MOONEY v. AINSWORTH, INC. et al

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
__________________________________________
JAMES C MOONEY, 	:
Plaintiff, 	:
:
v. 	: 	Civil No.: 5:25-cv-03598-JMG
:
AINSWORTH, INC. et al., 	:
Defendants. 	:
__________________________________________
MEMORANDUM OPINION
GALLAGHER, J. 	October 8, 2026
I. 	OVERVIEW
This case originally arose from Defendants Ainsworth, Inc.’s (“Ainsworth”) and GDI
Integrated Facility Services, Inc.’s (“GDI”) (collectively, “Defendants”) alleged failure to pay
Plaintiff James C. Mooney, in his Capacity as the Representative of the Former Members of
Enginuity LLC (“Sellers”), pursuant to the terms of a Membership Interest Purchase Agreement
(“MIPA”). On March 4, 2026, Defendants sought leave to file an Amended Answer and
Counterclaim to Plaintiff’s Complaint in which they sought indemnification pursuant to the MIPA
for alleged misrepresentations by Plaintiff. The Court granted in part Defendants’ Motion allowing
the counterclaim for indemnification to proceed. Plaintiff moved for summary judgment seeking
to dismiss Defendants’ counterclaim. For the following reasons, Plaintiff’s motion is DENIED.
II. 	BACKGROUND
A. The Membership Interest Purchase Agreement (“MIPA”)
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On September 1, 2021, the Sellers1 of Enginuity, LLC (“Enginuity”) entered into the MIPA
with Defendant Ainsworth2 in which Ainsworth purchased all the Company Units of Enginuity as
of the Closing Date. See Statement of Undisputed Material Facts in Supp. of Pl.’s Mot. for Summ.
J. (“Pl.’s SMF”), ¶¶ 1, 3 (ECF No. 78); Resp. to Pl.’s Statement of Undisputed Material Facts and
Additional Facts in Opp. of Pl.’s Mot. for Summ. J. (“Resp. to Pl.’s SMF”), ¶¶ 1, 3 (ECF No. 94).
The MIPA provides that the “Closing Date” is the date of execution of the MIPA which is
September 1, 2021. See Pl.’s SMF ¶ 2; Resp. to Pl.’s SMF ¶ 2.
Article IV of the MIPA is titled “Representations and Warranties of the Sellers and the
Companies” and states in introduction that “[a]s a material inducement to the Buyer to enter into
this Agreement, except as set forth in the disclosure schedules delivered by the Company and the
Sellers to Buyer concurrently with the execution of this Agreement (the “Disclosure Schedules”),
each of the A Members and the Company hereby jointly and severally represent and warrant to
Buyer as follows as of the date hereof[.]” Appendix, at Appx. 17. Section 4.16 of Article IV –
titled “Tax Matters” – includes a representation and warranty that “The Company has not deferred
any Taxes pursuant to the CARES Act or IRS Notice 2020-65 (or any corresponding or similar
provision of any state, local or foreign Law enacted in connection with COVID-19) and has not
affirmatively applied for, filed for or otherwise claimed any Tax credits pursuant to the CARES
1 James C. Mooney is acting as representative of the “Sellers” which consists of all
members of Enginuity who held Class A Common Units (“A Members”) and all members of the
Company who were not A Members but who held Class B Common Units. Appendix to Plaintiff’s
Motion for Summary Judgment (ECF No. 83) (“Appendix”), at Appx. 10.
2 According to the MIPA, Defendant Ainsworth is an indirect wholly owned subsidiary of
Defendant GDI and GDI agreed to act a payment gaurentor for Ainsworth under the agreement.
Appendix, at Appx. 10, 58.
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Act (or any corresponding or similar provision or any state, local or foreign Law enacted in
connection with COVID-19).” Appendix, at Appx. 35.3
Section 7.2 of the MIPA is titled “Indemnification” and provides:
(a) Indemnification by the Sellers. Subject to Section 7.2(b), the A Members shall jointly
and severally indemnify Buyer, the Company, and their respective officers, managers,
directors, officers, partners, agents, employees, representatives, Affiliates, subsidiaries,
parents, assigns, successors and predecessors (other than Sellers) (collectively the
“Buyer Parties” and hold each of them harmless from and against and pay on behalf of
or reimburse such Buyer Parties in respect of any Loss which any such Buyer Party
may suffer, sustain, or become subject to, through and after the date of the claim for
indemnification as a result of, arising out of, in the nature of, caused by, or relating to:
(i) 	the breach of any representation or warranty made by any of the Sellers,
Representative, or the Company contained in this Agreement or the
Transaction Documents; . . .
B. The Employee Retention Credit (“ERC”)
Disputes arise regarding Sellers’ pursuit of an Employee Retention Credit (“ERC”) –a tax
credit offered in connection with the CARES Act.
On July 19, 2021, Daniel Maurer, Enginuity’s head of finance, emailed David Hinchey,
GDI’s Executive Vice President of Corporate Development, informing Mr. Hinchely that Mr.
Maurer was checking to see if Enginuity was eligible for the ERC and stating that he “[j]ust wanted
to make sure it was okay for Enginuity to pursue.” Appendix, at Appx. 217. Mr. Hinchey
responded, “To be honest I’ve got no clue on the employee retention credit, but anything you can
claim prior to the closing date is yours.” Id. The parties disagree about the significance of this
exchange. Plaintiff states that Sellers asked for permission to apply for the ERC and that
permission was granted. See Pl.’s SMF ¶¶ 34-35. Defendants dispute that characterization and
direct the Court to testimony in which Mr. Hinchey stated “I remember having an email from their
3 The “CARES Act” is the Coronavirus Aid, Relief and Economic Security Act of 2020.
Appendix, at Appx. 59.
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VP of finance preclosing asking if they could file, and I said, as long as you file preclosing and
you get the funds preclosing, then, yes, you can. But after that I heard nothing from them whether
they did or not.” See Resp. to Pl.’s SMF ¶¶ 34-35; Supplemental Appendix to Defendants Response
in Opposition to Plaintiff’s Motion for Summary Judgment (“Supp. Appendix”), at Supp. Appx.
26-27. He further testified that he “assumed that they had not filed for it because of the statements
that they made in the schedules of the first agreement, you know, where they essentially stated
they had not filed for it.” Supp. Appendix, at Supp. Appx. 27.
Nevertheless, the Parties agree that on August 20, 2021, Alliant Group, a third-party
consulting firm hired by Enginuity, calculated a potential ERC of $648,116 for Q4 of 2020 based
on qualifying wage expenses. See Pl.’s SMF ¶ 6; Resp. to Pl.’s SMF ¶ 6; Appendix, at Appx. 76.
The parties further agree that on December 21, 2021 – after the Closing Date – Plaintiff
filed an ERC application (Form 941-X) in which it claimed a tax-refund of $648,116.44 for pre-
closing tax payments made by Enginuity. See Pl.’s SMF ¶ 36; Resp. to Pl.’s SMF ¶ 8-9; Appendix,
at Appx. 220-225.
The Parties disagree however whether this application was the first time that Enginuity had
applied for – or otherwise claimed – the ERC. For example, Defendants direct the Court to
testimony from Mr. Maurer in which – when asked about whether Enginuity had, as of September
2021, “applied for tax credits in connection with any COVID-19-related act or legislation or
regulation” – 	he responded “Yes. . . . We had the Alliance Group [sic] help us with some tax
credits. We also did the PPP. So there was two different ones there, yeah. But we didn’t do the
second PPP.” Resp. to Pl’s SMF ¶ 36; Supp. Appendix, at Supp. App’x 78.
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Regardless of when application for the ERC began or was submitted, the Parties agree that
Enginuity sought to include the calculated ERC amount as revenue in the Closing Working Capital
Statement. See Pl.’s SMF ¶¶ 8-9; Resp. to Pl.’s SMF ¶¶ 8-9.
C. The Working Capital Adjustment
Pursuant to the MIPA, the purchase price was $17,650,000.00 but this price was subject to
applicable adjustments after the Closing Date. See Pl.’s SMF ¶ 4; Resp. to Pl.’s SMF ¶ 4. One such
adjustment was referred to as the “Working Capital Adjustment.” See Pl.’s SMF ¶ 5; Resp. to Pl.’s
SMF ¶ 5. The Working Capital Adjustment adjusted the purchase price based on Enginuity’s
Closing Working Capital, as determined by the Closing Working Capital Statement. Appendix, at
Appx. 14. The purchase price would be adjusted by an amount equal to $4,000,000 minus the
Closing Working Capital. Id. If this difference were negative (meaning the Closing Working
Capital was less than $4,000,000), then the purchase price would be increased – dollar for dollar
– by the absolute value of the difference. Id. If this difference were positive (meaning the Closing
Working Capital was greater than $4,000,000), then the purchase price would be decreased – dollar
for dollar – by the difference. Id. In other words, the greater the Closing Working Capital, the more
Defendants would be required to pay under the MIPA.
The Parties describe a back-and-forth negotiation over the Closing Working Capital
Statement in which the ERC was eventually included as revenue – raising the overall Closing
Working Capital. On November 16, 2021, Daniel Maurer, Enginuity’s Chief Financial Officer sent
Jonathan Giaramita, Ainsworth’s Vice President of Finance, a spreadsheet described as a “Trail
Balance” as of August 31, 2021 (the day before the Closing Date). Pl.’s SMF ¶ 12; Resp. to Pl.’s
SMF ¶ 12; Appendix, at Appx. 108-109. After receiving the spreadsheet, Mr. Giaramita emailed
Charles-Etienne Girouard, GDI’s Director of Financial Information, stating “please see the
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attached trial balance from 08.31.2021, which includes the balance sheet accounts. In speaking
with Daniel, since disclosing the closing balance sheet at the conclusion of the deal, he’s create
[sic] an account for Employee Retention Credit as an asset (approximately $650k) and as added
revenue pre-deal.” Id. On December 20, 2021, a senior account manager at Ainsworth shared an
Excel spreadsheet with a tab titled “Work Cap.” Pl.’s SMF ¶ 14; Resp. to Pl.’s SMF ¶ 14;
Appendix, at Appx. 128-135. The “Work Cap” tab included a row for “Miscellaneous receivable”
and a note stating “Jonathan to review the employee retention credit specifically.” Pl.’s SMF ¶ 16;
Resp. to Pl.’s SMF ¶ 16.
Upon seeing the inclusion of the ERC as a receivable, Defendants state that they sought
supporting information from Sellers. Resp. to Pl.’s SMF ¶ 14. Regarding the additional information
about the ERC received from Sellers, Paul Mota, Ainsworth’s Head of Finance, testified:
So they -- they contracted Alliant to do the initial study, and the Alliant submitted
an application on their behalf, again, with an estimate amount that they were going
to get 650,000 ish. 	So we were told this has -- this has been submitted. This is
coming to us. It should be paid to us, you know, any day. So, yeah, based on that
information, and we -- we had copies of the invoice from Alliant with their estimate
of their fee and everything else, so we agreed to that as part of the working capital
with the expectation we would get paid, so we paid the sellers at that point.
Appendix, at Appx. 121.
On April 1, 2022, Mr. Giaramita sent an updated spreadsheet to Mr. Hinchey and Mr. Mota
which he described as “the final Working Capital worksheet.” Appendix, at Appx. 142. The
spreadsheet again included a tab titled “Work Cap” which included a row for “Miscellaneous
receivable”. Pl.’s SMF ¶ 17; Resp. to Pl.’s SMF ¶ 17; Appendix, at Appx. 148. The row included
a comment stating “Jonathan reviewed the employee retention credit – it is ok. Amount may need
to be adjusted – Jonathan & Anastasia to discuss.” Pl.’s SMF ¶ 18; Resp. to Pl.’s SMF ¶ 18;
Appendix, at Appx. 148.
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The parties dispute what, if any, validation was performed on the ERC by Ainsworth.
Plaintiff states that the Excel document shared between Ainsworth and GDI employees was used
to track its review and validation of any items, and that Ainsworth “vetted” all items Enginuity
included in its working capital submission. Pl.’s SMF ¶¶ 15, 44. Defendants dispute this and state
that any review of the ERC was limited to its value and that they did not review any documentation
as to its validity or how it was computated. Resp. to Pl.’s SMF ¶ 15. Defendants further state that
Mr. Mooney represented that Alliant Group had already submitted an application for the ERC on
Enginuity’s behalf and that the full amount of the ERC was almost guaranteed. Resp. to Pl.’s SMF
¶ 44.
Regardless, the Parties agree that the ERC was included in Enginuity’s final Working
Capital Statement in the amount of $648,116.44 and the associated fee to Alliant Group was
included as a liability in the amount of $147,446.39. Pl.’s SMF ¶ 21; Resp. to Pl.’s SMF ¶ 21. The
Parties further agree that on July 18, 2022, Mr. Giaramita sent an email to Mr. Hinchey indicating
that the final agreed Closing Working Capital was in the amount of $4,000,000, resulting in no
adjustment to the purchase price under the MIPA. Pl.’s SMF ¶ 56; Resp. to Pl.’s SMF ¶ 56;
Appendix, at Appx. 260.
D. Resolution of the ERC and Defendants’ Indemnification Claim
On September 8, 2023, the IRS sent a notice indicating that the Enginuity’s ERC was
disallowed. Pl.’s SMF ¶ 22; Resp. to Pl.’s SMF ¶ 22. Ainsworth appealed this decision. Id. On
January 20, 2026, Ainsworth entered into a settlement agreement with the IRS resolving the ERC
appeal in which the IRS disallowed only a portion of the total $648,116 ERC claim. Pl.’s SMF ¶
23; Resp. to Pl.’s SMF ¶ 23; Appendix, at Appx. 204. The IRS issued a check to Enginuity – now
owned by Defendants – dated April 7, 2026, and in the amount of $720,668.31. Pl.’s SMF ¶ 24;
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Resp. to Pl.’s SMF ¶ 24. Defendants contend that only approximately $388,000 of this payment
corresponds to the negotiated ERC amount and the remainder of the payment is still being
investigated. Resp. to Pl.’s SMF ¶ 24.
On September 19, 2025, Christian Marcoux, Chief Legal Officer and Secretary for GDI
sent Mr. Mooney a “Formal Notice of Claim” pursuant to the MIPA in which he asserted that
Defendants were entitled to indemnification under Sections 6.1 and 7.2 of the MIPA and sought
reimbursement for the unrealized ERC value. Pl.’s SMF ¶¶ 57-58; Resp. to Pl.’s SMF ¶¶ 57-58;
Appendix, at Appx. 338-339.
III. 	LEGAL STANDARD
Federal Rule of Civil Procedure Rule 56(c) provides that the district court must “grant
summary judgment if there is no genuine issue as to any material fact and if the moving party is
entitled to judgment as a matter of law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986).
Essentially, the Court must analyze “whether the evidence presents a sufficient disagreement to
require submission to a jury or whether it is so one-sided that one party must prevail as a matter of
law.” Id. at 251-52. A genuine issue of fact exists where “the evidence is such that a reasonable
jury could return a verdict for the nonmoving party.” Id. at 248. “A fact is material if it ‘might
affect the outcome of the suit under the governing law.’” Physicians Healthsource, Inc. v.
Cephalon, Inc., 954 F.3d 615, 618 (3d Cir. 2020) (quoting Anderson, 477 U.S. at 248). At this
stage of litigation, all facts presented are viewed in the light most favorable to the nonmoving
party. Daniels v. City of Pittsburgh, No. 22-1790, 2023 WL 2707178, at *2 (3d Cir. Mar. 30, 2023).
To survive a properly supported motion for summary judgment, the nonmoving party,
Defendants in this case, must present affirmative evidence of specific facts to demonstrate a
genuine issue of material fact. Anderson, 477 U.S at 256-57; Berckeley Inv. Grp., Ltd. v. Colkitt,
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455 F.3d 195, 201 (3d Cir. 2006) (citing Pa. Prot. & Advoc., Inc. v. Pa. Dep’t of Pub. Welfare,
402 F.3d 374, 379 (3d Cir.2005)) (“Although the non-moving party receives the benefit of all
factual inferences in the court’s consideration of a motion for summary judgment, the nonmoving
party must point to some evidence in the record that creates a genuine issue of material fact.”).
“[S]ummary judgment is essentially ‘put up or shut up’ time for the non-moving party: the non-
moving party must rebut the motion with facts in the record and cannot rest solely on assertions
made in the pleadings, legal memoranda, or oral argument.” Colkitt, 455 F.3d at 201; FED. R. C IV.
P. 56(c)(1)(A) (requiring any party asserting a fact to “cit[e] to particular parts of materials in the
record”). Statements of Disputed Facts are not evidence, so a “district court may not rely solely
on” them to justify a finding that a dispute of material fact exists. Doeblers’ Pa. Hybrids, Inc. v.
Doebler, 442 F.3d 812, 820 n.8 (3d Cir. 2006), as amended (May 5, 2006) (internal citation
omitted).
In applying this standard, “the court must construe the evidence in the light most favorable
to the non-moving party and give that party the benefit of all reasonable inferences.” Barton &
Pittinos, Inc. v. Smithkline Beecham Corp., 118 F.3d 178, 181 n.3 (3d Cir. 1997) (citing Meinhardt
v. Unisys Corp. (In re Unisys Sav. Plan Litig.), 74 F.3d 420, 433 n.10 (3d Cir. 1996)). At the
summary judgment stage, the Court’s role is not to weigh the evidence and determine the ultimate
truth of the allegations. Baloga v. Pittston Area Sch. Dist., 927 F.3d 742, 752 (3d Cir. 2019); see
also InterVest, Inc. v. Bloomberg, L.P., 340 F.3d 144, 160 (3d Cir. 2003) (“When analyzing the
evidence under this summary judgment standard, a court is not to weigh the evidence or make
credibility determinations; these are tasks left for the fact-finder.” (internal quotation marks
omitted)). Instead, the Court’s task is to identify and explain the law governing the matter, and
then, in light of that law, determine whether there remains a genuine issue of fact for trial. Id.
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IV. 	ANALYSIS
Plaintiff makes four arguments as to why summary judgment is appropriate. First, that
Defendants cannot establish that Enginuity breached the MIPA and Enginuity did not suffer an
indemnity loss. Second, that Defendants’ claim is time barred under the relevant statute of
limitations. Third, that Defendants’ claim is barred because it was paid to Sellers as part of a
settlement. And finally, that Defendants’ claim is barred by the voluntary payment doctrine.
A. Defendants’ Indemnification Counterclaim is Not Time-Barred
The Court first addresses Plaintiff’s argument that Defendant’s counterclaim is time-
barred. Plaintiff argues that Defendants’ “indemnity” claim is, in fact, a breach of contract claim
masquerading as an indemnity claim. Therefore, the time to file suit began to run as soon as the
date of the alleged breach which, in this case, would be the Closing Date of the MIPA.
Memorandum of Law in Support of Plaintiff’s Motion for Summary Judgment (ECF No. 77)
(“Pl.’s Br.”), at 11-12. 	Defendants rely primarily on this Court’s earlier April 7, 2026
Memorandum Opinion in which the Court allowed Defendant’s counterclaim for indemnification
to continue.4 Defendants’ Response in Opposition to Plaintiff’s Motion for Summary Judgment
4 Defendants are cautioned that the decision to allow the counterclaim for indemnification
to continue was made under a substantially differently procedural posture than the instant Motion.
The Court’s opinion was therefore not as definitive as Defendants suggest. For example, in
considering Plaintiff’s arguments that i) the indemnification claim was time barred and ii) there
was no indemnifiable loss, the Court sided with Defendants but made clear that this was at the
motion to amend stage – where a Court applies the same relatively permissive standard of legal
sufficiency as it would under Rule 12(b)(6). See ECF No. 44, at 11 (“It is unclear when the statute
of limitations would have begun to run, so the Court declines to find it is time barred at this
juncture.”); see id. (“At this stage, the Court declines to find that Defendants’ indemnification
claim is futile on these grounds.”); see also Montanez v. Price, 154 F.4th 127, 152 (3d Cir.) (“Leave
to amend is futile if the complaint, as amended, would fail to state a claim upon which relief could
be granted.”).
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(ECF No. 95-1) (“Defs. Resp. Br.”), at 14-15.5 Plaintiff – in its primary argument – does not appear
to dispute that if the Court were to consider the counterclaim as one which seeks indemnification
then it would be timely under the Pennsylvania statute of limitations governing indemnification
claims.6 Similarly, Defendant does not appear to dispute that if this Court were to find its
5 Defendants originally filed a response to Plaintiff’s Motion on August 24, 2026 (ECF No.
93), which was the due date for any such response under this Court’s Fifth Amended Scheduling
Order. See ECF No. 62, at 2. One day later, Defendants filed a “Praecipe to Substitute” its
previously filed response with a corrected version. Based on Defendants’ representations in that
Praecipe as well as the Court’s review of both responses, the corrected response filled in a large
number of citations which were missing in the original brief. Defendants’ “corrected” response is
untimely and Defendants did not seek leave to amend their original response. The Court would be
within its rights to refuse to consider this untimely submission. Nonetheless, because the two
responses are not substantively different, and in the interest of a more complete record, the Court
will consider it. Any citations made in this Memorandum to Defendants’ Response in Opposition
to Plaintiff’s Motion are made to the corrected version filed on August 25, 2026 as ECF No. 95-1
unless otherwise noted.
6 Plaintiff does make two alternative arguments as to timeliness. Neither are persuasive.
The first is that the language of the MIPA does not extend the applicable statute of
limitations or the time by which Defendants must file a “Notice of Claim.” Pl. Br., at 13-14. These
are two distinct issues that become muddled in Plaintiff’s brief. Beginning with the statute of
limitations, Plaintiff argues that the section of the MIPA which extends survival indefinitely, and
thus beyond any statute of limitations, covers “covenants and agreements” and not the
“representation and warranties” here. Id., at 14. This is a strawman argument. The Court agrees –
and Defendant does not appear to dispute – that the MIPA does not extend the applicable statute
of limitations. The dispute arises over which statute of limitations applies – the one governing
indemnification claims or breach of contract claims. 	Plaintiff separately argue however that an
indemnification claim would also be barred because Defendant failed to timely serve a “Notice of
Claim.” Plaintiff argues that the MIPA only allows for recovery of a “Loss” if a “Notice of Claim”
is served by an “Applicable Limitation Date.” Plaintiff quotes the MIPA in defining an Applicable
Limitation Date as “the date occurring twenty-four (24) months after the Closing Date. . . .”
Plaintiffs omit the rest of the definition which immediately follows this quote, stating “provided
that the Fundamental Representations shall survive until the expiration of the statute of limitations
applicable to the subject matter of such representation and warranty.” To the extent that Plaintiff
is arguing that the Notice of Claim was served more than two years after the Closing Date of the
agreement and is thus untimely, such an argument is belied by the clear text of the MIPA.
The second argument is that Defendants’ claims are untimely since the applicable statute
of limitations for the representations and warranties at issue are governed by 26 U.S.C. §§ 6511(a)
and 6532(a)(1). These sections govern, respectively, i) when a claim for a credit or refund of an
overpayment of federal tax must be filed and ii) that statute of limitations on disputing the
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counterclaim were in fact just seeking damages for a breach of contract, then it would be time-
barred.7 Thus, the dispute turns on whether the counterclaim should be treated as a claim for
indemnification – as it is pled on its face – or breach of contract.
Plaintiff’s primary argument is that the counterclaim cannot be an indemnification claim
because it does not involve a “shared liability or reimbursement of payment to a third party.” Pl.
Br., at 12. In other words, because the claim does not involve any actual outstanding tax liability
to the IRS – and instead only a smaller than expected refund – there is no “loss” for Plaintiff to
indemnify. Id. Plaintiffs argue that labeling the claim as “indemnification” does not change the
fact that “it arises from and seeks damages based on whether a representation and warranty in the
Agreement was true at the time of the Agreement.” Plaintiffs further argue that there is no liability
to a third party in this case. Id.
In support of its position, Plaintiff cites to caselaw and treatises which describe generally
when indemnity may apply. See Pl. Br., at 11-12. However, as Defendants correctly highlight, it
is the language of the indemnity contract which governs. See Jacobs Constructors, Inc. v. NPS
Energy Servs., Inc., 264 F.3d 365, 371 (3d Cir. 2001) (“If the indemnity clause is clear and
unambiguous, then the intentions of the parties should be ascertained primarily by looking to the
language used in the agreement.”); Devs. Sur. & Indem. Co. v. Chrisellie Corp., 497 F. Supp. 3d
9, 18 (W.D. Pa. 2020), dismissed sub nom. Devs. Sur. & Indemnit v. Chrisellie Corp., No. 20-
disallowance of a tax claim. See 26 U.S.C. §§ 6511(a) and 6532(a)(1). As Defendants correctly
argue, the dispute here is between Plaintiff and Defendants over indemnification, not between
Defendants and the IRS. Therefore, the statute of limitations governing when a party must bring a
tax claim are inapplicable to the instant dispute.
7 Plaintiff is correct that the time to file a suit begins to run as soon as the right to institute
and maintain a suit arises. Ismail v. Kolman, No. CV 24-5610, 2025 WL 3776041 (E.D. Pa. Dec.
29, 2025). For the breach of contract claim, this would be “on the date of the alleged breach” which
the parties appear to agree would be on the Closing Date of the MIPA, September 1, 2021. Id.
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3592, 2022 WL 18031493 (3d Cir. Oct. 3, 2022) (“[I]mplied indemnity principles are improper
when an express indemnification contract exists.”).
Plaintiff’s characterization of what constitutes indemnifiable loss is overly narrow given
the language of the MIPA. The MIPA provides that Sellers will indemnify against any “Loss”
resulting from “the breach of any representation or warranty made by any of the Sellers,
Representative, or the Company contained in this Agreement or the Transaction Documents.”
Appendix, at Appx. 49. The MIPA defines “Loss” to include “any damages, Liability, diminution
in value, demand, claim, action, cause of action, cost, damage, deficiency, Tax, penalty, fine or
other loss or expense, whether or not arising out of a third party claim . . . .” Appendix, at Appx.
64.
As set forth in more detail in the sections below, Defendants have put forth factual support
that Plaintiff breached a fundamental warranty by claiming that it had not “applied for, filed for or
otherwise claimed” any tax credits pursuant to the CARES Act while they had in fact claimed such
a tax credit. Defendants have previously argued that this breach and the subsequent denial of a
portion of the ERC claimed by Plaintiff on the Working Capital Adjustment resulted in a tax
position which “was materially worse than represented at the time of acquisition.” ECF No. 39, at
8. In other words, and in the language of the agreement, Defendants argue that Plaintiff’s breach
resulted in a “diminution in value” of their tax obligation. Under the terms of the MIPA, this could
constitute an indemnifiable loss and that loss was not realized until the Defendants had settled their
claims with the IRS.
Courts have considered a similar question in the context of a property appraisal. In Crester
Mortg. v. Peoples Mortg., the court addressed a partial motion for summary judgment on an
indemnification claim. 818 F. Supp. 816 (E.D. Pa. 1993). The case involved the sale of a mortgage
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from the defendant to the plaintiff on a property appraised for $780,000. Id. at 818. The appraisal
was overinflated, which was revealed after the property owner defaulted and an updated appraisal
valued the property at $225,000. Id. The plaintiff – the purchaser of the mortgage – sought
indemnification believing that the eventual sale of the property would not recoup its investment in
the loan. Id. The Court did not dispute the right of the plaintiff to bring the claim but did rule that
the claim would not be ripe until the property was actually sold, and therefore the amount the
plaintiff could recoup would be more fully known. See id. at 820-821 (“Count I will be dismissed
without prejudice to its reassertion, by amendment, if and when plaintiff's cause of action accrues
(presumably upon the sale of the subject property).”). As in Crester Mortg., the Defendants here
are seeking indemnification for a loss which results, not from a payment to a third party, but from
a diminution in value of an expected payment from a third party. And like the claim in Crester
Mortg., it was not ripe until the received value was fully known.
Nor is Plaintiff correct that the liability at issue is not owed to a third party. The primary
cases cited by Plaintiff in support of its position are Kessock v. Conestoga Title Ins. Co. and Xerox
State & Local Solutions, Inc. v. Xchanging Solutions (USA), Inc. Pl. Br., at 12. While these cases
do suggest that indemnity typically requires a liability to a third party, they do not change the
outcome here.8
8 It is also worth noting that the court in Xerox State & Local Solutions, Inc., was applying
New York – as opposed to Pennsylvania – law. See 216 F. Supp. 3d 355, 360 (S.D.N.Y. 2016)
(“Because this action was filed in a district court within the State of New York, we will apply New
York's substantive law.”) (quoting Schiavone Constr. Co. v. City of New York, 99 F.3d 546, 548
(2d Cir. 1996)).
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Unlike the parties in Kessock and Xerox State, Defendants are alleging indemnity from
liability to a third party. 9 Specifically, Defendants allege that they paid a higher price under the
MIPA based on an expected value in a credit, the ERC, which was to be paid by a third party – the
IRS. Defendants further allege that that value of that credit was diminished “as a result of, arising
out of, in the nature or, caused by or relating to” a representation made by Plaintiff in the MIPA
leaving Defendants in a worse financial position. See Appendix, at Appx. 49. Plaintiff may dispute
the extent to which the diminished ERC received from the IRS arose from the representations
made in the MIPA. But that is a factual dispute not appropriate for summary judgment. At issue
here is whether Defendants have created a genuine issue of material fact regarding an
indemnifiable loss under the MIPA. This Court finds they have.
B. Defendants Have Submitted Evidence of an Indemnifiable Loss
Notwithstanding 	the 	timeliness 	issue, 	Plaintiff 	argues 	that 	summary 	judgment 	is
appropriate because i) Defendant cannot prove that Plaintiff breached the MIPA and ii) Defendant
has not suffered an indemnifiable loss. The Court addresses each of these arguments in turn.
First, Plaintiff argues that the only warranty they are accused of breaching states that “[t]he
Company has not deferred any Taxes pursuant to the CARES Act . . . and has not affirmatively
applied for, filed or otherwise claimed any Tax credits pursuant to the CARES Act . . . .” and that
this representation – which is written in the past tense – is made “as of the date hereof” Pl. Br., at
8-9. In other words, the representation is made as of the Closing Date of the MIPA – September
1, 2021. Plaintiff argues that the Sellers did not apply for the ERC until December 22, 2021 and
therefore the representation was not false at the date of closing. Defendants does not appear to
9 Because it is not necessary to the resolution of this Motion, the Court does not take a
position on whether a third party liability must always be present under Pennsylvania law for an
indemnity claim to exist.
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dispute that the representation made in the MIPA was made as of the Closing Date. However, it
argues that the Sellers represented not only that they had not “filed” for the ERC but that it had not
“applied for, filed, or otherwise claimed” the credit. Defendant argues that before the date of
closing, the Sellers had claimed the ERC as a receivable and income on its books which renders
the representation false. Defs. Resp. Br., at 12.
The Court agrees with Defendants. Defendants have presented facts that Enginuity had in
fact at least claimed the ERC in its accounting before September 1, 2021. Defendants direct this
Court to deposition testimony in which both Enginuity’s head of finance at the time, Mr. Marurer,
and Plaintiff’s expert witness considered the ERC as at least recorded for accounting purposes
before the closing date of the MIPA. When asked with Enginuity had applied for any tax credits
in connection with any COVID-19-related act or legislation, Mr. Maruer testified that “[w]e had
the Alliance Group [sic] help us with some tax credits. We also did the PPP. So there was two
different ones there, year.” Supplemental Appx., at Supp. Appx. 78. Plaintiff’s Expert, John Stoner
testified that the $648,116 expected credit was “recorded” by August of 2021 before the MIPA
was executed. Id. at Supp. Appx. 119-121
Moreover, the parties agree that ERC was included in Enginuity’s trial balance as of August
31, 2021 – and eventually including in the Closing Working Capital for the working capital
adjustment – and recorded as an asset. See Pl.’s SMF ¶¶ 12-14; Resp. to Pl.’s SMF ¶¶ 12-14.
Therefore, Defendants have presented sufficient evidence of a breach to defeat summary judgment.
Plaintiff separately argues that because the disputed funds were a reimbursement from the
IRS as opposed to a liability owed, there is no “loss” which would be subject to indemnity.
Defendants argue that Plaintiff misunderstands Defendants’ theory of recovery. Defendants argue
that they are not claiming that they expected $648,116 from the IRS but received less so they are
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entitled to the difference. Defs. Resp. Br., at 18. Their argument is that Enginuity received
purchase-price value on a $646,116 ERC asset and that asset ultimately proved materially smaller.
Id. They argue this shortfall generated a loss through both the working capital adjustment process
as well as the first of multiple post closing payments required under the contract. Id.
As discussed above, the MIPA defines “Loss” broadly for purposes of indemnification and
its definition includes “diminution in value.” Defendants’ argument that it suffered a loss based on
Plaintiff’s false representation creates a potentially indemnifiable claim.10
C. Defendants’ Settlement of the Working Capital Adjustment Does Not Bar
Defendants’ Counterclaim
Plaintiff next argues that Defendants knowingly settled the Working Capital Adjustment
by voluntary agreement and the counterclaim is an attempt to relitigate what was already settled.
Pl. Br., at 16. In other words, Plaintiff argues that Defendants knew that the ERC was included in
the Closing Working Capital Statement, vetted it and still agreed to it as a component of the
eventual Closing Working Capital. Pl. Br., at 20. Because Defendants did not address the issue at
the time – using the procedures defined in the MIPA – Plaintiff argues they have waived the right
to challenge it after the fact. In essence, Platiniff’s arguments – and the caselaw it cites – rely on
the fact that a party cannot not challenge a settlement because the consequences were different
than previously accepted.
10 The amount Ainsworth received from the IRS totaled $720,688.13. Pl.’s SMF ¶ 24; Resp.
to Pl.’s SMF ¶ 24. However, Defendant contends that only $388,000 of this amount corresponded
to the negotiated ERC settlement. Resp. to Pl.’s SMF ¶ 24. Defendants contend that the remainder
constituted interest payments as well other components which Ainsworth is still investigating. Id.
To the extent Plaintiff contends that the fact that the total check issued by the IRS exceeds the
original amount claimed by Enginuity and therefore results in no loss by Defendants, this is a
factual dispute and thus not appropriate for resolution at the summary judgment stage.
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However, Plaintiff again misunderstands the nature of Defendants’ counterclaim. As
Defendants correctly argue, the counterclaim is not seeking to challenge or reopen the Working
Capital 	Adjustment 	negotiations. 	Defendants’ 	counterclaim 	is 	instead 	predicated 	on 	the
representations that the Sellers made in the MIPA. While the ERC’s inclusion in the Closing
Working Capital is certainly relevant to the dispute, Defendants are correct that the counterclaim
is brought under a discrete section of the MIPA. Any potential waivers made as to the Closing
Working Capital do not preclude Defendants from arguing that they suffered a loss as a result of
Plaintiff’s breach of a Fundamental Representation in the MIPA.
D. The Voluntary Payment Doctrine Does Not Bar Defendants’ Counterclaim
Plaintiff’s final argument is that Defendants counterclaim is barred by the voluntary
payment doctrine. The voluntary payment doctrine bars recovery where a party has “voluntarily
paid money with full knowledge, or means of knowledge of all the facts, without any fraud having
been practiced upon him.” Liss & Marion, P.C. v. Recordex Acquisition Corp., 603 Pa. 198, 983
A.2d 652 (2009) (quoting In re Kennedy's Estate, 321 Pa. 225, 183 A. 798, 802 (1936)). Plaintiff
argues that Defendants have not identified any potential mistake of fact which would preclude
application of the voluntary payment doctrine. Specifically, Plaintiff argues it undisputed that i)
Ainsworth vetted the ERC claim and yet still agreed to include it in the Working Capital Statement
and ii) Ainsworth chose to settle the ERC appeal with the IRS despite opportunities to continue its
appeal. See ECF No. 77, at 22. Defendants counter that its claim for indemnification is based on
facts that were not known at the time. ECF No. 95-1, at 20. Specifically, Defendants argue it was
unknown the IRS would later disallow a substantial portion of the ERC and, more critically to the
present inquiry, Mooney represented during the Working Capital Adjustment negotiations that the
ERC would be fully realized. See ECF No. 95-1, at 20. Defendants direct the Court to testimony
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from Mr. Hinchey and Mr. Mota in which they testified that they accepted the $646,000 at face
value and received assurances that it would be fully realized. Defs. Resp. Br., at 20.
The Court agrees with Defendants that there are factual disputes which preclude granting
summary judgment based on the voluntary payment doctrine. “The [voluntary payment] doctrine
applies only when payments are made due to a mistake of law, not a mistake of fact.” Gahagan v.
Penn Abstract & Land Servs., LLC, No. 1:24-CV-01921, 2025 WL 3644253, at *2 (M.D. Pa. Dec.
16, 2025) (emphasis added). As Defendants correctly argue, their claim is predicated on the idea
that a mistake of fact – caused by Plaintiff’s misrepresentation – exists. Plaintiff argues that
because there was no misrepresentation under the MIPA, there was no mistake of fact. Pl. Br., at
22. While Plaintiff’s will no doubt argue this as trial, genuine disputes of material fact exist as to
the issue which preclude summary judgment.
Finally, Plaintiff appears to argue, summarily, that Defendants’ choice to settle the ERC
appeal with the IRS bars any indemnification claim. See Pl. Br., at 22. (“Ainsworth also chose to
settle the ERC appeal with the IRS for a lower credit amount despite having opportunities to
continue its appeal with the IRS. Sellers are not required to indemnify Ainsworth for agreeing to
accept less than it was owed by the IRS.”). To the extent Plaintiff does make this argument, it is
not supported by the law. As the Pennsylvania Superior Court explained in Burlington Coat
Factory of Pennsylvania, LLC v. Grace Const. Mgmt. Co., LLC, “if a contractual indemnitee settles
an underlying action, the law does not prohibit recovery. Rather, courts must consider the validity
of the underlying claim and the reasonableness of the settlement.” 2015 PA Super 227, 126 A.3d
1010, 1023 (2015).
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V. 	CONCLUSION
The Court finds that Defendants have raised a genuine dispute of material fact for their
counterclaim for indemnification.
Accordingly, the Court 	DENIES summary judgment for Plaintiff on Defendants’
counterclaim. An appropriate Order follows.
BY THE COURT:
/s/ John M. Gallagher
JOHN M. GALLAGHER
United States District Court Judge
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