Court Opinion

ID: 4662902
Source: CourtListenerOpinion
Date Created: 2021-02-25 17:12:10.881532+00
Date Added: 2024-06-11T08:02:24.461563
License: Public Domain

J-A28034-20

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

 MCCARL'S SERVICES, INC.               :   IN THE SUPERIOR COURT OF
                                       :        PENNSYLVANIA
                                       :
              v.                       :
                                       :
                                       :
 DAVID DARGENZIO AND HUCKSTEIN         :
 MECHANICAL SERVICES, INC.             :
                                       :   No. 302 WDA 2020
                                       :
 APPEAL OF: DAVID DARGENZIO            :

           Appeal from the Judgment Entered February 20, 2020
    In the Court of Common Pleas of Allegheny County Civil Division at
                        No(s): No. GD-13-023104

 MCCARL'S SERVICES, INC.               :   IN THE SUPERIOR COURT OF
                                       :        PENNSYLVANIA
                   Appellant           :
                                       :
                                       :
              v.                       :
                                       :
                                       :
 DAVID DARGENZIO AND                   :   No. 331 WDA 2020
 HUCKESTEIN MECHANICAL                 :
 SERVICES, INC.                        :

           Appeal from the Judgment Entered February 20, 2020
    In the Court of Common Pleas of Allegheny County Civil Division at
                          No(s): GD13-023104

BEFORE: OLSON, J., MURRAY, J., and McCAFFERY, J.

MEMORANDUM BY McCAFFERY, J.:                 FILED FEBRUARY 25, 2021
J-A28034-20

        These consolidated1 cross-appeals arise from the judgment2 entered

February 20, 2020, in the Allegheny County Court of Common Pleas following

the non-jury verdict entered in favor of David Dargenzio (Dargenzio) on claims

filed by McCarl’s Services Inc. (McCarl’s), and in favor of McCarl’s on cross-

claims filed by Dargenzio.3 This action involves a non-compete clause in an

employment contract. At Docket No. 302 WDA 2020, Dargenzio contends the

trial court erred in finding McCarl’s was not liable for claims of breach of

contract, violations of Pennsylvania’s Wage Payment and Collection Law 4

(WPCL), and fraud in the inducement. At Docket No. 331 WDA 2020, McCarl’s

____________________________________________

1On March 1, 2020, this Court consolidated these appeals sua sponte. Order,
3/10/20.

2  Both the notice of appeal and the notice of cross-appeal purport to appeal
from the order entered February 6, 2018. However, that “order,” which was
docketed on February 9, 2018, announced the trial court’s non-jury verdict.
See Order of Non-Jury Verdict, 2/9/18. Rather, the appeal properly lies from
the February 20, 2020, entry of judgment on the verdict, following the parties’
filing of post-trial motions. See Crosby v. Com., Dep’t of Transp., 548 A.2d
281, 283 (Pa. Super. 1988) (explaining “the proper, procedural course to
pursue in perfecting an appeal from an adverse jury verdict is to reduce the
verdict to judgment and take an appeal therefrom”). As will be discussed
infra, both parties properly preserved their claims in timely filed post-trial
motions, although the trial court never ruled on those motions before
judgment was entered. We have corrected the captions accordingly.

3 McCarl’s also sued Huckstein Mechanical Services, Inc. (Huckstein) — the
competitor Dargenzio worked for after leaving McCarl’s. However, McCarl’s
settled its claims against Huckstein prior to trial. See McCarl’s Praecipe to
Settle and Discontinue, 1/6/17. Thus, Huckstein is not a party to this appeal.

4   43 P.S. 260.1 to 260.45.

                                           -2-
J-A28034-20

argues the trial court erred in finding Dargenzio was not liable on claims of

breach of contract, breach of duty of loyalty, and civil conspiracy. We affirm.

                        I. FACTS & PROCEDURAL HISTORY

       The facts underlying this appeal were summarized by the trial court as

follows:

              This case addresses Dargenzio’s departure from McCarl’s
       and new employment at Huckstein. McCarl’s is a Pennsylvania
       business corporation with a principal place of business located in
       Cranberry Township, PA. McCarl’s is in the business of designing,
       installing and repairing commercial heating, ventilation and air
       conditioning (“HVAC”) systems in the Greater Pittsburgh area. On
       or about May 12, 1994, McCarl’s hired Dargenzio as a Sales
       Engineer. On or about April 6, 1998, McCarl’s promoted Dargenzio
       to Sr. Project Manager and enrolled Dargenzio in a Phantom Stock
       Plan. On April 6, 1998, both Kevin McCarl[, President and CEO of
       McCarl’s,] and Dargenzio signed an Employment Agreement
       (“1998 Employment Agreement”), which included an agreement
       not to compete.       On the same day, both parties signed
       “Attachment A” to the Employment Agreement, which detailed the
       compensation and Phantom Stock Policy. McCarl’s argued that
       this Phantom Stock was the consideration for the Employment
       Agreement and that this Employment Agreement remained in
       place though Dargenzio’s employment until his departure in 2013.

             However, another agreement between the parties went into
       effect on January 1, 2010 (“2010 Agreement”), when Dargenzio
       transitioned from a full[-]time employee to a commissioned sales
       representative. Dargenzio argued that this 2010 Agreement
       replaced the 1998 Employment Agreement, hence rendering the
       agreement’s prohibition against competition no longer
       operative.[5]

____________________________________________

5 The 2010 Agreement was updated “towards the end of 2012.” See N.T.
Trial, 4/18-20/17, at 73. Both documents are attached to Dargenzio’s

                                           -3-
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             Dargenzio began communication with [Huckstein’s
       President and CEO,] Wendy Staso concerning potential
       employment at Huckstein on or about September 12, 2013.
       Dargenzio submitted his letter of resignation to Kevin McCarl on
       November 12, 2013. Dargenzio commenced employment at
       Huckstein on or about November 18, 2013. At the time Dargenzio
       commenced employment at Huckstein, Huckstein was a
       competitor of McCarl’s and located within 100 miles of Pittsburgh,
       PA[, which was a violation of the parties’ non-compete
       agreement].

Trial Ct. Memorandum & Order, 2/8/18, at 2-3 (unpaginated).6

       McCarl’s filed a civil action against Dargenzio and Huckstein on

December 9, 2013.         In an amended complaint filed on March 14, 2014,

McCarl’s asserted the following claims: (1) against Dargenzio, (a) two counts

of breach of contract, seeking money damages and injunctive relief, (b)

breach of duty of loyalty, and (c) civil conspiracy; (2) against Huckstein, (a)

interference with contract, (b) interference with business relations, and (c)

unfair competition; and against both Dargenzio and Huckstein, civil

conspiracy. See McCarl’s Amended Complaint, 3/14/14. Specifically, McCarl’s

alleged that Dargenzio breached the non-compete clause in his 1998

Employment Agreement when he accepted employment with its competitor,

Huckstein, and breached his duty of loyalty to the company when he diverted

business leads to Huckstein while still employed by McCarl’s. Id. at ¶¶ 5-9,

____________________________________________

amended Answer, New Matter and Counterclaim. See Dargenzio’s Amended
Answer, New Matter & Counterclaim, 6/10/14 at Exhibits B, C.

6  The trial court filed two opinions in this case.       The first, entitled
“Memorandum and Order,” was filed on February 8, 2018, and accompanied
its non-jury verdict. The second was filed on August 3, 2020, in response to
the parties’ Pa.R.A.P. 1925(b) statements of errors complained of on appeal.

                                           -4-
J-A28034-20

15-18. McCarl’s also asserted Dargenzio conspired with Huckstein to do so.

Id. at ¶ 44.

      Huckstein and Dargenzio each filed answers with new matter.                In

addition, Dargenzio filed counterclaims seeking relief for (1) breach of

contract, (2) violations of the WPCL, and (3) fraud in the inducement. See

Dargenzio’s Amended Answer, New Matter & Counterclaim at ¶¶ 64-122.

Specifically,   Dargenzio    asserted   McCarl’s   breached    its   agreement   to

compensate him under the Phantom Stock Plan upon his semi-retirement in

2009 as evidenced in two novations to the 1998 Employment Agreement

executed in 2010 and 2012. Id. at ¶¶ 66-77. He further alleged McCarl’s

verbally agreed to pay him commissions on projects which required the use

of his out-of-state licenses. Id. at ¶ 78. When McCarl’s informed him the

Phantom Stock Plan had no value, and continued to fail to provide him the

compensation he was owed, Dargenzio claims, he was constructively

terminated in 2013. Id. at ¶¶ 79-82. His cause of action under the WPCL is

related to McCarl’s failure to pay him compensation under the Phantom Stock

Plan. See id. at ¶¶ 98-106. Lastly, Dargenzio alleged McCarl’s fraudulently

induced him to continue his employment by offering him compensation via the

Phantom Stock Plan, knowing the Plan had no value. See id. at ¶¶ 116-22.

      Both Dargenzio and Huckstein filed motions for summary judgment on

December 15, 2014. On February 5, 2015, McCarl’s filed a motion for partial

summary     judgment    on    Dargenzio’s     counterclaims.     After   conducting

argument, the trial court denied all three motions on July 6th. Thereafter, on

                                        -5-
J-A28034-20

January 6, 2017, McCarl’s filed a praecipe to mark its claims against Huckstein

settled and discontinued.        See McCarl’s Praecipe to Settle & Discontinue,

1/6/17.

       The case proceeded to a three-day, non-jury trial from April 18 to 20,

2017. Both parties subsequently submitted post-trial briefs. On February 9,

2018, the trial court filed a memorandum and order, concluding neither party

was entitled to relief on any claim. The court’s “Order of Non-Jury Verdict”

specifies the trial court found as follows:

       (1) McCarl’s Breach of Contract Claim in favor of Dargenzio;

       (2) McCarl’s Breach of Duty of Loyalty Claim in favor of Dargenzio;

       (3) McCarl’s Civil Conspiracy Claim in favor of Dargenzio;

       (4) Dargenzio’s Breach of Contract Claim in favor of McCarl’s;

       (5) Dargenzio’s Violation of Pennsylvania Wage Payment and
       Collection Law Claim in favor of McCarl’s;

       (6) Dargenzio’s Fraud in the Inducement Claim in favor of
       McCarl’s.

Order of Non-Jury Verdict, 2/9/18.7

       Both Dargenzio and McCarl’s filed timely post-trial motions.8         While

these motions were still pending, Dargenzio filed a notice of appeal on March

____________________________________________

7 The trial court’s memorandum was docketed on February 8, 2018. However,
the Order of Non-Jury Verdict was not docketed until the next day, February
9th.

8 Pursuant to the Pennsylvania Rules of Civil Procedure, post-trial motions
must be filed within 10 days of “the filing of the decision” after a non-jury
trial. Pa.R.C.P. 227.1(c)(2). Once one party has filed a timely post-trial

                                           -6-
J-A28034-20

8, 2018. McCarl’s then filed a cross-appeal on March 14th. On April 26, 2018,

this Court quashed both appeals sua sponte because the post-trial motions

were still pending in the trial court. See Docket No. 497 WDA 2018 (Dargenzio

appeal); Docket No. 382 WDA 2018 (McCarl appeal).

       The trial court docket reveals no further activity for nearly two years.

On February 20, 2020, Dargenzio filed two praecipes for entry of judgment on

the court’s verdict in favor of Dargenzio on McCarl’s complaint, and in favor of

McCarl on Dargenzio’s counterclaims.9            See Dargenzio’s Praecipe for

Judgment on Non Jury Verdict, 2/20/20. Thereafter, Dargenzio filed a timely

notice of appeal on February 25, 2020, and McCarl’s filed a timely cross-appeal

on March 4, 2020.10 See Pa.R.A.P. 903(a) (notice of appeal “shall be filed
____________________________________________

motion, “any other party may file a post–trial motion within ten days after the
filing of the first post–trial motion.” Id. Here, Dargenzio filed a post-trial
motion on February 20, 2018. Although this was 11 days after the entry of
the court’s verdict, the 10th day — February 19, 2018 — was President’s Day,
a court holiday. Thus, his motion was timely filed. See 1 Pa.C.S. § 1908 (for
purposes of computing time, “[w]henever the last day of any such period shall
fall on Saturday or Sunday, or on any day made a legal holiday . . . such day
shall be omitted from the computation”). McCarl’s then filed a timely post-
trial motion within 10 days, on February 27, 2018.
9 It is well-settled that the parties were required to file post-trial motions in
order to preserve issues for appeal. Chalkey v. Roush, 805 A.2d 491, 496
(Pa. 2002). However, there is no accompanying rule requiring the trial court
to address the parties’ post-trial motions, and, in the present case, the court
provided no explanation for its failure to do so. Nonetheless, the parties were
permitted to praecipe for entry of judgment after the court did not enter an
order disposing of the motions within 120 days. See Pa.R.C.P. 227.4(1)(b).
10 Both parties subsequently complied with the trial court’s orders directing
them to file concise statements of errors complained of on appeal pursuant to
Pa.R.A.P. 1925(b).

                                           -7-
J-A28034-20

within 30 days after the entry of the order from which the appeal is taken”),

(b) (when timely appeal is filed, any other party may file cross-appeal within

14 days).

               II. DAREGENZIO’S APPEAL (Docket 302 WDA 2020)

       Dargenzio raises the following issues on appeal:

       1. Whether the Trial Court erred in determining that Dargenzio
       did not “retire” where, in 2009, Dargenzio openly announced his
       intention to retire and then withdrew from his position as Sales
       Manager of McCarl’s to assume the role of a commissioned sales
       representative[?]

       2. Whether the Trial Court erred in determining that Dargenzio
       was not “constructively discharged” in 2013 as a result of either
       McCarl’s failure to pay Dargenzio earned benefits under the
       Phantom Stock Plan or McCarl’s failure to pay Dargenzio earned
       commission for projects that required the use of Dargenzio’s Ohio
       and West Virginia licenses[?]

       3. Whether the Trial Court erred in determining that Dargenzio
       was not entitled to relief under the Pennsylvania [WPCL] where
       McCarl’s failed to pay Dargenzio earned benefits under the
       Phantom Stock Plan both subsequent to Dargenzio’s retirement in
       2009 and subsequent to Dargenzio’s constructive discharge in
       2013[?]

       4. Whether the Trial Court erred in determining that Dargenzio
       was not fraudulently induced by McCarl’s to sign the 1998
       Agreement or the 2010 Agreement where McCarl’s knew or should
       have known that the Phantom Stock Plan would lack funds
       sufficient to compensate Dargenzio upon either his retirement or
       discharge without cause[?]

Dargenzio’s Brief at 4-5.11
____________________________________________

11 Dargenzio listed two additional questions, which did not raise any further
claims of error on his own behalf, but rather were merely posed in response
to McCarl’s cross-appeal.

                                           -8-
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      In his first two issues, Dargenzio challenges the trial court’s finding that

McCarl’s did not breach the 1998 Employment Agreement when it failed to

pay him earned benefits under the Phantom Stock Plan in either 2009, when

he announced his retirement, or 2013, when he was “constructively

discharged.” See Dargenzio’s Brief at 10, 14.

      When considering the verdict in a non-jury trial, our standard of review

is well-settled:

      We must determine whether the findings of the trial court are
      supported by competent evidence and whether the trial judge
      committed error in the application of law. Additionally, findings of
      the trial judge in a non-jury case must be given the same weight
      and effect on appeal as a verdict of a jury and will not be disturbed
      absent error of law or abuse of discretion.

Yablonski v. Keevican Weiss Bauerle & Hirsch LLC, 197 A.3d 1234, 1238

(Pa. Super. 2018) (citation omitted).       “As an appellate court, we cannot

disturb the finding of the trial court on the witnesses’ credibility.” Id. at 1240

(citation omitted).

      Moreover, when the issue involves contract interpretation, we must bear

in mind:

      “[T]he interpretation of the terms of a contract is a question of
      law for which our standard of review is de novo, and our scope of
      review is plenary.” Furthermore:

           Contract interpretation ... requires the court to ascertain
           and give effect to the intent of the contracting parties as
           embodied in the written agreement. Courts assume that a
           contract’s language is chosen carefully and that the parties
           are mindful of the meaning of the language used. When a
           writing is clear and unequivocal, its meaning must be
           determined by its contents alone.

                                      -9-
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Braun v. Wal-Mart Stores, Inc., 24 A.3d 875, 957 (Pa. Super. 2011)

(citations omitted), aff'd, 106 A.3d 656 (Pa. 2014).

       By its own terms, the Phantom Stock Plan was created “to provide

deferred compensation to certain key employees of McCarl’s[.]” Dargenzio’s

Amended Answer, New Matter & Counterclaim at Exhibit E, Phantom Stock

Plan (PSP) at 1. Those employees were awarded “performance units,” each

of which equated to one share of stock in the company. Id. Kevin McCarl

explained the Plan gave the participating employees “an opportunity to share

in the growth and increase profitability in the company.” N.T. Trial at 48.

When the company’s profits rose above the baseline — established at

$5,859,000 — the participants were be entitled to a percentage “of the

increased value,” which was determined by a Phantom Stock Committee

established by the Board of Directors.12           See id. at 55; PSP at 1, 6.   A

participant was entitled to payment under the Plan when their employment

was terminated (1) upon their retirement, (2) by McCarl’s for reasons other

than cause, or (3) “as a result of death or disability.” PSP at 3. The value of

the participant’s stock was then calculated by the Committee based upon the

company’s profits above the baseline.              See N.T. Trial, 59-60 (value of

phantom stock for 2004 was zero because earnings of company “was less than

the value of the baseline”); 61-62 (value of phantom stock for 2005 was $500
____________________________________________

12When the Plan was created, the Phantom Stock Committee consisted of
Kevin McCarl, then Chief Financial Officer John Gregg McMillan, Jr., and
Dargenzio. N.T. Trial at 53.

                                          - 10 -
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per share).     Further, the Plan explicitly provided that a participant’s

performance units would be cancelled, and all payments forfeited, if, inter alia,

the participant “voluntarily terminate[d] his employment.” PSP at 4. When

Dargenzio resigned in November of 2013, he received no compensation under

the Phantom Stock Plan.

      On appeal, Dargenzio insists he is entitled to payment under the Plan

either because he effectively retired in 2009, or because he was constructively

discharged in 2013.    See Dargenzio’s Brief at 10, 14.      With regard to his

“retirement,” Dargenzio contends he told Kevin McCarl that he intended to

retire at the end of 2009, and “openly announced his retirement during the

company’s retreat” in early 2009. Id. at 12. He maintains he then “withdrew

from his position as Sales Manager,” which is memorialized in the 2010

Agreement, and “changed from a full-time employee to a commission-based

sales representative.” Id. at 13.

      Citing Franklin Cty. Career & Tech. Ctr. v. Franklin Cty. Career &

Tech. Ctr. Educ. Ass'n, PSEA/NEA, 39 A.3d 456 (Pa. Cmwlth. Ct. 2012),

Dargenzio contends that “[u]nder Pennsylvania law, ‘retirement’ has been

defined to include ‘withdrawal from one’s position.’” Dargenzio’s Brief at 10.

Further, he maintains “[a]n employee can retire . . . without ceasing

employment or withdrawing from the labor force.” Id. Thus, here, Dargenzio

insists that “[b]y announcing his retirement, voluntarily withdrawing from his

position as Sales Manager of McCarl’s, and attempting to collect earned

benefits under the Phantom Stock Plan, [he] retired from McCarl’s” in 2009.

                                     - 11 -
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Id. at 13 (emphasis added). Moreover, he asserts the fact he remained a

commissioned sales representative is “irrelevant.” Id.

     The trial court, however, found Dargenzio voluntarily terminated his

employment in 2013, thus, forfeiting his right to any compensation under the

Phantom Stock Plan. See Trial Ct. Memorandum & Order at 8-9. With regard

to Dargenzio’s purported “retirement” in 2009, the court concluded “Dargenzio

did not retire from McCarl’s[, but rather,] merely changed his role with

McCarl’s and . . . continued to work for McCarl’s until 2013.” Trial Ct. Op.,

8/3/20, at 8. We agree.

     Kevin McCarl acknowledged that Dargenzio talked about retiring at the

end of 2009, so that he could “slow down at some point and move to North

Carolina.” N.T. Trial at 126. However, he also testified that Dargenzio (who

was 46 years old at the time), did not retire at that time upon learning the

Phantom Stock shares had no value at the end of 2008. Id. at 126-27, 198.

McCarl explained:

     [Dargenzio] thought there was this big payday. He said: I need
     that damn stock. Other than that, I can’t retire, I have to sell my
     house.

Id. at 127. See also id. at 128 (McCarl stating Dargenzio told him “he had

no other means to retire other than the money through the phantom stock,

and there wasn’t any money in the phantom stock”).

     Dargenzio implies that his retirement announcement, coupled with his

withdrawal from the position as sales manager, triggered McCarl’s obligation

to pay him compensation pursuant to the Phantom Stock Plan. Dargenzio’s

                                   - 12 -
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Brief at 13.   He notes that in Franklin Cty., the Commonwealth Court

determined a teacher had “retired” after being furloughed for several years,

despite the fact the teacher requested to retain her furlough rights. See id.

at 11. However, we find the facts in Franklin Cty. distinguishable.

     In that case, a teacher decided to retire “for financial reasons” after

being furloughed for three years. Franklin Cty., 39 A.3d at 457. As such

she began receiving retirement benefits. Id. Nevertheless, she requested to

remain on the recall list in the event a position for which she was qualified

became available. Id. The school refused to pay her accumulated sick leave,

arguing she had not “retired” as defined by the collective bargaining

agreement. See id. The case proceeded to arbitration, and the arbitrator

ruled in favor of the teacher.   Id.   On appeal, the Commonwealth Court

affirmed, holding:

     The definition of “retirement” includes “withdrawal from one’s
     position.” The definition does not require complete cessation of
     employment or withdrawal from the labor force, as [the school]
     maintains. [The teacher] withdrew from her position as a teacher
     by notifying [the school] of her retirement and by applying for,
     and taking, a retirement pension. The fact that [she] retired
     for financial reasons and hoped to return to teaching via recall did
     not negate her retirement status at this time.

Id. at 458 (some emphasis omitted and some added). It bears emphasis that

the teacher in Franklin Cty. ceased working for her employer at the time she

retired. See id. at 457.

     Conversely, in the present case, Dargenzio never retired. Rather, he

took another position within the company, albeit in a reduced workload

                                    - 13 -
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capacity.   Kevin McCarl testified Dargenzio was still a full-time employee,

eligible for benefits, the company 401-K plan, and a car allowance — his

salary, however, changed to commission-based only. See N.T. Trial at 66-

68. According to McCarl, Dargenzio “wanted to slow down a bit, he didn’t

want to attend the weekly sales meetings[.]”      Id. at 66. It is undisputed

Dargenzio did not receive any retirement benefits at that time.       Thus, we

agree with the trial court that, for purposes of the Phantom Stock Plan,

Dargenzio did not retire in 2009. See Trial Ct. Op. at 8-9.

      Similarly, we conclude Dargenzio was not “constructively discharged”

when he left McCarl’s in 2013. This Court has explained:

      “[C]onstructive discharge of an at-will employee may serve as a
      basis for tort recovery if the employer has made working
      conditions so intolerable that an employee has been forced to
      resign.” In this context, “[i]ntolerability . . . is assessed by the
      objective standard of whether a ‘reasonable person’ in the
      employee’s position would have felt compelled to resign, that is,
      whether he would have had no choice but to resign.” It may not
      be premised upon the conclusion that resignation was the wisest
      or best decision under the circumstances, nor is it established
      based on an employee’s subjective judgment.

Helpin v. Trustees of Univ. of Pennsylvania, 969 A.2d 601, 614 (Pa.

Super. 2009) (citations and footnote omitted), aff'd, 10 A.3d 267 (Pa. 2010).

      Here, Dargenzio complains his working conditions at McCarl’s became

“intolerable” in 2013 because McCarl’s refused to pay him earned benefits

under the Phantom Stock Plan, as well as “earned commissions for projects

that required the use of his Ohio and/or West Virginia licenses.” Dargenzio’s

Brief at 16. He claims he and Kevin McCarl entered into an “oral agreement”

                                     - 14 -
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whereby he would receive part of the commissions on out-of-state projects

that required the use of his license. Id. Because termination by the company

without cause is one of the employment events which triggers payment under

the Phantom Stock Plan, Dargenzio insists he is entitled to relief. See PSP at

3.

       The trial court, however, found McCarl’s did not “constructively

discharge” Dargenzio.       Trial Ct. Op. at 9.    Rather, it concluded Dargenzio

“voluntarily terminated” his employment with McCarl’s when he resigned and

immediately began working for Huckstein. Id. We agree. In his resignation

letter, Dargenzio stated he “appreciated the opportunities” he had been given

at McCarl’s, and described his tenure there as a “pleasurable learning

experience.” N.T. Trial at 458. Further, he conceded that while he began

communicating with the President of Huckstein two months before he resigned

from MCarl’s, he told them in an email he was “in no hurry to make a move

at [that] point[.]”13 Id. Kevin McCarl denied he had any oral agreement with

Dargenzio to pay Dargenzio partial commissions for jobs completed in Ohio

and West Virginia, and, McCarl insisted, if there had been such an agreement,

it would have been in writing. Id. at 115-17. Moreover, he testified Dargenzio

never complained that McCarl’s failed to pay him for commissions he believed

were due, or indicated that his working conditions were “intolerable.” Id. at
____________________________________________

13 Dargenzio insisted that comment was taken out of context. N.T. Trial. at
458. He claimed he “knew [he] had to leave, but it had to be the right
circumstances.” Id. at 459. However, even this explanation undercuts his
insistence that he was subjected to objectively intolerable working conditions.

                                          - 15 -
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79. It is evident the trial court simply did not credit Dargenzio’s testimony on

this claim. Accordingly, no relief is warranted. See Yablonski, 197 A.3d at

1240.

        Next, Dargenzio contends the trial court erred in denying him relief

under the WPCL. Dargenzio’s Brief at 17. “[T]he primary goal of the WPCL is

to make whole again, employees whose wages were wrongfully withheld by

their employers.” Ely v. Susquehanna Aquacultures, Inc., 130 A.3d 6, 13

(Pa. Super. 2015) (citation omitted). Dargenzio’s claim, however, rests upon

his prior argument that he is entitled to payment under the Phantom Stock

Plan, either because he retired in 2009 or was constructively discharged in

2013. See Dargenzio’s Brief at 17-18. The trial court succinctly disposed of

this issue as follows:

        This argument is completely reliant upon Dargenzio’s claim for
        unpaid compensation pursuant to the Phantom Stock plan. Given
        that this Court concluded that Dargenzio was not entitled to
        payments pursuant to the Phantom Stock Plan, Dargenzio’s claim
        under the Pennsylvania Wage Payment and Collection Law must
        also fail.

Trial Ct. Op. at 9-10. We agree. Thus, no relief is due.

        Lastly, Dargenzio contends the trial court erred in concluding he was not

“fraudulently induced by McCarl’s to sign the 1998 Employment Agreement.”

Dargenzio’s Brief at 18. He insists McCarl’s “falsely represent[ed] . . . the

value of [the] Phantom Stock Plan” and the fact that another employee

actually received compensation under the Plan is irrelevant.         Id. at 19.

Rather, Dargenzio maintains that “when the 1998 Employment Agreement

                                      - 16 -
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was executed, McCarl’s knew or should have known that the Phantom Stock

Plan would lack sufficient funds to compensate [the participants] upon their

retirements.” Id. at 19-20.

      An actionable claim of fraudulent misrepresentation requires the

following elements:

         (1) A representation; (2) which is material to the transaction
         at hand; (3) made falsely, with knowledge of its falsity or
         recklessness as to whether it is true or false; (4) with the
         intent of misleading another into relying on it; (5) justifiable
         reliance on the misrepresentation; and, (6) the resulting
         injury was proximately caused by the reliance.

Weston v. Northampton Pers. Care, Inc., 62 A.3d 947, 960 (Pa. Super.

2013) (citations omitted). Furthermore, any claim of fraud “must be proven

by clear and convincing evidence.” Id. (citation omitted).

      In rejecting Dargenzio’s fraud claim, the trial court opined:

            Of the voluminous amount of testimony on this subject, the
      most telling piece of evidence was that McCarl’s compensated a
      former employee under the Phantom Stock Plan when [it]
      terminated that employee without cause. McCarl’s employed
      [McMillan] as CFO from 1994 until 2007.         Upon McMillan’s
      termination, McCarl’s paid [McMillan] in accordance with the
      Phantom Stock Plan. Accordingly, this Court correctly found that
      McCarl’s intended to honor the terms of the Phantom Stock Plan,
      provide[d] employees left on acceptable terms as they are
      outlined in the Plan. For the reasons stated above, Dargenzio
      simply did not leave under terms that would allow him to collect
      payment pursuant to the Phantom Stock Plan.

Trial Ct. Op. at 10.

      While Dargenzio insists McCarl’s “knew or should have known” the PSP

would lack sufficient funds to compensate both participants, him and McMillan,

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at the time of their respective retirements, he provides no evidence to support

this claim. See Dargenzio’s Brief at 19-20. Indeed, the value of the phantom

stock, which varied from year to year based upon the company’s profits, was

determined by the Plan Committee, of which Dargenzio was a member. See

N.T. Trial at 53, 58-63. When asked what “misrepresentation” Kevin McCarl

made to him regarding the Phantom Stock Plan, Dargenzio replied: “I don’t

believe he ever had the intent at that point in time of fulfilling his promise.”

Id. at 468-69. Dargenzio’s subjective “belief” that McCarl’s never intended to

compensate him under the PSP, is simply insufficient to sustain a claim of

fraud. See Weston, 62 A.3d at 960. Thus, this claim, too, fails.

      Because we detect no error in the trial court’s determination that

Dargenzio’s counterclaims warrant no relief, we affirm the judgment entered

in favor of McCarl’s.

            III. McCARL’S CROSS-APPEAL (Docket 331 WDA 2020)

      McCarl’s sets forth the following questions for our review in its cross-

appeal:

      A. Was [Dargenzio] liable to [McCarl’s] for breach of contract?

          1. Did [Dargenzio] violate the non-competition covenant
          contained in the parties’ 1998 Employment Agreement?

          2. Was the 1998 Employment Agreement supported by
          adequate consideration?

          3. Was there a novation of the 1998 Employment
          Agreement which superseded the non-competition covenant
          contained therein?

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      B. Was [Dargenzio] liable to [McCarl’s] for breach of his duty of
      loyalty to [McCarl’s]?

      C. Was [Dargenzio] liable to [McCarl’s] for the tort of civil
      conspiracy?

McCarl’s Brief at 4.

      In its first issue on appeal, McCarl’s asserts the trial court erred in

denying its claim for breach of contract. Specifically, McCarl’s insists the 1998

Employment Agreement, which included the non-compete clause, was

supported by valuable consideration — namely, both a $7,000 raise and

Dargenzio’s enrollment in the Phantom Stock Plan. McCarl’s Brief at 10-11.

Moreover, it argues the 2010 Agreement, which outlined Dargenzio’s change

in status to a full-time commissioned sales representative, did not constitute

a novation of the 1998 Employment Agreement or replace the prior agreement

and concomitant non-compete clause.           See id. at 12.     Thus, because

Dargenzio violated the non-compete clause when he began working for

Huckstein only days after resigning from McCarl’s, McCarl’s contends the trial

court erred when it failed to grant relief on its breach of contract claim. Id.

at 14-16.

      Preliminarily, we note that the inclusion of a covenant not to compete

in an employment contract is “generally disfavored” under Pennsylvania law.

Socko v. Mid-Atl. Sys. of CPA, Inc., 126 A.3d 1266, 1274 (Pa. 2015). See

also Hess v. Gebhard & Co. Inc., 808 A.2d 912, 917 (Pa. 2002) (restrictive

covenants in employment contracts “have been historically viewed as a trade

restraint that prevents a former employee from earning a living”).

                                     - 19 -
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Nevertheless, the courts of this Commonwealth will enforce a non-compete

clause in an employment agreement “assuming adherence to certain

requirements[:]” that the non-compete clause is “(1) ancillary to an

employment relationship between an employee and an employer; (2)

supported by adequate consideration; (3) the restrictions are reasonably

limited in duration and geographic extent; and (4) the restrictions are

designed to protect the legitimate interests of the employer.” Socko, 126

A.3d at 1274.

     When a non-compete clause is “executed at the inception of the

employment, the consideration to support the covenant may be the award of

the position itself.” Socko, 126 A.3d at 1275. However, where as here, a

non-compete agreement is required after the employee has already begun

employment,

     it is enforceable only if the employee receives “new” and valuable
     consideration — that is, some corresponding benefit or a favorable
     change in employment status. Sufficient new and valuable
     consideration has been found by our courts to include, inter alia,
     a promotion, a change from part-time to full-time employment, or
     even a change to a compensation package of bonuses, insurance
     benefits, and severance benefits. Without new and valuable
     consideration, a restrictive covenant is unenforceable. More
     specifically, the mere continuation of the employment relationship
     at the time of entering into the restrictive covenant is insufficient
     to serve as consideration for the new covenant, despite it being
     an at-will relationship terminable by either party.

Id. (citations and footnotes omitted).   See also Davis & Warde, Inc. v.

Tripodi, 616 A.2d 1384, 1388 (Pa. Super. 1992) (concluding execution of

non-compete clauses by former at-will employees was supported by adequate

                                    - 20 -
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consideration; “[n]ot only were they offered continued employment with new

responsibilities, but each was given a cash payment, a guarantee of certain

job benefits, including a favorable change in the employer’s automobile

reimbursement policy, and a guaranteed severance benefit in the event of

termination”).

      In the present case, Dargenzio had been employed by McCarl’s for four

years when he signed the 1998 Employment Agreement. The trial court found

“the mere change in Dargenzio’s job title and his enrollment in the Phantom

Stock Plan did not constitute valuable consideration” for the execution of the

non-compete clause. Trial Ct. Op. at 5. The court opined:

      Given that the terms of the restrictive covenant were meant to
      survive the end of Dargenzio’s employment with McCarl’s, in order
      for the Phantom Stock Plan to constitute valuable consideration,
      the Phantom Stock Plan also needed to survive the end of the
      employment relationship. McCarl’s cannot argue both that the
      Phantom Stock Plan was valuable consideration for the restrictive
      covenant, and that Dargenzio is not entitled to any benefit from
      enrollment in the Plan. Even assuming that the promise of future
      redemption of the Phantom Stock Plan appeared to be adequate
      consideration when the agreement was signed, that consideration
      failed when Dargenzio’s units were cancelled.        Contingent
      compensation, where the contingency does not arise, is not
      valuable consideration.

Id. at 5-6 (citation omitted).

      It is evident the trial court considered Dargenzio’s enrollment in the

Phantom Stock Plan to be the only consideration offered in exchange for the

non-compete clause. However, at trial, Kevin McCarl testified that at the time

Dargenzio signed the 1998 Employment Agreement, he was also given a new

                                    - 21 -
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position as Senior Project Manager, new responsibilities — which included

managing another employee and having the opportunity to earn incentives

based on that employee’s performance — and a 11 to 12% ($7,000 per year)

salary increase.       See N.T. Trial at 37-39.    Furthermore, although the

Agreement was signed on April 6, 1998, the salary increase took effect

retroactive to January 1st of that year. Id. at 39-40. When asked about

these changes to his employment, Dargenzio testified he was “not sure” if his

job title changed, and could not “verify” that he received a salary increase,

stating he would “have to look at [his] personnel file.”       Id. at 386-87.

However, he never provided any evidence to the contrary.

       Thus, even if we disregard Dargenzio’s enrollment in the Phantom Stock

Plan,14 we conclude Dargenzio’s new job title, new responsibility, and

increased salary provided sufficient consideration for the execution of the non-

compete clause. See Socko, 126 A.3d at 570-71.

____________________________________________

14 Based upon our disposition, we need not consider whether enrollment in
the Plan constituted sufficient consideration for the non-compete clause. We
note, however, the trial court provides no support for its assertion that
“[c]ontingent compensation, where the contingency does not arise, is not
valuable consideration.” See Trial Ct. Op. at 6. Here, the contingency did not
arise because Dargenzio voluntarily resigned — a disqualifying action under
the Plan — not because McCarl’s refused to pay him. Moreover, while it is
undisputed the phantom stock had no value when Dargenzio first discussed
retirement in 2009, there is no evidence that the shares remained valueless
in the ensuing years.

                                          - 22 -
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     The trial court also found, however, that the non-compete clause was

unenforceable because it was replaced by the 2010 Agreement. The court

opined:

     [T]he 2010 Agreement materially changed the terms of
     Dargenzio’s employment with McCarl’s and thereby replaced the
     1998 Agreement. The first paragraph of the 2010 Agreement
     reads as follows:

          This agreement is to represent the understanding between
          McCarl’s . . . and . . . Dargenzio for his changing from a full
          time employee to commissioned sales rep. This agreement
          goes into effect January 1, 2010 and continues through
          December 31, 2010.

     The 2010 Agreement provides a new set of duties and obligations
     between Dargenzio and McCarl’s. It changed Dargenzio’s position
     of employment, it changed his ability [to] quality for sales awards,
     it changed the means by which he was compensated, and it
     offered him the ability to participate in a deferred compensation
     plan in lieu of the Phantom Stock Plan. Most importantly, the 2010
     Agreement did not contain any restrictive covenant, nor did it
     make any reference to the restrictive covenant in the 1998
     Agreement. Indeed, while the 2010 Agreement stated that it
     “represent[ed] the understanding between McCarl’s . . . and . . .
     Dargenzio,” it did not reference the 1998 Agreement at all. Thus,
     without a restrictive covenant in the only operative employment
     agreement between Dargenzio and McCarl’s at the time Dargenzio
     left McCarl’s to work for Huckstein, Dargenzio did not breach his
     employment contract with McCarl’s when he accepted
     employment with a competitor.

Trial Ct. Op. at 6-7. We agree.

     Both McCarl’s and Dargenzio acknowledged they entered into a new

agreement in 2010.       Kevin McCarl testified that he prepared the 2010

Agreement — which reflected a “mutual understanding” between the parties

— after Dargenzio discussed “slow[ing] down a bit.” N.T. Trial at 66-67, 69.

                                      - 23 -
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However, he claimed that he did not intend the 2010 Agreement to replace

the 1998 Employment Agreement; rather, “[i]t was only to replace the

Attachment A that was in the Employment Agreement[,]” which set forth

Dargenzio’s title, salary and benefits.        Id. at 69.   See McCarl’s Amended

Complaint,     Exhibit   A,   1998     Employment    Agreement,    Attachment    A.

Conversely, Dargenzio testified that the 2010 Agreement constituted a “new

agreement” between the parties because “the capacity of what [he] did for

the company changed completely.” Id. at 414. See also id. at 416 (testifying

the 2010 Agreement “replaced” the 1998 Agreement).              Indeed, under the

2010 Agreement, Dargenzio’s title, duties, and salary changed considerably.

More importantly, the 2010 Agreement did not include a non-compete clause.

Considering this Agreement reflected a decrease in Dargenzio’s salary and

duties, we conclude it was incumbent upon McCarl’s, as the drafter, to

explicitly include the non-compete covenant in the new employment

agreement – particularly since “some” of the consideration for the non-

compete clause (a new position and increased salary), was absent from the

new agreement. Thus, McCarl’s is entitled to no relief on this claim.15
____________________________________________

15While at various times the parties referred to the 2010 Agreement as a
“novation,” the trial court did not do so. See Dargenzio’s Amended Answer,
New Matter & Counterclaim at ¶¶ 74-86; McCarl’s Brief at 12-14.
Nevertheless, we note:

       The required essentials of a novation are “the displacement
       and extinction of a valid contract, the substitution for it of a
       valid new contract, . . ., a sufficient legal consideration for the new

                                          - 24 -
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       Next, McCarl’s contends the trial court erred when it found Dargenzio

was not liable for breach of duty of loyalty. McCarl’s Brief at 16. Specifically,

McCarl’s challenges the court’s determination that it was required to prove

Dargenzio “used confidential information from McCarl’s to gain an edge in

competition.”     Id. at 17, quoting Trial Ct. Memorandum and Order at 7.

Rather, McCarl’s insists it was only required to establish that Dargenzio

“perform[ed] acts which are contrary to the interest of his employer.”

McCarl’s Brief at 18. Furthermore, it maintains:

       The record is clear and uncontroverted that, while still employed
       at McCarl’s, Dargenzio referred sales leads to Huckstein which
       involved McCarl’s existing customers; and that he divulged
       information to Huckstein relating to McCarl’s customers’ upcoming
       contracts, projects and bidding practices, in an effort to steer
       business to Huckstein.

Id. at 17 (record citations omitted).

       As agents of their employer, employees owe a duty of loyalty, which

requires them to “act solely for the benefit of the [employer] in all matters
____________________________________________

       contract, and the consent of the parties . . . .” The party
       asserting a novation or substituted contract has the burden of
       proving that the parties intended to discharge the earlier contract.
       Such intention of the parties to effect a novation or substituted
       contract may be shown by other writings, or by words, or by
       conduct or by all three.

Buttonwood Farms, Inc. v. Carson, 478 A.2d 484, 486–87 (Pa. Super.
1984) (citations omitted). Here, the trial court found the parties intended for
the 2010 Agreement to replace the 1998 Employment Agreement, even if they
did not say so expressly. Moreover, the consideration for the new agreement
was Dargenzio’s reduced workload and office hours.

                                          - 25 -
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connected with [their employment].” SHV Coal, Inc. v. Continental Grain

Co., 545 A.2d 917, 921 (Pa. Super. 1988), rv’d on other grounds, 587 A.2d

702 (Pa. 1991).16 “To prevail on a claim of breach of fiduciary duty of loyalty,

[an employer] must demonstrate that his [employee] acted for a person or

entity whose interests conflicted with the [employer].” Reading Radio, Inc.

v. Fink, 833 A.2d 199, 211 (Pa. Super. 2003), citing Restatement (Second)

of Agency § 394 (1958).

       Here the trial court concluded Dargenzio did not breach any duty of

loyalty owed to McCarl’s, his employer. The court found:

              Dargenzio credibly testified that he did not have access to
       McCarl’s full customer list. Dargenzio also testified that he did not
       need to, and in fact did not, use any confidential information of
       McCarl’s at Huckstein. The only customer that McCarl’s presented
       as “stolen” due to Dargenzio’s departure was the Mark West
       Project. Dargenzio testified that he did not solicit the repair job
       with Mark West. Rather, Dargenzio explained that a project
       manager at Mark West sought Dargenzio out to do the repair work
       because McCarl’s performed the work on the original system that
       now needed premature repairs.          Furthermore, Kevin McCarl
       testified that McCarl’s did not utilize exclusive contracts with its
       customers. Thus, McCarl’s customers were free to hire Huckstein
       without violating any existing agreements with McCarl’s.

Trial Ct. Op. at 7-8.

       Upon our review of the record, we detect no basis to disagree with the

trial court. Preliminarily, we emphasize the trial court found Dargenzio was

not bound by the non-compete clause in the 1998 Employment Agreement —

____________________________________________

16 The Supreme Court’s reversal in SHV Coal on appeal pertained only to the
issue of punitive damages. See SHV Coal, 587 A.2d at 702.

                                          - 26 -
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a decision with which we agree.     See supra. Moreover, the Pennsylvania

Supreme Court has explained:

      [T]he solicitation of customers and use of customers lists is
      permissible unless there is a breach of an express contract or
      violation of some confidence. There must be some element of
      fraud or trade secrecy involved . . . But equity is not
      protecting mere names and addresses easily ascertainable by
      observation or by reference to directories.

Spring Steels, Inc. v. Molloy, 162 A.2d 370, 372–73 (Pa. 1960) (citation

omitted).

      In the instant case, the trial court credited Dargenzio’s testimony that

he did not use any confidential information he obtained while working for

McCarl’s to solicit clients for Huckstein. See N.T. Trial at 493. In support of

its claim, McCarl’s directs this Court to emails between Dargenzio and Staso,

Huckstein’s President and CEO, during the two-month period before Dargenzio

resigned. See McCarl’s Brief at 17. It insists these emails prove Dargenzio

“set out to divert business, which he was being paid to acquire for [McCarl],

to a competitor with whom he had agreed to accept employment.” Id. at 17,

quoting SHV, 545 A.2d at 921. However, with regard to one large client,

FedEx, Dargenzio denied soliciting it, and testified instead that the client

asked him to obtain a quote from Huckstein because it “did not want to do

business with McCarl’s anymore.” N.T. Trial at 498-99. Further, while another

email mentioned the Hospital Council’s maintenance contract, Kevin McCarl

conceded that Dargenzio renewed that contract for McCarl’s before he left.

Id. at 235. See also id. at 440-43 (Dargenzio explaining that client for Mark

                                    - 27 -
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West project reached out to him when McCarl’s was not able to fix a problem).

Thus, because we conclude the trial court’s findings are supported by the

record, no relief is warranted.

      Lastly, McCarl’s contends the trial court erred when it found Dargenzio

was not liable for civil conspiracy.     It maintains Dargenzio and Huckstein

“conspired to engage in unfair competition by . . . diverting sales leads from

McCarl’s to Huck[ ]stein, and utilizing confidential information which Dargenzio

had acquired at McCarl’s to further the business interests of Huckstein.”

McCarl’s Brief at 19-20.      Specifically, McCarl’s insists it lost a boiler

replacement contract at Hospital Council to Huckstein after Dargenzio — while

still employed at McCarl’s — informed Huckstein of the upcoming project. Id.

at 20-21.

      This Court has explained the tort of civil conspiracy as follows:

      [A] civil conspiracy is a combination of two or more persons to do
      an unlawful or criminal act or to do a lawful act by unlawful means
      or for an unlawful purpose. A conspiracy becomes actionable
      when some overt act is done in pursuance of the common purpose
      or design held by the conspirators, and actual legal damage
      results.

Baker v. Rangos, 324 A.2d 498, 506 (Pa. Super. 1974).             Furthermore,

“[p]roof of malice, i.e., an intent to injure, is essential in proof of a

conspiracy.” Thompson Coal Co. v. Pike Coal Co., 412 A.2d 466, 472 (Pa.

1979).

      The trial court briefly disposed of this claim as follows: “Having already

determined that McCarl’s failed to prove that Dargenzio or Huckstein used

                                       - 28 -
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confidential information to obtain an unfair advantage over McCarl’s, this

Court correctly held that McCarl’s claim for Civil Conspiracy also failed.” Trial

Ct. Op. at 8. We agree. Regardless of whether Dargenzio provided Huckstein

with sales leads while still employed by McCarl’s, McCarl’s presented no

evidence that Huckstein and Dargenzio agreed together to divert clients away

from McCarl’s in an effort to undermine its business. See Baker, 324 A.2d

at 506; Thompson Coal Co., 412 A.2d at 472. Thus, we conclude the trial

court did not err in entering a verdict for Dargenzio on McCarl’s civil conspiracy

claim.

      Thus, because we conclude the trial court’s verdict is both supported by

the record, and free of legal error, we affirm the judgments entered in favor

of Dargenzio on McCarl’s claims, and in favor of McCarl’s on Dargenzio’s

counterclaims.

      Judgments affirmed.

      Judge Murray joins this Memorandum.

      Judge Olson concurs in the result.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 2/25/2021

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