Opinion ID: 2602248
Heading Depth: 2
Heading Rank: 1

Heading: allegations contained in barton's affidavit

Text: ¶ 3 Barton's affidavit relied upon statements obtained from eleven individuals, including two of Norris's former employees and several subcontractors. Based on these statements, Barton claimed that Norris initiated the fraud by approaching general contractors conducting business in Utah and asking them to sponsor quarterly construction brochures. These brochures contained space for advertising. Norris allegedly persuaded the general contractors to act as sponsors by offering to publish the brochures free of charge. ¶ 4 Once Norris received approval from the general contractors, he purportedly sold the advertising space included in the brochures to subcontractors that had a prior employment relationship with the general contractor. Barton further alleged in his affidavit that ninety-nine percent of the subcontractors purchasing advertising space signed promissory notes obligating them to make installment payments to Maxtron, a corporation listing Norris as its president. These signed notes contained a confession of judgment provision recognized under Pennsylvania law, [1] which authorized Maxtron to obtain confessions of judgment against defaulting subcontractors for the full amount of the promissory note and $2,000 in attorney fees. ¶ 5 Following the execution of these promissory notes, Norris, acting on behalf of Maxtron, allegedly transferred Maxtron's contractual rights to Santos International. Norris then, acting as an agent for Santos International, immediately transferred the rights from Santos International to United Investors. Although Norris allegedly informed the subcontractors that he had no affiliation with either Santos International or United Investors, Barton's affidavit asserted that Norris opened the mail sent to each corporation, managed the finances of both companies, and was the sole signatory on all of the accounts owned by the two businesses. ¶ 6 Following the transfer of these contractual rights, Norris purportedly led the subcontractors into default through various misrepresentations. According to the affidavit, Norris lulled the subcontractors into default by informing them that they did not have to make any payments until they received, and approved, the advertisement proofs from Maxtron. Further, Norris allegedly told the subcontractors they should ignore any notices demanding payment sent by Santos International or United Investors. ¶ 7 According to the affidavit, the subcontractors relied on Norris's misrepresentations and defaulted on the promissory notes. Norris then allegedly obtained confessions of judgment against the subcontractors in Pennsylvania. These default judgments resulted in United Investors recovering the full value of the promissory notes and $2,000 in attorney fees. ¶ 8 Barton's affidavit also included extensive allegations regarding the business purpose behind the Pennsylvania corporations, including the following allegations: (1) the money generated from the advertising contracts sold to the subcontractors barely covered the cost of publishing the brochures, (2) Maxtron produced just one legitimate brochure during the six month tenure of one of Norris's former employees, (3) Maxtron occasionally published falsified brochures in an attempt to prove that the advertisement proofs were created before the subcontractors had defaulted, (4) Norris incorporated Maxtron, Santos International, and United Investors in Pennsylvania to take advantage of Pennsylvania's confession of judgment law, (5) Norris inserted the confession of judgment language into the promissory notes because it enabled him to obtain judgments against the subcontractors without notifying them or serving them with any papers, (6) Norris preferred to sue the subcontractors because suing the subs on the contracts was actually how he made his money, and (7) Norris profited in the amount of $1800 by including the attorney fee provision in the promissory notes because he paid his attorneys only $200 for each default judgment.