Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Sizemore v. Hotwire Communications, LLC

United States District Court, E.D. Pennsylvania

May 18, 2015




This case concerns a disputed business relationship between plaintiffs Steven Sizemore and his company DVComm, LLC ("Sizemore"), and defendants Hotwire Communications, LLC and Hotwire Communications, Ltd. ("Hotwire"). According to the complaint, Sizemore, a telecommunications consultant, provided a business plan and drew upon local contacts in 2010 to assist Hotwire, a Pennsylvania company, with expanding its business into Atlanta, Georgia. Sizemore alleges that Hotwire followed his plan and made use of his contacts when it entered the Atlanta market in 2013- but that it did so without his involvement and without providing him any of their agreed-upon compensation. Hotwire thus deprived Sizemore of the benefits of the bargain, injured his reputation, and damaged his relationships with other members of the Atlanta telecom industry. Sizemore filed suit against Hotwire, bringing seven claims sounding in tort, contract, and equity. Hotwire moved to dismiss, arguing that all of the claims are deficient and that the tort claims in particular should fail under Pennsylvania's "gist of the action" and economic loss doctrines. Because Sizemore has adequately pleaded all but one of his claims, and because applying the state law doctrines here would be both premature and a poor fit, I will grant the motion in part and deny it in part.


Steven Sizemore, a resident of Lawrenceville, Georgia, began working in the telecommunications industry in 1998. First Am. Compl. ("FAC") ¶¶ 2, 21. In 2003, Sizemore created his own company, DVComm, LLC, to facilitate working (including as a consultant) with telecom companies that were operating in or looking to enter the Atlanta, Georgia market. Id. ¶¶ 3-4. In or around 2004, Hotwire Communications, LLC and Hotwire Communications, Ltd. (both based in Bala Cynwyd, Pennsylvania, the former a subsidiary of the latter, and collectively referred to as "Hotwire") began providing network services in the eastern United States. Id. ¶¶ 9-13. Hotwire first began offering fiber optic services in or around 2005. Id. ¶15.

Sizemore and Hotwire were introduced by a mutual contact in 2004, and beginning in 2005, Sizemore would occasionally provide customer leads to Hotwire. Id. ¶¶ 30-31. In December 2009, Sizemore and Hotwire made closer connection through the same contact, who at that point was partnering with Sizemore while working with Hotwire to sell its products to an Atlanta hospital. Id. In anticipation of working together. Hotwire asked Sizemore to enter into a mutual non-disclosure agreement ("NDA"), and such an NDA was . Id. ¶¶ 32, 36. Though the NDA as written was between DVComm and Hotwire Communications, LLC, it was understood by all parties that the agreement also extended to Sizemore and both Hotwire entities. Id. ¶¶ 37-38.

On January 26, 2010, Hotwire president Kristin Johnson contacted Sizemore and asked to set up a telephone call to discuss Hotwire's possible expansion of its fiber optic business into the Atlanta market, the company having previously tried and failed to do so in 2007. Id. ¶¶39-40. Johnson and Sizemore had several conversations to that effect in January 2010. Id. ¶ 41. On April 5, 2010, Johnson again called Sizemore to discuss opening a Hotwire branch in Georgia. Id. ¶ 43. On April 13, 2010, Sizemore informed Johnson that he was "on board" with Hotwire, and on April 19, 2010, Hotwire arranged at its expense for Sizemore to travel to Hotwire's headquarters in Pennsylvania. Id. ¶¶ 44-45. In advance of this meeting, Sizemore produced a business plan for Hotwire's entry into the Atlanta market, and at the request of Johnson's assistant, he sent the plan to Hotwire. Id. ¶¶ 46-48.

On April 23, 2010, Sizemore met with Hotwire's leadership and reviewed the plan. Id. ¶ 61. Sizemore was given a map of Hotwire's infrastructure and told where he would work. Id. ¶ 62. Following the meeting. Hotwire made plans for its director of facilities, Michael Grandizio, to travel to Atlanta and attend meetings arranged by Sizemore with other businesses that could partner with Hotwire in its expansion. Id. ¶ 64. Prior to these meetings, Sizemore revised the business plan and sent the revised version to Hotwire, at which point Johnson thanked Sizemore for "all the effort [he] ha[d] put in on moving this forward." Id. ¶¶ 63, 65.

Johnson "accepted and approved Sizemore's business plan" on May 5, 2010, and she told Sizemore to proceed under it. Id. ¶ 71. Johnson directed Grandizio to meet with Sizemore in Atlanta to start taking steps outlined in the business plan, and Grandizio traveled to Atlanta on May 20-21, 2010. Id. ¶¶ 71-72. There, Sizemore took Grandizio to meetings with various third parties that Sizemore had arranged; for example, Sizemore introduced Grandizio to Tim Kiser, who verbally agreed to provide certain services at his 55 Marietta Street facility to Hotwire at a discount. Id. ¶¶ 73-76. Sizemore further arranged meetings with at least three other individuals, including the majority owner of Netstream Communications. Id. ¶¶ 77-85. On June 2, 2010, Hotwire and Netstream entered into their own NDA, with Sizemore signing as Hotwire's authorized agent. Id. ¶ 86. By the end of June 2010, according to Sizemore, he had "fully delivered" on the business plan and Johnson "fully accepted" the plan. Id. ¶ 91.

At some point between May 24, 2010 and June 7, 2010, Johnson informed Sizemore that Hotwire would not activate its Atlanta network until it could confirm revenue of $15, 000 per month. Id. ¶ 92. In response, Sizemore negotiated verbal commitments from various contacts that would have provided $12, 000 per month in revenue. Id. ¶ 95. On June 15 and June 30, 2010, Sizemore requested that Johnson finalize his "compensation/participation"-Johnson had verbally agreed to pay Sizemore "in the range of $120, 000 per year as base compensation. Id. ¶ 96. Hotwire would not confirm Sizemore's future compensation. Id. ¶ 98. Sizemore met again with Netstream on July 19, 2010, during which time Netstream would not enter into any contracts or agreements with Hotwire due to Hotwire's decision not to activate its network. Id. ¶ 100. In September 2010, Sizemore agreed to personally raise the additional monthly revenue sought by Hotwire. Id. ¶ 103. Between June and October 2010, Hotwire executives made plans for several trips to Atlanta to meet with Sizemore, all of which were cancelled. Id. ¶¶ 99, 105-06. By October 2010, Hotwire stopped communicating with Sizemore. Id. ¶ 107.

Three years later, in September 2013, Hotwire began activating its Atlanta network. Id. ¶ 114. This included using the 55 Marietta Street facility and taking various other steps that, according to Sizemore, came "right out of Sizemore's business plan." M ¶¶ 114, 116, 118. Hotwire now operates in ten states, including Georgia. Id. ¶ 15. Sizemore alleges that the failure of Hotwire's roll-out in 2010 harmed his relationships within the telecom industry, and that the success of Hotwire's launch in 2013 tarnished his reputation. Id. ¶¶ 109, 111.

Sizemore filed suit against Hotwire on September 26, 2014. Hotwire moved to dismiss under Fed.R.Civ.P. 12(b)(6) on October 22, 2014, Sizemore responded on November 11, 2014, and Hotwire replied on November 18, 2014. Sizemore thereafter filed a first amended complaint on November 20, 2014. Hotwire again moved to dismiss on December 11, 2014, Sizemore filed a brief in opposition on January 9, 2015, and Hotwire replied on January 16, 2015.


In evaluating a motion to dismiss under Rule 12(b)(6), courts must "accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief" Phillips v. Cnty. of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008) (internal quotation marks and citation omitted). The pleading standard of Rule 8 "demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. (citing Bell Ail. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). The complaint must contain sufficient factual matter to be plausible on its face. See Id. "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged"; a sheer possibility that a defendant acted unlawfully is not sufficient. Id. Therefore, to survive a motion to dismiss, plaintiffs must allege facts sufficient to have "nudged their claims across the line from conceivable to plausible." Twombly, 550 U.S. at 570.

Counts I and II of the complaint, claiming fraud in the inducement and fraud and deceit, respectively, are additionally covered by the heightened pleading standards of Rule 9, which states that "[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake." Fed.R.Civ.P. 9(b). This particularity requirement is designed "to place the defendants on notice of the precise misconduct with which they are charged, and to safeguard defendants against spurious charges of immoral and fraudulent behavior." Seville Indus. Mack Corp. v. Southmost Mack Corp., 742 F.2d 786, 791 (3d Cir. 1984). The Third Circuit has therefore interpreted Rule 9(b) to mean that a plaintiff bringing a fraud claim must generally "plead the who, what, when, where and how: the first paragraph of any newspaper story, " Institutional Investors Grp. v. Avaya, ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.