HomeMy WebLinkAbout2012-1379
JOHN GROSS & COMPANY,
: IN THE COURT OF COMMON PLEAS OF
Plaintiff,
: CUMBERLAND COUNTY, PENNSYLVANIA
:
v.
:
:
IRISH RESTAURANTS LP, d/b/a
:
COAKLEY’S RESTAURANT and PUB
:
and TIMOTHY HOGG,
:
Defendants.
: No. 12-1379 CIVIL
IN RE: DEFENDANTS’ PRELIMINARY OBJECTIONS TO
PLAINTIFF’S FIRST AMENDED COMPLAINT
BEFORE HESS, P.J., MASLAND, J. and PECK, J.
OPINION and ORDER
Before the court are the preliminary objections of Defendants Irish Restaurants LP, d/b/a
Coakley’s Restaurant, and Timothy Hogg to an Amended Complaint filed by Plaintiff John
Gross & Company. (Defendants’ Preliminary Objections to Plaintiff’s First Amended
Complaint, filed May 24, 2012). Plaintiff’s Amended Complaint contains three counts: at Count
I, a claim against Defendant Coakley’s Restaurant for breach of contract; at Count II, a claim
against Defendant Coakley’s for quantum meruit; and at Count III, a claim of misrepresentation
and fraud against Defendant Timothy Hogg. (Plaintiff’s First Amended Complaint, filed May 3,
2012). The Amended Complaint has been preliminarily objected to in the form of a demurrer to
all three counts, by way of a motion to dismiss Counts I and III for lack of specificity, and by
way of a motion to dismiss Count III for reasons including the failure to conform to law or rule
of court and the failure to plead a claim of fraud with the particularity required by Pennsylvania
Rule of Civil Procedure 1019(b). (Defendants’ Preliminary Objections to Plaintiff’s First
Amended Complaint, filed May 24, 2012).
Plaintiff’s Amended Complaint may be summarized as follows: Plaintiff is a food service
distributor with a business address at 400 Cheryl Avenue, P.O. Box 1189, Mechanicsburg,
Cumberland County, Pennsylvania 17055. (First Amended Complaint, ¶ 1). Defendant Irish
Restaurants LP, d/b/a Coakley’s Restaurant, is a Pennsylvania limited partnership with a
business address of 322 Equus Drive, Camp Hill, Cumberland County, Pennsylvania 17011.
(First Amended Complaint, ¶ 2). The General Partner of Irish Restaurants LP is Irish New
Cumberland, LLC, a Pennsylvania limited liability company, with a registered office address of
322 Equus Drive, Camp Hill, Cumberland County, Pennsylvania 17011. (First Amended
Complaint, ¶ 3). Defendant Timothy Hogg is an adult individual with an address of 322 Equus
Drive, Camp Hill, Cumberland County, Pennsylvania 17011. (First Amended Complaint, ¶ 4).
This civil case arises out of a business relationship between the parties in which Plaintiff
was to supply to Defendant Coakley’s Restaurant various restaurant-related goods, including, but
not limited to, cheeses, dough, condiments, produce, sauces, coffee, and meats. (First Amended
Complaint, ¶ 6; Ex. B). Plaintiff’s Amended Complaint alleged that the parties entered into a
written credit agreement whereby Plaintiff would supply its goods and Defendant Coakley’s
Restaurant would pay for the same within thirty days of receipt. (First Amended Complaint, ¶ 7;
Ex. A). Plaintiff averred that “the terms of agreement were outlined in a written Credit
Agreement executed on December 23, 2008, by Defendant Coakley’s and re-affirmed in the
form of an invoice for each delivery of Goods.” (First Amended Complaint, ¶ 8). Attached to
Plaintiff’s Amended Complaint at Exhibit A was a copy of the credit agreement, signed by
Defendant Hogg on behalf of Irish Restaurants, LP, and which provided, in pertinent part, as
follows:
TERMS AND CONDITIONS
In consideration for the extension of credit and intending to be legally bound
hereby, the undersigned Buyer hereby agrees that the following terms will govern
any charge account established by John Gross & Co. (Seller) for Buyers benefit.
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1. Payment. Buyer hereby agrees to pay the Time Sale Price of purchases
charged to Buyers account. The Time Sale Price shall consist of the cash sale
price including applicable sales tax and delivery charges, if any, plus service
charges and any finance charge which may accrue pursuant to paragraph two (2)
hereunder.
2. Past Due Accounts. Payment is due upon receipt. Failure to pay within
30 days of receipt (“the billing date”) constitutes a default. Buyer hereby agrees
that interest charges of 1 ½ % per month or 18% per annum will be assessed on
any account balance which is not satisfied within 30 days of the Billing date.
3. Seller’s Remedies. In the case of Buyer’s default, Buyer’s entire account
balance shall become due and payable. Seller’s waiver of any Default shall not
operate as a waiver of any other Default. If Buyer’s account is referred for
collection to an attorney, Buyer will pay, to the extent permitted by law,
reasonable attorney’s fees and court costs incurred.
(First Amended Complaint, Ex. A). Attached to Plaintiff’s Amended Complaint at Exhibit B
was a copy of the first invoice issued by Plaintiff to Defendant Coakley’s Restaurant and which
had been signed upon receipt on behalf thereof; at Exhibit C, Plaintiff attached a statement
showing all outstanding invoices due and owed, which totaled approximately $48,227.69. (First
Amended Complaint, ¶ 13, Ex. B, C). Because of the voluminous quantity of invoices, Plaintiff
asserted that not all of the invoices had been reproduced as attachments to the complaint but
would be available upon request. (First Amended Complaint, ¶ 8). Plaintiff further averred that
“Defendant Coakley’s has refused and otherwise failed to make any payment of the outstanding
invoices during the period as set forth on the invoices between 2009 and 2011,” and, as a result
Defendant has thereby “breached its contractual duty to make payment for the Goods received,”
resulting in an economic loss to Plaintiff of $48,227.69. (First Amended Complaint, ¶¶ 11-13).
Based on the foregoing, Plaintiff asserted at Count I a claim of breach of contract against
Defendant Coakley’s Restaurant, and at Count II, in the alternative, Plaintiff set forth a claim of
quantum meruit. At Count III, Plaintiff set forth a claim against Defendant Timothy Hogg for
misrepresentation and fraud, alleging that “Defendant [Hogg] issued two checks dated February
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11, 2010, in the amount of $7695.56 and March 1, 2010, in the amount of $5,958.20, that are
similar to the check attached hereto as Exhibit E.” (First Amended Complaint, ¶ 19). At Exhibit
E was a scan of a check issued to John Gross and Company to be posted from an account
belonging to “Timothy J. Hogg Irish Restaurants LP” in the amount of $500.00. (First Amended
Complaint, Ex. E). The check indicated that payment had been stopped prior to the disbursement
of funds. (First Amended Complaint, Ex. E). Plaintiff alleged that “[b]oth of the checks
referenced in Paragraph 19 were returned to Plaintiff for insufficient funds,” and, furthermore,
Plaintiff averred that “Defendant Hogg knew or should have known that there was not sufficient
funds when the check was issued.” (First Amended Complaint, ¶¶ 20, 23). Furthermore,
Plaintiff alleged that “Defendant Timothy Hogg has fraudulently misrepresented to Plaintiff that
he could pay for certain goods received from Plaintiff on more than one occasion,” and that
“Plaintiff relied on the issuance of the checks by Defendant Hogg that a certain portion of the
Goods would be paid for.” (First Amended Complaint, ¶¶ 24-25).
Pursuant to Pennsylvania Rule of Civil Procedure 1028(a), preliminary objections may be
filed by any party to any pleading on several limited grounds, including the following:
(2) Failure of a pleading to conform to law or rule of court . . .;
(3) Insufficient specificity in a pleading;
(4) Legal insufficiency of a pleading (demurrer).
Pa.R.Civ.P. 1028(a)(2), (3), (4).
The standard of review for preliminary objections in this Commonwealth is well-settled.
Preliminary objections are properly granted only when, “based on the facts pleaded, it is clear
and free from doubt that the complainant will be unable to prove facts legally sufficient to
establish a right to relief.” Mazur v. Trinity Area School Dist., 599 Pa. 232, 240-41, 961 A.2d 96,
101 (2008) (internal citations omitted). In considering preliminary objections, “all well-pleaded
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allegations and material facts averred in the complaint, as well as all reasonable inferences
deducible therefrom, must be accepted as true.” Wurth by Wurth v. City of Philadelphia, 136 Pa.
Commw. 629, 638, 584 A.2d 403, 407 (1990). However, the trial court “need not accept as true
conclusions of law, unwarranted inferences from fact, argumentative allegations, or expressions
of opinion.” Penn Title Insurance Co. v. Deshler, 661 A.2d 481, 483 (Pa.Cmwlth. 1995). An
appellate court will only reverse a trial court’s ruling on a preliminary objection when “there has
been an error of law or abuse of discretion.” Excavation Technologies, Inc. v. Columbia Gas Co.
of Pa., 2007 PA Super 327, ¶ 5, 936 A.2d 111, 113.
Initially, Defendants seek the dismissal of Count I, breach of contract, based on two
grounds: (i) lack of specificity; and (ii) legal insufficiency.
Pennsylvania is a fact pleading jurisdiction. Foster v. UPMC South Side Hosp., 2010 PA
Super 143, 2 A.3d 655, 666 (quoting Lerner v. Lerner, 2008 PA Super 183, ¶ 12, 954 A.2d 1229,
1235). The plaintiff must state the material facts on which a cause of action is based “in a
concise and summary form.” Pa.R.Civ.P. 1019(a). It is well established that a plaintiff’s
complaint must provide sufficient factual averments in order to sustain a cause of action.
Feingold v. Hendrzak, 2011 PA Super 34, 15 A.3d 937, 942. The complaint must “not only give
the defendant notice of what the plaintiff’s claim is and the grounds upon which it rests, but the
complaint must also formulate the issues by summarizing those facts essential to support the
claim.” Id. (internal citations omitted). Moreover, the complaint must be sufficiently specific so
that the opposing party will know how to prepare his defense. Commonwealth ex rel. Pappert v.
Pharmaceutical Products, Inc., 868 A.2d 624 (Pa.Cmwlth. 2005). Lastly, our Supreme Court has
held that “the lower court has broad discretion in determining the amount of detail that must be
averred since the standard of pleading set forth in Rule 1019(a) is inapplicable of precise
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measurement.” United Refrigerator Co. v. Appplebaum, 410 Pa. 210, 213, 189 A.2d 253, 255
(1963).
A cause of action for breach of contract must be established by pleading the following:
“(1) the existence of a contract, including its essential terms, (2) a breach of a duty imposed by
the contract and (3) resultant damages.” Corestates Bank, N.A. v. Cutillo, 723 A.2d 1053, 1058
(Pa.Super.1999). While not every term of a contract must be stated in complete detail, every
element must be specifically pleaded. Id. at 1058.
Applying the foregoing, Plaintiff has averred facts with sufficient specificity to sustain a
cause of action for breach of contract. Plaintiff has alleged that, on December 23, 2008, a credit
agreement was entered into by the parties by which Plaintiff was to extend credit to Defendant
Coakley’s Restaurant for the purchase and procurement of Plaintiff’s goods. The credit
agreement was attached to the Amended Complaint at Exhibit A and contained a section entitled
“Terms and Conditions” which outlined the rights and responsibilities of the parties, including,
inter alia, that Defendant was to pay for goods received within thirty days of receipt. Moreover,
Plaintiff attached to its Amended Complaint a copy of the first invoice issued to Defendant
which was signed by a representative of Defendant, as well as a copy of the account statement
showing all outstanding invoices. Additionally, Plaintiff has informed Defendants that all of the
invoices not attached to the complaint are available upon request. Accepting as true all well-
pleaded, material, and relevant facts alleged in the Complaint, and every inference that is fairly
and reasonably deducible therefrom, we are satisfied that Plaintiff has pled facts sufficient to
support a cause of action for breach of contract and to enable Defendants to prepare a proper
defense. As a result, Defendants’ first preliminary objection seeking to dismiss Plaintiff’s Count
I for lack of specificity will be overruled.
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The standard of review for a demurrer is well-settled: “[a] preliminary objection in the
nature of a demurrer is properly granted where the contested pleading is legally insufficient.
Preliminary objections in the nature of a demurrer require the court to resolve the issues solely
on the basis of pleadings, no testimony or other evidence outside of the complaint may be
considered to dispose of the legal issues presented by the demurrer.” Strausser v. PRAMCO, III,
2008 PA Super 28, ¶ 12, 944 A.2d 761, 764-65 (internal citations omitted). A demurrer is “an
assertion that a complaint does not set forth a cause of action or a claim on which relief can be
granted.” Lerner v. Lerner, 2008 PA Super 183, ¶ 11, 954 A.2d 1229, 1234 (internal citations
omitted). “The question presented by the demurrer is whether, on the facts averred, the law says
with certainty that no recovery is possible. Where a doubt exists as to whether a demurrer should
be sustained, this doubt should be resolved in favor of overruling it.” Wawa, Inc. v. Alexander J.
Litwornia & Associates, 2003 PA Super 55, ¶ 2, 817 A.2d 543, 544 (quoting Price v. Brown, 545
Pa. 216, 221, 680 A.2d 1149, 1151 (1966)). If any theory of law will support the claim raised
by the complaint, dismissal is improper. Slaybaugh v. Newman, 330 Pa.Super. 216, 220, 479
A.2d 517, 519 (1984).
Applying the foregoing, we find that Plaintiff has properly set forth the fundamental
requirements of a breach of contract cause of action. Plaintiff has alleged that, on December 23,
2008, a credit agreement was entered into by the parties by which Plaintiff was to extend credit
to Defendant Coakley’s for the purchase of Plaintiff’s goods. The credit agreement attached to
the Amended Complaint at Exhibit A contained a section entitled “Terms and Conditions” which
outlined the rights and responsibilities of the parties, including, inter alia, that Defendant was to
pay for goods received within thirty days of receipt. Plaintiff has alleged that goods were
delivered to Defendant Coakley’s, as referenced by the attached invoice and account statements,
and that Defendant Coakley’s stopped making payments for the invoices, resulting in an
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economic loss of $48,227.69, plus interest. Thus, Plaintiff has set forth in its Amended
Complaint the existence of a valid contract, including its essential terms; a breach thereof; and
resultant damages. For these reasons, Defendants’ demurrer to Plaintiff’s Count I, breach of
contract, will be overruled.
As to Count II, Defendants seek dismissal of Plaintiff’s quantum meruit claim for reasons
of legal insufficiency. In its Count II of the Amended Complaint, Plaintiff raises the issue of
quantum meruit as an alternative theory to recover damages incurred in conjunction with the
provision of restaurant goods to Defendant for which Plaintiff has not received payment.
Quantum meruit is a quasi-contractual equitable remedy where a contract is implied in law under
a theory of unjust enrichment. Ragnar Benson, Inc. v. Bethel Mart Associates, 308 Pa.Super.
405, 414, 454 A.2d 599, 603 (1982). Although a claim for unjust enrichment is inapplicable
where a written or express contract exists, see Mitchell v. Moore, 1999 PA Super 77, ¶ 7, 729
A.2d 1200, 1203, a plaintiff is expressly permitted to plead in the alternative under the
Pennsylvania Rules of Civil Procedure. See Pa.R.Civ.P. 1020(c); Lugo v. Farmers Pride, Inc.,
2009 PA Super 5, ¶ 16, 967 A.2d 963, 970 (“We find that appellants may, indeed, plead causes
of action under. . . breach of contract, [and] in the alternative with a cause of action under a
theory of unjust enrichment.”). Where unjust enrichment is found, the law requires the
defendant to pay to the plaintiff the value of the benefit conferred. Schenck v. K.E. David, Ltd.,
446 Pa.Super. 94, 98, 666 A.2d 327, 328-39 (1995). The elements necessary to set forth a claim
of unjust enrichment are as follows:
(1) benefits conferred on defendant by plaintiff; (2) appreciation of such benefits
by defendant; and (3) acceptance and retention of such benefits under such
circumstances that it would be inequitable for defendant to retain the benefit
without payment of value. The application of the doctrine depends on the
particular factual circumstances of the case at issue. In determining if the doctrine
applies, our focus is not on the intention of the parties, but rather on whether the
defendant has been unjustly enriched.
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Mitchell, 1999 PA Super 77, ¶ 8, 729 A.2d at 1203-04 (quoting Schenck, supra, 446 Pa.Super. at
97; 666 A.2d at 328).
The Plaintiff has properly asserted the elements required to make out a cause of action for
quantum meruit. Although recovery on Plaintiff’s Count II would be precluded by a recovery
under Count I, Plaintiff is permitted under the Pennsylvania Rules of Civil Procedure to plead
both inconsistent and alternative causes of action. Plaintiff’s Amended Complaint avers that
Plaintiff conferred benefits upon Defendant, specifically, restaurant goods with a value in excess
of $48,000; that Defendant appreciated and realized the benefits provided, as evidenced by a
signature on each delivery invoice; and that Defendant accepted and retained the goods provided
in such a manner in which it would be inequitable for Defendant to retain the goods without
payment of value. Thus, Plaintiff has properly asserted a cause of action for quantum meruit,
and, if subsequently proven, would been entitled to recovery. For these reasons, Defendants’
demurrer to Plaintiff’s Count II will be overruled.
Lastly, Defendants seek the dismissal of Count III, misrepresentation and fraud, based on
two grounds: (i) the failure to plead fraud with the requisite particularity and specificity; and (ii)
legal insufficiency, in which Defendants’ contend that Defendant Hogg cannot be liable in his
individual capacity for an alleged partnership obligation.
Pennsylvania Rule of Civil Procedure 1019(b) provides that “[a]verments of fraud . . .
shall be averred with particularity,” Pa.R.Civ.P. 1019(b), and preliminary objections are
appropriate to challenge allegations of fraud where a complaint fails to meet the specificity
requirements of Rule 1019(b). McGill v. Southwark Realty Co., 828 A.2d 430, 436 (Pa.Cmwlth.
2003). Our Supreme Court has explained the particularity requirement as follows:
Averments of fraud are meaningless epithets unless sufficient facts are set forth
which will permit an inference that the claim is not without foundation or offered
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simply to harass the opposing party and to delay the pleader's own obligation....
The pleadings must adequately explain the nature of the claim to the opposing
party so as to permit him to prepare a defense and they must be sufficient to
convince the court that the averments are not merely subterfuge.
New York State Elec. & Gas Corp. v. Westinghouse Elec. Corp., 387 Pa.Super. 537, 553, 564
A.2d 919, 927 (1989) (quoting Bata v. Central–Penn National Bank of Philadelphia, 423 Pa.
373, 379–80, 224 A.2d 174 (1966)).
While it remains impossible to establish precise standards as to the degree of particularity
required by Rule 1019(b), Pennsylvania courts have consistently mandated that two conditions to
be met in order to satisfy the requirement: “(1) the pleadings must adequately explain the nature
of the claim to the opposing party so as to permit the preparation of a defense, and (2) they must
be sufficient to convince the court that the averments are not merely subterfuge.” Martin v.
Lancaster Battery Co., Inc., 530 Pa. 11, 18, 606 A.2d 444, 448 (1992).
In order to maintain a cause of action for fraud, a plaintiff must allege the following
elements: (1) a representation; (2) which is material to the transaction at hand; (3) made falsely,
with knowledge of its falsity or recklessness as to whether it is true or false; (4) with the intent of
misleading another into relying on it; (5) justifiable reliance on the misrepresentation; and (6) the
resulting injury was proximately caused by the reliance. Bortz v. Noon, 556 Pa. 489, 499, 729
A.2d 555, 560 (1999).
With these standards in mind, and after review of Plaintiff’s Amended Complaint in light
of all reasonable inferences deducible therefrom, we find that Plaintiff has not pled facts
sufficient to support a cause of action for misrepresentation and fraud, thus making its Count III
factually deficient. In its claim of fraud, Plaintiff alleges that Defendant Hogg issued two checks
to Plaintiff on behalf of Irish Restaurants, LP, with face values of $7,695.56 and $5,958.20,
which were subsequently dishonored due to “insufficient funds,” and one check with a face value
10
of $500.00 which was later “stopped from being honored.” Plaintiff thereafter contends that “[i]t
is believed and, therefore averred, that Defendant Hogg has issued a check that could not be
honored,” and, furthermore, “[i]t is believed and therefore averred, that Defendant Hogg knew or
should have known that there was not sufficient funds when the check was issued.” With this
backdrop, Plaintiff sums up the whole of its allegations of fraud as follows:
24. Defendant Timothy Hogg has fraudulently misrepresented to Plaintiff that he
could pay for certain goods received from Plaintiff on more than one occasion.
25. Plaintiff relied on the issuance of the checks by Defendant Hogg that a certain
portion of the Goods would be paid for.
(First Amended Complaint, ¶¶ 24-25).
Although Plaintiff asserted that it “relied” on the issuance of the subsequently dishonored
checks, it fails to state the resulting injury that was proximately caused by the reliance. In order
to state a cause of action for fraud, Plaintiff is required to establish that it justifiably relied on the
misrepresentation and thereafter suffered injury as a result. Nowhere in Plaintiff’s fraud count or
statement of facts has Plaintiff alleged that it took action or refrained from taking action in
reliance on Defendant Hogg’s issuance of the three checks, assuming, of course, that the
issuance of the checks constituted a “misrepresentation” within the definition of fraud. Plaintiff
makes no mention of any goods or services which may have been provided as a result of the
issuance of the checks, or any other harm, other than its breach of contract damages, which it
incurred after receiving the checks. Quite simply, Plaintiff’s count of fraud lacks the
particularity required by Rule 1019 and our precedent. For these reasons, Defendants’
preliminary objection to Plaintiff’s Count III, misrepresentation and fraud, will be sustained, and
Plaintiff will be given leave to amend, if so desired, to plead such a claim as is consistent with
the foregoing discussion. Because we will sustain Defendants’ preliminary objection on the
basis of a lack of particularity, we do not reach the issue of Defendant Hogg’s individual liability
11
in the context of a partnership obligation. In any event, this issue, though perhaps a substantial
one, cannot be resolved on preliminary objections.
To reflect the foregoing, the following order will be entered:
ORDER
th
AND NOW, this 14 day of August, 2012, upon consideration of Defendants’
Preliminary Objections to Plaintiff’s First Amended Complaint, and after oral argument, heard
July 13, 2012, the Preliminary Objections of Defendants are SUSTAINED in part and
OVERRULED in part.
For reasons contained in the opinion filed of even date herewith, Defendants’ preliminary
objection to Plaintiff’s Count III, misrepresentation and fraud, is hereby SUSTAINED and
Plaintiff is given 20 days to amend, if so desired, to plead such claim consistent with the
accompanying opinion.
AND FURTHER, Defendants’ preliminary objections to Plaintiff’s Counts I and II are
hereby OVERRULED.
BY THE COURT,
___________________________
Kevin A. Hess, P.J.
Christopher E. Rice, Esquire
For the Plaintiff
John P. Zeigler, Esquire
For the Defendants
:rlm
12
JOHN GROSS & COMPANY,
: IN THE COURT OF COMMON PLEAS OF
Plaintiff,
: CUMBERLAND COUNTY, PENNSYLVANIA
:
v.
:
:
IRISH RESTAURANTS LP, d/b/a
:
COAKLEY’S RESTAURANT and PUB
:
and TIMOTHY HOGG,
:
Defendants.
: No. 12-1379 CIVIL
IN RE: DEFENDANTS’ PRELIMINARY OBJECTIONS TO
PLAINTIFF’S FIRST AMENDED COMPLAINT
BEFORE HESS, P.J., MASLAND, J. and PECK, J.
ORDER
AND NOW, this 14th day of August, 2012, upon consideration of Defendants’
Preliminary Objections to Plaintiff’s First Amended Complaint, and after oral argument, heard
July 13, 2012, the Preliminary Objections of Defendants are SUSTAINED in part and
OVERRULED in part.
For reasons contained in the opinion filed of even date herewith, Defendants’ preliminary
objection to Plaintiff’s Count III, misrepresentation and fraud, is hereby SUSTAINED and
Plaintiff is given 20 days to amend, if so desired, to plead such claim consistent with the
accompanying opinion.
AND FURTHER, Defendants’ preliminary objections to Plaintiff’s Counts I and II are
hereby OVERRULED.
BY THE COURT,
___________________________
Kevin A. Hess, P.J.
Christopher E. Rice, Esquire
For the Plaintiff
John P. Zeigler, Esquire
For the Defendants