Marple-Newtown v. Broadview Networks

J-S77043-14
NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P. 65.37
MARPLE-NEWTOWN TAS, INC., : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellee :
:
v. :
:
BROADVIEW NETWORKS, INC., :
:
Appellant :
: No. 2035 EDA 2014
Appeal from the Order Entered June 26, 2014,
in the Court of Common Pleas of Delaware County,
Civil Division, at No(s): No. 14-2280
BEFORE: STABILE, JENKINS, and STRASSBURGER, JJ.*
MEMORANDUM BY STRASSBURGER, J.: FILED FEBRUARY 10, 2015
Broadview Networks, Inc. (Broadview) appeals from the order
overruling its preliminary objection in the nature of a motion to compel
arbitration against Marple-Newtown TAS, Inc. (MNTAS). We vacate the
order of the trial court and remand for proceedings consistent with this
memorandum.
This case arises from a dispute between MNTAS and Broadview, a
local, regional and long distance telephone carrier. MNTAS instituted this
breach of contract action against Broadview before a magisterial district
judge. MNTAS asserted that “[b]etween June 2009 and the present,
[Broadview] overcharged [MNTAS] $8,199.46 for services which it did not
provide to [MNTAS] and for which [MNTAS] paid [Broadview].” Complaint,
*Retired Senior Judge assigned to the Superior Court.
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4/16/2014, at ¶ 17. Thus, MNTAS requested judgment in its favor for that
amount plus pre-judgment interest.
On February 26, 2014, the district judge found in favor of MNTAS;
Broadview appealed to the Court of Common Pleas of Delaware County; and,
Broadview ruled MNTAS to file a complaint. MNTAS complied and filed its
complaint on April 16, 2014. Attached as Exhibit B to the complaint is a
“New Customer Enrollment Form and Letter of Agency” (Service Agreement)
dated June 1, 2009. The primary contact on behalf of MNTAS was Joseph
Stonelake, who signed the forms. Included in that form is a section entitled
Dispute Resolution, which provided the following.
The parties shall attempt to resolve all disputes in the spirit of
cooperation without formal proceedings. Any dispute which
cannot be so resolved (other than the collection of amounts due
for the Services and requests for injunctive relief) shall be the
subject of mandatory arbitration. Such arbitration shall be
conducted in accordance with the U.S. Arbitration Act (Title 9,
U.S. Code), and under the Commercial Arbitration Rules of the
American Arbitration Association. The arbitration shall be
conducted in New York, New York. The decision of the arbitrator
shall be final and binding upon the parties. Judgment upon the
arbitration award may be entered in any court of competent
jurisdiction.
Service Agreement, 6/1/2009, at 2.
Also attached to the complaint are additional forms dated June 2, 2009
and signed or initialed by Joseph Stonelake. In its complaint, MNTAS
averred that Joseph Stonelake was employed by MNTAS as a loan processor
between 2006 and January 2012, and that David V. Gilbert (Gilbert) was and
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is the President of MNTAS.1 MNTAS stated that in “February, June, and
November 2009, Gilbert advised [Broadview’s] representative, Daniel DiOrio
(“DiOrio”), both orally and in writing that only Gilbert and Victoria Stonelake,
the Manager, were authorized by [MNTAS] to discuss, negotiate, execute,
agree to and enter into contracts on behalf of [MNTAS].” Complaint,
4/16/2014, at ¶ 8. Furthermore, MNTAS averred that “[Broadview] likewise
knew this fact based upon previous contracts negotiated between DiOrio on
behalf of [Broadview] and [MNTAS].” Id. Attached to the Complaint as
Exhibit A were copies of e-mails between Gilbert and DiOrio, with a copy to
Joseph Stonelake, dated November 16, 2009, providing that “NOTHING IS
TO BE CHANGED WITHOUT Vick’s [] or my specific authorization[.]” On the
same day, DiOrio confirmed that “Nothing has been and nothing will[.]”
On May 5, 2014, Broadview filed a preliminary objection to the
complaint pursuant to Pa.R.C.P. 1028(a)(6), which provides that a
preliminary objection may be filed where there is an agreement for
alternative dispute resolution. It requested the parties be compelled to
arbitrate this matter pursuant to the aforementioned clause in the Service
Agreement in light of the fact that MNTAS “utilized the services provided by
Broadview under the Service Agreement, including the services in dispute
here, as well as other services, and, with certain lapses, [MNTAS] paid
1
Joseph Stonelake is Gilbert’s grandson.
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Broadview for the services so provided.” Memorandum in Support of
Preliminary Objection, 5/5/2014, at ¶ 4.
In response, MNTAS asserted that it should not be forced to arbitration
where the employee of MNTAS, Joseph Stonelake, who signed the Service
Agreement was not authorized to do so, and Broadview knew this
information at the time the Service Agreement was signed. Alternatively,
MNTAS suggested that the instant dispute falls outside the language of the
arbitration provision in the Service Agreement, because it is a collection
action.
On June 25, 2014, the trial court overruled Broadview’s preliminary
objection. Broadview timely filed a notice of appeal. 2 The trial court did not
order Broadview to file a concise statement of errors complained of on
appeal pursuant to Pa.R.A.P. 1925, but the court did file an opinion pursuant
to Pa.R.A.P. 1925(a).
2
We recognize that the
[d]enial of preliminary objections is ordinarily an interlocutory
order not subject to immediate appeal. Nevertheless:
Pennsylvania Rule of Appellate Procedure 311 provides that an
interlocutory appeal may be taken as of right from any order
which is made appealable by statute. The Uniform Arbitration
Act, 42 Pa.C.S.A. §§ 7301 et seq., states that an appeal may be
taken from ‘[a] court order denying an application to compel
arbitration....’ 42 Pa.C.S.A. § 7320(a)(1).
Midomo Co. v. Presbyterian Hous. Dev. Co., 739 A.2d 180, 182-83 (Pa.
Super. 1999) (some quotations and citations omitted).
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Our standard of review for a denial of preliminary
objections in the nature of a petition to compel arbitration is
limited to determining whether the trial court’s findings are
supported by substantial evidence and whether the trial court
abused its discretion in denying the petition. Where a party to a
civil action seeks to compel arbitration, a two-part test is
employed. First, the trial court must establish 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.
Callan v. Oxford Land Dev., Inc., 858 A.2d 1229, 1233 (Pa. Super. 2004)
(citations omitted).
Preliminary objections in the nature of a petition to compel arbitration
filed pursuant to Pa.R.C.P. 1028(a)(6) cannot be determined from facts of
record. See Pa.R.C.P. 1028(c)(2) (“Note: Preliminary objections raising an
issue under subdivision (a)(1), (5), (6), (7) or (8) cannot be determined
from facts of record.”). The Rule further provides that “[i]f an issue of fact is
raised, the court shall consider evidence by depositions or otherwise.”
Pa.R.C.P. 1028(c)(2).
Instantly, the trial court offered two reasons as to why it concluded it
was proper to overrule the preliminary objection.
[T]he arbitration clause specifically states that the mandatory
arbitration does not apply to collections of amounts due for
services and injunctive matters. Therefore, because this matter
is based upon collections, the Preliminary Objections filed by
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[Broadview] alleging mandatory arbitrations were property
overruled.
***
Based upon the fact [] that the Complaint alleges that the
President of [MNTAS] specifically stated that his employee Mr.
Stonelake, (the signature to the agreement) had no authority to
enter into contracts on behalf of the company raises an issue of
fact. Considering this fact is true, which must be done at this
stage of the litigation, it is mandated that the Preliminary
Objections be overruled and the matter proceed to discovery and
arbitration in the proper forum, Delaware County Court of
Common Pleas.
Trial Court Opinion, 8/6/2014, at 1-2.
On appeal, Broadview asserts that these conclusions were error. First,
MNTAS argues that the instant action is not a collection action of the type
contemplated by the arbitration clause. Broadview’s Brief at 13. Broadview
further argues that because
MNTAS accepted and utilized for nearly five years the
telecommunications and related services provided by Broadview
under the Service Agreement and these services were by no
means limited to those in dispute here. During these five years,
MNTAS, through various representatives, including its President,
regularly interacted with Broadview regarding the Services being
provided by Broadview, raising multiple service and billing
issues; in other words, MNTAS repeatedly insisted upon the
service quality and billing accuracy rights afforded it under the
Service Agreement. Moreover, MNTAS, with some lapses, paid
Broadview for the Services provided under the Service
Agreement at the rates and pursuant to the terms and conditions
set forth in the Service Agreement, imploring Broadview, during
one of these aforesaid payments lapses, not to disconnect its
services for nonpayment. Indeed, the very documents
submitted by [MNTAS] with its Complaint confirm that MNTAS’s
President knew that Broadview was installing the Services at
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MNTAS’s location before such installation was complete and did
not at that time disavow [Joseph] Stonelake’s authority to
execute the Service Agreement, or seek rescission of the Service
Agreement.
Broadview’s Brief at 19-20.
In other words, Broadview inartfully asserts that the trial court applied
the rules incorrectly by assuming the facts of MNTAS’s complaint to be true,
when Broadview was arguing those facts were false. There is no question
that, pursuant to the aforementioned rules, the trial court was required to
make a factual determination about the veracity of the allegations in the
complaint by considering the averments in the preliminary objections as
well. Moreover, had the trial court required additional facts to make such a
determination, it should have considered “evidence by deposition or
otherwise.” Pa.R.C.P. 1028(c)(2).
Accordingly, the trial court erred as a matter of law, and we vacate the
order of the trial court. We remand for the trial court to consider the
preliminary objections filed by Broadview consistent with Pa.R.C.P.
1028(c)(2), and make the factual determinations as to whether “a valid
agreement to arbitrate exists between the parties…. [and] if … such an
agreement exists, … ascertain if the dispute involved is within the scope of
the arbitration provision.” Callan, 858 A.2d at 1233.3
3
The determination about whether this is a collection action as
contemplated in the Service Agreement also requires consideration of facts
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Order vacated. Case remanded for proceedings consistent with this
memorandum. Jurisdiction relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 2/10/2015
other than those asserted in the complaint. Presumably this clause was
designed by Broadview to permit it to collect for non-payment of services.
The instant case involves a somewhat more complex inquiry where MNTAS
asserts it was billed for and paid for services that Broadview did not provide.
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