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UNIVERSAL COMPUTER CONSULTING v. PITCAIRN ENTERPRISES

February 23, 2004.

UNIVERSAL COMPUTER CONSULTING, INC. and UNIVERSAL COMPUTER MAINTENANCE, INC., Plaintiffs,
v.
PITCAIRN ENTERPRISES, INC., et al., Defendants



The opinion of the court was delivered by: JAMES KELLY, Senior District Judge

MEMORANDUM AND ORDER

Following litigation in multiple fora, presently before this Court are several motions filed by the parties in this matter. Defendants Kean Company, Kean Pitcairn, Kris Pitcairn and Pitcairn Enterprises, Inc. d/b/a Pitcairn Motorcars (collectively, the "Defendants")*fn1 have filed a Motion to Dismiss, to which a Memorandum in Opposition has been filed by Plaintiffs Universal Computer Consulting, Inc. and Universal Computer Maintenance, Inc. (collectively, the "Plaintiffs" or "UCC"). Plaintiffs then filed a Motion for Preliminary Injunction and a Motion for Hearing Date and Expedited Discovery, to which Defendants have filed responses. Finally, Plaintiffs filed a Page 2 Motion to Confirm Service, to which no response was filed.

These motions arise from a dispute concerning an asset sale by one of the Defendants, Pitcairn Enterprises, Inc. ("PE"), wherein certain creditors were paid in full, certain creditors were partially paid and certain other creditors were not paid at all. In this matter, some of the Defendants were partially paid while one Defendant and Plaintiffs were among those creditors not paid by proceeds of the asset sale.

  In their Complaint, Plaintiffs allege that the purpose of PE's asset sale was to evade and frustrate Plaintiffs' attempt to collect on a final judgment which was entered against Pitcairn Motorcars in the United States District Court for the Southern District of Texas in April, 2002 (the "federal judgment"), in confirmation of an arbitration award by a panel of the American Arbitration Association in Houston, Texas in August, 2001 (the "Texas arbitration"). The federal judgment was transferred to the Court of Common Pleas for Bucks County for enforcement against Defendants. Plaintiffs, in the instant suit, contend that Defendants' conduct surrounding PE's sale of assets give rise to liability for claims of equitable fraud, unjust enrichment, tortious interference, and under the Pennsylvania Uniform Fraudulent Transfers Act ("UFTA"), 12 Pa. Cons. Stat. §§ 5101-5110.

  The parties' various motions are addressed below. Page 3

  I. BACKGROUND

 A. The Parties

  Universal Computer Consulting, Inc. and Universal Computer Maintenance, Inc., are Texas corporations headquartered in Houston, that, among other things, design and install inventory and spare parts control systems, including hardware and software, for car dealers.

  PE is a Pennsylvania corporation which, until August 5, 2002, owned and operated a business known as "Pitcairn Motorcars" located at 1862 Lincoln Highway in Langhorne, Pennsylvania. PE was a franchisee of Volvo of America and Volkswagen of America. Kean Pitcairn, a Pennsylvania resident, is the president and sole shareholder of PE. Kris Pitcairn, also a resident of Pennsylvania, is Kean Pitcairn's wife. Mrs. Pitcairn is averred to have owned 80% of PE prior to 2002.

  In 1989, UCC and PE entered into a series of contracts wherein UCC would render computer services to PE. The contracts provide for, among other things, arbitration of disputes before the American Arbitration Association ("AAA") and recovery of attorneys fees and costs for the prevailing party in connection with the collection of the award. Page 4

 B. The Prior Litigation

  In 2000, UCC commenced an AAA arbitration in Houston, Texas, alleging certain breaches of the computer service contract by PE. Following motion practice before the AAA panel and this Court to dismiss the arbitration, which motions were denied, the arbitration was held in July 2001.*fn2 In August 2001, the arbitration panel issued its opinion setting forth an award in Plaintiffs' favor and providing for 10% annual interest and attorneys' fees and costs in connection with collecting the award.

  In December 2001, Plaintiffs filed a petition to confirm the Page 5 AAA award and, on April 16, 2002, the United States District Court for the Southern District of Texas reduced that award to judgment, confirming the award, interest and recovery of attorneys' fees and costs.

  On August 31, 2002, Plaintiffs transferred the federal judgment from the Texas district court to the Court of Common Pleas for Bucks County, docketed at No. 020570, pursuant to the Uniform Enforcement of Foreign Judgments Act, 42 Pa. Cons. Stat. § 4306. That same day, Plaintiffs began execution proceedings by filing for a writ of execution.

  On November 27, 2002, Plaintiffs filed a Petition for Supplemental Relief in Aid of Execution. A hearing was held on December 13, 2002, and Plaintiffs' request for relief was subsequently denied on December 23, 2002.

  On January 21, 2003, Plaintiffs filed a motion alleging insufficiency of interrogatory responses by Kean Pitcairn, a conclusion with which, according to Defendants, Judge Robert J. Mellon appeared to disagree at the conclusion of the motion hearing on February 7, 2003.

  On March 4, 2003, Plaintiffs filed a Motion to Correct Judgment, a Petition for Hearing on All Pending Motions and a Motion to Modify the December 23, 2003 Order, all of which were denied on March 19, 2003.

  On April 7, 2003, Plaintiffs filed a Motion for Contempt against Kean Pitcairn, and following a hearing on that motion, Page 6 Judge Mellon denied relief on July 7, 2003.*fn3

 C. The Asset Purchase

  Plaintiffs allege that, in or around April 2002, a bid package for the assets of PE was circulated and, on May 25, 2002, PE and non-party R&S Imports, Ltd. ("Buyer"), a Pennsylvania corporation, entered into an Asset Purchase Agreement to buy substantially all of the assets of PE. Plaintiffs aver that the sale of assets closed on or about August 5, 2002, and that, after closing, PE's assets were approximately $711,000.00 in cash, a company car and its accounts receivable. Plaintiffs further aver that the total purchase price for the assets of PE was $8.322 million.

  Plaintiffs allege that since the closing, Kean Pitcairn has caused an amount of $700,000.00 to be transferred to his personal trust and to his wife, Kris Pitcairn. Plaintiffs allege that neither is a secured creditor of PE and that both were relieved of contingent liability on ...


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