Advanced Telephone Systems Inc. v. Com-Net Professional Mobile Radio LLC

59 Pa. D. & C.4th 286, 2002 Pa. Dist. & Cnty. Dec. LEXIS 107
CourtPennsylvania Court of Common Pleas, Alleghany County
DecidedMay 15, 2002
Docketno. GD 00-9001
StatusPublished
Cited by1 cases

This text of 59 Pa. D. & C.4th 286 (Advanced Telephone Systems Inc. v. Com-Net Professional Mobile Radio LLC) is published on Counsel Stack Legal Research, covering Pennsylvania Court of Common Pleas, Alleghany County primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Advanced Telephone Systems Inc. v. Com-Net Professional Mobile Radio LLC, 59 Pa. D. & C.4th 286, 2002 Pa. Dist. & Cnty. Dec. LEXIS 107 (Pa. Super. Ct. 2002).

Opinion

FRIEDMAN, J.,

INTRODUCTION

This case arose from a contract between plaintiff, Advanced Telephone Systems Inc., t/d/b/a ATS Mobile Communications and defendant Com-Net Professional Mobile Radio LLC. In addition to recovering damages from Com-Net PMR LLC for an alleged breach of the contract, ATS also sought to recover damages from the other defendants by piercing the corporate veil.

At argument on motions in limine, it became evident that common facts gave rise to both an action at law (plaintiff vs. Com-Net PMR LLC) in assumpsit and an action in equity (plaintiff vs. all other defendants) for piercing the corporate veil. Therefore, only one evidentiary proceeding had to be conducted. This was followed by bifurcated decisions, a jury verdict for the action at law, and the instant adjudication for the action in equity. The trial was held before the undersigned commencing April 1,2002. At the conclusion of the evidence, the court directed a verdict on the issue of liability against defendant Com-Net PMR LLC, only, and the case was submitted to the jury on the issue of damages. On April 5, 2002, the jury returned a verdict in favor of ATS and [289]*289against Com-Net PMR LLC in the amount of “$2.5 million plus attorney’s fees [in an uncontested amount of $102,000].’1

The jury’s role in the case was thereby concluded and we then proceeded, in equity, to consideration of whether to pierce the corporate veil and impose liability on the other defendants. Extensive oral argument was heard by the undersigned on April 16,2002, after both parties had submitted proposed findings of fact and conclusions of law. For the reasons set forth below, we conclude that we cannot pierce the corporate veil and cannot impose liability for the breach by Com-Net PMR LLC on any of the remaining defendants.

ISSUES INVOLVED

ATS seeks to pierce the corporate veil of Com-Net PMR LLC so as to recover the jury award against it from the other defendants. ATS contends that the LLC form was misused by the other defendants so that the LLC became their alter ego, rendering defendants undeserving of LLC protection. ATS attempted to prove, inter alia, that Com-Net PMR LLC was never adequately capitalized, and that the individual defendants, especially Steven Savor Jr. and Stephen Frobouck, induced plaintiff to enter the contract with Com-Net PMR LLC by representing that it was backed by the financial strength of the W.E. Anderson Group Inc. and its various enterprises.

[290]*290FINDINGS OF FACT

As an aid to deciding the non-jury portion of the captioned matter, the court permitted the parties to submit proposed findings of fact. The facts summarized below, which the court finds material and supported by the credible evidence, are largely undisputed. The omission of any proposed finding of fact or portions thereof should not necessarily be regarded as a rejection of the proposed finding or the portion omitted, but rather as an indication that the court regarded it as either repetitive or immaterial to its decision, or that the court, without a full transcript, was unsure of a particular detail contained in the proposed finding. Certain proposed findings of fact which are specifically rejected will be indicated later herein. For the convenience of the parties, the court has noted where the substance of each finding was proposed by placing either P-_or D-_at the end of each.

(1) At issue in this proceeding is an “800 MHz subscriber service agreement,” executed on March 24,1999, between ATS and Com-Net PMR LLC. The subject matter of the agreement was the use of 14 800 MHz radio frequency channels for which ATS held licenses from the Federal Communications Commission. (Plaintiff exhibit 1.) (D-2) (P-6)

(2) Prior to entering the service agreement, ATS leased the 14 channels to ERI on an undocumented, month-to-month basis. (Adamson and Beatty testimony.) (D-54) (P-10)

(3) Pursuant to the service agreement, Com-Net PMR LLC leased the 14 800 MHz FCC channels from ATS for $2,000 per channel per month. The term of the serv[291]*291ice agreement was to be 15 years. (Plaintiff exhibit 1.) (D-56) (P-6)

(4) During the negotiations of the service agreement, ATS was represented by counsel and Savor, an officer of both Corn-Net Development Group LLC, and the Anderson Group, was a practicing attorney. (Adamson and Savor testimony.) (D-57)

(5) ATS’s counsel was a Washington DC lawyer who specialized in communications law and who drafted the service agreement and implemented negotiated changes to it. (Adamson testimony.) (D-59)

(6) Initial drafts of the service agreement, prepared by plaintiff’s counsel, identify Corn-Net Development Group LLC as the signatory of the service agreement. (Adamson testimony; defense exhibits 82, 84 and 85.) (D-60) (P-15)

(7) Adamson, ATS’s treasurer and CEO, knew that the early drafts of the service agreement were with Corn-Net Development LLC and he knew that ATS would be entering into the service agreement with a limited liability company. (Adamson testimony.) (D-62)

(8) Prior to the time the parties entered the service agreement, Adamson knew what limited liability companies were. (Adamson testimony.) (D-66)

(9) Before the service agreement was executed, Adamson directed ATS’s counsel to change the signatory and the party to the service agreement from “Corn-Net Development LLC” to “Corn-Net Professional Mobile Radio LLC.” Adamson believes he was the person who made the name change from Corn-Net Development to Corn-Net Professional. (Transcribed Adamson testimony, attached to defendants’ proposed findings of fact and conclusions of law as appendix A, at 9.) (D-63)

[292]*292(10) Adamson contacted Savor shortly before March 24, 1999 and indicated that ATS was prepared to sign the service agreement. (Savor testimony.) (D-65)

(11) Savor was willing to do this as he believed it gave the LLC leverage to persuade ERI to complete the deal sooner.

(12) ATS did not ask any representative of Corn-Net PMR LLC for financial statements or pro formas. It did not do any due diligence nor did it seek any form of guaranties of Corn-Net PMR LLC’s contractual obligation from any other entity or individual. (Adamson testimony.) (D-67)

(13) In 1998, representatives of Corn-Net Professional Mobile Radio Inc. had approached Equitable Resources Inc. with a proposed alternative to ERI’s current internal communications system. Instead of ERI operating its own system and leasing the 14 channels directly from ATS, on a month-to-month basis, the proposal envisioned an independent communications system, owned and maintained by an independent entity, of which ERI would be one customer. (Frobouck, Savor and Beatty testimony.) (D-18)

(14) ATS was aware of this larger deal that was being negotiated with ERI.

(15) At the time he signed the service agreement with Corn-Net PMR LLC, Adamson was aware that Corn-Net PMR LLC had not yet entered a contract with ERI and that negotiations with ERI were ongoing. (Adamson testimony.) (D-68)

(16) Because a necessary part of the proposed transaction with ERI would be the lease of the 14 channels from ATS, negotiations were also conducted with ATS [293]*293to secure the radio frequencies for the term of the proposed agreement with ERI. (Frobouck, Savor and Fasulo testimony; defense exhibit 126A.) (B-50)

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
59 Pa. D. & C.4th 286, 2002 Pa. Dist. & Cnty. Dec. LEXIS 107, Counsel Stack Legal Research, https://law.counselstack.com/opinion/advanced-telephone-systems-inc-v-com-net-professional-mobile-radio-llc-pactcomplallegh-2002.