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W. James Kernaghan, Ii, et al v. Bci Communications

July 19, 2011


The opinion of the court was delivered by: Slomsky, J.



Before the Court is a Motion to Dismiss filed by Defendant Clearwire Corporation (Doc. No. 9). This case arises out of an Independent Contractor Agreement (the "Agreement") between Plaintiffs and another defendant, BCI Communications, Inc. ("BCI"). Defendant BCI was hired by Defendant Clearwire Corporation ("Clearwire") to serve as general contractor on a project to launch Clearwire's wireless network in the Philadelphia area. BCI in turn entered into the Agreement with Plaintiffs. In the Agreement, Plaintiffs promised to perform site assessments and other site acquisition work on new and existing BIC sites, some of which would be used for the Clearwire/BCI project. In the Complaint, Plaintiffs assert that Defendant BCI breached the Agreement (Count I - breach of contract) and that Defendant Clearwire intentionally interfered with the Agreement (Count II - tortious interference).

On April 20, 2011, Defendant BCI filed an Answer to the Complaint. (Doc. No. 7.) On May 16, 2011, Defendant Clearwire filed the Motion to Dismiss now before the Court. (Doc. No. 10.) The issue presented by the Motion is a narrow one. Clearwire moves to dismiss the tortious interference claim alleged in Count II, arguing that this claim can only be asserted against a party with no beneficial or economic interest in the underlying agreement (the so-called "stranger" rule). Here, since the Clearwire project was the impetus for Plaintiffs and Defendant BCI to enter into the independent subcontracter Agreement, Clearwire argues it is not a "stranger" to the Agreement and therefore cannot be liable for tortious interference. In addition, Clearwire argues that the termination clause in the Agreement provides that BCI may terminate the Agreement if Plaintiffs' work is unsatisfactory to BCI or "Customer." Clearwire asserts that it is the "Customer" of BCI to which the Agreement referred and therefore had standing to terminate the Agreement. Based on its status as the "Customer," Clearwire asserts that it is a third-party beneficiary under the Agreement and, as a third-party beneficiary, it is not a "stranger" to the Agreement and therefore cannot be held liable for tortious interference with it.

Plaintiffs disagree with Clearwire's characterization of the termination clause and assert that the "stranger" rule does not apply in Pennsylvania. According to Plaintiffs, Pennsylvania has adopted the Restatement (Second) of Torts § 766 regarding tortious interference. This Section authorizes a claim of tortious interference to be brought against a person not a party to the contract. Plaintiffs assert that Defendant Clearwire is not a party to the Agreement and can be held liable under Section 766. In addition, Plaintiffs aver that the termination provision upon which Clearwire relies in asserting it is a third-party beneficiary is mischaracterized by Clearwire. According to Plaintiffs, the term "Customer" as used in the provision does not specifically refer to Clearwire, but instead refers generally to multiple wireless service providers.*fn1

The Court agrees with Plaintiffs. Pennsylvania does not apply the "stranger" rule as defined by Clearwire. Further, the use of the word "Customer" in the termination provision of the Agreement is ambiguous and for purposes of the Motion, the Court accepts as true the facts and inferences alleged by Plaintiffs which preclude a finding at this stage that Clearwire is the "Customer." Thus, at the Motion to Dismiss stage of the proceedings, the Court cannot conclude that Clearwire is a third-party beneficiary and therefore a party to the Agreement. For these reasons, the Court will deny the Motion to Dismiss the claim for tortious interference with existing business relations.


Plaintiff W. James Kernaghan, II ("Kernaghan") is the owner and President of Plaintiff On Target Acquisition, LLC ("On Target"), a Pennsylvania Limited Liability Company. (Compl., Doc. No. 1 ¶¶ 1-2.) On Target specializes in "scouting, securing, surveying, and maintaining locations for wireless and broadcast communications towers and structures." (Id. ¶ 2.) Kernaghan and On Target will be referred to collectively as "Plaintiffs." Defendant BCI Communications, Inc. ("BCI") is a Delaware corporation with its principal place of business located in New Jersey. (Id. ¶ 4.) BCI owns and operates wireless broadcast communication sites throughout the United States. (Id.) Defendant Clearwire Corporation ("Clearwire") is a Delaware corporation with its principal place of business located in the state of Washington. (Id. ¶ 5.) Clearwire is a wireless broadband provider of personal communication services. (Id.)

In or around January 2009, Plaintiffs learned that Clearwire hired BCI as a general contractor to, among other tasks, "'scrub' existing BCI sites and to secure lease agreements on BCI sites and other sites deemed qualified by Clearwire to launch its wireless network in and around the Philadelphia area" (the "Project"). (Doc. No. 1 ¶ 8.) Plaintiff On Target had experience in performing this type of site acquisition work and successfully submitted a bid to BCI to assist BCI in performing this site acquisition work. (Id. ¶ 9.) Kernaghan, on behalf of On Target, signed an Independent Contract Agreement (the "Agreement") with BCI. (Id. ¶ 12.) In the Agreement, Plaintiffs agreed to perform site assessments and to secure leases, zoning approvals, and building permits.*fn2 (Id.; see also Doc. No. 9-3.)

The Agreement provides:

The term of this Agreement shall begin on the date stated above with an initial term of three (3) months. The Agreement shall then continue on a month-to-month basis unless earlier terminated by either party in accordance with the terms of this Agreement. (Doc. No. 9-3 at 1.) With respect to termination, the Agreement provides as follows:

In the event that [On Target's] performance is unsatisfactory, in Customer or BCI [sic] sole opinion, BCI shall have the right to immediately terminate [On Target's] assignment with Customer and terminate this Agreement. (Doc. No. 9-3 at 2.) Plaintiffs claim that this paragraph provides that only BCI may terminate the Agreement if it is unsatisfied with On Target's work, but does not allow termination for any other reason and does not allow for early termination during the initial three (3) month term. (Doc. No. 1 ¶ 13.) Pursuant to the Agreement, Plaintiffs were to receive "in excess of" $105,000 for its work. (Id. ¶ 25.)

On January 29, 2009, Plaintiffs began work under the Agreement, searching, surveying, and securing the land, and obtaining permits, leases, zoning approvals, rights-of-way, and easements. (Id. ¶ 15.) While performing these tasks, Plaintiffs never received a complaint from BCI about the quality of their work. Moreover, Clearwire was made aware of the involvement of Plaintiffs. (Id. ¶ 14.) At the time Plaintiffs and BCI entered into the Agreement, Plaintiffs made their "professional associations clear to BCI, and disclosed all potential conflicts of interest to BCI." (Id. ¶ 10.)

On or about February 25, 2009, Christine Teeter, an employee of BCI, contacted Plaintiff Kernaghan to inquire whether he was representing AT&T in the Philadelphia area, or whether Plaintiffs had any other conflicts of interest with the BCI work. (Id. ¶ 17.) Kernaghan informed Ms. Teeter he had no such conflicts and offered to sign a non-compete agreement. (Id. ¶ 18.) Plaintiffs allege "[u]pon information and belief," Clearwire, concerned that Plaintiffs did have conflicts of interest, demanded that BCI terminate the Agreement. (Id. ¶ 19.) In February 2009, BCI verbally informed Kernaghan that it would discontinue using Plaintiffs for completion of the Project. (Id. ¶¶ 22-23.)

On February 27, 2009, Plaintiffs signed a "BCI Communications, Inc. Confidentiality, Non-Disclosure/Non-Competition Agreement for Independent Contractors." (Id. ΒΆ 24.) Plaintiffs signed the agreement "after learning of Clearwire's concerns which prompted BCI to breach its Agreement with [Plaintiffs]." (Id.) Although Plaintiffs have performed certain stages of work and have "achieved several milestones ...

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