Court Opinion

ID: 2778356
Source: CourtListenerOpinion
Date Created: 2015-02-10 22:06:00.388002+00
Date Added: 2024-06-11T12:26:18.386721
License: Public Domain

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NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P. 65.37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.
J-S77043-14

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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