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Madonna v. Francisco

United States District Court, E.D. Pennsylvania

March 13, 2014

GREGORY J. FRANCISCO, et al., Defendants.


GENE E.K. PRATTER, District Judge.

Plaintiff Christopher Madonna, unable to collect on a default judgment obtained in state court against non-party Kinesis, now seeks to collect on that judgment from Kinesis's alter ego, Defendant Gregory Francisco, and Kinesis's successor, Defendant AvanuOne LLC. Both Defendants filed a motion to dismiss the Second Amended Complaint. The Court will deny AvanuOne's motion and will deny in part and grant in part Mr. Francisco's motion.


Mr. Madonna, a former professional baseball player and former baseball coach for Villanova University, seeks to enforce an outstanding default judgment, which was entered in Pennsylvania state court against Kinesis Software, LLC and Kinesis Software, Inc. (hereinafter, "Kinesis"). The Kinesis entities are not parties to this suit. Mr. Madonna seeks to satisfy the state court default judgment by piercing the corporate veil to collect from either Defendant Gregory Francisco, the owner, president and treasurer of Kinesis, who, Mr. Madonna claims, is Kinesis's alter ego, or Defendant AvanuOne, who Mr. Madonna alleges is the successor to Kinesis.

According to the Second Amended Complaint, in September 2007, Mr. Francisco recruited Mr. Madonna, based on his reputation as an athlete, to assist with the marketing and sales of the Kinesis "First Choice Athlete" business, which features the "Coachware" software product. Mr. Madonna entered into an employment contract with Kinesis under which Mr. Madonna would receive $60, 000 annually, plus 8% in commissions, for his services.

However, Mr. Madonna alleges, Mr. Francisco failed to fulfill his end of the bargain, as he refused to compensate Mr. Madonna for his services. On June 3, 2010, Mr. Madonna filed suit against Kinesis in the Court of Common Pleas of Delaware County ("the state court lawsuit"), seeking recovery of his owed salary and commissions. On February 1, 2011, the Court of Common Pleas entered default judgment ("Judgment") against Kinesis for $73, 319. Kinesis did not appeal from this Judgment.

On May 11, 2010, AvanuOne purchased the assets of Kinesis in an Asset Purchase Agreement. Mr. Madonna claims that since the time of the asset purchase, AvanuOne has marketed and sold the "Coachware" product that Kinesis previously marketed and sold, and in so doing, has continued to reap the benefits of Mr. Madonna's still uncompensated efforts in marketing and selling the product.

On February 14, 2013, Mr. Madonna filed suit in this Court seeking enforcement of the outstanding Judgment, which he claims was valued at $80, 284.05 as of November 1, 2012. Mr. Madonna claims that Mr. Francisco executed the 2010 Asset Purchase Agreement between Kinesis and AvanuOne for purposes of evading liabilities incurred by Kinesis, specifically the liability of the salary and commissions owed to Mr. Madonna.

In this action, Mr. Madonna seeks to pierce the corporate veil to hold Mr. Francisco and AvanuOne liable for the state court judgment entered against the Kinesis entities. He claims that, for example, Mr. Francisco withheld payroll deductions for unemployment compensation but failed to make payments to the appropriate authorities and that he used company money to pay his son's tuition. He also claims, solely on information and belief, that Mr. Francisco depleted assets of Kinesis for his own interests, failed to maintain corporate formalities as a Kinesis corporate officer, defrauded him, and diverted the remaining assets of Kinesis to AvanuOne for purposes of evading liabilities incurred by Kinesis (and may have "hid[den]" the liability of his owed compensation from AvanuOne at the time of the asset purchase). He also alleges that the Judgment, incurred as a corporate debt of Kinesis, is now a corporate debt of AvanuOne because the sale of Kinesis's assets to AvanuOne was accomplished to prevent Kinesis's creditors from collecting their due.

Further, Mr. Madonna alleges that both Mr. Francisco and AvanuOne are liable for unjust enrichment because they "received and continue to receive benefit from the efforts, reputation and goodwill generated by [Mr. Madonna] while he was employed by the Kinesis entities and working to develop the business of First Choice Athlete" without ever compensating Mr. Madonna for his services. As to each of his three claims, Mr. Madonna requests relief in the form of judgment in the amount of "$80, 284.05, plus pre and post judgment interest, attorneys' fees and costs and award such further relief that this Court deems just and equitable."

Both Defendants moved to dismiss Mr. Madonna's original Complaint, and the Court granted Mr. Francisco's motion in part, to the extent that he argued that Mr. Madonna had failed to properly plead AvanuOne's citizenship for the purpose of determining diversity jurisdiction. Mr. Madonna filed an Amended Complaint, curing that defect, and the Defendants again moved to dismiss. The Court denied AvanuOne's motion attacking Mr. Madonna's allegations with respect to the amount in controversy, and, after oral argument, denied as moot Mr. Francisco's motion, giving Mr. Madonna another chance to amend his Complaint. Mr. Madonna then filed a Second Amended Complaint, and once again both Defendants moved to dismiss. Mr. Madonna opposes both motions.


A Rule 12(b)(6) motion to dismiss tests the sufficiency of a complaint. Although Rule 8 of the Federal Rules of Civil Procedure requires only "a short and plain statement of the claim showing that the pleader is entitled to relief, " Fed.R.Civ.P. 8(a)(2), "in order to give the defendant fair notice of what the... claim is and the grounds upon which it rests, '" Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citation omitted) (alteration in original), the plaintiff must provide "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do, " id.

To survive a motion to dismiss, the plaintiff must plead "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Specifically, "[f]actual allegations must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555. The question is not whether the claimant "will ultimately prevail... but whether his complaint [is] sufficient to cross the federal court's threshold." Skinner v. Switzer, 131 S.Ct. 1289, 1296 (2011) (citation and internal quotation marks omitted). Thus, assessment of the sufficiency of a complaint is "a context-dependent exercise" ...

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