MTPCS, LLC etc. v. Hollis, C.

• Court: Superior Court of Pennsylvania
• Decided: September 28, 2015
• Docket: 518 EDA 2014
• Status: Unpublished

Opinion

J-A24007-15

NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P. 65.37

MTPCS, LLC D/B/A CELLULAR ONE, : IN THE SUPERIOR COURT OF : PENNSYLVANIA Appellant : : v. : : CHARLES HOLLIS AND COLLEEN : MAYBERRY : : v. : : JONATHAN FOXMAN, DANIEL E. : HOPKINS, BROADPOINT HOLDCO, : LLC, BROADPOINT, LLC, CENTRAL : LOUISIANA HOLDCO, LLC, MTPCS : HOLDINGS, LLC, OK-5 HOLDCO, LLC : AND TX-5 HOLDCO, LLC : No. 518 EDA 2014

Appeal from the Order Entered January 7, 2014, in the Court of Common Pleas of Montgomery County, Civil Division at No(s): 2012-21508

MTPCS, LLC D/B/A CELLULAR ONE : IN THE SUPERIOR COURT OF : PENNSYLVANIA v. : : CHARLES HOLLIS AND COLLEEN : MAYBERRY : : v. : : JONATHAN FOXMAN, DANIEL E. : HOPKINS, BROADPOINT HOLDCO, : LLC, BROADPOINT, LLC, CENTRAL : LOUISIANA HOLDCO, LLC, MTPCS : HOLDINGS, LLC, OK-5 HOLDCO, LLC : AND TX-5 HOLDCO, LLC, : : Appellants : No. 519 EDA 2014

Appeal from the Order Entered January 7, 2014, in the Court of Common Pleas of Montgomery County, J-A24007-15

Civil Division at No(s): 2012-21508

* BEFORE: PANELLA, WECHT, and STRASSBURGER,** JJ.

MEMORANDUM BY STRASSBURGER, J.: FILED SEPTEMBER 28, 2015

MTPCS, LLC d/b/a Cellular One, Jonathan Foxman, Daniel E. Hopkins,

Broadpoint Holdco, LLC, Broadpoint, LLC, Central Louisiana Holdco, LLC,

MTPCS Holdings, LLC, OK-5 Holdco, LLC, and TX-10 Holdco, LLC appeal from

orders that, inter alia, overruled their preliminary objections brought

pursuant to Pa.R.C.P. 1028(a)(6).1 We affirm.

The undisputed and relevant background underlying this matter can be

summarized as follows. MTPCS, LLC d/b/a Cellular One (Cellular One)

offered Charles Hollis (Hollis) employment as an Executive Vice President

and Chief Operating Officer. On September 30, 2010, Hollis accepted the

offer by signing an “Employee and Noncompetition Agreement” (Employment

Agreement). In pertinent part, the Employment Agreement states that the

* Judge Panella did not participate in the consideration or decision in this case.

** Retired Senior Judge assigned to the Superior Court. 1 Rule 1028(a)(6) provides, “Preliminary objections may be filed by any party to any pleading and are limited to the following grounds … pendency of a prior action or agreement for alternative dispute resolution[.]” The appealing parties properly utilized this rule to assert the existence of an arbitration agreement. Pennsy Supply, Inc. v. Mumma, 921 A.2d 1184, 1189 (Pa. Super. 2007). An order overruling such a preliminary objection qualifies as an immediately appealable interlocutory order. Henning v. State Farm Mut. Auto. Ins. Co., 795 A.2d 994, 995 (Pa. Super. 2002).

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parties consent to jurisdiction in Pennsylvania if a dispute were to arise

regarding the agreement.

The same day that he signed the Employment Agreement, Hollis

signed six “Restricted Equity Grant Agreements.” Each of these agreements

listed Hollis as a party, and each one listed a separate entity as the other

party. Hollis signed such agreements with MTPCS Holdings, LLC, Broadpoint

Holdco, LLC, Broadpoint, LLC, Central Louisiana Holdco, LLC, OK-5 Holdco,

LLC, and TX-10 Holdco, LLC.2 The president and CEO of Cellular One and

many of the LLCs is Jonathan Foxman (Foxman). These agreements granted

Hollis equity interests in the LLCs and stated, in pertinent part, that the

parties agreed to litigate disputes in Delaware.

Cellular One terminated Hollis’ employment on March 16, 2012. In

August of the same year, Cellular One filed a complaint in the Court of

Common Pleas of Montgomery County, Pennsylvania. The complaint named

as defendants Hollis and Colleen Mayberry (Mayberry), Cellular One’s former

Director of Marketing.3 As to Hollis, the complaint contained counts of fraud,

breach of fiduciary duties, civil conspiracy, unjust enrichment, forfeiture, and

breach of the Employment Agreement.

Hollis responded to the complaint by filing an answer with new matter

and counterclaims against Cellular One. In addition, he filed a joinder

2 We will refer to these entities collectively as “the LLCs.” The LLCs apparently are holding companies for Cellular One. 3 Mayberry’s role in this litigation is irrelevant to this appeal.

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complaint against the LLCs, Foxman, and Daniel Hopkins (Hopkins), Cellular

One’s Executive Vice President and Chief Financial Officer.4

Concerning his counterclaims against Cellular One, Hollis presented

several counts: breach of the Employment Agreement, breach of the

Restricted Grant of Equity Agreements, violation of the Pennsylvania Wage

Payment and Collection Law, fraudulent inducement, defamation, and civil

conspiracy. Under the fraudulent inducement count, Hollis alleged that, in

September of 2011, Foxman fraudulently induced Hollis into signing “certain

documents for Cellular One in combination with the refinancing of certain

debt.” Answer with New Matter and Counterclaim, 10/9/2012, at

Counterclaims ¶ 91. Hollis further alleged that “Cellular One and [the LLCs]

are liable for the tortious acts of Foxman sounding in fraudulent inducement

by virtue of the doctrine of respondeat superior.” Id. at ¶ 97.

In his joinder complaint, Hollis presented the following counts against

only the LLCs: breach of the Restricted Grant of Equity Agreements and

breach of the Employment Agreement. He brought the following counts

against all of the Joinder Defendants: civil conspiracy and violation of the

Pennsylvania Wage Payment and Collection Law. He also presented a count

of fraudulent inducement against the LLCs and Foxman and a count of

4 We will refer to the LLCs, Foxman, and Hopkins collectively as “the Joinder Defendants.” In addition, when appropriate, we will refer to Cellular One and the Joinder Defendants collectively as “Appellants.”

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defamation against the LLCs and Hopkins. Lastly, he claimed that Foxman

and Hopkins breached their fiduciary duties.

As he did in his fraudulent-inducement counterclaim against Cellular

One, in his joinder complaint Hollis alleged that, in September of 2011,

Foxman fraudulently induced Hollis into signing “certain documents for

Cellular One in combination with the refinancing of certain debt.” Joinder

Complaint, 10/9/2012, at ¶ 115. He again averred that “Cellular One and

[the LLCs] are liable for the tortious acts of Foxman sounding in fraudulent

inducement by virtue of the doctrine of respondeat superior.” Id. at ¶ 121.

Regarding the breach of fiduciary duties claim in the joinder complaint

against Foxman and Hopkins, Hollis maintained that, in their roles as officers

of Cellular One and the LLCs, Foxman and Hopkins acted in such a way as to

benefit themselves instead of acting in good faith for the benefit of the LLCs.

On December 28, 2012, Cellular One filed a number of preliminary

objections to Hollis’ counterclaims, and the Joinder Defendants did the same.

Most relevant to this appeal, Cellular One presented a preliminary objection

pursuant to Pa.R.C.P. 1028(a)(6), wherein Cellular One contended that Hollis

is required to arbitrate his fraudulent inducement claim against Cellular One.

According to Cellular One, “[i]n connection with the September 2011

refinancing, Hollis entered into amended and restated limited liability

agreements for certain of the [LLCs] (the “Amended Operating Agreements”)

and corresponding written consents.” Cellular One’s Preliminary Objections,

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12/28/2012, at ¶ 22. Cellular One asserted that the Amended Operating

Agreements contain an arbitration clause, that the fraudulent inducement

claim is arbitrable pursuant to that clause, and that Hollis therefore must

arbitrate that claim in Boston, Massachusetts.

Cellular One also sought to dismiss Hollis’ claim that Cellular One

breached the Restricted Equity Grant Agreements. Cellular One maintained

that Hollis must pursue that claim in Delaware. In the alternative, Cellular

One contended that the claim must be dismissed because Cellular One is not

a party to those agreements; rather, those agreements are between Hollis

and the LLCs.

The Joinder Defendants’ preliminary objections were similar to Cellular

One’s objections. In relevant part, the Joinder Defendants invoked the

arbitration clause in the Amended Operating Agreements and contended that

Hollis must pursue his fraudulent inducement and breach of fiduciary claims

via arbitration in Boston, Massachusetts. They also sought to dismiss Hollis’

claim that they breached the Restricted Equity Grant Agreements, as those

claims must be pursued in Delaware. In addition, the Joinder Defendants

sought to dismiss Hollis’ claim that they breached the Employment

Agreement. According to the Joinder Defendants, they are not parties to

that agreement; rather, Hollis and Cellular One are the parties to the

Employment Agreement.

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On January 17, 2014, the trial court entered orders which, in relevant

part, overruled the preliminary objections. Cellular One and the Joinder

Defendants timely filed separate notices of appeal. The parties and the trial

court subsequently complied with Pa.R.A.P. 1925. This Court consolidated

the appeals.

Cellular One and the Joint Defendants filed a single brief in this Court

wherein they ask us to consider the following question: “Did the trial court

err by refusing to compel [] Hollis to submit his fraudulent inducement and

breach of fiduciary duty counterclaims to binding arbitration, where the

applicable Amended Operating Agreements require arbitration of these

claims?” Appellants’ Brief at 5.

This issue challenges the trial court’s decision to overrule the

preliminary objections wherein Appellants sought to compel Hollis to

arbitrate his fraudulent-inducement and breach-of-fiduciary-duties claims in

Massachusetts. “We review a claim that the trial court improperly overruled

a preliminary objection in the nature of a motion to compel arbitration for an

abuse of discretion and to determine whether the trial court’s findings are

supported by substantial evidence.” Taylor v. Extendicare Health

Facilities, Inc., 113 A.3d 317, 320 (Pa. Super. 2015).

Regarding Appellants’ primary argument, Appellants correctly observe

that, “[u]nder Pennsylvania law, where a party seeks to compel arbitration,

courts must apply a straightforward test that asks (1) whether a valid

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arbitration agreement exists, and (2) whether the dispute involved is within

the scope of the arbitration agreement.” Appellants’ Brief at 11 (citing, inter

alia, Henning v. State Farm Mut. Auto. Ins. Co., 795 A.2d 994, 996 (Pa.

Super. 2002)). According to Appellants, because they met this two-prong

test, the trial court erred by overruling their preliminary objections.

Appellants attempt to bolster their primary argument by contending that the

Federal Arbitration Act (FAA), 9 U.S.C. §§ 1-307, required the trial court to

sustain their preliminary objections and compel Hollis to arbitrate his

fraudulent-inducement and breach-of-fiduciary-duties claims.

Appellants have failed to persuade us that the trial court erred and

that they are entitled to relief. See Commonwealth v. Turner, 58 A.3d

848, 847 (Pa. Super. 2012) (“It is an appellant’s burden to persuade us that

the [trial] court erred and that relief is due.”).

Appellants do a poor job of explaining the Amended Operating

Agreements and who the parties are to those agreements. Identification of

these parties is necessary because, generally speaking, only the parties to

those agreements can invoke the arbitration clauses therein. See Smay v.

E.R. Stuebner, Inc., 864 A.2d 1266, 1271 (Pa. Super. 2004) (“In general,

only parties to an arbitration agreement are subject to arbitration.”); see

also Callan v. Oxford Land Development, Inc., 858 A.2d 1229,

1233 (Pa. Super. 2004) (“Where a party to a civil action seeks to compel

arbitration, a two-part test is employed. First, the trial court must establish

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if a valid agreement to arbitrate exists between the parties. Second, if

the trial court determines such an agreement exists, it must then ascertain if

the dispute involved is within the scope of the arbitration provision. If a

valid arbitration agreement exists between the parties, and the

plaintiff’s claim is within the scope of the agreement, the controversy must

be submitted to arbitration.”) (citations omitted and emphasis added). 5

We further observe that, for purposes of their preliminary objections,

Appellants made clear that Cellular One and the LLCs are separate entities

with different legal relationships with Hollis. Yet, on appeal, Appellants blur

these relationships. In fact, Appellants simply refer to themselves

collectively as Cellular One. See, e.g., Appellants’ Brief at 2 n.1 (“[The

Joinder Defendants] are officers or corporate affiliates of [Cellular One].

Accordingly, [Cellular One] and the [Joinder Defendants] shall be referred to

collectively as “Cellular One.”).

Further complicating matters is Appellants’ failure to include in the

certified record full copies of the Amended Operating Agreements. Instead,

Appellants attached to their preliminary objections portions of those

agreements. According to Appellants, they did not include the full

agreements “to protect confidential information that is not pertinent to the

5 We are aware that “a nonparty, such as a third-party beneficiary, may fall within the scope of an arbitration agreement if that is the parties’ intent.” Callan, 858 A.2d at 1233. Appellants have not invoked any claim regarding nonparty status to the Amended Operating Agreements.

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issues raised in these preliminary objections.” Cellular One’s Preliminary

Objections, 12/28/2012, at 8 n.1; Joinder Defendants’ Preliminary

Objections, 12/28/2012, at 8 n.1.

Without the entirety of these agreements, we are unable to review

them properly. See, e.g., Burton v. Republic Ins. Co., 845 A.2d 889,

893 (Pa. Super. 2004) (“In interpreting the terms of a[] contract, we

examine the contract in its entirety, giving all of the provisions their proper

effect.”); see also Gray v. Buonopane, 53 A.3d 829, 833 (Pa. Super.

2012) (“[T]he record as certified to this Court, the completion of which is

Gray’s responsibility as the appellant, is noticeably fragmented.”) (citing

Commonwealth v. Bongiorno, 905 A.2d 998, 1001 (Pa. Super. 2006), for

the proposition that the “ultimate responsibility of ensuring that the

transmitted record is complete rests squarely upon the appellant and not

upon the appellate courts.”). With this oversight in mind, we observe the

following.

The Amended Operating Agreements all contain similar language

defining the parties thereto. We will provide an example of the introductory

paragraph one of the agreements.

The Second Amended and Restated Limited Liability Company Agreement of Central Louisiana Holdco, LLC (the “Company”) is made as of September 21, 2011 (the “Effective Date”) by and among the Persons listed on Schedule A to this Agreement as Class A Members (such persons, and any other Persons admitted to the Company as Class A Members after the date of this Agreement in accordance with the terms of this Agreement, being referred to collectively as the “Class A

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Members” and each individually as a “Class A Member”), the Persons listed on Schedule A to this Agreement as Class B Members (such persons, and any other Persons admitted to the Company as Class B Members after the date of this Agreement in accordance with the terms of this Agreement, being referred to collectively as the “Class B Members” and each individually as a “Class B Member”). The Class A Members and the Class B Members sometimes are referred to collectively in this Agreement as the “Members,” and each individually as “Member.”

Cellular One’s Preliminary Objections, 12/28/2012, Exhibit 3, at 1 (emphasis

added). The agreement does contain a dispute resolution clause which

states the parties’ understanding that all disputes arising out of or related to

the agreement must be arbitrated in Boston, Massachusetts. Id. at 36-38.6

However, the quoted language dictates that the agreement was made

“by and among the Persons listed on Schedule A” of the agreement. Yet,

while Cellular One attached to the agreement what appear to be Member

signature pages, there is no document that is identified as “Schedule A,”

thus, making it impossible for this Court to determine definitively who is

bound by the agreement. Of further note, none of the signature pages is

signed on behalf of Cellular One.

This case involves any number of complicated agreements entered into

by sophisticated parties. Appellants nonetheless put forth little effort in

attempting to explain the relationships between and among the parties and

agreements. Indeed, it seems that Appellants consider Cellular One and the

6 Based upon the numbering at the bottom of the agreement, the substantive portion of the agreement is at least 38 pages long. However, Appellants included in the certified record only seven of those pages.

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LLCs to be one entity (Cellular One) when that benefits their position, and

they consider Cellular One and the LLCs to be separate entities when that

benefits a different position.

Appellants simply have failed to convince us that the trial court abused

its discretion by overruling the preliminary objections in the nature of

motions to compel arbitration. Consequently, we affirm the trial court’s

order.

Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq. Prothonotary

Date: 9/28/2015

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