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NEWNAM v. REMEDIAL EDUC. & DIAGNOSTIC SERVS.

July 31, 1981

Neda NEWNAM
v.
REMEDIAL EDUCATION AND DIAGNOSTIC SERVICES, INC.



The opinion of the court was delivered by: LUONGO

SUR PLEADINGS AND PROOF

This is a civil action in which plaintiff Neda Newnam contends that defendant violated the terms of its employment contract with her by failing to give her all of the bonus to which she was entitled under the terms of the contract. The case was tried to the court without a jury on June 22-23, 1981, after which the parties submitted proposed findings of fact and conclusions of law. On the basis of the pleadings, testimony, exhibits, and submissions of the parties, I make the following

 I. FINDINGS OF FACT

 1. Plaintiff Neda Newnam is a citizen and resident of New Jersey. She has experience in the delivery of educational services.

 2. Defendant Remedial Education and Diagnostic Services, Inc. (READS), is a Pennsylvania corporation incorporated in 1975 for the purpose of delivering remedial educational services to non-public schools under Act 89 of the 1975 Session of the Pennsylvania General Assembly, which provided public funding for such services.

 3. At the times material herein, the sole shareholder of READS was A/V Educational Products Co., Inc. (A/V), which dealt in educational materials and teaching aids. The sole shareholder of A/V was George Stricker, who was also the president of READS since its incorporation.

 4. At the times material herein, A/V was an 80% shareholder in Croft Company, which also dealt in educational products. Stricker was also an 80% shareholder in Walsh & Co., which dealt in educational products.

 5. For all practical purposes, George Stricker controlled the business affairs of READS, A/V, Croft, and Walsh.

 6. On August 30, 1976, Neda Newnam and READS entered into a written employment agreement under which Newnam was to serve as a project co-ordinator.

 7. The agreement provided for a salary for Newnam's services plus a bonus of 10% of the net profit of READS based on "institutional overhead" as that term is defined by Act 89.

 8. In effect, institutional overhead was the profit factor which READS was permitted to charge the local school districts with which it contracted to provide services.

 10. In February, 1978, READS relieved Newnam of her duties, but continued to pay her salary until the end of June 1978. READS also notified Newnam by letter of its intention not to renew the contract for her services beyond June 1978. In the letter containing the notice of termination, George Stricker re-affirmed READS' contractual obligation to pay Newnam the 10% bonus for the period July 1, 1978 through June 30, 1979.

 11. During the period of her employment, there were disagreements and conflicts between Newnam and officials of READS, but I find by a preponderance of the evidence that Newnam's conduct did not in any way constitute a breach of her employment agreement with READS.

 12. Newnam's written agreement with READS spanned three fiscal years:

 
July 1, 1976 June 30, 1977
 
July 1, 1977 June 30, 1978
 
July 1, 1978 June 30, 1979.

 13. During each of the three years, READS contracted with intermediate units of three school districts: the Philadelphia, Bucks, and Montgomery County districts.

 14. In the contracts with the Bucks and Montgomery units, READS set forth costs for its services, which READS was not permitted to exceed, and a line item for institutional overhead, which was a profit to READS.

 15. The initial contract submitted by READS to the Philadelphia unit followed the same format, including an item of $ 15,752 for institutional overhead, but was returned to READS because a local regulation prohibited the district from entering into a contract providing for a profit to the service ...


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