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32. Denied.
33, No responsive pleading is required.
34. No responsive pleading is required,
35. Admitted.
36. Neither admit nor deny. Plaintiff admits suggesting
the Dale Carnegie course to Defendant but doesn't remember the
specifics as to when this was mentioned to Defendant.
37. Admitted.
38. Denied. When Plaintiff first mentioned the Dale
Carnegie course to Defendant, Plaintiff and Defendant orally
agreed to the terms of the March 28, 1995 agreement before it was
reduced to a writing and the writing was a mere formality of an
earlier agreement.
39. Denied. Defendant did enter into all agreement with
Dale Carnegie Systems on March 10, 1994 but with the
understanding of the oral agreement between Plaintiff and
Defendant that if Defendant left the employment within two years
after payment of the course, Defendant would reimburse Plaintiff
for all expenses incurred relating to the course.
40. Denied. The Agreement states that if enrollment is
cancelled after the first session, tuition will be refunded
except for a $50,00 administrative fee.
41. Denied. There is no modification of an agreement.
42. Denied. There is no modification of an agreement.
43. Denied. Upon employment, Defendant was made aware to
the terms of the agreement,
44. Denied,
45. Denied,
46. Denied.
47. Denied,
WHEREFORE, Plaintiff demand judgment against the
Defendant for $995.00 together with the continually accruing
interest charge at the rate of 6% per annum from October 15,
1994, costs of suit including costs for levying on Plaintiff's
property, and all other relief to which Plaintiff may be justly
entitled,
VS.
IN THE COURT OF COMMON PLEAS
CUMBERLAND COUNTY,
PENNSYLVANIA
NO. CV!~95
LINDA C. TILL, PENNSYLVANIA
OFFICE SUPPLIES GROUP, INC.
DEBRA A. STEFFEY
CIVIL ACTION
COMPLAINT
The above Plaintiff brings this action against the above
Defendant to recover the sum of $995.00 plus the costs of the
suit with interest thereon as hereinafter stated, upon the
following cause of action.
1. The Plaintiff, Linda C. Till, is the owner of
pennsylvania Office Service Group, Inc. with its place of
buainess located at 320 East Meadow Drive, Mechanicsburg,
pennsylvania 17055.
2. The Defendant, Debra A. Steffey, is an adult individual
whose address is 4420 Old Gettysburg Road, Apartment #1, Camp
Hill, pennsylvania 17011.
3. Plaintiff employed Defendant on January 24, 1994 in the
capacity of Sales Representative.
4. On March 10, 1994 Defendant signed to enroll in a Dale
Carnegie Course.
5. The cast of the Dale Carnegie Course was paid by
Plaintiff.
6. The cost of the Dale Carnegie Course was $995.00.
7. The agreement between Defendant and Dale Carnegie
referred to as Exhibit "A" stated that the Defendant could cancel
the enrollment and all tuition would be refunded except a fifty
dollar ($50.00) administration fee if cancellation took place no
later than the close of the first session of the class.
B. The first session took place on April 4, 1994.
9. Defendant did not cancel enrollment to the Dale
Carnegie Course.
10. Defendant completed the Dale Carnegie Course.
11. On March 2B, 1994, Defendant signed a contract with
Plaintiff, referred to as Exhibit "B" stating that if within two
(2) years of the course, Defendant's employment is terminated by
Pennsylvania Office Services, Inc. or Defendant leaves employment
of Pennsylvania Office Services, then Defendant will reimburse
Pennsylvania Office Services for all expenses incurred by
Pennsylvania Office Services related to the course.
12. Defendant did not reimburse Plaintiff for Plaintiff's
expenses related to the Dale Carnegie Course.
13. Defendant left employment for Plaintiff on October 15,
1994.
14. Plaintiff is entitled to receive interest on the cost
of the Dale Carnegie Course, $995.00, at the interest rate of 6%
per annum to the past due balance.
WHEREFORE, Plaintiff demands judgment against the
Defendant for $995.00 together with the continually accruing
interest charge at the rate of 6% per annum from October 15, 1994
and the costs of suit.
COUNT II
(Alternative to Count I- Unjust Enrichment)
15. Plaintiff incorporates the allegations of every
paragraph enumerated above of this Complaint as if said
paragraphs were fully set forth here at length.
16. Defendant received the benefit of the Dale Carnegie
Course.
17. At all times material hereto, Defendant, with the
aforesaid knowledge, permitted Plaintiff to pay the cost of the
enrollment of the Dale Carnegie Course.
lB. At all times material hereto, the Defendant was
unjustly enriched by retaining the benefit of receiving the
knowledge and other benefits of the Dale Carnegie Course without
paying Plaintiff fair and reasonable compensation.
19. This course has helped Defendant grow personally and
professionally which is evidenced by her progress report as shown
by Exhibit "C".
20. By reason of the aforesaid unjust enrichment of
Defendant at Plaintiff's expense, an implied contract exists
between Plaintiff and the Defendant, and the Defendant is
obligated to pay Plaintiff the quantum meruit value of the
t.Xh'l b', \ Ii
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PR(6INTlD BY
DALE CARNEGIE SYSTEMS-
.713 LOCUST IN., SUITE 102
H.ARRISBURO, PA 17100
PHONE 17111 S4CH)801 HARRISBURG
(7111 561l-81a4 LANCASTER
BE. SAESNICK & ASSOCIATES. INC
ACC"IOUID IY ACCMIOlI.HO COUNCIL '00 CONI'IolUI..o tOUCoAllOH a fRAlNINO. IlrrfC
.....ou......, ""'UCAllOH 0rAl1 CAANIGlIIhIIlW,.
DATE
3-/b - 9"/
PAIN AS YOU DESIRE IT ON CERTIFICA TE
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BILLING INSTRUCTIONS _
'O~ O'Plel un ONLY
pal _ _ HRl REP <;t3
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"'-1A1I lilT THI NA.,. 0' THI I'I~~~ WANT TO" NOTIPlID AT YOU~ CDM'ANY" YOU WIN AN AWARD: IP.... PM'I
NAME .C-..yd-1-._.JI/L.u__u___
TITLE
CO NAME' ,\00111.1)$ 1111l11l1'lnlllom ,f)l).el'
MAiliNG ADDRESS
CITY
STATE
ZIP
ENIlOIJMENT AUIIEEM~NT IIElW}EN STUDENT AND B.E. BRESNICK & ASSOCIATES. INC.
ENROLLMENT PLEASE ENROLL ME IN TlIE.{)C.5L___ IN CONSIDERATION OF WHICH I AGREE TO PAY THE TUITION WHICH
SHALL INCLUDE ALL TEKTS AND SUPPLIES FUnNISHED TO ME AT NO EKTRA CHARGE. I UNDERSTAND THAT WITHIN ONE YEAR
FROM TIlE DATE OF TIllS ENnOLLMEN' I MAY MAKE UP SESSIONS FOR GRADUATION WHEREVER SUCH SESSION SHALL BE OF.
FERED TUITION FOn HIE DALE CAflNEOIE COUnSE.IS S . H A 9'- . DALE CARNEGIE MANAGEMENT SEMINAR-
S- . DALE CAnNEGIE SALES COURSE. S :IT 7./-'2... 110 ; EDClCRC S
REFUND I UNDERSTAND T"AT I MAY CANCEl TillS AGnEEMENT PURSUANT TO rHE TERMS AND CONDITIONS OF THE NOTICE OF
CANCELLATION If I 00 NOT CANCf.L lINDER HtE TERMS OF SAID NOTICE. I AGREE THAT I SHALL NOTSE ENTITLED TOANY RE-
FUND OF TUITION E KCEPT AS FOlLOW!1 I MAY CANCEL MY ENROLLMENT AND ALL TUITION. EKCEPT A S50 00 ADMINISTRATION
FEE. WILL BE nEFlJNDEIIPIlOVIDED I A !TEND TIlE ENTIRE SESSION NUMBER 1 AND GIVE YOU A WRITTEN NOTICE NO LATER
THAN THE CLOSE Of TIllS FIIIST 5E~510N OF MY CLASS. AND RETURN ALL BOOKS AND SUPPLIES ISSUED TO ME.
REOUIREMENTS FOil CEIHlFICATE OF COMPLETION 111 PAYMENT OF TUITION. 121 ATTENDANCE AND SATISFACTORY PARTICIPATION:
DALE CARNEGIE COURSE .IN AT LeAS T 10 OF THE 12 SESSIONS. DALE CARNEGIE MANAGEMENT SEMINAR-IN AT LEAST 10 OF THE
12 PERIODS. DALE CAIlNEGIE BALES COURSE. IN AT LEAST 10 OF THE 12 SESSIONS AND SUCCESSFULLY PARTICIPATE IN BALES
TALK C'lAMPIONS'IIP. 131 DECLARED OY YOUR INSTHUCTORS AS HAVING MADE PROGRESS WORTHY OF RECEIVING A CERTIFI-
CATE OF COMPLETION
USUAL CLASS SIZE DALE CARNEGIE COUIlSE. 30.44. DALE CARNEGIE MANAGEMENT SEMINAR. 15-36: DALE CARNEGIE SALES COURSE.
>>&e VISUAL AIDS. INCLUDING CHAnTS AND BLACKBOARDS. WILL BE USED FROM TIME TO TIME IN THE INSTRUCTION.
OUALIFICATIONS OF INSTRlJCTORS INSTRUCTION WILL BE GIVEN BY DALE CARNEGIE' INSTRUCTORS WHO ARE GRADUATES OF ONE
OR MORE DALE CAIINElIIE. COUIISES AFTEIl CAREFUL SCREENING. THEY HAVE RECEIVED INTENSIVE TRAINING TO TEACH THE
COURSE AND ARE REOUIRED TO ATTEND YEARLY REFRESHER COURSES WHERE THEY ARE RE.EXAMINED AS TO THEIR ELIGIBILITY
TO TEACH
'AOIIII TO THlA.OVI CONDITION' AND ACKNOWLIDGI RICIIPT OF III COpy 0' THIS ENROLLNINT AGRtENINT AND (2) CO"I' Of'
THlAnACHID NDTICI 0' CANCILLATION ON WHICH THI DATI OF THE TRANSACTION AND THI LAST DATefOR CANCIUATIOIl HAVI
HIN P1UIO IN. .~ 1.1, ..f- .
DATE"'" - - .. 0 ~ .Y;JNATURE ,/.
ACCEPTED ~ -z..~~ - r ~-"r
o"rE~-"-- - SPONSOR'S AEPRESENTATlVE
YOU, THE CLASS MEMBER, MAY CANCEL THIS ENROLLMENT AGREEMENT AT ANVTIMEPRIOR TO MIDNIGHT OF
THE THIRD DAY AFTER THE DATE OF THIS ENROLLMENT AGREEMENT, SEE THE ATTACHED NOTICE OF
CANCELLATION FORM FOR AN EXPLANATION OF THIS RIGHT,
,
. .'
VS.
IN THE COURT OF COMMON PLEAS
CUMBERLAND COUNTY,
PENNSYLVANIA
NO. 95-1919
CIVIL ACTION
DEBRA A. STEFFEY,
petitioner
LINDA C. TILL, PENNSYLVANIA
OFFICE SUPPLIES GROUP, INC.,
Respondent
RULE TO SHOW CAUSE
AND NOW, comes Respondent, through her attorney, Scott Alan
Bly, Esquire, to show cause why Petitioner's Petition for Relief
from Default Judgment should not be granted,
ANSWER TO PETITION FOR RELIEF
FROM DEFAULT JUDGMENT
1. Admitted,
2. Admitted.
3. Admitted.
4.
court.
Denied. There was no appearance entered with the
5. Admitted.
6. Admitted.
7. Admitted.
B. Admitted, There was no attorney of record. No
appearance was entered by Petitioner's attorney.
9. Denied, The default judgment was served on Defendant
but there was no attorney of record,
10. Denied.
11. Denied, There was no attorney of record,
12, Neither admit nor deny.
...'"
VS.
DEBRA A. STEFFEY
IN THE COURT OF COMMON PLEAS
CUMBERLAND COUNTY,
PENNSYLVANIA
NO . ffit:!!:5I! - 9 5 ~ 1'11'1
LINDA C. TILL, PENNSYLVANIA
OFFICE SUPPLIES GROUP, INC.
C1VIL ACTION
PRAECIPE FOR DEFAULT JUDGMENT
The above Plaintiff brings this action against the above
Defendant for default judgment to recover the sum of $995.00,
plus the costs of the suit with interest thereon as hereinafter
stated, upon the following cause of action.
~~~".Jpllll
1. Complaint was filed with the ~ on May 5,
1995,
2. Defendant signed for certified mail of the complaint on
May 13, 1995.
3, Notice of intent to default was sent on June 29, 1995
certified mail.
4 . Defendant signed for certified mail of the notice of
intent to default on July 12, 1995.
5. The defendant has not responded to the complaint.
6. The defendant has not responded to the notice of intent
to default.
WHEREFORE, Plaintiff requests this honorable court to a
default judgment against the Defendant in the amount of $995.00,
together with the continually accruing interest charge at the
rate of 6% per annum from October 15, 1994 to present, costs of
the suit and all other relief to which Plaintiff may be justly
entitled.
" ~
Scott Alan B
Attorney for aintiff
Attorney ID #71BB7
P.O. Box 341
Hershey, PA 17033
(717) 533-8315
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PROOF OF SERVICE OF NOTICE OF APPEAL AND RULE TO FILE COMPLAINT
(ThIS proof of sor",Co MUS I fJf FILED WIIIIIN ILN (/0) VA YS AlIEn "/IIIU 11011 flol'co 01 app""'. CIIllck i1pp/,cilblO boxos)
COMMONWEALTH OF PENNSYLVArllA
COUNTY OF ___ ; II
AFFIDAVIT: Illereby .wIlar or alllrrn Ihall .",vod
o i1 copy 01 tho Nutlce 01 ApPl!lIl, Common Ploits No ._.___.___._________ . upon Illn District Justicn designatod thoroin on
{(felto of sorvlce) _ ,19__ 0 by ~JlHsnflill sur'lICH 0 hy (collifiod) (rogistored) mall. sonder's
rocnipt attAched hereto. and upon the npplllll~U. (nilf1lO) .__ ,on
. 10_-D by pmstlllal St!lVICC 0 by (cIHtlfll!d) (rcUlslorocJ) mad, 5tHlder's recolpt tlttachod hereto.
o and (u(lhor that I sorvul! tho Rule to Flit! i\ COlllpliltf\1 accornpanY1no ltw abOVH Notlcu of Appnal upon tho nppellee(s) to whom
tho Rulo was nddrr.ssud on ______._______, lH__. 0 hy porsorlal SUIVICH 0 by (certified) (registered)
mail, sundor's receipt nttochmJ hereto
SWORN (AFFIRMED) AND SUBSCRIBED BEFORE ME
THIS DAY OF ,19___
SIgnature 01 atl,ant
SIll"a/IJfLl 01 OlllCldl btllollt ""lltlffl ,11/lt/,..,1 ""ol~ mdl/u
fll/O oloU,CIoJ'
MV commiSSion oxpires on
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Magisterial District 09-30.5.
4, On March 8, 1995 Petitioner's allorney. William A, Cornell. Jr. elllered an
appe;mmce wilh the court and notified Respondent in wriling, a true and correct copy of
which is allached herein marked as Exhibit" A" and incorporated by reference thereto,
5. A trial on the merits was held on March 21, 1995 before the 1I0norable Ronald
E, Klair and a judgmelll was elllered against Respondelll and in favor of Petilioner,
6, Subsequently, Respondent did cause to be filed a Notice of Appeal fro III the
District Justice lIearing.
7, That Respondent by and through her allorney, filed a Verified Complaint on May
5, 1995 in the Court of Common Pleas of Cumberland County, Pennsylvania,
8, Petitoner's attorney of record was not served wilh a copy of the verit1ed
Complailll by Respondent or her allorney.
9, On June 29, 1995, Petitioner was served via certified mail a notice of intention \0
enter default judgment inaccordancc with Pa,R,C,P.237,I a true and correct copy of which
is attached, marked as Exhibit "8" and incorporated herein by refcrence, however, neither
Respondelll or her allorney served a copy of thc noticc to Petitioner's allorney of record in
accordance with Pa.R.C,P. 237, \(a)(2)(ii).
10. Furthermore. the notice was improperly docketed and fails to conform to propcr
standards of notification due to thc incorrect civil dockct number.
II. That said lililure to notify Pctitioner's allorncy violates thc dual service
requirement of Pa.R,C.P, 237, I (a)(2)(ii) and the legislative intent of avoiding addilional
time constraillls that burden the allorney of record.
12. On or about early July 1995, Petitioner forwarded a copy of the notice (Exhibit
8, Admillcd
9, It is admittcd that Dcfcndunt did not canccl cnrulhncnt, howcvcr, thc agrccmcnt
bctwccn Dcfendant and Dalc Carncgic which is allachcd hercin markcd Exhibit "A" and
incorporatcd by referencc thercto, statcs that Dcfcndant could only cancel the agrecmcnt
within three days of thc date of cnrollmcnt,
10. Admitted
11. It is admitted that Defendant signcd an agreement on March 28, 1995,
however, by way of furthcr answer, Defcndant believes and therefore avers that Plaintiff was
under a pre-cxisting duty to pay for the course and that the subsequent unilateral
moditication of the parties verbal agreement was without consideration and was
unconscionable due to the incquities in the parties respective bargaining power,
12, It is admitted that Defendant did not reimburse Plaintifffor the course, however,
by way of further answer, .Defendant denies that she was or is under any obligation to offer
reimbursement.
13. Denied, Defendant was involuntarily dischargcd from cmployment.
14. No response is required, proof thcreof is demandcd at timc of triul.
15, No responsive pleading is required to paragraph 15 of Plaintiff's Complaint.
16, Paragraph 16 of Plaintiff's Complaint contains Plaintiff'schaructcrizations of the
alleged fact to which no responsive pleading is requircd und proof thcrcof is dcmundcd ut
timc of trial.
17. Paragraph 17 of Plaintiff's Complaint contains I'luintiff'schuracterizutions of thc
ulleged fuct to which no rcsponsivc plcuding is rcquired und proof thcreof is demanded HI
time of trial.
,
25, Thllllllulltimcs rclcvunt hcrctoforc, Pluinliffugrccd to hcur thc ClIst of thc Dulc
Carncgic Coursc,
26, Subscqucntly, in accordancc with and in rcliancc upon I'laintiff'srcprcscllllllions,
Dcfcndam did cntcr into an agrccmcnt with Dalc Carncgic Systcms on Murch 10, 1994, II
truc ulld corrcct copy of which is allachcd hcrcin, markcd us Exhibit" A" und incorporutcd
by rcfcrcncc thcrcto.
27. That Pluintiffpaid thc cost of cnrollmcnt.
28, Thc agrccmcnt bctwecn Dcfcndant and Dalc Carncgic rcfcrrcd to as Exhibit" A"
statcd that thc c1assmcmbcr could cancclthc agrccmcnt "any timc prior to midnight thc third
day aftcr thc datc of this cnrollmcnt agrccmclll" (i,c" March 13, 1994).
29, On March 28, 1994, aftcr Dcfcndant's option to withdrawal from thc coursc
had cxpircd, and notwithstanding thc protcsts of Dcfcndant, Plaimiff dcmandcd that
dcfcndant sign an agrccmcl1l to rcpay thc cost of thc coursc in thc cvcnt that hcr
cmploymcl1l was tcrminatcd within two (2) ycars. A truc and corrcct copy of said writing
is attachcd hcrcin, markcd as Exhibit "8" and incorporatcd by rcfcrcncc thcrcto,
30. That thc allcgcd agrecmcnt cOlllaincd no additional considcration in thc form of
any Icgal dctrimcm to thc Plaintiff.
31. That all bcncfit of thc modification inurcd to Plaintiff and against Dcfcndam.
32, Spccifically, thc allcgcd agrccmcnt rcfcrrcd to as Exhihit "8" was in thc form of
an adhcsion contract whcrc 1111 hargaining powcr wus inthc I'laimiff's hands thcrcby dcnying
any mcaningful choicc to Dcfcndant or providing any additional considcrution to amcnd thc
partics prior agrccmcnt.
33, Thai Plaintiffthcrcforc had a prc.cxisting duty to pcrform in accordancc with thc
Dcfcl1lllllU did cntcr huo llll agrccmclll wilh Dalc Carncgic Syslcms on March 10, 1994, a
truc and corrccl copy of which is allachcd hcrein, markcd as Exhihil "^" and incurporlllcd
by rcfcrcncc Ihcrclo.
40, On March 28, 1994, approximately onc wcek bcfore thc start of thc Dalc
Carnegic Course, and aftcr Dcfcndant's option 10 withdrawal from thc coursc had cxpircd,
and notwithstanding thc protcsts of Dcfendant, Plaintiff dcmanded that defcndant sign an
agrccment to repay thc cost of the course in the evcnt that hcr cmployment was tcrminated
within two (2) years. ^ truc and correct copy of said wriling is att:lchcd hcrcin, mark cd as
Exhibit "B" and incorporatcd by rcferencc thereto.
4\. That any brcach of thc allcged agrecmcnt marked Exhibit "B", whcthcr
attributable to the Plaillliff or Dcfendalll would inurc to the benefit of the Plaintif'"
42, That Defendalll rcccivcd no bencfit from the alleged agreement sufficicnt to
creatc a modification or rccision of Plaintiff's original agrccmcnt to pay the cost of thc
course,
43. That as such. thc allcgcd agreemcnt was unduly onc sidcd at thc timc it was
prcscntcd to Dcfcndant,
44, Thc Dcfcndant was unablc to canccl Ihc coursc bccausc thc coursc was a
rcquircmcnt of Dcfcndant's continucd cmploymcnt.
45. Thc Dcfcndant was without any mcaningful choicc as shc could not withdrawal
from thc coursc without suffcring a pccuniary loss and any withdrawal would rcsult in hcr
tcrmination and liability for thc full valuc of thc coursc undcr I'laillliff's attcmptcd
modification,
46. Spccifically thc llllcmptcd modification markcd Exhibit "B" was opprcssivc 10 thc
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DATi:. :-J'lHJsun5flLllIl!llltATIVL
YOU, THE CLASS MEMOEfl. r.IAY C^,ICEL TIllS E,mOLl.MErn AGflEEMENl (;f ",~y TIME PRIOR TO MIDNIG...
THE THIHD DAY AFTER THE DATE OF THIS WliOLLMEln AGIlEEr.IElIl. SEE THE ATTACHED NOTIC
CANCELLATlOrl FOIlM ron AN EXflLAtIATlON OF IHI~ IlIGHT.
~ 'J
.Lxhl01t II
. Ill. Il .
WRIT OF EXECUTION and/or ATTACHMENT
COMMONWEAL TH OF PENNSYL VANIA)
COUNTY OF CUMBERLAND)
NO. 95-1919 CIVIL 19
CIVIL ACTION. LAW
TO THE SHERIFF OF ___C,UMBE!!LAND______COUNTY:
Linda C. Till, Pennsylvania Office
To salls'y Ihe debt. interest and costs due.
Supplies Group, Inc.
'rom Debra a. Stdft,:,~_~20 ~.~d
17011.
PLAINTIFF(S)
Gettysburg ROad, Apt U2, Camp HIll PA
(1) You are directed 10 IOvy upon tho properly of the defondant(s) and 10 sell
DEFENDANT(S)
Personal Property.
, ..
(2) "You ate also ditected to altach Ihe properly 01 tho delendant(s) not levied upon In the possession 0'
GARNISHEE(S) as lollows:
and to notijy the garnlshee(s) that: (a) an attachmenl has been Issued; (b) Ihe garnishee(s) is/are enjoined 'rom paying any
debt 10 or for the account 01 the delendant(s) and from dellvetlng any properly 0' the defendanl(s) or otherwise disposing
thereo':
(3) If properly of Ihe defendant(s) not levied upon an subjecl to altachment Is lound In the possession of anyone other
than a named garnishee, you are dltecled 10 notify him/her that he/she has been added as a garnishee and Is enjoined as above
stated.
Amount Due $995.00
Interest 10-15-94 @ 6%
AllY's Comm %
Ally Paid $71.75
Plalntlll Paid
Date: Augus t 1, 1995
L.L.
Due Prolhy
Other Costs
$.50
$ 1. 00
LAWRENCE E. WELKER
REQUESTING PARTY:
Name Scot t Alan ~_lJ'--,_ .E:!3_q~.___
by' _-}_-',
prolhT'alVI Civil Division
I JlII",{ "}
/ / I /
. .
Deputy
Address:
POBox 341
Hershey PA 17033
Allorney lor: P 1 al n_~~FJ' _____
Telephone: ( 7 17) 533 - ~13 1 5
Supreme CourllD No. _)lJl.B:!.____.
GEISINGER CLINIC, II Pennsylvllnlal Non-Pro", Corporntlon
VS.
Nichollls W. 01 CUCCIO, M.D., Allpellllnt
No. 00253 Harrisburg 1991
SUPERIOR COURT OF PENNSYLVANIA
606 A.2d 509, 414 Pa, Super. 65
April 3, 1992, Flied
Petition for Allowance of Appeal Denied November 16, 1993.
Appeal from the Order of the Court of Common pleas, Clinton county, CIvil DIvision, at No, 6.90
(EQUITY).
COUNSEL
Jeffrey W. Stover, State College, for appellant.
Diane S, Danoff, Philadelphia, for appellee.
Robert A, Buller, pro se.
JUDGES
Olszewski, Hudock and Brosky, JJ.
AUTHOR: BROSKY
OPINION
{.S9} This is an appeal from an Order entering n declaratory judgment in favor of Geisinger
Clinic (Geisinger) and against Nicholns W. Di Cuccio. M.D.. (Dr. Di Cuccio) nppellnnt herein.
Dr, Di Cuccio raises for our consideration lour issues: (I) The employment ngreement is
invalid because its terms nre ambiguous and illusory. nnd. consequently. the restrictive covenant
ancillnry to the agreement is unenforceable; (2) The liquidated dnmnges c1nuse is an
unconscionable forfeiture which renders it an invnlid, unenforceable penalty clause; (3) The two
year limitation of the restrictive covenant clause has expired because the terms thereof had begun
to run at the time of the sale of the busincss; and (4) The trial court erred in awnrding monetnry
damages without permitting Dr. Di Cuccio to lile an answer and counterclnim to the complnint,
thereby usurping Dr. Di Cuccio's right to n jury trial on his counterclnim to allow a set off on the
nmount ofliquidnted damagcs. Wc allirm.
We ndopt the fnctunl findinl!s of the trinl court ns set forth in its Opinion of October 3, 1990.
See 1-7.
Dr. Di Cuccio. tOl!cthcr with the other physicinn/stockholders in thc Clinton Association of
Physicinns and Surgeons, P.C. (CAPS) nnd Geisinl!cr cntered into n bilateral contrnct lor thc
purchase of the assets of CAPS by Geisinl!er, the employment contrnct nt issue here being
nncillnry to nnd n condition of thc asset purchuse nl!reemenl. See Opinion, I, 2; Findinl!s of Fact
Nos. 3-5, 8. A bilnternl cOlllract is tormed when ono party to the contract promises to perlorm or
to forebear frol11 performing in exchanl!o for the promised performunce or lorbenrnnce of the
(~) 1lJ9.1.11J1}6 hy Mil.;hic, A lJimion Ill'lh.'\:lll:l~\'iI:r hh.:.,Il1111 UC\:d E11t,:\!cr l"III~llIclllll~, 1\11 Uh!.hIJ.lh~r\',,-d,
2
other contracting party. Greene v. Oliver Relllty Co.. 363 Pa. Super. 534, 526 A.2d 1192
(1987), appelll denied. 5171'a. 607. 536 A.2d 1331 (1988).
{t90} As his first issue, Dr. Di Cuccio attacks the allegedly illusory provisions of Exhibit A of
the ancillary employment agreement, relating to salary and additional compensation, in thatthe
nature Bnd extent of Geisinger's obligation in this regard arc uncertain and amount, in ellcct, to no
obligation on the part of Geisinger. Our reading of Exhibit A is not in accord with the
interpretation prolfered by Dr. Di Cuccio. Exhibit A of the employment agreement provides for an
initial annual base salary of one hundred sixty-five thousand dollars, not to be reduced during the
term of the agreement, provided that (I) Dr. Di Cuccio remain financially productive at the level
as existed prior to the execution of the agreement; and (2) Geisinger's net revenues over its
expenses for the fiscal year immediately preceding do not fall below eight percent of net revenues
budgeted for CAPS, Moreover, additional compensation for Dr. Di Cuccio was provided tor in
Exhibit A in three respects:
(A) Percentage or Net Revenue. Dr. Di Cuccio is entitled to a percentage of net revenue in
excess of his base salary. above, if the aggregate collected net revenues of Dr. Di Cuccio and
three other physicians who were also parties to the agreement exceeds their aggregate base salary
by a specific percentage to be annually reviewed and adjusted, if necessary.
(B) Medical Director's Fund, Dr. Di Cuccio would also be entitled to an annual
discretionary bonus from a fund comprised of one percent of the net revenue. This discretionary
bonus was to be awarded by the Medical Director of Geisinger to recognize non-income
generating contributions by physicians of CAPS.
(C) Group Bonus. Dr. Di Cuccio would also receive a bonus in the amount of up to forty
percent of CAPS' net revenues in excess of the budget if the expenses were at or below the
budget and the income goals set forth in Exhibit A (relating to basic salary).
r9J} A contract is evidenced by a mutuality of obligation. A mutuality of obligation exists
when both parties to the contract are required to perform their respective promises. lfa mutuality
of promises is absent, the contract is unenforceable. Id. A promise to perfoml or to forebear from
performing must be supported by consideration. Id. If the promise is entirely optional with the
promisor, it is said to be illusory and, therefore, lacking consideration and unenlorceable. Best v.
Realty Management Corll.. 174 Pa. Super. 326, 101 A.2d 438 (1953); J.D. Calamari & J.M.
Perillo, The Law or Contracts ~ 4-17 (2nd cd, 1977). The promisor has committed him/herself
to nothing. J.D. Calamari, supra; E.A. Farnsworth, Contracts ~ 2.13 (1982).
Dr. Di Cuccio argues that the additional compensation provisions of Exhibit A arc illusory
because the amounts of additional compensation are unascertainable. Dr. Di Cuccio maintains that
under the additional compensation provisions of Exhibit A, Geisinger was not bound to pay any
compensation to him beyond the one hundred sixty-five thousand dollar annual basic salary
because the terms in which these additional compensation provisions arc cast arc illusory, i.e.,
they arc optional with Geisinger and lack a return promise in exchange for the promise of Dr. Di
Cuccio to render mcdical services to pntiel1ts who come to Geisinger. A contract is enforceable
(\.") 199.1.11)1)(, by Mkhit:. II di\'ilillllllrn.:.:J EI~\-It:r lih:., 111I11 u\'(tJ EIM:\'h:r IIWI~11ii:1l 1111;. 1\11 ltig,hlllll':M:n'aI
3
when the parties thereto have reached a mutual understanding, have exchanged consideration and
have delineated the terms of their bargain with sutlicient clarity. Greene v. Oliver Realty, Inc.,
supra. An agreement is suOiciently delinite if the parties intended to contract with each other and
if a reasonably certain basis exists upon which a court could grant an appropriate remedy. Id.
The terms of the discretionary bonus provisions, we lind, arc sullicicntly dclinitc to withstand
a claim of illusoriness or indclinitencss. Each additional compcnsation provision of Exhibit A
statcs with sullicient clarity that it is discretionary. With respect to the basic salary provision,
Geisinger promises to pay an annual salary in the amount of one {*92} hundred sixty-five
thousand dollars which Geisinger promises not to reduce in exchange for the CAPS physicians'
promise to maintain certain levels of Iinancial productivity and paticnt accessibility, provided that
net revenues for the previous fiscal year do not fall below eight percent of budgeted net revenues
afterJune 30, 1987.
Clause A, relating to the percentage of net revenue additional compensation provides that
al!!!regated revenues must exceed the aggregate base salaries of the CAPS physicians by a certain
percentage. which percentage is subject to annual review and adjustment. At the time of the
execution of the asset purchase and employment agreements, the percentage was set out in the
lalter as forty-four point five percent. Therefore, Geisinger does promise the CAPS physicians a
percentage net revenue bonus in exchange for the physicians' promise to provide medical care for
Geisinger's patients. Clause B provides for a one percent annual allocation by the Medical
Director, at his discretion, to award a bonus for non-revenue generating contributions. Therefore,
Geisinger also promises to award a bonus to group member physicians for any non-revenue
generating contribution to Geisinger in exchange for the physicians' promise to treat Geisinger's
patient. Clause C allows lor a bonus to the CAPS physicians in an amount up to forty percent of
its net revenues in excess of the budget if expenses are maintained at or below budget levels and if
income goals are attained. Should expenses be kept at or below budget level, Geisinger promises
the CAPS physicians a bonus for a certain percentage figure in exchange for the physicians'
promise to keep expenses at least at the budget level and to attain specific income goals.
In sum, each of the above provisions spells out with definiteness and clarity the
responsibilities, duties and expectations of all the parties to the agreement. Geisinger is bound by
its promise to pay certain salaries and bonuses once certain net revenue levels have been attained
and so long as the CAPS physicians maintain a certain degree of prolessional responsibility to
Geisinger. We see nothing {*93} illusory, indelinitc or one-sided about this arrangement.
Moreover, the record indicates that the employment agreement and its Exhibit A were a product
of arms-length bargaining between knowing, willing and sophisticated business people. This is
especially pointed up by the lact that Dr. Di Cuccio personally received the sum of five hundred
twenty thousand four hundred forty-six dollars and lilly-seven cents, ($ 520,446.57), plus interest
from Geisinger on the purchase price of CAPS. Finding of Fact No.4. Therefore, Dr. Di Cuccio
is bound by the terms of this agreement. Boyce v. Smlth-Edwards-Dunlap Co., 398 Pa. Super.
345. 580 A.2d 1382 (1990). Since we are unable to conclude that the cmployment agreemcnt fails
for indeliniteness or was cast in illusory terms, we are similarly unable to l1nd that the restrictive
covenant provision of the employment agreement was unenforceable. We notc that Gdsinger's
employment of Dr. Di Cuccio would constitute consideration tor thc laller's acccptance of the
(..:) 199).191)6 by Mkhil:,lI.Ji\'isi()1I uJ'Hc~'\I E1~\'icr IIIC.,l1l1d It".....t E1sc\'icr ProptrticlllIl.". All ltill,hl! 1t,,'Scl'\',,'\J.
4
terms of the employment contract and, in particular, of the covenant not to compete in any event.
Morgan's lIome Equllllnent Corp. v. Martucci, 390 Pa. 618, 136 A.2d 838 (1953). See also
Records Cenler, Inc. v. Comprehensive Management, Inc., 363 Pa. Super, 79, 525 A.2d 433
(1987), and Darb-Lec Mobile Frlllne Co. v. 1I00t, 416 Pa. 222, 206 A.2d 59 (1965).
We will next move to Dr. Di Cuccio's third issue in which he maintains that the two-year
limitation of the restrictive covenant began to run at the time of the execution of the asset
purchase and employment agreements and has, therefore, terminated.
Under the terms of the asset purchase agreement, Dr. Di Cuccio, together with the other
CAPS physicians, was required to enter into an employment agreement with Geisinger. Finding of
Fact No.8. The lalter agreement was ancillary to the former and included a clause of
non-competition. Both agreements were executed by Dr. Di Cuccio on May 2, 1986. On January
23, 1990, Dr. Di Cuccio informed Geisinger that he would be tenninating his employment with
the lalter on February 28, 1990. Finding of Fact No. {.U} 13. Dr. Di Cuccio subsequently began
to practice medicine within a few miles of Geisinger, taking with him three other employees.
Before he len Geisinger, Dr. Di Cuccio informed his patients that he would be taking care of them
at his new location. Since that time, patients whom Dr. Di Cuccio had fonnerly treated at
Geisinger were receiving medical care from Dr. Di Cuccio at his new office. Findings of Fact Nos.
17,18,19.
The non-competition clause of the employment agreement between Dr. Di Cuccio and
Geisinger reads as follows:
8. NONCOM PETITION
(a) It is understood and agreed that Physician shall not, following termination of
employment, directly or indirectly, enter into the practice of medicine . . . within the
restricted area described by a radius of tiny (50) miles from such medical office facility
designated as the principal site of physician's medical office at the time of such
termination. This restriction shall endure for a period of two yean from the date of
termination of this Agreement and regardless of the grounds, if any, therefor, It is
understood that this restriction is necessitated in part because of the time, effort, and
resources required by Geisinger in connection with said Asset Purchase Agreement and,
otherwise, in the development and maintenance of Physician's practice and in the event
that Physician's relationship with Geisinger is temlinated, the additional time and effort
necessary to re-establish the practice which the Physician leaves. In the event the
provisions of this section are deemed to exceed the time, geographic, or occupational
limitations permitted by applicable law. then such provisions shall be automatically
reformed to the maximum time, geographic, or occupational limitation permitted by
applicable law.
(.:) 1993.1996 by MiI:hle,,, lii\'i!iollurlt"'"l:d EI~\'icr Inc.. null n..~J EIS&:\'jer l'n'lll:ltk-.lllc. Allltighu nn<n:cd
s
First emphasis in text; second emphasis supplied. As noted, the restrictive covenant clause
bars Dr, Di Cuccio from practicing medicine lor two years Irom the termination of his
employment with Geisinger. "Termination" is provided (.95) lor in the employment agreement
between Geisinger and the CAPS physicians as follows:
7. TERMINATION
(a) Either party may at any time terminAte this Agreement ullon thirty (30) days
prior wrllten notice to the other. . . .
(b) Physician understands and agrees that (i) his resignAtion or his other voluntary
termination of this Agreement . . . may result in [pursuance] . . . of remedies at law or in
equity [which] Geisinger may assert, Including the Ilrovisions of the following
paragraph 8 [the non-competition clause, supra]. It is understood that, solely for the
purposes of this Paragraph 7(b), the phrase 'termination' shall not include Physician's
death, the circumstances described in subparagraph (c) below, incurrence of a disabling
illness or injury which substantially interferes with his ability to carry out his duties
hereunder or the release from employment, initiated by Geisinger without cause.
(c) This Agreement is automatically terminated upon Physician's attainment of the age
of seventy years.
First emphasis in text; subsequent emphasis supplied.
On January 23, 1990, Dr. Di Cuccio notified Geisinger in writing that he would be leaving the
employ of the latter on February 28, 1990. Pursuant to the terms of Paragraph Seven, above,
resignation of employment terminates the employment agreement with Geisinger, This is further
evidenced by the language of Paragraph Eight which indicates that its two-year restrictive
provision is triggered by termination of employment which, in turn, ellccts cessation of the
employment agreement.
Therefore, when Dr. Di Cuccio lell its employ on February 28, 1990, he terminated his
employment agreement with Geisinger, thereby triggering the restrictive covenant provisions of
Paragraph Eight thereof In accordance with the plain terms of Paragraph Eight, then, Dr. Oi
Cuccio was barred Irom the practice of medicine within a tilly mile radius of Geisinger for a
period of two years Irom February (.96) 28, 1990 to February 28, 1992, See Boyce v.
Smllh-Edwllrds-Dunlap Co., sUllrll. In Ihat Cllse, we interpreted a non-competition clause in an
employment agreement restricling involvement with II competing business lor two years after
Boyce's period of employment with the employer to bllr Boyce's involvement with a competitor
(1:) 199.l.Jt)9l1 b)' Mh:hi~. a Ji\isillu ufltl:r...J U!M:H~r 1/1\:., 11111.1 Jtr..~J H~\.i~r 1't"I~llit, Ill":. AllltiShLJ ltl."!i(f)',,'lI.
6
for a two-year period followlllg termination of his employment with the predecessor to
Smith-Edwards.
Similarly, the language of the restrictive covenant in this case is patently clear that the
two-year bar takes ellect ollly after the employment agreement has beell terminated. We have
already determined that the employment agreement is tenninated upon cessation of employment
by a CAPS physician with Geisinger. Therefore. Dr. Di Cuccio's arguments in his Brief to this
court to the contrary do not in any way undercut the plain language of the restrictive covenant
clause of the employment agreement. We will not engage in a strained reading of contractual
provisions which are clear on their lace. See Greene v. Oliver Realty Co., IIIC., supra. The
meaning of the restrictive covenant, therefore. must be determined by its contents. alone, for a
court cannot supply or substitute contractual terms which are inconsistent with the parties' intent,
the paramount goal of contract interpretation. Id. The record is devoid of fraud, collusion.
overreaching or unequal bargaining power between the parties. In fact, Dr. Di Cuccio does not
even allude to any of these improprieties. His argument is, instead. an indication of a relationship
gone sour, and he now seeks to have this court rewrite the terms of the employment agreement to
vindicate his discontent. This we decline to do.
In his second issue on appeal, Dr. Di Cuccio contends that the liquidated damages clause
constitutes an unconscionable and unenlbrceable penalty clause. The targets of Dr, Di Cuccio's
attack in this regard are the waiver payment provision of the non-competition clause of the
employment agreement and a clause in the asset purchase agreement {.97} providing for
reduction of the purchase price in the amount of a terminating shareholder's proportionate
interest.
The clause in the asset purchase agreement providing for purchase price reduction in the
proportionate amount of a terminating shareholder's interest reads in relevant part:
1.4 Purchase Price. [Sets forth purchase price]
(a) · · ·
(b) · · ·
( c) The payment of the full amount of the Adjusted Balance is expressly contingent
upon the continued employment of the Shareholders pursuant to their respective
Professional Employment Agreements with the Geisinger Clinic. If 011 or before January
2, 1990, a Shareholder's employment with Geisinger Clinic, [sic] has terminated pursuant
to the provisions ofparngrnph 7(b) of said Prolessional Employment Agreement [supra J,
the amount then unpaid to Sellers [Geisinger] shall be reduced by the proportionate
Shareholder interest held by such terminating Shareholder and set forth in Exhibit 1.4(c) . .
(~) 1993.1996 by Mh:hit:.II lli...ishHlut'RI....'l1 Elsc\.icr h~.. bl1J Itl.'(ll Elsevier 1~"J(nics ll1l:. 1\lIltiShl.s ItCk'fWtl.
7
First cmphasis in tC1tt; sccond cmphasis supplied. Dr. Di Cuccio's argument with regard to
Paragraph 1.4(c) of the asset purchase agreement is devoid of merit as the above provision has no
application to the lacts at bar. Dr. Di Cuccio terminated his cmployment with Geisinger on
Fcbruary 28, 1990. We have already determined Dr. Di Cuccio's termination of employment with
Geisinger was pursuant to l)lIragraph Seven "(b)" of the employment agreement. The plain
language of clause 1.4 4(c), above, indicates that the price reduction provision applies only to
terminations elfected on or belore January 2, 1990. Therelore, this provision does not affect Dr,
Di Cuccio's termination of employment. Moreover, the trial court entered judgment in favor of
Geisinger only in the amount of Dr. Di Cuccio's compensation lor the twelve months in question,
or one hundred ninety-four thousand one hundred sixty-six dollars and thirteen {*98} cents ($
194,166.62).1 Finding of Fact No. 12. This amount represented the liquidated damages agreed to
by the parties to the employment agreement in the event of a breach of the non-competition clause
of the agreement by any of the CAPS physicians. Therefore, Dr. Di Cuccio's argument that he
would have been rcquired to pay approximately live hundred thousand dollars ($ 500,000.00) in
addition to one hundred sixty-live thousand dollars ($ 165,000.00) (his then annual salary) had he
terminated the day aller signing the employment agreement is irrelevant under the facts as they
actually occurred.
Dr. Di Cuccio's argument regarding the invalidity of the waiver payment provision of the
non-competition clause as a penalty or forfeiture is equally unavailing. Paragraph Eight "(b)" of
the non-competition dause reads as follows:
(b) If Physician desires to establish a practice within the restricted area during the
two-year period following termination, Geisinger will waive this restriction upon the
payment to it of a sum (the "Waiver Payment"), the amount of which shall be the greater
of either: (i) One Hundred Sixty Five Thousand ($ 165.000) Dollars; or (ii) the total
compensation paid Physician during the 12 calendar months preceding the month in which
the tennination occurred. It is further agreed and understood that because the Iinancial
burdens Geisinger would endure are dillicult to ascertain and quantitY, the amount of the
Waiver Payment is a fair amount to pay as liquidated damages, and not as a penalty, in the
event Physician desires to establish a practice within the restricted area during the
two-year period.
Early in the history of our court, we delineated the lour criteria to dil1erentiate a liquidated
damages provision from (*99) a penalty or forfeiture term in a restrictive covenant clause of an
employment agreement.
(I) 'When, independently of the stipulation, the damages would be wholly uncertain and
incapable or very dillicult of being ascertained, except by mere conjecture, then the
damages will usually be considered liquidated:'
(~) 1993.1996 by ~lil:hic, alli"iRiIlUtlflln."1l E1!k:\'icr h1l:.,I1I1J I{c,"'" E15l:vicr 1'roIk."ni.:111lc. AIII{j~ll. Hfo."!M:r\'\...J.
8
(2) 'Where a party binds himself in a sum named not tn carry on any particular trade,
business or profession, within certain limits or within a specified period of time, the sum
named will be regarded as liquidated damages and not as a penalty:'
(3) 'A sum fixed as security lor the performance of a contract containing a number of
stipulations of widely dillerelll importance, breaches of some of which are capable of
accurate valuation, for any of which the stipulated sum is an excessive compensation, is a
penalty.'
(4) 'When the covenant is for the performance of a single act or several acts, or the
abstaining from doing some particular act or acts, which are not measurable by any exact
pecuniary standard, and it is agreed that the party covenanting shall pay a stipulated sum
as damages for a violation of any of such covenants, that sum is to be deemed liquidated
damages and not a penalty:'
Stover v. Spielman, I Pa. Super. 526,530-31 (1896), qnotlng I Sedgwick, Measure of
Damages 549 (8th ed. 1891). Stover involved an agreement to purchase a bakery/confectionery
business. The court held that the sale included the good will of the business, as well. Mr. Spielman
agreed not to engage in the bakery/confectionery business in the borough of Greencastle and
within a five mile radius thereof. nor would he be employed as a clerk in any bakery/confectionery
business within a four mile radius. The restrictive covenant provision recited that for violation
thereof, Mr. Spielman agreed to pay the amount of eight hundred dollars ($ 800.00) to Mr. Stover
as liquidated damages. Mr. Spielman contended that the eight hundred dollars damages amounted
to a penalty, This court rejected Mr. Spielman's argument. In doing so, it analyzed the case
utilizing each {.100} oflhe above four criteria and concluded that each had been met to construe
the eight hundred dollar damage clause as a liquidated damages provision rather than as a penalty
clause.
We held, first, that the actual damages were uncertain and dillicult to ascertain given that the
actual amount of loss might increase with each year. We also held that the amount of damages
was reasonable in light of the fact that the sale of the business included its good will and a
covenant not to conduct the same type of business within a certain geographic area. Relying upon
Kelso v, Reid, 145 I'a. 606,23 A. 323 (1892), an earlier decision of our supreme court regarding
restrictive employment covenants, we concluded that criteria numbers one and two had been met
to sustain the eight hundred dollar damage clause as one for liquidated damages. Secondly, we
noted that the non-competition clause in the sales agreement concerning Mr. Spielman's
employment as a bakery/confectionery clerk at another bakery/confectionery in Greencastle or his
opening of a bakery/contectionery business in thllt same lIrea relerred to the same employment
(1:) 1'1'.)).11)1)(, by Mi...hi~.lldi\'iliun uflh.,,-d H!oI:\kr 11li:_.IlIlJ Ih,'tJ E1~\icr 1'l\Ilk.'1th:lIll1~, t\lIlti&lIIlItM"f\'1.:J.
9
restriction, i.e., II promise not to engllge in the slime type of business which Mr. Spielman had sold
to Mr. Stover. Onthllt basis, we concluded that criterillnumbers three and four had been slltisfied
to clllssily the eight hundred dollllr figure as a liquidated damages clause rut her IllIIn one for
penalty.
The principles outlining the dillcrences between liquidated damages and penalties in Spielman
v. Stover, snlJra, have been applied more recently to iIIustrllte the problem regarding the
unascertainability and difliculty of predicting actual damages in contract actions. In
Commonwea.... v. Musser Forests, Inc" 394 Pa. 205, 146 A.2d 714 (1959), our supreme court
held that damages which are intended to be compensatory because of the indeterminate extent of
the loss incurred are liquidated, rather than penal in nature.
Relying upon Kunkel & Jordan v. W"erry, 189 Pa. 198,42 A. 112 (1899), this court, more
recently in 1I0"'s Cigar Co. v. 222 Liberty Associates, 404 Pa. Super. 578, 591 A.2d {*IOI}
743 (1991), held that the Iynchpin of a liquidated damage clause is compensation for damages
sustained. The court further observed that a provision which represents a good-faith and
reasonable forecast of anticipated damages lor breach which are otherwise ditlicult to prove with
certainty will be construed as one for liquidated damages rather than for punishment or to secure
compliance. This court charucterized liquidated damages as a measure of foreseeable business
losses or as damages for loss of good will. If no measure of compensation is intended, the
damages clause is a penalty to secure compliance, (d. In that case, we reiterated the factors to
which we must look in deciding whether the damages are liquidated or for penalty:
The question [of Whether stipulation is a penalty or a valid liquidated damages
provision] . . . is to be detennined by the intention of the parties, drawn from the words of
the whole contract, examined in the light of its subject-malter and its surroundings; and in
this examination we must consider the relation which the sum stipulated bears to the
extent of the injury which may be caused by the several breaches provided against. the
ease or ditliculty of measuring a breach in damages, and such other malters as are legally
or necessarily inherent in the transaction.
404 Pa. Superior Ct. at 587, 591 A.2d at 747, quoting Commonwea.... v. Musser Forests,
Inc., supra, 394 Pa. at 212, 146 A.2d at 717. In 1I0"'s the five hundred dollar per diem damage
clause for delay in construction was construed to be II penalty to force compliance with the work
schedule rather than as a reasonllble forecast of business loss damage due to delay and was
therefore unenforceable as II molter of public policy.
Here, the waiver payment provision of the restrictive covenant clause of the employment
agreement meets the above-stated criteria of the foregoing case law. Paragraph Eight "(a)" of the
non-competition clause reads in pllrt:
It is understood that this restriction [the temporul and geographic limitation of a future
medical prllclice] is necessitated in part because of the time, ellort, and {* III:!} resources
required by Geisinger in connection with sllid Asset Purchase Agreement and, otherwise,
(.:) 11)1).1.11)1)(. h)' Mkhk. Q lli\'j,jtH' ul'lh'l.'\J n~\'i~r Inl.:..lllllllh.'t.'tJ EIlk:\icr l'rul~rli"..ln.:. 1\lIltighb 1~I.'5(rn~l.t.
10
in the development nnd mnintennnce of Physicinn's prnctice [sic) and in the event that
Physician's relntionship with Geisinger is terminated, the additional time and effort
necessary to re-establish the practice which the Physician leaves.
Parngrnph Eight "(b)" of the non-competition clause -- the waiver payment provision __ states:
[B )ecause the financial burdens Geisinger would endure are ditlicult to ascertain and
quantify, the amount of the Waiver Payment is alnir amount to pay as liquidated damages,
and not as a penalty, in the event Physician desires to establish a practice within the
restricted area during the two-year period [as set forth in Paragraph "(a)").
These provisions, we hold, satisly the first, second and fourth criteria of a legally acceptable
liquidated damages provision as set forth in Stover v. Spielman, supra, as these provisions
convey the intent of compensation of Geisinger for unquantifiable business losses due the
premature departure of Dr. Di Cuccio from its employ for the purpose of establishing a medical
practice in competition with Geisinger within the prohibited temporal and geographic bounds of
the non-competition clause. The above-recited provisions also fulfill the third criterion of Stover,
supra, in that they refer to the same matter, i.e., termination of employment with Geisinger in
order to establish a competing medical practice within the otherwise prohibited bounds of the
covenant, and the amount of damages so stipulated is solely for the purpose of protecting
Geisinger in this event,
Our reading of the non-competition clause leads us to conclude that the waiver payment
amounts to no more than a liquidated damages provision to compensate Geisinger for anticipated
business or good will losses if the event described in Paragraph Eight "(a)" occurs and that it
represents a reasonable forecast of damages which would be otherwise unquantifiable lIS a
measure of compensation to Geisinger. Musser Forests, Inc" supra; Holt's, supra. It {*/03} is
not designed to secure compliance with the terms of the employment agreement or to punish Dr.
Di Cuccio for tenninating. Id. In fnct, the employment agreement does not prohibit Dr. Di Cuccio
or any other physician from terminating his or their employment relationship(s) with Geisinger.
nor does it threaten Dr. Di Cuccio or any other CAPS physician with any sanction for voluntary
termination.
Generally, a restrictive employment covenant may be enforced if it is ancillary to an
employment agreement or a contract for the sale of a business and if it is necessary to protect the
legitimate interests of the employer or the purchaser of a business. Westec Security Services,
Inc. v. Westinghouse Electric Carll" 538 F.Supp. 108 (E.D.Pa.1982) (interpreting Pennsylvania
law). Specifically, restrictive covenants ancillary to the sale of a business, as here, are designed to
protect, in addition to physical assets and investments, the good will of the business, i.e., its name,
reputation and reliability. Morgan's flome Equipment Corp. v. Martucci, supra. For that
reason, a restrictive covenant ancillary to the sale ofa business promotes "goodwill [as) a saleable
asset 'by protecting the buyer in the enjoyment of that for which he pays.''' Westec, supra, at 121,
(~, 1 I)I)J. 1 996 by Mkhic, II lliyislutl Ilflh..,,'\J 1~1M:\'icr In..:,. nllJ HI.'\.'4I tllklvicf l'rol'cl1ics 11ll:. 1\III(jghIJ I~cll:r....-d.
II
quoting 6A Corbin, The Lllw ofContrllcls, ~~ 1385, 1387,and citing Morgllll'slIollle, sUllrll,
11 is the interference with or the destruction ofthe good will purchased with the physicalatlributes
of the business which is unascertainable and unquantifiable in terllls of actual loss, thereby
tri!!!lering the necessity lor II liquidated dalllllges clause. See John G, Bryant Co" Ine. v. Sling
Testing alld Relllllr, IIIC" 471 I'll. 1,369 A.2d 1164 (1977), and Robert Clifton Associates,
Inc. v. O'Connor, 338 Po. Super. 246, 487 A.2d 947 (1985). Therelore, the language contained
in I'atllgraphs Eight "(a)" alld "(b)" with respect to protecting Geisinger's interest in its investment
and its inability to quantify or ascertain with specificity any losses which it would incur in the
event ofa breach of the non-competition clause by any CAPS physician was proper.
{o/O-Ij In light of the above, we hold that the waiver payment provision of the
non-competition clause of the employment agreement between Dr. Di Cuccio and Geisinger
represents a valid liquidated damages clause, rather than a penalty, designed to reasonably protect
Geisinger in its purchase of both the physical assets and the good will of CAPS and that the loss
suffered by Geisinger as a result of Dr. Di Cuccio's untimely termination of his employment
relationship with Geisinger and his subsequent establishment of a competing medical practice
within the prohibited temporal and geographic bounds of the restrictive covenant is
unascertainable and unquantifiable so as to justify the imposition of damages as bargained for by
the parties, themselves.
Lastly, Dr. Di Cuccio complains that the trial court, in entering a declaratory judgment in
favor of Geisinger in the amount of one hundred ninety-four thousand one hundred sixty-six
dollars and sixty-two cents ($ 194,166.62), which is the amount of liquidated damages to whieh
Geisinger was entitled under Paragraph Eight "(b)" of the employment agreement, did so without
affording him the right to assert a counterclaim for a set-off on which he would have otherwise
been entitled to atrial by jury.
The purpose of awarding declaratory relief is to finally settle and make certain the rights or
legal status of parties. New London Oil Co"Inc. v. ZIegler, 336 Pa. Super, 380,485 A.2d 1131
(1984). Section 7533 of the Declaratory Judgments Act, 42 Pa.C.SA ~~ 7531 et seq., provides
in relevant part: "Any person interested under a . . . written contract. . . may have determined any
question of construction or validity arising under the. . . contract. . . and obtain a declaration of
rights, status, or other legal relations thereunder." Additionally, Section 7534 states: "A contract
may be construed either belore or aner there has been a breach thereof." See also New London
Oil, BUllra, Moreover, we have held that a declaratory judgment proceeding is a proper form of
action in which to determine the validity of a restrictive covenant of employment. Dahleda v,
Hankison Corp" 228 Pa. Super. 153, 323 {OW5} A.2d 121 (1974); WilshIre v. Penn Overall
Supply Co,,227 Pa. Super. 30,33,323 A.2d 239, 240 (1974).
Here, the trial court first construed the waiver payment provision of the restrictive covenant as
a valid liquidated damages clause rather than as II void penalty provision. The court then declared
lhe right of Geisinger to receive this waiver payment pursuant to the terms of the restrictive
covenant. Having so declared the validity of the waiver payment clause and the right of Geisinger
to receipt of the wuiver payment, the trial court then proceeded to enter judglllentlor the amount
of the waiver payment, plus interest, in lavor of Geisinger.
(~) ll)l)j.l'l% by ~lil:hic, It Ili\lliulIUflh.'l:11 E1M:\kr In~_, ltuJ Ih.'1:J EI~\'icr l'ntlk:r1kt 11I~. All Highls H"'M:n'~.J.
12
Dr. Di Cuccio now contcnds that hc had reserved the right to counterclaim lor a set-olf
against thc judgment and that thc trial court's relusal to amend the Ordcr cntering judgment to
makc it subject to the establishmcnt of any countcrclaim denicd him the right to a trial by jury on
his counterclaim. We disagrce.
For the first time in a Motion for rehearing tiled subscquent to the Order of April I, 1991,
entering a declaratory judgment in lavor of Geisinger, Dr. Di Cuccio raised the issue of
counterclaiming lor a set-oft' of damages. This contention was not included among Dr. Di
Cuccio's exceptions tiled to the decree 11151 entered on October 3, 1990, awarding a declaratory
judgment in favor of Geisinger. It was also not included in Dr. Di Cuccio's Brief tilcd in support
of his exceptions to the decree 11151.
Aside from the possibility of this issue having been waived on appeal, it is meritiess in any
event. First, no indication appears of record that Dr. Di Cuccio, as he claimed at the May 31,
1991, hearing, had reserved his right at any time to tile a counterclaim. Counsel for Dr. Di Cuccio
stated at the hearing of May 31, 1991, that this understanding had been reached by the court and
the parties at a prior court conference of an unspecified date. However, no transcription or other
documentation of this court conference appears in certified record of this case.
{. /O6} Secondly, at the hearing on the Motion held on May 31, 1991, the court requested
counsel for Dr. Di Cuccio to delineate the specific contours of the proposed counterclaim.
Counsel responded that the purpose of the counterclaim would be to set 01T some unspecified
amounts which Geisinger had purportedly deducted Irom the monies which were actually
allegedly due Dr. Di Cuccio. Counsel also alluded to some other various undefined "calculations
made throughout the life of the contract, not just the final payment, that were made purely by
Geisinger within thcir discretion which Doctor Di Cuccio would challcnge as being accurate."
N.T. May 31, 1991,9. Other than these bald statements, counsel never imparted to the trial court,
nor are we able to glean from a reading of his appellate brief, the specific calculations or withheld
monies now claimed by Dr. Di Cuccio and the factual predicate therefor.
Notwithstanding, counsel then requestcd the court to amend its final Order entering the
declaratory judgment to allow lor the determination of damages subject to a counterclaimed set
01T, even though counsel conceded that Dr. Di Cuccio had not at the pleading stage tiled any
counterclaim lor a set-olT because he did not wish to stall the progress of the case to final
determination of the validity of the employment agreement -- specifically, the restrictive covenant
clause -. and because of an alleged prior reservation to tile a counterclaim at a later date. Counsel
also acknowledged that the entry of judgment lor the amount of liquidated damages provided for
in the employment agreement would be subject to any counterclaimed set-olf only if Dr. Di
Cuccio could first establish his right to the latter. As we have already seen, counsel for Dr. Di
Cuccio was unable to articulate any specific factual basis for the counterclaim at the hearing
before the trial court. He has similarly lailed here on appeal.
Dr. Di Cuccio tiled an Answer and Ncw Matter to Geisinger's amended Complaint in Equity
in which he attacked thc validity and enforceability of thc cmploymcnt agrecmcnt for failure of
consideration on the basis of vagucncss, {.'07} indcfinitencss and iIIusorincss. He also avcrred
(c) 11)1).1.191)(, b)' Mkhit:. Q Ji\'hillll UfltCCll E1M:\'icr hll:., dU1.I1tt:..'\! E1Al:\'kr 111l'lk.'t1i"'1Iln..:, Allltishtl J{~r\'cd.
13
that the non-competition clause of the employment agreement was void as being violative of
public policy. Dr. Di Cuccio did not, as part of this pleading or anywhere else in the record, file
the counterclaim which he now maintuins he has the right to assert. Our review of the record does
not indicate that Dr. Di Cuccio was ever precluded, prior to the entry of judgment, from asserting
any set-olTwhich he now claims that he is dUe.
Counsellor Dr. Di Cuccio indicated at the hearing of May 31, 1991, that he had not asserted
a counterclaim for set-oil' because he did not wish to stall the declaratory judgment proceeding by
having to litigate his claims. However, at the hearing, he requested the court to amend its Order
to make the judgment entered therein for liquidated damages subject to any recovery as a result of
a yet-to-be-fiIed counterclaimed set-oil: the factual predicate for which, as we have seen, counsel
was unable to impart to the court when requested to do so. The court recommended to Dr, Di
Cuccio that he file a separate action to accomplish this purpose. Whether at law or in equity, a
party may tile a separate action for the claims upon which he would otherwise rest his
counterclaim. See Oak Lane Shopping Center v. Flame, 264 Pa. Super. 9, 398 A.2d 721
(1979) (equity action) and American Telephone and Telegraph v. Clifford, 406 Pa. Super.
128, 593 A.2d 903 (1991) (action at law). Therefore, the court acted properly in refusing to
amend the Order to allow for the possibility of a set-off, especially in light of counsel's inability to
articulate the basis lherefor and because of the availability of the remedy of filing an independent
cause of action to assert this same alleged claim.
Moreover, even if the court had acceded to counsel's request to amend the Order, it does not
follow that Dr. Di Cuccio would have been entitled to a jury trial on his claim for set-otT.
Pennsylvania Rule of Civil Procedure 1602 states: "In any action at law or in equity, a party may
include in the claim for relief a prayer for declaratory relief {*/08} and the practice and
procedure shall follow, as nearly as may be, the rules governing that action." Since Geisinger had
included in its Complaint a count requesting declaratory relief, this rule governs here. A
proceeding for declaratory relief under Rule 1602 does not aftord a party an independent right to
a jury trial other than what he/she/it may be entitled to on the underlying cause of action.
Orenckle v. Arblaster, 320 Pa. Super. 87, 466 A.2d 1075 (1983); 42 Pa.C.SA ~ 7539(b).
Therefore, a claim for declaratory relief made pursuant to Rule 1602 may be part of an action at
law or one in equity and will proceed in accordance with the rules governing the applicable action.
Id.; O.'enckle v, Arblaster, supra.
Geisinger tiled a Complaint in Equity in which it asserted, inter alia, a claim lor relief
requesting a declaration that Dr. Di Cuccio is in breach of the non-competition clause of the
employment agreement, that the waiver payment provision of the clause is binding and valid and
that as a result thereof, Geisinger is entitled to liquidated damages as set forth in that provision.
Geisinger also sought, alternatively, a claim lor injunctive relief, Geisinger's amended Complaint
in Equity also included separate counts lor various claims sounding in tort and in contract. These
counts were discontinued aller the Order of April I, 1991, entering a declaratory judgment in
favor of Geisinger had been tiled but before the hearing of May 31, 1991. Thus, on the date of the
hearing, at which Dr. Di Cuccio first asserted his right to tile a counterclaim lor set-oil' and his
right to a jury trial therelor, only two counts of the Complaint remained -- one for declaratory
relief and the other lor the alternative remedy of injunctive relief:
(1.:) 199.1-19')6 hy Mkhi~. u 1Ii\.j5iun 11fltccll n~\'icr Illc.. Ulllllt..",'" n~\'icr 1'001~niL., IlIc. 1\11 Ui~hI5Ih.'M:r\'(J.
14
Since we conclude that Geisinger's action, as ncarly as may be,2 soundcd in cquity, rather than
at law, any counterclaim which Dr. Di Cuccio could have asserted in any evelll would havc been
required to conform to the requirements of l'a.R.Civ.P. 1510 tor the pleading of counterclaims to
actions in equity. Rule 1510 states:
to J09} (a) A defendant may plead as a counterclaim only a cause of action, whether
equitable or legal, which 81 ises from the same transaction or occurrence or series of
transactions or occurrences from which the plaintifi's cause of action arose. . . .
(b) A cOllnterclllirn shall be pleaded and tried as an action in equity.
It thus appears that under Rule 1510, it matters not whether the counterclaim rests in equity
or at law. If it arises out of the same transaction or occurrence from which the plaintifl's cause in
equity arose, it must be litigated as an equity matter.
Geisinger requests perfomlance on the part of Dr. Di Cuccio for the payment of liquidated
damages in the amount agreed to by the parties according to the formula prescribed in Paragraph
Eight "(b)" of the employment agreement, Dr. Di Cuccio indicated to the trial court at the May
31, 1991, hearing and now states to this court that his proposed counterclaim would be in the
nature of a set-off to the liquidated damages which the trial court found due and owing and upon
which the court entered a declaratory judgm~nt in favor of Geisinger. We construe Geisinger's
request for relief as one for specitic perlomlance lor payment of the liquidated damages due it
under the terms of the employment agreement. As such, it is an cquitable rcmcdy which permits a
court to compel performance of a contract when there exists in the contract an agreement
between the parties as to the nature of the performance. Clmlna v. Dronlch, 349 Pa. Super. 399,
503 A,2d 427 (1985), revened, granting specific performance, 517 Pa. 378, 537 A.2d 1355
(1988); Turner v. Hostetler, 359 Pa. Super. 167, 518 A,2d 833 (1986). In this case, the
employment agreement sct forth the nature of the perfonnance to which the parties agreed. If Dr,
Oi Cuccio terminated his employment with Geisinger before the end of the two-year restriction
and embarked upon a competing medical practice within the prohibited geographical bounds of
the restrictive {*/JO} covenant, he would be required to perform on his agreement to pay
liquidated damages.
This being the case, Dr. Di Cuccio was not entitled to a jury trial on any counterclaim which
he could have asserted. A party who chooses to assert a counterclaim at law in an equity action,
rather than to liIe an independent cause of action at law on the same matter waives his light to
have these issues of fact determined by ajury. Rosenberg v. Rosenberg, 322 Pa. Super. 293,469
A,2d 626 (1980). See also DrenckIe v. Arblaster, suprl1. cr. United States v. Wl1de, 653
F.Supp. II (E.D.Pa.1984) (in declaratory judgment proceeding declaring liability lor payment of
response costs under the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. ~~ 9601 et 5eq., underlying rcmedy is equitable in nature and invokes no right to a
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