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Home My WebLink About05-0709 RITE AID CORPORATION, IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW Plaintiff, vs. NO. OS, '/oCf &~;J -r tt.-- HALF MOON INVESTMENTS, LLC d/b/a DIGITAL I STOP and GREENLEAF CAPITAL GROUP, LLC, COMPLAINT Defendants. JURY TRIAL DEMANDED 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 the plaintiff. You may lose money or property or other rights important to you. YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW. THIS OFFICE CAN PROVIDE YOU WITH INFORMATION ABOUT HIRING A LAWYER. IF YOU CANNOT AFFORD TO HIRE A LAWYER, THIS OFFICE MAY BE ABLE TO PROVIDE YOU WITH INFORMATION ABOUT AGENCIES THAT MAY OFFER LEGAL SERVICES TO ELIGIBLE PERSONS AT A REDUCED FEE OR NO FEE. Cumberland County Bar Association 32 South Bedford Street Carlisle, PA 17013 Telephone: (717) 249-3166 RITE AID CORPORATION, IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW Plaintiff, vs. NO. (J 5-. 701 t...WJ 7:;~ HALF MOON INVESTMENTS, LLC d/b/a DIGITAL I STOP and GREENLEAF CAPITAL GROUP, LLC, COMPLAINT Defendants. JURY TRIAL DEMANDED COMPLAINT Plaintiff Rite Aid Corporation ("Rite Aid"), by its undersigned attorneys, files this Complaint alleging as follows: PARTIES I. Rite Aid is Delaware corporation with its principal place of business at 30 Hunter Lane, Camp Hill, PA 17011. 2. On information and belief, defendant Half Moon Investments d/b/a Digital 1 Stop ("Digital") is a Minnesota corporation with a principal office at 2445 Nevada Avenue N, Golden Valley, MN 55416. 3. On information and belief, defendant Greenleaf Capital Group, LLC ("Greenleaf') is a Minnesota limited liability corporation with its principal place of business at 3411 Brei Kessel Road, Independence, MN 55359. JURISDICTION 4. This court has jurisdiction pursuant to 42 Pa.C.S. 9931 (a). 5. Venue in this Court is proper because th.e property or a part of th.e property which is the subject matter of the action is located in Cumberland County. 6. Venue in this Court is proper because the cause of action arose in Cumberland County and a transaction or occurrence took place out of which the cause of action arose in Cumberland County. 7. In addition, venue in this Court is required due to a valid forum selection clause in the Guaranteed Sales Agreement, executed by Digital and Rite Aid in September of 2003, that provides, "[a]ny lawsuit brought with regard to this Guaranteed Sales Agreement ("GSA") will be venued in the Court of Common Pleas, Cumberland County, Pennsylvania." A true and correct copy of the GSA is attached to this Complaint as Exhibit A. RELEVANT FACTS 7. Rite Aid is one of the largest drug store chains in the nation, operating approximately 3400 stores in 30 states and the District of Columbia. 8. At all times relevant to this Complaint, Digital was involved in the distribution of digital entertainment including, but not limited to, personal computer software, DVD movies, and videogames. 9. On information and belief, Greenleaf purchases and attempts to collect on bad debt. 10. In September, 2003, Rite Aid and Digital, entered into the GSA, a valid and enforceable contract, which provided that Digital's products would distributed and sold by Rite Aid. II. In September, 2003, Rite Aid and Digital entered into a Rite Aid Returns Agreement ("Returns Agreement") which provided the manner in which Digital's products could be returned to Digital. A true and correct copy of the Returns Agreement, a valid and enforceable written contract, is attached to this Complaint as Exhibit B. -2- 12. The GSA provides that Digital will accept returned goods in "as-is" condition. 13. The GSA forbids Digital from assigning any product covered by the GSA to a third party without the express written consent of Rite Aid. \4. The GSA provides that all returns are at risk of DigitaL 15. As of January 31,2005, Digital's account with Rite Aid has a $426,270.48 negative balance, which is expected to grow after all returns are processed and other account charge backs applied. 16. Returns to Digital continue to be processed through Rite Aid's return systems. 17. On information and belief, the amount due and owing to Rite Aid will continue to rise to a level likely to reach or exceed $500,000.00. 18. Upon information and belief, and contrary to the provisions of the GSA, Digital assigned all or a portion of its contracts, including the GSA and Returns Agreement to Greenleaf. 19. As of the date of the filing of this Complaint, Digital and Greenleaf are in breach of the GSA and the Returns Agreement (and related account contracts and agreements) because they refuse to pay Rite Aid the negative balance on its account COUNT 1 BREACH OF CONTRACT Rite Aid vs. Digital 20. Rite Aid incorporates the averments in paragraphs I through 19 above as if fully set forth herein. 21. As noted above, in September, 2003, Rite Aid and Digital entered into the GSA and the Returns Agreement, valid and enforceable written agreements under which Rite -3- Aid agreed to consider Digital's products for sale in it stores and Digital agreed, inter alia, to guarantee the sale of Digital's products to Rite Aid at both Customer Service Centers and retail levels. 22. The GSA and the Returns Agreement grant Rite Aid the authority to return unsaleable product to Digital at its sole discretion and at Digital's sole risk. 23. As of January 31,2005, Digital's negative account balance of $426,270.48 was the result of a $416,967.20 negative balance in recalled merchandise charges, a $5,205.15 negative balance in unsaleables, a $2,817.72 negative balance in freight charges and a $1 ,280.41 negative balance in warehouse returns. A full accounting of the negative balances and summary sheets rellecting the same are attached as Exhibit C. 24. Despite repeated requests, Digital refuses to pay the negative account balance of $426,270.48 to Rite Aid. 25. Rite Aid has performed all conditions precedent under the GSA, Returns Agreement, and all related agreements under the account. 26. Digital is in breach of the GSA and Returns Agreement because it has failed to pay the negative balance on its account. 27. Upon information and belief, Digital is in breach of the GSA because it improperly assigned all or some portion of the GSA and Returns Agreement to Greenleaf. 28. As of January 31,2005, Rite Aid has suffered damages in excess of $426,270.48, an amount that will increase as additional returns are processed, due to the breaches of Digital. WHEREFORE, Rite Aid requests judgment in an amount in excess of $426,270,48, plus interest, costs and all other amounts deemed appropriate by the Court. -4- COUNT II UNJUST ENRICHMENT Rite Aid vs. Digital 29. Rite Aid incorporates the averments in paragraphs I through 28 above as if fully set forth herein, 30, In the event Digital contends no contractual relationship exists, Rite Aid is entitled to recover the outstanding amounts to prevent Digital from being unjustly enriched. 31. Rite Aid provided Digital with payments totaling $656,413.01 ("Rite Aid Payments"). 32. Rite Aid has a reasonable expectation to be paid the negative balance. 33. Digital reasonably should have expected to pay for all charges accruing under the GSA and Returns Agreement. 34. Society's reasonable expectations of persons and property would be defeated by permitting Digital not to pay, 35. Rite Aid has no adequate remedy at law. 36, Rite Aid is entitled to collect the outstanding balance, plus interest, from Digital under the doctrine of unjust enrichment. WHEREFORE, Rite Aid requests judgment in its favor and against Digital in an amount in excess of $426,270,48, plus interest, costs and all other amounts deemed appropriate by the Court. COUNT III IMPOSITION OF CONSTRUCTIVE TRUST Rite Aid vs. Digital and Greenleaf 37. Rite Aid incorporates the averments in paragraphs I through 36 above as if fully set forth herein. ,5- 38. In the event the defendants contend that no contractual relationship exists, Rite Aid is entitled to recover the outstanding amounts to prevent Digital and Greenleaf from being unjustly enriched. 39. Rite Aid provided Digital and, as a result of the purported assignment, Greenleaf, with the Rite Aid Payments. 40. Pursuant to its GSA and Returns Agreement, Rite Aid started to return the unsold merchandise, 41. Digital and/or Greenleaf, however, did not refund the payment that Rite Aid made for the merchandise that was returning. 42, Because it was not being paid for the merchandise that it was returning, Rite Aid ceased returning additional merchandise and is holding that merchandise in its warehouses until it is assured that Digital and/or Greenleaf is not keeping both the payment for the product and the product itself. 43. Rite Aid is ready to return the remainder of the merchandise that it is holding for return. 44. If Digital and/or Greenleaf were permitted to retain the Rite Aid Payments made for the merchandise that Rite Aid returned and that it will return, Digital and Greenleaf would bc unjustly enriched by retaining both the merchandise and the payment for that merchandise. 45. Rite Aid has no adequate remedy at law. WHEREFORE, Rite Aid requests that a constructive trust be imposed on the Rite Aid Payments in the amount of $500,000.00, for the merchandise that needs to be returned and that Digital and/or Greenleaf be declared a trustee of that amount and other equitable relief that may be deemed appropriate by this Court. -6- COUNT IV TORTIOUS INTERFERENCE WITH CONTRACTUAL RELATIONS Rite Aid vs. Greenleaf 46. Rite Aid incorporates the averments in paragraphs I through 45 above as if fully set forth herein. 47. As set forth above a contractual relationship exists between Rite Aid and Digital based upon the GSA and Returns Agreement. 48. Upon information and belief, Greenleaf is willfully and wantonly intending to interfere with the contractual relationship by causing Digital not to pay the negative balancc. 49. The actions of Greenleaf to tortiously interfere with the contractual relationship are not privileged in any way. 50. As a result of the tortious interference by Greenleaf. Rite Aid has suffered damages in excess of $426,270.48. -7- WHEREFORE. Rite Aid requests judgment in its favor and against Greenleaf in an amount in excess of $426,270.48, plus interest, costs and all other amounts deemed appropriate by the Court. RA PA 81943 JUSTIN G. WEBER P A 89266 Pepper Hamilton LLP 200 One Keystone Plaza North Front and Market streets P.O. Box 1181 Harrisburg, PA 17108-1181 (717) 255-1155 (Telephone) (717) 238-0575 (Facsimile) downeyh@pepperlaw.com varnerr@pepperlaw.com weher:j@pepperlaw.com Date: February 9, 2005 Attorneys for Plaintiff Rite Aid Corporation -8- C) -t'l ..,.., 1"1 0.> I \..0 "::'" . Revised February, 03 RITE AID CORPORA nON GUARANTEED SALES AGREEMENT Rite Aid will consider Vendor's product(s) for distribution and sale under the terms and conditions set forth in this Agreement. In consideration of Rite Aid's agreement to review a new entry into its mix, as well as in consideration of the mutual premises contained herein, the parties agree as follows: 1. Vendor will guarantee the sale of Vendor's product(s) to Rite Aid at both Customer Service Centers (i,e, distribution centers) and retail locations, 2. During the first one hundred twenty (120) days, or such other period as Rite Aid may determine in its sole discretion (it being understood by Vendor that Rite Aid may terminate this Agreement in its sole discretion at any time, for any reason whatsoever) following the date if the Vendor's first delivery ofproduct(s) to Rite Aid (the "Review Period"), Vendor's account will be on a review status to permit Rite Aid to assess the performance of the product(s). During the Review Period, Rite Aid will pay only for those product(s) that are actually sold, and Rite Aid's payment will be reduced by any and all cash discounts or other debit amounts (including, but not limited to, advertising, displays, markdowns and price protection) due to Rite Aid, If at the end of the Review Period, Rite Aid determines, in its sole discretion, that the Vendor's product(s) is not selling at an acceptable rate, then Rite Aid will have the right to (a) require Vendor to review and modify Vendor's marketing plan to ensure future success and (b) extend the due date of the original invoice submitted by Vendor, Rite Aid also has the right to require a cash payment, as described in paragraph (3) below, The foregoing rights are not exclusive. At the end of the Review Period, Rite Aid may terminate this Agreement, place the Vendor on Rite Aid's customary payment terms, or extend the Review Period as Rite Aid, in its sole discretion, so desires. 3. If at any time Rite Aid determines in its sole discretion that Vendor's product( s) performance continues to be unacceptable, Rite Aid will have the right to return at Vendor's expense all unsold product(s) to Vendor's facility in return for Vendor's cash payment to Rite Aid for any products for which Rite Aid has paid, but have not been sold. Vendor's payment to Rite Aid shall be made (a) by wire transfer ofimrnediately available funds or certified check, and (b) no later than fifteen (15) days after Rite Aid has returned the product(s). 4. Upon settlement of Vendor's account, all outstanding invoices will be paid promptly, less any and all cash discounts or other debit amounts due to Rite Aid. 5, The terms and conditions of this Agreement are in addition to, and in no way limit, Rite Aid's rights and remedies under Rite Aid's Vendor Profile, standard terms and conditions or purchase orders. In the event of inconsistency between the terms and . conditions of the Agreement and any of the foregoing documents, this Agreement will govern, 6, The parties agree that Pennsylvania law governs this Agreement not withstanding its conflicts of law provisions. Any lawsuit brought with regard to this Guaranteed Sales Agreement will be venued in the Court ofComrnon Pleas, Cumberland County, Pennsylvania, 7. The parties specifically agree that 13 Pa. C.SA ~2326 & 2327(b) are inapplicable and . that Vendor will accept returned goods in their "as-is" condition, 8. All returns are at risk of vendor. 9, Vendor can not assign any product covered by this Agreement to any third party without the express written consent of a Vice President of Category Management. Rite Aid is enthusiastic about the opportunity to distribute product(s) into the marketplace. Rite Aid wishes you every success in your endeavor to provide a product that is unique. Please allow Rite Aid to assist your in your distribution needs by arranging for a duly authorized officer to sign and date this Agreement on behalf of your company, and return the executed letter to Rite Aid's Merchandising Department. By: ~/k~f .:1.uthorized Signature Ifokf tf;i'/e/n Title: Authori d Statul 9, ) (!] Vendor: D (.1'(!'rL 1. 51' or Date: 1&\.,:J Date: Revised February 2003 Please note: A SeDarate Returna Aureement must be filled out for each vendor number. Company Name: _Dl<~ \\"Ptt.. 1.. s-rof' L ~Rrz,)' H+IL1..l~ Contact Name: Vendor Number: . . . RITE AID RETURNS AGREEMENT ~~~e# ~~ ~~g~~ E-Mail Address: L1'lP.~1 eo D\(:j\TAUI.<m1"'<!.o"1 Shipping Ad~r ~~~~1V4J Invoice Addre~__ \, "2\.\.I+G ~'Pt~ ~ ,'\-h~N~~ LC; p..hu .::s'....?~-:1 ::::ategory Manager: 1'-\ ~ ~~ r..&sociate Cateqory Manaqer: -;:S': ~'\O( \.\Wi6S rERMS OF AGREEMENT: ~. Unsaleable Merchandise All vendors will be charged the following processing fees for damaged, defective, outdated, and discontinued goods. These fees are based on the findings from the Joint Industry Task Force Study (JIR): DPC (Direct Product Cost) PO!!t Damage Ops through Scan: $0,085 $0.111 iQ,1Q1 $0.297 All vendors must determine a method of disposition for their unsaleable products, Based on the CODEJDESCRIPTlONS listed below, the vendor representative will check (X) the method hislher company has authorized Rite Aid to use. The additional charge, shown in () at the end of the desCliption, will be added 10 the charges above. CODE COPT DONA RaPT ROON RTAK RSHP DESCRIPTION IJIR COSTI Scan and disposltlon is left up to the discretion of Rite Aid ($0.020). Scan and donate ($0,030) Scan, Hold, Vendor Review/Center Option ($0,127) Scan, Hold, Vendor Review, Donate ($0.137) Scan, Hold, Vendor Review, Take ($0.174) Scan, Hold, Vendor Review, Ship ($0.166) Note: AI1 Vendor Review merchandise wfff be heid for 21 days after Invoice date for review. A t that time If not reviawed, or if no decision has been provided by the manufacturer the product wffl be disposed of at the discretion of Rite Aid. SHBK X- Scan and ship back to vendor ($0.180) OPEN RA# REQUIRED WITH THIS OPTION RA# J 07;:'5'3 I 07/22/03 , . .' Rite Aid Returns Agreement Page 2 3. All products will be billed at RIte AId's list cost + JIR b1l1lng factors (OPC, Post Damage Handling, Rec Charges, Disposition Charges) unless otherwise agreed 10 in writIng by Rite Aid Corporation. Vendor billing" not to exceed 131m ot RIte Aid's list coat. 4. All Changes to policies must be in writing to Rite Aid Corporation. Approved poHcy changes will take effect within 30 days following their approval. 5. All vendors will agree to forward a copy of their current national polley regarding reclamation to be reviewed by Rite Aid Corporation. This wfll be sent to: Rite Aid Corporation 30 Hunter LitRe Camp Hili, PA 17011 Attention: Manager, Front End Returns B. Recall Merchandise .-Please note: The dispositions on pege 1 DO NOT apply to recalls. A separate agreement MUST be tilled out for all recalls at the time the recall Is beinG Ictlvated. This allows a vendor to have a separate disposition on reca'1s than they have on damaged and outdated returrns. The signatures below by the appropriate Category Manager of Aid Corporation nd the vendor representative of said company denote their understanding d ccaptance of the boye agreement. ~ tJ,.",f2.fArI" II-Ji/fltf7 CJ ''''0'' Signature (Vendor Representative) .~ 9/r7 l)J(:,lT,q'1.4 S"-op ~ompany Rite Aid Corporation v 07/22/03 Digital 1 Stop V#35725 Balance as of 1/3112005 Document Description Document # Date Amount Due Date Direct Warehouse Returns 4245990 9/t/04 $ (92.74) 9/14/04 Direct Warehouse Returns 4246005 9/2/04 $ (276.19) 1 017104 Direct Warehouse Returns 4246006 9/2104 $ (542.26) 9/15/04 Oirect Warehouse Returns 4246019 9/2/04 $ (277.54) 9/9/04 Oirect Warehouse Returns 4251051 9/7/04 $ (91.68) 9/16/04 Direct Warehouse Returns Total $ (1,280.41) Freight Charges 204080881 12/9/04 $ (904.42) 12/9/04 Freight Charges 204264953 12/30/04 $ (582.15) 12/30/04 Freight Charges 204281591 1/31/05 $ (779.34) 1/31/05 Freight Charges 248282056 12/2/04 $ (551.81 ) 12/2/04 Freight Charges Total $ (2,817,72) Offset Transaction H357250B03 10/6/04 $ 100,000.00 1 0/12/04 Offset Transaction H357250803 10/6/04 $ (100,000.00) 10/12/04 Offset Transaction Total $ USI Recalled Merchandise R185598790 10/15/04 $ (37,189,05) 11/9/04 USI Recalled Merchandise R185599958 10/15/04 $ (127,494.95) 11/9/04 USI Recalled Merchandise Rl90148790 11/19/04 $ (20,013.15) 12/14/04 USI Recalled Merchandise Rl90149958 11/19/04 $ (47,656.70) 12/14/04 USI Recalled Merchandise R190749790 11/19/04 $ (245,70) 12/14/04 USI Recalled Merchandise R194472790 12/17/04 $ (3,421.75) 1/11105 USI Recalled Merchandise R194473958 12/t7I04 $ (958.45) 1/11/05 USI Recalled Merchandise R195111790 12/17/04 $ (54,017.60) 1/11/05 USI Recalled Merchandise R195112958 12/17/04 $ (92,023,75) 1/11/05 US1 Recalled Merchandise R195131790 12/17/04 $ (175.85) 1/11/05 USI Recalled Merchandise R195132958 12/17/04 $ (5,408.55) 1/11/05 US) Recalled Merchandise R198756790 1/14/05 $ (1,171.05) 2/8105 USI Recalled Merchandise Rl98757958 1/14/05 $ (750.75) 2/8/05 USI Recalled Merchandise R199255790 1/14/05 $ (24,383.45) 2/8/05 USI Recalled Merchandise R 199256958 1/14/05 $ ( 486.85) 2/8/05 USI Recalled Merchandise R 199272790 1/14/05 $ (1,542.25) 2/8/05 USI Recalled Merchandise R199273958 1/14/05 $ (27.35) 2/8/05 USI Recalled Merchandise Total $ (416,967.20) USI Unsaleables 0178949299 9/17/04 $ (196.30) 9/20/04 USI Unsaleables 0180033790 9/17/04 $ (4.73) 9/20/04 USI Unsaleables 0183222299 1 0/15/04 $ (492,98) 1 0/18/04 USI Unsaleables 0184314790 10/15/04 $ (189.17) 10/18104 USI Unsaleables 0187967299 11/19/04 $ (1,938.06) 11/22/04 USI Unsaleables 0189079790 11/19/04 $ (204,73) 11/22/04 USI Unsaleables 0192514299 12/17/04 $ (656,33) 1 2/20/04 USI Unsaleables 0193598790 12/17/04 $ (294.91 ) 12/20/04 US) Unsaleables 019696t299 1/14/05 $ (585.59) 1/17105 USI Unsaleables 0198045790 1/14/05 $ (642.35) 1/17/05 USI Unsaleables Total $ (5,205.15) Grand Total $ (426,270.48t Digital 1 Stop V#35725 Balance as of 1/3112005 Days Document Over Description Document # Date Amount Due Date Due Aging USl Recalled Merchandise R198756790 1/14/05 $ (1,171.05) 2/8/05 -8 0-60 Days USI Recalled Merchandise R198757958 1114105 $ (750.75) 218105 -8 0-60 Days US! Recalled Merchandise R199255790 1/14/05 $ (24,383.45) 218105 -8 0-60 Days USI Recalled Merchandise R199256958 1114105 $ ( 486.85) 218105 -8 0-60 Days USI Recalled Merchandise R199272790 1/14/05 $ (1.542,25) 2/8/05 -8 0-60 Days USI Recalled Merchandise R199273958 1/14/05 $ (27,35) 2/8/05 -8 0-60 Days Freight Charges 20428159t 1131105 $ (779,34) 1/31/05 0 0-60 Days USI Unsaleables 0198045790 1/14/05 $ (642.35) 1/17/05 14 0-60 Days USI Unsaleables D196961299 1/14/05 $ (585,59) 1/17105 14 0-60 Days USI Recalled Merchandise R194473958 12/17104 $ (958.45) 1/11/05 20 0-60 Days USl Recalled Merchandise R195111790 12/17/04 $ (54,017.60) 1/11/05 20 0-60 Days USI Recalled Merchandise R195112958 12/17/04 $ (92.023,75) 1/11/05 20 0-60 Days USI Recalled Merchandise R195131790 12/17/04 $ (175.85) 1/11/05 20 0-60 Days USI Recalled MerchandIse R195132958 12/17104 $ (5,408.55) 1/11/05 20 0-60 Days USI Recalled Merchandise R194472790 12/17/04 $ (3,421,75) 1/11/05 20 0-60 Days Freight Charges 204264953 t 2/30/04 $ (582,15) 12/30/04 32 0-60 Days US! Unsaleables 0193598790 12/17/04 $ (294.91) 12/20/04 42 0-60 Days USI Unsaleables 0192514299 t2/17/04 $ (656.33) 12/20/04 42 0-60 Days USI Recalled Merchandise R190149958 11119104 $ (47,656.70) 12/14/04 48 0-60 Days USI Recalled Merchandise R190148790 11/19/04 $ (20,013.15) 12/14/04 48 0-60 Days USI Recalled Merchandise R190749790 11/19104 $ (245.70) 12/14/04 48 0-60 Days Freight Charges 204080881 12/9/04 $ (904.42) t 219/04 53 0-60 Days Freight Charges 248282056 12/2/04 $ (551.81) 12/2/04 60 0-60 Days USI Unsaleables 0187967299 11/19/04 $ (1.938.06) 11122/04 70 61-120 Days USI Unsaleabies 0189079790 11/19/04 $ (204.73) 11/22/04 70 61-120 Days USI RecaUed Merchandise R185599958 t 0/15/04 $ (127,494,95) 11/9/04 83 61-120 Days USI Recalled Merchandise R185598790 10/15/04 $ (37.189,05l 1119/04 83 61-120 Days USI Unsaleables 0183222299 10/15/04 $ ( 492.98) 10/18/04 105 61-120 Days USI Unsaleables D184314790 10/15/04 $ (189.17) 10/18104 105 61-120 Days Offset Transaction H357250803 10/6/04 $ 100,000.00 1 0/12/04 111 6,.,20 Days Offset Transaction H357250803 10/6/04 $ (100,000.00) 1 0/12/04 111 61-120 Days Direct Warehouse Returns 4246005 9/2/04 $ (276.19) 10/7/04 1 t6 61-120 Days USI Unsaleables 0178949299 9/17/04 $ (196.30) 9/20/04 133 121-180 Days USI Unsaleables 0180033790 9/17/04 $ (4.73) 9120/04 133 121-180 Days Direct Warehouse Returns 4251051 9/7/04 $ (91,68) 9/16/04 137 121-180 Days Direct Warehouse Returns 4246006 9/2/04 $ (542.26) 9/15/04 138 121-180 Days Direct Warehouse Returns 4245990 9/1/04 $ (92.74) 9/14/04 139 121-180 Days Direct Warehouse Returns 4246019 9/2/04 $ (277,54) 9/9/04 144 121-180 Days $ (426,270.48), Digital 1 Stop V#35725 Balance as of 1/3112005 Description Direct Warehouse Returns Total Freight Cl\argea Total Offset Transaction Total USI RecallBd Merchandise Total USI Uns8'eables Total Grand Total Amount (1,280.41) (2,817.72) $ $ $ $ (416,967.20) $ (5.205.15) J.,.J426,270.48) Description Direct Warehouse Returns Freight Charges Offset Transaction USI Recalled Merchandise USI Unsaleables Grand Total Digital 1 Stop V#35725 Aging of Debit Balance as of 1/3112005 Days Over DUB 0-60 Days 61-120 Days 121-180 Days Grand Total $ (276.19) $ (1,004.22) $ (1,280.41) $ (2,817.72) $ (2,817.72) $ $ $ (252,283,20) $ (164,684.00) $ (416,967,20) $ (2,179.18) $ (2,824.94) $ (201.03) $ (5,205,15) $ (257,280,10) $ (167,785.13) $ (1,205.25) $ (426,270.48) VERIFICATION James Coronale signs this Verification on behalf of Rite Aid Corporation, and does hereby verify that the foregoing Complaint was prepared with the assistance and advice of counsel, and in reliance upon counsel's advice; that the document, subject to inadvertent or undiscovered errors, is based upon and therefore limited by the records and information still in existence, presently recollected and thus far discovered in preparation ofthis document; and that subject to the limitations set forth herein, the statements contained in this document are true and correct to the best of his knowledge, information and belief. The language of the foregoing document is that of counsel. It is understood that the statements herein are made subject to the penalties of 18 Pa. C.s.A. 94904 relating to unsworn falsification to authorities. Date: Febru~, 2005 ~~ 't> ~ .... '- ~ ju .. () -<:. ~ g '^ ....) Y\ l;"- ce (? ....' , .. .' ,::J 0' ....., r-:'\ t}) \ u;:J '~. '. ;"" ," ,,~ . ........ -:; :::."-~ :i: ::-:',) o --n ,..... ~- l.:~~\-::,\ . \ ..~ -"tfi ~3\\~, ~ '~~';;A! ,^-/;-' ::::1, :.5 ,<; z ~t:- J;' I .. RITE AID CORPORATION, IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW Plaintiff, vs. NO. 05-709 CIVIL TERM HALF MOON INVESTMENTS, LLC d/b/a D IGlT AL I STOP and GREENLEAF CAPITAL GROUP, LLC, AFFIDAVIT OF SERVICE Defendants. JURY TRIAL DEMANDED AF'FIDA VIT OF SERVICE I, Randy 1. Varner, being duly sworn according to law, hereby depose and say that: I. I am over 2 I years of age. 2. On February 9, 2005, I caused an attested copy of the Complaint and Notice to Defend to be served upon the defendant in the following manner: Upon defendant, Half Moon Investments d/b/a Digital I Stop, at 2445 Nevada Avenue N, Golden Valley, MN 55416, by certified mail, return receipt requested, signed for by Ryan Hoops. 3. As evidenced by the attached receipt, the Complaint and Notice to Defend were delivered to Half Moon Investments d/b/a Digital] Stop on Febmary 14,2005, BRIAN P, PA 5989] RANDY 1. VARNER PA 81943 JUSTIN G. WEBER P A 89266 Pepper Hamilton LLP 200 One Keystone Plaza North Front and Market streets P.O. Box 118] Harrisburg, PA ]7108-1181 (717) 255-1155 (Telephone) (717) 238-0575 (Facsimile) downeyb@pepperlaw,corn varnerr@pepperlaw,corn weherj@pepperlaw.com Attorneys for Plaintiff Rite Aid Corporation Sworn to and subscribed before me this 22'HI day of February, 2005. ^) Notary P (j ) l(j ?r COMMONWEALTH OF PENNSYLVANIA Notanal Seal tQmberiy i<'elly Pen:z, j\\:)tary Put*; CIti Of Harrisburg i'"uphin C<lUn!Y MrConYniSsion E'\-iI;iES Aug. 3, 2!R1 MBrIber, 1?enI"::;y,vania Az~..cci:a'lion OfNdBdel -2- .' U S. Postal Service CERTIFIED MAIL RECEIPT (DomestIc Mall Only; No Insurance Coverage ProvIded) c- oO .LJ .LJ .-'I .LJ I1.J U1 Postage ~_L.'~ 1 1.30 . _J -]:}'---- Certified Fee M Ret,lJrnAeceiptFee CJ (Endorsclmenl Required) C1 Restricted O~,)ivery Fee CJ (Endorsement Required) C) Total Postage & Fees $ 5. '3 L.! =r ~ ~~;~~~}~~~.;;~~.f~~lA""A.~~~~~m.lD.........l ~ cii.s~~";.;P~'4.'...'i'i~n...nN)i\J$5i:fn;n. .mn.... '.'".",.", . Complete ~ems 1, 2, and 3. Also comptete ~em 4 ij AestI1ctecl Delivery Is desired, . Print your name and address on the reverse so that we can return the card to you. . Attach this card to the back of the mallplece, or on the front if space permits. 1. Article Addressed to: HALF MOON I~YESTMENTS d/b/a DIGITAL 1 STOP 2445 Nevada Avenue N Golden Valley, MN 55416 3,~1\Ipe Ii!! CertJfled Mall [J gxpress Mall o Registered liJ"Retum Receipt fe r1 ....J_..JI.l._ D Insured Mall [J C.O.D. 4. Re&trlcted Delivery? (Extra Fee) D Ves 2. ArtIcle Number rn-w-- 7001 1940 aaal 5261 6689 PS FOlm 3811, February 2004 Domestlc Retum Rec:eIpt 102595-02-M-1540 , CERTIFICATE OF SERVICE I hereby certify that on February 22, 2005, a copy of the foregoing document was served by first class mail, postage prepaid, addressed as follows: Half Moon Investments d/b/a Digital I Stop 2445 Nevada Avenue N Golden Valley, MN 55416 Greenleaf Capital Group, LLC 3411 Brei Kessel Road Independence, MN 55359 % -<'. <"" t::P t;1 7 '> - - VI CP RITE A rD CORPORA nON, IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW Plaintiff, VS, NO. 05-709 CIVIL TERM HALF MOON INVESTMENTS, LLC d/b/a DIGITAL I STOP and GREENLEAF CAPITAL GROUP, LLC, AFFIDAVIT OF SERVICE Defendants. JURY TRIAL DEMANDED AFFIDA VIT OF SERVICE r, Justin G. Weber, being duly sworn according to law, hereby depose and say that: I. I am over 2 r years of age. 2. On February 9, 2005, in an attempt to serve defendant Greenlcaf Capital Group, LLC ("Greenleaf'), I caused to be sent a copy of the Complaint and Notice to Defend to the Greenleaf by certified mail, return receipt requested to Greenleaf Capital Group, LLC, 34 J 1 Brei Kessel Road, Independence, MN 55359. -' 3. As evidenced by the attached copy of the original certified mail envelope and receipt, the Complaint and Notice to Defend were refused by Greenleaf Capital Group, LLC on or about February 16, 2005. 4. In order to effectuate service on Greenleaf, I caused the Complaint and Notice to Defend to be mailed on February 23, 2005, by ordinary mail to Greenleaf Capital Group, LLC, 3411 Brei Kessel Road, Independence, MN 55359, with my firm's return address appearing thereon, pursuant to Pa,R.c'P. 403 and 405(c). 5. The Complaint and Notice to Defend were not returned to the undersigned by March 10,2005, which is fifteen (15) days after the February 23, 2005, mailing. ,2- 6. Therefore, pursuant to the Pennsylvania Rules of Civil Procedure, I caused Greenleaf to be served with the Complaint and Notice to Defend, by ordinary mail at the address set forth above, which service was complete on March 10, 2005. Sworn to and subscribed before me this ~ 05h day, of Marc:!;05;. , / 9/j/!.1-; j ~/~!1~,--, !'ii tL:k.e. . Notary Publ,it r---~ J Ma - Notarial Seal -------,.." nanne SOffit ) M City Of Harrisburg e'oNotary Public ! Y CommIssion E '. auphm County I Member PA _ Xplres June 24 2006 ; '~"!nsv/v;:m'n~~!r'I\J(~""i:_::_.l ~hU--- BRI P. DOWNEY 59891 RANDY 1. VARNER PA 81943 JUSTIN G. WEBER PA 89266 Pepper Hamilton LLP 200 One Keystone Plaza North Front and Market streets P.O. Box 1181 Harrisburg, P A 17108-1181 (717) 255-1155 (Telephone) (717) 238-0575 (Facsimile) downeyh@pepperlaw.com varnerr@pepperlaw.com wehe rj@pepperlaw,corn Attorneys for Plaintiff Rite Aid Corporation -3- ~ ~ ~ .~ ~i ('C\. _\ ~I\\ r-- - ~~j~& >_ c~- ~': ~ ':c'. - .- as ~ U) ~ - (,) U; ~ .- u.. 1\ ~~ glS;;!: """"", "'~ tl;zC .....NCL. ~! s' -:; I ~ =1;; .H . ;a ~:i ;: ~ -= ..... , ~:;;; ~ ~ g :: ~ ~ ~ .H ~ 8 ~ ci :: ... N '" " ;! ,~ '0~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ,~. .. . A.,. . ..... -.- -~. - ~ "... ..._....'.....""'-_.:.....-.""l_ ""'-.....,.. .~,~,.."",.~ .,..."~.....'....................... .~"",..,..,,',....... lIdCH ...i-PISU. ":llJ'qM ~1(Ud S1~npOJd l\o:'lIc!._"ll.~cno vsn u! apel^J W ,.JfaAA.L~!IUOdna )j'~'II'IIJnS 06~~1:I# )j:)OlS ~. ~ ~ ~ - " ~ .- ca -. ~ ~ (,1 ~ .-+ CIJ (') CIJ ca - Q) - ~ U CIJ ~ CIJ ..... s: en .... .- Q) u.. -. - ~ ~ ~ ~ ...~ A A A . u.~ I-U",(dl,;,er",,",\C CERTIFIED MAIL RECEIPT (Domestic MatI Only No Insurance Coverage Provided) ...ll IT' ...ll ...ll /.Gq_ .'30 -1:::] S_~ r-:I Postage $ ...ll ru Certified Fee '" Return Receipt Fee n (Endorsement Required) C] Cl Restricted Delivery Fee CJ (Endorsement Required) Total Postage & Fees .' CERTIFICATE OF SERVICE I hereby certify that on March I J, 2005, a copy of the foregoing document was served by first class mail, postage prepaid, addressed as follows: Half Moon Investments d/b/a Digital I Stop 2445 Nevada Avenue N Golden Valley, MN 55416 Greenleaf Capital Group, LLC 3411 Brei Kessel Road Independence, MN 55359 ~~~~ i: RITE AID CORPORATION IN THE COURT OF COMMON PEAS CUMBERLAND COUNTY, PENl' SYV ANIA CIVIL ACTION - LAW Plaintiff, vs. NO. 05-709 Civil Tcrm HALF MOON INVESTMENTS, LLC d/b/a DIGIT AL I STOP and GREENLEAF CAPITAL GROUP, 1.LC, PRELIMINARY OBJECTIONS Defendants. Defendants, JURY TRIAL DEMANDED Half Moon Jnvestments, LLC d/b/a Digital I Stop and Greenleaf Capital Gro] p, LLC I (hereinafter collectively "Dcfendants"), as and for thcir .Joint Preliminary Objcctions to Plaintiff Rite Aid Corporation's ("Rite Aid") Complaint, state and allege as follows: OBJECTION 1. As and for thcir Erst objections, Defendants state that venue in t is Conrt is I Improper because the forum selection clause in the Guaranteed Sales Agreem1 nt ("GSA") provided that the forum selection provisions were only applicablc to disputes rega ding returns of mcrchandise arising during the 120-day Rcvicw Period provided for in the GS . Rite Aid I was only allowed to return mcrchandise under the terms and conditions of thc GSI during the I Review Period. The disputes between Digital 1 and Rite Aid arise out of returns ofl erchandise I delivcrcd to Rite Aid and returned by Rite Aid after the Review Period had cxpire!. Thus, the terms and provisions of the GSA no longcr applicd in regards to the return of that ~ erchandise. I Instcad, the terms and provisions of Digital l's invoices regarding that mcrchandl se govern cd I once the Review Period ended. The terms and conditions of those invoices clearlyl provide that they shall bc construed under Minnesota law and that any claims, actions, or dis tes shall be litigatcd in Minnesota courts. 2. As and for their second objection Defendants state that thisourt lacks jurisdiction in this matter under the principles of the "'first filed rule" due to the pendency of a prior action. Under that rule it is well-established that in cases of concurrcnt juri~ iction, 'the Co. v. Goodyear Tire & Rubber Co. , 920 F.2d 487, 488 (8th Cif. 1990) (quoting j rthmann v. first court in which jurisdiction attaches has priority to consider the case.'" United St~ tes Fire Ins. Applc River Campground Inc. , 765 F.2d 119,121 (8th Cif. 1985)). Prior to the iling of this action Digital I Stop brought an action against Rite Aid in Hennepin County Districtl Court of thc Fourth Judicial District of Minnesota in which the parties and issues are substantiall~ the same as in this action. Minnesota courts have the authority to enjoin a party ovcr which it las personal jurisdiction from proceeding with litigation in another court. St. Paul Sur Ius Line' Ins. Co. v. Mentor CorP., 503 N. W.2d 511, 516 (Minn.App. 1993). The court's determination ~s to whether to exercise that authority is dependent upon the similarities between the litigation' in the two courts, that is, whcthcr thc partics and issucs arc common to both actions such that I nc cause of 1 action will be dispositive of the other..Lch That is the situation that currcntly exists lin these two I 1 actions. Because the action in Minnesota was liled first it has priority over the actiO! liled in this Court, and Defendants will scek an order staying this action in either this COl!rt or in the , I Hcnnepin County Court. , 1 As and for its third objection, Defendant Greenleaf Capital Group,! LLC, states I that this Court lacks personal jurisdiction over it. The contract at issue in this caje, the GSA, was entered into between Rite Aid and Digital 1. Greenleaf was not a party to , mt contract. Digital 1 has not assigned all or a portion of its contracts to Greenleaf. Furthermole, Greenleaf has not purchased or had assignccl to it any of Digital I 's debts and Greenleaf has '0 ownership , .l. intcrest in Digital 1. Greenleaf therefore has no connection to the contracts and trmsactions that are the subject matter of this action, and has not therefi)l'e "purposefully establish( d minimum contacts in the forum State" such that it is fair to require Greenleaf to defend lawsuit in Pennsylvania. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474, 105 S. Ct. 2174,,2183 (1985) (quotation omitted). WHEREFORE, Defendants respectfully request that: I That this action be dismissed or in the alternative stayed pending the outcomj of the prior action brought in Hennepin County District. Dated: 3/?-.> ,2005 --- BENEPARTUM LAW GROUP, P.A. Attorneys for Defendants ----.. n Attorncy at Law 17 W. South Street Carlisle, PA 17013-3387 717-241-4300 Attorney f()l' Defendants ......./ .~ ....,---~ ~! ,...., i":-;'..' ~ - -::,'" ;;rJ N co '....' ~:..~ ~ -' ~ C1 u: (~) -n .... :-T;,:D f1' -'- '-Dt.1 '[1"'-' ("I t=) .--\ - <,0 ~ ,- > ;~r~3 ()'\\ \ ;:::; ,..;: -- . Plaintiff, IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CNIL ACTION - LAW RITE AID CORPORATION, vs. NO, 05-709 CNIL TERM HALF MOON INVESTMENTS, LLC d/b/a DIGITAL I STOP and GREENLEAF CAPITAL GROUP, LLC, Defendants. JURY TRIAL DEMANDED PRAECIPE FOR LISTING CASE FOR ARGUMENT TO THE PROTHONOTARY: Please list the above-referenced matter for the June 1 argument court. I. Matter to be argued: Preliminary Objections of Defendant Half Moon Investments, LLC d/b/a Digital 1 Stop and Greenleaf Capital Group, LLC, to Plaintiff's Complaint 2. Counsel: a. Counsel for plaintiff who will argue the case: Brian P. Downey, Esquire, Pepper Hamilton LLP, 200 One Keystone Plaza, Front and Market Streets, P.O, Box 1181, Harrisburg, P A 17108 b. Counsel for defendants Half Moon Investments. LLC d/b/a! Digital 1 Stop and Greenleaf Capital Group: Edward Cook, Esquire, Thomas M. Fafinski, Esquire, BenePartum Law Group, 860 Blue Gentian Road, Suite 295, Eagan, MN 55 I 21: Richard Gan, Esquire, 17 W. South Street, Carlisle, PA 17013-3387 BRI N P. DOWNEY (59891) STIN G. WEBER (89266) Pepper Hamilton LLP 200 One Keystone Plaza North Front and Market Streets Post Office Box 1 181 Harrisburg, Pennsylvania 17108-1181 (717) 255-1155 (717) 238-0575 (Fax) Date: May 10, 2005 Attorneys for Plaintiff, Rite Aid Corporation #' r~ CERTIFICATE OF SERVICE I hereby certify that on May 10,2005, I served a copy the foregoing document upon counsel of record by United States mail, first class postage prepaid, addressed as follows: Edward Cook, Esquire BenePartum Law Group 860 Blue Gentian Road, Suite 295 Eagan, MN 55121 Thomas M. Fafinski, Esquire BenePartum Law Group 860 Blue Gentian Road, Suite 295 Eagan, MN 55121 Richard Gan, Esquire 17 W. South Street Carlisle, PA 17013-3387 ~ ~' .-, C:i ~ Plaintiff : IN THE COURT OF COMMON PLEAS : CUMBERLAND COUNTY, PENNSYLVANIA RITE AID CORP, v. : CIVIL ACTION HALF MOON ET AL : NO. 05-709 Defendant File No 05-709 PETITION FOR ADMISSION TO BE ADMITTED PRO HAC VICE AND NOW comes Thomas M Fafinski, Petitioner, by his attorney, Richard R. Gan and Brings the following Petition for Admission Pro Hac Vice and respectfully Represents the following: 1. That he is a licensed attorney in the state of Minnesota 2. That he is General Counsel for the Defendants in this matter. 3, That no one is more familiar with the facts of this case from the defendant's perspective Than the petitioner. 4. That the petitioner believes that it is critical to the proper representation of the Defendants that he be permitted to participate in certain hearings and motions. 5. That it would be in the best interest of all parties to have the petitioner participate in Matters involving presentations directly related to the defendants, 6. that the petitioner has sufficient education background and training that are equal to the Requirements for admission to the Pennsylvania Bar. Please see Petitioners affidavit which is appended hereto and marked exhibit A. Wherefore, Petitioner, Thomas M Fafinski, by his attorney Richard R. Gan respectfully requests that he be admitted to Practice law in Pennsylvania Pro Hac in the above referenced matter. Respectfully Submitted, The Law ~ffices of Richard R~~--, ~~:dF~~~;lC -,----~ i< ~ Attorney LD. 68721 17 West South Street Carlisle, Pennsylvania, 17013 717-241-4300 Dated: 717 A1 .2 ;;.-2.CG\ - CJ / STATE OF MINNESOTA ) ) ss. ) AFFIDAVIT OF THOMAS M. FAFINSKI COUNTY OF DAKOTA Thomas M. Fafinski, being first duly sworn upon oath, states and deposes as follows: 1) I am an attorney for Defendants Half Moon Investments, LLC d/b/a Digital 1 Stop and Greenleaf Capital Group, LLC, 2) I offer this Affidavit in support of my motion for admission pro hac vice to the Court of Common Pleas, Cumberland County, Pennsylvania. 3) I graduated from the William Mitchell College of Law in Saint Paul, Minnesota, in January of 1991. 4) I was admitted to the practice law in the State of Minnesota on May 10, 1991. 5) I am currently a member in good standing of the bar of the State of Minnesota. My Minnesota law license number is 0215892. 6) I am also admitted to practice law in the U.S. District Court for the District of Minnesota. 7) I have ample courtroom experience having conducted numerous trials and argued numerous motions before the courts of Minnesota. FURTHER YOUR AFFIANT SAITH NOT. Dated: May 20,2005 Subscribed and sworn to before me this 20th day of May, 2005. Notary Public o r-' 0\ ,?, ,> /-, \:{""1 --' ~-\., ',\1 ,-.; ) ;;~ ,.,<~ ""'":. - [, (-.2l r0 -^< RECEIVED MAY 2 e 2ay Plaintiff : IN THE COURT OF COMMON PLEAS : CUMBERLAND COUNTY, PENNSYLVANIA RITE AID CORP, v. : CIVIL ACTION - LAW HALF MOON ET AL, : NO. 05-709 CIVIL TERM Defendant ORDER OF COURT AND NOW, TO WIT, THIS 2'" day of rn""1 2005, upon consideration of of the foregoing Petition for Admission Pro Hac Vice, filed on behalf of Petitioner Thomas M. Fafinski, it is hereby ORDERED and DECREED that Thomas M Fafinski, a Duly licensed lawyer in the state of Minnesota is admitted to practice before this court in the matter Of Rite Aid Corp v Half Moon Investments et al. BY THE COURT Dated: \. 2S' :1'1"" Jw .,J j',.' ,"! ......j il."i l? I 'ill Ci!07 . v J", ". i~ .li,i~)"", "1 RITE AID CORPORATION, Plaintiff, IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA vs. CIVIL ACTION - LAW HALF MOON INVESTMENTS, LLC d/b/a DIGITAL 1 STOP and GREENLEAF CAPITAL GROUP, LLC, NO. 05-709 CIVIL TERM Defendants. JURY TRIAL DEMANDED ORDER AND NOW, this I st day of June, 2005, it is hereby ORDERED the Preliminary Objections of Half Moon Investments, LLC d/b/a Digital 1 Stop ("DIS") are DENIED. DIS shall file and serve an answer to the Complaint on or before June 21, 2005. The first and second preliminary objections of Greenleaf Capital Group, LLC are DENIED. Argument on the third preliminary objection of GREENLEAF regarding this Court's jurisdiction is hereby continued until the July session of Argument Court. BY THE COURT, f,J. Prl'~n !? ~t.-U~, ES3' FOr 'f-hD. P/c.'J"!>{.f Ed'^'<lrd. C~ct.., n~. ('~ro.J Ci"u",,~ fYI, Fo.. f',f1SK.', E-"g. Fer -+~ 'lXtfnd.O-'\.f C OV-rt A,cL "'-<.f]" sfrcdor :>- 0'\ ~ 0;; ...:r ;::!: N wQ .::J<( ,.-) ~~ :II: 0~ Q.. C)?S ~~ 1.0 ~-"" .>.:.:: I :j~ 2: ,r:z u:~ :::> ""H:! ..., eLl 15 ...... ~ = a = <'-l . Jun-ZI.ZaO! a3:0hm From-9E"EPA~TU~ LAW GROUP PA 6!199480Z4 r-Z83 Poa2/0la F-942 RITE AID CORPORA TrON IN THE COURT Of COMMON PLEAS CUMBERLAND COUNlY, PENNSYV ANIA CIVIL ACTION - LAW Plaintiff, vs. NO. 05-709 Civil Term HALF MOON INVES1MENTS, LLC d/b/a DIGITAL I STOP and GREENLEAF CAPITAL GROUP, LLC, ANSWER AND COUNTERCLAIM Defendants. Defendants, JURY TRIAL DEMANDED Half Moon lnveslJllenlS, LLC d/b/a Digital I Slop ("Digital I"), and Greenleaf Capital Group, LLC, as and for their Answer and Counterclaim to Plaintiff Rite Aid Corporation's ("Rite Aid") Complaint, state and allege as follows: ANSWER 1. Digital 1 hereby denies each and every matter and thing contained in Rite Aid's Complaint except as may be otherwise admitted, qualified, or otherwise answered in the remainder of this Answer. 2. The allegations against Greenleaf Capital Group, LLC contained in paragraphs 46, 47, 48, 49 and 50, as well as any and all other allegations or claims made against Greenleaf Capital Group, LLC by Rite Aid are hcrej)y denied. 3, Digital I admits the allegations contained in paragraphs 2, 3, 7, 8, 9, 12, 13, and 14, of Rite Aid's Complaint. 4. Digital I specifically denies me allegations contained in paragraphs 4, 5, 6, IS, 17, 18, 19, 20, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31. 32, 33, 34, 35, 36, 37, 38, 39, 41, 44, and 45 or Rile Aid's Complaint. I , Jun-21-2005 03:06pm F'Qm-8E"EPARTU~ LAW GROUP PA 6519946024 T-Z93 P.003/010 F-94Z 5. As to the allegations in paragraph 10 of Rite Aid's Complaint, Digital I admits that it entered into the GSA with Rite Aid, but denies the rest ofrhe allegations in paragraph 10. 6. As to the allegations in paragraph II of Rite Aid's Complaint, Digital I admits that it entered into the RetUrDs Agreement wirh Rite Aid, but denies that the Returns Agreement is an enforceable written contract. 7. As to the allegations in paragraph 21 of Rite Aid's Complaint, Digital I admits that it entered into the OSA and Returns Agreement with Rite Aid, but denies the rest of the allegations contained in paragraph 21. 8. As to the allegations in paragraph 40 of Rite Aid's Complaint, Digital 1 admits that Rite Aid started to return merchandise, but denies the rest of the allegations contained in paragraph 40. 9. Digital I is without sufficient lcnowledge or information after reasonable investigation to form a belief as to the truth of the alleaations contained in paragraphs t, 16, 42, and 43, of Rite Aid's Complaint, and as such deny the same. AFFIRM'" TIVE DEFENSES 10. AS and for its first affirmative defense, Digital I states that Rite Aid's Complaint fails to state a claim for which relief can be granted. 11. As and for its second affirmative defense, Digital 1 states that Rite Aid's Complaint is barred, in whole or in pan, by the doctrine of accord and satisfaction. 12. As and for its third affirmative defense, Digital I states that Rite Aid's Complaint is balred, in whole or in plll't, by failure of consideration. 13. As and for its fourth affirmative defense, Digital I states that R.ite Aid's Complaint is barred, in whole Or in plll't, by estoppel or waiver. 2 , Jun-21r2005 03:06pm FrQm-8E"EPARTU~ LAW GROUP PA 6519948024 T-28! P004/010 F-942 14. As and for its fourth affirmative defense, Digital I states that Rite Aid's Complaint is barred, in whole or in part, by the doctrine of unclean hands. !5. As and for its fifth affirmative defense, Digital! states that it is not in breach of the GSA or Returns Agreement. 16. As for its sixth affirmative defense, Digitall states that it is entitled to an equitable right of set off. 17. As for its seventh affirmative defense, Digital I states that any ambiguities in the OSA or RA are constJUed against Plaintiff as Plaintiff was the party that dr,lfted the GSA and RA. COUNTERCLAIM Factual Background I. On or about September 4, 2003, Digital! and Rite Aid entered into an agreement whereby Digital! would supply certain electronic-related products to Rite Aid. As plll't of this arrangement, the parties entered into a Guaranteed Sales Agreement ("OSA") and a Returns Agreement ("RAn), true and correct copies of which arc hereto attached as Exhibit A. 2. The OSA provided that in consideration of Rile Aid's agreement to review a new entry into its mix, the panics agreed that during the first 120 days following Digital! 's initial delivery of product (the "Review Period''), Rite Aid had the right to return the product for a cash payment at some undetermined price. The RA merely provided that Rite Aid was entitled to charge an 18 cents per unit handling charge and an open return authorization number for all returned products during the Review Period. Neither the GSA nor the RA required or obligated Digital 1 to accept the return of any product beyond the Review Period. In addition, all salCl subsequent to the Review Period were subject to Digital! 's invoices, which contained a 3 . Jun-21~2005 0!:06pm FrQm-8ENEPARTU~ LAW GROUP PA 6519948024 T-!8! P. 005/01 0 F-B42 provision that specifically stated that all sales were final and no returns were accepted. An invoice for Digital I is hereto attached as Ell.hibit B. 3, Rite Aid began returning large volumes of product supplied to it by Digital 1 after the Review Period had ex.pired by improperly using the return authorization number that had expired. This product was returned in poor condition and with R.ite Aid labels affixed thereon. In addition, Rite Aid claims to have returned a larger number of products than was, in fact, returned to Digital J. 4. Digital 1 has inCUlTed significant costs in handling these unauthorized and improper returns. Digitall was required to unload, de-sticker, process and store the unauthorized returns. COUNT ONE (Breach of Contract against RAC) 5. Digital I re-alleges the allegations contained in paragraphs 1 through 4 above as though fully set forth herein. 6. Rite Aid bas breached its agreement by improperly returning product sold to it by Digital J. 7. As a direct and proximate result of Rite Aid's breach of contract, Digital 1 has been damaged in the amount of Twenty - Thousand Eight Hundred and Forty Seven and 0011 00 Dollars ($20,847.00). COUNT TWO (Declaratory Relief) 4. Digital 1 re-alleges the allegations contained in paragraphs I through 7 above as though fully set forth herein. 4 --- , Jun-21,2005 03:07pm Fr.m-8E"EPARTU~ LAW GROUP PA 6519948024 T-Z8! P.006/010 F-94Z 5. Rite Aid has and continues to attempt to return merchandise outside of the time allotted in the RA or GSA. 6. There is justiceable controversy between Digital I and Rite Aid regarding the applicability of the GSA and the R.A to returns of merchandise by Rite Aid made after the expiration of the ReView Period, 7. Rite Aids claims that it is allowed to retllrn merchandise pursuant to the RA or GSA despite holding the merchandise for longer than the time allotted in the RA or GSA. Neither the RA or GSA contains an integration clause and they only relate to merchandise returned within the 120 day period of time allotted. As a result, Rite Aid's purchase order and Digital l's invoice tenns and conditions, which apply to all returns of merchandise beyond the time allotted in the RA or OSA, control the return of merchandise. 8. Rite Aid's purchase order is silent as to terms and conditions relating to the return ofmercbandise. The terms and conditions ofDigitall's invoices prohibit any tcnns that modify it. 9. Therefore, the terms and conditions of Digital 1 's invoices apply making the return of any merchandise by Rite Aid 10 Digital I [outside the scope set out in the RA or GSA] invalid by stating clearly in bold and capital letters "ALL SALES ARE FINAL, UNLESS AGREED TO IN A WRITIEN INSTRUMENT SIGNED BY A OFFICER OF VENDOR." 10. An exercise of the Court'sjurisdiction is necessary to clarify' the rights of the parties in an efficient manner that will prevent the parties from incurring unnecessary additional expense before this dispute can be resolved. 5 Jun-21'200~ 03:0Tpm F'Qm-8ENEPARTU~ LAW GROUP PA 6519948024 T-Z83 P.OOTIOIO F-94Z 11. Digital 1 seeks a determination of this Court that Rite Aid is not permitted to return any more merchandise to Digital 1 pursuant to the terms and provisions of the RA, the GSA., the $ke1etal p1.II'CIllse order or the invoice terms and conditions and that the goods were accepted by Rite Aid. 12. As a result of the justiceable controversy hetween Digital! and Rite Aid, Digital I is entitled to a declaration and judgment of the Court that: a. The OSA, the RA and any purchase orders of Rite Aid lU'C inapplicable, invalid, and without force in regards to any tuture returns of merchandise made by Rite Aid to Digital 1. b. That any tuture rerurns of product made by Rite Aid to Digital I are subject to and controlled solely by the tenns and conditions set forth in Digital l's invoices concerning that merchandise. c. That the merchandise provided to Rite Aid by Digital I WIIS accepted by Rite Aid. COUNT THREE (Declaratory Judgment) 13. Digital! re-alleges the allegations contained in paragraphs I through 12 above as though twly set forth berein. 14. There is justiceable controversy between Digital 1 and Rite Aid regarding the applicability of the OSA and the RA to retUrns of product by Rite Aid made after the expiration of the review period. 15. Rite Aid has improperly made returns of product to Digital I that are the subject of this controversy which Digital! now holds in its possession and at its expense. 16. An exercise of the Court's jurisdiction is necessary to clarify' the rights of the parties in regards to the disposal oflhis product held in Digitall's possession in an efficient 6 Jun-2J-Z005 03:07pm FrQm-BE"EPARTU~ LAW GROUP PA 65199480Z4 T-la! P.008/010 F-941 manner that will prevent the parties from incurring unnecessary additionlll expense before thi s dispute can be resolved 17. By returning merchandise and placing it in Digital I' s possession, Rite Aid created an involuntary or constructive bailment. 18, 27 Pa. 9 2706 provides that where II buyer wrongfully rejects or reVOKes aCCCptallce of goods a seller may resell the goods concerned in a commercially reasonable manner and may recover the difference between the resale price and the contract price. WHEREFORE, Digital) prays for judgment in its favor, and against Rile Aid as follows: 1. For judgment in favor of Digital 1 and against Rite Aid in the principal amount of Twenty Thousand Eight HWldred Forty and No/100 ($20,847.00) Dollars. 2. For a declaratory judgment that any future returns of merchandise from Rite Aid to Digital 1 are not subject to the provisions and terms of the GSA, the RA or Rite Aid's pun:;hase agreement bllt are instead subject to the provisions and terms ofDigitall's invoices. 3. For a declaratory judgment granting Digital) the right to dispose of the returned merchandise it now holds in a commercially reasonable manner. 4. For all costs and disbursements incurred herein, including reasonable attorney's fees; S. For such other and further relief as the Court shall deem just and equitable. 7 . Jun-tH005 03 :O/pm From-8E"EPARTU~ LAW GROUP PA 6519948024 T-28! POG9/010 F-941 BENEPARTUM LAW GROUP, P.A. b~( .2005 !p. c;. r:???L Dated: Thomas M. Fafinski (#215892) Edwin A. Cook III (#267144) Suite 295 860 Blue Gentian Rd. Eagan, MN 55121 651.994.4300 Attomeys for Defendants --.... \ ~. - ~ Attorney at Law 17 W. South Street Carlisle, PA 17013-3387 717-241-4300 Attorney for Defendants VERIFICATION Robert Zalcheim.signs this Verification on behalf of Digital I, and does hereby verifY that the foregoing Answer lIIId Counterclaim WIlS prepared with the assistance and advice of counsel, and in reliance upon counsel's advice; that the document, subject to inadvertent or undiscovered , errors, is bllSed upon and thcrefore limited by the records and information still in existence, presently recollected and thus far discovered in preparation of chis document; and that subject to the limitations set fortb herein, the statements contained in this document are trUe and correct to the best ofbis knowledge, information and belief. The language contained in the foregoing document is that of counsel. 8 . ,Jun-~I'1005 0!:07pm FrQm-8E"EPARTU~ LAW GROUP PA 6519948024 T-le! P.OIO/010 F-941 Jt is understood that the statements made herein are made subject to the penalties of I 8 Pa. C.S.A. ~ 4904 relating to unsworn falsification to authorities. Dated: Jut1e ~ / .2ooS -...--2 .... " /' 9 D ,..., .~ c:::> L c:-~) <:.Jl (_... :?-n C:~ fT1.r~ "" :~F,j - , "j, 1"_' , - .., -. -<) " " ,r:.- --:'~ {'..) ~ - TO: HALF MOON INVESTMENTS, LLC, dlbl" DIGITAL 1 STOP Y au are hc;:reby notified to file a written response to the enclosed New Matter within twenty (20) days from service hereof or ajudgment may be entered against you. Pepper Hamilton LLP BY:~~ .( :.-}j ~~--- Ie ,Weber (PA 89266) RITE AID CORPORATION, Plaintiff IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW vs. NO. 05-709 CIVIL TERM HALF MOON INVESTMENTS, LLC d/b/a DIGITAL 1 STOP and GREENLEAF CAPITAL GROUP, LLC, REPLY TO COUNTERCLAIM Defendants. JURY TRIAL DEMANDED PLAINTIFF'S REPLY WITH NEW MATTER TO HALF MOON INVESTMENTS, LLC d/b/a DIGITAL 1 STOP'S COUNTERCLAIM Plaintiff Rite Aid Corporation ("Rite Aid"), by its undersigned attorneys, replies to Half Moon Investments, LLC d/b/a Digital 1 Stop's ("DIS") Counterclaim and incorporates the averments of Rite Aid's complaint in this matter, as follows: I. Admits in part and denies in part. Rite Aid admits that the parties entered into the Guaranteed Sales Agreement ("GSA") and Returns Agreement ("RA"). Rite Aid denies that true and correct copies of the GSA and RA were attached to the Answer served upon Rite Aid. 2. Denies, The GSA and RA are documents, which as writings, speak for themselves and any allegation or implication contained in this paragraph that is inconsistent with those writings is denied. By way of further answer, Rite Aid denies that any sales were subject to DlS's invoices and any terms contained therein. Rite Aid denies that an invoice was attached to the Answer served upon Rite Aid. 3. Admits in part and denies in part. Rite Aid admits only that it returned product supplied by D 1 S. Rite Aid denies any allegation or implication that any of that product was improperly returned. By way of further answer, Rite Aide avers that the product was properly returned pursuant to the GSA and RA. 4. Denies, After reasonable investigation, Rite Aid is without information sufficient to form a belief as to the truth of the matter asserted and the allegations are deemed denied. If an answer is required, Rite Aid specifically denies that any returns were unauthorized. COUNT I 5, Rite Aid incorporates by reference paragraphs I - 4 above. 6. Denies, This paragraph states a conclusion of law to which no response is required and is deemed denied, If a response is required, Rite Aid specifically denies that it breached an agreement with DlS. 7. Denies. This paragraph states a conclusion of law to which no response is required and is deemed denied. If a response is required, Rite Aid specifically denies that it breached an agreement with DlS, COUNT II 4. Rite Aid incorporates by reference paragraphs 1 - 7 above. 5, Admits in part and denies in part. Rite AJid admits only that it has returned merchandise and wishes to return additional merchandise. Rite Aid denies that it has improperly returned or attempted to return merchandise. -2- 6. Admits in part and denies in part. Rite Aid admits that a dispute exists but denies any allegation or implication that the returns made by it were or will be improper. 7. Denies. To the extent this paragraph states a conclusion of law, no response is required and it is deemed denied. By way of further answer, the GSA and RA are documents, which as writings, speak for themselves and any allegation or implication in this paragraph of the Counterclaim that is inconsistent with those writings is denied. By way of further answer, Rite Aid denies that it returned any merchandise: beyond the time period permitted pursuant to the RA or GSA. 8. Denies as stated. Rite Aid's purchase order and D IS's invoices are documents, which as writings, speak for themselves and any allegation or implication contained in this paragraph of Counterclaim that is inconsistent with those writings is denied, 9. Denies. Rite Aid specifically denies that the DIS invoice terms control the returns of merchandise. By way of further answer, Rite Aid denies that any of the returns were improper. By way of even further answer DlS's invoices are documents, which, as writings, speak for themselves, To the extent this paragraph states a conclusion of law, no response is required and it is deemed denied. 10. Denies. Rite Aid specifically denies that DIS is entitled to relief from the Court. By way of further answer, this paragraph states a conclusion of law to which no response is required and it is deemed denied. 11. Denies. Rite Aid specifically denies that it is not permitted to return merchandise. By way of further answer, this paragraph states a conclusion of law to which no response is required and it is deemed denied. -3- 12. Denies. Rite Aid specifically denies that DIS is entitled to any relief. By way of further answer, these paragraphs state conclusions of law to which no responses are required and they are deemed denied. COUNT THREE 13. Rite Aid is unable to determine what allegations DIS is re-alleging in paragraph 13 because there are multiple paragraphs labeled "4, 5, 6, and 7." To the extent D I S is incorporating all paragraphs preceding paragraph 13 in its Counterclaim, Rite Aid incorporates its responses to paragraphs 1-7 under the headings "Factual Background" and "Count One" and paragraphs 4 - 12 under the heading "Count Two." 14. Admits in part and denies in part. Rite Aid admits that a dispute exists but denies any allegation or implication that returns made by it were or will be improper. IS, Denies. Rite Aid specifically denies that its returns were improperly made, By way of further answer, after reasonable investigation Rite Aid is unable to determine whether DIS holds returned product "in its possession and at its expense." To the extent this paragraph states a conclusion of law, no response is required and it is deemed denied. 16, Denies. Rite Aid specifically denies that DIS is entitled to relief from the Court. By way of further answer, this paragraph states a conclusion of law to which no response is required and it is deemed denied. 17, Denies, Rite Aid specifically denies that an involuntary or constructive bailment was created, By way of further answer, this paragraph states a conclusion of law to which no response is required and it is deemed denied. -4- 18. Denies. Rite Aid believes that the citation 27 Pa. ~ 2706 is incorrect. By way of further answer, this paragraph states a conclusion of law to which no response is required and is deemed denied. If Rite Aid is required to answer, Rite Aid specifically denies that is in violation of any Pennsylvania statute with respect to DlS, WHEREFORE, Rite Aid requests that judgment be entered in its favor and that it be awarded other such relief as this Court deems appropriate. NEW MATTER 19. DlS's counterclaims fail to state a claim upon which relief may be granted. 20. Rite Aid did not breach any duty, contractual or otherwise, allegedly owed toDlS. 21. DlS's counterclaims against Rite Aid are barred by the applicable statute of limitations. 22. DlS's causes of action against Rite Aid are barred by the equitable doctrines of estoppel, laches and waiver. 23. Rite Aid is entitled to an equitable right of set off. 24. Rite Aid does not waive any of the affirmative defenses enumerated in Pa, R.c.P. 1030 or any other affirmative defenses, and hereby gives notice that it intends to rely upon such other defenses as may become available or appear during the course of discovery proceedings in this case. Rite Aid reserves the right to amend this Reply to assert such defenses. -5- WHEREFORE. Plaintiff Rite Aid Corporation requests that judgment be entered in its favor and against D I S in an amount in excess of $426,270.48, plus interest, costs and all other amounts deemed appropriate by the Court. Respectfully submitted, ~ N P. DOWNEY (PA 59891) IN G. WEBER (PA 89266) Pepper Hamilton LLP 200 One Keystone Plaza North Front and Market streets Post Office Box 1181 Harrisburg, P A 17108-1181 (717) 255-1155 (T,~lephone) (717) 238-0575 (Facsimile) downeyb@pepperlaw.com weber}@pepperlaw.com Date: July 6, 2005 Attorneys for Plaintiff Rite Aid Corporation -6- VERIFICATION James Comitale signs this Verification on behalf of Rite Aid Corporation, and does hereby verify that the foregoing Answer to Half Moon Inv1estments, LLC d/b/a Digital 1 Stop's Counterclaim With New Matter was prepared with the assistance and advice of counsel, and in reliance upon counsel's advice; that the document, subject to inadvertent or undiscovered errors, is based upon and therefore limited by the records and information still in existence, presently recollected and thus far discovered in preparation of this document; and that subject to the limitations set forth herein, the statements contained in this document are true and correct to the best of his knowledge, information and belief. The language: of the foregoing document is that of counsel. It is understood that the statements herein are made subject to the penalties of 18 Pa. C.S.A. ~ 4904 relating to unsworn falsification to authorities. Date: June 29, 2005 CERTIFICATE OF SERVICE I hereby certify that on July 6, 2005, I served a copy the foregoing Plaintiff's Reply with New Matter to Half Moon Investments, LLC d/b/a Dlgital I Stop's Counterclaim upon counsel of record by United States mail, first class postage prepaid, addressed as follows: Edward Cook, Esquire Thomas M. Fafinski, Esquire BenePartum Law Group 860 Blue Gentian Road, Suite 295 Eagan, MN 55121 Richard R. Gan, Esquire 17 West South Street Carlisle, PA 17013-3387 - ~ {;.~ G. Weber (PA 89266) o c~ S! ... ...., = = """ '- c:: r- I -J ~ ---~." ~ s:!, :!l n,. 01'r1 :ny (Jzj .01, ;J~::d i~h~ 20 ':<' CD - . - , RITE AID CORPORATION, IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYL VANIA CIVIL ACTION - LAW Plaintiff, vs. NO. 05-709 CIVIL TERM HALF MOON INVESTMENTS, LLC d/b/a DIGITAL I STOP and GREENLEAF CAPITAL GROUP, LLC, Defendants. JURY TRIAL DEMANDED STIPULATION FOR DISMISSAL The parties, by their undersigned counselor individually, stipulate that any and all claims against Greenleaf Capital Group, LLC, in the above-captioned case are dismissed without prejudice. The action shall proceed against Half Moon Investments, LLC d/b/a Digital I Stop without effect or prejudice. The parties further stipulate that the action may be reinstated by Plaintiff by the filing of a praecipe to reinstate and any temporary dismissal without prejudice will not be construed to benefit Greenleaf Capital Group, LLC, with regard to a statute of limitations, laches or any other defense against a claim by Rite Aid Corporation. . . . This stipulation may be executed in counterparts, all of which together shall constitute one stipulation. Dated: ~1;. h ~ B nP. Downey(PA 59891) Justin G. Weber (PA 89266) PEPPER HAMILTON LLP 200 One Keystone Plaza North Front and Market Streets Post Office Box 1181 Harrisburg, P A 17I 08- 1 181 (717) 255-1155 '17 , te- I Attorneys for Plaintiff Rite Aid Corporation Thorn M. Fafinski Edwin A. Cook III BENEPARTUM LAW GROUP, P.A. 860 Blue Gentian Rd., Suite 295 Eagan, MN 55121 ~ R;<~~~;21) D - 17 West South Street Carlisle, PAl 7013-3387 (717) 241-4300 - Attorneys for Defendants Half Moon Investments, LLC, d/b/a Digital I Stop and Greenleaf Capital Group, LLC -2- ("") c-_ ~> C-~-;} (,;,:-.) c...n 1'-;, C) -on 60',. C-' ...:::: -1 ;-F\ :;:- -n c.,.) 0' RITE AID CORPORATION IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYV ANIA CIVIL ACTION - LAW Plaintiff, vs. NO. 05-709 Civil Term HALF MOON INVESTMENTS, LLC d/b/a DIGITAL I STOP and GREENLEAF CAPITAL GROUP, LLC, ANSWER AND COUNTERCLAIM Defendants. Defendants, JURY TRIAL DEMANDED Half Moon Investments, LLC d/b/a Digital I Stop ("Digital 1"), and Greenleaf Capital Group, LLC, as and for their Answer and Counterclaim to Plaintiff Rite Aid Corporation's ("Rite Aid") Complaint, state and allege as follows: ANSWER 1. Digital I hereby denies each and every matter and thing contained in Rite Aid's Complaint except as may be otherwise admitted, qualified, or otherwise answered in the remainder of this Answer. 2. The allegations against Greenleaf Capital Group, LLC contained in paragraphs 46, 47, 48, 49 and 50, as well as any and all other allegations or claims made against Greenleaf Capital Group, LLC by Rite Aid are hereby denied. 3. Digital I admits the allegations contained in paragraphs 2, 3, 7, 8, 9, 12, 13, and 14, of Rite Aid's Complaint. 4. Digital i specifically denies the allegations contained in paragraphs 4, 5, 6, 15, 17, 18, 19,20,22,23,24,25,26,27,28,29,30,31,32,33,34,35,36,37,38, 39,41,44, and 45 of Rite Aid's Complaint. 1 5. As to the allegations in paragraph 10 of Rite Aid's Complaint, Digital I admits that it entered into the GSA with Rite Aid, but denies the rest of the allegations in paragraph 10. 6. As to the allegations in paragraph II of Rite Aid's Complaint, Digital 1 admits that it entered into the Returns Agreement with Rite Aid, but denies that the Returns Agreement is an enforceable written contract. 7. As to the allegations in paragraph 21 of Rite Aid's Complaint, Digital I admits that it entered into the GSA and Returns Agreement with Rite Aid, but denies the rest of the allegations contained in paragraph 21. 8. As to the allegations in paragraph 40 of Rite Aid's Complaint, Digital I admits that Rite Aid started to return merchandise, but denies the rest of the allegations contained in paragraph 40. 9. Digital 1 is without sufficient knowledge or information after reasonable investigation to form a belief as to the truth of the allegations contained in paragraphs I, 16, 42, and 43, of Rite Aid's Complaint, and as such deny the same. AFFIRMATIVE DEFENSES 10. As and for its first affirmative defense, Digital I states that Rite Aid's Complaint fails to state a claim for which relief can be granted. II. As and for its second affirmative defense, Digital I states that Rite Aid's Complaint is barred, in whole or in part, by the doctrine of accord and satisfaction. 12. As and for its third affirmative defense, Digital I states that Rite Aid's Complaint is barred, in whole or in part, by failure of consideration. 13, As and for its fourth affirmative defense, Digital I states that Rite Aid's Complaint is barred, in whole or in part, by estoppel or waiver. 2 14. As and for its fourth affirmative defense, Digital I states that Rite Aid's Complaint is barred, in whole or in part, by the doctrine ofunc1ean hands. 15. As and for its fifth affirmative defense, Digital I states that it is not in breach of the GSA or Returns Agreement. 16. As for its sixth affirmative defense, Digital I states that it is entitled to an equitable right of set off. 17. As for its seventh affirmative defense, Digital I states that any ambiguities in the GSA or RA are construed against Plaintiff as Plaintiff was the party that drafted the GSA and RA. COUNTERCLAIM Factual Background I. On or about September 4, 2003, Digital I and Rite Aid entered into an agreement whereby Digital I would supply certain electronic-related products to Rite Aid. As part of this arrangement, the parties entered into a Guaranteed Sales Agreement ("GSA") and a Returns Agreement ("RA"), true and correct copies of which are hereto attached as Exhibit A, 2. The GSA provided that in consideration of Rite Aid's agreement to review a new entry into its mix, the parties agreed that during the first 120 days following Digital I 's initial delivery of product (the "Review Period"), Rite Aid had the right to return the product for a cash payment at some undetermined price. The RA merely provided that Rite Aid was entitled to charge an 18 cents per unit handling charge and an open return authorization number for all returned products during the Review Period, Neither the GSA nor the RA required or obligated Digital I to accept the return of any product beyond the Review Period. In addition, all sales subsequent to the Review Period were subject to Digital I 's invoices, which contained a 3 provision that specifically stated that all sales were final and no returns were accepted. An invoice for Digital 1 is hereto attached as Exhibit B. 3. Rite Aid began returning large volumes of product supplied to it by Digital I after the Review Period had expired by improperly using the return authorization number that had expired. This product was returned in poor condition and with Rite Aid labels affixed thereon. In addition, Rite Aid claims to have returned a larger number of products than was, in fact, returned to Digital 1. 4, Digital I has incurred significant costs in handling these unauthorized and improper returns. Digital I was required to unload, de-sticker, process and store the unauthorized returns, COUNT ONE (Breach of Contract against RAe) 5. Digital I re-alleges the allegations contained in paragraphs I through 4 above as though fully set forth herein. 6. Rite Aid has breached its agreement by improperly returning product sold to it by Digital 1. 7. As a direct and proximate result of Rite Aid's breach of contract, Digital I has been damaged in the amount of Twenty- Thousand Eight Hundred and Forty Seven and 00/1 00 Dollars ($20,847.00). COUNT TWO (Declaratory Relief) 4. Digital I re-alleges the allegations contained in paragraphs I through 7 above as though fully set forth herein. 4 5. Rite Aid has and continues to attempt to return merchandise outside of the time allotted in the RA or GSA. 6. There is justiceable controversy between Digital I and Rite Aid regarding the applicability of the GSA and the RA to returns of merchandise by Rite Aid made after the expiration of the Review Period. 7, Rite Aids claims that it is allowed to return merchandise pursuant to the RA or GSA despite holding the merchandise for longer than the time allotted in the RA or GSA. Neither the RA or GSA contains an integration clause and they only relate to merchandise returned within the 120 day period of time allotted. As a result, Rite Aid's purchase order and Digital l's invoice terms and conditions, which apply to all returns of merchandise beyond the time allotted in the RA or GSA, control the return of merchandise. 8, Rite Aid's purchase order is silent as to terms and conditions relating to the return of merchandise. The terms and conditions of Digital I 's invoices prohibit any terms that modify it. 9. Therefore, the terms and conditions of Digital I 's invoices apply making the return of any merchandise by Rite Aid to Digital I [outside the scope set out in the RA or GSA] invalid by stating clearly in bold and capital letters "ALL SALES ARE FINAL, UNLESS AGREED TO IN A WRITTEN INSTRUMENT SIGNED BY A OFFICER OF VENDOR." 10, An exercise of the Court's jurisdiction is necessary to clarify' the rights ofthe parties in an efficient manner that will prevent the parties from incurring unnecessary additional expense before this dispute can be resolved, 5 II. Digital I seeks a determination of this Court that Rite Aid is not permitted to return any more merchandise to Digital I pursuant to the terms and provisions of the RA, the GSA, the skeletal purchase order or the invoice terms and conditions and that the goods were accepted by Rite Aid. 12. As a result of the justiceable controversy between Digital I and Rite Aid, Digital I is entitled to a declaration and judgment ofthe Court that: a. The GSA, the RA and any purchase orders of Rite Aid are inapplicable, invalid, and without force in regards to any future returns of merchandise made by Rite Aid to Digital I. b. That any future returns of product made by Rite Aid to Digital I are subject to and controlled solely by the terms and conditions set forth in Digitall's invoices concerning that merchandise. c. That the merchandise provided to Rite Aid by Digital I was accepted by Rite Aid. COUNT THREE (Declaratory Judgment) 13. Digital I re-alleges the allegations contained in paragraphs I through 12 above as though fully set forth herein. 14. There is justiceable controversy between Digital I and Rite Aid regarding the applicability of the GSA and the RA to returns of product by Rite Aid made after the expiration of the review period. 15. Rite Aid has improperly made returns of product to Digital I that are the subject of this controversy which Digital I now holds in its possession and at its expense. 16. An exercise of the Court's jurisdiction is necessary to clarify' the rights of the parties in regards to the disposal of this product held in Digital I 's possession in an efficient 6 manner that will prevent the parties from incurring unnecessary additional expense before this dispute can be resolved 17. By returning merchandise and placing it in Digital I 's possession, Rite Aid created an involuntary or constructive bailment. 18. 27 Pa. S 2706 provides that where a buyer wrongfully rejects or revokes acceptance of goods a seller may resell the goods concerned in a commercially reasonable manner and may recover the difference between the resale price and the contract price. WHEREFORE, Digital I prays for judgment in its favor, and against Rite Aid as follows: 1. For judgment in favor of Digital I and against Rite Aid in the principal amount of Twenty Thousand Eight Hundred Forty and No/lOO ($20,847.00) Dollars. 2. For a declaratory judgment that any future returns of merchandise from Rite Aid to Digital I are not subject to the provisions and terms of the GSA, the RA or Rite Aid's purchase agreement but are instead subject to the provisions and terms of Digital I 's invoices. 3. For a declaratory judgment granting Digital 1 the right to dispose of the returned merchandise it now holds in a commercially reasonable manner. 4. For all costs and disbursements incurred herein, including reasonable attorney's fees; 5. For such other and further relief as the Court shall deem just and equitable. 7 BENEPARTUM LAW GROUP, P.A. Dated: b~( .2005 m c;.;;e7Z Thomas M. Fafinski (#215892) Edwin A. Cook III (#267144) Suite 295 860 Blue Gentian Rd. Eagan, MN 55121 651.994.4300 Attorneys for Defendants -- ...-/~ ~ . ~~~--'--- an Attorney at Law 17 W. South Street Carlisle, P A 17013-3387 717-241-4300 Attorney for Defendants VERIFICATION Robert Zakheim.signs this Verification on behalf of Digital I, and does hereby verify that the foregoing Answer and Counterclaim was prepared with the assistance and advice of counsel, and in reliance upon counsel's advice; that the document, subject to inadvertent or undiscovered errors, is based upon and therefore limited by the records and information still in existence, presently recollected and thus far discovered in preparation of this document; and that subject to the limitations set forth herein, the statements contained in this document are true and correct to the best of his knowledge, information and belief. The language contained in the foregoing document is that of counsel. 8 It is understood that the statements made herein are made subject to the penalties of 18 Pa. C.S.A. S 4904 relating to unsworn falsification to authorities. Dated: JtiIJe ~ I ,2005 9 C) .-' 0 C':> c: " -n --I ~::~ ::r: rj~\ ~':'l ~ --r) ,." C..) ,::<,', Plaintiff IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW RITE AID CORPORATION, vs, NO. 05-709 CIVIL TERM HALF MOON INVESTMENTS, LLC d/b/a DIGITAL] STOP and GREENLEAF CAPITAL GROUP, LLC, Defendants, JURY TRIAL DEMANDED RITE AID CORPORATION'S MOTION TO COMPEL PURSUANT TO PA. R.C.P. 4019 Plaintiff Rite Aid Corporation ("Rite Aid"), by and through its undersigned attorneys, and pursuant to Pa. R.C.P. 4019, moves to compel Half Moon Investments, LLC d/b/a Digital I Stop ("DIS") to answer Rite Aid's Interrogatories. In support thereof, Rite Aid states the following: 1. Rite Aid filed this action on February 9, 2005 as a result ofDIS's failure to make payments and accept returns of certain products pursuant to its agreements with Rite Aid. 2, On June 21, 2005, DIS filed an Answer that included counterclaims. 3, On July 29, 2005, Rite Aid served, by United States first class mail, its First Set of Requests for Admissions, Interrogatories, and Requests for Production of Documents (collectively "Discovery Requests") directed to DIS. (The original Discovery Requests are attached as Exhibit A.) 4, Pursuant to the applicable rules of civil procedure, D1S's responses to the Discovery Requests were due to be served on or before August 28, 2005. 5. On August 29, 2005, Rite Aid received by facsimile responses to its Requests for Admissions and a letter indicating that responses to the Interrogatories and Requests for Production of Documents would soon follow. 6. Several weeks later on September 20, 2005, Rite Aid received a response to its Request for Production of Documents but still did not receive any response to its Interrogatories. 7. By letter dated October 10,2005, Rite Aid advised DIS to provide responses to its Interrogatories by October 21,2005 to avoid forcing Rite Aid to file a motion to compel. 8. On October 21,2005, Rite Aid received by facsimile an unsigned copy of DIS's Response to Plaintiff's First Set of Interrogatories and a letter indicating that the response to Interrogatory number 3 was still incomplete. (Copies of the letter and unsigned responses are attached as Exhibit B). 9. Interrogatory number 3 requested in part that D I S identify the basis for the calculation of D I S' s counterclaim of $20,847.00, each person with knowledge relating to the calculation of the claim, and any documents relating to the calculation or determination of the counterclaim. (See Exhibit A) 10. Despite verifying the facts of its counterclaim three months earlier, D 1 S responded by stating in pertinent part that it was "investigating and gathering information and documentation to answer this Interrogatory." (See Exhibit B). 11. After it still did not receive signed or complete responses within several weeks, Rite Aid, by letter dated November 18, 2005, requested that DIS provide signed, verified -2- and complete answers to its Interrogatories by Wednesday, November 23,2005 to avoid forcing Rite Aid to file a motion to compel. 12. On December 1,2005, Rite Aid received by facsimile a copy of signed, verified responses to its Interrogatories, Those responses, however, still contained the incomplete response to Interrogatory number 3. (A copy of the responses is attached as Exhibit C) 13. DIS's response to interrogatory number 3 provided that: Subject to Defendant's general objections, Defendant states that at present it is investigating and gathering information and documentation to answer this Interrogatory. Discovery is continuing and Defendant will supplement its answer to this Interrogatory as soon as possible. (See Exhibit C) 14. Thus, almost six months after it filed its counterclaim and verified the facts in that counterclaim, and five months after service of the Interrogatories, D 1 S asserts that it still is investigating I) the basis for the calculation of its counterclaim, 2) persons with knowledge regarding the calculation of its counterclaim, or 3) the documents relating to the calculation. 15. DIS's response to Interrogatory number 3 is not a permitted response to an interrogatory under Pa. R.CP. No. 4006(b). 16. The undersigned counsel contacted counsel for D I S seeking concurrence in this motion but did not receive a response, -3- WHEREFORE. Rite Aid Corporation requests that the Court enter an order directing (I) Half Moon Investments, LLC d/b/a Digital 1 Stop to completely answer Rite Aid's lnterrogatories within 10 days of the date of the order and (2) any other relief the Court deems appropriate. 'hU- P. DOWNEY (PA 59891) G, WEBER (PA 89266) Pepper Hamilton LLP 200 One Keystone Plaza North Front and Market streets Post Office Box 1181 Harrisburg, P A 17108-1181 (717) 255-1155 (Telephone) (717) 238-0575 (Facsimile) downeyb@pepperlaw.com weberj@pepperlaw,com Date: December 9,2005 Attorneys for Plaintiff Rite Aid Corporation -4- - . ~);\\\;,\ 11 . Plaintiff IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW RITE AID CORPORATION, vs. NO, 05-709 CIVIL TERM HALF MOON INVESTMENTS, LLC d/b/a DIGITAL 1 STOP and GREENLEAF CAPITAL GROUP, LLC, Defendants, JURY TRIAL DEMANDED FIRST SET OF REOUESTS FOR ADMISSIONS. INTERROGATORIES AND REOUESTS FOR PRODUCTION OF DOCUMENTS DIRECTED TO DEFENDANT HALF MOON INVESTMENTS. LLC, d/b/a DIGITAL 1 STOP Pursuant to Pa. R.C.P. 40]4. Plaintiff Rite Aid Corporation ("Rite Aid") requests that Defendant Half Moon Investments, LLC. d/b/a Digital I Stop ("DIS"), admit the following matters in writing, attaching verification. To the extent that DIS denies or refuses to admit any of the following matters, it shall, pursuant to Pa. R.c.P. 4005, 4006, 4009.11 and 4009.12, answer the following interrogatories and respond to the following requests for production of documents fully, in writing, attaching verification. The requests for admissions, interrogatories and requests for production of documents shall be collectively referred to as Discovery Requests. D 1 S shall serve a copy of its responses on counsel for Rite Aid within thirty (30) days after service of the Discovery Requests. . DEFINITIONS I, "Plaintiff' or "Rite Aid" shall mean Rite Aid Corporation and shall include its officers, agents, representatives, employees, and personnel, whether now or heretofore employed as such. 2. "D I S" shall mean Half Moon Investments LLC d/b/a Digital I Stop, and shall include its officers, agents, representatives, employees, and personnel, whether now or heretofore employed as such. 3, Unless otherwise indicated, the terms "you," "your," and "yours," as used herein, mean DIS, each person acting or authorized to act on its behalf, including but not limited to its agents, representatives, experts or its respective attorneys in this litigation. 4. "Document" shall mean the original and each non-identical copy (whether different from the original because of notes, additions, changes, or deletions made on the copy or otherwise) or draft of each writing of every kind and description (together with all worksheets, supporting documents, and other relevant material), whether inscribed by hand or mechanical, electronic, microfilm, photographic, or other means (such as recording, film, tape, videotape, disc, diskette, or other means including data processing files and other computer readable records or programs and all other data compilations from which information can be obtained, transcribed, and translated). Document shall also include, but not be limited to, correspondence, letters. electronic mail, telegrams, messages, telephone logs, diaries, teletype messages, memoranda, notes, reports, printouts, records, or minutes of meetings, conferences, or telephone or other conversations or communications, appointment calendars, contracts, contract addenda, amendments, changes, and modifications. 5. "Minutes" shall mean minutes to any meeting or telephone conversation, and notes or internal memoranda reflecting those meetings or telephone conversations. 6. "Person" or "persons" means all natural persons, corporations, partnerships or other business associations, and all other legal entities, including all members, officers, employees, agents, representatives, attorneys, successors, predecessors, assigns, divisions, affiliates, and subsidiaries. 7, "Relating to" (including any variant thereof), includes referring to, alluding to, responding to, concerning, in connection with, commenting on or in respect of, analyzing, touching upon, and constituting the being, and is not limited to contemporaneous events, actions, communications or documents. 8, The term "communications," as used herein, means all statements, admissions, denials, inquiries, discussions, conversations, negotiations, agreements, contracts (whether written or oral), understandings, meetings, telephone conversations, letters, correspondence, notes, faxes, electronic mail, voicemail messages, telegrams, telexes, advertisements, or any other form of written or verbal intercourse, -2- 9, "Invoice" shall mean any document evidencing a request for payment, statement of account or any other document requesting payment or reflecting an amount due to DlS. 10. "Identify," when used in reference to a natural person, means to state his or her name, present or last known address and telephone number, present or last known employer and his or her employer's address, and position or job title at time of employment. I I. "Identify" when used in all other contexts than those described above means to describe in detail with particularity and specificity. document, to: 12. "Identify" or "identification" shall mean, when used in reference to any a, state the type of document (e.g., letter, memorandum, telegram, etc.); b. state its date; c. state its title, if any; d. describe its general subject matter and contents; e. identify the present location(s) and custodian(s) of the original and all known copies of said document; f. identify its author or originator; g. if the document is no longer in your possession, identify its last known custodian, describe the circumstances under which it passed from your control to that person, and identify each person having knowledge of such circumstances and/or the present location of the document; and/or h. in lieu of identifying the document in the manner set forth above, attach a copy of the document in question to your response to these interrogatories. J 3. The conjunctions "and" and "or" shall be interpreted to mean "and/or," and shall not be interpreted to exclude any information otherwise within the scope of any request. INSTRUCTIONS 1. The Discovery Requests are to be answered in writing, verified, and served upon the undersigned within 30 days of their service on you. 2. To the extent any Discovery Request is objected to, set forth all reasons therefor. If you claim privilege as a ground for not answering or responding to any request in -3- whole or in part, describe the factual basis for your claim of privilege in sufficient detail to permit the court to adjudicate the validity of the claim, If you object in part to any request, answer the remainder completely. 3. These requests shall be deemed continuing and require additional responses if further information is obtained between the time the answers are served and the time of trial. Such additional responses shall be served from time to time, but not later than 30 days after such additional information is received. 4. If you assert a privilege, work product immunity, or decline to provide an answer on the basis of some other objection: a. identify or describe the document or communication in question; b. describe the basis for the asserted privilege and objection; c. identify every person to whom the document was sent, or every person present when the communication was made; d. identify the present custodian of the document, if any. 5, Where an interrogatory does not specifically request a particular fact, but where such fact or facts are necessary to make the answer to the interrogatory either comprehensible, or complete, or not misleading, you are requested to include such fact or facts as part of the answer, and the interrogatory shall be deemed to specifically request such fact or facts. 6. If, in answering any Discovery Request, you encounter any ambiguity in a question, instruction, or definition, set forth the matter deemed ambiguous and interpretation you used in the answering, 7, The singular shall include the plural and the plural shall include the singular. 8. A masculine, feminine or neuter pronoun shall not exclude the other genders. -4- 1. 2, Exhibit A. 3. 4. Exhibit B. 5. 6. 7. REOUESTS FOR ADMISSION D 1 S entered into a Guaranteed Sales Agreement with Rite Aid. A true and correct copy of the Guaranteed Sales Agreement is attached as D 1 S entered into a Rite Aid Returns Agreement with Rite Aid. A true and correct copy of the Rite Aid Returns Agreement is attached as Rite Aid has requested payment of $426,270.48 from D1S. D1S has refused to pay Rite Aid $426,270.48. Rite Aid provided DIS with payments totaling $656,413,01. -5- INTERROGA TORIES I, If you deny or refuse to admit any of the foregoing requests for admission, for each denial or refusal, identify: a. why you deny or refuse to admit; b, each and every fact supporting the denial or refusal; and, c. all persons, documents and communications which support or relate to those refusals or denials. ANSWER: -6- 2. If you deny or refuse to admit any of the foregoing requests for admission because of the dollar amount provided in the request, for each denial or refusal provide: a, the dollar amount that you believe is correct; b, the basis for that dollar amount; and, c. an identification of any documents supporting that dollar amount. ANSWER: -7- 3, Describe and identify: a, the basis for the calculation of the $20,847.00 claimed in paragraph 7 of Count I of D IS's Counterclaim; b. each person with knowledge relating to the calculation, determination or basis of the $20,847.00 claimed in paragraph 7 of DIS's Counterclaim; and, c. each and every document relating to the calculation, determination or basis of the $20,847.00 claimed in paragraph 7 of Count I ofDIS's Counterclaim. ANSWER: -8- 4. State whether Greenleaf Capital Group LLC has made any payments, performed any service or provided any value whatsoever to or for DlS within the past 3 years. For each payment, service or provision of value, state and identify: a. the date and amount of the payment, service or provision of value; b. copies of any documents reflecting the payment(s), service or provision of value; and, c. why the payment or provision of value was made, ANSWER: -9- 5. Identify any documents referring to, relating to, or evidencing any relationship or any communication between DIS and Greenleaf Capital Group LLC, or any person employed by or affiliated with Greenleaf Capital Group LLC. ANSWER: -10- 6. Identify each and every person who assisted in the preparation of, or contributed information to, the answers to these interrogatories, and indicated which interrogatory answer(s) each person assisted and/or contributed. ANSWER: -1]- REQUESTS FOR PRODUCTION OF DOCUMENTS I. Produce all documents identified or described in your answers to the interrogatories, above. RESPONSE: 2. Produce all documents relating to the Guaranteed Sales Agreement, Rite Aid Returns Agreement, or any other agreement between DlS and Rite Aid, RESPONSE: 3. Produce all documents evidencing communications between DlS and Rite Aid. RESPONSE: 4, Produce all invoices sent or issued by D I S to Rite Aid. RESPONSE: 5. Produce all documents relating to sales or delivery of product to Rite Aid, RESPONSE: 6. Produce all documents relating to Rite Aid's return of product to DlS, RESPONSE: 7. Produce all documents relating to DIS's sale or disposal of products returned by Rite Aid. RESPONSE: -12- BRI NP. DOWNEY (PA59891) JU . IN G. WEBER (PA 89266) epper Hamilton LLP 200 One Keystone Plaza North Front and Market streets Post Office Box 1181 Harrisburg, PA 17108-1181 (717) 255-1155 (Telephone) (717) 238-0575 (Facsimile) downeyb@pepperlaw.com weberj@pepperlaw.com Date: July 29, 2005 Attorneys for Plaintiff Rite Aid Corporation -13- . . CERTIFICATE OF SERVICE I hereby certify that on July 29, 2005, I served a copy the foregoing upon counsel of record by United States mail, first class postage prepaid, addressed as follows: Edward Cook, Esquire Thomas M. Fafinski, Esquire BenePartum Law Group 860 Blue Gentian Road, Suite 295 Eagan, MN 55121 Richard R. Gan, Esquire \7 West South Street Carlisle, PA 17013-3387 G ,. \ , \ },Xhl.\l1-'" -----------. l:-' '~ uct-l1-IUw5 03:45pm f,nm-BE~EPARTUM LAW GROUP PA 6519948024 H60 P 002/COI F-753 BENEPARTUM L.AW GROUP, '?:A:" Writer's Direct Dial: 651-994-4300 ext. 24 October 21, 2005 Justin G. Weber, Esq. Attol'ney at Law Pepper Hamilton, LLP 200 One Keystone Plaza North Front and Market Streets P,O. Box 1181 Harrisburg, PA 17108-1181 VIA FACSIMILE to 717-238-0575 RE: Rite Aid Corporation v, Half Moon d/b/a Digital One Stop, et al No. 05-709 Civil Term Dear Mr. Weber: Please be advised that our firm did not receive your letter of October 10, 2005 until October 18, 2005 and I myself did not see it until October 19, 2005. I have been working with our client in the attempt to complete our responses to your discovery requests. In general, the responses are complete with the exception of the response to Interrogatory NO.3 for which my client is gathering the documents and information necessary to completely answer it. In the meantime, please find attached and faxed to you an unsigned copy of Digital 1 Stop's Response To Plaintiffs First Set Of Interrogatories. Because I did not get your letter until/ate I did not have the time to get a signature from our client prior to your October 21, 205 deadline. I apologize for the delay in responding to your requests and appreciate your patience to date. If you have any questions please do nol hesitate to contact me. Sincerely, ~d~~ Edwin A. Cook III attachments 651.994.4:300.651.994.8024 FI\X 860 8U,.;E GENTIAN ROAD SL'ITE .295 EAGAN. MN 55121 ('h:ne pd'reJn) adj. hUI1Cli'<lhl)' ~,"rrwd: bMn of I(r.o,^.blgl.:. --~----.__.,_. f ____I OCT-21-.200,S 17:57 5519948024 96>: P.02 VI,.. ,'_,u,,:J \l,);~':l'Pm rrom-~t~trA~\UM ~A~ u~UUP VA 65199490/4 T-S60 P JU,/UUI ,-'e' RITE AID CORPORATION IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYV ANIA CIVIL ACTION - LAW Plaintiff, vs. NO. 05.709 Ci~il Tenn HALF MOON INVESTMENTS, LLC d/b/a DIGITAL 1 STOP and GREENLEAF CAPITAL GROUP, LLC, Defendants. Defendants, JURY TRIAL DEMANDED DIGITAL 1 STOP'S RESPONSE TO PLAINTIFF'S FIRST SET OF INTERROGATORIES Pursuant to Rules 4006,4009.12,4011, and 4014, of the Pennsylvania Rules of Civil Procedure, Defendant Half Moon Investments, LLC d/b/a Digital 1 Stop, ("DlS") submits the following Objections and Answers to Plaintiffs Requests for Admissions, Interrogatories, and Requests for Production of Documents GENERAL OBJECTIONS Defendant objects to Plaintiff's Requests for Admissions, Interrogatories, and Requests for Production ofDocumemsJo the elltent that they attempt to impose any obligations which are beyond the scope of those imposed by the Pennsylvania Rules of Civil Procedure, or are privileged; not relevant to the subject matter involved in the pending action; is sought in bad faith; would cause unreasonable annoyance, embarrassment, oppression. burden or expense to Defendant; is beyond the scope of discovery as set forth in Rules 4003.1 through 4003.6; or, would require [he making of an unreasonable investigation by Defendant. Response to Interroeatories 1. If you deny or refuse to admit any of the foregoing requests for admission, for each denial or refusal, identitY: 1 OCT-21-2005 17:57 6519948024 97>.: P.03 Oct-2'-2005 03:46pm from-BENEPAFiUM LAW GFOUP PA 65\5946024 i-660 P 004/007 f-753 a. why you deny or refil,e to admit; b. each and every fact supporting the denial or refusal; and, c. all persons, document, and communications which support or relate to those refusals or denials. RESPONSE: Subject to Defendant's general objections, Defendant States that in regards to those requests for admissions that Defendant has denied, the reason and facts supporting each denial have been set forth in Defendant's Response to Plaintiffs First Set of Requests for Admissions. 2. If you deny or refuse to admit any of the foregoing requests for admission because of the dollar amount provided in the request, for each denial or refusal provide: a. the dollar amount that you believe is correct; b, the basis for that dollar amount; and, c. an identification of any documents supponing that dollar amount. RESPONSE: Subject to Defendant's general objections, Defendant states see the response to Interrogatory number 1. 3. De,cribe and identify: a. the basis for the calculation of the $20,847.00 claimed in paragraph 7 ofCoUIlt I ofDI S's Counterclaim; b. each person with knowledge relating to the calculation, determination or basis of the $20,847.00 claimed in paragraph 7 ofDIS's Counterclaim; and, c. each and every document relating to the calculation, determination or basis of the 520,847.00 claimed in paragraph 7 of Count I of D 1 S ' s Counterclaim. RESPONSE: Subject to Defendant's general objections, Defendant Slates that at present it is investigating and gathering information and documentation to answer this Interrogatory, Discovery is continuing and Defendant will supplement its answer to this Interrogatory as soon as possible. 2 JCT-21-2005 17:58 651994,90,24 9T, F.04 0,t-11-20C5 01,41pm From-BE~E?ARTUM LA~ GRO!? ?A 6511141014 T-160 P 005/COT F-T51 4. State whether Greenleaf Capital Group LLC has made any payments, performed any service or provided any value whatsoever to or for D 1 S within the pasl 3 years. For each paymem, service or provision of value, state and identify: a. the date and amount of the payment, service Or provision of value; b. copies of any documenlS reflecting the payment(s), service or provision of value; and, c, why the payment or provision of value was made. RESPONSE: Defendant objects 10 this Interrogatory 10 the extent that it is not reasonably calculated to lead to discoverable evidence. Notwithstanding the foregoing, Greenleaf Capital Group, LLC has never made a payment or performed a service of any value to D I S \vilhin the past 3 years. 5. Identify any documents referring to, relating to, or evidencing any relationship or any communication between DIS and GreenJeafCapital Group LLC, or any person employed by or affiliated with Greenleaf Capital Group LLC. RESPONSE: RESPONSE: Defendant objects to this Interrogatory to lhe extent that it is overly broad, vague, ambiguous, confusing and not reasonably calculated to lead to discoverable evidence. In addition, Defendant objects to this Interrogatory to the extent that it seeks information and communications belween D 1 S and "any person employed by or affiliated with Greenleaf Capital Group, LLC" which is subject to attorney/client privilege, attorney work product privilege and/or constitute non-discoverable trial preparation material within the meaning of the Rules of Civil Procedure. Notwithstanding the foregoing objections, Greenleaf Capital Group, LLC has at no time been assigned by D I S any contract or agreemenls or portion thereof with Plaintiff or any olher company or third party. At no time has Greenleaf Capital Group, LtC purchased or had assigned to it any portion of Digital I Stop's debts. One ofDIS' attorneys, Timothy Fafinski. is the president and owner of Greenleaf Capital Group, LLC and in his capacity as DlS' legal counsel, has contacted Plaintiff in connection with settlement discussions concerning the dispute between D] S and Plaintiff. 6. Identify each and every person who assisted in the preparation of, or contributed information to, the answers to these interrogatories, and indicated which inrerrogatory answer(s) each person assisted and/or contributed. RESPONSE: 3 OCT-21-2005 1'7:58 6519948024 96;--; P.D5 Oct-2'-IDOS D3:~ipm flom-~ENEfA~TUM l~W G~OUP PA 6519948014 T-660 P ODS/DOT ,-Ie, Timothy Fafinski: Interrogatories 4 and 5. VERIFICATION Robert Zakheim signs this verification on behalf of Digital I Stop, and does hereby verify that the foregoing responses to Plaintiffs First Set of Requests for Admissions, Interrogatories and Requests for Production of Documents were prepared with the assistance and advice of counsel, and in reliance upon counsel's advice; that this document, subject to inadvertent or undiscovered errors, is based upon and therefore limited by the records and information still in existence, presently recollected and thus far discovered in preparation of this document; and that subject to the limitations set forth herein, the statements contained in this document are true and correct to the best of his knowledge, information and belief. The language contained in the foregOing document is that of counsel. It is understood that the statements made herein are made subject to the penalties of 18 Pa. C.S.A. g 4904 relating to unsworn falsification to authorities. Dated: ,2005 Robert Zakheim BENEPARTUM LAW GROUP, P.A. Dated: ,2005 Thomas M, Fafinski (#215892) Edwin A. Cook III (#267144) Suite 295 860 Blue Gentian Rd. 4 QCT-21-2005 17:59 6519948024 9"",., (/, P.1J6 Ott-ll-100S 03:47pm From-BE~EPA~iUM LAW "~OUp PA OCT-21-2005 17:5'3 S519948024 6519948024 1-560 '? lJ'H/UUr r-I J;J Eagan, MN 55121 651.994.4300 Attorneys for Defendants Riclulrd Gan Attorney at Law 17 W. South Street Carlisle, P A 17013-3387 717-241-4300 Attorney for Defendants 5 96,; P.O? .-------- (' \~ \ ,^, \> xV, v\ \ L ,.------ .' %LS \7c08\7551S;g FAX NO. ':1 ~ :tl ~ ~r.)f:Jc..- ILl -'--'''' :;:O'd DEC-Cl-2CG5 THU G9:56 AM P. 02 RlTE AID CORPORATTON IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYV A"i'fA CIVIL ACTION . LAW Plaintiff, vs. NO. 05-709 Civil Term HALF MOON INVESTMENTS. LLC d/b/a : DIGITAL I STOP and GREENLEAF : CAPITAL GROUP, LLC, Defendants. Defendants', JURY TRIAL DEMANDED DIGITAL 1 STOP'S RESPONSE TO "eLAINTIFF'S FIRST SET OF INTERROG~TORJES Pursuant to Rules 4006. 4009.12, 4011, and 4014, of the Pennsylvania Rules of Civil Procedure, Defendant Half Moon Inveslments, LLC d/b/a Digital 1 Stop, ("D 1 S") submits the following Objections and Answers to Pla.intiff's Requests for Admissions, Interrogatories, and Requests for Production of Documents GENERAL OBJECTIONS Defendant objects to Plaintiff's Requests for Admissions, Interrogatories, and Requests fOT Production of Documents .to the extent that they attempt to impose any obligations wllich are 'beyond the scope of those imposed by the Pennsylv!lllia Rules of Civil Procedure, or are privileged; oot relevant to the subject matter involved in the pending action; is sought in bad faith; would cause unreasonable annoYll1lce, embarrassment, oppression, burden or expense to Defendant; is beyond the scope of discovery as set forth in Rules 4003.1 through 4003.6; or, would require the making of an unreasonable investigation by Defendant. .!{csponse to IJ)terr()~atorie~ 1. If you deny or refuse to admit any oftbe foregoing requests for acb:nission, for each denial or refusal, idenlitY: 1 Vd dnOd~ MVl ~n1dvdlNl8-WQJ, WdVO'SO 5001-10-"0 ,,0-' ,00/,00 d 6,,-1 HoemlS! md U..5 l7C::I:j'drbb~~'::' ;n:~ ~ ~1'.J\:Jc.-~t)-j.::lU DEC-01-2005 THU 09:56 AM FAX NO, p, 03 a. why you deny or refuse to admit; b, each and every fact supporting the denial or refusal; and, c. all persons, documents and communications which support or relate to those refusals or denials. RESPONSE: Subject to Defendant's general objections, Defendant states that in regards to those requests for admissions that Defendant has denied, the reason and facts supporting each denial have been set forth in Defendant's Response to Plaintiff's First Set ofRcquests for Admissions. 2. If you deny or refuse to admit any of the foregoing requests for admission because of the dollar amount provided in the request, for each denial or refusal provide: a. the dollar amount that you believe is correct; b. the basis for that dollar amount; and, c. an identification of any documents supporting that dollar amount. RESPONSE: Subject to Defendant's general objections, Defendant states see the response to Interrogatory number I. 3. Describe and identify: a. the basis for the calculation of the $20,847,00 claimed in paragraph 7 of Count I ofD! S's Counte1"lllaill:1; b. each pCTSon with knowledge relating to the calculation, detemlllUltion or basis of the $20,847.00 claimed in paragraph 7 ofDlS's Counterclaim; and, c. each and every document relating to the calculation, determination or basis of the $20,847.00 claimed in paraglllph 7 of Count I ofDlS's Counterclaim. RESPONSE: Subject to Defendant's general objections, Defendant states that at present it is investigating and gathering information and documenta1ioll to answer this Interrogatory. Discovery is continuing and Defendant will ropplement its answer to this Interrogatory as snon as possible. 2 ,,0-, LOO/'OO d 611-1 ma?6SIS9 Vd dnOd~ MV1 ~nldVd3N3e-WOJ, w',D:SO SCOZ-IO-,eo SO'd DEC-Ol-200S THU 09:56 AM /:<.6 vc:eSv6S,S9 FAX NO. 'j ~ : t:I ~ ~1:::"'l)C - .I;j- J.:::J'.1 p, 04 4. State whether Greenleaf Capital Group LLC hM made any payments, performed any service or provided any value whatsoever to or for DIS within the past 3 years. For each payment, service or provision of value, state and identify: a. the date and amount of the payment, service or provision ofva1ue; b, copies of any documents reflecting the payment(s), service or provision of value; and, c. why the payment or provision of value was made. RESPONSE: Defendant objects to this Interrogatory to the elltent that it is not reasonably calculated to lead to disC"OvL1l"ablc evidence. Notwithstanding the foregoing, Greenleaf Capital Group, LLC has never made a payment or performed a service of any value to D 1 S within the past 3 years. 5. Identify any documents referring to, relating to, or evidencing any relationship or any communication between Dj S lIIld Greenleaf Capital Group LLC, or any person employed by or affiliated with Greenleaf Capital Group LLC. RESPONSE: RESPONSE: Defendant objects to this Interrogatory to the extent that it is overly broad, vague, ambiguous, ccnfusing and not reasonably calculated to lead to discoverable evidence. In addition, Defendant objects to this Inten-ogatory to the extent that it seeks information and communications between DiS and "any person employed by or affiliated with Greenleaf Capital Group, LLC>> which is subject to attorney/client privilege, attorney work product privilege and/or constitute non-discoverable trial preparation lUIlteriaI within the meaning of the Rules of Civil Procedure. Notwithstanding the foregoing objections, Greenleaf Capital Group, LLC has at no time been assigned by DIS any contract or agreements or portion thereof with Plaintiff or any other comp4nY or third party. At llD time has Greenleaf Capital Group, LLC purchased or had assigned to it any portion of Digital 1 Stop's debts. One ofDlS' attorneys, Timothy Fafinski, is the president and owner of Green1eafCapital Group, LLC and in his capacity as D IS' legal COUlISel, has contacted Plaintiff in connection with settlement discussiollS COncerning the dispute between D I S and Plaintiff. 6. Identify each and every person who assisted in the p;eparation of, or contributed information to, the llllSWetS to these intcrrogatori~, and indicated which interrogatory answer(s) each person assisted and/or contributed. RESPONSE: 3 EEO-J lOO/500 d 6ll-1 VZOSv66159 id dnOdO Mil ~nldid3N3a-wo.J WOVO'IO 100/-10-JaQ 90'd DEC-J1-2005 THU 08:57 AM ~~L6 l"c'08l"E,5 L:';" FAX NO, S\. d~'J. .='Ul,Ji--'U--'....!'.l P. 05 Timothy Fafinski: Interrogatories 4 and 5. YE~IFICAT10N Robert Zakheim signs this verification on behalf of Digital 1 Stop, and docs nereby verify that the foregoing responses to Plaintiff's First Set of Requests fur Admissions, Interrogatories and Requests for Production of Documents were prepared with the IlSsistance and advice of counsel, and in reliance upon counsel's advice; th:lt this document, subject to inadvertent or undiscovered errors, is based upon and therefore: limited by the records a.ru:l information still in existence, presently recollected and thus far discovered in preparation of this document; and that subject to the limitations set forth herein, the statements contained in this document lU:e true and correct to the best of his knowledge, information and belief. The language contained in the foregoing document is that of counseL It is understood that the statements made herein are made subject to the penalties of 18 PII. C.S.A. ~ 4904 relating to unsworn falsifioation to authorities. Dated: /I-)(} .- ,2005 ~ BENEPARTUM LAW GROUP, P.A. Dated: !::t III ,2005 &: c ~-;; ThomaS M. Fafinski (#215892) Edwin A. Cook III ('#267144) Suite 295 860 Blue Gentian Rd. 4 ttD-j 100/900 d 611-1 1'/061'66199 Vd dnOd~ MVl ~n1dVd3N3e-WOJj Wd1'0:90 9CO/-IO-'00 /Xd :<L..6 DEe-01-2005 THU 09:57 AM EEO-, 100/100 d 611-1 mm6119 ~'c08r5E, 15;9 FAX NO. Eagan, MN 55121 651.994.4300 Attorneys for Defendants ul:8~ S002-10-:!3G Richard Gan Attorney at Law 17 W. South Street Carlisle, PA 17013-3387 717-241-4300 Attorney for DefendAnt. s P. 06 Vd dnOd~ MVl ~n1dVd3N38-WCJ, W'IO:SO 1002-iO-"Q CERTIFICATE OF SERVICE I hereby certify that on December 9, 2005, I served a copy the foregoing upon counsel of record by United States mail, first class postage prepaid, addressed as follows: Edwin A. Cook, Ill, Esquire Thomas M. Fafinski, Esquire BenePartum Law Group 860 Blue Gentian Road, Suite 295 Eagan, MN 55121 Richard R. Gan, Esquire 17 West South Street Carlisle, PA 17013-3387 h LL- Just' eber (P A 89266) - ~ RITE AID CORPORATION, Plaintiff IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA vs. CIVIL ACTION - LAW NO. 05-709 CIVIL HALF MOON INVESTMENTS, LLC d/b/a DIGITAL I STOP and GREENLEAF CAPITAL GROUP, LLC, Defendants JURY TRIAL DEMANDED IN RE: PLAINTIFF'S MOTION TO COMPEL ORDER AND NOW, this 2-0. day of December, 2005, a brief argument on the plaintiffs motion to compel is set for Thursday, February 9,2005, at 3:00 p.m. in Courtroom Number 4, Cumberland County Courthouse, Carlisle, P A. BY THE COURT, vBrian P. Downey, Esquire Justin G. Weber, Esquire For the Plaintiff .4d ~ard Cook, Esquire LR:tthard R. Gan, Esquire F or the Defendants --\ \' rJJ \~~ :rlm ( "'1:.']1"'-. -",J '18 :01 W':) I Z JiO seaz }'~\IIC\':": ".: ' :'U' :10 \U'<-:" -,'hi' \.,...../.-'0 -:;,l.j,. ;1~U.:H}-{j3l!:J - Plaintiff, IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW RITE AID CORPORA nON, vs. NO. 05-709 CIVIL TERM HALF MOON INVESTMENTS, LLC d/b/a DIGITAL 1 STOP and GREENLEAF CAPITAL GROUP, LLC, Defendants. JURY TRIAL DEMANDED PRAECIPE TO DISCONTINUE TO THE PROTHONOTARY: Please mark the above-captioned matter and all claims and counterclaims asserted therein discontinued, with prejudice, pursuant to Pa. R.C.P. 229. The parties shall bear their own costs and atto ' fees. . an (PA 68721) 1 7 West South Street Carlisle, PA 17013-3387 (717) 241-4300 Attorneys tor Defendant Attorneys for Plaintiff Dated: September 26,2006 (') c So ,JG' rrJr; ..:/~ . , ::.?;-' ~~ ~\, ~~ ~ ,......, = = 0" o -n --l I"TI rn-= !-... -Of (~ "JY ::.) () -.~:~ -}' " 2M :::; ::;;! 5:J -< (/) i"'i -0 N \D v ::;: ~