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HomeMy WebLinkAbout2001-4206 Civil STANLEY M. DEIMLER, PLAINTIFF IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA V. FLIGHT SYSTEMS, INC., AND ROBERT D. SHAFFNER, DEFENDANTS 01-4206 CIVIL TERM IN RE: MOTION OF DEFENDANT. FLIGHT SYSTEMS. INC.. FOR POST-TRIAL RELIEF. AND MOTION OF PLAINTIFF TO MOLD JURY VERDICT OPINION AND ORDER OF COURT Bayley, J., May 15, 2006:-- On January 27, 2006, after finding that the claims of plaintiff were not barred by the statute of limitations, a jury returned the following verdict in favor of Stanley M. Deimler and against defendant Flight Systems, Inc.: (a) Do you find that plaintiff and defendant, Flight Systems, Inc., had a contract as claimed by plaintiff? YES X NO (b) If you answer "Yes," do you find that defendant breached that contract? YES X NO (c) If you answer "Yes," did plaintiff waive the breach by defendant? YES NO X If you answer "No," answer the following: Plaintiff's damages are: $ 120,000 Pursuant to Pa. Rule of Civil Procedure 227.1, defendant filed a motion for post-trial relief containing five averments in support of an entry of a judgment in its favor, or in the alternative a new trial. Plaintiff filed a motion to mold the verdict to add legal interest from 01-4206 CIVIL TERM March 7,2005. The issues were briefed and argued on May 1,2006. The evidence in the light most favorable to the plaintiff, the verdict winner, is as follows. Stanley Deimler's field is electronics. In 1972, in the early days of cable television, he and his brother started a cable business in Duncannon, Perry County. They were also involved in a cable system in Newberry town, Pennsylvania, and one in Virginia. Robert Shaffner and Robert York formed Flight Systems, Inc., thirty-eight years ago. Shaffner is the president and the majority shareholder, and York is the vice-president of the closely held corporation. Over the years the company operated twelve divisions. Today as a result of sales, there are three divisions: generator controls, marine and industrial controls, and real estate. In 1986, Deimler recognized that there was significant population growth in Silver Spring Township, Cumberland County. He obtained a municipal franchise to build a cable system in the northern section of the Township. He then sought investors, one of whom was Robert Shaffner. Flight Systems, Inc., had never been in the cable business. Shaffner recognized the opportunity and wanted to become involved. Deimler required an ownership interest and employment. He and Shaffner made an oral agreement to operate a cable business in which Deimler would have a ten percent ownership interest, and he would be employed full-time in the business upon the successful completion of a feasibility test. Following this oral agreement, Shaffner, as president of Flight Systems, Inc., wrote a letter to Deimler on July 30, 1986, setting forth "a preliminary outline of FLIGHT SYSTEMS CABLEVISION." The letter detailed the parameters of the initial test service area, the types of -2- 01-4206 CIVIL TERM control drawings that Deimler was to provide, and a timeline for Deimler to complete various aspects of the test. The letter included the following: It is our intention to set up FSCV as a separate stock corporation. Ten percent of the shares will be awarded to you upon completion of a defined contract for the initial set up and installation. This contract will be for a trial area tentatively set as the outline shown in Paragraph 2C. . . . In addition to the contract which will result in you owning a percentage of FSCV, we would intend to put you on salary as fulltime General Manager of the division, which means you would receive a percentage of the profits and a salary along with our full employees [sic] benefits. The salary would start at the completion of the set up contract period. In October, November and December 1986, Deimler worked without pay constructing and testing the initial setup operation. It worked. He then became the salaried general manager of Flight Systems Cablevision. Although Deimler and Shaffner had intended that the cable operation would be separately incorporated, it was not. Shaffner decided to operate Flight Systems Cablevision as a separate division within Flight Systems, Inc. Flight Systems Cablevision built and operated a cable system in Silver Spring Township using Deimler's franchise. In 1992, it expanded its cable business into Baltimore, Maryland. Deimler worked in Baltimore as well as in Silver Spring Township. In 1993, Shaffner and York decided to sell the Silver Spring Township part of the cable business to Sammons Communications, Inc. Although the sale was opposed by Deimler, Shaffner believed that Flight Systems Cablevision could make more money in Baltimore. The total sale price was $2,362,500, of which $350,000 was paid for non-compete agreements; $200,000 to Shaffner, $100,000 to York, and $50,000 to Deimler. Deimler then worked full- -3- 01-4206 CIVIL TERM time for Flight Systems Cablevision in the Baltimore operation. On December 30,2000, Flight Systems Cablevision was incorporated. Deimler was not issued stock. His employment was terminated on January 31, 2001.1 On July 18, 2001, Flight Systems Cablevision, Inc., was merged into Flight Systems, Inc., and again operated as a separate division of that company. The Flight Systems Cablevision business in Baltimore was sold to Comcast on March 7,2005, for $2,874,000. From that total, Shaffner and York signed non-compete agreements and were paid a total of $750,000; $500,000 to Shaffner and $250,000 to York. They were then out of the cable business. During the entire time in which Flight Systems Cablevision operated in Silver Spring Township and Baltimore, there were insignificant profits as revenues were poured back into operations and expansion. Besides employment, the real benefit to Shaffner, York and Deimler occurred when the operation in Silver Spring Township was sold in 1993, and to Shaffner and York when the operation in Baltimore was sold in 2005. DEFENDANT'S POST-TRIAL MOTION A post-verdict judgment can be entered if the movant is entitled to judgment as a matter of law, or the evidence was such that no two reasonable minds could disagree that the outcome should have been rendered in favor of the movant. Kiker v. Pennsylvania Financial Responsibility Assigned Claims Plan, 742 A.2d 1082 (Pa. Super. 1999). In considering such a judgment, the evidence must be viewed in the light most favorable to the verdict 1 Deimler brought a claim for wages against Flight Systems, Inc. Defendant countered that he was employed at-will, and even if not, he was terminated for just cause. The -4- 01-4206 CIVIL TERM winner, who must be given the benefit of every reasonable inference of fact. Id. A conflict in the evidence must be resolved in the verdict winner's favor. Id. A new trial may be granted if the court committed an error of law which controlled the outcome of the case. See Coker v. S.M. Flickinger Company, Inc., 533 Pa. 441 (Pa. 1993). If the basis for a new trial is the trial court's rulings on evidence, then such rulings must have been shown to have been not only erroneous but also harmful. Ratti v. Wheeling Pittsburgh Steel Corp., 758 A.2d 695 (Pa. Super. 2000). I. Defendant avers that, "the jury should not have been charged about oral contracts." It argues that the record reveals that the only contract claimed by plaintiff was the written memorandum of July 30, 1986, and that the memorandum does not constitute a contract. To the contrary, plaintiff pled an oral contract in his complaint, and introduced sufficient evidence to prove that oral contract. It was a simple contract; Deimler would have ten percent ownership in a cable business that proved feasible, and he would be employed full-time in that business. There was evidence for which the jury could conclude that the follow-up letter that Shaffner wrote to plaintiff on July 30, 1986, was exactly what it purported to be, "a preliminary outline of Flight Systems Cablevision," that set forth how the business would proceed. It confirmed that plaintiff would have a ten percent ownership, and would be employed on salary as the full-time manager "of the division." Deimler then proceeded, without pay, to prove that the cable business was feasible. He made it operational using his franchise in Silver Spring Township, and he became a salaried general manager. It is hardly surprising that the jury jury found in favor of defendant. -5- 01-4206 CIVIL TERM concluded that before Deimler proceeded, he had a contract in order to protect his idea, his cable franchise, and his required ownership interest. The essential terms of that oral contract were agreed to with sufficient clarity. See Biddle v. Johnsonbaugh, 444 Pa. Super. 450 (1995). Although the cable business was not initially incorporated as intended, that was not an essential term of the oral contract. What was essential was that plaintiff have a ten percent ownership of the cable business, which, as it turned out for most of its existence, was operated as a separate division of Flight Systems, Inc. The credibility of witnesses was for the jury.2 Plaintiff proved the existence of the oral contract, including its essential terms. See Gorski v. Smith, 812 A.2d 683 (Pa. Super. 2002). II. Defendant avers that, "the July 30, 1986 letter could not constitute a contract." It argues in its brief that the contract claimed by plaintiff was unenforceable "whether it was set up as a stock corporation or a division." This argument is based on its position that the letter of July 30, 1986, does not constitute a contract. The fallacy in the argument is that there was an enforceable oral contract entered into before Shaffner wrote the letter setting forth how Flight Systems Cablevision would proceed.3 Alternatively, defendant maintains that even 2 Shaffner testified that based upon his discussions with Deimler, he typed a document on August 18, 1986, that reflected their agreement. He testified that he alone signed it and put it in Deimler's personnel file, provided Deimler a copy, and sent the original to his attorney. The document set forth a business arrangement which was significantly different from the oral contract testified to by Deimler. The document with no signatures was located in the files of Shaffner's attorney. No copy was in Deimler's personnel file. Deimler denied all knowledge of the document and its provisions. 3 Defendant admitted that Shaffner had the authority to make a contract that would bind Flight Systems, Inc. -6- 01-4206 CIVIL TERM if there was a contract, "plaintiff failed to provide evidence that the contract was breached." When the cable business of Flight Systems Cablevision was sold, and it went out of business, defendant did not pay plaintiff his ten percent ownership interest. That was a breach of contract. III. Defendant avers that, "the jury verdict with regard to the statute of limitations was against the weight of the evidence." In Armbruster v. Horowitz, 813 A.2d 698 (Pa. 2002), the Supreme Court of Pennsylvania stated: . . . the authority of the trial judge to upset a verdict premised upon a weight claim is narrowly circumscribed. A trial judge cannot grant a new trial "because of a mere conflict in testimony or because the trial judge on the same facts would have arrived at a different conclusion." Instead, a new trial should be granted only in truly extraordinary circumstances, i.e., "when the jury's verdict is so contrary to the evidence as to shock one's sense of justice and the award of a new trial is imperative so that right may be given another opportunity to prevail." Id. (Citations omitted.) This suit was filed on July 10, 2001. The statute of limitations for the breach of contract claim is four years. See 42 Pa.C.S. S 5525. The jury found that plaintiff's contract claim was not barred by the statute of limitations. In Borough of Mifflinburg v. Heim, 705 A.2d 456 (Pa. Super. 1997), the Superior Court of Pennsylvania stated: In general, the statutory period will begin to run when the cause of action accrues, i.e., the date on which the injury is sustained. Pounds v. Lehman, M.D., 384 Pa.Super. 358, 361, 558 A.2d 872, 873 (1989). Our supreme court has held: As a matter of general rule, a party asserting a cause of action is under a duty to use all reasonable diligence to be properly informed of the facts and circumstances upon which a potential right of recovery is based and to institute suit within the prescribed statutory period. Thus, the statute of -7- 01-4206 CIVIL TERM limitations begins to run as soon as the right to institute and maintain a suit arises; lack of knowledge, mistake or misunderstanding do not toll the running of the statute of limitations. -8- 01-4206 CIVIL TERM Pocono International Raceway, Inc. v. Pocono Produce, Inc., 503 Pa. 80, 84, 468 A.2d 468, 471 (1983) (citations omitted). . . . "The 'discovery rule' is an exception to the rule which arises from the inability of an injured person, despite the exercise of due diligence, to know of the injury or its cause." Hayward v. Medical Center of Beaver County, 530 Pa. 320, 325, 608 A.2d 1040, 1043 (1992). A court presented with an invocation of the discovery rule must, before applying the exception of the rule, address the ability of the damaged party, exercising reasonable diligence, to ascertain the fact of a cause of action. Pocono Int'l. Raceway, supra, 503 Pa. at 85, 468 A.2d at 471. The standard of reasonable diligence is an objective or external one that is the same for all individuals. We evaluate the plaintiff's conduct in terms of what he should have known at a particular time by following a course of reasonable diligence. If a party has the means of discovery within his power but neglects to use them, his claim will still be barred. *** The polestar of the Pennsylvania discovery rule is not a plaintiff's actual acquisition of knowledge but whether the information, through the exercise of due diligence, was knowable to the plaintiff. The failure to make inquiry when information is available is failure to exercise reasonable diligence as a matter of law. Ingenito v. AC & S, Inc., 430 Pa.Super. 129, 133-35,633 A.2d 1172,1174-75 (1993) (citations omitted). Deimler testified that because he had a contractual ten percent ownership in the cable business of Flight Systems, it made no difference to him if there was a separate corporation, as was initially intended, or if the business was operated as a separate division of Flight Systems, Inc., which is what occurred until the incorporation on December 30,2000. Deimler testified that he would occasionally ask Shaffner about the status of incorporation. Shaffner would tell him not to worry or that he was working on it, and that he would not be cheated. Deimler, whom Shaffner claimed was only an employee with no ownership interest, was paid like an owner when he received $50,000 when the Silver Spring Township part of the business -9- 01-4206 CIVIL TERM -10- 01-4206 CIVIL TERM was sold in 1993.4 In November of 1999, Deimler asked Shaffner for a raise in salary. Shaffner gave him a raise and a bonus. Deimler asked him again about his ten percent ownership. This time Shaffner said that he did not have a ten percent ownership of the cable business. Deimler argued with him to no avail. While he continued to work in Flight System Cablevision's Baltimore operation, his relationship with Shaffner and others in the company deteriorated until he was terminated effective January 31, 2001. Defendant's position that the jury's finding on the statute of limitations is against the weight of the evidence is skewed by its position that any contract, which it denies existed, involved the issuance of stock in a separate corporation. In support thereof, it argues in its brief: [i]t was undisputed at trial that no "stock," as promised in the letter [of July 30, 1986], was ever given to plaintiff. . . . Thus, for what was promised him as of July 30, 1986, even if it constituted a contract, Plaintiff, right away, should have known that he was getting what he was promised in the letter. The letter, however, was not the contract. The contract was for a ten percent ownership in the cable business that proved feasible and employment by that business. The statute of limitations begins to run when a cause of action arises as a result of an injury to a party. Here, there was evidence for the jury to conclude that the four year statute of limitations for breach of contract was met in that Deimler filed the suit within that period after knowing he was 4 Shaffner brushed off this payment by testifying that he wanted to be generous, and that it more than adequately compensated Deimler for the work he did on the cable system. -11- 01-4206 CIVIL TERM injured, and within that period during which he reasonably should have known he was injured. As Deimler testified, he did not file the lawsuit earlier because: I didn't have any reason to. I was being paid. The cable was growing. I was part of it. I wanted to see it grow. Shaffner can tell you many times I would put pressure on him to expand into a certain area. I wanted to get it going just to make the cable system bigger. I figured the bigger it got the more I would have. The finding of the jury on the statute of limitations issue was not so contrary to the evidence to shock one's sense of justice. It was not against the weight of the evidence. IV. Defendant avers that, "it was prejudicial for the fraud issue to be submitted to the jury." A fraud in the inducement claim against Robert D. Shaffner was submitted to the jury with an instruction that it be considered only if the jury found against plaintiff on the contract claim against defendant, Flight Systems, Inc. Because the jury found for plaintiff against Flight Systems, Inc., on the contract claim, the jury did not decide the fraud in the inducement claim against Shaffner. Without citing any authority, defendant maintains that submitting the fraud in the inducement claim against Shaffner was prejudicial so as to warrant a new trial on the contract claim against Flight Systems, Inc. Not only was the submission of the fraud in the inducement claim proper, even if it was not, there was not harm to defendant because the jury did not render a verdict on that claim. There is no legal basis to grant a new trial on the contract claim for which the jury awarded damages. V. Defendant avers that, "the damage award of $120,000 was against the weight of the evidence." Plaintiff called a certified public accountant who valued plaintiff's interest in the Flight Systems Cablevision division of Flight Systems, Inc. He utilized Flight Systems -12- 01-4206 CIVIL TERM independent, certified financial statements following the sale to Comcast.5 The accountant was of the opinion that a ten percent interest was $181,286. Defendant called an accountant who worked for the accounting firm that prepared the independent, certified financial statements of Flight Systems, Inc. However, by the time he testified, he had become a member of the Board of Directors of Flight Systems, Inc. He impeached his own earlier financial statements in arriving at an opinion that Flight Systems Cablevision had no value from which to calculate a ten percent interest of plaintiff. The jury obviously rejected this revisionist accounting. The credibility of the witnesses was for the jury. The $120,000 verdict was not so contrary to the evidence to shock one's sense of justice. It was not against the weight of the evidence. PLAINTIFF'S MOTION TO MOLD VERDICT Plaintiff maintains that the verdict of $120,000 should be molded to add legal interest at the rate of six percent per annum from March 7, 2005, the date that the remaining business of Flight Systems Cablevision was sold to Comcast, and Shaffner and York took a total of $750,000 of the proceeds. We agree because, as of that date, plaintiff's ten percent interest in the business was readily ascertainable through computation. See Pittsburgh Construction Co. v. Griffith, 834 A.2d 572 (Pa. Super. 2003). The verdict will be molded. For the foregoing reasons, the following order is entered. 5 The total proceeds of that sale of $2,874,000 was augmented by retained assets for a total of $3,200,000. -13- 01-4206 CIVIL TERM ORDER OF COURT AND NOW, this day of May, 2006, IT IS ORDERED: (1) The post-trial motion of defendant, Flight Systems, Inc., IS DENIED. (2) The motion of plaintiff to mold the verdict, IS GRANTED. The verdict of $120,000 against Flight Systems, Inc., is molded to add legal interest at the rate of six percent per annum from March 7, 2005. By the Court, Edgar B. Bayley, J. Delano M. Lantz, Esquire For Plaintiff Steven E. Grubb, Esquire F or Defendants :sal -14- STANLEY M. DEIMLER, PLAINTIFF IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA V. FLIGHT SYSTEMS, INC., AND ROBERT D. SHAFFNER, DEFENDANTS 01-4206 CIVIL TERM IN RE: MOTION OF DEFENDANT. FLIGHT SYSTEMS. INC.. FOR POST-TRIAL RELIEF. AND MOTION OF PLAINTIFF TO MOLD JURY VERDICT ORDER OF COURT AND NOW, this day of May, 2006, IT IS ORDERED: (1) The post-trial motion of defendant, Flight Systems, Inc., IS DENIED. (2) The motion of plaintiff to mold the verdict, IS GRANTED. The verdict of $120,000 against Flight Systems, Inc., is molded to add legal interest at the rate of six percent per annum from March 7, 2005. By the Court, Edgar B. Bayley, J. Delano M. Lantz, Esquire For Plaintiff Steven E. Grubb, Esquire F or Defendants :sal