Cunney v. Patrick Commc'ns, LLC, CIVIL NO. JKB-13-2519

191 F.Supp.3d 480

John J. CUNNEY, Plaintiff

v.PATRICK COMMUNICATIONS, LLC, et al., Defendants.

CIVIL NO. JKB-13-2519

United States District Court, D. Maryland.

Signed June 13, 2016

Neil J. Ruther, Law Office of Neil J. Ruther, Towson, MD, Kenneth Broh Frank, Kenneth B. Frank PA, Baltimore, MD, for Plaintiff.

Harriet E. Cooperman, Saul Ewing LLP, Baltimore, MD, Brett Stephen Covington, Saul Ewing LLP, Washington, DC, for Defendants.

MEMORANDUM

James K. Bredar, United States District Judge

John J. Cunney ("Plaintiff"), a citizen of Connecticut, brought an action in diversity¹ against Patrick Communications, LLC ("PCL"), a limited liability company organized under the laws of Maryland; W. Lawrence ("Larry") Patrick, a Maryland citizen and PCL principal; and Larry's wife Susan Patrick, also a Maryland citizen and PCL principal (collectively, "Defendants"). Plaintiff seeks to recover certain commissions he allegedly earned in his former capacity as a vice president and broker at PCL. Against PCL, Plaintiff brought claims sounding in breach of contract and quantum meruit. Against each Defendant, Plaintiff asserted violations of the Maryland Wage Payment and Collection Law ("MWPCL"), Md. Code Ann., Lab. & Empl. § 3–501 et seq. ; Plaintiff further accused each Defendant of "intentional misrepresentation / fraud." Finally, Plaintiff requested a declaratory judgment with respect to the ownership of an equitable interest in an entity formed for purposes of broadcast spectrum investment and arbitrage, NRJ TV, LLC ("NRJ" or the "NRJ Venture").²

Now pending before the Court is Defendants' Motion for Summary Judgment. (ECF No. 60.)³ The issues have been briefed (ECF Nos. 60–1, 68–1 & 70), and no hearing is required, see Local Rule 105.6 (D. Md. 2014). For the reasons explained below, Defendants' motion will be GRANTED.

I. Factual Background and Procedural Posture

PCL is a brokerage firm specializing in "broadcast media, tower, telecom and wireless transactions." (ECF No. 60–3 ¶ 3.) The firm represents buyers and sellers in the purchase and sale of television and radio stations as well as wireless towers, telecommunications systems, and electromagnetic spectrum licenses. (Id. ¶ 5.) In April 2009, Plaintiff joined PCL as a vice president and commissioned broker: the basic terms of his employment are outlined in a memorandum drafted by Larry Patrick on March 13, 2009 ("Employment Memorandum"). (ECF No. 60–10 at 59.) Pursuant to that memorandum, Plaintiff was entitled to an annual base salary of $100,000 as well as commissions on certain transactions that he originated, executed, or assisted in executing to a reasonable degree. Specifically, Plaintiff was entitled to (1) 30% of all collected fees paid to PCL for telecom, wireless, or tower transactions that he originated and executed; (2) 30% of all collected fees for broadcast media transactions that he originated; and (3) 20% of all collected fees for broadcast media transactions that he executed or reasonably assisted in executing. (Id. )⁴ The memorandum further specified that Plaintiff's telecom/wireless/tower commissions would increase to 40% once he generated $1 million in fees from originating such transactions; his broadcast media commissions would likewise increase to 40% once he generated $1 million in fees from originating those transactions. (Id. at 60.)⁵ Despite this seemingly attractive compensation package, Plaintiff earned just $10,365 in commissions during his first eighteen months at PCL. (ECF No. 70–2 at 2.)

On March 17, 2010, the Federal Communications Commission ("FCC") unveiled a National Broadband Plan ("NBP"), a comprehensive roadmap to expanding broadband coverage and access that included as a goal the reallocation of electromagnetic spectrum to next-generation services.⁶ Under the NBP, the FCC determined to conduct a "reverse auction" at some unspecified date, acquiring spectrum from television stations in exchange for fees; the FCC would then conduct a "forward auction," licensing the newly reacquired spectrum to wireless service providers. (ECF No. 60–3 ¶ 16.) Larry Patrick avers that, upon learning about the NBP, he envisioned two distinct and potentially lucrative business opportunities—the first being an arbitrage opportunity whereby he and Susan could create an investment vehicle for the purpose of purchasing and holding underperforming television stations in advance of the reverse auction; the second being a marketing opportunity whereby PCL could sell its brokerage services to other investors who shared Larry's appetite for arbitrage. (Id. ¶¶ 20-21.) Thereafter, Larry reached out to two fellow businessmen with whom he had longstanding relationships: Urchie Bertram ("Bert") Ellis, Jr., the president of Titan Broadcasting Management, LLC, a company that operates television stations nationwide; and Teddy ("Ted") Bartley, an employee at Fortress Investment Group ("Fortress"), a global investment firm. (Id. ¶ 24.) Together, Larry, Ellis, and Bartley (the "NRJ Partners") agreed to form a partnership—what would become the NRJ Venture—for the purpose of engaging in spectrum arbitrage.⁷

On August 13, 2010, the NRJ Partners met with representatives of Fortress to discuss the venture and the possibility of securing a loan facility from Fortress. (Id. ¶ 25.) Around that same time, as negotiations continued, Bartley contacted Plaintiff on several occasions seeking his input on spectrum valuation, but Larry instructed Plaintiff to refrain from providing any such information until a final deal was reached. (See ECF No. 66–6 at 25-31.) Plaintiff testified that he complied with Larry's instructions. (ECF No. 60–10 at 7.) Plaintiff further averred that on "October 8, 2010, Larry told [him] the deal was funded and the investment partnership, known as NRJ, was up and running." (ECF No. 66–5 ¶ 29.)⁸ At that point, Plaintiff was free to supply Bartley and the other NRJ Partners (and Fortress) with spectrum valuation reports: Larry viewed these reports as a "marketing tool that would lead to brokerage engagements for PCL," resulting in "substantial fees to PCL and, in turn, commissions to its brokers who executed or assisted in executing the specific television station sale[s]...which would include Plaintiff." (ECF No. 60–3 ¶ 32.)

Although Bartley had at one point circulated a draft term sheet proposing that PCL could sign an exclusive brokerage agreement with NRJ in exchange for equity in the venture (ECF No. 66–6 at 66), no such agreement was ever executed (ECF No. 66–1 at 21). Instead, as Bert Ellis explained, the three NRJ Partners themselves "agreed to an equal split of the NRJ equity because of the value [they] understood each of [them] inherently brought to NRJ through [their] knowledge, experience and relationships...and because [they] had jointly developed, created and formed NRJ and brought it to fruition." (ECF No. 70–6 ¶ 15.)⁹ Bartley testified that Larry, in particular, received equity in NRJ because the two had a longstanding, valuable professional relationship. (ECF No. 66–1 at 33.)¹⁰ The final operating agreement, which was executed on December 23, 2010, reflects the equal shares to which the NRJ Partners agreed: each received one-third of membership units issued at the time of formation; Larry's units were allocated to Drumcree, LLC ("Drumcree"), a limited liability company that Larry co-owns with Susan. (ECF No. 61 at 46.)¹¹

Unlike the NRJ Partners, Plaintiff received no share of equity in NRJ as he "had no involvement in the creation, formation or capitalization of the venture." (ECF No. 70–6 ¶ 12.) Even so, the venture redounded substantially to Plaintiff's economic benefit. Whereas he had earned just $10,365 in commissions during his first eighteen months at PCL, he brought in $586,516 in commissions during his last eighteen months of employment, $306,400 of which amount was attributable to his work on NRJ transactions. (ECF No. 70–2 at 2-3.) In spite of these significant gains, Plaintiff began inquiring at an early stage about the possibility of receiving either equity in Drumcree or a cash payment upon final, post-auction liquidation of the NRJ Venture, either of which amount would be calculated based on the commission schedule laid out in the Employment Memorandum. According to Plaintiff, on November 3, 2010, he asked Susan for a portion of Drumcree's equity as his commission, "just like any other deal." (ECF No. 66–5 ¶ 32.) Plaintiff avers that Susan expressed "concerns about paying [him] a commission in equity," ostensibly because he might leave PCL before completing his work on NRJ transactions; however, he claims she "confirmed that [he] would get paid [his] percentage of any money they received in the future." (Id. )

Plaintiff had subsequent conversations with both Larry and Susan about his desire for a profit share in NRJ. On November 9, 2010, Plaintiff e-mailed a proposed "NRJ COMMISSION AGREEMENT" for Larry's review; Larry responded that the document "mis-states several key facts," and he did not sign it. (See ECF No. 66–6 at 80-81.) On November 28, 2010, Susan e-mailed Plaintiff to advise him that she had spoken with Larry at length about Plaintiff's proposed "deal"; that Larry was "willing to consider some sort of vesting in the NRJ stuff over time"; but that Larry felt it was "important that discussion of any vesting structure prior to just a simple payday at the end of the auction be tied to covering [their] investment in [Plaintiff] and some elements of financial performance." (Id. at 82.)¹² However, on December 10, 2010, Susan sent Plaintiff another e-mail, asking to meet and advising him that Larry was "extremely annoyed and frustrated" with Plaintiff's proposed "deal." (Id. at 83.) According to Plaintiff, during their conversation, Susan told him they would "pay [him] when the deal ‘closed[,]’ which they considered was the time they received cash for their shares in NRJ," and she advised him not to press the issue. (ECF No. 66–5 ¶ 40.)...