Equal partnership somehow led to unequal distribution of corporate monies, plaintiff alleges

By Nicholas Malfitano | Dec 15, 2017

PITTSBURGH – A corporation’s contributing partner has initiated legal action looking to correct alleged financial mismanagement by the other partner in that corporation, and its representatives.

W.G. Sekeras & Associates, Inc. of Pittsburgh filed suit in the Allegheny County Court of Common Pleas on Dec. 13 versus ISM, Inc. and its president Joseph L. Stein, both of Mars.

Sekeras and ISM are each owners of 50 percent membership interest and voting rights in S&S Intersource, LLC, with those parties being the only members of S&S and in accordance with an Operating Agreement for governance dated Dec. 8, 1998.

Since 2011, the parties have permitted S&S’s daily operations to be handled by Brian Stein, for which he is paid salary and benefits – though both parties need to agree in order to approve decisions affecting management and operations of S&S, the suit says.

“From and after 2012, S&S engaged in a pattern of distributing funds, under the premise of making loans to ISM, without the consent and approval of Sekeras,” the suit reads.

Such distributions to ISM totaled $663,000 as of Oct. 31 and to Joseph Stein and Brian Stein for $4,500 each as of April 30, with Sekeras allegedly not receiving the same distributions. Furthermore, from and after 2015, S&S has paid for season tickets for Stein to Pittsburgh Penguins hockey events and Pittsburgh Steelers football events, and for membership in Laurel Valley County Club for Joseph L. Stein, both allegedly without the consent and approval of Sekeras.

The lawsuit maintains when S&S first formed, Sekeras and ISM each contributed $25,000 cash as capital – with Sekeras later contributing an additional $70,000, and ISM making no such further contribution, making the financial input to S&S unequal.

“From and after 2016, ISM has unilaterally written down current inventory held by S&S by approximately 50 percent, claiming it to be outdated inventory, without the consent and approval of Sekeras. Sekeras disputes that the inventory of S&S has declined in value by 50 percent of its book value and rather, the decline in value is approximately 40 percent of its book value. From and after 2016, S&S has paid Joseph L. Stein a salary, despite the operation of S&S being assigned to Brian Stein, without the consent and approval of Sekeras,” the suit continues.

“In 2007, William G. Sekeras suffered a stroke, causing his day-to-day involvement in the business of S&S to decline from its previous active level. Notwithstanding the fact that William G. Sekeras reduced his involvement in the day-to-day operations of S&S due to the stroke he suffered in 2007, he did not reduce his role in making decisions for the operation of S&S,” the suit states.

For counts of breach of contract, conversion, unjust enrichment and breach of fiduciary duty, the plaintiff is seeking damages in excess of $35,000, plus other such relief as the Court deems appropriate.

The plaintiff is represented by Kenneth J. Yarsky II of Sherrard, German & Kelly, in Pittsburgh.

Allegheny County Court of Common Pleas case GD-17-016993

From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nickpennrecord@gmail.com

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