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Thursday, November 21, 2024

Contract dispute between finance law firm and marketing group headed to Pa. Superior Court

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Superior Court of Pennsylvania | PA Courts

HARRISBURG – The case of a financial law practice’s breach of contract suit against a legal marketing company it alleged had devised a scheme to sabotage its website and social media outreach will come before the Superior Court of Pennsylvania this week.

The Guiliano Law Group, P.C. initially filed suit in the Philadelphia County Court of Common Pleas on March 3, 2021 versus Majux Marketing, LLC and Bernard Clark. All parties are of Philadelphia.

“Guiliano was made aware of Majux and Clark by a colleague, and on or about Nov. 19, 2019, Guiliano met with Clark at his offices at 211 N 13th Street, Suite 601, Philadelphia, Pennsylvania for the purpose of potentially hiring Clark and Majux, among other things, to redesign and/or consolidate certain of plaintiff’s websites, including stockbrokerfraud.com,” the suit stated.

“By way of background, stockbrokerfraud.com was launched in 1998. As of November 2019, stockbrokerfraud.com consisted of more than 6,000 web pages, blog or news posts, and related content concerning the law of securities arbitration, including common investor claims, investment products, stockbroker misconduct, regulatory notices, and legal developments. The pages and blog posts collectively contained more than 2,000 outbound links to the original source materials, including case law on Google Scholar, and more than 1,400 ‘media’ files containing .pdf images of source documents, including, enforcement decisions, arbitration awards, pleadings, legal decisions and other documents relating to securities arbitration and investment fraud issues. Securitiesarbitrations.com was also launched in 1998, and its content, substantially consists of pages and articles concerning securities arbitration law, certain recent cases, and more generally the legal history of securities arbitration, the Federal Arbitration Act, Self-Regulatory Rules, discovery, customer eligibility and the securities arbitration process

The suit continued on that in November 2019, Guiliano met with Clark for the purpose of re-designing a new “appearance” for stockbrokerfraud.com, the prospect of merging or combining both sites, and to “optimize/implement onsite SEO [Search Engine Optimization] alongside of the design phase.”

“At this meeting, Clark touted his success placing law firms on the first page of Google within their practice area. Clark also stated that because of his particular expertise, to avoid his clients from competing with each other, that he and his company would only accept clients from different practice areas or different geographical areas. In addition to ‘simple’ redesign and SEO services, according to Clark, he also acted as a ‘publicist’ for its clients, and that through his contacts and Majux’s ‘digital press outreach,’ Clark could secure journalist inquires, and the publication of securities law related articles in the national media. Clark also stated that he could secure incoming links from these entities, and the underlying articles to plaintiff’s blogs and webpages,” the suit said.

“Upon learning that plaintiff’s blogs are based upon regulatory and enforcement news from state and federal regulators, regarding specific firms or individuals, or specific investment products, Clark stated that Majux could create an automated script or program to monitor, and ‘data mine’ or ‘scrape’ FINRA’s regulatory and enforcement database to obtain information on emerging cases in advance of plaintiff’s competitors.”

The defendants were said to have proposed a two-phase agreement whereby they would 1) perform a site redesign and search engine optimization for each of the plaintiff’s websites, then 2) continue to provide ongoing search engine optimization and content for the websites.

Phase 1 was to cost $10,000, with $5,000 to be paid to begin the project with the remaining $5,000 to be paid upon completion – while Phase 2 was to cost an ongoing $3,500 per month.

However, the plaintiff alleges that the defendants provided their services in both an untimely manner, months behind schedule, and in leaving their websites filled with missing content and broken hyperlinks.

“Defendants, however, knew, but failed to disclose, that the increase in traffic to plaintiff’s website was not the result of human visitors, but was attributable to robots or automated visitors from defendants placing links with certain offshore or otherwise questionable ‘link farms,’ some of which have been ‘blacklisted’ by Google. Plaintiff alleges that defendants placed these links to create the false appearance of a bona fide increase in website traffic from defendants’ purported SEO activities. Plaintiff was not permitted full administrative access to its website until Sept. 1, 2020. However, by November 2020, it became increasingly clear that defendants did not, and could not, fix the missing and persistent errors without re-engineering the new site, and reloading the data from the old site (together with those pages added since March 13, 2020),” the suit states.

“At or about this same time, plaintiff received notice of a copyright infringement claim against it seeking statutory damages and attorney’s fees under the federal copyright laws based upon defendants’ use of unlicensed copyrighted images in connection with the redesign of plaintiff's website. Clark maintains that his agency, Majux, secured the license to these images through Shutterstock. However, the purported owner of these images, now through its counsel, maintains that these images were never licensed through Shutterstock. No additional information has been forthcoming from defendants as to the licensing of these images. On Nov. 27, 2020, plaintiff also discovered that substantially for the entire month of November 2020, according to the Google Search Console for the new site constructed by defendants, there were 1,366 pages which contained ‘errors,’ including 375 pages that needed improvement, or that as a result, were not indexed or listed by Google. On Nov. 29, 2020, plaintiff terminated defendants’ services, and revoked defendants’ access to plaintiff's various internet properties and accounts. In addition to information regarding the actual work performed on plaintiff’s website since March 2020, Plaintiff also demanded a refund charges made to plaintiff's credit card, which by Dec. 1, 2020, totaled $38,500. Defendants have failed to respond to plaintiff’s requests.”

In an Oct. 26, 2021 answer to the complaint, the defendants “specifically denied that these claims have merit or that defendants wrongfully obtained monies or took part in any form of fraud.”

Rather, the defendants argued that the plaintiff was the party who breached their agreement and then made verbal threats over the telephone.

“Pursuant to the contract, GLG owed $3,500 per month (later amended per agreement by both parties to $3,000 per month) for Majux’s ongoing work on GLG’s website. On Dec. 1, 2020, Majux terminated the agreement pursuant to Article 20 of the contract. Under the terms of Article 20, termination is done with a 60-day notice and, during that termination period, the agreement remains in effect. Therefore, under the terms of the contract, GLG owed Majux for two months of fees at $3,000 per month. In addition, GLG demanded that payments by credit card be returned to it. In total, GLG made nine requests for return of funds, costing Majux $225 in fees and return of two months of fees totaling $6,000. To date, GLG has not made all payments owed to Majux and has provided no legitimate basis to refuse to pay the funds owed to Majux. Counterclaim-plaintiff’s claim is not excluded or limited by the terms of the contract. GLG’s continued refusal to pay Majux’s owed monthly fees is in breach of the agreement between the parties. As a direct and proximate result of GLG’s breach, counterclaim-plaintiff Majux has suffered damages,” the answer stated, in part.

“On Nov. 29, 2020 at or around 6:51 p.m., Mr. Clark received a call from Nicholas Giuliano, acting in his capacity as owner and representative of counterclaim-defendant Giuliano Law Group, LLC. This call was made to Mr. Clark’s personal phone. During this call, Mr. Giuliano acted unprofessionally and unethically and made a series of threats. These threats included that Mr. Giuliano demanded money and he was ‘considering kidnapping [Mr. Clark] and breaking [his] kneecaps.’ Mr. Guiliano further added that he would make Mr. Clark ‘disappear.’ Mr. Giuliano further threatened that he would ‘find out everything about [Mr. Clark] and follow [him] until [Mr. Giuliano] takes everything from’ Mr. Clark. Mr. Giuliano further threatened that Mr. Clark ‘had no idea who [Mr. Clark was] dealing with.’ Following this call, on the night of Nov. 29, 2020 immediately after the call ended, Mr. Clark filed a police report regarding the threats out of fear something might happen to him or his family and he wanted documentation with the police over the threats. On Dec. 1, 2020, in response to Majux terminating the agreement and stating these threats as the basis, Mr. Giuliano made additional threats confirming that he would follow Mr. Clark and that he would sue Mr. Clark ‘and relentlessly levy on all [Mr. Clark’s] worldly goods till [Mr. Giuliano] die[s], then [Giuliano’s] son, (who is also a lawyer), will take over.’ Mr. Giuliano’s threats were intended to put Mr. Clark in reasonable apprehension of physical injury and kidnapping.”

An arbitration session concluded on April 19, with the following decision rendered.

“We find in favor of defendants against plaintiff on all claims. We find in favor of Majux Marketing, LLC against plaintiff in the amount of $12,000 for the breach of contract counterclaim. We find in plaintiff’s favor in regards to Bernard Clark’s counterclaims,” the arbitration award read.

The following day, April 20, the plaintiff issued a notice to appeal the arbitration award. Eight days later, the defendants filed preliminary objections to the plaintiff’s notice of appeal pursuant to Rule 1028(a)(6), seeking to strike the notice of appeal and stay the matter pending final resolution of the arbitration.

On June 1, Philadelphia County Court of Common Pleas Judge Carmella G. Jacquinto overruled the defense’s preliminary objections to the suit.

Likewise, the defendants appealed this ruling to the Superior Court.

“Appellants have brought this appeal based on the trial court’s denial of its preliminary objections seeking to enforce an arbitration agreement. In the opinion, the trial court relies on two primary reasons for overruling the preliminary objections: A procedural and a substantive reason. The trial court also did not address the threshold question of whether a valid and enforceable arbitration agreement exists and the claims at issue are within the scope. A review of the plain language demonstrates that the broad arbitration agreement at issue is both enforceable and covers the entirety of the claims at issue, including the claims related to Mr. Clark, a non-signatory, but someone who falls within the scope of the agreement as a principal of appellant Majux,” the appellant brief stated, in part.

“In regards to the substantive reason, the trial court completely ignores the reasoning of the appellants and contends that the right to enforce the arbitration clause was waived. In making this decision, the trial court ignores that the parties did, in fact, participate in an arbitration and, under the terms of the agreement and the statutes of Pennsylvania, appellee had no right to a de novo appeal of that arbitration decision. The valid and enforceable arbitration clause states that ‘any dispute’ was to be ‘settled by arbitration.’ Under this plain language, there was no right to a de novo appeal. As to the procedural reason, the trial court contends that the appellants’ preliminary objections were improperly filed as preliminary objections. This argument ignores that preliminary objections filed pursuant to Pennsylvania Rule of Civil Procedure 1028(a)(6) operate as the equivalent of a ‘petition to compel arbitration’, and, therefore, the trial court erred in its sua sponte contention that the notice of appeal, which operated as a pleading to open this matter as a non-jury civil, did not constitute as a pleading and the preliminary objections at issue were procedurally defective. Because the preliminary objections here operate as a ‘petition to compel arbitration’, even if improperly titled as preliminary objections and not a motion or petition, precedent requires the trial court consider the substantive issues raised.”

An inquiry from the Pennsylvania Record to the plaintiff’s counsel for the appellee brief filed with the Superior Court was not returned.

For counts of breach of contract, common law fraud, negligence, unjust enrichment and computer trespass, the plaintiff was seeking, jointly and severally, an order to cease and desist from such conduct, compensatory damages, costs, interest and any other relief that this Court may deem just, fair and proper.

The defendants had levied counterclaims of breach of contract, assault and intentional infliction of emotional distress, for which they sought compensatory, consequential and punitive damages, attorney’s fees, costs, interest and such additional relief as the Court deems just and appropriate.

The plaintiff is represented by Richard F. Klineburger III of Klineburger & Nussey and Nicholas J. Guiliano of Guiliano Law Group, both in Philadelphia.

The defendants are represented by William H. Pillsbury of the Law Offices of William H. Pillsbury, in Willow Grove.

Superior Court of Pennsylvania case 1525 EDA 2023

Philadelphia County Court of Common Pleas case 210300347

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

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