Andrews v. Cross Atl. Capital Partners, Inc., 1694 EDA 2014

• Decision Date: 21 March 2017
• Docket Number: No. 1694 EDA 2014,No. 1934 EDA 2014,No. 1825 EDA 2014,1694 EDA 2014,1825 EDA 2014,1934 EDA 2014
• Citation: 158 A.3d 123
• Parties: Nicholas D. ANDREWS, Appellant v. CROSS ATLANTIC CAPITAL PARTNERS, INC. Nicholas D. Andrews, Appellant v. Donald R. Caldwell Nicholas D. Andrews v. Cross Atlantic Capital Partners, Inc., Appellant Nicholas D. Andrews v. Donald R. Caldwell, Appellant Nicholas D. Andrews, Appellant v. Cross Atlantic Capital Partners, Inc. Nicholas D. Andrews, Appellant v. Donald R. Caldwell
• Court: Pennsylvania Superior Court

158 A.3d 123

Nicholas D. ANDREWS, Appellant

v.CROSS ATLANTIC CAPITAL PARTNERS, INC.

Nicholas D. Andrews, Appellant

v.Donald R. Caldwell

Nicholas D. Andrews

v.Cross Atlantic Capital Partners, Inc., Appellant

Nicholas D. Andrews

v.Donald R. Caldwell, Appellant

Nicholas D. Andrews, Appellant

v.Cross Atlantic Capital Partners, Inc.

Nicholas D. Andrews, Appellant

v.Donald R. Caldwell

No. 1694 EDA 2014

No. 1825 EDA 2014

No. 1934 EDA 2014

Superior Court of Pennsylvania.

Argued August 2, 2016

Filed: March 21, 2017

Abraham C. Reich, Philadelphia, for appellant.

Patrick J. O'Connor, West Conshohocken, for appellee.

BEFORE: FORD ELLIOTT, P.J.E., BENDER, P.J.E., BOWES, J., PANELLA, J., SHOGAN, J., LAZARUS, J., OLSON, J., OTT, J., and DUBOW, J.

OPINION BY LAZARUS, J.:

Cross Atlantic Capital Partners, Inc., and Donald R. Caldwell¹ (collectively Defendants) appeal and Nicholas D. Andrews (Andrews) cross-appeals from the judgment, entered in the Court of Common Pleas of Chester County, following a jury verdict in favor of Andrews in the amount of $742,221.45² in damages, $216,268.75 in prejudgment interest, and $303,127.50 in attorneys' fees under the Wage Payment and Collection Law (WPCL).³ After careful review, we affirm in part, reverse in part and remand for calculation of liquidated damages.

We take the underlying facts and procedural history in this matter from the trial court's prior opinions and our review of the certified record.

Cross Atlantic is a corporation in the business of recruiting individual investors, institutional investors, and mutual fund managers who are seeking investment opportunities. These investors enter into a partnership agreement with Cross Atlantic[,] who holds the investors' funds and then uses those funds to invest in start-up companies. The partnership agreement between Cross Atlantic and the investors states how to disburse the investors' funds, any returns, fees, costs, etc., including the payment of any management fees due to Cross Atlantic.

Andrews worked for Cross Atlantic from the summer of 1999 through the summer of 2000. Cross Atlantic's [President] at the time, Glenn Rieger, hired Andrews to find, negotiate, and manage investments for Cross Atlantic. The ultimate goal was to sell the investments at a price that was sufficient to repay the investors their funds and to allow both the investors and Cross Atlantic to realize a profit. During his employment with Cross Atlantic, Andrews did not have a written employment agreement, as is customary in the industry. Compensation is deferred until the investment funds become sufficiently profitable to make corporate distributions. However, Andrews'[ ] employment ended before his funds made any corporate distributions. Therefore, on July 5, 2000, the parties entered into the [s]eparation [a]greement. Paragraph 5 of the [s]eparation [a]greement ("[p]aragraph 5") stated how and when Andrews was to be compensated.

Trial Court Opinion, 1/16/15, at 2–3. Paragraph 5 of the parties' agreement states:

By the end of this Severance Period, you will have vested one year of service towards 1.0% of carried interest⁴ in Cross Atlantic Technology Fund, L.P. and 0.5% carried interest in The Co–Investment 2000 Fund, L.P. Therefore, you will receive 0.2% and 0.1% carried interest as your earned and vested carry in Cross Atlantic Technology Fund, L.P. and The Co–Investment 2000 Fund, L.P., respectively. In addition, as special consideration for your effort put forth on GAIN Capital, we will offer you a full 1.0% and 0.5% carried interest on that particular transaction to be earned, paid and distributed at such time that the distribution is made to all other Limited Partners of the funds. Distributions of your participation in these carried interests will be in all cases identical to what you would have received if still employed by the funds.

Andrews/Cross Atlantic Separation Agreement ("Agreement"), 7/5/00, at ¶ 5 (emphasis added). In exchange for the benefits under the separation agreement, Andrews agreed to enter into one-year non-compete and non-solicitation agreements, as well as a release of any claims he might have against Cross Atlantic. Cross Atlantic paid Andrews' three months of additional salary, as per the Agreement, as well as a bonus, and continued Andrews' health care and dental benefits for an additional three months.

On September 3, 2003, Andrews read a press release indicating that a number of GAIN shareholders had sold a significant portion of their shares. The following day, Andrews sent Cross Atlantic's Chief Financial Officer (CFO) Brian Adamsky an email asking whether the Technology Fund was among those shareholders. Adamsky emailed Cross Atlantic's President, Glenn Rieger, about Andrews' query and told him to respond to Andrews. Over the next few days, an email exchange occurred between Andrews and Rieger. Rieger ultimately told Andrews that the Technology Fund had sold $1.1 million worth of its shares in GAIN and, that under the Agreement, Andrews was not entitled to any compensation.

In February 2011, after he had repeatedly asked Defendants about information on the status of GAIN and Cross Atlantic, Andrews received an email from Adamsky providing him with the requested financial data. On September 2, 2011, Andrews filed two separate complaints,⁵ one against Cross Atlantic for breach of contract and violations of the WPCL, and one against Caldwell, personally, under the WPCL. Defendants specifically denied that any distributions or other transactions had been made to investors that would trigger payment to Andrews under paragraph 5 of the Agreement. See Defendants' Answer with New Matter, 10/14/11, at ¶ 9. Defendants also raised, among other legal theories, the statute of limitations as a defense to the action, claiming that Andrews "knew or should have known that he had the claims asserted in the Complaint against Defendant[s] several years ago." Id. at ¶ 32.

In August 2013, the court held a five-day jury trial. After Andrews rested his case, the trial court granted Defendants' motion for nonsuit as to the payment that became due in September 2003, finding that the applicable statute of limitations barred Andrews' right to recover. However, the court denied Defendants' motion for nonsuit as to payments due after 2003.

Following trial, the jury returned a verdict in favor of Andrews,⁶ finding Cross Atlantic breached the parties' separation agreement and awarding him $742,221.45 in damages⁷ under the WPCL.⁸ The verdict included a finding that Defendants did not act in good faith when they failed to distribute Andrews' severance pay according to the Agreement. Jury Verdict Slip, 8/30/13, at 6, 8. On September 9, 2013, Defendants filed a joint post-trial motion; that same day, Andrews filed a motion to mold the verdict to include pre-judgment interest, post-judgment interest, and liquidated damages under section 260.10 of the WPCL. Andrews also filed a petition for attorneys' fees and costs in connection with his successful WPCL claims.

On December 19, 2013, the trial court denied Defendants' post-trial motions and granted Andrews' motion in part, awarding him pre-judgment interest in the amount of $216,268.75, and denied the motion in part with respect to his request for liquidated damages. The court denied, without prejudice, Andrews' request for post-judgment interest. On May 5, 2014, the trial court granted Andrews' request for attorneys' fees, awarding him $303,127.50, but denied his request for expert fees and out-of-pocket costs. On May 22, 2014, the Prothonotary entered judgment on the jury's verdict. See Pa.R.C.P. 227.4.

On June 3, 2014, Andrews filed a notice of appeal from the court's May 5, 2014 order denying his petition for expert fees and out-of-pocket costs under the WPCL. On June 18, 2014, Defendants filed a notice of appeal from the August 30, 2013 jury verdict, the court's December 19, 2013 order denying their post-trial motions and granting Andrews' petition for prejudgment interest, the court's May 5, 2014 order awarding Andrews' attorneys' fees, and the court's final May 22, 2014 judgment.⁹ On June 25, 2014, Andrews filed a notice of cross-appeal challenging the court's May 5, 2014 order as well as the court's December 19, 2013 order denying his request for liquidated damages. This appeal and cross-appeal follow.

On appeal, Defendants raise the following issues for our consideration:

(1) Did [D]efendants' absolute and unequivocal repudiation of its alleged obligations under a separation agreement start the accrual of the limitations period on [P]laintiff's entire cause of action under the agreement, including for future payments allegedly due under the agreement?

(2) Did payments that allegedly became due to plaintiff under a separation agreement negotiated and executed two months after the termination of [P]laintiff's employment; that were not earned by [P]laintiff during his employment; and that were allegedly given to [P]laintiff in exchange for entering into a non-compete agreement, constitute "wages" under Pennsylvania's Wage Payment and Collection Law?

(3) Was [P]laintiff's interpretation of paragraph 5 of the separation agreement unreasonable as a matter of law when, among other things, his interpretation was irreconcilable with the paragraph's last sentence, required the assignment of two different meanings to the same term, and was inconsistent with the very relief he sought?

Defendants' Appeal

In their first issue on appeal, Defendants claim that the trial court improperly denied their motion for nonsuit because Andrews' entire cause of action was barred by the statute of limitations. Specifically, Defendants assert that because they had "absolutely and unequivocally repudiated" their contractual obligations under the Agreement in September 2003, and, consequently, would never agree to pay Andrews any "deal specific" carried interest, Andrews could have brought suit for breach of contract at that time.

We find this claim waived. In their ...