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HomeMy WebLinkAbout08-1605Michael I. Levin Pa. Atty I.D. # 21232 Paul N. Lalley Pa. Atty I.D. # 78502 LEVIN LEGAL GROUP, P.C. 1301 Masons Mill Business Park 1800 Byberry Road Huntingdon Valley, PA 19006 Tel. (215) 938-6378 Fax (215) 938-6375 IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA Pennsylvania School Boards Association Insurance Trust, and School Claims Service, LLC 400 Bent Creek Blvd. Mechanicsburg, Pennsylvania 17050 Civil Action-Law No. bB - I l? Dj Jury Trial Demanded 0Ivil TCM Plaintiffs, vs. James Reynolds 7855 Manor Drive Harrisburg, Pennsylvania 17112-9379 Defendant NOTICE TO DEFEND You have been sued in court. If you wish to defend against the claims set forth in the following pages, you must take action within twenty (20) days after this Complaint and notice are served, by entering a written appearance personally or by an 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 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 HELP. THIS OFFICE CAN PROVIDE YOU WITH INFORMATION ABOUT HIRING A LAWYER. IF YOU CANNOT AFFORD TO HIRE A LAWYER, THIS 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. CUMBERLAND COUNTY BAR ASSOCIATION 32 South Bedford Street Carlisle, PA 1-717-249-3166 2 Michael I. Levin Pa. Atty I.D. # 21232 Paul N. Lalley Pa. Atty I.D. # 78502 LEVIN LEGAL GROUP, P.C. 1301 Masons Mill Business Park 1800 Byberry Road Huntingdon Valley, PA 19006 Tel. (215) 938-6378 Fax (215) 938-6375 IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA Pennsylvania School Boards Association Insurance Trust, and School Claims Service, LLC 400 Bent Creek Blvd. Mechanicsburg, Pennsylvania 17050, Civil Action-Law No.: 01- A q.< '.cvz? 7Z-- Jury Trial Demanded Plaintiffs, VS. James Reynolds 7855 Manor Drive Harrisburg, Pennsylvania 17112-9379, Defendant COMPLAINT AND NOW, come the Plaintiffs, the Pennsylvania School Boards Association Insurance Trust (the "Insurance Trust") and School Claims Service, LLC, ("SCS") by and through their counsel, the Levin Legal Group, P.C., which file this Complaint, and which, in support thereof, allege the following: 3 Parties 1. The Plaintiff, Insurance Trust, is a common law trust, with its principal place of business located at 400 Bent Creek Boulevard, Mechanicsburg, Pennsylvania 17050. 2. The Plaintiff, SCS, is a Pennsylvania limited liability company, with its principal place of business located at 774 Limekiln Road, New Cumberland, Pennsylvania, 17070. SCS is wholly owned by the Insurance Trust and is affiliated with the Insurance Trust. 3. The Defendant, James Reynolds ("Reynolds"), is an adult individual residing at 7855 Manor Drive, Harrisburg, Pennsylvania 17112-9379. Venue 4. Venue is proper in Cumberland County, Pennsylvania, as the circumstances giving rise to this litigation occurred within Cumberland County, and Defendant is subject to the jurisdiction of this Honorable Court. Factual Allezations 5. Reynolds began his work for the Insurance Trust on or about February 17, 1987. During his employment with the Insurance Trust, Reynolds has been employed with a number of job titles and had numerous job responsibilities. 6. On or about September 15, 2006, Reynolds resigned from employment with the Trust. 7. At all times relevant hereto, Reynolds' duties and responsibilities were on behalf of the Insurance Trust and for companies affiliated with the Insurance Trust, including SCS. 4 8. Reynolds' employment duties for the Insurance Trust and its affiliated entities, including SCS, included ensuring: (a) that wage taxes were properly withheld from employees of SCS and paid to the applicable taxing jurisdictions, including the Internal Revenue Service; (b) that bank statements were reconciled; and (c) that contracts were terminated when requested. 9. In breach of his duties to the Plaintiffs, prior to his resignation from employment with the Insurance Trust, Reynolds failed or refused to pay federal, state and local income taxes that were withheld from employees of SCS. This was not discovered by the Plaintiffs until after Reynolds left employment with the Plaintiffs. 10. During a period of approximately eighteen months prior to his resignation, Reynolds failed or refused to reconcile bank accounts for the Insurance Trust and for SCS. The Plaintiffs did not discover this until after Reynolds left his employment with the Plaintiffs. 11. Reynolds advised Wayne Smith ("Smith"), the Assistant Executive Director for Insurance Services and the highest ranking employee of the Insurance Trust, that he, Reynolds, had terminated a lease agreement that the Insurance Trust had with a storage facility, in accordance with the intent of the Insurance Trust. After Reynolds left the Insurance Trust's employ, however, Insurance Trust personnel discovered that the lease agreement had not been terminated. 12. As a direct result of Reynolds' failure or refusal to pay wage tax withholdings to the IRS, the Insurance Trust and/or SCS incurred interest charges and penalty charges in the amount of One Hundred and Four Thousand, Three Hundred and Thirty-two Dollars and No Cents ($104,332.00). 5 13. As a result of Reynolds' failure or refusal to reconcile bank accounts for the Insurance Trust and SCS, the Insurance Trust was required to hire temporary employees to complete the reconciliation at a cost of Twenty Thousand, Six Hundred, and Ninety-seven Dollars and Seventy-five Cents ($20,697.75). 14. As a result of Reynolds' failure or refusal to terminate the lease and as a result of his deception-having assured the Insurance Trust that the lease had been terminated-the Insurance Trust incurred unanticipated and unnecessary costs in the amount of Two Thousand, Eight Hundred and Fifty-six Dollars and No Cents ($2,856.00). 15. During the period of time that Reynolds was failing or refusing to perform his duties as described in the preceding paragraphs of this Complaint, he was meeting regularly with superiors and with the Trustees, failing to advise them of his breaches of responsibility and leading them to believe that there were no problems with these particular issues. Legal Allegations 16. At all times during the period of his employment with the Trust, Reynolds was an employee and agent of the Insurance Trust. 17. As an employee and agent of the Insurance Trust, Reynolds had legal duties and obligations to the Insurance Trust; including: (a) a duty of loyalty to the Insurance Trust; (b) a duty to act in good faith in his dealings with the Insurance Trust; (c) the duty to act in accordance with the care and with the skill which is standard for his position of employment with the Insurance Trust; (d) a duty not to conduct himself with such impropriety that he brought disrespect upon his employer, the 6 Insurance Trust or those affiliated entities with whom he worked; (e) a duty to advise his employer, the Insurance Trust and SCS, of information relevant to the affairs entrusted to him, including without limitation, the duty to advise the Insurance Trust and SCS that he was not paying the required taxes; that he had not reconciled the bank accounts, and that he had not terminated the lease for storage; (f) a duty to fulfill all reasonable requirements of his job, which included, without limitation, ensuring that taxes were properly withheld and paid, that bank statements were properly and timely reconciled; and that contracts were terminated when requested by Reynolds' employer, the Insurance Trust; and (g) a duty to be truthful in his dealings with his employer as to his fulfillment of his duties, responsibilities and obligations. 18. As part of his duties to the Insurance Trust and to SCS, Reynolds participated at the bi-monthly meetings of the governing boards of both the Insurance Trust and SCS and gave reports to the governing boards of the Insurance Trust and SCS. Despite giving such reports, which included reports on the financial condition of each, he failed or refused to disclose at such meetings: (i) that he was not paying withholding taxes, (ii) that he was not performing bank reconciliations, or (iii) that he was not terminating contracts as directed to do. 19. It is believed and therefore averred that Reynolds' refusal or failure: (1) to pay wage withholding taxes when due; (2) to ensure that bank reconciliation statements were completed on a timely basis, and; (3) to terminate the storage contract when desired by the Insurance Trust, all constituted breaches of his duties to the Insurance Trust and to SCS. 7 20. It is believed and therefore averred that by Reynolds' failure or refusal to advise the Insurance Trust of his breaches of duty as described in the preceding paragraph, Reynolds breached his duty of fair dealing and truthfulness to the Insurance Trust and to SCS. 21. It is believed and therefore averred that Reynolds' failure or refusal to pay withholding taxes, to reconcile bank statements, and to terminate the storage contract as alleged herein constituted a breach of his duty of fair dealing with the Insurance Trust and SCS. 22. It is believed and therefore averred that Reynolds' failure or refusal to pay withholding taxes, to reconcile bank statements, and to terminate the storage contract as alleged herein constituted a breach of his duty to exercise the degree of skill and competence expected of him. Count I: Neslizence 23. All preceding paragraphs hereof are incorporated herein by this reference as if fully set forth herein. 24. As result of Reynolds' neglect to ensure that taxes were properly withheld and paid, to date, the Trust has incurred penalties and interest for failure to pay taxes in the amount of $104,832.00. 25. As a result of Reynolds' negligence to reconcile bank accounts, the Trust has incurred costs for the employment of temporary employees to complete the reconciliation in the amount of $20, 697.75. 8 26. As a result of Reynolds' neglect to terminate a lease agreement, and his deception-having assured the Trust that the lease had been terminated-the Trust incurred unexpected costs in the amount of $2,856.00. 9 Count II: Breach of Duty 27. All preceding paragraphs hereof are incorporated herein by this reference as if fully set forth herein. 28. The Insurance Trust and SCS incorporate herein by this reference all previous paragraphs hereof as if the same were set forth at length herein. 29. As result of Reynolds's breaches of his duties as alleged previously herein, the Insurance Trust incurred the costs and expenses described above. Count III: Misrepresentation 30. The Insurance Trust and SCS incorporate herein by this reference all previous paragraphs hereof as if the same were set forth at length herein. 31. As a result of Reynolds's concealment of his refusal or failure to perform his duties as alleged previously herein, Reynolds damaged the Insurance Trust and SCS as alleged previously herein. Count IV--Disgorgement 32. The Insurance Trust and SCS incorporate herein by this reference all previous paragraphs hereof as if the same were set forth at length herein. 33. As a result of Reynolds' breaches of his duties as described previously, his concealment of his wrongdoing, and his misrepresentation to Smith that he had terminated the storage lease, Reynolds committed significant and material breaches of his employment duties and his duties as an employee of the Insurance Trust. 34. It is believed that for the period of approximately eighteen months during which time he was not performing his duties as set forth herein, Reynolds is not entitled 10 to the salary and benefits paid to him and has a duty to return the salary and benefits paid to him by the Plaintiffs. Prayer For Relief WHEREFORE, Plaintiffs request: (1) that the Court enter judgment against the Defendant and in favor of the Plaintiffs in the amount of One Hundred, Twenty-eight Thousand, Three Hundred and Eighty-five Dollars and Eighty Cents ($128,385.80), as their respective interests shall appear, the amount of or that measure of damages that would make Plaintiffs whole; (2) that the Court require that the Defendant disgorge all wages and benefits paid to the Defendant during the period of his breach through the date of his resignation; (3) that the Court award punitive damages against the Defendant; and, (4) that the Court award such additional remedies, including attorneys fees and costs incurred by the Plaintiffs in bringing this action, as may be allowed by law. Respectfully Submitted, Levin Legal Group, P.C. By: , _ PIZ./ Michael I. Levin Paul N. Lalley LEVIN LEGAL GROUP, P.C. 1301 Masons Mill Business Park 1800 Byberry Road Huntingdon Valley, PA 19006 (215) 938-6378 (Counsel for Pennsylvania School Boards Association Insurance Trust and School Claims Service, LLQ Date: February 25, 2008 11 VERIFICATION I, Wayne Smith, have reviewed the foregoing Complaint and the facts alleged therein are true and correct to the best of my knowledge, information, and belief. As the Assistant Executive Director for Insurance Services for the Pennsylvania School Boards Association, Inc., the Managing Director of the Pennsylvania School Boards Association Insurance Trust and as the Chief Executive Officer for School Claims Service, LLC, I am authorized to sign this verification on behalf of the Pennsylvania School Boards Association Insurance Trust and on behalf of School Claims Service, LLC. I understand that by signing this Verification, I am subject to the penalties for unswom falsification to authorities provided by 18 Pa.C.S. § 4904. Way mith Date: '?5Z/ /'?"F 11 (K 00 FTI O W D ? -a 4 _ ? 1 ?. µ? lJ1 . , A ti ? t SHERIFF'S RETURN - OUT OF COUNTY CASE NO: 2008-01605 P COMMONWEALTH OF PENNSYLVANIA: COUNTY OF CUMBERLAND PENNSYLVANIA SCHOOL BOARD ASSN VS REYNOLDS JAMES R. Thomas Kline , Sheriff or Deputy Sheriff who being duly sworn according to law, says, that he made a diligent search and and inquiry for the within named DEFENDANT , to wit: REYNOLDS JAMES but was unable to locate Him deputized the sheriff of DAUPHIN in his bailiwick. He therefore serve the within COMPLAINT & NOTICE County, Pennsylvania, to On March 28th , 2008 , this office was in receipt of the attached return from DAUPHIN Sheriff's Costs: So answers: Docketing 18.00 Out of County 9.00 Surcharge 10.00 R. Thomas Kline Dep Dauphin County 37.25 Sheriff of Cumberland County Postage 1.72 75.97 ? yla3 f b 8 03/28/2008 LEVIN LEGAL GROUP Sworn and subscribe to before me this day of , A. D. In The Court of Common Plus of Cumberland County, Pennsylvania Pennsylvania School Boards Association Insurance Trustetal vs. James Reynolds No. 08-1605 civil Now, March 13, Zoos , I, SHERIFF OF CUMBERLAND COUNTY, PA, do hereby deputize the Sheriff of Dauphin County to execute this Writ, this deputation being made at the request and risk of the Plaintiff. Sheriff of Cumberland County, PA Affidavit of Service Now, 520 , at o'clock M. served the within upon at by handing to a and made known to Sheriff of Sworn and subscribed before me this day of , 20 copy of the original the contents thereof. So answers, COSTS SERVICE $ MILEAGE AFFIDAVIT County, PA mtfit-t of thv "*hCrfr'r Mary Jane Snder Real Estate Depu William T. Tully Solicitor Dauphin County Harrisburg, Pennsylvania 17101 ph: (717) 780-6590 fax: (717) 255-2889 Jack Lotwick Sheriff Commonwealth of Pennsylvania County of Dauphin SCS Charles E. Sheaffer Chief Deputy Michael W. Rinehart Assistant Chief Deputy VS JAMES REYNOLDS Sheriffs Return No. 2008-T-0631 OTHER COUNTY NO. 08-1605 And now: MARCH 21, 2008 at 1:50:00 PM served the within COMPLAINT upon JAMES REYNOLDS by personally handing to JAMES REYNOLDS true attested copies of the original COMPLAINT and making known to him/her the contents thereof at 7855 MANOR DRIVE HARRISBURG PA 17112 Sworn and subscribed to before me this 21 ST day of March, 2008 AAT? NOTARIAL SEAL ARY JANE SNYDER, Notary Publi Highspire, Dauphin County [My Commission Expires Set 1, 2010 So Answers, Sheriff of /a?up ' oun a. By C Deputy Sheriff Deputy: P SHE R Sheriffs Costs: $37.25 3/20/2008 Michael I. Levin Pa. Atty I.D. # 21232 Paul N. Lalley Pa. Atty I.D. # 78502 LEVIN LEGAL GROUP, P.C. 1301 Masons Mill Business Park 1800 Byberry Road Huntingdon Valley, PA 19006 Tel. (215) 938-6378 Fax (215) 938-6375 IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA Pennsylvania School Boards Association Civil Action-Law Insurance Trust, and School Claims Service, LLC No.: 08-1605 Civil Term 400 Bent Creek Blvd. Mechanicsburg, Pennsylvania 17050 Jury Trial Demanded Plaintiffs, VS. James Reynolds 7855 Manor Drive Harrisburg, Pennsylvania 17112-9379 Defendant PRAECIPE FOR ORDER TO SETTLE, DISCONTINUE AND END TO THE PROTHONOTARY: Kindly mark the above-captioned matter settled, discontinued and ended. Respectfully Submitted, Levin Legal Group, P.C. By: P'W/1" A Paul N. Lalley 1 LEVIN LEGAL GROUP, P.C. 1301 Masons Mill Business Park 1800 Byberry Road Huntingdon Valley, PA 19006 (215) 938-6378 (Counsel for Pennsylvania School Boards Association Insurance Trust and School Claims Service, LLC) 2 OF THE 2009 SEP 18 Ph. 1