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Home My WebLink About02-3947 Andrew W. Barbin, Esquire JAMES SMITH DURKIN & CONNELLY, LLP 134 Sipe Avenue Hummelstown, PA 17036 (717) 533-3280 Attorneys for Perfect Solutions, Inc. CAVANAUGH MICHAELS, LTD. : IN THE COURT OF COMMON PLEAS 601 East Simpson Street : CUMBERLAND COUNTY, PENNSYLVANIA Mechanicsburg, PA 17055-3456, Plaintiff CIVIL ACTION - LAW V. SMITH & MASON FAMILY PRACTICE ASSOCIATES, LTD. 3992 Carlisle Road Dover, PA 17315, Defendant DOCKET NO. Q? -,39q7 ( !PRAECIPE FOR A WRIT OF SUMMONS To: Curt Long, Prothonotary Cumberland County Court of Common Pleas One Courthouse Square Carlisle, PA 17013-3387 Cavanaugh Michaels, Ltd., by and through counsel, James Smith Durkin & Connelly, LLP, hereby files this Praecipe for a Writ of Summons to be issued to the Defendant, Smith & Mason Family Practice Associates, Ltd., in the form attached hereto. JAMES SMITH DURKIN & CONNELLY, LLP Respectfully ' ? dread W. Barbin A ty. I.D. #43571 P. O. Box 650 Hershey, PA 17033 (717) 533-3280 Counsel for Plaintiff Cavanaugh Michaels, Ltd. DATED: August 15, 2002 Andrew W. Barbin, Esquire JAMES SMITH DURKIN & CONNELLY, LLP 134 Sipe Avenue Hummelstowu, PA 17036 (717) 533-3280 Attorneys for Perfect Solutions, Inc. CAVANAUGH MICHAELS, LTD. 601 East Simpson Street Mechanicsburg, PA 17055-3456, Plaintiff V. SMITH & MASON FAMILY PRACTICE ASSOCIATES, LTD. 3992 Carlisle Road Dover, PA 17315, Defendant : IN THE COURT OF COMMON PLEAS : CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW DOCKET NO. 0;?, - ,39 Y7 WRIT OF SUMMONS To: SMITH & MASON FAMILY PRACTICE ASSOCIATES, LTD. 3992 Carlisle Road Dover, PA 17315 You are hereby notified that Cavanaugh Michaels, Ltd. has commenced civil causes of action against you. DATED: Q( ?Q Ze?y Curt Long, Prothonotary t Cumberland County Court of Common Pleas One Courthouse Square Carlisle, PA 17013-3387 Cumberland County Prothonotary By: (Prothonotary or Dept, (Seal of Court) N (? "?E U ;4 O c r- -.S, ' a cn ?s.? n ?? .,; i? -? rv SHERIFF'S RETURN - OUT OF COUNTY CASE NO: 2002-03947 P COMMONWEALTH OF PENNSYLVANIA: COUNTY OF CUMBERLAND CAVANAUGH MICHAELS LTD VS SMITH & MASON FAMILY PRACTICE R. Thomas Kline , Sheriff or Deputy Sheriff who being duly sworn according to law, says, that he made a diligent search and and inquiry for the within named DEFENDANT to wit: SMITH & MASON FAMILY PRACTICE ASSOCIATES LTD but was unable to locate Them in his bailiwick. He therefore deputized the sheriff of YORK County, Pennsylvania, to serve the within WRIT OF SUMMONS On ?su1 ZUU2 , this office was in receipt attached return from YORK Sheriff's Costs: So answe ?- Docketing 18.00 Out of County 9.00 t--- ?i` Surcharge 10.00 R. Thomas Kline Dep York County 27.30 Sheriff of Cumberland County .00 64.30 09/24/2002 JAMES SMITH DURKIN CONNELLY Sworn and subscribed to before me this 7 ? day of ?2rro?7- A.D. Prothonota'ryT7 7-" COUNTY OF YORK OFFICE OF THE SHERIFF 28 EAST MARKET ST., YORK, PA 17401 1. SERVICE CALL (717) 771.9601 SHERIFF SERVICE PROCESS RECEIPT and AFFIDAVIT OF RETURN Michaels, LTD Date 3. DEFENDANTS/ Writ of Sumnons Smith & Mason Family Practice Associates, LTD SERVE ` 5. NAME OF INDIVIDUAL, COMPANY, CORPORATION, ETC. TO SERVE OR DESCRIPTION OF PROPERTY TO BE LEVIED, ATTACHED, OR SOLD. Smith & Mason Family Practice Associates, LTD 6. ADDRESS (STREET OR RFO WITH BOX NUMBER, APT. NO., -ITV, BORO, PNP., STATE AND ZIP CODE) AT 3992 Carlisle Road Dover, PA 17315 ?,y? ? 1ST CLASS MAIL J POSTED JOTHER 7. INDICATE SERVICE: J PERSONAL ? PERSON IN CHARGE ?uu1EPUTIZE 11 1,10 NOW Auaust 27 20 02 I, SHERIFF OF COUNY ? k, do hereby. , e the sheriff of yclrk COUNTY to execute tlrfig N[+tjrR4Wre ccording to law. This deputization being made at the request and risk of the plaintiff. SHERIFF OF COUNTY 8. SPECIAL INSTRUCTIONS OR OTHER INFORMATION THAT WILL ASSIST IN EXPEDITING SERVICE: Ctunberland OUT OF COUNTY CUMBERLAND ADVANCED FEE PAID BY SHERIFF NOTE: ONLY APPLICABLE ON WRIT OF EXECUTION: N.B. WAIVER OF WATCHMAN - Any deputy sheriff levying upon or attaching any property under within writ may leave same without a watchman, in custody of whomever is found in possession, after notifying person of levy or attachment, without liability on the part of such deputy or the sheriff to any plaintiff herein for any loss, destruction, or removal of any property before sheriffs sale thereof. --T7533_ TELEPHONE NUMBER 11. DATE FILED 1. TYPE?Nn17FdIDDRERF\HIi1NN U/ bG AT650d I HEY; PA 17033 3280 8-19-02 BELOW: (This area must be completed if notice is to CUMBERLAND CO. SHERIFF 13. lacknowledgereceiptofthewdt R. ARHENS or complaint as indicated above. 16. HOW SERVED'. PERSONAL ( ) RESIDENCE( ) POSTED( ) POE 17. J I hereby certify and return a NOT FOUND because I am unable to locate the individual, comps ......... ..?.wr,nnni iei e , I I I.ST AD9R HERE IF NOT Sy9M11 ABOVE 21. ATTEMPTS Date I Time L125 I Int. 23. Advance Costs 24. Service Costs 75. 00 34. Foreign County Costs 35. Advance 41. AFFIRMED add subscribed to 42. day of 25. N/F 7.30 36. Service INSTRUCTIONS PLEASE TYPE ONLY LINE 1 THRU 12 DO NOT DETACH ANY COPIES 2. COURTD' M@T47 civil 4. TYPE OFLLWRIIIT OR COMPLAINT r 14. DATE REUtIVtU crP^=„.""'=°""I a ••-•- 8-.8-02 9-18-02 SHERIFF'S OFFICE ( ) OTHER ( ) SEE REMARKS BELOW to above. (Se emarks belt . p to Defends t) 19. Date of Service 20. Time of Servi ° - -Oa Time Miles Int. Date Ime Miles Int. Date tme Miles Int. -17Zz ostage 1 28 Sub Total 25.30 37. Notary Cert. 38. ILL 50. I ACKNOWLEDGE RECEIPT OF THE Foreign Pound 30. Notary 31. Surchg. 32. Tot. Costs 33. Costs UUeo tuna au 2 00 7.30 47.70 -ipneto /Not Found N. Total Costs 40. Costs Due or Refund E 19-11-02 ---- 49. DATE DATE 1. WHITE- Issuing Authonty 2. PINK - Attorney 3 . CANARY - Sheriffs Office 4. BLUE - Sheriffs Office Andrew W. Barbin, Esquire ANDREW W. BARBIN, P.C. 5020 Ritter Road, Suite 109 Mechanicsburg, PA 17055 (717) 506-4670 Attorneys for Perfect Solutions, Inc. CAVANAUGH MICHAELS, LTD. : IN THE COURT OF COMMON PLEAS Plaintiff : CUMBERLAND COUNTY, PENNSYLVANIA V. CIVIL ACTION - LAW SMITH & MASON FAMILY PRACTICE ASSOCIATES, LTD. DOCKET NO. 02-3947 Civil Term Defendant PRAECIPE TO UPDATE ENTRY OF APPEARANCE To: Curt Long, Prothonotary Please entry the appearance of the undersigned as counsel for Plaintiff in the above referenced matter. Respectfully submitted, Andrew W. Barbin Atty. I.D. #43571 ANDREW W. BARBnv, P.C. 5020 Ritter Road, Suite 109 Mechanicsburg, PA 17055 (717) 506-4670 Counsel for Plaintiff DATED: December 10, 2002 Andrew W. Barbin, Esquire ANDREW W. BARBiN, P.C. 5020 Ritter Road, Suite 109 Mechanicsburg, PA 17055 (717) 5064670 CAVANAUGH MICHAELS, LTD. Plaintiff V. SMITH & MASON FAMILY PRACTICE ASSOCIATES, LTD. Defendant Attorneys for Perfect Solutions, Inc. : IN THE COURT OF COMMON PLEAS : CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW DOCKET NO. 02-3947 Civil Term CERTIFICATE OF SERVICE I, ANDREW W. BARBIN, do hereby certify that on the date indicated below, served a true and correct copy of the foregoing PRAECIPE To UPDATE ENTRY OF APPEARANCE by having the foregoing document served by United States first-class mail, postage prepaid addressed to the following: Smith & Mason Family Practice Associates, Ltd. 3992 Carlisle Road Dover, PA 17315 1;?4eu ed- ,>' - Andrew W. Barbin DATED: December 10, 2002 rv V) - !V '_ ) `t7 IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CAVANAUGH MICHAELS, LTD. Plaintiff , V. SMITH & MASON FAMILY PRACTICE ASSOCIATES, LTD. , Defendant Docket No. 02-3947 Civil Term Civil Action - Law PRAECIPE FOR ENTRY OF APPEARANCE TO THE PROTHONOTARY: Please enter my appearance on behalf of the Defendant, Smith & Mason Family Practice Associates, Ltd., in the above matter. DATE: , 2002 F:\USERS\NS\SM1TH&.MAS\CA VANAUG\ENTRYAPP. PRA 12/23/02 Respectfully submitted, STOCK AND LEADER it A. Slenker, Esquire I.D. #: 77974 Attorney for Defendant Susquehamla Commerce Center East Building, 6th Floor 211 W. Philadelphia Street York, PA 17404 717/846-9800 (Phone) IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CAVANAUGH MICHAELS, LTD. Docket No. 02-3947 Civil Term Plaintiff V. , SMITH & MASON FAMILY PRACTICE ASSOCIATES, LTD. Defendant Civil Action - Law CERTIFICATE OF SERVICE AND NOW, this -?4s-z- day of LLIDOLU , 2002, I, Lynn B. Lowe, as secretary for Neil A. Slenker, Esquire, of the law firm of Stock and Leader, attorneys for Defendant, hereby certify that I served the within Praecipe for Entry of Appearance this day by depositing the same in the United States mail, postage prepaid, in York, Pennsylvania, addressed to: Andrew W. Barbin ANDREW W. BARBIN, P.C. 5020 Ritter Road, Suite 109 Mechanicsburg, PA 17055 STOCK AND LEADER (g? By ') Lynn B. Lowe, Secretary for Neil A. Slenker, Esquire Attorney for Defendant Susquehanna Commerce Center East Building, 6th Floor 221 W. Philadelphia Street York, PA 17404 Telephone: (717) 846-9800 C- CD t; t cY Andrew W. Barbin, Esquire ANDREW W. BARBIN, P.C. 5020 Ritter Road, Suite 109 Mechanicsburg, PA 17055 (717) 506-4670 PERFECT SOLUTIONS, LTD. Plaintiff V. PROTOLOGICS FAMILY PRACTICE ASSOCIATES, LTD. Defendant Attorneys for Perfect Solutions, Inc. : IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW DOCKET NO. 02-3947 Civil Term NOTICE YOU HAVE BEEN SUED IN COURT. If you wish to defend against the claims set forth in the following pages, you must take action within twenty (20) days after this Complaint and Notice are served, by entering a written appearance personally or by 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 LAWYER REFERRAL SERVICE Cumberland County Bar Association 2 Liberty Avenue Carlisle, PA 17013 (717) 249-3166 or 800-990-9108 AVISO USTED HA SIDO DEMANDADO/A EN CORTE. Si usted desea defenderse de las demandas que se presentan mas adelante en las siguientes paginas, debe tomar acci6n dentro de los pr6ximos veinte (20) dias despues de la notificaci6n de esta Demanda y Aviso radicando personalmente o por medio de un abogado una comparecencia escrita y radicando en la Corte por escrito sus defensas de, y objecciones a, las demandas presentadas aqui en contra suya. Se le advierte de que si usted falla de tomar acci6n como se describe anteriormente, el caso puede proceder sin usted y un fallo por cualquier suma de dinero reclamada en la demanda o cualquier otra reclamaci6n o remedio solicitado por el demandante puede ser dictado en contra suya por la Corte sin mas aviso adicional. Usted puede perder dinero o propiedad u otros derechos importantes para usted. USTED DEBE LLEVAR ESTE DOCUMENTO A SU ABOGADO INMEDIATAMENTE. SI USTED NO TIENE UN ABOGADO, LLAME O VAYA A LA SIGUIENTE OFICINA. ESTA OFICINA PUEDE PROVEERLE INFORMACION A CERCA DE COMO CONSEGUIR UN ABOGADO. SI USTED NO PUEDE PAGAR POR LOS SERVICIOS DE UN ABOGADO, ES POSIBLE QUE ESTA OFICINA LE PUEDA PROVEER INFORMACION SOBRE AGENCIAS QUE OFREZCAN SERVICIOS LEGALES SIN CARGO O BAJO COSTO A PERSONAS QUE CUALIFICAN. CUMBERLAND COUNTY LAWYER REFERRAL SERVICE Cumberland County Bar Association 2 Liberty Avenue Carlisle, PA 17013 (717) 249-3166 or 800-990-9108 Respectfully submitted, Andrew W. Barbin, Esquire Atty. I.D. 43571 ANDRFP? W. BARBIN, P.C. 5020 Ritter Road, Suite 109 Mechanicsburg, PA 17055 717-506-4670 DATED: 2 Andrew W. Barbin, Esquire ANDREW W. BARBIN, P.C. 5020 RITTER ROAD, SUITE 109 MECHANICSBURO,PA 17055 717-506-4670 PERFECT SOLUTIONS, INC. 601 East Simpson Street Mechanicsburg, PA 17055-3456, Plaintiff Attorneys for Perfect Solutions, Inc. : IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW V. PROTOLOGICS CORPORATION 1517 Reisterstown Road, Suite 202 Baltimore, MD 21208, Defendant DOCKET NO. 02-1584 Civil Term COMPLAINT Plaintiff, Perfect Solutions, Inc., (Perfect Solutions), by and through undersigned counsel, make this Complaint and aver as follows: PARTIES 1. Plaintiff, Perfect Solutions, Inc., (Perfect Solutions) is a Pennsylvania corporation with principle place of business in Mechanicsburg, Cumberland County, Pennsylvania. 2. Defendant, Protologics Corporation (Protologics), is a Maryland corporation with offices in Baltimore, Maryland. JURISDICTION AND VENUE 3. The events which give rise to this action occurred in Cumberland County, Pennsylvania. 4. Jurisdiction and venue are proper in the Court of Common Pleas of Cumberland County. FACTS COMMON TO ALL COUNTS 5. Perfect Solutions provides professional healthcare management consulting services for a fee. 6. Protologics is a software development company which sought to introduce its software in the Pennsylvania healthcare market. 7. Perfect Solutions became aware of the ProtoMED product of Protologics. 8. As represented by Protologics, the ProtoMED product would present singular advantages to Perfect Solutions clients. 9. Protologics, through Lawrence Walsh and other agents and employees, provided detailed favorable descriptions of the characteristics and performance of its product, the state of development, and state of implementation, availability of user manuals and nature and quality of customer support. 10. Availability of user manuals and the nature and quality of customer support, are critical factors for consultants and end users in the medical practice field. 11. Protologics misrepresented its product as unique regarding its Claims Management Data Manager, when there was a substantially similar competitive product with this feature. 12. Protologics misrepresented its product as unique regarding its Electronic Medical Records feature when it was not, and when several competitors had implemented a fully integrated feature and Protologics had not. 13. Protologics dropped development of their Electronic Medical Records feature, promised to integrate the product of another vendor, but did not adequately integrate that product. 2 14. Protologics misrepresented itself as a solvent and successful company, but has since disclosed that it lost money the past five years and was judgment proof, rendering any warranty offered to potential buyers essentially illusory and making it impossible to ethically market its product. 15. Protologics intentionally or negligently, materially misrepresented the quality and capabilities of the ProtoMED product, the state of development, state of implementation, availability of user manuals and nature and quality of sales and customer support available and to be provided. 16. The misrepresentations were intended to induce and in fact, directly and proximately induced Perfect Solutions to enter into a contract with Protologics to its detriment. 17. The reliance of Perfect Solutions upon the misrepresentations was reasonable. 18. As a direct and proximate result of the misrepresentations entered into an Independent Dealership Agreement and purchased five licenses for the ProtoMED product under that agreement at the price of $55,000. 19. Protologics continued to misrepresent the quality and capabilities of the ProtoMED product, the state of development, state of implementation, availability of user manuals and nature and quality of sales and customer support available and to be provided. 20. In reasonable reliance on the ongoing misrepresentations Perfect Solutions hired new staff and devoted substantial employee work time to development and implementation of a sales plan for the product. 21. The basic thrust of the marketing plan was to identify a few particularly good prospects have them purchase and implement the product, iron out any user concerns and then use the new clients as critical references in a general marketing push to existing users of Perfect 3 Solutions' sister company's consulting services customers and leads generated from the related consulting business. 22. Protologics was to facilitate this process by putting together marketing materials in accordance with the contract, but Protologics did not provide the required materials. 23. Protologics breached the contract by offering marketing materials only for an additional fee. 24. The absence of the promised user manual was particularly damaging to marketing efforts, as potential customers were leery of software for which a user manual was not available and "coming soon." 25. Under the contract, Protologics was to provide training to Perfect Solutions staff, however, the training was inadequate. 26. The "training" which was provided was menu/submenu driven, rather than work flow oriented; it was like being taught to drive by being given, an owners manual, and then each part identified. 27. The training did not attempt to demonstrate the operation of the program in a simulated office work environment, and so was virtually useless for marketing or troubleshooting with prospective customers. 28. Protologics' sales support was materially inadequate, and their failure to provide timely responses to basic questions regarding the system resulted in lost sales opportunities and substantial wasted marketing expenses. 29. While Mr. Walsh indicated general availability for demonstrations, his staff did not provide the technical support necessary to allow Perfect Solutions staff to market the product themselves. 4 30. Perfect Solutions provided substantial expert feedback and suggestions regarding potential users' problems, which Protologics ignored and refused to address. 31. The continued failure to provide a user manual increased reliance upon phone technical support. 32. Protologics also failed to provide adequate integrated or web based help and/or FAQ support for the software, also rendering the live company phone technical support more critical. 33. Protologics breached its contract by failing to provide adequate phone technical support. 34. The phone technical support provided was inadequate at inception and deteriorated over time. 35. Protologics breached the agreement by proceeding on a protected lead with respect to the Loudon Medical Group, excluding Perfect Solutions, and losing the sale. 36. Protologics failed to provide timely copies of updates and new versions, and provided inadequate and incorrect install instructions which resulted in the loss of sales opportunities and wasted employee time. 37. Notwithstanding hindrances and interferences caused by Protologics, Perfect Solutions secured a sale to Oakwood Center. 38. Protologics made a series of misrepresentations to Perfect Solutions and to Oakwood Center regarding the quality and capabilities of the PIotO1V[ED product, the state of development, state of implementation, availability of user manuals, nature and quality of sales and customer support available and to be provided, the timing of installation and the timing when the product would be operational. 5 39. Protologics agreed to undertake the installation because of problems with installation of its new version, and to address other concerns which had been raised by Perfect Solutions regarding the product and the lack of adequate manuals and help files. 40. Protologics then repeatedly and unreasonably delayed installation. 41. Protologics rescheduled the Oakwood Center installation at the eleventh hour making it impossible for Perfect Solutions to even attend the installation. 42. Protologics intentionally withheld information regarding the absence of all required certifications for electronic billing when they did not have them, which resulted in an additional delay to implementation for Oakwood Center. 43. The patent inadequacy in phone technical support was a substantial factor in the loss of the Oakwood sale (discussed more fully below); their repeated calls went without response for months, and when they complained about poor technical support, it further deteriorated. 44. The above ongoing misrepresentations and breaches of contract by Protologics made the marketing of the ProtoMED product untenable, and require reduction of the staff added for the marketing effort, with consequent loss of the benefit of substantial training hours spent by such staff. 45. The difficulties of Oakwood Center result in a loss of a satisfied reference for marketing efforts, further crippling marketing efforts. 46. Perfect Solutions communicated its concerns regularly in a timely manner and received only untimely, inadequate and sporadic partial responses. 47. On October 24, 2001, Perfect solutions requested rescission of the agreement, refund of the license fees and restructuring of the agreement to a straight commission on referral basis to allow Protologics to address the stated concerns directly and to allow Protologics to continue to 6 benefit from the potential referral base and the remaining good will Perfect Solutions had for the product and the company. 48. On October 31, 2001, Protologics declined the request without addressing the substance of the concerns expressed leading to the request. 49. On November 28, 2001, Oakwood informed Perfect Solutions that they were dissatisfied with support from Protologics particularly with a lack of help with their loading of master patient files (a basic function) and the program sequencing files inconsistently. 50. Protologics blamed the user and unreasonably failed to provide timely and appropriate support. 51. The undisclosed credentialing for electronic; billing delay was exacerbated by misrepresentations by Protologics regarding required time for credentialing and Protologics' delays in credentialing. 52. While Protologics indicated that credentialing would take 45-60 days from installation, final Medicare credentialing for Oakwood did not occur until January 16, 2002, 100 days after the October 8, 2001 installation; causing hardship to Oakwood, and undermining any marketing opportunity the Oakwood sale would have presented for Perfect Solutions. 53. Protologics continued to provide inadequate support to Oakwood Center until February 4, 2002, when Oakwood discontinued its attempt to implement the use of the product and rescinded the sale. 54. Oakwood had just cause to rescind based upon the material misrepresentations, defects in the system, delays to implementation, and complete inadequacy of support from Protologics. 7 55. The above multiple material misrepresentations of Protologics made it impracticable fro Perfect Solutions to ethically market the ProtoMED product. 56. The above patent deficiencies in the Product and support of the product by Protologics made it impracticable to ethically market the ProtoMED product. 57. The above conduct breached the express and implied obligations of Protologics to Perfect Solutions and to the end users, which made it impossible for Perfect Solutions to ethically market the product and receive the intended benefit of its bargain. 58. The above conduct constitutes a willful hindrance which invalidates and renders inoperative any exculpatory provision of the agreement. 59. As a direct and proximate result of the misrepresentations and the breaches of contract, Perfect Solutions purchased and was unable to sell five licenses for $55,000 which are now worthless and regarding which Perfect Solutions seeks rescission and return of the full consideration, and/or damages in the amount of the full consideration. 60. As a direct and proximate result of the misrepresentations and the breaches of contract, Perfect Solutions incurred staff time and marketing expenses in an amount in excess of $75,000, which would not have been incurred but for the misrepresentations and which were made fruitless by the breaches of contract which prevented recoupment of such expenses through sale of the licenses and profit thereon. 61. This action was commenced by writ of summons in March 2002, reissued and service was accepted by out of state counsel for Protologics in July 2002. 62. Pre-complaint alternative dispute resolution attempts were unsuccessful. COUNT I - RESCISSION - FRAUDULENT INDUCEMENT 63. Paragraphs 1 through 62 are incorporated by reference here as if restated verbatim. 8 64. Protologics fraudulently induced Perfect Solutions to enter into the Independent Dealership Agreement and to purchase five licenses for the ProtoMED product under that agreement at the price of $55,000. 65. Under the facts and circumstances of this matter, it is equitable and appropriate to rescind the contract and require the return of the original consideration, $55,000. 66. In order to return the parties to their precontract positions, it is also equitable and appropriate to award Perfect Solutions $75,000 as the amount of additional damages incurred as the direct and proximate result of the fraudulent inducement. WHEREFORE, Perfect Solutions seeks judgment against Protologics in an amount in excess of the arbitration amount, together with costs, prejudgment interest, and such other relief as this court may deem just. COUNT II - FRAUD-INTENTIONAL MISREPRESENTATION 67. Paragraphs 1 through 67 are incorporated by reference here as if restated verbatim. 68. Protologics made numerous material misrepresentations before and after the contract was entered into which made it impossible for Perfect Solutions to ethically market the product and recoup its investment in the product. 69. The misrepresentations were material, intentional and fraudulent; they were intended to induce reliance, induced reliance and caused direct and proximate damages as indicated above. 70. Perfect Solutions reasonably relied upon the misrepresentations and suffered damages in excess of $130,000 as a direct and proximate result. WHEREFORE, Perfect Solutions seeks judgment against Protologics in an amount in excess of the arbitration amount, together with costs, attorney's fees and such other relief as this Court may deem just. 9 COUNT III - NEGLIGENT MISREPRESENTATION 71. Paragraphs 1 through 70 are incorporated by reference here as if restated verbatim. 72. Protologics made numerous material misrepresentations before and after the contract was entered into which made it impossible for Perfect Solutions to ethically market the product and recoup its investment in the product. 73. Assuming, arguendo some or all of the misrepresentations were made negligently rather than intentionally, the misrepresentations nonetheless were made under circumstances in which it would be just to require Protologics to assume responsibility for damages arising from the misrepresentations, as they induced reasonable reliance, rendered the ethical marketing of the licenses impossible, and direct and proximate caused damages as indicated above. 74. Perfect Solutions reasonably relied upon the misrepresentations and suffered damages in excess of $130,000 as a direct and proximate result. WHEREFORE, Perfect Solutions seeks judgment against Protologics in an amount in excess of the arbitration amount, together with costs, attorney's fees and such other relief as this Court may deem just. COUNT IV - BREACH OF CONTRACT 75. Paragraphs 1 through 74 are incorporated by reference here as if restated verbatim. 76. As detailed above, Protologics materially breached its express and implied obligations under its agreement with Perfect Solutions in numerous material respects, which rendered the ethical marketing of the license impossible. 77. The breaches caused the loss of the value of the licenses, substantial unproductive expense and lost employee time as also detailed above. 10 78. The multiple material breaches of contract directly and proximately caused direct and foreseeable direct and consequential damages as detailed above in an amount in excess of $130,000 ($55,000 license expense, and $75,000 marketing and staff expenses for marketing effort which Protologics breaches rendered fruitless). WHEREFORE, Perfect Solutions seeks judgment against Protologics for direct and consequential damages from the multiple material breaches of contract in an amount in excess of the arbitration amount, together with costs, pre-judgment interest and such other relief as this Court may deem just. Respectfully e W. Barbi?-? I At . .D.#43571 ANDREW W. BARBIN, P.C. 5020 Ritter Road, Suite 109 Mechanicsburg, PA 17055 (717) 506-4670 Counsel for Plaintiff DATED: June 14, 2004 11 +7176918255 Andrew W. Barbin, Esquire ANMV W. BARSIN, P.C. 5020 Ritter Road. Suite 109 Mechanicsburg, PA 17055 (717) 5064670 466 P02 SUN 14 '04 13:57 Attorneys for Perfect Solutions, hw. PERFECT SOLUTIONS, LTD. IN THE COURT OF COMMON PLEAS Plaintiff : CUMBERLAND COUNTY, PENNSYLVANIA V. CIVIL ACTION - LAW PROTOLOGICS FAMILY PRACTICE ASSOCIATES, LTD. DOCKET NO. 02.3947 Civil Term Defendant VERIFICATION 1, P- c F C n w AN A u (? r t of Perfect Solutions, Ltd., verify that the statements made in the foregoing CoMPLAnrr are true and correct to the blast of my knowledge, information, and belief. I understand that false statements herein are made subject to the penalties of 18 P&C.S. § 4904 relating to unswom falsification to authorities. Perfect Solutions, lAd. a P2?s?PS.?v'r DATED: &Ilgloy Andrew W. Barbin, Esquire ANDREW W. BARBIN, P.C. 5020 Ritter Road, Suite 109 Mechanicsburg, PA 17055 (717) 506-4670 Attorneys for Perfect Solutions, Inc. PERFECT SOLUTIONS, LTD. IN THE COURT OF COMMON PLEAS Plaintiff : CUMBERLAND COUNTY, PENNSYLVANIA V. CIVIL ACTION - LAW PROTOLOGICS FAMILY PRACTICE ASSOCIATES, LTD. DOCKET NO. 02-3947 Civil Term Defendant CERTIFICATE OF SERVICE I, ANDREW W. BARBIN, do hereby certify that on the date indicated below, served a true and correct copy of the foregoing COMPLAINT by having, the foregoing document served by facsimile and United States first-class mail, postage prepaid addressed to the following: VIA FACSIMILE (410/244-0775) Mark F. Scurti, Esquire Scurti and Gulling 1511 Court Square Building 200 East Lexington Baltimore, MD 21202-3530/ Barbin DATED: June 14, 2004 4 ? r-'rn ca w -<: -7 Andrew W. Barbin, Esquire ANDREW W. BARBIN, P.C. 5020 Ritter Road, Suite 109 Mechanicsburg, PA 17055 (717) 506-4670 CAVANAUGH MICHAELS, LTD. Plaintiff V. Attorneys for Cavanaugh Michaels, Ltd. : IN THE COURT OF COMMON PLEAS : CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW SMITH & MASON FAMILY PRACTICE ASSOCIATES, LTD. Defendant DOCKET NO. 02-3947 Civil Term NOTICE YOU HAVE BEEN SUED IN COURT. If you wish to defend against the claims set forth in the following pages, you must take action within twenty (20) days after this Complaint and Notice are served, by entering a written appearance personally or by 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 LAWYER REFERRAL SERVICE Cumberland County Bar Association 2 Liberty Avenue Carlisle, PA 17013 (717) 249-3166 or 800-990-9108 AVISO USTED HA SIDO DEMANDADO/A EN CORTE. Si usted desea defenderse de las demandas que se presentan mas adelante en las siguientes paginas, debe tomar acci6n dentro de los pr6ximos veinte (20) dias despu6s de la notificaci6n de esta Demanda y Aviso radicando personalmente o por medio de un abogado una comparecencia escrita y radicando en la Corte por escrito sus defensas de, y objecciones a, las demandas presentadas aqui en contra suya. Se le advierte de que si usted falla de tomar acci6n Como se describe anteriormente, el caso puede proceder sin usted y un fallo por cualquier suma de dinero reclamada en la demanda o cualquier otra reclamaci6n o remedio solicitado por el demandante puede ser dictado en contra suya por la Corte sin mas aviso adicional. Usted puede perder dinero o propiedad u otros derechos importantes para usted. USTED DEBE LLEVAR ESTE DOCDvIENTO A SU ABOGADO WMEDIATAMENTE. SI USTED NO TIENE UN ABOGADO, LLAME O VAYA A LA SIGUIENTE OFICINA. ESTA OFICINA PUEDE PROVEERLE WFORMACION A CERCA DE COMO CONSEGUIR UN ABOGADO. SI USTED NO PUEDE PAGAR POR LOS SERVICIOS DE UN ABOGADO, ES POSIBLE QUE ESTA OFICINA LE PUEDA PROVEER INFORMACION SOBRE AGENCIAS QUE OFREZCAN SERVICIOS LEGALES SIN CARGO O BAJO COSTO A PERSONAS QUE CUALIFICAN. CUMBERLAND COUNTY LAWYER REFERRAL SERVICE Cumberland County Bar Association 2 Liberty Avenue Carlisle, PA 17013 (717) 249-3166 or 800-990-9108 Respectfully submitted, Andrew W. Barbin, Esquire Atty. I.D. 43571 ANDREW W. BARBIN, P.C. 5020 Ritter Road, Suite 109 Mechanicsburg, PA 17055 717-5064670 DATED: 2 Andrew W. Barbin, Esquire ANDREW W. BARBIN, P.C. 5020 RITTER ROAD, SUITE 109 MECHANICSBURG, PA 17055 717-506-4670 Attorneys for Cavanaugh Michaels, Ltd. CAVANAUGH MICHAELS, LTD. : IN THE COURT OF COMMON PLEAS 601 East Simpson Street : CUMBERLAND COUNTY, PENNSYLVANIA Mechanicsburg, PA 17055-3456, Plaintiff V. SMITH & MASON FAMILY PRACTICE ASSOCIATES, LTD. 3992 Carlisle Road Dover, PA 17315, Defendant CIVIL ACTION - LAW DOCVJET NO. 02-3947 Civil Term COMPLAINT Plaintiff, Cavanaugh Michaels, Ltd, (Cavanaugh Nlichaels), by and through undersigned counsel, make this Complaint and aver as follows: PARTIES 1. Plaintiff, Cavanaugh Michaels, Ltd, (Cavanaugh Michaels) is a Pennsylvania corporation with principle place of business in Mechanicsburg, Cumberland County, Pennsylvania. 2. Defendant, Smith & Mason Family Practice Associates, Ltd. (Smith & Mason), is a Pennsylvania corporation with offices in York County, Pennsylvania. JURISDICTION AND VENUE 3. The events which give rise to this action occurred in Cumberland County, Pennsylvania. 4. Jurisdiction and venue are proper in the Court of Common Pleas of Cumberland County. FACTS COMMON TO ALL COUNTS 5. Cavanaugh Michaels provides professional accounting services for a fee. 6. Smith & Mason solicited services from Cavanaugh Michaels. 7. Cavanaugh Michaels provided services for several years. 8. Smith & Mason paid regular monthly invoices for services. 9. Smith & Mason reviewed invoices, contested particular entries and requested adjustments. 10. Cavanaugh Michaels periodically allowed requested adjustments as warranted. 11. At the request of Smith & Mason, Cavanaugh Michaels deferred payment for a portion of accumulated invoices until Smith & Mason was better able to pay the accumulated balance, but conditioned the deferment on the continuation of the business relationship. 12. In 2000, Smith & Mason also received a loan of $38,897, in the form of a refund of previously paid fees, in order to avoid substantial tax interest and penalties which would have accrued had a retirement contribution not been made in accordance with previously filed returns. 13. Outstanding invoices for services total $5,960.20; a copy of the most recent cumulative invoice is attached. 14. The invoices were issued to Smith & Mason in the ordinary course of business and no objection or question was raised regarding the time entries on the invoices. 15. Smith & Mason stopped communicating with Cavanaugh Michaels in January 2002 and refused to respond to emails, calls, or letters. 16. Smith & Mason terminated the services of Cavanaugh Michaels effective April 30, 2002 by letter dated April 25, 2002. 2 17. Effective April 30, 2002, all deferral agreements ended and Smith & Mason was obligated to pay the full balance of $44,857.20. 18. Smith & Mason claims that the balance owed is offset by an alleged guaranty made by Lee Cavanaugh of Cavanaugh Michaels regarding the prospective performance of Dr. William Frank who was hired by the practice. 19. Smith & Mason claims that Lee Cavanaugh guaranteed that Dr. Frank would be profitable, that he was not and that they are entitled to offset their bill by any amounts they claimed they lost on Dr. Frank. 20. The alleged guaranty was oral, ambiguous and based on express and implied conditions which were not met, including particularly that Smith & Mason would follow the advice of Cavanaugh Michaels as to the steps necessary to render the practice and Dr. Frank profitable; Dr. Frank was productive and profitable (by generating more; revenue than expense), alleged losses arose from allocation of excessive and unnecessary overhead. 21. The alleged guaranty was also conditioned on Smith & Mason not causing unnecessary expense through staff turnover and other causes within the control of Smith & Mason and outside the control of Cavanaugh Michaels. 22. Smith & Mason refused to implement Cavanaugh Michaels' advice. 23. Smith & Mason incurred avoidable expense due to staff turnover and other self inflicted causes unrelated to Dr. Frank. 24. The alleged guaranty is void for indefiniteness of terms. 25. The alleged guaranty did not come into enforceable existence as there was never a meeting of minds as to its scope and conditions. 26. The alleged guaranty is void for failure or absence of consideration. 3 27. The alleged guaranty is void for failure of express and implied conditions precedent, in that Smith & Mason failed to implement the policies under which any guaranty would apply. 28. Smith & Mason is not entitled to any offset of the amount due and owing on the basis of any alleged guaranty. 29. Smith & Mason had no intention of paying for any services rendered after December 31, 2001. 30. Smith & Mason refused to respond to comnnunications from December 31, 2001 to April 30, 2002 with the fraudulent purpose of defrauding Cavanaugh Michaels out of continued professional services through the close of the tax year. 31. By continuing to receive services under false pretenses, Smith & Mason was engaged in a fraudulent business practice, and not a mere breach of contract. COUNT I - BREACH OF CONTRACT 32. Paragraphs 1 through 24 are incorporated by reference here as if restated verbatim. 33. Smith & Mason solicited and received services from Cavanaugh Michaels. 34. Smith & Mason failed to pay for the services in accordance with the terms of its contract with Cavanaugh Michaels. 35. Smith & Mason owes Cavanaugh Michaels $5,960.20 for services rendered, invoiced and unpaid. 36. In 2000, Smith & Mason also received a loan of $38,897, in the form of a refund of previously paid fees, in order to avoid substantial tax interest and penalties which would have accrued had a retirement contribution not been made in accordance with previously filed returns. 37. As a direct and proximate result of the breach Cavanaugh Michaels is owed $44,857.20. 4 WHEREFORE, Cavanaugh Michaels seeks judgment against Smith & Mason in the amount of $44,857.20, together with costs, prejudgment interest, and such other relief as this Court may deem just. COUNT II - QUANTUM MERUIT 38. Paragraphs 1 through 37 are incorporated by reference here as if restated verbatim. 39. Alternatively, if any aspect of the contract is uncertain or ambiguous, or otherwise unenforceable as such, Smith & Mason nonetheless solicited and received services from Cavanaugh Michaels under circumstances where it would be inequitable to permit Smith & Mason to retain the benefit without assuming the burden for payment for such services at their reasonable value. 40. Cavanaugh Michaels reasonably relied upon Smith & Mason assurances of payment for placement services and provided services in the reasonable expectation of payment at the agreed rates. 41. The reasonable value of the services is $44,857.20. 42. Cavanaugh Michaels is entitled to quantum meruit recovery of $44,857.20 plus prejudgment interests and costs from December 31, 2001 to the date of judgment. WHEREFORE, Cavanaugh Michaels seeks judgment against Smith & Mason in the amount of $44,857.20, together with costs, prejudgment interest, and such other relief as this Court may deem just. COUNT III - FRAui 43. Paragraphs I through 42 are incorporated by reference here as if restated verbatim. 44. Smith & Mason originally contracted with Cavanaugh Michaels for services. 45. By December 31, 2001, Smith & Mason had decided not to pay any past due balances, or any future balances. 5 46. Smith & Mason failed to inform Cavanaugh Michaels of this decision, and refused to respond to calls, emails, or letters. 47. Smith & Mason nonetheless provided data f'or year end tax returns and fraudulently obtained continued tax services under false pretences. 48. Cavanaugh Michaels provided valuable services in reasonable reliance on the assurances. 49. In January 2002, Cavanaugh Michaels closed the accounting for the Smith & Mason year end accounting, performed their income split calculation, provided year end payroll services and met with the Smith & Mason principals to review the year end accounting on January 30, 2002. 50. In February 2002, Cavanaugh Michaels completed the Smith & Mason 2001 Dover Township Mercantile/Business Privilege Tax Return, an accounting review and bank reconciliations for January 2002, and Randy Flanagan of Cavanaugh Michaels had a meeting with June Dotts of Smith & Mason to work on their practical financial model. 51. February 11, 2002, Smith & Mason sent payment of $411.30 on a December 2001 invoice. 52. In March 2002, Cavanaugh Michaels completed an accounting review and bank reconciliations for February 2002, and David Michaels of Cavanaugh Michaels spoke with June Dotts and Dr. Larry Smith of Smith & Mason regarding extensions for personal tax returns, and preparation of the compensation report for Dr. Frank. 53. In April 2002, Cavanaugh Michaels prepared extensions for the real estate partnership and forwarded information for the payroll tax return for the first quarter of 2002. 6 54. At the time the services were solicited in 2002, Smith & Mason was in the process of switching accountants and did not intend to make payments to Cavanaugh Michaels for any services rendered from December 31, 2001 to the date services were finally terminated. 55. The conduct of Smith & Mason was fraudulent and outrageous and warrants imposition of attorney's fees and punitive damages. WHEREFORE, Cavanaugh Michaels seeks judgment against Smith & Mason in an amount in excess of the arbitration amount, together with costs, prejudgment interest, and such other relief as this Court may deem just. COUNT IV - DECLARATORY 'JUDGMENT 56. Paragraphs 1 through 55 are incorporated by reference here as if restated verbatim. 57. Smith & Mason contends there is an enforceable contractual guaranty by Cavanaugh Michaels regarding the profitability of Dr. Frank. 58. Cavanaugh Michaels contends there is no such contractually enforceable guaranty, or that any guaranty is void and/or unenforceable as set forth above. 59. Cavanaugh Michaels seeks a declaratory judgment that there is no enforceable guaranty by Cavanaugh Michaels to Smith & Mason regarding the profitability of Dr. Frank, and that Smith & Mason is not entitled to any offset of the balance otherwise due on account of such alleged guaranty. WHEREFORE, Cavanaugh Michaels seeks a declaratory judgment that there is no enforceable guaranty by Cavanaugh Michaels of Smith & Mason regarding the profitability of Dr. 7 Frank, and that Smith & Mason is not entitled to any offset of the balance otherwise due on account of such alleged guaranty. DATED: June 14, 2004 ANDREW W. BARBIN, P.C. 5020 Ritter Road, Suite 109 Mechanicsburg, PA 17055 (717) 506-4670 Counsel for Plaintiff +7176918255 Andrew W. Harbin, Esquire ANDREW W. HARM, P.C. 5020 Ritter Road, Suite 109 Mechanicsburg, PA 17055 (717) 5064670 CAVANAUGH MICHAELS, LTD. Plaintiff v. 466 P03 JUN 14 104 13:58 Attorneys for Cavanaugh Michacla, Ltd. IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW SMITH & MASON FAMILY PRACTICE ASSOCIATES, LTD. Defendant DOCKET NO. 02-3947 Civil Term VERIFICATION I, 1 CL 1Z:7. A v er uu A t 1 i of Cavanaugh Michaels, Ltd., verify that the statements made in the foregoing COMPLAINT are true and correct to the best of my knowledge, information, and belief. I understand that false statements herein are made subject to the penalties of I8 Pa.C.S. § 4904 relating to unworn falsification to authorities. DATED: Cavanaugh Wch td. YREStOEu.1T 3 Andrew W. Barbin, Esquire ANDREW W. BARBIN, P.C. 5020 Ritter Road, Suite 109 Mechanicsburg, PA 17055 (717) 5064670 CAVANAUGH MICHAELS, LTD. Plaintiff V. SMITH & MASON FAMILY PRACTICE ASSOCIATES, LTD. Defendant Attorneys for Cavanaugh Michaels, Ltd. : IN THE COURT OF COMMON PLEAS : CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW DOCKET NO. 02-3947 Civil Term CERTIFICATE OF SERVICE I, ANDREW W. BARBIN, do hereby certify that on the date indicated below, served a true and correct copy of the foregoing COMPLAINT by having the foregoing document served by facsimile and United States first-class mail, postage prepaid addressed to the following: VIA FACSIMILE (717/843-6134) Neil A. Slenker, Esquire Stock and Leader 6`h Floor, 221 West Philadelphia S t York, PA 17404 / 4DATED: June 14, 2004 ?- Ca vFT, L] Zj? _) IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CAVANAUGH MICHAELS, LTD. Plaintiff V. SMITH & MASON FAMILY PRACTICE ASSOCIATES, LTD. Defendant Docket No. 02-3947 Civil Term JURY TRIAL DEMANDED Civil Action - Law NOTICE YOU HAVE BEEN SUED IN COURT. If you wish to defend against the claims set forth in the following pages, you must take action within twenty (20) days after this Complaint and notice are served by entering a written appearance personally or by attorney and filing in writing with the Court your defenses or objections to the claims set forth against you. You arewarned 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. Lawyer Referral Service of The York County Bar Association The York County Bar Center 137 East Market Street York, Pennsylvania 17401 Telephone No. (717) 854-8755 AVISO Le han demandado en corte. Si usted desea defender contra las demandas dispuestas en las paginas siguientes, usted debe tomar ]la accion en el plazo de veinte (20) dias despues de esta queja y se sirve el aviso, incorporando un aspecto escrito personalmente o y archivando en escribir con la corte sus ddefensas u objeciones a las demandas dispuestas contra usted el abogado le advierte que que si usted no puede hacer asi que el caso puede proceder siva usted y un juicio se puede incorporar contra usted compra la corte sin aviso adicional para cualquier dinero demandado en la queja o para cualquier otra demanda o relevacion pedida por el demandante. Usted puede perder el dinero o la caracteristica de otra endereza importante a usted. USTED DEBE LLEVAR ESTE PAPEL SU ABOGADO INMEDIATAMENTE. SI USTED NO HACE QUE UN ABOGADO VAYA A O LLAME POR TELEFONO LA OFICINA DISPUESTA ABAJO. ESTA OFICINA PUEDE PROVEER DE USTED LA INFORMACION SOBRE EMPLEAR A UN ABOGADO. SI USTED NO PUEDE PERMITIRSE AL HIRE A UN ABOGADO, ESTA OFICINA PUEDE PODER PROVEER DE USTED LA INFORMACION SOBRE LAS AGENCIAS QUE LOS SERVICIOS JURIDICOS DE LA OFERTA DE MAYO A LAS PERSONAS ELEGIBLES EN UN HONORARIO REDUCIDO O NINGUN HONORARIO. Lawyer Referral Service of the York County Bar Association York County Bar Center 137 East Market Street York, Pennsylvania 17401 Telephone No. (717) 854-8755 IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CAVANAUGH MICHAELS, LTD. Plaintiff V. SMITH & MASON FAMILY PRACTICE ASSOCIATES, LTD. Defendant Docket No. 02-3947 Civil Term JURY TRIAL DEMANDED Civil Action - Law ANSWER, NEW MATTER, AND COUNTERCLAIM OF SMITH & MASON FAMILY PRACTICE ASSOCIATES. LTD. AND NOW comes the Defendants, Smith & Mason Family Practice Associates, Ltd., ("Defendants' or "Smith & Mason") by and through their attorneys, the law firm of Stock and Leader, to answer the Complaint of Cavanaugh Michaels, Ltd. ('Plaintiff' or "Cavanaugh Michaels"), and to set forth the following New Matter and Counterclaims, as follows: 1. Admitted, upon information and belief. 2. Admitted. 3. Admitted in part. Denied in part. Admitted that some of the events referenced in Plaintiffs Complaint occurred in Cumberland County. It is denied that all relevant events occurred in Cumberland County. 4. Denied. This averment is a conclusion of law to which no response is required, and it is therefore denied. 5. Admitted that at all times relevant hereto Plaintiff provided accounting services to the public and charged fees for said services. 6. Denied. When Smith & Mason opened their medical practice in 1987, York Hospital retained Cavanaugh Michaels to assist Smith & Mason with office management. Admitted. By way of further answer, it is averred that Plaintiff provided accounting and business management services to Smith & Mason beginning in 1987 and continuing through 2002. 8. Admitted in part. Denied in part. Admitted that Smith & Mason paid invoices that accurately reflected amounts due and owing to Plaintiff. It is also averred that Plaintiff did not always invoice Smith & Mason on a regular monthly basis. Plaintiff periodically invoiced Smith & Mason for services rendered months prior. The remainder of this averment is denied. 9. Admitted in part. Denied in part. Admitted that when appropriate, Smith & Mason contested charges on invoices that reflected amounts not properly due and owing to Plaintiff, and when necessary requested corresponding adjustments. It is denied that Smith & Mason reviewed, contested, and requested adjustments on all invoices. 10. Admitted in part. Denied in part. Admitted that in some instances, Plaintiff adjusted invoices when requested. This averment is denied to the extent it implies that Plaintiff's refusal to adjust certain charges was proper. 11. Denied. Smith & Mason denies that there was an agreement between the parties concerning deferral of payment on invoices. 12. Admitted in part. Denied in part. Admitted that in 2000, Plaintiff, through the actions of its agent, Lee Cavanaugh, tendered funds to Smith & Mason in the amount of $38,897.00. Any inference that Smith & Mason asked for Plaintiff to loan it the funds is expressly denied. Any characterization of funds as a loan or refund of fees is denied. Smith & Mason incorporates by reference the averments contained in its New Matter below. 13. Admitted in part. Denied in part. Admitted that Plaintiff issued invoices to Smith & Mason reflecting a balance due in the total amount of $5,960.20. It is denied that this amount is due and owing to Plaintiff. 14. Denied. Smith & Mason has questioned and raised objections to charges contained on various invoices. By way of further answer, Smith & Mason has objected to the payment of any fees for the reasons set forth in the New Matter set forth below, and incorporated herein by reference. 15. Denied. Smith & Mason communicated with Cavanaugh Michaels subsequent to January 2002. 16. Admitted. 17. Denied. This averment constitutes a legal conclusion to which no response is required, and it is therefore denied. To the extent an answer is deemed required, it is denied that Smith & Mason is obligated to pay Plaintiff the sum of $44,857-20- 18. Admitted in part. Denied in part. Admitted that Smith & Mason does not owe any sum to Plaintiff as a result of Plaintiff's contractual agreement with Smith & Mason concerning the performance of Dr. William Frank. The characterization of the promise as a "guaranty" is denied as a conclusion of law. By way of further answer, Smith & Mason incorporates by reference the averments set forth in the New Matter below. The remainder of this averment is denied as stated. 19. Admitted in part. Denied in part. Admitted that Plaintiff represented to Smith & Mason that Dr. William Frank would be profitable to Smith & Mason and that if Smith & Mason hired Dr. Frank, it would reimburse Smith & Mason for any losses relative to his employment. It is also admitted that Plaintiff owes Smith & Mason a substantial sum of money pursuant to this contractual arrangement between the parties, and that Smith & Mason is entitled to a setoff against any claims asserted by Plaintiff. By way of further answer, Smith & Mason incorporates by reference the averments set forth in the New Matter below. The remainder of this averment is denied as stated. 20. Denied. This averment constitutes a conclusion of law to which no response is required, and it is therefore denied. By way of further answer, it is denied that the contract in question was contingent on the conditions stated. Smith & Mason incorporates by reference the averments set forth in the New Matter below. 21. Denied. It is denied that the contractual obligation in question was contingent on the conditions stated. The characterization of the contractual obligation as a "guaranty" is denied as a conclusion of law. Smith & Mason incorporates by reference the averments set forth in the New Matter below. 22. Denied. Some of the advice and suggestions offered by Plaintiff was implemented by Smith & Mason. Other advice and suggestions could not be implemented regardless of Smith & Mason's desire to do so. In certain instances, such as the purchase of capital equipment that could only be used by Dr. Frank, Smith & Mason disagreed with the advice offered by Plaintiff but implemented the suggestions anyway at the insistence of Lee Cavanaugh. This averment is denied to the extent it suggests that Smith & Mason was in any way contractually bound to implement advice given by Plaintiff. 23. Admitted in part. Denied in part. Admitted that Smith & Mason incurred expenses, some of which were incurred as a result of staff turnover. It is denied that the expenses were avoidable or "self inflicted". 24. Denied. This averment is a conclusion of law to which no response is required, and it is therefore denied. 25. Denied. This averment is a conclusion of law to which no response is required, and it is therefore denied. 26. Denied. This averment is a conclusion of law to which no response is required, and it is therefore denied. 27. Denied. This averment is a conclusion of law to which no response is required, and it is therefore denied. By way of further answer, it is denied that the contract between the parties was contingent on the implementation of certain policies. Smith & Mason incorporates by reference the averments set forth in its new matter below. 28. Denied. This averment is a conclusion of law to which no response is required, and it is therefore denied. 29. Denied. It is denied that Smith & Mason did not intend to pay for services rendered, payment for which was properly due and owing. 30. Denied. It is denied that Smith & Mason refused to correspond and/or communicate with Plaintiff during the time period stated. It is further denied that Smith & Mason intended to defraud Plaintiff. 31. Denied. It is denied that Smith & Mason accepted services under false pretenses. The remainder of this averment is a conclusion of law to which no response is required, and it is therefore denied. COUNT I - BREACH OF CONTRACT 32. Smith & Mason incorporates by reference its answers to paragraphs 1 through 31. 33. Admitted in part. Denied in part. Smith & Mason incorporates by reference its response to paragraph 6. By way of further answer, it is admitted that Smith & Mason has since solicited and received services from Cavanaugh Michaels over the course of the relationship between the parties. 34. Denied. This averment is a conclusion of law to which no response is required, and it is therefore denied. By way of further answer it is denied that Smith & Mason failed to make payment to Plaintiff for amounts that are properly due and owing to Plaintiff. 35. Denied. This averment is a conclusion of law to which no response is required, and it is therefore denied. 36. Admitted in part. Denied in part. Admitted that Smith & Mason received $38,897.00. It is denied that Smith & Mason sought a loan from Cavanaugh Michaels and that the reimbursement of funds was characterized as a loan. On the contrary an authorized representative of Smith & Mason expressly told Lee Cavanaugh, as agent for Cavanaugh Michaels, that Smith & Mason did not want a loan, and that Smith & Mason would incur the requisite tax penalties instead. Any characterization of the transfer of funds as a refund of fees is denied. 37. Denied. This averment is a conclusion of law to which no response is required, and it is therefore denied. WHEREFORE, Smith & Mason demands that judgment be entered in its favor, and that the Plaintiff be awarded nothing. COUNT II - QUANTUM MERI'IIT 38. Smith & Mason incorporates by reference the averments of paragraphs 1 through 37 as if set forth at length. 39. Denied. This averment is a conclusion of law to which no response is required. It is therefore denied. 40. Denied. This averment is a conclusion of law to which no response is required. It is therefore denied. By way of further answer, it is denied that Smith & Mason is obligated to make payment to Cavanaugh Michaels of any amount. It is also denied that Smith & Mason made assurances of payment for amounts beyond those paid to Cavanaugh Michaels to date. 41. Denied. It is denied that the reasonable value of the services provided by Cavanaugh Michaels is $44,857.20 and strict proof thereof is demanded at trial. 42. Denied. This averment is a conclusion of law to which no response is required, and is therefore denied. WHEREFORE, Smith & Mason demands that judgment be entered in its favor, and that the Plaintiff be awarded nothing. COUNT III- FRAUD 43. Smith & Mason incorporates by reference its responses to paragraphs 1 through 42 as if set forth at length. 44. Denied. Smith & Mason incorporates by reference its response to paragraph 6. 45. Denied. It is denied that by December 31, 2001, Smith & Mason had decided not to pay any past due balances, or future balances. 46. Denied. Smith & Mason incorporates by reference its response to paragraph 45. By way of further answer, it is denied that Smith & Mason refused to communicate with Plaintiff. 47. Admitted in part. Denied in part. Admitted that Smith & Mason provided certain information to Plaintiff. By way of further answer, it is averred that Plaintiff was in possession of the majority of the necessary information and performed the tax returns in the ordinary course and without a specific request to do so. By way of further answer, it is averred that these returns were not accurate, and were subsequently amended by another accountant at Smith & Mason's expense. It is denied that Smith & Mason acted with any intent to defraud Plaintiff. The remainder of this averment is a conclusion of law to which no response is required, and is therefore denied. 48. Denied. This averment is a conclusion of law to which no response is required, and is therefore denied. It is also denied that assurances of payment were made for amounts in excess of those paid to date or otherwise due and owing to Plaintiff. 49. Admitted. 50. Admitted in part. Denied in part. Admitted that in February, 2002, Plaintiff completed the Smith & Mason 2001 Dover Township Merchantile/Business Privilege Tax Return and an accounting review, bank reconciliations for January 2002, and that Randy Flanagan Met with June Dotts (now Ralston) to work on practice financials. With respect to the allegation that work was done on a "financial model, " Smith & Mason is without sufficient knowledge to form an opinion as to the truth of this averment, and it is therefore denied. 51. Admitted. 52. Admitted. 53. Admitted. 54. Admitted in part. Denied in part. It is admitted that in 2002, Smith & Mason decided to switch accountants for purposes of future accounting work. It is denied that Smith & Mason accepted services from Plaintiff with the intent to defraud Plaintiff or to refrain from making payment for amounts properly due and owing to Plaintiff. 55. Denied. This averment is a conclusion of law to which no response is required, and is therefore denied. WHEREFORE, Smith & Mason demands that judgment be entered in its favor, and that the Plaintiff be awarded nothing. COUNT IV -DECLARATORY IUDGMENT 56. Smith & Mason incorporates by reference its responses to paragraphs 1 through 55 as if set forth at length. 57. Admitted that there is a contractual agreement between the parties whereby Cavanaugh Michaels agreed to reimburse Smith & Mason for losses related to the employment of Dr. Frank. The characterization of the contractual obligation as a "guaranty" is denied as a legal conclusion. 58. Denied. It is specifically denied that Cavanaugh Michael's contractual obligations are legally unenforceable. 59. Denied. No response required. WHEREFORE, Smith & Mason requests that this Court enter a declaratory judgment that the contract between the parties concerning losses related. to Dr. William Frank is legally enforceable, and that Smith & Mason is entitled to set off any balance due under the contract against any amounts claimed by Plaintiff. NEW MATTER 60. Plaintiff's claims are barred by the doctrine of accord and satisfaction. 61. Plaintiff's claims are barred by the doctrine of payment. 62. Plaintiff's claims are barred by the doctrine of setoff. 63. Plaintiff's claims are barred by the doctrine of justification. 64. Plaintiffs claims are barred by the doctrine of estoppel. 65. At all times relevant hereto, Cavanaugh Michaels' relationship with Smith & Mason involved more than the performance of typical accounting services. Specifically, Cavanaugh Michaels provided business management and employee placement services for Smith & Mason in addition to accounting services. 66. At various times in 1998, Lee Cavanaugh, as agent for Cavanaugh Michaels recommended that Smith & Mason retain another physician. 67. Lee Cavanaugh recommended that Smith & Mason retain Dr. William Frank, an internist, as an employee of the practice. 68. At all times relevant hereto Dr. Frank was a personal friend of Lee Cavanaugh. 69. It is averred, upon information and belief, that at the time Lee Cavanaugh recommended that Smith & Mason hire Dr. Frank, Dr. Frank's license to practice medicine had recently been reinstated on a probationary basis relative to a suspension resulting from alleged credit card fraud. It is also averred, upon information and belief, that various health insurance companies would not at that time accept Dr. Frank as an approved health care provider, and that Dr. Frank did not have staff privileges at Memorial Hospital. Lee Cavanaugh was aware of these potential limitations on Dr. Frank's ability to practice medicine. 70. Due to Dr. Frank's negative professional history and the resultant limitations on his ability to practice medicine, Smith & Mason was not interested in retaining him as an employee. 71. In an effort to secure employment for his friend, Lee Cavanaugh urged Smith & Mason to reconsider its position, and as an incentive to do so, promised that if Smith & Mason retained Dr. Frank, he would reimburse Smith & Mason for any loss incurred as a result of the employment of Dr. Frank. Lee Cavanaugh subsequently confirmed this contractual commitment in writing. Copies of documents confirming the contractual obligation are attached hereto collectively as Exhibit "A". 72. In reliance on the representations made by Lee Cavanaugh, Smith & Mason decided to hire Dr. Frank, and did so on or about January 22, 1999. 73. In order to have sufficient workspace for Dr. Frank, Smith & Mason increased the amount of the space leased for its Shrewsbury office, thereby incurring additional expense. 74. Lee Cavanaugh subsequently recommended that Smith & Mason purchase various equipment for sole use by Dr. Frank. 75. Smith & Mason purchased the recommended equipment in reliance on Lee Cavanaugh's advice. 76. Dr. Frank practiced medicine as an employee of Smith & Mason until April 30, 2002. 77. Dr. Frank was terminated for cause, including the violation of his employment agreement and willful misconduct. 78. Dr. Frank's employment with Smith & Mason resulted in a cumulative loss to the company in the amount of $79,049.59. 79. Smith & Mason offset the claims for payment described in Plaintiff's Complaint against the amount due by Cavanaugh Michaels to Smith & Mason pursuant to the contractual obligation described above. As a result of this setoff, Smith &: Mason is not liable to Cavanaugh Michaels for the amounts itemized in Plaintiff's Complaint. WHEREFORE, Smith & Mason demands that judgment be entered in its favor, and that Cavanaugh Michaels, Ltd. be awarded nothing on its claims. COUNTERCLAIMS COUNT I - BREACH OF CONTRACT 80. Smith & Mason incorporates by reference its responses to paragraph 1 through 59 of the Complaint and paragraphs 60 through 79 of its New Matter as if set forth at length. 81. Cavanaugh Michaels is contractually obligated to make payment to Smith & Mason in the amount of $79,049.59. 82. Cavanaugh Michaels refuses to make payment to Smith & Mason in the amount of $79,049.59, and for that matter refuses to make any payments to Smith & Mason in satisfaction of its contractual obligation. 83. Cavanaugh Michaels' refusal to make payment to Smith & Mason in the aforesaid amount is a breach of its contract with Smith & Mason. 84. As a result of Cavanaugh Michael's breach, Smith & Mason has incurred damages in the amount of $79,049.59. WHEREFORE, Smith & Mason demands judgment against Cavanaugh Michaels, Ltd. in the amount of $79,049.59, plus pre-judgment interest, and costs of suit. COUNT II-PROMISSORY ESTOPPEL (In The Alternative) 85. Smith & Mason incorporates by reference its responses to paragraphs 1 through 59 of Cavanaugh Michaels' Complaint, the averments set forth in paragraphs 60 through 79 of its New Matter and paragraphs 80 through 84 of Count I of its Counterclaims. 86. The losses incurred by Smith & Mason related to the employment of Dr. Frank fall within the scope of Cavanaugh Michaels' promise to reimburse Smith & Mason for such losses. 87. Smith & Mason hired Dr. Frank in strict reliance upon Cavanaugh Michael's promise to reimburse them for losses related to Dr. Frank's employment. 88. Smith & Mason's reliance on Cavanaugh Michaels' representation was reasonable under the circumstances. 89. Cavanaugh Michael's promise must be enforced to avoid a manifest injustice. WHEREFORE, Smith & Mason demands judgment against Cavanaugh Michaels, Ltd. in the amount of $79,049.59, plus pre-judgment interest, and costs of suit. Respectfully submitted, STOCK AND LEADER By: G Date Sleeker, Esquire Supreme Court I.D. #77974 Susquehanna Commerce Center East Suite 600 221 West Philadelphia Street York, PA 17404 Telephone: (:717) 846-9800 Fax: (717) 843-6134 VERIFICATION I hereby affirm that the following facts are correct: I am authorized agent of Smith & Mason Family Practice Associates, Ltd. in the foregoing action. The attached Answer, New Matter and Counterclaim is based upon information which has been furnished to counsel and information which has been gathered by counsel in the preparation of this document. The language of the Answer, New Matter and Counterclaim is that of counsel and not mine. I have read the Answer, New Matter and. Counterclaim and to the extent that the same is based upon information that I have given to counsel, it is true and correct to the best of my knowledge, information and belief. To the extent that the content of the Answer, New Matter and Counterclaim is that of counsel, I have relied upon counsel in making this Verification. I hereby acknowledge that the averments of fact set forth in the aforesaid Answer, New Matter and Counterclaim are made subject to the penalties of 18 Pa. C.S. §4904 relating to unworn falsification to authorities. SMITH & MASON FAMILY PRACTICE ASSOCIATES, LTD. By: Date '7??/ 0'f Karen Smith, M.D. FROM.: SMITH & MASON FAMILY PRACTICE FAX NO. 717 292+2398 Mar. 13 2002 11:29AM P2 CAVAj AuGH MicHmis, .LTD. CEKT7FIE1l PUBLIC ACCOUNTANTS bib E. o$but n SA 1 (717) 691-11W • FAX (717) 691.6355 Mxhaatcrborg, PA TOSS.3456 Date: November T. 2001 To: Larry Smith, M-D- Karen Smith, M.D. Debrsi Atiand, M.D. June dotes, office Manager From: Lee Cavanaugh Dear Larry, Karen, Deb and June; The purpose of this memo is to address some important issues on which we need to come to an agreement. The first Issue is our bill for September services, which was faxed to me by June on October 22. In her fax, June Indicated that you were only looking for a "bottom line" report in our last meeting. As a result, several services that were provided are being questioned as unnecessary. our last trimester meeting was a complete look at the year-to•date practice performance through August 31 plus a review of the practice financial management model. To just look at a "bottom line" is difficult to define. Based on June's request prior to prvparing for the meeting, we did out our scope significantly from what we normally prepare anal review with you. June circled several time sups on the September bill. The flrat was a Septerber 14 slip for Lisa Watts to prepare the Top Tan Non-E&M Code analysis for each provider and to prepare other practice analysis reports for the second trimester meeting. This time slip was for 1.3 hours and the charges were $86.80, 1 am proparod to concede that the top ton analyses were not necessary, but the other practice analysis rupvrts she J;J wurv uvrtahily necessary. Therefore, I agree to reduce this charge by 604A or $42.90. Member orthe American hudram at ckft tie Cumin A fttnu htetnhar etthe 7ehheybenLa In,utme at centnM effitle A/.n+w--tt FROM.: SMITH & MASON FAMILY PRACTICE FAX NO. 717 292+2398 M `r` 13I2?0022i11t:29A? 46P3 ' *il'tL+iS??S Page 2 of 5 Another questioned time slip was September 1S for Lisa Watts to change s This was far .4 that time procedures. the format and data Information on the am willing to wit lop ton slip off. hours at $2d40 and I summary shoot to review The next time e turnover Issue that from was 1997lion 001, This staff was prepared by Randy th Flanagan and took 2.1 hours for a charge of 3180.60. I believe this sheet was crucial in identifying problems with your staffing costs and, the discovery of omissions of staff positions in our staffing model. This data approdpriiagreatly to our meeting that night therefore, I do not feel it Is te to write-off any of this time. The same Is true of the September 18 time slip for.4 hours at $34,40 for Randy to complete that schedule. i propose that we reduce your September charges of &1,262.40 by $69.30 making the amount due for September 111,193.10. As always, our billing policy allows you not to pay for anything that you do not feel has value to you last (Jaeach month. A nuary, Its enclosed y Pleaset et billing within policy, 30 days of which was sent receipt know if my proposed adjustments are acceptable. My second subject Is the payment of $38,897 Cavanaugh Michaels, Ltd. (CML) forwarded to you In September. Last year retirement plan contributions were accrued in that amount on the 2000 tax return, They were to be paid before the tax return was filed. As of September 16, the last possible filing data, the practice's financial performance In 2001 was negative and the funds were not available. In conversations with Larry and Karen on September 14, we jointly decided that Cavanaugh Michaels, Ltd. (CML) would supply those funds and work out an arrangement with you on how this payment would be accounted for. We agreed that it was better to pay the retirement than to amend the corporate and personal returns increasing your taxable income and causing you to incur interest and penalties. As of now we have booked the payment we made as a refund of past fees. However, I now wish to open negotiations with you by proposing the following terms for your eenaideratien and appf oval. Let's begin with my guarantee of Bill Frank's performance when he was hired. I certainly acknowledge that when you hired 810 1 stated that if you loose money on Bill Frank 1 would guarantee the lose. Looking back at the practice's experience since Bill Frank was hired in 1999, we have calculated a cumulative loss on him of $51,762,89 through August 31, 2001. This Is based on his pruduuliun after an uverhead allaeaGvn bayed ut, his porcontago of production. This calculation shown on the enclosed schedule. C r1 V ANAUGH MICHAEL& LTA. FROM.: SMITH 8 MASON FAMILY PRACTICE FAX NO. 717 292+2398 Mar. 13 2002 11:29AM P4 Page 3 of 6 This number is made up of a $30,990,49 loss in 1999, plus a $17,805,49 loss in 2000, plus a $2,896.91 lose 2001 through August 31. As is evident from the shrinking amount of his loss each year, clearly Bill Is getting closer and closer to a break-even point His acceptance of a reduction in lilt salary this year also greatly helped the situation, When I guaranteed the loss on Bill Frank we were getting ready to move into a new Shrewsbury office and we had a plan for a full complement of providers in the practice, Since 1999 when Mill Frank was hired, the Shrewsbury office ended up being larger than we originally anticipated. The overhead In the practice has certainly been larger than we ever dreamed. The overhead rates for the years 1899, 2000 and 3001 through August 31 were 68.0%,64.6%, and 69.4% respectively. The provider base and the staff of Smith & Mason has experioncod an extremely high rate of turn-over and the pmotice hoe simply not boon able to achieve any stability during this period, We had the exodus of Betsy Thompson and Jon Douty, two very productive providers, and the fiasco with Dr. Sloma, When I made the guarantee I was not banking on these problems being part of the makeup during gill's tenure with the practice. Therefore, 1 personally do not feel that it is fair to completely hold me to my guarantee based on these events over which 1 had little control. 1 am willing to back up my guarantee with some modification for those unforeseen problems. That is why at our last meeting 1 recommended Chat you seriously consider finding a way to get out of the Shrewsbury offce and move back to Dover with just the three of you as providers In the practice, in that setting you would be very busy, you would work for yourselves only, and you would return to practicing in a profitable setting. I also was under the impression that Karen was in favor of this based on our ipast discussions. At that meeting you surprised me by indicating that you wanted to-keep the Shrewsbury office open and find the necessary providers to make it work. I still believe that you can do that and the practice model wo have built will show you the way to get to that point Randy is now updating that model fv, Um ajdiliarlal .1AIG1ly P0*; lvw,o UVal WVltl ,nil ill Ulu vnginwl nwthsl. In fact, the original model staff contingent was quite low, This was not pointed out to us when we presented the model to you two meetings ago. I told you from the outset that the model only works if we all take ownership of it. That means you too must understand Its function and its accuracy. I got a message from June yesterday that we were not to continue updating the mods) if there was going to be any charge bo you for doing so. I do not understand why you expoet u9 to update the model for free- I hive told CAVANAUGK MICHAF.Li. LTD. FROM : SMITH & MASON FAMILY PRACTICE FAX NO. 717 292+2398 Mar. 13 2092 11:30nM PS Page 4 of 5 Randy to stop working on the update until we jointly decide on the direction in which we should proceed, As we discussed at length during our last meeting, the turnover In your staff and provider boas must stop if your two office practice is to be successful, A minimum of two additional providers Is needed In Shrewsbury to make that office work given its overhead base. Stability must be reached before your practice will ever function in the way we all Want It to. As 1 told you at our last meeting, we are committed to helping you reach your practice goals. Again, I reiterate that if you can get the additional providers and stop the staff turnover the goal is ;attainable, We all know that those are big "IFS", given your experlences over the past three years. I also stated at our last meeting that 1 will no longer guarantee Bill Frank's losses in the future, but that I would stand by my guarantee through August 31, 2001. What I propose is that my guarantee be for ono-half of Bill Frank's lose through August 31, 2001 and that you as the practice take responsibility for the other one-half based on the management Issues I have already discussed. Based on the enclosed schedule the hosts through August 31, 2001 is $51,762.88, my ons-half would be $26,876.415. We will continue to track Hill's performance into the future, If and when his cumulative experience becomes positive, the positive amount at the end of any given year will be paid to CML until we get back the $28,876.45. If Bill leaves the practice or never becomes positive, we era simply out any part of this amount that has not boon returned to us, The remainder of the amount paid by CML on your behalf in September is $13,020.b6 ($38,697.00 minus the 525,878.46 allotted to Bill's foes). 1 propose thst this amount be paid back to CML after the threw of you begin warning a respeetsble income in the praetlee. We track your hours worked in the office and the amount of income each of you generate from your own productivity plu$ or minus your income or share of loss from the non- owner providers. My proposal is that you pay back the S13,02166 out of the practice revenues when your incomes, in the aggregate for all three of you, are greater than $75 par hour. Attached is a schodulb showing your incomes per hour after all adjustments, including losses on all non-owner providers, through August 31, 2001. The aggregate comes to $67.26 per hour currently. I propose that at the end of any trimester in which your aggregate incomes per hour for the year-to-date are $78 or greater, you pay us $2,000 towards the $13,020.55 portion of the amount we paid in CAVANAUGH MICHAEES. LTD. FROM.: SMITH & MASON FAMILY PRACTICE FAX NO. : 717 292+2398 Mar. 13 2002 11:31RM P6 ar. " st ;' fig :; ,Y t: a J, S-ept!µnh. bell-. U n-je-ir thi-S IIOr'2llor.OS1s 1 1101. Vff'GOluld get 0 r?&9Y4hnt,NNtOh "D9 ??46.!1$4i ?aFO a lust taMr?Nhu";nht of $11.020.55.K You reach ttAostit quale; at the end a .asevegh a9Nti`"ifdhvont tNihnh st.ors. 1 strongly aird'_ ar_.s,a tl4b .allow qA?a to cfanhtlrhue aASD°Ut&n;fiRAP.?t your priodAice INrutallwiaal rrnishh$h7;mineflht IlhhandeP. When vir are fflrnllo hod vve ArlpRAOd "40-ot and dote n'riline an c'iaw plash for Ultt'h6at the practice w1iw.dss' ?.* d-71 to gul !arlit A a I?r?p, Neat lan s: grP?sna. We wrcruid ze nd the aah:A lel ss he'dillht to you pr0l .r to zlq,ttluhaa to-Bother" `use that you tan rt,+.'1vI1evr them and be rsure vife have accull- ate staff {f`itouition s and ton6NRu Nth. I I:umw that Nt y oqt iAYork vvift'n it, tl'nt f9rYha!Inr:ne 1 4?P.:?d:'raStN BCN 1rB'hA?a'1ml N r 1114, yA nvlrmr to planning and making the pr'A2ABea decisions to Crita'TtN ' votair practice, t!UA,nrk. 1 will be thalpt y+ to pet tegether with you and f'd9°.a'2't a; this proposal or to clarltar narl`sllnnrn?p, tla$at hps nut clear t you. 9 1and";r'!Aanf! Yuan f.( Rv'af FafDt o1 g, e 114th rhty prdoltAa s"I ?arnol A!rl:"- will then r0A'ed to hBeg otiatte w"h ?hl;'3'YdahQzrt?uit9s9roQ we con all llare with. Any Nine st ela on these ellideavors aarus) the thni".. spent on tly-ur proponal will amts be charged Bch ypm I View the check we virra. 11 for you in Sept%ehnntwr to I N% aarn extr'e:uau•e show caa qdx•od.. faith in augur rdita?tfa7hl.``alhllo and in air coffNdence that worldratt td'i!f14".PiIITer, wo can qet Smith P4 h" #As on back on track. From any 't°antadgepoi nt, 4*1aa• rega^dt'NOOrnshin has 1?a•c_n an `hxc ellei?t:4.hr9"t QolrtA, the prast ,13 yeafs. I hope %lye- Vlrall Continue io 1"aiA've as rrnn.rtrAaally Baahbefic;ual ffellaYtIxJ9H"ahip right up to the point Mien we a'1rp all a xirrniuiiny'as&s`gr r0irwl. I I'll%3vo gl'pel despe n neAr• lea c a V- vpu an professionals bard hrndh eiduAa3l:. l..ret°s _yet to tlb`ohrk. "nd get ' hurngs tr gQeknBdxra rl EoW, IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CAVANAUGH MICHAELS, LTD. Plaintiff Docket No. 02-3947 Civil Term V. SMITH & MASON FAMILY PRACTICE ASSOCIATES, LTD. Defendant Civil Action - Law CERTIFICATE OF SERVICE AND NOW, this day of j_ 120049 I, Neil A. Slenker, Esquire, of the law firm of Stock and Leader, attorneys for Defendant, hereby certify that I served the within Answer, New Matter and Counterclaim this day by depositing the same in the United States mail, postage prepaid, in York, Pennsylvania, addressed to: Andrew W. Barbin, Esquire ANDREW W. BARBIN, P.C. 5020 Ritter Road Suite 109 Mechanicsburg, PA 17055 Respectfully submitted, STOCK AND LEADER -71z/° y By:--- ? Date Neil' lenker, Esquire Supreme Court I.D. #77974 Susquehanna Commerce Center East Suite 600 221 West Philadelphia Street York, PA 17404 Telephone: ('117) 846-9800 Fax: (717) 843-6134 0 Andrew W. Barbin, Esquire ANDREW W. BARBIN, P.C. 5020 RITTER ROAD, SUITE 109 MECHANICSBURG, PA 17055 717-506-4670 Attorneys for Cavanaugh Michaels, Ltd. CAVANAUGH MICHAELS, LTD. Plaintiff V. SMITH & MASON FAMILY PRACTICE ASSOCIATES, LTD. Defendant DOCKET NO. 02-3947 Civil Term PLAINTIFF'S REPLY TO NEW MATTER, AND ANSWER TO COUNTERCLAIMS WITH NEW MATTER Plaintiff, Cavanaugh Michaels, Ltd, (Cavanaugh Michaels), by and through undersigned counsel, Reply to New Matter and aver as follows: 60. Denied. This is a conclusion of law to which further response is not required. 61. Denied. This is a conclusion of law to which farther response is not required. 62. Denied. This is a conclusion of law to which further response is not required. 63. Denied. This is a conclusion of law to which further response is not required. 64. Denied. This is a conclusion of law to which further response is not required. 65. Admitted in part. Consultant services were also provided. 66. Admitted in part. Benefits of an additional physician under specified circumstances were discussed. 67. Admitted. 68. Admitted in part. Mr. Cavanaugh maintained a cordial professional relationship with IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW Dr. Frank similar to that maintained with members of the defendant practice prior to the present contractual disputes. 69. Denied in part. The defendant was aware of the professional status of Dr. Franks. 70. Denied. The decision was made to hire Dr. Franks by defendant. 71. Denied in part. The averment materially misstates the communications and mischaracterizes the writing which speaks for itself. No contract was formed. 72. Denied in part. The decision was made to hire Dr. Franks by Defendant. 73. Denied in part. Work space was increased. Motivation was not limited to the stated cause. 74. Denied in part. Equipment was purchased. Motivation was not limited to the stated cause. 75. Denied in part. Equipment was purchased. Motivation was not limited to the stated cause. 76. Admitted. 77. Plaintiff is without knowledge of the underlying circumstances of the separation from employment of Dr. Franks, and not discoverable on reasonable investigation. 78. Denied. Losses attributed to Dr. Frank arose from overhead decisions made by defendants. Dr. Franks was productive at all times, and had advice provided by Mr. Cavanaugh been followed alleged losses would not have been incurred. 79. Denied. No contract of indemnification was formed, terms were indefinite, necessary conditions precedent to any arguable obligation were not met, and no consideration was provided by defendant. There was no basis for indemnification as the losses were not attributable to Dr. Franks, but to the decisions and practices of defendants. WHEREFORE, the Affirmative Defenses set forth in New Matter should be dismissed with prejudice, and relief should be granted as requested in the Complaint. 2 RESPONSE TO COUNTERCLAIM - BREACH OF CONTRACT 80. Responses thereto are likewise incorporated as if restated verbatim. 81. Denied. No basis for the stated obligation is averred. 82. Denied. No indemnification obligation exists; no loss to which any obligation could attach is attributable to Dr. Franks rather than Defendants. 83. Denied. There was no contract, and no breach of contract. 84. Denied. As stated in the complaint, Defendant owes Plaintiff for services rendered. No payment is owed to Defendant and no offset exists. WHEREFORE, the Counterclaim should be dismissed with prejudice and relief should be granted as requested in the Complaint. RESPONSE TO COUNTERCLAIM- PROMIS45ORY ESTOPPEL 85. Responses thereto are likewise incorporated as, if restated verbatim. 86. Denied. 87. Denied. 88. Denied. 89. Denied. WHEREFORE, the Counterclaim should be dismissed with prejudice and relief should be granted as prayed in the Complaint. PLAINTIFF'S NEW MATTER 90. Counterclaim I, Breach of Contract fails to state a claim for which relief may be granted. 91. Counterclaim II, Promissory Estoppel fails to state a claim for which relief may be granted. 3 92. No indemnification contract was formed as pled because terms were indefinite, necessary conditions precedent to any arguable obligation was not met, and no consideration was provided by defendant. 93. Alleged losses were attributable to business practices of Defendants and not Dr. Franks; consequently any alleged guaranty would not apply. 94. Exhibit A was a privileged settlement offer and is not admissible. A compromise offer of settlement is inadmissible when offered against party who madeoffero6ettlemeut., Respectfully r Andrew bin Atty. I.D. # 71 ANDREW NV. BARBIN, P.C. 5020 Ritter Road, Suite 109 Mechanicsburg, PA 17055 (717) 506-4670 Counsel for Plaintiff DATED: July 27, 2004 4 Andrew W. Barbin, Esquire ANDREW W. BARBIN, P.C. 5020 Ritter Road, Suite log Mechanicsburg, PA 17055 (717) 506-4670 Attorneys for Perfect Solutions, Inc. CAVANAUGH MICHAELS, LTD. Plaintiff V. : IN THE COURT OF COMMON PLEAS : CUMBERLAND COUNTY, PENNSYLVANIA SMITH & MASON FAMILY CIVIL ACTION -LAW PRACTICE ASSOCIATES, LTD. DOCKET NO. 02-3947 Civil Term Defendant VERIFICATION I, Lee Cavanaugh of Cavanaugh Michaels, Ltd., verify that the statements made in the foregoing PLAINTIFF'S REPLY TO NEW MATTER, AND ANSWER TO COUNTERCLAIMS WITH NEW MATTER are true and correct to the best of my knowledge, information, and belief. I understand that false statements herein are made subject to the penalties of 18 Pa.C.S. § 4904 relating to unswom falsification to authorities. CAVANAUGH MICHAELS, LTD. ?'a Q L, a a ? ? e Cavanatiggh DATED: 7 JZ7 ?20C 4 Andrew W. Barbin, Esquire ANDREW W. BARBIN, P.C. 5020 Ritter Road, Suite 109 Mechanicsburg, PA 17055 (717) 506-4670 Attorneys for Perfect Solutions, Inc. CAVANAUGH MICHAELS, LTD. Plaintiff V. : IN THE COURT OF COMMON PLEAS : CUMBERLAND COUNTY, PENNSYLVANIA SMITH & MASON FAMILY CIVIL ACTION -LAW PRACTICE ASSOCIATES, LTD. DOCKET NO. 02-3947 Civil Term Defendant CERTIFICATE OF SERVICE I, ANDREW W. BARBIN, do hereby certify that on the date indicated below, served a true and correct copy of the foregoing RESPONSE TO NEW MATTER. AND ANSWER TO COUNTERCLAIMS WITH NEW MATTER by having the foregoing document served by facsimile and United States first- class mail, postage prepaid addressed to the following: VIA FACSIMILE (717/843-6134) Neil A. Slenker, Esquire Stock and Leader 6th Floor, 221 West Philadelphia Str York, PA 17404 DATED: July 27, 2004 c7 C-- o -n c iz cr-- rte` m? Cr r'i'1 N -C ?, IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CAVANAUGH MICHAELS, LTD. Plaintiff Docket No. 02-3947 Civil Term V. SMITH & MASON FAMILY PRACTICE ASSOCIATES, LTD. Defendant JURY TRIAL DEMANDED Civil Action - Law DEFENDANT'S REPLY TO PLAINTIFF'S NEW MATTER TO DEFENDANT'S COUNTERCLAIM AND NOW comes the Defendants, Smith & Mason Family Practice Associates, Ltd., ("Defendants" or "Smith & Mason') by and through their attorneys, the law firm of Stock and Leader, to reply to the New Matter of Cavanaugh Michaels, Ltd. ('Plaintiff" or "Cavanaugh Michaels") to Defendant's Counterclaim, and to set forth the following, as follows: 90. Denied. This averment is a conclusion of law to which no response is required, and it is therefore denied. 91. Denied. This averment is a conclusion of law to which no response is required, and it is therefore denied. 92. Denied. This averment is a conclusion of law to which no response is required, and it is therefore denied. 93. Denied. Defendants incorporate by reference the allegations set forth in their New Matter and Counterclaim. 94. Denied. This averment is a conclusion of law to which no response is required, and it is therefore denied. Respectfully submitted, STOCK AND LEADER i August 3 2004 By. Date A. Slenker, Esquire upreme Court I.D. #77974 Susquehanna Commerce Center East Suite 600 221 West Philadelphia Street York, PA 17404 Telephone: (7][7) 846-9800 Fax: (717) 843-6134 VERIFICATION I hereby affirm that the following facts are correct: I am authorized agent of Smith & Mason Family Practice Associates, Ltd. in the foregoing action. The attached Reply to Plaintiff's New Matter to Defendant's Counterclaim is based upon information which has been furnished to counsel and information which has been gathered by counsel in the preparation of this document. The language of the Reply to Plaintiff's New Matter to Defendant's Counterclaim is that of counsel and not mine. I have read the Reply to Plaintiff's New Matter to Defendant's Counterclaim and to the extent that the same is based upon information that I have given to counsel, it is true and correct to the best of my knowledge, information and belief. To the extent that the content of the Reply to Plaintiff's New Matter to Defendant's Counterclaim is that of counsel, I have relied upon counsel in making this Verification. I hereby acknowledge that the averments of fact set forth in the aforesaid Reply to Plaintiff's New Matter to Defendant's Counterclaim are made subject to the penalties of 18 Pa. C.S. 64904 relating to unsworn falsification to authorities. SMITH & MASON FAMILY PRACTICE ASSOCIATES, LTD. Date By' Karen Smith, M.D. IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CAVANAUGH MICHAELS, LTD. Plaintiff Docket No. 02-3947 Civil Term V. SMITH & MASON FAMILY PRACTICE ASSOCIATES, LTD. Defendant Civil Action - Law CERTIFICATE OF SERVICE AND NOW, this 3rd day of August _ . 2004, I, Neil A. Slenker, Esquire, of the law firm of Stock and Leader, attorneys for Defendant, hereby certify that I served the within Defendant's Reply to Plaintiff's New Matter to Defendant's Counterclaim this day by depositing the same in the United States mail, postage prepaid, in York, Pennsylvania, addressed to: Andrew W. Barbin, Esquire ANDREW W. BARBIN, P.C. 5020 Ritter Road Suite 109 Mechanicsburg, PA 17055 Respectfully submitted, STOCK AND LEADER August 3 2004 , Date By. A. Slenker, Esquire Supreme Court I.D. #77974 Susquehanna Commerce Center East Suite 600 221 West Philadelphia Street York, PA 17404 Telephone: (717) 846-9800 Fax: (717) 843-6134 N ? ? f ? c::i f ..- ..-? ?.w -"I" .?,.? L ? (11 ?: i it? ? ? f'-_'... ? -- it l") .? ? ,' -'" ?-.?It'1 T: ?,.?.. Cs? ., ?{ C.> ?J ? vs Case No. 02-3947 Smith & Mason Family Practice Associates, Ltd. Statement of Intention to Proceed To the Court: Cavanaugh Michaels, Ltd. intent . Prim Name Andrew W. Barhi n ,,,_? ,6ign Name Date: 1.2 1 Attorney for Cavanaugh Michaels, Ltd. Explanatory Comment The Supreme Court of Pennsylvania has promulgated new Rule of Civil Procedure 230.2 governing the termination of inactive cases and amended Rule of Judicial Administration 1901. Two aspects of the recommendation merit comment. 1. Rule of civil Procedure New Rule of Civil Procedure 230.2 has been promulgated to govern the termination of inactive cases within the scope of the Pennsylvania Rules of Civil Procedure. The termination of these cases for inactivity was previously govemed by Rule of Judicial Administration 1901 and local rules promulgated pursuant to it. New Rule 230.2 is tailored to the needs of civil actions. It provides a complete procedure and a uniform statewide practice, preempting local rules. This rule was promulgated in response to the decision of the Supreme Court in Shop v. Eagle, 551 Pa. 360,710 A.2d 1104 (1998) in which the court held that "prejudice to the defendant as a result of delay in prosecution is required before a case may be dismissed pursuant to local rules implementing Rule of Judicial Administration 1901." Rule of Judicial Administration 1901(b) has been amended to accommodate the new rule of civil procedure. The general policy of the prompt disposition of matters set forth in subdivision (a) of that rule continues to be applicable. II Inactive Cases The purpose of Rule 230.2 is to eliminate inactive cases from the judicial system. The process is initiated by the court. After giving notice of intent to terminate an action for inactivity, the course of the procedure is with the parties. If the parties do not wish to pursue the case, they -AU take no action and "the Prothonotary shall enter an order as of course terminating the matter with prejudice for failure to prosecute." If a party wishes to pursue the matter, he or she will file a notice of intention to proceed and the action shall continue. a. Where the action has been terminated If the action is terminated when a party believes that it should not have been terminated, that party may proceed under Rule230(d) for relief from the order of termination. An example of such an occurrence might be the termination of a viable action when the aggrieved party did not receive the notice of intent to terminate and thus did not timely file the notice of intention to proceed. The timing of the filing of the petition to reinstate the action is important. If the petition is filed within thirty days of the entry of the order of termination on the docket, subdivision (dx2) provides that the court must grant the petition and reinstate the action. If the petition is filed later than the thirty-day period, subdivision (d)(3) requires that the plaintiff must make a show in to the court that the petition was promptly filed and that there is a reasonable explanation or legitimate excuse both for the failure to file the notice of intention to proceed prior to the entry of the order of termination on the docket and for the failure to file the petition within the thirty-day period under subdivision (d)(2). B. Where the action has not been terminated An action which has not been terminated but which continues upon the filing of a notice of intention to proceed may have been the subject of inordinate delay. In such an instance, the aggrieved party may pursue the remedy of a common law non pros which exits independently of termination under Rule 230.2. C? ?' CIN Cavanaugh Michaels, Ltd. vs Case No. 02-3947 Smith & Mason Family Practice Associates, Ltd. Statement of Intention to Proceed To the Court: Smith & Mason Family Practice Assoc : , Ltd. intends to proceed with its_ c unterclaims in the above -cap?ed..&tion. Print Name Neil A. Shenker, Esq. Sign Name Date: 9/25/07 Explanatory Comment Defendant, Smith & Mason Family Practice Associates, Ltd. The Supreme Court of Pennsylvania has promulgated new Rule of Civil Procedure 230.2 governing the termination of inactive cases and amended Rule of Judicial Administration 1901. Two aspects of the recommendation merit comment. 1. Rule of civil Procedure New Rule of Civil Procedure 230.2 has been promulgated to govern the termination of inactive cases within the scope of the Pennsylvania Rules of Civil Procedure. The termination of these cases for inactivity was previously governed by Rule of Judicial Administration 1901 and local rules promulgated pursuant to it. New Rule 230.2 is tailored to the needs of civil actions. It provides a complete procedure and a uniform statewide practice, preempting local rules. This rule was promulgated in response to the decision of the Supreme Court in Shop v. Eagle, 551 Pa. 360,710 A.2d 1104 (1998) in which the court held that "prejudice to the defendant as a result of delay in prosecution is required before a case may be dismissed pursuant to local rules implementing Rule of Judicial Administration 1901." Rule of Judicial Administration 1901(b) has been amended to accommodate the new rule of civil procedure. The general policy of the prompt disposition of matters set forth in subdivision (a) of that rule continues to be applicable. II Inactive Cases The purpose of Rule 230.2 is to eliminate inactive cases from the judicial system. The process is initiated by the court. After giving notice of intent to terminate an action for inactivity, the course of the procedure is with the parties. If the parties do not wish to pursue the case, they will take no action and "the Prothonotary shall enter an order as of course terminating the mater ,,ith prejudice for failure to prosecute." If a party wishes to pursue the matter, he or she will file a notice of intention to proceed and the action shall continue. a. Where the action has been terminated If the action is terminated when a party believes that it should not have been terminated, that party may proceed under Rule230(d) for relief from the order of termination. An example of such an occurrence might be the termination of a viable action when the aggrieved party did not receive the notice of intent to terminate and thus did not timely file the notice of intention to proceed. The timing of the filing of the petition to reinstate the action is important. If the petition is filed within thirty days of the entry of the order of termination on the docket, subdivision (d)(2) provides that the court must grant the petition and reinstate the action. If the petition is filed later than the thirty-day period, subdivision (d)(3) requires that the plaintiff must make a show in to the court that the petition was promptly filed and that there is a reasonable explanation or legitimate excuse both for the failure to file the notice of intention to proceed prior to the entry of the order of termination on the docket and for the failure to file the petition within the thirty-day period under subdivision (d)(2). B. Where the action has not been terminated An action which has not been terminated but which continues upon the filing of a notice of intention to proceed may have been the subject of inordinate delay. In such an instance, the aggrieved party may pursue the remedy of a common law non pros which exits independently of termination under Rule 230.2. C"J ? c:3 ..,.,.1 C? '?'?' 'T"t ?? >\.1i ? . ...?.; .?,,,,? `" ` ?} 4l 4? _ ? a`"? `11 :-r _. ? ,