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HomeMy WebLinkAbout01-64994 Todd J. Shill, Esquire Attorney I.D. No. 69225 RHOADS & SINON LLP One South Market Square, 12th Floor P.O. Box 1146 Harrisburg, PA 17108-1146 (717) 233-5731 Attorneys for Petitioner MAUELL CORPORATION, Petitioner Vo FRANK A. ULRICH, Respondent IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA MAUELL CORPORATION'S PETITION TO CONFIRM ARBITRATION AWARD NOW COMES, Petitioner, Mauell Corporation ("Mauell"), by its attorneys, Rhoads & Sinon LLP, and files the within Petition to Confirm Arbitration Award as follows: 1. Mauell is a business corporation that manufactures and sells control room technology and power control systems, and has its principal U.S.A. offices at 31 Old Cabin Hollow Road, Dillsburg, Pennsylvania, 17019. 2. Respondent Frank A. Ulrich ("Ulrich") was employed by Mauell as its President and Chief Operating Officer pursuant to the terms and conditions of an Employment Agreement dated November 27, 1990 ("Agreement"). A true and correct copy of the Agreement is attached hereto as Exhibit "A." 408371.1 3. Ulrich's Agreement with Mauell, provided, in pertinent part: All disputes, differences, and controversies arising under or in connection with this agreement shall be settled and finally determined by arbitration in Harrisburg, PA under the then existing rules of the American Arbitration Association. See Exhibit "A," Paragraph 13 (emphasis added). 4. Ulrich was temfinated by Mauell on May 24, 2000. 5. Pursuant to Paragraph 13 of the Agreement (quoted above), Ulrich filed a Demand for Arbitration with the American Arbitration Association ("AAA") on September 6, 2000, seeking damages from Mauell for breach of contract, wrongful temfination, and breach of Mauell's duty to act in good faith and fair dealing. A tree and correct copy of Ulrich's Demand for Arbitration is attached hereto as Exhibit "B." 6. Mauell filed a timely Answering Statement and Counterclaim, seeking damages from Ulrich for breach of contract, fraud, misrepresentation, breach of fiduciary duties, and unjust enrichment. A tree and correct copy of Mauell's Answering Statement and Counterclaim is attached hereto as Exhibit "C." 7. Following a two day arbitration hearing on July 2-3, 2001, the AAA Arbitrator denied Ulrich's claims against Mauell and awarded Mauell $209,271.23 on its counterclaims. A tree and correct copy of the Award of the Arbitrator is attached hereto as Exhibit "D." 8. The AAA faxed the foregoing Award, as well as the Arbitrator's Opinion and Findings, to Mauell and Ulrich on October 16, 2001. -2- 9. Ulrich did not seek a clarification or modification of the Award. 10. Ulrich did not appeal the Award. 11. Pursuant to 42 Pa.C.S. §7313, Mauell files the instant Petition to confirm the above-referenced Award of $209,271.23 and to request that this Court enter an Order reducing the Award, plus interests and costs, to a judgment against Ulrich. WHEREFORE, Petitioner Mauell Corporation respectfully requests that this Court grant the instant Petition and enter an Order consistent therewith. By: Respectfully submitted, RHOAD7 SINON LLP One Sottth Market Square P. O. Box 1146 Harrisburg, PA 17108-1146 (717) 233-5731 Attorneys for Petitioner Date: November 14, 2001 -3- CERTIFICATE OF SERVICE I hereby certify that on this 14th day of November, 2001, a true and correct copy of the foregoing "Mauell Corporation's Petition to Confirm Arbitration Award" was served by means of United States mail, first class, postage prepaid, upon the following: Glenn R. Davis, Esquire Latsha Davis & Yohe, P.C. P. O. Box 825 Harrisburg, PA 17108-0825 EXHIBIT "A" ., mauell MAU.:LL CORPORATION ' 3! aid Cabin Hollow Road · P.O. Box 33? · DilJsburg, Pennsylvania 17019.0337 TeJepJ~one (717) 432-8686 · FAX: (717) 432-868B EMPLOYMENT ~ONTRACT AGREEMENT made on this twenty seventh day of November, 1990 between MAUELL CORPORATION (hereinaf;er called the "Corporation"), a Corporation organized and existing under the laws of the S~ate of Pennsylvania, having its principal office at 21 Old Cabin Hollow Road, Dillsburg, Pennsylvania, and Frank A. Ulrich (hereinafter referred to as "Ulrich"), residing at 427 East Ridge Road, Dillsburg, PA 17019· WITNESSETH: in consideration of the mutual covenants and conditions hereinafter set forth, the parties agree as follows: The Corporation hereby employes Ulrich and Ulrich hereby accepts employment upon the terms and conditions hereinafter set forth. Subject to the provisions for termination as hereinafter provided, the term of this agreement shall begin January 1, 1991. The agreement can be terminated provided that at least six (6) months notice shall be given by either party to the other and that in no event the agreement shall be terminated other than on the 31st of December. For all services rendered by Ulrich under this agreement, the Corporation shall pay a salary of $60,000.00 for the firs~ year of this contract. Starting with ;he 1st of January, 1991, Ulrich will be entitled to a bonus. This bonus will be based on ~he gross income minus the deferred income, calculated at a rate of 3% on the amount exceeding $1,000,000.00, as well as 5% of the gross profit before federal and state taxes. For the purposes of this agreement, the determination whether the Corporation has made a profit shall be made conclusively by the regular accountant for the -Corporation in accordance with generally accepted accounting procedures. Zf by sett~nB :2 or murchasing of additional PrOduct lines an essential increase in sales will be ~mcomm!ished. the marries have to aBree to a new base for mhe calculation of th~$ variable income. Zn case the Em21oyment A~reement is terminated dur:n~ a calendar year, the bonus shall be paid proportionallT. Ulrich is authorized to incur reasonable expenses for 2rommting the business of the Corporation. The Cmrporation will reimburse Ulrich for all such expenses upon presentation by Ulrich from time %o time, of an itemized account of such expenditures. The Corporation shall also furnish Ulrich with a suitable automobile for use in conduct of its business as well as such other reasonable use as Ulrich may desire. Ulrich will be entitled each year to a vacation of four (4) weeks, during which time his compensation shall be paid in full. The time of ~he taking of such vacation shall be determined by mutual consent of Ulrich and the Corporation. in the event that Ulrich is unable %o perform his services by reason of'illness or incapacity, the compensation regularly payable to him shall continue to be so paid for a period of 90 days from the date of his first absence from work. Subject %o the control of the Board of Directors, Ulrich's principal area of responsibility shall be that- of general manager and chief executive officer. The Corporation agrees that the duties assigned to Ulrich shall not be inconsistent therewith, and that Ulrich shall have such executive powers and authority as shall reasonably be required to enable him to discharge such duties in an efficient manner. Ulrich shall also ser~,e as director and officer of the Corporation, if elected, by the Board of Directors or stockholders, without further compensation, Page 2 10. 11. Ulrich shell devote his entire time, attention, and energies to the business of the Corporation, and shall not during the term of this agreement be engaged in an), other business activity whether or not such business activity is pursued for gain, profit, or other pecuniary advantage, Ulrich recognizes end acknowledges that the list of the Corporation's customers and its trade secrets are valuable, special and unique assets o¢ the Corporation. Ulrich will not, during or after the term of his employment, disclose same, or any part thereof, to any person, firm, corporation, association or other entity for any reasons or purpose whatsoever. In the event of a breach or threatened breach by Ulrich of the provisions of this paragraph, the Corporation shall be entitled to an injunction in restraining Ulrich from disclosing same, in whole or in part, or from rendering any person, firm, corporation, association or other entity to whom same have been disclosed or are threatened to be disclosed. Nothing herein shall be construed as prohibiting the Corporation from pursuing any other remedies available to the Corporation for any such breach or threatened breach, including the recovery of damages from Ulrich. As Further consideration for this agreement, Ulrich hereby transfers and assigns and agrees to transfer and assign to the Corporation the entire right, title and interest in and to all investments, improvements ideas, and suggestions, whether patentable Or not, and copyrightable material made or conceived by him solely or jointly, during the period or arising out of his employment, which relate 'to the methods, apparatus, products or components thereof pertaining to the then existing or contemplated business of the Corporation. Ulrich agrees promptly to disclose all such developments to the Corporation and on request, 'promptly to execute and deliver, without further consideration, formal transfers, and assignment of all such developments, as well as all other, documents and papers, and to do all other reasonable acts required to enable the Corporation to apply for and secure letters patent and copyright therefor in the United States and foreign countries. Page 3 12. 14. 15. 17. Notwithstanding an>'thin9 herein contained tc the contrary, the Corporation ma>, terminate this e~reemen% upon the happening of the death of Ulrich, tme substantial disability of Ulrich from carrying out his duties for a continuous Period of nine (9) months or continued neglect or willful misconduct by Ulrich in connection with the performance of his duties. All disputes, differences, and controversies arisin~ under of in connection with this agreement shall be settled and finally determined by arbitration in Harrisburg, PA under the then existing rules of the American Arbitration Association. It is understood and agreed that all matters relating to the execution, validity, interpretation and performance of this agreement shall be construed and determined in accordance with the laws of the state of Pennsylvania, regardless of the forum in which an action may be brought. Any and all notices, consents, offers, acceptances, or any other communication provided for herein shall be given in writing by registered or certified mail which shall be addressed in the case of the Corporation to then principal office and in case of Ulrich, to his residence or to such other address as may be designated by him. The waiver by the Corporation of a breach of any provision of this agreement by Ulrich shall not operated or be construed as a waiver of any subsequent breach by Ulrich. The rights and obligations of the Corporation un,er this agreement shall inure to the benefit and shall De binding upon the successors and assigns of the Corporation. Page 4 This agreement contains the entire agreement of the parties, it m~y only be chan~ed, altered, modified, or discharged by a similar writimg signed by all of the parties heretc. IN WITNESS WHEREOF, the parties have signed and sealed this agreement on the date first hereinabove set forth. FRANK. 'A. ULRICH Page 5 EXHIBIT "B" ? American Arbitration Association Commercial Arbitration Rules To institute proceedings, please send three copies of this demand ~nd the =rbltr=tion ~reement, with the {/ling fee as provided Lq the rules, to the AA~. Send the ori~nal demand to the respondent. DI~MAND FOR ARBITRATION DATE, September 6, 2000 Mauell Corporation TO: Name Address 31 01d Cabin Hollow Road (Df rche PR o~, Whom the De--nd I~ Made) Ci~ and S~a[e Dillsburg, Pennsylvania X~ C~e 17019 Telephone (717) 432-8686 F~ (717) 432-8688 Name of R~msen~a~ve Todd J. Shill, Esq.' (i~ ~o~) Repr~en~afive'sAddr~s P. 0. Box 1146 N~e of F~(~m) Rh~s & Sinon LLP Cited S~a~ Harrisburg, PA ~Code 17108-1146 Telephone (717). 231-6665 Fax (717) 231-6637 ~e n~ed da~t a pa~ to an arbi~a~on a~m~ COhered ~ a w~ff~ con~a~, da~ed 11/27/90 and p~vid~g for ~b~a~on ~der ~e Co~e~ ~i~a5~ Rules of ~he Amerlean ~bi~on ~s~ia~on, hereby deman~ ~bi~a~ ~der. NA~ O~ ~ ~: See attached. T~m C~UM O£ R~tm, SOUCHT (the Amount, ifAny): See attached. DO~S THIS DmPu~ ARISE Our OP AN ]~MPLOYM~NT RaLA~ONSH/F? ]~ Yes ~ No ~TYP~soFBusu~ss: Claimant ~ployee of Respondent Responds[ Electronics manufacturer H~c ~ALE ~Qt~r~o: Harrisburg, Pennsylvania You ~e hereby no~fied ~at copies o~ o~ ~bi~afion a~ement and ~s d~and a~ b~g filed wi~ the American Arbi~afion Association at its Philadelphia office, ~ a ~quest ~t it co~ a~~on the arbi~atiom Under ~e ~es, you ~y file ~ a~we~ng stat~ent ~ ten days a~er no~ce from ~e adm~ator. N~e off.ant, Frank A. Ulrich 427 East Ridge Road Ad'Ms5 (m ~ u~ in ~ with ~s ~) Cited S~ate Dillsburg, Pennsylvania M~C~e 17109 Telephone (717 } 432-3490 F~ (717) 432-8785 Name o{ R~~ve Glenn R. Davis, Esq. Nameof~0~A~,) Latsha Davis & Yohe, P.C. ~pr~ta~ve'sAdd~ss P' O. Box 825 ~dS~te Harrisburg, Pennsylvania ~C~e 17108-0825 T~l~phone (717 } 761-1880 Fax (717) 761-2286 M~IA~ON is · nonblndlmg p~cess. ~ m~i~t~ a~i~ ~e pa~s in workln~ ~u~ a solu~ t~! ~ acceptable t~ ~em. If ~u ~h ~r the ~ ~ com~a~ ~e oth~ pa~ ~ ~c~im whether lh~ ~h to m~m~e ~ mat~ pl~ ~e~ ~is box (~h~r~ is no addiMona[ admlmls~aMve fe~ ~ ~ EXHIBIT "C" MAUELL CORPORATION'S ANSWERING STATEMENT AND COUNTERCLAIM A. Answering Statement. Frank A. Ulrich ("Mr. Ulrich") was employed by Mauell Corporation ("Mauell") as its President and Chief Operating Officer pursuant to the terms and conditions of an Employment Contract dated November 27, 1990. A true and correct copy of said Employment Contract is attached hereto as Exhibit "A." Among other things, Mr. Ulrich's Employment Contract with Mauell provided that Mauell could unilaterally temdnate Mr. Ulrich's employment for "continued neglect or willful misconduct" in the performance of his duties and responsibilities. See Exhibit "A," ¶12. On May 24, 2000, Mauell terminated Mr. Ulrich's employment. Specifically, Mr. Ulrich was terminated by Mauell's Board of Directors for the following reasons: (1) Inaccurate and manipulative reporting of the results of Mauell in its financial statements; (2) Unauthorized disclosure of confidential Mauell information and trade secrets to third parties; (3) Breach of fiduciary duties; (4) Engaging in personal transactions amounting to conflicts of interest; (5) Incurrence of bank debt on behalfofMauell without proper authority from the Board of Directors; (6) Withholding and concealing material information from the Board of Directors; and (7) Disparagement of Mauell to its employees and third parties. In addition to the foregoing reasons, all of which mounted to Mr. Uldch's "continued neglect or willful misconduct" in the performance of his duties and responsibilities to Manell and constituted valid grounds for termination under ¶12 of Mr. Ulrich's Employment Contract, Mr. Ulrich was temdnated by the Mauell Board of Directors for violating additional provisions of his Employment Contract including, but not limited to, ¶9 (wherein Mr. Ulrich agreed to "devote his entire time, attention, and energies to the business of the Corporation" and to not "be engaged in any other business activity") and ¶10 (wherein Mr. Ulrich agreed to keep Mauell's trade secrets confidential). At the time of his termination, Mr. Ulrich was paid $28,532.09, representing all earned compensation, bonuses, vacation pay, and reimbursable expenses as of that date. Despite Mr. Ulrich's contentions to the contrary, the above mount was calculated properly in accordance with Mr. Ulrich's Employment Contract with Mauell and in accordance with Mauell's corporate practice (as implemented by Mr. Ulrich as President and Chief Operating Officer), and he is therefore not entitled to any additional monies from Mauell. B. Counterclaim. At the arbitration of this matter, Mauell intends to present witness testimony and documentary evidence to prove that Mr. Ulrich's inaccurate and manipulative reporting of the results of Mauell in its financial statements amounted to breach of contract, fraud, misrepresentation, breach of fiduciary duties, and unjust enrichment, and resulted in Mr. Ulrich's receipt of an inflated bonus and additional damages to Mauell such as overpayment of taxes, to which Mauell seeks reimbursement. Mauell also intends to prove that Mr. Ulrich's failure to "devote his entire time, attention, and energies" to Mauell's business, and his failure to refi'ain fi-om engaging in "any other business activity" during the term of his Employment Contract, amounted to breach of contract, fi-aud, misrepresentation, breach of fiduciary duties, and unjust enrichment, and resulted in Mr. Ulrich's receipt of compensation to which he was not otherwise entitled,, and to which Mauell seeks reimbursement. EXHIBIT "A" MAUELL CORPORATION Cabin Hollaw Road ., rnauell P.O. Box 339 · Dillsburg, Pennsylvan a 1701 .¢'.033.o Telephone {717) 432-B686 · FAX: {717) 432-B68B EMPLOYHENT CONTRACT AGREEMENT made on this twenty seventh day of November, 1990 between MAUELL CORPORATION (hereinafter called the "Corpora;ion"), a Corporation organized and existing under the laws of the State of Pennsylvania, having its principal office at 31 Old Cabin Hollow Road, Dillsburg, Pennsylvania, and Frank A. Ulrich (hereinafter referred to as "Ulrich"), residing at 427 East Ridge Road, Dillsburg, PA 17019. WITNESSETH: in consideration of the mutual covenants and conditions hereinafter set forth, the parties agree as follows: The Corporation hereby employes Ulrich and Ulrich hereby accepts employment upon the terms and conditions hereinafter set forth. Subject to the provisions for termination as hereinafter provided, the term of this agreement shall begin January 1, 1991. The agreement can be terminated provided that at least six (6) months notice shall be given by either party to the other and that in no event the agreement shall be terminated other than on the 31s% of December. ' For all services rendered by Ulrich under this agreement, the Corporation shall pay a salary of $60,000.00 for the firs; year of this contract. Starting with %he 1st of January, 1991, Ulrich will be entitled to a bonus. This bonus will be based on the gross income minus the deferred income, calculated at a rate of 3% on the amount exceeding $1,000,000.00, as well as 5% of the gross profit before federal and state ~axes. For the purposes of this agreement, the determination whether the Corporation has made a profit shall be made conclusively by :he regular accountant for the · Corporation in accordance with generally accepted accounting procedures. Zf by settin~ uo or our=!~asin~ of additional orodu=t lines an essential increase in sales will be accomplished, %he parties have tc a~ree to a new base for %he calculation of th~s variable income. Zn case the 5mnloyment Agreement is terminated during a calendar year. the bonus shall be paid proportionally. Ulrich is authorized to incur reasonable expenses for promoting the business of the Corooration. The C~rooration will reimburse Ulrich for all such expenses upon presentation by Ulrich from time %o time, of an itemized account of'such expenditures. The Oorporation shall also furnish Ulrich with a suitable automobile for use in conduct of its business as well as such other reasonable use as Ulrich may desire. Ulrich will be entitled each year to a vacation of four (4) weeks, during which time his compensation shall be paid in full. The time of the taking of such vacation shall be determined by mutual consent of Ulrich and the Corporation. in the event that Ulrich is unable to perform his services by reason of'illness or incapacity, the compensation regularly payable to him shall continue to be so paid for a period of 90 days from the date of his first absence from work. Subject to the control of the Board of Directors, Ulrich's principal area of responsibility shall be that- of general manager and chief executive officer. The Corporation agrees that the duties assigned to Ulrich shall not be inconsistent therewith, and that Ulrich shall have such executive powers and authority as shall reasonably be required to enable him to discharge such "duties in an efficient manner. Ulrich shall also serYe as director and officer of the Corporation, if elected, by the Board of Directors or stockholders, without further compensation. Page 10. 11.. Ulrich shall devote his entire time, attention, and energies to the business o¢ the Corporation, and shall ncr during the term of this a~reement be engaged in an), other business activity whether er not such business activity is pursue% for gain, profit, or other pecuniary advantage. Ulrich recogn~:es ~nd acknowledges 'that the list of the Corporation's customers and its trade secrets are valuable, special and unique assets of the Corporation. Ulrich will not, during or after the term of his employment, disclose same, or any part thereof, to any person, firm, corporation, association or other entity for any reasons or purpose whatsoever. In the event of a breach or threatened breach by Ulrich of the provisions of this paragraph, the Corporation shall be entitled to an injunction in restraining Ulrich from disclosing same, in whole or in part, or from rendering any person, firm, corporation, association or other entity to whom same have been disclosed or are threatened to be disclosed. .Nothing herein shall be construed as prohibiting the Corporation from pursuing any other remedies availabie to the Corporation for any such breach or threatened'breach, including the recovery of damages from Ulrich. As Further consideration for this agreement, Ulrich. hereby transfers and assigns and agrees to transfer and assign to the Corporation the entire right, title and interest in and to all investments, improvements ideas, and suggestions, whether patentable Or not, and comyrightable material made or conceived by him solely or jointly, during the period or arising out of his employment, which relate 'to the methods, apparatus, products or components thereof pertaining to the then existing or. contemplated business of the Corporation. Ulrich agrees promptly to disclose all such developments to ~he Corporation and on request, promptly to execute and deliver, without further consideration, formal transfers, and assignment of all such developments, as well as all other documents and papers, and to do all other reasonable acts required to enable the Corporation to apply for and secure letters patent and copyright therefor in the United States and foreign countries· Page 12. Notwithstanding an)'thin9 herein contained %0 the contrary, the Corporation may terminate this agreement upon the happening of the death of Ulrich, substantial disability cf Ulrich from carrying out his duties for a continuous period of nine (9) m=nth$ ~r continued neglect or willful misconduct by Ulrich in connection with the performance of his duties. All disputes, differences, and controversies arisin~ under of in connection with this agreement shall be settled and finally determined by arbitration in Harrisburg, PA under the then existing rules of the American Arbitration Association. 14. It is understood and agreed that all matters relating to the execution, validity, interpretation and performance of this agreement shall be construed and determined in accordance with the laws of the state of Pennsylvania, regardless of the forum in which an action may be brou§ht. 15. 16. 17. Any and all notices, consents, offers, acceptances, or any other communication provided for herein shall be given in writing by registered or certified mail which shall be addressed in the case of the Corporation to i;s then principal office and in case of Ulrich, to his residence or to such other address as may be designated by him. The waiver by the Corporation of a breach of any provision o4 this agreement by Ulrich shall not operated or be construed as a waiver of any subsequent breach bv Ulrich. ' The rights and obligations of the Corporation under this agreement shall inure to the benefit and shall be binding upon the successors and assigns of ~he Corporation. Page This agreement contains the entire agreement of the parties. Tt may only be change~, altered, modified, or discharged D). a similar writiog signed by all of ~he parties hereto. IN WITNESS WHEREOF, the parties have signed and seale~ this agreement on the date first hereinabove set forth. FRANK. A. ULRICH/ MAUELL CQRPORATION Page CHECKLIST FOR CONFLICTS Re:' 14 160 00376 00'MES FRANK A. ULRIC~ and .. KAUELL CORPORATION In order to avoid the ~0ssibility that potential arbitrators will have conflicts of interest with the parties in 'this matter,· you are requested. to l£st the names.of all persons, including witnesses, firms, companies, or ~ther entities that·may be involved in this case. In order to avoid conflicts of interest, parties are requested to also list substdiar~ and other"related entities. ' .:. ' . N'AME Ulrich Mauell Peter Wetzel Kathleen Wetzel LudolfKahlenbom Helmut Mauell AFFILIATION Mauell Corporation Mauell Corporation Maue!l Corporaiton Mauell Corporation Mauell Corporation · ADDRESS ,~. Am Jagdhaus 37, D-42113, Wuppertal (Gemmny) 129 Ridge Road Carlisle, PA 17013 129 Ridge Road Carlisle, PA 17013 Willow Glenn Road Dillsburg, PA 17019 Ansembourgallee 23, D-42553 Velbert (Germany) 365549.1 DATE SIGNATURE. LIST OF ARBITRATORS AGREED TO BY THE PARTIES 1. Judith E. Harris, Esq. 2. Thomas D. Rees, Esq. 3. Charles T. Joyce, Esq. 4. George P. Wood, Esq. 5. Carol F. Laskin, Esq. 6. Kathleen A. Davis, Esq. EXHIBIT "D" AMERICAN ARBITRATION ASSOCIATION, ADMINISTRATOR EMPLOYMENT DISPUTE RESOLUTION TRIBUNAL In the Matter of the Arbitration between: FRANK A. ULRICH, Claimant and MAUELL CORPORATION., Respondent Case No. 14 160 00376 00 ENH AWARD OF THE ARBITRATOR I, THE UNDERSIGNED ARBITRATOR having been designated in accordance with the arbitration agreement entered into by FRANK A. ULRICH, hereinafter referred to as CLAIMANT, and MAUELL CORPORATION, hereinafter referred to as RESPONDENT, and dated November 27, 1990, and having duly heard the proofs and allegations of the parties, AWARD as follows: 1. The claim o~'CLAIMANT against RESPONDENT is denied. RESPONDENT is awarded $209,271.23 on its counterclaim. The award is based on the following: $80,885, the amount of the overpayment of CLAIMANT'S bonus for 1999; $23,454.56, the amount of travel expenses for RESPONDENT from May 25, 2000 through December 13, 2000; $69,791.67, the mount of the salary reimbursement from May 20, 2000 through December 13, 2000 for RESPONDENT (reduced by the $35,208.33 savings resulting from RESPONDENT'S not having to pay CLAIMANT a salary from May 25, 2000 through December 31, 2000); $5,140 for accounting services and $30,000 for legal services. 3. Each party is to bear its own costs and attorneys fees for this arbitration. 4. The administrative fees of the American Arbitration Association totaling $9,500.00 shall be borne as incurred by the parties and paid as directed by the Association. The compensation and expenses of the arbitrator totaling $6,149.13 shall be borne equally by the part/es and paid as directed by the Association. Therefore, CLAIMANT shall pay to the Association the sum of $1,0245.56 for the balance of his share of the arbitrator's fees and expenses still due the Association, and RESPONDENT shall pay to the Association the sum of $24.56 for the balance of its share of the arbitrator's fees and expenses still due the Association. 6. This award is in full settlemen~~ a~d eo~terclaims submitted to this arbitration. __~ITH E. HARRIS DATED: October 16, 2001 American Arbitration Association In the matter of Arbitration between FRANK A. ULRICH, Claimant, and MAUELL CORPORATION, Respondent. AAA Case No. 14 160 0376 00 ENH OPINION AND FINDINGS This matter was heard by the undersigned arbitrator on July 2 and July 3, 2001. Claimant was represented by Glenn R. Davis, Esquire, and Respondent was represented by Todd J. Shill, Esquire. The matter was considered fully submitted upon receipt of the post hearing briefs on July 16, 2001. Thereafter, on August 3, 2001, the matter was reopened to receive additional submissions by the parties on the issue of "willful misconduct". Both parties made additional submissions, and the matter was closed on September 4, 2001. Claimant and Respondent had the opportunity to present their respective cases through oral testimony and documents. Nature of the Claims Claimant and Respondent entered into an employment contract ("agreement"), dated as of November 7, 1990, for Claimant's employment as President and General Manager of Respondent. In accordance with the agreement, Plaintiff was to be paid a salary and a bonus with two components, one component calculated on the basis of gross income and the other component calculated on the basis of gross profits before federal and state taxes. Claimant was terminated by Respondent on May 24, 2000. The reasons for his termination were set forth in a letter to Claimant dated May 26, 2000. According to the May 26th letter, Claimant's termination was based on "continued neglect" and "willful misconduct". Claimant contends that there was no basis for the termination, and accordingly, under the agreement he is entitled to six months notice of the termination of the agreement and to be paid his salary and bonus through December 31, 2000. In addition, Claimant seeks the difference between bonus payments made on the basis of"net sales" between 1996 and 1999 and bonus payments he claims for that same period based on "gross sales", as provided in the agreement. Respondent contends that since the Claimant was terminated for ''willful misconduct" and "continued neglect" he is entitled to his salary as of the date of termination and a bonus pro-rated as of the date of termination, as provided by the agreement. Respondent contends that the Claimant has received all payments to which he is entitled under the agreement. Respondent has asserted a counterclaim for damages incurred as a result of Claimant's alleged "willful misconduct" and "continued neglect". Specifically, Respondent contends it is entitled to damages for the overpayment ora sales bonus to the Claimant for the year 1999, the overpayment of bonuses to other employees for the year 1999, reimbursement for the salary and travel expenses of Ulrich Mauell for the period May 28, 2000 to July 6, 2001 and disbursements for legal and accounting services incurred as a result of Claimant's breach of the agreement. Finally, Respondent seeks a percentage of the compensation paid to claimant for his failure to devote his "entire time, attention, and energies to the business of the Corporation .... as required by the agreement. Findings Claimant has met his burden of showing that he had an agreement with Respondent, and that the agreement was ternfinable by either party, provided either party gave six (6) month s notice, in which event the agreement would terminate on the December 3 l following the giving of the notice. 2. Claimant has established that he was terminated, without the requisite six (6) months notice, on May 24, 2000. 3. The agreement contains the following provisions: Ulrich shall devote his entire time, attention, and energies to the business of the Corporation, and shall not during the term of this agreement be engaged in any other business activity whether or not such business activity is pursued for gain, profit, or other pecuniary advantage. (Paragraph 9) Ulrich recognizes and acknowledges that the list of the Corporation's customers and its trade secrets are valuable, special and unique assets of the Corporation. Ulrich will not, during or after the tem~ of his employment, disclose same, or any part thereof, to any person, firm, corporation, association or other entity for any reasons or purpose whatsoever... (Paragraph 10) Notwithstanding anything contained to the contrary, the Corporation may terminate this agreement upon the happening of... continued neglect 'or willful misconduct by Ulrich in connection with the performance of his duties. (Paragraph 12) 4. Respondent has the burden of showing that it terminated Ulrich for "continued neglect" or "willful misconduct". o 10. 11. Respondent has established that: a. Claimant became involved in UBR LLC to pursue his own business activities. UBR LLC was incorporated in August 1999, while Claimant was employed by Respondent; b. Claimant accounted for" ' " works ~n progress in such a manner as to improperly increase his bonus for the year 1999; c. Claimant did not include sales expenses known by him to have been incurred by an employee in 1999, thereby understating the Respondent's 1999 expenses and overstating Respondent's profits, to increase his bonus for the year 1999; d. Claimant disclosed to a third party; confidential infommtion regarding a meter project which Respondent had under consideration; e. Notwithstanding Respondent's directions to Claimant to cease activity on the meter project, Claimant continued such activity, and in addition, created a proposal in which he and a third party submitted to another party, a business plan to go forward with the meter project. Claimant's actions set forth in findings 5a through 5e above were actions taken by him solely for his own benefit, were not for the benefit of Respondent, and were harmful to the Respondent's interest. As such, they violated paragraph 9 of the agreement. In addition, Claimant's actions set forth in findings 5d and 5e violated paragraph 10 of the agreement. Claimant's actions set forth in findings 5b, 5c, 5d and 5e breached his duty of loyalty to the Respondent. An employee's duty of loyalty to an employer is an implied condition of the employment relationship. Paragraphs 9 and 10 of the agreement contain the contractual recognition of that duty. The agreement does not define "willful misconduct". The definition of the term ''willful" is "deliberate and intentional". The definition of "misconduct" is a "deliberate violation of a standard of conduct". (Webster's New Collegiate Dictionary) Claimant's actions set forth in findings 5a through 5e were a deliberate and intentional violation of paragraphs 9 and 10 of the agreement, which articulated the standard of conduct Respondent expected from the Claimant. As such, Claimant's violation of that standard of conduct amounted to "willful misconduct", and Respondent had the right to terminate him under paragraph 12 of the agreement. Respondent has established that, upon its May 24, 2000 termination of Claimant, it made payment to Claimant of all amounts due to him under the agreement. 12. Claimant has failed to establish that he is entitled to any additional bonus payments for the years 1996 through 1999. 13. Respondent has established that it overpaid the amount of the bonus due to Claimant for the year 1999. 14. Respondent has established that it is entitled to recover salary and travel expenses for Ulrich Mauell. Although Respondent seeks such expenses for the period May 20, 2000 through July 6, 2001, the undersigned finds that the expenses are reasonable only for the period from May 25, 2000, the day following Claimant's May 24 termination, through December 13, 2000, a period of approximately six and one half (6.5) months, after which it is reasonable to expect that Respondent would have secured a permanent replacement for Claimant. The undersigned also finds that the amount of the salary for that period should be offset by the savings resulting from Respondent's not having to pay Claimant's salary from May 25, 2000 through December 31, 2000. 15. Respondent has established that it is entitled to recover its expenses for accounting and legal services. 'Opinion Claimant is denied any award on his claim. Respondent is awarded $209,271.23 on its Countemlaim. The award is based on the following: $80,885, the amount of the overpayment of Claimant's bonus for 1999; $23,454.56, the amount of the travel expenses for Ulrich Mauell from May 25, 2000 through December 13, 2000; $69,791.67, the amount of the salary reimbursement from May 20, 2000 through December 13, 2000 for Ulrich Mauell (reduced by the $35,208.33 savings resulting from Respondent's not having to pay Claimant a salary from May 25, 2000 through December 31, 2000); $5,140 for accounting services and $30,000 for legal services. Each party is to bear its own costs and attorneys fees for this arbitration. Dated: October 16, 2001 ATTORNEYS AT LAW HARRISBURG, P~ 1146 MAUELL CORPORATION, Petitioner FRANK A. ULRICH, Respondent IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA ORDER AND NOW this 7.2~,1,% day of h~ i, ' ~ ' ,2001, upon revicw of the within Petition to Confirm Arbitration Award, it is hereby; ORDERED, DIRECTED and DECREED that Mauell Corporation's Petition to Confirm Arbitration Award is GRANTED and Judgment is hereby cntered in favor of Mauell Corporation and against Frank A. Ulrich in the amount of $209, 271.23 plus interest and costs.