EQUIPMENT FINANCE, LLC v. HUTCHISON et al

Filing 57

VERDICT, OPINION INDEX AND ADJUDICATION. SIGNED BY HONORABLE JAMES KNOLL GARDNER ON 9/27/2011. (Attachments: # 1 opinion index, # 2 adjudication) 9/27/2011 ENTERED AND COPIES E-MAILED.(lbs, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
EQUIPMENT FINANCE, LLC,

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Plaintiff
vs.
STEVEN M. HUTCHISON; and
BLUE HORIZON VEGETATIVE
RECYCLING & LAND CLEARING,
INC.,
Defendants
*

*

Civil Action
No. 09-cv-01964

*

APPEARANCES:
ALAN C. GERSHENSON, ESQUIRE
On behalf of Plaintiff
JAMES A. DOWNEY, III, ESQUIRE
On behalf of Defendants
*

*

*

ADJUDICATION
JAMES KNOLL GARDNER,
United States District Judge
The undersigned presided over a non-jury trial on the
Complaint of plaintiff Equipment Finance, LLC against defendants
Steven M. Hutchison and Blue Horizon Vegetative Recycling & Land
Clearing, Inc. (“Blue Horizon”).
took the matter under advisement.

At the close of the trial, I
Hence this Adjudication.

Plaintiff sued defendant Hutchison for breach of
contract seeking amounts due on a Promissory Note.

Plaintiff

also sued both defendants Hutchison and Blue Horizon on alternate
theories of implied contract and unjust enrichment.

In the within Adjudication, I make findings of fact
based upon the evidence adduced at trial, and conclusions of law
based upon the legal principles and standards discussed in this
Adjudication.
Based upon those findings of fact and conclusions of
law, and the law applicable to this contract action, I entered a
Verdict dated September 27, 2011, which accompanies this
Adjudication.
In the Verdict, I find in favor of plaintiff and
against defendant Hutchison for breach of contract on the
Promissory Note in the amount of $151,654.09.

I also find in

favor of plaintiff and against defendant Hutchison in the
additional amount of $1,352,040.00 for breach of an implied
contract, for a total award against defendant Hutchison of
$1,503,694.09.1

In the Verdict, I also find in favor of

defendant Blue Horizon and against plaintiff on plaintiff’s
claims based on implied contract and unjust enrichment.
At the close of plaintiff’s case-in-chief at the nonjury trial of this matter, defendants made an oral motion on the
record for judgment on partial findings pursuant to Federal Rule

1

As explained in the within Adjudication, plaintiff’s claims
against defendant Hutchison based upon implied contract and unjust enrichment
are alternative theories of liability. Therefore, because I entered a Verdict
in favor of plaintiff and against defendant Hutchison on plaintiff’s implied
contract claim in Count II of the Complaint, I did not reach or decide
plaintiff’s alternate unjust enrichment claim against defendant Hutchison in
Count III.
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of Civil Procedure 52.

Pursuant to Rule 52(c), I declined to

render any judgment until the close of the evidence.
Thereafter, pursuant to Fed.R.Civ.P. 52(a)(1), based
upon the findings of fact and conclusions of law stated
separately in this Adjudication, I entered an Order and Judgment
under Fed.R.Civ.P. 58, which will be filed immediately after the
filing of the within Verdict and Adjudication.

In that Order and

Judgment, I denied defendants’ motion for judgment on partial
findings in part, and granted it, in part.
Specifically, I entered judgment on the Verdict in
favor of plaintiff and against defendant Hutchison for both
breach of contract on the Promissory Note and breach of an
implied contract, in the amounts specified in the Verdict as
described above.

I also entered judgment on the Verdict in favor

of defendants and against plaintiff on plaintiff’s claims based
on implied contract and unjust enrichment as described above.
JURISDICTION
Jurisdiction in this case is based upon diversity of
citizenship pursuant to 28 U.S.C. § 1332.

Plaintiff Equipment

Finance, LLC is a limited liability company which is a citizen of
the Commonwealth of Pennsylvania.

Defendant Steven M. Hutchison

is an individual who is a citizen of the State of North Carolina.
Defendant Blue Horizon Vegetative Recycling and Land Clearing,
Inc. is a corporation which is a citizen of the State of North
Carolina.

The amount in controversy is in excess of $75,000.00.
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VENUE
Venue is proper pursuant to 28 U.S.C. § 1391(a) because
the events giving rise to plaintiff’s claims allegedly occurred
in Lancaster County, Pennsylvania, which is within this judicial
district.

Moreover, by contract, the parties agreed to venue in

this district.2
FACTUAL BACKGROUND
This Contract dispute arises from a lending
relationship.

Specifically, plaintiff Equipment Finance, LLC

advanced money to defendant Steven M. Hutchison pursuant to a
Promissory Note executed on May 31, 2001 by defendant Hutchison.
He executed the note to obtain funds on behalf of his company,
Long Leaf Wood Products, Inc. (“Long Leaf”).
Plaintiff advanced additional money through seventeen
checks issued by plaintiff3 (which plaintiff contends represented
loans).

These checks were issued between July 1, 2002 and

January 24, 2007 and made payable to either defendant Hutchison,
Long Leaf, Long Leaf’s successor Mid Atlantic Timber Company,

2

Complaint, Exhibit A (Promissory Note dated May 31, 2001).

3

Paragraphs 8-10 of plaintiff’s Complaint filed May 8, 2009
referred to eighteen checks. However, as noted in paragraph 8 of the
Complaint, a copy of check #4162 dated March 1, 2003, allegedly payable to
Long Leaf in the amount of $30,000.00, was not available and not attached as
an exhibit to the Complaint. As discussed on page 6 of my September 24, 2010
Opinion denying defendants’ Motion for Summary Judgment, all claims pertaining
to that check were withdrawn at oral argument on the Motion for Summary
Judgment held April 21, 2010. Accordingly, a total of seventeen checks remain
at issue in this action.
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Inc. (“Mid Atlantic”),4 or defendant Blue Horizon, a company
owned by defendant Hutchison’s son, Brian Hutchison.
PROCEDURAL HISTORY
Plaintiff’s five-count Complaint filed May 8, 2009
alleges breach of contract against defendant Hutchison for nonpayment of a portion of the Promissory Note (Count I); implied
contract against defendant Hutchison based upon seventeen5 checks
issued by plaintiff and payable to either defendant Hutchison,
his company Long Leaf, Long Leaf’s successor Mid Atlantic, or
defendant Blue Horizon (Count II); unjust enrichment against
defendant Hutchison based upon the same seventeen checks (Count
III); implied contract against defendant Blue Horizon based upon
two checks issued by plaintiff and made payable to Blue Horizon
(Count IV); and unjust enrichment against defendant Blue Horizon
based upon the same two checks (Count V).
The Complaint alleges that defendant Hutchison has only
made partial repayment of the amount due under the Promissory
Note, and that none of the amounts advanced through the seventeen

4

Long Leaf and Mid Atlantic are a single corporation. Originally,
the corporation was known as Long Leaf Wood Products, Inc., but its name was
changed to Mid Atlantic Timber Company, Inc. on December 13, 2001. See Agreed
Upon Findings of Fact and Conclusions of Law (Plaintiff’s Exhibit 21), ¶ 12.
For the sake of brevity, I refer to the corporation as “Long Leaf/Mid
Atlantic” throughout this Adjudication, except where discussing the execution
of the Promissory Note on behalf of Long Leaf, and where discussing particular
checks made payable to either Long Leaf or Mid Atlantic.
5
As discussed in footnote 3 above, only seventeen checks remain at
issue, although the Complaint lists eighteen checks.

-5-

checks, which plaintiff contends were intended as loans, were
ever repaid by defendants Hutchison or Blue Horizon.
By Order of January 8, 2010, I directed the parties to
file proposed findings of fact and conclusions of law.
Subsequently, on March 18, 2010, the parties jointly filed a set
of agreed-upon findings of fact and conclusions of law.

On

April 1, 2010, defendants filed proposed findings and conclusions
which were not agreed upon.

On April 2, 2010, plaintiff filed

proposed findings and conclusions which were not agreed upon.
By Order and Opinion dated September 24, 2010, I denied
defendants’ Motion for Summary Judgment.

Specifically, I

concluded that defendants had not met their initial burden as
movants for summary judgment on either affirmative defense raised
(statute of limitations and statute of frauds).

Further, I

denied the motion because defendants failed to file the statement
of undisputed facts required by my Rule 16 Status Conference
Order dated November 18, 2009 and filed November 23, 2009.
Plaintiff called one witness at the non-jury trial held
October 26, 2010.

The witness called in plaintiff’s case-in-

chief was Edward T. Martel, the Collections Manager for plaintiff
Equipment Finance, LLC.
Plaintiff moved 22 exhibits into evidence:

the May 31,

2001 Promissory Note (P-1); plaintiff’s records showing payments
made, and payments due, on the Promissory Note (P-2); the
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seventeen checks issued by plaintiff to defendant Hutchison, his
company Long Leaf, Long Leaf’s successor Mid Atlantic, and
defendant Blue Horizon between July 1, 2002 and January 24, 2007
(P-3 through P-19); official corporate records from the Secretary
of State of North Carolina for Long Leaf and Mid Atlantic (P-20);
Agreed Upon Findings of Fact and Conclusions of Law filed jointly
by the parties on March 18, 2010 (P-21); and a transcript of the
deposition of defendant Hutchison taken October 20, 2009 plus
four deposition exhibits (a memorandum prepared by defendant
Hutchison and financial audits of Mid Atlantic for fiscal years
ending September 30, 2004, 2005 and 2006) (P-22).
Plaintiff’s Exhibit 21 was received in evidence in the
absence of objection by defendant.

Plaintiff’s remaining 21

exhibits were received into evidence by stipulation of the
parties.
Defendants offered no witnesses, exhibits or other
evidence at trial.

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FINDINGS OF FACT6
Based upon the testimony and evidence adduced at
trial,7 the pleadings, record papers, and Agreed Upon Findings of
Fact and Conclusions of Law filed jointly by the parties, I make
the following Findings of Fact.
The Promissory Note
1.

On May 31, 2001, defendant Hutchison, as
President of Long Leaf Wood Products, Inc.
[“Undersigned”] executed under seal a
Promissory Note promising to repay “Equipment
Finance, Inc.” [“Lender”] the principal sum
of $127,803.66 in thirty-five successive
monthly installments of $4,480.52 each,
beginning July 15, 2001, followed by a
thirty-sixth payment of $4,480.67, for a
total Note amount of $161,298.87.

2.

Plaintiff’s Exhibit 1 is a true and authentic
copy of the Promissory Note dated May 31,
2001.8

6

My Findings of Fact incorporate the relevant facts agreed to by
the parties as reflected in the Agreed Upon Findings of Fact and Conclusions
of Law filed March 18, 2010 (Document 28).
7

The Findings of Fact reflect my credibility determinations
regarding the testimony and evidence presented at trial. Credibility
determinations are within the sole province of the finder of fact, in this
case the court. Fed.R.Civ.P. 52; See, e.g., Icicle Seafoods, Inc. v.
Worthington, 475 U.S. 709, 715, 106 S.Ct. 1527, 1530, 89 L.Ed.2d 739, 745
(1986).
8

Plaintiff’s Exhibit 1, the Promissory Note, was attached to
Plaintiff’s Complaint as “Exhibit A”. At trial, plaintiff introduced all of
the exhibits attached to its Complaint as Exhibits A-S, but re-marked them as
Plaintiff’s Exhibits 1 and 3-20, which is how plaintiff listed them in its
Pre-Trial Memorandum filed March 15, 2010 (Document 27). Throughout this
Adjudication, I refer to these exhibits by number, although the parties
sometimes referred to them by letter during the trial. The exhibits were remarked as follows:
(Footnote 8 continued):

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3.

In addition to the specific payment schedule
outlined for the total Note amount of
$161,298.87, the Promissory Note provides:
In addition to the payments provided for
above, the Undersigned promises to pay
on demand any additional amounts
required to be paid or advanced to or
paid or advanced on behalf of
Undersigned by Lender pursuant to the
terms of any other document or
instrument...executed and delivered by
the undersigned to Lender; and this note
shall evidence, and the said documents
and instruments shall secure, the
payment of all such sums advanced or
paid by Lender.

4.

Payments totaling $9,644.78, as listed in
Plaintiff’s Exhibit 2, were made on account
of the Promissory Note dated May 31, 2001
and, accordingly, $151,654.09 is still due
and owing on the Promissory Note. These
payments were as follows:
a.

$4,480.52 paid by check dated March 27,
2002 and deposited March 29, 2002.

(Continuation of footnote 8):
Complaint Exhibit

Plaintiff’s Exhibit

A
B
C
D
E
F
G
H
I
J
K
L
M
N
O
P
Q
R
S

1
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
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b.

$800.00 paid by check dated
September 25, 2002 and deposited
September 30, 2002.

c.

$1000.00 paid by check dated
December 31, 2002 and deposited
January 2, 2003.

d.

$1000.00 paid by check dated
February 25, 2003 and deposited March 4,
2003.

e.

$2,364.26 paid by check dated July 11,
2003 and deposited July 14, 2003.

Checks to Hutchison, Long Leaf, and Mid Atlantic
5.

Plaintiff’s Exhibits 3-17 are true, correct
and authentic copies of fifteen checks issued
by plaintiff that were delivered to, and
deposited by, defendant Hutchison, either by
himself or as a corporate officer of Long
Leaf/Mid Atlantic.

6.

Some of the fifteen checks were used in whole
or in part to pay down mortgage loans to RBC
Centura Bank and the Bank of Wilmington,
which defendant Hutchison had guaranteed,
specifically, Plaintiff’s Exhibits 4, 11, 12
and 14.

7.

The mortgage loans to RBC Centura Bank and
Bank of Wilmington which were guaranteed by
defendant Hutchison were secured by 10.79
acres of property that he owned, located at
2829 North Kerr Avenue, Wilmington, North
Carolina.

8.

The principals of those mortgage loans were
reduced by $350,000.00 to $400,000.00 by
funds provided to defendant Hutchison by
plaintiff from the checks issued by
plaintiff.

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9.

In 2007, the mortgaged property was sold to
defendant Blue Horizon Vegetative Recycling &
Land Clearing, Inc., a company owned by
defendant Hutchison’s son, Brian Hutchison.

10.

Prior to the sale of the mortgaged property,
the Bank of Wilmington loan was paid off.

11.

From the proceeds of that sale, the loan to
RBC Centura Bank was paid off and defendant
Hutchison received $25,000.00.

12.

Long Leaf Wood Products, Inc. filed Articles
of Amendment to change its name to Mid
Atlantic Timber Company, Inc. as of December
13, 2001, but continued to accept and deposit
checks made payable to Long Leaf thereafter,
including Plaintiff’s Exhibits 3, 4, 5, 6, 8,
13, 15, and 16, the last of which was dated
October 5, 2006.

13.

Some of the fifteen checks, although made
payable to Mid Atlantic or Long Leaf, were
deposited in a personal RBC Centura money
market account in the name of defendant
Hutchison (“Hutchison RBC Account”),
specifically, Plaintiff’s Exhibits 8, 9, 11,
12, 13, and 14.

14.

Plaintiff’s Exhibit 3 is a check dated
July 1, 2002 in the amount of $54,000.00 made
payable to Long Leaf.

15.

The $54,000.00 check to Long Leaf was
deposited into a “Production Account”, which
was a working account used for production
purposes, e.g., to pay subcontractors,
loggers and truck drivers.

16.

Plaintiff’s Exhibit 4 is a check dated
October 21, 2002 in the amount of $47,000.00
made payable to Long Leaf and deposited into
the Production Account. Of that $47,000.00,
$37,646.07 was used to pay down the Bank of
Wilmington loan which Hutchison had
guaranteed.

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17.

Plaintiff’s Exhibit 5 is a check dated
April 7, 2003 in the amount of $13,000.00
made payable to Long Leaf and deposited into
the Production Account.

18.

Plaintiff’s Exhibit 6 is a check dated
April 7, 2003 in the amount of $150,000.00
made payable to Long Leaf and deposited into
the Production Account.

19.

Plaintiff’s Exhibit 7 is a check dated
August 29, 2003 in the amount of $45,000.00
made payable to defendant Hutchison and
deposited into the Hutchison RBC Account,
although defendant Hutchison believes he gave
the money to his son’s company, defendant
Blue Horizon.

20.

Plaintiff’s Exhibit 8 is a check dated
January 15, 2004 in the amount of $35,000.00
made payable to Long Leaf, but deposited into
the Hutchison RBC Account.

21.

Plaintiff’s Exhibit 9 is a check dated
August 20, 2004 in the amount of $50,000.00
made payable to Mid Atlantic, but deposited
into the Hutchison RBC Account.

22.

Plaintiff’s Exhibit 10 is a check dated
February 27, 2004 in the amount of $65,000.00
made payable to defendant Hutchison and
deposited into the Hutchison RBC Account.

23.

Plaintiff’s Exhibit 11 is a check dated
October 8, 2004 in the amount of $175,000.00
made payable to Mid Atlantic, but deposited
into the Hutchison RBC Account. Of that sum,
Hutchison used $51,209.24 to pay down the RBC
Centura loan and $89,895.25 to pay payroll
taxes for the years 2002—2004.

24.

Plaintiff’s Exhibit 12 is a check dated
August 3, 2005 in the amount of $163,800.00
made payable to Mid Atlantic, but deposited
into the Hutchison RBC Account. Of that sum,
$148,800.00 was used to pay one of the bank
loans guaranteed by defendant Hutchison.
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25.

26.

Plaintiff’s Exhibit 14 is a check dated
April 28, 2006 in the amount of $200,000.00
made payable to Mid Atlantic, but deposited
into the Hutchison RBC Account. Of that sum,
$100,000.00 was used to pay down the RBC
Centura loan.

27.

Plaintiff’s Exhibit 15 is a check dated
June 21, 2006 in the amount of $34,000.00
made payable to Long Leaf and deposited into
the Production Account.

28.

Plaintiff’s Exhibit 16 is a check dated
October 5, 2006 in the amount of $30,000.00
made payable to Long Leaf and deposited into
the Production Account.

29.

Plaintiff’s Exhibit
January 24, 2007 in
made payable to Mid
into the Production

30.

The payments advanced through the fifteen
checks were in consideration for a mortgage
on the 10.79 acres of property at 2829 North
Kerr Avenue in Wilmington, North Carolina.

31.

Plaintiff was eventually to “buy the mortgage
from Centura and the Bank of Wilmington.”
This was to happen in 2003 or 2004.9

32.

9

Plaintiff’s Exhibit 13 is a check dated
November 17, 2005 in the amount of $10,240.00
made payable to Long Leaf, but deposited into
the Hutchison RBC Account.

Plaintiff’s assumption of the deed of trust
on the property was to be security for the
repayment of the money advanced.

Plaintiff’s Exhibit 22 at 27-28.
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17 is a check dated
the amount of $25,000.00
Atlantic and deposited
Account.

Checks to Blue Horizon
33.

34.

Plaintiff’s Exhibit 18 is a check dated
March 2, 2005 in the amount of $130,000.00
payable to defendant Blue Horizon. The check
was endorsed by Blue Horizon and delivered to
defendant Hutchison, who deposited it into
the Hutchison RBC account.

35.

Plaintiff’s Exhibit 19 is a check dated
March 2, 2005 in the amount of $125,000.00
payable to defendant Blue Horizon. The check
was endorsed by Blue Horizon and delivered to
defendant Hutchison, who deposited it into
the Hutchison RBC account.

36.

These two checks were supposed to be made
payable to Mid Atlantic, not to defendant
Blue Horizon, because the checks “had nothing
to do with Blue Horizon.”10

37.

Brian Hutchison, defendant Hutchison’s son
and owner of defendant Blue Horizon,
contacted Joe Braas, an employee of
plaintiff, to correct the error.

38.

Brian Hutchison told Mr. Braas that the
checks were not supposed to be sent to Blue
Horizon. Mr. Braas’s instructions were to
endorse them over and put them in Mid
Atlantic’s or defendant Hutchison’s account,
and he would fix the paperwork on plaintiff’s
end.

39.

10

Two checks were made payable to defendant
Blue Horizon Vegetative Recycling & Land
Clearing, Inc., a company owned by
Hutchison’s son, Brian Hutchison.
Plaintiff’s Exhibits 18 and 19 are true,
correct and authentic copies of those two
checks.

Of the $255,000.00 from the two checks
payable to Blue Horizon, defendant Hutchison
used $209,526.95 to pay down the RBC Centura
Note.

Plaintiff’s Exhibit 22 at 74-76.
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Additional Facts
40.

None of the sums advanced by plaintiff
through the seventeen checks (Plaintiff’s
Exhibits 3—19) were repaid by anyone.

41.

Plaintiff has no documents signed by
Hutchison on behalf of himself, Mid Atlantic
or Long Leaf relating to the loans allegedly
evidenced by the checks made payable to these
three parties (Plaintiff’s Exhibits 3-17)
other than the endorsements on the checks
themselves and the Promissory Note.

42.

Kyle A. Rineer, Repossession CoordinatorBanking Officer for plaintiff, sent a letter
to defendant Hutchison dated November 26,
2008 (Defendant’s Exhibit 1) regarding
obligations owed to plaintiff, and requested
defendant Hutchison to contact plaintiff to
discuss a payment plan.

43.

With the exception of Plaintiff’s Exhibits
7 and 10 (checks payable to defendant
Hutchison) and Plaintiff’s Exhibits 18 and 19
(checks payable to defendant Blue Horizon),
none of the checks discussed above were made
payable to any person or entity named as a
defendant in this civil action.

44.

Other than the handwritten words on the
documents, Plaintiff’s Exhibit 20 is a true,
correct and authentic copy of the records of
the Department of State of North Carolina as
of April 17, 2009 regarding the corporate
filings and status of Long Leaf/Mid Atlantic.

45.

Hutchison was at all times the sole officer,
director and shareholder of Long Leaf/Mid
Atlantic.

46.

Long Leaf/Mid Atlantic stopped doing business
shortly after plaintiff ceased sending it
funds in 2007.

47.

From 1998 until March 2009, Long Leaf/Mid
Atlantic did not file the annual report
required by the law of North Carolina and its
Secretary of State.

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48.

As a result of the failure to file annual
reports, on July 6, 2004, the Secretary of
State of North Carolina sent Mid Atlantic and
Hutchison a Notice of Grounds for
Administrative Dissolution of Mid Atlantic.

49.

When neither Mid Atlantic nor Hutchison acted
in response to the July 6, 2004 Notice, on
December 13, 2004, the Secretary of State of
North Carolina sent Mid Atlantic and
Hutchison a “Notice of Revenue Suspension”
suspending the corporate existence of Mid
Atlantic.

50.

When neither Mid Atlantic nor Hutchison acted
in response to the suspension of Mid
Atlantic, on January 27, 2009, the Secretary
of State of North Carolina declared Mid
Atlantic to be administratively dissolved and
issued a Certificate of Dissolution.
CONCLUSIONS OF LAW

Applying my factual findings to the legal principles
and standards discussed below, which are applicable to this
contract case, I make the following conclusions of law.
1.

Under the circumstances of this case, in
order to avoid injustice, the corporate veil
of Long Leaf/Mid Atlantic may be pierced to
hold defendant Hutchison liable for the
obligations allegedly incurred by that
corporation.

Count I: Breach of Contract on Note vs. Hutchison
2.

The Promissory Note represents a contract
between plaintiff and Long Leaf/Mid Atlantic,
which includes its essential terms.

3.

Long Leaf/Mid Atlantic breached its
obligation to repay plaintiff under the
Promissory Note.

4.

Through piercing of the corporate veil,
defendant Hutchison is liable to plaintiff on
Count I for damages of $151,654.09, the
balance due under the Promissory Note.
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5.

The Promissory Note was executed under seal.

6.

In Pennsylvania, the statute of limitations
for an action upon an instrument in writing
under seal is twenty years.

7.

The twenty-year statute of limitations for
instruments in writing under seal remains in
effect until June 27, 2018.

8.

Plaintiff’s claim in Count I against
defendant Hutchison for breach of contract on
the Promissory Note is not precluded by the
statute of limitations.

Count II: Implied Contract vs. Hutchison
9.

An implied-in-fact contract existed between
plaintiff and Long Leaf/Mid Atlantic as to
the fifteen checks payable to defendant
Hutchison, Long Leaf, or Mid Atlantic.

10.

The two checks payable to defendant Blue
Horizon were intended for and advanced on
behalf of Long Leaf/Mid Atlantic, and are
therefore encompassed by the implied-in-fact
contract between plaintiff and Long Leaf/Mid
Atlantic.

11.

The implied-in-fact contract was breached as
to all seventeen checks, as none were ever
repaid.

12.

Through piercing of the corporate veil,
defendant Hutchison is liable to plaintiff on
Count II for damages of $1,352,040.00, the
amount advanced through the seventeen checks
payable to defendant Hutchison, Long Leaf,
Mid Atlantic, or defendant Blue Horizon.

13.

The statute of limitations for actions on the
seventeen checks is four years.11

11

As explained more fully in my discussion of Count II, the twentyyear statute of limitations on the Promissory Note may also apply to these
checks because I conclude that an implied-in-fact contract exists, in part,
because language in the Promissory Note indicates that additional amounts may
be advanced. In that case, the Complaint was filed well within the twentyyear limitations period.
(Footnote 11 continued):
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14.

The seventeen checks were advanced under a
continuing contract between plaintiff and
Long Leaf/Mid Atlantic.

15.

The statute of limitations for actions on the
seventeen checks did not begin to run until
the termination of the parties’ relationship,
at the earliest, on January 24, 2007 when
plaintiff sent the last check.

16.

Plaintiff’s claim in Count II against
defendant Hutchison for implied contract on
the seventeen checks is not precluded by the
statute of limitations.

Count III: Unjust Enrichment vs. Hutchison
17.

The doctrine of unjust enrichment is
inapplicable because I have concluded that
defendant Hutchison is liable for the
seventeen checks (through piercing of the
corporate veil of Long Leaf/Mid Atlantic)
based upon an implied-in-fact contract.

18.

Therefore, it is unnecessary to address
whether defendant Hutchison is liable for the
checks on a theory of unjust enrichment.

Count IV: Implied Contract vs. Blue Horizon
19.

No implied-in-fact contract existed between
plaintiff and defendant Blue Horizon as to
the two checks made payable to Blue Horizon.

20.

Although these checks were made payable to
defendant Blue Horizon, they were intended
for and advanced on behalf of Long Leaf/Mid
Atlantic.

(Continuation of footnote 11):
However, at trial of this matter, the parties agreed that the
statute of limitations is the traditional four years for contracts in
Pennsylvania pursuant to 42 Pa.C.S.A. 5525(a). See Notes of Testimony of the
non-jury trial conducted before me on October 26, 2010, styled “Non-Jury Trial
(Day 1) Before the Honorable James Knoll Gardner[,] United States District
Judge” (“N.T. 10/26/10”), at 6, 31, 37-38.
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21.

Defendant Blue Horizon is not liable to
plaintiff under an implied contract theory
for the $255,000.00 advanced by these two
checks.

Count V: Unjust Enrichment vs. Blue Horizon
22.

Defendant Blue Horizon did not receive the
benefit of the two checks made payable to
Blue Horizon.

23.

Defendant Blue Horizon is not liable to
plaintiff under an unjust enrichment theory
for the $255,000.00 advanced by these two
checks.
CONTENTIONS OF THE PARTIES
Contentions of Plaintiff

Plaintiff contends that defendant Hutchison is liable
to plaintiff for a total of $1,503,694.09, representing three
categories of obligations.

First, plaintiff contends that

defendant Hutchison owes a balance of $151,654.09 on the
Promissory Note executed on May 31, 2001 by defendant Hutchison
as President of Long Leaf.
Second, plaintiff contends that defendant Hutchison
owes $1,097,040.00 because of the issuance of the fifteen checks
by plaintiff (which plaintiff contends represent loans) made
payable to either defendant Hutchison himself, to Long Leaf, or
to Long Leaf’s successor, Mid Atlantic.
Third, plaintiff contends that defendant Hutchison owes
$255,000.00 because of the issuance of the two checks by
plaintiff made payable to defendant Blue Horizon, a company owned

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by defendant Hutchison’s son Brian Hutchison, which checks were
actually deposited by defendant Hutchison to his own account.
Plaintiff further contends that, although the
Promissory Note was signed by defendant Hutchison as President of
Long Leaf, and thirteen of the checks (Plaintiff’s Exhibits 3—6,
8—9, and 11—17) were payable to Long Leaf or Mid Atlantic, rather
than to defendant Hutchison himself, the corporate veil of Long
Leaf/Mid Atlantic should be pierced so that defendant Hutchison
is individually liable for the amounts advanced under the
Promissory Note and those checks.
Moreover, plaintiff contends that defendant Hutchison
received the benefit of, and was unjustly enriched by, the two
checks written to defendant Blue Horizon because those checks
were actually delivered to defendant Hutchison and deposited into
his own account.

In the alternative, plaintiff contends that

defendant Blue Horizon received the benefit of and was unjustly
enriched by these two checks.
With regard to the statute of limitations for this
action, plaintiff contends that pursuant to 42 Pa.C.S.A.
§ 5529(b), the statute of limitations for an action to collect
under the Promissory Note is twenty years because it was executed
under seal.

Therefore, plaintiff contends that its claim related

to the Promissory Note executed May 31, 2001 is not barred.
Regarding the checks, for which the statute of
limitations would be four years pursuant to 42 Pa.C.S.A.
§ 5525(a), plaintiff acknowledges that eleven of the checks
-20-

(Plaintiff’s Exhibits 3—11 and 18—19) were dated and delivered
prior to May 8, 2005, more than four years before the filing of
plaintiff’s Complaint on May 8, 2009.

However, plaintiff

contends that the statute of limitations did not begin to run on
any of the checks until demand for payment was made, or for a
reasonable time after which demand should have been made, relying
on Gurenlian v. Gurenlian, 407 Pa.Super. 102, 595 A.2d 145
(1991).
Plaintiff further contends that it was reasonable for
plaintiff not to demand payment until after it stopped advancing
money to defendant Hutchison in 2007.

In support of this

contention, plaintiff avers that its relationship with defendant
Hutchison was in the nature of a “continuing contract” because
plaintiff advanced money to defendant Hutchison over a period of
years to keep his business afloat.
Plaintiff contends that in a continuing contract, the
statute of limitations would not begin to run until the
termination of the contractual relationship between the parties,
relying on Thorpe v. Schoenbrunn, 202 Pa.Super. 375,
195 A.2d 870, 872 (1963).

Therefore, plaintiff contends that the

statute of limitations on the checks began running, at the
earliest, on or around January 24, 2007 when plaintiff sent its
final check, made payable to Mid Atlantic, to defendant Hutchison
(Plaintiff’s Exhibit 17).

-21-

Contentions of Defendants
Defendants do not dispute plaintiff’s contentions
regarding the delivery of the seventeen checks or the amounts of
the checks.

However, defendants dispute that the checks were

intended as loans.

Specifically, defendants contend that, other

than the Promissory Note and the November 26, 2008 letter from
Kyle A. Rineer to defendant Hutchison, which letter refers to the
checks as loans, there are no writings, acknowledgment of
indebtedness or documents to indicate that the checks represented
loans carrying an obligation to repay.
Defendants further contend that even if the checks are
found to be loans, thirteen of the checks (Plaintiff’s Exhibits
3—6, 8—9, and 11—17) were not made payable to defendant
Hutchison, but to Long Leaf or its successor company, Mid
Atlantic, which are not named as defendants.

Therefore,

defendants contend that defendant Hutchison is not personally
liable for amounts due under those thirteen checks.
Additionally, defendants raise the statute of
limitations as an affirmative defense12, contending that
collection of certain amounts is therefore barred.
With regard to the balance of $151,654.09 on the
Promissory Note, defendants originally contended that the statute
of limitations on the Note was four years pursuant to

12
Throughout this litigation, defendants also raised the statute of
frauds as an affirmative defense to plaintiff’s implied contract claims on the
various checks. However, at trial of this matter, defense counsel indicated
that they were abandoning their statute of frauds argument. N.T. 10/26/10
at 32.

-22-

42 Pa.C.S.A. § 5525.

Therefore, defendants argued that an action

to collect on the Promissory Note was barred because the Note was
executed May 31, 2001, about eight years prior to commencement of
this civil action on May 8, 2009.
However, at trial of this matter, defense counsel
conceded that the Promissory Note was executed under seal.13
Plaintiff contends that this makes the statute of limitations on
the Promissory Note twenty years pursuant to 42 Pa.C.S.A.
§ 5529(b).
Regarding the seventeen checks, defendants appear to
agree with plaintiffs on several points, specifically, that the
statute of limitations is four years pursuant to 42 Pa.C.S.A.
§ 5525(a)14; that eleven of the checks (Plaintiff’s Exhibits 3—11
and 18—19) were dated and delivered prior to May 8, 2005, more
than four years before plaintiff’s Complaint was filed on May 8,
2009; and that the statute of limitations did not begin to run on
any of the checks until demand for payment was made, or for a
reasonable time after which demand should have been made.15

13

Specifically, in support of defendants’ Rule 52(c) motion, defense
counsel stated “[T]he Statute of Limitations for a contract in the
Commonwealth of Pennsylvania, as the Court is well aware, is four years.
There are some exceptions. ...[Plaintiff’s] Exhibit A is arguably...under
seal, which I submit is arcane, but it’s under seal and I can’t dispute that.”
N.T. 10/26/10 at 31 (emphasis added). Defense counsel appears to refer here
to the Promissory Note executed May 31, 2001 by defendant Hutchison as
President of Long Leaf, which Note was attached as Exhibit A to plaintiff’s
Complaint and admitted into evidence as Plaintiff’s Exhibit 1 at trial
(although defense counsel mistakenly calls it “Exhibit 2").
14

N.T. 10/26/10, ¶¶ 6,31, 37-38.

15
Defendants, like plaintiff, relied on Gurenlian v. Gurenlian,
407 Pa.Super. 102, 595 A.2d 145 (1991), in support of this contention.
See N.T. 10/26/10 at 40—41.

-23-

However, defendants’ contend that the appropriate
“reasonable time” after demand should have been made would be 45
days after advance of the funds under each check.

In support of

this contention, defendants reference the Promissory Note, which
they contend is one of the only records in plaintiff’s possession
evidencing any lending relationship between the parties.
The Promissory Note, dated May 31, 2001, provides that the first
installment to repay the funds advanced under the Note is due
45 days later, on July 15, 2001.16
Although the exact nature of defendants’ argument
regarding the “reasonable time” is somewhat unclear, defendants
appear to contend that the 45-day period in the Promissory Note
is the appropriate “reasonable time” after which demand should
have been made on any money advanced by the checks because it was
plaintiff’s practice to expect re-payment on funds advanced to
begin in 45 days.17

Therefore, defendants contend that the four-

year statute of limitations began to run on each check 45 days
after the date of the check, and thus collection on the eleven
checks dated and delivered prior to May 8, 2005 is barred.
In response to plaintiff’s contention that its
relationship with defendant Hutchison was in the nature of a
“continuing contract”, and therefore the statute of limitations
would not begin to run until the termination of the contractual

16

See Plaintiff’s Exhibit 1 at 1.

17

See N.T. 10/26/10 at 40—41.
-24-

relationship, defendants contend that plaintiff’s records show at
least four different account numbers associated with the lending
relationship.18

Defendants contend that the use of different

account numbers belies the argument that there was an ongoing
contractual relationship.
DISCUSSION
Motion for Judgment on Partial Findings
At the close of plaintiff’s case-in-chief, defendants
moved for judgment on partial findings pursuant to Rule 52(c).

I

deferred ruling on the motion until the close of evidence, and
took the matter under advisement.
Rule 52(c) provides:
If a party has been fully heard on an issue during
a nonjury trial and the court finds against the
party on that issue, the court may enter judgment
against the party on a claim or defense that,
under the controlling law, can be maintained or
defeated only with a favorable finding on that
issue. The court may, however, decline to render
any judgment until the close of evidence. A
judgment on partial findings must be supported by
findings of fact and conclusions of law as
required by Rule 52(a).
Fed.R.Civ.P. 52(c).
“In considering whether to grant judgment under Rule
52(c), the district court applies the same standard of proof and
weighs the evidence as it would at the conclusion of trial.”
EBC, Inc. v. Clark Building Systems, Inc., 618 F.3d 253, 272
(3d Cir. 2010).

Therefore, in evaluating a Rule 52(c) motion,

18

See N.T. 10/26/10 at 39-40; Plaintiff’s Exhibits 1 and 2;
Defendant’s Exhibit 1.
-25-

the court “does not view the evidence through a particular lens
or draw inferences favorable to either party.”

Id.

Moreover,

the court may evaluate the credibility of witnesses where
appropriate.

Id.

For the reasons discussed below, I find favorably on
plaintiff’s claims against defendant Hutchison in Count I for
Breach of Contract on Note, in Count II for Implied Contract, and
do not reach plaintiff’s alternative claim in Count III against
defendant Hutchison for Unjust Enrichment.

I find in favor of

defendant Blue Horizon on plaintiff’s claims in Count IV for
Implied Contract and in Count V for Unjust Enrichment.
Accordingly, I deny in part and grant in part defendants’ motion
for judgment on partial findings.
Piercing the Corporate Veil
As an initial matter, I must determine whether the
corporate veil of Long Leaf/Mid Atlantic may be pierced to hold
defendant Hutchison liable for amounts allegedly due under the
Promissory Note, executed by defendant Hutchison as President of
Long Leaf, and the thirteen checks payable to Long Leaf or Mid
Atlantic, neither of which is a defendant in this action.
Plaintiff contends that the corporate veil should be
pierced because defendant Hutchison, as the sole officer,
director and shareholder of Long Leaf/Mid Atlantic completely
dominated this corporate entity.

Plaintiff further contends that

defendant Hutchison deposited many of the checks payable to Long
Leaf or Mid Atlantic into an RBC Centura bank account in his own

-26-

name, and used some of the funds to pay down mortgage loans that
defendant Hutchison had guaranteed.
Moreover, plaintiff contends that Long Leaf/Mid
Atlantic was inadequately capitalized, failed to follow corporate
formalities, and failed to file annual reports which led to the
suspension and eventual dissolution of its corporate status by
the North Carolina Secretary of State.
In Pennsylvania, the legal fiction that a corporation
is a legal entity separate and distinct from its shareholders may
be disregarded, and the corporate veil “pierced”, “whenever one
in control of a corporation uses that control, or uses the
corporate assets, to further his or her own personal
interests....”

Village at Camelback Property Owners Association

v. Carr, 371 Pa.Super. 452, 461, 538 A.2d 528, 532-533
(1988)(quoting Ashley v. Ashley, 482 Pa. 228, 237, 393 A.2d 637,
641 (1978)).

In Camelback the Superior Court of Pennsylvania

further explains:
In deciding whether to pierce the corporate veil,
courts are basically concerned with determining if
equity requires that the shareholders’ traditional
insulation from personal liability be disregarded
and with ascertaining if the corporate form is a
sham, constituting a facade for the operations of
the dominant shareholder. Thus, we inquire, inter
alia, whether corporate formalities have been
observed and corporate records kept, whether
officers and directors other than the dominant
shareholder himself actually function, and whether
the dominant shareholder has used the assets of
the corporation as if they were his own.
Camelback, 371 Pa.Super at 461, 538 A.2d at 533 (internal
citations omitted).

-27-

Other relevant factors to consider are whether there is
an intermingling of corporate funds with the shareholder’s
personal assets, and whether the corporation was insufficiently
capitalized.

Id. at 465, 538 A.2d at 535.

Although an extraordinary remedy, piercing of the
corporate veil in Pennsylvania does not require a specific
showing of fraud.

Id. at 462, 538 A.2d at 533.

Rather, “the

separate corporate entity [may] be disregarded whenever it is
necessary to avoid injustice.”

Id. (quoting Rinck v. Rinck,

363 Pa.Super. 593, 597, 526 A.2d 1221, 1223 (1987)).
For the following reasons, I conclude that it is
appropriate to pierce the corporate veil of Long Leaf/Mid
Atlantic and hold defendant Hutchison liable for the obligations
allegedly incurred by this entity.
First, Long Leaf/Mid Atlantic failed to observe certain
corporate formalities during the time period encompassing the
transactions in this litigation.

Specifically, from 1998 to

March 2009, Long Leaf/Mid Atlantic did not file the annual report
required by the law of North Carolina and its Secretary of State.
As a result, the Secretary of State of North Carolina suspended
the company’s corporate existence on December 13, 2004 and
administratively dissolved the company on January 27, 2009.
This time period during which Long Leaf/Mid Atlantic
failed to observe corporate formalities encompasses the execution
of the Promissory Note on May 31, 2001 by defendant Hutchison as
President of Long Leaf.

It also encompasses the execution of the

-28-

fifteen checks payable to Long Leaf or Mid Atlantic dated between
July 1, 2002 and January 24, 2007.
Further, defendant Hutchison was at all times the sole
officer, director and shareholder of Long Leaf/Mid Atlantic.

In

addition, some of the checks payable to Long Leaf or Mid Atlantic
were used in whole or in part to pay down mortgage loans to RBC
Centura Bank and the Bank of Wilmington, which loans were
personally guaranteed by defendant Hutchison.19

The loans were

secured by property located at 2829 North Kerr Avenue,
Wilmington, North Carolina, which was eventually sold to
defendant Blue Horizon, a company owned by defendant Hutchison’s
son.

Moreover, some of the checks payable to Long Leaf or Mid

Atlantic were deposited into a personal RBC Centura money market
account in defendant Hutchison’s name (“Hutchison RBC
Account”).20
Finally, the fact that Long Leaf/Mid Atlantic stopped
doing business shortly after plaintiff ceased sending it funds
indicates that the company may have been undercapitalized.
Accordingly, I find that it is appropriate under the
circumstances of this case, in order to avoid injustice, that
defendant Hutchison be subject to personal liability for

19
As more specifically described in my Findings of Fact, these
checks are Plaintiff’s Exhibits 4, 11, 12 and 14.
20
As more specifically described in my Findings of Fact, these
checks are Plaintiff’s Exhibits 8, 9, 11, 12, 13 and 14.

-29-

obligations incurred by Long Leaf/Mid Atlantic.

I now address

the merits of plaintiff’s claims.
Claim Against Hutchison for Breach of Contract on Note
Count I of the Complaint alleges that defendant
Hutchison breached the terms of the Promissory Note because he
has only made partial repayment of the amount due, leaving an
unpaid balance of $151,654.09.
To state a claim for breach of contract in
Pennsylvania, plaintiff must show (1) the existence of a
contract, including its essential terms; (2) a breach of the duty
imposed by the contract; and (3) resultant damages.

Ware v.

Rodale Press, Inc., 322 F.3d 218, 225-226 (3d Cir. 2003)(quoting
CoreStates Bank, N.A. v. Cutillo, 723 A.2d 1053, 1058 (Pa.Super.
1999)).

It is plaintiff’s burden to prove the existence of a

contract by a preponderance of the evidence.

Viso v. Werner,

471 Pa. 42, 46, 369 A.2d 1185, 1187 (1977).
For the following reasons, I conclude that plaintiff
has met its burden with respect to its breach of contract claim
against defendant Hutchison for the balance of $151,654.09 due
under the Promissory Note executed by defendant Hutchison as
President of Long Leaf.
Initially, I conclude that the Promissory Note
represents a contract between plaintiff and Long Leaf/Mid
Atlantic, which includes its essential terms.

The Promissory

Note, executed on May 31, 2001, shows that plaintiff agreed to
lend Long Leaf/Mid Atlantic, and Long Leaf/Mid Atlantic agreed to
-30-

borrow, the principal sum of $127,803.66, together with interest
in the amount of $33,495.21, for a total balance of $161,298.87.
The Promissory Note indicates a promise to repay plaintiff the
total balance in thirty-five equal successive monthly
installments of $4,480.52 each, followed by one final installment
of $4,480.67.21
Next, Long Leaf/Mid Atlantic breached its obligation to
repay plaintiff under the Promissory Note.

As more specifically

outlined in my Findings of Fact, only $9,644.78 was paid toward
the amount due under the Promissory Note22.

Therefore, plaintiff

has established that it is entitled to damages in the amount of
$151,654.09, the balance due under the Promissory Note.
Therefore, I conclude that plaintiff has established
all of the elements of its cause of action in Count I for breach
of contract.

See Gorski, supra.

As noted above, I have

concluded that it is appropriate to pierce the corporate veil of
Long Leaf/Mid Atlantic to hold defendant Hutchison liable.
As discussed above, the parties originally disagreed as
to whether the statute of limitations for an action to collect
under the Promissory Note was four years pursuant to 42 Pa.C.S.A.
§ 5525(a), or twenty years pursuant to 42 Pa.C.S.A. § 5529(b)
because the note was executed under seal.

21

See Plaintiff’s Exhibit 1 at 1.

22

See also Plaintiff’s Exhibit 2.
-31-

However, at trial of

this matter, defense counsel conceded that the Promissory Note
was executed under seal.23
In Pennsylvania, “an action upon an instrument in
writing under seal must be commenced within 20 years.”

Gordon v.

Sanatoga Inn, 429 Pa.Super. 537, 538, 632 A.2d 1352, 1352
(1993)(quoting 42 Pa.C.S.A. § 5529(b)(1)).

See also Christopher

v. First Mutual Corp., 2006 U.S.Dist.LEXIS 2255, at *15-17
(E.D.Pa. Jan. 20, 2006)(O’Neill, J.), a more recent decision
applying the twenty-year statute of limitations under
42 Pa.C.S.A. § 5529(b)(1).
Section 5529(b)(2) provides that “[t]his subsection
shall expire June 27, 2018.”

Therefore, it appears that until

that date, the twenty-year statute of limitations for actions
upon instruments in writing under seal still applies.
Plaintiff’s Complaint was filed on May 8, 2009, well
within twenty years of the execution of the Promissory Note on
May 31, 2001.

Therefore, plaintiff’s claim in Count I for breach

of contract on the Promissory Note against defendant Hutchison is
not precluded by the statute of limitations.

Accordingly, I

conclude that on Count I, defendant Hutchison is liable to
plaintiff in the amount of $151,654.09, the balance due under the
Promissory Note.

23

See

N.T. 10/26/10 at 31; Plaintiff’s Exhibit 21, ¶ 4.
-32-

Claim Against Hutchison for Implied Contract
Count II of the Complaint alleges that defendant
Hutchison is liable to plaintiff under an implied contract for a
total of $1,382,040.00.

This represents funds advanced by

sixteen checks payable to either defendant Hutchison, Long Leaf,
or Mid Atlantic and two checks payable to defendant Blue Horizon.
As discussed in footnote 1 above, a copy of check #4162
dated March 1, 2003, allegedly payable to Long Leaf in the amount
of $30,000.00, was not available and not attached as an exhibit
to the Complaint.

As a result, all claims pertaining to that

check were withdrawn at oral argument on the Motion for Summary
Judgment held April 21, 2010.

Therefore, a total of

$1,352,040.00 advanced under seventeen checks remains at issue
for Count II.
Specifically, Count II characterizes the checks as
loans and alleges that the payments were advanced to defendant
Hutchison or for his benefit, with the understanding that he
would repay those loans on demand.

Plaintiff further alleges

that it demanded that defendant Hutchison repay the loans, but he
has failed and refused to do so.
In Pennsylvania, a contract implied in fact may arise
where the circumstances, including “the ordinary course of
dealing and the common understanding of men, show a mutual
intention to contract.”

Liss & Marion, P.C. v. Recordex

Acquisition Corp., 603 Pa. 198, 210, 983 A.2d 652, 659
-33-

(2009)(quoting Ingrassia Construction Co. v. Walsh,
337 Pa.Super. 58, 67, 486 A.2d 478, 483 (1984)).
A contract implied in fact can be found by looking to
the surrounding facts of the parties’ dealings.
337 Pa.Super. at 67, 486 A.2d at 483.

Ingrassia,

“Offer and acceptance need

not be identifiable and the moment of formation need not be
pinpointed.”

Id. (citing Restatement (Second) of Contracts

§ 22(2) (1981)).
It is the parties’ “outward and objective
manifestations of assent, as opposed to their undisclosed and
subjective intentions, that matter.”

Id. at 66, 486 A.2d at 483.

Thus, even if one party does not truly believe a contract exists,
a contract can be formed if that party’s manifested intent
reasonably suggests the contrary.

Id. at 66, 486 A.2d at 483.

Contracts implied in fact have the same legal effect as any other
contract.

Id. at 67 n.7, 486 A.2d at 483 n.7.
Defendants contend that, other than the Promissory Note

and the November 26, 2008 letter from Kyle A. Rineer to defendant
Hutchison, which letter refers to the checks as loans, there are
no writings, acknowledgment of indebtedness or documents to
indicate that the checks represented loans carrying an obligation
to repay.
For the following reasons, I conclude that under the
circumstances of this case, plaintiff has established that an
implied-in-fact contract existed and was breached concerning the
-34-

fifteen checks payable to defendant Hutchison, Long Leaf or Mid
Atlantic.

As discussed earlier, it is appropriate to pierce the

corporate veil of Long Leaf/Mid Atlantic to hold defendant
Hutchison liable for obligations incurred by that entity.
Regarding the two checks payable to defendant Blue
Horizon, I conclude that these checks are also encompassed by the
implied-in-fact contract between plaintiff and Long Leaf/Mid
Atlantic, and therefore defendant Hutchison (through piercing of
the corporate veil) is also liable for these two checks.

I

address each category of checks separately.
A.

Checks to Hutchison, Long Leaf and Mid Atlantic
Regarding these fifteen checks, the deposition

testimony of defendant Hutchison introduced at trial indicates
that the payments provided by the checks were in consideration
for a mortgage on the 10.79 acres of property at 2829 North Kerr
Avenue in Wilmington, North Carolina.

The apparent intention was

that plaintiff would “buy the mortgage from Centura and the Bank
of Wilmington” and “replace the local lender”.24

The testimony

further implies that plaintiff was eventually to receive the
mortgage as security for the repayment of the money advanced.25

24

Plaintiff’s Exhibit 22 at 27—28.

25
Specifically, during the deposition, defendant Hutchison was asked
whether plaintiff “made all these advances to you without getting
documentation or without getting a mortgage so that some day eventually they
could get a mortgage to secure all the money they had already lent you?”
Defendant Hutchison responded that “this was going to be done in 2003 or 2004”
and also said “we were still getting money” for several years afterward.

(Footnote 25 continued):
-35-

Further, the actions of the parties support the
existence of an implied-in-fact contract.

Plaintiff did advance

the money by fifteen checks dated and delivered between July 1,
2002 and January 24, 2007, although none of the amounts were ever
repaid during this time.

Defendant Hutchison accepted and

deposited the checks throughout this time period.
I conclude that from these actions, it is reasonable to
infer that the parties intended the advances under these checks
as loans which were eventually expected to be repaid.

In the

absence of such mutual intent, it belies logic that plaintiff
would have continued sending checks.
Moreover, even apart from an examination of the
parties’ actions, the language of the Promissory Note executed by
defendant Hutchison as President of Long Leaf contemplates that
further amounts beyond the principal Note amount of $127,803.66
could be advanced by plaintiff pursuant to that document.
Specifically, the Promissory Note provides:
In addition to the payments provided for above,
the Undersigned promises to pay on demand any
additional amounts required to be paid or advanced
to or paid or advanced on behalf of Undersigned by
Lender pursuant to the terms of any other document
or instrument...executed and delivered by the
undersigned to Lender; and this note shall
evidence, and the said documents and instruments

(Continuation of footnote 25):
Plaintiff’s Exhibit 22 at 27—28. Defendant Hutchison later indicated that
plaintiff’s assumption of the deed of trust on the property would be security
for paying back the money. See id. at 34.
-36-

shall secure, the payment of all such sums
advanced or paid by Lender.26
From this language, it is reasonable to infer a promise
not only to pay the Note amount, but also the additional amounts
advanced through the fifteen checks to Long Leaf, its successor
Mid Atlantic, and defendant Hutchison.
Accordingly, I conclude that on Count II, defendant
Hutchison is liable to plaintiff in the amount of $1,097,040.00
advanced to him through the fifteen checks payable to defendant
Hutchison himself, Long Leaf, or Mid Atlantic.
B.

Checks to Blue Horizon

Count II also alleges that defendant Hutchison is
liable under an implied contract theory for $255,000.00 for the
two checks payable to defendant Blue Horizon Vegetative Recycling
& Land Clearing, Inc. (Plaintiff’s Exhibits 18 and 19).

For the

following reasons, I conclude that plaintiff has established that
the implied-in-fact contract between plaintiff and defendant
Hutchison’s company for the fifteen checks payable to Hutchison,
Long Leaf, or Mid Atlantic also encompasses these two checks
payable to Blue Horizon.
As discussed above, the language of the Promissory Note
indicates that “the Undersigned promises to pay on demand any
additional amounts...paid or advanced on behalf of Undersigned by

26

Plaintiff’s Exhibit 1 at 1.
-37-

Lender....”27

Although defendant Blue Horizon was not a

signatory to the Promissory Note, I infer from this language that
Long Leaf/Mid Atlantic as the borrower under the note (and thus
defendant Hutchison through piercing of the corporate veil) are
each potentially liable for additional amounts paid not only
directly to Long Leaf/Mid Atlantic, but on behalf of that entity.
Further, the circumstances surrounding the issuance and
deposit of the two checks payable to defendant Blue Horizon, as
well as the parties’ actions concerning these checks, show the
apparent intent of the parties that these checks were part of the
implied-in-fact contract between plaintiff and Long Leaf/Mid
Atlantic.

See Ingrassia, 337 Pa.Super. at 66-67, 486 A.2d

at 483.
Specifically, as outlined in my Findings of Fact, the
two checks dated March 2, 2005, payable to Blue Horizon in the
amounts of $130,000.0028 and $125,000.0029 were endorsed by Blue
Horizon and delivered to defendant Hutchison.

In defendant

Hutchison’s deposition testimony, he indicated that these checks
were “suppose [sic] to be made payable to Mid Atlantic Timber”30
(Long Leaf’s successor).

Defendant Hutchison further stated that

27

Plaintiff’s Exhibit 1 at 1 (emphasis added).

28

Plaintiff’s Exhibit 18.

29

Plaintiff’s Exhibit 19.

30

Plaintiff’s Exhibit 22 at 76.
-38-

he did not know why the checks were written to defendant Blue
Horizon and that they “had nothing to do with Blue Horizon.”31
Defendant Hutchison then explained that his son, Brian
Hutchison, who owned Blue Horizon, contacted Joe Braas, an
employee of plaintiff, to correct the error.

Specifically,

defendant Hutchison testified:
Brian called Joe and said Joe, you sent these
checks to Blue Horizon, they are not suppose[sic]
to be. Joe’s instructions were to endorse them
over and put them in Mid Atlantic or your dad’s
account to pay the bank note, I will fix the
paperwork on EFI’s end.
Plaintiff’s Exhibit 22 at 76.
After Defendant Hutchison received the checks, he
deposited them into the Hutchison RBC Account, a personal RBC
Centura money market account in defendant Hutchison’s name.

Of

the $255,000.00 from these checks, defendant Hutchison used
$209,526.95 to pay down the RBC Centura Bank loan that he had
personally guaranteed.
Based on the above facts, I find that although these
checks were made payable to defendant Blue Horizon, the parties’
actions show that they were intended for and advanced on behalf
of Long Leaf/MidAtlantic.

Therefore, I conclude that these

checks are encompassed by the implied-in-fact contract that
existed between plaintiff and Long Leaf/Mid Atlantic, and that

31

Plaintiff’s Exhibit 22 at 74—76.
-39-

defendant Hutchison (through piercing of the corporate veil) is
liable for these checks.
Accordingly, I conclude that on Count II, defendant
Hutchison is also liable to plaintiff under an implied contract
theory for $255,000.00 advanced by the two checks payable to
defendant Blue Horizon.

Together with the $1,097,040.00 advanced

by the fifteen checks payable to defendant Hutchison, Long Leaf
or Mid Atlantic, defendant Hutchison’s total liability under
Count II is $1,352,040.00.
C.

Statute of Limitations

Defendant contends that even if defendant Hutchison
were liable for the seventeen checks, plaintiff’s claims as to
eleven of them (Plaintiff’s Exhibits 3—11 and 18—19) are barred
by the statute of limitations because they were dated and
delivered prior to May 8, 2005, more than four years before
plaintiff’s Complaint was filed on May 8, 2009.
As I determined above, the statute of limitations on
plaintiff’s claim in Count I for breach of contract on the
Promissory Note, which the parties agree was executed under seal,
is twenty years pursuant to 42 Pa.C.S.A. § 5529(b).

Presumably,

this twenty-year limitations period would also apply to the
additional amounts advanced by check under the above-quoted
language from the Promissory Note (although plaintiff has never
so contended).

Therefore, collection on the checks would not be

-40-

barred because plaintiff’s Complaint was filed well within twenty
years of the date of each check.
Alternatively, if, as the parties agree, the statute of
limitations on the checks is four years pursuant to 42 Pa.C.S.A.
§ 5525(a), it is clear that eleven of the checks (Plaintiff’s
Exhibits 3—11 and 18—19) were indeed dated more than four years
before the filing of the Complaint.
Plaintiff and defendants agree that the four-year
statute of limitations would not run until demand is made, or for
a reasonable time after which demand should have been made, each
relying on Gurenlian v. Gurenlian, 407 Pa.Super. 102,
595 A.2d 145 (1991).

Gurenlian states that where payment is to

be made after demand, the statute of limitations does not begin
running until demand is made.

Gurenlian, 407 Pa.Super.

at 112-113, 595 A.2d at 150.
“In such cases where a demand is necessary to perfect
the cause of action and the time of the demand is within the
plaintiff’s control, the demand must be made within a reasonable
time.”

Id.

Here, as noted above, I have concluded that the

checks fall into language of the Promissory Note which
anticipates that additional amounts could be advanced, which
amounts are payable on demand.
The parties disagree on what constitutes a “reasonable
time” for plaintiff to have demanded payment.

Defendants contend

that a reasonable time would be 45 days after the date of each

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check because the Promissory Note provides that the first
installment for repayment of the Note amount is due on July 15,
2001, 45 days from the execution of the Note on May 31, 2001.
Therefore, running the statute of limitations from 45 days after
the date of each check, collection on the eleven checks dated and
delivered prior to May 8, 2005 would be barred.
Plaintiff contends that it was reasonable for plaintiff
not to demand payment until after it stopped advancing money to
defendant Hutchison at the end of their lending relationship
because the relationship was in the nature of a continuing
contract.

Therefore, plaintiff contends that the statute of

limitations on all of the checks began running, at the earliest,
on or around January 24, 2007 when plaintiff sent its final
check, payable to Mid Atlantic, to defendant Hutchison.

I note,

however, that plaintiff actually made a demand for payment
through a letter dated November 26, 2008 from Kyle Rineer,
Repossession Coordinator — Banking Officer for plaintiff.32
A continuing contract is a contract, whether express or
implied, which does not fix any certain time for payment or for
the termination of services.

Thorpe v. Schoenbrun,

202 Pa.Super. 375, 378, 195 A.2d 870, 872 (1963).

See also Tenny

v. Dauphin Deposit Bank and Trust Co., 302 Pa.Super 342, 347,
448 A.2d 1073, 1075 (1982), which notes that a contract may be
deemed continuous because of its “silence as to duration”.

32

See Defendant’s Exhibit 1.
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Whether the contract is continuous in nature is also discerned
from the intent of the parties.
195 A.2d

Thorpe, 202 Pa.Super. at 381,

at 873.
The statute of limitations does not run on a continuing

contract until the termination of the contractual relationship
between the parties.

Id. at 387, 195 A.2d at 872.

The

continuing contract doctrine is meant to carve out an exception
to the general rule that the statute of limitations begins to run
on the date of breach.

Jodek Charitable Trust, R.A. v. Vertical

Net Inc., 412 F.Supp.2d 469, 476 (E.D.Pa. 2006)(Brody, J.)
(interpreting Thorpe).

The Jodek court noted that the “entire

focus” of Thorpe was the date on which the parties ended their
relationship.

Jodek, 412 F.Supp.2d at 477.

Here, I conclude that the seventeen checks payable to
defendant Hutchison, Long Leaf, Mid Atlantic and defendant Blue
Horizon were advanced under a continuing contract.

The

Promissory Note, although it sets a specific payment schedule for
the Note amount of $161,298.87, does not fix a certain time for
payment of “any additional amounts33...advanced on behalf of
Undersigned by Lender”.

Rather, it indicates only that “the

Undersigned promises to pay [these amounts] on demand”.34

Nor

does the Promissory Note fix a definite time for termination of

33

As discussed above, the checks fall under “additional amounts”
that could be advanced pursuant to the Promissory Note.
34

Plaintiff’s Exhibit 1 at 1.
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the lending relationship, for example, a date beyond which no
“additional amounts” will be advanced.
Additionally, it is reasonable to infer from the
parties’ actions that they intended a continuous lending
relationship.

As noted, plaintiff advanced money through the

seventeen checks over a period of years between 2002 and 2007,
with the expectation that it would eventually receive a mortgage
on defendant Hutchison’s property as security for repayment.
Defendant Hutchison accepted and deposited the checks throughout
this time period, and plaintiff continued to send further checks
even though none of the amounts were ever repaid.
Defendants contend that plaintiff’s use of more than
one account number in its dealings with defendants belies the
existence of an ongoing contractual relationship.35

However,

when weighing this fact against the many other indicia of a
continuous relationship which I have discussed, I do not find the
use of more than one account number sufficient to change my
conclusion that parties intended a continuous lending
relationship.
Therefore, I find that the parties’ relationship was in
the nature of a continuing contract, and the statute of
limitations thus did not begin to run until the termination of
that relationship.

See Thorpe, 202 Pa.Super. at 387, 195 A.2d

35

See, e.g., Plaintiff’s Exhibit 2, captioned “EFI Payment History
for Steve Hutchison”, which lists two different account numbers in a
spreadsheet reflecting the payments totaling $9,644.78 made under the
Promissory Note. See also N.T. 10/26/10 at 39-40; Defendant’s Exhibit 1.
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at 872.

Although the exact end point of the relationship is not

clear, I agree with plaintiff that the earliest date this could
have been is January 24, 2007 when plaintiff sent the last check.
Using this date, plaintiff’s Complaint filed May 8, 2009 was well
within the four-year statute of limitations.36
Claim Against Hutchison for Unjust Enrichment
As an alternative to plaintiff’s claim of implied
contract against defendant Hutchison in Count II, Count III of
the Complaint alleges that under a theory of unjust enrichment,
defendant Hutchison is liable to plaintiff for the $1,382,040.00
advanced by the eighteen checks payable to either defendant
Hutchison, Long Leaf, Mid Atlantic or defendant Blue Horizon.
As discussed in footnote 1 above, a copy of check #4162
dated March 1, 2003, allegedly payable to Long Leaf in the amount
of $30,000.00, was not available and not attached as an exhibit
to the Complaint.

As a result, all claims pertaining to that

check were withdrawn at oral argument on the Motion for Summary
Judgment held April 21, 2010.

Therefore, a total of

$1,352,040.00 advanced under seventeen checks remains at issue
for Count III.
A claim of unjust enrichment sounds in quasi-contract
or contract implied in law, which are distinguishable from

36

Alternatively, if I were to consider the relationship to end, and
the statute of limitations to begin running, when plaintiff made its demand
for payment on November 26, 2008 through the letter from Kyle Rineer addressed
to defendant Hutchison (Defendant’s Exhibit 1), plaintiff’s Complaint was
still filed well within the four-year statute of limitations.
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express contracts or contracts implied in fact.

Sevast v.

Kakouras, 591 Pa. 44, 53 n.7, 915 A.2d 1147, 1153 n.7 (2007)
(citing Schott v. Westinghouse Electric Corp. 463 Pa. 279, 290,
259 A.2d 443, 448 (1969)).
A court may utilize this doctrine “to enforce legal
duties by actions of contract, where no proper contract exists,
express or implied.”

Thomas v. R.J. Reynolds Tobacco Co.,

350 Pa. 262, 266, 38 A.2d 61, 63 (1944).

The doctrine of unjust

enrichment is therefore inapplicable when the relationship
between parties is founded upon a proper contract.

See Schott,

463 Pa. at 290, 259 A.2d at 448.
As I concluded above, plaintiff has established that an
implied-in-fact contract existed and was breached as to the
seventeen checks payable to defendant Hutchison, Long Leaf, Mid
Atlantic and defendant Blue Horizon and that defendant Hutchison
is liable for $1,352,040.00 owed under those checks.

Therefore,

I need not address plaintiff’s alternative unjust enrichment
claim in Count III against defendant Hutchison.
Claim against Blue Horizon for Implied Contract
As a partial alternative to plaintiff’s claim of
implied contract against defendant Hutchison in Count II, Count
IV of the Complaint alleges that defendant Blue Horizon is liable
under an implied contract theory for $255,000.00 for the two
checks dated March 2, 2005 payable to Blue Horizon (Plaintiff’s
Exhibits 18 and 19).

Specifically, Count IV alleges that if

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these checks were not advanced for defendant Hutchison’s benefit
with the intent that he would repay them, they were advanced to
and for the benefit of Blue Horizon with the intent that Blue
Horizon would repay them.
As explained more thoroughly above in my analysis of
Count II, an implied-in-fact contract exists where the
surrounding facts of the parties’ dealings and their outward
manifestations of assent indicate an intention to contract.
See Liss & Marion, 603 Pa. at 210, 983 A.2d at 659; Ingrassia,
337 Pa.Super. at 66-67, 486 A.2d at 483.

For the following

reasons, I conclude that plaintiff has not established that an
implied-in-fact contract existed between plaintiff and defendant
Blue Horizon.
Specifically, plaintiff has presented no evidence from
which I can conclude that plaintiff and defendant Blue Horizon
intended that plaintiff would advance checks to Blue Horizon in
exchange for Blue Horizon’s promise to repay them.

Plaintiff did

not present any testimony at trial, nor did plaintiff introduce
testimony in deposition form, from Brian Hutchison, owner of Blue
Horizon, or from any other representative of Blue Horizon.
Although plaintiff introduced defendant Steven
Hutchison’s deposition37, in which defendant Hutchison mentions
defendant Blue Horizon in several contexts, the primary focus of
that deposition is the history of the lending relationship

37

Plaintiff’s Exhibit 22.
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between plaintiff and Long Leaf/Mid Atlantic.

The fact that

defendant Hutchison’s son Brian owns Blue Horizon, as well as the
fact that defendant Hutchison sold his property in Wilmington,
North Carolina to Blue Horizon, does not establish that Blue
Horizon assumed any obligation to repay the two checks at issue.
Moreover, as explained more fully in my discussion of
Count II, although these two checks were made payable to
defendant Blue Horizon, I concluded that they were encompassed by
the implied-in-fact contract between plaintiff and defendant
Hutchison’s company, Long Leaf/Mid Atlantic.

Specifically,

defendant Hutchison’s deposition testimony indicates that the
checks were supposed to be payable to Mid Atlantic Timber and had
nothing to do with defendant Blue Horizon.
Further, plaintiff’s employee Joe Braas instructed
Brian Hutchison to “endorse the checks over” and that he would
“fix the paperwork on EFI’s end.”38

The checks were endorsed

over to, and deposited by, defendant Hutchison into the Hutchison
RBC Account.
From the above facts, I conclude that the actions of
the parties indicate that the $255,000.00 advanced through these
two checks was never intended for defendant Blue Horizon.
Further, nothing in the record indicates that Blue Horizon
assumed any obligation to repay these checks.

38

Plaintiff’s Exhibit 22 at 76,
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Although the language of the Promissory Note does
indicate that “additional amounts” may be advanced, the note was
executed by defendant Hutchison as President of Long Leaf, and
not by any officer or representative of defendant Blue Horizon.
Accordingly, I conclude that on Count IV, defendant
Blue Horizon is not liable to plaintiff under an implied contract
theory for $255,000.00 advanced by the two checks payable to
defendant Blue Horizon.
Claim Against Blue Horizon for Unjust Enrichment
As a partial alternative to plaintiff’s claim of unjust
enrichment against defendant Hutchison in Count III, Count V of
the Complaint alleges that defendant Blue Horizon is liable under
a theory of unjust enrichment for $255,000.00 for the two checks
dated March 2, 2005 payable to Blue Horizon (Plaintiff’s Exhibits
18 and 19).

Specifically, Count V alleges that if these checks

were not immediately delivered to defendant Hutchison, but were
kept by defendant Blue Horizon, then Blue Horizon was unjustly
enriched by its receipt of the checks.
A claim of unjust enrichment sounds in quasi-contract
or contract implied in law.

Sevast, 591 Pa. at 53 n.7, 915 A.2d

at 1153 n.7 (citing Schott v. Westinghouse Electric Corp.
463 Pa. at 290, 259 A.2d at 448).

The Schott court further

explained:
Quasi-contracts, or contracts implied in law, are
to be distinguished from express contracts or
contracts implied in fact. Unlike true contracts,
quasi-contracts are not based on the apparent
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intention of the parties to undertake the
performances in question, nor are they promises.
They are obligations created by law for reasons of
justice. Quasi-contracts may be found in the
absence of any expression of assent by the party
to be charged and may indeed be found in spite of
the party’s contrary intention.
Schott, 463 Pa. at 290-291, 259 A.2d at 449 (internal quotations
omitted).
Such contracts “will be presumed or implied whenever
necessary to account for a relation found to exist between
parties where no contract in fact exists.”
at 266, 38 A.2d at 63.

Thomas, 350 Pa.

The existence of such a relation may be

inferred if defendant has used for its benefit any property of
plaintiff “in such manner and under such circumstances that the
law will impose a duty of compensation therefor.”
38 A.2d at 63.

Id. at 266,

The remedy for recovery is restitution to prevent

unjust enrichment.

J.A. & W.A. Hess, Inc. v. Hazle Township,

465 Pa. 465, 469, 350 A.2d 858, 861 (1976)(emphasis in original).
I conclude that plaintiff has not established that
defendant Blue Horizon was unjustly enriched by receipt of these
checks.

Specifically, as discussed more fully above, these

checks, both dated March 2, 2005, were written to Blue Horizon
but were actually intended for Mid Atlantic.
Further, Brian Hutchison, owner of defendant Blue
Horizon, endorsed the checks over to defendant Steven Hutchison
at plaintiff’s instruction; defendant Hutchison deposited them

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into the Hutchison RBC Account during March of 200539; and
defendant Hutchison later used some of the $255,000.00 to pay
down the RBC Centura loan he had guaranteed.
Therefore, I cannot conclude that defendant Blue
Horizon kept the $255,000.00 or used this money advanced by
plaintiff for its benefit.

See Thomas, 350 Pa. at 266,

38 A.2d at 63.
Accordingly, I conclude that on Count V, defendant Blue
Horizon is not liable to plaintiff under an unjust enrichment
theory for $255,000.00 for the two checks payable to defendant
Blue Horizon.
CONCLUSION
Based upon the Findings of Fact, Conclusions of Law,
and Discussion contained in this Adjudication, I entered the
Verdict accompanying this Adjudication.
In that Verdict, I find in favor of plaintiff and
against defendant Hutchison on Count I of plaintiff’s Complaint
for Breach of Contract on Note in the amount of $151,654.09.
On Count II for breach of Implied Contract, I find in
favor of plaintiff and against defendant Hutchison in the amount
of $1,352,040.00.

39

See Plaintiff’s Exhibit 22, specifically, the Exhibit titled
“Hutchison 1" at 3. This exhibit is one of four exhibits attached to
defendant Hutchison’s deposition. At trial, plaintiff introduced defendant
Hutchison’s full deposition together with the four deposition exhibits as
Plaintiff’s Exhibit 22.
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On Count IV for breach of Implied Contract, I find in
favor of defendant Blue Horizon and against plaintiff.
On Count V for Unjust Enrichment, I find in favor of
defendant Blue Horizon and against plaintiff.
By separate Order and Judgment, I deny in part and
grant in part defendants’ oral motion for judgment on partial
findings made on the record at trial, and I enter judgment on the
Verdict accompanying this Adjudication.40

40

The Order and Judgment will be filed immediately after the filing
of the within Verdict and Adjudication.
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