WIRELESS BUYBACKS, LLC v. GO MOBILE, INC.

Filing 14

MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE J. CURTIS JOYNER ON 12/1/14. 12/2/14 ENTERED AND COPIES E-MAILED.(mbh, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA

WIRELESS BUYBACKS, LLC

:
: CIVIL ACTION
:
:
: NO. 14-CV-1666
:
:
:
:

Plaintiff
vs.
GO MOBILE, INC.
Defendant

MEMORANDUM AND ORDER

JOYNER, J.

December 1, 2014

This civil action has been brought before the Court on
Motion of the Defendant Go Mobile, Inc. for the entry of Partial
Summary Judgment in its favor.

For the reasons which follow, the

motion shall be granted.
Factual Background
According to the allegations in the First Amended Complaint
(“FAC”), this case arises out of a contract between the parties1
pursuant to which Defendant agreed to provide Plaintiff with some
953 refurbished Sprint HTC EVO Design cellular telephones in

1

Plaintiff Wireless Buybacks is a Delaware limited liability company
with a principal place of business in Elkridge, MD and “is in the business of
buying and reselling top-quality, pre-owned wireless phones in the secondary
market.” (First Am. Compl., ¶s 1,2). Defendant, Go Mobile is a Pennsylvania
corporation with registered offices and/or business addresses in Warrington
and Souderton, Pennsylvania. Go-Mobile “is a wholesaler in the secondary
market for pre-owned wireless phones). (First Am. Compl., ¶s 3, 4).

exchange for the payment of $247,780.00.2

Under the terms of

this agreement, which was initially negotiated in or around
November 2012, the handsets were to be capable of being activated
on the Sprint PCS Network, which is Sprint’s national wireless
network for its customers with monthly voice and data plans.
Beginning in November 2012 and continuing through February
2013, Defendant delivered to Plaintiff a total of 953 refurbished
Boost Mobile HTC Evo Design handsets at the agreed price of $260
each.

(FAC, ¶32).

The Boost Mobile phones, however, were

incapable of being activated on the Sprint PCS Network, as they
are in the PLBL database and do not appear in the Sprint PCS
database.

(FAC, ¶s 28-30, 36-37).

Despite numerous discussions

back and forth between the parties and despite Plaintiff having
returned the Boost mobile phones, Defendant never provided the
conforming Sprint-branded phones to Plaintiff nor apparently did
Defendant ever refund the full purchase price paid for the 953
handsets which were ordered.

Plaintiff therefore initiated this

lawsuit on March 20, 2014 for breach of contract and fraud
seeking to recover compensatory and punitive damages as well as
attorneys’ fees, interest and costs of suit.
By the motion which is now before the Court, Defendant seeks
the entry of judgment in its favor on Plaintiff’s fraud claim and
2
As reflected in the averments in paragraphs 8 - 17 of Plaintiff’s
First Amended Complaint, the contract originally called for Defendant to
supply 1000 of the HTC Evo Design handsets to Plaintiff at a price of $260
each.

2

on its claim for the recovery of attorneys’ fees and punitive
damages on the grounds that (1) the claim for fraud is barred by
the “gist of the action” doctrine and (2) that Pennsylvania law
does not permit the recovery of punitive damages in breach of
contract actions.

Defendant additionally argues that attorneys’

fees can not be recovered in the absence of a contractual feeshifting provision to that effect.
Summary Judgment Standards
It is Fed. R. Civ. P. 56(a) which outlines the standards to
be employed by the federal courts in considering motions for
summary judgment.

That Rule states, in pertinent part:

A party may move for summary judgment, identifying each
claim or defense - or the part of each claim or defense
- on which summary judgment is sought. The court shall
grant summary judgment if the movant shows that there
is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law...
In reviewing the record before it for purposes of assessing
the propriety of entering summary judgment, the court should view
the facts in the light most favorable to the non-moving party and
draw all reasonable inferences in that party’s favor.

Ma v.

Westinghouse Electric Co., No. 13-2433, 2014 U.S. App. LEXIS
5049, *9 (March 18, 2014); Burton v. Teleflex, Inc., 707 F.3d
417, 425 (3d Cir. 2013).

The initial burden is on the party

seeking summary judgment to point to the evidence “which it
believes demonstrate the absence of a genuine issue of material
fact.”

United States v. Donovan, 661 F.3d 174, 185 (3d Cir.
3

2011)(quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.
Ct. 2548, 91 L. Ed.2d 265 (1986)).

An issue is genuine only if

there is a sufficient evidentiary basis on which a reasonable
jury could find for the non-moving party, and a factual dispute
is material only if it might affect the outcome of the suit under
governing law.

Kaucher v. County of Bucks, 455 F.3d 418, 423 (3d

Cir. 2006)(citing Anderson v. Liberty Lobby,

477 U.S. 242, 248,

106 S. Ct. 2505, 2510, 91 L. Ed.2d 202 (1986)).
Moreover, to survive summary judgment, the non-moving party
must present more than a mere scintilla of evidence; there must
be evidence on which the jury could reasonably find for the nonmovant.

Jakimas v. Hoffman-LaRoche, Inc., 485 F.3d 770, 777 (3d

Cir. 2007).

Conclusory statements and general denials will not

suffice, nor can the non-movant simply reassert factually
unsupported allegations contained in the pleadings.

Williams v.

West Chester, 891 F.2d 458, 460 (3d Cir. 1989); Franklin County
Area Development Corp. v. Leos, 462 B.R. 151, 154 (Bankr. M.D.
Pa. 2011); Luther v. Kia Motors America, Inc., 676 F. Supp. 2d
408, 415 (W.D. Pa. 2009).

And, “if there is a chance that a

reasonable juror would not accept a moving party’s necessary
propositions of fact,” summary judgment is inappropriate.”
Burton, supra, (quoting El v. SEPTA, 479 F. 3d 232, 238 (3d Cir.
2007)).
Discussion

4

1. Gist of the Action
Although never formally adopted by the Pennsylvania Supreme
Court, the gist of the action doctrine is generally accepted as
established Pennsylvania law, having first been articulated and
applied by the Pennsylvania Superior Court and later by the
various federal courts (including this one) applying the law of
this Commonwealth.

In several instances, the principle has also

at least been acknowledged by the Supreme Court of Pennsylvania.3
In essence, the gist of the action doctrine is “designed to
maintain the conceptual distinction between breach of contract

3

As was cogently observed in Reardon v. Allegheny College, 2007 PA
Super 160, 926 A.2d 477, 485-486 (2007):
While an intensive research effort does indicate that our Supreme Court
has not explicitly reviewed the concept under the appellation “gist of
the action,” dicta from the Court indicates it recognizes that allowing
plaintiffs to forward both tortious and contractual theories of recovery
arising out of damages allegedly incurred in the context of a
contractual relationship is problematic. Over 40 years ago the Court
stated “to permit a promisee to sue his promisor in tort for breaches of
contract inter se would erode the usual rules of contractual recovery
and inject confusion into our well-settled forms of actions. Most courts
have been cautious about permitting tort recovery for contractual
breaches and we are in full accord with this policy.” ...
The methods of proof and the damages recoverable in actions for breach
of contract are well established and need not be embellished by new
procedures or new concepts which might tend to confuse both the bar and
litigants. ... Thereafter, both this Court and various federal courts
have operated under the assumption that the gist of the action doctrine
is a viable doctrine that will eventually be explicitly adopted by our
state’s High Court. The Supreme Court is clearly aware of the frequent
use of this doctrine by both the lower and federal courts of this state,
but has declined at least three opportunities to put an end to its use.
As a consequence, we consider the gist of the action doctrine to be
viable.
citing, inter alia, Yocca v. Pittsburgh Steelers Sports, Inc., 578 Pa. 479,
854 A.2d 425, 433 (2004); Glazer v. Chandler, 414 Pa. 304, 200 A.2d 416, 418
(1964); Hart v. Arnold, 2005 PA Super 328, 884 A.2d 316, 339 (2005);
Pittsburgh Construction Co. v. Griffith, 2003 PA Super 374, 834 A.2d 572, 584
(2003).

5

and tort claims” in that it “bars a plaintiff from re-casting
ordinary breach of contract claims into tort claims.”

Knight v.

Springfield Hyundai, 2013 PA Super 309, 81 A.3d 940, 950 (Pa.
Super. 2013)(quoting Empire Trucking Co., Inc. v. Reading
Anthracite Coal Co., 2013 PA Super 148, 71 A.3d 923, 931, n.2
(Pa. Super. 2013); Etoll, Inc. v. Elias/Savion Advertising, Inc.,
2002 PA Super. 347, 811 A.2d 10, 14 (Pa. Super. 2002)(citing Bash
v. Bell Telephone Co., 411 Pa. Super. 347, 601 A.2d 825, 829
(1992)).

This is because

“although they derive from a common origin, distinct
differences between civil actions for tort and contract
breach have developed at common law. Tort actions lie for
breaches of duties imposed by law as a matter of social
policy, while contract actions lie only for breaches of
duties imposed by mutual consensus agreements between
particular individuals. To permit a promisee to sue his
promisor in tort for breaches of contract inter se would
erode the usual rules of contractual recovery and inject
confusion into our well-settled forms of actions.
Mirizio v. Joseph, 2010 PA Super 70, 4 A.3d 1073, 1079 (Pa.
Super. 2010)(quoting Bash, supra.).

Hence, “although mere non-

performance of a contract does not constitute a fraud, it is
possible that a breach of contract also gives rise to an
actionable tort.

To be construed as in tort, however, the wrong

ascribed to defendant must be the gist of the action, the
contract being collateral.”

Id, at 4 A.3d at 1080.

In other words, the gist of the action doctrine operates to
foreclose tort claims: (1) arising solely from the contractual
relationship between the parties; (2) when the alleged duties
6

breached were grounded in the contract itself; (3) where any
liability stems from the contract; and (4) when the tort claim
essentially duplicates the breach of contract claim or where the
success of the tort claim is dependent on the success of the
breach of contract claim.
926 A.2d at 486.

Reardon v. Allegheny College, supra,

Where fraud claims are intertwined with breach

of contract claims and the duties allegedly breached are created
and grounded in the contract itself, the gist of the action is
breach of contract; claims of fraud in the performance of a
contract are generally barred under the gist of the action
doctrine.

Etoll, 811 A.2d at 17, 18.

In the case at hand, Plaintiff alleges that despite
Defendant having “explicitly promised to provide handsets for
activation on the Spring PCS Network, ‘not plbl,’” and Defendant
having “affirmatively represented ... that it was shipping
genuine refurbished Sprint PCS handsets for activation on the
Sprint PCS Network, ...” the phones that were sent were
“nonconforming Boost phones.”

(FAC, ¶s 73, 74, 77). Accordingly,

we find that the gravamen of Count II is clearly fraud in the
performance of the agreement, that the duties allegedly breached
were grounded in the contract itself, and that the gist of the
action is breach of contract.

We therefore agree with Defendant

that the claim for fraud is barred by the gist of the action
doctrine and that judgment as a matter of law is properly entered

7

in its favor as to Count II of the First Amended Complaint.
2. Punitive Damages
In addition to seeking the recovery of the monies which it
paid for the phones which it ordered but did not receive,
Plaintiff asks for punitive damages.

As a general rule, punitive

damages cannot be recovered merely for breach of contract.
Nicholas v. Pennsylvania State University, 227 F.3d 133, 147 (3d
Cir. 2000); Baker v. Pennsylvania National Mutual Casualty
Insurance Co., 370 Pa. Super. 461, 469-470, 536 A.2d 1357, 1361
(1987); Rittenhouse Regency Affiliates v. Passen, 333 Pa. Super.
613, 615, 782 A.2d 1042, 1043 (1984).

Insofar as this is nothing

more than a simple breach of contract action, Defendant is
likewise entitled to the entry of judgment in its favor as a
matter of law on Plaintiff’s claim for the recovery of punitive
damages.
3.

Entitlement to Attorneys’ Fees

Finally, Plaintiff’s First Amended Complaint also seeks an
order compelling Defendant to pay its attorneys’ fees as a result
of having to bring this suit.
On this point, we note that Pennsylvania follows the
“American rule” that attorneys’ fees and costs are not
recoverable from an adverse party unless a statute expressly
authorizes the fees, there was a clear agreement among the
parties to permit such recovery, or some other exception applies.

8

Medevac MidAtlantic, LLC v. Keystone Mercy Health Plan, 817 F.
Supp. 2d 515, 534 (E.D. Pa. 2011).

“Consequently, in breach of

contract matters, fees are unavailable absent an agreement
between the contracting parties.”

Id.

See also, McMullen v.

Kutz, 603 Pa. 602, 985 A.2d 769, 775 (2009)(“[t]he general rule
within this Commonwealth is that each side is responsible for the
payment of its own costs and counsel fees absent bad faith or
vexatious conduct... this rule holds true unless there is express
statutory authorization, a clear agreement of the parties or some
other established exception...”) and Kochmer v. Fidelity National
Title Insurance Co., No. 3:12-CV-1676, 2013 U.S. Dist. LEXIS
56603 at *7 (M.D. Pa. April 19, 2013)(same)).
Here, given that there is no evidence that the parties’
contractual agreement included a provision or requirement for the
payment of attorneys’ fees, judgment shall be entered in favor of
the defendant on this claim as well.
An appropriate order follows.