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NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P. 65.37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