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ark YORK COUNTY PROTHONOTk Y Pagel of 2 2124/2010 2009-SU-004091-01 FRAZIER LAURA vs. HUMAN ELEMENT GROUP INC Action 02/23/2010 MEMORANDUM OPINION & ORDER SUSTAINING 04726 9 DEFTS' PO'S TO VENUE/PROTHY IS DIRECTED TO TRANSFER CASE TO CUMBERLAND COUNTY PROTHY BY THE CT JOSEPH C ADAMS JUDGE 02/23/2010 NOTICE GIVEN RE: PA R. C. P. 236 MAILED TO ATTY 04089 2 BANGS/CUMBERLAND COUNTY PROTHY ON 2-23-10 @3PM FAXED TO ATTY MILLER ON 2-23-10 @12:03PM 12/28/2009 ORDER SCHEDULING ORAL ARGUMENT ON 1-6-10 04412 1 @1:30PM IN CT RM #11 BY THE CT JOSEPH C ADAMS JUDGE 12/28/2009 NOTICE GIVEN RE: PA R. C. P. 236 MAILED TO ATTY 04089 2 BANGS ON 12-28-09 @3PM FAXED TO ATTY MILLER ON 12-28-09 @11:28AM 12/15/2009 ONE JUDGE ASSIGNMENT - CASE ASSIGNED TO THE 05246 10 HONORABLE JOSEPH C ADAMS JUDGE 11/18/2009 ONE-JUDGE DISPOSITION LIST/PO'S/BRIEF IN SUPP 04186 10-20-09/BRIEF IN OPP 11-5-09 W/CERT OF SVC ,- 11/16/2009 DEFTS REPLY BRIEF TO PLTFS BRIEF IN 04156._ OPPOSITION W/ CERT OF SVC -- 11/05/2009 RESPONSE TO PRELIMINARY OBJECTIONS W/CERT 04343 OF SVC 11/05/2009 BRIEF IN OPPOSITION TO PRELIMINARY 04172 39 OBJECTIONS W/CERT OF SVC 10/20/2009 DEFTS' BRIEF IN SUPPORT OF PRELIMINARY 04053 36 OBJECTIONS TO PLTF'S AMENDED CMPLNT W/CERT OF SERVICE 10/16/2009 DEFTS PRELIMINARY OBJECTIONS TO PLTFS 04052 7 AMENDED COMPLAINT W/CERT OF SVC 10/14/2009 SHERIFF RETURN OF SERVICE COMPLAINT SERVED 04087 4 UPON HUMAN ELEMENT GROUP INC ON 8/19/09 BY SHERIFF OF CUMBERLAND COUNTY DEPUTIZED BY SHERIFF OF YORK COUNTY YORK COUNTY SHERIFFS COSTS 66.05 CUMBERLAND COUNTY SHERIFFS COSTS 57.44 09/22/2009 AMENDED COMPLAINT W/CERT OF SVC 04157 37 09/08/2009 ACCEPTANCE OF SERVICE OF COMPLAINT FILED ON 06930 1 BEHALF OF DEFT 09/04/2009 DEFTS PRELIMINARY OBJECTIONS TO PLTFS 04052 6 COMPLAINT W/CERT OF SVC 0 iv-l 1. vM T m o T O 0 o N a ° N *q..oo p1b PR'?" l V* a3W 1 ark YORK COUNTY PROTHONOTARY Page 2 of 2 212412010 2009-SU-004091-01 FRAZIER LAURA vs. HUMAN ELEMENT GROUP INC Action 09/04/2009 ENTRY OF APPEARANCE MICHAEL L BANGS ESQ 04038 2 FOR DEFTS 09/04/2009 DEFTS BRIEF IN SUPPORT OF PRELIMINARY 04053 17 OBJECTIONS W/CERT OF SVC 08/13/2009 COMPLNT IN CIVIL ACTION=ON WAGE PYMNT 04063 23 VIOLATION CONSPIRACY BREACH OF CONTRACT TORTIOUS ' INTERFERENCE W/CONTRACTUAL RELATIONS IN EXCESS OF $35000.00 AND INDEMNITY IN THE AMT OF $31193.24 Party Name D- HUMAN ELEMENT GROUP INC D- PAYTIME HARRISBURG INC D- PATTERSON, NATHAN P- FRAZIER LAURA Atty Name BANGS, MICHAEL L BANGS, MICHAEL L BANGS, MICHAEL L MILLER, ANDREW J Total Number of Pages : 210 P_J • IN THE COURT OF COMMON PLEAS OF YORK COUNTY, PENNSYLVANIA CIVIL DIVISION LAURA FRAZIER, No. 2009-SU-004091-01 Plaintiff, CIVIL ACTION - LAW V. HUMAN ELEMENT GROUP, INC., JURY TRIAL DEMANDED PAYTIME HARRISBURG, INC. and NATHAN PATTERSON, Defendants. APPEARANCES: Andrew J. Miller, Esquire For Plaintiff Michael L. Bangs, Esquire For Defendants MEMORANDUM OPINION SUSTAINING DEFENDANTS' PRELIMINARY OBJECTIONS TO VENUE Before this Court are the Preliminary Objections of Defendants Human Element Group, Inc., Paytime Harrisburg, Inc., and Nathan Patterson. The Defendants' Preliminary Objections are as follows: (1) Defendants object to venue in the Court of Common Pleas of York County; (2) Defendants object in the nature of a demurrer to Count I of the Amended Complaint; (3) Defendants object in the nature of a demurrer to Count II of the Amended Complaint; (4) Defendants Paytime Harrisburg, Inc, and Nathan Patterson object in the nature of a demurrer to Count III of the Amended Complaint; (5) Defendant Paytime Harrisburg, Inc. objects in the nature of a demurrer to Count IV of Plaintiff's Amended Complaint; (6) Defendants object in the nature of a demurrer to Count V of Plaintiff's Amended Complaint; (7) Defendant Patterson objects in the nature of a demurrer to Count VI of Plaintiff's Amended Complaint. For the following reasons, the Preliminary Objection of Defendants to venue in the Court of Common Pleas of York County is hereby SUSTAINED. 1. FACTS AND PROCEDURAL HISTORY Plaintiff is an adult individual residing in York County, Pennsylvania. The first named Defendant, Human Element Group, Inc., ("Defendant HEG") is a Pennsylvania corporation with an averred principle place of business in Camp Hill, Pennsylvania. The second named Defendant is Paytime Harrisburg, Inc., ("Defendant Paytime") with an averred principal place of business in Mechanicsburg, Pennsylvania. The third named Defendant is Nathan Patterson, an adult individual with an averred residence in Camp Hill, Pennsylvania. Plaintiff owned and operated Human Element Group, LLC, which provided human resource management and support. Defendant Paytime is in the business of II providing payroll services.' In February 2008, Christopher Haverstick, co-owner of Defendant Paytime, approached Plaintiff on behalf of Defendant Patterson about purchasing Human Element Group, LLC. ' The Court notes that at some point after February 2008, Human Element Group, LLC, terminated operation, and Defendant Human Element Group, Inc. commenced operation. 0 0 Defendant Patterson did not purchase Human Element Group, LLC, rather, Defendant Patterson and Plaintiff settled on an arrangement whereby Plaintiff transferred all her clients to a new corporation, Defendant Human Element Group, Inc. "Essentially, [Defendant HEG] took-over and continued to operate Plaintiff's former business in its same location." (Ain. Compl. 122), Defendant Patterson, in exchange for acquiring ownership of Plaintiff's business, entered into an employment agreement with Plaintiff. The employment agreement executed by Defendant Patterson, on behalf of Defendant HEG, and Plaintiff commenced July 1, 2008 (`Employment Agreement"). The Employment Agreement provides for a term of one year, an annual salary of $70,000, and an annual bonus equal to ten percent of the net income. On or about December 2, 2008, Defendant Patterson notified Plaintiff that Defendant HEG would cease operation on December 31, 2008. As such, Defendant HEG ceased issuing Plaintiff biweekly salary, and has continued not paying the amount averred due. The Amended Complaint makes a short statement of venue, and avers that venue is proper in York County, because "Plaintiff is a resident of York County, Pennsylvania, and Defendants maintain regular business contacts in York County, Pennsylvania. During Plaintiff's employment, approximately 50% of Defendant HEG's revenue came from clients in York County, and Defendant Paytime continued to service those clients. 0 ? ? 0 Specifically, Defendant Paytime is believed to provide payroll services for the York County Chamber of Commerce and over 3,000 employees located in York County. Plaintiff avers that in May 2009, Defendant HEG attended the York County Chamber of Commerce Business Expo in York County, and displayed an exhibitor booth with promotional flyers. Additionally, Plaintiff states that portions of the Employment Agreement's negotiation took place in York County. However, Plaintiff admits that the final execution of the Employment Agreement took place in Camp Hill, Cumberland County, Pennsylvania. Finally, the Employment Agreement specifically lists York County as a county in which Plaintiff is geographically restricted from competing. In addition to Plaintiff's statement of venue, Plaintiff attached a copy of the Employment Contract, which states: 13. All questions concerning the execution of this Agreement and the rights and liabilities of the parties hereunder shall be decided in accordance with the laws of the Commonwealth of Pennsylvania. Employee hereby irrevocably submits to the personal jurisdiction of the Court of Common Pleas of Cumberland County, Pennsylvania. Employee waives any objection to the venue and to the personal jurisdiction of the Court of Common Pleas of Cumberland County. On August 13, 2009, Plaintiff filed her initial Complaint. On September 4, 2009, Defendants filed Preliminary Objections and Brief in Support to the initial Complaint. On September 22, 2009, Plaintiff filed the Amended Complaint. On October 16, 2009, Defendants filed Preliminary Objections to the Amended Complaint. The Preliminary Objections to the Amended Complaint are currently before this Court. • II. DISCUSSION Forum selection clauses are presumed valid where the clauses are "clear and unambiguous." Patriot Commercial Leasing Co. v. Kremer Restaurant Enter., 915 A.2d 647, 650 (Pa. Super. Ct. 2006) (citing Cent. Contracting Co. v. C.E. Youngdahl & Co., 209 A.2d 810 (Pa. 1965)). Forum selection clauses are enforced through principles of contract, as such, "It is settled law that a party is bound by clear and unambiguous language contained in a contract." Id. at 651. In Patriot Commercial Leasing the forum selection clause stated, "in plain and nonlegal language that `any legal action concerning this lease' must be brought in Pennsylvania and that Appellants consented to the jurisdiction of the state courts." Id. at 651.2 The court found this to be "clear and concise" language determining venue.' A court determines whether a writing is, as a matter of law, clear and unambiguous. Metzger v. Clifford Realty Corp., 476 A.2d 1, 5 (Pa. Super. Ct. 1984). A contract will be found to be ambiguous only if it is "reasonably susceptible of different constructions and is capable of being understood in more senses than one and is obscure in meaning through indefiniteness of expression or has a double meaning." Id. "A contract is not ambiguous if the court can determine its meaning without any guide other than a knowledge of the simple facts on which, from the nature of the 2 In O'Hara v. First Liberty Ins. Corp., 984 A.2d 938, 940,942 (Pa. Super. Ct. 2009), the court enforced the forum selection clause that stated, "the suit `must be brought in a court of competent jurisdiction in the county and state of your legal domicile."' 3 This Court notes that almost any writing could be viewed in a way to create an ambiguity. Steuart v. McChesney, 444 A.2d 659, 663 (Pa. 1982). • • language in general, its meaning depends." Krizovensky v. Krizovensky, 624 A.2d 638, 642 (Pa. Super. Ct. 1993). Additionally, a contract is not ambiguous simply by the parties disagreeing on the meaning. Id. In this case, the parties agree that the Employment Agreement is a binding document, however, the parties disagree on the contract's interpretation, specifically, paragraph 13. Despite the disagreement, this Court finds that paragraph 13 is not ambiguous. Specifically, Plaintiff "waives any objection to venue ... of the Court of Common Pleas of Cumberland County." As such, proper venue is in the Court of Common Pleas of Cumberland County, Pennsylvania. When a court sustains a preliminary objection to venue, the sustaining court should transfer the action on its own motion to the proper venue. Anderson v. UVA, 326 A.2d 430 (Pa. Super. Ct. 1974). In this case, the proper venue is the Court of Common Pleas of Cumberland County, Pennsylvania, therefore, this matter shall be transferred accordingly. III. CONCLUSION For the aforementioned reasons, the Preliminary Objection of Defendants in the nature of a challenge to venue is hereby SUSTAINED. The Preliminary Objections to Plaintiffs Amended Complaint in the nature of a demurrer are hereby deferred to the proper venue, a decision of the Court of Common Pleas of Cumberland County, Pennsylvania. BY THE COURT, J H C. ADAMS, JUDGE DATED: February 23, 2010 • • IN THE COURT OF COMMON PLEAS OF YORK. COUNTY, PENNSYLVANIA CIVIL DIVISION LAURA FRAZIER, Plaintiff, V. HUMAN ELEMENT GROUP, INC., PAYTIME HARRISBURG, INC. and NATHAN PATTERSON, Defendants. APPEARANCES: Andrew J. Miller, Esquire For Plaintiff Michael L. Bangs, Esquire For Defendants ORDER No. 2009-SU-004091-01 CIVIL ACTION - LAW AND NOW, this 23`d day of February 2010, for the reasons set forth in the Memorandum Opinion of this date, the Preliminary Objection of Defendants in the nature of a challenge to venue is hereby SUSTAINED. The Preliminary Objections to Plaintiff's Amended Complaint in the nature of a demurrer are hereby deferred to the Court of Common Pleas of Cumberland County, Pennsylvania. The Prothonotary shall provide notice of the entry of this Order as required by law. Additionally, pursuant to Pennsylvania Rule of Civil Procedure 1006(e), the 0 0 Prothonotary is ordered to forward to the Cumberland County Prothonotary certified copies of the docket entries, process, pleadings, depositions and other papers filed in this action. The costs and fees for transfer and removal of the record shall be paid by the Plaintiff. BY THE COURT, C. G. .ADAMS, JUDGE CERTIFIED from the records of the Court of common Pleas of A D. 20 York County, Pennsylvania this y1 y of Pamela S. Lee, Prothonotary )TARY OF YORK COUNT( NTY JUDICIAL CENTER GEORGE STREET r • * * * COMMUNICATION RESULT REPORT ( FEB.23.2010 12:06PM ) * * * P. 1 FAX HEADER 1: COUNTY OF YORK PROTHONOTARY FAX HEADER 2: 7177714623 TRANSMITTED/STORED : FEB-23.2010 12:03PM FILE MODE OPTION ADDRESS RESULT PAGE ---------------------------------------------------------------------------------------------------- ` 1? -- R FASC>N FUR ERROR E -I) IiAN(,Uf OR LINE FAIL C- 2) BUSY L-9) NU AN WCR E --4) NU f=AC:S lfv{I LC=. CC?fdN CC:T IC>N OFFICE OF THE, PROTHONOTARY Of York County (ug( SHfa Pamela S. Lee Prothonotary °WL YoTk County Judicial Center Billie Jo Bones De ut P th 45 North George Sheet p y ro onotary Gregory E. Cettle York, Pezutsylvania 17401 Tele hone (717) 771-9611 Solicitor w a p FAX TRANSMITTAL DATE: 2-23-10 FROM. PROTHONOTARVIS OFMCE LOCATION: YORK CO JUDICIAL CENTE)l? TO: ANDREW MILLER LOCATION: CD 094 Notice of Entry of Order, Decree or Judgment in accordance with PA R. C P 236 CASE NUMBER 2009-SU-4091-01 NUMBER OF PAGES INCLUDING COVER SHEET: 10 pages ANY PROBLEMS WITH TRANSMITTAL PLEASE CALL (717) 771-9611 AND ASR FOR HEATHER Confidentiality Notice: This facsimile, including any attachments, is for the sole use of the intended recipient(s) and may contain confidential and privileged information. Any unauthorized review, use, disclosure, or distribution is prohibited. If you are not the intended recipient, please contact the sender at the phone number listed above and destroy all copies of the original message. IN THE COURT OF COMMON PLEAS OF YORK COUNTY, PENNSYLVANIA Civil Division LAURA FRAZIER No. 2009-SU-004091-01 VS. : HUMAN ELEMENT GROUP, INC., ` C- M i PAYTIME HARRISBURG, INC., and _ C-1 NATHAN PATTERSON Civil Action - Law'` APPEARANCES: ANDREW J. MILLER, ESQUIRE For Plaintiff MICHAEL L. BANGS, ESQUIRE For Defendant ORDER AND NOW, this 28th day of December, 2009, pursuant to the request of Defendants, in their Praecipe to List Case for One-Judge Disposition, it is ORDERED and DIRECTED that Oral Argument on Defendants' Preliminary Objections to Plaintiffs Amended Complaint is scheduled for Wednesday, January 6, 2010, at 1:30 p.m. in Court Room No. 11, 7`h Floor of the York County Judicial Center, 45 North George Street, York, PA, 17401. The Prothonotary shall provide notice of the entry of this Order as required by law. BY THE COURT, I?. /1 t C. ADAMS, JUDGE • • MAILED DEC 2 8 1009 PROTHONOTARY OF YORK COUNTY YORK COUNTY JUDICIAL CENTER 45 NORTH GEORGE STREET YORK PA 17401 am 3 pm MICHAEL L BANGS ESQUIRE 429 SOUTH 18T" STREET CAMP HILL PA 17011 P. 1 * * COM ICATION RESULT REPORT ( DEC. 28. 20Zf9 11:28AM ) * * * FAX HEADER 1: COUNTY OF YORK PROTHONOTARY FAX HEADER 2: 7177714629 TRANSMITTED/STORED : DEC-28.2009 11:28AM FILE MODE OPTION ADDRESS RESULT PAGE -------------------------------------------------------------- 2886 MEMORY TX MILLER POOLE OK 2/2 ------------------------------------------------------------------------------- REASON FOR ERROR E-1) HANQ UP OR LINE FAIL E-2) BUSY E-3) NO ANSWER E-4) NO FACSIMILE CONNECTION OFFICE OF THE PROTHONOTARY of York County Pamela S- Lee Billie Jo Bones Prothonotary Chief Deputy 2004- Gregory Gettle Solicitor York County Courthouse 45 N. George Street York, Pennsylvania 17401 Telephone (717) 771-9611 Fax (717) 771-4629 FAX TRANSMITTAL DATE: FROM: PROTHON TARY'S OFFICE LOCATION: YORK CO JUDICIAL CENTER TO: / • wj its P LOCATION: Notice of En" of Order, Decree or Judament in accordance with PA. R. C P. 236 CASE NUMBER: 09 -SQ --b t I V (_ NUMBER OF PAGES INCLUDING COVER SHEET: Z- pages ANY PROBLEMS WITH TRANSMITTAL PLEASE CALL (717) 771-9611 AND ASK FOR SUE. Confidentiality Notice: This facsimile, including any attachments, is for the sole use of the intended recipient(s) and may contain confidential and privileged information. Any unauthorized review, use, disclosure, or distribution is prohibited. If you are not the intended recipient, please contact the sender at the phone number listed above and destroy all copies of the original message. COURT OF COMMON PLEAS NINETEENTH JUOICIAL DISTRICT YORK COUNTY, PENNSYLVANIA 45 NORTH GEORGE STREET OFFICE OF J. ROBERT CHUK YORK. PENNSYLVANIA 17401 TERRY R. BAKER DEPUTY COURT ADMINISTRATOR DISTRICT COURT ADMINISTRATOR 717 771-9234 FAX 7',' 771-9911 BONITA L. JULIUS DEPUTY COURT ADMINISTRATOR December 15, 2009 0 a Cram Andrew Miller Esquire M> ?Zr_ - C.n , 139 E. Phila. St. York PA 17403 na CA5 Michael Bangs, Esquire . 429 S. 18t''. St. Camp Hill PA 17011 In Re: Laura Frazier vs. Human Element Group Inc., et al Civil Action No. 2009-SU-4091-Y01 Dear Attorneys: The above-captioned case has been assigned to the Honorable Joseph C. Adams, Judge for disposition under Rule 6030 et seq, (formerly Rule 30). Sincerely, J. R BE T K JRC/gl District Court AdminiAtratgrw _&,kW# cc: Prothonotary • • MILLER, POOLE & LORD, LLP Andrew J. Miller, Esquire Pa. Bar No. 84012 137 East Philadelphia Street York, Pennsylvania 17401 (717) 845-1524 Attorneys for Plaintiff LAURA FRAZIER, IN THE COURT OF COMMON PLEAS Plaintiff YORK COUNTY, PENNSYLVANIA VS. : No.2009-SU-004091-01 HUMAN ELEMENT GROUP, INC., CIVIL ACTION - LAW ; PAYTIME HARRISBURG, INC. and c._ a ., 4 NATHAN PATTERSON C3 Defendants - -- r--- CO ?, C) M D -v PRAECIPE TO LIST CASE FOR ONE-JUDGE DISPOSITION -- M z .. r*3 TO THE PROTHONOTARY: Please list this matter for one judge disposition. Document to be ruled upon: Preliminary Objections to Plaintiff s Amended Complaint. Brief in Support was filed on October 20, 2009. Brief in Opposition was filed on November 5, 2009. Reply Brief was filed on November 16, 2009. Oral Argument requested: (X) Yes ( ) No Judge previously assigned: ( ) Yes (X) No Judge assigned: 0 1 A 0 MILLER, POOLE & LORD, LLP Date: lnv? Andrew J. Miller, Esquire Supreme Court No. 84012 137 East Philadelphia Street York, PA 17401 Telephone: (717) 845-1524 Facsimile: (717) 854-6999 E-mail: amiller(a-)mpl-law.com 2 • r CERTIFICATE OF SERVICE AND NOW, the undersigned hereby certifies that I have, on the date written below, served a true and correct copy of the foregoing Praecipe to List Case for One- Judge Disposition by regular mail addressed to: Michael, L. Bangs, Esquire BANGS LAW OFFICE 429 South 18'h Street Camp Hill, PA 17011 MILLER, POOLE & LORD, LLP Date: ,c.?..e Carol M. Tutino, Legal Assistant r CO • C-) q V D r `r ?y MICHAEL L. BANGS, ESQUIRE ATTORNEY FOR DEFENDANTS I.D. No. 41263 429 South 18d' Street Camp Hill, PA 17011 (717) 730-7310 LAURA FRAZIER, ) IN THE COURT OF COMMON PLEAS Plaintiff ) OF YORK COUNTY, PENNSYLVANIA VS. ) NO.2009-SU-004091-01 HUMAN ELEMENTY GROUP, INC., ) PAYTIME HARRISBURG, INC. and ) CIVIL ACTION - LAW NATHAN PATTERSON, ) Defendants ) JURY TRIAL DEMANDED DEFENDANTS' REPLY BRIEF TO PLAINTIFF'S BRIEF IN OPPOSITION VENUE Plaintiff asks this Court in Section A(1) of its brief (Pages 7, 8 and 9) to ignore the plain language of the forum selection clause agreed upon by the parties and in support of her position cites the Hatfield. Inc., case which is a federal district court case interpreting New York state law. Plaintiff cites no Pennsylvania cases that support her position. "While we often turn to decisions by our brethren on the federal branch to seek their interpretation of state law that we have not had the opportunity to address, it is axiomatic that these decisions are not binding and that the court is the final arbiter of state law." Hoy v. An elope, 554 Pa. 134, 144, 720 A.2d 745, 750 (1998) (emphasis added). Since state courts have addressed the issue of the validity of forum selection clauses, federal law and cases are irrelevant to this outcome. Plaintiff's strained reasoning hinges on the absence of the word "shall" in the final two sentences of the mandatory forum selection clause at issue. Following that reasoning, a forum selection clause could never be mandatory without that word; an absurd result. Plaintiff agreed to "irrevocably submit to the personal jurisdiction of the Court of Common Pleas of Cumberland County," and "waives any objection to the venue and personal jurisdiction of the Court of Common Pleas of Cumberland County." (See ¶13 of Ex. A of Am. Comp.) This language is clear and unambiguous and requires this matter to be transferred to the Court of Common Pleas of Cumberland County. NON-APPLICATION OF THE WPCL TO PROSPECTIVE WAGES Plaintiff misstates Defendants' brief and misinterprets the applicable case law in her attempt to get this Court to permit the claims under the WPCL (Pl. Br. at 16-19). Contrary to Plaintiff's argument, the Defendants have cited cases that set forth the applicable standard to be followed to determine whether a claim can be brought under the WPCL. The Superior Court has quite clearly stated the purpose and the focus of the WPCL as follows: Pennsylvania enacted the WPCL to provide a vehicle for employees to enforce payment of their wages and compensation held by their employers. The underlying purpose of the WPCL is to remove some of the obstacles employees face in litigation by providing them with a statutory remedy when an employer breaches its contractual obligation to pay wages. The WPCL does not create an employee's substantive right to compensation; rather it only creates an 2 employee's right to enforce payment of wages and compensation to which an employee is otherwise entitled by the terms of an agreement. (emphasis added) Hartman vs. Baker, 2000 Pa. Super. 130, 1366 A.2d 347. The courts that have interpreted the WPCL have consistently indicated that it applies to wages and compensation that have been earned at the time of discharge rather than prospective wages in the f iture.I Plaintiff's reliance on the cases it cites in its brief is equally misplaced. In Shaer v. Orthopedic Surgeons of Central PA, Ltd., 938 A.2d 457 (Pa. Super. 20007), the Superior Court, in overruling the grant of summary judgment by the Court of Common Pleas of Cumberland County, stated that the WPCL applied because the Superior Court viewed that the parties had entered into an agreement that specifically required a 90 day notice before termination of employment. The court determined that the 90 day notice was effectively a guarantee of wages to the plaintiff and thus he had earned those wages by virtue of the agreement because the underlying purpose of that guarantee was to benefit both the practice and the plaintiff in an orderly transition of patients. 1 See Kafando v. Erie Ceramic Arts Compan y, 2000 Pa. Super. 377, 764 A.2d 59 (The court rejected Kafando's attempt to have included as wages under the WPCL a gain sharing [or bonus] program payable to employees under their employee manual since it had not been paid out at the time he was dismissed from employment, and thus not earned by him); Sendi v. NCR Comten. Inc., 619 F. Supp. 1577 (E.D. Pa. 1985) (Commissions on orders sold by plaintiff and accepted by company but were not yet paid to company were not wages under the WPCL because commissions were not earned until the orders had been paid); Allende v. Winter Fruit Distributors. Inc. and Eric Schakel, 709 F. Supp. 597 (E.D. Pa. 1989) (The court permitted plaintiff's claim for wages and bonuses under the WPCL for the period of time up to his termination but denied his request to pursue bonuses and wages under the WPCL which were promised to him for the period of time after his termination but which he had not yet earned); Thomas Jefferson University v Wanner, 2006 Pa. Super. 156, 903 A.2d 565 (Court granted Wapner's claim for unpaid wages under the WPCL for the final five weeks which he had actually worked since he had earned that compensation). 0 . . . The Common Pleas cases that Plaintiff cites seemingly to provide this Court with some guidance are equally inapplicable. The court in Goodyear placed significance on the fact that Goodyear had sold his company to the defendant and as part of the deal, agreed to work for them rather than a competitor. As such, the court seemed to suggest that he had been guaranteed those payments in exchange for him not going elsewhere and thus the WPCL was applicable. Those facts simply do not apply to this case in that HEG merely employed Plaintiff; it never purchased her company. Likewise, McKenna is inapplicable in that it doesn't even stand for what the Plaintiff suggests. McKenna deals solely with an analysis of the concept of de facto merger which will be addressed later. Seemingly, based upon some stipulations by the parties, the court applied the WPCL after determining that the de facto merger doctrine would apply thus assessing liability to the defendant. To the extent that this Court deems at all relevant to review other Common Pleas cases, the case of Weingrad vs. Fischer and Porter Comp anX, 47 Pa. D. & C.2nd 244 (PA Common Pleas 1968) deals with a factual situation exactly as this. Plaintiff had an employment agreement that provided him with certain benefits including a statement of his salary. The employment agreement was terminated before its completion. The court did not permit a claim under the WPCL because the employee had not earned any wages after his termination. Because he had not earned any compensation, the WPCL was not implicated. He was, of course, permitted to pursue a breach of contract claim. 4 0 . I ? The employment agreement at issue in this case simply does not provide the basis for a claim under the WPCL under a clear reading of the Act itself and of the cases that interpret the Act. This Court should grant Defendants' Preliminary Objection and dismiss this claim. DE FACTO MERGER AND PIERCING THE CORPORATE VEIL Plaintiff's arguments in her brief that the de facto merger doctrine is applicable in this case to assess liability against Paytime under the WPCL and breach of contract is simply astounding (Pl. Br. at 19-22). Plaintiff agrees that the Fizzano case cited by both parties correctly outlines the controlling law. However, Plaintiff shows a complete lack of understanding of the Fizzano reasoning and its holding. The de facto merger doctrine is one of five exceptions that may apply to overcome the general rule that a purchaser of assets from one company may not be liable for the debts of the other company. Prior to undergoing that analysis, however, there must be a sale of assets from one company to the other. Absent a sale, neither the de facto merger doctrine or any of the other five exceptions can be utilized. Nowhere in Plaintiff's Complaint does she allege that a sale of the assets of HEG to Paytime or Patterson occurred. The only allegation that gives rise to her theory of liability under the de facto merger is under Paragraph 39 of her Complaint (incorrectly identified as Paragraph 34 in Plaintiff's primary brief) which at best states that Paytime took over HEG's accounts once it ceased operations. Further, Plaintiff does not allege that Paytime was the successor corporation to HEG because Plaintiff knows full well that Paytime existed before HEG was 5 formed and that its primary business was providing payroll services. (see Am. Comp. ¶7) Since Paytime neither purchased the assets of HEG nor was a successor corporation to HEG, the de factor merger analysis is completely inappropriate. Absent the application of the de facto merger doctrine, Paytime cannot be liable to Plaintiff under the WPCL.2 Likewise, Plaintiff's brief reveals how inadequate her pleading is in regard to assessing liability against Patterson under the theory of piercing the corporate veil. Plaintiff's brief cites four averments in her Complaint to overcome the strong presumption against piercing the corporate veil and assessing liability against Patterson under the breach of contract claim as well as a claim under the WPCL (see Pl. Br. Pg. 23 referring to Am. Comp. ¶21, 27, 28, 33 and 34). These averments simply do not overcome that strong presumption. Paragraphs 33 and 34 of Plaintiff's Complaint apply to Paytime, not Patterson at all. Paragraph 21 doesn't provide a factual basis for piercing the corporate veil because it simply states that Patterson personally purchased the furniture and equipment of Plaintiff s former business. We then turn to the remaining averments, Paragraphs 27 and 28. Paragraph 27 correctly states that Patterson loaned HEG in excess of $120,000 prior to Defendant HEG's closing. The z Plaintiff argues for the first time in her brief that liability can be assessed against Paytime because it was the "managing agent" for the Defendant HEG subjecting it to direct liability as an employer under the WPCL. Plaintiff cites no cases to support that broad-brush statement. Plaintiff also conveniently ignores the Employment Agreement between the parties which states quite clearly that the Plaintiff was responsible for all management of HEG (see letter dated July 1, 2008 which is attached to the Employment Agreement and marked as Exhibit A to Plaintiffs Amended Complaint). 6 fact that Patterson loaned his own company funds to cover operating expenses does not defeat the fact that he had a corporate structure in place. This leaves Plaintiff with Paragraph 28 as a sole basis for imposition of liability against Patterson under the theory of piercing the corporate veil. This averment alone simply cannot form the basis for a claim against Patterson individually by causing this Court to ignore the corporate setup of HEG. The Complaint states quite clearly that HEG was a Pennsylvania corporation established on June 19, 2008 (see Am. Comp. ¶2 and 11). HEG was a services business and as such needed capital sufficient to cover its operating expenses. This capital was supplied by Patterson as a loan to HEG; he did not personally pay the bills. (See Pl. Comp. ¶27). Had Patterson ignored the corporate setup and personally paid HEG's expenses, Plaintiff may have at least one argument in support of her theory. Patterson, however, did not; rather the Complaint shows that he adhered to corporate formality by loaning the company funds which HEG, in turn, used to pay its own operating expenses. The Complaint simply does not make allegations sufficient for this Court to ignore the corporate setup of HEG and make Patterson liable for claims that may be assessed against HEG. CONSPIRACY Plaintiff's argument on the conspiracy theory is interesting in that it contradicts the previous sections of her brief. Under her argument concerning de facto merger and piercing the corporate veil, she alleges that Patterson is one and the same person as Paytime and HEG. To succeed under those theories, Plaintiff asserts that those legal entities should be ignored because 7 • • Patterson effectively was self dealing in his transactions with Plaintiff. Under that argument, there can never be a conspiracy because a conspiracy requires that two or more persons or entities are involved to create the conspiracy. See Thompson Coal Company vs. Pike Coal Company, 488 Pa. 198, 412 A.2d 466 (1979). Conveniently in her claim on conspiracy, Plaintiff now asserts that liability can be assessed under this claim because HEG, Paytime and Patterson were separate and distinct affiliated corporations. This is quite an acknowledgement given her previous arguments as stated. Plaintiff then suggests that she has pled sufficient facts to support her conspiracy cause of action and points to Paragraphs 32 through 38 and 60 through 64. Likewise, she suggests that Defendants have referred to no factual averments in its argument. To the contrary, those paragraphs cited by Plaintiff do not support this claim and the averments in Plaintiff's Amended Complaint clearly support Defendants' argument that a cause of action for conspiracy simply cannot be maintained. (See Am. Comp. ¶2, 3, 4, 11 and 12). Plaintiff's Amended Complaint establishes that HEG was a separate and distinct corporation owned 100% by Patterson. She also establishes that Paytime was a separate and distinct corporation owned by Patterson as the primary shareholder, sole director and sole officer. Finally, she establishes that Patterson was a separate and distinct individual. Under the Thompson holding, the co-ownership by Patterson of these corporations prevent Plaintiff from pursuing a conspiracy claim against any Defendants. 8 0 0 TORTUOUS INTEREFERENCE WITH CONTRACT Plaintiff's argument in her brief is contradicted by her Complaint. Also, she cites no cases, other than McKenna, a Common Pleas decision, supporting her position. Plaintiff's Complaint establishes that it was Patterson not Paytime who made the decision and notified Plaintiff that Defendant HEG would cease operation as of December 31, 2008. (Am. Comp. ¶32) The rest of the averments in the Complaint plead facts as to what Paytime allegedly did after HEG was shut down on December 31, 2008 and after Plaintiff no longer was employed by HEG. Therefore the breach, if any, as pled, had already occurred at the time Paytime took the various steps alleged in Plaintiff's Complaint. Paytime certainly could not have interfered with a contract between HEG and Plaintiff when that contract had already ended and according to Plaintiff, had already been breached. Paytime necessarily must be dismissed from this claim.3 INDEMNITY Plaintiff's brief fails to make any argument that a claim of indemnity can be made against Paytime or Patterson. At best, her argument is that a claim for indemnity can be made under an implied contract that she had with HEG whereby HEG agreed to indemnify her for payments under the copier lease and absolve her of any personal liability under the building s McKenna primarily involves an analysis of the de facto merger doctrine. The court did assess liability under a tortuous interference claim but that was because the successor corporation required, as a condition of the sale of the assets, that plaintiff be fired. No similar facts exist in this case. 9 0 1 . 6 lease. Therefore, based upon her argument alone, the cause of action against Paytime and Patterson under this claim should be dismissed. Plaintiff's Brief and Amended Complaint are also void of any factual assertions that she had personal liability for any amounts due under the building lease. If she is not personally liable for any debt, she certainly cannot be indemnified and as such, a claim for indemnity for the lease against HEG cannot be maintained. FRAUDULENT CONVEYANCE Plaintiff makes no argument in her brief or has any averments in the Complaint that establishes a transfer was made by HEG to Patterson individually. Absent a transfer, a fraudulent conveyance claim cannot be pursued against Patterson individually and the demur filed should be granted. This leaves the claim against Paytime. Plaintiff's arguments in this section of her brief are contrary to arguments that she set out previously in her brief. When claiming liability under the alter ego and piercing the corporate veil theories, Plaintiff argued that HEG was thinly capitalized, had no value and was losing money. Essentially she argued that HEG had no assets; only liabilities. (Am. Comp. ¶10, 27 and 32) Accepting this argument, HEG had nothing to convey since it had nothing of value and only liabilities. Necessarily, a fraudulent conveyance could not occur. Plaintiff nevertheless argues in this section of her brief that HEG's accounts were now somehow "assets" that were fraudulently conveyed to Paytime. This of course ignores the initial 10 fact that those accounts were already being serviced by Paytime because they were existing clients. What she fails to articulate in her brief, and more importantly state in her Complaint, was how these accounts had any value thus making them assets available to be conveyed.4 A bald assertion in her brief that these are assets is not enough to overcome the averments set forth in her Complaint which establish that a fraudulent conveyance simply could not have occurred since no assets were ever transferred. Therefore, the claim against Paytime must be dismissed as well. CONCLUSION Plaintiff has only sufficiently pled a claim of breach of contract against HEG and all claims against other Defendants should be dismissed. Respectfully submitted, Mj'j _ z MICHAEL L. BANGS Attorney for Defendants 429 South 18th Street Camp Hill, PA 17011 (717) 730-7310 Supreme Court ID #41263 4 Interestingly, Plaintiff never asserts that the employees were assets and had value thus the hiring of those employees cannot in and of itself make out a claim for fraudulent conveyance. 11 • CERTIFICATE OF SERVICE • I HEREBY CERTIFY that I have this day served the foregoing document by depositing a copy of the same in the United States mail, postage prepaid, at Camp Hill, Pennsylvania, addressed to the following: Andrew J. Miller, Esquire Miller, Poole & Lord 137 East Philadelphia Street York, PA 17401 DATE:- I I I 1-?Ibt 12 40 BARGS-LAWOFFICK'S 429 SOUTH 18M STREET CAMP HMI., PA 17011 E-mail: gl@ysezon.net PHONE: 717-730-7310 FAX: 717-730-7374 MICHAEL L. BANGS, Attorney-at-Law WENDY K. STRAUB, Paralegal November 13, 2009 Pamela S. Lee, Prothonotary York County Judicial Center 45 North George Street York, PA 17401 RE: Laura Frazier vs. Human Element Group, Inc., et al. No. 2009-SU-004091-01 Dear Ms. Lee: WILLIAM E. MILLER, JR. Of Counsel Enclosed you will find the original and one copy of a Reply Brief that I ask you to file on behalf of the Defendants. A true and correct copy of the Reply Brief has been provided to opposing counsel as of this date. Kindly time-stamp the copy and return it to me in the enclosed, stamped, pre-addressed envelope. Thank you. Very truly yours, Michael L. Bangs wks Enclosures cc: Nathan Patterson, President Andrew J. Miller, Esquire • • r? 4j 1 MILLER, POOLE & LORD, LLP Andrew J. Miller, Esquire - Pa. Bar No. 84012 137 East Philadelphia Street rya York, Pennsylvania 17401 r") (717) 845-1524 Attorneys for Plaintiff LAURA FRAZIER, Plaintiff IN THE COURT OF COMMON PLEAS YORK COUNTY, PENNSYLVANIA o u -? l CIVIL ACTION - LAW VS. HUMAN ELEMENT GROUP, INC., PAYTIME HARRISBURG, INC. and NATHAN PATTERSON Defendants JURY TRIAL DEMANDED RESPONSE TO PRELIMINARY OBJECTIONS Plaintiff Laura Frazier, by and through counsel, Miller, Poole & Lord, LLP, files the following Answer to Preliminary Objections as follows: VENUE 1. It is denied that Cumberland County is the proper venue for this dispute. Paragraph 13 of the employment agreement, (Am. Compl. at Ex. A), contained a permissive consent to jurisdiction, not a mandatory forum selection clause, meaning that it is not mandatory that this action be brought in Cumberland County. 1 CJ It is admitted all three Defendants reside in Cumberland County.1 It is further denied that all transactions or occurrences giving rise to Plaintiffs cause of action took place in Cumberland County. By way of further answer, Plaintiff s choice of forum should not be disturbed where Defendants have not proven the forum is vexatious or oppressive. Defendants cannot carry this burden of proof and, therefore, forum in York County is proper. WHEREFORE, Plaintiff requests the Court overrule Defendant's Preliminary Objections as to venue. COUNTI VIOLATION OF PENNSYLVANIA WAGE PAYMENT AND COLLECTION LAW 1. This paragraph contains conclusions of law to which no responsive answer is necessary. To the extent one is required, Plaintiff denies the allegations because the amount Plaintiff was supposed to be paid pursuant to the employment agreement, (Am. Compl. at Exhibit A), constitutes "wages" under the Wage Payment Collection Law ("WPCL") in that it was both a guaranteed payment and an amount to be paid pursuant to an agreement with the employee. 2. Denied that Defendant Paytime has no legal obligation to Plaintiff under the WPCL. By way of further answer, Defendant Paytime is directly liable as an "employer" as 1 Plaintiff mistakenly stated in her Amended Complaint that Defendant HEG was originally at 2556 Eastern Boulevard. Plaintiff operated Human Element Group, LLC, a separate entity, at that location before moving her office to Camp Hill during the pendency of the transaction that is the subject of this lawsuit. 2 l,?G l t{ 4?? W!9!? VI W 0 1 1 0 defined in the WPCL. By way of further answer, Defendant Paytime is liable for the obligations of Defendant Human Element Group, Inc. ("HEG") under the de facto merger doctrine. 3. Denied that Plaintiff failed to plead sufficient averments to hold Defendant Patterson personally liable under the WPCL. By way of further answer, Defendant Patterson is directly liable as an "employer" as defined in the WPCL. Plaintiff also pleads Defendant Patterson disregarded the corporate entity by Defendant HEG's undercapitalization of the corporation, the lack of corporate formalities, and the fact that Defendant Patterson purchased Defendant HEG's equipment and farniture with his own money. WHEREFORE, Plaintiff requests the Court overrule Defendant's Preliminary Objections. COUNT II CIVIL CONSPIRACY This paragraph contains a conclusion of law to which no responsive answer is necessary. It is denied to the extent a pleading is otherwise required. 2. This paragraph contains a conclusion of law to which no responsive answer is necessary. It is denied to the extent a pleading is otherwise required. 3. This paragraph contains a conclusion of law to which no responsive answer is necessary. It is denied to the extent a pleading is otherwise required. 4. Denied that there are no allegations in Plaintiff s Complaint that permit an award of punitive damages. Punitive damages may be awarded for outrageous or evil conduct. Here, 3 0 1 1 0 Plaintiff pleads that Defendants formulated and executed a scheme to purposefully and wrongfully evade Plaintiff s salary in violation of the WPCL. WHEREFORE, Plaintiff requests the Court overrule Defendant's Preliminary Objections. COUNT III BREACH OF CONTRACT 1. Denied for the reasons set forth in Paragraphs I and 2 of Count I above. 2. Denied for the reasons set forth in Paragraph 3 of Count I above. 3. Denied for the reasons set forth in Paragraph 2 of Count I above. 4. Denied for the reasons set forth in Paragraph 3 of Count I above. Denied for the reasons set forth in Paragraph 2 of Count I above. WHEREFORE, Plaintiff requests the Court overrule Defendant's Preliminary Objections. COUNT IV TORTIOUS INTERFERENCE WITH CONTRACTUAL RELATIONS 1. Denied that Plaintiff's Complaint fails to state a cause of action for tortious interference of contractual relations. By way of further answer, the plan employed by Defendant Paytime to evade salary obligations to Plaintiff under her employment contract establishes a claim for tortious interference with contract against the Defendant Paytime. WHEREFORE, Plaintiff requests the Court overrule Defendant's Preliminary Objections. 4 COUNT V INDEMNITY 1. This paragraph contains a conclusion of law to which no responsive answer is necessary. It is denied to the extent a response is otherwise required. By way of further answer, a separate cause of action for indemnity may arise under an express contract, an implied contract, or by operation of law. 2. Denied that Plaintiff failed to state a claim in the Complaint for indemnity. Defendants exercised control over and treated the copier and office space as their own, which indicate an implied contract of indemnity to Plaintiff. 3. Denied for the reasons set forth in Paragraph 2 of Count I above. 4. Admitted that Defendant Patterson never took over the lease from Human Element Group, LLC. By way of further answer, due to the reasons set forth in Paragraph 3 of Count I above, Defendant Patterson is liable under a theory of piercing the corporate veil. COUNT VI FRAUDULENT CONVEYANCE 1. Denied that that there was no transfer of any of Defendant HEG's assets to any entity, specifically Defendant Paytime. By way of further answer, all of Defendant HEG's customer accounts and virtually all other assets were transferred to Defendant Paytime after Defendant HEG was shut down. 2. Denied for the reasons set forth in Paragraph 1 of Count VI above. 5 3. This paragraph contains a conclusion of law to which no responsive answer is necessary. It is denied for the reasons set forth in Paragraph 1 of Count VI to the extent a response is otherwise required. WHEREFORE, Plaintiff requests the Court overrule Defendant's Preliminary Objections. Respectfully submitted, MILLER, POOLE & LORD, LLP 4- Date: Andrew J. Miller, Esquire Pa. Bar No. 84012 137 East Philadelphia Street York, PA 17401 (717) 845-1524 6 CERTIFICATE OF SERVICE AND NOW, the undersigned hereby certifies that I have, on the date written below, served a true and correct copy of the foregoing Response to Preliminary Objections by regular mail addressed to: Michael, L. Bangs, Esquire BANGS LAW OFFICE 429 South 18`h Street Camp Hill, PA 17011 Date: MILLER, POOLE & LORD, LLP 44?A LW ? stina K. Webb, Paralegal N N Ca 7 MILLER, POOLE & LORD, LLP Andrew J. Miller, Esquire Pa. Bar No. 84012 137 East Philadelphia Street York, Pennsylvania 17401 (717) 845-1524 Attorneys for Plaintiff LAURA FRAZIER, IN THE COURT OF COMMON PLEAS Plaintiff : YORK COUNTY, PENNSYLVANIA VS. HUMAN ELEMENT GROUP, INC., CIVIL ACTION - LAW PAYTIME HARRISBURG, INC. and NATHAN PATTERSON JURY TRIAL DEMANDED Defendants BRIEF IN OPPOSITION TO PRELIMINARY OBJECTIONS AND NOW, to wit, this day of November, 2009, comes Plaintiff Laura Frazier, by her attorneys MILLER, POOLE & LORD, LLP and files the following: ?a t- t GV1 _. N N A Y z a TABLE OF CONTENTS Pm e 1. PROCEDURAL HISTORY ........................................................................1 II. STATEMENT OF FACTS ..........................................................................1-3 III. STATEMENT OF QUESTIONS INVOLVED .........................................4 IV. ARGUMENT ................................................................................................4-7 A. PLAINTIFF'S CHOICE OF VENUE IN YORK COUNTY IS PROPER ..................................................7-14 B. PLAINTIFF PLEADS ADEQUATE FACTS TO ESTABLISH EACH OF HER CAUSES OF ACTION ..................................................................................... 15-32 V. CONCLUSION ............................................................................................33 1 TABLE OF AUTHORITIES CASES PAGE Agere Syst., Inc. v. Advanced Environ. Techn. Corp., 552 F. Supp.2d 515, (E.D. Pa. 2008) ................................................................................ 29 All-Pak, Inc. v. Johnston, 694 A.2d 347 (Pa. Super. 1997) ............................................................ 8 Amalgamated Cotton Garment and Allied Indus. Fund v. Dion, 491 A.2d 123 (Pa. Super. 1985) ........................................................................................ 22 Baker v. Rangos, 324 A.2d 498 (Pa. 1974) ................................................................................... 25 Belcufine v. Aloe, 112 F.3d 633 (3d Cir. 1997) .............................................................................. 6 Boswell v. Aetna Life Ins. Co., Pa.D. & C.3d. 94 (Pa. Cmmw. 1984) ............................................................................................................ 29 Bourke v. Kazaras, 746 A.2d 642 (Pa. Super. 2000) .................................................................... 15 Bowers v. NETI Technologies, Inc., 690 F. supp. 349 (E.D. Pa. 1988) ........................................................................................................... passim Central Transport., Inc. v. Bd. of Assessment Appeals. of Cambria County, 417 A.2d 144 (Pa. 1980) .................................................................. 8 Cheeseman v. Lethal Exterminating Co., Inc., 701 a.2d 156 (1997) ............................................ 13 Conrad v. Pittsburgh, 421 Pa. 492, 218 A.2d 906 (1966) ............................................................ 15 Fizzano Bros. Concrete Prods. v. XLN, Inc., 973 A.2d 1016 (Pa. Super. 2009) ..........................................................................................................20-21 Frazetta v. Underwood Books, 2009 WL 959485, *4 (M.D. Pa. April 6, 2009) ..................................................................................................... 8 Goodyear v. Pa. Steel Foundry & Machine Co., 43 Pa. D.&C.4th 285 (Pa. Com. Pl. 1995) ...................................................................18-19 11 Hatfield, Inc. v. Robocom Systems Intl, Inc., 1999 WL 46563 (E.D. Pa. Jan. 15, 1999) .................................................................................................. 8-9 Hirsch v. EPL Technologies, Inc., 910 A.2d 84 (Pa. Super. 2006) ................................................ 5 In re Konidaris, 87 B.R. 846, (E.D. Pa. Bankr. 1988) .................................................................. 22 McKeeman v. Corestates Bank, N.A., 751 A.2d 655 (Pa. Super. 2000) ....................................... 22 McKenna v. Open Webs Corporation, 76 Pa. D.&C.4th 82 (Pa. Corn. Pl. 2005) .................................................................................................... passim Mohney v. McClure, 604 A.2d 1021 (Pa. 1992) ........................................................................... 22 Oswald v. Olds, 493 A.2d 699 (Pa. Super. 1985) ......................................................................... 10 Pelagattie v. Cohen, 536 A.2d 1337 (Pa. 1987) .......................................................................... 25 Red Ball Brewing Co. v. Buchanan Ingersoll P. C., 51 Pa. D&C.4th 129 (2001) .............................................................................................. 15 S. T. Hudson Engineers, Inc. v. Camden Hotel Development Assoc., 747 A.2d 931 (Pa. Super. 2000) .......................................................................... 23 Shaer v. Orthopadedic Surgeons of Central Pa., LTD, 938 A. 2d 457 (Pa. Super 2007) ...................................................................................... 23 Shared Comm. Serv. of 1800-80 JFK Blvd. Inc. v. Bell Atlantic Prop. Inc., 692 A.2d 570 (Pa. Super. 1997) ................................................ 25 SHV Coal, Inc. v. Continental Grain Co., 587 A.2d 702 (Pa. 1991) ............................................ 26 Smith v. Wagner, 588 A.2d 1308 (Pa. Super. 1991)) .................................................................... 25 Solomon Edwards Group, L.L. C. v. Voranet Corp., 2001 WL 1807886, at *4 (Pa. Com. Pl. 2001) .................................................................. 25 Steuart v. McChesney, 444 A.2d 659 (Pa. 1982) ............................................................................ 8 Strickland v. Univ. of Scranton, 700 A.2d 979 (Pa. Super. 1997) ................................................................................................................ 25 iii . ` r r Tiab Comm. Corp. v. Keymarket of NEPA, Inc., 263 F.Supp.2d 925, 935 (M.D.Pa. 2003) .........................................................31 Tucker v. Philadelphia Daily News, 757 A.2d 938 (Pa. Super. 2000) ............................................................................................................... 15 Walls v. Phoenix Ins. Co., 979 A.2d 847 (Pa. Super. 2009) ......................................................... 13 Statutes 12 P.S. § 5101-5110 .........................................................................................30 12 P.S. § 5104 ................................................................................................31 12 P.S. § 5105 .............................................................................................30-31 43 P.S. § 260.2a .......................................................................................................................16-18 43 P.S. §§ 260.1-260.12 .................................................................................................................. 1 Pa.R.C.P. § 1028(c)(2) n. 1 ........................................................................................................... 15 Pa.R.C.P. 1006(f)(1) ..................................................................................................................... 10 Pa.R.C.P. 2179 .............................................................................................................................. 10 Restatement (Second) of Torts § 908(2)) ...................................................................................... 26 1v 0 I'll 0 I. PROCEDURAL HISTORY Plaintiff filed the complaint in this matter with the York County Court of Common Pleas on August 13, 2009. Defendants' counsel executed an acceptance of service for the complaint on September 1, 2009, which was filed in the York County Prothonotary Office on September 8, 2009. Defendants served preliminary objections and a brief in support thereof on September 3, 2009. Plaintiff filed an amended complaint on September 22, 2009, asserting six claims: (1) violation of the Pennsylvania Wage Payment and Collection Law, 43 P.S. §§ 260.1-260.12 ("WPCL") against all Defendants; (2) civil conspiracy against all Defendants; (3) breach of contract against all Defendants; (4) tortious interference with contract against Defendant Paytime Harrisburg, Inc. ("Defendant Paytime"); (5) indemnity against all Defendants fraudulent conveyance against all Defendants. Defendants served preliminary objections to the amended complaint on October 16, 2009 and a brief in support thereof on October 20, 2009. II. STATEMENT OF FACTS Plaintiff owned and operated a business originally formed as SourcePoint, LLC, which later changed its name to Human Element Group, LLC ("HEG LLC"). (Am. Compl. T 8.) HEG LLC provided its clients with human resources management and support, providing such services as employee handbooks, employee policies, benefits administration and other services. In early 2008, Defendant Nathan Patterson ("Defendant Patterson"), through a business partner, contacted Plaintiff about capitalizing on possible business synergies between HEG LLC and Defendant Patterson's corporation, Defendant Paytime Harrisburg, Inc. ("Defendant Paytime"). (Am. Compl. T 9.) Defendant Patterson and Plaintiff eventually settled on an arrangement whereby Plaintiff transferred all her clients to a new corporation, Defendant Human Element Group, Inc. ("Defendant HEG"), which Defendant Patterson would own entirely; the new corporation would takeover HEG LLC's office space and hire all of its employees to service Plaintiff s former clientele. Defendant HEG would also have the opportunity to expand its business by cross-selling services to clients with the larger Defendant Paytime. Defendant Patterson, in exchange for acquiring ownership of her business and clients, provided an employment agreement to Plaintiff drafted by his attorney with a one-year term at the fixed annual compensation rate of $70,000 with the possibility of a small fractional ownership in the future. Plaintiff retained many of her former duties, but gave up control to hire and fire staff and, ultimately, control over the business and expense decisions to Defendant Patterson. The arrangement went into effect on July 1, 2008. Plaintiff tried to make the new corporation succeed. Defendant Paytime's business manager, Leroy Ziegler, became a key manager for Defendant HEG, providing extensive business advice in exchange for a management fee collected by Defendant Paytime from Defendant HEG. Plaintiff did not, however, have the full support of her counterparts at Defendant Paytime because some did not see the need for a separate business unit to provide human resource services. Defendant HEG also had few fixed assets and most or nearly all of its expenses were in the form of lease expenses, management fees and wages to its employees. Not surprisingly, the biggest wage expense was to Plaintiff under her employment agreement. Leroy Ziegler and Defendant Patterson soon determined they needed to reduce expenses for the new venture to become viable. The most obvious expense to reduce was Plaintiff s 2 a a . r salary. Whether pre-planned or opportunistic, the solution that came to them seemed very simple. They decided to transfer the business and clients of Defendant HEG to Defendant Paytime as of January 1, 2009. In order for Defendant Paytime to seamlessly continue the business, it hired all of the employees of Defendant HEG, except Plaintiff. This eliminated the messiness of having to fire Plaintiff under her employment agreement and, instead, left her with an employment agreement that was only enforceable against an entity now defunct and having no assets. Defendant Paytime seamlessly continued the business and effectively eliminated the obligation to pay the remainder of Plaintiff s salary. Defendant Patterson used the same ploy to also reduce the rent expense for Defendant HEG's office space. The landlord for the office space was stuck in a lease being paid by a now defunct Defendant HEG. Defendant Paytime used the landlord's situation to its full advantage by negotiating a new lease with the landlord for a significantly reduced rate. Defendant Paytime thereafter moved its sales department to the former office of Defendant HEG and continued on with a leaner business model for its human resource management and support services. Defendants very obviously implemented their nefarious scheme for the primary purpose of evading the employment agreement with Plaintiff. The plan was simple and convenient to execute using Defendant Patterson's different corporate forms. The law, however, does not permit an employer and its management to walk away from wage obligations with such ease. 3 s r III. STATEMENT OF QUESTIONS INVOLVED A. Whether Plaintiffs choice of venue in York County is proper. Answered in the affirmative. B. Whether Plaintiff pleads adequate facts for each of her causes of action. Answered in the affirmative. IV. ARGUMENT Plaintiff brings an action for (1) violation of the WPCL against all Defendants; (2) civil conspiracy against all Defendants; (3) breach of contract against all Defendants; (4) tortious interference with contract against Defendant Paytime; (5) indemnity against all Defendants; and (6) fraudulent conveyance against all Defendants. Plaintiff's claim primarily arises under the WPCL with alternate theories of recovery also asserted. Defendants describe Plaintiff s claims as "convoluted," which very accurately describes the entangled strategy Defendant Patterson implemented with his two corporate alter egos to avoid his wage obligations to Plaintiff. Defendants repeatedly assert in their brief that they made a "sound business decision" in shutting down Defendant HEG and were "justified" in taking that action, (Def. Br. at 18), and that it was a "prudent business decision" to "simply close the doors of [Defendant] HEG." (Def. Br. at 20.) Defendant later claims "[Defendant] HEG did not have anything of value to convey", (Def. Br. at 30) but had some customers that "never generated enough revenues to pay [Defendant HEG's] expenses." (Def. Br. at 29.) "[Defendant] Paytime, after [Defendant] HEG shut down, continued to service its own accounts which were also accounts of HEG." (Def. Br. at 29.) To continue to provide this service uninterrupted, "[Defendant] Paytime hired HEG's employees, except for Plaintiff" (Def. Br. at 30), and entered 4 s • a new lease with the landlord for the location previously occupied by Defendant HEG and Sourcepoint, LLC, after Defendant HEG ceased to pay the rent. (Def. Br. at 4.) One must naturally question why Defendant Paytime had to hire employees and acquire office space to "take care of matters" for a corporation with "no value" that was allegedly shut down. Defendant Patterson asserts he is the loser in this ruse because he loaned over $100,000 to his own company which he claims had no assets and now would never repay him. Despite those losses, Defendant Paytime assumed the business of Defendant HEG, hired its employees, took over its office space and now continues to sell the services previously offered by Defendant HEG. (Am. Compl. at ¶¶ 20-22.) Defendant Patterson, as the "sole stockholder, director and officer" of Defendant HEG and the "sole stockholder, director and officer" of Defendant Paytime, appears to have simply shifted his business from one pocket to the other, which is inconsistent with his defense of mounting losses. Plaintiff pleads facts that strongly indicate instead that Defendants intentionally or opportunistically engaged in this shell game to evade paying Plaintiff the wages she was still due under the term of her one year employment agreement. Plaintiff s allegations, if supported by the evidence, entitle her to recovery. "Pennsylvania enacted the WPCL to provide a vehicle for employees to enforce payment of their wages and compensation held by employers." Hirsch v. EPL Technologies, Inc., 910 A.2d 84, 88 (Pa. Super. 2006). The WPCL "establishes as employee's right to enforce payment of wages and compensation to which an employee is otherwise entitled by the terms of an agreement." Id. "Under Pennsylvania rules of statutory construction the civil provisions of the WPCL are to be liberally construed." Bowers v. NETI Technologies, Inc., 690 F. supp. 349, 354 5 (E.D. Pa. 1988). The U.S. Court of Appeals for the Third Circuit has aptly stated that "[g]iven that the purpose of the WPCL is to deter managers from strategically diverting company resources away from the payment of wages and benefits, it makes sense for the WPCL to apply in only those contexts in which managers have room to behave strategically." Belcufine v. Aloe, 112 F.3d 633, 639 (3d Cir. 1997). The WPCL, therefore, is not premised on "prudent business decisions" of the employer for the exclusive benefit of the employer or management. Quite oppositely, the statute aims to make the payment of wages the prudent business decision and penalize employers and managers, like Defendants, who strategically avoid those obligations. Recently, in McKenna v. Open Webs Corporation, 76 Pa. D.&C.4th 82 (Pa. Com. Pl. 2005), a sister court to this Court faced factual circumstances nearly identical to the present case. In McKenna, as part of an arms-length asset purchase, the buyer instructed the seller to terminate plaintiff, a highly compensated employee, and then structured the transaction to assure the buyer would not assume any liability under the plaintiff s employment agreement. See id. at 84-85. The buyer bought every asset, assumed almost every unpaid liability, kept most of the key personnel and continued the general business of the seller, while the seller wound up its affairs leaving just a shell for the employee to pursue. See id. at 87-88. For the buyer, the transaction made good business sense, but the court found the scheme violated the WPCL as to the plaintiff employee. The court applied the de facto merger doctrine to hold not only the seller corporation liable under the WPCL, but also the successor corporation. See id. at 85-88. The court also held, in the alternative, that the successor corporation was directly liable for tortious interference with plaintiffs employment agreement due to its actions. See id. at 90. 6 0 . t . . 0 The only substantial difference between McKenna and the present case is that McKenna involved an arms' length transaction whereas, here, Defendant Patterson had the hubris to simply divert Defendant HEG's business to his other company, Defendant Paytime, and continue operating out of Defendant HEG's old office without Plaintiff. Defendant Patterson simply told Plaintiff he was losing money and decided to close Defendant HEG without further payment to her. He used Defendant HEG's corporate shell as a Chinese wall to insulate him from any liability to Plaintiff while he continued business uninterrupted under Defendant Paytime's corporate form. Not only is the present case similar, but in most respects, it is even more egregious than McKenna. Against this backdrop, Defendants now object to venue and demur to Plaintiff s substantive claims. A. PLAINTIFF'S CHOICE OF VENUE IN YORK COUNTY IS PROPER. (1) Plaintiffs employment agreement contained a permissive, not mandatory, forum selection clause. Defendants object to Plaintiffs choice of venue. (Def. Br. at 6.) Defendants first assert that venue is improper because of language contained in Paragraph 13 of the employment agreement. (Am. Compl. ¶ 14 & Ex. A.) Defendants correctly recite Paragraph 13 of Plaintiffs employment agreement in their brief, but incorrectly claim the provision mandates venue in Cumberland County, Pennsylvania. Properly read, the clause contains a mandatory choice of law provision with a permissive forum selection provision. 7 0 . I .. 0 "It is well-established that the intent of the parties to a written contract is to be regarded as being embodied in the writing itself, and when the words are clear and unambiguous the intent is to be discovered only from the express language of the agreement." Steuart v. McChesney, 444 A.2d 659, 661 (Pa. 1982) (citations omitted). "[W]here the language is clear and unambiguous, the focus of interpretation is upon the terms of the agreement as manifestly expressed, rather than as, perhaps, silently intended." Id. (emphasis in original). It is also well- settled that a written agreement is construed against the drafter. Central Transport., Inc. v. Bd. of Assessment Appeals of Cambria County, 417 A.2d 144, 149 (Pa. 1980); All-Pak, Inc. v. Johnston, 694 A.2d 347, 351 n. 7 (Pa. Super. 1997). A federal trial court in Hatfield, Inc. v. Robocom Systems Intl, Inc., 1999 WL 46563 (E.D. Pa. Jan. 15, 1999), interpreted an almost identical contract clause. The clause stated This Agreement shall be construed and enforced in accordance with the laws of the State of New York and the parties hereto submit to the jurisdiction of the federal and state courts of New York for any and all purposes hereof. Id. at * 1. The court found the plain meaning of the clause to be mandatory choice of New York law and permissive venue equivalent to consent to jurisdiction in New York courts. See id. at * 2. The court correctly reasoned that where the parties intend for all suits to be brought in a specified venue, the terms "shall" or "must" are used, but where such mandatory terms are not used, the provision is only permissive. See id. at * 3; see also Frazetta v. Underwood Books, 2009 WL 959485, *4 (M.D. Pa. April 6, 2009) (citing Hatfleld for the same principle of construction). The provision in Plaintiff's employment agreement is analogous to the contract term in Hatfield, which the court correctly interpreted to mean the parties would not 8 contest venue if brought in the specified forum, not to mean that any action had to be brought in that forum. The language in Plaintiff's employment agreement is free from any doubt. The word "shall" was used in the choice of law clause, which makes application of Pennsylvania law mandatory. Quite differently, the subsequent forum selection provision used the term "submits," rather than "shall" or "must." (Am. Compl. at Ex. A ¶ 13.) Defendants correctly state that, as a general rule of contract law, each provision of the contract should be given meaning. (Def. Br. at 8.) They then erroneously state that the only interpretation that can be given the two provisions is mandatory jurisdiction and venue. Defendant's interpretation requires the Court to infer the meaning of the provision. Plaintiff's interpretation does not require any inference and, therefore, should be adopted as the proper interpretation. Moreover, the provision in Plaintiffs case submits only her to the specified venue, apparently reserving Defendant HEG's right to sue in the venue of its choice. This further indicates the parties' intent that Plaintiff merely consents to being sued in Cumberland County, not strictly that Defendant HEG or her be strictly limited where either can sue if venue were is proper. Even if there were any doubt or ambiguity in the provision, the language must be construed against the Defendants as drafters. Therefore, this Court should properly interpret the provision to allow Plaintiff to file suit in the venue of her choice. 9 • i (2) Plaintiffs choice of forum should not be disturbed where York County has jurisdiction and proper venue over at least two of the Defendants. Next, Defendants object on the basis of forum non conveniens. Embedded within that argument appears to be an argument that venue is improper because proper venue has not been established as to each defendant individually. (Def. Br. at 8-9.) To the extent this argument is made by Defendants, it can be quickly dismissed. In an action against multiple defendants arising out of joint and several liability, the action may be brought where venue against any one of the defendants is proper. Pa.R.C.P. 1006(c)(1); Oswald v. Olds, 493 A.2d 699, 700 (Pa. Super. 1985) (holding venue proper over an individual defendant based on proper venue of a corporate defendant even though that defendant was subsequently dismissed from the action). Furthermore, if the plaintiff brings multiple causes of action against the same defendant, venue is proper in the county where any one of the causes of action may have been brought. Pa.R.C.P. 1006(f)(1). Venue for a personal action against a corporation is proper in any county where inter alia the corporation regularly conducts business or the county where a cause of action arose or a county where the transaction or occurrence took place out of which the cause of action arose. Pa.R.C.P. 2179. This Court may immediately look to Plaintiff's employment agreement to determine jurisdiction and venue in York County are both proper. The non-compete provision in the employment agreement included York County as a specific market area serviced by it, indicating clearly that it regularly conducted business in that market. (Am. Compl. at Ex. A ¶ 8.) Defendants admit in their brief that Defendant Paytime assumed Defendant HEG's clients and 10 0 .. .. 0 continued the business. (Def. Br. at 29-30.) Defendants even went so far as to threaten to enforce Plaintiff's non-compete against her in York County after the termination if she pursued a wage claim. (Am. Compl. at 144.) Plaintiff also establishes jurisdiction based on the location of the negotiations and occurrences leading to Plaintiff's claims. A substantial portion of negotiations leading up to her employment contract and sale of the businessI took place in York County. At the time negotiations commenced, Plaintiff operated HEG, LLC out of an office in York. She subsequently signed the lease in Camp hill and moved her office during the negotiations. Defendant Paytime's business manager, Leroy Ziegler, visited Plaintiff's office at 2556 Eastern Boulevard, York in April or May 2008, to meet with Plaintiff to perform due diligence ahead of the transaction. (Am. Compl. at ¶ 15a.) Defendant Patterson's attorney sent correspondence to Plaintiff's office at 2556 Eastern Boulevard, York, York County, Pennsylvania, which described proposed terms for Plaintiff's employment agreement. (Am. Compl. at ¶ 15b.) Defendant Patterson's attorney also sent the final draft of the actual employment agreement to Plaintiffs residence at 1085 Dandelion Drive, York, York County. (Am. Compl at ¶ 15c.) Plaintiff engaged in the final negotiation before signing the employment agreement over the phone from her home in York County, while Defendant Patterson was at his vacation home along the New Jersey coast. (Am. Compl. at ¶ 15d.) Defendant Patterson signed the employment agreement at his vacation home in New Jersey, (Am. Compl. at ¶ 16), following which Plaintiff signed the 1 Defendant Patterson denies he ever "purchased" anything from Plaintiff or that she ever had any "assets" to sell. That claim is quite.remarkable because there is really no other way to describe the transactions that led to Defendant HEG servicing all of Plaintiff's customers, hiring all of her employees, and even occupying her office space. 11 agreement at the office of Defendant Patterson's attorney in Camp Hill, Cumberland County. (Am. Compl. at ¶ 16.) Even the circumstances surrounding Defendants' breach of Plaintiff s employment agreement occurred in part in York County. Defendant Patterson sent a letter to Plaintiff s York County residence confirming conversations where she was told her employment agreement would no longer be honored because Defendant HEG would no longer be in existence as of December 31, 2008. (Am. Compl. at ¶ 32.) Plaintiff s wages for the balance of her employment agreement should have also been paid to her in York County given that she has no business or residential address in Cumberland County. (Am. Compl. at ¶ 42.) Defendant HEG also regularly conducted business in York County, with approximately 50 % of its revenues generated from York County clients. (Am. Compl. at ¶ 45.) Defendant Paytime continued to service those accounts after Plaintiff left, which also necessitated that it regularly conduct business in York County. Defendant Paytime also independently performs payroll services for thousands of York County employees and now provides human resources support for many of the same clients. (Am. Compl. at ¶ 48.) Defendant Paytime is also a member of the York County Chamber of Commerce since 2001 and provides payroll services for the chamber staff. (Am. Compl. at ¶ 47.) Plaintiff even recently attended a York County Chamber of Commerce Business Expo in York County where Defendant Paytime had an exhibitor booth with flyers promoting the same services as previously provided by Defendant HEG. (Am. Compl. at ¶ 49 and Ex. G.) 12 Where jurisdiction is proper over the Defendants, Plaintiff s choice of forum must be given the greatest weight in determining proper venue. A Pennsylvania Superior Court panel recently reversed the transfer of venue from Philadelphia County to Monroe County in the instructive case of Walls v. Phoenix Ins. Co., 979 A.2d 847 (Pa. Super. 2009). Plaintiff in that case suffered property damage to its home in Monroe County, but chose Philadelphia County to bring suit against the insurer after her insurance claim was denied. See id. at * 1. The trial court transferred the case to Monroe County because the occurrence giving rise to the litigation arose in Monroe County and the parties and witnesses were all in Monroe County. See id. In reversing the trial court's order to trarisfer venue, the Superior Court panel noted first that a "plaintiffs choice of forum should rarely be disturbed[.]" Id. at * 2. (citing Cheeseman v. Lethal Exterminating Co., Inc., 701 a.2d 156, 162 (1997) (emphasis added in original)). "Thus, the law is clear that the burden, which is a significant one, is on the defendant to demonstrate "with detailed information" that the plaintiff chose her forum with designs to "harass the defendant," and that a defendant cannot satisfy that burden by a showing of mere inconvenience." Id. at * 2-3. The panel went on to discredit the general allegations of the defendant insurer that its claims adjuster would be inconvenienced and the plaintiff s chosen forum oppressive if he had to travel from Bethlehem, Northampton County to Philadelphia County. See id. at * 4. Defendants have not asserted any facts to establish York County is a vexatious or oppressive forum. This case does not involve any claims that would require site visits by a jury or on-site investigations. Plaintiff s claims are all contractual in nature arising from acts and 13 0 1 . . . 0 transactions that did not occur in any fixed location. The two primary witnesses will likely be Defendant Patterson and Plaintiff. Plaintiff resides in York, so that forum is considerably more convenient to her. Defendant Patterson resides in and has his office in the eastern part of Cumberland County, which is nearly equidistant between the York County courts in York and the Cumberland County courts in Carlisle. In fact, Defendant Paytime's current sales office in Defendant HEG's former office at 3552 Gettysburg Road, Suite 200, Camp Hill, Pennsylvania, is 20 miles from the Cumberland County courthouse and only 24.5 miles from the York County courthouse; the office of Defendants' counsel at 429 South 18th Street, Camp Hill, Pennsylvania, is 20.7 miles from the Cumberland County courthouse and only 22 miles from the York County courthouse. Defendants' claim that this additional distance causes them hardship lacks merit. Moreover, the only party to suffer any inconvenience by a transfer from York County would be Plaintiff. Plaintiff resides in York and the difference for her is 38 miles to the Cumberland County courthouse compared to 4 miles to the York County courthouse. In addition, the office of Plaintiff s counsel, at 137 East Philadelphia Street, York, Pennsylvania, is more than 43 miles from the Cumberland County courthouse compared with less than one mile from the York County courthouse. From a cost perspective, Defendants may even benefit by a York County forum because if Plaintiff prevails on her WPCL claim, the time and costs for her attorney to travel to Cumberland County will be borne by Defendants. The choice of forum, therefore, has no impact or even a slight benefit for Defendants, while it has an adverse impact on Plaintiff. 14 Defendants' preliminary objections to venue in York County should, therefore, be overruled. B. PLAINTIFF PLEADS ADEQUATE FACTS TO ESTABLISH EACH OF HER CAUSES OF ACTION. (1) Standard of Review Rule 1028(a)(4) of the Pennsylvania Rules of Civil Procedure allows for preliminary objections in the form of a demurrer. When reviewing preliminary objections in the form of a demurrer, the Court must accept as true "all well-pleaded material, factual averments and all inferences fairly deducible therefrom." Tucker v. Philadelphia Daily News, 757 A.2d 938, 941- 42 (Pa. Super. 2000). Preliminary objections which would lead to the dismissal of a cause of action may be sustained only where "it is clear and free from doubt from all the facts pleaded that the pleader will be unable to prove facts legally sufficient to establish [its] right to relief." Bourke v. Kazaras, 746 A.2d 642, 643 (Pa. Super. 2000) (citation omitted). Preliminary objections in the nature of a demurrer "may be determined from facts of record so that further evidence is not required." Pa.R.C.P. § 1028(c)(2) n. 1. "A court may rely also on documents "forming in part the foundation of the suit," even where a plaintiff does not attach such documents to its complaint." Red Ball Brewing Co. v. Buchanan Ingersoll P. C., 51 Pa. D&C.4th 129, 135 (2001) (citing Conrad v. Pittsburgh, 421 Pa. 492, 495 n. 3, 218 A.2d 906, 907 n. 3 (1966)). 15 0 . . . 1 9 (2) Plaintiffs compensation for the remainder of the term of her employment agreement constitutes "wages" as defined by the WPCL. Defendants first argue the application of the VWPCL is misplaced because the monies owed to Plaintiff after Defendant HEG ceased doing business constitute prospective wages that were never earned. (Def. Br. at 11-12.) Defendants argue the employment agreement did not include "wages" for any time she did not work on behalf of Defendant HEG. Defendants' rely on the definition of "wages" from the WPCL for their position, without citing to any supporting case law. Defendants notably fail to also recite the relevant portions from the definition of "fringe benefits and wage supplements" which are an integral subset of "wages." "Fringe benefits and wage supplements" include inter alia "separation, vacation, holiday, or guaranteed pay... and any other amount to be paid pursuant to an agreement to the employee[.]" 43 P.S. § 260.2a (emphasis added). The compensation owed Plaintiff for the balance of her employment agreement guaranteed term constitutes "wages." First, it is not even clear that Defendant HEG ever terminated her. Under Defendant Patterson's plan, Defendant HEG simply ceased doing business and stopped paying her, apparently Defendant Patterson being confident enough to leave her with a potential judgment against a shell corporation. Second, Plaintiffs employment agreement was for a term of one year. (Am. Compl. at Ex. A ¶ 2.) After one year, Defendant HEG or Plaintiff could terminate the relationship at any time with ten (10) days notice. (Am. Compl. at Ex. A ¶ 2.) However, during the first year, Plaintiff was guaranteed employment and payment, unless terminated for "cause" as defined in the employment agreement. (Am. Compl. 16 at Ex. A ¶¶ 2 & 3.) Nowhere does the employment agreement contain a condition that Defendant HEG continue doing business for Plaintiff to be employed or paid. When crafting the definition of "cause" for termination purposes, Defendant HEG even went to great lengths to define "cause" in a very favorable way to itself, but neglected to include in the definition any mention of the cessation or sale of the business. (Am. Compl. at Ex. A ¶ 3.) Defendants even admit in Count IV of their Preliminary Objections that Plaintiff was not terminated "for cause", but only because Defendant HEG ceased doing business. Plaintiff's first year wages were, therefore, guaranteed payments or payments to be paid pursuant to the employment agreement, which entitled her to collect the balance of those wages when due, despite Defendant Patterson's strategy to clean out the corporation and move on without her. A similar defense was recently asserted by a defendant medical practice against a terminated doctor who sued under the WPCL in Shaer v. Orthopaedic Surgeons of Central Pa., LTD., 938 A.2d 457 (Pa. Super. 2007) The plaintiff doctor had a provision in his employment agreement that required ninety (90) days notice prior to termination. Id. at 460. The defendant medical practice only provided two weeks' notice before termination and failed to pay the plaintiff doctor for the balance of the ninety (90) days. Id. at 461. The defendant asserted the wages claimed by plaintiff for the balance of the ninety (90) days were purely prospective, unearned wages not covered by the WPCL. Id. at 464. The Superior Court panel rejected that argument stating the plaintiff doctor would have remained employed during the notice period but for the actions of the defendant to terminate him. See id. at 465. The plaintiff doctor was 17 therefore guaranteed salary and benefits during that period, which post-termination payments are covered by the WPCL. See id. at 465-66. Several other courts have similarly found that payments owed under an employment agreement are wages whether or not prospective at the time of termination. See generally Bowers, 690 F. Supp. at 354-55 (severance pay and option to sell back stock options covered under WPCL definition of "wages"); McKenna, 76 Pa. D.&C.4th at 82 (post-termination wages and benefits pursuant to an employment agreement covered under )APCL definition of "wages"); Goodyear v. Pa. Steel Foundry & Machine Co., 43 Pa. D.&C.4th 285 (Pa. Com. Pl. 1995) (remainder of monthly salary contracted for in employment and non-competition agreement deemed covered under WPCL definition of "wages"). Most notably, in Goodyear, the plaintiff was hired pursuant to an employment agreement and non-compete following acquisition of his company. Id. at 286. The agreement had a five- year term during which time he was to remain as President and chief executive officer. Id. The agreement also provided for monthly payments to him during the term of the agreement. Id. at 287. The initial purchaser was then purchased by another company after which the plaintiff was terminated just two years into his five-year contract. Id. The court held the remaining payments were covered "wages" under the WPCL because the payments were offered to encourage plaintiff to work for the successor company rather than a competitor. Id. at 289-90. The wages were, therefore, compensation for that commitment and earned as a result. Plaintiff, here, should be entitled to compensation for the balance of her guaranteed one year term of employment, plus the minimum ten (10) days for notice of termination pursuant to 18 her employment agreement. She entered the agreement for some of the very same reasons as the plaintiff in Goodyear. Defendant Patterson and Defendant HEG benefited at the time from her entering the agreement because she was taken off the market for other employers and hired to provide valuable services for Defendants. She would have remained employed the same as the plaintiff in Shaer, except for the actions of Defendants. The balance of her wages due under her employment agreement are, therefore, "wages" covered under the WPCL, the same conclusion reached by the courts in Goodyear and Shaer. (3) Defendant Paytime is directly liable under the WPCL as an employer and under the de facto merger doctrine. Next, Defendant Paytime argues it cannot be liable as an "employer" under the WPCL. (Def. Br. at 12.) The WPCL broadly defines "employer" to include "every person, firm, partnership, association, corporation, receiver or other officer of a court of this Commonwealth and any agent or officer of any of the above-mentioned classes employing any person in this Commonwealth." 43 P.S. § 260.2a. Plaintiff pleads that Leroy Ziegler, Defendant Paytime's business manager, was involved in much of the day-to-day decision making for Defendant HEG and Defendant Paytime collected a fee for those services. (Am. Compl. at IN 15a, 25-26, 29-30.) As such, Defendant Paytime became the managing agent for Defendant HEG, which subjected it to direct liability as an employer under the WPCL. (Am. Compl. at ¶ 39.) Defendant Paytime also argues that it cannot be liable under the de facto merger doctrine. (Def. Br. at 13-15.) Defendant first makes the bold argument that a merger never occurred, 19 apparently, because Defendant Patterson did not heed any corporate formalities when he diverted the customers and employees of Defendant HEG to his other corporation. Defendants cannot avoid the de facto merger doctrine simply because a transaction is so incestuous that nothing is formally sold between an owner's corporations. Defendant Paytime cites Fizzano Bros. Concrete Prods. v. 'UN, Inc., 973 A.2d 1016 (Pa. Super. 2009) in support of its position that it cannot be held liable for its predecessors obligations. Fizzano states that Pennsylvania courts consider four factors to determine if a de facto merger has occurred: (1) continuity of ownership; (2) cessation of the ordinary business by, and dissolution of, the predecessor as soon as practicable; (3) assumption by the successor of liabilities ordinarily necessary for the uninterrupted operation of the business; and (4) continuity of the management, personnel, physical location, and the general business operation. Id. at 1020. Quite remarkably, Defendants admit facts in their brief that establish the transaction between Defendant HEG and Defendant Paytime, whether for value or not, meets all four of the Fizzano criteria: (1) Defendant Patterson owns most or all of both corporations (Def. Br. at 2-3); (2) Defendant HEG ceased doing business (Def. Br. at 3); (3) Defendant Paytime assumed the obligations to Defendant HEG's customers and continued to service those customers uninterrupted (Def. Br. at 4); and (4) Defendant Paytime hired the employees of Defendant HEG to continue the business, (Def. Br. at 4), and entered a new lease to stay in the same office space (Def. Br. at 4). Further, Plaintiff pleads throughout her complaint that Defendants' whole strategy was to avoid Defendant HEG's obligations to her under the employment agreement. 20 Finally, Defendant Paytime continues to sell the same service previously offered by Defendant HEG. (Am. Compl. at 146.) Despite Defendants' use of Fizzano, that case supports or even necessitates application of the de facto merger doctrine in the present case. In Fizzano, the appellate panel refused to apply the doctrine for the primary reason that the allegedly merged entities lacked common ownership and the predecessor corporation continued to operate as a functional business. See id. at 1020- 22. Here, quite differently, Defendant Patterson, the common owner of both entities, left Defendant HEG as a mere shell, while Defendant Paytime continued the business uninterrupted. This case much more closely resembles the facts in McKenna, discussed above, in which the court found the de facto merger doctrine applied. Finally, Defendant Patterson's loan to Defendant HEG must be assessed. An argument can be made that, by diverting the business of Defendant HEG to Defendant Paytime, Defendant Patterson deprived himself of the right to be repaid the $100,000 owed to him by Defendant HEG. Therefore, one may claim it makes no rational sense for Defendants to engage in a de facto merger. However, the personal benefit to Defendant Patterson is readily transparent. He could increase income by transferring the human resources support business from Defendant HEG to Defendant Paytime which allowed him to evade the remainder of Plaintiffs salary and negotiate a new lease for Defendant HEG's office space. By shifting his assets, Defendant Patterson was able to trim down and continue on. In the end, he didn't really care whether he got paid out of the HEG pocket or the Paytime pocket because he owned and controlled both. Although the ruse would not make him rich or guarantee success of the human resources support 21 C? business, it was very simple to carry out a "prudent business decision" from an owner's perspective. Defendant Paytime, therefore, remains liable for the wages owed to Plaintiff both as an "employer" under the WPCL and as the successor to a de facto merger with Defendant HEG. (4) Defendant Patterson is directly liable under the WPCL as an employer and as the alter ego of Defendant HEG. Next, Defendant Patterson argues that he cannot be directly liable as an "employer" under the WPCL. (Def. Br. at 15-16.) Federal and state courts in Pennsylvania long ago established that an owner, corporate officer or even a director can be directly liable under the definition of "employer" in the WPCL. See, e.g., Mohney v. McClure, 604 A.2d 1021, 1022 (Pa. 1992) ("[T]he [WPCL] is quite clear that liability for all corporate officers is absolute."); Amalgamated Cotton Garment and Allied Indus. Fund v. Dion, 491 A.2d 123, 124 (Pa. Super. 1985) (same); Bowers, 690 F. Supp. at 354 (E.D. Pa. 1988) (holding that directors may be agents within definition of "employer"); In re Konidaris, 87 B.R. 846, 852-53 (E.D. Pa. Bankr. 1988) (holding the self-proclaimed owner of debtor employer liable as "employer" under WPCL). Defendant Patterson, therefore, may be held individually liable in his numerous corporate capacities. Defendant Patterson then argues he should not be held liable under a theory of piercing the corporate veil. (Def. Br. at 16-17.) Defendant Patterson correctly summarizes the standards for when to pierce the corporate veil in the Defendants' brief, but misapplies facts pled by Plaintiff. 22 First, Plaintiff pleads that Defendant HEG was undercapitalized because it had few or no assets according to Defendants (Am. Compl. IN 27-28.) and, according to Defendant Patterson, existed entirely on debt, "no different than if the corporation had received financing from a bank or other lending institution." (Def. Br. at 16.) Defendant Patterson confuses this debt with at- risk capital of the corporation that would be contributed without any right of repayment. Presumptively, at the time he loaned money to the corporation, Defendant Patterson expected to be repaid like any other creditor. As a result, Defendant HEG was undercapitalized with almost all debt and little or no equity ever contributed to the business. Second, Plaintiff pleads and Defendants confirm in their brief that Defendant HEG's assets (customers and employees) were transferred and subsequently serviced by Defendant Paytime without adherence to any corporate formalities-Defendant Paytime just picked up where Defendant HEG left off. (Am. Compl. ¶¶ 33-34.) Third, Defendant Patterson was sole stockholder, officer, director and primary creditor of Defendant HEG, while also the primary stockholder and sole officer and director of Defendant Paytime, which means his personal financial interests were intertwined between the two corporations. (Def. Br. at 2-3.) Plaintiff also pleads that Defendant Patterson used his own money to buy the office equipment and furniture used by Defendant HEG. (Am. Compl. ¶ 21.) Finally, Plaintiff pleads throughout that Defendant Patterson used his corporations to perpetrate a fraud on her by evading her salary. The present case is analogous to S. T. Hudson Engineers, Inc. v. Camden Hotel Development Assoc., 747 A.2d 931 (Pa. Super. 2000). In Hudson, the appellate panel upheld the 23 • trial court's decision to pierce the corporate veil to hold an individual developer and his two business entities liable for fees owed to an engineering firm for a development project. See id. The individual defendant was the sole officer and sole shareholder of the corporate defendant who was in turn the controlling partner of the partnership defendant. Id. at 933-34. The partnership operated without any formal operating agreement and the individual defendant even paid expenses of the business out of his own pocket at times. Id. The panel found the incestuous nature of the relationship ample reason to pierce the corporate veil. See id. at 935. Similar to the defendant in Hudson, Defendant Patterson exercises control over Defendant HEG and Defendant Paytime. He used his own funds to buy the office and equipment and furniture for Defendant HEG. His entities shared customers and management and eventually Defendant Patterson simply caused Defendant Paytime to take over the business of Defendant HEG in order to evade its contract obligations to Plaintiff. Defendant Patterson, like the individual defendant in Hudson, should be held individually liable on the debts to Plaintiff as a result. For the above reasons, Defendants demurrer to Plaintiff s WPCL claims against all Defendants should be overruled. (5) Plaintiff pleads sufficient facts to establish a claim for civil conspiracy. Next, Defendants argue that Plaintiff s claim for civil conspiracy must fail. (Def. Br. at 17.) Notably, Defendants do not argue that Plaintiff fails to plead adequate facts for her claim. Instead, Defendants set forth numerous unpled facts in an effort to establish that Defendants are mere alter egos of each other, therefore, incapable of conspiring together. (Def. Br. at 18.) For 24 now, this Court must consider only the facts pled by Plaintiff and disregard Defendants' unverified allegations and defenses. Nevertheless, Plaintiff shows the complaint supports her claim for civil conspiracy. A cause of action for civil conspiracy consists of (1) two or more persons acting with a common purpose to do a lawful act by unlawful means or for an unlawful purpose; (2) an overt act done in pursuance of the common purpose; and (3) actual legal damage. Strickland v. Univ. of Scranton, 700 A.2d 979, 987-88 (Pa.Super. 1997); see also Baker v. Rangos, 324 A.2d 498, 506 (Pa. 1974). "[A]bsent a civil cause of action for a particular act, there can be no cause of action for civil conspiracy to commit that act." McKeeman v. Corestates Bank, N.A., 751 A.2d 655, 660 (Pa. Super. 2000) (citing Pelagattie v. Cohen, 536 A.2d 1337, 1342 (Pa. 1987). Affiliated corporations may conspire to commit a tort against another where each corporation is distinct in operations, each has its own management, and each uses its corporate formalities to engage in its own business. Shared Comm. Serv. of 1800-80 JFK Blvd. Inc. v. Bell Atlantic Prop. Inc., 692 A.2d 570, 574 (Pa. Super. 1997). Additionally, a "plaintiff need not aver specifically the time, place or date for a conspiratorial meeting or the precise date on which the conspiracy was entered." Solomon Edwards Group, L.L.C. v. Voranet Corp., 2001 WL 1807886, at *4 (Pa. Com. Pl. 2001) (citing Smith v. Wagner, 588 A.2d 1308, 1312 (Pa. Super. 1991)). Plaintiff pleads the necessary facts to support a cause of action for civil conspiracy. (Am. Compl. ¶¶ 32-38, 60-64.) The unpled facts asserted by Defendants with respect to Defendant Patterson's control over Defendant HEG and Defendant Paytime may establish they are all three one and the same and, therefore, directly liable on Plaintiff s WPCL and breach of contract 25 claims. (Def. Br. at 18.) If that becomes the reality of this case, Defendants may successfully argue that Plaintiff's civil conspiracy claims must fail. If they take contrary positions to shield each from the liability of the other, they may be subject to a civil conspiracy claim in this case. Defendants also object to Plaintiffs claim for punitive damages made with her civil conspiracy claim. (Def. Br. at 19.) "Punitive damages may be awarded for conduct that is outrageous, because of the defendant's evil motive or his reckless indifference to the rights of others." SHV Coal, Inc. v. Continental Grain Co., 587 A.2d 702, 704 (Pa. 1991) (citing Restatement (Second) of Torts § 908(2)) (emphasis in original). Here, Plaintiff pleads that Defendant Patterson perpetrated a scheme for the specific purpose of evading her salary. This is precisely the kind of reckless indifference for the rights of others, together with full knowledge of the harm that will ensue, that justifies punitive damages. Therefore, Plaintiff s claim for punitive damages should not be disturbed. Defendants' demurrer to Plaintiff s civil conspiracy claim should, therefore, be overruled. (6) Plaintiff pleads sufficient facts to establish breach of contract claims against Defendant Patterson and Defendant Paytime. Next, Defendant Patterson and Defendant Paytime demur to Plaintiffs claim for breach of contract against them because they had no contractual privity with her. (Def. Br. at 19-21.) Defendants' objections dovetail with the arguments made against their liability under the WPCL based on theories of piercing the corporate veil and de facto merger, respectively. Defendants' arguments fail for the same reasons set forth above, which do not need to be restated. 26 As supplement to their argument, Defendants assert that it "makes no rational sense" for Defendant Paytime and Defendant HEG to engage in a de facto merger because doing so kept Defendant Patterson from collecting the $120,000 he loaned to Defendant HEG. The argument lacks merit from the start because Defendant Patterson owns both Defendant HEG and Defendant Paytime. Defendant Patterson could minimize his losses by moving the business to Defendant Paytime, thereby avoiding the balance of Plaintiff's $35,000 salary. It makes no difference to him that he would be repaid from Defendant Paytime instead of Defendant HEG. Plaintiff asserts her salary was the driving motive for shifting the business between the two entities because it was the primary cost saved in the transaction. The transaction otherwise appears completely superfluous. Plaintiff pleads adequate facts to establish direct liability for breach of contract against Defendant HEG and Defendant Paytime. Defendants' demurrer to this count should be overruled. (7) Plaintiff pleads sufficient facts to establish a claim for tortious interference with contract. Next, Defendants argue that Plaintiff s claims for tortious interference with contract must fail because Defendants were justified in their actions. (Def. Br. at 21-24.) Again, Defendants do not argue that Plaintiff fails to plead adequate facts for her claim. Instead, Defendants set forth numerous unpled facts in an effort to establish privilege or justification as a defense to the claim. Again, this Court must consider only the facts pled in Plaintiffs complaint and disregard 27 Defendants' unverified allegations and defenses. Nevertheless, Plaintiff addresses the demurrer to dispose of Defendants' arguments. Defendants' "justifications," even if eventually pled and proven, are all for the personal benefit of Defendant Patterson. Defendants even go so far as to again characterize their actions as a "sound business decision" with "no purposeful action on behalf of Paytime" intended to cause harm to the contractual relationship between Plaintiff and Defendant HEG. (Def. Br. at 24.) The court in McKenna, discussed above, held that a similar scheme, whether sound business or not, employed by a successor corporation to evade obligations under an employment contract established a claim for tortious interference with contract against the successor entity. Defendant Patterson's financial well-being is not justification or privilege that protects Defendant Paytime from liability if it interfered with the contract between Defendant HEG and Plaintiff. Plaintiff has pled and Defendants have stated in their brief that Defendant Paytime, albeit at the direction of Defendant Patterson, assumed all of Defendant HEG's customers, hired its employees and took over its office space. (Am. Compl. ¶¶ 74-80; Def. Br. at 24.) Defendant Paytime's actions, if done to acquire Defendant HEG's business and avoid liability for Plaintiff's wages, establish a claim for tortious interference with contract. Defendants' demurrer to Plaintiff s claim for tortious interference with contract should be overruled. (8) Plaintiff pleads sufficient facts to establish a claim for indemnity. Defendants argue they do not have any obligation to indemnify Plaintiff for her losses under the copier lease to Philips Group and the office lease. (Def. Br. at 25-28.) This claim is 28 6 L the least tenable of Plaintiff's claims, but perhaps best demonstrates the nefarious nature of Defendants' conduct from the start of the relationship with Plaintiff. In order to avoid assuming any liability or risk from day one, Defendant Patterson refused to "purchase" assets from Plaintiff with his new corporate entity and only offered her an employment agreement for a guaranteed term. He did, however, cause Defendant HEG, as part of the deal, to assume the payments on Plaintiff s copier lease and office lease. Defendant HEG, in turn, took over both and used them for the business. This he thought allowed him, as he now claims, to use the copier and lease without ever being liable for them if he walked away from his business venture with Defendant HEG. In Pennsylvania, indemnity can arise from express contract, implied contract or by operation of law. See Agere Syst., Inc. v. Advanced Environ. Techn. Corp., 552 F. Supp.2d 515, 519 (E.D. Pa. 2008) (citing Boswell v. Aetna Life Ins. Co., Pa.D. & C.3d. 94, 98 (Pa. Cmmw. 1984). Plaintiff pleads sufficient facts to establish a claim for indemnity by implied contract. She pleads Defendant HEG assumed the copier lease and office lease as part of their agreement when she transferred over her business to Defendant Patterson and Defendant HEG. (Am. Compl. ¶¶ 22-24, 82-90.) Plaintiff pleads that Defendant HEG kept the copier and returned it directly to Philips after closing the business. (Am. Compl. 137-38, 82-90.) Defendants also state in their brief that Defendant Paytime negotiated a new lease with the landlord without indicating that it ever received any consent from Plaintiff. (Def. Br. at 26.) Plaintiff included as an exhibit to her Complaint a letter from Defendant Patterson's attorney indicating his new company would "take over the existing lease in Camp Hill which would absolve you of any 29 6 . 4 ? " . 0 personal liability." (Am. Compl. at ¶ 15b and Exhibit B.) These facts indicate the Defendants exercised control over and treated the copier and office space as their own, which further indicate an implied contract of indemnity to Plaintiff. Defendants demurrer to Plaintiff's claim for indemnity should, therefore, be overruled. (9) Plaintiff pleads sufficient facts to establish a claim for fraudulent conveyance. Finally, Defendants argue that Plaintiff failed to sufficiently plead a claim for fraudulent conveyance under the Pennsylvania Uniform Fraudulent Transfers Act, 12 P.S. §§ 5101-5110 ("PUFTA") because no transfer of assets or obligations occurred. Plaintiff brings a fraudulent conveyance claim in the alternative in the event she does not recover on her multiple other claims. Plaintiff pleads Defendant HEG transferred active customer accounts and employees to Defendant Paytime. (Am. Compl. at 33-34). Defendants argue that no transfer occurred because the transferred assets had no value in the eyes of Defendants. (Def. Br. at 28-30.) First, the value of the transferred assets is unknown at this time, so any decision based on a lack of value would be premature. The assets were admittedly transferred from an insolvent entity in Defendant HEG to Defendant Paytime. The assets were not excludable under Section 5101 of PUFTA because there was no valid lien secured by the assets; the property was not exempt under general bankruptcy law; nor were the transferred assets entireties property. Moreover, Defendants' assertions about value immediately beg the question why Defendant Paytime retained the accounts if they were not valuable assets or why Defendant Paytime had to 30 6 .4 i • • hire additional staff (coincidentally, all the staff except Plaintiff), if it was doing no more than servicing shared accounts. The Defendants' arguments plainly lack merit from the start. Plaintiff has pled adequate facts to support her fraudulent transfer claim. Fraudulent transfers may be established under PUFTA in two ways. Section 5105 applies to present creditor claims and requires that either (i) the transfer occurred when the debtor was insolvent or (ii) that the debtor did not receive a reasonably equivalent value in exchange and the debtor was insolvent at the time or became insolvent as a result. A broader standard under Section 5104 applies to both present and future creditors and requires actual intent to delay, hinder or defraud the creditor at the time of the transfer. Section 5104(b) sets forth eleven statutory factors that may be considered to determine fraudulent intent: (1) the transfer or obligation was to an insider; (2) the debtor retained possession or control of the property transferred after the transfer; (3) the transfer or obligation was disclosed or concealed; (4) before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit; (5) the transfer was of substantially all the debtor's assets; (6) the debtor absconded; (7) the debtor removed or concealed assets; (8) the value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred; (9) the debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred; (10) the transfer occurred shortly before or shortly after a substantial debt was incurred; and (11) the debtor transferred the essential assets of the business to a lienor who transferred the assets to an insider of the debtor. 31 4 . * "It , • 12 P.S. § 5104(b). Not all eleven factors have to be present to find fraudulent intent. See Tiab Comm. Corp. v. Keymarket ofNEPA, Inc., 263 F.Supp.2d 925, 935 (M.D.Pa. 2003). Fraudulent intent may be inferred from all the facts and circumstances surrounding the conveyance. See id. Plaintiff has pled sufficient facts, and Defendants have admitted additional facts in their brief, to establish a fraudulent transfer under Section 5104 or a fraudulent transfer with intent to defraud under Section 5105. The pleadings and briefs so far contains the following: Defendant HEG was insolvent, (Def. Br. at 29, Am. Compl. 135); Defendant HEG did not receive any consideration in return for the transfer, (Def. Br. at 29); the transfer was to an insider or an entity under common control of Defendant Patterson, (Def. Br. At 2-3); the transfer was literally all of Defendant HEG's assets, (Am. Compl. at 33-34); the transfer occurred within months after a substantial debt in the form of Plaintiffs employment contract was incurred, (Am. Compl. at Ex. A); the debtor absconded to the extent Defendant HEG was left as a shell corporation that ceased to operate. Therefore, Plaintiff has pled adequate facts to establish a claim for fraudulent conveyance against the Defendants. Defendants' demurrer to Plaintiff s claim should, therefore, be overruled. 32 6 _ 0 V. CONCLUSION For all the reasons set forth above, Defendants' preliminary objections to venue and defendants' demurrer to Plaintiff s claims should be overruled. Respectfully submitted, MILLER, POOLE & LORD, LLP Date: Andrew J. Miller, Esquire Pa. Bar No. 84012 137 East Philadelphia Street York, PA 17401 (717) 845-1524 33 s * t. 0 CERTIFICATE OF SERVICE AND NOW, the undersigned hereby certifies that I have, on the date written below, served a true and correct copy of the foregoing Brief in Opposition to Defendant's Preliminary Objections by regular mail addressed to: Michael, L. Bangs, Esquire BANGS LAW OFFICE 429 South 18" Street Camp Hill, PA 17011 Date:? J MILLER, POOLE & LORD, LLP 17 stina K. Webb, Paralegal r-J C =o ` N N 34 MICHAEL L. BANGS, ESQUIRE ATTORNEY FOR DEFENDANTS I.D. No. 41263 429 South 18'' Street Camp Hill, PA 17011 (717) 730-7310 LAURA FRAZIER, ) IN THE COURT OF COMMON PLEAS Plaintiff ) OF YORK COUNTY, PENNSYLVANIA vs. ) NO.2009-SU-004091-01 HUMAN ELEMENT GROUP, INC., ) CIVIL ACTION - LAW PAYTIME HARRISBURG, INC. and ) a NATHAN PATTERSON, ) JURY TRIAL DEMANDED Defendants ) DEFENDANTS' BRIEF IN SUPPORT OF PRELIMINARY OBJECTIONS TO PLAINTIFF'S AMENDED COMPLAINT • TABLE OF CONTENTS r1 Headin Page Nos. 1. PROCEDURAL HISTORY 2. STATEMENT OF FACTS 2-5 3. ARGUMENT REGARDING VENUE 5-10 Can Plaintiff ignore the forum selection clause in her employment agreement that requires disputes to be litigated in Cumberland County? Answer: No. 5-10 Should Plaintiff be permitted to pursue this action in York County when all the transactions or occurrences that give rise to the cause of action occurred in Cumberland County? Answer: No. 5-10 4. ARGUMENT REGARDING COUNT I (Violation of Pennsylvania Wage Payment Collection Law versus all Defendants) 10-17 Does the Wage Payment and Collection Law apply to wages that have not yet been earned but are claimed to be due under a breach of contract? Answer: No. 10-12 Can Paytime be subject to liability under the WPCL when it never employed Plaintiff? Answer: No. 12-15 Is Plaintiff permitted to ignore the corporate setup of HEG and assess individual liability upon Patterson by piercing the corporate veil of HEG? Answer: No. 15-17 5. ARGUMENT REGARDING COUNT II (Civil Conspiracy versus all Defendants) 17-19 Can HEG, Paytime and Patterson engage in a civil conspiracy when Patterson is the sole or primary stock holder, sole director and sole officer of both entities? Answer: No. • • 6. ARGUMENT REGARDING COUNT III (Breach of Contract versus all Defendants) 19-21 Should Plaintiff be permitted to pursue a breach of contract claim against Patterson and Paytime when she had no contract with either one? Answer: No. 7. ARGUMENT REGARDING COUNT IV (Tortuous Interference with Contractual Relations against Defendant Paytime) 21-24 If Paytime did not interfere with any contract between Plaintiff and HEG, can it be held liable for tortuous interference with contractual relations? Answer: No. 8. ARGUMENT REGARDING COUNT V (Indemnity against all Defendants) 25-28 Does Pennsylvania recognize an independent cause of action for indemnity, especially where Plaintiff has incurred no damages? Answer: No. 9. ARGUMENT REGARDING COUNT VI (Fraudulent Conveyance against all Defendants) 28-30 If there was never any transfer of assets or obligations, can a fraudulent conveyance occur? Answer: No. 10. CONCLUSION 30-32 • PROCEDURAL HISTORY • Plaintiff initially filed a five-count Complaint against Human Element Group, Inc. ("HEG"), Paytime Harrisburg, Inc. ("Paytime") and Nathan Patterson ("Patterson"). Defendants subsequently filed Preliminary Objections to all counts. Plaintiff filed an Amended Complaint. The Amended Complaint is comprised of the following counts: Count I - Violation of Pennsylvania Wage Payment Collection Law versus all Defendants Count II - Civil Conspiracy versus all Defendants Count III - Breach of Contract versus all Defendants Count IV - Tortuous Interference with Contractual Relations against Defendant Paytime Count V - Indemnity against all Defendants Count VI - Fraudulent Conveyance against all Defendants All Defendants have filed Preliminary Objections asserting improper venue; demurs individually and collectively to Count I (Violation of Pennsylvania Wage Payment and Collection Law), Count II (Civil Conspiracy), Count V (Indemnity) and Count VI (Fraudulent Conveyance). Defendants Paytime and Patterson filed demurs to Count III (Breach of Contract). Defendant Paytime filed a demur to Count IV (Tortuous Interference with Contractual Relations). For sake of clarity, this brief will first address the objection to venue and then will track the various Counts of Plaintiff's Amended Complaint. • STATEMENT OF FACTS • Plaintiff has currently filed a six-count Amended Complaint against Human Element Group, Inc. ("HEG"), Paytime Harrisburg, Inc. ("Paytime) and Nathan Patterson ("Patterson"). The causes of action arise solely from an Employment Agreement entered into by Plaintiff and HEG dated July 1, 2008 which is attached and marked as Exhibit A to Plaintiff's Complaint ("Agreement"). Neither Paytime nor Patterson were parties to the Agreement nor did they ever employ Plaintiff. The essence of Plaintiff's Complaint is that she is due $35,000.00 under the Agreement with HEG. Plaintiff then morphs that underlying claim in a convoluted fashion by filing additional, multiple counts under various theories in an attempt to bring Paytime and Patterson into what is essentially a breach of contract claim. Plaintiff improperly commenced this action in York County even though the parties in the Agreement specifically had a forum selection clause that required them to resolve all disputes in Cumberland County, Pennsylvania. Moreover, all the transactions or occurrences that give rise to any of the counts in the Complaint occurred in Cumberland County. Paytime is a Pennsylvania corporation with its principal place of business in Cumberland County, Pennsylvania that provides payroll services to various clients in the Central Pennsylvania region. Patterson is the owner of all but some nominal shares of the corporation; is its only officer and Board of Director. Patterson resides in Cumberland County. 2 • • Paytime had in the past referred some of its clients to Frazier who previously was the owner of a company called Source Point, LLC and later changed to Human Element Group, LLC. Plaintiff, through her companies, provided human resource consulting for business entities. In the early part of 2008, Patterson and representatives of Paytime became aware that Frazier through her companies was struggling financially and was incurring significant losses in her business. Since Paytime had referred a number of its clients to Frazier's entities, it was concerned about the clients receiving those human resource consulting services if Frazier's business failed. Patterson decided to set up another corporation and named it Human Element Group, Inc. ("HEG"). Patterson is the sole shareholder, director and officer. HEG entered into an Employment Agreement with Frazier (Exhibit A to Plaintiff's Complaint). Patterson formed and funded HEG and employed Frazier based upon Frazier's representations as to her ability to run a profitable human resource business. HEG commenced operations on July 1, 2008. Within several months of operating, it became quickly apparent to Patterson that Frazier not only misstated the projections for the company but also her abilities to run the company in a profitable manner. Patterson decided that he would shut down HEG as of December 31, 2008, roughly six months after it started and after he personally loaned the company in excess of $120,000.00. Patterson personally notified Frazier of his decision to shut down the company and followed up that with a correspondence confirming that he was shutting down the business. 3 • E After shutting down HEG, Paytime hired several of HEG's former employees. Its purpose was to ensure that Paytime's clients would not suffer an interruption of services by the ending of HEG's operations. Further, Paytime believed that those employees could be used in Paytime's operations as well. When HEG started its operation in July, 2008 Patterson decided to locate it at 355 Gettysburg Road, Suite 200, Camp Hill, Pennsylvania as an accommodation to Frazier and because Paytime had no additional space at its location. Frazier's company, Source Point, LLC had signed a five-year lease at 355 Gettysburg Road commencing on January 1, 2008. Frazier did not personally guarantee that lease. When HEG started operating at 355 Gettysburg Road, it made monthly lease payments due directly to the landlord rather than subleasing the space from Frazier's former company, SourcePoint, LLC, which no longer was in operation. HEG stopped making lease payments after it shut down on December 31, 2008. Subsequently, Paytime began negotiations with the landlord to lease the space formerly occupied by HEG. Paytime, as indicated, was in need of additional space and being familiar with the location, thought it desirable to lease the location moving forward. The landlord and Paytime subsequently entered into a lease dated 12 March 2009. The landlord has not pursued Frazier's former LLC for any deficiency (and if it did, Source Point, LLC is essentially defunct). The landlord has not pursued Frazier for any deficiencies since she did not personally guarantee the lease.' ' The landlord was eager to enter into the lease with Paytime since its former tenant, SourcePoint, LLC (Frazier's company), was out of business, making it impossible to collect the remaining rent due. 4 • • Frazier had personally guaranteed a copier lease to the Phillips Group that was used by Source Point, LLC. When HEG began operations, and solely as an accommodation to Frazier, it paid the lease payments on the copier from July, 2008 to January, 2009. When it ceased operations, the Phillips Group was notified that no further lease payments would be made and that the copier was available to be picked up. According to Plaintiff's Complaint, Plaintiff was able to negotiate a release of her personal guarantee on the lease with the Phillips Group for $1,500.00 for the unpaid future lease payments due. However, Plaintiff actually benefited by HEG paying those lease payments for a period of six months. Frazier earned a generous salary from HEG for a period of six months until it shut down. When she entered into a contract with HEG, she was on the cusp of shutting her own business because of significant losses and was looking for other employment. Paytime, following the shutting down of HEG, has provided human resource services to its clients who were also customers of HEG so as not to cause a lapse in service to its clients. VENUE STATEMENT OF QUESTIONS INVOLVED CAN PLAINTIFF IGNORE THE FORUM SELECTION CLAUSE IN HER EMPLOYMENT AGREEMENT THAT REQUIRES DISPUTES TO BE LITIGATED IN CUMBERLAND COUNTY? SUGGESTED ANSWER: NO. 5 • • SHOULD PLAINTIFF BE PERMITTED TO PURSUE THIS ACTION IN YORK COUNTY WHEN ALL THE TRANSACTIONS OR OCCURRENCES THAT GIVE RISE TO THE CAUSE OF ACTION OCCURRED IN CUMBERLAND COUNTY? SUGGESTED ANSWER: NO. ARGUMENT The essence of Plaintiff's Complaint arises from the Agreement she entered into with HEG. There is no independent cause of action separate and apart from damages that she claims to have incurred from the non-payment of compensation to which she suggests she is entitled to receive under the terms of the Agreement. The Agreement has a very specific forum selection clause which states as follows: 13. All questions concerning the execution of this Agreement and the rights and liabilities of the parties hereunder shall be decided in accordance with the laws of the Commonwealth of Pennsylvania. Employee hereby irrevocably submits to the personal jurisdiction of the Court of Common Pleas of Cumberland County, Pennsylvania. Employee waives any objection to the venue and to the personal jurisdiction of the Court of Common Pleas of Cumberland County. (emphasis added) (See Paragraph 13 of Exhibit A attached to Plaintiff's Complaint) The forum selection clause in this Agreement is clear and unambiguous and requires this matter to be heard in Cumberland County. It is a clear principle of Pennsylvania law that forum selection clauses are generally held to be valid and enforceable. See, e.g., Central Contracting Co. v. C.E. Youngdahl & Co., 418 Pa. 122, 209 A.2d 810 (1965); Patriot Commercial Leasing Co., Inc. v. Kremer Restaurant Enterprises, LLC, 2006 PA Super 371, 915 A.2d 647 (2006). Forum selection clauses will be 6 0 • upheld "when the parties have freely agreed that litigation shall be conducted in another forum and where such agreement is not unreasonable at the time of litigation." Central Contracting at 133, 209 A.2d at 816. Furthermore, such a clause will be considered unreasonable "only where its enforcement would, under all circumstances existing at the time of litigation, seriously impair [a party's] ability to pursue his cause of action." Id. The modern trend is to uphold forum selection clauses when they are clear and unambiguous. Patriot Commercial Leasing at 650 (further citations omitted). Analogously, arbitration provisions are routinely upheld, and "agreements to arbitrate are essentially forum selection clauses." Huegel v. Mifflin Constr. Co., 2002 PA Super 94, 796 A.2d 350, 357 (2002), uQ oting, Cunningham v. Fleetwood Homes of Georgia, 253 F.3d 611, 617 (11O' Cir. 2001). As stated, the parties unambiguously and clearly signed an agreement with a forum selection clause, the forum being Cumberland County. Plaintiff may argue that this clause did not provide exclusive jurisdiction, rather it was merely a permissive forum selection clause. This argument is meritless. As indicated in the wording of the clause at issue in the instant case, it confers mandatory exclusive jurisdiction in Cumberland County by the choice of words "irrevocably submits to the personal jurisdiction of the Court of Common Pleas of Cumberland County," and "waives any objection to the venue and personal jurisdiction of the Court of Common Pleas of Cumberland County." It is axiomatic in general contract law that, wherever possible, meaning should be given to every provision in a contract. See, e.g., Gaffer Ins. Co., LTD v. Discover Reinsurance Co., 7 • 2007 PA Super 339, 936 A.2d 1109, 1113 (2007)2. In order to give meaning to both of the above provisions, the only interpretation for both parties is that both agree to jurisdiction and venue to rest exclusive in Cumberland County. Clearly, the provision was mandatory, and the interpretation as such gives effect to both of the clauses contained within. Even ignoring the express language of the agreement, venue properly lies in Cumberland County. According to the Rules of Civil Procedure, venue for an action against a corporation lies only in: (1) The county where its registered office or principal place of business is located; (2) A county where it regularly conducts business; (3) The county where the cause of action arose; (4) A county where a transaction or occurrence took place out of which the cause of action arose, or (5) A county where the property or part of the property which is the subject matter of the action is located provided that equitable relief is sought with respect to the property. Pa. R.C.P. No. 2179. 2 See also, Sterling Forest Associates v. Barnett-Range Corp., 840 F.2d 249, 251 (4th Cir. 1988), "[I]t is a well established principle of contract constructions that provisions of the parties' agreement... which... are knowingly incorporated into a contract should not be treated as meaningless." 8 Additionally, venue against an individual is only proper in a county where the individual may be served, in which the cause of action arose, or where a transaction or occurrence took place out of which the cause of action arose. Pa. R.C.P. No. 1066. Cumberland County is the only proper venue in this case. HEG and Paytime have their registered office and principal place of business in Cumberland County.3 Patterson resides in Cumberland County. Cumberland County is where the cause of action arose, namely the alleged breach of the Agreement between Plaintiff and HEG. The alleged breach occurred when HEG shut down its operations in Camp Hill, Pennsylvania. The alleged actions by Paytime and Patterson in fostering that shut down all occurred in Cumberland County. Simply put, there was nothing in York County that forms a basis of any of the Complaint filed against any of the Defendants in this case. Additionally, this Court should look very carefully at the sole allegation in Plaintiff's Complaint which she alleges to establish venue in York County. Paragraph 6 of the Complaint under the subheading "Venue" says as follows: 6. Jurisdiction and venue are proper in York County because Plaintiff is a resident of York County, Pennsylvania, and Defendants maintain regular business contacts in York County, Pennsylvania. (See Paragraph 6, Exhibit A attached to Plaintiff's Complaint) s Plaintiff, seemingly in an attempt to confer venue in York County, states in Paragraph 2 of her Complaint inaccurately that HEG was "originally at 2556 Eastern Boulevard, York, Pennsylvania." Plaintiff knows full well that HEG's registered office is 5070 B Ritter Road, Suite 115, Mechanicsburg, Pennsylvania and only operated at 355 Gettysburg Road, Suite 200, Camp Hill, Pennsylvania. 9 0 1 . . 1 9 Interestingly, Plaintiff cites no other reasons for venue to occur in York County. While Paytime has some business clients in York County and HEG had business clients in York County, Patterson has no business contacts or clients in York County at all. The fact that Paytime has and HEG had some business clients in York County is not enough in and of itself to establish venue in this case. As far as Patterson is concerned, venue is not established at all. Interestingly, Plaintiff under the Venue subpart of her Complaint makes no averment that either the cause of action arose in York County or that a transaction or occurrence took place out of which the cause of action arose in York County. This actually is an admission by Plaintiff that her causes of action all arose in Cumberland County and that all transactions or occurrences which give rise to the causes of action occurred in Cumberland County. Based upon this admission alone, the Court should transfer this matter to Cumberland County.4 COUNTI VIOLATION OF PENNSYLVANIA WAGE PAYMENT AND COLLECTION LAW (VERSUS ALL DEFENDANTS) STATEMENT OF QUESTION INVOLVED DOES THE WAGE PAYMENT AND COLLECTION LAW APPLY TO WAGES THAT HAVE NOT YET BEEN EARNED BUT ARE CLAIMED TO BE DUE UNDER A BREACH OF CONTRACT? SUGGESTED ANSWER: NO. a Plaintiff makes a misguided attempt in its Amended Complaint to focus on where she alleges the contract to have been negotiated as forming the basis for venue in York County. This is not relevant to determine the proper forum in this case. Plaintiff alleges that it was the actions of all the Defendants in shutting down HEG thus preventing HEG from paying Plaintiff under the Agreement, that give rise to her various causes of action. There is nothing in the formation of the contract that she alleges has caused her to suffer any harm. 10 ARGUMENT The purpose of the Wage Payment and Collection Law ("WPCL") is to enforce payment of wages and compensation earned by employees and withheld by employers. Kafando v. Erie Ceramic Arts Co., 2000 Pa. Super. 377; 764 A.2d 59 citing Hartman vs. Baker, 2000 Pa. Super. 140, 136 A.2d 347. The WPCL does not create an additional cause of action against an employer for damages that may arise under a breach of an employment contract. A review of the definitions under the WPCL is instructive in the resolution of the matter at hand. The WPCL has defined wages as follows: "Wages" includes all earnings of an employee regardless of whether determined on time, task, piece, commission or other method of calculation. The term "wages" also includes fringe benefits or wage supplements whether payable by the employer from his funds or from amounts withheld from the employee's pay by the employer. 43 P.S. Section 260.2(a) The WPCL clearly states when an employer is liable for wages or compensation to an employee under Section 5(a) as follows: a. Separated Employees. Whenever an employer separates an employee from the payroll, or whenever an employee quits or resigns his employment, the wages or compensation earned (emphasis added) shall become due and payable not later than the next regular payday of his employer on which such wages would otherwise be due and payable. If requested by the employee, such payment shall be made by certified mail. ... 43 P.S. Section 260.5(a) In this case, Plaintiff was paid all wages and compensation, including fringe benefits that she had earned, through December 31, 2008, the date that the company shut down. Obviously 11 Plaintiff did not work for HEG after December 31, 2008 and therefore did not earn any wages or compensation after that date from HEG. Plaintiff's claim in this case is that HEG breached its employment contract by not continuing to employ her after December 31, 2008 because the agreement was for one year. Whether or not HEG breached the Employment Agreement by failure to continue to employ her does not give Plaintiff a separate cause of action for a claim under the WPCL since HEG has paid to Plaintiff all compensation which she earned up to the date that HEG stopped operating. The WPCL simply cannot apply to compensation which Plaintiff might have earned had she continued with her employment with HEG and followed all the terms and conditions of the Employment Agreement through its initial one year term. Plaintiff's attempt to greatly expand the reach of the WPCL far beyond its stated purpose is misplaced and should be denied. This Court should grant all Defendants' demur to Count I in that the WPCL is simply not applicable in this breach of contract case. CAN PAYTIME BE SUBJECT TO LIABILITY UNDER THE WPCL WHEN IT NEVER EMPLOYED PLAINTIFF? SUGGESTED ANSWER: NO. ARGUMENT Plaintiff expresses two alternate theories to assess liability against Paytime under the WPCL. First Plaintiff claims that Paytime is liable the WPCL because it was "her employer" as defined under the Act because it charged a management fee to HEG when HEG was in operation. This argument is meritless. The WPCL defines employer as follows: 12 • s "Employer" includes every person, firm, partnership, association, corporation, receiver or other officer of a court in this Commonwealth and any agent or officer of the above-mentioned classes employing any person in the Commonwealth. 43 P.S. Section 260.2(a) By definition, Paytime was not her employer. HEG was her employer. Therefore, by definition alone, this demur should be sustained and the claim against Paytime should be dismissed. Plaintiff seems to be arguing that because Paytime charged HEG a management fee for back office administrative services that it somehow makes Paytime an employer or responsible for HEG's employees. There is nothing in the WPCL or any case law that would expand the definition to include Paytime under this factual scenario. More importantly, the Agreement itself makes it clear that it was Plaintiff, not Paytime, who was responsible for managing all of HEG's employees (See attachment A to Exhibit A of Plaintiff's Complaint). Plaintiff herself was responsible for management of all facets of HEG's business. She was never employed by Paytime nor did Paytime have any control over any of HEG's operations. Plaintiff's sole contractual involvement with Paytime was to work with Paytime's management in a focus group to develop a business plan for HEG. Participation by Paytime's management in a joint focus group does not make Paytime Plaintiff's employer under the WPCL. The second theory that Plaintiff propounds is that Paytime somehow is responsible for all of HEG's obligations under the theory of "de facto merger." Even assuming that HEG has 13 exposure to liability under the WPCL, this does not extend the WPCL to Paytime. More importantly, the "de facto merger" has no application in this case whatsoever. The "de facto merger" doctrine is an equitable principle that is used to overcome the general rule under Pennsylvania law that once a company sells all or substantially all of its assets to another company, the latter company is not responsible for the debts of the transferor simply because it acquired the transferor's property. Fizzano Bros. Concrete Prods. v. XLN, Inc., 2009 PA Super 898, 973 A.2d 1016, 1020 (2009), citing Continental Insurance Compm vs. Schneider, Inc., 582 PA 591, 599, 873 A.2d 1286, 1291 (2005). The "de facto merger" doctrine then is an exception to this general rule under Pennsylvania law and only applies when it can be established that a successor corporation has been formed merely to continue the former corporation's operations or to escape the former corporation's liabilities. Id. The very essence of the de facto merger concept is that there was in fact a merger. A merger by its terms, in the corporate context, means that there was a sale of the assets of one corporation to the other. There was never a sale of the assets of HEG to Paytime. Significantly, Plaintiff has not alleged any sale occurred and that alone defeats Plaintiff's "de facto merger" claim. Paytime is a payroll company that existed before and after HEG was formed and ceased doing business. Plaintiff's sole basis for claiming that Paytime is liable under the de facto merger doctrine appears to be based upon a sweeping allegation under Paragraph 34. Those 14 • • allegations, even if accepted, do not form the basis for a claim under the WPCL based upon a de facto merger. IS PLAINTIFF PERMITTED TO IGNORE THE CORPORATE SETUP OF HEG AND ASSESS INDIVIDUAL LIABILITY UPON PATTERSON BY PIERCING THE CORPORATE VEIL OF HEG? SUGGESTED ANSWER: NO. ARGUMENT Plaintiff s attempt to assess individual liability against Patterson on the theory of "piercing the corporate veil" is based upon two sweeping allegations in her Complaint (Paragraphs 28 and 53). These averments simply do not provide a legal basis to continue a claim against Patterson individually on this theory. Pennsylvania retains a strong presumption against piercing the corporate veil. Fletcher- Harley Corp. vs. Szymanski, 2007 PA Super 310, 936 A.2d 87 (2007), citing Lumax Industries v. Aultman, 543 Pa. 38, 669 A.2d 893, 895 (Pa. 1995). In general, a corporation is regarded as an independent entity even if its stock is owned entirely by one person. Id. However, in deciding whether the corporate veil should be pierced, the general standard is as follows: The legal fiction that a corporate is a legal entity separate and distinct from its shareholders was designed to serve convenience and justice,... and will be disregarded whenever justice or public policy require and where rights of innocent parties are not prejudiced nor the theory of the corporate entity rendered useless .... We have said that whenever one in control of a corporation uses that control, or uses the corporate assets, to further his or her own personal interest, the fiction of the separate corporate identity may properly be disregarded. In deciding whether to pierce the corporate veil, courts are basically concerned with determining if equity requires that the shareholders' traditional insulation 15 from personal liability can be disregarded and with ascertaining if the corporate form is a sham, constituting a fagade or the operations of the dominant shareholder. Thus, we inquire, inter alia, whether corporate formalities have been observed and corporate records kept, whether officers and directors other than the dominant shareholder himself actually function, and whether the dominant shareholder has used the assets of the corporation as if they were his own. Fletcher-Harlee Corp. at 96, quoting, The Village at Camelback Property Owners Association, Inc. v. Carr et al. ("The Village"), 371 Pa. Super. 452, 538 A.2d 528 (Pa. Super 1988). In summarizing the law, the Fletcher-Harlee Corp. court noted that the following factors are particularly considered: (1) Undercapitalization; (2) Failure to adhere to corporate formalities; (3) Substantial intermingling of corporate and personal affairs, and (4) Use of the corporate form to perpetrate a fraud. Fletcher-Harlee Corp. at 100-101. The court added that it also must be considered, after an analysis of the above factors, whether equity requires that the shareholders' traditional insulation from personal liability be disregarded to prevent an injustice. Id. at 101. An analysis of the above factors in the instant case reveals that there is no basis to pierce the corporate veil and proceed against Patterson personally. Contrary to the assertions of Plaintiff, HEG was not undercapitalized, rather it was fully capitalized in order to pay its debts. Patterson personally loaned the corporation in excess of $120,000; no different than if the corporation had received financing from a bank or other lending institution. Additionally, all corporate formalities were recognized; it was a registered business in Pennsylvania and adhered to all corporate formalities in its set up and operation. Patterson did not commingle his affairs nor is there any allegations that he did so. The fact that he loaned the corporation in excess of 16 $120,000 is evidence itself that there was not a commingling; rather there was a separation between himself and the corporation. Finally, there is as absolutely no allegation that HEG was utilized to perpetuate a fraud. A full and complete reading of Plaintiff's Complaint fails to set forth sufficient allegations that would allow this claim to move forward against Patterson on a theory of piercing the corporate veil. Consequently, Plaintiff s attempt to assess liability under the WPCL against Patterson on the theory of piercing the corporate veil should be prevented and this Count should be dismissed. COUNT II CIVIL CONSPIRACY (VERSUS ALL DEFENDANTS) STATEMENT OF QUESTIONS INVOLVED CAN HEG, PAYTIME AND PATTERSON ENGAGE IN A CIVIL CONSPIRACY WHEN PATTERSON IS THE SOLE OR PRIMARY STOCK HOLDER, SOLE DIRECTOR AND SOLE OFFICER OF BOTH ENTITIES? SUGGESTED ANSWER: NO. ARGUMENT To prove a civil conspiracy, the evidence must show that "two or more persons combined or agreed with intent to do an unlawful act or to do an otherwise lawful act by unlawful means." Thompson Coal Co. v. Pike Coal Co., 488 Pa. 198, 211, 412 A.2d 466, 472 (1979) (further citations omitted). Proof of malice, i.e., an intent to injure, is essential to a claim of civil 17 conspiracy. Id. This intent must be absent justification; justification in pursuing one's own business interests is sufficient justification to negate an intent to injure. Id. Additionally, a conspiracy requires at least two conspirators, and there is no "legal or rational basis" to hold that a person could conspire with an entity of which he is sole stockholder, director and officer. Id. at 213, 412 A.2d at 473 (further citations omitted). First, in regard to Patterson, he was the sole stockholder, director and officer of HEG. Therefore, under the Thompson holding, it is impossible for him to conspire with himself and therefore the claim of conspiracy must be dismissed as it relates to Patterson. In regard to Paytime, a similar analysis is applicable. Patterson is the sole director, sole officer and majority and controlling shareholder of the corporation (Patterson owns all but a nominal number of shares given to some key employees). As such, Paytime cannot conspire with HEG since Patterson is the sole stock holder, sole director and sole officer of that corporation. Additionally, there is a complete absence of malice. HEG ceased operations and as such, Plaintiff's employment with HEG stopped when HEG closed its doors. It was Patterson, not Paytime, who decided to shut down HEG. It was Patterson, not Paytime, who loaned HEG in excess of $120,000. Patterson decided to stop incurring significant losses in an entity that couldn't cover its costs. Patterson clearly made a sound business decision to stop incurring those losses and was certainly justified in taking the action that he did. 18 • 1] This is yet another attempt by Plaintiff to create legal theories to try and bring in Paytime and Patterson as additional defendants in a case that is, at best, a claim for breach of contract against HEG alone. This Court should not countenance to this type of shotgun approach and should dismiss this claim entirely. One final note. Plaintiff inserts in Paragraph 51 a gratuitous request for punitive damages yet makes no averments that, if proven, would allow this Court to assess punitive damages. Absent a specific pleading that sufficiently sets out facts, if proven, that punitive damages are permitted, this request should be dismissed. COUNT III BREACH OF CONTRACT (VERSUS ALL DEFENDANTS) STATEMENT OF QUESTIONS INVOLVED SHOULD PLAINTIFF BE PERMITTED TO PURSUE A BREACH OF CONTRACT CLAIM AGAINST PATTERSON AND PAYTIME WHEN SHE HAD NO CONTRACT WITH EITHER ONE? SUGGESTED ANSWER: NO. ARGUMENT Plaintiff has filed a breach of contract claim against all three Defendants: HEG, Paytime and Patterson individually. While Plaintiff did have a contract with HEG, she did not have any contractual relationship with Paytime or Patterson. The elements of a breach of contract claim are: (1) the existence of a contract, including its essential terms; (2) a breach of a duty imposed by the contract; and (3) resultant damage. Pittsburgh Constr. Co. v. Griffith, 2003 PA Super 374, 19 0 . 1. 1 0 834 A.2d 572, 580 (2003) (further citations omitted). Thus, it is axiomatic that the most essential element of a breach of contract claim is the existence of a contract, which Plaintiff did not have with either Paytime or Patterson. Plaintiff asserts that Patterson is liable individually for a breach of contract despite no contractual relationship with Plaintiff under the theory of piercing the corporate veils. As stated previously, this claim is completely without merit. HEG was a separate and distinct company and adhered to all corporate formalities. It was capitalized by a loan from Patterson to the company. Patterson never commingled his personal affairs with HEG as clearly evidenced by the fact that he had a loan directly from himself to the corporation. Most importantly, HEG was never formed to perpetuate a fraud; rather, HEG was formed in the hopes of it being a successful corporate entity. Unfortunately, HEG failed and after loaning the company in excess of $120,000 of his personal funds, Patterson made a very prudent business decision which was to simply close the doors of HEG. Next Plaintiff tries to assert a breach of contract claim against Paytime based upon the de factor merger argument 6. As stated, the de facto merger doctrine is an equitable principle that can only be found to overcome the corporate setup if it can be shown that the purpose of the merger was to continue the former corporation's operations to escape the former corporation's liabilities. In reviewing all the allegations of Plaintiff's Complaint, it is clear that that did not occur in this case. s The analysis stated on Pages 16 through 18 are incorporated herein but will not be restated. 6 The analysis stated on Pages 15 and 16 is incorporated herein but will not be restated. 20 Plaintiff would have this Court believe that HEG shut down and Paytime hired some of its employees for the sole reason to avoid payment of the amount claimed due Plaintiff by HEG. The amount claimed is $35,000. The biggest creditor, however, of HEG was Patterson himself who had loaned the company in excess of $120,000. It makes no rational sense that Paytime and HEG would be involved in a "de facto merger" when that de facto merger would in fact keep Patterson from ever collecting on the loan. The claim that there was a de facto merger in this case is ludicrous and the Court should not permit Plaintiff to pursue a breach of contract claim against Paytime on this theory. COUNT IV TORTUOUS INTERFERENCE WITH CONTRACTUAL RELATIONS (VERSUS PAYTIME ALONE) STATEMENT OF QUESTIONS INVOLVED IF PAYTIME DID NOT INTERFERE WITH ANY CONTRACT BETWEEN PLAINTIFF AND HEG, CAN IT BE HELD LIABLE FOR TORTUOUS INTERFERENCE WITH CONTRACTUAL RELATIONS? SUGGESTED ANSWER: NO. ARGUMENT The elements of a cause of action for intentional interference with contractual relations are as follows: 1) The existence of a contractual relation between the complainant and a third party; 2) Purposeful action on the part of the defendant, specifically intended to harm the contractual relation; 21 0 .11, 0 3) The absence of privilege or justification on the part of the defendant; and 4) The occasioning of actual legal damage as a result of the defendant's conduct. Reading Radio, Inc. v. Fink, 833 A.2d 199, 211 (Pa. Super. 2003) (further citations omitted). A privilege can be asserted if the person is acting in good faith to protect a legal interest of his own, which he believes may be impaired or destroyed by the performance of the contract. Gresh v. Potter McCune Co., 235 Pa. Super. 537, 541, 344 A.2d 540, 542 (1975). This privilege is narrowly construed, and must meet the three criteria of. (1) a legally protected interest, (2) that the person in good faith asserts to protect, and (3) the threat to protect it is by proper means. Id. A full analysis of this Complaint reveals that Plaintiff conveniently ignores the remainder of the Complaint in setting out her claims under Count IV, Paragraphs 73 through 80. Plaintiff tries to assess liability against Paytime for the actions of Patterson, seemingly because he was the controlling stock holder of Paytime. This attempt should be ignored and Count IV should be dismissed. Clearly, the only reason that Plaintiff s employment with HEG ended was because HEG went out of business. It is undisputed that Defendant Patterson had already personally invested over $120,000 into HEG during the six months that it was in operation, and since he was not willing to inject additional personal funds into a losing proposition, he chose to close HEG. Such a choice was a sound business decision and not in any way done to injure Plaintiff. More 22 0 . 1. . 0 importantly, this was Patterson's decision as the owner of HEG to shut down HEG; it was not done by Paytime. Plaintiff s contractual relationship with HEG ended when HEG shut its doors. After December 31, 2008, HEG paid no employees; paid no further expenses; and derived no further revenue nor borrowed any additional funds from Patterson. It was HEG's lack of ability to pay its own bills that caused it to close thus ending its relationship with Plaintiff. Paytime played no part in that decision. The essence of Plaintiff s Complaint is contained in averments 77 and 78. Essentially what Plaintiff is claiming is that Paytime interfered with HEG's contract with Plaintiff by "facilitating the liquidation of Defendant HEG's assets" which "caused HEG to cease performing under the Employment Agreement." (See Paragraph 77) However, if you look at the remainder of Plaintiffs Complaint, these averments contradict other factually accurate averments. When Plaintiff operated her own company, Human Element Group, LLC, it was not profitable and had significant liabilities and was on the verge of shutting down completely when she was hired by HEG (See Paragraph 10). This pattern continued when HEG was formed in that Patterson had to loan HEG $120,000 or so from its inception on July 1, 2008 until it shut down on December 31, 2008 (See Plaintiffs Complaint, Paragraph 27). HEG certainly was insolvent at the time it shut down and in fact was not solvent at any time during its history because it could not operate without the infusion of capital by Patterson. Despite making these averments, Plaintiff then asserts that Paytime somehow acquired all the "valuable assets" of HEG after HEG shut down 23 9 1 1. . 0 which caused it not to be able to pay Plaintiff under the Employment Agreement. Plaintiff can't have it both ways in this Complaint. Paytime had no control over whether or not HEG could pay its bills or not. The accounts that it had simply did not generate enough revenue to cover its expenses including the copier lease, the office lease, the employee costs, and the amount due Plaintiff under her Employment Agreement. Once Patterson made a decision to stop loaning funds, HEG couldn't pay its bills because its ability to pay those bills was based upon the loans from Patterson himself. Paytime never caused Patterson to loan HEG funds to start with nor had any influence on Patterson to cease loaning those funds that kept HEG afloat. Plaintiff is missing an essential element of a cause of action against Paytime under Count IV in that there was no purposeful action on behalf of Paytime that was specifically intended to harm the contractual relationship between HEG and Plaintiff. The actions that Paytime took in this case occurred after Patterson decided to shut HEG down by ceasing to loan it additional funds to pay its expenses. Paytime, for sound business reasons, decided to continue to service its own accounts (which were also accounts of HEG) by hiring some of HEG's employees. Further, several months later, Paytime decided to lease the office space that was housing HEG. These actions cannot form the basis for tortuous interference with a contractual relationship and this is yet another attempt by Plaintiff to try to keep Paytime in this litigation with no legal basis whatsoever. This Court should grant Paytime's Preliminary Objection under Count IV and dismiss this claim. 24 • COUNT V INDEMNITY (VERSUS ALL DEFENDANTS) • STATEMENT OF QUESTIONS INVOLVED DOES PENNSYLVANIA RECOGNIZE AN INDEPENDENT CAUSE OF ACTION FOR INDEMNITY, ESPECIALLY WHERE PLAINTIFF HAS INCURRED NO DAMAGES? SUGGESTED ANSWER: NO. ARGUMENT Pennsylvania law on corporations holds that a corporation "shall have the power to indemnify any person... that... is or was a representative of the corporation...." 15 Pa. C.S. Section 1741; 15 Pa. C.S. Section 1742. Notably, this statute allows, but does not require indemnification. Specifically, the indemnity is for any "expenses, judgments, fines and amounts paid in settlement...." Id. In the instant case, there is no evidence whatsoever that Plaintiff has incurred any amounts which require indemnification. There is no evidence that a claim for indemnity is something that can be filed for and litigated in a court of law. While a corporation may have the right to indemnify a representative of the corporation, there is no legal cause of action for its failure to do so. Furthermore, if for some reason this Court believes there is an independent cause for indemnity, Plaintiff herself has suffered no losses. In fact, she actually benefited by the actions taken by both HEG and Paytime. 25 • 0 In regard to the lease of the property, what Plaintiff conveniently ignores to state in Count V is that Plaintiff herself has no personal liability. Plaintiff certainly can't make a claim to be "indemnified" if she has no obligation under any lease to the previous landlord. In fact, what occurred was that Plaintiff's former company, SourcePoint, LLC, had a lease with the landlord. When HEG began operation, it paid the existing lease due by SourcePoint, LLC directly to SourcePoint, LLC's landlord. SourcePoint, LLC had stopped operating by that time and was essentially defunct and continues to be so. Plaintiff never had any personal guarantee on that lease. When HEG stopped operating, the landlord, at best, had a claim against SourcePoint, LLC for the rent due and owing under the lease. The landlord had no claim against Plaintiff individually. The landlord has never asserted a claim against SourcePoint, LLC or Plaintiff individually which is confirmed by the fact that Plaintiff has not averred that any demand has ever been made against either SourcePoint, LLC or herself in this Complaint. What occurred is that several months later (March 12, 2009 to be exact) Paytime entered into a new lease agreement with the landlord under different terms and conditions. While Plaintiff does not state where she came up with her damage amount, it appears that that amount is the difference between what would have been owed by SourcePoint, LLC if the lease had continued and what Paytime is paying the landlord under its lease. The fact that Paytime started a new lease actually benefited SourcePoint, LLC but in any event, it had no impact upon Plaintiff whatsoever since she has no personal obligation under that lease. 26 c: A similar analysis occurs with the copier lease. Plaintiff had personally guaranteed a copier lease with The Phillips Group. When HEG began operation, it continued to make the payments to The Phillips Group for the copier solely as an accommodation to Plaintiff. When HEG stopped operating, the copier was turned back to The Phillips Group. Seemingly, The Phillips Group asserted its claim against Plaintiff under the personal guarantee which Plaintiff apparently resolved for a payment of $1,500.00. Plaintiff actually benefited by the roughly seven months that the copier payments were made directly to The Phillips Group by HEG. Based upon what occurred in this case, there is no claim for indemnity upon any of the Defendants at all and this Count should be dismissed in its entirety against all Defendants. Plaintiff then tries to assert separate claims against Paytime and Patterson individually with absolutely no legally supportable theory. Plaintiff again asserts the claim against Paytime based upon the "de facto merger" doctrine. This was fully argued previously in this brief and will not be restated here. Simply put, this claim is meritless and there is no legal basis to make Paytime responsible for any obligations of HEG to the extent HEG has any liability for indemnity. As far as Patterson is concerned, Plaintiff asserts liability based on Paragraph 87 alone. Paragraph 87 is simply incorrect and contradicts Paragraph 88 of Plaintiff's Complaint. Patterson never took over the lease for Human Element Group, LLC. As clearly stated in Paragraph 88, it was HEG that made payments on the office lease to the landlord, not Patterson. (See also Paragraph 23 of Plaintiff's Complaint). Patterson was not involved in paying the 27 9 c: landlord any lease payments; he did not assume or take over any lease with the landlord; he did not pay The Phillips Group any lease payments; or enter into a new leasing arrangement with the landlord individually. The claim against Patterson for indemnity under this Count should therefore be dismissed. COUNT VI FRAUDULENT CONVEYANCE (VERSUS ALL DEFENDANTS) STATEMENT OF QUESTIONS INVOLVED IF THERE WAS NEVER ANY TRANSFER OF ASSETS OR OBLIGATIONS, CAN A FRAUDULENT CONVEYANCE OCCUR? SUGGESTED ANSWER: NO. ARGUMENT The statutory definition of fraudulent transfer is as follows: A transfer made or obligation incurred by a debtor is fraudulent as to a creditor whose claim arose before the transfer was made or the obligation was incurred if the debtor made the transfer or incurred the obligation without receiving a reasonably equivalent value in exchange for the transfer or obligation and the debtor was insolvent at that time or the debtor became insolvent as a result of the transfer or obligation. 12 Pa. C.S. § 5105. Plaintiff is arguing that HEG fraudulently conveyed assets to Paytime at a time when HEG was insolvent. The initial requirement of a fraudulent conveyance is that a transfer was made or an obligation was incurred. Clearly, HEG did not incur any obligation to Paytime nor 28 • E did Paytime incur any obligation to HEG. The question is whether or not there was any transfers of assets from HEG to Paytime and the answer to that simply is no. HEG ceased doing business because it could not pay its bills. HEG's customers never generated enough revenues to pay its expenses. These customers were not really "assets" in that the term "assets" suggest that the accounts had value in and of themselves. The accounts simply did not generate enough income through human resource work to permit HEG to operate without an infusion of significant capital by Patterson. Plaintiff's own Complaint acknowledges that these customers never generated enough revenue to allow for a successful operation of the human resource business (See Paragraph 10 of Plaintiff's Complaint). It is unfathomable that those same customers that could not generate enough income for Plaintiff when she operated her own business, and couldn't generate enough income to keep HEG going, should somehow turn to be a valuable "asset" that had any value that would subject any party to a fraudulent conveyance claim. Additionally, any employees of HEG were a liability because HEG could not generate enough revenue to pay the salaries. Again without Patterson infusing significant funds, none of the employees, including Plaintiff, could be paid at all. Once Patterson stopped lending funds, then HEG's abilities to pay its own payroll, including paying Plaintiff, ceased. The accounts simply did not generate enough income to pay any of the employees, Plaintiff included. Paytime, after HEG shut down, continued to service its own accounts which were also accounts of HEG. Paytime did this for sound business reasons so as to not interrupt service to its 29 customers. In order to continue to provide that service, Paytime hired HEG's employees, except for Plaintiff. Again, this occurred after HEG shut its doors. Simply put, a fraudulent conveyance could never occur in this situation because there was nothing to convey in a business that was incurring substantial losses. The very essence of a fraudulent conveyance claim is that something of value was transferred without receiving something in exchange. HEG did not have anything of value to convey at all. More importantly, there was nothing conveyed at all between HEG and Paytime. Paytime did not start servicing these accounts or hire any of HEG's employees until after HEG shut down. Without a conveyance at all, there cannot be any claim against Paytime and Count VI of this Complaint should be dismissed. Additionally, turning to the claim against Patterson individually, Patterson received nothing and was not involved in any of the transaction except in his role as President of Paytime and as President of HEG. Since Patterson individually was not involved in any conveyance, it is improper for him to even be included in this claim at all. This is yet another example of the extreme lengths that Plaintiff is attempting in her Complaint to include Paytime and Patterson in this litigation. Patterson's Preliminary Objection on this Count should be granted as well and this claim should be dismissed against him individually. CONCLUSION This action should be transferred to Cumberland County pursuant to the Employment Agreement's forum selection clause 30 • The Court should dismiss Count I against all Defendants because the WPCL does not apply to payment of prospective wages. At the very least, Count I should be dismissed against Paytime and against Patterson. Count II cannot survive because a conspiracy, by definition, must have two conspirators. It is impossible for HEG, Paytime and Patterson to conspire when Patterson owns HEG and Paytime. Moreover, punitive damages have no place in this lawsuit. A breach of contract claim under Count III can only be initiated against HEG, the only entity that had a contract with Plaintiff. All other Defendants should be dismissed. Count IV must be dismissed against Paytime because it was Patterson, not Paytime, that caused HEG to shut down and cease paying Plaintiff. Paytime and Patterson never agreed, under the terms of the Employment Agreement, to indemnify Plaintiff, neither did HEG. Absent an agreement, there is no independent cause of action for indemnity. More importantly, Plaintiff has suffered no losses. Count V should be dismissed against all Defendants. Count VI should be dismissed against Patterson and Paytime. Nothing was conveyed from HEG to either of them. 31 1? This matter involves a simple breach of contract claim by Plaintiff against HEG. This Court should prevent Plaintiff from engaging in meritless litigation against Patterson and Paytime and should dismiss them from all claims as requested. Respectfully submitted, ?1't?a c 'MICHAEL L. BANGS / Attorney for Defendants 429 South 18th Street Camp Hill, PA 17011 (717) 730-7310 Supreme Court ID #41263 32 CERTIFICATE OF SERVICE I HEREBY CERTIFY that I have this day served the foregoing DEFENDANTS' BRIEF IN SUPPORT OF PRELIMINARY OBJECTIONS TO PLAINTIFF'S AMENDED COMPLAINT, by depositing a copy of the same in the United States mail, postage prepaid, at Camp Hill, Pennsylvania, addressed to the following: Andrew J. Miller, Esquire Miller, Poole & Lord 137 East Philadelphia Street York, PA 17401 DATE: U O q_ 11Y AK.STj1kUB Paralegal 33 MICHAEL L. BANGS, ESQUIRE I.D. No. 41263 429 South 18'' Street Camp Hill, PA 17011 (717) 730-7310 • ATTORNEY FOR DEFENDANTS LAURA FRAZIER, Plaintiff vs. HUMAN ELEMENT GROUP, INC., PAYTIME HARRISBURG, INC. and NATHAN PATTERSON, Defendants IN THE COURT OF COMMON PL OF YORK COUNTY, PENNSYLV. NO.2009-SU-004091-01 CIVIL ACTION - LAW JURY TRIAL DEMANDED DEFENDANTS' PRELIMINARY OBJECTIONS TO PLAINTIFF'S AMENDED COMPLAINT w C- -a ??t_ Cn a% AND NOW comes the Defendants, Human Element Group, Inc. ("HEG"), Paytime Harrisburg, Inc. ("Paytime") and Nathan Patterson ("Patterson") by and through their attorney Michael L. Bangs, Esquire and files the following Preliminary Objections to Plaintiff's Amended Complaint: VENUE 1. All Defendants object to venue in York County as being improper. The proper venue for this dispute is in Cumberland County. All claims in Plaintiff's Amended Complaint arise out of or stem from an Employment Agreement between Plaintiff and HEG dated July 1, 2008 ("Agreement") which is attached to Plaintiff s Amended Complaint and labeled as Exhibit A. The parties specifically agreed to the selection of Cumberland County as the place for resolving all disputes relative to this Agreement. Paragraph 13 specifically states as follows: 1 • • 13. All questions concerning the execution of this Agreement and the rights and liabilities of the parties hereunder shall be decided in accordance with the laws of the Commonwealth of Pennsylvania. Employee hereby irrevocably submits to the personal jurisdiction of the Court of Common Pleas of Cumberland County, Pennsylvania. Employee waives any objection to the venue and to the personal jurisdiction of the Court of Common Pleas of Cumberland County. (emphasis added) Additionally, Cumberland, not York County, is the proper venue for resolution of this dispute because all transactions or occurrences giving rise to the causes of action filed by Plaintiff occurred solely in Cumberland County. The claims all arise from the Agreement, specifically the cessation of payments that Plaintiff believes are due under the Agreement. The Agreement was signed in Cumberland County. All Defendants are located in Cumberland County.' COUNTI VIOLATION OF PENNSYLVANIA WAGE PAYMENT AND COLLECTION ACT 1. Defendants HEG, Paytime and Patterson all demur to Plaintiff's claims under Count I for violation of the Wage Payment Collection Law ("WPCL"). Plaintiff's claim is for a breach of an employment agreement for prospective wages and the WPCL is not a remedy to collect wages which may have been earned but for a breach of an employment agreement. 2. Defendant Paytime demurs to Count I asserting a claim under the WPCL in that Plaintiff had no contractual relationship with Defendant Paytime; Defendant Paytime had no legal obligation to pay Plaintiff wages nor has it ever provided wages to Plaintiff. Defendant Paytime was never Plaintiff's employer. ' Plaintiff claims in Paragraph 2 that HEG was "originally at 2556 Eastern Boulevard, York, Pennsylvania." This is factually inaccurate in that HEG was never located in York and was always located in Cumberland County. 2 0 • 3. Defendant Patterson demurs to Count I of Plaintiff s Amended Complaint in that Plaintiff has failed to make sufficient averments to "pierce the corporate veil" and render Defendant Patterson liable for any obligations of Defendant HEG. COUNT II CIVIL CONSPIRACY 1. Defendants HEG, Paytime and Patterson demur to Count II in that a civil conspiracy requires more than one party. Patterson cannot conspire with HEG or Paytime since he is either the sole or majority stock holder of both HEG and Paytime and is the sole Director and sole officer of both HEG and Paytime. Paytime cannot conspire with HEG because Patterson is the majority stock holder of Paytime and the sole Director and sole officer and is also the only stock holder of HEG and the sole Director and sole officer. 2. Defendant Paytime demurs to Count II in that the Complaint lacks the requisite averments of both malice and a lack of justification. Specifically, HEG simply ceased doing business and Paytime, the corporation, had no involvement in the decision of HEG to cease operations. Moreover, Paytime did not receive any of the "assets" of HEG since HEG had significant losses and was unable to pay its own bills. 3. Patterson demurs to Count II in that the averments fail to state that he had both malice and lack of justification individually. Patterson in his role as President of HEG decided to shut down HEG because it was losing money. Patterson had no individual involvement in that decision and Count II lacks any averment that he had any malicious role individually that would substantiate a claim for civil conspiracy. • • 4. Defendants HEG, Paytime and Patterson demur to Plaintiff's claim for punitive damages in that there are no allegations that permit an award of punitive damages. COUNT III BREACH OF CONTRACT 1. Defendants Paytime and Patterson demur to Count III, Breach of Contract, in that they had no contractual relationship with Plaintiff. Plaintiff only had a contractual relationship with Defendant HEG. 2. Defendant Patterson demurs to Count III of Plaintiff's Complaint for Breach of Contract under the theory of piercing the corporate veil in that there is no legal basis to make Defendant Patterson individually liable for a claim for breach of contract against the corporate Defendant HEG. 3. Defendant Paytime demurs to Count III of Plaintiff s Complaint assessing liability under a breach of contract claim based upon a "de facto merger" in that there is no legal basis to assess liability against Defendant Paytime under this theory for a contract which was solely with Defendant HEG. 4. Defendant Patterson objects to Count III of Plaintiff s Complaint in that it has insufficient specificity to make out a claim for individual liability of Defendant Patterson under the theory of "piercing the corporate veil" which would make Defendant Patterson liable for any alleged breach of the agreement by Defendant HEG. 5. Defendant Paytime objects to Count III of Plaintiffs Complaint in that it lacks sufficient specificity to show that Defendant Paytime had a "de facto merger" with Defendant 4 C7 • HEG which somehow would assess liability against Defendant HEG for a contract that was solely between Plaintiff and Defendant HEG. COUNT IV TORTIOUS INTERFERENCE WITH CONTRACTUAL RELATIONS Defendant Paytime demurs to Count IV of Plaintiff's Complaint alleging tortuous interference with contractual relations in that Plaintiff's Complaint fails to state a cause of action. Defendant HEG had ceased doing business and as such HEG's contract with Plaintiff was terminated. After HEG ceased doing business, Paytime entered into a lease for the premises previously occupied by HEG and after HEG ceased doing business did Paytime hire any former employees of HEG as well as servicing any former accounts of HEG. COUNT V INDEMNITY 1. All Defendants demur to Plaintiff's claim of Indemnity on the basis that Pennsylvania law does not provide an independent cause of action for "indemnity." 2. All Defendants demur to Plaintiff's claim of Indemnity for damages that Plaintiff claims resulting from the lease entered into by Sourcepoint, LLC in that Plaintiff had no personal obligation for any lease payments and has failed to state in the Complaint that she has any personal obligation. Rather, Plaintiff is seeking to be paid in excess of $31,000.00 for damages which she believes she may be subject to in the future without any reasonable basis or allegation stating how that would occur. 3. Defendant Paytime demurs to Plaintiff's claim of Indemnity because there was no "de facto" merger between Defendant HEG and Defendant Paytime. 5 I- L-1 4. Defendant Patterson demurs to Plaintiff's claim of Indemnity in that Defendant Patterson never took over the lease for Human Element Group, LLC's Camp Hill office. COUNT VI FRAUDULENT CONVEYANCE 1. Defendant Patterson demurs to Count VI in that there was no transfer of any HEG assets to any entity, and more particularly to him individually. 2. Defendant Paytime demurs to Count VI in that it did not receive any transfer of assets from HEG nor did it purchase any assets of HEG. 3. Defendant HEG demurs to Count VI in that it never transferred any assets to either Defendant Paytime or to Defendant Patterson; rather it simply ceased operations. Furthermore, the former employees of HEG are not "assets" and cannot be the subject to a fraudulent conveyance claim. Respectfully submitted, ??J4 7 )? MICHAEL L. BANGS Attorney for Defendants 429 South 18th Street Camp Hill, PA 17011 (717) 730-7310 Supreme Court ID #41263 6 CERTIFICATE OF SERVICE I HEREBY CERTIFY that I have this day served the foregoing DEFENDANTS' PRELIMINARY OBJECTIONS TO PLAINTIFF'S AMENDED COMPLAINT, by depositing a copy of the same in the United States mail, postage prepaid, at Camp Hill, Pennsylvania, addressed to the following: Andrew J. Miller, Esquire Miller, Poole & Lord 137 East Philadelphia Street York, PA 17401 DATE: j b 1 ? jCq- WENDY K. S Paralegal N C= a M 3 7 1 ?J COUNTY OF YORK o OF CE OF THE SH {FF SE R ;I; 1-9601 45 N. GEORGE ST., YORK, PA 17401 SHERIFF SERVICE NISTRWTIONS PROCESS RECEIPT and AFFIDAVIT OF RETURN PLEASE TYPE ONLY LINE 1 THRU 12 DO NOT DETACH ANY COPIES 1 PLAINTIFF/S/ 2 C Laura Frazier 4. TYPE QF inVVRIT t OR C 1ND- SERVE 3 DEFENDANTrSr TComp YPElain Human Element Group, Inc. et al. 5 NAME OF INDIVIDUAL, COMPANY. CORPORATION, ETC TO SERVE OR DESCRIPTION Of PROPERTY TO BE LEVIED, ATTACHED, OR SOLD Human Element Group, Inc. 6 ADDRESS (STREET OR RFO WITH BOX NUMBER. APT NO. CITY, BORO. TWP. STATE AND ZIP CODE) AT 3552 Gettysburg Road, Suite 200, Camp Hill, PA 17011 7. INDICATE SERVI O PERSONAL ? PERSON IN CHARGE CKDEPUTIZE L) CERT MAIL U 1ST CLASS MAIL U POSTED U OTHER NOW 20 I, SHERIFF OF YORK C TY, PA, h r by d ze the sheriff of COUNTY to execute t - rit a OXa ?4ecording to law. This depu nation being made at the request and risk of the plaintiff. 6. SPECIAL INSTRUCTIONS OR OTHER INFORMATION THAT WILL ASSIST IN EXPEDITING SERVICE A ced) C-v 111fi. oo jp'? ?d ? a NOTE: ONLY APPUCA13LE ON WRIT OF EXECUTION: N.B. WAIVER OF WATCHMAN - Any deputy sheriff levying upon or attars m any prop" under w Ain V)fit may leave same without a watchman, in custody of whomever is found in possession, after notifying person of levy or attachment, without liability on the part of eputy or a eriff to any plaintiff herein for any loss. destruction. or removal of any property before shentrs sale thereof. 9. TYPE NAME and ADDRESS of ATTORNEY /ORIGINATOR and SIGNATURE 10. TELEPHONE NUMBER FIATE FILE Andrew J. Miller 137 E. Philadelphia St, rk, 11 01' 7178451524 / 12. SEND NOTICE OF SERVICE COPY TO NAME AND ADDRESS BELOW: (This area must be completed if notice is to be mailed) RICHARD KEUERLEBER, SHERIFF OF YORK COUNTY 45 N. GEORGE ST. YORK, PA 17401 13. I acknowledge receipt of the writ 114.-DATE CEIVE[yj 115 piratipa(HeariO.g?te or complaint as indicated above. 16. HOW SERVED PERSONAL( ) RESIDENCE ( ) POSTED( ) POE( ) SHERIFF'S OFFICE ( ) OTHER ( ) SEE REMARKS BELOI 17. O 1 hereby certify and return a NOT FOUND because I am unable to locate the individual, company, etc. named above. (See remarks below.) 18. NAME AND TITLE OF INDIVIDUAL SERVED i LIST ADDRESS HERE IF NOT SHOWN ABOVE (Relationship to Defendant) Li . Date of Service 20 Time of Service 8/19/09 11:58 AM 21. ATTEMPTS Date Time Miles Int. Date Time Miles Int. Dale Time Miles IntDate Time Miles Int. Date TMiles Int. Date Time Miles Int. 22. REMARKS: SERVED BY CUMBERLAND CONTY SHERIFF SEE ATT$CHFj RETURN G ca ? Ics -? X: * CL ftr CD 26. Mileage 23 th,t 2 ervi 25. NIF 29. Pound 30 Notary r 26. Sub Total 32. Tot. Costs 31 r k no - Refund C 1 IU M I X. V ,7M n Cou*Cbsts 35. slmee Costs 36 Service Costs 37. Notary cert . 36, Mileage/Poslage[Not Found 39. Total Costs 40. Costs Due or Refund SO ANSWERS 41. AFFIRMED and >bscrr? to before me this 5 DATE 44. Signature of 4 . 42, day of 20- 43 . Dep. $hWM, ?> v J PROTHY I NOTARY 46. Signature of York 47 DAT County 0 ?? O 46. Signat of 4 DATE Coun 50. 1 ACKNOWLEDGE RECEIPT OF THE SHERIFF'S RETURN SIGNATURE 51 DATE RECEIVED OF AUTHORIZED ISSUING AUTHORITY AND TITLE V WHITE -Issuing Authority 2. PINK - Attorney 3. CANARY -Sheriff's Office 4. BLUE - Shenfrs Office O COUNTY OF YORK F? E OF THE SHEI%FF O 45 N. GEORGE ST., YORI(, PA 17401 2 SERVICE LL (717) 771-9601 SHERIFF SERVICE WSTIMTIONS PROCESS RECEIPT and AFFIDAVIT OF RETURN PLEASE TYPE ONLY LNE 1 THRU 12 DO NOT DETACH ANY COPES 1 PLAINTIFF/S/ Laura Frazier _ OF WRIT OR _ 3. DEFENDANTISI Human Element Group, Inc. et al. Complaint ?- SERVE 5. NAME OF INDIVIDUAL, COMPANY. CORPORATION, ETC TO SERVE OR DESCRIPTION Of PROPERTY TO BE LEVIED, ATTACHED, OR SOLD Pa i me F Inc 6 ADDRESS (STREET OR RFO WITH BOX NUMBER, APT NO, CITY, BORO. TWP. STATE AND ZIP CODE) AT 5070B Ritter Road, Suite 115, Mechanicsburg, PA 17055 7. INDICATE SE ICE O PERSONAL U PERSON IN CHARGE }DEPUTIZE 0 CERT MAIL U 1ST CLASS MAIL U POSTED U OTHER NOW , 2 I, SHERIFF OF YORK COU , PA, do re depu the sheriff of COUNTY to execute this t nr puling to law. This deputization being made at the request and risk of the plaintiff. SHERIFF OF YORK COUNTY 8. SPECIAL INSTRUCTIONS OR OTHER INFORMATION THAT WILL ASSIST IN EXPEDITING SERVICE NOTE: ONLY APPLICABLE ON WRIT OF EXECUTION: N.B. WAIVER OF WATCHMAN - Any deputy sheriff levying upon or attaching any property under within writ may leave same without a watchman, in custody of whomever is found in possession, after notifying person of levy or attachment, without liability on the part of such deputy or the sheriff to any plaintiff herein for any loss, destruction. or removal of any property before sheriff's sale thereof. 9. TYPE NAME and ADDRESS of ATTORNEY / ORIGINATOR and SIGNATURE 10. TELEPHONE NUMBER 11 ATE FIL D 1137rEast.Phila el is Street York PA 1 01 7178451524 12. SEND NOTICE OF SERVICE COPY TO NAME AND ADDRESS BELOW: (This area must be completed d notice is to be mailed). RICHARD KEUERLEBER, SHERIFF OF YORK COUNTY 45 N. GEORGE ST.YORK, PA 17401 SPACE BELOW FOR USE OF THE SIvERFF -- DO NOT WRITE WOW THIS LM 13. I acknowledge complaint receipt of the writ O I 1 _QA`r 7 ? I 1 r /H i?te or complaint as as indicated above 16. HOW SERVED: PERSONAL( ) RESIDENCE ( ) POSTED( ) POE ( ) SHERIFF'S OFFICE ( ) OTHER( ) SEE REMARKS BELOW 17. O 1 hereby certify and return a NOT FOUND because I am unable to locate the individual, company, etc. named above. (See remarks below.) 16. NAME AND TITLE OF INDIVIDUAL SERVED I LIST ADDRESS HERE IF NOT SHOWN ABOVE (Relationship to Defendant) 19. Date of Service 20 Time or Service `r. N 8/19/09 11:14 AM 21. ATTEMPTS Da `,Time ilea Int. Date Time Miles Int. Date Time Miles Int. Date Tune Miles Int. Date Time Miles Int. Date Time Miles Int. 1 CO- 22. REMARKS: us C* qCt :Ctm, COUNTY SHERIFF SEE AT Hsi] CZ 23. Advance Costs 24 Service Costs 25. Nil: 26. Mileage 27. Postage 28. Sub Total 29. Pound 30 Notary 31. Surchg. 32. Tot. Costs 33 Costs Due or Refund Check No 34. Foreign Country Costs 35. Advance Costs 36 Service costs 37. Notary Cert. 38. Mileage/Postage/Not Found 39. Total Costs 40. Costs Due or Refund SO ANSWERS 41. AFFIRMED and subscribed to before me this 44 Signature"tj 45. DATE 42. day of 20 , 43 Dep. Sher(ff PROTHY / NOTARY 46. Signature of,Y t; A ,?l1 /47, OAT Q, ?5 Cou(Ny ahe?ilf , 4- ? ??A???n, (/ (/ , ?r?; t? O,/' (/ ' 4a. Signature 9f Foregh i, - 4 OAT 'Cpuply Sheuff 50. 1 ACKNOWLEDGE RECEIPT OF THE SHERIFF'S RETURN SIGNATURE DATE RECEIVED OF AUTHORIZED ISSUING AUTHORITY AND TITLE 1. WHITE - Issuing Authority 2. PINK - Attorney 3. CANARY - Sheriff's Office 4. BLUE - Shenfrs Office QP TY OF YORK CALL OF E OF THE SHE FF SERVICE(717) 7719 601 45 N. GEORGE ST., YORI(, PA 17401 SHERIFF SERVICE IN TRUCTIONS PROCESS RECEIPT and AFFIDAVIT OF RETURN PLEASE TYPE W&Y LM 1 THRU 12 DO MIT D"ACH ANY COPIES 1 PLAINTIFF/Si 2 C Laura Frazier 4. TYPE OF WRIT OR COMPLAIN 3 DEFENDANT/S/ Complaint Human Element Group, Inc et al. C4- SERVE 5 NAME OF INDIVIDUAL, COMPANY, CORPORATION, ETC TO SERVE OR DESCRIPTION OF PROPERTY TO BE LEVIED, ATTACHED, OR SOLD Nathan Patterson 6. ADDRESS (STREET OR RFO WITH BOX NUMBER, APT NO, CITY, BORO, TWP, STATE AND ZIP CODE) AT 3 Brandy Circle, Camp Hill, PA 17011 7 INDICAIM SERVICE O PERSO AL O ERSON IN CHARGE 30 DEPUTIZE O CERT MAIL O 1ST CLASS MAIL O POSTED 0 OTHER NOW 20 I, SHERIFF OF YORK COU , PA, do hereby eputiz the sheriff of COUNTY to execute thiftnd fe n then rding to law. This deputization tieing made at the request and risk of the plaintiff. SHERIFF OF YORK COUNTY 8. SPECIAL INSTRUCTIONS OR OTHER INFORMATION THAT WILL ASSIST IN EXPEDITING SERVICE NOTE: ONLY APPLICABLE ON WRIT OF EXECUTION: N.B. WAIVER OF WATCHMAN - Any deputy sheriff levying upon or attaching any property under within writ may leave same without a watchman, in custody of whomever is found in possession, after notifying person of levy or attachment, without liability on the part of such deputy or the sheriff to any plaintiff herein for any loss, destruction. or removal of any property before sheriff's sale thereof. 9. TYPE NAME and ADDRESS of ATTORNEY I ORIGINATOR and SIGNATURE 10. TELEPHONE NUMBER 11 DATE FILED A ndrew J. Miller 7178451524 / 1 '17 Fa-qt- Ph, lale PA 14401 12. SEND NOTICE OF SERVICE COPY T NAME AND ADDRE sYbr BELOW. (This area must be completed if notice is to be mailed) RICHARD KEUERLEBER, SHERIFF OF YORK COUNTY 45 N. GEORGE ST. YORK, PA 17401 co Am an nw rela itsc nr ruc rAwnCc _ nn unv wo rc an nw Tma i vir 13. 1 acknowledge receipt the writ / / ?-k// /7 „ {l 11A?AI REC?11(Q6) I 1 y E rat r- to or complaint as indicted d above. r r / ( (?n J J x 16. HOW SERVED: PERSONAL ( ) RESIDENCE ( ) POSTED( ) POE( ) SHERIFF'S OFFICE ( ) OTHER( ) SEE REMARKS BELOW I 17. Q 1 hereby certiy and return a NOT FOUND because I am unable to locate the individual, company, etc. named above. (See remarks below.) 18. NAME AND TITLE OF INDIVIDUAL SERVED I LIST ADDRESS HERE IF NOT SHOWN ABOVE (Relationship to Defendant) 19. Date of Service 20 Time of Service 21 ATTEMPTS Dike *ft Miles Int. Date Time Miles Int. Date Time Miles Int. Date Time Miles Int. Date Time Miles Int. Date Time Miles Int. 2 co 4 t 22- REMAR ? .; "Z CD NOT , VED BY=Ct?BERLMD COUNTY SHERIFF SEE ##ACAD RN co O G..: 23. Advance Costs 24 Service Costs 25. NIF 26 Mileage 27. Postage 28. Sub Total 29. Pound 30 Notary 31 Surchg. 32 Tot. Costs 33 Costs Due or Refund Check No 34. Foreign County Costs 35. Advance Costs 36 Service Costs 37. Notary Cert. 138. Mileage/Postage/Not Found 39. Total Costs 40 Costs Due or Refund SO ANSWERS 41. AFFIRMED and subscribed to before me this 44. Signature 7 j ? l 45. DATE 42, day of 20 43 rl , p f PROTHY I NOTARY A iyriature of York 47. DATE County Sheriff 48. Signatur 49 ATE County Sh 50. 1 AGKNOWLEUGE RECEIPT OF THE SHERIFF'S RETUKN SIGNATURE 151 DATE RECEIVED OF AUTHORIZED ISSUING AUTHORITY AND TITLE 1. WHITE - Issuing Authority 2. PINK - Attorney 3. CANARY - Sheriffs Office 4. BLUE - Sherdfs Office Sh s Office of Cumberland Cou* R Thomas Kline Sher Ronny R Anderson Chief Deputy ` W J T ,?? ?•_y' ? 4i Jody S Smith Civil Process Sergeant OFFICE 0` -,,E $"ERIFF Edward L Schorpp Solicitor Laura Frazier vs. Human Element Group, Inc. Case Number 2009-SU-004091-01 SHERIFF'S RETURN OF SERVICE 08/19/2009 11:58 AM - Gerald Worthington, Deputy Sheriff, who being duly sworn according to law, states that on August 19, 2009 at 1158 hours, he served a true copy of the within Complaint and Notice, upon the within named defendant, to wit: Human Element Group, Inc., by making known unto Mike Dosch, Sales Associate at 3552 Gettysburg Road, Suite 200 Camp Hill, Cumberland County, Pennsylvania 17011 its contents and at the same time handing to him personally the said true and correct copy of the same. 08/19/2009 11:14 AM - Gerald Worthington, Deputy Sheriff, who being duly sworn according to law, states that on August 19, 2009 at 1114 hours, he served a true copy of the within Complaint and Notice, upon the within named defendant, to wit: Paytime, Inc., by making known unto Dale Chwastyk, Operations Manager at 50708 Ritter Road Suite 115 Mechanicsburg, Cumberland. County, Pennsylvania 17055 its contents and at the same time handing to him personally the said true and correct copy of the same. 08/20/2009 R. Thomas Kline, Sheriff, who being duly sworn according to law, states that on August 20, 2009 at 0938 hours this Complaint and Notice upon defendant Nathan Patterson is returned not served per request from attorney Andrew J. Miller. SHERIFF COST: $57.44 August 20, 2009 SO ANSWERS, 1"00,40:,ow i3 R THOMAS KLINE, SHERIFF \ .v 13yA FV a7 Deputy Sheriff `° 3 - N . tV Sworn and Subscribed to befor e this 2 day of 2009 A.D. No`ffarv Public -rnn rn -i rn ¢n v x rn as Tj NOTARIAL SEAL . BREWBAKER, NOTARY PUBLIC IA A FMU:D arlisle Boro, Cumberland County Commission Expires April 4, 2013 U • • MILLER, POOLE & LORD, LLP Andrew J. Miller, Esquire Pa. Bar No. 84012 137 East Philadelphia Street York, Pennsylvania 17401 (717) 845-1524 Attorneys for Plaintiff LAURA FRAZIER, IN THE COURT OF COMMON PLEAS Plaintiff YORK COUNTY, PENNSYLVANIA VS. : No.2009-SU-004091-01 HUMAN ELEMENT GROUP, INC., CIVIL ACTION - LAW PAYTIME HARRISBURG, INC. and NATHAN PATTERSON JURY TRIAL DEMANDED Defendants NOTICE TO DEFEND You have been sued in Court. If you wish to defend against the claims set forth in the following pages, you must take action within twenty (20) days after this Complaint and Notice are served by entering a written appearance personally or by attorney and filing in writing with the Court your defenses or objections to the claims set forth against you. You are warned that if you fail to do so the case may proceed without you and a judgment may be entered against you by the Court without further notice for any money claimed in the Complaint or for any other claim or relief requested by Plaintiff. You may lose money or the 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. - r NAME: LAWYER REFERRAL SERVICE YORK COUNTY BAR ASSOCIATION ADDRESS: YORK COUNTY BAR CENTER - ?, 137 EAST MARKET STREET YORK, PENNSYLVANIA 17401 PHONE: (717) 854-8755 • . , • AVISO USTED HA SIDO DEMANDADO EN LA CORTE. Si usted desea defenderse de las quejas expuestas en las paginas siguientes, debe tomar accion dentro de veinte (20) dias a partir de la fecha en que recibio la demanda y el aviso. Usted debe presentar comparecencia escrita en persona o por abogado y presentar en la Corte por escrito sus defensas o sus objeciones a las demandas en su contra. Se le avisa que si no se defiende, la caso puede proceder sin usted y la Corte puede decidir en su contra sin mas aviso o notificacion por cualquier dinero reclamado en la demanda o por cualquier otra queja o compensacion reclamados por el Demandante. USTED PUEDE PERDER DINERO, O PROPIEDADES U OTROS DERECHOS IMPORTANTES PARA USTED. LLEVE ESTA DEMANDA A UN ABOGADO INMEDIATAMENTE. SI USTED NO TIENE O CONOCES UN ABOGADO, VAYA O LLAME A LA OFICINA EN LA DIRECCION ESCRITA ABAJO PARA AVERIGUARDONDE PUEDE OBTENER ASISTENCIA LEGAL. NAME: LAWYER REFERRAL SERVICE YORK COUNTY BAR ASSOCIATION ADDRESS: YORK COUNTY BAR CENTER 137 EAST MARKET STREET YORK, PENNSYLVANIA 17401 PHONE: (717) 854-8755 • 11 MILLER, POOLE & LORD, LLP Andrew J. Miller, Esquire Pa. Bar No. 84012 137 East Philadelphia Street York, Pennsylvania 17401 (717) 845-1524 Attorneys for Plaintiff LAURA FRAZIER, IN THE COURT OF COMMON PLEAS h, Plaintiff YORK COUNTY, PENNSYLVANIA r cn VS. No.2009-SU-004091-01 t- N HUMAN ELEMENT GROUP, INC., CIVIL ACTION - LAW PAYTIME HARRISBURG, INC. and rr NATHAN PATTERSON JURY TRIAL DEMANDED Defendants c? AMENDED COMPLAINT AND NOW, to wit, this 22"d day of September, 2009, comes Plaintiff Laura Frazier, by her attorneys MILLER, POOLE & LORD, LLP and files the following Amended Complaint: PARTIES 1. Plaintiff Laura Frazier is an individual residing at 1085 Dandelion Drive, York, Pennsylvania 17404. 2. Defendant Human Element Group, Inc. ("Defendant HEG") is a Pennsylvania corporation with a principal place of business at 3552 Gettysburg Road, Suite 200, Camp Hill, Pennsylvania 17011, originally at 2556 Eastern Boulevard, York, York County, Pennsylvania. 3. Defendant Paytime Harrisburg, Inc. ("Defendant Paytime") is a Pennsylvania corporation with a principal place of business at 5070B Ritter Road, Suite 115, Mechanicsburg, Pennsylvania 17055. 1 • t , • 4. Defendant Nathan Patterson ("Defendant Patterson") is an individual who at all relevant times hereto was the owner and President of Defendant HEG and an owner and the President of Defendant Paytime. Plaintiff believes and therefore avers that Patterson currently resides at 3 Brandy Circle, Camp Hill, Pennsylvania 17011. 5. Defendant HEG, Defendant Paytime and Defendant Patterson may also be collectively referred to as "Defendants". VENUE 6. Jurisdiction and venue are proper in York County because Plaintiff is a resident of York County, Pennsylvania, and Defendants maintain regular business contacts in York County, Pennsylvania. BACKGROUND FACTS 7. Defendant Paytime's business is to provide payroll services to its clients. 8. Plaintiff owned and operated Human Element Group, LLC, formerly known as SourcePoint, LLC, which provided human resource management and support. 9. On or about February 2008, Christopher Haverstick, a co-owner of Defendant Paytime, approached Plaintiff on behalf of Defendant Patterson about purchasing Human Element Group, LLC from Plaintiff. Defendant Patterson believed he could capitalize on synergies between Human Element Group, LLC and Defendant Paytime, and turn around Human Element Group, LLC's lackluster performance and grow the services of Defendant Paytime for mutual benefit. 2 10. Defendant Patterson was fully aware in February 2008 when discussions began that Human Element Group, LLC was not profitable at the time, that it had significant liabilities, and that it was on the verge of shutting down completely. On the advice of his attorney and accountant, Defendant Patterson decided not to purchase the business outright, but rather establish a new company under a similar name, personally purchase the furniture and equipment of Human Element Group, LLC, assume the office and copier leases and clients with the new entity, and cause the new entity to enter into an employment agreement with Plaintiff. 11. On June 19, 2008, Defendant Patterson incorporated Human Element Group, Inc. (Defendant HEG) of which Defendant Patterson is believed to be 100% owner, sole director and sole officer. 12. Defendant Patterson is also believed to be primary shareholder, sole director and .sole officer of Defendant Paytime. 13. Defendant HEG used the same address as Defendant Paytime on its checking account. 14. Defendant HEG employed Plaintiff pursuant to an employment agreement executed by Defendant Patterson commencing on July 1, 2008 ("Employment Agreement"). A true and correct copy of the Employment Agreement is attached as Exhibit A to this Complaint. 15. The employment agreement was in part negotiated in York County, Pennsylvania as follows: a. Leroy Ziegler, the business manager of Defendant Paytime, Inc., physically came to Plaintiff's office at Eastern Boulevard, York County to perform due 3 0 • diligence and review financial information during negotiations, the results of which believed to be used in part to determine Plaintiff's salary under the employment agreement. b. Plaintiff received correspondence dated April 30, 2008 from Defendant Patterson's attorney addressed and mailed to Plaintiff's Eastern Boulevard office with the proposed terms of her employment agreement. A true and correct copy of that correspondence as modified by Plaintiff to show receipt date is attached as Exhibit B. C. Plaintiff received correspondence dated June 19, 2008 from Defendant Patterson's attorney addressed and mailed to Plaintiff's home at 1085 Dandelion Drive, York, York County, Pennsylvania office with the proposed final employment agreement. A true and correct copy of that correspondence as modified by Plaintiff to show the receipt date is attached hereto as Exhibit C. d. The final negotiations prior to signing the employment agreement took place in a phone call between Plaintiff, at her York County home, and Defendant Patterson at his vacation home in New Jersey. 16. The final Employment Agreement was executed by Defendant Patterson at his vacation home in New Jersey while Plaintiff executed the final Employment Agreement at the office of Defendant Patterson's attorney in Camp Hill, Pennsylvania. 17. The Employment Agreement provides for an employment term of one year subject to certain rights of termination for cause, an annual salary of $70,000.00, and an annual 4 0 9 1 0 bonus equal to ten percent of the net income. Plaintiff requested a three year employment term; however, Defendants only agreed to a one year term. 18. The Employment Agreement included a termination for cause provision, describing "cause" as follows: Cause includes, but is not limited to, reasons such as Employee's failure, as determined by Employer, in its sole discretion, to effectively or completely perform Employee's assigned duties; chronic absenteeism as deemed solely by Employer; theft of Employer's property or failure to live up to Employee's obligations to Employer as described in this Agreement. 19. The Employment Agreement also contained a restrictive covenant not to compete that set forth Cumberland, York, Dauphin, Lebanon and Perry Counties as the specific areas where Defendant HEG conducted business. 20. Defendant HEG employed all of the former employees of Human Element Group, LLC. All parties ceased doing business under Human Element Group, LLC for use by Defendant HEG. 21. Defendant Patterson then personally purchased the furniture and equipment of Human Element Group, LLC for use by Defendant HEG. 22. Defendant Patterson and Defendant HEG effectively assumed the office and copier leases of Human Element Group, LLC and essentially took-over and continued to operate Plaintiff's former business in its same location. 23. Defendant HEG made payments on the office lease for 3552 Gettysburg Road, Suite 200, Camp Hill, Pennsylvania 17011 to DEEM Guys, LLC, which Defendant HEG continued until December 31, 2008. 5 0 1 1 0 24. Defendant HEG made payments for a copier leased from The Phillips Group to Source Point, LLC, which Defendant HEG continued to pay through January 7, 2009. A true and correct copy of the final regular payment on the lease from Defendant HEG is attached hereto as Exhibit D. 25. As Business Manager of Defendant Paytime, Leroy Zeigler established the business plan between Defendant HEG and Defendant Paytime along with Defendant Patterson and Plaintiff. Zeigler negotiated the financial logistics of transitioning Human Element Group, LLC to Defendant HEG with Plaintiff. 26. Defendant HEG paid Defendant Paytime a monthly management fee. 27. From July 2008 through December 2008 when Defendant HEG shut down, Plaintiff believes Defendant Patterson personally loaned Defendant HEG in excess of $120,000 to cover losses incurred by Defendant HEG. 28. Defendant HEG was thinly capitalized and wholly owned by Defendant Patterson. Therefore, Defendant Patterson is individually liable for Defendant HEG's obligations. 29. During her employment, Plaintiff was in almost daily contact with Defendant Patterson and Zeigler via E-mail and meetings. 30. Plaintiff regularly sought approval from Defendant Patterson and Zeigler regarding administrative actions and decisions. Plaintiff reported weekly to Zeigler regarding the financial status of new and existing accounts. 31. At no time was Plaintiff subject to a performance evaluation, nor was any disciplinary action taken against her at any time. 6 32. On or about December 2, 2008, Defendant Patterson notified Plaintiff that Defendant HEG would cease operation as of December 31, 2008 due to its poor performance. This notice was via a letter from Defendant Patterson addressed and mailed to Plaintiff at her York County home address. A true and correct copy of that letter is attached hereto as Exhibit E. 33. Plaintiff was further informed that Defendant Paytime would retain all employees of Defendant HEG except Plaintiff. 34. Defendant Paytime took over all sixteen active accounts served by Defendant HEG, including the six accounts brought by Plaintiff from her prior business. 35. Defendant HEG was insolvent at the time of the transfer of customer accounts. 36. Defendant Patterson, upon informing the employees of Defendant HEG that it would no longer operate, allowed employees to take whatever furniture or other equipment of Defendant HEG they wished. 37. Defendant Paytime renegotiated the lease for the Camp Hill office, previously Defendant HEG's office, and has continued to use the office for Defendant Paytime's sales staff. 38. Defendant Paytime retained the copier leased to Source Point, LLC from The Phillips Group. On January 7, 2009, Zeigler, on behalf of Defendant Paytime, contacted The Phillips Group regarding the copier, informing them Defendant HEG was no longer in business, that the copier was located at Defendant Paytime's office, and that The Phillips Group should pick it up. Neither Defendant HEG nor Defendant Paytime made lease payments on the copier after January 7, 2009. A true and correct copy of the January 7, 2009 email from Zeigler to the Phillips Group is attached hereto as Exhibit F. 7 E • 39. As a result of Defendant HEG ceasing operations and Defendant Paytime retaining all of Defendant HEG's accounts and employees except for Plaintiff, and Defendant HEG's office; Zeigler, as Business Manager of Defendant Paytime, exercising management and control over the operation of Defendant HEG from the time of its incorporation; and Defendant Patterson, as owner of Defendant HEG and Defendant Paytime, establishing and maintaining a cooperative relationship between the two corporations, there was a de facto merger of Defendant Paytime and Defendant HEG when Defendant HEG ceased operating. 40. Defendant Paytime, as the successor to Defendant HEG, is liable for Defendant HEG's obligations because of the de facto merger. 41. As of December 31, 2008, Defendant HEG ceased issuing Plaintiff biweekly installments of her salary pursuant to the Employment Agreement. 42. Payment of the balance of Plaintiffs wages after Defendant HEG ceased doing business would have been paid to Plaintiff at her home address in York County, Pennsylvania, as she maintains no other office or other place of business or residence in Cumberland County. 43. At no time did Defendants terminate Plaintiff or give any cause for termination. 44. Subsequent to the closing of Defendant HEG, Plaintiff received correspondence through her attorney from Defendant Patterson's attorney threatening to enforce the non- competition provision of the Employment Agreement against Plaintiff in the counties of York, Cumberland, Dauphin, Lebanon, Lancaster and Perry if Plaintiff pursued the present wage claim. 8 45. During Plaintiff's time employed by Defendant HEG, approximately 50 % of the revenue collected by Defendant HEG was from clients in York County, Pennsylvania, including regular sales calls and visits to clients physically located in York County. 46. Defendant Paytime continued to service those clients in York County, Pennsylvania after the close of Defendant HEG. 47. Defendant Paytime is a member of and provides payroll services for the York County Chamber of Commerce since 2001. 48. Defendant Paytime is further believed to provide payroll services for over 3,000 employees located in York County, Pennsylvania. 49. As recently as May 2009, Plaintiff attended the York County Chamber of Commerce Business Expo in York County, where Defendant Paytime had an exhibitor booth with promotional flyers on display to advertise the same services previously performed by Defendant HEG. A true and correct copy of the promotional flyer is attached hereto as Exhibit G. COUNTI VIOLATION OF PENNSYLVANIA WAGE PAYMENT AND COLLECTION LAW Laura Frazier v Human Element Group, Inc., Nathan Patterson and Paytime Harrisburg, Ina 50. Paragraphs 1-49 are incorporated by reference. 51. Defendant HEG is an "employer" as defined under the Pennsylvania Wage Payment and Collection Law (the "WPCL"), 43 P.S. §260.2a. 9 0 . 1 0 52. As sole owner, resident and primary decisionmaker, Defendant Patterson is an "employer" as defined under the Pennsylvania Wage Payment and Collection Law (the "WPCL"), 43 P.S. §260.2a. 53. Alternatively, Defendant Patterson is liable as the sole owner of Defendant HEG, an undercapitalized sham corporation, which warrants the piercing of the corporate veil to assess liability directly against Defendant Patterson. 54. As the managing agent of Defendant HEG, Defendant Paytime is an "employer" as defined under the Pennsylvania Wage Payment and Collection Law (the "WPCL"), 43 P.S. §260.2a. 55. Alternatively, Defendant Paytime acquired all essential assets and accounts, hired all employees except Plaintiff, and continued to operate in the leased office of Defendant HEG, which factors and others establish a de facto merger of Defendant HEG and Defendant Paytime, and the assumption of all liabilities of Defendant HEG by Defendant Paytime. 56. At all relevant times, Plaintiff was employed by Defendant HEG pursuant to the Employment Agreement. 57. Defendants violated the WPCL because they failed and refused to pay Plaintiff's wages due biweekly as designated by the Employment Agreement from December 31, 2008 through the term of the one year contract in the amount of $35,000. 58. Defendants are also liable to Plaintiff for liquidated damages, attorney fees and costs as provided in the WPCL. 10 0 . 1 0 WHEREFORE, Plaintiff demands judgment in its favor and against Defendants in an amount in excess of $35,000, together with liquidated damages, attorney fees, prejudgment interest and costs of suit, plus any such other relief as the court may deem appropriate. COUNT II CIVIL CONSPIRACY Laura Frazier v Human Element Group, Inc., Nathan Patterson and Paytime Harrisburg, Inc. 59. Paragraphs 1-58 are incorporated by reference. 60. Defendant Paytime, through Zeigler and Defendant Patterson, were directly and continuously involved in the operation of Defendant HEG. Defendant Paytime collected a management fee for its services. 61. Defendant Paytime and Defendant HEG conspired to evade paying Plaintiff s wages as provided in the Employment Agreement, in violation of the WPCL. 62. Defendant Paytime and Defendant HEG conspired to fraudulently convey the assets of Defendant HEG to Defendant Paytime in order to evade paying Plaintiff s wages. 63. As a result of Defendant Paytime and Defendant HEG conspiring to violate the WPCL, Plaintiff suffered damages in the amount of the $35,000 in unpaid wages as provided for in the Employment Agreement. 64. Defendant Paytime and Defendant HEG are also liable to Plaintiff for punitive damages. 11 0 1 . 0 WHEREFORE, Plaintiff demands judgment in its favor and against Defendant Paytime and Defendant HEG in an amount in excess of $35,000, together with punitive damages plus any such other relief as the court may deem appropriate. COUNT III BREACH OF CONTRACT Laura Frazier v Human Element Group, Inc., Nathan Patterson and Paytime Harrisburg, Inc. 65. Paragraphs 1-64 are incorporated by reference. 66. Defendant Patterson entered into an employment agreement on behalf of Defendant HEG for a term of one year, providing for a $70,000 salary for that term as stated in the Employment Agreement. 67. Defendant Patterson is directly liable for the obligations of Defendant HEG under the theory of piercing the corporate veil. 68. Defendant Paytime, as successor to Defendant HEG by virtue of the de facto merger, became Defendant HEG for the purposes of the Employment Agreement. 69. Plaintiff has performed all of her obligations in accordance with the terms of the Employment Agreement and has not done, or failed to do, anything that would constitute "cause" as defined in Section 3 of the Employment Agreement. 70. At no time did Defendants terminate Plaintiff or indicate any cause for such a termination. 12 71. The Employment Agreement provided that Plaintiffs salary was $70,000 per annum for a term of one year. 72. Defendants materially breached their contract with Plaintiff by failing to pay Plaintiff the portion of her yearly salary due biweekly from January 1, 2009 through the end of the one year term provided in the Employment Agreement. WHEREFORE, Plaintiff demands judgment in its favor and against Defendants in an amount in excess of $35,000, together with pre judgment interest and costs of suit, plus any such other relief as the court may deem appropriate. COUNT IV TORTIOUS INTERFERENCE WITH CONTRACTUAL RELATIONS Laura Frazier v Paytime Harrisburg, Inc. 73. Paragraphs 1-72 are incorporated by reference. 74. Defendant Paytime was fully aware of the terms of the Employment Agreement prior to the time that Defendant Paytime acquired all of the accounts and employees, except Plaintiff, of Defendant HEG. 75. Defendant Patterson, as President of Defendant Paytime and owner of Defendant HEG, entered into the Employment Agreement with Plaintiff on behalf of Defendant HEG in July 2008. 76. The Employment Agreement provided for an employment term of one year. 77. Nevertheless, despite this knowledge, Defendant Paytime intentionally interfered with Plaintiff's contractual relationship with Defendant HEG by acquiring all of Defendant 13 • • HEG's accounts, facilitating the liquidation of Defendant HEG's assets, and retaining all of Defendant HEG's employees except Plaintiff, causing Defendant HEG to cease performing under the Employment Agreement prior to the end of the contractual term. 78. Defendant Paytime intended to, and in fact did, interfere with Plaintiffs existing contractual relationship with Defendant HEG by intentionally causing Defendant HEG to breach the Employment Agreement. Defendant Paytime acquired all of the valuable assets of Defendant HEG such that Defendant HEG had no ability to pay its obligations, including those obligations to Plaintiff under the Employment Agreement. 79. In so doing, Defendant Paytime has acted without privilege or justification to deprive Plaintiff of her benefits under the terms of the Employment Agreement. 80. Defendant Paytime, by assuming the Defendant HEG's copier lease agreement, their office lease agreement, and their employees, caused Defendant HEG to breach its contract with Plaintiff. WHEREFORE, Plaintiff demands judgment in its favor and against Defendant Paytime in an amount in excess of $35,000, together with punitive damages, prejudgment interest and costs of suit, plus any such other relief as the court may deem appropriate. COUNT V INDEMNITY Laura Frazier v Human Element Group, Inc., Nathan Patterson and Paytime Harrisburg, Ina 81. Paragraphs 1-80 are incorporated by reference. 14 0 . 1 0 82. Because of the de facto merger of Defendant HEG and Defendant Paytime, Defendant Paytime is liable for Defendant HEG's obligations. 83. Defendant HEG took over the payments for the copier leased from The Phillips Group to Source Point, LLC, which lease was personally guaranteed by Plaintiff. 84. After Defendant Patterson informed Plaintiff that Defendant HEG would cease doing business, Defendant Paytime retained the copier leased to Source Point, LLC. 85. On January 7, 2008 Defendant Paytime contacted The Phillips Group regarding the copier, informing them Defendant HEG was no longer in business, that the copier was located at Paytime, and that The Phillips Group should pick it up. Neither Defendant HEG nor Defendant Paytime made lease payments on the copier after January 7, 2009. 86. Plaintiff incurred damages of $1,500 to settle and release her liability under the lease. 87. Defendant Patterson and Defendant HEG took over the lease for Human Element Group, LLC's Camp Hill office which became the principal place of business of Defendant HEG, and absolved Plaintiff of any personal liability. 88. Defendant HEG made lease payments directly to the landlord until Defendant HEG ceased doing business. 89. Defendant Paytime, after its de facto merger with Defendant HEG, renegotiated the lease for the Camp Hill office, previously Defendant HEG's office, and has continued to use the office for Defendant Paytime's sales staff. 15 0 1 0 90. Plaintiff has incurred foreseeable damages of $31,193.24 as a result of Defendant HEG ceasing to make payments on the lease and Defendant Paytime's renegotiation of the lease at a lower rate than the prior lease entered into by Source Point, LLC. WHEREFORE, Plaintiff demands indemnity in its favor and against Defendants for damages for the lease of the copier from The Phillips Group in the amount of $1,500 and the lease on the Camp Hill office in the amount of $31,193.24, together with attorney fees, prejudgment interest and costs of suit, plus any such other relief as the court may deem appropriate. COUNT VI FRAUDULENT CONVEYANCE Laura Frazier v Human Element Group, Inc., Nathan Patterson and Paytime Harrisburg, Inc. 91. Paragraphs 1-90 are incorporated by reference. 92. Defendant HEG's transfer of assets to Defendant Paytime was made at a time when Defendant HEG was insolvent. 93. Defendant Patterson's cessation of Defendant HEG's business operations and subsequent transfer of all of Defendant HEG's assets, including all accounts and employees other then Plaintiff, to Defendant Paytime left an empty shell corporation with an.outstanding payment obligation to Plaintiff. 94. The transfer of assets was done to evade the payment of wages to Plaintiff under the Employment Agreement. 16 • • WHEREFORE, Plaintiff demands judgment in its favor and against Defendants in an amount in excess of $35,000, together with liquidated damages, attorney fees, prejudgment interest and costs of suit, plus any such other relief as the court may deem appropriate. Respectfully submitted, MILLER, POOLE & LORD, LLP q - ??- oy Date: Andrew J. Miller, Esquire Pa. Bar No. 84012 137 East Philadelphia Street York, PA 17401 (717) 845-1524 17 0 . 1 0 UNSWORN VERIFICATION The foregoing document is based upon facts and information which has been gathered by me in the preparation of this law suit. The language of the document is that of counsel. I have read the document and the facts set forth therein are true and correct to the best of my knowledge, information and belief. This statement and verification are made subject to the penalties of 18 Pa.C.S.A. §4904 relating to unworn falsification to authorities, which provides that if I knowingly make false averments, I may be subject to criminal penalties. - ILA- tC1 Dated: aura . Frazier EMPLOYMENT AGREEMENT THIS AGREEMENT is made this day of ! , 2008, by and between: HUMAN ELEMENT GROUP, INC., a Pennsylvania corporation with offices at 5070 B Ritter Road, Suite 115, Mechanicsburg, Cumberland County, Pennsylvania, hereinafter called "Employer" and LAURA FRAZIER, an adult individual who resides at 1085 Dandelion Drive, York, York County, Pennsylvania, hereinafter called "Employee." WITNESSETH: WHEREAS, Employee is about to come into employment of Employer, under the terms and conditions as more fully set forth in this Agreement, and desires to set forth the terms and conditions of that employment; and WHEREAS, the Employee will come to deal directly with Employer's clients and certain information secret to and valuable to Employer, and the parties have reached an agreement to protect the trade secrets, client contacts, and other valuable property owned by Employer which is also made available to Employee and to protect all other persons employed by or otherwise interested in Employer in the event of the termination of employment of Employee by Employer, and wish to have this Agreement reduced to writing. NOW, THEREFORE, in consideration of the above recitals and in consideration of the payment of all compensation outlined in this Agreement, intending to be legally bound hereby and to legally bind their heirs, successors and assigns, the parties hereto do hereby covenant, promise and agree as follows: EXHIBIT 1. Employer hereby employs Employee as the President of the Employer and Employee hereby accepts such employment upon the terms and conditions set forth in Exhibit A which is attached hereto and incorporated herein by reference. 2. The term of Employee's employment with Employer will commence on the date of this Agreement and will continue in effect for a period of one (1) year, and thereafter until terminated by either Employee or Employer upon at least ten (10) day's prior written notice to the other party. However, Employee's employment with Employer may be terminated earlier, without the need for any prior notice, if any of the events described in Paragraph 3 occur. 3. The following events allow for immediate termination of Employee's employment: A. Employer may discharge Employee for cause at any time without prior notice. Cause includes, but is not limited to, reasons such as Employee's failure, as determined by Employer, in its sole discretion, to effectively or completely perform Employee's assigned duties; chronic absenteeism as deemed solely by Employer; theft of Employer's property or failure to live up to Employee's obligations to Employer as described in this Agreement. 4. Employee agrees to devote her full time and best efforts to carry out the duties assigned from time to time while employed by Employer. Employee agrees to perform the duties in a diligent manner, and to act at all times in the best interest of Employer. Employee agrees to fully comply with all corporate rules, regulations, procedures and policies of Employer. A more specific description of the position and the duties is attached as Exhibit A which is incorporated herein by reference. 5. Employer agrees to pay Employee, during the term of Employee's employment, compensation in accordance with the compensation plan attached hereto as Exhibit A which is incorporated herein by reference, less applicable withholding and payroll taxes, in consideration of the services to be rendered by Employee, and the covenants and agreements which have been made in this Agreement. 6. Employee may also receive a one (1 %) percent equity ownership in the company any time after the first six months of employment should the Employer deem it appropriate and in its sole discretion. Prior to receipt of the one (1%) percent equity ownership interest, Employee must provide proof to Employer that there are no claims against her for back trade debt or taxes due as a result of her operation of her current limited liability company, Human Element Group, LLC, and that there are no outstanding liabilities against Human Element Group, LLC. 7. Employee shall, at all times after this Agreement, both during Employee's employment by Employer and thereafter, keep secret, protect, safeguard and preserve for Employer all information given by Employer to Employee regarding Employer's business, clients, and the like and shall not share, disclose, or make known such information to any person or entity from and after the date of this Agreement. 8. In the event of the termination of Employee's employment with Employer, at any time, by either party, and for whatever reason, Employee shall not, for a period of not less than five (5) years, contact, solicit, or attempt in any way to do business with any of the customers, clients, or any persons doing business with Employer during the period of two (2) years prior to Employee's termination of employment and shall not, during said five (5) year period, as an owner, principal, agent, employee, director, officer, or in any other capacity engage in any 3 • C] business in competition with the business of Employer at the time of such termination in which any other person, employee, agent, or principal shall contact Employer's customers, clients, or any other person or entity with whom Employer has done business for a period two (2) years preceding such termination. Further, Employee agrees not to render services, as an employee or otherwise, which are the same or similar to the services which Employee rendered while employed by Employer, to or for any person or entity engaged, or who becomes engaged, in any business which is in competition with Employer within the market area serviced by Employer which includes Dauphin County, York County, Cumberland County, Lebanon County, Lancaster County, and Perry County, for a period of not less than one (1) year from the date of termination of employment with Employer. 9. During the course of Employee's employment, the Employer will disclose information concerning various business methods, data processing techniques, client lists, employee lists, and other items which will assist and benefit Employee in her assigned duties. This information would injure Employer if disclosed to competitors or potential competitors. Therefore, Employee agrees not to use, publish or disclose to any person or any other entity, processing techniques, marketing methods or plans, client lists, employee lists and other confidential information. All information regarding Employer's business, including information regarding clients, client lists, marketing or business plans, employee lists, wage and salary information, financial data, trade secrets, costs, prices, earnings, products, secret formulas or processes, machines, apparatus, systems, procedures, prospective and executed contracts and other business arrangements are presumed to be confidential unless the information is otherwise lawfully and readily available to the general public. 4 10. Employee further agrees that upon any termination of employment with Employer, Employee will return to Employer all records, documents and other written materials containing information relating to Employer, its business or its clients, and will not retain any copies of any such materials. This nondisclosure covenant will continue in force after the termination of Employee's employment with Employer. 11. This Agreement shall not be modified or changed in any way unless both parties to it agree in writing to a specific amendment. The invalidity or unenforceability of any provision or covenant of this Agreement will not affect the validity or enforceability of remaining provisions and covenants of this Agreement. The covenants contained in each separate paragraph shall each be considered a separate covenant. 12. Employee acknowledges that the provisions of this Agreement are reasonable and necessary for the protection of Employer and that Employer will be irreparably damaged if the terms and conditions of this Agreement are not specifically enforced. Accordingly, Employee agrees that, in addition to any other relief or remedies available to Employer, Employer shall be entitled to seek and obtain an appropriate injunction or other equitable remedy from the Court of Common Pleas of Cumberland County, for the purpose of restraining Employee from any actual or threatened breach of the terms and conditions of this Agreement, and no bond or securities will be required in conjunction therewith. If Employee breaches any of the promises set forth in this Agreement, and Employer proves Employee's breach in a forum of competent jurisdiction and/or Employer is awarded a permanent or temporary injunction against Employee, Employee's continuing breach, or damages arising from said breach, Employee shall be liable to pay all of Employer's reasonable costs and attorney's fees incurred in the enforcement of this Agreement, • proving such breach, obtaining said injunction and!or damages, and/or collection on any judgment. If Employee breaches any of the covenants set forth in this Agreement and Employer proves Employee's breach and is awarded a permanent or temporary injunction against Employee, Employee°s continuing breach, or damages arising from said breach, the length of the restricted period as set forth in this Agreement shall be extended to continue for an additional period of time equal to the length of time that Employee was shown to be in breach of the Agreement. 13. All questions concerning the execution of this Agreement and the rights and liabilities of the parties hereunder shall be decided in accordance with the laws of the Commonwealth of Pennsylvania. Employee hereby irrevocably submits to the personal jurisdiction of the Court of Common Pleas of Cumberland County; Pennsylvania. Employee waives any objection to the venue and to the personal jurisdiction of the Court of Common Pleas of Cumberland County. IN WITNESS WHEREOF, the parties hereto have set their hands and seals the day and year first above written. ATTEST: Secre ary A?,?,t ; \k-ITNESS HUMAN ELEMENT GROUP, INC. NATHAN J. PATTERSON, President LAU F ZIE 6 • EXHIBIT A Laura Frazier 1085 Dandelion Drive York, PA 17404 7/1/2008 Dear Laura: 1 am pleased to you offer you employment with the Hunan Element Group, Inc. You will receive an annual salary of $70,000.00 paid bi-weekly. You also may be eligible to receive an annual bonus equal to ten (10%) percent of the net income, net income being solely determined by our accountant calculated at the conclusion of each fiscal year. Your responsibilities will include but will not be limited to the following: • Complete management of all employees which include hiring and termination decisions with myself having the final say on such decision. • Managing and growing the business as determined by the Human Element Group business plan which is to be developed in tandem with Paytime and maintained by a focus group, which will include yourself and Paytime management personnel. • Day to day operations of the business. • I=nsuring that all clients receive the same level of care and attention they received in the past and mirror the same level of customer service that Paytime is known for. • Meeting Goals as determined by management focus group. • Managing all facets of all Human Element Group associates. • Ensuring that all of the above are taken care of in your absence. • Going on sales calls as needed. As I do with Paytime management employees, a benefit that they receive is that your time is your time. There are no sick, vacation or personal days. It is up to you to manage your time away from the business. If I feel that there is abuse then measures will have to be put in place to track your time but I trust that will never happen and I also will trust that you will use this benefit as processionally as they do. You are completely responsible for this endeavor's success or failure and I would hope that you would give it the time and attention that is needed in order for it to continue to grow and to reward everyone that is involved in its success. I look forward to a long and profitable relationship together and I hope that both of these businesses will share in these rewards. Sincerely, Nathan Patterson • BANCI,S LALW OFFICE 429 SOUTH 18TH STREET CAMP HILL, PA 17011 E-mail: mikebangjOverizon.net ]MICHAEL L. BANGS, Attorney-at-Law WENDY K. STRAUB, Paralegal April 30, 2008 • PHONE: 717-730-7310 FAX: 717-730-7374 WILLIAM E. MILLER, JR. Of Counsel RECEIVED MAY 0 1 2008 Ms. Laura Frazier 2556 Eastern Blvd. York, PA 17402 ?%.E: ivathwi 1 i tteisoiLllaylitne, irkc. Dear Ms. Frazier: I represent Nathan Patterson and have recently met with Nathan and his accountant to discuss the potential business relationship with you. Nathan believes there is some potential value in developing an HR consulting business because it would complement Paytime, Inc. I have reviewed the "wish list" that you submitted to Nathan and we have discussed the various •?rays in which this relationship can move forward. First, we have advised Nathan that there is no value in purchasing your existing company and that he should not entertain that type of arrangement, even though it was Nathan's desire to do so. Based upon the information that you have provided to him, it appears that the company has significant liabilities and has not been profitable. '.Nathan believes that an HR consulting business can be profitable with the resources that he can provide to it, both financially and from the client list available through Paytime. Obviously, he recognizes the value and experience. that you bring to the table and is willing to take a substantial :ill. Cial r::k 4asi' upon hdT coa,LiC ei-cm iii you. In that regard, Nathan is willing to move forward to discuss a more formal arrangement with you which would essentially be in accordance with the following outline: 1. Nathan would start up a separate and distinct company of which he would be a 100% owner. 2. You would be the manager of that company with an mutual salary of $70,000.00 plus would receive 10% of net income as cetennined by the accountant. 3. Nathan would be looking at the profitability of the business on a year-to-year basis and assuming that the business became profitable and grew due to your effort! • Page 2 April 30, 2008 there would be a potential for you obtaining some equity interest in the business. However, that would be totally up to the discretion of Nathan and would occur once he felt comfortable that the business was profitable and growing due to your management. 4. Nathan with the new company would take over the existing lease in Camp Hill which would absolve you of any personal liability. 5. You would have primary management responsibility for the new company with the autonomy to run that operation except that Nathan will have the final say in all hiring and firing of employees. He takes very much of a hands-off approach with his managers of his various divisions at Paytime providing; they are pro.t:table and running efficiently. He expects that he will do the same with this company. We believe this type of set up is very favorable for you in that Nathan is essentially starting up a company and incurring all of the financial responsibilities related to that start up. He will be infusing the cash necessary to keep the business running until enough business comes in so that it becomes self- sufficient. You have a set salary that you are going to earn plus a generous percentage of any net income. Moreover, you have the potential of obtaining an equity interest in the business. Please let us know if you want to move forward with this type of arrangement. If so, we can get into a more formal employment agreement which will have some standard provisions including a non- compete provision and in accordance with the outline as I set out above. We would request that you advise us whether you are amenable to moving forward before Nathan incurs the significant start up costs related to the formation of this business and the out-of-pocket costs to set up an office, etc. Nathan is anxious to move forward on this and 1 ask that you contact him directly in response to this letter. Assuming we move forward, my advice is that you have your own attorney look at any agreements that are prepared. Vey truly yours, Michael I.. wks cc: Nathan Patterson, President 0 1 . 0 BANGIS LAW OMCE 429 SOUTH 18'x' STREET CAMP HILL, PA 17011 E-mail mikebanea([verizon.net MICHAEL L. BANGS, Attorney-at-Law WENDY K. STRAUB, Paralegal June 19, 2008 Ms. Laura Frazier 1085 Dandelion Drive York, PA 17404 Dear Ms. Frazier: PHONE: 717-730-7310 FAX: 717-730-7374 WILLIAM E. MILLER, JR. Of Counsel Enclosed you will find a proposed Employment Agreement that I have prepared. The Employment Agreement does not have Exhibit A attached which is to be supplied by Nathan directly. Exhibit A will essentially outline your compensation which I understand to be $70,000 per year with a 10% bonus on net income as determined by the accountant at the end of each year. It also will outline your duties as well as outline any other benefits that are provided. I wanted to get this agreement to you now even though the Exhibit is not attached so that you can carefully review the terms and conditions of the Employment Agreement. I strongly encourage you to have this reviewed by an attorney of your choosing. We will have to get this Employment Agreement signed prior to you commencing employment with the new company. The projected start date is July 1, 2008 although that is totally dependent upon whether or not everything is in place for the new company. I have copied Nathan with this document and he has not had the chance to review it. I will be on vacation next week so if you or your attorney have any questions, they can contact me upon my return. Otherwise, you can speak with Nathan about the terms and conditions. Very truly yours, Michael L. Bangs wks Enclosure cc: Nathaniel J. Patterson, President EXHIBIT MHG LLC PAGE 10/12 8418112e89 12:53 5512563887 HUMAN ELEM@NT GROW, IINiIC- 50746 FOW Road sulta 415 Wdrl *xW M, PA 17055 717-450-0421 ARAVSTM 0" HAMS, PA 17101 06I"W13 1/7/2009 PA TO THE The Phillips Gaup $""504.56 ORDSA Five Hundred Four and 581100**""w""'*""'"A"" """.'""""' - -- -• ?.?.?., -- DOLLARS B The Phillips Group PO Box 61020 Harrisburg, PA 17106 3374409 "r 1900108 51' 1:0311143,4071: 16 L00 i68 3 2e' HMM EW11M t;?N"' nrc. The Phillips Group Date Type Refarance 12!31/2008 Bill 3374409 General Checking Ace 3374409 1085 1!7!2009 Original Amt, inoe Due Discount 504.58 504.56 Check Amount 504.96 EXHIBIT Payment 6604.56 804.56 0 1 1 0 December 31, 2008 Ms. Laura B. Frazier 1085 Dandelion Drive York, PA RE: Human Element Group, Inc. Dear Laura: This letter is to confirm my conversations I had with you that due to the amounting debt and lack of business, Human Element Group, Inc. will cease operation and no longer be in existence as of December 31, 2008. If you have any questions, please contact me. Very truly yours, HUMAN ELEMENT GROUP, INC. /' - -?' , C.:;-=- Nathan Patterson, Owner m 04/01,'2009 12:53 561266 7 _ ? MHG LLC ? PAGE 12/12 Page 1 of 2 LINDA KAZAR From. Leroy Zeigler [lzeigler@psytimepayroll.comj Sent: Wednesday, January 07, 2009 1015 AM To: LINDA KAZAR Subject: RE: statement Laura Frazier is no longer at this email address Effective 12/31/2008 liuman Element Group Is no longer in business. We have the copier/printer to be returned to you. How do we schedule someone to pick it up? It is presently locaed at the Paytime office. Leroy Zeigler Business Manager iRAYU::O. iH M,"."WM5"" 5070 B Ritter Road, Suite 115 Mechanicsburg, PA 17055 Phone: (717) 45840021 Fax: (717) 458-0027 Email: Izei (erftavdmepayroll,c9m www.g, y_timeM?gll..corn This email and any files transmitted with it may contain confidential and/or privileged information, if you are not the addressee or authorized to receive this for the addressee, you must not use, copy, disclose or take any action based on this message or any information herein. If you have received this message in error, please advise the sender immediately by reply e-mail and delete this message. Thank you for your cooperation. Prom: LINDA KAZAR [mailto:LKAZAPObuyphillips.com] Sent: Wednesday, January 07, 2009 9:25 AM To: 'I.frazierChumanelementgroup.com' Subject: statement Hi Laura, Attached is your monthly statement & invoices. Thanks & have a good day. Linda Kazar Ctr,ditxCollecfions reamLcedcr Responsive People... We Deliver The Phillips C,toup 501 Fulling Mill Road Middletown, PA 17057 4/1/2009 EXHIBIT I --f 1 take the sue..- pAYt. 1rne Right On The Money • HR Services 7 ??` ` ? `F. r Ya R L.S nd ess . K f?- ???'? 4SS-Q021 OH R Services Paytime's Human Resource Specialists can seamlessly administer the following services... Assist your Managers with any HR issues Assist with Workers Compensation Claims Assist you with property preparing for UC claims and hearings Administer Annual Background Checks Assist Employees with Company Policy interpretatio Monitor Employee Disciplinary Actions Provide Employee Termination Counseling Provide Termination Letters and Separation Agreemen Prepare internal communications Provide Benefits Coordination and Referral Maintain Employee files ensuring comptianc Y`t Additional Services, Paytime HR Services also offers a wide array of options yet essential services including... COMPANY POLICY 8t EMPLOYEE HANDBOOKS JOB DESCRIPTIONS 8t PERFORMANCE REVIEWS RECRUITMENT SUPPORT CRIMINAL BACKGROUND CHECKS OIG SANCTION VERIFICATIONS EMPLOYEE CREDIT REPORTS CHILD ABUSE CLEARANCE DRIVERS RECORD REPORTS K SOCIAL SECURITY NUMBER VERIFICATION MEGAN'S LAW DATA BASE VERIFICATION POST SECONDARY EDUCATION VERIFICATIONS PROFESSIONAL LICENSE VERIFICATIONS REFERENCE VERIFICATIONS t' NEW HIRE IMPLEMENTATION COMPLIANCY REVIEW OF EXISTING EMPLOYEE FILES COMPLIANCY REVIEW OF EXISTING POLICIES 6t HANDBOOK EXPERT HR CONSULTING HR EDUCATION Ft TRAINING (CONDUCTING PERFORMANCE REVIEWS, INTERVIEWS, SEXUAL HARASSMENT) EMPLOYEE RETENTION STRATEGY AND PLANNING SALARY SURVEYS O X G) z -v O O 0 O 4(73L7)0 4S?8-0021 CERTIFICATE OF SERVICE • AND NOW, the undersigned hereby certifies that I have, on the date written below, served a true and correct copy of the foregoing Amended Complaint by regular mail addressed to: Michael, L. Bangs, Esquire BANGS LAW OFFICE 429 South 18" Street Camp Hill, PA 17011 Date: o POOLE & LORD, LLP K. Webb, Paralegal r-f ?v te') ?J N N (fl MILLER, POOLE & LORD, LLP Andrew J. Miller, Esquire Pa. Bar No. 84012 137 East Philadelphia Street York, Pennsylvania 17401 (717) 845-1524 Attorneys for Plaintiff LAURA FRAZIER, Plaintiff VS. HUMAN ELEMENT GROUP, INC., PAYTIME HARRISBURG, INC. and NATHAN PATTERSON Defendants IN THE COURT OF COMMON PLEAS YORK COUNTY, PENNSYLVANIA NO.2009-SU-004091-01 CIVIL ACTION - LAW JURY TRIAL DEMANDED ACCEPTANCE OF SERVICE I accept service of the Complaint filed in the above captioned matter on:behalf of Human Element Group, Inc., Paytime, Inc., and Nathan Patterson and certify that I am authorized to do so. Dated: T// /?l "-2 Michael L. Bangs BANGS LAW OFFICE 429 South 18th Street Camp Hill, PA 17011 Court ID #41263 MICHAEL L. BANGS, ESQUIRE ATTORNEY FOR DEFENDANTS I.D. No. 41263 429 South 18th Street Camp Hill, PA 17011 (717) 730-7310 LAURA FRAZIER, ) IN THE COURT OF COMMON tLEA Plaintiff ) OF YORK COUNTY, PENNSYI XAI VS. ) NO.2009-SU-004091-01 -': r•' { a . HUMAN ELEMENT GROUP, INC., ) CIVIL ACTION - LAW -Y, PAYTIME HARRISBURG, INC., and ) ?-- NATHAN PATTERSON, ) JURY TRIAL DEMANDED - `•°•" ` Defendants DEFENDANTS' PRELIMINARY OBJECTIONS TO PLAINTIFF'S COMPLAINT AND NOW comes the Defendants, Human Element Group, Inc. ("HEG"), Paytime Harrisburg, Inc. ("Paytime") and Nathan Patterson ("Patterson") by and through their attorney Michael L. Bangs, Esquire and files the following Preliminary Objections to Plaintiff's Complaint: VENUE All Defendants object to venue in York County as being improper. The proper venue for this dispute is in Cumberland County. First, all claims made by Plaintiff stem from the employment agreement entered into by the Plaintiff and marked as Exhibit A and attached to Plaintiffs Complaint. Under Paragraph 13 of the agreement, Plaintiff specifically agrees to the venue for a resolution of all disputes is in Cumberland County, Pennsylvania. Second, all transactions or occurrences which give rise to the cause of action filed in this case by Plaintiff are in Cumberland County. Plaintiff signed the employment agreement in Cumberland County. Plaintiff was employed by Defendant HEG in Cumberland County. Both corporate Defendants are located in Cumberland County. The individual Defendant Patterson 0 E resides in Cumberland County. All matters which are alleged in the Complaint involving transactions which are claimed by Plaintiff occurred in Cumberland County. There were no transactions or occurrences of which the cause of action arose in York County nor did the cause of action arise in York County. All witnesses and sources of proof are located in Cumberland County. DO YOU WANT TO ADD ANYTHING ELSE ABOUT YORK COUNTY? COUNTI VIOLATION OF PENNSYLVANIA WAGE PAYMENT AND COLLECTION LAW 1. Defendants HEG, Paytime and Patterson all demur to Plaintiff's claim under Count I for violation of the Wage Payment Collection Law ("WPCL"). Plaintiff's claim is for a breach of an employment agreement for prospective wages and the WPCL is not a remedy to collect wages which may have been earned but for a breach of an employment agreement. 2. Defendant Paytime demurs to Count I asserting a claim under the WPCL in that Plaintiff had no contractual relationship with Defendant Paytime; Defendant Paytime had no legal obligation to pay Plaintiff wages nor has it ever provided wages to Plaintiff. Defendant Paytime was never Plaintiff s employer. 3. Defendant Patterson demurs to Count II of Plaintiff's Complaint in that Plaintiff has failed to make sufficient averments to "pierce the corporate veil" and render Defendant Patterson liable for any obligations of Defendant HEG. COUNT II CIVIL CONSPIRACY 1. Defendants HEG, Paytime and Patterson all demur to Plaintiff's claim under Count II to civil conspiracy on the basis that a claim of civil conspiracy requires both malice and a lack of justification. Defendants did not act either maliciously or without justification when they 2 0 • decided to close HEG; it was a sound business decision, and was not done in any way to cause injury to Plaintiff. 2. Defendants HEG, Paytime and Patterson demur to Count II in that a civil conspiracy requires more than one party, and there is no "legal or rational basis" to hold that a person can conspire with an entity of which he is the sole stockholder, director and officer. 3. Defendants HEG, Paytime and Patterson demur to Plaintiff's claim for punitive damages in that there were no allegations that permit such an award of damages. COUNT III BREACH OF CONTRACT 1. Defendants Paytime and Patterson demur to Count III, Breach of Contract, in that they had no contractual relationship with Plaintiff. Plaintiff only had a contractual relationship with Defendant HEG. 2. Defendant Patterson demurs to Count III of Plaintiff's Complaint for Breach of Contract under the theory of piercing the corporate veil in that there is no legal basis to make Defendant Patterson individually liable for a claim for breach of contract against the corporate Defendant HEG. 3. Defendant Paytime demurs to Count III of Plaintiff's Complaint assessing liability under a breach of contract claim based upon a "de facto merger" in that there is no legal basis to assess liability against Defendant Paytime under this theory for a contract which was solely with Defendant HEG. 4. Defendant Patterson objects to Count III of Plaintiff's Complaint in that it has insufficient specificity to make out a claim for individual liability of Defendant Patterson under E • the theory of "piercing the corporate veil" which would make Defendant Patterson liable for any alleged breach of the agreement by Defendant HEG. 5. Defendant Paytime objects to Count III of Plaintiff s Complaint in that it lacks sufficient specificity to show that Defendant Paytime had a "de facto merger" with Defendant HEG which somehow would assess liability against Defendant HEG for a contract that was solely between Plaintiff and Defendant HEG. COUNT IV TORTIOUS INTERFERENCE WITH CONTRACTUAL RELATIONS 1. Defendant Paytime demurs to Count IV of Plaintiff s Complaint alleging tortuous interference with contractual relations in that Plaintiff's Complaint fails to state a cause of action. Defendant HEG had ceased doing business and Plaintiff no longer continued in the employment of HEG when Paytime entered into a lease for the premises previously occupied by HEG; began employment with former employees of HEG; and began servicing any former accounts of HEG. COUNT V INDEMNITY 1. All Defendants demur to Plaintiff s claim of Indemnity on the basis that Pennsylvania law does not provide an independent cause of action for "indemnity." 2. All Defendants demur to Plaintiff's claim of Indemnity for damages that Plaintiff claims resulting from the lease entered into by Sourcepoint, LLC in that Plaintiff had no personal obligation for any lease payments and has failed to state in the Complaint that she has any personal obligation. Rather, Plaintiff is seeking to be paid in excess of $31,000.00 for damages which she believes she may be subject to in the future without any reasonable basis or allegation stating how that would occur. 4 • 3. Defendant Paytime demurs to Plaintiff's claim of Indemnity because there was no "de facto" merger between Defendant HEG and Defendant Paytime. 4. Defendant Patterson demurs to Plaintiff's claim of Indemnity in that Defendant Patterson never took over the lease for Human Element Group, LLC's Camp Hill office. Respectfully submitted, Attorney for Defendants 429 South 18th Street Camp Hill, PA 17011 (717) 730-7310 Supreme Court ID #41263 0 1 1 0 CERTIFICATE OF SERVICE I HEREBY CERTIFY that I have this day served the foregoing Preliminary Objections by depositing a copy of the same in the United States mail, postage prepaid, at Camp Hill, Pennsylvania, addressed to the following: Andrew J. Miller, Esquire 137 East Philadelphia Street York, PA 17401 DATE: i3loq v ? 6 V - 1 IICHAEL L. BANGS, ESQUIRE ATTORNEY FOR DEFENDANTS I.D. No. 41263 429 South 18'h Street Camp Hill, PA 17011 (717) 730-7310 LAURA FRAZIER, ) IN THE COURT OF COMMON PLEAS Plaintiff ) OF YORK COUNTY, PENNSYLVANIA VS. ) NO. 2009-SU-004091-01 HUMAN ELEMENT GROUP, INC., ) CIVIL ACTION - LAW PAYTIME HARRISBURG, INC., and ) NATHAN PATTERSON, ) JURY TRIAL DEMANDED Defendants ) PRAECIPE TO THE PROTHONOTARY: Please enter my appearance on behalf of all Defendants in the above-referenced matter. _d q Respectfully submitted, r? r AAe MICHAEL L. BANGS Attorney for Defendants 429 South 18th Street,; T Camp Hill, PA 17011 (717) 730-7310 Supreme Court ID #41263 Date: -lb/t, I • BANGS I.Aktil OFfId' 429 SOUTH 18TH STREET CAMP HML, PA 17011 E-mail: mikdmagdyerizon.net PHONE: 717-730-7310 FAX: 717-730-7374 MICHAEL L. BANGS, Attorney-at-Law WENDY K. STRAUB, Paralegal September 3, 2009 Pamela S. Lee, Prothonotary York County Judicial Center 45 North George Street York, PA 17401 WILLIAM E. MILLER, JR. Of Counsel RE: Laura Frazier vs. Human Element Group, Inc., et al. No. 2009-SU-004091-01 { Dear Ms. Lee: > .; w Enclosed you will find the following: - I. The original and one copy of a Praecipe entering my appearance on behalf oe Defendants; r`•' N) _ 2. The original and two copies of Preliminary Objections that I file on behalf of the Defendants; 3. The original and one copy of a Brief in support of the Preliminary Objections. A true and correct copy of these documents have been provided to opposing counsel as of this date. Please time-stamp a copy of the Praecipe for entry of appearance, the Preliminary Objections and the Brief and return them to me in the enclosed, self-addressed envelope. yours, Very truly VW Michael L. Bangs wks Enclosures cc: Nathan Patterson, President Andrew J. Miller, Esquire • MICHAEL L. BANGS, ESQUIRE I.D. No. 41263 429 South 18'h Street Camp Hill, PA 17011 (717) 730-7310 • ATTORNEY FOR DEFENDANTS LAURA FRAZIER, ) IN THE COURT OF COMMON PLEAS Plaintiff ) OF YORK COUNTY, PENNSYLVANIA VS. ) NO.2009-SU-004091-01 N =? C7 w HUMAN ELEMENT GROUP, INC., ) CIVIL ACTION - LAW PAYTIME HARRISBURG, INC., and NATHAN PATTERSON, ) JURY TRIAL DEMANDED Defendants ) '? DEFENDANTS' BRIEF IN SUPPORT OF PRELIMINARY OBJECTIONS r BACKGROUND Plaintiff filed a five-count Complaint against Human Element Group, Inc. ("HEG"), Paytime Harrisburg, Inc. ("Paytime") and Nathan Patterson ("Patterson"). The causes of action arise from an employment agreement entered into by Plaintiff and HEG which is attached to Plaintiff's Complaint as Exhibit A. Plaintiff was never employed by Paytime or Patterson. Defendants individually and collectively have filed Preliminary Objections to all counts of the Complaint as well as a Preliminary Objection to the venue. This brief will address each of those Preliminary Objections. VENUE Plaintiff improperly filed this action in York County. Plaintiff claims in her Complaint that venue is proper under Paragraph 6. Plaintiff's sole reason for making such claim is that Plaintiff is a resident of York County and that "Defendants maintain regular business contacts in • C York County." Plaintiff conveniently ignores several factors which control venue in this case and which require this matter to be transferred to Cumberland County. First, and most significantly, Plaintiff's cause of action arises solely and exclusively from an employment agreement which she entered into with Defendant HEG. Under Paragraph 13 of that employment agreement, Plaintiff agreed as follows: ...Employee hereby irrevocably submits to the personal jurisdiction of the Court of Common Pleas of Cumberland County, Pennsylvania. Employee waives any objection to the venue and to the personal jurisdiction of the Court of Common Pleas of Cumberland County. See Plaintiff's Complaint, Exhibit A, Paragraph 13. Once Plaintiff has agreed to be subject to the Court of Common Pleas of Cumberland County, she is bound by that agreement especially since it is the very agreement which she seeks to enforce. The law is quite clear that once the parties agree to jurisdiction and venue under the terms of the agreement that that is controlling. Stivason v. Timberline Post and Beam Structures Compan y, 2008 PA Super 88; 947 A.2d 1279 (2008). Second, even ignoring the express language of the agreement, venue properly lies in Cumberland County. According to the Rules of Civil Procedure, venue for an action against a corporation lies only in: (1) The county where its registered office or principal place of business is located; (2) A county where it regularly conducts business; (3) The county where the cause of action arose; (4) A county where a transaction or occurrence took place out of which the cause of action arose, or 2 • • (5) A county where the property or part of the property which is the subject matter of the action is located provided that equitable relief is sought with respect to the property. Pa. R.C.P. No. 2179. Additionally, venue against an individual is only proper in a county where the individual may be served, in which the cause of action arose, or where a transaction or occurrence took place out of which the cause of action arose. Pa. R.C.P. No. 1066. Cumberland County is the only proper venue in this case. HEG and Paytime have their registered office and principal place of business in Cumberland County. Defendant Patterson resides in Cumberland County. Furthermore, the contract which is the basis of this action was formed in Cumberland County and involved work that Plaintiff performed for HEG at its corporate offices in Cumberland County. Cumberland County is where the cause of action arose, namely the alleged breach of the employment agreement between Plaintiff and HEG. All transactions or occurrences which form all claims in Plaintiff's Complaint all took place in Cumberland County. Simply put, there is nothing that occurred in any county other than Cumberland County which forms the basis of Plaintiff's lawsuit. Therefore, the proper forum is clearly in Cumberland County as every essential piece of this cause of action took place there. There are three factors to be considered in determining proper venue: the plaintiff's choice of forum, the parties' interests, including location of the incident, access to sources of proof, and costs of obtaining witnesses, and the public interest. Black v. Pashman, 23 Phila. 637, 639 (1992), citing, Brown v. Delaware Valley Transplant Program, 371 Pa. Super. 583, 538 A.2d 3 • • 889 (1988). All of the factors except for the plaintiff s choice weigh heavily in favor of a Cumberland County venue. Every transaction or occurrence related to the case took place in Cumberland County, and all sources of proof are still located there. Clearly, the public interest in the case is much greater for Cumberland County than York County, which has only a very tenuous connection whatsoever to anyone involved in the case (except for plaintiff). The essential witnesses also work and/or reside in Cumberland County, and thus their costs would be less if the trial was held there. In deciding a similar case of venue, the Superior Court upheld the trial Court's decision to transfer venue from Dauphin County to Northumberland County, on the basis that Northumberland County was more convenient to the parties and witnesses involved. Ernest v. Fox Pool Coro., 341 Pa. Super. 71, 74, 491 A.2d 154, 155 (1984). The Court noted that the swimming pool (where the causes of action arose) was located in Northumberland, which was also where the owners and essential witnesses resided. Id. In contrast, Dauphin County's only connection to the case was that one defendant had an office there, and several of the defendants did business there. Id. at 75, 491 A.2d at 155-156. The venue issue in Ernest is almost identical to the situation in the instant case, with the exception that Defendants have even less contact in York County than the defendant in Ernest. Presumably Plaintiff is maintaining that Defendants, meaning HEG and Paytime, maintain "regular business contacts" in York County; that is that they may have some business clients located there. This is much less than even having an office in York County. Moreover, Patterson does not conduct business in York County personally and has no contacts with York County whatsoever for purposes of this lawsuit. The Defendants in this case then have even less contacts that those in Ernest and just as the court did in transferring 4 • venue in the Ernest case, this Court should transfer venue from York County to Cumberland County. COUNT I VIOLATION OF PENNSYLVANIA WAGE PAYMENT AND COLLECTION LAW (VERSUS ALL DEFENDANTS) Plaintiff weaves in this Count several theories as to the application of the Wage Payment Collection Law ("WPCL") as a basis for liability for all Defendants. Plaintiff's convoluted attempt to bring all Defendants within this claim will be addressed individually. Initially, however, Plaintiff's attempt to use the Wage Payment Collection Law at all is misplaced and unwarranted. The WPCL has been described as follows: Pennsylvania enacted the WPCL to provide a vehicle for employees to enforce payment of their wages and compensation withheld by their employers. The underlying purpose of the WPCL is to remove some of the obstacles employees face in litigation by providing them with a statutory remedy when an employer breaches its contractual obligation to pay wages. The WPCL does not create an employee's substantive right to compensation; rather, it only establishes an employee's right to enforce payment of wages and compensation to which an employee is otherwise entitled by terms of an agreement." Thomas Jefferson Univ. v. Wapner, 2006 PA Super 156, 903 A.2d 565, 575 (2006), citing Hartman vs. Baker, 2000 PA Super 140, 1366 A.2d 347 (citations and internal quotations marks omitted). The WPCL has a specific definition of wages as follows: "Wages" includes all earnings of an employee regardless of whether determined on time, task, piece, commission or other method of calculation. The term "wages" also includes fringe benefits or wage supplements whether payable by the employer from his funds or from amounts withheld from the employee's pay by the employer. 43 P.S. Section 260.2(a) 5 • • Essentially what the courts have said is that the WPCL applies to wages or compensation which an employee has earned and which has been improperly withheld by an employer. The WPCL does not apply to prospective or future earnings such as those in this case. In this case, Plaintiff's claims are for prospective wages, namely compensation which she had not earned since HEG shut down operations on December 31, 2008. Plaintiff makes no claim for any wages due prior to December 31, 2008 and that is because all wages due Plaintiff for wages she earned were paid. Plaintiff earned no wages after December 31, 2008 because HEG was out of business. The employment agreement between HEG and Plaintiff did not guarantee her wages for any time when she didn't work on behalf of HEG. Obviously since HEG was not operating after December 31, 2008, Plaintiff could not work for HEG nor earn wages from HEG. Plaintiff s attempt to greatly expand the reaches of the WPCL far beyond its stated purpose is misplaced and should be denied. Plaintiff s attempt to apply the WPCL against Defendant Paytime should also be denied. In addition to the arguments above that the WPCL does not apply in this situation at all, there is insufficient allegations to permit Paytime to be responsible for any of HEG"s obligations under the theory of "de facto merger." The "de facto merger" doctrine is in applicable to this case. The "de facto merger" doctrine is an equitable principle that is used to overcome the general rule under Pennsylvania law that once a company sells all or substantially all of its assets to another company, the latter company is not responsible for the debts of the transferor simply because it acquired the transferor's property. Fizzano Bros. Concrete Prods. v. XLN, Inc., 2009 PA Super 898, 973 A.2d 1016, 1020 (2009), citing Continental Insurance Company vs. 6 C Schneider, Inc., 582 PA 591, 599, 873 A.2d 1286, 1291 (2005). The "de facto merger" doctrine then is an exception to this general rule under Pennsylvania law and only applies when it can be established that a successor corporation has been established merely to continue the former corporation's operations or to escape the former corporation's liabilities. Id. The very essence of the de facto merger concept is that there was in fact a merger. A merger by its terms, in the corporate context, means that there was a sale of the assets of one corporation to the other. There was never a sale of the assets of HEG to Paytime. Significantly, Plaintiff has not alleged any sale occurred and that alone defeats Plaintiff's "de facto merger" claim. Paytime is a payroll company that existed before and after HEG was formed and ceased doing business. Plaintiff's sole basis for claiming that Paytime is liable under the de facto merger doctrine appears to be based upon a sweeping allegation under Paragraph 34. Those allegations, even if accepted, do not form the basis for a claim under the WPCL based upon a de facto merger. Plaintiff also claims that Paytime is liable under the WPCL as an "employer" as defined under the act because it charged a management fee to HEG when HEG was in operation. There is no support for this position in the act or otherwise. The fact that Paytime charged HEG a management fee for back office administrative services it was providing does not make Paytime an employer nor make it responsible for HEG's employees. In fact, Plaintiff's own employment agreement makes that clear. Under the terms and conditions of her employment as set forth in the attachment to her employment agreement (Exhibit A of Plaintiff's Complaint), it clearly stated that Plaintiff, not Paytime, was responsible 7 • for managing all HEG employees. Plaintiff herself was responsible for management of all facets of HEG's business. She was never an employee of Paytime, nor did Paytime have any control over any facets of HEG's operation. Plaintiff's sole contractual involvement with Paytime was to work with Paytime's management in a focus group to develop a business plan for HEG. Participation by Paytime's management in a joint focus group does not make Paytime Plaintiff's employer under the WPCL or otherwise. As to Defendant Patterson, Plaintiff asserts two alternate theories. First, Plaintiff claims that Patterson is an employer. Patterson is not the employer; rather HEG was the employer. Second, Plaintiff makes a general averment that the corporate structure of HEG should be ignored and that liability can be assessed against Patterson based upon the theory of "piercing the corporate veil." Assessing liability against Patterson under this theory also fails. (As an aside, this same theory is alleged under Count III). Pennsylvania retains a strong presumption against piercing the corporate veil. Fletcher- Harley Corp. vs. Szymanski, 2007 PA Super 310, 936 A.2d 87 (2007), citing Lumax Industries v. Aultman, 543 Pa. 38, 669 A.2d 893, 895 (Pa. 1995). In general, a corporation is regarded as an independent entity even if its stock is owned entirely by one person. Id. However, in deciding whether the corporate veil should be pierced, the general standard is as follows: The legal fiction that a corporate is a legal entity separate and distinct from its shareholders was designed to serve convenience and justice .... and will be disregarded whenever justice or public policy require and where rights of innocent parties are not prejudiced nor the theory of the corporate entity rendered useless .... We have said that whenever one in control of a corporation uses that control, or uses the corporate assets, to further his or her own personal interest, the fiction of the separate corporate identity may properly be disregarded. In deciding whether to pierce the corporate veil, courts are basically concerned with determining if equity requires that the shareholders' traditional insulation 8 from personal liability can be disregarded and with ascertaining if the corporate form is a sham, constituting a fagade or the operations of the dominant shareholder. Thus, we inquire, inter alia, whether corporate formalities have been observed and corporate records kept, whether officers and directors other than the dominant shareholder himself actually function, and whether the dominant shareholder has used the assets of the corporation as if they were his own. Fletcher-Harlee Corp. at 96, quoting, The Village at Camelback Property Owners Association, Inc. v. Carr et al. ("The Village'a, 371 Pa. Super. 452, 538 A.2d 528 (Pa. Super 1988). In summarizing the law, the Fletcher-Harlee Corp. court noted that the following factors are particularly considered: (1) Undercapitalization; (2) Failure to adhere to corporate formalities; (3) Substantial intermingling of corporate and personal affairs, and (4) Use of the corporate form to perpetrate a fraud. Fletcher-Harlee Corp. at 100-101. The court added that it also must be considered, after an analysis of the above factors, whether equity requires that the shareholders' traditional insulation from personal liability be disregarded to prevent an injustice. Id. at 101. An analysis of the above factors in the instant case reveals that there is no basis to pierce the corporate veil and proceed against Patterson personally. Contrary to the assertions of Plaintiff, HEG was not undercapitalized, rather it was fully capitalized in order to pay its debts. Patterson personally loaned the corporation in excess of $100,000; no different than if the corporation had received financing from a bank or other lending institution. Additionally, all corporate formalities were recognized; it was a registered business in Pennsylvania and adhered to all corporate formalities in its set up and operation. Patterson did not commingle his affairs nor is there any allegations that he did so. The fact that he loaned the corporation in excess of $100,000 is evidence itself that there was not a commingling; rather there was a separation between himself and the corporation. Finally, there was absolutely no allegation that HEG was utilized to perpetuate a fraud. 9 A full and complete reading of Plaintiff's Complaint fails to set forth sufficient allegations that would allow this claim to move forward against Patterson on a theory of piercing the corporate veil. Consequently, Plaintiff's attempt to assess liability under the WPCL against Patterson on the theory of piercing the corporate veil should be prevented and this Count should be dismissed. COUNT IV CIVIL CONSPIRACY To prove a civil conspiracy, the evidence must show that "two or more persons combined or agreed with intent to do an unlawful act or to do an otherwise lawful act by unlawful means." Thompson Coal Co. v. Pike Coal Co., 488 Pa. 198, 211, 412 A.2d 466, 472 (1979) (further citations omitted). Proof of malice, i.e., an intent to injure, is essential to a claim of civil conspiracy. Id. This intent must be absent justification; justification in pursuing one's own business interests is sufficient justification to negate an intent to injure. Id. Additionally, a conspiracy requires at least two conspirators, and there is no "legal or rational basis" to hold that a person could conspire with an entity of which he is sole stockholder, director and officer. Id. at 213, 412 A.2d at 473 (further citations omitted). First, in regard to Patterson, he was the sole stockholder, director and officer of HEG. Therefore, under the Thompson holding, it is impossible for him to conspire with himself and therefore the claim of conspiracy must be dismissed as it relates to Patterson. In regard to Paytime, a similar analysis is applicable. Patterson is the sole director, sole officer and primary stockholder. As such, Paytime cannot conspire with HEG since Patterson is the sole stockholder, sole director and sole officer of that corporation. 10 Additionally, there is a complete absence of malice. HEG ceased operations and as such, Plaintiff's employment with HEG stopped when HEG closed its doors. It was Patterson, not Paytime, who decided to shut down HEG. It was Patterson, not Paytime, who loaned HEG in excess of $100,000. Patterson decided to stop incurring significant losses in an entity that couldn't cover its costs. Patterson clearly made a sound business decision to stop incurring those losses and was certainly justified in taking the action that he did. This is yet another attempt by Plaintiff to create legal theories to try and bring in Paytime and Patterson as additional defendants in a case that is, at best, a claim for breach of contract against HEG alone. This Court should not countenance to this type of shotgun approach and should dismiss this claim entirely. One final note. Plaintiff inserts in Paragraph 51 a gratuitous request for punitive damages yet makes no averments that, if proven, would allow this Court to assess punitive damages. Absent a specific pleading that sufficiently sets out facts, if proven, that punitive damages are permitted, this request should be dismissed. COUNT III BREACH OF CONTRACT Plaintiff has filed a breach of contract claim against all three Defendants: HEG, Paytime and Patterson individually. While Plaintiff did have a contract with HEG, she did not have any contractual relationship with Paytime or Patterson. The elements of a breach of contract claim are: (1) the existence of a contract, including its essential terms; (2) a breach of a duty imposed by the contract; and (3) resultant damage. Pittsburgh Constr. Co. v. Griffith, 2003 PA Super 374, 834 A.2d 572, 580 (2003) (further citations omitted). Thus, it is axiomatic that the most essential 11 element of a breach of contract claim is the existence of a contract, which Plaintiff did not have with either Paytime or Patterson. Plaintiff asserts that Patterson is liable individually for a breach of contract despite no contractual relationship with Plaintiff under the theory of piercing the corporate veil. As stated previously, this claim is completely without merit. HEG was a separate and distinct company and adhered to all corporate formalities. It was capitalized by a loan from Patterson to the company. Patterson never intermingled his personal affairs with HEG as clearly evidenced by the fact that he had a loan directly from himself to the corporation. Most importantly, HEG was never formed to perpetuate a fraud; rather, HEG was formed in the hopes of it being a successful corporate entity. Unfortunately, HEG failed and after loaning the company in excess of $100,000 of his personal funds, Patterson made a very prudent business decision which was to simply close the doors of HEG. Next Plaintiff tries to assert a breach of contract claim against Paytime based upon the de factor merger argument. Again, the law in regard to de facto merger has been set out previously in this brief. As stated, the de facto merger doctrine is an equitable principle that can only be found to overcome the corporate setup if it can be shown that the purpose of the merger was to continue the former corporation's operations to escape the former corporation's liabilities. In reviewing all the allegations of Plaintiff s Complaint, it is clear that that did not occur in this case. Plaintiff would have this Court believe that HEG shut down and Paytime hired some of its employees for the sole reason to avoid payment of the amount claimed due Plaintiff by HEG. The amount claimed is $35,000. The biggest creditor, however, of HEG was Patterson himself 12 who had loaned the company in excess of $100,000. It makes no rational sense that Paytime and HEG would be involved in a "de facto merger" when that de facto merger would in fact keep Patterson from ever collecting on the loan. The claim that there was a de facto merger in this case is ludicrous and the Court should not permit Plaintiff to pursue a breach of contract claim against Paytime on this theory. COUNT IV TORTIOUS INTERFERENCE WITH CONTRACTUAL RELATIONS The elements of a cause of action for intentional interference with contractual relations are as follows: 1) The existence of a contractual relation between the complainant and a third party; 2) Purposeful action on the part of the defendant, specifically intended to harm the contractual relation; 3) The absence of privilege or justification on the part of the defendant; and 4) The occasioning of actual legal damage as a result of the defendant's conduct. Reading Radio, Inc. v. Fink, 833 A.2d 199, 211 (Pa. Super. 2003) (further citations omitted). A privilege can be asserted if the person is acting in good faith to protect a legal interest of his own, which he believes may be impaired or destroyed by the performance of the contract. Gresh v. Potter McCune Co., 235 Pa. Super. 537, 541, 344 A.2d 540, 542 (1975). This privilege is narrowly construed, and must meet the three criteria of. (1) a legally protected interest, (2) that the person in good faith asserts to protect, and (3) the threat to protect it is by proper means. Id. 13 Clearly, the only reason that Plaintiff s employment with HEG ended was because HEG went out of business. It is undisputed that Defendant Patterson had already personally invested over $100,000 into HEG during the six months that it was in operation; since he was not willing to further indebt himself to a losing proposition, he chose to close HEG. Such a choice was a sound business decision, and not in any way done to injure Plaintiff. Furthermore, Paytime did not do anything to impair Plaintiff s relationship with HEG; rather, it stepped in after HEG had closed, and tried to take care of matters as best as possible under the circumstances. Paytime's involvement came after the decision was made to close HEG, and thus the contractual relationship with Plaintiff was already coming to an end. Plaintiff has some sweeping allegations that Defendant Paytime acquired the "assets" of HEG yet does not identify what those assets are. In fact, Plaintiffs Complaint acknowledges that HEG had to be loaned in excess of $120,000 from Patterson in order to keep afloat (see Plaintiffs Complaint Paragraph 22). It is axiomatic, therefore, that HEG had no assets and therefore nothing to acquire. What HEG had was some customers that were failing to produce enough revenue to pay its bills. Those customers were also Paytime customers. After HEG closed, Paytime attempted to maintain its relationship with these customers by hiring some of HEG's employees to service those accounts as they moved forward. What is clearly stated in Plaintiff s Complaint and which was factual was that HEG could not pay its own obligations without a significant loan by Patterson to the company. Patterson chose to stop loaning HEG funds and as such, HEG had to close because it could not pay its bills. There was nothing that Paytime did to prevent HEG from paying its bills; rather, HEG could never pay its own bills without Patterson's loans. 14 Consequently, there was never any intentional interference with the contractual relationship and this Count must fail also. COUNT V INDEMNITY Pennsylvania law on corporations holds that a corporation "shall have the power to indemnify any person... that... is or was a representative of the corporation...." 15 Pa. C.S. § 1741; 15 Pa. C.S. § 1742. Notably, this statute allows, but does not require indemnification. Specifically, the indemnity is for any "expenses, judgments, fines and amounts paid in settlement...." Id. In the instant case, there is no evidence whatsoever that Plaintiff has incurred any amounts which require indemnification. Furthermore, there is no evidence that a claim for indemnity is something that can be filed for and litigated in a court of law. While a corporation may have the right to indemnify a representative of the corporation, there is no legal cause of action for its failure to do so. Under the specific facts of the instant case, HEG paid the copier lease fees while it operated which Plaintiff had personally guaranteed to The Phillips Group. Plaintiff benefited by these monthly payments. Assuming Plaintiff did settle with The Phillips Group, it was for an amount significantly less than what it would have been had HEG not paid any lease payments. Consequently, Plaintiff actually benefited from those payments. In regard to the lease for the office space, her argument is simply incredible. Paytime did not renegotiate any lease; Paytime instead entered into a new lease with the landlord for that space previously occupied by HEG and Sourcepoint, LLC. Plaintiff knows full well that she has no personal guarantee under the previous lease; otherwise she would have pled and attached to this Complaint proof of that personal guarantee. Rather, Plaintiff is suggesting that she has 15 E E "foreseeable damages" of an amount in excess of $31,000 yet has no basis for showing those damages even exist. What did occur is that Paytime, by entering into a new lease with the landlord for that space, actually benefited Plaintiff's former company Sourcepoint, LLC. So even if Plaintiff could make a claim for "indemnity," which is denied, there is nothing to indemnify her from since she has no liability or damages for past due rent personally. Finally, the claim against Patterson should be dismissed because he had no involvement personally in this lease at all. The sole basis for Patterson's involvement under Count V is based upon the allegation in Paragraph 73 of the Complaint. In that paragraph, it states that Defendant Patterson "took over the lease for Human Element Group, LLC (Plaintiff s former company)." Patterson did not take over the lease. The fact is that Paytime alone negotiated a new lease for the space; Patterson was not involved individually at all. This is again a feeble attempt by the Plaintiff to keep Patterson in the case by whatever means possible and this attempt should be prevented by this Court. CONCLUSION For the reasons set forth in this brief, the Preliminary Objections raised by Defendants should be granted. Respectfully submitted, A4? -7, MICHAEL L. BANGS Attorney for Defendants 429 South 18th Street Camp Hill, PA 17011 (717) 730-7310 Supreme Court ID #41263 16 • CERTIFICATE OF SERVICE is I HEREBY CERTIFY that I have this day served the foregoing DEFENDANT'S REPLY BRIEF, by depositing a copy of the same in the United States mail, postage prepaid, at Camp Hill, Pennsylvania, addressed to the following: Andrew J. Miller Miller, Poole & Lord 137 East Philadelphia Street York, PA 17401 DATE: EN DY Y K. S UB Paralegal ? PV <5 b ? rsi 4 rO 17 • '?-YMILLER, POOLE & LORD, LLP Andrew J. Miller, Esquire Pa. Bar No. 84012 137 East Philadelphia Street York, Pennsylvania 17401 (717) 845-1524 C: Attorneys for Plaintiff LAURA FRAZIER, : IN THE COURT OF COMMON PLEAS Plaintiff YOF Thursday, August 13 2009 3 35 PM NIA VS. 2009-SU-004091-01 HUMAN ELEMENT GROUP, INC., PAYTIME HARRISBURG, INC. and NATHAN PATTERSON Defendants CIVIL ACTION - LAW JURY TRIAL DEMANDED a n x> NOTICE TO DEFEND c,a . z -?? ° Y You have been sued in Court. If you wish to defend against the claims set forts inw the following pages, you must take action within twenty (20) days after this Complaint andN 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 Plaintiff. You may lose money or the 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. NAME: LAWYER REFERRAL SERVICE YORK COUNTY BAR ASSOCIATION ADDRESS: YORK COUNTY BAR CENTER 137 EAST MARKET STREET YORK, PENNSYLVANIA 17401 PHONE: (717) 854-8755 Ty ? C: ? 0 0 AVISO USTED HA SIDO DEMANDADO EN LA CORTE. Si usted desea defenderse de las quejas expuestas en las paginas siguientes, debe tomar accion dentro de veinte (20) dias a partir de la fecha en que recibio la demanda y el aviso. Usted debe presentar comparecencia escrita en persona o por abogado y presentar en la Corte por escrito sus defensas o sus objeciones a las demandas en su contra. Se le avisa que si no se defiende, la caso puede proceder sin usted y la Corte puede decidir en su contra sin mas aviso o notificacion por cualquier dinero reclamado en la demanda o por cualquier otra queja o compensacion reclamados por el Demandante. USTED PUEDE PERDER DINERO, O PROPIEDADES U OTROS DERECHOS IMPORTANTES PARA USTED. LLEVE ESTA DEMANDA A UN ABOGADO INMEDIATAMENTE. SI USTED NO TIENE O CONOCES UN ABOGADO, VAYA O LLAME A LA OFICINA EN LA DIRECCION ESCRITA ABAJO PARA AVERIGUARDONDE PUEDE OBTENER ASISTENCIA LEGAL. NAME: LAWYER REFERRAL SERVICE YORK COUNTY BAR ASSOCIATION ADDRESS: YORK COUNTY BAR CENTER 137 EAST MARKET STREET YORK, PENNSYLVANIA 17401 PHONE: (717) 854-8755 • • MILLER, POOLE & LORD, LLP Andrew J. Miller, Esquire Pa. Bar No. 84012 137 East Philadelphia Street York, Pennsylvania 17401 (717) 845-1524 Attorneys for Plaintiff LAURA FRAZIER, IN THE COURT OF COMMON PLEAS Plaintiff YOR- - - __ -- - -NIA NIA Thursday, August 13, 2009 3 35 PM vs. 2009-SU-004091-01 n r° n - HUMAN ELEMENT GROUP, INC., CIVIL ACTION - LAW -_ ' PAYTIME HARRISBURG INC. and 70-4 x , NATHAN PATTERSON JURY TRIAL DEMANDED s D efendants U) X N ;> COMPLAINT AND NOW, to wit, this _ day of August, 2009, comes Plaintiff Laura Frazier, by her attorneys MILLER, POOLE & LORD, LLP and files the following: PARTIES 1. Plaintiff Laura Frazier is an individual residing at 1085 Dandelion Drive, York, Pennsylvania 17404. 2. Defendant Human Element Group, Inc. ("Defendant HEG") is a Pennsylvania corporation with a principal place of business at 3552 Gettysburg Road, Suite 200, Camp Hill, Pennsylvania 17011. 3. Defendant Paytime Harrisburg, Inc. ("Defendant Paytime") is a Pennsylvania corporation with a principal place of business at 5070B Ritter Road, Suite 115, Mechanicsburg, Pennsylvania 17055. 4. Defendant Nathan Patterson ("Defendant Patterson") is an individual who at all relevant times hereto was the owner and President of Defendant HEG and an owner and the 1 President of Defendant Paytime. Plaintiff believes and therefore avers that Patterson currently resides at 3 Brandy Circle, Camp Hill, Pennsylvania 17011. 5. Defendant HEG, Defendant Paytime and Defendant Patterson may also be collectively referred to as "Defendants". VENUE 6. Jurisdiction and venue are proper in York County because Plaintiff is a resident of York County, Pennsylvania, and Defendants maintain regular business contacts in York County, Pennsylvania. BACKGROUND FACTS 7. Defendant Paytime's business is to provide payroll services to its clients. 8. Plaintiff owned and operated Human Element Group, LLC, formerly known as SourcePoint, LLC, which provided human resource management and support. 9. On or about February 2008, Christopher Haverstick, a co-owner of Defendant Paytime, approached Plaintiff on behalf of Defendant Patterson about purchasing Human Element Group, LLC from Plaintiff. Defendant Patterson believed he could capitalize on synergies between Human Element Group, LLC and Defendant Paytime, and turn around Human Element Group, LLC's lackluster performance and grow the services of Defendant Paytime for mutual benefit. 10. Defendant Patterson was fully aware in February 2008 when discussions began that Human Element Group, LLC was not profitable at the time, that it had significant liabilities, and that it was on the verge of shutting down completely. On the advice of his attorney and accountant, Defendant Patterson decided not to purchase the business outright, but rather establish a new company under a similar name, personally purchase the furniture and equipment 2 0 1 1 01, of Human Element Group, LLC, assume the office and copier leases and clients with the new entity, and cause the new entity to enter into an employment agreement with Plaintiff. 11. On June 19, 2008, Defendant Patterson incorporated Human Element Group, Inc. (Defendant HEG) of which Defendant Patterson is believed to be 100% owner. 12. Defendant HEG employed Plaintiff pursuant to an employment agreement executed by Defendant Patterson commencing on July 1, 2008 ("Employment Agreement"). A true and correct copy of the Employment Agreement is attached as Exhibit A to this Complaint. 13. The Employment Agreement provides for an employment term of one year subject to certain rights of termination for cause, an annual salary of $70,000.00, and an annual bonus equal to ten percent of the net income. Plaintiff requested a three year employment term; however, Defendants only agreed to a one year term. 14. The Employment Agreement included a termination for cause provision, describing "cause" as follows: Cause includes, but is not limited to, reasons such as Employee's failure, as determined by Employer, in its sole discretion, to effectively or completely perform Employee's assigned duties; chronic absenteeism as deemed solely by Employer; theft of Employer's property or failure to live up to Employee's obligations to Employer as described in this Agreement. 15. Defendant HEG employed all of the former employees of Human Element Group, LLC. All parties ceased doing business under Human Element Group, LLC. 16. Defendant Patterson then personally purchased the furniture and equipment of Human Element Group, LLC. 17. Defendant Patterson and Defendant HEG effectively assumed the office and copier leases of Human Element Group, LLC and essentially took-over and continued to operate Plaintiff's former business in its same location. 3 0 1 1 0. 18. Defendant HEG made payments on the office lease for 3552 Gettysburg Road, Suite 200, Camp Hill, Pennsylvania 17011 to DEEM Guys, LLC, which Defendant HEG continued until December 31, 2008. 19. Defendant HEG made payments for a copier leased from The Phillips Group to Source Point, LLC, which Defendant HEG continued to pay through January 7, 2009. 20. As Business Manager of Defendant Paytime, Leroy Zeigler established the business plan between Defendant HEG and Defendant Paytime along with Defendant Patterson and Plaintiff. Zeigler negotiated the financial logistics of transitioning Human Element Group, LLC to Defendant HEG with Plaintiff. 21. Defendant HEG paid Defendant Paytime a monthly management fee. 22. From July 2008 through December 2008 when Defendant HEG shut down, Plaintiff believes Defendant Patterson personally loaned Defendant HEG in excess of $120,000 to cover losses incurred by Defendant HEG. 23. Defendant HEG was thinly capitalized and wholly owned by Defendant Patterson. Therefore, Defendant Patterson is individually liable for Defendant HEG's obligations. 24. During her employment, Plaintiff was in almost daily contact with Defendant Patterson and Zeigler via E-mail and meetings. 25. Plaintiff regularly sought approval from Defendant Patterson and Zeigler regarding administrative actions and decisions. Plaintiff reported weekly to Zeigler regarding the financial status of new and existing accounts. 26. Plaintiff did not have check signing authority, did not have the authority to make any corporate purchases without approval from Defendant Patterson, nor was Plaintiff authorized to fire or hire employees without approval. 4 • E 27. Plaintiff was repeatedly instructed by Defendant Patterson and Zeigler to end her relationship with her business coach, which she did. 28. At no time was Plaintiff subject to a performance evaluation, nor was any disciplinary action taken against her at any time. 29. On or about December 2, 2008, Defendant Patterson informed Plaintiff that Defendant HEG would cease operation as of December 31, 2008 due to its poor performance. Plaintiff was informed that Defendant Paytime would retain all employees of Defendant HEG except Plaintiff. 30. Defendant Paytime took over all sixteen active accounts served by Defendant HEG, including the six accounts brought by Plaintiff from her prior business. 31. Defendant Patterson, upon informing the employees of Defendant HEG that it would no longer operate, allowed employees to take whatever furniture or other equipment of Defendant HEG they wished. 32. Defendant Paytime renegotiated the lease for the Camp Hill office, previously Defendant HEG's office, and has continued to use the office for Defendant Paytime's sales staff. 33. Defendant Paytime retained the copier leased to Source Point, LLC from The Phillips Group. On January 7, 2008 Zeigler, on behalf of Defendant Paytime, contacted The Phillips Group regarding the copier, informing them Defendant HEG was no longer in business, that the copier was located at Defendant Paytime's office, and that The Phillips Group should pick it up. Neither Defendant HEG nor Defendant Paytime made lease payments on the copier after January 7, 2009. 34. As a result of Defendant HEG ceasing operations and Defendant Paytime retaining all of Defendant HEG's accounts and employees except for Plaintiff, and Defendant 5 9 0 HEG's office; Zeigler, as Business Manager of Defendant Paytime, exercising management and control over the operation of Defendant HEG from the time of its incorporation; and Defendant Patterson, as owner of Defendant HEG and President of Defendant Paytime, establishing and maintaining a cooperative relationship between the two corporations, there was a de facto merger of Defendant Paytime and Defendant HEG when Defendant HEG ceased operating. 35. Defendant Paytime, as the successor to Defendant HEG, is liable for Defendant HEG's obligations because of the de facto merger. 36. As of December 31, 2008, Defendant HEG ceased issuing Plaintiff biweekly installments of her salary pursuant to the Employment Agreement. 37. At no time did Defendants terminate Plaintiff or give any cause for termination. COUNT I VIOLATION OF PENNSYLVANIA WAGE PAYMENT AND COLLECTION LAW Laura Frazier v Human Element Group, Inc., Nathan Patterson and Paytime Harrisburg, Inc. 38. Paragraphs 1-37 are incorporated by reference. 39. Defendant HEG is an "employer" as defined under the Pennsylvania Wage Payment and Collection Law (the "WPCL"), 43 P.S. §260.2a. 40. As sole owner, resident and primary decisionmaker, Defendant Patterson is an "employer" as defined under the Pennsylvania Wage Payment and Collection Law (the "WPCL"), 43 P.S. §260.2x. 41. Alternatively, Defendant Patterson is liable as the sole owner of Defendant HEG, an undercapitalized sham corporation, which warrants the piercing of the corporate veil to assess liability directly against Defendant Patterson. 6 • • 42. As the managing agent of Defendant HEG, Defendant Paytime is an "employer" as defined under the Pennsylvania Wage Payment and Collection Law (the "WPCL"), 43 P.S. §260.2a. 43. Alternatively, Defendant Paytime acquired all essential assets and accounts, hired all employees except Plaintiff, and continued to operate in the leased office of Defendant HEG, which factors and others establish a de facto merger of Defendant HEG and Defendant Paytime, and the assumption of all liabilities of Defendant HEG by Defendant Paytime. 44. At all relevant times, Plaintiff was employed by Defendant HEG pursuant to the Employment Agreement. 45. Defendants violated the WPCL because they failed and refused to pay Plaintiff's wages due biweekly as designated by the Employment Agreement from December 31, 2008 through the term of the one year contract in the amount of $35,000. 46. Defendants are also liable to Plaintiff for liquidated damages, attorney fees and costs as provided in the WPCL. WHEREFORE, Plaintiff demands judgment in its favor and against Defendants in an amount of $35,000, together with liquidated damages, attorney fees, prejudgment interest and costs of suit, plus any such other relief as the court may deem appropriate. COUNT II CIVIL CONSPIRACY Laura Frazier v Human Element Group, Inc., Nathan Patterson and Paytime Harrisburg, Inc. 47. Paragraphs 1-46 are incorporated by reference. 7 0 • 48. Defendant Paytime, through Zeigler and Defendant Patterson, were directly and continuously involved in the operation of Defendant HEG. Defendant Paytime collected a management fee for its services. 49. Defendant Paytime and Defendant HEG agreed to cease paying Plaintiff's wages as provided in the Employment Agreement, in violation of the WPCL, for the purpose of escaping and avoiding the wages due to Plaintiff for the financial benefit of Defendant Paytime and Defendant HEG. 50. As a result of Defendant Paytime and Defendant HEG conspiring to violate the WPCL, Plaintiff suffered damages in the amount of the $35,000 in unpaid wages as provided for in the Employment Agreement. 51. Defendant Paytime and Defendant Paytime are also liable to Plaintiff for punitive damages. WHEREFORE, Plaintiff demands judgment in its favor and against Defendant Paytime and Defendant HEG in an amount of $35,000, together with punitive damages plus any such other relief as the court may deem appropriate. COUNT III BREACH OF CONTRACT Laura Frazier v Human Element Group, Inc., Nathan Patterson and Paytime Harrisburg, Inc 52. Paragraphs 1-51 are incorporated by reference. 53. Defendant Patterson entered into an employment agreement on behalf of Defendant HEG for a term of one year, providing for a $70,000 salary for that term as stated in the Employment Agreement. 8 54. Defendant Patterson is directly liable for the obligations of Defendant HEG under the theory of piercing the corporate veil. 55. Defendant Paytime, as successor to Defendant HEG by virtue of the de facto merger, became Defendant HEG for the purposes of the Employment Agreement. 56. Plaintiff has performed all of her obligations in accordance with the terms of the Employment Agreement and has not done, or failed to do, anything that would constitute "cause" as defined in Section 3 of the Employment Agreement. 57. At no time did Defendants terminate Plaintiff or indicate any cause for such a termination. 58. The Employment Agreement provided that Plaintiffs salary was $70,000 per annum for a term of one year. 59. Defendants materially breached their contract with Plaintiff by failing to pay Plaintiff the portion of her yearly salary due biweekly from January 1, 2009 through the end of the one year term provided in the Employment Agreement. WHEREFORE, Plaintiff demands judgment in its favor and against Defendants in the amount of $35,000, together with prejudgment interest and costs of suit, plus any such other relief as the court may deem appropriate. COUNT IV TORTIOUS INTERFERENCE WITH CONTRACTUAL RELATIONS Laura Frazier v Paytime Harrisburg, Inc. 60. Paragraphs 1-59 are incorporated by reference. 9 • 61. Defendant Paytime was fully aware of the terms of the Employment Agreement prior to the time that Defendant Paytime acquired all of the accounts and employees, except Plaintiff, of Defendant HEG. 62. Defendant Patterson, as President of Defendant Paytime and owner of Defendant HEG, entered into the Employment Agreement with Plaintiff on behalf of Defendant HEG in July 2008. 63. The Employment Agreement provided for an employment term of one year. 64. Nevertheless, despite this knowledge, Defendant Paytime intentionally interfered with Plaintiff's contractual relationship with Defendant HEG by acquiring all of Defendant HEG's accounts, facilitating the liquidation of Defendant HEG's assets, and retaining all of Defendant. HEG's employees except Plaintiff, causing Defendant HEG to cease performing under the Employment Agreement prior to the end of the contractual term. 65. Defendant Paytime intended to, and in fact did, interfere with Plaintiff's existing contractual relationship with Defendant HEG by intentionally causing Defendant HEG to breach the Employment Agreement. Defendant Paytime acquired all of the valuable assets of Defendant HEG such that Defendant HEG had no ability to pay its obligations, including those obligations to Plaintiff under the Employment Agreement. 66. In so doing, Defendant Paytime has acted without privilege or justification to deprive Plaintiff of her benefits under the terms of the Employment Agreement. WHEREFORE, Plaintiff demands judgment in its favor and against Defendant Paytime in an amount of $35,000, together with punitive damages, prejudgment interest and costs of suit, plus any such other relief as the court may deem appropriate. 10 COUNT V INDEMNITY Laura Frazier v Human Element Group, Inc., Nathan Patterson and Paytime Harrisburg, Ina 67. Paragraphs 1-66 are incorporated by reference. 68. Because of the de facto merger of Defendant HEG and Defendant Paytime, Defendant Paytime is liable for Defendant HEG's obligations. 69. Defendant HEG took over the payments for the copier leased from The Phillips Group to Source Point, LLC, which lease was personally guaranteed by Plaintiff. 70. After Defendant Patterson informed Plaintiff that Defendant HEG would cease doing business, Defendant Paytime retained the copier leased to Source Point, LLC. 71. On January 7, 2008 Defendant Paytime contacted The Phillips Group regarding the copier, informing them Defendant HEG was no longer in business, that the copier was located at Paytime, and that The Phillips Group should pick it up. Neither Defendant HEG nor Defendant Paytime made lease payments on the copier after January 7, 2009. 72. Plaintiff incurred damages of $1,500 to settle and release her liability under the lease. 73. Defendant Patterson and Defendant HEG took over the lease for Human Element Group, LLC's Camp Hill office which became the principal place of business of Defendant HEG, and absolved Plaintiff of any personal liability. 74. Defendant HEG made lease payments directly to the landlord until Defendant HEG ceased doing business. 11 0 1 . *I 75. Defendant Paytime, after its de facto merger with Defendant HEG, renegotiated the lease for the Camp Hill office, previously Defendant HEG's office, and has continued to use the office for Defendant Paytime's sales staff. 76. Plaintiff has incurred foreseeable damages of $31,193.24 as a result of Defendant HEG ceasing to make payments on the lease and Defendant Paytime's renegotiation of the lease at a lower rate than the prior lease entered into by Source Point, LLC. WHEREFORE, Plaintiff demands indemnity in its favor and against Defendants for damages for the lease of the copier from The Phillips Group in the amount of $1,500 and the lease on the Camp Hill office in the amount of $31,193.24, together with attorney fees, prejudgment interest and costs of suit, plus any such other relief as the court may deem appropriate. Respectfully submitted, MILLER, POOLE & LORD, LLP ?I , Date: 10 - ©°1 ?'/ ! "?' Andrew J. Miller, Esquire Pa. Bar No. 84012 137 East Philadelphia Street York, PA 17401 (717) 845-1524 12 EMPLOYMENT AGREEMENT THIS AGREEMENT is made this day of tit- u", , 2008, by and between: HUMAN ELEMENT GROUP, INC., a Pennsylvania corporation with offices at 5070 B Ritter Road, Suite 115, Mechanicsburg, Cumberland County, Pennsylvania, hereinafter called "Employer" and LAURA FRAZIER, an adult individual who resides at 1085 Dandelion Drive, York, York County, Pennsylvania, hereinafter called "Employee." WITNESSETH: WHEREAS, Employee is about to come into employment of Employer, under the terms and conditions as more fully set forth in this Agreement, and desires to set forth the terms and conditions of that employment; and WHEREAS, the Employee will come to deal directly with Employer's clients and certain information secret to and valuable to Employer, and the parties have reached an agreement to protect the trade secrets, client contacts, and other valuable property owned by Employer which is also made available to Employee and to protect all other persons employed by or otherwise interested in Employer in the event of the termination of employment of Employee by Employer, and wish to have this Agreement reduced to writing. NOW, THEREFORE, in consideration of the above recitals and in consideration of the payment of all compensation outlined in this Agreement, intending to be legally bound hereby and to legally bind their heirs, successors and assigns, the parties hereto do hereby covenant, promise and agree as follows: A EX IBIT 1. Employer hereby employs Employee as the President of the Employer and Employee hereby accepts such employment upon the terms and conditions set forth in Exhibit A which is attached hereto and incorporated herein by reference. 2. The term of Employee's employment with Employer will commence on the date of this Agreement and will continue in effect for a period of one (1) year, and thereafter until terminated by either Employee or Employer upon at least ten (10) day's prior written notice to the other party. However, Employee's employment with Employer may be terminated earlier, without the need for any prior notice, if any of the events described in Paragraph 3 occur. 3. The following events allow for immediate termination of Employee's employment: A. Employer may discharge Employee for cause at any time without prior notice. Cause includes, but is not limited to, reasons such as Employee's failure, as determined by Employer, in its sole discretion, to effectively or completely perform Employee's assigned duties; chronic absenteeism as deemed solely by Employer; theft of Employer's property or failure to live up to Employee's obligations to Employer as described in this Agreement. 4. Employee agrees to devote her full time and best efforts to carry out the duties assigned from time to time while employed by Employer. Employee agrees to perform the duties in a diligent manner, and to act at all times in the best interest of Employer. Employee agrees to fully comply with all corporate rules, regulations, procedures and policies of Employer. A more specific description of the position and the duties is attached as Exhibit A which is incorporated herein by reference. 0 1 ? • 5. Employer agrees to pay Employee, during the term of Employee's employment, compensation in accordance with the compensation plan attached hereto as Exhibit A which is incorporated herein by reference, less applicable withholding and payroll taxes, in consideration of the services to be rendered by Employee, and the covenants and agreements which have been made in this Agreement. 6. Employee may also receive a one (I%) percent equity ownership in the company any time after the first six months of employment should the Employer deem it appropriate and in its sole discretion. Prior to receipt of the one (1%) percent equity ownership interest, Employee must provide proof to Employer that there are no claims against her for back trade debt or taxes due as a result of her operation of her current limited liability company, Human Element Group, LLC, and that there are no outstanding liabilities against Human Element Group, LLC. 7. Employee shall, at all times after this Agreement, both during Employee's employment by Employer and thereafter, keep secret, protect, safeguard and preserve for Employer all information given by Employer to Employee regarding Employer's business, clients, and the like and shall not share, disclose, or make known such information to any person or entity from and after the date of this Agreement. 8. In the event of the termination of Employee's employment with Employer, at any time, by either party, and for whatever reason, Employee shall not, for a period of not less than five (5) years, contact, solicit, or attempt in any way to do business with any of the customers, clients, or any persons doing business with Employer during the period of two (2) years prior to Employee's termination of employment and shall not, during said five (5) year period, as an owner, principal, agent, employee, director, officer, or in any other capacity engage in any business in competition with the business of Employer at the time of such termination in which any other person, employee, agent, or principal shall contact Employer's customers, clients, or any other person or entity with whom Employer has done business for a period two (Z) years preceding such termination. Further, Employee agrees not to render services, as an employee or otherwise, which are the same or similar to the services which Employee rendered while employed by Employer, to or for any person or entity engaged, or who becomes engaged, in any business which is in competition with Employer within the market area serviced by Employer which includes Dauphin County, York County, Cumberland County, Lebanon County, Lancaster County, and Perry County, for a period of not less than one (1) year from the date of termination of employment with Employer. 9. During the course of Employee's employment, the Employer will disclose information concerning various business methods, data processing techniques, client lists, employee lists, and other items which will assist and benefit Employee in her assigned duties. This information would injure Employer if disclosed to competitors or potential competitors. Therefore, Employee agrees not to use, publish or disclose to any person or any other entity, processing techniques, marketing methods or plans, client lists, employee lists and other confidential information. All information regarding Employer's business, including information regarding clients, client lists, marketing or business plans, employee lists, wage and salary information, financial data, trade secrets, costs, prices, earnings, products, secret formulas or processes, machines, apparatus, systems, procedures, prospective and executed contracts and other business arrangements are presumed to be confidential unless the information is otherwise lawfully and readily available to the general public. 4 10. Employee further agrees that upon any termination of employment with Employer, Employee will return to Employer all records, documents and other written materials containing information relating to Employer, its business or its clients, and will not retain any copies of any such materials. This nondisclosure covenant will continue in force after the termination of Employee's employment with Employer. 11. This Agreement shall not be modified or changed in any way unless both parties to it agree in writing to a specific amendment. The invalidity or unenforceability of any provision or covenant of this Agreement will not affect the validity or enforceability of remaining provisions and covenants of this Agreement. The covenants contained in each separate paragraph shall each be considered a separate covenant. 12. Employee acknowledges that the provisions of this Agreement are reasonable and necessary for the protection of Employer and that Employer will be irreparably damaged if the terms and conditions of this Agreement are not specifically enforced. Accordingly, Employee agrees that, in addition to any other relief or remedies available to Employer, Employer shall be entitled to seek and obtain an appropriate injunction or other equitable remedy from the Court of Common Pleas of Cumberland County, for the purpose of restraining Employee from any actual or threatened breach of the terms and conditions of this Agreement, and no bond or securities will be required in conjunction therewith. If Employee breaches any of the promises set forth in this Agreement, and Employer proves Employee's breach in a forum of competent jurisdiction and/or Employer is awarded a permanent or temporary injunction against Employee, Employee's continuing breach, or damages arising from said breach, Employee shall be liable to pay all of Employer's reasonable costs and attorney's fees incurred in the enforcement of this Agreement, 5 . . W'' --- --'' proving such breach, obtaining said iniunetion and/or damages, and/or collection on any ,judgment. If Employee breaches any of the covenants set forth in this Agreement and Employer proves L:mplo_yee's breach and is awarded a permanent or temporary injunction against Employee, Employee's continuing breach, or damages arising from said breach, the length of the restricted period as set forth in this Agreement shall be extended to continue for an additional period of time equal to the length of time that Employee was shown to be in breach of the :agreement. 13. All questions concerning the execution of this Agreement and the rights and liabilities of the parties hereunder shall be decided in accordance with the laws of the Commonwealth of Pennsylvania. Employee hereby irrevocably submits to the personal jurisdiction of the Court of Common Pleas of Cumberland County, Pennsylvania. Employee waives any objection to the venue and to the personal jurisdiction of the Court of Common Pleas of Cumberland County. IN WITNESS WHEREOF, the parties hereto have set their hands and seals the day and year first above written. ATTEST: VVV 5ecre ary WITNESS HUMAN ELEMENT GROUP, INC. BY- NATHAN J. PATTERSON, President C LA U FRAZIE 6 EXHIBIT A Laura Crazier 1085 Dandelion Drive York, PA 174(A 7/1/2008 Dear Laura: 1 am pleased to you offer you employment with the Human Element Group, Inc. You will receive an annual salary of $70,000.00 paid bi-weekly. You also may be eligible to receive an annual bonus equal to ten (10°1o) percent of the net income, net income being solely determined by our accountant calculated at the conclusion of each fiscal year. Your responsibilities will include but will not be limited to the following: • Complete management of all employees which include hiring and termination decisions with myself having the final say on such decision. • Managing and growing the business as determined by the Human Element Group business plan which is to be developed in tandem with Paytime and maintained by a focus group, which will include yourself and Paytime management personnel. • Day to day operations of the business. • Ensuring that all clients receive the same level of care and attention they received in the past and mirror the same level of customer service that Paytime is known for. • Meeting Goals as determined by management focus group- • Managing all facets of all Human Element Group associates. • Ensuring that all of the above are taken care of in your absence. • Going on sales calls as needed. As I do with Paytime management employees, a benefit that they receive is that your time is your time. There are no sick, vacation or personal days. It is up to you to manage your time away from the business. If I feel that there is abuse then measures will have to be put in place to track your time but I trust that will never happen and I also will trust that you will use this benefit as processionally as they do. You are completely responsible for this endeavor's success or failure and I would hope that you would give it the time and attention that is needed in order for it to continue to grow and to reward everyone that is involved in its sizecess. i look forward to a long and profitable relationship together and I hope that both of these businesses will share in these rewards. Sincerely, 6-1 Nathan Patterson UNSWORN VERIFICATION The foregoing document is based upon facts and information which has been gathered by me in the preparation of this law suit. The language of the document is that of counsel. I have read the document and the facts set forth therein are true and correct to the best of my knowledge, information and belief. This statement and verification are made subject to the penalties of 18 Pa.C.S.A. §4904 relating to unsworn falsification to authorities, which provides that if I knowingly make false averments, I may be subject to criminal penalties. to- - p QA4 LAURA FRAZIER, Plaintiff VS. HUMAN ELEMENT GROUP, INC. : PAYTIME HARRISBURG, INC., and NATHAN PATTERSON, Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO.-16-?i65-- ,t 176;" IN RE: DEFENDANTS' PRELIMINARY OBJECTIONS TO PLAINTIFF'S AMENDED COMPLAINT BEFORE HESS, P.J. AND MASLAND, J. ORDER AND NOW, this Z q day of August, 2010, the court being satisfied that the plaintiff has pled sufficient facts to state a cause of action under the various theories pleaded, the preliminary objections of the defendants to the plaintiff's amended complaint are OVERRULED. BY THE COURT, ? Andrew J. Miller, Esquire For the Plaintiff Michael L. Bangs, Esquire For the Defendants rlm „q 1, , i rt sa.. / et l S-ld 41J k'r I-. x Kevin ,r: Hess, P. J. r c; s N ? kw?_ s c? a. t r} j"/? " I"1 a ,. " I r"1 I ii Z 'J r? n rP P , MILLER, POOLE & LORD, LLP Andrew J. Miller, Esquire Pa. Bar No. 84012 137 East Philadelphia Street York, Pennsylvania 17401 (717) 845-1524 Attorneys for Plaintiff LAURA FRAZIER, IN THE COURT OF COMMON PLEAS Plaintiff CUMBERLAND COUNTY, PENNSYLVANIA VS. CASE NO. 2010-01765 HUMAN ELEMENT GROUP, INC., PAYTIME HARRISBURG, INC. and CIVIL ACTION - LAW NATHAN PATTERSON Defendants JURY TRIAL DEMANDED NOTICE TO PLEAD YOU ARE HEREBY NOTIFIED TO FILE A WRITTEN RESPONSE TO THE ENCLOSED NEW MATTER TO COUNTERCLAIM WITHIN TWENTY (20) DAYS FROM SERVICE HEREOF OR A JUDGMENT MAY BE ENTERED AGAINST YOU. Respectfully Submitted, MILLER, POOLE & LORD, LLP 144A?? Andrew J. Miller., Esquire 137 East Philadelphia Street York, PA 17401 (717) 845-1524 Pa. Bar No. 84012 MILLER, POOLE & LORD, LLP Andrew J. Miller, Esquire Pa. Bar No. 84012 137 East Philadelphia Street York, Pennsylvania 17401 (717) 845-1524 Attorneys for Plaintiff LAURA FRAZIER, IN THE COURT OF COMMON PLEAS Plaintiff CUMBERLAND COUNTY, PENNSYLVANIA VS. CASE NO. 2010-01765 HUMAN ELEMENT GROUP, INC., PAYTIME HARRISBURG, INC. and CIVIL ACTION - LAW NATHAN PATTERSON Defendants JURY TRIAL DEMANDED PLAINTIFF'S ANSWERS TO DEFENDANT HEG'S NEW MATTER AND NOW, to wit, this I ellday of October, 2010, comes Plaintiff Laura Frazier, by her attorneys MILLER, POOLE & LORD, LLP and files the following: NEW MATTER OF DEFENDANT HEG 95. Plaintiff s Amended Complaint is incorporated herein by reference. 96. Admitted in part; denied in part. Admitted that Defendant Patterson, in his capacity as owner and President of Defendant HEG, notified Plaintiff that Defendant HEG was going to cease operations at the end of the year. Denied the notice was provided in early December 2008. By way of further answer, Defendant Patterson notified Plaintiff approximately the end of November 2008 that he had to cut costs at Defendant HEG and so he was transferring 1 all the employees over to Defendant Paytime except for Plaintiff and moving the transferred employees into Defendant Paytime office space. 97. Denied that Plaintiff contacted any of Defendant HEG's customers/accounts to inform them that Defendant HEG was going to shut down or to personally attempt to solicit their business moving forward. 98. Admitted. By way of further answer, Plaintiff performed services for one of Defendant HEG's customers at the request of the customer after Defendant HEG ceased operations, but Plaintiff never received compensation for the services provided. 99. Denied that Plaintiff approached or solicited any of Defendant HEG's employees about working with her in the future. 100. Denied. After reasonable investigation, Plaintiff lacks sufficient knowledge to form a belief as to the truth of this averment. As such, strict proof thereof is demanded at trial. 101. Denied as stated. As of December 31, 2008, Source Point, LLC had not been "formally shut down" in the sense that it had not dissolved pursuant to dissolution procedures under Pennsylvania business law. It is specifically denied that Source Point, LLC was still operational or capable to conduct business. By way of further answer, Source Point, LLC, at this point, was only a hollow shell, similar to Defendant HEG at that time. 102. Admitted in part, denied in part. Denied that Plaintiff ever had knowledge that any employees were disgruntled with her management style. Admitted that Plaintiff knew Defendant HEG was losing money. 2 103. Denied. Plaintiff continued to work for Defendant HEG through December 2008 despite being informed that Defendant HEG was going to cease operations at the end of the year and, as such, that all of Defendant HEG's employees would be transferred over to Defendant Paytime and moved into Defendant Paytime's office space except for Plaintiff. 104. This paragraph contains a conclusion of law to which no responsive pleading is required. To the extent a response is required; Plaintiff specifically denies the averments therein. 105. Admitted. By way of further answer, there was no left work to be done under Defendant HEG as it became an empty shell of a company, as averred by Defendants in their respective answers. 106. Denied that Plaintiff knowingly provided Defendant Patterson with any inaccurate or misleading information. It is further denied that Plaintiff overstated her abilities or any revenue projections that could be earned by Defendant HEG. 107. Admitted. 108. Admitted. By way of further answer, Defendants Patterson and HEG effectively assumed the office and copier leases of Plaintiff's company and essentially took-over and continued to operate Plaintiff's former business in its same location. WHEREFORE, Plaintiff demands judgment in its favor and against Defendant HEG, along with costs plus any such other relief as the may deem appropriate. 3 Respectfully submitted, MILLER, POOLE & LORD, LLP (0-11- to 411Afflk--C-" Date: Andrew J. Miller, Esquire Pa. Bar No. 84012 137 East Philadelphia Street York, PA 17401 (717) 845-1524 4 UNSWORN VERIFICATION The foregoing document is based upon facts and information which has been gathered by me in the preparation of this law suit. The language of the document is that of counsel. I have read the document and the facts set forth therein are true and correct to the best of my knowledge, information and belief. This statement and verification are made subject to the penalties of 18 Pa.C.S.A. §4904 relating to unsworn falsification to authorities, which provides that if I knowingly make false averments, I may be subject to criminal penalties. 7 (?i? YAlul Dated: 6 o -a - r v 07 Laura B. Frazier CERTIFICATE OF SERVICE AND NOW, the undersigned hereby certifies that I have, on the date written below, served a true and correct copy of the foregoing Answer to Defendant HEG's New Matter by regular mail addressed to: Michael, L. Bangs, Esquire BANGS LAW OFFICE 429 South 18`" Street Camp Hill, PA 17011 MILLER, POOLE & LORD, LLP Date:' y -11-10 Penelope Wo ds, Legal Secretary FICE T"7 r l P TAP MILLER, POOLE & LORD, LLP Andrew J. Miller, Esquire Pa. Bar No. 84012 137 East Philadelphia Street York, Pennsylvania 17401 (717) 845-1524 Attorneys for Plaintiff LAURA FRAZIER, Plaintiff IN THE COURT OF COMMON PLEAS VS. HUMAN ELEMENT GROUP, INC., PAYTIME HARRISBURG, INC. and NATHAN PATTERSON Defendants CUMBERLAND COUNTY, PENNSYLVANIA CASE NO. 2010-01765 CIVIL ACTION - LAW JURY TRIAL DEMANDED NOTICE TO PLEAD YOU ARE HEREBY NOTIFIED TO FILE A WRITTEN RESPONSE TO THE ENCLOSED NEW MATTER TO COUNTERCLAIM WITHIN TWENTY (20) DAYS FROM SERVICE HEREOF OR A JUDGMENT MAY BE ENTERED AGAINST YOU. Respectfully Submitted, MILLER, POOLE & LORD, LLP Andrew J. Miller., Esquire 137 East Philadelphia Street York, PA 17401 (717) 845-1524 Pa. Bar No. 84012 MILLER, POOLE & LORD, LLP Andrew J. Miller, Esquire Pa. Bar No. 84012 137 East Philadelphia Street York, Pennsylvania 17401 (717) 845-1524 Attorneys for Plaintiff LAURA FRAZIER, Plaintiff IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA CASE NO. 2010-01765 CIVIL ACTION - LAW JURY TRIAL DEMANDED VS. HUMAN ELEMENT GROUP, INC., PAYTIME HARRISBURG, INC. and NATHAN PATTERSON Defendants PLAINTIFF'S ANSWERS AND NEW MATTER TO DEFENDANT PAYTIME'S NEW MATTER AND COUNTERCLAIM AND NOW, to wit, this _W 6y of October, 2010, comes Plaintiff Laura Frazier, by her attorneys MILLER, POOLE & LORD, LLP and files the following: ANSWER TO NEW MATTER OF DEFENDANT PAYTIME 95. Plaintiff's Amended Complaint is incorporated herein by reference. 96. Denied. After reasonable investigation, Plaintiff lacks sufficient knowledge to form a belief as to the truth of this averment. As such, strict proof thereof is demanded at trial. 97. Denied. After reasonable investigation, Plaintiff lacks sufficient knowledge to form a belief as to the truth of this averment. As such, strict proof thereof is demanded at trial. 98. Admitted in part, denied in part. Admitted Defendant Patterson engaged in discussions with Plaintiff concerning the operation of her business. After reasonable 1 investigation, Plaintiff lacks sufficient knowledge to form a belief as to the truth of the averment regarding what capacity Defendant Patterson discussed business operations with Plaintiff and if Defendant Patterson was seeking to find out Plaintiff's intentions to continue to provide human resource services to any of her clients. As such, strict proof thereof is demanded at trial. By way of further answer, because Defendant Patterson had several capacities throughout his devious relationship with Plaintiff, Plaintiff rarely if ever knew what capacity Defendant Patterson was actually acting. 99. Admitted in part, denied in part. Admitted Plaintiff told Defendant Patterson that she had experience with human resources. Denied that Plaintiff essentially claimed to Defendant Patterson that any financial difficulties were because of forces outside her control and that an infusion of capital was all that Plaintiff needed to make her companies profitable. 100. Denied as stated. Plaintiff provided Defendant Patterson with unaudited historic financial information for her businesses so that Defendant Patterson could determine whether there were potential sales and marketing synergies with Defendant Paytime that justified his entry into the human resources market. 101. Denied as stated. Plaintiff believed that with the help and assistance of Defendant Paytime's staff and sales leads she had the ability to grow the human resources business. 102. Denied that Plaintiff claimed to Defendant Patterson that because she did not have enough resources to get her company out of debt that it would continue not to be profitable and that she could not commit additional funds but that absent that debt it could be a profitable endeavor. 2 103. Admitted in part, denied in part. After reasonable investigation, Plaintiff lacks sufficient knowledge to form a belief as to the truth of the averment concerning Defendant Patterson's bases for deciding to use personal funds to form a new company or any indication made to form a new company. As such, strict proof thereof is demanded at trial. Admitted that Defendant Patterson caused Defendant HEG to employ Plaintiff. Denied Plaintiff ran the company. 104. Admitted. By way of further answer, Defendant Patterson is identified as President of the corporation in the Department of State records.. 105. Admitted. 106. This paragraph contains a conclusion of law to which no responsive pleading is required. To the extent a response is required; Plaintiff specifically denies the averments therein. 107. Denied. After reasonable investigation, Plaintiff lacks sufficient knowledge to form a belief as to the truth of this averment. As such, strict proof thereof is demanded at trial. 108. Denied. Plaintiff denies that any fraudulent representations or information was provided to Defendant Patterson. It is further denied that Plaintiff provided any fraudulent or inaccurate information to Defendant Patterson or that Plaintiff had any control or influence in the decision to form Defendant HEG. By way of further answer, Defendant Patterson solely and individually decided to form Defendant HEG with the advice and guidance of highly competent accountants and legal counsel. Plaintiff lacks sufficient knowledge to form a belief as to reasons behind deciding for or against formation of Defendant HEG. 3 109. Admitted in part; denied in part. Admitted that Defendant Patterson, in his capacity as owner and President of Defendant HEG, notified Plaintiff that Defendant HEG was going to cease operations at the end of the year. Denied the notice was provided in early December 2008. 110. Admitted. 111. Denied as stated. Plaintiff had several meetings with Defendant Patterson and/or Mr. Zeigler in order to improve the performance of Defendant HEG at which time Plaitniff expressed her concern that not enough effort was being devoted at Defendant Paytime to cross- selling the services of Defendant HEG. 112. Denied that between December 1, 2008 and January 1, 2009, Plaintiff began contacting Defendant HEG's customers indicating she could provide human resource consulting for them once Defendant HEG shut down. 113. Denied that Plaintiff advised one or more customers of Defendant HEG that Defendant HEG was going to shut down as of December 31, 2008. 114. Denied for the purposes set forth in paragraph 112 above. 115. Denied as stated. As of December 31, 2008, Source Point, LLC had not been "formally shut down" in the sense that it had not dissolved pursuant to dissolution procedures under Pennsylvania business law. It is specifically denied that Source Point, LLC was still operational or capable to conduct business. By way of further answer, Source Point, LLC, at this point, was only a hollow shell, similar to Defendant HEG at that time. 4 116. Admitted. By way of further answer, Plaintiff performed services for one of Defendant HEG's customers at the request of the customer after Defendant HEG ceased operations, but Plaintiff never received compensation for the services provided. 117. Admitted. 118. Admitted. ANSWER TO COUNTERCLAIM DEFENDANT PAYTIME v. PLAINTIFF 119. Paragraphs 95-118 are incorporated herein. 120. This paragraph contains a conclusion of law to which no responsive pleading is required. To the extent a response is required; Plaintiff specifically denies the averments therein. 121. This paragraph contains a conclusion of law to which no responsive pleading is required. To the extent a response is required; Plaintiff specifically denies the averments therein. 122. This paragraph contains a conclusion of law to which no responsive pleading is required. To the extent a response is required; Plaintiff specifically denies the averments therein. By way of further answer, Defendants HEG and Paytime either are separate legal entities as averred by Defendant Paytime in the previous paragraph or they are the same entity as averred in this paragraph. They cannot be both. 123. Denied that the claims within the Complaint or Amended Complaint lack legal basis or that Plaintiff has admitted that any of the claims therein lack basis. To the contrary, after reasonable investigation, Plaintiff has found that all of the claims asserted against Defendants are valid, as this Court. 5 124. Denied. Defendant Paytime chose to challenge jurisdiction and venue. 125. Denied. Plaintiff has a reasonable basis to join Defendant Paytime in this suit as evidenced by the denial of all Defendant Paytime's preliminary objections. 126. Denied. All of Plaintiffs claims are recognizable under Pennsylvania law as evidenced by this Court's ruling denying Defendants' Preliminary Objections. 127. Denied. After reasonable investigation, Plaintiff lacks knowledge sufficient to form a belief as to the truth of this averment. As such, strict proof thereof is demanded at trial. 128. This paragraph contains a conclusion of law to which no responsive pleading is required. To the extent a response is required; Plaintiff specifically denies the averments therein. WHEREFORE, Plaintiff demands judgment in its favor and against Defendant Paytime for Defendant Paytime's counterclaim, along with costs plus any such other relief as the may deem appropriate. NEW MATTER 129. Paragraphs 95-118 are incorporated herein. 130. Plaintiff incorporates by reference and asserts the following affirmative defenses based on the facts pled in Plaintiff s Amended Complaint, Answer to New Matter and Answer to Counterclaim: a. Defendant Paytime's counterclaim is barred by the applicable statute of limitations. b. Defendant Paytime's counterclaim fails to state a cause of action upon which relief may be granted. 6 C. Defendant Paytime has not alleged any conduct on the part of Plaintiff entitling Defendant Paytime to the relief requested. d. Defendant Paytime's counterclaim is barred in whole or in part by the doctrine of laches. e. Defendant Paytime's counterclaim is barred in whole or in part by the doctrine of unclean hands f. Defendant Paytime's counterclaim is barred in whole or in part by the principles of release and/ or waiver. g. Defendant Paytime's counterclaim is barred in whole or in part by the principle of estoppel. 131. To prevent waiver thereof, Plaintiff incorporates by reference and further pleads all affirmative defenses set forth in Pennsylvania Rule of Civil Procedure 1030 to the extent further discovery or proceedings may disclose their applicability and relevance of any such affirmative defense. WHEREFORE, the Plaintiff prays for judgment in her favor dismissing Defendant Paytime's counterclaim in its entirety, with prejudice. 7 Respectfully submitted, MILLER, POOLE & LORD, LLP Date: Andrew J. Miller, Esquire Pa. Bar No. 84012 137 East Philadelphia Street York, PA 17401 (717) 845-1524 UNSWORN VERIFICATION The foregoing document is based upon facts and information which has been gathered by me in the preparation of this law suit. The language of the document is that of counsel. I have read the document and the facts set forth therein are true and correct to the best of my knowledge, information and belief. This statement and verification are made subject to the penalties of 18 Pa.C.S.A. §4904 relating to unsworn falsification to authorities, which provides that if I knowingly make false averments, I may be subject to criminal penalties. Dated: 40 - a- r o 64 & %-I- / Laura B. Frazier CERTIFICATE OF SERVICE AND NOW, the undersigned hereby certifies that I have, on the date written below, served a true and correct copy of the foregoing Answer to Defendant Paytime's New Matter and Counterclaim by regular mail addressed to: Michael, L. Bangs, Esquire BANGS LAW OFFICE 429 South 18'h Street Camp Hill, PA 17011 MILLER, POOLE & LORD, LLP Date: o --// /D ?:? -6 0 /1 ) 0-?r4 Penelope Wo s, Legal Secretary j d , MILLER, POOLE & LORD, LLP Andrew J. Miller, Esquire Pa. Bar No. 84012 137 East Philadelphia Street York, Pennsylvania 17401 (717) 845-1524 Attorneys for Plaintiff LAURA FRAZIER, IN THE COURT OF COMMON PLEAS Plaintiff CUMBERLAND COUNTY, PENNSYLVANIA vs. CASE NO. 2010-01765 HUMAN ELEMENT GROUP, INC., PAYTIME HARRISBURG, INC. and CIVIL ACTION - LAW NATHAN PATTERSON Defendants JURY TRIAL DEMANDED NOTICE TO PLEAD YOU ARE HEREBY NOTIFIED TO FILE A WRITTEN RESPONSE TO THE ENCLOSED NEW MATTER TO COUNTERCLAIMS WITHIN TWENTY (20) DAYS FROM SERVICE HEREOF OR A JUDGMENT MAY BE ENTERED AGAINST YOU. Respectfully Submitted, MILLER, POOLE & LORD, LLP Andrew J. Miller., Esquire 137 East Philadelphia Street York, PA 17401 (717) 845-1524 Pa. Bar No. 84012 MILLER, POOLE & LORD, LLP Andrew J. Miller, Esquire Pa. Bar No. 84012 137 East Philadelphia Street York, Pennsylvania 17401 (717) 845-1524 Attorneys for Plaintiff LAURA FRAZIER, Plaintiff IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA CASE NO. 2010-01765 CIVIL ACTION - LAW JURY TRIAL DEMANDED VS. HUMAN ELEMENT GROUP, INC., PAYTIME HARRISBURG, INC. and NATHAN PATTERSON Defendants PLAINTIFF'S ANSWERS AND NEW MATTER TO DEFENDANT PATTERSON'S NEW MATTER AND COUNTERCLAIM AND NOW, to wit, this 11tLday of October, 2010, comes Plaintiff Laura Frazier, by her attorneys MILLER, POOLE & LORD, LLP and files the following: NEW MATTER OF DEFENDANT HEG 95. Plaintiff's Amended Complaint is incorporated herein by reference. 96. Denied. After reasonable investigation, Plaintiff lacks sufficient knowledge to form a belief as to the truth of this averment. As such, strict proof thereof is demanded at trial. 97. Denied. After reasonable investigation, Plaintiff lacks sufficient knowledge to form a belief as to the truth of this averment. As such, strict proof thereof is demanded at trial. 98. Admitted in part, denied in part. Admitted Defendant Patterson engaged in discussions with Plaintiff concerning the operation of her business. After reasonable I investigation, Plaintiff lacks sufficient knowledge to form a belief as to the truth of the averment regarding what capacity Defendant Patterson discussed business operations with Plaintiff and if Defendant Patterson was seeking to find out Plaintiff's intentions to continue to provide human resource services to any of her clients. As such, strict proof thereof is demanded at trial. By way of further answer, because Defendant Patterson had several capacities throughout his devious relationship with Plaintiff, Plaintiff rarely if ever knew what capacity Defendant Patterson was actually acting. 99. Admitted in part, denied in part. Admitted Plaintiff told Defendant Patterson that she had experience with human resources. Denied that Plaintiff essentially claimed to Defendant Patterson that any financial difficulties were because of forces outside her control and that an infusion of capital was all that Plaintiff needed to make her companies profitable. 100. Denied as stated. Plaintiff provided Defendant Patterson with unaudited historic financial information for her businesses so that Defendant Patterson could determine whether there were potential sales and marketing synergies with Defendant Paytime that justified his entry into the human resources market. 101. Denied as stated. Plaintiff believed that with the help and assistance of Defendant Paytime's staff and sales leads she had the ability to grow the human resources business. 102. Denied that Plaintiff claimed to Defendant Patterson that because she did not have enough resources to get her company out of debt that it would continue not to be profitable and that she could not commit additional funds but that absent that debt it could be a profitable endeavor. 2 103. Admitted in part, denied in part. After reasonable investigation, Plaintiff lacks sufficient knowledge to form a belief as to the truth of the averment concerning Defendant Patterson's bases for deciding to use personal funds to form a new company or any indication made to form a new company. As such, strict proof thereof is demanded at trial. Admitted that Defendant Patterson caused Defendant HEG to employ Plaintiff. Denied Plaintiff ran the company. 104. Admitted. By way of further answer, Defendant Patterson is identified as President of the corporation in the Department of State records.. 105. Admitted. 106. This paragraph contains a conclusion of law to which no responsive pleading is required. To the extent a response is required; Plaintiff specifically denies the averments therein. 107. Denied. After reasonable investigation, Plaintiff lacks sufficient knowledge to form a belief as to the truth of this averment. As such, strict proof thereof is demanded at trial. COUNTERCLAIM DEFENDANT PATTERSON v. PLAINTIFF 108. Paragraphs 95-107 are incorporated herein. 109. Plaintiff refers to and incorporates the answers provided in paragraphs 99-102 above herein. 110. Denied. Plaintiff never intentionally nor knowingly provided Defendant Patterson inaccurate, misleading or false information of any kind regarding the financial status of her company. By way of further answer, Plaintiff provided Defendant Patterson with unaudited 3 1 . historic financial information so that Defendant Patterson could determine whether there were potential sales and marketing synergies with Defendant Paytime that justified his entry into the human resources market. 111. Denied. Plaintiff never intentionally or knowingly made any inaccurate, misleading or false representations about the financial information of her business or about any of her abilities regarding her company. 112. Denied for the reasons set forth in paragraphs 110 and 111 above and fully incorporated herein. 113. Denied. Plaintiff's companies were not in debt beyond normal operating expenses. By way of further answer, the main reason Plaintiff was seeking assistance was to help increase sales, which Defendant Patterson represented he would be able to accomplish. 114. Denied. After reasonable investigation, Plaintiff lacks sufficient knowledge to form a belief as to the truth of this averment. As such, strict proof thereof is demanded at trial. By way of further answer, Defendant Patterson personally and solely decided to enter the human resources market. Plaintiff had no influence on such decision. 115. Denied. After reasonable investigation, Plaintiff lacks sufficient knowledge to form a belief as to the truth of this averment. As such, strict proof thereof is demanded at trial. 116. Denied. After reasonable investigation, Plaintiff lacks sufficient knowledge to form a belief as to the truth of this averment. As such, strict proof thereof is demanded at trial. 117. Admitted in part, denied in part. Admitted that Defendant Patterson purchased certain furniture from Plaintiff's company. After reasonable investigation, Plaintiff lacks 4 sufficient knowledge to form a belief as to the truth of the averment relating to why Defendant Patterson purchased the furniture. As such, strict proof thereof is demanded at trial. 118. This paragraph contains a conclusion of law to which no responsive pleading is required. To the extent a response is required; Plaintiff specifically denies the averments therein. 119. This paragraph contains a conclusion of law to which no responsive pleading is required. To the extent a response is required; Plaintiff specifically denies the averments therein. NEW MATTER 120. Paragraphs 95-118 are incorporated herein. 121. Plaintiff incorporates by reference and asserts the following affirmative defenses based on the facts pled in the Complaint, Answer, New Matter and Counterclaim: a. Defendant Patterson's counterclaim is barred by the applicable statute of limitations. b. Defendant Patterson's counterclaim fails to state a cause of action upon which relief may be granted. C. Defendant Patterson's counterclaim is barred by res judicata. d. Defendant Patterson has not alleged a legal basis to recover damages either consequential or incidental, or to be entitled to any of the relief requested; e. Defendant Patterson has not alleged any conduct on the part of Plaintiff entitling Defendant Patterson to the relief requested. f. Defendant Patterson has not alleged any fact entitling it to any damage or relief requested. 5 1 g. Defendant Patterson's counterclaim is baseless in whole or in part by the doctrine of laches. h. Defendant Patterson's counterclaim is barred in whole or in part by the doctrine of unclean hands i. Defendant Patterson's counterclaim is barred in whole or in part by the principles of release and/ or waiver and/or discharge and/or consent. j. Defendant Patterson's counterclaim is barred in whole or in part by the principle of estoppel. k. Defendant Patterson's counterclaim is barred in whole or in part by the defense of failure of consideration and/or inadequate consideration. 122. To prevent waiver thereof, Plaintiff incorporates by reference and further pleads all affirmative defenses set forth in Pennsylvania Rule of Civil Procedure 1030 to the extent further discovery or proceedings may disclose their applicability and relevance of any such affirmative defense. WHEREFORE, the Plaintiff prays for judgment in her favor dismissing Defendant Patterson's counterclaim in its entirety, with prejudice, along with costs plus any such other relief as the may deem appropriate. 6 i Respectfully submitted, MILLER, POOLE & LORD, LLP V, to -- t (-to Date: Andrew J. Miller, Esquire Pa. Bar No. 84012 137 East Philadelphia Street York, PA 17401 (717) 845-1524 7 UNSWORN VERIFICATION The foregoing document is based upon facts and information which has been gathered by me in the preparation of this law suit. The language of the document is that of counsel. I have read the document and the facts set forth therein are true and correct to the best of my knowledge, information and belief. This statement and verification are made subject to the penalties of 18 Pa.C.S.A. §4904 relating to unsworn falsification to authorities, which provides that if I knowingly make false averments, I may be subject to criminal penalties. f Dated: to'i(- ty Laura B. Frazier CERTIFICATE OF SERVICE AND NOW, the undersigned hereby certifies that I have, on the date written below, served a true and correct copy of the foregoing Answer to Defendant Patterson's New Matter and Counterclaim by regular mail addressed to: Michael, L. Bangs, Esquire BANGS LAW OFFICE 429 South 18t` Street Camp Hill, PA 17011 MILLER, POOLE & LORD, LLP Date: /d ll? U 2" U) 0?rk Penelope W ods, Legal Secretary