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Home My WebLink About2015-4643 HEARING INSTRUMENTS, INC., : IN THE COURT OF COMMON PLEAS OF Plaintiff : CUMBERLAND COUNTY, PENNSYLVANIA : vs. : CIVIL ACTION – LAW : NO. 2015-4643 CIVIL DENNIS GUFFEY, MANSFIELD : HEARING AID CENTER LLC, and : JANE DOE, : Defendants : JURY TRIAL DEMANDED IN RE: PRELIMINARY OBJECTIONS OF DEFENDANTS DENNIS GUFFEY AND MANSFIELD HEARING AID CENTER LLC BEFORE GUIDO, P.J. AND BREWBAKER, J. OPINION AND ORDER STATEMENT OF FACTS Dennis Guffey (“Guffey”) was employed by Hearing Instruments, Inc. (“Hearing Instruments”), a franchisee of Miracle Ear, a hearing aid distributor, in Lycoming, 1 Pennsylvania. Pursuant to his employment, Guffey signed an Employment Agreement with Hearing Instruments which contained provisions regarding confidential information and a 2 covenant not to compete. Within a week following his April 17, 2015 resignation of employment from Hearing Instruments, Guffey filed incorporation documents for Mansfield Hearing Aid Center LLC 3 (“MHAC”). Shortly thereafter, a number of Guffey’s customers from Hearing Instruments 4 returned their hearing aids, totaling more than $65,000. Several customers informed Hearing Instruments that they were contacted by Guffey or a woman purporting to be Guffey’s mother 5 who advised them that MHAC could give them a better deal. On or about August 26, 2015, 1 Plaintiff’s First Amended Complaint, filed 12/29/15, ¶¶ 1, 10. 2 Plaintiff’s First Amended Complaint, ¶¶ 11-13, 16-17. 3 Plaintiff’s First Amended Complaint, ¶¶ 18, 22. 4 Plaintiff’s First Amended Complaint, ¶ 23. 5 Plaintiff’s First Amended Complaint, ¶ 24. several flyers promoting the grand opening of MHAC were posted throughout the Wellsboro 6 Plaza in Wellsboro, Pennsylvania, which is the location of one of Hearing Instruments’ stores. Plaintiff Hearing Instruments filed a Writ of Summons on August 20, 2015, and a Complaint on November 17, 2015. Defendants filed Preliminary Objections to Plaintiff’s Complaint on December 11, 2015, to which Plaintiff responded by filing a First Amended Complaint on December 29, 2015. Defendants filed Preliminary Objections to Plaintiff’s First 7 Amended Complaint on January 15, 2016, with Plaintiff filing a response thereto on February 4, 2016. Argument was held before a panel of this Court on April 8, 2016. DISCUSSION Defendants are objecting to Count III of Plaintiff’s First Amended Complaint on two grounds: (1) the claim of Deceptive Trade Practices (Passing Off) under the Lanham Act fails to conform to law or a rule of court, and (2) legal insufficiency (demurrer). Specifically, Defendants argue that the Complaint fails “to aver material facts to support a claim of ‘passing off’ under the Lanham Act;” “to aver material facts that may show any false designation or false representation was made by Defendant;” and “to aver material facts to show any false designation occurred in interstate commerce to support a claim under the Lanham Act.” In so doing, Defendants cite to Pa.R.C.P. 1028(a)(2) for the proposition that a preliminary objection may be made for “failure of a pleading to conform to law or rule of court or inclusion of scandalous or impertinent matter.” Pa. R.C.P. 1028(a)(2). Defendants specifically allege that 6 Plaintiff’s First Amended Complaint, ¶¶ 27-31. 7 While Defendants initially filed five preliminary objections to Plaintiff’s First Amended Complaint, they only argued and briefed three: failure to conform to law or rule of court under Pa.R.C.P. 1028(a)(2) and 1019(a) to Count III; legal insufficiency in the form of a demurrer to Count III; and misjoinder of a cause of action under Pa.R.C.P. 1028(a)(5) arguing Plaintiff’s tort claims were barred under the “gist of the action” doctrine to Counts II, VI and VII. Defendants’ remaining preliminary objections will therefore be deemed to be waived. 2 Plaintiff failed to comply with Pa.R.C.P. 1019(a) which requires that “the material facts on which a cause of action or defense is based shall be stated in a concise and summary form.” Under their claim for legal insufficiency in the form of a demurrer, Defendants cite to Pa.R.C.P. 1028(a)(4). Plaintiff’s First Amended Complaint alleges that Defendant MHAC posted several flyers throughout the Wellsboro Plaza. Furthermore, Plaintiff alleges that the flyers were misleading, and did not clearly identify MHAC, thus leading to possible confusion on the part of Plaintiff’s customers. The law is clear that the question of whether there is a likelihood of confusion under the Lanham Act is a “mixed question of law and fact.” See, Curcio Webb LLC v. Nat'l Benefit Programs Agency, Inc., 2006 U.S. Dist. LEXIS 394 (S. D. Ohio 2006) (further citation omitted). This issue is clearly not appropriate for disposal by preliminary objection. “Preliminary objections which seek the dismissal of a cause of action should be sustained only in cases in which it is clear and free from doubt that the pleader will be unable to prove facts legally sufficient to establish the right to relief.” Hykes v. Hughes, 835 A.2d 382, 383 (Pa. Super 2003) (further citation omitted). It is apparent that Defendants are seeking an adjudication of the merits of this issue, which is not proper at this stage. Furthermore, there is a question of fact, which lies in the province of a jury. As the Court finds that there are material facts and the issue is neither “clear and free from doubt,” nor legally insufficient, the Defendants’ preliminary objections to Count III of Plaintiff’s First Amended Complaint will be overruled. Defendants are also objecting to Count II (Breach of Fiduciary Duty), Count VI (Tortious Interference with Current and Prospective Business Relationships) and Count VII (Unfair Competition) of Plaintiff’s First Amended Complaint on the basis that there is a misjoinder of a cause of action due to the “gist of the action” doctrine. 3 The seminal Pennsylvania case on the gist of the action doctrine, eToll, Inc. v. Elias/Savion Adver., 811 A.2d 10 (Pa. Super 2002), held as follows: ‘\[A\]lthough mere non-performance of a contract does not constitute a fraud\[,\] it is possible that a breach of contract also gives rise to an actionable tort\[.\] To be construed as in tort, however, the wrong ascribed to defendant must be the gist of the action, the contract being collateral.’ Bash, 601 A.2d at 829, citing, Closed Circuit Corp. v. Jerrold Electronics Corp., 426 F. Supp. 361, 364 (E.D. Pa. 1977). ‘The important difference between contract and tort actions is that the latter lie from the breach of duties imposed as a matter of social policy while the former lie for the breach of duties imposed by mutual consensus.’ Redevelopment Auth. v. International Ins. Co., 454 Pa. Super. 374, 685 A.2d 581, 590 (Pa. Super. 1996) (en banc), appeal denied, 548 Pa. 649, 695 A.2d 787 (Pa. 1997), quoting , Phico Ins. Co. v. Presbyterian Med. Srvs. Corp., 444 Pa. Super. 221, 663 A.2d 753, 757 (Pa. Super. 1995). ‘In other words, a claim should be limited to a contract claim when 'the parties' obligations are defined by the terms of the contracts, and not by the larger social policies embodied by the law of torts.' Bohler-Uddeholm Am., Inc., v. Ellwood Group, Inc., 247 F.3d 79, 104 (3rd Cir. Pa. 2001), cert. denied, 534 U.S. 1162, 122 S. Ct. 1173, 152 L. Ed. 2d 116 (2002), quoting, Bash, 601 A.2d at 830. Id. at 14. Guffey admits that his fiduciary duty to Hearing Instruments arose from the contractual 8 employment relationship. While Plaintiff argues that there is an agency relationship between the parties, unless there is a trade secret or a contractual obligation, an employee “has no duty not to compete with a former employer upon severance of their relationship.” Carl A. Colteryahn Dairy, Inc. v. Schneider Dairy, 203 A.2d 469 (Pa. 1964), citing Restatement (2d), Agency § 396(a) (emphasis added). As a result, Defendants’ preliminary objection to Count II (Breach of Fiduciary Duty) will be sustained. Count IV of Plaintiff’s First Amended Complaint is a claim of Tortious Interference with Current and Prospective Business Relationships. Count IV is filed against both Defendant 8 “Guffey’s actions, as set forth above, constitute a breach of his fiduciary duties and obligations to Hearing Instruments arising out of his employment relationship with Hearing Instruments.” Plaintiff’s First Amended Complaint, ¶ 51. 4 MHAC and Defendant Guffey. However, because it was only Defendant MHAC that was alleged to have taken the actions giving rise to this claim, and because Guffey’s obligations to Hearing Instruments arose only from the contractual employment relationship that he had with 9 Plaintiff, the preliminary objection to Count IV of Plaintiff’s First Amended Complaint as against Defendant Guffey will be sustained. Finally, Defendants object to Count VII of Plaintiff’s First Amended Complaint, which is a claim for unfair competition. The “passing off” and deception that was alleged to have been committed was by Defendant MHAC, not Defendant Guffey. The “gist of the action” of an unfair competition claim “lies in the deception practiced in ‘passing off’ the goods of one for that of another.” Goebel Brewing Co. v. Esslingers, Inc., 95 A.2d 523 (Pa. 1953) (further citations omitted). Because the deception alleged was committed by Defendant MHAC, and not Defendant Guffey, the preliminary objection to Count VII of Plaintiff’s First Amended Complaint will be sustained as against Defendant Guffey. ORDER OF COURT AND NOW, this day of April, 2016, upon consideration of the Defendants’ Preliminary Objections to Plaintiff’s First Amended Complaint, and for the reasons stated in the accompanying opinion: 1)The preliminary objection to Count III is OVERRULED; 2)The preliminary objection to Count II is SUSTAINED; 3)The preliminary objection to Count IV is SUSTAINED as it relates to Defendant Guffey; and 9 Again, Plaintiff’s own Complaint states that “Defendants are aware that their actions violate the aforementioned Employment Agreement.” Plaintiff’s First Amended Complaint, ¶ 77 (emphasis added). 5 4)The preliminary objection to Count VIII is SUSTAINED as it relates to Defendant Guffey. The remainder of Defendants’ preliminary objections are OVERRULED, and Defendants are afforded a period of twenty (20) days from the date of this order to file an Answer to Plaintiff’s First Amended Complaint. BY THE COURT, __________________________ Jessica E. Brewbaker, J. Todd J. Shill, Esquire Stephen Moniak, Esquire Lindsey E. Snavely, Esquire For the Plaintiff Tricia D. Naylor, Esquire For the Defendants 6 HEARING INSTRUMENTS, INC., : IN THE COURT OF COMMON PLEAS OF Plaintiff : CUMBERLAND COUNTY, PENNSYLVANIA : vs. : CIVIL ACTION – LAW : NO. 2015-4643 CIVIL DENNIS GUFFEY, MANSFIELD : HEARING AID CENTER LLC, and : JANE DOE, : Defendants : JURY TRIAL DEMANDED IN RE: PRELIMINARY OBJECTIONS OF DEFENDANTS DENNIS GUFFEY AND MANSFIELD HEARING AID CENTER LLC BEFORE GUIDO, P.J. AND BREWBAKER, J. ORDER OF COURT AND NOW, this day of April, 2016, upon consideration of the Defendants’ Preliminary Objections to Plaintiff’s First Amended Complaint, and for the reasons stated in the accompanying opinion: 1) The preliminary objection to Count III is OVERRULED; 2) The preliminary objection to Count II is SUSTAINED; 3) The preliminary objection to Count IV is SUSTAINED as it relates to Defendant Guffey; and 4) The preliminary objection to Count VIII is SUSTAINED as it relates to Defendant Guffey. The remainder of Defendants’ preliminary objections are OVERRULED, and Defendants are afforded a period of twenty (20) days from the date of this order to file an Answer to Plaintiff’s First Amended Complaint. BY THE COURT, __________________________ Jessica E. Brewbaker, J.