J-A10020-23
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT O.P. 65.37
NEWPORT INVESTMENT GROUP, LLC, : IN THE SUPERIOR COURT OF ASSIGNEE OF LUXURY ASSET : PENNSYLVANIA LENDING, LLC : : : v. : : : PHILADELPHIA TELEVISION : No. 1954 EDA 2022 NETWORK, INC. AND RICHARD : GLANTON : : : APPEAL OF: PHILADELPHIA : TELEVISION NETWORK, INC. :
Appeal from the Order Entered June 22, 2022 In the Court of Common Pleas of Philadelphia County Civil Division at No(s): 180500074
BEFORE: PANELLA, P.J., KING, J., and STEVENS, P.J.E.*
MEMORANDUM BY PANELLA, P.J.: FILED SEPTEMBER 7, 2023
Philadelphia Television Network, Inc. (“PTNI”) appeals from the order
denying its motion to enforce the orders vacating receivership and requiring
restoration of assets. The factual heart of PTNI’s appeal is a variation of the
“Nigerian Prince scam.”1 Unfortunately, one of the victims of the scam, Richard
____________________________________________
* Former Justice specially assigned to the Superior Court.
1 In this scam, a scammer “poses as a person of wealth and position who needs to get a huge sum of money out of their country and urgently requests your assistance …. In the version that became ubiquitous online in the 1990s, the supposed benefactor is a Nigerian royal, government official or business (Footnote Continued Next Page) J-A10020-23
Glanton, used his position as PTNI’s largest shareholder to use PTNI’s assets
as collateral for a loan from Luxury Asset Lending, LLC to finance his payments
to the scammers. After Glanton defaulted on the loans, Luxury Asset Lending
was temporarily partially successful in its attempt to foreclose on PTNI’s
broadcast assets; a Pennsylvania court erroneously transferred PTNI’s assets
to a court-appointed receiver before quickly realizing its mistake and revoking
the receivership. The only question before us now is whether Pennsylvania
state courts have the power to order the return of those assets to PTNI and
direct the receiver to initiate appropriate proceedings before the Federal
Communications Commission (“FCC”) to seek transfer of the broadcast license
back to PTNI. We hold that Pennsylvania courts have both powers, albeit with
certain limits. We therefore affirm in part, reverse in part, and remand for the
trial court to take appropriate action consistent with this memorandum.
A review of PTNI’s brief and the trial court’s opinion indicates that the
following factual and procedural history relating to a foreign judgment entered
in California and a vacated receivership in Pennsylvania is uncontested for
executive whose fortune is hostage to war, corruption, or political unrest. This desperate personage needs only … a relatively small advance payment (to cover taxes, bank fees or well-placed bribes) …. For your trouble, some of their millions will become your millions.” Nigerian Scams, https://www.aarp.org/money/scams-fraud/info-2019/nigerian.html, last retrieved 8/15/23.
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purposes of this appeal.2 Relevant herein, PTNI owned WEFG-LD, a low power
television broadcast station in Philadelphia, and related leases for equipment
and antenna facilities. PTNI also held an FCC license for the station to produce
and disseminate broadcasts.
In 2015, Curt Weldon, a former United States Congressman from
Pennsylvania, approached Glanton about the chance to manage a former
Libyan oil minister’s $350 million wealth fund.3 After several months, Glanton
informed Weldon he thought the deal was legitimate and suggested they travel
to Ghana to take custody of the funds. Upon arriving in Ghana, Glanton and
Weldon met with the potential client’s representative, Kweku Amedume
Thorpe (“Kweku”). Glanton and Weldon learned Standard Express Security
was holding the funds under the supervision of the Ghanaian Interior Ministry.
To release the funds, Glanton and Weldon agreed to wire approximately
$45,000 in “late storage fees” to Standard Express.
Subsequently, Glanton, Weldon, Kweku, and other representatives,
including a banker, Chris Obareki, met at the Standard Express offices to
inspect 3 boxes each containing over $100 million in $100 bills. The money
2 Newport Investment Group, LLC, an assignee of Luxury Asset Lending, as
Appellee, declined to file a brief in this appeal.
3 The California Court of Appeals has set forth an extensive factual recitation
of the underlying scam and the “Marquess of Queensbury fisticuffs” in this case. Luxury Asset Lending, LLC v. Philadelphia Television Network, Inc., 270 Cal. Rptr. 3d 724, 726–33 (Cal. Ct. App. 2020); see also In re Glanton, 2023 WL 4411849, at *3-4 (Bankr. D.N.J. filed July 7, 2023).
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was then taken to ECO Bank, which reported the money was real and totaled
over $360 million; however, the bank indicated that each of the bills had an
invisible insignia in Arabic that would need to be removed before the funds
could be deposited. The removal process would cost $2.4 million up front, with
Kweku and Obareki contributing about $900,000, and Glanton and Weldon
contributing the remaining money.
After the money had been raised, Kweku and Obareki advised Glanton
and Weldon that the Central Bank of Ghana had seized the $360 million, and
they had to pay a $3.6 million fine to release the money. Kweku and Obareki
indicated that if Glanton and Weldon paid approximately $800,000 of the fine,
they would pay the remainder. However, Kweku and Obareki did not produce
any money, causing Glanton and Weldon to provide additional funds.
Ultimately, Kweku and Obareki reneged on the deal, and it is unclear what
happened to the money contributed by Glanton and Weldon.
Significantly, to acquire part of the money needed to fund their
payments, Glanton and Weldon obtained loans totaling $530,000 from Brian
Roche and his affiliate, Luxury Asset Lending. By June 2017, Glanton and
Weldon had already defaulted on loans totaling $490,000. They then sought
an additional $40,000, which Roche and Luxury Asset Lending agreed to loan
them if they would pay back an additional $3.3 million. Glanton and Weldon
acquiesced to the demand.
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Importantly, without informing anyone at PTNI, Glanton obligated PTNI
on the loans and pledged PTNI’s company assets and his PTNI shares as
collateral to secure the loans. After Glanton and PTNI defaulted on all the
loans, Luxury Asset Lending filed a complaint against PTNI, Glanton, and
Weldon in Orange County Superior Court, alleging various claims and seeking
$3.79 million in damages. After serving Weldon and Glanton individually, as
well as serving Glanton as a representative of PTNI, Luxury Asset Lending filed
for entry of default against all defendants. The Orange County court ultimately
entered default judgment against PTNI and Glanton in the amount of
$3,897,919.22.4
On July 13, 2017, Glanton filed for Chapter 11 bankruptcy protection.
Subsequently, Glanton filed a motion to allow voluntary dismissal of his
Chapter 11 case, noting that he had reached a settlement with Luxury Asset
Lending. The bankruptcy court granted Glanton’s motion in April 2018.5 On
April 27, 2018, Luxury Asset Lending assigned the $3.897 million judgment
against PTNI to Newport, a company owned by Roche. On April 30, 2018,
Newport filed a stipulation seeking an order assigning Glanton’s PTNI shares,
4 Luxury Asset Lending also obtained a judgment against Weldon for $295,104.70. Weldon filed a motion to set aside the default judgment, arguing that Luxury Asset Lending and Roche facilitated the Ghana deal and that Roche had admitted the transaction was a scam. Weldon later reached a settlement with Luxury Asset Lending and is not involved in this case.
5 Glanton filed a second petition for Chapter 11 bankruptcy protection on February 9, 2022.
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and ownership and control of PTNI and its assets, including the FCC license,
to Newport. That same day, the California Superior Court ordered Glanton to
assign his stock and, upon FCC approval, the license and assets of WEFG-LD
to Newport.
On May 4, 2018, Newport filed an action in the Philadelphia Court of
Common Pleas to domesticate the California judgment against PTNI and
Glanton. Newport again filed a stipulation seeking an order assigning Glanton’s
PTNI shares, and ownership and control of PTNI and its assets, including the
FCC license to Newport. On May 11, 2018, the trial court entered an
assignment order, similar to the California Superior Court order, directing,
inter alia, Glanton to transfer his shares in PTNI to Newport, Glanton and PTNI
to assign control, possession, and ownership of PTNI, including all assets, FCC
license, furniture, records, and equipment to Newport.
On June 5, 2018, PTNI filed a request for dismissal with the FCC,
asserting that Glanton did not have authorization to assign the FCC license.
On November 13, 2018, the FCC granted PTNI’s request, noting that although
it accommodates state court decisions, the broadcast license could not be
subject to foreclosure by a lender under the Federal Communications Act and
FCC policy. Nevertheless, the FCC noted that if a court-appointed trustee or
receiver authorized the sale of a license, the FCC could approve such a transfer
of the license.
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As a result, on November 19, 2018, Newport filed an emergency
petition6 for the appointment of a receiver to control PTNI’s assets, including
the FCC license.7 The petition included a response date of December 10, 2018.
However, on November 19, 2018, the trial court granted the petition without
a hearing, and appointed Joseph Bernstein of Spina Company, LLC as receiver.
The trial court authorized Bernstein to file an application with the FCC to
effectuate transfer of the license to him and to take control of PTNI’s non-
licensed assets, including the tower broadcasting equipment, tower lease,
station records, and programming files. Bernstein immediately filed an
application with the FCC to assign PTNI’s FCC license to him pursuant to the
order appointing him as receiver. The FCC granted the application on
November 28, 2018. PTNI filed a petition to strike, vacate, open, or stay the
foreign default judgment and reconsider, stay, or vacate the appointment of
6 The trial court notes that this petition, although titled “Emergency,” was “filed in normal course of business and was not filed as an emergency.” Trial Court Opinion, 9/13/22, at 1 n.1.
7 In Pennsylvania, the appointment of a receiver “is not to be undertaken lightly,” and the decision to appoint and/or terminate the receiver “is within the sound discretion of the trial court.” Abrams v. Uchitel, 806 A.2d 1, 8 (Pa. Super. 2002); see also Mayhue v. Mayhue, 485 A.2d 494, 497 (Pa. Super. 1984) (noting that the appointment of a receiver is a harsh remedy that is typically imposed only as a last resort).
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receiver order.8 The trial court granted the stay and denied the petition to
strike the judgment.
PTNI and Newport both appealed.9 This Court subsequently entered an
order remanding the matter for a hearing on Newport’s petition for
appointment of a receiver and allowing PTNI to renew its petition to strike,
vacate, or open the judgment. See Order, 5/24/19, at 1-2 (per curiam). PTNI
filed another petition to strike, vacate, or open the foreign judgment. On
October 3, 2019, the trial court denied PTNI’s petition to strike or vacate the
foreign judgment. On October 24, 2019, the trial court, following a hearing,
8 On December 21, 2018, PTNI filed a petition for reconsideration with the FCC. Bernstein and Newport opposed the petition, arguing, in part, that Pennsylvania courts retain jurisdiction to determine the scope of the receiver’s authority and power. PTNI has filed numerous supplements to its petition. According to PTNI, its petition for reconsideration is still pending before the FCC. See Appellant’s Brief at 12, 20-21; see also FCC Letter to Senator Pat Toomey, 11/30/20, at 1 (unnumbered) (noting that the FCC would not act on pending pleadings and applications until issue courts resolve receivership issue).
9 On April 5, 2019, PTNI also filed a motion to vacate and set aside the default
judgment in California. The California Superior Court denied the motion. However, on October 29, 2020, the California Court of Appeals reversed the order and remanded with instructions for the California Superior Court to vacate the default judgment and assignment order against PTNI. See Luxury Asset Lending, LLC, 270 Cal. Rptr. 3d at 739; see also In re Glanton, 2023 WL 4411849, at *5 (noting that PTNI was the only party moving to vacate the default and rejecting Glanton’s argument that the judgment was vacated as to him as well). The California Superior Court subsequently vacated the judgment and assignment order as to PTNI. Nonetheless, we note that Newport filed another complaint against PTNI in California, arising out of a new assignment from Luxury Asset Lending and claims related to its loan documents with PTNI.
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denied Newport’s petition for appointment of a receiver, and vacated its
November 19, 2018 order appointing Bernstein as receiver. Specifically, the
trial court found that the prior order did not comply with 15 Pa.C.S.A. § 1985
(“Liquidating receiver”) and failed to post the required bond and security and
failed to limit the temporary receivership to a fixed period pursuant to
Pa.R.C.P. 1533 (“Special Relief. Receivers”). Additionally, the trial court found
that the FCC prohibits such a temporary receivership “as it seeks to create a
security interest in [PTNI’s] FCC license. Federal law prohibits the foreclosure
of a security interest in an FCC license.” Order, 10/24/19, at 1.
Due to the vacatur of the receivership order, Bernstein filed an
application to assign the FCC license to PTNI on November 1, 2019. However,
on November 4, 2019, Bernstein filed a request to withdraw and cancel the
assignment of the FCC license to PTNI.10 Bernstein’s application is also
pending before the FCC. See FCC Letter to Senator Pat Toomey, at 1
(unnumbered) (“At this time, an application for the reassignment of license
from Bernstein to PTNI is pending before the [FCC].”).
10 PTNI indicates that Bernstein withdrew the application because Newport and
Roche had threatened him with legal action if he did so and Bernstein also sought the dismissal of an ethics complaint filed by a PTNI shareholder against Bernstein’s accounting firm in exchange for filing the application. See Motion to Enforce Orders Vacating Receivership and Requiring Restoration of Assets, 5/19/22, at 8; Affidavit of PTNI’s FCC attorney Jeffrey Timmons, 5/17/22, at ¶ 16.
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Newport appealed from the October 24, 2019 order, and PTNI appealed
from the October 3, 2019 order. Subsequently, PTNI filed a motion to quash
or dismiss Newport’s appeal for failure to file a brief and vacate and remand
its appeal due to the California Court of Appeals’ vacatur of the underlying
judgment and assignment order. On April 13, 2021, this Court entered an
order dismissing Newport’s appeal, vacating the trial court’s October 3, 2019
order, and remanding the matter to the trial court for a determination of
whether the foreign judgment and assignment order entered in Pennsylvania
should be vacated. See Order, 4/13/21, at 1-2 (per curiam). Further, in the
order, this Court stated that on remand, PTNI “may seek relief in the trial
court for return of property, accounts, license rights, and for costs and
attorneys’ fees.” Id. at 2. Subsequently, on June 23, 2021, the trial court
struck the judgment and vacated the assignment order. Neither party
appealed this order.
Notably, despite his removal as receiver, Bernstein filed a request to toll
the station’s construction permit expiration for 660 days with the FCC pending
final action on the ownership of the station.11 On August 11, 2021, the FCC
11 On March 2, 2021, Bernstein filed a pleading with the FCC, requesting a decision on PTNI’s petition for reconsideration. Subsequently, on May 10, 2021, Bernstein’s counsel sent a letter indicating that Bernstein would withdraw his opposition to PTNI’s petition for reconsideration before the FCC and would request that the FCC reinstate the FCC license to PTNI. Nevertheless, it is unclear whether Bernstein has filed any further petitions before the FCC.
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granted Bernstein’s request, finding that until the ownership is resolved, no
further action can be taken on the construction. The FCC further noted that
“Bernstein maintains that he remains the licensee of WEFG-LD with legal
obligations and liabilities to third parties to preserve WEFG-LD’s assets, but
no longer with court-appointed authority to legally take actions regarding the
Station.” FCC Letter (Request for Tolling), 8/11/21, at 2 (unnumbered).
On May 19, 2022, PTNI filed a motion to enforce orders vacating
receivership and requiring restoration of assets, seeking to enforce the vacatur
of the receivership order and restore its pre-receivership ownership and
control of assets, including the FCC license. Specifically, PTNI sought, inter
alia, (1) a statement for the FCC that there is no receivership or judgment
against PTNI; (2) restoration of all property, assets, and license rights; (3)
that Bernstein and Newport make all necessary filings before the FCC to
transfer the license to PTNI within five days; and (4) that Bernstein submit
any required FCC filings at his expense while the transfer is pending and that
Bernstein and Newport stop interfering with the return of license process.
Newport filed an answer opposing PTNI’s motion. Newport did not dispute the
vacatur of the receivership order, assignment order, or the foreign judgment,
but indicated that the contractual assignment of Glanton’s PTNI shares for the
benefit of Newport still exists. Ultimately, the trial court denied PTNI’s motion.
PTNI timely appealed.
On appeal, PTNI raises the following questions for our review:
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1. Does the trial court have power and jurisdiction, including by this Court’s April 13, 2021 remand order, to enforce the unwinding and return of PTNI’s assets, after vacating the receivership, Judgment and Transfer and Assignment Order?
2. Was [PTNI’s] motion within the trial court’s judicial power because it did not interfere with FCC proceedings?
3. Should relief have been granted to restore assets, and remedy harm from the vacated receivership and judgment?
Appellant’s Brief at 3.
We will address PTNI’s claims together as they all address whether the
trial court had authority to restore the FCC license to PTNI. PTNI contends that
following the order vacating the appointment of a receiver, the trial court had
authority to restore its property and remedy the harms of the receivership.
See id. at 28-31, 42. PTNI emphasizes that this Court, pursuant to its April
13, 2021 order, indicated that PTNI could seek relief in the trial court for the
return of property and license rights. See Appellant’s Brief at 28, 31. PTNI
argues that contrary to the trial court’s finding, its request for relief does not
interfere with FCC proceedings. See id. at 31. PTNI claims that the FCC’s
stated position in this case is to defer to the state action. See id. at 31, 32-
33, 34-35, 41; see also id. at 33 (highlighting that in its letter to then-
Senator Pat Toomey, the FCC stated that “it was holding back from resolving
Bernstein’s and Newport’s opposition to returning the License to PTNI, out of
deference to and waiting upon the courts to ‘resolve the receivership.’”
(citation omitted)). PTNI points out that it is not requesting that the trial court
determine any licensing issues, but rather resolve the receivership. See id. at
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34, 42; see also id. at 35 (arguing that “[t]he FCC’s jurisdiction is over the
suitability of the licensee, not over the property rights involved between the
licensee and others” (citation omitted)). PTNI argues that Pennsylvania courts
have the power to enforce its orders, including to require or prohibit actions
before the FCC. See id. at 34-37. PTNI also asserts that the FCC’s August 11,
2021 letter that tolled deadlines for a construction permit does not enshrine
Bernstein’s role as the licensee, but instead indicated that it was postponing
deadlines because of the state action. See id. at 38-40.
PTNI claims that the protracted history of this case, including the fact
that more than three years have passed since the receivership was vacated
while Bernstein still holds the FCC license, establishes the court must provide
relief on this matter. See id. at 42-43; see also id. at 40 (noting that the
FCC’s inaction persists due to Bernstein’s and Newport’s filings before the FCC
opposing returning the license to PTNI). PTNI contends that the trial court
should have required Bernstein and Newport to exercise good faith to
proactively return the assets to PTNI following the vacatur of the receivership,
judgment, and assignment. See id. at 42. PTNI stresses that the harm it
suffers is significant because it cannot develop programming, market, or sell
the station, or construct new facilities without return of the license. See id. at
43.
In contrast, the trial court found that it could not grant PTNI relief as to
the return of the license, as this was strictly within the power of the FCC:
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[The trial c]ourt does not have the power under relevant case law to interfere in the administrative proceedings of the FCC as the FCC is a regulatory commission with its own authority and processes. [The trial c]ourt properly recognized that the FCC is the only government agency with jurisdiction and regulatory power over all forms of electrical communication and its exclusive jurisdiction extends to licenses. [PTNI] has further admitted this fact in prior proceedings before [the trial c]ourt. …[T]he record reflects that the FCC is aware that Bernstein is no longer a judicial appointed receiver, however[,] they still recognize him as the representative of the agency for its proceeding and have tolled its current proceedings in this matter. The August 10, 2021 Order of the FCC explicitly states, “[Bernstein] remains the [FCC] licensee of WEFG-LD with legal obligations and liabilities to third parties to preserve WEFG-LD’s assets but no longer as court-appointed authority to take actions regarding the Station.” Accordingly, the FCC has made it abundantly clear, consistent with its authority and jurisdiction, that it is aware that Bernstein has been removed by Order of [the trial c]ourt as receiver for [PTNI], however[,] they continue to recognize him as licensee. … [T]he relevant case law and [PTNI’s] own admission in prior proceedings makes clear the FCC has the proper jurisdiction in this matter as it has exclusive jurisdiction over licenses.
In the present matter, [PTNI] fails to recognize the difference between judicial jurisdiction and power. … Here, while the case law does grant [the trial c]ourt the jurisdiction for all “necessary proceedings” to wind up a terminated receivership, [The trial c]ourt does not have the power to interfere with the administrative proceedings of the FCC.
Trial Court Opinion, 9/13/22, at 10-11 (footnotes omitted).
We agree with the trial court’s reasoning as to the FCC license. The FCC
has “unified jurisdiction and regulatory power over all forms of electrical
communication, whether by telephone, telegraph, cable, or radio.” United
States v. Sw. Cable Co., 392 U.S. 157, 167-68 (1968) (footnotes and
quotation marks omitted); see also Nat’l Broad. Co. v. United States, 319
U.S. 190, 214 (1943). As such, the FCC has the exclusive right to approve the
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grant, assignment, or transfer of a license to broadcast television. See 47
U.S.C.A. § 310(d) (“No construction permit or station license, or any rights
thereunder, shall be transferred, assigned, or disposed of in any manner,
voluntarily or involuntarily, directly or indirectly, or by transfer of control of
any corporation holding such permit or license, to any person except upon
application to the Commission and upon finding by the Commission that the
public interest, convenience, and necessity will be served thereby.”); see also
47 C.F.R. § 73.3540(a) (“Prior consent of the FCC must be obtained for a
voluntary assignment or transfer of control.”); FCC v. Prometheus Radio
Project, __ U.S. ___, 141 S.Ct. 1150, 1155 (2021) (noting that the FCC
“possesses broad statutory authority to regulate broadcast media ‘as public
convenience, interest, or necessity requires.’” (citation omitted)).
The United States Supreme Court previously addressed the question of
a state court’s jurisdiction when its actions affect a field regulated by the FCC.
See Radio Station WOW v. Johnson 326 U.S. 120 (1945). In Johnson, the
owner of a station had leased the station and transferred its FCC license, with
FCC approval, to the lessee. See id. at 121. However, the state court later
concluded that the lessee had acquired the lease by fraud, and directed “that
the lease and license be set aside and that the original position of the parties
be restored as nearly as possible.” Id. at 122 (citation omitted). Further,
although the state court recognized that only the FCC could return the license
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to the owner, it ordered the parties to “do all things necessary” to secure a
return of the license. Id. at 122 n.1; see also id. at 123.
The United States Supreme Court initially noted that where there is a
conflict of the FCC’s licensing authority and a state court’s powers, attempts
should be made to reconcile both interests, to establish both a consistent
licensing policy and a mechanism to enforce state laws. See id. at 132 (stating
that “if the States’ [laws] can be effectively respected while at the same time
reasonable opportunity is afforded for the protection of that public interest
which [leads] to the granting of a license, the principal of fair accommodation
between State and federal authority ... should be observed.”). To that end,
the Court emphasized the power of a state court to adjudicate issues involving
FCC licenses as long as the state court does not affirmatively interfere with
the FCC’s authority to transfer, assign or otherwise dispose of licenses.12 See
id. at 131 (“We have no doubt of the power of the Nebraska court to
adjudicate, and conclusively, the claim of fraud in the transfer of the station
… and upon finding fraud to direct a reconveyance of the lease”).13 Based upon
12 When “a state court’s decision is contrary to [FCC] policy, the [FCC] is neither bound by the state court order nor need recognize it.” Charles W. Cherry, II Caswell Cap. Partners, LLC c/o Erwin G. Krasnow, Esquire Gresham Commc'ns, Inc. c/o Dan J. Alpert, Esquire, 24 F.C.C. Rcd. 2894, 2896 (2009)
13 The Supreme Court later reaffirmed this holding. See Regents of Univ. System of Ga. v. Carroll, 338 U.S. 586, 602 (1950) (noting that the FCC (Footnote Continued Next Page)
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this logic, the Court concluded that the state court’s action intruded on the
exclusive jurisdiction of the FCC, ruling that the state court’s decision
improperly controlled the conduct of parties before the FCC and that the FCC
was the ultimate arbiter regarding the disposition of the license. See id. at
130-131. Specifically, although the Court upheld the state court’s fraud ruling,
it found that the lower court’s order “to do all things necessary” to secure the
return of the license was an improper restriction on the FCC’s licensing system
and would have controlled the conduct of the parties before the FCC. See id.
at 130-32.
Notably, the Court further observed that the “most troublesome
question raised” was that the state court order setting aside the lease resulted
in the separation of the leased station property from the broadcast license,
which would, in effect, deprive the FCC of keeping the licensed properties and
the license together and force the FCC’s decision in favor of the party with the
station’s property. See id. at 131-32. Consequently, the Court held that the
state court’s order returning the property could not be executed until the FCC
could act on the license in time that the public would not be deprived of the
benefit of the station. See id. at 132.
“could make a choice only within the scope of its licensing power, i.e., to grant or deny the license on the basis of the situation of the applicant. … [The FCC] has said frequently that controversies as to rights between licensees and others are outside the ambit of its powers.” (footnotes omitted)).
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It is well-settled that the Federal Communications Act explicitly prohibits
the transfer of an FCC license without the express application to and approval
of the transfer by the FCC and state courts have no power to award or transfer
an FCC license to a party. See 47 U.S.C.A. § 310(d); 47 C.F.R. § 73.3540(a).
Pointedly, any attempt by this Court to return the license would impugn the
authority of the FCC to decide, as it is within its exclusive right, whether the
transfer of the license would serve the public interest, convenience, and
necessity. See 47 U.S.C.A. § 310(d); see also Johnson, 326 U.S. at 130-
31; In re Applications of Arecibo Radio Corp., 101 F.C.C.2d 545, 549-50
(1985). Therefore, we conclude that the trial court correctly concluded that it
had no power to either transfer the license to PTNI, or direct Bernstein and
Newport make all necessary filings before the FCC to transfer the license to
PTNI within five days. See Johnson, 326 U.S. at 131-32; In re NextWave
Pers. Commc’ns, Inc., 200 F.3d 43, 54 (2d Cir. 1999) (“It is beyond the
jurisdiction of a court in a collateral proceeding to mandate that a licensee be
allowed to keep its license despite its failure to meet the conditions to which
the license is subject.”).
Nevertheless, although the FCC’s evaluation of the public interest under
the Federal Communications Act necessarily involves consideration of
ownership of the physical broadcast assets, the FCC’s exclusive jurisdiction
over licensing does not extend to the physical assets of the television station.
See In re Merkley, 94 F.C.C.2d 829, 830 (1983) (the FCC “has consistently
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held that a broadcast license, as distinguished from the station’s plant or
physical assets, is not an owned asset or vested property interest[.]”); see
also In re Applications of Arecibo Radio Corp., 101 F.C.C.2d at 550
(noting that the FCC should have an opportunity to consider whether the
station license should be assigned to the party possessing the station’s
physical assets).14 As highlighted above, the FCC defers to state judicial
determinations in many areas, including private disputes, fraud claims, and
the enforcement of contracts. See, e.g., Carroll, 338 U.S. at 602; Johnson,
326 U.S. at 131.
Here, the FCC deferred deciding the petition to transfer the license
pending the resolution by Pennsylvania courts of the private dispute between
the parties involving the appointment of Bernstein as the receiver. See FCC
Letter to Senator Pat Toomey, at 1 (unnumbered) (“Several parties have filed
pleadings in connection with the application which raise questions concerning
the facts of the receivership and PTNI’s qualifications as a licensee. Staff in
the Video Division have determined that the proceedings in Pennsylvania and
California courts to resolve the receivership have not concluded. Because the
Commission defers to courts to resolve private disputes, we generally do not
14 Notably, this conclusion does not in any way bundle the license with the physical assets. See Kidd Commc’ns v. F.C.C., 427 F.3d 1, 6 (D.C. Cir. 2005) (noting that state courts attempts to fashion remedial orders that treat a broadcast station’s physical assets and the FCC license as a bundle “runs afoul of the [FCC’s] insistence that a broadcast license be treated distinctly—its transfer depends on the [FCC’s] determination of the public interest.”).
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act on such pleadings and/or applications until a private dispute has achieved
finality.”); see also FCC Letter (Request for Tolling), at 2-3 (unnumbered)
(“Until the litigation involving the Station’s ownership is resolved and a final
decision rendered, neither Bernstein nor the prevailing party will be able to
take the necessary steps to complete construction of the Station’s permanent
facilities.”).
Clearly, in this case, PTNI’s request to return the physical assets,
including the tower broadcasting equipment, tower lease, station records, and
programming files, does not raise a substantial federal question and does not
control the FCC’s determination of who possesses of the FCC license connected
to the assets. See Johnson, 326 U.S. at 131-32 (holding that the state courts
have the power to adjudicate a state claim and order the transfer of the station
itself); see also Arecibo Radio Corp., 101 F.C.C. at 550. The trial court’s
conclusion that it lacked the power to grant any relief would essentially
prevent PTNI from obtaining a return of the physical assets based upon the
vacated receivership order, as the trial court, not the FCC, has jurisdiction to
conduct further proceedings following vacatur to discharge the receiver and
return property. See Warner v. Conn, 32 A.2d 740, 741-42 (Pa. 1943)
(noting that the “possession of the receiver is the possession of the court; and
the court itself holds and administers the estate through the receiver, as its
officer, for the benefit of those whom the court shall ultimately adjudge to be
entitled to it.”); see also 65 Am. Jur. 2d Receivers § 90 (noting that when an
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order vacates a receivership, “the authority vested in the receiver to manage
the [assets] terminates.”); Northampton National Bank v. Piscanio, 379
A.2d 870, 871-72 (Pa. 1977) (stating that the trial court retains jurisdiction
to conduct proceedings necessary to conclude the receivership, discharge the
receiver, or provide relief to the aggrieved party).
Therefore, we reverse this portion of the trial court’s order and direct
the trial court to return the physical assets to PTNI. However, we also instruct
the trial court to stay the execution of this transfer to allow the FCC to decide
the license issue. See Johnson, 326 U.S. at 132 (concluding that “State
power is amply respected if it is qualified merely to the extent of requiring it
to withhold execution of that portion of its decree requiring retransfer of the
physical properties until steps are ordered to be taken, with all deliberate
speed, to enable the [FCC] to deal with new applications in connection with
the station.”); In re Merkley, 94 F.C.C.2d at 838-39 (stating that “if an
assignment application’s related contract of sale violated existing rules or
policies, we would withhold our approval until the problem was corrected. In
this way, while the interpretation and enforcement of contracts are within the
jurisdiction of state courts, the Commission has established certain public
interest limitations on a licensee’s contractual authority and imposes these
limits by withholding its approval of a pending assignment application.
Moreover, through this procedure, conflicts between Commission policy and
state laws can be avoided.”). The trial court, in its role as Bernstein’s principal,
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may exercise its discretion to order Bernstein to provide notice of this decision
to the FCC.15
We conclude by highlighting that no receivership was granted in
California, and the California Superior Court specifically vacated the default
judgment against PTNI.16 Moreover, as noted above, the trial court vacated
Bernstein’s receivership in October 2019 and this Court dismissed Newport’s
appeal in April 2021, and the parties do not dispute that the vacatur of the
receivership order is final. Likewise, the order vacating the assignment order
transferring Glanton’s shares in PTNI to Newport and the foreign judgment
are also final. To put it another way, the proceedings in Pennsylvania have
concluded and Bernstein’s receivership has terminated.
PTNI’s petition for reconsideration and Bernstein’s application to assign
the license to PTNI are currently pending before the FCC, and it now has the
15 We emphasize that while the FCC lists Bernstein as the possessor of the license, Bernstein does not have any personal right to possession of the license, as he is merely an agent for the court. We do not reach the issue of whether the court can direct Bernstein’s advocacy before the FCC as its agent, as opposed to in his personal capacity, as that issue is not currently before us.
16 While it appears Newport has filed a new complaint against PTNI in California, the parties have not established a receivership was ordered. Moreover, we highlight that the California Court of Appeals previously ruled that a judgment against PTNI in this case “would pin the financial burden of the wrongdoers’ risk-taking on an innocent third party who had no stake in the scheme[,]” and “[s]uch a result would run contrary to public policy and the objectives of the law.” Luxury Asset Lending, LLC, 270 Cal. Rptr. 3d at 738-39.
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power to exercise its discretion to decide whether the license should be
transferred to PTNI due to the conclusion of the Pennsylvania proceedings and
the vacatur of Bernstein as receiver. The various parties at issue may make
their arguments before the FCC, and this decision does not interfere with
Bernstein’s or Newport’s right to assert before the FCC any argument
regarding the potential transfer of the FCC license to PTNI or any potential
infringement on the FCC’s determination of all public interest issues related to
licensing. See Johnson, 130 U.S. at 130-31 (holding that in taking steps to
place a matter before the FCC, a state court cannot prohibit interested parties
from making arguments to the FCC concerning the merits of the matter); In
re Applications of Arecibo Radio Corp., 101 F.C.C.2d at 549 (noting that
“in taking steps to place a matter before the Commission, a court can neither
prohibit interested parties from making arguments to the Commission
concerning the merits of the matter nor infringe in any way the Commission’s
exclusive, jurisdiction over licensing matters.”).
Accordingly, we affirm the trial court’s order as to the license, and
reverse the order as to PTNI’s physical assets related to the television station
and stay the execution of the return of the assets pending the FCC’s license
decision. Furthermore, we underscore that the receivership is vacated and
that under Pennsylvania law, the broadcast assets are owned by PTNI. PTNI
must now turn to the FCC to obtain a determination of possession of the
license before it can enforce its possession of the broadcast assets.
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Order affirmed in part and reversed in part. Case remanded with
instructions. Jurisdiction relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq. Prothonotary
Date: 9/07/2023
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