HomeMy WebLinkAbout94-05304
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Cl-:lI'l'll-' I CM'I'; ANI> 'J"IANHM l'I"I'AI. 01-' Ill-:GOllll
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wjlhi.n fniltt.flJ tllI!l tJl'PII dPI)I'dlt\d:
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01 u<;lJMO~:JlI.ANll ('nl",1 Y, I h.! ';did "'HI"I. b,:in'l d court of n:cord.
do hereby cortlly Illdl dnl}llx(~d tlpr.(~t{) II-j d tr\l[~ dnd corrnct. copy
ot the whoLIJ dnd Plll iH' ,"()('ord, inc'}lIdinq dtl opinion of the court
uS requlred by P^ I~.^.I'. I'U',. Itl<! 'l/-iqltl<Jl pilperf; ilnd QxhlbltH.
it dny on lllc, the lI'dtl';Cl'lpl o( I Ill' procoedlngs. If uny. ilnd the
docket cntrle,; In th,' lollowinq mdltel':
No. 94-5304 Equity Term; No. 299 "OG 1995
STATEWIDE OFFICE PROllllC'rS, INC.
VB.
EILEEN J. FELMLEE
The documents comprislng the r~cord have been numbered
from No.1 to No. l3~ . and attilched hereto as Exhibit ^ is a
list of the documents correspondingly numbered and identified wlth
reasonable definiteness. lncluding with respect to each document.
the number of pages comprising the document.
The date on which the record has been transmitted to the
appellate court is May 23, 1995
(Seal of Court)
,~~L ~ ~~0-
Prothonotary
An additional copy of this certificate is enclosed. Please
sign and date copy, thereby acknowledging receipt of this record.
RECORD RECEIVED:
Dilte:
(,ll'lnilt.un: & titlo)
No.
299 HbQ
T~rm 19~
-
No. 94-5304 EquitYTerm 19_
Statewide Office Products, Inc.
V~r'u'
Eileen J. Felmlee
-
F.XF.MPI.lFIF.D RF.CORD
From
ClII1berland
County
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('Oi'Y OF _n.. u.... __.lllJ1.l!lilJ:iJIJl'P___.__ .__ ___ . ..________.__. 1)()('KFII;NT~ Y
!>'l'ATHWlDt: on'IC\': pROOllCT!>, INC.
VB.
EILEEN J. PHLMLHE
Sept. 16, 1994. Cclnplaint in f,quity. filed.
&lpt. 30, 1994, Acceptance of Service, filed.
By: .James .J. Kut.~, Esq.
Oct. 18, 1994, Answer, New Matter, and C0\Jr.terclaim of Defendant Eileen .J.
Felmlee to the Canplaint, filed.
Nov. 9. 1994, Statewide Officf! i'nxlucts, Inc. 's Reply to New Matter and
Answer to Counterclaim, filed.
Nov. 17, 1994, Praecipe for Listing Case for Argwnent, filed.
Nov. 17, 1994, Motion of tklfendant/Counterclaimant Eileen .J. Felmlee for
.Judgnent on the Pleadings as to Plaintiff's Canplaint in F.quity and Felmlee'
Counterclaim Seeking Declaratory Relief, fiIL~.
March 17, 1995, Opinion and Order of Court, filed. In Re: Defendant/
CounterclaJm Plaintiff's Motion for Judgnent on the Pleadings
AND NOW, March 17, 1995, Defendant/Counterclaim Plaintiff Eileen J.
Felmlee's Motion for Judgment on the Pleadings is GRANTEO, as is her Counter
claim for Declaratory Relief.
By the Court, George E. Hoffer, J.
118 - 121 March 31, 1995. Praecipe for Entry of Judgnent, filed. JUDGMENT ENTERED
Please enter judgnent and costs in the amount of $190.37 in favor of
Defendant/Counterclaim Plaintiff Eileen J. Felmlee and against Plaintiff/
Counterclaim Defendant Statewide Office Products, Inc. on the Court's Order
and Opinion granting Defendant/Counterclaim Plaintiff Eileen .J. FeJmlee's
Mot ion for Judgment on the Pleadings entered on March 17, 1995.
By: James J. Kutz, Esq. for Deft/Counter Cl PIf
122 - 129 March 31, 1995, Bill of Costs and Prothonotary's Tax of Costs Upon Statewide
Office Products, Inc., filed.
130 - 133 April 10, 1995, Notice of Appeal, filed.
Notice is hereby given t~,t Statewide Office Products, Inc., Plaintiff/
Counterclaim Defendant, appeals to the Superior Court of Pennsylvania fran
the or.der entered in this matter on the 17th day of March, 1995. This order
has been entered in the docket as evidenced hy the attached copy of the
docket entry.
By: lklnie.1 1.. Sullivan, Esq.
134 - 13'1 April 18, 1995, No. 299 f1bg. .199'1, assigned by Superior Court: of PA.
CERTIFICATE OF SERVICE
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AND NOW, this ~duy of~;(" 1',1995.1, DANIEl. 1.. SUl.LlVAN, ESQUIRE,
hereby certlly thutl um serving u copy of the lilrcgoing document upon the persons und In the
l11anner indlcuted below, which service sutlsfies the re'luirements of the I'u, Rules of Civil
Procedure, by depositing u copy of the sume in the United Stutes Mull, lIurrisburg, Pennsylvania,
with first.class postage prepaid, us tilllows:
James J. Kutl, ES'lulre
ECKERT, SEAMANS CIIERIN & MEl.I.(rlT
One South Market S'luarc Building
213 MUl'ket Street
lIarrisburg, PA 1710 I
METTE, EVANS & WOODSIDE
By:
Do.. " Q-1..~
Daniel L. Sullivan, Esquire
Sup, Ct. I. D, #34548
3401 North Front Street
P. O. Box 5950
Ilarrisburg, I' A 1 7110.0950
(717) 232.5000
44878 I
2
Nil.
299 HbQ
T~rm 19...2..2.
No, 94-5304 EquitYTerm 19_
statewide Office Products, Inc.
Venus
Eileen J. Felmlee
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EXF.MPJ.lFIED RF.CORll
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Ilt)('Kn I'N my
B1'A'1'1':WlllJo: O~'FJCH I'HOnllC'I'S, INC.
VB.
(.; I ItIU':N ~J. 1.'l-:I,HI.l-:l':
Sept,. 16, 1994, CnnpJdinl in Fquily, fll(~I.
Sept. 30, 1994, Acceptdnce of Service, fi 1(~1.
By: .limK:R .1. Kut~, E!Jq.
Oct. 18, 1994, Answer, New Maner, dnd C'lur.terclilim of Defendant Eileen .J.
Felmlee to the Conplaint, f il(~i.
Nov. 9, 1994, Statewide OffiCi! i'uxluctR, lnc:. 'H Ileply to New Matter and
Answer to Counterclaim, fil",l.
Nov. 17, 1994, Praecipe for Listing Case for ^r~Jlunent, filed.
Nov. 17, 1994, Motion of lK>fendant/Counterc1aimant Eileen ,J. FelJnlee for
,Judgnent on the Pleadings as to Pldintiff's CClnplaint in F:quity and Peunlee'
Counterclaim Seeking fX>claratory HeUef, filed.
March 17, 1995, Opinion and Order of Court, filed. In He: Defendant.!
Counterclaim Plaint iff's Motion for .Iudgnent on the Plead ingR
AND NOW, March 17, 1995, Defendant/Counterclilim Plaintiff Eileen ,I.
Fe.lmlee's Motion for .Judgnent on tile Pleadings is GR/lNTED, as is her Counter
claim for Declaratory Relief.
By the Court, George F:. Hoffer, ,J.
118 - 121 March 31, 1995, Praecipe for Entry of .Judgnent, filed. JUDGEMENT ENTERED
Please enter judgnent and costs in the ilIlxlUnt of $1<)0.37 .in favor of
Defendant/Counterclaim Plaintiff E.ileen .J. Felmlee and against Plaintiff/
Counterclaim Defendant Statewide Offi.ce Products, Inc. on the Court's Order
and Opinion granting fX>fendant/Counterclaim Plaintiff Eileen .J. Fe.1mlee's
Motion for .Judgnent on the Pleadings entered on March 17, 19<)5.
By: ,Ji~nes.J. Kut~, Esq. for Deft/Cnunl'er Cl PIf
122 - 129 Marr.h 31, 1.995, Bill of Costs and Prothonotary's Tax of Cost:; Upon Statewide
Office Products, Inc" filed.
130 - 133 April 10, 1995, Notice of ^pJ.'xlc1l, filed.
Notice is hereby given that Statewide Office Prcxlu("ts, Inc., Plaintiff/
Counterclaim Defendant, appeals to the Superior Court of Pennsylvania fran
the order entered in this matter on the l7th day of March, 1<)95. This order
has been entered in the? docket as evidenced by the attached copy of the
docket entry.
By: Dimiel L. Sullivan, Esq.
134 - 135 April 18, 1995, No. 2<)'J J-1bg. 1<)<)5, assigned by Superior Court of PA.
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implementation of the stock purchase by the Corporation
required by the Buy and Sell Agreement.
7, Ms. Felmlee began active employment by Statewide as a
telemarketer on or about September 13, 1992. She subsequently
became an Accountant Representative, continuing her employment
by Statewide, in September, 1993.
8. On January 7, 1994, Ms. Felmlee terminated her
employment by Statewide, effective at the close of business on
January 21, 1994.
9. Ms. Felmlee's termination of her employment by
Statewide triggered her obligation to sell her stock and
Statewide's obligation to purchase her stock, as provided for
in the Buy and Sell Agreement.
10. FOllowing Ms. Felmlee's termination of her employment
by Statewide, Statewide timely undertook all necessary and
proper steps to determine the purchase price of Ms. Felmlee's
stock, calculate the required down payment, calculate the
installment payment schedule for the balance of the purchase
price, and prepare necessary documents in order to close the
stock purchase transaction, all in accordance with the Buy and
Sell Agreement.
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Exhibit A
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BALANCE OF PURCHASE PR I CE
ld) Th. balanc. of fhl purch... pr lei romalnlng aftor plvmlnf
of In.,. luch I nlurlne, proceed. II pro... I did In lubp.rlgrlph (c) of th II
Per.or.ph 2 her.ln, 11'1011 be payable In Ilxt.,. (60) equal monthlv Inatltllmenh,
the "rlt such Instillment payable one (I) month from the doh of clollnOI
end the r.malnlng InatDllmlnh luc.ceul'Ylly monthlV ther.afhr, Thl.
Ind.btednl'l 11'101 t bl r.prlunted by It promlnory note of 'h. Corporatioll,
."derled and guaranteed by 'hit remaining Shareholders, d.llvered to '1'1,
dlc.d.nt'l per Ion a I rlpr.aentat I VI' t beer I ng I nt.re.' plr annum It I r.t.
not to .lICc..d light (8) percent. Th. rat. 0' Interllt ahell b. mutu.ll.,.
determined on thl date 01 ciOlino, end If there II no Dgr.ement thin ,1'1,
rete Ihall be nve" (7) percent per nnnum. The promissory note shall provide
that the maker she II hevI thl pr I v II.gI of prepay I ng e II or ony pert thereof
It Iny time with Interest to date of prepayment, thet II dehult In any payment
when due ahe II t;:aus. the rema I n I og unpe I d be I ence to become due end peyab I.
forthwith, end shell provide for the m!lker to pey ell cost, end '.plnlls
0' collection, Including a reasonabl. ettorneyls f.e.
INABILITY OR UNWILLINGNESS TO PURCIIASE
(.) If the Corporetlon ,shell not heve sufficient terned
surplus to permit It lewfully to purchese ell of such shari' of ceplhl stock,
or It the Corporation in any event shell be unEJble or refuse to purchaso
all of the decedent' s shares of cap I to I stock, the ob r 190t Ion of tho
Corporetlon with reapeet to the shares which tho Corporation sholl be unable
or r.fuse to purches8 sholl be doemod assumed by tho surviving Shareholdors,
.,.
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Thl rato of Inllrllt Ihlll bl mulull'V dltormlllld It Ihl dill ot ciolino
and If there ia no egrllment thin the rete Ihall b. ,IVln en plrclnt plr
annu," , The premlalcry not. ,hell provide that thl meker Ihall hlVI the
privilege of pr.paylnlil ell or any part th.r.o' .t Iny tlm. with 1I\'llrl.t
.
to date of prepayment, that. dehult In Dny pnVlftlnf when due shell ceu'.
thl rernl I n 1"9 IJnpai tJ be I ene. to become due end pnyeb I, for fhw I th, IInd shn II
provide for the maker to pay all costs nnd ....p.nI85 of collection, Including
D r.'lonable attorneyls "d.
INABiliTY OR UNWilliNGNESS TO PURCHASE
td) II thl Corporlllon II not I..fu"v .bll to purch... all
of auch ISh!r.. of capl tel .tock, or I f the Corporllt Ion other wll' 5hell b.
unlbl, or ,.fulI to purchesl all of the Shareholderl, Sh."15 of stock, thl
obi luetlon of the Corpor.flon with respect to the shares which the Corporation
ahal I be unable or r,fuse to purchese shal I be deemed assumed proportionately
by the remaining Shareholders.
DEATH OF REMAINING SHAREHOLOERS PRIOR TO CLOSING
(e) The provision of this Paragraph 4 shall be of no effect
If .11 01 tho Sharlholdlrs shall dll prior to thl ciOlino 01 thl ..II of
luch Itock to the Corporation.
PURCHASE BY SllAREHOlDERS
5. Whenever any Shareho I der purchases share, of cap I tel stock
und.r this Agreement, such purchasur (unI855 ,he shall have paid the entire
PUrChl'l price In cash) shall, following the delivery of the purchased atack,
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Upon tlrmlnltlon of thll Agrl.m.nt, thl Slcrlt.rv 01 thl Corporltlon
,h.lI, upon tlnd.r of the clrtlllcltel of .toc., dlllte tho Ilg.nd .ndorlld
th.r.on purlu.nt to Plrlgrlph 7 01 thll Agr..m.nt,
NOTICES'
I~. Any notlc., demand, off.r, or other wrlt't.n In.trumlnt required
or permitted to b, given, med., or .Int hereunder ,hall be In writing, a'gnld
bV thl plrtv giving or mlklng thl 11m., Ind Ihlll b. ..nt bV rlglltlr.d mIl I
to ,II partl.. her.to Ilmult.n,oully at theIr rl.plctivl eddressl' hlrelnaft,r
.It forth. Any notlc., demand, off.r, or other written Instrument required
to b. glvln to or ..nt to the I.t.t. of IIny dlelDled Shareholder shell b.
Ilgn.d end 'Int, In Ilk. menn.r, "ddrl"ld to the perlonal reprl'lntlltlv.
of luch d,c'.'ld perlon at his or her Iddrll., or, If there bl no luch
perlonal rlpr..lnt.tl"., to thl I,tat. of thl dlc....d Sher.h",ld.r, at hi.
or her IIddrlll her,lnatt.r lit forth. Any perty hereto shell hll"e the right
to chang. the plllce to which any such notlc., otfer, d.mand, or writing shal I
b. lint to her by slmller notlc' .ent In like menner to all pert lis h.r.to.
Th. date of mall I ng of any of fer, demand. not I C,, or I nstrum.nt shell be
d..m.d to be the date of luch off.r, dlmend, not Ice or I"atrument IInd shill
b. .fh.;tl"l from luch dete, The eddrelUtI of the parties to this Agr..ment
IIr. D5 followsl
tl) Petrlcla G. MangIn 239 Wood Str..'
Clmp ttlll, PA 17011
Ibl Maur..n T. Winter, 2105 Alp,n Drlv.
M.chenlclburg, PA 17055
Ie) EII.ln J, Fllml.1 16 Slnclllr ROld
M.chanlclburg, PA 17055
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PR I OR ~GRmIlNT6
16. Thl' AUr....o,,' ,uperud.. all prior ogro...o"t, ",odo betwee"
thl 6hlroholdor, o"d 'ho Corporo'lolI a"octlng tho ,toc~ 0' tho Corporltlo"
I"d III "oreo"",,t, Irl horobv tor",lnalld.
AGREEMENT GOVERNED BY THE lAW OF THE
CC)MMONWEALTlI OF PENNHlVANIA
17. Th. perti'l h.r.to egr.. that It II thllr Intention end
cove,,",,' 'hll thl. Agroomo,,1 ahal I bo govor"od bV Ihe IOW5 ot 'hI Commonwollth
01 Pon",vlvo,,'o.
IN WITNESS WHEREOF. tho Parll.. have ..ocuted Ihl. Agr..me"t on
the dlV end V..r flrat above wrltt.n.
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(PATRICIA G, MANGAN, ha holder
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MA REEN T, WINTERS, Shareholder
~ {k' jptlMJa/J
EilEEN J, FE lEE. Shareholder
STATEWIDE OFFICE PRODUCTS, INC,
BY~U:'/cA'. jY2.,.- --..--'~
1 Pres I dent ,
ATTEST I
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STATEWIDE OFFICE PRODUCTS,
INC.,
Plaintiff
vs.
EILEEN l. FELMLEE,
Defendantl
Counterclaim Plaintiff
vs.
STATEWIDE OFFICE PRODUCTS,
INC.,
Counterclaim Defendant
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,
...
IN THE COURT OF COMMON PLEAS
CUMBERLAND COUNTY,
PENNSYLVANIA
No, 94-5304
Civil Action. equity
NOTICE TO PLEAD
To: . Statewide Office Products, Inc.
c/o Daniel L. Sullivan, Esquire
Elyse E, Rogers, Esquire
3401 North Front Street
P.O. Box 5950
Harrisburg, PA 17110-0950
You are hereby notified to plead to the within document within twenty (20)
days after service hereof, or a default judgment may be entered against you.
DATED: October 17, 1994
ECKERT SEAMANS CHERIN & MELWTI
- ~ -,'-.., \ ,,-
.'lll"" -.::\ ~ .r..l'.
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lame ,Kutz, Esqllife, Esqu'ln
Supreme Cl, I.D. #21589
Douglas l. Davison, Esquire
Supreme Ct. 1.0. #69368
One South Market Square Building
213 Market Street
Harrisburg, PA 17101
(717) 237-6000
Attorneys for Defendant
Eileen l, Felmlee
,
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Plaintiff
IN THE COURT OF COMMON PLEAS
CUMBERLAND COUNTY,
PENNSYLVANIA
STATEWIDE OFFICE PRODUCTS,
INC.,
VS.
EILEEN J, FELMLEE,
Defendantl
Counterclaim Plaintiff
No. 94-5304
VS.
STATEWIDE OFFICE PRODUCTS,
INC"
Counterclaim Defendant
Civil Action - Equity
ANSWER, NEW MATTER, AND COUNTERCLAIM OF
DEFENDANT EILEEN.I. FELMLEE TO THE COMPLAINT
Defendant Eileen J. Felmlee, by and through her attorneys, Eckert, Seamans, Cherln
& Mellott, hereby makes the following Answer, New Matter and Counterclaim:
I. ANSWER
l. Admitted.
2. Admitted. By way of further response, Defendant Eileen 1. Felmlee
("Felmlee") is (a) a shareholder, (b) the Assistant Secretary, and (c) the Assistant Treasurer
of Statewide Office Products, Inc. ("Statewide").
3, Admitted in part and denied in part as stated, It is admitted that Statewide is a
closely held corporation in thatlhe shares of Statewide are held by Patricia Mangan ("Mrs.
Mangan"), Maureen T. Winters ("Winters") and Felmlee. It is further admitted that Mrs.
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Mangan owns one thousand (1000) shares of Statewide, while Winters and Felmlee each own
five hundred (500) shares of Statewide. Because Felmlee does not know what is meant by
Plainlifrs averment that these shareholders have held their respective shares "From a date
prior to October I, 1992". this Is denied.
4. Arlmined in part and denied in part as stato:d. It Is admilled that Mrs. Mangan
prepared and urged Winters and Felmlee to enter into a Buy and Sell Agreement
(N Agreement") on or about October 1, 1992. It is further admilled that a true and correct
copy of the Agreement is attached to the Complaint as Exhibit" A". It is expressly denied.
however, that the Agreement is valid; to the contrary, as set forth with specificity, infra. the
Agreement is invalid due to fraud, misrepresentation, and/or mistake. The remainder of the
averments in Paragraph 4 of the Complaint constitute an improper allempt to characterize or
paraphrase the Agreement. Any intent to aver or imply that ally provision of the Agreement.
in particular Paragraph 4 relating to the "Purchase on Termination of Employment" applies
to the facts and circumstances upon which Plaintiff brings this action is expressly denied. To
the contrary, as the paragraphs set for, infra, make clear, assuming arlluendo the validity or
enforceability of the Agreement, no provision of the Agreement has been triggered as a result
of Felmlee's voluntary resignation of employment with Statewide.
5, Admined in part and denied in part as stated. Admilled as to the accuracy of
the quoted provisions of the Agreement, It is specifically denied, however. that any
provision of the Agreement, and in particular, Paragraph 4, apply to the facts and
circumstances upon which Plaintiff brings this action,
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8. Denied as stated. Ills admilled that Felmlee terminated her employment m1b
Statewide on January 7, 1994, when she voluntarily submitted her resignation, It is further
admitted that Felmlee signed a letter, drafted by Statewide representatives, evidencing
Felmlee's voluntary resignation of employment and that Felmlee's resignation was effective
at the close of business on January 4, 1994. A true and correct copy of this resignation
letter is attached hereto as Exhibit "A". By way of further response, as set forth in
Paragraph 7, Plaintiffs attempt to plead the facts and circumstances surrounding Felmlee's
voluntary resignation of employment with Statewide is simply erroneous and contrary to the
plain language of Paragraph 4 of the Agreement.
9. The averments of Paragraph 9 state a conclusion of law which requires no
response. To the extent it is deemed an averment of fact, the allegation is denied. Felmlee's
voluntary resignation of employment with Statewide did not trigger any obligation to sell any
stock, nor did it trigger any obligation on the part of Statewide to purchase any stock. The
Agreement is invalid and/or unenforceable as it was procured through fraud,
misrepresentation, and/or mistake. Assuming, ar~uendo, the validity of the Agreement,
Felmlee was not "terminated by Statewide", rather Felmlee voluntarily resigned her
employment. Thus, if the Agreement is enforceable, Paragraph 4 was not "triggered" by
Felmlee's voluntary resignation of her employment with Statewide.
10. After reasonable investigation, Felmlee is without knowledge or information
sufficient to form a belief as to the truth of averment to the extent it relates to what "proper
steps" Statewide undertook and the averments in Paragraph 10 are, therefore, denied. By
way of further response, Plaintiffs allempt to plead and characterize the voluntary
5
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resignation of Felmlee as "Felmlee's termination of her employment b.x Statewide"
constilutes a conlorted and distorted inlerpretation of the plain language of Paragraph 4 of the
Agreement which Is erroneous and contrary to the plain language of Paragraph 4.
II. The averments in paragraph 11 conslitute legal conclusions requiring no
responsive pleading. To the extent any responsive pleading Is deemed necessary, the
averments are expressly denied for the reasons set forth in the foregoing paragraphs of this
Answer, all of which are incorporated herein by reference thereto as lhough fully set forth
and for the reasons set forth in the New Maller hereinafter stated, which New Maller is
Incorporated herein by reference therelo as though fully set forth.
12. Denied as stated. II is admilled that Stalewide has soughtlo invoke, albeit
improperly, the provisions of the Agreement and that Felmlee has consistently denied the
propriely of the application of the Agreement, and consequently, no sale of stock has
occurred. II is expressly denied that Felmlee's actions, in any manner, violate the "terms
and conditions" purportedly agreed to in the Agreement. Indeed, the Agreement is invalid
inasmuch as it was procured by fraud, misrepresentation, and/or mistake. In any event, even
assuming, ar&uendo, the validity of the Agreement, no provision applies to Felmlee's
actions, in particular Paragraph 4, inasmuch as Statewide did not "terminate Felmlee's
employment"; to the contrary, Felmlee voluntarily submiued her resignation,
13. The averments in paragraph 13 conslitute legal conclusions requiring no
responsive pleading, To the extent any responsive pleading is deemed necessary, the
averments are expressly denied for the reasons set forth in the foregoing paragraphs of this
Answer, all of which are incorporated herein by reference thereto as though fully set forth
6
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and for the reasons set forth in the New Maller hereinafter stated, which New Maller 15
incorporated herein by reference thereto as though fully set forth. By way of further
response, Felmlee has no "obligation to sell her stock to Statewide under the Buy and Sell
Agreement" inasmuch as the Agreement is Invalid since it was procured by fraud,
misrepresentation, and/or mistake. Even assuming the validity of the Agreement, Pal'Bgraph
4 of the Agreement simply does not apply to the facts and circumstances upon which Plaintiff
premises its action.
14. The averments In paragraph 14 constitute legal conclusions requiring no
responsive pleading. To the extent any responsive pleading is deemed necessary, the
averments are expressly denied for the reasons set forth in the foregoing paragraphs of this
Answer, all of which are incorporated herein by reference thereto as though fully set forth
and for the reasons set forth in the New Maller hereinafter stated, which New Maller is
incorporated herein by reference thereto as though fully set forth. By way of further
response, Statewide has Wl remedy, inasmuch as it has I1Q right since the Agreement was
procured by fraud, misrepresentation, and/or mistake. Even assuming the validity of the
Agreement, the plain language of Paragraph 4 precludes this action to compel specific
performance since the condition precedent, i&.., "Felmlee's termination of employment by
the Corporation" has not occurred. Rather, Felmlee voluntarily resigned.
15, The averments in Paragraph 15 constitute an improper allemptto characterize
or paraphrase Paragraph 8 of the Agreement. Additionally, the averments in Paragraph 15
do not set forth with complete accuracy the language of Paragraph 8 of the Agreement, and
the averments in Paragraph IS of the Complaint are, therefore, denied. Additionally,
7
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Felmlee denies that It was the "specil1c understanding of the parties" that any remedy would
be proper to enforce a provision of the Agreement, inasmuch as the Agreement was procured
by fraud, misrepresentation, and/or mistake.
16. The averments In paragraph 16 constitute legal conclusions requiring no
responsive pleading. To the extent any responsive pleading is deemed necessary, the
averments are expressly denied for the reasons set forth in the foregoing paragraphs of this
Answer, all of which are incorporated herein by reference thereto as though fully set forth
and for the reasons set forth in the New MaUer hereinafter stated, which New MaUer is
incorporated herein by reference thereto as though fully set forth. It is specitically denied
that Felmlee is "required" to sell her stock to Statewide for the very reasons set forth
hereinabove and hereinbelow, all of whicll are incorporated herein. Felmlee has no
obligation under the Agreement, has breached no obligation under the Agreement, and is
entitled to rescission of the Agreement, since the Agreement was procured by fraud,
misrepresentation, and/or mistake.
WHEREFORE, Defendant Eileen J, Felmlee respectfully requests this Court to enter
judgment in her favor and against Plaintiff on the Complaint and to award Defendant the
costs of this action and other relief the Court deems just and proper. including reasonable
fees.
II. NEW MATTER
17. The answers, responses, and affirmative averments of the foregoing Answer
are incorporated herein by reference thereto as an affirmative defense.
8
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18. Plaintiff, Statewide, has failed to state any claim or cause of action upon
which relief may be granted by the Court.
19. Plaintiffs Complaint is barred by the doctrines of duress, failure of
consideration, and fraud.
20. The Complaint is Improperly designated as being directed to the "equity" side
the Court,
21. In 1975, Ernest Mangan, Felmlee's and Winters' father, co-founded Statewide
Office Products. A true and correct copy of Statewide's Articles of Incorporation are
attached hereto as Exhibit" B".
22. Patricia Mangan was Emest Mangan's second wife, and is Felmlee's and
Winters' step-mother.
23, Patricia Mangan married Ernest Mangan four and one-half (4 Ih)
months before Ernest Mangan's death.
24. By operation of this Commonwealth's intestacy laws, Patricia Mangan received
from the Estate of Ernest Mangan fifty percent (50%) of the stock in Statewide, while
Felmlee and Winters each received twenty-five percent (25%).
25. Following Ernest Mangan's death, Mrs. Mangan, Winters, and Felmlee agreed
that the three of them would operate the business amicably and in concert with one another;
and, understanding that someone needed to serve as President, the three agreed that Mrs.
Mangan would serve first as President.
26, Prior to Mr. Mangan's death, neither Mrs, Mangan, Felmlee or Winters was
serving the company as a Director or in any corporate officer capacity.
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27. Although the By-Laws require thntthere be at least three Directors of
Statewide's Board where there eltists more than two shareholders, the present Board's
Directors are only two in number; 1&., Mrs. Mangan and Maureen Winters.
28. Mrs, Mangan is (a) a shareholder, (b) the President, and (c) n Director of
Statewide.
29. Winters is (a) a shareholder, (b) the Secretary, (c) the Treasurer, and (d) a
Director of Statewide.
30. Felmlee is (a) a shareholder, (b) the Assistant Secretary. and (c) the Assistant
Tr~surer of Statewide.
31. On or about October I, 1992, Mrs. Mangan presented the subject Buy-Sell
Agreement to Winters and Felmlee.
32. On or about October I, 1992, Mrs. Mangan induced Felmlee to eltecute the
Agreement and explained that the primary purpose of the Agreement was to provide for the
future disposition of the shares of the stock of Statewide in the event of the death of either
Mrs. Mangan, Winters and/or Felmlee.
33. At the time the Agreement was presented to Felmlee, Felmlee had no
understanding that any provision therein would trigger any obligation to convey her stock to
Statewide upon voluntary resignation of her employment with Statewide and Mrs. Mangan
urged Femlee to sign the Agreement immediately, thus precluding Felmlee from any
reasonable opportunity to review same or have it reviewed by an advisor.
34. If Mrs, Mangan had disclosed to Felmlee at the time she induced Felmlee to
eltecute the Agreement that a voluntary resignation of employment would trigger an
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obligation on Felmlee's behalf to sell her stock, Felmlee never would have signed the
Agreement.
3S, Mrs. Mangan's misleading representation to Felmlee that the Agreement was
intended primarily to provide for buy-out of Statewide stock upon the death of either Mrs.
Mangan, Winters, or Felmlee was false.
36. Atlhe time Felmlee executed the Agreement, she had no understanding that
the Agreemcnt would obligate her to sell her stock upon voluntary resignation of employment
with Statewide.
37. The misrepresentations made by Mrs, Mangan to Felmlee wcre material to
Felmlee's decision to execute the Agreement, and Mrs. Mangan knew or should have known
that if she fully disclosed all ramifications of the Agreement accurately, Felmlee would have
refused to execute the Agreement,
38. Felmlee relied on Mrs. Mangan's representations when Felmlee executed the
Agreement.
39, The misrepresentations made by Mrs, Mangan concerning the effect of the
Agreement were made in bad faith,
40. The misrepresentations falsely made by Mrs. Mangan to Felmlee amount to
fraud.
41. Due to Mrs. Mangan's fraud and misrepresentations, the Agreement is void ah
iniilil.
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42. Mrs. Mangan's misrepresentations to Felmlee with regard to the effect of the
Agreement, marked the inception of Mrs. Mangan's plan to eliminate Felmlee's rights and
economic interests as a twenty-five percent (25 %) shareholder and owner of Statewide.
43. At the time Mrs. Mangan coerced Felmlee Into signing the Agreement,
Felmlee had been placed in an employment capacity for which shr. had no experience and for
which Mrs. Mangan knew Felmlee would fail.
44. As Felmlee's work performance continued below standard (according to Mrs.
Mangan), Mrs. Mangan embarked upon an oppressive course of conduct, which included
urging Felmlee to resign.
45. Mrs. Mangan's scheme to "squeeze out" Felmlee culminated on January 7,
1994, when Mrs. Mangan wrongfully induced Felmlee to submit her resignation.
46. On January 7, 1994, Felmlee had no understanding that a voluntary resignation
of her employment with Statewide would trigger an obligation to sell her stock.
47. On January 7, 1994, had Mrs. Mangan disclosed at the time she induced
Felmlee to submit her resignation, Felmlee never would have resigned her employment with
Statewide.
48. The Complaint, in the name of the corporation, is collusive and a mere
subterfuge to advance the interests of the corporation's President, Patricia Mangan.
49. Representation of the corporation by the law firm which has represented and
continues to represent the President individually, presents a contlict of interest inasmuch as
this law firm represents and has represented the interests of the President of the corporation,
Patricia Mangan, whose personal interests are the only interests to be advanced by the relief
12
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requested in the Complaint In that, if successful in the suit, Mrs. Mangan's stock ownership
elevates from tifty percent (50%) of thl! outstanding stock to sixty-six and one-third percent
(661/1 %) of the outstanding stock.
50. Legal counsel was retained and this suit was comml!nced without approval of
either a mlijority vote of the Board of Directors, without a majority vote of the shareholders,
without the Board of Directors being properly constituted as three in number, and without
any consultation from any of the Statewide officers, save Mrs. Mangan herself.
51. There is a deadlock among the shareholders and the Directors of Statewide
and, in the face of this deadlock, Mrs. Mangan, using her purported authority as President,
is attempting to usurp all powers and control the management of the corporation, as
evidenced by this unauthorized suit, even though the By-Laws expressly vest in the Board of
Directors, and not the President, the management of the business of Statewide.
52. The relief requested in the Complaint should be denied by reason of the
doctrine of "unclean hands", which "unclean hands" of the collusive Plaintiff and Its real
party In interest, Patricia Mangan, include inter alia, the following:
(a) Insisting that a twenty-five percent (25%) shareholder,
Defendant Eileen Felmlee, assume a position within the
corporation for which she had no experience and for which Mrs.
Mangan knew she could not succeed;
(b) Refusing to make available to Felmlee any other employment
position within the corporation;
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(c) Preparing the Agreement and urging Defendant to sign same
Immediately without opportunity for review;
(d) Inducing Felmlee to resign her position from the corporation by
leading her to believe that no consequence, aside from the loss
of Income, would accrue when, in fact, Mrs. Mangan Intended
to secure control of the corporation by subsequently bringing
this law suit;
(e) Commencing this law suit when, in fact, Mrs. Mangan realized
that, under the clear language of the Agreement which she
prepared, grounds and circumstances did not exist to force a
sale of Felmlee's stock inasmuch as Felmlee resigned and was
not "terminated by the company", which is the condition
precedent to triggering Paragraph 4 of the Agreement, assuming
ar~uendo its validity;
(f) Refusing to provide the Treasurer, Maureen Winters, with
custody of the financial records of Statewide, despite the clear
and explicit language of the By-Laws which provide that the
Treasurer shall have custody and be responsible for, inter alia,
the financial affairs of the corporation;
(g) Retaining the law firm of Mette, Evans & Woodside to
purportedly represent the interests of the corporation under
circumstances whereby that law firm has had a long-standing
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relationship representing the personal intereslS of Mrs. Mangan,
knowing that proliferation of this law suit, and its Intended
result, Is for the benefit of Mrs. Mangan personally, and In no
material way benefits the Interests of the corporation;
(h) Cancelling the annual shareholders' meeting in August, 1994 for
the purported reason that, by merely intending to fi.ls: this law
suit, said shareholders' meeting was not proper and that
Defendant Felmlee was not a shareholder;
(i) Refusing to reschedule the shareholders' meeting;
(j) Abusing the corporate positions of President and Director for
private gain and at the expense of the shareholders of Statewide;
(k) Excluding Felmlee and Winters from having any meaningful
part in the affairs of Statewide;
(I) Using her corporate positions to completely control and manage
the corporation without majority stock support and without
effective participation of Eileen Felmlee, a shareholder. the
Assistant Secretary. and the Assistant Treasurer of Statewide;
(m) By refusing to hold or call an annual meeting, at which the
shareholders would have been called upon or permitted to vote
for Di rectors;
(n) Most recently, in an effort to work within the corporate
requirements and By-Laws, shareholder Felmlee, along with
IS
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shareholder/Director Winters, served notice of a special
shareholders' meeting to be held on Thursday, October 13, 1994
at S:30 p,m. at the ofl1ces of Eckert, Seamans, Cherln &
Melloll, Harrisburg, counsel for Ms. Felmlee.
(0) This notice of special shareholders' meeting was required by
reason of President Mangan's cancellation of the annual
shareholder meeting in August and her conjunctive effort to
divest Felmlee of her stock ownership before any shareholder
meeting could be held, A copy of the notice of special
shareholders' meeting, which contains a description of the issues
to be "considered and/or acted upon" at that meeting, is attached
hereto as Exhibit "C" and incorporated herein.
(p) In response, litigation counsel for Plaintiff in this case, served a
telefax notification that the meeting was to be held at the
corporate offices of Statewide, rather than the offices of counsel
for Felmlee. Although the By-Laws provide that shareholders'
meetings may be held at the corporate offices or at other
locations as designated by twenty-five percent (25%) or more of
the shareholders, Felmlee and her counsel agreed to abide by
the request and, therefore, presented themselves for the
shareholders' meeting at the corporate offices of Statewide on
Thursday evening, October 13, 1994. A copy of Plaintifrs
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letter requesting the location change and Felmlee's consent to
the change are attached hereto as Elthiblt"D" and incorporated
herein,
(q) At 5:30 p.m. on October 13, 1994, Felmlee, Winters, and
Felmlcc's attorneys appeared with a stenographer for the
purpose of addrcssing the Issues referenced In the noticc of
special shareholders' mccting.
(r) However, when they arrived, President Mangan, accompanied
by corporate counsel (another partner from the Mette, Evans &
Woodside law firm) advised that the stenographer would not be
permitted and must leave; Mrs. Mangan's counsel further
advised that, at least until further notice, she did not object to
Felmlcc's attorneys being present for the meeting.
(s) When Felmlee and her attorneys attempted to raise the issues set
forth In the notice for the purpose of "consideration" by the
shareholders, Mangan and her counsel interrupted, refused to
permit discussion, and advised that none of the listed subjects
were appropriate for discussion at a shareholders' meeting.
(t) Mangan and her counsel further contended that, in effect, this
had been an improperly called shareholders' meeting and it was
as if no meeting had been held.
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(u) Mangan and her counsel advised that there would be a Board of
Directors' meeting two days later, October 1.5, 1994, at
corporate offices.
(v) Accordingly, purportedly using her status as President of the
corporation, and her purported authority to hire counsel for the
corporation, Statewide, through Mangan and her counsel,
precluded the holding of a properly noticed meeting which, in
turn, precluded Felmlee and her sister, Winters, from any
meaningful dialogue, consideration, or action with regard to the
corporate affairs of Statewide.
(w) In an effort to further work with Mangan, Director Winters
appeared at the Board of Directors' meeting on the afternoon of
Saturday, October 15, 1994.
(x) At that meeting, Winters directed a number of questions for
answer by the President with regard to the operation of the
company, salaries of the individuals, employment of Felmlee,
decision-making process by which the Felmlee litigation was
commenced, etc.
(y) In response, Mangan refused to provide any meaningful answers
except to advise that she was the President, had the authority to
do what she was doing, and intended to continue the status quo.
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(z) Subsequently, Director Winters made two motions: (I) First,
she moved that the Directors elect Eileen Felmlee as a third
Director, 8iven the provisions in the By-Laws which require at
least three Directors if there are at least three shareholders; (2)
Second, Director Winters moved for her nomination as
President of the corporation Inasmuch as Mangan had served the
flrsttwo terms as President.
(aa) In response to both motions, Mangan refused to consider same.
(bb) Additionally, Mangan advised that she would not consider a
third Director's position because felmlee was not a shareholder;
a position which is wholly inconsistent with the present litigation
under which Mangan, through Statewide, is attemptin8 to
effectuate a divestiture of Felmlee's shareholder ownership.
(cc) Mangan further advised that there would be no change in
officers, including that of President, in that she intended to
continue to serve as President ad infinitum and that the status
quo would be maintained in terms of her being in control of all
aspects of the company, without necessity of input from either
Director Winters or shareholders Winters and Felmlee, who
t08ether own an equal number of shares of stock with that of
Mangan.
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~7, Statewide's claim in this action is simply erroneous and is premised upon a
distorted and contorted interpretation of Paragraph 4 of the Agreement, which was drafted
for or on behalf of Mrs. Mangan, is ambiguous, and should be construed most strongly
against Statewide,
~8. Felmlee's employment was not terminated by Statewide.
~9. Felmlee voluntarily resigned her employment with Statewide.
WHEREFORE, Defendant Eileen Felmlee demands that judgment be entered In her
favor and against Plaintiff on the Complaint and that Defendant be awarded the costs of this
action and any other relief the Court deems just and equitable, including fees,
III. COUNTERCLAIM
Count I .. Rescission
60. Defendant Felmlee incorporates herein the allegations of paragraphs I through
~9 as if fully set forth herein,
61. Defendant Felmlee is entitled to a determination that the Agreement is
unenforceable and/or invalid as it relates to Felmlee as a result of the false representations
and inducements made by Mrs. Mangan at the time she presented the Agreement to Felmlee,
which Mrs. Mangan knew or should have known to be [alse, which were made in bad faith,
and which were material to Felmlee's decision to execute the Agreement.
62. Plaintiff lacks an adequate remedy of law.
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68. On or September 26, 1994, Statewide commenced slIlt against Felmlee
claiming that felmlee's voluntary resignation of employment with Statewide triggered an
obligation on felmlee's part to sell her stock to Statewide,
69. St.ltcwldc's position is erroncous Inasmuch as Fclmlee was not "terminated
Iu:" Statewide; rather, Felmlee voluntarily resigned her employment with Statewide.
70. Defendant Felmlee Is entitled to a determination under thc Declaratory
Judgment Act of Pcnnsylvanla that she has no obligation to sell her stock under any provision
of thc Agreemcnt, in particular, Paragraph 4, slncc Felmlee vuluntarily resigned her
employment with Statewide, and was not "terminated by thc corporation".
WHEREFORE, Defendant Felmlee demands that judgment be entered in her favor
and against Plaintiff Statewide on this Counterclaim, that the Court Issue a declaration that
Paragraph 4, or any other provision of the Agreement has not been triggered by Felmlee's
voluntary resignation of employment with Statewide, and that Felmlce be awarded the costs,
Including fees, associated with this suit and any other reliet' the Court deems just and
equitable.
Count III -- Attornev's Fees
71. Defendant Felmlee incorporates herein the allegations in Paragraph 1 through
70 as if fully set forth herein.
72. The commencement of this action for the benefit of Mrs. Mangan, but in the
name of the corporation, is arbitrary vexatious and/or in bad faith, thus subjecting Plaintiff
and/or Its counsel to fees in favor of Felmlee In her defense of the action.
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CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of the foregoing Answer, New
Matter, and Counterclaim of Defendant Eileen J, Felmlee to the Complaint was served on the
following counsel of record by deposit in the United States mail, I1rst class postage prepaid,
this 18th day of October, 1994.
Daniel L. Sullivan, Esquire
Elyse E. Rogers, Esquire
Mette, Evans & Woodside
340 I North Front Street
P.O. Box 5950
Harrisburg, PA 17110-0950
DATED: October 18, 1994
7$611,1
60
l>l .",lllKIIIl iiI 1 10. I'W :IU'lu'H~
, . :......
: 5;U"~i :~1.~1I~1Il1 ol-t II t };~Il'
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717 ~;~b lHloa :)/ "
, .
.
aSt~ Olf,.,,......,.,~".
01 Oc tober, 19\14
1,,01. 'rofa..lonal CI"
10 I'Ny uno
IllUllil, '\I""lII~I.llrlt. 170U
"~""17t7J:l.'1OO
''1J1711IJU.lYO'J
~._~ 1~,!l!.Q
EII~'/1 J FolnllOI/
16 Slnclolr Road
Mechanlc5burg, P~ 170"
Maureen T. Winter.
2105 A.pen Drive
Machanlc.burg. PA 1'0"
Dear E 'I een Md Maur..n,
Stotew I dO Otl I ce PrOducts, I nc. aCknowledges your Ie t1'6r dated
October II. 1~~4 regardinG e Speclel Sharoholder5 Meeting to be held on
October I~. 1994 ot 5.30 p.ln. Mtlcle III, porollr.ph I of tho corporete
by-IOWG prov I des for ~hereho I der meet I ng5 to be he I d at thll r.nrporllto
offices, (former Iyl Pennlboro Center, Erford Roed, Lemoyne. Pennsy I ven Ie.
ThuI, whllo tho datv and 1'lme ere iotlsfectory, I must Insist thet the
locotlon of the Ineetlng be et Tne current corporete otflc6S. Enol.
Professlonol Center, 90 S~ldy Line, Enole. Pennsylvanle.
Neither this lett.r nor Iny subsequent ectlon should be Interpreted .1
en ecknowI edgement or egreemenT tneT ~lleen currently Is 0 proper
Ihereholder of Stetewlde Ottlce Produuch, Inc. end entitled to eny rl9hh,
plrtlr,lpetory. voting, nr othllrwlRII. ""wino tllllr.tro..,
Very Truly yours,
~L,w1'~?K-"
Petrlel, G, ~engen
President and Shereholder
eel J'~i J. Kutl. Esquire
61
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alleged in the Complaint or are otherwise applicable in any
fashion to the facts and circumstances of tnis lawsuit.
20. The averments of paragraph 20 are conclusions of law
to which no responsive pleading is required. In further answer
thereto, the Complaint properly invokes the equitable remedy of
specific performance.
21. Admitted. In further answer thereto, Statewide was
incorporated by Ernest Mangan as well as Basil Triscari.
22. Admitted. In further answer thereto, Felmlee and
Winters are sisters.
23. It is admitted that Ernest Mangan passed away four and
one half (4 1/2) months after his marriage to Patricia Mangan.
Ernest and Patricia Mangan were married on December 15, 1990
following a nine (9) year developmental relationship.
24. Admitted. In further answer thereto, Ernest Mangan
did not update his will following his marriage to patricia
Mangan.
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25. Denied. Mangan, Winters and Felmlee agreed that they
would try to operate Statewide as a family business and would
commit themselves to the education and training typically
associated with success in a small, closely held and partially
second generation family business. Mangan, Winters and Felmlee
agreed that the number of directors would remain at two (2) and
that Winters and Felmlee would annually trade off serving as
Director while Mangan would serve continuously as Director.
They further agreed to create a new officer position of
Assistant Secretary/Treasurer and that Winters and Felmlee
would annually trade off the positions of Secretary/Treasurer
and Assistant Secretary/ Treasurer while Mangan would
continuously serve as President. wint~rs and Mangan, with
Felmlee's agreement, nominated and elected Mangan to the office
of President based upon Mangan's education, business and
management experience, and in-depth working knowledge of
Statewide.
26. Admitted with the qualification and clarification that
although Mangan was not a director or officer prior to Ernest
Mangan's death, she had served the corporation unofficially
since 1984 as a representative attending and participating in
major business/social functions with Ernest Mangan and Basil
Triscari and began employment. by Statewide on July 5, 1988,
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Mangan, in completion of the transaction that had been started
prior to Ernest Mangan's death. On December 31, 1991, upon
completion of the buy-out, Triscari surrendered his 1,000
shares to the Estate of Ernest Mangan, Maureen T. Winters,
Executrix. On or about August 29, 1992, the Estate of Ernest
Mangan distributed 2,000 shares of Statewide stock as follows:
1,000 shares to Patricia Mangan, 500 shares to Maureen Winters
and 500 shares to Eileen Felmlee. On or about September 19,
1992, Mangan, Winters and Felmlee discussed and agreed that
Statewide should be protected by a current buy/sell agreement
in a form substantially identical to the prior buy/sell
agreement between Ernest Mangan and Basil Triscari. Mangan
undertook primary steps to amend as necessary the Mangan/
Triscari Agreement, obtain legal advice on behalf of Statewide
for review of the revised buy/sell agreement and distribute
copies of the proposed Buy/Sell Agreement to Winters and
Felmlee. Copies of the proposed Buy/Sell Agreement were
distributed prior to execution. It is believed and therefore
averred that Felmlee had the Buy/Sell Agreement reviewed by her
own counsel prior to execution. At the very least, Felmlee had
the opportunity to obtain independent review by her own legal
counsel prior to execution of the Buy/Sell Agreement. The
Buy/Sell Agreement, which was dated October 1, 1992, was
reviewed and signed by all parties in late October, 1992.
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32. Denied. The response to paragraph 31 is hereby
incorporated by reference. In further answer thereto, Mrs.
Mangan did not "induce" Felmlee in any manner. Rather, Felmlee
had full and complete opportunity to have the Buy/Sell
Agreement reviewed by counsel. The terms of the Buy/Sell
Agreement were reviewed in detail by Mangan, Felmlee and
Winters.
33. Denied. The response to paragraphs 31 and 32 are
hereby incorporated by reference. With respect to the averment
regarding Felmlee's understanding, Statewide is without
information or knowledge sufficient to form a belief as to what
Felmlee did or did not understand. In further answer thereto,
the Buy/Sell Agreement was available for Felmlee to read if she
chose to do so, and was reviewed in detail by Mangan, Felmlee
and Winters.
34. Denied. The responses to paragraphs 31-33 are hereby
incorporated by reference.
35. Denied. The responses to paragraphs 31-33 are hereby
incorporated by reference.
36. Denied. The responses to paragraphs 31-33 are hereby
incorporated by reference.
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37. Denied. The responses to paragraphs 31-33 are hereby
incorporated by reference.
38. Denied. The re~ponses to paragraphs 31-33 are hereby
incorporated by reference.
39. Denied. The responses to parayraphs 31-33 are hereby
incorporated by reference.
40. The averments of paragraph 40 are conclusions of law
to which no responsive pleading is required. In further answer
thereto, the averments are denied for the reasons set forth in
paragraphs 31-33, which are hereby incorporated by reference.
41. The averments of paragraph 41 are conclusiona of law
to which no responsive pleading is required. In further answer
thereto, the averments are denied for the reasons set forth in
paragraphs 31-33, which are hereby incorporated by reference.
42. Denied. The response to paragrapho 31-33 are hereby
incorporated by reference. In further answer thereto, the Buyl
Sell Agreement was part of a plan to achieve and retain
stability of Statewide and to reflect a commitment by all
parties to invest themselves in Statewide.
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43. It is denied that Mrs. Mangan coerced Felmlee into
signing the Buy/Sell Agreement. The responses to paragraphs
31-33 are hereby incorporated by reference. The remaining
averments of paragraph 43 are also denied. Felmlee was first
employed as a part-time telemarketer in consideration of her
previous employment history and her out-going personality. It
was believed at the time th&t the telemarketer position was a
viable position for her, would be of benefit to Statewioe, and
was consistent with Felmlee's employment background, personal
strengths and responsibilities.
44. Denied. Felmlee was never oppressed. On the
contrary, Felmlee was supplied with and supported with many
measures to encourage her success in her position. She
advanced from telemarketer to full-time account
representative. However, even with a sales quota set at a
lower than industry standard, Felmlee failed to reach even
minimal goals despite the many opportunities presented to her
for success.
45. It is specifically denied that there were any schemes
to squeeze out Felmlee. The responses to paragraphs 31-33 and
44 are hereby incorporated by reference. In further answer
thereto, in October, 1993, Felmlee indicated she was preparing
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to make a decision about her professional future and would
complete a Dalo Carnege personal motivation course in December,
1993. Felmlee was going to make a decision about her
professional future at that time. During the Fall of 1993,
Statewide continued with the training and encouragement of
Felmlee. Nevertheless, Felmlee continued to perform below
minimal sales objectives. On January 7, 1994, during a sales
performance meeting and discussion of employment options,
Felmlee submitted her two (2) weeks notice of employment
termination.
46. After reasonable investigation Statewide has no
information or knowledge sufficient to form a belief regarding
what Felmlee understood or did not understand. In further
answer thereto, the averments of paragraphs 31-33 are hereby
incorporated by reference.
47. After reasonable investigation Statewide has no
information or knowledge sufficient to form a belief as to what
Felmlee would or would not have done under other
circumstances. It is denied that Mangan induced Felmlee to
submit her resignation. On the contrary, the averments of
paragraphs 31-33 and 44 are hereby incorporated by reference.
In further answer thereto, between January 7, 1994 and January
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51. The averments of paragraph 51 are conclusions of law
to which no responsive pleading is required. In further answer
thereto, it is denied that there is a deadlock and that Mrs.
Mangan, using .purported authority as president" is attempting
to .usurp. powers and control in the management of Statewide.
Rather, Mangan is taking proper and authorized actions as
President of Statewide. The Statewide by-laws are written
documents which speak for themselves so that any attempt to
interpret the effect of the by-laws is denied.
52. The averments of paragraph 52 are conclusions of law
to which no responsive pleading is required. The averments are
further specifically denied as follows:
(a) The averments of paragraphs 43-44 are
hereby incorporated by reference;
(b) The averments of paragraphS 43-47 are
hereby incorporated by reference;
(c) The averments of paragraphs 31-33 are
hereby incorporated by reference;
(d) The averments of paragraphs 31-33 and
43-47 are hereby incorporated by
reference;
(e) The averments of paragraphs 31-33 are
hereby incorporated by reference;
further, the sale of stock was properly
triggered by Felmlee's termination of
her employment by Statewide;
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The corporate financial affairs,
matters and records are routinely open
and accessible to Winters;
(g) The averments of paragraphs 48-50 are
hereby incorporated by reference;
(f)
(h) An annual shareholders meeting in
August, 1994 was never properly called
or scheduled so could not have been
cancelled;
(i) There has been neither a request nor
refusal to reschedule the annual
shareholder's meeting;
(j) The averments of paragraphs 48-50 are
hereby incorporated by reference;
(k) Winters continues to have a meaningful
part in the affairs of Statewide.
While Felmlee was employed by Statewide
and fullfilling her contractual and
fiduciary duties to Statewide, she also
had a meaningful part in the affairs of
Statewide;
(1) The averments of paragraphs 30 and
52(k) are hereby incorporated by
reference;
(m) There has been no refusal to hold and
call an annual meeting;
(n) It is admitted that Felmlee and Winters
served such a notice;
(0) Th3 averments of paragraphs 52(h) and
31-33 are hereby incorporated by
reference.
(p) It is admitted that notification
regarding the meeting was sent as
described herein. It is denied that
the by-laws provide that shareholders
meetings may be held at other locations
as designated by 25% or more of the
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66, Admitted, with the clarification th~t no bold type/
underlining, or other means of signifying emphasis appear in
the agreement itself.
67. Denied as stated. On January 7, 1994, Felmlee stated
that she was preparing a formal letter of resignation. She
never submitted a formal letter of resignation, but Statewide
formally accepted her oral notice and Felmlee acknowledged the
reason for employment termination. Exhibit "A" is a written
document which speaks for itself.
68. Admitted, with the clarification that Felmlee resigned
her employment by Statewide.
69. Denied. On the contrary, Felmlee's interpretation of
the Buy/Sell Agreement is strained, controverted and
erroneous. The phrase "by the Corporation" clearly applies to
employment of a shareholder, not t.e.l'mina_tl.on. This meaning is
consistent with the language of the Agreement itself and is
fully consistent with the rationale for having a buy/sell
agreement in place in the first instance.
70. Denied. On the contrary, for the reasons set forth in
Statewide's Complaint and in the paragraphs set forth
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hereinabove, Felmlee is required to sell her stoak pursuant to
the Buy/Sell Agreement.
WHEREFORE, Statewide demands that Count II of the
Counterclaim be dismissed and that judgment be entered in its
favor as prayed for in its Complaint.
COUltT ..111 .-.ATTOJUtD"Bl"EBB
71. Statewide hereby incorporates by reference the
allegations of paragraphs 1-16 of its Complaint and paragraphs
17-70 as set forth hereinabove.
72. The averments of paragraph 72 are conclusions of law
to which no responsive pleading is required. In further answer
thereto, the averments are specifically denied. For the
reasons set forth in Statewide's Complaint and paragraphs 17-70
hereinabove, this action by Statewide is properly brought in
the corporation's best interest. There is no basis in law or
fact for any award of counsel fees.
WHEREFORE, Statewide demands that Count III of the
Counterclaim be dismissed.
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6. Statewide is a closely held corporation which is owned by three shareholders.
Statewide's Complaint, 1 3.
7. Patricia J. Mangan is (a) a shareholder, (b) the President, and (c) a director of
Statewide. Felmlee's Answer, New Maller, and Counterclaim, 1 28; Statewide's Reply to
New Matter and Answer to Counterclaim, 1 28.
8. Maureen T. Winters is (a) a shareholder, (b) the Secretary, (c) the Treasurer,
and (d) a director of Statewide. Felmlee's Answer. New Maller, and Counterclaim, 129;
Statewide's Reply to New Maller and Answer to Counterclaim, 1 29.
9. Winter's sister, Eileen J. Felmlee. is (a) a shareholder, (b) the Assistant
Secretary, and (c) the Assistant Treasurer of Statewide. Felmlee's Answer, New Matter, and
Counterclaim, 1 30; Statewide's Reply to New Maller and Answer to Counterclaim, 1 30.
10. Mrs. Mangan owns 1000 shares of Statewide, while Winters and Felmlee each
own 500 shares of Statewide. Statewide's Complaint, 1 3.
11. 'In 1975, Ernest Mangan, Felmlee's and Winters' father, co-founded Statewide
Office Products. Felmlee's Answer, New Maller, and Counterclaim, 121; Statewide's
Reply to New Matter and Answer to Counterclaim, 1 21; See also, Statewide's Articles of
Incorporation attached as Exhibit "8" to Felmlee's Answer, New Matter, and Counterclaim.
12. Patricia Mangan was Ernest Mangan's second wife, and is Felmlee's and
Winters' step-mother. Felmlee's Answer, New Maller, and Counterclaim, 122; Statewide's
Reply to New Matter and Answer to Counterclaim, 1 22.
13. Patricia Mangan married Ernest Mangan in 1990,4'/2 months before Ernest
Mangan's death. Felmlee's Answer, New Maller, and Counterclaim, 123; Statewide's
Reply to New Matter and Answer to Counterclaim, 1 23.
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14. By operation of this Commonwealth's intestacy laws, Patricia Manaan received
from the estate of Ernest Mangan 50% of the stock in Statewide, while Felmlee and Winters
each received 25%; this comprising all of the outstanding stock. Felmlee's Answer, New
Matter, and Counterclaim, 1 24; Statewide's Reply to New Maller and Answer to
Counterclaim, 1 24.
15. Statewide commenced this suit contending that Felmlee's admittedly voluntary
resianation of employment with Statewide purportedly triggered an obliaation to sell her
stock to Statewide under Paragraph 4 of the Buy and Sell Agreement attached as Exhibit. A.
to Statewide's Complaint, even though the language of this provision specifically states that
the buy/sell obhgation is triggered "upon the termination of employment of a shareholder by
the corporation". s.~, Exhibit" A" to the Complaint at 1 4, a copy of which is attached
hereto as a convenience to the Court as Exhibit" A".
16. Because Felmlee's legal positions advanced (a) as a defense to Statewide's
Complaint for specific performance, and (b) in support of Fehnlee's Counterclaim for
declaratory relief are essentially identical, Felmlee seeks judgment in her favor on both
Statewide's Complaint and Felmlee's Counterclaim sceking a d~.claration that the Agreement
does llil1 compel her to relinquish her stock.
17. Statewide's averred position in this easc is simply erroneous and contrary to
the plain language of Paragraph 4 of the Agreement; alternatively, the language is, at best
for Statewide, ambiguous.
18. There are no genuine issues of material fact in dispute between the parties with
respect to either Statewide's Complaint or Felmlee's Counterclaim, thereby making this
3
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Motion for Judgment on the Pleadings with respect to Statewide's Complaint and Felmlee's
Counterclaim for declaratory judgment ripe for disposition by this Court.
19. The parties do not dispute that on October I, 1992, Statewide and Mrs.
Mangan, Winters, and Felmlee, signed the Buy and Sell Agreement ("Agreement"). Ss:i:,
Felmlee's Answer, New Maller, and Counterclaim, 1 65; Statewide's Reply to New Matter
and Answer to Counterclaim, 1 65.
20. Paragraph 4 of the Agreement provides:
PURCHASE ON TERMINATION OF EMPLOYMENT
4. Upon the tennlnotlon of employment of a
shareholder by the corporatloll, or upon a
shareholder resigning as a Director and an officer
of the Corporation, all of the shares of the capital
stock of the Corporation owned by such
shareholder (hereinafter referred to as the retiring
shareholder) shall be sold and purchased provided
herein.
Aareement, 1 4 (emphasis added).
A. The Plain Language of the Agreement
Precludes the Relief Statewide Seeks.
21. The parties do not dispute that on January 7, 1994, Felmlee voluntarily
resillned from employment with Statewide; she was not terminated by the corporation. Ss:i:,
Felmlee's Answer, New Maller, and Counterclaim, 11 59, 67; Statewide's Reply to New
Matter and Answer to Counterclaim, 1159,67,68; See also, Felmlee's resignation letter
attached as Exhibit" A" to Felmlee's Answer, New Maller and Counterclaim.
22. Thus, assuming the validity of the Agreement, the "plain language" of
Paragraph 4 precludes this action to compel specific performance since the condition
4
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....,..I~'l'.,..,"'"'''''' '....-'..1..>.
In!
".''''dU@
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, ,
I,
"
Exhibit A
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BUY AND SEll AGREEMENT
AGREEMENT ~Idl thl. I.t d.V 01 octoblr . 1992. blt.lln
PATRICIA G. MANGAN Ind MAUREEN T. WINTERS Ind EilEEN J. FELMLEE, horolnllllr
IIp''lt.ly r.ferred to "' the Shareholder and togeth" "tlrrld to II thl
Sherlholdlr., end bV thlm _Ith STATEWIOE OFFICE PROOUCTS. INC.. I Pen".vlvenlo
clol' corpor.tlon, her,Jne,t., r.ferr.d to II thl Corpor.tlon.
WHEREAS. tho Sher.hold.r. .ech o_n 1.000, 500 end 500 .h.rl..
r.lp.ctl....IV. of thl 110.00 per "'Blu. .tack which conltltuf.. all of th,
out.tlndlng aherl' of cepit.' Itock of the Corpor.tlonl and,
WHEREAS. thl pertl.. b.ll,vI thet It I. In thl b..t Inllrllt 01
thl Corpor.tlon end the Shareholder. to make provlllon. for thl future
dlopo.ltlon 01 thl .herl. ot cepltel .tock 01 tho Corporetlon.
IT IS, THEREFORE, I agr.ed, In cooald.retlon of thl premia.. and
thl promla.. herein contaln.d, I. followsl
LIFETIME RESTRICTION
I. No Shareholder shall trensfer or .ncumber her ahar'l of clplte'
Itock of thl Corporetlon to any perlon, firm. or corpor.tlon .XClpt under
thl provlllon, of thla Agreement.
PURet'ASE ON DEATH
2. On the d.ath of e Shereholder (herelnaft.r rehrr.d to II
the d.cld.nt) ell of the ,har.s of the capltel stock of thl Corporltlon own.d
by he,. Ind to which she or her personll reprenntetlv. 'ahell b. entitled,
,~
I.....'
..
.
I~.II b. lold .nd purc~.I.d .. provld.d In thl. ASr....nt.
OBLIGATION OF COIlPORATION TO PURCHASE
1.1 Th. Corpor.tlon Ih.II' purch... Iro~ tho d.c.d.nt'l
p.rlonll r.prl.lnt.tlvl., and thl dlCldlntl, perlonll r.pr...nt.tlv. ,hll'
IIII to thl Corporltlon. III of tho .h.rl. of copltll .tock of thl eorpor.tlon
own,d bV thl dlcld,nt Ind to which the dlCldlnt or her plrlonal
rlpr...ntotlv.. .h.11 bl .ntltlld. It thl prlcl ..t lorth In p.r.sr.ph 3
hlreof,
CLOSING
Ib) Thl clollns 01 luch purchl" Ind thl ..II Ihlll tokl
pl.cI .t thl olllcI 01 thl Corporltlon It I dltl d.llsnltld by thl
Corporltlon. which Ihlll not b. IIIOr. thIn one hundr.d twonty (120) dlY'
following thl det. of the qUllllle.tlo" 0' the plrlonal r.prl.lnt.tivl.,
end not I... thin ten (10) deva tollowlng luch datil provided, howlv,r, '11d
clollng Ihell teke pilei regerdl... of det. of qUI' l'lcetlon 0' the plrlonel
rlpr"lnt,fIYI' within II~ (6) month. of the det, of death of the dlcld.nt.
INSURANCE
(c) I' the Corporation shall recelvl any proce.ds of env
InIU,..nc. pOlicy on the Ilf. of the decedent, . portion 0' auch proceld,
not In ')Celll of the purchllll pr ice aha II be pa I d by the Corpor at I on to the
dee_dent. perlonal representatives, such payment to be d.emed made on account
of such purChase prIce 8S designated end determined In Paragraph 3 hereot.
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DEATH OF All SHAREHOI.DERS WI nUN NINETY DAYS
CI) Th. prov III onl of th II Plrogroph 2 Ih.1I b. of no .II.ct
If .11 tho 5h.r.hold.rl Ih.1 I dl. within nln.ty (90) d'YI of .Ich oth.r.
PURCHASE PRle~
3. T~. prlc. of tho c.plt.I Itack of ..ch Ihlr.hold.r to b. lold
purlu.nt to thll Agr....nt Ih.11 b. tho book v.lu. of tho Ih.r," ., d.t.r.ln.d
on tho lilt dlY of tho mnth I.....dl.ftly proc.dlng luch d.ft of d..th or
ftr.ln.tlon of _loVl'llnt. For tho purpol' of d.ftrlllnlng book v.lu. under
the ter" of thll Agro_nt. tho book vllu. Ihlll b. d.ftrllln.d by .ddlng
., of .ny luch d.t. tho clplt.l. lurplul. .nd undlvld.d profltl .ft.r h.vlng
d.ducftd .ny r..,rv. thor.tofor. IIftblllh'D' tho lum of th.., It.1I1 Ih.11
b. dlvld.d by tho number of Iherll of c.plftl Itack ouhftndlng II of .,Id
detl, Ind the .lld quotient ,hili rlprl,ent thl book vllul of .ech ,hlrl
of c.plt.1 Itack of tho Corpor.tlon.
PURCHASE ON TERMINATION OF EMPlOYMENT
4. Upon the termlnetlon of employment of III Shlllreholder by the
Corpor.tlcn, or upon e Shereholder resigning os 0 Director end en officer
of the Corporation, II I of the sheres of the capltel stock at the Corpor.tlon
owned by such She,.ehol de" (h,"el nefter re ter,.ed to al the ret Ir 1"9
Sher,hold,r) shol I be sold end purchased provided herein.
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OOLlGATION Of CO~PORATIQN TO PURr.HASE
10' Thl Corporetlon Iholl purch..1 Irom thl Shlreholder.
ond thl Sheroholder .hol I .011 to Iho Corporltlon, III 0' thl .her.. of thl
cop I tel Ilock 0' Ihl Corporell on ownod by III d Sh.rlhol dor .1 tho pr I CI
det.r.lned pursue"t to PerBgrlph 3 of 1'hl& Agreement.
~J.!iQ
(b) The clollng tor the .11, 0' thl Ih.rl. 0' .tock purchl..d
by tho Corpor.llon Ihol I I.k. ploco II Iho prlnclpol olllco 0' thl Corporotlon
at . det. de.lgnated by the Corpor.tlon, which ,h,ll b. not more then on.
hundrod twonty (120) d.y. 'ollo.lng Iho IIr..ln.llon 0' o..ploy,,"nt 0' Iho
Shoroholdlr, ond not 11'" Ihon Iln (10) doy. 'allowing luch d.tl.
PAYMENT Of PURCHASE PRICE
(e) The pureha.. price 'or the Iherl. of .tock In the
Corpor.tlcR owned by the Shareholder Ihall b. paid I. folloWl1 The purehl..
price for the ISharl. of common .tock In the Corpor.tlon will b, .otla'led
by . cash p.yment to the Sh.r,holder It the 1'111'I' of clollng In the amount
of ten (10) percent of the pureh... price. and the Ix.cutlon of . promillory
not. by the Corporation, 8. make, to the Sherehold.r, I. PI.,.... In the amount
of the rima I n I n9 be I ance of the purchese price of the cap I hi I stock. The
promll5orv note shell be pltyeble at the Corporetlon'l option, either In ten
('0) equal annual Installments or one hundred twenty (120) equal monthly
Instillments, plus interest thereon per annum at e rate not to '~ceed eight
(8) percont.
-5-
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Th. ,.t. of Int.,nt Ih.1I b. OIutu.IIV d.to'OIln.d .t tho d.to or cla.lng
.nd I I thoro II no .gro....nt th.n tho roto .h.11 b. IIv.n 01 pore.nt por
.nnUlO. Th. p,,,,,,lua,y nato .h.11 praYld. th.t tho OI.~or .h.11 h.v. tho
p,lvll.g. 01 prop'Vlng .11 or .nv p.rt thor.af .t .nv tlOl. with Intornt
.
to d... of prlplytnlnt, thlt . d,lllIlt In tny PIV"""' whln dUI Ihlll c.ult
tho '....Inlng unp.ld b.l.ne. to b.e""" duo .nd p'V.bl. forthwith. .nd .hell
provide for thl .Ik,' to PlY ,II COltl lod '~P'"I'I of colllctlon, Including
. rl.tonablt .ttorn'Y'1 I...
INAllIL ITV OR UNWILLINGNESS TO PUIleHASE
Idl If tho Carparotlan II not lewlully .bl. to purch... .11
of lueh Iherl. 0' capltel ,'oek, or II the Corpor.Uon oth.r will Ih,11 bt
un.b I. or r.fu'l to pureh... III of thl Sherlhol de, II Ih.rl' of Itock, the
obllgetlan of tho earparetlan with "Ip.et to tho Iher.. which tho Carpa,etlan
Ihlll be un,blt or r.fu,1 to purehl" Ihell be deemed 1.lumed proportlon,t,ly
bV tho r.melnlng Sher.hald.ro.
DEATH Of ~EMAINING 5HAREHOlDE~5 PRIOR TO CLOSING
1.1 Tho praylolon of thlo Poregroph 4 oholl bo of no .ff.ct
If .11 01 tho Shorohold.,. Iholl die pr lor to tho cloolng 01 tho III. of
luch Itock to tho Corporetlon.
PV~CHASE BY SIl^~EHOLOERS
" Whlne",.r any Shareholder purcheu& Iher.. of c.plt,' .tock
und,r .hll Agr..ment, lueh purchour (unle'I ,I'll shell hevI paid the Intlr.
purchase PI" lei lo enh) ,hell, following the delivery of the purchllld &tock,
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upo, tormlnotlon of thll ~groomont. tho Socrotory 0' tho Corporotlon
.holl, upon tondor of tho cortlllcot.. 01 Itock. doloto tho log.nd .ndo...d
th.r.on pur.uont to porogr.ph 7 01 thll ~gr..m.nt.
llOTICES
", Any notlc., dlm'Md, of'.r, or other wrltt.n Instrument required
or permitted to b. glvln, mid., or ..nt herlund.r .hl.1 b, In writing. slgnld
by th. perty g','ng or OIoklng tho o.m., ond .h.11 b. ..nt by rogllhr.d moll
to .11 p.rtl.. h.r.to .Imulton,oully .t th.lr r..p.ctl.o .ddr..... h.r.lnolt.r
lit forth. Any not'cl. d....,nd, off.r, or other written inatrumlnt required
to b. gluen to or ..nt to tho .Iht. 01 ony d.c....d Shor.holdor Ih.1I b.
.fUnld end lint, In Ilk, IIlnn.r, Iddrl...d to the plrlon" rlpr...nt.tlvl
of luch d.c....d Plr.on It hi. or hlr Iddr..., or, If thlr. b, no luch
poroon.' r.pr..ontotl.., to tho ..toto of tho d.c....d Shor.holder, ot hi.
Qt' h.r .ddro.. h.r.ln.fhr ..t forth. ~ny p.rty h.r.to Iholl hO'. tho right
to ch.ng. tho p loco to wh I ch ony .uch not I c.. off.r, d_nd. or wr I t I ng .holl
bo ..nt to her by 1I001Ior notlc. I.nt In Ilk. Nnnor to .11 portl.. her.to.
Thl date of ..ailing of any off.r, demand, notlcl, or Instrument .hall be
d....d to be the date of luch off.r. dlmand, notlc. or InltrUfI'IIn't and ,hall
bo .ff.ctlue from .uch doh. Th. .ddr....1 of tho portl.1 to thll ~gr.'lIIOnt
.r. IS followal
(0) Potrlclo G. Mong.n 2'9 Wood Str.ot
Comp Hili, P~ 17011
Cb) Mlur..n T. Wlnt,r. 2105 ~.p.n Orl..
Mechanlclburg, PA 17055
Cc) EII..n J. F.lml.. 16 51nclolr Rood
Mechonlclburg. p~ 17055
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Mangan received 50% of the outstanding stock In Statewide (1,000 shares) by
opftratlon of Pennsylvania Intestacy laws. Felmlee and Winters each received 25%
of the Statewide stock (500 shares each).
On October 1, 1992, Felmlee, Winters and Statewide, through Mrs.
Mangan, signed the Instant Buy/Sell Agreement which Is at Issue. Mrs. Mangan
undertook the steps to amend the previous agreement that had been In place
between Mangan and Trlscarl; to obtain legal advice on behalf of Statewide for
review of the revised buy/sell agreement; and to distribute copies of the
agreements to Winters and Felmlee. Paragraph 4 of the Agreement, entitled
.PURCHASE ON TERMINATION OF EMPLOYMENT,. contains the provision at
Issue, stated as follows:
4.
~, . . . all the shares of the capital stock of the
corporation owned by such Shareholder (hereinafter referred to
as the retiring shareholder) shall be sold and
purchased provided herein.
Agreement 114 (emphasis added).
Mrs. Mangan Is the current president of Statewide. It Is undisputed
that on January 7, 1994, Felmlee voluntarily resigned her employment with
Statewide.
Statewide has flied suit seeking to compel specific performance of
Felmlee to sell her 500 shares of Statewide stock back to the corporation, based
on Paragraph 4 of the Agreement. Thereafter, Felmlee asserted a counterclaim
2
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seeking a declaratory judgment that she need not sell her stock back to Statewide,
She next flied this Instant motion for Judgment on the Pleadings as to Statewide's
complaint In equity and as to her counterclaim. Statewide contends that the
language In Paragraph 4 of the Agreement obligates Felmlee to sell her stock back
to Statewide, Irrespective of the fact that she voluntarily resigned from Statewide.
Conversely, Felmlee contends that the buyback provision of the contract Is only
triggered when a shareholder Is terminated from Statewide by Statewide. We
agree with Felmlee's contentions.
~
Pennsylvania Rule of Civil Procedure No. 1034 provides that 'after the
pleadings are closed, but within such time as not to delay the trial, any party may
move for judgment on the pleadings.' Pa.R.C.P. No. 1034. Such a motion may
only be granted where no material facts are at issue and the law is clear that trial
would be a fruitless exercise. , 156 Pa,
Commonwealth Ct, 299, 301, 627 A.2d 248, 249 (1993). In determining whether
judgment on the pleadings should be permitted, the Court must restrict Its view of
the facts to those appearing in the pleadings themselves or to any documents or
exhibits properly attached to them. , 414 Pa,
Superior Ct. 6, ,0,606 A.2d 470, 471 (1992). As such, a motion Is In the nature
of a demurrer and all of the nonmovant's well-pleaded allegations must be viewed
as true, "but only those facts specifically admitted by the non movant may be
3
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considered against him.' ,150 Pa, Commonwealth
Ct. 21, 24, 614 A.2d 338, 339 (1992),~, 534 Pa, 651,627 A.2d 181
(1993). Pennsylvania courts have held that the granting of a motion for Judgment
on the pleadings may be appropriate In cases that turn upon the construction of a
written agreement. GaI.Io v. J.C. Penney Cas. Ins. Co., 328 Pa, Superior Ct 267,
270.271, 476 A.2d 1322, 1324 (1984).
Under Pennsylvania law, It Is clear that the Interpretation of a contract Is a
question of law to be resolved by the court. , 432 Pa.
Superior Ct. 476, 481, 639 A.2d 37,39 (1994). In Interpreting a document, the
preliminary Inquiry Is determining whether the terms of the contract are ambiguous,
ld. To determine whether there Is ambiguity, 'It Is proper for the court to hear
evidence from both parties and then decide whether there are objective Indications
that the terms of the contract are subject to different meanings.' ~
KrJzovens~, 425 Pa, Superior Ct. 204, 212, 624 A.2d 638,643, appeal~,
536 Pa, 626, 637 A.2d 287 (1993). In addition, the court must view the contract
as a whole. f::l.IDQJn at 481, 639 A.2d at 39.
A contract Is not ambiguous If the court can determine Its meaning 'without
any guide other than a knowledge of the simple facts on which, from the nature of
language In general, Its meaning depends,' Metzger V. Clifford ~Ity Corp., 327
Pa, Superior Ct. 377, 386, 476 A.2d 1, 5 (1984). Nor Is a contract deemed
ambiguous by the mere fact that the parties do not agree upon Its proper
4
.-.,
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construction. I.d. Where the contract language Is considered clear and
unambiguous, 'the focus of the Interpretation Is upon the terms of the agreement
8S manifestly expressed rather than on the silent Intent of the parties.' Keenan
v. Scott TownshIp Aut~, 151 Pa. Commonwealth Ct. 225,231,616 A.2d 751,
754 (1992), aooeal. ~, 535 Pa, 671, 634 A.2d 1118 (1993). The rationale Is
that the parties have the right to make their own contract and It Is not the function
of the court to give It a construction In conflict with the accepted and plain meaning
of the language used. Meeting !:louse ~, 427 Pa, Superior Ct.
118, 126, 628 A.2d 854, 857 (1993), appeal ~, 642 A.2d 486.
In the Instant case, the full text of paragraph 4 specificallY provides:
4. UDon the termlnat!Qn..Qf emolovment of a sharetJQld.m.
~, or upon a shareholder resigning as a Director and
an officer of the Corporation, all the shares of the capital stock of the
corporation owned by such Shareholder (hereinafter referred to
as the retiring shareholder) shall be sold and purchased provided
herein.
Agreement ~4 (emphasis added).
Felmlee contends that the plain language of the Agreement precludes the
relief that Statewide seeks, I.e., the mandatory sale of the stock back to Statewide.
Alternatively, Felmlee contends that the above paragraph Is ambiguous and must
be construed most strongly against Statewide. Statewide argues that the contract
language clearly bestows an obligation upon Felmlee because the phrase 'by the
5
~
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Corpl)ratlon" modifies the phrase "employment of the shareholder" and not the
phrase "termination..
We find that the language of the provision at Issue Is unambiguous. The
terms are clear and an objective view of the sentence Indicates only one meaning:
that the mandatary buy/sell provision Is only triggered upon the termination of
employment by Statewide.
Statewide points to a number of cases which rely on a certain rule of
English grammar. Specifically, In v , 507
Pa, 53, 488 A.2d 270 (1985), our Supreme court stated: "Unless plainly meant
otherwise a modifying clause operates only on the phrase preceding It." ll1. at 60,
488 A.2d at 273. Statewide then cites a number of cases where the courts relied
on this principle of grammar when Interpreting lengthy and convoluted statutory
provisions. It Is noteworthy that In most of these cases the modifying clauses were
remote in space from the phrases that the unsuccessful proponents sought to
modify. The courts rejected such phrases in favor of the Immediately preceding
phrases. (~ Commonwealth V. WI~, 525 Pa, 216, 579 A.2d 869 (1990)
where the Supreme Court held that the phrase in question modified the phrase
directly connected to It, rather than the word "positioned remotely from [it]." J.d. at
219, 579 A.2d at 870.)
However, In the Instant case, we are not faced with Interpreting lengthy
statutory provisions with multiple commas and remote clauses. To the contrary,
6
,,,",,
--
the disputed words are within one short clause and the language Is clear and to
the point. Therefore, the phrase "by the Corporation" applies to the Immediately
preceding phrase "termination of employment of a shareholder" and not Just to the
words "employment of a shareholder' as Statewide contends. In fact, even If the
English rulos of grammar mandate Statewide's Interpretation, Statewide's argument
falls when the sentence Is read in context with the word 'termination.'
Statewide tries to circumvent the clear meaning and common usage of
"termination" as used In this sentence by pointing to various dictionary definitions
which Statewide argues may suggest a bilateral act that could be done by the
employee as well as by the corporation.' In essence, Statewide argues the word
'termination" can be Interchanged with the word "resignation". 2 However, when
the terms are used In the employment context, this argument Is without merit and
the "unless plainly meant otherwise" clause Is the rule of grammar that Statewide
quotes Is triggered.
IStatewlde's quoted dictionary definitions of 'termination" Include: "end In time
or existence" with the synonyms "close," "cessation" and "conclusion." (Stalewlde's
Brief, p. 12.) However, our dictionary definitions of termination when used In the
employment context are "to dismiss from employment; flre"Webster's New World
Qlctlonary, 1984; and "to dismiss from a job; fire', The Random House Dictionary of
the Enallsh Language, Second Edition, Unabridged, 1987.
'Our dictionary definitions of "resign" when used in the employment context are:
'to give up (a claim, or an office, position, etc.)" Webster's new World Dlctlonarv,
1984; and "to give up an office or position," with the synonyms 'abdicate," "
renounce," " quit," and "leave," Ine Random House Dlctlonarv of the English
LanguaQe, Second Edition, unabridged, 1987.
7
''"'''I
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Statewide also falls to acknowledge that the phrase In dispute Is
Immediately succeeded by the phrase "or upon a Shareholder maJgnJng as a
Director and an officer of the Corporation." (emphasis added.) As "termination"
and "resignation" are used within the same sentence, It Is clear that the words
denote specific acts which cannot be used Interchangeably. Moreover, even If
Statewide's definition of termination was employed, It logically follows that a word
other than the word "by" In the phrase "by the corporation" should have been used.
Obviously, It was not. Therefore, the common meaning of the terms as
specifically used In this sentence mandate that "termination" be by the corporation
and "resignation" be by the shareholder to activate the mandatory buy/sell
provisions of this contract. If the parties meant to suggest otherwise, they should
have so provided.
Statewide also contends that Felmlee's Interpretation would be more credible
If a comma had been placed after the word "shareholder," to make the sentence
read: "Upon termination of employment of a shareholder, by the corporation, . . ."
Statewide relies upon Commonwealth v. WlIll.mI!~, supra. where the Court
suggested that the losing party may have had a stronger argument had a comma
been present In the statute. However, unlike WIIIlsm:l.a, which Involved Interpreting
multiple clauses within one sentence, the present Issue Involves the words within
one short clause. As such, a comma Is unnecessary and extraneous.
In sum, the terms of this contract are unambiguous and Its plain meaning
8
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'1/10/15
- .
PYB510
1994-05304
cumbe;~nd ~ounty
""""'Iivi CUlt
COM LAINT
Prothonotary's aLfice Page 1
Inguirv r<
- EQUITY Filed.........
~/ l~{U
Superior Co
Execution Date
Bat/Dis/Gotd. .
JUI'y Trial. . . .
................................................................................
General Index Attorney Info
~it~f~~D~I~~~~C~ PRODUCTS INC E~~~~5l~~ ~H~~I~~~E~A~IEL L
Judge Ass igned I
Judgment I
190.37
0/00/00
0/00/00
Judgment Inde'l(
STATEWIDE OFFICE PRODUCTS INC 190.37 PRAECIPE JUDGMENT
..........................................................................*...**
· Date Entries *
.......*......*..............................*...........................*......
xg~~~~l~~E-O~Q~~A~ICE FOR DEFT BY JAMES J KUTZ ESQ.
ANSWER -NEW MATTER AND COUNTERCLAIM OF DEFENDANT EILEEN J FELMLEE
TO THE COMPLAINT
ST~TEWIDE OFFICE PRODUCTS INC'S REPLY TO NEW MATTER AND ANSWER
TO COUNTERCLAIM
~~~g~P~FFg~F~~BA~~1cgO~~Ekg~A~~M~E~iL~~NJ~M~~L~L~~T~O~S9UDGMENT
~~L~~~Ef~E~gO~~~R~fAi~ ~~~R~~~Fb~~L~~~~5ft~NAEl~E~QUITY AMD
03/17/95 ~~I~~9ND~~~Ng~~~'cS5~~~~cf~~RL~LKiNT~~~f~RMgT~g~ ~5~RJrlDGMENT
ON PLEADINGS PLFF EILEEN J FELMLEE'S MOTION FOR JUDGMENT ON
PLEADINGS IS GRANTED AS IS COUNTERCLAIM FOR DECLARATORY RELIEF
03/31/95 PRAECIPE FOR ENTRY OF JUDGMENT AND JUDGMENT ENTERED AGAINST
PLAINTIFF/COUNTERCLAIM
03/31/95 BILL OF COSTS AND PROTHONOTARY'S TAX OF COSTS UPON STATEWIDE
OFFICE PRODUCTS INC JAMES J KUTZ ESOUIRE
..............*..............................*...;...............**....****..*.*
· Escrow Information .
· Fees & Debits Bea Bal Pvmts / Ad i End Bal *
..............*.................f............*..,.........*............****...**
n~~~~u
11/09/94
H~H~U
35.00 35.00 .00
.58 .50 '.88
5.0 5.00
5.00 5.08 .08
9.00 9.0 .0
------------------------ ------------
54.50 54.50 .00
................................................................................
* End of Case Information *
......*........**............................*...................***********..**
COMPLAINT FILED
TAX ON CMPLT
SETTLEMENT
JCP FEE
JDMT
I ?> ,