ENT'ERED02dea0b.netsolhost.com/090521.Fischer.MontCoCirCt...February 16, 2005: $859,000 is drawn from BB&T (Defendants' Exhibit # 98) Spring/summer 2005: A lot of issues on multiple

IN THE CIRCUIT COURT FOR MONTGOMERY COUNTY, MARYLAND

BENSON FISCHER, ET AL. * *

Plaintiffs * *

v. * Case No.: 276599V

* SHELDON FISCHER, ET AL. *

* Defendants *

MEMORANDUM OPINION AND ORDER

This matter was before the Court on Plaintiffs' Sixth Amended Complaint from March 25

to April 2, 2009. The Defendants' Counter-Claim was dismissed during trial. The Third Party

Complaint filed by CoinStar was bifurcated and set for an evidentiary hearing on May 7 and May

8, 2009, which has been postponed to September 21 and 22,2009.

PROCEDURAL BACKGROUND

The parties are a son and his wife, Benson Fischer and Mona Fischer against Sheldon

Fischer and Ann Fischer, Benson Fischer's father and mother. Benson Fischer is 52 years old;

Sheldon is 79. In the interests of clarity, all parties are identified by their first name. In essence,

the Plaintiffs allege that they were co-owners of Coin X Change (hereinafter CXC), a business

which was sold in April of2007 for $4.35 million.

The Sixth Amended Complaint contains 6 counts:

Count I:

Count II:

Count III:

Count IV:

Count V:

Count VI:

Breach of Contract -by Benson and Mona against Sheldon and Ann

Quantum Meruit (lmplied-in-Fact Contract) by Benson and Mona against Sheldon

Fraud by Benson and Mona against Sheldon

Unjust Enrichment (Implied-in-Law Contract) by Benson and Mona against Sheldon

Unjust Enrichment (Implied-in-Law Contract) by Benson and Mona against Ann

Detrimental Reliance by Benson and Mona against Sheldon

ENT'ERED MAY 222009

Clerk of the Circuit Court Montgomery County, Md. tv

By the time of the closing arguments, plaintiffs were largely focused on obtaining the

relief set forth in Counts I, II, IV and V, with a bottom line demand of obtaining half of the

draws by Sheldon and proceeds of the sale of CXC to CoinStar, as well as prejudgment interest

accruing from the sale.

:NTER' D

Clerk of the eire Court Montgomery Co ty, Md.

May 15,2001:

June 2001:

January 30, 2003:

February 18, 2003:

March 28, 2003:

May 2003:

Beginning of 2004:

April 2004:

AprilS, 2004:

April 20, 2004:

April 20, 2004:

April 24, 2004:

May 27, 2004:

CHRONOLOGY

Montgomery Bakers Ownership agreement between Sheldon Fischer and Benson Fischer

Sheldon Fischer and his partners purchase Montgomery Donuts, a 57 year old business, after the previous owners filed for bankruptcy in 1999. The new business is named Montgomery Bakers

Decision of the District of Columbia Court of Appeals, affirming a judgment against Benson rendered by District of Columbia Superior Court Judge Graae on a counterclaim for bad faith litigation, awarding $930,000 in attorney's fees and costs together with $40,000 in punitive damages. See 816 A.2d 1 (2003)

Roof collapses at Montgomery Donuts, putting it out of business

Benson files for bankruptcy, which is still not closed

Benson starts marketing the Coin X Change conceptlbusiness to potential customers. Letters go out, in particular, a May 15 letter to Shoppers Food Warehouse (Plaintiffs' Exhibit #16).

Barry Haberman starts legal services in connection with CXC -most contacts with Benson

Working with CllI1lJilins-Allison

Sheldon says "At this time, Ann is a 50% shareholder" (Docket Entry # 117)

Benson and Mona send bulk mailing of brochure and CD regarding CXC program to potential customers around the country. (plaintiffs' Exhibit #359)

Operation Agreement signed

CXC Articles of Incorporation

Installation Agreement between CXC and Shoppers Food Warehouse

2 Fischer v. Fischer Case No. 276599V

~Ierk of the Circu vlontgomery Cou

May 28, 2004:

June 16, 2004:

June 2004:

June 2, 2004:

June 10, 2004:

October 2004:

Business plans and projections developed for bank

A letter of credit/promissory note for $350,000.00 to the National Capital Bank of Washington, which was due in one year. This is signed by all 4 parties and Montgomery Distributors (by Mona)

Problems with Cummins-Allison; the remote management system not developed yet

Letter from Perkins Coie (counsel for CoinStar) to CXC regarding possible patent infringement

Sheldon writes a check for $67,375 to Cummins-Allison as a deposit on 15 machines

Sheldon and Benson are looking for another bank which will loan more money to CXC

November 2,2004: The BB&T $3 million note signed by Sheldon only

November 12,2004: Meeting with Barrett Penan, accountant

November 2004: The first machines were installed

November 2004: Two option agreements are prepared; never signed.

February of 2005: Sheldon is hospitalized twice and almost dies.

February 16, 2005: $859,000 is drawn from BB&T (Defendants' Exhibit # 98)

Spring/summer 2005: A lot of issues on multiple fronts

May 23, 2005:

June 2005:

June 2005:

July 2005:

July 25, 2005:

Summer of2005:

December 2005:

Barry Haberman resigns

Problems with machines

The National Capital Bank of Washington letter of credit is rolling over; Benson refuses to sign

Things are going pretty bad; Mona emails Sheldon

Sheldon email "all assets 50% in wife's name"

Benson wants to sue; Mona and Haberman dissuade him

Still problems with Cummins-Allison. Sheldon agrees 100% with Benson. Encourages communication with Benson, too

December 14,2005: Sheldon conveys his interest in his home to his wife Ann

May 4,2006: Sheldon email: "I will do what 1 have to do to save this company"

May 8, 2006: CoinStar patent infringement lawsuit filed


c w a.: w ~ Z .u

May 19, 2006:

May 22, 2006:

May 27, 2006:

June 13,2006:

June 13,2006:

June 13, 2006:

July 2, 2006:

July 3, 2006:

July 28, 2006:

Cummins is not selling any more equipment to CXC

SheldonlCXC retains Wiley Rein as counsel in patent litigation

Benson's letter of credit (on his house) called in due to his bankruptcy

Benson changes Sheldon's affidavit to be filed in patent litigation

Email from Sheldon - "Take no direction from Benson"

"What would happen if different ownership documents appeared?" Benson's conversation with Rick Tierney.

Benson Fischer sends out mass email --starting anew business, is no longer affiliated with CXC

Letter from Maury Epner, Esq. to Sheldon announcing formation Pickle Partners. Now Benson is in competition with CXC

Pickle Partners Installation Agreement

September 19,2006: Letter to Wiley Rein from Friedlander, law firm representing Pickle Partners in the patent litigation

December 2006: GAS Software Operating Agreement

April 13, 2007: Wiley Rein memo memorializing settlement of CoinStar v. CXC

******************************************************************************

The business in question was conceptualized in 2003 when Benson saw a similar

machine owned by CoinStar in a grocery store. He asked some questions about the financial

operations of this business and decided to look into whether he could develop such a business.

Benson developed a business plan. The business involved coin changing machines which

were placed in retail stores, primarily grocery stores. He and Sheldon worked with different

manufacturers to come up with a machine that would produce an improved coin counting

machine. Customers would empty their change into the machine and they could take a voucher

to a cash register to be redeemed in the store. A percentage of that money went to CXC, which

paid smaller percentage of the take to the store.

They were abl~ to locate a company to make the machines - - Cummins-Allison. Benson

worked on developing a remote communications software program, which allowed this business

to be run essentially over the phone and on the computer. This software was instrumental to the

company's profitability. It also was a technology that the CoinStar machines did not have.


Benson obtained a copyright on his work in 2003. He did not tell Sheldon about this

copyright until after Benson left the business in July of 2006.

The big break occurred in April of 2004, when Shoppers Food Warehouse agreed to

allow a test program. Once that contract was signed, CXC got its foot in the business and could

then launch expansion plans. It was a very lucrative business.

The 800 pound gorilla in this business is CoinStar. In May of 2006, CoinStar sued CXC

for patent infringement. Ultimately, CoinStar bought out CXC for $4.35 million dollars. It is a

50% share of this money that the plaintiffs seek.

The parties have been in business with each other over the years. First, Yummy Yogurt,

then Montgomery Bakers and later a spinoff, Montgomery Distributors. In 2001, Montgomery

Bakers bought a well known business in this county, Montgomery Donuts, which business was

in bankruptcy. Montgomery Bakers was a thriving entity until one day in February of 2003, the

roof on the building they occupied, collapsed under the weight of a snowfall. At that moment,

the Montgomery Bakers business was over. Lawsuits followed. Benson Fischer filed for

bankruptcy in March of 2003.

After the Montgomery Bakers business collapsed, there was still a very good client

Starbucks. In order to keep that business, Montgomery Distributors became a "middleman" in

the supplying of bakery goods to Starbucks. Another extremely profitable making venture.

According to the testimony, the Montgomery Bakers business was put in Mona's name-to

provide Benson and his family with an income after the collapse of Montgomery Bakers and as

well as to shield Benson from any creditors or the bankruptcy trustee. According to the

evidence, it was Benson who located the vendor which produces the baked goods, which are then

sold to Starbucks.

Sheldon and Benson, father and son, to put it mildly, have issues. There is much anger on

the part of the father as to the son. Father feels he has shouldered much financial burden on

behalf of his son and his daughter-in-law. Father disagrees with his son's tactics, and

particularly his litigious, take no prisoners attitude. The father is proud of his honor in the

business and his reputation for paying his bills. He is not proud of his son's attitude towards

litigation and Benson's cut throat attitude towards people he goes into business with. He has

become tired of the games and the difficulties that follow when Benson is involved.

ENTER'ED MAY 222009

Clerk of the Circuit Court Montgomery county, Md.


Benson, the 52 year old son, is tired of being treated like a child. In many of the

communications throughout this drama, Sheldon treats Benson as a young boy. He calls him a

boy. Father chastises the son. Benson wants his father to acknowledge him as co-owner of a

business Benson feels he created. Sheldon refuses to acknowledge in anyway any co-ownership

of the business.

Sheldon is also furious about a lot of his money being frozen due to Benson's legal

problems and also feels that Benson and Mona owe him for Y2 of the Montgomery Distributors

business. Montgomery Distributors is a spin-off of the Montgomery Bakers business. There was

another prior lawsuit involving the distribution of the assets of Montgomery Distributors that

was decided by Judge Dugan of this Court and is now before the Court of Special Appeals.

That case didn't end the way Sheldon wanted it to end. In Sheldon's mind, Benson and Mona

have wrongfully refused to share in the wealth generated by that business. Sheldon is tired of his

assets being frozen and being involved in his son's endless litigation.

Benson has a grandiose personality. By his own testimony, he never takes no for an

answer. He does not take any of his lawyers' advice. He is impetuous. There isn't anything he

wouldn't do or say in the name of business, even it it's not true. Even if it means not paying

someone who worked for you. He says what he likes and then claims he doesn't mean it later.

His father testified that "Benson doesn't walk a straight line." Benson sends out press releases

with false assertions, making up quotes by other people without consulting them.

Benson's endless emails to his clients and competitors jeopardized the account with

Cummins-Allison, the company that produced the machines that made so much money for the

business. It is likely that his emails and ill-advised press release was an accelerant to the

CoinStar litigation.

Other examples of Benson's underhanded behavior follow. Benson changed the first

page of Sheldon's affidavit to be filed in federal court in the patent litigation before his father

signed it, without his father knowing that Benson made changes on the first page. This alteration

stated that Sheldon a co-owner, rather than what Sheldon thought he was signing - that Sheldon

was the sole owner. In early 2004, Montgomery Distributors made loans to the CXC business.

Later, Benson caused a 1099 form to be sent to his father for that money, which resulted in

Sheldon having to pay taxes on that money. Benson's reason for having the 1099 form issued to

ENTER·ED MAY 222009

Clerk of the Circuit Court Montgomery County, Md.


his father was to make it appear that Benson and Mona had no assets at the end of the year so

that they could get favorable college tuition assistance for Benson and Mona's two children.

All of that said-even according to the father, Benson has much energy.

The reason why there is no paper trail to support Benson's theory that he was a co-owner

of the CXC business is that Benson did not want his creditors or the bankruptcy court to find out

that he had any assets. He was also a liability due to his bad credit, given the bankruptcy.

Further, Sheldon did not want to have Benson's financial and legal problems cause any problems

in the CXC Business.

In the Court and in life, Sheldon is far more credible than his son. Sheldon is still a very

savvy business man who says exactly what he means. Because of this, I have incorporated some

of Sheldon's email statements in this opinion.

According to Sheldon, the reason that Benson was not a co-owner was that Sheldon had

all the financial risk in this business venture. Sheldon was also tired of financially bailing out

Benson and having a lot of Sheldon's money frozen due to Benson's actions. Sheldon was also

angry about how the lawsuit over the assets of Montgomery Distributors was decided.

Even factoring in Benson's credibility issues, it is clear that Benson Fischer did a great

deal of the work necessary to start up this business. He developed the marketing plan, found

potential customers, and did mass mailings. His efforts were relentless. He worked tirelessly

with Cummins-Allison, the machine manufacturer, to refine the remote communications

software. Once the business was up and running, Benson was largely responsible for the day-to

day workings of the business. When there were service calls for the machines, Benson was the

"go to" guy. He was on call 24/7.

The issue of who obtained the start up financing was contested. Benson says he was

involved. Sheldon says it was him. How much Benson was involved in locating the lender is

not that important in the overall scheme of things. Sheldon was on the hook for the lion's share

of the financing. Sheldon was the money man. Benson was the inspiration, and until he left

CXC in July 2006, the perspiration.

The evidence on Mona's involvement was limited. In April of 2004, Mona worked

together with Benson to send out the packages to proposed customers, eventually filling up two

trucks from the home. She paid for the trucks. The company in her name, Montgomery

Distributors, contributed financially to the initial start up costs. She and Benson personally


signed for the first letter of credit for $350,000. She proofread the mailings to the potential

customers. She testified that the family always talked about business at family gatherings. Other

than those early efforts, she didn't get involved in the day to day workings of the business.

Ann Fischer's testimony was not ~articularly credible. She claimed she knew nothing

about this business. She claimed that the only topic she and Mona discussed was recipes.

However, there were a few things on which her memory was detailed and crystal clear, making

her assertion that she knew nothing not especially credible. Nonetheless, given the generation

she came from, it is credible that the roles in her family were well defined. Sheldon made the

money and she spent it. That said, the notion that she did not know that the CXC business sold

for $4.35 million dollars and that half of those funds were put into her joint bank account is not

credible.

Notwithstanding the fact that Ann's testimony was not particularly credible, that does not

constitute affirmative evidence of the contrary. VF Corporation and Blue Bell, Inc. v. Wreham

Aviation Corporation 350 Md. 693, 711 (1998). Disbelief in the witness' testimony does not

supply a want of proof. Wessel v. Buhler 437 F. 2d 279 (9th Circuit 1971).

There was no evidence that Ann owned the company or was any party to an agreement

with Benny and Mona. Ann never operated any aspect of the business, made any decisions, reset

or invented any machines. She never wrote software or worked at CXC. No one ever said that

she actually agreed to anything related to CXC by implication or expression.

There was no evidence that Ann contracted with Mona or Benson or Sheldon to create

and operate CXC. She was not listed as an officer, employee or manager of CXC. She never

held herself out to anyone as an owner of CXC. She was not on any contracts with the suppliers.

She never held herself out to any customers as a representative of CXC.

Turning to the various causes of action:

Count I - Breach of Contract: There was no written contract and no written

documentation to support any agreement that Benson and Mona were owners of CXC. Count I

is dismissed.

Count II - Quantum Meruit Omplied-In-Fact Contract): The Court is persuaded that

there was an implied in-fact contract between Benson Fischer and Sheldon Fischer. On this

count, the Court finds in favor of Benson against Sheldon only.

ENT"ER'ED MAY 222009

Clerk of the Circuit Court MontQomery County, Md.


It is true that all the paperwork shows that Sheldon alone is the owner. The only person

named on any formal written documents, other than the one year letter of credit for $350,000 in

June of2004, is Sheldon.

Early on in April 20, 2004 email from Barry Haberman, counsel for CXC, he

recommends

that the business be set up as a Maryland LLC, with a Maryland corporation as the general manager. (He recommends setting) up CXC, LLC with CoinManagement, Inc. as the management company. Benny and Mona as they would own the management company and Sheldon and Ann would own the other 50% ( t bye?). The management company would employ whoever it wants, ... Benny as a salesperson without authority to bind the company and pay salaries, set up health care plans, etc., with the real revenues and profits going to the LLC, which is owned 50% by Mona and Benny t bye, and 50% by Ann and Shelly (t bye?) ... The purpose of this proposed structure is to restrict the ability of anyone to go after the hard assets of the LLC and the bulk of the revenues. Let me know what you think.

(Plaintiffs' Exhibit #28).

This scenario suggested by Mr. Haberman never came to fruition. In the early drafts of

the Operating Agreement, all four parties are identified as owners, then Sheldon and Ann, then

just Sheldon. The final Operating Agreement had only Sheldon as an owner.

A great deal of the evidence presented was in the form of emails. They were excessive in

number and emotion. However, what is telling in all those emails is what Sheldon did not ever

say-that Benson was not a co-owner. All he ever says is "trust me-I am your father." He never

flat out said that Benson was not an owner. He can't. Should any creditor get wind of it, it's

trouble in the form of litigation and freezes. Also, the financing is predicated on Sheldon being

the owner. Sheldon can't acknowledge that Benson is the -co-owner and ultimately, because he is

so burned by his son's actions and financial liabilities, Sheldon WON'T say that Benson is a co-

owner.

Now it's about principal, bad blood and leverage. Sheldon is holding the proceeds of the

sale of CXC so that Sheldon can get his understanding of his rightful share of the Montgomery

Distributors business and as insurance that he gets what is being held up by the bankruptcy court

and what creditors have frozen.

ENT'ERED MAY 222009

C'erk of the Circuit court Montgomery county, Md.


Q ILl I:t

~ Z w

There is an email where Sheldon acknowledges his son's energy and hard work. And

again-Sheldon never says Benson is not an owner. He is silent on the subject. The business

was set up that way initially to avoid the outside world of knowing that Benson was an owner.

So Sheldon tells everyone that Benson works for him. That, of course, drives Benson crazy.

The notion argued by Sheldon's counsel that his adult son was working for free for his

father is not plausible, given the facts of this case. The tireless work that Benson did in the start

up and in the servicing of this business supports that this was a joint business venture and that

they would all be financially rewarded in the end. Further, the case law cited by counsel for the

defendants, Sunderland v. Ebling 125 Md. 686 (1915), is from another time and stems from a

scenario where work was done by an adult child while the child was living with the parent. Not

the case here.

Manasseh Katz, the computer support contractor, received a $70,000.00 bonus for work

done above and beyond the call of duty. It makes no sense that Mr. Katz would be paid a bonus

and yet Benson would get zero.

In a May 4, 2005 email from Sheldon to Benson, Sheldon acknowledged "there is no

question in my mind about how much effort you have put into making Coin X Change a

company with great potential to be sold for a lot of money. I have never belittled your efforts."

(Plaintiffs' Exhibit # 145).

In a June 27, 2005 email from Sheldon to Barry Haberman, Sheldon wrote: "He does

work hard and accomplishes a lot. It seems to rub him wrong that my name gets the money. We

both contribute." (Plaintiffs' Exhibit #129). Later on in the correspondence, Sheldon stated "all

of the problems will have to be ended before I do anything with any stock in the ~ompany. I

have already suffered since 2003 and won't allow that to happen again. When the dust settles I'm

sure it will all work out and we will have a fair agreement and understanding." (Plaintiffs'

Exhibit #129, at 5).

Other evidence of the joint nature of this endeavor is the November 12,2004 handwritten

notes made by Barrett Penan, the accountant. Mr. Penan's notes say, among other things,

"provide Schedule C for Sheldon-solely owned by Sheldon because of Benson's legal issues.

Benson will become 50% owner in the future." (Plaintiffs' Exhibit #113).

In February of 2005, Benson got very nervous when his father was hospitalized and

suffers a bout of sepsis and almost dies. Benson realized he'd better get something in writing


and attempts to get something in writing. It's true that there would be no consideration for these

option agreements. But these were just a nicety - a legal way which would allow Benson, and

hopefully, his wife, to be Y2 owners of the business without Benson's name on any ownership

documents, invisible to the outside world. Benson's efforts were unsuccessful.

The situation became more agitated when it was time for the original letter of credit to be

renewed. Sheldon didn't want to be involved with Benson and Benson didn't want to sign

anything because Benson can't get his father to acknowledge his claim to CXC.

In a July 25, 2005 email from Sheldon to Barry Haberman, which was then forwarded to

Benson, Sheldon recounts the financial consequences he has suffered as a result of his son.

(Plaintiffs' Exhibit #137). Sheldon writes "all of his assets are 50% in my wife's name plus

some real estate." (Plaintiffs' Exhibit #137 at ~ 5). At paragraph 10, "We can resolve our

problems with a salary given to me in CoinExchange as General Manager which will make up

for the asset of MBI (meaning Montgomery Bakers - the Starbucks account). I will then share

50/50 with the profits of CoinXChange. If that can be agreed on then we can move on to bigger

and better goals." (Plaintiffs' Exhibit #137 at ~ 10). Why would he have to ask for a salary ifhe

was the sole owner?

There were some problems in the latter part of 2005 and the early part of 2006 with the

Cummins-Allison machines. While many would object to the inflammatory nature and number

of Benson's communications, the evidence is abundant that Benson was the point person dealing

with Cummins-Allison.

Sheldon says in an email to Cummins-Allison dated 4/12/06, "I agree 100% with the

issues that Benson has raised with your company." (Plaintiffs' Exhibit # 181). In response to

their refusal to deal anymore with Benson, Sheldon states "we must continue to have full

communication with each other's staff, which includes Benson." (Plaintiffs' Exhibit #181).

Later in the saga, in a June 13,2006 email from Sheldon to CXC counsel in the CoinStar

litigation, and after Benson has left the company, Sheldon directs that while Benson not be

involved in the litigation, he (Benson) is to be copied as to what is going on. (Plaintiffs' Exhibit

#209). He states at that point (this is after the changed affidavit) that "no person is authorized to

represent CXC except Barry Haberman and Wiley Rein .... The reason for these statements must

remain silent to all parties unless notified different from me or my wife Ann Fischer." (plaintiffs'

Exhibit #209)

ENTER·ED MAY 222009



This Court finds that Benson Fischer has proven by a preponderance of the evidence an

implied-in-fact contract between himself and Sheldon Fischer. As support for that finding, the

Court looks to Alternatives Unlimited, Inc. v. New Baltimore City Board of School

Commissioners, 155 Md. App. 415 (2004), a case written by Judge Moylan.

ld at 471-72.

A good many contracts are never expressed in words, or at least not fully in words. These are genuine understandings between the parties even though they have not been spelled out. . . . The term [implied in fact contract] only means that the parties had a contract that can be seen in their conduct rather than in any explicit set of words. In other words, the contract is proved by circumstantial evidence.

In Alternatives, Judge Moylan gave a long history of the differences between contract

implied in fact and contract implied in law. In doing so, Judge Moylan quotes Judge Salmon in

Mogavero v. Silverstein, 142 Md. App. 259, 275 (2002):

An implied in fact contract is a "true contract" and "means that the parties had a contract that can be seen in their conduct rather than in an explicit set of words." Implied-in-fact contracts are "dependent on mutual agreement or consent, and on the intention of the parties; and a meeting of the minds is required." . . . A true implied contract, or contract implied in fact, does not describe a legal relationship which differs from an express contract: only the mode of proof is different.

ld. At 479 (citations omitted).

'The term implied or inferred contract, also sometimes called an implied in fact contract, refers to that class of obligations which arises from mutual agreement and intent to promise, when the agreement and promise have simply not been expressed in words. Despite the fact that no words of promise or agreement have been used, such transactions are nevertheless true contracts, and may properly be called inferred contracts or contracts implied in fact.' ld at 4 79 (citing 1 Williston on Contracts § 1.5).

Judge Moylan also quoted Judge Cathell: "'An implied contract is an agreement which

legitimately can be inferred from intention of the parties as evidenced by the circumstances and

the ordinary course of dealing and the common understanding of men. '" Id. at 479.

That is what we have here: a contract implied in fact. An ordinary course of dealing and

common understanding supports the reality that Benson and Sheldon were both owners, given

Benson's contributions to the endeavor.

ENT"ERED MAY 222009



Benson identified the business, investigated it, created it, designed it and was a part of

making the contacts that retained their first account. He, along with his father, was involved in

countless meetings, including attendance at a Chicago trade show. In April 2004, Benson and

his wife spent many hours packaging up boxes containing promotional materials to potential

customers.

As of July, father and son continue to bicker. A July 17, 2004 email from Sheldon to

Benson:

I led [Neal] to believe that you were not involved but that I may give you a job in the sales dept. He knows no other story. Meyer Bobrow was told the same thing, as well as others. It should be obvious to you that I avoided having you involved due to the problems I have with the Mont Bakers .. As usual you overreact to everything. Relax boy relax, I'm the one with the pressure now.

(Plaintiffs' Exhibit #120).

In a July 19, 2004 email from Sheldon to Benson, Sheldon writes "Lets see what happens

when the dust settles and CXC makes it's entry into the world. When we were losing money, we

had a good relationship. Let's not ruin that when we start to do well." (Plaintiffs' Exhibit #118).

In his reply email to Mona dated July 31, 2005, Sheldon again recounts what he perceives

to be his son's legal cesspool. While not explicitly saying it applies to this case, Sheldon relates:

"Many partnerships exist with two people. One offers ideas and effort, the other offers the

money. Ideas go nowhere without the money."

Benson was the one who came up with the CXC business idea. Benson engaged in

massive marketing efforts in 2003 and in April of 2004, he created the artwork for the machines,

he modified the vault to the machine to make it accommodate more change, he worked up the

business plan which allowed CXC to get the bank loans, he worked with Joe Amato to provide

the required documentation to obtain financing. He was the point person when the machines had

problems.

Sheldon, in his emails, tells us the actual intent behind the ownership of the company.

Sheldon also communicates the intent by what he didn't do. He never denied Benson's interest.

He first kept ownership silent because he had to; in the end, he refused to acknowledge it

because he could.

ENT'ER'ED MAY 222009



It is also very clear that the ability to get loans and the one whose financial security was

on the line was Sheldon. Benson was a financial liability. But without Benson's initial efforts,

there would be no CXC.

A great deal of Sheldon's justification stems from what happened with the Starbucks

account. That controversy was decided already in the Montgomery Distributors litigation before

Judge Dugan of this Court, which case now before by the Court of Special Appeals. I cannot

rework this CXC agreement to factor any perceived inequities in the Montgomery Distributors

dispute. That issue was litigated, decided, and is on appeal.

Similarly, Sheldon and Ann put up a letter of credit for $250,000 to save Benson's house

from creditors. That generous act has nothing to do with this agreement to enter into the CXC

business.

The more difficult question is: What is the ownership of the two women?

MONA

The only evidence that Mona was an owner of CXC is as follows:

• Mona put forth efforts in the start up work in the fonn of getting the initial mailing out in April of2004 (Plaintiffs' Exhibit #359)

• She and her company signed for the first Letter of Credit in June of 2004. • Her company, Montgomery Bakers, loaned the CXC businesses in 8 checks from

March of2004 to July of 2004 • Mona was identified as a 50% tenants by the entirety owner in the first draft of the

Operating Agreement (Plaintiffs' Exhibit #103) • She paid for two trucks for the mass mailing in April of 2004 • The organizational structure of the Montgomery Bakers Corporation (Defendants'

Exhibit #506) • The Barry Habennan proposals

However, these facts are insufficient, even altogether, to prove any mutual agreement,

consent or intent that Mona was an owner of CXC.

ANN

Turning to Ann Fischer, the short answer is that her husband earns the money and she

spends it. The only evidence to support Plaintiffs' theory that Ann was an owner is as follows:

Clerk of the eire t Court Montgomery Co ty, Md.

• Ann was identified as a 25% owner in the first two drafts of the Operating Agreement (Plaintiffs' Exhibits #103 and #104)

• Ann was on the Letter of Credit for the first year • Ann used a company gas card • The Barry Habennan proposals when he discusses his recommendations for the

organizational structure of CXC


• The April 5, 2004 email from Sheldon (Plaintiffs' Exhibit #117): "At this time she (Ann) is 500/0 shareholder"

• Sheldon's admission that all of his property was in his and his wife's name, with the exception of the parties' marital home

• A document was created, but never signed, where it was envisioned that Ann would be the owner of GAS, a software company that was to spin off of CXC.

• Ann Fischer gained when the proceeds of the sale of CXC was deposited in a joint account.

As was stated before, the notion that Ann knew nothing about CXC is not credible. The

testimony by Mona Fischer that the family always talked about business at family gatherings is

more credible. It may well be that once things got sour, and Benson put up an option agreement

in his father's face at a time that Sheldon had been gravely ill, may have sealed Ann's distaste

for talking about the business.

Nonetheless, the evidence is not there to show by a preponderance of the evidence that

the parties intended that Ann was to be a co-owner. She did no work and took no action to create

or support this company.

Count III - Fraud: This count alleges fraud by way of Sheldon's false representations

for the purpose of defrauding the Plaintiffs. There was no evidence to support this cause of

action. Count III is dismissed.

Count IV - Unjust Enrichment - Implied-In-Law Contract as to Sheldon

Court V - Unjust Enrichment - Implied-In-Law Contract as to Ann:

Plaintiffs pled claims for unjust enrichmentlimplied-in-Iaw contract as an alternative to

their claim for breach of contract, either express or implied-in-fact. This Court has previously

found that an implied-in-fact contract exists between Benson and Sheldon Fischer. Therefore, an

unjust enrichment claim as to Sheldon does not lie. However, this Court finds that the Plaintiff,

Benson Fischer, has sustained his burden of proof as to a claim of unjust enrichment as to his

mother, Ann Fischer.

No quasi contractual claim can arise when a implied-in-Iaw contract exists between the

parties concerning the same subject matter. Here, there is no express contract; no contract in

writing. An implied in law contract, or quasi contract is a "fiction invented by common law

courts to permit recovery by contractual remedy in cases where, in fact, there is no contract, but

where circumstances are such that justice warrants a recovery as though there had been a

NTER·ED MAY 222009

Clerk of the Circuit Court ~!"ntnnmArv County, Md.


promise." Alternatives Unlimited, Inc. v. New Baltimore City Board of School Commissioners,

155 Md. App. 415, 480 (2004).

Quasi contracts unlike true contracts, "are not based on the apparent intention of the

parties to undertake the performances in question, nor are they promises. They are obligations

created by law for reasons of justice." Id. At 481.

To sustain a claim based on implied in law/ unjust enrichment, plaintiffs must prove:

1. A benefit conferred upon the defendant by the plaintiff;

2. An appreciation or knowledge by the defendant of the benefit; and

3. The acceptance or retention by the defendant of the benefit under such

circumstances as to make it inequitable for the defendant to retain the

benefit without the payment of its value.

Id (citing Willison on Contracts (3rd ed. 1970)).

Unjust enrichment is the measure of damages, given that the Court has found an implied

in fact contract. As Judge Moylan stated in Alternatives, "restitution in the form of a money

judgment based on a claim of quantum meruit is unquestionably a remedy at law." Id.

There can be unjust enrichment if actual services were performed without the request of

the defendant, but which nevertheless benefited the defendant in some way. This is what we

have here with respect to Ann.

"If recovery is allowed for such unrequested services, it is clear that the recovery is the

quasi-contract sort, that is, based upon the principal against unjust enrichment and not on

contract." Id at 477. "The law implies a promise on the part of the defendant to pay a particular

debt." Id. at 480. A "money judgment recovered by virtue of a quasi-contract is a remedy to

prevent against the unjust enrichment of the defendant." Id at 485. A quasi contract is no

contract at all. It involves no assent.

The "measure of recovery is the gain to the defendant, not the loss by the plaintiff." Id.

The restitution claim (here it's titled as unj.ust enrichment) is aimed at "forcing the defendant to

disgorge benefits that it would be unjust for him to keep." Id.

In other words, "the actual unjust gain of the defendant (restitution)." Id

As is stated in the Restatement

'a person is enriched if he has received a benefit,' the law does not

E'NT- RED consider him unjustly enriched unless 'the circumstances of the receipt of the benefit are such as between the two that to retain it would be unjust. ..

Clerk of t Montgo

Circuit Court County, Md.


the fundamental principle that it is not enrichment per se that obligates the beneficiary to make restitution to the benefactor but only UNJUST enrichment.

Id at 500 (citing Restatement, Restitution § 112 (1937».

In a claim for unjust enrichment, the measure of recovery as against the defendant Ann

Fischer would be the gain to the defendant-- appropriately Y2 of the net proceeds of the sale of

Coin X Change. In this case, the defendant, Ann Fischer, should not benefit by retaining all of

the net proceeds from the sale of CXC. It would be unjust.

Benson did a lot of the initial leg \-vork, business plans, soliciting clients, the day to day

operations and the bulk of the service calls. He worked with Cummins-Allison in developing the

remote communications software. He was the point person when there were problems. Given

all the work Benson put in, it would be unjust to allow Ann to retain all of the profits from the

sale of CXC. Accordingly, as to Count V, judgment is in favor of the Plaintiff, Benson Fischer,

as to Defendant, Ann Fischer. Count IV is dismissed.

Count VI - Detrimental Reliance - There was no evidence introduced as to this cause

of action. Count VI is dismissed.

EOUIT ABLE ESTOPPELIUNCLEAN HANDS ARGUMENT

Defendants' argument that the doctrine of unclean hands prevents Plaintiffs from any

recovery is inapplicable to the instant case. "For the clean hands doctrine to apply, 'there must

be a nexus between the misconduct and the transaction [at issue], because 'what is material is

not that the plaintiffs hands are dirty, but that (she) dirties them in acquiring the right (she) now

asserts. '" Mona v. Mona Electric Group, Inc., 176 Md. App. 672, 714 (2007) (citing Turner,

supra, 147 Md. App. 350, 420 (2002). Here, there is no nexus between the transaction-the

creation and ownership documents of CXC-and the alleged misconduct. As explained above,

the misconduct alleged by the Defendants stems from prior transactions between the parties,

namely, the Montgomery Bakers business. Further, the claims alleged in the Sixth Amended

Complaint are claims at law, not equitable claims. Therefore, the doctrine of unclean hands does

not apply to this case.

PREJUDGMENT INTEREST

The next question is that of prejudgment interest. Whether or not prejudgment interest is

awarded is discretionary to the trial judge.

f the Circuit Court mery County, Md.


c W 0:

~ Z W

Many times Benson was a liability, almost losing the contract with Cummins-Allison by

his excessive emails, the press releases against legal advice, the undisclosed patent, the litigation

"threats" by his new company Pickle Partners, his difficult behavior during the CoinStar

litigation and the fact that all of this was done in a fashion to avoid his creditors. That said, this

company was sold for over $4 million dollars. The company would never have been viable but

for the sweat and efforts of Benson Fischer in the start up and his efforts during the operation of

the company.

Sheldon knew that Benson was to be a co-owner. Initially, he couldn't admit it in writing.

As time went on, he wouldn't admit it. Now, Sheldon wants to use it as leverage due to what he

perceives to be a bad result in the Montgomery Distributors litigation and the freezing up of his

assets.

Still there is no way of knowing whether CXC could have been sold for more if Benson

had not been causing problems. This Court is certain that Sheldon sold CXC for the best price

he could get. In the 4/13/07 attorneys' memo memorializing the settlement agreement with

CoinStar (Plaintiffs' Exhibit #240), the firm of Wiley Rein notes that CXC was facing an

unfavorable and uncertain business environment and had limited potential for immediate growth.

The Giant Food (Royal Ahold) contract was lost, with Giant Food having just entered into a 5

year contract with CoinStar. CXC was without a supplier of coin counting machines. Cummins

Allison wouldn't sell their products anymore to CXC. Whether CoinStar bought them out or

Cummins-Allison was just tired of Benson's "repeated, unreasonable, and undiplomatic

demands", the fact is that CXC's future was dimming. It also appeared that CXC would not

prevail in the CoinStar litigation. It was time to get out.

This was a contract-in-fact between Sheldon and Benson from the beginning.

Considering the question of fairness and balancing the equities, it is appropriate that prejudgment

interest be awarded in this circumstance.

DAMAGES

In the Alternatives case, Judge Moylan quotes again from the Mogavero case:

If the quantum meruit is the claim in a case based on an implied-in-fact contract, quantum meruit is the measure of damages. The value of the work done and the services performed by the plaintiff for which he has not been compensated measure the loss suffered by the plaintiff.

Id. at 484 (citing Mogavero v. Silverstein, 142 Md. App. 259,275 (2002)).


As Judge Salmon pointed out in Mogavero: "Recovery on a contract implied-in-fact is

based upon the amount that the parties intended as the contract price or, if that amount is

unexpressed, the fair market value of the plaintiffs services." Mogavero, 142 Md. App. at 275.

The Court finds that Benson and Sheldon intended to share in the profits. Sheldon

shouldered all the financial risk. The financing was obtained on the strength of Sheldon's good

credit, reputation and significant assets. On the other hand, Benson provided much of the leg

work and was the initial inspiration.

The fair market value is one half of the draws taken by Sheldon as well as one half of the

net proceeds from the sale ofC X Change to CoinStar.

Accordingly, for the reasons indicated above, the Court does the following with respect

to the six counts in Plaintiffs' Sixth Amended Complaint:

Count I: Breach of Contract - Dismissed

Count II: Quantum Meruit (Implied-in-Fact Contract)--Judgment in favor of Benson

Fischer against Sheldon Fischer ONLY. Plaintiff Mona Benson's claim is DENIED

Count III: Fraud - Dismissed

Count IV: Unjust Enrichment (Implied-in-Law Contract) - Dismissed

Count V: Unjust Enrichment (Implied-in-Law Contract) by Benson Fischer and

Mona Fischer against Ann Fischer -- Judgment in favor of Benson Fischer ONLY against Ann

Fischer. Mona's claim is denied.

Count VI: Detrimental Reliance by Benson Fischer and Mona Fischer against

Sheldon - Dismissed.

Judgment is entered in the amount of $1,252,656.06 plus interest in the amount of

$121,830.79, for a total of $1,374,486.85, against Sheldon and Ann Fischer in favor of Benson

Fischer ONLY.

Datd ,

ENT-ER'ED MAY 222009

Clerk of the Circuit Court Montgomery county, Md. t,IV 19 Fischer v. Fischer

Case No_ 276599V

Documents

ENT'ERED02dea0b.netsolhost.com/090521.Fischer.MontCoCirCt...February 16, 2005: $859,000 is drawn from BB&T (Defendants' Exhibit # 98) Spring/summer 2005: A lot of issues on multiple