Court Opinion

ID: 9838692
Source: CourtListenerOpinion
Date Created: 2023-09-07 16:09:09.888623+00
Date Added: 2024-06-11T08:52:44.042212
License: Public Domain

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT O.P. 65.37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)
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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.

                                           -2-
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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).

                                           -3-
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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.

                                    -4-
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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.

                                           -5-
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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.

                                     -6-
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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).

                                           -7-
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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.

                                           -8-
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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.

                                           -9-
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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.

                                          - 10 -
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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.

                                          - 22 -
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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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