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Messett v. Home Consultants

April 22, 2010

KEVIN R. MESSETT, PLAINTIFF
v.
HOME CONSULTANTS, INC. D/B/A HCI MORTGAGE; RICHARD HARSCHE; AND EDWARD HARSCHE, DEFENDANTS



The opinion of the court was delivered by: Judge Munley

MEMORANDUM

Before the Court for disposition are the defendants' motion for summary judgment (Doc. 84) and motion to strike plaintiff's response (Doc. 91). The motions have been fully briefed and are ripe for disposition.

BACKGROUND

Plaintiff Kevin Messett ("Messett") signed a one-year employment contract ("2004 Employment Contract") with Defendant Home Consultants, Inc. ("HCI") in September of 2004, making him executive vice president. (2004 Employment Contract (Doc. 87-4)). The 2004 Employment Contract stated that Messett would be offered the position of president after ninety days. (Id. at § 1.02(a)).

Messett signed a promisory note dated January 1, 2005 under which he promised to repay $152,000.00 to HCI. (Promissory Note (Doc. 87-3)). No representative of HCI signed the note. (Id.) The promissory note had a maturity date of February 16, 2007. (Id.) As of July 2006, Messett owed a balance of $88,226.72 on the note to HCI, according to the defendants. (Def. Statement of Undisputed Material Facts ("SUMF") at ¶ 22).

On February 16, 2006, Messett signed another employment contract ("2006 Employment Contract") to continue as president of HCI for five years. (2006 Employment Contract (Doc. 89 at 3). The contract stated that Messett became president effective September 20, 2005. (Id.) Under the 2006 Employment Contract Messett was to be paid a salary of $250,000.00, plus a bonus. (Id. at § 1.03). The contract referred to Messett borrowing $152,000.00 from HCI under the promissory note. (Id. at § 1.04(b)). The contract provided that HCI had the right to offset amounts owed by Messett against amounts owed to him by HCI. (Id. at § 4.05).

The 2006 Employment Contract also provided for Messett to receive 10% of HCI's quarterly calculated profits which were to be used to satisfy Messett's obligation on the promissory note. (Id. at § 1.04(b)). However, if quarterly profits fell below the "break-even point" for four consecutive quarters, then Messett's base salary could "be reduced by not more than the original salary base of $120,000." (Id. at § 1.04(g)).

According to Messett, HCI profited in the second quarter of 2006, ending June 30, 2006, but did not pay him a bonus. (Answer at ¶ 21 (Doc. 6); Messett Pay Statements (Doc. 89 at 23)). Some personal expenses of Richard and Edward Harsche may have been paid from corporate profits. (Dep. of Donna Kiely at 37 (Doc. 89 at 26 to 27)). In June of 2006, Messett applied for a purchase money mortgage loan through HCI to buy a home. (Loan Documents (Doc. 89 at 17 to 21)).

In July of 2006, Edward Harsche told Messett that if business did not improve in thirty days, Messett would be fired. (Dep. of Kevin Messett at 255 (Doc. 87-2 at 31)). According to Messett, other employees who had received such warnings were terminated. (Id. at 294 to 95).

On July 20, 2006, HCI and Greenpoint Mortgage Funding, Inc. approved Messett and his wife Shannon Messett for their home loan. (Loan Documents (Doc. 89 at 17 to 21)). On August 2, 2006, the Messetts closed on their new home sometime in the afternoon. (Dep. of Kevin Messett at 183, 191, 194 to 196 (Doc. 87-2); Loan Faxes (Doc. 87-8)). Messett sent an email at 1:52 p.m. on August 2, 2006 stating, "[a]s I depart the company I would like to make arrangements to continue to provide services as well as utilize the many avenues of business which HCI has to offer." (Separation Arrangements Email (Doc. 87-5)).

On August 7, 2006 Messett signed a resignation agreement. (Resignation Agreement (Doc. 87-6)). Under the agreement, Messett would be paid his normal salary through December 2006 and the terms of his employment agreement would remain intact. (Id.)

In a September 19, 2006 Letter, Richard Harsche, informed Messett that his salary was being reduced because HCI was not profitable. (Doc. 89 at 24). The letter also informed Messett that his future earnings would be applied towards the promissory note. (Id.) Messett was paid through September of 2006. (Def. SUMF at ¶ 26). The defendants characterize Messett's salary between October and December 31, 2006 as a severance which HCI opted to apply the outstanding debt Messett owed on the promissory note. (Def. SUMF at ¶¶ 25 - 27).

Messett, and his wife Shannon Messett, filed their complaint on November 1, 2007 in the Court of Common Pleas of Lackawanna County. (Compl. (Doc. 1-4)). The complaint alleges breach of contract (Count I), fraud (Count II), violation of the Pennsylvania Wage Garnishment and Collection Act, 43 PA. C.S.A. § 260.1 (Count III), unjust enrichment (Count IV), and violation of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. §§ 1601, et seq. (Count V). (Id.)

The defendants removed the case to the United States District Court for the Middle District of Pennsylvania on December 5, 2007, based on the Court's original jurisdiction over the alleged violation of the FDCPA and its supplemental jurisdiction over Messett's state-law claims. ...


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