IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

ROBERT S. CHEATLE, JR. and

NANCY A. CHEATLE, h/w

 v.

DAVID A. KATZ and DAWN KATZ

and

PARADISE CONTRACTORS, INC. CIVIL ACTION NO. 02-CV-4405

and

PARADISE PINES HOMEOWNERS

ASSOCIATION

and

PARADISE MANAGEMENT GROUP, INC.

and

PARADISE DEVELOPMENT GROUP, INC.

DEFENDANTS ANSWER, AFFIRMATIVE DEFENSES AND

COUNTERCLAIM

First Defense - Answer

1. Admitted in part and denied in part. The allegations concerning the identity of the plaintiffs and the contracts

are admitted, except that the agreement dated August 6, 2000 was

executed after that date, and back-dated at plaintiffs“ request. 

The remaining allegations of paragraph 1 are denied.

2. Admitted in part and denied in part. Insofar as

David and Dawn Katz are ”sometimes collectively referred to

herein as Katz§, all uses of the term ”Katz§ in the Complaint to

include Dawn Katz are denied unless specifically admitted, since

Dawn Katz was not a party to any agreement or matter involved in

this action, and Dawn Katz was sued for the purpose of preventing

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the conveyance of the real estate owned by David and Dawn Katz as

tenants by the entireties. It is admitted that David Katz was a

party to the agreement to sell real estate attached as Exhibit

”1§ to Plaintiffs“ Complaint. It is denied that he was a party

to the construction contract attached as Exhibit ”2§, which is

between plaintiffs and Paradise Contractors, Inc. (PCI), a

Pennsylvania corporation. David Katz signed the Exhibits only as

President of that corporation and was, thus, acting only as agent

for a disclosed principal. The address of Paradise Pines

Homeowners Association is 501 Office Center Drive in Fort

Washington, Pennsylvania. The other corporate defendants have

registered offices at 832 Paradise Drive. Any remaining

allegations are denied. 

3. Admitted in part and denied in part. The

allegations that PCI is an affiliate of the ”identified corporate

entities§, and that David Katz ”controls§ those corporations are 

denied as conclusions of law. The use of the term ”purportedly§

is denied as a characterization. The entities were organized for

the purposes stated in their Articles of Incorporation. David

Katz exercises the function of Chief Executive Officer of each

and Dawn Katz is Secretary of Paradise Pines Homeowners

Association. All remaining allegations are denied.

4. Denied. David Katz represented that this was his

first sub-division; that he had been successful with its

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development so far; and that the house to be built for the

plaintiffs would be like the home PCI built for himself and Dawn

Katz. All other allegations are denied.

5. Denied.

6. Denied, although it is admitted the individual

defendants have been sued only because of their alleged

relationship to the defendant corporations.

7. Denied. Plaintiffs“ claim under 18 U.S.C. 1961,

et seq. is a sham designed to confer jurisdiction on this Court. 

There is no other basis for Federal jurisdiction.

8. Admitted in part and denied in part. Venue is not

proper because this Court has no jurisdiction; but, if this Court

had jurisdiction, venue would be proper.

9. Admitted in part and denied in part. The

agreement is dated October 30, 2000, but executed thereafter, and

back-dated at plaintiffs“ request in order to permit their son to

attend school in the Hatboro-Horsham School District. The

property consists of 46,269 square feet (1.06 acres), not 0.81

acres. It is admitted that it is a top-rated building lot

adjacent to the Katz“ personal residence. All other allegations

are denied.

10. Admitted in part and denied in part. The contract

was executed after August 6, 2000 as an accommodation to

plaintiffs, and was not signed by David Katz in an individual

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capacity, but strictly as President of the corporate defendant,

PCI, as disclosed by that document. All characterizations of the

document are denied as conclusions of law.

11. Denied. Paragraph 11 contains lengthy excerpts

from the document attached as Exhibit ”2§ to Plaintiffs“

Complaint, the authenticity of which have been admitted. The

quoting of excerpts with omissions and emphasis is misleading,

and constitutes conclusions of law.

12. The allegations repeated in the sub-paragraphs of

paragraph 12, that ”David A. Katz personally assured the

Cheatles, represented, and warranted§, are denied; since the

purported representations arise from contracts, of which only the

agreement of sale was a personal obligation of David A. Katz. 

Insofar as representations appear in the contracts, the terms of

which have been admitted, the characterization of those documents

are denied as conclusions of law. Further, all terms of the

construction contract, if they constitute representations, are

representations of PCI. As to the remaining allegations:

A. Allegations concerning the content

of zoning ordinances or compliance with them

are denied as conclusions of law. Allegations concerning breaches of contract are

denied as conclusions of law. Certain design

alterations were made with the knowledge,

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direction and approval of the Cheatles, who

accepted credits toward other extra items. 

All remaining allegations are denied.

B. Denied. The house was delivered on

July 26, 2001 and occupancy was authorized by

Township officials verbally, and the parties

agreed that the August 22, 2001 issuance of

the Certificate of Occupancy would be the

warranty date, all agreements made to the

plaintiffs“ benefit. Any personal expenses

incurred by the Cheatles were due to the fact

that they accepted an extremely high price

for their prior home, conditioned on a very

short closing date. As to any expenses,

after reasonable investigation, defendants

are without knowledge or information

sufficient to form a belief as to their truth

or falsity. All remaining allegations are

denied.

C. Denied. PCI agreed to make certain

changes demanded verbally by plaintiffs. All

construction was as agreed, either in

writing, or pursuant to the Cheatles“ verbal

demands. All remaining allegations are

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denied. 

D. Denied.

E. Denied, except the plaintiffs were

shown the Katz home.

F. Denied, except that the Katz

residence had been listed for sale because

plaintiffs are impossible to deal with as

neighbors, although any sale has been

prevented by the lis pendens indexed by

defendants in this matter, without factual or

legal basis.

G. Denied. 

H. Denied. 

I. Denied.

13. Denied.

14. Denied.

15. Denied, and it is further averred that PCI“s skill

as a general contractor was represented only to have been as the

contractor of the Katz residence. Allowing children to make use

of recreational facilities cannot constitute an easement running

with the land; and any such easement was not granted in

accordance with the Statute of Frauds.

16. Denied.

17. Denied.

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18. Denied, although it is admitted that multiple

punch lists have been submitted, some of which have been dealt

with on an on-going basis, the rest of which are without basis

and are claims that have been made in order to refuse to release

funds held in escrow. The inspection which is reported in the

document as Exhibit ”6§ was prepared on behalf of plaintiffs at

their request, after that same inspector had approved all items

during construction and issued a Certificate of Occupancy. There

would be no reason for any defendant to respond to that document,

as it is a letter addressed to plaintiffs and not defendants; and

it is unreasonable to accept claims that there are deficiencies

in construction based on assertions made by Township officials

inasmuch as there is still a Certificate of Occupancy in effect.

Any remaining allegations are denied.

Count I

19. The Answers to paragraphs 1 through 18 inclusive

are incorporated by reference as if fully set forth herein.

20. Denied, except that it is admitted that David A.

Katz was a party to the agreement of sale.

21. Denied. Any uncompleted punch list items were not

completed, due either to the refusal of plaintiffs to permit

completion or because they were not defects in materials or

construction.

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22. Denied. The allegations of paragraph 22 are

denied as conclusions of law.

23. Denied. The allegations of paragraph 23 are

denied as conclusions of law.

24. Denied, except that time was of the essence only

insofar as construction was to be completed on or before October.

The premises were occupied three months prior to that time.

25. Denied. 

26. Denied.

27. Denied.

Count II

28. The Answers to paragraphs 1 through 27 inclusive

are incorporated by reference as if fully set forth herein.

29. Denied.

30. Denied.

Count III

31. The Answers to paragraphs 1 through 30 inclusive

are incorporated by reference as if fully set forth herein.

32. It is admitted that the documents attached were

filed, but plaintiffs“ right to do so is denied.

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Count IV

33. The Answers to paragraphs 1 through 32 inclusive

are incorporated by reference as if fully set forth herein.

34. Denied. The allegations of paragraph 34 are

denied as conclusions of law.

35. Denied, except as to the offices admitted in

Answer to paragraph 3 above. 

36. Denied.

37. Denied.

38. Denied.

39. Denied.

40. Denied.

41. Denied.

42. Denied.

43. Denied.

44. Denied.

45. Denied.

46. Denied.

47. Denied.

Count V

48. The Answers to paragraphs 1 through 47 inclusive

are incorporated by reference as if fully set forth herein.

49. Denied.

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50. Denied.

51. Denied.

Count VI

52. The Answers to paragraphs 1 through 51 inclusive

are incorporated by reference as if fully set forth herein.

53. Denied.

54. Denied.

Count VII

55. The Answers to paragraphs 1 through 54 inclusive

are incorporated by reference as if fully set forth herein.

56. Denied.

Count VIII

57. The Answers to paragraphs 1 through 56 inclusive

are incorporated by reference as if fully set forth herein.

58. Denied, and the allegations of this pleading are

incorporated by reference as if fully set forth herein.

59. Denied.

60. Denied.

61. Denied.

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Count IX

62. The Answers of paragraphs 1 through 61 inclusive

are incorporated by reference as if fully set forth herein.

63. Denied.

Second Defense

64. Plaintiffs“ Complaint fails to state a claim upon

which this Court may grant relief.

Third Defense

65. This Court is without jurisdiction over the

subject matter of this action.

Fourth Defense

66. All claims arising under or related to the

contracts are merged in the deed to the premises, and are,

therefore, barred.

Fifth Defense

67. Plainiffs“ claims are barred by their contributory

negligence.

Sixth Defense

68. Plaintiffs“ claims are barred by estoppel.

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Seventh Defense

69. Plaintiffs“ claims regarding an easement are

barred by the statute of frauds.

Eighth Defense

70. Plaintiffs“ claims with regard to alleged

deviations from the contract or promises are barred by their

repeated verbal demands for the work.

Ninth Defense

71. Plaintiffs“ claims are barred by their conduct in

directing subcontractors to deviate from the written agreement.

Tenth Defense

72. Plaintiffs“ claims are barred by dismissing

subcontractors themselves.

Eleventh Defense

73. Plaintiffs violated the construction agreement by

their continual presence on the construction site and their

interference with the work.

Twelfth Defense

74. The Uniform Planned Community Act is inapplicable

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to the claims asserted in this action.

Thirteenth Defense

75. The Unfair Trade Practices and Consumer Protection

Law is inapplicable to the claims asserted in this action.

WHEREFORE, defendants pray that Plaintiffs“ Complaint

be dismissed.

Counterclaims

Count I

Paradise Contractors, Inc. v. Robert S. Cheatle, Jr. and

Nancy A. Cheatle

76. Plaintiffs have failed to pay Paradise

Contractors, Inc. the full agreed price for the work performed

pursuant to the contract attached as Exhibit ”2§ to their

Complaint.

77. The sum unpaid under that contract is Fifty

Thousand ($50,000.00) Dollars.

78. Paradise Contractors, Inc. made a payment on

plaintiffs“ behalf to Sun Electric in the amount of Twelve

Thousand Two Hundred Seventy-Five ($12,275.00) Dollars, less a

credit of Six Thousand Seven Hundred Forty-Five ($6,745.00)

Dollars, for a total of Fifty-Five Thousand Five Hundred Thirty

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($55,530.00) Dollars owed to Paradise Contractors and unpaid.

WHEREFORE, Paradise Contractors, Inc. prays that this

Court enter judgment in its favor and against plaintiffs in the

amount of Fifty-Five Thousand Five Hundred Thirty ($55,530.00)

Dollars, plus interest and the costs of this action.

Count II

Paradise Contractors, Inc. v. Robert S. Cheatle, Jr. and

Nancy A. Cheatle

79. Plaintiffs entered into the agreement with

Paradise Contractors, Inc., attached as Exhibit ”2§ to their

Complaint, with the intention to induce Paradise Contractors,

Inc. to construct a residence for them, with the specific

intention make sham claims in order to avoid paying the full

agreed price.

80. Paradise Contractors, Inc. entered into the

construction agreement in reliance on plaintiffs“ representations

to pay the agreed-upon price

81. As a result, Paradise Contractors, Inc. has

suffered damages in the amount of Fifty-Five Thousand Five

Hundred Thirty ($55,530.00) Dollars, plus the additional costs of

complying with plaintiffs“ demands, in an amount in excess of One

Hundred Thousand ($100,000.00) Dollars.

WHEREFORE, Paradise Contractors, Inc. prays that this

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Court enter judgment in its favor, and against plaintiffs, in an

amount in excess of One Hundred Thousand ($100,000.00) Dollars,

plus punitive damages and the costs of this action.

VANGROSSI & RECCHUITI

BY: __________________________

FRANCIS RECCHUITI

ATTORNEY I.D. #09284

319 Swede Street

Norristown, PA 19401

(610) 279-4200

Attorneys for Defendants

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CERTIFICATE OF SERVICE

I DO HEREBY CERTIFY that on this date, I served a true and

correct copy of Defendants“ Answer, Affirmative Defenses and

Counterclaim upon the following counsel by way of First Class

Mail:

John C. Fenningham, Esuqire

(Attorney for Plaintiffs)

CORR, STEVENS & FENNINGHAM

Suite 315, 5 Neshaminy Interplex

Trevose, PA 19053

BY: _________________________

FRANCIS RECCHUITI

Attorneys for Defendants

DATE: APRIL 14, 2003

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