Commonwealth Code Inspection Service Inc Vs Clem Malot and Pennsylvania Municipal Code Alliance

V
IN THE COURT OF COMMON PLEAS OF THE 39TH JUDICIAL DISTRICT OF

PENNSYLVANIA - FRANKLIN COUNTY BRANCH
COMMONWEALTH CODE
INSPECTION SERVICE, INC., Civil Action: Law and Equity
Plaintiff
V.
ROBERT C. MALOT a/k/a

R. CLEM MALOT and No . 2015- 1652
PENNSYLVANIA MUNICIPAL
CODE ALLIANCE, INC. Judge: Hon. Todd Sponseller
Defendant
PLAINTIFF'S OPPOSITION TO DEFENDANTS'

MOTION FOR PARTIAL SUMMARY JUDGMENT
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1015S0301 111
TABLE OF CONTENTS
Table of Authorities .......... .... ....... .. ..... .... .. ...... ..... ..................... ... .................. ..... ....... ................. iii
Introduction ................................................................................................................................... l
Counter Statement of Disputed/Undisputed Material Facts .............. ............. .. ........ ...... .............. 7
Argument ................... ....................... ... ..... ....... ... ........................................... ....... ......... .... ......... 15
Summary Judgment Standard ......................................................................................... 15
Defendants Are Not Entitled to Summary Judgment as to Counts I, II, and II of the
Amended Complaint ............................................... .... ............. ........ ... ....................... ..... 16
The Non-Compete Agreement is Enforceable as a Matter of Law and Defendants are not
Entitled to Summary Judgment as to Counts I, II, and Ill of the
Amended Complaint ....................................................................................................... 19
The Defendants Are Not Entitled to Summary Judgment on Counts IV, VI, VII, VIII, IX,
and Xl Because the Statute of Limitations Does Not Bar Those Claims ............. .......... 22
The Defendants are not Entitled to Summary Judgment on Count X Because the Question
of \Vhether the Defendants Misappropriated Trade Secrets is for a Jury ... .................... 26
CCIS did not Sanction Mr. Malot Unjustified Receipt of Inspection Fees Simply by
Issuing Checks to Mr. Malot. ...... ...... .. ... ......... ................. .. ...... ........ ......... ............ ........ .. 29
Defendants are not Entitled to Summary Judgment on Counts IV, VII, VIII, and IX
\Vhere Defendant Interfered with Existing and Potential Relationships with Customers
and Employees ................................................................................................................ 31
Defendants are not Entitled to Summary Judgment on Count VI of the Amended

Complaint Because the Record Facts Establish that Mr. Malot acted Contrary to the
Interests of CCIS while he was its Manager and Agent ........... ....................... ............... 35
EXHIBITS
APPENDIX OF UNPUBLISHED CASES
10158030111111
TABLE OF AUTHORITIES
CASES
Advanced Research Sys. , Inc. v. ColdEdge Techs., Inc., No. 3253 EDA 2012,
014 WL 10979726 .............. ......... ................................................................ .. ................. 27
A.M. Skier Agency, Inc. v. Gold, 747 A.2d 936, 940 (Pa. Super. 2000), as revised
Jan. 26, 2000) ............................................................................................................. ..... 26
Anderson v. Moore, 650 A.2d 1090 (Pa. Super. 1994) .. .... .... .... .. .... ....... ... .. ............................. .. 15
Barb-Lee Mobile Frame Co. v. Hoot, 206 A.2d 59, 61 (Pa. 1965) ...... .. .................................... 20
Beneficial Finance Co. ofLebanon v. Becker, 222 A.2d 873, 876 (Pa. 1966) ..................... 20, 21
Bi/bow v. Pennsylvania Gas & Water Co ., 43 Pa. D. & C.3d 529,530 (Pa. Com. Pl. 1986) .... 22
Blofsen v. Cutaiar, 333 A.2d 841 (Pa. 1975) ............. ..... .. ....... ..................................... .......... .... 16
Centennial Lending Grp., LLC v. Seckel Capital, LLC, No. 822 EDA 2016, 20 I 7 WL 4861625,
at *9 (Pa. Super. Ct. Oct. 26, 2017) ................................................................................ 33
Co/gate-Palmolive Co. v. Tandem Industries, 485 F. App'x 516,519 (3d Cir. 2012) ............... 35
Connor v. Allegheny Gen. Hosp., 461 A.2d 600 (1983) .......................................... ..... .... .... ...... 24
Crum v. Bridgestone/Firestone North American Tire, LLC, 907 A.2d 578, 585
Pa.Super.2006) ................................................................................................................ 27
Curran v. Philadelphia Newspapers, Inc., 497 Pa. 163 (1981) ................................................ .. 15
Demmler v. SmithK/ine Beecham Corp., 671 A.2d 1151, l 153 (Pa. Super. Ct. 1996) ............... 16
E. Coast Paving & Sea/coating, Inc. v. Emery, No. 11356 OF 2012,C.A., 2013 WL 10545382
(Pa. Com. Pl. Aug. 22, 2013) ............................. ........ ......... ............................................ 28
E. Frank Hopkins Seafood, Co. v. Olizi, No. 2:17-CV-01558-JCJ, 2017 WL 2619000, at *7

E.D. Pa. June 16, 2017) ................................................. ..................... ....... ....................... 33
Hodgen v. Summers, 555 A.2d 214, 215 (Pa. Super. 1989) (citation omitted), appeal denied,
563 A.2d 888 (Pa. 1989) ............... ........................... ............................................ ........... 23
Jacob v. New Kensington YM.C.A ., 459 A.2d 350 (Pa. Super. 1983) ............................... ........ 22
Jacobson & Co. v. International Environment Corp., 23 5 A.2d 6 l 2, 620 (Pa. 1967) ............... 19
101sso.;0111dii
John G. Bryant Co. , Inc. v. Sling Testing and Repair, Inc., 369 A.2d 1164 (Pa.1977) .............. 28
Kuisis v. Baldwin-Lima-Hamilton Co,p., 319 A.2d 914,919 (Pa. 1974) ............................. 22, 23
Langensiepen v. Com., Unemployment Comp. Bd. of Review, 451 A.2d 814, 816
(Pa. Cm\\'lth. 1982) ......................................................................................................... 35
Me/at v. Me/at, 602 A.2d 380 (Pa. Super. 1992) ................................................................... .4, I 6
Meriwether v. Philadelpl,ia Newspapers, 684 A.2d 137 (1996), appeal denied,

693 A.2d 967 ( 1997) ....................................................................................................... 15
Novelty Knitting Mills, Inc. v. SisJa·nd, 457 A.2d 502 (Pa. 1983) ......................................... 16, 18
Pennsylvania State Univ. v. Univ. Orthopedics, Ltd., 706 A.2d 863,867 (Pa. Super. 1998) ..... 33
Pestco, Inc. v. Associated Products. Inc., 880 A.2d 700 (Pa.Super.2005) ................................. 27
I
Potter v. Herman, 762 A.2d 1116 (2000) ................................................................................... 15
PTSI, Inc. v. Haley, 71 A.3d 304, 314 (Pa. Super. 2013) ............... .. ......................................... .29
Reading Radio. Inc. v. Fink, 833 A.2d 199,211 (Pa. Super. 2003) .............. ................ .............. 35
Sanchez v. City of Philadelphia, 448 A.2d 588 (Pa. Super. l 982 .............................................. 23
Shiflett v. Lehigh Valley Health Nenvork, Inc., 174 A.3d 1066, 1083 (Pa. Super. 2017),
reargument denied (Jan. 12, 2018), appeal granted in part,
191 A.3d 745 (Pa. 2018) ........................... ............. ...... ............................................. 22, 24
Smith v. Unemployment Compensation Bd. of Review, 367 A.2d 81 l (Pa. Cmwlth. 1977) ....... 35
Socko v. Mid-Atlantic Systems of CPS, Inc., 126 A.3d 1266, 1275 (Pa. 2015) ................ :......... 20
Spring Steels. Inc. v. Molloy, 400 Pa. 354, 162 A.2d 370 (1960) .... .. ...... ..... ............................ ..28
Sylvester v. Beck, 178 A.2d 755, 757 ( 1962) .............................................................................. 36
STATUTES/SECONDARY SOURCES
Pennsylvania Rule of Civil Procedure 1035.2 ......................... ........................... ..................... ... 15
12 Pa.C.S.A. § 5302 ........ .............................................. ...... ........................... ............................. 26
61A Am.Jur.2d Pleading§ 322 ............................................................... ......................... ........... 23
IOI SS0:0111} 1V
Restatement (Third) of Unfair Competition § I cmt. g ........... ............................................. ...... 35
1015S0JOlll IV
PLAINTIFF'S OPPOSITION TO DEFENDANTS'
MOTION FOR PARTIAL SUMMARY JUDGMENT
COMES NOW, Plaintiff, Commonwealth Code Inspection Service, Inc., by and through
counsel Zachary E. Nahass, Esquire and Stephen E. McDonald, Esquire and the CGA Law Firm,
and for its Opposition to Defendants' Motion for Partial Summary Judgment states to the Court
the following.
INTRODUCTION
l. Admitted .
2. Denied in part and admitted in part. On May 15, 2015 the Court entered a ruling
denying CCI S' s request for preliminary injunctive relief. However, the Court order is a
document that speaks for itself and any characterization or mischaracterization is
specifically denied. By way of further answer, CCIS notes that the Court stated with
regard to the non-compete "Specifically, the Court finds that CCJS ' s right to relief is not
clear because there are questions regarding the validity of the Non-Compete and
Confidentiality Agreement signed only by Mr. Malot on June 22 , 2001 ." (Def. Motion,
Ex . A; Court ' s Order of May 15, 2015 at 2). In its conclusion, the Court found, ''As
CCJS 's right to relief is not clear, the Court must deny the Motion for Preliminary
Injunction." (Id. at 5). This Order was entered prior to discovery being completed, and
based on an elevated burden that exists for preliminary injunction.
3. Admitted.
4. Denied. The pleadings in this matter are documents that speak for themselves and
as such any characterization is specifically denied. By way of further response, in
addition to claims related to Mr. Malot ' s breach of restrictive covenants and business
torts, CCIS ' asserts that Mr. Malot breached his fiduciary duty to CCIS.
101 5S0301/l I l
COUNTER ST ATEMENT OF DISPUTED/UNDISPUTED MATERIAL FACTS
Commonwealth Code lnspectio11 Services, Inc.
5. Admitted.
6. Admitted.
7. Admitted.
8. Admitted.
9. Admitted.
l 0. Admitted.
11. Admitted.
12. Admitted.
13. Admitted.
14. Denied as stated. Mr. Shilling actually testified that there is nothing really secret
about the fee schedules, "other than how they're developed." (Def. Motion, Ex. D; lnj.
Hrg., N.T. 26:9-19).
15. Denied. Mr. Shilling actually testified that he was not aware of any municipalities
that release financial information. (Def. Motion Ex. B; P. Schilling Dep. 151: 19-20).
CCJS Hires Mr. Malot in 2001
16. Denied. William Schilling testified that Mr. Malot was hired July 1, 2001. (Def.
Motion, Ex. C; W. Schilling Dep. 23 : 10-14).
17. Denied. While Peter Schilling testified that CCIS's operation was more limited, it
operated "throughout most of the state" in 2001. (Def. Motion, Ex. D; lnj. Hrg. N.T.
27:2-6).
18. Admitted.
(0 1580301 11I 2
19. Admitted.
20. Admitted.
21. Admitted.
22. Admitted.
Mr. Malot's Employme11t witlt CCJS a,rd Compe11satio11 Structure
23. Admitted.
24. Denied in part. Admitted in Part. By way of further response, CCIS operates in
various municipalities. Those municipalities each have their own way of operating and
not every residential permit fees are paid directly to CCIS .
25. Admitted.
26. Admitted.
27. Denied. Regional managers, including Mr. Schilling and Mr. Malot, had some
discretion as to how much would be drawn from the total inspection fee to pay for
individual inspections during the life of a project. However, what an inspector was
ultimately paid for an inspection was determined by a variety of factors, including the
total inspection fee on the project, the number of inspections and progress meetings
required, and how many other inspectors worked on the project. Ultimately, each
inspector was entitled to a pro-rata share (based on his contribution to the total project) of
sixty-five percent (65%) of the total inspection fee for the project. (Def. Motion, Ex. B; P.
Shilling Dep. 78 :19-21; 90:23-24; 91:11-12; Pl. Opp., Ex. A; P. Schilling Dep. 87:17-
21).1
1
In several cases, the Plaintiff has attached supplementary ponions of Deposition transcripts that were originally
referenced in Defendants ' Motion. The supplementary ponions of Peter Schilling' s Deposition transcript are
attached hereto as "Exhibit 8" .
{01 5S03011113
28. Denied as stated. Plaintiffs conversion claim is based both on Mr. Malot's
extraction of funds remaining at the conclusion of a project, and his extraction of funds
under false pretenses, such as that he had performed an inspection or some other work on
a project when he had not, .or that a project was complete when in fact it was not.
29. Denied as stated. Inspectors were supposed to receive a pro-rata share of sixty-
five percent (65%) of the total project inspection fee. (De. Motion, Ex. B; P. Shilling
Dep. 188: 12-18).
30. Admitted.
31 . Admitted in part and Denied in part. Mr. Malot's compensation consisted of a
management fee of I 0% of revenues realized for inspections conducted by inspectors he
supervised and a 65% commission on inspections he performed. (Def. Motion, Ex. H; Pl.
Response to Second Set of Interrogatories ,J 4 ). It is denied that Mr. Malet, or any of the
inspectors under his supervision, submitted inspection reports. Instead, he submitted pay
sheets which purported to identify inspections he claimed to have completed and the
draw he was requesting for having completed those inspections. They were not
accompanied by "inspection reports." (Pl. Opp., Ex. B; A. Schooly Dep. 14: 12-16; Pl.
Opp. Ex. C; N. Nead Dep. 17:20-25; 18:16-24).
32. Admitted.
33. Admitted.
34. Admitted.
35. Admitted.
36. Admitted.
37. Admitted.
!O!S S030111 14
38. Admitted.
39. Admitted.
40. Admitted.
41. Admitted.
42. Denied. In other offices besides the Chambersburg and Bedford offices, the
inspectors submitted their own sheets. In the Chambersburg and Bedford offices, the
calculation and data entry was performed by office personnel. (Def. Motion, Ex. B; P.
Schilling Dep. 58:5-15). It is admitted that CCIS calculated Mr. Malot's management fee
based on the revenues of inspectors he supervised.
43. Admitted.
44. It is Admitted that Mr. Malot regularly sought and received the inspection fee
balance when a project was complete, abandoned, or substantially delayed. For instance,
William Chittester, one of the CCIS' former inspectors, testified that the owner of a
grocery store project he had worked on in 20 l O and 20 I I ran out of money, causing the
project to come to a halt in 2011. (Pl. Opp. Ex. D; W. Chittester Dep. 107:6-108:21). Yet,
the inspection summary for that project showed a "close out" payment of S 13,042.50 to
Mr. Malot in 2014, after almost three years of no inspection activity. (A true and correct
copy of the Inspection Report is attached hereto as Exhibit E). Mr. Chittester could not
conceive of any reason for the project to have been closed out in that fashion. (Pl. Opp.
Ex. D; W. Chittester Dep. 110:5-111 :3). Peter Schilling testified that CCIS was involved
in quite a few situations where Mr. Malot took all the money from a project's inspection
fee budget before the project was complete, requiring CCIS to now complete inspections
without payment. (Def. Motion Ex. B; P. Schilling Dep. 96:3-13).
1015S030111}5
45. Denied. Mr. Malot's entitlement to extract remaining inspection fees at the
completion of a project is a material fact very much in dispute. (Def. Motion Ex. B; P.
Schilling Dep. 91: 11-12) (inspection fee balance to be divided between inspectors who
worked on a project); (Def. Motion Ex. C; W. Schilling Dep. 26: I 5-27 :8) (Malot entitled
to 65% of inspections he performed plus his management fee) . As the regional manager,
Mr. Malot was responsible for managing projects so that the inspection fee was not
depleted prior to the end of the project. (P. Schilling Dep. 80: 10-22; 81 :8-18; 84:7-21;
85:17-19; Pl. Opp. Ex. A; P. Schilling Dep 86:21-87:3). Mr. Matot received a
management fee of 10% on every job whether or not he performed any inspections and
whether or not the inspection budget was overdrawn.
46. Denied. Peter Schilling did not instruct Mr. Malot to compensate himself in this
manner. Mr. Schilling was clear throughout his testimony about CCIS' compensation
structure and how Mr. Malot should have been compensated. (Def. Motion Ex. B; P.
Schilling Dep. 46:12-24, 80:10-22, 85:6-19, 91:6-12; Pl. Opp. Ex. A; P. Schilling Dep.
37:2-19, 109:2-17).
47. Denied. CCIS did not retain any portion of the 65% designated for inspectors. Mr.
Malot was not entitled to any of the 65% designated for inspectors unless he did an actual
inspection on that job. He was entitled to a pro-rate share of the inspection fee based on
inspections he actually performed, plus a management fee (that came out of CCIS' 35%
overhead fee) for his management duties. (Def. Motion Ex. B; P. Schilling Dep. 46: 12-
24, 80:10-22, 85:6-19, 91:6-12; Pl. Opp. Ex. A; P. SchillingDep. 37:2-19, 109:2-17).
48. Admitted that Exhibit P to Defendant's Motion is a pay record that was calculated
and submitted by Mr. Matot for purposes of payment. However, any implication that Mr.
l01SS03011116
Malot was entitled to the amounts he claimed is denied. His pay structure was that he
would receive a portion of the 65% based on inspections he performed and 10% of all the
inspections that inspectors under his direction perfonned. The 10% was paid from the
35% retained by CCIS for its operations. (Def. Motion Ex. B; P. Schilling Dep. 46: 12-24,
80: l 0-22, 85:6-19, 91 :6-12; Pl. Opp. Ex. A; P. Schilling Dep. 3 7:2-19, 109:2-17).
49. Admitted that Exhibit Q to Defendant's ~otion is a pay record that was
calculated and submitted by Mr. Malot for purposes of payment. However, any
implication that Mr. Malot was entitled to the amounts he claimed is denied . His pay
structure was that he would receive a portion of the 65% based on inspections he
perfonned and 10% of all the inspections that inspectors under his direction perfonned.
The 10% was paid from the 35% retained by CCIS for their operations. (Def. Motion Ex.
B; P. Schilling Dep. 46:12-24, 80:10-22, 85:6-19, 91 :6-12; Pl. Opp. Ex. A; P. Schilling
Dep. 37:2-19, 109:2-17).
50. Denied as stated. It is denied that CCIS was " late" in claiming that Mr. Malot's
self-imposed compensation system was improper. It is admitted that CCIS did not
discover that Mr. Malot was engaged in such practices until long after he began the
practice. Mr. Malot and his office staff were responsible for submitting accurate payment
requests, which were regularly processed as submitted by staff in CCIS ' main office. (PL
Ex. B; A. Schooly Dep. 14:12-16; Def. Motion Ex. G; T. Moyer Dep. 27:22-28:25).
51 . Admitted.
52. Admitted.
53. Admitted. It is a mischaracterization of the testimony that the hypothetical
101 5SOJ0ll1 1 7
presented (after several) is meant to include the 35% CCIS retained. The deposition
testimony is replete \Vith other hypotheticals and explanations of the pay structure at
CCIS. (Def. Motion Ex. B; P. Schilling Dep. 46: 12-24, 80: 10-22, 85:6-19, 91 :6-12,
186:8-188:4; Pl. Opp. Ex. A; P. Schilling Dep. 37:2-19, 109:2-17, 173:14-175:6).
Admitted that some managers were able to manage jobs to a zero balance without a
deficit or an overage to be dispersed.
54. Admitted. However, it was an established business practice within the company
and the pay structure dictates that the inspectors receive their portion of the 65% as
payment for the inspections they completed. (Def. Motion Ex. B; P. Schilling Dep. 46: 12-
24, 80: 10-22, 85:6-19, 91 :6-12, 186:8-188:4; Pl. Opp. Ex. A; P. Schilling Dep. 3 7:2-19,
109:2-17, 173: 14-175:6). Mr. Malot disguised his claims for payment from CCIS by
using tenns such as "issuance" when he did not in fact issue the pennit or perfonn any
inspections on that job.
55. Admitted. By way of further response, CCIS received complaints from inspectors
in Mr. Malot's region. (Def. Ex. B; P. Schilling Dep. 95:25-96:13).
56. Denied. Mr. Malot's actions were contrary to CCIS's policy, practice and pay
structure. (Def. Motion Ex. B; P. Schilling Dep. 46: 12-24, 80: 10-22, 85:6-19, 91 :6-12,
186:8-188:4; Pl. Opp. E~. A; P. Schilling Dep. 37:2-19, 109:2-17, 173:14-175:6).
57. Admitted.
58. Admitted.
59. Admitted.
60. Admitted.
6 l. Denied. CCIS discovered, after Mr. Malot' s resignation, that the inspectors
101 5S0301/ll 8
under Mr. Malot were not paid in accordance with CCIS ' s compensation plan. Moreover,
Mr. Malot took for himself monies that were designated for CCIS' inspection program,
which should have been used to maintain inspection quality and staff satisfaction. (Def.
Motion Ex. B; P. Schilling Dep. 46 : 12-24, 80: 10-22, 85:6- l 9, 91 :6- l 2, 186:8-188:4; Pl.
Opp. Ex. A; P. Schilling Dep. 37:2-19, l 09:2-17, 173 : 14-175:6, 182: 17 - 183 : l ).
Mr.Malot's Attempts to Purcltase CCJS
62. Denied. Mr. Malot' s sole purpose was that he was going to assume that section of
CCIS ' s territory one way or another. As he put it to William Schilling he was "going to
run you out or buy you out" of business. (Pl. Opp. Ex. F; Inj. Hrg. N.T. 61 :24-25; Def.
Motion Ex. C; W. Schilling Dep. 35:21-22). Mr. Malot 's plans to were not driven by his
dissatisfaction with CCIS administration, but by his belief that his employment with
CCIS was in peril. (Pl. Opp. Ex. D; W. Chittester Dep. 70:3-6; 98:6-11 ).
63 . Denied. Mr. Malot never engaged in any negotiations. (Def. Motion Ex. C; W.
Schilling Dep. 45:11-46:8).
64. Admitted that CCIS gave Mr. Malot access to its records. Denied that Mr. Malot
used those records to negotiate a buy-out.
65. Admitted that Mr. Malot had discussions with CCIS employees about " [his] buy-
out.!' (Pl. Opp. Ex. F.; lnj. Hrg. N.T. 83 :12-23). Those discussions occurred in violation
of Mr. Malot' s non-disclosure agreement with CCIS. There is no record evidence to
support the suggestion that those discussions were in furtherance of Mr. Ma lot ' s efforts to
value the company, and it is difficult to imagine what information Mr. Malot could have
garnered from them to assist in valuation efforts. Mr. Malot was in violation of his own
non-disclosure agreement with CCIS when he held those discussions and meetings. (Pl.
IOI SS03011119
Opp. Ex. F; Inj. Hrg. N.T. 83:24 - 84:4). Prior to those meetings, and to induce CCIS to
agree to the NOA, Mr. Malot's attorney averred ;'it is imperative that we keep the
employees out of the situation and have only a direct line of communication between
counsel and the direct parties if need be." (Def. Motion, Ex. R; March 6, 2015 email of J.
Hughes to A. Schimaneck). In other words, after Mr. Malot cajoled CCIS into an
agreement preventing CCIS from discussing Mr. Malot ' s potential departure with its own
employees, and without obtaining CCIS' consent, Mr. Malot ignored his own obligations
and gathered CCIS' employees for a discussion on that very topic. (Pl. Opp. Ex. F; Inj .
Hrg. N.T . 83:21-84:1; Ex. C.; N. Nead Dep. 53:6-58:8). While still employed by CCIS,
and after having agreed to confidentiality, Mr. Malot convened a secret meeting with all
of the inspectors under his supervision, at which he discussed with them his plans to
leave the company. (Id.).
66. Admitted.
67. Admitted.
68. Admitted:
69. Admitted.
70. Denied. There is not admissible evidence in the record about what Attorney
Schimaneck averred with respect to Mr. Malot's non-compete agreement This is
evidenced by the fact that Paragraph 70 of Defendant's Motion fails to cite to any
testimony or documentary evidence.
71. Denied. The March 6, 20 I 5 e-mail actually states the following with respect to the
non-compete agreement: ;'You did confirm that either Clem or any of the employees
1015S0301111 I0
\vorking in the Chambersburg region were subject to any restrictive covenants." (Def.
Motion Ex, R).
72. , Denied as stated. It is admitted that the parties did not reach an agreement for Mr.
Malot to purchase CCIS. It is denied that Mr. Malot made any efforts toward that end.
Mr. Malot's Resig11ati011/rom CCJS and Formatio11 of PMCA
73. Admitted.
74. Admitted.
75. Denied. Mr. Malot signed a non-compete agreement at the time of his
employment with CCIS. (Def. Motion Ex. F). To the extent relevant, Mr. Malot's
understanding of the applicability of that agreement at the time of his resignation is a
disputed question of fact. Neither Mr. Malot's testimony, nor any other record evidence
establishes that CCIS disclaimed the existence of any non-compete obligation. Mr.
Malot's alleged understanding was the result of what his attorney told him about a
discussion he had with CCIS's attorney. (Def. Motion Ex. D; Inj. Hrg. N.T. 104:19-20). It
certainly appears, based on the evidence, that there was a discussion between counsel
related to potential buy-out negotiations, on or around March 6, 2015. (Def. Motion Ex.
R). However, leaving aside the questionable relevance, admissibility, and reliability of
defense counsel's email on the subject of what Plaintiffs counsel may have said during
that discussion, the email itself it not clear in its meaning. (Id.)(" ... either Clem or any
of the employees ... were subject to any restrictive covenants"). Without the benefit of
any firsthand account of the discussion between counsel, it is impossible to rule out the
likely scenario that Plaintiff agreed that any restrictive covenants would be waived in the
event that the parties reached agreement for Mr. Malot to purchase a portion of the
I0ISS0301/I I } }
business, but not that he was entitled to pilfer CCIS ' s employees, files, and customers
with impunity. Furthermore, Mr. Malot's incorporation of PMCA under his wife ' s name
and his adamant assertions that he was only an employee of the competing enterprise
belie his purported belief that he was not bound by a non-compete agreement. (Pl. Opp.
Ex. F; lnj . Hr. N.T. 66:22-70:7).
76. Admitted.
77. Admitted.
78. Denied. Mr. Malot took forms created by CCIS. Mr. Malot also took customer
lists(Pl. Opp. Ex. F; lnj. Hrg. N.T. 73 :8-76 :10).
79. Admitted.
80. Denied. Mr. Malot understood he had a non-compete agreement and took steps to
insulate himself from any liability under that agreement. (Pl. Opp. Ex. F.; lnj. Hr. N.T.
66:22- 70:7)
81 . Admitted.
82. Admitted that is Mr. Malot' s testimony.
83 . Admitted that is Ms. Malot's testimony.
84. Admitted that is Mrs. Malot's testimony. Mrs. Malot also testified that she and her
husband discussed the formation of PMCA months prior to Mr. Malot' s re_signation from
CCIS . (Def. Motion Ex. U; J. Malot Dep. 43: 14-44: I 5).
85 . Admitted.
86. Admitted that is Ms. Malot' s testimony.
87. Admitted that PMCA hired CCIS employees after improper inducement and
solicitation by PMCA ..
(015S030111 1 ] 2
88. Admitted. Several CCIS employees resigned from CCIS on the same day as Mr.
Malot, and others followed shortly thereafter all based on Mr. Malot's improper
inducement and solicitation. (Pl. Ex. C; N. Nead Dep. 53: 1-6).
89. Admitted that municipalities canceled their contracts with CCIS in favor of
PMCA after improper inducement and solicitation by PMCA.(Def. Motion Ex. B; P.
Schilling Dep. 154: 12-15. Within four days of Malot's resignation, municipal customers
began cancelling their contracts with CCIS. (Id.).
90. Admitted. CCIS has engaged in efforts to mitigate the effects of Mr. Malot's and
PMCA 's interference its contracts.
91. Admitted. Maintaining a presence in the offices formerly managed by Mr. Malot
was essential to mitigating damages caused by Mr. Malot and PMCA' s actions.
92. Admitted that those are the amounts shown on CCIS's returns. However, that
shows overall company perfonnance and not performance within the territories formerly
managed by Mr. Matot, which suffered more significantly.
93. Admitted that is the testimony on :the stability of the CCIS overall. However,
CCIS's revenues in Chambersburg and Bedford suffered significantly as a result of the
Defendant's unfair competition.
CCJS Resurrects tlte Non-Compete a,rd Alleges Misappropriation of Trade Secrets
94. Admitted that CCIS reminded Mr. Malot of his non-compete obligations
following his precipitous resignation.
95. Denied as stated. Mr. Schimaneck's email speaks for itself. However, in the
absence of testimony regarding the referenced earlier conversations or emails, the
suggestion that the email amounted to an effort to "retract CCIS's representations that no
l015S03D1/II} 3
such agreement existed" is misleading. Based on Mr. Schimaneck ' s email, the referenced
earlier conversations and emails could just have easily included an indication that CCIS had
not been able to locate a written non-compete agreement as they could have been an
affirmative confirmation that no such agreement existed. The context of those assertions
there referenced in the e-mail are not clear. However, Mr. Malot has testified that is his
signature on the agreement is his own signature. (PL Opp. Ex. F; Inj. Hrg. N.T. 66:6-16)
96. Admitted.
97. Admitted.
98. Denied. Paragraph 98 of Defendant' s Motion is a legal conclusion which is
addressed in Plaintiffs Argument below. Mr. Malot took customer lists, forms, and other
information from CCIS. Immediately prior to his resignation, Mr. Malot asked CCIS's
office staff to copy CCIS ' s electronic database for his use. (Def. Motion Ex. N; N.
Brubaker 13:24-14:23).
99. Admitted that this is Mr. Malot's festimony, which was directly contradicted by
the testimony of Ms. Brubaker as referenced above in Paragraph 98. Moreover, the
testimony was further discredited by PMCA' s use of CCIS ' s Order to Vacate form on
December 27, 2017. The contact information "814-624-0224" is the phone number for
CCIS ' s Bedford Office. (See PL Opp. Ex. H; Order to Vacate and email
communication) ..
100. Denied. Ms. Brubaker explicitly testified that Mr. Matot asked her to copy CCIS's
database immediately prior to their resignations. (Def. Motion Ex. N; N. Brubaker 13:24-
14:23).
101 sso.;o111 114

IO l. Admitted that was the testimony of Ms. Schooley. However, Ms. Schooley was
no longer employed with CCIS after August 2014, and was not present during much of
the relevant time period. (Pl. Opp. Ex. B; A. Schooly Dep.11: 18-21 ).
I 02. Admitted.
103 . Admitted.
ARGUMENT
SUMMARY JUDGMENT STANDARD
Summary judgment is appropriate only when there is no genuine issue of any material
fact when the record is viewed in a light most favorable to the non-moving party. Potter v.
Herman , 762 A.2d 1116, I 1 I 7 (2000) quoting Mertwether v. Philadelphia Newspapers , 684
A.2d 137, 140 (1996), appeal denied, 693 A.2d 967 (1997). The purpose of Summary Judgment
is "to pierce the pleadings and to assess the proof in order to see whether there is a genuine need
for a trial." Curran v. Philadelphia Newspapers, Inc. , 497 Pa. 163, 176 (1981). Pennsylvania
Rule of Civil Procedure 1035.2 governs summary judgment, and states in pertinent part:
After the relevant pleadings are closed, but within such time as not to
unreasonably delay trial, any party may move for summary judgment
in whole or in part as a matter of law (1) whenever there is no
genuine issue of any material facts as to a necessary element of the
cause of action or defense which could be established by additional
discovery or expert report, or (2) if, after the completion of discovery
relevant to the motion, including the production of expert reports, an
adverse party who will be the burden of proof at trial has filed to
produce evidence facts essential to the cause of action or defense
which in a jury trial would require the issue to be submitted to a jury.
Pa. R.C.P. I 035.2.
On motion for summary judgment, record and any inferences therefrom must be viewed
in light most favorable to nonmoving party, and any doubt must be resolved against moving
party. Pa. R.C.P. I 035 , see also Anderson v. Moore, 650 A.2d I 090 (Pa. Super. 1994);
(OISS0:>0111 1 } 5
Demmler v. SmithK!ine Beecham Corp., 671 A.2d 1151, 1153 (Pa. Super. Ct. 1996). On motion
for summary judgment, the trial court must accept as true all well-pleaded facts in nonmoving
party's pleadings, and give him or her benefit of all reasonable inferences to be drawn therefrom.
Me/at v. Me/at, 602 A.2d 380, 384 (Pa. Super. 1992). Summary judgment should not be entered
unless the case is clear and free from doubt. Id.
As is evident through Plaintiffs Counter Statement of Facts, many of the material facts
Defendants claim to be undisputed are very much in dispute and require presentation to the
finder of fact. Moreover, when viewed in a light most favorable to the Pl~intiff, the record facts
do not support summary judgment in this case.
DEFENDANTS ARE NOT ENTITLED TO SUMMARY JUDGMENT AS TO COUNTS I,
II, Ai~D II OF THE AMENDED COMPLAINT
Defendants argue that Plaintiff is estopped from enforcing its Non-Compete and
Confidentiality Agreement (the "Agreement") because it disclaimed the existence of the
Agreement prior to Defendants' breach thereof. However, the record facts do not establish any
such renouncement.
lt is well established that the burden rests on the party asserting estoppel to establish such
estoppel by clear, precise and unequivocal evidence. Novelty Knitting Mills, Inc. v. Siskind, 457
A.2d 502, 504 (Pa. 1983) (citing Blofien v. Cutaiar, 333 A.2d 841, 844 (Pa. 1975). At the same
time, the facts must be viewed in a light most favorable to CCIS as the non-movant. Me/at 602
A.2d at 384. Here, Defendants have not achieved the high hurdle required for its affirmative
defense.
As indicated in Plaintiffs Counter Statement of Facts, there is no admissible evidence in
the record to support Defendant's averment that "Mr. Schimaneck confirmed that Mr. Malot was
(01SS0301/11 } 6
not subject to any restrictive covenant." Certainly there was no first-hand testimony from Mr.
Schimaneck as to his discussion with Attorney Hughes. Nor did Mr. Hughes testify as to what
Mr. Schimaneck told him . Even the supposedly confirmatory email sent by Mr. Hughes to Mr.
Schimaneck is not as clear as Defendant seems to suggest. The operative sentence appears to be
" [y]ou did confirm that either Clem or any of the employees working in the Chambersburg
region \Vere subject to any restrictive covenants.:' Defendant's Motion Ex. R. (emphasis added) .
What is apparent from Mr. Hughes: March 6, 2015 email is: (l) Mr. Schimaneck was out
of town at the time of the purported discussion between them; (2) the discussion occurred during
a broader conversation about a potential asset purchase arrangement between Mr. Malot and
CCIS ; and (3) that Mr. Hughes sought additional feedback from Mr. Schimaneck on the issue of
restrictive covenants. Id.
Far from being undisputed, there are clearly a number of important details about the
averred conversation between Mr. Hughes and Mr. Schimaneck that remain in dispute. For
instance, to the extent that there was any suggestion by Mr. Schimaneck that Mr. Malot would
not be bound by non-compete obligations, was that, as might reasonably be expected, in the
limited context of the discussion about his purchase from CCIS of the Chambersburg operations?
Finally, the Agreement itself provides that no amendment to the Agreement would be
valid in the absence of a duly signed writing. Defendant' s Motion, Ex. F. ~ 7. Accordingly, even
if there were admissible evidence in the record that Mr. Schimaneck voiced an opinion that Mr.
Malot was not bound by a a restrictive covenant, such opinion would be of no consequence in the
face of the requirement that the Agreement could not be altered without a written and duel-
signed amendment.
I0 l5S0301 11I l7
Defendant's reliance on Savage, Sharkey, Reiser & Szulborski Eye Care Consultants v.
Tanner is misplaced. In that case, a successor employer attempted to enforce a non-compete
agreement the employee entered with its predecessor. Although the predecessor employer had
_assigned the agreement to its successor, the employee was never notified of the assignment.
And, because, by its tenns, the non-compete agreement in that case required that the employee
be notified of any assignment before the successor was entitled to enforcement, it was not
enforceable two years later when the successor employer attempted to enforce it. 848 A.2d 150,
152 (Pa. Super. 2004). This case is not analogous - the agreement in this case was between CCIS
and Mr. Malot, and required no additional conditions precedent to be enforceable by CCIS.
To the extent that Mr. Malot suggests that he started his competing enterprise in reliance
on any statement or act on the part of CCIS, it _is the Defendants' burden to establish, and a
question of fact for the jury, whether his reliance was justifiable. Novelty Knitting Mills, 457
A.2d at 503-4.
Here, to the extent that there was any suggestion on the part of CCIS that Mr. Malot
would not be bound by a covenant not to compete, that suggestion was clearly made in the
context of a discussion about him purchasing some portion of CCIS, and might reasonably have
been relied on to preclude enforcement of a non-compete agreement following a successful stock
purchase for adequate consideration. However, Mr. Malot was clearly not justified in relying on
any such discussion for the proposition that he would not be bound by the Agreement when he
jettisoned negotiations with CCIS and poached its employees and customers to start a competing
business.
IOISS0.!01/1} 18
Where the Defendants own the burden of establishing, by clear and unequivocal
evidence, both inducement and justifiable reliance, and because the court must interpret all facts
in the light most favorable to the Plaintiff, the Defendants ' estoppel argument must be rejected .
WHEREFORE, Plaintiff's respectfully requests that the Court enter an order denying
Defendants' requested relief.
THE NON-COMPETE AGREEMENT IS ENFORCEABLE AS A .M ATTER OF LA\V
At~D DEFENDANTS ARE NOT ENTITLED TO SUMMARY JUDGMENT AS TO
COUNTS I, II, A.t"'D Ill OF THE AMENDED COMPLAINT
Non-compete agreements are primafacie enforceable if they are reasonably limited as to
duration and geographical extent. Jacobson & Co. v. International Environment Corp. , 235 A.2d
612, 620 (Pa. 1967). General covenants are reasonably limited if they are "within such territory
and during such time as may be reasonably necessary for the protection of the employer . . .
without imposing undue hardship on the employee. Id. And, a court can reduce the geographical
scope of a restrictive covenant where necessary. Id.
Defendants argue that the Agreement is overbroad in that it "purports to foreclose Mr.
Matot from working in his field for a period of twelve months" . .. and "is overly broad in that it
contains no geographic limitation." In fact , the Agreement is much more tailored, preventing
only, for a period of twelve months following separation: (1) Solicitation of CCIS' clients and
customers; (2) Engagement in electrical and building inspection services in competition with
CCIS in any county in which CCIS did business in the twelve months preceding the separation of
employment; (3) Interfering with CCIS' accounts or business with clients or customers; and
101580301/1 I l9
Soliciting employees to leave the employ of CCIS or accept employment elsewhere. Def. Motion
Ex. 714,
Contrary to the Defendants' suggestion, the Agreement's geographic restriction was not
"worldwide," but was limited to counties in which CCIS had done business shortly prior to Mr.
Malot's departure. This is not a case where CCIS fired its employee and then sought to prevent
him from earning a living. And it is not a case where CCIS sought to prevent Mr. Malot from
working because it had some remote connection to the geographical region in which Mr. Malot
went to work.
In this case, Mr. Malot was the face of CCIS in the region he managed for the company
for more than ten years. While employed by CCIS, Mr. Malot developed close relationships with
both its customers and its employees in that region. In addition, Mr. Malot clearly became
intimately acquainted with CCIS' business methods, practices, and materials. Clearly, the
Agreement was intended to protect CCIS against someone in Mr. Malot' s position from using
those relationships and infonnation to kneecap CCIS's operations in his region, and allowed the
company a reasonable and limited timeframe within which to sure up those operations following
the employees departure. It is difficult to conceive of a more tailored restriction that would have
provided adequate protection to CCIS.
To the contrary, Mr. Malot evidenced his premeditated intent to ruin CCIS regional
operation through his statement to William Schilling that he would either "buy him out or run
him out." The Court 's enforcement of the Agreement in this case, at least as it pertains to the
relatively limited region in which Mr. Malot ran its operations, is undoubtedly the type of
enforcement that Pennsylvania courts have deemed reasonable to protect the employer.
(OUS0.!0111 120
As with all contracts, non-compete agreements must be supported by adequate
·consideration. The award of employment itself will generally be adequate consideration to
support a non-compete agreement. Barb-Lee Mobile Frame Co. v. Hoot, 206 A.2d 59, 61 (Pa.
1965). When a non-competition clause is required after an employee has commenced his or her
employment, it must be supported by "new" and valuable consideration. Socko v. Mid-Atlantic
Systems of CPS, Inc., 126 A.3d 1266, 1275 (Pa. 2015). However, where the contract is "ancillary
to the taking of employment," it is supported by adequate consideration. Beneficial Finance Co.
of Lebanon v. Becker, 222 A.2d 873, 876 (Pa. 1966). As long as the restrictive covenants are an
auxiliary part of the taking of regular employment ... and not an after-thought to impose
additional restrictions on the unsuspecting employee, they will be enforceable. Id.
The Agreement in this case was clearly not an afterthought. The Agreement was a
condition of Mr. Malot' s initial employment with CCIS. The May 29, 2001 offer letter makes
clear that Mr. Malot's execution of the Agreement was a condition of his employment.
Defendants' Motion Ex. E. Likewise, the Agreement itself indicates that it is "a condition of your
employment with" CCIS. Defendants' Motion Ex. F. In other words, Mr. Malot's execution of
the Agreement was consideration for his employment with CCIS, and by extension, his
employment was consideration for his execution of the Agreement.
The Defendants claim in their Motion that there is no record evidence establishing that
there was a meeting of the minds.with respect to the Agreement, suggesting that there was no
conduct in furtherance of the Agreement. Defendant's Motion 'J 126-128. In fact, the terms of the
Agreement were fairly elementary - CCIS agreed to employ Mr. Malot in exchange for his
agreement to be bound by the restrictive covenants. Mr. Malot acknowledged the terms of the
contract by singing directly below Paragraph 12, which reads:
IOISSOJ0111J2 l
Employee acknowledges as follows: (I) he/she has been given a reasonable
opportunity to review this Agreement; (2) he/she fully understands the meaning of
this Agreement; (3) the terms of this Agreement are reasonable and will not have
the effect of unreasonably restricting the Employee from earning a living
subsequent to his/her employment with Employer ...
Defendant's Motion Ex. F, ~ 9.
CCIS acted in furtherance of the Agreement by employing Mr. Matot on July 1, 2001 ,
which was the only conduct in which it could have engaged to acknowledge the existence of the
Agreement, and which would not have occurred had Mr. Malot not executed the Agreement.
Here, the Agreement was reasonably limited in duration and scope, and was supported by
adequate consideration. Mr. Malot' s execution of the Agreement and his employment by CCIS
reflect a mutual understanding and acknowledgment of its terms. As a result, the Defendants
have failed to establish, as a matter oflaw that the Agreement is unenforceable, and their Motion
must be denied.
WHEREFORE, Plaintiffs respectfully requests that the Court enter an order denying
THE DEFENDANTS ARE NOT ENTITLED TO SUMMARY JUDGMENT ON COUNTS
IV, VI, VII, VIII, IX, AND XI BECAUSE THE STATUTE OF LIMITATIONS DOES
NOT BAR THOSE CLAIMS
The right to amend pleadings is a matter within the sound discretion of the trial court.
Bi/bow v. Pennsylvania Gas & Water Co., 43 Pa. D. & C.3d 529, 530 (Pa; Com. Pl. 1986)
quoting Jacob v. New Kensington Y.M.C.A ., 459 A.2d 350 (Pa. Super. 1983). Amendments
should be allowed unless they violate the law or prejudice the rights of the opposing party. Id. In
this case, this Honorable Court approved the amendment of Plaintiff' s complaint to include
{01SS0301111 22
these claims. Defendants allege they are entitled to summary judgment because these claims
violate the statute of limitations.
New claims within an amended complaint are not automatically barred simply because
they are filed after the statute of limitations. "[A] complaint may be amended after the expiration
of the statute of limitations to amplify or clarify a cause of action already stated." _Kuisis v.
Baldwin-Lima-Hamilton Corp. , 319 A.2d 914, 918-19 (Pa. 1974). "The question is whether the
operative/acts supporting the claim were changed, not whether the amendment presented a new
category of claim or theory of recovery." Shiflett v. Lehigh Valley Health Network, Inc., 174
A.3d l 066, 1083 (Pa. Super. 2017), reargument denied (Jan. 12, 2018), appeal granted in part,
191 A.3d 745 (Pa. 2018). (emphasis added).
In other words, "the test is not whether, under technical rules of pleading, a new cause of
action is introduced, but rather, the test is whether an attempt is made to state facts which give
rise to a wholly distinct and different legal obligation against the defendant." Hodgen v.
Summers, 555 A.2d 214, 215 (Pa. Super. 1989) (citation omitted), appeal denied, 563 A.2d 888
(Pa. 1989) citing 61A Am.Jur.2d Pleading§ 322. Even where the amendment could subject the
defendant to different defenses and theories of liability, if they rest on the same basic facts, the
amendment will be allowed. Kuisis v. Baldwin-Lima-Hamilton Corp., 319 A.2d 914, 919 (Pa.
1974).
Applying these standards to various disputed counts, it is clear the amendments do not
violate the statute of limitations. The Amended Complaint merely amplifies the existing facts
and claims stated in the original complaint, and do not present new or distinct theories that
prejudice the Defendants.
!Oll80l0llll23
For example, Count IV of the Amended Complaint (Tortious Interference of Contractual
Relations) contains almost identical language and facts as the original complaint. Paragraph 41
of the original Complaint stated:
"It is believed and therefore averred that before and after his resignation,
Defendant solicited many CCIS municipal customers, interfered with the
contractual relations thereof and again falsely and intentionally maligned CCIS
to its customers in an attempt to induce said municipalities to cease business with
CCIS and to instead do business with Defendant ' s newly created competing
corporation, PMCA." (emphasis added)
Count IV simply expands on these allegations. The parties are the same and the allegations are
the same. Courts have also looked at whether resolution of the original facts and claims would
bar an action on the new claims. Hodgen, supra at 215 quoting Sanchez v. City of Philadelphia,
448 A.2d 588 (Pa. Super. 1982). Undoubtedly a judgment on the original Complaint would act as
res judicata to Count IV of the Amended Complaint.
Further guidance can be provided by the ruling in Connor v. Allegheny Gen. Hosp., 461
A.2d 600 (1983). In Connor, the plaintiff was given a barium enema which leaked into her
abdominal cavity through a perforation in her colon, causing serious injuries. Connor sued,
claiming the hospital was negligent in perforating her colon, causing the barium to leak into her
abdomen, and "otherwise failing to use due care and caution under the circumstances." Id. at
601 . After the statute oflimitations had run, Connor sought to amend her complaint to add an
allegation that the hospital negligently delayed removing the barium from her abdomen. The trial
court denied leave to amend, but the Supreme Court reversed, holding that the amendment
merely amplified the general allegations contained in the original complaint that the hospital
\
failed "to use due care and caution under the circumstances." Id. at 602. The Court added: "If
appellee did not know how it ' otherwise fail[ed] to use due care and caution under the
1015S0301/1)24
circumstances/ it could have filed a preliminary objection in the nature of a request for a more
specific pleading or it could have moved to strike that portion of appellants' complaint." Id. n. 2.
By contrast, the court in Shiflett v. Lehigh Valley Health Network, Inc., 174 A.3d l 066
(2017), reargument denied (Jari. 12, 2018), appeal granted in part, 191 A.3d 745 (Pa. 2018)
determined an amendment was improper. The facts of Shiflett are:
Plaintiff originally the sued the hospital relating to surgery on her knee and
treatment in the post-surgical unit where she fell. After proceeding through
discovery and setting a trial date, the plaintiff amended her complaint. The new
claims included additional negligence claims relating to her stay in the
Transitional Skills Unit, which she had been later transferred to, and its personnel
who were not part of the original claim.
The Superior court held such additional claims were too unrelated. "The claims rely on
different facts ... [t]he time of the events is different, the location is different, and the personnel
who are alleged to have engaged in the negligent conduct are different." Id. at I 086.
The same reasoning applies to all the other Counts to which Defendants object. Count VI
of the Amended Complaint states a claim for Breach of Fiduciary Duty and alleges Defendant
Malot made false and disparaging statements to employees and customers, solicited employees
to leave CCIS and caused loss of customers. (Amended Complaint, Paras. 149, 150 & 151 ).
The allegations in the original complaint similarly stated the Defendant: "falsely and
intentionally maligned CCIS to the remaining employees" (Paragraph 40), "falsely and
intentionally maligned CCIS to its customers" (Paragraph 41 ), "solict[ed] CCIS employees and
customers for his new competing business prior to tendering his resignation and while still owing
afiduciary duty to CCIS" (Paragraph 48) (emphasis added), and "his false and intentional
maligning of CCIS to their employees and customers" (Paragraph 63). Again, the Amended
Complaint merely amplifies what had already been claimed.
IOI SS0301lll25
Counts Vil, VIII, IX and XI are similarly claims regarding Tortious Interference with
Business Relations, Interference with Contracts, Unfair Competition, and Commercial
Disparagement which are based on the same facts and directly relate to the same allegations, the
same parties, the same actions, and the same harms to CClS as a result of those actions during
and after his employment. In the instant matter, the same basic facts are alleged and thus the
amendments do not state a new cause of action. Consequently, there is no prejudice to the
Defendants and the amendments do not violate the statute of limitations.
WHEREFORE, Plaintiff's respectfully requests that the· Court enter an order denying
THE DEFENDANTS ARE NOT ENTITLED TO SUMMARY JUDGMENT ON

COUNT X BECAUSE THE QUESTION OF WHETHER THE DEFENDANTS
MISAPPROPRIATED TRADE SECRETS IS FOR A JURY.
According to Pennsylvania law, the information Defendant Malet is averred to have
taken from the Plaintiff is, by definition, trade secrets. Specifically,
"Trade secret." Information, including a formula, drawing, panem, compilation

including a customer list, program, device, method, technique or process that:
( 1) Derives independent economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by proper means by, other
persons who can obtain ·economic value from its disclosure or use.
(2) Is the subject of efforts that are reasonable under the circumstances to
maintain its secrecy.
12 Pa.CS.A. § 5302.
Defendants argue that the information is publicly available, and therefore not protected.
However, Defendants'· argument misconstrues the law and is without merit. The "argument that
a collection of easily obtainable information is not a trade secret is incorrect." A.M. Skier
Agency, Inc. v. Gold, 747 A.2d 936, 940 (Pa. Super. 2000), as revised (Jan. 26, 2000).
101 5S0301 11 126

Moreover, whether Defendants could determine, through the Right-to-Know Law or other
means, if CCIS is the code inspector for a municipality is not the determining factor, as
Defendants claim. The Defendants could only utilize the Right-To-Know law to contact an
individual municipality to inquire if CCIS was the inspector for that particular municipality.
What the Defendants cannot do is use this method to obtain a ready-made compilation of such
information. CCIS has multiple offices and has performed work in multiple regions of multiple
states. The Defendants would have to individually contact every municipality, in every county,
of every state to create the equivalent of CCI S's customer lists.
If the Defendants had not misappropriated the list to begin with, they would have to write
to each of the approximately 2,600 cities or municipalities in Pennsylvania alone to compile the
equivalent information. The process of looking up addresses and departments to contact,
composing the Right-To-Know requests, mailing the requests, and assembling the information
would take hundreds, if not thousands, of man hours and would have set the launch of PMCA
back by months. Which is exactly the reason the information is protected and the reason the
Defendants choose to take the information rather than obtain it legally. Defendant Malot
resigned from CCIS in the morning and was able to have his business up and running by the
afternoon.
Multiple decisions by the court have recognized and addressed this issue. ;'No bright
line rule exists on what constitutes a trade secret; rather, Pennsylvania courts analyze the issue on
a case-by-case basis." Advanced Research S:vs., Inc. v. ColdEdge Techs., Inc. , No. 3253 EDA
2012, 2014 WL l 0979726, at *6 (Pa. Super. Ct. Mar. 21 , 2014) citing Pestco, Inc. v. Associated
Products, Inc. , 880 A.2d 700 (Pa.Super.2005). But, one of the crucial indicia used to make the
determination is the competitive value of the information to the owner. Id. (emphasis added).
101 ; so.,011112 7
Other factors include: the extent to which the information is known outside the business, extent
of measures the employer has taken to guard the information, the amount of effort or money
expended in developing the information, and the ease or difficulty with which the information
could be properly acquired or duplicated by others. Id. citing Crum v. Bridgestone/Firestone
North American Tire, LLC, 907 A.2d 578, 585 (Pa.Super.2006). (emphasis added).
Applying these standards, it obvious that PMCA was able to gain a competitive
advantage by starting out with information which it had taken CCIS years to accumulate. In
Advanced Research Sys., as in the present case, the Appellant asserted that the customer lists
were not trade secrets because the customer information could be obtained by industry
knowledge, trade journals, telephone listings, and the former employee' s experience. Id. at 4.
The Superior Court determined that the substantial cost involved in compiling the information
supported treating the customer list as a trade secret. Id. at 6. See also John G. Bryant Co., Inc.
v. Sling Testing and Repair, Inc. , 369 A.2d 1164 (Pa.1977).
The court overruled preliminary objections on the same basis in £ . Coast Paving &
Sea/coating, Inc. v. Emery, No. 11356 OF 2012,C.A., 2013 WL 10545382 (Pa. Com. Pl. Aug.
22, 20 I 3). Addressing whether customer lists, which the Defendants claimed could be obtained
through legitimate means, were trade secrets, the court stated:
Although the identity of customers may be found through public sources

such as a telephone book, it is the compilation of thousands of customer
names with contact information, customer preferences and peculiarized
information relative to each customer that would be valuable to
competitors and must be protected, as no public source could be the
equivalent ofsuch a compilation. Thus, a compilation of customer data
that is not readily available from other sources will qualify as a trade
secret. See Spring Steels. Inc. v. Molloy, 400 Pa. 354, 162 A.2d 370
(1960).
Id. at *3. (emphasis added).
10158030111128
The same issued was addressed by the Superior court in a case involving an injunction
against a former employee, who had misappropriated customer lists and other information A.M.
Skier Agency (supra). Although the former employee had not signed a non-compete, the court
upheld the injunction and restraining order, stating, "[t]he issue here, however, is not whether
appellants can compete, but rather whether they can compete unfairly using information Gold
stolen from Skier. Because appellants now have the benefit of the information misappropriated
from Skier, they now cannot compete fairly." Id. at 941. Central to the court's decision was the
determination that a customer list is an asset of value acquired by effort over time and deserving
protection as property in the form of a "trade secret" regardless of whether there is a non-
disclosure contract. A.M. Skier Agency, at 940.
In the instant matter, there was a non-compete agreement signed. Moreover, although
Defendants focus on the customer lists, it is not the only information averred to have been taken.
Plaintiffs also allege that Defendants misappropriated pricing structures (which also took
substantial time and effort create), employee compensation information, and forms and other
information. By themselves, the customers lists alone would suffice to create a basis for this
claim. However, in conjunction with all the other material which is alleged to have been
misappropriated, as well as the immediate and unfair advantage gained by Defendants as a result,
the information taken fits squarely within the definition of trade secrets. As a result, this issue is
not appropriate for dismissal by summary judgment.
CCIS DID NOT SANCTION MR. MALOT UNJUSTIFIED RECEIPT OF

INSPECTION FEES SIMPLY BY ISSUING CHECKS TO MR. MALOT
!01SSOJOl/1I29
Defendants argue that Mr. Malot was excused in violating CCIS' compensation
procedures and in taking payment for work he never did because the administrative staff in
CCIS's main office issued checks to him based on his requests for payment. Defendants claim
that because the checks were issued by CCIS, it must have consented to Mr. Malot's receipt of
those payments. Defendants also suggest that because the money taken by Mr. Malot came from
the inspection budget and not from CCIS's operating budget, CCIS suffered no harm as a result
of Mr. Malot's malfeasance. Neither argument stands up to scrutiny.
Conversion is the deprivation of another's right to property without the owner's consent
and without lawful justification. PTSI, Inc. v. Haley, 71 A.3d 304, 314 (Pa. Super. 2013). In this
case, the evidence suggests that Mr. Malot obtained payments from CCIS by falsifying his
reports of inspections performed, and by ignoring CCIS's compensation structure. CCIS relied
on Mr. Matot' s reports of his own work in issuing payment, and certainly did not consent to his
receipt of payment for work he did not do.
In Count V of its Amended Complaint, Plaintiff claims that Mr. Malot was responsible
for maintaining financial records for CCIS 's Chambersburg office, and for submitting requests
for payment in accordance with his compensation agreement. Amended Complaint 1 135. By the
terms of his compensation agreement, in addition to a management fee based on revenues
received in the region he managed, Mr. Malot was entitled to a 65% commission on any
inspections he performed. CCIS's other inspectors were also entitled to a 65% commission on
inspections they performed.
Payments were issued based on Mr. Malot's submission of pay sheets to CCIS's main
office. Over and over again, Mr. Malot sought payments far in excess of the commission to
which he was entitled. As a result of Mr. Malot's malfeasance, monies that should have been
101.1so:ro11113 0
paid to CCIS 's other employees were paid instead to Mr. Malot. Moreover, funds that were
intended to be used for CCIS ' s inspection program instead went to line the pockets of Mr. Malot.
The funds that Mr. Malot extracted from CCIS' s coffers for himself should have been
used for CCI S' s inspection program. But for Mr. Malot 's misappropriation of those funds to
himself, they would have gone toward the completion of necessary inspections - some of which
were never done- or to pay CCIS ' s inspectors in accordance with the compensation plan CCIS
maintained. Accordingly, CCIS was harmed either by having underpaid its employees, and their
resulting dissatisfaction, or by virtue of the fact that no money remained on certain jobs to pay
for required inspections that remained undone or incomplete.
In any case, although CCIS would ultimately have paid out to its inspectors the funds that
Mr. Malot took for himself, they were funds that should have benefitted CCIS instead of Mr.
Malot. Accordingly, CCIS was deprived of that property and suffered harm as a result of the
deprivation.
CCIS relied on Mr. Matot, as its manager, who owed a duty of care and loyalty to his
employer, to submit accurate reports, and to seek payment only for compensation to which he
was entitled. The fact that CCIS issued payment to Mr. Malot based on his false reports does not
suggest that it consented to his receipt of those funds. Record testimony establishes that CCIS
did not so consent. At a minimum, the question of whether CCIS agreed with or consented to Mr.
Malot' s extraction of inflated inspection fees must be determined by the finder of fact.
DEFENDAi'\'TS ARE NOT ENTITLED TO SUMMARY JUDGMENT ON COUNTS IV,

VII, VIII, Al"'D IX \VHERE DEFENDANT INTERFERED \VITH EXISTING AND
POTENTIAL RELATIONSHIPS \\'ITH CUSTOMERS AND EMPLOYEES.
1015SO.l011113}
The gravamen of these four claims is that Defendant Malot, while he was employed with
Plaintiff CCIS and immediately after he left their employment to start a competitor business,
engaged in a pattern of behavior that directly violated his contractual agreements with CCIS and
his duties to CCIS as its agent, and that was intended harm to harm CCIS. This behavior
included misappropriating protected information as well as systematically causing CCIS
,employees and existing customers to leave CCIS for PMCA.
Defendants challenge Counts IV, VII, VIII, AND IX on the basis that these events
occurred naturally and that there was no evidence Defendant Malot '"specifically intended to
harm the existing relation' between CCIS and its former customers." (Def Motion~ 176).
However, the Defendants' position is without merit and unsupported by the facts. On the
contrary, the record indicates that immediately prior to Defendant Malot's departure from CCIS,
he met with William Schilling, the owner of CCIS, and threatened Schilling that he was "going
to run you out or buy you out" of business. (Pl. Opp. Ex. F; Inj. Hrg. N.T., 61 :24-25). This
threat indicates Defendant Malot's intent, not just to become a competitor of CCIS, but to
destroy CCIS's business.
The intent to damage CCIS is further evidenced by Defendant Malot's other actions. In
addition to the non-compete agreement Defendant Malot signed with CCIS, he also signed a
non-disclosure agreement with CCIS in regard to the offer to buy the business. Having agreed to
confidentiality, Defendant Malot immediately went to the employees of CCIS and informed
them that if he was not able to purchase CCIS, he would be starting his own company and
solicited them leave CCIS and work for him. Defendant Malet then forced the employees to sign
a non-disclosure agreement to prevent them from discussing his solicitation. (Pl. Opp. Ex F; Inj.
Hrg. N. T. 83: 12-16). That non-disclosure also contained a solicitation for CCIS employees to
{01 5S0J0l/l I 32
work for Defendant Malot. (Id. Inj. Hrg. N.T.,87:16-21). Ultimately, all of the Defendants'
initial employees were employees who left CCIS to work for PMCA. This included the
inspectors who worked with, and were familiar to, the municipalities in the areas PMCA targeted
to take from CCIS.
Defendants then leveraged the fact that the employees with whom the municipalities were
familiar had left CCIS to work for PMCA. Defendant Malot, solicited the municipalities'
business and instructed them on how to terminate their contracts with CCIS by sending letters.
(Pl. Opp. Ex. F; Inj. Hrg., N.T. 80-81). As a result of Defendants' actions, immediately
following Mr. Malot' s resignation, CCIS began to receive letters from numerous municipalities
terminating their contracts with Plaintiff, beginning with the Borough of Chambersburg on
March 27, 2015, one week after Defendant Malot left CCIS. After that, the termination letters
began coming in on an almost daily basis. (Pl. Opp. Ex. F; lnj . Hrg., N.T. 56:7-8). Defendant
Malot admitted that all of the PMCA customers he could remember were former CCIS
customers. (id.; Inj. Hrg. , N.T.79:5-12). In 2015, as a result of Defendants' actions, and the
corresponding loss of customers, CCIS revenues in Mr. Malot's territory declined by
approximately S 750,000 compared to 2014. In 2016 they declined by an additional $550,000.
In other words, each of the elements of intentional interference with contractual or
potential relationships is present: the existence of such relationships with a third party, action by
the defendant intended to harm the plaintiff, lack of privileges, and damages. These same acts
also furnished a basis for a claim of unfair competition.
Pennsylvania courts have held that an unfair competition claim can be broad in scope and
include a plethora of behaviors. Centennial Lending Grp., LLC v. Seckel Capital, LLC, No. 822
EDA 2016, 2017 WL 4861625, at *9 (Pa. Super. Ct. Oct. 26, 2017) citing Pennsylvania State
1015S0J0III 13 3
Univ. v. Univ. Orthopedics, ltd. , 706 A.2d 863, 867 (Pa. Super. 1998). Unfair Competition can
encompass "misrepresentation, tortious interference with contract, improper inducement of
another's employees, and unlawful use of confidential information." E. Frank Hopkins Seafood,
Co. v. 0/izi, No. 2:17-CV-01558-JCJ, 2017 WL 2619000, at *7 (E.D. Pa. June 16, 2017). Even
more broadly, a claim of unfair competition may be had based on any unfair practices which
include as a misappropriation of the skill, expenditures or labor of another. Centenial, supra.
Motive can be inferred from a company's actions. "When a company hires essentially all of
the ... staff of one agency, the purpose in doing so is to induce the clients of that agency to move
their business." Centennial, supra at *9. "[S]ystematically inducing employees to leave their
present employment is actionable when the purpose of such enticement is to cripple and destroy
an integral part of a competitive business organization." Id. In Centenial, the court determined
that the defendant's action in hiring 30% of Centennial' s sales force, in conjunction with a threat
to destroy Centennial, was sufficient to establish the defendant's intent was to cripple and
destroy Centennial. Id. at * 10.
Applying the Centennial court's reasoning to the instant matter, a jury could clearly
decide the defendant had tortiously interfered with CCIS relations and engaged in unfair
competition. The combination of taking substantial numbers of employees from the
Chambersburg Office, as well as threatening to run CCIS out of business, would be sufficient to
establish Defendants motives were to harm CCIS.
Additionally, Plaintiff has stated a case for Misappropriation of Trade Secrets as
discussed, supra. While the misappropriation of trade secrets could also form the basis for a
claim of unfair competition, the "improper use of another's confidential information may qualify
as unfair competition 'even if the conduct is not specifically actionable under the rules relating to
i01 S80301 11} 34

... misappropriation of trade secrets. ' £. Frank Hopkins, quoting Restatement (Third) of Unfair
Competition § l cmt. g. (internal citations omitted). Thus, the same actions alleged in regard to
the Misappropriation claim provide even stronger support for a claim of Unfair Competition.
In sum, each of these claims finds support in the facts of this case. Thus, these are
questions for a jury, and not claims that may properly be disposed of by way of summary
judgment.
DEFENDANTS ARE NOT ENTITLED TO SUMMARY JUDGMENT ON COUNT VI OF
THE AMENDED COMPLAINT BECAUSE THE RECORD FACTS ESTABLISH TUA T
MR. MALOT ACTED CONTRARY TO THE INTERESTS OF CCIS WHILE HE \VAS
ITS MANAGER AND AGENT
As discussed above, it is clear that Mr. Malot planned and executed an effort to "run out"
CCIS, and that his planning and actions to that end began well in advance of his resignation from
CCIS. His exit was carefully planned while he remained employed by CCIS and involved, at a
minimum, the extraction of CCIS materials, plans for forming a competing enterprise, covert
discussions about his plans with other CCIS employees who he sought to solicit and use to
extract CCIS's information, and coordination with several key employees for a contemporaneous
exit. To the extent that there is any question, based on the record facts , as to whether or not Mr.
Malot' s competition with his own employer began during his employment with CCIS, only a
jury can resolve that factual dispute.
101 sso:;o11113 5
Likewise, Mr. Malot acted against the interests of CCIS by pilfering funds that were
intended for its inspection program, and by falsely claiming to have completed inspections that
were never completed.
An employee owes a duty of loyalty to his employer that requires the employee to act
with the utmost good faith in the furtherance and advancement of the employer's interests. Smith
v. Unemployment Compensation Bd. of Review, 367 A.2d 811 (Pa. Cmwlth. 1977). The duty of
loyalty is implied in every employer-employee relationship. Id. The employee' s duties to his
employer include loyalty, diligence, fidelity, obedience, and above all, honesty. Langensiepen v.
Com .. Unemployment Comp. Bd. of Review, 451 A.2d 814,816 (Pa. Cmwlth. 1982). To prevail
on a claim for breach of fiduciclf)' duty, CCIS must establish that Mr. Malot acted for a person or
entity whose interests conflicted with CCIS. Reading Radio, Inc. v. Fink, 833 A.2d 199, 211 (Pa.
Super. 2003). Certainly, misappropriating business that belongs to the employer is a breach of
fiduciary duty by the employee. Colgate-Palmolive Co. v. Tandem Industries , 485 F. App'x 516,
519 (3d Cir. 2012). And, the employee is bound to put the interests of the employer above those
of himself with respect to those areas within the scope of his agency. Sylvester v. Beck, 178 A.2d
755, 757 (1962).
Here, while employed to advance the interests and revenues of CCIS, Mr. Malot was
actively scheming to run CCIS out of business, using its own materials, employees, and
customers. Certainly he was not acting in the interest of CCIS, but of himself and his prospective
competing business in that respect. In addition the record evidence supports CCIS ' contention
that Mr. Malot ignored CCIS' compensation plan in order to enrich himself at the expense of
CCIS ' inspection program and the income and satisfaction of its other employees. Even more
egregious, evidence suggests that Mr. Malot routinely claimed that inspections or even entire
IO!l'S0.301/1136
projects were complete, to obtain payment, when, in fact, they were not. In that regard, CCIS has
incurred financial liability to complete projects for which the inspection budget has been
exhausted as well as the potential for legal liability where required inspections were not done.
Because the record evidence clearly suggests any number of issues on which Mr. Malot
put his own pecuniary interests ahead of the interests of CClS, County VI of the Amended
Complaint must not be dismissed .
Respectful Iy,
CGALAWFIRM
~
By:'<
Zacharrv E. Nahass.
PA~4834 .
Stephen R. McDonald, Esquire
PA310319
135 North George Street
York, PA 17401
(71 7) 848-4900
znahass@cgalaw.com
smcdonald@cgalaw.com
Attorneys for Plaintiff,
Commonwealth Code Inspection
Service, Inc.
(0158D30111 t3 7
IN THE COURT OF COMMON PLEAS OF THE 39TH JUDICIAL DISTRICT OF
COMMONWEALTH CODE
INSPECTION SERVICE, INC. , Civil Action: Law and Equity
Plaintiff
V.

R. CLEM MALOT and No. 2015- 1652
PENNSYLVANIA .MUNICIPAL
Defendant
CERTIFICATE OF COMPLIANCE
I certify that this filing complies with the provision of the Public Access Policy of the
Unified Judicial System of Pennsylvania: Case Records of the Appellate and Trial Courts that
require filing confidential information and documents differently than non-confidential
information.
RESPECTFULLY SUBMITTED,
CGA Law Firm
(0158030111)38
IN THE COURT OF COMMON PLEAS OF THE 39™ JUDICIAL DISTRICT OF
COMMONWEALTH CODE
INSPECTION SERVICE, INC., Civil Action: Law and Equity
Plaintiff
v.

R. CLEM MALOT and No. 2015- 1652
Defendant
CERTIFICATE OF SERVICE
I hereby certify that I have on January 28, 2019, caused a true and correct copy of the
within Plaintiff's Opposition to Defendants' Motion for Partial Summary Judgment to be mailed
by first class mail , postage pre-paid to the following:
Scott T. Wyland, Esq.
Hamsbu~
SALZMAl\TN HUGHES , P.C.
112 Market Street, 8th Floor
Heather Hunter, Paralegal to

Zachary E. Nahass, Esquire
(01 58030111}39
EXHIBITS
101 5S030ll1 I }
1 IN THE COURT OF COMMON PLEAS
OF THE 39TH JUDICIAL DISTRICT OF
2 PENNSYLVANIA - FRANKLIN COUNTY BRANCH
4 COMMONWEALTH CODE
INSPECTION SERVICE, INC., CIVIL ACTION:
5 PLAINTIFF LAW AND EQUITY
6 vs NO. 2015-1652
7 ROBERT C. MALOT A/K/A JUDGE: HON. ANGELA KROM

R. CLEM MA.LOT AND
8 PENNSYLVANIA MUNICIPAL.
CODE ALLIANCE, INC.,
9 DEFENDANT
10
11 DEPOSITION OF: PETER SCHILLING
12 TAKEN BY: DEFENDANT
13 BEFORE: TRACY L. LLOYD, RPR

NOTARY PUBLIC
14
DATE: OCTOBER 28, 2016, 9:00 A.M.
15
PLACE: SALZMANN HUGHES, P.C.
16 112 MARKET STREET
8TH FLOOR
17 HARRISBURG, PENNSYLVANIA
18
19
20
21
22
EXHIBIT
23
24 I A
25
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1 was I think it might have been even after 2006.
2 Q How was he paid?

3 A He had ari agreement. His agreement was
4 different than everybody else's due to the geographic
5 area that he covered in that he got salary benefits,
6 company car, expense account, and he was also -- I
7 think it was a modified commission.
8 Q When you say modified commission, what does
9 that mean?
10 A For example, for plan reviewers they 1 re
11 supposed to be getting 65 percent of the plan review
12 fee . I believe -- I'm not a hundred percent sure,
13 but I believe his commission was modified to 40
14 percent, I believe .
15 Q Downward?
16 A Downward .
17 Q So if he did a hundred dollar job, he'd get
18 paid only 40 percent of that; right?
19 A Yes.
20 Q Did he get a manager's commission for growth
21 areas?
22 A I don 1 t know.
23 Q Is it possible that he did?
24 A You would have to ask Bill and Lucile. His

25 employment agreement was with them.
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1 Q Okay. Typically to whom does the homeowner
2 make his check payable for the inspections that are
3 needed for his project?
4 In York County with the exception of three
5 townships they made them payable to CCIS.
6 Q And at what point in the project is the
7 check paid?
8 A Prior to issuance or at the time of issuance
9 of the permit.
10 Q The building permit?
11 A Yes.
12 Q And what happens if the project for some
13 reason is not finished? What happens to the money
14 that CCIS has for inspection services that are not
15 performed?
16 A In York it's our policy to refund the
17 customer.
18 Q Does it ever happen in a residential project
19 that the amount estimated by CCIS is insufficient to
20 cover the inspections that are needed to complete the
21 project?
22 A Yes.
23 Q How is that handled financially?
24 A The customer is billed .
25 Q At what point? Prior to the inspection or
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1 payroll to any degree at all were Manheim,

2 Chambersburg, and Bedford.
3 Q What about York?
4 A We never processed payroll there.
5 Q So tell me how things were different between
6 the way Chambersburg operated and the way York
7 operated.
8 A Chambersburg would get all the reports from

9 the inspectors, do all the data entry. Based on data
10 entry, they would generate payroll reports and send
11 the finished payroll reports into Manheim.
12 Q When you say payroll reports, was it simply
13 a report of the gross amount that was charged for a
14 particular inspection?
15 A Yes.
16 Q It wasn't the deduction from the pay of
17 Social Security and FICA and things like that; right?

18 A No . That was done, to my understanding, by
19 our accountant.
20 Q When a homeowner in Franklin County wrote a
21 check out for its inspection charges for a project,
22 did it submit the check to the Chambersburg office of
23 CCIS or somewhere else?
24 A To my understanding it was supposed to be

25 submitted to the Chambersburg office.

\'ork ili-845-6418 Harrisburg 717-541-1508 Toll Free l-800-233-932i
80
l building, at what point does he know how much he'll

2 be paid, not the percentage, but the dollar amount
3 for that inspection?

4 A At the time he submits his paperwork.
5 Q Before or after the inspection?
6 A After the inspection.
7 Q So he has no idea when he goes out to do
8 this inspection what his compensation will be for
9 that activity?
10 A They know that by policy it's going to be
11 $100 to $200.
12 Q And who sets that policy?

13 A I do in the York office.
14 Q What's that based off of?
15 A That's based on historical experience of not
16 overdrawing jobs. We had at one point guys setting
17 their own price, and they decided that looking at 10
18 feet of pipe in the ground was worth a thousand
19 dollars, and they would suck up all the money before
20 the job was over, which is no problem if they were
21 the only inspector on the job. But if we had to pay
22 other inspectors, then it was a problem.
23 Q So you cake in an example you have $10,000
24 to work with; right?
25 A Mm-hmm.

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1 $7,000 instead of $6500, they"re still paid their
2 $7,000 for all the inspections they did?
3 A Well, the only way it gets overdrawn by

4 accident is if the inspectors bill too much upfront.
5 Q Right .
6 A And we stopped that policy long ago because
7 we would have let's say an inspector who was a
8 sole inspector on a job said there's nobody else
9 going to do inspections, I want my 6500 upfront. So
10 we give him his 6500 upfront. The problem is he gets
11 sick or goes on vacation, now how are we going to pay
12 that?
13 In the past we ' ve had to eat it because when
14 we get overdrawn, we have to come up with a darn good
15 reason why we're going to bill these people extra.
16 The fact that the inspectors were overpaid is not a
17 good reason. So what we do is we try to give them a
18 low draw upfront and pay them the rest at the end of
19 the job.
20 Q Let ' s talk when you have a mistake or a bad
21 situation that you need to fix . I liked your example
22 where you have a single inspector on the job . That
23 makes it easy . But if the single inspector takes his
24 $6500 and then performs only half the inspections and
25 quits or gets s i ck, then you have to bring in another
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1 inspector to do, say, whatever, the final
·• 2
4
inspection --
Q
Yeah.
-- before the certificate of occupancy is
5 issued. So that inspector needs to be paid for doing
6 the job; right?
7 A Yeah.
8 Q Are you saying that you then bill the owner?
9 A No.
10 Q You don't bill the owner?
11 A No.
12 Q But CCIS winds up paying this inspector for
13 that job. Let's say he does a hundred dollars• worth
• 14
15
of work.
A
CCIS will pay him a hundred dollars; right?
I couldn't tell you the exact policy
16 everywhere, but in York in the past I made the bad
17 judgment to say, okay, pay the guy upfront and the
18 guy quit, and I ended up doing the inspections for
19 ·free.
20 Q Okay.
21 A And even though I didn't like doing it, I
22 felt that it was my responsibility because it was my
23 bad judgment that resulted in the inspector running
24 off with all the money upfront. That's why I was so
•
25' adamant that - we have to develop some sort of

87
1 procedure where they could draw against their final
• 2
4
amount up until the job is done to make sure we don't
end up in that situation again.
Q In your office does the inspector ever
5 really know how much he's going to be paid for an
6 inspection that he does?
7 A For an inspection?
8 Q Mm-hmm.
9 A Yes.
10 Q How does he know?
11 A Residential inspections are 50 a piece, and
12 the draws on commercial are 100 to 200 in general
13 unless you got a good reason on why it should be
• 14
15
16
higher.
Q Why is that a draw on a commercial project
instead of a flat fee for insp.ector?
17 A The inspe~tors are charged -- the fee
18 agreement is for 65 percent of everything the
19 inspector does. And if inspectors are covering
20 certain inspection disciplines, then those
21 disciplines are priced out.
22 Q Well, let me be more specific. First of
23 all, who sets that policy of how much they're paid
24 for $50 or a hundred dollars or whatever? Do you set
• 25 that as the manager for that office?

91
1 dollars for a building inspection, the guy who does
2 all the building inspections gets that thousand

3 dollars minus the 35 percent . If we have a guy that
4 is getting 250 for doing the electrical, then he gets
5 that 250 minus 35 percent.
6 Q So, again, at the end of the day if the
7 builder pays $10,000 for a building permit fee for
8 the entire project and the total cost of all the
9 inspections is only $9,000, what happens to that
10 extra thousand dollars?
11 A It's supposed to be divided up depending on
12 what inspection disciplines the inspectors performed.
13 Q You say it 1 s supposed to be divided up.
14 Does that mean sometimes it is and sometimes it
15 isn't?
16 A No. To my knowledge, it is .
17 Q Who does that divi'sion?
18 A The main office .

19 Q So let's say I 1 m
20 A Or should I say whatever office is doing the

21 payroll is supposed to be doing that .
22 Q In the case of York and Adams Counties,
23 let's say we come to the end of the project and the
24 co is issued, and there's a thousand dollars left

25 over. Do you know that or does only Manheim know

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1 about possibly paying an inspector a little bit more.
2 A No, not in this letter.
3 Q Okay. It's in the ·1etters that run between
4 CCIS and the individual inspectors?
5 A No. It was in the non-compete and
6 confidentiality agreement that was put into use. I
7 don't remember exactly when. I would have to
8 probably have somebody go back through the financial
9 files and find out when we contracted with that
10 attorney.
11 But since that point, one thing that was
12 made clear in that agreement was that any
13 supplemental agreements other than the standard fee
14 had to be in writing and had to be signed by both the
15 · company and the individual.
16 Q And it had to be supported by some extra
17 pay, right, or no? Was that an issue?
18 A Well, that was the whole point of the
19 letters that any extra pay had to be supported by the
20 document, the agreement.
21 Q Okay. There's a legal concept, and I'll
22 throw it out there. I know you're not a lawyer, but
23 the idea is this. That if in the middle of an
24 employment term you come to an employee, an existing
25 employee, and you say I want you to sign this
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1 accounting of exactly how they were paid.
~ 2 Q And, again, you see tµis as just sort of

"
{-
3 discretionary on your part on how to disburse that
4 amount or, on the other hand, do you think the
5 inspectors have some right they can point to and say
6 that's my money, I want it or I'll sue you?
7 A I don't think it's discretionary. I've
8 never treated it as such.
9 Q You can decide how much the electrical guy
10 gets - versus how much the multiple disciplinary
11 inspector gets in the case of a dispute you said.
12 A The way I divide it up is the way the fee
13 schedule is divided up. I look at if somebody did
14 all the building, the plumbing, and mechanical, then
15 I look at how they have been paid in accordance with
16 that. If the guy does just electrical, I feel that
17 he's entitled to everything on the electrical.
18 Q You divide it up then pro rata?
19 A Yeah .
20 Q Based on what, though? The dollar value of
21 the inspection? The hours?
22 A Based on what they've already drawn toward
23 the total amount for the inspection discipline.
24 Q So pro rata based on the amount of money
25 they've already got billed .basically for their time?
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1 probably Wendy or Lucile that question.
("\ 2 Q Okay. Did you talk to any inspectors that
3 did work for offices that Mr. Malot administered out
4 there?
s A Yes.
6 Q What was your understanding about their
7 expectations of compensation for the work they did on
8 commercial projects?
9 A I don't know that they had any expectations
10 other than Clem told them this is what you get and
11 that's it. I was aware that we had a lot of
12 complaints. And when I talked to the inspectors out
13 there, they said that they had lodged complaints with
14 Mr. Malot over their skimpy paychecks.
15 He had told them that the main office is
16 shady. That the girls in there are taking the
17 inspection funds, and that's why you're getting lousy
18 paychecks.
19 Q Did any of them raise the issue that they
20 were expecting more pay than what they received on
21 particular inspections?
22 A Yes. I had gotten some vague complaints
23 from the inspectors as far back as 2012 which I
24 forwarded to the main office to Lucile, and I
25 followed up with her, and she said she had it checked
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1 out, and all their books looked good, so they
2 referred it down to Mr. Malot.
3 Q What year is that?
4 A 2012. And Mr. Malot reported back
5 everything was okay. And on one or two occasions I
6 followed up with Mr. Malot. He indicated that there
7 was no problem.
8 Q Was the company ever sued by any inspector
9 for a claim that they were due additional money for
10 work they did?
11 A Not that I remember . No. Wait. I
12 should there is one that I remember.
13 Q What was the circumstance?
14 A That had to do with somebody that was in the
15 York office prior to my being there.
16 Q Okay. Anything relevant to Mr. Malot?
17 A No .
18 Q Okay. So certainly Mr. Malot was managing
19 things differently than you did; right?
20 A Yes.
21 Q Let me ask you about this . Mr. Malot
22 appears to have been able to tell how much was left
23 on a permit at any given moment and know how much was
24 left at the end of the commercial job when the
25 certificate of occupancy was issued . would you agree
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1 was cut by the CCIS home office; right?
2 A Yes.
3 Q Based on the sheets that he provided or his
4 staff provided to CCIS every week; right?
5 A Yes.
6 Q That was true from 2004 to the day he
7 resigned?
8 A That is my understanding.
9 Q What effect did Mr. Malot's departure from
10 CCIS have on its business in the areas in which
11 Mr. Malet had operated?
12 A Within four days of his departure we started
13 getting cancellations from municipalities, and about
14 half of the municipalities that were in Mr. Malot•s
15 area canceled our contracts.
16 Q What about in financial terms in terms of
17 gross revenues, what effect did his departure have?
18 A Not really great overall.
19 Q Why is that?
20 A Because the company is so large and derives
21 so ~uch of its income from other operations.
22 Q Can you put a -- what's the rough gross of
23 the company? Is it in the 5 to $6 million range?
24 A I couldn't tell you.
25 Q You sign the tax returns. Do you remember

173
1 The reason for that initially is because the
2 CCIS database was set up to do both invoicing and
3 recordkeeping, but it wasn't set up as a financial
4 database to track company percentages or do
5 withholding.
6 Q But you had told me earlier that CCIS
7 essentially got its 35 percent of these amounts that
8 we're talking about now; right?

9 A In essence all the money goes into the bank
10 account upfront.
11 Q Okay . And then CCIS gets its 35 percent or
12 retains its 35 percent?
13 A Yeah, as the inspections are paid.
14 Q So the next phrase there is to the
15 inspectors, should have gone also to the inspectors.
16 So one of the beefs that it looks like CCIS has upon
17 review is the 65 percent of the leftover money that
18 went to Mr. Malot in your view and in your practice
19 at your office would have either along the way or

20 after the project been distributed maybe pro rata
21 among some of the inspectors on the job, as well;
22 right?
23 A There are two beefs that I see here. One
24 was that if there were any - - if the inspectors were

25 able to do something more efficiently so there would

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1 be money. left over, that it should have been
n 2 distributed. Perhaps, for example, the contractor
3 instead of having one floor ready for rough wire at a
4 time, he had two floors. So all the money might not
5 have been distributed, but at the end it should have
6 gone to the in~pectors.
7 Q Did you ever hear this concept about work
8 fills the time available to do the work? Do you know

9 that idea of management? Have you ever heard that?
10 A Yes.
11 Q So it seems to me you're describing thi~ in
12 a financial sense that the inspector should take as
13 much time and effort to do the inspections as there
14 is money to pay them to do?
15 A In addition to doing regular inspections
16 that are calleq for, part of a good inspection
17 program is sending inspectors out when it's not
18 called for.
19 But as far as what you're talking about a
20 concept as far as a financial concept, let's say a
21 guy is billing a hundred dollars in inspections, but
22 he's doing twice as much work, but only bills a
23 hundred. Perhaps he should have been paid 200
24 upfront, but for some reason he didn't take 200.
25 - Q In the 13 or 14 years that you were working
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175
1 with Mr . Malet, did you have regular problems with
2 the quality of the work that he was doing or his
3 inspectors were doing?
4 A I didn't have knowledge of that for the most
5 part . The reports I saw everything looked fine.
6 Q Then if we turn over to the next page, it
7 looks like in order to remedy this, Plaintiff's
8 position is that all wrongfully taken payments should
9 be repaid with interest and an official statement
10 made to current and former inspectors and clients
11 offering an apology, etcetera . Repaid to whom?
12 A I would imagine repaid to the inspectors
13 that worked there . I did not assemble this
14 paragraph .
15 Q Okay.
16 A I do believe that there are certain funds in
17 question regarding the distribution of one plan
18 reviewer where the plan reviewer was entitled to 40
19 percent, but Mr . Malet took some of his wages at 65
20 percent.
21 Q Overpaid him or underpaid the plan reviewer?
22 A Underpaid the plan reviewer and underpaid
23 the company by doing so.
24 Q How much was that issue with that particular
25 plan review, if you know?
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1 paid on the job, if he comes to me, I can say, yeah,
2 I'll look into it. I'll call the main office or they
3 can jusc call directly and eliminate the middleman.
4 Q If they do a $50 inspection in Adams County,
5 that gets reported by them directly to Manheim, not
6 to you?
7 A Yes.
8 Q Then did you see it was any risk to the

9 company to tell the inspectors in western
10 Pennsylvania that, hey, we think you should have been
11 paid an extra amount, but you didn't get paid?
12 A Yes.
13 Q Why would you do something like that? It
14 seems like the worst business decision I could
15 imagine.
16 A We don't believe in lying to our inspectors.

17 Q Do you believe in inviting claims that you
18 don't otherwise have onto the company?
19 A Generally not, but we had to explain to them
20 why all of a sudden their pay shot up 700 or aoo
21 percent.
22 Q Did any of them say, you know what, I had an
23 expressed understanding that I should have been
24 receiving that money all along and I never got it?

25 A No . They said that all their information
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183
1 came directly from Mr. Malot .
2 Q Were they of the belief that every single
3 project was zeroed out and there was nothing left to
4 distribute?
5 A I don't know what they believed . They said
6 they were never allowed to look at the books and see

7 what was being done. They said they were lucky to be
8 able to look at the records to find out what they
9 were supposed to be doing sometimes.
10 Q That's not unusual, is it?
11 A No . Well, actually, yes, it is unusual in
12 that in my office we have open records where an
13 inspector could see anything at any time .
14 Q Can one inspector see how much another
15 inspector makes?
16 A They might be able to. They might be able
17 to determine that.
18 Q Do you think that 1 s a good idea?
19 A Yes, and, in fact, we sort of leave it to
20 their responsibility just to make sure they're not
21 overdrawing their accounts.
22 Q Any inspectors know how much you make?
23 A Probably.
24 Q Any inspectors know how much Bill Schilling ·
25 takes out of the business?

186
1 understanding that any time a municipality asked for
2 it back, they got it back.
3 MR. WYLAND: All right. I don't have
4 anything further for this witness.
6 EXAMINATION
7
·a BY MR. RIFE:
9 Q Peter, Attorney Wyland characterized the
10 amount of money left over on a commercial job as a
11 bonus when paid to the inspectors. Is that how you
12 view that leftover money on a commercial job when it
13 gets paid to the inspectors that perform inspections
14 on that job?
15 A I think a bonus is an incorrect term. I
16 would term it more as a balance.
17 Q can you succinctly explain Commonwealth
18 Code's policy re$arding what happens to the money
19 that's the balance on a commercial job? How is that
20 money to be allocated?
21 A It should be allocated to the people that
22 actually worked on the job.
23 Q And were you aware whether Mr. Malot had the
24 authority to reallocate that money in deviation of
25 Commonwealth Code's policy?
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187
1 A At what time period?
2 Q At any point during his employment.
3 A During his employment, no. After his
4 employment, yes.
5 Q The question was did Mr. Malot have the
6 authority to reallocate the amount of commercial job
7 balances to pay himself for managing the projects?
8 A -It was my understanding that he was given a
9 manager's commission to manage the project.
10 Q Is that the management commission that we
11 saw in these exhibits?
12 A Yes.
13 Q Listed on the pay sheet?
14 A Yes.
15 Q Is that the same thing as the balance left
16 on the inspection balance for commercial jobs?
17 A No.
18 Q Was he entitled to anything on the balance

19 of commercial jobs?
20 A If he worked on the project.
21 Q In the capacity of an inspector or a
22 manager?
23 A Inspector.
24 Q The policy in which Commonwealth Code
~ 25 inspectors receive the balance, their pro rata
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188
1 distribution, the amount that Attorney Wyland
2 characterized as a bonus, is that -- how is that
3 arranged between Commonwealth Code and the particular
4 inspectors?
5 A Could you repeat the question?
6 Q Is there any document or agreement between
7 Commonwealth Code as an entity and the individual
8 inspectors that they would be entitled to a portion

9 of the remaining balances on commercial jobs?
10 A The initial employment agreement for 65
11 percent of the inspection fees .
12 Q So the overall 65 percent of inspection fees
13 that an inspector was entitled to was not 65 percent
14 of the particular entry they made. It was 65 percent
15 of their portion within their vocation of that job?
16 A That's correct. If we have somebody that
17 did all the inspections on the job, they get 65
18 percent of everything .
19 Q Did Mr. Malet have the authority as an agent
20 of commonwealth Code to renegotiate or change the
21 contracts between Commonwealth Code and the
22 inspectors as to what overall percentage they would
23 get from a project?
24 A It was my understanding that every agreement
25 in the company was directly between the employee and
Geiger Lorin Fil_ius Mc Lucas Reporting, LLC

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1 IN THE COURT OF COMMON PLEAS
OF THE 39TH JUDICIAL DISTRICT OF
2 PENNSYLVANIA - FRANKLIN COUNTY BRANCH
4 COMMONWEALTH CODE
INSPECTION SERVICE, INC., : CIVIL ACTION:
5 PLAINTIFF : LAW AND EQUITY
6 VS NO. 2015-1652
7 ROBERT C. MALOT A/K/A : JUDGE: HON. ANGELA KROM

R. CLEM MALOT AND
8 PENNSYLVANIA MUNICIPAL
CODE ALLIANCE, INC.,
9 DEFENDANT
10
11 DEPOSITION OF: ALICIA SCHOOLEY

12 TAKEN BY: PLAINTIFF
13 BEFORE: TRACY L. LLOYD, RPR
NOTARY PUBLIC
14
DATE: OCTOBER 28, 2016 11:07 A.M.
15
PLACE: SALZMANN HUGHES, P.C.
16 112 MARKET STREET
8TH FLOOR
17 HARRISBURG, PENNSYLVANIA
18
19
20
21
22
23 EXHIBIT
24
25
13
2
1 APPEARANCES:
2 HOSKINSON & WENGER

BY: LAWRENCE R . RIFE, IV, ESQUIRE
3 147 EAST WASHINGTON STREET
CHAMBERSBURG, PENNSYLVANIA 17201
4 (717) 263-8535
5 FOR - PLAINTIFF
6 SALZMANN HUGHES, P.C.

BY: SCOTT T. WYLAND, ESQUIRE
7 ISAAC P. WAKEFIELD, ESQUIRE
112 MARKET STREET, 8TH FLOOR
8 HARRISBURG, PENNSYLVANIA 17101
(717) 234-6700
9
FOR - DEFENDANT
10
PENNY LEGAL, LLC
11 BY: JANE GOWEN PENNY, ESQUIRE
800 NORTH THIRD STREET, SUITE 201
12 P.O. BOX 682
HARRISBURG, PENNSYLVANIA 17108-0682
13 (717) 232 - 1414
14 ALSO PRESENT :
15 ROBERT C. MALOT
PETER SCHILLING
16
17
18
19
20
21
22
23
24
25

11
1 I was out, no longer with them.
2 Q Okay. Did you work alongside Pamela
3 Neville?
4 A Yes.
5 Q Did you have authority over her?
6 A In a sense, yes.
7 Q Okay. Did you ever work alongside Sharon
8 Hamm?
9 A Yes.
10 Q Did you have authority over her?
11 A Yes.
12 Q Did you ever have any reason to believe
13 while you were employed with Commonwealth that any of
14 those individuals that I mentioned may have had some
15 kind of special or private relationship with
16 Mr . Malot?
17 A No.
18 Q Do yo~ recall as specific as possible when
19 your separation from Commonwealth Code occurred?
20 A It was August of 2014. I'm not exactly sure
21 of the date off the top of my head.
22 Q And how did that separation come about?
23 A Lucile and Wendy were at the office when I
24 was there that morning, and they released me.
25 Q Did they tell you why you were released that

12
1 day?
2 A No, they did not.
3 Q At any point following your separation with
4 the company, were you made aware of allegations that
5 you may have been stealing cash from the company that
6 were made to the Manheim office by Mr. Malot?
7 MR. WYLAND: I'm going to object here.
8 I just have a question about relevancy. I mean there
9 are three claims in the complaint. Two of them have
10 to do with an injunctive relief and Mr . Malot's
11 conduct after leaving the company, and the other one
12 has to do with conversion having to do with the way
13 that fees were billed.
14 I don•t see that line of questioning
15 as reasonably calculated to lead to the discovery of
16 admissible evidence pertaining to those claims. Is
17 there a claim or defense that this has some relevance
18 to? I mean you can do an investigation, but not on
19 our time.
20 MR. RIFE: This is within the
21 conversion claim, but that was the end of that line
22 of questioning, so we can move on from that.
23 BY MR. RIFE:
24 Q While you were employed with commonwealth
25 Code, was there ever any impropriety regarding cash

13
1 from the Chambersburg office that you were aware of?

2 A No .
3 Q Following your official termination by the

4 Manheim employees of Commonwealth ·code, were you ever
5 asked to come in and consult or work on any
6 Commonwealth Code business?
7 A No.
8 Q Do you have any knowledge of who took over

9 your duties and responsibilities following your
10 termination?
11 A No .
12 I_Q,
1
13'_}
\; _ Code,d1ct-
\::::
1
-- . --- - - . __ y ou
__ p erform
--- ---- ··-a
_p _y rollent
___________r y...:.J
' ?\
16
1T9'
- 'J
i2 O\
' • I
Ji.ourl y --t:ime.
• - -- - ·· -· - - . ,'
21 MR . WYLAND: I guess it's an objection
22 as to form. I want to make sure we are using the
23 same language. I can do that through a follow-up
24 question, but the informat i on that goes from the

25 satellite office to Manheim is sort of one set of

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14
1 information like how much the inspectors charge.
2 And when I think of payroll
3 information, at least I think of how much the net

4 checks are that Manheim is paying back to the
5 inspectors, so would you mind just clarifying that a
6 little bit.
7 BY MR. RIFE:
8
12 A'
TS '
\._ CJ
17 Q So you were involved in the raw entry, not

18 any of the deductions or calculations?
19 A correct.
20 MR. WYLAND: Thank you.
21 BY MR. RIFE:
22 Q While you were employed at the Chambersburg

23 office of Commonwealth Code, who was responsible for
24 assigning inspectors to a specific job?

25 A We didn't necessarily assign inspectors to

IN THE COURT OF COMMON PLEAS
OF THE 39TH JUDICIAL DISTRICT OF PENNSYLVANIA
FRANKLIN COUNTY BRANCH
COMMONWEALTH CODE INSPECTION Civil Action - Law

SERVICE I INC. I
Plaintiff
vs. No. 2015-1652

R. CLEM MALOT and
CODE ALLIANCE, INC., Judge:
Defendants Hon. Todd M. Sponseller
- - - - - - - - - - - - - - -/
Deposition of: NELSON w. NEAD
Taken by · Plaintiff
Date : January 9, 2018; 12:35 p.m.
Place : CGA Law Firm

135 North George Street
York, Pennsylvania
Before : Susan D. Kashmere, RPR

Notary Public
APPEARAl'.JCES:
CGA LAW FIRM
By: ZACHARY E. NAHASS, ESQ .
Appearing on behalf of the Plaintiff
SALZMANN HUGHES, P.C.
By: SCOTT T. WYLAND, ESQ.
Appearing on behalf of the Defendants
ALSO PRESENT: .---EX·H·r·s·,T-~
PETER SCHILLING
BILL SCHILLING
TERESA MOYER
I G.
Henderson Kashmere Wetmore, LLC
(717)214-1182
Atty. Nahass - Witness Nelson Nead
17
1 A. No, I was contacted by the office. It was
2 really very limited contact with the office except maybe
3 to resupply for some forms or something of that nature.
4 They would either -- I believe at that time my
5 inspections were faxed to me, I believe, yes.
6 Q. To your home?
7 A. Yes .
8 Q. Okay. And how were you paid by CCIS?
9 A. I would turn my list of inspections that I had
10 completed in to the Chambersburg office and then whatever
11 procedure was followed to receive payment.
12 Q. Okay. And was there a form that you completed
13 for your list of inspections?
14 A. Yes, you could call it a form, yes. It was
15 just a basic form I would fill out and turn it in as to
16 what I had done, framing, plumbing, whatever it may have
17 been, and then that would be turned into the Chambersburg
18 office and then it would go from there to whatever their
19 procedure was.
20 Q. And what about records of the inspections
21 themselves, did you generate an inspection report when
22 you did an inspection?
23 A. No, we weren't required to do it with the
24 exception of in the future, when I received my
25 certifications for electrical, we did have electrical

(717)214-1182
18
1 forms that we filled out to submit.
2 Q. Okay. Let me understand this. You get a fax
3 from the Chambersburg office at your home that tells you
4 to go to a particular job and do a particular inspection.
5 Is that right?
6 A. That 1 s correct.
7 Q. Okay. So you go to that job and you do the
8 inspection. Let's say the inspection fails . Did that
9 ever occur?
10 A. Yes.
11 Q. Okay. To whom do you report the fact that the
12 inspection fails?
13 A. That we had a form for. It was called a Field
14 Correction. We would fill that out and then that would
15 also be sent to the Chambersburg office.
16 Q. Okay. But if the inspection passes, there's no
17 form?
18 A. No, we had no forms to submit .
19 Q. Okay. Was there anything that you did that
20 would let someone picking up a file know that this
21 particular building had passed its rough-in plumbing
22 inspection?
23 A. Just the submittal when I turned my pay
24 voucher in, that would have been it .
25 Q. The thing that you called sort of a form?

(717)214-1182
53
1 Q. Who's they?
2 A. Well, he left, Mrs. Sharon Hamm left and
3 Natasha Brubaker, all three left at the same time. Up
4 until that point I had no further conversations with him
5 from that initial one in February.
6 Q. Were you not part of an inspectors' meeting
7 where he informed you and others that he was engaged in
8 attempts to purchase CCIS?
9 A. That's correct, yes.
10 Q. Okay. Well, tell me about that meeting.
11 A. We signed a nondisclosure on that.
12 Q. I'm sorry. So you're saying you won't talk
13 about it?
14 A. No.
15 Q. You're not saying you won't talk about it?
16 A. No, I'm saying I won't talk about it because we
17 signed a document that day of nondisclosure.
18 Q. Okay. And that agreement was with who?
19 A. Mr. Malot .
20 Q. You signed a nondisclosure agreement with Mr.
21 Malot promising not to discuss his efforts to purchase a
22 portion of CCIS?
23 A. I will go that far, yes.
24 Q. Okay. And as a result of that agreement,
25 you're saying you won't talk about that meeting that he

(717)214-1182
54
1 had at CCIS with the CCIS inspectors?
2 A. That's correct.
3 Q. While you were all employed by CCIS?
4 A. That is correct .
5 Q. on ccrs 1
s time?
6 A. No, we were before hours .
7 Q. Okay. In their building?
8 A. In their building .
9 Q. Okay. Do you think that that is appropriate?
10 A. At the time none of us gave it any thought.
11 Q. When was th i s meeting?
12 A. I don't know what the dates were on it.
13 Q. But it was between February 2015 and the end of
14 March 2015?
15 A. Tha t would be correct, yes.
16 Q. Okay . Who was involved in the meeting?
17 A. I believe all of the inspectors out of the
18 office was there, ou t of the Chambersburg office.
19 Q. Okay . What about administrative staff?
20 A. I don't recall any of them being there. I just
21 can ' t recall .
22 Q. Okay. And the meeting occurred in the
23 Chambersburg office?
25 Q. With all of the inspectors and Clem?

(717)214-1182
55
2 Q. And when did he ask you to sign a nondisclosure
3 agreement?
4 A. Before we started.
5 Q. Okay. And did he tell you why he was asking
6 you to sign a nondisclosure agreement?
7 A. Not at that point.
8 Q. Has he told you since?
9 A. Well, I was in the meeting.
10 Q. Okay. And why did he say he wanted you to sign
11 a nondisclosure agreement in the meeting?
12 A. You're starting to dig a little deeper than I'm
13 willing to disclose at this point.
14 Q. Okay. Well, I'm sure I can have a court order
15 you to answer the questions, but I prefer not to have to
16 go through that if you want to just talk about it. It's
17 all coming out in this litigation, I can promise you.
18 MR. WYLAND: I think Mr. Nead feels he signed a
19 contract. He 1 s trying to adhere to it.
20 What I'd suggest is, and to the extent you want
21 to keep your options open to require him to answer
22 questions about that meeting and, you know, topics that
23 are arguably in violation of that contract, let's at
24 least for the moment set those aside. Ask him everything
25 else that you want to so that we have left this, you

(717)214-1182
56
1 know, little set of unanswered questions for now and
2 ·decide how to handle those .
3 MR. NAHASS: Okay.
4 BY MR. NAHASS:
5 Q. Well , let ' s review. Mr. Malot assembles all of
6 CCIS's Chambersburg inspectors at the Chambersburg office
7 of CCIS while you're all employed for CCIS in February or
8 March 2015?
9 A. Correct .
10 Q. And before the meeting starts he asks you all
11 to sign a nondisclosure agreement?
12 A. Yes.
13 Q. And you won't tell me why he wanted you to sign
14 the nondisclosure agreement?
15 A. That is correct .
16 Q. Did everyone in the meeting sign it?
17 A. I can't answer that.
18 Q. Why not?
19 A. I don't know .
20 Q. Oh, okay . Well, did anybody leave the meeting?
21 A. Not to my recollection .
22 Q. Okay . And then a meeting occurred, which you
23 won' t talk about because you t h ink you're bound by
24 contract not to?
25 A. Correct .

(717)214-1182
57
1 Q. Was there anything that occurred at that
2 meeting that did not fall under the nondisclosure
3 agreement that you believe prevents you from answering
4 questions about the meeting?
5 A. No, I will not discuss the meeting.
6 MR. WYLAND: I think he's asking you this
7 question, which is a little bit different, and it's
8 actually a pretty good question .
9 If the nondisclosure agreement had a list of
10 certain things that you weren't to discuss, is there
11 anything during the meeting that fell outside the scope
12 of that? One example would be you talk about somebody ' s
13 recipe for chili . That may not be something that was
14 covered within the agreement, but it might have been
15 discussed at the meeting. That 1 s a hypothetical.
16 A. In that context I can 1 t remember anything other
17 than what we discussed, no.
18 BY MR. NAHASS:
19 Q. Well, was there any pending CCIS -- let me back
20 up a minute.
21 You had had inspectors 1 meetings before, right?
22 A. Correct.
23 Q. And what was generally discussed at inspectors'
24 meetings?
25 A. Any issues we may have had out on certain

(717)214-1182
58
1 particular jobs, any updates on anything that we should
2 be looking for and so on and so forth.
3 Q. And at the meeting in question in February or
4 March of 2015, there was nothing discussed about pending
s CCIS business, it was all a topic that fell under the
6 nondisclosure agreement that you signed?
7 A. I can't remember anything outside that, no,
8 under normal meeting procedure.
9 Q. All right. Well, after Clem told everybody
10 that he was leaving to start his own company and that he
11 would like you all to go with him, did he tell you what
12 his business plan was for his new company?
13 A. No.
14 Q. Did he tell you what he would pay you if you
15 went with him to his new company?
16 A. No.
17 Q. Okay. You decided to go anyway?
18 A. Not at that stage, no.
19 Q. Okay. Well, I thought you told me in February
I
20 you told him you'd like to go with him?

21 A. I told him I would like to go, but I still
22 hadn't confirmed that I would go if he did start a
23 company. I wanted to be considered as an employment
24 for his employment, yes.
25 Q. All right. Did there come a point when you

(717)214-1182
70
1 Q. How about that CCIS was going out of business?
2 A. Not that I'm aware of.
3 Q. CCIS was struggling financially?
4 A. There again, not tha~ I'm aware of.
5 Q. Did you ever hear of anyone speaking badly
6 about CCIS?
7 A. Not in my part, because I kept it close to my
8 chest, I said it was personal. I had no problem except
9 for some incidents that I discussed earlier. These
10 people treated me good. I don't have a problem with them
11 personally. It was the procedure of what was going on
12 that made me convinced to leave.
13 Q. And I'm not talking about you now. I'm asking
14 if you ever heard anyone else talking poorly about CCIS.
15 A. Not that I can recall.
16 Q. Did you ever hear of anyone else talking poorly
17 about CCIS?
18 A. Nothing that I can think of.
19 Q. Okay. What was the presentation that Clem gave
20 at the Bedford co-op meeting? In other words -- sorry.
21 How was he trying to convince the people there that PMCA
22 was a better option for them than anything else?
23 A. The fact that we had worked with him all these
24 years, we were pretty much the same personnel.
25 Q. Okay. And was there anyone that worked for

(717)214-1182
IN THE COURT OF COMMON P~EAS
OF THE 39TH JUDICIAL DISTRICT OF PENNSYLVANI~
FRANKLIN COUNTY BRANCH
COMMONWEALTH CODE INSPECTION Civil Action - Law

SERVICE I INC. ;
Plaintiff
vs. No. 2015-1652

R. CLEM MALOT and
CODE ALLIANCE, INC., Judge:
Defendants Hon. Todd M. Sponseller
- - - - - - - - - - - - - - -I
Deposition of: WILLIAM CHITTESTER
Taken by : Plaintiff
Date : January 9, 2018; 9:00 a.m.
Place : CGA Law Firm

135 North George Street·
York, Pennsylvania
Before : Susan D. Kashmere, RPR

Notary Public
APPEARANCES:
CGA LAW FIRM
By: ZACHARY E. NAHASS, ESQ.
Appearing on behalf of the Plaintiff
SALZMANN HUGHES, P.C.
By: SCOTT T. WYLAND, ESQ.
Appearing on behalf of the Defendants
ALSO PRESENT:
PETER SCHILLING
BILL SCHILLING
TERESA MOYER EXHIBIT

(717)214-1182
I D
Atty. Nahass - Witness William Chittester
106
1 says issuance . so maybe they issued an occupancy permit,
2 ·I don' t know .
3 Q. Okay . And the entry on 1/11 also says

4 issuance?
5 A. It could have been a temporary, I don't know.
6 Q. Okay. Can't tell?
7 A. I can't tell.
8 Q. All right. Would there be any reason for
9 inspections or plan reviews to be completed following the
10 Certificate of Occupancy?
11 A. Shouldn't be.
12 Q. Okay. Sorry. I guess -- well, on the first
13 page it says the Date of Final, 1/11/12 . You probably
14 don't know what that means. Is that right?
15 A. I don ' t know . This is the first time I ' ve ever
16 seen one of these sheets.
17 Q. Okay . Let me just ask you to look at one more
18 document.
19 MR. NAHASS : Mark this as Exhibit 3.
20 (Chittester Deposition Exhibit Number 3
21 introduced and marked for identificat i on.)
22 BY MR. NAHASS:
23 Q. If you'd just take a minute to flip through
24 this or at least the first three pages .
25 Do you recognize, as a general matter, this
Henderson Kashrnere Wetmore, LLC

(717)214-1182
Atty . Nahass - Witness William Chittester
107
1 document?
2 A. Um-hum.
3 Q. Yes?
4 A. Yes.
5 Q. What is it?
6
:7 i _. _re
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_ . ___ --r --=-rem· __..... . correc
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_ -·· ____ _y .1
@ :i t _bt.Crrled-:-i ~ -·t11inkwhat ·-nappenect·-here-is -·r:n:ey · got-t:lfi_m
I know there was~ - - ·r-Ju§.t~emernberJ
l!~· (.a nd ~if¢>t~=..t nef ~_sn~J,].: ?up_:~a:ng. ·the1_1C:: ~1fe.y ~~p-~nta11:.,.· t@

T 6> ·ins_µra,nct=, _q19pey~ gn¢i ·the guy· w~~ - pro.Re .Ahd_J:h~Y 11.~Ye.1",
·17 ~finisl~ea-: ·thqt ?
18 Q. Okay. So you recall this project?
19 A. I recall some of it, yeah.
20 Q. And this was a - -
21 A. I don't know when it was started .
22 Q. Well, if you look at Page 2 --
23 A. It's clear back in 2010.
24 Q. - - you ' re doing plan reviews in November 2010,
25 right?

(717)214-1182
108
1 A. Yeah.
2 Q. Okay. And you did a plan review for the shell
3 in March 2011. Is that right?
4 A. Um-hum.
5 Q. That's a yes?
6 A. Yes.
7 Q. What's the May 2011 plan review revise?
8 A. I would say that would be revisions.
9 Q. Okay.
10 A. There must have been some small revisions. It
11 was only a $50 plan review fee.
12 {Q~ tArfd-:-:=t::~inJGne2'0Tl youdo _a~p1an· ·revi~
14
{1~) (cit.it· of:. !JlQrie"y · ang_'.'"""the_ 1;5.r.cfi.~_q_t~j \fsrx:ind-qf=·cam~to a fiarE]
rt~ ~Arfd~~nev~p)It..L8-ome· . t.~rrrp6r~ty~ !2\1]:Td:L)1gs _i:_11_ t:'!fe~!~J12-t _!J
22 Q. Okay. And was that the first time that you had
23 ever seen a development or a construction project come to
24 a halt due to a lack of funds?
25 A. No.

(717)214-1182
109
1 Q. Okay. Do you have any idea what happens to the
2 fees that a developer has paid to an inspection company
3 when the project gets put on hold?
4 A. No .
5 Q. If you look at the July 6, 2011, entry here
6 that is identified as a progress meeting with a thousand
7 dollar payment to Clem, do you recall a progress meeting
8 for this project?
9 A. No, I don't .
10 Do you believe that a thousand dollar payment
11 for a project that was stalling for a progress meeting
12 would be reasonable?
13 A. I don ' t know that . I wasn ' t there. You know,
14 it could have been a situation where Clem had been there
15 a dozen times before that. I don't know . And maybe he
16 just turned that in under one progress meeting . I don't
17 know. You know, I can ' t answer that .
18
''23'
- · )

{717)214-1182
Atty. Nahass - Witness Will i am Chittester
110
1 Q :. ._po ~y¢1..f ·1ia~~ _·al)y idea _whae --fii.e--Mai:.-c h- r1 en-,-2·01"""4-;J
·eJ}try-~~c,i-~D-(IJJ~q~_-~s: close·_out . wfch~$l3 .·,-ooo- fee-migntl
- · ·- · · . - to?'
:refer - _,
A. r -m~- 1i9J ~:
5 c· · ·- -__c:onc~ive
"-~Il-Y.O"LJ. · -· - · · · of
__ __ah--
.. y: -__
t eas-on·
____ ·chat tne--__ P.ro
.. __ ______ _ J·ect~
_____
0 radp.T(ionaT ·1ns2ect;16ris ~-_ pfQb_aq;nCadcfi"cfi;_5fi_4l~ P-lan revrew ,J

L8l ,and .a Certificate of _OccupftllCY. l5eing ·· issuea.?}
'.l C) (I :...G Q~J;gn 1 t: __-anS_\'!~r.;J~_n~_q
10 Q. You couldn't think of any good reason?
11 A. I just couldn't answer that . You know, I think
12 you're trying to lead me into a trap the way you're
13 giving me your question and I ' m not comfortable with
14 answering it.
15 Q. Okay. Well, I assure you I'm not trying to
16 lead you into a trap.
17 I'm asking you if you can think of any reason,
18 without additional inspections and plan reviews, that
19 this job should have been closed out in March 2014?
20 MR . WYLAND: I'm going to object to the form of
21 the question, too. I think you're asking him to
22 speculate . He said he didn ' t know and he didn't
23 A. I mean, I didn't have any involvement with
24 that.
25 BY MR. NAHASS:

(717)214-1182
111
1 o. ·
A. No. ·
Ar~- you aw~re o_f ai}z __9_t;h¢t- jQP_La t.: _~S-;J.$~-Ib-A"tl

:5. w~re ·closed crut t_o r any reas_oif Pt°i¢r to_ tti-:-e - Iss_Q:an_c ~_--<i_f.~ a
6 -c~rtifJ¢ate _of Occ14pa_ricy?
7 A. No.
8 MR. NAHASS: Off the record for just one more

9 minute.
10 (Off the record.)
11 MR . NAHASS: I think we're done. I don't have
12 any further questions. Mr. Wyland might have some
13 questions for you.
14 MR . WYLAND: Let me look here. I thought I had
15 just a couple things I wanted to clarify.
16 EXAMINATION
17 BY MR. WYLAND :
18 Q. When CCIS hired you, Mr. Chittester, did CCIS
19 know that you had a noncompete or a nonsolicitation
20 agreement with Guardian?
21 A. I believe they did. We talked about that.
22 Q. And they hired you anyway?
23 A. Yes .
24 Q. Did they, in essence, put you in a position
25 where you were being asked to violate that agreement?

(717)214-1182
.,
Inspection Summary
PERMIT# 2010-MI85C DATE ISSUED ll/1612010 DATE OF EXT
ADDRESS 72 /Jarrvilie Roat!, Belleville. PA l 7004
MUNICIPALITY Brown Township COUNTY Mifflin County

DESCRIPTION OF BUILDING
ConstructGrocer:y..with.DirJing Facjlities a~1d Offices -,SHEU AP.P.RQVAL ONLY
OWNER A.J. Peachey & Sons. Inc. CONTRACTOR McC<;,y Brothers, Inc.
CONTACT CONTACT Gregory Kuhn
ADDRl!SS 72 Barrville Road ADDRESS 1514 Conimerce Avenue
Belleville, PA 17004 Carlisle, PA 17015
PHONE 717-667-2185 PHONE 717-241-2023 X 210
JNSP.# INSPECTOR TYPE DATE FEE

0 BiU Plan Review Foote 11/1512010 $50.00
0 Bill Plan Review Rem 12120/2910 $ 1,325.00
0 Bod Footer 1/11/2011 SS0.00
0 Bud Footer 1/14/2011 $50.00
0 Bud Footer 1/17/20°11 $50.00
0 Bud Footer 1120/201 1 $50.00
0 Bud Footer 2/9/2011 ssg.oo
0 Bud Footer 2/17/2011 $50.00
0 Bud Footer . 211812011 _S50.00
0 Bud Footer 2/21/2011 SS0.00
o· Bud Footer 2/2412011 $50.00
0 Bud Footer 3/1/2011 S50.00
0 Bud Footer 31312011 S50.00
0 Bud Footer 3/412011 S50.00
0 Bud Foundation 3/4/2011 $50.00
0 Bin Plan Review - Shel 314/2011 $750.00
0 Bud Footer 318/201 l $50.00
0 Bud Foundation 3/8/2011 $50.00
0 Bud Foundation 3/912011 $50.00
PUN REVIEW FEE PAID $5,550.00
INSPECTION FEES PAID $12,860.00
Wednesday, Fdrua,y 17, 2016 Pag~ I o/2 EXHIBIT
I t
PERMIT# 2010-M185C DATEISSUED 11//6/2010 DATEOFEXT
ADDRESS 72 Barrville Road, Belleville. PA 17004
MUNICIPALITY Brown Township_ COUNTY Mifflin County

DESCRIPTION OF BUILDING
Construct-Grocery with Dini11g Facilities and Offices -_-SHELL APPROVAL ONLY
0 Bud Foundation 3/16/2011 $50.00
0 ··sud · ··footer ·3/1&2011 · •. S50.00
0 Bud Footer ·3/17/2011 $50.00
0 Bud Foundation 3fl7/2011 $50.00
0 Bud Foundation 4/18/2011 $50.00
0 Bud Plumbf!VAC 5/3/2011 $65.00
0 Nelson Plumb UG 515/2011 $50.00
0 Bud Plumb-HVAC 5/6/2011 $75.00
0 Bud Plumb-HVAC 5(10/2011 $65.00 . ;
· Plan Review Revis

'
0 Bill 5(17/2011 $50.00
0 Bud Plumb-HVAC UG 5/19/2011 S50.00
0 Bud Footer 5124'2011 $50.00
0 Bud Footer 5/25/2011 $50.00
0 Bud Plumb-HVAC 6/1'2011 $50.00
0 em Plan Review Sprin 6/17/2011 $687.50
0 Clem progress meeting I 7/6/2011 $1 ,000.00
0 Clem Close CM 3/11/2014 $13,042 .50
PUN REVIEW FEE'PAID "$5;550.00
INSPECTION FEES PAID $12,860.00
Wtdnmiay, F~btu0T}' 17, 1016 Pagt!1o/1

1
1 IN THE COURT OF COMMON PLEAS OF THE

39TH JUDICIAL DISTRICT, PENNSYLVANIA
2 FRANKLIN COUNTY BRANCH
3
COMMONWEALTH CODE : CIVIL ACTION
4 INSPECTION SERVICE, INC.
5 vs.
6 ROBERT C. MALOT a/k/a
R. CLEM MALOT and
7 PENNSYLVANIA MUNICIPAL
CODE ALLIANCE, · INC. : No. 2015-1652
8
10 TRANSCRIPT OF PROCEEDINGS
11
12
13
BEFORE: HONORABLE ANGELA R. KROM, J.
14
DATE: Tuesday, May 12, 2015; 9:00 a.m.
15
PLACE: Courtroom No. 4
16 Franklin County Courthouse
Chambersburg, PA 17201
17
18
19 APPEARANCES:
20 Lawrence R. Rife, IV, Esquire

For P1aintiff
21
EXHIBIT
r:
Scott T. Wyland, Esquire
22 For Defendants
23
' 24 Reported by:
L
·.4
/
i 25 Bonnie C . Fuhrman,
Official Court Reporter
Bonnie C. Fuhrman, Official Court Reporter

56
1 Q. Could you easily put a dollar value on that harm?
2 A. No.
3 Q. Is that harm li~ely to continue to occur?
4 A. Yes.
5 Q. Since filing the initial filing have you received
6 any other termination notices or resignations?
7 A. The termination notices from the municipalities
8 seem to be coming in every day from various counties.
9 ATTY. RIFE: I have no further questions, ,
10 your Honor.
11 THE COURT: Cross examine.
12 * * *
13 CROSS EXAMINATION
14 * * *
15 BY ATTY. WYLAND:
16 Q. Were you personally aware of the existence of any
17 agreement with Mr. Malet prior to when you said the
18 lawyers found it around the beginning of April?
19 A. No.
20 Q. Were you aware of whether he made any inquiries
21 about the existence of such an agreement and what CCIS
22 told him about it?
23 A. I can't recall.
24 Q. You can't recall?
lJ 25 A. Um --

61
1 Tuesday of next week, if you'd like to sit in with us
2 and see what you think. And that was on the Thursday,
3 March 19th. And Friday, March 20th, we received Clem's
4 resignation, and the attorneys e-mail said since Manheim
5 continues to interfere with Mr. Malot's operation in
6 Chambersburg, he gives his resignation.
7 Q. So from February 23rd until March 20th, sounds
8 like there was a period where Mr. Malot was having some
9 sort of discussions with CCIS about this purchase,
10 either to Mr. Shilling, William Shilling, or through
11 counsel, is that fair?
12 A. Through counsel.
13 Not too much communication was going on.
14 Q. Would CCIS naturally have hesitated in hiring any
15 brand new employee in the middle of discussions about
16 the possible sale of the very office Mr. Malot was
17 talking about?
18 A. At that point we intended on running the
19 business .
20 You mean from --
21 Q. Here's my point: Mr. Malot comes to you and says
22 comes to CCIS and says, Hey, let's discuss the
23 possible sale of the company to me --
24 A. Okay. But it wasn't put like that, sir. It was
u 25 put, I'm going to run you out or buy you out.
·. . .. . . ····· ·· ···. ······ ·· .. . . . . . . ... ..... . ·············· ·- . --· .. . . . ......... .... .......... ···········- ··
66
1 * * *
2 DIRECT EXAMINATION
3 (As On Cross)
4 * * *
5 BY ATTY. RIFE:
6 Q. Mr. Malet, that's the non-compete that you have
7 signed, correct?
8 A. Yes.
9 THE COURT: Counsel, what are you referring
10 to?
11 ATTY. RIFE: Plaintiff's Exhibit 2.
12 Sorry, your Honor.
13 THE COURT: Thank you.
14 BY ATTY. RIFE:
15 Q. And did you provide that upon signing it to CCIS?
16 A. It appears that I did.
17 Q. You don't recall giving it to CCIS?
18 A. No.
19 Q. Do you recall making a photocopy of it before
20 giving it to CCIS?
21 A. No.
22 Q. You had created Pennsylvania Municipality Code
23 Alliance, Incorporated?
24 A. Pennsylvania Muncipality Code, Incorporated.
l) 25 Q. You created it?
·· ···········-- · ·- ·- -·- . ·- ....... . ·· ······ · ···. .. .... . .. ··-·· - ·······•- ... . . . ·- -· ... . . ... ··-· .. ··· ······ . -·- .. ···-·. ······ . . . ... . ·····-----····--· ····-·····- ···········
67
1 A. I work for it .
2 Q. You did not establish . the corporation?
3 A. It's my wife's company .
4 Q. But I'm asking did you incorporate it? Were you
5 involved in the process of setting i t up?
6 A. Yes, that's correct.
7 Q. You were?
8 You said it's your wife's company now?
10 Q. Did you transfer your interest to her?
11 A. I had no interest in i t .
12 Q. How long has she been in this industry?
13 A. Since March 20th.
14 Q. Of this year?
16 Q. Is your wife licensed to do any inspection work?
17 A. She is not.
18 Q. So based on your testimony it's safe to assume
19 you were indirectly i nvolved i n the creation of PMCA?
21 Q. And you tendered your resignation on March 20,
22 2015, is that right?
23 A. Tha t 's true.
24 Q. This is Plaintiff's Exhibit 6. Is this the
l) 25 Pennsylvania Department of State search result for PMCA?

68
1 Does that information look familiar?
2 A. The information looks familiar, yes.
3 Q. Is the registered address also your home address?
5 Q. And what is the entity creation date?
6 A. 3/20/2015.
7 Q. That's the same date that you had tendered your
8 resignation, wasn't it?
9 A. That's right.
10 Q. Is it safe to assume if that's the creation date
11 that you had submitted the paperwork to create this
12 corporation while you were still employed with CCIS?
13 A. Can you restate that?
14 Q. You had testified that you helped create this
15 entity, this corporation, correct?
17 Q. And what was the time limit that you had to wait
18 from the time you filed the paperwork until it was
19 created on 3/20/15?
20 A. Probably around three hours.
21 Q. Three hours. So you had submitted the paperwork
22 three hours before 8:00 a.m. when you tendered your
23 resignation?
24 A. No, I tendered my resignation, then met with my
u 25 attorney, submitted the paperwork later in the day,

69
1 about 12:30.
2 Q. And you were able to get it through and approved
3 all in the same day?
4 A. Yes, sir.
5 Q. Did you have to pull any strings for that?
6 ATTY. WYLAND: Objection, your Honor. I
7 think it's standard practice that the effective date is
8 the date that the registrations are filed.
9 THE COURT: So the basis of your objection
10 is you're offering testimony?
11 ATTY. WYLAND: I guess I will object to the
12 form of the question, because it assumes facts that are
13 A) not in evidence, and B) not true, and C) I thought
14 more universally known, and may be subject to judicial
15 notice for that matter.
16 I'm just saying for the aid of everyone, I
17 think it's the practice of the Department of State that
18 when you file corporate papers they become immediately
19 effective.
20 THE COURT: Do you know that to be true?
21 ATTY. RIFE: I didn't believe so, but if it
22 is, I will accept that.
23 THE COURT: All right. Let's move on.
24 BY ATTY. RIFE:
\..._) 25 Q. Would you say that your indirect involvement in

70
1 establishing this business on March 20th was the kind of
2 indirect competition that that non-compete referenced,
3 creating a competing company?
4 A. I suppose it was.
5 Q. Okay. And you had said, that you're an employee
6 of the company?
8 Q. Would an employee of that company be the kind of
9 competition that this non-compete specifically bars?
10 A. No.
11 Q. Do you have the non-compete in front of you?
12 A. I do. Exhibit 2?
13 Q. Yes. Could you please, at the bottom on "b,"
14 start reading there, the second to last paragraph, it
15 starts with a lower case "b . II
16 A. Directly or indirectly as an employee, agent,
17 consultant, stockholder, proprietor, or otherwise,
18 engage in the business of electrical and building
19 inspection services or related serv i ces.
20 Q. Okay. And business of electrical building
21 inspection services and other related services, is that
22 what PMCA does?
24 Q. While you were in your managerial role with the
l) 25 Chambersburg office did you ever establish any

73
1 Q. Did they leave at the time that you left or
2 shortly thereafter?
3 A. Yes.
4 Q. Did you or anyone from PMCA or any agent of PMCA
5 use CCIS customer lists to solicit their customers?
6 A. No.
7 Q. This is Plaintiff Exhibit 8.
8 Mr. Malot, this is an e-mail correspondence
9 between Bill Definbaugh, Tasha, yourself, Sharon Hamm
10 and Bill Chitister all using either personal or Pa. Code
11 Alliance e-mail addresses, is that correct?
12 A. Can you give me a minute to look at it?
13 Q. Absolutely.
14 A. And your question again, sir?
15 Q. My question is this is e-mail correspondence
16 between Bill Chitister's Comcast e-mail, as well as
17 Sharon Hamm, Natasha, yourself, all from an
18 @pacodealliance e-mail address, is that correct?
20 Q. And your current work e-mail is
21 Clem@pacodealliance.com?
23 Q. Can you go to the fourth sheet of paper in that
24 exhibit.
L1 25 ATTY. WYLAND: Your Honor, before we go

74
1 further, I'd like to have an offer as to what the source
2 of this document was.
3 THE COURT: The source of the document?
4 ATTY. WYLAND: Well, it's not
5 authenticated. It appears to be from e-mail addresses
6 that are not CCIS, so I think it's just a simple
7 question of where did they come from.
8 THE COURT: All right. So your objection is
9 to foundation?
10 ATTY. WYLAND: Yes.
11 ATTY. RIFE: I believe that the witness has
12 testified that yes, these are all his e-mail addresses
13 of him and his other employees.
14 THE COURT: All right. My question is

15 what's the purpose of this?
16 ATTY. RIFE: The purpose of the next question
17 on Page 4, regarding an e-mail from Clem Malot to Sharon
18 Hamm copying Bill and Tasha.
19 THE COURT: All right. Counsel, I share
20 your concern regarding foundation. I'm also wondering
21 if this is just not purely hearsay, other than perhaps
22 Mr. Malot's portions, so what is the purpose of the
23 e-mail, so that the Court can determine if it is, in
24 fact, hearsay?
u 25 ATTY. RIFE: I would like Mr. Malot to read
• " ••• • • • • • • • · • • Oo O ••M•o • • · 0 0 • 0 0 • • • • 0 • • - - • • • ' " • • o Oo •··•

75
1 particularly the e-mail on Page 4 that he had sent to
2 those individuals, in which he references lists taken
3 from CCIS.
4 THE COURT: So the purpose of the e-mail is
5 what? What are you trying to prove?
6 ATTY. RIFE: To establish that Mr. Malot had
7 in his possession on April 10th of 2015 lists of CCIS's
8 municipalities.
9 THE COURT: All right. So then you really
10 don't need all of these other e-mails, all you really
11 need is the one from Mr. Malot, correct?
12 ATTY. RIFE: Absolutely. If counsel would
13 prefer, we could rip that off and just use that page.
14 ATTY. WYLAND: Maybe I'll do it this way:
15 I move to strike everything except for the e-mail he's
16 referring to at the bottom of Page 4 of the exhibit,
17 which is dated April 10th and appears to be from Mr.
18 Malot.
19 THE COURT: Your motion is granted.
20 THE WITNESS: And your question again, I'm
21 sorry.
22 BY ATTY. RIFE:
23 Q. Yes, my question is can you please read the
24 e-mail that you had sent there on the top of Page 4,
u 25 beginning with, Glad you asked. Bedford and Blair

76
1 Counties.
2 A. Glad you asked. Bedford and Blair Counties.
3 Mailing addresses only, and only for those
4 municipalities in Bedford and Blair. He can add board
5 of supervisors or town council, as he sees appropriate.
6 The list should only be current CCIS municipalities.
7 You can contact "young Bill" to see if you wants it as a
8 Word document or Excel, but it is okay to share. I have

9 done business with him for years and there will be no
10 problem with using it for our support.
11 Q. Who is "young Bill?"
12 A. Young Bill Definbaugh.
13 Q. What does he do?
14 A. He's an engineer-in-training.
15 Q. Engineer-in-training.
16 This is Plaintiff's Exhibit 9. It's an article
17 from the Fulton County New~, dated April 2, 2015. Can
18 you please read, Mr. Malot, the second to last paragraph
19 beginning with, "In other business."
20 A. In other business, the supervisors reviewed
21 correspondence from Clem Malot advising that he is no
22 longer employed with Commonwealth. And there's a
23 break. Do you want me to continue beyond the break?
24 Q. Yes, please.
25 A. Code Inspection, CCIS, is forming his own

79
1 Q. Can you remember any of them?
2 A. There's around 30.
3 Q. Can you shoot me some names out, the ones you
4 remember?
5 A. We operate the Health Department for the Borough
6 of Chambersburg; work for Borough of Gettysburg; New
7 Oxford Borough, Hamilton Township, Adams County. Ogle
8 Township, Somerset County. North Woodberry Township,
9 Blair County.
10 Q. Of the ones you just listed how many of them were
11 CCIS customers?
12 A. All of them.
13 Q. Does PMCA do work for Green Township here in
14 Franklin County?
15 A. No.
16 Q. What about South Hamilton Township?
17 A. In which county?
18 Q. In Franklin?
19 A. Not that I'm aware of.
20 Q. What about the Borough of Gettysburg?
21 A. Yes.
22 Q. And you had said that PMCA does service the
23 Chambersburg Borough?
24 A. Health Department, yes.
u 25 Q. Health Department?

80
1 Q. When did PMCA, if you recall, get that Health
2 Department contract?
3 A. I believe it was the 27th of March .
4 Q. Next up we have Plaintiff's Exhibit 10. Do you
5 recognize this letter?
6 A. I do.
7 Q. Did you sign this letter?
8 A. I did.
9 Q. Did you send this to the Borough Council of
10 Mifflintown Borough?
11 A. I did.
12 Q. And i t ' s true that in t hi s letter you instructed
13 them on how to question their sol i citors to determine
14 whether the contract was exclusive with CCIS and
15 instructed them on providing an i mmediate notice of
16 their 90-day termination, is that correct?
17 A. I think I exactly said, as with any change of
18 professional services I would suggest that you work with
19 your solicitor to transition.
20 Q. Is the 90 - day, was that -- is that a universal
21 constant amongst all third party agenc i es?
22 A. No, but it's fairly common.
23 Q. It's fairly common.
24 Were you aware that CCIS had that 90-day policy?

I"
\_) 25 A. I was.

81
1 Q. And were you aware of the municipalities that
2 received this letter were CCIS customers?
3 A. I was.
4 Q. And in your capacity as manager and overseeing
5 this region were you familiar with CCIS's contracts that
6 were between the municipalities and CCIS?
7 A. Basically.
8 Q. So you tendered your resignation, i t was sent --
9 the e-mail stamp I've seen looks to be around 8:00 in
10 the morning, on Friday, March 20th, I take it -- did you
11 leave work at the normal time that Thursday beforehand?
12 A. Work for me at normal time can be --
13 Q. Point very well taken.
14 What time did you leave work Thursday night?
15 A. I have no idea.
16 Q. Were you in the office at all first thing on
17 Friday morning?
18 A. I was.
19 Q. You were at the Chambersburg CCIS office Friday
20 morning?
21 A. Yes.
22 Q. Okay. At what point did you decide to take the
23 Chambersburg Borough Health Inspection laptop?
24 A. I don't understand that question at all. I

~-
L) 25 didn't take the Borough of Chambersburg Health

83
1 letter previously to China Buffet or any other local
2 restaurant that was communicated and sent out signed by
3 you prior to the 27th?
4 A. No .
5 Q. That would not surprise you?
6 A. No, China Buffet had been an on-going enforcement
7 problem for CCIS and the Health Department.
8 Q. So you had sent out a letter to China Buffet
9 between the date you left CCIS and the date that you
10 received the health code contract?
11 A. No, I don't believe.
12 Q. Okay. Is it true that you had a number of CCIS
13 employees under your supervision sign a confidentiality
14 or non-disclosure agreement between you and those
15 employees?
16 A. I did.
17 Q. In order to prevent them from providing
18 information to the main office?
19 A. That's not true.
20 Q. It's not true?
21 A. I did have them sign non-confidentiality -- if I
22 said that right -- agreements so that we could discuss
23 my buy-out.
24 Q. Did you receive permission from ccrs to be able

,.
~-) 25 to discuss that buy-out with them?

84
1 A. No.
2 Q. This is Plaintiff Exhibit 4. This is the mutual
3 non-disclosure agreement. Did you sign that document?
4 A. I did.
5 Q. In your opinion, you informing your employees of
6 this matter in which you signed a mutual non-disclosure
7 would that have been a violation of that agreement?
8 ATTY. WYLAND: Objection, relevance. I
9 think now he's talking about a separate agreement that's
10 not even part of this action.
11 THE COURT: I think it calls for a legal
12 conclusion.
13 ATTY. WYLAND: And that, too.
14 THE COURT: Sustained.
15 ATTY. WYLAND: Thank you.
16 BY ATTY. RIFE:
17 Q. Why did you feel it necessary to discuss with
18 your employees under your supervision the fact that you
19 were in the process of negotiating to buy part of CCIS?
20 A. The nature of what we do affects a tremendous
21 amount of people in the case of all of us. It affects
22 the entire Franklin County, and as we've heard from
23 previous testimony, most of South Central Pennsylvania.
24 Just the fact that there was an offer to buy/
L,1 25 offer to sell negotiation on the table, that needed to

87
1 I am negotiating to a buy our part of the company from
2 CCIS. Whether it happens(purchase) or not, I will be
3 looking for all bodied help that is interested in
4 working with me to let me know.
5 So why -- the people that did not sign your
6 non-disclosure -- why would they be aware of these
7 negotiations occurring?
8 A. Because if you read my non-disclosure, each time
9 I had communication with them, when I felt it was
10 important to keep it confidential, there was a provision
11 in that non-disclosure to have an addendum that would
12 mention whatever our specific conversation was.
13 At this point, because I had resigned and because
14 I felt that -- I just felt no need at that point to
15 continue with the non-disclosures.
16 Q. And the language that you used, whether it
17 referring to the purchase, happens or not, you're
18 looking for able-bodied people -- would you feel that
19 that counts as soliciting CCIS employees to quit and
20 come work with PMCA?
21 A. I would.
22 Q. Were any of those employees that you solicited
23 uniquely gifted in their chosen profession?
24 A. I think anybody that does this kind of work is

,.
u 25 uniquely gifted.

•
EXHIBIT
t\
'-
2114/2018 8:49:09 A~1 Safq;u:,rd Propcr1i<-s Inc.

CCIS 037352
From: Peter Schilling (mailto:pete8®ptd.net)
Sent: Monday, May 14, 2018 9:0'1 PM
To: 'Motts, Kimberly'
Cc: Heather M. Hunter; Wendy
Subject: RE: 1082795091 - 109 PALMER ST FAIRHOPE, PA
Good Evening,
I am sorry that I cannot help you out. This is not in a municipality that we represent, nor did we post this notice.
We have previously informed Safeguard Properties of this.
This notice had the phone number and address of our Bedford Office on it. It appears to be part of company
property that was removed from our Bedford office in March 2015, without our knowledge or approval. The first
signatory, R. Clem Malot is a former employee that left CCIS on March 20, 2015. The second signatory, C. A. Bowman,
has never worked for us.
Any.information you may have or acquire about who is posting our notices would be greatly appreciated. We
do not take it lightly when unauthorizes persons take ~fficial legal actions, using our company information or property,
without our approval.
Thank You,
Peter Schilling
President
Commonwealth Code Inspection Service
from: Motts, Kimberly <kimberly.motts@reoexperts.net>

Sent: Monday, May 14, 2018 10:15 AM
To: pete8@codeservices.net
Subject: 1082795091 - 109 PALMER ST FAIRHOPE, PA
Good Morning,
I am hopin~ you are the correct person who could help me with the attached violation.
NRT is handling this property on behalf of the owner, JPMorgan Chase Bank. Our intention is the sell this property "as is"
with a hold harmless agreement and the buyer will be responsible for bringing the deck into compliance or tearing
down.
Please advise if this would be acceptable.
CCIS 037353
Thank.you!
K_im Mot.ts ] Title Curative C:oordinator I NRT REOExperts LLC I 6365 N.W. 6th Woy, Suite 200 l Fort Lauderdale. FL
33309 I (215) 536-8826 Direct Phone I (937) 535-0058 Fax I Email: kimberly.motts@reoexperts.net I visit us at
http://v-,ww.reoexperts.net
This email may be confidential. If you are not the intended recipient, please notify us immediately and delete
this copy from your system.
2
CCIS 037354
From: Motts, Kimberly (mailto:kimber1y.motts@reoexperts.net]
Sent: Tuesday, May 15, 2018 8:50 AM
To: Peter Schilling
Cc: Heather M. Hunter; Wendy
Subject: RE: 1082795091 - 109 PALMER ST FAlRHOPE, PA
Wow ! That is terrible !! So there are no violations against this property currently?
Thanks!
Kim Motts I Title Curative Coordinator I NRT REOExperts LLC I 6365 N.W. 6th Woy, Suite 200 I Fort Lauderdale. FL
33309 I (215) 536-8826 Direct Phone I (937) 535-0058 Fax I Email: kirnberly.motts@reoexperts.net I visit us at
http:ljv.rww.reoexperts.net '
From: Peter Schilling [mai1to :pete8@ptd .net]

Sent: Monday, May 14, 2018 9:04 PM
To: Motts, Kimberly <kimberly.~otts@reoexperts.net>
Cc: Heather M. Hunter <hhunter@cgalaw.com>; Wendy <Wendy@commomvealthcode.com>
Subject: RE: 1082795091 • 109 PALMER ST FAIRHOPE, PA
Good Evening,
I am sorry that I cannot help you out. This is not in a municipality that we represent, nor did we post this notice.
We have previously informed Safeguard Properties of this.
. .
This notice had the phone number and address of our Bedford Office on it. It appears to be part of company
property that was removed from our Bedford office In March 2015, without our knowledge or approval. n,e first
signatory, R. Clem Malet is a former employee that left CCIS on March 20, 201S. The second signatory, C. A. Bowman,
has never worked for us.
Any information you may have or acquire about who is posting our notices would be greatly appreciated. We
do not take it lightly when unauthorizes persons take official legal actions, using our company information or property,
without our approval.
Thank You,
Peter Schilling
CCIS 037355
President
Commonwealth Code Inspection Service
, From: Motts, Kimberly <kimberly.motts@reoexperts.net>

Sent: Monday, May 14, 2018 10:15 AM
To: pete8@codeservices.net
Subject: 1082795091 - 109 PALMER ST FAIRHOPE, PA
Good Morning,
I am hoping you are the correct person who could help me with the attached violation.
NRT is handling this property on behalf of the owner, JPMorgan Chase Bank. Our intention is the sell this property "as is"
with a hold harmless agreement and the buyer will be responsible for bringing the deck into compliance or tearing
down.
Please advise if this would be acceptable.
Thank you!
Kim Motts I Title Curative Coordinator I NRT REOExperts LLC I 6365 N.W. 6th Way, Suite 200 I Fort Lauderdale, fl
33309 I {215) 536-8826 Direct Phone I (937) 535-0058 Fax I Email: kimberly.motts@reoexperts.net I visit us at
http://www.reoexperts.net
This email may be confidential. If you are not the intended recipient, please notify us immediately and delete
this copy from your system.
2
CC!S037356
APPENDIX OF
PUBLISHED
CASES
(0t lso;o111 l I
Centennial Lending Group, LLC v. Seckel Capital , LLC, Not Reported in Atl. Rptr. (2017)
2017 WL 4861625
Susan Meitner is the president and chief executive officer

of Centennial. a residential mortgage broker whose
2017 WL 4861625
potential cust~mers include potential borrowers and
Only the Westlaw citation is currently available.
referral sources-that is, prior customers and real estate
NON-PRECEDENTIAL DECISION-SEE
agents acting to buy or sell a home. N.T., 2/4/16, at 9,
SUPERIOR COURT 1.O.P. 65.37
65--{56. When Centennial first began operations, it did not
Superior Court of Pennsylvania.
have its employees sign any agreements addressing
CENTENNIAL LENDING GROUP, LLC, Appellee confidentiality. Id. at 79 . Subsequently, in 2013 ,
V. Centennial asked some of its then-current employees,
SECKEL CAPITAL, LLC, Appellant including Celeste Spadaccini,2 one of Centennial ' s loan
officers, to acknowledge receipt of a handbook with a
No. 822 EDA 2016 confidentiality provision and to sign a document with a
I confidentiality clause. Id. at 80; R.R. at 28a- 29a. 3
FILED OCTOBER 26, 2017
John Seckel is the president of Seckel Capital, another
mortgage broker. During the summer and fall of 2015 ,
Appeal from the Order Entered February 12, 2016, In the Centennial had twenty-two loan officers. N.T., 2/3/16, at
Court of Common Pleas of Philadelphia County, Civil 45 ; R.R. at 913a. That summer, Seckel hired six of
Division at No(s): October Tenn, 2015 No. 01023 Centennial's loan officers and one of its loan processors.
BEFORE: SHOGAN, J. , SOLANO, J., and PLATT, J: N.T .. 2/4/16. at 26, 13 I. Mr. Seckel personally recruited
two ·o f thos~ loan officers and reached out to others at
Centennial. Id. at 125-26. The six loan officers hired by
MEMORANDUM BY SOLANO, J.: Seckel comprised almost 30% of Centennial's loan
officers. Additionally, after Centennial " let go" two other
loan officers. Seckel hired them. Id. at 49, 131. Mr.
*1 Appellant, Seckel Capital, LLC, appeals from the
Seckel also' interviewed three other Centennial
order granting a preliminary injunction in favor of
employees, including a loan officer, but decided not to
Appellee Centennial Lending Group, LLC on its claim of
hire them. Id. at 138-39. As discussed in further detail
unfair competition. We conclude the record supports the
below. Mr. Seckel also interviewed and offered a job to
trial court's issuance of a preliminary injunction; but
Spada~cini, who declined the offer. Centennial contends
because the trial court failed to order the filing of a bond,
that it lost $500.000 in the fourth quarter of 2015, after
we are constrained to vacate the order and remand with
$70 million of its business went to Seckel as a result of
instructions to reissue the preliminary injunction with a
Seckel's hiring of its employees. Id. at 58-59.
bond requirement.
*2 Ed Walsh, a Seckel vice president and branch
In October 2015. Centennial sued Seckel, presenting
manager, is one of the six former Centennial loan officers
claims for misappropriation of trade secrets under the
who \l:as hired by Seckel. Shortly after midnight on
Pennsylvania Unifonn Trade Secrets Act ("PUTSA" ), 1
February 4, 2016, the second day of the hearing, Walsh
conversion. tortious interference with contract, aiding and
e-mailed Meitner and Steven Winokur, another
abening b;each of a fiduciary duty, unfair competition,
Centennial employee, from his non-work account. N.T. ,
and tortious interference with business relations.
2/4/16, at 64-65 , 68 . The e-mail stated that if Centennial
Centennial also moved for a preliminary injunction.
did not pay Walsh compensation to which he claimed to
Centennial requested an order mandating ( l) the return
be entitled, Walsh would destroy Centennial:
and destruction of confidential infonnation of Centennial
that was in the possession of Seckel, (2) that Seckel be
enjoined from acquiring more ofCentennial's confidential
information, and (3) that Seckel be prohibited from The clock is ticking. You have 3
soliciting Centennial' s employees for employment. Trial days to pay me in full or i will
Ct. Op. at 2. unleash the wolves. My money is
too long for you. Time is to short I
The court held a two-day evidentiary hearing on the will destroy your company .... Period
motion on February 3-4, 20 I 6, at which the following pay what you owe or its game over.
was established. 1 have more in cash in my fucking
safe, then your entire family has all
WESTLAW ©2019 Thomson Reuters . No claim to original U.S. Government Works . 1
Centennial Lending Group, LLC v. Seckel Capital, LLC, Not Reported in Atl. Rptr. (2017)
2017 WL 4861625
in. Wrong man to play games with. Spadaccini, Farhat suggested that if she brought her
Pay what you owe or it game over. laptop , Seckel would be able to extract the information
Final warning I' m undefeated in from Encompass. Id. at 103 , 106.
court!!!!
A few days later, Spadaccini again met with Farhat, and
she brought her laptop with her. N.T., 2/4/16, at 106; R.R.
at 286a. At that second meeting, Spadaccini used her
Centennial's Ex. 59; R.R. at 964a (punctuation and password to sign into Encompass, and Farhat used the
spelling as in original).' laptop to ';create those reports," N.T., 2/4/16, at 106, that
is, the spreadsheets containing the customer information.
That same morning of February 4 , 2016, Walsh also Spadaccini' s laptop was used to e-mail the ·spreadsheet
posted on his Facebook5 page: "FYI, if you burn me, I reports from Spadaccini's personal e-mail account to Mr.
will destroy you, period. Money is long. Time is short, Seckel. Id. at 107; see Exs. 4 & 5 to Centennial Ex. 44 ,
and it did say CLG [Centennial) tick-tock to [sic] ." N.T. , R.R. at 930a-50a (copies of the e-mails and spreadsheet
2/4/16, at 70. 6 Meitner is not a Facebook ;'friend" with reports at issue). 1 Spadaccini denies personally sending
Walsh, bu_t Meitner' s assistant viewed the post and those e-mails, however. N.T. , 2/4/16, at 120. Mr. Seckel
notified her of its content. N.T., 2/4/16, at 70. 7
testified that the reports he received contained
Spadaccini' s customer list. Id. at 144.' Mr. Seckel also
A portion of the hearing was devoted to Secker s attempt testified that although he deleted the e-mails upon
to hire Spadaccini and to gain access to Centennial receiving them, he was able later to recover the deleted
information on Spadaccini's laptop computer. Centennial e-mails. Id. at 155; R.R. at 917a-18a.
typically issued laptops to its mortgage brokers. N.T.,
2/4/l 6, at 114. A broker could electronically store a On February 12 , 2016, the trial coun issued an injunction
summary of a customer's personal and financial that included the following terms:
information for networking and potential future business
purposes in a customized database accessible on the I. Seckel shall not solicit employees of Centennial,
laptop through software named "Encompass". Id. at 104; until the conclusion of this action.
N.T., 2/3/16, at 72-73; R.R. at 27a, 196a, 215a. The
laptop also could be used to access Centennial's customer 2. This Order does not prevent employees of
relationship management software, called "Mortgage Centennial from applying for employment at Seckel.
Returns," in which a broker could enter customer names
and other personal information, such as birthdays, for 3. If such an employee is hired, Seckel shall contact
marketing purposes. N .T., 2/3/16, at 21, 86 ; N.T . 2/4/16, counsel for both .parties immediately upon the
at 112; R.R. at 321 a-22a. The programs appear to be acceptance of an offer of employment, so that both
integrated with each other, and information is easily parties can manage the transition of the employee and
shared between the two. Ex. 1, Suppl. Deel. of Meitner, at of any information.
~ 11 , 11/13/15, to Centennial's Reply Brief in Further
Supp. of Centennial's Pet. for a Special and/or Prelim. Order, 2/12/16. The order did not restore Centennial's
Inj ., I 1/19/_15, R.R. at 322a. control over its confidential business records, including
Spadaccini' s customer list. 10 However, Seckel's counsel
*3 In late August and early September of 2015, Seckel agreed to return that list to Centennial. N. T. , 2/3/16, at
contacted Spadaccini and extended a job offer to her, 17-18.
which Spadaccini initially accepted (though she later
changed her mind and rejected the offer). N.T., 2/4/16, at Seckel timely appealed. The trial court filed an opinion on
98- 99, 101. Spadaccini met with Mr. Seckel and Nabil June 30, 2016, that briefly explained its rationale for
Farhat, Seckel's chief financial officer. At that meeting, granting injunctive relief. The coun stated that the
Spadaccini expressed concern that she would be unable to "injunction is designed to prevent disclosure of
start working for Seckel immediately "because it would confidential records belonging to Centennial until the
be very labor-intensive to extrapolate four years of conclusion of a law case now at the pleading stage." Trial
business. I had four of my best years at Centennial Ct. Op. at 1. It continued:
Lending. I closed $125 million of business. To pull all of
that documentation out, I was a little concerned that l Testimony at the preliminary injunction hearing made
wouldn 't be able to do it." Id. at 103. Spadaccini was clear that Centennial has a likely chance of success at
referring to the customer relationship information that she trial and that some of the actions Seckel has undertaken
accumulated at Centennial. Id. at 104. According to are manifestations of bad motive to permanently harm,
WESTLAW © 2019 Thomson Reuters . No claim to original U.S. Government Works . 2

2017 WL 4861625
if not destroy, Centennial's business. These actions Seckel's Briefat 3.

included soliciting Centennial employees to divulge
confidential information directly from computer hard Our standard of review follows:
drives and systematic solicitation of Centennial
employees to leave [C)entennial, work for Seckel and
then divulge their old company's confidential work
product. Our review of a trial court ' s order
granting or denying preliminary
*4 ... tnJunctive relief is highly
deferential. ... [We] examine the
[T]he harm taking place is both immediate and record to detennine if there were
irreparable. This injury cannot be compensated fully by any apparently reasonable grounds
monetary damages. for the action of the court below.
If followed, the order properly restores Centennial to its WMJ Grp., Inc. v. Fox, 109 A.3d 740, 747-48 (Pa.
former control over its own confidential business Super. 2015). 12 More specifically:
records.E111
A trial court has apparently reasonable grounds for
granting the extraordinary remedy of preliminary
injunctive relief if it properly finds that all of the
Centennial is entitled to equitable protection and the essential prerequisites are satisfied.
transcript record reveals worrisome animus by some
Seckel personnel against Centennial's president. There are six essential prerequisites that a party must
establish prior to obtaining preliminary injunctive
Trial Ct. Op. at 2-3. relief. The party must show: I) that the injunction is
necessary to prevent immediate and irreparable hann
After Seckel appealed, Centennial filed an unopposed that cannot be adequately compensated by damages;
motion to set bond for the preliminary injunction. Seckel 2) that greater injury would result from refusing an
apparently agreed that the court must impose a bond. injunction than from granting it, and, concomitantly,
Centennial's Mot. to Set Bond for Preliminary lnj ., that issuance of an injunction will not substantially
11/16/16, {It 3 ("Counsel for Centennial has conferred harm other interested parties in the proceedings; 3)
with counsel for Seckel, who agrees that the Court must that a preliminary injunction will properly restore the
impose a bond requirement"). The court scheduled parties to their status as it existed immediately prior
argument for June 19, 2017. After argument, without to the alleged wrongful conduct; 4) that the activity it
explaining its decision, the court denied the motion to set seeks to restrain is actionable, that its right to relief is
bond, without prejudice. Order, 6/22/17 . clear, and that the wrong is manifest, or, in other
words, must show that it is likely to prevail on the
On appeal, Seckel raises the following issues: merits; 5) that the injunction it seeks is reasonably
suited to abate the offending activity; and, 6) that a
I . Whether the trial court properly entered a preliminary injunction will not adversely affect the
preliminary injunction when Centennial ... failed to public interest. The burden is on the party who
present concrete evidence supporting that it would requested preliminary injunctive relief.
suffer irreparable harm if solicitation was not
prohibited? *5 ... Simply, the moving party must establish a prima
facie right to relief. If the moving party's right to relief
2. Whether the trial court properfl]y entered a is unclear, then a preliminary injunction should not
preliminary injunction when Centennial failed to issue.
establish that it had a likelihood o[t] ... success o[n] the
merits of its unfair competition claim? Synthes USA Sales, LLC v. Ha"ison , 83 A.3d 242 ,
249- 50 (Pa. Super. 2013) (citations, quotation marks, and
3. Whether the trial court properly entered a footnote omined). Seckel's issues contest only the first
preliminary injunction without requiring Centennial to and fourth prerequisites. ·
post a bond?
WESTLAW © 2019 Thomson Reuters . No claim to original U.S . Government Works . 3

2017 WL 4861625
*6 If before a trial on the merits,

Seckel makes a mortgage loan to
any person listed on a customer list
that is determined to be improper,
Irreparable Harm then Centennial can easily prove
that Seckel made a Joan to such
In justifying the injunction, the trial court inferred
customer and calculate the Jost
irreparable harm from Seckel ' s past actions, which
revenues from any such loan.
" included soliciting Centennial employees to divulge
Given that most customers do not
confidential information directly from computer hard
come back for a new mortgage loan
drives and systematic solicitation of Centennial
for five to ten years, it is unlikely
employees to leave [C]entennial, work for Seckel and
that there could be a large quantity
then divulge their old company' s confidential work
of loans that Seckel could make
product." Trial Ct. Op. at 2. In evaluating the trial court's
using any allegedly improperly
assessment of irreparable harm, we apply the
obtained customer list. Thus, the
aforementioned deferential standard of review. WM/
use of Ms. Spadaccini 's customer
Grp. , 109 A.3d at 747--48; accord, Summit Towne
list until that case goes to trial,
Centre, Inc. v. Shoe Show of Rocky Mount, Inc. , 573 Pa.
could not cause Centennial to go
637, 828 A.2d 995, 1000--01 (Pa. 2003).
out of business ....
In challenging Centennial's showing of irreparable harm,
Seckel begins with the premise that a preliminary
injunction should issue only if the "threatened monetary Seckel's Brief at 14. Therefore, according to Seckel, ;;the
loss is so great as to threaten the existence of the alleged harm Centennial would suffer if Seckel solicited
business." Seckel's Brief at 12 (quoting Three County its employees or hired its employees without restricting
Servs., Inc. v. Phi/a. Inquirer, 337 Pa.Super. 241, 486 what documents the employees could take, can be
A.2d 997, I00 I (Pa. Super. 1985)). Seckel points out that adequately compensated by money damages," and no
the court ' s order did not instruct Seckel to return or preliminary injunction should have issued. Id. at 15.
destroy any allegedly misappropriated Centennial
documents. Id. The order also did not prohibit Seckel Centennial counters that it introduced evidence that
from using such documents. Id. Thus, according to Seckel actively recruited almost 30% of its sales force ,
Seckel, the trial court's opinion ;;suggests that [it] found which directly resulted in reduced revenue. Centennial's
that irreparable harm would be caused by the hiring of Brief at 14. Centennial emphasizes that Seckel's chief
additional employees of Centennial who were not financial officer obtained confidential information from
restricted from talcing unspecified documents from Spadaccini's laptop. Id. at 14-15. Thus, Centennial
Centennial." Id. at 13 . reasons that because its loss is more than solely a
monetary loss, Seckel's reliance on Three County Servs. ,
Building on that suggestion, Seckel contends that is misplaced. Id. at 16. Centennial posits that the facts of
Centennial failed to adduce sufficient evidence of this case are more akin to Kessler v. Broder, 851 A.2d
monetary loss from Seckel's past hiring of 30% of 944 (Pa. Super. 2004), in which we recognized that under
Centennial's loan officers. Seckel's Brief at 13 . In existing case law, "the impending loss of a business
Seckel's view, Centennial's contention that it lost opportunity or market advantage may aptly be
$500,000 in the fourth quaner of 2015 , after $70 million characterized as an ;irreparable injury' for ... the purpose
of business went to Seckel, is in tension with Centennial's of a preliminary injunction." Id. (quoting Kessler, 851
assertion, in one of its pleadings, that Centennial was one A.2d at 9 5 I ).I• Centennial also points out that even if the
of the ;'fastest growing private companies in America." monetary loss is small, it ';foreshadows the disruption of
Id. at 14 (citing R.R. at 376a). established business relations which would result in
incalculable damage should the competition continue .... "
Seckel then shifts to whether irreparable harm could flow Id. at 17 (quoting West Penn Specialty MSO, Inc. v.
from any use of Spadaccini 's customer list.i~ Seckel's Nolan , 737 A.2d 295, 299 (Pa. Super. 1999)).
argument necessarily presumes that the customer list is a
trade secret, though Seckel does not concede that point. In Nolan , this Court observed that ;;the purpose sought to
Seckel argues: be achieved by the issuance of a preliminary injunction is
the avoidance of irreparable injury or gross injustice until
the legality of the challenged action can be detennined."

2017 WL 4861625
Nolan. 737 A.2d at 299 (quotation marks and citation Pa. , 104 A.3d al 594-95.
omitted). The Court affinned the issuance of preliminary
injunctive relief because, among other reasons, the
defendant' s departure from the plaintiff to work for a
competitor damaged the plaintiffs existing cu~to~er
relationships and substantially undercut the plamuffs
competitiveness. Id. We agreed that even if a mo~e~ary
loss is small or unascertainable, irreparable mJury Likelihood of Success on Centennial's Unfair
nevertheless may result from the disruption of established Competition Claim
customer relationships, as well as a potential loss of a
*8 Seckel's initial premise is that Centennial failed to
business opportunity or market advantage. Id.
establish that Spadaccini's customer list was confidential
or a trade secret. Seckel's Brief at 17, 21. Furthennore,
*7 Here. as in Nolan, Seckel's contention that the
Seckel argues, Centennial had no enforceable
monetary loss is relatively minimal or unascertaina~le
confidentiality agreement with its employees. Seckel
does not negate the irreparable harm caused by tts
concedes that Spadaccini signed a confidentiality
conduct. The hann flows from the disruption of
agreement over a year after Centennial hired her, but
established customer relationships and loss of potential
insists that a lack of consideration renders that agreement
business opportunities should improper competition
unenforceable. Id. at 21 . Thus, it appears Seckel is
continue. The record set fonh above supports a
arguing that no unfair competition claim could lie when
conclusion that Seckel's hiring of almost one-third of
the information at issue is not protected by a contract or
Centennial's loan officers resulted in an immeasurable
other source of legal redress. Id. at 17, 20-21. Seckel
loss of business opportunities and market advantage.
bolsters its argument by summarizing the trial court's oral
findings that it was unclear to the court whether the
We also note that irreparable harm will have resulted if
information at issue was confidential. Id. at 23- 24.
Spadaccini's customer list is ultimately detennined __to be
Centennial ' s trade secret.is Under the PUTSA, a "'trade
Seckel argues that Centennial failed to demonstrate that it
secret" is defined to include a "customer list," provided it
offered Spadaccini a job solely for the purpose of
is subject to , among other conditions, efforts to "maintain
obtaining Centennial ' s customer list. Seckel references
its secrecy." 12 Pa.C.S. § 5301 . Injunctive relief may
Spadaccini' s own testimony that she--not
issue if there is an actual or threatened misappropriation
Seckel-wanted to bring the customer list and that Seckel
of such a trade secret. Id. § 5303(a). "Misappropriation"
did not hire her for the list. Seckel's Brief at 24- 25 .
is defined as either ;;acquisition of a trade secret of
Spadaccini was not aware, according to Seckel, whether
another by a person who knows or has reason to know
she was subject to a confidentiality provision. Id. at 25 .
that the trade secret was acquired by improper means," or
Seckel argues that the record was wtrebutted that it never
" disclosure or use of a trade secret of another without
asked any Centennial employee that Seckel hired to take
express or implied consent .... " Id. Notably, ;;use" is not a
away Centennial documents and bring them to Seckel. Id.
required element of either definition. See id. ; Synthes,
Seckel reiterates that Centennial has not established that
Inc."· Emerge Med., Inc., 25 F.Supp.3d 617, 712 {~.D.
Seckel (I) was aware of any alleged wrongdoing by any
Pa. 2014 ). 16 The PUTS A's protection of trade' secrets 1s a
Centennial employee; (2) possessed or used any of
statutory mandate, and the Supreme Court has held ;'.that
Centennial's allegedly confidential information; and ~3)
where the offending conduct sought to be restrained
hired Centennial's employees for the purpose of hanrung
through a • preliminary injunction violates a s~tuto~
Centennial. Id. at 26. With respect to the last point, Seckel
mandate. irreparable injury will have been estabhshed:
notes that it had interviewed but declined to hire three of
SEIU Healthcare Pa. v. Commonwealth , 628 Pa. 573 ,
Centennial's employees. Id. 19
104 A.3d 495, 508 (Pa. 2014) (collecting cases)."
In response, Centennial notes that it presented six claims
Our review of the record supports the trial court 's
against Seckel, but that Seckel has limited its_ c~alle~ge to
conclusion that Seckel solicited Spadaccini, accessed her
onlv the unfair competition claim. Centenmal's Bnef at
Centennial laptop to retrieve her customer list, and
I 8.. In Centennial's view, Seckel waived "[a]ny challenge
e-mailed the list to Mr. Seckel. N.T., 2/4/16, al 120."
10 Centennial's likelihood of success on any [of] the five
Therefore. if Centennial can prove that Seekers
other claims that independently support the trial court ' s
acquisitio~ of Spadaccini 's custom~r list violate_s . the
injunction." Id. -io Further, Centennial mai_ntains . that th~
PUTSA. the requirement of irreparable mJury
record established that Seckel " [s]ystemat1cally induced ..
automatically will have been satisfied. SEIU Healthcare
30% of Centennial's employees to leave with the purpose
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2017 WL 4861625
of crippling or destroying Centennial. Id. at 18-19. purpose of such enticement is to

Centennial highlights Seckel's improper pursuit of cripple and destroy an integral part
Spadaccini and access of her Centennial laptop to obtain of a compeuuve business
information that Centennial insists qualifies for trade organization rather than to obtain
secret status. Id. at 19, 22. the services of particularly gifted or
skilled employees. Further, when
As set forth above, a court should issue a preliminary the inducement is made for the
injunction only if the moving party has established, purpose of having the employees
among other things, a prima facie right to relief. Synthes commit wrongs, such as disclosing
USA Sales, 83 A.3d at 249-50. The Court in Synthes their former employer' s trade
explained: secrets or enticing away his
customers, the injured employer is
entitled to protection.
*9 To establish a reasonable
probability of success on the
merits, the moving party must Id. at 212 (citations and quotation marks omitted)
produce sufficient evidence to (affirming jury verdict finding defendant liable for,
satisfy the essential elements of the among other claims, unfair competition). "[W]hen a
underlying cause of action. company hires essentially all of the sales/marketing staff
Whether success is likely requires of one agency, the purpose in doing so is to induce the
examination of legal principles clients of that agency to move their business with that
controlling the claim and potential sales force ." B.G. Balmer & Co. v. Frank Crystal & Co.,
defenses available to the opposing Inc. , 148 A.3d 454,466, 472 (Pa. Super. 2016) (affirming
party. The mere possibility that the award of punitive damages following plaintiffs
claim might be defeated does not successful verdict on, among other claims, Wlfair
preclude a finding of probable competition), appeal denied, 2017 WL 1015542, 169
success if the evidence clearly A.3d 9 (Pa. Mar. 4, 2017).
satisfies the essential prerequisites
of the cause of action. Seckel's first argument-that the contested information is
not a protectable trade secret-assumes that an unfair
competition claim is limited in scope. But to succeed on
an unfair competition claim, Centennial was not limited to
Id. at 250 n.4 (citation omitted). demonstrating that Spadaccini' s customer list was
confidential or a trade secret. See Reading Radio, 833
Initially, we note that a common law unfair competition A.2d at 212. Similarly, it was unnecessary for Centennial
claim is relatively broad in scope and is not limited to the to establish that Seckel had the intent of hiring Spadaccini
misappropriation of trade secrets. Pennsylvania State for the customer list. See id. Centennial, as Seckel
Univ. v. Univ. Orthopedics, Ltd. , 706 A.2d 863 , 867 (Pa. recognized in its brief, Seekers Brief at 26, could succeed
Super. 1998) (" A claim of unfair compet1t1on in its unfair competition claim by establishing that Seckel
encompasses trademark infringement, but also includes a hired Centennial's employees with the intent of harming
broader range of unfair practices, which may generally be Centennial.
described as a misappropriation of the skill, expenditures
and labor of another" (citation omitted)). In Reading Recognizing our highly deferential standard of review,
Radio, Inc. v. Fink, 833 A.2d 199 (Pa. Super. 2003), WM/ Grp. , 109 A.3d at 747-48 , the record supports the
appeal denied, 577 Pa. 723, 847 A.2d 1287 (Pa. 2004), trial court' s issuance of a preliminary injunction. As noted
this Court explained : above, Seckel acknowledged hiring one of Centennial's
loan processors and six out of Centennial's twenty-two
loan officers, or almost 30%. N.T, 2/4/16, at 26, 131. Of
Offering employment to another those six, Mr. Seckel personally recruited two, and he
company' s at-will employee is not reached out to other Centennial employees. Id. at 125-26.
actionable in and of itself. Seckel also hired two fonner Centennial loan officers
However, systematically inducing after they were "let go." Id. at 49, 131.
employees to leave their present
employment is actionable when the * 10 The record also reflects that Walsh, formerly a
WESTLAW © 2019 Thomson Reuters. No claim to original U.S. Government Works . 6
2017 WL 4861625
Centennial loan officer and now a vice-president at

Seckel, e-mailed threats to the president of Centennial Centennial concedes that a bond was not posted, but
from his personal account. N.T., 2/4/16, at 64-65, 68. assens that the bond's absence does not require this Court
Walsh said he would destroy Centennial unless he was to vacate the injunction. Centennial's Brief at 23.
paid what he believed he was owed. Centennial's Ex. 59; Centennial posits that when issuance of an injunction is
R.R. at 964a. Walsh also posted a similar threat on his proper, an appropriate remedy is to remand for the sole
Facebook page. Centennial's Ex. 60 ; R.R. at 966a. purpose of setting a bond. Id. at 24 (citing Walter v.
Although the court had questioned whether Walsh ' s Stacy, 837 A.2d 1205, 1210 (Pa. Super. 2003)).
actions could be imputed to Seckel, N.T., 2/4/16, at 166, Centennial does not object to posting a reasonable bond
its opinion cited the personal threat as a basis for but suggests the issue would be moot if it again filed, and
injunctive relief. Trial Ct. Op. at 2. the court now granted, a motion to set bond. As the trial
coun did not order a Pa.R.A.P. 1925(b) statement, the
Taking all of this evidence together, the record court did not address the issue of the bond in its Rule
substantiates the trial court's detennination that injunctive l 925(a) opinion.
relief was warranted because Centennial demonstrated a
likelihood of success on its unfair competition claim. As a prefatory matter, because Centennial filed, but the
Although Seckel did not hire three of Centennial's court denied without prejudice, a motion to set a bond,
employees, its hiring of almost 30% of Centennial's Joan Order, 6/22/17, this issue is not moot and is properly
officers, in conjunction with the threat to destroy before us for disposition. The applicable rule is Pa.R.C.P .
Centennial, is sufficient to establish that a purpose of 1531 (b), which provides that-
hiring Centennial's employees was to cripple and destroy
Centennial. See Reading Radio, 833 A.2d at 212 .21 [A] preliminary or special injunction shall be granted
Because Centennial has established a likelihood of only if
success on this claim, we need not examine whether
Centennial could similarly succeed at trial on the other ( 1) the plaintiff files a bond in an amount fixed and
five claims. with security approved by the court, naming the
Commonwealth as obligee, conditioned that if the
injunction is dissolved because improperly granted
or for failure to hold a hearing, the plaintiff shall pay
to any person injured all damages sustained by
reason of granting the injunction and all legally
taxable costs and fees[ .]
The Trial Court's Failure To Require an Injunction
Bond *11 Pa.R.C.P. l531(b)(l) (emphasis added).
Although our review of an order granting preliminary In Walter, the trial court issued a preliminary injunction
injunctive relief is highly deferential, WMI Grp. , 109 but refused to order a bond. Walter, 837 A.2d at 1208.
A.3d at 747-48, the trial court must still comply with the This Court held that -
applicable rules oflaw in entering the injunction. Whether The bond ;;requirement is mandatory and an appellate
the trial court properly complied with a Rule of Civil court must invalidate a preliminary injunction if a
Procedure is a question of law. See Sahutsky v. H.H. bond is not filed by the plaintiff." Soja v. Factoryville
Knoebel Sons, 566 Pa. 593, 782 A.2d 996, 998 (Pa. Sportsmen's Club, 361 Pa. Super. 473,522 A.2d 1129,
2001). 1131 (198 7) (emphasis supplied). ;;Even if the trial
court's order was otherwise proper, its failure to require
For its last issue, Seckel asserts that Pennsylvania Rule of the posting of a bond mandate[s] our reversal of its
Civil Procedure 1531(b) required that Centennial post a decision." Id.
bond before an injunction could be entered. Seckel notes
that the trial court's order failed to provide for the posting Id. The Court concluded-
of security and argues that "an appellate court must
invalidate a preliminary injunction if a bond is not filed
by the plaintiff." Seekers Briefat 27 (citing Berger v. JI~
Jefferson Hill Sch. Dist , 669 A.2d 1084, 1086 (Pa. [W]e have no choice but to vacate
Cmwlth. !'995) (citing Christo v. TuscanJ' Inc. , 308 the order of the trial court due to its
Pa.Super. 564, 454 A.2d 1042, 1044 (Pa. Super. 1982)), failure to require a bond. \Ve note
appeal denied, 677 A.2d 840 (Pa. 1996)). however, that although the court's
WESrLAW © 2019 Thomson Reuters. No claim to original U.S. Government Works. 7

Centennial Lending Group, LLC v. Seckel Capital , LLC, Not Reported in Atl. Rptr. (2017)
2017 WL 4861625
failure in this regard renders the 1531(b); Walter, 837 A.2d at 1208; Christo, 454 A.2d at
injunction null, the error may be 1044. The trial court failed to comply with the plain
cured by the re-issuance of the language of 153l(b), which mandates a bond. See
preliminary injunction if the order Sahutsky, 782 A.2d at 998 . Therefore, we are constrained
includes the requirement of a bond. to vacate the injunctive order and remand with
instructions to reissue the injunction with a bond.
Order vacated. Matter remanded with instructions.

Id. (footnote omitted). Similarly, in Christo , because the Jurisdiction relinquished.
trial court erred in not imposing a bond, we vacated the
injunction and remanded to have the court and plaintiffs
comply with Rule 153 l(b). Christo, 454 A.2d at 1044. All Citations
Here , notwithstanding both parties' agreement that the Not Reported in Atl. Rptr., 2017 WL 4861625
trial court must require a bond, the trial court declined to
impose that requirement. The court did not explain its
reasoning, but its decision was erroneous. See Pa.R.C.P.
Footnotes
Retired Senior Judge assigned to the Superior Court.
See 12 Pa.C.S. §§ 5301-5308.
2 Her last name is spelled differently throughout the record; we use the spelling reflected in her affidavit. R.R. at 196a.
3 Seckel describes this document as an unenforceable employment agreement, Seckel's Brief at 21; Centennial calls it
an "Origination Plan• that it uses "for the purpose of providing meaning and market competitive financial rewards" for its
loan officers. R.R. at 28a.
4 Later that day, at the preliminary injunction hearing, Meitner read a sanitized version of the e-mail into the record. N.T.,
2/4/16, at 67-68. We note that none of the exhibits introduced at the hearing were transmitted to this Court as part of
the certified electronic record. However, the exhibits were made part of the reproduced record and no party has
challenged their authenticity.
5 Facebook is a social networking website on which "{u)sers of that Web site may post items on their Facebook page that
are accessible to other users, including Facebook 'friends' who are notified when new content is posted." Elonis v.
United States, - U.S.--, 135 S.Ct. 2001, 2004, 192 L.Ed.2d 1 (2015). A user may make a posted item viewable
by any user of Facebook or only to such selected users as their Facebook "friends." A user may also edit an item after
posUng it. See Daison v. Loudoun Cty. Bd. of Supervisors, - F. Supp. 3d - -, 2017 WL 3158389, •2 (E.D. Va .
2017); Facebook, "How do I edit a post that I've shared from my Page?,"
https:l/www.facebook.com/help/1376303972644600(as accessed on Oct. 25, 2017).
6 It appears that Walsh later edited the Facebook post to remove the reference to Centennial ("CLG"), as a printout of
the post states, "Just a FYI! If you bum me, I will destroy you! Period! Money is long, time is short!!! Tick tock."
Centennial's Ex. 60; R.R. at 966a.
7 After the hearing , the record reflects that Walsh, on February 9, 2016, e-mailed Meitner and Winokur an apology for his
·unprofessional email" and disclaiming any intent to destroy Centennial. R.R. at 985a. The e-mail also asserted that
"John Seckel had no idea I wrote that e-mail and it is by no means a representation of Seckel Capital." Id.
8 The reports were also downloaded to Spadaccini's computer, her personal cloud storage, or both (the record is
imprecise). See N.T., 2/4/16, at 105, 156; R.R. at 917a. "Cloud storage is a method of storing electronic data on
remote servers-in addition to or in lieu of the device itself. Data stored in the cloud can be accessed by an electronic
device connected to the Internet." Wertz v. State , 41 N.E.3d 276,285 n.8 (Ind. Ct. App . 2015).
9 Centennial has not moved to seal Spadaccini's customer list, which is present in the filed hardcopy of the reproduced
WESTLAW © 2019 Thomson Reuters . No claim to original U .S. Government Works . 8

2017 WL 4861625
record and the electronic record transmitted to this Court.
10 Centennial has not filed a cross-appeal to challenge the court's injunctive relief as insufficiently tailored to restore the
status quo.
11 As noted above, the order did not contain provisions for restoration of such control to Centennial.
12 We have explained :
It is somewhat embarrassing to an appellate court to discuss the reasons for or against a preliminary decree,
because generally in such an issue we are not in full possession of the case either as to the law or
testimony-hence our almost invariable rule is to simply affirm the decree, or if we reverse it to give only a brief
outline of our reasons, reserving further discussion until appeal, should there be one, from final judgment or decree
in law or equity.
WM/ Grp., 109 A.3d at 743 n.2 (citation omitted and emphasis in original).
13 For ease of discussion, we refer to the customer list as "Spadaccini's' list. At trial, the parties may resolve whether the
information in that list qualifies as a Centennial trade secret or belongs to Spadaccini.
14 In Kessler, a dispute arose between the majority and minority shareholders of corporations that reviewed magnetic
resonance images ("MRls"). Kessler, 851 A.2d at 945 & n.4, 948. MRI images need to be reviewed by radiologists,
and, under an oral agreement, the majority shareholders were supposed to allocate about one-third of the MRI reviews
to the minority shareholder. Id. at 945, 948. Because the majority shareholders failed to adhere to the allocation
agreement, the trial court issued a mandatory preliminary injunction directing them to comply. Id. at 945. In doing so,
the court rejected a defense argument that the plaintiffs failed to establish irreparable harm because their loss of
revenue was 'fully compensable by money damages,' reasoning that the plaintiffs were entitled to an injunction
because they were being inhibited from competing in the marketplace. Id. at 951-52. On appeal, we agreed with the
trial court's reasoning in justifying injunctive relief. Id. at 953.
15 The trial court has not yet decided whether the list is a protected trade secret and we therefore do not address that
issue.
16 "Although the decisions of federal courts are not binding on this Court, we may rely on them for guidance." Cresci
Const. Servs., Inc. v. Martin, 64 A.3d 254, 258 n.7 (Pa. Super. 2013) (citation omitted).
17 In support of this holding, the Supreme Court cited the following authorities in SEIU:
Commonwealth v. Coward, 489 Pa. 327, 414 A.2d 91, 98-99 (1980) (holding that where a statute prescribes
certain activity, the court need only make a finding that the illegal activity occurred to conclude that there was
irreparable injury for purposes of issuing a preliminary injunction); Pennsylvania Public Utility Commission v.
Israel, 356 Pa. 400, 52 A.2d 317, 321 (1947) (holding that when the Legislature declares certain conduct to be
unlawful, it is tantamount to calling it injurious to the public, and to continue such unlawful conduct constitutes
irreparable injury for purposes of seeking injunctive relief); Commonwealth ex rel. Corbett v. Snyder, 977 A.2d 28
(Pa . Cmwtth. 2009) (affirming issuance of a preliminary injunction and finding that irreparable harm was presumed
where there was a credible violation of the state consumer protection statute).
SEIU Healthcare Pa., 104 A.3d at 508.
18 We note a significant distinction between retrieving and saving the customer list for Spadaccini's own use and what
was done here: e-mailing the customer list to Mr. Seckel, who presumably had no prior knowledge of Spadaccini's
customers.
19 Seckel acknowledges that one of its ex-Centennial employees, Walsh, exhibited hostility to Centennial over a pay
dispute. But, citing to mid-trial commentary by the trial court (see N.T., 2/4/16, at 16~6), Seckel asserts that the trial
court found that Walsh was arguing about a "personal matter' between Centennial and Walsh and that it would be a
"stretch' to impute Walsh's actions to Seckel. Seckel's Brief at 26-27. We note that we are bound by the trial court's
order and decision setting forth its reasoning, but not by commentary made before the parties completed and rested
their cases.
20 In reply, Seckel contends that the trial court's opinion "does not explicitly state to which causes of action the court's
order was directed ." Seckel's Reply Brief at 1. Seckel maintains that after a review of the transcript, "it is apparent• that
the "court's finding of likelihood of success' was limited only to Centennial's unfair competition claim. Id. at 2.

Centennial Lending Group, LLC v. Seckel Capital, LLC, Not Reported in Atl . Rptr. (2017)
2017 WL 4861625
21 Of course, the fact-finder may reach different conclusions following a final hearing .
End of Document © 20 19 Thomson Reuters. No claim to original U.S. Government Work s.
WESTLAW © 2019 Thomson Reuters. No claim to original U.S. Government Works. 10

E. Frank Hopkins Seafood, Co., Inc. v. Olizi, Not Reported in Fed. Supp. (2017)
2017 WL 2619000
employees may access it. (Compl. ~,I 15-16). Hopkins '

employees are aware of the information 's confidentiality.
2017 WL 2619000
(Campi. ~ 17).
Only the Westlaw citation is currently available.
United States District Court, E.D. Pennsylvania.
Defendant Elio Olizi (" Mr. Olizi"), a resident of New
E. FRA.i\JK HOPKINS SEAFOOD, CO., INC. , Jersey, was employed by Hopkins until he quit in
Plaintiff September 2016. (Campi. ~1[ 4, 18). Because Mr. Olizi
V. was responsible for negotiating prices with customers, he
Elio OLIZI; Cheryl Olizi; and Pure Fish Seafood, had access to the aforesaid non-public information and
LLC, Defendants had contact with Hopkins ' suppliers and customers, both
current and prospective. (Compl. ~i~ 22-23).
CMLACTION NO. 2:17-CV-01558-JCJ
I ln August 2016, Mr. Olizi and his wife, Defendant Cheryl
Filed 06/16/2017 Olizi (" Mrs. Olizi" ), formed Defendant Pure Fish
Seafood, LLC ("Pure Fish" ) under the laws of New
Jersey. (Comp!. 1 30). Shortly thereafter, Mr. Olizi
Attorneys and Law Firms terminated his employment with Hopkins without notice.
(Compl. ~ 24). He then worked for Samuels and Son
Judith P. Rodden, Pozzuolo Rodden, Philadelphia, PA, for Seafood Co., Inc. ("Samuels"), a regional competitor of
Plaintiff. Hopkins, for three months. (Comp!. ~'il 25-26). Upon
ceasing his work there, Mr. Olizi sought to return to
Adam R. Elgart, Manleman, Weinroth & Miller,
Hopkins but was denied. (Campi. ~"J 27-29).
Philadelphia, PA, for Defendants.
Hopkins alleges that Defendants used information that
Mr. Olizi obtained as an employee to entice existing and
prospective customers of Hopkins to instead contract with
Pure Fish. (Compl. 'J'il 32-38). The Complaint also asserts
that several existing customers actually terminated their
contracts with Hopkins and became customers of Pure
Fish, and that several prospective customers instead_
i'HEMORANDUM AND ORDER contracted with Pure Fish, all due to Defendants ' use of
Hopkins' confidential information. (Compl. 'il 40).
Joyner, District Judge Counsel for Plaintiff corresponded \l.'ith Mr. Olizi,
demanding he cease and desist the alleged unlawful use of
Hopkins' confidential information and return all such
*1 Before the court are Defendants' Motion to Dismiss
information to Hopkins. (Comp!. 'J'il 43-44). Mr. Olizi
(Doc. No. 6) and Plaintiff's Response in Opposition
replied through counsel, denying possession of such
thereto (Doc. No. 8). For the reasons set forth in this
information. (Comp!. 45). In response to the alleged
Memorandum, the Motion is denied in its entirety.
continued possession and use of Hopkins' information by
Defendants, Hopkins sent two more letters repeating its
demands, which were met with no reply. (Comp!. ~,i
46-49). Hopkins filed a complaint on April 6, 2017,
alleging tortious interference with contractual relations,
I. Background tortious interference with prospective contractual and
business relationships, misappropriation of trade secrets,
Plaintiff£. Frank Hopkins Seafood, Co. , Inc . ("Hopkins") unfair competition, conversion, civil conspiracy, and
is a wholesale seafood distributor located in Philadelphia, accounting. Subsequently, Defendants filed a Motion to
Pennsylvania. (Compl. ~ 3). To facilitate its business, Dismiss under Federal Rules of Civil Procedure 12(b)(3),
Hopkins has developed and maintains lists of customers 12(6)(6), and 12(b)(7), and Plaintiff filed a Response in
and suppliers, order histories for these parties, and pricing Opposition thereto.
strategies. (Comp]. "lJ 11-13). To protect this information,
which is not available to the public, Hopkins limits which

2017 WL 2619000
II. Standard of Review Ill. Discussion
*2 A pleading is "a short and plain statement of the claim Plaintiff s Complaint alleges seven counts arising from
showing that the pleader is entitled to relief." FED. R. Defendants' alleged taking, retention, and use of
CIV. PRO. 8(a)(2). This is "in order to ' give the Plaintiffs confidential information. Broadly, Defendants
defendant fair notice of what the ... claim is and the argue that Plaintiff failed to sufficiently plead facts in
grounds upon which it rests. ' " Bell Atl. Corp. v. support of essential elements of its claims; that several of
Twomblv. 550 U.S. 544, 555 (2007) (quoting Conlev v. Plaintiffs tort claims are preempted by state statute, the
Gibson, 355 U.S. 41 , 47 (1957)); accord Palakovic v. elements of which are also not sufficiently pleaded; that
Wetzel, 854 F.3d 209, 219 (3d Cir. 2017). Furthermore, in Plaintiff failed to join an indispensable party under
considering dismissal under .Rule 12(b)(6), we ;'accept all Federal Rule of Civil Procedure 19, as required by Rule
factual allegations as true, construe the complaint in the I 2(b)(7) ; and that Plaintiff failed to establish proper venue
light most favorable to the plaintiff, and determine under 28 U.S.C . § 1391 , as required by Rule l2(b){3). We
whether, under any reasonable reading of the complaint, first address the 12(b)(6) motion with respect to each
the plaintiff may be entitled to relief." Phillips v. County claim, then we address the I 2(b )(7) and l 2(b)(3) motions.
of Alleghenv, 515 F.3d 224 , 233 (3d Cir. 2008) (citations
omitted).
The complaint "does not need detailed factual

allegations," but it does need "more than labels and A. MOTION TO DISMISS FOR F AlLURE TO
conclusions, and a formulaic recitation of the elements of ST ATE A CLAlM UNDER FEDERAL RULE OF
a cause of action ,viii not do." Twombly, 550 U.S. at 555. CIVIL PROCEDURE I 2(B)(6)
While "[f]actual allegations must be enough to raise a
right to relief above the speculative level," all that is
required is "a reasonable expectation that discovery will
reveal evidence of (the alleged unlawful activity]." Id. at
I. Tortious Interference with Contractual Relations
555-56. In other words , the claim must be "plausible on
its face ," not merely conceivable. Id. at 570. The Pennsylvania Supreme Court expressly adopted the
following standard fo r tortious interference \\ith
In Ashcroft v. Iqbal, the Supreme Court clarified that " [a] contractual relations :
claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged." 556 U.S. 662 , 678 (2009) ; accord One who intentionally and
Palakovic. 854 F.3d at 219 . After Twombly and Igbal, the improperly interferes with the
Third Circuit formulated a three-step test: performance of a contract ( except a
contract to marry) between another
First, the court must " tak[e] note of the elements a and a third person by inducing or
plaintiff must plead to state a claim." Second, the court otherwise causing the third person
should identify allegations that, "because they are no not to perform the contract, is
more than conclusions, are not entitled to the subject to liability to the other for
assumption of truth." Finally, "where there are the pecuniary loss resulting to the
well-pleaded factual allegations, a court should assume other from the third person ' s failure
their veracity and then determine whether they to perform the contract.
plausibly give rise to an entitlement for relief."
Burtch v. Milberg Factors, Inc., 662 F.3d 2 12, 221 (3d

Cir. 2011) (quoting Santiago v. Warminster Twp .. 629 *3 Adler, Barish. Daniels, Levin and Creskoff v. Epstein,
F.3d 121 , 130 (3d Cir. 2010)). 393 A.2d 1175, 1183 (Pa. 1978) (quoting
RESTATEMENT (SECOND) OF TORTS § 766 (AM.
LAW. rNST., Tentative Draft No. 23 , 1977)). In their

E. Frank Hopkins Seafood, Co., Inc. 11. Olizi, Not Reported in Fed. Supp. (2017)
2017 WL 2619000
interpretation of this section, Pennsyl\'ania courts have b. Absence of Privilege of Justification

delineated four elements necessary to state such a claim:
Under Pennsylvania law, a plaintiff must make a prima
(I) the existence of a contractual, or prospective facie showing that the defendant's interference was
contractual relation betv.'een the complainant and a unjustified (i.e., improper). Ira G. Steffv & Son, Inc., 7
third party; A.3d at 288 n.13 (citing T riffin v. Janssen, 626 A.2d 571 ,
574 n.3 (Pa. Super. 1993)). Broadly, " [t)he general issue
(2) purposeful action on the pan of the defendant, is ' whether, upon a consideration of the relative
specifically intended to harm the existing relation, or significance of the factors involved, the conduct should be
to prevent a prospective relation from occurring; pennitted without liability, despite its effect of harm to
another.' " Crivelli v. General Motors Corp., 215 F.3d
(3) the absence of privilege or justification on the 386, 395 (3d Cir. 2000) (quoting Adler, 393 A.2d at 1184
part of the defendant; and n.17). To detennine impropriety, a defendant' s conduct
should be assessed with regard to the " ' rules of the game'
(4) the occasioning of actual legal damage as a result which society has adopted." Adler, 393 A.2d at 1184
of the defendant's conduct.
(quoting Glenn v. Point Park Coll., 272 A.2d 895, 899
(Pa. 1971)). More specifically, courts consider:
Ira G. Steffy & Son. Inc. v. Citizens Ban1c of Pa. , 7 A.3d
278, 288-89 (Pa. Super. 2010) (footnote omitted) (quoting
*4 (a) the nature of the actor' s conduct,
Strick.land v. Univ. of Scranton, 700 A.2d 979, 985 (Pa.
Super. 1997)). In their motion, Defendants do not contest (b) the actor' s motive,
element (2); however, they do contend that Plaintiffs
Complaint does not demonstrate the existence of a (c) the interests of the other with which the actor's
contractual relation, address the lack of privilege or conduct interferes,
justification on the part of the Defendants, or identify any
consequent damage. (Motion to Dismiss, Doc. No. 6, p. (d) the interests sought to be advanced by the actor,
3).1 The sufficiency of the pleading of those three
elements is considered seriatim. (e) the social interests in protecting the freedom of
action of the actor and the contractual interests of the
other,
(f) the proxtm1ty or remoteness of the actor' s

conduct to the interference, and
a. Existence of Contractual Relations (g) the relations between the panics.
Where a case is not even in the discovery phase, requiring Id . (quoting RESTATEMENT (SECOND) OF TORTS§
a plaintiff 10 list the specific contracts which it alleges 767 (AM . LAW fNST . 1979)).
have been harmed would be an extreme and unnecessary
burden. Aetna, Inc. v. Health Diagnostic Lab. Inc. , No. Due to the fact-intensive nature of weighing these factors ,
15-1868 , 2015 WL 9460072, at *6 (E.D. Pa. Dec. 28 , doing so before discovery is generally inappropriate. See
2015). Here, Defendants argue that Plaintiff "fails to Odyssey Waste Servs .• LLC v. BFI Waste Sys. ofN. Am ..
identify a single existing contractual relationship." Inc., No. Civ.A. 05 -CV-1929 , 2005 WL 3! 10826, at •7
(Motion to Dismiss, Doc . No. 6, p. 3). To the contrary, (E.D. Pa. Nov. 18, 2005) (denying a motion to dismiss in
Plaintiffs Complaint alleges that: Plaintiff maintains a list pan because the fact- intensive inquiry " will require at
of current and prospective customers, (Comp!. ~•J 11 - 12 , least some discovery to resolve" ); Breon v. Waypoint Ins.
34); a number of Plaintiff's customers have terminated Grp .• Inc., No. I :06-CV-2204, 2007 WL I 575225 , at *3
their contracts with Plaintiff in order 10 contract with (M .D. Pa. May 3 I , 2007) (denying a motion to dismiss in
Defendants instead, (Comp!. ~ 39); and Defendants part because weighing the Restatement factors " is more
solicited Plaintiffs two largest customers, (Comp!. •J 54). appropriately reserved for summary judgment"). But see
These allegations are more than mere legal conclusions Hosp. Assocs. of Lancaster v. Lancaster Land Dev., LP. ,
and establish a reasonable expectation that discovery will No. 07-cv-03955 , 2008 WL 4444249 , at *9-•12 (E.D. Pa.
reveal evidence of this element of the claim. Sept. 30, 2008) (performing the seven-part analysis but
finding that the facts pleaded were sufficient to deny a
motion to dismiss). Instead, as Plaintiff argues, courts
have held that alleging Defendants ' knowing and
E. Frank Hopkins Seafood, Co., Inc. v. Olizi , Not Reported in Fed. Supp. (2017)
2017WL 2619000
purposeful intent to interfere with a contract is sufficient the grounds on which it rests.
to satisfy the impropriety inquiry for the purposes of a
motion to dismiss. Odyssey Waste, 200S WL 3110826, at
•7 (citing Total Care Sys., Inc. v. Coons, 860 F. Supp.
236, 242 (E.D. Pa. 1994}}; accord Breon, 2007 WL
157522S, at •3 _
In Total Care. it was sufficient that the plaintiff alleged I . T onious Interference with ProspectiYe Contractual and
the nature of the defendant' s interfering conduct and that Business Relationships
the defendant had a knowing and purposeful intent to
The elements of a claim for tortious interference with
interfere. 860 F. Supp. at 242. Similarly, it was sufficient
prospective contractual relations mirror the elements of its
that the plaintiff in Breon alleged that a defendant
non-prospective counterpart. A plaintiff must
intended to induce a third party to tenninate the plaintifT s
demonstrate: ''(I) a prospective contractual relation; (2)
employment contract, and that this defendant did not have
the purpose or intent to harm the plaintiff by preventing
any privilege or justification for doing so. 2007 WL
the relation from occurring; (3) the absence of privilege or
I S7S225, at *4. Here, Plaintiff alleges that: Defendants
justification on the part of the defendant; and (4) the
intentionally interfered with existing contracts, (Compl.
occasioning of actual damage resulting from the
~,i 34, 67); Defendants took and used confidential
defendant ' s conduct." Kachmar v. SunGard Data Svs ..
information in order to induce PlaintifT s customers to
Inc., 109 F.3d 173, 184 {3d Cir. 1997); accord Glenn, 272
break their contracts with Plaintiff and contract v.oith
A.2d at 898. In their motion, Defendants contend only
Defendants instead, (Comp!. ~,I 34-40); and Defendants'
that Plaintiff fails to plead the first element of its claim, a
actions were not privileged or justified, (Compl. ~'ll
prospective contractual relation, which is considered
35-36). Therefore, Plaintiff has sufficiently pleaded this
below.
element of its claim.
Although difficult to define, a prospective contractual
relation "is something less than a contractual right,
something more than a mere hope." S\nthes (U.S.A.) v.
Globus Med., Inc., No. Civ.A. 04-CV-1235 , 2005 WL
2233441 , at •7 (E.D. Pa. Sept. 14, 2005) {quoting
c. Existence of Resultant Damages Thompson Coal Co. v. Pike Coal Co., 412 A.2d 466,471
(Pa. 1979)). To survive a motion to dismiss, a plaintiff
For this element of tortious interference with contractual must establish a reasonable probability that but for the
relations, a plaintiff must demonstrate that actual damages defendant 's interference, a contract would have
resulted from the defendant ' s conduct, and those damages materialized. Id. (citing Santana Prods .. Inc. v. Bobrick
must flow from the loss of the benefits of the contract or Washroom Equip., Inc., 401 F.3d 123, 140); accord
consequential, emotional or reputational losses. Glenn, 272 A.2d at 898-99 . The last pertinent principle,
Pawlowski v. Smorto. 588 A.2d 36, 40 (Pa. Super. l 991 ). for which the S\nthes court provides ample support, is
As with their prior assertions, Defendants aver- without that:
further citation or argumentation--that Plaintiff failed to
identify any damage resulting from Defendants ' alleged [B]ecause such prospective relationships are "not
conduct. To the contrary, Plaintiff alleges that because of susceptible of a definite, exacting identification," a
Defendants' interference, customers have ended ongoing plaintiff is not required to identify a potential
contracts with Plaintiff in order to become customers of contractual partner by name. Kelly-Springfield Tire Co.
Defendants, (Comp!. CJ 39), and that Plaintiff has suffered v. D' Ambro, 408 Pa. Super. 301 , 596 A.2d 867 (Pa.
losses in excess of $75 ,000 as a result, (Comp!. ~~ 41, 1991) (holding that plaintiff did not have to identify a
59). specific potential purchaser to withstand motion to
dismiss under state pleading standard); see also Dunlap
*5 Accepting all factual allegations as true and construing v. Peco Energv, I 996 \VL 617777 (E.D. Pa. Oct. 23,
the Complaint in the light most favorable to Plaintiff, 1996) (finding that plaintiffs allegation that defendant
Plaintiff has pleaded sufficient facts to state a claim for had interfered with "a business expectancy in contracts
tortious interference v.oith contractual relations that is not ... to the energy industry" sufficient for purposes of
merely conceivable, but rather plausible. We can motion to dismiss); Arner. Health, 1994 WL 314313, at
reasonably infer that Defendants are liable for the alleged • 14 (noting that "although ... the amended complaint
offenses, and Defendants have fair notice of the claim and simply states that 'Plaintiff had and has prospects of

2017 WL 2619000
contractual relations with home care patients found in (B) acquired under circumstances giving rise to a
the relevant geographic market,' I am persuaded by all duty to maintain its secrecy or limit its use; or
of the allegations in the complaint that plaintiff has
alleged more than a 'mere hope' of prospective (C) derived from or through a person who owed a
relations with home health care patients"). duty to the person seeking relief to maintain its
secrecy or limit its use; or
2005 WL 2233441, at •7 (alterations in original).
(iii) before a material change of his position, knew
In Synthes, the defendants filed counterclaims against the or had reason to know that it was a trade secret
plaintiff for toniously interfering with the defendants' and that knowledge of it had been acquired by
prospective contractual relations by disparaging them in accident or mistake.
conversations ·with anticipated customers; these claims
survived a motion to dismiss since it was not necessarv to Id. § 5302. Defendants' motion argues that Plaintiff fails
identify the specific contracts at issue. Id. at •6-•7. H~re, to establish that "any of the alleged trade ·secrets were
Plaintiff pleaded the existence of confidential information ever acquired by or disclosed to any of the Defendants by
regarding prospective customers, (Compl. ~~ 23, 34-37), improper means or by accident or mistake."1 (Doc. No. 6,
as well as the existence of anticipated customers who p. 5). As Plaintiff points out, even if Defendants'
were instead enticed to contract with Defendants due to contention were true, Defendants ignore subsections
Defendants ' access to such information, (Comp!. ~ 40). It 5302(2)(ii)(B)-(C). So as to not deny this part of the
is alleged that by use of Plaintiffs confidential motion outright, we will consider the sufficiency of the
information. Defendants succeeded in inducing pleadings with respect to those subsections.
prospective ·customers of Plaintiff to instead contract with
Defendants. (Compl. ~•J 66-69). At this case 's nascent, A duty of secrecy may arise where a defendant is made
pre-discovery stage, and considering the pleading av.-are that certain information may not be disclosed to
standards under Rule 8(a), Plaintiff has sufficiently third parties, and the information itself is of a confidential
pleaded this element (and thus, this claim). Defendants ' nature; this is the case even absent a confidentialitv
motion to dismiss this claim must be denied. agreement. EXL Labs .• LLC v. Egolf, No. 10-6282, 20 l ·1
WL 880453 at •6 (E.D. Pa. Mar. 11, 2011 ); see also Swift
Bros. v. Swift & Sons, Inc., 921 F. Supp. 267,277 (E.D.
Pa. 1995) (holding that confidentiality agreements are not
necessary for Pennsylvania law to protect trade secrets,
such as customer lists, "if the other precautions taken by
the plaintiff are sufficient").
2. Misappropriation of Trade Secrets
Although EXL Laboratories dealt with a
*6 Under Pennsylvania law, a claim for misappropriation manufacturer-distributor relationship, not an
of trade secrets is governed by the Pennsylvania Uniform employer-employee one, the court's discussion of a duty
Trade Secrets Act (" PUTSA"). 12 PA. CONS. ST AT . § of secrecy applies with equal force here. In EXL
5308 (2014). PUTSA defines "misappropriation" as: Laboratories, one of the plaintiffs executives warned the
board of a distributor that board members could not
(I) acquisition of a trade secret of another by a
divulge the plaintiffs proprietary information to third
person who knows or has reason to know that the
parties. 20ll WL 880453, at •6. The court held that these
trade secret was acquired by improper means; or
circumstances, combined with the confidential nature of
the information itself, satisfied subsection 5302(2)(ii)(B)
(2) disclosure or use of a trade secret of another
and created a duty to secrecy. Id. Here, Plaintiff pleaded
without express or implied consent by a person who:
that its customer lists, as well as other information. are
(i) used improper means to acquire knowledge of confidential, (Comp!. 1J 12), and that employees are a~are
the trade secret; of this confidentiality, (Comp!. "J I 7). Plaintiff further
pleaded that Mr. Olizi was granted access to this
(ii)at the time of disclosure or use, knew or had information in order to perform his duties, (Comp!. ii"J
reason to know that his knowledge of the trade 22-23 , 82), and that he was aware of the information's
secret was: confidential nature, (Compl. ii 80). Lastly, it is alleged
that Defendants used this information without Plaintiff's
(A) derived from or through a person who had consent. (Comp!. "J 35). Because Plaintiff has sufficiently
utilized improper means to acquire it; pleaded, and Defendants do not contest, the existence and
WESTLAW © 2019 Thomson Reuters . No claim to original U.S. Government Works. 5

2017 WL 2619000
breach of a duty of secrecy, the motion to dismiss this tortious interference with ex1stmg and prospective
claim can be denied without needing to address the contracts, thus providing at least one basis for the unfair
sufficiency of the pleadings regarding "improper means." competition claim to survive Defendants' motion. See
supra Sections 111.A. l-2.
For this count and others, Defendants also object that

PUTSA preempts the common law tort claims brought by
Plaintiff. (Motion to Dismiss, Doc. No. 6, p. 7-8) (citing
12 PA. CONS . STAT. § 5308). Indeed, Third Circuit
3. Unfair Competition
courts have acknowledged PUTSA preemption for
common law tort claims such as unfair competition,
*7 Under Pennsylvania law, the tort of unfair competition
conversion, and civil conspiracy, among others. 3
is defined as follows:
Advanced Fluid Sys .. lnc. v. Huber. 28 F. Supp. 3d 306,
324 (M.D. Pa. 2014) (citing various examples of such
preemption). Defendants ' argument ultimately fails,
One who causes harm to the however, because "[w)hile this claim would be preempted
commercial relations of another by ... to the extent the information at issue is determined to
engaging in a business or trade is be trade secret information, the claim may otherwise rest
not subject to liability to the other on confidential information which does [not] [sic] qualify
for such harm unless . .. the harm for such status."• Bro-Tech, 651 F. Supp. 2d at 418
results from . .. acts or practices of (emphasis added) ; accord Youtie v. Macy' s Retail
the actor determined to be Holding, Inc., 653 F. Supp. 2d 612, 620 (E.D. Pa. 2009)
actionable as an unfair method of '(''[P]reemption exists to the extent that [claims] are based
competition, taking into account on the same conduct that is said to constitute a
the nature of the conduct and its misappropriation of trade secrets."); see also Triage
likely effect on both the person Consulting Grp., Inc. v. Implementation Mgmt.
seeking relief and the public. Assistance. Inc .. No. 12-4266, 2013 WL 3283462, at •4
(E.D. Pa. June 27 , 2013) (holding that with respect to the
plaintiff's claim for intentional interference with
contractual relations, PUTSA and tort claims were
Bro-Tech Corp. v. Thermax, Inc., 651 F. Supp. 2d 378, "properly pied in the alternative, even though the tort
417-18 (E.D. Pa. 2009) (quoting RESTATEMENT claims may ultimately be preempted by a factual finding
(THIRD) OF UNFAIR COMPETITION § l(a) (AM. that the information in question is, in fact, a trade secret");
LAW INST. 1995)); accord Giordano\'. Claudio, 714 F. PNC Mortg. v. Superior Mortg. Corp., No. 09-5084, 2012
Supp. 2d 508, 521-22 (E.D. Pa. 2010); Bldg. Materials WL 628000, at •25 n.19 (E.D. Pa. Feb. 27 , 2012) (noting
Corp. of Am. v. Roner, 535 F. Supp. 2d 518, 526 n.4 that insofar as the plaintiff's conversion claim applies to
(E.D. Pa. 2008); Svnthes, 2007 WL 2043184 , at •9; Air confidential information not rising to the level of trade
Prods. & Chem., Inc. v. Inter-Chemical Ltd., No. Civ.A. secrets, the claim is not preempted by PUTSA);
03-CV-6140, 2003 WL 22917491, at •12 (E.D. Pa. Dec. Bro-Tech, 651 F. Supp. 2d at 418 (holding that the
2, 2003). "Unfair competition" must not be construed as a plaintiffs unfair competition claim is not preempted by
catch-all for any wrongful business conduct, or to include PUST A since " [i]t may happen at trial that some or all of
all business torts. Giordano, 714 F. Supp. 2d at 522 (citing this infonnation is found not to be trade secret
USX Corp. v. Adriatic Ins. Co., 99 F. Supp. 2d 593, 619 information, but nonetheless confidential and proprietary
(W.D. Pa. 2000)). That said, the " improper use of in nature"). Finally, and most fatally here, a court should
another' s confidential information may qualify as unfair not determine whether the information at issue constitutes
competition ' even if the conduct is not specifically a trade secret without a fully developed record. Advanced
actionable under the rules relating to ... misappropriation Fluid, 28 F. Supp. 3d at 325 (citing Alpha Pro Tech. Inc.
of trade secrets.' " Bro-Tech, 651 F. Supp. 2d at 418 v. VWR lnt' l LLC, 984 F. Supp. 2d 425, 447 (E.D. Pa.
(quoting RESTATEMENT (THIRD) OF UNFAIR 2013)); see also N . Am. Commc ' ns. Inc. v. Sessa, No.
COMPETITION § I cmt. g). Unfair competition thus 3:14-227, 2015 WL 5714514, at •9 (W.D. Pa. Sept. 29,
encompasses " misrepresentation, tortious interference 2015) (denying a motion to dismiss and deferring the
with contract, improper inducement of another' s issue of whether information constitutes trade secrets until
employees, and unlawful use of confidential information." later, since ;;the issue of preemption should be addressed
Id. (quoting Svnthes, 2007 WL 2043184, at *9). As after discovery has been completed"); Kimbenon
discussed, Plaintiff has sufficiently pleaded its claim for
2017 WL 2619000
Healthcare Consulting. Inc . v. Primarv PhysicianCare, Proving civil conspiracy under Pennsylvania law requires
Inc., No. 11-4568, 2011 WL 6046923, at •5 (E.D. Pa. showing: ''( l) a combination of two or more persons
Dec. 6, 2011) (citing Hecht v. BabyAee.com, Inc., No. acting with a common purpose to do an unlawful act or to
3:IO-CV-724, 2010 WL 3940882, at •5 (M.D. Pa. Oct. 6, do a lawful act by unlawful means or for an unlawful
2010)) (allowing common law tort claims for purpose; (2) an overt act done in pursuance of the
misappropriation, unfair competition, and conversion to common purpose; and (3) actual legal damage." Smith v.
survive a motion to dismiss since it was inappropriate to Wagner, 588 A.2d 1308, 1311-12 (Pa. Super. 1991).
determine whether the relevant information constituted a Pleading a claim of civil conspiracy also requires alleging
trade secret without discovery). a separate underlying tort. Bovanowski v. Capital Area
Intermediate Unit. 215 F.3d 396, 405 (3d Cir. 2000)
*8 In Advanced Fluid, the plaintiff alleged not only (citing Nix v. Temple Univ. , 596 A.2d 1132, 1137 (Pa.
misappropriation of trade secrets, but also that the Super. 1991); Pelagatti v. Cohen, 536 A.2d 1337, 1342
defendants conspired to use a co-defendant as an (Pa. Super. 1987)). Here, Defendants argue only that
operative within the plaintiff-company. 28 F. Supp. 3d at Plaintiff failed to satisfy this last requirement; i.e.,
324. Here, in contrast, Plaintiff arguably does not allege sufficiently pleading a separate underlying tort. (Motion
conduct other than that which would form the basis for a to Dismiss, Doc. No. 6, p. 9). Because we held above that
misappropriation of trade secrets claim; however, it Plaintiff has sufficiently pleaded common law tort claims
remains wtresolved whether the infonnation itself such as tortious interference with existing and prospective
constitutes trade secrets, and thus Defendants ' motion is contractual relations, unfair competition, and conversion,
denied in accordance with Advanced Fluid. Indeed, Defendants' argument fails, and their motion to dismiss
Plaintiffs Complaint ant1c1pates such potential this claim is denied. See supra Sections III.A.1-2, 4-5 .
distinction, alleging that Defendants engaged in unfair
competition by misappropriating confidential information
as well as trade secrets. (Comp!. ~ 89). As such, this claim
will survive Defendants' motion to dismiss.
6. Accounting
*9 Pennsylvania law provides two methods for

determining damages from a misappropriation of trade
4. Conversion secrets: "one, the damages sustained by the victim (the
traditional common law remedy), and the other, the
As Plaintiff points out, Defendants argue only that the profits earned by the wrongdoer by the use of the
conversion claim is preempted by PUTSA, not that misappropriated material (an equitable remedy which
Plaintiff failed to state a claim under Pennsylvania law. treats the ·wrongdoer as trustee ex maleficio for the victim
(Motion to Dismiss, Doc. No. 6, p. 8; Response in of the wrongdoer's gains from his \\Tongdoing)."
Opposition, Doc. No. 8, p. 33). For the same reasons set Greenberg v. Crovdon Plastics Co.• Inc., 378 F.Supp. 806,
forth in the Unfair Competition section of this opinion, 816-17 (E.D. Pa. 1974). Indeed, PUTSA provides for this
Plaintiffs claim for conversion survives Defendants' possibility:
motion to dismiss. See supra Section III.A.4. While the
claim will be preempted insofar as it deals with converted
trade secrets, Plaintiffs Complaint also alleges
conversion of confidential information. (Compl. iiil 32, Damages can include both the
98). Because it is inappropriate for us to determine which actual loss caused by
(if any) of Plaintiff's information constitutes trade secrets misappropriation and the unjust
at this pre-discovery stage, Defendants' motion to dismiss enrichment caused by
this claim is denied.s misappropriation that is not taken
into account in computing actual
loss. In lieu of damages measured
by any other methods, the damages
caused by misappropriation may be
measured by imposition of liability
for a reasonable royalty for a
5. Civil Conspiracy m isappropriator' s unauthorized

E. Frank Hopkins Seafood, Co., Inc. v. Olizi, Not Reported in Fed . Supp. (2017)
2017 WL 2619000
disclosure or use of a trade secret. held that a jury would not be

qualified to state such an account.
We might even go farther and say
that equity will entertain
12 PA. CONS. ST AT . § 5304 ; accord Advanced Research jurisdiction where it is doubtful
Sys., Inc. v. ColdEdge Techs., Inc., No. 3253 EDA 2012 , whether adequate relief could be
2014 WL 10979726, at *7-*8 (Pa. Super. Mar. 21, 2014). had at law.
Plaintiffs Complaint requests, as a separate action, "an

accounting of all assets, income, revenues and other
monies received by Defendants as a result of the theft of *10 Stuyvesant Ins. Co. v. Keystate Ins. Agency. Inc. , 218
Hopkins' current and prospective customer contracts in A.2d 294 , 296 (Pa. 1966) (quoting Williams, 141 A. at
order to determine the monetary damages suffered by 49); accord Fudula, 424 A.2d at 923 .
Hopkins that are due and owing to Hopkins." (Compl. ,i
112). This nebulous "theft of ... contracts" presumably Here, Plaintiff alleges an inability to fully determine
refers to the common law tort claims alleged by Plaintiff monetary damages resulting from Defendants' alleged
as well as the claim of misappropriation of trade secrets. misconduct, (Comp!. ~ 112);6 this evokes the Williams
As discussed, Greenberg. Advanced Research, and proposition that if a remedy at law is inadequate,
PUTSA provide for the remedy of an accounting for the equitable jurisdiction may obtain, 141 A. at 48.
misappropriation of trade secrets; thus, we must Construing the complaint in the light most favorable to
determine separately whether Plaintiff has stated a Plaintiff, we can also reasonably infer that Plaintiff's
separate action for an accounting under Pennsylvania account could be implicated in determining damages,
common law. making this a ;;mutual" situation described by Stuyvesant.
As such, Defendants' motion to dismiss Plaintiff's claim
Accounting as a separate action exists in a bifurcated for an accounting is denied. 7 In sum, all of Plaintiffs
manner. As Defendants point out, an accounting may be claims (Counts I-VII) survive Defendants ' motion to
demanded in an action in assumpsit as a remedy at law. dismiss under Rule 12(b)(6).
Fudula v. Keystone Wire & Iron Works, Inc., 424 A.2d
921 , 923 (Pa. Super. 1981) (citing PA. R. CIV. P. 1021).
However, "[t]he mere fact that a remedy at law exists is
not sufficient to oust equitable jurisdiction. The question
is whether the remedy is adequate or complete." Williams 8 . MOTION TO DISMISS FOR FAJLURE TO JOIN
v. Finlaw, Mueller & Co. , 141 A. 47, 48 (Pa. 1928). Thus, AN INDISPENSABLE PARTY U1'TJJER FEDERAL
an action for accounting may be brought in equity " when RULE OF CIVIL PROCEDURE 19, PURSUANT TO
the accounts are mutual or complicated or when discovery RULE 12(8)(7)
is needed and is material to the relief." Fudula, 424 A.2d Because some of the alleged unla\l.,ful activity occurred
at 923 (quoting Setlock v. Sutila, 282 A.2d 380, 381 (Pa. during Mr. Olizi's three-month employment by Samuels,
1971 )); see also Holland \'. Hallahan, 60 A. 735 , 736 (Pa. Defendants argue that under PUTSA and through a theory
1905) (rejecting a request for an accounting because of vicarious liability, Samuels is an indispensable party
detennin.ing damages "does not involve the examination under Rule 19.8 Our analysis is twofold :
of intricate and complicated accounts, and under our
practice [the plaintiff] can obtain any information
necessary to enable him to prepare for trial and properly
* 11 [W]e first must determine
to present [the plaintiffs] case"); Gloninger v. Hazard, 42
whether the absent insurers should
Pa. 389, 401 (Pa. 1862) (rejecting equity jurisdiction
be joined as "necessary" parties
given that the accounts at issue were all on one side, not
under Rule l 9(a). If they should be
mutual). Lastly:
joined, but their joinder is not
feasible inasmuch as it would
defeat diversity of citizenship (as
[\\']here the matter to be would be the case here), we next
determined involves the accounts must determine whether the absent
of different parties, to which debit parties are "indispensable" under
and credit items anach and are Rule l9(b).
intermingled, it can generally be

2017 WL 2619000
Gen. Refractories Co. v. First State Ins. Co. , 500 F.3d by providing two funds from which
306, 312 (3d Cir. 2007). Defendants concede that joining a plaintiff may recover.... If the
Samuels would defeat diversity and thus is not ;;feasible" agent is available or has means to
under Rule 19(a). (Motion to Dismiss, Doc. No. 6, p. 13). pay, invocation of the doctrine is
As such, the only issue is whether Samuels is unnecessary because the injured
;;indispensable" under Rule 19(b). To determine this, we party has a fund from which to
must consider: recover.
( 1) the extent to which a judgment rendered in the

person ' s absence might prejudice that person or the
existing parties; Mamalis v. Atlas Van Lines, Inc., 560 A.2d 1380, 1383
(Pa. 1989). As Plaintiff concedes, it has not pleaded a
(2) the extent to which any prejudice could be cause of action against Samuels, (Response in Opposition,
lessened or avoided by: Doc. No. 8, p. 10), and all of Plaintiff's requests for relief
refer only to Defendants, Cu,_, Comp!. ~ 60).
(A) protective provisions in the judgment;
* 12 Plaintiff preemptively argues that Defendants also
(B) shaping the relief; or have no righ~ to seek indemnification from Samuels.
(Response in Opposition, Doc. No. 8, p. 9). We would
(C) other measures ; add that even if Defendants had such a right, it would still
not necessitate dismissal under Rule 19:
(I) whether a judgment rendered m the person ' s
absence would be adequate; and " ' [A] defendant's right to contribution or indemnitv
from an absent non-diverse party does not render th~t
(2) whether the plaintiff would have an adequate
absentee indispensable pursuant to Rule 19.' Janney
remedy if the action were dismissed for nonjoinder.
Montgomery Scon, 11 F.3d at 412 (quoting Bank of
FED. R. CIV. P. 19(b); General Refractories, 500 F.3d at Am. Nat ' I Trust & Sav. Ass' n, 844 F.2d at 1054).
319. Given their interconnectedness, the first two factors Indeed, defendants are free to pursue any claim for
are considered jointly, followed by the remaining two contribution or indemnification they might have against
factors . the absent insurers in a separate action. "
General Refractories, 500 F.3d at 320. As such, the

nonjoinder of Samuels incurs no prejudice whatsoever to
Samuels or the existing parties.
l. Prejudice to Samuels and the Existing Parties, and

the Possibility of Lessening It
Defendants argue that if Plaintiff's claims against

Defendants are proved, then Samuels could also be 2. Adequacy of Judgment
implicated under PUTSA and a theory of vicarious
The third factor ';allows the court to consider whether the
liability. Even if this were true, vicarious liability has not
relief it grants will prove an adequate remedy for the
been invoked in this case.
plaintiff." Id. at 320-21 (citing Provident Tradesmens
Bank & Tr. Co. v. Patterson, 390 U.S. 102 , 112 (1968)).
Because Plaintiff has not stated any claims against
The rules of vicarious liability Samuels or predicated on Mr. Olizi ' s short employment
respond to a specific need in the with Samuels, the nonjoinder of Samuels will not impede
law of torts: how to fully our ability to render adequate judgment for Plaintiff,
compensate an injury caused by the should any if its claims be proved.
act of a single tortfeasor. Upon a
showing of agency, vicarious
liability increases the likelihood
that an injury will be compensated,

2017 WL 2619000
3. Adequacy of Remedy for Plaintiff in the Event of and this motion must be denied.
Dismissal
*13 Although Defendants may fairly judge paragraph 8 of
The final factor ;.counsels that couns should consider Plaintiffs Complaint to be conclusory, they ignore the
whether there is any assurance that the plaintiff, if rest of the Complaint. Plaintiff alleges that: Plaintiff is
dismissed, could sue effectively in another forum where located in Philadelphia, (Comp!. ~,i 3, 9); most (if not all)
better joinder would be possible .... " 9 Id. at 32 I. Here, of Plaintiffs customers are in the Philadelphia region,
Plaintiff does not contend that it could not sue just as (Compl. ~ 10); Plaintiff maintains a customer list, as well
effectively in state coun; however, this is not nearly as other information about these customers, (Comp!. ~•J
enough to outweigh the prior factors, which are 11-12); Defendant Mr. Olizi worked for Plaintiff and had
overwhelmingly in favor of Plaintiff. As such, contact with such information and customers, (Comp!. ~'J
Defendants' motion is denied. 18, 20-23); and Defendants have solicited and continue
soliciting business from Plaintiffs Philadelphia-area
customers, as facilitated by Defendants' alleged use of
Plaintiffs information, (Comp!. ~'J 30, 32-40). With some
imagination, there could be a few narrow gaps here; for
example, the Complaint does not make it explicit that Mr.
A. MOTION TO DISMISS FOR IMPROPER VENUE Olizi worked for Plaintiff in Philadelphia instead of
UNDER 28 U.S.C. ~ 1301 , PURSUANT TO remotely from his New Jersey home. That said, we
FEDERAL RULE OF CIVIL PROCEDURE
reiterate that "the burden is upon the movant ... to show
(12)(8)(3)
that venue is improper under any permissible theory .. .. "
Unlike a proper basis for jurisdiction, which a plaintiff is Myers, 695 F.2d at 725-26. Given this standard and our
required to plead, improper venue is an affirmative
ability to draw reasonable inferences to the benefit of
defense; therefore, "on a motion for dismissal for Plaintiff, Defendants' motion is denied.
improper venue under Rule 12 the movant has the burden
of proving the affirmative defense assened by it." Myers For the foregoing reasons, the instant motion is denied i!!
v. Am . Dental Ass'n, 695 F.2d 716, 724 (3d Cir. I 982). In
toto. An order follows .
their briefs, the parties focus their arguments on the
sufficiency of the pleadings with regard to subsection
(b)(2) of the general venue statute, which holds that a All Citations
civil case may be brought in "a judicial district in which a
substantial part of the events or omissions giving rise to Not Reponed in Fed. Supp., 2017 WL 2619000
the claim occurred, or a substantial part of property that is
the subject of the action is situated .... " 28 U.S.C. §
l39J(b)(2) (201 I). Defendants have not met this burden
Footnotes
Defendants' brief lacks page numbers. For clarity, we consider page 1 to be the page following the Table of Authorities
and beginning with "FACTS."
2 PUTSA defines "trade secret" as:

Information, including a formula, drawing, pattern, compilation including a customer list, program, device, method,
technique or process that:
(1) Derives independent economic value, actual or potential, from not being generally known to, and not being
readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or
use.
(2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
12 PA. CONS . STAT. § 5302. "Improper means· is defined as including, but not limited to, "theft, bribery,
misrepresentation, breach or inducement of a breach of a duty to maintain secrecy or espionage through electronic or
other means." Id.
3 Thus, the preemption analysis that follows applies with equal weight to those subsequent claims made by Plaintiff.
4 In the original text, the court omits "not"; it is clear from context, however, that this was a mistake.

E. Frank Hopkins Seafood, Co., Inc. v. ~lizi, Not Reported in Fed. Supp. (2017)
2017 WL 2619000
5 Defendants' reliance on Nova Design Techs., Ltd. v. Walters, 875 F. Supp. 2d 458, 472-73 (E.D. Pa. 2012) is
misguided. In that case, the plaintiff alleged the conversion of "its sandpaper trigger technology, specifically, the use of
aluminum oxide sandpaper in a hea~ pack." kl The plaintiff did not allege conversion of any other information. kl This
was a detailed, solitary allegation about which the court made its preemption determination in the context of summary
judgment. kl This contrasts sharply with the instant pre-discovery motion, as well as the multitudinous allegations that
Defendants converted confidential information such as "records, reports, customer lists, customers' purchasing history,
the names, addresses, home phone numbers, cell numbers and/or extension numbers of current and former
customers, customer requirements, customer pricing information, contracts, printouts, pricings, pricing strategies, profit
margins, confidential information received from customers, suppliers[,) vendors, and other third parties, prospective
customer information and lists, Hopkins' established know-how,• etc. , any of which may or may not be a trade secret.
{Comp!. ,i 34). As supported by the predominant approach of Pennsylvania courts, we simply do not have enough
information at this stage to warrant supplanting a later determination by a more informed factfinder.
6 As this case proceeds into discovery, Plaintiff should not be content to rely solely on the possibility of an accounting:
"An accounting request is not a substitute for plaintiffs' obligation to establish their damages through discovery."
Centrix HR, LLC v. On-Site Staff Mgmt., Inc., No. 04-5660, 2008 WL 783558, at *17 (E.D. Pa. Mar. 25, 2008) {quoting
Arrowroot Nat. Pharmacy v. Standard Homeopathic Co. , No. 96-3934, 1998 WL 57512, at •12 (E.D. Pa. Feb. 10,
1998)). "An accounting should not be used to aide [sic] a party who has otherwise failed to satisfy his burden of proof
on the damages issue." kl (quoting Genica, Inc. v. Holoohane Div. of Manville Corp., 652 F. Supp. 616, 619-20 (E.D.
Pa. 1987)).
7 It should be noted that even absent Count VII , Plaintiff may have access to an accounting as a remedy for each of its
common law claims instead of as an independent cause of action. Indeed, "[a]n accounting is an essentially equitable
remedy. the right to which arises generally from the defendant's possession of money or property which, because of
some particular relationship between himself and the plaintiff, the defendant is obliged to surrender." Am. Air Filter Co .•
Inc. v. McNichol, 527 F.2d 1297, 1300 (3d Cir. 1975} (emphasis added) (citing Holland, 60 A. at 736 (Pa. 1905);
Shenango Furnace Co. v. Fairfield Twp., 78 A. 937, 943 (Pa. 1911 ); Crennell v. Fulton, 88 A. 783, 785 {Pa . 1913)); see
also Boyd & Mahoney v. Chevron U.S.A., 614 A.2d 1191 , 1196-97 (Pa. Super. 1992) ("Case law in Pennsylvania has
long recognized equitable accounting as an appropriate remedy for wrongful possession of property."). In addition to
the action for an accounting in Count VII , Plaintiff has requested it as a remedy in .each of Counts I-VI; and , even had
Plaintiff not done so, this court is bound to "grant the relief to which each party is entitled, even if the party has not
demanded that relief in its pleadings." FED. R. CIV. P. 54(c).
8 As Plaintiff points out, Defendants in effect concede that Plaintiff has stated a claim against Defendants: "The limited
facts alleged by Hopkins in its Complaint give rise to causes of action against Samuels under both the theory of
vicarious liability and under Pennsylvania statute." (Motion to Dismiss, Doc. No. 6, p. 13). If Plaintiff has stated a claim
against Samuels under a theory of vicarious liability, that necessarily entails that Plaintiff has stated a claim against
Samuels' employee, Mr. Olizi (and through the conspiracy claim, the other Defendants) . And if Plaintiff has stated a
PUTSA claim against Samuels under 12 PA. CONS. STAT. § 5301{1), Defendants also concede that Plaintiff has
sufficiently pleaded that Mr. Olizi employed "improper means· within the meaning of the statute. We must assume that
Defendants intended to state a contingency and argue in the alternative, not contradict their 12(b)(6) motion.
9 Plaintiff quotes General Refractories as saying that this factor "counsels strongly against dismissal ..." (Response in
Opposition, Doc. No. 8, p. 10) (alteration in original) {quoting 500 F.3d at 321). Presenting this as a generally
applicable rule is misleading because the rest of the quoted phrase is "in this case." General Refractories, 500 F .3d at
321. And in that case. the court found it was likely impossible for the plaintiff to be able to bring its suit in state court
given a controlling requirement imposed by the state supreme court, id.; such is not the case here.
End of Document © 2019 Thomson Reuters. No claim to original U.S. Government Works .
WESTLAW © 2019 Thomson Reuters. No cla im to original U.S. Government Works . 11

East Coast Paving & Sealcoating, Inc. v. Emery, Not Reported in A.3d (2013)
2013 WL 10545382, 32 Pa . D. & C. 5th 313
2017 WL 2619000
plaintiff, Parks signed an employee non-compete
agreement as pan of plaintiffs "Employee Guidelines
2013 WL 10545382
Company Policy." The agreement restricted Parks from
Court of Common Pleas of Pennsylvania, Lawrence
ovn1ing, managing, operating, consulting with or being
County.
employed by a business substantially similar to, or
EAST COAST PAVING & SEALCOATING, INC.
competitive with, plaintiffs business and from disclosing
V. or using on his own behalf trade secrets, customer
Michael El'\'lERY, Paula. information, confidential data gained through
employment, or otherwise utilizing the good will of
No. 11356 OF 2012, C.A. plaintiff. The restriction applied to business within one
I hundred miles of the location of plaintiffs place of
Aug. 22, 2013. business for a period of one and one-half years from the
date oftennination of Park 's employment with plaintiff.
Attorneys and Law Firms Parks performed paving and sealcoating work for plaintiff
in the course of his employment and was provided access
Louis M. Perrotta and Joseph P. DiCicco, for plaintiff. to customer infonnation and confidential business
information. Parks was advised that customer information
Norman J. Barilla, for defendants.
was considered a trade secret. Parks, as well as other
employees, was provided v,ith customer information on a
Opinion
need-to-know basis.
MOTTO, P.J. At some point during his employment with plaintiff,

Parks prepared to start a new business called "Emerv 's
Sealcoating" with family members, including the
* I Before the coun for disposition are the preliminary defendants Michael and Paula Emery. The defendants had
objections of the defendants, Michael and Paula Emery, to knowledge of Parks' agreement with plaintiff and Parks'
plaintiffs complaint. The complaint consists of three duty of secrecy regarding customer lists and information,
counts. Count I · seeks recovery for misappropriation of but encouraged Parks to steal infonnation from plaintiffs
trade secrets. Counts 2 and 3 seek recovery for intentional client list for the purpose of soliciting business for
interference with contractual relations. Count 2 relates to Emery' s Sealcoating.
defend ants ' alleged interference with an employment
contract between plaintiff and a one Charles R. Parks While Parks was employed by plaintiff he did steal
which prohibited Parks from competing with plaintiff information regarding plaintiffs customers that Parks and
upon termination 9f his employment and from disclosing defendants intended to use to benefit the business of
trade secrets. Count 3 relates to defendants ' alleged Emery' s Sealcoating.
interference \\ith existing customers and prospecti\'e
customers of plaintiff by inducing those customers to do *2 After Parks termination of employment with plaintiff
business with defendants instead of plaintiff. in September of 2009, Parks began business operations
with Emery's Sealcoating. Defendants assisted Parks in
Defendants' preliminary objections contend that plaintiff establishing Emery' s sealcoating and acquiring business
has failed to state a cause of action as to each count and by contacting and soliciting business from customers
further contends that the complaint fails to conform to law Parks became aware of through his employment with
and rule of court because of a lack of specificity in plaintiff. The business of Emery's Sealcoating was
violation of Pa.R.C.P. 1019(a) and (t). substantially similar to the work performed by plaintiff.
Parks thereafter died and the defendants herein continue
The facts hereinafter set fonh are alleged in plaintiffs to do business as Emery's sealcoating in competition with
complaint. plaintiff utilizing plaintiffs customer information which
parks improperly obtained from plaintiff.
Plaintiff is engaged in the business of paving and
sealcoating. Charles R. Parks was employed by plaintiff Plaintiff contends that the customer information stolen by
from October, 2006 to September, 2009 as an "at \\ill" Parks and used by defendants constitutes a trade secret
employee. In consideration for his employment with within the meaning of 12 Pa.C.S. § 5302 of the
WESTLAW © 2019 Thomson Reuters. No claim to original U.S. Government Works .

2013 Wl 10545382, 32 Pa. D. & C. 5th 313
Pennsylvania Uniform Trade Secrets Act and that in failed to provide in the complaint factual background to
violation of the act, defendants misappropriated the said support the contention that the defendants learned about
trade secrets by utilizing improper means to obtain the the customer information from parks, v.ith notice that the
customer information. customer information was a secret and that Parks
discovered the information by improper means.
Plaintiff further contends that defendants have engaged in Defendants argue that plaintiff has not stated facts to
intentional interference with the contractual relations that support the assertion that defendants were on notice of the
existed between plaintiff and Parks by encouraging Parks secrecy of the customer information.
to violate the employment agreement by misappropriating
customer information with specific intent to harm *3 A cause of action for misappropriation of a trade secret
plaintiff; by disrupting existing contractual relations or is governed by the Pennsylvania Uniform Trade Secrets
preventing funher contractual relations with the said Act ("PUTSA"), 12 Pa.C.S .A. § 5301 et seq. PUTSA
customers from being formed ; and by entering into a defines a "trade secret" as follows:
business in competition with Plaintiff in violation of the
non-compete agreement. Information, including a formula, drawing, pattern,
compilation including a customer list, program, device,
Plaintiff further alleges that the defendants, in method, technique or process that:
combination with Parks, have engaged in intentional
interference with contractual relations that existed ( 1) derives independent economic value, actual or
between plaintiff and its customers and also interfered potential, from not being generally known to, and not
with prospective contractual relations with third party being readily ascertainable by proper means by, other
customers that were solicited by Parks. In so doing, persons who can obtain economic value from its
defendants and Parks specifically intended to harm disclosure or use;
plaintiffs contractual relations with customers and to
prevent prospective relations from occurring when they (2) is the subject of efforts that are reasonable under the
solicited the business of such customers with the intent to circumstances to maintain its secrecy.
acquire their business for their business operations under
12 Pa.C.S.A. § 5302.
Emery's Sealcoating.
A compilation of a company' s clientele or a compilation
constituting a list of customers is an asset or value
acquired by virtue of efforts and expenditures over a
period of time and should be protected as a form of
property. John G. Bry•ont Co., Inc. v. Sling Testing and
Preliminary Objection in the Nature of a Motion to Repair, Inc., 369 A.2d 1164 (Pa. I 977); A.M. Skier
Dismiss Count l-Failure to State a Cause of Action for Agency. Inc. v. Gold, 747 A.2d 936 (Pa.Super.2000).
Misappropriation of Trade Secrets Although the identity of customers may be found through
public sources such as a telephone book, it is the
Defendants contend that plaintiff has failed to plead a compilation of thousands of customer names with contact
cause of action for misappropriation of trade secrets information, customer preferences and peculiarized
against defendants Emery with particularity and have information relative to each customer that would be
failed to provide the material facts upon which the claim valuable to competitors and must be protected, as no
against defendants is based. The preliminary objection public source could be the equivalent of such a
recites that plaintiff has failed to plead that either compilation. Thus, a compilation of customer data that is
defendant, Michael Emery or Paula Emery, entered into not readily available from other sources v.ill qualify as a
any agreement with Parks to perform the alleged unlawful trade secret. See Spring steels. Inc. ,,. Molloy, 400 Pa.
act of stealing trade secrets, or othernise consented 354, 162 A.2d 370 (1960).
thereto, and that plaintiff has failed to plead facts that
support the contention that the defendants acted with an Here, the complaint alleges that Parks, who had access to
evil motive. the confidential information, was prohibited from
disclosing or using on his own behalf customer
In their brief, defendants argue that plaintiff has alleged information gained through employment and that he was
insufficient facts to qualify any customer list as a trade provided access to customer information through his
secret or 10 otherwise demonstrate that any client employment to the extent that such access was necessary
information is entitled to trade secret protection and has for plaintiffs legitimate business operation. Further, it is

2013 Wl 10545382, 32 Pa. D. & C. 5th 313
alleged that Parks was advised that the customer potential customers were identified through public
information was considered a trade secret and that Parks, sources and customers were shared. Thus, the ultimate
as well as other employees, was provided with customer finding as to whether or not the customer list which
infonnation on a "need to know basis", and that Parks did plaintiff alleges was "stolen" by defendants can only be
"steal" infonnation regarding plaintiffs customers that determined by analysis of the available evidence, either
Parks and the defendants intended to use to benefit through summary judgment or trial.
Emery 's Seakoating. Thus, it may be inferred from the
allegations of the complaint that plaintiff maintained a The court here concludes that plaintiff has sufficiently
customer list which derived independent economic value stated a cause of action under PUTSA for misappropriate
from not being readily ascertainable by proper means and of trade secrets; that the defendants have been put on
that plaintiff utilized efforts that were reasonable under notice of the facts against which it must defend and that to
the circumstances to maintain the secrecy of the require any further facts to be alleged would improperly
information and that Parks and the defendants conspired require the pleading of evidence. The court further finds
ro steal this confidential information. -that discovery is available to defendants to discover the
information that will ultimately be relevant in making a
Defendants argue that the plaintiff has failed 19 allege the judicial determination as to whether or not the customer
factual background to support the allegations above information in question constitutes a trade secret.
referred to; that since plaintiff failed to provide specific
information pertaining to the contents of the client list, the
court is unable to perform the necessary fact intensive
analysis required to determine whether a customer list is
entitled to trade secret protection. Defendants also argue
that the complaint fails to state facts to support its
• assertion that the defendants were on notice of the secrecy Preliminary Objection in the Nature of a Motion to
of the customer information or that the customer Dismiss Count 2-Failure to State a Cause of Action for
infonnation was a secret and that parks discovered the Intentional Interference With Contractual Relations
information by improper means.
In count 2 of the complaint, the plaintiff has alleged that a
contractual relationship existed between the plaintiff and
*4 The court here finds that the complaint alleges the
Parks. That contractual relationship required that Parks
material facts to support the above stated cause of action
not compete with plaintiff and that he maintain the
for misappropriation of trade secrets. Material facts are
secrecy of customer lists. Plaintiff has alleged that the
those that are essential to show the liability that is sought
defendants intentionally encouraged Parks to steal
to be enforced. General Stare Authority 1•. Sutter Corp.,
information from plaintiffs client lists for the purpose of
44 Pa. Commwlth. 156,403 A.2d 1022 (1979). Sufficient
soliciting business for Emery Sealcoating, a business
facts must be stated to define the issues to be tried and put
which Parks unlawfully entered into in combination with
an opponent on notice of what he or she will be called
the defendants. The plaintiff alleges that the agreement
upon to meet at trial; however, evidentiary matters are not
not to compete between Parks and plaintiff was legally
to be included in the pleading. Com., Dept. of Tramp.
valid and enforceable and that defendants encouraged
(PennDOT) v. Bethlehem Steel Corp., 33 Pa. Commwlth.
Parks to violate the agreement by misappropriating the
l , 380 A.2d 1308 ( 1977). It is held that to require a party
customer information with specific intent to hann plaintiff
to plead purely evidentiary maners or matters that are the
by disrupting existing contractual relations that plaintiff
proper subject of discovery would emasculate Pa.R.C.P. §
had with its customers or preventing further contractual
1019. Pike county Hotels Corp. v. Kiefer, 262 Pa.Super.
relations with customers from being fonned. Plaintiff has
126, 396 A.2d 677 (I 978).
alleged that defendants have not had any privilege or
justification for their intentional actions in encouraging
In Iron Age Corp. v. !A-orak, 880 A.2d 657
parks to violate the agreement.
(Pa.Super.2005), the Superior Court held that an
employer' s customer list was available to competitors
*5 Generally, one who, without privilege to do so,
through legitimate means and, thus, could not be declared
induces or otherwise purposely causes a third person not
a " trade secret" so as to be entitled to protection by
to perform a contract with another is liable to the other for
injunctive relief. However, in reaching that conclusion the
harm caused thereby. Raneri v. DePolo, 65 Pa.
court relied upon the testimony of witnesses including a
Comm with. 183, 441 A.2d 13 73 (1982). The elements of
former employee which proved that the customer lists
intentional interference with contractual relations are: {I)
were widely known, and, in the industry in question
the existence of a contractual relation between the

2013 WL 10545382, 32 Pa. D. & C. 5th 313
complainant and the third party; (2) purposeful action by

the defendant, specifically intended to harm the existing *6 The plaintiff having alleged all the essential elements
relation, or to prevent a prospective relation fro~ of the tort of intentional interference with contractual
occurring; (3) the absence of a privilege or justification on relations, defendants ' motion to dismiss count 2 of the
the part of the defendant; and (4) the occasioning of actual complaint will be denied.
legal damage as the result of the defendant's conduct.
PM/lips \'. Selig, A.2d 420 (Pa.Super.2008), appeal
denied, 967 A.2d (Pa.2009). The tortious interference
with a contract requires the involvement of at least three
parties: the two contracting parties and a third person who
interferes with that contract. Kia v. imaging Sciences,
intern. , Inc.. 735 F.Supp.2d 256 (E.D.Pa.2010). Preliminary Objection in the Nature of a Motion to
Dismiss Count 3-Failure to State a Cause of Action for
The facts in this case are similar to the facts found in Intentional Interference with Contractual Relations With
Morgan 's Home Equipment Corp. v. Martucci, 390 Pa. Plaintiffs Customers
618, I 36 A.2d 83 8 (I 9 57). In Morgan 's, one of the
In count 3 of the complaint, the plaintiff alleges that it had
defendants admined that he offered employment and
either contractual relations or prospective contractual
ultimately hired the other defendants with knowledge that
relations with customers that were solicited by Parks and
they had signed restrictive agreements with the plaintiff,
the defendants. Plaintiff further allege that the defendants
and that they would be acting inconsistently with the
and Parks specifically intended to harm plaintiffs
covenants contained therein in the course of their new
contractual relations with customers and to prevent
employment. The Morgan 's court noted that one who
prospective relations from occurring when they solicited
intentionally interferes with an existing contractual
relation is subject to liability for the breach of the the. busine~s of such customers \\ith the intent to acquire
their busmess for defendants' business operations.
contract. The defendant asserted no privilege for inducing
According to the complaint, the defendants engaged in the
the breach of the covenants not to divulge confidential
conduct with the specific intent to harm plaintiff and
information, not to solicit or compete for the patronage of
acted without any legally valid privilege or justification
plaintiff Morgan ' s customers, not to anempt to persuade
for defendants ' interference, causing plaintiff to suffer
customers to withhold their patronage, and not to divert
damages in the form of lost profits.
plaintiff Morgan's business. Such defendant was therefore
enjoined from continuing the unlawful conduct. The facts
The elements of intentional interference \\ith contractual
alleged in the case at bar are nearly identical to the facts
relations has been above set forth relative to defendants'
in Morgan ·s where it is alleged that the defendants
preliminary objections seeking to dismiss count 2 of the
i~duce~ Parks to violate his contract with plaintiff by
complaint in relation to the contract that existed between
d1sclosmg the content of confidential customer lists of
plaintiff and Parks_ The same analysis applies with equal
plaintiff so that defendants, in a rival competing business,
force as to defendants' alleged interference with existing
could solicit those customers. All of the necessary
contractual relations that plaintiff had relative to existing
elements have been alleged including (I) the existence of
customers. Thus, the defendants alleged unjustified
a contractual relation between the plaintiff and the third
interference with contractual relations that plaintiff had
party, Parks; (2) purposeful action by the defendants
with its customers that were not privileged is actionable
specifically intended to harm the existing relation, in that
where it is alleged that the defendants used improper
the defendants purposefully induced Parks to violate the
means t~ ~olic!t the business of such customers away
contract by disclosing the confidential information and
from plamuffs m order to acquire that business for their
stealing customer information protected as a trade secret:
own business operation.
(3) the absence of any privilege or justification on the part
of the defendants, where it is alleged that the purpose of
With respect to the allegation of intentional interference
the defendants was to unla\\rfully compete in a rival
with the prospective contractual relationships between
business by using the protected information; and (4) the
plaintiff and its customers, a claim for intentional tortious
occasion of actual legal damage as the result of the
inte~erence with prospective contracrual relationships
defendants' conduct, here unlawfully transacting business
requires that a plaintiff establish: ( 1) prospective
with plaintiffs customers, disrupting existing contractual
contracrual relations; (2) the purpose or intent to harm the
relations between plaintiff's customers and Plaintiff. and
plaintiff by preventing the relation from occurring; (3) the
preventing funher. contractual relations with the · said
absence of privilege or justification on the part of the
customers from being formed with the plaintiff.
defendant; and (4) actual damage resulting from the

2013 WL 10545382, 32 Pa. 0 . & C. 5th 313
defendant's conduct. reality a request to require plaintiff to plead evidence and

seeks factual information that is more appropriately
A prospective contract relation is something Jess than a addressed through the discovery process.
contractual right, but something more than a mere hope.
In short, it is a reasonable probability that contractual The defendants specifically assert the failure of the
relations will be realized or established. JnfoSA GE. Inc. v. complaint to allege the date when Parks breached the
Mellon Ventures, L.P., 896 A.2d 616 (Pa.Super.2006). employee non-compete agreement; the failure of the
The tort of interference with prospective contractual complaint to allege facts to support the assertion that
relations is an intentional one in which the actor is acting defendants encouraged Parks to steal infonnation from
for the purpose of causing harm to the plaintiff. Glenn v. plaintiffs client lists and that the defendants solicited
Point Park College, 441 Pa. 474 , 272 A.2d 895 (1971). business from plaintiff's customers; the failure of
plaintiffs complaint to set fonh facts to support the
*7 Generally, a privilege exists in a case of competition allegations that defendants continue to do business as
between sellers or former customers and their suppliers. Emery' s Seakoating; the failure of plaintiff's complaint
>'eager 's Fuel. Inc. v. Pennsylvania Power & ligh1 Co. , to provide the nature of the customer information which
953 F.Supp. 617 (E.D.Pa.1997); Wexler v. Greenburg, defendants allegedly obtained improperly; the failure of
399 Pa. 569, 160 A.2d 430 (1960). One who intentionally plaintiff to provide specific factual details to support
causes a third person not to enter into a prospective assertions of misconduct by the defendants; failure of the
contractual relation with another who is his or her complaint to allege when and where the ,,1rongful conduct
competitor or not to continue in an existing terminable of acquiring business by contracting with and soliciting
at-will contract with the competitor is privileged to do so business from customers of plaintiff occurred; and the
and therefore does not interfere improperly with the general failure of the complaint to aver the specific date,
competitor' s relation if: (I) the relation concerns a matter time, identity of parties or location relating to the material
involved in the competition between the actor and facts supporting the plaintiffs cause of action which
another; and (2) the actor does not employ wrongful prevents defendants from adequately investigating the
means, Here, the complaint negates a finding of privilege claims and preparing an appropriate response of pleading.
on the part of the defendants, where they are alleged to be
in competition with the plaintiff, because the improper *8 The requirements and purpose of Pa.R.C.P. § 1019(a)
means utilized by the defendants have been alleged. The is summarized in Goodrich Arnram 2d, Volume 2, Section
complaint specifically alleges that defendants encouraged IO I 9(a): I as follows :
Parks to violate his employment agreement with plaintiff
by unlawfully disclosing confidential customer lists and
unlawfully stealing from plaintiff customer information
and providing that information to the defendants. The material facts on which a cause
of action ... is based must be stated
For the foregoing reasons, the court finds that plaintiff has in a pleading in a concise and
alleged a cause of action for intentional interference with summary form. The purpose of this
. contractual relations and interference with prospective Rule is to require a plaintiff to
contractual relations regarding plaintiffs customers. disclose the material facts sufficient
to enable the adverse party to
prepare the case. [T]he complaint
must not only give the defendant
notice of what the plaintiffs claim
is and grounds upon which it rests,
but also must formulate the issues
Preliminary Objection in the Nature of a Motion to by summanzmg those facts
Dismiss For Lack of Specificity essential to support the claim.
(Citing Finegold v. Hendrzak. 15
Throughout defendants' preliminary objections, A.3d 937 (Pa.Super.2011); Fosrer
defendants have repeatedly asserted a lack of specificity v. UPMC SoUllr Side Hosp., 2 A.3d
relative to the allegations of the complaint. In finding that 655 (Pa.Super.20 I 0), appeal
plaintiff has sufficiently alleged a cause of action for denied. 12 A.3d 371 (Pa.2010);
misappropriation of trade secrets, the coun has already Toney v. Chesler County Hosp. ,
addressed the specificity issue indicating that the 961 A.2d 192 (Pa.Super.2008),
additional specificity which defendants request is in order a.ff'd, 36 A.3d 83 (Pa.2011);
2013 WL 10545382, 32 Pa. D. & C. 5th 313
McShea v. City of Philadelphia, will not consider the statute of limitations, as the defense
995 A.2d 334 (Pa.2010). of the statute of limitations must be raised by \'.'a)' of new
matter and is not appropriate for determination by way of
preliminary objections. Pa.R.C.P. 1030; Cobbs l '. Allied
Chem. Co,p ., 443 Pa.Super. 386, 661 A.2d 1375 (1995).
Material facts are those that are essential to show the With the issue preserved in new matter, the discovery
liability that is sought to be enforced. General State process can develop the evidence relating to when the
Authority "· Sutter Corp., 44 Pa.Commwlth. 156, 403 cause of action arose, which in tum will allow the issue to
A.2d I022 (1979). A complaint that fails to set fonh be determined through either summary judgment, or at
material facts to support the claim is inadequate because a trial, if a factual issue is raised relative to the applicability
plaintiff must know the ground upon which to make the of the statute of limitations. Cf Farinacci v. Beaver
defense; thus, if there is a question of the basis on which County Industrial Dev. Authority, 510 Pa. 589, 511 A.2d
the complaint seeks recovery, the complaint is 757 (1986) holding that preliminary objections available
insufficient. Starks "· Montgomery County Housing to a party do not include the bar of a statute of limitations.
Authority, 11 Pa. D. & C.3d 93 ( 1978); Cassell v.
Shellenberger, 356 Pa.Super. 101 , 514 A.2d 163 (1986). *9 The coun therefore concludes that the complaint
contains sufficient specificity and as to each cause of
Here, the coun has performed an analysis regarding each action the plaintiff has alleged the material facts necessary
count of the complaint and has demonstrated how the to suppon each cause of action. Accordingly, the
material facts upon which each cause of action is based defendants ' preliminary objections in the nature of a
has been set forth. Defendants ' claim of lack of specificity motion to dismiss for lack of specificity will be denied.
is in reality a request that the plaintiff provide detail that
is not necessary to suppon each cause of action. Although
defendants cite Pa.R.C.P. 1019(f) as requiring the
pleading of time and place, whether the pleading of time
or place is required depends upon the significance of time
and place, where these factors are not significant,
discovery offers an adequate remedy. Gilbert v. Wohl, 56 ORDER OF COURT
Pa. D. & C.2d 376 (C.P.1972). The Pennsylvania Rules of
Civil Procedure do not require a party to do the And now, this 22nd day of August, 2013 , in accordance
impossible and what is sufficiently specific as to time with the accompanying opinion of even date herewith, it
. depends upon the nature of the circumstances. Here, is ordered and decreed that the defendants ' preliminary
knowledge of the exact date and time of the alleged objections to the plaintiffs complaint are each denied.
wrongful acts of the defendants are particularly within the The defendants shall file an answer to the complaint
control of the defendants and not the plaintiff. It is likely within twenty (20) days of the date this order is docketed.
that ascenaining the date and time at which the events
occurred will come about through the discovery process.
The specific dates and times are not crucial to the cause of All Citations
action but mav be relevant to determining the time that
Not Reported in A.3d, 2013 WL l 0545382, 32 Pa. D. &
the cause of ;ction arose for purposes of addressing the
C. 5th 313
statute of limitations. In fact , defendants have raised the
issue of the statute of limitations in their brief although
not in the J>reliminary objections. The coun at this time
End of Document © 2019 Thomson Reuters. No claim to original U.S. Government Works.

Commonwealth Code Inspection Service Inc Vs Clem Malot and Pennsylvania Municipal Code Alliance

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Commonwealth Code Inspection Service Inc Vs Clem Malot and Pennsylvania Municipal Code Alliance

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V

IN THE COURT OF COMMON PLEAS OF THE 39TH JUDICIAL DISTRICT OF

ROBERT C. MALOT a/k/a

PLAINTIFF'S OPPOSITION TO DEFENDANTS'

Summary Judgment Standard ......................................................................................... 15

Defendants are not Entitled to Summary Judgment on Count VI of the Amended

APPENDIX OF UNPUBLISHED CASES

Curran v. Philadelphia Newspapers, Inc., 497 Pa. 163 (1981) ................................................ .. 15

E. Frank Hopkins Seafood, Co. v. Olizi, No. 2:17-CV-01558-JCJ, 2017 WL 2619000, at *7

Meriwether v. Philadelpl,ia Newspapers, 684 A.2d 137 (1996), appeal denied,

Potter v. Herman, 762 A.2d 1116 (2000) ................................................................................... 15

Sylvester v. Beck, 178 A.2d 755, 757 ( 1962) .............................................................................. 36

Pennsylvania Rule of Civil Procedure 1035.2 ......................... ........................... ..................... ... 15

12 Pa.C.S.A. § 5302 ........ .............................................. ...... ........................... ............................. 26

61A Am.Jur.2d Pleading§ 322 ............................................................... ......................... ........... 23

document that speaks for itself and any characterization or mischaracterization is

based on an elevated burden that exists for preliminary injunction.

as such any characterization is specifically denied. By way of further response, in

Commonwealth Code lnspectio11 Services, Inc.

Hrg., N.T. 26:9-19).

CCJS Hires Mr. Malot in 2001

Motion, Ex. C; W. Schilling Dep. 23 : 10-14).

Mr. Malot's Employme11t witlt CCJS a,rd Compe11satio11 Structure

not every residential permit fees are paid directly to CCIS .

Dep. 188: 12-18).

31 . Admitted in part and Denied in part. Mr. Malot's compensation consisted of a

management fee of I 0% of revenues realized for inspections conducted by inspectors he

Opp. Ex. C; N. Nead Dep. 17:20-25; 18:16-24).

based on the revenues of inspectors he supervised.

without payment. (Def. Motion Ex. B; P. Schilling Dep. 96:3-13).

whether or not the inspection budget was overdrawn.

Dep. 37:2-19, 109:2-17).

53. Admitted. It is a mischaracterization of the testimony that the hypothetical

186:8-188:4; Pl. Opp. Ex. A; P. Schilling Dep. 37:2-19, 109:2-17, 173:14-175:6).

deficit or an overage to be dispersed.

inspections on that job.

in Mr. Malot's region. (Def. Ex. B; P. Schilling Dep. 95:25-96:13).

186:8-188:4; Pl. Opp. E~. A; P. Schilling Dep. 37:2-19, 109:2-17, 173:14-175:6).

Mr.Malot's Attempts to Purcltase CCJS

Schilling Dep. 45:11-46:8).

used those records to negotiate a buy-out.

of Mr. Malot' s non-disclosure agreement with CCIS. There is no record evidence to

leave the company. (Id.).

Schimaneck averred with respect to Mr. Malot's non-compete agreement This is

testimony or documentary evidence.

Motion Ex, R).

Mr. Malot's Resig11ati011/rom CCJS and Formatio11 of PMCA

understanding of the applicability of that agreement at the time of his resignation is a

Ex. F; lnj . Hr. N.T. 66:22-70:7).

lists(Pl. Opp. Ex. F; lnj. Hrg. N.T. 73 :8-76 :10).

82. Admitted that is Mr. Malot' s testimony.

83 . Admitted that is Ms. Malot's testimony.

CCIS . (Def. Motion Ex. U; J. Malot Dep. 43: 14-44: I 5).

86. Admitted that is Ms. Malot' s testimony.

inducement and solicitation. (Pl. Ex. C; N. Nead Dep. 53: 1-6).

PMCA after improper inducement and solicitation by PMCA.(Def. Motion Ex. B; P.

began cancelling their contracts with CCIS. (Id.).

PMCA 's interference its contracts.

managed by Mr. Matot, which suffered more significantly.

CCIS's revenues in Chambersburg and Bedford suffered significantly as a result of the

Defendant's unfair competition.

CCJS Resurrects tlte Non-Compete a,rd Alleges Misappropriation of Trade Secrets

following his precipitous resignation.