Laurel Gardens, Llc et al v. Mckenna et al

MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM

E.D. Pa.April 27, 2017

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA LAUREL GARDENS, LLC, et al. Plaintiffs, v. TIMOTHY MCKENNA, et al. Defendants. C.A. No. 5:17-cv-00570-JLS DEFENDANTS NORMAN AND ROBERT AERENSONS’ MOTION TO DISMISS Defendants Norman and Robert Aerenson, (hereinafter, “the Aerensons”) by and through their undersigned counsel, hereby move to dismiss all claims brought against them by Plaintiffs Laurel Gardens, LLC, American Winter Services, LLC, Laurel Garden Holdings, LLC, LGSM, GP, and Charles P. Gaudioso (collectively, “Plaintiffs”) with prejudice pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. Pursuant to Local Rule of Civil Procedure 7.1(c), the grounds for this motion are set forth in the accompanying Memorandum of Law, which is incorporated by reference as though set forth fully herein. A form of order is also attached pursuant to Local Rule of Civil Procedure 7.1(a). WHEREFORE, the Aerensons request that this Court grant this Motion. Case 5:17-cv-00570-JLS Document 52 Filed 04/27/17 Page 1 of 2 2 Dated: April 27, 2017 GRANT & EISENHOFER P.A. /s/ Stuart M. Grant Stuart M. Grant, Esquire (No. 73482) Stephanie S. Riley, Esquire (pro hac vice application pending) 123 Justison Street Wilmington, DE 19801 Tel: (302) 622-7000 Fax: (302) 622-7100 sgrant@gelaw.com sriley@gelaw.com Counsel for Defendants Robert Aerenson and Norman Aerenson Case 5:17-cv-00570-JLS Document 52 Filed 04/27/17 Page 2 of 2 UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA LAUREL GARDENS, LLC, et al., Plaintiffs, v. TIMOTHY McKENNA, et al., Defendants. C.A. No. 5:17-cv-00570-JLS ORDER GRANTING DEFENDANTS NORMAN AND ROBERT AERENSONS’ MOTION TO DISMISS AND NOW, this ___ day of ________________, 2017, upon consideration of Defendants Norman and Robert Aerenson’s Motion to Dismiss, and any response thereto, it is hereby ORDERED that the Motion is GRANTED and Plaintiffs’ Complaint is dismissed with prejudice as to Defendants Norman and Robert Aerenson. SO ORDERED __________________________ Hon. Jeffrey L. Schmehl United States District Court Judge Case 5:17-cv-00570-JLS Document 52-1 Filed 04/27/17 Page 1 of 1 UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA LAUREL GARDENS, LLC, et al., Plaintiffs, v. TIMOTHY MCKENNA, et al., Defendants. C.A. No. 5:17-cv-00570-JLS DEFENDANTS NORMAN AND ROBERT AERENSONS’ MEMORANDUM OF LAW IN SUPPORT OF THEIR MOTION TO DISMISS PLAINTIFFS’ CLAIMS Case 5:17-cv-00570-JLS Document 52-2 Filed 04/27/17 Page 1 of 25 i TABLE OF CONTENTS Page I. INTRODUCTION ........................................................................................... 1 II. BACKGROUND ............................................................................................. 2 A. The Settlement Agreement .................................................................... 2 B. The Allegations Against The Aerensons ............................................... 3 C. The Aerensons’ LLC – Rojan 586 Polly, LLC ..................................... 5 III. ARGUMENT ................................................................................................... 6 A. The Settlement Agreement Releases the Aerensons from Liability ........................................................................................ 7 B. Plaintiffs’ State Law Claims Are Time-Barred ..................................... 8 C. Plaintiffs Fail to State a Claim Upon Which Relief Can Be Granted ..................................................................................... 9 1. Count I: Aiding and Abetting Breach of Fiduciary Duty ............................................................................ 9 2. Count II: Civil Conspiracy ....................................................... 10 3. Counts III, IV, V: RICO, 18 U.S.C. § 1962(c), (b), (d) ........... 11 (a) 18 U.S.C. § 1962(c) ........................................................ 11 (b) 18 U.S.C. § 1962(b) ........................................................ 12 (c) 18 U.S.C. § 1962(d) ........................................................ 13 4. Count VI: Fraud ........................................................................ 14 5. Count VII: Conversion .............................................................. 14 6. Count VI: Negligent Misrepresentation ................................... 15 7. Count X: Tortious Interference with Contract ......................... 16 Case 5:17-cv-00570-JLS Document 52-2 Filed 04/27/17 Page 2 of 25 ii D. Plaintiffs Have Sued The Improper Party, Warranting Dismissal of All Claims ...................................................................... 17 IV. CONCLUSION .............................................................................................. 19 Case 5:17-cv-00570-JLS Document 52-2 Filed 04/27/17 Page 3 of 25 iii TABLE OF AUTHORITIES Page(s) Cases Ammlung v. City of Chester, 494 F.2d 811 (3d Cir. 1974) ................................................................................. 8 Averbach v. Rival Mfg. Co., 879 F.2d 1196 (3d Cir. 1989), cert denied, 492 U.S. 1023 (1990) .................... 18 Batoff v. Charbonneau, 130 F. Supp. 957 (E.D. Pa. 2015) ......................................................................... 7 Blake v. Custom Mortg. Solutions, Inc., 2009 WL 722298 (E.D. Pa. Mar. 17, 2009) ......................................................... 7 In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410 (3d Cir. 1997) ............................................................................... 7 City of Philadelphia v. Lead Indus. Ass’n, 1992 WL 98482 (E.D. Pa. Apr. 23, 1992) .......................................................... 14 Cooper v. Sirota, 37 Fed. Appx. 46 (3d Cir. 2002) ......................................................................... 16 Crivelli v. General Motors Corp., 215 F.3d 386 (3d Cir. 2000) ............................................................................... 17 Elf Altochem North Amer., Inc. v. U.S., 161 F.R.D. 300 (E.D. Pa. 1995) .......................................................................... 18 Erbe v. Billeter, 2006 WL 3227765 (W.D. Pa. Nov. 3, 2006) ...................................................... 17 Garvin v. City of Philadelphia, 354 F.3d 215 (3d Cir. 2003) ............................................................................... 18 Hanover Ins. Co. v. Ryan, 619 F. Supp. 2d 127 (E.D. Pa. 2007) ............................................................ 15, 16 Kaiser v. Stewart, 1997 WL 476455 (E.D. Pa. Aug. 19, 1997) ................................................. 12, 13 Case 5:17-cv-00570-JLS Document 52-2 Filed 04/27/17 Page 4 of 25 iv Laskowski v. Brown Shoe Co., Inc., 2015 WL 1286164 (M.D. Pa. Mar. 20, 2015) .................................................... 14 Lichtman v. Taufer, 2004 WL 1632574 (C.P. Philadelphia July 13, 2004) ........................................ 10 Lightening Lube, Inc. v. Witco Corp., 4 F.3d 1153 (3d Cir. 1993) ................................................................................. 12 McKeeman v. CoreStates Bank, N.A., 751 A.2d 655 (Pa. Super. Ct. 2000) ........................................................ 10, 11, 15 Palucis v. Continental Ins. Co., 1998 WL 474108 (E.D. Pa. July 16, 1998) .......................................................... 8 PBGC v. White Consol. Indus., 998 F.2d 1192 (3d Cir. 1993) ............................................................................... 7 Phillips v. Cnty. of Allegheny, 515 F.3d 224 (3d Cir. 2009) ................................................................................. 6 Pierce v. Rosetta Corp., 1992 WL 165817 (E.D. Pa. June 12, 1992) .................................................... 8, 10 Pittsburgh Constr. Co. v. Griffith, 834 A.2d 572 (Pa. Super. Ct. 2003) .................................................................... 15 In re Rockefeller Ctr. Prop., Inc. Sec. Litig., 184 F.3d 280 (3d Cir. 1999) ................................................................................. 7 Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479 (1985) ............................................................................................ 12 Statutes 42 Pa.C.S. § 5524 ....................................................................................................... 9 18 U.S.C. § 1962(a) ................................................................................................. 13 18 U.S.C. § 1962(b) ........................................................................................... 12, 13 18 U.S.C. § 1962(c) ..................................................................................... 11, 12, 13 18 U.S.C. § 1962(d) ................................................................................................. 13 Case 5:17-cv-00570-JLS Document 52-2 Filed 04/27/17 Page 5 of 25 v Other Authorities Fed. R. Civ. P. 9(b) ............................................................................................ 14, 15 Fed. R. Civ. P. 15(a)(2) ............................................................................................ 18 Fed. R. Civ. P. 11 ....................................................................................................... 1 Fed. R. Civ. P. 12(b)(6) ...................................................................................... 1, 6, 7 Case 5:17-cv-00570-JLS Document 52-2 Filed 04/27/17 Page 6 of 25 I. INTRODUCTION Defendants Norman and Robert Aerenson (collectively, “the Aerensons”) submit this Memorandum of Law in Support of their Motion to Dismiss all claims brought against them by Plaintiffs Laurel Gardens, LLC, American Winter Services, LLC, Laurel Garden Holdings, LLC, LGSM, GP, and Charles P. Gaudioso (collectively, “Plaintiffs”). These claims should be dismissed pursuant to Rule 12(b)(6) for four reasons. First, Plaintiffs and the Aerensons previously entered into a settlement agreement, dated November 5, 2014 (the “Settlement Agreement”), that releases the Aerensons from liability for all of the claims alleged in Plaintiffs’ Amended Complaint (the “Complaint”). Second, Plaintiffs’ state law claims are time-barred. Third, all claims are facially invalid, failing to state a claim for relief even if all allegations were true. Finally, Plaintiffs sued the improper party because Plaintiffs contracted with the Aerensons’ business entity, Rojan 586 Polly, LLC, and not with the Aerensons individually, and therefore any claims asserted against the Aerensons individually must fail. The Aerensons intend to seek Rule 11 sanctions and costs in light of the frivolous nature of the claims asserted in the Complaint.1 Of the 337 paragraphs of Plaintiffs’ Complaint, only eight allegations mention the Aerensons. As discussed 1 Defendants sent a Rule 11 letter to Plaintiffs’ Counsel on March 13, 2017. Defendants’ Counsel called Plaintiffs’ Counsel to have a meet and confer as required by Rule 11. In that meet and confer, Plaintiffs’ Counsel promised to respond to the Rule 11 Letter in writing but has failed to do so. Case 5:17-cv-00570-JLS Document 52-2 Filed 04/27/17 Page 7 of 25 2 herein, none of Plaintiffs’ allegations support the nine causes of actions asserted against the Aerensons. Accordingly, these claims against the Aerensons must be dismissed with prejudice. II. BACKGROUND A. THE SETTLEMENT AGREEMENT On November 5, 2014, Plaintiffs and Timothy McKenna, a defendant in this action, entered into the Settlement Agreement. See Settlement Agreement, at 1 (attached hereto as “Ex. A”). The Settlement Agreement specifically released the Aerensons and their business entity, Rojan 586 Polly, LLC, stating in pertinent part: hereby remise, release and forever discharge Rojan 586 Polly LLC, Robert Aerenson, Norman Aerenson, Capson Millsboro LLC, Polly Drummond Shopping Center . . . from and against any and all debts, sums, accounts, obligations, losses, costs, controversies, suits, actions, causes of action . . . foreseen or unforeseen, known or unknown . . . of any kind of nature or description whatsoever and out of whatever transactions arising, which the Laurel Gardens Parties ever had, now has or hereafter may have against McKenna or any of the above named parties. Ex. A at 2, ¶ 4. In the Settlement Agreement, the parties explained that they “desire to resolve all of their differences and disputes on the terms and conditions in this Agreement in full and final settlement of all claims and controversies between Case 5:17-cv-00570-JLS Document 52-2 Filed 04/27/17 Page 8 of 25 3 them.” Id. at 1. The Settlement Agreement also provides a covenant not to sue except for enforcement of the agreement. Id. at 4, ¶ 11. Plaintiffs’ allegations against the Aerensons in this action all relate to events that occurred between the winter of 2013 and the summer of 2014, prior to the execution of the Settlement Agreement and the release of any and all claims against the Aerensons and Rojan 586 Polly, LLC on November 5, 2014. See Pls. Amd. Compl. ¶¶ 60-67. B. THE ALLEGATIONS AGAINST THE AERENSONS In the Complaint, Plaintiffs allege that defendants Timothy and Michael McKenna (collectively, the “McKennas”) “are at the center” of a far-reaching scheme to acquire Plaintiffs’ money and assets. Pls. Amd. Compl. at ¶ 45. Including the McKennas, Plaintiffs sued thirty-three individuals and business entities. Plaintiffs brought the following nine claims against the Aerensons: aiding and abetting breach of fiduciary duty; civil conspiracy; civil RICO under 18 U.S.C. §§ 1962(b), (c), and (d); fraud; conversion; negligent misrepresentation; and tortious interference with contract. In the entire Complaint, only eight allegations reference the Aerensons. Taken as true, those allegations establish that the Aerensons own a shopping center, contracted with Plaintiffs for snow removal services, received those services and paid Plaintiffs’ employee for those services. Case 5:17-cv-00570-JLS Document 52-2 Filed 04/27/17 Page 9 of 25 4  “Aerenson and his family own the Polly Drummond Shopping Center.” Pls. Amd. Compl. at ¶ 60.  “Aerenson signed a contract with AWS for snow removal services for the 2013/14 season. After sending Aerenson several invoices that remained unpaid, AWS learned that McKenna made an arrangement with Aerenson for snow removal, salt, and landscaping services to be provided by the Plaintiffs for free in exchange for debt forgiveness of a personal loan to Timothy McKenna.” Pls. Amd. Compl. at ¶ 61.  “Aerenson entered into a handwritten agreement with Timothy McKenna, which was intended to relieve a $60,000.00 personal debt Timothy McKenna owed to Aerenson whereby Timothy McKenna provided Company goods and services and agreed not to charge for those services.” Pls. Amd. Compl. at ¶ 62.  “Aerenson paid Timothy McKenna an $18,000 personal check, which reflected the excess value of the services provided by the Company over the $60,000 personal debt of Timothy McKenna.” Pls. Amd. Compl. at ¶ 63.  “The handwritten agreement also provided for free Company services to Bobby Aerenson the following year as well for a properties [sic] also owed [sic] by Pettinaro.” Pls. Amd. Compl. at ¶ 64.  “Timothy McKenna apparently hid the evidence of salt deliveries to Aerenson. There are no listed deliveries going to Polly Drummond based upon AWS’s analysis of its salt deliveries. It is believed and therefore averred that Timothy McKenna was able to hide the deliveries amongst other deliveries, most likely made by Technivate. Timothy McKenna also arranged for Technivate to perform snow removal services at Polly Drummond and to bill AWS. Technivate, Inc. only charged AWS for the hourly rate of the plow, not for the salt. Technivate used AWS’s salt which Timothy McKenna had shipped to the site without recording that it was intended for Polly Drummond.” Pls. Amd. Compl. at ¶ 65.  “AWS continued to try and obtain payment from Aerenson for the above referenced services and product, but Aerenson continued to refuse payment. Gaudioso has demanded that Aerenson pay the invoices per the contract.” Pls. Amd. Compl. at ¶ 66. Case 5:17-cv-00570-JLS Document 52-2 Filed 04/27/17 Page 10 of 25 5  “In the summer of 2014, after Timothy McKenna was terminated for cause, Plaintiffs discovered that Michael McKenna, under Timothy McKenna’s instruction, assigned LG labor and assets to perform landscaping services on ground in southern Delaware that belonged to both Aerenson and Pettinaro. Again, the Plaintiffs attempted to collect payment for these services and Aerenson and Pettinaro refused to pay.” Pls. Amd. Compl. at ¶ 67. Plaintiffs also attached two invoices as Exhibit D to the Complaint. Those invoices state, in pertinent part, the following: (1) “On or about 5/1/14 – The Company sent Aerenson a statement showing amount due for snow services. Aerenson mailed the statement back with a hand written note saying ‘Paid in full. See Tim.’” (2) “6/2/14 – The Company emailed Aerenson requesting explanation for the ‘See Tim’ written on his statement. Aerenson emailed back, ‘See Tim.’” Pls. Amd. Compl. ¶ 290(d). On the face of the Complaint, Plaintiffs knew all of the above facts by the summer of 2014, more than two years before the Complaint was filed. Plaintiffs’ knowledge is further established by a letter dated July 7, 2014, terminating Timothy McKenna and stating identical facts as alleged in the Complaint. See Letter from Charles P. Gaudioso to Timothy McKenna, July 7, 2014 (attached hereto as “Ex. B”). C. THE AERENSONS’ LLC – ROJAN 586 POLLY, LLC The allegations in Plaintiffs’ Complaint are improperly alleged against the Aerensons individually. Plaintiffs contend that the Aerensons signed a contract with Plaintiff American Winter Services for snow removal during the 2013-2014 Case 5:17-cv-00570-JLS Document 52-2 Filed 04/27/17 Page 11 of 25 6 winter season at Polly Drummond Shopping Center. Pls. Amd. Compl. at ¶ 61. However, Norman Aerenson did not sign anything. Robert Aerenson signed a contract on behalf of Rojan 586 Polly, LLC, which is the entity that operated and maintained Polly Drummond Shopping Center. See 2013-2014 Snow Removal Contract, at 6 (attached hereto as “Ex. C”). See also Certificate of Formation of Rojan 586 Polly, LLC, Article One (“The Company’s business and purpose shall consist solely of the acquisition, ownership, operation and maintenance of the real estate project known as Polly Drummond Shopping Center. . . and activities incidental thereto.”) (attached hereto as “Ex. D”). III. ARGUMENT Plaintiffs’ Complaint against the Aerensons should be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6) because the Aerensons have been released from any and all liability, Plaintiffs’ state law claims are time-barred, all claims are facially invalid, and Plaintiffs have sued the incorrect party. Plaintiffs’ effort to impute liability to anyone and everyone doing business with Plaintiffs’ authorized agents and employees, the McKennas, is sanctionable. Motions to dismiss pursuant to Rule 12(b)(6) must be granted when, accepting all factual allegations as true, plaintiffs are not entitled to relief. Fed. R. Civ. P. 12(b)(6); Phillips v. Cnty. of Allegheny, 515 F.3d 224, 233 (3d Cir. 2009). In order to survive a motion to dismiss pursuant to Rule 12(b)(6), plaintiffs are Case 5:17-cv-00570-JLS Document 52-2 Filed 04/27/17 Page 12 of 25 7 required to plead sufficient facts that defendants are liable for the allegations alleged; a mere possibility that the defendants acted unlawfully is insufficient. See Batoff v. Charbonneau, 130 F. Supp. 957, 964-65 (E.D. Pa. 2015) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)) (“Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.”). A. THE SETTLEMENT AGREEMENT RELEASES THE AERENSONS FROM LIABILITY All of the Plaintiffs in this action released the Aerensons and their business entities from liability on November 5, 2014. See Settlement Agreement, Ex. A at 2, ¶ 4.2 When there is actual or promised performance of a settlement agreement, the signed release bars a plaintiff’s claim against the released party. See Blake v. Custom Mortg. Solutions, Inc., 2009 WL 722298, at *4-5 (E.D. Pa. Mar. 17, 2009) (dismissing the plaintiff’s claims pursuant to a settlement agreement and rejecting the plaintiff’s argument that the release is invalid due to lack of performance of the settlement agreement because the settlement agreement provided release “in consideration for the commitments and payments set forth in this Settlement 2 Rule 12(b)(6) does not require conversion of a motion to dismiss to one for summary judgment whenever a District Court considers materials outside of the pleadings. In re Rockefeller Ctr. Prop., Inc. Sec. Litig., 184 F.3d 280, 287-88 (3d Cir. 1999). Along with public records, courts can consider documents “integral to or explicitly relied upon in the complaint.” In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997). A District Court can examine authentic documents that a defendant attaches to a motion to dismiss if the plaintiff’s claims are based on that document because the plaintiff has actual notice and relied upon these documents in framing the complaint. See PBGC v. White Consol. Indus., 998 F.2d 1192, 1196 (3d Cir. 1993). Case 5:17-cv-00570-JLS Document 52-2 Filed 04/27/17 Page 13 of 25 8 Agreement,” meaning the promise of performance in itself barred the plaintiff’s claims); see also Palucis v. Continental Ins. Co., 1998 WL 474108, at *2-3 (E.D. Pa. July 16, 1998) (granting motion to dismiss bad faith claim based on a settlement agreement releasing such conduct). Both the Aerensons individually and their business entity, Rojan 586 Polly, LLC, with whom Plaintiffs actually conducted business, were expressly included as released parties under the terms of the Settlement Agreement and the promise of performance under this agreement bars Plaintiffs’ claims. Ex. A at 2, ¶ 4. Plaintiffs’ allegations against the Aerensons arise from events that occurred in connection with snow removal contracts for the 2013-2014 winter season, prior to the execution of the Settlement Agreement on November 5, 2014. See Pls. Amd. Compl. ¶¶ 61, 67. Accordingly, Plaintiffs’ claims against the Aerensons are barred by the Settlement Agreement and the Aerensons are entitled to dismissal. B. PLAINTIFFS’ STATE LAW CLAIMS ARE TIME-BARRED In addition to being barred by the Settlement Agreement, Plaintiffs’ state law claims are time-barred. In Paragraph 5 of the Complaint, Plaintiffs explain that all of their state law claims are brought under Pennsylvania law. For these state law claims, the statute of limitations is two years. See Pierce v. Rosetta Corp., 1992 WL 165817, at *9-10 (E.D. Pa. June 12, 1992) (applying two-year statute of limitations to the plaintiff’s aiding and abetting claim); Ammlung v. City Case 5:17-cv-00570-JLS Document 52-2 Filed 04/27/17 Page 14 of 25 9 of Chester, 494 F.2d 811, 814-15 (3d Cir. 1974) (affirming district court’s dismissal of conspiracy claim as barred by the two-year statute of limitations); 42 Pa.C.S. § 5524 (providing two-year statute of limitations for fraud, conversion, negligent misrepresentation, and tortious interference of contract claims). On the face of the Complaint, Plaintiffs were on actual notice of all state law claims no later than July 7, 2014, when Plaintiffs terminated Timothy McKenna. Pls. Amd. Compl. ¶¶ 61-67. Plaintiffs confirmed this knowledge through a letter sent to Timothy McKenna on July 7, 2014. Ex. B. The Complaint was filed more than two years after Plaintiffs admit they had actual notice of their state law causes of action. Hence, all of Plaintiffs’ state law claims are time-barred and must therefore be dismissed. C. PLAINTIFFS FAIL TO STATE A CLAIM UPON WHICH RELIEF CAN BE GRANTED Plaintiffs’ allegations, even if they were true (which they are not), do not support claims for which relief can be granted. Accordingly, this Court should dismiss each of Plaintiffs’ claims. 1. Count I: Aiding and Abetting Breach of Fiduciary Duty Plaintiffs’ aiding and abetting claim against the Aerensons fails to state a claim upon which relief can be granted. In order to succeed on a claim for aiding and abetting a breach of fiduciary duty, Plaintiffs must plead: (1) a breach of a fiduciary duty owed to another; (2) knowledge of the breach by the aider or Case 5:17-cv-00570-JLS Document 52-2 Filed 04/27/17 Page 15 of 25 10 abettor; and (3) substantial assistance or encouragement by the aider or abettor in effecting that breach. Pierce, 1992 WL 165817, at *8. Even if all of Plaintiffs’ allegations against the Aerensons are true, Plaintiffs fail to plead facts to support that the Aerensons gave substantial assistance or encouragement to effectuate a breach of fiduciary duty by McKenna to Plaintiffs. Conclusory statements that a defendant gave substantial assistance or encouragement do not suffice. See Lichtman v. Taufer, 2004 WL 1632574, at *8 (C.P. Philadelphia July 13, 2004) (granting dismissal of aiding and abetting breach of fiduciary duty claim because the complaint failed to allege that the defendants knew of the fiduciary duties between the parties, breach of those duties, and failed to allege that the defendant rendered substantial assistance in effecting the breach of the fiduciary duty). Plaintiffs allege that the Aerensons paid Plaintiffs’ employee. No where do they allege the Aerensons knew or should have known that Plaintiffs’ employee did not have authority to accept payment. See Pls. Amd. Compl. ¶¶ 60-67. Accordingly, Plaintiffs’ claim against the Aerensons for aiding and abetting a breach of fiduciary duty should be dismissed. 2. Count II: Civil Conspiracy Plaintiffs’ civil conspiracy claim also fails to allege a claim upon which relief can be granted. Because all claims in this action fail as a matter of law, there can be no conspiracy to commit the underlying acts. McKeeman v. CoreStates Case 5:17-cv-00570-JLS Document 52-2 Filed 04/27/17 Page 16 of 25 11 Bank, N.A., 751 A.2d 655, 659 (Pa. Super. Ct. 2000). Moreover, even if there were a viable claim (which there is not), Plaintiffs fail to plead any facts that the Aerensons intentionally agreed with another defendant to do an unlawful act as required by Pennsylvania law. Id. Therefore, Plaintiffs’ claim for civil conspiracy must be dismissed. 3. Counts III, IV, V: RICO, 18 U.S.C. § 1962(c), (b), (d) (a) 18 U.S.C. § 1962(c) There are no factual allegations in the Complaint to support the racketeering claims alleged against the Aerensons. 18 U.S.C. § 1962(c) requires a predicate act in addition to a pattern of racketeering. Plaintiffs fail to plead any facts whatsoever to support such a claim. Specifically, Plaintiffs must plead facts to show that the Aerensons were “employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity or collection of unlawful debt.” 18 U.S.C. § 1962(c). Plaintiffs fail to plead that the Aerensons were employed or associated with an enterprise that engaged in or affected interstate or foreign commerce. Plaintiffs’ allegations assert only that Plaintiffs sent two bills to the Aerensons and the Aerensons responded that they had paid Plaintiffs’ employee, Timothy McKenna. This does not constitute a predicate act. Moreover, two alleged emails of invoices, Case 5:17-cv-00570-JLS Document 52-2 Filed 04/27/17 Page 17 of 25 12 sent by Plaintiffs to the Aerensons, does not equate to a pattern of racketeering activity on the part of the Aerensons. Plaintiffs sent those emails to the Aerensons and their simple response “See Tim” does not constitute a “pattern of racketeering activity” under 18 U.S.C. § 1962(c). See Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496 n. 14 (1985) (finding that two isolated acts of racketeering do not constitute a pattern and that there must be continuity plus a relationship). Therefore, Plaintiffs’ claim fails as a matter of law. (b) 18 U.S.C. § 1962(b) In order to recover under 18 U.S.C. § 1962(b), Plaintiffs must show injury from the Aerensons’ acquisition or control of an interest in a RICO enterprise, as well as injury from the predicate acts. Lightening Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1190 (3d Cir. 1993). Plaintiffs must also plead facts that the Aerensons actually acquired control or an interest in a RICO enterprise. See Kaiser v. Stewart, 1997 WL 476455, at *2-3 (E.D. Pa. Aug. 19, 1997) (“[W]e conclude that control of an enterprise means more than simply being a manager or a corporate officer. In common parlance, control connotes domination. It signifies the kind of power that an owner of 51% or more of an entity would normally enjoy”). “Mere participation in an enterprise does not plead a violation of subsection 1962(b).” Kaiser, 1997 WL 476455 at *3. (citations omitted). Plaintiffs have made no such allegations. Plaintiffs allege only that the Aerensons own Polly Drummond Case 5:17-cv-00570-JLS Document 52-2 Filed 04/27/17 Page 18 of 25 13 Shopping Center, which is not alleged to be a RICO enterprise, nor could it. Therefore, this claim also fails as a matter of law. (c) 18 U.S.C. § 1962(d) There are no allegations to support a conspiracy to engage in a pattern of racketeering under 18 U.S.C. § 1962(d). This claim requires Plaintiffs to plead facts showing that a defendant conspired with another to violate 18 U.S.C. § 1962(a), (b), or (c). 18 U.S.C. § 1962(d). Because Plaintiffs’ claims under § 1962(b) and § 1962(c) fail, so too should their claim under § 1962(d). “A conspiracy claim predicated on § 1962(b) or § 1962(c) cannot stand if the underlying allegations under those sections do not set forth a valid claim.” Kaiser, 1997 WL 476455 at *9 (citing Rehkop v. Berwick Healthcare Corp., 95 F.3d 295, 290 (3d Cir. 1996). Other than conclusory allegations, Plaintiffs fail to aver facts supporting a claim for which relief can be granted that the Aerensons conspired to violate the underlying sections of the RICO statutes. Id. at *10 (dismissing the plaintiff’s conspiracy claims because the plaintiff failed to aver that the defendants conspired to acquire or maintain an interest in or control of the enterprise for themselves). Additionally, Plaintiffs provide zero allegations that the Aerensons agreed to and conspired with another, or even who that “another” might be. In the absence of factual allegations, Plaintiffs’ claims under 18 U.S.C. § 1962(c), (b), and (d) must be dismissed. Case 5:17-cv-00570-JLS Document 52-2 Filed 04/27/17 Page 19 of 25 14 4. Count VI: Fraud Plaintiffs’ fraud claim is facially invalid. Plaintiffs fail to “plead with particularity the circumstances constituting fraud.” Fed. R. Civ. P. 9(b). Rule 9(b) requires Plaintiffs to allege the “who, what, when, where and how” elements to state a claim for fraud. Laskowski v. Brown Shoe Co., Inc., 2015 WL 1286164, at *4 (M.D. Pa. Mar. 20, 2015) (citing In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1423 (3d Cir. 1997)). Plaintiffs’ fail to plead any particularized facts regarding their claim of fraud. See Laskowski, 2015 WL 1286164, at *4 (granting defendant’s motion to dismiss because the plaintiffs failed to sufficiently describe the nature of the alleged misrepresentation with enough detail to satisfy Rule 9(b)). Plaintiffs fail to plead what the material factual misrepresentation made by the Aerensons was; how the Aerensons knew or believed its falsity; or the Aerensons’ intention that Plaintiffs rely on the alleged false statement. See City of Philadelphia v. Lead Indus. Ass’n, 1992 WL 98482, at *5 (E.D. Pa. Apr. 23, 1992). The Complaint also contains no allegations that the Plaintiffs relied on any misrepresentations. Therefore, Plaintiffs’ fraud claim must be dismissed. 5. Count VII: Conversion Plaintiffs fail to plead factual allegations that support a claim of conversion, which requires plaintiffs to plead facts that demonstrate that the defendant deprived the plaintiff of his right to a chattel or interferes with the plaintiff’s use or Case 5:17-cv-00570-JLS Document 52-2 Filed 04/27/17 Page 20 of 25 15 possession of a chattel without the plaintiff’s consent and without lawful justification. Pittsburgh Constr. Co. v. Griffith, 834 A.2d 572, 581 (Pa. Super. Ct. 2003). There are no factual allegations that support that the Aerensons deprived Plaintiffs of the use or possession of some chattel without consent or lawful justification. See McKeeman v. CoreStates Bank, N.A., 751 A.2d 655, 659 (Pa. Super. Ct. 2000) (granting the defendant’s motion to dismiss conversion claim when facts set forth in the complaint failed to allege deprivation of use or possession of another’s chattel without the owner’s justification or lawful consent). Moreover, Plaintiffs’ allegations that the Aerensons failed to pay two invoices (i.e., debts) are insufficient because the failure to pay a debt does not constitute conversion. Pittsburgh Constr. Co, 834 A.2d at 581. In addition, Plaintiffs allege that the Aerensons paid Plaintiffs’ employee, Timothy McKenna, who was an agent of Plaintiffs. Plaintiffs did not plead that the Aerensons knew or should have known that Plaintiffs’ employee could not collect payment on behalf of Plaintiffs’ company. Accordingly, Plaintiffs’ conversion claim must be dismissed. 6. Count VI: Negligent Misrepresentation Like Plaintiffs’ fraud allegations, Plaintiffs also fail to satisfy the particularity requirement of Rule 9(b), which also applies to negligent misrepresentation claims. See Fed. R. Civ. P. 9(b). Hanover Ins. Co. v. Ryan, 619 Case 5:17-cv-00570-JLS Document 52-2 Filed 04/27/17 Page 21 of 25 16 F. Supp. 2d 127, 142 (E.D. Pa. 2007) (granting dismissal of negligent misrepresentation for failure to plead specific facts indicating a misrepresentation). Even if all allegations in the Complaint were true (which they are not), Plaintiffs fail to plead a valid claim for negligent misrepresentation. In order to state a claim, Plaintiffs must plead: (1) a misrepresentation of material fact; (2) that the defendant either knew of the misrepresentation, made the misrepresentation without knowledge as to its truth or falsity, or made the representation under circumstances in which he ought to have known of its falsity; (3) intent to induce action of another; and (4) resulting injury from justifiable reliance on the misrepresentation. Hanover Ins. Co., 619 F. Supp. 2d 127 at 142. Plaintiffs fail to allege any misrepresentation made by the Aerensons that they knew or should have known was false. Plaintiffs further fail to allege that the Aerensons used that misrepresentation to induce action that resulted in injury from justifiable reliance on that misrepresentation. See Cooper v. Sirota, 37 Fed. Appx. 46, 48 (3d Cir. 2002) (negligent misrepresentation requires an actual misrepresentation by the defendant of a material fact). Therefore, Plaintiffs’ negligent misrepresentation claim must be dismissed. 7. Count X: Tortious Interference with Contract Plaintiffs also fail to plead facts to support a claim for tortious interference with contract. In order to maintain this claim, Plaintiffs must assert: (1) the Case 5:17-cv-00570-JLS Document 52-2 Filed 04/27/17 Page 22 of 25 17 existence of a contractual, or prospective contractual relation between the complainant and a third party; (2) purposeful action on the part of the defendant, specifically intended to harm the existing relation, or to prevent a prospective relation from occurring; (3) the absence of privilege or justification on part of the defendant; and (4) the occasioning of actual legal damage as a result of the defendant’s conduct. Crivelli v. General Motors Corp., 215 F.3d 386, 395 (3d Cir. 2000). Plaintiffs allege that a contract existed between Plaintiffs and the Aerensons, not between Plaintiffs and a third party. For that reason alone the claim must fail. However, in addition, Plaintiffs fail to plead facts to show any purposeful action on the part of the Aerensons and an absence of justification on the part of the Aerensons. Accordingly, this claim should be dismissed. D. PLAINTIFFS HAVE SUED THE IMPROPER PARTY, WARRANTING DISMISSAL OF ALL CLAIMS Plaintiffs’ claims against the Aerensons must fail because they are alleged against the improper parties. Courts may grant motions to dismiss if an improper party is subject to suit. See Erbe v. Billeter, 2006 WL 3227765, at *10 (W.D. Pa. Nov. 3, 2006) (granting 12(b)(6) dismissal of improperly named defendant). Plaintiffs sued Robert Aerenson individually. But the contract Plaintiffs refer to is signed by Robert Aerenson on behalf of Rojan 586 Polly, LLC. Ex. C at 6. Plaintiffs also sued Norman Aerenson. The basis for suing Norman Aerenson individually is unclear; Norman Aerenson is not alleged to have signed anything or Case 5:17-cv-00570-JLS Document 52-2 Filed 04/27/17 Page 23 of 25 18 taken any action whatsoever. There is no basis to hold the Aerensons responsible individually. Accordingly, the suit against the Aerensons individually should be dismissed because Plaintiffs’ allegations stem from this contractual relationship, which was between Plaintiff American Winter Services and Rojan 586 Polly, LLC. Plaintiffs moreover should be precluded from amending the Complaint to include Rojan 586 Polly, LLC as a defendant. Whether to grant leave to Plaintiffs to amend is within the sound discretion of the Court. Fed. R. Civ. P. 15(a)(2); Elf Altochem North Amer., Inc. v. U.S., 161 F.R.D. 300, 301 (E.D. Pa. 1995). Factors that should be considered include: futility of amendment, undue prejudice to the opposing party, and undue delay. Averbach v. Rival Mfg. Co., 879 F.2d 1196, 1203 (3d Cir. 1989), cert denied, 492 U.S. 1023 (1990). Here, an amendment to include Rojan 586 Polly, LLC would be futile. See Garvin v. City of Philadelphia, 354 F.3d 215, 219-22 (3d Cir. 2003) (denying the plaintiff’s motion to amend and add individual defendants as futile because the statute of limitations had expired as to those defendants). All of the arguments made by the Aerensons herein apply equally to Rojan 586 Polly, LLC. According to the Settlement Agreement, the Plaintiffs explicitly released Rojan 586 Polly, LLC (as well as the Aerensons) from all civil liability relating to the underlying events alleged in the Complaint. Additionally, Plaintiffs cannot assert claims against Rojan 586 Polly, LLC because Case 5:17-cv-00570-JLS Document 52-2 Filed 04/27/17 Page 24 of 25 19 all of those claims are either time-barred or fail to state a claim as a matter of law, as discussed above. IV. CONCLUSION For the foregoing reasons, the claims against Robert and Norman Aerenson must be dismissed with prejudice. Respectfully submitted, Dated: April 27, 2017 GRANT & EISENHOFER P.A. /s/ Stuart M. Grant Stuart M. Grant, Esquire (No. 73482) Stephanie S. Riley, Esquire (pro hac vice application pending) 123 Justison Street Wilmington, DE 19801 Tel: (302) 622-7000 Fax: (302) 622-7100 sgrant@gelaw.com sriley@gelaw.com Counsel for Defendants Robert Aerenson and Norman Aerenson Case 5:17-cv-00570-JLS Document 52-2 Filed 04/27/17 Page 25 of 25 Exhibit A Case 5:17-cv-00570-JLS Document 52-3 Filed 04/27/17 Page 1 of 11 . SETTI.ENIENT AGREEiVillNT .. ---·--~--·· c.::~h THIS 51.\TTLF.MENT AGREEr..'fi:!NT (the "Agreement") is made thls•L- day of November, 2014, by and among: • Laurel Gardens, LLC, a Pennsylvania limited liability company ("Laurel G~rdcns"), with an address at 334 Kennett Pike, Chaddsford, PA 19317; • Laurel Gardens Holdings, LLC, a Delaware limited liability company ("Laure.! Holdings"), with an add1·ess at 334 Kennett Pike, Chaddsford, PA 19317; • American Winter Services, LLC, a Pennsylvania limited liability company ("American Winter"), with an address at 334 Kennett Pike, Chaddsford, P A 19317; • Charles Gaudioso ("GmLdioso") , an adult individual with an addJ'ess at 334 Kennett Pike, Chaddsford, PA 19317; and • Timothy McKenna ("McKenna"), an adL1lt individual with '111 address at 9 N. Harnpshil'e Court, Greenville, DE 19807. La~;u·el Gardens, Laurel Holdings, American Winter and Gaudioso are collectively refened to herein as the "Laute! Gardens Parties", McKenna and the Laurel Gardens parties are coUectively referred to herein as the "Parties", BACKGROUND: WHEREAS, McKm1na had a business affiliation with the Laurel Gardens Parties. WHEREAS, McKenna has acquired by assig:runent an open account receivable owed by Laurel Gardens/ American Winter Services to Chemical Equipment Labs of DE, Inc. ( "Chemical"), representing all amounts owed by Laurel Gardens/ American Winter Service to Chemical Equipment Labs of DB, Inc. (the "Chemical Receivable") as of the date of this Agreement for goods sold and delivered. WHEREAS, certain disputes exist by and between McKenna and the Laurel Gardens Parties in connection with their business affiliation in which Laurel Gardens claims that McKenna is indebted to Laurel Gardens, -/ WHEREAS, the Parties desire to resolve all of their differences and dispt;!tes on the terms and conditions ln this Agreement h1 full and final ~ettlemcnt of all claims and conh·oversles between them. l ;. Case 5:17-cv-00570-JLS Document 52-3 Filed 04/27/17 Page 2 of 11 . ' !\OW, THEREFORE the parties hereto intending to be legally bound, mutually agree: 1. Chemical Receivable, Simultaneous with the execution of this Agreement, McKenna shall deliver to Lam·el Gardens the original written confirmation from Chemical in the form of that attached hereto as Exhibit" A", The Laurel Gardens Parties acknowledge, consent and agree that the Chemical Receivable is now owned by McKennu. 2. Settlement Payment. ln full and £ina! settle.ment of all claims held by the Laurel Garde!W Parties against McKenna, McKenna hereby releases Lat1rel Gardens/ American Winter Services of and from the indebtedness owing on account of the Chemical Receivable, 3. General Release By Laurel Gardens Parties [n Favor of McKenna. The Lm1rel Gardens Parties, for themselves, and all of their respective officers, directors, members, partners, agents, servants and employees, and all of their respective affiliated companies, heirs and legal representatives, do hereby remise, release and forever discharge McKenna and McKenna American, LLC, and all of his heirs, executors, administrators, successors, or assigns, from and against any and all debts, sums, accllunts, obligations, losses, costs, controversies, suits, actions, causes of action, liabilities, judgments, damages, expenses, claims, or dema11ds, whether in law or equity, assel'ted or em-asserted, expressed or implied, foreseen or unforeseen, !mown or unl law or equity, asserted or un-asserted, expressed or implied, foreseen or unforeseen, lown or LU1.known, liquidated or non-liquidated, of any klnd, nature or description whatsoever, and out of whatever transactions arising, which McKenna ever had, now has or hereafter may have against the Laurel Gardens Pal'\ies, from the beginning of time to the date of execution of this Agreement. Witho1.1t limiting the generality of the forgoing, this release shall release any and all claims thBt were 01' could han been a.sserted by McKenna in any litigation. PROVIDED HOWEVER, it is understood and agreed that this general release is not intended to, nor shall it be construed to, release any claims or obligations owing by the Laurel Gardens Parties un,ier this Agreement. 6. Due Authorization. Each of the Parties represent and warrant that each hM all requisite power and authority to execute, deliver and perform their obligations unde1· this Agreement, that the execution, delivery and performance by the them of their obligations under this Agreement have been duly authorized by all necessary partnership/member action and do 11ot and wil: violate no provision of law or of their respective partnership or operating agreements, or result in a breach or constitute o default under any agreement, indenttu·e or instrument to which they are bound. 7. Confidentiality: The parties shall keep the existence and terms of this Agreement sh'!d:ly confidential and not disclose them to any persons other than to theil' legal, ftnandal and/ or tax advisors (all of whom shall also be bound by the foregoing confidentiality covenant). Notwithstanding the forgoing, nothing in this Agreement shall prohibit or restrict the patties from: (i) mal,ing any disclosure of infonnation requited or express.ly p1·otected by Jaw, including providing truthful testimony if required to do so by court order or legal process; or (ii) cooperating, participating or assisting in any investigation or proceeding brought by any federal, state or local regulatory or law enforcement agency or legislative body, any se!f-1·egulatory organization. 8. Non-Dispara$llffient: (a) The Laurel Gardens Parties represent, warrant and agree that neither they nor anyone acting on their behalf will in the future engage in any dispal'!l.ging conduct including, but 110t limited to, making disparaging or negative statements about McKenna or any business owned, in whole or in part, by him, that are intended to or does damage to the good will of, or the business or petsonal reputations of McKenna or any business owned, in whole or in part, by him. 3 I Case 5:17-cv-00570-JLS Document 52-3 Filed 04/27/17 Page 4 of 11 (b) McKenna represents, warrants ami agrees that neither he nor anyone acting on his behalf will iL1 the future engage in any disparaging condttct inclLtding, bllt not limited to, making disparaging or negative statements about the Lame] Garde11s Parties that are intended to or does damage to the good will of, or the business or personal reputations of the Laurel Gardens Parties. 9. Counsel/Voluntary Waiver: Each of the parties acknowledge they have been represented by counsel of their own choosing in the negotiation of this Agreement, and acknowledge and agree they understand the terms of this Ag:reement, and have entered into it voluntarily intending to abide by its terms. 10. Choice of Law: This Agreement has been executed and delivered in Philadelphia, Pel'UlSylvania and shall be construed, interpreted and enforced by anct in accordance with, the laws of the Commonwealth o£ Penrtsyl vania, without reference to its conflict of law principles. 11. Covenant Not To Sue. The parties hereto agree that they shall not now or in the future commence any suit or initiate any claim against the other based upon any matter that occurred prior to the date of this Agreement other than to enforce the terms of this Agreement. This covenant not to sue is a material term and inducement to entering into this Agreement. 12. N ot:ices. All notices required or permitted to be given under this Agreement to be effective shnll be given by electronic mail, with a request for a delivery receipt, or by hand delivery with a signed receipt, addressed as follows: II to the Laurel Garder\s Parties: lf to McKenna: 334 Kennett Pike Chaddsford, PA 19317 Timothy Mci~9H:Me~r. · 1) ... t ....... .__ ,,;..t-~>u h.J.d"t, ~ "7 By:~.c!.~ Nrune: ~/ ... .~. 0-...t,:.d Title: rn '""'-?'0., m.-.._ I.-<.. AMERICAN WINTER SERVICES, LLC A PEll\1\SYIVania limited liabJI!ty compo:!\y ny:~.ac·..J:~.-,· Name: C "'""" 1.... C:...,. .luoo Title: (Y!..-.."'-1; "'? /YI"- b..._ -~A~ Charles Gaudioso, Individually Case 5:17-cv-00570-JLS Document 52-3 Filed 04/27/17 Page 9 of 11 I I EXHIBIT"A" Case 5:17-cv-00570-JLS Document 52-3 Filed 04/27/17 Page 10 of 11 IN IN IN IN IN IN IN 'IN ; IN ·IN IN !N IN liN ~~ IN ~-~ A00~09 !Mi@liillli'iiw-~1 Ch'miCPI l!qulpm11nt \..lltrv of DE P,O, b.OX U:Sti UNWOOO, PA 1906:!. P~Dne: 610.497,9390 F'll:t} 61{1,497.95'24 Atm: Acoounts Payl!lble AMERICAN WINTER SERVICES 334 KENNm PIKE CHADDS FORD, PA 19317 610·496·041l0 KEYS TOW!N 18423 KEYS TOWIN 18428 2/19/2011 18389 2/19/2014 2/20/2014 020306 020305 3/14/2011 l/29(.!014 3(,!6/2014 3/ll/2014 STATEMENT j!@!ip%Ji#~hl A.ttnl Ac:cunts Receivable Chemlca/l!qulpmant Lab1 ot DE P.o. nox ua6 IJNWOOD1 PA 1.906\ ' ' 594.651 10,303.201 13,87<1.40 ll\,882,4(1 i 8,465.60! <9,llMO 111,762,lG 11,257.68 6,003.52 JJ367,00 3,S12,SO 15,264.00 15,463,50 35,187.50 10/9/1014 3/17/ZOH' ' 3/17/2014 j/.19/<014 3/9/2014 3/14/2014 2/ZS/20141 3/14/20141 3/9/2014 3/16/2014 3/26/2014 3/26/2014 3/26/2014 1/18/2015 3/13/2014 4/9/Z014 319/20!4 3/6/2014 4,109.70 12/26/2011 4,642,50 2{19/2014 4,690.66 4/1!/2014 3/9/2014: 10,336,00 5,097.00 3/ll/2014! 4,890.55' 101338.00, 5,097.00 4/l/2014 .t,m.2s J/14/ZO!IIi ~,772,2$ 4/3(.!014 I 4,881.76, ,,,,,2014l 4,861.78 19653 4/28/2014 21,578,90 Z{l(,!014 21,518,90 19654 S/1/2014 .. ...l_. . ···-- .. <--...... - .. ;, __ l6,D~~·6tZ/5/~01~ ----1&,049.60 ,. ' Case 5:17-cv-00570-JLS Document 52-3 Filed 04/27/17 Page 11 of 11 Exhibit B Case 5:17-cv-00570-JLS Document 52-4 Filed 04/27/17 Page 1 of 2 July7,2014 Timothy "Tim~ McKenna 9 North Hampshire Court Wilmington, De 19807 This is to confirm ln writing that your consulting contract is terminated for cause as follows: American Winter Services, llC {AWS) has a signed contract with Bobby Aerenson for snow removal at Polly Drummond Shopping Center, Polly Drummond Hill Rd., Newark, DE 19711. AWS has bllled Aerenson about $62,000 for those services for the winter of 2013-2014. Aerenson has refused to pay based on a signed agreement made on or about March 13, 2014 between "Bob Aerenson"' and "11m McKenna~ personally. In that agreement you state thatAerenson owes u60 +P' and that it is "all paid in fult. Aerenson states that he forgave a lik.e amount of personal debt that you owe to him. Bob Aerenson also states that he gave you a personal check for $18,000. You promised free snow services through Mardl201S You also promised to cut grass for Aerenson on a vacant lot ellery three weeks in 2014. We have learned that you used laurel Gardens LLC (LG} resources to fulfill the grass cutting part of the personal contract you have with Bob Aerenson. In adtfrtlon we have learned that there are other instances of theft and fraud by you which will be enumerated as our investigations and forensic attounting analyses are completed. Therefore your consulting contract that we have been operating under for the last 24 months Is tenninated for cause as verbally stated to you on June 1.1, 2014. That contract is binding in all respects. Moreover, on July 25, 2012 you signed another agreement that states that you uagree to continue best efforts as a Consultant to LGH and its subsidiaries to develop the business and not to harm it In any way:" Your actions have been extraordinarily destructive and harmful to LGH and its subs!dlarles.LGH, LG and AWS will pursue every lagal means both criminal and dvil against you. Moreover, you remain obllg;rted ~not to harm~ LGH and its subsidiaries "in any vay". Your intent to do harm is dear. Therefore you are commanded to have no contact whatsoever with vendors, customers, lenders, investors or employees of LGH, LG, or AWS. You are also commanded not to trespass on any company site or the site of any customer. Charles P. Gaudioso Managing Member laurel Gardens Holdings, LLC Case 5:17-cv-00570-JLS Document 52-4 Filed 04/27/17 Page 2 of 2 Exhibit C Case 5:17-cv-00570-JLS Document 52-5 Filed 04/27/17 Page 1 of 7 DATE:: 712612013 American Winter Services u.c 334 KENNETT PIKE CHADDS FORD, PA 19317 2013-2014 SNOW REMOVAL CONTRACT CONTRACfll: S-1<07 Cl:'Sll»IF.R: Bobby- JOB NAME: Polly Drummoud Shopping Center ...,.,_ 2213 Cono:nd Pike .JOB LOCAUON: Polly Drummaod Hill Rd. W"lh:ningQ:ln.D£19803 NewarK, DE 197ll A.l"JE!'o"'fi(),_~ Bobby- l'll YM'trwg!kr. pmtimrfals ad dkection of the Custmru.. 2_ Equipment 1111<'1 maiP3iBk maybe m:ored oosi!>:. Ibis will aid Contmdorto provide quickres_poru= time. B. Saow C~ring orSidcwalb: 1. Snow dearing of~ $IWl ~ wilhin a .easonoble limo: as a~ of a pcading or ;~ Wl:llibecfim:castgr ptecipimti:oD OT byt!JD diJ=aion of the C~. C.. Sdt A~ to Acer:sl" 1loadwayl aadfor J'arlalt. 2. TheamomJt ealed with salt. J"riC:{q: Scb~dule Fur Day or Scunu Su.-ica:: 0"-1..99" Salting of a= ro~ ami paWDg Jot. sidewaDt deariag m:ul spp\k:atioo ofkemolt tllSt=rlal Wlll e.tl onJvoa a T&:M basis 2"-739" Plo:rwiiJg 8Ild salling of 3IXleU ~and padcing lot,. sidewalk c:l=rillg and applicarinn ofilz =It matc:rial. ' <.160.00 8..0..- p .... .Pinwillg .and s:ahingofacccss roadways omd padciDg lot, sidcwalkdeariug and sppliQ!!ionofio:meltmatuial. lhe 2.0d-7.99" ram applies in .Jdition1o. m iDclt rate~ in i=ts ofOII!i>temhofiucb in.=oflO inc:br.:s. ...... ' 1-.o<> ~For Loading a.d lla•lia&: of S....,., ud/or lee: lDading: 8lld baaliogof anow 2llldfor ice will be perfoiDICd on a tirJm m:l m;tcrlals t-is. Pleas~ se Edllblt "l" for appliC!Iblc ntes. Aldaoaglr, AWS will maD ct1lry dfortto com.111cnee mow cleari.g sc......,_ at tile bqiDaina: or au ~r;-e riru.tiau. Iilre tiiDiq aad laknlity of lbe sto...., doatdo aot .00... Cbl!l paTu:y tobe - ed. Case 5:17-cv-00570-JLS Document 52-5 Filed 04/27/17 Page 3 of 7 Rdruze Tn:atmcat: Complete salting of~ roads, paO:ing lot aDd side\\oalks wbco ncces=y. :1\'TE IJl of0-1.99"' let! Oteck Tmlflueat of &ttU! roads, pufdnc; kK and sidewalks: s, Contnetor'lll'm 11111b e.rery dfurt to retura to site durinr; tbe two (l) days folJGvring a :mow 110n11 to perfonn a nfreeu or;.,., check tn:atnle~~.t. BO'ft'ner, Cllltomcr is rapomfblo: to a.l Ill pcneDtially dmptoDS CDDditloosaa it pcrtaia1111 rer-or iu dleeb,. .. d Customeradmotvlcd:a t1u1t Contrador R oot e~, oor doa it aazpt cugqement. all :a eontilllliag moniturofpotcnn.lly daagerom or DPUfe amditiom whieh .....,. arile by ra~SGD ofthaMagaad l'tfiuzin;: or prr:violl$ly plowed or trutcd areas.. Upo11 ~nabk aetil:e (rom eu.tomer of any wdl cvndicio11, Coatracmrlri!IUJe Ia ru501Uble be:rt diU$ 111 Jenil:£ Slll::b maufitioa. Coorra.:tDr shall Dot beo ~ to tervit:e p!Jtmtially d:eogenur coadit:lou for...tlidl it bou aot be= pea reasoaablf:, oodec. ~ or ice checb do not iAdude Joow or iee fllllllillg fro• roo& or~llllp. C!utoollau ....st e~~Q Coatractnr ifblrmg ice or 1aow sboGid oco;:ur. Plcue - .. EUlbil: l" tDr n:fr=zc or k:e chedo:: dofinitio&L unJtsJ ome ortbe bo"a ilil dtcc:bd..) """" AWS i:,;~ topcdi:mn refr= ao:i ice checl:: servil:es wbeD ~my fcc1 it is in teat- """" tl= bc:stinletcst:ofdleCa:stomcr. A WS is not l!lllhDri2ed1D perform refreeze or ice c!=k.seniccs wilb.out pmnissiun ftom tbe Custumel'..lt is reali7J:d that A WS docs a=d 4 bours ootice when lhcyaK> oo an on Qll1 bnsis.. Custtan=- i""'" Ice~ Ia:: on pP.iag lotsaod IIIXC:Sitoods will bc: treated wi1b saltandsidcwaltswill be Dealf:d with ice melt material Medium: Icc on park,ing lob,. :wcess roads 8Dd sido:walks will bc: cbippe:d. saltl:d, and ifu=y, aggregate will be applied. Equipmc:ntwill be used to ~crape.. ... , Icc: Oll padiDg:loiS, .:=roads -and sidcwalk:swill be traDed 11/Ub aggtCgllll= ll!llisaltso 1imt 1beyllnl pBS$Bbk.. Once W oulsidc t:cmpcnltlln:! 1= ri.'JCil ennugh mallow the 58hto begin 1D melt lbe icc,. the icc will be dripped and scraped. ·~. .... .. ..,_, ---- Case 5:17-cv-00570-JLS Document 52-5 Filed 04/27/17 Page 4 of 7 GmendProvitiano: 1. CUstmner Sl:i:nowiedgl:s that it is impossible and impndic;!ble to ~ 1he tnml elimina!iDn ofsnaw. ice. 5\ush, Wllll::t", ere from all areas. Cu3Id parties."). fium and ~ >illc::laixn!;. demands, m-uit:l, ~ ~clai!m mdpetitions,judg=nls. VQ'd.ielS, sdtlcmcnts,. C3U9eS of action,~ liabiftti=s, 1= ~10 indemnifY, defi:lod and hold hiiDill=s:<, BS setout !Obove, arE> bindiDg andsball amliecmeol 5. Legal Fees. .ED tho: eventofliligmon to =fon:e or ~ ~ sgro:o:menf,1he pre>'aili:llg party sball 1m attir1e>d 10 reasoeabb auomcy ll=. 6. Eotile contract. This illddservices con1:r.11:t m: other Miling or dorumc:at. There are no collaJ:eral or verbal undeistaddirrgs AnymDdificalions ot ~ sball be in writing, sigocd by all parties to be cffcctivc. 7. All wad: is to be completed m ~ manner KCOldingto indusay ~Any alteration or dcvia!ioo.from above ~caDuns illf1:hasc: JDid llllliJJI:,.in $1Z1U!Drywmkmed's COIDJI"''IS3lion :md tJibc:r <:ommarcially lC1I.50ilBhlc inslmu:Jcc as will protect jrfrum claim, which lJl8Y arise out of m: result fiow its operations under this "B'=<:DI:. Unle:o:s notifu::d by Customer to~ conlBiy within. 8 boul3 of a.nnpldioo ofopention, all S>~,DW=noV!llscrvices pafonncd pUrSUS:ntto this ~tare dcQnN SBiis.faclnry and accepted ~r'!. duty to p:dDrm =ices wd=:rthis agm:m=nt arises when BDYOfthc followiogOCCUl3: "-4ors Case 5:17-cv-00570-JLS Document 52-5 Filed 04/27/17 Page 5 of 7 a A tqlOI1. is i:s$ual by Ole NatioDal Weo;tha ~thai: sm11:s thai: acc:w;nulmion ofi~ and or snow is ~to reach amo111'1I5 which 1IIJdQ this ~t requ.in: sud!. servk:c. (~) k R=:iptofiiCtual 1'101i<::<=lromtbeCusromcr'lhar~ :serv~"""n:quc:sted (or) c. Tn !he discretion oflhe CCWes 1he aggn:gate, lhe Custolncr will bo cllarged in ac.oordallce wilh the tim<: andrni!Ieriah """"'"""'""'- lO. Cantnlclor; liCD!'p!S no tellpOIISibilily fur damage to trees, shruba.. ~ ~ <:111M. roads. payed pading areas and perking~ caused by the llSC of salt. il:cmclt and/ Dr~- t 1. It is Wldc:rstood that aoy ~regarding tbU ~ 1hc woO: proposo:>ifperl'onncd bct'Cin andfOl" aoy invoi= being executed as of Aprill7, 2003, for the purpose offorming a limited liability company pursuant to the Delaware Limited Liability Company Act, 6 Del. C. §§ 18-101, ~· (i) The name of the limited liability company formed hereby is Rojan 586 Polly, LLC. (ii) The address of the registered office of the limited liability company in the State of Delaware is 2213 Concord Pike, Wilmington, New Castle County, DE 19803. (ill) The name and address of the registered agent for service of process on the limited liability company in the State of Delaware is Advance Corporate Service, Tnc, 22l3 Concord Pike, Wilmington, New Castle County, DE 19803. ARTICLE ONE: PURPOSE The Company's business and purpose shall consist solely of the acquisition, ownen;hip, operation and maintenal)Ce of the real estate project known as Polly Drummond Shopping Center, loc~ted in New Ca,stle County, Delaware (the "Property") and activities incidental thereto. ARTICL\1: TWO: POWERS AND DUTIES Notwithstanding any other provisions of this Certificate and so long as any obligations secured by a first priority mortgage, deed of trust or deed to secure debt incurred in connection with any financing of the Property (a "Security Instrument') remain outstanding and not discharged in full, without the consent of all members, the Company shall have no authority on behalf of the Company to: (i) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligaiion), other than obligations secured by the Securily Instrument, except unsecured trade and operational debt incurred with trade creditors in the ordinary course of its business of owning and operating the Property in such amounts as are normal and reasonable under the circumstances, provided that such debt is not evidenced by a note and is paid when due and provided in any event rhe outstanding principal balance of such debt shall not exceed at any one time one percent (I%) of the outstanding obligations secured by the Security Instrument; (li) seek the dissolution or winding up, in whole or in part, of the Company; (Iii) merge into or consolidate with any person or entity or dissolve, terminate or liquidate, in whole or in part, transfer or otherwise dispose of ail or substantially all of its assets or change its legal structure; I Case 5:17-cv-00570-JLS Document 52-6 Filed 04/27/17 Page 2 of 12 0'''16'2003 09:10 PAX 302 652 8600 AERE~SO> & AEREI'SO~ ~ OOJ/005 (iv) file a voluntary petition or otherwise initiate proceedings to have the Company adjudicated bankrupt or insolvent, or consent to the institution of bankruptcy or insolvency proceedings against the Company, or file a petition seeking or cons.,nting to reorganization or relief of the Company as debtor under any applicable federal or state law relating to bankruptcy, insolvency, or oth"r relief for debtors with respect to the Company; or seek or consent to the appointment of any trustee, receiver, conservator, assignee, sequestrator, custodian, liquidator (or other similar official) of the Company or of all or any substantial part of the properties and assets of the Company, or make any general assignment for tbe benefit of creditors of the Company, or admit in writing the inability of the Company to pay its debts generally as they become due or declare or effect a moratorium on the Company debt or take any action in furtherance of any such action; or (v) amend, modify or alter Articles One, Two, Three, Pour, Pive or Six of' these Articles. Notwithstanding the: foregoing and so long as any obligation secured by the Security Instrument remains outstanding and not discharged in full, the Company shall have no authority to take any action in items (i) through (iii) and (v) without the written consent of the holder of the Security Instrument, ARTICLE THREE: TITLE TO COMfANX PROPERTY All property owned by the Company sho.ll be owned by the Company as an entity and, insofar as permitted by applicable law, no member shall have any ownership interest in any Company property in its individual name or right, and each member's interest in the Company sl1all be personal property for ail purposes. ARTICLE FOUR: SEPARATENESS/OPERATIONS MATTERS The Company has not and shall not: (a) acquire or ow~ any material asset other than (i) the Property, and (ii) such incidental personal property as may be necessary for the operation of the Property; (b) fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the laws of the jurisdiction of its organization or formation, or without the prior written consent of the holder of the Security Instrument, amend, modify, terminate or fail to comply with the provisions of these Articles of Organization, or the Company's Operating Agreement: (c) own any subsidiary or make any investment in or acquire the obligations or securities of any other person or entity without the consent of the holder of the Security Jnst:rument; (d) commingle its assets with the assets of any of its principal(s), affiliates, or of any other person or entity or transfer any assets to any such person or entity other than distributions on account of equity interests in the Company permitted by the Security Instrument and properly accounted for; 2 Case 5:17-cv-00570-JLS Document 52-6 Filed 04/27/17 Page 3 of 12 04/16/2003 09:10 FA! 302 652 8600 AERENSON & AERENSON 141004/005 (e) (f) (g) (h) (i) G) (k) (I) (m) allow any person or entity tQ pay its debts and liabilities (except for a Guarantor or Indemnitor (as defmed in the Security Instrument)) or fail to pay its debts and liabilities solely from its own assets; fail to maintain its records, books of account and bank accounts separate and apart from those of the parmers, members, principals and affiliates of the Company, the affiliates of a partner or member of the Company and any other person or entity or fail' to prepare and maintain its own financial statements in accordance with generally accepted accounting principles and susceptible to audit, or if such financial statements are consolidated fail to cause such financial statements to contain footnotes disclosing that the Property is actnally owned by the Company; enter into any contract or agreement with any partner, member, pdncipal or affiliate of the Company or any guarantor of all or a portion of the obligations secured by the Security Instrument or any partner, member, principal or affiliate thereof, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arms-length basis with third parties other than any partner, member, principal or affiliate of the Company, as the case may be, any guarantor or any partner, member, principal or affiliate thereof; fail to correct any known misunden;tandings regarding the separate identity of the Company; hold itself out to be responsible or pledge its assets or credit worthiness for the debts of another person or entity or allow any person or entity to hold itself out to be responsible or pledge itli assets or credit worthiness for the debts of the Company (except for a Guarantor or Indemnitor (as defined in the Security Instrument)); make any loans or advances to any third party, including any partner, member, principal or affiliate of the Company, or any partner, member, principal or affiliate thereof; fail to file its own taX returns or to use separate contracts, purchase orders, stationary, invoices and checks; fail either to hold itself out to the public as a legal entity separate and distinct from any other entity or person or to conduct its business solely in its own name in order not (i) to mislead others as to the identity with which such other party is transacting business, or (ii) to suggest that the Company is responsible for the debts of any third party (including any partner, member, principal or affiliate of the Company or any J?artner, member, principal or affiliate thereat); fail to allocate fairly and reasonably among the Company and any third party (including, without limitation, any guarantor) any overhead for common employees, shared office space or other overhead and administrative expenses; 3 Case 5:17-cv-00570-JLS Document 52-6 Filed 04/27/17 Page 4 of 12 04116/2003 09:10 FAX 302 652 8600 .'>ERE:-iSOX & ... ERENSON liiJ005<'005 (n) (o) (p) (q) allow any person or entity to pay the salaries of its own employees or fail to maintain a sufficient number of employees for its contemplated business opemtions; fail to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; share any common logo with or hold itself out as or be considered as a departmenr or division of (i) any partner, principal, member or affiliate of the Company, (ii) any affiliate of a partner, principal, member or affiliate of the Company, or (iii) any other person or entity or allow any person or entity to identify the Company as a department or division of that person or entity; or conceal assets from any creditcr, or enter into any transaction with the intent to hinder, delay or defraud creditors of the Company or tbe creditors of any other person or entity. ARTICLE FIVE: EFFECT OF BANKRUPTCY, DEATH OR INCOMPETENCY OF A MEMBER The bankruptcy, death, dissolution, liquidation, termination or adjudication of incompetency of a member shall not cause the termination or dissolution of the Company and the business of the Company shall continue. Upon any such occurrence, the trustee, receiver, executor, administrator, committee, guardian or conservator of such member shall have all the rights of such member for the purpose of settling or managing its estate or property, subject to satisfying conditions precedent to the admission of such assignee as a substitute member. The transfer by such trustee, receiver, executor, administrator, committee, guardian or conservator of any Company interest shall be subject to all of the restrictions hereunder to which such transfer would have been subject if such transfer had been made by such bankrupt, deceased, dissolved, liquidated, terminated or incompetent member. ARTICLE SIX: SUBORDINATION OF 1NDEMNIFlCA'fiON PRQVlSTO)SS Notwithstanding any provision hereof to the contrary, any indemnification claim agaill.'!t the Company arising under these Articles, the Operating Agreement or the laws of the state of organization of the Company shall be fully subordinate to any obligations of the Company arising under the Security Instrument or any other Loan Document (as defined therein), and shall only constitute a claim against the Company to the extent of, and shall be paid by the Company in monthly insta!hnents only from, the excess of net operating income for any month over all amounts then due under the Security Instrument and the other Loan Documents r::--r WITNESS WHEREOF, the undersigned authorized person has duly executed this Certificate of Formation 'IS ofthis Aprill7, 2003. By y-,/L--r--- Robert R. Aerenson, Managing .Member 1:\Andy\MY FD.,ES\CLIENTS\Roj.i!n\PoUy Orommc;~nci\Cett offQrmaliital Calls. No Member shall be required to make any additional capital contributions to the Company. Section 3.4 Adyances. If any Member shall advance any funds to the Company in excess of his Capital Contribution as set forth on Schedule A attached hereto, the amount of such advance shall neither increase his Capital Account nor entitle him to any increase in his share of distributions of the Company. ARTICLE IV Allocation of Protlts and Distributions Section 4.1 Allocation of Profits and Losses. All Company profits and losses shall be allocated on the basis of the percentage (as set forth on the Schedule A attached hereto) of the contributions to capital made by each Member. Section 4.2 Allocation of Distributions. All Company distributions of cash or other assets shall be made on the basis of the percentage (as set forth on Schedule A attached hereto) of the contributions to capital made by each Member. ARTICLE V Members Section 5.1 Powers of Members. The Members shall have the power to exercise any and all rights or powers granted to the Members pursuant to the express terms of this Agreement. The Members shall also have the power to exercise any and all other rights or powers of the Company and do all lawful acts and things as are not precluded by the Act or this Agreement. Case 5:17-cv-00570-JLS Document 52-6 Filed 04/27/17 Page 8 of 12 Section 5.2 Partition. Each Member waives, until termination of the Company, any and all rights that he may have to maintain an action for partition of the Company's property. Section 5.3 Resignation of Members. A Member may resign from the Company at any time by written notice to the Company and to all remaining Members, and such resignation shall not result in the dissolution of the Company, and the business of the Company shall be continued by the remaining Members. A Member who has resigned as a Member may not reinstate his membership except upon the affirmative vote of the holders of not le~s than 80% of the remaining LLC Interests, provided that, as of the time of the requested reinstatement, such Member shall not have divested himself of the LLC Interest that he held at the time of his resignation. ARTICLE VI Management of the Company Section 6.1 Management. The business and affairs of the Company shall be managed exclusively by Robert R. Aerenson as its Manager, acting pursuant to the affirmative vote of the holders of not less than 51 % of the LLC Interests. Section 6.2 General. The Managers shall have full, exclusive and complete discretion, power and authority, subject in all cases to the other provisions of this Agreement and the requirements of applicable law, to manage, control, administer and operate the business and affairs of the Company for all purposes herein stated, apd to make all decisions affecting such business and affairs as such business and affairs shall be in the ordinary course of the Company's business, including the authority to enter into a Property Management Agreement with a Property Manager, who may be affiliated with one or more Members, with respect to leases, operations, repairs, administration, collection of rent and other business and affairs of the Company. Section 6.3 Limitation on Authority of Members. No Member is an agent of the Company, or has authority to act for or bind the Company, solely by virtue of being a Member. Except as expressly provided for in this Agreement, no Member shall have the authority to bind the Company within the meaning of§ 18-402 of the Act. Section 6.4 Pro.perty Management Agreement. The Managers may, in their discretion, enter into a Property Management Agreement, subject to such terms and conditions as the parties may mutually agree. ARTICLE Vll Liabilitv Section 7.1 Liability. Except as otherwise provided by the Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and no Member shall be obligated Case 5:17-cv-00570-JLS Document 52-6 Filed 04/27/17 Page 9 of 12 Section 9.1 Dissolution. Subject to the terms contained in the Certificate of Formation, the Company shall be dissolved, and shall terminate and wind up its affairs, upon the first to occur of the following: (a) the determination of and unanimous consent of all the Members to dissolve the Company; or (b) an event specified in Section 18-801 of the Act. Section 9.2 No Dissolution. The Company shall not be dissolved by the admission of additional or substituted Members in accordance with the terms of this Agreement. ARTICLE X Miscellaneous Section 10.1 General. Any amendment or supplement to this Agreement shall only be effective if in writing and if the same shall be consented to and approved by all the Members. Section 10.2 Binding Effect. This Agreementshall be binding upon and inure to the benefit of all of the parties and, to the extent permitted by this Agreement, their successors, legal representatives and assigns. Section 10.3 Intemretation. Throughout this Agreement, nouns, pronouns and verbs shall be construed as masculine, feminine, neuter, singular or plural, whichever shall be applicable. Section 10.4 Counte[parl~. This Agreement may be executed in any number of counterparts with the same effect if all parties hereto had signed the same document. Section 10.5 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without regard to principles of conflict of laws. Section 10.6 Incomoration by Reference. All terms, conditions and restrictions stated in the Company's Certificate of Formation shall be incorporated herein. In the event of a conflict of provisions between the Certificate of Formation and this Operating Agreement, the Certificate of Formation shall prevail. Case 5:17-cv-00570-JLS Document 52-6 Filed 04/27/17 Page 10 of 12 IN WITNESS WHEREOF, the parties hereto have executed and delivered this Limited Liability Company Agreement the day and year first above written. (SEAL) I SEAL}