttarreas and tlieir heirs, personal representatives, seccessors and assigns, as Hre case maybe, of and from any and ant marrter of aediore and actiortsr cause or causes of action, sertis, debts. dues, dutles- Berns. or srxrrs of !Honey. e~rrtracts, rectwnitgs. bexrd~, bid. spew, oovenarrh„ agreetrterKs, promises, variartoes, damages. ~. e~denis, eooear6ores; chins a demandsvrf-atsoeMer, b taw a h equity. fi any pout a be#ore any ~ agerxy, or otherwise howsoever. which against Thomas. Davis a the Corporation ever had, raw has, or which they and ti>eir.hedrs, personal represeniaHves, serooessors and assigns, or R and ~ drectors, officers, agents. err~pbyees, serooessors and assigHSr as the case may be, he>,ei>afber ~r shaN or may have, for. erpon a by reason of any mater, e~erse a thing whatsoever relating b Thomas becarirg, being orc~si-g bo be Stoddatders of the Corporation. tJoti4rg oor>taireed herein shah prexlexie any party tram joinieg another party teereto in any action. cause eN action, claim or demand of whatever rratue by any third party- -2- s "~ ~ ~6teu~~y~ aw~"~ ,~,A ~. ~ t~ tl~e Pis betr+~~ tterepF. ~ ~ ~ ~ ~ ~1~~5 ~sA~~~ _ ~~y ,_ 2 ~~= ~'e __ R: ~~' ~ S. DAV{S y~r rietelrll. the ~ ~•~_ . _ ~~~~ ba-~ ~gq~s aittd •ie sde P~g~_ ~ A~t''aTES• ~. in~'~'s ~~ttas~ ate= ~_"' to s ~ ~ . { f~! D.~ 'Tt+~r - sy ~R. a~ _ _ -, .- - - . . ..: ... s(zsooooo t2 septemb«~ol ~- ~. Paaasytvaaa FOR VALIIE RECEIVED'aod to 6e bawd, C~ARI.ES R DAMS, of tamp EGEI, C~bablad CouelR ~' "0668x") promises to pay o0 D: MARKTHOMAS and JE~lNNE M. THOMAS, of Laaoyar, Ou~mbaiand Cauttty, Pemtsyl- vaaia, the aum of One Nuadrod Tviraity~ive Thousand DoQacs (S12S,000~, psya6k is tnonth<y i ofFiv~ Thottaaad DoLus (55,000) each for five {Sj tooattts with the first moathty itnddlment beatg due and payable on the fast day ot'(dovembec?A0l and monthly PaY~ thcaaftec for foar (4? >~, and thaw moothty watts ofF,t~tt Thousand Dolbns (58,000) each oa dte first day ofeach maotiy until the attics; balance due is paid'm Cu)L (f auy moathlj~ payment is notpaid on the fast day of the month when duq t6ece ~ be a peaaUq of Two Ii~ed DoUacs (5200) perauch iastaHmaat payment, together with a dady late dtac8e of1Y-xmy ~s~~)Pa~Y~~~YPaY~~[~~• +mYt~YinwhokoriaP~mY poAion of pcindpal due hcceuoder without pesaity at nay time. W(T'NESS the due cxeattion hereof the l2th day of Septaaber, ZOOt. ~~ CHARLES R DA ' 'i'kµt I+-~OV _ .S ~~? _j ~/~cL _ ~._11 ~s,?~c~ - C+JI~~°it) ._~s!Loc'_ .- -- - -- - '~g,~o. . _ .. , - . f SGad , : ~Lf~~6/- - - -`r$~c5po . ~Z12/02,~ dLOa irCLd s S;cAO-- . .. --:.1~1 foL - - ~~tY34 (' j I_, -- `"~t~I°~/. ..-6L'~~---•-----• ___..__~~~ . .. . .°_So~? _ i~Z,~/~~Z'. _ sS!-°°o .. ~+{~-2Lo2~. . ~LQO. ._ - _.. ~ .- - - ~1~3 8 ~ - -• --. . ._ s _ .. a i o2-- - - .. .-- - - :.. ~ - - - - - - --- --..__ __ . _. _ . R . _ . ~._. ~ g-~°.. .?SL /` o Z _ . _ . ~ Loo .. . _ _.. __ J?-~ L° o _ ~3.) - - ~ g tea. _ . g~`o2 .-- - '- -- - - ~ - ~ °---. ._ - - ~~ ~yb - C-~~ _a~~. ... to~jl~ --- - . ~ 2A6 - - - f Q~Opo 12~j/e Z ffc,'bo ~1 ~~~ . ~ Lob . .. -. .._- - ~~ q LO- ~t~.. a ~;~ . ... >.lt 1 ~ `8-«~. c,~~a3~ . - g Loa . . - . ... ~ ao c~~- s~,c~o :. ?~i1o3 ~Q-~~o ~J~A~ ~ 2-°'° .-. ago ~(2J . t ~'-~' ...3111 ,. ~ 3/LS"/4T a/stl.~ --~,~~ .. - - - -•---~b0 .~ t4t,S;~d ~. xy4~ - .. r3,~. . .. I1~. ~~d. - IOh+a~wr• a~ICp Cad I ~~/oy - - .. . u-TC c-w+~e (e~~ ~,oeo sec vasw;.r~r ~ 1 ~ ?`/O ~ / ~ /o s r+~~ = - o~ t 3~ oS' s 14 G, s''+ o 11 rlbwta/ra. P1-1y+-i•~ls p~'ST1MO~q~, 11 X ~.~ ~ lZtO ~o,R ~l-+ s t4~ o~rr+s x ~ttc~ 33, ~2~ 7rotr~. ~ a~co ns of s;/,m/as f~~ 0,3 G o ._._~.~. .. _. - --- ~_ - ~ s -----. - __. -... -~~ _ -?~` -~ .. - 3G~skf . - ~._L/I/_Qz,~. `~ _30~ X _2p _ ..~ . !f:,/ZO. ,___ _ --- •- ----'Z°-°3 _._- ~~.5"a~ys... it gLA _ 7 3.oc3. . _. .~ _ ?~~ .. 3 6S... -. gd C4/~/~~ ~ • Z7s v.. ~io_ _ . ~.S'b m . . ... -__._._.Y.~._...---- ..._.__:.__._._.__......_.._ _- --__..: .._... - --. _... --_-- ----- i2 4.00 _ .. -~._ ..:.CaJ Z.c~a2 _ .~~s, •tu~ . Cs/.~~) __ u~sX z~? -- - - Y,4nd_ . -. . ... -- - ... -- - - - - 2c°c o0 - _. ....... ..... T~3o°~- -. . ... zexs 3 ,ACS' K a 2r? - - - - - -- - •- - ... . -... - -- - - - - - -- - 1l~S'So _... ..._ . ~~? . 2~ Z- .. 3..~ - 1 ~/ C?l! ~~.~ =1 ~ x'SLzs . - - -- ... 3, 680 zoc~ 3 3GS-X 'YLo 300 - - - --- C~• Zcr~z 3rS - 212 ~/lp'~ ; hS3--t`~o - - 3, 0~ 0 ... .. ~ . _.. _ _ -. ~?~ .Z~o2• 3c,S"~ L43 ~g~l~2~ , IZZ,~o .. Z ~ . j ~3 , acs X ~~~/~/!i) .. --~-. . _...- ~4,T S~ - - ~ Lodz 3cS --2?~ die/ifbt) X42 r~ - ._ / ~cGo . ~. 7~3 , aG5- . X t~ . T ,300 ~) LooZ gc.,s^ _.,o~t ~ ~ - lt,~o=~ = ~I X~zo ... _ /, 220 - Loo3 3c~ X `'`Lc 7 300 . $, ~4 Kenneth L Jocl, Esquire Attorney I.D. No. 723"70 John M. Coles. Esquire Aporney I.D. No. 87398 RHOADS dt SINON I.I,P One SouUr Markel Square, 13th Floor P.O. Box 1146 iiarrisbnrg, PA 17108-i 146 (717)233-5731 Attorneys for Plaintiff SHELL REALTY, INC., tnda PARA ONE CORPORATION, Plaintiff v. D. MARK THOMAS, WAYNE B. TTfUS, JEAN S. T1TUS, HEATH L. ALLEN AND EL)?A1VOR M. ALLEN, Defendants r" r•~ a - - ~ e-. -v n ~ ~:~: .n -~ 7_c~ ~ = -v ~. '~ ..-~,-r C S' 'i1C N --I •• •.~ -i ~ na IN THE COURT OF COMMON PLEAS OF DAUPHIN COUNTY, PENNSYLVANIA CIVIL ACTION -LAW . NO. C J~:..~~ ~ ~ S~ ! ~'1 eV NOTICE YOU HAVE BEEN SUED IN COURT. If you wish to defend against the claim set forth in tbe following pages, yron must take action within twenty (20) days after this Complaint and Notice. are served, by ~~$ a" ~~ ~ PAY ~ by ~~Y ~ Ong ~ writirtg with the Court your defeatses or objections to the claims set forth against. yon. You are warned that ifyou fail to do so the casemay proceod without yon and a jndgmeat may be entered against. you by the Court without further notice for any money claimed in the Complaint tx for any other claim er relief r~oyueste~ by the Plaintiff Yon may lose mommy or property or other rights important to }rou. YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER, GO TO OR TELEPH6NE THE OFFICE SET' FORTH BELOW. THLS OFFICE CAN PROVIDE YOU WTTH INFORMATION ABOUT HIRING A LAWYER. IF YOU CANNOT AFFORD.TO HIRE A LAWYER, THIS OFFICE MAY BE ABLE TO PROVIDE YOU WTTH INFORMATION ABOVE AGENCIES THAT MAY OFFER LEGAL SERVICES TO ELIGIBLE PERSONS AT A REDUCED FEE OR NO FEE. DAUPHIN COUNTY LAWYER REF$RRAL SERVICE ' 213 North Front Street Harrisburg, PA 17101 . (71'n 232-7536 Kenneth L- Joel, Esquire Attorney LD. No. 72370 John M. Coles, Esquire Attorney LD. No. 87398 BROADS 8c SINON LLP One Souflt Market Square, 22th Fkor P.O. Box 1146 Jlarrisburg, PA 17108-1146 (717)233-5731 Attorneys for IHamiiS SHELL REALTY, INC., f/k/a PARA ONE CORPORATION, Plaintiff v. ~• C cv -... w K' '° O 7- .~ n n t - -o .fi ~~: w ~~ 7n ;rl. -rf N :~ ~ ~ 40 IN THE COURT OF COMMON PLEAS OF DAUPHIN COUNTY, PENNSYLVANIA CIVIL ACTION -LAW D. MARK THOMAS, WAYNE B. TTTUS, JEAN S. TITIJS, HEATH L. ALLEN AND ELEANOR NO. C~Z~~ C V SC~ t ~ e V M. ALLEN, . Defendants . NOTICE YOU HAVE BEEN SUED IN COURT. If you wish to defend against the claim 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 ifyou fail to do so the case may proceed without yon and a judgment may be entered against you by the Cotut without further notice for any money claimed in the Complaint or for any other claim or relief tegtxested by the Plaintiff. Yon 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, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW. THIS OFFICE CAN PROVIDE YOU WITH INFORMATION ABOUT HIRING A LAWYER. IF YOU CANNOT AFFORD.TO HIltE A LAWYER,.THLS OFFICE MAY BE ABLE TO PROVIDE YOU WITH INFORMATION ABOUT AGENCIES THAT MAY OFFER LEGAL SERVICES TO ELIGIBLE PERSONS AT A REDUCED FEE OR NO FEE. DAUPHIN COUNTY LAWYER REFERRAL SERVICE 213 North Front Street Harrisburg, PA 17101 (717)232-7536 Kenneth L Jcel, Esquire Attorney I.D. No. 72370 John M. Coles, Esquire Attorney IJ). No. 87398 RHOADS 8r SIIdON II..P Ooe South Market Square, 12th Floor P.O. Box 1146 Harrisbrug, PA 17108.1 l46 (717)233-5731 Attorneys for Plainfiff SHELL REALTY, INC., f/lda PARR ONE CORPORATION, P1ain11tl' : IN THE COURT OF COMMON PLEAS OF DAUPHIN COUNTY, PENNSYLVANIA C1VII. ACTION -LAW v. . D. MARK THOMAS, WAYNE B. TPTtTS, JEAN S. TTf1JS, HEATH L. ALLEN AND ELEANOR NO. M. ALLEN, Defendants AVISO USTED HA SIDE DEMANDADO/A EN CORTE. Si usted desea defenderse de las demandas que se presentan mss adelante eA las siguientes paginas, debe tomar action dentro de los proximos veinte (20) dies despues de Ia noti5cacion de esta Demands y Aviso radicando personalmente o por medio de un abogado nna comparecencia txctita y radicando en la Corte por escrito sus defeosas de, y objecciones a, las demandas presentadas atpu en cobra soya. Se le advierte de que si usteti fella de tomar action como se descn'be anteriormente, el caso puede procedei sin usted y un fallo por cualquier soma de ditrao reclamada en la demands o cualgaier otra reclamation o rtaztedio solicitado por el demandante puede ser dictado ~ contra soya por la Corte sin mss aviso adicional. Usted puede perder dinero o propiedad u otros derechos impottantes Para ttsted USTED DEBE LLEVAR ESTE DK)CtIMENTO A . SU ABOGADO IND~DIATAMEIVTE. SI USTED NO TIENE UN ABOGADO; LLAME O VAYA A LA SIGUIENTE OFICINA. ESTA OFICINA PUEDE PROVEERLE INFORMACION A CERCA DE COMO CONSEGUIR UN ABOGADO. SI USTED NO PUEDE PAGAR POR LOS SERVICIOS DE UN ABOGADO, ES POSIBLE QUE ESTA OFICINA LE PUEDA PROVEER INFORMACION SOBRE AGENCIAS QUE OFREZCAN SERVICIOS LEGALES SIN CARGO O BAJO COSTO A PERSONAS QUE CUALIFICAN. DAUPHIN COUNTY LAWYER REFERRAL SERVICE 213 North Front Street Harrisburg, PA 17101 (717)232-7536 Krnneth I.. Joel, Esquire Attorney ID. No. 72370 John M. Coles, Esquire Attorncyl.D. No. 87398 BROADS 8c SINON I,LP One South Marko Square,12th >:loor P.O. Box 1146 Harrisbtng, PA 17108-1146 (717) 233-5731 Attorneys for Plaintiff .SHELL REALTY, INC., f/k/a PARR ONE CORPORATION, IN THE COURT OF COMMON PLEAS OF DAUPHIN COUNTY; PENNSYLVANIA Plaintiff CP/U, ACTION=LAW v. D. MARK THOMAS, WAYNE B. TITUS, JEAN S. TTTUS, HEATH L. ALLEN AND ELEANOR NO. M. ALLEN, - Defendants COMPLAINT AND NOW, comes Plain6~ Shell Realty, Inc., by and thmugh its attorneys, Rhoads & Sinon LLP, and 81e this Complaint as follows: 1. Plainti$_ Shell Realty, Inc., is a Maryland corporation wiUl a mailing address of 7313 Park Heights Avenue, Apatlment #101, Pikesville, Maryland 21208-5469 and is the successor by merger to Para One Corporation ("Para One's. Z. Defendant D. Mark Thomas is an adult individual with an address at 212 Locust Street, Suite 500, P.O. Box 9500, Hatrisbnrg, Pennsylvania 17108-9500. 3. Defendant Wayne B. Titus is an adult individual with an address of 601 Femwalk Lane, Osprey, Florida 34229. +eusr9.r 4. Defendant Jean S. Titus is an adult individual with an address of 601 Femwalk Lane, Osprey, Florida 34229. 5. Defendant Heath L. Allen is an adult individual with an address of 210 Walnut Street, P.O. Box 11963, Harrisburg, Pennsylvania 17108-1963. 6. Defendant Eleanor M. Allen is an adult individual with an address of 210 Walnut Street, P.O. Box 11963, Harrisburg, Pennsylvania 17108-1963. 7. On or about October 29, 1998, The Capitol Steps Associates, Ina ("Capitol Steps', for value received, executed to the order of, and delivered to Para One, the predecessor in interest to the Plaintiff a Judgment Note pursuant to which Capitol Steps promised to pay to Para One the principal amount of 5260,194.00, plus interest at the rate of 6.5% per annum. A true and correct copy of the Judgment Note (the "Note's is attached hereto as Ezhrbit "A" and incorporated herein by reference. 8. On or about October 16, 1998, Para One and Capitol Steps executed, along with State and Third Street Associates, a general partnership, a Fourth Modification Agreement in which Capitol Steps agreed to pay to Para One the obligations evidenced by the Note, which obligations were originally incurred jn connection with a series of transactions that occrured is or about 1987 regarding the purchase of .certain real estate locatediu the City of liarrisbmg, Dauphin County, Pennsylvania. A true and correct copy of the FouNr Modification Agreement (the "Modification Agreement") is attached hereto as Exhibit `B" and incorporated herein by reference. 9. On of about February 16, 1988, Para One merged into Shell Realty, lnc., the Phiintiffherein. f 10. Over the years, Capitol Steps made its reguiar loan payments under the Note to the Plaintiff. 11. However, Capitol Steps is now in default under the Note and the Modification Agreement in that Capitol Steps has failed, refused and continues to fail and refuse to pay the monthly payments of principal and interest due to the Plaintiff under the Note and the Modification Agreement. 12. On September 29, 2003, the Plaintiff confessed judgment against Capitol Steps in the amount of $193,434.07, which amount represents unpaid principal, interest and attorneys' fees, pursuant to the Plamtifl's rights under the Note. A true and correct copy of the confessed judgment entered against Capitol Steps is attached hereto as Exlribit "C" and incorporated herein. 13. Defendant D. Mark Thomas guaranteed Capitol Steps' obligations under the Note. 14. Defendants Wayne B. Titus, Jean S. Titus, Heath L. Allen and Eleanor M. Allen guaranteed Capitol Steps' performance under the Modification Agreement. 15. Due to Capitol Steps' continuing failure to meet its obligations under the Note and the Modification Agreement, the Plaintiff now brings this action against the Defendants, all guarantors of Capitol Steps' obligations. 16. Defendants ate contractually obligated to satisfy the unpaid obligations of Capitol Steps arising under the Note and Modification Agreement, and therefore, are now jointly and severally liable to the Plaintiff in the amount of $193,434.0'7, plus accnred interest and costs of suit. WHEREFORE, Phrinti~ Shell Realty, Inc. hereby demands judgment against all Defendants in the amount of $193,434.07, together with costs and interest accruing at the rate under the Note, from the date hereof, and ail other damages, inciuding attorneys' fees and costs of suit as allowed by Pennsylvania law. Dated; (Z- a3 John M. Coles . One South Market Square, Twe1Rh Floor - P. O. Box 1146 EIazrisburg, PA t7108-1146 (717)233-5731 . Attorneys for Plaintiff Respectfully submitted, '-It:g8i2003 11:31 FA1 717 233 1346 dH0AD5 & 31SG~LIP - m0o8 VERIFICA~it>N Csmc A Garber hereby deposes and says, subject to the penalties of 18 Pa C.S. § 4904 reluing !o unsworn falsi8catioa to autlwrities, that he u the Ptesideat of Plaintiff She1i Really, Iuc., that he makes this v~erifialtion u such officer by its aathority and that the fads set forth in . the Songoitta Complaint art try add totrca to the best of his kaowtcdge. iofotmation and beliet Date: ~a-8•o3~ A , prosidaol Exhibit A $260,194.00 October 29, 1998 Harrisburg, Pennsylvania FOR VALOE RECEIVED and intending to be legally bound, THE CAPITOL STEPS A330CIATES, ZNC., a Pennsylvania corporation with offices in Harrisburg, Dauphin County, Pennsylvania (hereinafter "Obligor"), promises to pay to PARA ONE CORPORATION, a Pennsyl- vania corporation with a mailing address c/o Nachman M. Gerber, 4 Jonathans Court, Cockeysville, Maryland 21030, (hereinafter "Obligee"), the sum of Two Hundred Sixty Thousand One Hundred Ninety-four Dollars ($260,194..00), together with interest at the rate of six and one-half percent (6.5t) per annum,-as follows: Obligor shall pay interest and principal through a monthly payment of Three Thousand Ninety-one Dollars ($3,091) on the 1st day of each subsequent month pursuant to the amortization sched- ule attached hereto, made a part hereof; and marked Exhibit A. Obligor may prepay principal without penalty upon twelve (12) months' written notice of prepayment, but must prepay all princi- pal then due and.owinq. Monthly payments shall continua during the period created by notice. Obligee may demand payment of all principal upon twelve (12) months' written notice of demand, but will receive the monthly payments described above during the period of said notice. in the event of default, defined as failure oP obligor to . pay within seven (7) calendar days of a monthly payment date, Obligor further does hereby authorize and empower any attorney of any court of record of Pennsylvania or elsewhere to appear for it and tq enter judgment against it for the amount of this Note, with or without declaration, together with costs of suit and reasonable attorney's fees, and with full release of errors. Judgment hereunder may be confessed on executed or photostatic copies of this Note as many times and in as many jurisdictions as is necessary to secure satisfaction of any unpaid balance or balances,-and the judgment or judgments confessed shall be without stay of execution. Obligor specifically waives any right of inquisition on any real estate that may be levied upon, and vo,~untarily condemns the same, authorizing the Prothonotary of any county or counties to enter upon the writ of execution its said voluntary condemnation, and hereby waivees and releases any and all relief from any and all appraisement, stay or exemption laws oP any state whether currently in force or hereafter to be passed. WITNESS the due execution hereof this 29th day of October, 1998. ATTEST: C.~~ I THE CAPITAL STEPS ASSOCIATES, INC. I i i BY ~HM~s~ ~~ ( ~ President I, D. NARK THOMAS, intending to be legally bound, hereby guarantee the full and complete performance of-The Capitol Steps . Associates, Inc., to fund the obligation_ as described in the foregoing Judgment Note.~.,J j WITNESS: > f" ,: %~ 3 .~' ~1 ~ _(SEAL) D. 2 HOMAS i ~' -2- r... 9::090 - wtc0age alaorci[atioJ BECrtt 11000 7Vl.W t Ta7Ni, LLY fcu Oc< 1/199) to Dee~31/2j99 lYy9 - F[C~a[eJ fo[: hell Aaalty, 300 Se[N Sn1[a Sc[98t P Zee. l18r[lJb1[9 PA ` iwu :0.00 r xs r ~4,t 1[.,, t-j t'V ~ P[lr {pal: I6019a.D0 % r / /r~ ~ Payawet :]091.00 Aa[e: 6.90 ~ 2 ~• / ` J 1 ` ~ PJyeent Ftequaaeys 3beWly t tasC Faeto : 1 Z 0 0511 6 6 67 ~ypeanle0: 12 (,~.c2. / j -_ /~!/~ ( y :/j e a [ . layaleet rote! Iaterat P[iaeipal Balaau total IOC Wte IFOtD![ layeMC Payiaat Payllat IAia Pll[ Tb[ P![ Dia 77/1/1998 1 7091.00 1109.11 1601.62 230512.31 3109.31 /6-71 72/{/1999 I 3091.00 1100.21 1690.]2 25 K21. 66 2B 09.K 16.01 :/1/1999 BaD-roGl 1236.91 1/1/=999 3 ]091.00 1793.12 1699.11 233121-]e -76.1] 13.71 2/1/:949 1 7091.00 IJB 1.91 1709.09 233112-6f 3]13.]1 13.11 _'/1/:394 5 3091.]0 1772.65 1710.]3 231691.]1 2]10.]9 13.13 :/3/:994 6 ]09:.00 1]6].71 1727,K 219968.68 1081.]/ 11.83 ?!-/:499. 7 1091.00 3333.9) 17]7.01 218229.67 5173.]2 11.52 6/;/:944 0 7091.00 1711.51 .1]16.12 2f 611 3.23 6780.30 11.21 ]/{{1999 9 - 3091.00 1]]5.12 1]SS.ee 21172].]6 9115.12 17.79 i/:/199{ 10 3091.00 1725.61 1765-79 212961.97 9111.0] ~ 17.59 o/J/ 195! 11 3041.00 TJfS9T ~~ 11187.01 '-•1Si3~7 U.27 '5!1/!999 32 7091-00 1306-67 1781.57 239102.11 1206].30 12.96 1:/1/:759 ]3 7091.00 1296.76 1791.21 277608.21 1]760.26 12.66 12/1/:999 It ]091.00 1281.01 1807.96 2]5101.23 1a 61].71 12.32 i/1/1000 _ SUD-rotal 15959.19 1/i/LOCO 1! ]091.00 1177.21 1117.77 2]7990.57 -N.61 12.00 2/2/2Y0 16 7093.00 3267.15 1)27.55 372166.17 - 1232.11 61.67 3/1/2000 17 7091.00 1257.31 le]3.63 '270]37.5/ 26!0.11 {1.73 ~ 1/;/2000 18 ]On.00 1211.N 1913.36 2281lO.U 31]8.05 11.02 S/1/2000 19 3091.00 1237.66 - 1B57.N 226676.8{ 1975.71 10.70 6/1/2000 20 30!1.00 1227.62 le p.]1 221773.66 6207.]2 IO.J6 7/1/2000 21 7091.00 321].53 187].Ie 222197.„ 7620.86 10.0.7 8/1/2000 22 7091.00 }2g7.3I-~-• }88].6] 221016. J3 8628.22 39.70 9/1/2000 ~J 3071.00 1777.17 le n.13 239321.5] ~ 9825.7! 39.7) 16/1/2000 26 - 7091.00 1186.91 1901.01 ~ 237211.11 13012.71 39.03 :1/3/2000 25 7091.00 1176.60 2911.10 215]01.01 12181.90 ]0.f! 12/1/2000 26 7091.00 1166.23 1921.77 21377).27 37]55.11 Je.JS - 1/1/20D1 sae-rDtal lis/a.9! 1/I/zoo! 27 7091.00 1135.00 1]33.20 211661.07 -32.95 3e.00 i/1/2001 28 3093.00 1113.33 3N3.6t 209690.10 1132.38 77.66 7/7/2001 2! 3091.00 1136.71 1930.22 ~ 207512.11 2217.16 37.31 1/3/2003 30 1091.00 1121-1f 19K.11 205575.77 73]1.31 36.96 5/1/2001 31 3091.00 1137.53 1971.17 203597.)0 1181.11 96-i1 6/1/2001 32 1047.0_ 1102.)2.. ~et.lt 20160)-t2 55e7.70 36.2) 7/1/2^01 37 7091.00 1092.05 199e.l5 199610.]7 6679.75 75.91 8/1/2001 31 7091.00 1011.23 200!.77 197601.00-. 7760 zyj, 35.55 9/1/:0/il~ ~- 70~.0~ ~, ~6 I9S~~71 ~~BJ1.32 _ 75.19 IC/{/290: 36 7091.00 1059.79 2071.61 19]518.7] 9890.]1 ?1.83 CI/i/279: 37 7091.00 1010.?9 T012.61 191506.12 10919.30 ~ 76.1' 32/:/:OCC 31 3093.00 3037 J2 2053.61 3e 91T1.N 1197{. 12 71.3: :13/2a~2 !aD-focal 13017.80 3R/LC02 39 3091.00 1026-20 2D61.1D 187]17.65 -]1.17 31.1< 2/3,•:C 02 f0 3091-00 1015.02 2073.98 185711.66 997.81 31-Je 313/20?2 Q - 3091.00 3003.77 IOBL 23 187221.17 1M 7.61 JJ.01 _ f/112072 ~? 7091.00 992.17 20!1.5] 181323.)0 2980.08 72.67 _ _ ~`S/7/2L32 _ _ _ IJ 3091.00 983.10 2109.90 17%16.00 3%1.3! 32.26 , 6/I/:002 /1 3091.00 467.67 2123.7] 17 K96. 67 /930.15 71.88 7/I/2002 IS 3091.00 958.11 2332.82 17{761.85 5189.03 31.53 6/7/2002 /i 3091.00 916.63 2311.37 172617.17 6835.66 71.17 9/1/2002 17 3091.00 9]5.01 2155.!! 170161.1) 777q.67 ]0.75 to/v2ooz ,~ a aon.oo na.la xla.o lwm7.sz se!{.oo 70.76 11/1/2002 - 6! ]O9a.00 911.5) :17).61 lu3U-Il 9605.» 2!.!1 72/1/2002 30 ]0!1.00 8f9A9 21!1.21 367!27:20 70505.71 - 193! 1/3/200] 9uWletJ1 11622.58 1/1/200] S1 ]0!1.00 187.)2 2207.08 ~ 161720.11 2).28 29.20 2/1/2007 S2 ]091.00 175.)1 2213.02 159505.30 11{.70 .~ 20.80 7/1/2003 SJ - "~ 30!1.00 tp.lf 2227.01 157271.01 ~ 1710.69 28.11 ~ 1n/zooJ a1 3on.0o ssnl2 22u.Ot lsso».ol ns2.s1 zs.al 3/l/2003 SS ~ 7011.00 .1]1.71 2251.2a 15278L80 NO2.11 27.61 6/1/2003 Si 70)1.00 827.60 2363.10 150521.60 1270.01 1].21 7n/2co3 s7 30)7.00 1ss.a1 u7s.K u12un/ sols.7s Is.el to/too] s1 ]091.00 eoa.ol zxn.» us9co.76 sau.3c zc.u 9/:/2003 59 - 7091.00 790.)2 2300.31 117660.71 6678.!8 26 AO la/1/2007 - 60 7091.00 771.16 2732.11 IA1N731 7617.31 25.3! 31/3/2003 63 ]0!1.00 765.67 2725.37 1]9032.17 9112.71 25.18 32/1/20:7 62 ~ 7071.00 ]53.01 27]7.96 . 176681.23 9935.81 21.76 t/E/20^•a !eD-rocal 9]07.15 :/:/:O~a 6J ]Ofl-00 760.17 2750.:7 171731.58 -21.26 16.75 i/:/'e71 61 ]0!1.00 727.66 236].]6 1]1970.22 700. JB 2].97 'bl/<COa 63 30!1.00 71J.Q 2776-I6 129596.06 1613.22 27.51 <•1/ICO< 66 3091.00 701.97 2769.07 127205.07 2117.19 27.Oe 5/t/Y'100 bl 7091.00 W9-OJ 2101.97 121803.05 2)106.21 22.66 .:/1/: wt ~ d8 3091.00 - 676.03 2111.91 122A8.O7 3112.27 22.2] -il/2001 6] 3091.00 662.91 2121.06 119960.01 1115.11 ~ 23.10 9/1/ia01 70 70 n.00 619.71 3111.22 117511.7) 17N .95 21.37 4/1/3001 77 7091.00 676.56 2/51./6 115061. ]S 5171.51 20.97 30/3/:006 72 309E 00 623.27 Ni7.73 112596 61 6051.77 20.50 !3/1/2001 73 3091.00 609.)0 2181.30 - 310115.31 6664. 6T 20.06 32/1/2061 71 7091.00 596.16 2/n 3t 1D1620.l1 ]261.13 1l. 61 1/1/2003 - Sub-Ibfal 786)-11 1/1/2001 75 ]093.00 502.95 2501.05 105112.92 -25.11 ~ 1l. 17 2/1/:005 7{ 30!1.00 36).]6 "2521.K 102591.2e 316.26 61.72 3/1/2005 77 3091.00 SSS JO 2375.70 300033-f8 3099.9{ 11.2] - 6/1/005 ]1 3091.00 513.97 ~ 2519.03 97506.95 1611.97 17.12 5/1/2005 79 3091.00 520.16 2562.81 91961_11 2170.09 17.77 uJ. a. a~J .•~• •G.L a.F.} .-- >i1d96 lbrcga9e /aorciutlee 2EC17!R 30oD 713.LCN a RNUL. I.I.P hm Oe: 1/1f 91 co Dec 33/2199 PMe 2 P~lplie'1 ?qf: ]l. ll_ Rlilt%. I:IC. R-e: is: Sect tz! Street. ~lia zctsEuq, PA ?zi:a::pM l: JFf.;ti.00 7irl: '+. aL 3c~atF2ed: 3- Yeaca :0.00 PayarRt :3091.00 PIywRRt PrIQIKlleyi tbn[llly Iveazsat Yactort 1.005116667 Paynewt 2ota1 Iotereac Pileoipal MUxe Total Int ;ace DomGli Payawt Peyeeec Yayarovt Loaw Nc Tear Yei 01m 6/1/2005 ~ 80 30!3.00 111.21 2576.72 92767.10 2N1.77 16.91 7/1/2005 01 30!1.00 SOO J2 ri9o. if 0!776.72 ]U1.0 16.0 a/1/2005 02 ]091.00 1e 6.29 2601.71 17172.01 3670.99 15.99 9/1/2001 f] 3091.00 172.16 2611.12 16533.19 1113.17 15.5] IC/1/2005 f6 ]091.00 IS1+00 2633.00 61920.1! 1601.16 15.06 !!/1/2005 BS 3091.00 113.77 2W7.27 7M72.92 - 5061.!0 11.5! 11/1/2005 86 3091.00 129.3! 2661.61 76611.]2 5671.29 U X12 1/1/2306 SuD-Twl 5912.00 1/3/1006 e) ]091.00 111.96 2676.02 73!75.30 -22.11 13.R 2/:/2006 BB 3091.00 600.66 2p0.52 71211.76 ]17.N 1].17 /1/2N6 t9 3093.00 N5.91 2709.09 N57f. 69 763.59 12.p ' 6/1/2006 90 3093.00 171.26 271!.76 65!19.96 11]1.6! 12.21 3///IOOG 91 30!1.00 356.53 ~ 2771.11 63063.67 31!1.77 11.7] 6/!/2006 92 7091.00 ]11.11 270.29 60336.1! 36]].06 11.21 7/1/2005 9] 3091.00 726.63 27N.U ~ 57312.00 - 213!.90 30. TS 0/1/2006 91 3093.00 311.!5 2779.35 51792.83 317t.iS 10.26 9/1/1006 95 3097.00 296.79 2791.21 51990.65 '2]66.51 9.76 li./L/2s:0i 96 1091.00 211. 66 2!0!.76 19169.30 3050.$0 9.27 1:/1/2•:06 97 ]891.00 266.61 2021.56 l6]N.75. 3]16.61 6.7f '12 /1/200< 9• 3091.00 251.11 217!.16 17526.69 7567.79 f.36 ' i/3/2007 ~ Suer-total 701].90 - :/3/2:C7 99 - 3041.00 235.76 2853.26 70669.65 -20.]5 7.76 . 2/li PJCI 100 3091.00 220.29 2670.13 377!1.96 19f. !• ].ri ' 3/1/2001 tCl 7091.00 206.71 2866.26 71912.69 101.61 6_71 </:/i 03% 102 3091.00 169.13 2901.6! 32010.60 593.79 6.22 5/:/2007 30] 3091.00 377.39 2917.61 - 2!093.1! 7Q.If 5.71. 6/!/2007 ~ 101 3091.00 IS].19 29]].11 2635!.7! 926.77 5:11 7/1/1007 305 3091.00 161. t0 2969.10 2]210.16 lOK.17 1.66 ' 7/1/2007 106 3091.00 - 125.72 2965.28 20263.20 - 1192.20 1.16 . 9/1/2007 107 3091.00 109.66 tl11.N 172U.06 1]01.06 ]. 61 30/1/20pT 100 70!1.00 93.61 2!17.1! 162K.A 1]!5.37 .7.01 _1/3/2007 lOf ]091.00 =77. ZS 3017.72 11232.63 1172.63 2.35 _2/1/200T 310 3091.00 60.95 7030:05 1222.60 1137.L0 _ 2.01 1/1/2006 SOD-tetel 1395.11 2/1/zoos 171 ~ 3091.00 N.N 306 1.66 3376.36 -11.76 1.67 2n/zooa uz 3091.00 11.01 ]062.!6 211L1t 10.70 0.93 3/1/tooe 113 2121. sz u.IS z31].lf o. DO z1.7s o.ls Y;wa laywevt 0.00 PzlRefpal Paid Co Dsb 2601!6.00 ' letetaac Pa ld to O6G BB 122.62 SoGl Pald to Data 3U33i. 62 •-• :epazc ~eleeclona ••• Raper: tbrt9a9! Rleo rtixa clod 5a:e Yii Oct 09 71+39:30 1990 ia:. Ran7e : fim Ort 1/1991 to Oee 31/2399 6.7v: sMll Realty. ITC. is t 500 RorU '11:1 t0 SCieet, HuilsMltq• PR ~. 7c_ct!Val 2601!1.00 9.7ce 7 6.30 talxwc t 3091.00 Yez - 1' ].19.!10370 Exhibit B WHEREAS, Para One Corporation, hereinafter "Para," and State and Third Street Associates, a partnership, hereinafter "Associ- ,~ ates," entered into a Modification Agreement, on February 28, 1987, the Second Modification Agreement on February 20, 1992 ,. and the Third Modification Agreement on August 3, 1993, all of which, are incorporated herein by reference; and WHEREAS, Para and Associates wish to modify the terms of repayment of the unpaid principal of Two Hundred Sixty Thousand One Hundred Ninety-four Dollars ($260,194.00); and WHEREAS, Associates are-selling The State Street Building to The Capitol Steps Associates, Inc. ("CS") and CS will agree to pay the unpaid principal set forth above; and WHEREAS, subsequent to said sale, Associates will be terminated; and WHEREAS, CS is placing a first mortgage on The State street Building and has assured its .lender that said first mortgage will be the only mortgage lien against The State Street Building; and WHEREAS, Wayne B. Titus and Jean S. Titus, his wife, and Heath L. Allen and Eleanor M. Allen, his wife, are willing to guarantee performance by CS hereunder. NOW, THEREFORE, Para, Associates and CS, intending to be legally bound, agree as follows: 1. The foregoing recitals. are incorporated herein by reference. 2. The unpaid principal of Two Hundred Sixty Thousand One Hundred Ninety-four Dollars (S260,194.00) will be funded by CS with monthly payments of Three.Thousand Ninety-one Dollars ($3,091) a month, with the initial payment due and owing no later than November 1, 1998. Each monthly payment will include inter- est at the rate of six and one-half percent (6'~~) per annum. The amortization schedule is attached hereto as Exhibit A. 3. with twelve (12):months' notice, Para shall have the right to receive the unpaid principal, provided, however, for administrative convenience, Para shall have no right of partial prepayment of principal, but only of total prepayment of princi- pal. 4. With twelve (12) months' notice, CS may prepay the obligation, together with unpaid interest, provided, however, for administrative convenience, CS shall have no right of partial prepayment of principal, but only of total prepayment of princi- pal. 5. Para has delivered to Reefer Wood Allen & Rahal, LLP ("RWAR"); in trust nevertheless, a satisfaction piece for .its Mortgage dated October 29, 1982, which RWAR is authorized to deliver to CS at settlement, provided, however, that RWAR mails to Para a fully executed original of this Fourth Modification Agreement. 6. This Agreement shall bind the heirs, personal represen- tatives, successors and assigns of the parties hereto. -2- WITNESS the due execution hereof this ~ day of October, 1998. PARR ONE~~C,.OR~~ PppO~~RATION ~/ ~~~,,. ~ Nachman M. Gerber, President STATE AND THIRD STREET ASSOCIATES By~r~ eath L.L. A ten, PartnerPartner THE CAPITOL STEPS ASSOCIATES, INC. By~~ D. Ma Thomas,iPresident ~1/C1L -3- We, WAYNE B. TITUS, JEAN S. TITUS, HEATH L. ALLEN and ELEANOR M. ALLEN, intending to be legally bound, hereby guarantee the full and complete performance of The Capitol Steps Associ- ates, Inc. to fund the obligation as described in the foregoing Fourth Modification Agreement. WITNESS: ~,~r c~ {SEAL) WA TITOS , EAL) S. TITOS /~~~ ~ _ /`t'~+.••~~ {SEAL) . HEATH L. ALLEN ~~ ,.•~/ 1_ ~y[10.___ (sue) ELEANOR M. ALLEN -4- SHELL REALTY, INC., f/!c/a PARR ONE CORPORATION, Plaintiff v. THE CAPTfOL STEPS ASSOCIATES, INC., Defendant iN THE COURT OF COMMON PLEAS OF DAUPHIN COUNTY, PENNSYLVANIA CONFESSION OF JUDGMENT FOR MONEY NO. a.cR~3- ~~- a 33.E ENTRY OF JUDGMENT AND NOW, this day of ' ~ ' ." :~~ ,2003, Judgment is hereby entered in favor of the Plaintiffl; Shell Realty, Inc., and against the Defendant, The Capitol Steps Associates, Inc., and damages are assessed in the amount of S 193,434.07, together with interest from the date of judgment plus costs of collection. f '• Pmiho Appraisal Value (CB Richard Ellis, Inc.) $2,800,000 Less: Commerce Bank Loan (2895550) 226,641 (1) Commerce Bank Loan (2895450) 1,619,421 (1) City Real Estate Taxes 19,286 (1) School Real Estate Taxes 45,645 (1) County Real Estate Taxes 12,109 (1) First Monroe, Inc. 11,000 (1) Waypoint Bank 16,500 (1) Judgment Note 3 191,506 (2) Thomas Loans 95.000 $562,892 Plaintiffs 50% Interest 281 446 (1) See LaSalle National Bank Settlement Statement included herewith. (2) See Exhibit A hereto. Settlement Statement ~ ,,.,.1,d,,.,,,,,,«„„„q Transactions without Sellers waro...Nr.w ,,,,,,,,,,,,,,„~„~-0,,, ~. Han.a AOaa.a7Nnow.r. nan.aAfemdawa.~ s1a r~-rrOl st3t/s t.wiu a1m sarloeAl assoeurzos .Y10C1ATL1, AG. 133 ~. Lf1Lli9relLr soo s. 3eD ss3usr CeiC100, zz fofoa soo s, ssosrsss: . sASerssaaa, 1u7so1 ., . sfmmwa sans aarsrz, s/r. 137mT 1317( /1008, mmt1101f„ 1J 17101- 1G01NM11E01: 816NmON DNO: RaWOion ONO: 01 - N - 011 09/I7/IOOI " L 606M1naa at ONtnM1/01a11b 06101/ 100. N1m0 b C01M1/1a011 Wm 1.00n 1501. 601. tan b0 a % ' eo2. tandlaunt ~ taoz. 603. M b 601. b 1503.00NOICe e+1m, LNM /1193330 d11f, N3.21 SOS. M b 606.. N11dN100 lab 1301. '6m. bWwiab 60a 160b. CO/OICe edlR, 50011 /1193130 ,fU, 1.1 008. eto. t508.J10YZ9, emus s sooasr dl,sao.00 en. ooa 7NNOgpON00 L/WOrt/a-.abAdvme. 1507, 801. kd. Ban 09/17/m01 b 10/0 1001 = 1308. C17a ACnL L/r57S 1710Li d19,2/3.91 602. Map080 NOaaaO OmnY1i11 br 0 11101M9 b i508.1C11005 9rA5 L/707'i TAlOC/ 13, N1.70 803. MOU104gw011a P10miun for 0 yar(yb 1310.N07137 A1115 idi577: t.N17<9 d11,101.3J W/. lam' ~ 1511.rD1/r 1Q10lOC, I1C. f11, 000.00 1001. M07ald 11/1r011a ~ 0.00 11b/. 6 1002. NwagO 0.00 ia/. 8 .1512. 1005. 10na 0.00 mos. i np 10M: N1oK 0.00 11101. S 11q 15i3.147/0>gi' elWf ~ d1f,300.00 1005.AmON alanOnwllb 0.00 1n01. 6 n10 1006. FlOa Mnural0~ o.oo mos. 6 ist/. tam. o.oo mos. 6 m0 twos. o.oo Now 6 1s1s. loos E/avw 1100. T6N 1620. TOTAL OgBUgEW ,933, U2.93 1101. SNIMmOnta Mb Rr3s AOe111A ON7ran7a 16W 11a2.AM8001 or OOOIOhb 1103. TpOOasn Otlab 1101. TON t'M1111100 bYWNb 11 Doe1011/1d w rs6onb 1100. N010 Iab 77m.Ab1M)•'bab 1o/et1-roYmdq d10, 000.00 OnONda~ M71n 11W161af ~ . ' 1106. T/O NweN1a b IO/80emiY r317e •OOR,7' IMC, d11,11f.71 , SB8 ~ X71881: 1bOW M1N 0.111901/ 1108. tAn0111 ~ ~ - 11. N8T 1110. Onnas 6 1000. ,Iff,971.IS 1111. 7112. 1801, YM10 faWChOdt k01n Ba1al~r 1111. 1~' Oov01~NOat waT70rN/ 1002. tear TON( 801601n0111 gi9rya 111, 1//.71 1201. HOandlla NOO: J21o.00 ' t 11X/3.,760110 T04I ONWOanaAbCNMi- ;93l,S31./3 1203, t t 160/. 1g00N TOW DMbOamaltb6alawr (190,111.71 t (OINr010.41bnasn70001009N 11X0.' A/1MWX77ltOpNsN6t 107oN7bn071bf bP~ M X110 1 eoneYw(O) 610meXSpk 300. ' sot x ua6. esr sssls , zsc. t3oa x 1100. TNN 606Nnr1RC1171600 (OnNf011 NN 1602) W,19f.71 ~~ bnn IRxI.1A G181) M. RE73GA Exhibit II .,-e.~38 cL, na~o~l coLagrrr~xTx or Prxsnvaxw °~irnewA uoFCOMPUnxce OUT OF p057F•NCF/Lb:aGER SECI,ON FOIWaS&~1R~G. PZ A~ 17128-0967 TraePxore xuxeEn o,n 799-cost na taoot u~.9020 ts•~~+« TavW7,NS wiN Spetal Heanq arw« sa~q xee0z o~y> OUT OF EXISTENCE/WITHDRAWAL AFFIDAVIT PLEASE PRINT OR TYPE INFORMATION DEPARTMENT USEONLY BOX NUMBER THIS FORM WILL NOT BE PROCESSED IF NOT PROPERLY SIGNED AND NOTARRED NOTE: Page 2 of this form must bt completed Section A pertains to a PA corporation or a loreign corporation that operated wholly within Pennsylvania. Section B pertains to aN other foreign corporations. Date of Inwrporation or Certificate of Authority 9/09/1998 Aaount ID 3924-423 State of Incorporation PENNSYLVANIA Entity ID (Elr~ 25-1820541 Named Caporation/Tarpayer THE CAPITOL STEPS ASSOCIATES, INC. On this appeared, 2380DD11D16 day of ,year betore me personaly who duly swears or affirms: I was connected with the above corporation and have knowledge of its aNairs. Said corporation ceased to transact business in Pennsylvania do or about • 12/31 /03 ,and alt assets were sold, Month Day Year assigned or distributed on 12/31/03 ,and since that time, the corporation has not owned arty properly Month ley Year located in Pennsylvania, nor maintained an office therein, nor has performed any sales activity, and does not intend to bansact fiather business in the Commonwealth. Mf corporation never transacted business or held assets in Pennsylvania, please use the words NEVER TRANSACTED BUSINESS in place of a cessation dale. Ttx filing of this Affidavit does not aHeM tF,e status of the Certificate of Incorporatwn/Aulbority of this corporation but does pemrit the Department of State to relinquish the use of the present name of the corporation to another corporation. PA Swom to and wbscribed beforo me 11ds day of ,year (Nobltaryy PuWk, Dfsbtd Justlce, or Authodud Agen4 O parbnent of Revenue) My convnisslon year in ls4na.. aranw~q - Title: P.O. BOX 901 CA)4P HILL, PA 17011 QnsmlAddnabArerrq or•r+n sq•+oo.na s«rI TNephone Number PLEASE PRINT OR TYPE INFORMATION NO FILING FEE PAG9~1L 12/1883 0 0 0 1 2 7 O N ~~ ~ (/) r ~Qd N4~ ~O4 ~~ ~~ ~~~ ~ N~ yW a° W= fV 00 LLy p x a~ Zm Op Q~ ~U a £~ yWm~ F S WV y~O WN z~ rcw F W N O O .-1 W cm Q~ c V=!~ 'Z rl J G ~ N ~ f OS ~-~ p ~ ~ ~ ` O° i f 60 N r ,,~~ z!` N y r ~ ~ H _ O '~ os A On , D 3 ~u y K~ ; ~ d d ~ W O U. O= ' w i rc ~ a E' °sN CN ~ [[ ~~y x 'a ipl~ ~~ {{ $$ g ~ ' N . Q ~ Tp, i : h U vi v i Q oa v ~ d rc 4 2 z a Jo ~ J ~ 4 "~ W O 4 O O C p' a N 7 Q ~~ a n O V ~ N N J ' 6 i 0 n i N 4 i F p ~ C W ~ W ~ ~v°i Z U ~ Q O ~ u U ~ 5W ~ c n ~ O 4; 4 04 a O Y O 3 Q ~ 4 O 0 4 N Y N O Q F ~ c ~ ~ W 0 ~ J Q U LL d W ~ ~ z J ~ > ~ K Q o ~ ~- U z w a o Q Q a z 2 ~ Q ~ W 4 4 p h N cs a z °o Q Z = O a N W O N U 7 O y J 0 d¢ ~ p~ Z Z Q f Z H m N °w 0 °w '~ 7 K _m wo O y U O W W J m O '~ z ~ 3 _ ~ ~_ ti N } W~ F- Zh ~ Q 2 K Cc W N W O W W Q ~ O ~ ~ ~ w a 7 ~ O F ~ Q W z a r x j o ~ Q Z LL a ~ WrN Z 7 m ~ 0 N.-. ~ z°~ o Ztq _m fti WW N yFyK~ ~ W~ W ~WNNN WWHO K~ FN OQ r~ (j~ W O ~a ~° ~~ ~a~ ~ ~ LL ~ 4 m ~ NJ ' • • • 2 3 8 ^0 Y 1 2 1 7 a t~ n CERTIFICATE OF SERVICE I hereby certify that I have served the Defendants counsel in this case with a true and correct copy of the attached Second Amended Complaint by placing the same in the United States Mail at Harrisburg, Pennsylvania, first-class postage prepaid, on the 13 - day of October, 2005, addressed as follows: Thomas B. Schmidt, III, Esquire (19196) Pepper Hamilton, LLP 200 One Keystone Plaza North Front and Market Streets P.O. Box 1181 Harrisburg, PA 17108-1181 John Havas, Esquire Vikki Moore, Secretary ~`' ' C7 ~ - ~ -n ~ , .~ C T.n C > is ~:.. ~ 1 _ ' ~ _ ' . . _ rte, _ ` r-' :< ~~ R 'fo: D. Mark Thomas and Jeanne M. Tknmas, Plaintiffs You are hereby no[itied to file a written response to the below Preliminary Objections within twenty (20) days from service hereof or a judgment may be entered against you. PEPPER HAMILTON 1LI'P/ BY: ~~ Thomas B. Sch ,III D. MARK THOMAS AND JEANNE M. THOMAS, Plaintiffs, vs. IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA No. 04-0166 CHARLES R. DAMS, KAREN S. DAMS, AND 200 NORTH THIRD, INC., CIVIL ACTION -LAW Defendants. DEFENDANTS' PRELIMINARY OBJECTIONS TO SECOND AMENDED COMPLAINT Pursuant to Pa. R.C.P. 1028, Defendants Charles R. Davis ("C. Davis") and Karen S. Davis ("K. Davis") (collectively "Davis"), by their undersigned attorneys, assert the following preliminary objections to plaintiffs' second amended complaint: Count I -Breach of Contract D. Mark Thomas v. Charles R. Davis and Karen S. Davis Preliminary Objection Pursuant To Pa. R.C.P. 1028(a)(5) Plaintiffs' second amended complaint alleges that Capitol Steps Associates, Inc. ("Capitol Steps") has the primary obligation to pay "Judgment Note 3" as alleged by plaintiffs. 2. Capitol Steps is a necessary party to this litigation. Plaintiffs failed to join Capitol Steps as a party. WHEREFORE, Defendants Davis request that this Court dismiss Count I of the second amended complaint for plaintiffs' failure to join a necessary party. Count II -Breach Of Contract D. Mark Thomas and ,Leanne M. Thomas v. Charles R. Davis and Karen S. Davis Preliminary Objection Pursuant To Pa. R.C.P. 1028(a)(4) 4. Pa. R.C.P. 1028(a)(4) authorizes a preliminary objection if a complaint is legally insufficient. 5. Plaintiff Jeanne M. Thomas ("J. Thomas") lacks standing to assert a claim for breach of contract against Davis because, by the terms of her pleading, she is not a "guarantor" of any obligation that is alleged to be in default and had no rights arising by virtue of section 3 of the "settlement agreement," the alleged breach of which is the premise for Count II. 6. Because Plaintiff J. Thomas has no standing to assert the claim for breach of contract in Count II of the amended complaint, it is legally insufficient. WHEREFORE, Defendants Davis request that this Court sustain their demurrer and dismiss Count II of the second amended complaint as to plaintiff Jeanne M. Thomas as legally insufficient. Preliminary Objections Pursuant to Pa. R.C.P. 1028(a)(5) 7. Plaintiffs' second amended complaint alleges that Capitol Steps has the primary obligation to pay "Judgment Note 3" as alleged by plaintiffs. 8. Capitol Steps is a necessary party to this litigation. 9. Plaintiffs failed to join Capitol Steps as a party. WHEREFORE, Defendants Davis request that this Court dismiss Count II of the second amended complaint for plaintiffs' failure to join a necessary party. -2- Count IV -Fraud and Misrepresentation D. Mark Thomas and .ieanne M. Thomas v. Charles R. Davis and Karen S. Davis Preliminary Objection Pursuant to Pa. R.C.P. 1028(a)(4) 10. Plaintiffs assert fraud and misrepresentation claims against C. Davis and K. Davis. 1 1. Plaintiffs' second amended complaint does not allege any misrepresentation by K. Davis upon which plaintiffs reasonably relied to their detriment. WHEREFORE, Defendant K. Davis requests that this Court sustain her demurrer and dismiss Count IV of the second amended complaint as legally insufficient. Preliminary Objection Pursuant to Pa. R.C.P. 1028(a)(2) 12. The Pennsylvania Rules of Civil Procedure require fact pleading and that averments of fraud or mistake be pleaded with particularity. 13. Plaintiffs' second amended complaint does not plead their fraud and misrepresentation claim with sufficient particularity as to K. Davis. 14. Because plaintiffs have failed to plead their fraud and misrepresentation claim with sufficient particularity as to K. Davis, their second amended complaint does not conform to Pa. R.C.P. 1019(a) and (b). WHEREFORE, Defendant K. Davis requests that this Court dismiss Count IV of the second amended complaint for failure to conform to law or a rule of Court. Count V -Fraud and Misrepresentation D. Mark Thomas v. Charles R. Davis and Karen S. Davis Preliminary Objection Pursuant to Pa. R.C.P. 1028(a)(4) I5. Plaintiffs asserts fraud and misrepresentation claims against C. Davis and K. Davis. -3- r 16. Plaintiffs' second amended complaint does not allege any misrepresentation by K. Davis upon which plaintiffs reasonably relied to their detriment. WHEREFORE, Defendant K. Davis requests that this Court sustain her demurrer and dismiss Count IV of the second amended complaint as legally insufficient. Preliminary Objection Pursuant to Pa. R.C.P. 1028(a)(2) 17. The Pennsylvania Rules of Civil Procedure require fact pleading and that averments of fraud or mistake be pleaded with particularity. 18. Plaintiffs' second amended complaint does not plead their fraud and misrepresentation claim with sufficient particularity as to K. Davis. 19. Because plaintiffs have failed to plead their fraud and misrepresentation claim with sufficient particularity as to K. Davis, their second amended complaint does not conform to Pa. R.C.P. ]019(a) and (b). WHEREFORE, Defendant K. Davis requests that this Court dismiss Count V of the second amended complaint for failure to conform to ]aw or a rule of Court. Count VI -Breach of Fiduciary Duty and Fraud D. Mark Thomas and Jeanne M. Thomas v. Charles R. Davis and Karen S. Davis Preliminary Objection Pursuant to Pa. R.C.P. 1028(a)(4) 20. Plaintiffs assert breach of fiduciary and fraud claims against C. Davis and K. Davis. 21. Plaintiffs' second amended complaint does not allege any fraud by K. Davis upon which plaintiffs reasonably relied to their detriment. 22. C. Davis and K. Davis cannot have breached any fiduciary duty to plaintiffs after plaintiffs were no longer shareholders in Capitol Steps. -4- WHEREFORE, Defendants Davis request that this Court sustain their demurrer and dismiss Count VI of the second amended complaint as legally insufficient. Preliminary Objection Pursuant to Pa. R.C.P. 1028(a)(2) 23. The Pennsylvania Rules of Civil Procedure require fact pleading and that averments of breach of fiduciary duty and fraud be pleaded with particularity. 24. Plaintiffs' second amended complaint does not plead their breach of fiduciary duty and fraud claim with sufficient particularity as to K. Davis. 25. Because plaintiffs have failed to plead their breach of fiduciary duty and fraud claim with sufficient particularity as to K. Davis, their second amended complaint does not conform to Pa. R.C.P. 1019(a) and (b). WHEREFORE, Defendant K. Davis requests that this Court dismiss Count VI of the second amended complaint for failure to conform to ]aw or a rule of Court. Respectfully submitted, THOMAS B. SCHMIDT, III (19196) Pepper Hamilton LLP 200 One Keystone Plaza North Front & Market Streets Post Office Box 1181 Harrisburg, Pennsylvania 17108-1 18 1 (717)255-1155 (717) 238-0575 (Fax) Attorneys for Defendants Dated: November ]4, 2005 Charles R. Davis and Karen S. Davis -5- CERTIFICATE OF SERVICE I hereby certify that on November 14, 2005, I served a copy of the foregoing Defendants' Preliminary Objections to Second Amended Complaint on counsel of record by United States mail, first class postage prepaid, addressed as follows: John Havas, Esquire 6121 Stephens Crossing Mechanicsburg, PA 17050 Attorney for Plaintiffs Thomas B. Schmi ,III (19196) IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA D. MARK THOMAS AND JEANNE M. THOMAS, : Plaintiffs NO. 04-166 CIVIL TERM v. CIVIL ACTION -LAW CHARLES R. DAVIS AND KAREN S. DAVIS, : Defendants PRAECIPE FOR ENTRY OF APPEARANCE To the Prothonotary: Enter my appearance on behalf of Plaintiffs D. Mark Thomas and Jeanne M. Thomas in the above-captioned matter. Papers may be served at the address set forth below. Date: ~ ~ ~ P /t ~ David T. Kluz PA Attorney ID No.18005 212 Locust Street, Suite 500 Harrisburg, Pennsylvania 17101 Telephone: (717) 238-$183 Fax: (717) 232-3524 Email: dkluz@dkwlaw.com ., =~ .. ~~ - , , ~=~ `» _ 4 ,~ f„T r~~ y {^ } . , R D. MARK THOMAS AND JEANNE M. THOMAS, Plaintiffs v. IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION -LAW CHARLES R. DAVIS AND KAREN S. NO. 04-166 CIVIL TERM DAVIS, Defendants PLAINTIFFS' ANSWER TO DEFENDANTS' PRELIMINARY OBJECTIONS TO PLAINTIFFS' SECOND AMENDED COMPLAINT Plaintiffs D. Mark Thomas ("D. Thomas") and Jeanne M. Thomas ("J. Thomas") hereby answer Defendants Charles R. Davis ("C. Davis")and Karen S. Davis ("K. Davis") Preliminary Objections to Plaintiffs' Second Amended Complaint. Since Defendants' preliminary objections allege no new facts, Plaintiffs respectfully submit an answer is not necessary. However, should this Honorable Court deem an answer is necessary, plaintiffs answer said preliminary objections below: Count I -Breach of Contract D. Mark Thomas v. Charles R. Davis and Karen S. Davis Preliminary Objection Pursuant to Pa.R.C.P. 1028(a)(5) 1. It is admitted that Plaintiffs' second amended complaint alleges that Capitol Steps Associates, Inc. ("Capitol Steps"), had the primary obligation to pay "Judgment Note 3." That fact has no relevancy whatsoever to the Count I breach of contract claim in the second amended complaint. 2. Denied as a conclusion of law to which no response is required. By way of further answer, it is denied that Capitol Steps is a necessary party to the Count I claim of the second amended complaint. Plaintiff D. Thomas, in Count I of the second amended complaint, seeks damages directly resulting from Defendants breach of the September 12, 2001 settlement agreement. Defendants argue that since Capitol Steps had the primary obligation to pay Judgment Note 3 it "is a necessary party to this litigation." (Defendants P. Objections at 1-2.) This objection has no merit. Count I is a breach of contract claim. The September 12, 2001 settlement agreement is a contract between Plaintiffs and Defendants. (Sec. Am. Complaint, Exhibit B, page 1.) Capitol Steps is not a party to the settlement agreement upon which the Count I breach of contract claim arises. Defendant C. Davis executed the settlement agreement in his capacity as president of Capitol Steps solely for the purpose of Capitol Steps affirming and agreeing to the releases set forth in paragraph 6 of the settlement agreement (Sec. Am. Complaint, Exhibit B, page 3) and not for the purpose of Capitol Steps committing to any contractual obligation to Plaintiffs in connection with Judgment Note 3 and Plaintiff D. Thomas' guaranty thereon. Under the provisions of the settlement agreement, the Defendants and only the Defendants were contractually obligated to secure the removal of "Thomas as a guarantor -2- of the Corporation's obligations" prior to Plaintiffs stock ownership in Capitol Steps being transferred to Defendants. (Sec. Am. Complaint at 5.) Defendants, not Capitol Steps, breached this contractual obligation. Since Capitol Steps was not a party to this contractual obligation, it is not a necessary party to Plaintiff D. Thomas' Count I breach of contract claim. Further, Capitol Steps is now a defunct corporation without any assets. 3. It is admitted that Plaintiffs did not join Capitol Steps as a party. For the reasons set forth in paragraph 2 above, it is denied that Capitol Steps is a necessary party to Count I of the second amended complaint. WHEREFORE, Plaintiff D. Mark Thomas respectfully requests that Defendants' Preliminary Objections to, and specifically its request to dismiss, Count I of the Second Amended Complaint for Plaintiffs' failure to join Capitol Steps as a necessary party, be denied. Count II -Breach of Contract D. Mark Thomas and Jeanne M. Thomas v. Charles R. Davis and Karen S. Davis Preliminary Objection Pursuant to Pa.R.C.P. 1028(a)(4) 4. Denied as a conclusion of law to which no response is required. Byway of further answer, it is denied that Count II of Plaintiffs' second amended complaint is legally insufficient for, inter alia, the reasons set forth in paragraphs 5 and 6 below. 5. Denied as a conclusion of law to which no response is required. Byway of further answer, it is specifically denied that Plaintiff J. Thomas lacks standing to assert a claim for breach of contract against defendants in Count II of the second amended complaint. Defendants' argument fails to recognize that Plaintiff J. Thomas was a party to the settlement agreement. The settlement agreement "expressly conditioned" the conveyance on her ownership in Capitol Steps to the Defendants upon the removal of -3- Plaintiffs "as a guarantor of the Corporation's obligations." This meant before Plaintiff J. Thomas' ownership interest in Capitol Steps was to be transferred to Defendants, Plaintiff D. Thomas' guaranty on Judgment Note 3 had to be removed. Without effectuating the removal of the said guaranty at the time of the LaSalle National Bank refinancing, Defendants breached this contractual obligation to Plaintiff J. Thomas. As a result of this contractual breach, she was severely damaged. Plaintiff J. Thomas lost her ownership interest in the State Street Building. The building at the time of the contractual breach was appraised at $2,800,000 and Plaintiffs' net 50% interest therein after reflecting outstanding obligations was $281,446. (Sec. Am. Complaint at 14-15.) Plaintiff J. Thomas also had an interest in the $175,000 paid by her husband Plaintiff D. Thomas to satisfy the claim and confession of judgment on Judgment Note 3. Further, Plaintiff J. Thomas had an interest in monies expended for legal fees in regard to the action initiated against her husband on the guarantee. These damages to Plaintiff J. Thomas are the direct and proximate result of Defendants' breach of their contractual obligations to Plaintiff J. Thomas under paragraph 3 of the settlement agreement. As a result, Plaintiff J. Thomas clearly has standing under Count I I of the second amended complaint to pursue the breach of contract claim against Defendants. 6. Denied as a conclusion of law to which no response is necessary. Byway of further answer, for the reasons set forth in paragraph 5 above, it is denied that Plaintiff J. Thomas lacks standing to assert the Count II breach of contract claim against Defendants. WHEREFORE, Plaintiff Jeanne M. Thomas respectfully requests that Defendants Charles R. Davis' and Karen S. Davis' request for this Court to sustain their demurrer and -4- dismiss Count II of the Second Amended Complaint as to Plaintiff Jeanne M. Thomas as legally insufficient be denied. Preliminary Objections Pursuant to Pa. R.C.P. 1028(a)(5) 7. It is admitted that Plaintiffs' seconded amended complaint alleges that Capitol Steps had the primary obligation to pay Judgment Note 3. By way of further answer, Count II is a breach of contract claim arising from Defendants failure to remove "Thomas [D. Thomas] as a guarantor of the Corporation's obligations" pursuant to their obligations under the terms of the September 12, 2001 settlement agreement. For the reasons set forth in paragraph 2 above, Capitol Steps is not a necessary party in a breach of contract claim in which Capitol Steps was not a party to the contractual obligation in question. 8. It is denied, for the reasons set forth in paragraphs 2 and 7 above, that Capitol Steps is a necessary party to this litigation. 9. It is admitted that Plaintiffs did not join Capitol Steps as a party. Byway of further answer, Count II breach of contract claim arising from Defendants breach of their September 12, 2001 contractual obligation to have Plaintiff D. Thomas removed as a guarantor of all Capitol Steps obligations. Capitol Steps under the September 12, 2001 settlement agreement did not make this contractual commitment and is not a necessary party to this litigation. WHEREFORE, Plaintiffs D. Mark Thomas and Jeanne M. Thomas respectfully request that Defendants Charles R. Davis` and Karen S. Davis' request for this Court to dismiss Count I I of the Second Amended Complaint for Plaintiffs' failure to join a necessary party be denied. -5- Count IV -Fraud and Misrepresentation D. Mark Thomas and Jeanne M. Thomas v. Charles R. Davis and Karen S. Davis Preliminary Objection Pursuant to Pa.R.C.P. 1028(a)(4) 10. It is admitted that Plaintiffs assertfraud and misrepresentation claims against Defendants C. Davis and K. Davis. 11. It is denied that Plaintiffs' second amended complaint fails to allege misrepresentation by Defendant K. Davis upon which Plaintiffs reasonably relied to their detriment. Byway of further answer, Plaintiffs have not averred that Defendant K. Davis engaged in any verbal representations to Plaintiffs. The facts as averred in the second amended complaint show Defendant K. Davis' failure to disclose material facts were intended to deceive \Plaintiffs and induce them to execute the September 12, 2001 settlement agreement. The facts as averred show Defendant K. Davison September 12, 2001, executed the settlement agreement. The said agreement specifically addressed the refinancing of "the Corporation's principal asset, the real property and building erected thereon known and numbered as 500 North Third Street, Harrisburg, PA." (Sec. Am. Complaint, Exhibit B -paragraph 3.) Together with the aforesaid refinancing, the settlement agreement also conditioned Plaintiffs' ownership transfer upon the removal of Plaintiff D. Thomas' guaranty on Capitol Steps' obligations. The facts as averred show that at no time prior to or at the time the settlement agreement was drafted and executed did Defendant K. Davis inform Plaintiffs that she had or was also executing loan documents on the same day with LaSalle National Bank refinancing Capitol Steps and the State Street Building without effectuating the removal of Plaintiff D. Thomas' guaranty on Judgment Note 3. Plaintiffs were definitely deceived by Defendant K. Davis' actions. If Plaintiffs had been made aware of this material fact, they would not have executed the settlement -6- agreement. Based upon these facts as averred in the second amended complaint, Defendant K. Davis definitely committed actionable fraud and misrepresentation. WHEREFORE, Plaintiffs D. Mark Thomas and Jeanne M. Thomas respectfully request that Defendant Karen S. Davis' request for this Court to sustain her demurrer and dismiss Count IV of the Second Amended complaint as legally insufficient be denied. Preliminary Objection Pursuant to Pa. R.C.P. 1028(a)(2) 12. Denied as a conclusion of law as to which no response is required. Byway of further answer, it is denied that Count IV of Plaintiffs' second amended complaint is not pled with particularity. 13. It is denied that Plaintiffs' second amended complaint does not plead their fraud and misrepresentation claim with sufficient particularity as to Defendant K. Davis. By way of further answer, all elements of fraud have been pied with sufficient particularity to permit Defendant K. Davis to prepare a defense. Plaintiffs have averred facts demonstrating Defendant K. Davis' misrepresentation and concealment of material facts for the purpose of inducing Plaintiffs to execute the September 12, 2001 settlement agreement providing for the conditional transfer of their ownership in Capitol Steps to Defendants. Specifically, as set forth in paragraph 11 above, Plaintiffs have averred that Defendant K. Davis on September 12, 2001, executed the settlement agreement addressing both the refinancing and removal of Plaintiff D. Thomas' guarantee while purposely failing to inform plaintiffs that on the same day she had or was executing loan documents with LaSalle National Bank to carry out the refinancing without the satisfaction or removal of the guaranty. -7- 14. It is denied that Plaintiffs have not pled their fraud and misrepresentation claim with sufficient particularity as to Defendant K. Davis and that their Second Amended Complaint does not meet the requirements of Pa. R.C.P. 1028(a)(2). WHEREFORE, Plaintiffs D. Mark Thomas and Jeanne M. Thomas respectfully request that Defendant Karen S. Davis' request for this Court to dismiss Count IV of the Second Amended Complaint for failure to conform to law or a rule of Court be denied. Count V -Fraud and Misrepresentation D. Mark Thomas v. Charles R. Davis and Karen S. Davis Preliminary Objection Pursuant to Pa.R.C.P. 1028(a)(4) 15. It is admitted that Plaintiffs in Count V of the second amended complaint have asserted fraud and misrepresentation claims against Defendants C. Davis and K. Davis. 16. Based upon the reasons set forth in paragraph 11 above and in paragraph 13 of Plaintiffs' second amended complaint, it is denied that Plaintiffs second amended complaint does not allege misrepresentation by Defendant K. Davis upon which Plaintiffs reasonably relied to their detriment. WHEREFORE, Plaintiffs D. MarkThomas and Jeanne M. Thomas respectfully pray that Defendant Karen S. Davis' request for this Court to sustain her demurrer and dismiss Count V of the Second Amended Complaint as legally insufficient be denied. Preliminary Objection Pursuant to Pa. R.C.P. 1028(a)(2) 17. Denied as a conclusion of law to which no response is necessary. Byway of further answer, it is denied that Count V of Plaintiffs' second amended complaint is not pled with particularity. -8- 18. It is denied that Plaintiffs' second amended complaint does not plead their fraud and misrepresentation claim with sufficient particularity against Defendant K. Davis. Byway of further answer, all elements of fraud have been pled with sufficient particularity to permit Defendant K. Davis to prepare a defense. As set forth in paragraph 11 above, plaintiffs have averred facts demonstrating Defendant K. Davis' misrepresentation and concealment of material facts to induce Plaintiffs to execute the September 12, 2001 settlement agreement providing for the conditional transfer of their ownership in Capitol Steps to Defendants. Specifically, Plaintiffs have averred that Defendant K. Davis on September 12, 2001, executed the settlement agreement addressing both the refinancing and removal of Plaintiff D. Thomas' guarantee while purposely failing to inform Plaintiffs that on the same day she had or was executing loan documents with LaSalle National Bank to carry out the refinancing without the satisfaction or removal of the guaranty. 19. It is denied that Plaintiffs have not pled their fraud and misrepresentation claim with sufficient particularity as to Defendant K. Davis and that their second amended complaint fails to meet the requirements of Pa. R.C.P. 1019(a) and (b). WHEREFORE, Plaintiffs D. Mark Thomas and Jeanne M. Thomas respectfully request that Defendant Karen S. Davis' request for this Court to dismiss Count V of the Second Amended Complaint for failure to conform to law or a rule of Court be denied. Count VI -Breach of Fiduciary Duty and Fraud D. Mark Thomas and Jeanne M. Thomas v. Charles R. Davis and Karen S Davis Preliminary Objection Pursuant to Pa.R.C.P. 1028(a)(4) 20. It is admitted that Plaintiffs in their second amended complaint assert breach of fiduciary duty and fraud claims against Defendants C. Davis and K. Davis. -9- 21. it is denied that Plaintiffs second amended complaint does not allege misrepresentation by Defendant K. Davis upon which plaintiffs reasonably relied to their detriment. By way of further answer, based upon the reasons set forth in paragraph 11 above and in paragraph 13 of Plaintiffs' second amended complaint, Plaintiffs' second amended complaint alleges fraud by Defendant K. Davis upon which Plaintiffs reasonably relied to their detriment. 22. It is denied that Defendants cannot breach a fiduciary duty to Plaintiffs and that Plaintiffs were no longer shareholders in Capitol Steps. By way of further answer, Plaintiffs remained shareholders in Capitol Steps. Pursuant to the terms of paragraph 3 of the settlement agreement, a condition precedent to the "transfer of interest," meaning Plaintiffs' S0% ownership interest in Capitol Steps, was the removal of Plaintiff D. Thomas "as a guarantor of the Corporation's obligations." (Sec. Am. Complaint, Exhibit B, paragraph 3.) Not until Plaintiff D. Thomas' guaranty exposure on Judgment Note 3 was removed, did the transfer of interest of Plaintiffs' stock ownership in Capitol Steps become effective. Since such guaranty was never removed, Plaintiffs remained shareholders in Capitol Steps and their ownership in Capitol Steps was never transferred to Defendants. As a result, all fraudulent actions and inactions committed by Defendants against Plaintiffs constituted a breach of their fiduciary duties to Plaintiffs. WHEREFORE, Plaintiffs D. Mark Thomas and Jeanne M. Thomas respectfully request that Defendants Charles R. Davis' and Karen S. Davis' request for this Court to sustain their demurrer and dismiss Count V of the Second Amended Complaint as legally insufficient be denied. -10- Preliminary Objection Pursuant to Pa. R.C.P. 1028(a)(2) 23. Denied as a conclusion of law to which no response is necessary. Byway of further answer, it is denied that Count VI of Plaintiffs' second amended complaint is not pled with particularity. 24. It is denied, for the reasons set forth in paragraphs 11 and 22 above, that Plaintiffs' second amended complaint does not plead their breach of fiduciary duty and fraud claims with sufficient particularity as to Defendant K. Davis. 25. It is denied that Plaintiffs have failed to plead their breach of fiduciary duty and fraud claims with sufficient particularity as to Defendant K. Davis. Said Count VI meets the requirements of Pa. R.C.P. 1019(a) and (b). By way of further answer, all elements of fraud have been pled with sufficient particularity to permit Defendant K. Davis to prepare a defense. As set forth in paragraph 11 above, Plaintiffs have averred facts demonstrating Defendant K. Davis' misrepresentation and concealment of material facts for the purpose of inducing Plaintiffs to execute the September 12, 2001 settlement agreement providing for the conditional transfer of their ownership in Capitol Steps to defendants. Plaintiffs have averred that Defendant K. Davis on September 12, 2401, executed the settlement agreement addressing both the refinancing and removal of Plaintiff D. Thomas' guarantee while purposely failing to inform Plaintiffs that on the same day she had or was executing loan documents with LaSalle National Bank to carry out the refinancing without the removal of the guaranty. As to the breach of fiduciary duty assertion, and asset forth in paragraph 22 above, Plaintiffs' averments has been pled with sufficient particularity as to Defendant K. Davis. Pursuant to the terms of paragraph 3 of the settlement agreement, a condition precedentto "transferof interest," meaning Plaintiffs' 50% ownership interest in Capitol Steps, was the removal of Plaintiff D. Thomas "as a -11- guarantor of the Corporation's obligations." (Sec. Am. Complaint, Exhibit B, paragraph 3.) Consequently, not until Plaintiff D. Thomas' guaranty exposure on Judgment Note 3 was removed, did the transfer of interest of Plaintiffs' stock ownership in Capitol Steps become effective. Since such guaranty as never removed, Plaintiffs' ownership shares in Capitol Steps was never transferred to Defendants. WHEREFORE, Plaintiffs D. Mark Thomas and Jeanne M. Thomas respectfully request that Defendant Karen S. Davis' request for this Court to dismiss Count VI of the Plaintiffs' Seconded Amended Complaint for failure to conform to law or a rule of Court be denied. Dated: April ~, 2007 F:\CLIENTS\MISC\CAPITOLVaw Sui[\Pleadlrgs120071P1aiMiHs Answer m 2ntl Amended Complalnt.wpd Respectfully submitted, David T. Kluz Attorney for Plaintiffs PA Attorney ID #18005 Suite 500 212 Locust Street Harrisburg, PA 17101 Tel. No. (717) 238-8183 Fax No. (717)232-3524 -12- r CERTIFICATE OF SERVICE I hereby certify that on April ~8, 2007, I served a correct copy of the foregoing Plaintiffs' Answer to Defendants' Preliminary Objections to Plaintiffs' Second Amended Complaint by United States Mail, first-class postage prepaid, addressed as follows: Thomas B. Schmidt, III, Esquire (19196) Pepper Hamilton, LLP 200 One Keystone Plaza North Front and Market Streets P.O. Box 1181 Harrisburg, PA 17108-1181 David T. Kluz, Esquire By ~~1~1'U~- t~i-,Ew Vikki Moore, Secretary ~'-~ ;~~ C~' . _1 ~ - - ~ %~'3 i"'i T~ ""z ._ : _ -:- .. _. L.;'1 ,}7 1 _, IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA D. MARK THOMAS AND JEANNE M. THOMAS, Plaintiffs v. NO. 04-166 CIVIL TERM CIVIL ACTION -LAW CHARLES R. DAVIS AND KAREN S. DAViS, Defendants WITHDRAWAL OF APPEARANCE To the Prothonotary: Please withdraw my appearance on behalf of the above-named Plaintiffs in favor of the appearance of David T. Kluz. Date: April 19, 2007 6121 Stephen's Crossing Mechanicsburg, PA 17050 (717) 979-4840 t CERTIFICATE OF SERVICE I hereby certify that on April, 2007, I served a correct copy of the foregoing Praecipe by United States Mail, first-class postage prepaid, addressed as follows: Thomas B. Schmidt, III, Esquire (19196) Pepper Hamilton, LLP 200 One Keystone Plaza North Front and Market Streets P.O. Box 1181 Harrisburg, PA 17108-1181 John Havas, Esquire c '~ ~ ~ ~' . -~r,t,c,: ~ts ,, N ~ ..~~ D Mark Thomas and Jeanne M ThomaG vs Case No. 04-166 Civil Term Charles R. Davis and Karen S. Davis ~ o 0 '~ ~ ~ z Statement of Intention to Proceed ~~~ r ~ ---° -- --~ i'~t ~ cra r -C °1 -.~ ~ ~ c To the Court: ~ ~,, a ~~ .-~.t y ~ `~'?t D. Mark Thomas and Jeanne M. Thomas intends to proceed with the above captio~atteL.. ~- Print Name Cwr~'t~aS E. T+i,oMwt '1C~ Sign a Name ~s~/~^~ji - - /~[I~WCy to Mo• Zo t o 1 Date: ZS fkrt~e~ 2oto Attorney for ~- a/l~+t-~. Tre••~nt ~ J~.i,,g M• "T~to~A f Explanatory Comment The Supreme Court of Pennsylvania has promulgated new Rule of Civil Procedure 230.2 governing the termination of inactive cases and amended Rule of Judicial Administration 1901. Two aspects of the recommendation merit comment. I. Rule of civil Procedure New Rule of Civil Procedure 230.2 has been promulgated to govern the termination of inactive cases within the scope of the Pennsylvania. Rules of Civil Procedure. The termination of these cases for inactivity was previously governed by Rule of Judicial Administration 1901 and local rules promulgated pursuant to it. New Rule 230.2 is tailored to the needs of civil actions. It provides a complete procedure and a uniform statewide practice, preempting local rules. This rule was promulgated in response to the decision of the Supreme Court in Shop v. Eagle, 551 Pa. 360,710 A.2d 1104 (1998) in which the court held that "prejudice to the defendant as a result of delay in prosecution is required before a case maybe dismissed pursuant to local rules implementing Rule of Judicial Administration 1901." Rule of Judicial Administration 1901(b) has been amended to accommodate the new rule of civil procedure. The general policy of the prompt disposition of matters set forth in subdivision (a) of that rule continues to be applicable. II Inactive Cases The purpose of Rule 230.2 is to eliminate inactive cases from the judicial system. The process is initiated by the court. After giving notice of intent to terminate an action for inactivity, the course of the procedure is with the parties. If the parties do not wish to pursue the case, they will take no action and "the Prothonotary shall enter an order as of course terminating the matter with prejudice for failure to prosecute." If a party wishes to pursue the matter, he or she will file a notice of intention to proceed and the action shall continue. a. Where the action has been terminated If the action is terminated when a party believes that it should not have been terminated, that party may proceed under Ru1e230(d) for relief from the order of termination. An example of such an occurrence might be the termination of a viable action when the aggrieved party did not receive the notice of intent to terminate and thus did not timely file the notice of intention to proceed. The timing of the filing of the petition to reinstate the action is important. If the petition is filed within thirty days of the entry of the order of termination on the docket, subdivision (d)(2) provides that the court must grant the petition and reinstate the action. If the petition is filed later than the thirty-day period, subdivision (d)(3) requires that the plaintiff must make a showing to the court that the petition was promptly filed and that there is a reasonable explanation or legitimate excuse both for the failure to file the notice of intention to proceed prior to the entry of the order of termination on the docket and for the failure to file the petition within the thirty-day period under subdivision (d)(2). B. Where the action has not been terminated An action which has not been terminated but which continues upon the filing of a notice of intention to proceed may have been the subject of inordinate delay. In such an instance, the aggrieved party may pursue the remedy of a common law non pros which exits independently of termination under Rule 230.2. of ce., 41 David D. Buell e Knee X Simpson Prothonotary y + Deputy y 1st De ut Prothonotary ra� ". .` Irene E. 9l�lorrow �irkS. Sohonage, ESQ. _...,,, Solicitor ,7 50 2"d Deputy Prothonotary Office of the Prothonotary Cumberland County, cPennsyCvania oq-' QIwo CIVIL TERM ORDER OF TERMINATION OF COURT CASES AND NOW THIS 29TH DAY OF OCTOBER, 2013,AFTER MAILING NOTICE OF INTENTION TO PROCEED AND RECEIVING NO RESPONSE-THE ABOVE CASE IS HEREBY TERMINATED WITH PREJUDICE IN ACCORDANCE WITH PA R.C.P.230.2. BY THE COURT, DAVID D. BUELL PROTHONOTARY One Courthouse Square • Suite 100 • Carlisle, PA 17013 • (717)240-6195 • ''a.,(717)240-6573