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HomeMy WebLinkAbout13-6252 Supreme C , ennsylvania COur` of Co'mm0 leas For Prothonotary Use Only: G ovp.r �-� u Docket No: 7; Cuerl�ira `d`�`� ,ft County ( � I3 - �S�- C� The information collected on this form is used solely for court administration purposes. This form does not supplement or replace the filing and ser of plead ings or other papers as required by law or rules of court. ` Commencement of Action: Complaint ® Writ of Summons ©Petition ! :S © Transfer from Another Jurisdiction © Declaration of Taking EY Lead Plaintiff's Name: Lead Defendant's Name: David Coulston John Coulston Dollar Amount Requested: ©within arbitration limits T. *E: Are money damages requested? IM Yes No (check one) ®x outside arbitration limits ... .5, .. i N.`. Is this a Class Action Suit? ® Yes 0 No Is this an MDJAppeal? ® Yes lM No i A Name of Plaintiff /Appellant's Attorney: Michael A. 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[3 Product Liability (does not include mass tort) F' © Employment Dispute: ©Slander/Libel/ Defamation Discrimination C M Other: Employment Dispute: Other E3 Zoning Board - j ® Other: T' I © Other: O MASS TORT ® Asbestos ® Tobacco a ® Toxic Tort - DES ® Toxic Tort -Implant REAL PROPERTY MISCELLANEOUS © Toxic Waste © Ejectment © Common Law /Statutory Arbitration © Other: © Eminent Domain /Condemnation [3 Declaratory Judgment 1 B 0 Ground Rent [3 Mandamus 13 Landlord/Tenant Dispute 0 Non - Domestic Relations - © Mortgage Foreclosure: Residential Restraining Order PROFESSIONAL LIABLITY ® Mortgage Foreclosure: Commercial © Quo Warranto ! 13 Dental ® Partition ® Replevin } M Legal © Quiet Title 0 Other: © Medical ® Other: complaint in equity Other Professional: f ; E Updated 1/112011 DAVID COULSTON, C.B.R. IN THE COURT OF COMMON PLEAS OF INDUSTRIES, INC. & R.J.C. CUMBERLAND COUNTY, PENNSYLVANIA INDUSTRIES, INC., C Plaintiffs NO. 2013- oZ�� Ca IN EQUITY« C ; � { JOHN COULSTON,� Defendant NOTICE You have been sued in court. If you wish to defend against the claims set forth in; the following pages, you must take action within twenty (20) days after this complaint and notice are served, by entering a written appearance personally or by an attorney Qy and filing in writing with the court, your defenses or objections to the claims set forth against you. You are warned that if you fail to do so, the case may proceed without you and a judgment may be entered against you by the court without further notice for any money claimed in the complaint or for any other claim or relief requested by the plaintiff. You may lose money or property or other rights important to you. YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER OR CANNOT AFFORD ONE, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW. THIS OFFICE CAN PROVIDE YOU WITH INFORMATION ABOUT HIRING A LAWYER. IF YOU CANNOT AFFORD TO HIRE A LAWYER, THIS OFFICE MAY BE ABLE TO PROVIDE YOU WITH INFORMATION ABOUT AGENCIES THAT MAY OFFER LEGAL SERVICES TO ELIGIBLE PERSONS AT A REDUCED FEE OR NO FEE. Cumberland County Bar Association 32 South Bedford Street Carlisle, Pennsylvania 17013 (717) 249 -3166 all, DAVID COULSTON, C.B.R. IN THE COURT OF COMMON PLEAS OF INDUSTRIES, INC. & R.J.C. CUMBERLAND COUNTY, PENNSYLVANIA INDUSTRIES, INC., Plaintiffs NO. 2013- v. IN EQUITY JOHN COULSTON, Defendant COMPLAINT .1. The Plaintiff David C. Coulston (hereinafter "David "), is an adult individual who resides at 301 East Springville Road, Boiling Springs, Cumberland County, Pennsylvania. 2. The Plaintiff C.B.R. Industries, Inc. (hereinafter "CBR ") is a Pennsylvania corporation with a principal place of business located at 1257 Claremont Road, Carlisle, Cumberland County, Pennsylvania. 3. The Plaintiff R.J.C. Industries, Inc. (hereinafter "RJC ") is a Pennsylvania corporation with a principal place of business located at 2001 Harrisburg Pike, Carlisle, Cumberland County, Pennsylvania. 4. The Defendant is John T. Coulston (hereinafter "John "), an adult individual who resides at 19 Tiffany Drive, Carlisle, Cumberland County, Pennsylvania 17015. 5. John and David (the "parties ") are brothers. 6. David and John each own 50% of the common stock of RJC and CBR (hereinafter collectively the "companies "). 7. This action involves a corporate shareholder dispute, and claims alleging conversion and breach of fiduciary duty claims. 8. This Court has equity jurisdiction of this matter by virtue of Section 104 of the Business Corporation Law, 15 Pa.C.S.A. Section 104. 9. Venue is proper because both businesses operate from locations in Cumberland County and both parties are Cumberland County residents. BACKGROUND 10. RJC provides maintenance services to the fleet of tractor trailer trucks owned by ABF Freight Systems, Inc. 11. RJC employs a workforce of approximately fourteen employees to perform the maintenance work at the ABF facility on the Harrisburg Pike, Carlisle, Cumberland County, Pennsylvania. 12. CBR is a metal parts manufacturing company employing approximately five persons, which operates from a leased space located at 1257 Claremont Road, Carlisle, Cumberland County, Pennsylvania. 13. David does not believe either company has an active Board of Directors; nor is David aware of corporate bylaws for the companies, or that the parties or either company is affected by any shareholders agreements or buy -sell agreements. 14. Neither company has had regular or annual meetings of the shareholders or board of directors. 15. Both parties were previously employed by the companies and the parties had an agreement that they would be compensated equally for the services they provided to the companies. 16. John never advised David that the parties' compensation was anything but equal. 17. John resigned as an officer and employee of the companies by virtue of his letter to David dated April 2, 2013. A copy of the letter is attached hereto as "Exhibit A." 18. John was president of both companies until his resignation. 19. At all times material hereto David was the treasurer and secretary of both companies and now runs both companies in John's absence. 20. Prior to his resignation, John primarily supervised the daily business activities of CBR. 21. At all times material hereto, David supervised the shipping and performed inspections at CBR and reviewed and approved payroll for both companies. 22. Since John's resignation, David operates CBR exclusively. 23. At all times relevant hereto, David primarily supervised the business activities of RJC. 24. Prior to his resignation, John primarily controlled the assets, accounts receivable, cash and bank deposits of both companies. 25. Since John's resignation, David controls the assets, accounts receivable, cash and bank deposits of both companies. 26. John is now employed full time by a third party and provides no services to the companies. 27. For the last several years, David and John have had a strained working relationship. 28. In late 2012, David learned that John had unilaterally and without notice removed David's name as signer on the companies' financial accounts at Metro Bank where the companies have their financial accounts. 29. John replaced David as signer on those accounts with John's wife, Tammy. 30. Metro Bank would release no information to David, despite his 50% ownership of the companies and despite the fact that he was the treasurer for the companies. 31. When confronted about this action, John's only reply to David was that John was "protecting himself." 32. John's actions towards employees has been unusual, inconsistent and erratic, causing an atmosphere of uncertainty at CBR. 33. John's actions towards the employees at CBR has caused a number of employees to quit and seek other employment. 34. In late 2012 John announced to the employees at CBR that he would close the company. This statement caused great concern among the employees and served no legitimate business purpose. 35. In response to this statement the employees suggested, and David agreed that John should take some time off. David consented to John taking six weeks off work, with pay, in order to regain his sense of stability. 36. When John returned, he posted as available two employment positions on Craigslist which were filled at the time of the Craiglist posting; one of the positions was David's and the other was a shop foreman. The shop foreman quit after he notified David that their jobs were posted on Craigslist as being available to be filled. 37. John did not discuss the postings of the positions on Craigslist with David prior to making the postings. 38. Within the last two years, John made a verbal offer to David to buy his shares of the companies, which David viewed as a very low offer. David rejected the offer as being significantly below fair market value. ` 39. By letter dated November 13, 2012, John, through legal counsel, requested that David buy John's shares in the companies. David rejected the offer as being too high. 40. In May, 3013, John, through legal counsel, suggested that the companies be liquidated, and that John had contacted an auction house with regard to selling the business equipment. 41. David rejected the suggestion of liquidation as it would not represent the fair market values of the companies, would capture no goodwill value for the companies and also it would eliminate David's employment. 42: On July 19, 2013, David and John and their respective legal counsel met and discussed John's exit from the businesses and discussed a price at which David would buy John's shares in the companies. 43. At the conclusion of the meeting it was understood that David would proceed to attempt to secure financing for the terms of the deal discussed in the preceding paragraph. 44. David qualified for financing to implement the deal and communicated the loan approval to John and John's counsel. 45. John refuses to reply to David regarding the July 19, 2013 settlement discussions and apparently John is not willing to close the deal. 46. John has, over the last several years, engaged at least two business appraisers to evaluate the value of the businesses, ostensibly for purposes of selling his shares to David or acquiring David's shares. COUNT I- EQUITABLE PARTITION David Coulston vs. John Coulston 47. Paragraphs 1 through 46 are incorporated by reference as if set forth fully here. 48. Over approximately the last year, there have been discussions between John and David regarding one of the two brothers buying the shares of the other brother. 49. John has resigned from the companies and David would like to continue to operate the companies. 50. David has always viewed the liquidation of the companies as an unattractive option in that the values of the companies would not be realized if sold for just the value of the assets, and the sale of the assets of the companies would result in the loss of jobs to workers who live locally and support their families through employment with the company; and David would lose his employment as well. 51. John ostensibly does not want to own shares of either company. 52. The Court should not allow John to own shares in either company under the circumstances of this case in that John's continued ownership of the shares will serve to perpetuate the disagreements between the shareholders and will likely lead to further litigation. 53. It is necessary for the Court to resolve the present impasse between John and David. WHEREFORE, David requests that this Honorable Court direct John to sell his shares in both companies to David at fair market value. COUNT II - BREACH OF FIDUCIARY DUTY David Coulston vs. John Coulston 54. Paragraphs 1 through 53 are incorporated by reference as if set forth fully herein. 55. John has a fiduciary duty to David as a co -owner of close corporations. 56. As president of the companies, John had a fiduciary duty to David and the companies in connection with his operation of the companies and his control of the assets, cash and bank deposits of the companies. 57. John's statement to threaten to close CBR in the presence of the employees serves no legitimate purpose and disrupts the harmonious operation of the company. 58. John has stated to David in the past with respect to ownership of the companies that John would rather close both companies than see David own and operate them independently of John. 59. John's actions in offering to buy David's shares for an extremely low price and his demand for the extremely high price to sell his shares to David indicates his bad faith resolving the present shareholder dispute. 60. John has refused to communicate with David and the dispute between the brothers /owners is apparent to the employees, customers and vendors and John's refusal to close the deal which came out of the July 19, 2013 meeting has hurt CBR's ability to do business. 61. After David took control of the assets, cash and bank deposits of the companies, he learned of irregularities with the expenditures and expenses of the companies. 62. Specifically David believes that John secretly compensated himself beyond what the parties agreed to. 63. David believes that John siphoned money out of the company by paying himself money from the companies for bogus expenses. 64. Since John has been employed by a third party, he has returned to the CBR shop and made parts for his new employer on CBR machines. CBR obtained no benefit from this work. 65. John was paid after his separation from CBR despite rendering no services to CBR. David didn't learn of these payments to John until several weeks later and has since stopped the payment. 66. Repeated requests to John for an accounting of the funds that David believes were misappropriated have been ignored by John. 67. There are over $50,000.00 in payments to John from RJC from April, 2009 to May, 2013 that are unexplained. 68. From April, 2009 to May, 2013 there are payments from CBR to John totaling over $753,000.00. Some of these payments to John are legitimate reimbursements for company expenses. However, some of the payments are believed to be illegitimate payments to John. 69. John regularly paid himself $9,900.00 for credit card reimbursements for alleged company expenses. David does not believe that the monthly credit card expenses always equaled exactly $9,900.00. 70. John's actions with respect to expense reimbursements from the companies have injured David and the companies financially. 71. CBR's reputation and image have suffered as a result of the sudden departure of John and the possibility of John's return prevents David from making business decisions that are in the best interest of the company and the employees of the company. 72. CBR's customers have expressed doubt and concern regarding CBR's viability given the sudden departure of John, who had certain knowledge of the machining processes and relationships with customers. 73. John's actions as set forth herein constitute a breach of his fiduciary duty to his brother David in these closely held companies. WHEREFORE, David respectfully requests that this Honorable Court: A. Require John to account for the monies he distributed from RJC and CBR for the last five years. B. Require John to repay the companies and /or David for any monies John secretly took as compensation. C. Require John to repay any monies John inappropriately took under the guise of reimbursements for company expenses. . D. Require John to repay the companies for compensation John took but did not provide services for after his resignation. E. Require John to pay David punitive damages and reimburse his counsel fees incurred in this matter. COUNT III - CONVERSION David Coulston v. John Coulston 74. Paragraphs 1 through 73 are incorporated herein. 75. John, without David's consent and without lawful justification, intentionally transferred to his own use and benefit the property of the companies, or one of the companies, including but not limited to, corporate funds and assets. 76. By such transfer, John misappropriated funds of the companies, or one of the companies, which funds ultimately should have benefited David as a shareholder. 77. John's actions as described herein were intentional and constitute conversion. Q 78. As a result of John's conversion, David suffered financial harm as a shareholder of the companies. WHEREFORE, David respectfully requests that John be required to account for' the monies he controlled on behalf of the companies; and A. Repay David for any misappropriated funds; and B. Return all company property to the companies; and, C. Pay David punitive damages and counsel fees. COUNT IV — BREACH OF FIDUCIARY DUTY CBR & RJC v. John Coulston 79. Paragraphs 1 through 78 above are incorporated herein. 80. As former president of the companies, John had a fiduciary duty to the companies in connection with his operation of the companies and his control of the assets, cash and bank deposits of the companies. 81. John's actions as set forth herein have caused financial harm to the companies and have impeded the success of one or both of the companies. 82. John's actions as set forth herein constitute a breach of John's fiduciary duty to the companies. WHEREFORE, the companies respectfully request that this Honorable Court: A. Require John to account for the monies he distributed from RJC and CBR for the last five years. B. Require John to repay the companies for any monies John secretly took as compensation. C. Require John to repay the companies any monies John inappropriately took under the guise of reimbursements for company expenses. D. Require John to repay the companies for compensation John took but did not provide services for after his resignation. E. Require John to return any property owned by the companies which is in John's possession. F. Require John to pay the company punitive damages and reimburse the companies' counsel fees in this matter. COUNT V — CONVERSION CBR & RJC v. John Coulston 83. Paragraphs 1 through 82 are incorporated herein. 84. John, without the companies' consent and without lawful justification, intentionally transferred to his own use and benefit the property of the companies, or one of the companies, including but not limited to, corporate funds and assets. 85. By such transfer, John misappropriated funds of the companies, or one of the companies. 86. John's actions as described herein were intentional and constitute conversion. 87. As a result of John's conversion, the companies have suffered financial harm. WHEREFORE, the companies respectfully request that: A. John be required to account for the monies he controlled on behalf of the companies; and, B. John repay the companies for any misappropriated funds; and, C. John return all company property to the companies; and D. John pay the companies punitive damages and counsel fees. Respectfully submitted, BARIC SCHERER LLC Michael A. Scherer, Esquire - - 19 West South Street Carlisle, Pennsylvania 17013 (717) 249 -6873 VERIFICATION The statements in the foregoing Complaint are based upon information which has been assembled by my attorney in this litigation. The language of the statements is not my own. I have read the statements; and to the extent that they are based upon information which I have given to my counsel, they are true and correct to the best of my knowledge, information and belief. I understand that false statements herein are made subject to the penalties of 18 Pa.C.S. § 4904 relating to unsworn falsifications to authorities. DATE: David Coulston 1 April 02, 2013 CBR Industries, Inc. Attn: Mr. David Coulston RE: Letter of Resignation { Dear Dave: Please accept this letter as my three (:) x­eel no—u:�,e of intent to resign as ar. ei:.ployee of CBR Industries, Inc., as of 5:00 p.m. on April 19, 2013. Thereafter, I will be starting a new position at a new company and not available during normal work hours. However, if you are interested in retaining my services for a limited period of time and on a limited basis, I would be willing to discuss a consulting agreement with CBR Industries, Inc. If you have any questions, please feel free to let me know. Thank you. Very truly yours, i John T Coulston i i i "EXHIBIT A" DAVID COULSTON, C.B.R. IN THE COURT OF COMMON PLEAS OF INDUSTRIES, INC. & R.J.C. CUMBERLAND COUNTY, PENNSYLVANIA INDUSTRIES, INC., Plaintiffs NO. 2013- V. IN EQUITY JOHN COULSTON, ., i Defendant G Z: __C) 6.. ACCEPTANCE OF SERVICE >CZ AND NOW, this 7 ' day of 'AlelCM15eyZ, , 2013, I, Christopher Rice, Esquire, hereby accept service of the Complaint filed in the above-captioned matter on behalf of the Defendant, John Coulston pursuant to Pa. R.C.P. 402(b) and certify that I am authorized to do so. Christopher Rice, Esquire w F:\FILES\Clients\14241 Coniston\14241.1 General Business\14241.1.ans Christopher E. Rice, Esquire '` " i`1 ' Attorney I.D. No. 90916 :' . F Est' , 4 vi MARTSON DEARDORFF WILLIAMS OTTO GILROY & FALLER ' #IPd;,;' t� , ,� . ' MARTSON LAW OFFICES 10 East High Street Carlisle, PA 17013 (717) 243-3341 Attorneys for Plaintiff DAVID COULSTON, C.B.R. : IN THE COURT OF COMMON PLEAS OF INDUSTRIES, INC., & R.J.C. : CUMBERLAND COUNTY, PENNSYLVANIA INDUSTRIES, INC., Plaintiffs • : NO. 2013 -6252 CIVIL TERM v. • JOHN COULSTON, : IN EQUITY Defendant ANSWER WITH NEW MATTER TO: David Coulston("David"),C.B.R.Industries,Inc.("CBR"),and R.J.C.Industries,Inc. ("RJC"), Plaintiffs, and their attorney, Michael A. Scherer,Esquire YOU ARE HEREBY NOTIFIED TO FILE A WRITTEN RESPONSE TO THE ENCLOSED NEW MATTER WITHIN TWENTY (20) DAYS FROM SERVICE HEREOF OR A JUDGMENT MAY BE ENTERED AGAINST YOU. 1. Admitted. 2. Admitted 3. Admitted. 4. Admitted. 5. Admitted. 6. Admitted. 7. Denied as a conclusion of law. By way of further response,denied as the Complaint speaks for itself. 8. Denied as a conclusion of law. 9. Denied as a conclusion of law. BACKGROUND 10. Admitted. 11. Admitted. 12. Admitted. 13. Denied as a conclusion of law. By way of further response,there are bylaws for both companies and other supporting documentation. 14. Admitted. 15. Denied. By way of an example, until approximately 2009-2010, John Coulston ("John") was paid $600 per week from RJC and David received $400 per week from RJC. It was not until after 2009-2010 that they both equalized their payments from RJC to$500 per week. With regard to CBR,the parties were not compensated if they both entered the same amount of hours per week. However,if either John or David worked one hour more than the other,he would be paid for that additional hour. 16. Admitted in part and denied in part. It is admitted that John never advised David that the parties' compensation was anything but equal. It is denied, however, that David did not have access to the records showing the same. John received a higher compensation beginning in 2011 based on John's hours worked above and beyond David's hours. 17. Denied as the document speaks for itself. By way of further response,John resigned as a employee of CBR only. 18. Denied. By way of further response,John resigned as an employee on April 2,2013, and did not reference a resignation as an officer. 19. Admitted. 20. Admitted. 21. Admitted in part and denied in part. It is admitted that David supervised the shipping and performed inspections at CBR. It is denied that David reviewed and approved payroll for both companies because if he did,he would have known of the compensation change between John and David. It is admitted that he may have played some role in the payroll hours, but it is denied as stated. 22. Denied. After reasonable investigation, Defendant is without knowledge sufficient to form a belief as to the truth of the averment in Paragraph 22 and the same is therefore denied. 23. Denied. After reasonable investigation,Defendant is without knowledge sufficient to form a belief as to the truth of the averment in Paragraph 23 and the same is therefore denied. 24. Admitted. 25. Admitted. 26. Admitted in part and denied in part. It is admitted that as of this date, John is employed full time by a third party and provides no service to the companies. It is denied that since his resignation as a employee, John did not provide any services to the companies but had offered to serve as an independent contractor. 27. Admitted. 28. Admitted. 29. Admitted. 30. Denied. After reasonable investigation,Defendant is without knowledge sufficient to form a belief as to the truth of the averment in Paragraph 30 and the same is therefore denied. 31. Admitted in part and denied in part. It is admitted that John did reply that he was protecting himself, but the extent of the conversation and statement was beyond that phrase alone. 32. Denied. John's actions were not unusual,inconsistent and erratic. Nor did he cause an atmosphere of uncertainty at CBR. By way of further response, David's constant statements that he hated working at CBR caused an atmosphere of uncertainty. 33. Denied. John's actions did not result in employees quitting or seeking other employment. It is believed that some of the employees may have left due to the inability of David and John to work together as a cohesive ownership team. 34. Denied as stated. By way of further response, David did not want to participate any further with the company and when John had stated that he was leaving, the employees may have interpreted that the business would close with John's departure. 35. Admitted in part and denied in part. It is admitted that employees suggested that John take time off before departing from the company,but it is denied for lack of information and belief that David consented to John taking six weeks off with pay in order to regain his sense of stability. 36. Admitted in part and denied in part. It is admitted that John had looked for employment positions, but denied that John had personally posted anything on Craigslist. It is denied for lack of information and belief as to the remaining statements.By way of further response, John had handled employment posting in the past without David's knowledge and David had never complained. 37. Admitted in part and denied in part. John did not specifically discuss postings on Craigslist with David, but David was aware that John was looking to fill employment positions. 38. Admitted in part and denied in part. It is admitted that John made a verbal offer to David to buy David's shares of the companies,but is denied for lack of information as to how David viewed the offer or why he rejected the same. By way of further response,John made the offer based on David's statements that he no longer wanted to be a participant in the companies and hated being there. 39. Denied as the document speaks for itself. 40. Denied as the document speaks for itself. 41. Denied. After reasonable investigation,Defendant is without knowledge sufficient to form a belief as to the truth of the averment in Paragraph 41 and the same is therefore denied. 42. Admitted. 43. Admitted. 44. Denied. After reasonable investigation,Defendant is without knowledge sufficient to form a belief as to the truth of the averment in Paragraph 44 and the same is therefore denied. 45. Denied. John is further evaluating the value of the business in order to come up with a new offer to sell the companies since David rejected the prior offer. 46. Admitted in part and denied in part. It is admitted that John spoke with two business appraisers. It is denied that he received evaluations for both. The one evaluation was a summary view of the businesses and the other was not completed. There has not been a thorough equipment evaluation performed for CBR. COUNT I - EQUITABLE PARTITION David Coulston v. John Coulston 47. The answers to Paragraphs 1 through 46 are incorporated herein by reference as if fully set forth. 48. Admitted. 49. It is admitted that John has resigned as an employee of CBR. It is admitted that David has expressed an interest to operate the businesses. 50. Denied. After reasonable investigation, Defendant is without knowledge sufficient to form a belief as to the truth of the averment in Paragraph 50 and the same is therefore denied. 51. Denied as stated. John desires to be fairly compensated if he sells his shares of the companies to David. 52. Denied as a conclusion of law. 53. Denied as a conclusion of law. WHEREFORE, Defendant requests that Plaintiffs' Complaint be dismissed and that Defendant be permitted to complete the evaluations of the companies. COUNT II - BREACH OF FIDUCIARY DUTY David Coulston v. John Coulston 54. The Answers to Paragraphs 1 through 53 are incorporated herein by reference as if fully set forth. 55. Denied as a conclusion of law. 56. Denied as a conclusion of law. 57. Denied as a conclusion of law. By way of further response, it is denied that John made such statement. David had stated on numerous occasions that he did not want to be part of CBR any longer and John's departure could have been interpreted as a closure of CBR. 58. Denied as stated. It is denied that John would rather liquidate both companies than have David own and operate them. It is John's intent that if he cannot solely own and operate them, that he be fairly compensated for the transfer of his shares. 59. Denied as a conclusion of law. By way of further response, John's actions to offer to buy the shares was in response to David's continuous statements that he no longer wanted to part of CBR and that he hated being there. 60. Denied. John has and continues to communicate with David in order to reach a resolution on this matter.After reasonable investigation,Defendant is without knowledge sufficient to form a belief as to the averment regarding CBR's ability to do business. 61. After reasonable investigation, Defendant is without knowledge sufficient to form a belief as to the truth of the averment in Paragraph 61 and the same is therefore denied. 62. After reasonable investigation, Defendant is without knowledge sufficient to form a belief as to the truth of the averment in Paragraph 62 and the same is therefore denied. 63. After reasonable investigation, Defendant is without knowledge sufficient to form a belief as to the truth of the averment in Paragraph 63 and the same is therefore denied. 64. Admitted. By way of further response, it was standard practice to allow employees and owners use the equipment and facilities (e.g. to work on automobiles) for personal use. 65. Admitted in part and denied in part. It is admitted that John was paid after his separation,but it is denied that David did not learn of these payments since David was in charge of payroll as previously represented in the Complaint by David. 66. Admitted in part and denied in part. It is admitted that David has requested an accounting of the funds from John. John has responded that David should look internally for the accounting. After reasonable investigation, Defendant is without knowledge sufficient to form a belief as to the averment that David believes John was misappropriate with funds of the businesses. 67. After reasonable investigation, Defendant is without knowledge sufficient to form a belief as to the truth of the averment in Paragraph 67 and the same is therefore denied. 68. After reasonable investigation, Defendant is without knowledge sufficient to form a belief as to the truth of the averment in Paragraph 68 and the same is therefore denied. By way of further response, by reviewing this allegation, there is no way for John to understand which reimbursements are being questioned. 69. Admitted in part and denied in part. It is admitted that John reimbursed himself for company expenses. After reasonable investigation, Defendant is without knowledge sufficient to form a belief as to the truth of the averment that David does not believe that the monthly credit card expenses always equaled exactly$9,900.00. By way of further response, David was aware of such payments and had submitted similar statements to request reimbursement, but has not complained about such payments until the action set forth herein. The$9,900.00 figure was chosen because any check over$10,000 deposited into the account held by John personally would have been on a seven day hold. This allowed John to pay off his business expenses on his personal credit card faster and before incurring interest even though at some months the expenses exceeded $10,000 on John's personal credit card. 70. After reasonable investigation, Defendant is without knowledge sufficient to form a belief as to the truth of the averment in Paragraph 70 and the same is therefore denied. 71. After reasonable investigation, Defendant is without knowledge sufficient to form a belief as to the truth of the averment in Paragraph 71 and the same is therefore denied. 72. After reasonable investigation, Defendant is without knowledge sufficient to form a belief as to the truth of the averment in Paragraph 72 and the same is therefore denied. 73. Denied as a conclusion of law. WHEREFORE, Defendant requests that Plaintiffs' Complaint be dismissed and that Defendant be permitted to complete the evaluations of the companies. COUNT III - CONVERSION David Coulston v. John Coulston 74. The Answers to Paragraphs 1 through 73 are incorporated herein by reference as if fully set forth. 75. Denied as a conclusion of law. By way of further response, John's actions were within the customary practice of the businesses and the operation by John and David over the years. 76. Denied as a conclusion of law. By way of further response, it is denied that John misappropriated funds of the companies. After reasonable investigation, Defendant is without knowledge sufficient to form a belief as to the truth of the remaining averment that such funds should have benefitted David as a shareholder. 77. Denied as a conclusion of law. 78. Denied as a conclusion of law. By way of further response, after reasonable investigation, Defendant is without knowledge sufficient to form a belief as to the truth of the averment in Paragraph 78 and the same is therefore denied and strict proof is demanded at trial. WHEREFORE, Defendant requests that Plaintiffs' Complaint be dismissed and that Defendant be permitted to complete the evaluations of the companies. COUNT IV- BREACH OF FIDUCIARY DUTY CBR & RJV v. John Coulston 79. The Answers to Paragraphs 1 through 78 are incorporated herein by reference as if fully set forth. 80. Denied as a conclusion of law. By way of further response, John did not resign as president of the companies. 81. Denied as a conclusion of law. 82. Denied as a conclusion of law. WHEREFORE, Defendant requests that Plaintiffs' Complaint be dismissed and that Defendant be permitted to complete the evaluations of the companies. COUNT V- CONVERSION CBR & RJC v. John Coulston 83. The Answers to Paragraphs 1 through 82 are incorporated herein by reference as if fully set forth. 84. Denied as a conclusion of law. By way of further response, it is denied that John misappropriated funds or intentionally transferred to his own use and benefit the property of the companies. 85. Denied as a conclusion of law. 86. Denied as a conclusion of law. 87. Denied as a conclusion of law. WHEREFORE, Defendant requests that Plaintiffs' Complaint be dismissed and that Defendant be permitted to complete the evaluations of the companies. NEW MATTER By way of further defense, the Defendant avers the following in New Matter: 88. The Answers to Paragraphs 1 through 87 are incorporated herein by reference as if fully set forth. 89. John has been the president of both companies and a loyal employee since approximately 1992. 90. John has put in significantly more time in CBR to both the operation and success of the company when compared to David since 1992. 91. John has developed many processes and procedures that are crucial to the continued success of both companies today. 92. John has put in substantial time over the years. In fact, John has worked above and beyond by working nearly every weekend since his initial employment with the companies and most holidays. He has also worked both at night and before and after hours. 93. John and an outside sales representative spent substantial time in gaining and maintaining the two largest customers for CBR. 94. John's desire at this time is to be fairly compensated for his interest in the businesses of CBR and RJC. 95. The companies (CBR and JCR) are improper Plaintiffs in this action. 96. The Plaintiffs' claims are barred by the applicable Statute of Limitations. 97. The Complaint fails to state a claim upon which relief can be granted. 98. Plaintiffs' action against Defendant is barred by the doctrine of waiver. 99. Plaintiffs' action against Defendant is barred by the doctrine of estoppel. WHEREFORE, Defendant requests that Plaintiffs' Complaint be dismissed and that Defendant be permitted to complete the evaluations of the companies. MARTSON LAW OFFICES By: 4 Christopher E. Rice, Esquire Attorney I.D. No. 90916 10 East High Street Carlisle, PA 17013 (717) 243-3341 Attorneys for Defendant Date: /Z- 3/—/J VERIFICATION The foregoing Answer with New Matter is based upon information which has been gathered by my counsel in the preparation of the lawsuit. The language of the document is that of counsel and not my own. I have read the document and to the extent that it is based upon information which I have given to my counsel,it is true and correct to the best of my knowledge,information and belief. To the extent that the content of the document is that of counsel, I have relied upon counsel in making this verification. This statement and verification are made subject to the penalties of 18 Pa. C.S. Section 4904 relating to unsworn falsification to authorities, which provides that if I make knowingly false averments, I may be subject to criminal penalties. CERTIFICATE OF SERVICE I,Mary M. Price,an authorized agent for Martson Deardorff Williams Otto Gilroy&Faller, hereby certify that a copy of the foregoing Answer with New Matter was served this date by depositing same in the Post Office at Carlisle, PA, first class mail, postage prepaid, addressed as follows: Michael A. Scherer, Esquire BARIC SCHERER, LLC 19 West South Street Carlisle, PA 17013 MARTSON LAW OFFICES By VI,G2uc4.; M. Price en East High Street Carlisle, PA 17013 (717) 243-3341 Dated: /01-/3/ /r i DAVID COULSTON, C.B.R. IN THE COURT OF COMMON PLEAS OF INDUSTRIES, INC. & R.J.C. CUMBERLAND COUNTY, PENNSYLVANIA INDUSTRIES, INC., Plaintiffs NO. 2013-6252 V. IN EQUITY JOHN COULSTON, .a Defendant ;Z:x PLAINTIFFS REPLY TO NEW MATTER Pin 88. No response needed. 89.-93. Denied. 94. Denied. After reasonable investigation, Plaintiffs are without knowledge or information sufficient to form a belief as to the truth of these averments and they are, therefore, denied. 95.-99. Denied. Paragraphs 95.-99. state legal conclusions to which no response is required. To the extent, however, that a response is deemed necessary, said averments are denied generally pursuant to Pa.R.C.P. 1029 (d) and (e). Strict proof thereof is demanded at time of trial. Respectfully submitted, BARIC SCHERER LLC � 'A W Mi ae A. Scherer, Esquire 19 West South Street Carlisle, Pennsylvania 17013 (717) 249-6873 Attorney for Plaintiffs VERIFICATION The statements in the foregoing Plaintiffs Reply To New Matter are based upon information which has been assembled by my attorney in this litigation. The language of the statements is not my own. I have read the statements; and to the extent that they are based upon information which I have given to my counsel, they are true and correct to the best of my knowledge, information and belief. I understand that false statements herein are made subject to the penalties of 18 Pa.C.S. g 4904 relating to unsworn falsifications to authorities. DATE: OI �/6 kwt/ AV— David Coulston 4 CERTIFICATE OF SERVICE I hereby certify that on January 23, 2014, I, Jennifer S. Lindsay, secretary at Baric Scherer LLC, did serve a copy of Plaintiffs Reply To New Matter, by first class U.S. mail, postage prepaid, to the party listed below, as follows: Christopher Rice, Esquire Martson Law Office Ten East High Street Carlisle, Pennsylvania 17013 J nife S L' dsay