Free Reply Brief - District Court of Delaware - Delaware

2003 WL 22316772 Case 1:05-cv-00072-JJF
2003 WL 22316772 (E.D.Pa.) Motions, Pleadings and Filings

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Only the Westlaw citation is currently available. United States District Court, E.D. Pennsylvania. N. Douglas FLUKE v. HEIDRICK & STRUGGLES, INC. No. Civ.A. 02-CV-8385. Aug. 27, 2003. MEMORANDUM AND ORDER KAUFFMAN, J. *1 Plaintiff N. Douglas Fluke brings this diversity action against Defendant Heidrick & Struggles, Inc., alleging various state law tort claims arising out of Defendant's assessment of Plaintiff's suitability for advancement to the presidency of one of his employer's corporate divisions. Now before the Court is Defendant's Motion to Dismiss. For the reasons set forth below, the Motion to Dismiss will be granted in part and denied in part. I. Background Viewed in the light most favorable to Plaintiff, the relevant facts are as follows. Plaintiff was employed on an at-will basis as a vice-president of Cognis, a chemical company that was a division of Henkel Corporation ("Henkel"). (Compl.¶¶ 7, 61.) In 2001, Henkel was in the process of negotiating the sale of Cognis to a group of investors (the "investors"). (Compl.¶ 11.) During that negotiation process, either Cognis or the investors or both sought to determine whether any of the three vice-presidents of Cognis' North American offices were capable of taking over the post of president of North American operations. (Compl.¶ 12.) The investors stated repeatedly that they wanted an American to hold this position, and Plaintiff was the only American among the three vice-presidents of Cognis' North American offices. (Compl.¶ 13.) Either Cognis or the investors or both retained Defendant to evaluate Cognis' inside personnel, including Plaintiff. (Compl.¶ 14.) Plaintiff was directed by company e-mail to meet representatives of Defendant for a "strategic leadership initiative". (Compl.¶ 15.) Plaintiff was told to bring a current resume but not to prepare otherwise. (Id.) On or about October 16, 2001, Plaintiff met with Defendant's representatives. (Compl. ¶ 17 .) Although not asked to do so, he presented a summary of his accomplishments at Cognis and prepared a hypothetical case study. (Compl.¶ 19.) The meeting lasted for two hours, approximately twenty minutes of which was consumed by introductory "small talk" and the balance of which consisted of general conversation about the industry and Plaintiff's work. (Compl.¶ 18.) No objective tests were administered and no hypothetical questions were posed to Plaintiff. (Compl.¶¶ 21-22.) This two-hour meeting was the sole opportunity for Plaintiff to have contact with any representative of Defendant. (Compl.¶ 25.) Neither of Defendant's representatives had any training in psychology or other disciplines that would aid them in assessing personality traits beyond the ability of an average layman. (Compl.¶ 23.) After the meeting, Plaintiff received a copy of a written assessment which included the following conclusions: "His ability to learn is likely inhibited by his somewhat underdeveloped listening skills. He will work a problem long and may have a tendency to overwork it, trading analysis for action. His vision is average and medium termed. He does not display a long term, creative vision of his own. His ability to create buy-in therefore could be somewhat limited as well. He maybe will not be able to contribute too much with his own ideas and concepts to develop the company further." *2 (Compl.¶¶ 26-27.) Subsequently, Plaintiff was informed by Cognis that he would not be offered the position of president. Instead, he was given a copy of a flow chart that revealed that his oversight responsibilities would be reduced from two divisions to one. (Compl.¶ 28.) The presidency was filled by an outsider, recruited out of retirement by Defendant. (Compl.¶¶ 29-30.) [FN1] Defendant's assessment of Plaintiff not only ruined his opportunity for advancement, but also caused Cognis to reduce his responsibilities.

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(Compl.¶ 27.) He was humiliated and, after executing a severance package, left Cognis in May 2002. (Compl.¶ 33.) FN1. Defendant had a financial interest in placing an outsider, since it would receive a sizeable "headhunting" commission. (Compl.¶ 31.)

II. Legal Standard When deciding a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), the Court may look only to the facts alleged in the complaint and its attachments. Jordan v. Fox, Rothschild, O'Brien & Frankel, 20 F.3d 1250, 1261 (3d Cir.1994). The Court must accept as true all well-pleaded allegations in the complaint and view them in the light most favorable to the plaintiff. Angelastro v. Prudential-Bache Sec., Inc., 764 F.2d 939, 944 (3d Cir.1985). A Rule 12(b)(6) motion will be granted only when it is certain that no relief could be granted under any set of facts that could be proved by the plaintiff. Ransom v. Marrazzo, 848 F.2d 398, 401 (3d Cir.1988). III. Analysis A. Negligence In Count I, Plaintiff claims that Defendant is liable for negligence because it breached the duty it owed to Cognis and Plaintiff to conduct an assessment of Plaintiff's abilities in a fair, competent, and professional manner. "[T]he elements of a negligence-based cause of action are a duty, a breach of that duty, a causal relationship between the breach and the resulting injury, and actual loss." Campo v. St. Luke's Hosp., 755 A.2d 20, 23-24 (Pa.Super.2000); see also In re TMI, 67 F.3d 1103, 1117 (3d Cir.1995); Philadelphia v. Beretta USA Corp., 126 F.Supp.2d 882, 898 (E.D.Pa.2001). Defendant argues that Plaintiff's negligence claim must fail because it owed no duty of care to Plaintiff. The Court disagrees. Whether a duty exists is a matter of law. In re TMI, 67 F.3d at 1117. The determination of whether a duty should be imposed upon an alleged tortfeasor involves a balancing of the following factors: (1) the relationship between the parties; (2) the social utility of the actor's conduct; (3) the nature of the risk imposed and foreseeability of the harm incurred; (4) the consequences of imposing a duty upon the actor; and (5) the overall public interest in the proposed solution. Althaus v. Cohen, 756 A.2d 1166, 1169 (Pa.2000). See also Lindstrom v. City of Corry, 763 A.2d 394 (Pa.2000). It is clear that a sufficient relationship existed between Plaintiff and Defendant to support the imposition of a duty on Defendant to Plaintiff to exercise reasonable care. See Sharpe v. St. Luke's Hospital, 821 A.2d 1215, 1219 (Pa.2003) (finding a duty of reasonable care between a hospital and a plaintiff alleging that she was negligently screened and given a false positive result for the presence of cocaine because "a sufficient relationship exists between the Hospital and [plaintiff] to justify the imposition of a duty upon the Hospital to exercise reasonable care in the collection and handing of the urine specimen, despite the absence of a contract between the two parties. Specifically, plaintiff personally presented herself to the Hospital, which was aware of the purpose of the screening; the Hospital, in turn, should have realized that any negligence with respect to the handling of the specimen could harm [plaintiff's] employment."). [FN2] Defendant's representatives should have foreseen the inevitable harm to Plaintiff's career if his evaluation was performed negligently. Regarding the other Althaus factors, while Defendant's service is certainly socially useful, the Court sees no overridding public policy interest in protecting consulting services from liability for negligent performance. FN2. Accord Merrick v. Thomas, 522 N.W.2d 402 (Neb.1994) (finding that merit commission owed plaintiff a duty of care in examining her for suitability for employment with sheriff's department when the negligent party could foresee that its negligence could cause harm to plaintiff); Reed v. Bojarski, 764 A.2d 433, 442-43 (N.J.2001) (stating that "[a] professionally unreasonable examination that is detrimental to the examinee is not immunized from liability because a third-party authorized or paid for the exam").

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*3 Defendant also argues that there is no cause of action for negligent evaluation under Pennsylvania law. However, the only cases cited in support of this proposition involved evaluation by the plaintiff's employer. See, e.g., Mann v. J.E. Baker Co., 733 F.Supp. 885, 889 (M.D.Pa.1990) (holding that a supervisor could not be found liable for a negligent performance review that led to the at-will employee-plaintiff's termination because "absent a showing otherwise, her employment could have been ended by [Defendant] at any time for any reason if not proscribed by statute or public policy."). As Defendant is not Plaintiff's employer, these cases are inapposite. Accordingly, the Court will deny the Motion to Dismiss as to Plaintiff's negligence claim. [FN3] FN3. Defendant also argues that Plaintiff's negligence claim should be dismissed because he has not alleged that he was harmed by Defendant's negligence. However, it is clear from the face of the Complaint that Plaintiff alleges that he was denied the promotion he sought as a result of Defendant's unfavorable assessment. See Compl. ¶ 27.

B. Fraud In Counts II, IIA, [FN4] and III, Plaintiff alleges fraud, intentional misrepresentation, and negligent misrepresentation. In order to state a claim for fraud and fraudulent misrepresentation, Plaintiff must show "(1) a material representation of fact; (2) which was false; (3) that the maker was aware of the falsity or reckless as to whether it was true or false; (4) that the statement was made with the intent of misleading another into relying on it; (5) there existed a justifiable reliance on the misrepresentation; and (6) the resulting injury was proximately caused by the reliance." Kerrigan v. Vellei, 22 F.Supp.2d 419, 428-29 (E.D.Pa.1998); see also Delahanty v. First Pa. Bank, 464 A.2d 1243, 1252-53 (Pa.Super.1983). Negligent misrepresentation similarly contains requirements of "false information, justifiable reliance, causation and pecuniary loss." Kerrigan, 22 F.Supp.2d at 429. [FN5] FN4. The Complaint lists two counts, both labeled "Count II". For the purposes of differentiation between the two, the Court will refer to Plaintiff's claim of "Fraud-Intentional Misrepresentation" as Count IIA.

FN5. The only differences between intentional fraudulent misrepresentation and negligent misrepresentation are "the state of mind of the person making the representation and the standard of proof that must be met by the plaintiff." Kerrigan, 22 F.Supp.2d at 429.

Defendant argues that Plaintiff's claims of fraud, intentional misrepresentation, and negligent misrepresentation should be dismissed because he has failed to allege reliance upon the statements made by Defendant. In KBT Corporation, Inc. v. Ceridian Corporation, 966 F.Supp. 369 (E.D.Pa.1997), the court faced a similar issue. [FN6] In KBT, the owners of a radio station brought suit against a ratings company that conducted surveys on listener habits. These surveys were published in quarterly reports and advertising purchases were based on them. Plaintiffs in that case contended that the defendants' surveys were compiled using a method known to be biased and that they therefore had knowingly published false and misleading information that damaged plaintiffs' share of advertising revenues. Id. at 372. The court dismissed the plaintiffs' fraud claims because of their failure to allege reliance: "[A]ccepting KBT's allegations as true, it is the advertisers (1) who Defendants intended to act on their statements and (2) who did in fact act on them, not to their own damage, but to [Plaintiff's].... If, in fact, Defendants' statements were fraudulent, only the advertisers would have a claim, and only to the extent that the advertisers themselves incurred damage." Id. at

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377. See also Michelson v. Exxon Research & Engineering Co., 629 F.Supp. 418, 423-24 (W.D.Pa.1986) (holding that a cause of action for fraud "is available to those who receive misrepresentations and rely on such misrepresentations to their injury.... Plaintiff thus may not invoke this cause of action because he cannot ... satisfy the requirement that he himself must detrimentally rely on the alleged misrepresentation."). FN6. In KBT, the plaintiffs were KBT Corporation, Inc. and W. Cody Anderson, its sole shareholder; the defendants were Ceridian Corporation and Arbitron Company. KBT Corporation, Inc., 966 F.Supp. 369.

*4 The Complaint in the present action alleges that Cognis--not Plaintiff-- relied upon the statements made by Defendant in deciding not to promote Plaintiff. Thus, Plaintiff has failed to allege that he relied on Defendant's allegedly fraudulent and negligent statements. See Berda v. CBS, Inc., 800 F.Supp. 1272, 1276 (W.D.Pa.1992) (noting that fraudulent misrepresentation requires a showing of "justifiable reliance by the plaintiff"); Delhanty, 464 A.2d 1243, 1252-53 (Pa.Super.1983) (fraud requires a showing of "justifiable reliance by the recipient upon the misrepresentation"). See also Eisenberg v. Gagnon, 766 F.2d 770, 778 (3d Cir.1985) (reliance is a required element of negligent misrepresentation); In re Prudential Ins. Co. of America Sales Practices Litigation, 975 F.Supp. 584, 619 (D.N.J.1996) ("The common law tort of negligent misrepresentation shares all the components of fraud ..."). Accordingly, Plaintiff's claims of fraud, intentional misrepresentation, and negligent misrepresentation will be dismissed. [FN7] FN7. See Mellon Bank Corp. v. First Union, 951 F.2d 1399, 1411-12 (3d Cir.1991) (affirming summary judgment on fraudulent misrepresentation claim because plaintiff failed to present evidence of justifiable reliance on the alleged misrepresentation); Huddleston v. Infertility Ctr. of Amer., 700 A.2d 453, 461 (Pa.Super.1997) (dismissing fraud claims; explaining that a "complaint must provide sufficient facts to support a plaintiff's contention that the defendant intended to induce him to act based on the misrepresentation").

C. Tortious Interference In Count IV, Plaintiff alleges tortious interference. Although it is not explicitly labeled as such, Count IV states allegations which support a claim for tortious interference with prospective or future contractual relations. To articulate such a claim, Plaintiff must allege: "(1) a prospective contractual relation; (2) the purpose or intent to harm the plaintiff by preventing the relation from occurring; (3) the absence of privilege or justification on the part of the defendant; and (4) the occasioning of actual damage resulting from the defendant's conduct." U.S. Healthcare, Inc. v. Blue Cross of Greater Phila., 898 F.2d 914, 925 (3d Cir.1990). Defendant argues that Plaintiff's claim of tortious interference should be dismissed because it was acting as an agent of Cognis, and an agent of a corporation cannot interfere with the corporation's relationships with its own employees. See Michelson v. Exxon Research & Engineering Co., 808 F.2d 1005, 1007-08 (3d Cir.1987). As previously discussed, this argument assumes facts not alleged in the Complaint or its attachments. The Complaint does not allege that Defendant was hired by Cognis to assess Plaintiff; rather, it alleges that Defendant was hired by either Cognis or the prospective buyers of Cognis for that purpose. Thus, Plaintiff may have a cause of action for tortious interference if he can support his allegation that Defendant's interference was not justified or privileged. "The privilege determination is not susceptible of precise definition but is informed by ... the area of socially acceptable conduct which the law regards as privileged." U.S. Healthcare, 898 F.2d at 925 (internal quotations omitted). Accordingly, if Defendant's alleged interference with Plaintiff's prospective relations resulted from its socially valuable function of providing accurate evaluations, it would be regarded as privileged. If, however, Plaintiff can prove his allegation that Defendant provided an intentionally false negative evaluation solely in order to gain a headhunter's fee for placing an outsider in the position, its conduct would not be privileged.

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*5 Defendant also argues that Plaintiff's tortious interference claim should be dismissed because Plaintiff has failed to allege that he had any likelihood of receiving the promotion but for Defendant's assessment. Before a future contract can be the basis of a claim, the prospective contract must have been something more than a "mere hope," and there must have been a "reasonable probability" that a plaintiff would have entered into a contract for employment in the position but for the defendant's interference. U.S. Healthcare, 898 F.2d at 925; Fresh Made Inc. v. Lifeway Foods, Inc., 2002 WL 31246922, *12 (E.D.Pa.2002) (The complaint "must allege facts that, if true, would give rise to a reasonable probability that particular anticipated contracts would have been entered into."). Viewed in the light most favorable to Plaintiff, the Complaint alleges that he was a leading candidate for the presidency and that the statements made by Defendant were intentionally negative in order to eliminate him from consideration so that Defendant could place an outsider in the position and thereby earn a large "headhunter" commission. See Compl. ¶¶ 41, 66. Accordingly, Defendant's Motion to Dismiss will be denied as to Plaintiff's tortious interference claim. D. Defamation In Count V, Plaintiff alleges that Defendant's circulation of its evaluation to Cognis executives and the investors constitutes defamation. In order to state a claim for defamation, Plaintiff must allege: "(1) a defamatory communication; (2) pertaining to the plaintiff; (3) published by the defendant to a third party; (4) who understands the communication to have defamatory meaning with respect to plaintiff; and (5) that results in plaintiff's injury." Smith v. School District of Phila., 112 F.Supp.2d 417, 429 (E.D.Pa.2000); Russoli v. Salisbury Township, 126 F.Supp.2d 821, 872 (E.D.Pa.2000); D'Errico v. Defazio, 763 A.2d 424, 432 (Pa.Super.2000). Defendant argues that Plaintiff's defamation claim should be dismissed because the statements are incapable of defamatory meaning and because the statements at issue were protected by privilege. [FN8] FN8. Defendant also argues that the allegedly defamatory statements were not publicized, as they were only disseminated to Cognis personnel and the investors who were purchasing the company. However, "publication" is defined merely as "the communication of a defamatory matter either intentionally or by a negligent act to one other than the person defamed." Laniecki v. Polish Army Veterans Assn., 486 A.2d 1101 (Pa.Super.1984). See also Feldman v. Lafayette Green Condominium Assn., 806 A.2d 497, 500 (Pa.Com.Pl.2002). Plaintiff clearly alleges that Defendant disseminated its evaluation to Cognis executives and the investors.

In order to determine whether a statement is capable of defamatory meaning, the Court must look to whether the statements would harm Plaintiff's reputation in the community or "deter third persons from associating with him" or ascribe to him "conduct, character or a condition that would adversely affect his fitness for the proper conduct of his proper business, trade or profession." D'Errico, 763 A.2d at 432. See also Wilson v. Slatalla, 970 F.Supp. 405, 415 (E.D.Pa.1997) ("Injury to reputation is judged by the reaction of other persons in the community and not by the party's self-estimation."). Plaintiff has alleged that Defendant stated that he possessed an "inhibited" ability to learn and "underdeveloped" listening skills, both of which may prove to characterize him in a way that would affect his fitness for the proper conduct of his business as a high-level corporate executive. See Walker v. Grand Central Sanitation, Inc., 634 A.2d 237, 244 (Pa.Super.1993) (statements made about person seeking a particular employment position which question his ability to handle the responsibilities attendant to the position can be capable of having a defamatory meaning); Maier v. Maretti, 671 A.2d 701, 704 (Pa.Super.1995) (where a statement is capable of a defamatory meaning and a non-defamatory meaning, the matter should proceed to trial; only where the statements are incapable of a defamatory meaning should the matter be dismissed on motion). *6 In the alternative, Defendant argues that the statements at issue are protected by privilege because the only individuals who viewed the statements were those who had a direct interest in Plaintiff's leadership potential with regard to the position of president: "Statements are conditionally privileged if some interest of the person who published defamatory matter is involved, some interest of the person to whom the matter is published or some other third person is involved or a recognized interest of the public is involved. Communications among managers regarding employee job performance, discipline and termination are privileged when the

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publisher of the defamatory communication shares an interest in the employee's performance with the recipients." Puchalski v. School Dist. of Springfield, 161 F.Supp.2d 395, 409 (E.D.Pa.2001). "To show abuse of the conditional privilege, a plaintiff must show the statements were actuated by malice or negligence, [or] were made for a purpose other than that for which the privilege is given ..." Puchalski, 161 F.Supp.2d at 409-10 n.8. In the present case, Plaintiff has alleged that Defendant's statements were made not for the purpose of serving Cognis' interest and the investors' interest in finding out whether Plaintiff was the best candidate for the position, but for the purpose of causing Cognis to hire an outside candidate so that Defendant would receive a large commission. See Compl. ¶¶ 29-31. Plaintiff has, therefore, alleged facts which, if true, would support a finding of abuse of any conditional privilege. Accordingly, the Court will deny Defendant's Motion as to Plaintiff's defamation claim. E. Invasion of Privacy In Count VI, Plaintiff alleges that Defendant's distribution of the assessment to the investors (who did not yet own Cognis) constituted an intrusion upon seclusion. "One who intentionally intrudes, physically or otherwise, upon the solitude or seclusion of another or his private affairs or concerns, is subject to liability to the other for invasion of his privacy, if the intrusion would be highly offensive to a reasonable person." Restatement (Second) of Torts § 652B. See also Chicarella v. Passant, 494 A.2d 1109, 1114 (Pa.Super.1985) (noting that Pennsylvania law follows this section of the Restatement). Defendant argues that this claim should be dismissed because Plaintiff consented to being assessed by Defendant. The Court agrees. "[A]n actor commits an intentional intrusion only if he believes, or is substantially certain, that he lacks the necessary legal or personal permission to commit the intrusive act." O'Donnell v. United States, 891 F.2d 1079, 1083 (3d Cir.1989). Plaintiff has alleged that he was directed by Cognis to meet with Defendant's representatives. Defendant therefore reasonably believed that it had the necessary permission to engage in the interview and assessment of Plaintiff. See also Harris v. Easton Publishing Co., 483 A.2d 1377, 1383 (Pa.Super.1984) ("The defendant is subject to liability ... only when he has intruded into a private place, or has otherwise invaded a private seclusion that the plaintiff has thrown about his person or affairs."); Woodside v. New Jersey Higher Ed. Assistance Authority, 1993 WL 56020, at *6 (E.D.Pa.1993). Accordingly, Plaintiff's claim for invasion of privacy based on intrusion of seclusion will be dismissed. F. Breach of Contract *7 In Count VII, Plaintiff alleges that he is a third-party beneficiary to the contract between Defendant and Cognis, and that Defendant breached that contract by failing to carry out its evaluations in a fair, ethical, and unbiased manner. Defendant argues that the parties never intended to benefit Plaintiff by entering into the contract and, therefore, that this claim should be dismissed. "[A] party becomes a third-party beneficiary only where both parties to the contract express an intention to benefit the third party in the contract itself, ... unless the circumstances are so compelling that recognition of the beneficiary's right is appropriate to effectuate the intention of the parties, and the performance satisfies an obligation of the promisee to pay money to the beneficiary or the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance." Scarpitti v. Weborg, 609 A.2d 147, 150-51 (Pa.1992). See also Two Rivers Terminal, L.P. v. Chevron USA, Inc., 96 F.Supp.2d 432, 449-50 (M.D.Pa.2000); Blue Mountain Mushroom Co., Inc. v. Monterey Mushroom, Inc., 246 F.Supp.2d 394 (E.D.Pa.2002). The Court finds that, on the face of his allegations, Plaintiff is not a third-party beneficiary to the contract because he has not alleged that the parties intended the contract to benefit him. [FN9] See Hammond v. City of Philadelphia, 164 F.Supp.2d 481, 483 n.3 (E.D.Pa.2001) (stating that employee could not claim breach of contract where her employer had contracted with a laboratory to test her for the presence of illegal drugs because "there is no suggestion that both [the laboratory] and [her employer] intended to benefit plaintiff"). [FN10] FN9. As described in the Complaint, the contract's beneficiaries were Defendant and Cognis and/or the investors. Specifically, Cognis and/or the investors would receive Defendant's evaluations of various personnel and Defendant would receive a fee in return. Plaintiff does not allege that the contract between Cognis and Defendant specified that the evaluations produced would be positive or helpful to those being evaluated. Accordingly, the terms of the contract did not provide for a benefit to Plaintiff, but allowed for a range of outcomes which may have had a positive, negative, or neutral

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FN10. See also Sharpe, 821 A.2d at 1219, 1220 n.3 (differentiating between a duty of reasonable care in the context of a negligence claim and a duty owing to a party as a third-party beneficiary to a contract); Prost v. Caldwell Store, Inc., 187 A .2d 273, 276 (Pa.1963) (distinguishing between a duty imposed by law and a duty self-imposed by contract).

IV. Conclusion For the foregoing reasons, the Motion to Dismiss will be granted with regard to Plaintiff's claims of fraud (Count II), intentional misrepresentation (Count IIA), negligent misrepresentation (Count III), invasion of privacy (Count VI), and breach of contract (Count VII). The Motion to Dismiss will be denied with regard to Plaintiff's claims of negligence (Count I), tortious interference (Count IV), and defamation (Count V). An appropriate Order follows. E.D.Pa.,2003. Fluke v. Heidrick & Struggles, Inc. 2003 WL 22316772 (E.D.Pa.) Motions, Pleadings and Filings (Back to top) · 2:02CV08385 (Docket) (Nov. 08, 2002) END OF DOCUMENT
(C) 2005 Thomson/West. No Claim to Orig. U.S. Govt. Works.

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2004 WL 1632574 (Pa.Com.Pl.) Only the Westlaw citation is currently available. Court of Common Pleas of Pennsylvania, Philadelphia County. Jules LICHTMAN and Webnet Entertainment, Inc., Plaintiffs, v. Paul TAUFER, Esquire, Piper Rudnick, LLP, Schnader, Harrison, Segal and Lewis, LLP, Adrianne Lewis and Adtraction, Inc. T/A ad Traction, Defendants. Nos. 005560MARCHTERM 2004, CONTROL 041919, CONTROL 051697, CONTROL 051602. July 13, 2004. MEMORANDUM OPINION JONES, J. *1 Presently before the court are three sets of Preliminary Objections filed by the respective defendants in this action. For the reasons that follow, the court will Sustain in part and Overrule in part the parties' objections. BACKGROUND On or about August 25, 2000, Jules Lichtman and Adrianne Lewis entered into a Joint Venture Agreement ("Agreement") in regard to the development and exploitation of internet website projects and related businesses. The Joint Venturers developed and intended on developing internet web based games which they agreed to own on a 50/50 basis including all rights, title, interest, copyrights, trademarks, domain names, licensing rights and merchandising rights. Additionally, the parties agreed to share similar ownership rights in other projects which they from time to time created together under the agreement. The agreement additionally provides that in the event the Joint Venturers form a corporation or LLC for the purpose of conducting their business, they will each own equal shares in any such entity. Litchman and Lewis formed Webnet Entertainment, Inc. ("Webnet"). The Agreement also contains an Arbitration provision. The provision provides that any disputes or claims under the Agreement are to be submitted to arbitration before the American Arbitration Association in the city (or closest office) in which the Joint Ventures' home office is located or before such arbitrator as the parties may mutually agree. The arbitrator's decision is to be final and binding. In July 2001, Defendant Paul Taufer, Esquire, ("Taufer") while a partner at Schnader, Harrison, Segal and Lewis ("Schnader"), along with other members of the firm were retained to represent Webnet, Lichtman and Lewis in patent matters and other corporate and legal matters. Lichtman and Webnet ("Plaintiffs") claim that while Taufer and Schnader represented them, Taufer and Schnader allegedly removed Lichtman's name from the provisional patent application. Additionally, plaintiffs claim that on or about October 17, 2001, Taufer and Schnader filed a patent application solely on behalf of Lewis, despite their alleged knowledge that Lichtman was a coinventor/co-creator. Thereafter, Taufer and Schnader continued to represent Lewis in marketing and selling the product to the exclusion of Lichtman. Lewis allegedly conducted business as Adtraction, Inc., a/k/a ad Traction in which she was a shareholder and officer. In March 2004, Plaintiffs instituted suit against Lewis and Adtraction alleging breach of fiduciary duty and conversion (Count I) and against Taufer, Schnader and Piper Rudnick, LLP [FN1] for breach of fiduciary duty and aiding and abetting defendants Lewis and Adtraction's breach of fiduciary duty (Count II). The respective parties have filed preliminary objections to the complaint. FN1. Taufer allegedly became a partner in Piper Rudnick LLP in or after January 2003 and continued to represent Lewis and Adtraction.

DISCUSSION I. Plaintiffs Claims Against Lewis and AdTraction Are Not Subject To Arbitration. Defendant Lewis and Adtraction argue that Plaintiffs' claims are subject to the arbitration provision contained within the Agreement and therefore the claims against them must be dismissed. In response, plaintiffs argue that the dispute at bar does not fall within the arbitration provision and that

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defendants Lewis and Adtraction are not parties to the agreement and therefore not subject to arbitration. *2 When one party to an agreement seeks to prevent another from proceeding to arbitration, judicial inquiry is limited to determining (1) whether a valid agreement to arbitrate exists between the parties and, if so, (2) whether the dispute involved is within the scope of the arbitration provision. Smith v. Cumberland Group, Ltd., 455 Pa.Super. 276, 687 A.2d 1167, 1171 (Pa.Super.1997)(citing Messa v. State Farm Ins. Co., 433 Pa.Super. 594, 597, 641 A.2d 1167, 1168 (Pa.Super.1994)). If a valid arbitration agreement exists between the parties and plaintiffs claim is within the scope of the agreement, the controversy must be submitted to arbitration. Id. In order to determine the intent of the parties to a contract, a court should look to the four corners of the document and its express language. Midomo Co. Inc. v. Presbyterian Housing Development Co., 739 A.2d 180, 186 (Pa.Super.1999). The law favors settlement of disputes by arbitration and seeks to promote swift and orderly disposition of claims. Id. At the same time, a court must be careful not to extend an arbitration agreement by implication beyond the clear, express and unequivocal intent of the parties as manifested by the writing itself. Id. To resolve this tension, courts should apply the rules of contractual construction, adopting an interpretation that gives paramount importance to the intent of the parties and ascribes the most reasonable, probable and natural conduct to the parties. Id. All parts of the contract should be interpreted together, with the goal of giving effect to each of its provisions. Id. at 191. The Agreement at issue contains the following arbitration provision: 6. Governing Law; Arbitration This Agreement will be construed in accordance with the laws of the State where the Joint Venture's home office is located at the time of the bringing of any claim or dispute for resolution. In the event of any disputes or claims under this Agreement, the parties agree to submit such claims to arbitration before the American Arbitration Association in the city (or closest office) in which the Joint Venture's home office is located, or before such other arbitrator as the parties may mutually agree, whose decision will be final and binding and which may be entered as a judgment in any court of competent jurisdiction. The prevailing party in any such dispute or claim will be entitled to recover his or her reasonable attorneys' fees. Lewis and Lichtman are signatories to the Agreement and therefore subject to the terms of the arbitration provision. Webnet is also subject to the terms of the Arbitration provision since it is an intended beneficiary under the Agreement. Under Pennsylvania law, a party becomes a third party beneficiary only where both parties to the contract express an intention to benefit the third party in the contract itself. Scarpitti v. Weborg, 530 Pa. 366, 372-3, 609 A.2d 147, 150-151 (Pa.1992). The Agreement specifically contemplated the formation of a corporation or LLC for the purposes of conducting their business. The pertinent provision provides: *3 6. Ownership The Joint Ventures will jointly own, on a 50/50 basis, all right, title and interest in the Game, including all copyrights, trademarks, domain names, licensing rights and merchandising rights. They will share similar ownership rights in other projects which they may time to time create under this Agreement. In the event the Joint Venturers form a corporation or LLC for the purposes of conducting their business, they will each own equal interests in any such entity. Webnet is a corporation formed by the Joint Venturers for the purpose of conducting their business. The Joint Venturers specifically expressed an intention to form a corporation to conduct their business which grants Webnet third party beneficiary status. Since Webnet is a third party beneficiary under the Agreement, a fair reading of the Agreement also subjects Webnet to the terms of the Arbitration Agreement. Hence, Webnet by virtue of its third party beneficiary status is also a signatory to the Agreement. The same does not hold true for Adtraction. "A corporation is to be treated as a separate and independent entity even if its stock is owned entirely by one person." Sigmund v. Phillips & Brooke, P.C., 2003 WL 1848573, *10 (Pa.Com.Pl.2003) (J. Sheppard)(quoting Com. v. Vienna Health Products., Inc., 726 A.2d 432, 434 (Pa.Cmwlth.1999)). [FN2] The allegations within the complaint state that Lewis is a shareholder and officer of Adtraction which markets, uses and sells the software which was allegedly co-created and invented by plaintiff. (Plaintiff's complaint ¶ 3, 11, 15). Adtration is a separate entity not contemplated by the Agreement. "It is a well established principle of law that a contract cannot impose obligations upon one who is not a party to the contract." Manchel v. Hockberg, 2000 WL 33711078, *3 (Pa.Com.Pl.2000) (J. Sheppard) (quoting Juniata Valley Bank v. Martin Oil Co., 736 A.2d 650, 663 (Pa.Super.1999)). Adtraction has not agreed to submit itself to

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arbitration and therefore cannot be made to do so. See Hatboro Manor, Inc. v. Local Joint Executive Bd. of Philadelphia, 426 Pa. 53, 231 A.2d 160, 164 (1967)(holding "that arbitration, a matter of contract, should not be compelled of a party unless such party, by contract, has agreed to such arbitration ..."). FN2. The court is mindful that an officer of a corporation may be subject to liability for the acts of the corporation. Here, there are no allegations within the complaint to suggest imposing liability upon Lewis for the acts of her corporation.

Since Adtraction is not a party to the Agreement, requiring Lewis to arbitrate matters pertaining to the loss of corporate opportunity alone would be pointless. The arbitrator cannot make determinations affecting Adtraction and cannot compel Adtraction to submit to an accounting. Enforcement of the arbitration provision would frustrate the public policy interest in efficient dispute resolution. School Dist. of Philadelphia v. Livingston-Rosenwinkel, P.C., 690 A.2d 1321, 1322 (Pa.Cmmw.1997). Adtraction is not subject to the arbitration agreement between Lewis, Lichtman and Webnet. Therefore, enforcement of the arbitration provision against Lewis alone would create two cases, one in court against Adtraction and one in arbitration against Lewis. This would cause plaintiffs to relitigate the same liability and damage claim in two separate forums and before two separate fact finders creating repetitive, piecemeal litigation. Thus, in this case the arbitration's goal of "swift and orderly disposition of claims" would not be served by sending the case to arbitration. See School Dist. of Philadelphia v. Livingston-Rosenwinkel, P.C., 690 A.2d 1321, 1322 (Pa.Cmmw.1997); see also, University Mechanical & Engineering Contractors Inc. v. Insurance Co. of North America, 2002 WL 31428913 (Pa.Com.Pl.2002) (J. Sheppard). Accordingly, defendants Lewis and Adtraction's preliminary objection is Overruled. II. The Preliminary Objections of Defendants Paul Taufer, Esquire and Piper Rudnick, LLP and the Preliminary Objections of Schnader Harrison Segal and Lewis. *4 Defendants Paul Taufer and Piper Rudnick LLP filed Preliminary Objections to plaintiffs' complaint seeking dismissal of the complaint in its entirety. Specifically, Taufer and Piper Rudnick, LLP maintain that plaintiffs' complaint should be dismissed since 1) plaintiffs lack standing to bring the claim, 2) the court lacks subject matter jurisdiction, 3) plaintiff failed to conform to a rule of court by attaching a copy of a retention agreement, 4) lack of factual specificity and 5) lack of legal sufficiency. [FN3] FN3. Additionally, Taufer and Piper Rudnick LLP also raise as objections the doctrine of laches and failure to conform to Pa. R. Civ. P. 1042.2. Although these objections were raised, Defendants failed to address these objections within their memorandum of law.

Defendant Schnader Harrison Segal and Lewis ("Schnader") also filed Preliminary Objections to Plaintiffs' complaint seeking dismissal of the complaint in its entirety. Specifically, Schnader maintains that plaintiffs' complaint should be dismissed since 1) Webnet lacks capacity to sue, 2) the court lacks subject matter jurisdiction, 3) the complaint should be stricken since plaintiff failed to identify each defendant against whom plaintiffs are asserting a professional liability claim or in the alternative lack of specificity, 4) failure to attach a writing, and 5) laches. Schnader also requests that this action be certified to the law side of the court since an adequate remedy at law exists. Each of these objections will be considered below. A. A Legitimate Controversy Exists To Create Standing To Sue. Defendants Taufer and Piper Rudnick, LLP maintain that no legitimate controversy exists that would create standing to sue in plaintiffs. In support thereof, defendants contend that since plaintiffs' complaint is based entirely on allegations regarding a patent application and the alleged marketing of the invention which is the subject of the patent application and since the patent has not been issued and in fact has been denied by the Patent and Trademark Office several times, a legitimate controversy creating standing to sue does not exist. The court is not persuaded. The Supreme Court has held that a plaintiff has standing if (1) the plaintiff has substantial interest in

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the controversy, (2) that interest is direct and (3) that interest is immediate. Wm. Penn Parking Garage, Inc. v. City of Pittsburgh, 464 Pa. 168, 346 A.2d 269 (Pa.1975). The requirement of substantial interest simply means that the individual's interest must have substance. There must be some discernable adverse effect to some interest other than the abstract interest of all citizens in having others comply with the law. Id. The requirement that the interest be direct simply means that the person claiming to be aggrieved must show causation of the harm to his interest by the matter of which he complains. Id. The remaining requirements of the traditional formulation test are that the interest be "immediate" and "not a remote consequence of the judgment." Id. Under the applicable test summarized above, this court finds that plaintiffs have standing to bring this present action. Defendants argue that plaintiffs suffered absolutely no harm as a result of Lichtman's name being omitted from the patent application since a patent application has never been issued. That may be true however plaintiffs allege that defendants Taufer and Piper Rudnick, LLP breached their fiduciary duty to plaintiffs which caused plaintiffs to suffer harm in the patent matter as well as other corporate legal matters. (Plaintiff's complaint ¶ 6)(emphasis added). The harm alleged by plaintiffs includes but is not limited to lost revenue from the marketing, using and selling the software and other related items which were jointly owed by plaintiffs and defendant Lewis. (Plaintiffs' complaint ¶ 15). At this juncture, the court finds that plaintiffs do have standing to sue. Accordingly, defendant Piper and Rudnick's preliminary objection as it pertains to standing is Overruled. [FN4] FN4. The parties did not raise and the court did not address whether plaintiff Lichtman has standing to sue defendants Taufer and Schnader for breach of fiduciary duty and for aiding and abetting Lewis' breach of fiduciary duty.

B. Webnet Does Not Lack Capacity to Sue. *5 Defendants Piper Rudnick LLP and Schnader maintain that Webnet lacks capacity to sue since it is not a valid corporation in the State of Delaware. In support thereof defendants rely upon plaintiffs' failure to file a timely response to preliminary objections thereby admitting that Webnet is not a valid corporation and the Delaware Department of State records which reflect that Webnet's corporate status is void. While it is true that a failure to answer preliminary objections endorsed with a notice to plead constitutes an admission, defendants' objection is nonetheless overruled. Pa. R. Civ. P. 1026(a) requires that "every pleading subsequent to the complaint shall be filed within twenty days after service of the preceding pleading, but no pleading need be filed unless the preceding pleading contains a notice to defend or is endorsed with a notice to plead." Pa. R. Civ. P. 1026(a). Preliminary objections and answers thereto are considered "pleadings" under the rules. Pa. R. Civ. P. 1017(a). Additionally, Philadelphia Local Rule * 1028(C) provides: (C) (1) An answer to preliminary objections (as opposed to a responsive filing with the Motion Court under Philadelphia Civil Rule * 206.1) is required only to preliminary objections raising an issue under Pa. R. Civ. P. 1028(a)(1), (5) and (6) provided a notice to plead is attached to the preliminary objections. An answer need not be filed to preliminary objections raising an issue under Pa. R. Civ. P. 1028(a)(2), (3) and (4). (2) An answer to preliminary objections shall be filed with the Prothonatary in accordance with Pa. R.C.P. 1026(a) and thereafter with the Motion Court together with the other documents required by Philadelphia Civil Rule *206.1 (D). Philadelphia Local Rule * 1028(C). In the case at bar, the preliminary objections filed by defendants were endorsed with a notice to plead. Plaintiffs failed to file a response with the prothonatary. Since plaintiffs have not filed an answer to the preliminary objections, which were endorsed with a notice to plead, the allegations of fact made by the objections constitute an admission. Action Industries, Inc. v. Wiedman, 236 Pa.Super. 447, 346 A.2d 798 (Pa.Super.1975). It does not follow however that the preliminary objections must be sustained; that depends upon the facts that have been admitted. Id . Furthermore, there is no admission of conclusions of law as distinct from allegations of fact. Id. Accepting as true the uncontradicted factual allegations of plaintiffs' complaint and the additional factual allegations of defendants' preliminary objections, the court finds that although the corporate status of Webnet is void and non existing under Delaware Law, Webnet has capacity to sue.

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Under Pennsylvania law, the capacity of a corporation to sue is determined by the law of the state in which the corporation is organized. Webnet is a Delaware corporation. Under the Delaware Code, corporations exist for purposes of suit for three years after dissolution. *6 All corporations, whether they expire by their own limitation or are otherwise dissolved, shall nevertheless be continued, for the term of 3 years from such expiration or dissolution or for such longer period as the Court of Chancery shall in its discretion direct, bodies corporate for the purpose of prosecuting and defending suits, whether civil, criminal or administrative, by or against them ... With respect to any action, suit or proceeding begun by or against the corporation either prior to or within 3 years after the date of its expiration or dissolution, the action shall not abate by reason of the dissolution of the corporation ... Del.Code Ann. Tit. 8 § 278. Here, plaintiffs' claim that even though the corporate structure of Webnet was marked void, under Delaware law, Webnet has capacity to sue since the three year period from the date of dissolution to the institution of this lawsuit has not yet elapsed. A review of the exhibits provided by the parties fails to provide the court with evidence as to when Webnet's corporate structure was marked void. As such the court is unable to make a ruling at this time and therefore will hold its decision on this preliminary objection in abeyance for a period of ten days so the parties may provide the court with evidence as to when the corporate status of Webnet was marked void. [FN5] FN5. The court sees no need for the investigation to be extensive. Indeed an inquiry to the Delaware Department of State may resolve the issue.

C. The Court Has Subject Matter Jurisdiction Over Plaintiffs' Claims. Defendants Taufer and Piper Rudnick, LLP maintain that this court lacks subject jurisdiction. Defendants contend that the Patent and Trademark Office has exclusive jurisdiction over this matter since plaintiffs' claims and all the relief requested by plaintiffs are predicated upon whether Lichtman was incorrectly omitted as an inventor from the patent and the patent application. The mere mention of a patent in a cause of action will not automatically vest the federal courts with exclusive jurisdiction. Ogantz Controls Co. v. Pirkle, 346 Pa.Super. 253, 499 A.2d 593, 595 (Pa.Super.1985). While this Commonwealth has long recognized the exclusive jurisdiction of the federal courts in civil actions arising under the patent laws, the Pennsylvania Supreme Court has held that where patent rights are only indirectly involved, "jurisdiction is properly in the courts of the Commonwealth." Id (quoting Van Products Co. v. General Welding & Fabricating Co., 419 Pa. 248, 254, 213 A.2d 769, 772 (1965)). Patent rights are incidental or indirectly involved when the "cause of action [is for] the breach of contract or wrongful disregard of confidential relations", and thus the state courts properly have jurisdiction over the matter. Id (quoting Becher v. Contoure Laboratories, 279 U.S. 388, 391, 49 S.Ct. 356, 357, 73 L.Ed. 752 (1929)). A review of the complaint in this regard demonstrates that plaintiffs' cause of action against defendants is based solely on Pennsylvania law for breach of fiduciary duty. The issue of whether Lichtman was wrongfully omitted from the application is incidental to the main issue of the case. The relief requested by plaintiffs includes directing defendants to cease and desist their representation of Lewis and Adtraction, to prohibit any further dissemination of material, seeks an accounting for any activities they have been engaged in and seeks money damages for the breach of fiduciary duty. Accordingly, the court finds that the issue of patents is incidental to the claims made by plaintiffs within the complaint and overrules defendants' preliminary objection in this regard. *7 Schnader also maintains that this court lacks subject matter jurisdiction. Schnader claims that since no patent has issued, plaintiffs have unrestricted use of such product and therefore have not suffered an "injury in fact". As stated supra, plaintiffs' cause of action against defendants is based solely on Pennsylvania law for breach of fiduciary duty. The issue of whether Lichtman's name was omitted from the patent application is incidental to this claim. The harm which plaintiffs allege was caused by defendants' breach of fiduciary duty arising from lost revenue derived from marketing, using and selling software and other related items which are allegedly jointly owned by plaintiffs and Lewis. The court finds that an injury in fact has been alleged. Accordingly, Schnader's preliminary objection as to subject matter jurisdiction is overruled. D. Count II Alleging Breach of Fiduciary Duty Against Piper Rudnick is Legally Insufficient.

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Defendant Piper Rudnick maintains that plaintiffs' complaint is legally insufficient. In support thereof defendant contends that the complaint fails to allege any basis upon which Piper Rudnick could be found to owe plaintiffs any duty and therefore the complaint should be dismissed against it. For purposes of reviewing preliminary objections based upon legal insufficiency, "all well-pleaded material, factual averments and all inferences fairly deducible therefrom" are presumed to be true. Levin v. Gauthier, 2002 WL 372949, *4 (Pa.Com.Pl.2002) (J. Sheppard). When presented with preliminary objections whose end result would be the dismissal of a cause of action, a court should sustain the ojections only where "it is clear and free from doubt from all the facts pleaded that the pleader will be unable to prove facts legally sufficient to establish [its] right to relief." Id. Furthermore, it is essential that the face of complaint indicate that its claims may not be sustained and that the law will not permit recovery. If there is any doubt, it should be resolved by the overruling of the demurrer. Put simply, the question presented by demurrer is whether, on the facts averred, the law says with certainty that no recovery is possible. Baily v. Storlazz i, 729 A.2d 1206, 1211 (Pa.Super.1999). Under Pennsylvania law, a fiduciary relationship exists "when one person has reposed a special confidence in another to the extent that the parties do not deal with each other on equal terms, either because of an overmastering dominance on one side or weakness, dependence or justifiable trust, on the other." Levin v. Gauthier, 2002 WL 372949, *5 (Pa.Com.Pl.2002) (J. Sheppard) (quoting Com.,Dept. of Transp. v. E-Z Parks, Inc., 153 Pa. Cmmwlth. 258, 267, 153 Pa.Cmwlth. 258, 620 A.2d 712, 717 (Pa.Cmwlth.1993)). In the case at bar, plaintiffs have not alleged the existence of an attorney client relationship with Piper Rudnick and therefore have not alleged facts to show that Piper Rudnick owed them a fiduciary duty. They have not alleged an express contract, nor have they offered facts to show an implied attorney client relationship under which Piper Rudnick owed them a duty which was breached. *8 An implied attorney-client relationship will be found if 1) the purported client sought advice or assistance from the attorney; 2) the advice sought was within the attorney's professional competence; 3) the attorney expressly or impliedly agreed to render such assistance; and 4) it is reasonable for the putative client to believe the attorney was representing him. Romy v. Burke, 2003 WL 21205975 *2 (Pa.Com.Pl.2003)(quoting Cost v. Cost, 450 Pa.Super. 685, 692, 677 A.2d 1250, 1254 (Pa.Super.1996)). Here, plaintiffs neither sought nor received advice or assistance from Piper Rudnick. Accordingly, the claim for breach of fiduciary duty against Piper Rudnick fails as a matter of law. In addition to the breach of fiduciary duty claim, plaintiffs also assert a claim for aiding and abetting defendant Lewis in violating his fiduciary duty to plaintiffs. In order to state a claim for aiding and abetting a breach of fiduciary duty under Pennsylvania law, the following elements must be alleged: 1) a breach of a fiduciary duty owed to another; 2) knowledge of the breach by the aider and abettor; and 3) substantial assistance or encouragement by the aider and abettor in effecting that breach. Koken v. Steinberg, 825 A.2d 723, 732 (Pa.Cmwlth.2003) (quoting Restatement (Second) Torts § 876 (1079)). In the case at bar, although plaintiffs complaint alleges a breach of fiduciary duty by Lewis and Ad Traction, the complaint does not allege that Piper Rudnick knew of Lewis' and Adtraction's duties and their breach of those duties. The complaint also fails to allege that Piper Rudnick rendered substantial assistance or encouragement in effecting the alleged breach by Lewis and that said assistance and encouragement was the cause of the damage to plaintiffs. Accordingly, the court will sustain plaintiffs' preliminary objection to the aiding and abetting the breach of fiduciary duty claim against Piper Rudnick. In the event plaintiffs are capable of repleading such a claim, plaintiffs are granted leave to amend the complaint to solely allege facts as they pertain to the aiding and abetting the breach of fiduciary duty claim. [FN6] FN6. The court will not address the preliminary objection concerning punitive damages since the court has sustained defendant Piper Rudnick, LLP objections on other grounds. Thus, the preliminary objection on punitive damages is moot. Additionally, Piper Rudnick's LLP's preliminary objection based on a failure to attach the retainer agreement is also moot.

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E. Count II Alleging Breach of Breach of Fiduciary Duty Against Schnader is Factually Sufficient. Schnader filed a preliminary objection based upon Pa. R. Civ. P. 1042.2(a) for failing to identify each defendant against whom the plaintiffs are asserting a professional liability claim. In the alternative, defendant Schnader maintains that the facts set forth in the complaint are not sufficiently specific to enable it to determine the legal basis of the claims. This court finds that the claims presented within the complaint do not allege professional liability but rather allege claims for breach of fiduciary duty and aiding and abetting defendant Lewis to breach their fiduciary duty to plaintiffs. To determine if a pleading meets Pennsylvania's specificity requirements, a court must ascertain whether the allegations are "sufficiently specific so as to enable [a] defendant to prepare [its] defense." Smith v. Wagner, 403 Pa.Super. 316, 319, 588 A.2d 1308, 1310 (Pa.Super.1991). See also In re the Barnes Found., 443 Pa.Super. 369, 381, 661 A.2d 889, 895 (Pa.Super.1995) ("a pleading should ... fully summarize[e] the material facts, and as a minimum, a pleader must set forth concisely the facts upon which [a] cause of action is based"). *9 Count II of the complaint alleges that Schnader breached its fiduciary duty to plaintiffs and that it aided and abetted defendants Lewis and Ad Traction in breaching their fiduciary duty to plaintiffs. The court finds that plaintiffs' complaint is sufficiently specific to state a claim for breach of fiduciary duty and for aiding and abetting the breach of fiduciary duty claim. Accordingly, defendant Schnader's preliminary objections are overruled. F. The Complaint Should Not Be Stricken For Failure To Attach Writings. Schnader maintains that the complaint should be stricken for failure to attach the alleged retainer agreement, the provisional patent application and the patent application which were referred to within the complaint. Pa. R. Civ. P. 1019(i) requires a plaintiff to attach a copy of a writing on which his or her claim is based. A review of the prothonatrary file in this matter demonstrates that the plaintiffs filed a praecipe to annex the retainer agreement between plaintiffs and Schnader to the complaint. Additionally, the retainer agreement was also supplied to opposing counsel. Based on the foregoing, defendants preliminary objection with respect to failure to attach the retainer agreement is moot. [FN7] FN7. Defendant Schnader argues that the praecipe was not docketed. A review of the prothonatary file demonstrates that it is marked "Not Docketed Forwarded to Record."

Additionally, Schnader argues that the provisional patent application and the patent application have not been attached to the complaint and therefore the complaint must be stricken. There is no need to attach the provisional patent application and the patent application since they do not form the basis for plaintiffs' suit. See Pa. R. Civ. P. 1019(1) ("when any claim or defense is based upon a writing, the pleader shall attach a copy of the writing"). If the document does not form the basis of the claim the document need not be attached. See Com., Dept. of Transp. v. Bethlehem Steel Corp., 33 Pa.Cmwlth. 1, 15, 380 A.2d 1308, 1315 (Pa.Cmwlth.1977). Accordingly, Defendant's preliminary objection for failure to attach the provisional patent application and the patent application is Overruled. G. Plaintiffs Claims Are Not Barred By the Doctrine of Laches Schnader maintains that plaintiffs' complaint should be dismissed since its claims are barred by the doctrine of laches. Laches may be raised by preliminary objection in an equity action. Pa. R. Civ. P. 1509(b). "While the defense of laches may be raised by preliminary objections, laches should never be declared unless the existence thereof is clear on the face of the record." Ritter v. Theodore Pendergrass Teddy Bear Productions, Inc., 356 Pa.Super. 422, 514 A.2d 930 (Pa.Super.1986) (quoting Estate of Marushak, 488 Pa. 607, 610, 413 A.2d 649, 651 (1980)). This means that the party asserting laches must show, first, a delay arising from the other party's failure to exercise due diligence and second prejudice from the delay. Id. Whether this burden has been met is a factual question, answered by examining the circumstances of the particular case. Id. *10 Here, this court finds that the existence of laches is not clear from the face of the record since factual issues exist as to the circumstances surrounding the alleged delay in filing the complaint and any resultant prejudice arising from the delay. Accordingly, Schnader's preliminary objection is Overruled. H. Schnader's Preliminary Objection Seeking to Transfer the Case to the Law Side of the Court is Overruled.

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Defendant Schnader argues that plaintiffs' action should be certified to the law side of the court since plaintiffs have a full, complete and adequate remedy at law. This court is vested with the full jurisdiction of the whole court and may sit in equity and in law. Indymac Bank, FSB v. Bey, 2002 WL 31082395, *2 (Pa.Com.Pl. September 12, 2002) (J. Sheppard) (citing 42 Pa.C.S. § 952). Where the action is in equity and seeks both equitable relief and legal relief (for which an action at law is an adequate remedy), the court will adjudicate all such claims in the equity action in order to do complete justice and avoid piecemeal litigation. Com. v. Kitchen Appliances Distributors, Inc., 27 Pa. D. & C.3d 91, 95 (Pa.Com.Pl.1981). "Equity has jurisdiction to do complete justice between the parties ...... equity will itself proceed to round out the whole circle of controversy, by deciding every other contention connected with the subject matter of the suit, including the amount of damages to which plaintiff is entitled because of injuries sustained." Id. (quoting Wortex 11, 13, citations omitted). "The equity side of court shall always be open." Indymac Bank, supra. Id; (quoting Pa. R.Civ. P. 1502). Furthermore, there is no procedural mechanism to transfer a matter from the civil to the equity side of court. Id; (citing Lustig v. Lustig, 438 Pa.Super. 320, 321, 652 A.2d 393, 394 (Pa.Super.1995)). Accordingly, Schnader's preliminary objection is overruled. CONCLUSION For the foregoing reasons, the court sustains in part and overrules in part Defendants' Preliminary Objections as follows: 1. The Preliminary Objection of Defendants Lewis and Adtraction pursuant to Pa. R. Civ. P. 1028(a)(6) is Overruled. 2. The Preliminary Objections of Defendant Schnader Harrison Segal and Lewis and Defendants Taufer and Piper Rudnick, LLP as to Webnet's lack of capacity to sue is held under advisement for ten days so the parties may provide the court with evidence as to when the corporate status of Webnet was dissolved. 3. The remaining Preliminary Objections of Defendant Schnader Harrison Segal and Lewis are Overruled. 4. The Preliminary Objection of Defendants Taufer and Piper Rudnick, LLP as it pertains to Count II (Breach of Fiduciary Duty) is Sustained. 5. The Preliminary Objection of Defendants Taufer and Piper Rudnick, LLP as it pertains to Count II (Aiding and Abetting Breach of Fiduciary Duty) is Sustained. Plaintiffs are granted leave to amend the complaint as it pertains to this claim within twenty days from the date of this order. All other preliminary objections are Overruled. A contemporaneous Order will be filed with this Memorandum Opinion. ORDER *11 AND NOW, this 13th day of July, 2004, upon consideration of the Preliminary Objections of Defendants Adrianne Lewis and Adtraction, Inc., t/a ad Traction (cn 041919), the Preliminary Ob