Pennsylvania Record

Wednesday, December 11, 2019

Parties to talk settlement of lawsuit over $4M sale

State Court

By Nicholas Malfitano | Aug 6, 2019

Usdcphiladelphia
Philadelphia federal court

PHILADELPHIA – A settlement conference has been slated for the case of a company that believes it mistakenly overpaid more than $200,000 in the course of executing a contract to purchase interest in an Illinois firm.

U.S. Magistrate Judge Elizabeth T. Hey announced on July 29, after having been referred the case by U.S. District Judge Harvey Bartle, that a settlement conference will be held on Sept. 12 in the U.S. Courthouse at 601 Market Street in Philadelphia.

The case began with a 2016 interest purchasing agreement between Warren Hill and SFR Equities.

“On Feb. 17, 2016 Warren Hill and SFR entered into a Membership Interest Purchase Agreement effective Jan. 1, 2016. Under the Agreement, Warren Hill agreed to sell SFR its 33.246 percent-membership interest in an Illinois limited liability company known as Vendor Assistance Program, LLC. SFR agreed to pay Warren Hill the purchase price of $4,000,000 over time and in the manner outlined in the Agreement,” Bartle said.

Furthermore, the agreement contained additional terms defining the obligations of the parties, including the obligation of SFR to pay additional payments on a promissory note. The agreement contained a provision that “for each of the three years following the Closing Date, [SFR] shall, within 90 days of the end of each year, pay [Warren Hill] an amount equal to 50 percent of VAP’s Net Income allocable to the Interests for such year.”

Finally, SFR agreed to pay money from VAP’s reserve accounts, as defined under the agreement. The reserve accounts hold funds as security for amounts VAP borrowed from lenders.

“In March 2017 SFR made its first earn out payment for the 2016 year and two follow-up payments. SFR also paid an earn out payment for the 2017 year. According to SFR’s counterclaim, it has mistakenly overpaid Warren Hill by $200,000,” Bartle stated.

Warren Hill claimed when SFR calculated the earn out payments due to it for 2016 and 2017, SFR mistakenly included Vendor Assistance Program revenues that were part of an Excluded Reserve Amount and as a result of the overpayment(s), the plaintiff was unjustly enriched.

Under the circumstances, SFR believed equity demands that it was entitled to restitution from Warren Hill in the amount of any overpayments of $200,000 to plaintiff plus attorney’s fees, expenses of suit and costs.

Warren Hill opposed this rationale and sought to have the counterclaim dismissed, arguing there was no case made for unjust enrichment. However, Bartle applied Illinois law and said last year that the counterclaim wouldn’t be thrown out.

“The law of Illinois, considering the substance of the counterclaim, allows it to go forward. The argument of Warren Hill is without merit. Accordingly, we will deny its motion to dismiss the counterclaim of SFR for failure to state a claim upon which relief can be granted,” Bartle stated.

U.S. District Court for the Eastern District of Pennsylvania case 2:18-cv-01228

From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com

Want to get notified whenever we write about any of these organizations ?

Sign-up Next time we write about any of these organizations, we'll email you a link to the story. You may edit your settings or unsubscribe at any time.

Organizations in this Story

Philadelphia County Court of Common PleasU.S. District Court of Eastern District of Pennsylvania

More News