author: NEALON, J.,

text:
    Sandvik, Inc. v. Mecca C & S, Inc.

      Jessica A. Stow, for plaintiff.

      Joel M. Wolff, for defendants.
    May 21, 2014
   NEALON, J.,

— -A manufacturer of custom-engineered power springs has sued its former employee for alleged misappropriation of trade secrets, and “upon information and belief’ based upon its review of the ex-employee’s business website, asserts that the defendant employee currently sells spring design software which improperly incorporates the manufacturer’s proprietary information in contravention of his employment agreements and Pennsylvania trade secrets law. The former employee contends that he has developed superior spring technology software utilizing publicly available engineering concepts and his own ingenuity. The ex-employee has appealed the special trial master’s discovery ruling requiring him to provide the manufacturer access to his spring technology software, and argues that the grant of such discovery will enable the manufacturer to discover and possibly replicate his proprietary information and confidential formulas that are reflected in that software.

In trade secrets discovery disputes, the party resisting discovery must first establish that the material sought constitutes protected proprietary information, and if that party does so, the burden shifts to the requesting party to demonstrate a compelling need for that discovery which outweighs the harm of its disclosure. The parties’ submissions indicate that the defendant employee’s software contains his trade secrets and confidential equations. The manufacturer contends that it must, nevertheless, access that software to prove its trade secrets claims, while the ex-employee submits that the manufacturer has not demonstrated that its compelling need for such discovery outweighs the harm that the employee will suffer from the disclosure of his software to his business competitor and litigation adversary.

To resolve the parties’ circular arguments regarding the protected statuses of their trade secrets and software, a spring technology software expert will be appointed by the court to review the parties’ respective spring technology software, to determine whether the defendant employee’s software impermissibly integrates the manufacturer’s trade secrets as alleged, and pursuant to the protocol set forth in this memorandum and order, to prepare a report of the expert’s findings. After the expert has provided that report to the defense, the former employee may either (a) furnish it to the manufacturer or (b) file his objection(s) to its production to the manufacturer. In the latter event, the expert’s report will be submitted for an in camera review by the court to determine the discoverability of the report and the software at issue.

I. FACTUAL BACKGROUND

Plaintiff, Sandvik, Inc. (“Sandvik”), maintains a business unit, Sandvik Materials Technology, which designs and manufactures spring products, including custom-engineered power springs. (Docket entry no. 1 at ¶ 2). From October 1995 to July 2009, defendant, William Mecca (“Mecca”), was employed by Sandvik as a process engineer, senior production facilitator, manufacturing engineering manager, and Spring China operations manager. (Id. at ¶ 3; Docket entry no. 3 at ¶ 3). In November 2009, Mecca formed defendant, Mecca C & S, Inc., which is engaged in the business of selling custom-engineered spring technology software. (Id. at ¶¶ 4,44).

Sandvik claims to have developed “spring technology software” which “employs an N-value term that allows the otherwise theoretical spiral spring calculations to have ‘real world’ application by creating idealized straight line torque and stress information.” (Docket entry no. 1 at ¶14). Sandvik avers that it has also designed “a Finite Element Analysis (“FEA”) that is capable of application to spring technology software and modeling.” (Id. at ¶ 16). According to Sandvik, its “software is a compilation of numerous data points, formulas and calculations, including use of a refined N-value term, which took Sandvik...many years and substantial funds to develop,” and “that allows it to manufacture custom-engineered springs based on the design specifications of its clients.” (Id. at ¶17).

During the course of his employment with Sandvik, Mecca allegedly “worked on development of spring technology and software” and “helped develop the confidential and proprietary software that allows [Sandvik] to manufacture custom-engineered springs based on the design specifications of its clients.” (Id. at^ 39,40). In that capacity, he ostensibly had access to Sandvik’s “technology related to the process for developing and producing spiral springs, software, design parameters, empirical data on endurance and performance, and application and use of the N-value term in spring development software programming, including technology related to prestressed and precoiled springs.” (Id. at ¶ 37). While employed by Sandvik, Mecca reportedly “executed several agreements that prohibited him from disclosing or using Sandvik’s trade secrets and confidential business information other than in furtherance of his employment at Sandvik.” (Id. at ¶ 28). Specifically, Mecca’s employment agreements barred him divulging or using Sandvik’s “confidential or proprietary information” without Sandvik’s “prior written approval,” and required him to return any such information to Sandvik upon the termination of his employment. (Id. *¶¶31,33).

Sandvik contends that Mecca’s business “currently advertises online at http://www.spiral-spring.com/ as ‘Spiral Springs Solutions,’ offering consulting services, training, Power Spring Design services, and spring design software.” (Id. at ¶ 45). It is averred that Mecca’s website offers for sale Mecca’s “Power Spring Design Software” and “Spiral Hair Spring Design Software” which are described as using “numerous formulas and FEAmethods.” (Id. at ¶¶ 46-47). Based “[u]pon information and belief,” Sandvik asserts that “the Power Spring Design Software and Spiral Hair Spring Design Software available for sale on the Mecca C & S website incorporates and uses Sandvik’s confidential and proprietary spring technology software, including the numerous, complex calculations that Sandvik has spent substantial time refining.” (Id. at ¶ 50). More particularly, Sandvik maintains that Mecca’s software improperly integrates Sandvik’s “use of the N-value calculation term,” “application of FEA to spring technology,” and “use of the refined N-value term necessary to allow[ ] theoretical calculations to have ‘real world’ application.” (Id. at ¶¶ 53, 54, 56, 58).

Sandvik filed a complaint against Mecca asserting causes of action for breach of the non-disclosure provisions of his employment contracts, misappropriation of trade secrets and confidential business information under the Pennsylvania Uniform Trade Secrets Act (“PUTSA”), 12 Pa. C.S.A. §5301, et seq., and unjust enrichment. (Id. at ¶¶ 71-107). In connection with those claims, Sandvik “sought information regarding [Mecca’s] development and sales of the spring software at issue, such as information transmitted over [Mecca’s] website, http://www.spiralspring.com/,” and demanded production of Mecca’s spring design “software and the design and development of [Mecca’s] spring software.” (Docket entry no. 9 at pp. 2-3). After Mecca objected to that software discovery on the ground that it seeks his own “trade secrets and confidential information,” (Docket entry no. 10 at p. 3), Sandvik presented a motion to compel discovery to the special trial master, while Mecca submitted a motion for a protective order prohibiting any such discovery. (Docket entry no. 5; docket entry no. 7, exhibit C). On December 16, 2013, the master denied Mecca’s motion for a protective order, and granted Sandvik’s discovery motion subject to a confidentiality stipulation. (Docket entry no. 6).

Mecca has appealed the master’s discovery ruling, and argues that he has “developed superior software” in the form of his “Power Spring Design Software and Special Hair Spring Design Software” by utilizing FEA and N-value term concepts that are publicly available. (Docket entry no. 10 at pp. 1,7-10). Mecca asserts that the grant of access to his spring technology software will result in the disclosure of Mecca’s own “trade secrets and confidential information” to Sandvik. (Id. at p. 3). To that end, he states that “Mecca C & S purchased a third party encryption software allowing licenses sold to clients to be date protected, hardware locked to each specific computer, and making its trade secret equations invisible to users.” (Id. at p. 8). Sandvik maintains that the discovery sought is relevant and necessaiy for the resolution of its claims, and that the necessity for such discovery outweighs any potential harm resulting from that disclosure since the software discovery will be governed by a confidentiality order. (Docket entry no. 9 at pp. 1, 5-8).

The circular reasoning surrounding the parties’ discovery dispute can best be summarized as follows: Sandvik contends that Mecca misappropriated Sandvik’s trade secrets by including its confidential information in Mecca’s spring technology software, and seeks access to that software in order to prove its claims; whereas Mecca argues that Sandvik’s requested discovery will improperly enable Sandvik to obtain Mecca’s trade secrets and proprietary information. As a potential resolution, the undersigned suggested at the time of oral argument that the parties agree to the court-appointment of an appropriate software consultant (a) to conduct an in camera review of the parties’ respective software, (b) to ascertain whether Mecca’s software incorporates Sandvik’s trade secrets as alleged, and if the expert concludes that Mecca’s spring technology software does integrate Sandvik’s proprietary information, (c) to advise Mecca in the first instance of that finding by providing him with a copy of the expert’s written report. In the event that Mecca objects to the disclosure of the relevant software information to Sandvik, Mecca would be entitled to submit his objections to the undersigned, who would also conduct an in camera review of the expert’s report, so that the merits of Mecca’s objections could be addressed. Conversely, if the court-appointed software discovery master concludes that Mecca’s software does not utilize Sandvik’s trade secrets or confidential information as alleged, the parties’ discovery dispute, and presumably this litigation, would become moot. (Transcript of Proceedings (“T.P.”) on 2/14/14 at pp. 7-11, 14-17, 31-32). Counsel for the parties were directed to advise the undersigned within thirty (30) days whether they could agree to the appointment of such a discovery master to undertake the suggested software analysis. (Id. at pp. 34-37).

By letter dated March 13, 2014, Sandvik reported that it “is amenable to engaging a court-appointed expert to address the merits of the case such as whether trade secret information was misappropriated,” but that Mecca was only willing to retain such an expert “to address the limited issue of whether [Mecca] should produce the discovery requested by Sandvik.” (Correspondence from Jessica A. Stow, Esquire to Judge Terrence R. Nealon dated 3/13/14). Sandvik contends “that an expert is unnecessary for such limited purposes, and the cost and delay associated with that exercise is not warranted.” (Id.). On March 14, 2014, Mecca submitted his reply in which he stated that he “agrees with the court’s proposal” concerning the appointment of a software consultant as “a potential solution to the issues raised by [Mecca’s] motion” for a protective order. (Correspondence from Joel M. Wolff, esquire to judge Terrence R. Nealon dated 3/14/14). Hence, the parties’ software discovery dispute awaits resolution.

II. DISCUSSION

(A) STANDARD OF REVIEW

Pursuant to Lacka. Co. R.C.P. 4000.1, discovery motions must initially be presented to and decided by the court-appointed special trial master whose ruling “may be appealed de novo” to the court of common pleas within ten days of the master’s decision. Fratzola v. Klepadlo, 26 Pa. D. & C. 5th 533, 537-538 (Lacka. Co. 2012). Under Pa.R.C.P. 4003.1, “discovery is liberally allowed with respect to any matter, not privileged, which is relevant to the cause being tried.” Berg v. Nationwide Mutual Insurance Company. Inc., 44 A.3d 1164, 1178 n. 8 (Pa. Super. 2012), app. denied, 65 A.3d 412 (Pa. 2013). Information is relevant “if it logically tends to establish a material fact in the case, tends to make a fact at issue more or less probable or supports a reasonable inference or presumption regarding a material fact.” Kelin v. Aronchick, 85 A.3d 487,498 (Pa. Super. 2014); Smith v. Morrison, 42 A.3d 131, 137 (Pa. Super. 2012), app. denied, 57 A.3d 71 (Pa. 2012).

The relevancy standard applicable to discovery is necessarily broader than the standard used at trial for the admission of evidence. Com. v. TAP Pharmaceutical Products, Inc., 904 A.2d 986, 994 (Pa. Cmwlth. 2006); George v. Schirra, 814 A.2d 202, 205 (Pa. Super. 2002). The party objecting to discovery generally bears the burden of establishing that the requested information is not relevant or discoverable. Koken v. One Beacon Insurance Company, 911 A.2d 1021, 1025 (Pa. Cmwlth. 2006); Yadouga v. Cruciani, 66 Pa. D. & C. 4th 164, 168 (Lacka. Co. 2004). Any doubts regarding relevancy are to be resolved in favor of discovery. Ario v. Deloitte & Touche, LLP, 934 A.2d 1290, 1293 (Pa. Cmwlth. 2007).

Although trade secrets are afforded protection under the law, there is “no absolute privilege or unconditional bar as to disclosure of such matters.” Crum v. Bridgestone/Firestone No. Amer. Tire, LLC, 907 A.2d 578, 585 (Pa. Super. 2006). Pennsylvania Rule of Civil Procedure No. 4012 governs protective orders and states that “for good cause shown” the court may issue an order “that a trade secret or confidential research, development or commercial information shall not be disclosed or [shall] be disclosed only in a designated way.” Pa.R.C.P. 4012(a) (9). “If a party establishes that information sought is a trade secret or confidential business information, then it has established good cause under Rule 4012(a)(9).” Markwest Liberty Midstream & Resources, LLC v. Clean Air Council, 71 A.3d 337,343 (Pa. Cmwlth. 2013).

Pennsylvania employs a shifting burden of persuasion relative to discovery requests and objections implicating trade secrets. Under that standard, the party resisting discovery must first establish that the information sought is a protected trade secret, and if it does so, the burden shifts to the requesting party to demonstrate, by competent evidence, that there is a compelling need for that information, and that the necessity outweighs the harm of Markwest Liberty Midstream & Resources, 71 A.3d at 344; Crum, 907 A.2d at 587. The questions of whether discovery of trade secrets is to be allowed, and the form of any protection to be afforded, are matters vested to the discretion of the trial court. Rohm and Haas Company v. Lin, 992 A.2d 132, 143 (Pa. Super. 2010), cert. denied, 132 S.Ct. 852 (U.S. 2011); Crum, 907 A.2d at 586.

(B) TRADE SECRETS DISCOVERY

Mecca submits that the “decision of [special trial] master Henry P. Burke allows Sandvik to circumvent the law by avoiding the applicable burden shifting scheme which requires Sandvik to demonstrate by competent evidence that there is a compelling need for the documents and information it requests of [Mecca], and that such necessity outweighs the harm of disclosure.” (Docket entry no. 1 at p. 4). Mecca asserts that “Sandvik has no legitimate need for [Mecca’s] trade secret and confidential information as it has not suffered any recoverable loss as a result of [Mecca’s] market and sale of [Mecca’s] software.” (Id. at p. 11). Sandvik counters that its access to Mecca’s spring software is necessary “to determine the extent of [Mecca’s] misappropriation” of Sandvik’s trade secrets, and that “the discovery sought is central to resolution of this case.” (Docket entry no. 9 at p. 6). Sandvik further argues that the necessity for this discovery outweighs the harm of disclosure since “[a]ny potential harm from the disclosure of [Mecca’s] trade secret information is significantly lessened — if not eradicated — by the entry of the stringent protective order.” (Id. at p. 8).

As noted above, “[discovery in trade secret litigation is permissible so long as the information sought to be obtained is reasonably related to the underlying cause of action and the need for this information outweighs any harm that may occur as a result of its release.” Rohm and Haas Company, 992 A.2d at 143 (citing Crum, supra). Pennsylvania has adopted the definition of a trade secret set forth in comment (b) to Section 757 of the Restatement (Second) of Torts, which states that “[a] trade secret may consist of any formula, pattern, device or compilation of information which is used in one’s business, and which give him an opportunity to obtain an advantage over competitors who do not know or use it.” Crum, 907 A.2d at 585 (quoting Pestco. Inc. v. Associated Products, Inc., 880 A.2d 700, 706 (Pa. Super. 2005)). Section 5302 of PUTS A similarly defines trade secrets as “[information, including a formula, drawing, pattern, compilation including a customer list, program, device, method, technique or process that: (1) derives 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; [and] (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” 12 Pa.C.S.A. 5302. See also Krafft v. Downey, 68 A.3d 329,337 (Pa. Super. 2013), app. denied, 83 A.3d 169 (Pa. 2013).

The following factors are to be considered in determining whether the information sought is to be granted trade secret status: (1) the extent to which the information is known outside of the business; (2) the extent to which the information is known by employees and others in the business; (3) the extent of measures taken to guard the secrecy of the information; (4) the value of the information to the business and its competitors; (5) the amount of effort or money expended in developing the information; and (6) the ease or difficulty with which the information could be properly acquired or duplicated by others. Com., Department of Public Welfare v. Eiseman, 85 A.3d 1117, 1126 (Pa. Cmwlth. 2014); Crum, 907 A.2d at 585. “Whether information qualifies as a ‘trade secret’ is a highly fact-specific inquiry that cannot be distilled to a pure matter of law.” Eiseman, supra. The crucial criteria for determining whether information constitutes a trade secret “are substantial secrecy and competitive value to the owner.” Markwest Liberty Midstream & Resources, 71 A.3d at 344; Crum, 907 A.2d at 585.

The materials submitted by the parties reflect that Mecca’s spring software does, in fact, contain trade secret information. Mecca’s software embodies formulas and methods that he claims to have developed in the power springs industry, and which provide Mecca with a competitive advantage in that field. The components of Mecca’s particular software are not generally known within or outside his business since Sandvik is obviously unaware of the details of those program elements, even though it has described itself as “an industry leader in the design and manufacture of custom-engineered power springs.” (Docket entry no. 1 at ¶ 2). Mecca has undertaken measures to protect the secrecy of that proprietary information through his purchase and use of third party encryption software. Mecca also expended considerable resources in developing his software and “invested over 400 hours into programming and development prior to release [of the software], and numerous updates and improvements since the initial release.” (Docket entry no. 10 at p. 9). Additionally, Mecca’s spring technology software cannot be easily duplicated, as evidenced by the self-proclaimed industry leader’s continuing efforts to secure it in discovery. Consequently, Mecca has established that the software information sought by Sandvik contains protected trade secrets.

Nevertheless, Mecca’s spring technology software is clearly relevant to Sandvik’s claims that Mecca has misappropriated Sandvik’s trade secrets. See George, 814 A.2d at 205 (holding that developer of “flow-aid” product for use in steel making process satisfied relevancy standard for discovery of former employee’s home laboratory notes which allegedly contained developer’s trade secrets to alleviate the agglomeration of lime and other powdered constituents of steel manufacturing). To gain access to Mecca’s spring software, Sandvik must further demonstrate that its need for that information outweighs the harm of such disclosure. Although Sandvik contends that any potential harm to Mecca is negated by its proposed confidentiality order, it cannot be denied that “the confidentiality of potentially privileged information is irreparably lost” once it is disclosed to litigants and their experts since “the reality is that there is no effective remedy for a breach of the existing protective order.” Crum, 907 A.2d at 584 (citing Dibble v. Penn State Geisinger Clinic. Inc., 806 A.2d 866, 870 (Pa. Super. 2002), app. denied, 573 Pa. 666, 820 A.2d 705 (2003)).

In the context of electronic discovery, courts in other jurisdictions have appointed forensic experts to access the responding party’s electronically stored information in an effort to address electronic discovery disputes without unilaterally disclosing that party’s confidential or privileged information to its adversary in litigation. Following a procedure first articulated in Playboy Enterprises. Inc. v. Welles, 60 F. Supp. 2d 1050, 1054-1055 (S.D. Cal. 1999), those courts have appointed a forensic expert, from a list of proposed experts submitted by the parties, to review the objecting party’s digital files in order to identify any relevant and responsive material. See United Factory Furniture Corp. v. Alterwitz, 2012 WL 1155741, at *5 (D. Nev. 2012); Bank of Mongolia v. M & P Global Financial Services. Inc., 258 F.R.D. 514, 520 (S.D. Fla. 2009). The forensic consultant serves as an officer of the court and is required to sign a protective order to insure against the inadvertent waiver of any privilege or objection by the responding party. Alterwitz, supra, at *6; Commercial Law Corp.. PC. v. Federal Deposit Ins. Corp., 2012 WL 137835, at *3 (E.D. Mich. 2012); Bank of Mongolia, 258 F.R.D. at 520-521; Simon Property Group. L.P. v. mySimon. Inc., 194 F.R.D. 639,642 (S.D. Ind. 2000). The written findings of the court-appointed expert are provided to the responding party, which may either produce those findings in their entirety to the requesting party, or assert objections to their production by submitting an objection or privilege log to the trial court. In re Honza, 242 S.W.3d 578, 582 (Tex. App. 2008); Bank of Mongolia, supra: Playboy Enterprises, Inc., 60 F. Supp. 2d at 1055. If objections are asserted, the expert’s findings and the responding party’s objections are submitted to the court for an in camera review and eventual resolution of the parties’ discovery dispute. In re Honza, supra; Antioch Co. v. Scrapbook Borders, Inc., 210 F.R.D. 645, 654 (D. Minn. 2002); Playboy Enterprises, Inc., supra. See also, Richard H. Agins, “An argument for expanding the application of rule 53(B) to facilitate reference of the special master in electronic data discovery,” 23 Pace L. Rev. 689,707-708 (Spring 2003).

Sandvik contends that it devised in-house applications of a refined N-value term and FEA to create “idealized straight line torque and stress information” which enable it “to manufacture custom-engineered springs based on the design specifications of its clients.” “Upon information and belief’ following its review of Mecca’s website, Sandvik asserts that Mecca has misappropriated those trade secrets by assimilating them into his spring technology software. Mecca denies Sandvik’s allegations and insists that his software is the product of his own ingenuity and publicly available N-value term and FEA concepts. Mecca further submits that the grant of Sandvik’s discovery request will permit Sandvik to discover Mecca’s own trade secrets and to utilize his applications to improve Sandvik’s inferior software. See Crum, 907 A.2d at 584 (observing that the confidentiality of potential trade secrets “is irreparably lost” following their disclosure to a litigation adversary due to the absence of an “effective remedy for a breach of the existing protective order.”).

The most equitable means to unravel the parties’ Gordian knot is to appoint a spring technology software expert to review the parties’ spring technology software in order to determine whether Mecca’s software incorporates Sandvik’s trade secrets and, therefore, is subject to discovery by Sandvik. The appointed expert will serve as an officer of the court and will be required to execute a confidentiality order, jointly prepared by counsel for Sandvik and Mecca, which bars the expert from divulging the parties’ software and trade secrets except as prescribed by this memorandum and order. The court-appointed expert will prepare a written report containing the expert’s findings with respect to the issue of whether Mecca’s software improperly appropriates Sandvik’s trade secrets. The expert’s report will be provided to Mecca’s counsel in the first instance, and Mecca may either provide that report to Sandvik’s counsel or assert an objection to the discoverability of the expert’s findings and Mecca’s software. In the latter event, the expert’s report will be submitted to the undersigned for an in camera review, and Mecca’s objection(s) will be served upon opposing counsel so that Sandvik may respond to the same before the matter is submitted for a decision.

Trial courts possess the inherent authority to appoint special masters to assist in the resolution of discovery disputes. See, e.g., Liss & Marion. P.C. v. Recordex Acquisition Corp., 937 A.2d 503, 515 (Pa. Super. 2007), aff’d, 603 Pa. 198, 983 A.2d 652 (2009). Sandvik’s proffered objection to the appointment of a spring software expert for the limited purpose of discovery, as opposed to the global merits of the case, does not warrant a different course of action. The validity of Sandvik’s trade secrets claim and the discovery of Mecca’s software are inextricably intertwined and present inseparable issues. Indeed, in Sandvik’s brief in opposition, it acknowledges that Mecca’s software which Sandvik seeks to discover “is not merely relevant to the subject matter of the action, it is the touchstone of the entire case; without it, Sandvik would be unable to pursue its claims against [Mecca].” (Docket entry no. 9 at p. 5). Under the protocol set forth above, Mecca’s software must contain Sandvik’s trade secrets in order to be discoverable by Sandvik. If Mecca’s software does not integrate Sandvik’s trade secrets, Mecca’s software will not be subject to discovery and Sandvik will have no evidentiary basis for pursuing its claims against Mecca. See Pa.R.C.P. 1023.1(c). Thus, the most sensible solution to the parties’ discovery impasse is to appoint an appropriate expert to determine whether Mecca’s software merely embodies publicly available information and Mecca’s own sagacity or, as Sandvik contends, misappropriates Sandvik’s trade secrets and proprietary applications. An appropriate order follows.

ORDER

And now, this 21 st day of May, 2014, upon consideration of the “appeal motion of defendants, Mecca C & S, Inc. and William Mecca” relative to the discovery order of the special trial master, the exhibits and memoranda of law submitted by the parties, and the oral argument of counsel, and based upon the reasoning set forth in the foregoing memorandum, it is hereby ordered and decreed that:

1. Within the next ten (10) days, counsel for the parties shall agree upon the designation of a spring technology software expert to access and analyze the parties ’ respective spring technology software in order to determine whether defendants’ spring software incorporates plaintiff’s trade secrets and proprietary information, as alleged in the complaint. If the parties are unable to mutually agree upon the selection of such an expert, they shall submit to the undersigned, by no later than June 4, 2014, the names, biographies and contact information for three (3) individuals to be considered for court-appointment as the spring technology software expert;

2. The court-appointed spring technology software specialist will serve as an officer of the court and shall sign a confidentiality order, jointly prepared by counsel for the parties, barring that individual from disclosing any spring software information to any person or party, other than as prescribed by this memorandum and order. Any direct or indirect access that the court-appointed expert gains to the parties’ respective software shall not be deemed to be a waiver of any objection or privilege that either party may have to such software or information;

3. Within ten (10) days of the court-appointment of the spring technology software expert, plaintiff, Sandvik, Inc., shall provide such expert access to its spring technology software, including, but not limited to, any applications of a refined N-value term and finite element analysis which plaintiff contends constitute its trade secrets and proprietary information;

4. Within ten (10) days of the date that the court-appointed spring technology software specialist completes the expert’s review and evaluation of plaintiff’s spring technology software, defendants, Mecca C & S, Inc. and William Mecca, shall provide that expert access to defendants’ spring technology software in order to determine whether it contains plaintiff’s trade secrets and proprietary information, as alleged in the complaint;

5. Within thirty (30) days of the completion of the court-appointed spring technology software specialist’s review and analysis of defendants’ spring technology software, the court-appointed expert shall forward a written report to defendants’ counsel containing the expert’s findings and conclusions with respect to the review of the parties’ spring technology software. Within seven (7) days of defense counsel’s receipt of the written report of the court-appointed spring technology software expert, defendants shall either (a) provide the expert’s report to counsel for plaintiff, or (b) file written objections to the production of that report and serve copies of those objections upon the undersigned and opposing counsel. In the event that defendants object to the production of the expert’s report, it shall submit a copy of that report to the undersigned for an in camera review, and plaintiff shall file a written response to defendants’ objections within seven (7) days of the filing of those objections by defendants; and

6. The fees charged by the court-appointed spring technology software specialist shall be shared and borne equally by the parties, and the parties shall pay their respective shares of the expert’s bill within thirty (30) days of receipt of the same.

      . Mecca’s employment agreements with Sandvik define the phrase “[confidential or proprietary information” as any “information learned or acquired by [Mecca] during [his] employment with Sandvik that is not generally known in Sandvik’s industry including, but not limited to,... research activities,...designs, ideas, trade secrets,...data, records and formulas.” (Id. at ¶ 32).

      . Sandvik’s proposed confidentiality order contains detailed provisions designed to protect the parties’ trade secrets and confidential information, and limits the disclosure of any such material to the court, the parties’ counsel and counsel’s employees, non-industry testifying or consulting experts who have executed a non-disclosure agreement, and “witnesses or potential witnesses, to the extent they were the creator sendor or recipient of the confidential discovery material.” (Docket entry no. 6, exhibit A at ¶¶ 10-11). The confidentiality stipulation requires those individuals to return or destroy the originals and all copies “of documents designated as confidential discovery material” within thirty days “after the final termination of this action.” (Id. at ¶18).


source: Caselaw Access Project

author: GLAZER, J.,

license: Public Domain

text:
    Nutrition Management Service Co. v. New Courtland, Inc.

      Michael G. Louis and J. Charles Gerbron, Jr., for plaintiff.

      Zachary C. Glaser and Edward T. Butkovitz, for defendants.
    April 10, 2014
   GLAZER, J.,

— Before the court are two motions for post-trial relief filed respectively by defendants, New Courtland, Inc. and New Courtland Elder Services, and plaintiff, Nutrition Management Service Company. For the reasons below, the respective motions for post-trial relief are denied.

Background

Defendants New Courtland, Inc. and New Courtland Elder Services (“New Courtland” or “defendants”), are Pennsylvania entities engaged in the management of skilled nursing facilities. Plaintiff Nutrition Management Services Company (“Nutrition Management” or “plaintiff’), provides contract food and services to various institutions, including skilled nursing facilities in Pennsylvania.

On January 1, 2000, Nutrition Management and New Courtland entered into four identical Food Service Provider Agreements (the “contracts”), whereby Nutrition Management agreed to operate the food service departments at four nursing facilities owned or managed by New Courtland. The four nursing facilities were respectively named Cheltenham York Road Nursing & Rehabilitation Center (“CYR”), Cliveden Convalescent Center (“Cliveden”), Maplewood Manor (“Maplewood”), and Tucker House (“Tucker House”). Pursuant to the Contracts, Nutrition Management was required to issue three types of invoices: fixed-costs, variable-costs and adjustment-costs invoices. Under the contracts, the rates charged by Nutrition Management for the fixed-costs and variable-costs invoices were “subject to an annual adjustment,” to be mutually agreed-upon by the two respective parties. Unlike the fixed-costs and variable-costs invoices, adjustment-costs invoices required preapproval on a case-by-case basis.

Beginning in March 2007, Nutrition Management unilaterally increased the rates for the fixed-costs and variable-costs invoices. Due to a clerical or accounting oversight, Nutrition Management erroneously paid certain unilaterally increased fixed-costs invoices over a period of fourteen months. As a result, New Courtland overpaid Nutrition Management the amount of $44,822.12 under the CYR Contract. However, such overpayments were fully reimbursed to New Courtland by an entity acting on behalf of Medicare.

I. New Courtland failed to prove damages stemming from its overpayment of the fixed-costs invoices under the CYR contract.

The motion for post trial relief of defendant New Courtland asserts that the court erred when it failed to offset overpayment of certain fixed-costs invoices in the amount of $44,822.12, against any damages awarded to Nutrition Management at the close of trial. In the response in opposition, Nutrition Management asserts that New Courtland is not entitled to offset any overpayment because although New Courtland did overpay $44,822.12, it recovered that entire amount when it received full Medicare reimbursement. New Courtland counters the opposition of Nutrition Management by asserting the following:

[t]here is no basis for denying New Courtland’s request [for the offset]. In the context of a breach of contract claim, the purpose of a damage award is to place the non-breaching party as nearly as possible in the same position it would have occupied had there been no breach.

In Pennsylvania,

[i]n order to recover damages for breach of contract, the party alleging the breach must prove:
(1) the existence of a contract,
(2) a breach of a duty imposed by the contract, and
(3) damages.
The policy behind contact law is to protect the parties ’ expectation interests by putting the aggrieved party in as good a position as he would have been had the contract been performed.

In this case, New Courtland mistakenly overpaid Nutrition Management the amount of $44,822.12, representing certain unilaterally increased fixed-costs invoices issued by Nutrition Management under the CYR contract. However, New Courtland’s over-payment was subsequently reimbursed in full by an entity acting on behalf of Medicare; consequently, New Courtland was put in as good a position as it would have been if it had paid the CYR fixed-costs invoices at the lower agreed-upon rates, and had been reimbursed by medicare accordingly. New Courtland failed to prove damages and may not recover for overpaying Nutrition Management’s unilaterally increased fixed-costs invoices under the CYR contract.

II. New Courtland did not pay Variable Cost Invoice No. 51422.

The motion for post-trial relief of New Courtland asserts that this court erred in awarding recovery of invoice no. 51422 to Nutrition Management. The motion specifically states that the court erred by “improperly placing] the burden on New Courtland to prove the absence of Nutrition Management’s claimed damages.” Furthermore, the motion asserts that the court erred by disregarding New Courtland’s clear evidence establishing that invoice no. 51422 had been paid. In light of these assertions, this court re-examined the trial records and testimonies, and determined the following:

a) Kathleen A. Hill (“Ms. Hill”), president and chief operating officer of Nutrition Management, testified in the course of trial. On cross-examination, Ms. Hill testified that on many occasions, New Courtland’s wire transfer payments were overdue by two or three months. Ms. Hill also stated that owing to the accumulation of overdue invoices, Nutrition Management began to “book ... payments on the oldest invoice first unless we receive [d] from our client [instructions on] how they [were] to be booked.” The court found this testimony credible.
b) Beginning February 28,2009, Nutrition Management began to issue invoices bearing the following language: “All payments will be applied to oldest invoice first unless otherwise noted on check.”
c) Invoice no. 51442, issued under the CYR contract, contained the above-quoted language.
d) New Courtland produced internal accounting documentation showing that an amount of $56,610.90 was paid to Nutrition Management. According to the internal documentation, New Courtland’s payment of $56,610.90 covered in full two overdue invoices, including CYR invoice No. 51442. However, New Courtland failed to produce any notation on its wire transfer payment or canceled check requiring Nutrition Management to apply a portion of the $56,610.90 toward full satisfaction of invoice no. .51442.

The evidence above convinced this court that Nutrition Management, through the credible testimony of Ms. Hill, met its burden of proof regarding New Courtland’s failure to pay invoice no. 51422. The burden thus shifted to New Courtland. Although New Courtland provided internal accounting documentation showing payment of invoice no. 51442, this court did not find such evidence credible. The evidence was not credible because New Courtland “did not clearly demonstrate which portion, if any, of its lump-sum wire transfer had been allocated to the payment of invoice no. 51442.” In other words, after the burden of proof shifted to New Courtland, New Courtland failed to convince this court that it had paid invoice no. 51442.

III. The court properly determined that New Courtland waived the contractual requirements for multiple preapprovals of adjustment-costs invoices.

According to the post-trial motion of New Courtland, this court erred in finding that Nutrition Management was entitled to receive payments for adjustment-cost invoices without first obtaining written pre-approval from multiple individuals, as required under the terms of the four contracts. New Courtland argues that the court erred because Nutrition Management had failed to meet its burden of proof at trial that New Courtland was obligated to pay such invoices without multiple pre-approvals therefrom.

In Pennsylvania, “[i]f the plaintiff makes a prima facie case, and nothing is done by the other side to answer it the plaintiff wins.”

At trial, Nutrition Management did not present documentary evidence showing the manner in which adjustment-cost invoices were approved by New Courtland. However, Nutrition Management credibly testified that the adjustment-costs invoices were “always approved by [a single] administrator ... [and] were never approved by the other folks....” New Courtland rebutted this statement with the testimony of Mr. Andrew Seibert, chief financial officer thereof. Mr. Seibert testified that the requirement for multiple pre-approvals was very important to New Courtland as a mechanism to prevent submission by NutritionManagement of “extra invoices.” However, Mr. Seibert did not specifically rebut Nutrition Management’s assertion that, notwithstanding the clear contractual language requiring multiple pre-approvals, the disputed adjustment-costs invoices were always approved by a single administrator. The credible, un-rebutted testimony of Nutrition Management convinced this court that the parties, in their handling of the adjustment-costs invoices, had been engaging in a course of performance that deviated from the terms of the four contracts. In Pennsylvania,

Course of performance is a sequence of conduct between the parties subsequent to formation of the contract [which occurs] during performance of the terms of the contract.
A waiver [to a contractual provision]...may be found in a course of performance. Where there are repeated occasions for performance by one party and the other has knowledge of the nature of the performance and opportunity to object, a course of performance accepted or not objected to may be relevant to show the meaning of the contract, or a modification of it, or a waiver.
[A] party by conduct may modify a written agreement without a writing if and when his conduct clearly shows an intent to waive the provision....

In this case, New Courtland’s failure to credibly rebut Nutrition Management’s assertion convinced this court that the parties were engaged in a course of performance which waived the contractual requirement for multiple pre-approval for adjustment-costs invoices. Since New Courtland waived the pre-approval requirements, this court properly awarded Nutrition Management the full amounts listed in the adjustment-costs invoices.

IV. The court properly awarded interest on Nutrition Management’s claims.

In its brief in support of the motion for reconsideration, New Courtland argues that Nutrition Management was not entitled to prejudgment interest on several invoices, specifically on variable-costs invoices 51422 and 52559, and adjustment-costs invoices 50249, 52119, 52139, 52260 and 48916. New Courtland argues that Nutrition Management was not entitled to collect interest on the specified invoices because the amounts of interest thereon could not be ascertained until this court issued its findings-of-fact and conclusions-of-law. The court is not convinced by this argument. In the course of trial, Mr. Donald Levesque, vice president of finance of New Courtland, testified as follows:

Q. Were you in court yesterday when Mr. Roberts [of Nutrition Management] testified about his decision to [unilaterally] change the rate in March of 2007?
A. Yes.
* * *
Q. How did you respond when the facilities started receiving invoices in March of 2007 at rates you hadn’t agreed to?
A. I responded and instructed the accounts payable staff to continue to pay the rates, the last rates that we had agreed upon.

In Pennsylvania,

[P]rejudgment interest...has been defined to be... compensation allowed to the creditor for delay of payment by the debtor, and is said to be impliedly due whenever a liquidated sum of money is unjustly withheld.... [A] s prerequisites to running of prej udgment interest, the debt must have been liquidated with some degree of certainty and the duty to pay it must have become fixed.

In this case, the testimony of Mr. Levesque shows that New Courtland knew how to ascertain the amount of each variable-costs invoice by simply disregarding Nutrition Management’s unilaterally increased rates, and by calculating the actual amounts through the use of existing, agreed-upon rates. As to the adjustment-costs invoices, this court has already determined that New Courtland waived the requirement for multiple pre-approvals; consequently, New Courtland could have ascertained the amounts thereof by simply reading the figures submitted by Nutrition Management in the adjustment-costs invoices. Since the amounts due to Nutrition Management were ascertainable upon receipt of each invoice, the court properly awarded pre-judgment interest in favor of Nutrition Management.

For the reasons above, the motion for post-trial relief of defendant New Courtland is denied.

V. The court correctly concluded that interest shall be assessed at the rate of 6% per year on variable-costs and adjustment-costs invoices

According to the motion for post-trial relief of Nutrition Management, this court should have awarded Nutrition Management with interests on unpaid or underpaid invoices at the rate of 1.25% per month (or 15% per year). According to the motion, since the parties had failed to agree upon new rates after the sixth-contract year, the court should have awarded Nutrition Management a “reasonable” rate of 15% per year “under the circumstances,” beginning with the seventh-contract year and lasting until termination of each contract. Each contract between Nutrition Management and New Courtland specifically stated:

[Nutrition Management] shall bill [New Courtland] on the first day of each month for fixed costs and last day of the month for the variable costs each such bill to be payable within thirty (30) days from invoice date. The fixed cost component will be discounted one and one-quarter percent (1.25%) if paid within five (5) days from the beginning of the month. Failure to pay each such invoice within such forty-five (45) day period shall result in additional charge to [New Courtland] of one and one-half [sic] (1.25%) per month on the unpaid balance of such invoice...

Pursuant to the language above, this court determined that only the fixed-cost invoices were subject to an additional charge of 1.25% per month, if New Courtland failed to remit payment within forty-five (45) days from the date of billing. In the findings-of-fact and conclusions-of-law dated December 20, 2013, this court found that only variable-costs and adjustment-costs invoices issued by Nutrition Management remained unpaid or underpaid. Since the contractual language above did not extend the assessment of any interest upon variable-costs and adjustment-costs invoices, this court reasonably relied on 41 P.S. § 202, and properly awarded Nutrition Management with interests at the simple statutory rate of 6% on the unpaid and underpaid invoices.

For this reason, the motion for post-trial relief of Nutrition Management is denied.

ORDER

And now, this 10th day of April, 2014, upon consideration of the motions for post-trial relief of plaintiff Nutrition Management Service Company and defendants New Courtland, Inc. and New Courtland Elder Services, the respective briefs in support and opposition thereto, defendants’ reply brief in further support of their motion for post-trial relief, and the evidence of record, it is ordered that both motions are denied.

Defendants New Courtland, Inc. and New Courtland Elder Services shall satisfy judgment as entered by this court on December 20, 2013, in the amounts listed in plaintiffs “Interest Calculations,” which were stipulated by the parties and were filed with this court on January 21, 2014. To such amounts, defendants shall add interest accrued, at the simple rate of 6% per day, beginning from January 22, 2014 and ending at the time judgment is satisfied.

      . Food and services provider agreements, trial exhibits P1-P4.

      . Id. Exhibits B to the food service provider agreements.

        . id.

        . Defendant New Courtland’s trial exhibit D-22.

      . Brief in support of the motion for reconsideration of defendant New Courtland, IV-A.

      . Nutrition Management’s brief in support of its opposition to the motion for reconsideration of New Courtland, pp. 5-7.

      . Reply brief in further support of defendant New Courtland’s motion for post trial relief, p. 3.

      . Fritz v. Glen Mills Sch, 894 A.2d 172,178 (Pa. Commw. 2006) (emphasis supplied).

      . Reformed Church of Ascension v. Theodore Hooven & Sons, Inc., 2000 Pa. Super. 406, 764 A.2d 1106, 1109 (Pa. Super. 2000) (emphasis supplied).

      . Brief in support of the motion for reconsideration of defendant New Courtland, IV-B.

      . Id.

      . Notes of testimony dated 8/5/2013, 172:18-21.

      . Trial exhibit P-15.

      . Id., invoice No. 51442 dated April 30 2010.

      . Trial exhibit D-17.

      . “If the plaintiff makes a prima facie case, and nothing is done by the other side to answer it the plaintiff wins.” Pellegrino Food Products Co., Inc. v. The Valley Voice, 2005 Pa. Super 191, 875 A.2d 1161, 1168 (Pa. Super. 2005).

      . Findings-of-fact and conclusions-of-law, ¶36, dated December 20, 2013.

      . Pellegrino Food Products Co., Inc. v. The Valley Voice, 2005 Pa. Super 191, 875 A.2d 1161, 1168 (Pa. Super. 2005) (citing Arco Metalscraft Co. v. Shaw, 70 A.2d 850,853 (Pa. 1950)).

      . Notes of testimony dated 8/5/2013, p. 40:14-15.

      . Notes of testimony dated 8/6/2013, volume 2, pp. 94:22-25, 95:1-9.

      . J.W.S. Delavau, Inc. v. E. Am. Transp. & Warehousing, Inc., 2002 Pa. Super 336, 810 A.2d 672, 683-84 (Pa. Super. 2002).

      . Restatement (Second) of Contracts § 150 (1981) (emphasis supplied).

      . Douglas v. Benson, 294 Pa. Super. 119, 128,439 A.2d 779, 783 (1982) (emphasis supplied).

      . Brief in support of the motion for reconsideration of New Courtland, P.14.

      . Id. PP.4-15

      . Notes of testimony dated 8/6/2013, 24:24-25:20.

      . TruServ Corp. v. Morgan’s Tool & Supply Co., Inc., 614 Pa. 549, 39 A.3d 253, 263, 264 (2012).

      . The motion for post-trial relief of New Courtland asserts that the court should have entered judgment against Nutrition Management on its four alternative claims of unjust enrichment. In Pennsylvania, “theories of breach of contract and unjust enrichment must be pleaded alternatively in order to allow recovery under the latter theory where an express contract cannot be proven.” Lugo v. Farmers Pride, Inc., 2009 Pa. Super. 967 A.2d 963, 970 (Pa. Super. 2009). In this case, the order of this court dated December 20, 2013 found that the relationship between Nutrition Management and New Courtland was entirely based on the existence of four written contracts; therefore, this court implicitly entered judgment against plaintiff as to its four claims of unjust enrichment.

      . Nutrition management’s motion for post-trial relief, ¶ 1(d), p. 2.

      . Trial exhibits P1-P4 (emphasis supplied).

      . The task of interpreting... [a] contract is generally performed by a court rather than by a jury.... Where the language of the contract is clear and unambiguous, a court is required to give effect to that language. Madison Const. Co. v. Harleysville Mut. Ins. Co., 557 Pa. 595, 606, 735 A.2d 100, 106 (1999). In this case, the portion of the contractual language providing for a rate of interest of 1.25% per month is clear and unambiguous and that language extends interest of 1.25% per month only to fixed-costs invoices.

      . Findings-of-fact and conclusions-of-law, ¶45.

      . On December 20, 2013, this court entered an order granting judgment in favor of plaintiff on its breach-of-contract claim. In doing so, the court implicitly entered judgment against plaintiff as to its claims of unjust enrichment because such claims were available to plaintiff exclusively as alternatives to the claim of breach-of-contract. In Pennsylvania, “theories of breach of contract and unjust enrichment must be pleaded alternatively in order to allow recovery under the latter theory where an express contract cannot be proven.” Lugo v. Farmers Pride, Inc., 2009 Pa. Super. 967 A.2d 963, 970 (Pa. Super. 2009).


author: WILLIAMSON, J.,

text:
    Dunlap-Davenport v. Villas at Tree Tops & Fairway

      David B. Sherman, for plaintiffs.

      Hugh M. Emory, for defendants.
    April 28, 2014 —
   WILLIAMSON, J.,

This matter comes before us on a motion for judgment on the pleadings filed by The Villas at Treetops & Fairway, Fernwood Resort, Fernwood Resorts Group, Inc., Delaware River Highlands, Inc., and Bushkill Group, Inc. (hereafter “defendants”) on March 5, 2014. On April 4, 2014, Chantay Dunlap-Davenport and Harold Farrington, h/w (collectively hereafter “plaintiffs”) filed a response to the motion for judgment on the pleadings. In the motion, defendants argue that by virtue of Ms. Dunlap-Davenport signing a document at defendants’ request entitled “Fernwood Hotel & Resort Snowtubing Acknowledgment of Risks and agreement not to sue this is a contract — read It,” (hereafter “release”), which was attached to the defendants’ answer, Ms. Dunlap-Davenport has released defendants from liability for her accident. Further, defendants argue that Mr. Farrington’s loss of consortium claim is also released by virtue of signing the release. Therefore, defendants assert that judgment on the pleadings should be granted in their favor in accordance with Pa. R.C.P. 1034 because the pleadings have established no material facts are in dispute, and that they are clearly entitled to judgment as a matter of law.

The accident in question took place on February 14, 2011. Following several preliminary pleadings, plaintiffs filed a second amended complaint on August 1, 2013. Defendants filed an answer and new matter to plaintiffs’ second amended complaint on August 8, 2013. Plaintiffs then filed a reply to defendants’ new matter on September 23, 2013, generally denying all allegations as conclusions of law. On March 5, 2014, defendants filed the instant motion for judgment on the pleadings along with an accompanying brief in support thereof. On April 4, 2014, plaintiffs filed a response to defendants’ motion. Defendants filed a reply brief to plaintiffs’ response on April 7, 2014. The parties stipulated that the motion for judgment on the pleadings would be submitted to this court on their briefs. The pleadings are now closed and we are ready to dispose of defendants’ motion for judgment on the pleadings.

DISCUSSION

Motions for judgment on the pleadings are governed by the Pennsylvania Rules of Civil Procedure. Rule 1034 states:

(a) After the relevant pleadings are closed, but within such time as not to unreasonably delay the trial, any party may move for judgment on the pleadings.
(b) The court shall enter such judgment or order as shall be proper on the pleadings.

In ruling on a motion for judgment on the pleadings, the court must consider all of the pleadings and responsive pleadings filed by the moving and non-moving parties, including the complaint, answer, new matter, and reply to new matter. Herman v. Stern, 213 A.2d 594 (Pa.1965). The underlying purpose of a motion for judgment on the pleadings is to allow the court to conduct an overall examination of the legal sufficiency of the pleadings in order to determine if judgment should be entered prior to trial. Bensalem Township School Dist. v. Commonwealth, 544 A.2d 1318 (Pa. 1988). The standard of review in such a motion is identical to that of a demurrer. Id. A demurrer may be sustained only if it is clear on the face of the pleading that the law will not provide or permit the recovery sought. Morgan v. McPhail, 672 A.2d 1359 (Pa. Super. 1996). If there is any doubt, it should be resolved by overruling the demurrer. Mellon Bank N.A. v. Fabinyi, 650 A.2d 895 (Pa. Super. 1994).

Plaintiffs argue that, eventhoughMs. Dunlap-Davenport signed the Release on February 14, 2011, she is still able to bring a claim for personal injuries under Pennsylvania law. Plaintiffs take the position that the exculpatory clause contained in the release is unenforceable and invalid. Plaintiffs assert the release is extremely small with all writing listed on a single page. Further, plaintiffs claim that no evidence has been presented which shows the plaintiffs read and understood the release and intended to in fact release the defendants from all liability arising out of the snowtubing activity. Moreover, plaintiffs stress that the exculpatory clause in the release violates Pennsylvania public policy, which precludes such clauses from covering reckless conduct.

In support of their motion for judgment on the pleadings, defendants argue that based on the clear language contained in the release, and applying the principles of law as adopted in factually similar cases, that they are entitled to judgment on the pleadings. To support this position, defendants state the plaintiff admits signing the release that was attached to defendants’ answer and new matter. The defendants argue the release is enforceable as it is sufficiently clear and specific to establish the intent of the document. Defendants assert that the release agreement is between private parties and affects the plaintiffs’ rights with respect to a recreational activity. Further, defendants claim that the release in no way implicates or affects the plaintiffs’ well-being, nor was the plaintiff under any compulsion whatsoever to go snowtubing. Finally, defendants argue that the release does not offend public policy considerations, and by signing the release, Ms. Dunlap-Davenport not only assumed the risks associated with snowtubing, but also expressly agreed not to sue defendants for injuries sustained while participating in the activity.

We agree with the positions set forth by the defendants and for the following reasons grant defendants’ motion for judgment on the pleadings.

Release called into question. The defendants plead as a defense in their new matter, the fact that plaintiff Chantay Dunlap-Davenport, signed the release. The defendants attached the release as “exhibit A” to their answer with new matter. The plaintiffs filed a reply to new matter that generally denied defendants’ new matter as conclusions of law. The plaintiffs’ general denial as to conclusions of law, fails to specifically deny that she signed the release. As such, plaintiff admits that she signed the release as alleged by the defendants under Pa. R.C.P. 1029(b) (which states that “[ajverments in a pleading to which a responsive pleading is required are admitted when not denied specifically or by necessary implication.” Pa. R.C.P. 1029(b). Therefore, we must accept the allegation in defendant’s new matter that plaintiff signed the release attached to the answer with new matter before she suffered any injury. The next step is to determine the effect, if any, of signing the release.

The release states in bold, capital font across the top: “THIS IS A CONTRACT — READ IT.” The release contains the following language, again in bold, capital font, under the heading “AGREEMENT NOT TO SUE:

IN CONSIDERATION OF BEING ALLOWED TO PARTICIPATE IN SNOWTUBING AT FERNWOOD HOTEL & RESORT, I AGREE I WILL NOT SUE BUSHKILL GROUP INC, HARA CORPORATION, HRP CORP, TREE TOPS, INC. AND THEIR OFFICERS, DIRECTORS, AGENTS, SERVANTS AND EMPLOYEES (HEREINAFTER REFERRED TO COLLECTIVELY AS “FERNWOOD”) AND WILL RELEASE FERNWOOD FROM ANY AND ALL LIABILITY IF I OR ANY MEMBER OF MY FAMILY IS INJURED WHILE USING ANY OF THE FERNWOOD FACILITIES OR WHILE BEING PRESENT AT THE FACILITIES, EVEN IF I CONTEND THAT SUCH INJURIES ARE THE RESULT OF NEGLIGENCE, RECKLESSNESS, OR ANY OTHER IMPROPER CONDUCT ON THE PART OF FERNWOOD. I FURTHER AGREE THAT I WILL INDEMNIFY AND HOLD HARMLESS FERNWOOD FROM ANY LOSS, LIABILITY, DAMAGE OR COST OF ANY KIND THAT MAY OCCUR AS THE RESULT OF ANY INJURY TO MYSELF, TO ANY MEMBER OF MY FAMILY OR TO ANY PERSON FOR WHOM I AM SIGNING THIS AGREEMENT, EVEN IF IT IS CONTENDED THAT ANY SUCH INJURY WAS CAUSED BY THE NEGLIGENCE, RECKLESSNESS OR OTHER IMPROPER CONDUCT ON THE PART OF FERNWOOD.”

The release further goes on to provide an “ACKNOWLEDGMENT OF RISKS” section, which in part reads: “I understand and acknowledge that snowtubing, including the use of lifts, is a dangerous, risk sport and that there are inherent and other risks associated with the sport and that all of these risks can cause serious and even fatal injuries.” Id.

We recognize that Pennsylvania courts generally disfavor exculpatory provisions in contracts. However, as acknowledged by the Pennsylvania Supreme Court as recently as 2012, such provisions are enforceable where three conditions are met: “First, the clause must not contravene public policy; second, the contract must be between persons concerning their private affairs; and third, each party must be a free bargaining agent so the contract is not one of adhesion.” Tayar v. Camelback Ski Corp., Inc., 47 A.3d 1190, 1199 (Pa. 2012) (citing Employers Liab. Assur. Corp. v. Greenville Business Men’s Ass ’n, 224 A.2d 620 (Pa. 1966)).

In making a determination on the first condition, whether the release contravenes public policy, we are instructed that avoidance of a contract on public policy grounds requires “a showing of overriding public policy from legal precedents, government practice, or obvious ethical or moral standards.” Id. (citing Williams v. GEICO Gov’t Employees Ins. Co., 32 A.3 d 1195 (Pa. 2011)). The court in Tayar went on to discuss a ‘spectrum’ of tortious conduct to be used in evaluating whether a release, such as the one this case, contravenes public policy. Specifically, the court stated that “at one end of the spectrum, exculpatory clauses that release a party from negligence generally are not against public policy, and are enforceable provided certain criteria are met.” Id. at 1200 (emphasis added). The court concluded by stating that “on the other end of the spectrum are releases for intentional conduct.” Id.

Applying the above principles of law to this case, we first find that the exculpatory clause contained in the Release as applied to the plaintiff does not violate public policy. It is important to note that we recognize the ultimate holding in Tayar, that “there is a dominate public policy against allowing exculpatory releases of reckless behavior, which encourages parties to adhere to minimal standards of care and safety.” Id. at 1203. The release in this case explicitly contains the terms “negligence” and “recklessness” in the “agreement not to sue” portion. However, we reconcile the defendants’ use of “recklessness” in the release and the court’s holding in Tayar by finding that the plaintiff has not alleged a cause of action based on recklessness in the second amended complaint. Paragraph 16 of plaintiffs’ second amended complaint only raises a cause of action based on the alleged “negligence and carelessness of defendants.” Therefore, because plaintiffs have not alleged recklessness as a cause of action, and cannot then challenge the use of the term “recklessness” in the release, the release as applied to plaintiffs’ claim of negligence does not violate public policy.

In regard to the remaining conditions which must be met for the release to be enforceable, we find the following. The release was between Ms. Dunlap-Davenport and defendants, and concerned the use of and participation in snowtubing activities at Fern wood Hotel & Resort. Therefore, it was a contract between persons concerning and relating to their private affairs. Furthermore, there are no allegations in any of the pleadings that plaintiff was forced to agree to the specific terms of the release. If plaintiff did not agree to the terms contained therein, she had the ability to go snowtubing somewhere else, or simply not at all. Snowtubing is not an essential life activity, but rather, a voluntary recreational sport which plaintiff chose to participate. Moreover, we find the language of the release does clearly express the intent of the parties with precision and particularity. Relevant portions of the release were expressed in such a manner which would draw the attention of a reasonable person entering into such an agreement. Additionally, the language of the release itself is such that a careful and thorough reading would substantially apprise a reasonable person of the risks and consequences associated with snowtubing. Therefore the release, for all intents and purposes, was not a contract of adhesion as plaintiff was a freely bargaining participant who entered into the contract by her own volition, and it expressed the intent of the parties with upmost particularity.

Finally, we find no merit in plaintiff’s contention that the release is invalid due to small writing contained on a single page. A regular size copy of the release was attached to defendants’ answer with new matter and it was neither difficult to read nor to understand. Also, one of the risks of snowtubing clearly listed on the release is “the use of the snowtubing lift or tow, including falling out of a tube, coasting backwards, becoming entangled with equipment and other risks.

Because the release does not contravene public policy, was a contract between two private parties concerning their private affairs, was not a contract of adhesion, and expressed the clear intent of the parties with upmost particularity, we find the exculpatory provision and the release itself to be a valid contractual agreement between plaintiffs and defendants. For those reasons, we grant defendants’ motion for judgment on the pleadings with respect to count I of plaintiff’s second amended complaint.

We also dismiss Mr. Farrington’s loss of consortium claim in count II of plaintiffs’ second amended complaint, as it is dependent upon Ms. Dunlap-Davenport’s claim in count I. In dismissing count II, we recognize a long line of Pennsylvania case law which finds that “an action for loss of consortium is derivative.” Scattaregia v. Shin Shen Wu, 495 A.2d 552, 553 (Pa. Super. 1985); Little v. Jarvis, 280 A.2d 617 (Pa. Super. 1971); Elser v. Union Paving Co., 74 A.2d 529 (Pa. Super. 1950); Winner v. Oakland Township, 27 A. 1110 (Pa.1893). The appellate courts of Pennsylvania have held that “because a loss of consortium action has been viewed as derivative its success in this Commonwealth has always been dependent upon the injured spouse’s right to recover.” Id. at 554. Our Superior Court has also held that the “consortium plaintiff...has suffered no direct injury. [His/Her] right to recover is derived, both in a literal and legal sense, from the injury suffered by [his/her] spouse.” Barchfeld v. Nunley by Nunley, 577 A.2d 910, 912 (Pa. Super. 1990) (citing Scattaregia, 495 A.2d at 553-554) (quoting Maidman v. Stagg, 82 A.D.2d 299, 304 (N.Y. App. Div. 1981)). However, it is also recognized that “a loss of consortium claim is separate and independent from the personal injury claim where the injured spouse has settled the case or for some reason the merits of the directly injured spouse’s claim have not been reached.” Id. In dismissing count I of the second amended complaint, we are making a decision on the merits of Ms. Dunlap-Davenport’s claim. Therefore, in applying the above considerations of law to the instant case, it follows that count II of the complaint be dismissed.

In conclusion, for the reasons stated above, we find it to be clear on the face of the pleadings in this matter that the law does not permit recovery for the plaintiffs, and defendants are entitled to the requested relief. As such, judgment on the pleadings is appropriate at this time, and we enter the following order.

ORDER

And now, this 28th day of April, 2014, upon consideration of defendants’ motion for judgment on the pleadings, the same is granted. Counts I and II of plaintiffs’ second amended complaint are dismissed.

      . We note that in paragraph 10 of plaintiffs’ second amended complaint, the date of the accident is stated as February 14, 2012. However, in viewing subsequent pleadings submitted to this court by both parties, and looking at the release attached as “exhibit A” to defendants’ motion for judgment on the pleadings, we believe the date of the accident in question to be February 14, 2011.

      . A fourth condition had also been previously used by Pennsylvania courts, that being whether the agreement expresses the intent of the parties with the upmost particularity. See Zimmer v. Mitchell and Ness, 385 A.2d 437, 439 (Pa. Super. 1978).

      . Those certain criteria being “(1) the contract language be strictly construed; (2) the contract must state the intention of the parties with the greatest particularity; (3) the language must be construed against the party seeking immunity; and (4) the burden of establishing immunity rests on the party seeking protection under the clause.” Tayar, 47 A.3d at 1208 n.8.

      . Moreover, if a cause of action based on recklessness was alleged by plaintiffs, and the “recklessness” language contained in the release was determined to be violative of public policy, further language contained in the agreement not to sue portion of the release would allow this court to give full force and effect to the otherwise lawful portions of the release if we so determined.


author: HIGGINS, J.,

text:
    Rivera v. Jemmott

      Joseph F. Kulesa, for plaintiff.

      Laurie B. Tilghman, for defendant.
    May 5, 2014
   HIGGINS, J.,

— This case comes before the court on preliminary objections brought by plaintiff, Miguel Rivera, to defendant Lana Jemmott’s answer to plaintiff’s complaint with new matter. The facts of this case involve an accident between two motor vehicles on Route 611 on the morning of October 7, 2009.

Plaintiff commenced the action by writ of summons and on December 5,2013, filed a complaint alleging one count of negligence. On December 16, 2013, defendant filed an answer and new matter. Defendant’s new matter contains, inter alia, an allegation of comparative negligence (Def.’s new matter, para. 23), an assertion that plaintiff’s ability to seek tort relief is limited by the Pennsylvania Motor Vehicle Financial Responsibility Law of 1984 as amended by act 6 of 1990 (Def.’s new matter, paras. 24-26), and a “catch all” paragraph “reserving] the right to assert at the time of trial any and all affirmative defense revealed through discovery.” (Def.’s new matter, para. 31).

On December 24, 2013, plaintiff filed the instant preliminary objections comprised of two separate motions to strike: plaintiff’s first objection is to paragraphs 23-26 and 31 of defendant’s new matter for failure to conform to law or rule of court and for lack of specificity pursuant to Pennsylvania Rule of Civil Procedure 1028(a)(2) and (3), and; plaintiff secondly objects to the verification accompanying defendant’s answer and new matter, which was executed by the attorney for defendant, as opposed to the defendant herself as is required by Pennsylvania Rule of Civil Procedure 1024(a). On January 21,2014, plaintiff filed his brief in support of his preliminary objections to defendant’s answer with new matter.

DISCUSSION

In ruling on preliminary objections, we must accept as true all well-pleaded, material and relevant facts, along with all reasonably deducible inferences therefrom. Schuylkill Navy v. Langbord, 728 A.2d 964, 968 (Pa. Super Ct. 1999). We need not accept as true, however, “conclusions of law, unwarranted inferences from the facts, argumentative allegations or expressions of opinion.” Myers v. Ridge, 712 A.2d 791, 794 (Pa. Commw. 1998). When ruling on a preliminary objection that would dismiss the action, we are mindful to sustain the objection only in the clearest of cases. King v. Detroit Tool Co., 682 A.2d 313, 314 (Pa. Super. 1996). With these standards in mind, we now address plaintiff’s preliminary objections to defendant’s answer and new matter.

On February 3, 2014, this court received a praecipe to substitute verification attached to defendant’s answer and new matter. This emendation cures the defective verification to which plaintiff promptly and properly objected, rendering plaintiff’s second preliminary objection moot. See Lewis v. Erie Ins. Exchange, 421 A.2d 1214, 1217 (Pa. Super. Ct. 1980) (“[Bjefore dismissing a petition on the basis of a defective verification, a court should allow the petitioner to amend.”). Accordingly, the only preliminary objection currently before the court is plaintiff’s objection to paragraphs 23-26 and 31 of defendant’s new matter.

Plaintiff’s objections to paragraphs 23-26 and 31 of defendant’s new matter are predicated on the defendant’s boilerplate assertions and failure to allege any facts in support of the same. As plaintiff aptly notes in his brief, Pennsylvania is a fact pleading state: “Under the Pennsylvania Rules of Civil Procedure, ‘[t]he material facts on which a cause of action or defense is based shall be stated in a concise and summary form.’ Material facts are ‘those facts essential to support the claim raised in the matter.”’ (P.’s brief, p. 2, internal citations omitted).

Plaintiff objects to paragraph 23 of defendant’s new matter on the ground that defendant omitted to allege any facts essential to support a claim of comparative negligence. Because we agree, we find that paragraph 23 fails to comply with Pennsylvania Rule of Civil Procedure 1019(a). Plaintiffs objection is accordingly sustained and paragraph 23 is stricken.

Similarly, as to paragraphs 24 through 26, plaintiff again accurately points out a failure on behalf of defendant to allege any facts that would support her redundant, boilerplate claim that plaintiffs ability to seek tort relief is limited by the Pennsylvania Motor Vehicle Financial Responsibility Law of 1984. Accordingly, plaintiff’s objections to these paragraphs are sustained and paragraphs 24-26 are stricken.

Lastly, we agree with plaintiff that paragraph 31 is too broad to stand. The purpose behind Pennsylvania’s fact pleading requirement is to enable the opposing party to prepare his or her case. This is unattainable where, as here, defendant “reserve(s) the right to assert at the time of trial any and all affirmative defenses revealed through discovery.” (Def.’s new matter, para. 31). As this paragraph fails to comply with Pennsylvania Rule of Civil Procedure 1019(a), it is also stricken.

ORDER

And now, this 5 th day of May, 2014, upon consideration of plaintiff’s preliminary objections to defendant’s answer to plaintiffs complaint with new matter, we hereby make the following determinations:

1. Plaintiff’s first preliminaiy objection is sustained and defendant is granted leave to file an amended pleading
within twenty days of notice of this order.
2. Plaintiffs second preliminary objection is dismissed as moot.

      . Paragraph 23 of defendant’s new matter states in its entirety:
      “All negligence causes of action and/or claims asserted against answering defendant(s) are limited, governed, barred and/or restricted, by the terms of the Pennsylvania Comparative Negligence Act, 42 Pa. C.S.A. Section 7102, the relevant terms of which are incorporated by reference herein.”
      Paragraph 24 of defendant’s new matter states in its entirety:
      “All causes of action and/or claims as set forth in all civil action(s)/ complaint(s) are limited, governed, barred, and/or restricted by the terms of the Pennsylvania Motor Vehicle Financial Responsibility Law of 1984,75 Pa. C.S.A. 1701, et seq., as amended by Act 6 of 1990, the relevant provisions of which are incorporated by reference herein as though the same were fully set forth at length.”
      Paragraph 25 of defendant’s new matter states in its entirety:
      “All causes of action and/or claims as set forth in all civil action(s)/ complaint(s) are limited, governed, barred, and/or restricted by the terms of the Pennsylvania Motor Vehicle Financial Responsibility Law of 1984,75 Pa. C.S.A. 1701, et seq., as amended by act 6 of 1990, the relevant provisions of which are incorporated by reference herein as though the same were fully set forth at length, including but not limited to the ‘limited tort’ provisions of section 1705, and in accordance with the ‘tort option’ chosen and/or elected in the policy of insurance purportedly providing coverage for the accident in question.”
      Paragraph 26 of defendant’s new matter states in its entirety:
      “All causes of action and/or claims as set forth in all civil action(s)/ complaint(s) are limited, governed, barred, and/or restricted by the terms of the Pennsylvania Motor Vehicle Financial Responsibility Law of 1984,75 Pa. C.S.A. 1701, et seq,, as amended by act 6 of 1990, the relevant provisions of which are incorporated by reference herein as though the same were fully set forth at length, as plaintiff(s) owned a currently registered private passenger motor vehicle for which he did not have financial responsibility at the time of the accident. Therefore, plaintiffs) is deemed to have elected the limited tort option and is thus precluded from recovering against the defendant(s).”
      Paragraph 31 of defendant’s new matter states in its entirety:
      “Answering defendant(s) reserve(s) the right to assert at the time of trial any and all affirmative defenses revealed through discovery.”


text:
    Newman v. Borough of East Stroudsburg

      Kevin P. McAliney, for appellants.

      Robert J. Kidwell and John C. Prevoznik, for appellee.
    May 7, 2014
   HIGGINS, J.,

— Eagle Valley Realty, L.P. (“Eagle Valley”) owns a property located on Business Route 209, in East Stroudsburg Borough, Monroe County, Pennsylvania. Eagle Valley submitted an application for a conditional use permit to allow for the expansion a building located on its 209 property for its use as a kidney dialysis center. Public notice of the conditional use hearing date was duly advertised in the Pocono Record on July 10,2013 and July 17,2013. Eagle Valley presented evidence before appellee, the Borough of East Stroudsburg (“Borough”) on July 25, 2013, August 29, 2013, September 3, 2013, and September 17, 2013. On September 17, 2013, the Borough agreed to grant the conditional use application on the condition, inter alia, that Eagle Valley install a locked gate between Route 209 and the intersection of Pa. Route 447 and Sterling Road (“interconnected driveway”). On October 15, 2013, appellants Samuel W. Newman and Charles Cahn, co-executors of the Estate of Lester G. Abel off, deceased, and RJS Pacific Associates (collectively “appellants”) filed a notice of appeal. Appellants seek to vacate and strike paragraphs 4(a) and 4(b) from the Borough’s conditional use order because the installation of a locked gate interferes with appellants use of the interconnected driveway. Appellants contend that they and their predecessors in title have a right to use the interconnected driveway by adverse possession. Appellants also contend that they were denied the fundamental right of the process rights of prior notice and an opportunity to be heard at the Borough hearings. On November 18, 2013, Eagle Valley filed a motion to quash appeal for lack of standing or in the alternative to require appellants to post bond. Thereafter, on December 23,2013 the Borough filed an answer and joinder to Eagle Valley’s motion to quash appeal for lack of standing or in the alternative to require appellants to post bond. On December 23, 2013 appellants filed a praecipe requesting oral argument in this matter. We heard oral argument from the parties on February 3, 2014, and we are now prepared to dispose of the issue.

2 Pa. C.S. §752 provides that “[a]ny person aggrieved by an adjudication of a local agency who has a direct interest in such adjudication shall have the right to appeal therefrom to the court vested with jurisdiction of such appeals by or pursuant to Title 42.” Our appellate courts have held that “[rjegardless of whether an individual is a ‘person aggrieved,’ that person must nevertheless appear or at least raise some objection before the board in order to have standing to advance an objection on appeal.” Miravich v. Township of Exeter, 6 A.3d 1076, 1078 (Pa. Cmwlth. 2010) (citation omitted).

Instantly, appellants failed to appear before the board to establish standing to oppose the conditional use application or to challenge the conditional use approval. The Commonwealth Court of Pennsylvania held that “[ajbsent evidence to support a claim the objectors were aggrieved by the adjudication or had a direct interest in it, no basis existed for a finding that the objectors had standing to appeal. Capital BlueCross v. Pennsylvania Insurance Dept., 937 A.2d 552, 590 (Pa. Cmwlth. 2007) (citation omitted). Moreover, ‘[ejven if the objectors might otherwise have had standing, they failed to seize the moment by presenting evidence at the public hearing.” Id, citing Nernberg v. City of Pittsburg, 620 A.2d 692 (Pa. Cmwlth. 1993). Since appellants have failed to appear before the board or at least raise some objection before the board, they lack standing to appeal. Furthermore, we note that appellants only allege an interest in the interconnected driveway. They have not demonstrated that they maintain a recorded property interest in the interconnected driveway. There is no evidence in the record that appellants have an ownership interest in the interconnected driveway. Accordingly, we cannot say that appellants have a direct interest in this matter.

Nevertheless, appellants allege that they maintain an interest in the adjudication by virtue of the adverse possession interest in the interconnected driveway. In furtherance of this argument, appellants allege that they failed to receive prior notice and therefore they were denied an opportunity to be heard. Appellants request that we receive additional evidence to preserve their due process rights.

The Municipalities Planning Code (“MPC”) defined public notice as:

notice published once each week for two successive weeks in a newspaper of general circulation in the municipality. Such notice shall state the time and place of the hearing and the particular nature of the matter to be considered at the hearing. The first publication shall not be more than 30 days and the second publication shall not be less than seven days from the date of the hearing.

53 P.S. § 101074(a). “The purpose of the public notice requirements is ‘to ensure the public’s right to participate in consideration and enactment of municipal land use decisions.’” Gladstone Partners, L.P. v. East Union Township, 26 A.3d 542, 549 (Pa. Cmwlth. 2011) (citation omitted). These requirements “protect procedural due process.” Id. “Due process is ‘a flexible [concept] and calls for such procedural protections as the particular situation demands.’” Id, citing In Re Merlo, 609 Pa. 598, 604, 17 A.3d 869, 872 (Pa. Cmwlth. 2011). Demonstrable prejudice is a key factor in assessing whether procedural due process was denied. In Re McGlynn, 974 A.2d 525, 532 (Pa. Cmwlth. 2009).

Appellants contend that they were deprived the opportunity to be heard since the public notice did not indicate that the conditional use application concerned their continued use and enjoyment of the interconnected driveway. The notice for the public hearings was published in the Pocono Record on July 10, 2013 and July 17, 2013. This notice indicated that a public hearing would be held on July 25, 2013, on the conditional use application for an addition to the building located at 166 Sterling Lane, East Stroudsburg, Pennsylvania. This was in accordance with the requirements of the MPC. Although appellants argue that they were deprived due process, notice was provided pursuant to the requirements of the MPC. This notice specifically identified the former Blockbuster Video building in the shopping center where the interconnected driveway is located. Appellants received all process due and asserted no claim of prejudice or harm resulting from any defect in publication. In short, appellants have failed to demonstrate that their due process rights were denied. Hence, we find that appellants were not denied the opportunity to be heard before the board; appellants failed to take the opportunity to be heard after proper public notice was provided. Moreover, it is within the sound discretion of the trial court to refuse to take additional evidence. Board of Supervisors of East Rockhill Twp. v. Mager, 855 A.2d 917, 920 (Pa. Cmwlth. 2004). Under the circumstances present in this case, we will not receive additional evidence. Accordingly, we believe that appellants’ appeal should be quashed and we enter the following order.

ORDER

And now, this 7th day of May, 2014, the appeal of appellants is quashed.

      . On December 18, 2013, Vincent J. Trapasso and Charlie Lynn Trapasso, his wife, filed a petition to substitute transferees as appellants or in the alternative petition to intervene in this matter. By order dated May 7, 2014, we granted the Trapassos petition and substituted the Trapassos as appellants in this matter.

      . Protestants are not automatically entitled to part status even when they appeared before the board. Pessolano v. Zoning Board of Adjustment of City of Pittsburg, 632 A.2d 1090 (Pa. Cmwlth. 1993).


author: ZULICK, J.,

text:
    Unifund Corp. v. Sattar

      Joel M. Flink, for plaintiff.

      David A. Martino, for defendant.
    May 9, 2014
   ZULICK, J.,

— Unifund Corporation brought this action against Carmen Sattar to collect an unpaid Sears MasterCard that was originally issued by Citibank. The complaint was filed on October 12, 2011. Ms. Sattar filed an answer on November 4,2011. The case went to arbitration on November 9, 2012. The arbitrators found for defendant Carmen Sattar. Unifund appealed this determination and the case was placed on the April, 2014 civil trial list. It was then scheduled for non-jury trial on April 15, 2014. The parties appeared with their counsel and Plaintiff presented testimony.

FINDINGS OF FACT

1. A Sears MasterCard account was opened in the name of Carmen Sattar, at 37 Hilltop Drive, Kunkletown, PA 18058 before October 1, 2007. This is defendant Carmen Sattar’s name and address.

2. On October 1, 2007, a balance transfer was made to this account from a Bank of America Platinum Mastercard account in the amount of $8,500.

3. Regular payments were made on this account until October 27, 2008 when a $7,500 payment was made to pay the account in full. Plaintiff’s exhibit 3, November 5, 2008 statement.

4. On December 9,2008 a balance transfer was charged to this account from a discover card in the amount of $10,000. Id. January 6, 2009 statement.

5. Payments were made on the account until July, 2009. Id.

6. On June 11, 2009, a cash advance was taken on the Card at ESS A Bank and Trust, Brodheadsville, PA. Id. August 4, 2009 statement.

7. On June 12,2009, the credit card was used to purchase merchandise at the Rite Aid Store at Brodheadsville, PA.

8. On July 2,2009, a late payment fee was assessed due to lack of payment on the account. Id.

9. No further payments were made on the account.

10. A written bill of sale dated June 17,2011 was signed by Citibank (South Dakota), N.A. selling “the Accounts described in “exhibit 1 and the final electronic file” to Pilot Receivables Management, LLC. No document marked exhibit 1 was attached to the bill of sale. Plaintiff’s exhibit.

11. An assignment dated September 1, 2010 between Pilot Receivables Management, LLC and Unifund CCR Partners assigned to Unifund CCR Partners “the Receivables, for collection purposes only, including conducting litigation in assignee’s name, for those Receivables which assignor owns or may acquire from time to time. Assignor shall retain title and ownership of such receivables.” No specific identification of accounts was given. Plaintiff’s exhibit 1.

12. An assignment dated March 31, 2009 between Unifund CCR Partners and Unifund Corporation assigned to Unifund Corporation “the receivables, for collection purposes only, including conducting litigation in assignee’s name, for those receivables which assignor owns or may acquire from time to time. Assignor shall retain title and ownership of such receivables.” No specific identification of accounts was given. Plaintiff’s exhibit 1.

13. At the time the complaint was filed, plaintiff sought $14,578.07 in damages.

DISCUSSION

Unifund Corporation seeks to obtain a judgment against Carmen Sattar for non-payment of a Sears MasterCard account in the amount of $14,578.07. Unifund introduced a number of documents in support of its case pursuant to P.R.C.P. 1311.1, as plaintiff’s exhibit 1. The first document presented was a bill of sale from Citibank dated June 17, 2011 in which Citibank sold accounts to Pilot Receivables Management, LLC. The bill of sale identified the accounts being sold as those described on exhibit 1. However, there was no annexed document labeled exhibit 1.

The second was an assignment “effective as of September 1, 2010” (earlier than the Citibank bill of sale), from Pilot Receivables to Unifund CCR Partners assigning “all of assignor’s rights in the receivables, for collection purposes only, including litigation in assignee’s name, for those receivables which assignor owns or may acquire from time to time. Assignor shall retain title and ownership of such receivables.” Plaintiff’s exhibit 1.

The third document was an assignment from Unifund CCR partners to Unifund Corporation, dated March 31, 2009, assigning “all of the assignor’s rights in the Receivables, for collection purposes only, including conducting litigation in assignee’s name, for those receivables which assignor owns or may acquire from time to time.” Plaintiff’s exhibit 1.

Unifund contends that Pilot Receivables Management obtained an assignment of Carmen Sattar’s Sears Gold MasterCard account, account number 6813, delinquent since the last payment of $ 150 on May 26,2009. Plaintiff’s exhibit 1, pages 4-11. Unifund argues that it is the current owner of the receivable through the earlier assignments from Pilot Receivables Management, LLC and Unifund CCR Partners of future choses in action.

Unifund did not introduce any application signed by Ms. Sattar to open the account. No signed contract between Ms. Sattar and Sears Master Card was offered. No purchase receipt signed by Ms. Sattar was offered. No signed request for balance transfer was offered. Nothing signed by Ms. Sattar was offered into evidence. No terms and conditions of the alleged credit card agreement were offered.

Unifund introduced Sears MasterCard billings on the account purportedly sent to Carmen Sattar at her address in Kunkletown, commencing on November 2, 2007. The first entry in the November 2, 2007 bill was for an $8,500 balance transfer. Plaintiff’s exhibit 1. Regular payments were made on the account until an October 27, 2008 payment of $7,500 brought the account current. No evidence was offered showing that Ms. Sattar authorized the balance transfer or who made these payments on the account. Id.

On December 23, 2008, The Sears MasterCard records show a balance transfer was made from a discover card in the amount of $10,000. No evidence was offered to show that Carmen Sattar authorized this transfer. Id. Regular payments were made on the account until the last payment was made on May 26, 2009. Charges were made on June 11, 2009 on the card at ESSA in Brodheadsville, PA and Rite Aid in Brodheadsville, PA. No. evidence that Carmen Sattar made the payments or the charges on the account was offered.

Plaintiff called Ms. Sattar as a witness. She testified that she had no recollection of opening this card or obtaining a balance transfer on it. She testified that her husband handled household bills, and may have obtained a credit card in her name. She was not aware that this card was open in her name and was not aware that it was delinquent. She knew that her husband did have a discover card. She was not aware that card was delinquent either. She first learned of Unifund’s claim when the complaint was filed against her.

The defendant raises two arguments in seeking to dismiss Unifund’s claims. The first is that the record of Citibank invoices was hearsay, not covered by an exception. Unifund contends that the records were properly admitted as a business record pursuant to Pa.R.E. 803(6). Unifund called Matthew Mikhail, who testified that he was the custodian of Unifund’s records. He testified that Citibank assigned the Sattar credit card account to Pilot Receivables Management, which assigned them to Unifund CCR Partners, which assigned them to Unifund Corporation. No one from Citibank testified.

Unifund argues that the Citibank billing records were purchased by Unifund and its assignors in the regular course of business and were incorporated into their business records.

This argument was considered and rejected by the Superior Court in Commonwealth Financial Systems, Inc. v. Smith, 15 A.3d 492 (Pa. Super. 2011). There, in a case similar to this one, a debt collection company offered account statements, bills of sale and credit card agreements from a third party creditor as business records in a suit against the credit card user. The superior court held that “mere acceptance or incorporation into an assignee’s business records is not enough to satisfy the trustworthiness requirements of Pa.R.E. 803(6).” Id. at 499. Rule 803(6) “requires the proponent of documentary evidence to establish circumstantial trustworthiness.” Id. Here, Mr. Mikhail was an employee of Unifund, who had no information about how Citibank maintained the Sattar records.

Unifund has failed to establish the trustworthiness of the Sattar records. No document was produced showing that Carmen Sattar ever authorized, used or benefited from the account. She did not admit that she did; in fact the evidence credibly suggested that the account was not created or used by her, but rather was created and used by her husband in her name without her knowledge. No evidence was offered to suggest that Ms. Sattar knew he had done so, although she knew generally that her husband had obtained credit cards in her name. No evidence was introduced to show that she benefited from the use of the loaned funds. These records are hearsay and will not be considered.

Secondly, defendant argues that Unifund has failed to meet its burden in establishing a breach of contract. Ms. Sattar contends that the evidence does not support the finding of a contract between the parties. The court agrees. The record is bereft of testimony or one document showing that Carmen Sattar had knowledge of the use or payment of this credit card. An express contract is formed by either written or verbal communications.” Ingrassia Constr. Co. v. Walsh, 486 A.2d 478, 483 n. 7, (Pa. Super. 1984). It is elementary that an express contract requires an offer and acceptance. Here there is no direct evidence of such an agreement and no circumstantial evidence other than the fact that the account was created in the name of Carmen Sattar and at her address.

Nor has Unifund met its burden with an argument for an implied contract. “A contract implied in fact is an actual contract, and...arises where the parties agree upon the obligations to be incurred, but their intention, instead of being expressed in words, is inferred from their acts in the light of the surrounding circumstances.” Tyco Elecs. Corp. v. Davis, 895 A.2d 638, 640 (Pa. Super. 2006). “A contract implied in fact can be found by looking to the surrounding facts of the parties’ dealings. Offer and acceptance need not be identifiable and the moment of formation need not be pinpointed.” Ingrassia Constr. Co., 486 A.2d at 483. Again, there is no direct evidence that Carmen Sattar created or used this credit card account. While the fact that the card is in her name and uses her address is circumstantial evidence, there has been insufficient circumstantial evidence presented for Unifund to meet its burden of proof by a preponderance of the evidence. An award for the defendant will be entered.

DECISION

And now, this 9th day of May, 2014, following non-jury trial, it is ordered that judgment is entered for the defendant and against the plaintiff.

      . Matthew Mikhail, a trial litigation specialist for Unifund Corp. testified that several pages of lines from a computer spreadsheet attached as pages 4-11 in plaintiff’s exhibit 1 were taken from the bill of sales, exhibit 1, which included a portfolio of many other accounts.